Q3 2019 Earnings Call
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I would now like to turn the conference over to Bear and Anderson Chief Executive Officer. Please go ahead.
Thank you operator, good morning, and welcome to Ranger and it is.
Third quarter 2019 earnings conference call joining.
Joining me today, it's Brandon Blossman, our CFO , who will offers comment in a moment.
This morning, I'm not going to dwell on the challenging macro backdrop.
The Boston or even the hope I'm in early 2020, M.P. budget Relo, that's either all factors well outside our control.
And that I will focus more on what we have randgrid do how control as.
What we've accomplished a day well contained to spend or effort.
And what we hope to accomplish in the coming quarters.
With the <unk> third quarter here, what we've accomplished so far.
Cash flow and net debt reduction.
During the third quarter, we produced cash flow from operations of 22 million and reduced net debt by 17 million.
Our continued operational performance.
Resolving onetime working capital issue.
A minimal maintenance capex ban required borrow high quality assets. They all led to the significant cash generation that where we expected to deliver across 2019.
Second our wireline back on track.
Last quarter, we spend some time talking about our wireline business.
We particularly maintenance agent repossession, a course of the basket from one customer to another.
While this decision did have a material negative impact to our Q2 results.
We are pleased with the decision and note that for Q3.
Legalization it back to the high early 2019.
Next high grading our high spec rigs customer base.
We continue to leverage our young fleet, improving systems and streamline processes deliver high quality work to costs, which were willing to value. These attributes.
In line with its objective.
This quarter Weird now think and additional global integrated new customer contract.
Bob This new Patrick what the Great went <unk> core.
Our Q3 high spec rigs were negatively impacted by one time costs associated with preparing shallower rigs, but this contract and other existing top tier customers.
This expense and associated capital investment taken important will pay material dividend in the feature.
Oh the services.
And there are the fourth quarter, what's with Dan other therapists outside wireline.
Here, we saw the client activity in one particular service line.
However, during the quarter, we completed a ball restructuring I'll, just start with offering to better align our cost structure within near term expected revenue stream.
And finally, a process installation.
This segment delivered solid performance.
Reducing their best quarter of 2019 here increased revenue and EBITDA on incremental capital deployment.
Our mechanical refrigerated refrigeration unit pricing.
<unk> increased mobilization and demobilization revenue were partially offset by lower am argue utilization.
Now to give a little more detail on the core.
Total revenue for the quarter with nearly unchanged routing to 84 million each of Q2 and Q3.
Both wireline and processing solutions saw significant revenue uptick.
<unk> offset by decline in our non wireline best fit within our completion and other segment.
Well again modest revenue decline in high spec rigs.
Specifically.
With a high spec rig we experienced a remedy to creep up 2%.
This decrease was driven by 2% decrease in hourly rate.
Regarding <unk> regard for largely unchanged up just slightly.
While our Q3 top line performance imply a fairly flat non existing quarter in reality it was actually quite the opposite.
And I mentioned in my opening comments I'm excited to announce another significant contract win for our high spec rigs segment.
Our announcement earlier this year, we had been awarded a multiyear multi rig well certainly contract with another global energy integrated customer.
Because this is a completely new clapper ranger during the quarter, we completed an extensive operational audit and executed a trial project, culminating with new long term relationship.
In addition to the new contract. We also gained market share with two existing quiet.
One being my previous and now I will see contracted customer.
Between the date of September 12, and October 16th we play eight rig into service, but this group acquired along with an expectation to deploy an additional two to three more rig before year end with the thought of plot.
I am aware this type of activity counter to the market sentiment.
Here, we believe at least a portion of our market share gains are being realized at customers actively switch from incumbent service provider in order to align with Rangers newer better funded regularly.
Moving onto completion and other services.
Our Malibu brand of wireline completion, Beth it returned to full effective utilization achieving a Q3 stage count that matched Q1 19 record high for the best though.
