Q4 2024 Target Hospitality Corp Earnings Call
Operator: Good morning. And welcome to the Target Hospitlty fourth quarter and full year 2024 earnings call. At this time, all lines are in a listen-only mode.
Good morning.
Speaker Change: And welcome to the target hospitality fourth quarter and full year 'twenty 'twenty four earnings call. At this time all lines are in a listen only mode. Following the presentation you will conduct a question and answer session.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.
Speaker Change: But any time during this call go quietly get assistance. Please press star zero for operator. This call is being recorded on Wednesday March 26 2025.
Operator: This call is being recorded on Wednesday, March 26, 2025.
Mark Schuck: I would now like to turn the conference over to Mark Schuck, Senior Vice President of Investor Relations, please go ahead. Thank you.
Speaker Change: Now I'd like to turn to countries over to Marcia Senior Vice President of Investor Relations. Please go ahead.
Mark Schuck: Good morning, everyone, and welcome to Target Hospitality's fourth quarter and four year 2024 earnings call. The press release we issued this morning, outlining our fourth quarter and four year results can be found in the investor section of our website. In addition, a replay of this call will be archived on our website for a limited time. Please note the cautionary language regarding forward-looking statements contained in the press release. This same language applies to statements made on today's conference call. This call will contain time-sensitive information, as well as forward-looking statements, which are only accurate as of today, March 26, 2025.
Marcia: Thank you good morning, everyone and welcome to target hospitality is fourth quarter and full year 2024 earnings call.
Speaker Change: Release, we issued this morning.
Speaker Change: Our fourth quarter and full year results can be found in the investors section of our website at.
Speaker Change: In addition, a replay of this call will be archived on our website for a limited time.
Speaker Change: Please note the cautionary language regarding forward looking statements contained in the press release. This same language applies to statements made on today's conference call.
Speaker Change: This call will contain time sensitive information as well as forward looking statements, which are only accurate as of today March 26 2025.
Mark Schuck: Target expressly disclaims any obligation to update or amend the information contained in this conference call to reflect events or circumstances that may arise after today's date, except as required by applicable law.
Speaker Change: Target expressly disclaims any obligation to update or amend the information contained in this conference call to reflect events or circumstances that may arise after today's date, except as required by law.
Mark Schuck: For a complete list of risks and uncertainties that may affect future performance, please refer to the Target Hospitlty's periodic filings with the SEC. We will discuss non-GAAP financial measures on today's call. Please refer to the tables in our earnings release posted in the investor section of our website to find a reconciliation of non-GAAP financial measures referenced in today's call and their corresponding GAAP measures.
For a complete list of risks and uncertainties that may affect future performance. Please refer to the target hospitality is periodic filings with the SEC.
Speaker Change: We will discuss non-GAAP financial measures on today's call. Please refer to the table their earnings release posted in the investors section of our website to find a reconciliation of non-GAAP financial measures referenced in today's call and their corresponding GAAP measures.
Mark Schuck: Leading the call today will be Brad Archer, President and Chief Executive Officer, followed by Jason Vlacich, Chief Financial Officer and Chief Accounting Officer. After their prepared remarks, we will open the call for questions.
Brad Archer: Leading the call today will be Brad Archer, President and Chief Executive Officer, followed by Jason <unk>, Chief Financial Officer, and Chief Accounting Officer.
Speaker Change: After their prepared remarks, we will open the call for questions.
Brad Archer: I'll now turn the call over to our Chief Executive Officer, Brad Archer. Thanks, Mark. Good morning, everyone, and thank you for joining us on the call today. Target's 2024 results illustrate the benefits of our established network capabilities and strong operating platform. Our efficient operating structure, together with our approach to disciplined capital allocation, form the basis of a highly flexible and resilient business model. These elements support our ability to provide premium service offerings to customers across our network, while producing strong financial results and maintaining financial flexibility to quickly react to the growth opportunities. These characteristics consistently support our ability to successfully navigate through cycles, while maintaining focus on key strategic growth and diversification initiatives.
Speaker Change: Now I'll turn the call over to our Chief Executive Officer, Brad Archer.
Speaker Change: Thanks, Mark Good morning, everyone and thank you for joining us on the call today.
Speaker Change: 'twenty 'twenty four results illustrate the benefits of our established network capabilities and strong operating platform.
Speaker Change: Our efficient operating structure together with our approach to disciplined capital allocation form the basis of a highly flexible and resilient business model.
Speaker Change: These elements support our ability to provide premium service offerings to customers across our network, while producing strong financial results and maintaining financial flexibility to quickly react to the growth opportunities.
Speaker Change: These characteristics consistently support our ability to successfully navigate through cycles, while maintaining focus on key strategic growth and diversification initiatives.
Brad Archer: Turning to our segments, regarding our HFS segment, we continue to benefit from consistent customer activity and constructive market dynamics. Additionally, we remain focused on identifying opportunities to strengthen margin contribution through enhanced network optimization and operational efficiencies. This segment continues to exhibit positive momentum where our customers find added value in our network capabilities and unmatched hospitality solutions. These attributes supported the expansion of existing customer relationships in 2024, as well as adding new customers who find incremental value in our unique capabilities and strategically located assets. These distinct core competencies supported the recent announcement of our multi-year workforce subcontract, supporting Lithium America's development of ThakurPath.
Speaker Change: Turning to our segments regarding our Hff's segment, we continue to benefit from consistent customer activity and constructive market dynamics.
Speaker Change: Additionally, we remain focused on identifying opportunities to strengthen margin contribution through enhanced network optimization and operational efficiencies.
Speaker Change: This segment continues to exhibit positive momentum.
Speaker Change: Customers find added value on our network capabilities and unmatched hospitality solutions.
Speaker Change: Is that attributes supported the expansion of existing customer relationships in 2024.
Speaker Change: As well as adding new customers, who find incremental value on our unique capabilities and strategically located assets.
Speaker Change: These sustained core competencies supported the recent announcement of our multi year workforce sub contract supporting the lithium Americas development of Stacker pack.
Brad Archer: We have referenced this opportunity and growth initiative for some time, and we were excited to finalize this contract. As we have consistently stated, these large industrial opportunities inherently have longer sales cycles prior to contract award. However, the Workforce Hub contract exemplifies Target's focus and commitment in utilizing its existing service offering to deliver on strategic diversification initiatives. We're excited about this partnership and establishing a regional presence as we continue evaluating additional growth opportunities in the area.
Speaker Change: We have referenced this opportunity and growth initiative for some time and we were excited to finalize this contract.
