Q3 2022 North American Construction Group Ltd Earnings Call
Yeah.
Good morning, ladies and gentlemen, and welcome to the North America Construction group earnings call sort of certain work and then each September 30th 2022 at this time all participants are tiny.
And only moat Halloween day match transfer remarks, there will be an opportunity for analysts shareholders and bondholders to ask questions.
The media May monitor this call you know listen only mode.
Our free to quote any members of management, but they are asked not to quote remarks work any other participant without that participants permission.
The company wishes to confirm that today's squamish contain forward looking information.
Actual results could differ materially for from a quick mischer forecast or prediction Christine.
In that forward looking information.
Certain material factors or assumptions were applied in drawing St Lucia or in making forecast corporate nature that reflective on forward looking information.
How do we show information about those material factors eastern thing in the company's most recent management discussion.
Alex Yes.
He stopped me I Wouldnt say, there and that's why some of the company's website at NAC G E.
I will now like to turn the conference over to Joe Lambert Breccia and CEO . Please go ahead.
Thank you Sergio.
Good morning, everyone and thanks for joining our call today.
Let's start with our Q3 2022 operational performance before handing it over to Jason for the financial overview, and then ill conclude with the operational priorities bid pipeline outlook for 2022, and our first look at 2023 before taking your questions.
On slide three our Q3 trailing 12 month total recordable rate of <unk> 67 is the same as it was after Q2, but remains above our industry, leading target frequency 0.5, and we will be focusing our efforts on further advancing our green and new hire training programs.
Prevention of high potential injury events in our winter hazard awareness programs as we enter a busy winter season and continue to add to our workforce.
On slide four we highlight some of the major achievements of Q3.
Most of these topics are discussed another slides later in the deck. So I would simply summarize that we resolved our Q2 issues executed well and are now focused on our winter works program, a safe and efficient close out of the year.
Moving on to slide five.
We have added a new slide showing how we have moved away from vendor supported maintenance and continued to develop attract and retain our skilled maintenance tradespeople improved fleet utilization.
<unk> has an extensive and comprehensive program to expand both our action it field based maintenance workforce, we had some slight site setbacks in our programs earlier in the year as we tried to resist unusual and high skilled trades wage increases, but we are back on track and expect to continue the hiring.
As this slide clearly shows we know how to grow our maintenance workforce and we have been doing this for a long time.
We have long understood that the skilled maintenance trades are decreasing and supply and even went under average demand the industry cannot supply enough skilled trades.
<unk> also long know that wage increases often don't increased supply and that successful companies will develop and train neuro.
We believe we do this better than anyone else. We would prefer this was not the case because if others in the industry will likely grow their own we will all benefit from a more suitable supply of skilled maintenance tradespeople.
Moving on to slide six.
We achieved our highest Q3 utilization of record and the demand for our fleet remains high acuity Q3 utilization of 62% was directly correlated to increased maintenance manpower and improved fleet mechanical availability.
We expect the high demand remain interim possibly beyond 2023.
We likewise expect our progress on increasing the maintenance labor workforce will directly correlate to continued improvements in fleet utilization.
Lastly on this slide I would just like to point out that other than the average pandemic impacts our diversification efforts over the last several years had delivered into expectations and demonstrated higher Q2, and Q3 fleet utilization and we have moved the smaller underutilized portions of our heavy equipment fleet out of oil sands.
And into other geographies and commodities, where they have achieved more operating hours.
The diversification now built into the business has removed much of the seasonality and cyclicality seen in previous years.
Slide seven describes our most recent acquisition and add further to both our internal and external maintenance capabilities.
In addition to welcoming ml northern team to the <unk> family I want to acknowledge the strength of skills and abilities. This team brings to us.
We historically had use ml northern has a subcontractor when our internal servicing fleet was being stretch beyond capacity.
After several years of being an annual northern customer, we realized a share our safe low cost culture, and we also realized there are experts at carrying foreign operating a service fleet.
Rather than trying to emulate we decided we would be better off operating and managing our service fleet through northern and keeping our ACG team focused on the heavy equipment fleet.
