Q3 2021 Alithya Group Inc Earnings Call
Okay.
Good morning, ladies and gentlemen, and welcome to Alicia third quarter fiscal 2021 results conference call.
I would now like to turn the meeting over to Rachel Andrews, Vice President Communications and marketing. Please go ahead Ms Sanders.
Thank you very much and good morning, everyone and thank you for joining us for the lithium third quarter of fiscal 'twenty 'twenty. One results conference call. The press release and MD&A with complete financial statements and related notes were issued earlier today and are posted on our website the.
The webcast presentation can also be found on our website in investors section prison.
Presenting this morning are Paul Raymond Elite, He is president and Chief Executive Officer, and Claude Thibault Chief Financial Officer. Following their comments, we will open the call for questions before we begin I would like to specify the this conference call is intended for the financial community also please be advised that this call will contain statements that are forward looking.
And subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Please refer to the risks and uncertainties section of our MD&A available on our website for more detail. Let me remind you that all figures expressed on today's call are in Canadian dollars, unless otherwise stated and be aware that we will refer to.
Certain indicators that are non <unk> measures. Please refer to our MD&A for more detail now I would like to turn the call over to Paul.
Thank you Rachel and good morning, everyone volume.
And the context of the third quarter operating environment, where our resiliency and agility are rewarded and I'm very pleased with the results delivered by our team.
One we generated revenue growth over 7% on a constant currency basis, we signed record bookings in the quarter as we continue bringing on new clients, while renewing and expanding our relationships with existing clients, who continue to place their trust and the Lithia.
Our optimism is also supported by the continued growth and demand for of digital transformation services.
Clients plan for a very different future and our recruiting successes confirm this.
Let's have a look at our operations beginning with Canada.
Okay.
I am pleased to report that we are maintaining sustained revenue growth across our Canadian operations I would like to draw your attention to two things. One this momentum is being fueled by our largest historical clients, where we are seeing growth both year over year and sequentially and too.
Our digital solution center is benefiting from the positive impacts of last year's acquisitions, we have assembled a strong and unified team that is dedicated to helping our clients transform their businesses driven by the vision of becoming a world class digital solution Center the.
The elite the away is now recognized approach, which when combined with our additional scale results and now being invited to participate and much larger projects.
Now turning to the United States the utilization rate is still lower year over year, but has improved significantly sequentially and is on a positive trend.
We are optimistic about the coming quarters and remain confident and our decision to maintain our very talented workforce to be ready to support this growing demand.
Our team and the U S have delivered a substantial number of Microsoft and Oracle enterprise solutions to customers and a variety of industries and geographies and in fact during the third quarter. Our teams ensured the implementation of 'twenty to ERP and CRM projects and successfully completed the implementation.
<unk> of more than 20, EPS and initiatives. This is a trend that will continue to have traction into the upcoming quarters and Europe. Our team has demonstrated its resilience and agility and largely offsetting the pandemic impact from a significant client through new bookings and new clients in fact, and the third quarter.
Revenues in Europe fell by less than $100000 compared with the same period last year.
And I'm very proud of our European team's ability to overcome and very challenging times.
In addition to accelerating growth this quarter represents a record in terms of bookings over the past few quarters, we have invested in our sales force and now reaping. The benefits. These benefits are clearly demonstrated by the growth of our order book, which provides us with visibility and momentum for the quarters ahead.
And the demand for our digital transformation services combined with our team's recognition is of high value partner by our clients has resulted and these record high bookings during the quarter.
Our new contracts total $126 1 million, which translate into a new book to Bill ratio of 186 for the quarter. This includes the previously announced renewal of our two year framework agreement with digital Bank group and the financial services sector.
These wins also helped validate our decision to accelerate investments by building out our sales infrastructure and capabilities.
Example, earlier this year, we implemented the Microsoft dynamics customer relationship management solution inside of the Lithia, which has enabled us to better serve our customers and is in place the support the growth in the years to come.
As we enter the last quarter of our fiscal year and look ahead. The fiscal 2022, I am optimistic about our team's ability to leverage this tailwind and convert it into profitable growth.
During our last call in November I told you. The Olevia had launched a massive recruit and campaign in order to attract the level of talent needed to deliver the contracts. We've signed today I'm pleased to inform you that our campaign is attracting top talent.
Over 175, new experts joined the <unk> family as full time employees and the third quarter. This will not slow down.
I'll now ask Claude to go over some of the financial highlights I will then close with comments on the mergers and acquisition of environment and strategic highlights before taking your questions.
