Q4 2024 TETRA Technologies Inc Earnings Call
and Elijio Serrano.
Speaker Change: Good morning and welcome to Tetra Technologies' fourth quarter 2024 results conference call.
Speaker Change: All participants are in a listen-only mode. If you require operator assistance, please press star zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star one on your touchtone phone.
Speaker Change: To withdraw your question, please press star two. Please note that this event is being recorded and I would now like to turn the conference over to Julian Higuera. Please go ahead, sir.
Julian Higuera: Thank you, John. Good morning and thank you for joining Tetra's fourth quarter and full year 2024 results call.
Speaker Change: The speakers for today's call are Brady Murphy, Chief Executive Officer, and Elijio Serrano, Chief Financial Officer.
These statements are based on certain assumptions and analysis made
by Tetra and are based on several factors.
These statements are subject to several risks and uncertainties.
Many which are beyond the control of the company
Speaker Change: Your caution that such statements are not guarantees of future performance and that actual results may differ materially from those projected in the forward-looking statements.
Speaker Change: In addition, in the course of the call, you may refer to EBITDA, adjusted EBITDA, adjusted EBITDA margins, free cash flow, net debt, net leverage ratio, liquidity, returns on net capital employed.
Speaker Change: or other non-GAAP financial measures, please refer to yesterday's press release or to our public website for reconciliations of non-GAAP financial measures to the nearest GAAP measures.
Speaker Change: These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of our complete financial results for the period. In addition to our press release announcement, we encourage you to refer to our 10-K that we filed yesterday.
I'll now turn it over to Brady.
Brady: Thank you, Julian. Good morning, everyone, and welcome to Tetra's fourth quarter and full year 2024 earnings call.
Brady: and provide an update on our strategic initiatives before turning the call over to Elijio to discuss more details on the fourth quarter and some views on 2025.
Brady: Our fourth quarter results were overall in line with our expectations as strong offshore
Brady: and Industrial Chemicals performance mostly offset a weaker than expected year-end slowdown.
Brady: for our U.S. land operations. Adjusted EBITDA margins of 17%, improved from 16.6% in the third quarter and from 15.8% in the fourth quarter of 2023, despite lower revenue quarter on quarter and year on year.
Brady: Contributing to our strong offshore performance in the fourth quarter, we executed 13 deepwater completion jobs compared to 11 in the third quarter.
Brady: while our industrial chemicals business achieved a record revenue and adjusted EBITDA for the fourth quarter.
Brady: A water and flow back segment achieved even on margins of 13.8% and was impacted by a more severe than normal year-end completion slowdown.
Brady: and although both rig count and frack fleet count are down more than double digit from last year, the volume of produced water continues to increase. In the fourth quarter, we achieved a record volume of 89 million barrels of treated and recycled produced water for frack reuse.
Brady: For the full year, our completion fluids and product segment revenue was down 1%, but grew EBITDA by 2% year-over-year, driven by a strong performance in our industrial chemicals business.
Brady: Total year completion fluids and products revenue of 311 million was the second highest since 2015 when we completed two large CS Neptune projects in the Gulf of America.
Brady: Our industrial chemicals business had an excellent year, achieving its highest revenue and adjusted EBITDA in our company's history. With 24 revenue growth over 2023 of over 9%, our industrial chemicals business represents 22% of Tetra's total revenue.
Brady: This year and into the future we expect to ramp up meaningful volumes of zinc bromide based electrolyte and so we expect this percentage to continue to increase.
Brady: Our diversification of calcium chloride markets continues to increase, including grades for food, agriculture, paper, industrial applications, the more seasonal demand for de-icing and dust binding, plus a growing demand for technology, including chip manufacturing.
Brady: The superior purity level of our zinc bromide allows us to participate in the long-duration energy storage electrolyte market, as evidenced by our first batch of pure flow-based electrolyte shipments to EOS Energy Enterprises in the fourth quarter.
Brady: Our leading market positions in Northern Europe and the U.S. gives us stable markets in which to operate with predictable revenue and earnings and strong free cash flow, allowing us to reinvest in our new high growth business opportunities.
Brady: Looking back on 2024, we made some strategic investments that are paying off as we head into 2025. Capital investments in the expansion of our capacity in Brazil is supporting a large Deepwater Completion Fluids Award, which will start in the second quarter of 2025.
Brady: Investments in the Gulf of America has led increased deepwater activity for us including a three-well Tetra-CS Neptune project currently ongoing.
