Team Inc (TISI) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to your second-quarter 2014 Team, Inc. earnings conference call. My name is Kante, and I am your operator for today. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to Mr. Phil Hawk, Chairman and Chief Executive Officer. Please proceed, sir.

Thank you, Kante, and good morning, everyone. Again, it is my pleasure to welcome you to the Team Web conference call. Again, my name is Phil Hawk. I am the Chairman and CEO of Team. Joining me again this morning is Mr. Ted Owen, the Company's Executive Vice President and Chief Financial Officer.

The purpose of today's conference call is to discuss our recently released financial results for the Company's second quarter for fiscal year 2014, with that quarter ending November 30, 2013. As with past calls, our primary objective is to provide our shareholders and potential shareholders with an enhanced understanding of our Company's performance and prospects.

This discussion is intended to supplement our earnings releases, our SEC filings, as well as our annual report. Ted will begin with a review of the financial results. I will follow Ted with a few remarks and observations about our performance and prospects; and then following these remarks, we will take questions from our listeners.

With that introduction, Ted, let me turn it over to you.

Thank you, Phil. First, a word from our lawyers. As usual, I want to remind everyone that any forward-looking information that we discuss today is being provided in accordance with the provisions of the Private Securities Litigation Reform Act of 1995. We have made reasonable efforts to ensure that the information, assumptions, and beliefs upon which this forward-looking information is based are current, reasonable, and complete.

However, variety of factors could cause actual results to differ materially from those anticipated in any forward-looking information. A description of those factors is set forth in the Company's SEC filings.

Accordingly, there can be no assurance that the forward-looking information discussed today will occur or that our objectives will be achieved. And we assume no obligation to publicly update or revise any forward-looking statements made today or any other forward-looking statements made by the Company, whether as a result of new information, future events, or otherwise.

Now for the financial results. Adjusted net income available to shareholders was $0.62 per share in the current-year quarter versus $0.66 in last year's quarter. The adjusted net income for the quarter excludes a $2.1 million pretax accounting gain that is associated with a revaluation of contingent consideration in a business acquisition from a year ago.

On a GAAP basis, which would include the pretax revaluation gain, earnings were $0.68 per share, which represents the highest quarterly earnings in the history of our Company. Revenues were $200 million in the quarter, about the same as in last year's quarter. Operating income, or EBIT, was $21.7 million in the current quarter. Again, that is adjusted.

Now, here is the breakdown of revenue and operating profit by business group. First, revenues. Inspection and heat treating revenues were $109.4 million, about the same as last year's second quarter.

Mechanical service revenues were $71 million, down about $5 million from last year, due primarily to fewer large turnaround projects in the current-year quarter. And finally, Quest revenues were $20 million, up $4.5 million or 29% from last year's second quarter. This reflects, by the way, the first quarter in Quest's history of revenues in excess of $20 million.

Now for adjusted operating income -- again, or EBIT by group -- first, total adjusted EBIT percentage for the quarter was 11%, only slightly less than the very strong second quarter of last year. Inspection and heat treating's adjusted EBIT percentage was 14%. And the mechanical service EBIT percentage was 10%, which was down about 3 percentage points from last year -- again, due primarily to the impact of fewer large projects in the current-year quarter.

Quest EBIT margin was 27% in the current-year quarter, reflecting an 85% growth in EBIT from last year's quarter and the regained momentum that we expected after Quest's slow start to the fiscal year in the first quarter.

Now, with respect to cash flow related items, capital expenditures were $7.4 million in the quarter. And the combination of depreciation and amortization plus noncash compensation charges was $6.6 million in the quarter. So adjusted EBITDA for the quarter was $28.4 million or 14% of revenues, and on a trailing 12-month basis was $75 million.

During the quarter we reacquired 370,000 shares of our common stock for a total expenditure of $13.3 million. And at the end of the quarter our total debt was $92 million, and our cash was $37 million. Therefore, net debt was $55 million, which was about the same as at the end of the first quarter. Our net debt to trailing 12-month EBITDA remained at 0.7 to 1.0.

So with that, Phil, I will turn it back to you.

Thanks, Ted. Now I would like to provide a few additional perspectives on our recent performance and outlook. All financial results referred to in my remarks will be adjusted results that exclude nonroutine items that were described by Ted and are set forth in our financial statements.

