Q1 2025 Extendicare Inc Earnings Call
Speaker Change: Thank you for standing by. This is the conference operator. Welcome to the Extendicare Inc. First Quarter 2025 Analyst Conference Call. 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.
Speaker Change: To join the question cue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero.
Speaker Change: I would now like to turn the conference over to Jillian Fountain, Vice President, Investor Relations. Please go ahead.
Jillian Fountain: Thank you, operator, and good morning, everyone. Welcome to Extendicare's 2025 First Quarter Results Conference call. Joining me today are Extendicare's President and CEO , Michael Guerriere, and Executive Vice President, Chief Financial Officer, David Bacon.
Jillian Fountain: Our Q1 results were released yesterday in our available on our website, as is a live audio broadcast of today's call, along with an accompanying slide presentation.
Jillian Fountain: An archive recording will also be available on our website following the call today. As well replay numbers and passcodes have been provided in our press release to access an archives recording until midnight on May 23rd.
Jillian Fountain: Before we get started, please be reminded that today's call may include forward-looking statements and non-GAAP and other financial measures.
Jillian Fountain: Such forward-looking statements involve knowing and unknown risks and uncertainties that may cause the actual results to differ materially from those expressed or implied today.
Jillian Fountain: We have identified such factors as well as details of non-GAAP and other financial measures in our public filings with the security regulators, and suggest that you refer to those filings.
With that, I'll turn the call over to Michael.
Thank you, Jillian, and good morning.
Michael Guerriere: We were pleased to report another strong quarter marked by revenue and earnings growth with strong contributions from all our business segments.
Michael Guerriere: This performance reflects the growing demand for our services fueled by demographic trends, the focused execution of our strategy and the tireless efforts of our dedicated team.
Michael Guerriere: Adjusted EBITDA increased to $35.6 million, a 18.2% over the prior year.
Michael Guerriere: If we exclude out-of-period items, it increased by 42.7% to $29 million, with NOI and Margie Gross in all three business segments.
Michael Guerriere: In Home Health Care, Q1 average daily volumes were up 8.9% from the same period last year.
Michael Guerriere: Excluding out-of-period items, Q1 and a Y margin improved by 200 basis points.
Michael Guerriere: Driven by raid increases and the operating leverage that results when higher volumes are supported by our scalable back office.
Michael Guerriere: In our long-term care segment, Q1 NOI margin improved by 150 basis points over the prior year after adjusting for out-of-period items.
Michael Guerriere: This growth was largely driven by increased funding, improved preferred occupancy, and reduced
In Managed Services Justice.
Michael Guerriere: We delivered a year-over-year growth in revenue in NOI, largely attributable to the opening of three homes in the Axiom JV.
Michael Guerriere: and Organic Growth and Bed Service by SGP, which were up 7.2% from Q124.
Michael Guerriere: We are now servicing over 148,000 beds through our purchasing network.
Michael Guerriere: Given the results we've achieved with our Capital Light business model and our prospects for sustainable growth
Michael Guerriere: Our board declared a 5% increase to the monthly dividend on common shares to 4.2 cents per share which commenced with the dividend declared in March.
Michael Guerriere: Subsequent to quarter end, we completed the previously announced sale of three long-term care redevelopment projects into the Axiom Joint Venture.
Michael Guerriere: And last week, we announced an agreement to acquire closing the gap health care, a recognized provider of home health care services in Ontario and Nova Scotia.
Michael Guerriere: On the next page, we've outlined the details of the transaction.
Michael Guerriere: We are acquiring clothes in the gap for total cash consideration of approximately $75.5 million.
Michael Guerriere: which will be funded through cash on hand and existing credit facilities.
Michael Guerriere: The trends action also includes an urno tied to new business revenue growth in the 12 months after closing.
Thank you for watching!
Michael Guerriere: Based on closing the gap's financial performance for calendar 2024, the acquisition would have added approximately 84.2 million in revenue to our home health care segment with margins very similar to our own.
The transaction is accreted to earnings in AFFO.
Michael Guerriere: Based on the closing the gaps results last year, it would have increased our 2024 AFFO per share by approximately 6 cents.
Michael Guerriere: And we anticipate integrating closing the gap into paramet will result in approximately 1.1 million dollars in annualized cost synergies in the first year following closing.
Michael Guerriere: Closing the gaps proven capabilities in rehab services and experience innovating and delivering integrated care models are highly complementary to our existing home healthcare operations adding new channels for future growth.
