Q2 2023 US Silica Holdings Inc Earnings Call

Speaker 1: Good morning and welcome to the US Silica 2nd Quarter 2023 earnings conference call.

At this time all participants are in a lesson only mode.

A brief Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Patricia Gill, Vice President of Investor and Relation and Sustainability.

Please go ahead, ma'am.

Thank you and good morning everyone. I'd like to thank you for joining us today for US Silica's second quarter 2023 earnings conference call. Leading the call today are Brian Shin, our chief executive officer, and Don Merrill, our executive vice president and chief financial officer.

Before we begin, I would like to remind you of our standard cautionary remarks regarding the forward-looking nature of some of the statements that will be made today. Some such forward-looking statements, which are predictions, projections, or other statements about future events, are based on current expectations and assumptions.

which are subject to certain risks and uncertainties. For a complete discussion of these risks and uncertainties, we encourage you to read the company's press release and our documents on file with the SEC. We do not undertake any duty to update any forward-looking statements. Additionally, we've provided supplemental materials on our website in the investor section to accompany today's discussion.

On today's call, we may refer to non-GAAP measures such as adjusted EBITDA, segment contribution margins, net debt, and net leverage ratio during this call. Please refer to today's press release or our public pilings for a full reconciliation of adjusted EBITDA to net income.

and discussions of segment contribution margin, net debt, and the net leverage ratio. I would now like to turn the call over to our CEO , Mr. Brian Shin.

Thanks Patricia and good morning everyone.

During the second quarter, US Silica continued to strengthen our balance sheet and provide innovative and differentiated products to the markets and customers that we serve.

We reported robust, adjusted EBITDA and generated meaningful cash flow from operations in the quarter, which enabled us to extinguish an additional $25 million of debt.

In executing our overall growth strategy, we remain focused on three key elements with respect to our industrial segment. One, increasing the profitability of our base business at a GDP plus rate. Two, substantially growing existing high margin differentiated products. And three, expanding our addressable markets with new rad Occipital.

high-value advanced materials such as Everwhite pigment. I will walk you through our recent progress in these areas a bit later in the call.

The power and potential of our ISP business was evident in Q2 with substantial margin growth, record profitability, and a double-digit year-over-year increase in contribution margin dollars on improved pricing, reduced costs, and new product sales.

In our oil and gas segment, we delivered continued strong financial performance despite lower completions activity across the US oilfield market.

While our volumes sold were down, pricing held up well during the quarter, and with our ability to quickly match costs to market demand, our overall oilfield profit margin per tonne increased sequentially in Q2.

I'm very proud of the way that our teams executed during the quarter. While we delivered many outstanding accomplishments, one area that I'm particularly excited about is employee safety.

Our company is on track to achieve our safest year ever, with impressive performance across the board, delivering a 50% lower injury rate versus our previous best-ever performance in 2022.

Our teams have made a commitment to a belief-based safety culture where we're all accountable and dedicated to live by our credo that nobody gets hurt today.

On the governance side, as recently announced, we've added two new board members, expanding to eight directors in total.

Simon Bates will serve as an independent member of the Compensation and Nominating and Governance Committee.

Simon serves as CEO of Argos USA and that's one of the largest cement and ready-mix concrete producers in the US.

Jimmy Sue Smith will serve as an independent member of the Audit Committee. Jimmy Sue is the CFO of Coppers Holdings, Inc., a NYSE listed company and leading integrated global provider of treated wood products, wood preservation chemicals and carbon compounds.

Both Simon and Jimmy Su bring extensive industry experience to US Silica and complement our board's broad expertise. We welcome them and look forward to the benefits of their leadership.

I'd now like to turn the call over to our CFO Don Merrill who will discuss our financial results in more detail. Don?

Thanks Brian and good morning.

As Brian mentioned, we reported strong adjusted EBITDA, which was supported by price increases and a shift to higher value products in our ISP segment, coupled with lower costs across the board.

Compared to the prior quarter, total revenue decreased 8% to $406.8 million.

Adjusted EBITDA decreased marginally by 1%, or $1 million, to $123.6 million.

Total company contribution margin decreased 1% to $150.7 million. And overall tons sold decreased 10% sequentially to $4.5 million.

Selling, general, and administrative expenses for the quarter decreased 2% sequentially to $28.7 million, driven by lower overall spend and reduced employee-related costs in the quarter.

