Q4 2020 North American Construction Group Ltd Earnings Call
Yeah.
Good morning, ladies and gentlemen, welcome to the North American Construction group earnings call for the fourth quarter and year ended December 31, and 2020 at this time all participants are in listen only mode. Following management's prepared remarks, there will be and opportunity for analysts and shareholders and bondholders to ask questions. The media.
And May monitor best for call in a listen only mode. They are free to quote any member of management, but they are asked not to quote remarks from any other participants without that participants permission. The company wishes to confirm that today's comments contain forward looking information and that actual results could differ materially from a conclusion forecast.
Our projections contained and that forward looking information.
Certain material factors or assumptions were applied in drawing conclusions or in making forecast or projections that are reflected in the forward looking information additional information about those material factors is contained and the company's most recent management's discussion and analysis, which is available on SEDAR and Edgar as well as the company's website.
<unk> and ACG Dot C. I I will now turn the conference over to Martin Ferron Executive Chairman.
Thanks, Danzy and good morning to everyone.
Well after almost 25 years and doing quarterly and annual earnings call.
This will be my last one.
It could not be happier with our great team of employees Mark My final quarter as CEO with solid performance.
In particular, the impressively met or exceeded all of our important goals in relation to safety and free cash flow and to publish the condition.
2020 was a really challenging year and.
And I'm very proud that we were one of very few companies, so and control of our business.
To reset and deep financial guidance, and and operating environment dominated by the COVID-19 pandemic.
With that brief introduction and I will hop on these quarterly calls over to Joe.
But we will remain on today to answer any questions directed at me.
Beyond that I won't be actively supporting and get this team for the balance of the year.
Jason will start us off here today with financials, and then Joe will provide his outlook for the future.
Thanks for those comments Martin and good morning, everyone.
Given our call here today I'll start off on the safety content on slide five as is often stated here in North American no financial outcome is worth celebrating if our safety culture, our safety performance has been compromised.
Although yet again, we did achieve the industry benchmark for safety excellence for the sixth year in a row, we did see an uptick and incident frequency and 2020 and are refocusing our efforts as the macro environment and operating protocol stabilize.
As Joe will touch on later with our 2021 priorities, we will be doing everything and our power and make sure everyone gets home safe.
Slide six to 11.
I'll.
Provide a summarized view of 'twenty and 'twenty.
But as with past protocol. These prepared remarks will focus on the quarter to avoid repeating commentary from previous quarters.
And as such we'll begin the financial review on Slide 12.
Revenue for the quarter of $137 million was $53 million below last year's Q4, as we continue to recover from the widespread impacts of COVID-19.
The majority of the $53 million variance relates to the strong quarter. We had in 2019 at the Fort Hills mine prior to their decision to temporarily reduce the operating capacity at that mine.
The year over year variance represents 28% decline in revenue.
But is trending positively when compared to the negative 60% and negative 43% posted in Q2 and Q3 of this year.
The quarter enjoyed fairly standard fall and winter weather conditions and the revenue achieved was largely as expected.
The resiliency of the oil Sands mines remained strong and has access restrictions and safety protocols become more routine and predictable we will continue to see our productive operating hours and utilization utilization increase.
Joel will explain later and 58% operating utilization achieved in Q4 is trending and the right direction from the low of 24% and Q2.
While of course critical to our results reported revenue inherently lends itself to the programs, where we directly provide our own heavy equipment and where we provide the labor force.
Equity accounted interest being primarily new net as well as our external maintenance and mine management contracts do not factor presently into the reported revenue figure, but are strong contributors to EBITDA and particularly drive to 35% of adjusted EBIT that we generated from outside.
And the Fort Mcmurray region in 2012.
Furthermore, our strategic contribution of heavy equipment to these joint ventures is also increasingly becoming an important part of our business.
Therefore, we expect our reporting to adapt slightly in Q1, 'twenty and 'twenty as our diversification efforts continue and we look to accurately represent this to the readers of our financial statements.
