Q3 2020 Exchange Income Corp Earnings Call
The corporation's results, including the DNA and financial statements were issued on November 12, 2020 and are currently available via the company's website for study before.
Before turning the call over to management listeners are cautioned not today's presentation and the responses to questions may contain forward looking statements within the meaning of the safe Harbor provision of Canadian Provincial Securities line.
Forward looking statements involve risks and uncertainties and undue reliance should not be placed on such statements.
Certain material factors or assumptions are applied and making forward looking statements and actual results may differ materially from those expressed or implied and such statements.
For additional information about factors that may cause actual results to differ materially from expectations and adult material factors or assumptions applied and making forward looking statements.
Please consult the and DNA for this quarter the risk factor section of the annual information form and exchange and other filings with the Canadian Securities regulators ex.
Except as required by Canadian Securities. The law exchange does not undertake to update any forward looking statements such statements speak only as of the day made listeners are also reminded that today's call is being recorded and broadcast live via the internet for the benefit of individual shareholders and analysts and other interested parties.
I would now like to turn the call over to the CEO of exchange and GAAP income Corporation, Mike pile. Please go ahead mr. pile.
Thank you operator, good morning, everyone and thank you for joining us on todays call with.
With me. This morning is Carmel, Peter our President and Daryl Byrd from our CFO.
And our recent updates we've outlined the initial the impact of COVID-19 pandemic on our operations.
And we will provide detail on our plans for managed through the school health crisis.
And we'll continue to do that of interrupted Tonight, well all the school outlining the impressive performance we have achieved in the face of adverse circumstances, so far and 2020.
Well the Cobra and 19 continues as a drag on for the global economy and is dealing with the uncertainties associated with the second wave of the bar.
Poppy. The reports are very good years. He continues to perform exceptionally we've maintained our consistent the ability to fully fund our dividends and processors and obligation will be the getting the score.
Well meaningfully improving the financial position of the cash.
We always felt strongly the year she's proven approach the best for drives value for our shareholders well, our strategic positioning of the company of businesses prioritizing for your good service and gives us an advantage and dealing with on certain types of Cobra and 19 as providing the generator.
Total cash.
In that respect and I believe we're past the with flying colors.
Early in the pandemic, we identified the management of our cash resources of the strategic priority for you I see and is evidence of the collect the strength of our companies our performance of not respect has been excellent during the quarter.
In addition, the big our dividend we.
We Uh huh.
Maintenance capital and growth.
The group capital requirements, while reducing our debt debt by $30 million before funding the weird proposition.
Taken in combination of these ballot measures from improved current quarterly free cash flow of us maintenance capital expenditure payout ratio from 49% for 45% year over year, even with the pandemic trial yeah.
Yeah, I see again remain profitable through the quarter reporting adjusted net earnings of 20.6 million or 59 cents for sure.
We've consistently through this pandemic paid our dividend funding, our capital investments and pay down our debt.
The powerful strength, a boat and powerful statement about our strength today and the testament to how well positioned we are and take advantage of future opportunities.
And aviation and our ability to build the liquidity over this period is a drop of corn crops for traditional commercial airlines will reinforce the deplete cash reserves and access additional capital of the finance day to day operations.
These results validate yeah, I see is conscious choice to diversify our services, we continue to hold significant positions across the aviation industry and bought about and freight.
Slide three maritime surveillance parts sales and leasing.
That supports and are complementary to our passenger business.
As the central service providers and aviation certain of our subsidiaries in the segment have been lots of affected by the pandemic. The mothers day, our passenger traffic, which decreased significantly and the early days of cool. The 19 rebounded quickly you know relatively stable Q3 operating environment achieving.
Hi, and passenger volumes of approximately 60% of normal cash.
Capacity since the one Oh. This has declined recently with the Spike and COVID-19 cases.
And Walt going passengers back onshore and got work. We've also seen first and the benefit of our media net.
Our ensuring the safety of our employees customers and stakeholders in combination with the proactive steps, we took to evolve our service offerings in line with public expectations.
And we now see our passengers are true quickly and markets, where COVID-19 of the big true even temporarily we're more determined the number to maintain our leadership and pandemic safety protocols.
The I see airlines from we were quick to require the completion of held true questionnaires before trial, whose slickly the integrate passenger temperature trucks during the check in and boarding process and work to immediately implement the boss mandate for passengers before it was required by the government.
We are currently refining our board and processes, including see the passengers and groups determined by destination employing separate doors for boarding and de emphasizing and using direct flights the communities where ever it is feasible to do so.
Moving forward the I see we'll continue to evaluate our operation and find new ways to enhance passenger safety as our industries and the scientific communities of understanding of the buyers of all our.
Passengers, our employees and the communities we serve zone for that.
The bus conditions, we can provide and we're focused on beating that obligation.
For the diversity of our operations and the strong leadership teams, we have in place of each of our operators has directly benefit the yeah I see aviation family.
We have been able to move quickly and strength in our operations to share <unk> joined simple and take your best practice and ensuring that each of our companies as an immediate access to the resources they require to continue doing business safely and efficiently.
Regional ones operations continued to be significantly impacted by the bad debt.
Well, the sales and services revenues declining by 67% and lease revenue declining by 76% for of the comparative period due to a drop and customer demand right.
Digital one is not the for any cadence for lease customers during the period and therefore not see these receivables growth since the Oh, I'm, sorry go and part D. The.
Property continues to work closely with lease customers and is focused on identifying opportunities to strategically position the regional line when activity picks up and regional aviation.
EBITDA contributions from legacy Airlines and provincial decline negatively impacted by our committee the committee sorry negatively impacted by our commitment to continuing scheduled service despite reduced passenger volumes to the isolate and communities we serve.
Termination of service these instances of not an auction and man.
Its view of the presence of yes the airlines.
He is in many instances the only way to move passengers goods and the vital medical services in and out of these communities.
Our maritime surveillance business remained stable.
No more than average is vital we live up to the trust placed in us to deliver our services with hard work and integrity the tape and for the future.
With the Central service provision and mine despite the fluctuations of passenger volumes cargo operations across our airlines continue to remain strong and.
The continued whoever mckean and food and supplies into northern communities the.
The service is a benefit the directly from our call the aircraft and flexible aircraft configuration options across the bulk of our passenger fleet.
Our channel operations remained steady driven in part by the I see the ability to deploy the collective capacity of our airlines to affect director of transportation with strict safety first health protocols.
