Q1 2024 Brookfield Infrastructure Partners LP Earnings Call
Operator: Hello and welcome to the Brookfield Infrastructure Partners first quarter 2024 results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question, please press star 11 again. Please be advised that today's conference call is being recorded. It is now my pleasure to introduce Chief Financial Officer David Krant.
Hello, and welcome to the Brookfield infrastructure partners first quarter 2024 results conference call and webcast. At this time all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session to ask a question during this session.
Press Star one one.
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We will then hear an automated message advising that your hand has been raised to withdraw your question. Please press star one one again please.
Please be advised that today's conference call is being recorded.
It's now my pleasure to introduce <unk>, Chief Financial Officer, David Crane.
David Krant: Thank you, Operator, and good morning, everyone. Welcome to Brookfield Infrastructure Partners' first quarter 2024 earnings conference call. As introduced, my name is David Krant, and I am the Chief Financial Officer of Brookfield Infrastructure. I'm joined today by our Chief Executive Officer, Sam Pollock, and our Chief Operating Officer, Ben Vaughan.
David Krant: Thank you operator, and good morning, everyone.
David Krant: I'll come to Brookfield infrastructure partners first quarter 2024 earnings conference call.
David Krant: As introduced my name is David craft and I'm, the Chief financial Officer of Brookfield infrastructure.
Speaker Change: And today by our Chief Executive Officer, Sam Pollock, Our Chief operating Officer, Ben Vaughan.
David Krant: I'll begin the call today with a discussion of our first quarter 2024 financial and operating results, followed by some brief remarks on our strong financial position. I'll then turn the call over to Sam, who will provide an update on our strategic initiatives before concluding with an outlook for the business. At this time, I would 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.
David Krant: I'll begin the call today with a discussion of our first quarter 2024 financial and operating results followed by some brief remarks on our strong financial position.
Samuel J. B. Pollock: Then turn the call over to Sam who will provide an update on our strategic initiatives before concluding with the outlook for the business.
Speaker Change: At this time I would 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.
David Krant: For further information on known risk factors, I would encourage you to review our annual report on Form 20-F, which is available on our website. Brookfield Infrastructure's business recorded an excellent start to the year. During the first quarter of 2024, we generated funds from operations, or FFO, of $6 hundred and fifteen million, representing an 11 percent increase over the prior year period. This increase reflects organic growth of 7% as well as contributions associated with over $2 billion of capital deployed in the second half of last year.
Speaker Change: For further information on known risk factors I would encourage you to review our annual report on form 20-F, which is available on our website.
Speaker Change: Brookfield Infrastructure's business recorded an excellent start to the year.
Speaker Change: During the first quarter of 2024, we generated funds from operations or <unk> of $615 million, representing an 11% increase over the prior year period.
Speaker Change: This increase reflects organic growth of 7% as well as contributions associated with over $2 billion of capital deployed in the second half of last year.
David Krant: We have been pleased with the performance of our new investments, notably our newest data center platforms in North America and Europe. While it is early, the momentum building in each of these businesses positions us to exceed our initial return expectations. Taking a closer look at our results by segment, our utilities generated FFO of $190 million compared to $208 million in the same period last year.
Speaker Change: We've been pleased with the performance of our new investments, notably our data and our newest data center platforms in North America and Europe. While it is early the momentum building in each of these businesses positions us to exceed our initial return expectations.
Speaker Change: Taking a closer look at our results by segment, our utilities generated <unk> of $190 million compared to $208 million in the same period last year.
David Krant: The lower reported result is primarily attributable to capital recycling initiatives completed over the last 12 months, most notably the sale of our interest in an Australian regulated entity. After adjusting for asset sales and financings completed, organic growth for the segment was 8%. This growth is primarily attributable to inflation indexation and the commissioning of over $450 million of capital into the rate base during the last 12 months. Moving to our transport segment, FFO is $302 million, representing a 57% increase over the same period last year.
Speaker Change: Lower reported result is primarily attributable to capital recycling initiatives completed over the last 12 months, most notably the sale of our interest in the Australian regulated utility.
Speaker Change: After adjusting for asset sales and financings completed organic growth for this segment was 8%.
Speaker Change: This growth is primarily attributable to inflation indexation and the commissioning of over $450 million of capital into the rate base during the last 12 months.
Speaker Change: Moving to our transport segment, <unk> was $302 million, representing a 57% increase over the same period last year.
David Krant: The step change is largely attributable to the acquisition of Triton, which is performing well above our plan. Geopolitical events in the Middle East have resulted in the lengthening of certain shipping trade routes, thereby increasing global demand for containers. As a result, Triton's fleet utilization has increased to over 98 percent, while also securing attractive rates on recently contracted long-duration leases. This is in contrast to the reduction in utilization we had conservatively underwritten in anticipation of reduced global economic activity.
Speaker Change: Step change is largely attributable to the acquisition of <unk>, which is performing well above our plan.
Speaker Change: Geopolitical events in the Middle East have resulted in the lengthening of certain shipping trade route, thereby increasing global demand for containers. As a result, triton's fleet utilization has increased to over 98%. While also securing attractive rates on recently contracted long duration leases.
Speaker Change: This is in contrast to the reduction in utilization, we had conservatively underwritten in anticipation of reduced global economic activity.
David Krant: The balance of our transport operations grew by 10 percent, driven by inflationary tariff increases and higher volume. Our rail Networks and Toll Roads realized average rate increases of 9% and 7%, respectively, over the same period last year, highlighting the benefits of inflation and dexation. Traffic levels on our roads increased by 4 percent, and our diversified terminals recorded 7 percent higher volume.
Speaker Change: The balance of our transport operations grew by 10% driven by inflationary tariff increases and higher volumes, a rail networks and toll roads realized average rate increases of 9% and 7% respectively over the same period last year, highlighting the benefits of inflation indexation.
Speaker Change: Traffic levels on our roads increased by 4% and our diversified terminals recorded 7% higher volumes.
David Krant: Our midstream segment generated an FFO of $170 million, which is comparable to the prior year after excluding the impact of capital recycling initiatives. Although our direct commodity exposure is limited, the prevailing environment has been very favorable for customer activity levels and demand for our critical midstream assets. This demand has been most robust across our North American gas storage operations, where the fundamentals for the business continue to improve. Growth in North American LNG export capacity, the necessity of gas as a backup for intermittent generation sources, and extreme weather-based events continue to support storage rates and contract duration.
Speaker Change: Our midstream segment generated <unk> of $170 million, which is comparable to the prior year after excluding the impact of capital recycling initiatives.
