Q1 2021 DMC Global Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the DMC Global first quarter earnings call at.
At this time, all participants have been placed on a listen only mode and the floor will be opened for your questions and comments following the presentation.
It is now my pleasure to turn the floor over to your host Geoff High VP of IR, Sir the floor is yours.
Okay.
Hello, and welcome to Dmc's first quarter conference call presenting today are president and CEO, Kevin Wong and CFO, Mike Cuda.
I'd like to remind everyone that matters discussed during this call may include forward looking statements that are based on our estimates projections and <expletive>umptions as of todays date and are subject to risks and uncertainties that are disclosed in our filings with the SEC.
Our business is subject to certain risks that could cause actual results to differ materially from those anticipated in our forward looking statements DMC <expletive>umes no obligation to update forward looking statements that become untrue because of subsequent events.
A webcast replay of today's call will be available at DMC Global Dot com. After the call. In addition of telephone replay will be available approximately two hours after the call.
The details for listening to the replay are available in today's news release and with that I'll now turn the call over to Kevin Kevin.
Thank you, Jeff and good afternoon, everyone. Our first quarter sales of $55 $7 million came in at the low end of our forecasted range and were impacted by the pushout of $1 $7 million in orders at Novo plans.
Our composite metals business.
And by a winter storm in Texas that led to a nearly two week hall in U S customer activity of diner energetics are energy products business.
Consolidated gross margin was 23%.
It also was within our forecasted range.
The margins were impacted by lower absorption of dining energetics due to the shutdown of our Blum, Texas manufacturing Center.
Following the winter storm.
And by higher spending on patent filings of Diamond Energetics.
During the quarter, we spent approximately $1 million on patent litigation, which relates to legal action taken against several companies. We believe are violating dining energetics patents.
We are confident in our position and of the determination to see these cases through two of successful resolution for dine energetics.
DMT finished the first quarter with a strong balance sheet that included cash and marketable securities of approximately $67 million.
We repaid for the $11 $8 million balance on our term loan.
Ended the quarter with zero long term debt.
And raised net proceeds of $25 3 million by selling shares in an aftermarket equity program.
Our end markets continue to improve and we are encouraged by our prospects for stronger financial results during the second quarter and back half of 2021.
Notebook Plaid entered the second quarter with an order backlog of $43 million.
Several large international order opportunities and.
And of new product offering of expected to be commercialized later this year.
The dining energetics, well completion activity activity recovered rapidly following the February winter storm for.
<unk> spreads, which are a key barometer of completion activity are seeing increased demand.
After declining to fewer than 50 of spreads in may of last year.
The industry was approaching 200 frac crews operating.
The unconventional U S basins by the end of the first quarter.
The number of active spreads has continued to increase in April.
Yeah.
The <unk> implemented a 5% price increase on all products effective March 30th.
And we are beginning to see the impact of the increase in average selling prices month to date.
Integrated perforating systems, which are less than 2% of the cost of completing a well.
Enable safer and significantly more efficient frac operations at.
At a much lower total cost of conventional field <expletive>embled systems.
After a challenging year our businesses are again operating at full speed and our teams are back in the market visiting customers and meeting with suppliers.
I want to thank our employees for their continued diligence creativity and dedication to the success of DMC.
I'll now turn the call over to Mike for a review of our first quarter financial performance and a look at second quarter guidance Mike.
Thanks, Kevin in the first quarter sales were $55 $7 million down, 3% sequentially and down 24% versus last year's first quarter.
<unk> reported first quarter sales of $38 $2 million.
8% sequentially and the decline of 28% versus the same quarter last year.
International sales increased 65% sequentially.
While North America sales, which were impacted by the February storm in Texas increased 1% sequentially.
Sales of Novo cloud were $17 $5 million down 20% sequentially from 14% versus last year's first quarter.
Consolidated gross margin in the first quarter was 23% up from 21% in the fourth quarter of 2020 and down from 33% from last year's first quarter.