For essential medical personnel flying and first nations communities and protecting us against drove the type C.
This ongoing effort managed by the way I see operating on behalf of indigenous services cabinet and is routine and nurses true isolated communities. They shouldn't line moving over 2000 passengers sets the initiation of our contracted services day of 2020.
[noise], providing these charters and suse and health care and infrastructure professionals medical supplies and equipment required to maintain critical infrastructure such as water treatment plant will be able to access these communities.
And it also provides flexibility to support our community.
The other community needs such as the emergency management responses viewed security or amount of Doc services as required.
EBITDA improvement and quest is the direct reflection of our successful acquisition from a couple of your why the fourth quarter of 2019, our successful acquisition and the W.I. assets in the third quarter of 2020, and the continued ramp up of production at our dual class cuts the spot.
The completion of the with the acquisition of the quarter is another example of the value of our strategic positioning girls value for shareholders and supports the future success of our company free and Wi assets, a full service window Blaze and company with all the operations on the West coast of.
Ladies and states into the IC family builds our collective strength, but.
Hi, John Sunquest strategic integration and the issue in the manufacturing installation of our products.
Getting the synergies associated with the probably the functional single point of accounts ability for our customers gives us a tremendous competitive advantage is not space. We've seen the benefits of this kind of arrangement could bring to the Wi acquisition and is the very exciting.
W. I asked for the fall.
The balance of year, She's manufacturing segment collectively saw an uptick in the EBITDA due in part of the acquisition of he Oh.
Oh, the control of specialized provider and the design and manufacture of electrical distribution of equipments and process control systems, which was purchased and the fourth quarter of 2019.
This progress and our manufacturing side of it has been made of all our collective operations up and dealing with the practical trial the use of maintaining production during the cold the of 19 so.
Social distancing requirements and other operational and patterns continue to challenge our efficiency and through the.
Despite the robust demand.
We have also drawn the gain on the collective strength of exceptional management teams, we have in place across the manufacturing side to ensure the we're sharing best practices distributor and resources and integrating lessons learned to protect both our employees and effectively be and our customer demand.
I'm, especially proud to report the within the segment several of our subsidiaries of been able to shift some production to meet the government. The kind of this call for increased production of much needed P. P E and medical supplies to support front line of workers through the pad. These exceptional efforts speak the actually his commitment to leverage the.
And our skills and resources for the benefit of the communities of which we operate well.
Looking forward over the next several months yeah, I see of several exciting initiatives the either build part of the basis of our purse previous strategic investments with the future or on our ability to leverage our strength and take advantage of opportunities when they present and.
And matter of Oh, Yes, Oh, yes, he plans to complement our considerable existing legacy capacity to now include rotary wing services.
This past this capability is expected to the operational and early 2021 and it provides a meaningful enhancement of the service. We currently offer our northern customers, initially and Manitoba and northwest of and Terry.
Also in out of that he weight and their recently received proud for Cabot has approval to deploy for specially designed adult size single patient isolation and transport units called out for sure.
The self contained units keep patients completely isolated drink transport, allowing you wait and to move safely.
The fate structures patients from the remote communities to larger hospitals, where they would be better able to receive the proper cash and especially relevant and service of the contacts the probing the 19th.
And our Airlines Powell.
As recently entered into the service the first of its new bombard true Q4 hundred aircraft.
Pointing it and the service of vital charter business and Labrador and our roots of the Atlantic ball seeing sufficient passenger volume to justify the additional capacity.
The ability to offer Q4 hundred service is an important building block for Powell Airlines.
The new aircraft will further enhance the competitiveness of Pal charter services and allow the other carrier to take advantage of additional scheduled service opportunities as regional travel restrictions are gradually reduced in the coming months.
Regional one remains active and the search for additional assets and is prepared got quickly share favorable opportunities arise the cash.
How big was able to begin the acquiring several Q4 hundred aircraft earlier in the year and we'll continue with their strategic acquisitions in the fourth for.
And the aerospace to particularly exciting projects continue to progress here in Canada, well. We've also had the important port recent wins internationally for.
First the government of candid. The recently officially received the first of its new Airbus Cc too and that.
C to 95, Kingfisher aircraft and coal blocks PC and.
The aerospace is responsible for the in service support for the aircraft covering all aspects of maintenance work not undertaken by the Royal Canadian Air Force technicians, and including high value work, such as repairs second and third level, the future modification work and depot level of maintenance of the aircraft.
[noise] called aerospace and be working closely with Royal Canadian Air Force with our partners and Airbus Defense and space since the contract for these vital new aircraft was awarded in 2016.
It's extremely exciting to see the aircraft arrived in Canada, and we're looking forward to supporting this critical national program, keeping our partnership with the our share for years to come.
Palo Aerospace will soon enter into service to the new long term cash it maritime patrol aircraft required to support the part of the fisheries and oceans aerial surveillance and enforcement program. These.
These two new aircraft per tool draw and.
True additional new Beechcraft, Eric the 200 aircraft already and service for the program represents an important step forward for the government of CAD this capacity in the space.
Oh, the aerospace and surveillance needs of deal flow under contract since 1990 and.
The continued to do to do so through this contract for at least the next five years.
On the international stage Pal Aerospace along with partners of sport and Amsterdam were formally awarded the contract on September Thirtyth, two supply and so.
The port to fully Missionize dash eight aircraft along with the provision of crew training on all systems and support the operation of the aircraft for at least an additional 10 year period for the other ones Costar.
The important contract strengthens pals aerospace already extensive credentials and maritime surveillance and I am sorry services assets.
Stylish as a key strategic flow gold for the company and the European market.
And we will build our capacity in aerospace to support for the highly skilled employment here in Canada.
In closing I'd like to briefly remark on the strength of our leadership teams the contribution to our results and what I think it means for you I see his future.
From the start of the COVID-19 pandemic, we have learned a lot.
We can't predict where the virus is headed for one of these has in store for us over the next several months, we have proven that we have the team in place capable of succeeding in this difficult environments.
In many instances our accomplishments several quite a remarkable efforts from leaders and employees across all of our operations I. Thank them to the seriously for all they have done.
Over the last two quarters, the most challenging in the history of our company, we paid a dividend improved our balance sheet and grown our company.
Im very proud the we've been able to extend our track record in that regard even in today's environment.
We've always been responsible and our approach to management, the DMC grounded and the understanding that our investors are counting on us to continue delivering for them no matter the circumstances of the day.
