Q3 2023 Weatherford International Plc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the Weatherford International third quarter 2023 earnings call.

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As a reminder, this event is being recorded today.

I would now like to turn the conference over to Mohammed Toby Waller director of Investor Relations and M&A, Sir you may begin.

Welcome everyone to the Weatherford International third quarter 2023 conference call I'm joined today, My grief, Sonogram, President and CEO and I didn't get it all executive Vice President and CFO.

We will start today with our prepared remarks, and then open it up for questions. You may download a copy of the presentation slides corresponding today's call from the website Investor Relations section.

I want to remind everyone that some of today's comments include forward looking statements.

These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein.

Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward looking statements.

Our comments today also include non-GAAP financial measures.

Underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our third quarter earnings press release, which can be found on our website.

As a reminder, today's call is being webcast and a recorded version will be available on our website's Investor Relations section. Following the conclusion of this call.

With that I'd like to turn the call over to Gary Thanks, Mohammed and thank you all for joining the call.

We delivered another quarter of solid results driven by strong operational execution and a mixed market environment.

As always I want to start by thanking the 18000 plus members of our one weatherford team for their passion for our customers and business everything we've achieved as a result of their spirit tenacity and commitment.

Third quarter revenue increased 3% sequentially and 17% year on year, driven by international growth across most regions.

While we continue to be an internationally levered business I want to highlight what our North American team has achieved historically.

Historically, North America has been a margin challenge region for us and we have driven a strong focus on improving profitability in the past couple of years through operational improvements commercial focus facility consolidation and exiting certain businesses.

Despite the obvious weakness in North America over the past year, our margin performance in this region has actually increased on a year over year revenue decline and that is a very tangible proof point of the two cycled resilience of our operating strategy.

This quarter, yet again, but in a solid margin performance with adjusted EBITDA of $305 million, representing 23, 2% margin.

We've talked about the first on margin and cash several times and while this is another of those first it is still an intermediate step towards our goal of mid Twenty's EBITDA margins.

We generated adjusted free cash flow of $437 million in the quarter while.

While lower than the second quarter. It is higher than what we had guided towards as we had anticipated some significant collections headwinds in specific geographies.

But the rest of the company came together to deliver superior performance.

We also continue to build inventory for a higher product sales fourth quarter.

As you saw in our announcement yesterday, we now have a $550 million credit facility in place and I want to thank our banking partners for their support and engagement.

We have consistently said that ours is a journey of improvements in our capital structure.

And getting this facility would dramatically improve terms and a revolver of $300 million is a capstone event or not.

Net leverage is now at zero point, Nymex and I think that speaks for itself.

Over the past three years, we have spent a fair amount of time on these calls on capital allocation and our actions and results demonstrate our commitment to actioning our priorities.

Moving to some of our commercial highlights during the third quarter.

Our drilling and evaluation segment.

C. A joy tag awarded US a one year contract to provide MPD system since services in Norway.

And Transocean has commissioned us to provide an install and MPD system on the ultra deepwater rig the deepwater a killer.

For our well construction and completions segment.

Our energy awarded US a five year contract to provide liner hanger systems for its onshore and offshore wells and Chevron Angola awarded us a two year contract for conventional Trs, but its offshore deepwater operations.

For our production and intervention segment.

<unk> awarded US a three year contract for the supply and maintenance of drilling and fishing jars. In addition to a two year contract extension for comprehensive intervention services.

We were awarded a five year digital solutions contract by Pertamina, Hulu Recon in Indonesia to probe.

And finally Ecopetrol awarded Us a two year contract to provide integrated products and services, including artificial lift completions drilling tools and intervention services.

This quarter also witnessed several noteworthy technology milestones for each of our segments.

Parting with B R E.

We deployed the bellcore stabilizer lost circulation material and oil based drilling fluid using an engineered approach to reduce downhole losses and enhance drilling efficiencies.

We also deployed new high performance shale play inhibitor Val <unk> designed to improve drilling by mitigating the impact of drilling fluids on formations, while increasing well productivity.

In WCC, we deployed a new retreat back off stage tool, which offers a more reliable and robust ceiling system aimed at enhancing wellbore integrity.

We also deployed the first combination of 16 inch two states cementing tool an annulus casing packer in a geothermal obligation for the ever loop in Germany.

<unk>, the well construction process and improving well bore integrity.

