Q4 2019 Earnings Call
[music] good morning, ladies and gentlemen, thank you for standing by welcome to stellar Jones Q4, 20, <unk> earnings Conference call.
At this time, all participants are to listen only mode. Following the presentation. We will conduct a question answer session instructions will be provided at that time for you to catch up for questions.
Anyone have any difficulties hearing the conference. Please press star followed by several for operators of Society.
Before turning the meeting over to management. Please be advised that this conference call will contain forward looking statements.
At are subject to risks that number of risks and uncertainties that could cause actual results may differ materially from those anticipated.
I like to remind everyone that the conference call is being recorded on Wednesday March 11 2020.
I'll now turn the converts over to social President and CEO. Please go ahead.
Good morning, ladies and gentlemen, I'm here with so that troubling Chief financial Officer intelligent.
Thank you for joining us for a discussion or the financial and operating results for Celledge oldest full year and fourth quarter ended December 31st 2019.
Our press release reporting full year in Q4 results was published earlier this morning.
Along with our Mdna can also be found on our website at www Dot Stella <unk> dot com and will be posted on SEDAR today as well.
Let me remind you that all figures expressed on todays call are in Canadian dollars unless otherwise stated.
Before we begin I would like to also remind you that on January one 2019, the company retrospectively adopted <unk> Forest 16 leases, but has not restated as permitted comparative figures for the 2018 reporting period.
Please refer to our Mdna for further details.
I will begin with a brief overview of our full year results, we delivered solid financial and operating results in 2090, concluding the year with sales and EBITDA growth.
The 19th consecutive year, we increased sales, reaching $2.2 billion, despite challenges of tight untreated railway tight supply market.
Higher sales were supported by solid performances in our utility Poles railway buys and industrial product categories, which more than compensated 40 over 40 million dollar decline in sales in the laws in lover product category unfavorably impacted this year by lower lumber prices.
Led by sales growth and consistent with our garden guidance target range, EBITDA rose, 28% to $312.9 million in 2019, and net income amounted to $163.1 million or $2.37 per share 16.
20% respectively.
After adjusting for the impact of <unk> first 16, our EBITDA margins increased to 12.9% up from 11.5% in 2000 anything.
For the year, we generated good operating cash flows considering the significant increase in untreated would inventory required to meet anticipated 2020 sales.
Our strong balance sheet allowed us to return over $100 million to our shareholders, while continuing to pursue our growth strategy.
Warming acute residential lumber production facility and investing strategically in our network.
Inline with our capital allocation approach.
Which is focused on balancing growth and returns today, we announced 7.1% increase in a quarterly dividend, reflecting our commitment to delivering continued value to shareholders.
Turning to our fourth quarter results.
Total sales in the fourth quarter increased to $439.9 million up 1.6% compared to last year.
Excluding the currency conversion affect sales grew $4.4 million or 1%.
Utility pole sale amounted to $190.9 million down slightly from $192 million generated into fourth quarter 2018.
Excluding the currency conversion affect sales decreased by 1.5%.
Despite higher selling prices and healthy replacement demand for distribution pulled in the U.S. sales were unfavorably impacted by the lower level transmission pull projects in the fourth quarter compared to Q4 last year.
[noise] railway Tei sales increased to $131.3 million, excluding the currency conversion to say sales rose 3.1%.
The increase in sale stemming from improved pricing from class, one and non class one customers and ongoing strong demand was mitigated by the limited availability of untreated tie earlier this year.
During the fourth quarter, given the improvement in the availability of supply we replenished our untreated tie inventory levels required to meet anticipated 2020 sales.
Residential lumber sales totaled $61.1 million relatively unchanged compared to the fourth quarter last year.
Excluding the currency conversion affect sales increased by 1.2%.
The reduction into market price of lumber, which flows through to our selling prices.
What's more than offset by the continued organic growth in sales volumes.
And more winter bookings sales compared to Q4 2018.
[noise] industrial products sales amounted to $26.3 million up from $23.1 million recorded in the previous years quarter.
Excluding the currency conversion affect sales increased by 13% as a result stronger volumes, mainly for preplanning and crossing products.
Logs in lumber sales, which are closely tied to the market price of lumber were relatively unchanged.
$30.3 million in Q4 2019.
So then I will now provide further details regarding our results and financial position before I conclude with our outlook for 2020 Savannah.
Thank you Evan and good morning, everyone turning to profitability.
