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North American Construction Group Ltd (NOA 0.47%)
Q3Â 2020 Earnings Call
Oct 30, 2020, 8:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, ladies and gentlemen. Welcome to the North American Construction Group Earnings Call for the Third Quarter ended September 30, 2020. [Operator Instructions] Following management's prepared remarks, there will be an opportunity for analysts, shareholders and bondholders to ask questions. [Operator Instructions]. The media may monitor this call in listen-only mode. They are free to quote any member of management, but they are asked not to quote remarks from any other participant without the participant's permission.
The company wishes to confirm that today's comments contain forward-looking information and that actual results could differ materially from a conclusion, forecast or projection contained in that forward-looking information. Certain material factors or assumptions were applied in drawing conclusions or making forecasts or projections that are reflected in the forward-looking information. Additional information about those material factors is contained in the company's most recent management discussion and analysis, which is available on SEDAR and EDGAR as well as on the company's website at nacg.ca.
I will now turn the conference over to Martin Ferron, Chairman and CEO.
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Thanks, and very good morning to everyone. As predicted last quarter, the site access restrictions caused by the COVID-19 pandemic again severely impacted our business activity during Q3. However, also as anticipated, the impact gradually lessened as the quarter went on, with September heavy machine operating hours seeing roughly double those achieved in May. Unfortunately, when we mostly seen some help from the weather, what we got was significantly above-average summer rainfall for the second successive year. This led to far-above-normal fleet idle time and difficult operating conditions for our heaviest of equipment.
The one-two punches of site access restrictions and very rainy weather, together with the change in accounting treatment for our share of Nuna Logistics resulted in a 43% year-over-year decline in our Q3 revenues. Encouragingly, however, our sequential revenue was up by 33% compared to a 6% decline from Q2 to Q3 2019. This also supports our premise of a gradual recovery to pre-pandemic activity lines. Just as in Q2, our tight control of all costs then provided a nicely profitable quarter, demonstrating our ability to generate positive results and very negative operating circumstances. Indeed, adjusted EBITDA was only a shade less than achieved in Q3 2019.
And both EBITDA and EPS year-to-date are above 2019 levels despite considerably less revenue. Free cash flow was in line with our expectations as we build working capital and new sustaining capital in preparation for season in the oil sands. With that introduction, I will now hand over the call to Joseph Lambert, our President and Chief Operating Officer to take us through safety and other operational highlights, shown on slides four to 12. Jason Veenstra, our CFO, will then cover financial highlights from slides 14 to 18 before I talk about our outlook for the remainder of 2020 and 2021, using slides 20 and 21. Over to you, Joe.
Joseph C. Lambert -- President & Chief Operating Officer
Thanks, Martin. On slides four and five, you'll find our safety performance highlights. While we have maintained a strong performance relative to industry averages, we have seen a slight uptick in our trailing 12-month injury frequency. Although we have some unusual events in the last 12 months, we never want to make excuses for safety and have several areas that we do focus we're implementing to ensure we maintain the downward trend and focus on target 0. Safety is an area that we always want to maintain a chronic sense of unease to ward off complacency.
I would also like to point out an important impending milestone in that we will be issuing our inaugural ESG report in Q1 2021. We are excited to have the opportunity to show our ESG accomplishments and demonstrate our future commitments. Subsequent to the inaugural report, we will be expanding this quarterly slide deck to incorporate KPIs and focus areas of our maturing ESG plan. In the overview of Q3 on slide seven, I think the duck on the pond method were best described with our performance. Above the water things of comp, our Q3 numbers look to be a smooth transition between the highest impact of the pandemic in Q2 to anticipate Q4 demand increase and return to levels approaching normal by year-end. But below the water level, the paddle feet of our operations teams pushed through a second consecutive summer of record rains while successfully implementing and integrating pandemic protocols in all areas of our business.
Quickly adapting to change while maintaining commitment to safety and performance targets are characteristics that NACG employees display daily. On slide eight through 12, we discuss our Q4 priorities, progress on diversification and highlight several milestones achieved. While I'm not going to speak to the specifics on each slide, I would like to provide some additional color. On Q4 priorities, a safe and efficient closeout of the year is the obvious general plan. But more specifically, we want to ensure a smooth start to our recently awarded drilling project with Nuna and making sure we get our fleet and operations set up for success ahead of the growing winter demand of oil sand customers. On diversification, our success in winning both U.S. mine management contracts and opportunities with Nuna are exceeding expectations.
