Q3 2020 Trican Well Service Ltd Earnings Call
Good morning, ladies and gentlemen, and welcome to try catalog surfaces.
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<unk> earnings results and conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad.
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I would now like to turn the conference over to Mr., Brad Doris President and Chief Executive Officer of truck and well services. Please go ahead Mr. Scott.
Thank you very much good morning, everyone I'd like to thank you for joining our our Q3 conference call with me on the call.
Various people from our executive team, including Rob Skolnik, our CFO and taught to eat our chief operating officer.
Before we proceed with the call I'd like to refer everybody to our web site, which is W.W. dot tried can well service dot com.
On the web site you can go to the investors section and download our presentation then about the second page of the presentation as a disclaimer talking about forward looking information and and basically.
The usual legal illegal stuff around these calls so I encourage you to read that.
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Just the outline of the call.
First drops going it's going to give a give.
Given overview on the quarterly results and then I'll address the issues pertaining to the current operating conditions and the near term outlook for the remainder of Q4 and Q1 and then we'll open the call for questions and so.
So I'll now turn the call over to Rob.
Thanks, Brad as Brad mentioned referred or please refer to our 2019, <unk> and business risk section of rapid DNA.
For the quarter ended September Thirtyth for a complete description of risks and uncertainties and also a references to common industry terms and non-GAAP measures that are more fully described in the third quarter 2020 M. DNA.
Our third quarter results were released this morning and are available on SEDAR.
By Historic standards activity remained at cyclical lows the average western Canadian rig count was 53 drilling rigs, which compares to 202 in Q1 of 2020 at a 144 and the comparative Q3 2019.
However, despite historically low industry activity Q3 activity saw a sequential improvement of 135% relative to the second quarter of 2020 for this reason the company achieved sequential improvements in almost all financial categories.
The significant efficiencies achieved in our business at the end of March combined with efficiencies already being implemented in advance of COVID-19 events have resulted in a much more resilient business cost structure.
Despite year over year industry activity declines of 60% and our course corresponding year over year revenue declined to 43%.
Our adjusted EBITDA came in just below breakeven at negative 2.6 million compared to positive $3.5 million in the third quarter of 2019.
Excluding the effects of severance and the Canadian emergency wage subsidy adjusted EBITDA would have been approximately positive $5 million.
[noise] fracturing operations activity was inconsistent through the first half of the quarter, but then strengthened in the second half despite average utilization our threeq crews, a 53% strong operational performance and efficiencies allowed us to generate reasonable margins in the context of the current business climate.
Although cemented coil activity started off really slow both service lines achieved noticeable improvements in activity and revenue levels as the quarter progressed coil.
Oil activity improvements allowed us to increase our coil tubing crew count Doctor for.
The severance charge I referenced earlier for the quarter was significant as a result of COVID-19 events. The company had previously reduced personnel levels by approximately 800 staff in March and April.
These reductions consisted of both permanent reductions in temporary layoffs recently, we brought back about 200 of the temporary reduce staff to work while the remaining while the remaining 350 employees were permanently reduced due to anticipated permanent activity level declines.
Most of these employees were long serving employees with an average tenure of nearly six years, many having served much longer than that timeframe.
Additional significant severance was incurred related to the executive departures that were disclosed in our news release dated September 15th 2020.
The company's business generated modestly negative operating cash flow in the quarter before considering changes in working capital operating cash flow before working capital was negative 4 million. Despite the significant industry headwinds. However equipment sales did provide incremental cash flow to pay for sustaining capital and contribute to our NC.
The program.
Despite a network operating working capital investment of $18 million, the Companys financial position remains strong with cash exceeding borrowings at a positive noncash working capital position at $49 million.
Our available credit lines continue to provide the company with significant liquidity to weather. This current market uncertainty and will allow us to maintain our equipment and good working condition with a potential for making opportunistic investments.
Our Q3 2020, Capex remained modest at $1 million. Our current investment plans will allow also remain modest and we'll be focused on critical sustaining capital items that will allow and allow us to invest opportunistically and items that provide long term efficiencies and quick paybacks.
Overall, our full year capital should approximate our previous indications or approximately 4% of revenue levels.
While we do expect to continue to sell additional assets. The overall market uncertainty caused by COVID-19 resulted in the reclassification of our assets held for sale back into property and equipment.
