Q4 2022 Aecon Group Inc Earnings Call
Speaker 1: The.
Speaker 2: Good morning. Thank you for attending today's Q4 Transparent 2ACon Group Inc. My name is Granao, I'm a BD moderator for the day's call. If you have any questions in the presentation, you can press star followed by one on a type on keypad.
Speaker 3: for participating in our year-end 2022 Resolved Conference call. Presenting to you today are John and we serve ranks, President and CEO , and David Simeol, Executive Vice President and CEO . Our earnings announcement was released yesterday evening, and we posted a slide presentation on the investing section of our website, which we refer to during this call.
Speaker 3: Following our comments, we'd be glad to take questions from analysts, and we ask that the analyst keep to one question before getting back into Q to ensure others have a chance to contribute. As noted on slide two of the presentation listeners are reminded that the information we're sharing with you today includes forward looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties. I believe the expectations reflected in these statements are reasonable. We can get no assurance that these expectations will prove to be correct. And with that, I'm now turning the call over today. Thank you Adam and good morning everyone.
Speaker 4: I'll touch briefly on ACON's consolidated results, review results by segment and then address ACON's financial position before turning the call over to John Lewee. Turning to slide three, record revenue for the year of $4.7 billion was $719 million or 18% higher compared to 2021. Adjusted EBITDA of $219 million, margin of 4.7% compared to $239 million, margin of 6% last year.
Speaker 4: an operating profit of $97 million compared to operating profit of $119 million in 2021. Both adjusted EBITDA, an operating profit in 2021, benefited from a positive impact late to the Canada emergency wage subsidy or soos of $32 million.
Speaker 4: The Iluid earnings per share for the year of 47 cents compared to the diluted earnings per share of 78 cents last year. We've reported backlog of $6.3 billion at the end of 2022 compared to backlog of $6.2 billion a year ago. You contract towards the $4.8 billion.
Speaker 4: We booked in the year compared to 3.7 billion a year ago. Now looking at results by segment and turning to slide 4, construction revenue of $4.6 billion in 2022 was 706 million or 18% higher than the previous year. Revenue with higher in civil operations driven by an increase in major projects.
Speaker 4: road building construction and foundations work. Revenue was also higher in utilities from an increase in telecommunications and high voltage electrical transmission work.
Speaker 4: In nuclear driven by a higher volume of refurbishment work, generating stations located in both Ontario and the US.
Speaker 4: and in industrial operations, driven by increased activity on mainline pipeline work in Western Canada, and an increased scope of work at mining and water treatment facilities. In addition, higher revenue in urban transportation solutions was primarily due to commencement of the development phase.
Speaker 4: of the Rail Electrification Project in Ontario. In addition to 18% revenue growth in 2022, your contract awards told $4.7 billion, up 29% compared to $3.6 billion in the prior year.
Speaker 4: and construction backlog at the end of 2022 was 6.2 billion compared to 6.1 billion at the end of 2021.
Speaker 4: Adjusted EBITDA in the construction segment of $193 million, a margin of 4.2% compared to $212 million, a margin of 5.4% in 2021. Construction segment of just the EBITDA in 2021.
Speaker 4: included a favorable impact related to the SEWS program at $32 million. Excluding the impact of SEWS in 2021, the remaining year over year at Just the Badaar variants
Speaker 4: was favourable by $12 million, driven by higher volume and civil operations and higher volume and margin in utilities and nuclear. I've seen these favourable variances to some extent in addition to the year over year soos impact with lower gross profit and industrial operations.
Speaker 4: due in part to lower margin from pipeline projects, including coastal gasoline, as well as lower gross profit in urban transportation solutions, driven by negative growth profit of $118 million on two LRT projects in 2022, compared to a negative gross profit on those two projects.
Speaker 4: $67 million in the prior year.
Speaker 4: Turning to flight 6, concessions revenue for the year was $76 million compared to $69 million in 2021. The higher year-over-year revenue was primarily due to an increase in commercial flight operations at the Bermuda International Airport. The Luda continues to operate at a reduced volume compared to pre-pandemic levels.
Speaker 4: continue to recover in 2022 from the more severe impacts experienced in 2020 and 2021. In 2022 passenger traffic levels in Bermuda average 59% of 2019 pre-pandemic traffic compared to 33% in 2021.
