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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, ladies and gentlemen. Welcome to the Dexterra Group's first quarter results conference call. I would now like to turn the meeting over to Drew Knight, Chief Financial Officer. Please go ahead.
Thank you, Marie, and good morning. My name is Drew Knight and I'm the Chief Financial Officer of Dexterra Group Inc. With me today on the call are Mark Becker, CEO; and our Board Chair, Bill McFarland, who will provide some brief introductory comments.
After a brief presentation, we will take questions with the call ending by 9:15 Eastern Time. We will be commenting on our Q1 2023 results with the assumption that you have read the Q1 earnings press release and MD&A and financial statements. We will be discussing our longer-term vision at the AGM meeting later this morning. So, please join us at 11:00 AM.
The slide presentation which supports today's comments is posted on our website. And we encourage participants to access the slides and follow along with our presentation.
Before we begin, I would like to make some comments about forward-looking information. In yesterday's news release and on slide 2 of the presentation that we have posted to our website, you will find cautionary notes in that regard. I won't read the content of the cautionary notes in their entirety. We do claim their protection for any forward-looking information that we might disclose on this conference call today.
I will now turn it over to Bill McFarland for his introductory comments.
Thank you, Drew, and good morning. I'd like to start by welcoming Mark Becker in his new role as CEO effective March 1 to the call. The Board is very pleased that the CEO transition has gone smoothly over the past few months and our results show the team hasn't missed a beat.
Q1 was an important step in executing our 2023 full year business plan. It included continued success and growth in WAFES, a step change with improved IFM profitability. A significant portion of the BC-based modular fixed price contracts were completed, and the modular business is now on the pathway towards better results. Dexterra is also in a very strong financial position with good prospects for the rest of '23 and beyond as we execute on our plan.
Taking all of these factors into account, the Board announced yesterday that the company will file a Normal Course Issuer Bid as both management and the major shareholder believe Dexterra's shares are significantly undervalued in the market.
So, Mark, with that introduction, and welcome, I'll pass things over to you.
Thanks very much, Bill. And first and foremost, let me say I'm very excited to be speaking here today as the Dexterra Group's CEO. As Bill said in his remarks that Q1 is the first quarter of our 2023 business plan which had a goal to significantly improve our profitability. And I'm happy to say we achieved that.
Tactically speaking, we completed much of what we set out to do, which is itemized on slide 5, producing strong results with improved profitability. It's generally a quiet quarter, just the way we like it with few unusual items. I'll speak to each business unit specifically but suffice it to say it was overall a very good start to the year.
So, starting with IFM on slide 6. The IFM team is focused on margin improvement through contract rationalization, effective execution, and inflation management. Our 2022 acquisitions drove significant new revenue growth including recent new contract wins, but now with improved profitability, that's demonstrating their accretive acquisition thesis.
For example, the Dana foodservice business benefited from the lack of COVID restrictions in Q1 than what we saw in Q1 of 2022, with educational contracts now returning to normal capacity levels.
The 2022 acquisitions are expected to deliver about $130 million of revenue in 2023 at good margins. Also, across the business, rationalization of lost contracts has improved margins in IFM. Proactive inflation management continues to yield results, managing impacts and getting ahead of or minimizing the impact of the timing gap to recover cost increases from clients.
Our Q1 results yielded margin improvement of 6.4% compared to 5.9% in Q4, excluding the impact of lost contracts, which are near to being fully rationalized at this point. Margin optimization and expansion continues to be a focus going forward in 2023 as well as continued organic growth.
In Q1, we completed the acquisition of VCI Controls, and this acquisition adds to our building and automation controls capability which is a key proficiency for us as clients focused on ESG requirements, energy efficiency, and carbon footprint reductions.
New sales in the quarter was strong in IFM, providing good momentum to start the year and revenue growth that will take effect in the back half of the year. A number of new contracts won recently are in the educational sector that will also tend to marginally increase our business seasonality in IFM. We continue to review and explore acquisition targets for possible consideration in the back half of 2023 or into 2024.
So, moving now to WAFES on slide 7. We continue to win market share and capitalize on high activity levels in the mining and energy sectors in Q1. Occupancy across our network of workforce accommodations is strong at about 66% and about 19,000 total beds under management.
