Horizon North Logistics, Inc. (OTCPK:HZNOF) Q1 2015 Earnings Conference Call April 30, 2015 11:00 AM ET
Executives
Rod Graham - President and Chief Executive Officer
Scott Matson - Vice President, Finance and Chief Financial Officer
Analysts
Scott Treadwell - TD Securities Inc.
Stephen Kammermayer - Clarus Securities Inc.
Greg Colman - National Bank Financial
Dana Benner - AltaCorp Capital
Operator
Good morning. My name is Tania and I will be your conference operator today. At this time, I would like to welcome everyone to the Horizon North Logistics, Inc., First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.
Rod Graham, President and CEO, you may begin your conference.
Rod Graham
Thank you, Tania. Good morning. I'm Rod Graham, President and Chief Executive Officer of Horizon North. Scott Matson, Vice President of Finance and Chief Financial Officer is with me today to discuss our Q1 2015 operating results.
I’m going to turn the call over to Scott to cover some of the formalities of today’s call.
Scott Matson
Thanks Rod and good morning everyone. We’ll be commenting on the 2015 first quarter results assuming you’ve read the Q1 earnings release and the MD&A and financial statements which were made public last night they are available on our website and on SEDAR. We’ll be discussing Horizon’s 2015 capital budget and our outlook for the remainder of the year as well.
During this conference call, certain statements will be made relating to Horizon North that are based on expectations of management, as well as assumptions made by, and information currently available to Horizon North, which may constitute forward-looking statements or information under applicable securities laws, as well as certain financial measurements discussed today are not recognized measures under Generally Accepted Accounting Principles. And the cautionary statements contained in yesterday’s news release and in our annual filings that are both available on our website and on SEDAR, outline various risk factors, assumptions and cautions regarding any forward-looking statements, or information and financial outlook and other information contained including non-GAAP measures discussed today.
So with that, I’ll turn it back over to Rod to get things started.
Rod Graham
Thanks Scott. I plan to make a few high level remarks with regards to our longer term strategic direction, as well as try to provide a window into our execution plan to meet those objectives. Then I will turn things over to Scott to take us through the activities for the first quarter of 2015. And then I’ll end with some closing comments before we move into the Q&A portion of our call.
During the first quarter we recognized we had some significant challenges ahead in 2015 and in spite of having a solid first quarter those challenges have not gone away. Continuing low commodities prices are expected to have a negative impact on the balance of this year with respect to customer capital spending programs and consequently activity levels in our traditional energy markets.
In this challenging environment we are undertaking structural changes in our business which are helping to realign our operation to market conditions and prepare us for the next up-cycle. These aren’t [indiscernible] these are real and lasting structural changes that include cost controls, targeted and disciplined capital spending; accelerating internal integration; and a new business development strategy to defend our existing markets and develop new end markets, by product, service and geography.
Cost controls. With respect to cost controls we’ve significantly reduced our manufacturing headcount, bringing down our theoretical capacity from 7500 rooms to approximately 4000 rooms on a annualize basis to reflect our current order book. We accelerated our process to improve efficiency in our manufacturing plant and have an active continuous improvement program underway which will be augmented by bringing in lean manufacturing consultants - consenting in this quarter.
We are in early innings of our total quality initiative across all aspects of our business. We’ve added talent accounts for our best-in-class car manufacturer and into Q2, Q3 we’ll start to - talents of best-in-class hospitality providers. We believe that this continue drive to quality excellence coupled with our accelerated lean program will result in structural changes to our cost structure.
I can’t quantify yet as we are early days into initiative, but over subsequent calls we will get into what this means for our organization. Other cost adjustments include better coordinated supply chain management, consolidation of manufacturing plant footprint, optimize our efficiencies and aggressive look at all discretionary spending within our organization.
Discipline CapEx. In late 2014 we announced the 2015 capital spending program that will be limited to maintenance capital of approximately $25 million. Based on a slightly stronger Q1 and our expectations for the rest of the year this number is now going to expand to $30 million as we focused on refreshing the bottom 5% to 10% of our fleet and meet customer demand in specific areas such as our matting business. In Q1, we spend $12 million of this amount down by almost half compared to Q1 of 2014. Now we are committed to maintaining capital discipline for the balance of 2015.
Integration. One company, one brand, one vision. We are continuing to move towards an integrated business model which will provide us with the strategic focus on customers and markets more integrated processes and systems and help to reduce costs and improve efficiencies. This is also allowing Horizon North to respond more effectively to opportunities in our existing markets as well as our new developing markets.