The decline from the year ago first quarter, primarily relates to lower average selling prices of guidance energetics.
Dino Energetics reported first quarter gross margin of 22% versus 24% in the 2024th quarter and 37% from last year's first quarter.
Nobel <unk> reported first quarter gross margin of 26%.
Versus 18% in the fourth quarter and 25% in the year ago first quarter.
The increases reflect the more favorable project mix.
Looking at our first quarter expenses consolidated SG&A of $13 $2 million increased 5% versus the fourth quarter and declined 21% versus the year ago first quarter.
We reported a consolidated adjusted operating loss of $583000, which excludes the $127000 in restructuring charges at NOLA.
First quarter adjusted net income was $559000 or <unk> <unk> per diluted share versus adjusted net income of $5 $3 million for 35 per diluted share in last year's first quarter.
Adjusted EBITDA was $4 million versus $11 $3 million in last year's first quarter.
<unk> the energetics reported first quarter adjusted EBITDA of $3 $5 million, while know about flat reported adjusted EBITDA of $2 7 million.
As Kevin noted, we repaid our $11 $8 million term debt in full during the first quarter and raised an additional $25 $3 million under our aftermarket equity program, bringing our total cash and marketable securities balance of $66 8 million.
Looking at guidance.
Second quarter sales are expected to be in a range of 67 million to $72 million versus the $55 $7 million reported in the 2021 first quarter.
At the business level of Dine Energetics is expected to report sales in the range of $44 million of $47 million versus the $38 2 million reported in the first quarter.
Nobel <unk> sales are expected to range of $23 million to $25 million versus the $17 $5 million reported in 2021 first quarter.
Consolidated gross margin is expected in a range of 25% to 26% versus 23% in the first quarter.
First quarter, selling general and administrative expense is expected to be approximately $14 million to $15 million versus the $13 2 million reported last quarter.
The sequential increase primarily due to an anticipated $1 $5 million of litigation expense of that energetics.
<unk> and digital transformation.
Resuming business related travel for storing variable compensation.
Amortization expense is expected to be approximately $300000.
Interest expense is expected to be in the range of $90000.
Adjusted EBITDA is expected in the range of 6 million to $8 million versus $4 million in the 2021 first quarter.
With that we're ready to take any questions operator.
Ladies and gentlemen, the floor is now open for questions.
If you have any questions or comments. Please press star one on your phone now.
That will posing your question. Please pickup your handset with the stay on speaker phone to provide opt on the phone quality.
Please hold a moment of long pole for questions.
Your first question is coming from Tommy Moll.
Your line of life.
Good afternoon, and thanks for taking my questions.
Good afternoon Tommy.
Kevin I wanted to start on non energetics.
You're up quarter.
Quarter over quarter again guidance for a second corner of calls for another sequential increase which would be.
For in a row I believe.
So the industry is moving in the right direction here, you've announced the pricing increase it sounded like you've started to realize the benefit from that.
On the other hand in recent quarters, you've talked to the inventory overhang.
Across the whole competitive landscape.
The potentially a cross current there so I wonder if you could unpack for us some of the competitive dynamics that you're seeing in the marketplace right now.
Yes.
I think you've captured it well Tommy.
The inventory overhang has pretty much worked its way through the system there.
There is still some.
The inventory, but it's but it's not across the board with certain companies.
We actually believe that the from where we are today going forward.
People are going to be building for demand.
And in anticipating of a greater level of demand.
Going into the second half of this year compared to the the first half.
Pricing is.
We're out in front with the price increase.
Seeing.
Some positive.
Results in terms of our average selling prices going into April, albeit it's still early in April.
And.
Activity as it picks up we'll support.
Margins.
The one thing that we are always conscious of it.
Still.
The need to see improvement on in the market is the profitability of our customers.
And.
It is also necessary for our customers to improve their profitability for us too.
Improve our pricing and our margins over time.
