Helmerich and Payne Inc (HP) 2006 Q3 法說會逐字稿

[OPERATOR INSTRUCTIONS] I'll turn the call over to Mr. Doug Fears, Vice President and CFO of Helmerich & Payne. Go ahead, please..

Thank you, and good morning, everyone. Welcome to Helmerich & Payne's conference call and webcast to discuss the Company's third quarter earnings. With us today to provide statements and answers to questions are Hans Helmerich, President and CEO; John Lindsay and Alan Orr, both Executive Vice President's of the Company's wholly owned subsidiary, Helmerich & Payne, International Billing Company; and Juan Pablo Tardio, Manager of Investor Relations. As always, there will be forward-looking statements and estimates made today. We will be rounding some numbers in hopes of adding clarity and brevity to our comments. We will attempt to be as accurate as possible with our comments and information we provide. But it is important for you to know that much of the information provided involves risks and uncertainties that could significantly impact expected results. There is further discussion about these risks and uncertainties in our public filings, the most recent which is 10-K filed December 13, 2005. You may obtain this filing along with a copy of today's press release on our website.

This morning, Helmerich & Payne reported net income 79,775,000, or $0.75 per diluted share from operating revenues of 319,796,000 for its third quarter ended June 30, 2006. This compares with net income of 29,825,000 or $0.28 per diluted share from operating revenues of 207,387,000 during last year's third fiscal quarter ended June 30, '05. Included in net income were gains from the sale of portfolio securities and drilling equipment of $0.06 per share for the third quarter of this year and $0.01 for the third quarter of last year. For the nine months ended June 30, '06, the Company reported net income of a little over 195 million or $1.84 per diluted share from revenues of approximately 866 million. That compares with income, net income of over 91 million, or $0.88 per share from operating revenues of $567,516,000 during the 9 months ended June 30, of '05.

In those net income numbers were gains from the sales of portfolio securities and drilling equipment up $0.11 for the first nine months of fiscal '06, and $0.23 for the first nine months of '05. Just before Hans and John make their comments I'd like to touch on a few financial items. First of all, as was the case last quarter, we have a classification in the balance sheet called short-term investments which really represent very liquid investments and for practical purposes should be included with 114 million listed as cash balance at June 30. Therefore total liquid cash position should be around 217 million at June 30. Also at June 30, the stock portfolio had a market value of 371 million, currently it is at 350 million or an after tax value of approximately $2.30 per Helmerich & Payne share. Capital expenditures for the June quarter totaled 151 million bringing the nine-month total to 323 million. At this point we're guessing that we'll fall slightly short of our 500 million estimated capital expenditure budget for '06, with the number being closer to about 470 million. We're in the process of working on our budgets for fiscal '07 and we'll provide 2007 capital expenditure estimate at a later date.

John will cover some of the particular operating statistics, such as revenue per day, cost per day, and margins per day in our contract drilling segments. I would like to mention that in our international segment, third quarter numbers included some retroactive billings related to Venezuela. As a result of that, you should not view the international third quarter margin per day of $9,602 as reported as a go forward margin. I would suggest that your number be closer to 82 to 8500 a day for a more normalized number. I would like to now turn the call over to Hans Helmerich, President and CEO. After Hans and John have made their comments we will open the call for questions. Hans.

Thanks, Doug, good morning, everybody. During our last quarter the Company's fleet surpassed the milestone of 100 U.S. land rigs for the first time in our history. Our current new build order book will increase our domestic land rig fleet by 73%. We also saw our average revenue per day exceed $23,500 per day during the quarter, another all time high for the Company. While satisfying for our industry at large kind of the elephant in the room during the quarter has been the concern over soft natural gas prices. This has been a good week, including the 7 Bcf draw announced earlier this morning, but question people have been wrestling with is how will the dramatic drop in gas prices since last winter impact the future direction in day rates and activity levels and, more particular to us, new build opportunities.

Of course, no one knows for sure. Because in the end, it's a function of where gas prices actually go from here and if they pull back again and how long they remain at depressed levels. We've seen what things look like if prices return to a 7 to $10 sweet spot. The concerns have been what happens in a 5 to $6 environment. Most people say nothing changes. But even assuming customers don't uniformly drill through that softer pricing, we think some earlier observations of this cycle bear repeating.