Ted shared the overall results with you. Revenues were $200 million, approximately flat with the prior-year quarter. While normally we would not be pleased with flat revenue performance, we are encouraged by this revenue performance because we achieved it without the benefit of the significant and very large project activity of the prior-year period. I will elaborate on that more in a moment.

Adjusted earnings per share was $0.62, slightly down from the record $0.66 per share earned in the corresponding prior-year period. Again, there are encouraging trends here as well, both with Quest and our job margin improvement initiatives in our business groups.

Similar to the discussion of the first-quarter results in our last conference call, I will review and discuss our detailed results in two separate groupings: Quest Integrity Group and then a combined rest-of-Team grouping that includes inspection and heat treating services, mechanical services, and corporate support activities.

As Ted indicated, we are pleased that Quest has bounced back nicely in the second quarter, achieving record performance. Quest quarterly revenues exceeded $20 million level for the first time in its history. The revenue growth reflected significant momentum in both process and pipeline inspection services and engineering assessment services.

Several aspects of Quest's business are noteworthy. First, demand continues to be very strong for Quest integrated integrity and reliability management solutions. We are encouraged both by the breadth and depth of interest across geographies. Pipeline and process piping integrity present multifaceted challenges and are major industry issues. Quest provides a very interesting set of solutions specifically designed to address these challenges for difficult-to-inspect lines.

In this regard, we expect to apply these solutions to an expanding array of customer segments in the near to medium term.

Second, we are pleased with Quest's ability to expand its service delivery capability and capacity. Reaching the $20 million revenue level in this quarter was a significant milestone, reflective of our management's focus on disciplined scaling.

And finally, we are pleased with the attractive operating leverage associated with the Quest business growth. Quest remains on track with its business and performance plans.

Now let me move on to a discussion of the rest of Team's businesses. In the second quarter just completed, the combined revenues for the rest of Team's businesses, excluding Quest, were about $180 million, down about $5 million or 3% from the prior-year quarter.

As I mentioned in my introductory remarks, there was encouraging, positive growth in a number of areas of our business during the quarter. However, all of this growth was offset in this quarter by the $24 million decline in very large project activity versus the prior-year period.

The primary cause of this decline was the very high level of large project activity in the prior year comparable rather than significant revenue weakness in this quarter. As a reminder, we define very large project activity as any customer or project with more than $2 million of revenue in the quarter.

For the second quarter just ended, Team had 2 very large projects versus 9 similarly-sized projects in the corresponding prior-year period. Both the number of very large projects, 9, and the total project revenue from these very large projects, $29 million, achieved in last year's second quarter were significantly higher than this quarter -- as well as, by the way, any other prior quarter for Team.

As a further illustration of this, in the second fiscal quarter two years ago, Team also had just 2 very large projects, similar to this year. The difference versus last year primarily reflects the specific timing of individual projects and turnarounds and not any unfavorable trends in either overall demand or in Team's competitive position in very large projects.

I am pleased that Team was able to offset nearly all of this very large project decline in the quarter with attractive growth in other segments. For example, Team's smaller activity -- smaller project activity, those with revenues less than $500,000 in the quarter, increased by $16 million, or 17% in the quarter.

Inspection services -- again, this excludes Quest -- including both standard and advanced inspection services, increased $7 million or 8% in the quarter. Onstream mechanical services, which includes leak sealing, hot tapping, and fugitive emissions monitoring, increased about $5 million or 13% in the quarter. Not surprisingly, turnaround services declined $16 million or 24%, given the larger project association.

Summarizing all these facts and figures: Team faced a difficult comparison with the prior year due to extremely strong very large project activity in that same prior-year period. Nevertheless, we continue to see attractive growth and progress in many segments. And we remain optimistic about our growth opportunities in the second half of the year.

There are several attractive factors supporting this positive outlook: the continued positive momentum in the inspection and onstream services; the lack of strong prior-year large project comps going forward; and the expectation of project tailwinds in the remainder of the fiscal year -- that's driven by a very active spring turnaround season and a significant number of new projects related to America's new low-cost energy position that will initially take place along the Gulf coast. These new facilities include petrochemical facility expansion, LNG export terminals and related infrastructure, and gas-to-liquids projects.

Now, turning to operating profits and profit margins, adjusted overall profits for the rest of Team business grouping are down nearly $4 million, reflecting, primarily, lower volumes. Overall gross margin was about flat -- about 29% for both the current and prior-year quarters.

