EarningsCall · MDI Q2 2024

spk07: This conference has been recorded. Cette conférence est enregistrée. All participants, please stand by. Your conference is ready to begin. Good morning, ladies and gentlemen, and welcome to the second quarter 2024 results conference call. I would now like to turn the meeting over to Chantal Melançon. Please go ahead, Ms. Melançon.

spk00: Thank you, and good morning, everyone. As mentioned, we would like to welcome you to Major Drilling's conference call for the second quarter of fiscal 2024. On the call, we will have Denis Larocque, President and CEO, and Ian Ross, our Chief Financial Officer. Our results were released yesterday evening and can be found on our website at www.majordrilling.com. We also invite you to visit our website for further information. Before we get started, we'd like to caution you that during this conference call, we will be making forward-looking statements about future events or the future financial performance of the company. These statements are forward-looking in nature, and actual events or results may differ materially from those currently anticipated in such statements. I will now turn the presentation over to Denilera. Please go ahead.

spk04: Thank you, Chantal, and good morning, everyone, and thank you for joining us today. As you would have seen last night in our press release, we achieved the highest revenue in more than 10 years at a time when we feel we are still very early in the mining up cycles. The fact that the copper supply should fall well short of demand by 2025 is starting to get more and more recognition, and over the last two weeks, we have seen gold return to above the $2,000 mark, which is much higher than what is required for exploration at a time when the gold industry itself is facing depleting reserves. At Major, we continue to see the strength in our business as the increase in demand from copper and battery metals customers more than offset the slowdown in exploration from junior gold companies. During the quarter, we saw our combined revenue from copper and lithium increase by 40% compared to last year, now representing over 30% of our activity, while gold still represented approximately 40% of our revenue. In addition, growth from our South American operations outweighed the decline in North American revenue, showcasing the effectiveness of our global diversification strategy. The strong EBITDA generation, combined with our now completely debt-free position, allows us to continue to create long-term value for our shareholders as we repurchase over 875,000 shares this quarter at an average price of $8.31 a share. Despite executing on the share buyback and an aggressive capital expenditure program to get ready for the future, we still ended the quarter with a net cash position of over $84 million, an increase of $23.4 million during the quarter. With that, Ian will walk us through the quarter's financials, and I'd like to discuss the market outlook further before opening the call for questions.

spk02: Ian? Thanks, Denis. Revenue for the quarter was $207 million, up 3% from revenue of $201.7 million recorded in the same quarter last year. Activity levels remained elevated as mining companies continued exploration and resource definition programs to address depleting reserves and the need for battery metals. The favorable foreign exchange translation impact on revenue and net earnings for the quarter, when comparing to the effective rates for the same period last year, was approximately $3 million and $1 million respectively. The overall gross margin percentage, excluding depreciation, was 31% for the quarter, compared to 31.8% for the same period last year. Margins held relatively steady year over year, as inflationary headwinds have been mainly offset by modest price improvements in some markets. G&A costs were $17.6 million, an increase of $1.5 million compared to the same quarter last year. The increase was driven by annual inflationary wage adjustments, implemented at the start of the new fiscal year, along with high travel costs associated with increased activity levels. Foreign exchange loss was $900,000 compared to a loss of $1.1 million for the same quarter last year. While the company's reporting currency is the Canadian dollar, various jurisdictions have net monetary assets or liabilities exposed to various other currencies. Other expenses were $3.2 million, down from $4.7 million in the prior year quarter, primarily due to a decrease in the annual allowance for doubtful accounts as compared to the prior year quarter. The income tax provision for the quarter was $7.4 million compared to $7.5 million for the prior year period. The tax provision was flat compared to the prior year as profit levels were consistent year over year. EBITDA was $43.6 million compared to $43 million in the prior year quarter. The operational leverage in our business model continues to deliver excellent financial results and strong cash generation. With the robust cash levels and challenging capital markets negatively impacting company valuations across the mining sector, we took the opportunity to allocate capital to our share buyback efforts. In total, we spent $7.3 million in the quarter, acquiring and cancelling over 875,000 shares at a weighted average price of $8.31 per share. The company continues to view investment in the normal course issuer bid program as an effective method to deliver shareholder value while maintaining a financially prudent capital structure. We also remain committed to reinvesting in the business by spending $17.4 million on capital expenditures, adding six new drill rigs and support equipment while disposing of five older, less efficient rigs, bringing the total rig count to 602. Despite significant capital allocated to buybacks and capital spending, the company still managed to grow its net cash position by $23.4 million, ending the quarter with $84.2 million, leaving the company extremely well positioned moving into calendar 2024. The new breakdown of our fleet and utilization is as follows. 285 specialized drills at 46% utilization, 119 conventional drills at 48% utilization, and 198 underground drills at 49% utilization for a total of 602 drills at 48% utilization. As we've mentioned before, specialized work in our definition is not necessarily conducted with a specialized drill. Rather, it is work that requires we meet the rigorous standards of our customers in terms of technical capabilities, operational and safety standards, and other related factors. These standards are becoming increasingly important to our customers. In the second quarter, revenue from specialized work accounted for 65% of our total revenue, as we continue to see increased demand for our specialized services. Conventional drilling, which is mostly driven by juniors, made up 11% of our revenue for the quarter, while underground drilling revenue remained consistent at 24% of total revenue. We continue to see the bulk of our revenue driven from seniors and intermediates, representing 79% this quarter, as they continue to address depleting reserves and increase their exploration efforts for battery metals. With the continued challenges accessing capital, revenue derived from juniors was down slightly from last quarter at 21%. The recent run-up in gold prices could help this customer base access funds needed to ramp up their drilling programs. In terms of commodities, following on trends seen in previous quarters, there has been a shift to battery metals, with copper and lithium now accounting for approximately 30% of our revenue. Gold, which historically represents 50% of our revenue, was approximately 40% this quarter, while iron ore contributed 10% of our revenue. With that overview on our financial results, I'll now turn the presentation back to Denis to discuss the outlook. Thanks, Ian.

