Q3 2020 Exterran Corp Earnings Call

Greetings and welcome to the Exterran third quarter 2020, <unk> earnings call.

At this time all participants are in a listen only mode.

Question and answer session will follow the presentation.

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Please note that this conference is being recorded.

I will now turn the conference over to our host Blake Hancock, Vice President of Investor Relations. Thank you you may begin.

Good morning, and welcome to Exterran Corporation third quarter 2020 conference call.

With me today are experience, President and Chief Executive Officer, Andrew Way, and David Florida experienced Chief Financial Officer.

During this conference call, we may make statements regarding future expectations about the company's business management's plans for future operations or similar matters. These statements are considered forward looking statements within the meaning of the U.S. Security Hall and speak only as of the date of this call.

The company's actual results could differ materially due to several important factors, including the risk factors and other trend and uncertainty describing the companys filings with the Securities and Exchange Commission.

Management may refer to non-GAAP financial measures. During this call in accordance with regulation G. The company provides a reconciliation of these measures in its earnings press release issued earlier today and a presentation located in the Investor Relations portion of the company's website with that I'll now turn the call over to Andrew.

Thanks, Blake and good morning, everyone and thanks for joining the call today.

First I will discuss the third quarter highlights then some recent developments in wins, along with what we're seeing across our global footprint before I turn it over to Dave.

The third quarter came in line with our updated guidance from September as we had originally guided to the mid $30 million EBITDA range.

This was driven by improved eco revenue along with continued focus on our cost structure.

Yes, you need continues to move lower.

COVID-19 continues to challenge logistics globally for many of our customers and suppliers, but.

During the quarter, we saw a slight improvement in our ability to move people around the world, which is continuing so far into the fourth quarter.

We remain cautiously optimistic, but all closely monitoring the potential impact of renewed cobot cases around the world.

During the quarter, we signed an $18 million or six year extension in Latin America that requires no incremental capex.

This puts renewals for the region over 200 million for the year continuing to highlight the mission critical nature of our equipment globally.

During the third quarter and early in the fourth quarter. We were also awarded two small eco contracts in the region further enhancing our commercial success.

While new product bookings and new eco orders was slowed during the quarter. We are seeing a pickup in interest in tender activity a slowly increased outside North America. We continue to work on several large water projects and remain hopeful that at least one of these projects will get awarded during the fourth quarter.

Well it is an integral part of our transition story not only because it does not require incremental demand to drive growth, but also it's important to deliver enhanced environmental solutions to our customers and provides us multi industry applications over the medium to long term.

Well this year it pulls the growth in this business more than we would've liked as all customer step back to find the new normal we continue to see new projects come onto our radar and are starting to see customers look beyond the short term and plan for their future needs.

We have a strong pipeline of both large and small projects with the majority of the mix related to our middle East region at.

The dust settled in the U.S., we are beginning to have a more constructive dialogue with our customers on starting additional pilots and trials that go to prove out our technology.

The commodity supply demand imbalance and COVID-19 pandemic has certainly impacted our customers production. The net cash flow ultimately lead into many looking for ways to adjust spending over the near term.

Over the past nine months, we've had numerous conversations with our customers on helping them navigate these challenging markets. The outcome to these discussions has resulted in solutions to mutually benefit both exterran and all customers taking into consideration the short term uncertainty and balancing the longer term.

Needs.

The net result of these negotiations to date is roughly 40 million reduction in long term backlog largely tied to one specific contract with the term of the agreement was modified.

The reduction in backlog impacts the second half of 2022 through 2028, and Dave will provide more color on this in his comments.

Looking across all regions and starting in North America, clearly product bookings continued to be slow, but we are starting to see more positive conversations.

And it's a little early to say things will pick up next year as our customers are going through their budgetary cycles right now, but we are hopeful a few of these will turn into opportunities next year.

We're also extremely focused in the region on building out our Amat service offering to help generate revenue continued to enhance our margins.

In Latin America, despite all of the difficulty the region has faced between COVID-19, geopolitical challenges and currency headwinds we continue to have commercial success.

On top of the more than 200 million of extensions. So far in the region. We have had a couple of small eco wins and we still see additional opportunities for important renewals within the coming months some quarters.

Turning to the Middle East region, we continue to execute well on the projects in backlog however, with travel limitations. It has caused certain project schedules to move further to the right.

