Q2 2024 Drilling Tools International Corp Earnings Call
Greetings and welcome to the Drilling Tools International conference call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Operator: At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Denard. Sir, the floor is yours. Thank you, operator. Good morning, everyone.
If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Denard.
Ken Denard: Sir, the floor is yours. Thank you, Operator. Good morning, everyone. We appreciate you joining us for Drilling Tools International, or more commonly referred to in the industry as DTI. We welcome you to DTI's conference call and webcast.
Ken Denard: We appreciate you joining us for Drilling Tools International, or more commonly referred to in the industry as DTI. We welcome you to DTI's conference call and webcast. With me today are Wayne Prejean, Chief Executive Officer, David Johnson, Chief Financial Officer, and Jameson Parker, VP of Corporate Development. Following my remarks, management will provide a high-level commentary of the benefits of the SDP acquisition, a review of the 2024 second quarter results, and an updated outlook before we turn the call to you for your questions.
Ken Denard: There will be a replay of today's call; it will be available by webcast on the company's website at drillingtools.com, and there will be a telephonic recorded replay feature available until August 13th. Please note that any information reported on this call speaks only as of today, August 6, 2024, and therefore, you are advised the time-sensitive information may no longer be accurate at the time of any replay listening or transcript reading.
Ken Denard: Also, comments on this call will contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of DTI's management. However, various risks and uncertainties and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to carefully consider these risks and uncertainties and contingencies.
Speaker Change: With me today are Wayne Prejean, Chief Executive Officer, David Johnson, Chief Financial Officer, and Jamison Parker, VP of Corporate Development.
Speaker Change: Following my remarks, management will provide a high-level commentary of the benefits of the SDP acquisition, a review of the 2024 second quarter results, an updated outlook, before we turn the call to you for your questions.
Ken Denard: There will be a replay of today's call. It will be available by webcast on the company's website at drillingtools.com, and there will be a telephonic recorded replay feature available until August 13th.
Ken Denard: Please note that any information reported on this call speaks only as of today, August 6, 2024, and therefore, you're advised, the time-sensitive information may no longer be accurate of the time of any replay listening or transcript reading.
Ken Denard: DTI's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K to understand certain of those risks, uncertainties, and contingencies. The comments today may also include certain non-GAAP financial measures, including but not limited to adjusted EBITDA and adjusted free cash flow, these non-GAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures, a discussion of why we believe the non-GAAP measures are useful to investors.
Also, comments on this call will contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of DTI's management.
Ken Denard: However, various risks and uncertainties and contingencies could cause actual results
Ken Denard: performance or achievements to differ materially from those expressed in the statements made by management.
Ken Denard: The listener or reader is encouraged to read
Ken Denard: DTI's annual report on Form 10-K , quarterly reports on Form 10-Q , and current reports on Form 8-K to understand certain of those risks, uncertainties, and contingencies.
Ken Denard: The comments today may also include certain non-GAAP financial measures, including, but not limited to, adjusted EBITDA and adjusted free cash flow.
Ken Denard: These non-gap results for informational purposes and they should not be considered in isolation from the most directly comparable GAAP measures .
Ken Denard: A discussion of why we believe the non-GAAP measures are useful to investors, certain limitations of using these measures, and reconciliations to the most directly comparable GAAP measures can be found in the earnings release, which is on our filings page or with the SEC.
Ken Denard: Certain limitations of using these measures and reconciliations to the most directly comparable gap measures can be found in the earnings release, which is on our filings page or with the SEC. And now, with that behind me, I'd like to turn the call over to Wayne Prejean, DTI's Chief Executive Officer.
Ken Denard: And now with that behind me, I'd like to turn the call over to Wayne Prejean, DTI's Chief Executive Officer. Wayne.
Wayne Prejean: Thanks, Ken, and good morning everyone. I will begin my remarks with a quick review of our Superior Drilling Products acquisition and synergies, observations on second quarter results, and discuss how we are dealing with the market softness in North America. Our rationale for the SDP acquisition is quite compelling. Over the next 12 months, David will add more commentary to our updated outlook shortly.