And then northern will continue to perform work for external maintenance customers, but will also take on the operations and maintenance of the full <unk> and ACG fleet of support equipment for servicing of the ACG heavy equipment fleet.
The initial aim a great integration of ml northern has been seamless and we expect to have the full Nhcd service fleet under ammo Northern management over the next few months.
I'm excited about the benefits, we believe ml northern can bring to our business.
And look forward to sharing those achievements with you in more detail on our next call.
On slide eight my final slide before handing over to Jason.
I just wanted to highlight the open and honest discussions with our oil sands customers regarding cost escalation.
These conversations have resulted in what we believe are fair and equitable contractual amendments. These.
These client relationships are cornerstone to our business in all commodity and geographic areas. We work, but were developed tested and proven strong many times over a half a century working right here in Alberta oil sands.
On the lower half of the slide I also wanted to highlight that our Fargo Moorhead flood diversion project, which just broke ground. This past quarter is on track with the original cost schedule and margins. The project is less than 5% complete we're excited to be ramping up and heading into our first full operating year.
With that I'll hand, it over to Jason for the Q3 financials.
Thanks, Joe.
<unk> Financial review begins on slide 10, with a few of our key performance indicators combined revenue of $270 million represented the highest level of revenue. This company has ever had in a quarter and as a noticeable increase from last.
The last three quarters revenue, which were each around $235 million.
This revenue has culminated with trailing 12 combined revenue now exceeding $950 million and is closing in on a target we set of exceeding $1 billion.
From a gross margin perspective, we realized 14, 7% based on the improved context that Joe touched on and as much discussed throughout this quarter's materials.
Getting started with slide 11.
On a total combined basis revenue was 30% ahead of Q3, 2021, which is a recurring variance percentage throughout our financial metrics rare.
Revenue generated by our core heavy equipment fleet was up 18% quarter over quarter with the driver of this increase being Ecuador contributions from higher equipment and unit rates as well as improved equipment utilization.
Equipment and unit rates were updated in the quarter to reflect the specific inflationary cost pressures being experienced in the Fort Mcmurray region.
Equipment operating hours and the associated operational head count were both up 10% in the quarter and yielded utilization of 62%, which was significantly higher than Q3 2021 utilization of 52%.
The month of September was particularly strong and provides good momentum heading into the fourth quarter.
Vacancy rates related to the heavy equipment technician rolls have lowered with net new hires of approximately 50 in the past three months, which was the primary factor in the overall equipment utilization achieved.
The other wholly owned business lines, primarily being dji trading and the external sale of rebuilt haul trucks each posted strong revenue in the quarter consistent with Q3 2021.
Our share of revenue generated by joint ventures was $78 million compared to $43 million in Q3 2021.
Unit group of companies had its best financial quarter on record driven by the activity at the gold mine in northern Ontario, as well as the core business is operating at better than historic levels.
Secondary drivers of the increase in combined revenue include the continued growth of top line revenue from rebuilt ultra class haul trucks now being owned by our joint venture with the mix issue.
And the increasingly important impact of the joint venture is dedicated to the Fargo Moorhead flood diversion project the.
The groundbreaking ceremony and official startup construction work occurred in the quarter and ramp up of activities.
Is underway with the project currently at less than 5% complete and remains on budget and schedule in this early phase of the project.
Combined gross project combined gross profit margin of 14, 7% was much improved from the nine 6% we posted last quarter Q2, 2022 and reflected strong operational performance in the quarter as our primary operations in Fort Mcmurray, Northern Canada.
And northern Ontario experienced predictable and productive weather conditions for the majority of the quarter.
Our joint ventures continue their strong their trend of strong consistent operating margins and the updated equipment in unit rates were drivers for the Fort Mcmurray operations, returning to historical margin performance.
Margins realized from the parts and components sales made by dji contributed to margin stability when compared to Q3 2021 given the acquisition occurred on July one of last year.
The second life rebuild program commissioned and sold to 240 ton haul trucks in one ultra class haul trucks during the quarter.