As we have consistently stated these large industrial opportunity inherently have longer sales cycles prior to contract award.
However, the workforce subcontract exemplifies targets focus and commitment and utilize its existing service offering to deliver on strategic diversification initiatives.
Speaker Change: We're excited about this partnership and establishing a regional presence as we continue evaluating additional growth opportunities in the area.
Brad Archer: Now moving to the government segment. Our government segment experienced a transition as we moved through the election cycle of 2024 and into a new administration in January. However, amidst this disruption, Target has illustrated its ability to provide unmatched solutions supporting a range of critical U.S. government initiatives. The reactivation of our dealing community early this month exemplifies the importance of our proven reputation, unmatched capabilities, and strategically located assets. These elements have supported a seamless reactivation of this community and further illustrate the benefits of our flexible operating model and ability to quickly respond to customer demand. In addition, the current administration has indicated the need for a significant increase in facility and hospitality solutions required to adequately implement their stated immigration policy initiatives.
Speaker Change: Now moving to the government segment.
Speaker Change: Our government segment experienced a transition as we move through the election cycle of 2024 and into a new administration in January however, admit this disruption target has illustrated its ability to provide unmatched solutions supporting a range of critical U S government delicious.
Speaker Change: A reactivation of our daily community early this month exemplifies the importance of our proven reputation unmatched capabilities and strategically located assets.
Speaker Change: These elements have supported a seamless reactivation of this community and further illustrate the benefits of our flexible operating model and ability to quickly respond to customer demand.
Speaker Change: In addition, the current administration has indicated the need for a significant increase in facility and hospitality solutions required to adequately adequately implement their stated immigration policy initiatives.
Brad Archer: targets existing government-focused network capacity and operational capabilities aligned with this increased demand, providing a natural solution to support this critical mission. Further, our strong operational reputation and partnerships with industry-leading companies uniquely position Target to quickly and effectively implement these mission-critical solutions. Specifically, Target's existing West Texas assets offer the benefit of purpose-built, readily accessible solutions. We believe this establishes a distinct advantage as we actively pursue opportunities to recontract these assets in support of these critical U.S. government initiatives. We are actively engaged in discussions with industry-leading partners and U.S. government agencies regarding opportunities to reactivate our West Texas community.
Speaker Change: Target's existing government focused network capacity and operational capabilities align with us increased demand, providing a natural solution to support this critical metric.
Speaker Change: Further our strong operational reputation and partnerships with industry, leading companies uniquely position target to quickly and effectively implement these mission critical solutions.
Speaker Change: Specifically targets the existing west, Texas assets offer the benefit of purpose built readily accessible solutions.
Speaker Change: We believe this establishes a distinct advantage as we actively pursue opportunities to re contract. These assets in support of these critical U S government initiatives.
Speaker Change: We are actively engaged in discussions with industry, leading partners and U S government agency regarding opportunities to reactivate our west Texas community.
Brad Archer: These conversations have included proposals regarding our capability and tours of the facility. We are encouraged by the level of interest in the West Texas community and believe it can quickly satisfy a portion of the government's significant demand for appropriate housing solutions. While final outcomes remain uncertain, we are encouraged by the frequency and substance of ongoing dialogue. While we're actively engaged in pursuing these unique opportunities supporting the U.S.
Speaker Change: These conversations have included proposals regarding our capability and tours of the facility.
Speaker Change: We are encouraged by the level of interest in the West, Texas community and believe it can quickly satisfy a portion of the government significant demand for appropriate housing solutions.
Speaker Change: While final outcomes remain uncertain, we are encouraged by the frequency and substance of ongoing dialogue.
Speaker Change: While we are actively engaged in pursuing these unique opportunities supporting the U S. Government. We are also continuing to evaluate nongovernment growth initiatives. As we have previously discussed these opportunities center on target existing capabilities and include a variety of large industrial projects throughout the U S.
Brad Archer: government, we're also continuing to evaluate non-government growth initiatives. As we have previously discussed, these opportunities center on Target's existing capabilities and include a variety of large industrial projects throughout the U.S. As illustrated by the Lithium America's Workforce Hub Contract Award, the size of these growth opportunities inherently leads to longer sell cycles. However, we believe pursuing these non-government growth initiatives is an important element of our diversification strategy, and we remain committed to pursuing these opportunities. In summary, the strength of our existing customer base, network capabilities, and proven operational flexibility support a resilient business model. These elements have consistently supported our ability to navigate through cycles while maintaining focus on our strategic objective.
Speaker Change: As illustrated by the lithium Americas workforce up contract award the size of these growth opportunities inherently leads to longer sales cycle. However.
Speaker Change: However, we believe pursuing these nongovernment growth initiative is an important element of our diversification strategy and we remain committed to pursuing these opportunities.
Speaker Change: In summary, the strength of our existing customer base network capabilities and proven operational flexibility to support a resilient business model.
Speaker Change: These elements have consistently supported our ability to navigate through cycles, while maintaining focus on our strategic objectives.
Brad Archer: This foundation supports our continued focus of providing premium services to our customers while simultaneously pursuing attractive growth opportunities.
Speaker Change: That foundation supports our continued focus of providing premium services to our customers, while simultaneously pursuing attractive growth opportunities.
Jason Vlacich: I'll now turn the call over to Jason to discuss our financial results in more detail. Thank you, Brad. Our fourth quarter results continue to reflect the benefits of our flexible and efficient operating model. Fourth quarter 2024 total revenue was approximately $84 million with adjusted EBITDA of approximately $41 million. Our government segment produced quarterly revenue of approximately $44 million. The decrease from the prior period was primarily driven by lower PCC variable services revenue and no infrastructure revenue amortization, which was fully amortized as of November 2023. In addition, the decrease was partially a result of the termination of the South Texas Family Residential Center contract, effective August 9, 2024.
Speaker Change: I'll now turn the call over to Jason to discuss our financial results in more detail.
Jason: Thank you Brad our fourth quarter results continue to reflect the benefits of our flexible and efficient operating model.
Jason: Fourth quarter 2024, total revenue was approximately $84 million with adjusted EBITDA of approximately $41 million.
Jason: Our government segment produced quarterly revenue of approximately $44 million. The decrease from the prior period was primarily driven by lower PCC variable services revenue and no infrastructure revenue amortization, which was fully amortized as of November 2023.
Jason: In addition, the decrease was partially a result of the termination of the South Texas family residential center contract effective August nine 2024.
