Q2 2023 Brookfield Infrastructure Partners LP Earnings Call
Hello, and thank you for standing by welcome to the Brooksville infrastructure partners second quarter 20, twenty-three results conference call and webcast.
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It is now my pleasure to introduce Chief Financial Officer, David Crane.
[noise] introduced to my name is David and I'm, the Chief Financial Officer of Brookfield infrastructure.
I'm joined today by our Chief Executive Officer, Sam Pollock, and Uday, Matthew Allegheny, a managing director and C. E O of our global data Center platform.
It is joining our call from Mexico. So if we encounter any technical difficulties. We also have been Vaughn with us in the room today.
I'll begin with a discussion of our second quarter financial and operating result, as well as our liquidity position and the recent success of our capital recycling initiatives.
Then turn the call over to Uday, who will expand upon one of the three d's driving investment opportunities digitalization through the lens of our global data Center operations.
Finally, Sam will provide an update on our strategic initiatives and then I'll look for our business.
At this time I'd like to remind you that in our remarks today, we may make forward looking statements.
These statements are subject to known and unknown risks and future results may differ materially.
For further information on our known risk factors I would encourage you to review our annual report on form 20th which is available on our web site.
Beginning with our financial and operating results, we generated funds from operations or F. F. A $552 million during the second quarter, an increase of 8% over the comparable period last year.
Results were supported by the contribution of approximately $2.1 billion of capital deployed in new acquisitions over the past year, partially offset by the impact of asset sales and borrowing costs associated with financing these new investments.
Organic growth was near the high end of our targets, 6% to 9% range, reflecting the benefit of elevated inflation on tariff increases and the commissioning of approximately $1 billion in new capital projects during the last 12 months.
Partially offsetting the strong underlying performance of our business was the normalization of market sensitive revenues as the prior year benefited from elevated commodity prices.
Starting with our segments and the utility statement regenerated apropos of $224 million, an increase of 19% from the same period last year.
Organic growth for utilities was 10%, reflecting the continued benefit of elevated inflation indexation and the commissioning of approximately $500 million of capital into our rate base. During the last 12 months.
Current quarter results also benefited from the expansion of a residential decarbonized patient infrastructure platform in North America and Europe . Following the acquisition of Homeserve in January of this year.
F F O for the transport segment was $199 million, an increase of 5% from the prior year once excluding R. U S container terminal that was divested in the second quarter of last year.
Results continue to benefit from inflation linked rate increases across our global portfolio <unk>.
Compared to the prior period last year, our global toll road portfolio increased rates by 10% and our rail networks pastor increases of 8% <unk>.
Partially offsetting the strong operational results of our road and rail assets with a 1% reduction in port volumes and the normalization of commodity prices that provided an outsized contribution at R. U S. LNG export terminal in the prior year.
Modest decrease compared with the prior year.
Strong performance across our based business was from increased utilization and hire contracted cash flows was offset by software results at our Canadian diversified Ministry in business.
Results are impacted by the normalization of market sensitive revenues and the delay in meaningful contribution from the Heartland petrochemical complex, which underwent repairs I was offline for much of the quarter.
During July we successfully completed the restart and wrap up on complex, which is currently achieving high operating rates.
Heartland is anticipated to partially contributor results during the third quarter, while the fourth quarter is expected to provide a full contribution.
Lastly, apropos for the data segment with $772 million, an increase of 20% from the same period last year.
Current quarter flex the benefit of the acquisition of a European Telecom tower operation in February as well as a contribution from Australia and fiber business acquired in August of last year.
In addition to the strong financial and operational resolved times described our business is also well positioned to execute his financing plans with access to capital strong.
And a very robust liquidity position.
We ended the second quarter with $2.3 billion in corporate liquidity, which was supported by the significant progress achieved in our capital recycling initiatives.
To date in this calendar year, we have secured $1.9 billion of asset sale proceeds of which $1.4 billion has already closed.
Most notably during the quarter, we secured and close the sale of our 50% interest in our New Zealand integrated data distribution business to our existing joint venture partner for net proceeds of approximately $275 million.