Brady: We just completed the first of the three wells, and we'll be getting the second well shortly.
Brady: Inventory ramp up for both of these projects contributed to a year-on-year working capital increase of 21 million dollars, but the combined CAPEX and working capital investments are expected to be earned back more than dollar for dollar in the first six months of 2025.
Brady: Turning to our water and flow back services segment, 2024 proved to be a challenging year. Operator consolidation, as well as low natural gas prices, contributed to a decline in the rig count and fracked leachs by 17% and 30%, respectively, over the past two years.
Brady: and two, focus on recycling, treatment and desalination of produced water for beneficial reuse. We believe that we're industry leaders in both of these areas, which we expect over time will improve margins and give us a significant path to grow through desalination.
Brady: Looking ahead to 2025 for water and flow back, we expect revenue to remain flattish while increasing margins by enhancing operational efficiencies including automation, enabling us to maximize capital returns and generate substantial cash flow.
Brady: Earlier this month, I had the pleasure of being a keynote speaker at the well attended 35th annual Produced Water Society Conference in Houston. The main topic of focus for the conference is the industry's challenge dealing with over 23 million barrels per day of produced water in the Permian Basin.
Brady: It is clear that downhole pore pressure in water disposal wells is spilling up. Disposal well pressures are increasing and potentially more regulatory restrictions are coming.
Brady: The best long-term solution for this problem is reducing the volumes of water for disposal and desalinating the water for beneficial reuse, including industrial, agriculture, and irrigation purposes.
Brady: I discussed Tetra's commercial offering, Tetra Oasis Total Desalination Solution, or TDS, as a comprehensive end-to-end desalination solution for beneficial reuse, and emphasized the added benefit of recovering essential minerals from produced water as part of the process.
Brady: Our recent announcement of Tetra Oasis TDS has been very well received and our blue chip customer engagement continues to grow broader and deeper.
Brady: Although we expect favorable gas prices will contribute to pockets of increased activity in 2025, we will limit our capital investment to automating our current business assets and expect to deploy multiple pilot projects for desalination.
Brady: In total, we're expecting a very strong start to the year in 2025.
Brady: The combination of a strong Gulf of Mexico market, three-well Neptune project, the start of the Brazil deepwater work, increased EOS electrolyte deliveries, and our seasonal second quarter European peak has us projecting a significant year-over-year increase in both revenue and EBITDA in the first half of 2025, as detailed in our Q4 press release.
Brady: We project net income before taxes between $19 million and $34 million and adjusted EBITDA between $55 million and $65 million for the first half of 2025, levels approaching or exceeding a 10-year record high for the company.
Brady: Moving on to our strategic initiatives, regarding our Bromine, Arkansas project, we have secure power for the project. We've completed the plus or minus 10% front-end engineering design and prepared the plant site for the next phase of construction.
Brady: As communicated previously, we're in discussions with multiple elemental bromine suppliers for a bridging supply agreement.
Brady: The purpose of the bridging supply would give us more flexibility on timing for capital spend, give us more opportunity to accumulate cash from operations, and allow us to execute a staged approach, targeting initial bromine production at approximately two-thirds of the published.
Definitive Feasibility Study Volumes.
Brady: We will continue to communicate our progress and actions with this critical, long-term, low-cost bromine supply investment as we achieve various milestones.
Brady: For our lithium opportunity and project, we and our partners have completed the plus or minus 10% feed studies as well. We believe the lithium OPEX from the plant could be more competitive than current hard rock mining operations. But as owners of 65% of the lithium resources in our Evergreen unit, we're waiting for the royalty decision and a firm review of future lithium prices before publishing financial studies.
In the meantime, we're prioritizing strategic initiatives.
Brady: that can immediately impact our near-term results. These initiatives include deploying CS Neptune in the Gulf of America, shipping Tetra PureFlow to EOS.
Brady: Energy Enterprises, and further advancing our water desalination commercial pilot units initiatives that we expected to evolve into longer term contracts for commercial desalination plants.
Thank you, Brady.
Brady: In the fourth quarter, we booked a favorable adjustment to the valuation allowance for our deferred taxes.
Brady: We had previously established a reserve against that asset given our prior uncertainty in the timing of using those NOLs or Net Operating Loss Carry Forwards.
Brady: Our taxable income in the United States over the past three years has been almost a hundred million dollars following the recovery from COVID and strong performance of our US business.
