Pason Systems’ (PSYTF) CEO Jon Faber on Q3 2020 Results – Earnings Call Transcript

Ronda Beazley

Pason Systems, Inc. (OTCPK:PSYTF) Q3 2020 Earnings Conference Call November 5, 2020 11:00 AM ET

Company Participants

Jon Faber – President and Chief Executive Officer

Dave Elliott – Chief Financial Officer

Conference Call Participants

Michael Robertson – National Bank Financial

Keith MacKey – RBC Capital Markets

Cole Pereira – Stifel

John Gibson – BMO Capital Markets

Matthew Weekes – Industrial Alliance Securities

Operator

Good morning. My name is Amanda, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the Pason Systems, Inc. Third Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

Thank you. Mr. Faber, you may begin your conference.

Jon Faber

Thank you. Good morning, and welcome to Pason’s third quarter 2020 conference call. I’m joined today in Calgary by Dave Elliott, our Chief Financial Officer. I will start with the highlights of the third quarter, and Dave will provide a more detailed look at our financial performance. I will then close with a brief perspective on the outlook for the industry and for Pason, and we will then take any questions.

Industry conditions in the third quarter of 2020 were the most challenging that Pason has faced in its history. The ongoing global COVID-19 pandemic has had devastating impacts, both from a health and economic perspective. Global oil demand remained below pre-pandemic levels in the third quarter, though it has increased from its lowest points. The North American land drilling rig count declined a further 25% from the second quarter, and international activity also remained well below historical levels. Compared to the prior year, North American activity was down 72%. As a result, consolidated revenue for the third quarter of $23 million was down 68% from the third quarter of 2019.

The company posted an adjusted EBITDA loss of $1 million. It is worth noting that the quarterly adjusted EBITDA loss was similar to that in the second quarter of 2016 despite the fact that the North American land rig count was 35% lower in the third quarter of 2020. This underscores how our competitive position has strengthened over the past four years as well as the adjustments we have made to our fixed cost base in response to lower levels of drilling activity.

Pason recorded a net loss for the period of $3.7 million or $0.04 per share. Capital expenditures in the quarter totaled $807,000, down 80% from the third quarter of 2019. Full year capital expenditures in 2020 are expected to come in below $10 million. And assuming rig counts do not meaningfully increase in 2021, we expect a similar level of capital expenditures next year. Energy Toolbase, our emerging business in the solar and energy storage market, continues to leverage its leading economic modeling and proposal generation software package to generate additional sales of intelligent energy management control systems. We are continuing to invest in providing a common platform for the modeling, control and monitoring of solar and energy storage projects.

Pason’s balance sheet remains strong with $169 million in cash and cash equivalents at the end of the third quarter. And there’s no interest-bearing debt on our balance sheet. In the third quarter, we consolidated our United States and Canadian operations into one North American business unit. Under shared commercial and operational leadership, we are seeing benefits in terms of operating efficiencies and the management of important customer relationships. As a result, beginning in the third quarter, we have started to report the results of our consolidated North American operations, consistent with how we are managing the business. We are also providing better visibility on the results of Energy Toolbase in order to allow investors to better evaluate our progress in this area.

Now I recognize the frustration of the investment community when companies alter their reporting segments or format. We have provided a historical look at our performance under the new reporting segments on our website to assist with this transition.

That said, focusing the management of our organization on the performance of the North American business unit rather than individual regions will drive better business outcomes, financial results and ultimately, returns for investors. Similarly, I expect there will be some investors who are disappointed that we have moved back to reporting revenue per industry day rather than its individual components namely market share and revenue per EDR day. Ultimately, revenue per industry day is more closely correlated with revenue generation than either of its individual components taken in isolation. All businesses constantly have to navigate the balance between market share and customer spending, whether that’s driven by pricing or product adoption. Focusing on the outcome of those trade-offs rather than the individual metrics underlying it, again, drives better outcomes for the business and for investors.

Also, I would note that there has long been significant differences in market share in Canada and the United States. As a result, consolidated North American market share will be volatile based on a proportion of activity in each of those regions and their different degrees of seasonality. There is a meaningful risk that upward or downward movements in that more volatile pattern would be misinterpreted. We will continue to provide commentary about the underlying drivers of revenue per industry day.

With that context, I will now turn the call over to Dave for a more detailed look at the financials.

