Q1 2022 Tidewater Inc Earnings Call
Yeah.
Good morning, My name is Audrey and I will be your conference operator today at this time I would like to welcome everyone to the Tidewater Q1, 2022 earnings call today's conference is being recorded.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one once again.
And at this time I would like to turn the conference over to West Gotcher, Vice President of Finance and Investor Relations. Please go ahead.
Thank you Andre and good morning, everyone welcome to Tidewater earnings Conference call for the three months ended March 31 2022.
I'm joined on the call. This morning by our President and CEO Quintin Kneen, our Chief Financial Officer, Sam Rubio, and our General Counsel and corporate Secretary, Daniel Hudson, and our Vice President of sales and marketing peers Middleton <unk>.
During today's call, we'll make certain statements that are forward looking and referring to our plans and expectations. There are risks and uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comment that we make during today's conference call. Please.
Please refer to our most recent Form 10-K and Form 10-Q for additional details on these factors. These documents are available on our website at T. D. W dot com or through the SEC at SEC Gov.
Information presented on this call speaks only as of today May 10 two.
'twenty two.
Therefore, you're advised that any time sensitive information may no longer be accurate at the time of any replay.
Also during the call we'll present, both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP measures is included in yesterday's press release, and now with that I'll turn the call over to Clinton.
Thank you Wes good morning, everyone and welcome to the first quarter 2020 to Tidewater earnings Conference call I.
I am pleased to say that the first quarter was another solid quarter and a series of solid quarters momentum and the business continues to build and we are starting to see the benefits of the tightening supply and demand balance we've been talking about over the last few quarters.
In addition to a solid quarter, we closed on the acquisition of the 50 vessel fleet of Swire Pacific offshore now that the transaction is completed we are beginning to optimize the G&A and operating costs of that business. So that we realize synergy objectives, we laid out and we are beginning to leverage our larger footprint to improve the earnings performance.
Of the combined business.
Revenue was up slightly in the first quarter compared to the fourth quarter, which is a nice outcome as the first quarter is typically the softest quarter in the year due to weather in the North Sea.
Revenue was just over $105 million for the quarter up about 1% from the fourth quarter.
Gross margin also improved during the quarter up three percentage points to 35% vessel level cash margin expanded nearly five percentage points to 34% nicely in excess of the 30% target we've talked about in recent quarters.
Geographically there are supply and demand dynamics in two of our regions that I would like to cover in a bit more detail. Although the trend is positive everywhere.
The West Africa region was the region most impacted by the Covid pandemic, but it continues to rebound quickly <unk>.
Revenue grew at a sizable pace up nearly 14% sequentially with vessel margins up to 41% from 32% in the prior quarter revenue in the West Africa is up 69% year over year.
Margin in West Africa in the first quarter of 2021 was 12%. So vessel margin is up 29 percentage points year over year. This market is recovering nicely active vessels increased to 42 from <unk> 39 in the prior quarter were adding approximately 25 vessels to this region through the acquisition of the Swire fleet essentially.
<unk>, our fleet count in the region.
The addition of these vessels gives us the opportunity to leverage the momentum of this rapidly improving market with a considerably larger fleet.
Utilization in the Americas dropped from 80% in the fourth quarter to 76% as a result of a dry docks and vessels down for repair in Mexico and Brazil.
Utilization dropped revenue still increased about 2% sequentially as day rates improved by about $900 per day.
The Americas, and especially the Caribbean is one of the strongest markets. We see today our day rates in this part of the Americas was up over $1700 per day during the quarter.
We believe the continued success in offshore development in the Trinidad Suriname, Guyana region will continue to drive vessel demand in the region and given the tightness in vessel supply will continue to drive up day rates.
Peterson and his team have been doing a great job moving rates up in some anecdotal day rate movements in that geography that will help illustrate that market's tightness.
During the first quarter in the North sea weather inhibits some offshore activities. The north sea is comprised of four discrete sectors and we're active in the two larger sectors the Norwegian sector in the UK sector.
Although utilization was down for the entire region utilization was up in the UK sector. During the first quarter. This counter seasonal movement speaks to the strength in demand. We are seeing in this region day rates increased nearly 2% across the region. It's worth noting the continued growth in the Egypt sub sector as well during the quarter, where revenue was up.
About 45% during the quarter.
Along with a day rate increase of about $740 per day.