Speaker Change: Although our direct commodity exposure is limited the prevailing environment has been very favorable for customer activity levels and demand for our critical midstream assets.
Speaker Change: This is this demand has been most robust across our north American gas storage operations, where the fundamentals for the business continue to improve growth in North American LNG export capacity the necessity of gas as a backup for intermittent generation sources and extreme weather basis to continue to support storage rates and contract durations as a risk.
David Krant: As a result, we have successfully increased FFO at a compound annual growth rate of over 20% over the past five years. As we have highlighted before, last year we sold our interest in two non-core U.S. gas storage assets to strategic buyers. Through these sales and the dividends received during our ownership, we have returned more than our original invested capital and still own one of the largest independent gas storage businesses in North America that today generates over $240 million in EBITDA.
Speaker Change: We have successfully increased at a compound annual growth rate of over 20% in the past five years.
Speaker Change: As we've highlighted before last year, we sold our interest in two non core U S gas storage assets to strategic buyers through.
Speaker Change: Through these sales and the dividends received during our ownership we have returned more than our original invested capital and still own one of the largest independent gas storage businesses in North America that today generates over $240 million of EBITDA annually.
David Krant: Lastly, FFO from our data segment was $68 million, which is comparable to the same period last year. Results for the quarter benefited from a full contribution from our German telecom tower operation, two hyperscale data center platform acquisitions, and the purchase of 40 retail co-location data centers out of bankruptcy. These acquisitions were largely offset by the sale of our interest in a New Zealand integrated data distribution business, which closed in June of last year.
Speaker Change: Lastly, <unk> from our data segment was $68 million, which.
Speaker Change: Which is comparable to the same period last year.
Speaker Change: Results for the quarter benefited from a full contribution from our German Telecom tower operation to Hyperscale data center platform acquisitions, and the purchase of 40 retail co location data centers out of bankruptcy.
Speaker Change: These acquisitions were largely offset by the sale of our interest in our New Zealand integrated data distribution business, which closed in June of last year.
David Krant: Focusing on our global data center platform, we continue to see significant activity from major hyperscale customers. As a result, we have been able to commercialize significant capacity on favorable contract terms that are long duration and underpinned by highly creditworthy counterparties. Today, we have approximately 670 megawatts of booked but not built capacity that we expect to come online over the next three years.
Speaker Change: Focusing on our global data Center platform, we continue to see significant activity from the major hyperscale customers. As a result, we have been able to commercialize significant capacity on favorable contract terms that are long duration and underpinned by highly credit worthy counterparties.
Speaker Change: Today, we have approximately 670 megawatts booked but not built the capacity that we expect to come online over the next three years.
David Krant: In the last 12 months, we have commissioned approximately 40 megawatts, which is expected to contribute roughly $45 million of run rate EBITDA on a 100% basis. In addition to the strong financial and operational start to the year, we have an excellent financial position. While macro debates on the pace and size of interest rate cuts by central banks have recently been influencing market behavior, we believe that investors will return to their focus on the micro factors that are key to differentiating businesses over the long term.
Speaker Change: In the last 12 months, we have commissioned approximately 40 megawatts, which is expected to contribute roughly $45 million of run rate EBITDA on 100% basis.
Speaker Change: In addition to the strong financial and operational start to the year. We have had we have an excellent financial position, while macro debates on the pace and size of interest rate cuts by central banks, who has been recently influencing market behavior. We believe that investors will return to their focus on the micro factors that are key to differentiating businesses over the long term.
David Krant: Today, despite higher interest rates, our business is the strongest it has ever been. This is evidenced by our current revenue profile and sector tailwinds driving our organic growth outcomes. In terms of our revenue profile, approximately 90% of these cash flows are regulated or contracted and also inflation protected. This provides tremendous resiliency in this environment.
Speaker Change: Today, despite higher interest rates our business is the strongest it has ever been this is evidenced by our current revenue profile and sector tailwind is driving our organic growth outlook.
Speaker Change: In terms of our revenue profile approximately 90% of these cash flows are regulated or contracted and also inflation protected this provides tremendous resiliency in this environment our.
David Krant: Our sector-leading organic growth is highly correlated to the two most significant trends of this decade, namely decarbonization and digitalization. The investments we are currently making in our transmission, residential decarbonization, semiconductor, and data center businesses will fuel our growth for many years to come. Lastly, I wanted to touch on the strength of our balance sheet and the depth of the debt capital markets. Credit markets have performed exceptionally well thus far in 2024. Investment-grade bond index spreads remain only modestly higher than post-financial crisis lows, despite nearly half a trillion dollars of supply in the first quarter.
Speaker Change: Our sector, leading organic growth is highly correlated to the two most significant trends of this decade, namely decarbonization and digitalization.
Speaker Change: The investments we are currently making in our transmission residential de carbonization semiconductor and data center businesses will fuel our growth for many years to come.
Speaker Change: Lastly, I wanted to touch on the strength of our balance sheet and the depth of debt capital markets.
Speaker Change: Credit markets have performed exceptionally well thus far in 2020 for investment grade index spreads remain only modestly higher than post financial crisis lows. Despite nearly half are trailing our supply in the first quarter.
David Krant: This environment has provided a constructive backdrop to opportunistically de-risk and optimize capital structures of many of our businesses while taking advantage of record low spreads. Following an active quarter of refinancings today, over 90 percent of our capital structure is fixed rate with an average term of seven years. Only four percent of our asset-level debt is maturing over the next 12 months, and we have no corporate maturities until 2027. Based on where interest rates are today and recently completed or well-progressed financings, we expect less than $600 million of asset-level maturities in 2024 to have higher borrowing costs than those in place today.
Speaker Change: This environment has provided a constructive backdrop to opportunistically de risk an optimized capital structures of many of our businesses, while taking advantage of record low spreads.
Speaker Change: Following an active quarter of refinancings today over 90% of our capital structure is fixed rate with an average term of seven years only 4% of our asset level debt is maturing over the next 12 months and we have no corporate maturities until 2027.
Speaker Change: Based on where interest rates are today, and recently completed or well progressed financings, we expect less than $600 million of asset level maturities in 2024 to have higher borrowing cost than those in place today. Moreover.
David Krant: Moreover, our corporate liquidity at the end of the first quarter remains strong, with over $2 billion available to support our growth initiatives. That concludes my remarks for this morning, and I'll now turn the call over to Bob.
Speaker Change: Moreover, our corporate liquidity at the end of the first quarter remained strong with over $2 billion available to support our growth initiatives.