Jason Vlacich: However, the DILI assets associated with the prior South Texas Family Residential Center contract were recently recontracted, effective March 5, 2025, under a new contract that is expected to provide over $246 million of revenue over its anticipated five-year term. Regarding the PCC community, as we previously announced, Target's contract for this community was canceled, effective February 21st, 2025. However, as a reminder, Target owns the modular assets and real property associated with this community, and we are actively remarketing these assets to prospective customers. We are encouraged by the ongoing conversations and interest in these assets, and as a result, we have elected to keep this community in a ready state.
Jason: However, the daily assets associated with the prior South Texas family residential Center contract were recently re contracted effective March 5th 2025 under a new contract that is expected to provide over $246 million of revenue over its anticipated five year term.
Jason: Regarding the PCC community as we previously announced targets contract for this community was canceled effective February 21, 2025. However, as a reminder, target owns the modular assets and real property associated with this community and we are actively remarketing these assets to prospect.
Jason: <unk> customers, we are encouraged by the ongoing conversations and interest in these assets and as a result, we have elected to keep this community in a ready state.
Jason Vlacich: We believe maintaining these assets in a readily accessible manner provides a distinct advantage as we pursue growth opportunities, particularly in the government and market. This decision, which is similar to the approach we took regarding our DILI assets, will result in carrying costs prior to a potential new contract award of approximately $2 to $3 million per quarter. Turning to our HFS segment, our HFS and all other segments delivered quarterly revenue of approximately $40 million. These segments continue to benefit from consistent customer demand, illustrating the value our customers find in our premium service offering and network capabilities.
Jason: We believe maintaining these assets in a readily accessible manner provides a distinct advantage as we pursue growth opportunities, particularly in the government end market.
Jason: This decision, which is similar to the approach we took regarding our daily assets will result in carrying costs prior to a potential new contract award of approximately $2 million to $3 million per quarter.
Jason: Turning to our HFF segment.
Jason: Our hff's in all other segments delivered quarterly revenue of approximately $40 million.
Jason: These segments continue to benefit from consistent customer demand illustrating the value our customers find in our premium service offering and network capabilities.
Jason Vlacich: Recurring corporate expenses for the quarter were approximately $9 million. As we move through the year, we will continue to look for opportunities to optimize our cost structure and strengthen margin contribution. Total capital spending for the quarter was approximately $4 million, primarily focused on enhancing and maintaining Target's asset base across our expansive network. We have continued to prudently manage our capital allocation initiatives while benefiting from strong cash generation. We ended the quarter with $191 million in cash and $366 million in total liquidity, with zero borrowings under the company's $175 million revolving credit facility and a net leverage ratio of 0.0 times.
Jason: Recurring corporate expenses for the quarter were approximately $9 million as we move through the year. We will continue to look for opportunities to optimize our cost structure and strengthened margin contribution.
Jason: Total capital spending for the quarter was approximately $4 million, primarily focused on enhancing and maintaining targets asset base across our expansive network.
Jason: We have continued to prudently manage our capital allocation initiatives, while benefiting from strong cash generation, we ended the quarter with $191 million in cash and $366 million in total liquidity with zero borrowings under the company's $175 million revolving credit facility and then.
Jason: Net leverage ratio of 0.0 times. This focus supported the achievement of zero net debt as of year end 2024.
Jason Vlacich: This focus supported the achievement of zero net debt as of year-end 2024. Our strong financial position supported our ability to return approximately $33 million to our shareholders during 2024 by repurchasing approximately 3.8 million shares of Common Sock. These repurchases illustrate our focus on utilizing a broad range of initiatives to pursue value-enhancing opportunities for our shareholders. Regarding the 2025 senior notes, on March 25th, 2025, we redeemed all outstanding senior notes due June 2025 at a redemption price of 101% of par, resulting in expected annual interest expense savings of $19.5 million. Our decision to redeem all outstanding senior notes was focused on maintaining a balanced capital structure and financial flexibility as we continue pursuing a pipeline of strategic growth initiatives.
Jason: Our strong financial position supported our ability to return approximately $33 million to our shareholders. During 2024 by repurchasing approximately three 8 million shares of common stock.
Jason: These repurchases illustrate our focus on utilizing our broad range of initiatives to pursue value enhancing opportunities for our shareholders.
Jason: Regarding the 2025 senior notes on March 25, 2025, we redeemed all outstanding Senior notes due June 2025 at a redemption price of 101% of par, resulting in expected annual interest expense savings of $19 $5 million our decision to redeem all out.
Jason: Standing senior notes was focused on maintaining a balanced capital structure and financial flexibility as we continue pursuing a pipeline of strategic growth initiatives. We believe the current structure supports our ability to react to value enhancing growth opportunities as they arise while appropriately balancing our obligations.
Jason Vlacich: We believe the current structure supports our ability to react to value-enhancing growth opportunities as they arise, while appropriately balancing our obligations. Target's strong business fundamentals, including an efficient operating structure and commitment to network optimization, have established a flexible and durable operating model.
Jason: Target strong business fundamentals, including an efficient operating structure and commitment to network optimization have established a flexible and durable operating model. These elements support the company's revised 2025 financial outlook, which consists of total revenue of between 265 and 285 million.
Jason Vlacich: These elements support the company's revised 2025 financial outlook, which consists of total revenue of between $265 and $285 million, and adjusted EBITDA of between $447 million and $57 million. Our revised 2025 outlook gives effect to the previously announced PCC contract termination, effected February 21st, 2025, and the recently announced DILI contract award, effected March 5th, 2025. Target is well-positioned with a flexible operating model and distinct core competencies as we continue pursuing value-enhancing growth initiatives.
Jason: And adjusted EBITDA of between 447 million and $57 million.
Jason: Our revised 2025 outlook gives effect to the previously announced PCC contract termination effective February 21, 2025, and the recently announced Daily contract Award effective March 5th 2025 targeted.
Jason: Target is well positioned with a flexible operating model and distinct core competencies as we continue pursuing value enhancing growth initiatives and importantly, as we evaluate these opportunities we will remain focused on maintaining a strong financial profile centered on disciplined capital allocation, while optimizing margin comp <unk>.
Jason Vlacich: Importantly, as we evaluate these opportunities, we will remain focused on maintaining a strong financial profile centered on disciplined capital allocation while optimizing margin contribution through our efficient operating structure.
Brad Archer: Through our efficient operating structure with that I will turn the call back over to Brad for closing comments.
