Q2 2021 Romeo Power Inc Earnings Call
As well as the disclosures in our public filings with the SEC.
Today's call will also include a discussion of non-GAAP financial measures as that term is defined in regulation G. non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with GAAP.
Accordingly at the end of today's press release, we have provided a reconciliation of these non-GAAP financial measures to the company's financial results prepared in accordance with GAAP.
Before getting into the quarter I want to take some time to introduce you to some of the new faces in leadership at Romeo power.
As we previously announced Kerry Shiba has joined US as our Chief Financial Officer, and Youll get a chance to hear from him shortly.
Gary is a highly experienced public company CFO with decades of experience driving financial strategy for companies going through major growth and change in a few weeks. He has been at Romeo. He has already made strong contributions to the team.
In addition, we are all happy to welcome Susan brands, who joins US today, as our President and Chief Executive Officer.
As a director of the Romeo Power Board I've been asked by our chairman Bob meant to convey to you that we could not be more pleased to have named Susan as the new Romeo power CEO at the conclusion of our nearly three months long robust vetting process.
Our experience working with Susan on the board gives us valuable insight to know she possesses highly relevant experience innate abilities and the disposition necessary to lead Romeo power into the future.
Susan most recently held the role of Chief Operations Officer at Bloom Energy Corporation, a pioneering energy solutions business focused on de carbonization through innovation and environmental stewardship, where she helped lead it through substantial growth from relative startup to an approximately $4 billion market cap company.
Prior to joining Blum, Susan was vice President of manufacturing at Nissan Motor Company, where she ran the highest output automotive manufacturing plant in the world at that time.
Prior to her tenure at Nissan Susan spent 13 years at Ford Motor company, including as a director of the global manufacturing business and as a plant manager.
Susan unique experience makes him the ideal leader as Romeo enters its next phase of growth.
Her success in technology, and energy startup environment and in leadership roles at some of the largest automotive Oems in the world offers a rare perspective into how to scale and early stage disruptor, effectively and what a successful public company infrastructure looks like after going through that process.
Susan's insights experience and drive make her an exciting addition to our leadership bench I hope you'll all join me in welcoming Susan the Romeo with that I'll turn it over to Susan to introduce yourself before Carey and I talk a bit more about the quarter.
Thank you so much Lauren and good afternoon to everyone.
Im excited to be here, alongside Laurie and Perry, who as Lauren mentioned recently joined baronial power team as CFO.
It has been my great pleasure to be part of Romeo Power's Board since we became a public company last year.
I have a personal passion for businesses initiatives and people that are committed to improving the world, we live in including by cleaning up the environment for both us and for future generations.
I had the opportunity to follow this passion at Bloom energy.
And now I have an even greater opportunities as the leader of Romeo power to continue down this path.
During the Covid pandemic.
All have seen the benefits of reduced miles driven by internal combustion powered vehicles.
It's as simple as enjoying the cleaner air that we breathe.
While we also understand the longer term benefit on our climate of reduced greenhouse gas emissions.
Romeo power is well positioned to support and participate in the electrification of commercial truck fleets with our current focus on heavy duty vehicles.
I couldnt be more eager to engage and help the company execute on its commitment to continued innovation and expanding access to green energy solutions.
In the past six years or EMEA power has made important strides critical to safe and cost effective electrification and operation of heavy duty fleet.
That will certainly be applicable in other industrial applications.
As we enter full commercialization our projects have been thoroughly validated.
We have approximately 3000 battery modules and road test vehicles that have driven an estimated 750000 miles in total.
While also being subjected internally to strenuous stimulation of environmental and other end use conditions.
Safety is a must and always has been a key priority and our product design.
When combined with the superior energy performance, our products bring unique value to our customers.
Our advanced software management system works together with our patented thermal management technology to create this exceptional performance.
We also have a differentiated and flexible approach to scaling our products to meet a wide range of different power requirements.
Our approach is designed to shorten time to market, which is a clear advantage for customers in this rapidly developing environment.
I have been at this long enough to know that taking technology technological innovation through commercialization and scale up does not happen without an incredibly talented and hard working team.
It takes a combination of visionary scientists engineers and strong business practitioners to achieve success for Romeo.
I have been impressed with the blend of team members possessing these talents.
Now we are entering a pivotal moment for our company and industry as customers are increasingly demanding safe effective affordable and sustainable solutions.
With my decades of experience in running large and complex organizations.