We still have a number of assets that we plan to setup and despite the ongoing market uncertainty, we sold nearly $5 million of assets during the quarter.
We will continue to monitor monetize stranded capital and redeploy that capital back into the business either into equipment.
Or into our NC IB program during.
During the quarter and for the third consecutive NCB cycle, we maxed out our NC I'd be purchases.
Since 2017, we have purchased more than 26% of our shares.
In addition, we renewed our anti program at the beginning of the fourth quarter and we have continued to make share repurchases since this wearable.
The company continues to view share repurchases as a good long term investment investment.
For use of any excess capital.
I will now turn the call over to Brad who will be providing comments on the operating MTGE conditions of strategic outlook, yes.
I'll make some quick comments and then we can we can go to questions. So Q3, obviously was coming off the historical lows in.
In the oil patch so the quarter started very slowly as everybody knows with.
Only a couple of dozen drilling rigs running and then slowly built up as the quarter progressed and was fairly lumpy throughout.
The market that were in Q3 or in Q4's, there's very busy weeks followed by some slow days and then returned back to busy days it is quite lumpy.
Lumpy.
Yes, like probably most of our competitors. We were we're very focused on our core group of customers.
As everybody knows terminaling as a big part of our business and thankfully they were busy and we had a fairly active quarter the cementing business.
As with fracking started slow and then built up as the quarter progressed.
I think at the beginning of Q3, we were less than 20 drilling rigs and and now we're at.
Around 88.
And so that so many business has continued to build as as things have gotten busy and basically the same with coil at the beginning of Q3, we were doing very little work and then we actually got into a into.
The situation, where we needed to add crews at the at the end of at the end of Q3.
Pricing of course whenever you think it can go lower it goes lower.
It's extremely competitive I would say it was relatively stable through Q3, and then as Q4 progressed, we've seen we've seen some volatility in pricing like there just isn't there isn't enough consistent work.
For what we think is approximately 20 frac crews running in the basin and every time that happens of course, you get you.
Get this ridiculous pricing behavior in certain of our competitors are obviously.
Miley pricing issues more than than some.
But thats not going to go away and so we're trying to trying to work through that it's a balance between securing.
Spot work at prices that are frankly, too low versus saving your equipment for for longer term contracts that are running into 2021. So.
All we can do is continue to manage that.
It's important to note.
Everybody knows you know, it's a high fixed cost business and so any.
Any any pricing or any additional crews that get added to our business. Those cash flows go directly to our to our bottom line as our fixed costs will not change with the addition of crews here.
In the quarter, we average three frac crews running about 200000 horsepower and we averaged about 10 cement crews and three coil cruise.
All of those have increased over the over that quarter average but.
You can tell it was it was a pretty slow quarter.
Not not a lot was happening.
The area that we're focusing of course is the montney and deep basin.
We're very gas focus between liquids rich and dry gas, it's basically 95% of the work we're doing.
We do very little oil work.
We're very very Montney focused we pumped only.
Only about a 127000 tons of sand, we provided all of that our customers in the quarter didn't provide any of their own sand and as unusual about 70% of the sand, we pump to us was Ottawa white versus 30% domestic.
You've seen the tonnage is on on wells stabilize this year in 2020.
We were not seeing a lot of growth.
But I do think you know like Q2, Q3, probably not all that representative.
And as much as Q4 progresses and Q1 as we look out to Q1. We are seeing we are seeing some tonnage growth on a per well basis. So I think we'll get back to.
Our customers try to optimize.
What they're doing and get the best from their reservoirs.
We did obviously I think Rob alluded to the cost cutting that that we have done.
And we've we've invested a lot in systems and all of this is to say that.
We're in a position now that as we grow our fixed costs will not change.
We can probably double or triple our crew crew count and there's going to be very little changes to fixed operating costs or DNA and so we're at the part of the cycle, where the operating leverage is starting to work in our favor and as we as we get busier into the quarter here and into next year, you should see some yes.
You should see the financial contribution coming from those from those additions.
But Q4 to date has been quite busy busier than Q3, and we're not expecting that to change.
We do see we do see growth in Q4 over Q3, and we do expect growth in Q1 over Q4.
Tobar November who've had some weather issues, but you have been had been quite busy and we don't we think it's going to stay busy until until mid December and we expect that Q1 is going to start is going to start with a bang relatively.
It's important to note that.