spk04: Looking at calendar 2024, customer demand is expected to remain strong as the growing supply shortfall in most mineral commodities should continue to drive demand for our services for several years. The growing global demand for electrification will only increase the need for metals like copper, nickel, and lithium. The enormous volume of copper, battery metals, and likely uranium required will further increase pressure on the existing supply-demand dynamics. We expect all of this to drive substantial additional investment in copper and other base metal exploration projects as we help our customers discover the metals that will allow the world to accelerate its efforts towards decarbonization. As well, with gold prices recently reaching record highs, this could have a positive impact on funding for junior mining companies. In the short term, it's important to note that we are now in our third quarter, traditionally the weakest quarter of our fiscal year, as mining and exploration companies pause their drilling program often for extended periods over the holiday season. While compensations remain encouraging heading into calendar 2024, we have started to see several projects shutting down earlier than the previous year. It's important to note that we feel we are still very early in the mining upcycle and also how major drilling is positioned for that upcycle. The last exploration upcycle we saw in the mining sector followed a six-year downturn and that upcycle lasted 10 years from 2003 to 2012 at which point reserves of both gold and base metals were fairly replenished. At that point we saw a drop in commodity prices and a big drop in exploration spending that lasted for eight years while at the same time mining companies continued to produce at high levels, therefore depleting their reserves given that they were not carrying on the exploration efforts to replenish those reserves. Then in 2021, we saw the start of the next up cycle with the same picture we saw in 2003, with mining companies facing a supply shortage and needing to ramp up their exploration efforts to catch up. At this point, we are still in the discovery phase, therefore still early in the mining cycle. For mining companies to bring those projects into production, they need to then go through an intense phase of infill drilling while they develop those mines, which is what we saw the last time, which led us to peak levels. Major drilling is extremely well positioned at this point of the cycle to benefit from that potential upturn. We are the leader in specialized drilling, being the go-to drilling company for many mining companies with technically challenging programs, whether it's remote, deep, high altitude, arctic, or directional. As well, our strong financial position has allowed us to invest in our fleet and training, which allows us to have the resources ready to mobilize on some of the most demanding projects out there and maintain our position as both the operator and employer of choice in our industry. With these fundamentals still firmly in place, the long-term outlook for our company remains extremely positive. Major drilling remains in a unique position to react to and benefit from these market dynamics. As well, the company continues to view investment in the share buyback program as an effective method to deliver shareholder value while maintaining a financially prudent capital structure to be able to take advantage of opportunities that might arise. With that, we can open the call to questions. Maud?

spk07: Thank you. We will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please lift your handset before making your selection. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a brief pause while participants register for questions. We thank you for your patience. Our first question is from Gordon Lawson from Paradigm Capital. Please go ahead.

spk12: Hey, good morning and congratulations on a great quarter. There's been a lot of gold financings over the past few months, so I'm wondering if you're seeing higher demand going into 2024 from that sector as well as silver.