Thank you Kevin that's very helpful.
I wanted to pivot to the balance sheet.
So all of your debt's been repaid.
Continued to build the cash.
In part through through the offering that you called out in the earnings release.
So again, just hoping you could help us read the tea leaves here.
Should we think about some potential acquisitions near term.
Any potential strength.
Change in capital allocation strategy that that might be forthcoming.
Or should we view this more as the.
Conservatism on the heels of a pretty severe downturn and just wanted to protect the balance sheet.
We believe our two businesses are sustainable from a cash flow and cash generation standpoint.
Month to month of quarter to quarter, depending on the.
Capital project.
They they they may consume or generate cash.
But all in all we expect our two businesses to generate cash and fund themselves as we go forward.
The <unk>.
ATM the.
Building of our cash balance is to help.
Our two businesses look within.
There are markets for opportunities from a bolt on acquisition standpoint.
Companies are areas that.
Would improve their competitive position expand their total available market.
And and leverage there the sales channels to the markets that they're in.
And it's also.
Yes.
Part of directed towards future.
<unk>.
Activities looking at businesses that we could add to our portfolio.
At the end of the day DMC is.
Okay.
Our holding company for.
Tech technical businesses in niche markets and the way for us to grow is to expand our total available market through adding new product lines of businesses.
So it's.
We are looking towards M&A as we go forward.
Thank you, Kevin and if I could tell us one more in.
Hmm.
There is a new administration in Washington.
Talked about potentially incentivising plugging old wells.
You've got a system dawn of slot.
The can do that for operators.
So realizing its early in the process here, but any comment you would.
You'd want to offer for of our system.
The investors may be less familiar with just in terms of the capabilities and the potential opportunity that you see here.
Yes, I mean, there's there's the thousands actually.
Essentially 100, thousands of abandoned wells that have not been plugged properly.
Net.
Leak methane and greenhouse gases and it's.
Prudent for the industry.
To invest into.
Capping those so that they no longer.
Contribute to the greenhouse gas situation.
So we're pretty excited about the fact that the.
The new administration.
The.
Dedicating resources to this area, which should benefit our customers and should benefit.
The product line that we have debt is a very effective tool used in the plug and abandonment.
Thank you, Kevin I will turn it back I appreciate it.
Your next question. The question is coming from Taylor Zurcher.
Your line is live.
Hey, Thank you and good afternoon, Kevin I wanted to.
Start and diner energetics the guidance for Q2.
If we add back the the $5 million in and sort of lost sales due to the winter storm.
There's really not a whole lot of of growth sequentially.
I realize that's not really an apples to apples comparison, but I was hoping you could help us parse through U S for versus international it looks like Canada sales were fairly strong and that will obviously get being pretty hard as we go into spring breakup in Q2, but could you help us parse through the U S and international as it relates to sequential growth in Q2 within Dino.
<unk>.
Yes.
One thing I would like to note first as our two businesses somewhat behave differently when there is a.
A market disruption.
The <unk>, which.
Makes a product that goes into the construction industry of rounds downstream petrochemical applications.
When there is a.
Something that misses in their quarter, Inc.
And goes it goes into the next quarter and it's additive to that quarter, we recover of that.
Business.
In dining energetic dining our jet ex mix.
Consumable.
And.
And there.
And the integrated system, that's delivered fully <expletive>embled to the field or to the well at time of consumption just in time.
And.
And we're able to catch up in terms of our ability of the manufacturer of products, but the time that was lost in that one to two week period by our service companies is time that they have a hard time regaining.
And so so it doesn't necessarily go from one quarter to the index and dine energetics.
Because it's dependent upon the service companies.
And Taylor I would I would just add debt and the Q1.
The Q2.
The growth is all in the.
North America, we're forecasting international to the flat Q1 day Q2, it's a lumpy business, we expect that the the much stronger in the second half, but so all of the growth that Youre seeing is North America.
Got it that's very helpful and my.