Walk Cuties decision to move like worth about that consisting of two wireline trucks to pop to pump down spread.
You are trying to acquire I've heard Q2 s performance.
The team's success and reposition these assets across three high quality publicly traded client support decision at the right one.
And finally, we are things some pricing pressure in the business line. However, today, we have been able to offset that pressure with part unit cost reduction.
Revenue from our remaining surfaces captured within this segment were down for the quarter.
While most of the third line shelf offsetting revenue puts and takes well testing had a material fall off versus Q2.
Yeah, we made some significant structural changes to better align Paul and running Additionally, select new contracted rigs are now pulling through well testing asset that's part of a total service solution.
We expect to reimburse the negative impact to start with life had almost segment going forward.
And finally, our processing solutions like return its best quarter since inception.
Overall revenue was up 29% on an increase in gas cooler F services revenue.
The buyer of a decrease in M. argued utilization.
Lower M. argued yields actually is negative it doesnt mean that there was a more that everything is more potential.
In this segment as we source opportunities to deploy idle am argues into our current market space.
<unk> other potential need application.
On the capital spending probably.
During the quarter, we had some incremental capex, which was all associated with rolling out additional rig packages brought new I'll see customers.
The remaining balance sheet recap expand what the wrap up previously budgeted gas cooler capital.
Moving onto consolidated earnings.
Adjusted EBITDA decreased 6% to 12.2 million from 13 main in Q2, Wal Mart doesn't decrease decreased from 15.4% to 14.5% branded will walk you through these details by segment in a moment.
In summary.
In spite of a challenging all feel service market, we continue to focus on what we can't control.
Positioning ourselves to start with a high quality customer base, delivering safe and efficient operation.
Immediately adjusting our cost structure when required and disciplined capital spending all into market share gain and free capital generation I will now turn the call of the branded for his remarks.
Thank you Don and good morning to everyone.
All right, let's jump right into a both walk through the numbers for the quarter I'll repeat some of the numbers that Darren gave you and add a bunch of incremental color. So as Dan mentioned on a consolidated basis overall revenue was materially unchanged sequentially down just 200000 from 84.3 million.
To 84.1 billion adjusted EBITDA did move down 6% or 800000 from 13 million to 12.2 million Rollup, resulting adjusted EBITDA margins ticked down slightly from 15.4% to 14.5%.
Now, let's move onto the segment details and start with revenue.
Quarter over quarter revenues saw decreases at both high spec rigs and completion and other services segments declines, which were partially offset by growth in processing solutions specifically.
Hi, that's high spec rigs segment revenue was down 2% or 600230 $2.5 million on a 2% decrease in rig rates, which was slightly offset by a small uptick in period rig hours like ours went up from 62200 to 62.
2400 hours, while hourly rig rates went down from $530 an hour to $519 an hour.
Our completion rig count held steady during the quarter at 13 rigs and overall rig utilization held flat at around 63%.
And the completion and other services segment revenue was down 2% or $1 million to $45.3 billion underneath that quarter over quarter decline was an uptick in wireline revenues, which was more than offset by a decline in other non wireline service lines within that.
Segment.
Wireline revenues were up sequentially as those assets return to targeted utilization levels with a cute three stage count back to our record setting previous record set in Q1 2019 peak for that business.
The drop off in other non all wireline service lines in that segment was driven by well testing as Darren mentioned, which saw a meaningful customer loss and a return to a negative EBITDA for the quarter.
As Darin noted we have taken the necessary action here and don't expect dust impact future periods.
And finally moving to our processing solution segment.
Sure revenues were up 1.4 million or 29% from 4.9 billion to 6.3 million. The primary driver of this increase was incremental installation mobilization and demobilization revenue along with some incremental gas cooler rental revenue.
Operationally the quarter saw an average of 11 additional gas coolers deployed with the units going out on contract as soon as completed.
