Q2 2022 Independence Contract Drilling Inc Earnings Call
It gets to our improving financial performance and overall market positioning.
As we sit here today, we have 18 rigs operating.
700, working in the Haynesville 10 are working in the Permian and one is working on the Gulf Coast on a carbon capture project for a super major E&P.
Over the past quarter. So we've added several key large independent public clients to our customer base, who we believe are ideal candidates for additional rig adds as we entered the 2023 budgeting cycle.
Today seven of our rigs are working for public E&P operators and seven of our rigs are operating for the two largest private operators in the Permian and the Haynesville overall, that's almost 80% of our operating fleet. I think this is an underappreciated fact regarding ICD, one I would stack up against any of our competitors, which is being.
Driven not only by our superior rig fleet led by the ICD team's reputation for service and professionalism in our target markets. When I look forward I believe we are still in the early innings of the most constructive market for pad optimal super spec rigs we've ever seen at this point I feel it's safe to say that for the most part the COVID-19 hangover for ICD is over.
And what we're seeing now in Icd's, improving margins and enhanced customer base and rig utilization is early manifestation of the benefits from strategic decisions. We made as far back as late 2018, when we consummated the merger with Sidewinder and began the integration of the two rig fleets and leveraging the merged customer base.
<unk> spoken about this before but I think it's a good time to revisit the question what is different about ICD now compared to when we entered the pandemic.
Why is icd's utilization day rate and margin progression outpacing our logic larger public company competitors.
As we've highlighted on past conference calls, we've been focusing more on shorter term contracts and what we believe are the early stages of this up cycle backlog is important and as I've mentioned, we are looking to increase that as we move into the 2023 budgeting season and rigs such as our 300 series rigs earned $15000 per day.
Margins are higher.
Where there are opportunities for term contracts and building, our backlog, especially with target customers at appropriate rates and margins, we will look to execute upon those.
I'm not signaling that we wished to term up everything just that we want to take a balanced portfolio approach and our contracting strategy as we continue to expand Icd's operating rig fleet and earnings capability.
Most importantly, icd's operating fleet mix is different and how we are marketing our fleet to maximize margins and returns is different we believe our 300 series rigs are an underappreciated value proposition embedded in Icd's fleet. We acquired all 14 of our current 300 series rigs in our merger with Sidewinder in late 2018.
And this current up cycle is the first time, we've been able to market. These rigs across icd's expanded customer base and consolidated target markets and an improving market.
For reference we had an average of three 300 series rigs operating in March 2020, pre pandemic today, we have eight operating and we will have 10 running by the end of 2022 with additional 300 series rigs available for reactivation in 2023, So we have fundamentally changed our fleet operating mix.
Rigs meeting 300 series specifications are in shorter supply and they command premium day rates in fact, today's spot market day rates for this class of brake start with a three and with adders can easily reach the mid thirties.
Our higher.
Not every operator requires rigs with 300 series specifications, but as acreage positions become more contiguous pads get larger laterals get longer and wells get deeper and more complex demand for rigs with these 300 series specifications continues to grow.
And as we've been intentionally patient about how we market and reactivate these rigs I'll just reactivating them for the sake of reactivating.
But making sure we don't outrun our organization's capability, while placing these rigs with customers who need their performance characteristics in order to secure these higher margin generating opportunities.
And what is abundantly clear over the past 12 months as this as these rigs in our operating fleet our margin progression accelerates and they are a significant reason why our overall fleet margins today are largely on par with our larger public company peers and rapidly improving something we could not say pre pandemic or even pre merger 'twenty.
18, I also believe these rigs enhance our competitiveness in the Haynesville and Delaware basins, which has been an important driver for our evolving geographic mix and improvements in our customer base with respect to larger operators in these plays.
All this leads me to why I'm. So excited about our announcement today regarding our 200 to 300 series rig conversions. This is something we've been working on since prior to the pandemic, making sure. The Engineering's right capital costs are identified so that this opportunity makes strategic operational and financial sense and I couldnt be more excited about what has been occur.
<unk> in this regard.
So what does all this mean for Icd's fleet capabilities.
Simply it means almost all of our marketed fleet can now be marketed with 300 series specifications again rigs with these specifications are in the highest day rates and highest margins and are in the shortage of supply.
Prior to this announcement, we had 32 total rigs of which 24 were included in our marketed fleet.