Commercially in the region, we see the D. boom structure, gaining additional traction, which should set us up well for additional opportunities in the coming years. There are also other large countries in the region, where we have not had a significant presence that we are currently focused on expanding in the coming years to help drive additional revenue and profitability.

For the Asia Pacific Region, we are seeing a breakthrough for exterran in new processing and treating equipment enabled by the many years of successful service support RMS team has performed in the region.

Overall, despite the industry challenges, we continue to have constructive dialogue with our customers and see a healthy pipeline of opportunities for our products and services.

And with that I'll now turn it over to Dave.

Thanks, Andrew for the quarter, we delivered EBITDA of 36 million, which was in line with the updated guidance that we provided in September on revenue of 170 million.

You will see in the earnings press release and in our 10-Q, which will be filed soon we've now reclassified our U.S. compression fabrication business into discontinued operations for all results presented have been restated to exclude this business from our re occurring numbers.

For the past year, we have talked about becoming a company with EBITDA margins greater than 20% as we reported this quarter, our adjusted EBITDA margin was 21% this.

This achievement is not just a function of the mix of higher margins are more recurring businesses, but also results from the focus of the organization to drive productivity.

As one example, we have taken out almost $30 million, an EPS unit costs out of our structure since 2018.

We also have had strong opex productivity does reflect reflected in gross margins.

The Q3, adjusted EBITDA margin of 21% compares to 15% for 2018.

Well some variable cost of benefited from lower volumes.

We've had margin rate pressure from fixed cost due to these lower volumes as well.

These results in our transformation have been accomplished and what could possibly be the most difficult business environment in the past 70 years.

Exiting compression was the last significant adjustment to our product portfolio and we're now focused on higher margin cash generating and returns enhancing businesses.

Back to the Q3 results from a segment perspective revenue for contract operations was 82 million, while gross margin was 57, resulting in a gross margin rate of 70%.

Revenue increased sequentially as a result of the contract adjustments, which Andrew mentioned, the full quarter impact over Q2 contract startup and more overall activity during the quarter.

I will add the contract term that was adjusted result, with an acceleration of deferred revenue and appreciation for the project, which will continue over the next two years. This.

This may be a good time to point out and remind everyone.

When we receive upfront cash reimbursements for Eco project, we amortize that over the life of the project as deferred revenue.

Pico backlog at the end of the quarter stood at 1.21 billion. The backlog was down at the new contract extension was partially offset by the contract adjustment.

For mass revenue was 30 million in gross margin was $70 million this resolve and the gross margin rate of 24%.

The revenue increase was driven by increased activity in Asia Pacific region, and Latin America.

Revenue in the product sales segment was 57 million and gross margin was 3.1 million, resulting in a gross margin rate of 5% revenue increase sequentially driven by incremental activity in our international locations.

Margin increase for the quarter due to better better absorption of fixed costs with increased factory activity.

Continue to make strategic decisions to hold certain engineering and manufacturing costs that we deem critical going forward and this was roughly a $1.1 million drag for the quarter.

Our product sales backlog was $497 million at the end of the third quarter compared to $547 million at the end of the second quarter.

DNA expenses were 30 million down from $32 million in the second quarter.

Moving to the balance sheet net debt at the end of the third quarter was 488 million our leverage ratio was 3.5 times and compares to three times at the end of the second quarter also remind you that we have no near term maturities. Our next maturity is our revolver and 2023.

Turning briefly to the fourth quarter, we expect adjusted EBITDA to be in the high 30 million dollar range.

We have included guidance for Capex and cash taxes, an earnings presentation deck.

While there remains a great deal of uncertainty and variability in the business environment. We are also well into the 2021 planning process, but we're not in a position today to provide quantitative guidance, we're confident that EBITDA and 2021 will improve to the 2020 level. This will be driven by the strong eco on product backlogs, along with the productivity and efficiencies.

That we've achieved over the past year.

EBITDA margins will remain north of 20% as well and with that I'll turn the call back to Andrew for his closing remarks, thanks, Dave as we look beyond Twentytwenty and into next year, we continue to see the year to be a growth year driven by backlog execution additional productivity and cost controls. We are strongly focused on building additional momentum.

In our water business grow in aftermarket services and expanding on new product development to help enable and enhance our total product offering.

We will control, what we can control and we'll adjust quickly and swiftly if needed as we have shown we are capable of doing over the past couple of years all.

