Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Stella-Jones' Q3 2021 earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a Q&A session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star followed by zero for operator assistance at any time. Before turning the meeting over to management, please be advised that this conference call will contain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.
I'd like to remind everyone that this conference call is being recorded on Tuesday, November 9, 2021. I'll now turn the conference over to Éric Vachon, President and Chief Executive Officer. Please go ahead.
Thank you and good morning. I'm here with Silvana Travaglini , Chief Financial Officer of Stella-Jones. Thank you for joining us for this discussion of the financial and operating results for Stella-Jones' Q3 ended September 30, 2021. Our press release reporting Q3 results was published earlier this morning. It, along with our MD&A, can be found on our website at www.stellajones.com and will be posted on SEDAR today as well. We also published our 2020 environmental, social, and governance report today. It can also be found on our website in our investor relations sections under environmental, social, and governance.
I invite you to read our report and learn more about the steps we have taken to refine our ESG strategy and build upon the integration of our priorities of environmental commitment, sorry, product stewardship, our valued employees, and our governance principles.
Let me remind you that all figures expressed on today's call are in Canadian dollars unless otherwise stated. Before I review the results, I would like to touch on our recent announcements. Last week, we announced that we entered into an agreement to purchase the shares of Cahaba Pressure Treated Forest Products and Cahaba Timber, Inc. for $66 million and $36.5 million, respectively, subject to post-closing working capital adjustments. Cahaba Pressure is an oil-borne preservative treater of wood poles, crossties, and posts, and also provides custom treating services. Cahaba Timber is a water-borne preservative treater of utility poles and pilings and engages in a raw material procurement. Both facilities are located in Brewton, Alabama. The combined sales of Cahaba Pressure and Cahaba Timber totaled approximately $97 million for the year ended 2020.
Both entities were subcontractors of Stella-Jones, and our purchases represented approximately 20% of their annual sales. Both transactions are expected to close prior to the end of December 2021. We are very excited about these acquisitions that will expand our capability to supply the growing needs of North America's utility pole industry. In addition, they will further support the preservative offering to our customers and optimize the overall efficiencies of our continental network. Turning to our quarter, our Q3 results reflect the impact of the normalization of lumber market conditions and the increase in the cost of untreated railway ties, which outpaced price adjustments. Sales for the Q3 of 2021 amounted to CAD 679 million, down from sales of CAD 742 million for the same period in 2020.
Excluding the negative impact of currency conversion of CAD 25 million, pressure treated wood sales decreased CAD 32 million or 5%, while sales for logs and lumber decreased by CAD 6 million. More specifically by product category, utility pole sales increased to CAD 256 million compared to sales of CAD 251 million in the corresponding period last year. Excluding the currency conversion effect, utility pole sales increased by CAD 16 million or 6%, driven by improved maintenance demand for distribution poles and sales mix, including the impact of additional sales volumes for fire-resistant wrapped poles. This sales growth was partially attenuated by the decrease in project-related volumes. Railway tie sales were CAD 179 million compared to sales of CAD 188 million in the same period last year.
Excluding the currency conversion effect, railway tie sales were stable as lower volumes for Class I customers, largely due to the timing of shipments, were compensated by continued strong demand and improved pricing for non-Class I customers. Residential lumber sales were CAD 170 million, down from sales of CAD 220 million in the corresponding period last year. Excluding the currency conversion effect, residential lumber sales decreased CAD 47 million or 21%. While residential lumber pricing remained higher compared to the same period last year, it was not sufficient to offset the drop in demand. Industrial product sales were CAD 32 million compared to sales of CAD 34 million in the Q3 last year. Excluding the currency conversion effect, industrial product sales remained relatively unchanged.
The sales of logs and lumber, a product category used to optimize procurement, totaled CAD 42 million, down compared to CAD 49 million in the corresponding period last year. Sales decreased mostly due to a reduction in lumber trading activity. Silvana will now provide further details regarding our results and financial position before I conclude with closing remarks. Silvana?
Thank you, Éric, and good morning. Turning to profitability. Gross profit was CAD 82 million this quarter, down compared to CAD 147 million in the Q3 last year. This decrease in profitability is largely explained by higher fiber costs for residential lumber and railway ties, combined with lower residential lumber sales volume. These factors were partially offset by the realization of higher pricing across most of the product categories. Gross profit for the quarter was also impacted by a CAD 7 million inventory write-down provision related to our residential lumber finished goods. Similarly, EBITDA and operating income decreased to CAD 69 million and CAD 51 million, respectively.
