Topaz Energy Corp

TSX:TPZ

Earnings Call Transcript 2021-Q4

[Operator]

Good morning. My

name is Ellis

and

I'll

be your

conference

operator

today.

At

this

time, I

would

like

to

welcome

everyone

to

the

Topaz

Energy

Corp.

Fourth

Quarter

2021

Results

Conference

Call.

All

lines

have been

placed

on

mute

to

prevent

any

background

noise.

After

the

speakers'

remarks,

there

will

be

a

question-and-answer

session.

[Operator Instructions]

Thank

you.

Mr.

Scott

Kirker,

you

may

begin

your

conference.

[William Scott Kirker]

Thank

you,

operator, and

welcome,

everyone,

to

our

discussion

of

Topaz

Energy

Corp.'s

results

as

at

and

for

the

year's

ended

December

31, 2021

and

2020.

My

name

is

Scott

Kirker

and

I'm the

General

Counsel

for

Topaz.

Before

we

get

started,

I

refer

you

to

the

advisories

on

forward-looking

statements

contained

in

the

news

release

as

well

as the

advisories

contained

in the

Topaz

Annual

Information

Form

and

our

MD&A

available

on

SEDAR

and

on

our

website.

I

also

draw

your

attention

to

the

material

factors

and

assumptions

in

those

advisories.

I

am

here

with

Marty

Staples,

Topaz's

President and

Chief

Executive

Officer;

and

Cheree

Stephenson,

Vice

President-Finance

and

Chief

Financial

Officer.

We

will

start

by

speaking

to

some

of

the

highlights

of

the

last

quarter

and

of the

year

so

far.

After

their

remarks,

we

will

be

open

for

questions.

Marty, Cheree, please go ahead.

[Marty Staples]

Thank

you,

Scott.

Good

morning

and

thank

you

for

attending

the

Q4

conference

call

for

Topaz

Energy.

First

off,

I'd

like

to

thank

all

of

our

management,

staff,

directors,

shareholders,

partners,

analysts,

advisors

and

all

the

others

who

have supported

Topaz.

Cheree

and

I

are

closing

in

on

our

second

year

at

Topaz

which,

as

you

know,

was

at

the

beginning

of

a

world

pandemic.

We're

encouraged

that

this

chapter

is

looking

like

it

is

well

behind

all

of

us.

With

the

beginning

of

another

major

macro

event,

we

hope

that

the

conflict

can

be

settled

peacefully

and

quickly.

Now,

jumping

into

Q4,

it

was

another

busy

and

exciting

quarter

for

Topaz,

and

we're

pleased

to

look

back

on

the

growth

we've

accomplished

through

2021,

which

we

believe

was

at

the

right

stage

in

the

commodity

price

cycle.

In

the

fourth

quarter,

we

generated

record

cash

flow

of

CAD 68

million.

For

the

full

year,

we

generated

cash

flow

per

share

of

CAD

1.54,

which

was

57%

higher

than

2020

at

CAD 0.99

per

share.

We're

also

pleased

to

announce

our

third

dividend

increase

to-date

to

CAD 1.04

per

share,

which

represents

a

30%

cumulative

increase

since

our

initial

dividend

was

set

at

CAD 0.80

per

share.

The

dividend

is

consistent

with

our

messaging

that

we

aim

to

provide

modest

and

sustainable

dividend

increases

alongside

growth.

During

the

past

few

months,

we've

opportunistically

layered

on

some

hedging

with

a

focus

on

summer

gas

price

protection.

We

have

hedged

approximately

30%

of

our

summer

2022

gas

production

at

an

average

price

of

CAD 3.94

per

mcf.

When

you

combine

our

stable

infrastructure

income

and

moderate

hedging,

our

2022

dividend

is

fully

covered

even

at

ultra-low

commodity

pricing.

Our

royalty

acquisition

strategy

isn't

focused

on

low

decline,

highly

economic

oil

plays

to

complement

our

[ph]



best-in-class

(00:03:09)

natural

gas

exposure.

In

the

fourth

quarter,

we

realized

better-than-anticipated

production

results

and

48%

liquids

weighted

royalty

production

growth.

When

we

released

our

November

2021

guidance

update,

we

estimate

estimated

fourth

quarter

royalty

production of

16.7

thousand

BOE

per

day

and

Q4

actuals

came

in

at

17.2

thousand

BOE

per

day.

