Horizon North Logistics' (HZNOF) CEO Rod Graham on Q4 2016 Results - Earnings Call Transcript

| About: Horizon North (HZNOF)

Horizon North Logistics, Inc. (OTCPK:HZNOF) Q4 2016 Results Conference Call March 2, 2017 11:00 AM ET


Rod Graham - President and CEO

Scott Matson - SVP, Finance and CFO


Greg Colman - National Bank

Jason Zhang - Cormark Securities


Good morning. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Horizon North Logistics Inc. Fourth Quarter Results Conference Call. All participants are in a listen only mode. [Operator Instructions] Thank you.

And I will now turn the call over to Rod Graham, President and CEO. Mr. Graham, you may begin.

Rod Graham

Thank you, Kelly. Good morning. My name is Rod Graham. I'm the President and Chief Executive Officer of Horizon North. With me today is Scott Matson, our Senior Vice President of Finance and Chief Financial Officer. We're here to discuss our Q4 2016 operating results, provide an update on our evolving business strategy, speak to some of the recent events that we outlined in our press releases last night and update on our overall outlook for 2017.

I'll provide some comments on the market conditions that are affecting our business development, strategy, plan and objectives. Then Scott will walk through our results for Q4 2016, and finally, I'll provide an update on our views of 2017 before turning to the Q&A portion of our call.

First, I'll turn things over to Scott for some perfunctory comments. Scott?

Scott Matson

Thanks, Rod, and good morning, everyone. As Rod mentioned, we'll be commenting on our 2016 fourth quarter results with the assumption that you've read our Q4 earnings release, our MD&A and our financial statements, and all of which remain public last night and are available both on our website and on SEDAR.

During this conference call, certain statements we made relating to Horizon North that are based on the expectations of management as well as assumptions made by Horizon North using information currently available that may constitute forward-looking statements or information under applicable securities laws. As well, certain financial measures discussed today are not recognized measures under Generally Accepted Accounting Principles or IFRS and more information regarding these measures can be found in our public documents.

The cautionary statements contained in yesterday's news release and in our annual filings, again, both available on our website and on SEDAR, outline various risk factors, assumptions and cautions regarding forward-looking statements or information and also contain further information regarding any non-GAAP measures that we may talk about today.

So with that, I'll turn it back to Rod.

Rod Graham

Thanks, Scott. Before discussing our results from the quarter, I'd like to make a few comments pertaining to some of the items outlined within our press release from last night.

Modular construction, we continue to gain traction on the development of our modular construction offering, utilizing Horizon North core design and manufacturing capabilities in our center of excellence in Kamloops, British Columbia, to provide permanent modular structures for a variety of end markets. A dedication to building out this business vertical has taken the better part of the 18 months, but this diligence has now enabled us to deliver a product to a diversity of end customers with lexis standard of quality, on time and on budget.

We continue to refine the use of technology in our modular construction strategy with our cornerstones being ICE. ICE is our 3D design and visualization software in development under an exclusive licensing arrangement with DIRTT Environmental Solutions. We believe it will be part of the competitive moat we are aggressively building around this business vertical. ICE is being custom tailored to augment our modular construction expertise to deliver hotels, multifamily residential projects, office structures, retail outlets, government infrastructure and social housing projects.

We're very pleased to have recently completed some successful projects via our modular construction division, including a BC Housing SkillsPlus facility and a 40-room transitional housing project for the Vancouver Affordable Housing Association. Projects on the floor right now include a custom office complex for an energy sector client in Northeastern Alberta, a multifamily Aboriginal housing project, and a 19-room assisted living facility in the northern regions of British Columbia, and we're in the process of putting the final touches on our 86-room hotel slated for Revelstoke, British Columbia.

By bolstering our personnel roster with the recently hired Joe Kiss as Vice President, Business Development, Commercial; and Chris Bradley in the role of Commercial Building Solutions managers, we bring to the table reputable experience within the modular construction industry to accelerate the momentum already generated within division. We'll continue to focus on developing and refining our modular construction operations, further enhancing the products and project execution quality, and we will be adding a few more key players to our bench in 2017.

As of today, March 2nd, two months into 2017, we have approximately 80 million of future modular construction revenue in front of us, through a combination of existing projects under contract and extremely strong line of sight for projects currently in the memorandum of understanding or letter of intent phase. We expect that between 40 million and 60 million of these projects will occur in 2017, and are pleased that these projects have moved from our quote log into real backlog.

