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Toromont Industries Ltd
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Good morning. Today is July 25, 2018. Welcome to the Toromont to announce the Second Quarter 2018 Results Conference Call. Please be advised that this call is being recorded. Your host for today will be Mr. Paul R. Jewer. Please go ahead, Mr. Jewer.
Thank you, Marie, and good morning everyone. [Foreign language]. Thank you for joining us today to discuss the results of Toromont Industries Limited for the second quarter of 2018. Also on the call with me is Scott Medhurst, President and Chief Executive Officer. Before we continue, I'd like to advise listeners that this presentation may contain forward-looking statements and information that are subject to certain risks, uncertainties and assumptions. For a complete discussion of the factors, risks and uncertainties that may lead to actual results or events differing materially from those expected, please refer to Toromont's press release from yesterday, which is available on our website. We assume you've had an opportunity to review our press release from yesterday and as such we'll focus on key highlights. Scott will begin with a few remarks -- some comments on our outlook and an update on the integration, after which I will review the operating group results and financial position. Then we'll be more than happy to answer your questions. Scott?
Thank you, Paul and good morning, everyone. The company delivered solid results in the second quarter on organic growth at the legacy operations, together with a growing contribution from the acquired businesses. We are still in the early days of realizing the growth of opportunities presented by the substantially expanded business, and we are pleased with the progress so far. Revenues at our legacy businesses increased 15% in the quarter and 11% year-to-date, while Toromont QM contributed $348.7 million in the quarter and $590.1 million year-to-date. Net earnings were up 67% in the quarter and 46% year-to-date on a year-over-year comparable basis. Net earnings at the legacy businesses grew 32% in the quarter and 27% year-to-date.In the Group, the expansion of our territories to include Quebec and the Maritimes, is expected to be transformative to the long-term performance of our company. Effective execution will be required to realize on the significant potential of a combined presence in key Canadian economic sectors and a growing rental services market. Infrastructure projects and a broader construction activity continue to present opportunities and the long-term outlook remains positive across most territories.Parts and service business continues to provide a measure of stability and opportunity for further growth. Our shops remain busy, and we continue to hire technicians in anticipation of an increase in demand. In the mining space, we have experienced good growth in product support so far this year. Production continues at existing mine sites, which is good for future product support business and incremental equipment sales to support the growth and expansion. On the integration front, we continue to work through an orderly approach that I described during our last call. I'm pleased to report the following developments during the second quarter: there was heightened focus on improving safety practices, customer experience, operational excellence processes and market coverage and position. Complementing these initiatives was the introduction of key strategic organizational goals helping align the new enterprise. Deployment of capital investments was strategic and broad-based, including uploads to the rental fleets, parts inventory optimization and upgrades and enhancements to facilities, IT infrastructure and service vehicles. Toromont CAT -- QM embraced the pursuit of growth experiencing increased revenues as a result. The team has been encouraged by the business with new customers through the sale of GCI and BCP products and accelerated growth in our component rebuild centers. There has been considerable focus on increasing the QM technician headcounts and traction has taken place in the first half of the year. We continue to actively pursue various avenues to fast-track the hiring of technicians and other key revenue-producing positions.The rollout of our Battlefield for rental services model continued with the integration of broader product lines taking hold. The footprint has already begun to expand, positioning the business to provide products and services over the full 12-month cycle to our clients. This business model takes time to reach full potential, but the initial phases of capital infrastructure investment have begun. Undoubtedly, much work remains, and we continue to ask our people for patients and support as we continue our journey. Our backlogs are solid, our shops are busy, and thanks to the effort of our people, we are focused on building a strong, sustainable platform with the goal of leading in the markets we serve.Over at CIMCO, weaker project execution in the U.S. dampened the year-over-year bottom line comparison, however, Canada continued a strong performance. Across our organization, recent tariff increases have not had an immediate direct impact on our business, however, it is expected that cost increases could ensue as tariff changes work through the supply chain and as suppliers deal with less predictable environments.Overall, the diversity of markets in the new and significantly expanded territory, a strong management group and solid financial underpinning provide substantial opportunities for continued success over the long term. I will now turn the call over to Paul, to take you through the highlights of the financial results. Paul?
