Black Diamond's (BDIMF) CEO Trevor Haynes on Q2 2014 Results - Earnings Call Transcript

| About: Black Diamond (BDIMF)

Black Diamond Group (OTC:BDIMF) Q2 2014 Earnings Conference Call August 13, 2014 10:15 AM ET

Executives

Tara Sukut - Communications Manager

Trevor Haynes - President & CEO

Mike Lambert - EVP & CFO

Troy Cleland - SVP, Structures Business Unit

Dave Brown - SVP, Energy Services

Steven Stein - EVP & COO

Marshall McRae - EVP

Harry Klukas - EVP, International

Analysts

Dana Benner - AltaCorp Capital

Kevin Lo - First Energy Capital

Jon Morrison - CIBC World Markets

Jeff Fetterly - Peters & Co

Operator

Welcome to the Black Diamond’s Second Quarter Results Conference Call. (Operator Instructions). I would now like to turn the meeting over to Ms. Tara Sukut. Please go ahead Ms. Sukut.

Tara Sukut

Thank you Mary. Good morning everyone before we begin I would like to remind everyone that in the interest to providing listeners with information regarding Black Diamond Group Limited, including management’s assessments of the future plans and operations of Black Diamond. Certain statements made on this call will constitute forward-looking statements. All such statements other than those of historical fact, which address future plans, activities, events, outcomes, results or developments that Black Diamond anticipates or expect may occur in the future should be considered forward-looking statements.

Listeners are cautioned not to place undue reliance on any forward-looking statements, as they are subject to numerous risks and uncertainties, certain of which are beyond Black Diamond’s control. As a consequence actual results may differ materially from those anticipated in the forward-looking statements. Information of risk factors that could affect Black Diamond’s operations and financial results are included in Black Diamonds annual information form and other reports are filed with the Canadian securities regulatory authorities.

Now Trevor Haynes President and Chief Executive Officer of Black Diamond Group, and Mike Lambert, Executive Vice President and Chief Financial Officer, who will lead the call. Please go ahead Mr. Haynes.

Trevor Haynes

Thank you Tara. Good morning. Thank you for joining us today to review our results for the second quarter of 2014. Before we begin I would like to formerly introduce and welcome our new Executive Vice President and Chief Financial Officer, Mike Lambert who has joined our team late last week. Welcome Mike. Marshall McRae, our Interim CFO is also present on the call today and at this time I would like to thank him for his guidance, support and leadership as we conducted our CFO search over the past several months. Marshall will stay on with the company as an Executive Vice President until the end of the year to ensure a smooth transition. We also have Troy Cleland, Steven Stein, Dave Brown and Harry Klukas in the room each of whom will be available in the second half of the call to answer question specific to their operating units.

In today’s call I will begin by briefly reviewing highlights for the quarter following my remarks Mike will provide some additional commentary on the financial results for the period. We will then open the call to questions.

We are pleased to report that the results for this quarter are our best Q2 results in the company’s history. Seeing record quarterly revenue and EBITDA generation of 88 million and $35 million respectively or increases of 24% and 20% on a year-over-year basis. Our aggregate fleet count has grown by 369 units to well over 10,000 pieces and has generated $38.3 million in retinal revenue reinforcing the foundation and strength of our platform.

We believe this quarter’s results further demonstrates the differentiating business model deployed by our company. We have focused on asset management and complimentary services without manufacturing and it has outperformed food services. We continue manage utilization risk by strong contracting practices by diversifying our products industries and geographies and by disciplined capital allocation. We have and continue to deliver stability of recurring revenue and earnings, visible contracted for the revenue and an attractive return on capital.

Over the past 10 years the Black Diamond team has proven both the business model and our ability to steadily grow the scale of the business while increasing return on capital, reducing cost of capital, increasing dividends, keeping a clean and conservative balance sheet and reducing risk.

Our ambition has been to position this platform as the premium wealth creator for investors within our sector. We believe we have done this.

Our goal now is to continue to generate above average wealth creation for our shareholders while minimizing every risk we can identify. This goal is only outranked by our desire to keep our employees and community safe.

I will now briefly discuss a number of highlights for the quarter. In May we announced the award of a three year rental contract on a new 1244 person facility in the Montney Shale resource play in northeastern British Columbia. This is a significant capital commitment for the company for the fourth quarter of this year and the first quarter of 2015.