Depreciation, depletion, and amortization expense decreased 5% sequentially to a total of $33.5 million in the second quarter due to a non-recurring adjustment made in Q1, coupled with lower volumes sold in the second quarter.

Our effective tax rate for the quarter ended June 30, 2023 with 24.7%, including discrete items.

In the second quarter, we used excess cash in the balance sheet to extinguish an additional $25 million of outstanding debt at par.

This brings our total debt retired over the past year to $284 million, an impactful reduction in our total debt outstanding of 24%.

At the end of the second quarter, our net death to trailing 12-month adjust to the Ivita ratio was 1.5 times, which marks what had been our year end target for significantly improving the health of our balance sheet to quarters that had a schedule.

I will now walk through our operating segment results.

The oil and gas segment reported revenue of $262.3 million for the second quarter, a decrease of 13% when compared to the first quarter.

Volumes for the oil and gas segment decreased by 13% to total 3.4 million tons. Sandbox delivered loads decreased 12% compared to the prior quarter.

SEGMA contribution margin decreased 10% quarter over quarter to $99.1 million, which on a per ton basis was $28.98.

Despite the decreases mentioned above, this is a high watermark not realized since 2018.

These results were driven by lower prop and volumes and fewer sandbox loads, partially offset by reduced operational costs, mix, and stable sand pricing.

Our industrial and specialty product segment reported revenues of $144.5 million, a 2% sequential increase.

Volumes for the ISP segment increased 3% when compared to the prior quarter and totaled 1,040,000 tons.

Segment contribution margin increased 20% on a sequential basis and totaled $51.6 million, which on a per ton basis was $49.61, the highest level since Q1 of 2021.

The sequential increase in the results for the ISP segment was due to price increases, a shift to higher value products, and the benefit of lower production costs.

Additionally, it is important to note that the ISP segment contribution margin in the second quarter was up 12% year over year.

Turning to the cash flow statement.

We delivered meaningful cash flow from operations of $92.1 million during the second quarter, a sequential increase of 125%, driven in part by very efficient net working capital.

During the second quarter, we invested $15.1 million of capital primarily for facility maintenance, cost improvement, and ISP growth projects.

resulting in free cash flow of $77 million for the quarter. As of June 30th, 2023, the company's cash and cash equivalents totaled $187 million, a sequential increase of 34%, which includes the impact of the $25 million loan extinguishment.

along with associated fees as mentioned earlier.

At quarter end, our $150 million revolver had $0 drawn with $128.7 million available under the credit facility after allocating for letters of credit.

Looking forward, the high level of profit customer contracts in our oil and gas segment, coupled with our sticky and diverse customer base in the industrial and specialty product segment.

gives us relative confidence in our visibility for the remainder of 2023.

We expect robust operating cash flow generation this year, and we plan to direct our free cash flow to organically fund our growth capital needs while we continue to opportunistically reduce net debt.

Our current expectation is that we will maintain a net leverage ratio of around 1.5 times through the remainder of the year.

With regards to capital spending, we will continue to be disciplined in our investments, with an emphasis on effectively maintaining operating levels at our facilities and focusing on profitable growth.

For the full year 2023, we continue to forecast capital spending towards the high end of our guidance of $50 to $60 million and may accelerate our capital investments for growth projects supported by customer contracts and attractive returns.

Finally, our full year 2023 SG&A expense is still forecasted to be down approximately 5 to 10 percent year-over-year, primarily due to the supplier contract termination and M&A related expenses that took place during the prior year.

The forecast for the full year 2023 depreciation, depletion, and amortization expense continues to be projected at flat to 5% down given higher CAPEX spending levels in prior years for assets that have become fully depreciated.

Our estimated effective tax rate for the full year 2023 is forecasted to be approximately 25%.

With that, I'll turn the call back over to Brian .

Thanks Don. I'd now like to review some of the trends that we saw during the quarter, starting with our oil and gas segment.

Lower commodity prices over the past few months have driven an overall reduction in the land rate count and the number of well completions.

Accordingly, market demand for sand-propane and last-mile logistics declined sequentially, particularly in the Permian, where the frac crew count had been reduced by approximately 15% from the peak.

For example, sandbox transportation margins expanded sequentially and profit pricing and activity in the Northeast market remained resilient.

We continue to sell DamSams to select customers and deploy additional new well site solutions to support our customers. More on that in just a moment.