Moving back to reported results gross profit margin of 17% reflected a solid operational quarter as mentioned by Martin and his opening comments.
And the key drivers of the margin, where and effective utilization of our fleet as well as disciplined cost constraints that remain in place.
Canada emergency wage subsidy program continued to support margins and I'll touch on that later.
With regards to cost constraints Q4 was particularly impacted and are positively by lower third party costs, which has been a focus of ours.
Lastly margin was positively impacted by the mine management contracts, which provides strong returns.
These positives in the quarter were offset by continued cost impacts at the Millennium mine as we continue to stabilize the equipment and labor performance of the complex operating conditions and the increasingly large heavy equipment fleet, we have at that mine.
Included in gross profit margin was depreciation.
Which was 19% of revenue for the quarter.
The depreciation percentage in Q4 was higher.
And then our expected rate given the continued higher proportion of larger equipment operated when compared to a typical three months period over the past few years.
When stepping back and looking at the full very unique year of 2020 depreciation of 18% of revenue was higher than our historical run rate primarily due to this higher proportion of larger or ultra class equipment operated when compared to a typical fleet, which includes smaller support equipment.
And straight line depreciation on fixed assets during the low revenue quarters of Q2 and Q3 also contributed to the percentage increase.
And lastly, the inefficiencies caused by poor haul road conditions, particularly in Q3 resulted in higher than usual operating equipment hours, which of course drives depreciation.
General and administrative expenses and the quarter were $6 3 million equivalent to four 6% of revenue.
This spending percentage was consistent with the trend in 2019 and was achieved through continued cost discipline and the complete halt and late Q1 of all discretionary and nonessential spending and has remained in place.
And.
Adjusted EBITDA of $46 $2 million was.
And with Q4 2019 under as we all know a very different macro environment.
Adjusted earnings for the quarter of 36.
It was consistent to Q4, 2019, which generated 38.
Interest specifically continues to trend nicely as the three 7% rate and the $4 $2 million cash expense and the quarter compares favorably to the four 8% and the $5 million incurred last year.
We continue to benefit from both reductions and posted rates as well as competitive.
Equipment financing.
We provide slide 13, one more time for clarity to close out 2020, and as disclosed in detail and our financial statements net income for the quarter includes $6 $6 million of wage and salary subsidies received under the Canada emergency wage subsidy program.
Consistent with past practice. These subsidies are presented with they're correlated employee expenses and project and equipment costs and G&A expenses.
These subsidies reimbursed us for a portion of the wages, we paid and greatly aided our efforts and retaining workforce.
As noted in the slide the program reimbursed us for approximately 20% of the all in employee costs, which in turn allowed us to maintain and 20% of the head count level, we may have otherwise had to reduce either temporarily or permanently.
From our perspective.
The program has worked effectively and positions us well as we move forward here into 2021.
Moving to slide 14, I will summarize our cash flow.
Net cash provided by operations of $63 million was produced by the business and includes a positive impact of $18 million of working capital changes that bolstered free cash flow.
Similar to 2019 cash from our joint ventures was collected in Q4 and was a primary driver in this working capital change.
Sustaining capital of $26 $7 million was dedicated.
<unk> two major component replacement and the heavy equipment fleet required for the stronger than expected recovery as.
As indicated this spending level was required earlier than anticipated.
As we prepared not only for the strong finish to Q4, but also and.
And preparation for the full year of 2021.
Moving to our balance sheet on slide 15.
Liquidity of $148 million reflects our upside Upsized credit facility that was extended on October eight.
EBITDA generation and positive changes in working capital had the correlated and desired effect of reducing our debt levels.
On a trailing 12 month basis, our senior leverage ratio.
And as calculated by our credit facility agreement was 2.0 times.
Which is well below our covenant of 3.0 and reflects our intentional capital allocation in Q4.
Yes.
To close out the financial review on Slide 15, I'll briefly touch on our current debt structure.
Three year extension in October of our $325 million credit facility provides the stability and low cost financing that we require over the next three years.