The NACG corporate strategy for diversification is based on lowering capital intensity and gaining higher utilization of the smaller end of the fleet which is uncommitted and underutilized in oil sands. With this diversification focus, we expect to continue to meet our oil sands customer needs with high utilization of our large fleet, improve the utilization of smaller fleet outside of oil sands and reduce the consolidated risk by having more customers and more commodity markets and geographic regions. For my final comments, I'd like to highlight with great pride the NACG achievement of key strategic milestones.
The Nuna acquisition; the significant competitor fleet purchase; the ultra cost truck purchase; the vertical integration of equipment maintenance and component rebuilds with associated facility construction; and the order of the two U.S. mine management contracts and recent JV contract with Nuna have all achieved the synergies and financial results in line with our exceeding expectations. These achievements all occurred in the last 24 months and will continue to produce benefits long into the future. We continue to seek and see opportunity in our business. Our estimated team is busy, and we have many choices, both independently and through partnerships, to improve and expand on our success. On the surface and with the pandemic still impacting the world, we may look like we're just gliding along. But underneath and inside the company, we are vigorously paddling toward our strategic objectives.
With that, I reached my limit of duck analogies, and I'll hand it over to Jason for our financials.
Jason William Veenstra -- Executive Vice President & Chief Financial Officer
Great. Thanks, Joe, and good morning, everyone. I'll start with our top line on slide 14. Revenue for the quarter of $94 million was more than $70 million below last year's Q3 as we continue to suffer the impact of COVID-19 which were enhanced by the wet weather. As Martin and Joe outlined, our quarter was dominated by the site access issues and the wet weather in July and August. All said, revenue decreased by 43% from Q3 2019. But as with all comparisons now, what is more relevant is 2020 on a stand-alone basis.
When just looking at this year, Q2 was down by 64% from Q1, but we bounced back here in Q3, being 33% up from Q2. The resiliency of the oil sands mine remains strong. And on the access restriction needs, we will continue to see our productive operating hours increase. The Nuna Group of Companies has had less of a direct impact from the pandemic and posted a very strong quarter by essentially matching their record set in Q3 2019. Just to remind users of our financial statements, Nuna is not reported revenue, and therefore, fluctuations in revenue, good or bad, are not driven by Nuna performance. Gross profit margin of 16.3% reflected a difficult operational quarter, as mentioned.
Difficult wet operating conditions in the summer months exasperate cost impacts of the necessary safety protocols now in place at all the mines we operate on. Furthermore, demobilization and mobilization costs had a noticeable impact on margins as we continue to reposition and optimize our commission fleet. All these factors were partially offset by continued disciplined cost constraint in place during the customer imposed reduction and the Canada Emergency Wage Subsidy, which I'll touch on later. Included in gross profit margin was depreciation of 20.3% of revenue for the quarter.
The depreciation percentage in Q3 is higher than our current run rate primarily due to a higher proportion of larger equipment operated when compared to a typical three-month profile. Also contributing to the percentage increase was straight-line depreciation on certain fixed assets during a low-revenue quarter and, due to haul road conditions, higher nonproductive idle equipment hours, which determines our depreciation expense. Direct general and administrative expenses in the quarter were $3.6 million, equivalent to 3.9% of revenue. This gross spending was consistent with Q2 2020 but reflects an improved percentage as our revenue rebounds.
The 3.9% was achieved through cost reductions put in place early in the pandemic, which included mandated reduced work hours and the complete halt of all discretionary and non-essential spending. Adjusted EBITDA of $37.1 million was essentially equal to Q2 2019 under completely different circumstances. Adjusted earnings per share for the quarter of $0.26 was lower than Q2 2019 due to higher depreciation, as mentioned, as well as a consistent tax rate this quarter, where last year benefited from a retroactive adjustment for a tax rate reduction. Higher depreciation and taxes were offset by interest as cash-related interest expense for the quarter of $4 million represented an average cost of debt of 3.6%.