Wayne Prejean: Thanks Ken and good morning everyone. I will begin my remarks with a quick review of our Superior Drilling Products acquisition and synergies, observations on second quarter results, and discuss how we are dealing with the market softness in North America.
Ken Denard: After that, I will hand off the call to David to go through the financials and our revised 2024 outlook.
Ken Denard: Also on hand today is our VP of Corporate Development, Jameson Parker, available during Q&A for comments on our recent acquisitions.
Ken Denard: Starting with SDP, we believe this acquisition, along with deep casing tools completed in March, has created a step change for DTI to offer current and prospective customers proprietary products into expanding markets, both domestic and international.
Ken Denard: These two transactions are outstanding examples of how we are showcasing DTI's growth opportunities with a particular focus on our presence in the Middle East.
Ken Denard: Our rationale for the SDP acquisition is quite compelling. Over the next 12 months, we expect to realize an excess of $4.5 million in identifiable SG&A synergies and realizable NOL tax benefits.
Ken Denard: In addition, there are vertical and horizontal integration synergies that include approximately 60% CAPEX savings on new DNR tools and 45% margin capture on repair and maintenance of our global drill and remanifests.
Ken Denard: Superior is headquartered in Vernal, Utah.
Ken Denard: The team and state-of-the-art facility adds to DTI's offering additional engineering and product development, PDC cutter brazing and bit repair expertise, a substantial manufacturing facility with precision machining capabilities, and of course our ongoing drill and ream repair center.
Ken Denard: In addition, after a significant investment and three years of trials and development,
Ken Denard: A fully staffed and operational PDC bit and drill and ream repair facility in Dubai, UAE. A local bit repair contract with ongoing revenues, as well as several hundred fit-for-purpose DNR tools on the ground across the Middle East.
Ken Denard: This provides us fuel in the tank to serve our clients in the region.
Ken Denard: While our vertical and horizontal integration synergies are activity and backdrop driven, we believe they will prove to be quite significant once market activity stabilizes and the rate count improves into 2025 and beyond.
Ken Denard: Adding to these synergies, we also gained an approximately $6.6 million receivable from the selling party to extinguish a note which will accrue to DTI's benefit, effectively reducing the total purchase price of the transaction from $32.2 million to $25.6 million.
Ken Denard: Subject to Purchase Price Accounting Adjustments.
Ken Denard: As you can see,
Ken Denard: The SG&A synergies of 4.5 million
Ken Denard: The CapEx and cost reduction, the note due of $6.6 million, and millions in previously invested rentable assets and infrastructure add up to a very meaningful long-term accretive value to DTI.
Ken Denard: Moving now to our 2024 second quarter operating results, the U.S. rig count experienced continued softness in the quarter compared to our flat rig count outlook earlier this year.
Ken Denard: So what have we done to adjust to the softer market conditions and recount decline?
Ken Denard: First.
Ken Denard: We have implemented a cost reduction program for an annualized savings of 2.4 million dollars in overall cost.
Ken Denard: We will continue to appropriately scale our operations to adjust for the activity levels in North America, but we'll continue with our growth initiatives in other markets where growth opportunities are available.
Ken Denard: Currently, our cost adjustment decisions are focused more on the near-term environment, realizing that our current and short-term needs must be met with a lower cost structure, while still keeping our eye on the long term.
Ken Denard: Additionally, we were able to manage capital expenditures during the quarter and improved our adjusted free cash flow by 3.2 million dollars compared to last year's second quarter.
Ken Denard: Our unique business model enables us to generate returns despite a decline in North American land activity.
Ken Denard: As a result, we are maintaining our adjusted free cash flow guidance range from $20 million to $25 million for the full year.
Ken Denard: David will add more commentary to our updated outlook shortly.
David Johnson: And now, some observations of the market and what has transpired over the last few months as oil and gas customers have reduced activity.
David Johnson: Our customers, the operators, and oil field service providers became very focused in improving efficiency and producing more with less.
Ken Denard: It appears E&P mega-mergers have begun to slow, and operators have turned their attention to integrating, executing, and rationalizing their drilling programs.
Ken Denard: In essence, these operators are utilizing their best rigs as efficiently as possible by deploying their best crews to drill longer laterals with more producing footage, all with fewer rigs.