Following several quarters of unfavorable gross margin comparisons, I was pleased with our performance (technical difficulty) initiatives. Excluding Quest, SG&A expenses for the rest of Team businesses increased about $1.9 million versus the prior-year quarter, reflecting the impact of acquired businesses as well as our continuing business development initiatives in a number of areas.

As our expected revenue growth returns in the second half of the year, we believe we are well positioned to achieve attractive operating profit leverage, consistent with our performance in past years. As stated in our earnings release yesterday, we are affirming our current guidance of $1.55 to $1.85 per share on an adjusted basis.

We continue to expect full-year revenue in the $765 million to $790 million range. While the holiday period during the third quarter always presents challenges for us, looking forward we see significant project activity levels beginning in mid-January and continuing at least through the end of the fiscal year.

Now, to wrap up, I remain confident about our overall position and longer-term prospects. Of course, we still have to earn all of these opportunities with continued outstanding service and support to our customers. All Team colleagues are focused on that responsibility every day.

That concludes my remarks. Let's now open it for questions.

(Operator Instructions). Matt Duncan, Stephens Inc.

You guys did a very nice job getting the gross margins back up this quarter. And Phil, you touched on this a little bit, but how much of that is -- are you now starting to get the wage rate inflation in the form of price to help offset that wage inflation? How much is that helping versus other actions that you guys have taken?

I think it is a combination of rate improvement that is kind of offsetting some of the wage inflation that we're having, as well as we continue to work hard on utilization levels. So I think it is a combination of both.

Because we are the sum of so many different projects, it's hard to be real precise about that. I can tell you, there's just a lot of focus on margins across our Company. And we are getting some traction in rate adjustments in a number of places.

Okay. Looking at the spring turnaround season, you referenced that you guys see a lot of large projects out there. I'm wondering if maybe, as you sit here projecting the spring season, can you maybe quantify how many projects you are expecting to do that are north of that $2 million mark that you would define as a large project? Just to give us some idea how many big projects are out there for you guys?

I am very humble about projecting anything these days, Matt, with some of the difficulties we have in forecasting. But I would just say, as I mentioned, it is starting earlier.

We have significant manning that will be taking place here within a week or so on a major Gulf Coast project. And if you look at our total expected activity, as I mentioned in my remarks, we expect project activity to continue; or we can identify projects, really, all the way through the end of the fiscal year.

So I think there will be a number of very significant projects there; if not very large, above $2 million, certainly in that next category. So we are -- again, we are going to be cautious about forecasts, but we're pretty excited about the outlook.

If you -- stepping back from this, our day-to-day business, our small project activity, continues and has continued to expand nicely, as it has over, really, the last decade. What we have been challenged with is just the lumpiness of big projects. And I feel like as we go forward from here, we are on the positive side of the curve on that, as we got behind some big comps and see some pretty good tailwinds that will be beneficial.

And Phil, the bigger projects you are seeing for the first half of your fiscal 2015 -- so the back half of the calendar year: are those turnaround driven? Or are we now starting to talk more about some of the petrochem plant expansion projects that are on the horizon?

They are primarily turnaround driven in the spring. I think the other projects are probably fall events, for the most part, is when they start to crank up.

Okay. Thanks for the insights. Appreciate it.

Arnie Ursaner, CJS Securities.

Easy follow-up, starting with Matt. So you had 55 projects in 2012 greater than $500,000; seven large ones over $2 million. In 2013 it was 65 projects greater than $500,000 and two greater than $2 million. What are the same numbers for this year?

You're talking about for the second quarter?

Well, when you -- last year, obviously after you gave your Q2 guidance, things changed fairly rapidly. And you did a bottoms-up review.

Right.

So I'm assuming you have at least a rough similar idea of the number of projects you are looking at.

You mean going forward?

Yes.

I think, honestly -- we do forecast those numbers from our groups. But when you get out more than, frankly, the current quarter, they get very suspect. And frankly, our estimates versus actual have not been very good. So I am reflecting more the tone of what I'm hearing from our managers in our quarterly VP meetings than I am specific forecasts.

Arnie, where you asking about forecasted, or were you asking about the categorization of various buckets for the second quarter?