In P. R. I, we further enhanced our foresight suite of offerings by launching foresight region X sight, the energy industry's first regenerative variable speed drive for Rod lift systems that harnesses untapped energy through recycling, otherwise wasted power and reduces emissions.

We deployed our endura dual string section mill for a major operator in the middle East and a new alpha the single trip cased hole exits system in the North Sea for Ecuador, both aimed at improving operational efficiency by reducing runtime.

The examples demonstrate how we continue to innovate and expand the breadth of our portfolio to create meaningful value for our customers every step of their lifecycle.

Now, let's turn to our view on the markets.

But north America continues to be a challenging period, despite strong commodity prices as continued capital discipline by both public and large private e&ps asset sales and consolidation in the U S shale, especially in the Permian, but a headwind to incremental rig and well activity.

We believe we are close to a bottom and as we move into 2024, we expect activity to improve slightly with growing energy demand and strong energy prices supportive for both E&ps and service companies across the lifecycle.

Further improving production outlook provides additional opportunities for us to help customers meet their production targets.

However, as we have discussed the situation a significantly different for both international and offshore markets, maybe we see continued strength leading to double digit activity growth in 2024.

In the middle East the investment pieces of our major customers remains intact and shows no signs of <unk>.

While onshore activity remains strong we see an acceleration in offshore activity across the region, which is forecasted to grow in the mid to high teens next year.

Needless to say, the most significant risk as geopolitical not economic or otherwise.

In Latin America, E&P, Capex and activity growth is expected to grow in the high single digits led by offshore, particularly deepwater well.

We ultimately so also see regional pockets of growth in sub Saharan Africa Asia Pacific offshore and several other areas, where we remain well positioned.

As we have said before our focus will be on revenue quality and pricing versus volume as we continue to prioritize driving margin expansion and cash generation.

The digital ecosystem that runs throughout our portfolio has proven to be a differentiator as well as a force multiplier for driving operational efficiencies and performance across the cycle.

On November seven we will host our 19th annual forward Digital conference with customers Technology partners and technical experts, we look forward to a robust discussion on the increasing role of digitalization and automation in the sector and how Weatherford digital technology supports safe efficient and optimized operations for our customers.

As we look forward into Q4 and 2024, we're cognizant of the uncertainty stemming from geopolitical and macroeconomic concerns. However, we continue to be constructive on the near to midterm outlook, both in terms of market fundamentals and operator demand.

Along with our proven ability to execute and deliver margin growth and cash generation.

With that I'd like to hand, it over to water.

Thank you Krish good morning, and thank you everyone.

Joining us on the call.

It came in with our consolidated results and then move into our segment results.

Quiddity in cash flows we had a strong quarter with revenue of 1.31 billion, which grew 3% sequentially and 17% year over year, North America revenues improved 2% sequentially, driven mostly by our Canadian business and crashed.

Whoa crew was underpinned by strong performance in the Middle East North Africa Asia regions.

Our operating income was 218 million in the third quarter up 23, compared to 201 million in the second quarter of 'twenty, three and 121 million.

Third quarter of 'twenty two.

Net income was 123 million compared to an 82 million second quarter, and 28 million per quarter of 'twenty two.

Adjusted EBITA for the quarter was 305 million, which translated to 23, 2% adjusted EBITA margins, an improvement of 39 basis points sequentially and 412 basis points year over year.

Now moving into our segment results.

Sure.

Drilling and evaluation our D. R. D revenues of 388 million decreased by 6 million or 2% sequentially, primarily due to lower activity for drilling related services, partially offset by increased activity in Latin America.

D. Our east segment adjusted EBITA of 111 million increased by five 5% sequentially helped by a change in mix, mainly in managed pressure drilling and wireline.

Well construction and completion or WCC revenues of 415, 9 million increased by $19 million or 4% sequentially, mainly due to higher activity in middle East North Africa, and Asia regions.

<unk> segment, adjusted EBITA of 119 million increase probably 10 million.

Or 9% sequentially, primarily due to higher cementation products.

Hungry activity.

Production and intervention are priv revenues of 371 million increased by $5 million or 1% sequentially, mainly due to higher international pressure pumping activity.

Actually offset by Lord intervention services and artificial lift activity in Latin America.