Before closing this slide I would like to take the opportunity to point stakeholders to page.
Seven of our MD&A, and which we provide a functional breakdown of our cost of sales.
There is useful information in that table and we expect to utilize this moving forward to message and explain the cost profile of our business.
Moving to slide 12, adjusted EBITDA of $60 million was easily a Q3 record and virtually matched our company record of $61 million as the 30% revenue increase translated to a 26% EBITDA increase on steady margins previously mentioned.
Included in EBITDA, as general and administrative expenses, which were $6 $6 million in the quarter equivalent to three 4% of the strong revenue quarter.
As always we pride ourselves on G&A disciplined in Q3 was no different.
Going from EBITDA to EBIT, we expense depreciation equivalent to 10, 6% of combined revenue, which reflects the depreciation rate of our entire business. When looking at just the wholly owned entities. The depreciation percentage for the quarter was 13, 8% of revenue and reflected an extremely.
Effective use of our fleet this quarter.
Adjusted earnings per share for the quarter of 65 cents was 30% up from Q3 2021 as the revenue increase translated all the way down to net income.
EPS was driven by $37 million of adjusted EBIT net of interest and taxes.
Our overall interest rate to date is now five 1% as we trend up from the 2021 effective rate of four 3% from well known interest rate increases.
Our credit facility, which currently sits at $180 million drawn and made up approximately 42% of our total debt is directly impacted by rate increases.
We expect debt levels to decrease in Q4 based on our projected free cash flow generation.
Moving to slide 13, I'll summarize our cash flow net cash provided by operations of $40 million was produced by the business with the difference between this figure.
And the $60 million of EBITDA being being cash interest paid in the quarter of $6 9 million and the timing of joint venture cash distributions in relation to the quarterly EBITDA they generate.
Sustaining maintenance capital of $31 million was primarily dedicated to maintenance of the existing fleet as we invest in the fleet that drives our core business.
Working capital was required in the quarter and is fully expected to reverse in the fourth quarter.
I'll end with slide 14.
Total capital liquidity of $162 million reflects the importance of our credit facility and getting through the challenges that come with being a heavy equipment contractor.
On a trailing 12 month basis, our senior leverage ratio as calculated by our credit facility remained fairly steady at one seven times, but which we expect will be the high watermark for the year.
Net debt levels increased $16 million in the quarter as breakeven free cash flow of $3 million was more than offset by the purchase and cancellation of one 1 million shares for $15 $8 million in the quarter.
And with those financial comments I'll pass the call back to Joe.
Thanks, Jason.
Looking at slide 16.
<unk> summarizes our priorities for 2023.
I have frequently previously discussed our commitments increased our skilled trades shown in item four but wanted to highlight the other three areas that will be particularly important to progress in 2023.
The first area of focus and core to our culture and values is our ongoing efforts to ensure each and every one of our employees returns home safely at the end of every workday.
Although we have an extensive health and safety management system and multiple initiatives for improvement far too expensive to go into depth here today, we feel our growing workforce requiring increased new hires and in industry supply lowering experience will be best served with an increased focus on further developing our frontline.
Supervision and expanding our green hand training programs.
The second area Prioritizes continued expansion of our operational and maintenance expertise.
We will prioritize new technology, such as our telematics system, which is now installed on half of the fleet with the remaining fleet installs scheduled for 2023.
And considering the in house and vertically integrate our maintenance services and supply such as the previously mentioned ml Northern acquisition and our component manufacturing business with the newly expanded facility and added large hydraulic cylinder rebuild capabilities.
We believe this prioritization and focus will continue to lower costs and improved equipment availability and utilization.
Last but not least item three described are prioritizing a winning bids and achieving our target of greater than $2 billion in backlog by end of next year.
Which is a great transition to our next slide 17.
Slide 17 highlights a net increase of around 600 million to our already strong bid pipeline.
In Q3, we also received Rfps bid and were awarded several wind projects in oil sands totaling around $100 million, which never showed up on this list and essentially have is fully booked through winter.
