Q1 2021 Boyd Group Services Inc Earnings Call
Good morning, everyone and welcome to the Boyd Group Services, Inc. First quarter 2021 results conference call.
That's the nursery of minded that certain matters discussed in today's conference call or answers that may be given the questions asked could constitute forward looking statements.
They are subject to risks and uncertainties.
Related to boyd's future financial or business the performance.
Actual results could differ materially from those anticipated indeed forward looking statements.
The risk factors that may affect results are detailed.
Boyd's annual information form and other periodic filings and registration statements.
And you can access these documents at the jars database and found that the dark dotcom.
I'd like to remind everyone that the conference call is being recorded the D bench.
They may 12 2021.
I would now like to introduce Mr. Tim Oh day.
President and Chief Executive Officer of.
Boyd Group Services, Inc.
Please go ahead Mr O'day.
Thank you operator, good morning, everyone and thank you for joining us for today's call on the call with me today are Pat Pat from Patty, Our executive Vice President and Chief Financial Officer, and Brock <unk>, our executive chair.
We released our 2021 first quarter results before markets opened today you.
You can access our news release as well as our complete financial statements and management discussion and analysis on our website at Boyd group Dot Com, our news release financial statements and the M. DNA have also been filed on SEDAR. This morning.
Today's call, we will discuss the financial results for the three months period ended March 31, 2021, and provide a general business update we will.
We'll then open the call for questions.
The first quarter of 2021 continued to be significantly impacted by the COVID-19 pandemic. This business of mobility restrictions continued to impact demand for collision repair services.
We continue to focus on health and safety practices, such as contact free customer drop off and pick up enhanced vehicle and facility cleaning practices, social distancing and wearing personal protective equipment to keep our employees and customers safe.
All of which has been very important given the significant surge in COVID-19 infections that occurred during the quarter.
We continue to poll of key practices that include deep cleaning of facilities, where an employee or potential or confirmed case of COVID-19 has identified as well as defined processes per quarantining and testing and situations of potential exposure to help prevent the spread of the virus.
As was previously communicated beginning in January January one 2021, Boyd is reporting results in U S dollars. This.
This change has been made in order to better reflect the company's business activities given the significance of the U S denominated revenues.
During the first quarter, we recorded sales of $421 6 million adjusted EBITDA of $52 7 million of net earnings of $7 7 million.
Sales were $426 6 million of nine 9% decrease when compared to the same period of 2020.
This reflects a $19 $4 million contribution from 56 new locations are.
Our same store sales, excluding foreign exchange decreased by 14, 2% in the first quarter.
Same store sales, excluding foreign exchange decreased by 12, 6% on a days adjusted basis, recognizing one less selling and production days in the U S and Canada in the first quarter of 2021, when compared to the same period of 2020.
Same store sales declines in Canada were much more significant than same store sales declines in the U S and unfavorable when compared to the fourth quarter of 2020.
The first quarter of 2021 was impacted by a significant surge in COVID-19 infections and the reinstatement of restrictions in many markets, especially Canada.
Production challenges, including technician technician capacity constraints in select markets weather events in southern states and supply chain disruptions compounded the demand challenges we faced.
Gross margin was 46% in the first quarter of 2021 compared to 44, 8% achieved in the same period of 2020.
The gross margin percentage improved as the result of higher labor margins, including the recognition of the sous of Approx of approximately $1 $5 million. The gross margin percentage was also positively impacted by higher retail glass sales margins, partially offset by a higher mix of parts in relation to labor.
Operating expenses for the first quarter of 2021, well $141 2 million or 33, five percentage of sales compared to 31, 8% in the same period of 2020.
When the pandemic was declared Boyd took significant steps to manage expenses in relation to the decline in sales. While many operating expenses were managed in relation to decline in sales of certain expenses could not be reduced such as property taxes and utility costs, which increased as a percentage of sales.
Also impacting the beginning of 2021 is the seasonality of certain operating expenses, such as employee payroll taxes, which are typically highest in the first quarter of the year.
