Q4 2021 Superior Drilling Products Inc Earnings Call
Greetings and welcome to the superior drilling products, Inc. Fourth quarter 2021 financial results.
At this time all participants are in a listen only mode.
And answer session will follow the formal presentation.
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I'll now turn the conference over to your host Craig Mahalo. Thank you you may begin.
Yeah. Thanks, John .
Welcome everyone to our fourth quarter 2021 earnings call. We certainly appreciate you joining us today I.
I have joining me Troy Meier, our chairman and CEO and Chris Cashman, our Chief Financial Officer.
They have a copy of the financial results that were released before the market. This morning.
You should also have the slides that will accompany our conversation today.
If you do not both can be found on our website at S. E T I dotcom.
Turning to slide two I'll point out that we'll make some forward looking statements during the formal discussion as well as during the Q&A session.
These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today.
These risks and uncertainties are provided in the earnings release, the slides and other documents filed by the company with the Securities and Exchange Commission.
These documents can also be found on our website or does he see backed up.
I wanted to also point out that during today's call, we'll discuss non-GAAP financial measures, which we believe will be useful in evaluating our performance.
You should not consider the presentation of this additional information in isolation.
Or as a substitute for results prepared in accordance with yes, we.
We have provided reconciliations of non-GAAP with comparable GAAP measures in the tables accompanying the earnings release as well as its like that.
That I'll turn it to slide three and I'll turn it over Detroit up again right.
Thanks, Greg.
And thanks, everyone for joining us for today's call.
Here on slide three.
Let's get into it and start right off with talking about strong execution.
As we look back at 2021.
One of the things that I'd like to emphasize is the fact that.
You know we spent.
In the second half of last year really strengthening our foundation.
When you when you look at what.
Talent, we've been able to bring into our company I'd really like to see.
To tell our HR group, what a wonderful job they've done.
They've strengthened our our team with bringing in some world class fabricators.
When you look at.
The programs that they've put into place as they've talked and convinced people and showing them the benefits of a rural Utah and coming here.
All of that it has to offer.
We've really hired well.
We've been able to bring in some you know.
Indus talent in the fabrication side of things.
And in every every department.
And you look at our our management teams have been really really strengthened with some world class managers.
Really looking forward to as we go forward into.
2022 and beyond so.
I think we've really strengthened our foundation here, we've put together a.
Fabulous team.
You know looking at the quality management team and what they've been able to do there.
Turning to our quality program into a real TQM of total quality management system.
They've done a fabulous job there.
Working with the.
Local university too.
You know get testing get a testing and certification structure here in place so that as we bring on a new team members and qualify them and in processes that we can do it locally here and not have to send sample coupons out too.
Other parts of the country to be tested in the time lag that takes they've done they've done a fantastic job.
When we look at.
We looked at our business as far as the tools that we build and design you know you look at our flagship drilling ream product our channel to market.
Partner There D. T. I has done a really good job penetrating the market.
They continue to.
Bringing new customers on you know some of the things that we're seeing there as you know we're starting to see tools that they'd go to California to go to Alaska.
So are we.
They're doing a good job and they're they're selling deeper into their existing customer base. So that they're doing a good job in and so we appreciate that relationship.
When you look at our our P. D. C activity, we continue to find ways to strengthen that for our legacy customer we take on new product lines.
We now have turnkey processes going on.
With that P. D C and it's not just refurbishment when we talk about P. D. C. We also we have an opportunity and we'll talk about this a little bit more as we get into the slides.
You know we we've.
Anything that has a PDC cutter and a diamond cutter, we were we're very good at building and repairing and.
And we've been able to identify product lines within.
Customers.
The products that we can we can then start.
Looking at turn key operations and then we'll talk about that here when we get down to you know looking looking forward.
As you noticed the strong cash position.
Mhm.
We continually to strengthen our balance sheet.
But as we go forward.
I want to spend a little more time today, as we talk about opportunities or opportunities but.
I'm going to turn the time over to Chris. So he can he can go over the numbers with you in.
And we'll catch back up on opportunities Chris.
Okay.
Thank you Troy and welcome everyone.
Please turn to slide four.
We provide an overview of our.
Very impressive revenue growth for the year.
Q4, 2021 revenue increased $4 million up 11% sequentially.
156% year over year.
Our North American market continues to see growth in drilling tool demand.
Higher royalty and and tool fee.
Repairs and robust bit refurbishment demand.
For the full year of 2021 revenue increased 27% to $13 3 million.