Operating income rose to $41.4 million or 9.4% itself in the fourth quarter compared to $31.8 million or 7.4% of sales in the same period last year.
The improvement was primarily attributable to higher selling prices for utility Poles and railway Todd.
Which more than compensated the decrease in volumes for transmission Poles and higher production costs are railway time due to longer treating cycle.
The decrease in the mark to market losses related to diesel and petroleum derivative commodity contracts also improved operating income in the fourth quarter by $9.6 million, while the adoption of I effort to 16 did not have a significant impact.
Fourth quarter, EBITDA improved to $58.8 million, yielding a margin of 13.4 per cent compared to 41.8 million or a margin of 9.7% in Q4 2018.
The increase was mainly driven by stronger pricing and the favorable mark to market variation related to derivative commodity contracts.
Partially offset by higher costs for railway Todd.
EBITDA in the fourth quarter also benefited by approximately $8 million from the favorable impact of the newly standard.
Operating lease expenses are now recorded as depreciation and interest expense rather than operating costs.
Driven by the growth in operating income net income for the fourth quarter increased 34% to $27.7 million.41 per share.
Turning to liquidity and capital resources.
We thought resilient business model, we were able to deliver solid performance in 2019, including generating $305 million, that's cash flow from operating activities before the effect of working capital changes and interest and income taxes paid.
The improved availability of untreated ties and the anticipated Twentytwenty sales calls for utility Poles resulted in an older hundred $60 million increase in inventory this year.
It's largely explains the reduction in cash from operations to $89.9 million for the year.
Together with additional borrowings under our syndicated credit facility of $126 million, we returned for the full year $109.1 million to our shareholders.
Insisting 70 point sixmillion share buybacks and 38.5 million dividends.
As part of the company's normal course issuer bid, we repurchased in 2019 1.8 million shares at an average price of $38.47.
We also invested $65.8 million in capital expenditures.
This included spending to finalize our plant expansion in common Wisconsin.
And the acquisition and upgrade of the Shelburne, Ontario assets, which expanded our network of residential lumber treating facility.
As at December 31st 2019, our long term debt stood at $604.9 million in our leverage ratio remained low at 1.9 times.
We concluded 2019 in a very healthy financial position.
Yesterday.
The board of directors, a stellar Jones declared a quarterly dividend a 15 cents per common share representing an increase of 7.1% over the previous quarterly dividend payable on April 24 to shareholders of record at the close of business on April Threerd.
This represents the 16th consecutive year of dividend increase.
I'll now turn the call back to Eric for the outlook Eric.
Thank you still Donna.
Based on the assumption that current market and economic conditions stabilize and foreign exchange rates and raw material prices remain comparable to those prior year, we expect higher year over year overall sales, mainly driven by increased market reach into utility pole railway tie and residential lumber product categories.
More specifically into utility pole product category sales and margins for 2020 are expected to improved due to better pricing.
Let's see demand for replacement programs and greater market reach.
In the railway type product category, both sales and margins are forecasted to increase.
Improved on treated railway tight inventory availability should lead to opportunistic sales to class, one and non class when customers.
We also expect stronger mix of non class, one sales, which will support improved margins.
In the residential lumber product category, we are forecasting higher sales, mainly driven by volume increases and market reach.
Management closely monitors changes in the North American lumber markets and adjust pricing accordingly in order to meet the dollar margins on similar volumes.
While absolute dollar margins are expected to increase as a result of higher volumes margin as a percentage of sales should remain at levels similar to those of 2019.
In the industrial product category sales are expected to be slightly lowered twentytwenty as rail related maintenance should require less bridging crossing components.
For log and lumber product category sales in 2020 or forecasted to increase mainly due to higher lumber volumes. It's important to highlight that this product category is used to optimize procurement and does not generate margin.
Sales growth in or three core product categories is expected to support and improve and improvement in operating margins.
As a result, notwithstanding additional acquisitions EBITDA for 2020 is forecasted to be in the range of $320 million to $345 million compared to $312.9 million in 2019.
In terms of capital expenditures, we plan on spending between 45 and $55 million. In 2020. This includes an investment for storm water control under construction of a new distribution center to improve operating performance at the newly acquired Shelburne facility as well as expenditures to implement a new ERP system.
As a follow up to our press release from last December regarding Penta chlorophyll supply we have ceased taking steps to produce this preservative.
We're currently working with our customers to offer a variety of solutions for the treatment of utility Poles are.
