Q4 2023 North American Construction Group Ltd Earnings Call
Operator: Good morning, ladies and gentlemen. Welcome to the North American Construction Group conference call regarding the fourth quarter ended December 31st, 2023. At this time, all participants are in a listen-only mode. Following management's prepared remarks, there will be an opportunity for analysts, shareholders, and bondholders to ask questions. The media may monitor this call in listen-only mode.
Good morning, ladies and gentlemen, welcome to the North American Construction Group conference call regarding the fourth quarter ended December 31st 2023.
At this time all participants are in a listen only mode. Following management's prepared remarks, there will be an opportunity for analysts shareholders and bondholders to ask questions. The media may monitor this call in listen only mode.
Operator: They are free to quote any member of management, but they are asked not to quote remarks from any other participant without that participant's permission. The company wishes to confirm that today's comments contain forward-looking information, and that actual results could differ materially from a conclusion, forecast, or projection contained in that forward-looking information. Unknown Attendee, Aaron MacNeil, Tim Monachello, Bryan Fast, Maxim Sytchev, Yuri Lynk, Rahul Malhotra, Devin Schilling, Sean Jack, Additional information about those material factors is contained in the company's most recent management's discussion and analysis, which is available on CDAR and EDGAR, as well as the company's website at nacg.ca. I will now turn Thanks, Joanna. Good morning, everyone.
Are free to quote any member of management, but they are asked not to quote remarks from any other participant without that participants permission.
The company wishes to confirm that today's comments contain forward looking information and that actual results could differ materially from a conclusion forecast or projection contained in that forward looking information.
Certain material factors or assumptions website, and try and conclusions or making forecasts or projections that are reflected in the forward looking information.
Additional information about those material factors is contained in the company's most recent management discussion and analysis, which is available on SEDAR and Edgar as well as the Companys web site at any C. G C E O.
Now turn the conference over to Joe Lambert, President and CEO.
Thanks Joanna.
Joseph C. Lambert: And thanks for joining our call today. I'm going to start with a few slides showing our 2023 operational performance before handing it over to Jason for the Q4 financial overview. And then I'll conclude with our 2024 operational priorities, our bid pipeline outlook for 2024, and finish up with our capital allocation plan before taking your call.
Good morning, everyone and thanks for joining our call today.
I'm going to start with a few slides showing our 2023 operational performance before handing it over to Jason for the Q4 financial overview.
And then I'll conclude with our 2024 operational priorities our bid pipeline outlook for 2024.
And finish up with our capital allocation plan before taking your questions.
On slide three.
Joseph C. Lambert: Our record Q4 safety performance contributed positively to achieving a trailing 12-month total recordable rate of 0.29, which is the second-best annual rate in company history and remains well below our industry-leading target frequency of 0.5. We will continue to focus our efforts on further advancing our training systems and processes to identify and eliminate hazards and health risks in our business.
Our record Q4 safety performance contributed positively and achieving a trailing 12 month total recordable rate of zero point to nine which is the second best annual rate in company history, and remains well below our industry, leading target frequency of 0.5.
We will continue to focus our efforts on further advancing our training systems and processes to identify and eliminate hazards and health risks in our business.
Okay.
On slide four we have.
Joseph C. Lambert: We highlight some of the major achievements of 2023. The McKellar acquisition was the obvious major accomplishment during the year. And with the strength of the Australian resource industry and the strength of our own team down there, I'm confident our Australian businesses will be highlighted in our annual accomplishments for many years to come. Our Fargo-Moorhead flood diversion project completed its ramp-up for its first full year of construction in 2023, and we enter our largest year of earthworks construction in 2024 with confidence in our productivity and our overall project plan. Our telematic system continues to provide more detailed and meaningful operations and maintenance data every day, and the 95% reliability is an impressive achievement. Also impressive is the 5.3 million maintenance savings achieved in 2023 and the system operating costs more than 30% below budget. We are targeting to have this same or similar telematic system tested in Australia in 2024, with full rollout expected to commence in 2025.
I like some of the major achievements of 2023.
The Mccullough acquisition was the obvious major accomplish accomplishment during the year and with the strength of the Australian resource industry and the strength of our own team down there I'm confident in our Australian businesses will be highlighted in our annual accomplishments for many years to come.
Our Fargo Moorhead flood diversion project completed its ramp up for its first full year of construction in 2023, and we enter our largest year of earthworks construction in 2024 with confidence in our productivity and our overall project plan.
Our telematics system continues to provide more detailed a meaningful operations and maintenance data every day and the 95% reliability is an impressive achievement.
Also impressive is the $5 3 million of maintenance savings achieved in 2023 and systems operating costs more than 30% below budget.
We are targeting to have the same or similar telematics system tested in Australia in 2024 with full rollout expected to commence in 2025.
Joseph C. Lambert: And last but not least, we successfully completed our Ontario gold mine construction project through our NANJV partnership and have several active bids in the Ontario and Quebec regions. Slide 5 captures all of our financial highlights for the year, and the 17-28% year-on-year increases include only Q4 of McKellar contributions and a negative contribution from Nuna. I'm already eager to see what this slide looks like this time next year with a full year of McKellar contributions and a new return to operations. On slide six, you will see our EBITDA and EPS results for the last five years, which I hope you agree is an oppressive trend and one that we expect to continue. When people try to tell me how risky and volatile a resource-based business can be.
And last but not least we successfully completed our Ontario Gold mine construction project through our NAND JV partnership and have several active bids in the Ontario, and Quebec regions.
Slide five captures all of our financial highlights for the year and a 17% to 28% year on year increases include only Q4, but kellogg contributions and a negative contribution from nuno.
[noise] etcetera.
Are eager to see what this slide looks like this time next year with a full year mckellar contributions and a nooner returned to operational excellence.
On slide six you'll see our EBITDA and EPS results for the last five years.
Which I hope you agree is an impressive trend and one that we expect to continue.
When people try to tell me, how risky and volatile our resource base business can be.
Joseph C. Lambert: I'd like to point them to graphs like these and remind them this is what was achieved with a pandemic in the middle. On slide 7, we have updated our calculation methodology and added our Australian fleet to our utilization graph. One of the inherent benefits in the Australian market is the 5-15% upside utilization potential when demand is strong. We remain on track and confident in our ability to hit our Canadian target range of over 75% by the end of this year, and we'll also be looking to similarly increase our Australian fleet to over 85% during this same period. With that, I'll hand it over to Jason for the Q4 financials. Thanks, Joe. And good morning, everyone.
I'd like to point them to graphs like DS and remind them. This is what was achieved with a pandemic in the middle.
Yeah.
On slide seven we have updated our calculation methodology and added our Australian fleet to our utilization grass.