Cross selling. We are continuing to change our business development strategy to drive towards full cross selling capabilities for all of our products and services. Our mission statement at Horizon North is to provide superior, safe, fully integrated turn-key accommodations and related ancillary infrastructure in Western Canada and Alaska.
Targeted balance of OpEx and CapEx spend. We are expanding our product and service offerings to balance our exposure between the OpEx and CapEx budget of our major customers. We are still mapping out this initiative and we will roll out what this means in subsequent phone calls.
Geographical focus. We continue to pursue opportunities to use our core competencies of designing, engineering and manufacturing robust equipment ideally suited for Northern climates to accelerate our business opportunities in the State of Alaska. Opportunities continue to develop in this market area held by a significantly lower Canadian U.S. exchange rate and a pending deal with a very commercially successful native cooperation that will help out our competitiveness in the Alaskan market.
Permanent modular we are also developing new end of markets for our manufacturing platform moving into the construction of permanent modular buildings and commercial and institutional marketplaces. We continue to look at the segment as a growth area for Horizon North in the back half of 2015 and into 2016 especially as development moves forward in North Eastern BC as well as North Western British Columbia in conjunction with potential LNG development. We have a few early adaptors on the hometown side and are working our way to a couple of formalities. So stay tuned.
Liquefied natural gas we believe we are very well-positioned to participate in significant potential LNG projects in the province of British Columbia, due to the combination of our BC land infrastructure. Our safety record which right now is a rolling 12 months total recordable incident rate of 0.91.
A local first nation relationships a very strong support from regional government bodies in North Western British Columbia and our significant footprint with a main manufacturing operation for Horizon North based in Canada's British Columbia. We continue to view LNG development as a full cycle game whereby the proponents that will ultimately be successful will be - that commercial viable solution at all major points along the value chain which include the resource that convince the outlet and the marketing.
Balance sheet, with respect to our balance sheet our net debt position improved by a $11 million in Q1 as compared to year end due to another strength of our earnings and our discipline and our capital spending. Our total debt to trailing 12 months EBITDA ratio as of March 31 was 1.45 times as compared to 1.66 times at year end. Scott will provide some additional commentary with respect to updates to our credit facilities that we accomplished during the first quarter.
Dividend. The Board has declared a dividend for Q2 2015 of $0.08 per share for shareholders of record as of June 30, 2015 payable on July 15, 2015. This is part of our total return strategy over the next few years. All of our strategies continuing to pay shareholders a dividend as Horizon North and the market in general works through this current down cycle.
That said the quarterly payment of dividends is subject to review and approval by the Board of Directors and as something that I and our Board will continue to take a hard and disciplined look out each and every quarter. Horizon North I would like to thank you for your continued support and confidence as we work through this challenging business environment.
I am now going to turn the call over to Scott Matson to comment on Horizon North’s financial results for the first quarter of 2015.
Scott Matson
Great thanks Rod. I am going to talk through Horizon North’s results for the first quarter of 2015, and make some comments on each of our major business lines. And I’ll be talking mainly about Q1 2015 versus Q1 of 2014, but I will make a few comments relative to what our expectations are for the rest of the year as well.
On a consolidated basis we are very pleased to report our results for Q1 2015 came in as we expected and slightly ahead of the analyst consensus. First quarter revenues were $133.9 million, an increase of 10% as compared to $122 million last year and EBITDA for the first quarter $29.4 million, an increase of 25%, as compared to Q1 of 2014.
On a percentage basis as a percent of revenue EBITDA was 22% for the quarter as compared to 19% last year with strong cash flow from operations $32.4 as compared to a slight loss last year in Q1 of 2014, fully diluted earnings per share of $0.09 as compared to $0.07 in Q1 of 2014.
I’ll hit some of the major details in our major business lines starting with our camp rental and catering operations. In large camps revenues for Q1 were $75.3 million, 21% increase as compared to last year we exited the first quarter of 2015 with approximately 8,600 rentable beds in this category compared to 7,100 last year. Mainly do our capital spending program in 2014, but we added roughly 1,500 beds throughout the year.
We experienced very strong overall fleet utilization in the first quarter 79% as compared to last year’s 63% this was driven mainly by higher seasonal activity levels and by several large dedicated camps that became operational late in 2014 with that solid utilization through the first quarter. Pricing held in reasonably well as we came through Q1 revenue per average available bed came in at $97 versus $98 last year with strong utilization offsetting a slight drop in the revenue per manday numbers.