We believe the Europe and Mediterranean region will continue to exhibit meaningful growth as we go through the remainder of 2022.
Our G&A costs during the first quarter included $2 2 million in professional fees and integration costs related to this wire acquisition. Excluding these costs G&A came in right at $16 million for the quarter Sam will cover this in more detail, but with the addition of this wire fleet, we do anticipate G&A expense, increasing for a couple of quarters until the synergies.
Begin to take hold after everything settles, we anticipate about $2 5 million of additional quarterly G&A due to the additional personnel and various other G&A costs that come along with 50 additional vessels and a new regional office in Singapore.
Free cash flow for the quarter was negative $10 4 million as we mentioned on the last call. We anticipated free cash flow in the first half of 2020 to be weighed down by a significant drydock expense and vessel reactivation during the quarter of which we spent $13 6 million during the first quarter. We also had a working capital.
Bill during the first quarter Sam will also cover this in more detail as well, but the growth in DSO should normalize by the end of the third quarter.
We remain confident that market conditions will result in our entire fleet working by the end of 2022, a combination of reactivation and disposing of non core vessels. We made additional progress during the first quarter in disposing vessels available for sale selling five vessels for total proceeds of $4 6 million we ended the quarter.
With only 12 vessels remaining in the held for sale category.
Vessels in lay up cost of $1 4 million in the first quarter down 23% quarter over quarter and down 75% year over year.
Costs associated with COVID-19, also continued to fall down 21% quarter over quarter and down 44% year over year.
As a reminder, we announced an at the money stock issuance plan back in the fall ATM plan.
No shares have been issued under that plan since it was put in place are intending to use for the plan is simply to the repurchase of Jones Act warrants which requires.
Well, we're includes legacy warrants as well as the $8 1 million warrants, we issued just wire.
Iteration for the acquisition.
Our intention with the ATM plans to create a market for those warrants by issuing new equity shares under the ATM plan in exchange for those warrants no new net shares are intended to be issued.
Before I turn the call over to Pierce I'd like to briefly touch on the progression of the market during the first quarter and what that implies for the remainder of 2022 and short the market is tight we've reached near equilibrium in supply and demand balance for the larger <unk>. There still remains some slack in the smaller PSV market, but that sector of the market is also tightening.
During the first quarter, we fixed charges for 16 vessels commencing work beginning after the first quarter. These 16 vessels are of various sizes and the charter terms where for various durations, but the average day rate improvements for these 16 vessels as compared to their prior contracts is just over 20% with our largest PSV use.
Even in average day rate improvement of nearly 30% we remain confident that the second half of 2022 will represent a meaningful uplift in vessel demand was 2023, representing yet another leg up.
Consistent with price level increases throughout the economy, we are experiencing cost inflation and we will continue to keep this in mind as we said day rates around the world.
With that let me turn it over to Pierce for an overview of the markets and the company's performance with it.
Thank you Quintin and good.
Good morning, everyone.
Before I talk about the market and put some acquaintance comments about our improving regional performance into a wider global context I wanted to mention that we will be releasing our second sustainability report later this month and reiterate that our core ESG is something that has always been and always will be an extremely important part of tidewater.
This DNA.
And it's great with our second sustainability report, we have an opportunity to continue to showcase to our stakeholders, our historical as well as our future commitment to ESG. Please look at the report when it is released later this month.
On previous calls during 2021, we've been very vocal about certain key tenants for the business as we saw the market slowly rebalancing.
Two of those tenants revolved around discipline on how and what we did for <unk> and the flight to quality.
Thank you now view when a slowly seeing the benefits of remaining focused on these two themes during 2021 and into 2022.
With the acquisition of Swan over 63% of our OSV fleet and now <unk>.
With 17, 9% of those in the largest 700 square meter plus was 7500 square foot plus deck size to put that into a global context. This is a class of vessel, where we believe the supply demand balance is almost in parity with the current active fleet of circa 770 vessels and with only an additional one.
108 vessels still stacked of which 68% have already been sanctioned over five years and all are over 20 years old and in our view will find it difficult if not impossible to come back into the market.
Especially as we are seeing limited dry docking space globally, and significant long lead times of major equipment items, which we believe will further exacerbate the already tight supply demand balance in this class of vessel.
As we saw this early and this allowed us to be disciplined in how we reactivated our vessels and how we chose to bid and build optionality to allow us to lead the market in driving rates up in 2022 and.