One of the inherent benefits in the Australia market is the 5% to 15% upside utilization potential when demand is strong.
We remain on trade and confident in our ability to hit our Canadian target range of over 75% by the end of this year.
And we'll also be looking to similarly increase Australia leaked over 85% during the same period.
With that I'll hand, it over to Jason for the Q4 financials.
Okay.
Thanks, Joe and good morning, everyone.
Jason William Veenstra: To start, I will provide brief context regarding the McKellar transaction, which closed effective October 1, 2023. As disclosed in our financial statements, the overall purchase price for the McKellar Group was $383 million, which included $394 million of PP&E, which in our case is the heavy equipment fleet. This overall purchase price included $14 million of cash, which McKellar had in their bank accounts on close, and when factoring $35 million of equipment we purchased after October 1, the all-in cost was $405 million, and Consistent with Expectations. Even the generation today is slightly higher than the initial expectation and confirms that less than 2.75 multiple we disclosed last July. The transaction and gross spending were fully funded with debt, with approximately 70% of this debt being senior secured and 30% being vendor provided.
To start I will provide brief context regarding the mckellar transaction, which closed effective October one 2023.
That was disclosed in our financial statements. The overall purchase price for the Mckellar group was $383 million.
Which included $394 million of PP&E, which in our case is the heavy equipment fleet.
This overall purchase price included $14 million of cash, which mckellar had in their bank accounts on close and when factoring $35 million of equipment. We purchased after October one the all in cost was $405 million.
And consistent with expectation.
EBITDA generation today is slightly higher than initial expectation and confirms that less than $2 75, multiple we disclosed last July.
The transaction and growth spending we are fully funded with debt with approximately 70% of this debt being senior secured and 30% being vendor provided.
Jason William Veenstra: At the time of the announcement in July, we had targeted net debt leverage of 1.8 times by the end of 2023 and are very happy to have slightly beat that target. We've had an excellent first few months with McKellar and are looking forward to further integration and reporting progress in the months to come. Our teams are in daily dialogue with their Canadian counterparts and their Australian counterparts, with weekly and monthly processes starting to become routine.
At the time of announcement in July we had targeted net debt leverage of one eight times by the end of 2023 and are very happy to have slightly beat that target.
We've had an excellent first few months with Mckellar and are looking forward to further integration and reporting progress in the months to come.
Our teams are in daily dialogue between Canada, and their Australian counterparts with weekly and monthly process is starting to become routine.
Jason William Veenstra: Moving into financials and some brief commentary. On slide nine, the headline EBITDA number that exceeded $100 million for the first time in our company's history was driven by a full quarter of McKellar results. It exceeded our previous record by about 20% and exceeded Q3 by 70%. All businesses.
Moving to the financials and some brief commentary.
On slide nine the headline EBITDA number that exceeded $100 million for the first time in our company's history was driven by a full quarter of Mckellar results at.
It exceeds our previous record by about 20% and exceeded Q3 by 70%.
All businesses are.
Jason William Veenstra: All business units contributed to this result, with the exception of Nuna, which we will discuss later, and is one metric among many that our diversification efforts make us stronger and more consistent. Moving to slide 10, and our combined revenue and gross profit. As we will have now for four quarters, McKellar will provide step changes in quarterly over quarterly variance. On a total combined basis, we are up $83 million quarter over quarter. McKellar and DGI, which we combine as Australia in our results, were up $128 million, which could have been higher if the rainfall in November and December had been less severe. This rainfall impact can be seen in Australia's equipment utilization, which almost hit 85% in October but fell to the mid-70s in November and December. This positive variance was offset primarily by lower equipment utilization in the oil stands region.
All business units contributed to this result, with the exception of data, which we will discuss later as a metric among many that our diversification efforts make us stronger and more consistent.
Moving to slide 10, and our combined revenue and gross profit.
As you will have now for four quarters Mckellar will provide step changes in quarter over quarter variances.
On a total combined basis, we were up $83 million quarter over quarter.
Mckellar and TGI, which we combine is Australia and our results were up $128 million, which could have been higher if the rainfall in November and December had been less severe.
This rainfall impact can be seen in the in Australia as equipment utilization, which almost hit 85% in October but felt to the mid Seventy's in November and December.
This positive variance was offset primarily by lower equipment utilization and the oil Sands region.
Jason William Veenstra: Our share of revenue generated by joint ventures and affiliates was a net $10 million lower than Q4 2022. The Fargo-Moorhead project had an excellent operational quarter and achieved the progress metrics and milestones required of the project schedule. In addition, we had positive contributions from the continued growth of top line revenue from rebuilt ultra-class haul trucks and excavators owned by our joint venture with Mikisew. However, more than offsetting these positives, the completion of the construction project at the gold mine in Northern Ontario led to lower quarter-over-quarter revenues within the NUNA group of companies.
Our share of revenue generated by joint ventures, and affiliates was a net $10 million lower than Q4 2022. The Fargo Moorhead project had an excellent operational quarter and achieved a progress metrics and milestones required of the project schedule.
In addition, we had positive contributions from the continued growth of top line revenue from rebuilt ultra class haul trucks.
And excavators owned by our joint venture with <unk>.
More than offsetting these positives the completion of the construction project at the gold mine in Northern Ontario led to lower quarter over quarter revenues within the <unk> group of companies.
Jason William Veenstra: Combined gross profit margin was 18.4%, despite the challenges experienced by Nuna, and again, reflects the strength of a diversified business. As both Joe and I have alluded to, losses at three specific mining projects within the Nuna group of companies had a direct impact on margin. Joel will expand on his comments for NUNA moving forward, but from a financial perspective, excluding these project losses would have yielded an overall margin of approximately 20% given the impact of $7.5 million. Gross profit margins benefited both from the operations in Australia higher than 20% in the quarter, which is normal course, and from ML Northern, whose fleet lowers our internal costs, as well as generates strong margins from services provided to external customers. Moving to slide Record adjusted EBITDA was consistent and reflective of the revenue commentary.
Combined gross profit margin was 18, 4% despite the challenges experienced by noon.
And again reflects the strength of a diversified business.
As both Joe and I have alluded to losses at three specific mining projects within the <unk> group of companies had a direct impact on margins.
Joe expand in his comments for noon and moving forward, but from a financial perspective. Excluding these project losses would have yielded an overall margin of approximately 20% given the impact of $7 $5 million.
Gross profit margins benefited both from the operations in Australia higher than 20% in the quarter, which is normal course.
And from ml, Northern whose fleet lowers our internal costs as well as generate strong margins from services provided to external customers.
Yeah.
Moving to slide 11.
Record adjusted EBITDA was consistent and reflective of the revenue commentary the 25% margin reflects an effective operating quarter.
