Q3 2022 QualTek Services Inc Earnings Call
Please wait the conference will begin shortly.
[music].
Good morning, and welcome to <unk> third quarter 2022 earnings call.
All participants are in a listen only mode. After the speaker's presentation, we will conduct a question and answer session.
I'll ask a question you will need to press star followed by the number one on your telephone keypad.
As a reminder, this conference call is being recorded.
I would now like to turn the call over to Michael Bowen.
Thank you. Please go ahead Mr. Bowen.
Thank you operator, and good morning, everyone welcome to <unk> third quarter 2022 earnings call before we begin I would like to remind everyone that we will be making forward looking statements during today's call.
In prepared remarks or during the Q&A session. These forward looking statements are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factors section of our filings with the Securities and Exchange Commission, specifically in the company's forms 8-K and 10-K.
As otherwise required by federal Securities laws, Coltec disclaims any obligation to update or make revisions to such forward looking statements contained herein or elsewhere to reflect changes and expectations with regards to those events conditions and circumstances with us today is Scott Hiseq, Biotechs, President and Chief Executive Officer and Adam.
Stettler Caltex, Chief Financial Officer, the format of the call will be opening remarks from Scott followed by a financial review from Adam We will have a Q&A period. Following these updates with that I'll go ahead, and turn things over to Scott Scott.
Thanks, Michael and good morning, everyone.
On today's call, we will discuss our results for the third quarter of 2022, our outlook for the balance of the year and early perspectives for 2023.
To begin with last month <unk> celebrated our 10th anniversary over.
Over the course of that 10 year period. The company has achieved organic growth of our base telecommunications business and strategic acquisitions, which have allowed us to extend our geographic footprint and add new and exciting service offerings, including recovery logistics and renewable energy support we.
We have built strong relationships with major Blue chip Fortune, 500, telecommunications and energy providers and we are viewed as an essential player in many facets of the telecommunications industry.
Within the past two years, we have weathered the COVID-19, pandemic and unprecedented inflation and transitioning to a public company, all while continuing to grow our backlog quarter over quarter.
Since our inception, <unk> has been agile and adaptable and we will continue that trend as we enter our second year as a public company.
I want to thank our customers and our employees for their hard work and partnership.
Yes, I'll transition into our third quarter results.
During the quarter, we once again recorded record revenue with our third quarter topping $216 million total company revenue was up sequentially versus Q2, 2022 by more than 17% and slightly above revenue from the prior year same quarter a significant achievement.
Given Q3 2021 revenue was heavily impacted by an active third quarter hurricane season.
Revenue growth is primarily attributable to our telecommunications segment, which posted topline results of $188 3 million, an increase of over 38% versus the prior year, our renewables and recovery logistics revenue year over year was impacted by the general slowness in the renewables industry.
Ari coupled with the timing of 2022 hurricane season with the major events of the season occurring much later than in previous years.
We head into Q4 with a 24 month backlog of over $2 4 billion. While we have continued to experience significant topline growth and an increase in backlog, we like many companies continue to combat wage and fuel inflation, which impacted our margins and overall profitability. This year.
Furthermore, as we quickly grow and address demand, we've incurred ramp up related costs, which has impacted our profitability.
It'll company adjusted EBITDA for the quarter was $15 7 million a decrease from the prior year same quarter, which is attributable to the timing of the 2022 hurricane season and inflationary pressures.
We believe there are opportunities to improve our profitability and we have taken several measures to do so going forward, which I will touch upon shortly.
Yesterday, we issued updated guidance for the full year 2022, and expect revenue to range from $750 million to $760 million or 22% increase year over year, our adjusted EBITDA will range from $50 million to $55 million when considering the incremental public company cost in 2020.
Two our results will be roughly flat year over year.
The updated guidance considered our year to date performance timing and the extent of 2022 hurricane season, and the inflationary pressures I just spoke about.
When you look at each of our segments beginning with telecom.
Our telecom business continues to remain in extremely high demand as evidenced by our record revenue.
As we discussed on our second quarter call. The industry was entering a period of significant growth due to <unk> and fiber expansion.
The availability of C band licenses has increased our utilization in the northeast and we are now building at record pace expansion has also been consistent in our Midwest and western markets and our backlog continues to grow at the same time as the company recorded all time high revenues as.
