Q1 2024 ATCO Ltd Earnings Call
Thank you for standing by this is the conference operator welcome to the <unk> Co Ltd first quarter 'twenty 'twenty four results conference call and webcast.
Operator: Thank you for standing by. This is the conference operator. Welcome to the ATCO Ltd first quarter 2024 results conference call and webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. If you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Finance, Treasury, and Sustainability. Please go ahead, Mr. Jackson.
Operator: As a reminder, all participants are in listen only mode.
Operator: And the conference is being recorded after the presentation, there will be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad.
Operator: Did you need assistance during the conference call you May signal, an operator by pressing Star then zero.
Operator: I'd now like to turn the conference over to Mr. Colin Jackson Senior Vice President Finance Treasury and sustainability. Please go ahead Mr. Jackson.
Colin R. Jackson: Thank you good morning, everyone.
Colin R. Jackson: Thank you. Good morning, everyone.
Colin R. Jackson: We're pleased you could join us for ATCO's first quarter 2024 conference call. With me today is Executive Vice President and Chief Financial and Investment Officer Katie Patrick, and our President of ATCO Structures, Adam Beattie. Before we move into our formal agenda, I would like to take a moment to acknowledge the numerous traditional territories and homelands on which our global facilities are located. Today, we are speaking to you from our ATCO Park head office in Calgary, which is located in the Treaty 7 region.
Colin R. Jackson: We're pleased you could join us for the <unk> first quarter 2024 conference call.
Colin R. Jackson: With me today is executive Vice President Chief Financial and investment Officer Katie Patrick.
Colin R. Jackson: President of Atco structures, Adam Beatty.
Colin R. Jackson: Before we move into our formal agenda I would like to take a moment to acknowledge the numerous additional territories and homeland how much our global facilities are located.
Colin R. Jackson: Today, we are speaking to you from our Alco Park head office in Calgary, which is located in the Treaty seven region.
Colin R. Jackson: This is the ancestral territory of the Blackfoot Confederacy and is comprised of the Siksika, the Kainai, and the Pagani Nations, the Tsitsinna Nation, and the Stony Lakota Nations, which include the Tukneki, Berespa, and Good Stony First Nations.
Colin R. Jackson: This is the ancestral territory of the Blackfoot Confederacy comprised of Zika.
Colin R. Jackson: I end up Ghani nations, the <unk> nation, and a stone in the combinations, which includes the key bearish Pas and good Stony first nations. The city of Calgary is also home to the maintenance nation of Alberta districts five and six.
Colin R. Jackson: We honor and respect diverse histories language ceremonies and culture of the indigenous people who call these areas home.
Colin R. Jackson: The City of Calgary is also home to the Métis Nation of Alberta in Districts 5 and 6. We honor and respect the diverse histories, language, ceremonies, and culture of the Indigenous peoples who call these areas home. The call today will begin with some opening comments from Katie on recent company developments and financial results, followed by an update from Adam on our global structures business. After these prepared remarks, we will take questions from the investment community.
Colin R. Jackson: Our call today will begin with some opening comments from Kt of recent company developments and financial results.
Colin R. Jackson: Followed by an update from Adam on our global structures business.
Katie: After these prepared remarks, we will take questions from the investment community.
Colin R. Jackson: Please note that a replay of the conference call a short supplementary presentation and a transcript will be available on our website at <unk> dot com and can be found in the investors section under the heading events and presentations.
Colin R. Jackson: Please note that a replay of the conference call, a short supplementary presentation, and a transcript will be available on our website at atco.com and can be found in the investor section under the heading events and presentations. I'd like to remind you all that our remarks today will include forward-looking statements that are subject to important risks and uncertainties. For more information on these risks and uncertainties, Please see the reports filed by ATCO with the Canadian Securities Regulators, and finally, I'd also like to point out that during this presentation, we may refer to certain non-GAAP or other financial measures, such as total of segment measures, adjusted earnings, Adjusted Earnings Per Share, and Capital Investments. These measures do not have any standardized meaning under IFRS. And as a result, they may not be comparable to similar measures presented by other entities.
Colin R. Jackson: I'd like to remind you all that our remarks today will include forward looking statements that are subject to important risks and uncertainties from.
Colin R. Jackson: For more information on these risks and uncertainties. Please see the reports filed by <unk> with the Canadian Securities regulators.
Colin R. Jackson: And finally.