Jason William Veenstra: The 25% margin reflects an effective operating quarter, with a positive trend from the Q3 margin of 22% indicative of where we see our business operating at. Included in EBITDA are direct and general administrative expenses, which when excluding one-time acquisition costs, were $12.8 million in the quarter, equivalent to 3.9% of revenue and remained under the 4% threshold we've set for ourselves. McKellar runs a similar DNA profile and is not expected to change our DNA burden as a percentage of revenue.
With a positive trend from the Q3 margin of 22% indicative of where we see our business operating at.
Included in EBITDA is direct and general administrative expenses, which when excluding one time acquisition costs were $12 $8 million in the quarter equivalent to three 9% of revenue and remained under the 4% threshold, we have set for ourselves.
Mckellar runs a similar G&A profile and is not expected to change our G&A burden as a percentage of revenue.
Jason William Veenstra: Going from EBITDA to EBIT, we expensed depreciation equivalent to 11.8% of combined revenue, which reflected the depreciation rate of our entire business, including the equipment fleet at the Fargo-Moorhead project. When looking at just the wholly-owned entities and our heavy equipment in Canada and Australia, the depreciation percentage for the quarter was 12.8% of revenue and reflected the addition of the Australian fleet and an overall efficient, productive Adjusted earnings per share for the quarter of $0.87 was $0.23 down from Q4 2022, as the impacts of higher interest are factored in with EPS, with the project losses at NUNA being particularly impactful to EPS at approximately $0.20. The average interest rate for Q4 was over 8.5%.
Going from EBITDA to EBIT, we expense depreciation equivalent to 11, 8% of combined revenue, which reflected the depreciation rate of our entire business, including the equipment fleet as the Fargo Moorhead project.
When looking at just the wholly owned entities in our heavy equipment in Canada and Australia.
The depreciation percentage for the quarter was 12, 8% of revenue and reflected the addition of the Australian fleet and an overall efficient productive use of equipment in the quarter.
Adjusted earnings per share for the quarter of 87 was 23 <unk> down from Q4 2022 as the impact of higher interest are factored in with with EPS with the project losses at noon at being particularly impactful to EPS at approximately 20.
The average interest rate for Q4 was over eight 5%.
Jason William Veenstra: As we're up from the Q3 rate of seven. This effective interest rate, the highest we've paid in a long time, is a compelling indicator for us to look to pay down debt in 2024. Moving to slide 12, I'll briefly summarize our cash flow. Net cash provided by operations of $161 million was generated by the business, reflecting EBITDA performance and working capital collection.
<unk> up from the Q3 rate of 7%.
This effective interest rates the highest we paid in a long time is a compelling indicator for us to look to pay down debt in 2024.
Moving to slide 12, I'll briefly summarize our cash flow net cash provided by operations of $161 million was generated by the business, reflecting EBITDA performance and working capital collection net of cash interest paid.
Jason William Veenstra: Net of Cash Interest Paid, free cash flow was $111 million dollars, as sustaining capital of $41 million dollars was invested in the fleet in both Canada and Australia. Moving to slide 13. Our PP&E of $1.1 billion is up $450 million from September 30, on the $430 million worth of McKellar assets we purchased. Net debt levels ended the year at $721 million, an increase of $326 million in the quarter, as the $405 million of net debt incurred related to McKellar was offset by free cash flow generation.
Free cash flow was $111 million at sustaining capital of $41 million was invested in the fleet in both Canada and Australia.
Moving to slide 13.
Our PP&E of $1 $1 billion is up $450 million from September 30 on the $430 million worth of Mckellar assets, we purchased.
Net debt levels ended the year at $721 million, an increase of $326 million in the quarter as the $405 million of net debt incurred related to mckellar was offset by free cash flow generation.
Joseph C. Lambert: Net Debt Leverage and Senior Secured Debt Leverage ended at 1.7 and 1.4 times, respectively, and are considered reasonable levels three months after a transformative debt-funded acquisition. And with that, I'll pass the call back to Joe. Thanks, Jason. Looking at slide 15. This slide summarizes our priorities for the year. I'll speak to McKellar integration and growth in detail on the next slide, so I'll jump to the second.
Net debt leverage and senior secured debt leverage ended at one seven and one four times, respectively and are considered reasonable level three months after a transformative debt funded acquisition.
And with that I'll pass the call back to Joe.
Thanks, Jason.
Looking at slide 15.
This slide summarizes our priorities for the year I'll speak to the <unk> integration and growth in detail on the next slide so I'll jump to the second point.
Joseph C. Lambert: This area of focus is our ongoing efforts to win strategic projects for our business. As we look to sustain and grow our infrastructure business, we'll need to win infrastructure work as our Fargo-Moorhead flood diversion project reaches completion. Although this project is several years away from completion, the tender qualification and the RFP process can take one to three years, depending on the size and complexity of the project.
This area of focus is our ongoing efforts to win strategic projects for our business.
As we look to sustain and grow our infrastructure business, we will need to win infrastructure work as our Fargo Moorhead flood diversion project reaches completion.
This project is several years away from completion the tender qualification in the RFP process can take one to three years, depending on the size and complexity of the projects.
Joseph C. Lambert: As such, and with a strong fit potential U.S. infrastructure project in the bid pipeline, we believe this year's priority should be to qualify as part of a team on one major infrastructure project. The second part of this priority is to win a meaningful project that uses our smaller mining assets that are currently underutilized in our oil. We have several active tenders in both Canada and Australia that would utilize these smaller assets, and we expect to win one of these projects this year. Item 3 prioritizes the continued expansion of our operational and maintenance expertise. We will prioritize new technologies, such as our telematic system, and continue to in-house and vertically integrate our maintenance services and supply, including a near-term focus on identifying and sharing best practices between our Canadian and Australian businesses.
As such and with a strong fit potential U S infrastructure project in the bid pipeline. We believe this year's priority should be to qualify as part of a team on one major infrastructure projects.
The second part of this priority is to win a meaningful project that uses our smaller mining assets that are currently underutilized in our oil sands business.
We have several active tenders in both Canada, and Australia that would utilize the smaller assets and we expect to win one of these projects this year.
Item three prioritizes continue expansion of our operational and maintenance expertise.
We will prioritize new technologies, such as our telematics system, and continuing to announce and vertically integrate our maintenance services and supply, including the near term focus on identifying and sharing best practices between our Canadian and Australian businesses.
Joseph C. Lambert: We believe this prioritization of focus will continue to lower costs and improve equipment utilization, resulting in increased competitiveness and the likelihood of winning the tenders mentioned in the previous item, too. The final area is prioritizing returning NUNA back to operational excellence and setting it up for growth and consistent performance. This work began earlier this year, and I am confident in the changes made that NUNA will be back on its feet in time for their big summer projects and growing off a much stronger and stable foundation before the end of the year.
