Exterran Corporation (EXTN) on Q2 2021 Results - Earnings Call Transcript
Operator: Greetings and welcome to Exterran Corporation Second Quarter 2021 Earnings Call. I would now like to turn this conference over to your host, Mr. Blake Hancock, Vice President, Investor Relation for Exterran Corporation. Thank you. You may begin.
Blake Hancock: Good morning and welcome to Exterran Corporation's second quarter 2021 conference call. With me today are Exterran's, President and Chief Executive Officer, Andrew Way; and David Barta, Exterran's, Chief Financial Officer. During this conference call, we may make statements regarding future expectations about the company's business, management's plans for future operations or similar matters. These statements are considered forward-looking statements within the meaning of the U.S. securities laws and speak only as of the date of this call. The company's actual results could differ materially due to several important factors, including the risk factors and other trends and uncertainties described in the company's filings with the Securities and Exchange Commission. Management may refer to non-GAAP financial measures during this call. In accordance with Regulation G, the company provides a reconciliation of these measures in its earnings press release issued earlier today and a presentation located in the Investor Relations portion of the company's website. With that, I will now turn the call over to Andrew.
Andrew Way: Thanks, Blake and good morning, everyone. Exterran performed well in the second quarter as we remain focused on employee safety, operational efficiency, strong execution of our global backlog and positioning the company to capitalize on a robust commercial pipeline that continues to grow. Overall, the quarter came in line with our expectations on an EBITDA as adjusted basis, up over 40% when compared to the second quarter of 2020. While the COVID-19 vaccine appears to be working to lower the severity of the impact of the virus, the latest variants are starting to create potential challenges. Having traveled to different parts of the world since we last spoke, the operating environment continues to be dynamic. We are beginning to see some logistical challenges important equipment, and people facilities and sites to get in the third quarter. We continue to mitigate most of these challenges given our global supply chain, the COVID continues to be present and provides the greatest risk we see in the second half of this year. Another topic that continues to come up with investors and others since the last earnings has been around inflation. I would say we have three distinct areas of commercial checkpoints where inflation can impact us. The first being projects that are operational and generate revenue and there we typically have annual escalation clauses allowing us to increase rates for inflation. The second area would be project under construction. Here we leverage our global supply chain to help minimize and offset inflation costs. We also have the ability to work with our customers as well on passing through material inflation changes also afforded us to minimize our CapEx or margin impacts on the projects. And lastly, projects are in the bid phase. The biggest adjustment we've made here is to reduce the bid validity to minimize time between bid and award to allow us to have better control over our costs. Overall, I would say we have not seen any material impact on our costs over the past several months, but continue to monitor inflation globally. Commercially, we continue to further our discussions with our customers globally and continue to feel strongly in the over 3.5 billion opportunities we see in both our natural gas and water products. The Middle East continues to drive the bulk of these opportunities, but we are seeing an incremental gas and water project demand in Latin America and Asia Pacific. We also continue to have constructive conversation on renewals in Latin America. We signed over 30 million in renewals or new contracts in the region in the second quarter and over 100 million views in the past year. There are additional opportunities that can meaningfully add to our backlog without any material CapEx needs. On the water front, we continue to work towards at least one more incremental eco-project this year. This would meaningfully add to our eco-backlog, and has the potential to make water accounted for nearly 30% of eco backlog in the future. As we look at our technology, we continue to see applications across many industries, including petroleum mining, where this technology originated in municipal water waste to name just a few. And as we continue to build our opportunity set and book of business, we're also beginning to look at what will be needed to begin branching off technology out into other sectors outside of oil and gas. We are confident that our water business is poised for growth that will drive enhanced financial performance and compelling value creation. Looking over the past quarter, commercially and operationally, little has changed. We continue to progress well on both fronts and are excited about the transition and transformation that is underway for the company. They will cover the capital structure review process that should only help accelerate and drive our ability to continue to push and win new opportunities. And with that, I will now turn it over to Dave.