Thank you Paul and good morning.
Let's review of certain Q3 highlights.
Revenues for the quarter increased by $4 4 million or six 6%.
The $76 million.
Driven by both our Canadian operations, and our U S operations the.
Assuming a constant U S dollar the overall increase would have been seven 1%.
More specifically revenues and Canada increased by $3 3 million or 9%.
$240 million.
While revenues in the U S increased by $1 $2 million or for 5% to $27 6 million.
And both cases, our two most recent acquisitions contributed to the reported the third part third quarter growth.
Which was offset by the negative impacts of Covid.
We are reporting that the revenues from our large historical Canadian clients are continuing to show stabilization and in certain cases growth.
Also contributing to the strength of the quarter.
Regarding them and thesis acquisition as it was completed on October one 2019, it no longer has an impact on year over year comparability.
I would also point out that our recent acquisitions on an aggregate basis are reporting solid organic growth.
Over the period before they joined the Lithia.
And lastly on the sequential basis, our consolidated revenues increased by $2 $2 million for three 2% compared to the second quarter.
Gross margin increased $200000 to $20 4 million.
For 28, 9% of revenues from $22 million or 34% of revenues last year.
As a percentage it is the decrease but it remains a solid performance, especially in the U S and France.
And the context of Covid of lower U S dollar and increasing cost and one large project.
It is also a notable sequential improvement of 160 points versus our recent second quarter.
SG&A expenses amounted to $24 million up $2 $7 million or 51%.
And from $17 $7 million last year.
This increase was primarily driven by the additional expenses related to our recent acquisitions.
As well as increased employee compensation.
When looking at adjusted SG&A expenses I E expenses before non recurring non operational and non cash elements.
The increase diminishes to $1 5 million or seven 5%.
Again, mainly explained by our two most recent acquisitions.
Increased head count.
As such this underlies careful expense management.
And reflects gradually and successfully implementing synergies and our combined operations.
Adjusted EBITDA amounted to $2 $3 million or three 2% of revenues.
Versus threep and $5 million or five 3% for the same period last year.
This variation is attributable to our increased revenues and gross margin.
Which was offset by increased SG&A.
As in previous quarters high amounts of noncash depreciation and amortization.
Makeup of the bulk of the quarter's accounting costs.
Now turning to our liquidity and financial position.
Net cash flow from operating activities amounted to $1 $1 million into third quarter.
Compared to $8 $1 million and the same period last year.
This variation was mainly attributable to the fact that last year had an unusual amount of positive change and noncash working capital.
Which did not reoccur in Q3 this year, even though the amount was still positive.
We ended the quarter again, and a solid financial position.
At the end of December we had $17 1 million of net bank borrowing.
Which is net of our $12 7 million and cash and restricted cash.
It is an improvement of $9 $8 million compared to a net bank debt of $26 $9 million at the end of March 'twenty and 'twenty.
We are currently and the process of applying for different given us of our U S PPP loans.
As of today, we have obtained confirmation from the small business administration.
For one of our of our five PPP loans, representing 475000 U S dollars.
Out of the total of $6 $3 million.
As indicated and our financial statements. This first forgiveness was recorded to the P&L during the third quarter.
For the remainder we have used the funds for qualifying expenses and otherwise comply with all relevant rules and regulations of the PPP program.
The PPP has been an important tool and implementing our decision to support our valuable work force. Despite the temporary COVID-19 decline and the U S.
However, there still can be no assurance that the company will obtain forgiveness and whole or and part for the remaining for PPP loans.
We are still continuing to benefit from the Canadian emergency wage subsidy program.
Albeit of a reduced level, considering the improving performance of our Canadian operations.
And we are monitoring the new rules to be confirmed over the coming weeks and months.
Overall, we are and of great financial situation.
And having used a small portion of our available senior credit facility on the net basis.
The navigate the current ongoing uncertainty.
And keep pursuing our business plans and objectives.
Going back to book.
Thank you Claude.
To summarize.
Our third quarter results showed revenue growth in Canada, and the U S as well as increased gross margins in the U S and Europe and the current context, our accelerating growth demonstrates the resiliency and agility of our business model as well as sustained demand for our high value services.
We have made progress and the execution of our three to five year strategic plan.
In terms of our response to Covid, we continue to make the right decisions in terms of protecting our people and our business for the long term.
I would like to take this opportunity to express my sincere thanks to all of the people for what they do day in and day out for our clients.