We continue to expect to win our fair share of the large red Dot regional oil sands tender, but believe this Gulf award is delayed or possibly scheduled for re tender next year, although we have not heard so formally.
Lastly, we believe we will see another meaningful blue that win outside of oil sands over this winter, which will continue our diversification success and potentially offer some upside to our forecasted smaller fleet 2023 utilization.
On slide 18, our backlog sits at one five game and we continue to replenish and win our fair share of work across all resource sectors.
What I continue to believe is a key takeaway on this slide is that our backlog is roughly proportionate to our diversification target demonstrating both confidence and sustainability of our diversification efforts.
Lastly, on the backlog I briefly stated expectations or exceeding $2 billion before the year is out but with the assumed deferral. The regional oil Sands tender award, which was the driver of that expected increase whereby likewise deferred expectations into next year.
On slide 19, we have provided a revised outlook for 2022.
With our strong Q3 results progress on priorities Q3 tender wins and focus on safe and efficient close to the year, we have been able to increase the midpoint for almost all of our key financial metrics.
Free cash flow was deferred into the new year predominantly due to work expanded and extended at our northern Ontario, Goldmine JV with no debt.
We made what we believe are high value investments in growth through the acquisition of <unk> margin and as Gerald friendly buybacks, which we see is complete for the year and we'll direct the remaining expected free cash flow to deleverage.
On slide 20, we have provided our initial outlook for 2023.
As stated in my letter to shareholders, we expect some pressure on earnings and free cash flow due to increased interest rates, but are pleased to show continued annual EBIT growth coming out of a record expected combined revenue of over $1 billion.
Free cash flow of between 85, and 105 million continues to show the strength of our business and we are eager to continue the trend execute 2023 worked safely and effectively and continue to profitably grow and diversify our business.
Regarding 2023 capital allocation, we continue to assess our options in light of market and other macro conditions and will provide our expected outlook in more detail on our next call.
In closing I'd, just like to thank our fantastic in Atg employees partners and clients for all your efforts and support in helping US achieve these record third quarter financial results in a challenging economic environment characterized by high cost inflation and increasing interest rates.
With that I'll open up for any questions you may have.
Thank you, ladies and gentlemen to ask a question. Please press star one on your Dutch is on the phone if.
If you wish to withdraw your question you can press star two.
Once you have completed your questions I would like to return to the queue. Please press star one after our response, we'll begin the Q&A question.
Your first question comes from Aaron Macneil from TD Securities. Please go ahead.
Hey, Good morning, guys I know Joe you just said you would speak to it on the next call but.
At a high level in terms of where your head's at.
On capital allocation next year, I mean, you've already blown through the and CIB pretty quickly leverage ratios are pretty good youre guiding to.
Think of free cash flow next year, So I guess I'm wondering.
What what are they going to be the priorities can be considered.
Dividend increase to make the yield a bit more competitive in the context of rising interest rates special dividends more acquisitions organic growth debt reduction and smbs like I know, it's a broad question, but I guess I'm trying to just gauge where where your head's at.
Got it.
Appreciate the question here.
Agree that our dividends are probably.
Less meaningful in this high interest rate environment, and what we think should be an increasing share price environment.
And we will certainly be reviewing that we have two board meetings between now and our next I'll actually.
When it comes to M&A or our growth. We're always just looking at what that accretion and return is versus other opportunities are.
Our share price relative to our value assessment is going to drive whether we look at NCI visa visa or otherwise and.
And then looking at those dividends as far as what.
Why do we think it's meaningful and what we need to do to adjust them itself. So I don't have a direct answer I would tell you that when we have these discussions with our board, we try and be very.
Tangible about how we measure it and not be emotional and comparable but what opportunities are there at the time or that we see coming via the M&A growth, we're looking at dividend or other shareholder friendly activities.
The direct answer to you, but that's probably the best I can do right now in this.
This quarter is a big one for us because this is this is where we get our cash flow. So getting all that cash flow in and then figuring out what to do with it.
That's our focus over the next the next couple of months here.
Fair enough.
<unk> answer as I was expecting so maybe I'll ask something a bit.