As we respond to our customers' strong demand for our services. We continue to have focus on our margins and profitability and telecom, which had been hampered in the current environment.
To that end, we have worked with several of our customers on price scope and scale and delivery options. This include successfully negotiating rate increases and more favorable payment terms with many of our customers, which we believe will benefit us in 2023, we believe that executing the right mix of our $2 four.
$1 billion backlog at the new pricing will improve our telecom margins.
Moving to our renewables and a recovery of logistics segment.
In previous years, the third quarter has been our most profitable time of year for our business as the timing of the hurricane season has generated significant demand from our recovery of logistics services. In 2022 are relatively quiet and delayed Q3 storm season drove significant variability year over year.
And recovery logistics.
More specifically our recovery logistics business was heavily deployed in September of 2021, following hurricane either making U S landfall in late August this.
This resulted in a sizable revenue and adjusted EBITDA in the third quarter of last year.
During Q3 of 2022 Hurricane Ian made U S landfall in the last week of the quarter with the majority of our revenue generating activities occurring in Q4, and therefore, causing variability when looking at Q3 2022 versus the same period prior year.
Our recovery logistics business remains well positioned and we expect our investments in assets people and relationships to provide future positive prospects as we look to expand into other non storm related activities.
We'll be agile with our service offerings and we continue to explore opportunities to more regularly deploy this valuable asset base year round.
As we have mentioned previously the renewable energy industry has been impacted by regulatory delays and supply chain challenges that impacted 22.
In the third quarter. These trends continued causing build plans to be pushed into 2023.
We've recently begun to see increased bid activity and look forward to participating in new prospects in 2023 and 2020 for.
Finally, we were supported by our senior lender and executed amendments to our ABL, which Adam will speak about in greater detail.
We're analyzing ways to balance our unprecedented demand and growth strategy with our current capital structure and today's elevated interest rate environment. We continue to remain laser focused on balancing liquidity and cash management as we profitably converted $2 $4 billion backlog.
In closing <unk> has continued to perform and deliver for its customers as we have throughout our 10 year history, our customers remain committed to partner with us as they execute on their key objectives as we head into the last quarter of 2022 and look towards 2023, we're focused on our backlog customer.
<unk> chips and profitable delivery of services and look forward to continuing to work with our senior leadership and financial partners and positioning the company to execute on our future goals.
With that I will now turn it over to Adam Spitler, Our Chief Financial Officer Adam.
Thank you Scott and good morning, everyone. Today, I will cover our third quarter 2022 financial results as indicated at the beginning of this call. Our discussion of financial results will include non-GAAP adjusted EBITDA.
Conciliation and details of non-GAAP measures can be found in our press release.
Turning now to third quarter results revenue for the quarter was $216 1 million.
3% increase from third quarter, 2021 revenue of $215 $5 million.
Our revenue growth continues to be impressive and it is important to note that our Q3 2022 results were achieved without significant benefit from a recovery business as the majority of our services to date have occurred after the third quarter.
Net loss from continuing operations for the third quarter 2022 was $6 9 million versus net income of $14 5 million in the third quarter of 2021.
Third quarter 2022, adjusted EBITDA was $15 7 million.
Compared to $45 3 million for the third quarter of 2021.
Comparative results are skewed due to this year's abnormally late season hurricane activity and also impacted by ongoing inflation, particularly related to wages and fuel cost.
Sequentially. However, we achieved significant improvement from a net loss of $25 6 million in the prior quarter.
While we expect to continue to improve margins into 2023 through price scale and scope changes and our significant telecom ramp costs begin to level out inflationary costs, we and others have experienced will continue in the near term.
I will now provide some detail on our segment results.
Third quarter 2022, telecom revenue increased 38, 9% to $188 $3 million.
Compared to $135 6 million for the third quarter of 2021.
We are pleased to have grown top line revenue in each of our telecom service offerings with our wireless and wireline business reporting year over year revenue increases of 32, 7% and 76% respectively.
Third quarter 2022 Telecom adjusted EBITDA was $14 1 million, an increase of 29, 5% from the $10 9 million.
As reported in the third quarter of 2021.
Comparatively on a year over year basis, our adjusted EBITDA margin was down slightly and we attribute this decline to continued wage and fuel inflation, coupled with costs associated with a ramp up in the <unk> space.
