Finning International Inc. (FTT) Q2 2026 Earnings Call Transcript

thank you for standing by this is the conference operator welcome to defending international inc second quarter 2026 investor call and webcast as a reminder all participants are in listen-only mode and the conference is being recorded after the presentation there will be an opportunity to ask questions analysts who wish to join the question queue may press star then one on the telephone keypad should you need assistance during the conference call you may reach an operator by pressing star than zero. I would now like to turn the conference over to David Primrose, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Finning's second quarter earnings call. Joining me on today's call is Kevin Parks, our President and CEO. Following our remarks, we will open the line to questions. This call is being webcast on the Investor Relations section of Finning.com. We have also provided a set of slides on our website that we will reference and an audio file of this call and the accompanying slides will be archived. Before I turn it over to Kevin, I want to remind everyone that some of the statements provided during this call are forward-looking. Please refer to Slides 9 and 10 for important disclosures about forward-looking information as well as currency and specified financial measures, including non-GAAP financial measures. Please note that forward-looking information is subject to risks, uncertainties, and other factors as discussed in our Annual Information Forum under Key Business Risks and in our MD&A under Risk Factors and Management and Forward-Looking Information Disclaimer. Please treat this information with caution, as our actual results could differ materially from current expectations. In addition, unless otherwise noted, this presentation reflects the results of continuing operations only. Kevin, over to you.

Thank you, Dave, and good morning, everyone. Thank you for joining us, and thank you to our teams, our customers, and Caterpillar for your hard work, trust, and partnership. Strong strategic execution delivered record quarterly EPS of $1.22, up 21% year-over-year. Revenues exceeded $3 billion for the first time, and product support grew year-on-year for the ninth consecutive quarter, growing 11%. And even with record new equipment deliveries, which were up 34%, backlog remains strong at $3.8 billion, driven by strategically significant mining orders in Chile and gas compression orders in Canada. Quoting activity and fleet enhancement discussions are increasing in Chile and Argentina. Oil sands production, pipeline activity, and infrastructure building Canada are gaining momentum.

And market share gains across all regions give us confidence in future backlog growth.

Most importantly, the machine and engine population continues to grow across our territories. That installed base is the engine for future product support growth and the clearest line of sight to long-term value creation. As in prior quarters, my prepared remarks will focus on the long-term earning potential we are building. Dave will then cover off quarterly results in more detail. Please turn to slide two. Our performance across our three strategic pillars of our strategy is fundamentally increasing our EPS potential. Product support revenue reached $6.2 billion on a last 12-month basis. In the quarter, product support was up 11% year-over-year, led by 19% growth in Canada. Canadian product support is growing across every sector, supported by larger mining population, rebuild activity, and increased contracted labour penetration. Indeed, customer value agreements with labour grew by 70% in the quarter, enabled by a deliberate strategic investment in capacity, including a 20% increase in technicians year over year. Our rental businesses are also gaining momentum in each region, with revenue up 19% led by Canada. Strategic fleet investments are allowing us to capture improving end market demand while growing with new customers and growing our population. At the same time, our cost and capital discipline continue to anchor our resilient operating model. We are invested in building capacity and capability to create long-term growth, while maintaining strong operational leverage. SG&A's percentage of revenue was 14.5% on a last 12-month basis, down by 120 basis points from 12 months of Q2 2025. Investing capital turns increased to 2.35 times, and these are not just efficiency metrics. They are proof points that our operating model is more resilient, more scalable and more capable of compounding earnings. Before I hand back to Dave, I want to talk about a long-term opportunity for power for data centres in Western Canada, so specifically Alberta. We are working with operators, power producers and government on primary bridging and backup solutions. This is a generational power opportunity for Canada, Alberta, and Finney. And it fits directly with our core strategy of building an in-store base in our operating territories and supporting it over its lifecycle by converting that population into long-term product support growth. I also want to say that this is not new territory for us. Our UK and Ireland dealership has been supporting the build, maintenance, and operation of data centers for more than a decade, developing a trusted capability and deep application experience. That capability is showing up in the numbers. Empowering Energy and new equipment sales in our UK and Ireland business are up 38% year-to-date, supported by a healthy product backlog. Turning to Canada, while we are encouraged about the generational opportunity for data center builds in Western Canada, our incumbent power and energy business is also building momentum ahead of any data center contribution. Sales are up 63% year-to-date, and our backlog is up more than 100% compared to Q2 2025. This is primarily driven by gas compression as the oil and gas outlook improves following significant business development announcements in the quarter. It is clear, Power is becoming a larger strategic platform for Finin, and it strengthens the same installed base and product support firewheel that underpins our long-term earning potential and growth. To close, Quarter 2 demonstrates the power of the strategy. We are growing the installed base, we are converting that growth into product support, and we are maintaining discipline, cost, and capital execution. And we are building a more resilient operating model, and the combination is the foundations of our earnings growth potential and the reason why we remain highly optimistic about Finning's long-term future. With that, I'll hand the call back to Dave.

