Q4 2021 Flotek Industries Inc Earnings Call
Greetings and welcome to Flotek industries fourth quarter and full year 2021 earnings conference call. At this time, all participants are in listen only mode.
Question and answer session will follow management's prepared remark if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce Nick <unk> Senior Vice President General Counsel, and Chief compliance officer for 'twenty.
Thank you you may begin.
Thank you and good morning, everyone. We appreciate your participation with US today joining me in participating on the call are John Gibson, Chairman, Chief Executive Officer, and President Michael Morton, Chief Financial Officer, Ryan <unk>, Chief operating Officer, and James Silas interim President of data analytics and senior Vice.
President of research and innovation.
On today's call. We will first provide prepared remarks concerning our business and results for the quarter. Following that we will answer your questions.
We have now released our earnings and asset for our 2021 fourth year and full year with the fourth quarter and full year results, which is available on our website. Additionally, we have uploaded an investor presentation to our website.
Today's call is being webcast and a replay will also be available 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 forward looking statements are subject to a number of risks and uncertainties many of which are beyond our control and which can cause actual results to differ materially from our current expectations, we advise listeners to.
To review our earnings release, and the risk factors discussed in our filings with the SEC.
Also please refer to our reconciliations provided in the earnings press release, as we May discuss non-GAAP metrics on this call and with that I will now turn it over to John .
Thank you Nick and good morning, and thank you for joining our discussion of our 2021 fourth quarter full year results.
2021 it's been another challenging year for many businesses and individuals supply chain instability became a household term worries over inflation has had an impact on markets as we hold this call.
The conflict in Ukraine, and Russia continues although 2021 was difficult flotek, we used the opportunity to strengthen our company both financially and operationally. We also use the time to get laser focused on strategic objectives.
Those objectives call on us to focus on flawless execution profitable growth and strengthening our financial position and this call I'll highlight the strategic priorities through the lens of what we accomplished in 2021, all of which may not be evident by strictly reviewing the financials. These accomplished much of what put us on the path.
Pat to the transformative deals and the like the recently.
Protracted great Matt.
We believe that the Flotek, a 2022 and beyond will be vastly different than the version to exiting 2021. It showed today instead of focusing on the past, let me share with you the flotek in the future.
Our strategic priorities are built around a core commitment to environmental leadership. The last few years to term ESG has gained tremendous amount of traction.
Pardon me there has been as well.
We'll be right back with you.
[music].
Okay.
[music].
Yes.
[music].
Pardon me everybody. Thank you for your patience, we are reconnecting the speakers. Please continue to hold.
[music].
Hello, everybody.
[music].
Hello, everyone. We have rejoined the speaker line. Please go ahead.
As far as really interruption guys are apparently a backhoe near the building managed to improve our telecommunications are there for them all of that so we're actually dialed in so I'll, let Bob so, let's let's pick it up I just wanted to thank you for joining our discussion on the 2021 fourth quarter and full year results.
'twenty one it's been another challenging year for many businesses and individuals.
Blockchain instability became a household term worries about inflation has had an impact on market and as we hold this call. The conflict between Ukraine, and Russia continues although 2021 was a difficult year here at Flotek, we used the opportunity to strengthen our company both financially and operationally. We've also used the time to be laser focused on our.
Our strategic objectives.
Objective is calling us to focus on flawless execution profitable growth and strengthening our financial position.
This call I will highlight these strategic priorities through the lens of what we accomplished in 2021, all of which may not be evident a strictly reviewing the financials. These accomplish much of what put us on the path to transformative deals like the recently announced pro breath agreement, we believe that the Flotek, a 2022 and beyond.
It will be vastly different than the version exiting 2021 and so today instead of focusing on the past, let me share with you flotek of the future are fatigue.
Power feature built around our core commitment to environmental leadership.
In the last few years the term E. S. G has gained a tremendous amount of traction, but like many topics in the popular discourse trending items often have their moment and then they fade away.