I believe we are firmly meeting our commitments.
We're not going to stop positioning the company for tomorrow, our ability to deliver results through challenges the cobi.
19 has presented builds our opportunity to move quickly and strategically if investments or acquisitions make sense.
And not respect despite no I will continue to be called on to address the challenges of COVID-19, and the weeks the comp.
And particularly enthused about the future of our company.
Thanks, very much and I'll now hand, the call off the Darryl who will walk you through the third quarter financials.
Okay.
Thank you, Mike and good morning, everyone as Mike duly noted the unprecedented events of the pandemic continue to affect the corporation and the quarter that said management and staff across all of the IC companies continue to remain laser focused and committed to managing the challenges that we're facing this focus and commitment most certainly a replay.
Elected and the successful results for the quarter.
Once again the corporation was able to maintain positive cash flow after capital requirements and payment of dividends and before the acquisition of west reduce net debt and another COVID-19 and challenged quarter.
As our distinct business model continues to be tested and these trying times. This quarter's results continue to support its resilience to stand up under pressure.
The financial results for Q3, 2020 that I will summarize year to follow.
Were negatively impacted by the COVID-19 pandemic I will caution that compare ability of current results with that of prior period. This materially impacted due to this unprecedented of that.
Conclusions taking into account comparability should be made carefully given the current circumstances affecting results.
Following the same order of presentation from last quarter I will commence the discussion of our Q3 2020 financial results with comments regarding the corporation the balance sheet and liquidity.
We have stated that of supporting the principal to our business model and the strong focus on our balance sheet with modest leverage and good liquidity.
Our commitment to the spreads and will remain unchanged even during the Stella trying times.
The size of the Corporation's credit facility as at September Thirtyth remained at approximately 1.3 billion.
With the capability of being able to access the another 300 million and an accordion feature should we choose to exercise the.
This translates into the corporation being and an enviable position with readily available access to liquidity of approximately 840 million, including the accordion feature.
The long term debt net of cash of roughly 760 million is an increase of approximately $59 million from Q4 2019 the.
The increase of since December 30, Onest 2019 entirely attributed to the acquisition of with and the weakening of the Canadian dollar over the spirit.
Since March 30, Onest 2020, the last few quarters, where were the impacts of COVID-19 were most apparent for the corporation and operations. The corporation net debt decreased by more than 20 million and.
In addition, it should be noted that the company has no long term debt coming due before December 2022.
In the quarter as a measure to support our principal regarding access to liquidity. The corporation amended its senior leverage Russia ratio from a maximum of four times defy Cai and five times for the fiscal quarters ending December 30, Onest 2020 through September Thirtyth 2021.
At the end of Q3 2020, our leverage ratio remained well within the four times the covenant coming in at 2.6 times contribute contributing to this strong covenant result, or the corporation successful efforts and managing capital expenditures along with working capital.
The increase in the Covenant metric provides the corporation financial flexibility. During these uncertain times. It was pursued and is intended to be managed conservatively and in line with the underlying focus on a responsible management approach that has always been a core part of the IC DNA.
And it's sort of all stakeholders well throughout the history of the Corporation.
At this time inclusive of inclusive of impacts of all announcements to date management continues to expect to be well within the original for times Covenant.
Working capital management has been a key focus for the organization.
Management and staff across the entire year ex the organization of Dennis of per job and staying on top of working capital management and supporting our ability to remain cash flow positive during these times and dealing with the impact of COVID-19 day.
During the third quarter of working capital contributed for $18 million and positive cash flow.
I will now turn to a summary of summarize discussion on the financial results and more fulsome explanation of results can be found in our Q3 2020 mdna.
In Q3, we generated 297 million.
Which is a decrease of $58 million or 16% over Q3 2019.
Aerospace and aviation shakes.
The segment revenue was down 36% from the comparative quarter and 2019 to 171 million.
Revenue from the legacy Airlines and Prudential decreased by $34 million.
Well the comparison to the Q3 2019 packings your volumes were due to covert night and comparison, sorry to the cash to the Q3 20 and 18 passenger volumes.
Were lower due to cold and 19, we did see improvement throughout Q3 2020 from levels seen in Q2 2020.
That said volumes have declined the decline subsequent to the quarter and due to an increase in the cobot and 18 basis.
Cargo volumes remained strong throughout the quarter the strength can largely be attributed to the continued need for essential goods and supplies and the communities we serve and.
Net of Bakken charter operations were strong throughout the quarter and improved over the comparative period.
The impact of COVID-19 on the aerospace operations with minimal due to the contractual nature of the work the force multiplier aircraft returned to service and the third quarter and the several missions scheduled for the remainder of the year.
The regional one revenue decreased in the quarter compared to the same period last year by 61 million.
Regional ones operations and have been greatly impacted by Cobot night King regional ones business is dependent on the traditional air carriers more.
For travel throughout the World has put pressure on all ex lines of business, including part sales aircraft and engine sales and lease revenues.
The sales and service revenue and decreased by 67% and the third quarter compared to the same quarter last year.
While we started to see improvements as the second quarter progressed, the significant rise in cases of COVID-19, and third quarter negatively impacted revenues quarter over quarter.
Aircraft and engine sales were down significantly from the prior period as they are in line look to the for large purchases as airlines look to the for large purchases lease.
Lease revenue decreased by $18.4 million or 76%.
And the current period due to a significant drop off and customer demand and utilization of the corporation leased assets.
The Corporation has no lease revenues recorded for deferred lease payments during the period and is not seen and lease receivables growth since the onset of Covidien 18.
Turning to our manufacturing segment revenue grew by 38 million over the prior period. The total revenue for the segment was 126 million.
Quest revenue was higher than the prior period, reflecting the acquisition of Wi and the fourth quarter of 2019, and the acquisition of with with with within the third quarter of 2020 with no comparative and the prior period.
The balance of the segment collectively experienced an increase in part from the acquisition of Lv control and the fourth quarter of 2019.
It should be noted that all of the IC subsidiaries within the manufacturing segment continued to be deemed the central businesses, which has seen the case, which and in the case since the onset of the COVID-19 pandemic.
That said management measures implemented to ensure health and safety of staff because of the impacts of COVID-19, every deuce efficiency and throughput despite robust demand.
Moving to EBITDA consolidated EBITDA was $83 million down, 6% or $6 million for the quarter compared to Q3 2019 the.
Primary contributing factor to the decrease can be attributed to the impact of cobot, Nike and on both segments.
