Q2 2020 World Fuel Services Corp Earnings Call
Thank you for standing by your conference call will begin approximately two minutes. We thank you for your patience and ask that you. Please stay on line.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the World fuel services, 2022nd quarter Earnings Conference call. My name is Kevin and I will be coordinating the call. This evening.
During the presentation, all participants will be in listen only mode. After the speaker's remarks, there will be a question and answer session instructions on how to ask the question will be given at the beginning of the couponing session.
If it anytime during the conference you need to reach an operator, Please press star zero.
As a reminder of this conference is being recorded Thursday July Thirtyth 2020.
I would now like the from the conference over to Mr., Glenn Klevitz World Fuel's, Vice President Treasurer, and Investor Relations Mr. Klevitz you may begin your conference.
Thank you Kevin Good evening, everyone and welcome to the World fuel services second quarter 2020 earnings Conference call I'm, Glenn Klevitz and I'll be doing the introductions on this evenings call alongside our lives slide presentation.
This call is also available via webcast to access this webcast or future webcast. Please visit the world fuel services Corporation website and click on the web cast iron.
With us on the call today, or Michael Kasbar, Chairman and Chief Executive Officer, an IRA Birns Executive Vice President and Chief Financial Officer.
You should now have all received a copy of our earnings release, if not you can access the release on our website.
Before we get started I would like to review World fuel Safe Harbor statement.
Certain statements made today, including comments about world fuels expectations regarding future performance.
And plans are forward looking statements that are subject to a range of uncertainties and risks that could cause world fuel's actual results to materially different from the forward looking information I.
A description of the risk factors that could cause results to materially different from these projections can be found in world Fuel's. Most recent form 10-K, and other reports filed with the Securities and Exchange Commission.
World fuel assumes no obligation to revise our publicly released the results of any revisions to these forward looking statements in light of new information or future events.
This presentation also include certain non-GAAP financial measures as defined in regulation G. a reconciliation of these non-GAAP financial measure.
They're most directly comparable GAAP financial measures is included in World Fuel's press release and can be found on its website.
Well begin with several minutes of prepared remarks, which will then be followed by a question and answer period.
As with prior conference calls, we ask that members of the media and individual private investors on the line participate in listen only mode.
At this time I would like to introduce our chairman and Chief Executive Officer, Michael Kasbar.
Thank you Glen and good evening, everyone. We're speaking to you today for our second quarterly earnings call during the covert 19 pandemic.
First I want to say, how proud I am that well where global team has continued to operate our day to day business activities with nearly all of our employees working from home. We're on the front line delivering fuel.
It is a testament to their professionalism and passion for the business.
As I've said previously.
We took swift action at the beginning of the pandemic to activate or safety procedures and protocols and Fortunately we have had very few cases, it cobot 19, among our employees.
Despite all of the continuing complexities in the world around US we delivered a very respectable result in the second quarter.
While our aviation volumes were naturally lower in the current environment, we delivered better than expected results driven by increased cargo activity unscheduled aircraft activity as well as historic oil price volatility during the quarter.
Global airline passenger volume well recovering at varying pieces in different parts of the world is still far from treat pandemic levels.
Before it covert 19 hit the aviation industry was not as strong upswing with good passenger mild growth consistent with it very long growth trend.
It's clear the world wants to travel by Air.
That is not likely to change.
I'm optimistic that science will ultimately prevail and the airlines focus work on safety and when we announce will bring back this industry, which is so vital to local national and global economies and modern living.
Yeah fuel is fortunate to have it geographically and segment diverse portfolio of energy clients that rely on our solutions.
Our core marine activity held up as well.
Well the cruise market continues to work gets re entry plan with some limited cruising occurring in Asia and Europe.
We continue to be selective on marine risk as we have been over the last five years, which should position us well in today's market.
Our global Lan business delivered good results boosted by seasonal strength in the UK, which carried into April and a rebound in our north American gasoline and diesel business as many taking not taking to disguise began taking to the road.