Slow today, we believe that the concepts around improved environmental stewardship are inseparable from long term sustainable growth in the energy industry. In addition to the issue of maintaining a social license to operate companies already deal with increasing pressure around availability of water.
Housing waste and maximizing efficiency of operations in the face of tighter cost structures, our products and services, including our speciality Green chemistry solutions, our <unk> analyzer, and our data analytics all of our customers minimize their environmental impact.
Timely and efficient operating decisions.
This reason environmental leadership is a key element of our business strategy today and will be in the future.
In order to achieve our mission to be the collaborative environmental partner of choice for sustainable Chemistry technology and digital analytics solutions. We will continue our focus on flawless execution of our vision.
Morris Chang said without strategy execution is English without execution strategy is useless, our vision created the opportunities we now possess are.
Our execution will make us a leader in this field.
With that we will continue to prioritize safety and service quality throughout our organization I am extremely proud of the Flotek team for achieving our goal of zero total total recordable incidents zero nonproductive time for our customers in 2021, and we will build on this focus.
2022 .
I will tell you. It's the first time in my career that I have ever achieved a zero T. Our IR and and no nonproductive time, it's amazing accomplishment and I just.
Incredible congratulations to the operations team and to all of our employees.
Our consistent attention to and performance all safety considerations communicate that flotek accompany that actively manages risk both for ourselves and our partners at <unk>.
'twenty, two and beyond Flotek will continue to build.
Upon the progress we made in 2021 and reestablishing our relationship with indirect channels to market through energy service companies are critically important segment of the market in fact half of our new energy chemistry customers, where service companies in 2020 one.
Certainly our most exciting win on this sustainable revenue go is our new contract with pro Frac valued at over $2 billion in revenues over the next decade, which will commence on April 1st if you missed our in depth discussion around our contract with pro Frac I encourage you to listen to our recorded investor call for March.
As we build upon this success, we will continue to solidify our partnerships.
Winning on a daily basis remaining committed to building trust through reliability and quality of our products and services impeccable logistics transparency and mutual value creation.
As we enter 2022, we rebate a significantly more efficient streamlined organization, which we have achieved by realigning our entire organization to our vision, we have rebuilt our business development structure and tools to accelerate our revenue growth and more seamlessly forecast with our supply team, we have implemented new supply chain.
Management strategies to ensure we have multiple sourcing options, including in basin sourcing, which has lowered our operational into logistics cost. These changes mean that we deliver more effectively to our customers while significantly improving our margins.
Flotek of 2022 and beyond is a lean operationally efficient organization.
Looking to the future, we will maintain our financial discipline by adhering to cost saving initiatives that were begun in 2019, and we will effectively managing our SG&A and R&D costs, which are improved from 2020 by 11% and 23% respectively.
Also one or 2022 with greater transparency in how we report our market. What you will see reflected in our 10-K, when it's released as the saying goes what gets measured gets managed Mike Burton will speak in more detail about some of the changes that you will see moving forward.
Finally, our future success as an organization comes down to the right leaders teams and structure to drive profitable growth well into the future. We've made changes to our cost structure. The way we approach our markets and we've also implemented leadership changes it will help us better respond to uncertainty support operational excellence.
Top line revenue growth of over four X in the next three years alone. This underlies the creation of a chief operating officer role, we named Brian Israel, Our CLO in early March.
No doubt that Ryan at Flotek pain will go forward with success there.
Simpler we also named Dr. James Silas is the interim head of data analytics. James also retains his previous role as senior Vice President of research and innovation.
For anyone who has not had the great benefit of knowing James Silas Let me tell you a little bit about it James joined Flotek eight years ago. Following 15 years of academic research investigating the physics and chemistry of surfactants and polymers.
Personal care products bioengineering and in our all industry.
Joining flotek James has been critical to our strategy of environmental leadership, and the development of ESG grain scorecard as well as having our intellectual property strategy.
