Q4 2024 Finning International Inc Earnings Call
Thank you for standing by this is the conference operator, welcome to the Finning International Inc. Fourth quarter 2024, Investor call and webcast. As a reminder, all participants are in a listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions analysts who wish to join the question you May Press Star and then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing star and then zero.
Speaker Change: I would now like to turn the conference over to Greg Palast, Chuck Executive Vice President and Chief Financial Officer. Please go ahead Sir.
Speaker Change: Thank you operator, good morning, everyone and welcome to <unk> fourth quarter earnings call. Joining me today is Kevin Clark, our president and CEO.
Speaker Change: During our remarks, we'll open the line to questions. This call is being webcast on the Investor Relations section of <unk> Dot com.
Speaker Change: We provided a set of slides on our website that we will reference an audio file of this call and accompanying slides will be archived.
Speaker Change: Before I turn it over to Kevin I would remind everyone that some of the statements provided during this call are forward looking.
Speaker Change: Please refer to slide 11, and 12 for important disclosures about forward looking information as well as currency and specified financial measures, including non-GAAP financial measures.
Speaker Change: Please note the forward looking information is subject to risks uncertainties and other factors as discussed discussed in our annual information form under key business risks and in our MD&A under risk factors and managements and forward looking information disclaimer.
Speaker Change: Please treat this information with caution as our actual results could differ materially from current expectations.
Speaker Change: Kevin over to you, thanks, Greg and good morning, everyone.
Kevin Clark: I'm pleased to talk to you today about 2024.
Kevin Clark: Following my remarks, Greg will provide more details about fourth quarter results.
Kevin Clark: I would like to express my gratitude to our employees for their commitment to making a positive impact of one another.
Kevin Clark: Our company, our customers and the communities in which we work.
Kevin Clark: Sure robust execution of our strategy, we are striving to build a strong resilient business in a safe and secure workplace.
Speaker Change: Please arent pad to build customer loyalty.
Kevin Clark: Please turn to slide two.
Kevin Clark: We are really pleased with Yahoo, gross about business, the geographic and market diversity all of that business was critical to asphalt defaults in 2024.
Kevin Clark: First they will remain important as we move through 2025.
Kevin Clark: Turning to slide four we grew net revenues by 6% over 2023 to $10 1 billion, a new milestone for our company by building equipment population and strengthening our product support capabilities and capacity.
Kevin Clark: Our product support revenue alone was $5 $5 billion and it's a record high and its approaching the same level as our entire company revenues in 2020.
Kevin Clark: This scale is a direct result of execution of our strategy and when combined with a simplified focused organization and operational discipline.
Kevin Clark: This has enabled us to unlock a new level of earnings capacity.
Kevin Clark: Our growth in 2024 was achieved through record high revenues in most lines of business led by strong new equipment sales of over 10% as well.
Kevin Clark: Used equipment sales of nearly 30%.
Kevin Clark: We also grew our hospital period of the year.
Kevin Clark: $550 million.
Kevin Clark: And accomplishment, we are very proud of which represents the diversity in our geographies and end markets and our partnership with caterpillar with strategically and critically important business.
Kevin Clark: In 2024, we grew product support revenue year over year by 2% led by a 6% increase in functional currency in South America.
Kevin Clark: Importantly, we are exiting the year with solid momentum in all regions with Q4 of 2024 consolidated product support revenues up 6% relative to Q4 2023.
Kevin Clark: In South America, excluding the impact of a weaker Chilean peso to U S. Dollar part support revenue was up 8% year over year in Q4 2024.
Kevin Clark: We continue to build capacity and capabilities to capture the opportunities in this growing market.
Kevin Clark: Nearly 358 net new technicians during the year.
Kevin Clark: In Canada, we saw product support levels stabilized quarter over quarter, reflecting strong activity levels in the power sector related to oil and gas activity and higher spending by mining customers offset by continued slower activity in construction.
Kevin Clark: Well, that's the point that you cannot just showing signs of improvement in Q4 with a year over year increase of 5% in functional currency.
Kevin Clark: With solid activity in rebuilds and power systems.
Kevin Clark: We continue to focus on maximizing product support revenues across all regions.
Kevin Clark: We are pleased with the progress we are making in building.
Kevin Clark: Great resilience into our business.
Kevin Clark: Our SG&A as a percentage of net revenue was 16, 3% a new low level.
Kevin Clark: This is a result of our continued focus on cost management across our business.
Kevin Clark: We also delivered significant free cash flow in the year of $865 million, while at the same time delivering $3.90 of adjusting items for sure.
Kevin Clark: The last time, we achieved this level of annual free cash flow our adjusted earnings per share was $1 14.
Kevin Clark: While we have made progress advancing our resiliency initiatives, we believe there's more opportunity for us to improve our cost structure and working capital efficiency and Greg will shine light as a result of that.
Kevin Clark: <unk> two increased invested capital velocity.
Kevin Clark: We're making progress against our strategic priority of sustainable growth, we continue to develop I used equipment capabilities, including launching fused equipment are brand agnostic online marketplace to expand our presence and participation in this important market.
Kevin Clark: And part of the system as we continue to see healthy demand processes with power systems revenues up 14% year over year with strong contributions from all regions.
Kevin Clark: Importantly, our power systems backlog was up 70% from the end of 2023 to approximately $860 million driven by a 150% increase in multi year datacenter backlog in the U K.
Kevin Clark: In Canada, we saw healthy activity in power systems in the oil and gas industry that drove a 15% increase in power systems revenues, while in South America. Other systems revenues were up 30% on strong oil and gas sector activity in Argentina, a data center deliveries in Chile.
Kevin Clark: Our rental business was softer than we anticipated.
Kevin Clark: Given by the softer construction activity in Canada.
Kevin Clark: But I want to reiterate we remain committed to growing this important line of business and the long term.
Greg Palast: Before I turn the call over to Greg I wanted to just share with you.
Greg Palast: More information about some visits of hundreds of agents this year.
Greg Palast: Two weeks ago I was in South America, and each time I visit on more and more impressed by the growing capabilities and the team's commitment to executing the strategy in the region.
Greg Palast: I had the pleasure of turning our expanded facilities Antofagasta region met with an ever growing team visited some critical and important customers and operations to discuss both execution and growth opportunities.
Greg Palast: We achieved record net revenues in 2024 in the region and we delivered backlog.
Greg Palast: Since our <unk> contracts.