Ken Denard: Also important, they are much more efficient with a focus on minimizing drilling mistakes like lost and hole events.
Ken Denard: Operators will look to redeploy additional rigs when demand picks up.
Ken Denard: And we believe demand will eventually rise and should require more drilling and producing activity.
Ken Denard: Certainly things have changed over the last decade and although oil and gas operations are much more efficient, producing wells typically peak early in their life then decline year by year.
Ken Denard: If we believe demand will continue to rise, then more wells will be needed to meet that demand.
Ken Denard: For the next few months and likely through mid-2025, we expect a soft activity pace for North America and are confident rig counts and well counts should rise in 2025.
Ken Denard: International markets should be flat to upwards with less volatility.
Ken Denard: Due to the current North America market softness, we have had to align our core rental tool business to remain more competitive.
Ken Denard: As our customer landscape shifts with mergers and our customers rotate oil field service suppliers to find best cost and value, we have had to be more flexible by adjusting commercial terms to meet our customers' changing needs.
Ken Denard: Although we have strategic modes for these events, we are not immune to this type of request and have installed key initiatives to deal with this transitory trend.
Ken Denard: In some product lines, we have adjusted to pricing reflective of footage drilled as opposed to price per day. And yes, it's challenging, but we will prevail and be more vibrant coming out of this downturn like we have during so many other market downturns.
Ken Denard: As we have previously stated, in a steady-state environment, our business consistently delivers 30-plus percent adjusted EBITDA margins and mid- to high-teens adjusted free cash flow margins.
Ken Denard: While we have taken measures to adjust to lower demand, we believe we will be well-positioned to come out stronger when the market recovers.
Ken Denard: Although we have acquired some new revenue streams with product sales, such as deep casing, and service repair revenue, superior drilling products,
Ken Denard: Our business model has historically relied mostly on rental, repair, and recovery revenues. Our customers count on us to maintain a relevant and sustainable fleet of equipment.
Ken Denard: The rental and repair income provides the basis for our rental model. The tool recovery revenue, also known as lost and damaged equipment charges, allows us to sustain our fleet, which enables us to not only remain relevant, but also generate positive adjusted free cash flow throughout the energy industry cycles.
Ken Denard: This is one of those cycles.
Ken Denard: As I said previously, our blue chip customers prefer to rent downhole tools because it would not be efficient to own and maintain their own fleet due to the many extorted configurations, hole sizes, geographies, and engineering requirements.
Ken Denard: Bottom line, our customers rent tools from DTI because we provide high-quality service and value along with our substantial fleet of tools to best serve their needs.
Ken Denard: This, along with our acquired new products and revenue opportunities, positions us to continue to capture a greater share of the industry on a global scale.
Speaker Change: Longer-term demand trends remain robust. Agencies such as the EIA expect oil demand to continue to grow through 2050.
Ken Denard: In addition, many industry experts are forecasting that the medium to long-term natural gas demand outlook is very strong, particularly with the new LNG capacity slated to come online in 2025 and 2026.
Ken Denard: and with electricity demand rising rapidly to accommodate the anticipated growth of data centers.
Ken Denard: DTI is well positioned for this industry trend.
Ken Denard: We have been extremely active in the M&A market since going public in June 2023 as we work to position DTI for future growth, which is what we said we would do. And we continue to believe that there are meaningful consolidation opportunities that exist in our sector.
Ken Denard: It is our stated goal to make thoughtful acquisitions a significant part of our growth strategy.
Ken Denard: We have established an M&A framework and robust M&A pipeline that will allow us to selectively and strategically consolidate numerous oilfield service product and rental tool companies that meet the criteria for our growth plan.
Ken Denard: With that, I'll turn it over to our CFO , David Johnson, for a review of our financial results and outlook. David?
David Johnson: Thanks, Wayne, and thank you, everyone, for joining us today. In today's earnings release, we provided detailed financial tables, so I'll use this time to offer further insight into specific financial metrics for the second quarter.
David Johnson: DTI generated total consolidated revenue of $37.5 million in the second quarter of 2024.