Regarding pricing, we've noted questions and speculation from various sources and can confirm that our Q2 pricing held up well for SAND and SANDBOX given our strong contracts and Blue Chip customer base.

We also took swift actions across our supply chain to maintain our margins by aligning costs with market demand.

Also in the quarter, the U.S. Fish and Wildlife Service announced a decision to recommend listing of the dunes sagebrush lizard as an endangered species, which affects certain areas of West Texas and New Mexico. In 2017, when we began to plan our future West Texas mines, we were able to plan the

We surveyed many properties and specifically chose our crane and Lamesa locations due to their low risk of habitat disruption.

We continue to perform due diligence and conduct routine surveys on our properties and believe that there is minimal likelihood of impact to our operations from an endangered species lifting.

However, we believe that many of the other mines built in West Texas were constructed in areas classified as high risk for DSL habitat disruption.

As such, it's uncertain what impact the future endangered species listing may have on the overall available sand production capacity in West Texas.

And finally, our oil and gas team has developed and launched a new well site filtration offering called Guardian. Our patent-pended Guardian system prevents unwanted debris and other impurities from entering frac pumps, resulting in significantly increased pump uptime, decreased repair and maintenance costs.

increased longevity of pump consumables.

In a recent case study, we demonstrated a 25% increase in stages pump per day and a 30% increase between pump maintenance intervals on frat crews running our guardian system.

We currently have units operating in four separate basins and will continue to build and deploy units throughout 2023.

In our industrial segment, we recorded double digit, year-over-year profitability growth that was driven by price improvements, cost reductions, and sales of high value products to new markets and for new applications. We also benefited from numerous cost reduction efforts driven by improved operational performance, enhanced maintenance, and improved performance.

programs, lower contractor spend, greater plant efficiency, and reduced natural gas prices.

Volumes were lower year over year due to mild economic softness, particularly for building products, fiberglass, and industrial oil markets.

Nonetheless, total contribution margins grew 12% year-over-year as Don noted.

I will now provide updates on key developments in our industrial portfolio and then finish with a summary of our outlook for the third quarter and balance of the year.

As I mentioned at the outset, we continue to successfully execute our ISP segment growth strategy and are focused on three key elements which are first increasing the profitability of our base business at a GDP plus rate. Second, substantially growing existing high-value differentiated products such as ground okay.

dyes, macious earth powders and fine fillers, and high purity filtration substrates. And third, expanding our addressable markets and applications with sales of new, high-value advanced materials such as Gerstobolite, Everwhite pigment, and White Armor solar reflective roofing materials.

In Q2, we made significant progress across these three fronts, including successfully developing new applications for specialized whole grain and ground silica products and building materials, further displacing imported materials.

Growing Christobelite market share, which is expected to further maximize throughput and efficiencies at our Mill and Georgia location throughout this year,

capturing the strong and growing demand for our low iron silica used in solar panels, given facility expansion investments by a prominent domestic solar panel manufacturer, increasing business and cost efficiencies with improved data insights by year-end integration of our two back office ERP systems.

capturing significant international freight savings from our newly implemented Export Transportation Management System.

announcing another round of price increases today for our non-contracted aggregate clay and diatomaceous earth products that will range from 8 up to 25% effective September 1st.

And finally, since the launch of our new Everwhite pigment products last quarter, our customers are finding additional benefits and unique properties which could significantly increase our addressable market as we qualify our products into new markets.

We reaffirmed today our increased guidance for the last quarter of a 25 to 30 percent year over year increase in adjusted e-to-dop. Numerous factors were considered in this decision, including the strong results that we reported in the first half of 2023. The inherent unpredictability of course in energy markets and commodity pricing. A strengthening outlook in our industrial segment. The positive visibility of strong customer contracts across the company. And expected additional cost and productivity improvements during the remainder of the year. We also continue to anticipate that we'll generate robust associated free cash flow.

of about $200 million this year. And as Don mentioned earlier, we expect our net leverage ratio to remain around current levels of 1.5 times through the remainder of 2023.

Our oil and gas segment remains well positioned to continue generating strong earnings and meaningful cash flow to the current multi-year energy cycle. With expectations for constructive commodity prices and strong demand for profit and last mile logistics.