It has been said before this cycle will most likely produce higher highs and higher lows. We've seen the higher lies with leading edge day rates exceeding $30,000 a day. That unprecedented high demand has caused a rising tide that's lifted all boats, all of us have heard stories about operators forced to scramble in order to find an old rig they can drag to the starting line in some cases just in order to save a lease. If lower gas prices do in fact moderate the uptrend, customers will use the opportunity to high grade their contractors and rig assets. In short, they will become more choosey. We believe we're in a strong position when the customer can choose based on drilling efficiency, safety, reliability and lowest overall costs, versus simply rig availability.

In turn, we're expecting any downward pressure on day rate prices will first be mitigated by the self-correcting nature of soft gas prices themselves. Second, by a more recognized segmentation of asset quality in our business today. A segmentation we believe we helped drive. And then, third, by international redeployment opportunities.

Our international segment posted encouraging results and we're pleased to have recently announced expansion into North Africa. John will say some more things about that in just a minute. The larger point is that our business model does not require an ever-ending upward march in day rates. Of course, we'll take the higher highs, but that's where the notion of higher lows in this cycle still benefit us. Ultimately our people's field performance, the world's newest and most innovative fleet and a track record of higher activity levels and premium day rates should continue to service well. And another earlier observation of this cycle is just the fundamental indicators of its longer duration. That's reflected, we believe, in our new build to order book that represented expanded to 66 rigs, all of which as you know are secured by long-term contracts. We cannot remember a time when our customers have had literally years of drilling inventory involving thousands of wells. And today we're still actively entertaining additional new build opportunities.

It begs an interesting question at this point in the market, why are these sophisticated well informed forward-looking buyers or customers not just waiting on the sidelines to see if a possible coming shakeup might free up some available rigs? Of course, some will do that, but more than enough understand the rig food chain and know that the fruit that falls from that old tree is tired and old and not suitable for their future long-term plans. It underscores our own conviction that while the business is still cyclical, we are engaged in a massive retooling effort where the new and improved will displace the same old-same old. And where organizations that combined people who can deliver superior field performance with innovative and productive equipment, will amply reward our shareholders. So with that, I'm going to ask John to make his comments.

Thank you, Hans. Drilling operations, which includes land, offshore and international operating segments, as shown in the segment reporting on the press release reported the fourth consecutive record level of segment operating income this quarter at 119 million as compared to 103.3 million last quarter. The 15.7 million improvement was driven by U.S. land at 10.8 million and international at 4.6 million. The U.S. land rig count and day rates continue to increase and the customer has maintained interest in ordering new FlexRigs, even with the summer gas market concerns and with operators pushing back more firmly on further day rate increases.

Hans mentioned the 66 new FlexRigs previously announced represent a 73% expansion on our December 2005 U.S. land rig fleet, and all have firm three or four-year term contracts. In addition to the continuing strength of the U.S. land market, our international fleet is also demonstrating improving day rates and margins as well as potential for additional FlexRig expansion in other international areas.

Today H&P have 103 land rigs working in the U.S. Our average day rate for all land rigs has increased $475 a day when compared to day rates on 27, April, which was the date of our last webcast. Day rates corresponding to new build FlexRigs that were contracted in 2005, and that are working, or currently being deployed are on average lower than the current spot rates. This factor will be more than offset by the growth and total activity generated by our FlexRig construction program. Approximately 46% of our U.S. land rigs today are on term contracts.

Our international operations have continued to see improving activity in rates. Today, 26 international land rigs are contracted in South America. With 25 of 26 on full operating rate. The 26th rig should begin operations in Venezuela during the first fiscal quarter of 2007. The third quarter experienced pricing improvements for many of the 25 active rigs and we expect to see additional pricing improvements on other remaining rigs in the fourth quarter. One idle rig in Venezuela was recently returned to the U.S. However, it is not anticipated to affect 2006 numbers.

As Hans mentioned and previously announced, a new FlexRig 3 will be mobilized to Tunisia and it should begin operations in the first fiscal quarter of 2007. This is really an opportune time for H&P to display FlexRig performance and technology in the expanding North Africa market and pursue the type of market share growth that FlexRigs have captured in the U.S. Our offshore operations had third quarter activity of 9 of 11 rigs contracted with 8 of 9 on a full operating rate, generating a 4% increase in total segment operating income, compared to the last quarter. Total daily margins were down by $1300, due to expenses related to mobilizing a rig in the third quarter. As previously discussed, Rig 201 is undergoing repairs after Hurricane Katrina and is not expected to contribute to operating income until the first or second fiscal quarter of 2007.

