Oil States International Inc

NYSE:OIS

Earnings Call Analysis

Oil States: Growth Despite Market Challenges

Oil States International reported robust revenue growth for its Offshore/Manufactured Products segment in Q4 2023 by 24% sequentially, reaching the highest level in eight years with a backlog of $333 million, partly countering the declines in U.S. land activity caused by a 20% crude oil price drop. Overall, the company achieved positive operating and net income for six consecutive quarters, with Q4 revenues up 7% sequentially and 3% year-over-year, while EBITDA rose by 2% and 17%, respectively. Moving forward, Oil States anticipates a 5% annual revenue growth with EBITDA between $90 to $95 million despite expecting Q1 2024 to be the weakest due to seasonality.

Recovery in Offshore Markets Driving Revenue Growth

Following the industry's downturn, a spotlight on recovery is evident, particularly in the Offshore/Manufactured Products segment, which saw a sequential revenue jump of 24%, leading to the segment's highest revenue quarter in eight years. This growth is attributed to a notable 39% increase in project-driven revenues. Despite a decline in U.S. land activity, the consolidated revenue and adjusted EBITDA also saw increases of 7% and 2% sequentially, respectively.

Innovation as a Growth Pillar

The company launched new technologies post-quarter, cementing innovation as a cornerstone for future performance. The introduction of digital platforms for remote well site monitoring and control, coupled with active seat gate valve technology and an expanded perforating gun system portfolio, highlights the commitment to advancement in Well Site Services and Downhole Technologies. These segments are expected to leverage the global investment cycle, focusing on international and offshore markets, which should bolster the company and its technology offerings for years to come.

Healthy Financial Results Amidst Market Fluctuations

For the fourth quarter, the company boasted revenues of $208 million, a modest operating income of $8 million, and stable adjusted EBITDA of $24 million. This translated to a net income of $6 million, or $0.09 per share.

Strong Performance in Key Segments

The Offshore/Manufactured Products segment proved to be a powerhouse, generating $138 million in revenues with an adjusted EBITDA margin consistent at 22%. Similarly, the segment's operations income stood robust at $25 million. The company's strategic disposal of facilities in Singapore and Houston slated for 2024 is anticipated to garner proceeds between $35 million and $40 million, propelling the momentum further.

Challenges in Downhole Technologies Segment

The Downhole Technologies segment faced hurdles, suffering revenues of $19 million with an operating loss of $7 million and an adjusted EBITDA loss of $3 million due to North American industry declines. This loss incorporated some inventory reserves amounting to $1.3 million.

Cash Flow Dynamics and Liquidity Position

The quarter saw generated cash flows from operations of $4 million and investments of $6 million in net CapEx to support growth. Importantly, the firm positioned itself without any borrowings under the revolving credit facility, boasting available liquidity of $123 million.

Guidance with Caution amidst Declining U.S. Land Activity

With U.S. land activity taking a hit and crude oil prices falling by about 20%, management set expectations for U.S. land drilling and completion spending to linger at current levels through 2024. Nonetheless, positivity reigns for the international and offshore markets, with anticipated year-over-year revenue growth of approximately 5% and EBITDA projections between $90 million to $95 million. The first quarter, however, is anticipated to be the weakest of the year, bearing typical seasonality and slow U.S. land activity. Free cash flow is expected to be at least $40 million, translating to a yield of 10% or greater.

Operational Optimization and Profitable Activity

Despite challenges, there remains a steadfast commitment to operational optimization and profitability. With strong macro fundamentals signaling a multiyear up cycle, especially outside the U.S., the company looks forward to growth in revenues, earnings, and free cash flow generation from international and offshore operations. Furthermore, management sets a free cash flow to EBITDA conversion rate target of approximately 40%, reflecting confidence in efficient capital management.

Earnings Call Transcript 2023-Q4

[Operator]

Good day, and welcome to Oil States International Inc. Fourth Quarter 2023 Earnings Call. [Operator Instructions] Please note that today's call is being recorded. [Operator Instructions]

That's all I need to go through for now. At this time, I would like to introduce the call to Ellen Pennington. You may now proceed, please. Thank you.

[Ellen Pennington, executive]

Thank you, Eli. Good morning, and welcome to Oil States' fourth quarter 2023 earnings conference call. Our call today will be led by our President and CEO, Cindy Taylor, and Lloyd Hajdik, Oil States' Executive Vice President and Chief Financial Officer.

Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. No one should assume that these forward-looking statements remain valid later in the quarter or beyond. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our Form 10-K along with other SEC filings.

This call is being webcast and can be accessed at Oil States' website. A replay of the conference call will be available 2 hours after the completion of this call and will continue to be available for 12 months.

I will now turn the call over to Cindy.

[Cindy Taylor, executive]

Thank you, Ellen. Good morning, and thank you for joining our conference call today, where we will discuss our fourth quarter 2023 results and provide our thoughts on market trends in addition to discussing our company-specific outlook comments. For the oil and gas industry, 2023 can be summarized as a year in which international and offshore growth strengthened, while North American activity started to moderate.

Our fourth quarter results reflect those trends with revenues in our Offshore/Manufactured Products segment growing 24% sequentially, boosted by a 39% sequential quarter increase in project-driven revenues. This significant growth was offset by the impact of declines in U.S. land-based completion activity due to an approximate 20% decline in the price of crude oil during the quarter with continued weak natural gas prices and holiday impacts.

Despite the reduction in U.S. activity levels during 2023, Oil States reported both positive operating and net income for a sixth consecutive quarter. Our fourth quarter consolidated revenues and adjusted EBITDA increased sequentially by 7% and 2% respectively, while year-over-year revenues and adjusted EBITDA grew by 3% and 17%. These sequential and year-over-year improvements reflect significant growth within our Offshore/Manufactured Products segment where revenues totaled $138 million in the fourth quarter, the segment's highest revenue level in 8 years.

Segment backlog totaled $333 million as of December 31, with backlog conversion supporting the 39% sequential quarter increase in project-driven revenues. Segment bookings totaled $120 million, yielding a quarterly book-to-bill ratio of 0.9x and a full year ratio of 1.1x.

2023 marked the third consecutive year that our book-to-bill ratio was greater than 1x. We remain encouraged by the continued expansion in offshore activity globally coupled with enhanced competitive positioning in each of our business segments through our recent new technology introductions.

In the fourth quarter, in response to the needs of global drilling contractors to drill more complex wells and unlock previously inaccessible reservoirs more safely, our Offshore/Manufactured Products segment delivered what is believed to be the industry's first deepwater, slimline, managed pressure drilling system, and we now have begun to market another industry-first MPD-ready system for jack-up rigs.

Subsequent to quarter close, our Well Site Services and Downhole Technologies segments have also launched key new technologies, including our active hub digital platform for remote Well Site monitoring and control, along with our active seat gate valve technology and an expanded portfolio of perforating gun systems called Epic Precision and Epic Flex. Benefits of our expanded technology offering, combined with this international offshore focused investment cycle are expected to extend well beyond the next couple of years.

Lloyd will now review our results of operations and financial position in more detail.

[Lloyd Hajdik, executive]

Thank you, Cindy, and good morning, everyone. During the fourth quarter, we generated revenues of $208 million, operating income of $8 million, adjusted consolidated EBITDA of $24 million and net income of $6 million or $0.09 per share. This represents our sixth consecutive quarter of positive net income. Adjusted consolidated EBITDA margin in the fourth quarter was 12% comparable to the prior quarter. Results for the fourth quarter included facility consolidation charges of $0.8 million, which were incurred as we prepare selected facilities for sale as well as patent defense costs of $0.6 million.

Our Offshore/Manufactured Products segment generated revenues of $138 million, operating income of $25 million and adjusted segment EBITDA of $30 million in the fourth quarter. As Cindy mentioned, revenues reported by this segment in the fourth quarter are at the highest level since the fourth quarter of 2015. Adjusted segment EBITDA margin was 22% in the fourth quarter comparable to the prior quarter.

Regarding our facility planning, we consolidated certain facilities in Houston and are in the process of strategically relocating our Asian manufacturing and service operations from Singapore to Batam, Indonesia. These 2 facilities are classified as held-for-sale assets at December 31.

Proceeds from the sales of our facilities in Singapore and Houston, which are anticipated to close in 2024, are expected to range between $35 million and $40 million, exceeding the costs associated with our planned investment in our new Batam facility. Construction in Batam will commence in the first quarter with completion targeted for the first half of 2025. In the meantime, temporary manufacturing lines have been set up in Batam, so that we can efficiently execute both our contracted backlog and subsequent orders during construction.

