Earnings Call: Q2 2020

Aug 13, 2020

Earnings release

Good morning, everyone. Welcome to Exchange Income Corporation's conference call to discuss the financial results for the 3 month ended June 30th, 2020. The corporation's results, including the MD and A and financial statements were issued on August 12 2020. And are currently available via company's website or SEDAR. Before turning the call over to management, listeners are cautioned that today's presentation and the responses to questions may contain forward looking statements with the meaning of the Safe Harbor provisions of Canadian provincial securities laws. Forward looking statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward looking statements. And actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward looking statements, please consult the MD and A for this quarter. The Risk Factors section of the annual information form and the exchanges other filings with Canadian securities regulators. Except as required by Canadian securities law, Exchange does not undertake to update any forward looking statements. Such such statements speak only as of the date made. Listeners are reminded that today's call is being recorded and broadcast live via the Internet for the benefit of individual shareholders, analysts, and other interested parties. I'd now like to turn the call over to the CEO of Exchange Income Corporation. Mike Pyle, please go ahead, Mr. Pyle. Thank you, operator. Good morning, everyone. Joining me this morning are Carmel Peter, EIC's President, Daryl Bergman, our CFO, and David White, VP and Aviation. On our first quarter results call in May, we followed a unique format where we had several of our subsidiary speak about the impact of COVID on their operations and what plans we've been able to deal with it. This quarter marks the second report since the onset of the pandemic, And we will return to a more traditional format, which includes commentary for myself, our president, and our CFO. On the Q 1 call and in our Q 1 report, we laid out our plan to manage in the COVID environment. The plan included the safety of our customers, our employees and all stakeholders. It also included adopting our service offerings to meet the changing needs of the public. And included managing our cash resources through the challenging period to ensure we have the resources to take advantage of opportunities for long term growth that are uncovered. And finally, we've prepared for increased demand as the pandemic was better controlled in the future. The second quarter was less of a planning and more about execution, putting the plans into actions, and we are very pleased with the progress that we have made. The majority of our revenue and earnings are driven by the Aerospace Aviation segment. As such, there has been a tendency within the market to UEIC as a as a similar to traditional North American air carriers such as Air Canada or Delta. This comparison is fundamentally flawed. As even within the Aerospace And Aviation segment, our operations are very diverse. With MetaVac, freight freight, freight training, maritime surveillance, parts sales, and equipment leasing in addition to the passenger business. In addition to this diversity within the segment, we have our manufacturing businesses with operating in other diverse marketplaces. The value of this diversification strategy has never been more apparent than during this The airline comparatives are dealing with ongoing passenger declines of over 80% and are describing their business in terms of how many millions of cash per day and is being lost. Our airlines experienced passenger declines of over 90% at the beginning of the test, but the essential nature of the service we provide has seen volumes recovered of 40% to 60% of normal depending on the geography of the operation. We expect these levels to recover quickly when travel restrictions are reduced or lifted. Our return to pre COVID levels will be described in weeks or months, not years when the pandemic is finally brought under control. Our revenues decreased 25 percent year over year to 244,000,000, and EBITDA fell by 29 percent to $62,000,000. We remain profitable with adjusted net earnings of $0.16 per share. When the pandemic began, we chose to maintain our dividend of $0.19 per month to our shareholders, which made us an outlier in the aviation business. As most cops or cancelled their dividend in its entirety. However, not only do we keep the dividend at previous levels, We committed to funding and all sustaining capital investments from operations without decreasing our debt levels. I'm pleased to report that we not only met that commitment, we have significantly exceeded it. Our payout ratio for the quarter with 78% of the free cash flow less maintenance capital expenditure basis. Much stronger than the breakeven 100 percent payout ratio commitment. Tight management of both maintenance and growth initiatives together with strong working capital management and stronger Canadian dollar have enabled us to reduce our secured debt net of cash by $40,000,000. We paid our dividend, funded our capital investment, and paid down debt. Our focus, however, was not just on surviving the pandemic, but rather it was focused on returning to expansion of the pandemic is under control. Subsequent to quarter end, we announced the closing of window window installation systems or WES a window in Asia, located on the west coast of the United States. WISSA served as the installer of Quest Windows since he entered this market a decade ago. The acquisition of this company is very similar. To the purchase of AWI in the fall of last year. AWI is the installer of Quest Products on the Eastern Half of the United States. These 2 transitions, transactions, I'm sorry, in addition to being significantly accretive to our shareholders, our strategic as Quest, as in Canada, we'll now have a prime single point of contact for all customers. For both the design and purchase of windows and for their installation. Installation makes up a significant portion of the window budget. And by internalizing this function, QuestNow benefits of the entire project on future contracts. Permitral aerospace, together with his partner, local partner, Jet Support, was selected as the best bid in the Netherlands maritime surveillance contract. The opportunity cost of 2 Adapted Dashgate Aircraft, and the contract when executing will have a 10 year term together with 2 1 year options. The contract is material financially and is expected contribute immediately upon the planes going into service in late 2021. The award is also highly strategic as it's Powell's 1st major surveillance contract in Europe. The increase in Powell's profile of the surveillance community in extended history of newer extended contracts, for the company. Work on 2 DASHA aircraft is expected to begin later this year. Where the aircraft earmarked for the enhanced government, a Kansas fisheries contractor completed and put in service. I'm pleased to report that as of today, the 20 day response period for this contract in the Netherlands has passed, and we will now proceed, to negotiating the final terms of the contract with the government. The various components of our Aerospace And Aviation segment have fared quite different during COVID, and I will speak briefly on each of them. Carmel will add a little color on the future in her closing remarks. Our Nunavac business, both in Nunavut, where we are the sole provider of service, and in many provinces, where we are one of several licensed operators, saw a significant decline in demand of approximately 1 third early in the pandemic. Many medevacs are used to transport patients who are not healthy enough to fly on the scheduled flight to the south for medical diagnostic appointment. Early in the pandemic, all was the most urgent of these trips were postponed and as such demand declined significantly. Over ensuing months, the demand for service has returned to ear pandemic levels. Our maritime surveillance contracts were largely unaffected by desk. While margins face some pressures from the cost of safety addition is put in place to protect our employees and to prevent workplace workplace spread of the virus. Small delays at the start of the fisheries contract and to ramp up, fixed rate search and rescue contracts I've experienced that they are not material. I'm not material issue. The forced multiplier did not fly