Q3 2021 Stella-Jones Inc Earnings Call
Okay.
Good morning, ladies and gentlemen.
Thank you for standing by welcome to Stella Jones, Q3, 2021 earnings conference call.
At this time all participants are in a listen only mode. Following the presentation. We will conduct a question and answer session is.
Instructions will be provided at that time for you to queue up for questions.
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Before turning the meeting over to management.
Please be advised that this conference call will contain statements that are forward looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.
I would like to remind everyone that this conference call is being recorded on Tuesday November 9th 2021.
I'll now turn the conference over to any commercial President and CEO. Please go ahead.
Thank you and good morning.
I'm here with Silvana, Travaglini, Chief Financial Officer of Stella Jones.
Thank you for joining us for the discussion of the financial and operating results for Stella Jones its third quarter ended September 32021.
Our press release reporting Q3 results was published earlier this morning.
It along with our MD&A can be found on our website at www Dot Stella Jones' dot com and will be posted on SEDAR today as well.
We also published our 2020 and environmental social and governance report today.
Can also be found on our website in our Investor Relations section.
Under environmental social and governance.
I invite you to read our report and learn more about the steps we have taken to refine our ESG strategy and build upon the integration of our priorities of an environmental matter.
Mitchell commitment sorry products to a chip our valued employees and our governance principles.
Let me remind you that all figures expressed on today's call are in Canadian dollars unless otherwise stated.
Before I review the results I would like to touch on our recent announcements.
Last week, we announced that we entered into an agreement to purchase the shares of Cahaba pressured forest products and Cahaba Timbers, Inc. For $66 million and $36 5 million U S dollars, respectively subject to post closing working capital adjustments.
Cahaba pressure and oil borne preservative treater of wood Poles cross ties and posts and also provides accustomed trading services.
A hub of timber is a waterborne preservative treater of utility Poles, and piling and engages in a raw material procurement.
Both facilities are located in <unk>, Alabama.
The combined sales of cahaba pressure and to hub of timber totaled approximately $97 million for the year ended 2020.
Both entities, where subcontractors of Stella Jones, and our purchases represented approximately 20% of their annual sales.
Both transactions are expected to close prior to the end of December 2021.
We are very excited about these acquisitions that will expand our capability to supply the growing needs of North America as utility pole industry. In addition, they will further support the preservative offering to our customers and optimize the overall efficiencies of our Continental network.
Turning to our quarter, our third quarter results reflect the impact of the normalization of lumber market conditions and the increase in the cost of untreated railway ties, which outpaced price adjustments.
Sales for the third quarter of 2021 amounted to $679 million down from sales of 700 $742 million for the same period in 2020.
Excluding the negative impact of currency conversion of $25 million pressure treated wood sales decreased $32 million or 5%, while sales for logs and lumber decreased by $6 million.
More specifically by product category utility Poles sales increased to $256 million compared to sales of $251 million into corresponding period last year, excluding the currency conversion effect utility poles sales increased by $16 million or 6%.
Driven by improved maintenance demand for distribution Poles.
And sales mix, including the impact of additional sales volumes for fire resistant Rep. Poles. This sales growth was partially attenuated by the decrease in project related volumes.
Railway ties sales were $179 million compared to sales of $188 million in the same period last year.
Losing the curve the currency conversion effect.
Railway ties sales were stable as lower volumes for a class one customers largely due to the timing of shipments were compensated by continued strong demand and improved pricing for non class one customers.
Residential lumber sales were $170 million down from sales of $220 million into corresponding period last year.
Excluding the currency conversion effect residential lumber sales decreased $47 million or 21%, while the residential lumber pricing remain higher compared to the same period last year. It was not sufficient to offset the drop in demand.
Industrial product sales were $32 million compared to sales of $34 million in the third quarter last year, excluding the currency conversion effect industrial product sales remained relatively unchanged.
The sales of logs and lumber product category used to optimize procurement totaled $42 million down compared to $49 million in the corresponding period last year.
<unk> decreased mostly due to a reduction in lumber trading activities.
So that I will now provide further details regarding our results and financial position before I conclude with closing remarks.
Okay.
Thank you Eric and good morning.
Turning to profitability.
Gross profit was $82 million this quarter down compared to a $147 million in the third quarter last year.
This decrease in profitability is largely explained by higher fiber cost for residential lumber and railway ties combined with lower residential lumber sales volume.
