Boyd Group Services Inc.

Good morning, everyone. Welcome to the Boyd Group Services Inc. Second Quarter 2021 Results Conference Call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risk and uncertainties related to Boyd's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Boyd's annual information form and other periodic filings and registration statements. And you can access these documents at CDAR's database found at cdar.com. I'd like to remind everyone that this conference call is being recorded today, Wednesday, August 11th, 2021. I would now like to introduce Mr. Tim O'Day, President and Chief Executive Officer of Boyd Group Services Inc., Please go ahead, Mr. O'Day.

Thank you, operator. Good morning, everyone, and thank you for joining us for today's call. On the call with me today are Pat Pathapatti, our Executive Vice President and Chief Financial Officer, and Brock Bulbock, our Executive Chair. We released our 2021 second quarter results before markets opened today. You can access our news release, as well as our complete financial statements and management discussion and analysis on our website at BoydGroup.com. Our news release, financial statements, and MD&A have also been filed on CDAR this morning. On today's call, we will discuss the financial results for the three and six month periods and the June 30th, 2021, and provide a general business update. We will then open the call for questions. Comparing the second quarter of 2021 to the same period of 2020, demonstrates how significantly the business was impacted by the pandemic one year ago and how far we've come since that time. During the second quarter, we saw infection numbers and restrictions decrease while vaccination levels increased. We achieved strong same-store sales growth in the quarter, which resulted in increased adjusted EBITDA margins and net earnings both in the quarter and on a year-to-date basis. Although we continue to experience reduced demand in certain markets at the beginning of the second quarter, demand accelerated in most U.S. markets as the quarter progressed. By the end of the second quarter, demand in the U.S. was at meaningfully higher levels than we experienced in Q1 of 2021. By contrast, demand in Canada remained significantly lower than the pre-pandemic levels and below the levels experienced in the first quarter of 2021. As was previously communicated, beginning January 1st, 2021, Boyd is reporting results in U.S. dollars. This change has been made in order to better reflect the company's business activities given the significance of U.S. denominated revenues. During the second quarter, we recorded sales of $444.6 million, adjusted EBITDA of $58 million, and net earnings of $10.5 million. Sales at $444.6 million showed a 44.4% increase when compared to the same period of 2020. This reflects a $28.3 million contribution from 72 new locations. Our same-store sales, excluding foreign exchange, increased by 34.5% in the second quarter, recognizing the same number of selling and production days in the U.S. and Canada Thank you. Thank you. Thank you. Gross margin was 46.1% in the second quarter compared to 46.8% achieved in the same period of 2020. The gross margin percentage was negatively impacted by reduced parts and labor margins, as well as variability in direct repair program pricing. Operating expenses for the second quarter of 2021 were 147.1 million, or 33.1% of sales, compared to 108.5 million or 35.2% of sales in the same period of 2020. The increase in operating expenses was primarily the result of growth in the number of locations as well as the COVID-19 related cost reductions that impacted the second quarter of 2020. The decrease as a percentage of sales was primarily due to increased sales in the second quarter of 2021 as compared to the same period of the prior year, which was significantly impacted by the COVID-19 pandemic. Increased sales levels provided improved leveraging of certain costs such as property taxes and utilities. Adjusted EBITDA or EBITDA adjusted for fair value adjustments to financial instruments and costs related to acquisitions and transactions was $58 million. an increase of 62.7% over the same period of 2020. Adjusted EBITDA was positively impacted by improved sales levels, which also provided improved leveraging of certain operating costs. In total, Adjusted EBITDA in the second quarter benefited from the Canadian Emergency Wage Subsidy in the amount of 3.6 million as compared to 3.4 million in the same period of the prior year. as is the objective of the program, Boyd continued to employ and incur costs for employees that would have been laid off or furloughed absent the wage subsidy. As a result of the steady progress toward more normal business conditions in the US, EBITDA margin percent improved 50 basis points compared to Q1. Net earnings for the second quarter of 2021 was 10.5 million compared to a net loss of 5 million and John Wysseier. which also provided improved leveraging of certain operating costs and other relatively fixed costs such as depreciation and amortization that could not be reduced in relation to a decline in sales due to the COVID-19 pandemic during the second quarter of 2020. For the six-month period ended June 30th, 2021, we reported sales of 866.3 million, an increase of 11.7% over the same period of the prior year, driven by same-store sales growth of 4.9% or 5.7% on a day's adjusted basis, as well as contributions from new locations that had not been in operation for the full comparative period. Gross margin increased to 46.1% of sales compared to 45.6% in the comparative period. The gross margin percentage was positively impacted by improved retail glass margins and a higher mix of glass sales in relation to collision sales, partially offset by variability and direct repair pricing. Operating expenses increased $30.8 million when compared to the same period of the