As the slide highlights we don't have required financing decision to make until 2023.
And with those financial comments and I'll pass the call over to Joe.
Thanks, Jason.
On slide 18, you.
You'll find our operational priorities for 2021.
This slide summarizes our 2021 objectives and I will walk through the objectives of at a high level.
And in some brief detail and the slides to follow and finish up with our outlook, which adds a spoiler alert remains unchanged from what was presented back in October.
Our number one priority as always is the health and safety of our work force, we continue to maintain rigor and our Covid protocols and have made these are part of our standard safe work procedures, including social distancing masks and other personal protective equipment.
Likewise, we're always looking to target zero harm and all areas of the business and as outlined in our recently released sustainability report, we will prioritize the progress and achievements of our ESG goals.
Our equipment utilization priority linked closely to our diversification objective as we seek gains and utilization of the smaller and of the fleet, which is uncommitted and underutilized and oil sands.
The diversification objective is reflected and item four while we expect to continue the momentum of synergies of our new group of companies as evidenced by the recent contract minute, the Ontario Goldmine.
With this diversification focus we expect to continue to meet our oil sands customer needs with high utilization of our largely while at the same time and proven and utilization of smaller fleet outside of oil sands and reduce the consolidation risk by having more customers and more commodity markets and geographic regions.
We will also continue to preserve pursue diversification and low capital intensity growth areas, such as the U S mine management contracts and major earthworks infrastructure projects.
These contracts generally have fleets provided and as such don't affect our utilization calculations, but they do offer low to no capital entry and diversification into other commodities and regions.
And.
The operational priority items, three and five relate to our continued push to vertically integrate equipment maintenance and expand on our external maintenance services.
We will be expanding our action and maintenance facility with construction starting in late March and we will complete the expansion and early Q4.
The expansion includes four new shop base, and new cold storage building and a full rooftop solar array, which we estimate will supply about 15% of electrical demand.
This expansion will also reduce our demand on maintenance labor and the field and provide more external maintenance service capacity.
Last but not least on this slide as items six where we will continue to keep tight controls on our SG&A spend and ensure our administrative costs are necessary effective and efficient.
Moving on to slide 19.
This is a new slide in our deck and shows our quarterly fleet utilization going back to 2015.
Couple of items I would like to point out here.
And the Q1 2015 to Q4 2018 period, you'll notice the high variance between quarters with consistent and I usage and Q1 generally followed by Q4 than Q3, and lastly by Q2, which is most impacted by spring breakup and was quite exaggerated to say, the least and too.
16 with the wildfires.
As we progressed our strategy made the competitive fleet purchase and acquired the new and interest in late 2018, followed by the used Ultra class fleet purchase we have been able to continue to post operating utilization above the positive trend line for all of 2019 and into 2000 Q.
Q1 2020.
And 2019, we still add a bit of a Q2 Q3 trough, but not nearly as exaggerated as previous years.
Obviously, the 2020 COVID-19 impacts totally blew us off course, but youll see that we began to get back to normal and Q4, and we expect to get back to the 2019 pattern going forward with high utilization in Q1, and the more consistent utilization throughout the year.
We also believe our increasing diversification and counter cyclical summer work such as the recent award of the Ontario Gold mine.
We'll continue to lessen the Q2 and Q3 troughs and provide more consistent and overall improved fleet utilization.
Simply put our goal is to keep that trend line sloping up and keep putting quarterly data near or above that line.
Flipping to slide 20, and this is also a new slide in our deck and one that showcases why we push so hard for virtu vertical integration and our maintenance business.
And you can see the component manufacturing vendor partnerships, we have developed over the last several years have enabled us to significantly lower component costs.
A couple of items and note that you can't see and the simple quantitative price comparison, one is that the partnerships. We have today actually have better warranty and lower risk than our previous suppliers.
Secondly, these lower cost lower risk components from our partnerships.