Of these 24 marketed rigs 14 method 300 series specification, that's approximately 60% of our marketed fleet.
With all of the engineering and operational plans in place for these 200 to 300 series conversions.
We've now increased our marketed fleet to 26 rigs of which 25 can now be marketed with 300 series specifications. In other words, we've increased the 300 series component of our marketed fleet to 96% up from 60%.
And when you consider what we've been able to accomplish so far with margin progression the ability to convert 200 series rigs and our operating fleet to 300 series specifications will only accelerate margin expansion and our comparative competitive posture with respect to our larger public company peers. In addition to our 18 operating rigs.
Now have eight additional rigs all 300 series rigs that can be reactivated as market conditions warrant based upon current rates and estimated reactivation costs, we expect to earn one year or better payback on these reactivation investments.
Regarding the 200 to 300 series conversion opportunities. It is important to note. We currently have contracts to signed to convert two of our operating 200 series rigs to 300 series specifications. These conversions will occur in late Q3, and early Q4, and we are negotiating a third conversion commitment.
That would occur here during 2022.
Capex cost to effect. These conversions is minimal, especially compared to the significant strategic consequences of these actions, we expect each conversion to cost approximately $650000.
In addition, we can execute the conversions on our long rig move only a handful of days. So there is minimal operational downtime and based upon current day rate differentials between 203 hundred series spot market rates. We expect these conversion investments to pay back in less than a year.
However, similar to how we've been careful in marketing our 300 series rigs to customers, who are value and pay for these rigs additional capabilities. We will do the same when considering additional conversions of existing 200 series rigs to 300 series specifications.
When customer customers were quiet and are willing to compensate us for the capital investments and added performance characteristics, we will make the conversions in the meantime, our 200 series Super spec rigs remain in very high demand and they are also earning substantial margins that continued to increase so we're in a very enviable position with a very.
<unk> rig fleet capable of satisfying all of our customers drilling requirements whatever their rig needs may be.
Spoken about the tightness in the Super spec market in the past and that tightness continues and this is particularly exciting for ICD. When you consider not only our current 18 rig operating fleet, but the additional eight rigs we have available for reactivation again, all 300 series rigs the.
The market for pad optimal super spec rigs such as our shell Driller fleet is as tight as I've ever seen and in particular for our 300 series rigs for.
For the most part they are no hot Super spec pad optimal rigs available today, if an E&P operator wants an incremental super spec rig it will likely have to come out of stack and reactivation costs for all drilling contractors today, a very significant and another thing I believe may be underappreciated not only is there a very very limited supply of <unk>.
Mental pad optimal rigs that must come out of stack, but because most contractors are sold out there is only a small number of contract drillers and operator could go to if they want an incremental super spec rig ICD is fortunate to be one of them.
This is the market dynamic, which we are marketing our eight incremental 300 series rigs into and why we are so excited about these opportunities and what they mean for our company our customers and our stockholders the market needs more pad optimal super spec rigs in particular rigs meeting 300 series specifications and we expect the U S law.
Rig count in particular in our target basis, we will continue to increase this demand coupled by industry capital discipline is driving day rates and margins higher at a pace not seen before.
Today's spot market day rates for 300 series rigs are about $30000 and with adders approach mid 30, thousands or even higher.
<unk> meeting 200 series specifications arent far behind.
So as I close out this portion of my prepared remarks, I want to reiterate that it's not just our day rate margins that are improving performance of our rigs remains strong whether the metric is safety downtime rig move times, our days to depth and that is reflected in our evolving customer mix I want to thank our sales and marketing team for their hard work in making sure that.
We have very attractive contracting opportunities.
I also could not be prouder of how our operational teams and field and support personnel have responded to the challenges before them.
Whether it's the unprecedented tight labor market.
<unk> chain challenges and disruptions that persist or all that they do to safely and effectively reactivate rigs and manage and exceed our customers' increasing and evolving performance expectations.
I think we sometimes get distracted talking so much about our equipment performance that we don't highlight icd's focus on our people and culture in reality. It is the ICD people and our culture that make the difference. It is our dedicated employees, who get the rigs out safely on time on budget and with minimal downtime and operational disruption they earn the accolade.
Our company has received for industry, leading service and professionalism and why our premier customer list and margins continued to expand.
I'll make some additional concluding remarks right now want to turn the call over to Philip to discuss financial results and outlook in a little more detail.