More tangible.
As it relates to the.
Ongoing inflationary pressures and your increased equipment and unit rates. It's obviously, great to see that you were able to resolve those issues with your customers in an equitable way but.
I guess im wondering.
Where's your head at in terms of.
Inflationary pressures today like are they still there.
There and what levers do you have now with those amendments to prevent.
Future margin contraction that we saw earlier this year.
Yes.
Yeah.
I think the inflationary pressures, we're seeing now and what we would expect to see over the next six months or a year I think will be captured in.
Our escalation clauses in our normal indices and if we see something unusual like we saw in wage escalations in Fort Mcmurray.
We know of a precedent that template to address it.
Escalation or de escalation. So I think we're in a very good spot.
Just having <unk>.
<unk> open and honest communications with clients, where no one is trying to.
Hi, things are trying to benefit off of something then.
I feel very comfortable going forward regardless of weather.
Future inflation is covered under indices or not so I think we're going to integrate spot for that.
Okay Fair enough, maybe I'll sneak one more in I know you've covered the Fargo Moorhead margin expectations in your prepared remarks.
Like do you think we'll start to see or will it be material enough.
Youll be able to prove out your expectation in Q4 or do you think we have to wait for Q1 or Q2 to really see Canada.
The full run rate impact.
That project is kind of true.
Tracking as you expected.
Yes.
For us would be we have to be kind of in that 10% to 20% complete range before we even start.
Looking at reanalyzing going into real depth of re forecasting.
Just because you don't have it right right now we're less than 5%.
I don't even think we get much beyond that before the end of the year. So I doubt, we'll see any updates until.
Likely this time next year, Okay, No that's fair.
Great well I will turn it over thank you for taking my questions.
Thanks Sarah.
Thank you.
Your next question comes from your link from Canaccord Genuity. Please go ahead.
Good morning, guys.
Coronary.
Joe did the updated rates impact the full quarter or.
Just the tail end.
It's the full quarter.
Yes.
Without getting into the details of it.
Yes.
There is going back to when we submitted things we had adjustments, but we had accrued some of that so.
It affected the whole quarter.
Regardless of how the amendment works out tactically.
Okay.
And just on the on the bid pipeline.
Can you provide any more detail on the.
The large blue dot.
Uh huh.
There's going to be awarded sometime this winter and then just in terms of visit.
Is it another mine or is it on the construction infrastructure side.
It's a north American gold mine contract.
Okay.
Yes.
And last one just for Jason I did have some trouble getting.
Two 2023.
EPS from from the midpoint of EBITDA.
Can you just share with me what your interest expense assumption is for next year and also.
If youre going to be paying.
Cash taxes next year.
Yes, so we're right around 6% of cost of capital assumption for next year all in so that should be.
With our debt coming down and in this quarter and then <unk>.
<unk> over the next year that Q4 would be.
Quarter to pay down debt.
And no cash taxes next year yet.
We're projecting 20.
2024 for cash taxes at this point and continue to manage that but free cash flow is not impacted by any cash taxes next year.
So the 6%, you're saying that's going to be your effective.
Yes effective rate overall of our debt, yes, that's right, which includes the convertible debentures and.
Capital leasing and the credit facility.
Yes.
Okay.
Okay, maybe I'll follow up with you offline.
He was a bit low.
Yes.
Yes, otherwise good quarter and I'll get back in the queue. Thanks, Thanks, Jerry Thanks Gerry.
Thank you.
Your next question comes from Marcelo from ATV capital markets. Please go ahead.
Hey, good morning, guys good morning, Tim.
The implied guidance for 2022, and so there's a pretty wide range for Q4 I'm. Just wondering if you could describe the levers that could get you to the upper end.
Going back to that range.
Mostly.
Weather and operational.
Yes.
The sooner of freezes to better Ralph usually so.
Typically.
By the end of the first week or so November you start freeze in day and night so the.
The weather plays a lot to do with it because our dance card is full its just a matter of whether we get started earlier or run later kind of thing. So it's no different than kind of spring breakup.
