Q1 2020 Earnings Call

Good morning, ladies and gentlemen.

Welcome to the natural gas turbine group first quarter 2020 earnings call.

This time, all participants will be an 11 only mode.

Operator system is available at anytime during this call by pressing star zero.

Called leader for today's call or at least your daughter, IR coordinator and Steve Taylor, Chairman President and CEO.

I would now like the turned to covert your hosts LIFO you may begin.

Thank you Ross and good morning.

People tell me a moment can meet the following forward looking statement prior to commencing <unk> earnings call.

Separately historical information contained herein statements in this morning's conference call before looking at are made pursuant to the Safe Harbor Nations I've outlined in the private Securities Litigation Reform Act at 1995.

Forward looking statements as you may know involve known and unknown risks and uncertainties, which may cause natural gas services group actually we thought that future parents could differ materially from forecast that we thought.

Those risks include among other things to watch the market share to competition or otherwise.

That's some competing technologies by other companies in new governmental safety health or environmental regulations, which could require natural gas services group make significant capital expenditure.

The forward looking statements included in this conference call.

The data this call and natural gas services undertakes no obligation to publicly update such forward looking statements to reflect subsequent events or circumstances.

Important factors that could cause actual results could differ materially from expectations reflected in the port looking statements include but are not limited to.

Factors described in our recent press release and also under the caption risk factors and the company's annual report on form 10-K thought with the Securities and Exchange Commission.

Having all the stated I will turn the call over just even Taylor, who is president chairman and CEO of natural gas San Francisco Steve.

Okay.

Thank you Alicia and Ross Good morning, everyone. Welcome to natural gas services groups first quarter 2020 earnings would be thank you for turn tuning into our call.

The current 19 pandemic has had an impact arguments trim business activity, but in just continues to provide quality service to our customers.

We've seen no material impact our supply chain or critical vendors.

If adopted remote and started work processes and our middle headquarters.

Yeah, but that's what our feeling fabrication work to me to new reality from the covert bars.

We have implemented guidelines and turn to keep our employees, our customers and suppliers as safe as possible.

We have managed to do so without any significant cost for operation. We continue to be vigilant to find ways to remain as efficient as possible in this environment of new operating challenges.

The impact to covert 19 in the resulting old demand destruction contusion cloud our visibility for short term business prospects.

In April as expected, we experienced more you know returns and shutting those just from customers and we anticipate in our prepared for additional volatility in our business.

Of course of the next several months.

Nevertheless, unlike many other oilfield service companies Ingeus has the balance sheet to withstand this environment.

With $13.1 million in cash on hand minimal debt, it's 30 million dollar credit line and and an expected $15 million.

Cash tax refund, we have adequate liquidity and are well positioned to emerge and tied 20 more normal industry and economic environment returns.

We anticipate impact to our business going forward from equipment being returned the associated lower utilization rates in revenue and margin pressure.

Our larger horsepower installations are faring relatively well with the medium horsepower equipment will be impacted the greatest.

Interestingly or smaller horsepower units, which are generally oriented towards a production natural gas now I relatively valuable come out the may get by relatively unscathed.

That's not a promise or no promises anymore. So we're seeing some isolated instances where that might be the case.

We have implemented various cost cutting measures with respect to operating and capital expenses, including reductions in our head count from layoffs at attrition.

Right freezes centralization of certain processes for better cost control.

Listen one of our suppliers on cost cutting efforts.

We continue to review additional opportunities to become more efficient when combining in reorganizing fill operations to reduce the number of operating locations.

Our rationalization of cost as a multifaceted process that have started.

Continuously being implemented it will not go away for the foreseeable future.

I also want to remind everyone of flexibility in resilience or the Im just business model.

Moving on the production side of the energy business as opposed to the drilling side conversion inherent advantage.

The last vestige of an operator to make money when they start drilling.

We also need compression never on need compression.

And all the wells can be shut in some production has to be maintained to keep even a minimal amount of revenue rolling in.

Because as soon as tight as from this downturn, that's like not but does give us your preferred position in the oilfield services structure hierarchy.