James has a long history with J P. Three in his considerable role in the development of our differentiated technologies Big recent protests Green chemistry stand apart from our competitors as James leadership part from his technical credentials changes highly engaged with our customers is an exceptional commercial mob for these reasons I appointed him as interim head.
Analytics, because he has already added exceptional value in this role and I expect them to add more as the year progresses with that I'd like to turn the call over to James Silas to give you his perspectives on the data analytics.
Yes.
Thank you for the kind words, John and good morning, everyone well. That's a segment we did not achieve our goals in the fourth quarter I've had the opportunity to work closely with the team since December .
I'm impressed with our customer engagements and the market opportunities that lay in front of US Let me mention a couple of points about the data analytics segment first our core J P. Three technology, our near infrared analyzers represent an optimized blend between speed of measurement versatility of applications and robust operating conditions, we are delivering data every minute.
It is driving operational efficiencies these critical compositional and physical property measurements to enable our customers to more effectively manage their product in inventory by optimizing their blending and separation processes in real time, given the enterprise wide impacts of our solutions, our sales and marketing efforts must shift to be aligned with our customers' leadership.
While our sales efforts to date have built powerful use cases, we are expanding our focus beyond siloed single level applications to enterprise wide solutions and partnerships.
We will continue to elevate our engagements with C suite customers, especially to communicate the value proposition our technology enables in meaningful improvements in the ESG performance access to critical real time information supports decisions that reduced carbon footprint energy consumption and emissions that automate large scale processes and that minimize wasted.
Inefficient reprocessing.
Utility of optical analyzers and edge embedded chemo metric modeling means that we have the platform capable of delivering next generation reductions in greenhouse gas emissions finally in 2020 . One we initiated several international pilot programs currently in various stages of execution. These pilots are on schedule and we feel confident that they will.
The value proposition that has already been established in our North American markets and will afford us a defined growth trajectory in summary, the technology to drive the next generation of ESG performance globally is available here and now.
With that I will turn the call to Ryan to discuss our chemistry technology cycle.
Today I'll discuss our chemistry technology segment performance, which includes our energy chemistry technologies as well as our professional chemistries for industrial and consumer chemistry solutions.
At the completion in the fourth quarter I am pleased to report that our energy chemistry technology strategy to be the collaborative partner of choice, we're delivering sustainable optimized chemistry solutions is being fully executed and gaining momentum.
<unk> differentiated solutions focused on maximizing our customers value by elevating their ESG performance lowering operational costs and delivering improved return on invested capital.
We're continuing to see growth with both domestic and international E&P operators as well as service companies. Thus delivering on our continued commitment to diversify our revenue stack and minimize risk of customer concentration.
In the fourth quarter, we observed implementation of our accelerated structural changes already paying dividends as our cost continue to decrease while our revenue growth outpaced the growth of the domestic hydraulic fracturing fleet market.
Digitally we completed the year with a stellar performance in regards to safety service quality and customer satisfaction.
As a result I'm pleased to report the following highlights for the fourth quarter.
First revenue for the energy chemistry technologies improved 32% quarter on quarter, thus significantly outpacing the market and indicating continued market share growth. This marks at 26% improvement from Q4. The prior year secondly revenue generated from domestic accounts grew 34%.
While the international accounts grew 24% quarter over quarter, demonstrating the continued emphasis on improving revenue diversification.
And revenue from our materials and Trans logistics facility and race in Louisiana with the world's top oilfield services providers.
And by more than 53% quarter over quarter as it became a key facility for delivering services to minimize the impact of Hurricane Ike.
We continue to make notable progress in rebuilding our indirect channels to market with service companies.
We have solidified our partnership with <unk> to deliver downhole chemistries to as hydraulic fracturing fleets in North America.
The contract extension to be approved by shareholders. We anticipate combined organic appropriate related 2023 revenues to be well in excess of $200 million.