We believe this prioritization and focus will continue to lower costs and improve equipment utilization, resulting in an increased competitiveness and likelihood of winning the tenders mentioned in the previous item too.
The final area prioritizing returning noonan back to operational excellence and setting it up for growth and consistent performance. This work commenced earlier this year and I am confident in the changes made that Newton, who will be back on its feet in time for the big summer projects and growing off a much stronger and stable foundation before the end of the year.
Joseph C. Lambert: Slide 16 shows some key milestones in our McKellar integration plan, much of which I have discussed previously. Two points I would like to make are as follows. One, the transition team headed by our COO Barry Palmer is now resident in Australia, and the integration has progressed smoothly and on plan. The second point, which has been a pleasant surprise, is that the Australian marketplace has shown to be even better than originally contemplated. As an example, and as you would have recently seen in our press release last week, we were awarded a five-year, $500 million contract extension at a major metallurgical coal mine in Queensland. That contract extension was achieved through direct discussion with the customers and awarded 15 months before the original term expiry date.
Slide 16 shows some key milestones in our Mckellar integration plans much of which I have discussed previously.
Two points I would like to make are as follows.
One the transition team headed by our CEO Barry Palmer is now resident in Australia, and the integration has progressed smoothly and on plan.
The second point, which has been a pleasant surprise is that the Australian marketplace is shown to be even better than originally contemplated.
As an example, and as you would have recently seen in our press release last week, we were awarded a five year $500 million contract extension and a major metallurgical coal mine in Queensland.
That contract extension was achieved through direct discussion with the customers and awarded 15 months before the original term expiry date.
Joseph C. Lambert: These alliance-type contracts with long-term commitments and early negotiated renewals show real strength in both the commodity markets and the client relationship. When you combine these market strengths with the higher fleet potential utilization in Australia, it's easy to see the potential to improve returns on not just our underutilized smaller size assets but also increased and longer-term returns and internal competition for even our larger mining assets. There is meaningful time and cost to ship our big assets halfway around the world, but the opportunity to optimize return on our assets in lower risk, longer-term contracts will be compelling and should provide healthy internal competition for us. Slide 17 illustrates a strong bid pipeline with the addition of Australian tenders and continued interest from long-term non-oil sands contractors. Although we truly believe our oil sands demand will remain strong for many years to come.
These alliance type contracts with long term commitments and early negotiated renewals show real strength in both the commodity markets and the client relationships.
When you combine these market strengths with the higher fleet potential utilization in Australia.
It's easy to see the potential to improve returns and not just our underutilized smaller sized assets, but also increase in longer term returns and internal competition for even our larger mining assets.
There is a meaningful time and cost to ship, our big assets halfway around the world, but the opportunity to optimize return on our assets and lower risk longer term contracts will be compelling and should provide a healthy internal competition for assets.
Slide 17 illustrates a strong bid pipeline with the addition of Australia tenders and continued interest from long term non oil sands contract tenders.
So we truly believe our oil sands demand will remain strong for many years to come.
Joseph C. Lambert: We also see those big blue diversified dots and continued strong heavy equipment demand in Australia as opportunities to further diversify and reduce consolidation risk. On slide 18, our pro forma backlog sits at $3.3 billion with the award of the Queensland major metallurgical coal mine and the award of the regional oil sands tender offset by our normal quarterly drawdown from executed work. The 3.3 billion backlog is the highest in company history and provides improved confidence and predictability in our business, especially in our Australian business. On slide 19, we have provided our updated forecast for 2024. The outlook is mostly unchanged, except for some timing-based reclassification of sustaining capital to growth and some growth capital additions supporting recently announced project awards. Last but not least, Capital Allocation is always a focus for me, and our projected free cash flow range of $160-185 million gives us flexibility in that regard. De-leveraging presents an attractive opportunity at current interest rate levels and is our default choice. However, should the share price drop to where we believe the risk-weighted return is higher, we have an established history of engaging in share repurchases where we see value in that for our shareholders. The McKellar integration is a focus for 2024.
We also see those big Blue diversified dots and continued strong every equipment demand in Australia as opportunities to further diversify and reduce consolidation risks.
On slide 18, our.
Our pro forma backlog sits at $3 3 billion with the award of the Queensland Major Metallurgical coal mine and the award of the regional oil Sands tender offset by our normal quarterly drawdown from executed work.
The $3 3 billion backlog is the highest in company history and provides improved confidence and predictability in our business, especially in our Australia business.
On slide 19, we have provided our updated outlook for 2024.
The outlook is mostly unchanged, except for some timing based reclassification of sustaining capital to growth and some growth Capital addition, supporting recently announced project Awards.
Lastly on slide 20 capital allocation is always a focus for me and our projected free cash flow range of 160 to 185 main gives us flexibility in that regard.
Deleveraging for blend and attractive opportunity at current interest rate levels and as our default choice.
However should share price dropped and where we believe the risk weighted return is higher we haven't established history of engaging in share repurchases, where we see value in that for our shareholders.
The <unk> integration is our focus for 2024, while we continue seeking growth opportunities whether organically or through acquisition that likewise generate superior risk weighted returns and accretion.
Joseph C. Lambert: But we continue seeking growth opportunities, whether organically or through acquisition, that likewise generates superior risk-weighted returns and accretion. Any and all options compete for our capital allocation, and this is something we analyze continually in seeking to always be opportunistic in directing our cash flow in a way that maximizes value. With that, I'll open up for any questions you may have. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any key.
Any and all options compete for our capital allocation and this is something we analyze continually and seeking up to always be opportunistic and directing our cash flow in a way that maximizes value.
With that I'll open up for any questions you may have.
Thank you Lady.
Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by one on your Touchtone phone you will hear I think Tom problems acknowledging everquest.
If you are using a speaker phone please lift the handset before pressing any clue.
Okay.
Operator: The first question comes from Yuri Lynk at Canaccord. Please go ahead. Good morning, guys. Good morning, Yuri.
First question comes from Yuri Lynk at Canaccord. Please go ahead.
Good morning, guys.
Good morning, Gary.
Good morning, Joe.
Joseph C. Lambert: Morning, Joe. Let's talk about Nuna a little bit. It sounds like you're expecting the issues that you encountered in the fourth quarter. Containing the fourth quarter, but can you just elaborate on that like when? When do these three projects wrap up, and do you expect any spillover into Q1, Q2? No, I think that's an accurate assessment, Yuri.
Let's talk about newness and a little bit.
It sounds like you're expecting the issues that you encountered in the fourth quarter.
To be contained to the fourth quarter, but can you just elaborate on that like when.