In addition continued location growth has resulted in increased operating expenses as a percentage of COVID-19 impacted sales.
Adjusted EBITDA or EBITDA adjusted per fair value adjustments to financial instruments and costs related to acquisitions and transactions was $52 7 million.
Decrease of 12, 8% over the same period of 2020 of them.
The decrease was primarily due to operating expenses that could not be managed in relation to the reduction in sales and additional operating expenses incurred along with continued location growth as well as costs incurred to begin rebuilding and supporting the workforce.
In total adjusted EBITDA in the first quarter benefited from the shoes and the amount of $3 4 million.
And as is the objective of the program Boyd continue to employ and incur costs for employees the would've been laid off or furloughed absent this wage subsidy.
Net earnings for the first quarter of 2021 was $7 7 million compared to $17 million in the same period of 2020 of them.
Excluding fair value adjustments and acquisition and transaction costs adjusted net earnings for the first quarter of 2021 was $8 3 million or <unk> 39 per share compared to adjusted net earnings of $15 2 million or <unk> 75 per share in the same period of the prior year.
The decrease in adjusted net earnings per share is primarily attributed to the operating expenses and fixed costs, such as depreciation and amortization that could not be reduced in relation of the decline in sales due to the COVID-19 pandemic.
Adjusted net earnings per share for the three months ended March 31, 2021 include one to six 5 million shares issued in the public offering which was completed in may of May of 2020.
At the end of the period, we had total debt net of cash of $539 9 million compared to $538 5 million at December 31, 2020, we continue to have financial flexibility with our conservative balance sheet and more than $875 million in dry powder to take.
<unk> of opportunities as they arise.
During 2021, the company expects from a cash capital expenditures within the previously guided range of one six to one eight percentage of sales.
This excludes those capital expenditures related to acquisition and development of new locations, the investment and environmental initiatives, such as led lighting and the investment and the expansion of the wall operating waste practices through its corporate applications and process improvement efficiency project.
During the first three quarters of the first three months of the year. The company has invested approximately $1 4 million and environmental initiatives of a planned $4 million of investment during 2021 of.
These investments will not only provide environmental and social benefits, but also achieve accretive returns on invested capital.
Additionally, the company is expanding its while operating waste practices towards corporate business processes.
Related technology and process efficiency project will result in the total of $4 million to $5 million being invested before the end of the year and will also be expected to streamline various processes as well as generate economic returns. After the project is fully implemented.
This initiative began in the third quarter of 2020.
Early in the pandemic the company moved quickly and decisively to take aggressive action to both preserve liquidity and to reduce expenses and preparation of the demand and revenue decline anticipated as a result of the pandemic.
This included converting a large number of production facilities to skeleton staff the intake centers in most cases staffed with the single employee.
In late Q4 of 2020 Boyd made the decision to prepare for the higher post pandemic demand levels expected in 2021.
This was a major factor contributing to our lower adjusted EBITDA margin versus Q3, and Q4 of 2020.
We're excited and optimistic about our positioning for the future. We have converted all of our temporary intake centers in the U S back to full production facilities and we've added back most of our indirect and support staffing resources in anticipation of a return to normal demand for our services.
Although we are still in the process of the more difficult task of adding back the technician capacity and re engaging and the initiatives that we'd undertaken pre COVID-19 to address the technician capacity constraints, including but not limited to our technician development program.
This may result in us experiencing technician capacity constraints in some markets in the near term notwithstanding the return the continued improvement in demand in most of our U S markets.
This combined with worsening demand in Canada as restrictions either continue or are tightened as the resulted in the overall sales performance to date in Q2 that is only marginally higher than our Q1 sales.
We continue to execute on our growth plans with 35 locations opened year to date, the majority of being single shop growth.
Our pipeline, including the acquisitions as well as Greenfield and brownfield locations is healthy and we are confident in our ability to achieve our five year plan.
As vaccination rates increase and as market demand returns to normal levels, we are well positioned for the future with our leadership position our growth pipeline and many business initiatives, including our Wow operating way.
Cable technician development program scanning and calibration all the certifications and didn't make center strategy to name a few.