The spread of end customers include residential, office buildings, government social housing, First Nations Housing, seniors complexes, hotels, condominiums and resort developments. The reason I provide that the list of end customers as that number that we talked about is not one project, but multiple project types, and many of them had a Phase 2 and beyond type prospectivity. With a growing opportunity funnel and strong bidding activity, we believe our backlog will continue to grow as we move through 2017.

Kent Homes, after a number of in-person meetings and positive discussions, we are extremely proud to announce that Horizon North is entered into a relationship principles agreement with Kent Homes, which is a part of the J.D. Irving Group of Companies. The agreement was initiated to response to a federal government-issued request for information through the Department of Indian Affairs and Northern Development for a First Nations Housing Initiative focused on the delivery of 440 housing units across 44 different Aboriginal communities across Canada. This relationship and utilizing our combined experience, expertise and capabilities, will allow us to provide a pan-Canadian approach to Aboriginal housing initiatives, including those outlined in this initial request for information.

Modular home distribution in Fort McMurray. Last summer's fires in Fort McMurray were devastating on many levels. We mentioned in our Q2 2016 conference call, our strong desire to be part of the rebuild solution for the region. I'm pleased to discuss Horizon North's first promotional services agreement to market modular homes with a key channel partner throughout the Regional Municipality of Wood Buffalo. This agreement establishes our channel partner as the exclusive distributor of Horizon North's Kadence line of modular homes in and around the Fort McMurray region.

This agreement also comes with a series of minimum volume thresholds that given early demand indications, provided with extreme confidence, our relationship will be mutually beneficial. Through this partnership, we'll be able to provide the residents of Fort McMurray with high-quality, cost-effective housing options to assist with the rebuild of their community. Our first Kadence home will be delivered to Fort McMurray in the near future and will be utilized as a show home to help promote this solution.

Finalization of our insurance process, I will steal Scott's thunder, but as we have noted in our press release from last night, we are very pleased to have successfully settled our ongoing insurance claims related to losses that we incurred as a result of the Fort McMurray wildfires of last summer.

I'll finish off this section to talk a little bit about our Q4 reported EBITDA. I'm disappointed. I've been around capital markets for 26 years, and I have been a call-in participant to a number of conference calls over the past 2 decades, and I have always hated management's weatherman answer to weak activity levels in any given quarter. However, I'll tell you as CEO of our company, we moved through the first -- the fourth quarter, business was progressing as expected, and then we met unseasonably warm and wet weather in Northwestern Alberta and Northeastern British Columbia during latter part of October and all through November.

And this created unexpected access issues, which deferred pipeline projects in the area and abruptly reduced the demand for our camp catering and lodging offerings. However, part of our strategy is to be in the complementary product line hedged, and so we're pleased to offer customers with service access issue as a solution to the use of our high-quality matting stock and soil stabilization services, but unfortunately, not enough to meet our EBITDA expectations.

So with that, I'll let Scott comment on the Q4 2016 results, and I'll come back with the outlook for 2017. Scott?

Scott Matson

Thanks, Rod. I'll walk through our results for the fourth quarter in aggregate and then briefly comment on each of our major business lines. I'll be comparing mainly to Q4 of 2015, but I will provide few comments on the entirety of 2016 as well as some information with respect to our outlook as we move further into 2017. On a consolidated basis, fourth quarter revenues of 60.4 million, we're down about 12% compared to Q4 of last year, primarily due to lower activity in our camp rental and catering operations.

This was partially a result of the generally challenging conditions we continue to face across our industrial services offering, but more specifically we saw several pipeline construction projects get delayed or deferred by our customers due to wet ground conditions in Northern Alberta and Northeastern BC. That shift of activity into 2017 was partially offset by higher activity in our matting business, which was much more active in response to those wet ground conditions, but overhang on the pricing in this business served to offset the incremental activity levels.

Consolidated EBITDA for the quarter just over 4.6 million, again down meaningfully compared to Q4 of last year and coming in overall at about 8% of revenue compared to the 12%, we saw last year. This reflects, again, generally lower activity levels and the effects of the competitive price environment that we felt throughout the year.