during the second quarter as government's focus on other pandemic issues. Prior to the pandemic discussions were underway with a number of countries for deployments in the second quarter and beyond. Some of these discussions have been restarted, and some shorter term deployments have already been scheduled for Third And Fourth Quarters. Our freight business has been largely unaffected by the pandemic. And in fact, in some markets, It has led to an increase as the community members have remained at home and not traveled to Southern Centers to shop. Some of this freight is delivered on combination aircraft with both passengers and freight on board. The dramatic decline in passenger revenue led to a reduction in frequency of service to Northern communities, which in turn resulted in alternate freight delivery mechanisms being required. Pure grade aircraft had lower margins than combination flights, and this did put some pressure on margins, in spite of increased volumes. Research increases in passenger loads, however, have facilitated increased frequency, which has now alleviated this concern. Monster Point College was closed for a period during the 2nd quarter as it was not considered essential service by the provincial government. It is back in service, albeit at less controlled capacity. The demand for international student training remains strong. But there could be some dislocation later this year if international travel is not available to take graduate's home or break the new students here. Passenger volumes were very dramatically impacted by the pandemic, following by 90% in early April. It was only the most essential travel being allowed in an attempt to keep the virus out of remote communities. As the pandemic has become under better control. Volumes have increased, although not evenly across the country. We are now operating at 40% to 60% of normal volumes. Travel restrictions and quarantine from requirements remain in place in some markets. Nunavut, for example, requires a 14 day quarantine for anyone who is returning to the territory from a trip to the south. As these restrictions are lassiter removed, passenger volumes are expected to rise very quickly. Regional 1, our aftermarket parts and leasing company has been the hardest thing of our subsidiaries. Our one specialized in regional jets, and large turboprop aircraft, which are operated by carriers around the world. It is very well publicized. The airlines around the world have dramatically reduced operations and are flying far less, which has a direct and immediate impact on the Deep footprints engine and aircraft sales as well as leasing. We had begun to see an uptick late in the second quarter, but the resurgence of the number of cases in the United States has yielded the short term improvement. Carmel will come back to the outlook for Regional 1 and her comments, but material improvement in Regional 1's results will not be seen until 2021 when regional jet volumes increased. Our manufacturing sector was impacted by the virus as the process changes required to keep employees safe and prevent the spread of COVID impacted margins. Demand was surprisingly strong across the segment. With the exception of our Alberta and BC operations, where demand is well below normal. These operations in the 2 Westernmost provinces become a very small part of EIC's total, less than 3%. And as such, we have cost for small. LV control, dead machine, and stainless fabrication all performed strongly through the quarter, and the outlook remains positive. Quest also performed well in the period, but dealt with the most dislocation as the result of the pandemic. COVID in different parts of the continent at different times, and this resulted in construction job sites opening and closing at different times throughout the quarter. We also dealt with production employees becoming ill with COVID to contact outside of our plants. Our first job was to reconfigure our production facilities to socially distance our employees to the greatest extent possible. This was simpler in Dallas because of the size of the new plan and much more challenging in Toronto when we did not have the extra space to spread into. We actually chose to close the trial by briefly on few separate occasions in order to ensure the safety of our team. Our order book remains robust, and we continue to be bullish on the short, medium, and long term outlook for glass. As evidenced by our recent acquisition of West. We expect there to be continued inefficiency from the adjustments to project Chadwell's at COVID plant configuration in the near term, which will subside with the pandemic. One last topic before I hand the call to Daryl, for a more detailed look at the numbers. We have received approximately $29,000,000 in sales payments of the federal government. We utilized these funds to maintain employees who were either otherwise as a layoff or terminate. It also enabled us to maintain a higher level of service in certain communities that would have been possible without the program. He enabled us to do a better job in working after our people and our customers. I will now hand the call off to Daryl, who will walk you through the second quarter Thank you, Mike, and good morning, everyone. Within the quarter that was marked with the unprecedented challenges, of having to deal with the continuing COVID 19 pandemic. The corporation through the actions of management and staff across all our EIC companies We're able to maintain positive cash flow after capital requirements and payment of dividends and reduce net debt in the most challenging quarter the corporation has ever faced. This in turn is a testament that our distinct business model is sound, even in the most difficult times. The financial results for Q2 2020 that I will summarize here to follow were negatively impacted by the COVID-nineteen pandemic. I will caution that the comparability of current results without a prior period is materially impacted due to this unprecedented event. Conclusion taking into account any comparability should be made carefully given its current circumstances affecting results. Before turning to the discussion on Q2 2020 financial results, I will leave with comments regarding the corporation's balance sheet and liquidity. To begin, it is noteworthy to reiterate that the size of our corporation's credit facility as of June 30th was approximately 1,300,000,000. In addition to that, the corporation can access another $300,000,000 in an accordion feature should we choose to exercise it. Utilization of the corporate credit facility was $802,000,000 at the end of the quarter. This is a reduction of approximately $90,000,000 from the quarter end of Q1 twenty twenty, which is comprised of a repayment of debt within the quarter and changes in foreign exchange on the US denominated debt. With the lower long term debt and $66,000,000 in cash on hand, net debt decreased by approximately $40,000,000 in the quarter to $736,000,000. Giving the Corporation near term assets to 564,000,000 in liquidity, excluding the accordion. As Mike noted, tight management of both maintenance and growth initiatives together with strong working capital management and a stronger Canadian dollar have enabled us to reduce our net debt. In addition, it should be it should be noted that the company has no long term debt coming due before December 2022. At the end of Q2 2020, our leverage ratios remain well within our covenant with lenders. Even with the current challenging environment, we are committed to the supporting principle of our business model, which has always been a strong focus on our balance sheet with modest leverage and good liquidity. Subsequent to the quarter, and the corporation amended its leverage ratio from a maximum of four times to five times for the quarter's ending December 31, 2020, through September 30, 2021. The amendment was unanimously supported by our syndicate of lenders, reflecting a strong support for and confidence in the corporation. Given the corporation's opportunistic DNA, The increase in the covenant was solely intended to provide the corporation with flexibility under the credit facility to draw further capital in the future to take advantage of opportunities as either proven investment criteria as they present themselves. Inclusive of the impact of all announcements to date, management continues to expect to be within the original 4 times covenant. Management has also