Q2 2023 Dycom Industries Inc Earnings Call
Yeah.
Good day, and thank you for standing by and welcome to the Dotcom Industries incorporated second quarter results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one one on your telephone.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your host today, Mr. Steven Nielsen President and Chief Executive Officer. Please go ahead.
Yeah.
Thank you operator, good morning, everyone I'd like to thank you for attending this conference call to review, our second quarter fiscal 2023 results.
Going to slide two during this call we will be referring to a slide presentation, which can be found on our website's Investor Center main page relevant slides will be identified by number throughout our presentation.
Today, we have on the call drew that Ferrari, our Chief Financial Officer, and Ryan <unk>, Our general counsel.
I will turn the call over to Ryan Urness.
Thank you Steve.
All forward looking statements made during this call are provided pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Looking statements include all comments, reflecting our expectations assumptions or beliefs about future events or performance that do not relate solely to historical periods.
Forward looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections.
Including those risks described in our annual report on Form 10-K filed March four 2022.
Together with our other filings with the U S Securities and Exchange Commission.
We assume no obligation to update any forward looking statements Steve.
Steve Thanks, Ryan now moving to slide four and a review of our second quarter results as.
As we review our results. Please note that in our comments today and in the accompanying slides we reference certain non-GAAP measures. We refer you to the quarterly report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.
Now for the quarter Rev.
Revenue was $972 3 million, an organic increase of 23, 5%.
As we deploy gigabit wireline networks wireless wireline converged networks and wireless networks. This quarter reflected an increase in demand from three of our top five customers.
Gross margin was 17, 9% of revenue and increased 63 basis points compared to the second quarter of fiscal 2022.
Improved operating performance of 122 basis points in the second quarter was partially offset by 59 basis points of higher fuel costs Jed.
General and administrative expenses were seven 5% of revenue at all of these factors produced adjusted EBITDA of $104 7 million or.
Or 10, 8% of revenue and earnings per share of $1 46, compared to 59 in the year ago quarter.
Liquidity was solid at $366 3 million improving sequentially during the quarter, we repurchased 104000 shares for $10 million now.
Now going to slide five.
Today major industry participants are constructing or upgrading significant wireline networks across broad sections of the country.
These wireline networks are generally designed to provision gigabit network speeds to individual consumers and businesses either directly or wirelessly using <unk> technologies.
Industry participants have stated their belief that a single high capacity fiber network and most cost effectively deliver services to both consumers and businesses.
<unk> multiple revenue streams from a single investment.
This view is increasing the appetite for fiber deployments and we believe that the industry effort to deploy high capacity fiber networks continues to meaningfully broaden the set of opportunities for our industry.
Increasing access to high capacity telecommunications continues to be crucial to society, especially in Rural America.
The infrastructure investment and job tax includes over $40 billion for the construction of rural communications networks, and Unserved and underserved areas across the country.
This represents an unprecedented level of support in addition, substantially all states are commencing programs that will provide funding for telecommunications networks, even prior to the initiation of funding under the infrastructure Act.
We are providing program management planning engineering and design aerial underground and wireless construction and fulfillment services for gigabit deployments.
These services are being provided across the country and numerous geographic areas to multiple customers.
These deployments include networks, consisting entirely of wired network elements and converged wireless wireline multi use networks.
Fiber network deployment opportunities are increasing in rural America, as new industry participants respond to emerging societal initiatives.
We continue to provide integrated planning engineering and design procurement and construction and maintenance services to several industry participants.
Macroeconomic effects and supply constraints may influence the near term execution of some customer plants.
Broad increases in demand for fiber optic cable and related equipment may cause delivery volatility in the short to intermediate term.
In addition, the market for labor remains tight in many regions around the country. It remains to be seen how long this condition persists.
Furthermore of the automotive and equipment supply chains remains challenged particularly for the large truck chassis required for specialty equipment.
Prices for capital equipment are increasing.
As we contend with these factors we are encouraged that industry participants increasingly understand the cost pressures are industry wide share.
Several have addressed those impacts while others are expected to do so as well.
Within this context, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.
Moving to slide six during the quarter organic revenue increased 23, 5% our top five customers combined produced 67, 4% of revenue increasing 26, 6% organically.
Demand increased from three of our top five customers all other customers increased 17, 4% organically.
<unk> AT&T was our largest customer at 26, 3% of total revenue or $255 9 million AT&T grew 44, 2% organically.
This was our sixth consecutive quarter of organic growth with AT&T.