Colin R. Jackson: I'd also like to point out that during this presentation, we may refer to certain non-GAAP or other financial measures such as total segment measures.
Colin R. Jackson: Adjusted earnings adjusted earnings per share and capital investments.
Colin R. Jackson: These measures do not have any standardized meaning under I R. S.
Colin R. Jackson: As a result, they may not be comparable to similar measures presented in other entities.
Colin R. Jackson: And now, I'll turn the call over to Katie for her opening statement.
Colin R. Jackson: Now I'll turn the call over to Katie for her opening remarks.
Katie: Thanks, Colin and good morning, everyone.
Katie Patrick: Thanks, Colin. And good morning, everyone.
Katie Patrick: You all very much for joining us today for our first quarter 2024 conference call.
Katie Patrick: Thank you all very much for joining us today for our first quarter 2024 conference call. ATCO achieved adjusted earnings of $148 million in the first quarter this year. This is $11 million, or 8% higher than the first quarter last year. This $11 million of growth came primarily from the strong performance of our structures business and the Alberta utility business. Collectively, this more than offset the expected downward earnings pressure associated with the normalizing inflation profile in Australia, along with a decline in merchant power pricing and weather challenges that impacted ATCO Empower.
Katie Patrick: Actual achieved adjusted earnings of $148 million in the first quarter this year.
Katie Patrick: This is $11 million or 8% higher than the first quarter last year.
Katie Patrick: This $11 million of growth came primarily from the strong performance of our structures business and the Alberta utility businesses.
Katie Patrick: Collectively this more than offset the expected downward earnings pressure associated with the normalizing inflation profile in Australia, along with a decline in merchant power pricing and weather challenges that impacted act will empower.
Katie Patrick: I won't go into too much detail on Canadian utilities, as we spoke to their performance on this morning's call, but I do want to reiterate that we continue to focus on delivering growth in 2024 and beyond.
Katie Patrick: I won't go into too much detail on Canadian utilities as we spoke about their performance on this morning's call, but I do want to reiterate that we continue to focus on delivering growth in 2024 and beyond. This year, we have an increase to our allowable ROEs from 8.5% to 9.28% across our Alberta-based utilities. We have strong regulatory prospectivity as our distribution utilities enter their third performance-based regulation cycles. Our gas transmission utility confirmed its two-year rate application, and electric transmission currently has rates set to the end of 2025.
Katie Patrick: This year, we have an increase to our allowable or roe's from eight five to nine point to 8% across all our Alberta based utilities.
Katie Patrick: We have strong regulatory perspective, Eddie as our distribution utilities enter their third performance based regulation cycles, our gas transmission utility confirmed their two year rate application and electric transmission currently has rates set to the end of 2025.
Katie Patrick: Transitioning to our other investments Echo frantic delivered first quarter earnings earnings declines nominally from 'twenty to 'twenty three levels, primarily due to the closure of the Trans Mountain expansion project camps.
Katie Patrick: Transitioning to our other investments, ATCO Frontec delivered first quarter earnings that declined nominally from 2023 levels, primarily due to the closure of the Trans Mountain Expansion Project. Now it may continue to drive a strong quarterly level of earnings, contributing $5 million in the quarter. ATCO structures continues to deliver exceptionally strong results, with adjusted earnings of $24 million in the quarter, over 25% higher than the prior year. Structures continue to deliver growth from the expansion of our base business and the optimization of our fleet, with major projects being a supplement to these earnings. To speak to this success of driving repeatable base business earnings and to provide an update on the structure of the business overall, I will now turn the call over to Adam.
Adam: Now to May continue to drive a strong quarterly level of earnings contributing $5 million in the quarter.
Adam: I co structures continue to the law to deliver exceptionally strong results with adjusted earnings of $24 million in the quarter over 25% higher than the prior year.
Adam: Structures continues to deliver growth from the expansion of our base business and the optimization of our fleet with major projects being in supplements to these earnings.
Adam: To speak to the success of driving repeatable base business earnings and to provide an update on the structures business overall I'll now turn the call over to al.
Adam M. Beattie: Thank you, Katie, and good morning, everyone. As Katie alluded to, we had a great quarter and were able to build on our solid 2023 performance. So our typical earnings pattern has a seasonal low in Q4 that carries into Q1. This quarter, we were able to deliver performance more in line with the seasonal peaks we experienced in 2023. Moreover, we've delivered year-over-year improvement in first quarter results for five consecutive years now. Continued investment in our base business, particularly in our space rental business, has allowed us to expand both our footprint of operating locations and our customer base, increasing the number of units we have on hire while improving our average rental rates by 12%.
