Flotek Industries Inc (FTK) 2021 Q4 法說會逐字稿

Greetings, and welcome to Flotek Industries Fourth Quarter and Full Year 2021 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce Nick Bigney, Senior Vice President, General Counsel and Chief Compliance Officer for Flotek. Thank you. You may begin.

Thank you, and good morning, everyone. We appreciate your participation with us today.

Joining me and participating on the call are John Gibson, Chairman, Chief Executive Officer and President; Michael Borton, Chief Financial Officer; Ryan Ezell, Chief Operating Officer; and James Silas, Interim President of Data Analytics and Senior Vice President of Research and Innovation.

On today's call, we will first provide prepared remarks concerning our business and results for the quarter. Following that, we will answer your questions.

We have now released our earnings announcement for our 2021 fourth year and full year -- fourth quarter and full year results, which is available on our website. Additionally, we have uploaded an investor presentation to our website. Today's call is being webcast and a replay will also be available on our website.

Please note that any comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC.

Also, please refer to our reconciliations provided in the earnings press release as we may discuss non-GAAP metrics on this call.

And with that, I will now turn it over to John.

Thank you, Nick, and good morning. I just want to thank you for joining our discussion on the 2021 fourth quarter and full year results. 2021 has been another challenging year for many businesses and individuals. Supply chain instability became a household term. Worries about inflation have had an impact on market. And as we hold this call, the conflict between Ukraine and Russia continues.

Although 2021 was a difficult year here at Flotek, we used the opportunity to strengthen our company, both financially and operationally. We've also used the time to get laser focused on our strategic objectives. Those objectives calling us to focus on flawless execution, profitable growth and strengthening our financial position.

In this call, I will highlight these strategic priorities through the lens of what we accomplished in 2021, all of which may not be evident by strictly reviewing the financials. These accomplishments are what put us on the path to transformative deals like the recently announced ProFrac agreement. We believe that the Flotek of 2022 and beyond will be vastly different than the version exiting 2021. And so today, instead of noticing on the past, let me share with you Flotek of the future.

Our strategic priorities are built around a core commitment to environmental leadership. In the last few years, the term ESG has gained a tremendous amount of traction. But like many topics in the popular discourse, trending items often have their moment and then they fade away. At Flotek, we believe that the concepts around improved environmental stewardship are inseparable from long-term sustainable growth in the energy industry.

In addition to the issue of maintaining a social license to operate, companies already deal with increasing pressure around availability of water, minimizing waste and maximizing efficiency of operations in the face of tighter cost structures. Our products and services, including our specialty green chemistry solutions, our Verax analyzers and our Data Analytics, help our customers minimize their environmental impact and make the timely and efficient operating decisions. This reason, environmental leadership, is a key element of our business strategy today and will be in the future.

In order to achieve our mission to be the collaborative environmental partner of choice for sustainable chemistry technology and Digital Analytics solutions, we will continue our focus on flawless execution of our vision. Morris Chang sa id, with our strategy, execution is aimless. Without execution, strategy is useless. Our vision created the opportunities we now possess. Our execution will make us a leader in this field.

Flotek will continue to prioritize safety and service quality throughout our organization. I am extremely proud of the Flotek team for achieving our goal of 0 total recordable incidents and 0 nonproductive time for our customers in 2021, and we will build on this focus in 2022. I will tell you it's the first time in my career that I have ever achieved a 0 TRIR and then no nonproductive time. It's an amazing accomplishment and just incredible congratulations to the operations team and to all of our employees.

Our consistent attention to and performance on safety considerations communicate that Flotek is a company that actively manages risk both for ourselves and our partners. In 2022 and beyond, Flotek will continue to build upon the progress we made in 2021 and reestablishing our relationships with indirect channels to market through energy service companies, a critically important segment of the market. In fact, half of our new energy chemistry customers were service companies in 2021. Certainly, our most exciting win on the sustainable revenue goal is our new contract with ProFrac valued at over $2 billion in revenues over the next decade, which will commence on April 1. If you missed our in-depth discussion around our contract with ProFrac, I encourage you to listen to our recorded investor call from March 10 as we build upon this success, we will continue to solidify our partnerships by winning on a daily basis, remaining committed to building trust through reliability and quality of our products and services, impeccable logistics, transparency and mutual value creation.