Due to the increasing orders for our drill N ream tool and <unk>.
Significant recovery in oil and gas production in North America.
As the oil and gas production ramps up we are we're benefiting from an increase in rig count.
We ended the quarter with the average U S rig count of 559 rigs.
Up 62 rigs from the third quarter of 2021.
And up 248 rigs from the average in the fourth quarter of last year.
We continue to be confident that the improvement, particularly in North America as we've seen throughout 2021 will continue at a steady pace well into 2022.
Even as we deal with and go through the various global headwinds impacting our industry.
On the international revenue side.
Has been consistent though remains a dampened somewhat by the pandemic and middle East Covid driven containment restrictions.
Despite the pressure fourth quarter 2021 revenues, which.
Which now represent about 10% of our total revenue.
Still increased roughly 30% from last year's fourth quarter.
The loss in international revenue for the full year was offset by a 35% increase in North American revenue.
Now, let's move on to slide five and review our tool and contract services revenue.
Contract services revenue for the fourth quarter was $1 million.
Up 54% from the same period in 2020.
For the year up roughly 20% to $4 1 million.
The improvement in contract services reflects expanded volume.
And product refurbishment and manufacturing for a long term legacy customer.
As we mentioned, we're seeing a recovery in tool sales and contract services is as tool fleet replacement is ramping up.
Full year total revenue was measurably higher at $9 2 million up 31% or $2 two from the prior year period.
Propelled by the drilling rig.
We're seeing both new tool orders as well as increasing repair and royalty revenue as we enter into 2022.
Now on slide six you can see that we are continuing to be very focused on cost discipline.
Even as we strive to in building our team Troy referred to.
We're investing in the company growth with this with this team and.
We see increasing demand for our products and services.
Operating expenses in 2021 were down roughly 400000 or roughly 3%.
Primarily as a result of lower amortization expense.
And the reorganization reorganization of the company's international business to improve profitability.
Our cost control efforts and the higher demand.
And the market is has allowed us to generate operating income of $90000 in the quarter.
And I would just like to point out that this is the third straight quarter.
Accordingly positive operating income for us.
Further validating the progress we're making.
Like many companies inflationary pressures persist.
And are keeping expenses elevated but our teams are working hard to improve processes and controls.
Troy spoke about.
These are to address these pressures and support in hiring and training efforts staffing will continue to be a focus area as we move forward.
Now on slide seven you can see that our bottom line.
Net income in our adjusted EBITDAR results have improved considerably in Q4 2021 and for the full year.
Quarterly net income was $645000 or too sensitive.
<unk> per share.
Paired to a loss of $655000 of three cents per share in the prior year period.
For the year.
We reported a loss of $500000 roughly.
Close to breakeven.
And up significantly from a loss of $3 4 million.
In calendar year 2020.
That's an approximately $3 million bottom line turnaround.
With a revenue increase of $3 million.
Adjusted EBITDA for Q4 2021.
$827000 roughly 21% of revenue.
And that's $2 6 million for the full year.
Which is a $2.7 million turnaround.
EBITDA.
This performance continues to demonstrate the strong operating leverage of our business.
Now, let's move on to slide eight where we highlight our balance sheet.
You'll see that the balance sheet continues to strengthen as we continue to lower our debt levels.
Cash at the end of the year was $2 $8 million up roughly 800000 from the end of 2020.
And up 400000 sequentially.
Cash provided by operations for the year, roughly a half a million dollars.
Long term debt, including the current portion at year end was two and a half.
And we've got one more $750000 principal payment due on R.
Our hard rock note that's due on October 5th 2022.
So.
Net debt debt net debt to cash net.
Cash to debt ratio is actually negative now we've got more cash than debt on our balance sheet.
Finally during the fourth quarter of 2021, the company completed a.
Equity offering of $1 7 million shares priced at $1 15.
And that resulted in net proceeds of approximately $1 $7 million.
We will be strategically directing a portion of our capital.
Into raw material inventory.
To address supply chain and consistency that we're seeing and.
And constraints.
Moving out the delivery times, so that we can ensure that we can successfully meet the increasing demands of our customers.
Lastly, I would like to report that our book equity balance at 12 31 21.
$6 $1 million, which puts us back into the New York Stock Exchange continued listing requirement.
So with that I'm going to turn the presentation back over to Troy.
To wrap up with a review of our outlook and opportunities.
Troy.
Thanks, Chris.