not changed its attitude towards or appetite for debt. Further on our balance sheet, We ended Q2 2020 with working capital of $339,000,000, which represents a current ratio of 2.28. This compares to working capital of $308,000,000 and a current ratio of 2.1 at the end of 2019. I will try to summarize discussion on financial results, a more fulsome explanation of results can be found in our Q2 2020 MD and A. In Q2, we generated revenue of $244,000,000, which is a decrease of $82,000,000 or 25 percent from Q2 2019. Aerospace And Aviation segment revenue was down 41 percent from the comparative quarter in 2019 to $140,000,000. Revenue from the legacy airlines and Provincial decreased by $61,000,000. Passenger volumes in the airlines were down as much as 90% early in the quarter. Stemming from the reduced demand as a result of COVID-nineteen. Passenger volumes gradually improved throughout the second quarter. Operating at 40% to 60% of normal volumes, with scale of improvement varied by geographic regions, depending on travel restrictions and quarantine periods, specific to the region. Cargo volumes remain strong after the onset of COVID 19. The strength can largely be attributed to the communities that we service continuing to need essential goods and supplies. MetaVAC and charter operations were also impacted by COVID-nineteen factors early in the quarter, but gradually normalized the pre COVID-nineteen levels towards the end of the quarter. The impact of COVID-nineteen on the Aerospace segment was minimal due to the contractual nature of the work, except for the forced multiplier aircraft, which was vital during the second quarter why governments globally were focused on the pandemic. For Regional Wine, revenue decreased in the quarter compared the same period last year by $39,000,000. Regional One's operations have greatly been impacted by COVID-nineteen. Regional One's business is dependent on traditional regional air carriers and lower travel throughout the world has put pressure on all of its lines of business. Including parts sales, aircraft and engine sales and lease revenues. The sales and service revenue stream decreased by 49 percent in the quarter compared to the same quarter last year. The level of sales bottom note at the beginning of the quarter gradually improved throughout the quarter, and installed at the later stages of the quarter with a resurgence of the pandemic. Aircraft and engine sales were down significantly from prior period at the airline to defer large purchases. Lease revenue decreased by $17,000,000 or 71 percent in the current period, due to a significant drop off in customer demand and utilization of the corporation's leased assets. Turning down to our Manufacturing segment. Revenue grew by $17,000,000 over the prior period. The total revenue for this segment was 104,000,000. Quest was higher than the prior period, reflecting the acquisition of AWI in the fourth quarter of 2019 with no comparative in the prior period and increased production at its Texas plan. EWI has consistently outperformed our expectations and documentation, including outperforming pre COVID 19 forecast during the second quarter of 2020. The balance of the segment collectively variance and increase due to the acquisition LV control in the fourth quarter of 2019. It should be noted that all of EIC subsidiaries within the Manufacturing segment, we're deemed essential businesses at the onset of the COVID-nineteen pandemic and have continued to operate. That said, management measures were implemented to ensure the health and safety of staff because of the impacts of COVID 19 have reduced efficiency and throughput despite robust demand. Moving to EBITDA. Consolidated EBITDA was $62,000,000, down 29% or $25,000,000 for the quarter compared to Q2 2019. The primary contributing factor to the decrease can be attributed to the impact of COVID 19 on both segments. $4,000,000 of the reduction in EBITDA was caused by a pending reassessment of certain input tax claims that related to several years for which a charge was booked in the second quarter of 2020. While we have conservatively accounted for the reassessment in the quarter, the Corporation does plan to pursue an appeal. EBITDA in the Aerospace segment in the quarter was $47,000,000, a decrease of 41% compared to the prior year. EBITDA generated by legacy airlines and provincial decreased by $11,000,000. The corporation quickly adopted its operations to mitigate the impact COVID-nineteen travel restrictions and implemented cost reduction measures through scheduled frequency reductions, labor rationalizations and various reduction strategies and qualified for the Canadian emergency weighted subsidy to program. EBITDA for Regional 1 decreased by $21,000,000 from the prior year, contributing to the lower comparable at this a decrease in revenue across all lines of business with the most significant being the $17,000,000 reduction in high margin lease revenue. In the Manufacturing segment, EBITDA was $22,000,000, an increase of $6,000,000 compared to the same quarter last year. The increase was driven by the same factors I noted. For revenue. Margins in the Manufacturing segment continued to be impacted by lower efficiencies from social distancing protocols implemented in the plant, and higher costs from sanitization and personal protective equipment. Turning to earnings. In Q2 2020, the net earnings was $3,000,000, a decrease of $19,000,000 compared to the prior period. The corporation generated lower EBITDA compared to the prior period as previously discussed. And which mostly explains the earnings variance from the prior period. Net earnings per share decreased from $0.68 per share in the prior period to $0.08 per share for the current period. It should also be noted that In the period, the weighted average number of shares increased 8% over the prior period, which has impacted the per share amounts in the current period. Adjusted net earnings was $6,000,000, a decrease of $21,000,000 from the prior period. Adjusted net earnings per share was $0.16 per share, down from $0.83 for the prior period. In Q2 2020, free cash flow was 42,000,000, or $1.21 per share, a decrease of $23,000,000 from the prior quarter. The main reason for the decrease is the decrease may be the effect. Free cash flow less maintenance capital expenditures per share decreased by $0.35 per share to $0.73 per share in the quarter. The corporation's payout ratios in the quarter were negatively impacted by COVID 19. The payout ratio for the quarter was 78%. Which is much stronger than our 100 percent payout ratio con commitment. And given that it occurred at the height of the pandemic lockdowns, management believes it is a testament to the resilience of our business model and our subsidiary operations. We were able to generate sufficient positive cash flow fund our capital needs, our dividends, and pay down debt at the same time. To allow for variations due seasonality in the business, we continue to utilize the calculation of ratio is on a 12 month trailing basis. The free cash flow less maintenance capital less maintenance capital expenditure payout ratio On a 12th trailing basis, increased to 76% from 54%. Before I pass the call on to Carmel, I would like to note that was in the quarter, the Corporation reviewed all available programs and government aid in each jurisdiction in which it operates. In addition to the CEWS, which Mike noted, in the quarter for the corporation also received a lot of support from the government of Nunavut In the form of a revenue guarantee, which allows for the corporation to continue to provide a level of vital services to our Nunavut customers. The corporation chose not to participate in the payroll protection program in the United States. Without this substitute been received, the corporation would have sought to offset a significant portion of the subsidies received by way of cost reductions throughout the such as significant reductions in workforce or as it pertains to our airlines in frequency of service. The federal government has recently announced a new bilateral program with the provinces and territories to support air service into isolated communities. We expect EIC Airlines to qualify for this program, but no details have been released on how to qualify or if the relevant provinces will choose to participate. We look forward to the details of this program being announced. That concludes my review