As I will explain further we have used the considerable learnings of the past four months to rethink our global work routines.
When the World does return to some steady state, we will have a more flexible and efficient hybrid workforce and workplace.
Some returning to the office and some continuing to work remotely driving both greater cost in business efficiencies and giving us the ability to access wider talent pools.
Our global team also continued to do a great job managing cash risk and operating expenses with expenses down sequentially and strong operating cash flow supporting our very healthy liquidity position.
[noise] underwriting has always been a core competency and one of our core values to the marketplace.
Insulating buyers and sellers for multi multitude of counterparty risks has been the essence of or existence last 35 years.
And it's still wins.
Protecting the balance sheet in cash flow is what we have always focused on every day.
Speaking of liquidity as announced earlier today, we have signed an agreement to sell our multi service payment solution business to Corsair capital, a New York based private equity firm.
Well I love this business and its people and it was certainly additive to world fuel focus is truly the key to success.
The sale would provide us with even more capital with which we can reinvest in our core business enhancing our ability to drive growth greater operating leverage and higher returns.
I will shortly provide you with all the related financial information timing.
So while the pandemic continues to challenge the world, we have been staying healthy in safe well, serving our customers and suppliers with the same level of commitment and old fashioned customer service excellence and operational support we always have.
Adversity, often drives efficiency and productivity.
Many of the company's they come out on the other side of extraordinary events will be smarter stronger more efficient and poised for growth.
I am confident that we will be one of them.
I'll now turn the call over to Iraq for review of our financial details followed by some Q and <unk>.
Thank you Michael and good evening, ladies and gentlemen, before I get into the company's results for the second quarter I would like to reiterate our thanks to our 5000 loyal employees worldwide, who dedicated countless hours toward business during the quarter, which is pose some unique challenges for the world.
And of course, our company.
The resilience of our company and commitment to best in Class service has differentiated us as a solid counterparty with a sustainable business model for decades, and this has only been further accentuated over the past few months.
While the timing of returning to any sense of normalcy remains unclear. We remain focused on our long term strategy, which encompasses strategic growth in our core businesses and a continual focus on cost and balance sheet management to deliver greater value for our shareholders and other stakeholders while of course looking after the health and safety.
We have all of our employees worldwide.
And now I will provide you with our financial update.
As usual please note to the following figures exclude the impact of pretax non operational items in the second quarter, which had been highlighted in our earnings release.
Our non operational expenses in the second quarter, principally consisted of an $18.6 million asset impairment relating to our decision to rationalize our global office footprint in light of new World We're living in.
Some of our office locations will simply transition to a more permanent remote work environment and some will be relocated to smaller more flexible and cost effective locations.
Non operational expenses also included costs related to certain other organizational changes as well as acquisition and divestiture related expenses.
To assist you as always in reconciling results published in our earnings release, a breakdown of the non operational items can be found on our website and they're also on the last slide of today's webcast.
So now I'll, let me get into some second quarter highlights.
Adjusted second quarter net income and earnings per share were $8 million in 13 cents per share.
Adjusted EBITDA for the second quarter was $57 million and lastly, we generated $236 million or cash flow from operations, which enabled us to continue to maintain more than $1 billion in total available liquidity a critically important metric during this time period.
Consolidated revenue for the second quarter was $3.2 billion the significant year over year decline was driven principally by the dramatic impact of the cobot 19 pandemic arc segment volumes as well as significantly lower average fuel prices during the quarter due to the unprecedented impact of the pandemic on global.
Demand.
Our aviation segment volume was 690 million gallons in the second quarter, representing a sequential decline slightly less than the 65% decline forecasted on last quarter's call.
Although we experienced relatively strong volumes related to cargo activity in certain business in general aviation customers commercial or commercial passenger activity remained at levels below 25% of normal activity and that was the principal driver of the volume decline in the second quarter.
Volume in our Marine segment for the second quarter was 4 million metric tons down approximately 18% sequentially driven principally by the negative impact of the pandemic, our core reselling activity, including sales the cruise lines experienced most of the volume decline.