Brady: Without the NOL, we would have likely paid over $20 million in U.S. cash income taxes in the past three years.
Brady: Given the three-year cumulative profits, we performed an analysis and reviewed our projections with our auditors and came to the conclusion that there's a high likelihood that we will be using our NOLs in the coming years.
Therefore, we eliminated the valuation allowance we had previously established.
Brady: and save us approximately $97.5 million of cash taxes in the United States.
Brady: This assessment and adjustment reflects our confidence in the performance of our U.S. business driven by the strong activity in the Gulf of America.
Brady: profitability, profitable results from a U.S. oil and gas business and the growing long duration battery electrolyte business.
Brady: However, our cash taxes will only be around six to seven million dollars per year for taxes we pay overseas.
Brady: We'll provide periodic updates on how rapidly we are using our deferred tax assets to offset the $345 million of annual wealth.
Brady: The more profitable we become in the United States, the higher the fall through is to cash flow from utilizing our NOL.
and Elijio Serrano.
Brady: On cash flow, we made significant investment in fixed assets and inventory for our offshore business.
Brady: Those CAPEX and working capital investments were higher than what we would normally have made.
Brady: that contributed to the slightly negative base business free cash flow in 2024.
Brady: Those investments were to prepare us for the CS-Neptune 3-Well project.
Brady: and the Brazil Multi-Well Multi-Year Project are expected to contribute to a strong free cash flow in the first half of 2025.
For 2025, we expect interest expense of approximately $20 million.
Brady: Capital Expenditures for the base business of between $30-$35 million, which are below the amount of 2024.
Brady: and as I mentioned cash taxes of approximately six to seven million dollars.
Brady: Depending on your assumptions for our total year 2025 EBITDA, we have the opportunity to generate over 50 million dollars of free cash flow in 2025 from the base business.
Brady: We provided guidance for the first half of 2025 as we believe that when others in the industry are looking at weaker first half 2025 results versus the second half of 2024, we're showing a strong sequential improvement in our adjusted EBITDA.
Brady: Our first half projections are underpinned by the Three Well Neptune project, the start of the Brazil Deepwater Project, our seasonally strong European calcium chloride business, and the continuing improvements in the other businesses.
Brady: On the Neptune Project, the first well has been completed, and we'll soon shift fluids to the second well.
Brady: The timing of the projects between the first quarter and the second quarter are uncertain and that is why we gave first half of the year guidance instead of guidance individually for the first or second quarters.
Brady: With respect to Arkansas, we reduced our investments in Arkansas in the fourth quarter to less than $1 million.
Brady: from the free cash flow being generated from the base pit that we will make a determination of how much of that we will spend in Arkansas in 2025.
Brady: As Brady mentioned, we're looking for the most capital light solution to source additional effective volumes, cost effective bromine volumes to meet our deep water demands and to meet the ramp up in electrolytes required by EOS.
Brady: If we source adequate volumes in the immediate years, we will delay or defer building a borrowing plan in Arkansas, or we'll space it out over multiple years, allowing us to fund it from the base business free cash flow without taking on any debt.
Brady: Our objective is to keep our leverage ratio below two times and invest with base business free cash flow.
Brady: As we make progress on our bromine bridging agreements, we will communicate what firm arrangements have been agreed upon.
Brady: In the meantime, we'll continue to negotiate for the best alternatives.
Brady: At the end of December, cash on hand was $37 million, and total liquidity as of yesterday was almost $207 million.
We sold our Kodiak shares at a near record high.
for Kodiak's share price and above yesterday's closing price.
This is the second time that we've been able to.
Brady: appropriately timed the sale of shares that we've held in publicly traded companies.
Brady: I'll turn this back over to Brady for closing comments before we open it up to questions.
Brady: Thank you, Elijio. As you can see, we're very excited about what we have in front of us. As we enter 2025, we're pleased with the decisions that we've made for the business in the past few years that sometimes take patience but are paying off.
in a big way.
Brady: Expanding our deep water presence and market share in key markets, staying diligent on the Neptune pipeline of projects that slowed to a crawl during COVID, but are now moving forward. Expanding our core aqueous chemistry in the long-duration energy storage electrolyte, and focusing on produced water treatment and recycling. All of these are paying off in the first half of 2025.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, please press star one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing any keys.
Speaker Change: To withdraw your question, please press star 2. Once again, star and 1 if you wish to ask a question. At this time, we'll pause momentarily to assemble our roster.
card.