Michael Guerriere: The acquisition is anticipated to close in Q3 this year, subject to customary closing conditions and regulatory approvals.
Michael Guerriere: Now, we'll turn to our progress in long-term care redevelopment on Slide 5.
Michael Guerriere: In February , we opened Crossing Bridge, a new 256-bed long-term care home in Stitsville, Ontario. The third home opened in the Axiom Joint Venture within a year.
Michael Guerriere: As we did in Sudbury in Kingston, we've initiated a process to sell the vacated sea bed home that it replaces.
Michael Guerriere: As mentioned, subsequent to quarter end, we closed the previously announced sale of three long-term care projects under construction in St. Catherine's, Horn Stanley, and London Ontario to the Axiom Joint Venture for cash proceeds of $56.3 million.
Michael Guerriere: And an estimated net after tax gain of $11.1 million that we will record in Q2, with Extendicare retaining a 15% managed interest in the homes.
Michael Guerriere: These milestones demonstrate our approach to replacing older homes and adding long-term care capacity which allows us to recycle significant capital into advancing the balance of our redevelopment program and other compelling growth opportunities.
Michael Guerriere: We currently have six homes under construction, which will bring 1,408 new beds into operation to replace 1,097 class C beds.
Michael Guerriere: We continue to progress 12 additional projects to replace our remaining seahomes in anticipation of future capital funding programs.
Michael Guerriere: The previously announced acquisition of nine homes from Rivera for $60.3 million is a weighting regulatory approval with clothes expected later in Q2.
Michael Guerriere: With this transaction, we would add six additional redevelopment projects to our redevelopment pipeline, comprising 1,100 beds.
Michael Guerriere: While we remain focused on driving organic growth, to keep pace with the needs of the aging demographic.
Michael Guerriere: We will pursue opportunities to augment that growth with acquisitions and new long-term care redevelopment opportunities where value and strategic alignment weren't.
Michael Guerriere: Now, I'll turn it over to our CFO , David Bacon, to discuss our financial results in more detail.
David Bacon: Thanks, Michael. I'll start by reviewing the consolidated results for the quarter and our balance sheet and liquidity position before commenting on our individual business segments.
David Bacon: As mentioned, our Q&R results were impacted by out of period funding and operating costs, and we've summarized these in the appendix to this presentation, and have referenced them on the applicable segment financial results slides.
David Bacon: Our consolidated Q1 revenue increased by 2.1% to 374.7 million. Drim Byell, TC funding increases growth in our home care volumes and increased bill rates and expansion in our managed services.
David Bacon: This was partially offset by the closure of three Class C LTC homes that were vacated following the opening of the newly developed long-term care homes in the Axiom Joint Venture.
David Bacon: Excluding out-of-period items are Q1 NOI improved by 8.7 million or 24.9% to 43.6 million with growth across all segments.
David Bacon: Excluding the impact of out-of-period items, our Q1-adjusted EBITDA increased by 8.7 million or 42.7 percent, reflecting the improvement in NOI and flat administrative costs.
David Bacon: Growth in AFFO continues to be strong with Q1 AFFO of 23.5 cents up from 21 cents in the period last year, supported by stronger after-tax earnings.
David Bacon: When adjusted to remove the out-of-period items, our AFFO per share improved by 6.1 cents year over year to 17.7 cents.
David Bacon: Turning to our next slide in our liquidity position, which remains strong with cash on hand of 110 million and access to a further 108 million under our new 275 million secured credit facility and a favorable debt maturity profile with no maturities until 2027.
David Bacon: Subsequent to a quarter end, the company completed the sale of the three long-term care redevelopment projects to the Axiom JV, as Michael covered in his presentation.
David Bacon: Adding that net cash proceeds a 56.3 million to our liquidity position.
David Bacon: To sail these of these homes into the joint venture aligns with our strategy of recycling capital into new projects, advancing our redevelopment agenda, while providing a flexibility to address other strategic capital needs.
David Bacon: Given our liquidity position, XZNQ1 and the added proceeds from the sale, we are well positioned to close both the nine long-term care homes that we're buying from Rivera and closing the gap transaction in the coming months utilizing our liquidity position and our existing credit facilities. Thank you.
David Bacon: As a result, we recognize retroactive revenue of 4.4 million and Q4 of 24 as a recovery of eligible costs that were incurred in those retroactive periods.
David Bacon: The 4% rate increase enabled us to make further enhancements to our compensation programs and investments in recruiting retention and technology this quarter.
David Bacon: The net impact resulted in an out-of-period revenue and expense item of $11 million, with no impact to NOI, so that we recorded this quarter.