The earliest it actually freezes in today's frozen and we don't have freestyle events.
The better off we are so that's really what drives a lot of it more than anything else Tim.
Okay.
And I guess same question for 2023.
The guidance there.
As far as what's what's driving.
Yes.
What do they take it to the top end or to take care of the bottleneck.
A lot of it is our equipment utilization and mechanical availability, we're looking at and the opportunity side of that.
We also have.
Fleet coming out of our of our Ontario, Goldmine joint venture with Nona.
We've assumed a pretty modest.
Amount of hours on that fleet and.
Re mobilization theres, some upside in that especially with one of those big blue dots, what should that really well.
No.
The upper end of the range.
Everything is driven by utilization at the end of the range is winning more work that has better utilization on the smaller fleet and and Guinea neither.
Mechanical availability out of our fleet.
Okay. So the upper end of the range.
Would include winning some of these bigger projects on slide 17, that's correct.
No it's kind of a more of a that those assets returned to lower utilization of oil sands use.
If we.
Get one of the bigger blue dots and we'd actually improve on that.
Okay got it.
Ed.
Sorry go ahead.
It's more driven by the fleet utilization and mechanical availability.
We see extremely strong demand so it's keeping the equipment running to feed that demand.
Got it.
It's a good segue into my next question, which is just round slide 17.
<unk> got a big Blue Dot.
Active tender fees, which looks like it could commence before year end.
And that I don't.
That showed up in the last.
Presentation from the previous quarter can you talk a little bit about I guess your near term opportunities.
You might be well positioned for.
Actually that that Blue Dot is the gold mine of speaking of and that.
That has a spring of 2023 start.
What we're anticipating in that.
This chart shows one we expect the award that necessarily ready to start date of the project is.
We should probably look at how we represent that because it's difficult to do both and this has actually been re sculpting re tendered a couple of times. So we think this is the final one and we expect to know in the next few months with a.
Kind of.
On April may kind of start in 2023.
Okay got it.
Good quarter, guys I'll turn it back.
Thanks.
Thank you.
Your next question comes from the vaccine Ctrip from National Bank Financial. Please go ahead.
Hi, good morning, gentlemen, good.
Morning, Matt.
I had a quick question in terms of the unit rates and I know you addressed that that sort of impacted the full quarter, but there was no catch up dynamic I guess right like so the margin that whiting it snow.
Like you didn't benefit from the previous two quarters.
Sort of low rates that materialized in Q3 is that a macro way to think about it or.
Absolutely yes.
Yes, there was no recognition in Q3 beyond what we did in Q3 okay.
Okay. Okay. Okay perfect. Thanks for clarifying and then the other question I had just around.
I suppose that the needs for the guidance sort of so so early.
And for 2023 I mean.
And I guess in terms of the level of confidence in having these numbers out. So early do you mind, maybe just providing a bit of.
The rationale in terms of how you and the board approached the budgeting process for 2023.
Yes, actually we've done this at this time.
Two years back so I don't think it's unusual for us to provider. Our initial outlook. We are we do actually this is our budgeting season. Our next board meeting will be to review that budget in <unk>.
These numbers reflect that work that we've done so.
This is really just part of our normally scheduled.
Reviews that we do.
Once we get our kind of 2023.
Budget.
And in the range.
Believe it's accurate we've put it out with our Q3 results. So.
These these are what we expect to be in our budget documents that we bring to our board here in about three weeks alright.
Right No I guess I mean it is.
Perhaps a bit more fluids.
Art.
Maybe relative to what we would've seen in the past, but just was curious to see what was the thought process there.
We have a lot more.
Kind of in the books kind of work than we used to have years ago. So I think the fact that we can see that backlog and we know this work very well it gives us a lot more comfort in doing this.
You know I'd say really the only kind of.
Estimating.
We're doing here was was in that fleet coming out of Ontario and weather.
We get a nice big blue dot to rollout directly into or not and.
Generally we're fairly conservative on those assumptions.
Okay excellent Thats helpful. And then last quick question just in terms of the labor costs I mean should we assume that we're seeing some.