Brad Archer: With that, I will turn the call back over to Brad for closing comments. Thanks, Jason. Our 2024 performance benefited from the strong operating platform and durable business model we have established. Target's flexible and efficient network provides the ability to appropriately match customer demand, while simultaneously remaining focused on strategic growth initiatives. We are excited about the government in-market opportunity, and we believe we are well-positioned to support the U.S. government's increased demand for hospitality solutions. In addition, we remain intentionally focused on pursuing opportunities to grow and diversify our customer reach and contract portfolio. We are encouraged as we pursue these growth initiatives, intent on further strengthening Target's business fundamentals and contract portfolios, while accelerating value creation for our shareholders.
Speaker Change: Thanks, Jason our 2024 performance benefited from a strong operating platform and durable business model, we have established.
Speaker Change: <unk> flexible and efficient network provides the ability to appropriately match customer demand, while simultaneously remaining focused on strategic growth initiatives. We.
Speaker Change: We are excited about the government end market opportunity and we believe we are well positioned to support the U S government increased demand for hospitality solutions. In addition, we remain intensely focused on pursuing opportunities to grow and diversify our customer reach and contract portfolio.
We are encouraged as we pursue these growth initiatives.
Speaker Change: On further strengthening target's business fundamentals and contract portfolio.
Speaker Change: Accelerating value creation for our shareholders.
Brad Archer: I appreciate everyone joining us on the call today, and thank you again for your interest in Target Hospitality.
Speaker Change: I appreciate everyone joining us on the call today and thank you again for your interest in target hospitality, we would now like to open the call for questions.
Operator: We would now like to open the call for questions. Thank you.
Operator: And ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star followed by the number 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star followed by the number 2.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session to ask a question you May press star followed by the number one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing any keys. We draw. Your question. Please press star followed by the number killed once.
Stephen Gengaro: Once again, please press star 1 to join the And your first question comes from the line of Stephen Gengaro with Steeple. Please go ahead. Thanks, good morning everybody. Good morning. Thanks. So, two things from me. The first one would be...
Speaker Change: Once again, please press star one to join the queue.
Stephen: And your first question comes from the line of Stephen <unk> with Stifel. Please go ahead.
Speaker Change: Thanks, Good morning, everybody.
Speaker Change: Good morning, Brian.
Stephen: Good morning, Thanks, So two things from me.
Stephen: First one would be.
Brad Archer: When you think about re-marketing the West Texas PECOS ASH And we sort of think about the economics of the Dilley contract. You know, where PECOS was. Is there anything about the specific assets or the application that would warrant sort of a higher economic contract for you for the West Texas assets versus Dilley? Like, just maybe help us understand if there's any difference in the assets and the application.
Stephen: When you think about remarketing, the west, Texas gross assets.
Stephen: And we sort of think about the economics of the daily contract versus.
TECOS wise.
Stephen: There anything about the specific assets or the application that got it.
Stephen: Would warrant sort of a higher economic contracts for you for the West Texas assets versus daily.
Stephen: Maybe help us understand if theres any difference in the assets and the application.
Jason Vlacich: Yeah, good question, Stephen. I would say the best proxy for the economics at this point are the DILI assets. It's possible they could be slightly better, but that would be what I would point you to.
Speaker Change: Yes. Good question, Stephen I would say the best proxy for the economics at this point are the daily assets, it's possible that it could be slightly better but that would be what I would point you to at this point.
Brad Archer: Yeah, I think it depends on the population, right, on what you what you put on there. But Jason's right. The thought is that model, you know, kind of where Dilley's at. The upside could be if there's a little bit of a different population.
Stephen: Yes, I think it depends on the population right.
Speaker Change: On what you what you put on there, but Jason to write the thought is that model kind of where where it believes that the.
Stephen: The upside could be if there is a little bit of a different population mix there.
Brad Archer: Okay, okay, good, that's helpful, and then the second question I had was that when you look at the Lithium Americas contract. and sort of the opportunity set there over multiple years. Is there any, is there any way to sort of think about the size opportunity of that market and kind of what We need to see from a development perspective by them or others that would sort of accelerate their demand needs. Yeah, I would say that there is potential to go beyond 2027 in multiple phases. We feel pretty well positioned in that regard. No guarantees, obviously, but we've expanded our workforce hub capacity there with some asset purchases in Q1, as we outlined in our release of 15 to 20 million.
Stephen: Okay, Okay great.
Speaker Change: Helpful. And then the second question I had was that when you look at the lithium Americas contract.
Stephen: And sort of the opportunity set there over over multiple years.
Stephen: Is there any is there any way to sort of think about the size opportunity of that market and kind of what.
Stephen: We need to see from a development perspective.
Stephen: By them or others that would sort of accelerate their demand needs.
Stephen: Yes, I would say that there is potential to go beyond 2027, and multiple phases, we feel pretty well positioned in that regard no guarantees obviously, but we've expanded our workforce hub capacity there.
Stephen: Asset purchases in Q1, as we outlined in our release of $15 million to $20 million and the project is pacing quite well.
Brad Archer: And the project is pacing quite well. And so we feel we're well positioned to potentially go into multiple phases beyond 2027. Economics would be tough to say at this point. I'd say the best proxy is what we've already announced. Yeah, just a little bit on that project, you know, it's publicly out there, you know, their idea is not to do just one phase of this project, right? Just as late as last week, the governor of Nevada was out there. We were out on site at site as well for that, that, that tour. So, you know, the, and they, their CEO was there and talking about their plan is to do a second phase, right?
Stephen: And so we feel we're well positioned to potentially go into multiple phases beyond 2027.
Stephen: Economics will be tough to say at this point I'd say the best proxy is what we've already announced.
Stephen: Yes, just a little bit on that project, it's publicly out there.
Stephen: Their idea is not to do just one phase of this project just as late as last week the governor.
Stephen: Nevada was what's out there we were out on <unk> side as well for that debt that two or so.
Stephen: The <unk> and.
Stephen: Their CEO was there and talking about their plan is to do a second phase right. If you look at the resource play itself as some of the best.
Brad Archer: If you look at the resource play itself, it's some of the best dirt that there is out there in the world. So their plan is not to, you know, stick with just one phase for sure. Nothing's guaranteed, but we like this project from day one, as we think there's, there's more years in it than what we've got got in today, right? That's, that's the hope. And then when you look at the, the resource play around that within 150 mile radius, there's a lot of other minds. There's a lot of money being poured into that area.
Stephen: That there is out there in the world. So their plan is not to stick with just one phase for sure nothing is guaranteed but we like this project from day, one as we think there is.
Stephen: Theres more years in it than what we've got today.
Stephen: And then when you look at the the resource play around that within 150 mile radius. There's a lot of other mines theres a lot of money being imported.
Brad Archer: And we think it can kind of be that launching point for more work. We're actively, you know, our sales force is actively knocking on doors, talking to folks about, about the need out there. We, you know, gathering capital project information.