Thank you, Kevin. I'll now turn to slide three. Our Q2 revenue of $3.1 billion was up 20% compared to Q2 2025, primarily driven by strong new equipment deliveries across all regions and continued product support growth, particularly in Canada. Exceeding $3 billion in quarterly revenue for the first time in our history helped to drive record EPS and reflects continued execution momentum. We are pleased with our growth across our diversified end markets. New equipment deliveries accelerated in all regions, increasing our installed population and creating a base for future product support opportunities. Product support revenue also continued to grow, supported by robust mining activity and an improving construction sector. EBIT was $249 million, up 16% compared to Q2-25 adjusted EBIT. An EPS of $1.22 was up 21% compared to Q2-25 adjusted EPS of $1.01. Long-term incentive plan expense was $21 million this quarter, or approximately $0.13 per share of EPS impact, driven by continued strong share price appreciation. This compares to LTIP expense of $25 million, or approximately $0.13 per share of BPS impact in Q2-25. Our balance sheet and capital efficiency remain strong. Free cash flow was a positive $15 million, with increased collections from higher revenues, largely offsetting investments in working capital to support growth. Net debt to adjusted EBITDA was 1.6 times at the end of June. Invested capital turns were 2.35 times. An adjusted return on invested capital from continuing operations was 19%, all within our target ranges. On slide four, we show changes in our revenue by line of business compared to Q225 and the composition of our equipment backlog by market sector. New equipment sales were up 34%, driven by increased mining deliveries in Canada and South America, as well as construction deliveries in all regions. Used equipment sales were up 18%, primarily driven by increased activity in the Canadian construction business. Rental revenue was up 19%, reflecting improving construction and power and energy activity across all regions. Product support revenue was up 11%, primarily driven by strong activity in Canada, where product support was up 19%, led by mining. Despite the record level of new equipment sales in the quarter, equipment backlog remained at record levels of $3.8 billion at June 30, 26, in line with March 31, 26, and up 26% from June last year, and up 22% from December 2025. 5. Order intake continued to outpace deliveries in the quarter. Power and energy benefited from oil and gas activity in Canada, while mining was supported by strong activity in South America. Backlog remains well diversified by market sector, with approximately half in mining, about one-third in power and energy, and the remainder in construction. Backlog strength continues to provide confidence in future product support opportunities. Turning to our EBIT performance on slide 5. Gross profit margin was 21.3%, down 240 basis points compared to Q2 25, reflecting lower product support margins on strong volume growth and a higher proportion of new equipment revenue in the sales mix. SG&A margin was 13.3%, down 220 basis points from Q2.25. This demonstrates continued cost discipline through the growth cycle and also reflects a higher mix of new equipment sales. EBIT margin was 8%, down 30 basis points from Q2.25 adjusted EBIT margin, reflecting lower product support margins and higher new equipment revenue mix. Importantly, EBIT dollars increased 16% year over year. Q2 EBIT margin was 9.7% in South America, 8.3% in Canada, and 6.2% in the UK and Ireland. Looking ahead, we will continue to seek opportunities to reduce costs, improve efficiency, enhance operating leverage, and strengthen resilience to drive higher earnings capacity. Moving to our South America results and outlook, which are summarized on slide 6. In functional currency, new equipment sales were up 35% from Q225 due to higher construction and mining deliveries in Chile. Product support revenue was up 3% driven by higher mining activity in Chile, and also increased revenue in all sectors in Argentina. EBIT margin of 9.7 percent was down 40 basis points from Q225 adjusted EBIT margin, primarily driven by the higher proportion of equipment revenue in the mix and also lower product support margin, partially offset by lower SG&A margin. Adjusted return on invested capital of 23.5% was down 240 basis points, impacted by working capital investments supporting growth and the resulting increase in average invested capital. In Chile, our longer-term outlook remains positive, underpinned by growing global demand for copper, strong copper prices, capital deployment into large-scale brownfield expansions under supportive government priorities and customer confidence to invest in greenfield projects. We are continuing to see a broad-based level of quoting, tender and award activity for mining equipment, product support, and technology solutions. Some of these awards hit our order backlog in Q2, while others are expected to be finalized in Q3 and beyond. In the near term, we continue to expect some moderation and product support activity levels and a more stabilized labor environment through 2028. In the Chilean construction sector, we continue to see a healthy demand from large contractors supporting mining operations, and we expect infrastructure construction activity to remain steady. In power and energy, activity remains strong in the industrial and the data center markets. In Argentina, the outlook is increasingly positive and quoting activity remains high. We are diligently monitoring what is a dynamic operating environment to ensure we are best positioned to capture opportunities, particularly in oil and gas and mining, as they arise. Turning to Canada on slide 7. New equipment sales were up 33% from Q225, with strong sales across all market sectors, led by mining and continued market share gains in construction. Used equipment sales were up 25%, reflecting increased activity in the construction sector in line with overall market activity. Rental revenue was up 22%, driven by improving construction and power and energy activity. Product support revenue was up 19%, reflecting strong demand across all sectors, and particularly in mining. EBIT margin of 8.3% was down 110 basis points, driven by lower product support margin and increased equipment sales mix, partially offset by improved SG&A margin. Return on invested capital from continuing operations was 18%, up 170 basis points, driven by higher profitability and improved capital efficiency over the last 12 months. Our outlook for Western Canada remains positive. Mining activity continues to strengthen, with customers actively looking to increase production and fleet capacity through both performance and investment. In power and energy, oil and gas activity remains strong and backlog is increasing. Data center sentiment continues to grow, supported by recent announcements, although the timing remains uncertain pending project approvals. Construction sector activity continues to improve with customer demand increasing ahead of anticipated major project confirmations. We expect this to have a positive impact on new, used, and rental revenue while remaining cautious with respect to the exact timing and magnitude of future projects. Our focus remains on building resilience by managing costs and invested capital levels while driving productivity improvements through the growth cycle. Please turn to slide 8 for our results in the UK and Ireland. In functional currency, new equipment sales were up 34% from Q2 25, driven by delivery of delayed sales from Q1 as mentioned last quarter. Product support revenue was down 2% due to lower activity in both construction and power. we expect the product support business to remain stable in the short and midterm. EBIT margin of 6.2% was up 100 basis points, driven by robust SG&A control on higher revenues. Adjusted return on invested capital of 21.6% was up 320 basis points year-over-year, reflecting the higher profitability achieved during the quarter and optimization of the pension assets. In terms of outlook, market sentiment and construction is improving, but we continue to expect demand to remain soft in line with low projected GDP growth. We continue to expect a growing contribution from power and energy as we execute our strategy. Quoting activity remains strong, driven by healthy demand for both primary and backup power generation solutions. I'll now turn it back to Kevin for some closing remarks.