There is some uncertainty in regards to the platform rig activity in the Gulf of Mexico for the fourth fiscal quarter of '06 and the first fiscal quarter of '07. Today we have one rig on warm stack status and one rig that will be stacked for the remainder of the fourth quarter. Two management contracts remained active during the quarter, one in the Gulf of Mexico and the other in California.

We continue to see increasing cost pressures in this dynamic market. I mentioned in the last webcast the quality of our supply chain management system, and our field personnel's efforts to control costs. That effort has produced a reduction in our U.S. land, international and offshore daily maintenance and supply costs by 142, 184, and $95 a day respectively. And that results in a 4% reduction in M&S costs for the fleet. U.S. land rig costs have increased by $539 a day, which is a 5% increase compared to the previous quarter, with the primary driver of the daily increase being labor costs, which were $506 a day or 5%.

Other daily costs increased by 2% or $175 a day. Another ongoing effort that has delivered great value for H&P and our customers is our personnel development center or PDC, which is in our Houston construction facility. We trained over 700 personnel during the 32 new build FlexRig 3 program. To date, we've had over 290 new and experienced H&P personnel go through the PDC, and the results to date have been impressive. We have experienced an 88% retention of the employees of those first 15 FlexRigs. The 32 FlexRig 3s built new from 2002 to 2004 continue to set the industry benchmark in field performance and pricing with an average daily revenue and margin in the third quarter of $25,710, and $15,769 respectively. Today, 12 of the 17 FlexRig 3s contracted on the spot market are working at day rates of $29,000 a day or higher. The first 15 new FlexRigs are commissioned and are either working or mobilizing to their first locations. We have been pleased with the overall start-up performance of the new FlexRig 4s as compared to our experience with the previous three generations of FlexRigs.

Let me talk about a few highlights. The Flex4s working in the Piceance basin in northwestern Colorado have experienced efficiency improvements ranging from 20 to 60% with the overall average being 30% and this is compared to the competitors' conventional rates. 34 of 38 wells drilled to date have been faster than the average competitor well, and 13 of those wells have beaten the field record. We have our first FlexRig4 in the Barnett shale and the early performance has been more than 20% faster than the competitors conventional rigs. With the ongoing performance of the FlexRig3s in Piceance and in the Barnett and now the Flex4 performance records, we believe that both generations of rigs offer additional opportunities for more new build contracts in all of our operating areas.

To deliver best value to our shareholders and customers, we are making every effort to safely drill each well at the lowest possible total cost. The results have been outstanding and very rewarding to H&P field employees and our stake holders and I want to give some examples. Even with all-time high rig counts in our U.S. land operations, the first half of calendar year 2006 was completed with a best ever safety record which is a total recordable estimate rate of 1.62 and this achievement represents 75% better than the industry average. The entire H&P FlexRig fleet completed the first half of 2006 with a safety record of 1.25, and this is 81% better than the industry average. H&P's international operations surpassed 3 million man hours in early July without a lost-time incident, and to date this is the best -- this is the third best accomplishment in H&P's international operation, and this is ongoing.

U.S. offshore operations have worked 76 consecutive days in over 400,000 man hours without an OSHA reportable. We have a substantial investment in our personnel and they are the best people in the business. We're going to do everything we can to protect that investment. Our experience and proven ability to deliver substantial well savings to our customers with new FlexRigs will allow H&P shareholders to take full advantage of this extended up cycle. We're fortunate to have 65 FlexRigs in the field today, and at least an additional 51 new FlexRigs to be delivered over the remainder of 2006 and into 2007. I'll turn the program back to Doug.

Thank you, John. And we would now like to open the call to questions.

[OPERATOR INSTRUCTIONS] And we'll take our first question from the site of Arun Jayaram with Credit Suisse. Go ahead, please.

Good morning. Hans, I wanted to discuss with you your operating leverage internationally, because you had a very good quarter there. I was wondering if you could talk about what percentage of your contracts internationally are fixed or on a term basis? How much of those rigs are drilling for oil versus gas? And maybe just highlight how good do you think margins can get over the next four to six quarters?

