Q1 2024 Stabilis Solutions Inc Earnings Call
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Operator: Please stand by; we are about to begin. Should you require operator assistance, please press star and zero on your telephone keypad. Good day, everyone, and welcome to the Stabilis Solutions first quarter 2024 earnings conference call.
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Operator: Good day, everyone and welcome to the stability solutions first quarter 2024 earnings conference call. At this time, all participants have been placed on a listen only mode and the floor will be opened for your questions. Following the presentation. If you would like to ask a question at that time. Please press star zero on your telephone keypad. If at any point. Your question has been answered.
Operator: At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, press star and zero on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue simply by pressing star and two. So that others can hear your question clearly, we ask that you pick up your handset for best quality.
Operator: You may remove yourself from the queue simply by pressing star and two so that others can hear your question clearly we ask that you pick up your handset for best quality also to ensure that we have time for everyones question. We ask that you limit yourself to a single question as well as a follow up and then you are invited to re signal for a question.
Operator: Also, to ensure that we have time for everyone's question, we ask that you limit yourself to a single question as well as a follow-up, and then you are invited to re-signal for another question. Now, it is my pleasure to turn the floor over to our host, Andy Puhala, Chief Financial Officer. Mr. Puhala, please go ahead.
Operator: Now it is my pleasure to turn the floor over to our host Andy to Holler, Chief Financial Officer. Mr. Paula. Please go ahead.
Andrew Lewis Puhala: Good morning, and welcome to Stabilis Solutions' first quarter 2024 results conference call. I'm Andy Puhala, Senior Vice President and CFO of Stabilis. And joining me today is our President and CEO, Westy Ballard.
Andrew Lewis Puhala: Good morning, and welcome to <unk> solutions first quarter 2024 results conference call I'm, Andy Pooh, Halle Senior Vice President and CFO, Steve Ellis and joining me today is our president and CEO Westy Ballard.
Andrew Lewis Puhala: We issued a press release after the market closed yesterday detailing our first quarter operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at Stabilis-Solutions.com. Before we begin, I'd like to remind everyone that today's conference call will contain forward-looking statements within the meaning of the Private Securities Reform Act of 1995 and other securities laws. These forward-looking statements are based on the company's expectations and beliefs as of today, May 8, 2024.
Andrew Lewis Puhala: We issued a press release after the market closed yesterday detailing our first quarter operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at stability Stash solutions dotcom.
Andrew Lewis Puhala: Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. The company undertakes no obligation to provide updates or revisions to the forward-looking statements made in today's call. Additional information concerning factors that could cause those differences is contained in our filings with the SEC and in the press release announcing our results. Investors are cautioned not to place undue reliance on any forward-looking statement. Further, please note that on today's call, we may refer to certain non-GAAP financial information.
Andrew Lewis Puhala: Before we begin I'd like to remind everyone that today's conference call will contain forward looking statements within the meaning of the private Securities Reform Act of 1995 and other securities laws.
Andrew Lewis Puhala: You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release. Today's call is being recorded and will be available for replay. With that, I'll hand the call over to Westy Ballard for his remarks.
Westervelt T. Ballard: These forward looking statements are based on the company's expectations and beliefs as of today may eight 2024.
Westervelt T. Ballard: Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected.
Westervelt T. Ballard: The company undertakes no obligation to provide updates or revisions to the forward looking statements made in today's call.
Westervelt T. Ballard: Additional information concerning factors that could cause those differences is contained in our filings with the SEC and in the press release announcing our results investors are cautioned not to place undue reliance on any forward looking statements.
Westervelt T. Ballard: Further please note that we may refer to certain non-GAAP financial information on today's call you can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release.
Andrew Lewis Puhala: Today's call is being recorded and will be available for replay with that I'll hand, the call over to Westy Ballard for his remarks.
Andrew Lewis Puhala: Sure.
Westervelt T. Ballard: Thank you, Andy, and good morning to everyone joining us on the call. We delivered a strong first quarter performance building on the commercial momentum demonstrated in the latter half of 2023. Net income increased 36% in the first quarter, supported by an 8% increase in LNG volume sold when compared to the year-ago period. We generated nearly $4 million in operating cash flow in the first quarter and ended the period with nearly $13 million in cash and availability under our credit agreements and a trailing 12-month net leverage ratio of 0.1 times, even after deploying significant capital toward discretionary growth investments over the past several quarters.
Westervelt T. Ballard: Thank you Andy and good morning to everyone joining us on the call.
Westervelt T. Ballard: We delivered a strong first quarter performance building on commercial momentum demonstrated in the latter half of 2023.
Westervelt T. Ballard: Net income increased 36% in the first quarter supported by an 8% increase in LNG volumes sold when compared to the year ago period.
Westervelt T. Ballard: We generated nearly $4 million in operating cash flow in the first quarter and ended the period with nearly $13 million in cash and availability under our credit agreements and a trailing 12 month net leverage ratio of 0.1 times.
Westervelt T. Ballard: Even after deploying significant capital towards discretionary growth investments over the past several quarters.
Westervelt T. Ballard: Over the past 24 months, we've transitioned our business model toward firm, longer-term customer relationships that support higher asset utilization over sustained periods, resulting in more predictable cash flows from operations. More recently, we announced a transformational marine bunkering supply contract, extended an agreement with a major power generation customer, and continue to expand our presence as a leading fuel supplier to the commercial space launch industry. To that end, our own liquefaction capacity is expected to be fully utilized through 2025, providing us with a high degree of visibility over the next 20 months.
Westervelt T. Ballard: Over the past 24 months, we've transitioned our business model towards firm longer term customer relationships that support higher asset utilization over sustained periods, resulting in more predictable cash flows from operations.
Westervelt T. Ballard: More recently, we've announced a transformational marine Bunkering supply contract.
Westervelt T. Ballard: An agreement with a major power generation customer and continue to expand our presence as a leading fuel supplier to the commercial space launch industry.
Westervelt T. Ballard: To that end our own liquefaction capacity is expected to be fully utilized through 2025, providing us with a high degree of visibility over the next 20 months.
Westervelt T. Ballard: However, in addition to our own capacity, we maintain an extensive third-party LNG supply network which allows us to meet ongoing incremental growth in customer demand while pursuing expansion of our internal liquefaction capacity. Within our marine market, the first quarter of 2024 was our first full quarter of LNG fueling operations and related services for Carnival Corporation, representing a milestone achievement for Stabilis.