As we enter 2022, we arrive at a significantly more efficient streamlined organization, which we have achieved by realigning our entire organization to our vision. We have rebuilt our business development structure and tools to accelerate our revenue growth and more seamlessly forecast with our supply team. We have implemented new supply chain management strategies to ensure we have multiple sourcing options, including in basin sourcing, which has lowered our operational and the logistics cost. These changes mean that we deliver more effectively to our customers while significantly improving our margins. The Flotek of 2022 and beyond is a lean, operationally efficient organization.

Looking to the future, we will maintain our financial discipline by adhering to cost-saving initiatives that were begun in 2019, and we are effectively managing our SG&A and our non-cost, which have improved from 2020 by 11% and 23%, respectively. We also entered 2022 with greater transparency in how we report our margins, which you will see reflected in our 10-K when it's released.

As the saying goes, what gets measured gets managed. Mike Borton will speak in more detail about some of the changes that you will see moving forward.

Finally, our future success as an organization comes down to the right leaders, teams and structure to drive profitable growth well into the future. We've made changes to our cost structure, the way we approach our markets and we've also implemented leadership changes that will help us better respond to uncertainty and support operational excellence and top line revenue growth of over 4x in the next 3 years alone. This underlies the creation of a Chief Operating Officer role. We named Ryan Ezell, our COO, in early March. I have no doubt that Ryan and Flotek team will go forward with success.

In December, we also named Dr. James Silas as the Interim Head of Data Analytics. James also retains his previous role as Senior Vice President of Research and Innovation. For anyone who has not had the great benefit of knowing James Silas, let me tell you a little bit about him. James joined Flotek 8 years ago, following 15 years of academic research, investigating the physics and chemistry of surfactants and polymers and personal care products, bioengineering and in our oil industry. Since joining Flotek, James has been critical to our strategy of environmental leadership and the development of ESG green scorecard as well as having our intellectual property strategy.

James has a long history with JP3 and has considerable role in the development of our differentiated technologies. Big reason Flotek's green chemistry stand apart from our competitors is James' leadership. Part from his technical credentials, James is highly engaged with our customers as an exceptional commercial mind. For these reasons, I appointed him as Interim Head of Data Analytics, as he has already added exceptional value in this role, and I expect him to add more as the year progresses.

With that, I'd like to turn the call over to James Silas to give you his perspectives on the data analytics segment. James?

Thank you for the kind words, John, and good morning, everyone. While as a segment, we did not achieve our goals in the fourth quarter, I have had the opportunity to work closely with the team since December. And I'm impressed with our customer engagements and the market opportunities that lay in front of us.

Let me mention a couple of points about the Data Analytics segment. First, our core JP3 technology. Our new infrared analyzers represent an optimized blend between speed of measurement, versatility of applications and robust operating conditions. We are delivering data every minute that is driving operational efficiencies. These critical compositional and visible property measurements enable our customers to more effectively manage their product and inventory by optimizing their blending and separation processes in real time.

Given the enterprise-wide impacts of our solutions, our sales and marketing efforts must shift to be aligned with our customers' leadership. While our sales efforts to date have built powerful use cases, we are expanding our focus beyond siloed single-level applications to enterprise-wide solutions and partnerships.

We will continue to elevate our engagements with C-suite customers, especially to communicate the value proposition, our technology enables and meaningful improvements in ESG performance. Access to critical real-time information supports decisions that reduce carbon footprint, energy consumption and emissions that automate large-scale processes and that minimize waste and inefficient reprocessing.

The versatility of optical analyzers in edge embedded chemometric modeling means that we have the platform capable of delivering next-generation reductions in greenhouse gas emissions.

Finally, in 2021, we initiated several international pilot programs currently in various stages of execution. These pilots are on schedule, and we feel confident that they will prove the value proposition that has already been established in our North American markets and will afford us a defined growth trajectory.

In summary, the technology to drive the next generation of ESG performance globally is available here and now.

With that, I will turn the call to Ryan to discuss our Chemistry Technology segment.

Thank you, James. Today, I'll discuss our Chemistry Technology segment performance, which includes our Energy Chemistry Technologies as well as our Professional Chemistries for industrial and consumer chemistry solutions.

