Q1 2023 TETRA Technologies Inc. Earnings Call
Welcome to chorus call. Please hold and operator will be with you shortly.
<unk>.
[music].
Yes.
Yeah.
[music].
Yeah.
[music].
[laughter] condition.
Yes.
It's called conference that you'd like to join.
First of all.
Tetra technologies earnings call.
Yeah, what is your name.
Okay.
Hello, Ma'am. Please go to your name.
Okay.
Thanks.
<unk>.
Your name.
David Brown.
And your company.
Sure.
Okay, Phaedra pay I E R. A.
Okay, joining us thank you.
Thank you.
These statements are based on certain assumptions and analysis made by Tetra and are based on several factors.
These statements are subject to several risks and uncertainties.
Many of which are beyond the control of the company.
You are cautioned that such statements are not guarantees of future performance and that actual results may differ materially from those projected in the forward looking statements.
In addition in the course of the call we may refer to EBITDA adjusted EBITDA adjusted EBITDA gross margins free cash flow net debt.
Our net leverage ratio liquidity or other non-GAAP financial measures. Please refer.
Prior to yesterday's press release or to our public website for reconciliations of non-GAAP financial measures to the nearest GAAP measures.
These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of our complete financial results for the period in.
In addition to our press release announcement that went yesterday, we encourage you to also refer to our 10-Q, we also filed yesterday.
I will now turn it over to Brady.
Thank you Rocco and good morning, everyone. Welcome to <unk> first quarter of 2023 earnings call I will summarize some highlights for the first quarter discuss our near term market outlook and provide an update on our strategic initiatives before turning the call over to Lee to discuss first quarter financials and provide an update on our second quarter financial outlook.
With the exception of some one time legal and employee benefits costs first quarter results were in line with our internal expectations, including stronger EBITDA margins in both of our segments adjusted EBITDA, excluding gains or losses on investments increased by 6% quarter over quarter and by 8% year over year and was the highest.
Adjusted EBITDA since the first quarter of 2020.
Revenue from our international locations grew by 9% from the fourth quarter, including strong performance by our European Industrial chemicals business, where operations have nearly returned to the pre Russia, Ukraine conflict levels, coupled with stronger pricing.
Revenue from international markets grew by 17% as compared to the first quarter of 2022, driven by stronger activity in Latin America as well as the contribution from strategic investments announced at the end of last year.
We recently completed another completion fluids investment this one in Brazil that will more than double our deepwater operational capacity ahead of the well communicated growth and the deepwater Brazil market with.
With the Brazil expansion, we have now completed our investment plans for our key offshore market expansions that also includes the Gulf of Mexico and North Sea.
As mentioned in our first quarter press release, we feel these investments are very well timed to support our significant revenue and adjusted EBITDA projections for the second quarter.
If realized our second quarter projections will be the highest revenue quarter for our completion fluids segment since the third quarter of 2015, when there were more than 50% more active deepwater rigs operating globally.
The outlook in the international and offshore markets remains strong and as communicated previously we feel were still in the early days of a longer term deepwater market up cycle. Our strong second quarter forecast reflects the most recent capacity investments market share gains from a recognized service performance as well as innovation leadership such STS.
CS Neptune.
The combination of these has positioned us very well for this up cycle.
Domestically, despite near term volatility in commodity prices, particularly natural gas, we remain encouraged and the resiliency of activity and continue to expect double digit growth for our overall water and flowback services segment in 2023, while.
<unk> does not have significant exposure to the gas markets. We believe the softness in those markets will be balanced by growth in the oil basins and our continued market share gains and production based services, including water recycling and Sam management with such a sandstorms.
Our strategic priority for 2023 is to continue driving margin expansion maximize returns on capital and generate meaningful cash flow.
Now turning to the segments completion.
Completion fluids and products first quarter 2023 revenue of $69 million increased 4% sequentially.
Despite significant projects that had previously moved up from the first quarter of 'twenty three into the fourth quarter of 2002 <unk>.
Adjusted EBITDA of $18 million increased $2 million sequentially with adjusted EBITDA margins of 26, 1% compared to 24, 2% in the fourth quarter of 2022.
Adjusted EBITDA margins improved by 110 basis points sequentially, when excluding unrealized gains and losses from both periods.
For the quarter, we benefited from strong sales in the middle East and positive manufacturing variances across all of our plants.