Already this year, we've had some success in the spot market at rates in excess of $40000 per day and similarly in the high 30, thousands can telework and this larger class of PSC.
Similarly on the large Acs size, where we now had a significant foothold in the global market with a fleet of 11 large Acs is over 180 tonnes volatile. We also see the global fleet for this class investments close to parity with only 8% of the fleet still in lab that we feel possibly could.
Still be reactivated based on the same matrices as mentioned earlier.
However, the large HTS sector is a more lumpy market as contracts tend to be shorter. So we still need to see a little more demand pick up in drilling activity before we really start seeing the rate increases we have been able to push through on our larger PSV.
Conversely, we've seen that in the smaller PSC and HTS segments, where we only have about 36% of the OSV fleet operating we're still leading the pushing day rates and recent 8% to 18% day rate increases in regions like Mexico, and the middle East the both sides of the vessels.
But we're also still competing in a much more fragmented owners market.
And with the added sword of Damocles concern that there is still potential significant supply overhang that could still be reactivated back into the market.
That's the sort of devotees references a missile dramatic but there are still over 20% of the smaller fleet in lay up today of which 13% are under 20 years old.
<unk> have been laid up for less than three years now.
Now as I mentioned earlier, I think supply will take longer to come back into the market and then previous areas key to dry dock and equipment lead time constraints and competitive cash flow constraints, but it is still a potential headwind we need to be aware of along with the fact that we're starting to see some of our customers changing their stance around vessel age limit requirements.
And moving the goalposts from 15 years old and 20 years old as they are starting to worry about the potential upcoming supply squeeze.
So as we said had all store for the remainder of the year and into 2023, we feel confident and optimistic that our focus over the past few years of being commercially disciplined and committing to a flight to quality philosophy for the fleet is really starting to bear fruit.
Lastly, before I hand over to Simon to talk in more detail on the numbers.
I wanted to just leave you with a couple of final positive thoughts regarding OSV supply.
We don't see or expect to see any new building orders happening now or anytime soon.
And according to Clarksons research the total OSV fleet has actually shrunk by 4% compared to the high watermark set in 2017.
Marginal numbers, maybe but still positive to see is demand creeps up with.
With that I'll hand, it over to Sam Thank you.
Thank you Paris, and good morning, everyone I would like to take you through our financial results and discuss some key points that make up. These results my discussion will focus primarily on quarter to quarter results of the first quarter of 2022 compared to the fourth quarter of 2021.
As noted on our press release filed yesterday, we reported a net loss of $12 2 million or 29 per share from an operational perspective, we showed modest revenue improvement quarter over quarter.
Our revenue for the first quarter of 2022 was $105 7 million versus 554000 or approximately 1% increase from the fourth quarter of 2021.
Utilization and day rates were up slightly in the first quarter with active utilization of 82, 5% compared to 82, 4% in the previous quarter.
We also saw average day rates increased about 1% to 10687 per day in the first quarter from $10 $5 83 per day in the fourth quarter.
Overall gross margin for Q1 increased nicely to 35% up from 32% in Q4.
Vessel operating cost for the quarter was $68 5 million a decrease of $2 7 million from Q4.
The decline in operating cost consistent reduction in Covid related costs down about 400000 stacking costs down about 400000, and backfill vessel reactivation expenses down about 300000.
The remaining reduction was primarily the result of lower repair and maintenance spend.
We sold five vessels during the first quarter for net proceeds of $4 6 million and recorded a net gain of 300000 on the sale of these vessels.
Our operating loss was $7 3 million for the quarter decreased by $19 7 million from Q4 due to the absence of the $13 5 million asset impairment and $1 4 million affiliate credit loss incurred in the fourth quarter.
Along with modestly higher revenue and lower vessel operating expenses.
We did not record any credit losses during the first quarter. However, we did book a 500000 impairment credit as we returned one vessel one of our vessels held for sale back to the active fleet.
G&A costs for the quarter was $18 2 million up about 600000 from Q4.
G&A for the first quarter included $2 2 million of transaction expenses associated with <unk> acquisition.
Our legacy Tidewater projections for G&A costs, excluding transaction and synergy type costs was previously $68 million per year, and we feel that number is still a good number.
Over what the addition of wire that number will increase initially by $2 8 million per month, but decrease in synergies begin to.
Can materialize.