Lumen was our second largest customer at 13, 1% of revenue or $127 6 million lumen grew organically 33, 7%. This was our second quarter of organic growth with lumen rare.
Revenue from Comcast was 111 8 million or 11, 5% of revenue Comcast was <unk> third largest customer.
Verizon was our fourth largest customer at $88 million or eight 3% of revenue and finally revenue from frontier was $78 7 million.
Or eight 1% of revenue frontier grew 147% organically.
This is the first quarter since April of 2017, where our top five customers grew organically in excess of 25% and the 14th consecutive quarter, where all of our other customers in aggregate, excluding the top five customers have grown organically.
Of note fiber construction revenue from electric utilities was $79 8 million in the quarter and increased organically 54, 4% year over year.
We have extended our geographic reach and expanded our program management network planning services.
In fact over the last several years, we believe we have meaningfully increased the long term value of our maintenance and operations business.
<unk>, which we believe will parallel our deployment of gigabit wireline direct at wireless wireline converged networks as those deployments dramatically increase the amount of outside plant network that must be extended and maintained.
Now going to slide seven.
Backlog at the end of the second quarter was 6.028 billion versus $5 $5 93 billion at the end of the April 2022 quarter, an increase of $435 million.
Of this backlog of approximately 311 1 billion is expected to be completed in the next 12 months.
Backlog activity during the second quarter reflects solid performance as we both new work and renewed existing work.
We continue to anticipate substantial future opportunities across a broad array of our customers.
During the quarter, we received from lumen fiber construction agreements in Washington, Oregon, Arizona, Colorado and Minnesota.
For a bright speed fiber construction agreements for Pennsylvania, New Jersey, Virginia, and North Carolina.
From Verizon, a construction and maintenance agreement in Pennsylvania.
For frontier construction, and maintenance and fiber construction agreements in California, Ohio and Pennsylvania.
And from connect sign a rural fiber construction agreement in Louisiana.
Head count was 14951.
Now I will turn the call over to drew for his financial review and outlook.
Thanks, Steve and good morning, everyone going to slide eight <unk>.
Contract revenues were $972 3 million and organic revenue increased 23, 5% adjusted EBITDA was $104 7 million or 10, 8% of revenue compared to $73 8 million or nine 4% of revenue.
This reflects an improvement of 140 basis points compared to Q2 of last year.
Gross margin was 17, 9% of revenue and increased 63 basis points.
Improved operating performance of 122 basis points of gross margin was partially offset by 59 basis points of higher fuel costs.
G&A expense of seven 5% decreased from eight 2% of revenue in Q2 'twenty two from improved operating leverage at the higher level of revenue and tight management of costs.
Net income was $1 46 per share compared to <unk> 59 per share in Q2 last year.
This increase reflects higher adjusted EBITDA, lower depreciation and amortization and higher gains on asset sales, partially offset by higher stock based compensation and interest expense.
Going to slide nine.
Our financial position and balance sheet remains strong we ended the quarter with $500 million of senior notes $341 million to $5 million of term loan and no revolver borrowings.
Cash and equivalents were $123 million and liquidity was solid at $366 3 million.
Our capital allocation prioritizes organic growth, followed by opportunistic share repurchases and M&A within the context of our historical range of net leverage.
Going to slide 10 cash.
Cash flow used for operating activities was $12 million to fund the sequential growth in operations.
Capital expenditures were $39 1 million net of disposal proceeds and gross Capex was $42 5 million.
During Q2, we repurchased 104000 shares of our common stock for $10 million.
The combined Dsos of accounts receivable and net contract assets was 107 days a sequential increase of two days.
Going to slide 11.
As we look ahead to the quarter ending October 29, 2022, the company expects contract revenues to increase low to mid teens as a percentage of contract revenues as compared to the quarter ended October 32021, and.
And we expect non-GAAP adjusted EBITDA percentage of contract revenues to increase modestly compared to Q3 of last year.
We also expect $10 $8 million of interest expense, reflecting higher market interest rates.
A 26, 5% effective income tax rate and 30 million diluted shares.
For Q4, ending in January 2023, we expect a growth rate of contract revenues to moderate for normal seasonal winter impacts compared to the October quarter. Each year. Our January quarterly results are impacted by seasonality, including inclement weather fewer available work days due to.
The holidays reduced daylight work hours as well as the restart of calendar payroll taxes. These and other factors may have a pronounced impact on our actual results for the January quarter, now I will turn the call back to Steve. Thanks drew moving to slide 12.