All of this leads to the focus on protecting the core of our business, which means managing our cash flow to protect our balance sheet, while allowing us to continue to invest in the business in the coming years.

As we near the completion of the compression divestiture the clean up of our portfolio will largely be complete from this leg of our transformation. The areas of focus I laid out for 2021 will drive improved backlog enhance margins and better returns over the medium to long term our strong backlog gives us visibility had.

Turning to 2021 on the opportunities we see in the coming 12 months provides confidence for the years to come.

And with that I'll now turn the call back to the operator. Thank you.

Thank you.

Ladies and gentlemen at this time, we will begin our question and answer session.

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One moment, while we poll for questions.

Our first question comes from Kyle May with capital One Securities. Please state your question.

Hi, good morning.

I have a two part question about the contract operations business to get started.

One can you give us any color about.

How the renewal in Latin America compares to the previous rate and terms and then too.

You had mentioned some contract adjustments and an increase in activity.

Just wonder if you can give us any more details around the changes there and how we should be thinking about that.

Yes, good morning Kyle.

First of all the renewal that we saw during the quarter was pretty consistent with the renewals that we've had year to date.

In terms of the commercial terms of those contracts, we see no no changes to our current outlook and as you can see in the last few quarters, we've seen a fair amount of productivity and a lot of great work.

Done by our teams in the regions to continue to enhance our margins in an eco. So we really don't see any changes on a go forward and the contract renegotiations that were very very successful as it pertains to that particular contract that you referred to.

In terms of the the other contract that you referred to and also just specifically on overall negotiations.

Very clear.

Not just for ourselves, but the whole industry have been through a multitude of challenges this year and really early in March April timeframe, we had a lot of customers.

Throughout the industry not just from eco, but I'd say just generally.

Asking if we could work through with their particular profile of hydrocarbons in producing and see if we can come up with ways to.

Either produce them in a more productive way are there opportunities that we could maybe change some of the the construction of the facility in order to produce a different type of output from maybe less dry gas more liquids. So we've had a lot of discussions throughout and throughout the past six months were on.

Most complete with those discussions we had the one that I've mentioned in the call certainty.

Certainly Dave can give you a little bit more color, but we did have one contract that we were able to negotiate.

That changed the term of that contract and that specific contract had some issues that they were working through as it pertains to the offload.

Capabilities, and who has taken some of that gas and so were able to renegotiate both the scope and the term in order to come up with the right the right solution ready for both parties.

So overall I'd say a very strong.

Outcome for for Exterran on a very in a very good outcome for our customers and certainly our teams around the world both in Latin America, and the Middle East.

And also in Africa really worked hard during the last few months do in real difficult times to try to navigate and help customers be it you have some of the contracts that I referred to in my prepared remarks that our product contracts that may be have moved slightly to the right.

We've been able to negotiate and worked with our customers to make sure that the projects are still flowing adequately our engineering teams have embraced a lot more technology to be able to provide solutions real time with customers. So we've had a lot of activity, where we've been able to keep pace with all the engineering deliverables that we've had to do whereas in the <unk>.

Past you would have required people to be offices together. So just a lot of changes a lot of challenges that weve success successfully navigated and that we feel very good at the overall outcome going into the fourth quarter and into 2021.

Got it okay. That's that's very helpful.

And then for my next question, Dave I appreciate the preliminary thoughts on 2021, and I realize there's still a lot of uncertainty ahead, but.

Just wondering if you can give us any additional thoughts or goalpost of how we should think about framing out next year and.

Maybe any any color around initial thoughts on capex.

Yeah I think.

Yeah, we said that.

Actually Ryan I think there's a lot of variables right now that we are working through and hope that some of those things are settled in the coming months, obviously covance being warm as Andrew said it impacts.

Projects and you know we had the big project, we announced in the first quarter.

Heavily dependent sumant on our people getting on that site. So obviously covance a challenge so hopefully get more clarity, we'll give you more guidance around revenue and.

Margins and EBITDA I think from a capital standpoint again, we're being as you can imagine very thoughtful about our investing we're focused on investing in high quality opportunities, whether thats capital or working capital type investments and at this point, we have very little.

Capital that is committed for next year.

And I think in terms of our final view on capital will depend on any.

Attract new project opportunities that we see between now and the start of next year and we mentioned there are some water projects that are out that we're involved in and so some of that may come down our final guidance to how those projects are awarded.

Okay got it and maybe one more for me.