Next I would like to provide a brief update as it relates to <unk> combination and what expectations are now that we have closed the transaction.
If you recall, we previously announced we expect to achieve $20 million in G&A synergies related to the transaction.
We have already commenced efforts to integrate the <unk> business into the broader Tidewater platform.
We anticipate having the G&A functions principally integrated by the end of 2022 and begin to realize the full run rate of these synergies in early 2023.
We also note it to expect to achieve $25 million of Opex related synergies as previously discussed we anticipate this effort will take a bit longer to realize the synergies probably closer to 18 months.
We expect to spend another five or $6 million. This year in professional fees related to the completion of the acquisition and $14 million and cost to achieve the noted synergies which.
Which includes items such as severance costs lease termination costs stay bonuses integration performing bonuses and it costs.
In the quarter, we incurred $12 6 million of deferred drydock costs compared to $9 9 million in Q4 as expected Q1 was a heavy drydock quarter with a combination of write offs that crossed over from Q4 and previously scheduled drydocks for the first quarter.
In the quarter. It would write offs were in process and we incurred 547 dry dock days, which negatively impacted our overall utilization by five percentage points.
We expect the second quarter to be another heavy drydock quarter with spend of around $21 million, including about $2 million of dive outs associated with the recently acquired while our vessels.
We anticipate full year 2020 to drive our cost to be approximately $54 million up modestly from our prior estimate of 51 million principally related to the addition of the <unk> vessels.
In the quarter, we also incurred about $1 2 million and capital expenditures, we expect capex for 2022 to be about $9 million, including $2 million on Florida vessels.
Free cash flow was negative $10 4 million this quarter due primarily to the heavy drydock spend and they build in working capital.
<unk> will be another challenging quarter as write offs will be substantial and we'll continue to build.
Due to the increase in revenue.
However, as Drydocks Covid and stacking costs decrease in working capital timing begins to improve we do see significant improvement to free cash flow occurring in the second half of the year.
On previous calls we've talked about collections challenges related to Pemex, while outstanding AAR with Pemex dropped nicely in the fourth quarter, we have seen that balanced buildup approximately $5 million from Q4.
We continue to engage with Pemex to keep their DSO within a reasonable range. We also had some buildup in other locations due to customers failing falling behind on their payables of approximately $6 million.
Along with the natural build in AR due to meaningful revenue increases in Trinidad Egypt in West Africa to an extent.
We fully expect DSO to get back to the normal range, but I do want to remind everyone. We would expect to naturally increase over the coming quarters as revenue increases, but will similarly works to keep DSO in a reasonable range.
In Q4 of 2019, we began reclassifying vessels on our balance sheet from property and equipment to assets held for sale and at the end of 2021, we had 18 vessels held for sale at a value of $14 4 million.
During the first quarter, we sold five vessels for proceeds of $4 6 million and transferred one vessel back to the active fleet, leaving our vessels held for sale at 12 with a value of $8 6 million.
During the quarter, we entered into an at the market sales agreement pursuant to which we may offer and sell shares from time to time of our common stock, having an aggregate offering price of up to $30 million.
We did not issue any shares under the ATM program. During the first quarter of 2022, we intend to utilize the ATM program.
Create a market for outstanding Jones Act warrants, including the $8 1 million Jones Act warrants issued to acquire on closing the transaction.
I would now like to focus on our performance of the regions.
Our Americas region reported a small operating loss of 82000 for the quarter compared to an operating loss of $2 9 million in Q4 'twenty one.
The region reported revenue of $28 4 million in Q1 compared to $27 9 million in Q4 the region operating.
Vessels in the quarter, which was an increase of one from Q4.
Active utilization for the quarter was 76%, which was down from 80% in the prior quarter due in part to 56 more drydock days in the quarter.
However day rates did increase to 15501 from 14603 per day in Q4.
The decrease in operating income was due primarily to an increase in revenue. In addition in Q4, we accrued for legal court claim in Brazil did not occur in Q1, which reduced operating cost for the quarter as well.
Our Middle East Asia Pacific Region reported operating income of 290000 compared to operating income of $1 1 million in Q4.
The radio reported revenue of $25 1 million in the first quarter as compared to $26 $9 million in prior quarter.
The region operate at 38 vessels, which was up one vessel compared to Q4 active utilization decreased by approximately six percentage points to 86% in the quarter compared to 92% in Q4 as a region incurred 230 Drydock days.