Okay. Arun, we'll take a crack at that. I think, first of all, as you know, the international business has been a little slow in materializing, but this last few months we've seen lots of inquiries, improvement, interest, and I think one of the things that we have looked forward to is a chance to get FlexRig technology into international markets. We're seeing more and more interest from our customers, many of which have experienced that in the U.S. to move that into markets where they operate overseas. So I think the general trend is very positive.

To other parts of your question, we don't have term contracts except for like with this Tunisian rig starting off we will, but the other elements of the international fleet is not under term. Almost all of it, I say that, I would say the large majority of it is drilling for oil, instead of gas. I'm trying to think of other -- I think one of the things that we would like to see is a -- and the market has driven or skewed our balance towards U.S. domestic. We've had a higher percentage of international business in the past. We think over the next several years we'll be able to grow the international business. So I think there's lots of opportunity out there. I hope I touched on most of your question.

Okay. Second question, Hans, you're talking about some challenges on the cost front, which is not unexpected. How are you doing from a man hours perspective on the Flex3s and Flex4s relative to expectations? Can you maybe highlight where you're seeing in the cost challenges we're hearing, it may be from some of your third party fabricators, but just maybe trying to understand the magnitude and where you're seeing the increases?

Well, it's something that is receiving lots of our energy now, and it's kind of job number one. Having said that, there are lots and lots of moving parts. You mentioned fabricators, but it's something that we're looking at, the whole supply chain, and every aspect we can. And really the greatest opportunity, and it's also a challenge, is to drive increased productivity, and you reference it whether you measure it by man hour per ton, or dollar per ton, but it's to drive productivity gains throughout the production process. And where we are today, is we've got 15 rigs out. Those have lots of the prototype issues surrounding them, and you're trying to get the first ones out and working well.

Now, we're in the larger part of our production effort and we really expect to see some productivity gain and we're seeing some encouraging things in that effort. So that's the thrust of what we're doing. We don't have a whole lot of more detail to break down, but I think our hope and expectation is to continue, like we did with Flex3. We saw really very rewarding productivity gains as we got into kind of the meat of the production, and that's what we're hoping for now.

Final, last one for Doug is your margins in the U.S. were, 12.9. Doug, as you do bring on the 24 rigs or so in 2006, fiscal 2006, what kind of impact or what kind of margins should we anticipate on those 24 rigs and what will that do to the overall base?

Well, as you -- if you looked at a graph of the margins on all of the 66 rigs, over time you would see margins moving upward over time. And a spot rate being below today's spot rate for the first, I'm going to make a guess with you, probably half of those rigs. I don't know if John has a thought on that. But that would be a guesstimate is that half of those 66 are below the current spot margin.

I think what you also see is that, as we put rigs out, there will be less of a drag from just start-up costs. The more rigs that we have out there, we see a slight drag on start-up costs for these first few and as we get more out there, there will be less of that. So I'm not sure I'm answering your question. I might have forgotten.

No, that is very helpful. Thank you.

We'll next go to the site of Pierre Conner with Capital One.

Hi, Pierre.

John, first on the -- maybe a little bit more on the rig, the FlexRig 3 going to Tunisia, I think yo'd mentioned scheduled to begin operations in the December quarter. Is that correct, first? And then do you want to expand a little bit about what further interest you might have for Flex internationally and why you're seeing, what evidence of any additional interest you have?

The Flex3 will begin operations in the first quarter of 2007.

Okay.

As far as opportunities, I think North Africa is just one of several examples of where we have opportunities. I think we've talked before, the worldwide rig fleet is much like the North American fleet, in that it's an older fleet and it hasn't had a lot of reinvestment. So we expect to see the same types of drilling performance enhancements and rig move enhancements in North Africa and other places that we've seen in North America and consequently we think we're going to see operator demand similar to what we've seen in North America. That is really the opportunity.

John, do you see any specific evidence, are they inquiring now, that you have one already moving over there, up to a higher level of recent phone calls for additional rigs potentially?

We have nothing at a point where we can talk about the details, but we do have a some people obviously involved in international marketing and they are spending a lot of time in various places and getting a lot of interest, lot of inquiries and we're going to be bidding on some things. And I think in some cases, kind of like this particular opportunity, it's not a bid, it's a negotiation. It's kind of a single-source or sole-source type opportunity.

Would you -- I want to -- this I think in an opportunity area, so I just wanted to spend a little time on it. Would you see future opportunities as moving existing, or would this be a component for a subsequent new building program of size? The 5, 6 rig type programs, or all of the above?