Despite the current short-term decline in land, rig, and frack crew counts, causing some softness in third quarter activity, we are maintaining pricing discipline and continue to have strong contractual commitments for our sand with over 85% of production capacity committed for this year. Also, we have attractively positioned this segment to ensure that the

These actions have raised the floor on earnings in a down market for our oil and gas segment without sacrificing upside in a peak market. We continue to focus on efficiently running our operations while preserving pricing and margins and now executing the competition. For the third quarter, we expect that profit sales volumes will be down roughly 10% sequentially due to the reduction in frac crew count. We also believe that our realized pricing will be relatively stable with total contribution margin dollars influenced by customer, product, and basin sales mix. We still expect to finish the year with two historically strong quarters and believe that we are in an advantaged position.

term market weakness. Regarding Q3, on a year-over-year basis, volumes may decline slightly as certain customers undertake maintenance projects after several years of high demand. However, we expect contribution margin dollars to increase 3 to 7% on a year-over-year basis.

due to improved pricing, a beneficial mix of higher value products, and ongoing improvements in operational efficiencies.

So to recap, during the second quarter we continued to secure future cash flow visibility through price increases in ISP, maintaining pricing discipline in oil and gas, and implementing swift cost optimization and efficiency efforts across the enterprise. We also achieved our company net leverage ratio target for the year.

future and can help unlock transformational growth pathways for the company to create value with our improved balance sheet and strong expected pre-cash flow.

And with that, operator, will you please open the lines for questions.

Ladies and Chairman, we will now be conducting a question and answer session.

If you would like to ask a question please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

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One moment please while we poll for questions.

Our fourth question comes from Steven.

Gengaro with Stifle, please go ahead.

Thanks. Good morning, everybody.

Good morning. Good morning, Stephen.

So a couple for me, just the I guess maybe start with ISP the

You mentioned the strong mix in the second quarter.

Can you just talk a little bit about the stickiness of that mix shift relative to what's kind of normal seasonality over the next couple quarters?

Sure, Stephen. So I think what we've seen is a continued increase in some of our higher value products, some of the more specialized silicas, Diatomaceous earth and some of our newer products starting to come on online and get a bit of traction out in the market.

I think as we look ahead for the remainder of the year and hopefully beyond, we'll continue to move in that direction. So I feel pretty good about where we're headed there.

And and the just remind me there's periods of the year we attend to have a a mixed headwind. Is that more 1Q than 4Q?

So I think what we typically see is that 1Q and 4Q are a little bit lighter. Q2 and Q3 tend to be heavier. And the historical trends in the business in terms of mix perhaps might not be entirely accurate given that we're continuing to...

to shift our mix to more higher margin, higher level advanced materials. We're seeing more of those come through. So I think we'll be evolving versus the traditional expectations of how mix might shift throughout the year.

We've all seen kind of what the spot market has done. I mean, there's been some softness there. You mentioned the lower third quarter volumes around activity. When you talk about your 85% of your sand volumes committed this year,

Are there price levers that your customers have around that volume or is that pretty sticky and can you just give us any color on what the volumes that are committed look like going into 2024?

Sure, so what we have today I think is very sticky and most of our contracts are pretty fixed in terms of pricing and the margins that are locked in there. So I feel good about that. Most of our contracts also have minimum volume commitments or sort of other penalty clauses.

I think we're we're in very good shape there as as we mentioned we have 85% of our capacity under those long-term contracts today. I think next year we're already somewhere between 70 to 75% of our capacity contracted and I know quite frankly we're already having customers come to us and want to secure volumes for 2024.

and perhaps us seeing the same kind of trends that we've seen for the last couple of years, where in the back half of Q4, which used to be kind of a dead zone, if you will, with the holidays and things, we'll see customers wanting to line up, profit, last mile logistics, also obviously pressure pumping resources, and kind of get things starting to work early.

out is it something that is complementary or competes with products that either frack companies or other service companies own themselves?

So, it's a really interesting piece of equipment and it's something that we invented and we have patents pending at this point, as I mentioned in my prepared remarks. And essentially, I think of it as a kind of a filtration system that's very effective at preventing foreign objects from getting to and passing through the frack pumps and other construction spaces.

You know, you would think that that stream going through there with all the things that happened to it before it gets to that point would be relatively clean, but what we're finding is it's really not. We've basically filtered out plastic, wood, rocks. My favorite is fish and snakes.