David Barta: All right, thanks Andrew. For the quarter we delivered EBITDA as adjusted of $35 million on revenue of $146 million which is in line with our guidance. This results in an EBITDA margin rate of 24% flat to Q1 and a significant improvement to the 19% reported in Q2, 2020. Since we have closed the sale of the U.S. compression fabrication business, our EBITDA margins have exceeded 20%. From a segment perspective, revenue for contract operations was $87 million while adjusted gross margin was $60 million, resulting in a segment gross margin rate of 68%. Revenue increased sequentially primarily due to the acceleration of deferred revenue productivity and better operating efficiencies. Eco backlog at the end of the quarter stood approximately $1.2 billion. For AMS revenue was $29 million and adjusted gross margin was 6 million. This resulted in a segment gross margin rate of 20%. Revenue increased 17% sequentially as first quarter seasonality abated while adjusted gross margin was flat. Revenue of the product sales segment was $29 million and adjusted gross margin was $2 million, resulting in the gross margin rate of 7%. Revenue was flat in the prior quarter with continuing COVID challenges impacting the ramp of our Middle East project. Adjusted gross margins declined sequentially due to higher under absorption. Our product sales backlog was $411 million at the end of the second quarter, compared to $445 million at the end of the first quarter. Moving to the balance sheet our total debt at the end of the quarter was $575 million. While our net debt was $529 million. Our leverage ratio improved to 3.6 times in comparison 3.8 times at the end of the first quarter. Our total available capacity was $148 million as at the end of the quarter. Our available capacity grew by over $35 million from the prior quarter. With respect to the third quarter, we expect adjusted EBITDA to be in the mid to high $30 million range. We expect continued progress on key projects in the Middle East region, which will drive a meaningful increase in the second half product sales revenue. For the year, the outlook has remained unchanged, as we expect adjusted EBITDA to be between $150 million and $160 million. Clearly this guidance suggests a ramp in our Q4 expected EBITDA which is driven by our current view of the pace of project execution in the Middle East. As Andrew mentioned earlier, the COVID pandemic remains an ongoing challenge. They will continue to present operating hurdles. How the impact from the different various unfolds in the second half of the year will dictate our ability to hold guidance. That said our employees, suppliers and customers have done a phenomenal job anticipating issues and taking appropriate actions to prepare us to execute as well as possible. SG&A for the year is still forecasted between $125 million and $135 million. CapEx for 2021 is expected to be between $75 million and $85 million with reimbursable CapEx around $35 million. Maintenance and other CapEx should be approximately 20 million. Lastly, I want to take a few minutes to discuss the ongoing capital structure review. I will remind you this review is being undertaken to enhance our liquidity to continue to take advantage of the pipeline of opportunities we're tracking. On the Q1 call we didn't set a timeframe. This effort blends operational variables with financial as we define the best path forward in both the short term and over the longer term. With regard to the longer term, we have had some very productive conversations with several potential partners. They've made good progress in developing a structure that allow us to secure additional ECO projects without the CapEx burdens on our balance sheet. And with that, I'll turn the call back over to Andrew for his closing remarks.
Andrew Way: Thanks, Dave. We continue to focus on the things that we can control including our cost structure, customer relationships, and market leading products and services, the state of the organization into the quarters to come and into the following years. Project execution is key to our success over the near term and we look to see our opportunity set start to convert to orders over the next several quarters to set the stage for our three year outlook. Exterran remains on its transformational journey and given the tremendous market opportunity in both natural gas and water, we intend to further amplify our leadership in this space with a commercially proven and fully integrated solution. I'm very excited about the opportunities I see that lie ahead and look forward to the growth and value Exterran will continue to provide. And with that, I will now turn the call back to the operator.
Operator: Thank you. At this time, we'll be conducting a question and answer session. Our first question comes from lines of Kyle May with Capital One. Please proceed with your question.
Kyle May: All right, good morning, everyone.
Andrew Way: Hey good morning Kyle.
Kyle May: Maybe starting with your guidance, as we look at results for the first half of the year and the initial look at the third quarter Dave, you mentioned a big ramp in the fourth quarter. Can you talk more about what's driving that growth and then maybe how that momentum carries into next year?
Andrew Way: Yes. So maybe I'll first tell you what's not in the guidance is really some assumption on global markets improving dramatically. I think we continue to see tremendous amount of opportunity as we've shared the pipeline is large, and frankly, you seems to grow every day. So there's a lot going on. But we haven't assumed that those turn into orders that are actionable in the short run. But what we do have in the guidance, what's driving and I think its better news is, it's really a function of the backlog we have. So certainly there are some MSI book and ship and so forth that you make certain assumptions for, but it's really, highly dependent and based on the backlog we have, and the projects we have going in the Middle East are a significant part of what's driving that. And although we're certainly cautious in this environment with COVID variants that continue to raise their head it's our best view of the project schedule. So that project is they don't after, obviously, a long COVID base delays is really starting to take hold and ramp up. That's really what's driving it as well as finishing some other projects that we have underway.