So as we look at look forward into 2022 and you.
You know a lot of the things that we were working on throughout 2020 . One was you know.
It was agreements and structure too to get signed.
Early on this year and get into place and I think as we go throughout the year that you'll all be pleased with what we with what we come out with but.
You know you look at our North America opportunity.
You know we continue to work closely with with our with our channel partner and also our legacy.
Our partner is as we look for more opportunities within those companies.
You know we have.
We have an opportunity as we we looked at our manufacturing and we we say you know what is it that we do well.
And how do we get more of that and its not not looking at you know just being a third party machine shop building. Some some high end products, where we're looking at turnkey were looking at same not only let US you know.
Manufacturer that body, but let us complete that body and as we've got a process in place that we call product line adoption that we're currently.
Setting up our first cell.
We're spending a million dollars on a on a machining center that's been.
I identified or this particular product line.
Well, we'll we'll do that complete product line within the cell around this machining center and we think that's going to you know once we prove that up we're gonna be able to do that over and over again.
When we look at.
Our international opportunities, where we're doing some things there when you look at Oman.
Saudi Arabia, Qatar UAE, we've really strengthened our opportunities there with the we're working with you know a very large serco in some of these countries where were working with.
You know.
The e&ps in these countries. It was it's been a very slow process and like Chris mentioned earlier the whole Covid thing hasn't helped you look at you look at too late and it's still it's still an issue to you know to get ex pats in there and to get in there too.
So.
But that's going to open up and when it does you know that that's where we we broke out into the Mena region and the mid east.
Area, and we expect that the rig count there to come back up and.
But what we're really looking forward the team that we've got in place is doing a wonderful job and we're working with some very high end.
E&P opportunities there. So we're excited about what could happen there this year.
You know you look at it we've talked about M&A opportunities, we're still going down that road and we're still talking to companies. You know that is very much alive. So we like what we're doing there.
We don't have a a big staff to pay a lot of attention to that but but we.
We're working at and where we're moving that ball down.
Down the court so.
One of the things that we're excited about we've always for the last couple of years, we've been talking about diversification. So we don't get.
You know beat up on the next downturn in this cycle that you know it was it's been very ambitious to us everybody in the oil and gas industry, and we were diversifying where.
Currently were working with electric vehicle.
Technology company that is doing some very exciting stuff, we're helping them with design support and manufacturing support.
On a on a very small.
Small scale right now, but they want us to engage in a in a in a big way.
And so we're excited about the opportunity that as we build it we can we can support their efforts as they grow this business.
In a big way they've got some real unique technology that that it's fun to see.
So as we look into 2022, I think it's gonna be a wonderful year for us we've got a lot going on we've got a lot of things.
Right close to the finish line to be signed with we've been working on agreements and so I think you'll all be happy with with how this year.
Rolls, along and how it turns out.
So with that being said.
I'm going to go ahead and.
Turn it over to Q&A.
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One moment, please while we poll for questions.
Okay.
Our first question comes from the line of John Sturges with Oppenheimer. You May proceed with your question.
Thank you.
Nice end of the year gentlemen.
My congratulations.
Two questions. One is the you have some flexibility and you've done this in the past where you've made an early payment on hard rock.
You have one more left but you have a lot of Optionality and I was just curious whether are you likely.
To make the early payment and just get that off the books.
You know John that is an option and we would look at it when we talk about it but we'll.
Well evaluate that here you know as we go forward.
We've so as we look at this product line adoption in spending.
$1 million to bring this machine in stock.
Not going to $1 million cash, there's going to be a good down payment that goes with it and the structure that goes around that machine. So you know, we're we're watching it and just.
No I wouldn't.
It's very possible that we could we could pay that off early it would be it would be beneficial when you look at the interest that we pay on it.
Okay. So, but do you have the option not to as well, obviously, depending on the conditions business demand.
Other question I have is I see.
Uh huh.
Drilling that's gone on is really are not.
[noise] boosted production anywhere everyone is being cautious.
Domestically and internationally that that looks last couple of weeks possible.
Possible stalling of of the rig count it's too early to tell.
Could you.
Comment on just a general color of the geopolitical stuff that's going on.
And if you see any of that easing up near term.
You know when we we meet with our team over in the Mena region, and we meet with them.
You know three or four times a week.
And ER.
Like I mentioned dirty and what we see on the international market. If you look at Kuwait, there, there's still some issues there getting in I mean, we.
The travel in and out of those areas are difficult I think what they're seeing over there is like we're seeing here you know when you win.