EBITDA in the aerospace Aerospace and aviation segment in the quarter was 61 million a decrease of 25 per cent compared to the prior year.
EBITDA generated by the legacy Airlines and Prudential decreased by $1 million.
The Corporation and quickly adapted at the operations to help mitigate the impact of cobot and 18 travel restrictions.
Reduction measures that were introduced in Q2 2020 that included scheduled frequency reductions and labor rationalizations, among others continued into the third quarter. Additionally, the corporation and benefited from the extension of the Canadian emergency wage subsidy or Cws program.
Net to a lesser extent than in the second quarter of 2020.
EBITDA from regional one decreased by 19 million from the prior year contributing to the lower comparable is the decrease in revenue across all lines of business with the most significant being the 18 million reduction and lease revenue, where EBITDA margins, our historically high.
And the manufacturing segment EBITDA was 27 million, an increase of 15 million compared to the same quarter and the prior year. The increase was driven by the same factors I noted prior for revenue.
Strengthen demand continues within the segment, while the Cws helps to offset higher safety cost and job site delays cause.
Cost related to lower efficiencies and include social distancing protocols implemented and all our plants and higher operating costs from sanitation and personal protective equipment.
Turning to earnings and Q3 2020 of the net earnings was 17.2 million a decrease of $12 million compared to the prior year.
A remeasurement of contingent consideration and increased net earnings by 5 million and the prior period and did not reoccur and the current period.
In addition, the corporation generated lower EBITDA compared to the prior period as previously discussed.
Net earnings per share decreased from 90 cents per share in the prior period to 49 cents per share and the current period.
It should also be noted that in the period the weighted average number of shares increased by 9% over the prior period, which has impacted per share amounts and the current period.
Adjusted net earnings was 21 million a decrease of 12 million from the prior period adjusted net earnings per share were 59 cents per share down from a dollar three cents per share and the prior quarter.
In Q3 2020 of free cash flow was 58 million a decrease of 9.3 million from the prior quarter or 1.6, sorry.
Sorry, $1.64 cents per share. The main reason for this decrease is the decrease in EBITDA and the increase and current tax expense.
Free cash flow less maintenance capital expenditures per share increased by 12 cents per share to $1.26 cents per share in the quarter.
The corporation payout ratios in the quarter were also tested.
By the impact of Cobot and 18.
The free cash flow less maintenance capital expenditure state.
Its capital expenditure payout ratio in the quarter was 45%, which is an improvement from the comparable quarter last year at 90 day, 49%.
During the global pandemic, where passenger volumes initially felt by up to 90%. The corporation was still able to fund its maintenance capital expenditures its dividends and people and have cash cash left over to fund future growth and pay down debt.
Maintenance capital expenditures decreased materially during 2020 during the 2020 period as reduced flying hours reduced maintenance.
Requirements.
The timing of maintenance capital expenditures is directly impacted by the flying time of aircraft and engines once the impact of COVID-19 become apparent for the corporation the.
For capital expenditures where appropriate.
In addition, during the third quarter of the Corporation and benefited from maintenance capital expenditures performed earlier in the year, primarily in the first quarter of 2020.
Okay.
Notably for the second and third quarters of 2020 combine the free cash flow less maintenance capital expenditures of great payout ratio was a very strong 57%.
While slightly higher than the 50% reflective of the same periods from 2019. This is a significant achievement during the unprecedented headwinds created by the COVID-19 pandemic.
The adjusted net earnings payout ratio in the quarter was 97 per cent compared to 55% in Q3 2019.
The free cash flow less maintenance capital expenditure payout ratio on a 12 month trailing basis increased to 73%, which continues to be below 100%, which was a target that was identified at the onset of the pandemic.
Even now with two quarters of Covidien 18 impacts on the business. We have maintained the respectable 12 month trailing free cash flow less maintenance capital expenditure payout ratio, while continuing to be able to successfully fund requirements for dividends and maintenance capital expenditures.
Before I pass the call on to Carmel I would like to comment that is the definite the corporation focus on being responsible and our approach. The management is definitely reflective in the impressive results for the quarter.
That said our approach is not the result of the challenging times, we have faced for most of 2020, the impacts and challenges of the pandemic have certainly made are true colors more vibrant but the responsibility toward its our management approach is engrained across the corporation has been and remains a distinct of part of our culture and then.
Horton attribute that has been and will continue to help drive success for the IC.
That concludes my review of our financial results and comments I will now turn the call over to Carmel.
Thanks, Daryl my comments today will focus primarily on the outlook for the balance of the year for our various lines of businesses and then we'll shift to some more general observations about the IC performance as a whole.
Well the first that the COVID-19 buyers will take the months ahead its impact on the economy, our employees' travel restrictions and consumer confidence is uncertain. What is certain is our ability to manage through the shifting landscape continues the to deliver service and products and the way that protects our employees.
And our customers delivers profitable financial results fiscally responsible cash management and opportunity for future growth.
Our confidence and making this statement is the fact that we have been doing exactly that for the last eight months during which the pandemic.
Has been with us.
With the onset of the second wave of the pen debt met the recovery, we were beginning to experience and our passenger business in Q3 has stalled and there has been some pullback and passenger numbers, but they are still at levels higher than the initial loads and.
And Manitoba increased case numbers caused the government at the beginning of November can move restrictions to the code red critical level, which has created more uncertainty around our passenger levels in Manitoba and none of that.
Our passenger business, however will rebound quickly when restrictions ease as travel in and out of the communities. We serve is essential travel. It's quick recovery was evidenced in Q3 when community started to open up passenger volumes went from being 90% below normal in April the 40% to 30%.
Debt below normal at the peak and Q3.
Similarly, the second wave continues to stall the recovery of regional one business and to 2021.
No one's volumes materially reduce fund and pandemic head and have remained relatively consistent from the end of Q2's through the Q3 and we expect similar results in Q4, notwithstanding these lower results regional one hasn't each of these quarters generating positive free cash flow less maintenance capital expenditure.
Due to its ability to readily and Jeff its call infrastructure together with the cautious management of its investments in light of the general condition of the airline industry and although the recovery of regional ones business will not be as quick as our passenger business. The regional jet market is expected to rebound the mark.
Weekly then the larger gauge aircraft and he has the remains bullish on the sector.
I do believe that regional one data driven approach and superior understanding of the industry can be leveraged the acquired distressed assets at very favorable values.
