Q2 2021 Geospace Technologies Corp Earnings Call
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Welcome to the G O speech technologies second quarter, 2021 earnings conference call.
Hosting the call today from G. O space is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Robert Kurt on the company's Chief Financial Officer, and Mark Tinker CEO of G. O space subsidiary Quantum technologies services today's call is being recorded and will be available on the Geo space.
Technologies Investor Relations website following the call.
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And it's now my pleasure to turn the floor over to Rick Wheeler, Sir you may begin.
Thank you Brittany.
Good morning, and welcome to Geospatial Technologies conference call for the second quarter or for our 2021 fiscal year.
I'm, Rick Wheeler, the company's President and Chief Executive Officer, and I'm joined by Robert Kurt and the company's Chief Financial Officer, and also with US. This morning is Dr. Mark Tinker CEO of our quantum technology Sciences subsidiary.
I'll first give an overview of the second quarter and Robert will follow with an in depth commentary on our financial performance.
After a few last remarks, we'll open the line for questions that hopefully Robert Marc and I can answer.
So I'm on today's statements may be considered forward looking as defined in the private Securities Litigation Litigation Reform Act of 1995. This includes comments about product markets revenue recognition planned operations and capital expenditures.
Such statements are based on our present awareness, while actual outcomes are affected by factors and uncertainties, we cannot predict or control, both known and unknown risks can lead to differing performance or results from what we say or imply today.
These risks and uncertainties include those discussed in our SEC form 10-K, and 10-Q filings.
As a convenience we will link a recording of this call on the Investor Relations page of our Geo space Dot Com website, and I encourage everyone to visit and browse that site to learn more about geo space and its products.
Note that day information discussed and recorded this morning is time sensitive and may not be accurate at the time, one listens to the replay.
Yesterday after the market closed we released financial results for our second quarter of fiscal year 2021 which ended March 31st 2021.
Just as the COVID-19 play worsened and some locations, while improving and others our business segments reflected similar divergence and the second fiscal quarter yet. Despite the challenges of the pandemic is thrust upon us there are signs of recovery for the overall economy as well as the businesses we serve.
And many places COVID-19 restrictions are being lifted and air travel is ramping up and businesses are reopening and returning to work.
Nonetheless, the pandemic severe impact as evidenced in the three and six months periods and at March 30, <unk> 2021.
And our oil and gas market segment gaps and demand for our Ob ex Marine nodal systems continued through the second quarter. This led to much lower rental revenue throughout the first six months of the fiscal year compared to last year.
Moreover, as earlier Ob ex rental contracts ran to completion many of the planned contracts for follow on work and do surveys and could not be started due to COVID-19, lockdowns and travel restrictions.
And constellation we believe much of this work will resume as COVID-19 vaccines are broadly distributed and recovery from the pandemic gains momentum even now request for quotes on future it'll be X system rentals have increased and some new contracts that are already underway or about to begin.
On another positive note lower rental revenue from our oil and gas market segment was largely offset by revenue recognized from the sale of a large G. C. L and recording system that was delivered a year ago.
Since that time, the initial downpayment and monthly promissory note payments, we've received toward the purchase had been accumulating on our balance sheet as deferred revenue.
However, our ongoing due diligence review of this customer, including recent audited financial information has determined and completion of all remaining payments is probable and their revenue from the sales should be recognized.
Despite the negative effects of COVID-19, and in contrast to the oil and gas market segment second quarter revenue and our adjacent market segment experienced growth of 7% compared to the same three months a year ago with that growth expanding to almost 10% over last year's for six months.
The improvement is mostly attributed to even larger growth from our industrial products and services, which includes our smart water meter cables and connectors and our contract manufacturing.
Notably however, a portion of this growth was partially offset by reductions in revenue from Iraq and imaging products, where many of our customers continued to be negatively impacted by COVID-19.
But as the pandemic abates, we believe demand will increase for these products and promotions and merchandising for school and sporting events and other social gatherings resume.
