Q4 2019 Earnings Call
Your 2019 conference call at this time, all participants are in listen only mode. After the speakers presentation. There will be a question answer session ask a question during the second only to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero. So now like to hand, the conference over to your speaker today Adam.
Got it senior Vice President of corporate development and Investor Relations. Please go ahead Sir.
Thank you Julie and good morning, everyone. Thanks for participating in our yearend 2019 results conference call.
Hi, guys speaking presenting to you. This morning are all of these are wrong.
Yep.
David sales executive Vice President and CFO.
Or anything else. It was released yesterday evening, we have posted a slide presentation on the investing section of our website, which we will refer to during this call. Following our comments, we will be glad to take questions from analysts.
As noted on slide two of the presentation listeners are reminded that information we're sharing with you today includes forward looking statements.
These statements are based on assumptions that are subject to significant risks and uncertainties.
Although econ believes that the expectations reflected in these statements are reasonable we can give no assurance that these expectations proves to be correct.
With that I'll now turn the call over today.
Thanks, Adam and good morning, everyone I'll touch briefly on any calls consolidated results and then review results by segment before turning the call over to John that we.
Turning to key highlights on slide three of the presentation equals 2019 results. So revenue and adjusted EBITDA reached record levels once again, while maintaining near record backlog of $6.8 billion as at year end.
Adjusted EBITDA margin also improved on a like for like basis by 50 basis points to 6.6% for the year.
As announced yesterday.
Cones board of directors approved an increase to the quarterly dividend on the basis of continued financial strength strong cash flow generation and positive outlook.
The quarterly dividends will increase to 16 cents per share from 14 and a half since previously with the first increased quarterly dividends to be paid on April 2nd 2020.
Turning to slide four record annual revenue for the year was $3.5 billion was 194 million or 6% hi, compared to 2018.
On a like for like basis, excluding the contract mining business sold in November 2018 growth in revenue was 403 million or 13% compared to 2018 as shown on slide five.
Record annual adjusted EBITDA of $222 million, a multitude of 6.4% improved by 50 million compared to adjusted EBITDA of 207 million.
Margin of 6.3% in 2018.
On a like for like basis, excluding contract mining in 2018, and a one time executive transition charge in 2019, adjusted EBITDA for the year 229 million margin of 6.6% compared to $286 million that margin of 6.1%.
Last year, an overall increase of 23%.
Slide five outlines the full impact on results of both the sale of the contract mining business.
2018 in the onetime executive transition charge in 2019.
Reported operating profit of 107 million net profit of 73 million diluted earnings per share of $1.12. All showed considerable growth compared to 2018 on the back of high volume and improve margins.
As I mentioned earlier reported backlog as of December 31st was $6.8 billion inline with record year in backlog at the end of last year.
Now turning to results by segment.
No. We don't slide six construction revenue of $3.4 billion in 2019 was 206 million or 6% Hi isn't the same period last year.
This increase was driven by higher revenue in civil operations and urban transportation systems in both eastern and Western Canada.
Revenue was also higher from nuclear operations relate to refurbishment work in Ontario.
These increases were partially offset by lower volume in the conventional industrial sector. Following the sale of the contract mining business in November last year and in the utility sector from reduced mainline pipeline volume.
Adjusted EBITDA in the construction segment of 185 million.
Margin of 5.5%.
Increased by 17 million compared to 168 million a margin of 5.3% in 2018.
This was primarily due to increased revenue and margin from civil operations, the Durbin transportation systems.
You contract awards in 2019 totaled $3.4 billion compared to 5.8 billion in 2018 due mainly to the high number of large project awards in 2018, including the sites see generating station and spillway Civil works you already in Montreal a lot.
See the Finch Westell oxy and the Gordy how international bridge.
Construction backlog at the end of December was 6.7 billion inline with backlog at the end of 2018.
Turning to slide seven concession revenue for the year was $218 million, a decrease of 5 million or two per cent compared to the same period last year.
<unk> as a result is slightly lower management development fees for Canadian concessions.
Adjusted EBITDA in the concession segment of 83 million was up by $3 million compared to 80 million in the same period last year.
Increase was primarily driven by increased revenue from the Buda International Airport redevelopment project.
At this point I'll turn the call over to John Lewis.
Thank you Dave.
Before addressing the slide presentation I would like to formally welcome our new employees from voltage Paula.
Which we acquired in February.