Yes, cooler utilization for Q3 maxed out at 100% up from Q2 s, 98% average offsetting the gas cooler growth was a drop in edmar, you utilization, which moved down from 78% in Q2 to 66% this quarter.
While utilization was a mixed bag for the segment, both gas coolers and Marty Hughes saw an increase in rental rates with rates, averaging up 9% quarter over quarter.
Now moving to segment level EBITDA in margins overall consolidated segment level adjusted EBITDA. How this is before corporate DNA saw a decline of 1.2 million or 6% quarter over quarter.
As with revenue EBITDA decreases in high spec rigs and completion and other services were partially offset by an EBITDA increase at processing solutions.
Specifically for the quarter high spec rigs sought EBITDA decrease of $1.1 billion and completion and other services saw an EBITDA decreased $600000. These two declines were partially offset by processing solutions 500000 dollar EBITDA increase.
On the margin fraud consolidated segment margins again before corporate DNA were down from 22% 21%.
This aggregating that overall margin decline to the segment level.
Starting with completion and other services margins here held flat at 24%.
Sure and improvement in wireline margin was offset by the materially weaker other non wireline services margins driven by poor Q3, well testing results as discussed earlier.
Hi, specs high spec rigs margins, a decrease from 13% to 10%. This decrease was driven equally by the combined impact of the lower rates and an incremental $700000 of operating cost incurred in preparing for new rig deployment.
As Darren noted in his prepared comments absent these new rig prep costs high spec rig margins would have been a bit north of 12% for the quarter.
Processing solution segment margins move down from 61% to 56% here. The decline was driven by the increased contribution of what is typically lower margin installation revenue.
Moving on to DNA expense.
DNA as adjusted was down $400000 sequentially.
That decline was largely the combined effect of a reduction in our corporate bonus accrual on lower expected full year results and lower medical benefit costs.
And bridging from EBITDA to adjusted EBITDA, we showed $600000 of adjustments for Q3. This adjustment made up of several items, including.
The add back of a capital item write down on a vendor nonperformance issue severance expense and our other services segment.
The shutdown costs on the consolidation of our Permian high spec rig business to our ADESA facility and the last installment on a handful of retention bonuses dating back to the ESCO acquisition.
And finally.
Some detail on the change to the net income line quarter over quarter.
For Q3, we reported a net income loss of $900000 that as a 2.7 billion decrease from Q2 s $1.8 million of net income the biggest portion of the sequential variance is driven by Q3 s $1.1 million that recorded tax expense.
This tax expenses wholly noncash and associated with the utilization of pre IPO and all wells, which resulted in an income tax provision booked in the quarter.
The remaining decrease in net income on a quarter over quarter basis is explained by the EBITDA change and an increase in depreciation expense.
Now, let's move onto the balance sheet cash flow starting with Capex.
Total capex recorded for the quarter was $3.7 million, which breaks down into $2.3 million related to high spec rigs.
This spend was nearly fully attributable to new assets and upgrades to rig packages in preparation for work for our new and existing integrated customers.
Processing solutions saw $1.2 million of capital spend for the completion of 15 previously budgeted and currently contracted gas cooling units.
Maintenance Capex was just $200000 for the quarter well below our 1 billion dollar per quarter expected 2019 run rate also we added $1.2 million up new leased light duty vehicles to our fleet.
Now for debt.
Our term debt balance stood at $30 million at the end of Q3 down $2.5 million quarter over quarter per our quarterly amortization schedule.
On liquidity, we ended Q3 with $25 million of liquidity. This is up $9 million from Q2 on a combination of increased cash and a reduction in our revolver draw partially offset by a reduction in our quarter end borrowing base specifically at quarter end cash was up 6 million.
Colors from $2 million to $8 million, our revolver draw was down $8 million to $18 billion and our borrowing base was down $5 million from 40 to 35 on a reduction in eligible receivables.
Now for cash flow.