Net income for the Q3 decreased to CAD 34 million or CAD 0.52 per share, compared to CAD 79 million or CAD 1.17 per share last year. Turning to liquidity and capital resources.
We generated CAD 225 million of cash from operations in the quarter, primarily reflecting favorable movements in non-cash working capital. During the quarter, we used the cash generated from operations to invest CAD 14 million in capital expenditures and return CAD 38 million of capital to shareholders through dividends and the buyback of about 628,000 shares. In total, we repurchased 3.1 million shares at an average price of CAD 45.40 under the NCIB program that expired on August 9th. We also used our cash to reduce our debt. At the end of the quarter, Stella-Jones' net debt, including lease liabilities, stood at CAD 679 million versus CAD 745 million at the end of December 2020.
We maintain a strong financial position with a net debt to trailing twelve-month EBITDA ratio of 1.6 times, and we had available liquidity of CAD 540 million. During the quarter, we obtained a one-year extension of our unsecured syndicated revolving credit facility to February 27, 2026. All other terms and conditions remain substantially unchanged. Subsequent to the end of the quarter on November 8, the TSX accepted Stella-Jones' notice of intention to make a normal course issuer bid. Pursuant to the notice, Stella-Jones may purchase for cancellation up to 4 million common shares, representing approximately 8% of the public float during the 12-month period commencing on November 12 and ending November 11, 2022.
Yesterday, the board of directors of Stella-Jones declared a quarterly dividend of CAD 0.18 per common share, payable on December 17, 2021 to shareholders of record at the close of business on December 1st. I will now turn the call back to Éric for concluding remarks. Éric?
Thank you, Silvana. While we recognize that the quarterly results were lower than expected, I would like to highlight the solid year-to-date performance. Sales for the first nine months of the year were up 15% organically compared to the same period last year, and EBITDA grew 10% to CAD 348 million. The softer quarterly results has led us to revise our full-year 2021 EBITDA forecast to about CAD 400 million. Excluding the impact of currency conversion, the company expects sales growth in 2021 compared to 2020 to be in the low- to high-teens range. The company remains confident that it will deliver solid EBITDA in 2021 and that its EBITDA margin as a percentage of sales will be comparable to 2020.
Based on current market conditions and assuming the conclusion of the acquisitions of Cahaba Pressure and Cahaba Timber, we're forecasting sales, EBITDA, and EBITDA margin in 2022 to be comparable to the solid results expected in 2021. The company anticipates that the robust demand for utility poles and the contribution from the pending acquisitions will offset the normalization of residential lumber sales in 2022. Our priorities to create superior value for our stakeholders have not changed. We intend to continue to be active on the acquisition front, continue to improve our operating efficiencies, and expand our capacity to increase our profitability. With our financial strength, scale, and focus on execution and innovation, we continue to be well positioned to drive continued growth and generate solid return for our shareholders.
This concludes our prepared remarks. We will now be pleased to answer any questions you may have.
At this time, if you'd like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star one again. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Walter Spracklin from RBC Capital Markets. Please go ahead. Your line is open.
Yeah. Thanks very much, operator. Good morning, everyone.
Good morning, Walter.
All right. I want to ask you, Éric, about the normalization comment and how that ties into your 2022 outlook. I know, you know, you benefited from a significant and a little bit hard to predict increase in demand. Now, you know, as that normalized, that's also hard to predict and of course, guidance has had to move alongside that difficulty to predict. My question, I guess, when you reference normalization, what confidence do you have as you go into 2022 that normalization has occurred and that the guidance that you provided for around CAD 400 million or similar to last year or this year is what visibility and confidence do you have in that outlook?
Yeah. Thank you, Walter. You're completely right. You know, the guidance review or adjustments that we've been making this year are mostly all related to the residential lumber changes we've seen in pricing and in demand. When we look currently at the forecast for volume for this year in 2021, I would argue that it will be most likely comparable to what we have seen pre-pandemic in 2019. Talking with our customers, contractors and you know, different expectations for household improvements, you know, our forecasts for the coming years, we feel that, you know, going into 2022, you know, we'd be looking at these similar volumes in 2019.
