Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the egg on Q1 Twentytwenty earnings call.
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I'd now like to hand, the conference over to your speaker today, Mr., Adam Borgata SVP of corporate development and Investor Relations you may begin.
Thank you Amy good morning, everyone and thanks for participating in our first quarter 2020, <unk> results Conference call. We hope that you are all keeping safe and well in this extraordinary time.
This is Adam breakout <unk> senior Vice President corporate development in Investor Relations speaking.
I think to you. This morning are gonna be Sirona, president and CEO and even smells.
Executive Vice President and CFO.
Respecting current best practices, we're presenting to you from separate locations. So please bear with us if there any technical issues along the way.
Our earnings announcement 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.
During our comments, we'll be glad to take questions from analysts.
As noted on slide to the presentation listeners are reminded that the information we are sharing with you. Today includes forward looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties.
In the wake on believes the expectations reflected in these statements are reasonable we can give no assurance that these expectations will prove to be correct.
With that I'll now turn the call over to date.
Thanks, Adam and good morning, everyone I'll touch briefly on acreage consolidated results review results by segment and then address a comes financial position before turning the call over to drill movie.
Turning to slide three revenue for the three months ended March States, you first of 748 million.
Thank you 7 million old, 15% higher compared to 2019.
Adjusted EBITDA for the first quarter 19.2 million marching to 2.6% improved by 7.3 million or 61% compared to adjusted EBIT dollar of $11.9 million a margin of 1.8% in Q1 last year.
First quarter operating loss of $9.7 million improved by 1.1 billion compared to an upgrade cost at 10.8 million in that same period in 2019.
Diluted loss per share 19 cents in the quarter compared to diluted loss per share of 16 cents in the same period last year.
Reported backlog or $7 billion compares to backlog of 6.7 billion.
Representing an increase it suite that said.
Now turning to results by segment.
No we don't flight school construction revenue of 785 million in the first quarter.
$97 million, all 15% higher than the same period as last year.
This increase was driven by higher revenue in civil operations, and they've been transportation systems, both east into Western Canada.
Revenue was also higher than utilities operations due in large part to be acquisition of voltage power in February.
And in industrial operations, primarily due to increased activity on mainline pipeline projects in Western Canada.
Partially offsetting these increases with lower revenue from nuclear operations.
Even by a reduction of the Darlington nuclear facilities, Ontario, where work is winding down on the fish unit. The main reacted refurbishment project headed ramping up in future quarters on the next units.
Adjusted EBITDA during the construction segment 16.5 million a margin of 2.2% increased by 9.2 million.
Pets, and 7.3 million marching to 1.1% Q1 2019.
This was primarily due to increased revenue in industrial and civil operations and it had been transportation systems and high gross profit margin from nuclear operations.
These increases were partially offset by lower gross profit margin in utilities.
You contract awards of 896 million in the first quarter Twentytwenty.
334 million higher than that same period last year, driven primarily by the award Tilo Bridge replacement project in BC.
Constriction backlog at the end of the core to was 6.9 billion.
She's 197 million higher than at the same telling in 2000 and Nike.
Turning to slide five.
Concessions revenue for the first quarter was $27 million, a decrease of 31 billion well, 53% compared to the same period last year.
Early as a result, lower construction activity New airport terminal in Bermuda gets closer to the completion.
Adjusted EBITDA in the concession segment 14.3 million was no point $5 million lower compared to 14.8 million, let's say last year.
This was primarily related to operations in Bermuda, resulting from the slow down and then temporary suspension on March 20th of all commercial flights in unanswered Bermuda acute at Cobiz 19.
Turning to slide six.
Its financial position liquidity Encapso resources remains strong.
But it should be sufficient to finance operations in working capital requirements for the foreseeable future.
At March 31st a corner, who didnt $5 million of cash on hand, excluding cashing joint ventures of restricted cash and a committed revolving credit facility of 600 million.
15 million withdrawn and 75 million utilized selects the credit.
When combined with an additional 700 million dollar performance security guarantee facility to support letters of credit provided by either you see a columns committed credit facilities. The working capital letter of credit requirements total $1.3 billion.
He called has no debt or working cap to credit facility maturities until the second call for Twentytwenty swing.
In the current environment. However, a come believes it's prudent to conserve cash and its eliminate nonessential spending reduced discretionary capital investments is pretty this week at schools.
At this point I'll turn the call over to show moving.
Thank you Dave.
Turning to slide seven we are confident that he called diversified portfolio.