Speaker Change: I'll leave from a benchmark company is go ahead or our lines now open.
Speaker Change: Hey, good morning, guys. Thanks for that. Thanks for that summary. Hey, Brady, question for you, right? There's been a lot of...
Speaker Change: are the fits and starts and maybe some, you know, frustrations with respect to you know, timing on some of these emerging growth opportunities that you guys have.
Speaker Change: over the past year or so. Right. Um, so as you kind of, you know, maybe rub off the crystal ball a little bit here for 2025 and as you've had, you know, follow on discussions with a number of different potential customers for whether it's Water Decal or what's going on with electrolytes. Um, how do you, how do you kind of think about the evolution of those businesses for this year? And which one do you think?
Speaker Change: You know, without giving specific numbers around it, but which one do you think has the opportunity to have some element of a meaningful contribution to the 25 results?
Yeah, thanks, Kurt.
Speaker Change: So, I mean, clearly, in the first half of 2025, we're seeing some of the benefits.
Speaker Change: You know, EOS, I don't want to speak for them, but, you know, if you look at their
Speaker Change: I think their investor presentation in January, they're projecting to meaningfully ramp up
Speaker Change: their volumes of their batteries. And, you know, obviously, that's that's material for us as we go through 2025.
Speaker Change: On the water desal, you know, we know this is a long term venture. We are very encouraged with the blue chip customers that we're in discussions with. As we've said before, we
Speaker Change: You know commercial scale type of desalination for beneficial reuse projects Until we get into 2026. That's our that's our current expectation
Speaker Change: But again couldn't be happier with the quality of the blue chip customers we're discussing since we've last talked around our seven NDAs with with major operators in the Permian. We've extended that to a new major midstream player.
Speaker Change: as they are clearly looking at this as part of their future offering.
Speaker Change: So that's kind of the cadence, Kurt, that I would respond to. You know, the longer term, we're still...
very much intent on getting our bromine plant constructed.
Speaker Change: As Elijio said, you know, we are looking at some alternatives to make sure we can fund that through our own cash flow. That may mean deferring a little bit, that may mean getting some additional supply arrangements in place.
and
Speaker Change: for Elijio, if you take the numbers you provided in terms of free cash flow and back that up into EBITDA, that would get you to at least $100 million of EBITDA on a full year basis, right? You're looking at something around $60 million in the first half?
Speaker Change: So that would suggest at least, right, $40 million in the back half. What are the variances, you know, as you look into the second half of the year, Elijio, that could...
Speaker Change: I mean, you got it differently. You have a high degree of conviction in at least 40 million in the back half, and what could be the variances that could push you higher than that?
Elijio: Yeah, we don't traditionally provide guidance as you know, Kurt, unless we're moving in a direction different from the rest of the industry. In the first half, we clearly...
Speaker Change: have visibility with the best backlog that we've had in the company's history on the offshore side. We're very comfortable with what's occurring in the first half of the year by those projects. I think it's foolish to believe that anyone in the industry has full visibility to what's going to happen in the second half of the year.
Speaker Change: But with the initiatives that we have with the deep water projects including the Brazil multi-year program
Speaker Change: Elijio Serrano, Unknown Executive, Brady Murphy, Elijio Serrano, Unknown Executive, Brady Murphy,
Speaker Change: We expect high single digits, low double digits, top line growth. And we think our margins will continue to hold in the range that we're at, if not slightly above that. Appreciate that. Thank you, guys.
Speaker Change: John, you want to bring on the next question? Yes, sir. Thank you. I will now take the next question. And this comes from the line of Tim Moore from Clear Street. Please go ahead.
Tim Moore: Oh, thanks so much. You know, I really like the branding of your desalination oasis.
Elijio Serrano, Unknown Executive, Brady Murphy, Elijio Serrano,
Right. Yeah. Good morning, Tim.
Tim Moore: Yeah, so the lead time for the pilots really is predominantly based on the HI-REC membrane system or the CAM-X membrane systems. We obviously are in very close communication with both of them.
Tim Moore: And as I said, we are we are actually confident enough where we are right now to be placing orders for additional
Tim Moore: a pilot units for the year in 2025, if we had to start from scratch and get additional, you know, pilots, say, in mid year, that might be a stretch to get them into the year in 2025. But we've got some room between now and then to add to that capacity.
Speaker Change: That's helpful commentary, Brady. And then just going back to your Brazil, you know, the Deepwater multi-year program.