We

saw

higher

production

from

a

number

of

our

partners,

including

Headwater,

Tourmaline

and

Reserve

Royalty

counterparties,

while

our

other

operators

continue

to

meet

or

exceed

initial

forecasts.

We

estimate

a

minimum

of

CAD 1.5

billion

in

capital

deployment

on

our

royalty

acreage

in

2022.

Through

Q1,

we

expect

there will

be

between

21

and

24

rigs

active

on

our

royalty

lands.

For

the

fourth

quarter

– so for

the

quarter there

were 143

gross

wells

spud

on

our

acreage

and

142

gross

wells

were

brought

on

production.

A

number

of

wells that

were

brought

on

stream

in

Q4

were

Q3

drills,

and

there

are

significant

Q4

drills,

which

are

scheduled

to

be

brought

on

production

in

Q1.

We

have

maintained

our

2022

production

guidance

range

at

16,100

to 16,300

boe

per

day.

Assuming

commodity

prices

of

CAD 4

AECO

and

$75

WTI,

we

estimate

2022

EBITDA

of CAD

270

million,

which

represents

a

39%

increase

to

2021

EBITDA

of CAD

194

million.

After

payment

of

our

increased

dividend,

we

estimate

we'll

have

CAD 115

million

of

excess

free

cash

flow,

which

we

plan

to

direct

towards

M&A

growth

as

we

continue

to

identify

new

opportunities.

Consistent with

our

IPO

messaging,

we

believe

we

can

continue

to

repeat

transactions

with

existing

counterparties

as

well

as

add

new

high

quality

partners.

During

Q4

2021,

average

daily

utilization

of

Topaz's

net

natural

gas

processing

capacity

was

97%,

consistent

with

the

prior

quarter.

During

Q4

2021,

Topaz

generated

CAD 16

million

of

total

infrastructure

income,

compared

to

CAD

16.6

million

generated

in

the

prior

quarter.

In

2021,

we

invested

a

total

of

CAD

945

million

in

royalty

and

infrastructure

acquisitions,

which

increased

our

royalty

acreage

77%

and

natural

gas

processing

capacity

by

23%.

In

addition,

we

diversified

our

infrastructure

portfolio

through

the

acquisition

of

a

water

conservation

facility

under

a

fixed

take

or

pay

contract,

and

doubled

our

corporate

tax

pools

to CAD

1.8

billion.

On

current

strip

pricing,

the

cumulative

2021

acquisitions

are

estimated

to

generate

a

return

on

capital

of 16%

in

2022,

based

on

an

estimated

free

cash

flow

of

CAD

149

million.

In

2021,

our

reserves

increased

significantly.

92%

growth

in

our

proved

plus

probable

net

present

value

discounted

at

10%

from

CAD

592 million

in

2020 to

CAD

1.1

billion

in

2021.

This

includes

a

29%

increase

in

the economic

value

attributed

to

our

infrastructure

cash

flow.

Our

proved

plus

probable

reserves

volumes

increased

82%

from

last

year.

We

added

18

million

boe

of

proved

plus

probable

reserves

through

our

acquisitions

and

the

operators

on

our

royalty

acreage

generated

6

million

boe

volume

additions.

At

no

capital

cost

to

Topaz,

118%

of

our

2021

production

of

5.1

million

boe

was

replaced

with

development

drilling

by

our

operators.

In

the

fourth

quarter,

we

expect

to

– we

expanded

our

credit

facility

from

CAD 400

million

to CAD

700

million

and

extended

the

term

to

December

2025.

At

year

end,

we

had

net

debt

of

CAD 234

million

or

0.8

times

net

debt

to

Q4 2021

annualized

cash

flow.

We've

set

a

number

of

corporate

ESG

commitments

and

targets,

which

we

look

forward

to

reporting

in

our

2021

sustainability

report

targeted

for

early

fall

2022

release.

At

this

time,

if

there's

any

questions,

please

feel

free.

[Operator]

Thank

you.

[Operator Instructions]



Your

first

question

comes

from

Aaron

Bilkoski

with

TD

Securities.

Please

go

ahead.

[Aaron Bilkoski, Analyst, TD Securities, Inc.]

Thanks.

Good

morning.

My

question

is

around

production

cadence

through

the

year,

given

the

royalty

[indiscernible]



(00:07:48)

you

talk

about

how

you

would

expect

production

to

trend

on

a

quarterly

basis

through

2022?

[Cheree Stephenson]

Yeah.