We continue to see robust demand for our wireline and wireless service offerings and believe that we are extremely well positioned to experience significant continued growth across all service offerings within our telecom segment.
Third quarter 2022, renewable and recovery segment revenue was $27 8 million with adjusted EBITDA of $8 $7 million.
A decrease over the same period last year of revenue of $79 9 million.
And adjusted EBITDA of $38 2 million.
The decrease in both revenue and adjusted EBITDA are primarily due to the variability and timing of significant events within our recovery business to reiterate Scott's point earlier in 2021, a recovery logistics services were deployed in response to Hurricane Ida beginning in late August thus, providing an entire month of recovery services.
<unk> being recorded in the third quarter of the prior year.
Conversely, Hurricane Ian made U S landfall during the last week of September .
Therefore, shifting the majority of recovery activities to the fourth quarter. Despite.
Despite the shift in timing our margins for our recovery business remained very strong and on par with those of the prior year.
Third quarter 2022, corporate costs were $7 million or corporate costs for the quarter were three 3% of revenue a sequential improvement from three 4% in the second quarter. We believe our corporate costs will approximate to this level for the near term.
Now I will discuss a summary of our five largest customers for the third quarter 2022, as a percentage of revenue.
AT&T was 38% and our services for this provider include wireless wireline and recovery services.
T mobile is 15% Verizon was 14% in Florida power and light and Comcast were each approximately 7% of revenue.
This compares to the prior year period of Entergy at 32% AT&T at 31%.
T mobile at 11%, Verizon at 8% and blattner at 4%.
Our top three customers accounted for 67, 2% of our revenue in Q3 2022 versus <unk> 72, 5% in Q3 2021. This reflects a five 3% improvement in our customer diversification.
We're extremely proud of our growth with our largest customers AT&T revenue increased 26, 2% Verizon is 76% T mobile, 42% and Comcast, 143% from the prior year period.
We view this as a testament to our ability to provide trusted and reliable services as we help these important customers execute on crucial infrastructure built.
As it relates to our backlog we report a rolling two year backlog on a quarterly basis totaled.
Total backlog was $2 4 billion at the end of Q3, 2022, which is an increase versus the $2 3 billion.
That was reported at the end of our Q2 2020 to our increase in backlog is primarily related to increased visibility and awards within our telecom segment.
Finally during the quarter, we amended our facility with PNC to increase our credit line to $130 million each year between September 15th and December 31.
This additional liquidity helps the company and addressing the working capital needs that are traditionally associated with a recovery logistics business. This amendment demonstrates the longstanding relationship we have with our senior lender.
I want to close with echoing what Scott mentioned earlier in his remarks, it's clear that demand is strong across all of our service offerings and we remain committed to continuing to look for opportunities to maximize our profitability through partnering with our customers and other stakeholders I will now turn the call back to Scott to conclude our prepared remarks Scott.
Thanks, Adam.
While 2022 has been a challenging year for profitability given the current economic environment.
OPEC has continued to perform at a high level for our customers as reflected in our strong revenue growth and increased backlog.
We are encouraged by our customers' willingness to work with the industry on pricing scale and scope.
We remain laser focused on executing a record $2 $4 billion backlog as we work to return to normalized margin and profitability in 2023.
This concludes our remarks and I will now turn the call back to the operator for Q&A.
Operator.
Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad to withdraw your question. Please press star one again, we'll pause for just a moment to compile the Q&A roster.
Our first question comes from Tim Horan from Oppenheimer. Please go ahead. Your line is open.
Okay.
Guys a couple of questions.
Can you talk about the timing of the price increases and.
What youre kind of expecting for EBITA margins going forward.
Secondly, I know you said you'd give a little bit more color on 2023.
Yes.
Can you give us a sense so revenue growth overall range may be in.
What you expect margins can kind of be and then third the renewables business can we get a sense of what type of revenue that could represent for the fourth quarter.
And will that flow into into next year and.
And any sense or any color on the timing on the on the recovery doesn't sorry. Thanks.
Thanks, Tim.
So on.
On the <unk>.
Renewables piece I'll take that first.
We looked at that business all year.
As slowing and having a lot of projects that were sort of pushed to 'twenty. Three there were a lot of supply chain issues and regulatory issues, which.