As a reminder, we estimate that 70% of the deepwater wells completed in the Gulf of Mexico use bromine based completion fluids. So the deepwater activity increase that we're seeing globally is resulting in very high demand for our high value bromine based completion fluids, which includes Tetra CS Neptune.
We're currently executing Acs Neptune job in Norway and fuel there is a high probability we will execute a second north Ccs Neptune job during the quarter.
Our market, leading European industrial chemicals business is nearly back to pre Russia, Ukraine conflict levels and is well prepared for the seasonal second quarter activity peak contributing to the strong second quarter forecast.
Shifting to our water and flowback services segment revenues of $77 million improved $20 million or 36% year on year, while adjusted EBITDA of $12 9 million improved by $4 7 million or 57% year on year revenue decreased $4 1 million or 5% quarter over quarter due to the timing of certain cut.
<unk> completion schedules.
Water and flowback services adjusted EBITDA margins of 16, 7% improved 180 basis points as we execute on our strategic priority of margin expansion.
Market penetration and customer adoption of our differentiated sandstorm advanced cyclone technology continues to improve.
As revenues associated with this product offering grew by 40% as compared to the same quarter last year and.
In addition, we signed an agreement with a valuable customer to supply a fleet sandstorms for their production facilities, which is a new application.
And new market Avenue for growth.
Based on our current utilization and discussions with key customers. We expect to remain at near sold out levels throughout the year on 20% higher average fleet count versus 2022.
The third early production facility in Argentina is expected to come online in the second quarter, we continue to drive operational efficiencies and automation in our water management businesses, all of which support double digit growth for the year and our goal of achieving adjusted EBITDA margins.
From the range of 18, 5% to 25% by the end of the year.
Our water desalination initiatives also continue to progress as we're making engineering improvements to our proprietary pre treatment process that feeds our exclusive desalination technologies, we're targeting to complete the commercial plant design by the end of this year.
Finally in the first quarter, we continue to make good progress on our low carbon energy initiatives. We're currently drilling a delineation well in our estimated 5000 acre section and southwest, Arkansas with intend to improve the accuracy of our lithium and bromine resource estimates and progress from our bromine preliminary economic assessment towards a feasibility study.
<unk>.
We also continue to evolve our long duration energy storage electrolyte formulation to include chemistry beyond the zinc bromide pure flow component to cover the broader electrolyte chemistry.
Additionally, we are also in the process of selecting an engineering procurement and construction contractor for a front end engineering design or feed study for our lithium project, which has an estimated inferred resources of 240 234000 tons of lithium carbonate equivalent.
As a reminder, should petro decided to approve a development project for lithium bromine or both the capital required for the wells and pipelines would support the production of Brian with both minerals or the inferred resources report lists an average of 416 milligrams per liter of lithium and 5370 milligrams per liter of bromine.
With that I'll turn it over to Leo.
Some additional commentary then we will open it up for questions.
Thank you Brady.
Cash flow from operating activities was $9 million in the first quarter compared to our cash used in operating activities of $7 million in the fourth quarter of last year.
Adjusted free cash flow from continuing operations with a use of $8 7 million after funding capital expenditures of $12 5 million.
The first quarter has traditionally used cash and the timing of property tax and employee incentive cash bonus payments or the prior year.
In the first quarter, we received $2 $85 million in cash proceeds financial settlement.
On our prior year clean.
We did not include this $285 million of proceeds and our free cash flow and adjusted EBITDA for the quarter.
Inventory expanded in the first quarter in anticipation of the second quarter seasonal peak in the European industrial chemicals business.
Working capital at the end of the first quarter was $109 million.
Working capital consumed $5 $3 million of cash in the first quarter as compared to a use of cash of $18 8 million in the fourth quarter of last year.
At the end of the first quarter unrestricted cash of $17 million and availability under our credit agreements was $69 million.
Liquidity at the end of the first quarter was $86 million.
Slight improvement over the fourth quarter.
Long term debt with the September 2025 maturity was $163 million, while net debt was $144 million.
Our net leverage was two zero times into the first quarter.
In addition to the liquidity and cash I mentioned earlier, we're also holding marketable securities.
We received another 400000 shares a standard lithium, bringing our total share count 300000 shares with a market value of approximately $2 $7 million based on Friday's closing price.
We are also holding approximately $5 1 million common units of CSI compressco with a market value of approximately $6 $2 million also based on Friday's closing price.