Greg Palast: We are optimistic that our mining customers in the region will continue to refresh and expand the fleets in many cases incorporated and coal pricing autonomous and electrification solutions.
Greg Palast: We are definitely Melbourne mobilizing for growth in the region as we highlighted in our Investor day in September 2023.
Greg Palast: So I see for our business in the region in 2025 and beyond.
I also visited the U K, Northern last week, where I met with new members of our leadership team employees and customers.
Greg Palast: Pleasure traveling into island of Thursday, where obviously with the Christmas was recently awarded a significant agreement to supply new quarry in equivalent to multiple sites, both in Ireland and.
Greg Palast: Okay.
We then cross the road to visit Dice site, where we have supply when the 60 megawatts of standby power.
Greg Palast: We are supporting both of these sites with long term maintenance contracts.
Greg Palast: Despite continued soft market conditions and activity levels, we are showing signs of improvement in there in the region with solid order activity added to the backlog in the quarter.
Greg Palast: The <unk> team has done a great job in controlling the controllable margin costs in a lower growth environment and creating more sustainability in our operations.
Speaker Change: We're excited to promote guarded mcgarrah as managing director of the UK and auto dealership starting January of this year.
Speaker Change: Gary has more than 25 years' experience in the business and we strongly believe maybe he will continue to sustainably grow this resilient business.
Speaker Change: In Canada, we are seeing activity is modestly improve particularly in the oil sales. However, we remain cautious given the customer discipline.
Speaker Change: And the continued political landscape.
Speaker Change: We exited 2024 was substantially better Parker for sales and earnings before interest and tax and we believe the market should improve as we move through 2025.
Speaker Change: <unk> has assumed the role of president of our Canadian business.
Speaker Change: I am confident he will leverage the excellent work related to UK, and Ireland to accelerate our strategic execution and our largest dealership.
Speaker Change: Our focus in 2025 will remain squarely on executing our strategy to maximize product support drive full cycle resilience and grow I used rental and power business is to improve our return on invested capital.
Speaker Change: With that I'll hand, it back to Greg.
Greg Palast: Thank you Kevin.
Greg Palast: Turning to slide three.
Our Q4 net revenue of $2 6 billion was up 7% from Q4 of 'twenty three led by strong growth in new equipment sales and product support revenue.
Greg Palast: It was down 4% from Q4 'twenty three adjusted EBIT 2220, $3 million, primarily due to lower earnings in our Canadian business, partially offset by substantial improvements in the UK and Ireland.
Greg Palast: EPS of $1 two was up 7% for Q4 of 23, adjusted EPS to a record level for Q4, reflecting our cost and capital resilience on with the benefit of a lower share count.
Greg Palast: Overall, we're pleased with our fourth quarter performance marked by healthy customer activity in the mining and power sectors as well as diligent execution of our strategy across all regions.
Greg Palast: Our South America team delivered double digit year over year product support growth revenue growth, our Canadian team demonstrated strong resilience, despite challenging market conditions and achieve sequential EBIT improvement in our UK and Ireland more than double the EBIT compared to Q4 of 'twenty three.
Free cash flow delivery continued in the fourth quarter at nearly $400 million.
Greg Palast: I'm now turning to slide four.
Greg Palast: We showed changes in our net revenue by line of business compared to Q4, 'twenty three and the composition of our equipment backlog by market sector.
Greg Palast: Net sales were up 12% driven by strong mining deliveries in South America, a power project activity in the UK and Ireland.
Greg Palast: Rental revenue was down 14% from reduced fleet size and lower utilization levels.
Greg Palast: Product support revenue was up 6% with solid growth in South America, and the U K and Ireland.
Greg Palast: Our equipment backlog of $2 6 billion at the end of December was up 27% from the end of 'twenty, three and up 14% from the end of September of this year sequential backlog build reflected strong Warner order intake from mining and construction customers, while deliveries continue to be efficient.
Greg Palast: Turning to EBIT performance now on slide five gross profit as a percentage of net revenue was down 140 basis points, primarily due to higher proportion of lower margin mining equipment deliveries in both South America and Canada.
Greg Palast: Meanwhile, we remain focused on cost control with SG&A as a percentage of net revenue down 30 basis points to 16%.
Greg Palast: We'll continue to build on this momentum to achieve a more resilient cost structure and drive higher earnings capacity going forward.
Greg Palast: Q4, EBIT as a percentage of net revenue was 10, 9% and South America, eight 1% in Canada, and five 8% in the UK and Ireland.
Moving to our South America results and outlook, which is summarized on slide six.
Greg Palast: In functional currency equipment sales were up 29% from Q4 of 23, driven by strong strong mining deliveries.
Greg Palast: Product support revenue was up 10% driven by strong demand for mining and oil and gas customers.
Greg Palast: EBIT was comparable to Q4 of 23, adjusted EBIT and EBIT as a percentage of net revenue was down 170 basis points, primarily due to a higher proportion of lower margin mining equipment deliveries, partially offset by lower SG&A as a percentage of revenue.
Greg Palast: Our Argentina operations remain profitable throughout the year.
Greg Palast: Our outlook for Chilean mining remains strong underpinned by growing demand for copper and strong copper prices as well as solid levels of quoting tender and award activity in the mining equipment and product support space productivity levels and outlook remains positive. We continue to expect continued challenging environment in attracting and retaining qualified labor.
Greg Palast: In Chile, we continue to see healthy demand for large from large contractors supporting mining operations and we expect infrastructure construction activity remains steady.
In the power system sector activity remains strong in the industrial and data center markets.
Greg Palast: In Argentina, we continue to take a low risk approach and closely monitor the government's new rules and policies at the same time, we're also positioning our business to capture potential growth opportunities in oil and gas and the mining sector.
Greg Palast: Yeah.
Greg Palast: I'm now turning to Canada on slide seven.
Greg Palast: New equipment sales were down 3% from Q4 of 23 with slower activity in the construction sector.
Greg Palast: Equipment sales were up 15% with strong growth in mining and power sectors, reflecting execution of our strategy.
Greg Palast: Product support revenue was comparable to Q4 of 23 with higher activities in the power sector related to oil and gas and higher spending by mining customers offset by continued slower activity in the construction space.
Greg Palast: EBIT was down 17% from Q4 of 'twenty three adjusted EBIT EBIT as a percentage of net revenue was down 160 basis points, primarily driven by higher proportion of lower margin mining equipment deliveries.