This is significantly down from last year's Q3 rate of 4.8% as we continue to benefit from both reductions in posted rates as well as competitive rates in equipment financing. We provide slide 15 again for clarity. And as disclosed in detail in our financial statements, net income for the quarter includes $11 million of salary and wage subsidy received under the Canada Emergency Wage Subsidy program. These subsidies are presented with their correlated employee expenses in both projects and equipment costs as well as general and administrative expenses. As is well understood now, these subsidies reimbursed us for a portion of the wages we pay and greatly aid our efforts in retaining our workforce.
As noted in the slide, the program essentially reimbursed us for 20% of the all-in employee costs, which in turn allow us to maintain 20% of the headcount level we may have otherwise had to reduce either temporarily or permanently. From our perspective, the program has worked effectively and better positions us moving forward as we look to continue to ramp up activity levels. Moving to slide 16, I'll summarize our cash flow. Cash provided by operations of $26.3 million was produced by the business and properly reflects the cash generation of Q3. Working capital changes over the three months had a $24.6 million impact on our cash balance and temporarily drove our free cash flow negative for the quarter.
The additional factor that impacted free cash flow was the accumulation of cash in our joint ventures which we expect to collect on in Q4. Sustaining maintenance capital of $19.7 million remained constrained in the quarter and strictly adhered to our revised capital plan we implemented in early Q2. The spending was exclusively dedicated to our heavy equipment fleet required for the upcoming winter season. Moving to our balance sheet on slide 17. Total liquidity of $124 million is on a pro forma basis, reflecting the credit facility extension that was signed on October eight after the end of our quarter.
As mentioned, working capital and joint venture cash impacted free cash flow and had the correlated effect of temporarily increasing our debt levels. On a trailing 12-month basis, our senior leverage ratio, as calculated by our credit facility, was 2.3 times and reflects what should be a peak given the working capital profile we expect for Q4. To close out, on slide 18, I'll briefly touch on our current debt structure. Our credit facility makes up about half of our overall debt, and the three-year extension provides the stability and low-cost financing we require over the next three years. As this slide highlights, we don't have a required financing decision to make until Q4 2023. Our current run rate, being Q3 2020, had a cost of debt of 3.6%, and the amended agreement will not have a noticeable impact on this. And with those financial comments, I'll pass the call back to Martin.
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Thanks, Jason. And now to our outlook for Q4 and 2021. As always, our performance in the last quarter of a year hinges on how early the cold temperatures arrive so that we can start our winter work programs. Also, Nuna, after a very good Q3, you'll see their activity levels decline in Q4 on a seasonal basis. Therefore, the EBITDA range for the quarter is still quite wide, with the midpoint being around $35 million. As Jason mentioned, we do expect to generate most of our free cash flow for year during Q4, which is normal for us. And much of this will likely go to lowering year-end debt. We're also introducing mainly the financial outcomes for 2021.
We're probably going to be one of the few companies to do that. And at this juncture, we expect the midpoints of the ranges for EBITDA and free cash flow to be around 15% and 40% higher on our anticipated numbers for full year 2020. This robust outlook is based upon our solid backlog and the numerous identified and actionable opportunities that we are pursuing. We are especially excited about our good pipeline with diversifying work outside mine sites, being on infrastructure projects or other natural resource mine sites, which we are confident will propel us to meet or exceed our target of 40% on all sites EBIT by 2022.
My confidence here is very recently bolstered by the reward of a substantial construction project in relation to a gold mine in Northern Ontario. That contract also emphasizes the way of our ownership stake and relationship with Nuna. The midpoint of our anticipated free cash flow range for 2021 equates to 15% of expected year-end 2020 debt and just over 20% of our current market capitalization. Therefore, debt reduction and share buybacks are likely to be higher of 2021 capital allocation, as clearly shown on the slide. To conclude on the topic of share buybacks, may have been surprised that we were not active with our NCIB in Q3. And there are two main reasons for that.
Firstly, as explained above, we are a user of cash in Q3 work preparation. Secondly, we are the hedging place to portion of the shares issued in relation to the call of debentures early in the year. Should we sell the hedge in cash as we generate free cash flow in Q4 or in Q1 because we have that time available to us, the remaining balance of the 2020 normal course issue bid would be used up. With that, I'll now hand the call back to Mariana, the operator, for the Q&A session. Thanks.