When do these three projects wrap up and do you expect any spillover into Q1 Q2.
No I think thats it.
And accurate assessment you are any of these projects are predominantly complete theres, a little bit of tail and work on.
Joseph C. Lambert: These projects are predominantly complete. There's a little bit of tail end work on one or two of them. I don't expect, you know, we put new leadership in place. The issues we saw were really around risk management and predominantly in dealing with junior, minor clients.
One or two of them.
I don't expect.
Put new leadership in place.
The issues, we saw were really around risk management and phenomenon in dealing with junior minor clients.
Joseph C. Lambert: Change Management and Contract Administration. These are things that are in our wheelhouse. You know, we were blessed to have some strong bench strength here where we were able to put guys in place that had confidence in running those systems and processes going forward. And this is the slow time of the year for Nuna.
Change management and contract administration.
Are things that are in our wheelhouse.
We were blessed to have.
Some some.
<unk> bench strength here, where we were able to put guys in place that have confidence in and running those systems and process going forward. So.
I'm very and this is the slow time of the year for unit and then it really picks up and in Q2 and Q3 with their summer work, but nominally up north.
Joseph C. Lambert: Nuna really picks up in Q2 and Q3 with their summer work predominantly up north. And so, you know, I think the timing and the moves we've made will put it in the past very quickly. And I fully expect that our summer and our kickoff of our summer works will go as planned. Unknown Attendee.
And so I think the timing and the moves we've made we'll we'll put it in the past very quickly and I fully expect that our summer and a kickoff of our summer works, we'll go as planned.
Okay.
Youre also in your shareholder letter you talked about.
Yuri Lynk: You also talked about in your shareholder letter about The Seasonal Earnings Pattern. Proforma, The McKellar Acquisition, is 20% of EBITDA in the first quarter. Is that tip going to be typical going forward? It looks a little bit low to me.
The seasonal earnings pattern.
Pro forma on the.
The Mccullough acquisition.
Is 20%.
Of EBIT in the first quarter.
Is that.
Going to be typical going forward it looks a little bit low to me just I'm wondering if that's the.
Joseph C. Lambert: Just wondering if that's the Yeah, again, I think you're accurate there. We've got a little bit of an unusual year this year. I think we will be more consistent between quarters. But this particular year, you know, like I just said, Nuna's big quarters are Q2 and Q3. Same in Australia.
Again, I think you're accurate there you did that.
We've got a little bit of an unusual year. This year I think we will be more.
Consistent between quarters, but this particularly are you know like I, just said known as big quarters are Q2 and Q3.
Same in Australia, So Australian cyclone season is in the summer, which is our winter so they're usually impacted operationally more in Q4 and Q1 and then.
Joseph C. Lambert: So the Australian cyclone season is in the summer, which is our winter. So they're usually impacted operationally more in Q4 and Q1. And then, with our biggest construction year at Fargo, that summer is also the biggest part of that Fargo job. So even though we had a good-sized construction year in 2023, it's even bigger in Fargo this year. And there's more infrastructure construction like bridges and roadwork that occurs during Q2 and Q3, whereas our previous earthworks were more year round. And then we've just had a bit of a slower winter this year in the oil sands, and we're shuffling around some equipment in Q1. It is going to be more consistent between quarters, but the lower Q1 this year is, I believe, a 1-0.
With our biggest construction year in Fargo.
The summer is also the biggest part of that Fargo job. So even though we had a good sized construction here in 2023, it's even bigger in Fargo. This year and there's more infrastructure construction like bridges and roadwork.
Occurred during Q2 and Q3, whereas our previous earthworks is more more year round.
And then we've just had a bit of a slower winter this year and oil sands, even and we're shuffling around some equipment in Q1 so.
And it is going to be more consistent between quarters, but the lower Q1. This year is I believe a one off.
Joseph C. Lambert: Okay, and just to follow up on that one, I mean, which quarter is going to be the largest, Q3? I think so going forward. But you know, we're gonna have projects come and go to Yuri, depending on when they end. I think we're going to be within one or two points between quarters going forward.
Okay, and just a follow up to that one which which quarter is going to be the largest Q3.
I think so far but we're gonna have projects that come and go to Europe, depending on Monday and I.
I think we're going to be within one or two points between quarters going forward.
Yuri Lynk: But obviously, if there's a new project starter or stop in any one quarter, it can distort a year. But generally, I would say it's going to be very consistent. Okay, that's all for me. Thanks.
But obviously if there's.
Our new projects start or stop in any one quarter it can distort a year, but.
Generally I would say, it's going to be very consistent.
Okay.
Okay. That's all for me thanks, guys.
Yeah.
Yuri Lynk: Thank you. The next question comes from Maxim Sytchev at National Bank Financial. Please go ahead. Hi, good morning.
Thank you next question comes from Maxim.
At National Bank financial Please go ahead.
Hi, good morning, gentlemen.
Maxim Sytchev: Good morning, Mac. I was wondering if you would mind expanding a little bit on the comments you made in your shareholder letter talking about some of the oil sands work right now, the transition to maintain the rental fleet, kind of similar to what you're seeing in Australia. Yeah, do you mind providing a bit of more color? Yeah, I think, you know, we provided in the regional tender, we provided pricing for unit rate work, and we also provided pricing for maintained rental equipment and operated and maintained rental equipment. Historically, the unit rate work was what was awarded, and this year, about half of our big trucks are being rented or maintained on rental with operators versus the unit rate work. And it's just that the client believes that they have some excess assets in some categories. So they'd rather rent piecemeal versus the unit rate.
Good morning Mac.
John I was wondering if you're seeing one please expanding a little bit on the comments you made in your shareholder letter talking about.
Some of the oil sands more on quite now transition to maintain the rental fleet.
Similar what youre seeing in in Australia, do you mind.
Ah providing them.
More color on that.
Yeah I think.
We've provided in the regional tender we provided pricing for unit rate work and we also provided pricing for maintained rental equipment and operated and maintained rental equipment.
Historically the unit rate work was what was awarded and this year about half of our big trucks are being.
<unk> rented or maintain.
<unk> maintained rentals with operators.
Versus the unit rate work and it's just the the client believes that they have some.
Excess assets in some categories, so they'd rather rent piece.
Piecemeal versus a unit rate and it's believed that by doing this.
Joseph C. Lambert: And it's believed that by doing this, I believe they believe they're lowering their costs, and we have respect for that, and hopefully, it is, and we're very happy to do it. It's very similar to what's being done in Australia. Certainly lowers your operating risk. You do take a bit of a hit on the top line, but it's not a huge difference, and this is just a. A Contracting Philosophy whereby the clients are trying to be more efficient with their own to lower their costs.
I believe they they believe they're lowering their cost and we have to.