All the dual fuel pumps that are available in the basin are basically being operated today and so going forward.
As customers grow their programs and demand dual fuel there is basically going to be a shortage as theres about as the all the dual fuel pumps that.
US and our competitors have are basically all working today, so that is going to be a pinch points in Q1 for sure and it is something we will continue to invest in.
We're not expecting the rig count to really change and for the rest of this quarter. We are expecting it to go up in Q1 to what level I'll leave that to the analysts, but we do expect that the rig count will break through 100 and that will cause tightness and so we've added one frac crew since Q3.
Free wrap before we're expecting that we're going to be adding another one maybe as high as two.
Same thing on coil in cement, we're running five five.
Coil crews today animal 15 cement crews and we'll see how that goes in and we're in a position thankfully that we can continue to add equipment into the base and without any changes to any of our fixed costs. So.
We'll continue to monitor that we won't put crews on the road and less we're going to make money.
Nothing's nothing's changed there.
The basin I would say is as everybody would expect is extremely or what were working on any way is extremely natural gas focused client.
Clients are clearly taking advantage of higher gas prices and and using that to to drill profitable wells in the montney in the deep basin and as long as those gas prices hold we think activity will be relatively relatively busy.
And unfortunately for us our margins are still tight but certainly its always a good thing when you're when your customers are making money.
We do get questions on people I.
Im not going to say, we have people issues, yet certainly there's areas in the basin like Grand Prairie, where they've stayed they've stayed relatively busy and the people that have been laid off have returned home to various parts of Canada. That's always a tough market, but we're we're still not seeing any any significant hurdles on the people side.
We do think we're going to be at we're going to be able to add the people that that we need to add certainly for the next six months or so anyway on.
On the supply chain and just general cost efficiencies, we continue to make sure we grind the cost out of our systems and structure a company that we think is running at its most efficient.
And Weve been think we've been going through our supply chain and our vendors and.
Trying to get the best prices, we can obviously, we continue to look for every cost savings.
That means that we can find.
And again, it's important it's significant so this is as we do grow revenue all of that margin or all of that field margin.
We'll float or will flow to the bottom line.
On the technology side as everybody knows that the Frac business is sort of in a bit of flux.
And our strategy is to maintain financial flexibility look for ways to differentiate ourselves or look at consolidation opportunities I will.
We will just continue to investigate the various opportunities that we have and and and.
Hopefully make the right decisions with.
On the backs of thorough analysis. So we the industry is changing we're getting away from diesel driven frac crews were starting to hear about the desire for electric or natural gas fired equipment.
And we're in the fortunate position that we can look at at any and all of those opportunities and when we find the right opportunity will.
We'll we'll make a move and.
And we hope to differentiate ourselves not only through our balance sheet, but through the equipment and the services that we offer.
The DSG.
Pressures put on our industry, they're real we are responding to them. We are working working in in our company to quantify and identify all of the things that this industry has done in the last few years and there are significant we've reduced fresh water consumption reduce diesel.
Assumption weve reduced the number of trucks on the road.
And we will reduce the amount of chemicals, we're we're hauling around the countryside by replacing it with dry chemicals or bulk chemicals.
Giving chemistry options that allow our customers to use produced water or recycled frac flowback water all of these things the.
The industry has made great strides in.
In our environmental foot.
Brent and I think it's we probably need to do a better job of sort of informing the public and the investment community as to what those things have been and just how significant they are so our SG plan internally, we'll we'll continue to develop but mostly with the goal of providing our customers with concrete.
Data as to how.
How much less diesel or water or whatever it is that they're they're consuming now versus even even a few years ago.
On the capital side.
We're going to pick our spots look for look for areas of differentiation.
Our equipment is all in very good shape.
We have a lot of equipment on the fence, but it's it's basically ready to go and so our capital needs are fairly minimal.
And as we have to pull that equipment off the fence and put equipment into the field.
Our costs are.
Certainly just not that significant.
And we will continue to look at the new equipment designs and whether it's more dual fuel or tier four engines what.
With the with the general desire that we want to reduce emissions reduced the amount of diesel we're burning use customer sales gas on location just to create the most cost effective and efficient frac fleets as we can on the cementing on the cementing a coil side, we don't a lot of that technology hasn't applied to those business.
Lines yet.
But certainly we're looking at every and any opportunity.
Whether its with new blends or new Chemistries.