Or a base purchase price of 30 million.
I want to teach power is an electrical transmission and substation contractor headquartered in windbag.
That brings key medium to high voltage power transmission and distribution capabilities to a comp.
We are very excited to have the team join a call and we look forward to building on desktop will interpret your spirit across the called organization electrical transmission and distribution is a key strategic business development for equal.
Now turning to slide eight as Dave mentioned earlier, he can produce record revenue and adjusted EBITDA in 2019.
I know what diverse and resilient business model is positioned to deliver continued strong results.
The capabilities of our construction segment are well aligned.
Record level of infrastructure investment underweight and committed by all levers of government across Canada as well.
Hi, it's a private sector.
The concession segmented activity pursuing a number of lumps getting trust structure projects and Thats required private finance solutions and participating as a concession now on the five piece we projects identified on this slide.
Turning to slide nine of them.
Hey, Con ended 2019 with near record and backlog of 6.8 billion.
Backlog to be worked off in the next 12 months of 2.8 billion.
Increased over 40% versus last year. These around 60% of backlog is for work off beyond the next 12 months.
Providing significant visibility to eight kong longer term outlook.
Of note.
As these backlog does not include the total bridge replacement project in DC awarded to an E. Com 50, 50 joint venture in February two solid 20.
Hey, conch shell of the almost 1 billion contract value will be added to its construction segment backlog into first quarter.
Annual recurring revenue grew by 4%.
On a like for like basis over last year, reflecting the significant ongoing revenue from recurring work under long term agreements and concession arrangements.
We do remain very focused on the strong execution of our backlog, while ensuring we continue to build capacity and flexibility for further gross.
Turning now to slide 10.
He comes cash flow generation balance sheet and financial capacity remain key advantages in our ability to grow into coming years, both in Canada, I don't select international projects.
These financial strengths is also enabling us to continue to invest in our business, including potential new concessions increase our dividend again in addition to buying back shares and our program and mix strategy tuck in acquisitions.
Further strengthen our capabilities.
Now turning to slide 11.
Our overall outlook for 2020 remains strong E commerce current backlog and recurring revenue contract robust pipeline of future opportunities and ongoing concessions I expect it to lead to another year of revenue and adjusted EBITDA growth in 2020.
In the construction segment.
Bidding activity continues to be solid.
With a number of E commerce larger per suites expected to be awarded in 2020 or solvent 21.
In addition to the recent Bachelor breach awarded.
Weve strong and diverse backlog in hand, a call. These focused on ensuring solid execution on its project and selectively adding backlog through an extremely disciplined bidding approach that supports continued margin improvement in this segment.
As a concession segment continues to partner with a cost construction segment.
Focus on the significant number of piece, we opportunities in Canada, and honest selective basis internationally.
Well enough preparations for a smooth transition from the existing to the new terminal in Bermuda Vito.
Before turning the corner over two and a need for questions I would like to take a moment to address John Beck's transition to the role of non executive chairman.
I think serve the E com for over 50 years, and founder former CEO and executive Chairman.
John has been an extraordinary leader mentor and a two industry cycle.
John guidance has been in value either to me since joining a common in September 2018.
And I look forward to continuing to benefit from his trustees counts at an experience.
As channels a border.
I'm really honored to have assumed full executive responsibility for E com and.
And I look forward to working with our teams to successfully complete our impressive portfolio of projects, while executing our ongoing growth strategy.
Thank you.
Now I'll turn the corner over to at least for questions.
Thank you if you would like to ask the question. Please press star followed by the number one on your telephone Keybanc. Your first question comes from Harry Link from Canaccord Genuity. Your line is open.
Hey, good morning.
When you are wanting your morning.
Just on the outlook.
Calling for for better revenue.
In margin in 2020.
Your.
Backlog for over the next 12 months is up 40%.
So in light of that can you just help us.
Better frame, what our revenue expectations should be.
For for 2020 or what are what are some of the puts and takes.
But that's going to enter the outlook.
Yes, so there's really three elements to think about in terms of thinking about 2020. The first overseas is where you pointed out is that growth in.
Backlog to be executed in the next 12 months. The second piece is our recurring revenue, which we expect to be fairly stable to low growth similar to a similar to this year.
And then that said Pcs is more seasonal work coal projects, we win during the year and have some execution on in the same year.
I would suspect good that will be a lower than.
Historically being just because of the amount of work we already have on hands. So.