Greg Palast: As noted last quarter margin recovery in the used and rental sectors is expected to take several quarters. Thus these lines of business also contributed to lower margins in Q4.
Greg Palast: In terms of outlook, we expect continued spending discipline from our large mining customers as they work to achieve operating cost targets going forward based on customer commitments and discussions we anticipate stable demand for product support.
Greg Palast: The recent government changes and announcements in Canada, and the U S create additional uncertainty for our business and our customers regarding tariffs and exchange rate fluctuations.
Greg Palast: In response to a near term market environment of slower growth and higher uncertainty.
Greg Palast: We are focused on managing working capital levels and evaluating opportunities to create further sustainable cost efficiency, specifically, we're excited about the opportunity to further improve our cost structure in Canada, leveraging the structural changes and overhead reduction strategy demonstrated in our UK operations.
Greg Palast: Please turn to slide slide slide eight of our results on UK and Ireland.
Greg Palast: In functional currency, new equipment sales were up 11% compared to Q4 of 23, driven by strong project activity in the power sector.
Greg Palast: Our UK and Ireland team demonstrated resilient strategic execution this quarter with solid year over year product support revenue and EBIT growth.
Greg Palast: Support revenue was up 5% driven by strong capture of rebuild opportunities as well as improved activity in the power sector.
Greg Palast: EBIT more than doubled from adjusted EBIT in Q4 of 23 with higher new equipment and product support revenue, coupled with 8% lower SG&A through execution of structural changes and overhead reductions to our cost base.
Greg Palast: EBIT as a percentage of net revenue was up 310 basis points from Q4 of 23 adjusted EBIT.
Greg Palast: With improvements in both gross profit and SG&A as a percentage of net revenue.
Greg Palast: We expect demand for new construction of Covid in the UK and Ireland to remain soft in line with low projected GDP growth. We continue to expect a growing contribution from used equipment and power systems and resilient product support as we execute our strategy.
Greg Palast: Please turn to slide nine for an update on our invested capital progress.
Greg Palast: It has been a year since our 2023 Investor day, where we laid out our refreshed strategic priorities.
Greg Palast: Yes.
Greg Palast: We saw execution momentum, particularly exiting.
Greg Palast: 2024, as with digital diligently carried out our strategic plans.
Greg Palast: Alongside our milestone achievements in SG&A free cash flow generation and substantial growth in used equipment at power systems I'd like to share an update on our progress on our invested capital reduction journey.
Greg Palast: We're making progress on our focus to improve invested capital position as an example, 2020 force our free cash flow exceed net income by nearly $360 million.
Greg Palast: On the left hand side, we have listed three major categories of opportunities in action items to improve our invested capital for our 2023 Investor day.
Under the exited optimize category, we have been continuously evaluating lower ROIC activities and we have significantly reduced our run rate spending and operating costs also successfully completed the optimization of our UK pension in Q4, 2024, and we continue to seek and review further opportunities for improvement.
Greg Palast: For real estate sale of our South American Master plan has been proceeding on track. We've completed the planned facility sales and are currently near completion of our new facility in that for gas to region that will add incremental capacity.
Greg Palast: This will strengthen the quality and efficiency of our product support offerings as well as continue to service the expanding an aging equipment population in the region.
Greg Palast: In Canada.
Greg Palast: <unk> conducted and reviewed our facilities and proceeded with several land and building sales to optimize our footprint.
Greg Palast: Moving to the largest dollar opportunity category, increasing working capital velocity.
Greg Palast: We're seeing solid progress driven by fundamental operating improvements or new equipment preparation velocity has significantly improved as reflected in a 11% year over year no equipment revenue growth in 2024, while at the same time, new equipment inventory levels reduced by 23% and December 24 versus 23.
Greg Palast: We're also pleased with our efficient backlog deliveries throughout the year in some instances we started to deliver equipment on award awarded deals before it hit backlog.
Greg Palast: We continue to optimize our service work in progress balance as well as work on expedited invoicing and improving collections management.
Greg Palast: We restructured and streamlined our remanufacturing operations in Canada.
Greg Palast: And we've made considerable progress in improving parts velocity and reducing in transit times and.
Greg Palast: In Chile, we implemented auto store, which is a robotic warehouse automation system that enables lower cost and improved speed and accuracy of fulfilling customer orders currently over 50% of our parts orders in chili's utilize the system.
Greg Palast: And our Edmonton parts distribution center in Canada, approximately half of the total parts volume to customers flow through our automated vertical lift modules and vertical buffer modules, which also enhance both the efficiency and accuracy of our fulfillment process.
Greg Palast: Overall, our invested capital at the end of 'twenty, four was down $200 million compared to 2023, and our business has grown.
That's a full year net revenue exceeding 10 billion. We are encouraged by the progress to date on improved capital efficiency. We're very pleased with the resilient free cash flow performance. However, we still have significant room for continued improvement in invested capital turnover, which will lead us to sustainably higher overall ROI, we look forward to making continued progress here in 2025.
Kevin Clark: I'm now going to turn the call over to Kevin for some concluding comments.
Kevin Clark: Thanks, Greg.
Kevin Clark: To summarize 2024 was another strong year for <unk>.
Kevin Clark: We have built a stronger more resilient company.
Kevin Clark: We continue to grow sustainably with improved resilience, including substantial free cash flow of $865 million, which is well in excess of our net income.
Kevin Clark: Our balance sheet is healthy with a net debt to adjusted EBITDA of $1 five clients and we continue to return capital to shareholders via share repurchases and dividends.
Kevin Clark: Importantly, we exited the year with strong momentum included record Q4 earnings.
Kevin Clark: Over $1 per share, while concurrently generating Q4 free cash flow of nearly $400 million.
Kevin Clark: We're also building our backlog to a near record $2 6 billion.
Kevin Clark: Driven by the diversity of our end markets.
Kevin Clark: Mining of 41% and power systems up 72%.
Kevin Clark: We exited the year with positive product support growth and improved earnings capacity.
Kevin Clark: We believe these solid outcomes are a result of robust strategic execution, our diverse and attractive end markets and laying the foundation for long term sustainable growth and positive impact.
Kevin Clark: Operator, I'll now turn the call over to you for questions.
Speaker Change: We will now begin the question and answer session analysts who wish to join the question you May Press Star then one on the telephone keypad, you will hear a tone acknowledging your request.