Speaker 4: Just an e-booked hour in the concession segment of 71 million, increased by 7 million, that is last year, primarily due to results from the Vermeer Airport. Turning to slide 7, at the year end, ACON had a committed revolving credit facility of 600 million dollars.
Speaker 4: of which $121 million was drawn and 3 million utilized for less of a credit. On December 31, 2023, convertible debentures with a face value of $184 million were mature, and the company expects to repay these debentures at maturity or before.
Speaker 4: It comes next quarterly dividend of 18.5 cents per share. It will be paid on April 4, 2023 to shareholders of record on March 24, 2023.
Speaker 4: At this point, I'll turn the call over to John the Week. Thank you, David. I would like to take a moment to address a four large six-price legacy project laid out in our latest disclosure documents. As a reminder,
Speaker 4: Those four projects entering to in 2018 or earlier by John Venture in which ACON is a participant are being negatively impacted due to additional cost for which the John Ventures assert that the owners are contractually responsible.
Speaker 4: including four among other things, and four-ciable side conditions, third-party delays, COVID-19, supply chain disruptions, and inflation related to labor and materials.
Speaker 4: In 2022, due to the fact of noted that impacted this project during the year, ACON recognized an operating loss of 120 million related to these four projects. ACON and our partners continue to work vigorously toward resolution of...
Speaker 5: and to move forward towards project completion in each case.
Speaker 5: At that same before.
Speaker 5: This will take some time.
Speaker 5: This will take some time, but we are on it constantly.
Speaker 5: Turning to slide 9 in 2022 and early 2023, we have made good progress in our goal to de-risk ACONs business through collaborative models that properly address the challenges associated with major projects while balancing the needs of all stakeholders. Thank you.
Speaker 5: Three projects are anticipated to be added to the outcomes backlog of the next few years that present significant opportunities for long-term, sustainable growth.
Speaker 5: non-sick price contracting models. In the second quarter of 2022,
Speaker 5: The good additional education project in Ontario was awarded to an ACON John Venture and a progressive design build, operate and maintain contract model.
Speaker 5: The project is the initial phase of the two-year joint development phase and is advancing well so far. In the fourth quarter,
Speaker 5: Scarborough Transit Connect, a consortium in which ACON holds a 50% interest and is a lead partner, executed an agreement with Metrolinx and infrastructure Ontario to deliver the Scarborough subway extension stations, rail and systems project.
Speaker 5: in Ontario, using a progressive design bill model. A 18-month collaborative development phase to finalize a scope, cost and schedule of various elements of the project.
Speaker 5: is now underway, including certain early works activities. This is another example of the lower risk progressive design build model, which has been developed to deliver complex transit projects in Ontario. And finally, subsequent to year end, a partnership in which ACON is a participant, executed a six year alliance agreement with Ontario Power Generation.
Speaker 5: smaller and medium sized projects.
Speaker 5: as evidenced by year-over-year revenue growth of 18% and higher new project awards of 31% in 2022.
Speaker 5: While volatile, global and Canadian economic conditions are impacting inflation, interest rates, and overall supply chain efficiency, these factors are stabilized to some extent. And I've largely been and will continue to be reflected in the pricing and commercial terms.
Speaker 5: of our recent and prospective project awards and BITS. We're now heading to slide 11 with a backlog of $6.3 billion at the December 31, 2022, and recurring revenue programs continuing to see robust demand.
Speaker 5: driven by the utility sectors and ongoing recovery in our portrait in Bermuda. ACON believes its position to achieve further revenue growth over the next few years.
Speaker 5: As a reminder, the major scope of the Gorae expansion on corridor works project, the Scarborough Subway Extension project and the Darlington Uniclier project will only be reflected in backlog at the successful conclusion of the lengthy development phases. A comment, including John Ventures in which we...
Speaker 5: $8,000,000 and $15 million will up 25% versus a prior period and 61% versus two years ago.
Speaker 5: primarily from growth in utility operation. Recarring revenue is expected to continue to grow.
Speaker 5: driven by demanding the utility sector and the concession segment is expected to see airport traffic in Bermuda continue its recovery in 2023 and 2024
Speaker 5: Turning to slide 12, ACON continues to support the energy transition to build and operate sustainable infrastructure. In February 2023, ACON announced that the onada energy storage
Speaker 5: A consortium in which ACON concessions would be an approximately 10% equity partner upon financial close.
Speaker 5: Executed an agreement for the Oneda Energy Storage Project.