When combined with the sale of the tower assets with last year, we generated in the U S. Dollar IRR, a 31% which represented to six times a multiple of our capital over the four year hold period.
We also secured and closed the partial sale of a U S gas pipeline to one of our existing partners for approximately $420 million. This.
This implied in 18% IRR and at 2.8 times multiple of our capital since the recapitalization of the business in 2015.
Finally, we secured the sale of a portion of our financial asset portfolio and are 8% interest in our Australian regulated utility for total proceeds of approximately $840 million.
Approximately $380 million has been received during the year with the remainder scheduled to close later this month.
With our capital recycling objectives, largely achieved our organizational focus has shifted to the integration of our newly acquired businesses and the execution of their respective business plans.
This includes the development of our global data Center platform. What's your date will discuss next I would like to thank everyone for their time. This morning, and I will now pass the call over to him.
Thank you David and good morning, everyone.
I'm pleased to be joining today's call to discuss the digitalization investment team and the exponential need for data storage.
Digitalization has been a strong tailwind driving a recent investment activity.
Two large scale capital that is required to support exponential increases in data consumption.
We typically invested several core data focused areas, including fibre telecom towers indoor wireless systems and data centers.
The data storage and processing industry in particular is benefiting from <unk> wins, including the rise of January <unk> artificial intelligence, which is transforming industries by automating complex tasks and advanced analytics.
We would also experiencing an exponential search and data storage and processing requirements from enterprises migrating workloads and applications from one premises to the cloud.
Well, it's a widespread adoption of new use cases, such as five G technology.
These trends are amplifying demand for robust well located and scalable data infrastructure, including data centers.
This year, we capitalize on these tailwinds and a significantly expanded our data center operations.
We secured the acquisitions of two development platforms data for encompass which meaningfully contribute to our operating capacity and explore expand our presence in Europe , and North America, respectively.
In fact, following the closing of both transactions, we will own and operate one of the largest global Hyperscale data centre platforms.
Are operating capacity will increase to over 485 megawatts within.
With an additional 775 megawatts of capacity already contracted and deserved that will be built out over the next several years.
These customers at a strong credit quality and represent industry, leading companies that are at the forefront of technological advancement such.
Such as artificial intelligence.
We believe our size scale and global portfolio will prove to be a competitive advantage going forward.
Are operating footprint is across five continents, which can give ah hyperscale customers are highly flexible and consistent offering multiple geographies.
These relationships will also provide critical and real time information on the global market that should provide us with a competitive edge.
Another differentiate it for a data centre offering is the ability to leverage Brookfield ecosystem to provide a turnkey solution that includes renewable power connectivity and adjacent real estate development.
A new term focus is on the execution of a large scale and high growth business plan.
The high degree of contracted capacity provides multiyear visibility to sit you access to critical equipment reliable labor and priority procurement with the pricing benefits of development at the scale.
We also expect to benefit from a modular and repeatable Bill design as well as a permitted power ready and owned land bank for all of our development plans.
Personally to further support our customers go with ambitions, we have an existing land bank in prime markets.
As a potential to increase a total capacity to over two gigawatts.
That concludes my remarks for this morning, and I will now farcical over to Sam [noise].
Thank you and good morning, everyone.
As we highlighted in our letter to unitholders, we continue to find good opportunities to invest capital above are targeted return threshold.
In that regard for 2023, we've already exceeded our annual deployment objective securing three new investments totaling nearly $2 billion.
Now beginning with trade that trading privatisation I'm.
I'm pleased to say that nearly all the required regulatory approvals have been received an a shareholder vote has been set for August 24th.
We currently expect to close the transaction shortly after receiving confirmation of shareholder support.
As they touched on just now.
We recently accelerate our global data center growth strategy through the acquisition of two marquee development platforms in North America and Europe .
These verses fill gaps in our existing portfolio.
Which was primary focus on the South American in Asia Pacific regions.
We now have development capabilities, and our current markets, including North America, and Europe and had become one of the largest developers in the world.