That's our macro advantage. We also have a number of macroeconomic company specific adventures.

As you know.

If you fall dingy has seen a short time.

Our model is demonstrably different from our competitors.

Operator for years that all kinds of cycles essentially without debt, we typically have an appreciable amount of cash on balance sheet.

We retain the ability to generate cast for rental business. We have always been one of the first to cut capital expenses to an extremely low level and accelerated manner.

Our playbook is the same this time, but it is being implemented in an even quicker man or due to the extreme downward slope in the industry.

In spite of the pressures on the industry and our business I feel certain will emerge in a preferred position, both financially and superior provider of equipment and services to our customers.

So with all that said I'll discuss the financial results as well as permanent operating in market comments.

Given challenges in our industry and the overall economy, we're pleased with our operational performance in the first quarter 2020.

A rental revenue increased 5% sequentially and 20% when compared to the first quarter 2019.

I was driven by increased rentals or a large horsepower units our unit and horsepower utilization remains solid we generated adjusted EBITDA of $5.8 million, an increase of 11% over the fourth for 2019.

Our operating cash flow for the quarter was $8.3 million.

We can further revenues and just reported total revenue of $17.9 million for the first quarter 2020.

The 100000 dollar decrease from the same quarter in 2019.

We experienced an increase in rental revenues of 20% decrease in both sales and service and maintenance revenue streams.

Sequentially total revenue decreased by 9%.

More importantly, rental revenues increased 5% sequentially.

Not unexpectedly self revenues decreased due to a drop in compressor sales.

Capital constrained environment.

We would expect self revenues remained soft in the coming months its companies has significantly reduced capital spending.

Total adjusted gross margin for three months ended March 31, 2020 increased by 3% <unk> point $1 million from $7.9 billion.

For the same period ended March 31 2019.

Adjusted gross margin, which does not include depreciation as a percentage of revenue for three months ended March 31 was 45% an increase from 44% year over year.

Sequentially adjusted gross margin for the first quarter 2020.

<unk> increased by 3% $8.1 million from $7.9 billion from prior quarter.

Adjusted gross margin as a percentage of revenue increased to 45% in this quarter compared to 40% in the prior quarter.

Selling general and administrative expenses were $2.2 million a year over year decrease for approximately $330000 decrease of approximately $580000 sequentially.

My vision for the year over year decreases due to a credit of $350000 related to the company's reduce deferred compensation liability.

Without this the first quarter 2020, yes, you know you would have been relatively flat compared to the first quarter 2009.

Sequentially. The $580000 decrease is also related to lower deferred compensation liability and lower stock compensation expense.

Adjusted EPS, you know expenses generally run at 13% to 14% of total revenue and continue to do so.

Operating income for the first quarter 2020.

It was a loss of $273000 compared to a loss of $145000 in the first quarter 2019.

The adjusted operating loss this quarter would be lower sales lower rental margins and hard depreciation expenses are lower horsepower equipment.

Sequentially operating income increased $608000 from adjusted operating loss of $881000 in the fourth quarter 2019.

This increase was primarily driven by higher rental revenue lower as Tonight and higher rental margins.

Our adjusted net loss after tax for this quarter was $808000.

This compares with net income of $90000 in last year's first quarter.

Any $1.4 million adjusted net loss in the fourth quarter 2019.

Well I find the loss for this quarter, our net loss before taxes for her $61000. So almost 350000 at the bottom line net loss this quarter was attributable to deferred taxes.

With another $300000 related to a loss in our fabrication facilities.

As far as reported net income net income will be a positive $4.1 million.

Fortunately due to our recent change in tax laws.

Claim net operating loss carry backs recoup some past pass cash income taxes.

This will result in a total of $15 million in actual cash tax refunds.

$4.9 million is the income tax benefit recorded this quarter.

And just reported earnings per diluted share of 30 cents for the first quarter.

EBIT dollars earnings before interest taxes, depreciation and amortization and our adjusted EBITDA also exclude any increases in inventory allowance.