Turning to our various segments, I'll start with our camp rental and catering operations. Large camp revenues for the fourth quarter at 27.4 million were down about 37% compared to the same period of last year. This decrease reflects about a 20% decrease in overall activity levels quarter-over-quarter. That relates to generally weaker economic demand conditions that persisted throughout the year and further impacted by the wet weather that we've already talked about. Pricing was also impacted as contracts were renewed or extended at generally lower rates than we'd seen in the past and new projects were won at very competitive pricing arrangements.

Our drill camp operations for the quarter generated just under 3 million in revenues, up nearly 40% compared to the same period last year, driven primarily by increased drilling activity in the West 5, West 6 areas for customers executing on liquids-rich gas projects. Our catering-only revenues were 5.5 million for the quarter, fairly significantly up as compared to the same period of last year, mainly as a result of some additional catering and camp maintenance contracts, specifically related to the potash project in Saskatchewan we added in late Q4 of 2015.

On the services side of this business which includes transportation, installation and demobilization of facilities for customers. Revenues for the quarter were up $5.1 million as compared to the same period last year. That increase was mainly due to a higher volume products associated with various camp setups and removals compared to the last year, which had fewer projects in place. So in total camp rental and catering operations revenues were just under 41 million for the quarter, down about 9.3 million or 19% compared to last year.

On the manufacturing side of our business, our Q4 revenues were 7.2 million, up about 14% compared to the same period in last year, but with a much different flavor. Activity in the quarter was primarily related to modular construction projects, including the Revelstoke hotel that ships later this week and the transitional housing project for the Vancouver Affordable Housing Authority that was completed in mid-February. In comparison, Q4 of 2015 saw fewer projects with relatively smaller scopes.

So overall, segment revenues were 48.2 million for the quarter, down just under 8.5 million or 15% as compared to the same quarter of last year. Segmented EBITDA for the quarter just under 4 million, a decrease of about 5.1 million from Q4 of 2015. Again, that result was the challenging demand profile and combination with a competitive pricing environment that drove EBITDA as a percentage of revenue for the segment to 8% as compared to 16% last year.

Turning to our Rentals and Logistics segment, revenues in Q4 12.2 million relatively flat compared to the same period of 2015, although the mix of revenues were slightly different. Our re-locatable structures business for the fourth quarter generated revenues of just over 1 million, down from 2.3 million in the same period of last year. Both fleet utilization and average pricing came down as compared to last year as market conditions, particularly in Alberta, continue to be challenged. Our access mat rental revenue for Q4 decreased a little bit by 0.3 million, 300,000 or so or 17% compared to last year, mainly as a result of the lag in pricing dynamics, which more than offset the relatively sharp spike in activity related to the wet weather we experienced in the quarter.

Used equipment sales were mostly sales of used mat as customers called on a significant amount of matting purchases in response to those weather conditions as they worked through the quarter and in preparation for the upcoming spring season. Our service revenues, which include transport, installation, mat management services that we perform on behalf of customers and charge for separately and some ancillary business lines were about 5.5 million for the quarter, a 5% increase compared to the same period of last year.

EBITDA for the segment 3.2 million or 26% of revenue and compared to 2.2 million or 18% of revenue last year, up in both areas, again, mainly driven by higher mat rental activity and higher mat sales activity compared to the same period of last year. Our corporate costs were 2.6 million as compared to 2.8 million for the same period of last year, and we continue to focus closely on managing costs across all aspects of our business, including our overhead and G&A cost buckets.

From a capital spending perspective, taking into account proceeds received from our asset disposals, net capital spending for the quarter was approximately 7.7 million bringing total net capital spending for the year to 18.7 million. Spending for the year was focused on setup and mobilization of assets in response to the Fort McMurray fires, finishing the site works and servicing our West Coast land position in preparation for potential future developments, some additions to our asset retirement obligations as part of our normal course annual reviews and spending to support a variety of contracts and other opportunities. We continue to employ a disciplined case-by-case approach with respect to CapEx and remain focused on allocating funding only to strategic alternatives, initiatives or to support contracted revenue-generating projects.

Our total loans and borrowings, exiting the year, were 75.3 million as compared to 73 million at the end of Q3, so relatively flat. That translated into a total debt to trailing EBITDA ratio of 2.46: 1 as we exited the year. And our overall borrowing position and our resulting leverage profile was elevated as we exited the year, largely impacted by the timing difference between the acquisition in Q3 of 2016 of Empire Camps and the receipt of proceeds from our insurance claims related to the losses incurred as a result of the Fort McMurray forest fires in May of '16.