Thanks, Scott. Let's look at the operating results in more detail, starting with the Equipment Group. Toromont QM's total revenue contributions, as Scott mentioned earlier, represented a 19% increase in revenues generated for both periods last year under the former ownership. For legacy businesses, total revenues increased 15% in the quarter and 10% year-to-date with higher total equipment sales, rentals and product support. New equipment sales in the legacy businesses increased 19% in the quarter and 17% year-to-date. Sales in the construction markets were up in both the quarter and year-to-date with good growth reported across most of the territory. Mining sales were relatively unchanged in the quarter and down 2% year-to-date. Power system sales decreased 6% in the quarter and 14% year-to-date from the record levels generated last year, mainly on software demand for electrical power generator sets. In Manitoba, agriculture sales grew 56% in the quarter and were up 16% for the year. Used equipment sales increased 1% in the quarter, but were down 16% year-to-date, following a slow start to the year. Sourcing used gear has been challenging with U.S. Fire is pursuing these inventories given the weaker Canadian dollar. Total new and used equipment sales at Toromont QM were up 28% in the quarter and 21% year-to-date, driven by strong new equipment sales, while used equipment sales remained relatively unchanged.Rental revenues in the legacy businesses increased 16% in the quarter and 14% year-to-date. All areas of the rental businesses reported good growth in the quarter on improved utilization. On a year-to-date basis, with the exception of heavy rents, all lines were up. At Toromont QM, rental revenues increased 25% in the quarter and 17% year-to-date, approximately 2/3 of which were generated from the light equipment fleet and lift trucks. At the end of June 2018, our net investment on the rental fleets was $522.1 million. During the quarter, we invested $63.5 million into our rental fleets and [ have ] dispositions, which is $24.7 million higher than last year.Product support revenues of the legacy businesses increased 15% in the quarter and 11% year-to-date, with growth in both parts and service across most market segments. At Toromont QM, product support revenues increased 8% in the quarter and 12% year-to-date.Gross profit margins increased 110 basis points in the quarter and 100 basis points year-to-date, void by improved margins across most revenue streams at the legacy businesses.Despite revenue margin improvements at Toromont QM versus a year ago, the margin gap still had a dilutive impact of approximately 40 basis points in the quarter and 50 basis points year-to-date.Selling and administrative expenses increased mainly due to the expenses related to the acquired operations and certain integration-related costs. Excluding these, expense ratio was 80 basis points lower in the quarter and 30 basis points lower year-to-date.Operating income increased $43.9 million in the quarter and $54.7 million year-to-date. Toromont QM contributed $24.9 million in the quarter and $30.8 million net of integration-related costs. At the legacy businesses, operating income increased 38% in the quarter and 28% year-to-date, which translates to an increase in operating income margin of 220 basis points in the quarter and 180 basis points on a year-to-date basis. Bookings increased in the quarter and year-to-date on the incremental orders at Toromont QM. Bookings at the legacy businesses were comparable in the quarter excluding a large mining order in the second quarter of last year. Year-to-date legacy orders were up across all market segments except mining.Backlogs increased to $407 million, including $175 million at Toromont QM, most of which is expected to be delivered over the remainder of this year.Let's turn now to CIMCO, where revenues increased 20% in both the quarter and year-to-date on strong package sales growth in Canada and the U.S. In Canada, all regions except Atlantic Canada reported growth in the quarter and year-to-date on higher industrial activity, while recreational levels were somewhat softer. In the U.S., the same market trends were experienced in both the quarter and year-to-date. Product support revenues increased 2% in the quarter, but were down 1% year-to-date. There is an inverse correlation between package sales and product support, as increased package sales draw unlimited technician availability to facilitate installation and startup. Margins decreased 540 basis points in the quarter and 480 basis points year-to-date. Package margins were lower against a tough prior year comparator, which included good project closeouts and favorable onetime adjustments not repeated. Additionally, weaker project execution on 2 projects in the U.S. and higher warranty costs further pressured margins downward. Higher product support margins in the quarter and year-to-date serve to partially offset the lower package margins and an unfavorable sales mix of product support revenues to total revenues.Selling and administrative expenses were relatively unchanged in both the quarter and year-to-date, but 230 basis points and 310 basis points lower respectively as a percentage of revenues. Operating income decreased 23% in the quarter and 9% year-to-date. Bookings were down 15% in the quarter and 10% year-to-date. In Canada, bookings were down 19% in the quarter and 4% year-to-date, while in the U.S. bookings increased 31% in the quarter, but were down 35% on a year-to-date basis.Backlogs of $163 million were lower than the record set last year, but still significantly higher than the previous 5-year average. Approximately 3 quarters of the backlog is expected to be delivered over the remainder of this year. On a consolidated basis, basic EPS increased $0.31 in the quarter to $0.83 and were up $0.35 for the year to $1.21. On a comparable basis, year-over-year, this translates to a 31% increase in the quarter and 26% year -- for the year. As Scott pointed out earlier, we're pleased with the results from both the legacy and acquired businesses and remain focused on the long runway for growth. At June 30, our overall financial position remains strong. We ended the quarter with cash of $280 million with a net debt to total capitalization ratio of just 28%. That concludes our prepared remarks, and we'll be pleased to now take your questions. Marie?
