Q2 2021 Cactus Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Cactus Q2.
The 21 earnings call.
At this time all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session.
To ask a question during the session you will need a press star 1 on your telephone.
If you require any further assistance. Please press star zero I would now.
I'd like to hand, the conference over to John Fitzgerald Director of corporate development and I are thank you. Please go ahead.
Thank you and good morning, everyone.
We appreciate your participation in today's call.
Speakers on today's call will be Scott vendor, our Chief Executive Officer, and Steve Tadlock.
The 'twenty, our Chief Financial Officer.
Also joining us today are Joel Bender, Senior Vice President and Chief operating Officer, Steve.
Stephen vendor Vice President of operations, and David Isaac Our General Counsel and Vice President of administration.
Yesterday, we issued our earnings release, which.
A couple on our website.
Please note that any comments, we make on today's call regarding projections or our expectations for future events are forward looking statements covered by the private Securities Litigation Reform Act.
Forward looking statements are subject to a number of risks and uncertainties.
As of <unk>, many of which are beyond our control.
These risks and uncertainties can cause actual results to differ materially from our current expectations.
We advise listeners to review of our earnings release, and the risk factors discussed in our filings with the SEC.
Any forward looking statements we make.
Make today are only as of today's date and we undertake no obligation to publicly update or review any forward looking statements.
In addition, during today's call, we will reference certain non-GAAP financial measures Rec.
A reconciliation to these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release.
With that I will turn the call over to Scott, Thanks, John and good morning to everyone cactus demonstrated its ability to achieve meaningful sequential growth during the second quarter revenue on adjusted EBITDA were each up over 25% versus Q1 significantly outpacing the 16% increase in the U S land.
The rig count on <unk>.
On a market share remained robust at just under 42% during the period.
We believe we are well positioned to capitalize on the U S market recovery given expectations for activity gains beyond the private operators as we head into next year.
In summary, first quarter revenues.
Increased 29% sequentially with each revenue category reporting growth of more than 15% adjusted EBITDA was up 27% sequentially. Adjusted EBITDA margins were 27% free cash flow was above $25 million for the quarter, our cash balance rose to 309.
And our board of directors approved an 11% increase in our quarterly dividend to <unk> <unk> per share on.
Now I'll turn the call over to Steve Tadlock, Our CFO, who will review our financial results. Following his remarks I'll provide some thoughts on our outlook for the near term before opening the lines 2.
So Steve Thanks, Scott in Q2, total revenues of $109 million or 29% higher than the prior quarter product revenues of $70 million were up 35% sequentially driven by an increase in rigs followed improved drilling efficiencies production related equipment demand and cost recovery initiatives product.
Gross margins were 32% of revenues up approximately a 190 basis points on a sequential basis as we began to address the impact of the significant cost inflation, which commenced in late 2020.
Rental revenues were nearly $15 million for the quarter up approximately 17% from the first quarter of 2021.
Product gross margins decreased 90 basis points sequentially due primarily to higher repair costs as we deployed more equipment in the field.
Field service and other revenues in Q2 were nearly $24 million up 20% versus the first quarter of 2021. This represented 28% of combined product and rental related revenue during the quarter.
The rental was in line with expectations.
We expect field service revenue to be approximately 27% of product and rental revenue during the third quarter of 2021.
Gross margins were 26% of revenues down 160 basis points sequentially with the reduction largely attributable to wagering statements completed for our associates during the quarter.
The adverse impact on utilization of time spent on new higher training and overtime required to meet the aforementioned increase in activity levels.
SG&A expenses were $11.4 million during the quarter up $1.8 million versus the first quarter. The sequential increase was primarily attributable to higher payroll related expenses associated with higher.
A bonus accruals wagering statements and employee additions.
Additionally, the quarter included an increase in stock based compensation expense related to previously granted psus.
As a percentage of revenue SG&A expenses decreased from 11% during the first quarter to 10% in the second quarter, we expect SG&A to be a 11% to 12.
Q3, 2021 inclusive of a slightly reduced stock based compensation expense of approximately $2 million.
Second quarter, adjusted EBITDA was approximately $29 million up 27% from just under $23 million during the first quarter of the year adjusted EBITDA for the quarter represented nearly 27% of revenues in line with.
In the quarter adjustments during the second quarter of 2021 included slightly over $2 million in stock based compensation and $1 million in other expense related to the revaluation of our TRA liability.