We expect first rental revenue in January 1st, and full rental on stream early in the second quarter of 2015. In June we acquired the land lease fixtures and improvements along with long term commitments from three key customers for the Horn River lodge in northeastern British Columbia. This now becomes our second large format operating lodge the first being Sunday Creek lodge in the Conklin area of the oil sands.

We have increased our guaranteed revenue under contract by 4.4% from the first quarter to $174 million at the end of the second quarter. We now have a large fleet of high quality accommodation assets sufficient to meet current demand levels. Large projects requiring specific build including the new large facilities in northeast BC, and pending LNG project construction will drive further fleet growth.

Our space rentals platform in North America, continues to grow and demonstrate strong returns. Western Canada remained strong and we have seen a meaningful improvement in the U.S. space rental utilization and custom project revenues. We believe this is a reflection of strong construction activity related to industrial and public infrastructure.

Our energy services surface rentals platform has been softer over the past two years to primarily to market conditions in Western Canada. However we’re now seeing rig counts rise and corresponding modest improvements in surface rental utilization.

Australian resource development activity has softened dramatically despite utilization falling from 83% to 49% year-over-year, we continue to generate positive cash flow. Australia remains a small part of our platform at this time and has little overall effect on our results. That said we’re committed to this market over the long term and continue to see opportunities.

On the capital deployment side our CapEx spend is at a similar cadence with 2013 levels after netting off our Australian acquisitions in that prior year. As of the end of June 30, we have expanded 39 million with a further $71 million firm committed. As of today we can update that to advice you we have substantially committed, we have committed substantially all of the $121 million announced capital budget as either spent or firm committed. This speaks to our robust sales pipeline.

Our balance sheet remains very healthy with steady cash inflows and a net debt position well below one times our trailing 12 month EBITDA. Our bank facilities have been renewed in the quarter with enhanced flexibility to support further growth.

In summary our outlook remains positive, our business continues to perform well demonstrating continued stability of returns and growth. We have a healthy sales pipeline, strong contract base, ongoing growth and a robust financial position plus an exceptional team we continue to strengthen most notably this quarter with Michael Lambert coming on-board.

Given our favorable balance sheet position and in keeping with our quarterly protocol, the Board has reviewed the dividend and felt the strong operating results, forward visibility of contract revenue, low leverage and low payout ratio all combined provides a necessary confidence to increase the dividend effective for the month of August by 6.7% to $0.96 per year from the current $0.90 to be paid monthly at a rate of $0.08 per share.

I’m now happy to turn the call over to Mike who will add some additional commentary to our financials. Mike?

Mike Lambert

Thanks Trevor and let me add, I’m delighted to be here. We’re pleased with or second quarter results, having set a second quarter record with revenue of 88.4 million and EBITDA of 34.9 million. This represents an increase of 24% for revenue and 20% for EBITDA compared to the second quarter of 2014.

Our net earnings grew modestly to 9.6 million up from 8.9 million on a diluted per share basis EPS for the second quarter of $0.22 was $0.01 higher than the comparative quarter in 2013.

Excluding the impact of a onetime item relating to the provision of a debt guarantee of an investee by alluded EPS for the second quarter would have been $0.34 up over 60%. Our structured business unit generated second quarter revenue of 50.8 million and EBITDA of 32.4 million. On a percentage basis margins were consistent with the prior year, utilization for both camps and (indiscernible) equipment were down slightly from the comparative quarter but remained strong at 86% and 81% respectively.

In our logistics business unit revenue grew 58% to 28 million despite and expected seasonal decline in our managed bed camps. This increase was driven by an increased activity level as well as the conversion of an operating camp into an open camp effective February 1, 2014.

Logistics EBITDA for the quarter was 5.3 million and margins of 19% were consistent to comparative quarter. Energy services revenue was up from a year ago results to 6.8 million a 31% increase, while EBITDA was up 13% to 1.8 million. Utilization for Energy Services drilling accommodation and surface rental was 58% and 29% compared with 57% and 24% respectively in 2013.

Q2 results for the international business unit was 2.7 million in revenue and 790,000 in EBITDA. As anticipated results of this business unit reflect ongoing weakness in the Australian mining industry with average utilization rates of 49% compared with 83% last year.

Long term debt net of cash was roughly a 107 million at the end of the second quarter. This implies a net debt to EBITDA ratio of approximately 0.7 to 1 on a trailing 12 month basis. The company continues to operate with a conservative amount of debt financing and significant unused credit capacity that offers considerable room for ongoing investments.