As always operational excellence remains central to our business model with the with the ongoing investment in our wall operating way, we continued to drive excellence from repair quality customer satisfaction and repair cycle times to ensure the continued support of our insurance partners the vehicle owner customers.
For me personally and on behalf of the Board I would also like to acknowledge L. Davis's retirement from the board of directors.
<unk> served on the board since 2005 and as independent share since 2011.
He has helped to guide our strategy for many years and I personally appreciate the support and guidance that <unk> provided to me during my tenure as CEO and I wish him well in his retirement.
In summary, and in closing I continue to be incredibly proud of the steps that we've taken to adjust to this constantly changing environment and to position ourselves well for the future.
We continue to believe there will be many opportunities that come from this crisis, both internal and external and we put ourselves in a good position to come out of this crisis as a stronger company.
Our priorities remain taking care of the health and safety of our team members and customers.
Enhancing shareholder value through accretive acquisition growth building, our capacity as demand returns as well as preserving financial flexibility and preparing for the opportunities that lie ahead.
With that I would now like to open the call for questions operator.
Thank you Sir at this time of we'd like to take any questions from the tab for SCD.
And now I'd like to ask the question since the passage of the number one on your telephone keypad.
Okay.
We have our first question from the line of David Newman from.
<unk> your line of Jonathan.
Good morning, and Aloha and welcome to Hawaii.
Good morning, David.
A couple of questions on the I guess reopening keeping issues I'll call them.
What you are seeing across a number of the company.
But with the supply chain disruptions are you seeing any parts of inflation as well and I'm talking about the sort of steel aluminum and all of the commodities, obviously of spiking and does that change your dynamic of OE versus recycled refurbished or aftermarket parts at all.
The the supply chain disruptions, we mentioned, we're really not related to the pricing of components and as we've talked before from a pricing standpoint, we really pass through pricing per.
Per repair costs as those components become more expensive, though it may provide more competitive alternatives, whether aftermarket or used so there could be some shift in that although nothing that we've noted to date.
We have seen some.
Parts availability issues that had been a challenge.
From manufacturers related to I suspect some of it related to just the ability to get the parts through the system in from overseas.
Okay and then on the.
On the technician issue, obviously through the pandemic, we've seen of real focused on on ESG as I'm sure you guys are aware of.
The need us and all of that sort of thing.
And how do you navigate going forward.
And I would presume that this could actually accelerate consolidation just maybe thoughts on the near term on training compensation of things that you've done so effectively in the past to secure technicians and does that put you in kind of a really.
The competitive advantage first of your peers and consolidate the market.
I think our the investments that we've been making in training for the past several years and we have a fairly unique way of doing it because we have a debt of dedicated team of internal technical trainers that actually build relationships with our our technicians and help them not only improve their skills user.
In training Thats available to the industry, but they actually build of revision relationship with them and focus on improving their their productivity as well.
But we are very well prepared to continue to invest in our team members to make sure they have the technical skills.
To perform repairs as it become more complex, including.
Issues related to a das.
Calibration of matters such as that.
Very good and last one of if I can squeeze one more in guys. Just in terms of a lot of navel gazing I guess through the through the pandemic and the organization is really looking at their cost structures et cetera. So I know, we're still kind of going through the machinations of it and all of that but post pandemic.
From an Opex point of view is there any permanent cost reductions such that your margins could even improve as we get to a more normalized conditions.
David Yes.
It's taken us to have it all of the Bancshares sought to address that specific area. So we have streamlined operations and also we have consolidated consolidated certain functions of too many did reduce some expenses and costs.
Okay, and any any any sort of essentially the <unk>.
Magnus <unk> Pat.
No we don't want off of any guidance on that I'd also David the out of the thing is also the double wall.
Operating way of it expanding into strategic support services like finance HR and procurement also dose should yield improvement and the productivity too.
Very good thanks, gentlemen.
Thanks, David.
Thank you. Our next question is from Steve Hansen from Raymond James. Please go ahead.
Yes, good morning, guys just the good.