Adjusted EBITDA for the three months ended March 31, 2019 was $5.8 million slight increase.

From $5.7 million, the same period and 19.

Actually 20 $25.8 million.

Adjusted EBITDA increased approximately $580000 sequentially from $5.2 million, primarily due to higher rental revenues and lower as Tonight.

Total sales revenues, which include compressors flares and product sales.

Decreased 65% or $2.7 million on a year over year basis.

Sequential sales revenue decreased to $1.5 million from $3.9 million.

Fortunately, 70% to 80% of these declines depending on the quarter were driven by lower compressor sales.

First quarter 2020, total sales gross margin was a loss of $289000.

This was the result of Unabsorbed cost in our fabrication facilities, primarily due to lower plant throughput and our attention of incremental personnel.

And compares to positive gross margins of $426000 in the first quarter 2019, and $358000 in the fourth quarter 2019.

First quarter 2020 compressor only sales decreased from $2.7 million in the first quarter 2019.

$3 million in the prior quarter to $852000 this quarter.

Again due to unabsorbed costs.

Yes, we're only cells margin posted a loss of $435000 for three months ended March 31 2020.

Compared to a loss of $30000 from the same period a year ago.

Profit of $76000 last quarter.

Our sales backlog as of March 31.

2019 was approximately $1.4 million compared to approximately $2.2 million.

In that fourth quarter of 2019.

I'm, sorry that backlog of $1.4 million was this corner.

Our rental revenue continues to grow in the year over year sequential quarters rental revenue in the first quarter 2020 was $16.1 million compared to $13.4 million in that <unk> first quarter last year.

And $15.3 million last quarter.

Rental revenue increased 20% and 5% respectively.

Compared to the fourth quarter 2019, our average rental rates on a per unit basis increased 7%.

4% on average per horsepower basis.

Rental rates increased by an average of 18% per unit in the year over year quarters, mainly due to our continued penetration into larger horsepower market.

This is a large per unit rental rate increase over the past year.

Yeah, I'm going to brag about it.

Remember that almost all the rental fleet equipment added last year was large horsepower it carries much higher rates per unit than our average unit.

Reported rental gross margins this quarter were 51% an increase from fourth quarter 2019, real gross margin of 47%.

Decrease from last year's first quarter of 54%.

Fourth quarter rental margins were negatively impacted by the previously mentioned $620000 bad debt charge.

Without the bad debt charge gross margin sequentially would've been flat at 51%.

Fleet size at the end of March 2020 totaled 20 316 compressors.

For 437007 or 50 horsepower. In addition of 12 units or 8100 horsepower during the first quarter.

As of March 31, 2020, 37% of are you lost horsepower is classified as large.

Over the past 12 months, we've added 86, new fleet units totaling just above 72000 horsepower with 94% of those you know just classified our large horsepower category.

37% over utilize if our utilized horse power being classified as large as important.

Large horsepower as compared to small and medium horsepower.

Just a fair better downturn and this is the first time, we've had this kind of backstop when entering a period of depression activity.

Our horsepower utilization to 60% and unit base utilization was 60% as at March 31 2020.

Overall, we had 25% more horsepower generate revenue this quarter compared to last years quarter. It had a small one per cent decrease sequentially.

I noted on a year in called and we thought our capital expenditures would decrease approximately 75% when compared to.

2019 levels.

Suggests a capex budget of about 17 half million dollars this year.

We spend about $6 million to $6.7 million in the first quarter, including $5.8 billion on rental equipment.

We have approximately $5 million to $7 million of additional capital commitments for the year, which suggests they totaled 2020 capital expenditure budget of only $12 million to $14 million.

Appreciably below the capital expenditures, we estimated just last quarter.

On August 12, 2019, Ngs announced that our board had approved and authorization to invest up to $10 million directly into the company to a stock buyback.

And as of March 31, 2019, the company's repurchased almost 38000 shares at a cost of almost $409000.

We continue to lead our equity remains one more attractive investments available in the current environment.

That said given the current I'm certain in the market.

<unk> belief that enhance liquidity is prudent we're not likely to be active participants and share repurchases at this time.