Backlog totaled $333 million at December 31, an increase of 8% from December 31, 2022. The current quarter end backlog is at its second highest level since the fourth quarter of 2015.

In our Well Site Services segment, we generated revenues of $51 million, an operating loss of $1 million and adjusted segment EBITDA of $6 million in the fourth quarter. We also recorded charges of $0.6 million associated with the defense and enforcement of certain of our patents.

Adjusted segment EBITDA margin was 12% in the fourth quarter compared to 16% in the third quarter, reflecting industry activity declines in the quarter.

In our Downhole Technologies segment, we reported revenues of $19 million, an operating loss of $7 million and an adjusted segment EBITDA loss of $3 million for the quarter. Lower revenues and margins in the quarter were driven by the North American activity declines previously discussed. Included in the EBITDA loss was $1.3 million of inventory reserves.

During the fourth quarter, we generated cash flows from operations of $4 million and invested $6 million in net CapEx to support future growth.

As of December 31, no borrowings were outstanding under our revolving credit facility while amounts available to be drawn totaled $76 million. This, together with cash on hand, resulted in available liquidity of $123 million. We also extended the maturity date of our revolving credit facility to February 2028.

Now Cindy will offer some market outlook and concluding comments.

[Cindy Taylor, executive]

Thanks, Lloyd. The tight commodity markets of 2022 led to higher commodity prices and activity levels. However, this took a turn in early 2023 as softening global demand, higher production and resultant elevated inventories caused oil prices to drop during the first quarter of 2023.

Activity declined in U.S. land basins during the second half of 2023, with the land rig and completion counts down about 20% by the end of the year. WTI and Brent crude oil prices were both down approximately 20% at December 31 compared to the prices in effect at September 30. Global inventories continue to hold within their 5-year seasonal average for crude oil, albeit at the low end, but remain above the 5-year average for natural gas.

Given current industry dynamics, we expect U.S. land drilling and completion spending in 2024 to remain at or near current levels, but do think we will see increased spending in international and offshore markets.

Revenues in our Offshore/Manufactured Products segment are expected to continue to grow year-over-year as a result of strong order flow, increased levels of backlog and execution of major project milestones. We expect our Well Site Services and Downhole Technology segments to continue to perform in line with market activity indicators, which softened for U.S. land activities beginning in the second half of 2023.

Increased contributions from the commercialization of new technologies that I discussed previously, should help us succeed over the longer term in the U.S. land market. Considering these market conditions, we expect our annual revenues to grow about 5% on a consolidated year-over-year basis, with EBITDA ranging from $90 million to $95 million. Given typical seasonality and slow U.S. land activity, the first quarter of 2024 is expected to be the weakest quarter of the year.

In terms of our estimates for free cash flow generation in 2024, we expect to generate at least $40 million in free cash flow implying a free cash flow yield of 10% or greater. Our planned facility sales create more cash flow variability than is customary for us. Typically, the first quarter represents a use of cash due to the timing of various payments, including the payout of short- and long-term incentives with the balance of the year being cash flow positive. In terms of free cash flow conversion, we are targeting a free cash flow to EBITDA conversion rate of approximately 40%.

We remain focused on optimizing our operations and pursuing profitable activity in support of our global customer base. As market opportunities unfold, both in the U.S. and in international and offshore markets, we will continue to focus on core areas of expertise with the deployment of our recently enhanced equipment and technologies to further differentiate our product and service offerings.

Now I would like to offer some concluding comments. Initially, the industry responded to higher commodity prices with accelerated shorter-cycle investments in the United States, which the industry clearly benefited from in 2022. In 2023, we experienced an increase in investments in long lead time projects in international markets and deepwater basins around the world based upon the longer-range outlook for commodity prices.

Strong macro fundamentals continue to point to a multiyear up cycle outside the U.S., which should drive growth in revenues, earnings and free cash flow generation from our international and offshore operations. Our core competencies are well entrenched in the markets we serve, and we continue to bid on potential opportunities supporting our traditional subsea floating and fixed production systems, drilling and military customers while also bidding to support multiple new customers and projects involved in developments such as deep-sea minerals gathering, fixed and floating offshore wind developments, carbon capture and storage, geothermal applications and other renewable and clean tech energy opportunities.