Morning.
Just a couple quick ones from me if I may is one thing is just on <unk>.
The acquisition pipeline and the multiples that are being paid I know you've stepped out of recently into Hawaii or Dave's suggestion here can you just give us a sense for what the cost is for entry level.
Performance.
<unk> really looking for the spread between one of the TV type deals relative to the larger mid sized yields at this point at the end of that changed at all.
We really don't provide detailed information on MSR acquisitions, we have communicated for a long time that we underwrite single shop acquisitions two of 25%.
Our ROIC.
The post synergy EBITDA, and we're still comfortable with that guidance.
Obviously as you get to larger and larger businesses the multiples become higher.
And I think for that reason, it's important for us to have.
A good mix in our in our pipeline.
Greenfield brownfield single shop, and multi shop opportunities.
But we don't think of shared in the past that.
The most of you haven't paid was nine six times to assured back in July of 2017. So you can imagine some of the falling in between between four and $9. Six so yes, they've used the higher for MF. So typically again it depends on the strategic value of the quality of earnings quality of management and things like that but.
I think of the shops at more attractive.
Let me maybe ask it that way because I recognize you don't provide into the guidance I guess I'm just trying to get a sense for.
The trend and the fact that there was another MSR acquisition announced this morning as you are probably aware in some of these super regional groups are moving quite quickly right now.
Just trying to get a sense for whether that's been of price you out of the market to go after these mid sized deals.
I think we'll be able to remain competitive and achieve our five year growth plan and I'm confident in the bad.
Okay.
Steve I think from the Big picture plus pages of the industry is highly fragmented. So there's ample opportunity to consolidate so you may see some consolidation, but still it is highly highly fragmented.
Yeah, no I recognize that Patrick I appreciate that.
Just maybe a final one and then changes just looking at.
The piece of it which you brought back some of the staff here.
I understand it's not at the.
Linear projection in terms of the activity levels, returning but just do you get a sense that you brought people back to the fast you need to make adjustments.
At the current levels of activity that youre seeing or are you comfortable with where you are at now and the trajectory that we're seeing on vaccine rollouts and others I'm just trying to get a sense of that expense base.
Good day relative to activity.
Nobody has a perfect picture of exactly how things are going to unfold. So I think I'm comfortable with the approach that we've taken and think because of it will be well positioned to service the business as it returns.
So I don't see a need to make any.
The jerk reactions to the short term variations in the market.
Okay. Appreciate the color thanks, guys.
Thanks, Steve.
Thanks, Steve.
Thank you.
Our next question is from the line of Bret Jordan from Jefferies. Your line is now open.
Good morning, This is mark Jordan on for Brett Hi, Mark.
Mark.
Has it gone.
Just thinking about the outlook you put out today, you said performance. Thus far during Q2 was only marginally higher than Q1, I guess is that more of a dollar basis or is that the same store sales percentage basis got it.
Basis.
Dollar basis Okay.
And then if I'm looking correctly, what you re standard last year for U S. Dollar terms is it.
What we're looking at in Q2 'twenty was that about 23% decline in same store sales if I, if I'm looking at that rate.
I think Q2 was about.
I don't know if you have that part of the I believe it was about 35 percentage yes.
Yeah.
Third the center model.
Okay.
I might of been looking I was trying to figure out what the U S.
The free standard in the U S dollars, but could you sort of talking okay. Yes.
The number of you just quoted what's the standard in Canadian dollars. You. Obviously, you have to exchange of the U S dollars yes.
Okay, Okay alright.
And then I guess thinking about how demand trended throughout the quarter can you talk about what youre seeing maybe in early Q1, how it compared in the later Q1 and maybe.
So far quarter of today, just kind of have the at the pace of improvement changed.
Well I think I'm trying to think of what what is the.
Specifically disclose I mean.
We have looked at data from CCC.
You've.
Clearly, we lapped the pandemic.
In the probably the second week of March.
We started to see year over year demand above above.
Above what.