When when we had this whole shutdown from Covid your ex Pats that were very comfortable going in and out of these countries that in some instances. It's got got stuck in some of these places for 3456 months.
You know there's there's one.
A shortage of of these workers a lot of people have retired from oil and gas.
It's that we're doing these ex pats programs.
But.
We need them domestically here as well so I think as weird as we're starting to come back here.
Growing stronger here and in North America.
And it's still not.
A easy travel you know seeing out there going in and out of these countries.
I think that they're going to struggle to bring up production I don't I don't think it's going on on the international markets I don't think you're going to see a quick.
You know I love.
Our increase in production my my personal view of that is there they're not finding the people to do that they're not finding their hands to be able to drill. These wells. So when you see the rig count there. It's it's tough for them to bring on more rigs they really rely heavy on the expat market.
And it's just not it's just not a friendly environment for.
For travel right now and going into these countries. So.
But you know if you look at where we're at and I mean, not looking at internationally.
International rig count.
Globally, but just looking at it in the in the region that we're in a I don't I don't think you're going to see a lot of rigs standing up there you know, but the opportunity there for us is tremendous because the rigs that are up you know for the most part we havent done much if any on those rigs.
So as far as the scene in the mid east.
We feel good about what we've got going on in and.
Places like the U a E places like Saudi Arabia.
Places like Oman.
We've got a lot going on as far as opportunities coming forward, we've had to build in inventory to get over there and we've done that and we've got tools in place and we've got a team in place we still struggle with.
You know identifying a an area, where we actually want to setup a.
A refurb facility there just because of all the all of the restrictions that are placed on on those countries over there in the way of doing business. It's a it's incredible.
But we're working on it we feel we're going to we're going to get one up and running here.
I would say late Q2 early Q3, we should have something up and running.
When you look at the North American market share our domestic market.
I think what we're going to see is a lot of small E&P companies popping up.
No. We've got the we've got the bigger companies that have said, they're going to have.
No.
Just it doesn't matter if it goes to $200 a barrel, they're gonna have real restrained growth theyre going to.
You know.
Not just start putting rigs up.
But I think what youre going to see is a lot of small E&P companies that come up and pick up a rig two rigs three rigs and there's those pop up and develop.
<unk> fields, then I think these larger e&ps will buy up those fields and that still allows them to keep their agreement with what the market is saying, we're not going to do.
Go after you know standing rigs up, but they'll still be able to achieve.
Bringing on more production bye bye now.
Gathering up these smaller newer fields that are small E&P companies develop.
That's that's how I look at it anyway.
Do you think they're going to be able to bring back the labor pool.
You know what that's that's been really really a strange deal you know we we.
We've been hiring a lot and we've been looking.
You know it you need pumper drillers.
No.
Location builders all of this stuff that you need that just to put up you know.
One one location, that's going to have 28 wells on it.
You know John to answer that question.
Are you seeing rigs come up.
And it's slow and steady, which I actually like.
But I I do think they'll bring backs you know they'll entice people to come back into the.
Into this market.
But it's it's not gonna be rapid it's not gonna be rapid growth, it's going to be.
Slow steady I don't think the labor pools, there just to go to a thousand rigs by by year end.
But but I definitely think that you know we will get to seven 770 725 somewhere in there.
Okay. The.
The other item you had referenced.
Oh sometime in.
2021 a.
That you were getting greater penetration of market share could you make the.
A rough guess as to where you are currently.
As far as the the drill N Ream technology and what we have here in the domestic market are you know if you look at the areas where most of the drilling is going on.
Down here, let's just say west Texas for instance.
No I would say the market shares as you know.
30, plus percent and then if you look on a if you look on the just the the North American market in general its probably a high a high twenties.
Hum.
And do you have a sense of the trend line on that is it sounds like it's growing.
So it is growing.
It is more and more people are finding out you know.
What are the benefits of a condition to wellbore.
Thank you. Our next question comes from the line of <expletive> Ryan with Colliers. You May proceed with your question.
Thank you.
Trying to stay on that theme.
Asked about D. T. I, you know, bringing on new customers, increasing penetration is that in west, Texas are hitting into other fields, but can you give us a little more color as to Oh, you know what DTI is hearing from their customers.
Sure. It's it's it's everywhere you know, it's it's looking at what's happening with setting up like I said, the smaller e&ps in the Oklahoma area. It's it's getting some new customers in West Texas.