These new energy transition opportunities create strong potential for us to expand our product and service offerings and our revenue base over the longer term.

Oil States will continue to conduct safe operations and will remain focused on providing technology leadership in our various product and service offerings with value-added products and services available to meet customer demands globally.

That completes our prepared comments. Eli, would you open up the call for questions and answers at this time?

[Operator]

[Operator Instructions] Our first question comes from Connor Jensen from Raymond James.

[Connor Jensen, analyst]

Yes. So first quarter, the book-to-bill fell below 1 for the first time in a little bit. How is the -- kind of some color around bidding activity and the current outlook would be great. Maybe contrast that with the past few quarters and if this is something that's going to continue or if you expect that to jump back above 1?

[Cindy Taylor, executive]

Yes. Thanks for the question, Connor. I think you meant fourth quarter book-to-bill of 0.9 and the annual was 1.1. I have to point out that quarter-by-quarter bookings obviously can vary and importantly, we have one of the strongest revenue quarters in years. And so bookings at $120 million were actually favorable bookings overall. So you can't necessarily look quarter-by-quarter. But importantly, I would say what are we looking at for 2024, and I guided to a book-to-bill north of 1 at this point in time. And as always, we may have some mix shifts in there, whereas we had lower kind of connector products activity really in 2023. We expect some uplift in 2024.

Strong production facilities, particularly in Brazil, that may moderate just a bit given timing of projects only. But importantly, some of our new capital drilling equipment technologies around our MPD systems and our high-pressure riser systems will get a lift that we've not seen in several years. And we're pleased to say that our first MPD system has been in the water, operating an MPD mode successfully in the first quarter. So we're pretty positive about this new piece of our business. That, again, is brand-new technology for us.

So while some projects can flatten or moderate, other ones are listening. We also expect to see strong activity on the military order side of our business. And so that on balance, again, expect a book-to-bill north of 1. There can be variations quarter-by-quarter. There always are. So we tend to look at the annual type book-to-bill more so than individual quarters because of both order variability as well as revenue-generating variability.

[Connor Jensen, analyst]

That's great context there. And then just following up, you said that you expect military to be strong. Obviously, it ticked up a little bit here. Do you expect those levels to continue higher? Or was this kind of a one-off?

[Cindy Taylor, executive]

No. We expect a very strong order book in 2024 as well.

[Operator]

Our next question comes from Alec from Stifel.

[Unknown Analyst]

So just to kick it off here. I was wondering if you can provide us some color on your expectations for margins in the Well Site and Downhole Technologies if activity already remains steady around current levels in the North American land?

[Cindy Taylor, executive]

Yes. I think that's a very good focal point for us. I'm having Lloyd kind of look at the model vis-a-vis the margins. But just generally speaking, it's no secret that the natural gas market is under significant pressure right now. And in fact, the March contract for nat gas closed below $2 at $1.61 on Friday, that's the lowest price we've seen in 25 years. And so that's the major message for me around land.

Crude oil prices seem to be trading in a steady band and therefore, activity in your oilier basins should be at least flat, if not modestly up throughout the year, but we've got to really focus on the margin degradation that occurs in areas like the Northeast, the Haynesville, the stack, et cetera. And so our focus has to be around cost management and control, intense conversation with our customers in terms of what activity, if any, they're going to prosecute during this time.

And so I'm kind of looking at our EBITDA margins for Well Site in Q4 were 10.4%. If I'm looking at the correct numbers, that's the Well Site. Those are down from kind of mid- to high teens throughout the other 3 quarters of 2023. Now we are looking to have slightly better margins in totality in 2024, but that is really predicated on significant cost control initiatives in the natural gas basins as well as our newer technology, particularly our Active Seat Gate Valves which not only we think leverage our revenue, our kind of market share, revenue generating potential, but it also reduces our cost of repairs, our cost of greasing et cetera. And so overall margins in totality flat to up, but the reality is they just got to come up from where at least for the year 2024 compared to where they were in the fourth quarter, if that is helpful to you.

But November and December for our business and for most really fell off for all the factors we're talking about and it's hard to really get your cost down immediately in that time frame, but that's an acute focus for us going forward this year.