Thanks Anthony.
During the quarter, we reported an adjusted net loss of $9 8 million or <unk> 72 per share and adjusted EBITDA of $9 2 million.
We operated 16 nine average rigs during the quarter.
We expect to operate approximately $17 five average rigs during the third quarter based upon our 18th rig commencing operations around August one.
The 19th and 20th rigs are not scheduled in our operating fleet until the fourth quarter.
Revenue per day came in at $24875, representing a 14 sequential increase over the first quarter.
Cost per day of $15929 were favorable compared to prior quarter guidance.
Cost per day does reflect upward field pay adjustments, we implemented June one this year, which will be fully reflected in the third quarter and onward, that's about $550 per day.
So overall margins came in at $8946, representing 56% sequential increase and ahead of guidance prior provided on our prior conference call.
SG&A costs were $4 9 million, which included approximately $670000 of stock based and deferred compensation expense.
Cash SG&A was relatively flat compared to the first quarter stock based compensation was favorable based upon variable accounting of stock price declines quarter on quarter.
Interest expense during the quarter aggregated $8 $2 million.
This included $2 million associated with noncash amortization of deferred issuance cost of debt discount and we excluded that when presenting our adjusted net income.
The pic interest rate used during the quarter was sofa plus 14% the new rate of sofa, plus nine 5% on our convertible notes becomes effective at the end of the third quarter of this year.
As mentioned on our prior calls we do expect to pick interest, while we continue to reactivate rigs, which we would expect to continue at least through next year, assuming market conditions remain strong.
We did recognize a sizable tax expense during the quarter of approximately <unk> 16 per share.
We are now forecasting book income for the year after adding back permanent differences, which largely relate to interest expense and noncash charges.
This change generated the largest expense.
<unk> expense during the quarter and I do want to point out that only $300000 of this record expense relates to cash taxes for state and local matters for federal income tax purposes, we maintain substantial future depreciable assets as well as our sizable net operating loss position.
During the quarter cash payments for capital expenditures net of disposals were approximately.
$4 5 million breaking this capex out approximately 37% related to rig reactivation, 47% related to maintenance capex and 16% related to investments in capital inventory spares.
It was approximately $5 6 million of Capex accrued at quarter end, which we expect will flow through during the third quarter of 2022.
Reactivation plans for our 19th and 20 rigs remain on schedule and we have begun ordering long lead time items relating to our 21st rig which is planned for January 2023, and as Anthony mentioned, we plan to complete three 200 to 300 curious conversions during the second half of this year at an aggregate cost of approximately $2 million.
With these with these changes we have increased our capex budget for the year by $4 5 million to $28 5 million.
Anthony mentioned, we have begun entertaining longer term contracts as a result, our backlog is beginning to increase however, most of our rigs are operating on short term contracts and will reprice one to two times during the remainder of the year.
Our backlog of term contracts with original terms of at least six months as of June 30 stood at $54 $3 million approximately 30% to 36% as backlog extends into 2023, and an average day rate of over $32000 per day.
Moving onto our balance sheet I want to point out that we've included in our press release, a new measurement adjusted net debt. This amount represents the face amount of our convertible notes and borrowings under our ABL less cash ignores impacts from debt discounts.
Financing costs and finance leases.
I also want to point out that the derivative liability reflected on our March 31 balance sheet was reclassified to additional paid in capital and gain on extinguishment of derivative. This quarter. This was triggered by the shareholder vote at our annual meeting in June which eliminated potential variability and the conversion price and pick interest rates under the convertible notes.
The note conversion price is now set at $4 51.
For sure and as already mentioned the Pik interest rate under our notes will drop the sofa plus nine 5% beginning September 30th.
Prior to that time to pick interest rate remained at so for plus 14%.
At quarter end, we reported adjusted net debt of $158 million. This adjusted debt was comprised of the convertible notes and $787 million $8 million drawn on our revolver and finance leases reflected on our balance sheet at quarter end were approximately $4 8 million.
We did not issue any shares under our ATM program during the quarter.
At quarter end, our financial liquidity was $21 $3 million comprised of $7 3 million cash on hand, and $14 million available under our revolving.
The credit facility.
Now moving on to the third quarter guidance.
We expect operating days to approximate 1610 days, representing 17, five average rigs working during the quarter.