prior year, primarily due to the growth in the number of locations, as well as the COVID-19-related cost reductions that impacted the prior year. adjusted EBITDA for the six-month period and the June 30th, 2021 was $110.7 million compared to $96.1 million in the same period of the prior year. The $14.6 million increase was primarily due to improved sales levels, which also provided improved leveraging of certain operating costs compared to the prior year period that was much more significantly impacted the pandemic. We reported net earnings of $18.2 million compared to $12 million in the same period of the prior year. Adjusted net earnings per share increased from 51 cents to 92 cents. These increases are primarily attributed to improved sales levels, which also provided improved leveraging of certain operating costs and other relatively fixed costs, such as depreciation and amortization, that could not be reduced in relation to the decline in sales due to the COVID-19 pandemic during the second quarter of 2020. At the end of the period, we had total debt net of cash of 671.1 million compared to 539.9 million at March 31st, 2021. During 2021, the company expects to make cash capital expenditures within the previously guided range of 1.6 to 1.8% of sales. This excludes those capital expenditures related to acquisition and development of new locations, the investment in environmental initiatives such as LED lighting, and the investment in the expansion of our while operating way practices through the corporate applications and process improvement efficiency project. During the first six months of the year, the company has invested approximately 2.4 million in environmental initiatives. These investments will not only provide environmental and social benefits, but also achieve accretive returns on investing capital. Additionally, the company is expanding its while operating way practices to its corporate business processes. The related technology and process efficiency project will result in a total of two to three million of additional investment before the end of this year, and will also be expected to streamline various processes as well as generate economic returns after the project is fully implemented. This initiative began in the third quarter of 2020. As has been our practice, I would now like to comment on some potential for insider selling. For personal or estate planning reasons, some insiders, although excluding myself, may choose to sell some of their void holdings during the balance of the year, but in any event, will continue to hold ownership of Boyd's shares at levels well above those required by the company's share ownership policies. While the COVID-19 pandemic significantly impacted Boyd's business over the past year, we experienced increased demand in most US markets during the second quarter of 2021, as restrictions continued to ease during this period. Thus far, in the third quarter of 21, Although still below pre-pandemic levels, demand is exceeding our capacity in all U.S. markets, which has resulted in high levels of work in process. The process of adding location-level administrative staff and technician capacity to address this constraint remains a work in process and is resulting in increased wage pressure. By contrast, demand in Canada remains significantly lower than pre-pandemic levels. Demand in Canada in Q3 is building very slowly in comparison to Q1 and Q2 as restrictions are eased and removed. Looking to the balance of 2021 and beyond, we continue to be confident that we will maintain progress toward our long-term growth targets and operational plans. We have added 100 locations on a year-to-date basis, and our pipeline to add new locations in existing markets and to expand into new markets is healthy. The recent acquisitions of John Harris Body Shops and Collision Works, which added a combined 51 locations with quality leadership, are strategically opportunistic and better position us to execute on our comprehensive plans for a creative market build out in and around these platforms. For these reasons, Boyd paid toward the upper end of our historic multiple range for similar strategic growth platforms. In addition to taking time to execute on our build-out plans, as with many acquisitions, especially those of larger size, it will also take time to integrate and achieve our expected synergies and the resultant earnings from these acquisitions and other new locations, especially given the continuing impact of the pandemic. We continue to have financial flexibility with our conservative balance sheet and more than $600 million in dry powder to take advantage of opportunities as they arise. Notwithstanding our strong growth and positioning for the future, the previously mentioned factors are contributing to adjusted EBITDA margin pressure with very modest sequential quarterly same-store sales gains in the third quarter to date. We are excited and optimistic about our positioning for the future. Our pipeline, including acquisitions as well as greenfield and brownfield locations, is healthy and we are confident in our ability to achieve our five-year plan. As market demand returns to normal levels in all areas of our business and we build our staffing capacity, we are well positioned for the future with our leadership position, our growth pipeline, and many business initiatives including our WOW Operating Way, Scalable Technician Development Program, Scanning and Calibration, OE Certifications, and Intake Center Strategy, to name a few. As always, operational excellence remains central to our business model, and with ongoing investment in our WOW Operating Way, we continue to work to drive excellence in repair quality, customer satisfaction, and repair cycle times to ensure the continued support of our insurance partners and vehicle owners. With that, I would now like to open the call to questions. Operator?