We will continue to review market conditions.

Our business capital position as we evaluate future opportunities.

Moving to the balance sheet.

Bank debt remains a minimum of $417000 as of March 31, 2020.

Our cash balance remains strong at $13.1 million.

In addition, we have a largely untapped credit line of $30 million available to us.

Provides ample liquidity in early every any conceivable scenario.

We generated positive net cash flow from operating activities this quarter of $8.3 million, which represents 46% of our quarterly revenues.

Free cash flow was $1.6 million, we anticipate this will increase through the year due to our recurring rental revenue and dramatically lower capex budget.

In summary, there are not many companies in the office space that have a recurring rental revenue stream essentially no debt on the balance sheet cash reserves in the bank and continuing ability to generate cash.

Finally, I want to comment on the.

PPP long, we risk we recently received and then paid back.

As noted in our earnings press release in a recent AK, we applied for and received 4.6 million dollar loan and the Paycheck protection program.

Which we intend to use to help maintain our employee population in a period of unprecedented turmoil in our industry and overall economy.

With the assistance of our banking under the rules at the time, we applied in good faith and received alone.

However, that's in a week phone improve our alone by the U.S. small business administration.

We were informed by our bank as well as the media the as a public company.

And solely because we were a public company were deemed to have applied pharmacy phones that maybe.

On the sudden werent meant for us.

Essentially were expected to divine the intended the S.P.A. has it developed over a couple of weeks never mind this be specific rules.

In effect public companies in our employees were discriminated against what became a politically driven process.

Well this is not the former wish the debate the merits or the politics the program.

Management in our board believes that the time and continued lay that Ngs was in as a company that should have participate and benefited from the program.

However, after carefully consider any potential costs.

Okay with the revised PPP program and guidelines.

We determined it was on balance the best interest of our collective stakeholders to return alone.

Vision set forth by the S.P.A. after we applied and received alone.

That himself to injury, we were charts interest on the loan for the interim period, we had it.

Unfortunately, your resolute nature of this government program.

The in my view irrational rescue political correctness exactly the opposite impact to the programs intent.

As Ngs was forced to reduce our workforce by 20% or roughly 50 of our team members upon the return of alone.

Before we take questions I want to thank the entire ngs team for their dedication and efforts during this difficult period.

Very trying environment or our employees have demonstrated the up most and professionalism and responsibility.

Some challenging months ahead of us who will emerge stronger than most thanks to our superior financial strength and exceptional people we have.

These are challenging times, the where a company that found ways to effectively navigate through turbulence and we'll continue to focus on exceptional service and our strong balance sheet.

Ross I see it in my remarks, so if you would please open the phone lines for questions.

At this time, we will pay question.

I'd like to ask the question. Please press star one on your phone now and you will be placed in the key when do I received.

You can press pound one at any time to remove yourself from the Q. Once again, if you would like to ask a question. Please press star one on your phone now.

Our first question comes from Rob Brown from Lake Street Capital. Please go ahead Rob.

Let's see.

Hey, Rob.

First question is kinda on your tax refund you talked about a 15 million other refund or I guess, maybe when do you expect it and then maybe some clarity on on sort of how you get that and ER and some of that.

Cash flow items in terms of the deferred tax offset in the quarter, but maybe some clarity on that tax refunds would be great.

You know weve applied for the refund the 4.9 million dollar.

You know ER, Adam we booked this quarter is.

Effect told me what the what than net book impact of the the 15 million dollar cash refund will be in all this is going back awesome cash taxes.

Changes in tax law.

Where we can you know.

The operating losses can be carried.

Back and get those so it was cash in applied towards those cash taxes and netted out. So that's going to result in I don't remember funds over three or four years. That's can result in $50 million in cash coming back as far as timing.

Yeah.

It's the government.

So.

Yeah, we would expect something.

Your next quarter too, but it could be you know it.

Good take throughout the year just depends on what's going on you know what the priority is on this stuff, but yeah, we'll we'll get it we're just not.

I, just can't confidently say exactly wins.