Working proactively do the identify opportunity. We believe we can make investments that will set the table for future growth.
Our aerospace and aviation segment business line, which have performed strongly during the pen dammit being our cargo business charter services medevac business and the aerospace operations continue to do well. We expect continued strong cargo demand through the end of the year focused largely on the transportation of essential goods.
It's like groceries, and nail, particularly considering the second wave of coal bid 19. We're currently experiencing our charter services have continued their strong performance for the pandemic nearing and in some regions exceeding the normal levels well the traditional core of our churn or business moving workers and cargo in and out of.
Camps, and the reserve sector has come back and pre pandemic level strength and that segment continues to be bolstered by the charters. He actually continues to operate transportation transporting essential medical personnel to remote first nation communities across Canada.
Our men and Mac business was the initially impacted by the onset of the pandemic, but once the community implemented the respective cold and 19 protocols and isolation plan volume steadily increased the near normal levels, which are expected to be maintained.
Our average suppose aerospace the vision will continue to perform consistently and mentioned early on and affected by Kobe 19 for the balance of 2020. The force multiple a force multiplier aircraft returned to service in Q3 and as contract comes from through Q4 of which will support Paul.
The results.
As further evidence of the relative impervious net of the business tell aerospace has recently participated and arrival ceremony for the first Canadian see too. Many five kingfisher aircraft is on track to enter into new Dash eight maritime patrol aircraft into service on behalf of the department of Fisheries and oceans.
And one for only awarded the contract to supply and support to new Maritime surveillance aircraft for the Netherlands Coast Guard beyond the significant task of managing all of this activity in the middle but pandemic tell aerospace achievements continue to establish the company as a clear leader and international is our solutions.
Our manufacturing businesses continued to have strong demand, but with reduced margins and some project deferrals due to the impact of cold and 19, particularly at quest.
Leads to lower revenues at quest in the short term as it is not possible the backfill the production GAAP given the long lead time on these projects.
Long term demand remained strong also of the recent acquisition of West together with the ADW I now vertically integrates quest and all of its markets and provide a strong foundation for further growth and enhancing our competitive advantage.
As for he or she is the hole in the fourth quarter, we normally experience a sequential quarter over quarter decline and EBITDA of approximately 15% from the third quarter due to seasonality last year, the decline, which must line as we had two material acquisitions and got the line Alby and the third quarter.
This year again of the resurgence and the number of cold and 19 cases, and lower Cws help offset COVID-19 related inefficiencies and expenses the decline may be somewhat greater than our 15% historical decline turned.
Turning now to our Capex outlook, our maintenance Capex is primarily driven by higher aerospace and aviation segment and moving in line with our scope of operations as we experienced a decrease in flight hours given the impacts of COVID-19 of our maintenance Capex is similarly reduced the mask the level of top line. This.
This has resulted in lower levels of maintenance Capex for Q2, and Q3 than experienced the comparative quarters and 2019. This lower level of maintenance Capex is expected to continue through the remainder of the year growth capital expenditures and the fourth quarter were largely relate to the acquisition and the start of the mission Ization.
One of the two dash eight aircraft required for the Netherlands Coast Guard contract no. Other material growth Capex is expected. However, we will take advantage advantage of opportunities if they arise.
Well the circumstances of the pandemic continue to evolve around yes, yes, she's business model and our approach to the implementation and management remain unchanged.
We are still focused on our three core objectives and I continue and believe it is instructive to check in on a pro guest towards those objectives for the last quarter, yes.
Yes, the first objective is to and provide shareholders with stable and growing dividends share.
From Q2, and now again in Q3 and the face of the unprecedented challenges we have again demonstrated our ability and generate free cash flow from our operations and pay your dividend well meeting our capital obligations and paying down our debt the SEC.
And the objective is to maximize shareholder value true ongoing act of monitoring of and investment in our operating subsidiaries.
And Q2, and Q3 2020, while managing our way through and generational Global Health crisis. We have also meaningfully expanded our business through acquisitions. Consequently, growing the range of products and services, we offer expanding our airline network, rather the contracting and extending the HC international and aerospace.
And across North America, and our manufacturing segment again, our careful approach to management and our emphasis on sound financial fundamentals has allowed us to focus on being bold and entrepreneurial and a time when others are focused on costs are simply trying to keep operations running our third objective is to continue to acquire.
The additional businesses or interest there and expand and diversify Yankees investments and Q3, we completed the acquisition and the pandemic will not stop us from pursuing additional meaningful opportunities to strategically acquire assets or standalone businesses that advance our long term objectives.
For the last few quarters I believe he has demonstrated at every turn how our careful proven of the.
Best men and management delivers value for our shareholders. We have shown how strong our foundation is and Weve tangibly advanced our position free and the future finally before moving on the questions I want the customers shareholders and all the stakeholders for their ongoing support and also to express my.
Gratitude for all the front line workers and put themselves at risk through this pandemic to look after the rest of US we would now like the open the call for questions operator.
Thank you we will now conduct the question and answer session. If you do have the question. Please press the star followed by the number one and your Touchtone phone you will hear a tone acknowledging your request for your questions will be pulled and the order that they are received.
Ladies and share that you lift that handset if you're you didnt the speaker phone bill for pressing any key.
Thank you and your first question here comes from the line of Steve Hansen from Raymond James. Please go ahead. Your line is now open.
Yeah, good morning, and and Steve.
Just a quick one on the legacy and northern Airlines and they make the trying to get a sense for.
For the best of your ability here to understand what the step down might be like in the Q4, recognizing that medivac will be strong.
Cargo the strong and turn it will be strong and passenger in particular sounds like it would be the point of weakness too early to tell I know the kids give us the sense for what kind of drawdown you've seen this for and how we should think about that in the keyboard.
Well, the the hard part Stephens and code Red spend really.
Recent in terms of its implementation so it's hard to see exactly how far back for the core travel for medical is going to the.
Moving now.
I don't see us moving to Q2 levels, where we were down 90% I don't see that kind of response.
We will certainly see a decline, particularly in Manitoba, and northwestern Ontario, where we had the biggest bounced back up during Q3 other.
Things were relatively stable and Nunavut and.
And.
Things remain reasonably strong on the east coast and Pal So.
I think we'll see a material pull back in particular, the perimeter of operations, but.
Oh limited and then we've seen how fast soon as these restrictions comes off how fast the.
The market bounces back.
Fair enough.
I understand the still pretty cloudy day.