Canford that business for us as a player who supports a lot of the activity in the builds.
We looked at that business is something we're excited to continue to build in but more of a 2023 and 2020 for opportunity for <unk>. So we see that we were seeing strong bid activity and we're seeing other opportunities for <unk>.
2023, and 24 in renewables. So we're excited about that business is just not a 2022.
Priority for US right now as the work has been pretty consistent on the.
Guidance for 2023 I think.
We're focusing on right now.
With our customers is to look at our backlog, which continues to grow we're looking at balancing wireless and wireline and other opportunities within the renewal in the power segment and looking to maximize margin.
<unk> growth so.
What I will say regarding 2023, we're still heavily in bid season and budget season, and we feel like we can probably give some better color and guidance on 2023 later in this quarter.
And then the last piece.
It was from price increases.
So this is this is something yes.
After we went public in Q2 and as we started to look at the significant ramp in <unk> and it really started late Q2 and Q3.
We've been working with our customers on pricing throughout the whole year.
With fuel inflation and you think about what we do we put people in trucks.
Users can use a lot of fuel and wage inflation being pretty.
Dominated in an industry that has zero percent unemployment, we've been working with our customers throughout the course of the year on pricing on scale on payment terms and really it's the unprecedented demand and the growth that we're managing through so a lot of the pricing.
<unk> there were early in the year, where there are some opportunities to increase prices.
For the most part.
A lot of the pricing and contracts that we have are resetting for 2023 and.
We'll feel the effects from a margin standpoint.
I mean, when you think about margins, we've operated double digits for almost our whole entire existence last couple of years with growth in inflation theres been a lot of pressure on that we expect to move back to our normalized margins and continue to perform at previous levels in the coming years.
So just to be clear you think youre going to get some significant price increases at the beginning of 'twenty three kicking in.
Is that fair.
Fair to say that you can get back to your historical margin level.
Yes, so we negotiated price increases scope changes with our customers.
There were some customers who were perhaps not as willing to look at pricing in.
We're going to focus our efforts on.
Long term partnerships and.
From a perspective of wage inflation and fuel inflation.
We had to address margins with our customers and as I said and as you know some of our peers have several near calls as well I'm encouraged by the reality of where margin pressures are and what work needs to be done in the labor rate and the industries being what they are I feel like our customers have stepped up.
And supported growth initiatives, because they have a lot of work.
Lot of cases they have.
<unk> requirements to build and I think we're all stepping up together to meet these challenges and I feel confident that we're going to focus our efforts on return on our margins the normal levels.
And yes, and just a sense of timing is that.
First quarter, we'd get back to normal is it third quarter next year, just a rough sense.
I feel like in Q2 of next year, we're going to return to normal margin levels, obviously with cloud tax basis those of US who are familiar with our story, we have a lot of winter market. So typically speaking.
We don't set a very high bar for Q1, because of seasonality and weather, but from a margin standpoint, the jobs that we are bidding and the work that we're converting from backlog.
Very focused on margin profile profitability and delivery of what our customers' expectations are.
And then on the recovery business on the Hurricanes.
We get a sense of how large.
How big of a deal this recovery is for Ian and maybe Nicole and.
How long you think it'll last rough.
Rough idea and maybe what kind of revenue that could represent for the fourth quarter.
Yes, so we're still now partially deployed and where we're working down the hurricanes. So we're not going to really.
<unk>.
Dial that number in quite yet.
When we get a little further into the quarter, we'll look at that and other opportunities to be able to talk about it a little better and Tim as Scott mentioned, we are still deployed so we're just taking it on a day by day basis.
And any idea how much well can we get a sense of what this hurricane season was like I know it was later but versus last year.
Do you think it is like.
Half the overall impact of about the same to.
The infrastructure.
Yes, so Tim you can tie to kind of back into the guidance, but as I mentioned there is some variability we're still deployed in at this point, we're just taking it on a day by day basis.
Got it got it and then last question sorry for all the questions.
Can you maybe just talk about the longer term outlook when you listen to Verizon AT&T. They basically said capex is peaking over the next 12 to 18 months and will decline from there.
I know they still have a lot of rural build outs and other places to kind of go but do you have a sense of how sustainable you are.
Wireless revenues are up at this relatively high level.
Yeah. So.
The one thing I will say Tim is our customers are.