Westervelt T. Ballard: However, in addition to our own capacity, we maintain an extensive third party LNG supply network with.
Westervelt T. Ballard: It allows us to meet ongoing incremental growth in customer demand, while pursuing expansion of our internal liquefaction capacity.
Westervelt T. Ballard: With our marine market. The first quarter 2024. It was our first full quarter of LNG fueling operations and related services for Carnival Corporation, representing a milestone achievement for stimulus.
Westervelt T. Ballard: This win is also a significant development for the domestic marine fueling market, representing the first ever LNG bunkering operation in the Port of Galveston, Texas. Moving forward, we will continue to enhance our logistical capabilities as the only small-scale LNG bunker provider to the marine industry capable of executing multiple modes of delivery to our bunkering customers. The focus of our efforts will be on rapidly expanding our bunkering operations directly to the waterfront of strategic ports across the continental United States.
Westervelt T. Ballard: This win is also a significant development for the domestic marine fueling market, representing the first ever LNG Bunkering operation and the port of Galveston, Texas.
Westervelt T. Ballard: Moving forward, we will continue to enhance our logistical capabilities as the only small scale LNG bunker provider to the marine industry capable of executing multiple modes of delivery to our bunkering customers.
Westervelt T. Ballard: Focus of our efforts will be on rapidly expanding our bunkering operations directly to the waterfront strategic ports across the continental United States.
Westervelt T. Ballard: These efforts will be supported by our robust inland LNG supply and logistics network, which remains a clear competitive advantage for Stabilis for several key reasons. First, combined with our extensive experience in designing, constructing, and operating multiple liquefaction plants, it significantly de-risks greenfield expansion activities.
Westervelt T. Ballard: These efforts will be supported by a robust inland LNG supply and logistics network, which remains a clear competitive advantage for <unk> for several key reasons.
Westervelt T. Ballard: First combined with her extensive experience in designing constructing and operating multiple liquefaction plants, it's significantly de risks greenfield expansion activities.
Westervelt T. Ballard: Second, it allows us to immediately execute new bunkering contracts as we can provide LNG bunkering fuel today anywhere in the U.S. utilizing our diverse third-party LNG supply network. Third, it affords us the option to supplement waterfront LNG production on a temporary or permanent basis to support incremental demand. And finally, our operational flexibility provides our current and prospective customers the ability to consider a wide variety of trade lanes throughout the U.S., knowing they will have a reliable LNG fuel supply with Stabilis. We remain in advanced discussions with several potential marine customers currently seeking LNG as a lower-cost, cleaner-burning bunker fuel alternative for their growing inventory of LNG-fueled vessels.
Westervelt T. Ballard: Second it allows us to immediately execute new bunkering contracts as we can provide LNG bunkering fuel today anywhere in the U S. Utilizing our diverse third party LNG supply network.
Westervelt T. Ballard: Third it affords us the option to supplement waterfront LNG production on a temporary or permanent basis to support incremental demand.
Westervelt T. Ballard: And finally, our operational flexibility provides our current and prospective customers the ability to consider a wide variety of trade lanes throughout the U S. Knowing they will have a reliable LNG for fuel supply what's develops.
Westervelt T. Ballard: We remain in advanced discussions with several potential marine customers currently seeking LNG as a lower cost cleaner burning bunker fuel autonomy alternative for their growing inventory of LNG fuel vessels.
Westervelt T. Ballard: Given the importance of this initiative to our customers, our history of successfully executing LNG bunkering operations on three U.S. coasts gives these customers tremendous confidence in our ability to deliver an actionable, credible, best-in-class bunkering solution for their long-term needs. Within our commercial and industrial markets, we continue to capitalize on a multi-year investment cycle in infrastructure and electrification as data centers, cloud computing, emerging technologies, and emergency power needs give rise to increased demand for behind-the-meter power generation solutions.
Westervelt T. Ballard: Given the importance of this initiative to our customers our history of successfully executing LNG bunkering operations on three U S coast.
Westervelt T. Ballard: Gives these customers tremendous confidence in our ability to deliver an actionable incredible best in class Bunkering solution for their long term needs.
Westervelt T. Ballard: Yes.
Westervelt T. Ballard: Within our commercial and industrial markets, we continue to capitalize on our multi year investment cycle in infrastructure and electrification as data centers cloud computing emerging technologies and emergency power needs give rise to increased demand for behind the meter power generation solutions.
Westervelt T. Ballard: At the same time, our nation's aging electric grid lacks the reliability, capacity, and resilience to effectively support this rapid growth in power consumption. As we move closer toward a world where the electrification of everything requires reliable access to both central and remote power sources, Stabilis is uniquely equipped to provide decentralized, on-demand power through our integrated system-based solutions.
Westervelt T. Ballard: At the same time, our nations aging electric grid lacks the reliability capacity and resilience to effectively support this rapid growth and power consumption.
Westervelt T. Ballard: As we move closer toward a world, where the electrification of everything requires reliable access to both central and remote power sources.
Westervelt T. Ballard: <unk> is uniquely equipped to provide decentralized on demand power through our integrated system based solutions.
Westervelt T. Ballard: For example, several weeks ago, we announced a 14-month contract extension that solidifies our position as a leading clean fuel solutions provider for behind-the-meter energy installations and further enhances our growing position in this space. For context, the power generation sector represented approximately 25% of our total revenue in 2023, and we expect this opportunity to accelerate as domestic energy demand continues to grow over the next decade. Looking ahead, we intend to further optimize our existing asset base and supply chain while prioritizing investments in incremental capacity, infrastructure, and product offerings capable of supporting increased demand across our entire franchise, which includes our marine, power generation, aerospace, and other diverse end markets, both in the U.S. and abroad.
Westervelt T. Ballard: For example, several weeks ago, we announced a 14 month contract extension, which solidifies our position as a leading clean fuel solutions provider for behind the meter energy energy installations and further enhances our growing position in this space for.
Westervelt T. Ballard: For context, the power generation sector represent approximately 25% of our total revenue in 2023, and we expect this opportunity to accelerate as domestic energy demand continues to grow over the next decade.
Westervelt T. Ballard: Looking ahead, we intend to we intend to further optimize our existing asset base and supply chain, while prioritizing investments in incremental capacity infrastructure and product offerings capable of supporting increased demand across our entire franchise, which includes our marine and power generation aerospace.