We don't have any restrictions on selling the CSI Compressco unit.
Below the 400000 standard lithium shares we received April of last year.
And our investment in carbon fleece currently valued at approximately $6 million, which is not publicly traded.
Combine this investments totaled slightly less than $15 million.
The earnings power of both of our segments segment is continuing to strengthen.
And as highlighted in Brady's remark, we anticipate further revenue growth and margin expansion in the second quarter.
Based on current visibility, we anticipate revenue in the second quarter to be between $165 million to $175 million.
Income before taxes to be between $11, five and $13 5 billion.
And adjusted EBITDA to be between 27% and $30 million compared to $21 million in the first quarter.
This excludes any impact from gains or losses on investments.
Total year 2023 capital expenditures are projected to be between 30% and $35 million.
Please note that we are we are providing second quarter guidance given the expected material sequential change that we're anticipating.
Going forward, we do not expect to provide annual or quarterly guidance, unless we expect to see a significant.
Or material change in our quarterly performance.
We would also point out that the second quarter forecast includes offshore fluids projects that moved from the first quarter into the second quarter.
And approximately 12% to $15 million sequential revenue increase.
Due to the seasonality of our calcium chloride business in northern Europe .
In the third quarter, we expect to see an equal downward change.
European industrial business.
Our adjusted EBITDA margins for our European calcium chloride business approximate our coal segment margins.
The wrong, the strong ramp up in our European business and the strong deepwater fluids activity are expected to generate significant free cash flow in the second half of the year as we convert inventory to accounts receivable then monetize those receivables in the second half of the year.
With respect to the process, we discussed on our last call seek strategic partners to develop our Arkansas assets, we continue to work with identified potential strategic partners.
Bartlett of energy.
For our bromine project.
We will not be publicly commented on the progress of both discussions until we have something definitive to announce.
All of the engage counterparties and tetra are under confidentiality agreements and we.
Tend to respect.
I'll turn the call back to <unk> for closing comments before we open it up to questions.
Thank you leave you. So in closing we're off to a good start for the year and anticipate a very strong second quarter, while the outlook remains positive for the markets in which we operate we will continue to execute on our strategic priorities of increasing margins and cash flow with steady progress on the engineering and economic feasibility of our art.
Consol bromine and lithium resources.
We have invested in international markets via the deployment of early production facilities as well as expansion of our completion fluids businesses in the midst of a deepwater market recovery.
These investments made during the last quarters several quarters, our time very well and are already contributing to our earnings base, while driving returns on capital with that I'll open the call for questions.
Thank you we will now begin.
<unk> and answer session to ask a question you May Press Star then one on your Touchtone phone.
You're using a speakerphone please pick up your handset before pressing the keys.
So Danny Bang My question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question comes from Martin Malloy with Johnson Rice. Please go ahead.
Good morning.
Good morning.
My first question I wanted to ask about the water desalination technology could you maybe.
Give us a little bit of an overview in terms of the competitive environment how differentiated it is.
Thought I heard you say.
Do you expect to have a commercial plant by the end of this year is there a targeted customer for that plant.
Yes, Marshall and update as we've announced previously.
We have signed exclusive technology agreements for the oil and gas.
Industry for some water desalination with both <unk> and high Rec, both both technologies service different applications.
<unk> unit for higher Tds levels, and the high Rec unit for mid to lower.
Solidity.
Markets.
The pilot that we did earlier in the year with very successful that was with one of our key customers that's sponsoring our efforts.
We are working on improving some of the engineering improvements to the front end.
<unk> proprietary front end treatment of the fluid before we run it through the.
The technology that I had mentioned and so that's something we are working on.
We are highly confident we will have that engineering completed and at the same time, we're looking at a scale project because what we had used on the on the first pilot was obviously a pilot unit to.
To scale. These operations will require some additional engineering.
So combined we think by the end of the year, we will have a commercial plant design completed.
And we're very hopeful that we'll be executing a contract if not with the current customers. There are plenty of other customers at this point that are.
A very engaged.
And very much interested in this in this whole field of technology, we feel like we've got a leadership position in this Marty.
Because of the agreements that we have in our our expertise around treating produced water and Brian's.
But.
So that's the current situation.
Thank you.
My follow up question was on Neptune, and maybe just trying to get.
A sense of if you look out into 'twenty four with the market opportunities look like.