There will be some offset there, but if we were to do.
I don't know 50% of what we normally do in terms of seasonal type work book and burn work in the same year, probably something more appropriate given where we are coming into the.
And.
You read if I may ask Tom seeing about these these backlog when I see I mean of very interesting.
And what I see.
It is a train so a call on.
Yes.
The fact that our TVT is extremely well balanced.
Even more now once you can see I mean, we are very much balance between the concession segment and the construction segment.
Within our construction segment you can see in the graph the two or is that we have put on our internet site.
We are very well balanced now between our six operating sectors, a highway and bridge is heavy civil urban transportation system nuclear industrial and and utilities.
We are very well balance now and Patrick fluid added to this between east and west much better than before and we also extremely well balance will be between the kind of contracts between unit price.
Target cost.
Fixed price, which give us a real balance in terms of duration of our backlog and I think this season is really.
A very strong capacity of Eagle.
Yes, Thanks, certainly it's nice to see the diversity.
I guess just back to the expectations for for the revenue growth I mean, Dave are we.
Talking single digit double digit.
Just trying to narrow it down into at least a EUR range.
Yeah, I mean, we don't give specific guidance obviously.
But I think a if you take that 12 month backlog fairly stable recurring revenue and that kind of normal book and burn.
Assumptions, you get to something in the.
Single digits, but still still relatively strong.
Okay. That's helpful.
Last one for me I guess of you have you seen any any disruptions to your to your first quarter.
On the on the coastal Gaslink.
Project or Corona virus or any of these other externalities that are quite active at the moment can you just give us an update on.
Well those are impacting you if at all.
Yes, I mean I can do it on our pipeline activities you know that we have begun one spread on the Trans mountain and we've been awarded also to spreads on encore sort of where we on preparatory work.
All of lose on undisputed land. So that we are absolutely at the moment knowing to upfront season no issues.
Regarding the Corona virus I mean of course, we are actively.
Monitoring the situation I mean, we our priorities attention 50 of our people.
And.
We have not seen any interruptions I mean.
12, a workable our supply chain.
So far what it shows that we've been working during the last week, so neat our steps mitigation plan.
Is ready and this is where we are.
Okay, I'll turn it over thanks.
Your next question comes from Jacob.
You see your line is open.
Good morning.
Good morning, Yeah. My first question here is just on the construction construction margins that we saw in the corner quite strong.
You just talk about the so what happened in the corner and then can we expect further margin expansion in 2020.
Yes, so Jacob.
Right.
Of contingent consideration margin in Q4, but more importantly for the year as well. So the trend continues to be close to go over time and cheese.
Our goal is we always say don't look at one quarter in isolation is always a mix of work and different things going on in each specific quarter.
But over the course of the you margins continue to move into right direction I think as we look forward. We expect continued progress we continue to be very selective about the type of projects we bid.
Our margin expectations on what we're bidding and ER that should all a combined with good execution to see margins continued to improve so so thats the objective.
And then.
On the concessions.
No in the past you've talked about.
Expect things the earnings contribution be fairly stable over the next.
Your your and a half if that's still the expectation and then can you just remind us again.
As we think about crane, a virus and.
Yes.
Airline volumes to decline what that impact would look like.
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Yes, so the answer to the first part of that question, Yes, we expect.
Things to be to be relatively stable over the next 12 to 24 months in concessions business. It will only start to a change in terms of profile once the.
Logic Canadian concessions move into the operations phase, but that's a still couple of years away at this point.
Intended traffic.
Obviously at this point, we haven't seen any impact, but as you. All we said we'd continuing to monitor that we do have various.
I guess protections in place.
In the commercial.
Structure.
Arrangement that would protect as to some extent.
In a worst case scenario around two thirds of a revenue would be protected.
But obviously it would be a a negative impact to some extent.
We saw widespread reductions in capacity or travel into the new to as a result grown of ours, but at this stage no indications.
Okay.
And then just last question how active you have you been on your insight would be a year to date.
So we just released the latest through to the end of February.
And so.
It's all public record, we purchased about 850000 shares or give or take which we spent about $50 million.
We come out of a blackout period or.
Shortly.
Current share price levels and expect to continue to be a active on that program going forward.
Okay, great. Thank you.
Your next question comes from Ben check from Stifel. JMP. Your line is open.