Most recently, we entered into an agreement to acquire a Coca Cola steak encompassed data centers.
Leading north American Hyperscale desk platform.
The business has approximately 170 megawatts of operating capacity with a significantly derisks capacity backlog of 565 megawatt tdp's developed on power ready and owned land across several major campuses.
We expect the transaction to close in the fourth quarter.
We also recently closed the previously announced acquisition of data for our European Hyperscale data Center platform.
Since announcing the transaction that business converted 130 megawatt memorandum of understanding with a leading hyperscale client and deferred contracted capacity.
This results in over 50% of our business plant growth profile of 400 megawatts based access to contracted.
For these recent data Sir investments, we expect initially earned single digit going and yields that we expect will grow materially as we develop our highly visible and large scale growth pipeline.
We planned development numbers, one gigawatt capacity over the next three years, which we anticipate will increase last year's EBITDA by over five times.
To finance this growth, we intend to utilize our capital recycling experience to create a self by the structure monetizing operating and contracted data centers to fund capo backlog.
These investments are expected to generate hide amid team returns, which could be even higher depending on the success of our capital recycling.
We continue to demonstrate strong momentum in our financial operating strategic initiatives.
The closing of trade is expected to generate meaningful accretion to results in the second half of the year.
And our data center investments will provide meaningful FFL growth in the years to come.
In addition, our continued ability to pass through inflationary increases in our tariffs above headline rates.
Should continue for the next several quarters.
We continue to surface highly attractive opportunities to invest for value in this get capital scarce environment.
While we have surpassed our cap of the climate target for the year, we will continue to pursue new and follow on opportunities.
Especially those that offer greater returns and are targeted levels.
We fully expected chief continued success in our capital recycling initiatives in the years ahead, given the quality and diversification of our asset base.
So that concludes my remarks, and I'll now pass it back to the operator to open the lines for questions.
Reminder, to ask a question you will need to press star one one on your telephone once again to ask a question. Please press star one one on your telephone please.
Please stand by while we compiled the Q&A roster.
And our first question comes from the line of Shetland Radburn with T D Coward.
Thank you very much and good morning.
In terms of the very large scale data center platform that you have now assembled can you speak to the extent to which you can share best practices and generate energy to cross it just considering that in some cases you have partnerships with other investors.
Hi, Carolyn.
Maybe I'll start off and then.
Let the Uday, maybe chime in a few comments from Mexico, but.
Look at our goal is to.
Extract as many synergies as possible from these.
For those businesses, where we control our quote control.
In particular, the that the more recent ones.
Think we will have lots of opportunities to share best practices.
And those businesses, where we have partners who.
Or quasi competitors I guess.
It will be a little more challenging.
But nonetheless, we have a great relationship.
With our partner, particularly in South America and.
In India, and I expect that.
Will will.
We will take advantage of those things, where it's mutually beneficial in.
<unk> been a great partner to date Nay I don't doubt still continue to be a great partner.
Did you want to add into that.
Probably just one one more point in time sandwiches I think.
Particularly unquote controlled situations our interests are absolutely the same and partners bring very specific inputs and in some of these arrangements different bodies are contracted to provide particular inputs I think we have a very productive collaborative approach to bringing best practices within those those J V set up.
<unk> and of course on and the other businesses, where we have 100 per cent ownership. This may be more opportunity as well to ship best practices.
Lessons from other markets.
Great. That's helpful and then as it relates to the plant itself and the development pipeline by selling fully operating and contracted data centers can you give us some color on the pool of buyers out there that we'd be looking to purchase I guess single facilities or perhaps a smaller scale.
Doctors facilities.
Sure sure Lynn.
Yeah. So today we've seen.
A number of industry participants.
Monetize steaks.
Two individual investors.
Both in Europe , and North America and done so at cap rates that I think are are very attractive.
We've also seen.
Some groups.
Setup.
Vehicles were they a dropdown assets and setup kind of private grief.
Think our our plan will be to explore a whole range of different capital recycling alternatives, taking advantage of our knowledge of.