Our robust network is well positioned to offer a wide range of preservative that are suitable and approved for wouldn't utility poles throughout North America.
We believed that the fundamentals of each product category will remain strong as a result, we will continue to focus on optimizing operating capacity, while seeking acquisitions to further expand our presence in our core product categories.
Our solid financial position, we have the flexibility to continue to carry out or growth strategy and deliver sustainable long term value to shareholders.
This concludes our prepared remarks will now be pleased to answer any questions you may have.
Thank you if you'd like to ask a question. Please press star followed by the number one on your telephone keypad, if you'd like to withdraw your question. Please press the pound Keith will pause for just a moment to compile the kuni roster.
Your first question comes from Walter Spracklin from RBC capital markets. Your line is open.
Thanks, very much a good morning, everyone.
Morning, Walter So just starting on the merging a expectation for margin expansion. You mentioned two items are first of all you would you had indicated that there were.
There were an increase in untreated would inventory and.
But you expect a that to improve and you also mentioned a stronger mix of non class one sales, which would lead to increase emerging. It's this is this something you're seeing your visibility on that you're seeing evolve and you're comfortable putting out there for 2020 or is this something that youre predicating it on but have not.
Seen a examples or demonstrated a indications of of either of those at this point.
Okay. Thank you Walter so the comment on inventory is as you know last year, we got tight supply the market had opportunities in into fourth quarter actually great opportunities to increase our inventory levels untreated ties which positions us very.
Very well to be able to answer to the non class one demand I'll start with that one so we do see very active quoting activities in this commercial contractor business for 44 railway ties and send their forces will also have availability. We do believe we'll have a chance to see certain demand from class ones.
Sure. So based on that you feel fairly comfortable that being said those indications in the actions you've taken you should see merger and enhancement as early as the first quarter.
That is correct, okay, perfect and then interestingly on your shareholder return strategy I noticed your buyback.
You ramped it up in the a in the fourth quarter here.
For 70 million total for the year the dividend increases net 4 million additional so.
It seems that youre directing a higher focus here on your buyback.
Can you talk a bit about your strategy. There is that is that just based on the share where you see the shares today or would you consider increase dividends on a more regular basis to appeal to more income oriented investors.
Well so the the.
The approach we want we run a balanced approach and we want we want to be mindful of leverage.
I I understand Youre. Your question it was about to the dividend. It was important for the board to show a year over year increase as we've we've wanted to demonstrate that we continue believing in our capacity to generate strong cash flows or that we wanted to be prudent with leverage going forward in particular, as we mentioned in the outlook that we maintain our position to be able to.
To to grow our network through a who potential M&A you know in a in India in the coming coming months coming here.
And on the M&A side, you know, there's obviously some disruption or emerging here, we have not seen you overly active on that front can you talk about is this due to willingness on the this on on the seller here just not not not at this point willing to step up is that.
Disconnect in in the the multiple the price.
The price offered yeah.
Is there an opportunity here in 2020 for you to really ramp up your acquisitions given everything given the climate.
So.
We've been we've been constantly active with a with a few sellers over the last year and are continuing discussions with with seller. So I'm being prudent obviously, because as you know these processes they take their own climb and have their own approach.
I'm confident that we can conclude.
Potential acquisition historical multiples I don't think the multiple that necessarily D. The the role block it's more the process to get there, but we management's still remains quite confident in our ability to to bring some M&A to finish line.
Okay final question here is on sensitivities to academic activity.
Given given the Coca 19, if it if it if it turns out to have a wider spread demand impact.
You you accurately pointed out I believe that you consider ties to be fairly low on the sensitivity range with regards to economic activity.
Polls would you characterize is perhaps seem direct same directionally, but perhaps a little less than ties and then as you go into things like residential lumber and so on then we get into more more sensitive is that because that's the right way to characterize.
The aspect of your business.
Well, yes, I agree with what you're saying, our we haven't seen any disruption in our supply network.
We are in the very healthy position on the inventory side I would think if there were there would be some short term disruptions, we could definitely be able to navigate through it and continue as consistent supply to our customers. So I think your view on that is accurate.
Okay. That's all my questions appreciate the time.
Thank you Walter.
Your next question comes from more than is your from French Bank. Your line is open.
Good morning, and thank you for taking my questions.