So,

I'd

say,

we'd

speak

more

to

an

annual

rates.

We

see

about

16,200 boe/d

as

our

midpoint

of

our

range

for

2022.

We

definitely

see

cadence

of

growth

through

the

year.

But

we

do

see

very

positive

results

from

a

number

of

our

operators.

But

we

have

sort

of

maintained

the

forecast

we've

set

previously.

Ultimately,

we

don't

control

the

CapEx.

We

do

as

best

as

we

can,

but

we

don't

have

full

disclosure

of

drilling

plans.

Also

we

don't

have

a

[indiscernible]

(00:08:31)

on

all

acreage

for

all

of

our

counterparties.

So

there

are

some

factors

built

into

our

modeling

to

account

for

some

of

that

other

lands

that

they

need

direct

capital

to.

And

also, we've

accounted

for

water

flood

capital

spending

which,

trades

off

near-term

production

growth

with

long-term

and

has

economic

value.

So

we're,

we're

very

confident

in

the

16,200 boe/d

we've

presented

and

hope

to

have

some

upside

to

that,

but

I

want to

see

how

Q1

comes

through

and

then

we'll

revise

the

guidance

accordingly.

[Marty Staples]

Yeah. And

one

comment

there

to

Aaron

is

we

are

going to

see

some

updated

five

year

plans

from

a

couple

of operators

this

week

being

Tamarack

Valley

and Tourmaline.

And

so,

we

will

adjust

accordingly.

We

don't

get

that

information

beforehand,

obviously.

And

so,

we

do

kind

of

like

Cheree

mentioned,

the

capital

costs

and

some

of our

capital

commitments

are

actually

fully

spent

as

well

that

we've

put

in

place.

So

they've

accelerated

those

programs.

The

Tamarack

Charlie Lake

capital

commitment

has been

finalized

and

the

Headwater

capital

commitment

has been

finalized.

So,

well

ahead

on,

on

both

of

those

capital

commitments.

[Aaron Bilkoski, Analyst, TD Securities, Inc.]

Perfect.

Thanks,

guys.

[Operator]

Thank

you.

Your

next

question comes

from

Patrick

O'Rourke

with

ATB

Capital.

Please

go

ahead.

[Patrick J. O'Rourke, Analyst, ATB Capital Markets, Inc.]

Oh,

hey,

guys. Good

morning, thanks

for taking

my

question. Results

in

the

quarter

tend

to

be

pretty

consistent,

pretty

solid

and in

line

with

our

expectations.

One

thing

that's

obviously

opaque

and

difficult

to

predict

is

the

M&A

or

the

acquisition

environment

for

Topaz

out

there.

I

noticed

you

talked

about 15%

historical

ROIC, which

is

well

above

what

we

gauge

to

be

a

cost,

weighted

average

cost

of capital

around

9.5%.

You're

guiding

to 10%

to

13%

for

that

sort

of

CAD 115

million

you

have

to

deploy

in

2022.

And

just

wondering

how

the

nature

of

the

acquisition

landscape

is

changing

and

where

the

sort

of most

attractive

deals

are

right

now?

[Marty Staples]

Yeah,

and

good

question.

So,

we

kind

of

thought

with

this

higher

commodity

cycle,

we

wouldn't

see

as

much

opportunity

in the

M&A

environment

and

it's

been

quite

the

opposite.

It's

been

very

active.

We're

in a

number

of

data

rooms

right

now.

I

think

the

big

key

to

it

is

to

maintain

our

discipline,

though,

and

we

don't

want

to go

out and

acquire

at

all

costs.

And

so,

that

was

one

of the

comments

or

in

your

question

you

asked

is

–

there

is

a

cost

component

that

goes

along

with

this

where

we've

got

to

maintain

discipline?

Lots

of

good

opportunity

but

that

doesn't

mean

we

have

pay

an

egregious

amount.

It

is

at

the

high

end

of

the

cycle

right

now,

we

think.

Anything

else

Cheree

you'd

like

that?

[Cheree Stephenson]

It

is

a

time

we

can

focus

more

on

infrastructure.

We

don't

see

those

multiples

changing

as

much.

Some

of

the

deals

take

a

bit

longer

to

do

because

we're

a bit

pickier

to

make

sure

that

– it's

within

our

strategy.