Yes, just two quick questions I wanted to just confirm so petula bridges a billion dollars a it's a 50 50 joint venture and the when will hit the backlog in the first quarter.
Okay, Yes.
To be a little more precise it's around 970 million, it's a 50 50.
Joint venture it will be added to the backlog.
On the fourth quarter of 2000.
Q1.
First quarter.
Solvent 20.
And.
We have a limited Nazis to cross Eden and we are now ramping up our activities.
Okay.
Okay. Thank you and my second question is if I look at your.
The composition of your backlog in terms of contract type.
Fixed price a portion of 66%, which is a well quite a bit higher than revenues. In 2019 can you just refresh your memory on what what or do you have any targets around that composition or or is there any.
Specific sort of risk management I mean, your execution has been quite strong.
Can you just to elaborate on that.
Yeah, we don't have a specific target a golf the mix, we have a specific target on building efficiency.
And this is what wed where is our focus.
What you say about backlog and revenue.
Dependent I mean, just comes from the fact that our record revenue are not into backlog.
No. This is what creates is this kind of discrepancy, but he doesn't always being the case for equal.
It's very important as I as I say to you re a few minutes ago I mean too.
No the.
The balanced.
Capacity that we have now at Acorn for example, I mean, we we got New award for 3.5 billion.
During 2019.
Our revenue is 3.5 billion and Youre, probably Nazis that we just entered one big lump sum turnkey job that was a full one layne on which we have a share off approximately 300 million.
All I would add to that venues.
As we look forward, we don't expect to see that mix change significantly either so we still expect revenue.
To be pretty well balanced between the two two components just just as 2019 was so.
The backlog profile is one thing, but the revenue profile is typically.
Imbalance and we don't see that changing moving forward.
Perfect. Thanks, so much.
Your next question comes from further question from Raymond James Your line is open.
Hi, Good morning can you provide some Ted bets on the two additional tuck in acquisitions, you made in and how they complement your existing business.
Thank you.
So we've got a bolt.
Sure John Louis I referenced in his remarks, which is a medium to high pitch.
Transmission.
Let's see.
Okay being a good growth area for us it's.
An area that has to get you for is because we do a lot of work around.
Our goal is transmission, but not actually the.
Hi voltage stuff itself. So we do a lot of the civil work Randy we do.
More local distribution a plugs into piece that was missing pool, we see.
The.
Wafers to two growing that space and we expect demand in that area to grow significantly.
Either one was a.
Recently.
I would call.
Small utility business.
Basically expands.
Capabilities in telecom.
Further east so into Quebec.
To the East coast.
We think we.
All the activity going on in that space.
The next phase G. Sci is well positioned hope its capitalize on.
Creeps up presence with existing clients into other geographies.
Great. Thanks.
That's been nearly a four months I guess since you last call. So.
Since your last comment said on the competitive landscape, particularly in respect to.
Hi, guys, you're you're going against on large scale projects.
Could you provide a bit of an update there is the environment as it unchanged has it gotten better or has it become more competitive.
Yes, I can do it I mean, the trained is is the same that quickly.
Okay.
Nonseasonal.
So we just can't see that there is more discipline.
Against our competitors, we have just check timing.
We said we still.
Being say that mean as I already told you.
We are comfortable and really comfortable with that backdrop between 6.5, and 7.5 billion, where we are now we are not stopping at also.
We are.
Truly disincline.
Now with bidding activity, we have our targets, we put our best team on our targets to be sure that our estimates.
To be accurate.
And.
We evaluate.
Based on each project sort release those issues.
At the moment.
Okay.
Thanks, Jeremy Thanks, David.
Okay.
Your next question comes from Michael tough home from TD Securities. Your line is open.
Thank you can you provide a status update on some of your larger ongoing infrastructure projects.
In particular, the RPM project any eglin to know Archie project.
Okay, or all are progressing well.
A full project of the size and on durations.
I mean, obviously the result learning curve.
Between Eglinton, and then Ram and Finch.
And your first question was about Rem rather is progressing.
Quite well.
We have a very strong team and we are on time on these drop and I'm very happy about it.
And thank you and anything further on on Eglinton and in terms of specifics.
Hey.
And getting 10 is as high billion job.
Across Toronto, I mean first of all we we will come and we're extremely happy about the provincial government announcement about this building trended cost to act, it's very important it will expedite to planning design and construction process on as was big LLP you remember that.