Kevin Clark: If you were using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star then two.
Kevin Clark: We will pause for a moment as callers join the queue.
Speaker Change: And your first question today will come from <unk> Khan with RBC. Please go ahead.
<unk> Khan: Great. Thanks, and thanks, and good morning, just I guess, if you can say you can talk about it I know you guys don't have official guidance, but just given the puts and takes on the guidance.
<unk> Khan: Can you maybe just talk about maybe the margin profile heading into 2026.
<unk> Khan: Part of that is likely going to be driven by mix. So I'm just curious based on your outlook today, what's your expectations are for product support mix and maybe the direction of the margin through this year.
<unk> Khan: Obviously, a highly we're not we're not adding any extra guidance I mean overall, we continue to focus on the strategy right, which is to grow our product support business to the maximum degree.
<unk> Khan: As we highlighted last quarter continue to be really optimistic about the growth rates in South America in Q4 was obviously excellent.
<unk> Khan: If you can on the slower growth and in the economy, but really delivered well to end the year and have some good momentum and in Canada, there is a bit wider range.
<unk> Khan: And the mix been dependent on some of the customer spending patterns as well as just overall economy.
<unk> Khan: Product support continues to be the focus continue to drive resilience cost and capital and then growth focus on used rental and power. So that continues to be the frame and.
<unk> Khan: And overall, we continue to be very optimistic.
<unk> Khan: And then maybe just looking at Canada, specifically I think you called out of its current spending environment, focusing a bit more on costs and how much more runway do you see on that front to take costs out of that geography does to rightsize. It for your outlook for second patterns over the next little while or is it is it more.
<unk> Khan: Driving product quarter, a mix of both.
<unk> Khan: So what are the focus areas and how much each of those two buckets.
<unk> Khan: Right.
<unk> Khan: Yes, I Couldnt class most of the second bucket book sorry, Yes.
I guess would that geography likely impacted by lower product support makes as well I'm just curious as you look ahead.
<unk> Khan: How much contribution do you expect maybe better mix over the next few years versus cost reduction on the <unk> side.
<unk> Khan: Sorry about that.
<unk> Khan: We expect it to come from both we're encouraged by the sequential improvement in product support in the region and as we've said before our outlook Hasnt changed.
<unk> Khan: We call it a slow and steady in Canada, obviously, it's impacted by a lot by the.
<unk> Khan: Oil sands producers, who continue to exhibit discipline in the way that we're running the business, which we which we encourage and with which we are endeavoring to support.
<unk> Khan: But we do see some encouragement in that space.
<unk> Khan: Equally as well.
<unk> Khan: Would you tend to get reset at the start of the year typically leads to more normalized spending behaviors.
<unk> Khan: And so we're encouraged by that.
<unk> Khan: I also believe there is a fair degree of self help in terms of capturing more market share in Canada, and attracting the cost of capital that are required and appropriate to two whatever.
<unk> Khan: Product support business level of activities are in that region.
<unk> Khan: That's why you see you've seen us move came into that region. We believe that you've got a track record of balancing those two things as demonstrated by the UK and audited.
<unk> Khan: Our results.
Speaker Change: <unk> is about four weeks into the job, but he spent most of Q4 in Canada.
<unk> Khan: So we encourage that.
<unk> Khan: There is opportunity to increase product support sales and AR and.
<unk> Khan: An improving market, but we would say as we said last quarter, we think there's a couple more quarters of.
<unk> Khan: Softness in that.
<unk> Khan: There's some self help in terms of energizing the sales teams and getting that and winning market share.
<unk> Khan: There is an opportunity to ensure our cost of capital base is appropriate to both support that product support growth and to increase the resiliency in the Canadian business.
<unk> Khan: Okay, and just one last quick one theres some commentary out in the industry about pricing I think I've talked about a little bit at the last quarter. How is the pricing environment in each of the three use or is it at least stabilized as you head into 2025 or is it still dynamic.
<unk> Khan: For the machines.
<unk> Khan: I think I mean, I always say this right the pricing is dynamic as you're talking it's always dynamic but.
<unk> Khan: We have to be competitive in the markets that we serve and we believe we are competitive in the markets we serve.
<unk> Khan: We are a premium.
<unk> Khan: But those competitive those premiums have to be in the competitive range I would say that if you look at the backlog build quarter over quarter sequentially and year over year that would suggest we are well positioned for that we have some externally accredited market share figures, which we would be encouraged about as well.
<unk> Khan: And even in Canada, we are seeing sequential quarter.
<unk> Khan: Backlog built more than 20%.
<unk> Khan: I know the price sensitive market, obviously is the U K.
<unk> Khan: We saw sequential improvement in <unk>.
<unk> Khan: In fact, one day, if I can construction in the U K the backlog.
<unk> Khan: Around 40%, both year over year and quarter over quarter, So that would suggest that we're well positioned.
<unk> Khan: From a pricing perspective.
<unk> Khan: But we're committed to selling our premium premium services.
Speaker Change: Your next question today will come from Steve Hansen with Raymond James. Please go ahead.
Steve Hansen: Yeah. Good morning, guys. Thanks for the time.
Speaker Change: Greg you outlined your capital improvement plan.
Speaker Change: The progress to date it looks like you got an extra 200 plus million still to go there.
Speaker Change: Do you have sort of a timeline on how quickly you think you can get there through the balance of the opportunity.
Speaker Change: Yes, it's going to be continuous focus throughout the year.
Speaker Change: We're pleased with the cash flow performance, but a lot of ways. We're just getting started if you look at sales to working capital our working capital to sales. Please.
Speaker Change: Pleased to get it down to $28, one which is better than 30, but it's certainly not back to that kind of 25 level that we've been in the past and want to get back to you. So.
Speaker Change: Just a lot of running room left and we want to get after as much of that within the calendar year as we can.
Speaker Change: Of course, there is regular seasonality.
Speaker Change: And you know theyre selling season to start the year here, but through the rest of the year similar to this year, we want to put consistent points on the board in Q2, three and four.
Speaker Change: Helpful. Thanks, Ed.
Speaker Change: Going back to the can the Canadian side and product support not trying to parse words.
Speaker Change: Apologize, but I think I think the commentary in general is fairly balanced mix of described in the MD&A. Given I think you said you would see some improvement through the year.
Speaker Change: In your prepared remarks, but you also suggested there could be a couple more quarters of softness or can we see positive growth in product support.