[Operator Instructions] The first question is from Jacob Bout from CIBC.
I think to start off here just comment on the sustainability of the revenue growth you saw at Toromont QM?
Well, what -- sustainability to us really is focused on, is continuous improvement and this is long-term journey, particularly with our integration right now. We were fortunate with some timing of business in the quarter relating to some movement from Q1 into Q2. If you recall, we talked about Q1 a bit and we saw some deals move into Q2. We had very strong new RPO or rental purchase conversions, the timing of our rebuilds was excellent for the quarter, so but we really continued to focus on the long-term gains here and then our performance over the long term.
So I think, Jacob, as we constantly point to folks, it wouldn't be prudent to just take the quarter and extrapolate off of a quarter. I mean, obviously, we're focused on the long-term trends and this thing won't be linear on a quarter-to-quarter basis. So we're absolutely confident in terms of value that we'll be creating over the long term for our long-term shareholders, and we're pleased with results we've achieved so far this year.
Are you expecting to see a divergence in revenue growth in Q1 versus the legacy business?
We'll have to see how that unfolds. I mean, it really comes down to end markets and timing of projects and how that taps our demand.
Can you give any color on the performance of backlog and bookings year-on-year for Toromont QM?
We can't really because the former organization really didn't track backlog and bookings in the same way that we do. So we certainly can't comment on the numbers that they would have generated. But certainly, business levels would be broadly up.
And we are pleased with the progress so far.
Okay. Maybe last question here. Just -- so you talked a bit about tariffs and possibly having some impact in second half of the year. How do you prepare for that? And what are some of the consequences you see coming down the pipe?
Well, what we've seen so far is minimal impact both from behavior some suppliers as well as customer behaviors. So that's what we've seen so far, however, when you look at the environment with steel and aluminum, the results of the tariff change could impact our pricing, but -- so we're monitoring that closely and working with our supply chain on that to ensure we understand it fully.
We have a question from Cherilyn Radbourne from TD Securities.
Wanted to start by asking about the margin improvement that you saw in the legacy equipment group, which seem to have been quite broad-based against all types of business. Can you just comment on to what extent that was driven by, what I'll call, market factors versus sort of internal initiatives?
I think it's a combination of both. Certainly, our focus really is try to take hold in that quarter on operational excellence initiatives. We're very focused on working with the teams on that front. We also were very fortunate with some of the business activities obviously, in the new sales and product support, which was -- we were pleased with that progress, and we started to see some progress in our rebuilds of shops as well. The timing of some of that rebuild work was favorable, both at the legacy and the QM businesses. Our rebuild activity for components and prime product was up significantly in the quarter.
Okay. And then just shifting to the rental business. Clearly, time utilization I think has been the driver of improvement for some time and we've seen rates under pressure. Is there any sign that you're starting to kind of get lift on rental rates?
Not at this point Cherilyn. So we can continue to see pressure in the quarter. The rates being marginally down on the year-over-year basis in the light equipment rental fleets.
But the -- as you said, the utilization was very encouraging in the quarter.
On larger fleets.
On larger fleets, yes.
Yes. Okay. And can you update us on your progress just with respect to the rollout of the rental model at Toromont QM?
Yes. So we're -- in Q2, we really tried to move forward on some of those initiatives to bring in full-round services models into the QM businesses. So we have invested, broadened those product lines and as you know, Cherilyn, these -- this business philosophy takes time to take hold in terms of returns. So the investments are starting to take hold, we're really focused on broadening our footprint as well. And so we are encouraged, we are moving forward on this front, but it will take time before you can really capture the full maturity of that business model. So this is going to be a longer process, but we're committed to it.