For asset utilization and energy services, which is really access matting and relocatable rentals remains high at over 70%. The energy services division proceeded with a special access matting investment in Q1 of $5.9 million, which is supporting a rental agreement to a key client under an advantage multiyear contract. At Kitimat, the Crossroads Lodge is increasing -- our occupancy is increasing with LNG Canada now moving into a lodge in May, which will be ramping up and is contracted for the balance of the year.
Forestry activity is also expected to be slightly higher this year with 30 million trees -- total trees expected to be planted. And our wildfire support activity in Q2 is off to a very strong start with dry conditions and heavy fire activity in Alberta, as everybody has been seeing on the news.
The Q1 adjusted EBITDA as a percentage of revenue was 14%, for a loss business, which is consistent with Q1 of '22. It is lower than 17% in Q4 of 2022. However, it is consistent once Q4 is normalized for the retroactive price increases of $2.8 million that we had in Q4.
We're also having a strong start to the year in new sales opportunities in WAFES particularly focused around oil sands as well as Ontario and Quebec mining projects in workforce accommodations. A key focus for WAFES going forward is replacing major projects like Coastal GasLink that have been tapering off to scheduled completion this year. With the new sales momentum we are seeing significant good margin opportunities in WAFES. We're making good progress towards that goal.
So, lastly, modular on slide 8. The modular solution business delivered expected revenue and improved profitability over the quarter as a result of the continued execution of our four-point business turnaround plan. efforts around commercial contract improvement, stronger project, and supply chain management are creating better cost certainty in our projects with the further diversification of the business progressing as our remaining medium-term initiative.
We continue to work through the backlog of BC Housing fixed-price affordable housing projects. The business completed about $13 million of that backlog in Q1 with no margin contribution. The remaining $35 million of that backlog is expected to be substantially completed by Q3 or perhaps into Q4. The provision booked in Q4 to cover higher costs to complete these projects remains reasonable based on current project status and negotiations.
Revenue in the quarter outside of the BC Housing projects had roughly a 4% EBITDA margin. The demand for affordable housing in Canada also continues to grow. Our pipeline and backlog in modular projects and business activity we expect to expand over the course of this summer as federal and municipal governments approve funding on new projects. We've put in a substantial number of quotes and proposals for new projects in Q1.
Award of new projects is expected in the summer into the fall of this year. The timeline of these projects may result in some temporary slowdowns in manufacturing capacity at our plants and overall project activity in Q2 and Q3. However, we still expect to exceed $200 million in modular revenue in 2023.
Also, the modular diversification plan with our US supply-only projects has been impacted by the higher interest rate environment as clients are deferring their slowing down projects with weakening demand for new project starts. Building the backlog is a priority, in spite of the challenges I described, we are seeing other areas of opportunities in industrial and indigenous housing projects as well as in active educational portables market.
With that, I'll turn it now back to Drew for comments on our financial position.
Thank you, Mark. I'll speak about our financial position and capital markets on slide 10. Our financial position and liquidity remained strong with $78.1 million of unused capacity on our credit lines at March 31. Debt was at $110.6 million at March 31. The increase of $16 million in Q1 versus Q4 is due to three things.
First, the cash paid on the VCI acquisition of $3.2 million. Second, the special access matting investment of $5.9 million. And third, additional working capital investments related to the growth of the business in the quarter. Our leverage is well less than 1.5 times go-forward EBITDA at March 31. And we expect leverage to be below one times EBITDA by the end of this year in the absence of any acquisitions. We started work to renew our debt facilities and expect to be able to conclude the renewal in Q3 on favorable or similar terms.
The debt facility renewal terms will incorporate our working capital needs for organic growth and seasonality with dry powder available for acquisitions. I'm pleased to say there was little impact from nonrecurring items in Q1, which made my job easier as the quarter was much cleaner to report. But the real benefit is having reliable results, which translate to EPS and cash. More reliable results and improved forecasting are also important as we have assessed the impact of a recession. We expect currently that any recession will be mild and short in duration and have minimal impact on our business. However, we have also run scenarios and prepared action plans to be quickly executed if the recession is deeper and for a longer period.
Our prime focus is building a portfolio of profitable businesses. The conversion of EBITDA to free cash flow for 2023 is expected to be approximately 50%, excluding any nonrecurring items. This cash flow will easily cover our dividend payments of $22 million per year.
