Good morning and thank you for standing by. Welcome to Stella-Jones' Second Quarter of 2025 Earnings Call. At this time, all participants are in listen-only mode. Following the presentation, we will hold a question-and-answer session. To queue up for questions by phone, please press star one and a moderator will contact you. If anyone experiences difficulties during the conference call, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded on Thursday, August 7, 2025. I will now turn it over to David Galison, Vice President, Investor Relations of Stella-Jones. Please go ahead.
Thank you, Ina, and good morning, everyone. Earlier this morning, we issued our press release reporting our results for the second quarter of 2025. Along with our MD&A, it can be found on the Investor Relations section of our website at www.stella-jones.com, as well as TR Plus. As a reminder, all figures expressed on today's call are in CanadIna dollars unless otherwise stated. Please note that the comments made on today's call may contain forward-looking information, and this information, by its nature, is subject to risks and uncertainties. Actual results may differ materially from the views expressed today. For more information on these risks and uncertainties, please consult the company's relevant filings on TR Plus. These documents are also available in the Investor Relations section of Stella-Jones' website at www.stella-jones.com.
Additionally, during this conference call, the company may refer to non-GAAP measures, which have no standardized meaning under GAAP and are not likely to be comparable to similar measures presented by other issuers. For more information, please refer to the company's latest MD&A available on Stella-Jones' website and on TR Plus. Lastly, we have prepared a corresponding presentation, which we encourage you to follow along with during this call. I'll now hand the call over to Éric Vachon, President and Chief Executive Officer of Stella-Jones, for a strategic business update, followed by Silvana Travaglini, Senior Vice President and Chief Financial Officer of Stella-Jones, who will provide a more detailed financial overview for this quarter. Éric, over to you.
Thank you, David. Good morning, everyone, and thank you for joining us today. Our Q2 results reflected the disciplined execution of our strategy for value creation, supported by the scale and reach of our extensive network. Though volumes were softer, we focused on sustaining a strong EBITDA margin and generating healthy cash flow while executing on our strategy to broaden our infrastructure offerings. With the acquisition of Rockwell, which was completed in Q2, we now have a presence in the steel transmission structure market and a platform to further expand our reach and share of wallet as we leverage our robust customer relationships. The integration of Rockwell into our business and the operational investments to increase production capacity are well underway, and we are already seeing the benefits of this addition to our network.
I will now turn to a performance overview of our main product categories before moving to the outlook for the remainder of the year. Starting with utility poles. Since the end of Q2, we've seen a pickup in quarterly activity, particularly in the Southern Alpine region in the U.S., and have started to benefit from new customer agreements secured last year. While utilities continue to acknowledge the need to upgrade the grid and expand capacity, in the current economic environment, European utilities have maintained a more cautious purchasing phase, with this trend being particularly pronounced in Canada. Although sales volumes were lower when compared to the strong shipments reported in the same period last year, volumes were above those seen since Q2 2024, and we expect continued improvement in the second half of the year.
Based on the lower level of demand experienced since mid-2024 and the expectation of a return to a mid-single-digit growth only towards the end of 2025, we have reduced our utility pole sales outlook for the back half of the year. We now expect sales growth for utility poles for the remainder of the year to be in the low single-digit range versus 2024. Our extensive network and strong offering in utility poles positions us well to benefit from the meaningful investments required by our customers over the long term to replace aging infrastructure and increase grid resiliency. Timing of these investments will continue to be influenced by our customers' capital expenditure program and their capital deployment strategies. In July, there was a fire incident at O'Brienfield, Alabama, utility pole treating facility. We are pleased to report that no Stella-Jones employees were injured.
The fire impacted the site's oil treating facility, but its CCA treating, peeling, drying, and framing capabilities remain unaffected. Within hours of the incident, the team developed plans to leverage our networks to reallocate the facility's orders. As a result of this exceptional agility, we do not expect any significant impact on our capacity to fulfill customer orders. The swift turnaround following the fire incident highlights the strategic value of our extensive network and the capabilities of our experienced management team. I'm very proud and appreciative of all employees involved for their mobilization and dedicated efforts. For railway ties, sales in the second quarter continue to be impacted by a platform customer now treating more of their railway ties internally. This shift follows the customer's acquisition of the only platform railroad that operated its own treating facility.