Crystallizing vision into strategy and continuing to build and align the organization to execute and win I am honored to take the reins to REIT lead Romeo power to continued success and to build shareholder value.
In a moment I'll hand, it back over to Loren, who will talk more in depth about the past quarter.
As you likely know following carries appointment where we're in transition to a new leadership role as chief strategy and commercial officer.
Warren will continue to use her vast institutional knowledge and deep understanding of Romeo power to develop and drive our business strategy.
Contract negotiations and overall growth initiatives.
Loren has been a key partner to carry and me as we integrated into the team at Romeo.
She will present today's business overview and of course, we'll be here to answer questions now over to Laurent.
Thank you Susan we hope you're about a chance to review our second quarter earnings press release issued at approximately 110 P. M.
During today's call and we will walk you through key updates regarding cell supply, our customer activity and outlook and our talent.
Let's start with cell supply.
Last week, we filed a form 8-K disclosing that we have secured a long term cell supply contract with a tier one battery cell supplier.
The content of that 8-K is accurate and we were required to file it with the SEC because it is a material contract to US. However, we are sensitive to the business environment related to cylindrical battery cells, and we want to respect our partners' competitive position.
During this call we will not discuss the details of that contract, but we can and will say is that we're excited to have signed a long term agreement with a top tier global supplier of battery cells, and we look forward to the possibility of expanding that relationship in the future.
We're excited about the path ahead supplying erroneous customers with premium batteries and we are very pleased to have reached this agreement.
However, we also are in discussion with additional potential partners to secure further commitments for self supply including cells manufactured in the U S.
We continue to deepen strategic relationships to ensure we are well positioned to be the best battery partner to scale with our customers as they execute their electrification initiatives.
Next I'd like to provide an update on our customer activity and outlook.
The team at Romeo power has been heavily engaged with customers and strategic partners to understand how we can work together to mitigate supply headwinds and expedite the process of getting our electric solutions to the market as.
As an emerging growth company. There are many details that need to be addressed as we prepare to ramp up our production and manufacturing capacity.
Accordingly, we take a deliberate approach to finalizing customer commitments.
We anticipate being able to update you on future calls.
The urgent need to electrify all types of transportation on a large scale is rapidly gaining attention.
We are seeing an increased sense of urgency more and more in the stated goals of our customers and in various pieces of existing and proposed state and federal legislation focused on enabling electrification.
We're taking pragmatic steps to meet increasing customer demand in the near term and through 2022 in the most cost effective ways available.
We seek to balance short term demand fulfillment with the need to implement systems and processes to scale our operations for the long run as.
As the entire industry continues to face high material and logistics costs and supply constraints. We are actively shoring up alternative suppliers for key components, and making strategic advanced purchases for long lead time or increasingly scarce items.
I'd also like you mentioned, an exciting new development in our long term electrification strategy.
We've recently executed an Mou with the government of the United States Virgin Islands Energy office to participate in their efforts to adopt Green energy solutions.
This mutually beneficial relationship allows romeo to support development of the electric infrastructure in the Virgin Islands in two ways.
First by assisting with various aspects of fleet electrification and secondly, helping to establish a pilot program in the future for second life applications using Romeo power batteries.
To provide stationary energy storage within the territory.
Lastly, let's talk about talent in addition to bringing on Susan and Gary Romeo power has been busy building a team of seasoned leaders in all areas of our business, who will take the company into its next exciting phase of growth.
The expanded team includes several impactful new hires.
As we announced during July <unk> has joined US as general Counsel and <unk> has become our chief accounting officer other.
Other important additions to our organization include Vice President of manufacturing Vice President of cell Engineering, and Vice President of global supply chain. These hires are an important validation of our commitment to an expectation for growth.
I will now turn the call over to Kerry Shiba, our CFO to discuss our second quarter results in greater detail.
Thank you Lauren and good afternoon to everyone joining us today like Susan I'm incredibly excited to join the team at Romeo during this formative period in the company's history.
<unk> transitions to vehicle electrification is Susan also mentioned Loren has been incredibly important to help me transition into the company and get up the learning curve as quickly as possible. So my personal thanks to all.
So Lauren as she takes over a very important and exciting new role and her and her own transition.
Our past experience in manufacturing and public companies has included periods of rapid change and company growth that I am excited to draw from as we progress Romeo strategy, where.