Q3 is operating cash flow was a very healthy $22 million. The result of a combination of Q3 is operating performance and a 11 billion dollar reduction in working capital.
A quick reminder, on working capital last quarter. We spent some time discussing a few items that had negatively impacted that quarters cash flow, specifically Q2 suffered from a couple of stale uncollected receivables and a spike in wireline gun inventory.
These items consumed a material amount of working capital during Q2.
These are issues, which had been largely reversed during Q3.
And finally.
At the end of Q2, we announced a $5 million stock buyback program. During Q3, we're able to buyback a handful shares 47000 or about $300000 worth of shares.
And that is it for me in my prepared comments Darren Thank you Brian .
As Brendan highlighted the wins brought this quarter, where did the delivery of a big free cash flow number and the subsequent net debt decreased along with the new I'll see contract win.
Going for our near term focus on continuing high spec rig customer high grading effort.
We've had success on this front, but there's still more work to do.
Penetrating new IC customers simply step one.
We must continue our focus on delivering safe efficient operations to excellent personnel and best in class asset, which will lead to continued market share growth with these clients and other.
On the competitive.
Pricing at the bottom in the summer speak market continues to be concerned with some block peered seemingly pricing were below full economic cost.
We believe we're now seeing the comp when that below cost pricing as competitors exit markets, presumably due to poor earnings.
Well this landscape creates the opportunity for additional share growth. We are committed to working at a price level of allow for long term sustainability on each rig deployment, rather than just a short term utilization when.
As a side note our disciplined pricing allows us to run a sustainable business, which we believe benefits our customer at this enabled us to train our personnel operate and service our rigs effectively and make the necessary capital investments when needed for both of our longer term success.
Within our completion of the services.
With wireline utilization back to near 100%.
Our focus will be other continued delivery of best in basin efficiency.
Thanks to continued rate pressure will require careful cost management to ensure the ongoing success in this business.
Today, we have to successful on this Brian going forward. Some success will require the redoubling our efforts.
Within our non wireline other services.
Because most of our from all service lines do not enjoy the geographical or customer diversity as our larger offering there for more susceptible to customer activity swing, we will continue our effort to engage these services.
Part of me solution offering with that 24 rigs when possible.
We will also be disciplined and efficient and responding to market changes as they occur.
And finally processing solution.
Our record 40 here still allow for meaningful upside with the current asset base.
Brandon noted our utilization was 66% core.
Recently in addition to heartfelt effort to traditional channels, we have been spending incremental marketing efforts on new opportunities for our gas processing unit.
Some of our top tier customers have expressed pull through interest in contracting our am argue for both be traditionally used and in some cases for alternative uses of these assets.
At these opportunities develop we look forward to sharing more.
In regard to capital spending will continue our current strategy of investing in assets that are supported by contractual arrangement, our ancillary asset that complete a full package for our very best customers and yield a quick payback.
And finally on the strategic Frank.
We're very pleased with our position.
Our young purpose built Lee efficient operation low leverage and strong cash flow places us in a unique position amongst our peers.
We have the optionality to protect and validation opportunity health as well as contained in the course of market share gain which translates into organic investment opportunities.
Regardless of the outcome of a number of potential strategic options. We continue to believe our market performance.
Our position and strategic direction will benefit our shareholders.
This concludes our prepared remarks, he will now open the call for questions operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
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At this time, we will pause momentarily to assemble our roster.
Our first question comes from John Daniel with Simmons Energy. Please go ahead.
Hey, guys, Thanks, but man.
Thanks, Darren Congrats first on the new customer wins.
As you I know you guys are adverse to giving guidance, but I'm not trying to tee went up for you. When you look at these customer wins.
And you sort of alluded to is one of the reasons is the equipment quality Ranger has.
Hi.
Thank you Thats essentially trying to say you're not under the financial dressed and others are.
One might assume a customer would be paying attention to do you think the health of the company.