We have an amazing team and I'm extremely proud to represent them here today.
On the acquisition side, we continue our disciplined approach to actively pursue a number of acquisition opportunities and we remain committed to our strategic goal of eventually doubling the size of the company through a combination of organic growth and acquisitions.
Looking ahead for the next quarter, we are very optimistic despite the pandemic challenges that persist our teams continue to be instrumental and assisting our customers and their motivation and commitment are stronger than ever.
As I mentioned numerous times, our employees choose the lithia because they seek to work on exciting projects and wished to be owners of the company. They work for I am pleased to here on a regular basis that our team's value of their work because they help our clients transform and improve their businesses and.
In addition to this tremendous display of enthusiasm and the excellent feedback provided by our customers and teams our kpis and the other tracking tools are showing us promising results as well.
So before we go to questions I would like to leave you with my three takeaways from this past quarters.
Our revenues are increasing compared to the same period last year.
Secondly, we have continued to build our trusted partner reputation as demonstrated by our record bookings and finally the success of our recent hires is attribute to the lithia strong reputation and attraction ability and a tight labor environment.
<unk> will work for Saturday quoted and I will now be pleased to answer any questions you may have Michelle.
Thank you if anybody would like to ask a question. Please press star one on your telephone keypad and your first question will come from Paul steep Scotia Canon capital and Canada Youre line is open.
Good morning, Paul could you just maybe talk just about where youre seeing some of the bookings strength I guess relative to your Microsoft and Oracle practices, maybe start with the U S. And then we can maybe talk a little bit more of a Canada. Thanks.
Sure. Good morning, Paul. Thank you for the question, we're actually seeing the bookings across the board.
Over over one and.
Every region and every business unit has had a very strong quarter. So we're very very positive on both Microsoft and Oracle.
We've announced in the past quarter, a few wins, where the the fact that we now have both the EPS and ERP armed together, we've won and much larger projects than we have and the past and have been able to go after larger project debt in the past. So we're really seeing the benefits of.
The cross selling from our acquisitions of both the both on the Oracle front and the Microsoft side as well.
And then maybe just with regards to bidding for larger projects.
What sort of changed in terms of clients requirements. There, obviously, you're stepping up in terms of the size of resources you can apply.
But maybe is there anything noteworthy about what youre seeing from client demand, maybe the might be of change from the past given given the pandemic.
Yes, sure. So so one of them and we made public and I've talked about it before but I use it just because it's a very good example of other initiatives that we're working on today and it wasn't the more is the more is the project. So the more of the hospital group and the U S.
And we were not invited initially to bid on this because of our size.
After we completed the traverse and acquisition.
And combined with their health care expertise and ERP.
And with our EPS and expertise as well we put the two together and combined with our size we were able to go back and get included in the and the request for proposal, which we were included excluded before and were able to win that and beat some of the big for US added. So today, we can now bid on much larger projects. So one of them though.
We mentioned, we won one of the largest cities and Canada for the implementation of their ERP for the same reason.
Alone, we would not have been able to do it but our combined scale and the skills from from these acquisitions has positioned us for the US. So we can now go after these larger projects, which we could not go after before so that's very positive for us.
Great and maybe just the last one on the M&A environment and you talked about the fact that you remain active out there is it at a point now where we're sort of the year almost a year and did this new.
New semi normal.
Maybe you've seen some of the owners come back to you with now of different focus and maybe your willingness to reengage and revisit on price or what would you say the end markets looking like and I'll pass the line. Thanks guys.
Alright. Thank you. So there wasn't there was a pause for a while as I mentioned in the past and the first six months of the pandemic.
After that things restarted I think it also weeded out some of the people, we're just kind of testing the market.
As you know, we're very disciplined and our approach to M&A and so we don't like it.
We won't do stupid deals or <unk> or anything.
Anything and everything so it was a very discipline, we have a very good track record for our past acquisitions, and integrating them and cross selling and growing generating growth from these so we still have a very healthy funnel.
The idea is doing the right one of the right price.
And the.
And it's not for lack of opportunities there are many opportunities out there is just doing and the right way. So we're always working on those.
Thank you.
Thanks, Paul.
And the next question will come from Deepak of Paul's for from Stifel and G. M P.
And from Canada at your line is open.
Oh, Hey, guys. Good morning, Thanks for taking my questions.
Paul.
The follow up on on pulse Steve's question earlier, and you mentioned the travelers and I was wondering if you could talk a little bit more about Chavez and youre a year in the that acquisition now it's focused on health care and we're in the middle of the global pandemic, what are some of the opportunities and challenges.