And maybe some bad.
Gulf of Mexico, where higher revenue potential per well.
Exists and then maybe if you could talk about some of the.
Other markets.
Is there a potential outside Gulf of Mexico, and North Sea, maybe Brazil.
Yes, so what we're seeing right now is the north sea is kind of leading the way in terms of the new the new opportunities for us and as we've stated previously that the north sea jobs are typically smaller volumes. So there are smaller compared to the Gulf of Mexico, which which are very large volumes.
As it relates to the Gulf of Mexico, we have several projects that we're tracking with customers. It's possible that we could execute a well before the end of the year.
But very likely that will fall into 2024, and then there's a series of potential projects longer term deepwater projects Gulf of Mexico that we're hopeful for but.
Nothing at this point that we can give a specific a specific date for.
So right now those those two markets are driving the Neptune opportunities.
Brazil's market has some potential.
The most part the pressure.
Levels in Brazil are not as high as what we see in the Gulf of Mexico, North Sea and some other markets that would that we think would be a big C is enough to announce its a big market for our normal completion fluids business, but not necessarily a big market for Neptune opportunities. Thank you I'll get back in queue.
Thank you.
The next question comes from Stephen <unk> with Stifel. Please go ahead.
Thank you and good morning, everybody.
Morning.
So I guess two things from me if I may sorry, just.
Kind of a big picture view as you look into the second half.
It sounds like from your comments, there was about $5 million EBITDA headwind into <unk> relative to <unk>.
And just from the ERP calcium chloride business and some of the pull through or pull forward from <unk> is do you expect growth in the underlying businesses to offset at least a portion of that based on what you're seeing right now.
Yes, we believe that the.
Facility or early production coming online in Argentina.
I'll begin in the second quarter, and obviously it carries into Q3 and Q4.
We believe that.
The progress that we're making moving more towards the production side pleading water on the onshore site will continue to give us progress.
We're just seeing an overall strong market on the deepwater side, especially on the completion fluids side.
So.
We think theres an opportunity.
Mitigate some of the seasonal drop in Q3.
From Q2.
Okay. Thank you.
My other question, it's probably a two parter, but when you think about the <unk>.
Already in some of the regulations around electric vehicles in the U S as far as critical minerals being sourced domestically.
Is that.
Impacted your thinking or potential partners thinking.
Moving forward maybe more rapidly.
Right.
Lithium side of the of the <unk>.
Projects in Arkansas.
Yes.
No question and I would add to that the recent news of nationalization of the lithium business in Chile.
The lithium business in the U S is going to be.
A very important market.
In a booming market in the future I think for our project.
There is a certain cadence we have to follow we have to prove up the the resource level, we're doing that now as we're drilling our second well.
But theres no question in my mind that both bromine.
Which is also used in electrical vehicles for the fire retardant side of things.
As well as the lithium asset that we have if we're able to prove those assets up.
I think we're in very good shape as it relates to identifying a partner to work with but we still have to complete that exercise.
But we're very optimistic about the future outlook for that for our business.
Thanks, and then just a quick one.
Sure.
Based on what we're hearing on the Eos side I mean, it's a late 'twenty three and kind of 24 grant restart C.
The slower revenue streams that are reasonable.
Yes, we don't want to get ahead of Eos, because we're going to we're pretty well tracked.
There are forecast so, we'll let them communicate to the market what that looks like but you can I mean.
You can assume or.
Components that we have developed we'll track Dios's demand.
Great Alright, Thank you I'll get back in line. Thank you. Thanks, David.
Yes.
The next question comes from Timur <unk> with Cowen. Please go ahead.
Thanks for providing second quarter guidance some details.
I'm wondering if flowback specifically.
What could be the aspects or swing factors that could cause a difference between the bottom end and the top end of the EBITDA margin guidance.
18, 5% in 2025% is it is it more driven by the early production facilities in Argentina or is it more driven by the Sandstorm fleet.
I would say that there is a few items driving that number one our team is focused on margin enhancement they've got a series of initiatives to further advance the use of automation.
And our remote monitoring to keep driving personnel cost down at the well site.
We've talked about utilizing sandstorms and applications other than.
<unk> filtration online new wells that have come on line.
And the early production facilities I would think that those three are going to be the main drivers of margin enhancement, even if theres a modest pullback in gas related drilling activity. The vast majority of our business is around the oil side of this so there is a slight pullback it might introduce some competition from.