Tim Moore: You know, I think investors clearly understand CS Neptune pretty well, but, you know...
Yeah, the, the, uh,
Tim Moore: The Brazil market is typically not a heavyweight brine market, but the contract that we have is, in fact, we're really the only heavy brine.
Tim Moore: Completion Fluid Provider in in the Brazil market so very well positioned with with how we've positioned ourselves and the investments we've made there so
Yeah, that's a two-year contract. There's a number of wells
Tim Moore: that are due to be executed this year and next. So we think that'll be pretty evenly spaced out.
Over the next two years, but we're really encouraged by
Tim Moore: You know what we see is a trend for potentially heavier brine completion projects in Brazil and we'll see how they develop.
Tim Moore: That's great. And my only other question is just switching gears to the potential bromine development project. You know, you had commentary about, you know, maybe getting close to finalizing the supply agreements.
Tim Moore: I'm just kind of curious, you know, without putting words in your mouth.
Tim Moore: How long is maybe the lead time, you know, many, many months lead time between, you know, if the board does approve the bromine project and you go forward with it versus kind of the plant startup construction, you know, is that three or four or five months? Just kind of curious.
Tim Moore: Yeah, no, the lead time to get the full bromine project in place is longer than that, Tim. But we've done quite a bit of work already. We've completed the engineering, as you know. We've secured the plant site.
Tim Moore: We've prepared the plant site for the next phase of construction. We've sourced the power. I mean, so we've made considerable progress advancing.
The Bromine Project.
Tim Moore: While we're monitoring the demand needs that we have and at this point in time, we're balancing that and We'll keep you posted as we get to a final investment decision
Speaker Change: Great, Brady. Thanks for that color. That's it for my questions.
Thanks, Tim.
Speaker Change: Thank you. And the next question comes from the line of Bobby Brooks from Northland Capital Markets. Please go ahead.
Bobby Brooks: Hey, good morning, guys. Thank you for taking my question. So I just wanted to start with the beneficial reuse project Oasis. I mean, this is literally turning a waste stream into a scarce resource in a region that is desperate for more water. So I have to imagine that the demand for the recycled water.
Bobby Brooks: that can pass all types of wet testing is very high, especially when I think about conversations of data centers being co-located near well heads, and along with the fact that data centers have a big demand for water as well.
Bobby Brooks: So, just taking that all into account, how are discussions with potential customers?
Bobby Brooks: and the U.S. but I'll stop there and have a follow-up. Yeah no you know sure Bobby I mean the momentum is is clearly building for this solution the more discussions that we have with operators but remember this is also a fairly complex
Bobby Brooks: Problem to solve and and solution to put in place just because of the regulatory issues
Bobby Brooks: that come into play with this as well. You mentioned data centers and uses of the water. You know, there's a logistics challenge that the operators have to work with as well, because, you know, once they, or once we desalinate the water for beneficial reuse,
You know, there's there's got to be a logistics solution
Bobby Brooks: to get that that beneficial water where it needs to be used. And so that's all part of the equation that is being worked on. There's no question in my mind the momentum is building.
Bobby Brooks: As I mentioned, I had the opportunity to speak at the Produced Water Society conference and everyone's on the same page that this is, you know, one of the highest priorities for the industry.
Bobby Brooks: and now it's just a question of working through the details, getting everybody comfortable with the quality of the product, the commercials of the projects, the regulatory framework.
Bobby Brooks: and the end use destinations for this. And when you throw it all together, it takes time to work through this, but it's definitely coming.
Speaker Change: Got it. And then just to follow up, you mentioned, you know, expecting a couple different pilots to kick off this year. I just wanted to confirm, it seems like none of those have, none of those have locked in yet, right? Those are still in discussions, or have you actually locked in any of these pilots?
Speaker Change: I would say our confidence level is extremely high for multiple pilots to be getting started in the first half of 2025.
Got it.
Speaker Change: And then, so you had three Neptune job wins in 2024, you know, internally, how many shots on net per se are you guys mapping out on Neptune opportunities in 2025? Does the first half guide bake in any additional wins?
Speaker Change: Did you say the first half of 2025? Yeah, just like that first half guide, is there any, is it just, are you guys baking in any additional Neptune winds into that and more broadly? Okay, and then more broadly? Okay. 2025, really, the first half of 2025 that we've got it on, really,
Speaker Change: and as those projects move forward we don't really want to announce you know any of those projects until we're actually given the award and we have the you know kind of a definitive drill time for those wells.