Stephen: Into that area and we think it can kind of be that launching point for more work we're actively.
Stephen: Our sales force is actively knocking on doors talking to folks about about the need out there.
Stephen: Gathering capital project information.
Stephen Gengaro: So we look for this to be more of a long-term area to get some growth out of. Great, thanks.
Stephen: So we look for this to be more of a long term area.
Stephen: Get some growth out of.
Brad Archer: And just a follow-up to that, and I'm not sure how to exactly ask this, but when we think about the lithium opportunity, so when I think about HFS South and the oil and gas and the network approach you took, which was obviously an excellent way to approach that business because these projects tend to be short-term and your customers move around a lot versus some other markets where the customer is more stationary, right? Is this a market where the customer moves around and you need more of a network approach, or is this a market where the labor force is really more in one location and you can have sort of a single facility that houses a number of employees?
Stephen: Great. Thanks, and just a follow up to that.
Stephen: I'm not sure how to.
Speaker Change: As we think about the lithium opportunities.
Stephen: Think about HFF, south in the oil and gas.
Stephen: The network. The charge you took which was which was obviously an excellent way to approach that business. Because these projects tend to be short term and your customers move around a lot versus some other markets where the customer is more stationary right is this a market where the where the customer moves around and you need like more of a network.
Stephen: Or is this a market where the labor forces, it's really more.
Stephen: One location and you can have sort of a single facility that houses.
Brad Archer: Do you understand what I'm asking? Yeah, for sure. So we like the mining industry itself, right? When you talk about lithium, copper, gold, is there long term investments, right? And usually if there's one mine, there's multiple mines around. So very similar to, you know, the thought process around, if you will, in an area like the Permian for an investment. But what you're not having is that workforce moving from one facility to the other, right? But for our type of assets, like we've invested in there, we can literally house multiple different contractors, right? Not so much on the LAC side, but our thought process was, you know, spending a little bit of capital, getting that going, and it won't just serve LAC as we believe there's others out there that will.
Stephen: <unk> employees.
Speaker Change: You understand I'm asking.
Speaker Change: Yes for sure. So we like the mining industry itself right. When you when you talk about lithium copper gold as they are long term investments right.
Speaker Change: Usually if there is one one mind theres multiple mind the wrap around so very similar to <unk>.
Speaker Change: That process around if you will in an area like the Permian for an investment, but what youre not have and is that workforce moving from one facility to the JV.
Speaker Change: Right.
Speaker Change: But for our type of assets like we've invested in there. We can we can literally house multiple different contractors not so much on the <unk> sites, but our thought process was.
Speaker Change: But spending a little bit of capital getting that getting that going in it. It wont just serve LIC is we believe there's others out there that work so that area itself I would say.
Brad Archer: So that area itself, I think, could look like a Permian, but the workforce itself is not so much a traveler. The difference, again, is the long term nature of these mining projects, right? They're not a three year investment, they're a 10, they're a 15, they're a 20, and they continually, you know, are putting money into this. Yeah, I sort of think about it more like an oil sand than a Permian oil and gas well, is that reasonable? That is reasonable. Yep. Perfect. Great. Thank you. Yep.
Speaker Change: That looked like a our Permian plus the workforce itself.
Speaker Change: Not so much a traveler the difference again is the long term nature of these mining projects right. There, they're not a three year investment there are 10, or 15 or 20 and they continually.
Speaker Change: We're putting money into this.
Speaker Change: Yes, so I would think about it more like an oil sands.
Speaker Change: And oil and gas.
Speaker Change: Reasonable.
Speaker Change: That is reasonable yep perfect great. Thank you.
Yes.
Speaker Change: Welcome.
Scott Schneeberger: And your next question comes from the line of Scott Schneeberger with Oppenheimer. Please go ahead. Thanks very much. Good morning, all. I think it would be helpful with all the moving parts that the new contract wins, losses in the first quarter. We appreciate the guidance for 2025.
Speaker Change: And your next question comes from the line of Scott Schneeberger with Oppenheimer. Please go ahead.
Scott Schneeberger: Thanks, very much good morning all.
Speaker Change: I think it would be helpful with the morning with all the moving parts that are.
Speaker Change: New contract wins or losses in the first quarter. We appreciate the guidance for 2025 could you speak as kind of a two parter.
Scott Schneeberger: Now, if you speak as kind of a two-parter, to the first quarter as things, you know, are starting, how should we think about revenue and EBITDA in the first quarter upcoming? And then, also, not asking for 2026 guidance but how should we think about run rate for the contracts, the major contracts you have set at this point? Thank you. Yeah, sure.
Speaker Change: To the first quarter.
Speaker Change: As as things are starting how should we think about revenue and EBIT in.
Speaker Change: In the first quarter upcoming and then also not asking for 2026 guidance, but how should we think about run rate for the for the contracts. The major contracts you have said at this point thanks.
Jason Vlacich: So take the second question first. So the run rate, for example, on DILI, is that what you're getting at on that one, for example, I would say the run rate on that once we get through the ramp up phase is very similar to the prior concept. Right, so roughly 50 to $55 million of annual revenue and approximately a 40 to 50% margin on that slightly less than the last one, because on the last one, we had some minor deferred revenue amortization that we have burned off on the last contract of a couple million dollars a year.
Speaker Change: Yes sure so.
Speaker Change: The second question first so the run rate for example on daily.
Speaker Change: What you're getting at on that one for example, I would say the run rate on that once we get through the ramp up phase is very similar to the prior contract right. So roughly $50 to $55 million of annual revenue and approximately a 40% to 50% margin on that slightly less than the last one because.
Speaker Change: On the last one we had some minor deferred revenue amortization that we have burned off on the last contract of a couple million dollars a year.
Jason Vlacich: But outside of that, the economics on that from a run rate standpoint should be pretty similar.
Speaker Change: But outside of that the economics on that from a run rate standpoint should be pretty similar.
Jason Vlacich: And then on the LAC deal, I would say that the bulk of the revenue is going to be recognized this year on the construction. So about 65 million of that is recognized this year for the construction at a 25 to 30 percent margin. And the remaining portion of the contract would be recognized at approximately a 30% margin, not materially dissimilar from the HFS margin profile.
Speaker Change: And then on the LSE deal I would say that the bulk of the revenue is going to be recognized this year on the construction so about $65 million of that.
Speaker Change: It's recognized this year for the construction at a 25% to 30% margin.
Speaker Change: And in the remaining portion of the contract would be recognized at approximately at 30% margin not materially dissimilar from the HFF margin profile.