[Unknown Analyst]

Got it. No, that's great color there. And then also just continuing in Downhole Technologies. Has there been any noteworthy change in the competitive landscape as well as pricing like, for example, are operators spending more for integrated systems? Or is there any kind of color you could provide there?

[Cindy Taylor, executive]

I think that what we are looking at right now is trying to look internally and say how is our technology and where is it on the competitive continuum against the landscape that we operate in. And that's why we've invested both R&D money and engineering time in 2023 to bring an upgraded suite of products to the domestic market, which is the technology that I referenced in my call notes. And then in addition to that, most of our international activity has been more P&A oriented, which can be extraordinarily cyclical and lumpy depending on activity.

And so we're really working to really get more international steady revenues around the completion side of the business, the shorter guns as well as the charges that go internationally to more stabilize the ongoing cost absorption in our international side of the business. But those are the major focus initiatives that we are entering 2024 with, and we do expect to see improvement over 2023, because of the technology introductions.

Now first quarter is a weak quarter. I'll be the first one to tell you that these natural gas basins are weak right now. And again, those are comments that I also offered you -- offered to you in my call, but we do think the upgraded technology gets legs and some footing to help us be the most competitive in both the U.S. market and the international market. You do mention the landscape, and I would say it's generally stable. No secret that DMC Global is evaluating what to do with the DynaEnergetics business. But I would just say at this point, we don't have clarity around whether that really changes anything in the landscape. So we've got to do what we can control, which is enhance our technology offering to our customer base.

[Unknown Analyst]

Got it. And then also, just shifting gears a little bit to OMP. I was curious if you could provide some color on what's on the backlog and how that should kind of flow through to margins in 2024?

[Cindy Taylor, executive]

Our margins are -- have been pretty steady. The key for us is the mix in backlog. But as I mentioned, production infrastructure, capital drilling equipment, service revenues, those are really favorable to our margin profile and mix, then it becomes one of just kind of timing and absorption across our facilities. Even though we had a really good 2023, our short-cycle piece of the business, which has a little bit of a land focus, obviously suffered some declines late in 2023. And it will be slow to kick off in 2024. That's really why we've guided on a consolidated basis that the first quarter will be the weakest quarter for us.

[Unknown Analyst]

Got it. And if I could squeeze one more in, I would appreciate for bearing with me here. Just on the -- when we're thinking about 2024, I know you said there's some variability given the assets held for sale. But I was just curious if you could provide some details on what you're expecting in terms of just working capital or capital spending and just the free cash flow conversion. I think you said it was 40% in 2024 [indiscernible]

[Cindy Taylor, executive]

I really think -- go ahead, Alec. I'm sorry. I thought you were done.

[Unknown Analyst]

Almost. And then I was just around that. I was wondering if you could just comment on the patent defense charges during the fourth quarter and if that's expected to continue where that stands?

[Cindy Taylor, executive]

Perfect. I'll kick off and Lloyd will pick up along the way. I'm really glad you asked the question about kind of free cash flow generation. And I mentioned in the notes, there's quite a lot of variability in our free cash flow because of these facility sales. And I just want to be clear that what we've included in the guidance of roughly $40 million is the Singapore facility sale and the Batam CapEx construction simply because that Singapore facility is currently under contract. We've not yet included the cash proceeds from the Houston facility sale because we don't know the timing. It's not under contract. We do expect it to sell.

So there could be upside to that cash flow I'm trying to give you the guidance that, to some degree, would be the floor, I would say, in terms of EBITDA conversion and free cash flow generation.

Now I'm going to ask Lloyd to comment on working capital. But I'll just say, importantly, the shift towards more offshore and international revenue, i.e., growth in that does carry with it percentage of completion accounting, and therefore, some increases in average working capital because of project duration, he's got the numbers for you. I'm looking at him right now to offer comments.

[Lloyd Hajdik, executive]

Alec, so in 2023, used working capital $21 million with revenues up, we gave guidance on about 5%. I kind of would expect working capital to be fairly consistent with 2023, maybe slightly less. And again, in the first quarter of last year, 2023, we used $26 million of working capital. First quarter is typically, as Cindy mentioned, is typically the heavier use of cash quarter with the rest of the year cash flow positive. So forecasting, say, $15 million to $20 million of working capital in 2024.