However, a day rates remain constant at 8589 per day in Q1 compared to $8 $5 80 per day in Q4.
The decrease in operating income was due primarily to the decrease in revenue caused by the lower utilization.
Our Europe and Mediterranean region reported an operating loss of $2 4 million in Q1 compared to an operating loss of $4 million in Q4.
We saw revenue increase by 6% to $23 9 million compared to $22 5 million in Q4.
The region operate at 24 vessels in the quarter, which was an increase of one vessel from Q4 in active utilization increased to 91, 3% compared to 88, 5% in Q4.
We did see a slight uptick in dayrates to 12001 four per day compared to 11917 per day in Q4.
Improvement in operating income for the quarter was mainly driven by the increase in revenue and decrease in operating costs due mainly to lower reactivation costs.
Our West Africa region reported operating income of $3 2 million in Q1 compared to an operating loss of $1 1 million in Q4.
The market in this area has continued to improve as we have seen revenue increases steadily for five straight quarters and was the region with the highest.
The increase in revenue for the quarter were 14% from Q4. In addition revenue also increased 69% from Q1 2021.
Revenue for Q1 was $26 4 million compared to $23 2 million in Q4.
The region operated three more vessels in Q1 and active utilization increased meaningfully to 79, 1% in Q1 compared to 71, 4% in Q4.
Day rates did drop modestly to 8834 per day in Q1 from 9052 per day in Q4.
The increase in operating income.
From Q4 resulted mainly from an increase in revenue on essentially flat operating expenses.
In January we acquired 51% of the <unk> joint venture, which included two vessels those vessels contributed approximately $1 million to the increase in revenue.
In summary, we are encouraged to see the increase in revenue day rates and utilization and we are encouraged to see the continued positive signs in market activity.
We reactivated 20 vessels in 2021 and five in the current quarter with a few remaining to be reactivated later this year.
The original 20 vessels have begun to contribute nicely to the operating results revenues have increased operating cost is beginning to stabilize.
As noted we still have if you remaining reactivation so operating costs will still be a little bumpy, but we are starting to see a significant increase in COVID-19 and stacking costs, which will also have a positive impact in our results.
We completed the <unk> acquisition in late April and very excited to begin integrating both the employees and the vessels into Tidewater operations.
As I mentioned last quarter, they have a great team of people high quality fleet with strong commercial positions. This made them successful and will be essential to tidewater as continuous success in creating a world leading OSV company.
We remain very encouraged valda positive signs and look forward for this to continue in 2022 and beyond.
With that I will now turn the call over back over to Quentin.
Thanks, Sam in closing allow me to highlight a few things first while the first half of this year will be a net investment of cash our free cash flow will improve substantially in the second half of 'twenty, two and the year 2022 will be a marked improvement over 2021.
This will be driven by a variety of factors, especially as drydock and reactivation expense dropped considerably in the second half of 2022 is working capital timing is worked through and as the impact of increasing utilization and day rates begin to materialize and worked through to the cash flow statement.
Second we will be diligently working to realize the synergies associated with the <unk> acquisition that we laid out and third leveraging our fleet in such a way as to drive day rates for the combined fleet as the market continues to tighten and we have substantial operating leverage in a rising environment and we will harness this to the benefit of our shareholders.
And with that Ultra we will open it up for questions.
Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Yeah.
And again that is star one for questions.
Yeah.
And we do have a question from Patrick Fitzgerald at Baird.
Yes, hi, thanks for taking the questions.
Sorry, if I missed this did you give a number you gave updated drydocking.
Capex, what would you expect full year for proceeds from asset sales.
And then on working capital you said it would be a use as revenue increases.
Any sense of how big of a use that will be.
Okay.
So the proceeds from vessel sales will be about 13 million.
As far as the.
Okay.
Yes, so the DSO.
Right now is at 83 days. So we normally typically we see the DSO at about 75 days.
Okay.
Okay.
Okay.
So.
You guys are.
Seeing a lot of seeing a lot of improvement.
And the market.
<unk>.
Could you could.
Could you just kind of give us an update because in the past you said that production represented.
Production support represented like over half of your revenue and then you know drilling support represented over half of your army.
The other half.
Obviously, we're seeing a.
Now.
Some uptick in drilling activity.
Now going to be next quarter going to be next.
Quarter.
Seems like to me, but.
Certainly more constructive than it has been in the past.