spk04: Well, at this point, mining companies are preparing their budgets for next year, so we are having lots of conversations. It's still... hard to predict how high the level of that exploration will be because it's still very early in that budget process. We go through that every year, but to your point, yes, there is a lot of positives out there, especially with gold, that price that has crossed the $2,000 mark. That certainly, hopefully, is going to help those discussions, those budget discussions, and push expiration high over the next year.

spk12: Okay, thank you. And your Forex loss, as you mentioned, it has improved from last quarter and last year. So I'm wondering if you could elaborate on your local investment strategy, particularly with the Argentine peso, but also elsewhere.

spk13: Yeah, I mean, we have...

spk02: Yeah, we've got kind of hedging mechanisms in place within Argentina to kind of minimize the exposure. That is certainly a challenging jurisdiction. The rest of the effects is kind of made up of small amounts in various countries. But we've certainly, Argentina would be the biggest challenge these days. And with the recent election, you know, there's lots of uncertainty down there with that. But we try and mitigate the exposure as much as possible.

spk12: Okay, okay, sounds simple enough. Thank you very much.

spk07: Thank you. Once again, please press star 1 at this time for any questions or comments. Our following question is from Hamad Shah from Beacon Securities. Please go ahead.

spk11: Hey, guys. Maybe a first comment on the gross margin and the margins in general. You guys mentioned operating leverage, but we typically expect better improvement in margin compared to revenue, but the trend here today has been somewhat the opposite. Am I reading too much into that? I understand the order of magnitude is small in terms of the deterioration margin, but Can you give us any colors that someone else in there, or are you seeing some price pushbacks in the marketplace?

spk04: Well, at this point, I mean, you see our revenue is just slightly up versus last year, so we've kind of, there's been quite a growth in margin over the last couple of years, and that was fueled by a lot of growth in activity. Now we basically have reached kind of a point at this point where things are, the pricing pressures have come down. And so there is more of what I'd call regular, more into regular pricing at this point. But again, with the junior gold coming in, should we see junior gold coming in and adding a layer of activity, then that would certainly create a lot more tightness in the sector for sure.

spk11: Okay, that's that's great. I appreciate it. I think that's that's all I had Congrats on a solid quarter Thank you.

spk07: Thank you. Once again, please press star 1 at this time if you have a question Our next question is from Steven green from TD securities, please go ahead Good morning guys

spk05: Just a question on the revenue mix by commodity. You mentioned the shift to battery metals, lithium and copper. Does that impact at all the type of rigs you're using on these jobs and the overall gross margins of those jobs versus the prior mix?

spk04: No. Typically, we're pretty much agnostic to the commodity. I always say we drill a hole to pull the rock out of the ground so what's in it really doesn't matter to the process for the most part and it's more where the demand is, who wants the drill and where the demand is coming from. The only difference sometimes that we see is with iron ore where the rock is a lot harder and requires a bit more a bit of a different consumables. But other than that, no, it's pretty much the same.

spk05: Okay, great. And just on your comments on the holiday season, some of the shutdowns coming a little bit earlier than expected or than last year, can you just give a little more color around that, you know, what you're seeing there?

spk04: Yeah. Yeah. I mean, every year at this time, we start to see projects shutting down for the holidays and restart in January. But last year, we had a few projects that got extended longer than usual and some going right to Christmas. But this year, we're seeing the more typical shutdown beginning end of November, beginning of January. December, but this does not impact our views of calendar 2024. It's just the typical Q3 shutdown that happens every year. Okay, that's helpful. Okay, thanks a lot.

spk05: Thank you.

spk07: Thank you. The following question is from Hamad Shah from Beacon Securities. Please go ahead.

spk11: Just a follow-up, I guess, on capital allocation strategy, given the strong balance sheet and the strong free cash flow generation you guys have. And in light of what you've seen in the market, maybe it's a little bit too early, but any changes to your CapEx growth, given what's going on in the junior space, or is it too early to make any conclusions based on that? And give away the share prices, I imagine we should expect it to continue to be as active on the NCID, if not even more.

spk04: On the CapEx growth, we basically, when we started the year, we had a CapEx budget of $80 million. And at this point, we're a little bit behind, but really it's more related to deliveries than sales. than anything else. We have put orders in there and if you remember when we set our CapEx budget at $80 million, it was because we had a view way back in April that 2024 was shaping up to be a busy year. We were already having conversations and people talking about doing more in 2024. That's why we kind of raised their CapEx budget and went in and put orders in. And so at this point, there's been some delays, but those delays are for rigs that are on spec and that we expect to basically put to work in the next fiscal year.