At the completion of the fourth quarter, I'm pleased to report that our Energy Chemistry Technology strategy to be the collaborative partner of choice for delivering sustainable, optimized chemistry solutions as being fully executed and gaining momentum. Flotek's differentiated solutions focused on maximizing our customers' value by elevating their ESG performance, lowering operational costs and delivering improved return on invested capital.

We are continuing to see growth with both domestic and international E&P operators as well as service companies, thus delivering on our continued commitment to diversify our revenue stack and minimize risk of customer concentration.

In the fourth quarter, we observed the implementation of our accelerated structural changes already paying dividends as our costs continue to decrease, while our revenue growth outpaced the growth of the domestic hydraulic fracturing fleet market.

Additionally, we completed the year with a stellar performance in regard to safety, service quality and customer satisfaction. As a result, I'm pleased to report the following highlights for the fourth quarter.

First, revenue for the Energy Chemistry Technologies improved 32% quarter-on-quarter, thus significantly outpacing the market and indicating continued market share growth. This marks a 26% improvement from Q4 the prior year.

Secondly, revenue generated from domestic accounts grew 34%, while international accounts grew 24% quarter-on-quarter, demonstrating the continued emphasis on improving revenue diversification. And revenue from our materials and Trans Logistics facility in Raceland, Louisiana with the world's top oilfield services providers expanded by more than 53% quarter-on-quarter as it became a key facility for delivering services to minimize the impact of Hurricane Ida. And we continue to make notable progress in rebuilding our indirect channels to market with service companies.

We have solidified a partnership with ProFrac to deliver downhole chemistries to as hydraulic fracturing fleets in North America. Should the contract extension be approved by shareholders, we anticipate combined organic and appropriate related 2023 revenues to be well in excess of $200 million.

Furthermore, the segment has continued its growth into adjacent energy markets with revenue generation and geothermal drilling and cementing operations as well as solar panel coatings. In the spirit of minimizing risk, we continue to negotiate with key suppliers to secure future purchase prices and material allocation volumes with our top product lines for 2022 as we focus on accelerated growth and margin expansion.

And finally, we're pleased to announce that Flotek completed the year with 0 total recordables and 0 hours of nonproductive time in the field and manufacturing operations thus further exemplifying our commitment to execute for the customers and deliver on our value proposition.

And going forward, we're excited about the future and the continued opportunities for our Chemistry Technologies segment as we continue to empower our customers socialize to operate with our enhanced chemistry solutions.

Now I'll turn the call over to Mike to discuss our financial results.

Thank you, Ryan. As John mentioned earlier, the 10-K now reflects gross margin in the consolidated statement of operations for the first time since 2017. Segment level sales and marketing costs and corporate G&A is now combined and reported as selling, general and administration on the statement of operations.

Cost of goods sold, as reported now, represents product costs, transportation and certain other costs required to produce and deliver goods and services. The company made these changes in reporting in an effort to provide greater transparency and after a considerable review of industry peers and in consultation with our external auditors.

Now let's go through the income statement in more detail. During the fourth quarter, consolidated revenue was $12.2 million, up 20% from the $10.2 million in the third quarter and slightly up from the $12.1 million of revenue during the same period last year. The total revenue for the year was down 19% from 2020, primarily impacted by the M&A activity impacting 2 significant customers and the nonrecurring sales of excess terpene.

Even with the lower revenue for the year, our losses narrowed from last year, both in the fourth quarter and the total year as we manage our business more efficiently across the organization. By segment, Chemistry Technology, including the impact of excess terpene sales saw a 23% increase in sequential revenue or $11.6 million for the fourth quarter. This also represents a 7% increase from the same period in 2020.

The Data Analytics segment saw a 27% decrease in sales sequentially from Q3, driven by several product purchases being pushed out into 2022. In the fourth quarter, we have made an $8.1 million impairment of goodwill, roughly $0.11 loss per diluted share related to the Data Analytics segment. Ultimately, we believe this asset to have considerable value over the long term. The impairment decision is a noncash transaction that will reflect a slower ramp-up of cash flows as we continue to move certain customers to a Data-as-a-Service model.

We ended the year with consolidated gross margin of $3.3 million, which is a substantial improvement from a loss of $28.7 million in 2020. The primary reason for these differences in gross margin dollars between the periods were driven by the accrual of the ADM reserve in Q4 2020 were $9.4 million and the subsequent reversal of this reserve in Q3 '21 was the settlement payment of $1.75 million.