Jason Vlacich: And then in terms of Q1, you know, you'll have obviously, you know, very minimal amount of the DILI contract in Q1, as it just started on March the 5th, and there's a ramp up period. So, for whatever revenue we end up recognizing on that in Q1, it'll be pretty minimal, but largely a 40 to 50% margin on that. And then we'll have a prorated portion of the PCC contract through February 21st at the same margin profile as we had last year.
Speaker Change: And then in terms of Q1.
Speaker Change: You will have.
Speaker Change: Obviously very minimal amount of the daily contract in Q1 as it just started on March 5th and Theres a ramp up period.
Speaker Change: So for whatever revenue we ended up recognized on that in Q1, it will be pretty minimal, but largely of 40% to 50% margin on that and then we will have a prorated portion of the PCC contract through February 21 at.
Speaker Change: The same margin profile as we had last year.
Jason Vlacich: And then HFS will be pretty steady. I would say the utilization trends on that are actually slightly ahead of last year, but I would estimate pretty similar utilization to that of last year. for Q1.
Speaker Change: And then Hff's will be pretty steady I would say the utilization trends on that are actually slightly ahead of last year.
Speaker Change: But I would I would estimate pretty similar utilization to that of last year.
Speaker Change: For Q1.
Mark Schuck: And hey, Scott, this is Mark. Just to follow on to Jason's comment there, too, specifically related to the Lithium Americas piece, that is going to be a little lumpy through 2025. And so the majority of that is going to be back half-weighted. So anyways, we can get into more details offline, but I would not assume that's straight line through 2025.
Speaker Change: Hey, Scott. This is mark just to follow on to Jason's comment there too specifically related to the lithium Americas piece that is going to be a little lumpy through 2025, and so the majority of that is going to be back half weighted so anyways, we can get into more details offline, but I would not assume that straight line through 2025.
Jason Vlacich: Yeah, so to follow on to that, I would say Q1 very minimal activity on the LAC contract and ramps up in the latter half, as Mark said.
Speaker Change: Yes, so to follow on to that I would say Q1 very minimal activity on the legacy contract and ramps up in the latter half as Mark said.
Scott Schneeberger: Thanks, appreciate all that color for both horizons, guys.
Speaker Change: Excellent. Thanks appreciate all that color for both horizons guys.
Scott Schneeberger: I guess I'll follow with the more fundamental. The asset that was acquired back in May of 2023, could you give us an update on how that's being marketed right now, what purposes you're looking at for that? Yeah, it's got to spread.
Speaker Change: I guess I'll fall with.
Speaker Change: The more fundamental of the asset that was acquired back in May of 2023 could you give us an update on how thats being marketed right now what what purposes.
Speaker Change: Youre looking at for that thanks.
Brad Archer: Yes, Scott it's Brad Thanks for joining let me just maybe.
Brad Archer: Thanks for joining.
Brad Archer: Let me just maybe This will probably answer it, but let me give maybe everybody a little bit of a high-level, take a minute to touch on our government segment as a whole, and I think this will answer your question. While we recently lost a major contract in this segment, I'll tell you, we've never in my 30-year career had this many real opportunities in front of us. The government has publicly stated for them to be able to manage their mission around immigration, they need somewhere between 110,000 to 150,000 beds. Today, they sit around 50,000, give or take a few thousand beds.
Speaker Change: This will probably answer it but let me give it.
Brad Archer: Everybody a little bit of a high level.
Brad Archer: Ill take a minute to touch on our government segment as a whole and I think just to answer your question.
Brad Archer: While we recently lost a major contract in this segment I will tell you we've never in my 30 year career had this many real opportunities in front of us.
Brad Archer: Government has publicly stated for them to be able to manage their mission around immigration.
Brad Archer: They need somewhere between 110000 to 150000 beds.
Brad Archer: Today, they sit around 50000 give or take a few thousand beds.
Brad Archer: We are actively quoting and have quoted many different opportunities, ranging in size from 250 beds all the way up to 5,000 beds and anywhere in between that, right? These opportunities vary in term from one to five years, with most being a three- to five-year term, very similar to the recent Dilley award. We've quoted using any and all of our existing and available fleet, including the assets you mentioned, right? But with the demand for beds being so high, we're also quoting projects that would require us to source new equipment or readily available equipment that we can obtain on the open market.
Brad Archer: We are actively quoting and have quoted many different opportunities ranging in size from 250 beds, all the way up to 5000 beds and anywhere in between that right.
Brad Archer: These opportunities vary in term from one to five years with most being a three to five year term very similar.
Brad Archer: Two are they.
Brad Archer: The recent Daily Award.
Brad Archer: Quoted.
Brad Archer: Using any and all of our existing and available fleet, including the ask that you mentioned right.
Brad Archer: But with the demand for beds being so high we're also quoting projects that would require us to source new equipment are readily available equipment that we can obtain on the open market.
Brad Archer: So all of these I'm describing, they're all active in some form, meaning some have moved to formal bid process, some we've already submitted. Some are in request for information, the RFI stage for the government. And as mentioned earlier, DILI's already been awarded, so they are becoming more active in awarding projects, right? We expect others' decisions to be made on these projects over the next six months. Look, this is going to depend on funding as well, so that can slide. But I would also tell you that when I say it's very active, our pipeline continues to build weekly.
Brad Archer: All of these opportunities I am describing.
Brad Archer: They are all active in some form.
Brad Archer: Meaning some had moved a formal bid process. Some we've already submitted formal bids somewhere in request for information the RFP stage for the government and as mentioned earlier <unk> already been awards. So they are becoming more active in awarding projects we.
We expect others decisions to be made on these projects over the next six months look this is going to depend on funding.
Brad Archer: Funding as well so that can slide but I would also tell you that when I said, it's very active our pipeline continues to build a weekly so theres going to be new projects from the government that slide into our pipeline.
Brad Archer: So there's going to be new projects from the government that slide into our pipeline, you know. So suffice to say, very busy. The assets you talk about are in play, just like our West Texas assets are as well, as well as other available equipment. So we've quoted thousands and thousands of beds of existing equipment, as well as much more than that on new equipment that we can get in the market. Great. Thanks, Brad.
Brad Archer: So suffice to say a very busy the asset you've talk about our employee.
Brad Archer: Just like.
Brad Archer: Our west, Texas assets are as well.
Brad Archer: As well as other available equipment, so we will get thousands and thousands of existing equipment as well as much more than that on new equipment that we can get in the market.
Scott Schneeberger: Great. Thanks, Brad and good core brands have answer.