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press star followed by one on your touchtone phone. You'll hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Okay, your first question comes from David Newman from Desjardins. David, please go ahead.

Good morning, gentlemen. Good morning, David.

Just on the sense of sales growth, do you have an estimate of what you think was left off the table because of capacity or labor constraints in the second quarter, or was it just deferred into work in progress? And I'm just trying to reconcile the ramp or acceleration that you're talking about in demand versus the tempered sequential outlook. So just trying to get an understanding of what was left on the table, how much was in work in progress, and the kind of mixed outlook.

We haven't quantified anything. Quantify that, David. I will say that volumes have not returned to pre-pandemic levels, but the labor shortage is making it difficult for us to process the available work. So our work in process has increased. I think there's some risk that as work in process continues at high levels, that our capture rates could diminish a bit. So it could impact some of that available revenue. But as I communicated, we're working hard to build our staffing to take advantage of the work that is available.

And, Tim, just in terms of just trying to reconcile this acceleration that you're above capacity in all your U.S. markets versus sort of the tempered sequential outlook, how do we reconcile that?

I think it's really the labor constraint is really what's tempering our same-store sales growth right now, not so much the market volumes, although market volumes have not yet returned to normal. Okay.

And then if you look at sort of supply chain labor challenges, you know, the benefits from Biden are poised to end in September. Maybe labor will become less of an issue. But what sort of margin pressure or maybe just a quantum of the upside in labor inflation as you head into the second half here?

I would say it's clearly a very tight labor market in the United States right now. And, you know, we will – remain competitive to attract our fair share of the labor. Historically, as we've had to do that, over a period of time, we've been able to recover, you know, any labor rate increases we've had to provide through pricing with clients. Although, you know, I wouldn't expect that in lockstep, but we've had pretty stable margins over a very long period of time.

Okay. And last one for me, guys, is just if you look at coming out of the pandemic here, Any change that you're seeing at all in insurer behavior to concentrate the DRPs of larger players, especially those that have OE certifications, technology, people, etc.? In other words, you guys enjoy a national advantage by being a larger player and your greater ability to process work, because if you're having difficulties, I have to think a lot of the mom and pops out there are having even more difficulty in terms of securing labor. So any change that you're seeing in insurer behavior at all?

Well, I think insurers still have a desire to concentrate their volume with fewer players. It creates benefits for them. And I believe that the investments we're making both in training and in OE certifications will make us more attractive to our partners over time. I think the OE certifications, we've grown our network of certified locations extensively over the past for a few years. I don't think that's an immediate payback. I think it's a longer-term benefit that we can provide. And as we do with other things like our aluminum repair capabilities, we can hub and spoke our OE certifications so that where there's a need or a desire for an OE certification, we can move vehicles to an adjacent repair center that has the appropriate certifications. Excellent. Thanks, Pat. Thanks, Tim. Thanks, David.

Your next question comes from Jonathan Lamers from BMO Capital Markets. Jonathan, please go ahead. Thanks.

Pat and Tim, could you update us on the labor rate situation and whether insurers are prepared to absorb the wage pressures the industry is seeing?

I guess I don't have anything specific to comment on that other than Jonathan, over several years, We've experienced labor rate pressure before and we've been able to recover that over time through market pricing. So we intend to be competitive to attract the labor that we need and I would expect that over time we'll recover that incremental cost.

Thanks. And Tim, I'm curious about opportunities for automation collision repair, such as automated inspection systems with cameras. or software. Are there any opportunities that you see there longer term, maybe for identifying minor dents or anything else?

There is some equipment out there that is not common, although it has grown in its presence. It's primarily used for things like PDR or hail damage to assess quantity of dents on panels. I think there will be more automation coming into our industry. I think the early part of it may come on improving the efficiency of the repair planning and estimating process, AI around estimating and looking at maybe some of the technical requirements to properly complete a repair. That could also evolve in scanning and diagnostics to help with the interpretation and the other repair procedures necessary to repair or correct diagnostic or calibration issues with vehicles. I haven't seen anything yet that's really going to greatly improve the efficiency of labor other than things like the investments we make in our WOW operating way, which are really more process-focused in nature.