With our blended visionaries and technical expertise combined with strength strengthening our leadership. It is incumbent on us to drive strong execution throughout the company to generate positive returns for the company and its shareholders.
While I am still a relatively new face of Romeo power I've been working closely with Lauren in the rest of the team as I mentioned to get up to speed quickly on the company as well as its financial position to prepare us for what lies ahead is expected to be at the beginning of a period of a ramp up of sales and operating active.
<unk> for us, but keep in mind that while we are pleased to have hit this inflection point there still are many variables that will affect the final revenue outcome for the year.
With our current focus on electrification of large commercial vehicles, we are working in our marketplace ecosystem that is fundamentally still under development despite being on the verge of a volume ramp up relative to our past.
Our customers suppliers and as a result Romeo all face similar challenges these challenges require quick read.
The action.
Adjustments.
We are reaffirming the revenue guidance provided last quarter, which to romp remind you is 18 million to $40 million for the full year 2021 IRA.
I recognize this range may seem pretty wide based on where we are in the year.
However, the size of the range reflects the nature of the underlying variables we must consider.
Specialty given the vast bulk of this frankly in the fourth quarter.
As much as I would love to hog predictability of demand.
And its related timing, we are a tier one supplier and don't control the pace of end market product acceptance and sales volume.
Don't mean to make excuses or bore you with stating the obvious but I do want to be sure everybody understands what we control and what we do not control.
The shape of our estimated sales curve, coupled with a nearer term dynamics I just discussed also.
So it creates operating geologist when balancing cost against preparedness to focus of course is on serving the customer no matter. What it takes as a result, you should continue to expect the rate of increases for expensing.
To run ahead of the rate of our revenue growth as long as the growth.
Despite lower volumes and a developing market and business lead times are less predictable.
And higher cost debt.
Out of our factory.
Similarly, we have the same challenge when managing working capital more specifically our investment in Raleigh.
And finished goods.
Finally as discussed.
We will continue to invest in research and development and closely aligned product engineering.
We also must continue to strengthen our bench and infrastructure and we will continue to incur both permanent and temporarily higher costs associated with becoming a public company.
Let me address the next subject before yes.
We believe securing our long term supply agreement mitigate to some degree the wildcard of availability for our most important product component. However, the fundamental demand driver in our market, which is the pace at which end users purchase heavy duty commercial battery electric vehicles will remain the most overriding.
<unk> upon which longer term revenue guidance for lives growth.
<unk> share of this developing market also was in developmental stage, adding one more important variable to the eventual outcome. As a result, we are not offering revenue guidance for 2022 at this time.
Now, let's quickly walk through the second quarter financial results I also will provide some reference to sequential comparisons.
Revenue of $96000, which compares.
So $1 million $129000 in the same quarter last year.
The sequential quarter to quarter comparison basically is similar.
We are continuing to prepare to scale manufacturing and our cost of revenues in the second quarter was $5.9 million up from $2.4 million in the same quarter last year sequentially cost of revenues in the first quarter of this year was $4.8 million.
SG&A expense for the second quarter was $22.9 million, which compares to 22, I'm, sorry, $2.5 million in the prior year and $18.0 million sequentially.
The prior year comparison as I believe you know reflects the company prior to becoming public and much further back from the impending sales volume ramp up as.
As I mentioned earlier, we are preparing for rapid sales growth. So where you are investing to increase the strength and capacity of our team while also incurring costs related to becoming a public company.
The resulting operating loss in the second quarter was $29.7 million, which grew $3.4 million operating loss.
Boston, the same quarter last year, and a $25.5 million operating loss in the first quarter.
Moving down the P&L the change in the fair value of public and private placement warrants in the second quarter was a positive $2 million and resulted from the decline in the price of both our common stock in the public warrants since the end of Q1 as well as the public warrant redemption that occurred on April 5th 2021.
Sequentially. This item was substantial equaling $116.1 million favorable in the first quarter of this year and primarily resulted from the decline in the price of our common stock in the public warrants during that period.
The items just noted were the principal items, bringing our net loss to $28.7 million for the second quarter of this year. This compares to a net loss of $7 million for the same quarter last year and $90000 of net income sequentially.
Our loss per share was 22 for the second quarter of this year and compares to a nine loss per share in the same quarter last year. The sequential comparison is 70%.
I'm, sorry, 70 cents per share and net income.
These per share amounts all around our basic rather than a diluted basis.
