Greetings, and welcome to the ProFrac Holding Corp. 2023 Year-End and Fourth Quarter Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Messina. Thank you, Mr. Messina, you may begin.

Thank you, operator. Good morning, everyone. We appreciate you joining us for ProFrac Holding Corp.'s conference call and webcast to review our fourth quarter and 2023 year-end results. With me today are Matt Wilks, Executive Chairman; Ladd Wilks, Chief Executive Officer; Lance Turner, Chief Financial Officer; and Matt Zinn, CEO of the Proppant Business. Following my remarks, management will provide high-level commentary on the financial highlights of the fourth quarter and full year 2023, as well as the business outlook before opening the call up to your questions. There will be a replay of today's call available by webcast on the company's website at pfholdingscorp.com as well as the telephonic recording available until March 20, 2024. More information on how to access these replay features is included in the company's earnings release. Please note that information reported on this call speaks only as of today, March 13, 2024. And therefore, you are advised that any time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. Also, comments on this call may contain forward-looking statements within the meaning of the United States federal securities laws, including management's expectations of future financial and business performance. These forward-looking statements reflect the current views of ProFrac management and are not guarantees of future performance. Various risks, uncertainties and contingencies could cause actual results, performance or achievements to differ materially from those expressed in management's forward-looking statements. The listener or reader is encouraged to read ProFrac's Form 10-K and other filings with the Securities and Exchange Commission, which can be found at sec.gov or on the company's Investor Relations website section under the SEC Filings tab to understand those risks, uncertainties and contingencies. The comments today also include certain non-GAAP financial measures as well as other adjusted figures to exclude the contribution of Flotek. Additional details and reconciliations to the most directly comparable consolidated and GAAP financial measures are included in the quarterly earnings press release, which can be found on the company's website. And now, I would like to turn the call over to ProFrac's Executive Chairman, Mr. Matt Wilks.