David Bacon: You may recall, in the same quarter a year ago, we recognized a similar out of period revenue and expense of 13.6 million in connection with the retroactive rate increases in 20-24.
David Bacon: Our home health care operations also benefited from workers compensation rebates this quarter of 3.9 million.
David Bacon: Excluding the net impact of retroactive funding, our home health care revenue increased by 17.3 million or 13.3% year-over-year, driven by growth in volumes and our rate increases.
David Bacon: Excluding out-of-period items, NOI improved by 4.4 million, or 41 percent.
David Bacon: Reflecting the 8.9% volume growth, rate increases, and the benefit of one less statutory holiday this quarter, with an NOI margin of 10.3% of 200 basis points from the prior year.
David Bacon: Turning to our long-term care segment, Q1 results were impacted last year by out-of-period funding of $9.8 million and this year by workers' compensation rebates of $2.7 million.
David Bacon: Excluding these out of period funding impacts are revenue increased by 1.1 million driven by funding increases and the timing of envelope spending partially offset by 9.8 million in lower revenue resulting from the closure of the three redeveloped class C long term care homes.
That were replaced by new homes in the J.V.
David Bacon: Excluding out of period items, NOI increased by 3 million, driven by increases in revenue, the impact of the Easter falling in the second quarter of this year.
David Bacon: This was partially offset by higher operating costs and an NOI reduction of approximately only one million related to the closure of the three redeveloped homes.
David Bacon: Corresponding NOI margins increased to 9.4% in the quarter from 7.9% last year.
David Bacon: Finally, turning to our managed service segment, our revenue increased 1.6 million in the quarter to 18.6 million. We're largely due to organic growth in our FTP clients and changes in the mix of assist services, including management fees from the newly opened homes and the JV.
David Bacon: NOI increased by 1.3 million to 10 million within NOI margin of 53.4% within our expected range for the segment of between 50 and 55%.
David Bacon: On May 1, 2025, Rivera completed the sale of the 21 Classy Homes managed by Extendicare Assist to a third party. As a result, their existing management development agreements for these 21 Homes were terminated.
David Bacon: Not a combined pro form of basis, giving effect to both the third party sale of the 21 homes, and our pending acquisition of the nine long-term care homes from Rivera. Thank you very much for your time.
David Bacon: Extendicare would operate 101 long-term care homes, consisting of 59 homes wholly owned by Extendicare with approximately 8100 beds, and 42 homes with approximately 64 beds being managed through our Extendicare Assist group.
David Bacon: Of these 28 are operating homes within the Axiom Joint Ventures in which we hold the 15% managed interest.
Michael Guerriere: With that, I'll pass the call back to Michael for his closing remarks.
Thank you David.
Michael Guerriere: The momentum across all our business segments, combined with the strength of our balance sheet and robust demand for our services, positioned Extendicare to build on our track record of growth.
Michael Guerriere: Our health system continues to be challenged by the demographic reality of an aging population.
Michael Guerriere: Homecare and long-term care are fundamental to addressing the rapidly increasing needs of seniors across the country.
Michael Guerriere: We're focused on obtaining the necessary regulatory approvals to close the nine long-term care home acquisition from Rivera and Q2, and welcome closing the gap and their team to Paramet in Q3.
Michael Guerriere: Finally, our annual shareholders meeting will be held on May 27th in Toronto. Further details are available on our website and we hope to see you there.
Michael Guerriere: As always, I want to end by expressing my sincere gratitude to each and every member of our team for their hard work and commitment to helping people live better.
Michael Guerriere: Our success would not be possible without their dedication to providing quality care to the people we serve, and with that we're happy to take any questions that you might have.
Speaker Change: We will now begin the question and the answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request.
Michael Guerriere: If you're using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star MN2.
Speaker Change: Our first question comes from Kylie McPhee with Core Mark Securities. Please go ahead.
Kylie McPhee: Hi everyone. First from me on your Home Health Care platform, one of your two asset lights organic growth engines.
Kylie McPhee: You delivered another round of good organic volume growth in Q1. We can see that in your metrics, hours of service, average daily volume, both up high single digit. I'm curious if you see any issues.
Kylie McPhee: Holding on to the level of organic volume growth for home health care, or if any organic bottlenecks are popping up like here.
Kylie McPhee: Labor Supply Situation. And maybe this is a good time to describe your relative ability to supply labor in the home health care space versus other players in the market that maybe have less resources.