The vast majority of revenue for my emerging market segment was recorded and our first fiscal quarter and is thus reflected and the six month period ended March 31, 2021 with very little contribution and the second quarter.
This revenue is affiliated with the contract awarded by the Department of Homeland Security to our quantum subsidiary and April of 2020.
The contract called for by providing the customs and border protection and U S border patrol and with a novel border and perimeter security solution, comprising our unique technological advances and sensors and systems and data analytics and we're very pleased that the deployment and installation of this advanced border and perimeter security solution proceeded on course.
Yeah.
This is accomplished expansion and diversification of products and services and our emerging market segment serves as demonstration that Geo space is first and foremost and innovative technology company.
Our focused strategy is to push highly engineered for purpose products into the hands of customers and other marks it markets as well as in our oil and gas market and we see even more of this occurring and our future.
Before turning the call over to Robert I'd also like to highlight that is as of March 31, 'twenty 'twenty. One we have purchased over 275000 shares of our common stock as part of the stock repurchase plan and we announced in November of 2020.
This is just yet more evidence of our returning value to shareholders.
At this point I'd like to turn the call over to Robert for more financial detail.
Thanks, Rick and good morning, before I begin I'd like to remind everyone that we will not provide any specific revenue or earnings guidance during our call. This morning.
And yesterday's press release for our second quarter ended March 31, 2021, we reported revenue of $23 9 million compared to last year's revenue of $25 9 million. The net loss for the quarter was $7 2 million or 53 cents per diluted share compared to last year's.
Net loss of $3 8 million or 28 cents per diluted share.
For the six months ended March 31, 2021, and we reported revenue of $52 3 million compared to revenue of $43 6 million last year on.
Our net loss for the six month period was $8 2 million or 61 cents per diluted share compared to last year's net loss of $13 1 million or <unk> 97 cents per diluted share.
Our oil and gas markets revenue is as follows our traditional seismic product revenue for the second quarter was 789000, a decrease of 61% compared to revenue of 2 million last year.
Revenue for the six months of 2021 was $1 8 million a decrease of 59% compared to revenue of $4 4 million for the same prior year period.
The reduction of revenue and both comparable periods is due to lower demand for traditional sensor products and marine seismic products.
Our wireless product revenue for the quarter was $14 8 million a decrease of 8% compared to revenue of $16 1 million last year wireless product revenue for the six months was $26 5 million and increase of 6% compared to revenue of 25 million for the same period.
And last fiscal year.
For three months and six months periods, both benefited from the recognition of 12, and a half million and revenue from the sale of land wireless system delivered to our customer and the second quarter of fiscal year 2020.
Excluding this sale revenue from wireless products for the three and six months periods was $2 3 million and $14 million and 85% and 44% decrease and revenue for the same periods of fiscal year 2020.
The six month period is partially offset by the sale by the $9 9 million dollar sale of used Ob X for rental equipment.
The decrease in revenue as a result of selling a portion of our obs rental fleet and lower utilization of the remaining Ob ex rental fleet caused by COVID-19 related lockdowns and travel restrictions globally.
We believe as COVID-19 restrictions are lifted or expired seismic survey is using our equipment will resume or commenced resulting in a higher level of utilization of her ob ex rental fleet. We believe this shift has to be good.
And our reservoir product revenue for the second quarter was 571000, and an increase of 69% compared to revenue of 337000 last year.
Reservoir product revenue for the six months period was 600000, and an increase of 8% compared to revenue of 55000 last year.
The increase for the three months its six month periods reflect a higher level of demand for our engineering services.
We do not expect meaningful revenue from these products until we are engaged and a contract for the delivery of a permanent reservoir monitoring system. We continue to discuss P. R and products with multiple customers, but do not expect any significant P. R. M related revenue to be recognized for fiscal year.
22021.