I think I am looking at the various buckets you have, and again, the quantity. One of the things that should make it a little easier for you guys is the breadth of -- how many increase are you getting. I think you mentioned it was pretty broad.

Yes.

It is. I don't have very meaningful numbers in terms of a forecast as we look at the third and fourth quarter. I have detail on projects by size actual in the second quarter, if that -- I may have misunderstood your question, if that is what you are looking at.

As I mentioned in my remarks, in the very large projects, we had 2 versus 9 last year. As we get into the other sizes, they were fairly comparable, if that is what you are asking. The $1 million to $2 million, they were 15 this year versus 13 last year; $500,000 to $1 million, they were 32 this year versus 40 last year.

And so it is 49 versus 62 in terms of counts above $500,000 -- if that was what you were referring to. And again, as I mentioned, we are bigger on the smaller projects.

I guess what I am trying to figure out is last year, when you guys spoke and had to revise your views, you had 65 projects. And I am trying to equate where we stand now versus that number.

Okay. I think the 65 -- my number here is 62, so we might have misspoke last year, or there might have been some adjustment. We had 62 projects greater than $500,000 in last year's second quarter. The corresponding number is 49 for this year's second quarter, if that is the --.

So what I am trying to get a better feel for is the tone of optimism, given that it at least appears that you have fewer in the backlog.

We have fewer in the actual. That reflects the downturn of our turnaround activity in this just recently completed quarter. As we look forward to next year, if you will, to the second half of the year, for the total second half of the year we have -- above $500,000 we have approximately 100 projects in last year's period. But again, only 6 that were greater than $2 million in a quarter for that six-month period. And we would be expecting more than that, probably significantly more than that, in the upcoming six months.

Perfect. The other question I have is you normally at this time of year have a fairly broad range of guidance, driven by two factors. One would be when you expect activity to start, and then the other real important factor that impacts you is the amount of work you will have at the end of your fiscal year when you come to May.

Yet it sounds like your tone is you are going to start a fair amount of work in mid-January, which sometimes is earlier than normal. It also sounds like you have quite a bit of work that will continue post-May, particularly if you have more, like, petrochemical work. Why wouldn't that lead you to be at the higher end of your guidance?

Have you been paying attention the last few quarters, Arnie? I'm being facetious, of course.

I think we are optimistic. But I think until we start actually delivering on that optimism or the positive view that we see, I think it is prudent to maintain our current guidance.

See you next week at our conference. Thanks.

Tahira Afzal, KeyBanc Capital Markets.

This is Saagar Parikh on for Tahira. Congratulations on a good quarter.

First off, looking at your request business, on your prior call you had mentioned that for fiscal 2014 you are looking at something around $70 million revenue for Quest and $11.5 million in operating profit. If we take the fiscal second-quarter results and look at it on a go-forward run rate, you would be on track to meet the top-line forecast, but you would be much over on the profit guidance. So could you just give us some additional insight on the different puts and takes, including your confidence and worries that you might have around meeting the targets for Quest?

I think, as I mentioned, we are confident about Quest business, and its performance, and its trajectory. I think just timing of investments and expenditures and all that, again, caused us not to want to continually tweak estimates for areas. So we continue to be comfortable with the overall guidance we gave for Quest, which you correctly related as $70 million and $11.5 million in operating profit.

And then a follow-on -- as I said, you guys had a commendable fiscal 2Q performance, given the sharp declines and the turnaround work in the large projects. And along with that you had a big uptick in Quest performance. So quarter over quarter, should we expect a less-seasonal dip for Team from fiscal second to fiscal third versus what you have normally seen?

As I mentioned, I think the challenge of the third quarter -- it's always the weakest quarter, and we would expect that to be the case this year, as well. We are hopeful that the earlier start to high activity or project activity will be helpful and constructive for the quarter.

I think if you look at our total revenues for the second half of the year for the -- exclude Quest now for a moment; we're looking at revenues that would be for the rest of Team: up 11% versus the prior year and probably sequentially up about 5% from the first half of the year. So we are, again, pretty positive and constructive about the rest of the year.

But again, just to reiterate the point relative to the third quarter -- will still be the weakest quarter of the year. That is true every year. It will be true this year.

We have a resetting of benefit costs on January 1, which falls into kind of the middle of our third quarter. So new costs plus the seasonal downtime of Christmas, New Year's. All of those things portend a much weaker third quarter than any other quarter of the year.