Just on the one for all but it may just the on your quest operations, you've historically disclose backlogs, there, but pretty good a sense for how that backlog has progressed through the pandemic.
And again, recognizing you've had some operational.
The inefficiencies at this point, but just trying to get a sense for the backlog and sort of your your projected outlook there.
The challenge with the with quest isn't the absolute level of the backlog, it's the timing of the backlog of certain projects. The we thought we'd be done.
During 2021 may be moved into 2020, Tim. So we reported Q4 will give an update and outlook all of what that was.
Overall backlog looks like.
For hasn't been a big decline in the absolute numbers. It's just it's it's.
Sort of in transit in terms of which projects and Dennis Don when which has put some stress on to our team as this project accelerates for this project gets moved up.
As to what we put in each of the factories.
But the overall them and the number of things, we're bidding on and stuff remains solid.
Okay, great and the figures and guys all of them by the Q. Thanks.
Your next question comes from the line of Chris Murray from Altacorp Altacorp Capital Inc. Please go ahead. Your line is now open.
Good morning, and Chris.
Maybe just thinking about regional one here for a little bit you talked a little bit about how we're going to be the lower level for it looks like a little while.
How do we think about that business coming back at some point you know.
Some of the of some of the longer term partnerships that you guys have had maybe those couple of part a little bit. So I'm just trying to think about you know of return to normalcy, there and what you're seeing.
And the lease market and and how we should think about this maybe later and the 21 of the 22.
Oh I think when you look at the the types of aircraft per flying aircrafts, whether it's the abry errors were true.
For a greater extent the crj as those remain a big part of People's regional slate and.
And as those fleets begin to fly and the hours increase those little back into service.
We've talked a little volume.
A little boat and past quarter, but our relationship with Skywest, which remains strong and European carriers, It's really just a matter of when do those planes and starts line and.
And the.
Greg will ramp up the parts revenue first and the lease revenue under the current but there isn't an alternative to those aircraft and as the most markets open up and we're going to open up the smaller regional aircraft for works.
So not much has really changed and our outlook we were.
Really excited in Q2, where we saw the business start to ramp and we started the meaningful discussions on redeploying some assets and then as the second when and if that's kind of slowed down so.
I don't anticipate any real improvement and not until the beginning of next year.
I think.
When you look at the the Skywest is the biggest operator and the world and what you see with their their ideas on how volumes will ramp I think that's a pretty good proxy for the demand for the type of aircraft. We have obviously, we have a lot more customers. The one that I believe there of public proxy for the regional business.
And Chris just a couple of other.
On the.
We think parts will come back first and we think the will be.
Some pent up the man because obviously, there's still been some continued flow.
Traffic and as a result, what airlines and look to do is effectively scavenge, what they had either on their shelves are true aircraft that they weren't are currently utilizing but the come a point when you start seeing an uptick word and they'll have to go out and start replenishing whats been on the on the shelf so definitely see.
When it does come back that there'll be some pent up demand on the leasing from.
The the I guess, the beauty of our one and its ability to shift and.
Our lease assets are not long term leases for short term and we have the ability to easily pivot to lease just engines and we think theres going to be pretty strong demand for engines because operators are not going to want to spanning a million dollars overhauling and engine. So we think that's an opera.
And you need going forward and we're certainly looking at that and the you know just generally and we look at the industry.
Our ones also been very bullish on the kind of other step up strategy, where operators again will take the advantage of pricing today to move into the zebra and tear day 200 and move up the seven hundreds or 900, so we're well positioned to help our customers do that and theres been a lot of discussion about kind of.
Reevaluating airframes.
And to kind of low density configuration, and so that they're smaller more space. We've seen the popularity of the share gains by 50. So again those are spaces, where we think that we can materially contribute.
Okay. That's helpful. Thank you and then a couple of questions around the yours your passenger airlines.
And.
Awesome of questions and I'll, let you guys answer these as a pair of.
Well first of all the Theres been some discussion around the federal government wanting to support.
One of we'll call.
Like smaller communities.
For your airlift of strategic and but it would have to be done at the in conjunction with some of the provincial governments.
And it's like that in Nunavut and Yukon.
I'm wondering is there anything like that that you see coming up and maybe the Atlantic provinces for Manitoba for even northern Ontario, where you operate that you could receive some support.
The operator.
Related you're continuing to operate even though you are at low load and.
And the other question I have for you is around.
Atlantic travel.
Discuss a little bit what you're starting to see now you've seen some of the major carriers.
And get that market and there is there any concern that they could re enter and and sort of rough.
Any of your and the of your operations at this particular point.
Okay I'm going to take your first question, Chris and I'll give the sector one of the what the Maritimes the Carmel.
The.
Government subsidies were up.
Much more quickly put in place in the far north.
And the territories and new the event in.
You crime and the northwest territories, and we had support during the for the first the quarter of this our second quarter from them as revenues improved the.
There is only.
There's no material support in the in our third quarter, we have recently executed and the new long range agreement with the.
Government, the noon of that and indirectly the federal government, which provides for revenue support yes.
Ticket sales fall below certain levels to make sure we can maintain the service.
Similar discussions are underway in Manitoba, and northwest share in Ontario, quite frankly, we are looking to the government to support our profits it's to help us when there are certain markets that are simply on that economic the fly to and we've done it for seven months.
We need the health of the government and some of those and we're good discussions right now with the provincial government and Manitoba and the provincial government and Ontario, both of which will have the support of the federal government and those programs. We've not reached any arrangements at this point, but I would be cautiously optimistic that that will help us.
The Larry and some of the other economic businesses, we need to keep going through I want to be crystal clear, we don't need the government to help us one of our business, we need the government to help us with service into certain communities, where we have of a moral responsibility to continue.
And so Chris Let me answer your question on the kind of Atlantic and travel and the withdrawal that we've seen from the main line carriers in that region. So that you know, we certainly seen an uptake in the and particular in the small communities going into the hubs and you know we made it clear to all of those communities that upheld the airlines.
As we've been for for decades is there to provide whatever a lift is required and you know impella of the several different right engaged aircrafts and we can match the aircraft of the demand.
We recently extended service.
New rooms from St. John's the Montana, and we were seeing actually really good demand and that route slightly reduced when a monkey and went into a core code orange and but you know as it removes the code Orange and do I believe the yellow if I've got my colors, right and we saw the man regime.