Page of the fleet that your position to grow your rig business the hours in 2020 over 2019, along with these recent customer wins.
John I think everything you just described it completely accurate.
In direct conversations with customers effort picking up some of that new market share is exactly what you said the stability of our organization our asset quality our performance.
Is leading to the market market share gains.
As we sit here coming into the fourth quarter.
Again, we don't give guidance, but I will say that with a significant load out that occurred the last two weeks of September and the first week of October of eight rigs with those three customer law alone and the opportunities to will have in front of it.
We're very excited about fourth quarter now I will caution that with.
We will have our continued with the customers declined from standpoint of a budget exhaustion holiday and I think even this year as operated the popular on cash flow generation will pay a plane impact there. So I think these customer whether outstanding it will offset some of the market constraints. The we will have at the back half quarter.
And that translates into 2020, I think we're very bullish on 2020.
Because of these new contract these deployment there having at year end.
When we start to spike that.
From rebounding in I would say latter part of Q1 at budget drug to be fully deployed for 2020.
I would expect that we should see an hours growth over the 19 performance.
Okay and stick to more for you want us a bit tied to guidance.
Knowing that you won't give me any specifics, but some of your public peers to date have talked you know their activity guidance for Q4.
State reductions of 20 plus percent quarter over quarter I.
Im assuming given the nature of your business you would not expect that type of drop off in Q4 that fair I'm not expecting that type of drop off again, we don't know what the the latter part of the fourth quarter can hold for the reasons I stated before but from everything that we have in front of with right now and what's been akorn come over the last month, there's nothing that implies.
This is across any of our segment of the range of charter Mellott brand that we would see that type of drop off.
Got it so better business model, Okay, and then finally, he alluded to consolidation, obviously, we and others have been harping on this for about 10 years now haven't really seen it.
Do you feel more comfortable today that we're likely to see some some sort of consequential consolidation or whether or not you play in it or not to be determined but do you see that happening in the well service sector in 2020.
I did happening I think the condition of this part of the sector, it's very difficult as we all know.
There are strategic opportunities out there we review a lot of being but we're going to be very very blankets, though.
Not committing that we will participate in them, but we are looking a lot of things and I do think we will see.
Consolidation, one way or the other.
All right. Thank you very much for your time.
Thanks for the questions John .
Our next question comes from Daniel Burke with Johnson Rice. Please go ahead.
Yes, good morning, guys.
Morning, Daniel.
Let's see hard hard to follow up John John covers a lot of ground, but just.
Couple a couple of questions left.
In terms of.
Nice job offsetting pricing pressure, that's that's emerged in the wireline business.
Just to build on that so can you maybe elaborate a little more on on where you've had success addressing your materials cost and how you characterize the labor market now out there in west, Texas with the ability to to cut some cost there as well.
Yes.
Mean, only completion market in the Permian as you all know that market is softening. So the constraint although labor market is definitely not there.
I think that are mallard has been a great business for us we've got a great workforce there.
But I also think that.
We're all at the realization that we're happy to be keep activity level active ultimately you are relative to the peer group and as a result.
The group at the loan to make decision, except the vision that has able to allowed us to.
Reduced to cost on the labor front itself with the personnel.
That being traded by the full utilization of the asset base that they're getting in the work they're getting.
From a cost of goods sold or supply standpoint, as you all know our gun call is our most expense cost that we have within that service line and so we've been able to to work with our vendors they understand the market that we're in and getting some offsetting leaf there. So between the labor majority of our gun cost control is where we've been able to.
Now that some of the pricing pressure.
Okay, great Jerre and that the that's helpful.
And then.
The switch over to the.
Rick side, maybe maybe the other question I would have would be that has an impressive ramp.
Now that you've identified with three customers to them integrated.
Hi.
You might be reticent to talk about this but within that group and I guess, specifically thinking about that that couple of integrated customers what type of additional runway.
Thank you might have over the the forward 12 months.