<unk> segment adjusted EBIDTA of 86 million increased by five 6% sequentially, primarily due to higher hold true for international pressure pumping and artificial lift activity primarily in North America.

Turning to cash flows and liquidity, our adjusted free cash flow was 137 million a strong performance given the seasonal headwinds and collections. During this during the quarter, which impacted our overall net working capital performance in the quarter.

As good as our overall charney has been in improving our net working capital efficiency I am excited about opportunities to further improve we continue to make improvements in internal processes across billings collections management, and inventory management, which hartke performing.

Stripers.

We generated operating cash flows of 172 million down 29 million sequentially.

Opex was 42 million this quarter compared to 36 million in the second quarter of 'twenty three big coastal third quarter of 'twenty three with total cash of approximately 946 million up 24 million sequentially.

Improving the company's balance sheet efficiency and Derisking the company on a through cycle basis has peanut creep priority, we have compounds to credit facility with total aggregate commitments amounting to $515 million.

Five year maturity under this facility, we have expanded our borrowing capacity from fortifying opinion through a 300 million revolver with additional 250 million capacity performance letters of credit.

The software a benchmark component of plc facility has been eliminated and the covenants tied to the facility now give us more degrees of freedom on capital allocation.

As we have done so far our immediate priority will be to continue addressing the overall type structure.

We have made tremendous progress on that front prepaying 147 million of Cros that since the end of the second quarter of 'twenty three bringing our total year to date tax repayments of 368 million and now with approximately 1.88 billion total pet.

It is the lowest cross that level. The company has had since 2007.

For the six 5% senior secured notes now below 250 million, we will continue to execute on our capital allocation priorities remain.

I mean unchanged.

We continue to have opportunities to invest in the company in terms of technology infrastructure, and Capex and that still leaves us with significant cash flow to improve capital structure.

Credit facility underscores a significant progress in strengthening our balance sheet as it provides us with creative flexibility to improve our overall capital structure in sync with the scale of the business I am very pleased and proud of the team for this remarkable achievement in securing this facility.

Turning to our outlook for the fourth quarter 'twenty three we expect consolidated revenues to be up low single digits sequentially.

Across the segments. Dr revenue is expected to be flat to up probably low single digits terribly C. C is expected to grow by low.

Low single digits and Youre right. It is expected to grow by low to mid single digits.

Overall, adjusted EBITDA margins are expected to be similar to the third quarter margins more importantly, they are now expected to be higher than previously anticipated.

Putting towards near margin expansion of approximately 400 basis points.

Capex is expected to be in the range of 60 to 65 million and adjusted free cash flow is expected to be greater than $115 million.

To recap for the full year 23, this will mark another impressive year of high teens revenue growth approximately 400 basis points of adjusted EBITA margin expansion and a very impressive adjusted free cash flow performance of over 415th.

Indian.

I'd like to thank each and every team member of the one Weatherford team that helped us consistently deliver on our commitments. Thank you for your time today I'll now pass the call back to carriage for his closing comments.

Thanks, Don.

Our strongest outperformance has been the future looks better.

We have laid out a roadmap to achieving mid twenty's EBITDA margins and that involves the following elements.

Lastly, we are still in an inflationary environment and while that creates headwinds on material and labor costs. We believe pricing will be a net positive overall and help offset those headwinds.

New technology is an enabler to grow share and expand our presence in white space areas. We.

We have launched several new technologies. This year and are excited about the pipeline we have in place.

Next our fulfillment initiative is a paradigm shift in how we run operations and bring solutions to customers.

Driving structural changes in manufacturing sourcing logistics, and our repair and maintenance operations is an enabler for lower cost and faster cycle times, leading to efficiency and better asset utilization.

Finally, our overall cost infrastructure still represents opportunity for us.

We have taken a lot out in the past few years. The next step is to gain efficiencies through simplification and better technology.

These steps will fully fully unfold over the next couple of years and our goal will be to continue to demonstrate progress on these quarterly updates.

Our ultimate strategic priority remains financial performance not only on cash and margins, but also on improving the balance sheet.

Our results in the third quarter and credit facility announcement, a clear outcomes of executing on that priority.

The new Weatherford is an organization that is capable of capitalizing on the current cycle, while driving long term value creation with that operator, let's open it up for questions. Please.

Okay.

We will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad.

If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

And our first question today will come from Luke Lemoine with Piper Sandler. Please go ahead.