Westervelt T. Ballard: And other diverse end markets, both in the U S and abroad.
Westervelt T. Ballard: To accomplish this, we are routinely evaluating a variety of prospective sources of capital with heavy emphasis and focus on those partners that know our industry, know our company, and recognize the significant upside potential in our operating model. Decisions to proceed with new infrastructure investments will balance longer-term rateable off-take agreements that de-risk our investment over a multi-year period and our comfort in assuming merchant risk to assume timely and critical infrastructure is in place to sufficiently address the rapidly advancing needs of next-generation fuels like LNG.
Westervelt T. Ballard: To accomplish this we are routinely evaluating a variety of perspective sources of capital with heavy emphasis.
Westervelt T. Ballard: And focus on those partners that know our industry know our company and recognize the significant upside potential in our operating model.
Westervelt T. Ballard: Decisions to proceed with new infrastructure investments will balance longer term ratable off take agreements that derisk, our investment over a multiyear period.
Westervelt T. Ballard: And our comfort and assuming merchant risks to assume timely and critical infrastructure is in place.
Westervelt T. Ballard: Officially address the rapidly advancing needs of next generation fuels like LNG.
Westervelt T. Ballard: In closing, while you've heard me discuss how Stabilis is uniquely positioned to capitalize on the significant asymmetrical growth opportunity we see within last-mile clean fueling solutions across a diverse range of end markets, it's also important to highlight how we, as a microcap equity, provide an incredibly compelling value proposition for energy transition investors. Today, Stabilis is one of only a handful of profitable, well-capitalized, proven operators in the energy transition market, as demonstrated by our actions over the last 24 months and, more recently, as demonstrated by our strong first quarter results, which included a significant increase in available liquidity and a net leverage ratio around zero.
Westervelt T. Ballard: In closing while you've heard me discuss has the bills is uniquely positioned to capitalize on this significant asymmetrical growth opportunity, we see within last mile clean fueling solutions across a diverse range of end markets. It is also important important to highlight how we as a microcap equity provide an incredibly compelling value.
Westervelt T. Ballard: Proposition for energy transition investors.
Westervelt T. Ballard: <unk> is one of only a handful of profitable well capitalized proven operators in the energy transition market as demonstrated by our actions over the last 24 months and more recently as demonstrated by our strong first quarter results, which included a significant increase in available liquidity and our net leverage ratio around.
Westervelt T. Ballard: <unk>.
Westervelt T. Ballard: We're patient investors building a platform for growth that, over the next decade, will continue to become the last mile fueling solutions platform of choice for a growing roster of industry-leading, high-performance brands. Like you, we are shareholders, and we're committed to driving long-term value creation. We're glad you're on this journey with us and look forward to delivering on our next phase of profitable growth. And with that, I will turn it over to Andrew.
Westervelt T. Ballard: We're patient investors building a platform for growth that over the next decade will continue to become the last mile of fueling solutions platform of choice for a growing roster of industry, leading high performance brands.
Andrew: Like you we are shareholders and we're committed to driving long term value creation. We're glad you're on this journey with us and look forward to delivering on our next phase of profitable growth.
Andrew: And with that I will turn it over to Andy.
Andrew: Thank you SD.
Andrew Lewis Puhala: Let's move to a discussion of our first quarter performance together with an update on our balance sheet and liquidity at the end of Q1. We delivered record first quarter net income of $1.5 million, or $0.08 per share, driven by strong LNG demand, improved utilization of our own liquefaction facilities, and improved operating leverage. Our first quarter 2024 results reflect 10% sequential revenue growth and continued improvement in both profitability and free cash flow. The sequential improvement in our overall quality of earnings is a result of the directed shift in our business model toward steady and predictable offtake agreements.
Andrew: Let's move to a discussion of our first quarter performance together with an update on our balance sheet and liquidity exiting Q1, we.
Andrew Lewis Puhala: We delivered record first quarter net income of $1 $5 million or <unk> <unk> per share driven by strong LNG demand improve utilization of our owned liquefaction facilities and improved operating leverage our.
Andrew Lewis Puhala: Our first quarter 2024 results reflect 10% sequential revenue growth and continued improvement in both profitability and free cash flow the sequential improvement in our overall quality of earnings as a result of the directed shift in our business model towards steady and predictable off take agreements.
Andrew Lewis Puhala: We generated $3.9 million of cash from operations in the first quarter, representing a conversion of over 100% of our EBITDA for the quarter. This strong cash generation continued to build our already favorable cash and liquidity position, which we intend to leverage as we invest in growth going forward. As of March 31, 2024, Stabilis had total cash and equivalents of $8.3 million, together with $4.3 million of availability under our credit facility. Total debt outstanding as of March 31, 2024 was $9.2 million, resulting in a net debt to trailing 12-month adjusted EBITDA of 0.1 times.
Andrew Lewis Puhala: We generated $3 $9 million of cash from operations in the first quarter, representing a conversion of over 100% of our EBITDA for the quarter.
Andrew Lewis Puhala: This strong cash generation continued to build our already favorable cash and liquidity position, which we intend to leverage as we invest in growth going forward.
Andrew Lewis Puhala: As of March 31, 2020 for stability had total cash and equivalents of $8 3 million together with $4 3 million of availability under our credit facilities totaled debt outstanding as of March 31, 2024 was $9 $2 million, resulting in a net debt to trailing 12.
Andrew Lewis Puhala: Month, adjusted EBITDA of 0.1 times.
Andrew Lewis Puhala: As we continue to approach full capacity utilization, we're evaluating the deployment of internal capital towards high-return investment opportunities to grow capacity within our key end markets, in addition to larger prospective capital infusions on more transformational growth opportunities. That concludes our prepared remarks. Operator, please open the line for the Q&A session. Thank you.
Andrew Lewis Puhala: As we continue to approach full capacity utilization, we're evaluating the deployment of internal capital towards high return investment opportunities to grow capacity within our key end markets. In addition to a larger perspective capital infusions on more transformational growth opportunities.
Andrew Lewis Puhala: That concludes our prepared remarks, operator, please open the line for the Q&A session.
Operator: Thank you, gentlemen. The floor is now open to questions. At this time, if you have a question or comment, please press star and one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star and two. Again, we ask that you pick up your handset when asking your question to provide optimal sound quality for our audience. Thank you. We'll allow just a moment to assemble our roster. We'll take our first question today from Martin Malloy at Johnson Rice. Please go ahead, sir. Your line is open.