David Johnson: Second Quarter Tool Rental Net Revenue was $28.3 million and Product Sales Net Revenue totaled $9.2 million.
David Johnson: Second quarter operating expenses were $35.3 million and income from operations was $2.2 million. Adjusted net income for the second quarter was $3 million or adjusted diluted EPS of 10 cents per share.
David Johnson: Second quarter adjusted EBITDA was $9 million and adjusted free cash flow was negative $1.1 million, a $3.2 million improvement compared to the second quarter of 2023.
David Johnson: As of June 30th, 2024, we had approximately $6.8 million of cash, net debt of $17.4 million, and an undrawn $80 million ABO credit facility.
David Johnson: As Wayne mentioned, we saw the U.S. land rig count down sequentially during the second quarter. Rig count was down roughly 15% over the last 12 months.
Wayne Prejean: Despite this decline in rate count and activity, our revenues in the second quarter of 2024 were flat over the second quarter of 2023.
David Johnson: Our acquisition of DeepCasing, our Tier 1 customer base.
David Johnson: Our wide distribution, service, and support network and new product offerings have been integral in managing this challenging cycle.
David Johnson: Moving to Maintenance CapEx, as a reminder of what I have shared on previous calls, we are a downhole rental tool company and our maintenance capital is funded by tool recovery revenue.
David Johnson: The customer is responsible for all lost or damaged tools while the tools are in their care, custody, or control. This tool recovery component of our rental model helps keep our rental tool fleet relevant and sustainable.
David Johnson: For the three-month period ended June 30, 2024, maintenance CAPEX was approximately 7% of total consolidated revenue.
David Johnson: This portion of our capital investments is trending lower due to the decline in rig count and our customers focus on efficiencies that have translated into fewer lost and whole and damaged beyond repair events.
David Johnson: Now, moving on to our Outlook, we are updating our 2024 ranges, which includes the estimated impacts of deep casing tools and superior drilling products on full-year results.
David Johnson: We expect 2024 revenue to be in the range of $155 to $170 million.
David Johnson: We expect adjusted EBITDA to be within the range of $41 to $47 million.
David Johnson: Gross capital expenditures are expected to be between $21 and $22 million.
David Johnson: Adjusted net income for the full year is expected to be between $9.9 and $13.5 million.
David Johnson: And finally...
David Johnson: Since a majority of our CAPEX was incurred in the first half of this year, and we have curtailed or deferred other planned CAPEX,
David Johnson: We are maintaining our adjusted free cash flow to be between $20 to $25 million for 2024, which is more than double the adjusted free cash flow in 2023.
David Johnson: That concludes my Financial Review and Outlook section. Let me turn it back over to Wayne to provide some summary comments before Q&A.
Wayne Prejean: Thank you, David.
Wayne Prejean: Before opening up the line for Q&A, I'd like to reiterate we are extremely pleased to welcome SDP's talented team to the DTI family and add SDP's products, service, and world-class manufacturing expertise into our broad-reaching and expanding global sales channels.
Wayne Prejean: In conclusion, I would like to reemphasize that, one, we are very pleased to have closed in our two acquisitions in five months, and we believe we will see significant cost synergies as well as vertical and horizontal integration synergies from the STP acquisition that will lower our costs and improve our margins.
David Johnson: 2. We have implemented an annualized $2.4 million internal cost reduction program to adjust to the softer market conditions. 3.
David Johnson: We are competitive and profitable despite the soft market and are well positioned to combat pricing pressures. Four, our rotosteer technology continues to make positive commercial traction, but at a slower pace than we anticipated late last year when the market outlet was flat to upward.
David Johnson: We expect to have continued growth in this important technology, but have tempered our fleet development plans and deferred quarter-to-quarter increases to adjust our CAPEX and fleet utilization.
David Johnson: I am highly confident this product line will continuously grow. Stay tuned for updates as this exciting opportunity develops. And finally, we believe additional thoughtful consolidation opportunities exist in oilfield services that will supplement our organic growth initiatives.
David Johnson: Throughout industry cycles, our focus on safety, quality, and reliability continue to be the hallmark of DTI.