Okay, but that's a that's on that number or the 15 million to be in that number.

[noise] that you'll you'll actually island she okay, yeah, yeah, well get 15 main in cash.

Okay.

Good in it and then and kind of utilization rates, you talked about the high horsepower kind of maintaining utilization rates in a downturn.

What's the dynamic that drives that how sticky is that a high horsepower.

Mark.

Well it.

Yeah.

These are relative questions right, you know big horsepower relative small and medium.

Large horsepower and this is one of the reasons, we want to move into it a couple of years go.

'cause, it's relatively sticky from the point that is pretty expensive to freight and installed.

Once you have it there it's hard to move it.

Or or send it back or anything else and as you know we've got pretty good long term contracts on this stuff. So it's kind of stay out there.

As with anything in an environment like this there are.

Obviously negotiate negotiations going on as far as discounts and things like that but ER that equipment is generally stand out we see some of the four and 600 horsepower come back a little but not much I mean, our large horsepower utilization and we classify large horsepower far horsepower and.

Yeah. So it's essentially 400 to 14 horse part for us.

Yeah utilization has.

Hi has dropped.

Oh, you know still in a in the Ninetys just drop in the low end of a low ninetys from the high nice probably three or four points. So nothing appreciable in that and again that is what tends to move into this thing is proven out to be the there I've moved from that standpoint, So we don't expect.

Hardly hear the big horsepower to come back you know the.

Yes.

Medium will be the.

Primary impact we see it hasn't Michel a small horsepower that may actually held in pretty well too.

Depending on the gas marketing gas price and what everybody's doing there but.

Yes, just more expensive to build install operate and operators 10.

Not to do anything large horsepower, let's just say last last resorts.

Okay, Good and then.

I'm curious to get your thoughts on the latest sort of environment.

Most recently the last few weeks how is the pricing environment you mentioned, some some shut ins and.

And shut off but how how is that sort of trending how you're are you seeing the near term utilization and.

Sort of pricing environment at the moment.

You know to talk about pricing right now.

Oh, it's you have to shift to talking about.

Discounts being given you know plus shutdowns this downturn quite different from all the others.

And that speed and how fast it's come off and how offers have reacted and of course.

You know, how we've had direct according to what they're doing so.

Spin up.

Pretty quick downturn it really is gone from initially.

Discounts given to shut ins happening.

And shut ins are.

There's two reasons right all prices being extremely low where people just kept Mike.

You know money at it cash money and you know storage issues.

Now both those I think are starting to alleviate themselves are seeing some.

Strength in crude and young.

Strength is relative to turn right you know and things.

Up from $10 or $15, but yeah, it's been it's been.

Little steady climb here here recently, and I think that will probably hold we'll see how long.

It continues up.

Storage I think a we're getting very close and there's a lot of on the water and tankers right now and storage is going to stay high for a bit but I.

Have a feeling that we're not going to run out totally as opposed to fear a couple three weeks ago, it'll be fall and there's going be some issues around it but as far as a totally run out of storage and shut in or is totally shut and everything in seems to be fighting a little.

More than what it was a couple weeks ago.

So pricing, it's just all told down right. So there's hardly any.

Any pricing to compared to now we're still putting out some equipment.

Obviously, if we're getting more back two or putting out and the and the unit for putting out or.

Really not taking too severe.

Beating all and you know what I'd say prices were six months ago.

But there's not a whole lot going out so it's not a good.

Statistic to use right now just because the or the amount of equipment going out is far lower than men equipment, calling back.

But if you just like what we've done pricing is not an issue right now for the issue is.

Managing through shut ins.

And and we'll we'll do that we've gotten some back but oh gets more bag, but.

I think generally will be.

Got better safe and in most other people coming out of this thing.

Okay, great. Thank you I'll turn it over.

Thanks, Rob.

Next question comes from Craig Hoagland from Anderson Hoagland. Please go ahead Craig.

Yeah was curious.

Steve could you talk a little bit about the various regions you operate in and where you're seeing units being turned back.

And which reasons are faring relatively better.