Hey, good morning.

Good morning.

You are less than 200 basis points away from hitting that mid 20% or 25% EBITDA margin target did.

Could you refresh us on the roadmap to get there I believe most of this was basically through internal initiatives and some pricing that's already locked in.

And really wasn't didn't change at all activity really inflection higher.

That's right Luke guys as we just talked about on the call a little it's really four components. The first is pricing, which we are really looking at as an offset to the inflationary pressures that we see both labor and material. We continue to see some very strong inflationary headwinds, but we think we've got a constructive pricing environment, especially.

Actually in the International Arena. So we think we'll get a net positive out of that the second is technology. So multiple new technology launches that we have.

<unk> this year and several more to come and these help US you know across the spectrum. The first in capitalizing on where we have opportunity to compete that we don't today and the second is more exciting is to carve out new opportunities and sort of white space markets New solutions motives.

Our motives that we announced earlier this year is a great example of that and creating a new segment in our MPD business.

The third is our fulfillment initiative.

We are still going through a lot of change in the way, we run our manufacturing and sourcing in our overall fulfillment operations, how we deliver to customers as I've said before Weatherford was never really designed to be what it is today. So we are we're sort of starting over and that we think will give us a significant amount of cost efficiency and.

Allow us to deliver better customer and drive better asset utilization and the fourth piece is our cost infrastructure, we still have a lot of inefficiencies bolt on the direct cost side as well as our overall support infrastructure. So while we continue to invest in technology and commercial resources et cetera, we still have opportunity to gain efficiencies.

Those four elements really make up our roadmap and then when you put that in the context of a growth environment and higher activity those fall through should enable an acceleration or getting to that but really it's more on that as you said internal initiatives to help us get there.

Okay, Great and then just changing gears recognizing our near term focus is still on repaying debt and the shareholder return plan is pro next year, just the new revolver include any negative covenants or restrictions on share repurchases or total capital returns to shareholders.

Look as matter of fact, I'm you know.

It gets or enhance the restrictions, which Houston P attached to the prior revolver or the prior facility. He meant and what it does is introduces a couple of governors pitch, our liquidity and leverage paste, which we feel.

Very comfortable with so it gives us much more decrease of freedom.

Okay perfect. Thanks, a bunch.

Okay sure.

And our next question will come from T mobile with Goldman Sachs. Please go ahead.

Yeah.

Hey, good morning, guys I'm just wondering so you mentioned some factors on the EBITA margin expansions, but.

Just any color you can provide on the free cash flow confidence that you're working on what has been completed.

What's the next 612 months target what are the last leg to get to your 50% target just to understand how things are progressing.

Yes look at the again, we have not explicitly given a timeframe or an explicit number on that but I think directionally that is wherever you want to head towards I think a few different elements on that.

The first is.

As we pay down debt, taking interest costs out automatically just helps us getting.

Getting closer so that's one really important factor. The second is working capital improvements that's something that we are putting a lot of emphasis on and it really is all three components of it.

On the collection side, making sure that we are improving our processes on billing.

Improving our cycle time, there as well as making sure that we are a more rigorous dispute resolution process all of that to get collections and faster on the inventory side better S. N O P mechanisms and again, our overall and fulfillment initiatives that I just talked about that's a big enabler on better inventory management.

On the payables side, yes, that's a long term journey again as you know we continue to work with our supply base and our vendors as we are transitioning some of them as we are strengthening relationships with others, making sure we have the right tradeoff between.

The different components of value, which is cost and terms and pushing out our payables to them is another factor.

The next element of it is really Capex capex is something that we've put a lot of emphasis on in the last few years and our refresh view on 3% to 5% of revenue I think really shows that we are operating in a much more what I'll call asset light or type of a mindset and that's both a combination of efficiency in Capex operations.

But also in terms of the business strategy for specific product lines pivoting ourselves to much more asset light or models, which really give up much higher return and make the company far more exciting in my view. The final element is really around taxes et cetera, and thats a little bit of a function of the jurisdictions we operate in.

I'll pass it on to add any any color on that but those are really the elements and we expect again on an annual basis to continue to improve that there will be quarterly fluctuations, but this is probably better to be looked at on an annual basis.

And in terms of just to put some numbers around that as far as working capital efficiency is concerned.