David Johnson: I would again like to express my sincerest gratitude to every member of the DTI, Deep Casing, and most recent addition, Superior Team, for their continuous dedication to safety, customer service, and the successful execution of our strategic initiatives.
David Johnson: The commitment of our employees has been critical in driving our success, and I extend my heartfelt appreciation for their contributions. With that, we will now take your questions. Operator?
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 1 if you would like to remove yourself from the question queue.
David Johnson: Thank you.
David Johnson: for participating.
David Johnson: Participants using speaker equipment, it is necessary to pick up your handset before pressing the star key.
David Johnson: Thank you. Our first question comes from Jeff Cramp from Alliance Global Partners. Go ahead, Jeff. Your line is open.
Jeff Cramp: Morning, everyone.
Jeff Cramp: One of the first start on the Superior integration here now that we've closed, I understand we're only in the first week here, but do you guys have any kind of preliminary estimate for when you could potentially see some traction or signs of success?
Speaker Change: do what our customer base is doing and get larger and leaner.
Jameson Parker: Yeah, you know, we see there, you know, they have some bid repair business opportunities in the Middle East that are starting to get traction, so we anticipate that, contribution and also we have assets on the ground, rentable assets on the ground that we can put to work, we believe, as things kind of continue to ramp up as we integrate our efforts.
Speaker Change: Contribution, you know, and also, you know, we have assets on the ground, rentable assets on the ground that we can put to work, we believe, as things kind of continue to ramp up as we integrate our efforts. So, you know,
Jeff Cramp: We factored in an appropriate amount of what we believe is, you know, sticky activity.
Jeff Cramp: So that we feel like we feel pretty good about our guidance. You know, there's certainly potential for more opportunity in the future. So we'll just have to gauge that, you know, quarter to quarter as we integrate these two businesses.
Speaker Change: Fair enough.
Jeff Cramp: When we think about the updated guidance, obviously rate count has continued to soften, but
Speaker Change: We're down about 20 rigs last quarter, and I know we're continuing to decline this quarter, but when I see the updated guidance...
Speaker Change: and you touched on it in your comments, there seems to be maybe a more severe pricing impact or maybe it's utilization. And I'm trying to figure out how much consolidation is playing into that, even though you're probably the incumbent.
Speaker Change: of the acquirer in a lot of these cases. Are you getting more pricing pressure from consolidation, or is it more just the slower rate count?
Speaker Change: So, you know, with the rig count, the slow bleed of the rig count over the last 18 months has been kind of an interesting...
Speaker Change: Phenomenon within our industry where it didn't go down just rapidly, you know, just kind of
Speaker Change: What I spoke to in the press release was
Speaker Change: And, you know, that's affected us because we've seen some of our core customers, you know, get shuffled around from this operator to that operator, and we've had to shuffle as well, so...
Speaker Change: the most relevant types of connections and things in the industry that gives us the strongest sticking power. But as I've said previously in calls and with the different investors, no one is immune to a compression of the market by our customers.
Speaker Change: So, I think it's just a matter of time that our customers, you know, do put more activity in play because they have a desire to grow their business as well, being the oil and gas customers.
Speaker Change: As far as pricing, you know, rising back up, what we've done, we've tried, we make every effort to maintain our pricing points, but we modify our commercial terms with utilization.
Speaker Change: You know, our goal is to, you know, modify our commercial terms and then, you know, move our, you know, utilization efforts back to where the activity supports, you know, a better pricing model. And we think we'll be in a competitive position to offer better products and more relevant products for the future.
Speaker Change: Perfect. Last one for me. The International Outlook, as we come out of the first half listening to some of the bellwether conference calls, the International Outlook remains really, really healthy. A lot of people calling for a multi-year cycle here with particular strength in the Middle East.
Speaker Change: Can you touch on how that's, you know, your strategy with SDPI deep casing?
Speaker Change: Can you give a little bit of picture on how that affects your international strategy and how that will play into sort of this international potential multi-year upcycle?
Speaker Change: So, you know,
Speaker Change: Deep casing, for example, has, you know, a product line that's very...
Speaker Change: contributory and beneficial to many of your Middle East and international offshore players so that we see that business you know slowly growing and evolving.
