Q4 2023 Newpark Resources Inc Earnings Call
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Savannah: Good morning, My name is Savannah, and I will be your conference operator today at this time I would like to welcome everyone to the New Park Resources' fourth quarter and full year 2023 earnings conference call.
Savannah: Thanks, Kirk and I will be and will be available for replay beginning at 12 30 P. M. Eastern the recording can be accessed by dialing 890, 590, 394 domestic or for O Choo Choo Choo 05386 International.
Savannah: All lines are currently muted and after the prepared remarks, there will be a live question and answer session.
Savannah: I'd like to ask a question during the Q&A segment. Please press star one on your phone. If your question has been answered you may remove yourself from the queue at any time by pressing star too. We do ask that you. Please pick up your handset for optimal sound quality. It is now my pleasure to turn the floor over to Gregg Piontek, Senior Vice President and Chief Financial Officer.
Gregg S. Piontek: Please go ahead.
Gregg S. Piontek: Thank you operator, I'd like to welcome everyone to the New Park resources fourth quarter 2023 conference call.
Gregg S. Piontek: Joining me today is Matthew Lanigan, our president and Chief Executive Officer before handing over to Matthew I'd like to highlight that today's discussion contains forward looking statements regarding future business and financial expectations.
Gregg S. Piontek: Actual results may differ significantly from those projected in today's forward looking statements due to various risks and uncertainties.
Gregg S. Piontek: Including the risks described in our periodic reports filed with the SEC.
Gregg S. Piontek: Except as required by law, we undertake no obligation to update our forward looking statements.
Matthew Lanigan: Our comments on today's call May also include certain non-GAAP financial measures additional details and reconciliations to the most directly comparable GAAP financial measures are included in our quarterly earnings release, which can be found on our corporate website.
Gregg S. Piontek: There will be a replay of today's call and it will be available by webcast within the Investor Relations section of our website at <unk> Dot com.
Gregg S. Piontek: Please note that the information disclosed on today's call is current as of February 22nd.
Gregg S. Piontek: 2024.
Gregg S. Piontek: At the conclusion of our prepared remarks, we will open the line for questions.
Gregg S. Piontek: And with that I would like to turn the call over to our president and CEO Matthew Lanigan.
Matthew Lanigan: Thank you, Greg and welcome to everyone joining us on today's call.
Matthew Lanigan: I'm pleased to share that the new park team continued to execute at a high level in the fourth quarter, maintaining a focus on operational excellence, while also advancing our multi year business transformation strategy.
Speaker Change: We entered 2023 with very clear priorities first our focus on operational efficiencies to drive improvements in returns and consistent free cash flow generation.
Speaker Change: Second prioritizing investment in the growth of our industrial solutions business, while evaluating strategic alternatives for our fluids business.
Speaker Change: And finally, maintaining a strong balance sheet and returning excess cash generation to our shareholders.
Speaker Change: I'm pleased to say that in 2023, we delivered on all three.
Speaker Change: Our industrial solutions business delivered 12% year on year growth in rental and service revenues, which included a solid improvements across all major industry sectors, resulting in a 21% increase in segment operating income and a 13% increase in adjusted EBITDA.
Speaker Change: We continued to strengthen our position within the key utilities transmission market, which is forecasted to grow robustly over the next three years with an average of more than $30 billion per year projected to be spent annually on transmission line projects. According to recent survey of asset owners.
Speaker Change: For the full year 2023, with an al fluids business divestitures and restructuring actions along with disciplined balance sheet management and the strong performance of our international businesses contribute to a 15% year over year improvement in adjusted EBITDA and a $69 million reduction in this segment's net working capital.
Speaker Change: <unk> in this segment's strongest return on net assets since 2019.
Speaker Change: Notably our eastern Hemisphere delivered 28% year over year growth to a record $257 million of revenues in 2023, while our Canada operations also delivered 12% year over year revenue growth.
Speaker Change: As a result, Newport delivered $74 million of free cash flow in 2023, we.
Speaker Change: We increased our rental fleet by 11% and continue to prioritize capital to the expansion of our rental and service footprint to say, it's a multibillion dollar infrastructure markets.
Speaker Change: And finally, we reduced our net debt by $54 million and returned $32 million to shareholders through the repurchase of $6 5 million shares.
Speaker Change: Turning now to specifics of the fourth quarter, we generated adjusted net income of $4 million or four cents per diluted share on revenues of $168 million.