Our cash conversion cycle in the second quarter of <unk> 22 was 112 days.

We were able to get it down to 100 days last quarter, we had some headwinds this quarter, it's back up to four but that is to cherny. We continue on and we expect to meaningfully drive that number down with all of the components had highlighted.

Yeah.

And of course interest coverage is coming up interest <unk>, Queenstown and Paramount dramatically helps conversion.

Got it and.

The stock's done well, obviously here so as we talk to investors and as you think about the story going forward. How do you frame that mattered. There I mean, obviously, you've got micro factors of guard macro factors as well, but just curious how you are seeing the narrative going forward from here, especially in the light of the strong performance so far.

Yeah look at me I think it's it's actually fairly consistent with the way we have portrayed it before the <unk>.

Weatherford story has been one of demonstrating that it is a different company of building that credibility. So I think we are at a point I will never say that we have achieved at 100% because it's we've got to do that quarter in quarter out, but I think three years of consistent performance I think allows us to say that we have a track record now of delivering on our results.

The second thing is we are.

I don't know very robust cycle for the whole sector and this is an international company. So it's a great way to play the international leverage and the last piece of it is when you take those two and you look at where our multiple stands today it still trades at a substantial discount when we believe that a narrowing of that.

Multiple discount is very much warranted given the track record given the international leverage given the improvements that we've made on the capital structure. So that's why we think it is a really good value proposition.

Thanks, I'll turn it off.

Thanks Avi.

Thanks Rafi.

And our next question will come from Doug Becker with capital one. Please go ahead.

Thank you Krish your commentary seems to want to get endorsed double digit revenue growth for next year.

And just trying to think about North America, probably up only modestly.

International up double digits.

Should we be incurring more toward the low end of double digits or do you see a path to say mid light.

15% growth.

And a favorable environment.

Yes, I think it's too early Doug to jump to a specific number on that and again, we will give detailed guidance on our.

Q4 call, but look I think you've sort of said.

<unk> said it yourself right North America.

I think it's a bit of a wait and see but hopefully a modest expansion in somewhere in probably the low single digits, but the international is where the story is but international has multiple different regions. We think the middle East continues to be very robust and we expect to see solid growth in the middle East, We think Latin America has experienced tremendous.

This growth this year, we think will be positive next year, but beyond.

Not to the same extent and then the rest of the geographies, but look there are a lot of uncertainties as well right now in the macro environment, especially from a geopolitical standpoint, so I think a tad bit early to get the specifics on what it is but I think this notion of.

Much more tepid kind of in North America, but internationally in double digits I think it's an overall correct thesis.

No. It makes sense and you kind of touched on the fulfillment initiatives a couple of times during the call, but how would you characterize how far along through this process would you characterize it and just any way to think about what this could mean for margins over over an extended period of time.

Doug when we started talking about this it's now we've been talking about it for about a year year and a half. We've always said, it's sort of a three to four year journey. This is fairly complicated.

Where we are.

Closing several factories you are shifting work across the planet Youre, creating new supply basis, New logistics channels, you are qualifying vendors you're.

Getting certifications on quality of different facilities for different product lines et cetera. So it's a tremendous amount of work we've got a very rigorous plan around every single transfer around supplier qualification, we have built out a quality function in the company that our teams.

Team is doing a terrific job on so all of that I would say, we're probably about a year year and a half into a four year journey I think what we will start to see is next year. Some of the initial benefits of that start to come through and that's what we've alluded to is that we will continue to focus on margin expansion.

Fulfillment as a part of that and then the really significant benefits of that I expect will really start to show up in 'twenty five.

Yeah makes sense and then just briefly.

Slipping one more in just in terms of the collection issues during the quarter, just any more color on that and how you expect those to resolve resolved going forward.

Yeah look I'll, just say again, its we had fully anticipated that it was not so much issues as we knew that we had just some dynamics that would cause you know relative to Q2 or Q3 that was softer so we baked that into our guidance.

See that coming back on track in Q4.

It was really in in Latin America, and we will have a little bit more specifics in the Q, but but nothing that we are unduly alarmed by and really what it was is.

Just one of our key customers pushing out things a little bit, but we're very confident that we'll get back on track in Q4 and talk.

Reminder, that we had a really good quarter in the second quarter. So we were fully anticipating some headwinds in the third quarter and it came to fruition and we expect to recover in the fourth quarter.