Dave Elliott

Thank you, Jon. Q3 consolidated results. Pason’s third quarter financial results reflect the drastic downturn in industry activity as a result of the global supply/demand imbalance, resulting in precipitous fall in the active rig count in all of the major markets the company operates in. Consolidated revenue was $23 million in the third quarter of 2020, a decrease of $49 million from the corresponding period in 2019.

Pason posted an adjusted EBITDA loss of $1.1 million compared to positive adjusted EBITDA of $31.5 million in the third quarter of 2019. Capital expenditures of $800,000 were down 80% from the third quarter of 2019. Free cash flow was $4.1 million in the third quarter of 2020 compared to $33.1 million from the corresponding period in 2019. This decrease is due to a $31.7 million reduction in cash from operating activities, partially offset by an 80% reduction in capital expenditures. In the third quarter, Pason recorded a net loss of $3.7 million or $0.04 per share compared to net income of $15.4 million or $0.18 during the third quarter of 2019.

Year-to-date consolidated results. On a year-to-date basis, consolidated revenue totaled $123.9 million, a decrease of 45% from the prior year period. Adjusted EBITDA for the nine-month period was $31.3 million, a 70% decrease compared to 2019. Free cash flow for the nine-month period was $57 million, a 14% decrease compared to 2019 driven by a 27% reduction in cash from operating activities, offset by a 75% reduction in capital expenditures. Net income attributable to Pason for the nine months ended September 30, 2020, was $8.7 million or $0.10 per share, a decrease of 80% from the comparable period in 2019.

I will turn to a review of the financial results of each of our business units. North America, as Jon noted earlier, beginning in the third quarter of 2020 we have combined the legacy Canadian business unit and U.S. business units into the North American business unit to better reflect how our business is managed under our streamlined organizational structure. Industry activity in the North American market decreased 72% in the third quarter over 2020, throughout 2020 over the 2019 comparable period. Pason’s revenue for the North America business unit was $18.3 million, a decrease of 71% from the 2019 comparative period.

Revenue per industry day was $667 during the third quarter of 2020, unchanged from the comparable period in 2019. A decline in product adoption and certain price concessions negatively impacted revenue per industry day as contractors and operators continue to manage drilling costs. These factors were offset by an increase in market share. This increase in market share was primarily due to the type of rigs operating during the quarter as well as customer mix combined with a slight uptick in new customers. Segment gross profit of the North America business unit was $0.8 million compared to $30.5 million in the third quarter of 2019.

International revenue was $3.9 million during the third quarter of 2020, a decrease of 55% from the third quarter of 2019 as activity levels in the company’s international markets experienced same significant reduction in activity witnessed in North America. On a year-to-date basis, revenue was $16.2 million, 42% lower than the comparable period of 2019. A segment gross profit of $0.1 million in the quarter was down from a segment gross profit of $2.9 million in the third quarter of 2019. On a year-to-date basis, the International business unit generated segment gross profit of $1.7 million compared to a $9.3 million segment gross profit during the comparable period of 2019.

Solar and energy storage. Beginning in this quarter, we are reporting the solar and energy storage segment as its own business unit to allow investors to better evaluate our progress in this area. In prior quarters, solar and energy storage was part of the U.S. business unit. Revenue generated by the solar and energy storage business unit was $0.9 million in the third quarter of 2020 compared to $0.1 million during the 2019 comparative period.

Revenue in the third quarter of 2020 reflects revenue generated from Energy Toolbase Software Inc., or ETS, the company formed through the amalgamation of the former Pason Power entity and Energy Toolbase LLC, which was acquired in 2019. The revenue in the third quarter of 2019 was generated only from Pason Power. The solar and energy storage business unit generated a segment gross loss of $0.5 million in the third quarter of 2020 compared to a segment gross loss of $0.3 million during the third quarter of 2019.

Capital allocation and balance sheet. In summary, our financial results for the third quarter were reflective of the challenging conditions, which continue to face our industry. In that context, we continue to carefully manage both our operating and capital cost outlays. Our capital expenditure in the third quarter was $800,000, a decrease of 80% from the third quarter of 2019.