Strong financial position and safety culture.
It would be great benefit that we navigate evolving market conditions and focus on the health and wellbeing.
Our employees why he successfully serving our clients.
The construction segment is aligned to the significant infrastructure investment commitments by all levers of government across Canada as witnessed by the private sector.
The concession segment is pursuing that number of law scaling construction projects.
Let's see quite private finding solutions and participating in the concession now on the price piece we projects.
I don't see fight on this slide.
Acorn expects that demand for each services will remain strong billings, a coffee 19 pandemic.
The federal government provincial governments across Canada, I fight onto Friday investment in infrastructure as a key schools of economic stimulus one of the country reaches the recovery phase.
Turning now to slide eight they mentioned earlier.
Backlog at the end of the quarter, well 7 billion.
The time evil work to be perform full project backlog at March 31st be subject to some uncertainty due to the impact of the 19 and related slowdown rescheduling and in some cases.
Suspension of work on in that terminate period.
As such we have not providing detailed.
On estimated timing of backlog work already signed but we'd endeavor to do so at the visibility improves.
In addition, certain projects that were expected to be available to make on to beat.
Secure new revenue.
I've been delayed.
And he says delays are currently expected to be temporary and the current backlog and level of newer walled year to date have remained robust.
To date no projects, that's where because usually recorded in eight homes backlog I've been concerned.
Trailing 12 month recurring revenue was down 17% compared to last year I certain projects typically perform through the two ring revenue more than you know what utilities operations were undertaken have defined scope backlog contracts into period.
Total revenue in utilities will how ya versus the same period last year.
And demonstrate the flexibility a cone and you know what contracting model to meet our client needs.
Turning now to slide nine I would like to address a significant impacts woman corresponding measures. We have put in place in response to the unprecedented events arising from the coffee 19, Dan.
In terms of operational impact with the majority of governments across the drug injections, which are you calling operates declaring the state of emergency response to the copied 19 pandemic.
E Com operations have been impacted by wheel suspension of certain of our projects.
I said bites clients all due to a broader government directive.
By disruption to the progressive projects due to the need to modify what it used to meet appropriate infant safety standards.
All by all the coffee 19 related impacts on the a BBB T O labor or to the supply chain.
The main impacts to date relate to the Bermuda internationally that Paul could you Gluckman project.
Both commercial operations and construction of the new 10 million I've been suspended.
The Montreal, <unk>, and possibly site C projects construction has been temporarily suspended.
A nuclear operation where ramp up on the next phase of refurbishment work has been delayed.
While the impact to these projects as well as all the will be to reduce revenue into normal operation review.
There is no warranty that all related costs will be recovered and death 40, specifically that you to project margins could be impacted.
Eight cone as I can see they keep continuity plan.
And a rigorous coffee 19 essence safety assessment process, which meets or exceeds guidance biopsy could been government to enforce already.
To minimize disruption suites business and adapt to evolving market conditions and safety standards.
These plans include the stringent site prescreening processes I didn't I Jenny kind of infection practices sees it couldn't be sensing provision of had decent her personal protective equipment like workers.
Separation and staggered work hours, where possible as well as an extensive technology enabled remote work initiative.
As Dave mentioned earlier ache on financing for Jason remain stronger and is expected to be sufficient to finance operations and working capital requirements for the foreseeable future.
Turning now to slide 10, Michel Combes outlook has been called <unk> earlier comments I wanted to.
I want to stress every key areas before turning the corner over two and any school questions.
Why certain projects that were expected to be available to equal to beat on to secure new revenue has been delayed.
And he says delays our currency expected to be temporary.
And the current backlog and 11 of new World you have to date have remained robust.
To date no project that were previously recorded in eight comes back log have been concept.
Eight unexpected that demand for services will remain strong for rigs a copy of 19 pandemic as a federal government in provincial governments across Canada, why don't you fight investment in infrastructure as a source of economic stimulus one of the country, we choose the recovery.
He couldn't continues to monitor developments and mitigates risk related to the company 19 pandemic and the impact on E Commerce projects operations.
Like chain and most importantly, the health and safety of its employees.
At this time to the majority of governments across the jurisdictions in which a call operates.
Teams the types of construction projects.
Constitute the majority of acorns contract to be essentially certainly season.
And therefore operations all broadly continuing ongoing maybe cases on a body fight base you have no.
Hi, this is Pete and evolving situation shifting Directv and policies I expected to continue.
I will now to personally thank all of a cones employees in particular, our frontline workers.
Well the dedication commitment and professionalism.