Coming out with Capex forecast that some of them are flat some of them are to decrease and in some ways, but the work that we're doing and the type of work that we're doing.
Either on the wireless side replacement fiber that that is pretty much committed within their capex. So.
We're not looking at backlog our budgets for the particular specific work that we do is going down.
The necessity to improve their networks and deploy fiber and change out equipment on cell towers that demand is not decreasing so we feel pretty confident that the portion of capex that we do for those customers.
We'll continue at these levels and greater and the other portions of the Capex that they have within your businesses I can't speak to.
Understood. Thanks, guys.
Okay.
Our next question comes from Christian Schwab from Craig Hallum Capital. Please go ahead. Your line is open.
Hey, Greg just a few questions Adam just on the.
The ABL that just to be clear on that rate, it's extended to $130 million from $70 million from September 15th to do this.
December 31 that it goes back to <unk> is that correct.
So the facility.
The amendment was $103 5 million.
This amendment extends it to $130 million from September 15th through year end and then it does go back down to a $103 5 million.
Great and how much is on that.
Finally, it is not about how much do you have on the ABL currently at the end of the quarter.
Yes, so theres about $102 million drawn on that obviously, there is a sizable portion related to the recovery business that we will we anticipate collecting in Q4.
Okay.
Great and then.
In the telco business or are you guys assuming.
Typical seasonality in Q4 for that business to be down, 5% or 10% is that what we should be thinking.
Yes, I think that's reasonable as Scott mentioned Christian we do work in some cold weather markets. So far.
It has been mild but that can turn relatively quickly and have an impact.
Okay. Okay.
I'm really confused on the backlog you guys have.
So call it 600 and $775 million in revenue this year, plus or minus and telecommunications, but $2 4 billion in backlog.
Which should lead to great visibility because its kind of unprecedented versus trailing 12 versus your peers like dye common mastec.
But yet you have no visibility on 'twenty three because you have to wait for Capex cycles I don't understand.
So Christian just just to kind of put a finer point on that I mean, if you look at the ramp in our revenue through 2022, obviously, we did experienced some significant growth in both the wireless and wireline portion of the business.
If you look at our Capex and kind of the way. It works out for 2023, yes, we do anticipate a similar step up in revenue.
And the majority of the growth in our backlog over the last few quarters has been related to wireline programs.
The other thing Christian you did have an anomaly in 2022, we were issued a lot of work at the beginning of 2022.
Particularly in wireless and particularly around C band and although a lot of that work.
Was issued to us.
The licenses and when supply change and commitments are allowed us to start building was really as youll recall mid summer so.
You sort of have an anomaly, where our backlog is sort of outsized to our revenue run rate, we have no choice, but to increase our revenue run rate and find a way to split that backlog in half. That's a 24 month backlog. So we have to continue to grow and manage our growth and profitable.
<unk> and bring our crews up to speed to take down that backlog, which we've been doing.
From a standpoint of.
Normalization I can't really speak to how the other companies work has slowed I can tell you that our work, particularly in the northeast was slower getting going in as is typically the cycle in this industry, but we were issued the work there were.
Four or five months of delays in the next day, everybody wants to know where our crews are and let's get going so we've been responding to.
A pretty hefty ramp and I think the Q3 numbers and telecom or sort of indicative that we're meeting the challenges of growing.
Do you guys have the capital to even work through that backlog in a material fashion over the next 24 months. So I mean should we assume that either of the backlog.
Where it can't be accomplished in a two year timeframe and a substantial decrease in backlog occurs.
Versus say more substantial.
The increase in revenue well above what you grew last year to get anywhere near cover it at that.
So I'll take that in two different parts Christian.
Obviously, we continue to have robust growth in the business, which is it's a good problem to have.
And we're considering all options to maximize liquidity to execute on that backlog on the flip side, we need to add people. We focus every single day on adding people, adding resources to help us execute that backlog.
Okay, I guess I'm kind of confused so on the on the conversation regarding you know how wage and fuel inflation surprise you somehow.
This quarter last quarter.
So you guys suggested that you could.
Get to double digit margins in the second half of the year.
And you stated that you met with all your customers had meaningful discussions about how to continue to organically build that.
The business around.
Existing locations and you mentioned scale et cetera et cetera.
And we missed it by miles.