Adam: Thank you Katie and good morning, everyone as Katie alluded to we had a great quarter MRI able to build on our solid 2023 performance.
Adam M. Beattie: Our typical earnings pattern has a seasonal low in Q4 that carried into Q1. This quarter, we were able to deliver performance more in line with the seasonal peaks we experienced in 2023.
Adam M. Beattie: Moreover, with delivered year over year improvement in first quarter results for five consecutive years now.
Adam M. Beattie: Continued investment in our base business, particularly in that space rentals business has allowed us to expand both the footprint of operating locations and our customer base, increasing the number of units we have on Hawaii, while improving our average rental rates by 12%.
Speaker Change: To reiterate this is a strong first quarter result from our teams as we now move into the more active construction season in North America.
Adam M. Beattie: To reiterate, this is a strong first quarter result from our teams as we now move into the more active construction seasons in North America. Our expansion into the residential housing sector through the Triple M housing acquisition continues to perform with another great quarter. We see continued demand for housing coupled with recent federal government interventions to reduce the mortgage burden on first home buyers, with changes to the home buyer's plans and extending amortization on new home mortgages as continued evidence of improved opportunities in this business line for us.
Adam M. Beattie: Our expansion into residential housing sector by the Triple aim housing acquisition continues to perform with another great quarter.
Adam M. Beattie: We see continued demand for housing coupling coupled with recent central government interventions to reduce the mortgage burden on first time buyers with changes to the hind baas planes and extending amortization on new high mortgages as a continued as continued evidence of improved opportunities in this business.
Adam M. Beattie: For us the residential housing segment has been a valuable strategic addition to our base business growth.
Adam M. Beattie: The residential housing segment has been a valuable strategic addition to our base business growth. Growth in our base business continues to be exceptionally meaningful to our overall results, as it contributes upwards of three-quarters of our total earnings in a given period, providing earnings stability and a platform to offer our other products and services. Our continued investment in our base business has enabled us to reliably backfill earnings from major projects with sustained quality earnings.
Adam M. Beattie: Growth in our base business continues to be exceptionally meaningful to our overall results as it contributes upwards of three quarters of our total earnings in a given period.
Adam M. Beattie: Providing earnings stability and a platform to offer other products and services.
Adam M. Beattie: Our continued investment in our base business has enabled us to rely believe backfill earnings from major projects with sustained quality earnings.
Adam M. Beattie: To emphasize again, this quarter is a great starting point for the year and is reflective of our continued execution on our strategy to expand our business with a combination of base-reliable earnings, balanced with access to high-growth markets that foster longer-term growth potential, such as residential housing and permanent modular construction applications. As we look to the future, there continues to be a solid pipeline of real projects in Australia, Canada, and the United States that we believe will drive additional opportunities and support further growth for structure. I'll now pass the call back over to Katie.
Adam M. Beattie: So emphasize again this quarter is a great starting point for the year and is reflective of our continued execution on our strategy to expand our business with a combination of bice reliable earnings balance with access to high growth markets that foster longer term growth potential such as residential housing and permanent.
Katie Patrick: Modular construction applications as we look to the future that continues to be a solid pipeline of real projects in Australia, Canada, and the United States that we believe will drive additional opportunities and support further growth for structures.
Adam M. Beattie: I will now pass the call back over to Katie.
Katie Patrick: Thank you Adam and congratulations on another strong quarter of Atco structures.
Katie Patrick: Thank you, Adam, and congratulations on another strong quarter at ATCO Structures. Overall, ATCO had a great first quarter.
Katie Patrick: <unk> actually had a great first quarter.
Colin R. Jackson: Colin and I appreciated speaking to many of our investors last week about our portfolio of businesses. We continue to provide information to the investment community, which we hope will bring light to pockets of unrealized value in our businesses. We look forward to keeping you updated as we progress on our growth plans throughout the year. That concludes my prepared remarks. I will now turn the call back to Colin.
Katie Patrick: Colin and I appreciated speaking to many of our investors last week about our portfolio of businesses.
Colin: We continue to highlight information to the investment community, which we hope will bring light to pockets of unrealized value in our businesses.