We expect this volume loss to provide a headwind for the remainder of the year. While we anticipate recovering some of the volume shortfall with more commercial sales in the second half of the year, certain project starts are taking longer than expected. As a result, we are now forecasting a low single-digit year-over-year decline in railway tie sales. Railway tie customers continue to look to Stella-Jones to deliver solutions to address their evolving needs and optimize their business model. This allowed us to achieve a mid-single-digit sales growth over the last three years. Over the long term, we continue to leverage our customer relationships to deliver low single-digit sales growth for this business. While residential lumber's performance this quarter remains relatively stable, we are encouraged by the improved volume performance we noted in June.
We anticipate demand for the remainder of the year to trend favorably, and we remain optimistic about achieving sales within the CAD 600 million- CAD 650 million target range for this product category. As we enter the second half of 2025, we have adjusted our revenue outlook for the year but remain confident in the long-term sales growth trajectory of our infrastructure product categories. For 2025, we now expect to generate approximately CAD 3.5 billion of sales, including the contribution from Rockwell, versus our previous outlook of approximately CAD 3.6 billion. We are maintaining the same level of profitability with the EBITDA margins over 17%. Our commitment to returning more than CAD 500 million to shareholders cumulatively over our outlook horizon, while maintaining leverage within targeted levels, remains unchanged. With that, I will now ask Silvana to provide a more detailed overview of our second quarter financial results.
Thank you, Éric, and good morning, everyone. Sales for the second quarter were down 4% organically compared to a strong prior year quarter, largely explained by lower railway tie volumes. While utility pole sales were also down, the decrease was modest and we observed a positive sequential volume trend. Including the contribution from our recent acquisitions and relatively stable sales for residential lumber, total sales were down about 1% or CAD 15 million compared to Q2 last year. Despite lower sales, we continued to deliver a solid EBITDA margin of 18.3%. For utility poles, we generated CAD 476 million in sales in the second quarter. Compared to our strong shipment quarter last year, sales were down 4% organically. While the pace of purchases of some utilities remained slow, incremental volumes from new customers and improved quarterly activity in the southern Yellow Pine region provided a partial offset.
Volumes in the quarter were down 2%, with a corresponding decline in pricing, largely attributable to an unfavorable sales mix. Offsetting, in large part, the lower utility pole sales was the contribution of Rockwell, whose results are reported in the utility poles product category. Rockwell's sales were better than anticipated as they had backlog orders that existed prior to the acquisition that was completed during the quarter. Sales of railway ties were down 11% organically this quarter to CAD 240 million, as volumes continue to be impacted by a Class 1 customer treating more of their railway ties at their company-owned facility. While we expected to offset some of the sales shortfall with commercial sales, delays in the timing of major projects and funding grant reviews impacted these recoveries. In the second quarter, all of the sales decline for railway ties was attributable to lower volumes.
Residential sales were CAD 246 million in the second quarter of 2025 compared to CAD 243 million in Q2 last year. Sales benefited from the higher market price of lumber, but volumes continued to be soft, particularly in the earlier part of the quarter. As the weather improved, we saw an upward trend in demand towards the end of the quarter. Turning now to profitability. EBITDA declined by CAD 11 million to CAD 189 million in Q2 of 2025. The decrease was largely attributable to lower sales volume and a less favorable sales mix in our utility pole business compared to the same period last year. Despite lower volumes, the company delivered an EBITDA margin of 18.3% for the quarter and 18.8% year to date, excluding the insurance settlement gain recorded in the first quarter. A strong EBITDA performance underscores the resilience of our business and ability to deliver results in a dynamic environment.
During the quarter, sales generated from operating activities were CAD 224 million compared to CAD 177 million in Q2 last year. This improvement was largely attributable to a more significant decrease in inventory levels compared to the same period in 2024. In addition to the typical seasonal decrease in inventory expected in Q2, we reduced inventories as part of our efforts to optimize the higher levels at the start of the year. We continue to expect to end the year with a lower inventory level compared to the beginning of the year. We remain committed to a balanced approach to capital allocations. Over the last 12 months, we generated cash from operations of approximately CAD 500 million, allowing us to invest over CAD 100 million in our business, acquire Rockwell, and return CAD 155 million to shareholders. The remaining capital was used to bolster our liquidity.
