Q1 2021 Badger Daylighting Ltd Earnings Call
Good day, and thank you for standing by welcome to the Badger Daylighting L. T D. 'twenty to 'twenty, one first quarter was on at this time all participant lines are in a listen only mode.
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I'd now like to hand, the conference over to your speaker today traveled back yeah.
Major Daylighting. Please go ahead.
Good morning, My name is promote bhatia VP of strategic planning and Investor Relations at Badger, Daylighting and welcome to Badger <unk> first quarter 2021 earnings call.
On the call. This morning got a badge as Chief Executive Officer, Paul Vanderberg and out on your walks keep badges CFO.
I just want to 'twenty, one first quarter earnings release, MD&A and financial statements were released after market close yesterday and are available on the investors section of Badger's website and on SEDAR.
We are required to note that some of the statements made today may contain forward looking information in fact, all statements made today, which are not statement of historical fact are considered to be forward looking statements. We.
We make these forward looking statements based on certain assumptions that we consider to be reasonable. However forward looking statements are always subject to certain risks and uncertainties and undue reliance should not be placed on them as actual results may differ materially from those expressed or implied.
For more information about material assumptions risks and uncertainties that may be relevant to such forward looking statements. Please refer to badger Twenty-twenty M. D N a along with a 2020 annual information form.
Further such statements speak only as of today's date and Badger does not undertake to update any such forward looking statements.
I'll now turn the call over to Paul Vanderberg Paul.
Thanks promoter and good morning, everyone before we get into the quarter, let's take a minute to talk about health and safety.
We've managed very well through COVID-19, and we're really proud of our response to especially to focus on keeping our customers and employees safe.
Andrew as an essential services provider and we continue to safely service our customers under any operating conditions, we find.
We're now looking past the pandemic and positioning the company for market recovery and we continue to focus on maintaining safe working procedures for everyone.
ESG is a critical success factor in the years ahead.
Our ESG initiatives align well with our business and corporate strategy and we're pleased to announce our inaugural ESG report.
Available on the company website in the Investor Relations section.
Now, let's get into the quarter.
As we discussed on our Q4 call market activity in quarter. One 2021 started off slowly due to extended holiday job site shutdowns in January and severe weather across many of our markets in fact, almost all of our markets in February.
Activity levels significantly improved during March and as a result, the revenue run rate at the end of the quarter was up very much from the beginning of the quarter we.
We've seen an increase in bidding activity and that indicates we should expect an increase in activity and we're planning for it in the coming months.
We're beginning to see the real benefits of the U S accelerated vaccination process.
Yes March U S revenues in U S. Dollar terms were higher than March of 2020, and we're beginning to approach the pandemic pre pandemic March 2019 revenue levels.
We continued to experience weakness in our energy focused regions, specifically in western Canada. During the quarter. This weakness combined with February weather shutdowns and the polar vortex really has impacted us all the way up through northern Alberta.
And the slower vaccine rollout that we've seen in Canada that all contributed to a slower quarter.
Canadian business.
But we've continued to add operators sales and support staff to get ready for the summer season, and the overall market recovery debt from COVID-19 that we're beginning to see we're planning for a busy summer.
We're seeing the early signs of the U S market recovery and our revenue run rate entering Q2 is again approaching in the U S. Our 2019 pre pandemic levels in a number of our markets.
We continue to position for growth this year.
The other aspect of this severe Q1 winter weather was that we saw how it impacts it a wide range of critical infrastructure and this to us really highlights the potential need for work on these facilities and system upgrades.
This needed work along with increased focus on upgrading and expanding America's infrastructure.
A significant focus now with the economic recovery plan in the U S represents significant long term opportunity for Badger and.
And how we provision provide non destructive excavation services to these end use markets.
In addition increased focus on sustainability and infrastructure is another positive trend and we think additional work will be required on a sustainability side for these facilities.
Especially in the energy segment and this also we expect to provide additional opportunity for non destructive excavation.