Speaker 5: to deliver a 250 megawatt, 1,000 megawatt hour energy storage facility in Ontario.
Speaker 5: which would currently represent the largest battery storage project in Canada. And as your agreement, ACON was also awarded 150.
Speaker 5: $141 million EPC contract by Oneda LP.
Speaker 5: The project will provide much needed capacity to the entire reader, while prioritising local indigenous partnerships and environmental benefits.
Speaker 5: We also continue to grow our Green Home Energy Business within our utility sector, which includes residential solar programs.
Speaker 5: EV Charger and battery storage solutions. We seek to provide dependable and convenient energy solutions to help all owners, developers and commercial customers reduce greenhouse gas emission and energy cost.
Speaker 5: Initiatives such as this and projects such as onada energy storage go expansion on Corridor Works, Scarborough Subway Extension.
Speaker 5: and the Darlington Nuclear Project all demonstrates the path ACON is on to embrace the opportunities and the increasing focus on energy transition, decarbonization and sustainability present. This is very much
Speaker 5: the future direction for ACON and we are excited by the progress made to date in establishing ourselves in this space.
Speaker 5: Turning now to slide 13 with strong demand, growing recurring revenue programs, and diverse backlog in hand.
Speaker 5: ACON is focused on achieving solid execution on these projects and selectively adding to backlog through a disciplined building approach that supports long-term margin improvement in the construction segments.
Speaker 5: In the concession segment, in addition to expecting an ongoing recovery at the Bermuda Air Port through 2023,
Speaker 5: There are a number of opportunities to add to the existing portfolio of Canadian and international concessions in the next 12 to 24 months. Including a project with private sector clients that support a collective focus on sustainability and the transition to an end-to-end zero economy.
Speaker 5: The Go Expension on Corridor Works project and the UNEDA Energy Storage project are examples of the role ACON's concession segment is playing in developing, operating and maintaining assets.
Speaker 5: related to this transition. On slide 14, as disclosed this morning, ACON have entered into a definitive agreement with Green Infrastructure Partners, or GIP, to discuss the transition.
to sell its ACON transportation East or ATE road building, aggregates and materials businesses in Ontario for $235 million cash. ATE provides road building infrastructure solutions throughout Ontario to the provincial government.
municipalities and private clients through a workforce of over approximately 1,000 employees.
As I've said, ACON's targeted growth initiatives are increasingly focused on helping meet our clients' sustainable infrastructure needs and harnessing the opportunities that are expected to come from the transition to an end-to-theore economy through decarbonisation. This transaction is consistent with our goal of target
Ontario that leverage both ACOND, EV civil construction services and GIP's road building capabilities.
I would like here to expand my sincere thanks to all of the ATD employees for their hard work and dedication over the years.
and which them continued success with GIP. Thank you. We now turn the call over to analyze for questions.
them continued success with GIP. Thank you. We now turn the call over to Anadis for questions. Thank you.
As a reminder ladies and gentlemen, if you'd like to ask a question, please press star followed by one for our telephone keypad now. Would be praying to ask any of your question. Please ensure you're familiar with local Lee. We have our first question coming from Yulee Lake from Kennecord. Yulee, your life is not open. Good morning, gentlemen. Can you help us out with the EBITDA impact of...
And that would give you a good sense of where this business is. I think we're talking the past to the fact that road building is kind of middle of the pack in terms of risk profile. It's mainly unit price type work. And the margin that goes along with that is fairly commensurate with being kind of middle of the pack in terms of large defaults.
that. Okay so that would imply like a double-digit
EVB had multiple on the sale. I'm not saying that. I'll check on that. I'll check on that. I've been lodging the here and construction was around 89%.
multiple on the sale. Just wondering if that's reflective. No, I'm not saying that. Okay. I'll check that out on that. I'm not talking to here. And construction was around eight to nine percent. It's a nine okay.
Can you just, in a hop-off after this one, what's the CapEx profile of the company, a pro forma? Yeah, so on average, normalize CapEx for that business is in the range of about $15 million a year. I've worked to age here to year, but it would be in that counter-range.
Okay. I'll hop back in the queue. Thank you, Louis.
Our next question comes from Jacob Bopt from CIBC. Jacob, your line is now open.