Fourth quarter SG&A was $5.8 million, up $1.7 million from Q3 2021. This increase is driven by the elimination of the Federal Employee Retention Credit Program, Data Analytics severance and the fact that the 2021 management incentive plan accruals were reversed in Q3. We continue to renegotiate annual contracts to drive even more improvement in our expense run rate.

For the year, we reported a loss of $30.5 million or $0.42 loss per diluted share for 2021, a sharp improvement over the loss of $136.5 million or $2 loss per diluted share last year. The 2020 loss per diluted share included a few significant adjustments, $1.28 in impairment, $0.26 in ADM terpene reserves and $0.14 in the product rationalization, all one-off impacts.

Our adjusted EBITDA for the fourth quarter was a loss of $5.7 million, which is not only better than the third quarter's loss of $6.3 million and last year's fourth quarter loss of $6.8 million. In the last part of 2021, the company also leased out 2 idle facilities, which improved our EBITDA run rate by roughly $250,000 per quarter.

Let's move on to the balance sheet performance as we are focused on preserving our liquidity. At the end of the fourth quarter, we had cash equivalent of $11.6 million versus $20.5 million in the third quarter. There were several factors that impacted our cash position, operating losses, higher revenue that impacted working capital for receivables and inventory and the ADM settlement-related expenditures.

The company has $4.8 million of loans outstanding pursuant to the Paycheck Protection Program related to the CARES Act. Company applied for forgiveness in substantially all of the loan in late Q3 2021. The company has not yet received final feedback from SBA regarding the forgiveness amounts expected here in the near term.

As we look forward to 2022, our goal is to continue to leverage our back office cost efficiencies, growing our top line, including both organic and ProFrac related revenue as ensuring the necessary working capital to execute our growth strategies.

In February 2022, Flotek closed a $21.2 million pipe as previously announced. Flotek continues to work with Piper Sandler on various additional cash generation activities, including, but not limited to GAAP and continued monetization of noncore assets to fund the previously discussed ProFrac working capital needs. Both our Marlow and Monahans facility should be sold in the next several months in the company proceeds in excess of $6 million.

Finally, before I turn this call back to John, I would really like to take a minute to express my thanks to the accounting and internal audit teams and a number of other employees of Flotek, who support the successful remediation of our 2020 material weaknesses. It was hard work, but yet another example of building a strong governance and monitoring program that will help this company continue to deliver on our commitments.

At this point, I will pass the call back to John for his final remarks.

Thanks, Mike. Today, Flotek stands as an operationally efficient organization positioned for profitable, long-term growth with a team who can execute on our mission of delivering solutions that reduce the environmental impact of energy on air, water, land and people.

I believe there's plenty of room to be optimistic this year. We've seen some big names, particularly for the energy producers, posting considerable gains already through 2021. While there is typically a time lag between producer events and the impact to service companies, we believe that much of the momentum that operators are having will yield gains for us as well.

Looking forward to 2022, we look -- we believe we'll be able to hold the budget flat, and we're going to see our margins improve. As I alluded to earlier, we recently hosted an investor call to better explain the elements and impact of our contract with ProFrac, that gives us $225-plus million in contracted revenue over the next 3 years a tremendous upside over the next decade.

Combined with the organic growth, we anticipate our first month of business profitability in 2022, which should be followed by uninterrupted profitability, thereafter. When I joined the Flotek team in January 2020, I came in with the philosophy of looking forward. We feel confident today that the ProFrac deal holds the potential to secure our future and allow us to look forward.

Of course, this is contingent on approval in our upcoming special shareholder meeting, so I'd like to take this final opportunity to strongly encourage you to vote in favor of the proposals in our proxy at this time.

In closing, I just want to thank all of the people here at Flotek. It's been an endurance contest, and we've emerged from it in a great and successful position to go forward, particularly thank our customers and our shareholders for their continued support. You guys are great.

And with that, operator, I'll turn it back to you for questions.

(Operator Instructions) Our first question is from Jeff Robertson of Water Tower Research.

Ryan, can you talk a little bit about the capacity utilization on the Energy Chemistry business in 2022 and 2023 with the ProFrac contract and then also about penetration with other service company customers for utilization of the amount of capacity they are not taking up?