Now getting customers in California, and Alaska, So yeah, there they're doing a good job.
If the market growth.
It expands and the smaller E&ps are is that a better environment for you or.
Do you still need the larger ones to kick in too.
Really kind of benefit your business model.
No. It's it's it's good for us it creates you know in this.
In this current environment. We're in you know with with the whole you know when you look at the supply chain and you look at steel and cutters insiders and all the materials that we where we work with.
And you know you can look at you can look at existing customers existing opportunities out there and you can you can you know.
Manav to that and say this is this is how much of these items that we need.
And as you all know we were built we have to we have to hold larger inventories and we'd like to just to just because of the of the.
You know the inconsistency in the supply chain today, and when you have a new customer come on but that may require you know different connections different threads.
Their drill strings.
No. It it it just throws some complications into okay. You know that that size of steel that different I D diameter that different thread that goes on there. That's the stuff that you don't see you can't plan for because you don't know.
Where it is or what it is and when it pops up it's like everybody else they need it right now and.
And so we have to kind of look look forward and say how much more of these different sizes and different quantities of still blanks and cutters and insiders in flux as you know that that you that you really have a strong billions, it's going to pop up.
But we just don't know how much and when.
Sure.
On the contract services side.
Is that still largely with the legacy customer I thought you had some optionality to move.
You know two other larger customers on that front is that an option is that there are you expanding opportunities with your legacy customer that that's the focus still no. It's an option and it's a very good option and we've been working it as you know very large customers moved very very slow.
And but they do things very well.
And it's we've been working on getting getting some qualified.
You know Doug.
One you know step one step two I think we're I think we're getting close to the final stages of an agreement to bring on another.
High end customer, but at this point in time, we havent done it but we've been.
That's an opportunity and I think it's something that we can get done.
Great. Thank you.
You bet.
As a reminder, if you'd like to ask a question. Please press star one.
Our next question comes from the line of John Bair with ascend wealth Advisors. You May proceed with your question.
Thank you good afternoon.
Hello, Troy, and Troy and Chris I'm kind of.
I asked this question Rick.
Regarding our market penetration in a little different way.
The statistics that I've seen indicates that.
A lot of the rig increase rig count increase is coming from independent or privately owned companies.
As the majors and the you know intermediate size.
Public companies have remained pretty steady in there and their overall rig count. So the question then is have you seen.
New new business coming from that.
And to the market and given that the DUC count is has dropped rather significantly.
Some point the you know.
Independent.
Majors are gonna have to start picking up their activity not only to replace their production but.
So I'm wondering if that happens.
In conjunction with your maybe these smaller companies.
Adopting your your drill N ream.
If you could see a meaningful pickup in order activity.
You know one of the things John when when we have a channel to market like we do here in North America.
We when we when we.
Put that program in place one of the things that that we that we lost was.
That direct line of communication to that end user.
You know if we do those programs going forward.
On the international basis, we'll we'll keep we'll make sure that we keep aligned to that end user.
But when you look here in North America.
The who's running the tools and who the new customers are.
We really I really can't answer that you know when I when I look at that and say well you know, there's there's three new small e&ps that each got two rigs down in.
No.
South Texas, you know, we are in communications with DTI and when.
We see that you know when we when we invoice or when we get news new connections or new tools request. So I don't know I don't know how many small E&P operators have come on or to be honest with you I don't even know who they are I just know that in communications with with the <unk>.
T I team that the you know, though they'll tell me you know they've got a new company here, a new company there and.
But we.
We don't have that direct access to that end user.
Alright, that's kind of unfortunate but.
You know in my mind, I think that you know.
At some point, it's yeah, I think yeah, you've got the problem with the labor force to be able to bring on any significant new.
The amount of rigs, but tapping that being said hopefully more people are adopting or your tools are you seeing any meaningful improvement in in say Canada.
You know I don't I don't I haven't seen much in the way of Canada, I think there they'll actually be laying down right now because of the you know they go through that.
Uh huh.
Freeze and thaw period.
They can't have their drilling activity going on and and and right now we'll be going into the soft periods, so you'll probably see rigs laying down.
And then then you know picking up again in a couple of months and go in heavy once the once the thought is gone.
Okay.
One last thing.
In the in the press release, you said there was a related party note receivable that was cleared up 707000.
Can you elaborate on that at all.
Yeah that's.
What that is is that <unk> co you may recall that John when we fully reserved.
That receivable back in 2019.