Furthermore, the segment has continued its growth into adjacent energy markets with revenue generation, a geothermal drilling and cementing operations as well as solar panel codes.
Ooh spirit of minimizing risk, we continue to negotiate with key suppliers to secure future purchase prices and material allocation volumes with our top product lines for 2022, as we focus on accelerated growth and margin expansion.
Finally, we're pleased to announce that Flotek completed the year with zero, Osha recordable and zero hours of nonproductive time in the field and manufacturing operations. Thus further exemplifying our commitment to execute for the customers and deliver on our value proposition.
Going forward, we're excited about the future and the continued opportunities for our chemistry technologies segment as we continue to empower our customers social license to operate with our enhanced chemistry solutions now I'll turn the call over to Mike to discuss our financial results.
Thank you Ryan as John mentioned earlier, the 10-K now reflects gross margin in the consolidated statement of operations for the first time since 2017.
Segment level sales and marketing costs and corporate G&A is now combined and reported as selling general and administration on the statement of operations.
Cost of goods sold as reported now represents product costs transportation and certain other costs required to produce and deliver goods and services.
The company made these changes in reporting in an effort to provide greater transparency and after considerable review of industry peers.
And in consolidation with our external auditors.
Now, let's go through the income statement in more detail during the fourth quarter consolidated revenue was $12 2 million up 20% from the $10 2 million in the third quarter and slightly up from the $12 1 million of revenue during the same period last year.
The total revenue for the year was down 19% from 2020 promoting impacted by the M&A activity impacting two significant customers and the nonrecurring sales of excess therapy.
Even with the lower revenue for the year, our losses narrowed from last year, both in the fourth quarter and the total year as we manage our business more efficiently across the organization.
By segment.
Chemistry technology, including the impact of excess tripping itself saw a 23% increase in sequential revenue or 11 6 million for the fourth quarter. This also represents a 7% increase from the same period in 2020.
The data analytics segment saw a 27% decrease in sales sequentially from Q3, driven.
By several product purchase is being pushed out into 2022.
In the fourth quarter, we have made an $8 1 million dollar impairment of goodwill roughly 11.
Loss per diluted share related to the data analytics segment.
Ultimately, we believe this asset to have considerable value over the long term. The impairment decision is a noncash transaction that was.
A slower ramp up of cash flows as we continue to move certain customers to a data as a service model.
We ended the year with consolidated gross margin of $3 3 million was a substantial improvement from a loss of $28 7 million in 2020.
The primary reason for these differences in gross margin dollars between the periods were driven by the accrual of the AVM Reserve in Q4, 2020 were $9 4 million and the subsequent reversal of this reserve in Q3, 21, let's say settlement payment of $1 $75 million.
Fourth quarter SG&A was $5 8 million up $1 7 million from Q3 2021. This increase was driven by the elimination of the federal employee retention credit program do you have any severance and she and the fact that the 2021 management incentive plan accruals were reversed in Q3.
We continued to record renegotiate annual contracts to drive even more improvement in our expense run rates.
What a year, we reported a loss of $30 5 million or 42 cents loss per diluted share for 2021, a sharp improvement over the loss of $136 5 million or $2 loss per diluted share last year.
The 2020 loss per diluted share included a few significant adjustments of $1 28, an impairment 26 cents in ADM turbine reserves in 14, and the product rationalization, all one off impacts.
Our adjusted EBITDA for the fourth quarter was a loss of $5 7 million, which is notably better than the third quarter's loss of $6 3 million in last year's fourth quarter loss of $6 8 million.
And the last part of 2021 the company also leased out to idle facilities, which improved our EBITDA run rate by roughly $250000 per quarter.
So let's move on to the balance sheet performance as we are focused on preserving our liquidity.
At the end of the fourth quarter, we had cash equivalents of $11 6 million versus $20 5 million in the third quarter. There were several factors that impacted our cash position.