I believe you mentioned that you're nearing the exit of the U.S. compression fabrication business can you give us an update on timing.

Timing of the close for that and use of proceeds.

Sure. So Kyle we we've got a great working relationship the past few months during this transaction with Columbus.

And we're pleased to say that actually as we speak we're in the middle of closing today. So.

So by the end of close of business. This evening the business will be closed the.

The transaction will be complete and encompass will be the the proud owner of the of Exterran compression manufacturing business here in North America and so.

It's it's pure timing that happen today, we're in the middle of it as we speak and we're hoping that by the end of plate today it will be it.

It will be moved Don and the team will be in great hands, we accomplished and we certainly look forward to working with them and transition here.

Over the next couple of months as we support their needs, but today's the day that thats planned to close.

Got it okay. Congratulations on.

And that one done and I'll turn it back thanks guys.

Thank you.

Our next question comes from Doug Becker with Northland Capital markets. Please state your question.

Thanks, Andrew.

Andrew You mentioned one of the Middle East water services contracts is still expected to be awarded by by year end or would this be for services or equipment and just any color around the remaining hurdles.

From getting those across the finish line.

Yes. Good morning, we actually have a number of contracts that were currently negotiating the pipeline for our water business is still strong.

I would say that during the summer timeframe there were a number of contract negotiations that stalled.

Mainly because of the.

The challenges that it brings with.

Our customers coming together with their decision makers and.

Our ability to get face to face.

With our customers.

So there are a number of contracts that still working its way through.

I wouldn't say, there's any hurdles or stumbling blocks as always in some of these contracts you need.

We need to do a lot of work upfront on making sure that you got the right technical profile of the actual.

Water profile than what actually needs to get done so all of that technical evaluation really said he took place during late spring early summer.

I really hope that in the fourth quarter here in the next couple of weeks.

One of the projects out of the few that when the go shaded will come through.

They're both equipment and services.

And so it's a combination of equipment that we would provide and services that would be on a long term basis.

And so we're very hopeful here, but that will happen I'm, assuming it does we look forward to communicate and then let you all know.

Perfect.

Dave maybe just to follow up a little bit on.

I'll call it the cash flow or free cash flow thoughts as we think about fourth quarter and next year.

I appreciate that the middle east projects going to be a huge.

Use of working capital, but that's still increased net debt still increased a bit more than I was expecting can you just maybe give a little more color on what you're thinking for free cash flow in the fourth quarter and is it fair to say that.

Barring something really unforeseen that free cash flow positive next year.

Yes so.

Wrapping up this year.

And Karl that's the question.

Most of these firms the sale the compression business, obviously, we'll pick that paid.

Pay down the revolver. We also have our interest semiannual interest payment in the fourth quarter as well.

And we're focused on cash flow in a major way and I think if you look at the third quarter what drove the increase in debt was substantially due to capital investment in a couple of the projects in the middle East that were in the process of.

Wrapping up and as I said earlier, we don't have a significant amount of committed capital in terms of growth capital for next year at this point, we'd just have federal called the residual of a few of them.

Surgical awards, where we're completing those projects and then it.

We will be dependent upon.

Where some of these other projects go and.

We're focused on and also you know traditionally we would use the revolver to initially fund these projects and then kind of make decisions from there.

As we move forward certainly the opera opportunity. However, I would also say we're being.

Helpful about the ways that we could continue to be successful and going forward I mean, we're not.

At a point, where we're concerned like from that are having challenges at the operating line as is more about.

How much we have available for growth type projects and again, there's lots of different structures and ways to do that some of it comes down to the customer negotiations.

We've had projects, where we've had substantial reimbursements.

Reimbursements upfront from customers, there's lots of ways to get after this and for US it's being prudent about the balance sheet, but also.

Taking advantage of high return opportunities that we see and be as creative and thoughtful as we can around kind of accomplishing both keeping a prudent balance sheet, but also taking advantage of these opportunities where customers are looking for us to to help them with solve a problem.

Again, we haven't finalized next year and some of it frankly depends on the project Award we got in the first quarter of Middle East project as a as I said from the start of somewhat of a hybrid project has got some HMS and product sales to it.

Schedule will be critical in determining.

Kind of our cash profile for next year.

Where it's predominantly a product sale so.

So therefore, it's got a working capital element to it it will really depend on.

The schedule, which we're continuing to work through and again that is almost a 100% covidien related in terms of.