Kyle May: Got it. That's helpful. And I appreciate that your strategic capital structure review is still ongoing. But just wondering if you can share any color any thoughts around maybe what you've learned from the process so far?
Andrew Way: Yes. I think a couple comments to start. This is something that from the start, we've said, is really about positioning ourselves to take advantage of the strong pipeline of opportunities we see. So it's really a proactive kind of offensive move, and therefore there's not a rush to go do just anything. And I think we're trying to be very thoughtful, in terms of both operational and kind of financial topics, if you will. And part of the reason why we're looking for this is, as we've laid out the guidance in the next couple of years, is that we have a couple CapEx projects we've assumed but we also have some working capital requirements, which are really driven by predominantly that large project in the Middle East. And we're always working on the balance sheet side of things as well. So ideally, operationally, improvements, we could make that forecast but obviously change the math on the financial side of it. So those are kind of working hand in hand, if you will I would much prefer to have operational improvements or changes in the environment there that would change that calculation somewhat than to kind of rush into financial solutions to something. So they really work hand in hand and you can imagine in this environment as I just shared, it's a tremendous amount of opportunities, tremendous amount of dialogue with going on with customers. But it seems to be a very difficult environment to kind of get things to the goal line, just given the logistical challenges and uncertainties and a lot of customers are facing.
Kyle May: Got it. And I appreciate that. I'll turn it back. Everybody have a good day.
Operator: Thank you. Our next question comes from line of Doug Becker with Northland Capital. Please proceed with your question. Mr. Becker, your line is live. I'm sorry. Our next question comes from the line of Samantha Hoh with Evercore ISI. Please proceed with your question.
Samantha Hoh: Hi, guys, maybe it's just to stay on the CapEx topic. I noticed that you guided down back $5 million for the range and then also, it just came seems to have started a little bit came in a little low for second quarter. Is there some I mean, it's just like very back end loaded here on CapEx?
David Barta: Yes. CapEx. I mean, it's always fluid. But again, it kind of relates to the same topic of just operationally and we shared that we and Andrew in his comments mentioned the one ECO project that we hope to get signed this year and that's been a project we've been talking about for some number of quarters now. So that originally we had in our forecasts starting a little bit earlier. So it's more timing related.
Samantha Hoh: And I know that we spent a lot of time on the water and natural gas side, but I was wondering if you guys have any comments about the infrastructure bill, specifically on the power business, and how you guys might be exposed to just an increase in spinning focus only the power grids?
Andrew Way: Yes. I don't think initially, there's probably a lot of momentum there for us. I think anything that would further incentivize the build out of natural gas infrastructure in the U.S. would obviously be something we would welcome. In fact we believe in very strongly, obviously, I think we believe it ultimately, carbon neutral situation worldwide is going to have natural gas as part of that solution. It just makes too much sense from a variety of perspective. So we're very bullish on natural gas and think that there is a very long runway there. And in addition, then to what we see on the water side.
Samantha Hoh: And then maybe if we could just delve a little bit on the waterside. Earlier deck that you guys had had three pretty extensive sides on the water business, I was wondering if you could maybe break out sort of, of the different technologies, or uses within AWS, which area do you really see being like the primary driver of growth? Is it separation, treatment? Or is it like more, I guess is it is more like an all in integrated project, like if you can actually go into some of the bigger driver of the water business? Like, which business do you think will be the main beneficiaries? That'd be kind of interesting.
David Barta: Yes. I think I'll start off and Andrew had anything he might want to, the technology we have, and we've shared this deal started out as the technology in wastewater treatment. So the applications are, can be quite broad. And we truly start off with situations where our customer oftentimes sends us a sample of the water that they're dealing with and then asked us to come up with engineer the solution. So it's very flexible using the technology, patented technology we have and as we've shared, we're putting a lot of effort around additional technology. And I think in the quarters and years to come, you'll see even more in terms of new technologies that we're bringing to the marketplace. So I think it's anywhere where someone has a water problem today we've been focused on an energy for the last number of years. But I think, again, there is other examples, other industries, industrial being one, potential wastewater being another and beyond where this tech can be applied.