To do a better job and provide more efficient services to our customers.
Our primary focus continues to be in Canada continues to be in the montney in the deep basin and so we're not looking to grow outside of Canada, we're going to continue to build market share here, we will continue to sell off old equipment, given the opportunity keep our balance sheet our balance sheet is strong.
Keep that flexibility continue to buy back our stock.
And just look for look to make the next move and provide good services to our clients.
So I think I'll stop there and operator, we can go to questions now.
We'll now begin the question and answer session.
Your next question queue, you May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.
Using a speakerphone please pick up your handset before pressing the keys.
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Our first question is from Andrew Bradford with Raymond James. Please go ahead.
Good morning, guys.
Hi.
Yes, so youve activated accrue since the third quarter, you're talking about activating assists frac crew under the circumstance under the current circumstances can you describe.
So how much guaranteed work do you need.
To activate that crew.
Well, so what are the sort of business conditions that are required because.
We only started described the situation in the basin right now where there might be about 20, frac crews out there not quite enough attention of market to support stable pricing.
So you're adding a fifth career now so what does what sort of circumstances do you need to see or what kind of guarantee work do you need to have to make you do that.
So it would have to be sort of project based awards.
And and indications from our core customers as to what their plans will be for 2021.
Given our four crews today, we cannot get to everything that is on the board today.
And so we're not prepared to reduce price to add those crew to add that crew.
But we're not expecting a big price increase either.
And keep in mind that the people that we're adding to add that crew are all variable, they're all variable cost and so they would come and go with with the workflow.
And there wouldn't be any incremental salaried positions added.
And so we do have quite a bit of flexibility there if the work does go away.
So did the costs.
But really its.
Fairly detailed discussions with the customer or the look through the project timing.
And making sure that we have the equipment for everything that weve.
Sort of made promises for.
Today I can tell you we don't we don't really have enough.
But because it's so gas focused.
We all know what can happen if we end up with a warm December.
So were staying nimble.
Until until we have to make those final decisions.
Okay. So the.
The variable cost part was my next question so all.
Everybody on the next crew.
Our staffing requirement for the next or for the next crew.
Is there not none of these guys would be salary.
Right. We did so we didnt actually lay off any supervisors, we we basically had cement and frac and coil cruise.
Staff almost entirely with salaried supervisors over the summer and into Q4 here. So.
We made the decision that we were going to keep all the the people with the knowledge and the experience and so we just we're fortunately now as a result, we can spread those people around now and the people that we do at our our day rate employees.
Okay.
Okay. Thanks, Thanks for that just.
Last one from me would just be around.
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Capital allocation looking at the buyback.
Versus the potential to.
For M&A in the sector and maybe just your comments around.
Do you view the sector.
Or could not benefit.
M&A as as activity picks up.
It's tough to beat the buyback.
We trade at 50, 60% of book or whatever the exact number is.
As everybody knows buybacks permanent.
It's the top investment for us to beat and so you've seen us deploy.
Almost all of our capital into the buyback and.
We're continuing to do that I mean, there are.
There are places, where we do need to.
Consider investing more bi fuel that kind of thing.
But it's we've always got that buyback in the back of our minds here and that that's been our way of growing on a per share basis over the last couple of years we've.
Well, we bought back to whatever 28% of our stock.
And so our per share numbers I'm, obviously by growing by that amount. So.
It's a tough tough thing to beat and so when we look at buying our own stock versus consolidation.
It really gets down to.
I mean, it gets down to price I mean consolidation makes sense I mean, if things get cheap enough. You can you can you can justify the economics of consolidation but.
From a longer term perspective, I think our strategy would be more focused around.
Low cost operations and and differentiation.
And so in order to to to beat that out.
We'd have to see consolidation at really attractive prices.
That's perfect. Thank you very much guys.
The next question is from coal.
With Stifel. Please go ahead.
Hey, good morning, guys.
So a lot of commentary today, just around improving utilization on the gas side as expected heading into the winter drilling season.
Would it be fair to say that a lot of this activity is still call. It largely maintenance spending are you are you getting any indications that MPS might be starting to actually think about growth on the gas side.
I'm not sure we would know the answer to that.
Yes.
But.
I mean, it is definitely both but I don't think I could give you a very well informed answer on the split between maintenance versus growth.
It would be very customer specific.
Yes, that's better asked.