We expect margin per day to come in between 10 and $110400 per day, representing an approximate 14% sequential increase at the midpoint of this range.
We expect revenue per day to come in between 27350 and $27550 per day with many of the day rate increases on contract roles only partially benefiting the third quarter.
Cost per day is expected to range between 16800 $17200 per day sequentially higher as pay adjustments implemented in June fully impact the third quarter, and we incur operating costs associated with reactivating, our 18th and 19th rigs.
Based on contracts.
In hand, and assuming spot market pricing and operating costs remained stable right now we would expect fourth quarter margins to come in between 11000 $512000 per day.
Okay.
Unabsorbed overhead costs will be about $600000. In there also are concluded and are not included in our cost per day guidance.
We expect third quarter cash SG&A expense to be approximately $4 $6 million with.
<unk> increase was tied to higher incentive compensation accruals.
Stock based compensation expense is expected to be approximately $900000 with a sequential increase being driven by annual awards that became effective following our annual meeting in June of this year.
Interest expense to be approximately $8 $6 million of this amount approximately $2 2 million or relate to noncash amortization of deferred financing costs and debt discounts.
Depreciation expense for the third quarter is expected to be approximately $10 million.
We expect tax expense during the third quarter to be approximately $400000.
For capital expenditures, we expect approximately six $5 million net of dispositions to flow through our cash flow statement during the third quarter.
And with that I'll turn the call back over to Anthony.
Thanks, Phil before opening up the call for questions I want to make a couple of comments regarding ICD strategic positioning and what I think it means for all ICD stakeholders.
While we forecasted this evolution to in prior calls so much has changed for ICD over the last four or five months and I think it's important to focus on how much we have truly transformed our company and the opportunities for our investors and other stakeholders.
Our utilization and margin growth coming out of the pandemic is best in class our contracted rig count has increased by 500% compared to an increase in the U S land rig count of approximately 200% and over the last 12 months our margin per day has expanded 183% and as I've highlighted in my prepared remarks, there's more utilization and margin growth to come.
We have the youngest and we believe the best in class rig fleet with our announcement today that will allow us to market, 96% of our fleet with 300 series specifications. We firmly believe the capabilities of our fleet are best in class or.
Our customer list is expanding and evolving in meaningful ways and we are operating not only in the most important oil and gas plays in North America.
What we believe are the most important customers in these target markets, many with an eye toward expanding the rig count in the coming quarters.
We are marketing incremental 300 series rigs into one of the tightest rig markets, we've ever seen and ICD is one of only a few contractors with visible spare 300 series capacity that can be economically reactivate it.
Finally, we substantially improved our liquidity and balance sheet with the refinancing we announced earlier this year.
So summing it all up I think we are checking all the boxes, whether you are looking for best in class assets, leading margins leading customer base.
On the most important oil and gas plays financial or operational upside.
Our leading industry reputation ICD delivers on all of those metrics, but all of this in place our operations and financial performance as closing any gap between us and our larger public company peers and we believe all of these results will work toward closing the stock valuation gap between ICD and our peers as we continue to execute upon ICD strategic.
Initiatives.
So with that operator, let's go ahead and open up the line for questions.
We will now begin the question and answer session.
Good question.
Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset.
Keith.
Is it any color on your question Hudson It yet and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question today comes from Don Crist with.
Jonathan.
Please go ahead.
Good morning, Anthony and Filippo, we don't do that.
John Good morning.
Anthony I really applaud the.
Engineering and.
Somewhat ease in which you are.
You've outlined going from a series to the 200 to 300.
Rig in.
The speed in which you seem to be able to do it as well. So my question is when you are having conversations with the customers that have the 200 series rigs today.
Are they.
In the market for 300 series and they are only able to get a 200 series and.
Are they showing significant interest in going through that upgrade process on a long rig move and the second part to that question.
What is the day rate difference between.
Our series 200 metric charging today in a series 300.
Yes. Thank you. Thank you for the question.
As we as I noted in my comments, we actually have two of these signed up now and we're about to finalize a third contract, which will support the decision to move forward with that and the reason I point that out is.
I think in those two customers already.
See.
Drivers for the conversion in one case, it's a customer that the rig has been with now we're approaching a year.
And we've talked on earlier calls about how we as an industry as we move deeper into the resource play the unconventional resource play.
Especially.
Being driven by the <unk>.