Samantha Hoh: Thank you.
Operator: Thank you. Our next question comes from the line of Tim Monachello with ATB Capital. Please proceed with your question.
Tim Monachello: Hi, good morning, everyone.
Andrew Way: Morning.
Tim Monachello: My first question is just around Delta variant. I'm just curious to understand, across your regions how that's being impacted if you're starting to see any slowdown in project execution or I guess, project towards.
Andrew Way: Hi Tim. So I think what we're seeing, first of all, operationally, is really no material different I would say, from the Delta variant versus the COVID that we saw generally at the peak. A lot of different countries, a lot of different governments, I would say, even regions within countries, similar to the U.S., every state seems to apply their perspective a little different, that has some implications based on whether you live on the East Coast or the West Coast, or where we're based here in Texas, no different globally. I think what we're seeing today is just from an Exterran point of view, just an absolute, we're not seeing suddenly a dramatic increase in employees that have caught COVID or perspective of internally seeing challenges to get things done. What we are seeing is in the locations globally where at some point Exterran needs to move to site. There is only so much that we can manufacture, and engineer, and ship. Then you have to execute and what brings Exterran to light is our capabilities to bring projects together and build and execute and start up operations on time and effectively produce for our customers. So that's what we're seeing today is just a small indication that in certain countries there are logistics that require resolving both our physical componentry infrastructure skids, that we're manufacturing in Dubai, that needs to be shipped into certain countries, certain shipping lanes that were open, that we're needing to make sure that we've got the relevant personnel and backup, should there be a problem. And I would say that there are some cases starting to show where our customers are requiring certain provisions in certain conditions. So the subject of vaccination is a hot topic right now. And that is becoming a new norm in certain locations globally where you're having to provide Tim, at some of these locations, at the peak, we'll have 2000 people working. While they're contractors or people that were supervising. So just the logistics of making sure that is done in a safe way and in an environment that's capable has its challenges. And so no one wrote COVID into contracts and thought about how to manage this, when many of these projects were bid and won originally. So we are having to adjust. We're having to pivot. And the good news is, I believe we've done an exceptional job so far. But it is something that we keep an eye on and making sure that we're doubling down on our intensity for prevention where we can and in cases where we do see a blip, how do we make sure we rectify that and get back to work as fast and safely as we can. So that kind of gives you a little bit of a scale. It obviously differs by country. It's clearly different right now in some countries in Latin America, we're seeing more of a concern, some parts of the Middle East, we're seeing concerns. And we're managing it daily. So we haven't changed our operating rhythms internally since the start of COVID. And the teams is continuing to do a really wonderful job managing it, but we're just starting to see it becoming a little bit more intense in certain locations when we see.
Tim Monachello: Can you speak specifically to the large Middle Eastern project? Is that progressing as expected?
Andrew Way: Yes. The project is progressing. In fact, we have teams on the ground as we speak in the Middle East that's about ready to head into that location next week from Houston. We've got a significant amount of the upfront work complete. The engineering work, as we talked already has been well documented and we're on with that. Site preparedness and handover process where we're working with the customer as we speak on that topic, and that's working on progressing in line with what we anticipated. A lot of the manufacturing aspects of the project is underway. And so right now, I'd say we feel very good with where we are on that project. It's clearly a topic that we spend a lot of time on internally. It is critically important to the country and it's critically important to us as an organization. But I feel good with where we are today with everything that we're controlling. And we have that built into the guidance that we gave earlier today. But we are clearly keeping an eye on the situation to make sure if something crops up, we can adjust. That's what we do. But we feel good where we are today.
Tim Monachello: Next question. Just on North American bookings, obviously, bookings were still fairly depressed in the second quarter, as you move into the third quarter, are you starting to see signs of life in terms of, I guess, North American processing and treating bookings?