Hi, good morning. This is the whole one for Jacob. So, so a couple weeks ago, there were, there was some press reports that ACON is looking at monotyping part of the Bermuda concession. Could you share your thoughts on this and progress, excuse me? Yeah, I mean, I think we've been asked this question.
the ownership of that project, selling a minority interest in the airport would be something that at some point would make sense for us. And then during COVID, obviously, you know, that wasn't something that was particularly feasible. We said during that period that we would.
Look for recovery and a good track record in Bermuda and then look at that again and nothing has really changed from that perspective. So we're open to a monarchy interest but that's consistent with what we've said from day 1.
And maybe just a question on the four legacy projects when there are thoughts on cost inflation and project productivity in general. So I know you've highlighted that three of those four projects should be complete by late 23, early 24, but it would be helpful if you could directly point to the path of these projects to operating profit and free cash.
They represent now just a little more than 1 billion of backlog.
It means something like 17% of the declared backlog, if we add to this backlog, the projects that have been awarded under progressive design build scheme, which backlog is not yet within the declared one.
If we add the recurrent, you have seen that we once again increase them, it's $850 million during the year 2022. This project represents less than 10% of the expected backlog.
Among those jobs, three are going to be finished between the end of 2023 and I would say mid-2024, which is a good point.
We are working continuously to find solution and if you just do your math
Now that we have disclosed this 120 million during the year 2022 you will
immediately feel the robustness of our business outside of this four legacy project and and the adequacy of our strategy which is around operational excellence on our job which is about derisking the business which is about relocating capital to to growth here.
In terms of productivity, maybe I can speak about CGL, we are now perfectly aligned with our clients and happy with the arrangement to work toward completion. The mechanical completion was developed before the end of 2023 going forward.
And we are working hard to resolve in parallel the past issues. David, maybe a little more detail on the economy. Yeah, I mean in terms of thinking about operating profit, obviously as you can see from the disclosure, you can see that those projects...
in a lost position or breaking even. From the perspective of construction accounting, that means we've taken all the losses that we forecast to have on those jobs through to the end of the project.
From that perspective, we should see no impact from those projects based on our year-end positions through to the end of those jobs. That doesn't mean to say there isn't still risk attached to completing those projects. Our disclosure in the MD&A and the financial statements call out the risk that we still have on those projects through to the end. So from that...
year end position we feel that projects are appropriately positioned but they'll be ongoing risk on those projects through to the end until
until all the backloves worked off. In terms of cash flow, as you can see in 2022, cash flow, you know, and lagging work in capital compared to what we would normally see, there's largely attributed to those projects. We would expect that as we resolve some of the projects yet to challenge itself.
issues as we go through this year that some of that will unwind and will be a net benefit to working capital. And so overall for the year we expect positive free cash flow with some contribution from those projects and winding in terms of the lag we've seen over the last 12 to 18 months. Great, thank you, Jennifer. That's very helpful. I'll turn it over. Thanks for moving.
issues as we go through this year that some of that will unwind and will be a net benefit to working capital and so overall for the year we expect positive forecast flow with some contribution from those projects and winding in terms of the lag we've seen over the last 12 to 18 months. Great thank you Jennifer that's very helpful. We'll turn it over. It's real. Thank you.
We have our next question comes from Bennet, prior from this Jandons Securities. Bennet, your knife is now open. Yes, thank you very much and good morning everyone. Jean, could you talk a little bit about where do you see the greatest opportunity to deploy cash right now, especially with the proceeds that you've gone to receive from this transaction and looking at your outlook, you also talked about the opportunities that you're seeing in terms of concession perspective for the next 12 to 80 months. I would be curious to know about the potential investment required to capitalize on this opportunity and whether any of your current concession need to be sold in order to capitalize on these new potential projects.
I will take the first part, more general, on this question. Let's come back a few minutes on the sale of our road building business. I mean, evidently, we are extremely proud of the work that had been executed by this group within ACON. You can imagine there's some emotion this morning because...
those are the roots of the ACON company. This being said, and we are extremely consistent on this, as in the past, when we decided to diversify the contract mining activity at the end of 2018, we just consider that there are other places that present for us better opportunity to grow and where we are confident.
that we have been able to create better competitive advantage. Especially, in my introduction, you have heard about the energy transition, and this is quite important. The magnitude of the oncoming project and the associated forecasted capex.
to decarbonize the whole industry and reach an end-zero world are just huge. And you have noticed in the recent world, I mean we have been speaking about the Oneda battery project, very, very important project for us. I mean, I've associated...
with a 25 years of operation. We have a few PEM storage also under study. You probably are not even in the rehabilitation work of John Hart. The HMR job nuclear, all this is energy transition. And you may not know, but in our geothermal activity, we are just forecasting to drill more than 2,000 more over in 2023. I mean, it's quite an interesting.