We respect that and hopefully it is and.
We're very happy to do it it's very similar to what's being done in Australia.
We lowered the operating rescue do take a bit of a hit on the top line, but it's not a huge difference.
And this is just a.
Our contracting philosophy, whereby the clients are trying to be more efficient with their own assets to the lower their cost and we're happy to participate in that.
Joseph C. Lambert: And we're happy to participate. Okay, but structurally, how should we think about this? Is it sort of more visibility, but a better sort of RYC on on the assets from your perspective? Or how should we think that it doesn't really make a huge amount of financial difference to you at NOLA?
I guess, yes structurally.
I mean, how.
How should we think about this is it.
So our visibility but.
What are sort of ROIC E on on on the assets from from your perspective, or how should we think that it doesn't really make a huge amount of financial difference to you at the NOI level.
Maxim Sytchev: I think the biggest difference is in the risk. When you're in unit rate work, you take a lot more risk of productivity. And that can be in weather-related stuff like that. So I get the downside risk, but I would say it is much lower. But I would agree that the visibility is less so because of the contract structure with the three years with only a one year commitment. More so than I think this change of philosophy a bit on the unit rate. Okay, I just think about it so much.
I think the biggest differences in the risk.
When you wear and unit rate work you were a lot more risk of productivity.
And that can be and weather related stuff like that so.
The I guess the downside risk I would say is much lower.
But I would agree that the visibility.
And so the visibility less sell more because of the the contract structure, where the three years with only the one year commitments.
More so than.
I think this changes our philosophy a bit on the unit rate work.
Okay understood. Thanks, so much and then.
Joseph C. Lambert: And then another comment, talking about sort of the time in Australia being, you know, dramatically larger than Canada for your type of work. Do you mind maybe expanding a little bit in terms of, you know, how you came up with that number? And at what point could that be, you know, potentially realized? I mean, I presume it's a long-term, obviously an opportunity, but maybe if you can provide, Brockes. Are you referring to the 10 times market item there?
Another comment talking about sort of the Tam.
Australia being dramatically larger than Canada for for your type of work do you mind, maybe expanding a little bit in terms of how you came up with that number.
And at what point that could be potential realized.
It's a long term global opportunity, but maybe you can provide any brackets that would be helpful. Thanks.
Are you referring to the 10 times market, yes item there.
Maxim Sytchev: Yeah, I think it's from industry numbers in the Australian mining industry and how much work is contracted out. And, you know, we, you know, the cold coal mine data, it's just a huge marketplace; there's a much higher propensity to contract mine there. You know, the two main operations we're on, we're the only operators there. The client's not operating next to us.
Yeah, I think it's from we get that from industry numbers in our Australian mining industry.
And how much work is contracted out and we.
You know the the coal co mined data, it's just a huge marketplace theres a much higher propensity to contract mine there.
No. The two main operations were on were the only operators there.
It's not operating next to us.
Joseph C. Lambert: It's just a different marketplace. It's a huge resource industry, very similar to Canada. But the big separator is that the producers there allocate their capital more towards producing an extra ounce or a pound or finding the next deposit than they do on owning yellow iron like we do. And so it's just a much bigger, stronger marketplace. And as I discussed earlier in my slides, before my Mitch McConnell moment there, I was talking about the coal marketplace, where there are 50 mines, of which we're only on six of them. You know, it's just a great opportunity, a great marketplace. Okay, that's super helpful.
It's just a different marketplace. It is a huge resource industry very similar to Canada, but the big separator is is that the producers there.
Allocate their capital more towards producing an action ounce or pound or or finding the next deposit than they do on owning yellow iron like we do and so it's just.
A much bigger stronger marketplace in and as I discussed earlier in my slides before my Mitch Mcconnell moment there.
And I was talking about the.
Yeah.
Yes, the coal marketplace, where theres 50 minds of which were only on six of them.
It's just a great opportunity great marketplace Air Max.
Okay. That's helpful. And then one last quick question for Jason If I may.
Joseph C. Lambert: And then one last quick question for Jason, if I may, in terms of the rollout of ERP, do you mind providing some milestones in terms of when it should be sort of up and running and how you're testing this and so? Yeah, so we've obviously the go live date is obviously the most important date. So we've circled September one as our target. The project team is fully engaged at the moment, and they're at peak capacity currently.
Hum.
The rollout of ERP demand, providing like some some milestones in terms of when.
It should be sort of up and running and how youre testing this and so forth. Thanks.
Yeah. So obviously the Golar data is obviously the most important dates that we've circled September one as our target.
Our project team is fully engaged at the moment and there are peak capacity are currently so.
Jason William Veenstra: So it's pretty exciting, actually, for our organization to be going through an ERP like this. Rolling out what we do here, there is a lot of excitement generated. So if all goes to plan, it should be pretty seamless. And then, yeah, we'll start to see hopefully some margin improvements post-Go Live. And that would be seen more in 2025.
It's pretty exciting actually for our organization it would be going through.
ERP like this are rolling out what we do here there is generate a lot of excitement. So if all goes to plan it should be pretty seamless and then yeah, we'll start to see hopefully some margin improvements post.
Post go live and that would be seen more in 2025.
Jason William Veenstra: Okay, and sorry, and just clarification, are you kind of capitalizing, expensing, what are you doing from accounting? Yeah, we would capitalize, but it's not big dollars. We're talking in the one to two million dollar range for this.
Okay, and sorry, just a clarification are you kind of capitalizing expensing what are you doing from from accounting perspective.
Yeah, we would capitalize but it's not big dollars, we're talking in the $1 million to $2 million range for us.
Jason William Veenstra: You know, we're really doing a cut and paste here, copy and paste. It's not We're not using a lot of external resources for this. So it's not what you see in a typical ERP implementation.
This we're doing really are.
Cut and paste here copy and paste, it's not we're not using a lot of external resources for this so it's not what you see in a typical ERP implementation.
Jason William Veenstra: Unknown Attendee, Aaron MacNeil, Tim Monachello, Bryan Fast, Maxim Sytchev, Yuri Lynk, Rahul, Okay, that's great. Thank you so much. Thank you. Next question comes from Aaron MacNeil at TD Cowan. Please go ahead.
Okay, I'm, sorry, I meant <unk>.
Max Mckellar was actually in process of Av.
Bringing this actually this exact same system online at the time when we purchased them. So they really had already started progressing this ERP transition even before we bought the company.