of our financial results and comments. Will now turn the call over to Carmel. Carmel? Thanks, Earl, and good morning, everyone. I'm going to focus my comments on the outlook for the year for various lines of business and ESE as a whole. Although you're willing to predict with any degree of certainty about the next chapter the COVID virus will bring, Looking forward to the balance of 2020, we expect sequential quarterly improvements in our consolidated results even as the CEW sub state is phased out. The level of recovery, however, will vary between business lines and geography. As Mike indicated, our schedule passenger volumes are currently about 40 to 60 percent of normal as many of the communities we service still have power restrictions and quarantine periods in place. As these restrictions are eased, passenger volumes will rebound quickly to historical levels as there is pent up demand. This demand is driven by the fact that the underlying reason for movement in and other communities is essential or near essential travel, like medical travel, movement of healthcare workers, trade people, and resource sector workers. The recovery we obtained to date where we have rebounded from the 90% below normal in April when probable restrictions were the most severe to where we are now at about 40 to 60% of normal with only some of the communities opening up or easing restrictions provides a sense of the speed of recovery we expect. The slowdown in passenger travel has meant an increase in demand for freight for the reasons Mike explained. This increased demand is a efficiencies sustained to the balance of the year, even if communities open up, although the mix of cargo will likely revert back to more historical norms. During the height of a pandemic, almost all of the cargo we moved was essential goods like groceries and mail. As people start traveling out of their communities, there is likely to be some reduction in essential goods freight, but an increase in the movement of discretionary items and construction materials. Charter work is nearing normal levels and in some regions, exceeding historical volumes assisted by the work we've secured from indigenous services Canada to Blue Healthcare Workers into the North and all ten provinces and the resumption of various resource projects recurring movement workers in and out of the camp. Similarly, our MetaPack business has returned more historical levels as governments resume moving non urgent medical patients who cannot travel for medical treatment on scheduled flights. We expect both of these trends to continue. The Aerospace division will continue to perform materially unaffected by COVID for the balance of 20.20 and will be assisted by the resumption of operations of force multiplier after being idle in Q2 and the start of a new vehicle contract towards the end of the year. The resiliency of the aerospace sectors passed most evidence from the fact that the Netherlands surveillance contract hindering process was completed. Pell Aerospace together with its partner Jet Support Holdings were selected as the successful bidder, and a contract will all be concluded in the middle of a pandemic. This contract solidifies Cal Aerospace as a leader in international ISR solutions and builds on expertise and operations in Canada the Caribbean, the new AD, and now in the European Aerospace market. Regional 1 is the subsidiary that has banned hit the hardest and will be the slowest to recover as it is dependent on the improvement of traditional regional carriers. The regional jet market is expected to return to service sooner than larger body aircraft. For mainline carriers trying to restore their networks in the wake of a pandemic, Passenger volumes will be very low to begin with to minimize those losses during low demand main line charterers will look to utilize regional aircrafts. The role of regional aircrafts and recovery of the airline industry will create increased demand in regional aircraft parts and engines as customers look for economic parts solutions and ways to avoid expensive shop visits. Regional One is well positioned to be that solutions provider. With the recent resurgence resurgence of new COVID cases throughout the world, The commencement of the recovery in the regional debt industry has stalled. We anticipate a measure recovery for the balance 2020 with no material improvements until 2021. However, with challenge comes opportunity, Regional One's data driven knowledge and discipline has always enabled it to acquire assets, but in the money, such that the end of asset will value is greater than the acquisition value. However, the environment created by COVID 19 provides even greater opportunities to act assets at favorable values. The lower acquisition prices enhance potential returns provide a greater cushion time and flexibility to monetize the asset and create new opportunities for Regional One's customers to step up. Into aircraft that they could not previously afford. These methanar activities will drive future growth. We expect demand overall in our manufacturing segments to remain strong, but with continued reduced demands in some project deferrals due to the impact of COVID. Our manufacturers have settled into the mental norm of operating in a COVID environment and are focused on finding different ways to mitigate the impacts of the virus. This is included, for example, overhaul and shift structures to retain social distancing, but increase overall production hours. Also, the recent acquisition of Whist together with the purchase of AWI late in 2019 now vertically integrates Quest in all of its markets and provides a strong foundation for further growth. Turning now to our CapEx outlook. Our maintenance CapEx is primarily driven by our Aerospace And Aviation segment and moves in line with our scope of operation. As flight hours decrease, as beginning Q2, so with our maintenance CapEx. This level of maintenance CapEx is expected to gradually increase over the balance of the year as our flight hours increase. Material growth capital expenditures for the balance of 20.20 are comprised of completion of the VFO aircraft, which will be operational by the end of the year and the acquisition and the start of the miss miss miss miss miss miss miss miss miss miss miss miss miss miss. I see that we're in mission. Of a 2 dashes aircraft required for the start of the Netherlands coast guard contract, which are required to be completed in about 17 months. No other material growth CapEx is expected. However, we'll take advantage of opportunities if they arise. Although there's much uncertainty in the world, a content has been our business model and our execution of it. Our business model has developed 2 achieve has been developed to achieve 3 objectives, which we have set out in each and every MD and A since our inception. Since the best predictor of the future in the past, I thought it was useful to conclude this outlook section by seeing how we varied in achieving our objectives in the most difficult time and how this bodes for the future of EIC. CIC's first objective is to provide shareholders with stable and growing dividends. Q2 was undoubtedly the most challenging quarter in our history, yet we were able to generate free cash flow from our operations and manager working capital to not only pay all of our capital expenditures are different in, but also pay down our debt by more than $10,000,000. And we are just getting stronger as is our confidence in our ability to continue paying the dividend. Our second objective is to now to my shareholder value through ongoing active monitoring of an investment in our operating subsidiaries. What did we do in the midst of a pandemic? We secured a a new long term maritime surveillance contract in the Netherlands, Netherlands. We invested in 2 400 aircraft to meet the growing demand of customer. We modified 2 dashes aircraft to increase cargo capacity, just to name a few examples. The strength of our balance sheet allows us to not simply focus on cost cutting to manage through the pandemic. It allows us to capture opportunities to add shareholder value and come up with this crisis well positioned for growth. And we won't continue to invest in our companies to create shareholder value. For example, we are assessing the void left by other air carriers, the opportunity to access new revenue streams with larger days turbo prop air comm and investigating providing