Speaker Change: Thank you gentlemen, the floor is now open for questions. At this time, if you have a question or comment Please press star and one on your telephone keypad. If at any point. Your question is answered you may remove yourself from the queue by pressing star into again, we ask that you pick up your handset when posing your question to provide optimal sound.
Operator: Quality for our audience. Thank you.
Operator: We will allow just a moment to assemble our roster.
Operator: Yes.
Martin Whittier Malloy: We will take our first question today from Martin Malloy Johnson Rice. Please go ahead, Sir your line is open.
Martin Whittier Malloy: Good morning, congratulations on the quarter, and thank you for taking my question. Thanks, Marty. The first question, could you maybe talk about the milestones we should look for that would result in giving FID for additional liquefaction capacity or a marine terminal or infrastructure that would assist in the support debunkering?
Martin Whittier Malloy: Good morning, congratulations on the quarter and thank you for taking my questions.
Speaker Change: Thanks Marty.
Martin Whittier Malloy: The first question just could you maybe talk about the milestones we should look for that would result in giving <unk> for additional liquefaction capacity or marine.
Martin Whittier Malloy: Terminal or infrastructure.
Martin Whittier Malloy: Assistant support the Bunkering.
Westervelt T. Ballard: Yes, sir. As you know, we operate and have historically operated on three coasts, and each one of those geographies presents different variables that need to be considered as we think about FID and then the ultimate deployment of capital. I think without going through each one of those locations, I think, holistically, it's important to recognize the balance, as I mentioned in our comments. We want to try and de-risk these investments to the greatest extent possible, but also balancing that with not overly thinking about commercial offtake and missing that opportunity.
Marty: Yes, sure. So as you know we're operating in have historically operator on three coasts.
Westervelt T. Ballard: Each one of those geographies present.
Westervelt T. Ballard: Different variables that need to be considered as we think about.
Westervelt T. Ballard: And then the ultimate deployment of capital.
Westervelt T. Ballard: Without going through each one of those locations I think holistically, it's important to recognize the balance as I mentioned in our comments, we want to try and de risk.
Westervelt T. Ballard: These these are these investments to the greatest extent possible, but also balancing that with not not overly.
Westervelt T. Ballard: And so I think that since we've got such a strong liquidity position, we will continue to advance a lot of pre-FID initiatives with the understanding of property, lease, or purchase. As I mentioned, we've already acquired another 100,000-gallon train. We acquired that last year.
Westervelt T. Ballard: Thinking about.
Westervelt T. Ballard: Commercial offtake and missing that opportunity and so I think that since we've got such a strong liquidity position, we will continue to advance.
Westervelt T. Ballard: A lot of.
Westervelt T. Ballard: A lot of pre FID.
Westervelt T. Ballard: Initiatives with the understanding of property.
Westervelt T. Ballard: Lease or purchase as I mentioned, we've already acquired another 100000 gallon train we acquired that last year, we're spending a lot of time with engineering and pre deployment designs and configuration of different plants in different geographies. We are spending a lot of time and energy around building sufficient.
Westervelt T. Ballard: We're spending a lot of time with engineering and pre-deployment designs and configurations of different plants in different geographies. We are spending a lot of time and energy around building a sufficient supply chain and infrastructure along several coasts. And so it's not one thing that you can point to.
Westervelt T. Ballard: <unk> supply chain and infrastructure along several coasts.
Westervelt T. Ballard: And so it's not one thing that you can point to I think it's the narrative that we have about where we're spending our time and energy not only on the pre FID.
Westervelt T. Ballard: I think it's the narrative that we have about where we're spending our time and energy, not only on the pre-FID work that we're doing but also on the commercial side. And with these announcements, we think we're going to be able to leverage that Carnival contract beautifully. It's safe to assume that we're in discussions with other would-be offtakers. They think that we are a credible, interesting, and safe operator. And so it's not one thing that's going to be a telltale sign for you, Marty. It's a variety of things on the CapEx side but also on the commercial side.
Westervelt T. Ballard: Work that we're doing but also on the commercial side and these announcements we think we're going to be able to leverage that carnival contract beautifully.
Westervelt T. Ballard: It's safe to assume that we're in discussions with other would be off takers.
Westervelt T. Ballard: They think that we are incredible and interesting and safe operator, and so it's not one thing thats going to be a telltale sign for you Marty it's a variety of things on the Capex side.
Westervelt T. Ballard: But also on the Opex excuse me on the commercial side.
Speaker Change: Great that's very helpful.
Westervelt T. Ballard: Great, that's very helpful. For my next question, I just wanted to talk about providing gas for data centers or industrial manufacturers. We've heard a lot of stories from these companies about how they're concerned about getting power in a timely manner and the quantities that they need and also about the reliability of the grid. Could you maybe talk a little bit more about what kind of solutions they're looking for and the role that Stabilis can play? Yeah, they're are...
Speaker Change: My next question just wanted to talk about.
Westervelt T. Ballard: Providing gas for data centers or industrial manufacturers that we've heard a lot of stories.
Westervelt T. Ballard: From these companies that they're concerned about getting power in a timely manner and the quantities that they need and also about the reliability of the grid could you maybe talk a little bit more about what kind of solutions there, they're looking for and the role that stability can play.
Westervelt T. Ballard: Yeah, they're in a tough spot. And as you know, and as we've mentioned, 25% of our business in 2023 will be in and around kind of that power generation business. And as we mentioned in our remarks, we've extended one of those contracts. So we've got a lot of experience here.
Westervelt T. Ballard: Yes.
Westervelt T. Ballard: They are in a tough spot and as you know and as we've mentioned 25% of our business in 2023 was in and around kind of that power Gen business.
Westervelt T. Ballard: As we mentioned in our remarks that we are extending one of those contracts. So we got a lot of experience here I think what it's going to take is really the aggregation of a wide variety of solutions as the vast majority of these these cloud and data centers are eager to have as clean as an alternative as possible and we think that we can.
Westervelt T. Ballard: I think what it's going to take is really the aggregation of a wide variety of solutions, as the vast majority of these cloud and data centers are eager to have as clean an alternative as possible. And we think that we can play a meaningful role on the front end, as a lot of these data centers are being installed and are trying to think through their supplemental, redundant, and backup power needs. We think our solutions capabilities can bring not only that natural gas but potentially aggregate other potential clean fuels as a package solution.