During these challenging time.
Thank you.
Be safe and we'll now turn the call over to at least for questions.
Hi, this time, ladies and gentlemen, if he would like to ask a question. Please go ahead Im Press Star then the number one on your telephone keypad.
Your first question today comes from the line of Yuri Lynk of Canaccord Genuity. Your line is open.
Hi, good morning, guys.
Morning.
Okay.
So obviously a lot of moving parts I understand but margins in Q2.
Likely to be impacted as.
I think you'll probably be carrying some some overhead costs associated with the projects that are shut down I got that.
But on your client trying to download the costs associated with delayed projects.
Not recognizing.
Corporate 19, as as a forced measure them.
Ah, Yes, do we I mean, it say, it's an interesting question I mean.
No no about what contracts all Sheila.
Mainly speaking when we receive an instruction by government open or in a hurry tiara client.
Add to sustained and we all call good full.
<unk>.
And and find entry compensation.
When works.
That being be clear on essentially said season on going on them.
You mean packs on a public TV teaser negotiated with our client Muslims are tied the delay.
He is not an issue and so far Muslim all with clients and.
Just.
Going through a very positive attitude.
In order to L plus.
To navigate through these challenging time.
So the clients are by and large.
I'm going to be eating the the resulting cost overruns and you don't expect to see.
A material amount of that down downloaded to shoot you.
As I said I mean, most of our plane already pulled it either.
The work is extremely collaborate either.
Who try to find a good.
The good response to the spend Bendix, who and what we can say that.
Most of our work.
Our own have they central services will continue and a stringent procedures.
As I told you that meet or exceed a pickup in government to requirements.
And what we have addressed realized during the last.
Five to six weeks now.
Is that it works.
And when I would team.
Followed the rules.
About screening or about IDN about disinfection about 'cause. It can this 10 seeing about taking care of bumps yet today about mosque.
And bouts target a work hours and team separation.
And I would seem schools are we each works I mean, we are very few positive case on an all behind what we have been proving during the last week is that when a cheap doesn't follow the rules you can become a problem and rather quickly so that after a certain discovery phase that everybody now is.
Well acquainted.
We want to ask to be dawn.
And Oh, we just have to be are extremely focused on romping. Good our productivity and these new Mexico deal works and we are working very hard on it.
Okay. Thanks.
Last question for me and I guess related to that.
Is there anyway you can.
Quantify or qualify the pace of backlog burn on the projects that are continuing at this point versus versus pre shutdown.
Yes, I mean, so I mean, the punch into a continuing I don't I.
I'd be really those you know from a revenue perspective, not huge impact is young we said or you know there's a period of time why we went through a little bit description kind of right around quarter end, where we were kinda working now what the appropriate with perhaps whose would be going forward.
But what mail we'd go older protocols in place work is progressing pretty much is normal on all those projects. So it's only really a the projects that being kind of formally oh put on hold where we're seeing a any kind of capping in revenue.
Okay, I'll turn it over guys. Thanks.
Your next question comes from the line of Maxim Sytchev National Bank Financial Your line is open [noise].
Hi, good morning.
Well nothing.
Maybe I'll start with the question too David if I may when we look at a concession rights in the cash flow from from investing of 20 point point 7 million. So that's down versus versus last year and I'm just trying to see because you're not actually doing construction right now in Bermuda should we expect to I guess the much.
Smaller contribution on.
ER that a concession rights in the cash flow from investing on a let's call. It for the next kind of two quarters is that the way we should be thinking about this.
Yeah that number was was coming down anyway, because we're getting near to the end of construction of the new terminal. Obviously, you know there to time here where.
Hi, constriction sees a where we're hopeful construction will start up again in the need to ensure older hopefully early may.
But the number was coming down anyway, because we you know with through the bulk of the that the main construction period, where we had a lot more workers on site a lot more activity, we really mailing to just finishing the interior of the terminal and starting to.
Get to that the phase, where we commissioning older systems and equipment baggage handling at all what kind of stuff. So so the the constriction piece in Bermuda <unk>, there's really been done anyway in terms of goal you.
Okay Fair enough and then in terms of once you start amortizing the new concession.
Once you're done a construction off Oh, then you terminal I use the different pace of the amortizing concession assets on the cash flow statement. These are the the income statement.
Well I can.
The cash flows things in the amortization I mean, it's noncash.
Quite sure Folio question I mean, obviously once we go into the new terminal the amortization number comes down in the personnel.