Questions and Answers:
Operator
[Operator Instructions] Your first question comes from Yuri Lynk with Canaccord Genuity.
Yuri Lynk -- Canaccord Genuity -- Analyst
Martin, just on the outlook, when do you anticipate that activity levels in the oil sands will reach back to pre-pandemic levels? Is that something you see potentially happening in the fourth quarter or more mid next year?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
We're hopeful that it will be the fourth quarter. But obviously, we had a recent uptick in cases and second wave worries, etc. could push that out into really in 2021. But all indications so far is that it will be late fall.
Yuri Lynk -- Canaccord Genuity -- Analyst
Okay. And then -- so in terms of guidance for next year, your outlook is 15% EBITDA growth at the midpoint. Should we be -- how should we be thinking about revenue? Should that be growing in excess of 15%, implying slightly lower margin? Is that the way we should look at the top line?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Jason, you got the revenue numbers upcoming?
Jason William Veenstra -- Executive Vice President & Chief Financial Officer
Yes. So yes, I think that's a fair correlation. One thing, Yuri, we'll have to do is disclose supplementally revenue from our joint ventures. The gold mine contract that we announced is expected to flow through equity earnings, so that won't show up in top line reported. But from a true revenue perspective, yes, we don't expect differing margins year-over-year. And so correlated 15% full revenue is the right way to look at it.
Yuri Lynk -- Canaccord Genuity -- Analyst
Okay. So kind of matching -- revenue matching this year, and then you'll get a pickup from the gold contract, all else equal, through the JV line?
Jason William Veenstra -- Executive Vice President & Chief Financial Officer
Correct.
Operator
Your next question comes from Aaron Macneil with TD Securities.
Aaron Macneil -- TD Securities -- Analyst
I've got a handful of questions on the gold project in North Ontario and, I guess, its broader implications. The first one, is that 50% North American, 50% Nuna joint venture sort of a special purpose relationship for this specific project? Or do you intend to use this as a vehicle to bid on other projects as well?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Joe, you can take that.
Joseph C. Lambert -- President & Chief Operating Officer
Yes. Aaron, as I said, I think that structure actually provides great strength for us in a lot of bids. In particular, this one, where the clients saw both of us having a significant amount of experience. Nuna, having strong indigenous relationships, is obviously our partner in the. But then we also brought the fleet capacity and the balance sheet strength.
So I think those characteristics of a partnership are going to work well for us in tendering work in that area of the world and certainly in those resource areas in Northern Canada. So I don't think this client's view of that partnership strength is going to be unique at all. I think a lot of our potential clients in other resource areas in the northern parts of Canada will see it the same way.
Aaron Macneil -- TD Securities -- Analyst
Okay. Great. Martin, you mentioned the bid pipeline in the prepared remarks. So as it relates back to the gold project, was there anything about the gold project that made it a natural fit for North American? In general, what types of project culture are you looking for? And how would you characterize the opportunity set, I guess, for this newly created joint venture for other projects?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Yes. So we're bidding in the category. I'm also through the JV for projects that involve major earthworks. Obviously, earthworks is one of our core competencies. We're very good at it. So if we can find a major earthwork site, the oil sands, it makes sense for us to build. So we've got a pipeline of potential opportunities, other resources plus infrastructure projects, so there's a wide opportunities there. And I would say, off the top of my head, right now, it's more than $1 billion worth of opportunity. Clearly, we're not going to get all of that, but that just puts a kind of number two is the size of the opportunity.
Aaron Macneil -- TD Securities -- Analyst
Okay. You -- that color is really helpful, actually. But you -- my understanding is that you won't need to deploy additional capital for this project. I mean you're probably mobilizing some of the smaller pieces of your equipment fleet. But you've often said in your past remarks that you're at capacity for your equipment fleet based on that project of oil sands projects you already had in hand. So could you give us a sense of how you're going to supply this gold project with equipment and the types of equipment that the project will need?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
As Joe mentioned in his commentary, the equipment we're going to deploy on the gold project is underutilized smaller equipment, so it's not going to detract from our oil sands efforts. So we want to keep our customers happy there, clearly. So this equipment we have in the fleet is underutilized, certainly on a seasonal basis and now we can send over there and getting moving on. So the capital required for this is kind of modest.