Morning, Warner winning so in your commentary you just touched on that Twentytwenty out lots and lots of revenue, particularly in the pull segment also related margin improvement the guidance range is helpful. But I'm just wondering if you could quantify.
When thinking about the consolidated revenue growth range is kind of low single digits are you comfortable with that or could it be higher and just on the margin range how much expansion could we expect year over year, so either one of those.
So total growth on so as you know and you know our business very realm went up and welcome back by by the way they have you.
So as you know our three different categories have.
Hi different dynamics, we've always guided our utility pole product category to be a mid single digit and that that we will I I sustain that debt.
Assumption going forward into for our CFO for 2020.
Our railway type product category, which weve historically tight to inflationary growth could be slightly higher.
Simply because we this year have.
Sufficient inventory to be able to to answer to all inquiries from from from from potential customers.
And then we talked about growth in our.
In our.
Essential lumber product category as we're seeing.
Great opportunities in 2020 to serve some some stores that we will qualify into dealer network, where to non big box. If you want so I don't know Thats helpful. No that's very helpful.
Okay perfect.
And then if we're just looking at the leverage just touching kind of on Walter's question.
When you speak about your desire to do M&A is there any change in the appetite from the management our board I mean, historically, you've done one to two acquisitions a year that has equated to 70 million plus in revenue contribution is that still the case or can we expect it down from the acquisition growth.
That's a good question one others, there's there's no change in views and there is definitely appetite as you know in within management and myself included and the board to pursue M&A and to grow our footprint.
We are very disciplined into multiple we want to play I, we want to pay sorry were also willing to.
Work, a seller that have quality assets to sell it would be you would be easy for us to do an acquisition in the short term with a high multiple than assets that would require a lot of capex going forward, but that's not how we've been doing things over time.
I understand your question in the sense that we did.
Not have a well we had a small acquisition last year into residential looked at a number of business, which will actually.
B of a great use and to be a good contributor in our 2020 performance.
But to answer your question Theres, no change in appetite and where we're actively seeking a set some some some targets.
Actually okay actually discussions with them as well.
Okay.
And that's a perfect segue so that.
Ah targets that you were speaking about or have started talking to a lot 12 to 18 month.
Those targets still our discussion still occurring with some of them or is it new targets. They Olivia.
We are currently in discussion with a with targets.
Okay.
Thank you I'll step back.
Thank you.
Your next question comes from Hamir Patel from Sea Ibcs capital markets. Your line is open.
Good morning.
Eric.
Is your outlook factoring in any benefit from that 45, GE short line tax credit extension and you know how meaningful could that be because from what I understand that's at a retroactive as a sort of for two years and renewed four or five years.
Well, it's a very good question so that that tax credit is what probably is what is prompting all the deployment inquiries in that non class one business. So it's a very insightful for you to bring that up.
It is a credit that every year the short lies or.
Expecting to see if it's going to be renewed its always a bit of if the credit is not going to happen we might be less activity in maintenance of the credit is available. The short lines are more active so in this case that is it. It is factored is behind our expectation for a full for strong demand for not from the class one business.
Okay, Great and then or can you speak to in Q1 or the rail blockades and Canada. How did that has that affected the business for the various segments.
So for the easy answer is utility Poles and residential lumber have had suffered no impact move a lot of inventory bye bye bye.
By truck. We also have a lot of distribution centres across North America to supply customers, we didn't see any impact obviously, having to Canadian rail network being offline for over 25 days slowed down shipments to the PD did Pacific and CN.
Happy to see that car flow I started up again late last week in over over last week and actually so I expect our railway tei sales for the first quarter no to be impacted but the sales will be at least equivalent to last year's sales results for the first quarter.
Okay, great. Thanks, that's helpful and could you elaborate more on the preservative options, you're exploring to replace pence a win win that supply a come sooner than two years.
Thank you.
The so penta supply will be are available for the next call. It 27 22 months. So we have plenty of time to actively working we are actually actively working with our customers to see what their preferences or you're going to be going forward. The company has access to a very wide.
Arranger preservatives, we mastered or process, we have supply agreements in place. So it's right now the it's a more question of working on the thoughtful trend transition with it with our customers.
Great. That's that's all had I'll turn it over thanks, Sir.
Thank you I'm here.
Your next question comes from the <unk> from Deutsche Bank Capital markets. Your line is open.
Yes, good morning, everyone.
Good morning.