Okay. So we set up a 100% valuation allowance against that.
And so as we settle that with.
Troy Internet.
On an annual basis the interest piece of that then we can recapture.
A portion of that of that note that was fully reserved.
So it's like like collecting a full reserve receivable.
That you would have written down we can we can take that back as other income when we when we sell it and so that okay.
That's what that is okay, great and then since you're now compliant with NYSE listing, what's what's kind of the timeline before you.
Have to submit something to them and then they review it and then say.
That's great and then.
What's the what's kind of the timeline on that.
Yeah, we typically have to submit a quarterly report to them and we'd do that about three weeks or so after this this earnings call. So we'll be setting that date with them probably in early April maybe the first week of April we'll submit the report for Q4.
And then they typically take.
Oh, three weeks or so.
Come back to us and with the thumbs up that they are the facts.
Except our report that.
That's been the pattern that we've seen over the last three quarters.
Thank you. Our next question comes from the line of Matt Reiner with Adirondack funds. You May proceed with your question.
Hey, Chris.
Hey, Matt.
First question is I know when you first started out your your two life was on the drilling ream is like longer than you had anticipated.
Good quality tool with lasting I guess longer than you expected and.
Now that you've had more experience with it do you have a like a.
Better feel for what the.
The two life is.
Yeah, we do we've got but we got a better feel for that.
And is it.
Yeah.
Go ahead.
Yeah, well what can you tell me about it is it is it.
He kind of solidified it.
And does it.
Yeah. When you look part of what it was what.
When you look at the model that we originally modeled out it was 12 runs in and it's up closer to 18.
That's going from the only thing we had modeled when we started was just the basin that we were in pretty much. When you looked at the you know up and in the Bakken.
And you know and it was it was really the six inch class of tools. So we didn't have a lot.
Tough to model from but now we do and so as we look at opportunities in the international markets Although.
What we've seen in the drilling environments in those markets.
We see like in Oman, and so it's really really you know the the tools the where the usage on the tool.
It's really similar to what we see.
You know here in in most areas in North America.
But then you see Kuwait Kuwait, they just you know beat tools up.
And so we think we've got a lot more lot smarter with modeling this out I know we are.
But.
You know when you look at to wait versus something on two totally different environment. So if you're gonna model runs and try to predict that.
It's gonna be a lot less than when we model it out in Oman.
Got it okay.
And then but then I just have a kind of a housekeeping one for Christian on the.
The D&A. So I've seen you know its been declining the last few years I'm for my Shreveport to weight down like two one this year.
But it sounds like maybe you're making some investments so I didn't know if maybe depreciation starts.
And if I haven't right it was roughly a million and a half this year and then amortization was just under 600 is.
And you kind of give me a ballpark is is that and I think next year your amortization in tangibles supposed to dropped like a 167.
Was just curious if depreciation should model store like that one and a half million range or.
Are you going to have some investments where that creeps up a pet.
Yeah that that that's going to creep up a bit we are expanding.
We've got some near term opportunities that Troy talked about in the middle East.
We're getting some good revenue coming out of Oman now.
So yeah that depreciation is going to inch up a bit.
What drove what drove the DNA down 2021 versus 'twenty was fully amortized.
A bucket of intellectual property.
And so that that led to an end that that bucket was fully amortized at the in May of last year. So we've got one more bucket of intangibles that were amortizing and so.
And 2023 that third and last bucket of intangibles will be fully amortized and so yeah. It will we'll see a drop again.
But yeah. So that's S amortization expense has been going down.
And yeah.
Depreciation is going up a bit but you're in the ballpark with a million I have kind of a number that you've got but do it but do expect it to go up slightly over 2022.
Okay.
Thank you.
Hey, good job.
Right.
Okay.
At this time, we have reached the end of the question and answer session and I will now turn the call back over to management for any closing remarks.
Thanks, again, everybody for joining us and.
So we're very excited about what the opportunities we have in 'twenty, two and 'twenty, three and where are we.
We're going to continue to move forward in <unk>.
And.
Do it the best we can do on this where like I said, there's a lot of opportunities and I think.
The thing that excites me. The most is when I look at our management team that we that we now have in place I look at our employee base that we continue to grow on Ah and I look at the need that our.
Our customers have for our for our products and not just not just the the drill N ream, but for the things that we do well.
We're evaluating those and so we're going to capture some great opportunities.
Thanks for joining us and we look forward to seeing you on our next call.
This concludes today's conference call and you may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Okay.
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