Marine losses, higher revenue that impacted working capital receivables and inventory and the ATM settlement related expenditures.
The company has $4 8 million of loans outstanding pursuant to the Paycheck protection program related to the cares Act.
Can we apply for forgiveness of substantially all of the loan in late Q3, 2021 .
He has not yet received final feedback from SBA regarding the forgiveness amounts, but expect to hear in the near term.
As we look forward to 2022 uncles, who continue to leverage our back office cost efficiencies and growing our topline, including both organic and pro back when revenue is ensuring the necessary working capital execute our growth strategies.
In February 2020 to Flotek closed a $21 2 million pipe as previously announced.
<unk> continues to work with Piper Sandler on various additional cash generation activities, including but not limited get and continue monetization of noncore assets to fund the previously discussed pulling back working capital needs.
Both our Lora monahan facilities should be sold in the next several months and the company proceeds in excess of $6 million.
Finally, before I turn this call back to John I would really like to take a minute.
Express my thanks to the accounting and internal teams a number of other employees that flotek, who supported the successful remediation of our 2020 material weaknesses.
It was hard work, but yet. Another example of building a strong governance and monitoring program. It will help this company to continue to deliver on our commitments.
At this point I will pass the call back to John who his final remarks.
Bob.
Today Flotek stands as an operationally efficient organization positioned for profitable long term growth with a team who can execute on our mission of delivering solutions that reduce the environmental impact of energy on air water land and people.
I believe there's plenty plenty of room to be optimistic this year, we've seen some big names, particularly for the energy producers posting considerable gains already in and through 2021, while there is typically a time lag between producer a bench and the impact of service companies. We believe that much of the momentum that operators are.
Having will heal gains for us as well.
Looking forward to 2022, we we look we believe we'll be able to hold the budget flat and we're going to see our margins improve as I alluded to earlier, we recently hosted an investor call to better explain the elements and impact of our contract with pro Brac. It gives us a 225 plus million of contracted revenue over the next three years.
A tremendous upside over the next decade.
The organic growth, we anticipate our first month of business profitability in 'twenty, 'twenty, two which should be followed by uninterrupted profitability thereafter, when I joined the Flotek team in January 2020, I came in with the philosophy, a philosophy of looking forward.
I'm confident today that the profile holds.
Or has the potential to secure our future and allow us to look forward of course. This is contingent on approval and our upcoming special shareholder meeting so I'd like to take this final opportunity to strongly encourage you devote in favor of the proposals in our proxy at this time in closing I just want to thank all of the people here at Flotek.
It's been an endurance contest and we've emerged from it in a great and successful position to go forward, particularly thank our customers and our shareholders for their continued support you guys are great and with that operator, I'll turn it back to you for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone Com. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw from the question queue. Please press Star then two.
This time, we will pause momentarily to assemble our roster.
Our first question near term Jeff Robertson.
A water tower or research. Please go ahead.
Thank you good morning.
Ryan can you talk a little bit about the capacity utilization on the energy chemistry.
Business in 2022 and 2023.
With the pro Frac contract and then.
Also about penetration with other service our service company customers.
For for utilization of the amount of capacity, they're not taking up.
Yeah, absolutely. It's a great question you know when we look at somebody uniqueness part first off around with the appropriate contract as it is a nonexclusive agreement. So it allows us to continued growth in our other areas of the market.
When we look at the capacity in our current you know.
<unk> operations as we were actually running probably less than I would look at 15% overall utilization to deliver our field services and chemical blending operations.
And that was only one run any atypical day shift when you look at the growth of what just with appropriate component with it included with the potential parts of where we're going we will still be sitting at probably around the full operations with program will be probably still less than.
52% of our operational capacity on what we can handle without making any type of capex expenditures. So we definitely have opportunity to grow without having to spend a lot of money doing the support and believe it or not in the in the past you know if you go back two years as far back as say 2017, we actually moved 300 million pounds.