Operator
Your next question comes from Maxim Sytchev with National Bank Financial.
Maxim Sytchev -- National Bank Financial -- Analyst
Maybe I'll just start a couple of quick ones. Jason, I don't know if you guys have actually quantified the impact on revenue loss due to weather. I don't know if you have that particular but more ballpark can be.
Jason William Veenstra -- Executive Vice President & Chief Financial Officer
Well, when we look at the year-over-year decrease of $70 million, we think the lion's share of that outside the Nuna impact of $10 million is equally represented by COVID with the restrictions and then the wet weather in July and August. So that kind of impact north of $30 million, $30 million to $40 million impact.
Maxim Sytchev -- National Bank Financial -- Analyst
Okay. So quite significant. And then I guess, what are you seeing guys on the ground right now as kind of Q4 ramps up, what's -- any update from that perspective?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Joe?
Joseph C. Lambert -- President & Chief Operating Officer
I'm sorry, Max, in particular, the what in Q4? I didn't catch it.
Maxim Sytchev -- National Bank Financial -- Analyst
Just the weather, is there anything kind of unusual as you guys resume the activity levels?
Joseph C. Lambert -- President & Chief Operating Officer
I think if there's one thing we can count on in Alberta, I know freezing and get cold. I don't think we've ever missed that in the winter. The -- usually, it's just the timing of that, Max. So generally, we're freezing day and night by the first week or second week in November and through the end of March. Sometimes that's a couple of weeks off one way or another. But usually, that just moves revenue from Q4 into Q1 kind of thing. So we don't expect anything unique about this winter. I think we're well set up to perform the work, and we're looking at full utilization of our fleet.
Maxim Sytchev -- National Bank Financial -- Analyst
Okay. That's helpful. And then maybe a question for Martin. I think in the past, we discussed in a way potentially attacking the ore opportunity just not dealing with the overburden. I mean given all the pressure that we're seeing right now on the producer side, Martin, do you think that, that potential, is it increasing, decreasing? I mean what's kind of your sense now? Or is it still a bit of a sort of a status quo dynamic, where people are trying to shorten the pencils on this particular question?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Yes, I think it's status quo. Obviously, the has stopped a lot of discussion on many topics, including that one. I'm sure the operators are going to be looking to reduce their costs going forward. Clearly, they are receiving the results published already. So I'm sure, at a certain point, that will come up as a topic, and we are ready to discuss it. So -- but I don't see it happening anytime soon. It's probably medium to long-term opportunity.
Maxim Sytchev -- National Bank Financial -- Analyst
Right. And actually, I mean speaking about the client base, I mean given the fact that we've seen increased amount of consolidation in the space, is there an opportunity to capture some incremental market share to work with some clients which you previously didn't have a relationship? Maybe any commentary on that front?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Yes, I think so. We haven't done much work for one or two of them for a while because we're being capacity constrained, to be honest. So those constraints are still there, but we're always looking to do work for others if we can. So depending on capacity, we'll certainly look to -- look for other revenue opportunities.
Maxim Sytchev -- National Bank Financial -- Analyst
Okay. That's great. And then the last question, just wanted to circle back to the gold mining project. Is there anything specific that we should know in relation to kind of the margin profile and working capital dynamics? Or is it quite similar, the profile, as what we see better on the core business?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Yes, I think the margins are similar to what we see in our core business and working capital. We're actually getting some pain upfront, which is always nice to fund mobilization activities and preparations. So the working capital profile is also fine.
Operator
Your next question comes from Bryan Fast with Raymond James.
Bryan Fast -- Raymond James -- Analyst
I'm just looking for some color maybe on pricing concessions with customers. Are you seeing a plateau in the level of price concessions? Or could you expect more?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Joe?
Joseph C. Lambert -- President & Chief Operating Officer
I believe it's plateau. I don't think we expect more. I think -- and I think going forward, there's normal escalators with markets over time, so I think it will actually improve over time. But it's plateaued right now and expect it to go down going forward.
Bryan Fast -- Raymond James -- Analyst
Okay. And then maybe just switching to guidance here. Does the EBITDA guidance for the remainder of this year and next include further wage subsidy benefits?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Yes. We were hoping to get some in Q4. But Jason, I don't think it's including any in 2021, correct?