And

then

I'd

also

comment

that

the

enhanced

environment

and

better

commodity

prices

expanded

our

opportunity

set

where

some

more

intermediate

or

smaller

cap

producers

maybe

are

more

in

our

line

of

sight

as

opposed

to

two

years

ago,

and

we probably

wouldn't have

ventured

into

that

space with

the

Probably wouldn't

have

ventured into

that space

with

the

debt levels

and the

position

some

of those

operators

were

in.

[Patrick J. O'Rourke, Analyst, ATB Capital Markets, Inc.]

Does

the

sort

of

increasing

interest

rate

cycle

that

we're

heading

into

here

– given,

you

know,

the

nature

of

infrastructure

assets

and

the

timing

of

cash

flows

there

to make

those

deals

sort

of

more

attractive

relative

to

core

deals

at

this

point

in

time.

[Cheree Stephenson]

It

just depends

on

the

asset. But –

yeah,

we

– we

would

like

to

continue

to

have

a

balanced

portfolio

both

and

as

long

as

it

meets

our

strategy

where

there's

a

good

contractual

strength

and

newer

quality

high

utilization,

we're

definitely

willing

to

look

at

those.

[Marty Staples]

Yeah,

and

interest

rates

are going to

play

into

that

a

little

bit.

Obviously,

I

mean,

we're

going

to

see

I

think

lending

rates

are

probably

going

to be

impacted

by

that.

And

so,

we

do

think

that,

that

might

actually

benefit

our

business

because

we're

competing

against some

of

these

higher

interest

rate

net

debt

type

scenarios.

[Patrick J. O'Rourke, Analyst, ATB Capital Markets, Inc.]

Yeah,

that's

sort

of

what

I

had

in

mind

there, especially

with

the

longer

duration

nature

of

those

assets

and

the

sensitivity

and

then

just

one

more

question,

I

think

pro

forma

we're

estimating

the

dividend

payout

ratio

in

and

around

54%

right

now.

And

could

you

just

remind

us

sort

of

what

the

guideposts

for

the

target

dividend

range

will

be

going

forward?

And

sort

of

what

are

the

levers

or

sensitivities

that

that

kind

of

gravitate you

towards

upper

end

and lower

end?

[Marty Staples]

Yeah,

50%

to

90%

is

what

we've

always

guided

towards.

Like

you

mentioned,

we

are

below

that

right

now,

even

after

the

dividend

increase.

Why

we

didn't

go out

and

increase

it

more

aggressively.

Obviously, we've

had

a

big

run

in

commodity

price

that

is

this

long-term

or

is

it

short

term.

I

think

we

got

to

watch

the

macro

environment

and

see

if

that

is

something

that we don't

want to

be

–

react

to

it

too

quickly.

In

addition

to

that,

as

I

mentioned

like

we

are

seeing

a

lot

of

opportunity

right

now

and

we

have

this

excess

free

cash

flow

that

we

think

growth

is

still

a

function

of

this

company.

And

if

we

can

grow

in

this

environment,

we

want

to use

excess

free

cash

flow

to

do

some

of

that.

[Patrick J. O'Rourke, Analyst, ATB Capital Markets, Inc.]

Okay.

Thank

you

very much.

[Marty Staples]

Thanks,

Patrick.

[Operator]

Thank

you.

Your

next

question

comes

from

Josef

Schachter

with

the

Schachter

Energy

Research.

Please

go

ahead.

[Josef Schachter, Analyst, Schachter Energy Research Services Inc.]

Good

morning,

guys,

and

Cheree,

Scott

and

Marty,

and

Cheree,

congratulations

on

the

great

year

and

the

increase

in

the

dividend.

Two

questions

for

me.

One,

do

you

guys

have

any

kind

of

guideposts

are

you're

looking

at

for

the

mix

of

business,

as

you,

as

you

mentioned

your

82%

natural

gas

now

and

targeting,

you

know,

78%

for

next

year.

Do

you

have

a

minimum

that

you

want

to stay

at

and

continue

to

be

a

natural

gas

focused

royalty

payout

firm?

[Marty Staples]

Yeah.

We

definitely

want to

be

focused

on

natural

gas.

We

think

you

look

across

the

environment

right

now,

it's

setting

up

very

nicely

for

natural

gas

and

across

North

America,

I

think

we're

the

only

royalty

company

that

is

focused

on

natural

gas

and

probably

one

of

the

larger

royalty

companies

that

are

exposed

to

it

with

one

of

the

best

operators

in

North

America.

We've

always

targeted

about

75%

natural

gas,

25%

oil

liquids.

So

that's

ultimately where

we

want to

be.