As of the end of June, we returned CAD 417 million of capital to shareholders out of the CAD 500 million that was committed for the 2023 to 2025 period. Yesterday, our board of directors approved a quarterly dividend of CAD 0.31 per share. We ended the quarter with almost CAD 700 million in available liquidity and a net debt to EBITDA ratio of 2.4 times, down from the 2.6 times at the end of the previous quarter. With a continued focus on profitability and working capital management, the leverage ratio was reduced within the desired target range. We remain committed to maintaining our strong balance sheet, which allows us to execute on strategic growth initiatives and to continue to pursue value accretive acquisitions core to our growth strategy.
In summary, with the breadth of our network, the strength of our business, and our teams, combined with our healthy financial position and strong cash-generating ability, Stella-Jones is well-positioned for continuous growth and success in 2025 and beyond. I will now turn the call back to Éric for his closing remarks.
Thank you, Silvana. While our lower sales guidance reflects some near-term softness largely associated with ongoing macroeconomic conditions, the mid-to-long-term market dynamics remain intact. As such, we maintain our confidence in the growth prospects of each of our infrastructure businesses. We are encouraged by the progressive improvement in utility pole volumes, and we are positioned to further capitalize on the growing North American infrastructure demand. For railway ties, we're focused on exploring opportunities that will mitigate some of the near-term headwinds and leverage the evolving railway tie landscape. Our customers view Stella-Jones as a partner that is capable of delivering impactful business-enhancing solutions, and we are fully committed to fulfilling that role. Enhancing our growth through acquisitions remains a cornerstone of our value creation strategy, as we focus on expanding our offering and strengthening our market position.
We are dedicated to pursuing acquisitions that are accretive and complementary to our current infrastructure portfolio, further strengthening our overall business resilience. We expect to continue to maintain EBITDA margins above our 17% target, reflecting the strengths of our business. Compared to our original guidance from 2023, where we projected a 9% EBITDA CAGR for the 2023 to 2025 period, the EBITDA CAGR is now expected to be closer to 11% despite softer sales over the past year. We look forward to providing further insight on our growth strategy at our next investor meeting, which is planned to be hosted in November. Thank you for your continued support and trust in Stella-Jones' vision of connecting communities through stronger infrastructure. This concludes today's prepared remarks. I will now open the lines to questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. As a reminder, if you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and if you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please hold your handset up before pressing any keys. One moment please for your first question. Thank you. Your first question follows on the line of Hamir Patel from CIBC Capital Markets. Please go ahead.
Hi, good morning. Éric, if you start with the pole side of the business, the 4% organic decline in Q2, how much of that was pricing versus weaker volumes?
Roughly half and half, you know, 2% on pricing and 2% on volume.
Okay, great. In terms of the outlook for the remainder of the year, pointing to low single-digit organic growth in poles, what's the similarity? What's the pricing and volume assumptions underlying that? Can you speak to what you're seeing in the spot markets for pole prices?
Right. I would say pretty much all volume for the back half of the year is progressively growing now, moving forward. I'm very encouraged to see the steady trend of increasing volume year-over-year. To answer your question, all volume, I think we have much of the pricing headwind now behind us.
Okay. In the spot market, in the past, you pointed to some pockets of weakness. Is that still the case, or have things stabilized?
Compared to last year, it's slightly down still compared to last year. Luckily for us, the larger percentage of our sales are through the long-term contracts, which is around 75%. That has been mitigating that impact. Yes, we're seeing the spot market being softer.
Okay, great. This is the last question I had, Éric, with respect to Rockwell. Can you speak to how the integration has been going over the past two months, and how you're feeling about your plans to sell through the capacity expansion that you have planned over there?
Yeah, certainly. We obviously, considering myself, I would say the integration has gone extremely well. That's what I want to say, so pretty much behind us. We've committed to the capital investment to expand the capacity, but I was, you know, announced at CAD 15 million. You can expect, you know, by the end of this year, we will have spent a first shot of, let's say, CAD 9 million- CAD 10 million of that CapEx. Delivery of equipment is expected between, well, some equipment is actually going to be delivered in September, and then the balance will be early next year. That's progressing well. I'm happy to inform the listeners that we secured a five-year commitment from a large North American utility to produce a preference, which, you know, will take up or utilize a large part of that or a good part of that capacity.