Brad Archer: Good comprehensive answer. What's that? Were you going to say something else? Nope, that's that's good. I was just going to say hopefully that provides a little bit of, you know, color on where we're at, kind of in the government on the opportunity set.
Brad Archer: So how are we going to say something else.
Speaker Change: No. That's good I was just going to say I, hopefully that provides a little bit of.
Speaker Change: Color on where we're at and kind of in the government on the opportunity set.
Brad Archer: Maybe the only thing I would add is a little bit more color on on our West Texas assets while we're talking all things government, you know, very strong interest around these assets. That facility checks a lot of boxes for the administration when it comes to the, again, their mission around immigration, you know, speed and availability, location, past performance, the acceptance of the local community, you know, where we've operated for more than 10 years. So lots of, I would tell you, easy buttons here for them to put this back into their portfolio and increase beds pretty quickly, right?
Speaker Change: Maybe the only thing I would add is a little bit more color on on our west Texas assets, while we're talking all things government.
Speaker Change: Very strong interest around these assets.
Speaker Change: That facility checks a lot of boxes for the administration when it come to that again, they're missing around immigration speed availability location past performance the acceptance of the local community, where we've operated for more than 10 years.
So lots of I would tell you easy buttons here for them to put this back into their portfolio and an increase that's pretty quickly. So we feel good about where that's headed.
Brad Archer: So we feel good about where that's headed. Excellent.
Brad Archer: Thanks.
Scott Schneeberger: Appreciate all that color.
Speaker Change: Excellent. Thanks, I appreciate all that color.
Scott Schneeberger: I guess one more quick one, throwing it back to you, Jason. Nice seeing the refinancing activity balance sheet in great shape. How much did you draw on the revolving credit facility? What do we anticipate seeing drawn on that at the end of, well, around about this time? Just curious, because you had a lot of cash. Looks like you only had to nibble on the facility a little bit.
Scott Schneeberger: Just one more quick one throwing it back to you Jason.
Speaker Change: <unk>.
Speaker Change: Refinancing activity.
Speaker Change: The balance sheet in great shape, how much did.
Speaker Change: Did you draw on the revolving credit facility at <unk>.
Speaker Change: What do we anticipate seeing drawn on that at the end of <unk>.
Speaker Change: Around about this time.
Speaker Change: I'm just curious because you had a lot of cash.
Speaker Change: It looks like you only had to nibble on the facility a little bit and then just thoughts on with the balance sheet in such great shape.
Jason Vlacich: And then just thoughts on, with the balance sheet in such great shape, just how should we see you all be applying that strong balance sheet and maybe applying cash in a return to shareholder function, given it sounds like many opportunities out there available to you? Yeah, no problem. So I would say with respect to the first question, it was a very minimal draw on the ABL. I would say specifically to pay off the notes, about $15 million of the ABL draw was used to pay down the notes. So to your point, we had an abundance of cash, as you know, at the end of Q4, we had $191 million, as announced this morning.
Speaker Change: How how should we see you all.
Speaker Change: Applying.
Speaker Change: Applying that strong balance sheet, and maybe applying cash in our return to shareholder function given it sounds like many opportunities out there available to new thanks.
Speaker Change: Yes, no problem. So I would say with respect to the first question. It was a very minimal draw on the ABL I would say specifically to payoff the notes about $15 million of the ABL draw was used to pay down the <unk>.
Speaker Change: The notes so to your point, we had an abundance of cash as you know at the end of Q4, we had $191 million as announced this morning.
Jason Vlacich: And so there was a little some additional draw as well, just for working capital requirements. But, you know, relatively minimal. So the balance sheet's in great shape. We feel really good about that. You know, virtually debt free, since we got since we went public. And we've got, you know, an additional $19.5 million of excess free cash flow that that will that will drive, you know, in terms of capital allocation priorities, I would say we're really focused on these organic opportunities that Brad outlined. We expect that many of them will require very minimal CapEx. But to the extent that some of them do require CapEx, that's where we're going to put our capital.
Speaker Change: And so there was a little some additional dry as well just for working capital requirements.
Speaker Change: But relatively minimal so the balance sheets in great shape, we feel really good about that.
Speaker Change: Virtually debt free since we got since we went public and we've got an additional $19 $5 million of excess free cash flow that that will that will drive in terms of capital allocation priorities I would say, we're really focused on these organic opportunities that Brad outlines we expect that many of them will require.
Speaker Change: Very minimal capex, but to the extent that some of them do require capex, that's where we're going to put our capital.
Operator: Great, thanks. And once again, if you would like to ask a question, simply press star 1 on your telephone keypad.
Speaker Change: Great. Thanks Al.
Speaker Change: Yeah.
Speaker Change: And then once again, if you would like to ask a question Cynthia France's star one on your telephone keypad.
Greg Gibas: Your next question comes from the line of Greg Gibas with Northland Securities. Great. Good morning, Brad and Jason. Thanks for taking the questions. One of the follow-up...
Speaker Change: Your next question comes from the line of Greg Gibas with Northland Securities. Please go ahead.
Greg Gibas: Great. Good morning, Brad Jason Thanks for taking the questions I wanted to follow up I guess on that last one regarding just liquidity post redemption.
Speaker Change: You expect that $15 million or so drawn on the revolver.
I guess be enough to kind of bridge the gap on liquidity and.
Speaker Change: Sorry, if I missed it but.
Greg Gibas: Could you provide maybe CapEx expectations for 2025 and maybe how you're thinking about free cash flow with that 19 million of interest saving? Yeah, right. So, free cash flow is expected to be positive. I would say our CapEx spend is projected to be lower than last year. We'll depend on the opportunities, right? But at this point in time, we had reported $32.5 million or so of CapEx for last year. We expect it to be lower than that. So, I would say you're going to anticipate free cash flow, lower CapEx this year, unless we get an opportunity where we feel like it's a good enough one with the creative economics to go ahead and invest in.
Speaker Change: Could you provide maybe capex expectations for 2025, and maybe how youre thinking about free cash flow with that.
Speaker Change: $19 million of interest savings.
Speaker Change: Yeah, right. So free cash flow is expected to be positive I would say our capex spend is projected to be lower than last year will depend on the opportunities right, but at this point in time.
Speaker Change: We had reported $32 5 million or so of Capex for last year, we expect it to be lower than that.
Speaker Change: So I would say youre going to anticipate free cash flow lower capex this year.
Speaker Change: We get an opportunity where we feel like it's a good enough one with accretive.
Speaker Change: Economics to go ahead and invest in but I would expect capex to be lower than.
Jason Vlacich: But I would expect CapEx to be lower. than it was last year.