Thank you, Dave. Before I close, I wanted to talk about the leadership transition in South America and recognize my colleague, Juan Pablo Omar, who will be retiring later this year. For more than 30 years, Juan Pablo has made an enormous contribution to our business. His loyalty, flexibility, and commitment to our company, customers, and employers has been inspiring. Under his leadership, our South American business has more than doubled by many metrics. And importantly, he has positioned our business for the next phase of growth. He has led critical investments in our team, facilities, and capabilities to ensure our business is ready to support our customers as they embark on their growth plans. I feel lucky to have had his support for the past four years and wish him well in his retirement. He will continue to support me and the new team led by Sebastian Reich to ensure we have an effective and energized transition. To close, we are pleased with the continued execution of our strategy and the results we are generating. We are committed to growing our product support business by growing population and building new capacity and capabilities. We are excited about the more transformative opportunities we have in Argentina, power generation and rental. With that, we'll open for questions.

Thank you. We will now begin the question and answer session. Analysts who wish to join the question queue may press star then 1 on the telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. The first question comes from Sherilyn Radborn with TD Cohen. Please go ahead.

Thanks very much and good morning. I do want to quickly wish Juan Pablo our very best on his retirement. Kevin, the prospects for energy egress in Western Canada have shifted in a fairly short period of time. So I was hoping you could spend a bit more time addressing that opportunity set for spinning and also sort of the timing and scale of a corresponding production response.