I don't want to speak on their behalf.
Got you know totally fair.
So your comments around by fuel.
How would you be thinking about that in terms of timing would it would that be more of a 2022 type of situation or you know of things if things pick up in the market for that stays tight could we see some of that in the second half of next year.
Yes about a quarter of our fleet today is by fuel and.
The timeline on.
Can converting more of your fleet is is a few months, it's not it's not a few quarters.
So we'll continue to.
Sort of upgrade and.
And maybe experiment with new new technologies on the bi fuel side.
So that will be 2021 thing for sure.
Got it that's helpful color. That's all for me guys I'll turn it back thanks.
Thanks.
The next question is from John Gibson with BMO capital markets. Please go ahead.
Good morning, guys.
Darren talked about the targeting obviously been a big customer and they've been a pretty active on the acquisition front here recently I'm just wondering if you.
I have seen it impact your business or any conversations with them in terms of.
Dental work going forward.
Yes, we expect our work to grow as as their activity grows whether it's through drill.
Drilling on their existing lands or is as the inherent.
Acquisition drilling programs like we we generally as long as we're doing good work for them obviously.
We expect to grow to grow with them.
Okay great.
Second for me back to the dual fuel fuel units I know you talked about them basically all being utilized in the base and so in order for you to add more crews would you need to invest in additional dual fuel capacity in the short term or or could you activate.
Curious from existing equipment on the sidelines.
We would yes, we will likely continue to add dual fuel as we add more fleets.
Because the demand for dual fuel is has.
But increase and it's becoming almost a must have I guess.
There are certain places or certain customers that are more flexible but.
The kinds of work that we're pursuing typically does require dual fuel.
And this would have to happen before you.
Radically add any more fleets.
Not necessarily I mean that one doesn't have to come for the other but given you.
Generally with the intention that if you're going to add another crew.
You would want it to be dual fuel capable as soon as possible.
Okay, Great next.
For me just on the asset sales can you quantify what.
That level stands currently.
Sorry, the asset sales for the quarter like our assets held for sales, sorry, and I know some moved in and oil.
Well, we don't have a quantification like we took it down to zero on the balance sheet. It was sitting at around $15 million, but I mean, we'd have.
We'd have assets listed on the real estate market north of $20 million at this time.
You go on a real estate web sites and track it down your interest.
Okay Fair enough and then last one for me just can.
Can you quantify.
There is going to be any more restructuring charges here to hit in the remainder of the year and then also what you expect for accuse in Q4 2000 and to 2021.
Yes, I think.
So on the first one we think we're largely done on the.
The restructuring here in the short term I mean, we've got to continue to look at the business and see how that's that's moving and pressing like if were permanently at 3000, well count theres going to be some challenges there.
As far as the queues program goes it's only really define until the beginning of December.
I would expect it to be slightly below the Q3 number and then looking out to next year, it's waiting to see how it's fully define.
To get clarity into June of next year.
Okay, great. Thanks, there's lots of I'll turn it back.
Thanks, John.
The next question is from car sales ATP capital markets. Please go ahead.
Hi, Thanks for taking my question and thank you, Brad sort of a comprehensive rundown on on activity and outlook.
Just one first identification question.
The number you mentioned the five coiled tubing units and 15 cementing units that you said a number for the fourth quarter is that what you expect for the first quarter of next year.
That would be like today's the current number.
Okay great.
That's good.
Yes, we would expect the number of cement crews were running to increase proportionate to the.
To the to the rig count.
Okay.
Make sense no secondly, it's interesting to hear your comments on demand for dual fuel systems in Canada.
South of the border into us seeing.
Seeing the similar trends as well no one pumping company in the US is investing in the logistics for.
So for supplying CNG on Mena, putting infrastructure upbringing infrastructure to use fee yes.
Is that something that you think has value in Canada as well and is that something that you would consider investing in as well.
All right all yes, no I.
I think the future here is using using gas right on the pad like there the cup the customer's own gas on the pad and we've already got.
Mr terraces of the world providing.
Providing CNG so.
It's not something we would pursue.
We're trying to get away from and syllabary logistics invest.
Investments.
So it is it's it's tougher and tougher to get paid for those investments and so we are hyper focused on making sure that we get a return on anything we.
On anything we we invest in and we get it quickly.
And so typically the history of the pressure pumping industry is that the more ancillary equipment or services you provide.