Could you just kind of update us on on.
Now how you see this.
Impacting your your utilization.
Because I wouldn't expect.
From a production standpoint that.
Any more vessels are needed, but the market kind of tightened on the on the drilling side. So if you could talk about that that would be helpful.
Sure Hey, Patrick its quantum.
So.
Let me illustrate a couple of things that are happening out there certainly what youre seeing in the drilling market, we are seeing as well and with the Swire acquisition in there.
There are more weighted towards anchor handlers, I anticipate that youre going to see us more leverage to drilling activity as we go through 'twenty three.
Into 2004, so so so before I think we've said something like 60, 40, I could see that moving up to 70%.
There's a class of the anchor handlers that we're getting and swire that do that are dual use.
We'll work as anchor handlers, but also supply vessels in those regions versus just not economical to have two types of vessels.
Hard to know exactly how that's going to shake out, but it's definitely leaning more towards drilling is the drilling market improves and as we've acquired the anchor handlers from from supplier.
But on the PSV, let me explain to you another phenomenon, that's going on which is around the world today is especially outside of the Soviet Union, everyone is trying to figure out how to pump more from existing production and that means more vessels, because theres going to be well stimulation activity theres going to be other enhancements to <unk>.
<unk> offshore production platforms and things like that and that is all vessel intensive and so what we're seeing right now in the bidding stage is certainly one.
On the drilling side, we're definitely seeing that we're participating in that but we're seeing a lot more infill development.
And I expect that to go on throughout two.
<unk> and into <unk>.
Early 'twenty three 'twenty four that timeframe and then a layer on top of the one thing that.
We should keep in mind is that the <unk>.
World is getting that much more oriented towards offshore wind and so those take a combination of vessels. Both PSV use an anchor handlers and we're starting to see that level of activity increase it's relatively small today, but I think we anticipate its going be increasing nicely.
Early in the U S.
Our market over the next couple of years.
In the past there was.
Each floater needed.
It was like.
The boom years like five Osp's I believe depends.
Depending where they were and then that kind of tightened down.
As people are trying to cut costs.
Two or three I believe could you talk about kind of the sentiment out there and in that regard.
Yes, so so.
You think about the demand equation for companies like print Tidewater, obviously, there is the production piece, which not drilling related not really count related.
On the drilling side. It has a lot to do with where the drilling occurs right. So to the extent of the North Sea gets real activity in starts.
Gene westward and its drilling activities, North and West then youre definitely going to see the rig count per I'm, sorry, the vessel count per rig increase okay. So the farther they are offshore the more remote locations or are in the world. The higher the rig count is going to be.
So as you see developments continue in Senegal, as you see things develop and.
Mozambique, those are going to be a lot more vessel per rig intensive because there's not an existing infrastructure there.
The other phenomenon that occurs and we saw those reverse in 2015 and 16, I don't think youre going to and we're already starting to see signs of it pick up as we as we go through the remainder of 'twenty, two and I think in through 'twenty. Five is that people will start to get worried about not having the vessels so vessels scarcity kicks in and so instead.
Releasing a vessel because well there's three of the Doc and you can pick one up any day you wanted people will start holding onto boats and in that process. The boat count just naturally in place a little bit so the option value of holding onto a boat as is so low relative to the spread of an offshore field that people will.
We'll begin to do that we're already starting to see indications of that in West Africa.
Okay.
Great Alright, Thanks, and then I just wanted to.
Kind of an update on obviously you are going to integrate this transaction, which as you know.
Would you have done a great job in your password.
Acquisitions in.
Getting a lot of cost out of.
The entity.
But.
Looking across the space, you're still kind of the most.
Capable of doing M&A so.
How do you see that process unfolding.
Well certainly the integration effort.
With wire is going to take some time, but that's not slowing us down from anything that we would do strategically.
Confident by.
Beginning in the fourth quarter that that will all be well in hand.
Uh huh.
It will play out as Sam indicated over 18 months, just because that's how long it takes us to rollout.
But nothing is going to stop us from further consolidation.
For the opportunities presenting themselves in versa.
The appropriate valuation.
Okay.
Alright, Thanks, a lot.
Thank you.
And that does conclude the question and answer session I will turn the conference back over to management for any closing remarks.
Thank you everyone and we look forward to updating you again in August Goodbye.
That does conclude today's conference. Thank you for your participation you may now disconnect.
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