Speaker Change: and making a more significant contribution.
Speaker Change: Now that we have the FDP acquisition, you know, we've joined forces with them. We're no longer serving two masters.
Speaker Change: We're now aligned and working together in unison.
Speaker Change: I think we can help, you know, that platform rapidly expand and set up, you know, repair centers in other locations and expand that product line so the opportunities are there.
Speaker Change: For, you know, in addition to that, what Jameson didn't give you any real color on because he's he's reserving his comments But I'll add to it is one of the criteria for M&A strategies is to
Speaker Change: you know, place a high emphasis on what international impact and component these M&A deals can do for us.
Speaker Change: You know, we pretty much, you know, look at that as a higher value proposition than maybe just some tuck-in and bolt-ons in the North American market, which, you know, many could be attractive, but...
Speaker Change: We're aiming more towards technology and Middle East and international expansion as far as when we make an M&A deal. That needs to make a significant contribution to our long-term strategy.
Wayne Prejean: Fantastic. Thanks, Wayne.
Speaker Change: And our next question comes from John Daniel from John Daniel MG Partners. Go ahead.
Unidentified Speaker: Wayne, your margins are already better than a lot of your peers, and that was just noteworthy when I saw the cost reduction effort.
John Daniel: Wayne, your margins are already better than a lot of your peers and that was just noteworthy when I saw the cost reduction efforts.
John Daniel: The $2.4 million. Can you elaborate on what you guys are doing?
Speaker Change: with regard to our cost reduction.
Speaker Change: Is it regional or how are you approaching that?
Wayne Prejean: So, you know, one thing interesting about our business is that we can scale our business according to activity, and that's very challenging. But, you know, some of it's labor-centric, some of it's deferring certain aspirational costs. So we've made those appropriate adjustments in North America. We have a tenured management team in all of our facilities, which is unique, and they all understand, you know, what is required of them, quarter to quarter, year to year, and how the industry fluctuates. So we've made those variable cost adjustments.
Wayne Prejean: So, you know.
Speaker Change: One thing interesting about our business is we can scale our business, you know, according to activity and that's very challenging but
Speaker Change: You know, some of it's labor-centric, some of it's deferring certain, you know, aspirational costs.
Speaker Change: So we've made those appropriate adjustments in North America.
Speaker Change: We have a tenured management team in all of our facilities, which is unique, and they all understand what is required of them quarter-to-quarter, year-to-year, and how the industry ups and flows. We've made those variable cost adjustments.
Speaker Change: You know, we are a public company now, so we've had to take on some public company burdens that we're all aware of. So we've been mindful of managing that, you know, escalation as we grow and, you know, build muscle to take on more and more M&A and larger, you know, broader enterprises.
Speaker Change: But most of it's been the variable cost component in North America where we see the lever of ebb and flow of activity. And if the activity raises or rises to a level that requires more support, we're prepared to make those increases if needed to support the business.
Speaker Change: Okay, and then just a follow-up, unrelated, but the press release calls out the BIT repair facility in the UAE. I'm just curious, when you have a facility like that, what's the opportunity for additional roofline there, and how quickly could you start taking other product services into a facility like that?
Speaker Change: If you could just expand, that would be helpful.
Speaker Change: The facility that's set up now was centrally located in the UAE, and that serves our needs for now, but we're looking at how to, you know, put something possibly in Saudi.
Speaker Change: The roof line that we currently have could add support for some of our other product lines in the Middle Eastern market.
Speaker Change: It's expandable, the bit repair business can be expanded, the drilling repair business can be expanded, and we have some machining capability that's being loaded into there to add more repair capability to support room fleets. So we're good to go for a while.
Speaker Change: Good. Okay, that's all I had. Thank you for including me.
Speaker Change: Thank you. This does conclude, sorry, this does conclude the question and answer session. I would now like to turn it to management for any closing remarks.
Speaker Change: Well, thanks everybody for your interest in DTI. You know, it's been a challenging year, but we've once again overcome those challenges and we see a pretty bright outlook going forward and we look forward to keeping you posted on those events. Thanks for your interest.
Speaker Change: Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.