Speaker Change: Within industrial solutions, while rental revenues remained in line with Q3 levels like Florida customer project timing shifts due to non matting related supply chain and local permitting issues impacted expected Q4 direct sales deliveries.
Speaker Change: Combined with reduced service activities. This led to a 19% sequential decline in segment revenues.
Speaker Change: This segment delivered $17 million of fourth quarter, adjusted EBITDA, reflecting a 36% adjusted EBITDA margin again, highlighting the business has flexibility to maintain strong margins and returns despite mixed shifts in revenue sources across borders.
Speaker Change: As mentioned in my full year comments, despite quarterly fluctuations, we're remaining Paris with the longer term outlook in our served markets and our ability to continue to penetrate them.
Speaker Change: Consistent with our Q3 commentary the fluids systems business revenues declined 14% sequentially, primarily reflecting the anticipated pullback in the EMEA and U S regions.
Speaker Change: On the lower revenues this segment delivered $5 million of adjusted EBITDA and a 4% adjusted EBITDA margin.
Speaker Change: Importantly, our fluids team's disciplined focus on working capital management led to a $25 million or quarter reduction in the segments net working capital, which ended the year at $171 million.
Speaker Change: With the meaningful reduction in fluids working capital, we generated $28 million of free cash flow in the fourth quarter, which provided for a $13 million reduction of debt and a $6 million return of capital to shareholders through continued repurchases of our equity in the open market.
Speaker Change: We also invested $9 million of Capex, primarily reflecting late quarter additions to our rental fleet to support our expanding rental project pipeline.
Speaker Change: We finished the year with net debt of $36 million and a 0.5 times net leverage ratio.
Speaker Change: All told I'm Nicole over to Greg for his prepared remarks.
Greg: Thanks Matthew.
Greg: I'll begin my remarks, with the summary of our consolidated and segment level results for the fourth quarter, followed by an update on our outlook for 2024.
Our fourth quarter was highlighted by strong cash flow generation, which provided for further expansion of our rental fleet debt reduction and return of capital to shareholders.
Total fourth quarter revenues were generally in line with our expectations shared on our previous quarterly call with stronger than expected customer activities in international fluids markets offsetting lower revenues from the U S fluids and lower industrial solutions product sales.
The industrial solutions segment revenue was $46 million in the fourth quarter with more than 75% coming from rental and service.
Speaker Change: Rental and service revenues was $36 million for the fourth quarter and 11% year over year decline.
As we highlighted on our November call customer activity in early Q4 was impacted by more pronounced hot and dry weather conditions that we saw a steady improvement throughout the quarter and ended the year with much stronger rental utilization.
This is a very different dynamic than we faced in the prior year as the fourth quarter of 2022 was exceptionally robust benefiting from strength in utility infrastructure project activity.
And bind with the benefit of favorable weather conditions.
Which drove rental fleet utilization above typical levels.
Direct sales, which tend to fluctuate based on timing of customer projects declined $7 million year over year to $11 million for the fourth quarter as multiple customer project delays shifted the timing of acceptance expected sales into 2024.
Further the historical pattern of elevated Q4 purchases from utility customers Didnt manifest this year.
These customers utilize the remaining capital budget to fulfill other needs.
On a full year basis rental and service revenues have increased 12% reflecting growth across all major sectors, while product sales were down slightly.
Industrial solutions segment profitability remained strong in the fourth quarter as reflected by the segment adjusted EBITA margin of 36%.
The fluids systems segment generated revenue of $121 million in the fourth quarter, representing a decline of 28% versus the prior year period with a $44 million decline in U S land and $20 million impact from last year's divestitures, partially offset by an $18 million increase.
<unk> from international operations.
Our eastern Hemisphere contributed $63 million or 52% of our total fluid systems revenues in Q4.
The fourth quarter result reflects a sequential decline from the record Q3 results, primarily driven by the anticipated reductions in the Congo in several European markets.
Somewhat offset by the restart of activity in Cyprus, and an increase in the APAC region.
On a year over year basis, our eastern hemisphere revenues improved 19%.
Revenues from Canada increased 21% sequentially to $21 million in the fourth quarter, which reflects a 74% year over year improvement.
Our U S operations contributed $37 million of revenue in the fourth quarter.
Excluding the divestitures.
This reflects a 26% sequential and 54% year over year decline. The sequential decline was primarily driven by the continued softening in the U S market activity as well as a notable decline in the average revenue contribution from the rig service.