I will now open up the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions). The first question is from Dana Benner from AltaCorp Capital. Please go ahead.

Dana Benner - AltaCorp Capital

I wanted to start with the non-rental category within your workforce business and notwithstanding fact that it was up nicely year-over-year, it was down quite a bit sequentially. I know that you’ve -- but there have been a lot of whether it's sales or resales, brokered transaction et cetera and so I was wondering if you can give us some more color on how that variable changed from Q1 into Q2 and maybe help us understand how that may trend in the back half of this year and early next year?

Troy Cleland

I think the two quick and simple responses would be on the sales side, there was a significant sale that took place in Q1, while because sale isn't our primary business platform it's hard to predict when those are going to take place and obviously a significant one took place in Q1 while nothing of significance took place in Q2, and I think the other non-rental revenue category would have been the operations revenue. Often times when we have winter camps there will be some operations that will take place in Q2 as a result of dismantle of many camps and actually this year, lot of camps didn’t come off work because we were able to renew certain projects and so while good for the rental revenue I guess short term have an impact on the operations revenue.

Dana Benner - AltaCorp Capital

So was there any surprise at all in that variable? Again I understand that it was up nicely year-over-year but yours has been a steadier state, that was so sequential comparisons can be made a little more readily than a lot of companies in the oil and gas sector. So any surprises in that trend line or no?

Trevor Haynes

Not really Dana. I think the anomaly is the size of the sale in Q1 versus the lower sales or ancillary revenue in the second quarter. We might have predicted more activity on the field level operations related to relocating facilities as Troy mentioned the tear out of winter camps for example but as far as the sale line I think the unusual piece is more of the scale of that revenue in Q1 versus what we experienced in Q2.

Dana Benner - AltaCorp Capital

And then I guess a forward insight, say the next 2 - 3 quarters do you sort of move back to run-rate growth in that area either side of a normal run-rate or could you see some more exceptional items occurring?

Troy Cleland

Again when it comes I mean the operations side of things we anticipate the 1250 person camp, that will be of significance when it takes place starting up in Q4. On the sale side of things it's just so hard to predict. We don’t often plan to sell our assets, it's just when it happens it's based on a client request and those ones can be very spotty throughout the quarters.

Trevor Haynes

But we do anticipate the latter part of the year on field level operations to be busier and we do have a large facility but we also have other projects that are being installed right now that will bring the operations revenue line up in Q3, Q4.

Dana Benner - AltaCorp Capital

Just a few more, your committed CapEx it looks like post quarter has gone from I think 70, that’s what you’ve talked about in the press release and then in your opening remarks I think you said you’re pretty much committed the whole amount if I understand that correctly and if that’s the case could you maybe help us understand where that increment may have come or any other color?

Trevor Haynes

Yes, so at the end of the quarter we had 71 million committed over top of $0.38. So approximately a 110, we continue on a day-to-day basis based on opportunity through the pipeline in various part of the company to commit capital. So at the end of the quarter the additional 11 million or 12 million has since been committed which takes us to the 121, for the year. It's always important to note that the timing of CapEx doesn’t always fit quite neatly into the 12 month calendar year. So part of that expenditure given where we’re and how long it takes to manufacture and have equipment delivered to us. We’re fortunate what we’re seeing for capital commitment now is following into the beginning of 2015. And we anticipate continuing to secure work and commit capital through the balance of the year and we will be able to give you some visibility when we announce our 2015 CapEx which will be with the Q3 results.

Currently our visibility is that we will have a meaningful capital program into 2015, we are seeing with the commitments we’re making today the first piece of that, certainly the 1250 bed camp that we referred to, half of that will be expended in the first quarter. So we would characterize the CapEx draw through an absorption as being very healthy. We think till mid-year we were on a similar cadence to the prior years as I mentioned once we took out the Australian acquisitions. So we have not seen any degradation of growth opportunity.

We’re seeing capital being committed and demand for capital in all parts of the platform certainly here in Western Canada, in our camps fleet, a very steady ongoing strong demand out of our space rentals fleet in Western Canada. Reasonable amount of capital demand in the U.S. I think we had indicated previously 20 million plus being invested in the U.S. as we’re seeing good growth for there, we anticipate, and we’re even seeing some capital deployment in Australia as we see the market changing to higher mobility type of assets which the market has not very many of versus the large format mining camps and so we see that as an opportunity with the smaller platform to invest there and see some growth. So we do have capital committed for expenditure in the second half of the year for Australia.