The other piece of this, obviously, is historically we've prided ourselves on having a prudent balance sheet with low leverage. It has ticked up over the last 18 months or so with some of the working capital impacts that we talked about earlier. So the ability to reduce that leverage again.
not a requirement at all. I mean, the concessions we're looking at and are entering into
the whole don't require huge amounts of equity and we fund them on the basis that they're kind of self financing to some extent. All of these concessions that we enter into were involved in the construction of those assets, generating construction profits, some of which we recycle into the equity investment in the concession. So no, we don't need to sell concessions.
Okay, and maybe just a quick one. What kind of margin profile are you aiming at once those four large fixed price projects are completed and once we see an impact from the three collaborative projects at the more regular pace? I think you can see the strength of the margins.
in the underlying business in 2022, which I think we've talked for a while about the fact that we've been very selective on projects that we've pursued and added to backlog that we think the demand supply balance has been favorable in the bidding environment we've seen over the last little while.
and our execution on all that work that's been added in the last couple of years is going well. So I think the margin performance you see in 2022, again, excluding the impacts of the four legacy projects, is something that we think is higher than we've seen historically and something we would be looking to at least maintain going forward. And-
I think that's certainly feasible. And as we add new projects, then clearly we'll look to enhance margins wherever we can. But I think we're already operating at a pretty good level. That's great, Collar. Thank you very much. Thank you. Thank you.
Our next question comes from Chris Murray from ATB Capital Market. Chris, your line is now open. Thanks folks. Dave, maybe just going back to the margin profile and just maybe trying to get a better understanding. You know you talk about where the backlog is. Is it fair to think that, and I'm just trying to parse your comments a little bit around this.
So should we expect that these contracts are going to be essentially a zero mark in direct through 23? Is that the right way to think about your comments? And could you also maybe give us the revenue impact from 22 or how much of the backlog you burned down over 2022?
So, yeah, I mean, in terms of margin or operating profit in 2023, again, implied in the accounting positions we have at all of those jobs is the fact that we have to forecast those jobs to the end.
The forecast has to reflect our current estimates of cost and revenue on those projects. And to the extent there's a loss, you have to book all that at the time you forecast that. So if everything played out to the end of those jobs exactly how we foresee them, along with our joint venture partners, then that's the implication that there would be zero impact on margin. As I said earlier, that's...
That's our view in how we position them. But as everybody knows, until large complex projects reach the finish line, there's going to be residual risk. And we've disclosed that. So there's an implied assumption in our positions that these will have zero impact going forward.
The last piece of your question about backlog was work off in 2022 related to those four projects. I missed the last bit of question. Yeah, so I was just curious about how much of the backlog you worked off against that, you know, all of that 120 million in law. So if you were about 17% of the backlog.
I guess at the end of this year, where were you about a year ago at the same on the same metrics? So a year ago with a similar level of backlog we would have been around 700 million higher than that this time a year ago.
Okay, so that's helpful. And then just one follow up to kind of all of the challenge projects. You're also going to end up as a concessionaire on some of the, um, those.
Does you've been the concessionaire, and this is maybe more of a conceptual question, does that change your approach to how you think about the construction risk on on these types of projects or even how you would manage. You know, the what you would normally do on a on a construction project that you wouldn't normally be the part owner or the owner of the asset at the far end of the process.
I would tend to say that the answer is no. I mean, we separate the way we look at construction and the way we assess risk to the way we look at construction and we assess the associated risk. We have done enormous efforts within the last year to de-risk our backlog. And...
You have seen in terms of figures, I mean, we have now a six price share within our backlog or revenue for 2022, around 50%, coming from a little above 65%. So what we are saying, we do it. We have installed within the company a very robust.
what we call a gate zero process now and those by the whole company to be sure that we have a thorough analysis on our construction and concession project before to decide to bid and at which level we are going to bid. So we are in a good path on this.
And we will always assess risk in construction, apart from risk in concession. I mean, it's not a sort of mix where we try to be at the level we would like to be. We have to be extremely disciplined to assess it on each segment.
Okay, that's fair. Thank you. Thanks, Chris. Thank you.
With our next question comes from Michael Tupon from TV Securities. Michael, your life is now open. Thank you.