And as we've communicated in the past there continues to be main markets in the U S where use of non destructive excavation is still on its fairly early stages.
As we discussed at our Investor update in April we continued to invest the strength of our organization improve our technology and in key initiatives to position the company to service the opportunity we see coming.
We're aligning our company structure with our operating model by changing our branding our ticker and legal entities, we talked about that last week in our investor update.
The name Badger infrastructure Solutions Ltd. More accurately describes the work we do on our business opportunities as North America's leader in non destructive excavation and related services.
We provided an update that as I mentioned last week.
The background on that from last week's presentation is also available on our website.
Just a couple of comments on the fleet side of the operations during the quarter, we built eight new hydro Vacs and retired 20. So we ended the quarter with 1300 80 units.
Down 12 units since year end, we currently expect and continue to expect to build between 20 and 30 units this year and retire 60 to 70.
As we've communicated previously we're focusing on driving fleet utilization.
We have the new tools from our new ERP system, which gives us much better visibility into the fleet.
In the near term, we remain focused on driving utilization with new debt.
Yeah.
To drive higher returns on invested capital.
And we will of course add new units when required.
At the plant we've kept a base level of production in order to retain key staff. This has worked out very well during the COVID-19 downturn.
We have the ability to scale up production is required to respond to growth as market activity improves we are confident in our ability to ramp up production when required.
We took real advantage of the slowdown in 'twenty 'twenty to reconfigure our process flows in red deer, and related parts storage and warehousing and as we previously communicated our manufacturing capacity today is at least 350 units a year. This compares to our historical peak production of 220 units in <unk>.
On 14th.
So for the foreseeable future we're in good shape with our capacity at Red deer to meet market demand.
So I'd like to turn things over to Darin to talk a little bit about our financial results.
Thanks, Paul and good morning, everybody.
Our revenue in the quarter was $108 $5 million or approximately 83 per cent of the first quarter of 2020 when normalized for FX on.
On an FX adjusted basis revenue in January and February was roughly 75 per cent of revenue achieved in 2020 and revenue in March was equal or modestly better than revenue levels that experienced in 2020, and roughly 86 per cent of the revenue levels experienced in 2019 for April revenue levels.
Are notably higher than 'twenty, 'twenty and approaching levels experienced in 2019.
RPT in the quarter was approximately $20000 compared to $25000 in Q1 of 2020.
Gross margin was 15, 7% or 650 basis points lower than prior year gross margin was impacted by slower activity levels due to COVID-19, and extreme weather events in the southern U S. S. As Paul previously mentioned.
With the increasing volume in our business, we expect margins to return back to normal as we start to flex our operating leverage debt.
Dieter has historically proven over the summer construction season.
In in.
In late Q4 and into Q1, we began recruiting and training operators sales and operation staff to ensure our business is well positioned going into the construction season and to take full advantage of what is expected to be a strong market recovery.
We are a service business and we view. These additional costs is an important investment to ensure that badger always has a truck and operator available when a customer requires one.
The unpredictable unpredictability of COVID-19, and extreme weather in the quarter presented short term variability, but recent trends.
There are approaching more typical ramp up volumes for the construction season seems to support our expenditure decisions.
G&A expense was $11 $5 million, which includes approximately $1 $9 million in onetime costs related to our strategic initiatives to enhance our organizational design and management structure.
We continue to anticipate our G&A run rate for 2021 to be approximately $40 million, excluding onetime costs related to these initiatives of course, we always would be cost for additional efficiency opportunities.
Adjusted EBITDA for the quarter was $5 $5 million compared to $18.1 million in the prior year.
Adjusted EBITDA margin was five 1% compared to 13, 3% again expenses and EBITDA margins reflect our investment in direct costs to position our expected market recovery in strategic initiatives to support long term growth and shareholder value creation.
Now onto the balance sheet.
Badger maintains a focus on ensuring the strength of its balance sheet and the financial flexibility.