The strength of our financial position and excess free cash flow in conjunction with the strength of loss, the IFM robust and growing business and stabilization of modular results have resulted in Dexterra making a Normal Course Issuer Bid commencing May 15.
The NCIB will allow us to repurchase 1.3 million shares. That number will keep Fairfax's ownership interest below 50%, which will preserve our tax losses, which total roughly $90 million. Fairfax does not intend to tender any shares under the NCIB. The share repurchases will help support the share price. More importantly, the Dexterra shares currently trade at a large discount to the real value. So, this is a good investment for our capital. The maximum investment will be less than $10 million which will be quickly recovered from free cash flow.
Lastly, we have declared a dividend for Q2 2023 of $0.0875 per share for shareholders of record at June 30, 2023, to be paid July 17, 2023.
I will now turn it over to Mark for closing comments.
Great. Thanks, Drew. I will cover all the points on slide 11 in detail. They are effectively a recap of our comments in the presentation, and I encourage everyone to use that as a summary. Suffice it to say, my focus and the focus of the Dexterra team in upcoming quarters is driving strong execution, continuing to improve profitability and capture profitable new sales across all the business units.
We have a talented team of focused people and plans in place to deliver these outcomes. Big picture, we know our company is undervalued in the market as we continue to execute, improve, and sustain our profitability and grow, we believe the market will recognize our value over time. I'm confident and energized about our plans and excited about the future ahead for our company, a future that will deliver strong stakeholder value to shareholders, employees, customers, suppliers, and our communities.
This concludes our prepared remarks, and I'll turn the call back to Marie for the Q&A portion of the call.
[Operator Instructions]. The first question is from Chris Murray with ATB Capital Markets. Please go ahead.
Mark, first congratulations on taking over the CEO role. And I know you've only been in the seat officially for a few weeks, but I know you've been with the company for some time. With that being said, can you talk a little bit about your thoughts around strategy for the company?
I know there's always been this big push on trying to make IFM the growth driver, maybe just operate WAFES and try to do something with modular. But any thoughts around the strategy and any opinion you may have on ways that it may shift or more for over the coming couple of years?
Yes. Thanks, Chris, and good morning, and I encourage you to dial into the AGM a little later this morning. Check my time zones here. I know you're in Alberta or, no, you're Toronto. But we will talk more about the strategy and our broader path forward at the AGM. We've got a prepared presentation at that time. But suffice it to say we are building on the foundation.
Our near-term goal of $1 billion and $100 million EBITDA, we're very close to achieving that. And we're confident we're going to achieve that in the short term, and then our broader goal to take us to a $2 billion, in a profitable growth to a $2 billion company. With strong growth still in loss, we've had 25% growth in WAFES in the three years since merger. And we see, as we'll say this afternoon, getting that business to a $500 million or $600 million business as very achievable, getting modular, more profitable, and a growing business unit is a key part of that part of that strategy.
And then as you mentioned, we really do see IFM as our growth engine for our overall broader target of $2 billion and driven by organic growth as well as acquisitions and really driven not only by the things that we know we do well already in the scope of IFM services, but also continuing to develop in our foundation that we have around integrated IFM, which is really getting into healthy buildings, ESG. A lot of clients are looking to optimize building carbon footprint.
And, with our VCI acquisition and other things we're looking at, we're continuing to build our capability around that. So, we see a significant market growth. So, with that focus in IFM and IFM growth, both organic and through likely acquisitions, we see us out that business as potentially up to a $1 billion business in of itself. So, Chris, I would urge you to dial in to the AGM. We'll have a little more detail for you on that later today.
Perfect. That's great. And then may be turning to IFM, which is a growth engine, the expectation was between contract wins and acquisitions -- at least the indication was that we'd be looking at something, call it, growth rates, maybe margins in that seven to eight range. We saw margins this quarter, maybe a little bit below that.
I know you were doing some contract adjustments and rightsizing in Q4, but with that being said, like are those numbers still kind of feasible longer-term targets? And maybe I'm getting ahead of myself, but certainly, it's an important part of the business, maybe even near term. Can we get there?
We still see, as I said, the IFM part and the IFM growth would be an advantageous part of the business. Across 2022, inflation impacts, the things that we saw that impacted us, and we're seeing a good recovery from that in our margins. You do get a range of margins within the IFM business. We see the soft FM services, which are good services and good foundations, for us around food service and industrial air cleaning and those kinds of things in that six to seven range.