Great. And then one last question on weather. In December weather was -- the weather temperatures were down, colder, 16% or so year over year. And as everyone knows, temperatures in the beginning part of January have been very cold. Is there any impact on your business from that, negative or positive?

For the length of time we're talking about, I think it is about a push. Obviously, it disrupts activities at the very time of the extreme cold and hazardous conditions, but that is generally -- the work that we have to do doesn't go away. So we have to make that up in the subsequent days and weeks. I don't think there's a big impact to it is what I would say.

All right. Thank you. And congratulations again on a good quarter.

Adam Thalhimer, BB&T Capital Markets.

Nice quarter. I wanted to ask you: you seem bullish about the new construction that is coming along the Gulf Coast. Can you talk for a little bit about how and when you think Team benefits from that?

Well, I think what we have -- and I think the first projects will be starting summer to fall, as we have just a whole lot of new facilities that are going to be constructed. What it reminds us of is, frankly, the reconstruction related to Katrina. And that was destruction, so it was a rebuild of existing facilities; so it was different, obviously, than new facilities.

But the scramble for resources is going to be very, very significant, and the scramble for the trades and the general construction. So we think just a tight demand environment.

Plus, we will do -- all of our turnaround activities are needed for new construction. So we will have inspection, field machining, heat treating, all those activities associated with that where we participate in some of those projects. But just more generally, we're just going to have a tone of tightness and scarcity, which we think is bullish for our business.

And then when I say that to investors, the one pushback I get is: well, how is Team going to keep their people if things are so tight? How does that work?

We're going to meet the competitive environment and have -- maintain our wages. Much the same way we did in Katrina. So it is a -- and we have the advantage of a business, where, again, it is inherently local. So no competitor can have a fundamental cost or wage advantage versus Team, or vice versa. And if we keep our focus on -- if we are a good place to work and keep our focus on market levels, we are highly confident that we can maintain our staffs.

And when some of the early -- the plants that you see starting in the early phase of this, the summer or fall of this year, when would those be operational?

I don't know. I think they are probably a couple year projects, some of them.

Okay.

Just broadly, I think it is really unbelievably positive for America. It is the beginning of a manufacturing renaissance, I think, in some respects.

I wanted to ask about the spring turnaround season. We had seen some press that it was supposed to be very strong along the Gulf, but then not as strong in the Mid-Continent. But you seem pretty bullish about the spring turnaround season. So is that -- you just have more exposure to the Gulf and less exposure to the Midwest? Or you would disagree with that?

I don't know that I have -- that I have tallied it in every single region or made note of the tallies, but I think there's some general strength across all of our markets. It is for sure strong in the Gulf Coast, but I think it is not just the Gulf Coast, would be my observation.

And then again, what is driving that is really just lumpiness, timing?

We think so.

Okay. And then two last questions: one, Canada -- is that improving at all? It looks like some large projects are finally starting to move forward up there.

Yes, a little bit. If you look at our -- the turnaround activity declined in the quarter. Obviously, it was significant. About half of that was in Canada. Again, because we had very big stuff going on last year.

We have some project work up there, and we are encouraged by our position there and some of the opportunities we have. Again, I just hesitate to -- our planning premise is not that we go back to the boom era of not only last year, but if you go back to the real boom time of the expansion with the upgrader projects, I think that is still going to be fairly limited.

Okay. And then lastly, I just wanted to ask about the buyback. I would assume you were, maybe, fairly active with the program when the stock was in the mid $30s, but less active with the stock in the low $40s. Is that fair?

That is correct.

Okay. Thanks again.

(Operator Instructions). Tristan Richardson, D.A. Davidson.

Just curious. With the strength that you guys saw in the Quest business, or the rebound from the previous quarter -- and Phil, you talked a little bit about pipeline integrity work -- do you see that continuing going forward, that strength in the pipeline work? And do you see that changing as a percentage of your business? Do you expect to see more pipeline work in your overall portfolio over the next couple of years?

Yes is the short answer. Within Quest, again, we are doing pipeline work both within Quest but also within the other, particularly, inspection and heat treating services activity as well.

Within Quest, they are on the leading edge of a lot of the new techniques and in-depth analysis and understanding of just condition assessment. High-profile failures, both within plants but also in pipelines, create a greater urgency and focus on this issue.