We've continued to make meaningful progress in accounts receivable and working capital management collecting over 20 $28 million in receivables.
Since Q4 further improving our DSO and an overall liquidity of the company.
Finally, we had an excess of $300 million in total liquidity through a combination of cash on hand, and committed credit facilities as at the end of the quarter and our debt to EBITDA ratio was 1.2 times well within our financial covenants.
We also renewed our $100 million credit facility for additional year, providing us a total of $400 million in committed credit facilities I'd like to now turn it back to Paul for some final comments Paul.
Thanks, Darren just a couple of final comments before we open it up for the Q&A.
We're very encouraged with the improved activity levels, we've seen in margin, especially into Q2, we are continuing to anticipate a strong market recovery and a strong construction season for 2021.
Our view of the significant U S and Canadian long term opportunity for non destructive excavation and badger's growth prospects remains unchanged.
Nothing we saw on the last year with COVID-19 has changed it's changed our view on that.
The increased focus on infrastructure in the U S. In recent stimulus announcements and continued discussion about further infrastructure bills further supports demand for non destructive excavation over the long term.
We stand ready and our business model is ideally positioned to help strengthen and maintain that infrastructure.
And where we stand ready to to supplier services.
The Badger proven business model operating scale and flexibility our diversification of end use and geographic markets combined with our strong operating track record across all stages of economic cycle and we've just come through a very interesting one all support achieving badger has long term growth aspirations.
So, let's turn it back to the moderator for questions.
Ladies and gentlemen to ask a question you will need to press star one on your telephone.
As a reminder, class a question you will need to press star one on your telephone.
Let me try a question press the pound key.
Please standby, while we compile the Q&A roster.
First question Maggie Macdougall from Stifel. Your line is open.
Thanks, Good morning.
If I may.
So.
I think you know we were all inclusive.
Q1.
I think the margin weakness is particularly surprising.
I guess, there's two questions.
Coming from Nash on the.
First would be what level of activity are you currently staffed up for in terms of a recovery is it back to pre pandemic levels.
Is it also in anticipation of growth and then the second question I have in.
Your commentary highlighted improved activity.
Wondering if.
If we are in fact.
Thanks.
Recovery in both the U S.
All across the us markets with regards to getting.
Okay.
Okay as far as our staffing levels.
For different levels of activity in comparing to pre pandemic were still a little bit below the staffing levels. We would've been at at this time in 2019, we were actually just looking at that this week and but however, we have more operators in the recruitment process almost double the operators and the <unk>.
Groupement process in early May 2021 than we did at the same time in 2019, so we're continuing to ramp up.
And the other part to your question is do you know what.
What position are we into service demand.
We're very confident that we're going to have the operators have the operators and will have the operators to service demand as the summer season rolls out and that's part of what the cost was in Q1 quite frankly is we always want to have operators. Some trucks available and the last thing we want to do is turn a customer away or say, we can't get there until next week.
So that's part of what the cost, whereas you have to have those folks on board.
The second part of your question on activity levels and were they consistent across our regions in Q1, we.
We continue to see a range of activity.
Our softest area right now.
From Q1 into Q2 would be Ontario.
It's very much impacted by the COVID-19 shutdowns and what we've seen is that especially the larger projects have just been delayed in starting this summer season because of COVID-19. So it's quite a quite a wait and see and.
Other than that.
Really that's probably the softest area I'm still a little softness on some of the oil and gas markets, but we anticipate that recovering as we get it through the breakup in Western Canada. That's just getting started in the end of the summer season, but other than that you know some of our older more mature regions in the U S are the ones that actually are on.
The most positive.
Versus not only this time last year, but also versus pre pandemic levels in 2019, so that bodes very well for a strong summer season for us.
As he goes through the next couple of months, how should we be thinking about the cadence of margin improvement.
As activity increases.
Especially considering.
I mean, I'm sitting in Toronto, and it doesn't feel like things are really opening up much at present.
So we're probably going to continue to have a weak Canadian market for a little while.