What's what's kind of causing uncertainties. There is project and go forward, we're continuing to work on it and as Andrew said, but.

Real spending starts when we start procuring the major equipment and get to the site and start working through the civil side of that and again that will depend mess of working capital use for next year just a question of.

Of how much at this point, it's just too early to provide you too much more color on that so.

The.

Next year as I said committed growth Capex is fairly small number we will have a working capital use in this project, but again the schedule will depend on.

The covance related issues being resolved and then with this particular customer there are some prepayments as well as the progress payments along the way and those two will all kind of have to come together for us to give you on the working capital.

Information for for modeling or planning purposes.

I appreciate that is it fair to say that.

Hi.

You'll be free cash flow positive barring some pretty obvious we high return investments that from the outside looking in we can appreciate is that is that a fair statement.

Again this this project and.

A few points back to the large projects. It is a big project as we said it's.

Over $350 million top line and so.

Just normal working capital considerations.

Would suggest as a fairly substantial working capital investment.

And so I'm not going to go that far yet until we can kind of see all the pieces.

And so we kind of need to finalize the plan and get to a final schedule on on this particular project before we can get.

Real specific.

But again, just kind of as a little bit of a heads up there as a working capital component there and we've got to work through that work through.

Not only that schedule, but that's how the customer progress payments work into to our our spending plan if you will.

Sure and then just one last one on the guidance I think it was for upper Thirtys in terms of EBITDA for the fourth quarter just any.

Particular variables, we should be keeping an eye out for.

Yes, the business.

No I would say it's normal business.

As we've said in the prepared comments, we've seen some kind of a.

Step forward two steps back three steps forward when it comes to co that we've been able to get people in those certain regions and countries easier than than we had that helped certainly the HMS itself in some of these the.

The projects that we've been working on but I would say for the most part we've tried to as usual anticipate all the variables that we can think of and the kind of blended get to that point Theres, certainly some pluses and minuses in there, but that kind of all lead us back to that similar.

Zone.

Great. Thank you.

Thank you and just a reminder to ask a question. Please press star one on your telephone keypad. Once again to ask a question press star one on your telephone keypad.

Our next question comes from Tim on the Chello with Altacorp capital. Please state your question.

Hey, good morning, everyone Martin I'm.

Just a couple of questions I guess.

Am I understanding it we've kind of looked at 2000, 2000, capex, a little bit already but excluding growth projects I'm.

Just knowing where your contracts are rolling in and what might be needed.

To sign renewals next year, where do you see sustaining capex coming in for 2021, excluding growth, yes, I think on a sustaining and theres nothing thats going to cause us to deviate significantly from the past and kind of that 20 to 30 million dollar kind of other than growth. So that includes.

Corporate IP would include.

The anything tied to a.

Capex maintenance or some of the small things we do have renewals. So absolutely don't see that changing I think we confirm we stay between 20 and 30 million for.

Maintenance and other as we call. It I think thats, a pretty hard fast number now, it's a pretty big range, but.

We will fine tune that with the plan so that piece I think should be very consistent with what we've traditionally seen.

Okay. So fair assumption you be free cash positive before growth and working capital investment in 2021, Yeah, I think that fairway, that's definitely a fair way of thinking about it I mean, we're we're not it's kind of a two.

Two angles to this we're not a business that when volume declines has a tremendous amount of working capital that unwinds, because we're not a distributor or were not an item type seller. So a lot of our inventory is more tied to projects and supporting Rtms and supporting our retail business, but again. It means also in a normal course win.

Volume start returning we don't have a tremendous working capital investment either so it really is going to come down to as it always does is the investment we're making in projects, which again, we also have the ability to throttle that as we need to and we're going to be proud of you balanced improvement as we can in terms of those opportunities versus prior.

Just on the balance sheet.

Got it.

In terms of the Q4 guidance.

The presentation uses high $30 million EBITDA, which.

Which is sort of in the middle of the preliminary range that you provided previously.

I'm curious just with the gives and takes are there.

Got it from what.

Might influence it up to the higher end or if you.

You think high very high Thirtys is sort of where we really should expect it and.

Was the high end based on sort of a better price.

A question of the Middle Eastern project or how should we think about that.

Yeah, I think its a.

And we will as.

We go to Bob.

Developed in our guidance and I think we've talked about this on a couple of quarters ago. We try to think about every scenario, maybe too many scenarios and try to come up with a of our expected blended case of how we think about it. So I think we're anticipating.