We would see, Chris, the more integrated services, and we see that in the integrated services and contracts that we have currently at a higher margin than . And in fact, we find the more we do for a client, the more comprehensive scope we have for client, the more opportunity for us to deliver to our clients, but also to build margin within those opportunities. And we see that time and again.
So, we continue to believe, and that is our strategy to pursue that approach as we go forward. And we'll review that or build that balance of business that gives us a range of margins. But suffice it to say, we want to be at least seven and higher depending how much we get in terms of the integrated business that will tend to bring our margins up even higher than that.
The next question is from Michael Doumet with Scotiabank.
Maybe sticking to IFM, I believe maybe go a year back, maybe a little bit more, but you guys used to provide a pipeline in which you were bidding on. And I think you used to highlight the track record of closing about 40% of bids, correct me if I'm wrong there, but I wonder if you can talk about the pipeline today, maybe some of the drivers behind it, your confidence in terms of executing on that pipeline? And maybe a little bit of a commentary on the expectations for the second half growth as well?
Yes. I think a good question, Michael. And I would say our pipeline -- and we monitor it fairly carefully. It's similar to what we had talked about that you're referencing. And I'd say certainly post-pandemic, we would say that we're seeing a lot of even more activity and of the pandemic that people are still bringing more and more work to the table. You know, call it $300 million pipeline is kind of an active number for us, if we look at what we have in our roster of pursuits. And that would be similar to what we had talked to you about before, and just continuing to figure out where we -- again, focusing on the things that we know we have a good presence. We know we have a good value offering. We know we have a good win rate.
And then building on that IFM strategy, we are seeing those coming forward and just work on building our hit rate higher than it currently is. And it's currently around 30%. We'd like to see that higher. It's a very competitive environment out there. But as we build our repertoire and our capabilities, we see a strong capability to do that. And again, things like VCI and our sales focus is driving some of that.
And maybe flipping to modular, I'm wondering how you think about the potential risks there of additional one-time costs related to the lost projects in modular because I think this quarter you ran effectively zero EBITDA through the P&L on the $14 million of revenues. So, have cost trend or do you think that the accrual is sufficient? I'm just wondering, again, for the balance of about $35 million and again, commentary on how the $35 million splits in Q2 versus Q3 as well, too?
Yes. In terms of I guess the progression on that, I mean, you see it a $13 million progress there. As we complete projects in that repertoire, that's the remaining $35 million. The amount we do per quarter will taper off, but you'll see similar bites, probably in Q2 and Q3 as we complete those projects ideally by the end of Q3, but it may bleed into Q4.
We watch that top provision that we took. We thought through that pretty carefully in Q4 and what we've seen so far, we see that provision to be reasonable to cover the additional costs that we're seeing on those projects. And then our focus is really getting through those projects and looking forward on the new projects that we're bringing forward.
Rob Johnston that's been part of the team now is doing a lot of things to really better commercialize how we're building contracts, how we're contracting work, how we're subcontracting work, and build a better sustainability, or I guess let me say it this way, a better reliability in terms of our profitability on new projects going forward.
In Q1, we had about 30 -- in just the affordable housing space alone, we had about 30 proposals and bids that went in. So that's going to help us with our pipeline going forward. And we're also seeing things outside of that as well. We've indigenous community housing projects or even doing things in the industrial space as well.
So, I think we view that provision and completion of those challenged BC projects, it's being reasonable for the rest of the year. And then really just building our pipeline and winning work. For sure that strength will carry over into 2024 and just build that reliability of our profitability on that business.
The next question is from Zachary Evershed with National Bank Financial.
What kind of revenue contribution can we expect from CCI? And how does that ramp up through revenue synergies as it's integrated in the capabilities spread the network?
Yes, good question, Zach. VCI initially will bring about $8 million in revenue to us. And that's good work and they've got a really good repertoire of clients and service segments that they work on. And they're now integrated within our business. But really, it's about the , the people that we brought over, their expertise around building controls, building management, energy system management is really what we're looking to leverage there. We like the revenue. We like the EBITDA that they bring, but it's really the expertise that we're leveraging.
And so, as we put in proposals and bids and work actively with our current clients, those folks and those that came across in their experience bringing that to bear across our IMF network as we pursue those integrated opportunities that I was talking about.