That's very encouraging as we're making this investment. I'm confident now for the next five years, you know, we've got a solid book of order, and we're actually quoting a lot of long-term projects right now that span between the two to five-year horizon. There's actually some discussions about quoting the period from 2030 to 2035. It's an interesting environment, the transmission world as, you know, projects get planned over, you know, a much longer horizon, the seven to 10-year timeframe. Things are looking very well. Thanks for the question.
Okay, great. I appreciate the color. That's all I had. I'll turn it over. Thanks.
Thanks, Hamir.
Thank you. Your next question follows on the line of James McGarragle from RBC Capital Markets. Please go ahead.
Good morning, and thanks for having me on. Since this one is a change in guidance, can you just elaborate a little bit on some of the primary challenges that you're seeing at the customer level? I guess kind of what changed with those conversations between Q1 and Q2? I guess just what on your pins were confident in achieving that look at the utility pole guidance in the second half of the year?
Thanks, James. What encouraged me and what we're seeing is that there's a constant trend in improving volumes. In recent discussions with shareholders, I mentioned what's important for me is to see that trend and for me to continue in June in 2026. I'll say there's a bit more softness. I pointed out we're seeing some softness in the CanadIna markets. CanadIna utilities have definitely taken a more prudent approach to products. That being said, we're still confident about seeing that volume growth in the back half of the year. It's just a slower pace than in my notes.
I appreciate the call. Thanks. You alluded to its determination in your prepared remarks. Can you just remind us how you're viewing your balance sheet capacity right now? Any color that you can provide on your recent acquisition of Rockwell and any potential opportunities that might have opened up in the U.S. for you? After that, I'll turn the line over. Thank you.
Thank you, James. As Silvana pointed out, we have a lot of availability on the credit facilities right now, around CAD 700 million. Our leverage sitting at 2.4 for this time of the year, both very well as, you know, typically we actually leverage down in the second half of the year. I think from a financial perspective, we have a lot of dry powder to go out and execute on acquisitions. To that extent, we are looking at a few projects that are related to the wood treating industry and also related to, you know, as I had qualified in the past, adjacent businesses.
Now, to the point of the Rockwell question, we definitely executed on that transaction with the intention to use it as an entrance to this market, which, you know, we've qualified to give us CAD 5 billion of CanadIna in annual sale, which would be a lattice and shooting with a pole. That being said, our intention is definitely to keep pursuing a determination in that space in North America.
Thank you.
Thank you. Your next question follows on the line of Maxim Sytchev from National Bank Financial. Please go ahead.
Hi, Éric. This is Sytchev. Good morning. How are you?
Good, good. Thank you. Yourself, Matt?
Good, good. Thank you. The first question I have here, I just want to take a look on Rockwell and your thought process as you learn more about sort of the lattice market and the capacity to expand organically in the U.S. What do you still say? Can you provide maybe a little bit of an update there in terms of what's happening in that market specifically?
Yes, certainly. Thank you and happy to provide more details. The last two months, our sales team and the Rockwell team have been meeting with customers, introducing the new joint forces of the two businesses, and definitely introducing Rockwell to these potential customers. It has been widely welcomed by all our customers. The same question you have, our customers have for us now is that, what are your intentions? Are you guys going to acquire something in the U.S.? Is Stella-Jones going to expand? There is a lot of interest for us to do so. We're definitely putting some time behind analyzing that possibility. I think right now there's very positive feedback from our customers, which is usually the hardest part of a project, to properly scope out the commercial aspects and the ability to penetrate the market. I think that is really creating very positive for us right now.
The balance of executing on that comes back down to CapEx, which obviously we have a lot of financial means, know-how, which we now have with the Rockwell team. To say that this team at Rockwell is definitely very high on the idea of expanding the division and becoming the largest lattice manufacturer in North America. I would say we're definitely exploring those avenues.
Okay. Do you have a sense of potential timing to kind of making a decision, is that 2025, 2026 timeframe, or is it too premature to talk specifics?
Let's really start specifics. Obviously, you know, we do have governance and discussions with the board. We need to structure a project. I want to say that we don't want to drag our feet. I think there's an opportunity and the commercial market is key in my mind. It's too early to talk about the timing, but it's definitely something that's on my priority list.