These factors were partially offset by the realization of higher pricing across most of the product categories.
Gross profit for the quarter was also impacted by a 7 million inventory write down provision related to our residential lumber finished goods.
Similarly, EBITDA and operating income decreased to $69 million and $51 million respectively.
Net income for the third quarter decreased to $34 million or <unk> 52 per share compared to $79 million or $1 17 per share last year.
Turning to liquidity and capital resources.
We generated $225 million of cash from operations in the quarter, primarily reflecting favorable movements in noncash working capital.
During the quarter, we used the cash generated from operations to invest $14 million in capital expenditures and returned $38 million of capital to shareholders through dividends and the buyback of about 628000 shares.
In total we repurchased three 1 million shares at an average price of $45 40.
Under the <unk> program that expired on August nine.
We also used our cash to reduce our debt.
At the end of the quarter stellar joins us.
Debt, including lease liabilities stood at $679 million.
$745 million at the end of December 2020.
We maintained a strong financial position with a net debt to trailing 12 month EBITDA ratio of one six times and we had available liquidity of $548 million.
During the quarter, we obtained a one year extension of our unsecured syndicated revolving credit facility to February 27 2020.
All other terms and conditions remain substantially unchanged.
Subsequent to the end of the quarter on November eight at TSA access a Stella Jones. This notice of intention to make a normal course issuer bid.
Pursuant to the notice Hello, John May purchase for cancellation up to $4 million 4 million common shares representing approximately 80% of the public float during the 12 month period commencing on November 12, and ending November 11 2022.
Yesterday, the board of directors of Stella Jones declared a quarterly dividend of <unk> 18 per common share payable on December 17, 2021 to shareholders of record at the close of business on December <unk>.
I will now turn the call back to Eric for concluding remarks, Eric Thank.
Thank you Savannah.
While we recognize that the quarterly results were lower than expected I would like to highlight the solid year to date performance sales for the first nine months of the year were up 15% organically compared to the same period last year and EBITDA grew 10% to $348 million.
The softer quarterly results has led us to revise our full year 2021, EBITDA forecast to about $400 million.
Excluding the impact of currency conversion the company expect sales growth in 2021 compared to 2020 to be in the low to high teens range.
The company remains confident that it will deliver solid EBITDA in 2021 and that its EBITDA margin as a percentage of sales will be comparable to 2020.
Based on current market conditions, and assuming the conclusion of the acquisitions of cahaba pressure and cahaba timber, we're forecasting sales EBITDA and EBITDA margin in 2020 to be comparable to the solid results expected in 2021.
The company anticipates that the robust demand for utility Poles and the contribution from the pending acquisitions will offset the normalization of residential lumber sales in 2022.
Our priority is to create superior value for our stakeholders have not changed we intend to continue to be active on the acquisition front continue to improve our operating efficiencies and expand our capacity to increase our profitability.
With our financial strength scale and focus on execution and innovation, we continue to be well positioned to drive continued growth and generated solid return for our shareholders.
This concludes our prepared remarks, we will now be pleased to answer any questions you may have.
At this time, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.
Your question. Please press Star one again, we'll pause for just a moment to compile the Q&A roster.
Your first question comes from Walter <unk> from RBC Capital markets. Please go ahead. Your line is open yes, thanks, very much operator, and good morning, everyone.
Good morning, Walter Alright, So I wanted to ask you about the <unk>.
Normalization comment and how that ties into your 2022 outlook I know you.
<unk> benefited from a significant then.
And a little bit hard to predict.
Increase in demand and now.
Has that normalized that's also hard to predict and of course guidance is.
I just had to move alongside that difficulty to predict my question I guess when you when you referenced normalization what confidence do you have as you go into 2022.
That normalization has occurred.
The guidance that you provided for around $400 million similar to last year or this year.
Is what visibility and confidence do you have in that in that outlook.
Thank you Walter.
So you are completely right.
Guidance review or adjustments that we've been making this year are most all mostly all related to the residential lumber changes we've seen in pricing and in demand. When we look currently at the forecast for volume for this year in 2021, I would argue that it will be most likely comparable to what we see.
We have seen pre pandemic in 2019.
Talking with our customers contractors and.
Different expectations for household improvements.
Forecast for the coming years, we feel that going into 2022.