So we expect continued growth in Quest's presence in that market. And as I mentioned, not only traditional applications, but we see new segments where these techniques and technologies are going to be applied. Nuclear power is one of them that we expect to be in the fairly near term, but expanding offshore; and other plant piping system applications are also segments that are being developed and working with customers on solutions in some of those areas. Again, expanding the served market.

Now, within Team, if you look at the other two service groups of Team, our legacy and history is that we are more plant-centric. So we have a greater mix of plant work than pipeline work. Yet again, there is a tremendous amount of opportunity in the pipeline world. And we are extending our capabilities there, so -- both in inspection of existing, and -- well, we have traditionally been limited to inspection of new -- activities related to new pipeline construction. We are developing some techniques sometimes in concert with Quest, but not always, with regard to pipeline inspection activities or pipeline integrity management activities associated with these existing pipeline activities.

And we are extending a lot of our onstream services, hot tapping in particular, and some of the line intervention activities. We're building our capabilities and extending our presence in the pipeline world and those services, as well.

And the list of customers in that market is a little bit different. Do you guys see the same on the competition side? Is it the same players -- sort of plant focused versus pipeline focused? Or are you going up against different competitors and run into different ways to market yourself as far as reputation in the market, et cetera?

I think we start from different points of historical presence. So our relative market strength is different. Even within plant it is different by region and area. So it would be different in pipelines than it is in plants -- we're weaker, historically, so we don't have the same presence. But we think the technologies apply. We think there is really -- we're getting a lot of receptivity to our presence in the market. And we are encouraged that we can continue to grow and expand our position.

Great. Thanks, Phil. And you hit on the major theme that we have been hearing for a while now about the Gulf Coast and really the theme of tight demand for resources, labor, et cetera. You talked a little bit about how you are seeing some rate improvements on some of your projects.

Will rate improvement be a big theme going forward for Team? And is that an active initiative that you guys are pursuing, or is it more just a natural progression as the cycle plays out?

Well, I think what we think about rate improvement -- it's not getting ahead of where we have been vis-a-vis our customers; it is maintaining our position and maintaining our margins is the way we think about it. And if you are in an inflationary environment, and I think we are because of these demand issues that you referenced, that you have to -- our processes have to be focused on regular price adjustments or rate adjustments to reflect, if you will, the regular or ongoing pressures or cost increases that are incurring in our labor force. So those are the habits we have to build back into our organization.

By the way, it was exactly that case in the Katrina time frame. We had a lot of the same issues, and we had to address them the same way.

What we had in the interim, though, was a period of fairly modest demand or labor demand pressure. So we had correspondingly modest adjustments and infrequent adjustments with our customers. So it is just building our habits again to stay up.

Great. Thanks, Phil. And just one last one. Maybe, Ted, could you talk a little bit about the noncash gain? Was that (technical difficulty) didn't expect?

Yes, we had a -- it was associated with the TCI acquisition of a year ago that, you will recall, is the above-ground storage tank inspection company. We had a contingent consideration earnout based on the achievement of certain performance levels within the first year after acquisition, so that on the day of acquisition, that future consideration was valued pursuant to some sort of arcane accounting rules. And then it was revalued after the first year, and that simply resulted in a reduction in the valuation of that consideration.

And because of just very arcane accounting rules, rather than adjusting goodwill, for instance -- which most people would probably think that is what you would do; since that is where you put it in the first place, you would adjust that -- that is not the accounting rule. It's more of a fair value accounting concept.

And so the change in value goes to the P&L, whether it be a gain or a loss, by the way. So it wouldn't have -- either way. And so it is one of those almost inexplicable accounting nuances that results in a gain. But it really doesn't change our view of -- it has nothing to do with our view of the intrinsic value of the transaction or how the transaction is doing. It's doing just fine. It just so happens the accounting rules resulted in the recognition of a noncash gain.

Okay, that's helpful. Well, thank you guys very much. Appreciate it.

Thank you for your question. As there are no further questions, I would like to turn the call over to Mr. Hawk for closing remarks. Please proceed.

Thank you, Kante. And I would like to thank everyone for your participation in this call this morning and your continuing interest in Team. We look forward to updating you on our progress during our third-quarter conference call in early April. In the meantime, everyone, have a good day.

Thank you for your participation in today's conference call. This concludes your presentation. You may now disconnect. Have a good day. Thank you.