Revenue per manday for the quarter was $123 per day as compared to the Q1 2014 figure down a little bit primarily due to the mix of contracts in place and also somewhat due to the effects of pricing pressures we experience as we continue to work together with our customers to shoulder the burden through these challenging times.
Our drill camp business, revenues were recently strong $5.8 million in the quarter roughly even with last year. Activity levels held up reasonably well with the winter season drilling program certain operators kept their rigs running and we had an average of about 18 camps running during the quarter. We do expect this business to be particularly challenged for the rest of 2015 due to an expected drop in drilling activity as following lower commodity prices in general.
Catering only revenues from this segment for our business of Q1 are about $4.5 million a slight increase as compared to the last year, revenue stream that remains reasonably steady for us.
On the service side, service related revenues within the camps and catering stream $3.6 million for the quarter down from about $8.1 million last year. This revenue stream again relates primarily to transportation, installation, decommissioning of camps and projects. The decrease reflects really the mix of specific activities going on in the projects underway in each period.
So overall camp rental and catering operations $89.3 million for the quarter, an increase of about $8.8 million a little over 11% as compared to last year with improved activity levels across the segment.
Manufacturing side, our revenues for Q1 of 2015 were $29.5 million or $29.4 million up a little bit from last year, up 24% from last year. Total direct hours worked in plants and onsite 242,000 hours in the quarter down about 8% from the same period of last year and notably down 12% from Q4 of 2014. As Rob mentioned this reflects lower headcounts in our manufacturing and field installed operations based on the visibility of our current order book.
During the quarter about 75% of our total direct hours were allocated to external customer projects compared to only 48% in Q1 of 2014. This resulted in an increase revenues for the quarter. Of that our external hours we’re mainly focused on executing the final stages of our 1,250 bed camp sale project that we commenced in 2014.
In the re-locatable structures business revenues for Q1 were about $4 million, an increase of $1.8 million or 78% as compared to last year. This increase is reflective of consistent and strong utilization of a slightly larger fleet. Remember last year we allocated approximately $17 million of capital towards this business and focused very hard on getting these units exposed into the Alberta marketplace which has held for the utilization and margin.
So overall from a consolidated camps and catering segment point of view are much stronger quarter compared to this time last year. Revenues of $122.8 million about a 15% increase versus last year and consolidated EBITDA was just over $30 million or 25% of revenue compared to $25 million or 23% of revenue last year.
The matting side of our business I’ll walk through the various pieces again fairly quickly. Rental is fairly strong, revenues were up $2.8 million from last year increased activity starting to come through later in Q1 and what we’ve seen notably as a result the customer is starting the choose leaning more towards renting versus buying in a tougher capital allocation environment and also some of this increased activity was offset by slightly softer pricing just a more generally competitive environment as we come through Q1 and then into our busier Q2.
From a mat sales perspective, revenues were $2 million a significant decrease compared to the same quarter of last year. Number of mats sold in the quarter was down significantly again due to the combination of reduced capital spending programs by our customers and as a result of having several large projects in Q1 of last year.
Service revenues includes the transportation, installation, mat management services that we do on behalf of customers that are charged for separately from the rentals and sales $6.7 million in the quarter, an increase of $1.2 million or 20% compared to the same quarter of last year. We’re again really driven by higher mat rental activity and customers actively managing their mat fleet to ensure that they had better visibility and control over their assets.
So overall revenues for the segment were $11.6 million down $4.5 million or 28% compared to last year margins held in reasonably well as a larger chunk of our revenue came from rentals and services which carry a better margin than mat sales as compared to last year. From a cost perspective, corporate costs totaled about $3 million for the quarter a reduction from the $3.6 million in the same time last year this reduction really driven by a number of factors but included focus on cost controls and a focus on discretionary spending that we continue to pursue across the organization.
As Rod mentioned capital spending for the quarter was about $12.2 million split between our camps and catering segment and our matting division as we continue to execute on our plan to refresh the bottom 5% to 10% of our fleet as we move through the year. We allocated some capital to the matting rental fleet during the quarter to take advantage of increasing demand on the rental side again customers are preferring to rental mats right now rather than buy them given their capital programs.
Balance sheet, overall as Rod mentioned we worked to improve our balance sheet since year end we repaid a little over $11 million of debt during the quarter, bringing our bank borrowings to $135.2 million at the end of the quarter compared to $146.4 million at year end. As Rod mentioned total debt to trailing 12-month EBITDA ratio 1.45 times at the end of the quarter as compared to 1.66 at year end. So nice improvement there.