On that note, I'm pleased to announce that we've recently concluded negotiations with our insurers, and agreed to a total settlement to the amount of 34.1 million. You would recall that we received an initial advance in Q3 of 2016 against our final settlement in the amount of 15 million. We received a second advance of $10 million in mid-February, and we expect to receive the balance of final proceeds by the end of Q1 of 2017. As you can imagine, this was a fairly significant undertaking, and throughout the process, we worked very closely with the various parties involved, and I'm pleased to see a classical resolution of our claims. I'd like to thank the various members of my team, who worked diligently to bring this to a successful resolution.

So with that, I'll turn things back over to Rod.

Rod Graham

Thanks, Scott. Before I provide an outlook on the months ahead, I'd like to touch on the update to our Board of Directors announced in yesterday's release. Horizon North is pleased to announce that Kevin Nabholz has been appointed as Chairman of the Board of Directors. Kevin has been a member of our board for almost 5 years. Prior to joining the board, Kevin retired as the Executive Vice President of Major Projects at Suncor Energy. He had been at Suncor for 25 years, and he was involved in all facets of the business, including operations, maintenance and projects; and over the course of his career, led the execution of over $30 billion worth of Major Projects.

We're also pleased that Russell Newmark is continuing as a member of our board. Russell has been a Director of Horizon North since inception in 2006 and has been an integral to the evolution of the company. As we go forward in time, you'll hear more in upcoming conference calls about our corporate vision through the end of the decade, including a significant and very sophisticated growth initiative for Northern Canada and Russell's unique knowledge of the region is invaluable.

Our management team is focused on building out a significant infrastructure platform through the end of the decade. Our traditional legacy business, our industrial offering is under pressure from a continued range-bound commodity price, unknown impacts of changes in provincial, federal fiscal policies surrounding the implementation of prospective carbon taxes and the lack of new takeaway capacity and access to growth capital, albeit improving. Over the past year, we have refined the sales and marketing strategy for our industrial offering and this improvement has allowed us to maintain or grow our market share in targeted geographies and non-energy end markets.

We continue to implement our operational excellence program in an effort to drive down operating costs, while maintaining our high standards for safety and for quality. We are affirming our belief that consolidation makes sense for this product service vertical, but with the absence of like-mindedness, we will continue our drive towards our axiom of best quality, best cost structure, best pricing model flexibility.

Our commercial vertical has extraordinary prospects. Our disclosure of backlog and line of sight project work indicates we are developing a real and growing business vertical. We are extremely confident that the real growth in this market segment, well in excess the numbers we talk to today, is being well supported by infrastructure money from all three levels of government. In addition, our First Nations partnership platform and our corporate values commitment to community has allowed for unique commercial opportunities, well supported by a federal government with a mandate to improve living conditions for all Canadians across this country.

Our residential vertical now has the right alchemy of creative flair and process discipline. A level of interest in our high-end Karoleena product offering and its more value-oriented derivative line cadence has allowed for us to enter into discussions on the prospect for complete designer prefab communities in British Columbia and Alberta. The contract we discussed earlier on this call with our new channel partner in Fort McMurray is a precursor of more to come.

While we have stayed away from providing formal guidance to capital markets, we do agree with a range being carried by many of the analysts that follow us with EBITDA in the $40 million to $50 million range for 2017. We would caveat the 2017 estimates by suggesting that many analysts are remaining cautiously optimistic on the future of our commercial and residential offerings. Our capital spending profile for the year is roughly $15 million.

The strength of our balance sheet is a key priority for us and will continue to closely manage debt levels and working capital. Our focus will be to maintain a manageable leverage position and balance cash outflow with cash inflow through reducing debt, minimizing working capital and disciplined capital spending. We also remain committed to a total return strategy that pay our investors to wait as we build out our operational excellence across a number of verticals.

Our transformational change process has been a challenge. However, we believe. We believe is a theme I spoke about in my President's Message contained in our Annual Report. We believe, we are on the right track to see us through to the end of the decade. We believe, we continue to hold firm to our vision of building a proxy for investors interested in exposure to multiple resource end markets, coupled with lower beta exposure to commercial and residential end markets across Western and Northern Canada.

We believe, we successfully added the modular construction vertical to our offering and concurrent with that offering starting to bear fruit, we will look to augment our customers experience with the introduction of 2 additional business verticals over the next 12 to 14 months. Stay tuned for more discussions regarding Horizon North utilities and Horizon North infrastructure maintenance. Trust me, we have a plan, we believe. That is the end of our prepared comments.