We are hopeful that second quarter volumes with a low point as we're beginning to see some increased activity in certain segments of the marine market.
Our land segment volume was 1.2 billion gallons per gallon equivalents during the second quarter, that's a 15% decrease sequentially, while volume declines our land segment were not as significant as the aviation and marine segments. We did experience following the volume declines in our retail commercial and industrial connect businesses.
Yes.
Consolidated gross profit for the second quarter was $214 million, that's a decrease of 20% compared to the second quarter of 2019.
Our aviation segment contributed $92 million of gross profit in the second quarter, that's down 35% year over year, and basically flat sequentially, but significantly above the expectation shared on last quarter's call.
Despite the significant decline in traditional passenger activity during the quarter as well as a decline in government related activity as a result of the ongoing drawdown of troops in Afghanistan, We did benefit from some situation specific non traditional activity arising from the pandemic such as repatriation flights.
And the repositioning of aircraft.
We also benefited from historic inventory volatility experienced during the quarter, whereas many of you know crude oil prices started out at $20, then technically drop to negative 40, and ultimately ended the quarter at just under $40.
The resulting return to a contango market following a somewhat prolong backwardated market environment served to contribute positively to our second quarter aviation results as well.
While we are slowly beginning to see an increase in volume during the early part of the third quarter in many parts of the World. We expect aviation gross profit in the third quarter to be generally flat sequentially due to reduced price volatility as compared to the second quarter as well as an expected further decline in activity in Afghanistan.
Obviously with the ongoing effects of the cobot 19 pandemic globally performance. The latter part of the year remains difficult to forecast at this stage.
The Marine segment generated second quarter gross profit of $37 million, representing a slight increase year over year and generally in line with the guidance we provided on last quarter's call.
As we look ahead to the third quarter, we expect the modest sequential increase in marine gross profit driven principally by seasonality and the modest volume growth in our core business mentioned earlier.
Our land segment delivered gross profit of $85 million into second quarter down 8% year over year land results were actually better than expected at the start of the quarter as gas and diesel activity began rebounding midway through the quarter and the strength of our UK operations in the first quarter. This year actually continued into the early part of the second.
Quarter.
However, many customer segments, such as the busing sector. For example continue to be constrained until related markets reopened.
Looking ahead to the third quarter, we expect land gross profit to decline sequentially due principally to traditional seasonal weakness in the UK.
Our core operating expenses, which exclude our bad debt expense were $154 million in the second quarter down more than $20 million sequentially and just below the guidance provided on last quarter's call.
As mentioned last quarter, we made immediate cost related decision decisions as the pandemic began impacting our business activity.
These measures included a global hiring freeze and other organizational changes the postponement or elimination of all non essential projects and a reduction in discretionary spending.
With a broader learning stemming from our ability to effectively operate many functions within our business with a remote workforce, we explored the opportunity to rationalize our global office footprint as mentioned earlier, which we expect will result in additional annualized cost reductions of close to $10 million, while ensuring a healthy and.
Digital work environment for our employees as we look towards 2021 and beyond.
Based on the actions taken to date and our continued efforts to identify additional cost saving opportunities. We expect core operating expenses to be in the range of $149 million to $154 million in the third quarter, representing another sequential decline in operating expenses.
Last quarter, we mentioned the likelihood that bad debt expense will increase over the balance of the year considering the strain cobot 19 is placed on the global transportation this industry and many of our customers around the world.
As a result, our bad debt expense increased to $25 million in the second quarter, principally due to the establishment of reserves related to a few notable bankruptcies in the commercial aviation market.
While our consolidated receivables portfolio is down from $2.9 billion at year end to $1.4 billion in June and Aviations receivable portfolio is down from $1 billion to just over $400 million over the same time period.
Risk levels clearly remain elevated however, our underwriting team has done a fantastic job managing through this crisis and the challenging market conditions, we've experienced since March.