Yeah. So, I mean, undoubtedly, it's been a good summer for positive sentiment and collaborative announcements between the federal and provincial government in Alberta. And so that's that's really encouraging. I think that built on an already improving sentiment and outlook from the major producers in Alberta. um you know i think that there is a there's a long way to go there's a lot more discussions to happen and some critical hurdles or agreements to uh to overcome and some infrastructure to build out as well before we see you know any kind of real meaningful growth uh in production in the region um but i expect you know i mean it's a tailwind and i expect um you know miners that the all-sands producers and energy producers to be organizing themselves around that positive outlook for more production in Western Canada. And, you know, we're seeing some of that just in general confidence and sentiment today. I point to our gas compression business being a good example of that, but also, you know, we delivered a truck a week in Canada in the quarter, and we expect that to continue from our very healthy backlog. And so, you know, we've seen some of that immediately, I guess, Sherilyn, in our backlog and how we deliver that. Like Dave mentioned about strong gas compression sales in the quarter. And so, it's more an incremental and positive improvement right now rather than a step change in production and impact on our company.

And related to that, as we think of it, the labor that will be needed to support nation building infrastructure, do you think the government needs to be doing more on that front in addition to expediting the approval process?

100 percent and i've had some of those conversations with the major projects office um you know there's a lot of positive momentum but it's companies like finning that supply the equipment and the uh the labor and the talent to really make the projects happen um we are we have been um you know recruiting as we've said a technician a day that's still going very well. Our technician base, not including OEM, is up 20% in Canada year to day. And so, you know, we are encouraged by our ability to attract talent in the marketplace. And we're kind of preempting the projects. But any confidence that the government can provide or the market can provide in terms of what they think that demand will actually look like will help us to organize ourselves even more effectively um you know i think the most important thing to say about that sherrylyn is that we're doing it anyway because of our opportunity and our ambition to increase to increase dramatically increase our the percentage of labor that we have working on our on and around our machines anyway so we have a market share opportunity ahead of us anyway uh which we're getting after and um you That gives us momentum in the recruitment, the training that's required that we can lever up and down as the demand materializes.

I would add there, Sherylane, we're certainly supportive to any government initiatives there. But in the meantime, like Kevin said, we've had very good success in Western Canada. We have a very strong brand in the employment market. And we've doubled down even further this year with the various trade schools all across Western Canada. So the team's had very good success to date.

Thank you for the time.

Thanks, Arlene.

The next question comes from Devin Dodge with BMO Capital Markets. Please go ahead.

All right. Good morning, guys. for data center related projects in western canada would finning consider internalizing the packaging of that power system i know finning has done some of that work in the past but i'm not sure if the capacity is available to do that work at the scale required for the opportunities in front of you and just wondering if that approach would differ between prime and backup power Yeah, so the answer to the question is absolutely yes.

We are totally committed to packaging the data center requirement in our territory. You know, we have a fantastic facility that requires minimal investment to move that forward. You've been following us for a long time, Devin, and you probably remember our investment in Colicut and the facilities we have in the Red Deer region. And so we feel well positioned that we can build that capability and capacity relatively quickly and without a kind of major investment. And we think it's critical to participate in all aspects of the data center opportunity, including controlling the quality and the velocity of packaging, particularly as it relates to cold weather in Alberta. And, you know, and being associated and working with that package as it goes through build and deliver and commissioning and ultimately to participate and to partner with the product support opportunity, which is, you know, really the big opportunity for us as we look forward. from a packaging perspective there's no real difference material difference between prime and backup from a packaging perspective but obviously there's a demonstrable difference as it relates to lifecycle product support in a prime application i think that was the second part of your question but forgive me if i got it wrong yeah no that's uh that was great thanks for that um second question uh product support margins uh they're compressed in both canada and south america just wondering if you could provide a framework for how much of the margin pressure was related to to mix versus maybe some cost inefficiencies to accommodate the growth that may be more transient yeah i think you see you know we would put i'd put it down to um three aspects actually uh devon and you've hit on two uh certainly mix within mix i mean we've seen about a three percent product support shift in canada specifically to our larger customers um you know so when you normalize that you know that three percent product support at a more normalized product support rate you you uh you'd account for you know about half of the of the difference um you know there's also the second point that you raised is very valid and fair you know there are some as you grow a technician a day um you know there are some training and productivity ramp ups that you need to work on and so you know there is a little bit of a drag there it's something that might take you 100 hours might take you 110 for example and then you know there's one other one which is you know an aggressive approach to product support growth in commodities that that are more less proprietary and to that end more competitive but they offer us great opportunity to grow our business at a healthy which is still a healthy margin but it will have an overall impact on the overall product support margins and the last one really which is more transient than the others is just the impact of tariffs on heavy steel products which impacts us due to the proportion of our business which is mining so we're managing through that with our customers because we do see it as as transient um the others you know we'll we'll work through but we we see that continuing for a while as we improve productivity we're not going to stop aggressively going after after market share um and you know we see we do see improvement in in product support in construction and power it's just not growing as fast as mining which is a which is a nice problem to have they're all growing but one's growing really substantially which is just having an impact on the margin in the NATO.