With the effects of the U S market softness we are maintaining our focus on pricing discipline and balance sheet efficiency, resulting in strong cash from U S operations.
Yeah.
Segment adjusted EBITDA margin was three 9% in the fourth quarter as Matthew touched on we reduced our net working capital in the fluid systems business by $25 million in the fourth quarter include.
Including a $14 million reduction in the U S, reflecting the solid progress driving working capital efficiency.
As of the end of the year the fluids systems business has $171 million of net working capital consisting primarily of receivables and inventory, which represents more than 80% of the segment net assets employed.
SG&A expenses were $23 3 million in the fourth quarter of 2023.
Including $6 million of corporate office expense.
Okay.
The decreases in SG&A and corporate office spending on both the sequential and year over year basis, primarily driven by the impact of short term and long term performance based incentive programs.
Interest expense decreased modestly on a sequential basis to $1 9 million for the fourth quarter, reflecting the effects of the lower overall debt balances.
Tax expense was $2 4 million in the fourth quarter as we were not able to recognize a tax benefit on the $3 $5 million of impairment charges.
The effective tax rate was 39% year to date.
Adjusted EPS was <unk> <unk> per diluted share in the fourth quarter compared to seven in the fourth quarter of last year, reflecting the effects of lower profitability, partially offset by a 7% decline in our diluted shares outstanding.
Operating cash flow was $36 million for the fourth quarter, while $8 million was used to fund our net capex with the majority once again directed toward the expansion of our industrial solutions rental fleet.
We also used $13 million to reduce debt and $6 million to fund share repurchases.
As a result of stronger than anticipated international receivable collections near the end of the year, our cash balance increased $10 million in the fourth quarter.
We generated $28 million of free cash flow in the fourth quarter, bringing our full year free cash flow to $74 million, a 93% full year cash conversion of adjusted EBITDA.
Let's now turn to the business outlook.
Our view on their respective markets and the opportunity remains largely unchanged.
For industrial solutions, we continue to see strong fundamentals for utility and critical infrastructure spending, which we expect will provide a multiyear tailwind to support our growth plan.
In terms of our Q1 outlook, we expect modest sequential growth in rental and service revenues and while we are pleased with the robust pipeline of opportunities on product sales the timing of customer projects remains dependent upon permitting supply chain and other factors.
For the full year 2024, we anticipate total industrial solutions revenues in the $230 million to $240 million range and industrial solutions, adjusted EBITDA of $80 million to $85 million.
With segment Capex of $30 million to $35 million.
In fluids systems, while the U S market outlook remains somewhat challenged in the near term.
Eastern Hemisphere in Canada business unit, which contributed roughly 70% of the segment's revenue in Q4 continued to perform at a high level.
Overall, we expect fluids systems revenue to improve modestly on a sequential basis in the first quarter with international growth somewhat offset by continued U S softness.
At this revenue level, we expect segment adjusted EBITDA margins to improve toward the mid single digits.
Benefiting from international operations.
We anticipate corporate office expense will remain fairly in line with our 2023 exit rate for the foreseeable future as we continue to advance the strategic process for the fluids segment.
Meanwhile, we expect interest expense and tax rates to remain fairly in line with current levels until we conclude the fluids process.
In terms of capital allocations, we expect our 2024 net capital investments will remain dependent upon our projected rental revenue growth rate.
Beyond our continued organic growth investments in industrial solutions, we expect our 2020 for cash generation will be primarily used to build liquidity or inorganic growth opportunities. Following the fluids divestiture or return of capital to shareholders through our programmatic share repurchase program.
And with that I'd like to turn the call back over to Matthew for his concluding remarks.
Thanks, Greg as.
As we leave 2023 and look ahead to 2024 I am pleased with the progress we've made to drive organic commercial growth across the enterprise, while continuing to build a more efficient competitive business.
Industrial solutions once again delivered year over year, grossing revenue EBITDA and margin realization with our ongoing expansion in the multibillion dollar global Worksite access market, we remain optimistic about the longer term prospects for our business.
In fluids systems, our international operations continued to deliver significant year over year growth in revenue and profitability offsetting declines in U S land markets with a total fluids segment delivering the highest return on net assets since 2019.
I remain proud of our global fluids business as they continue to navigate the changing global landscape streamlining the U S operations and overhead structures, while enhancing support capabilities within strategic international markets and maintaining a laser focus on safety exemplary customer service and working capital efficiency.