On a year-to-date basis, our capital expenditures were $4.7 million, a 75% decrease from the comparable period last year. We expect to spend up to $10 million on capital expenditures in 2020. Appropriate management of our strong balance sheet remains our top priority through the current difficult economic crisis. As of September 30, 2020, we had positive working capital of $167 million including $169 million of cash and cash equivalents on the balance sheet.

Our Board of Directors have declared a quarterly dividend of $0.05 per share. We expect to face extremely challenging industry conditions over the next few quarters. However, we’re doing so from a position of excellent competitive and financial strength.

I will now turn the call back to Jon for his closing comments and on our outlook.

Jon Faber

Thank you, Dave. While we have been encouraged by the gradual increase in rig counts over the past few weeks, we continue to expect low levels activity to persist through the remainder of the year and for the first half of 2021. The consensus of industry forecast calls for rig activity to double by the end of 2021, but significant uncertainty remains in the near term. Further waves of COVID cases are likely to negatively impact oil demand. Supply uncertainty persists around OPEC compliance with agreed production levels.

In recent weeks, significant M&A transactions have been announced among E&P companies, and we expect the industry to continue to consolidate both through further M&A activity and with companies exiting the market due to financial distress. We expect that as the drilling industry recovers, it will be characterized by a smaller number of companies. And those companies will have a heightened focus on technology initiatives. As a result, we have made the conscious decision to retain critical technology development and service capabilities that will allow Pason to retain our strong competitive position. This decision puts pressure on near-term financial results as it serves to increase our operating leverage. However, history has shown that competitive gaps tend to expand the most and persist the longest based on relative levels of investment through kinds of crisis.

Pason is fortunate that its financial stewardship throughout its history allows us to make appropriate investments through downturns to strengthen our position. We expect to be able to absorb much of the growth in medium-term forecast of industry activity within our existing operating cost structure, while meaningful growth could push capital expenditures above 2020 levels to those more similar to what we spent in 2019. Our strategy remains sound. We continue to see opportunities for growth, both within our core drilling end market as it recovers as well as from our investments in the completion space through a minority investment in intelligent wellhead systems and in the solar and energy storage space through Energy Toolbase.

I have been honored to be part of this great company for the past 6.5 years, and I’m humbled to be asked to lead the organization as its next President and Chief Executive Officer. Surrounded by an exceptional leadership team and hundreds of talented and dedicated Pason employees, I remain confident in our ability to tackle the challenges we encounter and to seize on attractive opportunities as they present themselves. I am grateful for the support of our employees, our customers, our suppliers, our shareholders and our Board whose confidence we all work to earn each and every day.

We recently announced that Celine Boston will be joining us as Pason’s Chief Financial Officer later this month. Before I close off and take questions, I want to take a moment to acknowledge my friend and colleague, Dave Elliott, who is currently serving as our Chief Financial Officer. Dave has been with Pason for 14 years, and I have had the pleasure of partnering with him for almost half of that time. Every great CEO will tell you that one of the keys to success is to have a great CFO. And every great CFO will tell you that one of the keys to success is to have a great VP Finance or Controller. With Dave, I’ve had the good fortune to have had both of those experiences.

Those who know Dave well know there are two sets of numbers he cares deeply about; Pason’s financial results and his golf scores. We share common aspirations with Dave that in the years ahead, Pason’s financial results will continually increase, while his golf scores will continually decrease. While Dave will be with Pason for a number of months yet, this will be his last conference call. And as such, on behalf of all those on this call, I want to extend our best wishes for a healthy and happy retirement to Dave.

And with that, we would now be happy to take any questions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from Michael Robertson [National Bank Financial].

Michael Robertson

Hey, good morning. Jon, Dave, thanks for taking my call.

Jon Faber

Good morning, Mike.

Michael Robertson

A couple of quick points here. The net cash position decreased by a little over $7 million sequentially. Hopefully, we’ve worked our way through the worse of the industry activity level impact of the pandemic at this point. But hypothetically speaking, if there were significant demand ramifications for the second or third wave of COVID-19, how long would you be comfortable maintaining the dividend at current levels of rig count scale to recover the more sustainable levels in the coming quarters?

Jon Faber

Thanks, Mike. Good question. You’ll recall when we talked about reducing the dividend earlier, we talked about the notion that we had taken sort of a medium-term forecast of how we thought the drilling industry may shape up. And we had really signed both the cost structure and the dividend to that sort of an environment. And then sort of did a look at how much cash we thought we might consume on our way towards that medium term.