Andrew Way: So I mean, the answer is simply yes. There was some opportunities in the second quarter, I'd say, that would have traditionally been in the wheelhouse of what we supplied as Exterran. There were certainly some compression bookings that we've made in the industry, that, of course, we didn't participate in. And I think as you've seen, as a result of what we said, the company would increase our margins. And we've seen that happen. So we're not chasing bookings for the sake of bookings. What we focused on is making sure that we can get the infrastructure aligned with the strategy of what the companies had done that's now in place. So we've been working hard with many customers that we have shipped previously plants and are successfully operating today. So we have, as you know, Tim, a large install base today, of gas processing facilities across the U.S. We feel good, we certainly feel better today. I certainly feel better today seeing the pipeline and the bid activity, as it relates to North America than say where I did six months ago, and certainly feel better than where I did a year ago. And we've got a good combination of customers who are working through their own internal bottlenecks and capacity and debate and frankly whether capacity in certain regions need to be moved to additional locations. So I would say more of a Brownfield to Brownfield site where we would have a role to play. And in some locations, there are talks and discussions on the way for Greenfield build out where maybe they are looking for a train 2 or train 3 in some cases. And we were successful on the original train 1 and train 2 in many cases. So a good combination, I'd say of activity that really for us the question is the go and we've spent a lot of time internally lately on the go function of these projects. A lot of these projects that we've seen some delays, our pipeline is continuing to build not just in North America, which is a small component of what we describe with our pipeline. But our international pipeline is building very nicely. And the question always comes internationally when you're dealing with NOC and in certain cases, large entities is the goal, is the goal of this project going to work. And we spend a lot of time as an organization, mapping all of the different aspects of how we can get leading indicators on the go. We feel comfortable on the gap. Because in many cases, we're either first, we were negotiating as an where we negotiated based on the fact that we built facilities before. The question always becomes the go. A little easier in the U.S. because a lot of the companies we're talking about are public. And so you can pick up a lot of indications on their earnings and on various aspects that we see, pull in various permanent data and publicly available information. But again, there is still a little bit of a hesitant that we're seeing to get back to somewhat of the level that we saw in the past. I don't think that's going to come back for some time. I think first of all, there's somewhat of a reconciliation of where gas is flowing and how it's moving. And making sure that the customers have the relevant equipment in the locations where they can provide the best opportunity for the use of that gas; whatever that means may be. So kind of a little bit of a long winded answer to the question. But it's important that I highlighted that it's not just North America, the international markets are equally as important. But one key point I would like you to take away is that we certainly feel better today about the indications that we're seeing in North America, which always starts off with a request for quote, or starts off with a request for us for bid and activity and that level of activity is significantly up from where we've seen in the past on the processing and trading side. On the water side I'd say it's an equal story. In the past quarter we spent a lot of time working with some key critical customers on proving our technology in certain markets. And hopefully in the next few months we'll have I have some news to share with you on the success of that, and how that will manifest itself into future projects and future plans. And so feel good where we are commercially, we clearly need in the second half for the pipeline start converting. And that's the critical focus that we have in front of us.
Tim Monachello: I would say that's maybe a fair comment that the exit of the compression business in the US has made you sort of a later cycle participant in the up cycle. In terms of bookings activity. You think that's fair?
Andrew Way: I think, yes, I think it's been traditionally we tended to see the compression business, maybe get signs of life first, and then you'll see the plant follow after that as initially, people are still deferring that the bigger capital, trying to increase production throughput, so compression tended to get a little bit of a head start.
Tim Monachello: Got you. And then last one, for me. I'm just wondering if you give me an idea of what you're seeing on energy transition opportunities, things like CCUS, hydrogen bio gas applications for processing equipment.
David Barta: I think for us it's really early in the end, all of those topics where we're working through as part of our strategic growth plan, and we have a pretty robust, rigorous new product development team that looks at all aspects and indications of various technologies. And some were looking at, in a much deeper context with potential to partner with others. I think for Exterran, there hasn't been a traditional model for us to be a natural provider of some of those alternative technologies that you described. But we certainly are looking at the potentials and I think, led by our water team, and our natural gas team we're certainly seeing some areas that are of interest. But as you know, Tim, there are a lot of companies out there that have great ideas and technology no revenue, and that work for a public company in the short term. So I'd say for us, we're spending time understanding the market, looking at where the gaps are, how do we bolt on some of the technology to make what we're already doing today more efficient. The great thing about Exterran is that we have an enormous installed base of various applications around the world. And in some of the cases that we're looking at right now we're bringing potentially some new technology to bear where we can install it in our own equipment, and produce efficiencies and some areas of energy efficiency to our customers that's already enjoying the use of our equipment producing traditional hydrocarbons. So we're working through that. No real big update that I can put dollars in value to you today. But it's a subject that we're spending time on.