We believe our global recovery from COVID-19 from the COVID-19, pandemic will increase energy demands increased dinner and energy demands for what reinflate demand for oil and gas and our P. R. M systems provide the preeminent tool for oil and gas companies to maximize production from existing assets.
And lower cost and a reduced carbon footprint.
Moving to our adjacent market segments.
Our industrial product revenue for the second quarter of fiscal year, 2021 was 5 million and an increase of 19% over the second quarter of 2020.
Industrial products six month revenue for fiscal year 2020, 'twenty, one is nine 4 million and increase over the same period and 2020 or 21%.
Both periods revenue increases are due to higher sales of our water meter and cable.
Water meter cable and connector products and higher demand for our contract manufacturing services.
Imaging product revenue for the second quarter was $2 6 million a decrease of 10% compared to last year's revenue of $2 9 million.
And the six month revenue for engineer imaging products for fiscal year, 2021 is $5 1 million, a 6% decrease when compared to the same period and 2020.
The decrease in revenue for both periods is due to lower demand for our products due to COVID-19 related restrictions on social gatherings. We believe when these gatherings resumed demand for these products will increase.
Finally revenue from our emerging market segment totaled 165000 for the three months and $9 million for the six month period, ending March 31 2021.
Prior year revenue was 372000 and for the second quarter and 469000 and for the six month period, ending March 31 2020.
The decrease in revenue for the three months period over the prior years due to fewer sales of our specialty border and perimeter security products. The increase in revenue for the six month period is due to the partial completion of the contract awarded in April 2020, with customs and border Protection U S border patrol.
We expect to complete this per contract within fiscal year 2021.
Our second quarter fiscal year, 2021, and operating expenses decreased by $2 4 million or <unk> 21 per skin compared to the second quarter of 2020.
The six month operating expenses decreased by $4 5 million or 21% when compared to the same prior year period.
The decrease in operating expenses for the three months and six months periods is due to reduced personnel cost related to our cost reduction program that began in fiscal year 2020, a noncash decrease to the fair value of contingent earn out liabilities for a quantum and <unk> acquisitions.
Decrease in research and development projects.
Cost and a reduction and general business expenses related to our business operations.
Our six month cash investments into property plant and equipment is $1 7 million depending on demand for our <unk> Marine really equipment, we expect fiscal year 2021, cash and investments into our rental fleet to be approximately $2 million and investments into our.
Property plant and equipment could be as much as $3 million.
Our balance sheet at the end of the second quarter reflected $35 1 million of cash and short term investments.
We have law, we have no long term debt outstanding and the available borrowings under our credit agreement is $18 5 million.
In addition, we own numerous real estate holdings in Houston, and around the world and our own free and clear without any leverage that concludes my discussion and altering the call back to Rick.
Thank you Robert.
COVID-19 has not yet gone away, but fortunately nor has our resolve to overcome the challenges and it created.
Many people continue to be impacted but relief seems to be insight, especially as vaccines are more broadly distributed throughout the world and.
And parts of the U S more than 40% of the population has been fully vaccinated and in some countries even higher rates have been achieved.
And as economic conditions improve the engines of commerce everywhere and we will accelerate we firmly believe this will translate into higher demand for our products and services, including a further upward climb for those products that are seeing growing demand. Despite the pandemic.
And the broader landscape the world will need energy to fuel its rebounding economies and it will need even more energy to raise the quality of life for those portions of society continuing their journey out of poverty toward a higher standard of living.
It must be remembered that oil and gas will remain the primary means of supplying this energy for some time to come.
As we look back over the course of time Geo space has navigated a continuum of cyclical industry ups and downs and it appears that a viral pandemic will now be added to that list of overcome challenges.
And steering our course, we have exercised conservative management and consistently maintained a strong balance sheet with zero debt and ample liquidity.
And all the while and without interruption, we have steadfastly advanced our technologies to new levels across multiple products and have diversified our interests and to new markets.