Depreciation expense for the quarter was flat versus Q1 at $9.2 million with a similar amount expected.
For the third quarter.
During the period, we recorded a $1 million noncash adjustment in other expense related to the revaluation of our tax receivable agreement liability.
We reported income tax expense of $1.4 million during the second quarter, which is inclusive of a $3 million income tax benefit associated with the partial release of a valuation.
The first one's during the period and was partially offset by 600000 of expense related to changes in a foreign tax credit position.
During the quarter, the public or a class a ownership of the company average 73% following cadence distribution of all of that 900000 of its shares to its limited partners. Our public ownership was 77% at the end of the quarter.
This distribution of removes what was considered an overhang on our stock.
Barring further changes in a public ownership percentage should we expect an effective tax rate of approximately 21% for Q3.
GAAP net income was $14.8 million in Q2, 2021 versus $15.1 million during the first quarter, which had a tax benefit for the period.
On laterally, we prefer to look at adjusted net income and earnings per share, which were $12.3 million of <unk> 16 per share respectively. During the second quarter versus $8.6 million of <unk> 11 per share in Q1 the.
Q2 adjustments included backing out $1 million in other expense related to the revaluation of the tax receivable agreement liability and the application.
<unk> of the 28% tax rate 2 our adjusted pre tax income generated during the quarter, we estimate that the tax rate for adjusted EPS will be 28% during the third quarter of 2021.
During the second quarter, we paid a quarterly dividend of <unk> <unk> per share, resulting in a cash outflow of nearly $7 million, including related distributions to members.
In terms of the board has approved a dividend of <unk> 10 per share to be paid in September of this year.
Our cash position increased by $17 million during the quarter to approximately 309 million highlighting the continued free cash flow generation of the company above and beyond dividend related payments for the quarter operating cash flow was approximately 20.
The $1 million and a net capex was $2 million.
Capital requirements for our business remain modest and we will continue to exercise discipline with regards to growth capex as such our net capex guidance for 2021 remains on the range of $10 million to $15 million.
During the third quarter, we expect to make a TRA payment of approximately $9 million and.
And in the associated distribution of the members of $3 million that covers the financial review and I'll now turn it back to Scott Thanks, Steve the.
The second quarter and highlighted our ability to outperform domestic drilling and completion activity while the U S.
While the U S land rig count gained 16% during the quarter. Our total revenue grew 20.
The 9% with product revenue up 35% over the period.
Despite the majority of rig count additions in the quarter being driven by private operators, who have historically represented a smaller portion of our business, we reported market share at nearly 42% during the period. Additionally, our product revenue.
Per rig followed increased by approximately 20% due to a combination of rig efficiency gains.
Later production tree revenue and cost recovery efforts looking to the third quarter. We currently anticipate our rigs followed and product revenues to increase by high single digit percentage.
<unk> remainder of the opinion that are publicly traded customers will respond to the improved commodity environment as we head into 2022, thereby contributing to the tightness in this competitive market.
Product EBITDA margins or by a slightly higher for the third quarter as increased direct costs are offset by cost recovery initiatives.
That should more fully materialize over the coming months.
The supply chain headwinds that we referenced on last quarter's call continued to persist as you may know steel prices make up the largest portion of our material costs, while our input cost increases have not been as drastic as the heart.
<unk> fold coil steel index prices you see on your Bloomberg screens, we've seen a double digit increase since last year in some cases the cost of freight specifically ocean freight continues to experience, even a higher inflation. Moreover delivery disruptions of emerged is increasingly problematic highlighting.
<unk> the important role that our Bossier city facility plays and our ability to execute effectively and retain it and enhanced customer loyalty.
The cactus has diligently worked with our customers and managing the impact of materially higher costs as the economies continue to open worldwide. The global supply chain is likely.
The to remain under pressure in the market for our equipment should remain tight whether that be from materials freighter people. Thus, we expect further negotiations with customers in order to address this dynamic during the second half of the year at the same time, we're optimistic that some of these inflationary pressures will begin to ease by next year representing.
Presenting a potential tailwind for returns in 2022.
On the rental side of the business revenues increased by more than we anticipated during the second quarter with this came increased equipment repair costs as more of our fleet move to the field, which weighed on our margins during the period Rev.
Revenue from our innovations was up.