Is this a situation where youre going to be able to trend back to a pre pandemic margin.
Through Q2.
On a sort of like for like basis, given the seasonality or is it a situation, where we need to be sort of waiting for that to happen for a while.
Yeah, I I would expect that to happen just about everywhere as the summer plays out Maggie other than Ontario, and you're better positioned to understand what's happening there but.
You know, it's it's really going to be dependent on volume and Ontario I'm on.
Terry owes you know about 15%, 10% to 15% of the company.
So it's a bit of a drag but it is what it is we'll manage through it just like we manage through the last 16 or 18 months, we're well positioned in Ontario on our cost structure is the best it's ever been in my time at Badger. So we're very well positioned there, but I see improved volume driving improved operating leverage and improve.
<unk> margin am I am highly confident and badger's operating leverage and it'll flex up just like its flexed on the downside Q1 was really an anomaly in my mind.
And you know when you when you get a week or two wiped out.
With weather in February and you lose a week or 10 days with just slow recovery because of COVID-19 from the holidays and a slow start up you know you lose three weeks in a quarter, that's a tough one.
Especially when you're staffed up to service the customers, which is our business model. So you know we manage through these things and we're managing you know for this summer and the long term and began on I'm very confident in the margin ramp up as volumes improve.
Okay. Thanks.
Next question, we have on Jonathan Lamers from BMO capital.
Yeah.
Thanks, Maggie touched on the topics I wanted to cover.
I'm curious how did activity levels in Q1 compare to your internal expectations are.
Following the staffing increases you made them.
Late 2020.
Yeah, well, that's a great question Jonathan good morning.
Actually the as far as our 2021 budget, we were behind in January and February and significantly ahead in March.
Thanks and.
Is the bulk of the increase on direct costs.
Related to.
Paying permanent staff.
Hum.
Is there any way to break out the portion that's related to.
Recruitment that will kind of roll off.
Next year.
Yeah. That's that's that's a great question.
Recruitment is there in Q1, it's always there in Q1 as I mentioned, we have we have double the activity.
On with recruitment this year than we did at the same time in 2019. So that's there but the most significant factor is always that direct labor and the operators and you know you you have to call people in you have jobs canceled you have that expense when you have people called in in our Union.
Areas there are minimum hours for call outs on whether you work or not so if we call people and that you could pay people for a half a day half a day or a day. So that's always there when you have choppy demand in the short term.
And also you want to make sure you keep operators. There. So you do maintenance on the trucks you do things around the branches and that's just smart good smart business to make sure. The operators are there and they get some hours those are individual branch decisions and we support that I mean, our local area managers have to run their business and.
And it's tough when you have the kind of choppy demand we saw on January and February, but it's short term, it's transitory and Theres really nothing structural.
That's a concern of mine.
As the volumes come the operating leverage will kick in and we will see that margin. So you know.
Q1 is behind us.
And you know it is what it is I mean, we're in a contracting business, where you dig holes outside.
And when you get the big the big weather impact everything shuts down and outside construction and that's just the way it is and you manage your way through it.
And Paul I believe you mentioned at the Investor Day last week that.
There's been no real change to the business model.
Badger still believes in paying operators for hours worked and Incentivising local area managers based on local profit that's it sounds like.
You know any any any shifts have been kind of just due to this abnormal period of disruption as you're rapidly right hiring.
No in fact, I mean, I I could almost make comments on our business model not so much based on a short term transitory factors in Q1, but really the downturn. We went through last year with the COVID-19 downturn and I think we all saw the ability to flex the business model very successfully in our long term.
A protracted downturn that to me was the real test Jonathan and we were extremely successful in that.
We didn't even know how it would work going into it but we were really pleased with how the business model flexed.
And that's really a reflection of the operator pay structure, which is if they don't get called in they don't get paid and also that's the the majority of that direct labor is a variable cost and that's a real strength of our business model you have challenges on the rebuild side.