And so I guess what I would tell you is a couple of things is, number one, our medium-term forecast hasn’t changed. We’re still very confident that, that’s what the world ultimately looks like. And while we recognize that there’s a variety of scenarios that can play out here in the shorter term, we’re quite comfortable with the dividend, the level we size it in any of those scenarios.

Michael Robertson

Got it. Got it. It’s good color. Thank you. You also noted an increase in market share, offsetting revenue per EDR day during the quarter. Are there particular regions or basins that stand out in terms of where you want to increasing market share? Or is it more widespread? And is it driven more by business with new clients or increasing business levels with existing clients?

Jon Faber

So I guess there’s a couple of questions there. If I think about the regions, I would say it’s only regional, and that the activity has become more regional. I don’t think there’s anything unique about specific regions. It’s a mix, quite frankly. We work with existing customers as well as a couple of new client – customers. There’s also, of course, the question around the relative proportion of the market that our customers represent. So I think all three of those actually would have played into the market share side.

Michael Robertson

Got it. All right. Well, thanks for taking my question. And Dave, good luck, chipping away with that handicap.

Dave Elliott

Thanks, Michael.

Jon Faber

Thanks, Michael. Operator, we will take the next question.

Operator

Our next question comes from Keith MacKey [RBC Capital Markets].

Keith MacKey

All right. Good morning. Thanks for taking my questions.

Jon Faber

Good morning, Keith.

Keith MacKey

Just on first one. So the North American rental and services and local admin expense actually did quite well, no doubt reflecting some of the changes you’ve recently made to the business. Just wondering if that $10 million to $11 million is kind of the new baseline where we should expect to jump off from? Or would that kind of would that shift around as revenue changes from Q3 to Q4 and into the latter half of 2021?

Jon Faber

It will shift around a little bit, Keith. The cost structure, as you know, has a significant amount of fixed cost to it. Now that’s not to say there are no variable costs. And so I kind of harken back to a comment I made in the previous downturn. We’re coming off of the bottom, we felt like we could absorb anywhere from $50 million to $100 million of additional revenue at north of 75% incremental adjusted EBITDA margins. And I don’t want to sound like a broken record. I actually feel quite similar in the current environment that we would have very large adjusted EBITDA incremental margins coming on the upswing, but there would be some operating costs that would come back on a variable basis.

Keith MacKey

Got it. Okay. Okay. Makes sense. And just one that kind of caught my eye from a comment you made sort of near the end of your prepared remarks about being prepared for attractive opportunities as they may present themselves. Do you foresee that being more organic? Or would you look at this point in the cycle to augment your business with some inorganic opportunities as well?

Jon Faber

I think there’s going to be both. And I think we probably feel a little bit better about the potential for inorganic opportunities. There’s nothing we’re looking at today. But I think the one thing we know when the industries shrink significantly is that the universe of things you can look at inorganically isn’t just distressed companies in good environments. It’s actually companies that are very good companies, but they become a little bit maybe subscale based on the size of the industry. And there’s opportunities for us to say, how do we leverage our footprint and our fixed cost base, if you think of it from a financial perspective, to actually absorb some of what those other companies might be doing. And so I think there might be some opportunities, but there’s nothing specifically we’re looking at today.

Keith MacKey

Got it. Okay. Well, that’s it from me. Thanks very much.

Jon Faber

Thanks, Keith.

Operator

And your next question comes from Cole Pereira [Stifel].

Cole Pereira

Hey, good morning, guys.

Jon Faber

Good morning, Cole.

Cole Pereira

So acknowledging it’s a small piece of the business right now. But just going back to Energy Toolbase, can you kind of share some of the metrics or maybe the strategy that you think about when you think about how to grow that business?

Jon Faber

Yes. So the business, Cole, is a couple of different things, right? We talk about that sort of value chain on how we think about the projects, both from the upfront modeling and proposal generation, and that’s what the software package that Energy Toolbase would have created and that we would have acquired. You have a control system that controls the energy storage devices, largely batteries, in a production environment, right? And that’s what Pason Power was largely working on. And then there’s a monitoring aspect once you have this system in place to keep track of how the system is doing, right? So the historical revenue and much of what you see is revenue today is really still the subscription business related to that modeling and proposal generation tool.