33% on a sequential basis in Q2 and represented over 20% of our domestic rental revenue the highest level of witness since the COVID-19 related downturn.
For the third quarter, while general market commentary is pointing to limited completion activity growth following the second quarter DUC drawdowns.
We expect rental revenue to be up in the 10% to 15% range sequentially as we continue to gain traction from larger customers, who value of efficiency and reliability. We currently anticipate rental EBITDA margins to be in the high 40% range for Q3, as we expect this market to remain competitive.
Regarding our expansion into the mid east we've been encouraged by recent progress made in deploying personnel into the region, which is an important step in our model. We now expect to generate first revenue in the region towards the end of the third quarter as previously disclosed the assets we've shipped to date at revenue potential of approximately $1 million per quarter.
We continue to evaluate the shipment of additional assets into the region given the additional demand for our equipment.
In field service revenues continued to be driven by both product and rental activity revenue as a percentage of product and rental revenue is expected to decrease marginally on a sequential basis as cost recovery likely.
It has a higher upside potential versus second quarter levels, we expect to see field service EBITDA margins in the low 30% range during the third quarter.
Down sequentially to reflect a full quarter of wage reinstatement and continued new hire activity, but still strong versus historical levels.
I'd like to close our prepared remarks by highlighting a few key points starting with returns.
Despite being only 1 year removed from the worst oil price collapse of my career, we achieved an annualized return on capital employed of over 30% for the second quarter. This speaks to the disciplined approach.
By our management team and our ability to quickly capitalize on the industry of recovery currently underway since.
Since the beginning of 2020, we've generated free cash flow above and beyond our second our quarterly dividend every single quarter during that time of our cash balances increased by over $100 million. Despite.
Taking the $35 million in dividend related payments to our shareholders I'm, especially proud of our team's management of working capital levels over this period, particularly in light of the accelerated revenue growth this year.
Our confidence in this business to continue to generate free cash flow and the strength of our balance sheet have enabled.
More of the raised a regularly quarterly dividend to <unk> <unk> per share on a 11% increase as we stated previously we set the original dividend at a level, we would hope to grow over time.
While we had the capacity to increase our dividend rate sooner, we were sensitive to the sacrifices of our that our associates.
It made now the compensation has been reinstated we feel more comfortable reassessing the dividend level on a more regular basis. Additionally, we do not view regular dividend increases as a mutually exclusive from potential special dividends buybacks or M&A, we will continue to carefully monitor and evaluate.
US from all capital deployment opportunities.
In summary, we were extremely pleased with the ability to show significant top line growth during the second quarter and generate meaningful free cash flow. Despite.
Despite the speed and severity of the industry's cost inflation being greater than anticipated.
We proactively address these pressures during the second quarter, our ability to dampen the impact of increased cost is a reflection of the differentiated nature of our products and services and the value our customers our customer base places on US. This provides optimism for margin improvement next year as.
Volumes expand and cost potentially returned to more normalized levels.
We remain ready to take advantage of our favorable positioning as the ongoing activity recovery continues so with that I'll turn it back over to the operator, and we may begin Q&A operator.
As a reminder to ask a question.
In the press Star 1 on your telephone keypad, we do ask that you limit yourself to 1 question and 1 follow up.
Your first question is from George O'leary of T. P. H a company.
Good morning, Scott morning, guys, Hey, George how are you.
I'm hanging in there a manual doing all right.
Great. Thanks.
Ed.
The first question is on the the Middle East now that you should have some revenue there by the end of the third quarter, but more of a a longer term question just given your build multiple businesses. During your career how long do you believe it will take to ramp up in the middle east such that it becomes.
The a meaningful piece of the business call it 10% of revenue somewhere in that market is it a 3 year time horizon of 5 year time horizon.
Bracket, what's the reasonable of whats unreasonable to think about net.
Alright, George it's going to take about.
Meaningfully ramp up our mid east revenue.
The.
In the range of 20%, 15%, 20%, we're going to have to.
The build a facility and building a facility is about an 18 month proposition so.
As our comfort level increases, which which.
Which we expect to.
To happen with the introduction.
<unk> of these rental assets.
You can figure 18, 18 to 24, a much from the end of the year.
Okay. That's very helpful. Scott and then just the the Super strong revenue growth in products in Q2.
Caught my eye and you mentioned rig efficiencies.