Despite the historic market conditions experienced in the second quarter, we still delivered $35 million of adjusted income from operations I think Thats. Another testament to the work of our team and they are laser focused on supporting our customers through these unprecedented times, while also carefully managing costs throughout the quarter.
In the second quarter non operating expenses, which is principally interest expense was $14.9 million, which is down 15% year over year, primarily driven by a decrease in borrowing rates.
While we had been making progress in reducing our tax rate over the past several quarters due to the pandemics negative impact on our profitability, most notably in the United States as well as discrete tax items recorded during the quarter, we had an unusually high tax rate this quarter at this point considering the current environment. It is.
Difficult to forecast our effective tax rate for the second half of the year, but it is now more likely that our rate will be over 30% over the next two quarters.
Our team did a fantastic job managing working capital during the second quarter, resulting in $236 million of operating cash flow while prices were extremely volatile during the quarter lower prices combined with significant volume declines contributed to reduction in working capital that resulted in substantial cash flow generation.
Our net debt position declined by more than $200 million sequentially to $450 million in the second quarter again due to our strong operating cash flow. This resulted in a further decline in our net debt to EBITDA ratio to 1.2 times and our total available liquidity remained more than $1 billion consistent with our ACV.
Actually somewhat above our liquidity position at the beginning of the second quarter.
Obviously looking forward our available liquidity is dependent in great part apart our future performance and cash flows.
The strength of our balance sheet as a result of a phenomenal remote team effort involving our commercial business under our underwriting and collection teams and many other members of our organization.
Finally, today's announcement of the sale of our multi service payment solutions business represents a significant step in our strategy to sharpen our portfolio of businesses.
Offsetting this line of business will enable us to continue to simplify our business and focus our attention on driving growth and greater digitization in our core businesses accelerating our ability to drive greater operating efficiencies and returns.
While the proceeds from the sale, which is expected to close within 90 days will initially be utilized to repay outstanding debt. It also will provide us with additional capital to strategically invest in our core businesses in closing like most businesses worldwide. Our business has clearly been impacted by the global pandemic.
Our employees, our customers, our suppliers and even our shareholders have all been impacted.
Despite the continuing need to run our business remotely our global team pull together to deliver reasonably good second quarter results given current circumstances.
While we have no direct control over the timing of return to any sense of normalcy, we remain focused on our core priorities of keeping our employees safe serving our customers with excellence driving growth in our core businesses and continuing to improve our operating efficiencies all of which should contribute positively to shareholder.
The returns.
Thank you please be safe I would now like to turn the call back over to our operator for queuing it.
Thank you spoke to register a question press. The one followed by the four on your telephone keypad still here are three telling prompts that acknowledges that request for your question has been answered you would like to withdraw your registration plus the one followed by the three so again for questions. It's a one for.
Our first question is from Ken extra with Bank of America. Please go ahead.
Hey, good afternoon, Michael in Iraq and Glenn.
So congrats on on the sale and managing through this this rough environment.
Maybe just given the sale.
Michael our and maybe just your thoughts on acquisitions as you consolidated assets do you want to now take that capital and focus on land Marine aviation at that particular segments within that I guess, given what's going on in the world.
Are there are you seeing competitors that are more available now to thinking about joining.
Teams with with a larger entity to to get available access to capital.
Thanks, Ken.
You know, it's it really varies.
Across the board.
The company is that may want to sell assets are not necessarily the ones that you may want to buy.
Those are the ones that.
Our perhaps the businesses that are not highly desirable and have been impacted.
Most and so.
You know buying quality I think the thing that we've learned is certainly.
Buying at a good price is always a good idea but.
You are always better off buying good company that.
It was in an area that youre going to accelerate.
So.
We've said it before the land businesses.
The energy transition businesses in terms of our connect activity is interesting that certainly growth area.
So our are seeing eye businesses, our commercial and industrial diesel delivering diesel.
Two commercial users.
It is fairly large part of the business.