So when you talk about what are the paths for revenue growth from here, part of it is continued feature development and customer base than within that proposal tool and modeling tool. There’s another piece there that we’ve started to see some traction on in terms of motivating the sale of control systems. So through using that modeling tool as an upfront channel, if you will. And then there’s the monitoring service that ultimately we think is available, too.

So we kind of see three different revenue areas, right? The continued growth, either through future development or customer-based expansion within the proposal tool. They continued sale and increased functionality and by essential price of the control system, and then the provision of monitoring tools and services as well. So now all of that is not going to be a 2021 event, but that’s the path that we see if you talk about growth in the revenue side.

Cole Pereira

Got it. Thanks. That’s a helpful color. So I think the U.S. rig count has rebounded here more meaningfully than maybe some expected. Can you just talk about if and how customer conversations have changed over the past few weeks?

Jon Faber

So clearly, we’re seeing more activity, right? So we are having more conversations around installs. Now I think the general feeling that the first half of 2021 is likely still to remain fairly depressed relative to how we would have seen the world pre pandemic is a widely held view, right? So I think we’re all very happy that things have gotten a little better than we expected. And quite candidly, Cole, things never got as worse as we thought they might, right? So we feel good on both of those sides. But I don’t think our excitement is quite that we’re past this, and we’re moving on. I think we expect we’re probably going to go sideways here in terms of activity for a little while before it starts to pick up in the second half of next year.

Cole Pereira

Got you. Got you. And as well, so gas economics are obviously a lot better, but we haven’t really seen a ton of additions there in the U.S. Any color you’re willing to share on if you see some opportunities there in the near term? Or how you think that may play out?

Jon Faber

I guess what I would say as it relates to gas is that has always been a source of drilling activity that we see as underpinning some base level of activity, right? So we feel good about the prospects. And we’ve typically done very well in gas-oriented basins. Now that’s been more a question of where they’re located as opposed to the commodity that comes out of them. So that would be on balance and net positive for Pason if gas activity was to continue to strengthen.

Cole Pereira

Got it. That’s all from me. I’ll turn it back. Thanks, guys, and congrats Dave.

Dave Elliott

Thanks, Cole.

Jon Faber

Thanks, Cole.

Cole Pereira

Congrats on retirement, Dave.

Operator

[Operator Instructions] Your next question comes from John Gibson [BMO Capital Markets].

John Gibson

Good morning. Thanks for taking my questions.

Jon Faber

David?

John Gibson

Pardon me?

Jon Faber

I said, no problem, John. Thanks for joining us.

John Gibson

Not sure what that was there before I joined, but anyways, how are you prioritizing free cash flow and your large cash bonds going forward, just regarding potential dividend payments, share buybacks and maybe further growth in your solar platform?

Jon Faber

Yes. So again, we talked about capital allocation around when we thought about the dividend, I’ll sort of reiterate a lot of those comments. First of all, of course, with a much, much smaller industry, free cash flow will likely be lower for the foreseeable period of time, which informed a lower dividend. But we also then brought the dividend to a point where we felt it would be a lower percentage of free cash flow generation to allow ourselves a little bit more flexibility in terms of how we think about allocating capital to sources or uses other than the dividend, right?

So the earlier comment or question, on the inorganic side – I think there’s actually two areas where there could be inorganic opportunities, John, right? I think the current environment in the oil and gas complex may create opportunities wouldn’t have existed in a larger environment based on attractive companies being subscale. So that could be very interesting. And we have also said, if we see the opportunity to bolster either the markets we serve, the size of the customer base or the technology and services we offer in that solar space, that’s something we would look to do should opportunities show up there.

Now as you can appreciate, prices in that area have gone up a lot of late. So the other place we could do something resembling M&A, of course, is buying your own stock through repurchases. And I think we always look at the repurchases as a more flexible mechanism for return of capital to shareholders than the regular dividend, which is sort of a fixed amount of return to shareholders. And so I think we’ll continue to allocate between those two, but probably with a little bit more preference than historically on the buyback side to allow more of that flexibility around capital allocation.

John Gibson

Okay. Great. That’s fair. Second one for me. Just – this is more of a high level one, if you look out sort of five years down the road, how do you envision Pason’s revenue split between your core oil and gas offerings and maybe other alternative business such as your solar platform?