<unk> because there's just they're also.
The production trees go heads with increased revenue driven more by those drilling efficiencies in selling more wellheads or did the production 3 sales really kick in and use the revenue. So it was a larger contributor there.
Okay.
Yeah. It was it was a.
A mixture of a variety.
It's really so we can't point of any 1 factor, but it was production tree.
And completion related increases on the product side. It was obviously the cost of recovery efforts and it's just the kind of catch up we'd seen a rapid recovery on rigs and we still even had a pretty healthy rig count growth over.
Do you think period, but as the increase sort of settles in you tend to see more revenue per rig theres always a lag there.
Great. Thanks for the color guys. So all of the government.
Thanks George.
Your next question is from Tommy Moll of Stephens.
Good morning, Tommy.
My questions.
Scott I wanted to start on supply chain.
Just any anecdotes you can share with us on measures that you've taken to try to address some of the issues that have arisen and then.
Secondarily anything you can do to quantify.
What the impact has been or where it might.
Might be going forward and what you've attempted to do on what I think youre referencing as cost recovery there.
I'll have Tom Thats pretty easy.
Easily answered the question there first Joel is the inherent he can he can.
Add some color on the supply chain.
Jane issues.
First on I'm, not going to disclose the impact of our of the cost increases nor.
I will talk about cost recovery, though so we started that.
Fairly early as you would expect and it accelerated during the second quarter towards.
<unk> at the end of the second quarter. These things don't happen overnight.
A lot of pushback.
But we were we've been very by the end of the second quarter.
We were successful in reaching agreements with virtually all of our customers that's not to say that the price increases were fully implemented by the end of.
Because they were not so youll see a.
A much greater impact from those negotiations.
In the third quarter.
In terms of supply chain.
Yes.
I can tell you that I think the area of that.
Been the most impacted.
It has been ocean freight it but I'll, let Joel answer that I mean that has I mean, we saw that coming.
The first quarter or so so we actually ordered up inventory for 2 reasons 1 to to protect the supply chain and have availability for our customers and secondly to try to.
First we could protect our.
Margins.
By ordering up and we had the cash to do it. So it allowed us to put some inventory on the ground and maintain those costs as best we can as I mentioned, that's really been the issue. It's just trying to keep.
Product on the ground and trying to really protect our margins. So we have stocked up on.
On most of our common products in.
In anticipation of what we've seen and honestly the disruption we've seen with the vessels on the containers has probably been greater than we anticipated but fortunately.
Ended June beginning of July a lot of this product started showing up so thats allowed us to make our deliveries.
He's an increase or a product revenue.
Tommy I think we've seen ocean freight.
Double would you say that's fair.
A than doubled more than doubled in the ocean freight as a.
Pretty high percentage of our total cost, it's a meaningful percentage of our total cost.
Related to 2 all of these issues.
Wonder if you've had or anticipate having some share gain opportunities just given the flexibility you have with Bossier.
And the balance sheet, you've got and have deployed to the order in advance of a a lot of these big bottlenecks.
Maybe.
Where some key auditors had not been as nimble.
Yes, Tommy I'd be I'd be very disappointed.
As.
For the year progresses, particularly.
End of the fourth quarter and first quarter of next year.
Doesn't result in.
Meaningful.
Gains.
<unk> already had the bailout.
A customer or 2.
Don't use us exclusively most of it most of our customers do use is exclusively but yes.
Yes.
Our larger competitors.
<unk> are not as flexible and nimble in terms of support.
My chain response.
As I mentioned.
In the script, we do view this as a positive having Bossier city.
Great.
We look forward to watching the progress thanks for the time and I'll turn it back.
Your next question is from Chase Mulvehill of Bank of America.
Hey, good.
Good how are you Scott.
Thanks for squeezing me in here I guess a few questions.
The first just kind of go back and touch on kind of supply chain friction and raw material inflation.
The dead horse here, but just kind of thinking about supply chain.
Pressures if you were to look at them today are they accelerating or decelerating and the same question really on the raw material cost we can look at herc.
Hot rolled coal accrual on a Bloomberg screen, but we don't know exact still most of the stuff that they're flowing through your P&L. So just help us.
I understand it if that pressure is starting to kind of decelerate yet.
That round price.
Okay. We don't we don't really think we're going to say on the easing.
Joel can add some again some color, but we don't antennas.