So

a

significant

component

of

this

company

will

always

be

tied

to

natural

gas.

[Josef Schachter, Analyst, Schachter Energy Research Services Inc.]

Okay.

Super.

And

my

next

question

is,

have

you

contemplated

going

across

the border

and

looking

at

deals

in

the

US

as

well

as

having

your

big

exposure

area,

the

large

exposure

in

Canada?

[Marty Staples]

Yeah.

Absolutely,

we've

looked

at

some

things

in

the

US.

I

mean,

it's

a

space

that

we

haven't

participated

in

as

a

management

team,

as

an

executive

team.

And

so,

a

little

cautious

looking

into

that

space.

Right

now

there's

just

a

bunch

of

opportunity

in

Canada

that

we'd

like

to

focus

on.

And

from

a

royalty

standpoint,

there's

three

to

four

other

royalty

companies

out

there.

So

it's

limited

competition.

You

look

in

the

US,

there's

10s

to

20s

to

hundreds

of

royalty

companies

if

you

go

to

the

small

cos.

And

from an

infrastructure

standpoint,

I

think

we're

doing

a

little

bit

of

a

different

business

here.

And

so,

we

do

think

we've

got

a

competitive

advantage

in

Canada.

And

like

I

said

– a

lots

to

do

in

Canada

still.

[Josef Schachter, Analyst, Schachter Energy Research Services Inc.]

Okay,

super. Thanks

very

much.

That's

it

for

me

and

congratulations

on

another

great

year.

[Marty Staples]

Yeah.

Thanks,

Josef.

Good

talking

to you

again.

[Operator]

Thank

you.

Your

next

question

comes

from

Matthew

Weekes

with

IA

Capital

Markets.

Please

go

ahead.

[Matthew Weekes, Analyst, Industrial Alliance Securities, Inc.]

Good

morning,

thanks

for

taking

my

question.

Just

looking

at

the

guidance

and

thinking

about

commodity

prices

where

they

are,

at

least

in

the

short-term.

I'm

just

wondering

what

some

of

the

gives

and

takes

are

on

the

guidance.

And

if

you

see

upside

going

forward

here

based

on

your

hedging

program,

and

I

know

you

talked

about

the

hedging

as

far

as

natural

gas

goes

into

the

summer,

but

maybe

if

you

could

also

provide

a

comment

on

your

hedging

program

for

crude

oil.

[Cheree Stephenson]

Yes. So,

we

layered

on

a

small

amount

of

hedging

in

Q4

from

a

WTI

perspective,

so

total

liquids,

we

are

about

15%

in 2022

and

the

WTI

just

under

$74.

That

was

focused

on

Q4

acquisitions

that

at

the

time

were

done

near

the

top

of

– the

higher

end

of

the

Strip.

So,

just

wanted

to

protect

those

economics.

Go

forward,

given

the

resiliency

of

the

business,

the

infrastructure

and

the

payout

ratio,

we

are

comfortable

to

remain

unhedged

on

the

balance

of

the

production.

We

definitely want

to provide

that

commodity

exposure,

but

we

want

to do

it

in

a

really

reliable,

safe

way.

So,

we've

done

about

30%

of

our

estimated

22

summer

gas

production at

an

average

price

of CAD

3.94

in

mcf,

but

do

feel

that's

sufficient.

And

as

Marty

mentioned

in

the

discussion

earlier,

our

dividend

even

with

the

increase

is

protected

down

to

I

think

about

a CAD

1

AECO

and

$40

WTI,

so

we

feel

very,

very

protected.

We

never

want

to

touch

that

dividend,

but

we want

to provide

the

commodity

exposure

as

well.

[Matthew Weekes, Analyst, Industrial Alliance Securities, Inc.]

Okay.

Thank

you.

And

then

my

second

question

was

just

clarifying

something

made

earlier.

You

said

there

were

a

couple

sort

of key

operators

on

your

lines

that

were

expected

to

release

updated

five-year

[ph]



plans

with this

week (00:18:37).

Could

you

just

remind

me

who

those

were?

[Marty Staples]

Yeah.

Tourmaline

and

Tamarack

Valley.

[Matthew Weekes, Analyst, Industrial Alliance Securities, Inc.]

Okay.

Thanks.

Appreciate

it.

I'll

turn

the

call

back.

[Marty Staples]

Okay.

Thanks,

Matthew.

[Operator]

Thank

you.