This quarter, we experienced solid activity and capitalized on our significant strengths.
First and foremost we maintained significant customer presence throughout our markets. We are encouraged by the breadth in our business.
Our extensive market presence has allowed us to be at the forefront of evolving industry opportunities.
Phone companies are deploying fiber to the home to enable gigabit high speed connections increasingly rural electric utilities are doing the same.
Dramatically increased speeds to consumers are being provisioned and consumer data usage is growing particularly upstream.
Wireless construction activity in support of newly available spectrum bands is increasing this year.
Federal and state support for rural deployments of communications networks is dramatically increasing in scale and duration.
Cable operators are deploying fiber to small and medium businesses and enterprises a portion of these deployments are in anticipation of the customer sales process.
Deployments to expand capacity as well as new build opportunities are underway.
Customers are consolidating supply change, creating opportunities for market share growth and increasing long term value of our maintenance and operations business.
As our nation and industry navigate some increased economic uncertainty.
We remain encouraged that a growing number of our customers are committed to multiyear capital spending initiatives we.
We are confident in our strategies the prospects for our company.
Capabilities of our dedicated employees and the experience of our management team now.
Now operator, we will open the call for questions.
Yes.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone.
Star one one on your telephone please standby, while we compile the Q&A roster.
And again Thats Star one wanted to ask a question.
One moment for our first question.
Our first question comes from.
Regal with B Riley financial your line is open.
Thank you good morning, Steve.
Hey, Alex.
A couple of questions here first.
Can you address labor inflation in it and its biggest and broadest sense on.
Understanding that you've probably felt a little bit of it here in the first and the second quarter, but how do you think about that address it sort of in your guidance and looking ahead.
Yes, so Alex I think we first raised the issue around what we were seeing in the marketplace.
Year ago, or maybe even a little more.
And we highlighted the fact that we saw labor cost.
Issues around new hires around some semi skilled positions it just costs more to get folks in the door into our training programs and in.
Into positions that we had opened in those areas I think that continues.
We're working hard to bring more people in.
I think the market is tight and cost, particularly in those areas.
Our are certainly higher.
So more more broadly if we look ahead and this is not.
That's the first time, we've ever seen this but what's important right now is to think about what the cost of labor is going to be going forward to make sure that we're set up with the customers in a way.
We are able to deliver.
The valuable resources that they need and.
This one's tight it's a tight unemployment.
Unemployment is low, but that's really the way we're thinking about it.
That is helpful. And then obviously, there's been plenty of talk as to whether or not we're in an economic recession or not.
Do you see this developing in your business at all.
And second how have your customers reacted to a recession in the past.
How might they react or how might that impact your business in the future given a lot of different sort of funding sources and different dynamics with your cost structure.
Sure. So so Alex in terms of the near term indicators that we look at we're not seeing signs of a recession in the business. Obviously, when we were able to grow sequentially.
Our revenue $95 million from the April quarter, we're clearly seeing lots of opportunity out there.
With respect to.
If there is a recession that we don't currently see.
I think what's always been important for us as we work for big customers that have large well established businesses they have.
Balance sheet.
<unk> capacity and in this instance, the programs that we're working now are very strategic for their ability to grow their own businesses into the future.
There is never any guarantee how any individual economic cycle will play out, but I think we always take comfort brand we work for.
Good.
Well <unk>.
<unk> customers.
And for which what we're doing for them is strategic.
And that's I think the way we.
We look at it.
Very helpful Nice quarter. Thank you.
Thank you.
Thank you.
One moment for our next question.
Yes.
And our next question comes from the line of Steven Fisher with UBS. Your line is now open.
Great. Thanks, Good morning, sorry for the background noise here.
I think your margins historically are down a little bit sequentially from Q2 to Q3. So I'm wondering if there's anything different that you're expecting this year given that it's a little bit of an unusual year with maybe some of the timing of the cost and the pass through trends.
Getting relief on that so I guess.
Q3 down sequentially on margins or.
Is it typically would be or can it be different this year.
Steve. This is drew thanks for the question. So I think youll see in the outlook that we've provided.
Well within the range of expectations as both revenue and EBITDA margin percentage kind of in line with Q2.
Yes, and I don't we don't see anything in particular right now in the marketplace.
That would indicate.
Any pressure there.
Once again no guarantees we're encouraged with the cost of fuel through the month of August but again, it's too early to see exactly how that plays out for the entire quarter.