Because you know ideally you'd love to keep all those operators, but.
You know the cost add up very dramatically, it's just not unsustainable too.
To keep operators on with a long term downturn like we saw last year. So we're paying a little bit of the price right now.
But when you look at the success, we had last year and the the the margin and earnings generation and the cash flow generation in a very challenging time debt to me really spinks speaks to the strength of the model.
Then the second part of your question on our incentive plans.
As for everyone on the call the area managers have a bonus pool, which as a percentage of pretax earnings after a capital charge.
That really works and it encourages them to manage everything from the top to the bottom of the income statement and also their capital employed it to me is a real strength and as part of Badger secret sauce of an entrepreneurial.
Leadership teams, so I wouldn't see that changing.
And.
It's a real plus for our business model.
Thanks, and quick to two just quick follow ups on this just to circle it up.
And the annual information form it lists the number of operators and those were down 16% year over year as of December 31.
Are you able to tell us.
How much that was down at the end of Q1 on how.
How much that's down it may I know you said slightly.
Yeah, I'd I'd have to I'd have to refer to the quarterly numbers do we disclose those no no no we don't disclose those quarterly.
But I can say as I mentioned, a minute ago that I actually on our operators that are in the recruitment process right now are about two times what they were at the same time pre pandemic.
And it gives you a little bit of color.
On the build back so it's twice what we would've had pre pandemic and pre pandemic would have been a normal seasonable summer build so it's about a two X factor on on that.
Well and just a quick one on manufacturing.
I would assume some of the direct.
Costs are there to maintain truck assembly capacity does that have a material impact on gross margins I know it's fairly small.
No that that would not be on gross margins at all that would go into the cost of the badgers. So you'll see the cost per unit and Badger is higher.
Then it has been historically and that's just the allocation. So we're really pleased with the decisions we took in that area.
And our ability to ramp up and we're starting to look at whats all required to ramp up but our ability to ramp up is very robust and so we're really pleased with the decisions. We took here, but no none of that would go into margin just under the cost of the badger.
Thanks for your comments.
Thanks, Jonathan.
Next question, we have line of Daryl young.
The T D Securities.
Good morning, guys.
On the narrow body.
So badger has managed through a lot of volatility historically and been able to take the margin keep the margins.
Slightly more stable I would say now obviously COVID-19 is.
On a very unique situation for managing.
Our business, but just trying to understand if there's been any changes to how your pay structure or your thinking of how quickly you let people go or bring them back.
Versus prior maybe oil and gas downturns that would that would really change how the margin profile is.
Yeah.
Reacting to some of these changes in activity levels.
Yeah, Great Great question Daryl.
I don't we don't really see anything in the business model that's different from past downturns and in fact, we were talking a couple of weeks ago that <unk>.
Q1, 2021 has a lot of similarities to Q1 on 17 and for those that debt followed Badger and 2017, we were coming out of the 15 and 16 in oil and gas downturn and we were the market was basically looking for a bottom in Q1 and it just pretty much bottomed during that quarter.
But we were doing a lot of the same things, which is trying to gauge the size of the market opportunity for the year and the recovery and making sure also we had the operators in place. So that was about the last time, we had some similarities it was much amplified this year versus 2000, Twenty's 17, because of the COVID-19 uncertainties and Maggie today.
You know I had commented on that we talked about Ontario earlier, which is you know pretty unprecedented when you think about it compared to normal economic or seasonal cycles. So we don't really see anything different there and we're going to manage through all of this highly confident we'll manage through it.
And highly confident debt as the volumes kick in that we will see the margins recover in and net operating Leverages is very much intact and my mind Darryl.
Okay, Great and then just one more follow up question. When you look at the new go to market.
Strategy on how I think you'd mentioned that some of the Investor day is how youre going to attack some of the major markets.
Would you anticipate more cost to come ahead of revenue in those markets as you deploy that strategy or how should we think about the margin profile of entering some of these major markets under the new approach.