Speaker Change: Thanks, Kyle. We are not seeing any change in the momentum in terms of paramet growth. The demand continues to be quite robust.
And are...
Speaker Change: Ability to hire and train new caregivers is well keeping up with the demand.
So there's no constraint there.
We've...
Speaker Change: Invested quite a lot in our back office capabilities to automate the recruiting and onboarding activities.
And we've also invested a lot in training facilities.
Speaker Change: across the organization in many different locations, which allow us to partner with colleges and universities.
and have students.
Speaker Change: Completing part of their training in our organization which puts us on a very competitive footing in recruiting new graduates.
Speaker Change: We have about 3,000 students in total spending part of their year at Extendicare and Paramet, so that gives us a very significant pool to recruit from.
Speaker Change: So we're quite confident about that and the pace of growth in paramedics seems to be continuing as it has for the last couple of years.
Speaker Change: Is it fair to say you're winning share of wallet in the home health care space, you know, our provincial payers increasingly leaning on you because of your supply capabilities? Maybe you can describe your home health care growth rate, which, you know, is in and around 10% versus what the broader market is growing out for home health care?
Speaker Change: Yeah, we have some insight but not complete visibility to what's happening across the market.
Speaker Change: We do believe that we're growing a little bit faster than the broader market, but the overall market for home care has been increasing at a similar pace.
so you know we're not we're not
You know, we're not-
Speaker Change: Sure that we're that much faster than the rest of the market we think we are in some parts.
but
Speaker Change: But really this is the one sector of health care that can be expanded relatively quickly without a significant capital investment. And so we're seeing governments.
Leaning on it quite heavily to take pressure off hospitals.
Speaker Change: And also to compensate for the fact that the pace of long-term care bed construction is not keeping up with the demographic requirements.
Speaker Change: Okay, thanks for those comments. And last one for me on your growth capital deployment runway.
Speaker Change: You did the Creative Rivera deal. That's closing, you know, probably this quarter. You did the nicely Creative Closing in the Gap at Home Healthcare Deal, Closing Q3. Still seems like you have a lot of
Speaker Change: access capital and leverage capacity beyond these deals. Do you have a very active pipeline of deals to match this access capital position? And specifically, do you think there's a lot more to do in home healthcare?
[inaudible]
Yeah, Kyle.
Speaker Change: I think that, yeah, we are well positioned from a liquidity perspective with selling the three projects in after...
Speaker Change: Quarter End into the JV, gives us another 56 million. So I think coming out of this closing those two deals will still be in quite a strong position from that perspective. We've set on past called and continue to believe that the home care.
Speaker Change: The sector in particular is quite fragmented and we'll continue to look for a creative opportunities in that space.
Speaker Change: You know, wouldn't talk today about pipelines near term or anything to any kind of detail, but we are going to remain active and again, as we've said in the past.
Very focused on buying.
Speaker Change: Opportunities that would continue the growth agenda, so not volume for the sake of volume, but really complimentary assets in terms of geographic mix or service level mix. So...
Speaker Change: I'd say we're still open for business from from a acquisition point of view, but you know, we'll be very prudent in terms of what we look at on that respect.
And then on, you know, the long-term care side.
Speaker Change: As well on the redevelopment, I think as we're demonstrating our redevelopment agenda needs quite minimal capital needs given the route being a little recycle into the into the J.B. So, but then we still do believe.
Speaker Change: That there's opportunities on a longer-term outlook for potential for net new greenfield long-term care, like brand new projects that are not tied to our redevelopment. So that's just another area that we keep our eyes open for as well.
Okay, thank you for that, David, or I'll pass it on.
Speaker Change: And the next question comes from Jonathan Kelcher with PD Securities. Please go ahead.
Jonathan Kelcher: Thanks. I guess just sticking with sort of growth for acquisition. I see the majority of your home health care business permits in Ontario, and I guess.
Jonathan Kelcher: Closing the gap sort of expands your geographic reach, but what about other parts of the country? Are there opportunities on the home health care side there?
Yes, they're definitely are.
Speaker Change: And so just as David said, that's what we would be looking to do, is to find other platforms for growth that would...
Take advantage of the back office.
A technology stack that we've created.
Speaker Change: So very similar services, but provided in a different...
Speaker Change: You know, in a different geography. You know, as you know, we're in three provinces, but the majority of our volume is in Ontario. One of the things about closing the gap that was appealing is they have...
Speaker Change: Footprint as well in Nova Scotia, which fits very nicely with what we've been doing there. So yes, we're very interested in looking at acquisitions that would take us into other provinces.