When we talk about normalization, we went through the swing of the high prices of lumber, which, you know, increased our pricing and our sales. Then, you know, since July, end of June or July, you know, we've seen volumes normalize, if you want, and by that I mean, being comparable to what we've seen historically. Right now, as we're sort of landing at towards the end of 2021, we see volumes to be comparable, and that's how we're, you know, drawing our assumption that for 2022, we'd be seeing these similar volume levels.
Okay. That's very helpful. Thank you. Just as my follow-up question with regards to the M&A pipeline, first up, you're including Cahaba in your EBITDA for next year. We've estimated that at about CAD 18 million. Not sure if you could give us a sense of whether that's accurate or not, in terms of how much that'll be contributing to next year. Then just your overall thoughts on the M&A environment. I know there was a pole acquisition that you're zeroing in on. If you could update us there and just generally the overall pipeline would be very helpful. Thank you.
Yeah. Thank you, Walter. We have not provided specific guidance on, you know, EBITDA margins for the acquired companies of Cahaba. However, I can tell you we've paid in our traditional multiple range. You know, we've always talked about it, you know, 6x-7 x traditional multiples. I think that gives you a good indication about how accurate your number is. With regards to the pipeline, you referenced a pole acquisition, so this would be one of them. The Cahaba Pressure and Timber, you know, combined would be one of the projects we were working on since the beginning of the year that we've alluded to in previous calls.
That being said, I did discuss in previous calls about potentially looking at several other projects, and we're still actively discussing with potential target acquisitions. Our balance sheet is strong. We definitely have the leverage to accommodate more M&A, and you know, we remain focused on those projects.
Okay. Thank you very much, Éric.
My pleasure.
Your next question comes from Michael Tupholme from TD Securities. Please go ahead. Your line is open.
Thank you. Good morning.
Good morning, Mike.
Just clarification to begin with, the new 2021 EBITDA guidance of about CAD 400 million that includes the negative impact of the CAD 7 million inventory provision taken in the Q3?
Yes, it does.
Okay. Perfect. Thank you. Second question is the various factors that have been pressuring results lately, so namely greater than expected margin compression for residential lumber, higher untreated railway tie costs and anticipated, softer demand for Class I railway customers, to what extent do you see those factors continuing to pressure results in the Q4?
Those three factors are incorporated in, I guess, the adjustments in our guidance. When you look at, you know, consider the midpoint or the guide, the EBITDA that, you know, you had previously to what we're talking about today, you know, we're looking at the contribution for those three items to be part of the scenario. You know, I would say probably 50% of that is related to residential lumber. In fact, if you include actually the write-off that was not in our forecast, you could call it probably, you know, closer to 70%-75% and the balance of that would be railway ties.
Now, I'd like to add the fact that although we've seen our fiber cost for railway ties increase, we do have the opportunity in many cases on a quarterly basis to adjust our pricing. We have on October first a certain Class I, and for others, you know, we'll have another opportunity early in January. We do feel that will subside, you know, over time.
That was actually sort of gonna be my next question, is the extent to which these factors are expected to be an ongoing issue into next year. You sort of answered it there, I guess, with respect to the ability to pass costs through on the ties side. More holistically, you know, are any factors gonna continue to weigh on results next year in a material way in your opinion?
No, I don't think so. You know, maybe it's an opportunity for me to talk a bit about the write down. Through the Q3, you know, we did not see residential lumber volumes move as fast as what we wanted to. At the end of September, you know, we sort of took a hard look at our inventory position, the average cost, and, you know, what we need or what we needed to achieve our December 31st, goal of having the proper cost of inventory to be able to address 2022 in a more historical margin fashion, if you want. That write off gets us exactly where we need to be for the end of December.
It's certain items that we've gone out to the market now and offered at a very attractive price, which I would say are in better part sold as I speak today. We're in very good shape to you know put this residential lumber inventory adjustment behind us.
Okay. That's helpful. Thank you, Éric. Maybe circling back on one of the questions that Walter asked about the outlook you provided for 2022, which implies about CAD 400 million of EBITDA next year. I think you touched already on some of your assumptions regarding the residential lumber business in terms of assuming it looks similar to 2019 levels. Can you talk maybe about some of the other assumptions you've made around the rest of the business? I guess, you know, beyond the specific assumptions, just your level of confidence in this number you provided for next year. Obviously, there are various risks and uncertainties, and this year was very clear this year with the way the year played out.