Speaker Change: That concludes my remarks for this morning, and I'll now turn the call over to Sam.
Samuel J. B. Pollock: Thank you, David, and good morning, everyone. As Dave mentioned outside of the call, I'm going to provide an update on our strategic initiatives and conclude with an outlook for the year ahead. As we have advanced through 2024, market conditions have continued to improve, activity levels for M&A processes have increased, and as a result, the environment for transacting should be more balanced this year as compared to the prior year.
Samuel J. B. Pollock: Thank you David and good morning, everyone.
Samuel J. B. Pollock: As Dave mentioned at the outset, the call Im going to provide an update on our strategic initiatives and conclude with an outlook for the year ahead.
Samuel J. B. Pollock: As we have advanced through 2024 market conditions have continued to improve.
Samuel J. B. Pollock: Activity levels for M&A processes have increased and as a result, the environment for transacting should be more balanced this year as compared to the prior year.
Samuel J. B. Pollock: We've made significant progress in our capital recycling plan, securing $1.2 billion in proceeds, of which $1.1 billion has been closed to date. This success sets us up well to achieve our $2 billion annual capital recycling target, regardless of transaction activity in the sector. In April, we signed binding documentation to sell the Fibre platform within our French telecom infrastructure business.
Samuel J. B. Pollock: We've made significant progress on our capital recycling plan secured $1 2 billion in proceeds of which $1 $1 billion has been closed to date.
Samuel J. B. Pollock: This success sets us up well to achieve our $2 billion annual capital recycling target regardless of transaction activity in the sector.
Samuel J. B. Pollock: In April we signed binding documentation to sell the fiber platform within our French telecom infrastructure business.
Samuel J. B. Pollock: The transaction has an enterprise value of over 1 billion euros and is expected to result in an IRR of 17% and a multiple capital of approximately 1.9 times. We created this greenfield fiber development segment in 2017 and quickly scaled the business to become a leading wholesale fiber-to-the-home network in the region. We expect to generate up to $100 million in proceeds when the transaction closes later this year. The balance of our capital recycling initiatives were completed through opportunistic asset-level financing to right-size capital structures and pull forward future sale processes.
Samuel J. B. Pollock: The transaction has an enterprise value of over 1 billion euros is expected to result in an IRR of 17% and a multiple of capital of approximately one nine times.
Samuel J. B. Pollock: We create this greenfield fiber development segment in 2017 and quickly scaled the business to become a leading wholesale fiber to the home network in the region.
Samuel J. B. Pollock: We expect to generate up to $100 million of proceeds when the transaction closes later this year.
Samuel J. B. Pollock: The balance of our capital recycling initiatives were completed through opportunistic asset level financings to right size capital structures and pull forward future sale proceeds.
Samuel J. B. Pollock: During the quarter, we completed a $1.6 billion financing in our Brazilian regulated gas transmission business that resulted in approximately $500 million of proceeds. This recapitalization takes advantage of the strong demand for high-quality issuers in Brazil and low leverage levels at the company, and was combined with two previously completed refinancings. We have generated over $1 billion for the partnership and successfully reduced the equity required from future buyers. Moving to acquisitions, the investment pipeline remains quite full. But we are being very selective and pursuing only those opportunities with high risk-adjusted returns.
Samuel J. B. Pollock: During the quarter, we completed a $1 $6 billion financing at our Brazilian regulated gas transmission business that resulted in approximately $500 million of proceeds.
Samuel J. B. Pollock: This recapitalization takes advantage of the strong demand for high quality issuers in Brazil, and low leverage levels at the company.
Samuel J. B. Pollock: When combined with two previously completed refinancings.
Samuel J. B. Pollock: We have generated over $1 billion for the partnership has successfully reduced the equity required for future buyers.
Samuel J. B. Pollock: Moving to acquisitions, the investment pipeline remains quite full but.
Samuel J. B. Pollock: But we are being very selective in pursuing only those opportunities with high risk adjusted returns.
Samuel J. B. Pollock: There are a significant number of organic and tuck-in opportunities that are our primary focus at the moment since these are typically our highest-returning events. For example, our largest investor in the quarter was a low-risk follow-on investor. We acquired an incremental 10% stake in our Brazilian integrated rail and logistics provider from an existing shareholder for approximately $365 million. The purchase increased our ownership in a high-performing business with strong fundamentals at an approximately 20% discount to our view of fair value.
Samuel J. B. Pollock: There are significant number of organic and tuck in opportunities that our primary focus at the moment.
Samuel J. B. Pollock: These are typically our highest returning investments.
Samuel J. B. Pollock: Our largest investment in the quarter with a low risk follow on investments, we acquired an incremental 10% stake in our Brazilian integrated rail and logistics provider from an existing shareholder for approximately $365 million.
Samuel J. B. Pollock: The purchase increased our ownership in a high performing business with strong fundamentals added approximately 20% discount to our view of fair value.
Samuel J. B. Pollock: The other initiative we are advancing is the follow-on acquisition of a portfolio of telecom towers in India, which is expected to close in the fourth quarter. The total equity consideration is $1 billion, with our share expected to be approximately $150 million.
Samuel J. B. Pollock: The other initiative. We are advancing is the follow on acquisition of a portfolio of telecom towers in India, which is expected to close in the fourth quarter.
Samuel J. B. Pollock: The total equity consideration is $1 billion.
Samuel J. B. Pollock: With our share expected to be approximately $150 million.
Samuel J. B. Pollock: We are also screening a large pipeline of early stage M&A opportunities that we believe could achieve returns in excess of our target. These opportunities range from asset carve-outs to strategic partnerships and are concentrated in OECD countries in Asia Pacific, North America, and Europe. As we look ahead, the longer-term outlook for the global economy remains positive. However, our expectation is that we may experience several additional quarters of volatility as we settle into a flat to lower interest rate environment, and geopolitical situations in Europe and the Middle East remain unresolved.
Samuel J. B. Pollock: We're also screening a large pipeline of early stage M&A opportunities that we believe could achieve returns in excess of our targets. These.
Samuel J. B. Pollock: These opportunities range from asset carve outs, each strategic partnerships and are concentrated in OECD countries in Asia Pacific North America and Europe.
Samuel J. B. Pollock: As we look ahead the longer term outlook for the global economy remains positive.
Samuel J. B. Pollock: However, our expectation is that we may experience several additional quarters of volatility as we settle into a flat to lower interest rate environment.