You saw that we acquired you the air and that was a good acquisition straighten our wheel house so.
The marine area again is.
You know an area that we're still committed to and certainly the commercial aviation business aviation space. So.
I think the thing we've learned.
Over the period of time is.
Stick to your netting.
Work with your core.
So this is a similar answer that we've given.
In the past that that that broader land businesses.
We like.
There is an interface between land and marine and land in aviation ships come into Port Dan.
Aircraft.
Comes into airport so.
Anything that is within that core of logistics.
That is service that is compatible with our end user community.
We'll consider.
The government business, where you know fairly active government contractor.
That's an area that I think we give some consideration.
We acquired NCS about 10 years ago Thats been an excellent.
Acquisition for US, we always knew that that business was not going to last forever is sunset business and.
It's carried on for about 10 years.
And the reason that we acquired that years ago is that we thought we were going to learn a lot and we certainly did so.
I've said that time, and again, where we've leveraged the capability in the competencies in terms of logistics areas. So.
Anything that helps us within energy within logistics.
The technology space while.
Exiting multi service.
As you know poignant I guess is maybe a good word and you know the and Iris commented in terms of the Digitization journey and.
Jeff in our technology team.
Eliminating manual touch points.
It's been a heck of a journey with what we're doing what we do is very tedious.
Where we are trusted brand we've got to global network, we're powering global Commerce, we take a lot of pride in the brand and the trust.
And the brand promise.
It's a lot of moving parts, it's been a heck of a journey.
We have made a lot of progress over the last four or five months.
In terms of processes and eliminating some of those manual areas. It is about driving automation using our PVA.
We're seeing acceleration there so I'm encouraged by that.
We love, our aviation business or commercial aviation business aviation, our marine business, we've been added for while they're not going away.
In terms of passengers are cargo up so the intersection with all of those and then and the energy transition in terms of solar and wind and sustainability and gas and power all of those areas.
We will sort of consider.
So.
It's sort of long winded answer.
Hopefully some folks are listening that may have an interest of cashing out or becoming part.
Of our enterprise, we've grown through acquisition successfully and it's really about reducing complexity.
And getting the focus on that energy management.
For consumers the end user, it's giving those low cost but tailored solutions.
For those those industries and anything that can bring bring that together is what we're going to focus on.
So just maybe.
Maybe a couple of quick ones.
Cost of revenues from the sale and then an aviation highly you mentioned some bankruptcies.
You want to just kind of expand on that your thoughts on what of the.
Current revenue stream is might might be exposed are at risk.
How would you break it down may be categorized as.
Well at the start as happy birthday can now year now your questions. The revenue stream going away on multi service was the question yes.
It's under $100 million of it because it makes their business their gross and net revenues, particularly to the same number.
So it's a little run rates about 90, 90 $190 million or so.
In terms of the bankruptcies look we've obviously all experienced.
The last few months.
Which has been.
Historic is probably an understatement and its impact on the aviation industry.
It is also using the word historic on that is probably an understatement as well. So every single airline in the world has been affected.
Some of them one in a little stronger than others.
Some of them have been fortunate up to be domiciled in the jurisdiction that's provided.
There.
Significant government support or banking support or equity support and even many companies.
Got some support from bondholders.
There are some jurisdictions where.
Yes, there wasn't as much help available.
And that tended to be in Latin and South America. So there are few publicized bankruptcies. There that were there were customers of ours that we're working through when it's still early stages in terms of where where those might come out.
As I mentioned in in my script.
The.
The aviation receivable portfolio overall, the glass half full of the significant drop off that we've seen in where we stand today is our entire aviation receivable portfolio is now only $400 million, which is 40% of where it was at year end with no significant exposure is in.
Visually remaining because no one has a lot of activity right now right. So.
Ironic to the situation our past due balances are at historic lows for maybe somewhat obvious reasons because.
We've been collecting and that hasn't been recycled back out at the same pace because volumes are down so much.
So.
In the future is still.
Unclear in terms of where we go tomorrow being very careful in terms of the extension of credit.