The oil sector into the from the gas sector into the oil sector, but we think we can counter most of that with the internal initiatives that we have.
Thanks for that color.
As a follow up to an earlier question regarding CS Neptune.
It's very interesting that you might be executing two jobs in the same quarter with different customers.
Can you just maybe provide a little more color on your line of sight for.
Additional Neptune projects over the next 12 months.
We know there could be maybe one in the Gulf of Mexico starting.
Helpful next year, but if you could talk about anything else.
Good afternoon.
Yes.
Tim I think the.
We're really pleased with the momentum.
That we are starting to see in the North Sea I mean, we've always known that's been a good market for Neptune, it's taken us a while to kind of get through all the.
Testing levels et cetera been required an introduction with customers, but we're seeing that happen now. So there is there is a strong line of sight of.
Neptune jobs for us both on the UK Pri.
Primarily Norway side of the of the North Sea market the Gulf of Mexico. As you know is where we started our Neptune with some fairly large projects from the early days that was introduced in the market collapse.
Water market decline.
Those opportunities have always been on the radar, but haven't necessarily moved forward, we're seeing those projects start to move forward.
As I said I think there's a possibility we will execute a job by the end of this year.
More likely into 2024.
And we're hopeful those will also be multi well campaigns.
No.
But to this point.
That's as much as we can communicate.
That's helpful.
Just maybe switching gears to your Permian development project evaluation.
Just theoretically if the board and you approve the projects.
When it comes out.
That might be in September .
How many months later do you think you can maybe begin construction of that project is there.
Long lag or could it be a couple of months later.
Yes, actually we've already been identifying the long lead items and components. So we have actually a very good handle on.
On the timeline.
Once once we expect.
If we were to get board approval for this project.
We will we will be ready to go day, one in terms of launching long lead items and progressing on that that plant project, Tim. The key thing we want to work on is that we're not going to over lever the company.
We're going to put debt on tangible.
Put us at risk in case, there's a change in the market.
Now it's also a matter of finding the right strategic partner.
To source some of this capital as part of our process.
No that sounds great I like to color on that.
Minimizing the leverage impact, but I mean, the NPV and IRR is quite attractive and amazing.
I know you mentioned some of the earlier comments about free cash flow it sounds like it's second half timing.
How should we think about the June quarter or some of those remaining extra drilling costs for the bromine positively fall, mostly in the June corner or some of them.
Paul on the September quarter was.
Was that something like $5 million I can't remember the exact total I know you only spent less than 1 million in the March quarter.
Yes that test well will probably be <unk>.
Half of that number and most of it we expect to fall into the second quarter.
Now with respect to free cash flow.
We convert inventory into AUR in the second quarter in our European business and then we begin those collections and Julien, but primarily in Q3.
We expect strong free cash flow.
In the second half of the year.
And earlier published.
A list of the deducts to arrive at free cash flow, we'll let you make your own out total year EBITDA assumptions, but that lift of deducts that we published our investor presentation remains good.
To give you a sense as to what we think we can achieve free cash flow this year.
Great. That's helpful and my last question is it was nice to hear kind of the sales guidance for the calcium chloride in the second quarter.
Calling and decline in the third quarter, but.
It seems like according to your press release, you are pretty confident.
Being prepared with inventories and sourcing for that.
As you look out to the second half of the year.
Or you're lining up some backup suppliers.
Should we is it pretty fair to assume the calcium chloride sales should be up year over year. This year given that some of the supply chain issues last year.
That's correct, we expect calcium chloride and the industrial business to be up sequentially.
Also recognize that we do sell calcium chloride throughout the year in Europe , but obviously that peak is always in the <unk>.
While our European operations normally do is as soon as the peak season and in June they start gradually build in inventory from July all the way into March of next year to meet that peak demand, but they do continue to sell some decent volumes each quarter, leading up again to the peak year.
Terrific well thankfully calibrating for answering all those questions. Thank.
Thank you thank you Tim.
The next question comes from Samantha Hoh with Evercore ISI. Please go ahead.
Hey, guys.
Quick question about <unk>.
<unk>.
<unk>, you're doubling capacity here.
Thank you for it and that seems that sounds pretty meaningful I was wondering if you could maybe.
Yeah, Ken a little bit more.
More information about how the market.