Aaron MacNeil: Morning. Thanks for taking my question. Unknown Attendee, Aaron MacNeil, Tim Monachello, Bryan Fast, Maxim Sytchev, Yuri Lynk, Rahul Malhotra, Devin Schilling, Sean Jack Unknown Attendee, Aaron MacNeil, Tim Monachello, Bryan Fast, Maxim Sytchev, Yuri Lynk, Rahul Malhotra, Devin Schilling, Sean Jack Do you see any regulatory hurdles or broader issues with demand for thermal coal that might prevent your customer from giving you, you know, that similar five-year contract extension that you just obtained from the Metco customer? And ultimately, I'm just trying to understand how you think about the outlook for Metco versus thermal coal. From the industry information I've seen, I think all coal, particularly in Queensland, is in very strong, long demand. I don't think there will be any issue in renewing contracts at these coal mines. Most of them are already permitted, and they're generally permitted for multiple decades in advance. There's no re-permitting.
Okay. Okay. That's great. Thanks, so much.
Thank you next question comes from Aaron Macneil at TD Cowen. Please go ahead.
Good morning, Thanks for taking my questions.
Alright.
It looks like you've got a thermal coal mine contract that comes up for renewal in 2020 Fives do you see any regulatory hurdles are.
Router issues with demand for thermal coal that might prevent customer term, giving you that.
Thats similar five year contract extension that you just obtained from the medical customer and ultimately I'm just trying to understand how you're thinking about the outlook for met coal versus thermal coal in Australia.
From from the industry information I've seen I think all the coal.
Particularly in Queensland is a very strong demand I don't think there'll be any issue in renewing contracts at these coal mines.
Most of them are already there all permitted already and they're generally permitted for multiple decades in advance there's no re permitting.
Joseph C. Lambert: We don't know of anyone that's got to go back out or has that kind of risk in our current operation. I think the numbers, both thermal and met, are about 90% of Queensland coal is exported to an extremely strong and high demand in the Asian Indian marketplace. He predominately competes with Indonesian coal, and it's far superior in its efficiency, and it's burning its price per BTU, and it has a cleaner, cleaner burn, so I don't think we're going to see any impacts in that market. You know, although, you know, that carbon footprint's going down. There are more and more electricity requirements.
We don't know of anyone that's.
You got to go back out or has that kind of risk in our current operations.
Queensland.
The numbers, both thermal and met is about 90% of Queensland coal export to an extremely strong and high demand in Asia and India marketplace.
Predominantly competes with Indonesian coal and it is far superior in its efficiency and its burn and it's price per btu and the cleaner cleaner burn. It has so I don't think we're going to see any impact in that market you know although.
You know that carbon footprints going down there's more and more electricity requirements in.
Joseph C. Lambert: And, you know, from the numbers we see in, like, the Queensland Coal Mining Associations and that they've seen strong demand going into the next two, three decades, it makes sense. So, I mean, Faridou, I don't want to put words in your mouth here, but we could potentially see a renewal in the near term on that site as well. Yeah, for sure. Unknown Attendee, Aaron MacNeil, Tim Monachello, Bryan Fast, Maxim Sytchev, Yuri Lynk, Rahul. One more question is probably for Jason.
You know from the numbers, we see in the like the Queensland coal mining associations are that they're they've see strong demand.
Going into the next two to three decades.
Makes sense.
I mean fair to I don't want to put words in your mouth here, but we could potentially see a renewal.
Near term on that site as well.
Yeah.
For sure.
Yeah.
One more question on strike for for Jason.
Jason William Veenstra: Are the costs to move or revenues associated with the move of assets contemplated in the 2024 guidance? As you mentioned in the prepared remarks, there's the potential to move smaller, smaller assets either within Canada or Australia. Yes, they are.
Are the costs to move.
Our revenues associated with the move of assets contemplated in the 2024 guidance like you mentioned in the prepared remarks.
There's the potential that the smaller smaller assets and you grow with it in Canada to Australia.
Yes, they are.
Jason William Veenstra: You know, we would expect that shipping costs would be capitalized through the McKellar group given the low cost that's on our balance sheet for the. Unknown Attendee, Aaron MacNeil, Tim Monachello, Bryan Fast, Maxim Sytchev, Yuri Lynk, Rahul, Understood. Thanks, guys. Thanks, sir. Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star 1. Operator, this next question comes from Kevin Gainey at Thomson Davis. Please go ahead.
We would expect or that are shipping cost.
Would be capitalized.
Through through the Mckellar group given you know the low cost that's on our balance sheet for the.
You know the actual cost of the units for units that are shipped in.
And the.
The revenue contemplated in Canada does have some allowance for.
Uh huh.
And it's coming out of the region. So it is included in our guidance and but we haven't.
It out specifically in our forecast.
Understood. Thanks, guys I'll turn it back.
Thank you Sir.
Thank you, ladies and gentlemen, as a reminder, should you have any questions. Please press star one.
Next question comes from Kevin Jamie at Thompson Davis. Please go ahead.
Operator: Good morning, Joe and Jason. Crap, it's on the Q4. Good morning.
Good morning, Joe and Jason Congrats on the Q4.
Maybe if we could start on the bid pipeline.
Kevin Gainey: Maybe we could start on the bid pipeline in Australia. You guys have made, well, a pretty big announcement recently. Could you go into more details about that?
In Australia, you guys have tendered.
Ah well, that's pretty big announcement recently.
Could you go into more details about that.
Joseph C. Lambert: Specific, and what you're thinking as you look forward. Unknown Attendee, Aaron MacNeil, Tim Monachello, Bryan Fast, Maxim Sytchev, Yuri Lynk, Rahul Malhotra, Devin Schilling, Sean Jack, Second turn of a five-year contract, and then we extended it another five years, a long-term customer. But I do think that, You know, those kind of contracts are typical, especially in the Queensland coalfields. And I think there's opportunities to lock in more of them on other sites with growth, and that's some of that bid pipeline you'd see in Australia. And, and I think the, you know, Western Australia and other areas of Australia's resource marketplace is starting to see more activity in those areas as well. And, you know, gold and iron ore typically have been the strong sides of Western Australia, but there are some copper markets that are picking up there.
Specifically and whats your thinking as you look forward.
Into that bid in particular is that what you asked yeah. Yeah. Yeah, I think we see continued opportunity that that bid was one more.
This is the second of our five year.
Second turn of a five year contract and then we extended another five.
Long time customer.
But I do think that.
You know those kind of contracts are typical especially in the Queensland coal fields, and I think theres opportunities to lock in more of them on other sites with growth.
And let some of that bid pipeline you'd see.
In in Australia and <unk>.
And then I think the you know the western Australia and in other areas of Australia resource marketplace.
Turning to see more activity in those areas as well.
And.
Golden Iron ore have typically been the strong Washington, Australia side, but there is some.
Some copper markets that are picking up there and we have one of those in our tender pipeline. So overall just a really.