We believe this measurable success, we will continue and I'd like to personally. Thank all of our hard working employees valued clients and trusted shareholders for their help and support as we strive to accomplish and even more.
This concludes our prepared statements and I'll now turn the call back over to Brittany for questions.
The floor is now open for questions. At this time, if you have a question or comment. Please press star one on your Touchtone phone is.
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And thank you we will take our first question from.
Bill does not with Titan capital. Your line is now open.
Good morning, and thank you.
Let's start to if we could with Ob ex.
And your comments and for that Youre, starting to see some green shoots are once again and in that segment.
So the question is when do you expect the Ob ex rentals to return to the to the prior peak quarterly run rate levels.
That's a very good question Bill and thanks for calling in.
I don't know that we could actually go so far as to say they'll reach prior levels that they were I mean that that remains to be seen I certainly think the opportunity is there for that to occur but as far as the green shoots we are already seeing that we have contracts that are underway now new contracts and ones that are about to begin and.
And we're certainly answering quotes for those that are some of them even extending into the next fiscal year.
So I mean, it's a good question, but I don't really have an answer for you I think this is going to be contingent on.
How the recovery of.
It takes place and how these projects get scheduled Theres certainly been some disruption actually within the actual service providers as it were so some of that has to get sorted out as well.
Is it your sense that from this point forward and that at least for the foreseeable future you will have a sequential.
Increases in revenue from the Ob ex rentals.
I think that we believe the demand is going to increase so to what extent that would lead to in your mind sequential increases in revenue then there's certainly likelihood that's the way it will manifest.
And I understood. Okay. Thank you, let me shift to a P. R M and and and then Oh, we can make sure that mark and it has an opportunity to participate too.
Okay.
So relative to the Oh, I'm going to call it and no bid 10 or tender the tender that was out and that you chose not to bid on.
Would you please and give us an update on debt and and is it still the D.
P. R. M system, that's that is number one I guess and the lead in terms of of potential opportunities.
Discussions with with that company are ongoing and continuing.
There are other oil companies that we are also talking to so which one would would manifest first I really couldnt say because the.
And this interest is pervasive and I think.
All companies are realizing you know and that to maximize these resources, which they've already learned to do that P. R. M is again going to continue to provide a good way of doing that.
And that being said I can't tell you, which which of those companies that were currently in discussions with.
And I would manifest into a first system.
But we think we can accommodate any and all of them as they would come on board as we said, we don't expect any of that to translate into any sort of revenue and this fiscal year certainly but.
But nonetheless discussions keep going.
Let me take this a step further.
Your comments and answering the question seems more favorable than than maybe what we've heard in the past and certainly more favorable that if someone were new.
To to the company and and I heard that you hadn't sold the system since.
Since 2012.
And it sounds like something different is is unfolding would you maybe expand upon that or or just correct me if I'm wrong.
No I think things are unfolding differently, and it's certainly with more interest.
Being express.
If you think about it the oil companies there their react reactions have had to deal with a destruction of demand and the and the last year. So the focus on oil companies has been how to navigate that particular circumstance and with economy shutting down air travel just demand in general.
And what they're now grappling with is the recoveries and the demands that will now place on their existing resources they've already learned that there is a lot of success gained and being able to leverage existing resources and <unk> as a part of that as they are exploring and and.
Examining reservoirs near their existing platforms and infrastructure and to this extent as I've mentioned before and you know theres the interest now extending into the deepwater as we have a lot of obs, our deepwater version of that of that product and and play.
So I certainly believe that with that new focus on being able to adjust to an increasing demand I think that brings new attention to P. R M, especially in light of maximizing their existing resources.
Rick I'm going to one one more question. Please and this is from a point of ignorance, if a if and oil company were to install.
Install a P. R M system.
And on a around a platform that they otherwise would use <unk> to do a shoot to identify new reserves would would they be able to use the P. R. M. Instead and I you know I I'm asking the question because I think a P. R M as more that the whole for.