And in terms of the additions that you've been making to the rental fleet in that territory. Are those largely on the lighter end of the spectrum?
Right now, I'd say it's more weighted to the lighter, but still we are building on the heavy as well, that's a focal point. What we've had to do in the quarter was we -- our disposition was down, because we're holding onto these fleets due to the activity and due to the timing of uploads.
Our next question is from Yuri Lynk of Canaccord Genuity.
Just on the cash flow statement, what's driving these the big inflow of noncash working capital? It's around $195 million year-to-date, and would you have sort of a guess as to where that number might end the year?
Well as we refer to in the MD&A, basically, we'll work through a number of different factors, as it relates to noncash working capital and one of the factors is certainly related to various supplier terms, and [indiscernible] factor that we're dealing with.
Okay. And so this would be kind of the low-hanging fruit on those initiatives? And I mean that probably not going to continue throughout the rest of the year, right?
It -- we'd certainly expect it will continue through the year.
Okay. Good. Just want to go back on the legacy equipment group margin question. I wasn't exactly clear how much of it was -- I mean mix looked neutral compared to last year when I look at product support and rental as proportion of sales. So anymore color you can provide as to the sustainability, of some of the changes you made, anything special that might have boosted the margin in the quarter and the legacy group because it was a substantial step up sequentially and year-on-year?
So before I flip it over to Scott, to sort of broader discussion, just one point, you referred to mix, but there's also utilization as a large factor, right? So certainly, improved utilization of rental fleets certainly contributed to those margins. Scott, anything to add.
Yes, that was a key and as well as we had some uptick in legacy on the new rental conversions and as well as the rebuild closure of jobs was favorable in the quarter. So some of those factors did increase. We even saw some improvement on the used purchased revenue streams, which was helpful as well as the used trade revenue streams as well. That was an increase on a year-over-year basis.
Our next question is from Derek Spronck of RBC.
Just on the hiring of additional technicians and front-end staff, should we expect a little bit higher SG&A as a percent of revenue in the back half of the year, as -- until those new hires kind of get rationalized into the business?
Well, just what we're focused on is the hiring of revenue producing positions, that's our key point there in terms of our model that we want to create. There is cost associated with that as you integrate and the other thing that we have to be attentive to is we are investing in those rental fleets and that takes time before it comes to full maturity and where you're really reaching the full potential of that model.
Okay. And I think you stated that the QM was a 40 basis point drag to margins for the quarter. Is that generally the drag that we should anticipate over the next 2 quarters? Or could it be a little bit lumpy I guess depending on the revenue growth there?
So certainly, as I said earlier, I mean you cannot, and as I consistently say, don't extrapolate off a quarter, right? So this is not going to be linear as we continue to implement processes and seek opportunities for the complete integration of these 2 businesses. So I'd certainly wouldn't take a quarter. I'd roll it, the closer you can get to a year, is better, and [indiscernible] ?
Do you think you can eventually achieve the margin profile that you had in the legacy business over time? And just finally, from a cultural perspective, has -- QM or the Hewitt Group, have they embraced the change? And culturally, how is that -- the integration process has gone so far from a cultural perspective?
So far, we're pleased. A lot of work remains in there. Obviously, we're building a new team and it takes time, but we're working towards that. And it's all about continuous improvement right now and it's -- again, I know there is focus on the margins, but it's also about ensuring we're building a platform for growth and sustainable growth and that's what we're really focused on with the team as we embrace these opportunities and making sure we have the right infrastructure and we're allocating the capital appropriately. That's where the focus is and we're very pleased how the team is embracing these initiatives.
Relative to your expectations coming into the -- after buying Hewitt, has the integration and the overall platform, relative to your prior expectations, how would you comment on that in terms of -- is it tracking better than you anticipated kind of where you expected?
We are satisfied with the integration so far. We've got a lot of initiatives on the plate, on all aspects, from safety to the customer experience, from the operational perspective, how we're deploying capital, it's all about the pursuit of growth here and making sure we have the right infrastructure. So I would say we are satisfied with the progress so far.
Our next question is from Michael Doumet of Scotiabank.
So on the gross margins, just want to follow up on that -- the legacy equipment business, again, nice expansion, no real benefit for mix. Any way you guys can break the gross margin expansion, say, into buckets, new equipment rentals and products for -- I just want to get a sense for the magnitude of the improvement from each of the businesses?