Westervelt T. Ballard: Play a meaningful meaningful role on the front end is a lot of these data centers are being installed in trying to think through there there is supplemental and redundant backup power needs. We think our solutions capabilities can bring not only that natural gas, but potentially aggravate other potential clean fuels as a packaged solution.
Westervelt T. Ballard: And so we'll continue to be, I think, involved heavily on the front end in assisting them, but also providing fuels that we currently offer or that we will in the future offer as kind of package solutions to supplement their behind-the-meter needs. It's really not so much a primary power concern; it's that peak or supplemental or backup power that's of grave concern to them.
Westervelt T. Ballard: And so we will continue to be I think involved heavily on the front end.
Westervelt T. Ballard: And assisting them, but also providing fuels that we currently offer or that we will in the future offer as kind of package solutions.
Westervelt T. Ballard: To supplement their behind the meter needs, it's really not so much primary power concern is that that peak or supplemental our backup power that's of great concern to them.
Westervelt T. Ballard: Yes.
Martin Whittier Malloy: Thank you. I'll turn it back.
Speaker Change: Thank you I'll turn it back.
Martin Whittier Malloy: Thanks.
William J. Dezellem: Our next question today will come from the line of Bill Dezellem at Tyaton Kappa.
Martin Whittier Malloy: Our next question today will come from the line of Bill does Zelem at Titan capital.
William J. Dezellem: Great, thank you. I have a couple of questions also. First of all, were both of the plants fully utilized in the first quarter?
William J. Dezellem: Great. Thank you I have a group of questions.
William J. Dezellem: Also so first of all.
William J. Dezellem: We're both of the plants fully utilized in the first quarter.
Westervelt T. Ballard: By and large, yeah, we had high utilization rates on our George West plant, and we had some maintenance items that happened in March, but by and large, we were fairly highly utilized.
William J. Dezellem: By and large yes, we we had high utilization rates.
Westervelt T. Ballard: On our George West plant, and we had some maintenance items that happened in March, but but by and large.
Westervelt T. Ballard: Fairly highly utilized.
William J. Dezellem: Okay, in the spirit of the question, I was trying to understand if using the first quarter as a run rate is a reasonable is a reasonable starting point to your comment in the press release that you're going to be fully utilized through 2025.
Speaker Change: Okay and spirit of the question was trying to understand if using the first quarter as a run rate is a reasonable is a reasonable starting point to your comment in the press release that you are going to be fully utilized through 2025.
Westervelt T. Ballard: Yeah, I think that's probably a good proxy. One of the things that you got to remember, though, is we had some seasonality in our financials in that first quarter. These will manifest themselves again in Q4. And so seasonality can make it a little bit tricky. But I think in answer to your question about our own production capacity, it's not a false assumption for you to think that both plants will be highly utilized. Obviously, our George West is a much larger plant than our Port Allen plant. But we think utilization should be high throughout the entire year as well as through next year.
Speaker Change: Yes, I think thats, probably a good proxy one of the things that you got to remember, though is we had some seasonality our financials and that first quarter. Those those will manifest themselves again in Q4 and so.
Westervelt T. Ballard: Seasonality can make it a little bit tricky, but but I think to your question about our own production capacity.
Westervelt T. Ballard: It's not.
Westervelt T. Ballard: False assumption for you to think that those both plants will be highly utilized obviously, our George west is a much larger.
Westervelt T. Ballard: Plant in our Port Allen plant.
Westervelt T. Ballard: But we think utilization should be high throughout the entire year as well as through next year.
William J. Dezellem: That's helpful. And relative to seasonal business in the Northeast, how much of the first quarter would be attributed to that?
Speaker Change: Okay, that's helpful and relative to that.
William J. Dezellem: Seasonal business in the northeast how much of the first quarter.
William J. Dezellem: That would be attributed to that.
Westervelt T. Ballard: The winter peaking revenue bill for the first quarter was about three quarters of a million dollars.
William J. Dezellem: The winter, peaking revenue bill for the first quarter was it was about three quarters of $1 million.
William J. Dezellem: So not a large portion of the corridor.
Westervelt T. Ballard: So not a not a large portion of the quarter.
Westervelt T. Ballard: This year it wasn't it wasn't that large, but it's revenue at pretty good margins because a lot of it is standby power, so it's you know it's solid business for us. We see that in Q1 and to a lesser extent, Q4.
William J. Dezellem: This year it wasn't.
Westervelt T. Ballard: It wasn't that large but it's.
Westervelt T. Ballard: Its revenue at pretty good margins, because a lot of its standby power. So it's a solid business for us we.
Westervelt T. Ballard: We see that in Q1 and to a lesser extent Q4.
William J. Dezellem: Okay, that is helpful. And then I want to circle back to the discussion about data centers that you were having before. I would have thought, and I'm just expressing my ignorance here, that most of these data centers would be in locations that they could tie into a natural gas pipeline and not need to use LNG. Am I completely off base with that, or does it really depend on the plant? Would you kind of put some perspective on that, please?
Westervelt T. Ballard: Yes.
Speaker Change: Okay. Great that is that is helpful. And then I wanted to circle back to the discussion about data centers that you were having.
William J. Dezellem: Before I would have thought and I'm just expressing my ignorance here that most of these data centers would be.
William J. Dezellem: In locations that they can tie into.
William J. Dezellem: Natural gas pipeline and not need to use <unk>.
William J. Dezellem: LNG.
William J. Dezellem: Am I completely off base with that or does it really depend on the plant would you kind of put some.
William J. Dezellem: Perspective around that please.
Westervelt T. Ballard: It's a mix of both, and so you've got a wide array of locations where these data centers are plugging in, and it's not so much that they're not part of the grid. It's not so much that they aren't involved in natural gas pipelines, certainly where there is a large infrastructure of natural gas pipelines. It's when you get outside of the Texas kind of Gulf Coast corridor and you're in Virginia and you're in the Midwest, the availability isn't nearly as robust to have supplemental peak capabilities, not just somewhere to the northeast in peak shaving times.
William J. Dezellem: It's a mix of both and so you've got a wide array of locations, where these data centers are plugging into and it's not so much that theyre not.
Westervelt T. Ballard: Part of the grid.
Westervelt T. Ballard: And it's not so much that they arent.