And bind with our highly scaled and cost effective shop labor are the main ingredients and how we can do hold machine second life rebuilds for about half the new replacement cost.
And the economics are pretty simple to figure out which is why we continue to add maintenance capacity such as a component Remanufacturing, we completed last year and the expansion to the main shop, we will do this year.
With these facilities and our strong resource industry, we are confident and our external maintenance building business will rebound back to the level, we're at and 2019 and continue building.
These next two slides 21 and 'twenty two.
Highlight the two main areas that drive our confidence and our diversification success and have led to the recent increase in EBIT target from 40% to 50% by the end of 'twenty two 2022.
And the bid pipeline slide 22 shows the increasing demand and the expanding opportunities and other resources and geographic regions, where commodity prices are as strong as we've seen and many years.
And the contracted demand we are seeing isn't just for new mines, but we're also seeing several mine sites looking to contract mine satellite deposits to fill excess processing capacity.
What's exciting about these type of projects and is that they are generally have a high success rate and that the economics for incremental production are usually compelling and barriers to expand existing sites are lower than establishing new mines.
So and summarizing my long winded story demand and other resource areas is high and we expect that demand to remain high.
The second part of the story highlighted on slide 21 is what drives our confidence that we will win and are expected share of this work.
Obviously, the recent award door JV of known as the most tangible confidence builder.
Similarly, we have a major earthworks projects at both Nona and NAC Gee had individually expressed interest and bidding and the client recently suggested our combined team would be seen as a stronger ship metal.
So although less tangible that feedback from clients likewise reinforces our confidence.
Lastly, but probably most importantly, we simply believe and our strategy and that our safe low cost experienced contractor with strong indigenous partnerships and extensive and well maintained fleet and a commitment to sustainability, we will have a significant competitive advantage to win these tenders.
Moving on to the next slide which is also a new slide and the deck.
This slide highlights our recently released inaugural sustainability report.
This slide includes our three key focus areas and provides a new update on our shop expansion solar usage, but I would recommend reading the full sustainability report to all of our stakeholders and.
And in future quarters, Dax will use this slide to show the progress we have made towards our sustainability goals.
And so kind of like the idea of where we highlight safety and our first slide and and on sustainability before giving the outlook, which I will now do on slide 24.
And as briefly mentioned earlier, our outlook remains as presented in October and won't revisit the details, but I'd highlight that the 70 million midpoint for this year as expected free cash flow is equal to about 20% of our net debt of $386 million and has a similar percentage of our current market cap of 300.
$60 million.
Therefore debt reduction and share buybacks are likely to be heightened list of capital allocation priorities with growth capital being allocated to the highly accretive shop expansion.
I'll now hand, the call back to kenzie for the Q&A session.
Thank you to ask a question. Please press star one on your Touchtone phone if you wish to withdraw your question you can press the pound sign once you have completed your questions and would like to return to the queue. Please press star one after a brief pause we will begin the Q&A section.
Our first question comes from the line of Aaron Macneil with TD Securities. Please go ahead. Your line is open.
Hey, good morning, everybody, Joe It looks like you've introduced it 2021 revenue diversification goal and bumped your goal in 2022.
And I guess I'm wondering can you hit these targets and what you have.
And hand or do these charges implied new contract awards asked the question because it looks like your bid pipeline only starts to contemplate diversified project in 'twenty and 'twenty, two and beyond that would be slide 'twenty to 'twenty two and your newly introduced 2021 figure is higher than your old 2022 figure if that makes sense.
And I'm, just trying to get a sense of what might have changed over the last quarter given the.
The overall 2021 guidance is essentially the same.
Yeah.
And then what you see for 2021 as well.
What we have and our and our forecasting right now so there is no anticipation and that 45 of being awarded anything new or quickly.
And and.
And it's the increased to 50% and 2022 is based on our expectation of winning some of those external.
Or.
Other area of awards that we have highlighted on that bidding pipeline page.
Okay. Maybe you can also walk us through how these diversified projects in the bid pipeline will ultimately be fulfilled you mentioned, the new joint bid and your prepared remarks, just a minute ago, but.