Colin: We look forward to keeping you updated as we progress on our growth plans throughout the year.
Colin R. Jackson: That concludes my prepared remarks, I will now turn the call back to Colin.
Colin: Thank you Katie and Adam in the interests of time, we ask that you limit yourself to two questions. If you have an additional question you are welcome to rejoin the queue.
Colin R. Jackson: Thank you, Katie and Adam. In the interest of time, we ask that you limit yourself to two questions. If you have an additional question, you are welcome to rejoin the queue. I will now turn it over to the conference coordinator for questions.
Speaker Change: I will now turn it over to the conference coordinator.
Speaker Change: Our questions.
Colin: Thank you.
Operator: Thank you. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. The first question comes from Rob Hope with Scotiabank. Please go ahead.
Colin R. Jackson: Did you end the question queue. You May Press Star then one on your telephone keypad, you'll hear it talent acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.
Operator: First question comes from Rob Hope with Scotiabank. Please go ahead.
Robert Hope: Good morning everyone. I want to start off on two questions about ACCO's structures. As you kind of pointed out in your prepared remarks, the seasonality of this business was not quite what we would normally see here. So, when you take a look at what we have... Is this a situation where we're going to be moving away from that normal seasonality?
Robert Hope: Good morning, everyone I wanted to start off on the actually two questions.
Robert Hope: Structures.
Robert Hope: As you kind of part of that in your prepared remarks, you know the seasonality of this business was not quite what we would normally see here. So when you take a look at what Eric.
Robert Hope: No you is this.
Robert Hope: A situation, where we're gonna be moving away from that normal seasonality.
Robert Hope: Okay.
Colin R. Jackson: Sorry, Rob, it's Colin. I'm sorry to cut you off. We're having a very hard time hearing you. You're cutting in and out. Could you maybe just try moving closer to your microphone and try again? Yeah, sorry about that. Is that better?
Robert Hope: Sorry, Rob it's Rob it's call it I'm sorry to cut you off we're having a very hard time hearing you you're cutting in a note.
Colin: Could you maybe just just try moving closer to your microphone and try again.
Colin: Yes, sorry about that is that better.
Speaker Change: That does seem better.
Robert Hope: Sorry about that. In terms of the rateability of the structures business, it does seem like the seasonality is not quite what it was. Is this a situation where the base business is just growing at such a clip that you could be moving away from some of the more seasonal and cyclical parts of the business?
Colin: Okay, sorry about that yeah, just in terms of the rate ability of the structures because I say it does seem like the seasonality is.
Robert Hope: Not quite what it was is this a situation where the base business is just growing at such a clip that you know you're you could be moving away from some of the more seasonal or cyclical parts of the business.
Robert Hope: Yeah.
Adam M. Beattie: Hi Rob, how are you? It's Adam.
Robert Hope: Hi, Rob How're you it's Adam.
Rob: I think there will always be the seasonality cycle in our base business in North America purely because of the weather conditions and how they impact the construction season, so they'll always be some seasonality. We've certainly tried to balance the structure of that business. So we can reduce that seasonality impact.
Adam: In Q1, and Q4, and so I guess, reducing the spread that is the main objective and I think that's certainly an intention and we hope that that'll be seen further forward.
Adam M. Beattie: I think there will always be a seasonality cycle in our base business in North America, purely because of the weather conditions and how they impact the construction season. So there'll always be some seasonality. We've certainly tried to balance the structure of our business so we can reduce that seasonality impact in Q1 and Q4. So I guess reducing the spread there is the main objective, and I think that's certainly an intention, and we hope that that'll be seen further ahead.
Robert Hope: And Adam, if I may ask, the cyclicality that we once saw with the large camps, can you address that as well?
Speaker Change: And Adam if I may ask the cyclicality that we saw with the large caps can you address that as well.
Adam: Ah, yes, with a large camps certainly we're doing a lot more in terms of other business lines outside of camps that is what we called style trade activity that is selling product that balances out the that cyclicality of the workforce housing stream of business line as well whether that's edgy.
Adam M. Beattie: Yes, with the large camps, certainly we're doing a lot more in terms of other business lines outside of camps. That is what we call sales trade activity that is selling products that balances out that cyclicality of the workforce housing stream of business as well. Whether that's education products, whether that's commercial industrial applications, or residential housing, that certainly contributes to balancing out some of the peaks and troughs that we've seen in major project activity in the past.