We also provided an EBITDA and GAAP reconciliation is a table in the back of our earnings announcement. The large items included in the reconciliation I have already commented on and include stock based compensation as well as the change in fair value of public and private placement warrants.
Moving on to the balance sheet.
Cash cash equivalents and investments totaled approximately $267.7 million at the end of the second quarter of this year. This compares to approximately $287.5 million at the end of the first quarter.
And as it was at the time of our last call our backlog under contract stands at essentially the same at $554 million.
This concludes our prepared remarks, and we will now address your question So Charlie I will turn it.
Back over to you to take questions.
If you would like to ask a question. Please press star followed by one on your telephone keypad now if you change your mind at stall followed by chance.
Our first question comes from Gabe Daoud of Cowen. Your line is open. Please go ahead.
Hey afternoon, everyone. Thanks for all the prepared remarks was hoping we could start on the.
So the supply side understand there's only so much you can say, but could you maybe just give us a sense of timing around additional agreements last quarter, you had spoke about being in negotiations with I believe up to four parties.
You have the LG.
I'm curious.
Other tier one supplier, we Samsung if theres an update there and then you mentioned talking are securing potential U S supplies that also coming from a tier one supplier or is that qualifying additional suppliers.
Beyond beyond just Q1.
Thanks, Gabe flow, we're not going to talk about specific agreements or details there, but I will reiterate that our strategy is a multi pronged multiyear approach. So we continue to pursue in further discussions with tier one.
<unk> as well as more up and coming suppliers and those conversations include cell supply outside of the U S and in the U S. So that is a very important part of our strategy and U S line discussions will be something that we hope to talk about in the coming quarters.
Okay. Thanks Loren.
Just a quick follow up.
Our prepared remarks, I think you mentioned that there was an early stood just the amount of miles the touch taxes.
Kind of.
The experience to date or kind of hit today.
That.
If I think about.
The energy density that was talked about.
Romeo was coming public I think you had promised 200.
While our per kilogram is that whats currently being tested on the road today or what's being seen in some of the prototypes today about 200 watt hours per kilogram number.
Great question.
I believe what's on the road is a variety of different measurements that we will have to get back to you with the best blended average there and we will take that to get back to you.
Okay. Okay sounds good thanks, Thanks Lauren.
Maybe last one could you just remind us what manufacturing capacity has come.
Coming out of the La facility today is at about a gigawatt hour.
I was just curious if I look at Caf.
Capital spend.
Imply that you have a big ramp in the second half and so just curious how does capacity grow and how does that play into capital spend for the rest of this year.
Yes, that's accurate.
Quote inputs I expect it to be at run rate about a gigawatt by the end of the year and you are correct that our.
Anticipated largest portion of the ramp as Gary noted in the second half of the year and in Q4 to a large degree.
Okay. Thanks, a lot.
Yes, thanks for the questions David.
Our next question comes from Jon Lopez of vertical group. Your line is open. Please go ahead.
Hi, Thanks, very much I just wanted to start on that last topic again, because youre calendar Q2, Capex was like pretty significantly below what we had modeled.
So I guess two things one are you still.
Planning on spending let's call it mid <unk> for the calendar year kind of start there.
Yes.
I think John a couple of things as far as the.
Size of the Capex, we've incurred through this year.
As you know.
We had some volume push off since.
And delay since the the.
The viewpoint that you referenced which was.
The original model looking at the business. So I think it was appropriate that we continue to adjust capital spending in accordance with that.
With respect to going forward.
We're currently in the process of Reassessing I think what's very natural as you think about students background with Oliver operating and manufacturing.
Experience one of the first things you want to look that as she comes in as well.
Future capacity, how we're going to do it what kind of equipment et cetera, et cetera, and so.
And.
Yes.
Given Susan the chance to get our arms around that before we.
Reaffirm where we're at as far as that expectation is concerned.
Okay. Thanks that helps a bit.
Kind of the same set of questions around R&D, which.
Again sort of it wasn't quite where we expected it to be are you reassessing their as well or can you give us any feel for the cadence on that line item between say here in the end of the calendar year.
John I think it's a couple of things.
First off the importance of R&D in our view has not changed we're going to continue to.
Recruit and sign up the best and the brightest that are out there.
And quite honestly, Doug It include manufacturing engineering on top of R&D, both incredibly important resources. So the commitment remains similar to what I just mentioned with regard to capital expenditures. Once again this is something that Susan needs a little bit of time.