Global.
Lp's and their desires to deploy capital in these types of acid. So I think.
Who have that same global reach an understanding of the LP.
LP desires, and we will do our best to match.
Those those buyers with the assets that we have.
Structured that's appealing to them so that could be retail investors institutional investors.
And high net worth individuals so there's there's a whole host of of.
And we.
We plan on staying up those structures too.
Access them in a.
And a very large way.
Yeah. My two thank you for the time.
Thank you one moment. Please for next question.
And our next question comes from the line of Robert <unk> with Scotiabank.
Good morning, everyone wanted.
I want to stay on the theme of the Hyperscale of data business.
With now now that you have platforms on five continents, how does the focus for growth shifts.
Hi, Robert I'll I'll start and then maybe again escalate to to talk but our organic growth opportunities.
Yeah, I think it's unlikely that will.
Pursue any more platform investment opportunities I think we have operations.
And all the regions, where we want to be that's not to say there might be some small.
Investment somewhere.
In a region.
Maybe the middle East to where we have relatively modest.
Activities today, but.
I think we have most of the.
The regions, where we wanted to play capital well covered.
And so I think the focus will be on just organic growth acquiring land and building more campuses and just executing the business plans that each of our businesses has in front of them and maybe just with that I'll turn it over to <unk> to expand on it.
Probably just building on that <unk>.
<unk> exactly I think you know we've got <unk>, there's a huge pipeline in front of us in terms of customer opportunities and that's probably we definitely noticing a bit of a narcotic as well with you know.
With Hyperscalers in particular and others looking at applications like a I N.
Probably you know that.
Mmm.
Seeking to secure supply so I think a lot of the focus will be just building out on the land bank, you've gotten perhaps some small sort of extensions into new locations from each of the platform companies that serve some very natural geography's, which which could be expanded into so that's.
That's probably will be the main focus for the next next awhile.
I appreciate that.
So Robert.
I think.
<unk> expectations have moderated and so I think that's also helped to improve deal activity, but.
Skilled.
Wary of Generalising too much because there are some sectors that are still in high demand, but for the most part this is a buyer's market.
Create dry powder for acquisitions, so I think.
The market is definitely picking up but I think for the next little while we still see an opportunity to.
Invest in very high returning situations that.
Particularly with those that tuck into our existing operations I think that's where the real opportunity lies today.
Okay.
You.
One moment. Please for next question.
Your next question comes from the line of Robert Kwan with RBC capital markets.
Good morning, if I can just.
Just continue on.
The statement you made around Byers, having a lot of <unk> access to capital and the other statements just for you investing in the capital scarce environment.
Sam you touched a little bit on it with the last answer but can you just talk about what all this means in terms of the attractiveness, both or opportunities for acquisitions and divestitures just across the different asset classes.
And geographies that you're targeting.
Hi, Robert.
So maybe just let me rephrase your question to make sure I understood I think you're asking me just to.
Give the.
Investment outlook.
For lack of a better expression across different regions in the world and different sectors is that what the question was yeah, especially just towards your comments here around.
Capital scarce scarcity and.
Just the moderating valuations.
So.
Look I think the.
The investment climate is pretty consistent.
Markets have got today, I don't see any market and which is unusual because usually.
There's always one place that has no capital another place that has a lot of capital today, it's actually pretty consistent across.
The globe as far as capital availability.
Typically we would expect that.
The North American capital markets would come back probably the soonest would usually be my expectation.
And I think that's probably still will be the case with the other markets following behind a little bit.
But.
We're seeing good opportunities I guess just to sum up in our markets today. So in each in each of our regions. We are looking at tuck in acquisitions that are above our traditional return expectations.
As far as.
Sectors go.
The.
The digital sector remains very attractive for investors.
There's still a lot of people who want to.
Gain exposure to it.
There are parts of the data sector that are not as.
Attractive as others. So people are maybe a little more wary <unk>.
Particular.
Some of the wholesale fiber enterprise fiber type businesses are a little bit more distressed.