Tim Monachello: That's really helpful. I appreciate the answers. I will turn back.
Operator: Thank you. Our next question comes from the line of Doug Becker with Northland Capital. Please proceed with your question.
Doug Becker: Thanks, Dave, you mentioned operational improvements a couple times as part of the capital structure review. Can you just give a few examples what that might look like?
David Barta: And again, more and more operational, maybe opportunities is the better word. So again, the forecast information we've provided obviously, is dependent upon CapEx and assets, and then working capital. So we are constantly looking at are there ways to improve that situation? So a couple examples could be things like, is there a equipment or a facility somewhere that someone whatever their motivations might be, is willing to buy that today is under an ECO contract where we keep the AMS business, but potentially could realize something's there that would make sense for us in the short term, long term. That would be an example. We've talked about this, primarily this big project in the Middle East, and it has a working capital component, and constantly looking, whether it's our own internal working with vendors and suppliers on trying to match our payments to them with customer payments, or is there anything we can do on the customer side? It's a very fluid situation. And we're working really hard and fortunately, with good relationships with our customers and suppliers to try to see if we can improve that cash curve on a project like that, that could be an example. So those are the type of things we're working on that I would say it's always something we think about every day, but I think in this situation, certainly would be a real nice way to kind of thread the needle here and provide ourselves the more flexibility and more dry powder to be offensive on that backlog of potential projects.
Doug Becker: Makes sense. And then last core, you mentioned that all options were on the table as part of the review. Has anything been taken off the table at this point, in particular, I'm thinking about issuing equity?
David Barta: We're not probably going to go into the specifics of our board deliberations. But I think that the point of that was that we have a management team and a board that doesn't rule out anything when it comes to considering all options that make sense for this company and all of our stakeholders in particular, our investors. And so that's the way we're approaching it. And that's the way the board and management both are addressing it. And, frankly, at some point, we'll have more to share, I think, and we'll talk about those kinds of topics, then.
Doug Becker: Just one last more on this. Is the expectation, the expectation be that this is really managing the leverage ratio or is it potentially that we actually see absolute debt levels decline as the plan ultimately is rolled out?
David Barta: Yes. I would say it's probably actually both. If there are operational opportunities, we can take advantage of that would obviously lower the debt levels and leverage that way versus just kind of addressing just one or the other. But that's why the operational opportunities, frankly, are very high on list, it solves a lot of things for us, and in a way that doesn't require any type of disruption on the capital structure side.
Doug Becker: Sounds good. Thank you.
Operator: Our next question comes from line of Brian DiRubbio with Baird. Please proceed with your question.
Brian DiRubbio: Good morning. I want to circle back with the capital structure review and recognizing that you didn't provide a timeframe on it. I'm just wondering, love your thoughts on this do you have a chicken and the egg problem, sort of where you're you haven't gone you haven't communicated your steps forward on what the new business model is going to be? So is that preventing contracts from actually occurring?
Andrew Way: No, we haven't had any issues on the commercial side and this is really, as we've said, from the start, this is not about a situation where we've got a gun to our head anyway. This is about being more flexible, more dry powder, if you will, when you've got a pipeline of 3.5 billion, and there's probably every construct of opportunity in there. You can imagine from traditional Eco to project, product sales to some hybrid. We're trying to be as flexible and prepared as we can to tell every customer yes. I mean, that's always the way we walk into these deals is, yes, little we're glad to support, we got to go figure it out. And there's some projects, I would say, throughout, there's a very large project product sale there. There is a large Eco and this is about really being positioned ourselves in the best possible way to take advantage of all those opportunities. It's not a commercial issue at all. It's not a crisis. It's not there's no gun to the head. This is about looking forward, being transparent on what we see the next few years but really motivated by that pipeline of over 3.5 billion that we are tracking.
Brian DiRubbio: Got it and more requests than a question but it would be really helpful if you provided on a quarterly basis, cash interest paid and cash taxes paid, just so we can better track what's going on with cash flow.
Andrew Way: Noted.
Brian DiRubbio: Great, thank you.
Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. I'll turn the floor back to Mr. Way for any final comments.
Andrew Way: Thank you everyone for dialing in today. Appreciate your interest. Have a safe later part of the summer and we look forward to update and you after the next earnings call. Thank you.
Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