Yes, just looking at the inventory replenishment could you talk a little bit about what kind of working capital we might see in 2020, given you a there was almost 146 million usage in 2019 and does it mean that bulk tonight position a will be much.
Hello, very much reduced in 2020, and maybe a kind of the impact on margin.
Given your ability to replenish D and treated the railway ties. Thank you.
Thank you better so a.
Last we spoke to look back in November December last year.
We thought that our ability to replenish would be much longer and times, we actually accelerated or ability to replenish untreated ties. So therefore, I don't expect a significant investment in untreated ties for at least call. It the.
Seven eight months to ahead of us in Twentytwenty simply because we've got sufficient to be able to answer our customer requirements.
To your other part of your questions. We do expect you don't very little more my thing there theres always some going on but we never necessarily referred to it because it doesn't have an impact on the business. So what am I think it's something that should be behind us as we're heading into the back half of the year and we get better visibility on our 2021.
Expected sales, we might have to ramp up and hopefully we will have to wrap up a bit of working capital to be able to answer future future sales. It to 2021, so thats hum viewing.
Working cap investment for railway tightened its also true for utility Poles.
Okay, So probably some working capital investments still in 2020, but much less versus the 146 million made in 2019 right.
Yes, yes, definitely much less and most likely closer to to the back half when we back half of the year wouldn't have proper visibility on our 2021 cells. Okay. That's great and with respect to the lumber could you maybe elaborate a little bit with respect to the dynamics with China here.
How the impact demand and supply in which segment are impacted with the dynamics with China. Thanks.
I mean, theres no theres, no significant dynamics, especially not with our residential lumber nor with Kohl's, because I mean residential lumber sourced out of Canada utility Poles and ties as well the only impact that we actually saw is there and this is a very getting really deep in India, we isn't the explanation but.
What we saw last year is that due to the very low prices of upgrades lumber in hardwoods in North America, driven in part by the inability to exported to China first our hardwood saw in those to cut more railway tie that's actually where to supply came from is we saw.
The vast majority of hardwood mills in the fourth quarter cut railway ties instead of cutting grade lumber. So if anything we've had a bit of a positive sector to help us replenish on inventory other than that we're not seeing much effect in our business.
Okay, that's great color and with respect to the ERP system implementation could you maybe mention the overall capital and globe and maybe also the timing for the implementation at it.
So implementation will span over but we need where we're initiating the the to the project. So theres a development phase and the implementation phase we're looking at a 24 to 30 month.
Rollout if you want.
Capex you know will be in the range of.
20 to 25 million affected quote these numbers generally there were still working or working with our consultants to to finalize pricing on it but that would be a raise but thats over that 30 month period, if you want.
Okay, perfect and last one for me when we look at the organic growth from utility pole down 1.5% in the quarter. Although it seems that did this was driven by a transmission poles. So is it. The fact that there was a tough conversion versus the Q4 last year and how does it look like for transmit.
Question Paul Thanks.
So you boy you answered the question, we had a tougher comp in Q4. This year, we had very strong sales, which are were project driven in Q4 2018 going forward into 2025. If my bases is 2019 were seeing we're seeing sales growth for transmission Poles.
2020.
Okay. Thank you very much for that long.
My pleasure burner.
Your next question comes from Michael Saipem from TD Securities. Your line is open.
Thank you good morning.
Hey, Mike.
Eric maybe just a follow up on a on been wise last question there about utility Poles.
If I.
Can you just comment on what the distribution pulls organic growth would have looked like in the fourth quarters based verifii sort of put the transmission.
Falls tough comp issue aside.
Well that's.
That's a tough question.
Michael simply because we don't provide that that detailing color.
The best guidance I can give you is to stick to that mid single digits for a full for next year based on the 2019 result, okay.
And then just a question about the sort of some of the commentary you made the outlook regarding sales growth.
When I look at the commentary this quarter versus last quarter.
It reads fairly consistently although last quarter. When you talked about 2020 were you were including some discussion around.
Calling for price increases and I know it does sound like you're calling for some price gains on the utility poles side, but.
On an overall revenue basis is pricing expected to be a driver to some growth or or is that utility poles.
Pricing increases getting that have somewhere else.
I get the best way to look at had been why is this the thing well, it's I think more on the product mix sizes will have more non class one there will be.
Theres a bit of better margin there for a bit of better pricing on the non class one business.
But I think you you're right that volume will definitely be a driver for rail with us for us next year.
Or 22 initiatives this year.
Okay.