We'd be looking at these similar volumes in 2019, so when we talk about normalization as we went through the swing of the high prices of lumber, which increased our pricing and our obviously our sales and then since since July end of June or July we've seen volumes.
Normalized <unk> and by that I mean being comparable to what we've seen historically so right now as we're sort of landing towards the end of 2021, we see volumes to be comparable and that's.
That's how we are drawing our assumption that.
For 2022, we would be seeing the similar volume levels. Okay.
Okay. That's very helpful. Thank you and just as my follow up question with regards to the M&A pipeline.
First of all you are including Cahaba in your EBITDA for next year, we've estimated that at about $18 million and if you could I'm not sure. If you can give us a sense of whether whether that's accurate or not in terms of how much that will be contributing to next year and then just your overall thoughts on on on the M&A environment I know there was a.
But.
Paul a pole acquisition that you were zeroing in on if you could update us there and just generally the.
The overall pipeline that would be very helpful. Thank you.
Thank you Walter we have not provided specific guidance on EBITDA margins for the acquired companies.
However, I can tell you we've paid in our traditional multiple range as always.
<unk> talked about.
Six to seven times, a traditional multiple so I think that gives you a good indication about how accurate your number is.
With regards to the pipeline. So you referenced the Pall acquisition. So this would be one of them.
Rob or pressure in timber combined would be one of the projects. We were working on since the beginning of the year that we've alluded to in previous calls.
That being said.
I did discuss in previous calls about potentially looking at several other projects and we are still actively discussing with with potential target acquisitions. Our balance sheet is strong we definitely have the leverage to accommodate more M&A and we remain focused on the on <unk>.
Product.
Okay. Thank you very much of it might.
My pleasure.
Your next question comes from Michael <unk> from TD Securities. Please go ahead. Your line is open.
Thank you and good morning.
Good morning, Mike.
Maybe just.
A clarification to begin with the new 2021, EBITDA guidance of about $400 million.
That includes the negative impact of the $7 million inventory provision taken in the third quarter.
Yes, it does.
Okay perfect. Thank you.
Second question the various factors that have been pressuring results lately, so, namely greater than expected margin compression for residential lumber.
Higher untreated railway tie costs than anticipated.
Softer demand for class one railroad customers.
To what extent do you see those factors continuing to pressure results in the fourth quarter.
So those.
Those three factors are incorporated in I guess the adjustments in our guidance.
So when you look at.
Considered the midpoint or the guy.
The EBITDA that you had previously thought.
We're talking about today.
Looking at.
We're looking at the contribution for those three items to be part of of the scenario. So I would say probably 50% of that is related to two residential lumber. If you include actually that the write off that was not in our forecast you could call it probably closer to 70% to 75% in the balance of that would be railways.
Now I'd like to add.
The fact that although we've seen our fiber cost for railway ties increase we do have the opportunity.
In many cases on a quarterly basis to adjust our pricing. So we have on October one to certain class one and for others. We will have another opportunity early in January so we.
We do feel that will subside overtime.
Okay. So that was actually starting to be my next question of the extent to what these facts towards these factors are.
We expect it to be an ongoing issue into next year.
You sort of answered it there I guess with respect to the ability to pass costs through on the tie side, but more holistically or entity.
These factors are going to continue to weigh on results next year in a material way in your opinion.
No I don't think so and maybe it's an opportunity for me to talk a bit about the write down so.
So through the third quarter, we did not see residential lumber volumes.
Move as fast as what we wanted to so at the end of September.
We sort of took a hard look at our inventory position the average cost and what we need or what we needed to achieve our December 31 goal of having the proper cost of inventory to be able to address 2022 in our more historical margin fashion. If you want so that write off gets us.
Exactly where we need to be for the end of December it's certain items that we've gone out to the market and offer it at a very attractive price, which I would say are in better parts sold as I speak today. So we're in very good shape.
Put this.
Residential lumber inventory adjustment behind us.
Okay. That's helpful. Thank you Eric.
Maybe circling back on one of the questions that Walter asked about the.
The outlook you provided for 2022, which implies about $400 million of EBITDA next year.
I think you've touched already on your some of your assumptions regarding the residential lumber business in terms of assuming it looks similar to 2019 levels, but can you talk maybe about some of the other assumptions you've made around the rest of the business and I guess.
Beyond the specific assumptions just your level of confidence in this in this number you provided for next year.
Obviously, there are various risks and uncertainties and this year was that was very clear this year with the way the year played out but.