Speaker Change: Okay, and then just like talking about that pipeline I can appreciate you guys not wanting to
Speaker Change: Yeah, I wouldn't, I wouldn't say the timing of these projects are going to double year on year, but they will definitely, our expectation is they will increase year on year.
Speaker Change: Got it. I appreciate it. Thank you guys. Congrats on the great 24 results and I'll return to the queue. Thank you, Bobby
Speaker Change: Thank you. And the next question comes from the line of Stephen Jengaru from Stifel. Your line is now open. Please go ahead.
Thanks, good morning, everybody. Morning, Stephen.
Speaker Change: So a couple for me and I think maybe the first just if I want on a previous question.
Speaker Change: So, over the last, I don't know, five, six, seven years, the CS Neptune work
Speaker Change: has we've sort of thought about a sort of episodic and obviously a big plus when it happened but but not kind of part of our model because they were kind of few and far between and that that seems to be Changing so maybe another way to ask the prior questions when we think about 25 26 27
Speaker Change: Like at a high level, given the activity level of Deepwater, can we think about that business and that product line being kind of a more consistent contributor on either a quarterly or half-year basis? Like, how do we think about it at the higher level?
Speaker Change: Yeah, yeah, absolutely, Stephen, and I just just remind our followers, you know, the last C.S. Neptune job in the Gulf of America that we executed was the fourth quarter of 2019.
Speaker Change: before the current jobs that we have ongoing and of course right after the fourth quarter of 2019 COVID hit and as I said when when COVID hit in 2020 and 2021 we essentially lost two years
of that pipeline coming to pretty much a halt.
started, we saw it started moving again.
in 22 and 23 and so now.
Speaker Change: As that pipeline moves forward, and you know, more Gulf of America wells start going into the lower tertiary, which are the high pressure, high temperature, you know, sweet spot.
for C.S. Neptune.
Speaker Change: We absolutely believe that the future of CS Neptune projects will increase and we're also getting some attraction now in deep water markets.
Speaker Change: outside of the Gulf of Mexico. We've been successful in the UK and Norway to some degree, but those have typically been smaller jobs. But now we are getting visibility of larger scale projects outside of the Gulf of Mexico. And so, yes, I would fully expect.
Speaker Change: Our C.S. Neptune projects and work to be certainly at a faster cadence than where we have been.
Speaker Change: Okay, good. Now, thank you. That's good color. The other two quick questions were, one,
Speaker Change: When we think about the sort of the history of the company, you've done a good job sort of simplifying the structure to two really core businesses. And I know, I know in the past, you know, there's
Speaker Change: Obviously, the fluids business, at least in our views, is sort of the gem, right? And I know the desalination efforts out there, but when you think about the structure of the company, like two or three years out, do you think there's any kind of material changes to fund operations and grooming, etc.? Do you think we're kind of looking at the structure of the company, you know, two years out will be similar to where we are now?
Speaker Change: When you say the structure of the company, I think if I look at our business, you know, further years out, Stephen, the way we think about it, our industrial chemicals business, certainly including our electrolyte
You know a chemicals industrial products type of business
Speaker Change: I think the deep water market has got a lot of legs for quite a few years, so our energy services completion fluids business will still be a very core part of our business. I think our water and flow back business will morph into a desalination business.
Stephen Jengaru: Future segments down the road that we see in the company, Stephen.
Speaker Change: Great. That's great color. And and then just the final one.
Speaker Change: When we think about shipments to EOS, and obviously EOS seems to be on the cusp of
Speaker Change: very robust growth. Can you give us a sense of when you're thinking about, so like what's the time frame that you recognize in ship revenue?
versus when they're able to ship product.
Speaker Change: We book revenue when the product leaves our facility and sell it to EOs at that point.
Speaker Change: I think one of the nice arrangements that we have with EOS is that we can produce product real-time for them, just-in-time production. And they're likely buying at or within a few weeks of when they put it into the battery.
Okay, great. That's good detail. Thanks, Lijo. Thanks, Brady.
Sure. Thanks, David.
Speaker Change: Thank you. No further questions at this time. I'll hand the call back over to Brady Murphy. Please go ahead, sir.
Speaker Change: Well, thank you very much for your interest. As you can see, we're very excited about our 2025 future and beyond. So thank you for joining us this morning for our call.
Speaker Change: Thank you. This concludes our conference for today. Thank you all for participating. You may now disconnect.