And activity among our customers M&A things like that they have larger acres acreage positions that physicians are more contiguous. So this customer in particular is a great example of someone who.
No.
Very very happy obviously with the 200 series rig has done a fantastic job, but as they move deeper into their playbook.
The laterals need to get a little longer and there's always risk I think any customer would tell you when they change rigs change customers. So in that particular case, we were able to present here.
Him the best of all worlds this is.
Really great rig Thats done a fantastic job you know it knows you cruise your team everyone's work together, we know how how an ICD, we'd like to do things so for.
Some some increased day rate.
Justifies the investment, which we've made also compensates us for the the rigs enhanced capabilities. We can give you the best of all World. So that's an example, there of where it's just really the evolving need of the customer really proud that we were able to do that with them and other cases, certainly the 300 series.
<unk>.
Rig.
<unk> vacations its capabilities are where we are.
We're seeing increasing demand being driven by some of the same reasons.
In those cases, sometimes it's a customer that.
Sure.
<unk>.
Maybe there is a high grade opportunity.
They are not actually increasing the net number of rigs that are running but.
We may be able to take.
Another rigs position theyre not based on price, but one based on operational performance reputation and history and.
And second the rig specification so.
Look these are things that we don't have to do things.
Things that we.
We can offer our customers more options, if you will and it makes financial sense for us.
To your second question regarding the day rate differential again, it depends on where the customers' requirements are in that spectrum.
Some people out there for example that are drilling and want to drill laterals that are three miles and linked that's on the extreme edge.
There's others where it.
It's 15000 feet or less I should say so the day rate differential range is anywhere from one to 4000, a day is kind of where we see that.
That's what we're seeing in our own fleet and.
Where we would that's the range that we would put out there.
I appreciate all that color and it makes total sense to me.
My second question.
As day rates get to a point, where you're more apt to sign longer term contracts.
Can you talk about some of the mitigating efforts you're taking towards the cost side I E are you doing things on the labor side or other long term cost side that may mitigate increases in cost going forward as you tend to lock in.
Mid Thirty's say contracts going forward.
Absolutely so we would not sign a term contract.
Without escalation provisions in it not just for labor I mean, that's kind of where I mean, as you know thats, where most of our cost is at the operating level, but also.
For R&M rig suppliers things like that and we typically would use the oilfield and machinery index as a way to set a benchmark going into the into the contractual period, and then you'd have an ability to escalate sometimes your client will put some minimum threshold below which you can't.
But.
That increased cost to them, obviously, our preference would be no threshold just it is what it is but we at ICD, we rolled out rolled out three pay increases since November of last year. The last one went into effect June one.
And even in the contracts, where they werent term because obviously, we've just started signing term we've been very effective at.
Having most of the customers agree to to allow us to pass that on it's to their benefit as much as it is ours.
In terms of retention.
And everything else so yes.
We signed a term contract there would be escalation provisions and at others.
We just can't do that.
Have to tell you about the world that we live in today.
Exactly.
And one kind of macro question, if I could squeeze it in at the end.
In the past we have talked about.
Rumors in the industry that the majors and larger independents could add upwards of 50 rigs going into year end I think you are.
Peers are kind of confirming that as well but.
Since our past conversations has anything really changed there in conversations with your customers and do you think that 50 is still kind of a ballpark number that we could add going into call. It fourth quarter or early first quarter next year.
Yes, I think no nothing has changed if anything I think the outlook has only gotten better done in.
Look.
Our expectation would be that's the minimum that gets added over the next 12 months very bullish about where things are right. Now if you think about kind of how we got here.
There has been.
You kind of two tranches, so far of incremental demand in the first would be the coming off the pandemic bottom I think we would all agree for the most part that growth was driven primarily by the privates.
They picked up more than two thirds of incremental rigs coming off the pandemic and then we rolled into this year and it's the privates have continued to add but you've seen some of the larger.
Independents and some large independents begin to.
Pick up some rigs so I think there is another leg up in demand thats coming.
We will begin to see that as the 2023 capex programs.
Get announced and I think that's going to be driven by the large independents and even the supermajors.
Based on some of the conversations that we're having with people. So we're pretty comfortable with that range that you gave in terms of incremental demand for next year.
This cycle as you know it's played out so differently for for all of us, especially compared to prior cycles.
<unk> got the just the huge ramp up in demand, but on the supply side you look at what's happened there I mean.