I guess my first question relates to the ATE road building business sale announced today. I guess is there any further you can add just on the strategic rationale and maybe beyond that though and arguably more importantly, curious if there are any other businesses you are or would consider selling to fit within the parameters of the strategic profile you're looking to do.
a very capitalistic industry. As we have always said, I mean, in the past, we are looking at all opportunities to go within our strategy. And this is the way we are going to act.
in the future. Just in terms of the strategic cooperation agreement with GIP, is there at any sort of a base level of a revenue that you would expect at this point to realize from that or is it very much?
project specific and it would very greatly year to year depending on what happens in the market. Yeah, no, it's very project specific Mike. It's essentially replicating what we previously had internally where we had internal joint ventures between a road building group and a heavy civil group on major projects.
We will replicate that between our major projects group and GIP going forward. The pursuits that make sense to have those two combined skill sets come together. So it will be project specific in terms of which projects it makes sense for us to pursue together.
and have successful we are in securing those projects. So it's really just allowing us to continue to participate in major projects where road building is, you know, a significant component of a larger project.
Right, fair enough, okay, thanks Dave. And then just for modeling, can you share with us what the depreciation and amortization associated with that, that road building business, what that has been? Yeah, yeah, in the 15 to 20 million dollar range.
Okay, so similar to the CapEx number you gave us earlier. A little higher than the CapEx typically. I think we've got a fairly conservative depreciation policy on that business. Okay, all right, turn it over.
Thank you Michael. The following question comes from Nagi Badeon from Industrial Alliance Capital Market. Nagi EO lies now open.
I just wanted to ask a few questions about the Oneida storage project. Can you just help us quantify the equity investment in that project? It is something a bit different for you, a newer type of opportunity. Maybe you can give us a bit more of a sense of yourself.
If you're looking at concessions in the more, I guess, traditional power size of the business going forward, is that something you consider? Yeah, we are working on this project at two levels. At the ETC level, it's a $141 million.
job which is a balance of plant. I remind you that the battery provider and the performance of the battery provider is another contract.
And at the top level, our plan to be is to have a 10% share of the equity which we present more or less of 1515 million.
of investment. Okay and just generally are you looking at more storage opportunities or more traditional kind of power investments from a concessions perspective or is this more of a one-off? No I mean it's not a one-off because there's a lot coming so it may be... Yeah.
battery storage, you are aware that the IAO has launched a request for interest on proposal on this battery storage, but there are also quite a number of water pump storage understood at the moment in Canada, so we are building a power capacity in this business life.
So I was asking, I think we also have massive procurement on the work for storage and our bird-aub, Pum-todd that seems to be picking up. Okay, that's good. And just maybe one last question, no dividend increase announced this time around, probably approved and approved, given everything that's going on, but just maybe an update on your payout expectations for this year. Okay, well we obviously don't get guidance on the earnings. So...
is the level of dividend is in terms of yield is pretty attractive and that was kind of played into the decision to hold it where it is. Okay, that makes no sense. I'll get back in the case. Thank you.
The level of dividend in terms of yield is pretty attractive and that was kind of played into the decision to hold it where it is. Okay, that makes sense. I'll get back to you. Thank you. Thank you.
As a reminder, ladies and gentlemen, if you would like to ask any further question, please press star followed by one on the iPhone keypad now. With our next question comes from Jonathan Namos from Laurentian Bank. Jonathan, your line is now open. Good morning. Thank you for taking my question. makes siren sound
on the four identified, morning, on the four identified legacy projects. It sounds like the loss is related to those stepped up sequentially in Q4 from Q3. Is that accurate?
on the four identified, morning, on the four identified legacy projects. It sounds like the loss is related to those stepped up sequentially in Q4 from Q3. Is that accurate? Could you tell us a bit about? Well.
what drove the increase sequentially, Q3 to Q4? Yeah, so I mean obviously we look pretty hard across all our projects every quarter. And again as I said earlier in conjunction with our joint venture partners on each of these projects.
with clients. So really Q4 just reflects things that we saw in the quarter in terms of agreements with clients, in terms of schedule, in terms of things that we agreed to do together to hit schedule and obviously we'll be pursuing
the appropriate compensation for those areas, but we've taken a view as to what that might look like, and that's kind of what drives the positioning. As we get closer to the end of these projects, schedule is obviously top of mind, and something that going into 2023 has been part of an active...