Your

next

question

comes

from

Jeremy

McCrea

with

Raymond

James.

Please

go

ahead.

[Jeremy McCrea, Analyst, Raymond James Ltd.]

Yeah.

Hi.

I

just want

to follow up

on

Patrick's

question

just

on

M&A.

Just

if

you

can put

a

little

bit

more

numbers

to

what

you're

talking

about

in

terms

of

your

M&A

strategy. I

was

just

curious

if

there's

an

actual

change

in

strategy

and

how

you

think

you

can

get

M&A

done

this

year

versus

last

year?

Maybe

number

of

data

rooms

that

you're

in

today

versus

last

year

if

you're

looking

at

different

size

of

packages,

if

it's

1,000 boe

or

if

it's

lower,

if

it's

higher,

just

a

few

more

numbers

to

kind

of

go

back

to what

you

were talking

with

Patrick

about.

[Marty Staples]

Yeah.

So

data

room wise right

now,

probably

around

eight

different

packages

that

– they're

not

even

just

packages,

some

of

them

are

– are

kind

of

manufactured

ideas

that

we've

come

up

with.

So,

the

flow

is

still

there.

Last

year,

I

think

it

was

similar

8

to

12

kind

of

and

there's

some

pretty

quick

answers

on

some

of

these

packages,

but

we

still

look.

And

what's going

to

be

very

material

to

us

is

if

there's

a

spread

between

bid

ask

price

and like

any

time

there's

a

high

commodity

cycle,

there's

lots

for

sale

it

seems

like,

but

not

as

many

buyers.

And

so,

what

I'm

going

to

reiterate

again

is

this

is

a

time

to

show

discipline.

And

historically,

if

you

look

at

how

Tourmaline

performed

when

– I

used to

work

at

Tourmaline,

high

commodity

cycles

are

tougher

to

buy

things

at

and sometimes

you

got

to

wait.

But

what

I

will

reiterate

as

well

is

there's

lots

of

good

packages

out

there

that

are

coming

to

market.

And

I

think

the

valuations

of

some

of

these

E&P

companies,

although

they're

healthier,

they're

still

a

unique

form

of

funding

that

they're

going to

have

to

use and

I

don't

think they

want to

use

all

equity.

I don't

think

they

want to

use

all

debt.

It's

probably

a

balance

between

the

two

and

maybe

a

royalty

or

infrastructure

component

can

go

along

nicely

with

that.

[Jeremy McCrea, Analyst, Raymond James Ltd.]

Okay.

And

then do

you

guys

still

have

a

kind

of

a

rough

goal

to

get

to

about

60%

of

your

revenue

being

from

infrastructure

or

is

that

changed

a

bit

here

as

well,

too?

[Marty Staples]

Yeah.

That's

the

goal.

We'll

see

if

this

next

cycle

provides

some

infrastructure

opportunity,

which

we

think

it

will.

That's

some

of

the

items

we've

been

working

pretty

hard

on.

So

50/50

is

the

ultimate

goal.

But

like

I've –

I've

said

in

the

past to

you,

Jeremy,

it's

always

written

in

pencil.

We

want to

be

opportunistic on

assets

and

ideas

that

are

in

front

of

us.

And over

the

last

year, it

was

royalty

based

and

maybe

this

year,

it

changes

a

little

bit. But

we're

pretty

open

to

either

side

of

the

business,

and

I

think

over

time

you'll

see

us

get

more

balanced

to

50/50.

One

of

the

questions

I

didn't

answer,

you

asked

about

size.

I

mean,

yeah,

we're

looking

at

even

from 1,000

boe

to

a

lot

larger

than

that

and

looking

to

fund

high-quality

names

with

high-quality

assets.

[Jeremy McCrea, Analyst, Raymond James Ltd.]

Okay.

That's

great

to

hear.

Well,

thanks,

guys. Talk soon.

[Marty Staples]

Good

talking

to

you

again,

Jeremy.

[Operator]

Thank

you.

There

are

no

further

questions

at

this

time.

You

may

proceed.

[William Scott Kirker]

Thanks,

everyone,

for

checking

in,

and

we'll

come

back

to

you

at

the

end of

the

next

quarter.

[Marty Staples]

Thanks,

everyone.

[Cheree Stephenson]

Thank

you.

[Operator]

Ladies

and

gentlemen,

this

concludes

your

conference

call

for

today.

We

thank

you

for

participating

and

ask

that

you

please

disconnect

your lines.

Have

a

great

day.