And have come up since the pandemic started with travel.
And how are you guys.
Managing through those are taking advantage of those of business.
Thanks for the question of Deepak so.
I focused on that one, but I don't want to take away from the other acquisitions, we've done because they've all been very.
Accretive for us and as Claude mentioned, we're generating growth from these acquisitions as well.
And traverse and.
It was very specific to a certain a certain the market sector, which was healthcare, especially in the hospital.
And second in the U S and they were number one and what they were doing in terms of number of the implementation of Oracle cloud ERP and the health care, so bringing them onboard and combining that with our existing skills on the EPS side and our cloud practice and.
We're able to accelerate that so if you look at the growth they had before alone we've grown that.
Several fold since they've joined us because we're going to add it together the other the other thing that is useful as now with that skill set we can also bid and Canada on the on large projects, where we have relationships and presence where they did not because they were based in the U S and focus and the U S. So we see many.
And many opportunities there for cross selling boat and geographically and and complimentary sectors. So healthcare.
And as you all are aware had the changed dramatically in the past year with the cloud based services and telehealth and all of these other things so moving to the cloud for their internal platforms is critical so we haven't seen an acceleration there I don't think this is going to slow down its not going to go away. After the pandemic. So we see we see a tremendous potential for <unk>.
There and and the the.
Similar sectors. So the expertise we've developed there we can actually.
The cross sell into the public sector. So for example.
The city or universities and.
The higher Ed type the type of environment. So so we see we see a lot of opportunities there and we're very happy with the those acquisition.
Excellent.
To leave out.
Husky. The then maybe I'll ask you about that and all they have.
Our QA software and you have some IP there. So I'm just wondering if you can give us a sense of of how of that.
How are you guys have been able to leverage that IP to drive.
Higher IP sales and margin for the business.
Great. Thank you. So yes, we're very happy with that acquisition as well and generating some state and the significant growth there as well and two ways. One day had complimentary clients, where we were not present. So now we're cross selling our other services into those customers and from our perspective is the IP we're leveraged.
And across our ERP practices, because the view the beauty of the cloud ERP systems is that Youre always up to date and on the latest version of the challenge for the customers as you have to upgrade every quarter to the latest version whenever you do that there are significant testing involved to make sure you didn't break anything with the.
With the upgrade in the past customers would do this manually.
With the with our solution. We can now automate this and then the beauty of what we've done we've talked about our investments we've done and our infrastructure over over the past couple of years debt to be able to support the larger company, but we rolled out Oracle cloud internally as our ERP, we have rolled out Microsoft CRM and <unk>.
And as part of our CRM. So we actually use the tools that we sell to our customers. So we can actually use our internal environment as the Testbed for these solutions that we then can get and cross sell to the customers. So we'd ask either we developed the new solution to be able to the.
And the roll it into our Oracle proposals as an example, so that when the upgrades come through and their clients need the upgrade every quarter that we now have a solution that we can sell to every customer at piggybacked on our ERP projects that generate future revenue and license sales on the on this IP. So it's been very very comparable.
The entry.
Excellent and it sounded like the dogs or even the talks of it I guess that's the expression.
And then my last question guys just on the M&A side I know in the past you've kind of of <unk>.
The explored of considered areas like.
And broader ERP like SAP.
Consulting or integration or even.
New areas like supply chain.
Where does that fall and the priority list or what does that look like in terms of your pipeline for M&A and diversification.
Yes, we're looking at the all of the above of the packaged good question, we tried to be.
We tried not to disclose too much because it could impact our draw some competition for some of the targets that we're looking at.
But the.
Yes, I'd say all of the above we like we like acquisitions that bring us a new skill set and complementary skill set or a new a new industry.
That is also complementary.
So again, if I look at the last three that we've done traverse and what's the position us and health care and Oracle cloud.
<unk> was the position us on that and the testing and the IP.
The mattress this was to be able to cross sell of Iot type.
Projects and machine learning across all of our customers. So we look for these best of breed the.
And the companies out there that would be very complementary that would be easy to the bolt on and we also are looking for transformational ones as well I mean, we've done the edgewater and the past there's no reason why we couldn't do something else. The same sizes edgewater. So we look for those as well.
Okay, well. Thank you for taking my questions I appreciate the extra color on them.
Ill pass the line.
Thank you Deepak.
And our next question will come from Gavin Fairweather from Mack and Canada. Your line is open.