On the credit facility side as I mentioned in our year end call we were looking at a number of options to improve our financial flexibility and I am happy to report that we completed two rounds of changes with respect to our facilities during the quarter. At the first round that you’ve seen was completed in February included increasing our available senior credit facilities from 175 million to 200 million by adding an additional lending partner to our banking syndicate.
Second round of changes was accomplished more recently and involve addressing a number of components of our facilities including extending the term out three years now due in the spring of 2018 refreshing an upsizing the accordion provision embedded in the facility to 50 million and adding the ability for us to take on some potential term debt going forward updating the covenant package overall and getting those levels more in line with our peers.
So on that our covenant package now includes a senior debt to trailing 12-month EBITDA covenant of three times essentially bank debt and a total debt to trailing 12 month EBITDA covenant of 4.2 times giving us a little bit of flexibility on the upside and our interest coverage ratio of three times. So need us to say we’re quite pleased with these changes and very appreciate the support of our lending group as we worked through these updates.
So overall we continue to actively manage our balance sheet focusing on cost control undertaking our modest capital spending budget and managing our working capital position. Essentially spending within our means for the goal of continuing to improve the strength of our balance sheet as we move through the year.
With that, I’ll conclude my comments and turn things back over to Rod.
Rod Graham
Thanks Scott, I'll now speak the market outlook for the remainder of 2015. First of all activity levels in Q1 of 2015 were seasonally strong as our customer spending was not immediately impacted by the following commodity prices. So let’s start with the macro environment.
Looking beyond Q1 2015, the lower oil price environment and lower levels of activity forecast for 2015 continue to create a challenging operating environment, not only for Horizon North, but for most energy services companies. As a result we will continue to focus on our cost reductions, accelerate our internal integration, and focus on new markets in Alaska and Western Canada for permanent margin restructures as well as camps that we have talked about before.
BC Hyrdo Site C, with respect to upcoming activity one project of note that we received multitude of questions on is BC Hydro Site C dam project, while we have very strong BC content excellent First Nation’s relationship, excellent safety statistics, solid history with the client. Our P3 consortium has been formed by BC Hydro that we are not the preferred vendor.
Analyst range, we are still recently comfortable with our covering analyst’s range of $70 million to $80 million of EBITDAs for 2015 given what we know the market at this time. This gave us comfort to increase our capital budget from $25 million to $30 million as well as maintain our quarterly dividend rates of $0.08 per share. While subject to review and approval by our Board of Directors each quarter, at this time Horizon North is committed to our policy of paying dividends to our shareholders through this current downturn.
So by taking the steps that we listed throughout this call we believe that we have the requisite cash flow to continue to accomplish payment of the dividend as well as satisfy our capital program. As I stated earlier this is something that myself and our Board of Directors will be taking a hard and disciplined look at each quarter as we move through 2015.
That is the end of our prepared comments. So I'll turn the call back over to our Tania for the Q&A.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from Scott Treadwell from TD Securities. Your line is open.
Scott Treadwell
Thanks, good morning guys. I’ll take the opportunity to say what might be a rare statement, congratulations on a good Q1.
Rod Graham
Thanks very much.
Scott Matson
Thanks Scott.
Scott Treadwell
First question on drill camp I mean to me that stands out as obviously not a big revenue number, but a strategic pretty good win. Can you give us some insight was that a result of have sort of a revised sales strategy or was it really just a customer specific thing in Q1 obviously it didn’t look you gave a pricing to maintain utilization. Can you just give us some insight there as to what the success was in Q1 there?
Rod Graham
Sure, Scott and thanks for your comments. Yes, it’s a combination of both of those things. So number one, its customer specific and the customers that we’ve been focused on with that drill camp business over the last - continue to drill through the quarter. Then partly as a result of our cross selling initiative as well just maintaining visibility in those accounts. That business will be challenged as we go through the back half of this year just given that the drilling platform that we see for the rest of 2015 as you can imagine.
Scott Treadwell
Okay, so would you expect with those key customers you’ll maintain your share and you’ll just kind of ride with those customers if they up you are up, if they are down you are down?
Rod Graham
To a degree, yes.
Scott Treadwell
Okay, good. Second one again for you Scott maybe on the - specifically on accounts receivable do you have a sense of how much of that you can get out in the next quarter to both from the construction and the billable side?
Scott Matson
Yes, I know there will be some working capital compression as we come out of Q1 which is typically our highest demand quarter. So it will come down as we go through kind of Q2 into Q3. Hesitate to give you the number Scott just to stay with there will be some compression there as we see rules come down hedging still in good shape, but we’ll continue to manage it.