Yes, I think the way I would categorize that is when I look at the eight rigs that have been put out.
September 12th again through the October 16 timeframe two of those were with the first contract, we we announced back in Q1.
Three of those rigs went out along with the the new contract that we just put out now those three that went out two of them work contracted rigs, but here at the opportunity of the third rig that went out to them was not part of the original contract was actually for another geographical region.
Well, we picked up a rig with that particular customer picking up market share.
The next three were another existing customer that we have for the total of the eight as we think about moving forward with beef second contract. Most recent when we will deploy a third contracted rig out for that customer starting on December 1st we will deploy another non.
On contract rig in a different geographical region on November 15, So what I'm trying to explain to you is winning at a particular contract at a certain geographic region. We love the awarded that contract, but it also gives us the opportunity to gain market share in other regions as they get better close to Ranger. So again here, we're looking at from.
Mid September to December 1st with one particular customer long five rigs going after them three of them 24, three of them under firm contract for two years.
I think they'll dock dates will continue to present, Phil we're still early in this process, but we are.
Seeing great opportunities with the international oil companies and the Guy who really are paying attention to their service provider what are their balance sheet like what are the healthy organization, what long term sustainability and I think that is driving some demand toward ranger.
Got it that's a great answer and maybe maybe I'll finish off which is just one last one.
I would assume that you know that the capex run rate, you're going to sustain into second half of 19.
I can't think of any reason 2020, you'd have a different philosophy about deploying capital at this time, but just figured I'd clarify that.
When you look at the overall market condition.
We're not in the mode of going to just build asset and trying to buy homes for them. So when you look at the with our Q3 numbers that we just reported we're talking about items, such as 10-K Beall piece that were needed to supply two year contracts.
We will continue to make those investments again contractual type investment or investments to where we may have a full package and a customer need that amped, Larry asset and we'll bring build out outside of that we're not expecting to do that aggressive capex for 2020. This market is not needing more asset, but strategically we will make net.
Our investments when we get our return for particular customers, where we know we're going to ask Seth.
Thank you Dan and I appreciate all those answers to actually Chuck.
Great. Thanks for the questions.
Our next question comes from a Derek pod Heizer with Barclays. Please go ahead.
Hey, good morning, guys.
There are.
I Wonder if you can expand on some of the pull the pull through you discussed some of your other well servicing businesses do you described it as an integrated well solution what type of customers are driving the strategies. This mainly aligned with the two iOS sees as you can give some color there.
No. It's definitely of the focus this with two while the than we've had success actually with bolt on them with our first one we thought the pull through on from ancillary rental equipment that traditionally doesn't go out with the rig and our second contract, we're seeing being closer to such as our wealth testing asset so.
The second contracted consuming some of our very best rig 60 rigs again 10-K.
Lps parse will high pressure pump nicely to of asset but in addition, it pulling through.
Manifolds plug TACTRESS flow aren't assets that would typically.
Be consume more well testing operation, but as being pulled and with the rigs as well.
We have some additional opportunity that's 13 the strategy of integrating more of our rates if nothing packages with our rigs as well too. So is the type of asset that we're trying to focus on more dilution approach.
With the larger iOS seeds, who prefer to deal with one supplier and having a total solution offering.
Got it.
That's helpful.
Follow up question, we've seen a lot of asset really recalibration so far.
A lot of itself I will just to deal with an oversupplied market. I mean, you discussed how the lower end of the well servicing fleet is under some pricing pressure. If you have you thought about your fleet size and where you are today and kind of where that is.
Where that should be right sized for today's current market demands and just just want to get your thoughts around like potential.
Asset retirements or anything like that.
So no we're not looking at any asset retirements were comp with our fleet five but.
Jeff if we're not looking to asset retirement now looking at that addition.
We have an ample rig fleet.
I think right now we're growing our utilization entering Q4 for the things be right. It's brought the with the new I don't see customers. So.