Thank you. And then still in IMF, any pushback from clients to the way you're approaching pricing? Any chance of losing market share as margins are rightsized?
I mean, it's a challenging business and I would say, in fact like in some of the more commodity style facility management like more -- some of the cleaning work and that kind of thing -- things can be pretty unbelievably competitive. And we do look for opportunities. Our Hotel, Rail and Leisure Group that got now in that space down in the US has been developing some advantaged margins.
You really got to look for where you're competing and how you're competing on it and really look for your opportunities where the margins are adequate, like the other thing I would say to you is another example, within foodservice, with Dana Hospitality, we're doing really well in the educational space. And we're just looking for those opportunities where the combination of the service model that the institution is looking for in delivery.
And if they're actually looking for the absolute lowest cost, we tend not to focus on those, but we focus on the ones that are looking for, kind of, fresh from scratch offering that we see with Dana. And we won a few contracts this year already on that basis, which then tends to give us more of a reasonable margin.
So, I think, Zach, it's a bit of a selectivity model, right? Looking for the sectors, the clients, the geographies where we know we can make adequate margins and focusing on that and then try to stay away from the highly commoditized, highly competitive segments, if that makes sense.
The next question is from Frederic Bastien with Raymond James.
Good morning. I'm sorry, I jumped on the call late. So, apologies if you've covered this already, but does your intention to buy back stock at the current levels take priority over potential M&A transactions that you may have in the pipeline?
Yes. Thanks, Fred. This is Drew. Yeah, absolutely not. The NCIB, as you saw, it's quite small. It's only a maximum of 1.3 million shares, so it'll be less than 10 million . As you know, it happens over time, we can only buy 6,000 shares a day roughly. So, it's going to be 10 million spread over a long period of time. So, it will not impact our acquisitions. We're still aggressively targeting acquisitions.
Okay, thanks for clarifying this. You also mentioned in your prepared remarks that, or at least in the press release I noticed that there's lower demand for supply-only projects in the US would impact the pace of modular profitability recovery. Can you please expand on that? From what I recall that wasn't a big part of the business but obviously had potential but just wondering on this particular opportunity?
Yes, good question, Fred. And I would say I'd agree with you like on the size of the work but the strategic significance of that work getting us down into the US. You know, some of our clients down there, we were doing a multi-unit residential housing supply, they were very happy with what we were doing. They're very happy with our supply. They do tend to continue to develop. They've just slowed down their development profile.
So, we've learnt how to build those products and deliver those products successfully. We also supplied an affordable housing project in Washington state as well through a business partner that we have in the US. We still see that as a really strong opportunity for us and part of that diversification strategy for modular. It's just a matter of timing and what our clients are saying as bringing their new developments online that if that are going to come, it's just really delayed because of the high interest rate environment.
I guess in terms of profitability, we're going to be profitable on whatever we take on. So, , impact on profitability, it's really our revenue mix and our diversification strategy that's going to be the foundation for more of a growing business within modular.
The next question is from Trevor Reynolds with Acumen Capital.
Just building on the modular question. Maybe you guys have a target on when you guys expect to return to your target margins in the business and on those new deployments, maybe what margins you're expecting on those new deployments? And if those have changed at all since what has happened over the last two years in the modular division?
Yes, good morning, Trevor. I'd say around modular, kind of, as soon as possible would be where we'd want to get our profitability to. Obviously, these BC-based projects that we're working through at a lower margin is balancing itself. But as I mentioned, the balance right now in Q1 was about 4%.
And, you know, like we've actually been in this business a while, and we know we can do the types of projects that we're doing currently in modular, the turnkey projects at a 6% margin and we'd aim to get back to at least that or get back to that, for sure, would be our objective. And the challenging thing sometimes about modular is that it's the project-based business. The good thing about modular is that you can reprice everything as the projects come in.
So, it is an opportunity to get back to our margins. You know, the only thing I would say, and I'll make this comment at the AGM later this morning, that we are looking to get into some other potential segments within modular that would give us a better foundation. So, we're not so dependent on the larger turnkey projects that we get more of a foundational type productization market going within our manufacturing plant capacity, which also give us a more of a foundation as well for those profitability levels I mentioned.
Okay, that's helpful. Thanks. Just on the lost business, couple of quick ones there. Just the Coastal GasLink assets you guys mentioned, what opportunities are you seeing for redeployment on that front? And then what does a strong year look like for in terms of the fire assistance business? And obviously it looks like we're off to a strong start on that business. So, what could that look like in a year that's heavily impacted by forest fires?