Speaker Change: Okay, and I guess semi-related to that, you guys are pushing the margins on the home healthcare business. Do you have, and I get Q1 had a little bump from Easter moving, which will obviously negatively impact Q2, but do you have a target and annualized target that you want to get to?
Well, we think that there's-
More opportunity to.
to expand margins in home care.
Speaker Change: So, you know, we continue to leverage technology for back office efficiency. And, you know, as you can see in the results. [inaudible]
Speaker Change: This quarter, our GNA has been quite flat despite the growth that we've put forward.
Speaker Change: And so, you know, we're going to see continuing, you know, operating leverage and expanding margins as we add volume.
Speaker Change: So, we don't have a target other than to continually look for ways to expand the margin, but we think that there's...
Speaker Change: Potential there for another one or two hundred basis points over the next period of time, but part of that depends on how fast we grow and the nature of the acquisitions that we might look at.
Speaker Change: So it's really just, I guess, margin expansion will largely come from economies of scale as you ramp up hours.
Speaker Change: Yes, and the efficiencies that were able to drive out of the back office, I mean every time we increase volume by 10% without increasing the back office, that represents quite a lot of work behind the scenes to increase the efficiency of the back office operations.
Speaker Change: Yeah, for sure, that's what I was trying to get at. So, in buying the closing the gap, I'm assuming you don't have to add much if any to the back office to kind of bring that on and that would be the majority of the synergies in that deal.
Speaker Change: Yes, that's where it will come from, the moving all of those operations to one technology platform will be the majority of that lift.
Okay, thanks all of us. I'll turn it back.
Speaker Change: And the next question comes from Tom Callaghan with BMO Capital Markets. Please go ahead.
Tom Callaghan: Thanks, Martin, guys. Maybe just to follow up on the train of thought around closing the gap, wondering if you can just kind of provide some color more broadly, obviously most of the operators in this space are private. So just in relation to that 75.5 million dollar acquisition cost, how should we think about the size of opportunities going forward? Is this a bigger one kind of mid size or any commentary there would be helpful?
I characterize this as a mid-size.
Acquisition, there may be some larger ones.
Tom Callaghan: Uh, possible in the future. Uh, and then I say there are. Uh,
tends to
Tom Callaghan: Close to 100 smaller operators across the country that would be quite a bit smaller than closing the gap. So, I think there's...
There's a variety there.
Tom Callaghan: And we'll look at each one of those just on the criteria that we talked about in terms of fit.
Tom Callaghan: and providing us with an additional opportunity to grow, that David said we're not looking to buy volume.
Tom Callaghan: Just to buy volume, we're looking to make acquisitions that are going to help us to continue our organic growth path and to accelerate it.
Speaker Change: Great. Thanks. That's very helpful. And then I guess just on the balance sheet.
Speaker Change: You know, under leveraged coming in the year, lots of capacity, as you think, kind of towards the back half of the year, post-closing of these two deals. Is there any type of targeted metric, whether debt to EBITDA or otherwise, that you're kind of thinking about in terms of the balance sheet? [inaudible]
Speaker Change: Yeah, there's no specific target that we're looking for time. We have, as you mentioned, we have, you know, would be viewed as being under levered. I think, you know, we'll close these two transactions.
Speaker Change: What the liquidity we have on hand, there's probably a room there to maybe...
Speaker Change: Reintroduced some leverage related to some of the acquisitions, especially given there's a real estate component there with the nine homes. But we still view.
Speaker Change: It probably continues to take a conservative view of the balance sheet, so I don't think there is any, you know, no plans to kind of lever up the existing. I think we like having the flexibility. For the...
Speaker Change: in the liquidity and in our facilities to look at more acquisitions as we've talked about. So, we don't really have a target, but I'd say that you'd see us remaining.
Speaker Change: More on the conservative side like we have been, and really that positions us to be both strategic and potentially opportunistic as opportunities could come to market on the M&A side.
Thanks, David. That's it for me.
Speaker Change: And the next question comes from Tanaya Armstrong, Whitworth with Canacor Genuity.
Good morning, Mike David. A couple more for me here.
Speaker Change: On that, I get just following up on closing the gap. If you could provide some color on how quickly those back-office energies that you highlighted can be realized, I think you said it at first, year after close. But I'm wondering if this is pretty easily practiced in the first range structure.
Speaker Change: Johnny, that last bit broke up a little bit, so I missed it. I think you were asking whether it would...