Dana Benner - AltaCorp Capital

Right just one last question for me then, you’ve had on the Q1 call and at your AGM you had a genuine -- if you were genuinely optimistic as it's related to your bid log, some very large projects coming along and I think you said it was a high bid log or potential bid log anyway as you had ever seen and I wonder if you could update us on your visibility around that even if things haven't gone to formal bid, maybe they have, what do you see for the next three quarters as it relates to that? Because clearly the market has pulled back somewhat in it's estimation of the camps companies for a variety of different reasons and I guess that optimism that you had in Q1 has not at least translated more recently in the way that stocks are being valued notwithstanding I think your strong results.

Trevor Haynes

I would suggest the bid log on a gross dollar value basis is still as high as we have seen as a team in this industry for quite some time, there are big projects that are dependent on final investment decision and as you know some of those have very complicated inputs from government community, environmental et cetera, et cetera. So the big LNG projects, some of the pipe projects, some mining projects in Canada, the timeline of our sales cycle can often be measured in multiple years depending on what’s happening. We have seen a reasonable amount of turnover from sales proposal to award in the marketplace and we think that continues on.

Obviously that’s back stop [ph] for our CapEx, we don’t do a lot of speculative CapEx. We think that if a couple of things occur over the next six months that the marketplace for the camp and accommodation business here in North America could become extremely active and specifically that would be one of the LNG projects going forward. But certainly some of the large pipe projects if they were to go ahead would represent meaningful demand and then there is a number of other infrastructure and resource related projects of that size [ph].

Set those aside and what does the market look like? We have got fairly good footprint and we think as projects cycle on and off our fleet can remain very well utilized and so there is the benefit of not having a large manufacturing capacity focused on new capacity required by the marketplace. So we continue to be optimistic, obviously we work for our customers and our customers are trying to get their projects moving forward. It's not the easiest task.

Operator

Thank you. The next question is from Kevin Lo from First Energy Capital. Please go ahead.

Kevin Lo - First Energy Capital

Upto $70 million in new committed capital, can you kind of maybe kind of highlight us or tell us what industry they are in or probably what they are involved in?

Trevor Haynes

Well a good chunk of that committed capital is not yet spent is the camp that we referenced in the Montney as being you know half or better than that and so we see that CapEx being taken up late this year and then into the first quarter of next year. So that represents a good piece of that and so that’s accommodation in Western Canada. In addition to that we have continue to have additional accommodation assets being brought into the market for specific projects augmenting a number of projects and fleet requirements. Then we have within that 70 million a reasonably healthy amount of that is for our space rentals platform here in Western Canada and for our U.S. operation.

And then with the -- the indication that we have committed the 121, we draw in a chunk of capital committed in Australia for very specific type of product to support oil and gas operations in Queensland.

Kevin Lo - First Energy Capital

And the last thing is, can you kind of maybe tell us what the pricing environment is looking like in Canada? Is it are you seeing any movement there?

Trevor Haynes

With our structures group? Troy do you want to comment?

Troy Cleland

Yes. There hasn’t been much of an indication of any changes in our pricing to our clients, our pricing obviously varies based on what the commitment term is but I think what you’re alluding to is are we having to lower our prices? And the answer is no.

Trevor Haynes

Dave in Energy Services, what are you seeing there?

Dave Brown

Well we’re seeing utilization, it's certainly in Q2 it's above 30%, greater than in Q2 of last year and we’re seeing that trend in the July, so the expectation is that if you look at both the CODC [ph] forecast but also where we’re sitting in July we expect the utilization is reaching stronger levels and that’s seen in the previous year and the optimistic way to look at that is pricing we’re expecting leading into Q4 and into the winter season should lead to stronger pricing going into obviously than the last year.

Trevor Haynes

And so the management Steve?

Steven Stein

Our rates are staying very constant, we had a really good quarter and our margins actually were above our expectation. So we’re seeing the same pricing regime and markets.

Trevor Haynes

I guess Australia, it's one area we do see pressure.

Steven Stein

We do, we continue to do.

Troy Cleland

Where it's going to level off? I think it's leveled off right now but the big players in the market and then somewhat of an opportunity for us with the smaller fleet, we can be a little more agile but they have obviously they have increased their utilization and have gone quite aggressive on their pricing but still if we can get them out, there is an exceptional return for us.

Operator

Thank you. The next question is from Jon Morrison CIBC World Markets. Please go ahead.