Westervelt T. Ballard: Involved in natural gas pipelines, certainly where there is a large infrastructure of natural gas pipelines. It's when you get outside of the Texas Gulf Coast Corridor, and you're in Virginia, and Youre in the Midwest the availability isn't nearly as robust to have supplemental peak.
Westervelt T. Ballard: Capabilities not dissimilar to the northeast.
Westervelt T. Ballard: And so as they come off kind of baseload, and they start to migrate towards peak or supplemental power, there isn't enough for them to have. And so they've got to think of alternative solutions to supplement their contractual requirements for massive redundancy and massive uptime rates. It's a real problem, and we think we can be a real solution for it.
Westervelt T. Ballard: And peak shaving times, and so as they come off kind of base load and they start to migrate towards peak or supplemental power there isn't enough for them to have and so they've got to think of alternative solutions to supplement.
Westervelt T. Ballard: Their contractual requirements for massive redundancy and massive uptime rates, it's a real problem.
Westervelt T. Ballard: And we think we can be a real solution for them.
William J. Dezellem: So, Westy, to make sure that I'm clear on what you're saying, so if you have a plant in the Midwest that... (inaudible) is based off of electricity, it gets hot in the summer. And so a great proportion of the time, electricity and pulling from the grid are just fine. But in those periods where it's extraordinarily hot, or, conversely, super cold in the winter, and it starts to put pressure on the grid, at that point, to maintain their high uptime, they need backup. And that's what you're talking about here.
Speaker Change: So westy to make sure that unclear what youre, saying, so if you'd have a plant in the.
William J. Dezellem: The Midwest.
William J. Dezellem: That.
William J. Dezellem: It is based off of electricity it gets hot in the summer.
William J. Dezellem: And.
William J. Dezellem: So a great proportion of the time, the electricity and pulling off the grid is just fine but in those periods, where it's extraordinarily hot.
William J. Dezellem: Or Conversely, Super cold in the winter.
William J. Dezellem: And it starts to put pressure on the grid.
William J. Dezellem: <unk> point to maintain their high uptime, they need backup and Thats, what youre talking about here.
Westervelt T. Ballard: That's exactly right. That's exactly right. It's that peak. It's not base load or primary power that's a market that we're going to, those utilities are going to do that. It's exactly right.
Westy: That's exactly right that's exactly right. It's that peak, it's not base load a primary power that.
Westervelt T. Ballard: A market that we're going to those utilities are going to do that.
William J. Dezellem: The supplemental peak and non-base load power demands they have is part A. Part B is, just if you look at the general landscape of power demand, we think over the next five years the U.S. is short 30 to 40 gigawatts. And that's because you're just going to have this proliferation of multi-dimensional hyperscale data centers that are coming online, and there just isn't enough grid power to even suffice that. So those base loads won't be nearly as high as the pre-existing ones. So we're just short of power.
Westervelt T. Ballard: Exactly right the supplemental peak and non Baseload power demands they have is part a.
William J. Dezellem: Great, thank you. And then would you please provide more detail on the power generation customer that you extended the contract with?
William J. Dezellem: Part B is just if you look at the general landscape of power demand. We think we think over the next five years. The U S is short $30 to 40, Gigawatts and that's because you're just going to have this proliferation of multi dimensional hyperscale data centers that are coming online and there just isn't enough grid power.
William J. Dezellem: Suffice that so those base loads won't be nearly those new data centers coming onto Baseload offtake won't be as high as the pre existing so they're just there is just that we're just short power.
William J. Dezellem: Great. Thank you and then would you please provide more detail on the power generation customer that you extended the contract.
Westervelt T. Ballard: I can't give you the name, but it's a customer along the Gulf Coast that we've had a relationship with for quite some time now.
William J. Dezellem: I can't give you the name, but its a customer along the Gulf coast.
Westervelt T. Ballard: That we've been we've had a relationship with for quite some time now.
William J. Dezellem: Is this a storm repair situation where the utility just has not made the repairs as quickly as anticipated, so your customer has a longer contract, and therefore, you have a longer life on this also? Yes. Okay, that is helpful. And then the last question is about marine bunk bunkering. Would you please go into some more detail and discuss as much as you can about additional perspectives, marine bunkering customers, and the process that they're going through to make their decision?
Westervelt T. Ballard: Is this.
William J. Dezellem: A storm repair situation, where the utility is just not.
William J. Dezellem: It has not made the repairs as quickly as anticipated so your customer as <unk>.
William J. Dezellem: Longer contract and therefore, you have longer longer life on this also.
William J. Dezellem: Yes.
William J. Dezellem: Okay that is helpful and then last question.
William J. Dezellem: Marine bunker.
William J. Dezellem: Bunkering would you. Please go into some more detail and discussing as much as you can about.
William J. Dezellem: Additional perspective, marine Bunkering customers and the process that they're going through to to make their decision.
Westervelt T. Ballard: Sure, so if you think about the addressable market from our perspective, it's really rateable and has large offtake. That's kind of the sweet spot for us.
Speaker Change: Sure. So if you think about really the addressable market from our perspective, it's really really ratable and large offtake.
Westervelt T. Ballard: That's kind of a sweet spot for us and so when you more specifically think about that it's those large cruise ships. Its those large container ships large car carriers large voluminous.
Westervelt T. Ballard: And so when you more specifically think about that, it's those large cruise ships, it's those large container ships, large car carriers, large voluminous buyers, but also, it's those that are as sticky as possible. We like the cruise industry because there's rateability. Every five, six, seven days, they're coming back to port and refueling because they're on and off loading. Their cargo carriers are pretty predictable in their ports of call, as are the container guys. So those are really, really interesting offtakes because they're just so large and predictable. But every market is going to be a little different.
Westervelt T. Ballard: Buyers, but also those that are as sticky as possible, we like the cruise industry.
Westervelt T. Ballard: Because theres rate ability every 567 days are coming back to port and refueling because they are on and off loading their cargo carriers are pretty predictable.
Westervelt T. Ballard: In their ports of call as are the container guys. So those are really really interesting.
Westervelt T. Ballard: Because there are just so large and predictable.
Westervelt T. Ballard: But every market's going to be a little different than the Gulf coast is going to have a heavier influence of of tankers West Coast has got that big trade Lane coming out of Asia is a big cargo port that port of long Beach L. A it's one of the if not the largest busiest most heavily traffic and port in the U S.