Our customers' requirements of their contractors have increased in terms of having systems and processes there to underlie operational integrity.
Rig that they require for U S. Unconventional work has changed as well we've gone beyond just needing to be pad optimal needing to have the draw works off the ground.
Having systems and processes in place to underlie the operational integrity and then the thing that on the supply side, we're dealing with now as we reach deeper into the inventory of stack rigs. These rigs have been stacked for two years plus capex requirements are going up and just really glad and proud to see the.
Service side of the industry demonstrate the same types of <unk>.
Financial discipline that we've seen our customers display over the last couple of years and all of that.
Says that.
Demand is going to supply is going to be constrained.
Because of the reasons I just noted and.
The market is going to find equilibrium pricing and all of that tells me its higher than where it is right now so.
We're very excited about the next couple of years.
But especially about the next 12 months.
I appreciate all the color I'll turn it back and give somebody else James.
Okay. Thank you Sir.
The next question comes from Jeff Robertson with water Towers Research. Please go ahead.
Thank you good morning.
Anthony given you.
Given your optimism about the market over the next 18 months at least.
How should we think about.
The portfolio mix of your.
Contract structure between.
What you'd like to lock up longer term and what you'd like to keep that shorter term.
Yeah. So thank you for the question, Jeff as you probably know we've been intentionally short term and our posture.
Until really this summer.
And with where day rates have gone our ability to have some pretty good cost discipline margins now are.
Good as they've been in a long time so.
By agreeing to take on some term contracts here over the summer, we're definitely not making a call on peak pricing.
While margins have gone up as I, just mentioned a second ago, so as capex requirements as well.
No.
And not all of our customers necessarily want to go long on contracts. That's the other thing so where we are is especially where margins are today, we have the ability to put some term on the book to go ahead and lock in some margin, which will give us some cover.
And dry powder to continue to fleet expansion, which is underway.
What you said is right where we are is we're not going to go and lock up all of our rigs we want to take a balanced portfolio approach.
We think that makes sense for where we are we don't want to have everything rolling over in December of 2023. For example, we want to stagger the expiration of our contracts.
<unk>.
We're going to look at it as a portfolio, but certainly I would expect as we round out this year as we begin to have serious conversations with customers around their needs next year.
Probably going to be a few more opportunities for us to continue to take some term, especially around these incremental rigs that were looking to bring out over the next 12 to 15 months.
Does the tightness in the market and with.
For the 300 series type of inter spec rigs.
Does that allow you to push back against somebody who would say okay.
Longer term contracts when you say look if you don't take it there's plenty of people who want these rigs you've got more leverage I guess in this discussion is that okay.
Yes, certainly the relationship today and the dynamics is different than it's been for six or eight years and.
The increasing and evolving need of our customers, both current and perspective and the very limited supply of that class of rig.
Not only are we able to receive or secure better day rates, but better contract provisions. There's a lot of things that get buried in contracts reimbursable costs things like that that we don't necessarily talk about on these calls, but it's also one of the contributors to the better margin per day that are.
Sales and others are able to report.
You want to add anything I think.
Our willingness to sign a longer term contract. If you look at our backlog today that goes into next year.
Just a couple of rigs really.
Three rigs that actually have backlogs dig into next year to LMR 300 series rigs, 1% to 200 series rig and if you just look at the margin and those rigs on the high end on the 300, those rigs are going to generate $17000 a day margins for us which is us.
That's something we will.
That's an interesting term contract for us because it is going to reward us for that.
What we see is an improving pricing environment, obviously operators want to lock in a lower rate if they can so that's the dynamic that the push and pull between.
Our willingness to sign a contract today and are in the operator, it's really are they going are they willing to compensate us because there is a tight the markets tighter it's getting tighter.
Pricing and pricing is improving and so we need to and when we are signing a longer term contract, we need to get that and that term contract or it's going to be hard for us to look at it.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Andrew.
Any closing remarks.
Okay. Betsy we appreciate that I want to say to everyone really appreciate everybody taking the time to dial in this morning.
Just want to end on a quick safety.
Everybody that kids are starting to go back to school over the summer here.
Probably I'll have gotten out of the habit of paying attention through school zones and on highways and things like that so just want to remind everybody here over the next week or two it.
Kids will be returning to school, so, let's let's watch out for them.
Hope everyone has a good safety ended their summer again, thank you everybody we'll end the call.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.