My follow ups and noble clad no debt.
The business can be lumpy as well certainly from a margin standpoint, and how the margins rebound nicely. This quarter I'm curious as you look out over the balance of 2021 that the backlog is strong and the guidance for Q2 was relatively strong as well from a profitability standpoint.
Based on the mix of backlog and work you have in front of me right. Now do you think that the mid teens EBITDA margin type ballpark.
That you did in Q1 is kind of the right place to think about that business at least in the near term future.
Yes, I would say I would say low to mid teens, the first quarter was.
Hi.
The favorable.
Project mix, so I think that that's going to be of business in 2000 for 25% gross margin in the first quarter is 20, I think 26 of 26 for.
So, yes, I think thats ballpark is low.
Low to mid teens.
Great. Thanks for the answers I'll turn it back.
Okay.
Your next question is coming from Stephen Kim Gyro.
Your line is live.
Oh, Thanks, good evening everybody.
Good evening Steven.
A couple of things.
Yes.
If you start the started at Diana <unk>, Inc.
You've talked about in the past.
And when you look at what customers are growing and I think in 2020, they were in cost cutting mode as of the world kind of of unraveled, but.
If you think about this mix shift.
Towards the integrated perf systems versus components.
It ties into another question about about inventories but.
What are you seeing there as far as the <unk>.
Overall industry trends, the kind of reaccelerate the adoption of.
Of the integrated for systems versus the components.
Yeah.
Well first of all of the.
Recovery is in the very early stages.
And.
Somewhat of what we experienced in the.
Back half of 2020.
Is that.
When the market is down and down as significant as it was in there as of.
Large inventory of of components.
In the marketplace.
The focus was on cash flow and turning those components turning that inventory into cash.
And in systems.
Some of it took a backseat to to consuming inventory.
Inventory and generating cash for the companies that have a lot of inventory.
And and.
And to move that inventory in the market that was.
Extremely challenged.
Rice was an important factor and moving it.
And so.
We're just beginning to return.
Two of more normalized situation, where the inventories out of the market.
The companies are.
Having to invest in working capital and manufacturing capabilities to meet current demand.
And.
And Theres a number of companies debt.
That we see that we're consuming components in the downturn that may not go the field <expletive>embled component path as we come out of the downturn.
And so I.
The next.
A couple of quarters are going to be important in the transition from components to systems.
We're also going to be important as.
As the activity picks up for the.
The return of profitability, both through volume and price increases not just for ourselves, but for our customers.
And.
And we believe that the further we get into the year.
The stronger our markets are expected to be.
And so should to the demand for systems.
And therefore, our revenue and earnings and.
The other thing Thats important to note is that.
At the low levels of the market has been operating.
Some of the service companies have been able to meet their own demand through through the legacy approach to the business.
But the market has seen some attrition and consult consolidation is just starting to begin.
In certain areas and.
The capacity coming out of.
The market slowdown.
Some people are going to be challenged on that and we're going to see hopefully with our.
Investments that we've made over the last couple of years, we should benefit.
Because of our capacity is in place.
In order to serve our customers as the market gets stronger and.
So kind of a long answer to your question, but I.
I think we're at a per.
Pivot point over the next.
A couple of quarters and into the second half of this year.
Gotcha. Thanks.
And.
Along the same lines, you mentioned a little bit on the split the.
You clearly saw something.
Because you put four of our price increase on the <unk> side it sounded like you're seeing some traction on that front is that fair.
We've seen some traction.
Yes, it's still early.
<unk>.
I will say that we probably.
Do not see broad based support in the market as of yet.
But we're hoping that.
The market pricing will strengthen as the activity strengthens going into the second half of the year.
Okay, great. Thanks, and then finally the.
Two questions around <unk>.
The litigation one is pretty straightforward I think the.
Second quarter.
Adjusted EBITDA guide of $6 million to $8 million.
Is that after deducting or is that excluding the expected litigation of about 90 of them up.