I guess I've got a couple of questions first will the majority of these projects flow through new diner growth.
And we're through a new non north American joint venture.
And then if that's the case do the project sizes contemplated on the slide.
Are they total revenues for the project or just North American share and then second my understanding is that you're essentially fully committed on your.
Our current owned fleet, so how do you plan to finance or or or bid or operate these new projects.
There was a lot of questions and I'll try and follow up and so.
And the bullets on the on the bid pipeline.
Catch me, if I Miss any of them.
So those are representative of our share or our share of nona.
I'd say roughly a third of them are what known it looks at individually.
There's only one or two of those that have us looking at together with known and the rest of them are by ourselves or with other partners. So we do have other partners and especially and the larger infrastructure work.
And in that and then.
As far as how we fulfill these most of the infrastructure and mine management work has their own fleets as I mentioned before.
In general the commodity areas, we look at B and iron ore gold diamonds and coal.
And in other areas and other regions are predominantly our smaller fleet, which kind of 150 ton trucks and smaller.
And those are have been underutilized.
And roughly 160 of those size trucks alone and they have been significantly underutilized and oil sands over the last several years.
So.
Likely would be some add ons.
Here and there, but we don't expect.
A significant amount of capital to pursue any of these at this point.
The bid pipeline.
They don't I'll, even go forward these jobs, they get deferred and the major infrastructure job. We're bidding we actually started it four years ago and it's pushed back twice so.
They have different levels of success and going forward. They may run into permitting hurdles, but one of the things that I spoke to and the and the presentation that I was excited about is it.
The satellite mining and resources.
And other resource areas.
When you have and existing mine site, where permitting is already in place and they want to do and expansion or do you have an underground mine that has a surface deposit that day contract mine those have great success going forward because they really have very low barriers the land disturbance as usually in place so.
We're confident that.
The normal amount will flow forward through out of this but that also there'll be a little extra because of those type of bids that are have satellite deposits and that I can.
From a mile off air and or did I Miss anything.
No that's great. That's perfect. So that's all from me Martin as you know I used to cover this company before he took the helm and.
And the way you have transformed this company is nothing short of incredible. So wishing you all the best and the future and Joe Congrats again on the new gig. So that's all from me I'll turn it over.
Thanks, Mike.
Our next question comes from the line of Tim Monticello with ATV capital markets. Please go ahead. Your line is open.
Hey, good morning, everyone, maybe I'll follow up on Aaron's question first and I'm just curious on.
And those satellite.
Mind, you know opportunities.
And what percentage of the bid book would be.
And we'd be those types of opportunities and we would also be.
The lower capital intensity line operating contracts.
And I'd say, we're somewhere and.
Theres, probably four or $500 million of that we have and that we're looking at right now that our satellite minds of existing operations.
And they're more of a near term projects.
Okay, that's great.
And then <unk>.
In past quarters, I guess through the downturn and it seemed like there was a number of projects and the oil sands that had been deferred out of 2020 and into 'twenty and 'twenty, one and obviously commodity prices are a lot more constructive today than they were.
And most of the year.
Yes.
So are you starting to see those opportunities return.
Yeah.
We haven't seen a lot right now Tim but that's not unusual we usually don't see summer construction tenders until.
Late February and even up to and April.
Because they are usually made June starts so depending on the scope and that all.
And we don't hear about much until until that kind of timeframe and a Q1 beginning of Q2.
Okay, I guess, the upper end of your guidance for 2021 would that contemplate.
And that work returning this year.
Not to any significant increase of what we've seen in the past it's pretty much based on.
Normalized 2019.
Okay got it.
And then just last one from me and you guys talked a little bit about the actress and expansion. This year is that contemplated within the $5 million to $10 million growth Capex.
Yes.
And it's right in the middle of that I'd say.
Okay.
If you guys win some of these other awards do you think there is upside to that Capex guidance.
Guidance for the year.