We intend to extend that to Ottawa once the bundle is removed and we think we're well positioned to be able to drive that traffic as it relates kind of more generally and what opportunities exist. We obviously carefully monitor that we also thanks.
I think that we would be well positioned to work with any of the main line carriers to ensure that the flow of traffic into the communities, which maybe makes more sense for them to fly and that we're there to support that so we're cautious and where we go we want to make sure that all our members of the communities we serve our.
Well served and look for opportunities as the IRI.
Okay. Thank you for that's true.
Your next question comes from the line of Mona Nazir with the Laurentian Bank Securities. Please go ahead. Your line is now open.
Good morning, Thank you for your time and congratulations.
The first.
Hi, good morning, Firstly on the payout ratios and the improvement in every aspect of the coal that.
There's continued low levels of Capex and you did touch on deferrals and the correlation of flight time and operations to maintenance and your prepared remarks, but just more of the clarify.
Clarification from my side. So is it fair to say the as you expect activity to rebound into 2021 and beyond maintenance Capex and similarly uptick at a similar pace and then also just on the growth Capex side, if I'm reading correctly.
For the foreseeable future, it's safe to say that it went from eight and low but just given pent up demand on the one side, we could see some return of inventory level of decline. Thank you.
Oh, yes, and actually a really good question on the as it relates the maintenance Capex.
It's important and we don't give the impression that their discretionary.
Airplane engines have defined life landing gear as the defined life, you're going to do these things in line with the schedule for the the aircraft are flying was the time. When those are required is extended so out of our planes ramp up we will see and return to the and quotation marks more normal capital expenditures.
We're still working out of the budget for next year and as has been the case in the in the past. The we may front end load a little bit of that in the slower winter season, when winter roads are.
Available, having said that with the pandemic the availability of Winter Road just is not certain.
Certain and so we aren't exactly sure exactly how that's going to play out but to the extent that it's it's.
A normal seasonal slower period, we will probably do slightly more maintenance capex and the first quarter than in other quarters.
As it relates to of growth Capex, you're definitely going to see the close off all of our all fisheries project, which we've been working on for the last six or seven quarters, and you will see the ramp up of the purchase.
Purchase and then the should Ization of our two dash and it's for our Netherlands contract and you'll see the out over the next of four or five quarters. Those go into the service right at the beginning of 2022.
Oh, yes, no girls that you'll see and 2021 will be the start of the building for fixed and search and rescue lot and when it take here.
As it relates to the original one we've maintained.
The inventory, we need to the keep that business October.
But quite frankly, we are actively pursuing opportunities, where there's a distressed situation the up to.
Q4, hundreds we bought we've done very well and we will continue to look for opportunities to buy fleet of aircraft we.
We're bullish on the long term.
[noise] future of that business and so if we could buy things of distressed prices will be glad to do that but the game, that's opportunistic and we're not going to buy things for the sake of buying them. So I think your statement. The you can anticipate lower growth Capex is accurate.
Accurate.
Just one of the comments on maintenance Capex and this is something.
That is different than I think many other airlines all of her assets <unk> our aircraft are flying so.
Other airlines that have park aircraft, where you might see a tremendous uptick and maintenance just to get them operational we will have that we'll just have the kind of correlation between the increased flying hours and the increased maintenance capex.
Hey, that's helpful. Thank you and.
Secondly from me with Pfizers vaccine announcement of rapid distribution plans have been put in place I understand you did manufacturers from PPV and now wondering if you would be one of the Canadian companies that put transport the vaccine specifically to northern and from the communities.
Thank you and we are actively and discussions with the federal government.
And being able to provide that service as.
As you saw with BARDA and did you the services and the contract for we're bringing the medical professionals to the communities across Canada and managing not on behalf of the government I think we are quite of.
We're clearly the logical provider of the service into the north nor arrangements and been reached the and there's still some work to do because the.
At least at this point the vaccines are expected to require exceptionally low temperature and transport and so were going out the work on how we do those things, but in terms of flying into the communities. We serve as we've got the rate of assets, where we've got near National coverage and we will work with other companies.
Tom for use in the areas, where we don't cover but to make sure and we can have a comprehensive solution for the Canadian government and just this is really where the strength of the actually comes out and.
First of all the ice and charge offs, you've been very successful and the complex logistics involved and that is a.
Probably beyond the one can comprehend mean, we move thousands of health care providers and.
Oh, Canada over 150 segments, so its really a complex and.
Structure, and I think that bodes well because we've been very successful and our execution. So the government and the wherever capability as it relates to the vaccine Mike made a point about the special needs and might be required in order to transport, whether its refrigeration or other requirements.
Requirements, well, we have Pell engineering. So if there is an engineering thats required to make modifications to the aircraft. We can design, the most and and we can get them certified internally, we can do or modifications internally and then we've got the of course, the aircraft and sort of flights and we're well positioned to be.
And the solutions provider for the.
Perfect. Thank you and it and just the follow up on the.
Is it safe to assume that if you were successful pricing and yields would be favorable.
Yes, I mean, absolutely it would reflect the obviously the cost and the effort required in order to execute the contract.
Okay. Thank you.
Your next question comes from the line of Konark Gupta with Scotia Bank. Please go ahead of your line is now open.
Hi, This is Cornell associates.
I have a question of margin strength for the.
Aviation segment, we look at the sequential increase maybe it's on revenue for Q true.
The pipe margins very strong of 47% can you. Please help us understand of what played into the margin strength.
I'm not entirely sure I understand the question, but the.
The margins of the aviation improves with the of the density of the passengers and the planes and so were flying less for aircraft that were almost completely empty over the period. You also saw and the aviation business supported and understand the sequential improvement and the maritime surveillance business and the return to.
Action of the.
Force multiplier of aircraft, which largely did not fly and the second quarter and so and you see the also see increased NAV of operations and so the.
A margin analysis, it's not like the cost structure is the same store somehow inherently it's more profit lets just the business is returning to normal and you.
You got.
More robust for operations and the number of areas of better load factors on your on the passenger slashed freighter aircrafts.
Great and you have another question how's the pasture load factor of trending the north of.
And what do you see.
For Q4.
We mentioned that earlier that it had.
Increased dramatically during the third quarter of.
And then has plateaued has declined with the implementation of code Red and Manitoba and similar Rob.
Classifications, and northwestern Ontario, So we've seen a decline in this period the implementation of code Red is two recent for us to get a real.
Ability to forecast other than to say, we expected to decline.
In the near term and until now.