Okay. Good to hear. Just one quick question around ties. I mean, now that I've seen exploration around additional consolidation in the rail space, do you have a sense in terms of if there could become spillover shock in terms of insourcing or do these companies not have their own treatment capacity? Just any color, that would be great.
That's a good question, Matt. It's a question that has come up several times in recent months. To clarify, there was only one Class 1 that had a seating facility, and they've merged with another Class 1. There's only one Class 1 that owns a seating facility, and now they're using it in service. All the other customers do not have this capability. I would say if I were to personally comment, I don't think any of them are interested in owning those assets. We have customers talking to us about doing treating services where they would actually own the ties but leverage our network. Some are talking to us about expansion projects. They're definitely wanting Stella-Jones to service them better in certain geographical regions.
We do have some of these discussions with our customers, which indicate to me that this is a trend in the industry of seeing the railroads start investing in these assets, which are not their core business.
Yeah, makes sense. Okay, that's great. Thank you so much.
Thank you, Maxim.
Thank you for getting that. I certainly wanted to ask a question. Your next question comes from the line of Benoit Poirier from Desjardins Capital Markets. Please go ahead.
On the rail side, could you maybe provide an update on the rail side customer projects that could help compensate for the volume shortfall we see with this Class 1?
Certainly. As I said in the prepared remarks, we're definitely looking to compensate some of the headwinds with some commercial business. There was a bit of delay in the first half of the year with federal funding in the U.S. As these programs got reviewed and there were some delays in those funds being made available to our customer base. Now we've been quoting and got awarded contracts here in the second half of the year, which will support my view that we'll be able to compensate some of the lost volume that we had in the first part of the year. Once we get into next year, obviously this headwind of this Class 1 will be behind us. It's like a once and done. I do believe, as I said, we're going to continue growing our business at that low single-digit pace.
I also see some opportunities with certain of our customers looking towards us for some capital investment so we can enhance our business with them. More to come and obviously it's going to take a bit of time, but this thing is going to see 2027. We'll put this behind us and I think the decision will sit for the railway tie division.
Okay. Could you talk a little bit about the upcoming contract renewals to come with the Class 1? How many might we see in 2025? Should we expect this to be more a positive or negative catalyst, Éric?
Without naming them, one is behind us and another one to go this year, which is renewed at the end of October. Obviously, as we're renegotiating these contracts, we're looking to adjust pricing favorably for us in the sense that we need to catch up on some cost increases that we've seen over the last few years. These contracts are for the long term and we still, in certain cases, feel the pain of cost increases through COVID, which has not receded and have maintained. As we execute on these contracts and look for adjusted pricing or, I would say, favorable triggers will fit the intent on good pricing. By that, I mean, if someone wants to give me more volume, I can definitely be more flexible on pricing. I think it looks favorable for us for the balance of the year, obviously.
I'd say we've got renewals now in 2026 and 2027 also. It will gradually sort of make its way in our results over the next 24 months, I'd say.
Okay. Moving on to utility poles, when we look at the U.S. electric companies, they've asked for CAD 29 billion in the rate increase for this year, which more than doubled their request for the first half of 2024. American Electric Power also completed some divestitures or equity issuance. It looks like the fundamental is quite strong, although we see still elevated interest rates. Is this still going to put some pressure on spending? Would you say that utilities now realize the importance to spend despite the elevated interest rate environment? Any thoughts about the fundamental for utility poles?
Thank you, but I think you described the fundamentals very well. What you just stated is what we observe as well. Rate increases have been allocated to several customers. We see some customers adjusting their capital structures to be able to move forward with their investments. I associate those factors to what we expect in seeing our volumes picking up here in the second half of the year. I'd like to think we will keep doing so into 2026. There's no doubt about investments being required in the grid as a whole. I think no matter what the interest rate environment does at this point, our customers have adjusted to this reality. If these do drop in the U.S. in the next several months, it will only be favorable, I would say. At this point, I think our customers have found ways to move forward.
Okay. Just looking for residential lumber, it's been flat. We've seen, obviously, the housing start down. Home renovation also down. Home prices are down. Although weather, any thoughts? Weather was more driven by rain, or any thoughts about what we should expect from residential lumber in the second half of the year?