Yes, absolutely. It's a great question. When we look at some of the uniqueness part, first off, around with the ProFrac contract is it, is a nonexclusive agreement. So it allows us to continue growth in our other areas of the market. When we look at the capacity in our current manufacturing operations is, we were actually running probably less than I would look at 15% overall utilization to deliver our field services and chemical blending operations and that was only all running in typical day shift.

When you look at the growth of what -- just with the ProFrac component, it included with the potential parts of where we're going, we'll still be sitting probably around a full operations with ProFrac. We'll be probably still less than 52% of our operational capacity on what we can handle without making any type of CapEx expenditures. So we definitely have opportunity to grow without having to spend a lot of money and doing the support.

And believe it or not, in the past, if you go back to years as far back as, say, 2017, we actually moved 300 million pounds of chemicals in that year and that falls in line with -- similar to how we're going to be expanding in the ProFrac operations, our organic growth. So we still have quite a bit of room to take up until we get into any need for capital expansion.

The unique part about how we're doing the service delivery model is now is that we also leverage in support and that we don't have to bring all the chemicals that we do through our main manufacturing facilities because some of them are basically repackaged materials that we buy when we consider some of the lower-end technologies. And so we source those in basin and deliver those straight to the rig site, of rail spurs et cetera from some of the chemical companies that we work with in doing that.

So we have a great opportunity to not only to do the nonexclusivity components of the ProFrac contract to grow the core business, but also have capacity to handle this growth in the long term before we have to do any significant capital expansion.

Ryan, to be clear, the 52% capacity, that's what will be used for the ProFrac contract, including the supply -- the amendment and what your -- what Flotek's baseline business has been in 2021?

That's correct. That's correct.

Okay. Does -- just ProFrac -- does the ProFrac agreement in the basins that they are operating in where you will have -- where they will have crews deployed that you will service, will that help enhance -- to potentially enhance Flotek's margins with other customers in that basin by giving you more scale?

Absolutely. Absolutely. We definitely feel that. The more -- obviously, the more volume we move helps us on a leverage component of particular areas where we can look for margin enhancement. It also -- the one big thing that suppliers really enjoy is that, if we can get an accurate forecast of this volume out to them and we start looking at companies like ProFrac and even some of the other companies we brought in our organic business, we're getting a much better lead time out to forecast what type of material usage we're going to be, which gives us better leverage with our suppliers on helping us reduce our overall cost and leverage that for margin improvement, that's correct.

Okay. Mike, you mentioned working with Piper on alternatives. Can you talk about the -- with the pipe financing that was completed in February with the first supply agreement, how much of the working capital for the supply agreement in the expand -- or the supply amendment is covered by the capital that you all raised in that event?

So thanks for the question, Jeff. So we think a majority of it in the short term is covered by the pipe. Clearly, we have projections going out that we'll need some in the future. We're trying to determine how much. It depends on how fast they ramp up and also as we monetize the other assets in the organization.

So to be clear, that's a longer-term issue than short term?

Correct. Correct.

Operator, before we move to the next question in the queue, we've received 1 by e-mail for John from Eric Swergold from Firestorm Capital.

Eric asked us, what the sensitivity of the ProFrac contracted the oil prices?

I'll answer a bit and then throw it over to Ryan. The great part about this contract, which I hope does not go unnoticed is that it gives us continuity regardless of oil price. The contract promises us 70% of the crews for a minimum of 30 crews. And with them at 45 crews, they would have to come down by nearly 33% before we got to the 30 crews or less.

I'm not anticipating any price scenario for the commodity that would cause a reduction in crews that far. So we basically -- I think we're one of the only service companies that have true backlog in place that goes out for a decade, that's secure in the current price environment. And so pretty excited to know that we can make plans going forward and we have a robust revenue stream to support that. Anything to add, Ryan?

No, I think it's all correct, John, in alignment with my thoughts as well. You look at the near term, particularly on a plus -- a decade length in contract, what we do see is a lot of protection in the way ProFrac operates. And I would say, what we call some of the upper tier service companies are starting to have longer-term operations for their scopes of work and that they're not so well-to-well transaction. This also helps us have a lot of confidence in the work scope that how we're forecasting our materials. So that's why, I would say, the big transition that we're starting to see around the capital discipline in particular in these upper tier hydraulic fracturing operations is that, they have a longer guarantee type scope of work, and that's something I hope gives us stability in the near term where the oil prices as well.