A chemicals in that year and that falls in line with similar to how we're going to be expanding in the <unk> operations. Our organic growth. So we still have quite a bit of room to take up until we get into any need for capital expansion. The unique part about how we're doing the service delivery models now.
Is that we also leverage in basin support and that we don't have to bring all the chemicals that we do through our main manufacturing facilities because some of them are basically repackaged materials that we buy when we consider some of the lower end technologies and so we source those and base and deliver those strict to the rig site off rail Spurs et cetera for <unk>.
Some of the chemical companies that we work with in doing that so we have a great opportunity to not only to do the non exclusivity components of appropriate contracted grow the core business, but also have capacity to handle this growth in the long term before we'd have to do any significant capital expansion.
Brian to be clear the 52% capacity, that's what will be used for the pro frac contract, including the supply the amendment and.
What your what Flotek baseline business has been in 2020 one.
That's correct that's correct.
Okay.
Yes.
Does.
Yeah.
Pro Frac them.
Yeah.
I was just a perfect.
Agreement in the basins that they are operating where you will have or where they will have crews deployed that you will serve us well that help enhance potentially enhance.
Flotek margins with other customers in that basin by giving you more scale.
Absolutely absolutely, we definitely feel that the mobile obviously the more volume we move helps us all leverage component all of particular areas, where we can look for margin enhancement. It also the one big thing that suppliers really enjoy is that if we could get an accurate forecast of this volume out to them and when you start looking at companies like.
Pro Frac and even some of the other ones. We companies we brought in our organic business, we're getting a much better lead time out to forecast what type of material usage, we're gonna be which gives us better leverage with our suppliers don't helping us reduce our overall cost and leverage that for margin improvement that's correct.
Okay.
Mike You mentioned working with chop with.
Or on alternatives can you talk about the with the pipe financing that was completed in February with the first supply agreement.
How much of the working capital for the supply agreement and the expanse or the supply amendment is covered by the capital that you all raised in that event.
So thanks for the question, Jeff. So we think a majority of it in the short term is covered by the <unk> clearly we have a projections going out that we'll need some in the future were trying to determine.
Herman how much it depends on how fast they ramp up and also as we monetize the other assets in the organization.
So to be clear, that's a longer term issue that.
The short term.
Great Okay.
Thank you.
Operator, before we move to the next question to mature weaknesses.
The email off for John from my airplane.
Storm capital, Eric asked us what the sensitivity of the pro forma contracted the oil prices.
Well I'll ask forbidden and throw it over to Ryan the great part about this contract, which I hope does not.
Go unnoticed is that it gives us continuity regardless of oil price.
Contract promises that 70% of the crews are a minimum of 30 crews.
And it with them at 45 crews that they would have to come down by nearly 33% before we got to the 30 crews or less I'm not anticipating any price scenario for the commodity that would caused a reduction in crews that are so we basically are I think we're one of the only service companies that have.
True back.
Backlog in place that goes out for a decade, that's secure and the current price environment and so pretty excited to know that we can make our plans going forward and we have a robust revenue stream that to support that anything thought Brian .
I think that I think it's all correct John in alignment with my thoughts as well you know you look at the you know the.
Near term, particularly on a plus a day.
Okay blinking contract Oh, well, we do see is a lot of protection in the way <unk> operates and I would say what we call some of the upper tier service companies are starting to have.
Longer term operations for their scopes of work and that they're not so well to well transaction. This also helps us have a lot of confidence in.
The work scope and how we're forecasting our materials so.
That's why I.
I would say the big transition that we're starting to see them around the capital discipline, and particularly upper tier hydraulic fracturing operations is that they have a longer guarantee type scope of work and that's something I hope gives us stability in the near term or the oil prices as well.
Okay.
Pumps me up as we were not going to be doing a call with you again in probably six or seven weeks as we report Q1.