Speaker Change: Take a full year, or whether it might be faster? Is that what you were getting at?
You got it, Michael.
Okay, so...
Speaker Change: I actually think we'll see some of those synergies coming in in the first year, so I don't think we have to wait for an entire year before we start to see some of those benefits.
Speaker Change: But at the same time in terms of achieving the full run rate, I think we are looking at a full 12 months before we get there.
Speaker Change: Okay, that's fair. And then secondly, I wonder if there has been any increase on those long-term care funding envelopes, effective April 1st of this year? I didn't see any new numbers come out. And I know these usually take effects on April 1st.
Yes, they usually do, but they also usually get…
communicated to us sometime later than April 1st.
Typically later in the summer.
Speaker Change: Or, you know, in the early fall, but this year is an unusual year given that there was an election in Ontario and the Ontario budget is not due until May 15th.
Speaker Change: So we expect the whole process to be delayed this year to some extent.
Speaker Change: So, you know, we're hoping to have some information in the fall, but we really don't have any any transparency yet on the timelines as to when we'll hear.
Speaker Change: Similar in Manitoba and Alberta, we haven't heard anything yet, but typically we wouldn't know at this time of year. It's usually a later summer into September exercise.
Speaker Change: Okay, that's good to know. I appreciate that color. And then lastly, on the acquisition of those nine Rivera homes.
Speaker Change: I'm wondering if you can provide any more color on exactly what we're waiting on in terms of regulatory approvals, if these are just kind of standard course approvals that we're waiting on or if there's any one or two items holding this up.
No, this is... this is pretty...
Speaker Change: It takes a while to go through the process, and it's more than one province.
Speaker Change: And because there's retirement beds, we have, you know, more than one authority in the province of Ontario that we're talking to. But all that said, it's been an entirely routine process from our perspective so far.
Excellent. That's all for the week. Thank you, gentlemen.
Speaker Change: And the next question comes from Kyle McPhee with Cornmark Securities. Please go ahead.
Everyone, just a couple quick follow-ups.
Speaker Change: Do you have any insight on the next round of Enhanced Funding Windows in Ontario, the Construction Funding Subsidies that will pop up and allow you to continue your classy redevelopment playbook using the JV structure, effectively feeding ongoing growth of your managed services
Speaker Change: Yeah, no, Kyle, at the moment, we don't have any new...
Perspective, as Mike mentioned, we suspect that...
Speaker Change: The any new announcements around the capital funding are going to be tied into the budget and then.
Speaker Change: As Mike said, usually what happens, the budget will come out on May 15th, and it may take some time for the details and the clarity to come after that.
Speaker Change: There's the sector, us and the number of the other operators through the OLTCA has been quite active on the Capitol.
Speaker Change: side of the equation in terms of, you know, working with the ministry and our advocacy work around it. So, you know, we've we've all fed in information into the ministry to consider around the current climate construction costs outlook, etc. And, you know. And, you know, we've we've we've we've we've we've
Speaker Change: We're hopeful that they'll turn back on the subsidy, whether it's the same $35 top-up or they go a bit more broad, we'll have to wait and see. We're hoping it's a bit more broad so that it can open up.
Speaker Change: Some additional projects in certain markets were to date the top that hadn't been sufficient for the sector to build. So, it's tied up into the budget timing and then as Mike mentioned into the summer months till we hopefully bring clarity there.
Speaker Change: And last one, in Q1 you had a large tax payment outflow on your cash flow statement. Can you explain, give it some color and why it was such an abnormally high number in Q1?
Speaker Change: Yeah, I mean the biggest sort of new impact there from a run rate perspective is the cash taxes that get factored into that on our settlement of our annual PSU grants and director DSUs with a director retirement. Thank you very much.
Speaker Change: So, probably had between a million, a million, a half of the incremental cash taxes on the PSUs and DSUs are in that 7 million plus number.
Speaker Change: So, that's not a recurring item, and then we do call out kind of our outlook for FFO effective tax rate for the years in the 23 to 25% range.
Speaker Change: So, we're still comfortable with that full-year guidance, but there was some additional taxes in the quarter tied into the settlement of the PSUs and the DSUs with the Director of Retirement.
Okay, that's it from me. Thank you.
Speaker Change: If concludes our question and answer session, I would like to turn the conference back over to Jillian Fountain for any closing remarks.
Speaker Change: Thank you, operator. That concludes our call for today. This presentation is available on our website along with a link to a replay of the call. Thank you all for joining us and please don't hesitate to reach out if you have any questions.
Goodbye.