Speaker Change: Under in 25 is that a possibility.
Speaker Change: Absolutely yeah.
Speaker Change: Yeah.
Speaker Change: We're comfortable we can grow product support in Canada in 2025, the sequential improvement.
Speaker Change: <unk> to that.
Speaker Change: Why not with the.
Speaker Change: Ton of energy from Tim and the team that he's building and.
Speaker Change: Really strong support from our partner Caterpillar.
Speaker Change: Look I think I want to make sure that people discontinued dissipating the wider Christmas spending is a good thing drives sustainable.
Speaker Change: Mining business.
Speaker Change: And we.
Speaker Change: It's our role is to support.
Speaker Change: <unk> customers be competitive everyone really effective operations.
Speaker Change: As we've said.
Speaker Change: The turn of the calendar year.
Speaker Change: We do see some room refresh bush.
Speaker Change: Budgets.
Speaker Change: Some catch up.
Speaker Change: But I don't see dramatically improving.
Speaker Change: But we do we would have a level of optimism around not mining side of the business. The continued softness over the next two quarters release.
Speaker Change: <unk> has a new construction season starts in Canada, it's always really important to see.
Speaker Change: Has that side of the business gets going with that.
Speaker Change: What's the weather improves and clearly there is a lot going on in the Canadian markets right now, which we are monitoring very very closely as well so.
Speaker Change: But that softness really is more a function of that continued softer activity in construction I would be a little bit more encouraged about the outlook for mining, but the combination of that.
Speaker Change: And the renewed energy from Tim is the focus.
Speaker Change: Means that we are pretty confident that we can grow products are fully kind of during 2025.
Speaker Change: That's great color. Thanks, I appreciate that.
Speaker Change: Anthony.
Speaker Change: Your next question today will come from Yuri Lynk with Canaccord Genuity. Please go ahead.
Yuri Lynk: Good morning, guys nice quarter.
Speaker Change: Thank you.
Speaker Change: Can you talk a little bit about the both the rental.
Speaker Change: Markets.
Speaker Change: Canada.
Still seeing some contraction there.
Speaker Change: Yet you are planning to add more fleet.
Speaker Change: Just wondering what gives you the visibility to to move ahead with that capital plan.
Speaker Change: Yes sure here is that it's important to note that as we've said a few times that our rental line of business as you see in our financials.
Speaker Change: Is more diverse.
Speaker Change: You would see in other rental businesses. So we have heavy rents and we have rental purchase options as well so I would say that.
Speaker Change: We are happy with.
Speaker Change: The way that we build into the plan for rental as I mentioned on the last call. We provided as we strengthen the team by adding a new vice president of rental services.
Speaker Change: <unk> is working hard to his main priorities that he is working on right now is optimizing the fleet and the returns.
Speaker Change: Profile from that fleet, hence why you need to invest to make sure you're optimizing that fleet regardless of.
Speaker Change: Have you seen demand play out.
Speaker Change: So he is doing that is all still building sales and operational coverage.
Speaker Change: And also developing a compelling.
Speaker Change: <unk> proposition for what is rental particularly in Canada.
Speaker Change: So I would say that.
Speaker Change: I guess my question is if you see this you still seeing the softness why why are you thinking about investing two reasons, we have to reframe and realign and optimize the fleet and that will take some investment and the second thing is we believe regardless of softness in that space we have.
Speaker Change: Incremental quite substantive market share opportunities to go after and so.
That's the reason why you see that.
Speaker Change: That level of investment.
Speaker Change: Okay.
Speaker Change: Last one from me just wanted to shift to South America.
Speaker Change: You mentioned oil and gas increased oil and gas.
Speaker Change: And market activity as a driver in the quarter I don't recall that end market.
Speaker Change: Being cited before so maybe just a little more detail on.
Speaker Change: It's Argentina, but what youre seeing there and how sustainable that oil and gas activities.
Speaker Change: Yes, sure so I mean oil.
Speaker Change: Oil and gas.
Speaker Change: The oil and gas opportunity in Argentina has been around for decades, we started to see that developing.
Speaker Change: To develop probably five or six years ago, we actually share.
Speaker Change: In the past.
Speaker Change: Substantial investments in the new K region, which is the Vaca <unk> basin and.
Speaker Change: We continue to see be optimistic and see development in the area and Thats only been.
Speaker Change: Accelerated.
Speaker Change: Given the change of government.
Speaker Change: In Argentina, and so the opportunity continues to gather more and more momentum.
Speaker Change: We continue to see that come through product support in Argentina, but also in terms of backlog build for four engines and transmissions.
Speaker Change: To support the development of the oil and gas sector.
Speaker Change: It's a key strategy for the Argentinian government to develop those resources to become a net exporter of those resources.
Speaker Change: In the region.
Speaker Change: We are super well place to to support outlook.
Speaker Change: That's great I'll turn it over there guys. Thanks.
Speaker Change: Right.
Speaker Change: And your next question today will come from Jonathan <unk> Goldman with Scotia Bank. Please go ahead.
Speaker Change: Hi, good morning, Thanks for taking my questions.
Speaker Change: Given all the recent headlines around tariffs have you noticed any change customer behavior thinking or conversations around capital investment.
Speaker Change: Due to a higher level of uncertainty.
Speaker Change: No not yet Jonathan.
Speaker Change: The last two to three weeks has been a period of listening and learning.
Speaker Change: Educating for sure aware.
Speaker Change: We're also looking at mitigation.
Speaker Change: Tariffs came in but we're certainly encouraged by.
Speaker Change: The announcement that they were going to be paused for a while to allow fulfillment sensible.
Speaker Change: <unk> dialogue I think between the two administrations.
Speaker Change: Look as we think about tariffs from a from my perspective, and we've done a ton of work on this but from my perspective, it doesn't change it and we've got.
Speaker Change: Our strategy is designed to.
Speaker Change: Withstand challenges in the market both in terms of growing that resilient part of our business parks support.
Speaker Change: And driving more resilience into our business. So as it relates to team and strategy in the UK North Sea changes in fact, all this dose is served to provide more urgency to accelerate that strategy.
Speaker Change: But also it is also important to understand that diversity diversity in our end markets.
Speaker Change: Shelter us to a certain degree from that being off that business being outside of the geographies that are.
Speaker Change: <unk> tariffs.
Speaker Change: Our earnings growth right now is coming from those of the region, so important to realize that but long term.