Good morning.
Good morning, Kevin.
I just wanted to dig a little bit into the.
And to the bookings you talked to the.
The book to Bill of being positive.
Across the region, which is great to hear I guess, just specifically and the U S. Can you talk about whether project kicking off.
And as you would expect and and going law.
Sure. So so our book to Bill as I said is it was very good and all of our geographies and.
And all of our practices.
Yeah.
We have seen in the U S and Claude mentioned at the sequential growth and our billable hours and utilization and the U S. As you know last year the.
And the second quarter.
Were hit by the slowdown of new projects starting up so what this is and what this tells US because of these bookings and Q3, we know that the next quarters.
Things are only going to improve because of the utilization goes up.
As the as these new bookings come in and of these projects start up. So that's why we are very <unk>.
Happy with the momentum and the visibility we have for the coming quarters because of bookings like path as you know and the U S. We need to replenish those projects.
A lot more than in Canada, because in Canada, we have a lot of recurring business from existing customers and the U S. We have to sell new customers new projects. All the time, so whenever you see that it's very encouraging and promising for the quarters ahead.
Which also which also supports the decision we made the hang onto our people because we need them now so we're very happy with that decision.
Yeah for sure and maybe just to follow on on that can you talk about how much slack.
Or kind of era of utilization there would be within that U S business.
Historically, and you were probably doing around $30 million on the and trucking business kind of <unk>.
Top line and true obviously added to that so could we think about there being capacity and <unk> and the business to move accordingly, billings and maybe a 49 a quarter.
So and so if you look at the run rate, we had pre COVID-19 and the U S. We hung on to our people the and the key people we needed to deliver projects, we've hung onto so theres no reason and if the business is there that we can't get back to those levels with the existing work force, we have and the U S. We always need to replenish because you do have of turnover.
There's no reason, we can't get to those levels.
Okay, Great and then just lastly for me could you just.
Talk a bit more broadly about some of the investments, you're making and the sales force.
And maybe.
Talk about the <unk>.
<unk> of the sales team now how many people and Youre looking to add and then kind of the timeframe that it takes the produce sales given the ramp up towards the expected productivity.
So we have invested and.
And growing our sales force and transforming it.
As you know of selling larger projects is very different than selling the the smaller stuff. So we've invested in and more strategic sales, we've invested and our platform and we also invested and recruiting.
As you can imagine back in the back in April last year, when everybody was freezing everything.
And we werent hiring much.
And the past quarter, we hired a 175 new employees. So you need the you need the ramp up the recruiting team for that we had a very good base. So we actually invested and our recruiting team as well and we still have several hundred open positions on new projects that we and we're going after so it was very important for us to invest and those two parts because they go.
Together.
Okay I'll pass along.
Alright, Thank you Kevin.
And our next question comes from Suzanne and shook them or from eight capital from Canada and your line is open.
Hi, Good morning, guys, it's actually and here on for Susan Good morning.
And I just wanted to thanks.
I just wanted to dig a bit deeper and the overall spending environment and you touched on it a little bit the floor, but whats the rolling Lockdowns and North America.
What are you seeing and from in terms of the clients in terms of their spending priorities are they getting more comfortable in this environment and and generally how do you see that playing out for the rest of calendar 2021.
Thank you for the question so in terms of the or the demand side.
As you can imagine everybody now realize that this thing is going to be around for a while.
So the cloud transformation type projects have accelerated and we have more demand across the board that we're seeing for that so we we.
From where we're at in terms of our strategy, we're very happy with where we're going how we're positioned and if you look at any kind of the statistics out there, whether it's from gartner or IDC or any of these other organizations youll see that the spend.
On the cloud based environments, our transformation towards cloud based environment and accelerating and we're seeing this and very large.
Customers as well, which is which is very positive. So we don't see any sign of that slowing down I think one of our advantages is the relationships that we have in place. So when these customers are doing this and theyre not going for the lowest bidder and they're not they're not looking for you know what I would call staffing type organizations.
They are looking for organizations that provide value added service that can guide them that can help plan, where they need to go debt can.
And drive those projects and for them and accompany them and and that's where we're at today. So that's why we're very well positioned that's why we're seeing the kind of growth numbers that we're seeing now which is what we expected and we said in the past that as soon as.
People getting used for this new environment, we thought we had the right approach and the right solutions and it's paying off today. So that's very positive.
I don't think this is going to slow down I think based on what we're seeing from even the solution providers every number that we see for Microsoft and Oracle from some of the other enterprise solutions.