And what I would add to that, Devin, is, you know, in Canada, they had a remarkable 19% product support growth. All three segments, mining, construction, and power were double digit, but, you know, mining led the way. So, you know, their growth was even higher. So, again, that mix plays into that.

Yeah, for sure. Thanks for that. I'll turn it over.

Thanks, Devin.

The next question comes from Steve Hansen with Raymond James. Please go ahead.

Yeah, good morning, guys. Thanks for the time. Congrats on the product support growth. It's great to see. It's hard to think back in 24. It wasn't that long ago when it was a little more difficult. I just want to dig into a little bit more. I think you've referenced your desire to grow your labor share on the machines a couple of times now in recent calls. And I just wanted to get maybe a sense or some sort of framework to think about that. Is it, you know, do you have an ability to grow that share by 5%, by 20%? Do you have a sense for just sort of putting some bookends around what the growth opportunity could be over the next period of time?

Yeah, so I think, you know, it's different in the different regions, but specifically, you know, targeting Canada. You know, we would have a lower market share of labor on the supporting, you know, Caterpillar equipment. um you know i would say that there's line of sight to uh you know doubling that in canada um and we're on the way we're on the way to that and that that effort is being well received and as as i mentioned to cheryl in like we've totally re-engineered our apprenticeship program because we grew out of the last one of the partner we were using so we've re-engineered that to we were very focused on one college and we're now working with multiple colleges to help us expedite and expand our apprenticeship programs so I would say you know it's a doubling and then we'll continue the effort and then we'll recalibrate at that point in time. In South America we have a relatively high market share given the contracts in mining and the proportion of our business in South America, which is mining. The opportunity there is just the increased population. You'll notice we've added two backlog in the quarter. We talked about a moderating growth environment for a few quarters here in South America, and I'm encouraged by the backlog adding Q1 with Alambrera and then the significant win in Q2. Here they've put the backlog up 40% quarter over quarter here in South America. And, you know, a lot of the proportion of that population is under some kind of contract with Finian. And so there's an opportunity to maintain our market share in labor in South America, but just the volume of trucks that are under contract is going to increase in Chile and in Argentina. And then in the UK, the growth there, we have relatively high market share as major customers have outsourced product support over a decade. But where we're seeing the big growth opportunity in the UK is in our servicing contracts. We've seen that in Canada too, but the number of machines that are under a service contract with Finning Lake, is increasing dramatically in Canada and in the UK. And so that's where the drivers are coming from.

That's really great, Collar. Thanks. And just one quick follow-up in a smaller line of your business and rental, but it has demonstrated some solid growth here of late. And if I think back to the 23 investor day down south, I think you had started to prioritize some growth there. That was subsequently pulled back from an expectation standpoint, But it does feel like now your commitment to growing that business, I guess, in partnership with CAD has come back to the fore here. Maybe just give us a sense for where you're viewing that business today and where it stands and where you want to take it here in the next year or two.