Speaker Change: We are optimistic and we feel that this this discussion and the dialogue that is happening right now will be good for Canada.
Speaker Change: In terms of.
Speaker Change: We are working on developing resources building infrastructure.
Speaker Change: Energy.
Speaker Change: And I think this management team has a track record of managing through challenges in the coming out the other side of them stronger.
Speaker Change: As a business with stronger customer relationships and loyalty and more resilient and reliable results. So.
Speaker Change: I guess my answer to the question is yes, we of course as you would expect we're doing a ton of work.
Speaker Change: But we're just focused on our strategy and the execution, it's designed to withstand.
Challenges like this.
Speaker Change: That's really helpful and I guess my second question, maybe a little more nearer term can you provide any color around how equipment margins are trending now relative to 2019 levels.
Speaker Change: Alright, so relative to 2019, I mean, obviously you have seen.
Speaker Change: A mix shift to product support which is always helpful haven't grown that business to the extent we have since 2019.
Speaker Change: Super Helpful. And then really it's a lot of it is SG&A right. So to hit 16% in Q4 is obviously a good place to be when you compare that to 2019, which is probably more around that 19% level. That's a good chunk of the earnings capacity that we gain and so where we are.
Speaker Change: We're very focused on continuing that and improving upon that so.
Speaker Change: I'd say on the gross profit side it would be more mix, that's moved towards product support and really grown that business and then it's the SG&A.
Speaker Change: Structural improvements that are really driving to the bottom line and we'll look to continue to focus on that as Kevin highlighted.
Speaker Change: I'm not sure whether you said machine margins there were new equipment.
Speaker Change: <unk> disclosed that and I would just point you back to my previous answer to save.
Speaker Change: Dr competitive premiums.
Speaker Change: He is in the company.
Speaker Change: Our new equipment margins.
Speaker Change: Been largely stable.
Speaker Change: Of course that different by end market.
Speaker Change: And type of product, but we have to be well positioned and competitive.
Speaker Change: And I think our backlog build reinforces that we are.
Speaker Change: Okay. Thanks for the color guys.
Speaker Change: Got it.
Speaker Change: Your next question today will come from Cherilyn Radbourne with TD Cowen. Please go ahead.
Cherilyn Radbourne: Thank you very much and good morning.
Speaker Change: I think it's been the product support side.
Cherilyn Radbourne: Glen.
Cherilyn Radbourne: Earlier than it used.
Cherilyn Radbourne: USD 24 billion.
Speaker Change: The weight of an aspirational target of EUR $28 million.
Cherilyn Radbourne: 26.
Cherilyn Radbourne: In light of that are there things that we'll be doing in concert with dealer.
Cherilyn Radbourne: Alright.
Speaker Change: Good morning import growth.
Cherilyn Radbourne: Including rebuild in 2025.
Cherilyn Radbourne: 100% sure Cherilyn I mean that the.
Speaker Change: Obviously, we saw product support growth levels.
Cherilyn Radbourne: Soften.
Cherilyn Radbourne: 2024, probably a little more outside of Chile, a little more than we anticipated that's the only serve to.
Cherilyn Radbourne: Re energize and refocus the whole enterprise, including Caterpillar.
Cherilyn Radbourne: Our teams are working daily closely together.
Cherilyn Radbourne: To both <unk> and to look for new ways.
Cherilyn Radbourne: Two to improve that gross support trajectory on the way to that really critical $28 billion target.
Cherilyn Radbourne: <unk> saw a significant.
Cherilyn Radbourne: And largely in that regard and we tie that responsibility really seriously and we get the.
Cherilyn Radbourne: The subsequent support.
Cherilyn Radbourne: And.
Cherilyn Radbourne: And encouragement from a from a part of caterpillar in terms of.
Cherilyn Radbourne: Making sure that we are playing a role.
Cherilyn Radbourne: Delivering on a really important target, but I would say that the level of energy and focus around.
Cherilyn Radbourne: Product support growth.
Cherilyn Radbourne: Within the enterprise is as high as it's ever been.
Cherilyn Radbourne: Okay. That's helpful.
Cherilyn Radbourne: And then I don't want to jump ahead too much but.
Cherilyn Radbourne: Can you give us any color on the learnings that you've seen.
Cherilyn Radbourne: Can be taken from the UK and Ireland and be adapted to Canada.
Cherilyn Radbourne: Yes sure.
Cherilyn Radbourne: It's not rocket science.
Cherilyn Radbourne: As I said, Timna Tianjin kind of weak for us just moved into phase Edmonton base.
Cherilyn Radbourne: Which is really important is going to be super close to the team that.
Cherilyn Radbourne: But he did spend most of Q4 in Canada.
Cherilyn Radbourne: I think its priorities.
Cherilyn Radbourne: B, making a standalone on safety.
Cherilyn Radbourne: Our opportunities to improve our safety performance in Canada, and there is a lot we can learn from the UK and Ireland.
Cherilyn Radbourne: In that regard so.
Paul: Paul We don't pass that because safety is.
Paul: Most critical responsibility I know you spent a ton of time meeting with the team.
Paul: He's already.
Work towards simplifying prior.
Paul: Prioritizing the org structure is added three new members to the <unk> all internal.
Paul: Recruit some more of our internal strengthening of the team that.
Paul: And then the next focus is energizing our sales teams meeting with customers, making sure we're on the front foot.
With that Chris Smith, and you saw that the energy that team drove in to your previous question.
Paul: I mean energy bought to the table support growth.
Paul: In the UK and Ireland really starting to take hold in the second half of last year. So I think pick that playbook in.
Paul: In Canada.
Paul: And of course, then there is the.
Paul: Cost and capital optimization.
Paul: No.
Paul: I'll ask myself.
Paul: Canada is a heavier business in that regard.
Paul: Different business for sure.
Paul: So it's not an exact.
Paul: <unk> repeat.
Paul: Opportunistic, but theyre off theres, there are opportunities to bring fresh perspectives and to challenge everything.
Paul: To make sure that we're not.
Paul: Not losing they saw it or taking advantage of this opportunity.
Paul: <unk>.
Paul: Thank.
Paul: And I asked the question about how we could run the Canadian business differently. So.
Paul: That's how I would summarize the work that he has got in front of him.
Paul: It's not an exact playbook.
Paul: Pretty pretty simple.
Paul: That's helpful. That's my two thank you.