Another thing sort of pumps me up is, we're going to be doing a call with you again in probably 6 or 7 weeks as we report Q1. We'll have been able to get through the month of April, which will be our first month where we are really ramping up on this contract. And we're excited about how we're already engaged with them and the number of crews that are being brought on and look forward to giving you details on that as we come into that call for Q1, we'll be able to explain how well we're doing in the ramp-up. And that will give you a clear indication of what 2022 is going to look like. So pretty excited. Let's go back and take another call. Nick?

The next question is from Mike Heim of NOBLE Capital Markets.

I'm looking to get a little bit better understanding on the nature of sales associated with the Data Analytics. I heard Mike made some comments that maybe some projects were pushed out into 2022. And I certainly understand that it can be a lumpy business. At the same time, we were writing down, taking the goodwill write down. Just wondering if you could talk a little bit more about the nature of sales, timing issues, the impact of specific projects or customers in terms of affecting timing issues?

Sure. James, is here with me, too. But when we took a look at it, the impairment issue was really related to the sensitivity and discount rates. And we took a look, and I don't want to have to do this quarter after quarter. And so we just -- we took what was provided to us by third parties, and we felt like it was realistic and we just went ahead and finish that off because right now, we're so focused on the chemistry business and how big that's going to be. I don't want major and minors here over the next quarter. So it's like, let's focus on where we're really going to be making money.

At the same time, we've got tremendous amount of upside with some big opportunities in the Data Analytics, sales cycles become a little longer. But we're excited about the use cases, excited about new customers. And with that, I'm going to let James sort of give you some more highlights, but a great business.

I appreciate the question, Mike. I just wanted to reemphasize some of the comments I had earlier on the call. We really are looking to shift from a single use or a single project to more to technology adoption from the customer side. And in doing that, it involves customer conversations at multiple levels as well as engaging in partnerships with other service providers in order to be able to provide a bundled solution to them as well. So those are things we're looking forward to talk more about as we get those in play later in the year.

The next question is a follow-up from Jeff Robertson of Water Tower Research.

James, to follow up on Data Analytics, I think you mentioned an international pilot project and moving more to an enterprise type solution for customers. Can you talk about kind of hurdles you need to cross and what -- on those initiatives and what that would mean as far as being able to sell units across that company's platform as opposed to one-off sales?

Sure. I'm happy to discuss that. From the international pilot programs, we are on schedule with those as you're dealing with national oil companies. Schedules can shift from 18 months to 24 months in between initial proposal to when you're finishing those programs, and we're in the middle of that period currently. We view that if we were able to get those successful, which we are expecting to be, we will open up additional markets greater than what we currently have available within North America. And so we're excited to get those up and running and showing value, and we'll be happy to talk about that more as we have something to say.

And is part of the goal trying to get a corporate adoption of the JP3 systems as opposed to, let's say, 1 manager and 1 plant? So corporate accepts it and deploys it across a much broader asset base?

Yes. I think what James was trying to explain is we're looking more to be a platform than to be a device. And so in trying to pursue that, we've actually been working with a couple of, what I'll call, dashboard or process engineering companies as to how we plug our sensor into their processes. I think you'll see us pursuing that as we go forward in the next quarter or so because that supports how it needs to work in a national oil company. They don't really need a device. They need a platform that supports business decision. So we're elevating it from a device sale to a business decision support device. It's not just a sensor, and that's where James is taking. And I'm quite excited about it, and we look forward to talking about that more as we go forward.

With that, I think that's probably the end of the time we have questions this morning, and I just want to thank everybody for joining us. Please go back and review the call from March 10 that covered the ProFrac contract.

Please get on -- get in there and vote in favor of this proxy. We're excited about working with them. And I think you're going to begin to see the impacts, particularly in Q3 and Q4, but you'll see the ramp-up and how exciting this is going to be for us going out for the next decade. And you're going to have a company that really has an annuity in terms of revenue that we can count on and that we're going to build our cost structure around so we could provide positive results. So thanks, guys. I really appreciate it. Take care.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.