Okay. Thanks.
And then the follow up.
You made reference to industry participant.
Increasingly understanding the cost pressures and others are expected to follow on that can you maybe just give us some sense of what percentage of your customers.
Have released from and then maybe the timing of when others could accept that as well and then you kind of nailed the.
The headwind for the quarter on the fuel increase.
Despite everything moving around so I'm just curious how sort of this next round of relief will come through.
Yes, Steve I don't think we're not going to talk specifically that kind of individual programs or customers, but I would say that we were encouraged that a number of the major customers.
Have acknowledged that there are cost pressures in the business that we that they were able to address with us they are bearing ways that.
Happened during the quarter.
But I think I would also point it just broadly recognized across all industry participants that those cost pressures are there there's lots of demand in the industry and that working together, we can minimize those cost pressures.
But.
Our economics and the economics that we have for employees and subcontractors have to reflect market realities.
Giving up given what's going on in the industry.
Okay, but you do you expect incremental relief and in the third quarter relative to the second quarter.
I mean, we're not going to get down to tying it tight.
<unk> are down to a quarter I mean, if it came in the day after the quarter that would be fine too. It's just that there's an acknowledgment by everybody in the marketplace that as we continue to grow capacity and remember if.
You take the first two quarters together and annualize those.
We're growing a big business I mean organic revenue was up over $330 million in the first half of the year.
And in order to grow that capacity and make sure. We can deliver we just got to make sure we get the economics right.
Terrific. Thank you very much.
Thank you.
One moment for our next question please.
And our next question comes from Sean Eastman with Keybanc. Your line is now open.
Hi, Steven drew thanks for taking my question.
So this is kind of just a segue from that last comment Steve.
It was the 22% organic growth in the first half on 4% head count growth achievable, yes, it looks like head count actually went down from <unk> to <unk>.
So how should we think about that how is that possible and how should we think about that dynamic on a go forward.
Yes, Sean I think when you consider head counted fluctuates from quarter to quarter. It can reflect.
Movement from program to program for a region of the country to region of the country.
That can influence what we choose to self perform versus subcontract. So I think in any given quarter.
It's hard to read a whole lot into it.
He's working on.
<unk>.
Back office efficiencies and better field productivity, so that factors into it over time and then obviously in this case, we were able to bring on.
More productive resources from subcontractors and we were able to get more work done with the people that we have.
So.
At that level of fluctuation.
From our perspective, not a lot to read into it.
Okay.
Fair enough.
Coming back to the comments about.
The customer base, recognizing the cost pressures. So it sounds like everybody is recognizing the cost pressures, but what proportion of the customer base would you say has.
Already.
<unk> actually addressed the cost pressures with contractors at this point.
And in light of that.
Broad based recognition of higher costs have you seen any evidence that that's resulting in any throttled back and build plants.
So again, so unlike as we.
<unk> discussed with Steve.
A number of the major customers have addressed the issue with.
Not only with us, but with the industry best on what we know.
We're not going to quantify that for you because we think that's a long term positive, but we can't we're not going to sit there.
At quarter to quarter.
But but.
It's encouraging and then I think there were a number of comments.
On earnings calls or other industry presentations, where customers have acknowledged that there is.
Cost pressures, but when you think about that these are long term assets that they're being very successful in.
<unk>.
Getting folks to buy the service that it based on their own comments.
There was nothing that was affecting their long term plans I'm sure, they're like everybody else they like it to be less wheat, probably like our cost to be less.
But it doesn't seem to be impacting.
The plans as their plans as they've discussed them with investors.
Okay got it thanks for that I'm going to sneak in one more just on the rail side.
Yes, it seems like we are.
Sort of in a holding pattern waiting for these maps to be produced by the FCC.
I'm wondering I'm wondering if you could just help frame for us what.
Broadband activity can ramp without these maps sort of.
We're going to have to wait for the maps for any.
Any help on that dynamic that would be helpful.
So Sean a couple of things. It's a good question. So one we were encouraged in the quarter that with our fiber deployments for electric utilities, we did just less than.
Then $80 million I think that was up over 54% organically year over year. So it's still it's a dynamic market I think one of the things as folks focus on the infrastructure Act that they missed is that there were substantial amounts of money under prior.
Covid stimulus programs that were released to the states as well as state fundings out of their own general budgets. We keep score on that we think it's north of $15 billion.
That's already underway through the state mechanism and of course, the art off.
Phase one release was also.