Got it.
Speaker Change: Your next question today will come from Christopher <unk> with CIBC. Please go ahead.
Christopher <unk>: Alright, Thanks for taking my question.
Paul: If I can just follow up on.
Paul: Argentina, so it seems like things are slowly starting to improve there.
Paul: As fitting.
Paul: Adjusted.
Paul: Maybe not.
Paul: Not necessarily how youre thinking about it.
Paul: Any incremental investments in Argentina are still taking a bit of bad.
Paul: Approach there.
Paul: Okay.
Paul: Yes, I mean certainly from a.
Foreign exchange perspective, we're keeping our risk extremely low and we will continue to take proactive steps to make sure that that risk is in check.
Paul: But the business opportunities are improving.
Paul: Theres midterm elections, this year that will provide the full mandate and give even more visibility.
Paul: So keep an eye on that and we'll keep our risk low, but yet oil and gas as we talked about earlier or mining, there's a lot of even public Canadian companies talking about some pretty significant large investments and.
Paul: And so some of our recent investor slides, we've highlighted a couple of investments we've made in terms of.
Paul: The mining side.
Paul: On the back of motor shale side, so a little bit of a physical footprint.
Paul: Improvement certainly happy that we preserved our capacity through the last couple of years, even through the volatility.
Paul: So it will take a low risk approach, but as we've highlighted before we think the option value of that business continues to go up.
Paul: And certainly some larger scale opportunities that continue to grow and mature and become more serious so.
Paul: Some encouragement there will balance the risk reward, but definitely net encouragement.
Paul: I'll just add Chris that we're really proud of the team in South America, particularly Argentina highlighted modest the last.
Paul: 18 loans, we talked about at our option value and make sure that we're still retiring not false positioning ourselves for.
Paul: Roasting thoughtful growth, we've talked about the lack of water in the oil and gas and not beyond that as mining and call for opportunity. So we're well placed to take advantage of those opportunities but were the team are running a really disciplined and thoughtful business down there and Oh I'll go directly to sign up.
Paul: How much we appreciate that.
Paul: Great. Thanks, and then just the last one from me.
Speaker Change: Obviously, a pretty strong performance in the UK and Ireland. This quarter do you view that as sustainable as we look out through 2025.
Paul: Thank you.
Paul: Yeah.
Paul: So.
Paul: It's important to note that the product support mix.
Paul: <unk> in the U K, it's still not at the level of the other two dealerships, but as per our strategy.
Paul: Product support mix.
Paul: A portion of total sales continues to increase so does your absorption.
Paul: And so that is a great enabler for sustained.
Paul: Into performance.
Paul: Dynamic.
Paul: Market and we have to retire the agility and the discipline of execution and cost management, because the market can move around very quickly.
Paul: Over that but as I said I think this.
Paul: I thought if I think about the UK business now and I think about.
Paul: The product pool mix the mix of Walter data center opportunity as I mentioned.
Paul: Previously.
Paul: Kay.
Paul: Backlog year over year for multi data center.
Paul: 50%, that's multi year goes out a couple of years as I said in my remarks.
Paul: The pleasure of visiting.
Paul: Big Cement works and then crossing the road and go into.
Paul: A huge data set to build that we're working on.
Paul: That represents.
Paul: A different thinking you kind of out of business.
Paul: And.
Different possible forward for that business in the quarter.
Paul: Remarkable what I never thought I'd say a day when I went to a cement works across the route and let's see a huge data set to build and that just plays to the diversity of our business now in <unk>.
Paul: The teams have done to position themselves in these growth markets.
Devin Dodge: Your next question today will come from Devin Dodge with BMO capital markets. Please go ahead.
Devin Dodge: Yeah. Thanks, good morning.
Devin Dodge: I wanted to start with a comment that we've seen in the outlook for South America for the last while specifically around a more competitive labor.
Speaker Change: Market for qualified technicians I'm just wondering if you can give us a sense for how retention in wage inflation has been tracking there and just can you remind us how easily these cost pressures can be passed through to your customers on some of those long term contracts.
Devin Dodge: Yes sure.
Devin Dodge: I think I'm pretty consistent in this regard.
Acquiring and retaining skilled technicians as being.
Devin Dodge: That's been a constant.
Devin Dodge: Challenge and opportunity for the 30 years that I've been around.
Devin Dodge: The work that we do it in South America types that to a whole new level.
Devin Dodge: As I said in my remarks, Devin obviously in all of the big.
Devin Dodge: Big mine site, two weeks ago, and as you know I need to get a bit of a medical check before you go in there are bumped into three new.
Devin Dodge: Women that have joined our company.
Devin Dodge: From outside of the industry to help us without the support of that growth. So I'm really pleased with how the team are approaching that recruitment drive looking at slide of traditional pools.
Speaker Change: Sure we have the right.
Devin Dodge: Where.
Devin Dodge: Looking into the REIT gender diversity, which is a big opportunity for us.
Devin Dodge:
Devin Dodge: And so it really is I mean.
Devin Dodge: It's.
Devin Dodge: Really innovative and structured approach, we're applying in South America.
Devin Dodge: Our retention is challenging.
Devin Dodge: It's a it's an enterprise right. It's I guess the word people use it as an ecosystem of technicians.
Devin Dodge: Understand that.
Devin Dodge: <unk> move around that part of our role is to strengthen the overall technician base.
Devin Dodge: So we're always mindful of our turnover rates.
Devin Dodge: But outside that are abnormal or acceptable levels.
Devin Dodge: And then finally on costs.
Devin Dodge: And negotiations, we often I think we are going to be negotiating with some really important unions. This year.
Devin Dodge: Across the company, but particularly in Chile.
Devin Dodge: What else that two weeks ago. It was a big part of the discussion not just.
Devin Dodge: Meeting with technicians and ensuring that they have been and that there are pleased to be part of our company, but also meeting with the team who are going to be negotiated with the unions to make sure. We've got a solid plan.
Devin Dodge: I was really pleased by the level of productivity there.
Devin Dodge: We're going to try and get out ahead of that to avoid any kind of compressed timelines or or.
Speaker Change: Paul I'd call it stops.
Devin Dodge: And as a company.
Speaker Change: We're committed to.
Speaker Change: To fab balanced agreements for the loan volume successive.
Speaker Change: Of our people.
Speaker Change: Copenhagen and <unk>.