We wouldn't be prepared to parse it to that level, Michael. I mean, just, we would say that the development that we saw certainly was broad-based.
Any way you can rank them? Paul, I mean, did the improvement come from one of the businesses in particular?
It was pretty even actually, across the business.
Okay, that's helpful. And maybe on the rental margin, anyway you can provide some historical context, just wondering if there's a potential decent margin recovery story there just given the rental rates and the trend there.
Well the key on the rental was the utilization in the quarter and that we realized it both on the heavy, the light and the power. We saw all areas improving on the utilization, which certainly helps.
So certainly from a financial utilization perspective, we are down a bit from where we were couple of years ago. And that's largely rate pressure, but it is also some cost inputs. As you think about rental, I mean, think like a hotel room, managing a hotel room. And if you get an additional night rental then obviously that flows the margins. So clearly, improved utilization of rental fleets is a margin expansion opportunity.
But that takes time as well, Michael, and that's what we're ramping up our fleets. Doing it orderly, but we do want to upload these fleets, it's taking time to upload them, and you have to make sure you have the right infrastructure and then it takes time to realize the gains and as you interface with your customer base.
To use another analogy, think of rental as [indiscernible] planting an orchard not a wheat field. And a part of the profitability in terms of total rental fleet is keeping the fleets for the right duration and then selling it at the right time. And so the gross margin and disposition of rental fleets is important part of the profitability in that total model and that's what takes a number of years to work out.
It's going to take time.
Okay. No -- I appreciate those comments. And maybe just turning it to a comment made last quarter, as it relates to slippage and some orders being pushed out related to extended lead times. Can you comment on whether you saw an improvement, as it relates to lead times? And maybe secondly any thoughts on whether expectations for higher equipment prices due to higher steel prices may have pulled demand forward in the quarter?
Well, we can't speculate, because we don't have enough substance just yet. What we saw in the quarter was minimal impact, however, there is -- these tariffs could equate to increases in prices and we're monitoring it closely, but that's all we can -- we understand so far.
And on the lead times, any sense if that's getting better?
That's very fluid right now. We're monitoring that closely, that explains some of our reasoning behind holding onto our fleets and so the disposition was down in the first half, because these delivery times are moving right now, and we're monitoring it closely. Availability is a focal point.
Our next question is from Devin Dodge of BMO Capital Markets.
Just to get back on the pricing, so at some recent investor events, CAT management appeared to put in a greater emphasis on pushing through prices to offset some of the cost inflation that is either has experienced or expected to experience? I guess, from your perspective, has CAT been a bit more aggressive in pushing through the newer price hikes? And do you think your markets are strong enough to absorb these price increases?
What we do is we focus on the total value proposition and how we're positioning our equipment and services. We've dealt with these things before and these variables, I don't think there's anything out of the ordinary. We're all working on efficiencies and to make sure we compete effectively with our customers.
Okay. That's helpful. And can you provide some color on your plans for the material handling business? Just trying to get a sense for how this business is performing? How do margins compared to the overall equipment group? And what's you're focusing on to drive improvement?
Yes, so there's a lot of fundamentals in play there. We did see progress in the quarter, sales were up, [indiscernible] were up. Where we're focused there, is on our market coverage, our sales coverage, particularly in the Ontario market, and to look at your product support as a percentage, we're really focused on the fundamentals of that business, and there's great growth opportunities in there.
And historically, as we have commented in the past, this business has not had the same sort of profitability profile as the balance of business. One of the things that we're heavily focused on right now in terms of looking at that business is to manage it in much the way the Toromont manages its other business units. So we're looking at separating it, bringing in the various components of the predecessor businesses together under common leadership and the common IT platforms. And running it as a totally separate entity with targets that are autonomous to that entity. So we've achieved great success in the rental services business with that strategy. We'll have to see how that unfolds in material handling.
And that's another strategic area and there where we're looking at is the rental side of that business. We're isolating it and we believe there could be opportunities there, but we want to understand it first, get the processes in place before we'd start to allocate capital.
Our next question is from Ben Cherniavsky from Raymond James.
Any comment -- any further comments you can make on CIMCO, and the margins that -- we saw this quarter, I think last quarter as well where total softer -- I realize it's a lumpy business, but I think it's 2 quarters in a row now we've sort of called out the U.S., and I know that's also been a big focus of the growth opportunity there. So anything we can read into that?