Adam M. Beattie: <unk> product, whether that's commercial industrial applications residential housing that suddenly.
Adam M. Beattie: Contributes to balancing out some of the peaks and troughs that we've seen in the major project activity in the past.
Speaker Change: Thanks for that and then maybe as a follow up just taking a look at the average rental rates.
Robert Hope: Thanks. And then maybe as a follow-up, you know, just taking a look at the average rental rates, global space was up 12%, and the workforce was down 35% year over year. Can you just talk about kind of what the key factors are that are driving that difference for each individual movement? Certainly. So when you get some work,
Robert Hope: Global space was up 12% workforce was down 35% year over year can you just talk to kind of what the key factors are that are driving that difference or each individual a movement.
Robert Hope: Certainly when you get a workforce housing rentals come off I come up on a larger scale of products at one particular time. So a lot of that is driven by Canada, where we've seen a pause on trans mountain.
Adam M. Beattie: Certainly. So when workforce housing rental rates come off, they come off on a larger scale of products at one particular time. So a lot of that is driven by Canada where we've seen off-hires on the Trans Mountain Pipeline Project and also the Coastal Gas Link Project. So a portion of that product has returned, and that will need to be redeployed. So that's why that volatility in the utilisation rate tends to occur at a larger scale than what you would see in space rentals.
Adam M. Beattie: The pipeline project and also the coastal gasoline project. So a portion of that product is return and that will need to be redeployed.
Adam M. Beattie: So that's why that volatility in the utilization right tends to occur at a larger scale than what you'd seen spice rentals.
Speaker Change: Thank you.
Adam M. Beattie: Yeah.
Adam M. Beattie: The next question comes from Maurice Choy with RBC capital markets. Please go ahead.
Operator: The next question comes from Maurice Choy with RBC Capital Markets. Please go ahead. Please go ahead. The next question comes from... Hi Maureen.
Maurice Choy: Please go ahead.
Operator: The next question comes from Murray.
Operator: Hi Maurice, we can't hear you. Not sure if you're on mute.
Maurice Choy: Oh, Hi, Maurice we can't hear you I'm not sure if you're on mute.
Maurice Choy: The next question Maury.
Operator: The next question. Maurice. I'll go to the next questioner. The next question comes from Ben Pham with BMO. Please go ahead. [inaudible]
Operator:
Benjamin Pham: I'll go next.
Benjamin Pham: Next question next questioner. The next question comes from Ben Pang with BMO. Please go ahead.
Benjamin Pham: Alright, Thanks, sorry can you hear me okay.
Benjamin Pham: All right, thanks. Can you hear me okay? Yes. Okay, great. First question I wanted to ask: your peers so far from a Canadian Energy Infrastructure Landscape have been highlighting the Harlow Data Center. I'm curious from ATCO's perspective, or through CU, your franchises, Alberta, Australia there. Any conversations you're having on that front where it's interconnects or power generation that you're at least having some discussions about?
Benjamin Pham: Yes.
Speaker Change: Okay great.
Benjamin Pham: Great.
Benjamin Pham: Yes.
Benjamin Pham: Our first question I wanted to ask that.
Benjamin Pham: Your peers, so far from a Canadian.
Benjamin Pham: Energy infrastructure landscape.
Benjamin Pham: They've been highlighting.
Benjamin Pham: Carload data center.
Benjamin Pham: Potential opportunities.
Benjamin Pham: I'm curious from from alcohol perspective accuracy you your franchises.
Benjamin Pham: Berta Australia there.
Benjamin Pham: Any conversations you're having on that front, where its interconnects or power generation, but you're always having some discussions about.
Speaker Change: Yeah, I I can I can take that thing's been.
Katie Patrick: Yeah, I can. I can take that. Thanks, Ben. You know, I think it's definitely an interesting trend for the industry as a whole. We all know the sort of statistics around the need for power to drive some of the AI technology. And a lot of our peers have, candidly, a lot of our peers have strong U.S. One thing I will say is that, for the most part, obviously, Alberta's energy market is different in the sense of it not being within our regulated rates. So it would have a different profile should we look for those types of opportunities.
Katie Patrick: You know I think it's definitely an interesting trend for the for the industry as a whole are we all know this of the statistics around the need for power to drive some of the AI.
