Joe Lambert: It’s certainly always a conversation point, Frederic. It’s — we’re — how do you measure the return. It’s a risk-return discussion with the Board all the time. I would say that the return on the debt is high with us hitting our highest rates. And obviously, the risk when you pay down debt is zero. So we’re comparing that against risk versus return on where you think your share price should be fairly valued. And then even looking at our growth, we’ll still look at bolt-ons and smaller stuff this year. If there was a bigger project go M&A opportunity, we’ll still have the discussion but it likely would never — not have an effect on this year because they’re usually like MacKellar was 2.5 years. But we’ll still look at any opportunities for vertical integration, even growth capital and winning some of these bids where we might have to add some fleet and balancing those risk versus returns with our base case of deleveraging and our share price.
And yes, there is a share price. I like to get these things to a solid metric and there’ll be something we’ll work with the Board in our Board meeting next month to say at what price do you switch, be it share price or what return on a growth opportunity, would we switch those deleverage dollars into growth capital or share buybacks. And we expect to set those with firm numbers and have a clear understanding.
Operator: Your next question comes from the line of Adam Thalhimer of Thompson Davis.
Adam Thalhimer: Congrats on the record Q1. Is it too early to give high-level thoughts for the oil sands demand in the next peak season? I’m thinking about this Q4 and the next year’s Q1.
Joe Lambert: Yes. I mean we generally don’t see our winter reclamation scopes until September or so, October. And so it’s hard for us to gauge the winner programs. And they’ve varied our win and work. If you go back over the last 4 or 5 years, our win work has been in our small truck, like reclamation work has been high as $80 million in a winter with small truck works to as low as 20%. And we’ve seen that kind of volatility in the winter scope works. As far as the bulk work and the base overburden, we see that being steady or growing. This year’s reductions were a bit of a surprise in scope. But generally, we think that’s more of a deferral than an elimination. And I expect volumes and demand in big earthworks in oil sands to increase next year.
But I don’t have that scope. And again, we’ve got a 3-year contract but it’s being awarded in 1-year terms. And I would expect to see next year’s volumes, I’m guessing sometime between July and September of this year for us to tender on for next year.
Adam Thalhimer: Okay. That’s perfect. I know that’s a hard question to answer but there were so many moving parts last year. So — and then in Australia, so you’ve called out weather from MacKeller for a couple of quarters, even though the results have been really strong. I’m just curious — as I think about the year-over-year comp for MacKellar, how much was weather an impact in Q4, Q1?
Jason Veenstra: Compared to the previous year or…
Adam Thalhimer: No, sorry, I’m thinking…
Joe Lambert: They had significant cyclone activity in Queensland in both Q4 and Q1, especially January and February. So they incurred a pretty wet year. And when you get a lot of rain there, roads actually start getting shut down and you can’t get supplies into mine sites. It’s generally not the mine site’s ability to operate as far as operators get in truck, it’s getting supplies and people to the site because massive rains have cut off road access and that can last for a week at a time kind of thing.
Adam Thalhimer: Yes. And I guess I’m just thinking because of the weather, MacKellar, even though the results were good, they actually had easy comps. Because of the way in Q4, Q1. Is that fair?
Joe Lambert: We would typically expect less weather-related disruptions than what we had this year. Usually, it would be more December, January centric and we actually had November, February kind of impacts as well.
Adam Thalhimer: Okay. And then the high end of the revenue guide, what would have to happen for you to trend more towards the high end?
Joe Lambert: I’d say getting a lot of summer work in the oil sands this — in the next few months and getting a big winter program that starts early and picking up something like that iron ore mine in Quebec work.
Adam Thalhimer: Okay. Well, good luck with that. We’ll talk to you in a few months.
Joe Lambert: There’s a lot of moving parts right now and that’s for sure but…
Operator: Your next question comes from the line of Prem Kumar [ph], an individual investor.
Unidentified Analyst: A couple of questions on capital allocation. In the previous gentleman asked about buying back. My questions are on the same line, especially considering where the shares are trading and how reasonable the price is. So free cash flows of expected range for the year is around $150 million to $185 million. After — I’m assuming even after we hit the leverage target of 1.5 and paying the dividend, there will be still quite a bit of money left on the table. How high are buybacks are on the list for this incremental capital, I guess.
Joe Lambert: Like I said, right now, our default is to pay down debt because of the higher rates. But we’re going to evaluate at whatever point in time and where the share price is. I’d also say we have more opportunity as we get later in the year just because we’re so — we’re very back weighted in our free cash flow. So the bulk of that free cash flow comes in, in Q3 and Q4. And so that’s really when we have more flexibility. And at this point in time, we’re looking at — we consider all those options. We consider M&A growth opportunities. We’ll look at increasing dividends. We’ll look at share buybacks. And everything is going to play on a balanced playing field of risk versus reward. And those are discussions we have at every board meeting.
Unidentified Analyst: Okay. Can you maybe talk a little bit about the acquisition landscape like M&A in terms of is there a pipeline of companies that you kind of keep a look on and how are the valuations and just the landscape in general and the geography, maybe you working morely in Australia, Canada, other geographies? Or can you give a bit more color on that Joe or Jason.