And it is -- it can be a lumpy business, Ben, as you point out, and as you clearly understand, that was a great report that you did last year on the industry. The large part comes down to project execution, right? So when you look at project execution, we did have some challenges that we encountered both in the first quarter and second quarter on a number of projects. I did spend some time in the U.S. visiting our mobile operations about a month or so ago to better understand it. I think we made some improvements in terms of both how we're monitoring the projects and how we're managing the projects, so I'm hopeful on a go-forward basis, but it's something that we need to continually monitor and manage.
Yes, I'll put a little more color. We're not pleased with what's -- the trend that started to develop in there in terms of our deal structure, our processes relating to estimating and so we're doing a full review with the team and we've got to quickly identify these root causes and address them.
I know we've talked a little bit about this off-line, but just perhaps to make it a little clearer, is this in any way a reflection of, may be a strategy of trying to establish a foothold in the market, where basically you compete on price to win some projects and prove your platform? Or is this really just missed execution on specific projects that were -- should have been bid at -- or should have been executed on higher margin?
Unfortunately, it's a latter factor, Ben.
This is fundamentals.
But would you consider the former strategy as a way to get some more scale on the market?
I mean, we're certainly -- we continue to be focused on improving our penetration of industrial markets and we certainly sharpen our pencils on that front and we're bidding aggressively to pursue those market.
Okay. And just also on rental, again, something I think we've discussed in the past, but maybe you can give us a little update on CapEx. What we might expect for this year and anything really into next year or beyond, because obviously that's a big focus for you guys in Quebec, in particular there's a big change in the strategy for rentals. So have you got any further clarity on what it might cost you to get where you want to be with that opportunity?
We certainly don't have an end number in terms of what the opportunity is, but we are certainly investing aggressively in our Quebec and Maritimes operations. I would say and we would've invested about $40 million in QM so far this year. So that's fairly substantial, and we're probably looking at somewhere in the order of $65-or-so million just there alone this year. So as opposed to that would increase rental from roughly $70 million last year to somewhere $135 million, $140 million this year, really depends upon the opportunities as we roll out that platform. We are quite pleased with how that platform has rolled out, we're probably a little bit ahead in terms of the integration of those business units as compared to the integration of other business units.
The other thing impacting this is the retail side, and there's been signals from retail, so we're monitoring that closely and so we are shifting a bit relative to those signals we're getting from the customer base.
And sorry, Paul, those number on rental, you quoted, those are -- or sorry, the numbers on Quebec that you quoted, those are just for the rental fleet?
That's just rental fleet.
And is that net or gross CapEx.
That's net CapEx and the latter that I refer to in terms of the total expectation for the year would be total rental across the whole business.
Total net rental for all of your equipment group?
All of the equipment group, so somewhere in $130 million $140 million range. And in Quebec, it could be somewhere in the $60 million to $70 million range.
[Operator Instructions] We have a question from Maxim Sytchev from NBF.
I have a -- so now that you obviously have your feet wet in Quebec for a couple of quarters, is there anything structural in the rental market, in that geography, specifically, that would prevent the same level of penetration as you have with Battlefield in Ontario, just besides the obvious duration of presence, but is there anything structural in the market that's different?
No. The fundamentals are there. It's just we're creating new business model so it's going to take time.
Okay. And then I think when you were looking at the acquisition originally, potentially, sharing the rebuild volumes between Ontario and Quebec, can you comment on sort of the progress for that initiative, what's going on there?
A very early stage, but starting to leverage that and that is the next phase where we start to look at these items, like rebuild centers and how we can maximize capacity as well as expertise.
And so right now, I mean across the entire platform, so is Ontario overutilized, Quebec is underutilized and you're trying to figure out what's -- how to better manage that? Is that an accurate assessment?
I wouldn't look at it as underutilized anywhere or overutilized. I'd look at it as we're looking at it strategically of maximizing and improving on all fronts with the resources we have and that is early stage in that assessment. We have been moving resources around to meet the demand signals, particularly in QM and so that's helpful. We're starting to leverage as a team now, Eastern Canada and Central Canada team.
There are no further questions registered at this time, I would like to turn back the meeting over to Mr. Jewer.
Thank you, Marie, and thanks, everyone, for their participation today. [Foreign Language]. That concludes our call. Have a great day.
Thank you, Mr. Jewer. The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation.