North American Construction Group Ltd. (NYSE:NOA) Q1 2025 Earnings Call Transcript

North American Construction Group Ltd. (NYSE:NOA) Q1 2025 Earnings Call Transcript May 15, 2025

Operator: Good morning, ladies and gentlemen. Welcome to the North American Construction Group Conference Call regarding the First Quarter Ended March 31, 2025. At this time all participants are in a listen-only mode. [Operator Instructions] The company wishes to confirm that today’s comments contain forward-looking information and that actual results could differ materially from a conclusion, forecast or projection contained in that forward-looking information. Certain material factors or assumptions were applied in drawing conclusions or in making forecasts or projections that are reflected in the forward-looking information. Additional information about those material factors is contained in the company’s most recent management discussion and analysis, which is available on SEDAR and EDGAR, as well as on the company’s website at nacg.ca. I’ll now turn the conference over to Joe Lambert, President and CEO. Please go ahead.

Joe Lambert: Thanks, Jennifer. Good morning everyone, and thanks for joining our call today. I’m going to start with a brief overview of our Q1 2025 operational performance before handing it over to Jason for the financials, and then I’ll conclude with the operational priorities, a review of our growth opportunities in Australia and the infrastructure markets, our expanding bid pipeline, our backlog and our outlook for the remainder of 2025 before taking your questions. On Slide 3, our Q1 trailing 12-month total recordable rate of 0.34 improves upon our Q4 results and remains better than our industry leading target frequency of 0.5. We continue to advance our systems and training with key focus on Human and Organizational Performance principles commonly called HOP and look to continue the trend with our ultimate goal of getting everyone home safe.

On Slide 4, we highlight some of the major achievements of Q1. While we struggled to overcome the weather impacts to our business, we were able to achieve some meaningful accomplishments. We expanded our heavy equipment fleet in Australia by over 10%, boosting capacity to meet growing demand. In Canada’s oil sands, we achieved an impressive 68% equipment utilization rate in the quarter, with February peaking at 70%, reflecting our focus on operational efficiency. Early stage development and heavy civil infrastructure work began at a major copper mine in New South Wales, positioning us for long-term value in the critical minerals sector. The Fargo project continued to advance surpassing 65% completion with final construction now underway in Q2.

Financially, we reached a new milestone with trailing 12-month combined revenue hitting a record $1.5 billion. Our disciplined management approach kept administrative costs at 3.9%, meeting our internal targets. Additionally, our parts and component supply and services agreement with Finning delivered a full quarter of impact, effectively combining our in-house capabilities with their expertise to drive improving cost and equipment utilization. Moving on to Slide 5; you can see that the Q1 utilization of 68% was the same in both Canada and Australia. Our Canadian fleet improved to our best quarterly utilization since the winter of 2022, 2023. And while we expect Canadian utilization to drop modestly in Q2, we also fully expect it to then trend back up, approaching our 75% target by year-end.

Australia took a major hit in Q1 due to rain impacts, but we remain confident in our ability to hit our target range of 85% in late Q2 to early Q3. With that, I’ll hand it over to Jason for the Q1 financials.

Jason Veenstra: Thanks, Joe, and good morning everyone. Starting on Slide 7, the headline EBITDA number of $100 million and the correlated 25.5% margin were both negatively impacted by the weather in Australia and Canada, which Joe mentioned and will be reviewed in the next slide. We included a comment here about our steady growth since the second quarter of 2024 which was our weakest revenue quarter post the MacKellar acquisition. We generated $330 million of combined revenue in that quarter after absorbing a 25% reduction in Canada from the first quarter. Since that time, our combined revenue has been steadily climbing and the $392 million of revenue this quarter represents an overall increase of 18%. But importantly, when just looking at Australia and Canada represents a 25% increase in just three quarters.

And when looking one level further, the Canadian operations posted an encouraging top-line of $178 million this quarter, which is impressively 45% higher than the second quarter of 2024. Moving to Slide 8 and our combined revenue and gross profit. MacKellar Group and DGI Trading, which we combine as Heavy Equipment Australia in our results, were up $24 million on a quarter which was impacted by heavy rains in February and March and during which MacKellar posted equipment utilization of 68%, their lowest mark since acquisition. The reason for the quarter-over-quarter increase is due to the 25% increase in fleet capacity since March of last year, with 10% of that increase coming since year-end. This top-line positive variance was further bolstered by higher revenue in the oil sands region and as previously mentioned, was importantly and significantly up from the fourth quarter.

Our share of revenue generated in the first quarter by joint ventures was consistent with last year as higher scopes in the Fargo-Moorhead project were mostly offset by lower scopes within the Nuna Group of Companies, as well as the discontinuation of the Brake Supply joint venture. Before getting into the weather, our reported combined gross profit margin of 13.2% was impacted by unusually high early component failures in Canada, which we have adjusted for in the adjusted EBITDA margins. Excluding these abnormally high component failures, which we have addressed through the reorganization of our component supply approach, overall combined gross profit was approximately 14% and Canada’s gross profit margin was approximately 8%. As mentioned, the weather significantly impacted gross margins with the dual impact of lower top line revenue not covering overheads and the increased costs incurred during idle time.

In Australia, the consistent rain resulted in poor utilization as equipment remained parked for significant amounts of time, particularly at the Carmichael mine, and this was compounded by increased costs incurred for site cleanup and dewatering activities. In Canada, February was the month that had the most serious impact on operations with the extreme cold requiring both equipment to be idled for extended periods of time, as well as the incurrence of cost to keep personnel and equipment warm. All told, it is estimated based on historical precedent that the weather impacted gross margins by between 5% and 7% in the quarter. Moving to Slide 9; Q1 EBITDA essentially matched last year as the revenue increase was fully offset by operational challenges.

As mentioned, the 25.5% margin we achieved reflected the weather we were required to operate through. This margin level is not indicative of where we see our business operating at with cumulative EBITDA margin since the MacKellar acquisition at 29%, which covers over $2 billion in revenue in an eventful 18-month timeframe. Included in EBITDA is general and administrative expenses of $11.1 million in the quarter and equivalent to 3.3% of reported revenue, which is below the 4% target we’ve set for ourselves. Going from EBITDA to EBIT, we expensed depreciation equivalent to 16% of combined revenue, which is much higher than the 14% posted in 2024 Q4 and reflects the high idle hours incurred in Canada, particularly in February. Again, this 16% is much higher than our expected run rate moving forward, given we’ve been at approximately 14% since the MacKellar acquisition in 2023 Q4, and we fully expect 2025 to finish in that range.

Adjusted earnings per share for the quarter of $0.52 reflects the steady EBITDA performance but was significantly impacted by the $11 million of increased depreciation, which is equivalent to $0.30 per share. Interest and taxes were generally consistent with last year, and the average cash interest rate for Q4 was 6%. Moving to Slide 10, I’ll briefly summarize our cash flow. Net cash provided by operations prior to working capital of $76 million was generated by the business, reflecting EBITDA performance net of cash interest paid. Free cash flow usage was impacted by our front-loaded capital maintenance programs, as well as a $25 million draw on working capital accounts. Moving to Slide 11, net debt levels ended the quarter at $867 million, an increase of $11 million in the quarter as the free cash flow usage and growth spending required debt financing, but was mostly offset by the $73 million of debentures that were converted into shares during the quarter.

Net debt and senior secured debt leverage ended at 2.2 times and 1.8 times. Of note, and subsequent to quarter end, we issued $225 million of 7.75% senior unsecured notes, which had no impact on net debt leverage ratio, but decreases pro forma senior debt leverage to 1.3 times. ROIC of 10.6% as at March 31 decreased more than 1 percentage point in the quarter as the high depreciation and capital spending in the quarter with normalized levels having resulted in an approximate 12% ROIC. As we get the full trailing 12 benefit of the increased Australian fleet and with the Fargo project achieving certain financial milestones, we expect to see a trend back to our company target of 15%. With that, I’ll pass the call back to Joe.

Joe Lambert: Thanks, Jason. On Slide 13, we highlight our 2025 priorities. These priorities remain unchanged. Safety is our social license to operate and our moral obligation to our employees and will forever be our highest priority. Equipment is our largest, most controllable cost and high utilization drives return on capital and financial performance. Geographic and commodity diversification is both our growth engine and opportunity to engage underutilized assets and increase the stability and consistency of our business. Customer satisfaction, especially with our Queensland and Alberta markets in which we have worked continuously for many decades, is what drives our expectations for 100% renewal rates in those markets and opportunities to increase scope with expected increasing client production forecast.

As we have grown, we have also relied on expanded and upgraded systems to increase our management information, cost monitoring and ability to enter new markets such as unit rate work in Australia, which we have had recent success with our win and smooth start-up of the copper mine in New South Wales. Lastly, we continue to look to improve and expand our internal maintenance skills, both to improve our internal costs and also to expand our revenue streams through external customers. As I have stated previously, we believe our in-house component rebuilds, whole machine rebuilds, telematics and strategic partnerships with OEM dealer, will provide increasing opportunity for external maintenance sales. I don’t have a slide specifically on tariffs, but this is as good a place as any to clarify.

We have had two vendors identify increases in costs due to tariffs. One is a U.S. engine manufacturer who had advised of a 3% to 4% increase due to tariffs, which isn’t far beyond normal expected annual increases. The other is a U.S.-based tire manufacturer for our ultra-class truck tires, which has a 25% tariff increase in pricing. While we are researching other suppliers, there are limited ultra-class tire manufacturers. Overall, we expect the tariffs to potentially raise our internal costs less than one-half of one percent over the next year or so should the tariffs remain in place. We continue to monitor the potential impact of U.S. tariffs, but at this point, believe it is negligible. On Slide 14, we highlight the growing civil infrastructure spend in our key markets of the U.S., Canada and Australia.

Aging infrastructure, energy transition, climate resiliency and tariff threats pushing nations to seek more resource independence are all driving what we believe is a vastly growing opportunity in the civil infrastructure markets. We see the desired speed for development also lowering the risk for contractors. The growing opportunity and lower risk is why we believe we can build our infrastructure business to about 25% of our overall business in the next three years. We have a new executive member starting with us in a couple of months, and she will be leading our Infrastructure business in what we see as an exciting area for growth. Stay tuned as we provide more information and analysis on this expanding infrastructure market over this summer.

On Slide 15, we highlight what we believe is our biggest organic growth opportunity going forward, and that is our continued expansion in Australia. The Australian contractor marketplace is massive and growing. Western Australia, in particular, is 50% of the active mines in the entire country, and we have less than a 1% share of that market. We have just started to see initial tender packages and budgetary proposals coming out of Western Australia and believe we will begin to receive RFPs in late Q2, early Q3 for 2026 project starts. Slide 16 highlights a strong bid pipeline of $15 billion with a massive increase around $4 billion in our upcoming infrastructure opportunities. The addition of a major equipment operator labor supply tender in oil sands, continued strong activity in diversified resources in Canada and a couple of major opportunities for early renewal extensions and expansions with our existing Queensland clients in Australia.

We have had a 100% success rate in renewals with our Queensland clients and look to continue that trend. Moving to Slide 17; with the Q1 typical quarterly backlog consumption, our pro forma backlog now sits at $3.2 billion and is a decrease of about $300 million from our year-end 2024 backlog. With the previously mentioned activity level in our bid pipeline, we expect our backlog to hit a record $4 billion mid-year this year and demonstrate increasing geographic and resource diversification. On Slide 18, we have provided our outlook for 2025 with unchanged key metrics from year-end. We believe we can make up for the Q1 weather impacts in both Australia and Canada over the course of the year and expect December construction activity in North America will be busy, particularly in Q3.

We also expect that the growth assets we have added into our Australian operations will be fully operational by the beginning of Q3, providing what we will be another busy second half of our year. Lastly, regarding capital allocation going forward, we have been active in our NCIB having purchased and canceled 250,000 shares since inception to quarter end, demonstrating our commitment to shareholder-focused allocation. We have increased liquidity with our high-yield raise, which gives us confidence to continue investing in our NCIB and provides us funds should we need to settle our remaining convertible debt with cash, which is now a current liability. The high-yield also provides additional funding should we need letters of credit for future infrastructure bids or fund other high-return investment opportunities.

Q1 weather dragged down our start of the year, but we see great opportunities, improved financial performance and continued shareholder-friendly investments going forward. With that, I’ll open up for any questions you may have.

Q&A Session

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Adam Thalhimer from Thompson, Davis. Please go ahead.

Adam Thalhimer : Hi, good morning guys.

Joe Lambert: Good morning Adam.

Adam Thalhimer : Can you help us a little bit thinking about seasonality for the rest of the year? I’m curious how you guys think Q2 might trend versus Q1 from a top-line and an EBITDA perspective.

Jason Veenstra : Yeah, I can take that one, Adam. We actually see top line and EBITDA being quite consistent with Q1. The oil sands is seasonally slower. It’s less of an impact in our more diversified business, but we see utilization in the oil sands coming down a little bit. But with lower depreciation, we see on the EPS side, a nice increase in Q2. So top-line and EBITDA consistent with Q1.

Adam Thalhimer : Great. And then, Joe, can you just expand? You talked about a new hire on the infrastructure side and just maybe what you’re seeing for large infrastructure bidding in the U.S. and Canada.

Joe Lambert : Yeah. I mean predominantly what we’re looking at recently has been a big increase in P3s in the U.S. The ones we are looking at are — there’s a couple of dozen actually. It’s all around energy transition and climate resiliency. So there’s quite a few pumped hydro projects. We’re seeing quite a few dam construction levy raises around flooding. We see a lot of water retention in the Western U.S. And so we’ve really just got into the business development side of this, which is the big adds you are seeing. Those are all P3 projects. About half of them are the U.S. Corps of Engineers. And yeah, we’ve got what we think is a great leader for that business and our overall business development starting here at the beginning of July.

So we think those are great opportunities. We also see them as lower risk in the form of contracts that are coming out. So most of the stuff you’ll see on our bid chart is actually from the P3 conference in Dallas in the U.S. and that’s really what’s driving that part of the business.

Adam Thalhimer : And is that in your $4 billion backlog expectation by midyear or would that be?

Joe Lambert : That wouldn’t be in this year at all. They’re longer lead times. They’d be more in the 2027 kind of range on average. If you look at that bid chart, the two that are the furthest to the right on the bid pipeline are both flood protection jobs from the Corps of Engineers. There is some potential for some earlier, but that’s kind of the timeframe we’re looking at is around 2027 for most of these to kick off.

Adam Thalhimer: Perfect. I’ll turn it over. Thanks guys.

Operator: Thank you. And your next question comes from the line of John Gibson from BMO Capital Markets. Please go ahead.

John Gibson : Good morning guys. Thanks for taking my questions. Just first, wondering if you could quantify the financial impact of the rainy weather in Australia in Q1?

Jason Veenstra : Yeah. We put it at about 5% to 7% of gross profit margin in Australia. Was your question just on Australia, John?

John Gibson : Yeah. I guess just what a normalized quarter would have been absent the severe weather impact.

Jason Veenstra : Yeah. So we are kind of in the $10 million range in Australia. They’re normally at about 25% gross profit margin. They came in at 16% or 17%. So that kind of order of magnitude.

John Gibson : Okay, great. And then second one for me, just your oil sands work continues to improve. I guess what’s changed here? Is it the new contract structure? Is it just a bit of a pickup from some work that was delayed last year?

Joe Lambert : I think it is very similar top-line. I think we are getting a bit more efficient in the operations there. Obviously, Q1, we had a big hit on the cold weather. When it gets extremely cold, like in that minus 25 or colder you just got to leave equipment running because if you turn it off, it’s very difficult to get them started again. Other than that, I think we are seeing very strong demand. Q2 is usually our weakest quarter in oil sands, and then we think we’re going to finish strong there and look forward to the projections for next year. We think with production continuing to increase in oil sands and material movements will follow, and we see modest growth potential year-on-year in the oil sands as well.

John Gibson : Okay, great. Congrats on the solid quarter in light of some tough operating conditions.

Operator: Thank you. And your next question comes from the line of [indiscernible]. Please go ahead.

Unidentified Analyst: Hey, good morning guys. Hoping you having a good day. Joe and Jason and the whole team, thanks for your time. I was coming through the financials and saw that the subcontractor services increased a good bit. It looks like from $59.6 million ballpark to $75.6 million comparing 2024 Q1 to 2025 Q1. How would you comment on that? What was the reason for the increase?

Joe Lambert : Yeah. So that’s all Australia driven, and we are doing some new work in Australia that requires subcontractor services, particularly at that copper mine in Australia as well as the rainy weather required some services to be brought into sites that we coded as subcontractors. So — about $18 million of that increase is MacKellar related. And we — it is a kind of a run rate that we would expect to see. We do enjoy a margin on that subcontractor work. So it is all kind of part of the different scopes year-over-year.

Unidentified Analyst: Okay, got it. And then my second question is I think that you guys are doing an excellent job as far as management is concerned. But how do you respond to any investors who might be losing confidence in management’s ability to execute based on I guess, repeated issues related to climate and weather.

Joe Lambert : I think our job is to deliver results that we say we are going to get. And so yeah, Q1 was a bit down due to weather, and we need to deliver into the yearly guidance, and that’s our expectation. I think any market is just expecting you — if you put up a number that you hit it or beat it. And that is our internal expectations as well.

Unidentified Analyst: Excellent. Thank you so much guys. Hope you have a good day.

Operator: Thank you. And your next question comes from the line of Chris Thompson from CIBC. Please go ahead.

Chris Thompson : Good morning guys.

Jason Veenstra : Good morning Chris.

Chris Thompson : Last quarter, you put out a bit of guidance on the quarterly cadence of EBITDA. You kind of framed it as percentage of your guidance per quarter. Just wondering if you could reiterate that for us going forward?

Jason Veenstra : Yeah, Chris, just as mentioned in the previous call, I think we didn’t put that in Joe’s shareholder letter this quarter, but we do see Q2 looking a lot like Q1 on the EBITDA perspective. I think as far as first half, second half, the way we see it is on the EBITDA anyway that about 55% being in the second half of the year with 45% in the first half. So that’s kind of the cadence we’re seeing right now. Q3 will be a little bit up on Q4. But yeah, you are getting into the 1s and 2 percentages at that point.

Chris Thompson : Okay. And then just with respect to the guidance, when you said it back in December, these weather impacts would have been unforeseeable. And you talk about your run rate EBITDA margin being about 3% higher than what you put up in the quarter. So that implies there’s potential slack in the guide. So I’m just wondering like given the context of that, how should we be thinking about the guide? Even the range, are you feeling like you’d be leading more to the lower end of the range after the tough Q1?

Joe Lambert : I guess it depends on how you look at the law of averages, Chris, I think we’re expecting average weather becomes average weather. And I think that’s a reasonable expectation. If you project the weather in Q1 through the rest of the year, and generally, 2 and 3 are — we’re obviously not running into idle issues even if we get rain in Q2 and Q3. We had a colder Q1. Do you expect a warmer Q4? The law of average would suggest so. But I don’t think, we project our guidance with any kind of slack or anything else. We project the midpoint is what we think is our 50% probability number. And the range where we think the volatility of that is. So I fully expect to deliver into the range. If we have worse than average weather for the year, will we be in the lower end of it? Probably. We go by the law of averages. We forecast on average weather. And so I expect we are going to be close to average when the year ends.

Chris Thompson : Got it. Okay. And then just touching on the weather. Looking at rainfall data in Queensland, it looked like April was still relatively high versus historic. I mean, significantly less rain compared to February and March. So I’m just wondering like do you expect a bit of a gross margin headwind in Australia for part of Q2 or is the general drying trend enough that you are not seeing those kind of impacts?

Joe Lambert : I’m impressed that you are following the Australian weather that closely. But yeah, Chris, April started with some rain continuing into it in Australia. Again, we think by the end of the quarter and by midyear, those things will average out. It was just a late rainy season in Australia and a very rainy season. They are measuring rainfalls in feet. That’s pretty crazy, doesn’t it? But I mean, yeah, there was a bit of disruption to the beginning of April, but we think that will work its way out through the year. And then we had a very warm April in oil sands. So even March, we had an early spring breakup. So I think Q2 looks better in the oil sands side as far as not having to deal with the spring break up in Q2 because it all kind of occurred in Q1.

Chris Thompson : Got it. Okay. And then just touching on the oil sands. You mentioned that there was additional work at Millennium and then lower scopes at Fort Hills. I’m just wondering if you could give us some color on what’s driving that.

Joe Lambert : I think was that quarter-over-quarter? We’ve seen pretty consistent demand. We’ve moved some fleet between sites. They recently had some scheduled shutdowns and turnarounds on specific sites, and those usually create some near-term impacts and maybe some shuffling around sites. But overall, we are seeing strong demand for our services across the oil sands. And it is typically a Q2 low in the oil sands, and I think we will be typical of that. And then it starts to ramp up again and peak in Q4.

Chris Thompson : Okay. Last question for me. Just on the NCIB. I’m just wondering what — just given where the share price has gone over the last few months, how much flexibility you have with respect to your debt target? Can you lean on the NCIB a little harder in the near-term and then maybe sacrifice like [0.1 of a turn] (ph) on the debt side in exchange? Maybe just frame how you guys are thinking about that.

Joe Lambert : Yeah. I think at the pricing and what we think is the return on our — what we think is our intrinsic value, yeah I think we can lean on a little more. I don’t — it just depends on where it goes. We have — obviously, we have a lot more liquidity with the high-yield raise that we just did. So we’ll look at it opportunistically and do what we think is the right investment. And right now, I’d say buying our shares is the best investment that we have out there.

Chris Thompson : Great. Thank you guys. I’ll hop back.

Operator: Thank you. And your next question comes from the line of Devin Schilling from Ventum Financial. Please go ahead.

Devin Schilling : Hi guys. Good morning.

Joe Lambert: Good morning Devin.

Devin Schilling : I see a couple of contracts up for renewal here in 2025. Any updates on these two renewals on timing and maybe expectations on any potential scope changes?

Joe Lambert : Yeah. The first one in the middle row there, that is the earlier one is actually a negotiated early renewal. We’ve been very successful with these, Devin. And like I said before, you can’t be any more successful. We’ve had 100% renewal rate. The second one is actually an expansion, which is in the top line-there, is an expansion of an existing operation where we are looking to potentially increase our scope. And that one we’ll know more towards the end of the year. The one in the middle of the early renewal potentially we should know in the next quarter or so. And that’s really the driver for what I said is going to be an increase to $4 billion in our backlog. So I’m highly confident in our ability. And obviously, a record of 100% renewal feeds that confidence.

Devin Schilling : Okay. That’s helpful. I believe in the past, you guys mentioned a large infrastructure opportunity, I believe it was in California that you’re aiming to qualify for. Any updates on that project?

Joe Lambert : Yeah. We were unsuccessful in that. We have added quite a few other projects. Our feedback on that was California was looking for California experience. And obviously, we haven’t got a lot of experience there. We have a lot of dam building experience, but we haven’t done it in California. So unfortunately, that was a weakness in that particular tender. But from what we’ve added and the information we’ve seen now in these large earthworks projects like picking up two dozen projects that we followed out on infrastructure earthworks, bigger earthworks in the next three years, of which we’ve added 3, 4 or 5 that you’ll see on the bid pipeline, which generate about [Audio Gap]. We want to win every bid, but obviously, that doesn’t happen.

And yeah, we see plenty of backfilling for the one that we just didn’t qualify for. And I think with this new exec we’re adding on and our focus on the infrastructure side and expansion, I look forward to much success in that market.

Devin Schilling: Understood, I’ll hop back in queue. Thank you.

Operator: [Operator Instructions] Your next question comes from the line of Maxim Sytchev from National Bank Financial.

Unidentified Analyst: Good morning gentlemen. It’s [Caspin] (ph) here on for Maxim guys. My question is regarding the technician count. You’ve mentioned in the past that it is been a bottleneck. I’m just wondering for both your regions in Canada and Australia, is that still the case? And if so, how much shortfall in technician count do you think you have? And is it still a factor preventing you to reach your respective utilization targets in both regions or is the gap mostly because of weather in your business?

Joe Lambert : I’ll start with [indiscernible] would be a bit more of weather. Australia, we’ve got very full demand in Australian long-term contracts. I think the consistency of how equipment stays on site and the consistency of our labor workforce, especially our skilled labor and the mechanics. We’ve been very successful in attracting and retaining maintenance personnel. I think skilled trades are an issue around the world, but I think we manage it extremely well in Australia, and that’s why between that, the high demand and the weather, you’ll see that utilization target is at 85%. And we are very confident in that. We’ve been right in that range, obviously, not the last quarter, but before that. In Fort McMurray, the oil sands, we’re getting — when we get into that close to 70% range and above, that means we’re full on demand and getting from 70% to 75% is the efficiency of our skilled labor workforce.

We’ve put in systems and processes and developed things like our apprentice program over the years to address this. And now is the time to deliver. So as we — as you look to get from that high 60s to mid-70s towards the year-end, that’s really where you are testing your abilities in that. And we are confident we’ve got the systems and the processes in place now. And when the high demand is there, we’ll get into that range of utilization. So it is not hindering us at any point right now. And as we go forward, we think we’ve got the systems and processes as far as attracting and retaining skilled workforce in place, both in Australia and in Canada.

Unidentified Analyst: Okay, thank you guys. That’s helpful. That’s it from me.

Operator: Thank you. There are no further questions at this time. I will now hand the call back to Joe Lambert for any closing remarks.

Joe Lambert : Well, thanks very much, and Jennifer, and thanks again, everyone, for joining us today. We look forward to providing next update upon our closing of our second quarter results.

Operator: Thank you. And this concludes today’s call. Thank you for participating. You may all disconnect.