What extent have you buffered that that number you've put out there.
Is that a conservative number have you factored in various risks and uncertainties or how confident are you in that $400 million.
Yeah.
So.
Let's start with the residential lumber part.
We're talking about assumptions there are a couple of assumptions.
I would like to add to the comment so we talked about similar volumes in 2019 assumption.
Assumption obviously is.
FX.
Price of lumber is quoted under random lengths market in U S. Dollars. So obviously there is a currency conversion potential impact and lastly, there's the depressive lumber itself. The random lengths average in 2019 was around $500 a thousand board foot.
You are currently.
Futures looking into.
Sure.
Early to late spring seem to be indicating pricing between $6 50, and 700 U S dollars per thousand board foot. So I guess, if you think about that delta of 150 to $200 per thousand board foot that is an assumption that that could change overtime to back to your comment about the volatility if you want and in the pricing.
<unk>.
So.
Other than that when we think about our $400 million.
So we have as I may as we mentioned in our in our remarks.
There will be a bit of a pause.
Pull back on residential lumber and it'll be offset by two things one is growth in utility Poles, we've always guided to the two.
Mid to high single digit growth and I think we're all set up to see that continuing.
For for coming years, so that into next year is not an exception to that and then obviously with the conclusion of the cahaba transaction that sort of gets us more or less so where we need to be.
Okay. Thanks for the time.
Your next question comes from Samir Patel from CBS CIB.
CIBC capital. Please go ahead your line is open.
Hi, good morning.
Good morning.
Could I am not sure if you have any indication yet from the class ones as to the volume commitments for a for next year I know a couple outlined their intentions.
At an industry conference recently, but any any color you might be able to share them.
Sort of the picture across maybe some of the Canadian ones as well.
Yes.
So great Great question as you might know at the not all class ones were present at the conference. This year. So we did get color from.
Certain number of them.
This seemed relatively.
Slightly upbeat I would probably say, none relative was slightly a bit.
Most of them are up a few hundred thousand ties for in their annual maintenance program for for coming year.
So I think that's that that's positive I think it's an indication of something that we've been talking about of increased traffic onto rail networks, obviously that leads to more maintenance and I think.
Railroads have been focused so far this year, probably a bit more on executing on logistics in delivering products and that's why we're seeing a bit of a.
The slowdown in class one maintenance in the second half of this year, but I think looking forward into the second half of 'twenty, two and going into further years I do see the potential for maintenance to be to be up.
Okay, Great and Eric can you earn your outlook if you factored in a while.
To what extent have you factored in the U S infrastructure plan.
And then specifically related to that.
On the railway ties side, what I understand a lot of that investment is planned with with Amtrak.
And so if you could speak to.
I'm not sure what their sort of wood or concrete time mixes, but any color you might have there.
No certainly so to answer the first part of your question the infrastructure Bill.
<unk> are not factored in our guidance for next year.
Tough to say to what extent.
It could impact next year and what I mean by that is by the time the programs get set up and are presented to the market and new funds are allocated could we see some effects in the latter part of next year, Yes, I think ultimately yes in 2023, we should we should see we should see that.
The impact to our results over 60 product demand come come to our business.
With with regards to.
Two to Amtrak.
They are a customer of ours, we do service them from time to time. It Theyre part of our I guess I would say that the non class one our commercial business with its a quoted business, but we have we have service that network in the past then.
Do expect that we will be at the table discussing for that business.
Okay. Thanks, that's helpful and.
Eric just turning to the Poles side of the business I know there's been some <unk>.
Media reports lately, <unk>, essentially spending $20 billion to underground.
They're they're power lines are you seeing signs of any other utilities.
Considering moves like that and you know, what's what's the sort of company's response given your.
Some of the fire retardant Poles that year, you have in the market now.
Sure.
Well.
<unk>.
Yeah.
First we haven't seen any slowdown from demand from our customers.
Planned for next year.
There is still growth that includes a fire wrap.
Products so.
The press release, you are referring to the <unk>.
I guess it's.
It's a project that they're studying internally.
My understanding is that it takes a lot of planning and engineering to be able to execute it will take several years to be able to execute.
I guess.
We'll see where that goes we're good partners with those customers.
The project that they are announcing represents probably maybe a third of their network. So there's still another great.
Great part of their network that will require maintenance and our products. So we're not necessarily concerned with that part and last but not least we're not seeing any other.