To get our arms around she has a significant technology and startup experience as you can also tell so it's very natural that she wants to understand the pace of our investment in this area as well as how it integrates directly with our our manufacturing.
Manufacturing capacity plan, so we're going to be looking at that altogether.
We're going to look at it fast, but we're just not in a position today that Susan first day with the company. So.
Well, we'll we'll get an update when we can but we're not there today.
Okay understood.
Sorry, My last one.
It feels like you guys might have made as an answer but.
I guess the thinking on our side and then you had this kind of chicken and egg problem.
And.
Now you sort of have one or the other I don't know the chicken and egg, but now do you have the cells.
Are you able to comment at all on customer engagements to what extent what customer engagements inhibited by the lack of visibility on cells is there a.
Potential for some of the activity to maybe move from discussion to perhaps more commercial type of terms could you guys just talk conceptually about sort of that.
You are in the cycle of that evolution.
Absolutely. So we are really really strong customer relationships and the cell supply challenges have had a very limited impact on our ability to attract new business. We've been very deliberate in the timing of executing commitments to both new and existing customers as things and working.
<unk> securing the cell supply, but those conversations are very strong we are in.
A number of them that we anticipate being able to talk about.
Soon the.
Right now.
A lot of our customers are going through electrification for the first time analogy and the operational considerations and one of the things that Romeo is pleased to do and proud of is somewhat of what we see as a differentiator is that we really do facilitate that education and work closely with customers to <unk>.
Identify the precise solution that suits their needs and that takes more time than selling them.
That is more off the shelf. So we are very encouraged by the increasing engagement that we get from existing and prospective customers.
Got it really helpful. Thanks.
Our next question comes from Greg Lewis of <unk>.
Your line is open. Please go ahead.
Yeah, Thanks, Craig and good afternoon.
Everybody.
Yes, I guess I just wanted to talk a little bit about.
And you touched on the prepared remarks about maybe some of the inflation pressures that Europe.
Deal with.
As we think about whether it.
Is there any kind of way of parcel that out.
There is some.
The other goes into the into Europe into your battery pack, there's obviously supply and logistics is there any kind of way to parcel out with different kind of pressure points you are seeing in terms of the.
Inflation side and really just as we think.
Goodbye.
Sales going forward.
You do have that backlog are there any cost adjustments.
Green prices that could kind of be a little bit of EMEA Earl.
Yes.
We have a bad connection here.
As part of your question went in and out because you get enough to make a.
Comment John.
John if I understand correctly, you are asking about im sorry, I Didnt mean, Jonathan that Greg. Thank you.
Greg.
If I understood correctly, you are asking more about the cost drivers and challenges there, where we're having a really hard time understanding.
Oh sure sorry, hopefully this is a little bit better my question was around the various points pressure points, you might be dealing with inflation and so what I'm trying to understand is if it's like a raw material cost.
Is that versus say supply logistics costs.
Or would maybe raw material costs be something thats easier to pass through to your customer than kind of what we're dealing with right now in terms of on the transportation side or is that all pass through or is that none of the pass through just trying to understand how we should think about.
It looks like it's going to be a challenging environment for the next couple of quarters.
Yes, Greg Thanks for clarifying and for repeating that we heard you much better the second time, so as we're negotiating our long term supply agreements the pricing is partly dependent on the fluctuations in the raw material indices, and we've built that into a number of our contracts.
You're right, though it is not just the material there are a number of other variables and drivers in the fluctuation and so to the greatest extent possible, we're trying to balance that risk in an appropriate way with all of our customers and our suppliers and thats.
Dependent.
Little bit on timing and the actual product mix that we're supplying so theres not a blanket solution there, but we are.
<unk> pricing into a number of our new agreements as well as have already done. So in current agreements. These protections against spikes, where we would see those in either raw materials or landing cost basically.
I think the other thing to keep in mind.
Keep in your mind is it will be closer to the ramp up period, we're working also.
On.
Getting to run rate economics, so that is going to affect.
The cost of components and materials that we buy.
Certainly directionally favorably.
And as we go from the prototype to the ramp up or through the ramp up.
We hope to implement some changes in manufacturing type of increases.
Okay.
Okay, Great and then just.
Hello.
Well more than mitigate I guess should have been the the way I should have put it.
Okay. Thanks for that and then just one more on batteries.
Sales.
I guess I guess, it's a two part question one is.
As we look at this and we can see what's happening out there.