Our priorities for 2024 are clear.
Within our industrial solutions business, we're prioritizing geographic expansion within the U S across our high growth regional footprint.
Regarding our unique position as a vertically integrated manufacturer of composite matting to expand athlete and drive share gains within our existing markets.
We will continue to manage to a return on margin targets carefully balancing our pricing and fleet utilization as we evolve our project mix towards larger longer duration projects that provide for more stable revenues, but more competitive pricing dynamics.
We will also continue to expand the usage of alternative and recycled materials in our raw materials mix.
Further cementing our circular plastics credentials and optimizing manufacturing costs without impacting quality appearance or design capability of our products.
While volume growth within this business isn't linear given the factors of permitting and project timing, we remain bullish on the multiyear demand outlook, given the pace of new investment within our energy and infrastructure markets and specifically within the utility transmission market considering the growth in spend in this space that <unk>.
Referred to in my opening comments.
As we expand our already meaningful relationships across the country with asset owners and that construction partners. We believe this will provide strong long term growth and a reduction in quarter to quarter volume swings such as we experienced in the fourth quarter.
We believe that <unk> portfolio includes the most flexible lightweight and durable solution in the market positioning us to win where we compete.
As it pertains to our fluids systems business as strategic review remains on track given the scope of our international fluids operations diligence is time intensive however, we're making good progress with our partners. It was odd to move the process forward and continue to anticipate it will be concluded around mid 2024.
Finally, with respect to capital allocation, we continued to optimize our balance sheet, while investing in the expansion of our matting sleep and service capabilities.
As we move closer towards becoming a pure play industrial solutions business, we see the opportunity to become a strategic acquirer of assets within our existing scope of capabilities evaluating adjacent markets that enhance our unique value proposition with customers, while supporting a path towards incremental margin expansion over time.
In closing I want to thank our shareholders for their ongoing support our employees for their dedication to the business, including their commitment to safety and compliance.
And our customers for their ongoing partnerships and with that we'll open the call for questions.
Thank you and at this time, if you would like to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star to again that is star one to ask a question and our first question will come from Aaron <unk> with Craig Hallum. Please.
Please go ahead.
Yes, good morning, Mathew and Greg Thanks for taking the questions.
Yes.
First for me on the industrial business I know, we had a tough comp year over year with weather, but could you give a little more details on some of the project pushout. It sounds like it was supply chain permitting.
That broad based or just a handful of projects have those started in the first quarter and then maybe just discuss how the pipeline sits today compared to the past few quarters as we think about that growth for 2024.
Yes, Thanks Erin.
Yes.
On the Q4 shift it was really.
Two specific projects at the end of the day, one was related primarily to steel products not being available for the full scope of the project, which caused them to push that.
As it as it stands to its timing it looks like that the utility moved onto other projects and are now planning that for a little later in this year. So it has not yet commenced the other projects was related to a local permitting issue that caused that delay in permitting issues is also still.
Not resolved so not necessarily what I told a systemic issue related to two specific projects in this case.
The pipeline, if we look at where we are.
<unk> volume this time this year versus last we're seeing some strong mid to high.
Teens growth in al quite rights, which is really underpinning the confidence that were referred to in the call.
Alright, thanks for the color there and then I appreciate the margin guidance for the year.
It looks like right around the mid Thirty's, but it's down slightly a little bit year over year can you just talk about how youre thinking about price versus volume and mix in 2024, especially with lumber prices, where they are and maybe how recycling factors into that as that starts to grow as a percentage of your mix.
Yes I'll.
Got it and then all of Matthew.
Add to it but I think the growth that we see in 2024, I think is going to be much more so driven by volume volume expansion as we penetrate the markets as Mac.
You mentioned in his comments.
We are intentionally pursuing some of these longer duration.
<unk>, which.
Obviously coming at a different price point, youre kind of trading utilization and predictability for a little bit of price I wouldn't expect price to be a big movement, there probably kind of gradually reduce as we progress through the year and make that progression of longer term projects, Dan I think you've got it.
Alright, and then just maybe one more I know you didn't guide for fluids explicitly as you have in the past, but just with the decline in the fourth quarter relative to the past few quarters are there are there any other less profitable areas that we need to still step away from.
Just want to understand a little more on what drives that drove the <unk> performance and how we should be thinking about that business from here.
No major changes in the overall business makeup or business changes in the way obviously, we are in the midst of the process and so.