Speaker Change: Then it was last year.
Jason Vlacich: And then what was your other question? I guess it was just expectations for, you know, do you expect to draw any more on the revolver or are we kind of, you know, I guess I'll, you know, assuming kind of no changes. Right? Like, yeah, I don't know. Right. So, I would anticipate, I would anticipate a short term carrying balance on the revolver of around 40 to 50Million. That includes the 15Million and some working capital timing differences related primarily to, for example, the LAC construction project. As you know, with construction projects, there's milestones and things like that that we have to work through.
Speaker Change: And then what was your other question.
Speaker Change: I guess it was just expectations for.
Speaker Change: Do you expect to draw anymore on the revolver or are you kind of.
Speaker Change: I guess.
Speaker Change: Kind of no changes right.
Speaker Change: Yes, I don't know Brian.
Speaker Change: I would anticipate a short term carrying balance on the revolver of around $40 million to $50 million.
Speaker Change: That includes the $15 million in some working capital timing differences related primarily to for example, the lessee construction project as you know with construction projects Theres milestones and things like that.
Jason Vlacich: So that's kind of the balance that I would expect no more than about 40 to 50Million dollars of an outstanding average balance on the ABL.
Speaker Change: We have to work through so that's kind of the balance that I would expect no more than about 40% to $50 million of an outstanding average balance on the ABL.
Speaker Change: Perfect. That's what I was trying to get to your great. Thanks very much.
Brad Archer: And if I could follow up on the West Texas as a PCC, you know, given you're seeing a lot of opportunities there, great to hear and, you know, it does make sense that you're kind of not closing down the facility completely. But, you know, would you expect, you know, much in terms of modifications that would be needed to be made to those assets based on maybe, you know, those opportunities that you're seeing. You mentioned the some. getting closer, you know, just wondering if you had visibility on kind of what changes need to be made there?
Speaker Change: Yeah, and if I could follow up on the West, Texas as our PCC.
Speaker Change: Given youre seeing a lot of opportunities there great to hear and it does make sense that you're kind of not closing down the facility completely but would you expect.
Speaker Change: Much in terms of modifications that will be needed to be made to those assets based on maybe those opportunities that youre seeing you mentioned that some.
Speaker Change: Getting closer just one.
Speaker Change: Wondering if you had visibility on kind of what changes need to be made there and do you expect.
Brad Archer: And, you know, do you expect there, like something to be announced to be dependent on funding, like government funding? I'll just touch on capital to get that project back open. Very little to none. perfect shape for the use that they're talking to us about. So it's not like we would need to go in there and spend really any money, right? I would tell you if they say, hey, we want some things changed around, that's things we're going to get them to pay for. So, again, just don't see really a capital expense on those projects, the West Texas asset.
Speaker Change: Like something to be.
Speaker Change: Announced to be dependent on funding like government funding in a way.
Speaker Change: Well I'll just touch on capital to get that project back open right.
Speaker Change: Little to none right.
Speaker Change: Is that project.
Speaker Change: Perfect shape.
Speaker Change: They use that they're talking to us about.
Speaker Change: So it's not like we would need to go in there and spend.
Speaker Change: Really any money right.
Speaker Change: Tell you if they say hey, we want some things changed around that things were going to get them to pay for.
Speaker Change: <unk>.
Speaker Change: Again, just don't see really a capital expense on those projects the west Texas assets.
Greg Gibas: Got it.
Scott Schneeberger: And, um, you know, I guess last I can't imagine. Q1. Wanted to kind of get your thoughts on the 4-HFS business, so maybe ex-LAC expectations for the full year that are maybe implied in What was that again? Oh, just kind of the energy side of the business. So, you know, excluding the work. Yes, I would say Wage and Fest. Yeah, the HFS business, it would be relatively similar to last year. Okay, fair enough. Thanks.
Speaker Change: Got it and.
Speaker Change: I guess lastly, you kind of mentioned expectations for Q1, one of the kind of get your thoughts on the four hff's business, So maybe ex LLC.
The expectations for the full year.
Speaker Change: Maybe implied in guidance.
Speaker Change: But what was that again.
Speaker Change: Just kind of the energy side of the business. So excluding the work, yes, I would say.
Speaker Change: Yes.
Speaker Change: Yes, the HFF business.
Speaker Change: It would be relatively similar to last year.
Speaker Change: Okay fair enough thanks, guys.
Speaker Change: Yes.
Stephen Gengaro: And we do have a follow-up question coming from the line of Stephen Gengaro. Would people please go ahead? Thank you. Actually, a follow-up on the question that was just asked, on HFS. Your performance there seems to be more stable than kind of what we've seen from an activity-level perspective. Can you talk about sort of the visibility there? I know you kind of said flattish your rear. Is most of that sort of behind contracts with some of your larger customers, or is that sort of an expectation off of your read on activity-level? Yeah, majority of that is contracted under long term arrangements with our customers.
Speaker Change: And we do have a follow up question coming from the line of Stephen <unk> with Stifel. Please go ahead.
Speaker Change: Thank you.
Speaker Change: A follow up on the on the question that was just asked on Etfs.
Speaker Change: Your your performance there seems to be more stable than kind of what we've seen from an activity level perspective.
Speaker Change: Can you talk about sort of the the visibility there.
Speaker Change: Kind of said flattish year over year.
As most of that sort of behind behind contracting some of your larger customers or is that sort of an expectation off of your read on activity levels.
Speaker Change: Yes. The majority of that is contracted under long term arrangements with our customers and so that's what gives us the visibility.
Stephen Gengaro: So that's what gives us the visibility. Okay, that's what I thought. I just wanted to clarify that.
Speaker Change: Okay. That's what I thought I just wanted to clarify that great. That's all for me. Thank you. Thanks.
Stephen Gengaro: Great, that's all for me. Thank you. Thanks, Stephen.
David: Thanks, David welcome.
Speaker Change: Okay.
Operator: I am showing no further questions at this time.
Speaker Change: Im showing no further questions at this time.
Brad Archer: I would like to turn it back to Brad Archer for closing remarks. Yeah, thanks to all of you who joined today, and we look forward to speaking again very soon on our first quarter call in early May.
Brad Archer: I would like to turn it back to Brad Archer for closing remarks.
Brad Archer: Thanks to all of you who joined today and we look forward to speaking again very soon on our first quarter call in early may.
Operator: Operator, that will conclude the call for today. Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining.
Speaker Change: Operator that will conclude the call for today.
Speaker Change: Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.
Operator: You may now disconnect.
Speaker Change: Yeah.