Samuel J. B. Pollock: And geopolitical situations in Europe, and the middle East remain unresolved.
Samuel J. B. Pollock: Nonetheless, in this environment, infrastructure assets should continue to attract significant interest from institutional investors worldwide as a source of stability for their portfolios. This interest in the sector is best exemplified by new allocations to the asset class, which we've seen accelerate over the past six months. In addition, we are also witnessing significant excitement about the growth in the data sector driven by the tailwind. Overall, we believe our strong business performance and strategic outlook outweigh any factors related to the near-term interest rate environment.
Samuel J. B. Pollock: Nonetheless in this environment infrastructure assets should continue to attract significant interest from institutional investors worldwide as a source of stability for the portfolios.
Samuel J. B. Pollock: This interest in this sector is best exemplified by new allocations to the asset class.
Samuel J. B. Pollock: Which we have seen accelerate over the past six months.
Samuel J. B. Pollock: In addition, we are also witnessing significant excitement about the growth in the data sector driven by the tailwind.
Samuel J. B. Pollock: From digitalization, including advancements in AI and the build out of fiber in telecom networks to support the growth in data consumption.
Samuel J. B. Pollock: Overall, we believe our strong business performance and strategic outlook outweighs any factors related to the near term interest rate environment.
Samuel J. B. Pollock: Over the long run, interest rates will stabilize, but there are few infrastructure businesses like ours that are globally diversified across sectors and geographies that can offer investors a stable and growing distribution which, over time, will easily overtake any interest rate. This global footprint continues to be a competitive advantage and enables us to arbitrage various economic conditions to buy and sell attractive assets at valuations in the same environment. This concludes my remarks, and I will now pass over to the operator for Q&A.
Samuel J. B. Pollock: Over the long run interest rates will stabilize.
Samuel J. B. Pollock: But there are few infrastructure businesses like ours that are globally diversified across sectors and geographies that can offer investors, a stable or growing distribution, which over time will easily overtake any interest rate increases.
Samuel J. B. Pollock: This global footprint continues to be a competitive advantage and enables us to arbitrage various <unk>.
Samuel J. B. Pollock: Economic conditions to buy and sell attractive assets at valuations in the same market same environment.
Speaker Change: This concludes my remarks, and I will now pass over to the operator for Q&A.
Operator: Thank you. As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. And our first question comes from the line of Cherilyn Radbourne with TD Cowan.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker Change: And our first question comes from the line of Cherilyn Radbourne with TD Cowboys.
Cherilyn Radbourne: Thanks very much and good morning. With regard to the leverage that the business has to decarbonization and digitalization, is there a way that you can help us frame how much of the current FFO is levered to those trends or, more importantly, where you would see that going over the next five years based on the orientation of your CAFX project backlog and the M&A pipeline?
Cherilyn Radbourne: Thanks, very much and good morning.
Cherilyn Radbourne: With regards to the leverage that the business had to decarbonization and digitalization is there way you can help us frame how much of the current SFO is fever to dilute trends or more importantly, where you would see that going over the next five years based on the orientation of your cap.
Speaker Change: <unk> project backlog and the M&A pipeline.
Samuel J. B. Pollock: Hi Cherilyn. Maybe I'll start for a second there to give Dave a few minutes to do some stuff on his calculator to see if he can answer some of those questions. You know, at a high level, what I would say is that, from an M&A perspective, today, probably. I'm going to estimate 80 percent, 75-80 percent of our new investment opportunities probably relate to data, data and decarbonization, sectors, or at least the trend.
Speaker Change: Hi, Cherilyn.
Speaker Change: Maybe I'll start for a secondary to give Dave a few minutes to do some Stefan a calculator to Cedric to answer some of those questions but.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: At a high level, what I would say is that.
Speaker Change: From an M&A perspective.
Speaker Change: Today, probably.
Speaker Change: I'm going to estimate, 80%, 75% to 80% of our new investment opportunities probably relate to data and.
Speaker Change: Okay.
Speaker Change: The data and decarbonization.
Speaker Change: The sectors or at least the trends.
Samuel J. B. Pollock: And I would expect that to continue, at least for the foreseeable future, and that's been the case, I think, other than Trident, for the last, probably, year or two. In relation to our backlog, the vast majority of it relates to the utility sector, which is obviously focused on decarbonization initiatives, as well as our data centers and semiconductor investments. So you can definitely see it in our backlog. But maybe not.
Speaker Change: And I would expect that to continue at least for the foreseeable future and Thats been the case I think.
Speaker Change: Other than trading.
Speaker Change: That's been the case in the last probably a year or two.
Speaker Change: In relation to our backlog.
Speaker Change: The vast majority of it relates to the utility sector, which is obviously focused on decarbonization initiatives.
Speaker Change: As well as our data centers and semiconductor investments no you can definitely see in our backlog, but maybe I can give you some numbers to frame that with in to help fill that and I think if we look at our business today Charlotte and it won't surprise you. If you look at our residential de carbonization platform and our data.
David Krant: I can give you some numbers to frame that and to help fill in that. I think if we look at our business today, Cherilyn, and it won't surprise you, if you look at our residential decarbonization platform and our data sector, we have about 30 percent of our FFO from those two segments or subsegments. But in contrast, if you look at our backlog today, 80% of our capital projects are in those two areas.
Speaker Change: Sector, we have about 30% of our <unk> from those two.
Speaker Change: The segments or sub segments.
Speaker Change: But in contrast, if you look at our backlog today, 80% of our capital projects are in those two areas. So to your point you will certainly see the proportion of cash flows grow for those sub segment disproportionally than something like our midstream our transport business is it just make up much less of our of our backlog.
David Krant: So to your point, you will certainly see the proportion of cash flows grow for those subsegments disproportionately than for something like our midstream or our transport businesses. They just make up much less of our backlog in growth capex.
Speaker Change: Growth Capex.
David Krant: Great. That's really helpful, even though I sort of sprung that on you. The letter also comments that the credit markets have provided a very supportive backdrop to de-risk and optimize the capital structure across a variety of your businesses. Just given the relatively long average duration of your debt, are there still opportunities to take advantage of that backdrop, or do you think you're largely done on that front for the year?
Speaker Change: Great that's really helpful. Even though Brendan on you.
Speaker Change: The letter also comment that the credit markets have provided a very supportive backdrop to derisk and optimize the capital structure across a variety of your businesses.
Speaker Change: Given the relatively long average duration of your debt are there still opportunities to take advantage of that backdrop or do you think you're largely complete on that front for the year.