Rod Graham
As well as inventory just to talk through other working capital items, we continue to have a very sharp eye on inventory levels.
Scott Treadwell
Okay that’s fine. The next question on the cost side I know I’ve raised this before with the U.S. dollar and the winter season meaning their groceries are coming from the U.S. how have you guys managed that through Q1 which is obviously a busy season with high utilization. Have you gotten some sort of maybe not relief, but at least some sort of sharing of the cost with customers or have you just how to manage that all on your own.
Rod Graham
On the supply chain side, our suppliers have been very good to work with Scott I mean again it’s not a high margin business the volume business. But we’ve been able to have very pragmatic conversation with them and they have been helpful.
Scott Treadwell
Okay, perfect. Last one from me on the LNG side, obviously there is nothing concrete to report, but I mean if we think about the size of some of these camps in the 1000s of beds range I mean you are looking at capital well north of $100 million, obviously a big chuck to bite off for you guys.
Can you give us any updates strategically of how you look at that would that be something you might look for a financial partner. I mean you certainly reference term that in your preferred remarks, how you might look for a financial partner I mean you certainly referenced term debt in your prepared remarks. How you might skin that particular cap?
Rod Graham
Certainly there is a capital spending profile it comes along, so your comments are very favorable in terms of kind of a total cost for what you described, but it’s not all of the door one, day one. I think so we can manage that part of the process, our lending partners has been very good and certainly if there is a new contract that comes with one of these wins, my expectation is that that they would be very helpful and it’s getting us there.
Scott Treadwell
Okay, perfect. As always guys I appreciate the colors. Thanks again.
Rod Graham
Thanks for your time.
Operator
Your next question comes from Dana Benner from AltaCorp. Your line is open.
Dana Benner
Good morning guys.
Rod Graham
Hi, Dana.
Dana Benner
I wanted to start on the large camp rental side, you put up some pretty strong numbers in Q1, if I look at what happened last year acknowledging that you get seasonal moves et cetera, but you had a small tick down in utilization last year from Q1 into Q2 although you are starting from a much lower base.
So could we see a similar pattern this year where you see only a modest tick down into Q2 or given what’s happening in the industry generally right now, do we see a significant tick down in Q2 in the area of relative strength then truly becomes manufacturing and the finishing up of the major contract you are working on?
Scott Matson
Yes, Dana its Scott here. I’ll just comment maybe basically versus last year. I think we will see the step down as we come to Q2 just in general what’s going on in the marketplace. The back half of the year will probably be I would suggest slightly less busy than it was last year as well just given the visibility that we have in terms of new projects coming on-stream. Certainly we are underpinned by a number of the contracts that we have in place et cetera such that we are comfortable with overall activity levels, but I do expect to step down and things will be a little bit slower as we go through the back half of the year.
Dana Benner
Right, I guess do you expect again last year you only had a modest tick down in Q2 very, very modest it was slight actually is I mean you are through the months of one month of your second quarter already should we expect a much more significant step down in Q2?
Scott Matson
Yes, I think you will see that Dana.
Dana Benner
Okay. And then I guess on the pricing side your Q1 pricing ticked up a little bit from Q4 although that’s makes et cetera, et cetera given do we see much more evidence of tougher pricing Q2, Q3, Q4 makes adjusted or is pricing and then they are okay and it’s more of a volume issue right now?
Scott Matson
We’ve had conversations with every kind of one of our customers Dana and probably the best way to answer that question is part of that, is reflected in Q1 already and then the rest of it would be in kind of the general range although when I get a formal guidance for 2015 we feel comfortable in that range. So I’ll let you conclude kind of where pricing goes.
Dana Benner
I guess moving next to OpEx, CapEx I know we’ll learn more as the year progresses, but how does one shape a strategy toward getting more of the OpEx spend can you give us any more color there?
Scott Matson
Again, I don’t want to be premature in terms of exactly what is going to look like, but there is an element of our business that we are very good at, that we’ve been doing it internally. We believe with couple of additional pieces this will become something that we can go on a third party basis.
And this does have the look and feel of something that does come with longer term contracts. Like I said Dana –we’d very much like to wait until it’s fully baked, but I do want to get people a window that were pushing forward on that. We are very mindful of this OpEx, CapEx split in end customers and certainly pushing forward in oil sands country for more OpEx spend.