I'll turn the call back over to Kelly for the Q&A session.

Question-and-Answer Session


[Operator Instructions] Your first question comes from the line of Greg Colman at National Bank.

Greg Colman

I just have a couple questions for you. I was wondering if you can start by talking about your newly disclosed backlog. Backlog, the word sometimes takes different meanings for different companies. I'm just wondering if you can help us understand exactly what it means for Horizon North? Are these signed in-hand contracts, which if the backlog was to change in the negative sense, would have to be canceled, I suppose? Or are these MOUs or intentions to spend where there's still a likelihood that the ultimate results could be lower than what you've disclosed?

Scott Matson

Yes, Greg, I'll start and Rod may be able to put a punch line on this. I would say it's a combination of those. We do have a strong line of sight in terms of contracts in hand and projects that are going to be hitting the floor here fairly shortly and signed MOUs and LOIs that are kind of in the late stage of development. So we've got a pretty good line of sight as we comment through that. And again, one of the things we haven't put in there is what the prospectivity for phase 2, 3, and beyond looks like. So we feel reasonably comfortable quoting that number.

Rod Graham

And so when we talk backlog, Greg, it is assigned $40 million with prospect really high line of sight through to the -- that number that we kind of quoted that looked like an $80 million.

Greg Colman

Got it. Okay. And keeping on that theme, can you give us any color as to what kind of bid to backlog conversion rate resulted in that $40 million to $80 million in now backlog? What dollar value did you bid on versus the ultimate $80 million that you won? Is it a 10% win, is it a 80% win?

Rod Graham

Yes, you know what, Greg, I'm not going to provide that number.

Greg Colman

No worries.

Rod Graham

No, we're working through it in terms of that the signed backlog is real backlog. And as we go forward, we have a very aggressive large quote log right now, and we'll get more sophisticated with the way that we actually translate that for you in upcoming conference calls. So if you don't mind, I'd like to defer that question.

Greg Colman

Okay. Coming at another part of, again, in modular construction here, historically, the old manufacturing division back when it was focused on mainly building for expansion in and around Fort McMurray, we had assumed about a 20% EBITDA margin for you guys and some of your peers were more heavily focused on manufacturing when they were still bigger. We got good color as to that being the profitability level. That probably would be high versus where you are because it's -- this is more to emerging part of the market, maybe high water mark. But can you give us some thoughts as to what we should be thinking about as to what that $80 million would turn into from a cash flow or an operating margin or an EBITDA margin, however you think about the profitability of that revenue stream?

Scott Matson

Sure, Greg. As we look through that, we've talked fairly openly about a margin profile in the kind of 10% to 20% range. Certainly, as we start down this road, the early projects are going to be a little bit lower than that range and work their way up as we get a little bit more efficient in terms of our operations and our execution and gain more traction in this business. So somewhere in that range would be fair depending on the timing of those contracts.

Greg Colman

Got it. Okay. That's great. That's consistent with what we were thinking. And then just from a modeling perspective, what's the cadence on this? Is this front-end loaded, back-end loaded, relatively even, evenly distributed over the 2017 year?

Scott Matson

Well, the nature of a lot of this backlog is driven to kind of an October-type delivery. So I think you'll start to see that certainly in the first 3 months here, Greg. And again, like I said, we're sitting here up to March 2 with that in place. Our guys won't be throwing pencils in the ceiling for the next 10 months. They will continue to going to add to that as we go forward in time here.

Greg Colman

And on that thought of guys just throwing pencils at the ceiling, how much of your capacity does this pick up? Is this the majority of it? Or could you do twice as much, 10x as much construction? How much of your modular construction would this backlog take up?

Scott Matson

Yes. So as we broadly think through this, Greg, we think that our current in-place manufacturing capabilities could do this and more throughout a year. I think, for this year, we could see the upper end of that range be delivered pending project completion and execution. So I'm kind of dancing around your question, but certainly, we can handle what we've got in front of us and more and probably significantly more as we move into '18.


[Operator Instructions] Your next question comes from Jason Zhang of Cormark Securities.

Jason Zhang

So understand you don't want to provide sort of a bid to backlog ratio. But maybe trying to coming up from another direction. Can you give us, maybe just sort of the order of magnitude of what the bid log today is versus maybe what it would have been a quarter ago or 2 quarters ago?