Yeah, good question, Steve. I mean, just to be clear, we've never pulled back from it under my leadership. I'm committed to rental. I think it's a great business. It's a different business, and it needs to be effectively run. The pullback, which you're alluding to, which is fair, was more market conditions in 2023 and 2024 that didn't support aggressive growth. Back again to Sherilyn's question around what are the impacts you're seeing on the more positive sentiment, particularly in Western Canada. It's across the board, right? It's in gas compression. It's in new trucks in the oil sands. It's in rental projects for enablement and things like that. So actually, you know, the vast majority of our rental businesses in construction in Canada today, that's where the big the big proportion of our businesses and that business actually was up 60 percent in the quarter, 50 percent year to date. And so that's heavy rents and rental services. So that's that we're really encouraged by that. and we've got a big opposite like similar to your question around service then let's let's double it and then then we'll have a calibration and uh and see what what the next steps is but doubling would be the ambition from the outset and i would say that um in canada um and uk specifically you know we're super encouraged by excuse me super encouraged by the um the opportunity in power rentals. It complements our business well. It supports the need for reliable power generation. It supports the opportunity to bridge to more permanent power generation for mines, for communities, for data centers. And so we're seeing really healthy growth in terms of our power rental business. So that business is up 25% year to date in the UK, 20-ish percent in Canada year to date so not seeing the kind of really really great products and growth levels that we're seeing in construction right now but moving along really really nicely so and you know the rental figure that Dave mentioned as well previously that that includes some pretty big declines in mining rentals because that's lumpy right we rent for nine months or a year or 18 months and then they come off rental we don't necessarily have or they typically they get bought uh the customer purchase this purchase the rental units um so no i think our our rental performance is extremely encouraging right now we're really committed to it um and we believe it can make a meaningful contribution to our eps and i would suggest that in q2 the eps contribution I'm not going to share it, but the EPS contribution from rental service from rental and to the Canadian business was was very helpful.

That's very good. Appreciate it.

Once again, if any analysts have a question, please press star, then one on your telephone keypad. The next question comes from Chris Defriesen with CIBC. Please go ahead.

Hi, thanks for taking my question. I was just wondering on the power side in Alberta when it comes to data centers, we've seen a little bit of movement with the AESO coming up with updated guidelines back in June, and there's a comment in there about bridging capabilities.

And I'm just wondering how you're thinking about the prime power opportunity with some of the changes and announcements coming out of the AESO in the past month or two. yeah so i mean there's um i would describe the situation as evolving right now as you mentioned um and um you know it's uh it's it's kind of quick quick slow quick quick um you know and we're trying to stay across all of that that opportunity and make sure that we're ready to support um the opportunities for prime bridging or backup power um clearly you know prime power um has a you know has a higher value creation for fulfilling so we're we're super focused in in that area and um working with customers behind the meter i think that the the first opportunity probably is going to be coming is going to be backup um as the there is some capacity in the in the grids um you know but then i think as it moves forward um the opportunity will probably shift to bridging power uh whilst uh permanent capacity is constructed and built um and then as it relates to the permanent the permanent power you know that's the that's the kind of crown jewels that's where we're really focused on participating in that uh that prime power generation but as you know there are multiple um you know multiple ways you can produce that power um there's already been some announcements um that support the build of new gas fire power generation uh but we think that you know we think the opportunity in and around that to to bridge um and to participate in the resiliency of that of that behind the fence power generation is super exciting. And, you know, right now, it doesn't feature in our financials and our, you know, more than 100% growth that we're seeing in our power generation business today is in prime power, is in gas, and it's in gas compression.

Okay, thank you for the color there. And then maybe just to follow on, as we think of the backup opportunity and we see some of these data center projects be announced like uh like project green light um would that be a a one-for-one backup to prime power um solution or would you not necessarily uh need that level of uh of replication thank you yeah no there's not a we tried to give some examples of of uh how it might play out with in terms of the one-for-one to help shape and model it.

It's a very dynamic, as I mentioned previously, it's evolving and dynamic. There certainly isn't a one-for-one relationship between prime and backup if you're providing prime power generation because when you're building prime generation, you're building in a level of redundancy. It's not like the grid goes off and you have to back it up. If you've got 10 engines, 10 gas engines, the likelihood that all 10 go down at once is very low. and so you've always got some redundancy in the system so no it's not one for one there will be backup generation opportunities and there'll be some bridging opportunities while that prime power is being constructed and built but you've got diesel backing up you know grids when you've got behind the meter bring your own power there's an element of redundancy built into those projects which reduces that doesn't reduce it to zero but it reduces the need for for the proportion of backup generation you need there's also there's also the fact different types of different types of data centers that have different latency and and productivity requirements So, there's different data center use cases that require – that are less critical, and so require less backup generation.

Thank you. I appreciate the comments on that.

This concludes the question and answer session. I would like to turn the conference back over to Mr. Primrose for any closing remarks. Please go ahead.

Thank you, Operator. And, yeah, thanks everyone for joining. Kevin and I are in Santiago, Chile today. and we appreciate you joining us and we look forward to joining you in November when Kevin and I will be in Dublin with the UK and Ireland team for that call. So thank you again and have a safe day.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.