On paid an easing of Fry.
Right.
The steel until the end of the year I am going to say maybe into the first quarter of next year honestly.
That's why.
Incredibly important that we stay close with our customers and.
I can't overemphasize.
Tests of the jobs that this organization has done.
And ensuring that this incredibly rapid and the severe increase in cost has not been reflected in severe margin degradation. So we've done an exceptionally good job in my opinion of protected.
<unk> This company and that work on it and I think as Joel mentioned, he's been proactively ordering to protect the.
Going forward as well and lock in prices of the SEC's rates go up it is not necessarily yes that could be the next order but.
Heavily ordered.
Starting in Q1.
Okay that makes sense.
I guess kind of a 2 quick follow ups or a quick follow up on that 1 are you able to kind of.
Or a push surcharges through related to kind of incremental shipping.
Shipping cost and then what about how much can you save by shifting more to Bossier city from a production standpoint to avoid.
The higher the elevated cost of shipping.
Yes.
For a supply chain is still more competitive even including the higher freight costs. So.
It doesn't really move a sense to.
To do that because you have to remember too that as steel is going up.
In China, it's going up everywhere at this point, so any product you buy the day that steel or have a.
A component of steel in it you're going to see an increase whether it's coming from China. The U S. Italy, India any of these locations youre seeing the same kind of increases on the steel.
So in answering the question about.
Freight recovery. So we are now implementing freight surcharges.
With our clients and I think historically and this hasnt changed if we get a drop in order that was not forecasted joel's not shy about.
Requesting.
That's going to go at a at a market price is not going to go it necessarily a contract price.
Okay perfect.
I guess coming back to the questions around the kind of market penetration on the international side, obviously youre starting on the.
With rentals.
But maybe could you speak to kind of the wellhead market.
Sure.
The us investors are really not.
Q2, well educated on on the the wellhead market structure internationally. So maybe just talk about that market structure and how fragmented it is or is.
Yeah.
Yeah. So it's clearly not as fragmented as the U S market you've got.
3 major players internationally.
And.
It used to be for so.
It's a it's a much tighter market.
Non.
The better markets internationally are the markets that require.
Indigenous manufacturing. So if you think about the world think about the areas that have the most attractive.
Of.
The margin potential of those of the markets that require that you have a facility and thats.
That's why a responded earlier to see a meaningful contribution from the mid east in particular is going to require that we build a factory Fortunately a factory a cost of about $15 million Fortunately.
We're in a position.
<unk> to do that the U S.
No. It's so fragmented that.
The competitive pressures are just much more acute here.
Okay perfect.
Appreciate all the answers I'll turn it back over a Scott.
As a reminder, if you'd like to ask a question. Please press star 1 you're.
Your next question.
<unk> is from Connor Lynagh of Morgan Stanley.
Yeah. Thanks, good morning, guys.
Yeah.
I was wondering what we should read into from the the magnitude of your dividend increase certainly good to see you guys returning extra capital but.
Yeah.
If we think about the sustainability.
S durability, even to your point the worst downturn, we've had on this industry.
Decades, you guys are on a very easily covered even the new dividend run rate. So I'm just curious what's your sort of thinking are you are you continuing to think that there is incremental M&A opportunities.
Just a preferred.
See this grow more long term as opposed to.
On a big step change just curious of the calculus around that.
So the.
You really asked 2 questions. The first is as I mentioned, we set a low to make sure. It was sustainable we would have raised it earlier had it not been for.
I think the.
Morale at the company, we asked our associates to.
It takes some very painful hits to their wages.
And benefit and we didn't feel like it was appropriate to increase the dividend. Although we have the capacity to do so until we can address those those are behind us.
And the.
<unk>, a reflected or will be fully reflected in this quarter and so on.
Our plan is to.
Much more frequently address incremental increases in the dividends. So I think that that barring the unexpected that's still on the horizon.
We do.
Not absolutely view that is mutually exclusive with M&A opportunities.
So we are absolutely focused on accretive M&A opportunities.
The don't impair our balance sheet and in our ability to continue.
<unk> to pay a dividend or increase the dividend.
Yeah understood I definitely understand the portion of around the people, maybe just sticking with that theme.
What are you seeing in terms of the labor market, how is your sort of capacity yet.
At your facilities and then in terms of of your field.
Yeah.