To acquisition utility relocation efficient land access and timely access to municipal services rights of way or lose I extremely important for us. So we continue to work with Metrolink send a I always trust return targets.
To telegraph these trends, it's a similar timelines that does not compromise quality no safety. Obviously, we are currently in discussions on resolutions on a few key issues and we cannot provide further details at this time.
Okay. That's helpful. Thank you.
Just just a question about the the project pursuits pipeline or in your commentary and the outlook you sound fairly positive on on the outlook.
It relates to pursuits.
Pursuits in 2020.
Based on an assumption of historical normal win rates.
If that's a reasonable way to think about it.
Based on the on the project pursuit pipeline that you have today would you expect to potentially see new wins in 2020 exceed what you did in 2019 as that is that sort of situation, we could be looking man.
So obviously hard to predict exactly could you don't know which projects you don't know the exact timing what we would say is Ah you look at 2019.
We really names any.
Our so called Mega projects, but still.
Monies to maintain backlog exactly where it was at the end to 2018, so I think sometimes people get.
Fixated on these very large projects.
You will they do great kind of a one time step up.
And then you worked down again over time, but we're confident that we the mix it works with issuing launches medium size smaller projects.
That will continue to maintain backlog in that.
Range, the John that we referenced which is more or less where we are today. Obviously, if we were tried a couple of.
Larger projects.
Similar time than than we'd see a step up but it's very hard to predict.
Exactly when those are going to be awarded which ones were going to wins. So I don't want to make any any from predictions but.
We certainly expect to continue forward with a strong backlog.
We saw a step change in 2018 and we're.
Comfortable operating a higher level of close to 7 billion.
Okay. So it's a fair enough Dave Thank you.
Just a question about the the voltage power acquisition and the the move into.
Into that transmission and distribution area.
With that acquisition does that provide you what you need now to to be active in that part of the market nationally or is the idea here that you may need to look at.
Other other acquisitions in that area to to further build out that presence. If you want to do that work sort of across the country.
Definitely gives us a very good basin, we felt very comfortable with this company I mean of course, we will.
Leverage.
Mission of this company.
To broaden our.
TVT and this is what we called tuck in acquisitions.
They do have a track record of operating nationally there very.
The nature of the industries, it's very mobile on.
So they have operate coast to coast.
No. We don't expect to have to make any of the kind of acquisitions to add to that we we bring our own capabilities. In addition to the expertise that voltage has in the combination of the two allows us to go wherever the work is in a in that space.
Okay.
Thanks, and then just lastly, a Dave can you help us in terms of how we should be thinking about changes in noncash working capital in 2020, both full year basis, and if there's anything unusual or different this year, but at the seasonality.
No nothing.
Two unusual from seasonality perspective, so just just for everyone's benefit that usually seizes Ah I start to build working cap tool.
Two in Q3, and any kind of on lines in Q4 and through Q1. So.
Which is what we saw this year and don't expect that general trend to be any difference in in 2020.
One thing again coming back to.
Large projects and the unpredictability of the timing of some of those awards. That's the only thing that could really.
Moved the timing a little bit as you saw in 2018, when you get awarded.
When in two of these major projects is usually very large advance payments associated with those that lead to a big influx of a cash at the start of the project.
And.
I think those a site and the timing of those we don't really expect any kind of material working cap tooling impacting 2020 kind of post to go negative.
We do expect the topline to grow.
But we don't expect to see a huge impact on working capital you should be relatively stable year over year.
The the caveat those large projects and the timing of those.
Okay perfect. Thank you.
As a reminder, if you'd like to ask a question. Please press star followed by the number one.
Question comes from Chris Murray from Altacorp Capital Your line is open.
Thank you good morning folks.
Turning to Bermuda, and just maybe a couple questions about this.
Yes, the thought is that.
The new Karl be ready I would assume we talked about kind of Q3 or before the end of the your type timeframe.
A couple of things you gave us some indications in your outlook about some changes around interest and amortization and thank you for that.
I'm just wondering how the revenue might transition as you move.
Operating the new terminal from the alternative as it or should there be anything that we would expect to see different than that.
So the only impact really Chris is.
Because the construction will will end.
Right now we have some revenue flowing through concessions, which is really the constriction revenue that flows through concessions.
With all gets eliminated on consolidation anyway. So the total consolidate they come level it won't have an impact.
On that.
With respect to.
But obviously, we'll see less.
Revenue on the construction side from from Bermuda since the operating revenue from the at Pall itself.