Yeah, Good morning, Craig.

Well the Permian.

It's been hit the hardest and that's.

You know simply because it's been the fastest GERD last two or three years. So it's not unusual that you.

You'd see that and of course this is primarily oh country Nols and commodity that are getting hurt so we're seeing most of it and.

In the Permian, we're seeing a touch of it and mid continent Scoop stack area, Oklahoma.

And that.

ER and those are probably.

The biggest impacted areas.

We haven't seen much in the Rockies, yet and the San Juans been affected some bought in and.

The oil play out there.

But generally the Rockies haven't seen much ER.

You know.

Barnett South, Texas haven't seen much Appalachia hadn't seen much so it's primarily going to be.

And again this makes sense from the point of this has been most active mid continent or or the Permian.

You know as far as well.

Area is stronger than others I think that's again, that's relative to you say well you know these have gone down on these haven't gone down as much to the ones that haven't gone as much I guess or the relatively good areas.

Right, Okay, and do we are there any more large.

Rigs under contract that haven't begun working around them began generating revenue yet.

Yes, we've got you know number just says we have in the past and number of units are on standby rights or.

With people you know they've been built in the past and contracts allowed us to charge standby rates now.

He said on standby rates, you're gonna be invoke a little longer than we anticipated.

Thank and most of stuff would be out an operating by mid year third quarter the latest.

And we were on track to do that.

Two quarters ago, but now you will see those standbys standby rates extended much longer now.

We're still going to get the contracted minimum Carmel. This equipment. So standby goes on another two or three months or two or three quarters, Florida. We think we'll get standby rate plus we'll still get the full contract terms at the end. So it's essentially a deferral of full rights but.

Yeah, we're gonna that we're going to see lot more on standby and longer than we anticipated.

Okay.

And you mentioned in your prepared remarks, you you believe [noise].

Free cash will be better and in Q2 or Q3 than it was in Q1.

Merely because there's a drop in capex.

Right right now, we're obviously going to have some drop in cash, but yes. The capex.

It's much quicker is more in our control and yeah, we spent six points.

2.75, 0.8 of I think was.

<unk> compression and that's telling off.

Pretty quick so my third or fourth quarter, who got some obligations to fulfill in Q2 on it and again their obligations from contractor equipment.

But by Q3 and four Capex is gonna be.

Negligible.

Mhm.

At our current rental run rate.

Able to cover.

Overhead.

Yes, Sir.

Yeah well.

We will still well, we'll still be generating some cash they obviously, there's as can be under pressure but.

No.

<unk> was it was good and resilient Ah, but you know.

Our company and all the other companies you know Q2 is ready to start up where are you going to start seeing some.

Some real major impacts from a crude because that that's essentially a March March event, so the impact start taking.

Q2, but.

No, we anticipate generating free cash.

At the end of the year.

Right you know throughout the second half.

Right Okay. Thanks, Steve.

Okay great.

Our next question comes from Tate Sullivan from Maxim Group. Please go ahead. Thanks [noise].

Thanks, Hey, Steve always appreciate your comments.

Hey, like hot in the current environment the shutting in notices and you commented on it or but how do you get advance notice from the customers that they're planning to shutdown a well known returned equipment two months or is it is the instantaneously shutdown return equipment.

Thank you hear about at the same time.

Yeah, It's already and then yes, then they're not whiting.

How long time to call us.

Pretty much when they decide internally to.

Shut some down or shut a feel down or something like that were.

We're probably about next on the phone list.

[music].

You know because you know compression as though is that fair.

Fair operating expense to them, so we get very little notice.

Yeah, we have agreements we put in place on on shut ins from the point of.

You know how long ago last what the right is gonna be yeah. So Jim in terms had to be fulfilled and things like that.

So we've got that stuff pretty well covered and and.

You don't like those I mean actually I hate them, you know shut ins because.

You know nobody is making money at that point.

But I think weve and I've been in.

So the direct customer negotiations on some of age and.

I think you know out of a bad situation, we're going to come out.

Fairly good shape on not just from what the shut ins might be in the and the terms and conditions around them, but.