So, there's all kinds of things that end up going through the pumps, and ultimately, all that material goes down whole as well. And so, there's a sort of a pumping aspect to this. What we're seeing, really big improvements in terms of stages pumped per day. I mentioned in prepared remarks that

where we have this out running, we're seeing approximately 25% additional stages pumped per day because there's less downtime for the pumps, and about 30% more time between pump maintenance intervals. So, customers love this thing. Every time we put it out for a trial.

the kind of request has come back to see how can we get more faster. So we're really excited about this and I think we'll grow this over the next couple of years. And at this point it is an equipment rental model. So we're still working on that and figuring out exactly how to...

maximize value, but it's off to a very interesting start for it.

but it's off to a very interesting start for it. Excellent. Thank you for the color.

art for it. Excellent, thank you for the color. Thanks, Stephen.

Thank you. Our next question comes from the line of Derek Podhizer with Barclays. Please go ahead. Good afternoon.

Hey, good morning guys. Morning Derek.

Just a quick follow-up on that on my Guardian system sounds pretty interesting is that for both dry and wet sand or is it just for wet sand?

It's for both, but given kind of the nature of wet sand, there's probably additional challenges in terms of impurities and things that could be in there. So I think it's kind of the wet sand entree is what got customers interested in this, but then as they started to use it on dry sand jobs, they found that...

there were a lot of issues, a lot of it's coming in with the water. There's a lot of old water tanks out there, and that is what's bringing in the things like the snakes and the fish and all kinds of other things. So, I feel like this is one of these situations where the industry, because of the work we're doing, is realizing what kind of a problem they have out there.

and right now we're a great solution for the problem that they're realizing that they have. That's helpful. So for oil and gas, I know that the guy you talked about volumes being down 10%. Any color around what we think about profitability, either from a contribution margin dollar perspective or a contribution margin per ton perspective? So I tend to think of it this way, volumes I think as we said will be down.

probably see some additional friction on cost, but we've done a really good job over the last couple of years of either taking out cost or variableizing the cost that we have and I'm happy to go into more detail on that because it's pretty interesting. So there'll be a couple of extra margin points ehhhh.

decline there probably. And then, you know, the big unknown is always is exactly what the mix will be in terms of the volumes by basin, which customers buy, how much, and then the grades that they buy. So that's always a wild card. So that could be a plus or minus on top of the kind of volume and small amounts of cost friction that we'll see.

Can you talk about the interplay between your contracted volumes and just the spot market pricing that we're hearing out there that's obviously going through some weakening. Are you seeing some of your customers perhaps forgo the contracted volumes and buy the spot market based on an economic?

I believe the the sand market particularly in the Permian has been pretty pretty disciplined And so it's great to see that discipline in terms of pricing Certainly, there are some spot prices out there that are a little bit lower than where we were a quarter or two ago But quite frankly we haven't participated in any of that

given the value of our offerings, if customers want to buy spot tons from us, they're at much higher prices than some of the numbers that are thrown around today in terms of what the quote-unquote spot market price is. And part of that is where you are from a logistics standpoint, and we have a premium location so we can

command a premium price there. So I feel pretty good about that. We haven't even gotten anywhere near any kind of shortfall fees or non-performance fees or any of that. Customers have been buying pretty well and living up by and large to their contracts to this point.

As I mentioned earlier in response to Steven's question, I think that we believe that we could see an improving oil price environment here into year-end and that could tighten profit supply and last mile logistics supply up pretty darn quickly. And just given the discussions we're having with customers, it seems like things are headed more in that direction than the other direction. So it's all good news there. There is promise finding systems out there all over the world that can be used to drive the consumers very quickly. So just to tell you know that a lot of the production industries,...

Okay, that's good here. And just last one for me. I think you're at 70% contract for 24. So can you give us an update of that and then maybe just as far as your conversations around further contracting, I mean, have they become more difficult or challenged just given the

the weakening completion activity and just pressures around the spot market? So I think we're somewhere between 70 to 75 percent right now and we're having conversations with customers on contract extensions and especially those who are going to need additional sand in 2024.

And they've been really constructive. I feel like most of the customers that we deal with appreciate the service that we provide, the consistency of our operations, the quality, the ability, particularly in the Permian, to go through and be able to supply enough sand to complete.

these high capacity fracks that we have out there today, a lot of the simul fracks and some of the other things that are coming. So we haven't gotten a lot of pushback from customers around pricing quite frankly. I think you know what they're looking for is a supplier who's got all the service they want and is offering a fair and reasonable price.