Yeah, well, we've always had on organic growth model and so what the market segmentation does is it really puts that on steroids.
And it actually helps us focus better so we can capture more of the market and actually achieve higher penetration than our historical.
You know smaller add.
Add on type of branch locations our strategy so.
No. We're on basically doing the same thing its organic growth, but it's taking a very targeted and segmented approach and in these large metro markets, it's actually an acceleration.
On the entry and putting the infrastructure in place to go bigger.
Those markets. So it's kind of a small medium large approach.
Baron would say it in a more sophisticated way from a marketing strategy side, but that's the way I think about it and so there are going to be cost ahead, and built ahead, but it's really no different than our historical organic growth model, where you add one truck and one operator in one area manager at time historically those costs have always had to be put in.
So you know to the extent the cost through accelerated on the upfront side, we fully expect that the benefits will be accelerated due to larger sized markets and improved penetration.
Okay, Great. That's all for me thanks, guys.
Thanks Darryl.
Next question, we have Maggie and lots of the Wolf Lake Stifel.
Yeah.
Good morning.
One follow up question.
First one.
Thank you.
For us the impact of weather.
Zone.
In terms of revenue and EBITDA.
Yeah, I commented a little bit earlier I mean.
From from my My view, we probably lost about three working weeks across the network in the quarter.
Yes.
Okay and are you able to quantify it in terms of your thoughts.
Yes.
Right now we're comfortable providing.
Yes, that's the way I look at it Maggie we haven't we haven't done the detailed analysis on it but I mean, the revenue numbers are there and but.
But we basically lost about three working weeks because of weather.
And the slow start up from them.
From the holiday and the COVID-19 shutdowns.
Okay. Okay.
Okay. Thank you.
Thanks, Maggie I think of the way you can look at it as debt.
Paul's comments.
Topline revenue, but don't necessarily impact expenses. So if you extrapolate.
Rapid late that out if that will probably give you the answer youre looking for.
Right I guess I'm, just not clarify three working week relative to U S revenue consolidated revenue.
Right.
There's a bunch of different ways.
Hold on numbers.
Perhaps I'll follow on the top line.
Yeah on my comments were on a consolidated basis Meg.
Okay. Thank you.
Yeah, that's that's about what we saw.
Again as a reminder, if you wish to ask a question you will need to press star one on your telephone again debt or wants to ask a question.
Our last question, we have Jeff Fetterly with Peters that's true.
Good morning, everyone a couple of random questions for you.
Last year, Paul you referenced pre COVID-19 in Q1.
A ring or bringing on about 250 new operators.
How does that number compare in the first quarter of 2021.
Very similar.
And in the two ex that you referenced earlier.
From a magnitude standpoint, how would that compare to that to 50.
Yeah that the two X I referenced would've been 2019.
Early may of this year versus early May of 19.
So should we be thinking about sort of a number of operators in your training program in that 250 range.
Alright.
No training operators and training would be in addition to that.
This would just be in the stages on various stages of recruiting and onboarding.
Okay. So sorry, so the reference of two X that's across the spectrum of people you're hiring.
In the hiring process and training people and training would be in addition to that yes. Okay.
Okay.
The comment in the MD&A about pricing being stable across most markets.
That debt.
You and the overall market has excess capacity right now do you how is that possible that pricing has been holding flat.
Yeah, well, we have not even it's even through COVID-19, we've not seen a lot of what I would call price flourish.
And in the market, there's always local markets, where you have.
And individual competitor or some competitive intensity, but as you know that's always been the case I would expect debt will always be the case, just because of local circumstances, but you know it's our comments are really based on broad trends across many markets and we have not we have just.
Not seen.
The broad trends and market pressure, but there'll always be small markets and individual markets with what I call pricing flurries adult don't ever expect that to change.
And with the recovery in demand.
For the summer construction season.
Expect any changing in pricing.
We don't have anything major that we're expecting at this stage, Jeff, but you know again as we do new bids what we're obviously watching our costs very closely.