The the pen down the classification is reduced I think the key takeaway and this is not trying to guess the number for every month Weve got a six months period items and downtick, where we had very very low load factors and the beginning of Q2 and better Joe and practices and Q3 and if.
The looked at the average over that we've generated more than enough cash flow to fund our all of our capital requirements, whether it's like human and maintenance and growth Capex. So we don't anticipate that changing we do definitely expect the decline in passenger traffic in the near term. However.
Thank you I don't have any further questions.
Once again, ladies and gentlemen, as a reminder, if you do have the question. Please press the star followed by the number of on your Touchtone phone.
Your next question comes from the line of Tim James with TD Securities. Please go ahead of your line is now open.
Good morning, Tim Thanks, Good morning.
My first question.
And just the the working capital of the cash coming from working capital through the first three quarters and it's been quite quite strong.
Stronger than the most sort of nine month periods. If you look back historically just wondering how we should think about that in terms of the fourth quarter does that mean that the fourth quarter could be.
A little bit weaker than than you would normally see during that quarter, it's trying to get a sense for what usage would look like here in the and the for.
First quarter of this year.
It's a good question Joe I, we don't see any up.
Material further and drawdowns of working capital as the we've downsized the working capital with the downsize of the operation So its generated cash flow.
We think we've sort of fully and based on the size of operating and we don't see of material.
Decrease and work to tap leaks and see a slight usage for that depending on.
The small variables of the quarter, whereas we sort of think of it moves with the business from here on.
The really sort of the only exception would be the as we close and the outlook the.
Expectation that we will be parting out some aircraft the regional onto the won't be a cash usage and steel output from capex, the inventory and the fourth quarter. So we may take some aircraft and regional line and tear them down so that would end up increasing inventory and but at the same time, reducing fixed assets or no net cash. Thanks for the reminder of that rich.
Right, so that will be kind of a disposition effectively.
And then and a build and inventory in terms of what exactly the right did you say no no cash okay. Okay no cash.
Okay.
That's really helpful then linked to the.
The bigger picture here when you look at acquisition opportunities do.
Do you feel you're looking now at company size and but we're still looking at company sizes. The flying under the radar of other bigger private equity firms and where are you increasingly.
Kind of considering larger opportunities where competition from from PE firms might be increasing.
Oh.
That's a really good question for you.
It varies a lot of quarter to quarter, our real sweet spot in the sort of the 50 to 100 million dollar transaction and we do face private equity competition and some of those for where they're the best fit with our company, we're where we have a very high success rate and those areas. We continue to look at deals in the 100 million.
Dollar price range, and that's where the competition remains very high from private equity.
I wouldn't say that in the near term the number of transactions the number of companies big market and has declined but the quality of the opportunities. We see remain strong so out of and this team remained very active.
Now onto of opportunities that we're part way down the road with the.
The single biggest challenge in the Kobin environment, when acquisitions and the difficulty and traveling you just cant give the feel for management and do due diligence on the zone call.
And so we have tried to do as much of the work upfront from one of the big as we can but ultimately we've chosen to bite the bullet on occasionally send out of and his team out understanding that we're going to end up with our team quarantined when they come back.
But the we are so reliant on balance from where we buy companies because we leave from autonomous.
We need to do that work and to be honest, that's slowed our ability to close transactions.
Okay.
I assume maybe just to round off the question I mean, you know looking at your your performance here in the third quarter, which is good I mean, what what the company's done in Q2 and Q3 the liquidity position.
Like are you you must be feeling sort of very positive in terms of M&A over the next couple of years, just because you you know you'd looks so strong and while others and I'm sure. There are struggling and many locations. It just seems like the great recipes and.
The missing something or do you feel sort of very encouraging.
It's paying on I mean, I'm I've been doing these conference calls for 16, or 17 years and I'm not sure I got a quarter where.
We've had more challenges and more successes.
To be able to line that contract in Europe.
Has opened all kinds of new doors for Pal being able to vertically integrate Wi EPS into class is great for strength from that business and a lot of Ron.
The work the Daryl and his team of Don we of our bankers to make sure the we've got flexibility and liquidity of.
I think it speaks to the soft and the simple business plan and executed well of works and in all environments and.
I don't want the in any way of.
Underplay the tremendous efforts with the team has had to have to generate the stuff the tough times and the tough times and overhead by any stretch but the.
The last six months is really evidence the strength of this model and our ability to grow this business in all markets and then all of different economic times.
Okay and that's that's great. Thank you.
Your next question comes from the line as Steve Hansen with Raymond James. Please go ahead. Your line is now open.
Oh, Hey, Mike sorry, I couldn't resist kind of follow up here on your comments there on the European foothold and what that could mean I mean, how do we think about some of the opportunities.
That could be out there on the international speech and now that you have the base of operation.
For pals Maritimes around that.
For the you want to delve into now or is that maybe just give us the couple of comments on and what that opportunity might look like over three to five years.
Yes, I think what it does is the more we can expand our international footprint. The bigger of player. We are in the maritime surveillance business as a whole there is currently of.
The serial opportunity and Malaysia to provide sort.
The surveillance aircraft other is going to be a number of law for areas of the cells try and sort of area, whether it's Australia, New Zealand, Thailand, Japan and ensuing years and.
For us.
We vertically integrated pals business with the acquisition of current now the few years ago, who is an industry leader and the software and that helps all of these fancy sensors talk for one another and then downloaded from mentioned the governments.
And by the market acceptance of that by expanding ourselves through a foothold and Europe speaks well to our ability to further grow this business and because of an international leader.
And this business and its something that business, we really like because of the long term nature of the contracts.
And.
The emerging environment, I think also bodes well for that industry as a whole and had geopolitical tensions oh each.
Even the environmental and all the.
Our net globally, that's happening competing for natural resources budget tightening and just to name a few I think really drives a greater need for surveillance and surveillance data increased importance in that area governments looking for solutions that they can afford and so that's where our on demand and.
And the force multiplier of comes into play so Palo certainly elevated several years ago onto the and international stage. It continues to show line. That's the case and we certainly see is a tremendous growth area for us.
Okay. That's very helpful guys. Thanks.
And I'm not showing any further questions that are in the queue. At this time I will turn the call back over to Mr. pile of for closing comments.
I'd like to thank all of you for taking the time to listen to US today, it's a challenging time and the world and as a group we pulled together as a country and and then the people and I look forward to talking to you again next quarter, Steve say and take care of each other.
And ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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