Really being driven by one customer I guess year to date, how many customers have we actually delivered batteries.
And if it is multiple it does any of that kind of per test and validation or is at this point, we're just delivering batteries to customers that our customer that we have under contract and then also some that are validation or demonstration units that we would expect to open the door.
So you've seen the list.
Key customers that we've disclosed and then there are I would say another.
Half a dozen that we are delivering product.
So type two under various forms of.
Smaller agreements or pre agreement.
Yes.
Was there a second part generation great perfect. That's perfect. Thank you very much.
Sure.
Our next question comes from Noel Parks of Tuohy Brothers investment Research. Your line is open. Please go ahead.
Hi, good afternoon.
Our water partnership.
Where it stands in terms of.
Helping international penetration.
<unk>.
If memory serves me there are some restrictions longer term in the JV.
About how much they might be able to sort of independently compete with you in the same marketplace. I'm. Just wondering if you have any sense of whether they were trending aggressive in that or or focusing more and more tightly on.
The company relationship.
Our relationship with Borgwarner and our joint venture with Borgwarner remain in place and to our commitment to the joint venture is entirely unchanged.
We continue to develop business in the fields that are defined for the joint venture and those primarily focused in Europe at this time.
Yeah.
Okay great.
Yes.
One other thing I wonder.
Yeah.
In terms of how early.
Overall market penetration is for electrification.
Early adopters.
Folks are getting getting ahead of the.
Initiatives I'm just curious do you have a sense of maybe some of the slower next wave of adopters.
Maybe some of the fleets that are more in a wait and see mode.
I'm just curious about maybe as.
As you look ahead doing.
<unk>, maybe maybe by vehicle type if you see any of the next wave looking like it might be shaping up to be strong.
Can you use to be right now in the heavy duty commercial space and there's plenty of business there that we are.
Prove ourselves in.
Yes.
We also have begun discussions in a number of adjacent industries and we would expect to see movement in some of those I believe we've mentioned in the past agriculture mining.
Our products work very well in marine applications from what we're seeing.
The off road there are a number of things and right now as I mentioned, there is an urgency to electrify in every vehicle tight and there is a.
We are.
Looking strategically at the best places to deploy romeos batteries in the right sequence for short medium and long term growth of the company in the most cost effective way.
Okay.
Great and just everybody.
The other good awesome.
Another feature of how we've developed our product and are deploying it is that we have.
Flexibility I think to adjust to the various positions in the market.
Lauren talked about.
So to scale up our power requirements scale it back down to smaller vehicles, that's one of the.
<unk> features of how we approach building our products. So we can we can.
As we move our focus with whatever part of the market is.
Running out ahead, we're very very prepared to be able to get to market quickly.
Great. That's all for me thanks.
Sure.
Thank you.
As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad now.
We have a question from Evan Silverberg of Morgan Stanley. Your line is open. Please go ahead.
Tayo because it doesn't feel great on behalf of Adam Jonas few questions for you first.
How should we think about capital commitment commensurate with securing long term results.
I'll speak to them Directionally.
As much and we're not going to go into specifics.
Guarding our new agreement, but I think what we are seeing thus far in the market is with the capacity shortage.
The.
Kind of the structure of the agreements.
Right now is appearing to be similar which is.
Eight.
Call. It it is a prepayment technically for the committed self supply.
Substantively it is.
Helping to fund the capacity investments that are being made and then very importantly to remember those prepayments are recouped over time as we are buying sells off that commitment.
So.
A big chunk of money involved upfront and then a recruitment over the life of the agreement is the way to think about it.
I hope that the supply demand balance evens out as time goes on in the future.
The.
The structure that I just described is no longer required, but where we're at right now I think is a reflection of the tightness in the market.
That makes sense, thank you and one follow up.
The company has.
Cash targets.
You're kind of working around.
Thanks.
Yes.
I think very specifically in response to that one I think a minute minimum cash its a matter of how much cash do we have to keep sloshing around in the system.
Yes.
In one location company right now we are all focused in one country and so minimum cash requirements for that type of structure or not not really material.
So I'm not sure if that's getting to your question, but that's how I think about it when somebody asked me about minimum cash that we need to have.
Yes.
Great. Thank you.
There are no further questions from the lines at this time I will turn the call back over to Lauren.
Thank you Charlie and thank you everyone for participating in our second quarter earnings call.
This concludes today's call. Thank you for joining you may now disconnect your lines.
Yeah.
[music].