That's the after the.
Our spending on litigation.
So it's seven five to.
Mine in the half.
If you strip correct, yes.
Yeah, if you strip it out correct.
Okay. Good.
Chuck that and then.
I know you probably.
Reluctant to say much.
Is there sort of round.
The.
The charges.
And the downhole energetics or is this around.
The delivery system.
We're seeing in surround.
Yes.
Yes.
Three areas of.
Of.
Intellectual property that the.
Are involved and.
Two of them are around the <unk>.
Two of the areas of our around the delivery system and the packaging of the shaped charges and one is around the initiating system.
And.
And the design of of that.
Technology.
Okay, Great and then if I could slide one more as you.
About the.
The gross margin progression and we've talked about this in the past all of your dining margins had plenty of good gross profit margin growth.
Ticked above 40% for a quarter of 2019 of market. The average suggests a touch under 40% in 2019.
As I as activity normalizes.
Look into 2000 22022, maybe one of the things we're seeing in the industry is as e&ps are sticking to their for their capital discipline.
I think as the industry for example, like on the pressure pumping side I think people are not expecting that the.
We're expecting price improvement of things tighten at some point I believe some arc, but they're not expecting the kind of moves we've seen in prior cycles and I was just curious in the context of.
Sort of E&P capital discipline.
It reasonable to think that there is those sign up gross profit margins can get back to 30% plus.
Okay.
Without a doubt I mean.
So there is there is.
It's it's one market that we participate in a different part of the ecosystem.
Then.
Some of the other service from product companies and.
It's important to realize that.
We have an <expletive>et light high bearable cost business.
With differentiated products.
Have a greater value and use for our customers.
The significant cost savings to the companies who organize their business around our.
Products and systems, they have a much lower total cost.
The higher value add to their customer.
And so are our products pay for themselves and their.
Integrated perforating system, which enables the safer and more efficient operations. When you look at the the.
The cost of drilling and completing the well there are less than 2% of the cost of.
Of the overall of completion, let alone the overall well consider.
Construction.
Yes, they are of significant contributor.
Two the productivity safety.
And the efficiency of of completing wells and so.
It's a whole different thing that if you have.
Overcapacity.
In <expletive>ets that need to be utilized.
And you have a high fixed cost.
It's quite a bit different when when there.
Asset like variable cost business.
And there is differentiation on the performance of.
The products and use.
So we.
We're cognizant of and sensitive to the profitability of our.
Customers.
And we're working hard with them to to optimize.
The total costs between our two businesses.
In.
Our ability with our customers to serve the E&P and I think that we've got.
A strong approach that will.
Definitely allow us to return to acceptable margins.
Great. Thanks, I'll get back in line, but I appreciate the color.
Okay.
Your next question is coming from Gerry Sweeney.
Your line is live.
Hey, good afternoon, Thanks for taking my call, Kevin, Yes, Hi, Jerry.
Just following up a little bit maybe on <unk>.
Just curious.
All about well.
It's partly about expanding our customer base I know there was a lot of components from the market people.
The board sort of chewing through them over the course of the.
The past year, let's say, but would you be able to say I mean do you have more customers today than you did a year ago.
For specced in or however, you would want to answer that.
I think we have.
More.
E&P company as operators that are aware of our product line.
We have.
Probably a similar number of customers to two a year ago.
It's really about going deep with those customers.
And.
We're not out chasing.
Low price component business, which is what the market has been for.
For the last.
Essentially.
For quarters.
And so.
Yes.
Feel that there is.
Pretty strong awareness and that we're working.
With the right people so that when the market.
Does start to improve we'll go deeper with them and you'll see the growth in our revenues.
On that front.
I didn't want to imply that you're chasing.
The components, but go ahead I'm sorry.
Well, we're not trying to be all things to all people, we're trying to be all things to a handful of people, where we aligned culture.
Culturally and we're focused on.