I think it's an opportunity to further our new build construction. I wouldn't totally rule out moving an existing rig, but obviously the challenge there is that the North America market is so strong it is kind of hard to think about pulling a rig out and then going through that whole process, but I think it gives us a great opportunity to expand what we're doing with new builds, and I think operators more and more are waking up to the performance that's out there, that we're able to achieve, and they're going to be willing to pay for it.

Sure. And relative to the new building you mentioned, you still have operators interested even in the current gas environment, and so I'm assuming that is referencing potential domestic market new builds if that's the case. Assuming that any additional new builds are still strategy in this 5, 6 type pack, 5, 6 rig type packages, is that the kind of thing you're hearing, is it still in domestic markets?

I think, Pierre, this is Hans, that we have got inquiries on both sides of that.

Okay.

So really the point I was trying to make is we take it as a real encouragement, even in this kind of softer price environment, we've got customers that are taking a long view, they know what they want. They have an experience with the FlexRigs that they like, that they see as a great match with their drilling program. So that was kind of the larger point I was making. But to your question, we're really seeing inquiries on both domestic and international.

Okay. Well, then, Hans, my question to you was much more a higher level, but tell me where, given your view of the cycle, that you are comfortable with what the balance sheet should look like?

Well, we believe we're in a unique position that we've got a place for capital investment and organic growth that has been aggressive. And so we continue to want to feed that and we're going to want to take our portfolio and translate that into operating assets. And depending on the contractual terms and some other conditions, we would be willing to push that harder and look at even some more debt exposure. Pierre, we've talked over the years, we're just a cyclical business. We're never going to have some very aggressive debt exposure, but I guess to your point, we like the fact that our balance sheet has lots of room left and we want to continue going forward to translate that into new build opportunities.

Okay. That's great. Appreciate the perspective. Gentlemen, thanks.

Thank you.

Go ahead.

Are there any other questions?

We'll next go to the site of Mike Drickamer with Morgan Keegan.

Good morning, guys.

Good morning, Mike.

Doug, I think you answered this question. I just want to make sure I understand it here. Half of the 66 FlexRigs are on what you consider margins below current spot rate. Correct?

That was my guesstimate. I don't have a firm number in front of me but I'm just guessing that.

If we looked at the previous quarter here, third quarter, the slowing growth that we saw in the margin during the third quarter is that related to the mix issue of bringing on some of the lower margin FlexRigs and not so much indicative of a broader slowing in the industry?

Yes, there is an effect for lower margin versus spot in that margin growth number, and there is some related to just the start-up expenses that the expenses on the Flex4s were higher on a per-day basis, than the rest of the fleet. So the 371 increase was burdened with that, and so like I said I think we'll see less of an issue as we go forward just on a percentage basis of drag, because of start-up costs. We will, of course, see some because of just the lower margin, as well.

As we go forward and we see, fewer start-up costs, will that be sufficient to offset the impact of the lower margins on the new rig?

I'm not sure, John, do you have a sense for that?

Mike, this is Juan Pablo. Basically what we see going forward is we continue to see, although moderating increasing margins, we expect that those margins on our previously existing fleet will be higher than the margins corresponding to the new builds that are coming on line now. And so as we move forward, those -- the total average combining those two groups will be somewhere in between. And, yes, there will be a tendency for the previously-existing rigs spot average to come down in time.

It will continue to -- the total average we expect will continue to increase regardless.

Okay.

Mike, one other thing to keep in mind. This is John, is that these contracts were negotiated over -- a year ago. The most recent contracts we have, a lot of those rates are more closely resembling spot market prices. But again those rigs aren't going to come into operation until '07, first quarter or second quarter. I guess it would be second quarter of '07.

Year ago you couldn't have forecast rates where they are today.

Right.

On those new-build contracts, am I correct to assume that you can increase the rates pushed to incremental costs, labor, and whatever else?

Yes, labor pass-throughs, maintenance and supply, based on PPI increases, and other types of cost increases, yes, it protects our margin.

What kind of costs can you not push through to the customer?

Oh, I guess -- trying to think.

The type of cost that would be extraordinary, for example, repair of some of our equipment that was not related to general increases in pricing in the industry, in general. That type of cost.

We really don't -- I can't recall us ever seeing that in a large way. Typically the cost increases we're talking about are just what we mentioned.