More normal business environments thinking through the impacts of.

Second wave of Cove is and what that could mean and how that could affect us I think it's a pretty balanced view and I wouldn't say there is anything that.

We're particularly worried about other than just the normal business environment, which is certainly a.

Then challenged in the last 12 plus months. So I think it's a fairly balanced view that we feel pretty good about that and there are some opportunities for some puts and takes in that but we still government up enough. Some similar same spot.

Okay got it.

So would some of that middle Eastern project and shifted into 2021, but yes that project as we said it was a very large projects. So the initial schedule was was two years type schedule. I mean this is a long.

Project and so we definitely have seen.

The project slide to the right and as Andrew said, we have been successful and we're completing all of our engineering deliverables and while the initial sourcing for the schedule I think what's critical for us and the customer is to be able to get to that site and started doing basically the civil works well site preparation and that's the part that's been difficult.

And so thats caused the schedule to move so we are recognizing revenue for that project. This year is less than what we initially I would have anticipated given the initial schedule. So we'll see.

Yes that slipped 400 to 2021 and there's actually this project will go into 2022 at this point.

Okay got it and then last one from me.

Earlier in October we saw the Argentine government come out with the gas stimulus program.

Track of $5 billion over the next couple of years.

To invest in increased gas production are you seeing any positive impact from that program.

On the horizon or or just on the fringes sort of early stages.

Yeah, I would say that there's been a lot of excitement in Argentina says about the Marta.

Discovery and its been very slow there was a lot of.

Comments early on about the billions of dollars that we are going to flow.

That's been much slower than I think initially people would've thought, but we are seeing right.

Renewed interest I think it's kind of good and bad news. The good news is there's certainly a need there is there is an opportunity there the challenge is going to be.

Is the capital available in country.

For people to make those investments I think it's very public that one of the largest.

The.

See there has has said that they see a big opportunity to invest in question is how is it finance so as we look at it. We think there is a good opportunity for us in terms of equipment potentially eco deals, but it's one that we need to move cautiously and carefully and just given the.

Environment, There and you know you've got certainly enhance concerns around currency devaluation.

Potentially some enhanced concerns around customers and credit risk and so forth. So we do think that we've got we always have given that we've been there for so long we've got renewals.

Happening there all the time as we mentioned earlier this year, we had a big renewal we've got the more things coming up in the future with renewing contracts and we're confident in and getting through those and think that there will be more opportunities. In 2021, we are having some those initial conversations with customers, but frankly, it will come down to the particular.

Shares of.

Of those projects as to whether or not there are things to materialize and are things that are will make sense for us to be involved in.

Right so.

Im glad that he is or that you're pointing to sort of inherent risks and operating in Argentina, and how you think about them today and obviously most of the capital investment Argentina's years past and in the risk profiles change so.

Has the view on returns from those projects change I guess thresholds and.

Or I guess contract structure or how do you think about new capital investments in Argentina going forward I would say that the certainly with the investment base. We have there nothing has really changed I mean, we have.

Just phenomenal customers, there and phenomenal relationships I think at least from our perspective and.

We've added customers over the years, there, new new kind of emerging customers and.

We I think have had enjoyed quite a.

Good success in the country.

But it does with the environment. There. It does cause you to be very thoughtful about risk management and these projects, but going forward.

We have certainly core competencies that we have.

A team in Argentina that probably would rival any company.

So we've got this great assets they are in people and processes in our history that we're going to continue to leverage, but we will leverage in a way that makes sense for us and.

We're actively working with customers and certainly for us its understanding not only their operational needs, but are there other needs from a financial standpoint.

Contracting standpoint, and again try to work through a mutual success I think we'll have some more successes there as we move forward. So we've definitely seen an increase in the Gulf of dialog with customers around things, but.

In the.

That makes sense for both of us to be able to move forward.

Okay, Great I will turn it back thanks, so much for the color.

There are no further questions at this time I will turn it back to management for closing remarks. Thank you.

Okay. So thank you everyone for dialing in today and allowing us to give you an update of where we are I'd also like to finish by thanking all of our employees that have really gone above and beyond the last few months working through some pretty difficult situations globally. Thanks.

Thanks for everything that you are doing and we look forward to update you all at the end of the fourth quarter, thanks and be safe.

Thank you. This concludes today's conference all parties may disconnect have a good day.