alternative service delivery models in the aerospace sector as governments look to outsource services to lower costs and reduce debt. The 3rd objective is to continue to acquire additional businesses or interests therein to expand and diversify EIT's investments. We have done exactly that as is evidenced by our acquisition of WIPs at the end of July. And the pandemic will not stop us from pursuing additional acquisitions whether that be stand alone businesses, tuck in or asset purchase opportunities at Regional 1. So what can you expect in the future? More the same. Continue to nasty in the execution of our business model and achievements of our objectives. Finally, before moving on to questions, I want to thank all customers, shareholders and stakeholders for their ongoing support, and all the people who put themselves at risk to look after the rest of us. We would now like to open the call for and Your questions will be pulled in the order they are received. First question comes from Chris Murray with AT And T Capital Markets. Good morning. Just maybe turning back to the government of Canada support announcement for, for remote communities As part of that announcement, they also put out a, I guess, what they call a background document, and just sort of connecting the dots it really does look to impact a lot of your operations in Manitoba, Ontario and Newfoundland. And I also get the impression that the Nunavut program that you've been running, or participating in is maybe tied to this somehow. Can you give us some more color on what you think that they're proposing? And I mean, is this intended to be, call it, a direct subsidy, or is it more to treat the, I guess, the service as a utility and just kind of give you a minimum guaranteed return? I think, first of all, I got a little bit, but we haven't seen the precise details. This is from discussions we've had over the last 3 or 4 months still, this was put in place. But the concept is that they understand that we can't stop flying into certain communities because it's essential service. And they know that you can only lose money for so long trying to those communities So the idea is to provide some revenue and active guarantees to make sure that you can afford to continue to provide the service. The the plan we had with you that was similar to that in the past, that period, program expired at the end of the quarter. Where they made sure that if we met a certain schedule, they would buy a certain number of tickets, and we did get some model supported out of $2,000,000 or $3,000,000 on that program. We expect that the new program will be similar, but the challenge is going to be that it's meant as a bilateral program with each province. So they've gotta lay down these parameters of the province, then we have to negotiate with each province. So while we're very excited to see this, we view this as we're just kind of getting started. We gotta talk to the government, how it's gonna work. And I think it'll be very important if we face a second wave, and we see a decline in volumes again. Having this as a backstop will be very valuable. Hopefully, if we don't see that we'll outgrow this program very quickly, because volumes will be such that we won't require it. Alright. And the activity level would apply. Essentially, a lot of ways. It's almost like you're running a CPA on behalf of them because the the you'd probably be indifferent to passengers or cargo is just maintain the supports of the communities as a way to think about Yeah. Exactly. I mean, the as much as, a pound of passengers, above the same as a pound of freight, the beauty of the passenger is they go south and north, whereas freight largely goes just south to north of the planes aren't as full. So the more active the passenger business is, the more efficient the businesses. Okay. Fair enough. And then my other question is just on the quarterly cash flow. You made a comment about, you were able to manage your working cash capital and cash flows in such a way that you're able to fund the dividend and your maintenance capital expenditures. So I guess a couple of questions I mean, first of all, you received the CUES payment in the quarter. And just any thoughts around, what that might deem to Q3 3. But as well, you know, certain companies have been telling us that they've received other benefits, tax deferrals things like that. So I guess trying to think about the rest of the year, how should we be thinking about, call it, an unusual quarter of levers pulled to manage working capital and how that might unwind through the back half of this? Well, I think, yeah, if we start with working capital, as the business grows, will undoubtedly have a growth in receivables because we're doing more business. And, I would expect to see any more funds generated from decline in working capital, but we will stay on top of that to make sure that to building working capital to the extent that there is 1 is at a bare minimum. As it relates to other support, We really haven't taken advantage of any deferrals. We paid those, bills sort of as they're due. We have taken advantage of the Sears program. It helped us maintain more employees than we otherwise could have. We're skilled employees that you don't want to lose, and it's helped us not do that. We certainly expect to see that phased out over this quarter. Certainly phased down dramatically. But the growth of the business is expected to more than offset that, and we're expecting sequential improvement. So we're bullish on that. And I think the final thing I'd like to point out is there were other programs with the option of tapping into the most obvious one being the PPP program in the US. And we qualified based on the the the pure rules of the program, we chose not to access it because the program was intended to support businesses that might not have, been able to get through the period without the support. That was never the case with us, and we thought it was disingenuous to draw those funds. And as well as all we chose not to. And so as we exit this, the, the weight support program is you'll be from EIC program, size, program, material EIC. Right. The relationship with the government and dealing with been awesome. They've been a great partner. And that's a big part of how Calm has been able to do what they do. But at a VSC level, that's a very, modest size program. Okay. And just to follow-up, so I just wanted to, if I understand correctly, so the staffing levels that you maintained in Q2, which were offset by the CUES program, your expectation is the activity levels in Q3 will probably be able to absorb all that staffing. Kind of in a normal fashion as a as a way to think about it then? The that'll be the shortest answer of the day. Yes. Okay. Alright. Thanks folks. Stay safe. Next question comes from Cameron Doerksen with National Bank Financial. Good morning. Good morning. Good. So I can give you a a question on the restrictions that are still preventing a fair amount of the ramp up in flying activity. Do you have any sense of when some of these things are going to be eased, like, in Nunavut, for instance. And, you know, I guess there's even individual communities in Manitoba, for instance, that have, you know, restricted access. What's your sense on when some of these things are going to start to to ease up? Discussions with the government are new to their ongoing. We believe they're going to go to a model in the near future. So that's weeks, a short number of months. Where they will test when people, return to the community. And that will and then they'll quarantine within the community as opposed to quarantining in the south, which will have a dramatic impact on the number of people buying not some time. I mean, it depends on what happens with the number of cases, but the government tends to move forward without our understanding is over the next 68 kind of thing. Again, I'm speaking on behalf of somebody else, and there's always a huge risk in getting that. In terms of Manitoba, it it's highly it's safer in Ontario. It's highly variable based on the communities and experiences of the past. Northwestern Ontario, as an example, experienced a very difficult time with the SARs outbreak a decade ago. And as a result, we strictions in Northwestern, Ontario would be far higher than they are in Manitoba. And so one's at the high end of that range, one's at the low end. Having said that, as, governments have