Jon Faber

Well, I hope it will be higher in all areas. Right now what exactly will look like is very hard to forecast when you say – particularly in the core business, what it could have looked like five years from now, right? We have talked about fairly openly a medium-term view that something that looks like 500 to 600 rigs in the U.S., 100 or so rigs in Canada and continued growth on the international side. And so I think all of that would inform higher revenue into the core business.

We’re clearly very excited about the opportunities in the solar and energy storage space as we think across the different areas of revenue growth that I would have talked about before. But it’s starting from a much, much smaller space than the core business, right? So I don’t know that it’s – it’s hard to know how exactly that will play out because the nascent industry today, right? But it’s hard to see that it’s going to overwhelm the core business within the next three to five years. Obviously, we’ll be delighted if both grew significantly.

John Gibson

Okay. That’s fair. And then just last one for me. I know you talked a little bit on this in your preamble. Can you just talk – touch a little bit more on recent M&A across North America? And any sort of big move in market share you expect going forward?

Jon Faber

Well, I think the movement towards less companies more focused on technology will be a net positive for Pason in the medium to longer term, right? The – we have been growing our presence and credibility on the technology side with those largest customers over the last few years. And I think those efforts will both continue and will show greater rewards as those larger companies become a larger share of the market.

Right now the other side of that, of course, is that the – navigating the sales process with much larger companies is different, right? And so while we’ve been building that capability over the last couple of years, that’s an area we’re going to have to continue to focus on, right, is how do we continue to sell to and service those customers in addition to delivering the compelling technologies. But it’s going to take all parts to continue to grow market share with a more concentrated set of larger customers.

John Gibson

Okay, great. I appreciate your responses and thanks, I’ll turn it over.

Jon Faber

Thanks, John.

Operator

[Operator Instructions] Next question comes from Matthew Weekes [Industrial Alliance Securities].

Matthew Weekes

Good morning. Thanks for taking my question.

Jon Faber

Good morning, Matthew.

Matthew Weekes

I was wondering – I know you guys don’t look at it this way anymore following the resegmentation, but I was just wondering if you would be able to break apart what market share looks like in Canada versus the U.S. in the quarter?

Jon Faber

So yes, we do look at it that way, but we look at it that way, the same way we look at market share and revenue per day in any region, right? We look at the Permian. We look at the Rockies. We look at east. We look at the west. So I’m not going to get into the specifics of any of the regions on the North American side.

What I would say is that we would feel very good about our competitive position in all of the regions we operate in. Clearly, market share did increase in the quarter. And so that it’s not a question around the – how is the market share doing. The market share is doing very well kind of everywhere. It’s really a question of the – what happens to market share based on the proportion of activity from Canada, in particular, starts to really swing that number. And that’s why we’re saying, look, we’re going to focus on revenue per industry day. That’s what ultimately drives revenue.

Matthew Weekes

Right. Okay. Thanks. I was also wondering, you saw a pretty good increase “quarter on quarter on quarter” terms in the international segment, kind of picking up in those regions a bit quicker than in North America. As we go forward here, are you continuing to see directionally sort of added improvement in the international activity?

Jon Faber

We are. And so international is, of course, a lot of different areas, right? So the biggest growth quarter-over-quarter in Latin or South America would simply be the easing of COVID restrictions, right? It was so slow in the second quarter as a result of COVID, effectively being completely locked down. But the relaxation of some of those restrictions would have driven growth on a quarter-over-quarter basis in South America.

Now the other big region we have is Australia. And there, to the earlier question around gas development, there’s obviously a lot of drilling related to LNG on the Australian side, and there’s been some significant announcements around further projects there, and that will stand to benefit our Australian business. So we feel good about the international markets. Different drivers in different areas, but we would expect to see growth on the international side.

Matthew Weekes

Okay, thank you. I appreciate you answering my questions. And I think that’s it from me, I’ll turn it back.

Jon Faber

Great. Thanks very much.

Operator

And there are no further questions at this time.

Jon Faber

Thank you very much. I want to thank everybody for taking the time to join us this morning. We appreciate your continued interest and support of Pason. And we trust that in the weeks ahead, each of you will stay safe and healthy. We look forward to speaking again after the fourth quarter results. And in the meantime, if you have any further questions, we always welcome your calls. Thank you very much, and have a great day.

Dave Elliott

Have a good day.

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