I think the customers were dealing with and we've got and you know and shutting in to our ones. We had good relationships with for him to work through some though.

The details and stick your points with them as we negotiate some these things and and I think we're going to come out from the point of having a.

Pretty good.

You know image with our customers as far as being responsive unfair and what we're doing all this stuff and you know.

Okay.

Those guys don't want to shut a man we sure don't want to shut a man, but it's all of its all a given right now and the best you can do is try to negotiate some fair. So we can.

Get through it and come out on the other side and I think we're going to be in pretty good shape from that standpoint, Oh man, but you know it's one it is a shut in as a.

I was not good for anybody.

But we get very little motors typically.

And then Oh no other technical quite the larger horsepower. That's currently in the fields or or on a pad supporting supporting multiple wells and the wells are producing currently well does a customer sometime stopped the gas lift process for keeping the pre production at a lower level or will they set the whole steel down is it.

[laughter].

Typically used to home.

Well, one of the field or or a bunch of wells or just.

Hi, Dan you can probably some of those gas that wells you you could produce the that gas lift most I couldnt story or you wouldn't be able to produce enough to make a worthwhile. So typically when there shouldn't be compression there shutting in wells and you know just hoping for a higher.

Higher oil price.

Okay.

Thank you Keith.

Okay. Thanks type.

As a reminder, if he would like to ask the question. Please press star one on your phone now.

Hi, Steve It this time Derby it'd be no for actually someone just queued up one moment.

We'll go because George May last from M. creates <unk>. Please go ahead George.

Thank you, yes, and good morning.

And the third story.

Hey, wait to stack main they've been contra revenue between low horsepower I would be Yemen height in this quarter roughly what other.

How much of the rental revenue, we each of those categories.

Yeah, I don't have it off the top of.

My head, but I mentioned, 37% of are utilized horse power is.

Is large classified as large so you could.

You could roughly say if you just want to.

Quite dollars to horsepower you roughly say, 40% of the rental revenue is large horsepower.

Totally just 60% so of that I'm going to hazard, a guess unsafe, 40% is medium horsepower and 20% is a small horsepower.

Okay great.

Thanks, that's helpful to me and then a question on your deferred tax liability that.

And I don't know I do understand that number and it typically large number on your balance sheet.

Does that represent taxes that deferred and that you want to go into future.

Yes, yes.

Now you know the the.

4000 dollar question is when you Oh woman, when you pay him and et cetera et cetera.

But yeah. It does represent taxes that are deferred down the road you know we get some tax advantages throughout different years, depending on what our depreciation loads are depending if you have bonus depreciation yeah, what that what the tax laws that allow you from a depreciation standpoint, so semi as you can shelter all those taxes and somebody was it.

Can't Yeah, those are the years or would have some cash taxes paid but.

Yeah.

And that's about as far as I'm Gonna go because I'm going to start a.

Story until you as far as well well that means but it is it is a liability because our they are taxes Oh, but.

Well, we caring for a long time, so sometimes is not out for quite awhile.

Okay, then again thank you.

Okay. Thanks.

And I do have a question from Patrick hadn't fleet. Please go ahead Patrick.

Yes. Its noted that you guys getting back that PPP loan, but is there any indication that there are other stimulus programs out there that you all are eligible for and you will apply for.

No there's some others out there, but I think they have.

Did a good job of surgically removing small public companies from eligibility for anything.

Excuse the sarcasm.

So no. There's some out there you know it becomes you can take advantage of and you know et cetera, et cetera, but no actually I think yeah. We've looked at a couple others and there's just not you know they don't apply or they're not a appreciable.

You know or.

You know pet care you can read the rules are going to change next week, when we get to alone. So no. There's nothing there's nothing in the queue that we're gonna be doing.

Right now anyway.

Hi, Steve It this time to our no further questions.

Okay. Thanks, Ross and thanks, everybody for joining on the call I. Appreciate your time this morning, and look forward to visit with you again next quarter. Thanks.

That's good food.

Well, thank you for that.

Oh has ended this call goodbye.