I don't understand how you can't get that right with a few days left in the quarter.
So.
To your question Christian and I appreciate the question.
Wouldn't say, we're necessarily surprised I think as we were growing the business and demand continues and our customers shifted priorities of what we needed to build and how fast we had to ramp during the quarter. There were certainly inflationary and field pressures associated with the ramp and telecom.
I think from a perspective of how we're ramping telecom, which.
Our core business from inception of the company I think that and then the the.
The slowness in Q3 of this.
This particular storm season, I think that was the weight of where the blended margins ended up but I think from a <unk>.
Telecom perspective.
We've had great demand for our business in Q3, we have ramped significantly I think Adam spoke.
Two customer increases with all of our major customers year over year and what percentage of revenue. They are so the demand for our services from our largest customers in Q3 caused us to build and ramp fast and as we spoke about with margins and there's a lot of pressure on margins, particularly with wage and fuel inflation.
It has continued through the course of this year.
But one thing I will tell you is historically as we've continued to build this company since.
I started is our focus has always been on margins and margin improvements we've gone through a pretty rough period here with wage and fuel inflation, but we're laser focused on.
Prioritizing our customers the rates are.
Cost structure, and returning to normalized margins with the business.
Okay, great no other questions. Thank you.
As a reminder, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.
Our next question comes from Brent Thielman from D. A Davidson. Please go ahead your line is open.
Good morning. This is general motors for Brent how are you.
Great how are you.
Regarding telecom could you, let me know or provide some color.
Do you see which part of the business.
Are you seeing more pressures on margins between wireless and wireline.
Thank you and I'm actually really glad you asked that question because historically in the telecom business theres been swings between wireless and wireline and Im sure all the analysts and those of US who've been in the industry for 30 years I have seen.
And I will tell you there is an unprecedented demand for wireless right now and a labor shortage that have fueled a lot of growth, we see that continuing for a long time, and we're working with our customers on scope and scale and pricing to make sure that there is a.
<unk> labor market to accomplish some pretty healthy goals of all of the carriers around five <unk> I know the word <unk> is a little tiresome for everyone. Because we talked about it for two years before it started but I can assure you. We really have just started <unk> in the last 12 months and there is a.
Long way to go building out wireless.
That being said.
The profile and type of work and opportunities on the wireline fiber side are pretty substantial right now.
We are moving to balance out wireline and wireless.
Within <unk> I think you'll see our.
The growth that Adam spoke about I think our wireline gross growth.
Growth was 70% year over year, So we're looking to.
Balanced out and move to more wireline projects historically.
<unk> has been a significant wireline player throughout the different shifts, but theres also violent swings the other way in wireline, sometimes where it gets slower we don't see that for the foreseeable future. So we're going to move folks into wireline and continue to build as that margin.
His strong and opportunities with our customers are strong and really look to balance out, but historically, we've been substantially larger in wireless and wireline.
And then just to clarify.
So you are seeing more pressure on margins on wireline that.
What are you seeing or am I missing something here.
Yeah, I would just be a little more clear then there is more pressure on wireless than there is on wireline.
And that's primarily due to a shortage of cruise and some of the contracts.
Having.
Pre date is the parent inflationary and recessionary conditions.
As we move forward, obviously, youre addressing wireless margins through pricing inefficiencies, but we're also seeing sort of a new and unprecedented demand for fiber construction and projection from.
From that we see opportunities just from the bids the margins or the margin profile of new bid activity is stronger so wounds balancing out of our business and.
I think the best way to approach the telecom business is with a balanced approach cloud tech has become pretty heavily.
Shifted towards wireless says, we're pretty good at in our demand.
Pre substantially but we are looking to balance out wireless and wireline.
Okay got it thank you for that.
And just one more question.
Rick will recover and logistics kind of a record year based on all the activity you've done to date.
As I mentioned earlier.
We are still deployed we're taking on a day to day basis. There is a lot of variability. So it's just too early to tell and just just to be clear I mean that is an extremely important and strong part of our business and the foundation and the management team have done a tremendous job with that business.
We see.
Significant opportunities for that segment.
To grow.
Our leadership in recovery logistics.
Also.
Support.
All of our power initiatives.
Renewable initiatives in the future. So we feel very confident in that group and as we go forward. That's a big part of our plans to reduce the seasonality piece of that business and run it more as a consistent growing SEC.