We don't expect any significant change there is some upside to moving to new terminal short term because they're all subcom sessions, so things like retail.
And.
Commercial opportunities within the pool that will lead to.
Hi revenue, but it's it's not like a step change.
Over time.
Hi.
The an ability to add additional flights, but that doesn't happen overnight. It kind of thing we'll give color.
Okay.
All right and the merch margin profile.
If we sort of back out that that intercompany revenue margin profile seems pretty healthy are expected I've seen keeps in the same kind of ballpark of were where you spend last few quarters.
Yes, yes, we expect.
Overall earnings from concessions pretty stable.
Okay, great and.
And then just a housekeeping one for me.
Taxes.
Last year, the second rate seem to be a little bit lower than your their statutory rate how do we think about taxes, but some extra revenue that you guys are expecting this year.
So overall.
We expect the effective rate increasing being 2020 fuel is a function of the.
Less of our earnings overall and this is again.
Mid year on whats coming from Bermuda, because construction will will come to an end. So there is a portion of our construction revenue and profits today.
We focus with you.
Tax supply.
That will go away. So the effective rate will creep up a little bit, but again, not a huge impact and only really kicks in late two India.
So you still think it will be below the Canadian statutory rate then for 2020 letter.
Yes.
Your next question comes from Jennifer.
From Janney capital markets. Your line is open.
Yeah, good morning, gentlemen.
So just coming back to the potential for margin improvement within the their construction business in DMD, Indiana, you're talking about the creation of the your been transportation system theme I was just wondering if you could provide additional details. Our example of the benefit that this team bring to the promotional exits.
One of those project thanks.
Yes, we can.
It's about our.
Pressure sectors within that construction segment.
My idea is that you don't expect and you don't need the same qualities.
For our teams.
When DAP to do a water treatment plant or where they have to do a breach or a damage.
When do you have to do.
And I'll Ti that we caught up and transportation system I mean, those jobs are a little different.
They are usually bigger and a is that within the is the scope of work.
An important part about system and system integration. So we have just been building during the last 12 months very strong team to take care of those project at the moment we are suite.
In our backpack.
Egginton.
Ram and Finch and we just want to out of the best teams.
In Canada to take care of that was Qlogic I'll remind you that a big part of the pipeline infrastructure is about to lose NRT project and this is why we have specialized.
A division of the scope.
Thanks for color in maybe come back on the M&A strategy, you talk about the acquisition of voltage power, but is there any other white space in your service offering where would you like to that to expand into short term.
And because I think you mentioned in the past your desire to expand into mining sector.
Okay.
A desire to extending the mining sector I don't remember that up safety.
No.
But.
Not really I mean, we took a decision in 2018 and I can tell you that we're extremely happy about having diagnosis.
Our mining.
Division and oil sand in the north of Canada.
So and any time I mean, we aren't we are constantly.
Looking at the market and any tuck in opportunities that give us a capacity to to self perform better too to enter into special niche of the market, where we are not present I mean, we will be ready and we are today the financial strengths.
To do it without any problem.
Okay, Great and maybe one last for me you mentioned earlier the pipeline. Unfortunately. These that is very robust I've seen yesterday that you were shortlisted for the Union station enhancement project that will be procured through the alliance contracting model. So I was wondering if you could talk a little bit about that your strategy for no store type.
Project in the future as they become more and more present in the competitive landscape. Thank you.
Yes.
We.
We are very happy of having being quite high for this union station under the Alliance model.
It has been.
Yeah.
It is true.
Remember his discussion.
And a market sounding with our clients.
We have been able to explain to them that indicates a union station equals much too much complex and much too much depending on on interferences from third parties.
To be dealt tweens with.
Fixed price so with a piece we scheme.
So.
Our client Metrolink.
The.
Don.
Evolution and these jobs.
I'm now going out on the market as an alliance contract.
We probably a mix of target cost of of unit price contract management. So.
The model is not totally fixed.
And once now that we are pre qualified we'll know a little more but I mean, it's important for us.
This trend is going to developing in Canada and to be within the companys recognized to do it.
Great. Thank you very much further color and congrats for the good quarter.
Thanks.
We have no further questions I would now like to turn the call back over to Mr. I forgot it for closing remarks.
Super Thanks, Julianna and thank you all for joining us once again, if you have any questions always feel free to a follow up have a great rest of your day. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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