Rod Graham

Well, I like the ability to try to trap me with the math question. So again, I would argue that the quote log is certainly in excess of $0.5 billion and growing. And so as we take a look at kind of that comparative period, some of the projects have fallen off and new ones have come on. I take a look at that active quote log and $0.5 billion to $1 billion as a range. I think it's reasonable context as out there in what we see. And as we gain kind of more momentum and certainly, again, a higher profile with our offering here, my expectation is that we would see the upper end of that quote log continue.

Jason Zhang

Got it. Great. And then maybe on the partnership with Kent Homes, obviously, early on in that process, but how should we be thinking about what the economics there might look like? Is it a 50-50 JV? Or are you guys not sort of down that road yet?

Rod Graham

No. And very, very pleased to be working with this group. They're very private in orientation, so I want to be careful in terms of how much I disclose on this call. But they were good enough to allow us to release the information that we did in yesterday's press release. It'll vary project-by-project. As we take a look at it, especially, the First Nations and Aboriginal housing initiative that's underway right now, it truly needs a pan-Canadian solution.

And depending on the geographies, the demand will come from, that will be how we skew our teaming or partnership agreement. So it's not a 50-50 partnership. It'll be skewed based upon geography and deliverables. But very, very like-minded in the way that they look at this business very strong support for Aboriginal and First Nations out of that group and very pleased that this now offers us an ability to kind of be on a very short list of individuals that can bid on some of this federal government type work.

Jason Zhang

Got it. Understood. And then finally, again, I know you hate to blame the weather, but given how unseasonably weather it was in Q4, how should we think about what the impact would have been on your Q4 numbers? If I sort of look at the margin decline sequentially from Q4 to Q3, call it roughly 20% to 15%, was pretty much all of that related to weather?

Scott Matson

I think it's safe to assume a chunk of it is, Jason. I'll stay away from maybe trying to quantify it, but certainly there's a big effect of that.

Jason Zhang

Okay, okay. And then is it also safe to say that pricing has more or less bottomed, and you didn't see a big change Q3, Q4?

Scott Matson

I mean, in various pockets, pricing pressure has continued, although I think we've seen we worked through, I would say, the vast majority of that -- those rounds that we've seen come at us. New projects are still very competitive as we go. Existing projects in in-place, locations certainly give you as we incumbent the -- a leg up, so to speak. But so pricing hasn't meaningfully moved the opposite direction. But we're not seeing a tremendous amount of downward pressure.


Your next question comes, again, from the line of Greg Colman of National Bank.

Greg Colman

I got 2 out of 3 similar to my hit ratio for the questions for you. I just want to turn around and talk a little bit about the quarter going into Q1, building on some of the questions Jason had. You were talking about being a weather event in Q4, I know you hate to blame it on that, but would we -- should we be expecting to see a rebound into Q1 more towards those -- what we've seen as recent historically accurate margin profile? Or should we be thinking more the mid-teens for the start of 2017? I know we still have breakup to go through, but just wondering how events are playing out and wondering if this is a weather thing or pricing thing or if we're going back to sort of normality in Q1?

Scott Matson

Yes, so certainly, Greg, I think, a chunk of that activity that we didn't see in Q4 didn't disappear. It slid, I would say, into 2017. I would say that January was still reasonably slow. We didn't see the same kind of immediate pickup that we've seen in previous years in terms of that spike of activity as we move into the winter season. We are starting to see that, and we have seen that start to come back as we move through February and now into March. So I don't think we're going to see the same magnitude in terms of the seasonal bump that we would normally see in Q1, although there is a bump from where we were in Q4, if that helps you.

Greg Colman

It does. I appreciate it. And then just a last one for me, forgot to ask earlier. But just to be clear on the insurance, the final settlement, good to see some clarity there. And the math is pretty basic, but I just want to make sure there's no misunderstandings, but from when we looked at the balance sheet at year-end, last disclosure we just got last night and compared to what we're expecting to see at the end of Q1, we should see an incremental $19.1 million in insurance proceeds to get you all the way up to that $34.1 million. I just want to do a couple of things that's what we're seeing.

Scott Matson

Yes. Yes, that's correct, that's correct, Greg.


And there seems to be no further questions at this time.

Rod Graham

Great. Thank you, Kelly. We look forward to updating our investors as material information becomes available in the future. Thanks, again, for joining us today.


And this concludes today's conference call. You may now disconnect.

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