We still see lots of capital for Tom.
Towers and data centers and does demand.
Similarly, we see.
A lot of interest.
<unk> and from our our clients.
For utilities.
Particularly electric utilities, maybe less so for gas.
Fossett <unk> related utilities, but electric utilities are very much in demand and I think we'll see that for the long term so.
Maybe from a.
From a traumatic perspective.
The three d's that we've talked about the last.
Year year, and a bit yes.
We're still very relevant and driving a lot of the.
Capital needs as well as.
Investor desires to get in front of Decompensation digitalization.
And.
Some of these D globalization trends that we see.
That's great if if I can just follow up on.
On a.
Specific sector and then you didn't touch on as much just midstream.
Seen M&A evaluations moderate there does that make.
It more attractive to you from the perspective of acquiring or.
Is it.
Less attractive just in terms of whether it's how industry dynamics are quite out where the market is and I don't know if there's any comments you can make is it right to your own assets.
Yes.
We are still very enthusiastic about mid stream at our midstream assets.
We think today or acid are highly cash generative.
And.
January very robust sustainable cash flow so any business that you can.
Have that that generates those types of attribute then.
We think they are great businesses.
I think the only caveat is.
Obviously, we're in too.
In an environment, where there is less buyers for some of those types of assets and so terminal value is something that everyone's mindful ups and.
And everyone takes a view.
Of.
The longevity of certain types of assets and so that requires a lot of diligence.
And for Us we.
Yes, we will continue to invest in high quality and scarce midstream businesses and ones that <unk>.
Provide a relatively quick return of capital and that's always been our investment focus of pieces for the last number of years and will continue with that approach, but we like to sector, we think valuations.
Are are actually okay. We've we've been on the buy and sell side last coupla years and.
And I think they're fairly constructive.
That's great. Thank you.
Thank you one moment. Please for next question.
Our next question comes from the line of Devin Dodge with BMO capital markets.
Good morning, So I wanted to start with Ah Clifford a total business in Brazil, No. We haven't seen are terrorists too many or <unk> new concessions recently.
There's been some focus in the Brazilian media that are terraces leverage is too high which they're they're attributing as a factor behind that lack of growth and they're even suggesting that the business menu that <unk>.
Capital injection from Brooklyn, its partner, so I'm not sure if you want to respond to that directly but I'm just trying to get a sense for how bip you via a terrorist business and its capacity for pursuing growth.
It's been here.
I guess, our terrace, and our Brazil, Torode operations operating conditions have been a bit challenging over the last several years in Brazil, and mostly due to just a broad economic challenges impacting the country overall.
And as we always do.
We're very focused on evaluating R capital allocation into the business and need to make sure we're earning a proper return and so.
That's our main area of strategic focus with our terrace at this time and and we will weigh all that very carefully as we consider adding further concessions to the platform in the coming years.
Okay. Okay. That's correct and then you know I got stuck in in South America, but moving a bit further north Colorado, Peru like I know this is a smaller investment, but there's been a lot of unrest in media coverage on a toll road in Lima could you provide an update on the situation there.
So at this stage to have and I can't get into too many details.
But this is a road in Peru that we bought back in around 2016, and the road has a lot of really attractive characteristics. It. It's got a good growth profile and an excellent concession contract.
And since rebounded the operations have gone very well.
And what's happened here is earlier this year the municipality, which is the counterparty on our concession contract indicated that they'd like to go in a different direction with the road and so we're now in discussions with the municipalities on that to see if we can accommodate their needs in those discussions are underway.
Okay. Thank you I'll turn it over.
Okay.
Thank you.
A moment please for next question.
Our next question comes from the line of Nausea, Beydoun with I E capital markets.
Oh, Yeah. Good morning, I, just wanted to go back to the topic of.
M&A you.
You you sort of fully funded these acquisitions here from <unk> I I guess your comment about maybe some katherine recycling and shapes picking a bit longer to execute or complaint does that slowly your appetite for acquisitions at all in the meantime that sounds avoiding to secure funding.