For D being able to watch over time, but it seems like maybe it would also be able to do the work of of what the Ob X would otherwise be doing with this initial shoot also no I think your original perspective is actually the more correct one of.
The P. R. M systems generally speaking are are located above a reservoir and they can be quite large as you as you well imagine.
But the <unk>, it's more utilized in examining a nearby potential resources, so where there's a reservoir oftentimes there are other reservoirs that are very near that one.
So to that extent and I think the <unk> is extending beyond the imaging.
You know the capability of the of the PRN systems and to some extent they can see out and beyond the geology is that theyre centered over but for the most part that requires the additional exploration effort.
Great. Thank you, let's switch to our quantum and border security. Please mark I have a few questions but.
How about if we just start with having you.
Give us an update in terms of what you are seeing and and and and where.
And maybe just let's just start there just with an update and and just kind of open it up for US If you would please.
Well I've never known you to ask such a specific question before.
[laughter] I'd be delighted to update is.
Contract performance has gone very well on the on the revenue that everyone is on warehouse.
I'm very very very pleased with what we have been able to accomplish from the architecture design and manufacturing and the deployment of our system.
It's one and the client system and.
And we now have it and the ground and operational and burn.
Now being able to reference that system and going forward.
So as we look for the future, we're going to see where we might be able to apply its capabilities.
And for other customers who are interested in.
Similar.
Solutions.
Such a scale, it's kind of like a PRN type of model.
Well, we expect it with more frequency, but where we are looking at.
Larger scale opportunities so quarters will bounce around on the low end and then we'll have a big quarter like we did last one so I'm pretty pleased with where we're sitting right now and and the fact that we can go for it and use it for some reference system.
And in Robert's opening remarks, he referenced is that the system and should be completed this year. My sense was that it would have been done.
And would have been done by the end of and of March, whereas theres something that extended or did I just misinterpret the day opening remarks.
Both of you are right to be honest the systems and the ground doing its job Theres just nuances.
And once it is on the end of the contract that we have to tie up and right now we have and COVID-19.
COVID-19 scenario and we have that net migration scenario that is taking on customers.
Resources, So theres, a few and loose ends that we clean up contractually that that's always part of the contract and we're just going to put those off for about a month or so.
I think that's of any substantial nature.
Understood.
And so.
Hmm I'm going to ask you to characterize them what disruption if any you have experienced from the administration transitioning and and I'm not trying to get you to back out of the administration I think there's a there's disruption that takes place anytime that there is administration change.
But hoping that you can characterize it and to what degree, it's creating challenges and <unk> opportunities for quantum.
I don't think the landscape has changed for from our perspective.
Around the administration change.
On it.
And the border patrol remains the border patrol under customs and border protection within the department of Homeland Security.
And whether you were under the prior administration or this one.
For the 20 people in place of stability is the biggest factor.
And that's happening and.
I Wouldnt label it as a boundary between prior and now and overall, what's happened with and not with so much and administration, but what.
And we see on the Hill remains also the thing which and.
We have bipartisan support for the types of capabilities that we provide.
Because we are doing a job that is a security function.
And so it enjoys that buy cars and support and that hasn't changed either.
I think also bill and it's important to sort of.
Everyone on where that you know the.
Uh huh.
We're not building or we're not a part of building a wall or any of that sort of thing. So I mean, clearly there is a has been on withdrawal of funds and and other work and effort towards it and where that goes who knows that's something that I guess will unfold over the course of time.
But that's not what we were involved and are are involved in our you know our.
<unk> is is advanced and and are in a different way and if you'll make if youll remember even and <unk>.
Our recent address to Congress.
He he mentioned the fact that even his administration is interested in deploying technology solutions on the border for our security.
So that's that's the area that we are.
Really sponsor and employ ourselves doing.
Great. That's that's helpful.
And the S. B I R phase three a M.
Approval and that you have does this apply to government contractors one of them.