Because up until now we'd been amortizing the existing terminal over the life of constriction going forward will be amortizing the new terminal over the remaining 27 years at the concession.
So the absolute number in terms of amortization is coming down in the piano, but I'm not sure where you're getting to that cash flow sorry.
Sorry, no because when I look at last year for example, 2019, a the concession rights on the cash flow statement, if I kind of 60 million. So I'm just trying to get a better sense in terms of how we should be thinking about this on a going forward basis.
One day, so that that that investment in concession rights is effectively the cost of construction building up.
And then when obviously as I said that slowing down now as we reached the end of constriction. Once we reach into constriction that balance will start to come be amortized down.
So you've got the amortization going through the Pinedale and that's that's effectively reducing the balance sheet a concession right investment a every period.
Right. Okay. No. That's that's real helpful. Thank you and then just in terms of a you mentioned you're hoping for the Bermuda restart in in May can you maybe provide and I mean, maybe that's the questions on the we based on kind of your conversations with that with clients a interims off I you know some opening up is that kind of what you guys are expecting that.
You know in May at some point I you know most of this projects will we'll we'll get going again.
How should I guess, how you internally thinking about managing capacity and so forth to to be able to run pop on on Ram Bermuda and so forth.
And what is important to note is that on the multiples and probably that had not been suspended.
And it's not a zero one activity that we just know now is that before.
The vast final adequate treatment wouldn't be owns a market.
It will be a continuous ramp that but with different methodology of work. So.
Yes.
We just completed that not even may I mean, we we have begun to rent that being productivity after its little.
Discovery phase by all our workers about seasons you.
Medicines are up working we we think that we out of the situation internally and different tool.
In terms of accent season.
Yeah, probably benefited from a a lot of all the construction projects that were not essential. So the worked at from whose side I'm just come to our sites and what we have to be careful about sees a is about supply chain to be should that the why we will ramp up that progress evenly would you have already begun.
We don't want out of default of our supply chain.
And but he said these are ramping up but do you see the where we are at the moment.
The new that maybe only 10 different that they did say that mean that most probably what we are we going into more money that we may be able to be you construction during the first off of May.
On all Oh were finishing trade.
It's already being commissioning and integrating systems that may tick a little more time, because we asked to wait for experts being able to multi tenant commissioning and coming from abroad. Bermuda do you think where we are the moment.
And and again going back to David So then.
I believe you were on capitalizing the interest on on Bermuda.
So that will start to get Expensed. Once you physically finished the construction right is that how we should be thinking about this.
Yes, so I think we flagged.
Outlooks you in a year end release that.
We expected that you need to middle to open kind of mid year and that would mean, we would start expensing interest at that point in time as opposed to capitalize it now it's more likely vehicle will oh, the new terminal will open.
At the end of year or early early next year. So we'll continue to capitalize any interest small through that construction period.
Start to a expensive once new to middle opens so that will delay the expensing that interest.
I just want to come back to really a question MCCS. Similarly, I think Maxim is also asking specifically about the other projects is suspended light Redmond site C and what our expectations for a at least on those projects.
Okay, maybe I can comment on this.
When I've been.
Suspended.
Thanks Bye.
The province of came back then by GBP <unk> billion.
We are now working for trying to reopen need during the first 15 days of May but of course.
ER and doesn't decision of the government.
We are working extremely closely with TDP, Q and a and we'll be ready to come back to work as soon as the authorities are low weight.
So I see as being partially to spending on all activities that I'm not on the three kicking off of the global projects.
They.
Probably a trigger that season was about since the Ken.
You know that it's a remote play so we have a ken.
Most of our work doesn't work because of all the companies or all the joint ventures, though.
Oh, leaving.
And that could be Kathleen can be sure that they could not be an outburst of Oh Casey's <unk>.
If you didn't was taken by I do will be he.
So far.
They have not been any probably T.K. into campus I see it means that we are expecting probably a relaxing on who's suspension within the tools to be weeks to call on the trouble psyche.
Okay. That's very helpful. Thank very much that's it for me.
Your next question nine of Ben we put a yet of the day Chardan capital markets. Your line is open.
Yes, good morning, everyone with respect to Bermuda could you comment a little bit about the a the.
When the a the traffic will will come back and if you could talk about the traffic. These days and also what are the Mccann isn't that protect you again be a significant reduction.
Activity at the airport. Thanks.
Yeah, hi, but a lot so.
Different to our comments about the construction side in Bermuda.
<unk> game going again in May.
The expectation is that the.