And they're all showing significant growth and their cloud based solutions sales.
We focused on very key industries, where we want it to be number one and number two.
And that way, we know we're always on the list.
We always gonna get calls when somebody is looking at a solution.
And on the Microsoft side, we again made the the top 1% so put that and perspective, Microsoft has thousands of partner integrators. We're I mean, we're and the top two or three and North America. So it's.
So when something happens on the Microsoft side and Agrifood R. R.
And in the industries, where we specialize we get a call when something happens and the health care area, we get a call out and the Oracle side. So these things and positioned us really well and it's a big differentiator for us. So so we see that accelerating and that's why the acquisitions that we're looking at are complementary to that.
And the people who want of cell and joined with US is because they see the potential upside of joining an organization because we have the track record we can havent talked to the previous acquisitions and they can testify to the benefits. They saw of joining the company like ours. So so that's why we put all of those things together and we really believe we have the right strategy.
G for this time and proposed Covid as well.
Okay. That's great. Thank you very much for the color I'll pass the line.
Thank you Hi, Michelle we'll have time to take one last question. Thank you.
Okay. Sir your next question and then will come from <unk>.
Is that the from echelon and your line is open.
Hello, and good morning, and thanks for taking my questions.
And good morning, MRO up and good.
And so just a follow up I am pleasantly surprised to see your sales up sequentially during the seasonally weak quarter and I'd just like the whole net all of the dynamics.
You mentioned and CAD, you've got large accounts coming back and a good number of projects across all geographies.
Just wondering do you feel like this is just like pent up demand with projects like coming back that were paused.
I E. How sustainable is the and your view.
Thanks for the question and Ammar.
And there might be a little bit of that the amarin in terms of pent up demand, but the what.
What we're seeing is that the customers at the beginning of the pandemic Werent too sure. How long. This thing was going to last and what they had to do I think as people realize that this is going to be the new normal with people working remotely is not going to go away.
Theres systems need to adapt to that new reality, whether it's for cyber security reasons, giving people access and the secure fashion for the systems. So all of these things combine all of these companies are trying to become more agile more cloud based.
And more and more in tune with where the industry is going and where they need to be for their employees and for their own customers. So what we're seeing is not.
And I believe is just pent up demand, but we are seeing is at.
And the transformation and how our clients and customers, who want to work and want and how they want to work and the future. So if I look at the type of projects. We're doing I don't think of those are going to slow down based on what we're seeing and.
And if you'll allow me just one other quick one.
On the gross margin side and your prepared remarks, Claude you mentioned the increased costs.
And one large projects and you give us the sense of when the projects sort of tailing off and how material.
And the impact on the margins are from that specific project because of the case, where we would expect to see of good bump and margins post completion.
Yeah I'll comment on the project.
And the Amarin and I'll, let the Clos and give you a bit of color and the numbers after so.
It's a very specific project, we have hundreds of projects on the go all the time by the way. So this is one specific project, where we're helping and a very large and important customer of ours, where we do many other projects as well and building out some IP. So of some new intellectual property of something they're using internally and something that they want to sell.
There is the R&D involved so it's always the always interesting when you do that and and this particular case once the systems in place, we actually get royalties from the the sales of the customer is doing for the future. So we believe it's a good investment.
We are we know where the problem is and it's interesting because if you take that project out of our numbers and the the.
Gross margins in Canada, and overall would improve and look very much in line with last year. So.
We know where the problem is we were fixing it and we're confident the.
The payback, we're going to have on that project and the future of closed I don't think that will give more color on the numbers.
We decided not to provide specific numbers, although what you just said Paul.
By triangulation and you can figure out is the sizable amount. That's why we were singling out and our disclosure this quarter.
In terms of the future by by definition, the accounting rules make it so that we would need to book the whole anticipated loss and this past quarter.
So as we stand today, we are not expecting.
Significant impacts going forward from that project.
Is what I would answer.
Great that's fantastic color. Thanks.
Yes.
Thanks ever.
Okay.
And so I'll ask we have no further questions. Thank you I turn the call back over to the presenters for closing remarks.
Thank you Michelle and thank you everybody for being with US today before we go as usual I would like to say thank you to all of our first responders and health care workers on the frontline fighting to keep us safe from this pandemic, we will never be able to recognize them enough. So thanks, again and take care of and the stay safe.
Thank you everyone and this will conclude today's conference call you may now disconnect.
Okay.