Katie Patrick: Technology and a lot of our peers have candidly a lot of our peers and the strong U S. A.
Katie Patrick: Portions of their business, which I think is where the majority of that action is currently coming from that said, there's nothing to say that Alberta wouldn't be a good market for that and and in previous time, we did have inbound discussions related to bitcoin.
Katie Patrick: Data facilities, which have a similar profile of the high high need for energy I need for space and cooler conditions actually in Alberta with conducive to that so you know nothing nothing to report as yet Ah interesting something to watch the one thing I will say is that.
Katie Patrick: For the most part obviously, Alberta energy market is different in the sense of it.
Katie Patrick: Not being within our regulated rates. So it would be a different profile should be look for those type of opportunities.
Katie Patrick: Okay.
Katie Patrick: Yeah.
Speaker Change: And I'm not sure if someone asked this on the call your your Alberta power generation.
Benjamin Pham: OK. I'm not sure if someone asked us on this call about power generation, segment, and the native earnings coming from that. Are you able to share? From an EBITDA perspective instead, are you? Are you tracking or expecting it to track in that initial range that you had previously highlighted?
Benjamin Pham: Segment, and the name of earnings coming from that.
Benjamin Pham: Are you able to share.
Benjamin Pham: Oh from an EBITDA perspective, instead of you.
Benjamin Pham: Are you tracking or expecting them to track in that initial.
Benjamin Pham: Initial range are you you had previously highlighted.
Speaker Change: Yeah, I may I may have you take that one offline I'm with Collyn and team on the specifics on the modeling.
Katie Patrick: Yeah, I may, I may have you take that one offline with Colin and the team on specifics about the modeling. You know, I can point to, I can just, I don't think you were on the CU call, but generally, we did highlight that we had a rough quarter for the renewables business. There are a number of conditions in Alberta, including drought, historically low wind averages, as well as merchant pricing given the turbulence in the market, which was very low. So those all contributed to a difficult quarter for our renewables. Yeah, and then maybe I'll just add that we can certainly take the even.
Katie Patrick: You know I can point to I can just then and I don't think you were on the <unk> call, but generally we did highlight.
Katie Patrick: That we had a rough quarter for the renewables business, you know theres a number of conditions in Alberta.
Katie Patrick: Drought.
Katie Patrick: Historically low wind averages as.
Katie Patrick: As well as you know the merchant pricing given the the turbulence in the market were very low so those all contributed to a difficult quarter for our renewables business.
Colin R. Jackson: Ben, maybe I'll just add that we can certainly take the EBITDA offline. The investor relations team and the Empower team are currently in discussions to see if there's perhaps some additional disclosure we can make in Q2 to help people understand the wind, hydrolysis, and solar profiles and the EBITDA a little bit better in those businesses. So stay tuned, and hopefully we'll have some slightly
Katie Patrick: Yeah, and then maybe I'll just add it we can certainly take the EBITDA offline.
Colin R. Jackson: The Investor Relations team and the empower team our.
Colin R. Jackson: In discussions currently to see if there is perhaps some additional disclosure we can make in Q2.
Colin R. Jackson: To help people understand the the wind.
Colin R. Jackson: Hydrolysis solar profiles and the EBITA little bit better in those businesses, so stay tuned and hopefully well have some slightly additional disclosure in Q2.
Speaker Change: Okay understood. Thank.
Speaker Change: Thank you.
Speaker Change: The next question comes from Mark She IV with CIBC capital markets. Please go ahead.
Operator: The next question comes from Mark Jarvi with CIBC Capital Markets. Please go ahead.
Mark Thomas Jarvi: Hi everyone. On structure and logistics, we saw a lower CapEx this quarter than we have seen in the last couple of quarters. Is there something there where you are running a little lower and that business starts to generate more free cash flow, or is there an expectation that investments will ramp up in the next quarter as you get back to sort of that CapEx profile we saw for the last couple of years?
Mark Thomas Jarvi: Yeah, Hi, Ron.
Mark Thomas Jarvi: Unstructured and logistics, we saw a lower capex this quarter than we've seen in the last couple of quarters is there something.
Mark Thomas Jarvi: There will you are running a little lower in that business starts to generate more free cash flow or is there an expectation that investments will ramp up in the next quarters, you'll get back to sort of that Capex profile. We saw for the last couple of years.
Mark Thomas Jarvi: Yeah, Hi, Mark Adam here.