Creating value for the E&P and optimizing.
The ecosystem.
Yes and.
And so so.
We're going after the more.
Technologically focused.
Total cost focused companies, who also value.
Safety reliability of the actual product performance and <unk>.
Companies that are doing the right thing from.
ESG standpoint, and so.
Sure.
We're not trying to be all things to all of people, we're trying to be.
The best in our area and <expletive>ociated with the best.
And then the.
Absolutely understand that and agree with that.
But.
Digging a little deeper as you said deeper in the customers.
Is this a function of also maybe some of your customers. They have of Baseload of employees and if activity picks up right.
You remove certain.
Labor constrained at <unk>.
And supply chain.
If activity picks are they sort of at the base, where they want to be and as activity picks up.
It was more of your equipment because you.
Alleviate the need to bring more people on it.
Ponant the pie right.
Yes.
We're definitely.
The industry has gone through.
Two once in the lifetime downturns over the last seven years.
Has fewer people that have fewer knowledgeable people and skill in the area of <expletive>embling.
The explosives into perforating systems.
And.
And it doesn't make it doesn't make sense for companies to two who are not vertically integrated in the components themselves and have the engineering of the technology.
The support aspects around debt.
Two two.
They are by the very nature of theyre going to be less efficient and less skilled and.
And there are <expletive>embling.
Systems of that.
Of components that aren't designed to work together and so.
We think that debt.
The consolidation that's taken place the attrition in the either people or companies.
It's going to favor.
The perforating companies and were just one of them theres others that debt.
That will benefit from this.
It will favor of those that have.
Our medium to longer view.
Investment of the market.
And the investment to build systems.
On things that we're vertically integrated.
In doing.
And.
Changes to be.
Becoming more complex.
And we can do it more effectively and efficiently than.
The people would do it for a part time basis or for a small part of the overall needs.
Got it.
Switching gears slightly too well.
Actually no cloud.
How has COVID-19 impacted.
How much has COVID-19 impacted the sales cycle, there obviously for long lead time projects.
And once they start at the start it but things do can shift around.
Several quarters, if not more.
Do you of any yes, COVID-19, yes, COVID-19 did not.
I mean it.
Impacted it in the.
More of a around the peripheral.
Compared to die the energetics.
And because of the longer lead time longer gestation period for these projects.
If it.
We've seen things, where theres been shipments slowdowns in <unk> and.
And difficulties on the logistics of either getting metals are shipping composite plates.
And products.
But it's.
Not in terms of the overall activity and.
And a lot of what they are.
Make goes.
Into markets that are more GDP driven.
And.
A more stable on a longer term basis.
Got it okay.
We share it.
The.
That's it from my end thank you.
Mhm.
Your next question is coming from Matthew of Billings go.
Your line is live.
Hey.
Good afternoon, Thanks for taking my questions.
Maybe first day on the patent litigation.
Can you give us the raw.
Rough sense of timeline.
And how.
How should we expect expenses litigation the answers too.
Okay.
As we move through that litigation process.
Yes, I think.
Intellectual property.
IP litigation.
As.
More of a marathon than of sprint.
With the way that.
The discussions take place the.
Filing takes place and then the response to the filings.
And.
Yes.
We expect it to continue throughout 2021 and into 2022 without a doubt.
I will say that.
We started.
We've had litigation happening kind of in the background for a couple of years now.
<unk> accelerated.
Both of our patent portfolio has grown and as the strength of our designs have been recognized.
So.
We had a step up in September October of <unk>.
Last year.
In terms of.
Sending letters to those that we believe are infringing.
We've had a mixed bag of responses.
And we started filing infringement suits. Unfortunately, we do not enjoy this we wish we did not have to take.
Take this path when we started filing those in December.
And.
And so we're just early in the.
Net earnings of some.
Some of the two out of the three areas that we have intellectual property and one we've been in it for quite some time.
It's a long process.
And Matt.