Jason William Veenstra -- Executive Vice President & Chief Financial Officer
Correct.
Operator
Your next question comes from Devin Schilling with PI Financial.
Devin Schilling -- PI Financial -- Analyst
Just looking at MSAs here, I see the one is up for renewal this year. Can you guys maybe provide a bit of commentary on if you're expecting this to be renewed? Or do you guys anticipate maybe relocating some of this equipment to another mine site within the oil sand?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Joe?
Joseph C. Lambert -- President & Chief Operating Officer
I didn't hear the question very well, Devin. Would you mind saying it again?
Devin Schilling -- PI Financial -- Analyst
Yes. I was just mentioning you guys have one MSA that's coming up for renewal here. Just looking to get some color on if you guys are anticipating this to be renewed or should we be expecting some of this equipment to be possibly relocated to another mine site within the oil sand.
Joseph C. Lambert -- President & Chief Operating Officer
As far as the ones that expire this year, they aren't active ones that we've been working on. And we've had no issue when we work, even when we don't have any MSA, to getting a new one regenerated. So if one expires, it would just be because we aren't active there at the time. And with -- it won't prevent us from bidding on jobs and we still get the RFPs. And as soon as we won one back on that site, we would get a renewed MSA. Oftentimes, they'll renew even when there isn't any work, but sometimes they'll stress for the next time you actually become active on the site. Is that the answer what you're looking for there, Devin?
Devin Schilling -- PI Financial -- Analyst
Yes. Yes. No, that's very helpful. That wraps it up for me. Again, congrats on the recent contract win.
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Thank you, Devin.
Joseph C. Lambert -- President & Chief Operating Officer
Thanks, Devin.
Operator
[Operator Instructions] Your next question comes from Richard Dearnley with Longport Partners.
Richard Dearnley -- Longport Partners -- Analyst
I'm confused as to how -- why the -- well, first, how the newly formed joint venture with Nuna is different than the previous arrangement with Nuna. And then part two would be why was that necessary. Why wasn't the old structure enough for the future?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Yes. So the normal relationship with Nuna is that we own 49% of the company. So they're particularly owning 51%. So there's generally good work and do it themselves, right? Here, we talk in our bid and the project together. We combine to give the customer exactly what they wanted in terms of whose nation's content plus expertise. So it made sense for us to form this JV because, I think as Joe mentioned earlier, we see further opportunities through it in the future. So basically, we'll be providing resources into this project because, normally, we don't. Nuna provides all of it. So it's just a natural setup for an effort which is pretty much 50-50.
Richard Dearnley -- Longport Partners -- Analyst
So is it 50-50?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Yes, -ish.
Richard Dearnley -- Longport Partners -- Analyst
-ish, so not quite. What's the first decimal place?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
No, it's a 50-50, Richard.
Richard Dearnley -- Longport Partners -- Analyst
I see. So you're -- in this case, the difference then is the 1% of ownership plus you're bidding it together rather than getting called in if needed?
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Yes. So our 50% will come to us, and we get 49% or the other 50%, basically, in simple terms, I think. Thank you, Richard. Always a good question from you.
Richard Dearnley -- Longport Partners -- Analyst
I'm just confused.
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Well, I hope I cleared it up a little bit.
Richard Dearnley -- Longport Partners -- Analyst
Yes.
Operator
There are no further questions at this time. I will now turn the call back over to the presenters.
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Well, thanks, Mariana, and thanks, everybody, for calling in today. We look forward to speaking to you next time. All the best.
Operator
[Operator Closing Remarks].
Duration: 38 minutes
Call participants:
Martin R. Ferron -- Chairman of the Board & Chief Executive Officer
Joseph C. Lambert -- President & Chief Operating Officer
Jason William Veenstra -- Executive Vice President & Chief Financial Officer
Yuri Lynk -- Canaccord Genuity -- Analyst
Aaron Macneil -- TD Securities -- Analyst
Maxim Sytchev -- National Bank Financial -- Analyst
Bryan Fast -- Raymond James -- Analyst
Devin Schilling -- PI Financial -- Analyst
Richard Dearnley -- Longport Partners -- Analyst