Sort of the less likely you're going to get paid for it.
So our capex is going to be very very focused.
On things like dual fuel.
Okay that makes sense.
No you made a comment about the sand pumps, the well has been relatively flat last two quarters and could go up now could you maybe give us some numbers in terms of what the average sales.
Oh, well is currently in the Montney and deep basins.
Hi.
I don't have that data with me, so I don't even want to.
Try to answer that we can we can follow up on that but I'd have to get back to my computer.
Okay.
Right.
And then just final question as activity picks up in the first quarter.
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How do you expect your revenues to be on a year over year basis in first quarter 21 versus.
First quarter of 20.
I just wanted me would be yeah, yeah, we're not we're not going to make last year's numbers now if we could get pro rata to the average rig count I mean Thats us.
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That's as good a place to be as anywhere at this point.
Okay great.
Great. Thank.
Thank you very much that's very helpful.
Thank you. Thank you.
Once again, if anyone has a question. Please press star then one.
Our next question is from Keith Markey with RBC. Please go ahead.
Hi, good morning, Thanks for taking my questions.
Thanks, just a question.
Just a question here on on customer consolidation you mentioned terminaling.
We could potentially see more consolidation in the basin, but ultimately likely fewer potential NP customers for frac companies.
It is an outcome here. So do you see it as a positive that your customers have been the ones consolidating or is there a material risk that some of the other pumpers to maybe have their customers get consolidated come after come after your your work.
Yes, we've been fortunate that.
Our efforts to.
Work for the consolidators versus the.
The sellers has has generally paid off but you don't always have that luxury.
Especially in a tough market like this but.
From a long term strategic perspective, we are obviously taking into consideration all of those issues and.
Targeting our efforts accordingly.
And we know we would agree with you we do expect the customer count to two to get more focused and have bigger, but fewer customers and there is a lot of implications of that.
How how you're you're designing your service offering and.
Your integration of things like safety any SG and we're we're playing through that we're playing through all those issues.
When we think about what does is based on look like in two years, So and we're making we are we think we're making moves accordingly so.
Okay. Thanks for that and one more from me maybe.
Could you just walk us through a roadmap on what it would take for pricing to get better or.
Significantly better over the next call it year or two.
I mean, it's it's not complicated weve got to vote.
1.8 million horsepower in the basin today.
About half of that is heavy duty continuous duty style pumps, that's appropriate for high pressure wells.
In places like the Montney, where where customers are expecting to pump 20, plus hours a day.
And about half of that equipments dual fuel so.
The dual fuel heavy duty equipment is consumed already at these levels.
So.
As this if this well count.
Starts to trend towards sort of 4000, plus you work, you're going to see constraints and on the equipment side and.
And that's what you'll need to get better pricing and.
You know, we're actually expecting pricing to firm up as early as Q1, just because I.
I think all the frac companies in the basin.
You might add a crew here in a crew there but.
Small again small like any of us are in a position to double down on crew counts are like that so we do expect we do expect some firmer pricing in Q1.
It only takes one company to ruin it all unfortunately, and we do see that.
We have seen that in Q4 so.
We'll see a little bit of firming up in Q1, and then anything beyond that is going to is going to require you to oil prices gas prices stay where they are in oil prices to go up.
People start to add to their programs, it's all the obvious stuff.
But the good news is in Canada, like it's not the supply and demand fundamentals in Canada are way more attractive than they are in the U.S. and.
We're not that far away from kind of a.
Fairly tight market.
And it's a high fixed cost business and so.
All of those all of that additional revenue goes straight to the bottom line and I.
I don't I think a lot of times people don't appreciate just how much operating leverage exist in these businesses.
We've done we've done a lot of work over the last couple of years to reduce our to reduce our fixed cost synergy in a room and I'll say it set up for it all emphasize it again, we can we can double or triple our crew count from these levels without any.
Any material changes to our fixed costs.
Got it thanks.
Thanks, Thanks for the color that's it from me.
Thanks. Thanks.
This concludes the question and answer session I'd now like to turn the conference back over to Brad Doris for any closing remarks.
Yes. Thanks, everyone. We appreciate your interest and your time to join our call. The management team is available for follow up calls for the for the rest of today on Monday.
You can get our numbers off the web site.
So please call us if you have any follow up questions.
Thanks, again have a good weekend.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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