As we think about consolidation I mean, what are the factors we have to consider that we do have some spare capacity.
We're picking up market share.
Continue that strategy versus going out and trying to consolidated market and getting a lot of asset that.
Potentially inferior to our current asset base to all of that going into our decision process, but as far as our fleet. We're happy with our fleet, we're not planning on any addition.
But there will be of core ancillary additions as I talk about more 10-K, B Lps are higher pressure pump at more requests door special ultimate higher tier type work.
Got it and just squeeze in one just housekeeping items. The the average monthly hours for rigs I know usually disclose that number 143 last quarter. Just curious if we get an update on third quarter.
If we give the idea that handy.
Yes, Derrick it's been a b. I don't have at handy, but I think edge should be at 145.
Got it okay guys Thats it for me I appreciate the time.
Thanks for the question.
Our next question comes from Thomas Curran with B. Riley. Please go ahead.
Good morning, guys.
And Tom.
Darren starting with the high spec rig fleet on this new multi bring multiyear contract would you. Please tell us which basin. The rigs are headed to and then what percentage of your active rig count is now with high grade customers and what was or would you estimate was that percentage a year ago.
Yes, so as far as basins I would say that.
Without giving too much detail on any particular based in the Eagle Ford in the Bakken would be two bases that we're referring to with the most recent.
Contract and some of this new work this one particular.
Customer.
As far as percentages I.
I don't have those handed I'm looking at my team here, if they would have any thought process, but when you think about.
This the first contract as I said, we've got five rigs out for rig probably more running about six rig equivalent because we bounce back and forth between daylight 20 acquired so those six we've got another five that we'll be at here with the new contract for that 11, just from the two customers alone.
And then.
King.
14% roughly fell 13% today as we sit here with some of these new hire to your customers that we've been focusing on.
Okay.
And then.
When it comes to your continuously evolving array of strategic opportunities.
I would have been the most noteworthy changes in that said just since the Twoq call.
The number.
Yes.
Thanks, Paul.
And this is almost literally true nothing has fallen out of the opportunity set Q over the last and looking at their nine months and things have been added so deals keep circulating back that we reject with.
And in many cases, better terms and conditions or offers.
Or more aggressive sellers and then.
It's pretty incredible, but new deals come in the front door here pretty regularly so the absolute number is what's changed I don't think anything other than anything else materially has changed other than perhaps the incremental enthusiasm around taking equity as opposed to cash from a sellers.
Spectrum.
All of which sounds to the extent there had been changes directionally.
The bidding your favour.
It is a buyers market, yes, youre right, okay fairly obvious, but just wanted to confirm that.
And then Brandon please remind us what is your target level arrange for total debt and given that the.
The buyback, we did see with sort of a one off unique situation.
Should we expect that once you've hit.
That target for total debt.
You would just then.
Build surplus cash on the balance sheet.
So on the short term basis, yes, the target for total debt.
We havent fully endorsed it but I think.
For all all stakeholders the numbers zero, so as we and what we're really doing here is preparing for the consolidation opportunities and making sure that we are in the best position possible, if and when they come so to us that means no debt and plenty of capacity on that side of the.
Our balance sheet, if needed, but right now it doesn't look like that will be needed so no debt.
Will we be what we build the cash versus buying back stock.
If this gets a long dated in terms of how long that opportunities take to mature.
I think that with a problem. If you have balance there, but I don't want to speak too far out ahead of where the board is.
If they have approved that 5 million dollar of buyback and we havent used that up yet. So we don't have to make a decision around that until that gets used up.
Got it okay I appreciate the Q anytime.
Thanks, Tom.
This concludes our question and answer session I would like to turn the conference back over to Darren Anderson for any closing remarks.
No I just want to thank everyone for their participation in the wonderful questions here at the end and I personally want to thank all of our outstanding Ranger team members, who are cutting their great efforts in building us into a great organization. So that concludes our call and thank you everyone.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.