To what extent have you buffered that number you've put out there? You know, is it a conservative number? Have you factored in various risks and uncertainties, or how confident are you in that CAD 400 million?
Let's start with the residential lumber part. You know, we're talking about assumptions. There are a couple of assumptions that I would like to add to the comment. We talk about similar volumes to 2019. Assumption obviously is FX or price of lumber is quoted, you know, under Random Lengths market in U.S. dollars. Obviously, there's a currency conversion potential impact. Lastly, there is the price of lumber itself. The Random Lengths average in 2019 was around $500 per 1,000 board feet. Currently, futures looking into, you know, early to late spring seem to be indicating pricing between $650 and $700 per 1,000 board feet.
I guess, you know, if you think about that delta of $150-$200 per 1,000 board foot, that is an assumption that could change, you know, over time to back to your comment about the volatility, if you want, in the pricing. Other than that, when you think about our CAD 400 million, you know, so we have as we mentioned in our remarks, there will be a bit of a pullback on residential lumber, and it'll be offset by two things. One is growth in utility poles. You know, we've always been guided to mid- to high-single-digit growth, and I think we're all set up to see that continuing, you know, for coming years.
That next year is not an exception to that. Then obviously, with the conclusion of the Cahaba transaction, you know, that sort of gets us more or less to where we need to be.
Okay. Thanks for the time.
Your next question comes from Hamir Patel from CIBC Capital. Please go ahead. Your line is open.
Hi. Good morning.
Good morning.
I'm not sure if you have any indication yet from the Class I's as to the volume commitments for next year. I know a couple outlined their intentions at an industry conference recently, but any color you might be able to share about the sort of the picture across maybe from the Canadian ones as well?
Well, great question. As you might know, not all Class I were present at the conference this year, so we did get color from a certain number of them. They seem relatively slightly upbeat, I would probably say. Not relatively, but slightly upbeat. I mean, if most of them are up a few hundred thousand ties in their annual maintenance program for the coming year. I think that's positive. I think it's an indication of, you know, something that we've been talking about of, you know, increased traffic on the rail networks. Obviously, that leads to more maintenance. Railroads have been focused so far this year, probably a bit more on executing on logistics and delivering products.
You know, that's why we're seeing a bit of a slowdown in Class I maintenance in the second half of this year. I think looking forward into the second half of 2022 and going, you know, into further years, I do see the potential for maintenance to, you know, be up.
Great. Éric, you know, in your outlook, have you factored in, well, I guess, you know, to what extent have you factored in the U.S. infrastructure plan? Specifically related to that, on the railway tie side, what I understand a lot of that investment is planned with Amtrak. If you could speak to, you know, I'm not sure what their sort of wood or concrete tie mix is, but any color you might have there.
No, certainly. To answer the first part of your question, the infrastructure bill impacts are not factored in our guidance for next year. Tough to say to what extent it could impact next year. What I mean by that is by the time the programs get set up and are presented to the market and, you know, funds are allocated, could we see some effect in the latter part of next year? Yes. I think ultimately, yes, in 2023, we should see that impact our result, or we should see part of that demand come to our business. With regards to Amtrak, they are a customer of ours.
We do service them from time to time, and they're part of our. I guess I would say they're the non-Class I commercial business, so it's a quoted business. But we have serviced that network in the past. So I do expect that, you know, we'll be at the table discussing for that business.
Okay, thanks. That's helpful. Éric, just turning to the pole side of the business. I know there's been some media reports lately of PG&E potentially spending $20 billion to underground a portion of their power lines. You know, are you seeing signs of any other utilities considering moves like that? You know, what's the sort of company's response given your, you know, some of the fire retardant poles you have in the market now?
First, we haven't seen any slowdown from demand from our customers. The plan for next year, you know, is still growth. That includes the fire wrap products. The press release you're referring to for PG&E is, I guess it's a project that they're studying internally. My understanding is that, you know, it takes a lot of planning and engineering, and it could even take several years to execute. I guess, you know, we'll see where that goes. We're good partners with those customers and, you know, the project that they're announcing represents probably maybe a third of their network. There's still another great part of their network that will require maintenance and our products.
We're not necessarily concerned with that part. Last but not least, we're not seeing any other of our customers having discussions or thoughts about putting a certain part of their network underground.