David Krant: The short answer is I think we've done a lot, which we're really happy about the ability to execute at the start of 2024, but there is still some to do if markets continue to remain favorable. I think there's a few that we're looking at in the near term. Intel is one where we have project finance that we'd love to take out. It spreads at these levels, so that's one we'll monitor closely over the next. [inaudible]
Speaker Change: The short answer I think we've done a lot, which we're really happy about the ability to execute in the started so far but there is still starting to do if markets continue to remain favorable I think theres a few that we're looking at in the near term.
Speaker Change: Intel is one where we have project finance that we'd love to take out at spreads at these levels. So that one will monitor closely over the next.
Speaker Change: A few weeks.
Speaker Change: And then over the balance of the year. If there are opportunities to derisk maturities that are coming due channel is not 2024, but certainly 2025 maturities in 2026, even that we'll look to if we can de risk those and extend like we've seen at North River at <unk>, where we're pushing out maturities 567 years, that's something we're more than happy to do even though it cost us a few.
Speaker Change: Basis points, our incremental interest in the short term because again there is nothing you can't put a price on having that strength and duration of our capital structure.
Cherilyn Radbourne: That's my two. Thank you for the time.
Speaker Change: That's my two thank you for your time.
Operator: Thank you. One moment, please, for our next question. Our next question comes from the line of Devin Dodge with BMO Capital Markets.
Speaker Change: Okay. Thank you cherilyn.
Speaker Change: Thank you one moment please for our next question.
Speaker Change: Our next question comes from the line of Devin Dodge with BMO capital markets.
Devin Dodge: Alright, thanks. Good morning.
Devin Dodge: Alright. Thanks, good morning, So I wanted to start with a question on inter pipeline. So this might be for Ben but it seems like there may have been some additional challenges there with the PD startup at Heartland.
Devin Dodge: Can you provide some color on the nature of those issues and when we should be expecting the facility to ramp up to full production.
Devin Dodge: So I want to start with a question on the inner pipeline. This might be for Ben, but it seems like there may have been some additional challenges there with the PDH startup at Heartland. Can you provide some color on the nature of those issues and when we should be expecting the facility to ramp up to full production?
Devin Dodge: Yes, Thanks, Devin it's Ben here.
Benjamin Michael Vaughan: Yeah, thanks Devin, it's Ben here. Yeah, IPL is providing updates directly on the Heartland startup. So we don't have much to add to the updates that they're providing. You know, the facility made a little over 170 million pounds last quarter, which was in line with the previous quarter. And I believe in the IPL's recent disclosure that they plan to achieve full run rate by mid this year. So that's bringing the plan online and bringing back the PGP side to full run rate. So we don't have much to add over and above what they've disclosed.
Benjamin Michael Vaughan: Yes, IPL is providing updates directly on the heartland startup. So we don't have much to add to the updates that they are providing.
Devin Dodge: Okay, okay, it makes sense. Okay.
Benjamin Michael Vaughan: The facility made a little over 170 million pounds last quarter, which was in line with the previous quarter and I believe in the IPO.
Benjamin Michael Vaughan: In a recent disclosure they plan to achieve full run rate by mid this year.
Devin Dodge: The plant up online and bring it back the PGP side to full run rate. So we don't have much to add over and above what they've disclosed.
Devin Dodge: And then I was going to ask about Intel. So when we look at the capital backlog for this project, it seems to have moved higher versus a year ago, despite, I think, somewhere in the range of like four to 500 million dollars of spending that's occurred over the last 12 months. You know, can you speak to how this project is proceeding? And if you're starting to see some cost escalations there? Or is it like additional scope? Or what we should be thinking about?
Speaker Change: Okay. Okay. Okay, and then I was going to ask about Intel so when.
Speaker Change: When we look at the capital backlog for this project it seems to have moved higher.
Speaker Change: A year ago, Despite I think somewhere in the range of $4 million to $500 million spending thats occurred over the last 12 months.
Speaker Change: Can you speak to how this project is proceeding and if you're starting to see some some cost escalations there or is it <unk>.
David Krant: Let me cover the first part. Devin, in terms of the increase in the size of the project for BIF, it's really just a function of our flagship infrastructure fund having its final close. So, you know, when we were during fundraising, we assumed Brookfield would be 25 percent, but we ultimately ended up at 25 and a half. So we've updated our capital backlog to reflect our final ownership in the fund. There's nothing, I wouldn't read through that, to say there's any issues with the scope or capital size of the project. It's still in line with the guidance we would have given at the beginning; it's just the net-to-bit figures by a little bit.
Speaker Change: Additional scope or how we should be thinking about that.
Speaker Change: Let me cover the first part Devin in terms of the increase in the size of the project for <unk>. It's really just a function of our flagship infrastructure fund having its final close so when we were during fundraising we assumed Brookfield will be 25%. We ultimately ended up at $25. Five so we've updated our capital backlog to reflect our final ownership in the <unk>.
Speaker Change: Fund there is nothing I wouldn't read through that to say there is any issues on scope of our capital size of the project is still in line with the guidance we have given at the beginning it's just been activist fingers are a little larger.
David Krant: But, and to be clear, we haven't made any adjustments because we thought the construction was going higher, so that's not the case. And again, you know, there's only so much we can report on this because Intel provides updates directly, and they did provide an update, I think, on April 15th, but I think the main takeaway, you know, from our perspective, is that, you know, from the pace of construction funding and, you know, the expectations regarding our economics, they remain very much in line. And so far, it's proceeding as we underwrite.
Speaker Change: But as you because we haven't made any adjustments because we've got price.
Speaker Change: Construction was going higher so that's not the case.
Speaker Change: <unk>.
Speaker Change: Sure.
Speaker Change: Again theres only so much we can report on this because Intel provides updates directly and they did provide an update I think on April 15th.
Speaker Change: But I think the main takeaway from our perspective is that from the pace of construction funding and the expectation regarding our economics. They remain very much in line.
Speaker Change: And so far it is proceeding as we underwrote.
Devin Dodge: Okay, thank you. I'll turn it over to you.
Okay. Thank you I'll turn it over.
Speaker Change: Thank you.
Operator: Thank you. One moment, please, for our next question. Our next question comes from the line of Robert Kwan with RBC Capital Markets.
Speaker Change: Thank you one moment please for our next question.
Speaker Change: And our next question comes from the line of Robert Kwan with RBC capital markets.