Commercial traffic at the airport will take a little longer to open up again, so certainly not before June.
And we'll see see whether its Juno later, but.
Yes, or no decision made ran not by the government.
Our expectation is Ah ones here pool reopens for operations it will take a period of time.
There are traffic volumes to start to build up again.
You know I I don't see plenty to do you expect seems to be a quick return to normal in terms of traffic will will.
Yeah, we'll see what happens with the of course and airlines generally, but it's going to take appear to charge for things to get back to normal for sure. So were kind of been busy genus slow ramp up.
Once operations are beginning to anything yet pool.
In terms of any kinda back stock, that's really that really kicks in.
Over a longer period of time, the real in 10 of that a backstop ER, which is a minimum revenue guidance. He provided by by the good government is to protect the cash flow all see at pool to the extent that there's any shortfall required to we pay that down.
On the airport so that's why the.
Net financing on the employees non recourse take home because it's all either generally specific specifically by the project or backstopped by the government.
We're not into that scenario, yet where that would kicking.
But obviously in the worst case scenario, where this this was extended over a longer period of time.
The debt repayments and the cash flow needed for those that repayment sees is protected.
Okay. Okay, that's great color, David and with respect to some other concession. Unfortunately. These that you were looking I was wondering if the a the dependent make will slow your ability to secure a new project to replace Bermuda or would it be outflows this where some government might take your pool.
Actually to renovate <unk> airport during the downturn as the stimulus package.
Oh I, we don't sit here I mean, we are constructive.
We are off.
Optimism or wait so of course, I mean, we just feel that from this crisis situation.
We can emerge and better and better position.
On someone who's markets and we just feel that between creates new opportunities we are ready for them.
And we didn't see a the fact that we are not able to traveled and two of the one to one face to face.
Discussions and meetings that.
I may not add buddies being fade I mean, we just see these have being an opportunity to do clubs and sort of project the future we already because it.
Okay.
And with respect to the government stimulus shall we go back to slide seven where you showed year six that business segment, which segment would benefit the most from the government stimulus then you would it be fair to say that some project may be fast track a thereafter as a form of spend.
Analysts.
Yes, we have to be only three cats, what about the fast track because if you didn't see the major projects.
No duty to a project with a environment turn assessments with ER and generating that has to be fully developed and before we can build them. What do you shouldn't that rolls in highway and we benefited from the stimulus package I mean, Fabio that but I've already and now that we put in place a 2 billion.
In a plan coal <unk> jobs, they don't require a lot of engineering and maybe research facing off highway isn't it being a maintained also rehabilitation, especially perspective. So we really think that lease can go very quick on on another Hank utilities also should rebound very quickly as a commercial operators.
I mean are extremely who she took twice to expands our networks and Matt.
And the situation created by the coffee that with a more people working from home and just require more power to all who utilities.
You mean that diesel and so we must probably benefited from a stimulus package. All off effect was also went position or sleep may be probably a better and b to.
Stimulus, then or short term warm.
Okay, that's great color and could you talk maybe a little bit about the potential. Unfortunately, these with voltage far worse. Since you you you are completed the the acquisitions are we.
Yes.
We are very happy above this acquisition.
Before the tragic target.
We are happy with the team I mean, the team is now with <unk> from the month of February they are integrating a very well and we want to developing in the markets all of the.
At power distribution, they are extremely competitive NBC into and out known all have attended out of the base.
In Manitoba and also from a power station. So we just photos east with a lot of care, we I'm very happy to see that the integration needs blend and we are looking for what pool.
For a lofty very interesting projects and between bonus age and a call.
Okay. Thanks, and last one for me or could you maybe talk a little bit about whether there's been a shift in your capital allocation priority, but more specifically about the capex expectation for 2020 and also the desire to revisit your share buyback program with the first.
Order results.
Yeah. They do I saw it certainly on the Capex side, we are.
Pushing back a anything a that's kind of non essential.
In terms of a capsule spend obviously with the most about projects continuing on they they have the equipment needs and or the capsule need. So we'll continue to fund those but anything that.
Isn't required or a and can be pushed off to next year. We all elites appeared <unk> recently doing that.
So we expect a capex to be a lower than than than last year, but but no.
We don't have the ability to completely a freeze it because most of our operations carry on.
In terms of Ah Ah NC I'd be obviously, we.
Pools that well we were in the blackout period, and now coming out that period are we back into a period, where we have the optionality and flexibility to be opportunistic.
And we'll continue to similar to what's happening.