Okay. John, one last one for you, here. You mentioned your current average day rate up $475 over last conference call. Is there any way to quantify what the impact of that number is related to the new rigs coming into the fleet? And then how much of that 475 is also related to just higher labor costs than they were last quarter?

I want to say the impact is around 250 on the new builds coming on.

Okay.

I think 250 to 500.

Okay.

As far as -- I didn't quite follow your other question about the expenses.

Well, how much of the 475 increase is a pass-through of higher labor costs?

I really don't have a feel for that.

Okay. Have labor costs increased over the past quarter?

You're breaking up a little bit, Mike. He was asking if labor costs increased over the past quarter.

Yes, labor costs have increased over the past quarter and I would expect that we'll continue to see, in this market, as you can imagine, there is quite the competition for the best people, and of course we believe we have the best, and of course we're also attracting additional people. So I would expect that we'll continue to see labor increases as this market continues to move ahead.

Thanks a lot, guys, that's all my questions.

Mike, this is Hans, just to not leave your question with -- without making the point that I believe we conveyed which is there are a lot of moving parts to this. Some of it is based on the entry of Flex4s that in effect provide some drag. There is some cost issues. But I think there is some also dynamic market issues out there. We tend to be the -- well, not tend to be, we are the price leader, we've got a 20% premium in day rates over our peers. We probably encounter the market head winds faster than other folks. So I don't want to -- I don't want to dismiss your question without saying there are all of those elements in this thing going forward.

No, that's fine, Hans. I expected the head winds from the new FlexRigs4s being delivered. I just wanted to make sure there wasn't anything unexpected in there as well.

Fair enough.

Thanks, guys.

We'll take our next question from the site of Stacy Neubold with Pickering Energy.

Good morning, guys.

Hi, Stacy.

I had a question for you on rig delivery timing. We saw slippage during the first half of '06. How many rigs a month are you now able to produce with the productivity gains you're seeing? And when do you expect to hit your 4 rigs a month target rate?

Well, I think this month, you guys correct me, but we're on schedule for five. Next month, Stacy, I think we're going to be at a four-rig production. So in fits and starts we're getting there. I think it was an aggressive, by design, it was an aggressive target when we set it, and we've talked about some of the things that provided challenges there, but I think we're slowly getting to that type of cadence.

Okay. Great. And then on the land rig rate side, you mentioned 46% of your fleet is currently contracted. On the non-new builds, what kind of spot exposure do you think is ideal?

Oh, I think -- you always have a better sense of that in hindsight. Things are going to fall, we would like all of it contracted -- we've liked the -- I think for a long time, John, we had about a third on contract and part of that was we knew that the new build was going to take us slightly over 50%. We don't really have a hard and set formula. I think that we're still long-term bullish on the cycle and I think really we're about where we want to be. If you would strip out the new builds, we're at 38% contracted today. That feels about right.

Okay. Great. And then you mention that one rig had recently lost Venezuela. Is this rig going to be redeployed in the U.S. and timing on that coming back into day rate?

Oh, I think that that rig had not worked in Venezuela in a while and it made sense to us to bring it back. We have got to decide if we're going to sell it or if we're going to redeploy it. If I had to tip my hand right now, I would say that we would look for opportunities to sell it. But we haven't made that determination, yet.

Okay. Great. And then one final question. On retention, I believe I heard this correctly. You mentioned that you're retaining 88% of your people in the first 15 FlexRigs? Can you tell us kind of what your overall retention rate is and how you're able to achieve that 88%, just the new builds and no retractive pay?

Stacy, on the new builds, that 88% references the people that have gone through the PDC that are still on those particular rigs. The overall retention, as far as whether they're still in the Company or working somewhere else is higher than that, I'm just referencing those people that were trained and are continuing to work on the FlexRigs, the new FlexRigs. Overall retention, there is a lot of moving -- a lot of moving parts in that. We've really done probably a better job of tracking and annualized turnover, which has continued to improve based on this market, compared to say in 2001. And that's in the 40, 35, 40% annualized turnover. Retention, I don't have those numbers off the top of my head right now.

Okay. Great. Thanks so much, guys. I'll turn it back over.

Thanks you.

[OPERATOR INSTRUCTIONS] Okay. It would appear at this point we have no further questions, so I'll turn it over to you, Mr. Fears.

Thank you very much for joining us today, have a good day.

That concludes today's audio conference. Thank you for your participation. You may disconnect your lines at any time.