Yes, there is certainly if there is a.
Some of these major bids and required.
They might have some.
And kind of some support equipment or maybe a unique piece of equipment that's associated with it. So yes, there could be but it would also be associated with an increase in revenue.
Right right Okay great.
It's a fantastic color I appreciate it and turn it back.
Our next question comes from the line of Brian <unk> with Raymond James. Please go ahead. Your line is open.
Thanks, Good morning, everybody.
Just on the component rebuild facility.
And the presentation, I guess really illustrates well the value add that you're achieving.
With that initiative.
Are you now operating at full capacity and facilities and are the savings and <unk>.
Average component costs exceeding your expectations.
We are operating at our full capacity, what we expect it to and we've ramped up from when we started in February of last year.
And it still has we have more capacity if we wanted to put through it but we'd have to get more external.
Request, if we wanted to push more through.
And.
As far as it is what it is saving us and what its doing I think it's.
<unk> met or exceeded those expectations.
Okay. Good thanks, and then.
I guess now is that we hopefully have the worst of the pandemic behind US are you starting to see those those M&A channels open up.
Is that something that's on the radar right now.
And we're seeing some interest and activity obviously, it's very hard to do any.
Thing when and when it deals with the hard assets like ours and traveling to see things are putting their hands on them is pretty important so.
I think we've seen some smaller stuff and we keep our eyes open and we've always done for something that's accretive and interesting.
And and fits kind of our diversification strategy.
Okay. Thanks.
That's it for me and congrats Martin on the retirement and and Joe with the new equipment.
Thanks, Brian.
Our next question comes from the line of Maxim <unk> with National Bank Financial. Please go ahead. Your line is open.
Hi, good morning.
Alright.
And I was wondering going back to the shop expansion is it possible to talk a little bit about that.
How you think about payback terms.
And on these investments in terms of I.
And I don't know exact percentages like otherwise see or time horizons, and maybe any color and that's on that front.
That's the compelling economics, and I was talking about Max and this is very similar to what we saw and our Remanufacturing facility when we built it.
And the paybacks are like three years.
And so it's pretty fast and I think because of the.
We've had great success, and filling our shop and getting skilled maintenance labor here to increase the hours and the throughput here. So it's.
We have high confidence, we will achieve that three year payback and this expansion.
Yes, absolutely.
Helpful and then and do you mind, maybe just coming commenting.
Around.
The ramp up on the gold project and how that's going.
But you have conversations with the client.
And any sort of its early issues.
And your learnings and maybe any color on that please.
As far as the Ontario volt minded that we've talking about months, yes, exactly yes.
I think typical of most ramp ups, we've seen and especially.
And given the parameters with with Covid and that and Theres always a little disruption upfront.
Getting camp set up getting lay down areas, you know theres always a bit of us and our scheduling, but nothing unusual and when do you expect.
It wasn't high activity levels upfront, so the real high activity levels and startup and kind of the April may timeframe.
So we still fully expect to be hitting those project milestones at the same time as we add originally.
Okay. Okay. That's helpful and do you mind, maybe just commenting a little bit around.
And just thinking about this.
Winter low.
Pro brand versus maybe lost share.
Our declines kind of back to sort of almost.
The same level of production activity levels.
And then 15% below maybe just any grand.
Granular directional color you might promote and lunch.
And I'd say.
Our level of activity.
Probably almost.
Almost the same or slightly maybe slightly lower.
But not much I would say, it's very similar to what we saw last year I think the overall marketplace. The small truck side is about the same day big truck marketplaces, less but we have more of it.
Okay. So is it the way that we should be thinking about this is greater market share is that.
Is that how we see this.
I think there's probably a little less overall being done.
Specially on the big dirt site and the overburden, but we're doing more of that so our numbers are.
Very slimmer slightly below I would say.
Alright and.
Obviously, given the fact that Sam.
And the underlying commodity rebounded pretty pretty aggressively.
Seeing any body language changes from the customer perspective.