<unk> been able to get through the month of April which will be our first month, where we are really ramping up on this contract and we're excited about how we're already engaged with them and the number of crews are being brought on and look forward to giving you details on that.
As we come into that call. It for Q1 will be able to explain how well where we're doing it in the ramp up and that'll give you a clear indication of what 2022 is going to look like so pretty excited.
Go back and take another call.
The next question is from my time of Noble capital markets. Please go ahead.
Hi, Thanks for taking my question I'm looking to get a little bit better understanding on the nature of sales associated with the data analytics I heard might make some comments that maybe some projects were pushed out into 2022 and I certainly understand that it can be a lumpy business at the same time, we were writing down the goodwill write down.
Just wondering if you could talk a little bit more about the nature of sales timing issues the impact of specific projects or customers in terms of affecting timing issues.
Sure. It's James is here with me too but when.
When we took a look at it impairment issue was really related to the sensitivity and discount rates.
And we took a look and I don't want to have to do this quarter after quarter and so we just we took what was provided to us by third parties and we felt like it was realistic can we just went ahead and.
And finish that off because right now we're so focused on the chemistry business and how big that's going to be I don't want a major and miners here over the next quarter. So it's like let's focus on where are we really going to be making money at the same time, we've got tremendous amount of upside with some big opportunities in the data analytics sales side.
<unk> come a little longer but we are excited about the use cases excited about new customers and with that I'll, let James sort of giving you some more highlights, but a great business.
I appreciate the question Mike I, just wanted to reemphasize some of the comments I had earlier on the call. We really are looking to shift from a single use or single project, it's more to technology adoption from the customer side and in doing that involves customer conversations at multiple levels as well as engaging and partnerships.
With other service providers in order to be able to provide a bundled solution to them as well. So those are things. We're looking forward to talk more about as we get those in play US later in the year.
The next question is a follow up from Jeff Robertson of water Tower Research. Please go ahead.
James to follow up on data analytics, I think you've mentioned a international pilot project at.
And moving more to an enterprise type.
<unk> solution for customers can you talk about what kind of hurdles you need to cross and what.
Are those initiatives and what that would mean as far as being able to sell.
Units across our company's platform as opposed to one off sales.
Sure I'd be happy to discuss that from the international pilot programs. We are on schedule with those as you're dealing with national oil companies schedules can shift from 18 months to 24 months in between initial proposal to when you're finishing those programs and we're in the middle of that period currently we view.
If we were able to get those successful, which we are expecting to be a we will open up additional markets greater than where we currently have available within North America, and so we're excited to get those up and running and showing value and.
And we'll be happy to talk about that more as we have something to say.
And it's it's it's part of the goal trying to get a corporate adoption of D.
Of the J P. Three systems as opposed to let's say one manager and.
And one in one plant so that so corporate accepts it and deployed it across a much broader asset base.
Yeah, Yes, I think what James was wood products client as we're looking more to be a platform then to be a device and so in that.
Trying to pursue that we've actually been working with a couple of well what I'll call, a dashboard or process engineering companies as to how we plug our sensor into their processes I think you'll see you know she is pursuing that as we go forward in the next quarter or so because that supports how it needs to work in a national oil company.
I don't really need a device they need a platform that supports business decision. So we're elevating it from a device sale to a business decision support.
Device, it's not just the center and that's where James is taking and I'm quite excited about it and and we'll look forward to talking about that more as we go forward.
That I think are you know that.
That's probably the end of the time, we have questions. This morning, and I just want to thank everybody for joining US. Please go back and review the call from March 10th that covered pro Frac contract.
Please get I'll get in there and vote in favor of this proxy were excited about working with them and I think you're going to begin to see the impacts, particularly in Q3 and Q4, but you'll see the ramp up and how exciting. This is kind of baked for us going out for the next decade, and Youre going to have a company that really has an annuity.
In terms of revenue that we can count on and that we're going to build our cost structure around so we could provide positive results. So.
Thanks, guys really appreciate it take care.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.