Moderation in terms of wages as you.
Ramp up hiring.
I don't know if you can.
Quantify or maybe Directionally speaking like <unk>.
Probably ops versus last year is still kind of on a rolling basis, but probably kind of down versus the peak, maybe just any directionality there. Thanks.
Yes.
We really haven't seen any unusual wage increases outside of what we saw for maintenance personnel in Fort Mcmurray.
I think we're still in those.
Typical to have kind of 4% years, maybe inflation will push us to the higher end of that.
Our operator wages in our normal wages are really never an issue.
Because our escalation clauses tied directly to our union contract.
Where we had issues where and maintenance wages, because theyre actually covered off in equipment costs not in your normal operating wages, so and we believe that's pretty much.
Come to ahead, and we've got a pretty good idea of where that's going so.
I don't think we see anything unusual.
As far as wage escalations going forward.
Mark just looking at.
Availability of people and focusing on the fact that our training side and the fact that we're probably going to have more.
Less experienced people than we've had in the past so that we need to really focus on our training and development of that frontline supervision and those new hires.
Okay excellent. Thank you so much that's it for me thanks, Matt.
Thank you, ladies and gentlemen, as a reminder show you have a question. Please press star followed by the number one.
Your next question comes from Brian <unk> from Raymond James. Please go ahead.
Yeah. Thanks, Good morning, guys good morning, Brian .
Just what were some of the key drivers and attracting talent in the quarter I mean, that's a pretty large step up and maybe are those technicians coming from outside of the region or is it just a matter of shifting from some of your competitors.
We're getting quite a bit of outside.
We've got a pretty innovative process, especially when it comes to maintenance personnel.
We've attracted a premises at all levels from entry level.
To do.
Guys that were light vehicle or a medium duty kind of mechanics, and getting them back to get their heavy duty.
Artifice patients and so.
Extremely pleased and proud of our HR efforts in bringing in mechanics, and bringing in our premises.
Bringing in what we call direct service providers, which are kind of.
Individual contractors that we hire is into the business, it's a mechanic in a truck.
Even though our vendors we've added a significant amount to our vendors.
Historically, our our OEM dealers haven't been able to do.
Adjusted much.
Brought in 30 odd.
People from outside vendors talking about my shareholder letter from.
As far as Wayne Australia so.
Both building our own attracting others looking into new places.
We'll continue doing all of that and I believe will be successful.
Really what held us back was.
We didn't we didn't feel a need to.
Wait raise wages back in early part of the year, because we know it doesn't increase people buy just ways raising wages.
But unfortunately at some point you start losing people to those higher wages and you need to adjust so our Jessica was we adjust our wages to where the market was at the time and we couldnt resist any longer and.
We don't try and pay over market, we pay market rates and we try and attract based on the quality of our programs and what we can do for our employees.
Thanks, Thats good color.
I just wanted to get some more color on the on the rebuild program have you now completed the order for <unk> and maybe could you talk about the level of interest you're seeing from maybe some of your clients on rebuilt and Remanufacturing.
Alright.
Completed.
Today, I think we have one more truck that we're doing for <unk>.
Our joint venture.
We continue to look at there are great opportunities for us when we can find these core machines and rebuild them for.
40% less than the new ones are.
Have a great value to me now it'd be great value if we could.
Marking them externally I think are.
Our kind of limiting factor on this is we want to make sure we do our own maintenance first there is high value to us and that utilization when our demand is high.
So.
It's a real balance to make sure we get all of our own gear running before we start fixing or building somebody else's.
Okay. Thanks I appreciate it that's it for me.
Thanks, Brian Thanks, Brian .
Yeah.
Hi.
Their cereal.
If you missed the numbers it looks like there are no further questions I would like to turn the conference over to you again.
Mr. You're lumbered, president and CEO for closing remarks.
Thanks, Margo and thanks, everyone for joining us today really appreciate your time and look forward to talking to you next time.
Thank you. This concludes the North American construction group Q3, 2022 conference call.
Yeah.