It happened when the pandemic began to in cloud impact claim counts, but the first quarter overall on the data that we've seen from CCC was still down about 20% from historical norms that could be comparative to the 22019 volume.
But because of the pandemic began to impact claim volumes in March of last year, we saw an uptick relative to prior year in the latter part of March.
Okay great.
And then just one last one.
Just kind of thinking about the mix between parts versus the labor.
Can you break out what Youre seeing there and then.
In your report mentioned higher labor margins during the quarter and is that primarily from the wage subsidy is there something more structural there.
I think the.
Little bit of it is the wage subsidy.
There is also as.
<unk>.
We.
I would say modified things last year, there was some near term benefit related to that as well for example, we.
We have not really invested in the technician development program, which has a negative impact on labor margins in the early going but we are increasing our investment in that area.
Have been really building that since.
The very early part of the year.
Okay, great. Thank you very much for taking my questions.
Mark one common dates I think I'll ask that you focus on this same store sales grew.
Both of decline at the one of the things I think you need to keep in mind is we do have a good chunk of business around nine plus the business coming from Canada, and Kennedy's hit really hard.
You can go to the segment disclosure in the footnotes and you can do your own calculation how hard you of let's say for example in Q1 of last year, we had the.
$56 $49 million and in Q1 of the search 30, 727, and we added seven of locations in Canada. So you can you can get a good ballpark same store decline in Canada. So you have to big debt and when you do the calculation.
Okay, Great I'll I'll take a look at that thank you.
Thanks Mark.
Thanks Mark.
Thank you. Our next question is from the line of Jackie Mcdougall from Stifel. Your line is now.
Good morning, Maggie Maggie.
Hi, good morning, Thanks for taking my question.
Yes, it is the development of cash liquidity.
Your line outage and.
Reading about a number of sheets are experiencing price index pricing.
This line related shortages Im wondering if youre seeing any impact to your payments from the.
Okay.
And if you can help us understand.
Both cash and then some of the <unk>.
Non COVID-19 related things that may have impacted you in Q1, such as the weather patterns.
Okay.
Yes, I would say on the pipeline.
Problem.
The eastern part of the country, that's really very very new and we probably if it is having an impact of delta we would even see it yet.
Although it clearly would have the potential to have an impact of miles driven for some period of time I'm not sure of how long, but I would say too early to understand on that one.
The weather related events, and we were referring to were really the we had some extreme weather in the southern states in the U S. During the winter.
The obvious one the got most of the press is what happened in Texas, which was ice storms and then significant power outages for several days.
But that's the same storm was hitting other southern states and as most people know the southern states are not well prepared to deal with that type of weather event.
So rather than plowing the streets.
What happened in northern markets.
It really just shut down driving an activity stops and thats really what we experienced in those states.
For a period of time during the winter.
Thanks.
One of my question.
I appreciate this might be a challenging one to answer but.
Something I've been struggling to understand which is.
In the states, where you've seen them.
Let's say driving miles driven and gasoline consumption demand for your services return to more of like pre pandemic levels.
You noted any change in driving pattern.
And related to work from home or just people sort of generally doing more online shopping versus going into the story.
Hi.
Could have an impact on the NAND for collision repair service day.
I think the main one Maggie would be the.
Measure of congestion.
<unk> really is the the sort of the morning commute and more than in the evening commute and probably ties into the schools being opened as well, which puts pressure on traffic and while there has been.
Improvement if you will if there has been improvement in congestion, it's gotten better for the collision repair industry in most markets, it's still not back to normal levels, but I think we're still we're still early on in many places where the recovery.
Vaccination rates of increased significantly in the past few months and they'll continue to so I think we'll just have to wait and see what happens in terms of the.
The pressure on congestion with the normal commute.
Maggie in the U S. I think we don't have large enough sample at this point of time, it's too early but if you look at other countries like China, and Australia, where.
Thanks.
Recently gone back to normal levels day is I think the frequencies have gone back to our historical levels. So if you use that as the proxy I think that might offer you some clues.
Yeah, Yeah, that's really good.
Of note Pat Thank you very much all line.
Ill get back in the queue, if I have more questions.