Thanks, Michael, and good morning, everyone. After my prepared remarks, Ladd and Matt Zinn will take a deeper dive into the performance of our subsidiaries, and Lance will provide additional insight into our financial performance. While fourth quarter results were challenged, we continue to take strategic actions to better position ProFrac for growth in 2024, and we are already seeing improved results in the first quarter. Despite the industry headwinds that persisted in the second half of 2023, we meaningfully grew free cash flow for the year to $293 million, an increase of 173% over 2022. This substantial cash flow generation demonstrates the earnings capabilities of our vertically integrated operating structure and the resiliency and differentiation of our services in the face of market softness. We were hindered a bit in 2023 by our exposure to the spot market and our strategy to hold prices steady when activity flattened, but we have adjusted and now entered 2024 with positive momentum. I'd also like to highlight that in 2023, we grew our asset base and improved our capital structure, a strategy that we believe will pay dividends for years to come. We completed the acquisition of REV Energy Holdings and producer services holdings, which added frac fleets and expanded ProFrac's geographic footprint to include the Rockies and Bakken. We also completed the acquisition of Performance Profits, which demonstrated our commitment to the Haynesville, greatly enhanced our vertical integration strategy and made ProFrac the largest provider of in-basin sand in North America with a multi-basin footprint. Then, in October, we announced our intent to maximize the full value of our profit production segment, which operates through the wholly owned subsidiary, Alpine Silica, and confidentially filed a registration statement on Form S-1 with the SEC. Finally, in December, we refinanced our senior secured term loan through two new financings, which will both mature in January of 2029. This recapitalization provides a bifurcated capital structure to allow for future optionality designed to realize the full value potential of the profit segment as well as enhance ProFrac's overall financial flexibility. The common theme of all these achievements and strategic initiatives is that they demonstrate how highly motivated we are to enhance ProFrac's position as a leader in the oilfield services industry. And these items were executed with a very targeted approach. We will remain steadfast in our pursuit of enhancing value and strive to navigate the market accordingly with the end goal of being the industry's best of breed. Moving forward, I am pleased to report on the transformative progress we are making as well as the improving visibility we see approaching in the current market. We remain hyper-focused on the operational performance that we have discussed over the past few quarters, which includes vertical integration, benefits of scale, enhancing utilization, and cost control across all of our subsidiaries. In addition, today, we are working even more closely with each customer to ensure strong working relationships, providing valued solutions, and maintaining long-lasting partnerships. We are constantly evaluating all of our efforts in evolving these key priorities in 2024. Before I get to that, however, I do want to comment on the challenges of 2023, both externally and internally. As the market flattened out, our position of holding the line on price caused us to miss out on the large efficiency gains experienced throughout the industry. This, combined with the ongoing integration led to lower market share as we reduced costs to accommodate. This was a mistake. We fully appreciate the negative impact this had on our financial performance in the back half of the year. We are committed to correcting that in 2024 and getting back to our foundation. The foundation we were built on, which is maximizing vertical integration and high asset utilization to restore our per-unit operating costs to the lowest in the industry. Prior to 2023, we were a profit leader in our industry. When comparing our metrics, we surpassed the overall peer group each year. In 2020, we were one of the few that had positive EBITDA. In 2022, we were the first in our peer group to reach record-level profitability metrics. ProFrac expects to outperform in 2024 and gain market share, regardless of whether activity rises, falls, or remains at constant levels. To achieve our goals, we are focused on three primary things: First, our customers. What we do best is pump. We always have and always will. This year, we are doubling down on our efforts to ensure the entire team is focused on providing tailored solutions for the customer. Partnering with the customer to achieve long-term results and generate long-term value with constant improvement is our value proposition. This also means that we are partnering with the right customers that set us up for success to also achieve our next goal, utilization. We have expanded our targets for the benefits of utilization across the entire organization. Today, our utilization focus is not only on total fleet count and how many fleets are deployed, but also on the efficiency of active fleets and how many hours they were able to complete. We want to improve utilization of labor hours, the utilization of our manufacturing facilities, our sand mine, as well as every single asset and team at ProFrac. We are measuring it all, and we plan to improve at each and every level. This is taking one of our foundational building blocks and ingraining it across the entire organization. We have 45 high-quality fleets. We are not satisfied until they are all pumping stages. Finally, our focus will continue to be on cost. We believe that we have the lowest operating costs in the industry, and we are going to keep it that way. In addition, if there is a strong value proposition to improve our capabilities, our utilization, or our customer offering, we are prepared to deploy capital to meet that need. However, we are going to ensure that we remain lean and effective. With these priorities front and center for all of our teams, we expect our business to lead the industry. As we grew through acquisitions, we scaled up our stimulation segment. We have adapted with a multipronged strategy suited for all customer types and have built a more dedicated business model to deliver full-cycle resiliency. This year, we expect to generate a significant amount of cash that will be focused on the balance sheet, and we intend to delever to a point that will put us in a position to talk about returning cash to shareholders. Our focus in 2022 and 2023 was to build the business that we have today, exploit the cash generation capability of that business, and pass these rewards on to our shareholders. We will continue to execute upon our strategic goals and maintain focus on our key priorities, to create long-term value for our stakeholders and provide best-in-class services to our customers. We believe we are well-positioned in 2024 for profitable growth. With that, I'll turn the call over to Ladd.