Customers, having discussions with thoughts about putting putting certain part of their network underground.
Okay. Great. Thanks, that's helpful. Just last question for me for Silvana.
Could you comment on Capex for 2022 or are there any larger investments being considered to grow capacity at the existing assets and anything you might have planned.
At Cahaba.
So yes for 2022 bandwidth.
You could expect our capex to be at the high range exactly to what you mentioned and we are looking at various initiatives to expand our capacity to support the additional pulse growth that that Eric just mentioned and we do.
Have some capex also dedicated to the conversion of our penta is gender.
So.
In terms of announcing timing, we're still in the process of completing up.
So we don't have that those that those are numbers.
The numbers as of yet, but yes, we would expect it to be about $60 million for cahaba and nothing nothing significant that pretty much in line with that.
With I think our overall of that I guess.
Corporate cat at percentage of maintenance annually is that is what we're seeing a slight cahaba.
I would add Amir.
<unk> assets are.
Extremely good quality very well maintained by the previous owners. So we're very proud to be able to add.
<unk> plans to our network.
Okay, great. Thanks, that's all I had.
I'll I'll turn it over.
Thank you.
Your next question comes from Ben Wyatt Poirier from Deutsche Bank. Please go ahead. Your line is open.
Yes, good morning, everyone.
Good morning, Ben.
Yes, just to follow up on the previous question Silvana could you talk a little bit about the working capital movement.
We might expect in light of the move in residential lumber for 2021 'twenty to 'twenty two.
First lens.
Yes, so for the last quarter of 2021, as we've mentioned in the past we are expecting.
Favorable working capital movement and exactly as you mentioned have been lumpy adds as.
We continue to drawdown on our residential lumber inventory and even less of a build than in past years prevailing type given the tighter supply of.
Having treated tie for 2022.
Assuming no unexpected.
Unexpected I guess market movements, we would.
And we would be budgeting, a typical build in inventory to support sales growth.
Following year, so typically our $50 million or so I think at this point given that we're still in the process of assembling our bedroom.
Yes.
Okay, Okay, that's great and just in terms of share buyback.
How should we be thinking about the allocation of capital going forward.
Versus the M&A opportunities you might have for 2022.
So thats pretty consistent with I guess, what we've been saying in the past obviously as you know the new program is there to be used so we do expect.
And to continuously use it.
But always keeping in mind.
<unk> can leverage ratio and to remain within our target ratio and.
Prioritizing obviously the acquisition.
Okay, Okay, that's great and any thoughts about.
Look of the fourth leg of growth I'm, just wondering how this initiative as progress.
So far in 2021, whether you have a better picture on.
The ability to have the fourth leg of growth.
Down the road.
Yes, so I'll take that question.
I think for the next foreseeable future call it.
12, 24 months, there is still a lot of opportunities that are.
Closer to our core competencies of wood treating.
I think so.
Youll see our team being focused on M&A with that nature Silvana spoke a bit about capacity expansion to address.
Upcoming demand, where M&A is not necessarily readily available.
The other.
Other aspects that youre, referring to is something that we are still studying and investigating and discussing with the board but.
I think for the next short while you will still hear us talk about.
Treated lumber in all three of our product categories.
Okay and last one for me could you talk about the.
Pent up reserve additive I know theres change going on and it will eventually run down so just to some color about the market acceptance for the other preservative.
Eventually replace the penta.
Certainly so the current manufacturer of Penta is.
Closing shop at the end of this year.
We will be doing performing to transition away from penta in the next 18 months, we have sufficient supply to to provide penta treated poles to certain customers that.
We are very much interested in taking that product for as long as we can provided we have discussed with all of our customers their preferences for conversion and there are of many avenues.
Certain customers will move to waterborne preservatives, such as CCA.
Other.
Sorry, other utilities are discussing about the opportunity to move to <unk>, which is an oil borne preservatives such as as penta.
Last but not least another option that is offered as a product called copper NAFTA Nate that we also offer within our network I would say the interest for that product is lesser than <unk> at the time being but we've got a plan laid out with most of our customers at this point, we have an 18 month plan.
Two sort of progressively phase out certain plants and convert certain customers and we're sort of working collectively with those customers to be able to address it in an orderly fashion.
Okay, and with respect to those preserve additive or there are some additional costs due to be expected or.
Margins fair to expect that margins will remain about the same given the change in with pent up yes.