Thanks, Mike ex Megan.
Thank you the.
Next one is from Kate.
Shane from Goldman Sachs.
The hit.
Hey, good morning. Good morning, Thanks for taking my question I was wondering if.
We could better understand the quarter to date comp composition I know, it's only slightly better so far compared to Q1.
Can you talk at all to specifically, how it's being driven if the U S is that much better in Canada stayed similar or it's gotten worse and then my second question was just we heard the comments that <unk> benefited from higher retail glass margins I wondered what was driving that.
I would say.
The relative difference between Canada and the U S.
Canada as many people know Canada has been on.
An extraordinarily tight lockdown.
And that is absolutely.
Impacted miles driven and claims in Canada, So we're not seeing.
We're not seeing the reversal of that trend in Canada and in fact is as we communicated we actually saw lower demand in Q1 than we saw in Q4 in Canada.
The so hopefully that addresses that question.
On the glass.
We've had good performance out of our auto glass business, our retail auto glass business and it does have higher higher margins than our collision business. So the comment was really just.
Positive performance out of our auto glass business with relatively higher margins.
Thank you.
Thanks Keith.
Thanks Keith.
Thank you.
Our next question is from the line of Jonathan.
From BMO capital markets.
Morning, Jonathan.
Good morning.
To clarify have you continued to reopen repair centers into Q2, and if so is that being done.
Of that.
Right that makes the fixed opex go up faster than the marginal increase in sales.
We really made the decision to reopen all U S centers late last year and that.
Has now occurred.
And because business is not yet at normal levels across all of our markets.
It does increased fixed costs.
So does that answer your question.
I think so it sounds like everything was reopened at the end of Q4, so the U S. Jonathan in the U S.
Yes.
In the U S not in Canada, but in the USA, we have converted all of the predictions of.
Vendor was convicted of battery and take that kind of get back to production in the U S. But in Canada, we still have not done debt completely.
Okay. Thank you.
And the somatic question my understanding is that one way of that.
Gerber and Boyd add value to the insurers is by handling some of the claims processing work.
Im reading that the insurers of increasingly deploying AI based software solutions for claims processing. So my question is does that help or hurt your ability to add value to the <unk>.
Claims process versus the average repair center.
Hi, based claims from Samsung.
Yes.
It's a good question I think the insurers of really trying to move toward.
More touchless claims processing claims as seamlessly as they can in a direct repair environment, we would be right in the right and the estimate and submitted it to the insurer and the insurers are growing.
Growing basis would use AI tools to evaluate.
Whether our estimates.
Appear to be reasonable.
And then if theyre not they may provide us feedback on that we do have some both staff and technology, we use to evaluate our estimates.
We review those before they get to air insurer. So it should put us in a position of having fewer.
Fewer estimates either being reviewed or fewer issues found when they are reviewed so I think we still have.
An advantage in that area.
Okay. Thank you.
Thanks, Jonathan.
Thank you.
One is from the line of Zachary average head from.
National Bank financial your line is open.
Good morning, Jack Good morning, everyone. Good morning Zach.
So great question, so far as I'll go a little bit more out there and feel free to punt on the question. If you don't feel like answering.
Would you care to comment on legislation in the few states now and just looking to require OEM repair procedures and how that might affect the Boyd.
Sure.
We follow the OEM repair procedures today.
And all of our all of our locations have access to OEM repair data.
And repair researches.
Key part of any repair and is as following.
Repair requirements. So it should have no impact on us.
And so the legislation really doesn't it doesn't change what we would do.
And if the.
Like kind of quality clause ends up being a Trojan horse for OEM part sales.
Since you guys are of pass through on price cost for repairs that should have no impact either.
Well, yes, I think in your <unk>.
Referring to the OE position statements, where they say you need to use in the OE part.
Is that what youre, referring to Mike or.
Or like kind of a lot of yes.
Yes, I mean, some of the Oes are even taking a more aggressive position on used parts is not being appropriate for the repair.
But I think the the aftermarket is protected.
And I think in order to keep repair costs down we.