Jon Morrison - CIBC World Markets

On the CapEx side, what’s the expected roll over into 2015? Sorry if I missed that from a hard dollar perspective or a round number.

Trevor Haynes

We’re trying to avoid having to guess at that prior to being able to give you a clear visibility. I would suggest, it's always difficult to tell if you look at the profile of CapEx for Black Diamond it's always back end weighted and as you know our customers typically are trying to get these sites up and running in advance of the winter work season which often takes us late into December.

So I would suggest we would have a carryover of that at least 20 million of the 120, maybe that’s a little bit greater than that, 20 or 25, going into the first part of the year. We’re able to give you much better visibility with the Q3 results as there is always -- we are factoring for some delays, because we always expect some field level delays whether they are weather or permit related or other contractors who have to come in before we can move the camps into place but perhaps this year everything gets expedited. So sorry, at this point to guess we know the volume of what we’re looking in term so capital pull through and facilities that have to be positioned but it could be a couple of weeks one way or the other at the year-end.

Jon Morrison - CIBC World Markets

Of the incremental CapEx, in Australia are you willing or are you able to share what you think the total outlay in Australia is this year either from a spend or committed perspective? Just to give a sense of how much capital allocation you expect in that market before you’re in?

Trevor Haynes

Well Jon, it's an interesting market because the capacity represented by more longer term large format camps has gone into oversupply as the mining industry has significantly reduced activity on their resource development. Yet there is parts of the market and parts of the fleet that are deficient in supply and so we found ourselves adding as we reposition to smaller type of camps, so I think there will be more smaller kitchens into these higher mobility assets.

Troy Cleland

Exactly, quick rapid deployment, shorter term applications where the client does not want to incur significant cost related to installation and operation. So that’s a bit of a niche market that as Trevor said in terms of fleet is -- there is not to the same extent as a traditional type of product. What we’re also doing is converting some of our existing assets to be able to participate in this market sector. So hopefully we will get a bit of an increase in our existing workforce fleet by converting these assets.

Marshall McRae

Jon, maybe just to build on that, this is Marshall here. We started the year by looking at deploying 10 to 15 of capital into Australia, this year eventually we believe we will be deploying significantly more than that in our Australian market. At this point in time it looks like that we will be right in that range.

Jon Morrison - CIBC World Markets

And it's fair to say that those counts will be what -- we would classify it as a conventional highly mobile drill camper something in-line with what we have seen in Western Canada for conventional drill camp.

Troy Cleland

That’s a pretty good analogy. There is some nuances you can appreciate the climate and climate is somewhat different but that would be put into context of what we’re doing there.

Jon Morrison - CIBC World Markets

Harry, is your expectation to be cash flow positive in the back half of the year in Australia?

Harry Klukas

Yes.

Jon Morrison - CIBC World Markets

On the onetime fleet sales, I realize that Q1 was much more pronounced and had a large number in it but Troy was there any onetime fleet sales in this quarter that had a positive impact on numbers?

Troy Cleland

There were some onetime fleet sales obviously a lot smaller for camps and then there was a regular run of some sales that took place in our space rentals operation but of course in terms of size and magnitude they don’t compare to the camp to operations.

Jon Morrison - CIBC World Markets

So was the majority of that, was any of it new customer camp related or more weighted to selling of legacy assets that you didn’t believe had a home in the Black Diamond go forward?

Trevor Haynes

The latter.

Jon Morrison - CIBC World Markets

Last one from me, just on the logistic side, what is your sense for managed bed camp in the back half of the year and what we saw in kind of Q2, does that spell what you think is going to be a run-rate for a managed bed count perspective go forward?

Troy Cleland

In Q3 it will be, it will stay consistent. Q4 we will start up 15 [ph] again much like last year where we have our winter pipeline camps come on board and depending on when they start in Q4 impacts that quarter quite a bit.

Jon Morrison - CIBC World Markets

Just one last one, on the onetime fleet sales. Can you disclose any sense of revenue on how big that onetime was in the quarter or it's insignificant in the context of the business?

Trevor Haynes

Probably insignificant. It's a couple of dorm really.

Operator

Thank you. (Operator Instructions). The next question is from Jeff Fetterly from Peters & Co. Please go ahead.

Jeff Fetterly - Peters & Co

First on the Dana’s questions around the non-rental side within structures, the $36.5 million customer sale you guys announced last fall that was we talked about in Q1, is that still scheduled to hit in coming quarters or has any of that showed up in the results to-date?