Even though that's one of our core value props going forward as the market starts to rebound.
Looking at that very carefully.
So.
Yes, it's tough to give you a.
Clear answer than that working very hard at a day to day to make sure that.
We keep.
Additional.
Central needs for reserve down as much as possible there there is certainly.
Certainly smart issues out there.
But.
Arguably none of them as big as some of the ones we've already seen.
So.
Hopefully that answers your question.
No that definitely appreciate that appreciate that.
And to Michael on yesterday.
The.
Last one sorry, Ben but.
Can you breakdown marine maybe just before this downturn what percent was containership what percent was crews and then what percent was other.
Container is.
I don't have the exact percentage for you a reasonable piece of the pie that hasn't changed that that much crews is only about 10% of our portfolio.
And.
You know that that obviously is the portion of marine Thats got impacted there has been impacted the most.
Even though.
Similar to my comments in aviation Ken.
There is repositioning of ships moving crew members to their home bases et cetera. So has actually been a reasonable amount of activity there that weve that we've supported even even during the period, where there is no passenger activity.
And then you know there okay. Thanks.
Yeah, I just wanted the percentages to understand what what was that at risk within the group, but if it's a vast majority container and 10% crews that's.
Thats it.
Unless there is anything else in there.
No I mean crews as the is the portion of that.
That business that got impacted the most.
Hi, Thanks, Thats all my right at the.
Thanks again.
Next question is from Ben Nolan with Stifel. Please go ahead.
Hey, guys.
I appreciate can leaving a couple of for me.
I, there's a there's a few things well, let me start with multi service I got a handful of question. So.
Let me start with multi service per share you given the kind of $90 million revenue run rate, but was curious if you maybe.
If you have the how we should think about the volume impact.
And also maybe the any impact too.
The going forward net income.
Well, there's no volume in multi service because they don't sell fuel so thats. It thats. The easiest question today that would be zero [laughter].
And part two I'm, sorry, part too I was so focused on that difficult question.
How should we think about any.
Negative impacted net income or remove profitability going forward.
Well you know I think the best way I could describe it.
His.
On on an EPS basis.
The net impact considering the cash will be used to repay debt is less than 10 cents a share.
So it will have a relatively minimal impact on EPS.
Perfect.
All right so that.
Me there.
The other thing it was gonna well one of the other things is going to ask about is.
The the gross profit on the aviation business as you talked about was.
On a per gallon based may maybe the highest that I've ever seen it.
Or at least as far back at my model.
And obviously there were some.
Thing that.
We're unable to use sort of.
Those numbers higher.
I think interesting at least was interesting to me as I think I are you said you expect that third quarter gross profit for aviation be flat sequentially. So is that in that sort of expectation are you anticipating there to be some recovery in volumes or is it a continuation of some of this higher margin.
It kind of activity in the third quarter as well.
Yes, So let me let me describe that as best I can bend so.
The answer to recovery on volumes, yes, there is an assumption on some recovery, we're being conservative but through July so far Fortunately we've started to see.
Different recovery levels in different parts of the world nothing overly significant but certainly better than going the opposite direction right. So.
That coming back some of the traditional passenger activity.
Contract type business that was almost nonexistent in the second quarter is slowly creeping back a bit but nowhere near.
The levels of the first quarter for example.
So to give you a broader answer on the flattish forecast.
He had the non traditional business that I described in the second quarter that.
Almost certainly will not continue with the same pace in in the third quarter, you never know, but I think that was more situation specific in that.
That's not necessarily a piece of activity that will continue on at the same rate cargo business is still pretty strong, but it was even stronger for some of those reasons in in Q2.
We also had a significant amount of volatility again I mentioned the.
The price facts that we that we're all familiar with where we were around zero and and then we went all the way back to almost $40 at the end of a quarter.
Market return to a contango environment, we we had some challenges for awhile before Corona.
With the with the market in a backward dated state.
So bye bye.