Joseph C. Lambert: And we have one of those in our tender pipeline. So, you know, overall, just a really, really strong bid pipeline. Thank you for that. And then maybe we could talk about Q1 as well. Has it started slower for MacKellar and then, Just the oil sands in general as well.
Really strong bid pipeline.
Yes.
Thank you for that and then maybe we could talk about Q1 as well that has it started slower from a color and then.
Just the Oilsands in general as well.
Joseph C. Lambert: Yeah, I mean, this is kind of what I was talking to Yuri about earlier, that we're having a little bit of a slower winter. But I think that the biggest reason why Q1 is different is the addition of McKellar. So McKellar is a lot more consistent year round, but their rainy season is summer, which is our winter.
Yeah.
Just kind of what I was talking to here about earlier or is it you know we were having a little bit more slower of a winter, but I think that.
The biggest reason why Q1 is different is the addition of Mckellar Soma caller is a lot more consistent year round.
But their rainy season in summer, which is our winter. So you know their November to February is is slower than the rest of the year. So there.
Joseph C. Lambert: So, you know, their November to February is slower than the rest of the year. So they're, That's taken us to more counterseasonal Q2, Q3. Noon has always been that way. And then, you know, we see Fargo, even though last year was big, it was predominantly all earthworks, and it was very year-round work. It is a little higher in the summer, but this summer will be much higher just because there's a lot more concrete work and big bridge construction, which has to occur in the summer.
And that's taken US two more counter seasonal Q2, Q3 noon has always been that way.
And then you know.
We see Fargo, even though last year was big it was predominantly all earthworks and it was very year round work. If it is a little higher in the summer, but this summer will be much higher just because of there's a lot more concrete work in bridge construction, which has to occur in the summer.
Joseph C. Lambert: And so, you know, all of those factors just push our top line more into Q2 and later. Thanks, Richard. And maybe for Jason, just a bit on the forecast for DNA in 24. Maybe Cadence as well on that, as I look at the model.
And so you know all of those factors just just push them.
Our top line more into acute Q2 and later.
Thanks for that and maybe for Jason just a bit on the forecast for DNA and 24.
And maybe cadence as well about that.
As I look at the model.
Jason William Veenstra: Yeah, we touched on that too. We expect to be in the 4% range on reported revenue moving forward. You know, we've had some questions on the Q4 metric, which did include $6 million of acquisition costs in the quarter. So Q4 is not indicative of our run rate. But I think for modeling purposes, 4% is still where we expect to be in 2024.
Yeah, we touched on that too we expect to be in the 4% range on reported revenue moving forward.
We've had some questions on the Q4 metric which did include.
$6 million of acquisition costs in the quarter. So Q4 is not indicative of our run rate, but I think for modeling purposes, 4% is still where we expect to be in 2024.
Jason William Veenstra: Perfect. I appreciate the time, guys. Thanks, Sean. Oh, thank you. The next question comes from Sean Jack at Raymond James. Please go ahead. Hey, morning, guys.
Perfect I appreciate the time guys.
Thanks, Sean.
Oh, Thank you Kevin.
Yeah.
Next question comes from Sean Jack at Raymond James. Please go ahead.
Hey, good morning, guys.
Sean Jack: So, Quickly just wanted to switch over to the acquisition point that was talked about earlier. Overall, do you expect in Australia that there's any more sort of material acquisitions that you guys could make that would be able to be done at the multiple point that McKellar was done? Or is that kind of standing as a pretty unique deal for you guys?
So quick.
Quickly just wanted to switch over to the acquisition point that was talked about earlier.
Overall do you expect in Australia that there's any more sort of material acquisitions that you guys could make that would be able to be done.
Multiple point that Mckellar was done or is that kind of standing is a pretty unique deal for you guys.
Joseph C. Lambert: I think there could be other opportunities, but they'd have to be very compelling now because I think we can grow a lot of stuff ourselves. So, you know, I don't think we, if there were an opportunity, certainly wouldn't be paying any huge premiums because most of us feel very comfortable that we can build up from brownfields right now. Okay, that's good color. And then looking forward, obviously, you guys have a lot of stuff to do, or just, you know, a process ahead of you on your plate for the integration, like, when does acquisition actually in bolt-ons become a priority? Or something that's very realistic?
Yeah.
And I think there could be other opportunities.
And I think you'd have to be very compelling at now because I think we can grow a lot of stuff ourselves. So.
I don't think we'd if there were an opportunity we certainly wouldn't be paying any huge premiums because most of us we feel very comfortable that we can we can build out from brownfields right now.
Right. Okay. That's good color and then looking forward. Obviously you guys got a lot of stuff to do or just you know a process I had you on your plate for the integration like when when does the acquisitions actually in bolt ons become a priority or something that's very realistic and thoughts maybe far deeper into 2020 four.
Joseph C. Lambert: Is that maybe far deeper into 2024? Or is that actually an opportunity in the coming months here? You know, I think small bolt-ons can happen fast. If there are big acquisition opportunities, historically, they've taken us many months, years. And McKellar was a two and a half year process.
Or is that actually an opportunity in the coming months here.
You know I think small bolt ons can happen fast if there was a big acquisition opportunities historically, they've taken us.
Many months years and in the color was it two and a half year process.
Joseph C. Lambert: So even if we had one on the desk today, it'd probably be 2025 or later kind of thing unless it's a smaller bolt-on acquisition. Those things, ML Northern, DGI, we will process pretty quickly. And so, you know, our focus will be on the McKellar integration this year. And regardless of what acquisition activities occur, I think we'll be able to maintain that focus for the year and get that integration done smoothly.
So even if we had one on on the desk today, it'd probably be 2025, or later kind of thing unless it's an and.
Smaller bolt on acquisitions, those those things Northern D. G I, where we were in the process pretty quickly and so.
Our focus will be on the Mckellar integration.
This year, regardless of what acquisition activities occur I think we'll be able to maintain that focus for the year and get that integration done smoothly.
Joseph C. Lambert: Okay, perfect. Yeah, I'll jump back in the queue. Thank you. We have no further questions. I will turn the call back over to Joe Lambert for closing comments. Thanks, Joanna. Thanks again, everyone, for joining us today. We look forward to providing the next update upon closing of our Q1 2024 results in early May. Thanks. This concludes today's conference call. Thank you for participating. You may now disconnect. Have a good day
Okay, perfect Yeah, I'll jump back in the queue. Thanks.
Mhm.
Thank you we have no further questions I will turn the call back over to Joe <unk> for closing comments.
Yeah.
Thanks, Joanne Thanks again, everyone for joining us today, we look forward to providing the next update upon closing of our Q1 2024 results in early May.
Thanks.
This concludes today's conference call. Thank you for participating you may now disconnect have a good day.
Yeah.
Yeah.