spk09: And I guess on the INCID, I guess I'll lay it in there. Oh, sorry.

spk04: Yes. Yeah, no, we continue to execute on that. We trade at a multiple that is at pretty much the lowest multiple we've ever traded at, so we feel that executing on the share buyback at this point is... is a good use of our cash. So, yes, we are continuing to push on that.

spk10: That's great. Thanks a lot, Denis. I'll jump back in the queue.

spk07: Thank you. Thank you. Once again, please press star 1 at this time if you have a question. And so we have no further questions registered at this time. I would now like to turn the meeting back over to you, Mr. Larocque.

spk04: Well, thank you, and thank you for listening today. I want to wish you the best for the holiday season, including to our employees. Rest up for what could be another busy year. Thank you.

spk07: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation. Yeah. Thank you. Thank you. Good morning, ladies and gentlemen, and welcome to the second quarter 2024 results conference call. I would now like to turn the meeting over to Chantal Melancon. Please go ahead, Ms. Melancon.

spk00: Thank you, and good morning, everyone. As mentioned, we would like to welcome you to Major Drilling's conference call for the second quarter of fiscal 2024. On the call, we will have Danila Ruck, President and CEO, and Ian Ross, our Chief Financial Officer. Our results were released yesterday evening and can be found on our website at www.majordrilling.com. We also invite you to visit our website for further information. Before we get started, we'd like to caution you that during this conference call, we will be making forward-looking statements about future events or the future financial performance of the company. These statements are forward-looking in nature, and actual events or results may differ materially from those currently anticipated in such statements. I will now turn the presentation over to Deniletta. Please go ahead.

spk04: Thank you, Chantal, and good morning, everyone, and thank you for joining us today. As you would have seen last night in our press release, we achieved the highest revenue in more than 10 years at a time when we feel we are still very early in the mining up cycles. The fact that the copper supply should fall well short of demand by 2025 is starting to get more and more recognition, and over the last two weeks, we have seen gold return to above the $2,000 mark, which is much higher than what is required for exploration at a time when the gold industry itself is facing depleting reserves. At Major, we continue to see the strength in our business as the increase in demand from copper and battery metals customers more than offset the slowdown in exploration from junior gold companies. During the quarter, we saw our combined revenue from copper and lithium increase by 40% compared to last year, now representing over 30% of our activity, while gold still represented approximately 40% of our revenues. In addition, growth from our South American operations outweighed the decline in North American revenue, showcasing the effectiveness of our global diversification strategy. The strong EBITDA generation, combined with our now completely debt-free position, allows us to continue to create long-term value for our shareholders as we repurchase over 875,000 shares this quarter at an average price of $8.31 a share. Despite executing on the share buyback and an aggressive capital expenditure program to get ready for the future, we still ended the quarter with a net cash position of over $84 million, an increase of $23.4 million during the quarter. With that, Ian will walk us through the quarter's financials, and I'd like to discuss the market outlook further before opening the call for questions.