Or is it just the border patrol and I'm asking the spirit and the question and the spirit of a prior conference call you had referenced some interaction with our contractors.
It does not.
He was not bound to homeland security at all it goes across the federal space.
And and would that include when working with either with a government contractor or would you really need to be operating under whatever level that they are.
And that they have.
No it is not.
Bound by whether we are the prime or the sub.
We can still receive a source of sole source for it and procurement of our systems.
And that that is helpful and then.
You may have may have partially answered. This question earlier, but I am I have been pondering why why a sector of the border patrol wouldn't just on their own on.
Order on a additional equipment to our.
And to deploy and areas that they see or that are high risk rather than coming from the from the.
I guess I'll say from corporate for lack of a lack of a better phrase because I thought that the S. P. A R phase III would allow for any sector too to do such a thing would you talk a talk to that point and and how you are viewing that.
Well remember the headwaters for funding within the government start on the Hill.
And where their authorized and appropriated by Congress.
And then as they trickled down into the various departments each department does it.
Somewhat differently homeland security has more open.
Opened buckets, if you will for fun, whereas department of defense is far more.
And so it remains and.
D C at that level within the border patrol and Thats.
And how they choose to go forward with work and deploy because they do the all borders it's not just for southern borders Holistically to decide where best to apply those resources.
Great. Thank you all for taking so many questions.
Youre welcome.
And once again, if you would like to ask a question. Please press the star and one on your Touchtone phone at this time.
Yeah.
Okay.
And it appears I apologize, we do have a question from Glenn <unk> with Cook with capital.
Yeah.
Okay.
Hi, guys good morning, Hi, Glen.
I wanted to.
Dive into a couple of topics.
First of all please again that the.
Cash is ever growing it's great for the balance sheet using its repurchase stock gives us a lot of confidence.
I wanted to ask about the G C L.
Contract for that seems to be performing well, what do you think would trigger reclassifying that from deferred revenue too.
On another line item on the balance sheet, such as unrestricted cash et cetera.
We actually recognize that sale and and this quarter. So we no longer have that recorded as deferred revenue is it's actually revenue now.
Okay, right and and I mean, you know as it was the entire story I mean, there was a.
A case where through the public.
Financial statements of.
Exploration.
And they had a in times past.
Indicated and their filings that they were under risk of not not remaining a going concern so that sale was to them prior to that following.
Net filing and.
That prompted us that we needed to hold.
Hold that as a.
On a reserve on.
On revenue so that's what it.
Ended up putting it on our balance sheet over the course of time, but since then.
They've gone through a bankruptcy emerged from that bankruptcy and and and and more recently, we've gotten audited financial statements all of which are indicated that day.
And as we've mentioned in the press release that probability of full payment on this is high so it made sense to go ahead and recognize that revenue now that they've emerged.
Great.
I appreciate your conservative classification of that in prior quarters and appreciate your instincts on their viability as a <unk>.
Eventually coming through to pay that it's great to see debt.
Did those payments once they were reclassified from differed did they flow through and add to the unrestricted cash number.
I think they were already and the cash statement on the balance sheet, Yes, that's correct okay.
Great.
Moving on to other sales like that do you expect so you had a good obs and got a good. This G. S. L sale do you expect more like that consistently or do you think it'll be more of a lumpy.
Pipeline and the next couple of years, Atlanta's, it's going to be lumpy and always really has been so I think your instinct on that is as accurate that's how it's likely going to manifest and of course of time.
Okay, Great and then flipping over to a new investment Robert could you repeat and I didn't quite catch up the amount and you're expecting too.
And invest in new equipment and PP&E.
Yes, so we think we could invest as much as $3 million towards plant property and equipment, we've already put almost $2 million towards that this fiscal year, and then and on our rental fleet.
Depending on what kind of demand we see throughout the rest of the year, we expect to spend as much as 2 million Bucks.
That could change, though depending on.
If things that we don't have visibility to today come up.