The volatility that we saw and a curve that that is now more shaped in the contango variety. If you will that that provided us with a lot more opportunity for upside in the second quarter now prices have been relatively stable since the beginning of a month right. We've been hanging out between 40 and 42 days.
It is consistently so that level of volatility.
Is is way down for now that could change tomorrow. So we don't necessarily expect the same benefit.
From a.
From that.
I also mentioned that we expect government activity to be down a little bit more.
So if you balance all that out it puts us.
Maybe a complicated answer but puts us into a similar net position.
The mix will drive a lower margin than what we saw in.
In Q2, but there should be more volume to get us too about the same place.
Okay No. That's that's helpful.
And an extra me as.
The.
Sort of capital allocation obviously.
You are still generating a pretty cash flow gear pretty good cash flow leverage is not really an issue liquidity.
And with the sale multi service.
That is just enhance that much further.
Mike you talked about looking at potential opportunities to acquire things.
Sounds like the first take for multi service.
Liquidity or subs, what you're generating out of that is.
As to repay debt, but.
I believe in first quarter, you guys bylaws shares back I mean, where does that rank.
With the shares being where they are.
Relative to either the other two.
Buying debt or buying assets.
Yes so.
Well on our yet so.
We maybe sound like we've gone back and forth a bit, but we've never big fans of buybacks and then we started generating cash.
Way more consistently our balance sheet start improving so we started.
Including a greater portion of our capital allocation for for buybacks I would say while.
We bragged about our liquidity being strong, which which you're was again at the end of the second quarter, a multi service will obviously, a pad that a bit more we're still in a very uncertain world in terms of.
What the next few quarters might bring how quickly business may come back.
And.
So preserving liquidity that were so proud of is important to us and trying to.
Maintain as much of that as possible as time goes on so I would say in the for the time being even though we may not be very happy with our current valuation.
It is not necessarily.
As high as a priority is it may have been.
Four months ago, but over the long term it remains.
A key element of our capital allocation strategy, we're just.
I want to take a little more time to see what develops over the next couple of quarters to get more comfortable before we start reinvesting in our own stock.
Okay. That's helpful. And then last one for me is.
The bad debt close $25 million, so bad debt or.
Provisions I guess for bad debt the I am curious.
Historically, you guys have a long track record of managing credit here.
Would you anticipate any of that actually being able to be recouped back ended at PNM, all either I don't know ultimately its collected or.
Or some other.
Credit provision that enables you to capture that back a minute.
It's a pretty critical service that you guys provided and I believe it even in case of bankruptcy puts you pretty high.
A repayment profile. So I'm just curious it may be could just got that a bit.
I'll put our general counsel on the spot save it does it really good job yeah, maybe so of course.
We will do everything possible to.
To minimize US you know the potential damage related to some of the the bankruptcies that are already out there. It's always a very complicated process, you're right, there's things like a central vendor.
Fortunately most of these airlines is still operating and want to need credit going forward. So there are lot of things that could happen I wouldnt count on.
Recouping.
The that amount, but certainly we would love to and we're working as hard as possible to.
Reduce the risk to is smaller than number as possible, which would increase the odds of that happening.
But.
It's really I would say, it's too early to tell but you're absolutely right we have.
Maybe some strategic advantages over other types of creditors, but you know, it's a it's a tough and unique environment. So I wouldn't.
I wouldn't make any promises along those lines.
Okay, all right appreciate and.
That's it for me appreciate the time guys and.
Congrats on a multi service so that is.
Pretty good idea.
Thanks, a lot then.
Thanks Ben.
Okay No further questions on the phone.
Well. Thanks, Thanks, very much to all of our shareholders to our employees.
No its head down.
We're.
We're optimistic.
About our future.
It's been.
It's been a heck of a journey over the last several months, but.
We see the future and.
That's really what we're looking towards so thanks very much and we'll we'll look forward to updating you next quarter.
Take care now.
That does conclude our conference call for today, we thank everyone for participating you may now disconnect.
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