spk02: Ian? Thanks, Denis. Revenue for the quarter was $207 million, up 3% from revenue of $201.7 million recorded in the same quarter last year. Activity levels remained elevated as mining companies continued exploration and resource definition programs to address depleting reserves and the need for battery metals. The favorable foreign exchange translation impact on revenue and net earnings for the quarter, when comparing to the effective rates for the same period last year, was approximately $3 million and $1 million respectively. The overall gross margin percentage, excluding depreciation, was 31% for the quarter, compared to 31.8% for the same period last year. Margins held relatively steady year over year, as inflationary headwinds have been mainly offset by modest price improvements in some markets. G&A costs were $17.6 million, an increase of $1.5 million compared to the same quarter last year. The increase was driven by annual inflationary wage adjustments, implemented at the start of the new fiscal year, along with high travel costs associated with increased activity levels. Foreign exchange loss was $900,000 compared to a loss of $1.1 million for the same quarter last year. While the company's reporting currency is the Canadian dollar, various jurisdictions have net monetary assets or liabilities exposed to various other currencies. Other expenses were $3.2 million, down from $4.7 million in the prior year quarter, primarily due to a decrease in the annual allowance for doubtful accounts as compared to the prior year quarter. The income tax provision for the quarter was $7.4 million compared to $7.5 million for the prior year period. The tax provision was flat compared to the prior year as profit levels were consistent year over year. EBITDA was $43.6 million compared to $43 million in the prior year quarter. The operational leverage in our business model continues to deliver excellent financial results and strong cash generation. With the robust cash levels and challenging capital markets negatively impacting company valuations across the mining sector, we took the opportunity to allocate capital to our share buyback efforts. In total, we spent $7.3 million in the quarter, acquiring and cancelling over 875,000 shares at a weighted average price of $8.31 per share. The company continues to view investment in the normal course issuer bid program as an effective method to deliver shareholder value while maintaining a financially proven capital structure. We also remain committed to reinvesting in the business by spending $17.4 million on capital expenditures, adding six new drill rigs and support equipment while disposing of five older, less efficient rigs, bringing the total rig count to 602. Despite significant capital allocated to buybacks and capital spending, the company still managed to grow its net cash position by $23.4 million, ending the quarter with $84.2 million, leaving the company extremely well positioned moving into calendar 2024. The new breakdown of our fleet and utilization is as follows. 285 specialized drills at 46% utilization, 119 conventional drills at 48% utilization, and 198 underground drills at 49% utilization for a total of 602 drills at 48% utilization. As we've mentioned before, specialized work in our definition is not necessarily conducted with a specialized drill. Rather, it is work that requires we meet the rigorous standards of our customers in terms of technical capabilities, operational and safety standards, and other related factors. These standards are becoming increasingly important to our customers. In the second quarter, revenue from specialized work accounted for 65% of our total revenue, as we continue to see increased demand for our specialized services. Conventional drilling, which is mostly driven by juniors, made up 11% of our revenue for the quarter, while underground drilling revenue remained consistent at 24% of total revenue. We continue to see the bulk of our revenue driven from seniors and intermediates, representing 79% this quarter, as they continue to address depleting reserves and increase their exploration efforts for battery metals. With the continued challenges accessing capital, revenue derived from juniors was down slightly from last quarter at 21%. The recent run-up in gold prices could help this customer base access funds needed to ramp up their drilling programs. In terms of commodities, following on trends seen in previous quarters, there has been a shift to battery metals, with copper and lithium now accounting for approximately 30% of our revenue. Gold, which historically represents 50% of our revenue, was approximately 40% this quarter, while iron ore contributed 10% of our revenue. With that overview on our financial results, I'll now turn the presentation back to Denis to discuss the outlook. Thanks, Ian.

spk04: Looking at calendar 2024, customer demand is expected to remain strong as the growing supply shortfall in most mineral commodities should continue to drive demand for our services for several years. The growing global demand for electrification will only increase the need for metals like copper, nickel, and lithium. The enormous volume of copper, battery metals, and likely uranium required will further increase pressure on the existing supply-demand dynamics. We expect all of this to drive substantial additional investment in copper and other base metal exploration projects as we help our customers discover the metals that will allow the world to accelerate its efforts towards decarbonization. As well, with gold prices recently reaching record highs, this could have a positive impact on funding for junior mining companies. In the short term, it's important to note that we are now in our third quarter, traditionally the weakest quarter of our fiscal year, as mining and exploration companies pause their drilling program often for extended periods over the holiday season. While compensations remain encouraging heading into calendar 2024, we have started to see several projects shutting down earlier than the previous year. It's important to note that we feel we are still very early in the mining upcycle and also how major drilling is positioned for that upcycle. The last exploration upcycle we saw in the mining sector followed a six-year downturn and that upcycle lasted 10 years from 2003 to 2012 at which point reserves of both gold and base metals were fairly replenished. At that point we saw a drop in commodity prices and a big drop in exploration spending that lasted for eight years while at the same time mining companies continued to produce at high levels, therefore depleting their reserves given that they were not carrying on the exploration efforts to replenish those reserves. Then in 2021, we saw the start of the next up cycle with the same picture we saw in 2003, with mining companies facing a supply shortage and needing to ramp up their exploration efforts to catch up. At this point, we are still in the discovery phase, therefore still early in the mining cycle. For mining companies to bring those projects into production, they need to then go through an intense phase of infill drilling while they develop those mines, which is what we saw the last time, which led us to peak levels. Major drilling is extremely well positioned at this point of the cycle to benefit from that potential upturn. We are the leader in specialized drilling, being the go-to drilling company for many mining companies with technically challenging programs, whether it's remote, deep, high altitude, arctic, or directional. As well, our strong financial position has allowed us to invest in our fleet and training, which allows us to have the resources ready to mobilize on some of the most demanding projects out there and maintain our position as both the operator and employer of choice in our industry. With these fundamentals still firmly in place, the long-term outlook for our company remains extremely positive. Major Drilling remains in a unique position to react to and benefit from these market dynamics. As well, the company continues to view investment in the share buyback program as an effective method to deliver shareholder value while maintaining a financially prudent capital structure to be able to take advantage of opportunities that might arise. With that, we can open the call to questions. Maud?