Thanks. And one follow-up on the recent acquisitions. You know, it's great that things are tracking on target. Would you frame the multiple paid for collision works as setting a new Benchmark versus Assured and the other history?

No, it is within the range, but it's towards the higher end of that range.

Okay, thank you for your comments.

Thanks, Jonathan.

Thank you, Jonathan.

Your next question comes from Brett Jordan from Jefferies. Brett, please go ahead.

Hey, good morning, guys. Morning, Brett. Could you give us just a little bit more clarity, I guess, on you talked about variability in DRP pricing a couple of times and maybe the cadence of that variability. Is it just your costs are going up at a faster rate than they're passing through pricing and it will catch up, or is there anything else going on?

No. When we refer to the variability, it has to do more with performance-based agreements and pricing adjustments that can happen favorably or unfavorably on a quarter-to-quarter basis. as it relates to our agreements. And it's not, you know, these are not large, large adjustments typically, but they do have an impact.

Okay. And then I think you mentioned a couple times that we're still below pre-COVID volumes, but picking up. Could you give us a feeling for where we are on a comparable basis to the second quarter of 2019 from a cost standpoint?

What I've heard through CCC, and I've actually read it more in the analyst reports directly from CCC, was somewhere the volumes are down about 12 to 15% from 19 levels. Assignment volumes.

Okay, but I guess theoretically you would have gained share of that period. So could you talk, would you be in the same ballpark or would you be doing somewhat better than the market?

We don't disclose specifics on that and it's pretty difficult to measure because you know, we've grown an awful lot since 2019 as well. Mm-hmm.

Brett, if you look at our same-store sales decline, and again, this is a proxy, this is not perfect. In Q2, they were down by 33%, and we are reporting they're up by 34.5. So if you compound, it essentially tells me we are down around 10%. Obviously, you have Canada, you have other things, but that's a proxy, and then you can compare that to the CCC benchmark, so it might give you some hints.

Okay, great.

Thank you. Your next question comes from Maggie McDougall from Stiefel. Maggie, please go ahead.

Good morning.

Good morning, Maggie. Good morning, Maggie.

You made some comments around some initiatives you have to essentially increase operational efficiency or find some cost savings in the business. I'm wondering if you could provide us with a bit more detail in terms of the opportunities that you see and whether there's costs associated with that. Thanks.

Whether there's investment costs associated with that, Maggie?

Yeah, exactly.

Yeah. I think we're always working on refining our WOW operating way processes. We've talked a lot over the past year about what we're doing at a corporate level. but we continue to look at our operating practices in the field as well that would be designed to help us move cars through the process faster and more efficiently. So we continue to make investments there. Those are really largely built into our cost structure so they're not necessarily incremental. I would say if we had an opportunity that we thought would require a significant expense or a significant investment, we would probably speak to that separately.

Okay. Okay, thanks, gentlemen.

Thank you.

Your next question comes from Darrell Young from TD Securities. Darrell, please go ahead.

Good morning, guys. First question is just around the contribution from recent acquisitions. I noticed it looked significantly lower than maybe I would have expected. Is that a reflection of just more greenfield and brownfield locations opening during the period?

I think that's part of it, although that's not the lion's share. It's really, we're buying businesses that are still impacted by the pandemic. And it takes time to get our synergies, our relationships in place in the current environment. So it's really more related to that than it is to Greenfield-Brownfield.

Okay. And then just to longer-term question around some of the U.S. electric vehicle targets that have been proposed. Can you remind us what some of the considerations are in repairing electric vehicles? And I know there's obviously less engine work in your business, but just any considerations there we should keep in mind for future adoption.

Yeah, I think, you know, the vehicles, all newer vehicles are going to come with more technology. and that's true of electric vehicles probably as well as the general population, although electric may even have more than average. So I think you'll see more ADAS-type systems on these vehicles as it becomes a greater share of the market. There are fewer mechanical parts. That's not necessarily bad from a collision repair perspective. The panels that are typically repaired by us would continue to be damaged and be an opportunity. There are safety-related matters around electric vehicles. They're high-voltage vehicles, and in some cases may require some specialized equipment, and in many cases do require specialized training. So we would intend to use our hub-and-spoke network to create those capabilities, whether it's equipment or training or certifications in certain locations, and then route vehicles to those those locations as needed. That will change as it becomes a greater share of the market. But as it begins to evolve, I think we'll be well prepared to service that segment of the business.