Speaker Change: The ability to pass it through in Chile.
Speaker Change: Definitely we have the opportunity that that we pass through it.
Speaker Change: It doesn't mean that we don't want we don't negotiate in.
Speaker Change: And carefully we're very thoughtful about the value proposition that our labor and important part of life applies and that value proposition, but we do have the ability to pass that through particularly in the Chilean mining contract. So hopefully that helps them.
Speaker Change: So it does that was excellent color. Thank you for that.
Speaker Change: Second question, just wondering if you could speak to the mix of rebuilds that you saw in Q4 and if it continued to be tilted more towards smaller machines and just wondering how that.
Speaker Change: Line for rebuild it looks currently in Canada, and South America.
Speaker Change: Yes, so I would be encouraged by the trajectory in the not rebuild business I think we've said a number of times now.
Speaker Change: Is there a structural change in our in our company.
Speaker Change: And despite us in some areas softer.
Speaker Change: Softer product support revenue I would point to the fact that the amount is either we will rebuild our contracted through a maintenance contract to strengthened even through.
Speaker Change: If its even if the number was a little softer as we saw in Canada I'd be happy to that revenue base is of higher quality.
Speaker Change: Yeah.
Speaker Change: One of the previous questions in terms of energizing and driving parts support we.
Speaker Change: Rebuilds as the go to place and so not only because it has high quality work, we've got a growing workforce that need to be and we.
Speaker Change: We want to make sure that we're fully utilized utilizing our facility. So.
Speaker Change: Growth in all three regions actually.
Very encouraged by the trajectory and rebuilds for sure the product range.
Speaker Change: He is coming down and the scope is probably narrowing because the sculpt generally narrow as you come down and the size of.
Speaker Change: And the size of product range, that's the economics and how it works and so you have to do a lot more rebuilds to achieve the same same dull, but I still think it's a it's a.
Speaker Change: Number one of our approach support growth opportunities.
Speaker Change: So again.
Speaker Change: Okay. Thanks for that good color I'll turn it over.
Speaker Change: Yeah.
Speaker Change: And your next question today will come from Maxim <unk> with National Bank Financial. Please go ahead.
Maxim: Hi, good morning.
Speaker Change: Hey, Matt maybe.
Speaker Change: Just a question for Kevin if I may there was some discussion around potentially accelerating 18 kind of large projects in BC.
Speaker Change: And some of them you actually.
Speaker Change: The work done in the past I'm wondering.
Speaker Change: How quickly do you think you could see any potential impact from this or is it more sort of a 2026.
Speaker Change: Yes, I saw that matches that I mean so.
Speaker Change: My previous point around <unk>, you know I think that you know.
Speaker Change: One of the one of the encouraging things Thats come out of the discussions over the last two to three weeks is a recognition that Canada can do more to help itself.
Speaker Change: We would agree with and we think that.
Speaker Change: No.
Speaker Change: The discussions are happening.
Speaker Change: There's lots of different opinions able at the discussion around it.
Speaker Change: Helping itself into strengthen it and taking the optimizing the opportunities that it has.
Speaker Change: Within its own borders.
Speaker Change: No disagreement on that.
Speaker Change: That's really encouraging the hospitals in the past it hasn't always been.
Speaker Change: It hasn't always been alliance.
Speaker Change: You'll see that long list of projects over the last couple of days is a good example of that BC.
Speaker Change: Really look into how they can tie.
Speaker Change: Tiger Destiny, so there are items in it.
Speaker Change: Accelerate some of these projects and then in terms of how quickly that I couldnt answer that much you know what I mean.
Speaker Change: I'm sure that this is an incentive to reduce administration and red tape to get some of these projects are moving faster and.
Speaker Change: For sure our business model.
Speaker Change: Would mean that we would be.
Speaker Change: Confident that we can build we can build our capabilities and have the inventory to be able to support them.
Rapid execution of these projects.
Speaker Change: I guess the biggest limiting factor to devins previous question is that would be.
Speaker Change: Labor skilled labor.
Speaker Change: The advancement of technology and I mean, that's we can that helps in that regard, but I wouldnt know how quickly that they will get executed.
Speaker Change: Happy that we could support an accelerated execution and I'm very happy that they're kind of just look into solid destiny is looking to control its own destiny by getting some of these critical projects moving faster.
Speaker Change: Yes, I can.
Speaker Change: It's encouraging to see the less that includes copper projects gold projects more LNG and to have that supported by government.
Speaker Change: Upstream oil and gas I mean, that's.
Speaker Change: Those are all helpful things for sure.
Speaker Change: Yes, and I guess I mean, none of these things are.
Part of your official outlook is that fair.
Speaker Change: Yeah.
Speaker Change: None of it would definitely not in backlog and in terms of outlook that would go a long way.
Speaker Change: To support it.
Speaker Change: Particularly the construction softness.
Speaker Change: Improvement in activity in construction, but also.
Speaker Change: Some more encouragement and confidence in our energy production too.
Speaker Change: Right, Yeah Fair enough and then quick question for Greg If I may in terms of.
Speaker Change: Thinking about sort of level rich what do you think is the optimal level of where.
Speaker Change: You're comfortable being at any like is it does it makes sense to come down even more or where you are.
Speaker Change: Yes.
Speaker Change: Since at the optimal level.
Speaker Change: Yeah, I mean, I think pretty consistent around this I mean.
Speaker Change: Full cycle mid cycle, two times net debt to EBITDA, we're comfortable to run the business and supports our credit rating.
Speaker Change: We've been pleased to generate a lot of cash and have good capital allocation choices to make them be down to one five times feels.
Speaker Change: It feels pretty good and particularly in a market where it has some uncertainty so staying at that level.
Speaker Change: It feels pretty good but do we have the ability to go back up to two if we need to see an opportunity.
Speaker Change: Sure, but as we highlighted earlier, we still think we have a lot of ability to generate free cash and make some good positive choices and as always it will be a balance between returning capital to shareholders managing the debt investing in organic projects. So.
Speaker Change: The good news is cash has been excellent and we look to continue on that path.
Speaker Change: Okay. That's all for me thank you.
Matt: It's Matt.
Speaker Change: The question and answer session I would like to turn the conference back over to Greg Palast Chuck for any closing remarks.
Speaker Change: Yeah. Thanks, operator, thanks, everyone for joining today's call I appreciate your time and I hope everyone has a safe day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines and have a pleasant day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].