Robert Michael Kwan: Good morning. If I can just start with a question on the transaction environments, and you mentioned that you're being very selective. I assume by calling this out, I presume you're being even more selective than normal. So I'm just wondering, you know, what's behind that? Is that you are seeing valuations move higher? Are you kind of treating yourself a little bit here as a capital constraint?
Robert Michael Kwan: Good morning.
Speaker Change: If I can just start with your question.
Devin Dodge: Transaction environments, and you mentioned that you'd be very select is I assume by calling this out.
Robert Michael Kwan: Presume youre being even more selective than normal so I'm just wondering what's behind that.
Robert Michael Kwan: Is that you are seeing valuations move higher each kind of treating yourself a little bit here is as capital constrained.
Samuel J. B. Pollock: Hi Robert. It's Sam here.
Robert Michael Kwan: Hi, Robert It's Sam here.
Samuel J. B. Pollock: So no, I don't think it's really either of those things. You know, I would say that. You know, we have, we still see a fair amount of situations that we can pursue. You know, we want to preserve some of our capital for what could be coming down the pipe. And so we think that, you know, the longer that deal activity remains a little bit slowed or depressed, this could result in situations where people become more stressed and feel that they need to get done, and as a result, this creates a real contrarian opportunity.
Samuel J. B. Pollock: So no I don't think its really.
Samuel J. B. Pollock: Either of those things.
Samuel J. B. Pollock: Yes.
Samuel J. B. Pollock: I'd say that.
Samuel J. B. Pollock: We have.
Samuel J. B. Pollock: We still see a fair.
Samuel J. B. Pollock: Fair amount of.
Samuel J. B. Pollock: Situations that we can pursue but.
Samuel J. B. Pollock: We want to preserve some of our capital for what could be coming down.
Samuel J. B. Pollock: Pipe and so.
Samuel J. B. Pollock: We think that the longer that.
Samuel J. B. Pollock: Deal activity remains a little bit.
Samuel J. B. Pollock: Slowed or are depressed that.
This could result in situations that.
Samuel J. B. Pollock: People become more stressed and feel they need to get done and as a result creates.
Samuel J. B. Pollock: We might be wrong about that, but we've had such great success in the last couple of years in deploying capital, and we still deployed $500 million in the first quarter, so it's not as if we're not deploying capital, but I do think we are sort of holding onto a bit of our powder for potential opportunities we think might be in front of us.
Samuel J. B. Pollock: A real contrarian opportunity.
Samuel J. B. Pollock: So.
Samuel J. B. Pollock: Yes, we might be wrong in that.
Samuel J. B. Pollock: But we've had such great success in the last couple of years and deploying capital in and we still deployed $500 million in the first quarter. So it's not as if we're not deploying capital but.
Samuel J. B. Pollock: I do think we are sort of holding on to a bit of our powder for a potential opportunities, we think might be in front of us.
Samuel J. B. Pollock: product. And as you just think about some of these elevated returns you can hopefully achieve, you know, without changing the 12 to 15% target, do you have kind of some soft hurdles as to what types of returns you'd be targeting at, you know, based on
Speaker Change: Got it and then as you just think about some of these elevated return hopefully can achieve.
Samuel J. B. Pollock: Without changing the 12% to 15% target, Jeff kind of assume source hurdles as to what types of returns you'd be targeting.
Samuel J. B. Pollock: Based on trying to be more selective.
Samuel J. B. Pollock: Yeah, look, I think we are. You know, everything's got to be risk adjusted, but. For the last year and a bit, we have definitely targeted opportunities in the 15% to 20% range with the ability to even achieve returns in excess of that if certain parts of our business plan come together. So we're definitely being a bit greedy at the moment. To take one of Buffett's words, I guess, but I think that's just the environment that we're in at the moment.
Speaker Change: Yes look I think we are.
Samuel J. B. Pollock: Yes.
Samuel J. B. Pollock: Everything's got to be a risk adjusted but.
Samuel J. B. Pollock: For the last year and a bit we have.
Samuel J. B. Pollock: Definitely targeted opportunities in the 15% to 20% range with.
Samuel J. B. Pollock: Our ability to even achieve returns in excess of that certain parts of our business plan come together so.
Samuel J. B. Pollock: We're definitely being a bit greedy at the moment.
Samuel J. B. Pollock: To take one of <unk>.
Samuel J. B. Pollock: Buffett towards I guess.
Samuel J. B. Pollock: But we.
Samuel J. B. Pollock: I think thats just the environment that we're in at the moment.
Robert Michael Kwan: Got it. If I can just finish with Triton here,
Speaker Change: Got it if I can just finish with Triton here you commented that it's performing well above your plan.
Robert Michael Kwan: You commented that it's performing well above your plan. I was just wondering if you could be a little more specific about what aspects of the business have outperformed and whether you expect that to be, you know, ongoing. And then just the second question: I think part of the original thesis was what Triton could do for just, you know, broader synergies and information for your global shipping business. So if you could just talk maybe a little bit about what you've seen to date and what you expect to get out of Triton.
Robert Michael Kwan: Just wondering if you can be a little more specific about what aspects of the business have performed and whether you expect that to be.
Robert Michael Kwan: Ongoing and then just the second question.
Robert Michael Kwan: I think part of the original thesis was tightened could do for just broader synergies.
Robert Michael Kwan: And information for your global shipping does not so can you just talk maybe a little bit about what you've seen to date and what you expect to get out of training.
Benjamin Michael Vaughan: Ben will take the first part, and maybe I can touch it. Sure, Sam. Yeah.
Robert Michael Kwan: So maybe bandwidth take first part and maybe I can touch on effect for sure Sam Yeah, Hey, Robert It's Ben here.
Benjamin Michael Vaughan: Yeah, hey Robert. It's Ben here.
Ben: Yes, just in terms of the underlying business.
Ben: Been a story of excellent utilization. So our fleet is our utilization is substantially full.
Ben: In our north of 98% utilized so.
Ben: With a combination I'd say.
Ben: The I'll call it the Red Sea dynamics, a little while ago and then just good good trade flows more recently, our clients have called on our fleet to be fully utilized.
Benjamin Michael Vaughan: Yeah, just in terms of the underlying business, you know, it's really been a story of excellent utilization. So our fleet is, you know; our utilization is substantially full. It's, you know, north of 98% utilized. So with a combination, I'd say, of the Red Sea Dynamics, a little while ago, and then just good, good trade flows more recently. You know, our clients have called on our fleet to be fully utilized.
Benjamin Michael Vaughan: It's sort of that.
Benjamin Michael Vaughan: Simple and rates are solid so I'd say in general the early story of trading is just excellent utilization.