And you know.
The one where we'll be watching in the coming months and through 2021 and into next year.
Is the obvious one which is going to be direct labor.
But.
That's something we've always had in our organization is very tuned into that so that's about the only cost plus area that we're seeing will be significant.
You'll have fuel.
Which.
As always the second biggest one and.
And of course, that's that's higher year over year.
But we've had good success and continue to have good processes in place on surcharge recoveries on which is pretty well accepted now in the market. So I don't expect any significant margin deterioration there.
So on on net pricing basis things are holding relatively flat.
Yeah. That's that's that's been a very pleasant.
Pleasant trend that's come out of the whole COVID-19 thing and continues to be the case.
Okay.
On the capital capital spending side on new builds.
You need to see either on outlook or broader markets to to get your build cadence back to at least equal to replacement of retirements.
Yeah, well, that's something we watch very closely on an ongoing basis and.
Really going to be based on the market activity, we see and the utilization that we're seeing.
As we've communicated we are pushing utilization yet.
With our new visibility from the ERP system and tracking in a lot more closely.
We've moved a significant number of trucks around.
In the last nine months and into Q1 so.
A little bit different than badger's past pattern in a very positive way for shareholders and our return on invested capital.
We.
We will ramp up.
When we see the need and we're well aware of our lead times at the plant and with our key components like chassis. So we're very well positioned to be able to ramp up when we see it coming.
We've done it before we do it every year seasonally.
And if you go back to what we did in during 2017 coming out of the last downturn.
You can see how we responded there and it worked out very well too. So the models well set up to go after it.
And is that something you envision for later this year or is it more likely to fall into the next construction season cycle in 2022.
Yes, that's a great question.
We're looking at things very closely.
You know on a weekly and monthly basis staying in very.
Close contact with our operating leaders.
And I'd love to be able to have the conversation that we're looking at increasing the build rate, but we're not at that stage with releasing our Q1 results.
But.
If I if I saw bias over the next year and a half it would be to the upside for sure.
Okay.
The last question Darrin Shlomo to clarification on.
No.
You did you said you saw some improvement on a sequential and year over year basis, but.
DSO in Q1 was still higher than that 80 day number that you've mentioned there was a target when do you expect or.
Thank you could be getting to that 80 day level.
With our we track this on a weekly basis, where we're below 80 days and our latest reporting.
Jeff I just wanted to go back to.
The question on manufacturing build so one of the things that Paul has had its D. This is carey.
<unk> modestly higher key component manufacturing component inventory E chassis. So we can respond fairly quickly we have.
Probably around 50 chassis as an inventory.
So that allows us to be able to respond very quickly.
To avoid any lead time issues from from our chassis suppliers. So.
There's.
To Paul's point Theres, a longer view that we look at E RPT.
And the business volume, but we've also got the contingency benefit of carrying a little bit higher inventory.
Okay.
Clarify on the DSO side so when.
When we think about Q2 is likely to be around that 80 day, cadences, where you've come in or targeting.
Yes, I think my objective is slightly below but 80 days, it's probably.
A good modeling parameter.
Okay perfect. So it covers.
Yeah.
Thanks, Jeff.
There are no further questions I will now turn the call over to Paul Vanderberg.
Okay. Thanks, Brian we appreciate everyone's participation this morning and on behalf of all of US at Badger, we want to thank our customers employees, our suppliers and obviously and most importantly, our shareholders for all your ongoing support that drives our success. So Bryan you can end the call. Thanks.
Ladies and gentlemen, this concludes today's conference call. Thank you all for participating you may now disconnect.
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Okay.
Yes.
[music].
Sure.
[music].
Our revenue.
[music].
On that.
[music].
Yeah.
Yeah.
Yes.
Yes.
Yeah.
Okay.
Yeah.
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Okay.
[music].
Yeah.
Okay.
Okay.
Okay.
[music] accounts.
On.
[music].
Sure.
Yes.
[music].