Need to continue to evaluate and use.
Cost effect of quality alternative parts.
Where it makes sense.
I think thats those are usually position the statements by the oes rather than mandates.
And I take the mandates will be a little bit more difficult. So if we were forced to only use OE parts, but I think the risk is that it could increase repair cost.
Potentially impact total loss rates.
But I think there will be a fair amount of market pressure to.
Continue to have the healthy alternative part market.
Makes sense, thanks, very much I'll turn it over.
Thanks, Patrick.
Thank you.
Thank you.
All of the Shin from Steve Hansen from Raymond James. Please go ahead.
Yes, thanks, guys just to follow up on.
Some of it some of the.
I guess mused changes to capital gains taxes that are coming down the pipe in the U S are there.
Is that entered the any of your discussions thus far I guess ultimately trying to figure out here are there more sellers that are willing to contemplate.
Getting off.
The facilities in the shorter term because of some potential changes capital gains taxes and does that increase your pipeline at all or is it at the midpoint.
Steve you should.
And again, obviously kind of us won't comment I will try to say that but I think it should and as you know that legislation is still at the proposal stage and if it comes to pass I think sort of new should have an impact they'll have motivated silos in the shorter term.
Okay, but it is not really any of the discussions as far I guess.
You are not seeing any discernible change in your and your interest in selling that as far as some more steady course.
We don't talk specific do you just put all of our pipeline is very robust. So we can tell you that but beyond that we don't tell the whats the modulating the silos, we have a number of conversations, but we don't get into that level of disclosure.
Okay.
Thanks, I appreciate that.
Thanks, Steve.
Thank you.
Another question from Daryl Young from DB Securities.
Good morning, gentlemen, just one quick one from Neil.
With regards of the technician shortage.
<unk> bin.
A net outflow of technicians during the pandemic from the industry just.
Individuals that may have been laid off in the early days shifted into a new.
The new career path.
And then I guess second to that.
The rate of poaching between large msos of technicians changed at all during the pandemic.
On the first question on the net outflow of I haven't seen any data on debt I do know and most people of read about this but the participation rate in the workforce is pretty low right now.
And there are a lot of.
Enhanced unemployment benefits and many states that don't even require that you are actively looking for employment.
To continue to collect unemployment, so I think thats, making it difficult for employers to staff up.
In the U S. Those benefits are scheduled at least the federal portion of those benefits are scheduled to end in October.
So that will probably help improve the participation rate in the workforce.
And I just don't have any data on the outflow from the industry.
On the other question I, probably wouldn't comment on specific activities that happen amongst larger players, it's always been a very competitive environment.
For the technicians.
But I probably can't comment on that further.
Okay fair enough. Thanks, Thanks, so much guys. Thanks.
Thanks Darryl.
Thank you.
Your next question is from the line of Chris.
The pricing from CIBC.
The Lancaster Hi, Thanks, Good morning quick question.
Just a follow up on some previous.
The previous question, so I understand that.
Reopened all of your U S shops.
At this point are all of the Canadian one Canadian ones reopened as well.
No no as I mentioned the the.
The business in Canada remains at relatively low levels and it has not yet made sense to reopen all of the facilities for pulp production.
Okay and then.
Just another question, obviously, Canada has been has.
That's been underperforming due to some of the loss, but in the states where those states of fully reopened the have you seen some shops return to pre pandemic levels or is that still taking some time.
I would say if you look at individual shops, we would see that.
There may even be markets that are nearing prepaid and pandemic levels and then there are others, where maybe restrictions or remain more significant impacts from rates are high that could be impacted.
The impact of more than others.
But hopefully over the coming months.
As vaccination rates continue to increase in infection rates decrease that will balance out.
Great. Thank you that's it from me.
Thanks Kristen.
Thank you.
We don't have any further questions at this time presenters. Please continue.
Okay, well, thank you operator.
Thank you all once again for joining our call today, and we look forward to reported our second quarter results to you in August thanks.
And have a great day.
Thanks, everyone.
Bye bye.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect have a great day.