Hi analogy.
Well look the.
We always have to.
<unk>.
Based on our available liquidity so.
That's obviously a consideration I think what is unique about our business is that we have many sources of capital to fund growth.
And.
Will evaluate all those different sources and.
The extent that we can raise capital in a an accretive manner to fund hi, returning opportunities will do so obviously if.
If the sources of capital.
Don't provide for a creative growth then we will slow down the growth, but our history is that we've been always been able to find these levers to continue to take advantage of opportunities, particularly in market, where you can buy for value. So that would be my expectation is that we will <unk>.
<unk> to be able to grow and and find ways to finance that growth.
Okay understood.
The comment that you made earlier about the <unk>.
The utility mortgage <unk> maybe.
Such an asset to the others can you can you maybe talk about.
You you are you on the water utilities.
Mmm.
Okay. So what are utilities.
The.
Come in different structures in different regions. So.
Talk about it based off each region.
Probably the most.
Well known prominent water utility investments are in the UK.
Well known and particularly now with all the.
[noise].
These are for the most part because of.
Probably mistakes with.
Capital structures, and how people finance those acquisitions as well as <unk>.
Difficult operating and regulatory environments.
Perform particularly well.
There's probably a few that are better than others. So I don't want to.
Smear, everyone with that same comment because there are some that have done okay, but for the most part it's been a challenge sector and it's probably one that we would avoid.
And not find particularly <unk>.
Interesting from a risk return perspective today.
In Europe , there is a few.
Water utilities.
Pain in other places but.
For the most part have not been actionable.
And the U S.
It it's.
There really hasn't been an ability to invest.
In the water utility sector.
In scale most of them had been small roll ups and so not really.
Well suited for us they've also traded at extremely high returns high valuations driving lower returns and again that.
Didn't really appeal to us so we haven't done much.
In the U S and I wouldn't expect it the opportunities that would be large there.
And then in South America there is.
A few water utility type businesses and chili and.
And Brazil, and we've generally not focused on those.
So I guess you can say you can get from my remarks that there's not too much for us to do in the water utility space.
So like the comprehensive so thank you for that and just maybe last question on.
Two more recent a couple of recycling initiatives. The U S pipeline, then and <unk> and any comments on valuation supposed to be.
Sorry, what was it was Austin it and what's the appeal.
<unk> and your Bill.
Yeah, So <unk> look we.
We sold down through two transactions.
Bulk to save buyer.
One was done in a coupla years ago.
Prior to the movement and rates and one afterwards and I think the takeaway is that.
The valuation for the business increased during that period of time, So I think.
That says a lot to the quality of the acid and the fact that <unk>.
In spite of movement and rates you can still achieve values.
That were present.
Prior to this environment, so that I think that's a.
Great example of that.
On us net.
We held it for a relatively short period of time.
We sold it.
Effectively at a return consistent two what we bought at so it would have been created up in value over the period of time that we held it.
But the going in and going out valuations were very consistent.
Okay. Thank you for that.
Thank you one moment please for our next question.
And our next question comes from the line of Andrew Husky with Credit Suisse.
Thanks, Good morning, I guess the questions targeted to Sam and really if you look at the hips operations in the scale of them.
You know maybe you could just give us some insight as to how you're managing data <unk>.
Effective way if you think of all the information you have hydrocarbons low traffic numbers connections et cetera across the whole portfolio. How are you managing that data effective regenerate proprietary insights.
Really at the top of the House and then by way of extension maybe across the broader Brookfield group to help direct you in allocating capital.
Hi, Andrew.
That's a very interesting question because.
It's topical given all the advances in AI and the ability to.
Scrape and analyze.
Proprietary.
Data.
Historically.
It's been.
More.
I don't know I'm not sure what the right word is but maybe haphazardly, where we would just get business leaders together and regularly compare notes and try to tie and opportunities and and we've done that successfully particularly between our renewable group.
Some of our businesses that are heavy power users.
And data is being a good example of that.
And our businesses, where we would have.
The ability to leverage new solar.