Contingent necessarily are released to the maps.
So what would have been a than any other period would have been a huge amount of state and art off muddy.
He is out there, but it is going to be followed as these maps get finalized by federal money. So we're seeing lots of state funded activity right now in a number of states around the country.
It is not contingent on the maps.
Very helpful. Thanks, Steve.
Yes.
Thank you our next question.
Comes from the line of.
Brent Thielman with D. A Davidson your line is now open.
Hey, Thanks, Good morning, Steve.
Hey, good morning, Brett.
Hey.
Steve I imagine a lot of these programs are still in early stage deployment and so there is that there is a buildup component still occurring where maybe youre still offering allowed us to.
Procurement related activities and so forth is there is there a way for us to think about that versus the activities or services that you're actually doing in the field.
Assume youre, earning much higher margin mix.
And then services and normal relative to history.
So Brent at least in the way, we do procurement in those programs, where we're providing.
The actual materials as we acquire then they go into inventory they get released out of inventory when we provide the service. So I'm not sure that I am following the question we recognize the margin.
Those items as well as the services.
Margin at the same time.
Anything to add yes, that's correct.
Okay.
And then when we look in a couple of these sort of historically larger customers for you in the top five.
Are you seeing lower revenue levels year on year.
Is that a function of their spending initiatives today, where you're sort of reallocating resources to address it.
Frankly value anymore.
Yes, I think it's <unk>.
Primarily the former Brent I think it's well known in the industry that the one fiber program for Verizon.
It is based on their discussions with investors at conferences on our earnings call is coming down we certainly are reflecting that.
In our revenues, although as we highlighted in the comments, we did pick up a new state for them. So thats helpful to offset some of that and then as we've talked about broadly in the cable industry. They are taking a more technical approach to upgrading capacity.
Construction related.
And we're happy to perform that service and want to make sure that.
Whatever we commit to we can deliver but but happy to do that.
Okay. Thanks, guys.
Thank you.
One moment for our next question.
Our next question comes from Eric <unk> with Wells Fargo. Your line is now open.
Great. Thanks for taking the question, Steve you made a comment about about wireless capital spending increasing this year and it still seems like a lot of mid band spectrum upgrades are still still ahead of us. So perhaps you could talk about the contribution in the quarter.
Perhaps where that could go this year or next year and is that still mostly coming from your largest customer AT&T or are you seeing more diversified opportunities from the other operators like a Verizon dish or T mobile.
Sure So Eric revenue in the quarter was a little more than 6% wireless.
Actually grew 20% little over 20% year over year, I think Thats first time, we've had sequential growth there and <unk> been.
Quite a while so we were encouraged as these new spectrum bands begin.
To be deployed that we have some good opportunities there we have grown our footprint somewhat.
That's always helpful.
We are still primarily focused on our largest customer, but we certainly do work for others.
The number.
Particularly one and we expect that to grow also so I think we're just generally encouraged coming out of this year into next year on wireless.
Yes fair enough.
Also I just wanted to ask one of your top customers was issued a cease and desist order in Connecticut for underground fiber construction hearing and I know you typically don't want to comment on specific customers, but just wondering what if any impact that might've had on growth of that customer either in the quarter anything that changes the outlook from that geography.
Yes, Eric I'd, just say that we're aware of it the customers handling the situation.
It is reflected in our guidance and we really don't have anything to add beyond that.
Yeah Fair enough and then just one more from me, Steve obviously the bead.
Infrastructure build that you've touched on earlier.
It's kind of a big topic of discussion so.
Once the maps are completed it gets allocated to the states. It seems like funding may not flow until 'twenty three 'twenty four but what's your best sense on.
I mean from that program and when you could see construction activities actually commence would you expect that some.
Some of the private capital to come in ahead of the subsidy funding based on past precedent with these programs.
Yes, I think overall, Eric look we're not experts on the mapping process and getting it through bureaucracy. So we read what everybody else reads, we think.
But there are certainly some opportunities as the maps come out into 'twenty three I think what you've highlighted though is that the private capital who is confident that they will be able to get.
Help from the program may very well be reorienting their programs.
To new geographies based on the prospect of that additional funding source.
And I do think that that will certainly.
Certainly is a strong possibility.
Just like we saw on the.
On the art off there certainly were a number of market participants who were confident that they would eventually receive their fair share of the art off that was that we're able to use other funding sources to begin.
Early and before that funding was to begin so I just think it's kind of an overall change in the market equilibrium.