Segment of the company.
Got it and if you don't mind, Chris one more question regarding cash flow.
I just wanted to yes. Thank you.
So I know you said you are playing.
Just going to see how you're still deploy and you wouldn't see the variability going on but could you perhaps provide some idea or some guidance into the cash flow coming in in the next in Q4 in <unk>.
Maybe.
Does it bleed into 2023 or.
Or are you or is it the same answering providing that youre still seeing how much work there is and how much and guys how much cash flows coming in.
Yes, so obviously, we've been working with customers on an accelerating some payment terms just based on demand, but if you look at our Q3 cash flow. Obviously, we mentioned in Q2, we do anticipate having positive cash flow in the back half of the year in Q3, our wireless business grew 10, 5% sequentially. So there was some build.
Working capital in that business and then a recovery business just related to two events, we had about a $12 million build that we anticipate collecting in Q4 and then the rest of the business was was was about $4 million of cash flow positive.
So as you think about Q4, we do anticipate being pretty strongly cash flow positive.
Great. Thank you I appreciate it.
Our next question comes from Tim Horan from Oppenheimer. Please go ahead. Your line is open.
Thanks, guys, just a little bit more color on the backlog the $2 4 billion is that primarily telecom does that.
<unk>.
Future price increases.
And can you give us maybe a range of what type of price increases you're expecting and just sorry lastly on the backlog.
I mean, so to meet this backlog I mean, we're talking all things being equal telecom has got to be roughly $1 billion run rate in revenues.
$23 24, unless I'm missing.
Missing something thank you.
Yes.
We did start.
Some large multi year programs that.
That we believe are an edge attractive margins in our wireline business that you haven't seen the full extent up.
But yes, I mean that is that is the math.
I think to answer your other question our backlog is almost entirely telecom.
As we grow there is a portion of renewables and a portion of power line and they're but they're small so our telecom backlog reflects.
Two years out.
Contracts that we have that are three and four years. So it goes beyond that.
But to your point, we are still ramping we are still in a growth mode. There are still expectations of our customers for 2023, and some cases, we have sites that go out into 2024 in terms of build schedule. So from a timing standpoint.
The expectation from our customers is that we will execute that backlog.
And as that backlog include.
The price increases you expect to get and can you give us a range on the price increases at this point.
It does include price increases yes.
We're not going to disclose what the ranges are at this time as we are still in discussions with various customers.
Understood. Thank you.
Our next question comes from Christian Schwab from Craig Hallum Capital. Please go ahead. Your line is open.
Hey, guys can you give a rough estimate of how many.
Wireless crews you have currently and how many wireline crews you have currently.
So we don't break that information out Christian.
What do you think that any any of our peers would either we're continuing to grow our workforce and our contractor workforce and our our balance of employees.
To contractors remains similar to others in the industry.
Okay.
I guess I think it's pretty obvious.
No.
Leading telco companies wanted to aggressively lay fiber.
No.
Probably at unprecedented levels actually.
Wireline crews are very expensive.
It's my understanding that I'd say.
It's a significant skill set that not everybody has right wireless crews can be taught.
So we're not afraid of heights.
Who takes.
Take something off and put something else on the tower.
Wire line workers.
<unk> are expensive crews are expensive capital equipment is expensive. So I'm just confused on how youre going to grow that materially given your current cash situation.
So we've.
<unk> been involved in some of the largest construction builds for the last decade in.
Prior to that our senior leadership team has worked with all of the major cable operators and telecom operators building.
And we're pulling from the same pool.
As our peers a lot of this work is contracted out with companies would drills and equipment and from an in house perspective.
We have equipment and have as needed flexed in.
Bought equipment as the industry and to build that we've committed to have warranted. So.
I feel like our opportunity is the same as anyone else's and reputation Ali.
<unk> been a veteran sensitive business, there's a lot of folks in our industry that is yes.
Gone to trust, our relationship and our performance and we typically do a really good job of developing relationships and that people working with us for a long long terms and the geographies that we had in <unk>.
Christian from a structural standpoint in the contracts what we're seeing just given the the overwhelming demand in the business is our customers are off rate are offering accelerated payment terms, where they're significantly lessen carry during the build cycle than what you've seen historically.
Okay, great no other questions. Thank you.
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