Yes.
I suspect that the.
The margins will stay similar.
In both cases, when we converted away from penta, usually the customers will prefer to if you are an old if you if a utility prefers in oil based preservative. It will most likely move move to another oil based preservative in the margin profile would be similar.
Okay. Thanks for the time.
My pleasure.
As a reminder, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.
Your next question comes from Maxim <unk> from National Bank Financial. Please go ahead. Your line is open.
Hi, good morning.
Good morning, Tim.
Eric I, just wanted to circle back to M&A and I guess my question on around this.
Are we.
In the process of identifying kind of needle moving opportunities or how should we think about kind of the quantum of revenue contribution that could be coming from acquisitions over the next 12 to 24 months.
Yes, certainly so.
Maxim our industry in all three product categories have many participants but family owned business of.
Various sizes, we've always said.
It vary between the $30 million to $100 million Mark depending on the size.
So for me to be respectful needle moving for Stella Jones now sitting today.
$2 7 billion revenue you might argue.
That it's not necessarily a needle moving but this is how we build our network over the last 15 years is by adding to our network, adding these smaller companies consolidating our respective markets and becoming a strong presence.
For current customers and future customers.
Alright.
Fair enough and then is there I mean, obviously as you mentioned other potential some months are being considered as we speak.
In terms of providing incremental services to your existing customers is there's some thoughts.
From a process on that front from a strategic perspective.
Yes definitely.
It's.
There are activities products and services that are closely adjacent to what we do for which we do have internal expertise that discussion with customers would would see us favorably addressing those and back to <unk> question, a few minutes ago. When he was talking about a fourth leg.
I know if you could talk about a fourth leg, but I think it's enhancing our offering to our customer base, if you want but definitely their items.
In those categories that we're definitely looking into.
Alright.
Is it fair to say that you're implementing your assumptions to kind of play capital driven businesses, but also sort of a service type.
Potential as what would make sense for you.
Yes, I mean, we're not excluding anything at this point if we if we have the internal knowledge and the capacity to execute it is accretive to our margin profile, it's something we will definitely consider so.
Yes.
I'd be hard pressed to address a business that would lower our average EBITDA margins. So there is a few Gran Tierra is where we're looking at but we've always said it needs to be accretive.
Needs to be somehow close to our core competencies and we're trying to stick to those to those criterias.
Okay. That's great. Thank you and then maybe just a quick question for savanna in terms of synergies on the acquired assets anything that you can.
You can suggest to us.
I think we are.
We're fairly confident that in the past transactions that we'd be able to pick up half a turn to a turn on on that traditional marketable debt to that Erik exposed earlier.
Would include any.
Yes.
Optimization of customers at procurement.
And that and some of them and some SG&A synergy.
Okay Super helpful. Thank you and then last question Eric how are you seeing any obviously thoughtful discussions around supply chain bottlenecks wage pressures kind of labor availability and so forth anything you can share with us on these fronts.
Yes, maybe a few little things.
Like any company North America holding onto your Labor Force is.
Is it a bit more difficult we have adjusted internally, our wages to two or to our employees and keep being very mindful of market dynamics on that front, but I think we're holding our own pretty well on that front.
With.
<unk> tightness, we didn't necessarily talk about it but we are seeing tightness in the untreated tie market. So less untreated tie availability is putting some pressure on procurement.
Nothing to be overly concerned about but we are seeing.
Some some decline in our inventory levels since since let's say the last few months and I think it will subside somewhere probably early next year. So we are definitely adjusting to that.
That being said being mainly a black tie supplier, we have a large inventory of ties in at our facilities. So we can definitely.
We're in a good position to address that.
But not least.
It is not directly tied to us, but we are hearing certain utilities that are faced with a challenge to find complementary product that they need for for maintenance installation.
Cabling hardware.
Transformers and things of the like nothing alarming, but we are we are hearing that general supply constraints in North America for all sorts of AV products is not.
Is impacting to some extent that.
Our certain utility customers so.
But.
Nothing that would change our views on our guidance, but I'm just throwing it out there as well.
To answer your question.
Okay. That's great. Thank you so much for some time.
We have no further questions I would like to turn the call back over to Eddie for closing remarks.
Thank you Julianne and thank you everyone for joining us for this call. We look forward to speaking with you again at our next quarterly call.
This concludes today's conference call. Thank you for your participation you may now disconnect.
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