That says rural is a place where people expect to have.
Good returns from a combination of their capital private capital as well as government support.
Don't think people are going to wait until the first dollar comes in to act on that.
Okay fair enough. Thanks for taking the question Steve.
Thank you one moment for our next question.
And our next question comes from Adam.
<unk> with Thompson Davis Your line is now open.
Hey, good morning, Stephen very nice quarter.
Good morning, Adam.
First question, how do we think about margins going forward you did a little better than you expected.
In Q2, despite some inflation headwinds.
Is the Q2 results something you can build off of.
Adam we've had.
Long expressed view that when we have broadly distributed growth when we have robust industry opportunities that we can grow margins from where they are now.
To be in excess of where they have been on a long term historical average basis.
And I think we're encouraged that as we work together.
With our customers that we think that we can achieve that so long as we continue to deliver.
Good service and create value for the customer.
And the customers that you work together with kind of over the last three months does that benefit you in the second quarter or is that benefit still on the comp.
There were certainly some impacts in the quarter, but obviously.
As we've talked about it in May we did reference it so I would say it happened more towards the latter part of the quarter than the beginning.
Makes sense and then I just wanted to try to understand your comment about the normal seasonal growth deceleration in Q4.
So you're guiding to.
Kind of low teens growth in Q3 does that imply something in the kind of high single digit year over year growth range for Q4.
We're not providing guidance Adam for the fourth quarter, but what we did want to highlight is it's not unusual in a year, where <unk> had lots of growth.
Everybody has been really busy that at the end of the calendar year and perhaps at the beginning of the next if things are somewhat slower.
As I know Youre aware, you've followed the company a long time, our fourth quarter. The January quarter isn't all that predictive of how the subsequent year goes.
<unk> of all the seasonal effects.
That we talked about so that's that's the purpose of the comment.
Okay. Thanks, guys.
Thank you.
One moment for our next question.
And our next question comes from Noelle Dilts with Stifel. Your line is now open.
And congrats on the nice quarter.
Just wanted to add.
To ask a question on <unk>.
On Google I recognize that there are a lot of layers now to this customer.
In terms of customer spending.
But we did just see Google announced five states could you speak to.
Just how we should think about that opportunity your historical positioning there and when we go back years to when you were doing more work with a large customer that I believe to be Google.
Lot of that work seem to be aerial and it was it was nice margin works. So any thoughts on just generally how we should be thinking about that opportunity.
Yeah, Yeah, no I don't think were going to have any comment specific to Google or to the mix of work for any individual customer I think what we would say is that their commitment to.
Resumed the expansion of their network deployment into new markets is reflective of the robust environment that we see in the industry I mean, there's a lot going on there's a number of new entrants it seems like.
Maybe not every day, but every week there is a.
New private equity investment of some size into a network.
Operator.
So I just think that is what certainly they talked about in the article that I read about.
That they have been successful and so theyre going to expand.
Okay got it.
And then just in terms of obviously this has been discussed quite a bit in terms of progress on pricing with customers.
Just curious there tends to be I believe a bit of a concentration in terms of MSA work.
And reopening toward the end of the year.
Just curious if that.
So it is still the case that there is a bit of a concentration around reopening that around year end and.
Are any of these repricing and sort of formulaic or tied to.
Some sort of an inflationary metric just curious how we should think about that thank you.
So noelle so I think theres really two questions. There certainly there are there are contracts that are under renewal processes all the time.
I would not say that we've got a quarter by quarter, but there are certainly some customers that are calendar year and so as you work through the renewal of the new agreement, obviously, you have to contemplate the current costs.
To provide the service there are others that.
Before the formal term is renewed do have annual escalators. Some of those are formulaic others are such that we propose and have a discussion with the customer.
They certainly do have.
So some opportunity there and then there are other situations, where based on new opportunities or an ability to to help out perhaps in a new geography that when we do that we reflect the current costs and what we think the future holds for those cost when we when.
We work out an arrangement.
On those opportunities.
Got it thank you.
Thank you and I'm currently showing no further questions at this time I'd like to hand, the conference back over to Mr. Steven Nielsen for closing comments.
Well, we thank everybody for your time and attention today, and we look forward to speaking to you the week of Thanksgiving. Thank you.
Ladies and gentlemen, thank you for your participation in today's conference you May now disconnect everyone have a wonderful day.
Yes.
The conference will begin shortly.
As Johan during Q&A, you can dial star one one.
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Okay.
Okay.
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