Desire to outsource to a greater extent or maybe not just again, maybe anything from from that perspective.
Yeah, I haven't had a lot of tangible feedback from the clients I think.
And we'll probably hear and see more of that as we go into the summer because that's usually when you see capital project work, it's starting up and the summer. So like I said before I think we'll have more insight into that Max here and the next few weeks couple of months.
And all.
Overall, there is I'd say there is a.
And our long term drive I think the volumes will the overburden volumes will continue to increase obviously, the one mine that had closed down as reopening is producing so we think thats going to start to create some demand and the future.
And.
Overall, I think the barrels flowing are higher so.
It's typically the more and.
More barrels youre going to produce the more materially and go to move.
Okay. That's very helpful. And then just last question.
And in terms of M&A and maybe Thats the question to Joe and Martin.
Terms of the type of potentially assets that youre looking at I mean, obviously, unaware has performed extremely well and resilient and fashion throughout.
And the crisis.
Situations and I'm looking at right now I mean is there a bit more of a sort of distressed component attached to it or how should we think about what's potentially on the horizon, if anything from from an acquisition perspective.
I'll, let Martin comment from salvage.
My point of view matches, we're looking for.
Similar businesses.
And that our skill set we're not.
And indifferent and.
And diverse areas FERC commodity and geography so.
I think anything that fits that that's accretive and something we would look at.
We're going to be.
Capital conscious too.
But those are.
Be the areas that we've looked at and I don't think theres, a huge amount of distress out there that I've seen anyway, and if you have.
Anything you'd add.
Yes.
Say that the strong demand for every single natural resource right now so that's.
The way distressed assets pretty much because all the assets are needed.
So.
I think Oh, and M&A will be focused upon.
Super optic diversification, maybe like say a lot but.
That's all I'll off at this point.
Okay. That's very helpful. Thank you very much gentlemen, and again Martin amaze.
Amazing job and Joe Congrats.
Thanks, Luke Thanks for your time words from everybody I appreciate it.
Our next question comes from the line of Richard Danley with long partners. Please go ahead. Your line is open.
Good morning.
On slide 19.
The.
Understand.
No.
Well the question is with new know how.
How does noon or change the fourth quarter utilization.
Correct.
It would seem like you don't get the same kind of highs you get higher third second and third quarter utilization, but lower fourth quarter.
This is all this is all just our own fleet Richard So this doesn't have known as fleet utilization.
You are correct you.
You are correct and there theyre typically counter cyclical to us.
So they their fleets if we had their fleet in here.
And we'd probably see barb highs and Q twos and Q3 for them.
And so it will be looking at noon and enter this Richard zone.
Right. So so the and their fleet as the 277 that you mentioned right right. Okay, and then I'm curious on the solar only part of the Atchison expansion and how much does the solar.
And that size cost these days.
We're doing a full rooftop on the shop side of the facility I think it's roughly and area of about a half million dollars.
The economics of it are.
Good day.
It's fairly.
Breakeven or slightly favorable at today's.
Rates, but if you expect future power rates increase, which I think is a pretty safe bet.
And then it'll actually be a positive force going forward along with obviously the reduction in emissions by producing your own solar power for sure are you going to own that or are you going to lease that.
Well on it.
We did the same thing on our Fremont facility last year, and Richard and it's performed very well.
Oh I see thank you.
Okay, Thank you and and Martin sorry, I'm going to Miss your colorful.
Your commentary on the stock price and other things but.
But thank you for the past.
Well I'll Miss you all right great questions to Richard.
All of Us do too right.
And this concludes the Q&A section of the call and I will pass the call over to Joe Lambert, President and CEO for closing remarks.
Thanks, Kenzie and.
And my thanks to all you and for joining us today and for your continued interest and our growth and diversification journey and.
Very excited about our opportunities to advance our business in 2021, and what we all hope is a much healthier and more stable environment.
Thank you. This concludes the North American construction group Q4, 'twenty and 'twenty Conference call.
[music] growth.