We we added I think this quarter of about 100 to a 25 or so associated since the beginning of the year we've added over 200.
We have about 90 open positions right now is that right.
It's correct something like that.
It's a struggle.
To be sure.
We're no different from anyone else.
Fortunately when we go out into the field, unlike a pressure pumper.
<unk>.
Typically typically on a go out with 1 associates, sometimes too.
Service, so that the burden in terms of service techs is not quite as high.
We've been able to hire.
We've been able to control of our labor cost surprisingly well, but it's a full time job to try to bring these folks on.
It's impacting us it's just.
Not probably as impactful to us as it is.
Pressure pumper.
Perhaps drilling contractors.
That's fair are you anticipating.
<unk> on wage increases from the duration of the year here.
So I think that we are going to see some some increases towards the end of.
Of the year, but I don't think there'll be.
The cause for concern.
Alright Thats helpful. Thank you.
Your final question is from Stephen <unk> of Stifel.
Hi, Thanks, good morning, gentlemen.
Good morning.
<unk>.
Things from me 1 is I just wanted to get back to the revenue per rig followed number that you guys talked a little bit of out earlier and I think you said it I might've missed this that you expected a.
So if you set a 7% to 9% of our high single digit increase in the third quarter. I think you said in the rigs followed if that was correct.
How does that revenue per rig number evolve a and I know there are some puts and takes with the with the tree sales et cetera, but given the pricing and given what you are seeing does that is that the stabilized is that.
Trend back towards a more normalized level in the next call how do we think about that.
Quarter.
We're expecting it to the.
A more stabilized.
The production activity maintains and as Scott said the cost recovery initiatives came throughout the quarter.
And we're growing it.
A more well high single digits.
I think.
We would expect that to be relatively flat.
Per quarter.
Okay, Great. That's helpful. Thank you and then.
Just on the on the.
On the market share question, I mean, I understand the dynamics of the privates versus the publics and your share being so so strong with the publics.
How is the share with the privates evolved because my sense was it.
Has improved just based on what you guys did the first quarter, but how has that evolved over the last.
Over the last couple of quarters, and how do you see how do you see that playing out as it fits into the puzzle.
Yes.
On.
There's absolutely no question of our market share gains with the privates have.
<unk> meaningful a substantial I think that.
John help me out here I think we've gone from at the end of last year from about 20 to now 27, or so percent something like that yeah. Middle of 2020, we were probably down in the mid maybe even lower mid teens.
Through this year we.
We kind of got into the <unk> and the first and second quarter.
Despite the fact that the overall market share number ticked down in the second quarter, our share with the private has actually ticked up a little bit.
As you know Stephen.
The private went from 45% of of the rigs the 55 per cent of the rigs that we can gain.
Been mirror, a little bit, but just given the mix of Huey.
It's going against us from that perspective from an overall market share standpoint.
Exactly.
That makes sense and its publics pickup activity, we should see that benefits of I would expect the.
The lease but.
The other the other quick 1 on I think chase.
Sure the the international landscape on the wellhead side, but on the U S. Front have you seen any changes I know 1 of the business has changed hands a couple of quarters back and just curious have you seen any change in the U S competitive landscape or anything you're watching closely.
Yes, So we had a we had a couple of competitors.
Asked about small competitors that retreated.
Since the beginning of the year and simple.
We've seen.
An equal number of new competitors enter the market I think that.
I think people think that frankly.
The replicating the cash.
The story is easy.
No.
It seems that everybody wants to try it and <unk>.
Apparently they don't view the barriers to entry as being very significant so I think on a net basis.
We probably have the same number maybe 1 more competitor in a day then.
Since the beginning of the year.
Okay, great. Thank you for the for the color gentlemen.
Thank you Steve.
There are no other questions on queue do you have any closing remarks.
Now, we just want to thank everybody.
For your support.
I.
We did of the rest of this year is going to be incredibly challenging.
People don't realize a managing in a downturn in some respects is pretty easy you have to cut your expenses managing in an upturn is much more challenging.
We're blessed with the very best.
I think the management team in the industry.
And taking advantage of.
This really.
Unexpected growth that we've had on our topline.
So anyway stay tuned thanks for your support everybody have a great day of stay safe.
Ladies and gentlemen, this concludes.
Today's conference call. Thank you for your participation you may now disconnect.
Okay.
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The answer.
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