Okay, great. Thanks. That's helpful. Just last question from me for Silvana. Could you comment on, you know, for the CapEx for 2022, are there any larger investments being considered to grow capacity at the existing assets and anything you might have planned at Cahaba?
Yes, for 2022, we could expect our CapEx to be above our range exactly to what you mentioned. We are looking at various initiatives to expand our capacity to support the additional poles growth that Éric just mentioned. We do have some CapEx also dedicated to the conversion of our Penta cylinders. In terms of amounts and timing, we're still in the process of completing our budget, so we don't have those numbers as of yet. Yes, we would expect it to be above CAD 60 million. For Cahaba, nothing significant.
Pretty much in line with, you know, with, I think, our overall, I guess, corporate percentage of maintenance annually is what we're seeing also at Cahaba.
I would add, Hamir, that the Cahaba assets are of extremely good quality, very well maintained by the previous owners, so we're very proud to be able to add those plants to our network.
Great. Thanks. That's all I had. I'll turn it over.
Thank you.
Your next question comes from Benoit Poirier from Desjardins. Please go ahead. Your line is open.
Yes. Good morning, everyone.
Good morning, Benoit.
Yes. Just to follow up on the previous question, Silvana, could you talk a little bit about the working capital movement we might expect in light of the move in residential lumber for 2021 and 2022 at first glance?
For the last quarter of 2021, as we've mentioned in the past, we are expecting a favorable working capital movement, exactly as you mentioned, Benoit, as we continue to draw down on our residential lumber inventory, and even still less of a build than in past years for railway ties, given the tighter supply of untreated ties. For 2022, you know, assuming, you know, no unexpected, I guess, market movements, we would be budgeting a typical build in inventory to support sales growth of the following year. You know, typically our CAD 50 million or so, I think at this point, given that we're still in the process of completing our budget, would be our best guess.
Okay. That's great. Just in terms of share buyback, how should we be thinking about the allocation of capital going forward versus the M&A opportunities you might have for 2022?
That's pretty consistent with, I guess, what we've been saying in the past. Obviously, as you know, the new program is there to be used. You know, we do expect to continuously use it, but always keeping in mind our target leverage ratio and to remain within our target ratio, and prioritizing obviously the acquisition.
Okay. That's great. Any thought about the look of the fourth leg of growth? I'm just wondering how this initiative has progressed so far in 2021, whether you have a better picture on the ability to have the fourth leg of growth down the road.
Yeah. I'll take that question, Benoit. I think for the next foreseeable future, call it 12, 24 months, there's still a lot of opportunities that are, you know, closer to our core competencies of wood treating. I think so, you know, you'll see our team being focused on M&A with that nature. Silvana spoke a bit about capacity expansion to address upcoming demand where, you know, M&A is not necessarily readily available. The other aspect that you're referring to is something that, you know, we're still studying and investigating and discussing with the board. I think for the next short while, you will still hear us talk about the treated lumber in all three of our product categories.
Okay. Last one for me. Could you talk about the penta preservative? I know there's change going on, and it will eventually run down. Just some color about the market acceptance for the other preservative that will eventually replace the penta.
The current manufacturer of penta is closing shop at the end of this year. We will be performing the transition away from penta in the next 18 months. We have sufficient supply to provide penta-treated poles to certain customers that are very much interested in taking that product for as long as we can provide it. We have discussed with all of our customers their preferences for conversion, and there are many avenues. Certain customers will move to waterborne preservatives such as CCA. Other utilities are discussing about the opportunity to move to DCOI, which is an oil-borne preservative such as penta.
Last but not least, another option that is offered is a product called copper naphthenate that we also offer within our network. I would say the interest for that product is lesser than DCOI at the time being. We've got a plan laid out with, you know, most of our customers at this point. We have an 18-month plan to sort of progressively phase out certain plants and convert certain customers, and we're sort of, you know, working collectively with those customers to be able to address it in an orderly fashion.
With respect to those preservatives, are there some additional costs to be expected or is it fair to expect that margins will remain about the same given the change with penta?
Yeah. I suspect that the margin will stay similar there. You know, in both cases, you know, when we convert away from penta, usually the customers will prefer to. If a utility prefers an oil-based preservative, they will most likely, you know, move to another oil-based preservative, and the margin profile will be similar.