Okay, great.

I'll hop back in the queue. Thanks, guys.

Thanks, Cheryl.

Your next question comes from Steve Hansen from Raymond James. Steve, please go ahead.

Yeah, good morning, guys. I just wanted to circle back on the John Harris CliftonWorks deals. and the effort and multiples that you've paid. Can you just give us an added context there? Do you think that's just reflective purely of the quality of those two franchises or is it more indicative of a more competitive M&A environment out there?

Well, certainly it's a competitive environment for M&A right now, but I think it's probably more related to the quality and what we believe we can do with those platforms once they were under our ownership. while they were both decent-sized businesses, we assessed it carefully and identified lots of fill-in market opportunities in and around these platforms that we can use our single shop and Greenfield-Brownfield strategy to grow those networks out. They both also came with high-quality leadership that was accustomed to and experienced in a growing business. So we think it added to our capabilities and there were both really good, high-quality platforms in areas that we intended to grow in as well with lots of room for further growth. So that was really how we came to the conclusion that it was a good investment for us.

Steve, we would characterize these as strategic growth platforms and the multiple way quality reflects that.

Okay, that's helpful. Maybe let me ask it in other ways. Do you see any multiple inflation in the smaller single and maybe double-type shop acquisitions out there at the moment?

The market right now, as we discussed before, there is ample supply. So we are able to acquire those things that are very attractive for valuations. And we consistently told we underwrite to 25% pre-tax ROAC basis, and we're able to get those valuations.

Okay, that's helpful. And just one last one, if I may, is on the emerging technician and people shortage issue. I guess re-emerging, it feels like that was a big issue prior to the pandemic as well. But how do you feel like your position relative to the industry? I'm just thinking back to your strategic decision last quarter or even into late December last year to restaff or repopulate many of your skeleton operations. it strikes me that that might have given you an advantage relative to some of the other parties that might have been more flat-footed on restaffing. Do you have a sense for how you're positioned relative to others out there and whether that could benefit you in the back half?

There's no real industry data on it. My sense is that most in the industry right now are feeling the same pressure that we are. So it's a very tight labor market and business has picked up over the past few months. So I I think it's probably, we're not in an unusual position. I do think that we've continued to make investments over the past few quarters to grow our technician development program. And while that, and we've talked a lot about this in the past, that's not an immediate fix. We've been doing that for a while now, and we do see graduates coming out of that program with greater frequency now. And we've expanded the program as well. I think this is not an easy thing to address, but it's our intent to invest in people to grow their skills and capabilities to solve the problem longer term and be competitive in the marketplace in the near term.

Okay, thank you for that. Appreciate it.

Your next question comes from Nauman Fadi from Laurentian Bank. Please go ahead.

Hi, good morning, everyone. Good morning, Nauman. Good morning. So my first question is, I remember in the last call, I think you mentioned that not all shops in Canada were open. So I'm just wondering if that has changed or are there still shops that are closed on the Canada front?

We still have some locations in Canada that are intake only at this time.

But in the near term, do you expect them opening up soon or is it going to stay that way?

No, I expect them to open up. improved business conditions.

Fair enough. And just on the cost side, I know you've mentioned about technician pressures and wage pressures, but I'm just wondering that last year you guys had taken out some costs. Were there any permanent cost reductions that can sort of offset these cost pressures or those costs are also coming back?

We've really brought a lot of the costs back in Q4 and in Q1. so that we were prepared for the increase in business. Where we have fallen short of where I would like to be is with the specific level shop staffing. So we did identify some permanent savings, but our focus has been on preparing ourselves for the recovery and the growth of our business. And I think that's the right place for us to be. We're seeing positive signs that we need the people to take advantage of.

Okay, thanks for that color. And maybe just the last one from my end. This is more like a big picture long-term question, I would say. You've mentioned the hub and scope framework where you could take in a car and then move to another location. I'm just wondering at what stage are you in that? Because you have close to 700 locations. Is that something which is widely available within your network or there's two states in which you're doing it and eventually you're going to roll it out to other states?