And then Eric again, just on the outlook.
You are.
You're indicating that the outlook is predicated on on the assumption that current market conditions and economic conditions stabilize.
And I understand it's sort of hard to look forward to given some of the the volatility recently in to really make sense of that.
But to what extent have you tried to incorporate any conservatism in this guidance and this outlook.
View of what appears to be some concerns around the economic outlook.
So.
To answer your question Mike.
Right now as I stated before we're not seeing any disruptions on the supply and we're not seeing any pullback from from from customer demand.
To your point Theres lots of volatility in markets right now, it's very difficult to understand where the price of the barrels of oil is going is going to go and.
Obviously, the corner virus could have a.
Some some sort of impact from low to a significant in North America. All of these items are very difficult to decipher at this point, it's very early in the year.
Yeah, we're trying as well right now reaching out to customers and suppliers were being thoughtful about worthy impacts that come we're working on contingency plans internally, but I guess you know the bed I'd be im most likely will be able to provide more color on that when we talk in our Q for at our joint conference call, Okay, but but at this point.
And in your conversations with customers has there been any change in tone or anything that would suggest that.
What they've been telling you previously is potentially.
The process of altering.
No. We have we haven't had and we we consistently talk well, obviously with our utility pole customers. It's obvious that we're talking a lot of these days with discussing about.
Changing preservatives and we also talk regularly with all the class when customers.
No one has indicated.
A shift in their expectations for for this year and I'll I'll say so far.
Okay. All right. That's all for me. Thank you.
Thanks.
As a reminder, if he would like to ask a question. Please press star followed by the number one.
Your next question comes from Maxim Sytchev from National Bank Financial Your line is open.
Hi, good morning.
Turning makes him.
I had a quick question in terms of the commentary that koppers was making on their conference call talking about.
Growing market share in the group's division, which overlaps with your utilities and ties obviously just wondering as I think you on Telegraphing also sort of increasing.
I could reach and your main competitor is looking for market share gains just in terms of how do you think that pricing dynamic might play out in this type of situation.
Let me covers has always been.
Active in our industry as you know we can compete against each other and utility Poles and railway ties. So I wouldn't expect any less from them to say that they're going to try to leverage opportunities in a market where.
And on class when business as quoting and utilities are looking to do more more we're increasing the replacement cycle.
We are in very we're in very different markets into utility pole business. So I don't see that necessarily being a concern on the railway type business. You know, we have our annual contracts with with our customers that sort of guide.
The pricing and greater either our how we service where did the volumes I want to measure my words here, but how we divided that we should we service our customers. So there were left with the you know the Dong class one business to which you know we as a company. So Jones have very strong ties.
This is how we.
Quarter call grew up into us market through all the acquisitions, we did starting in 2008, where we acquired a lot of businesses with some class when business, but we're always have been heavily weighted to non class one business have service it very well so I'm quite confident we'll we'll be able to add to it to leverage.
Yes, healthy pricing, which leads into the better mix and the increasing margin for that product category. Okay. That's very helpful and actually do you mind I guess I'm not sure. If you get started when disclose this but a percentage of revenue that comes from non class one for full ties just just a ballpark as a.
20%, 40% say anything can provide there.
We've we've quoted and meet many occasions in the past suggestion.
Reiterated our roughly were 65% revenue was class one and 35% is not glassware. Okay very helpful. And then last question on ERP.
Good morning, maybe just sharing a little bit in terms of.
Which processes will the ERP.
We'll try to optimize is that a you know procurement sourcing.
Everything just if you don't want to writing some sort of incremental color.
Yes, so we're looking for the full suite of ERP system. So it covers the the procurement the sale to finance the logistics.
Okay, and one was last time you implemented.
RP system.
Good question, we've been working with our in house system for the last the 26 years. So this would be we've done many projects of implementing different modules and different tools within the company. This would be I guess are first attempt at a.
The.
Revisiting our entire ERP system rest assured that we're working with a.
A few third party consultants that we don't.
Have deep knowledge in being able to execute these projects that we've staffed accordingly to be able to support it.
Okay. So you will have as you said, a third party, helping you and actually implementing the actual ERP right.
Alongside with dedicated internal resources, yes, okay. Okay. That's very helpful. Thanks, very much my pleasure.
We have no further questions I turn the call back over to the presenters for closing remarks.
Thank you for joining us on this call. We look forward to speaking with you again at our next quarterly call.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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