In the ball to make decisions I said, when but but no.
No fixed plans to eat away at this point, we'll we'll just continue to monitor have things are unfold.
Okay, and maybe just a quick one could you talk about the timing for ramping up the second the reactor on the nuclear side, though given now the first one is one thing though.
Yes, I can take at least one and we mechanically completed the first you need that whole P.G. Darlington fault.
<unk>.
Hey, it's a great success, you probably remember that the older units, that's two years ago out a bit extremely difficult. This one has been a.
I'd like for Us on time and on budget. So now we are indeed offers a unique.
Okay, you operation teams.
And then I'm just going to rent it can be able to switch on these you need to the agreed that should happen or.
Around the end of Q2.
From this movement, well BG gig could be either position to disconnect. The second reactor.
And the lowest too and change the volt tend to run to begin with our patchy words.
I mean.
Okay and does it was time zone.
Copied 19 pandemic OPGC favoring the operation of the reactors to produce.
And he is very cautious about mixing teams that off construction with operation.
So these disconnection of the second you need.
To be able to begin or the refurbishment work will probably continue during Q4, but the decision on the exact date.
Not yet been taken man no. We know that LPG is now seeing kick the ball eventually bringing back to lead to an earlier at the beginning of the works so most probably and before the end of the girl.
And then.
Maybe.
Earlier in a in Q4 or end of Q3, I mean, it's it's a decision and their Oh P.G. management.
Okay.
Regarding Bruce regarding Bruce a booth, we are beginning with the fact reactor everything.
Looking at plan and <unk> seems to be that we will be able to answer. The first we actually had whose power between the end of July and middle of all that.
Okay. Thank you for much more to talk.
<unk>.
Your next question comes from the line of Frederick That's Stein of Raymond James.
Your line is open.
Hi, Good morning, I appreciate you're dealing with a bunch appreciate you're dealing with a bunch of disruptions that impact your ability to work at a normal pace, but.
As you limit or spread the number of trades on site are you seeing a positive.
Offsetting impact on employee productivity.
I think very very interesting question I mean, we are just discovering a or.
Figuring out that.
In some cases, we can do more with less.
This is why it's quite seats at the end of the day, Oh, <unk> I think when that will allow us to be to be better.
Just the is it could've distancing.
I just the fact that speaking.
Hey, maybe an issue even if you have basket. So we we are extremely focused.
Employees on their own task and we just realized that and it's a it's a balance he gets take time you know schools.
Wedding mask and being extremely careful about not sharing Tuesday.
Is there isn't an issue and I have impact on productivity, but on an all behind US now that people have realized that piece really protect them.
The reason very strong focus on executing and that you did everything that we would not lessons learned from these crises and a and that wouldn't be very very interesting for the company.
Can you I know, it's maybe early days, but could you provide some of those a positive lessons that you maybe take away from us.
We also realized that the I mean.
Most of our administrative staff can work perfectly and very efficiently from home. So it may be anything difficult to bring that back to the coffee.
But sure I mean, we we'd have to think about it we left and see kibali that what's is simply a function very well everybody connected at all with supporting teams are perfectly supporting our operation.
From home, so, it's probably a different way off looking at our offices, probably Uh huh.
I mean in terms of supporting teams that you're going to be a.
Very very interesting.
In terms of what I call. The operational excellence I I told you about productivity about focusing on the top and it's evident that between these crises, we probably push for more pre fabrication more pre assembling and abbvie onsite only the strictly necessary.
The axle building.
Great.
You said your answers thank you.
Your next question comes nine and take about a CIO <unk>. Your line is open.
Good morning.
Well injection.
A question on your on your backlog.
What what percent could be at risk of Ah termination or what percent can be at risk of being pushed out or delayed in your mind right now.
So as I mentioned earlier.
Earlier, no one of the prospects that we have put in backlog it.
I've been Isaac cancers.
Or postponed these days and maybe some actually shoe about our productivity when we all under essential services. So we don't see a real impact on the volume.
Oh, hi, or backlog so far on another hence the reason extremely robust.
Pipeline for suites, and very diverse that perfectly fit we thought were at different operating sector. So I would tend to say that.
We are not that much worried about the future evidently as you can Nazi from what do we have been telling you I mean are from the beginning of this conference I mean Q2 is going to be challenging we are extremely focused on our productivity. We are focused on our jobs and a and we will take care.
But not that much of worried about upset about the backlog even without talking about additional shorten shovel ready projects that are both federal and provincial government not getting ready.