In terms of the CapEx, I guess we are kind of forecasting around $40 million. That's gross CapEx, including the lion's share of the construction cost associated with the Batam facility. As Cindy mentioned, we've got the proceeds of the Singapore facility in our forecast or in our budget, and that will offset those lion's share of the CapEx needs for Batam.

That's how we arrive at roughly the $40 million of free cash flow for the year, again, only including the Singapore facility. Could be -- if you add in the potential proceeds from the Houston Ship Channel, that could be in the $60 million range.

[Operator]

We have our next question from John Daniel from Daniel Energy Partners.

[John Daniel, analyst]

First, sort of a big picture, it's a 2-part question and one first part is big picture, but just Cindy, your thoughts on U.S. landscape in light of the E&P consolidation and the impact of the business. And then the second part is just given all of the E&P consolidation, how does that influence your willingness to either invest growth CapEx in the U.S. or prosecute domestic M&A?

[Cindy Taylor, executive]

I think that is a fantastic question, John, not surprised by that. But our focus is to try to stay high technology and I'll say is asset light as we can. And a lot of these new technology rollouts really achieve our objectives as well as the objectives of our customer base. And so focus around Active Seat Valves and automation are keys for us to do both of those things because it's hard to be in the service business and support these large customers without a broad range of equipment, but with that carries high labor costs, high R&M costs and high CapEx and we tend to not want to do all of that because of the cyclical nature of the business.

And so we are trying to stay niche, I'll call it, in our product and service offerings. We're more likely to deemphasize growth in M&A around this piece of the business, particularly if we view it as a more commoditized market with few barriers to entry, which, quite frankly, is about all the transactions we have seen heretofore. If there are unique technologies that are more asset-light or manufacturing in support of U.S. land, yes, we would be interested in looking at those.

Just to date, we haven't seen a lot, if that's helpful .

[John Daniel, analyst]

That's helpful. And then I just have a labor question, but clearly, natural gas basins are weak, and that's probably going to result in the OFS space rationalizing costs to try to preserve margin, which generally has an impact on the labor market. But we also all kind of expect those gassy markets to take off in '25, hopefully, as LNG comes online. So just the push and pull of how do you deal with labor in those isolated markets and being ready to rent...

[Cindy Taylor, executive]

Yes. You're absolutely right. I'll call it labor, but another key area of focus for this business are the associated costs that go with labor, all of your travel, your hotels, your vehicle cost, leasing, gasoline per DMs. And so obviously, pro-focused on the ancillary cost. If my labor utilization is low, maybe I just let them set at home, don't make them drive to the shop. And then when they drive to the shop, they start doing R&M on equipment, so you have a double whammy in a low revenue environment. I do not -- I really want to focus on labor retention for all the reasons that you talk about.

We're really diligently working with our customers because as you know, several of these natural gas plays are thinly supported by customers, i.e., the Northeast. They're just aren't that many big customers working up there. So we really do need to retain a certain amount of work with the ones that we have to support a core labor component, but we are absolutely going to have to look at out of basin labor support in the oilier regions and do what we can. We -- the key question for us right now is, do we have to cut the work week down from historically an average of about 60 hours work week to lower levels just to sustain our labor through 2024. And that is the acute focus we have right now. But labor is essential. And I think our customers recognize that. Not a lot matters when prompt nat gas is [ 161 ].

[Operator]

[Operator Instructions] Looks like we don't have any questions as of the moment. I'd now like to hand back over to Cindy for closing remarks.

[Cindy Taylor, executive]

Thank you so much, Eli, and thanks to all of you for joining us today and answering good, insightful market-oriented questions that we can respond to. Obviously, there -- as is always the case in this business we love. There's a lot of things going on that affect the commodities at this point in time. But I do think fundamentally, supply/demand will get back into a healthy balance for natural gas. It's logical anyway. We are in an election year. So I think there's a lot of unexpected things that might hit us such as this permitting pause, if you will, around LNG export facilities and other things. But maybe I'll just say that ends up making us stronger in the long term in terms of how to run and manage businesses. And so there's always a bright side.

I think a lot of you will be at the conference later this week here in town, and we look forward to visiting with you all then. I hope you have a great remainder of the earnings seasons and a nice week. Thanks so much.

[Operator]

Thank you for attending today's call. You may now all disconnect.