You know, we've tried to be in that zone already and not sign contracts at unrealistically high prices. And we did some of that in the past, in the early days of FRAXAN, and I would say that we're better off signing realistic contracts that are going to hold through the cycles, and that's kind of where we've been.

So I feel good again about the customer discussions that we are having today. Great, appreciate all the color. I'll turn it back.

the customer discussions that we're having today. Great, appreciate all the color. I'll turn it back. Thanks, Derek.

Our next question comes from the line of John Daniel with Daniel Energy Partners. Please go ahead.

Our next question comes from the line of John Daniel with Daniel Energy Partners. Please go ahead. Hey, good morning.

So on the Guardian system, I'm curious when you guys deploy that, are you able to track the source of the sand? And is there a way that you could…

use the data to sort of, you know, highlight which minds are the problem children, which minds are the better ones from an internal marketing perspective.

So we don't we don't track that on those on those sites I mean the only only times we know exactly where the sand is coming from is when it's in our sandbox system so we frequently as you know we frequently go to the competitors minds to pick up products but

I think it would also be somewhat inappropriate for us to use that information to to disclose something around quality or whatever. But no, we don't track anything like that.

Fair enough. It would be cool to know that data though. Okay, on the lizard. Yeah, well the lizard is a whole other story. Yeah, look I'm not a lizard expert, but I'm curious. When would you realistically expect lizard restrictions to come into play?

And has any of the inbound interest for contracting in 24 or 25 perhaps been driven by lizard scares? Well, we have seen some of that. And as you might imagine, we've seen a lot of customer questions around all of this. And it's kind of fascinating. We were focused on this early on as we thought about our permeability.

lizard population in Texas. So we very thoughtfully made those choices. I think some of our competitors and some of the mines that are out there running today, you know, folks started up operations in kind of high-risk habitat areas. So we'll see how that all plays out. Realistically...

I think we're right now in this kind of 60 day comment period and that ends approximately September 1st from my understanding. Then there'll be review of public comments. There may well be hearings held if requested and as always with these kind of things it would take some time.

to play out and our belief is there's probably a 12-month window here where a lot of hearings and legal maneuverings might take place assuming that the Fish and Wildlife Service decides to take this forward.

Okay, and can you remind, back in the day I used to look at the high risk, low risk areas because there are nice charts out there that I haven't looked at recently. Can you remind me?

what percent ballpark is and the mines would be in high-risk areas.

Yes, so it's quite a few. I don't have the exact percentage off the top of my head, but as you go a little bit further west in the Midlands, so the western edge of the Midland, north-south in that area is a lot of habitat area, at least from some of the...

the maps that I've seen in the past. There's more than one map out there, more than one set of maps, so this kind of thing is always very kind of controversial, but I can say that at our sites we routinely survey and try to do trapping and just try to understand if there's anything out there that we may...

the expectations for Q3 sort of rank for us.

which geographies were the greatest percentage declines, if you could, and then as you think about Q4 where you see the recovery coming first.

So I think we've seen most of the declines from a volume standpoint, as you might expect in the Permian given that that's more than 50% of our volume. But some basins are very different. So in the Northeast, things have stayed quite strong and we actually saw some growth in the Northeast. So...

I feel like that basin is somewhat more isolated. To me, the Permian, as always, is a swing factor here. And my hope is that as we get into early to mid Q4, we'll start to see things coming back there, perhaps a bit faster than people have expected, assuming that oil price stays..[BLANK AUDIOographer sticks of goodness

constructive. I know that Bank of America I think was out yesterday with a big piece talking about where oil prices are expected to go and Brent, you know, topping 90 and obviously WTI, somewhere less than that but still pretty constructive. So if those kind of things come to pass based on our understanding and discussions with customers, I think we can see.

Activity preps come back faster than some people think. Okay, thank you all very much for entertaining my questions.

back faster than some people think. Okay, thank you all very much for entertaining my questions. Thanks John .

Thank you.

As there are no further questions, I would now like to hand the conference over to Brian Shin for closing comments.

Thank you very much, operator. As we look ahead, we remain confident in our strategy and we believe that our industry-leading business segments, market and capital discipline, free cash flow visibility, and commitment to further strengthening our balance sheet will deliver substantial value for our shareholders and other stakeholders.

Thank you all again for joining us on the call today, and we look forward to speaking with you again next quarter. Everyone stay safe and be well.

Thank you sir. The conference of US silica has now concluded. Thank you for your participation. You may now disconnect your lines.