Great.
And that's encouraging that may portend, some of the green shoots that are filled as elements and.
Asking about to me that it's a sign that you're expecting some activity there.
Of course can't come and because we don't know but it's.
It's encouraging it is encouraged and I was right.
And <unk>.
So to kind of dovetail to that if there is no.
Significant P. R M Award and the next couple of years, if that doesn't contribute.
What do you think and you can speak and very general terms and and.
Not looking for specific guidance, but what segment or Subsegment do you think would then be the best contributor.
On the topline and Bottomline.
Yeah.
Well.
Yeah, our wireless portion of the oil and gas markets has historically been the debt.
The other main producer and.
And I suspect that will remain to be the case.
Traditional products, which are typically or the sensors and that sort of thing those.
For the sort of manifests as consumable items as as exploration takes place primarily on land.
Okay.
Land exploration is still very much and a depressed state compared to prior norms. So we don't have evidence that that's going to change right away.
But to what extent it does we believe our G. C L, which is a part of our wireless product line within the oil and gas.
We believe that would be.
One that would continue to contribute because it and it's an easier deployment and.
Less weight and all that it just makes the seismic survey capabilities easier.
And a further two comments, though that in the land seismic world. There's there's a huge amount of stacked equipment debt.
Our customer has customers have.
And so.
Recovery It would take a lot of recovery for us to see anything significant with and debt ladder products. Yes. The one thing that might accelerate some of that to Robert's point is with this stacked equipment much of it is older legacy type equipment and not all of it but but some of it is and to the extent that those are much less.
Sufficient and costly to operate and the newer technologies such as we offered today and.
And then and then they may be abandoned and some sense. So we'll just have to see how that how that turns out.
Okay, great. Thanks for the color on that.
One last question flipping back to PRN.
And just in general can you walk us through the lag between.
If you were.
It just takes did get it on award what is typically a lag between the award and when.
The first chunk of revenue gets recognized.
Typically.
And it depends a lot on the size of of the.
And the size of the contract the amount of cable we're providing.
Yeah.
Debt.
And that has a big factor and that it also had it could have some factors based upon on weather windows and where this equipment needs to be installed debt that could affect when that happens.
Typically it could be.
And as long as six months out or or up to a year or even more.
It also amounts to sifting through all of the revenue recognition rules.
Of accounting, it doesn't necessary, which do not necessarily represent cash flow as those types of contracts manifest.
Fair enough.
Great.
Carbon sequestration and.
And.
Dr tanker has.
I've heard excitement and his voice on some past calls, but do we see that as and.
And anything that might create.
Great business or has there been any any interest on that or is that just more of a way long term opportunity.
No it definitely is a potential as future business.
It is a rather.
Infant market with respect to how that might manifest I think most focus. These days is on you know the actual capture and storage aspects.
And where we would fit and mostly using the monitoring aspects of a reservoir.
But keep in mind too that the P RM systems.
Really fall into into utilization of carbon capture because oftentimes they inject.
Oh two.
Floods these reservoirs with C O two to enhance their oil recovery.
And they learned where and how to do that oftentimes by monitoring the reservoir and its changes with the peer and so the PRA actually becomes a carbon sequestration.
Management tool and those situations, where they are actually using C O two for that enhanced oil recovery.
Great.
Rick.
That sounds like it also did a sales pitch to coach your sales team with.
Labor.
Well, it's all true.
Great.
And I have for today, you guys take care alright, Thanks Lynn.
And we have no further questions at this time and I will turn the floor back over to Rick Wheeler for any additional or closing remarks, alright, well. Thank you Britney and I'd like to thank everybody that joined our call today and we'll look forward to speaking with you again on our conference call for the third quarter and fiscal year, 2021, which will occur and.
August so thanks and goodbye.
Thank you. This does conclude today's T O space technologies second 2021 earnings conference call. Please disconnect your lines at this time and have a wonderful day.
Yeah.
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