Westervelt T. Ballard: You know, the Gulf Coast is going to have a heavier influence of tankers because the West Coast has got that big trade lane coming out of Asia. It's a big cargo port, that Port of Long Beach, L.A. It's one of the, if not the largest, busiest, most heavily trafficked ports in the U.S. East Coast has certainly got its own interesting demand needs. And I think as these vessels start to come online more and more throughout the latter part of this year and into next year, the real inflection point will hit.
Westervelt T. Ballard: East Coast has certainly got its own interesting.
Westervelt T. Ballard: Demand needs and I think as these vessels start to come online more and more throughout the latter part of this year. It is next year, the real inflection point hits and procurement teams are in desperate need of finding a U S domestic solution for liquefied natural gas and.
Westervelt T. Ballard: And these procurement teams are in desperate need of finding a U.S. domestic solution for liquefied natural gas. And we think that we've got the credibility and capability and know-how to do greenfield infrastructural construction, commissioning, and operations of liquefied natural gas plants. And so we are in lots of discussions with a lot of prospective customers who recognize that and recognize our capability in that cruise, cargo, car carrier, large kind of offtake, big, big ships.
Westervelt T. Ballard: We think that we've got the credibility and capability.
Westervelt T. Ballard: And know how to do Greenfield infrastructural.
Westervelt T. Ballard: Construction commissioning and operations of liquefied natural gas plants and so we are in lots of discussions with a lot of prospective customers, who recognize that and recognize our capability along that cruise cargo car carrier large kind of offtake big big ships.
Westervelt T. Ballard: Does that help.
William J. Dezellem: It does, and then I guess I'll take that one step further. Is, are there... What are the key factors that they are looking for, and what slows them down in their decision making?
Westervelt T. Ballard: It does.
Westervelt T. Ballard: And then I guess I'll take that one step further is are there.
William J. Dezellem: What are the key factors that they are looking for.
William J. Dezellem: Yes.
William J. Dezellem: And what what slows them down in their decision making.
Westervelt T. Ballard: Well, I think the first one or two are obvious. It's availability. And secondly, it's creating availability at scale. I think one of the interesting dynamics here is a lot of these procurement teams who have vessels traversing the planet were not as, I think, in tune with the lack of liquefied natural gas infrastructure to support bunkering operations in the U.S. And so I think they've had to really think differently about, you know, A, those trade lanes and where they're going to bring these ships in to fuel their ships, and B, their contractual obligations
Speaker Change: Well I think the first first one or two are obvious its availability.
Westervelt T. Ballard: And then secondly, it's creating availability of scale.
Westervelt T. Ballard: I think one of the one of the interesting dynamics here is a lot of these procurement teams who have vessels traversing the planet.
Westervelt T. Ballard: We're.
Speaker Change: Not us.
Westervelt T. Ballard: I think in tune with the lack of liquefied natural gas infrastructure to support Bunkering operations in the U S and so I think they've had to really think differently about.
Westervelt T. Ballard: Hey, those trade lanes, and where theyre going to bring these ships and to fuel their ships and b their contractual obligations. Obviously a lot of people would love to just have a gas station every corner and the Optionality to refuel. That's just not the case in the U S and so.
Westervelt T. Ballard: You know, obviously, a lot of people would love to just have a gas station on every corner and the optionality to refuel. That's just not the case in the U.S. And so, we're very excited and bullish on the prospects of getting some rateability and some firmness to some of these contracts. It's not going to happen with all of them, but those discussions are ongoing, and as I mentioned earlier, we're going to balance that with some merchant risk based upon the tidal wave of demand that we see from ships that need fuel. And so, that's really kind of the state of play right now.
Westervelt T. Ballard: We're very excited and bullish on the prospects of getting some some rate ability and some firmness to some of these contracts is not going to happen with all of them.
Westervelt T. Ballard: But those discussions are ongoing and as I mentioned earlier, we're going to balance that with some some merchant risk based upon the tidal wave of demand that we see.
Westervelt T. Ballard: Chipset that need fuel and so that's really kind of the state of play right now.
William J. Dezellem: Thank you and congratulations on another solid quarter.
Speaker Change: Thank you and congratulations on another solid quarter.
Speaker Change: Thanks Bill.
Operator: and a reminder to our phone audience that it's Star and one if you would like to ask a question. Our next question comes from Barry Haimes at Sage Asset Management.
William J. Dezellem: And a reminder to our phone audience that is star one if you would like to ask a question. Our next question comes from Barry Haimes at Sage asset management.
Barry George Haimes: Thanks so much for taking my questions, and good quarter, guys. First question is, for the Carnival contract, which I think you said started in the first quarter, for the balance of the year, is it a similar run rate? Does it ramp? Could you just describe how the volumes might look across the year for them? Thanks.
Barry George Haimes: Thanks, so much for taking my questions and good quarter guys.
Barry George Haimes: First question is.
Barry George Haimes: Carnival contract, which I think you started in the first quarter.
Barry George Haimes: For the balance of the year is that a similar run rate does it ramp could you just describe how the <unk>.
Barry George Haimes: Volumes might look across the year for them. Thanks.
Westervelt T. Ballard: Yeah, I think it's pretty range-bound for the balance of the year and certainly through the next year.
Barry George Haimes: I think it's pretty range bound for the balance of the year and certainly through the next year.
Barry George Haimes: Got it, okay. And then the extra 100,000 gallons of capacity, when does that equipment actually get delivered? To get a feel for the timing, thanks.
Speaker Change: Got it Okay and then.
Barry George Haimes: The extra.
Barry George Haimes: 100000 gallons of capacity.
Barry George Haimes: When does that equipment actually get delivered.
Barry George Haimes: I think I feel for the timing thanks.
Westervelt T. Ballard: Yeah, so one of the unique attributes of that is it's mobile, it's flexible, and it's modular. And so we want to be thoughtful about doing that. So trying to pinpoint a timeline is difficult, but I think our predisposition is to have that on the waterfront or at least have decisions made in the next quarter or so about where that's going to go on the waterfront in order to build out a first train for LNG capacity for bunkering operations, likely the Gulf Coast. And I think, you know, it's over the next few months; we'd like to have a firm appreciation of where that And once that happens, I think we'll explain that to you all.
Speaker Change: Yes, so one of the one of the unique attributes of that is it's it's mobile and it's flexible and it's modular and so we want to be thoughtful about doing that so trying to pinpoint a timeline is difficult, but but I think our predisposition is to have that.
Westervelt T. Ballard: On the waterfront.