Adam M. Beattie: Yeah, hi Mark, Adam here. Certainly. So what happened there is we obviously self-performed a lot of our fleet manufacturing, and we manufactured a number of sale trade projects during that period. So it slowed down a little bit of our capital; we redirected our priority into those sale trade projects. So that capital will catch up over the next few quarters. Understandable. Okay. And then we're still forecasting to spend on our annual
Adam M. Beattie: Certainly saw so what happened there is.
Adam M. Beattie: We obviously self perform a lot of our fleet manufacturing and we manufactured a number of style tried projects during that period.
Adam M. Beattie: So it slowed down a little bit of that capital of what you've redirected our priority into those style tried projects. So that capital will catch up back up over the next few quarters.
Speaker Change: Understood, Okay, and then you're still forecasting to spend on al <unk> Andy.
Adam M. Beattie: Realized budget.
Adam M. Beattie: Okay.
Mark Thomas Jarvi: And then when it comes to Triple M, can you just kind of, you know, maybe outline how that business has been tracked since you bought it in terms of revenue?
Adam M. Beattie: And then when it comes to Triple M. Can you just kind of you.
Mark Thomas Jarvi: You know maybe outline how that business has tracked since you bought it in terms of.
Mark Thomas Jarvi: With attorneys revenues in and just sort of the the housing policy aspect here in Canada, what's sort of the upside case could be in.
Mark Thomas Jarvi: One that would have you know.
Mark Thomas Jarvi: Sort of like relative to what you see as the base business in terms of then maybe the upside scenario on that business.
Adam M. Beattie: Look I think the business has been quite reliable quarter over quarter in their performance. They have a consistent backlog that's been quite realised probably above what our expectations were on initial acquisition so they've outperformed expectations so far to date. We certainly think the activity in the market or the demand, the housing supply and demand gap we'll see that continue over the next few quarters as we see more demand coming into their pipeline and also other external factors like some encouragement from the federal government around modular as a solution to part of the housing crisis, financial mechanisms that support first-time mortgage buyers and then also permitting and adjustments in policy municipal and local that could also encourage modular as a fast term solution for some of the housing gaps that we've seen.
Speaker Change: Look I think the business has been quite reliable quarter over quarter.
Adam M. Beattie: In their performance.
Adam M. Beattie: I have a consistent backlog that Spain quiet.
Adam M. Beattie: Realized probably above what our expectations were on initial acquisition, so they've outperformed expert expectations so far to date.
Adam M. Beattie: We certainly think the activity in the market all the demand that the housing supply and demand gap, we'll see that continue over the next few quarters as we see more demand coming into they had pipeline and also other external factors like some encourage.
Adam M. Beattie: I meant from the federal government around modular as a solution to a part of the housing process.
Adam M. Beattie: Financial mechanisms.
Adam M. Beattie: That support them first time mortgage bonds, and then also permitting and adjustments in policy municipal and local that could also encourage modular as a fast time solution for some of the housing gaps that what you're saying.
Adam M. Beattie: So is there like an LTM earnings that you can share for the carve out of triple them and then share what do you think a reasonable earnings trajectory growth rate should be.
Mark Thomas Jarvi: So is there like an LTM earnings that you can share to the carve out of triple M and then share what you think a regional earnings trajectory and growth rate should be?
Speaker Change: No not at this time Sir.
Adam M. Beattie: No, not at this time. Don't say that.
Adam M. Beattie: Yeah.
Adam M. Beattie: This concludes the question and answer session I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks. Please go ahead.
Operator: This concludes the question and answer session. I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks. Please go ahead.
Colin R. Jackson: Thank you so much and thank you to all of you for participating today. We appreciate your interest in Agco and we look forward to speaking with you again soon.
Colin R. Jackson: Thank you so much. And thank you to all of you for participating today. We appreciate your interest in ATCO, and we look forward to speaking with you again soon.
Speaker Change: This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Operator: Okay.
Operator: Yeah.
Operator: Yeah.
Operator: Yeah.
Operator: [music].
Operator: Yeah.
Operator: Uh huh.
Operator: Yeah.
Operator: [inaudible] Linda Ezergailis, Mark Jarvi, Maurice Choy, Adam Beattie, Benjamin Pham, Lawrence Gramson, ATCO Ltd.
Operator: [music].
Operator: Okay.