spk07: Thank you. We will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please lift your handset before making your selection. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a brief pause while participants register for questions. We thank you for your patience. Our first question is from Gordon Lawson from Paradigm Capital. Please go ahead.

spk12: Hey, good morning and congratulations on a great quarter. There's been a lot of gold financings over the past few months, so I'm wondering if you're seeing higher demand going into 2024 from that sector as well as silver.

spk04: Well, at this point, mining companies are preparing their budgets for next year, so we are having lots of conversations. It's still... hard to predict how high the level of that exploration will be because it's still very early in that budget process. We go through that every year, but to your point, yes, there is a lot of positives out there, especially with gold, that price that has crossed the $2,000 mark. That certainly, hopefully, is going to help those discussions, those budget discussions, and push expiration high for next year.

spk12: Okay, thank you. And your Forex loss, as you mentioned, it has improved from last quarter and last year. So I'm wondering if you could elaborate on your local investment strategy, particularly with the Argentine peso, but also elsewhere.

spk13: Yeah, I mean, we have...

spk02: Yeah, we've got kind of hedging mechanisms in place within Argentina to kind of minimize the exposure. That is certainly a challenging jurisdiction. The rest of the effects, it's kind of made up of small amounts in various countries. But we've certainly, Argentina would be the biggest challenge these days. And with the recent election, you know, there's lots of uncertainty down there with that. But we try and mitigate the exposure as much as possible.

spk12: Okay, okay, sounds simple enough. Thank you very much.

spk07: Thank you. Once again, please press star 1 at this time for any questions or comments. Our following question is from Hamad Shah from Beacon Securities. Please go ahead.

spk11: Hey, guys. Maybe a first comment on the gross margin and the margins in general. You guys mentioned operating leverage. We typically expect better improvement in margin compared to revenue, but the trend year-to-date has been somewhat the opposite. Am I reading too much into that? I understand the order of magnitude is small in terms of the deterioration margin, but Can you give us any colors, some one-offs in there, or are you seeing some price pushbacks in the marketplace?

spk04: Well, at this point, I mean, you see our revenue is just slightly up versus last year, so we've kind of, there's been quite a growth in margin over the last couple of years, and that was fueled by a lot of growth in activity. Now we basically have reached kind of a point at this point where things are, the pricing pressures have come down. And so there is more of what I'd call regular, more into regular pricing at this point. But again, with the junior gold coming in, should we see junior gold coming in and adding a layer of activity, then that would certainly create a lot more tightness in the sector for sure.

spk11: Okay, that's great. I appreciate it. I think that's all I had. Congrats on a solid quarter. Thank you.

spk07: Thank you. Once again, please press star 1 at this time if you have a question. Our next question is from Stephen Green from TD Securities. Please go ahead.

spk05: Good morning, guys. Just a question on the revenue mix by commodity. You mentioned the shift to battery metals, lithium and copper. Does that impact at all the type of rigs you're using on these jobs and the overall gross margins of those jobs versus the prior mix?

spk04: No. Typically, we're pretty much agnostic to the commodity. We drill a hole to pull the rock out of the ground so what's in it really doesn't matter to the process for the most part and it's more where the demand is, who wants the drill and where the demand is coming from. The only difference sometimes that we see is with iron ore where the rock is a lot harder and requires a bit more a bit of a different consumables. But other than that, no, it's pretty much the same.

spk05: Okay, great. And just on your comments on the holiday season, some of the shutdowns coming a little bit earlier than expected or than last year, can you just give a little more color around that, you know, what you're seeing there?

spk04: Yeah. Yeah. I mean, every year at this time, we start to see projects shutting down for the holidays and restart in January. But last year, we had a few projects that got extended longer than usual and some going right to Christmas. But this year, we're seeing the more typical shutdown beginning end of November, beginning of January. December, but this does not impact our views of calendar 2024. It's just the typical Q3 shutdown that happens every year. Okay, that's helpful.

spk05: Okay, thanks a lot. Thank you.