Trevor Haynes

It has shown -- we should touch on that accounting treatment works.

Mike Lambert

Yes when we looked at that -- so part of that in the numbers already, Jeff. But when we look closer at that and the just the nature of contract that we entered into with our customer and are manufacturing that. We actually account for that transaction on an agency basis and therefore it doesn’t really impact the top line on the rental side. We do non-rental operations revenue out of it but it impacts EBITDA. So EBITDA impact on part of that contract is in the numbers and there is more to come in the second half.

Trevor Haynes

We take the margin but not the revenue on the sale of the asset and the operations, field level construction work gets -- both in a traditional way.

Mike Lambert

So that is not the contract that impacts or the sale that impacts in Q1 that we have been assuring to.

Jeff Fetterly - Peters & Co

Okay. On the logistics side how much of an impact the purchase and swap over of 90 to an open cap, how much of that impact in terms of the effective date of February 1 benefited the Q2 numbers in terms of catch up?

Mike Lambert

It did impact the number quite a bit but margin during that period of time isn't very good, you’re talking spring break up so the loading of the camp at that time of the year is small. So, while that did impact top line fairly well it did not impact the bottom line that much. We do see though that camp being more heavily loaded in each quarters.

Jeff Fetterly - Peters & Co

So when I look at Q2 logistics results the 5.3 million of EBITDA would not materially be different without that sort of onetime anomaly but the revenue number -- the margin side would look a lot better?

Mike Lambert

The revenue side looks quite a bit better, not materially on margin side.

Jeff Fetterly - Peters & Co

Okay. Your guidance around results in Q3 to be modestly better than Q2, can you just walk through the pieces you expect directionally to be stronger in Q3 versus Q2 and what you expect to offset that?

Mike Lambert

So I guess what we see going into Q3 Jeff, because we do see growth on a year-over-year basis and on a sequential quarter basis into the quarter. We do see that in continues to build through Q4 and we see a stronger Q4 relative to Q3 which is normal for our business and what the drivers of that are Q3 in the logistics business or in our -- in that business -- as Steve just said our management count should be relatively stable Q2 through Q3. We will see if there is growth in there and then the structures business, we see kind of rental revenue continue to go up for us and so we see that business being stronger. Our Energy Services, small uptick there just you know just because we’re coming out of spring breakup and drilling activity is a bit better, so we will see a little bit of uptick there. Australia not so much, as Harry referred to. So, really kind of growth across the segments that has been growing. Hopefully that has answered your question.

Q4 we will see logistics ramp up that’s kind of what we’re doing in our numbers, structures will continue to be -- will continue to grow but one of the unknown is there just quickly some of the operations projects come on as Trevor has mentioned it will be a bit lumpy as to the timing of some but nonetheless even with that we expect growth from that business. Trevor do you want to add to that?

Trevor Haynes

I would say, Energy Services should go through the end of the year and it's a typical profile to winter drilling -- building through to the end of the year and then Q1--

Dave Brown

Yes, should be there -- again that’s where we expect to see any pricing increase have in Q4 and then peaking into Q1.

Jeff Fetterly - Peters & Co

On the structure side is there anything lump in terms of better camp additions in Q3 that will positively impact results?

Troy Cleland

I can’t think of anything, no. It should be somewhat consistent in terms of -- on the rental revenue side with what we had in Q2.

Jeff Fetterly - Peters & Co

Last question on the CapEx side, so with 121 largely committed, is there opportunity for you guys to spend any more capital in calendar 2014 or are any incremental awards likely to form the basis of your ’15 program?

Trevor Haynes

You would have to look at that in the different segments that we buys assets. So it will be very difficult to add new manufactured camp product given the amount of time to the end of the year other than what we have already got committed unless we’re buying assets in place which we do from time to time. We can accelerate addition of equipment in the U.S., manufacturing backlogs are shorter and certainly we could accelerate in Australia if we had the opportunity of where to place those assets. So, there is the potential yet to -- for assets we haven't already identified we’re adding to the fleet, as opportunity flows to add a little bit here and there but mostly now for larger projects we secure -- delivery times would be and the project startups for that customer would be in the first half of next year. So as we get into the fall as is typical in our industry we’re starting to commit capital for the following year.

Operator

Thank you. There are no further questions registered at this time. I would now like to turn the meeting back over to Ms. Sukut.

Tara Sukut

Thank you Mary. And thanks everyone for participating in the call this morning. We will now formally conclude the call.

Operator

Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.

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