Westervelt T. Ballard: Or at least have decisions made in the next quarter or so about where that's going to go in the waterfront in order to build out our first train four LNG capacity for Bunkering operations likely to the Gulf Coast.
Barry George Haimes: Okay, great. So just to follow up on that, because that was my next question. When you say the likely Gulf Coast, when you talk about the applications, you know, cruise ships, you know, I always think Miami, and to your point, the container ships, you know, L.A. Long Beach is the.., you know, the biggest import spot for them. So why, since you're already on the Gulf Coast, why wouldn't you more likely look to, you know, one of the other coasts, if you will, Thanks. No, no.
Barry George Haimes: And I think.
Barry George Haimes: Over the next few months wed like to have a firm appreciation of of where thats going to go in and once that happens I think we'll be we'll articulate that to you all.
Barry George Haimes: Okay, great. So just follow up on that because that was my next question when you say likely Gulf coast, when you talked about the applications.
Barry George Haimes: Cruise shifts.
Barry George Haimes: Link Miami and to your point the container ships.
Barry George Haimes: L a long beach.
Barry George Haimes: Okay.
Barry George Haimes: The biggest.
Barry George Haimes: Import spot for them, so why since you're already in the Gulf Coast why wouldn't.
Barry George Haimes: More likely look to one of the.
Barry George Haimes: Other costs, if you will that you've been looking at.
Westervelt T. Ballard: No, no, we are. We're looking at a variety of coasts. There are just, I think, a couple dynamics on the Gulf Coast that I think are really important. First, which is our backyard.
Barry George Haimes: No no. We are we're looking at a variety of coast. It's just I think a couple of dynamics in the Gulf Coast that I think are really important first which is our backyard.
Westervelt T. Ballard: Secondly, we think we can successfully leverage that contract that we have now in Galveston. It's a suboptimal supply chain because we're taking LNG from an inland supply source, ours, and trucking it to the water, then bunkering their vessel and moving that to the water is a much more scalable, efficient operation. Thirdly, we think that there is really some pent-up demand, not only for incremental cruise ships coming into the Galveston market but also container and car carriers that are also coming into this market as well.
Speaker Change: Secondly, we think we can successfully leverage that contract that we have now.
Westervelt T. Ballard: And Galveston.
Westervelt T. Ballard: It's a suboptimal supply chain because were taken.
Westervelt T. Ballard: LNG from an inland supply source hours and trucking it to the water and then bunkering their vessel and moving that to the.
Westervelt T. Ballard: To the water is a much more scalable efficient operation.
Westervelt T. Ballard: Thirdly, we think that there is.
Westervelt T. Ballard: Really some pent up demand not only in incremental cruise ships coming into the Galveston market, but also container and car carriers that are also coming into this market as well. So we think it's an elegant location for us to strongly consider deploying that first train recognizing there there should and will be follow on trains thereafter.
Westervelt T. Ballard: So we think it's an elegant location for us to strongly consider deploying that first train, recognizing that there should and will be follow-on trains thereafter. But it doesn't mean that we don't reserve the right to put it inland if all of a sudden an aerospace customer comes with highly attractive needs, or if data center needs are highly attractive as well, driving real earnings and high returns on capital. So that's one of the benefits and attributes, as I mentioned, about having small-scale modular capacity that we've already purchased. Lead times are long, so we've got a unique advantage here. And I think, to repeat myself, our first inclination is to leverage our success in Galveston and expand that capability because there's a tidal wave of demand on the Gulf Coast, West Coast, and East Coast.
Westervelt T. Ballard: But it doesn't mean that we don't reserve the right to put it inland.
Westervelt T. Ballard: If all sudden and aerospace customer comes with highly attractive.
Westervelt T. Ballard: Needs or if data center needs are highly attractive as well that drive real earnings and high returns on capital and so that's one of the benefits and attributes as I mentioned about having small scale modular.
Westervelt T. Ballard: On capacity that we've already purchased lead times are long. So we've got a unique advantage here, let me I think to repeat myself. Our first inclination is to leverage our success in Galveston and expand that capability because theres a tidal wave of demand in the Gulf Coast West Coast and East Coast.
Barry George Haimes: Got it. No, thanks.
Speaker Change: Got it. Thanks, that's very helpful and that explains a lot my final question is.
Barry George Haimes: That's very helpful. That explains a lot. My final question is maybe just an update on space. I know it's lumpy, but could you describe how that went in the first quarter and what your outlook is for the year compared to last year? Thanks.
Speaker Change: Maybe just an update on space I know, it's lumpy, but could you describe.
Speaker Change: How that went in the first quarter and what your outlook is for the year.
Speaker Change: Compared to last year, yes.
Westervelt T. Ballard: Yeah, I'll just say, qualitatively, space is a really good business of ours, and it's a great margin business for us, and we're very excited and honored to be kind of the size participant we are in that market, and that market's growing. Quantitatively, Andy, do you want to shed some light on that?
Barry George Haimes: Yes.
Speaker Change: I'll just say.
Westervelt T. Ballard: Qualitatively space is a really good business of ours.
Andy: And it's a great margin business for us and we're very excited and honored to be kind of the size participant we are in that market and that market is growing.
Westervelt T. Ballard: Quantitatively, Andy you want to shed some light on that it was about 6% of our revenue in the first quarter.
Andrew Lewis Puhala: It was about 6% of our revenue in the first quarter. And as we've talked about in some of our releases, we expect that to continue to grow and become a more significant part of our business.
Andy: And as we've talked about it in some of our releases, we expect that to continue to grow and become a more significant part of our business.
Barry George Haimes: Great, thanks guys, I appreciate it.
Speaker Change: Great. Thanks, guys I appreciate it thank you.
Westervelt T. Ballard: This does conclude the Q&A portion of today's call, and at this time, I'm pleased to turn the floor back to Mr. Ballard for his closing remarks.
Speaker Change: This does conclude the Q&A portion of today's call and at this time I am pleased to turn the floor back to Mr. Ballard for his closing remarks.
Westervelt T. Ballard: Thank you everybody for joining us, and we look forward to seeing you on the road in short order.
Ballard: Thanks, everybody for joining us and we look forward to seeing you on the road in short order.
Operator: This does conclude today's teleconference, and we thank you all for your participation. You may now disconnect your lines.
Speaker Change: This does conclude today's teleconference and we thank you all for your participation you may now disconnect your lines.
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