Yeah makes sense I guess I'm, just anxious to get to a 25% of revenue net working capital to be 25% of revenue.

Thank you very much enabled that go but these things do take a little bit of time.

Understood.

Yeah.

And our next question will come from Jim Rollyson with Raymond James. Please go ahead.

Hey, good morning, guys and great job again this quarter a lot of questions asked and answered, but a couple of follow ups, Greece, you talked about offshore and obviously that's been a popular topic given the growth rate there.

<unk> seen some of your large peers kind of giving some color on their exposure to offshore and I'm wondering if he would give us maybe just a hint of where weatherford stands from a revenue percentage that's tied to offer these days yeah.

Yeah.

Jim first of all thank you.

On the quarter look on offshore we've never really given a specific number in terms of how we break it out because it is a bit of a variable and it varies by geography there is some.

Some changes around our segments et cetera, but look I think a couple of things that are relevant first of all as we talk about our market leading product lines right, we've talked about MPD sema.

<unk> products Trs intervention services.

They said that these are both onshore and offshore place, but the value proposition is even more skewed towards the offshore because of the high risk element. So we tend to do really well in those in those businesses.

We've talked about several of our contract wins that include these product lines, but also product lines such as drilling.

For example, we talked about a win in the Gulf of Thailand, with PTP, a few quarters ago. So we've got multiple different product lines that we play in.

Our clean product lines, we've got drilling we've got completions.

<unk> got multiple different pieces basis, but we don't break it out explicitly.

In terms of what it is suffice to say, though look it is an important part of the business and we're extremely excited about the continued growth in offshore because we think it does continue to present opportunities for us to grow not just with the natural rate of growth, but hopefully create some additional opportunities that we can get a little bit more lift out of.

Yes, that's very helpful color I appreciate that and just one follow up notice the <unk>.

<unk> Angola announcement word in your in your press release and just curious in light of the recent Chevron news kind of how you are situated with chevron as a customer and if you think there's any potential for that to lead to opportunity down in Latin America, given who they're attempting to buy.

Look first of all chevron's, a terrific customer.

As are many of our other customers. This was a terrific win again, Neil as you talked about offshore earlier, it really again highlights where we've got some true differentiation in our product lines and continue to win with customers.

We also have.

Terrific relationships with a lot of other customers we have.

We talked on this on this earnings call I think about three or four quarters ago about a significant win with the test for example.

As we pointed out in our prepared remarks, we do think that there will be continued consolidation that will create some interesting challenges, but also creates a lot of opportunities for us. So we continue to engage in very constructive conversation with all of our customers and look to make sure that we can help serve them as they expand their.

<unk> and they try to solve new challenges that they come up with and consolidation.

Thanks, Chris I appreciate it.

Yes.

Our next question will come from Kurt <unk> with benchmark. Please go ahead.

Hey, good morning.

Hey, good morning.

Yeah, I've got a couple of quick follow up questions for you right. So given the pipeline of international projects.

That you already have been.

<unk> been awarded right does that give you conviction that you think your overall.

<unk> revenue growth to be closer to 15% than the 10%.

So Curt I will answer it the way I just did a few minutes ago I think it's a it's way too soon to give a specific number around that.

We will provide more color on our guidance when we give our <unk> results and guidance for for 2024, but again I think it's going to be a little bit mixed by region. We think the middle East is very strong we think Latin America will continue to grow we expect to see continued growth in many offshore markets.

Asia and Europe, so it's going to be a bit of a mixed bag, but I think it would be best to wait.

While our Q4 call to get into specifics on what it is.

Yeah.

I appreciate that.

And then on.

On the balance sheet elements, what in terms of additional debt reduction what do you expect to achieve in 2024.

We mentioned before.

And in the previous calls.

Our pro.

Ted and interest coverage is 10 <unk> per in terms of.

When compared to our scaled peers, even on larger peers. So we would like to keep.

Quinton this Pat.

In content, which with a specific focus on senior secured loans.

And and increasing our interest coverage so.

We expect to continue doing it.

The next six to 12 months and.

Hope to have a meaningful conversation with our.

Investors on shareholder returns beyond that point.

Okay, great. Thank you appreciate it.

Thank you.

This concludes our question and answer session I would now like to turn the conference back over to management for any closing remarks.

Yeah.

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.