So this Rio Tinto, where termination you view as a one off.
Yes, I mean, it's it's a very special case.
As you know I mean, well thing and going venture with a punch that can't be <unk>, which is a share of 40%.
Works off any when a advance it's not I don't know problem of performance. It's much more a problem <unk> safety and motion. We don't think the termination is appropriate then and we all students studying.
All the alternative it's it's a unique case and we are dealing with these 50 K. says we have to.
I have to do it.
Okay, and then just on the on the concessions. So you talked a bit about Bermuda revenue being tied to a truck volumes.
Is there is it similar for the Canadian concessions or how should we think about though.
Yes, so the Canadian concessions I guess two things that there.
There's still primarily in the construction phase so we know in the concession phase yet so there's a war clue, what we're very small piece of that concession.
But the the model in a in the Canadian piece, we see very different in the they're essentially availability payment models. The then all tied to.
Hi traffic all overall ride to ship pool or revenue from those transportation system. So.
No impact at this stage, because they're not really in the concession sales yet, but that would be a very different model. There's no traffic risk on the Canadian P series.
Okay. That's it for me thank you.
Your next question comes the line of Michael How Cool TD Securities. Your line is open.
Thank you good morning.
Good morning.
First question just relates said progress for Dave relates to whether or not you've seen any changes in collectability of receivables or every single was the extended at all.
And as a follow on to that just your views or thoughts around how we should think about changes noncash working capital. This year last quarter, you had talked about.
The full year looking I think sort of a relatively flat like not materially higher or lower I'm. Just wondering if he can.
Right up there on those from.
So no I mean, we haven't really seen.
Any issues are in quick question Bill to receivables I mean.
If you look kind of project profile and climb profile, we work with primarily with government. So government agencies I would say if anything the they're motivated to keep all they contracts as well funded right now as part of the.
Broader given the pushed to support the drivers with the economy in the current situation. We're in so so from that perspective.
No concerns and then even on the private client side.
You know, we really were quick kind of blue chip or.
Private clients, where we have very strong confidence in a that funding and their ability to pays for the work that was done so whether its utility clients.
Or major manufacturing or processing climates, we have no concerns over the financial viability of any of the.
Customer base. So so no we don't expect or haven't seen any impacts on receivables.
And then just in terms of the overall outlook for the year nothing really has changed in terms of a few little girl working capital I think you know obviously, we we expect so with some lower volume in Q2 for the projects have been impacted.
Yeah.
That won't.
Moving collage unifying the Grand scheme of things to really impacting the overall working capital profile. Most of those projects are kinda milestone based or Ah.
Funded in advance because the either p. threes, so very large civil projects.
And so ER abuse haven't really changed in terms of the full year working cap so what.
Okay, and then I realize this is somewhat.
Early days just in terms of how long would be.
The impact of the covert 19 pandemic isn't affecting.
Situation in Canada, but.
As far as you're bidding activity.
Have you seen any changes in competitive behavior, and where do you expect there to be any changes in competitive behavior coming out of the situation.
Yeah I would take this question I mean in terms of our bidding activities.
At all small and medium projects I'm, just going on at the normal pace.
A bigger project I've been full spooning.
Nope indefinitely or most of them out would be for sport between six weeks and a two month on hall.
In terms all eyes are.
Delivering and our acute <unk>.
ER, our joint ventures, or delivering an RFP I mean a deed.
It means that we we are not that much worried about activity in terms of the competitiveness.
And I I mean, it's very early.
What are you sure isn't resell them quite see.
And we'll probably be Allah competitive.
More prudent I just second example use reasons global these on Paul's Nashville, where not a big part of the negotiation of the contract.
Evidently he's going to become a very important point and and the way you cannot relief on time and on the money is going to be a.
Very interesting.
Development. So this is what I can on the idle bidding.
Okay. That's helpful. Thank you.
And then just lastly.
Just back on Bermuda as far as the operations of the existing airport you provided some commentary around.
Probably could possibly think about.
The the airport reopening and taking five for for traffic volumes to normalize.
While the airport is is closed or can you just talk about this the downside risk.
As far as Youre your concessions segment from an EBITDA and cash flow perspective, I'm, just trying to understand there.
Is it simply a a situation where you may not.
You know you may not receive what you would have would've otherwise expected an ordinary environment or is there actually a situation where you're incurring costs here.
And there's actually material downside to the negative.
Got a side.
Yes. So so my consensus well airport is essentially closed I mean that some.
As a very small volume of cargo traffic going in and out would be a pool and.