Yes, Good questions. And kudos to you for fitting in three questions, but I'll answer them both for you. First of all, Coastal GasLink, and Coastal GasLink is a huge project, everybody knows this, and it's been tapering off the last couple of years. And we've had -- we got a huge -- for a pretty large component of work as part of Coastal GasLink. It is finishing, but it is extending as well.
So, we're certainly happy about that. But it is going to complete, and it is going to complete somewhere towards the end of this year and maybe into next year to some degree. But, as I mentioned in my comments, like IFM, we're having a pretty good start to the year on new sales opportunity, seeing some of that within the oil sands and on operational support type work, and then also in workforce accommodations.
And also in the northern Ontario, northern Quebec mining, we're seeing some projects there. And Coastal GasLink is good margin work and big work, but we're seeing new opportunities that are of good size and good margin that's given us probably some good confidence that on our quest to replace that major projects flow at good margin. We're seeing some good opportunities to replace that and continue our growth profile for WAFES.
Fire situation, very active for us in Alberta. Our main focus of efforts around firefighting welfare support is Alberta and in Ontario. So, we're on the front of that. We've actually -- Alberta government's got 21 fire base camps, permanent fire base camps that we operate for them and support for them. We've got 18 out of 21 fire base camps in Alberta as well. By the last count, which in the last 24 hours, I think, we've got four incident camps that are being mobilized to support Alberta wildfires.
So, we like that business because it's a strong community support initiative for us and we're happy to provide that since primary provider in Alberta. So yeah, it is going to be a strong year for WAFES. It looks to be going to be a strong year in wildfire support in Alberta.
We also have to keep in mind the size of the business relative to the overall size of loss. We will probably see if it does continue the way it looks, you know, an increment to EBITDA related to related to wildfire, but, of course, keeping that in mind, it's a smaller or moderate increment compared to the overall size of the business EBITDA delivery.
The next question is from Zachary Evershed with National Bank Financial.
Hey, guys, quick follow-up. Could you quantify some of the actions that fall under the recession action plan? How would you react to a deeper per recession?
Yes, good question, Zack. And it is a range across our businesses. The good thing about our business and a lot of our business segments, including things like IFM and then others, even in a recessionary environment, a lot of our institutions, a lot of our defense, our airports do cut back, and we certainly saw that in the pandemic very significantly, but not necessarily, we'll see it as heavy may be in a recession environment.
So, we do see some good support because we are an operational support business and short of a pandemic recession we can tend to do better. But what we've got to keep our eyes on is just, obviously, the energy space, very strong for us, particularly the oil and gas space, perhaps the mining space. So, it depends on like precious metals and gold does and what oil price does. Some of our energy-based stuff is pretty high margin work or good margin work can we say it that way.
So, we have to watch those sectors because they are pretty strong foundations for things like lost business. But as Drew talked about, we've kind of looked at across the space. And I do want to say we've kind of been here before around energy, volatility, and cyclical conditions.
So, it's really a matter of just looking at our workload, making sure we look at our staffing, which has a bit of a direct drive on direct staffing, if I could say it that way is the workload -- does the work kind of ebbs and flows, but also in our overheads as well we would have plans. And again, we've done this before where we take a careful look at our overheads and make plans around that to manage our SG&A costs over top of the business.
Access matting is another piece of the business that can be pretty volatile, so we're making sure -- like now, it's crazy. And I mentioned earlier on, we're doing a pretty large capital investment on behalf of a client for a long-term rental contract. We're not overspending in that world because you don't want to overspend and overcommit and then have something fall off as we get into a significant recession. So, it's a delicate balance and we are running both sides of that.
And since you read it at the special access matting investment, can you give us a little bit more detail around the length of that contract versus the investment that you've made and what kind of return matrix are you going to expect?
Yes, I mean, it's a three-year contract. Average matt life is five years, but we'll get a substantial amount of life around that. I think you know that Zach, I mean, margins in the access matting business on another energy support businesses are reasonably good. So, it would be very typical margins that we would see around that. I guess what we would see with that particular situation is just a long-term commitment which we like and an extendable commitment as well.
Thank you. This concludes the question-and-answer session.
Great. Thank you.
Goodbye.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.