<unk> did to do kind of the.
Taking the common sense actions to streamline the overall organization and really adjust to that mix shift, but as we kind of framed out. This thing has shifted pretty dramatically over the past year with now 70% of our revenues here coming from.
From the international piece of the business so.
As we look in the near term don't see any major changes in that continue to have the market dynamics of international is where we see the greatest stress.
In the U S market.
<unk> continues to be struggling as a general market as a whole.
Alright, thanks for taking the questions I'll turn it over.
Thanks Ann.
Our next question will come from.
IOL with H C Wainwright.
Go ahead.
Thank you good morning, everyone.
Hi, good morning, so on the industrial.
And the industrial outlook.
Is that new supported by some concrete backlog.
We just sort of.
Okay.
Yes.
It's really pipeline driven.
Think in this business.
Backlog is a hot concept for us we just look at what our acquired volumes.
With various various start times throughout the year, they typically tend to be more.
Here and now type project activities that we are actively fighting on in the pipeline. So it's really just looking at pipeline volume changes year over year and period over period, which as I said.
As said to Aaron we're looking at.
High teens sort of growth in the acquired volumes in that fairly stable conversion rate on that which is really driving the which is driving the forward guidance and.
Just adding to that just as we saw in Q4, even when you do have.
Firm orders and locked in projects, we find that the timing of those projects starts slide because they are dependent on some other things that are beyond our control.
Interesting thing there is you go back a year ago is isolated in our favor and we had a really strong Q4 with all these things lining up in the quarter. This year. It appears that that shouldn't be repeated so it's there are swings and roundabouts.
Understood. Thank you for that.
On the Capex, that's going on until the industrial Goldman.
Thanks, Bob.
Mainly we need to support the rental business or some other progress.
Yes, primarily its supporting fleet expansion there.
And there are some maintenance capex needs at the plant, but the primary focus is on rental fleet expansion as we looked at look to grow with those geographic regions forward in.
And continue to penetrate new customers in the space.
Round numbers, roughly 75% of our of our Capex here. This year was really driven by that supporting that growth of that rental fleet. So.
As we look forward that's the growth rate in our rental fleet is going to be kind of a key driver of our level of capex in the business.
This continues.
<unk>.
And then on the fluids business.
It seems I mean, lazard instead, we are working on.
Jimmy.
Getting some.
Interest I mean should we assume that there is no sort of hormones.
Bids.
Business.
Yes, without getting into too many details on exactly where the process is we.
Followed what ill frame up as is typical.
Marketing process as we had mentioned previously that process launched in September and then you go through your phase one phase two diligence as Matthew mentioned in his comments.
As you can kind of naturally expect when you look at the international complexities and the breadth of the operations the diligence phase takes.
A reasonable amount of time, but having said that we're still seeing kind of a mid year 'twenty four expectation to get the process substantially rep.
That's all on the walls and pursuing one of my other questions offline. Thank you.
Sure.
And our next question will come from Bill <unk> with Keybanc capital. Please go ahead.
Okay. Thank you you had mentioned that in 2023 that 75% of your Capex was from.
Our directed towards rental fleet expansion do you anticipate that same ratio this year.
I would not expect any major changes in there, yes, I think I think you still have at least 75% or so of our or our capex will be in the form of the fleet expansion.
And Directionally what.
What geographic regions are you looking to expand in.
Yeah, Bill, we really we see some nice growth in sort of the Midwest.
And northwest markets opening up as well.
A lot of continued activity with enel.
More traditional markets in the southeast and southwest, but in terms of new activity I think I think really it's a midwest focused.
And then.
Once you have a.
Of the of the country would you still be underpenetrated in.
Yes.
Describe it is underpenetrated I think it's really just.
We can move fleet fairly efficiently and we can move crews fairly efficiently. What we want to do is as we see sustained activity levels set up set up more permanent and establishment there, it's really going to be a case of using our logistics efficiency to service those those projects specific areas versus sustained the level of activity in the.
Big area.
Okay. Okay. Another way to say that as we cover the country now, but as we look at where we want to have more established.
Presences further for what we see is more sustained activity longer term that they are the areas, where we're looking to move fleet too.
Yeah.
Understood. So there arent any areas in the countries that you are just.
Not not in at this point or at least once you get into the northwest and Midwest.
Yes.
It's robin.
And if I just think about a map of the United States in the northwest and Midwest encompass a really large geographic area.