Benjamin Michael Vaughan: Assets at good rates and locking in that duration of the fleet and extending that out.
Benjamin Michael Vaughan: So it's sort of that, that simple. And, you know, rates are solid. So, I'd say, in general, the early story of Triton is just excellent utilization of the assets at good rates and locking in that duration of the fleet and extending that out.
Speaker Change: And just on your second part of your question.
Benjamin Michael Vaughan: Ability to leverage the information.
Samuel J. B. Pollock: And on the second part of your question, our ability to leverage the information coming out of the trade flows, I'd say we're still in the early days of achieving that. We do interact very closely with the... Trident Management Team, and they do have excellent intelligence as to what's taking place, but I wouldn't say today that we've been able to utilize that information for any specific transaction. So our hope is obviously to be able to do that, but I don't have any at this time to report on that.
Benjamin Michael Vaughan: Coming out of the trade flows I'd say, we're still in the early days.
Samuel J. B. Pollock: Achieving that we do interact very closely with the.
Samuel J. B. Pollock: <unk> management team and they do have excellent.
Samuel J. B. Pollock: Intelligence as to whats, taking place, but I wouldn't say today that we've been able to.
Samuel J. B. Pollock: Utilize that information for a specific transaction.
Samuel J. B. Pollock: So our hope is obviously to be able to do that and.
Samuel J. B. Pollock: But I don't have any at this time to report on that.
Robert Michael Kwan: Okay, I got it. Thank you very much. Thank you.
Speaker Change: Okay got it. Thank you very much okay. Thank you.
Operator: Thank you. One moment, please, for our next question. The next question comes from the line of Robert Hope with Scotiabank.
Speaker Change: Thank you one moment please for our next question.
Operator: And our next question comes from the line of Robert Hope with Scotiabank.
Robert Hope: Morning, everyone. Just want to continue the commentary on the M&A market, especially given the kind of your views, maybe holding some back in the expectation of better entry points moving forward. You know, under that kind of premise, as well as the commentary that market conditions continue to improve, you know, how are you looking at your asset monetization goal? You know, we've seen it be more biased towards financing and refinancing now. Could we see an acceleration of asset monetizations to give you some further cushion on the capital side?
Robert Hope: Good morning, everyone.
Robert Hope: Just wanted to continue the commentary on the M&A market, especially given kind of your views maybe being holding some back end and the expectation of better entry points moving forward.
Robert Hope: Under that kind of premise as well as the commentary that market conditions continue to improve.
Robert Hope: Are you looking at your asset monetization goal, we've seen it be more bias towards up financing and refinancing now could we see an.
Robert Hope: An acceleration of asset monetization to give you some further cushion on the capital side.
Samuel J. B. Pollock: Yeah, hi, Robert. As I said in our remarks and in our letter, we are seeing more activity, broadly speaking, but we're coming off a relatively, you know, we're coming off a relatively, you know, we're coming off a relatively, you know, we're coming off a relatively, you know, we're coming off a relatively, you know, we're coming off a relatively, you know, we As far as what we're doing at the current moment in time, we are focused on monetizing those businesses that are probably a little on the smaller side and, you know, relatively de-risked.
Speaker Change: Yes, Hi, Robert.
Samuel J. B. Pollock: So.
Samuel J. B. Pollock: As I said in our remarks and in our letter.
Samuel J. B. Pollock: We are seeing more activity broadly speaking, but we're coming off a relatively.
Samuel J. B. Pollock: Low base.
Samuel J. B. Pollock: With regards to that.
Samuel J. B. Pollock: But we'll continue to see improvement as interest rates start to find.
Samuel J. B. Pollock: Find a.
Samuel J. B. Pollock: Settling point.
Samuel J. B. Pollock: Yes, as far as what we're doing at the current moment in time, we are focused on.
Samuel J. B. Pollock: Monetizing those businesses that are probably a little on the smaller side.
Samuel J. B. Pollock: And.
Samuel J. B. Pollock: Relatively de risked.
Samuel J. B. Pollock: Just to appeal to the broadest possible audience, the other group that we're trying to target in our disposition programs is strategics because they're still relatively more active in the M&A market than financial investors are probably the one group that is a little less active than what we've seen in the past.
Samuel J. B. Pollock: Just to appeal to the broadest.
Samuel J. B. Pollock: Audience as possible and I would say the other sort of group that we're trying to target in our disposition programs are strategics because.
Samuel J. B. Pollock: I'd say theyre still relatively more active in the M&A market, then financial financial investors are probably the one group that or a little less active than what we've seen in the past.
Robert Hope: And then maybe moving over to the data segment, maybe you could provide some additional color on kind of the opportunity set moving forward? You know, just given the significant amount of interest that this segment is seeing, you know, across a number of geographies, could we see you pivot more towards the organic side to build out the backlog there versus the M&A side?
Speaker Change: Thanks for that and then maybe moving over to the data segment.
Robert Hope: Maybe can you provide some additional color on kind of the opportunity set moving forward just given the significant amount of interest.
Robert Hope: This segment is seeing across.
Robert Hope: A number of geographies could we see you pivot more towards the organic side to build out the backlog there versus the M&A side.
Samuel J. B. Pollock: I think it's a combination of everything. So our organic pipeline is very strong. So we have a lot of build-to-suit opportunities with our tower businesses. We can continue to take on new territories to build out our fiber-to-home in the US. As well as in other regions. Obviously, the data center sector is just on fire, and so we have a huge backlog there.
Robert Hope: I think it's a.
Samuel J. B. Pollock: A combination of everything so our organic pipeline is very strong. So we have a lot of build to suit opportunities with our tower businesses.
Samuel J. B. Pollock: We can continue to take on new territories to to build out our fiber to the home in the U S.
Samuel J. B. Pollock: As well as in other regions.
Samuel J. B. Pollock: Obviously, the data center sector.
Samuel J. B. Pollock: Sector is just on fire and so we have a huge backlog there.
Samuel J. B. Pollock: So I think in relation to the organic side of the business, it's as big as it's ever been. But, you know, we also see lots of interesting opportunities from a carve-out and M&A perspective, and it has to do sort of with the same dynamic, which is the fact that a lot of parties also have significant organic growth opportunities but don't have the capital to execute them. And so they're looking for partners, or they're looking to, you know, sell businesses that they can no longer, you know, continue to grow. So I think... We'll, you know, we'll hopefully have a balanced approach to investing in the data sector, which is both M&A and organic going forward. Thank you.