Dana Benner
Okay. And then just finally from me, over the course of the next, let’s say couple of years, how significant could Alaska be if you are able to understand you tying up some native relationships et cetera, but how significant on opportunity is this for you?
Rod Graham
It’s a part of our business Dana. I mean I’m a little bit vary to kind of quantify, but there is certainly a series of inbound calls that’s really happened, it’s going to post the [indiscernible] that they held back in August in the State of Alaska, obviously no one anticipated we’d be sitting in 55, 60 overall, but certainly is an uptick and a lot of the infrastructure on that [indiscernible], you don’t have significant sized camps right now, large part of it is just lithography, but you certainly have a demand for an overhaul of the vintage of it. So I just want to talk about the size of that, I’m a little bit vary right not Dana, but in subsequent calls we’ll get into that.
Dana Benner
Sure. Okay, well that’s great. I’ll turn it back to queue.
Rod Graham
Thanks, Dana.
Operator
Your next question comes from Steve Kammermayer from Clarus Securities. Your line is open.
Stephen Kammermayer
Hi, guys. Most of my questions been answered. But I just like to touch on the manufacturing here you’ve taken down your capacity, I’m just curious if we do see a positive FID for an LNG plant. Do you need to ramp that capacity back up and if so, how long or how easy is that to ramp that backup?
Scott Matson
We believe that we get accommodated within the corner signs of what we have right now, Steve. So there is a series of kind of initiatives that perhaps would provide more productivity through the kind of the same footprint. So I don’t believe that we’re imperiled if we go forward on that basis.
Stephen Kammermayer
Okay and maybe just a little more high level I mean you’ve made a number of changes here since you’ve been in the CEO role here changing out some management entering the permanent structures, moving to one brand. Have we seen the majority of the big changes that you likely to put in place and we are just looking for some fine-tuning of those going forward or can we expect to see some other major opportunities going forward I guess?
Rod Graham
While there is three or four initiatives that we have internally that probably we won’t talk to directly on these types of calls, but I do believe they will impact our fit and finish as well as impact is going to our cost structures, so well you’ve asked about it and these initiatives are underway and 2015 is our year or two to undertake this.
Stephen Kammermayer
Perfect. Thanks, that’s all I had guys. Thanks.
Rod Graham
Thank you.
Scott Matson
Thanks Steve.
Operator
[Operator Instructions] Our next one comes from Greg Colman from National Bank Financial. Your line is open.
Greg Colman
Yes, just a couple of quick ones on the manufacturing side I know you’ve spent quite a bit of time talking it already, but I was wondering if you could give us an idea as to the size of the manufacturing you have in your backlog now are already science stuff on the completion of your sizable contract that’s ramping up now?
Rod Graham
Yes, I would say the way I comment on that Greg is that we don’t have a larger significant contract to replace what’s coming off right now. There are some green sheets out there, they are typically smaller in size and duration for the back half of the year.
Greg Colman
But absolutely the green sheets it would be just kind of the ramping up lesson and hopefully some of those comes here, but nothing obviously in hand at the moment?
Rod Graham
Yes, in terms of the external side and we do still have some internal demand that we are working through in terms of our capital program et cetera, so that will keep us moving, but limited view in terms of the external piece.
Greg Colman
Okay, great. And then I only really have one other which is on the co-pack log, when you look at the split there, is it predominately the kind of we all hope LNG comes through and we see some activity there or is it there still sizeable opportunities that exist sort of what I’ll call your traditional markets?
Rod Graham
I would say it’s a little bit of both Greg. So I mean certainly LNG would be a boom to our industry - particularly as well given our manufacturing capabilities and design on estimating capabilities as well. But certainly there are pockets of our traditional markets that are still bidding there is still activity out there. I guess anecdotally I would say no one is in a really hurry to put pen to paper right now there is a lot of deferral and delay going on, but there still is a relatively robust platform.
Scott Matson
The other comment I’d make Greg and again we are not providing kind of formal guidance, but if we look at the analyst range is $70 million to $80 million of EBITDAS for 2015 we in our own internal forecasting have not included any LNG revenue in that as well.
Greg Colman
Great. That’s it for me. Thanks very much.
Scott Matson
Thanks a lot Greg.
Operator
There are no further questions at this time. I turn the call back over to the presenters.
Rod Graham
Thank you, Tania. And thank you to all for participating with us on this call. We’ll update you with our Q2 release in early August. In the meanwhile if you have any further questions, please don’t hesitate to contact either Scott or myself. Thanks again.
Operator
This concludes today’s conference call. You may now disconnect.
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