When we think about the one 5 million in Q2, we expect that run rate.
Currently right now, we're not giving guidance obviously for the rest of the EBITDA run rates.
Kind of be there for Q3 Q4 as well.
Yes.
Got it so I mean.
If we get to the point of the trial in April we expect the run up at that point of <unk>.
That's scheduled for trial in 2023, and your valuable to the figure something out of the core.
Or maybe 2000 Twenty's of I guess, Joe just generally I mean do you have a sense of.
At what point do you get to a trial of the 2022% of 2023 of just how far backlog of the courts now.
All of it create any challenge there.
Do you expect the.
The a bump up those expenses as you sort of of trial.
Ah trial, certainly would bump up the expenses.
But we are communicating with all parties right now.
Understand how we believe the infringe.
We are open to discussions for resolving this outside of court.
And the hope that we can avoid going to court.
And.
But we're also organized very efficiently on this and.
It's important we knew this was the potential of necessary action that may have to be taken when we filed the patents of the first place.
And so there is an obligation on our part when we feel that.
Infringement as is happening and it's.
And it's impacting.
US in the marketplace that we have to defend the intellectual property that we filed in the first place.
No.
We're very focused on this and committed to seeing it too.
Successful conclusion, but it's it's the.
The path, we believe is straightforward.
There's a lot of jockeying to get to where we need to be.
Got it that makes sense and just I guess on the follow up.
The backlog in client does not because it was pretty nice move sequentially I'm just curious how much of that do you put on market development efforts that you've been.
Kind of engaging in over the last couple of years.
Well I think the market development.
A small amount.
One of the other things that we measure in the <unk>.
Additionally, our backlog as our book to Bill and our book to Bill.
<unk> just seen a modest increase over the past year.
So.
The backlog is.
Is the quite a favorable backlog.
But it doesn't reflect some of the projects that we hope to start landing over the next few quarters.
Yes.
We're pretty excited about some of the new applications and products.
The plant is now <unk>.
<unk> and it takes a long time to commercialize in the construction related.
Product.
Our process related product.
<unk>.
And so we feel.
Pretty good that they'll have.
A modest improvement this year over last.
And but it should get stronger from here on out.
Great Alright, thank you.
Your next question is a follow up coming from Stephens, Inc.
Your line is live.
Thanks, two quick ones one is.
Any any.
Color on the Lone Star system that you guys are sort of talking about I think on last quarter's call.
And the other new products worth highlighting.
But are gaining traction.
Yes, we're seeing a great deal of interest in the Lone Star.
And.
Yes.
<unk> rolled it out cautiously so that we.
Get.
Time in the market and the bugs worked out a bit but it's.
It's a pretty powerful.
Perforating system, that's great gaining a lot of interest.
So the.
The areas that we see right now are the lone star and also our oriented perforating systems.
Those would be the two areas that have the our gravity system that has the strongest level of interest right now.
The quick one.
I think Mike mentioned earlier, the international business being a little bit lumpy.
Kind of jacks.
I struggled for sort of things.
Think about how to model of for last year, I believe that at about $35 million for the year.
Is that a reasonable place to the start.
As an international.
The revenue target for 2021 and Diana.
Steven.
When we say international it's everything but the U S.
US and Canada in last year.
The third.
$31 million in that 30 day.
35 range low <unk> is where we see that going this year and again it is.
About $7 million in Q1, and we've got it forecasted for $7 million in Q2.
Hi, Thanks, I was I was actually growth channel by mistake, but thanks for that alright, that's all I have thank you gentlemen.
Okay.
We have no further questions from the lines at this time I would now like to turn the floor back to Kevin long for closing remarks.
Okay.
We'd like to thank everybody for joining us for this call.
As I mentioned earlier.
The further we get into this year the stronger we believe our markets are expected to be in.
And we look forward to.
Discussing this with you in July.
And.
Thank you very much.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at the <expletive>ignment of a wonderful day. Thank you for your participation.