I'd say it's fairly widely available, but it is evolving. If you take aluminum, which we've had aluminum capabilities for six or seven years now, we would have the hub and spoke capability for structural aluminum repair broadly throughout our network. We would also, we have plenty of OE certifications. Most repairs today don't require an OE certification. It's more premium-based vehicles that may be routed to a specific shop. But I think that could evolve, and we're building our network to be well-prepared for that. One of the other benefits of the hub-and-spoke network is that when we have a location that has enough work or maybe even too much, we can pretty easily move work to adjacent locations to take advantage of available capacity. So it goes beyond just when it's required to properly repair a vehicle. And it allows us to better take advantage of our capacity, which really allows us to deliver better results for our insurance clients by reducing length of rental and increasing customer satisfaction.

Okay, that's it for me. Thank you for your time.

Thanks, Nolan.

Your next question comes from Chris Murray from ATB Financial. Chris, please go ahead.

Yeah, thanks, guys. Good morning.

Good morning.

Turning back to look at some of the larger acquisitions, and Pat, I think you mentioned earlier that part of this is looking at it on a return on capital basis. When you're looking at doing these larger acquisitions, and I appreciate you're talking about paying for higher multiples, and maybe that's just the brain damage of getting a larger transaction done as opposed to several small ones. But in order to meet your hurdle rate, are you looking at this from a perspective of just the baseline transaction? added more in the terms of everything that'll go with it over the next couple years in terms of, as you said, expanding the network or synergies or anything like that.

Yeah, we do look at the future, Chris. When we talk about the single shops, that is, I think, the growth is not that critical. But when we talk about these MSOs, we look at what that brings to the table. So these are the strategic acquisitions. We look at the quality of earnings, quality of the management, the growth opportunities it brings. brought in the relationships, stuff like that. So we do look at the future with these things.

So, I mean, is it fair to think that, you know, the effect of multiple, if we were to go back and look at the kind of on an EBITDA basis or whatever out further, the multiple actually will probably end up being kind of more in the range than it would be, you know, just at first blush or when you're talking about the higher level. Okay. So that higher level multiple you're talking about, it's just on the base transaction. It's not on the. Okay. Yeah. No, I just want to clarify. You know, and then just sort of thinking about, you know, average revenue per store and growth. I think, you know, somebody alluded to the fact that, you know, maybe the revenue growth wasn't as big as they thought, maybe around, you know, the store growth. You know, I guess two pieces of this question. One, how do we think about now that you've started to add additional intake centers? Should we just be starting to make sure that we're separating those out in terms of, you or how should we think about intake centers impacting revenue generation? Or is it just more still kind of a utilization play? And then the other piece of this question is, since you've started really adding intake centers, I guess maybe in December when we really started seeing it step up, how are you seeing the performance so far maybe over the past six to eight months?

Chris, I would clarify that the intake center strategy is intended to help us boost same-store sales, and it ties into our OE certifications. Intake centers are typically in an OE dealer location, so it gives us another point of contact with customers and more of a revenue channel to that brand. In the short term, the labor capacity constraints make that a little bit more challenging, but as we begin to solve the labor problem, I think it can be one of the strategies that we have in place to help us generate incremental same-store sales.

Okay. And so, but I guess the way to think about it is when we think about, you know, store or revenue growth on a store basis, don't be including the intake centers as a way to think about it?

Yeah, we don't count the revenue in the intake center. We count it in the production facility.

Okay. That's helpful. Thanks.

Thanks, Chris. Thanks, Chris.

Your next question comes from Zachary Evershed from National Bank Financial. Zachary, please go ahead. Good morning. Actually, Tom is calling in for that.

Most of my questions have been answered, and maybe one last one. Looking at the M&A pipeline, we've seen a nice little kick up in pace here over Q2 and now Q3. Do you think this space is sustainable and do you think there could even be a little uptake from the current pace?

No, we don't extrapolate the current pace. So we provide that guidance on a long-term basis and we are sticking to the guidance of doubling our revenues using 2019 as the base. And we'd like to double by 2025. And at any point in time, you may see absent flows because Acquisition comes in lumps. We don't want people to get too excited when we do more, as well as get dejected when there is a lull in the activity. Sounds good.

Thank you.

Thank you.

There are no further questions at this time. I'll turn it back to Mr. O'Day for closing remarks.

All right. Thank you, Operator. And thank you all for once again joining our call today. And we look forward to reporting our third quarter results in November. Thanks and have a great day.