DRAM market has historically been for you guys.
There's been a huge contributor.
If you could actually.
Maybe frame that out for us in terms of what that means to double capacity down there.
Sure Smith, so we've been in the Brazil market for for some time I think we have announced over the last year or so some fairly significant awards.
So our market share has definitely increased to where we have bumped up against our capacity and now as you know the Brazilian market is forecasted to improve activity wise quite.
Quite meaningfully so a combination of awards that we have.
Our customer projects growing in terms of the activity.
Really led us to start looking for additional capacity.
And so we're fortunate that we found some <unk>.
Capacity Thats very favorable from a logistics to our current deepwater.
Plant and so it made for a very nice fit for us too.
To make that to make that acquisition.
Okay great.
Great.
And as you said I'm, sorry, and as you said it hasn't I wouldn't say, it's been a huge part of <unk> business in the past, but as we look forward, we expect it to be a much more meaningful part of our of our business sorry, I didn't mean to cut you off.
Uh huh.
The other question I had was about the contract that you called out for Sandstorm.
I don't I mean I was wondering.
How that works in terms of providing a dedicated fleet customer do you do need to add units.
Alright.
Hey, guys, what's the visibility like where those units in terms of.
The contract that you signed.
Yes, so the one we had mentioned Samantha a unique application we have not contracted with.
A customer before on their actual production facilities as you know.
Our flowback technology, our sandstorm technology is normally at the well site.
Where the flowback is we're taking sand out of the flow stream.
As the oil and gas.
<unk> has produced on location.
This actual project is is putting the sandstorms with customers' production facilities, which is weight wafer their downstream because they just don't want any sand at all getting into their production facilities and so this is a new application that is a long term contractual agreement.
I expect these types of agreements will take on.
Either long term lease arrangements or in some cases customers may even want to buy.
These.
Sandstorms as part of their production facilities.
But there is a new market for us and so it's still a little bit early days, but it's obviously got some significant potential for us.
Okay, and then just one last one I believe you were expanding capacity in Europe chemicals business.
Is that is that all on tax.
This quarter end.
Any sort of things that we should look out for the mindful that that would cause any sort of interruptions and the emphasis.
So we had announced I think a year before last they were going to expand capacity in our calcium chloride business and that was right before the clean Russia conflict sort of slowed down everything as we see business ramping up we're ramping up into a production opportunity here, where now we've got the.
<unk> to produce.
Beyond the volumes that we're producing in calcium chloride in northern Europe .
And we also mentioned that we had done a small acquisition.
To support our fluids business.
The first quarters, where we got the first.
Four months.
A benefit of having that business performed and they performed above our expectations. So those two expansions one on the industrial chemical site, which we have not yet fully exploited and one on the completion fluids side that we're now seeing the full benefit of all.
Great. Thanks, guys and best of luck with liquidity.
Thank you.
Again as a reminder, if you have a question. Please press star then one to be joined into the queue.
The next question is a follow up from Stephen <unk> with Stifel. Please go ahead.
Thanks.
Just quickly when you think about your.
Sure.
<unk> holdings and <unk>.
<unk>.
I know, it's not big numbers.
How do you evaluate those and is there any thought process.
Selling them.
Just pay down debt.
Well our objective is to do what we did with standard lithium is try to hit the peak and then sell at peak.
We believe that our investments in standard lithium our investments in CSI compressco.
To date does not reflect the value that is.
Obtainable for those.
Companies.
So at this point, we have a higher expectation as to when to monetize it we are not yet having to source capital to build our Arkansas asset.
You can imagine that as we go through that process that will be.
Our surplus capital available to us.
You mentioned not big Big numbers, but $50 million is not something to sneeze at.
Yes, Okay, and how do you think about.
Your target leverage ratio.
Yes.
Prefer that in difficult times were noteworthy at two five times and then solid times to where earnings are being maximized with <unk>.
Significant investments already behind us closer to one five times. So that's the band that we would like to stay with we don't see us going above two five times to.
While at IR to bring our assets in Arkansas market.
Okay. Okay.
Thank you.
This concludes our question and answer session.
I'd now like to turn the conference back over to Mr. Brady Murphy for any closing remarks.
Thank you very much for participating in our first quarter of 2023 earnings call with that we will we will conclude the call. Thank you.
The conference has now concluded thank you for attending today's presentation.
Correct.
Yeah.
[music].