I reiterated our views on that, the range of CAD 600 million - CAD 650 million. I think we will be largely inclined to hit the range, the middle of the range, let's say, for this year. You're completely right that we have some headwinds early spring with a lot of rainy weekends and, you know, I guess unfavorable weather. The month of June was actually very good, and we're seeing a positive trend on the volume side right now. We definitely, again, have a great partner on the retail side in the area that some of the pricing is dedicated to, to get market share in Canada. That is a real positive thing for us. You're right. If market reading only starts to pick up again, that would also be very favorable and contribute to positivity to the business.
Given that, at this point, I don't think that this is really going.
Okay, thank you very much for the time.
Thanks, Benoit.
Thank you. Once again, if you have a question, please press star followed by the one on your telephone keypad. That is, once again, star and one to ask a question. Your next question comes from the line of Jonathan Goldman from Scotiabank. Please go ahead.
Hi, good morning, team. Thanks for taking my question. Éric, just a question on the outlook for poles for the rest of the year. Do you assume any rate cuts? What sort of macroeconomic variables are you considering in that guidance?
We're not thinking in any rate cuts. That'd be very difficult for us to speculate on. We use the information we have today, the current effects with some projections on the effects and current interest rates. Anything else that happens, if there are rate cuts, it's positive. First, it takes a while to just go into our, to trickle back down to us. I think it's a leading indicator of a positive for us. We also follow our customers' data. At this point, if the rate cuts, then we might impact next year's plan. At this point, probably not as much this year. As I said, it's a good leading indicator for us.
If the macroeconomic conditions stay the same, what gives you confidence that volumes will accelerate through the back half of the year? If it's slow to book, what sort of visibility do you have on that? Can customers delay orders and push them out potentially further?
Yeah, I think that's a good question. At this point, I guess we went through the same surprise last in the third quarter, but we definitely saw some slow to book and had some concerns with our customers with regard to what's expected this year. You will notice the guidance slightly adjusted, right, in the expected growth, but it's still a positive growth for the year. To be honest, there's also an easier comp year-over-year. We had a decline last year in Q3 as before. I'm quite comfortable with what's going on right now as far as the order book is, conversations that our team is having with customers. My client had a couple of discussions with some key customers as well. I think what we've put out is definitely achievable.
Okay, it makes sense. Maybe moving to the margin guidance, still the same sort of guide above 17%. I mean, that gives a lot to the imagination. You're above 18% for the second quarter in a row now. Why not lead us to you that you can do 18%? I mean, spot volumes have been, you know, weaker for a bit now, and you're still able to maintain that 18% mark.
As a reference, we looked last year, but it's true in many years. The second half of the year typically has less volume. The residential lumber business sort of goes down. The maintenance season also for poles and ties slows down as well. Typically, there's a bit of a lower volume, and if the job margins are slightly lower than in the first half of the year. If you scope that in, it pulls us a bit downward from the point we are today on a year-to-date basis. Yes, energy is the floor. You're right, it leaves a lot to the imagination. As I like to say, the team always seems sort of hesitant when I'm looking for a home run.
I don't let anyone off the hook easily when I'm looking for mixed performance, but there's always that impact share of H2 that would bring us slightly lower than the year-to-date number we have now.
Okay, that makes sense. If we look at the historical cadence from the first half to the second half in terms of margins, is the last couple of years, three years, maybe a good reference point, or is it better to look farther back to kind of remove some of the pricing dynamics we've seen in the past couple of years?
I'll let you go there, Martin, because we actually spent some time talking about them the last few days.
I would say, Jonathan, that in most years, it's pretty representative. Starting last year, I would say probably one of the anomalies that we saw was in 2023. It was a year that's probably, you remember, when there's a lot of demand and a little bit of craziness in the market. Other than that year, I think if you go back historically, I think you'll always see probably, you know, that gap between the first half and second half.
Okay, it makes sense. Thanks for taking that question.
Thanks, Jonathan.
Thank you. No further questions will be clear.
Thank you, Ina. Thank you, everyone, for joining us today. We look forward to updating you when we release our third quarter results. Until then, enjoy the rest of the summer and stay safe.
This concludes today's call. Thank you for participating. You may all disconnect.