come to grips with the fact that this is gonna be about managing COVID, not eliminating it, I think you're going to see programs because to travel more simply because the medical needs that those people are traveling whether it's to go see the orthopedic surgeon about their hip or go see the cardiologist and go see the kidney doctor. Those aren't going away. And you can only defer those for a period of time. And so we expect that those volumes will TV to rise over the queue, the third quarter. They likely plateau somewhat less than a 100% of normal, which is some of the humor discretionary stuff may not come back to the variant, things like fishing lodges and those kinds of things. May not return until next year on some of that. But we anticipate, continued growth in those passenger loads sort of on a progressive basis over the ensuing period with the big asterisk that if something else happens with COVID, it could change. Okay. No, that's helpful. And just my second question relates to Regional 1 and specifically on the aircraft leasing revenue, I mean, obviously down significantly year over year. I'm just wondering how you're accounting for that. I mean, it looks to me like, if you've got an airline that's leasing 1 of your aircraft from Legion be the one that if they're not paying you, you're not recording that as revenue. Have I got that right? Are you actually building some receivables in there somewhere from deferred payments or anything like that? The financials, no. We are not. We are only recording revenue that we expect to receive. And in fact, our receivables, if I were to look, over Q1 and Q2, I'd say 2 thirds of those have already been collected just to give you a sense of kind of how we're how we're dealing with this. But any of this deferred does not get recorded. Okay. Okay. That's helpful. And maybe just as quickly a third question, just on the, I guess, the manufacturing margin in the quarter. I mean, obviously, there was some, I guess, some benefit from government subsidies in there, but I'm just wondering what kind of a more normalized margin or a sustainable margin might look like if you've acquired some businesses here that I think are in the last 6 months or so that are probably positively contributing to margin. So just any commentary around sort of the go forward manufacturing margin would be helpful. Product makes you a huge part of that issue. When you look at advanced manufacturing stuff where we make things in factories, so whether it's a bed machine or a quest or stainless fabrication. Those tend to be higher margins. Some of the stuff we do in the field, where we're doing service work West Tower, for example, would be lower margins. So product mix is a large driver of this. The things we bought recently would tend to be towards the higher end of the margin structure, whether it be the, like, glaziers or, health district controls. And you're right. To the extent there is a a benefit to the bottom line of the CDW would be in the manufacturer because the demand remains strong for those, and we did have some benefit of CDW in there. So that helped the margin profile in manufacturing in the quarter. We would expect from a big picture point of view that as things stabilize, we would, we would see an improvement in margins over time from, from markets from operations simply because the amount of work that went into keeping our people safe, shutting down plants, cold proofing for a lot of a better term is significant. And I don't want to give anybody the, misinformation that that's somehow and that's exactly where we're staying. We've put a lot of effort to get to where we are. But in the future, as we get this, this nasty pandemic under control, we'll be able to see some improvements in margins as we put more people into our factories. That's not expected in the near future, however. And in the second quarter, we did experience rural health and adding and flowing in particular at Quest as we had some of those job sites try now because COVID may reopen and they shut down again. So that was, obviously challenging. And you know, and in the comments I made, one of the points, was that we were settled into how we need to operate our manufacturing factories in assets. Our focus now is actually improving efficiency. So this is the new norm, but how do we get better? And we're starting to see some changes that are driving some increased efficiencies for us. Next question comes from Steve Hansen with Raymond James. Good morning, James. Just a couple for me. Can you, Mike, you referenced the opportunities at the near term medium and long request in your remarks? I'm just wondering if you could speak to the near term demand profile, and you see it right now. Just trying to get a sense of how much dislocation might still be out there. There has been a number of public companies reported in the U. S. Recently on the building product side. Not perfect comps, admittedly, but they all seem to have very strong, rebound to their profiles ending through the quarter. So just trying to get a sense for how that business is performing today relative to norm and sort of what you're seeing here through the balance of the year? So in the near term, our biggest challenge is simply just changes in the timing of certain projects that have been delayed or not delayed and making sure we can get those delivered on time. And so it's really just shifting of capacity. We were booked to a very high level of capacity before this happened. And so just keeping up is the challenge. In the medium term, our order books strong, the completion of new projects, there's delays in in in terms of the final award in some of those. So you may see pockets in the next couple of years where I'll just push out, we're seeing a bit of what is a little more challenging in the look of the entire the ability to just pull in new work with an easier task, a year ago. So, you know, as we saw a smooth production previously, to extend something gets pushed, harder to fill. So you might, in the medium term, see a little bit of town pockets of as not being, having the throughput that we've had in the past, but the demand long term, very strong. We're still Destiny quoting the law. We don't see any reduction in that regard, so still fairly optimistic in this space. And, you know, the long term part of it, Steve, is driven quite simply by densification markets. And We've seen this through, dislocation before in 2008, 2009. There wasn't a hiccup in in Toronto as an example, in terms of our building. The simple fact is that people want to live at major centers, it's too expensive to build, low level housing. So it's high rise buildings, which are our, strength. So we're very bullish as the I don't think there's any greater, evidence of that in investing $40,000,000 plus you are seeing in the purchase of Lyft. That's a good that's a good segue. Mike, just wanted to ask about the capability profile there now. You've got you had AWI previously, and now you've got WIPs. I mean, do you need is that is that done? Like, do you have the compliment that you need now as a service profile? For the US, or do you need additional capabilities on the service side over time? No. The that covers everything off Canada, we always looked after our own installation in the U. S. We use these 2 third party companies. And the beauty of this is as spend into these cities. You'll recall, we're in a relatively limited number of markets we've crossed, the western seaboard and a little bit in the northeast. As we move into the Dallas of Houston, the bi heavies of the world, our window installers will be with us. Our experts from AWI and with will continue. So as we move into those markets, we'll no longer have just the procurement part of the project, but we'll have the installation part of the project. So each project will be worth more money. Thanks. Next question comes from Mona Nazir with Laurentian Bank. Good morning, Mona. Good morning. How are you? It's a good day. Good. Congratulations on the quarter. So my first question is just maybe another way of asking a prior line of questioning. And that would be what would be what would reasonable expectations be if I'm thinking about You guys receiving aid in Q3 and Q4, specifically in regard to the Canadian emergency's age subsidy. I understand that you're expecting and already seeing a pickup in demand, which would ultimately reduce that. But is the figure perhaps 5 or 