How does that relate to the size of revenue possibility just geography equal revenue with these.
Transmission lines or.
Population basis.
Yes, it's really I mean, it's really more tied to what.
What activity is going on in those spaces in terms of renewable tie ins as a renewable type project time at tie ins as just infrastructure upgrades is it.
Into state connections, what the activity levels that is to support the kind of the supply goals.
The utilities in those geographies typically higher populations high demands that would would drive that kind of thing, but I think it's more generally related to what's actually going on in those markets from all tenants supply and a reliability perspective, yes, I think you do have some issues.
IRA fees that have more of an issue with age aging of their infrastructure. So therefore need for them to harden the grid et cetera.
So what geographies are in need of grid hardening, the most and then second.
As is our perception correct that the renewable specifically wind and solar are most active in terms of new new installation in the Midwest.
Basically from the Mississippi West.
Yes.
Bill I think on a project basis.
Coal out of the focus in that Midwest areas, where we see the activity levels really supporting our push into that space.
As it pertains to project activities, specifically around renewable times et cetera, I think as you've called out the geographies and where you see those projects that's why we're going to be.
Okay, great hardening, whereas that most needed.
I think as you've seen as we move through the southeast and southwest regions, where you've got more exposure to extreme weather events.
Particularly in the form of Hurricanes and things of that nature, but generally as Greg touched on it I think the grid across the country is kind of at the outer edge of its age limit said is full.
Full court press here too to upgrade that to meet the reliability standards and the capacity requirements that.
That society needs.
Thank you and then.
One more a totally different direction here.
Would you please detail what you.
You hinted at relative to the quote rate increase for the for them that business you provide us more perspective on that please.
Sure.
As we look at our quoting activity is we're capturing in our systems and we see the level of that from a volume perspective of whats out there in the market place, we look year on year and we see that at a point in time. This year. The volume of quotes that we are being asked to participate in is up in that sort of 15% to 19% year.
For the year, which which gives us confidence that the longer term demand in the activity levels are lining up with the macro themes are you hearing in terms of utilities, expanding capex budgets and talking about the need to upgrade their infrastructure, we're seeing that flow through into project requests.
What we have kind of alluded to in the call is.
Supply chain specific or permit specific the timing of those.
Is becoming less.
AZ to predict.
So hopefully that covered what you're off to bill.
Great. Thank you very much.
Cool.
And next we have a follow up from Erin <unk> with Craig Hallum. Please go ahead.
Yeah, Hi, again, just just so maybe a couple of others for me.
On the free cash flow can you just maybe talk about how you see that trending in 2020 for some of the moving pieces. There I mean, you had a really strong year in 2023 from.
Working capital benefits, just how how does that look as we head into 2024, yes. The working capital benefit we saw in 'twenty three that provided a pretty significant tailwind and thats really the overall revenue driven.
As I look to 2024, what I would say is the fundamental model you still see strong.
Free cash flow generation.
The one thing that would work.
A headwind to that is if you do have a very sharp growth rate and the revenues that would actually that would consume working capital and work against you, but absent that we see a solid free cash flow generation through the year.
Q1, I would say I would expect that to be somewhat muted in part because we had a very strong Q4 Q1, you also have certain.
Impact of like payout of your annual incentives so that kind of works against you as well. So I would expect kind of a muted free cash flow generation here in Q1, but solid for the year.
Got it thanks, and then just maybe one last one on the 800 series launch just maybe an update on the progress there how has the uptake been given the performance benefits and just is that something that that kind of helps accelerate growth given given kind of the value proposition there.
On the 800 series, we've deployed the majority of that product into our internal fleet, So where we're seeing the transportation advantages from from the lighter weight in the air Iron internal fleet.
Slight use and so really that's what we wanted to do to kind of put that put that product to work in our own fleet first and then look to expand that to customers.
Into this year and beyond so I'd say, it's all it's all going on track the performance of the product as we predicted and expected is performing like a traditional <unk> based product with just that that wide advantage, that's really helping on the transportation side.
Great. Thanks for taking the questions I appreciate it.
Yeah, you bet. Thanks, Dan.
And that will conclude our time further question and answer session I would now like to turn the conference back to Mr. Gregg Piontek for any closing remarks. Thank.
Thank you that concludes our call today should you have any questions. Please reach out to us using our email at investors at <unk> Dot Com and we look forward to speaking with you again next quarter.
And that will conclude today's conference. Thank you for your participation and you may now disconnect.
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