Okay. Thanks for your time.
My pleasure .
As a reminder, if you'd like to ask a question, please press star followed by 1 on your telephone keypad. Your next question comes from Maxim Sytchev from National Bank Financial. Please go ahead. Your line is open.
Hi. Good morning.
Good morning, Maxim.
Éric, I just wanted to circle back to M&A. I guess my question around this, are we in the process of identifying kind of needle-moving opportunities? Or how should we think about kind of the quantum of revenue contribution that could be coming from acquisitions over the next, you know, 12-24 months?
Certainly. You know, Maxim, our industry, you know, in all three product categories have many participants, but you know, family-owned business of, you know, various sizes. We've always said, you know, it vary between the CAD 30 million-CAD 100 million mark, depending on the size. For me to be respectful, needle moving for Stella-Jones now sitting today at a, you know, CAD 2.7 billion revenue, you might argue that it's not necessarily needle moving, but this is how we build our network over the last 15 years is by adding to our network, adding these smaller companies, consolidating our respective markets and becoming a strong presence, you know, for current customers and future customers.
All right. Well, fair enough. Is there, I mean, obviously, as you mentioned, other potential, sort of legs of the story are being considered as we speak. In terms of providing incremental services to your existing customers, is there some sort of thought process on that front from a strategic perspective?
Yes, definitely. You know, there are activities, products and services that are closely adjacent to what we do, for which we do have internal expertise. That discussion with customers would see us, you know, favorably, you know, addressing those. You know, back to Benoit's question a few minutes ago when he's talking about a fourth leg, you know, I don't know if we can talk about a fourth leg, but I think it's enhancing our offering to our customer base, if you like. But definitely there are items in those categories that we're definitely looking into.
All right. I guess, is it fair to say that you're not limiting yourself just to kind of like capital-driven businesses, but also sort of a service type potential as well would make sense for you?
Yes. I mean, we're not excluding anything at this point. If we have the internal knowledge and the capacity to execute it is accretive to our margin profile, it's something we'll definitely consider. You know, I'll be hard-pressed to address a business that would lower our average EBITDA margins. You know, there's a few criteria we're looking at, but we've always said it needs to be accretive. You know, it needs to be somehow close to our core competencies, and we try to stick to those criteria.
Okay. That's great. Thank you. Maybe just a quick question for Silvana. In terms of synergies on the acquired assets, anything that you can suggest to us?
I think we are fairly confident, as in past transactions that you know we'd be able to pick up you know half a turn to a turn on the traditional multiple that Éric exposed earlier. You know that would include you know any optimization of customers of procurement you know and some SG&A synergies.
Okay. Superb. Thank you. Last question, Éric, have you seen any, obviously lots of discussions around supply chain bottlenecks, wage pressures, kind of labor availability and so forth? Anything you can share with us on these fronts?
Yeah. Maybe a few little things. Like any company in North America, you know, holding on to your labor force is a bit more difficult. You know, we have adjusted internally our wages to our employees and keeping very mindful of market dynamics on that front. I think we're holding our own pretty well on that front. With regard to tightness, we didn't necessarily talk about it, but you know, we are seeing tightness in the untreated tie market. So less untreated tie availability. It's putting some pressure on procurement. Nothing to be overly concerned about, but you know, we are seeing some decline in our inventory levels since, let's say the last few months.
You know, I think it will subside somewhere probably early next year. We're definitely adjusting to that. That being said, you know, being mainly a bulk tie supplier, we have a large inventory of ties at our facility, so we can definitely, we're in a good position to address that. Last but not least, which is not directly tied to us, but we are hearing certain utilities that are faced with a challenge to find complementary products that they need for maintenance and installation. You know, cabling, hardware, transformers and things of the like. Nothing alarming, but we are hearing that, you know, general supply constraints in North America for all sorts of products is, you know, impacting to some extent our utility customers.
you know, nothing that would change our views on our guidance, but I'm just, you know, throwing it out there as I, you know, wanted to answer your question.
Okay. That's great. Thank you so much. That's it for me.
Thank you.
We have no further questions. I would like to turn the call back over to Éric Vachon for closing remarks.
Thank you, Julianne, and thank you everyone for joining us for this call. We look forward to speaking with you again at our next quarterly call.
This concludes today's conference call. Thank you for your participation. You may now disconnect.