10,000,000 versus 29,000,000 in Q2. I'm just trying to get a get my head around that. Thank you. The calculation for CDW is such advanced math. We're still running different models on exactly how to qualify because you can claim it individual company basis, and you can call it about a consolidated basis, and you can claim it under the oral program and the new program. I think it's safe to assume you'll see a decline in the range of half. And my control is glaring at me right now for giving a number. Because it's really hard to determine exactly how it's going to work with the rules and where the numbers shake out, but there will be a material decline into the Q3. And what's left in Q4 will be quite ball. Okay. And it's not material. So at the time we get to 2:40, the amount is not material. No, that's very helpful. That's great. Exactly what I was looking for. Secondly, just in regard to the recent acquisition of, the window installation company, asked in the press release you provided the purchase price. But I was just wondering if you could give revenue EBITDA contribution or what we could expect. I'm I'm just I understand, the vertical integration and complimentary nature of the acquisition versus question, AWI. But, you know, just wondering if you've talked to me about your thought process of why purchase now, especially when you were, you know, looking to bring in spending. Okay. No. I'm not telling you I will tell you that when we released AWI, we told you those transactions were accretive on a pure equity basis. This transaction would be no different. It's at the very low end of the multiples we pay because of the the symbiotic nature of the two businesses. We're the natural buyer. So, you can work backwards off that and get a pretty good rest of it. The other thing we said when we bought AWI, which isn't much different here, the backlog of of about 3 years pays for the majority of the company. So those are 2 shortages in the right direction. In terms of why now, we were way down the road with this before COVID. When COVID hit, we literally positive because we were so busy trying to juggle the balls of this job, miss Campa, as closed. This job is open. Free up and catch up on this job, a slowdown on this job. And as you got that under control, we did a little third party due diligence to confirm what they thought the market would look like in in months and years to come, and it was directly in line with our thoughts. And so because we knew the people, because we had negotiated a deal, largely, going into COVID. And because we could do the due diligence entirely knew that we knew in the order book. There was no reason to not take advantage of the profitability of the projects and not close the deal out. It strikes in DI, Quest. And it's a very unique deal, Mona, in that it's highly accretive from a financial point of view but it's also highly strategic in terms of allowing us to grow in the future, internalized processes, and quite frankly, making it easier for our customers. They now have a single point of contact. And if the windows aren't installed on the right time, there's no debate about whether while the installers lay into the production was late, it's our fault of ladder relevance. And it makes it easier for the customer, easier for us, and, makes it easier to pay the dividend with the returns. It's also, I think, showcases the EIC business model quite well in my view. There's a couple different ways you can do it in a pandemic. You can put your head down focus on cost and use that as your sole tool to manage through it. That's not our view. We have a balance sheet that's strong that enables us to seize opportunities. And for the reasons Mike stated, we felt comfortable we were able to do due diligence on on this deal and we knew we could be very credo. So it was an opportunity that we took advantage of. And if other opportunities like that arise, we will continue to take advantage of those opportunities and because that will continue to propel our growth going forward. Perfect. That's great. And I wanna be cognizant of the time, but if you could just share, perhaps the biggest takeaway or most of this enterprise, while working through this pandemic. I'll and and one might have different answers here, but I'll go first. To me, it's our people without a doubt. How they stepped up how they've effectively almost done the impossible and managing operations and putting themselves on front lines given the nature of all the things that we do on products we make. It was coming up with ideal to be able to take care of needs that we had as a society, whether that the manufacturer of face shields or IV poles, everyone stepped up. And we acted as a big family, and we got through this successfully as these quarterly results show, and then he contributed to trying to minimize the impacts of the pandemic. I have to agree with Carmel. I think the biggest sense of price takeaway is the cross collaboration within the organization as well. And get that overall effect of a family and get it and making sure that as an overall company, our health is strong going forward. That's great. Thank you. Next question comes from kornark Gupta with Scotiabank. Hi. My name is. I would like to know I'd love to good morning. I would like to know at what level of capacity or load factor did the legacy airlines breakeven on cash flow in the current fuel price environments? That's an impossible question to answer because you've got, we're profitable. We were profitable in the airlines in the last quarter, with the very low levels because of the diversity held our product with the net of acts and the charters and the other things we do. On a pure schedule basis, we're profitable now with the load factors we have, in aggregate. But in certain markets, We've significantly losing money where the load factors are. It's not as simple as saying at 48% of capacity. We may find it to just sum up more freight than others, sum up in in our business is is 2 different, to simplify it in that way. But as as, load factors climb over 50%, we start to getting closer to making money on a pure schedule basis. We'll make money in aggregate now because of our diversity. Thank you. I do have another question. What do you expect cash flow before working capital and growth CapEx to be for the next two quarters? We don't provide specific guidance like that. We have said sequentially, we expect results were approved in the 3rd quarter, increases in EBITDA with, maintenance CapEx relating modest by historical standards. Carvallo outlined in growth CapEx profile being essentially being limited to, the 2 aerospace projects. So, we expect, continued improvement in that to look to Q4 as difficult with COVID. I mean, it changes so fast. But all things being equal, we'd expect continued improvement. Thank you. I don't have any questions. Next question comes from Scott Thompson with CIBC. Thanks folks. Just a couple questions on Regional 1. I guess it's three questions in one part. Can you give some color on the current operating situations that they're carrier customers for 2 carriers SkyWest. And do you anticipate, any changes to the partnership as well, what strategy changes and cost measures can you take should, COVID 19 continue to hit those, regional airline customers? Okay. With SkyWest, we maintained a strong partnership. The the conversion of 700 to 5 fifties, what has been slowed by this, but, the main airlines, interline airlines, we're looking to that strategy or still looking to that strategy. So the implementation of it may be slowed, but the ultimate, deployment of those aircraft, I don't believe is in jeopardy. SkyWest like all carriers is, is, reducing its fleet and that has some impact, on some of the older aircraft we have with them, but it's not a material, material issue. In terms of the strategies we can deploy, the beauty of the Regional 1 model is, as sales slow, amount of capital that needs to go into it declines dramatically because we have the assets available there. It generated positive cash flow in the quarter. Each No. The regional airlines was very, very slow. We fully anticipate that there's going to be a supply and demand in so over the next couple of quarters in terms of people trying to liquidate assets because of financial difficulty. We look forward to that because we understand the value of those assets better than anybody else. And when we combine with that, prices