Samuel J. B. Pollock: I think in relation to the organic side of the business. It's.
Samuel J. B. Pollock: It's as big as it's ever been.
Samuel J. B. Pollock: But yes, we also see lots of interesting opportunities from a carve out an M&A perspective, and it has to do sort of with the same dynamic which is the fact that a lot of.
Samuel J. B. Pollock: Parties.
Samuel J. B. Pollock: Also have significant organic growth opportunities, but don't have the capital to execute them and so they're looking for partners or they're looking to.
Samuel J. B. Pollock: To sell businesses that they can no longer continue to grow.
Samuel J. B. Pollock: So I think.
Samuel J. B. Pollock: We will we will hopefully have a balanced approach to deploying in the data sector, which is both M&A and organic going forward.
Speaker Change: Thank you.
Operator: Thank you. One moment, please, for our next question. The next question comes from the line of Robert Catellier with CIBC Capital Markets.
Speaker Change: Thank you one moment please for our next question.
Robert Catellier: And our next question comes from the line of Robert <unk> with CIBC capital markets.
Robert Catellier: Hey, good morning. I just have a couple of follow-up questions. First, on HPC, I'm curious if you know if there's a line of sight to a technical solution for that screen issue and visibility to getting that facility producing at nameplate capacity again.
Robert Catellier: Hey, good morning, I just have a couple of follow up questions here first on HBC Im curious if you know if there is a lot of site towards technical solution to that.
Robert Catellier: Screen issue.
Robert Catellier: And I have visibility to getting that facility producing at nameplate capacity again.
Benjamin Michael Vaughan: Yeah, thanks, Robert. Look, you know, I think what we said last call was that, you know, we are working through the full startup of the PGP facility. And I think IPL, as I mentioned a minute ago, disclosed the facility will be back up by mid-2024. And we would fully expect the facility, over time, to achieve its full name plate capacity.
Robert Catellier: Yes.
Speaker Change: Yes, Thanks Robert.
Benjamin Michael Vaughan: I think what we said last call was that we are working through the startup of the PGP facility.
Benjamin Michael Vaughan: And.
Benjamin Michael Vaughan: I think IPL as I mentioned a minute ago disclosed the facility. We've got the backup by mid 2024, and we would fully expect the facility over time to achieve its full nameplate capacity.
Robert Catellier: Given the strength of Triton, does that impact your investment plans there? In other words, is there an opportunity to invest in more capacity given how utilized the fleet is, or is there potential for that this to be a little bit of a budge if Geopolitics calms down, and, you know, the utilization settles down a bit?
Speaker Change: Okay, and then given the strength of trading does that impact your investment plans. There in other words is there an opportunity to invest in more.
Robert Catellier: More capacity given how utilized of the fleet is or is there potential for that this is a little bit of a budge.
Robert Catellier: Geopolitics.
Robert Catellier: Calmed down.
Robert Catellier: The utilization slows down a bit.
Benjamin Michael Vaughan: So, Robert, the nature of the business is such that Triton, because of its scale, is able to get itself into the queue with suppliers of containers and always has some sort of running supply chain. We make capital allocation decisions at various points in time to take on more inventory or less inventory, and that's really where the management team has been very successful over time, being able to predict when to hold inventory and when not to.
Speaker Change: So Robert.
Benjamin Michael Vaughan: <unk>.
Robert: Yes, the nature of the business is such that.
Benjamin Michael Vaughan: Trading because of its scale is able to get itself into the queue.
Benjamin Michael Vaughan: With suppliers of containers.
Benjamin Michael Vaughan: And always had sort of a running.
Benjamin Michael Vaughan: Source of continuous because of that.
Benjamin Michael Vaughan: We make capital allocation decisions at various points in time too.
Benjamin Michael Vaughan: Take on.
Benjamin Michael Vaughan: More inventory or less inventory and Thats really where the management team has been very successful.
Benjamin Michael Vaughan: Over time as being able to predict.
Benjamin Michael Vaughan: When to hold inventory we're not.
Benjamin Michael Vaughan: They were fortunate to have inventory on hand when this latest crisis for the shippers took place in the Red Sea, and so that's what pushed what we thought was going to be a relatively soft year and our underwriting to one that turned out to be one of the best years of utilization. We will replenish our inventory over the next couple of months, and so we should very soon have a normal level, and then the management team will continuously decide if they increase that or decrease that, depending on where they see the need. Current Per Diem, and you know just whether or not you think it's a good time to invest in inventory or not, but that is what they do really well.
Benjamin Michael Vaughan: They are fortunate to have inventory on hand when.
Benjamin Michael Vaughan: This latest crisis.
Benjamin Michael Vaughan: For the shippers took place with the Red Sea and so that's what pushed what we thought was going to be a relatively soft year in our underwriting to one turned out to be one of the best years of utilization.
Benjamin Michael Vaughan: We will replenish our inventory over the next couple of months.
Benjamin Michael Vaughan: And so we should very soon have.
Benjamin Michael Vaughan: A normal level and then the management team.
Benjamin Michael Vaughan: We'll continuously decide if they increase that or decrease that depending on where they see.
Benjamin Michael Vaughan: Current per Dms in.
Benjamin Michael Vaughan: Just whether or not you think it's a good time to invest in inventory or not but that is what they do really well.
Robert Catellier: Okay, I got it. Thank you.
Speaker Change: Okay got it thank you.
Operator: Thank you. I'm showing no further questions at this time. So with that, I'll now turn the call back over to CEO Sam Pollock for any closing remarks. OK, thanks.
Robert Catellier: Okay.
Operator: And I'm showing no further questions at this time, so with that I'll now turn the call back over to CEO, Sam Pollock for any closing remarks.
Samuel J. B. Pollock: Okay, thank you operator and thank you everyone who joined our call. We appreciate your interest in the company, and we look forward to updating you again on our progress for the 2024 objectives on our next call in August.
Samuel J. B. Pollock: Okay. Thank you operator, and thank you, everyone, who joined our call.
Samuel J. B. Pollock: Appreciate your interest in the company and we look forward to updating you again on our.
Samuel J. B. Pollock: Progress for 2024 objectives on our next call in August.
Operator: Ladies and gentlemen, this does conclude today's program, and you may now disconnect.
Speaker Change: Got it.
Speaker Change: Ladies and gentlemen, thank you for participating this does conclude today's program and you may now disconnect.
Operator: Okay.
Operator: Okay.
Operator: [music].
Operator: Okay.
Operator: Good.
Operator: Okay.
Operator: [music].