A couple of or the flights associated with just logistics, but.
Well the airport is essentially close to or commercial traffic, we have a fixed cost base. There is a people take a million dollars. Among so it's not huge.
From that perspective, obviously those from an EBITDA perspective.
Are you know Bermuda think kits is kind of ER known is roughly two thirds of the concessions you, but and so teach them. It's no appraisal not generating revenue for a period of time or depending how long a period of time.
Yes, I think people can kind of estimate the impact that might have so many EBITDA perspective.
And cash flow is isn't really impacting the short term because all the cash being generated by those operations effectively.
Kind of fits in Bermuda is restricted cash it ends up being part of Oh by the cash that when she goes to repay the debt and the distributions and those distribution himself June to stop for a period of time anyway. So there's no short term.
Cash impact to from the from the suspension.
Okay. That's helpful. Thanks.
Your next question comes the line, Chris Marai Altacorp Your line is open.
Thanks folks good morning, I could just maybe turning back to the a pipeline a little bit and some of the delays I guess just trying to understand a couple of different things here one how much of the delays our call. It mechanical just difficulties in in accessing process isn't getting together.
With folks to to move the paperwork along and how much of this is clients sort of saying, let's just hold off when maybe committing to funding are spending at this point.
We have no Tina Andy fly in trying to pull off on funding oh from or putting on the market that project.
And and this is a is very important I mean, you may even be the contrary.
On another hand, I mean, we probably see the changes that ahead of the Canadian infrastructure Bank I mean, I can said yeah from a it's easy to ingest stepping in I mean, Oh of course, we like we would like <unk>, because we have been dealing with TD PQ at twin quite that ran project and man we know that.
Mike and knows out.
Good thing dog, so I would not be a worried.
About the future of the pipeline.
The project solve their.
Apply and I'll just went there either delay that just stick with total prudential attitude to say, we don't know exactly.
How he's going to end divisions copied crises, so let's have a little more week.
Oh understanding always can work.
That we can deal with the eventual impact and we launch our project. So he is the way. They are reacting we do not see a any any project I mean being gas being stopped or because of this oh, it's quite.
Okay, and you're not seen any change differences and behavior between public sector and private sector Clinton.
Not that much I mean that as you know.
Very significant part of our activities it from a public sectors.
And the increase structure I mean in dues moment or at following the shock of these covina I mean infrastructure is going to be a major part of their own action.
Yeah.
Much less than before exposure to private client.
Maybe industrial and as you know we don't do anymore.
Hi rights building or commercial building going with the recent if they do bloke, but so it's not that much an issue for us.
Okay.
The other question is just maybe a little more theoretical I mean, even come into this you were still working for pretty healthy backlogs. You know you keep some good growth over the last couple of years.
But part of the discussion was also around people and your capacity to even absorb more work. So the question is if there actually is stimulus dollars that come into the system. How do you think economy going to perform and how does the industry going to be able to absorb which is probably you know adding on to almost all already Rex.
And levels of work.
It's a it's a very Ah interesting point at what I've just stated during the last month, you probably remember that we are comfortable with the backlog add between six and an 8 billion I mean, the aim of all the company a is not to grow.
Extremely quickly I mean, it's to be more profitable it to be better organized on our website <unk> to be a interim all progression or next and then to be the top company in Canada in terms of Oh.
Infrastructure. So we are comfortable we saw what size.
What do you also shows that we we are not a holding company I mean, we have boots on the ground.
And we have superintendents, yeah, but team leaders.
We have construction manager we are feeling you know working with us and we aren't even in a constant process of UK keying off 'cause bettering the skis into capacity all.
Of our people so.
I'm I'm not seeing at this stage any real issue with being able to tech.
The good Paul on the stimulus package that we caught me in Golden Highway I'm not I'm not worried about it I, usually we wouldn't be disinclined in baby, but yeah, we will have to Texans opportunities and our organization and Justin.
Got it.
Makes us able to treat that as you have seen I mean between our organization and our own people, our finance sort of trends.
I think that he called needs really very well equipped.
Two navigates, who are the stronger but temporary quite <unk> and what we told all of his crisis.
Okay. Thank you very much.
Hi, there no further questions in queue at this time I turn the call back to the presenters for any closing remarks.
Thanks, very much Jamie and thank you all for joining US today, obviously, a these are interesting times. So we're always available to speak a afterwards feel free to try me at your convenience stay safe and we look forward to speaking you all soon thank you.
This concludes today's conference call you may now disconnect.
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