Technology and capabilities to.
To replace some fossil fuel type.
Generation. So so that's where I'd say, we've done a really good job in the past and and I think we've done a reasonable job with.
The.
Real estate group.
Where we've been able to find synergies between many of our metering businesses.
Particular.
And.
District energy businesses in the real estate group.
What I think the next level is though and what you're touching on is where we can take advantage of the 14 and a half million customers. We have in our demand decompensation business and understand the buying patterns.
That exist within all those markets that they touch.
And within our trade and investment.
Being able to take advantage of the movement of boxes, and how that's going to be.
Telegraphing Tracy.
Trade flows in the future and so we are working on how we can institute some AI solutions to all of that.
But I would say, it's it's early days, but hopefully that's something in the quarters and years ahead will be able to brag about and tell you more of what we're doing.
Okay. That's good I appreciate that color and that's that's very helpful. I guess, maybe just building upon that.
That potential informational advantage, along with a capital that you've managed to from race and then also recycle alright.
I'd suggest some nothing patronising about it but your partnership quality is probably the best is ever has been and when you have these kinds of strategic partners.
Does that allow you to better Tilton, Lena to organic growth on a longer term basis with increased competitive advantages and I'll just highlight just some of the activities with reliance they're given the fact that it is also on the call.
So.
Yeah sure answer is yes because.
As I think you were telegraphing and what I would concur with his yes, we aim to be a partner of choice.
Four strategics and help them.
With the ballets or with the.
Reliance's.
With Intel's I think we have a we cover many different types of strategic and.
We are able to grow with them.
Maybe just on the <unk>.
Yeah, I'd, probably just had one one more point Sam.
Draw. The example of the Indian market, where I think we took a view a couple of years ago that the runway in India is quite long in terms of just opportunities for data and that just the quality of the infrastructure that is.
Is amazing.
Stuff needs to be built and as we progressed billing.
It's C a large <unk>.
Global access to customers data set of designs I think it is just.
You got a powerful combination. So that's that's one example, but I think we are.
Sleek pottering in different places.
With different different counterparts.
Okay. That's great appreciate the time.
Q1 moment. Please for next question.
Our next question comes from the line of <unk> with the C. I B C.
Hi, just wondering.
Fires in Alberta, and practice, a mystery methods and is there any impact to the H P. C ramp up that you can talk about.
Yeah, I will it's been here I think the question was how are we impacted from the wildfires in in Western Canada, and they had a we did have to take two facilities in one of our business is down for a very brief period of time and it was immaterial from a financial.
Perspective, and they're all back up and running today and there was no wildfire impact at all on the Heartland facility.
So so so that's.
I guess, that's what happened with the wildfires in Western Canada.
Okay. Thank you and one more if I could I guess can you talk about the broad implications of the AI on took Wilson and and the and they're both on the data center business.
Okay.
So.
That's a great question, just throw a Buddha and booted.
<unk> do you want to respond to that.
Yeah happy to Sam.
Thank you.
A L I.
Is creating some some great new opportunity spot data set a portfolio.
Particularly when you look at the you know the way the a is breaking up data processing for you know the large learning modules and the way you know capacity can actually tolerate.
A bit more latency and in some cases would also noticing that the redundancy requirements for Powell could potentially be different too.
Cloud computing, what it means is I think you know.
One the Hyperscalers are excellent writing.
Curing capacity to we're seeing some other new players potentially coming in.
It is a real an additional tailwind to the data centers circa and it also particularly some of the more recent acquisitions of very well targeted benefiting from the past.
To the uptake in changed sort of needs from customers.
Perfect. Thanks, that's all for me.
Thank you I wouldn't I don't like to hand, the call back over to a C E O Sam Pollock for any closing remarks.
Okay. Thank you operator, and thank you to everyone who joined the call. This morning.
Again, providing an update on our results next quarter.
We hope you enjoy the rest of your summer. Thank you.
Ladies and gentlemen, this concludes today's conference call and webcast. Thank you for participating and you may now disconnect.
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