that are advantageous, we would do that. We've got a small deal where We bought for the q 400 at a price that was materially less, than we would have paid 6 months ago. We've already, found homes for a significant portion of the, of the planes we were purchasing. So Regional One is glitching you through a period where it's small. There's absolutely no question about that. But there's also regional carriers are not going away. There may be insolvencies in the business, But if you're gonna fly from Cincinnati to Cleveland, you're still gonna do it on a regional jet. If you're gonna go from Toronto to Montreal, you're still gonna do it on a regional janitor turboprop. And as those recover, so will that business, and it will recover faster than live body jets. So we we are, in any way, concerned about the the long term health. And this, even the medium term health, But in the short term, it doesn't it doesn't absorb cash. It's not a a cash lead. And, We will we will ride through it. I will look for opportunities to make us stronger when we come up. And I can add a little bit more color. Sure. Sorry, Scott. Okay, like the 550 program, we are still receiving lease payments just to put some kind of reality to to your question and expect, regardless of whether it's from the existing carriers, or the program they shipped that that program for United will remain. Also, time will tell, but that's what kind of industry thoughts are at the moment. On the cost side, I mean, we've pretty nimble our comp infrastructure, at R1 so we can adjust that and have adjusted that accordingly. And when I look at it and kind of see potential opportunities, when, regional carriers start to fly again, they're going to be looking for, effective costs way to deal with maintenance, accessing parts, and gyms, they're not gonna wanna spend a $1,000,000,000 to, overhaul an engine, but they might leave something in the short term until they're available to build up their you know, maintenance reserves. Again, those are all the things that that's what we do at Regional 1. And, you know, scar scheduled charter is actually growing the momentum in the sense that people look to perhaps month 1 travel on the typical scheduled service airline where you go to your major airport and there's obviously lots of other people there that they wanna go to private FBOs. Where they can get to places they need to go to on aircraft that have, fewer people, than you would typically see And so people are looking at maybe buying a tier 8 900 by stripping out a number of seats. Again, we're there to fight solutions because that's what Regional One does. It's not wrong or not just a parts provider. It is a solution provider. So we're in discussion of many of our customers to be able to make sure we're there for them. To provide thoughts and options as to what they can do to be able to access the market that does exist. That's, that's great. That's, that's a very useful Just, another question on, a little bit, related to, regional weather and, and Aerospace. How does COVID-nineteen and airlift deterioration? How does that change your longer term acquisition focus? Is it going to be more manufacturing focused companies that are directly related to your current portfolio. And, make it making, manufacturing a larger part of the asset portfolio while aviation and aerospace are, hampered or impaired. I think there's a few parts here, Patrick. I think if we start with the manufacturing piece first, I think it's likely and you see more opportunities on that side simply because we're a bigger portion of the aviation market already. And the number of companies that need our criteria are smaller. So over time, yes, I think it's a reasonable assumption that you would see more acquisition on the manufacturing front. The one part of the, the underlying question I would challenge though on the aviation front, We've seen that some parts of this business have done very well through the pandemic and in fact, actually increased our diversity So whether it be maritime, surveillance, medevox, some of them, and we love those businesses. And COVID has probably made us like them even more. And so we're not scared of way of investing in that segment. Having said that there's probably less opportunities to do it. So if we get something that fits, that would augment our, as an example, our surveillance business, We have a new technology or something. We would jump at that opportunity. But practically speaking, I think it's realistic that there's more opportunities on the factoring time. Okay. Thanks, Mike. And just a couple of housekeeping questions. What's included in growth CapEx for the first half of, 2020. And I apologize if I missed it, your disclosure is more than detailed. Have you incurred CapEx for the 2 Netherlands dash 8? Is that included? No. Not yet. We just won the contract and you may see a touch of that in the at the end of Q3, but more likely that begins in Q4. Most of the go down that relate to finishing the fisheries contract. So that's where the the lion's share of the growth CapEx, we have. And that, again, the start up part of it has been delayed a couple of months by COVID, but that stuff still goes into, into service, like, late Q4. Correct. Yes. So, no material impact on the start date, but most of the money we spent is getting ready for that contract. Okay. Yeah. Thanks. And, just final question, how's the Quest sales backlog? How and how long is it gonna take to see whether revenue synergies with the, with acquisition. I'd assume that part of it in, includes expansion into new markets. Yeah. We obviously, the the new markets, we're gonna wait till we get through a little bit of this COVID stuff and things normalize. The order book, would probably be down marginally, quarter over quarter simply because people aren't finalizing projects in terms of the inquiry book and, intent basis. That's actually up. So it's really the just variations in times of closing of that. The synergies, and I'd struggle with the word synergies of this because we're buying a service we didn't do before. So it's really mostly additive, but essentially now every job, new job we book, we book at 30, 40, 50% more than it was before. Because we have the, the installation part of that job. And so that but with you, nature and the order book that you might help me here come out 18 to 24 bucks out. Yes. And you the new jobs we booked don't show up till then. Till then, it's the order book we purchased as part of this to show up. So it's instantly in our results. And the organic improvement of it helps as we book new jobs and because of the order cycle, that's probably 2022 sometime. Before this year? Sure. That's that's 18 to 24 months for, wiz or or for the whole quest Well, they they're all the they're all the same thing. Like, the order profile, we get a a job booked At the very short end, the year in advance and the longer end 2 years in advance, So what we're looking for now is it's until 2022. Okay. Great. New orders. That's why the order book is so significant. Okay. Great. Thanks, Mike and Carmel. That's, very useful detail. Thanks a lot. Yeah. Hi, guys. So I just wanted to follow-up on the force multiplier. Mike, you had mentioned it didn't fly in the period, but you had some short term duration contracts set up for the back half of the year. Just trying to get a sense for how much activity there is in sort of the options there for that aircraft? Into the back half? Are you still booking additional, deployment at this point to fill up the back half? I mean, how should we think about that as incremental to what we saw in keep you with your 0. Sure. Steve, it's Carl. I can take that question. So we're actually booked now to the end of the year, fully booked. With a government, Canadian government. So we are now looking into 2021. We're in discussion with a couple of different governments for its use that would be longer term, as we work through those details but we're very comfortable. I'll see what's having it to fully utilize the balance of the year. And we do not have any telephone questions at this time. I will turn the call over to the presenters. You know, for the questions, I'd like to thank everyone for for participating in today's call. 922, and I've lost the ability to speak. So have a great day, and we're forward to speaking to you. We report Q3 in November. This concludes today's conference call. You may now disconnect.