Thank you, Matt. I want to start by thanking our amazing team for their hard work, dedication, and commitment to safety. We're extremely proud of the reputation that our people have built with our customers. This is a direct result of an extreme focus on the customer experience and the strong culture throughout our entire organization to make customer service our number one priority. We also recognize that the team is vital in order for us to accomplish our three priorities in 2024. Now diving into our 2023 results, I'd like to give a state of the union for PF Holdings. On the Pressure Pumping side, we have activated 10 fleets as we focused on utilization and a dedicated customer base. We believe our profitability per spread should revert to the $20 million to $25 million level, in line with expectations for our peers and exclusive of profit generated by the Proppant Segment. Our focus on utilization is shining through. Starting in late Q2 2023, our white space in our frac calendar reached unsustainable levels and our pumping hours per active fleet dropped. In 2024, we plan to improve utilization by at least 30%. While we did see some lost time in January, primarily due to weather, I'm happy to share that January was a stellar start to the year. And in the month of February, we achieved a pumping efficiency that was 20% higher than what we averaged in Q2 and Q3 of last year. And we think there is room to grow that figure as we continue to align with dedicated high-efficiency customers that have strong backlog of work. Now that our recent acquisitions have been fully integrated into the ProFrac umbrella, we have refocused on our core pumping stages and selling sand. In addition, our leadership teams have been spending a lot of time on location with our operations teams across the organization, instilling a laser-like focus on our strategic initiatives so that all segments are aligned in our shared goals. This has already led to quicker decision-making, more direct allocation of capital, and improved customer service across our business lines, and we continue to improve on those fronts. Additionally, we continue gearing up and preparing fleets for reactivation this year to accommodate anticipated customer demand. We remain focused on dedicated agreements with operators at favorable prices. Current pricing levels are constructive, especially when coupled with higher utilization and optimal cost structure. We're targeting approximately 80% of our fleet to be working for customers with larger programs on a dedicated basis. We also continued to maintain a strong presence and reputation with the customers in the gas-heavy areas, which we believe will pay dividends in the future. Moving forward, we continue to believe we are well-positioned to be the preferred Pressure Pumping and profit provider for large multi-basin operators. These operators require service providers with equivalent scale that can provide custody over the supply chain of materials. This is exactly what we were built for at ProFrac. On the Proppant side, we have made a lot of progress on diversifying our customer base, and we think we are poised to see the increased utilization that we have discussed. Entering 2024, we made organizational changes that support our strategic initiatives for enhancing growth, and we are very excited to welcome Matt Zinn and Rick Reynolds to our Proppant business. Matt has over 18 years of industry experience driving results and will lead the Proppant business as CEO. Rick Reynolds is COO and joined us with the Performance acquisition. Rick has over 35 years of mining experience, driving operational improvements and peak utilization. We have the utmost confidence in Matt and Rick, and both have already provided critical value to the business in the RFP and budgeting season, setting Alpine up for major success in 2024. Today, I've invited Matt Zinn to join us and give additional commentary on current operations and our expectations for the year. Matt, take it away.

Thanks, Ladd. I am honored and humbled to be chosen as the steward of the Proppant Production segment. We are extremely excited about the assets we have and the transformation taking place within the organization. On our last call, Ladd spoke about how we are marketing all eight lines for the first time with a focus on securing term contracts with customers at sustainable prices that support our goal of consistent high utilization of our mines. I am pleased to report that we had success over the recent RFP season. The contracts that we secured with customers over this process are a mixture of traditional take-or-pay and percentage of customer demand. These percentage of demand contracts, while not as desirable as take-or-pay contracts, align with our desire to develop long-lasting partnerships with our customers with upside potential as our customers become more efficient or expand their completion activity. While we have a great foundation with this commercial approach, we have seen weather impact us in Q1, along with customer impacts related to natural gas prices. We estimate we lost approximately 300,000 to 400,000 tons of sales in January and February, but expect to further increase production into the warmer months. Our first quarter utilization is expected to increase slightly from the fourth quarter. However, we then expect utilization to increase to 65% to 75% starting in the second quarter. We are confident that our focused effort on commercial and operational growth in our Proppant segment will meaningfully improve 2024 metrics and results. Alpine is in the middle of a transformation and will produce higher throughput, higher utilization and lower cost per ton, and we believe that it will soon emerge as the sand market leader in 2024. I will now hand it over to Lance to provide more detail on our consolidated financial results.

Thank you, Matt. To recap the year, we generated $688 million of adjusted EBITDA on $2.6 billion in revenue for an overall EBITDA margin of 26%. We also generated $293 million of free cash flow in 2023 that was used to significantly expand our asset base, both in Stimulation Services and the Proppant Production segments. Fourth quarter revenue totaled $489 million, a sequential decrease driven primarily by the lower fleet count as it bottomed in the middle of the fourth quarter. EBITDA was $110 million as we experienced slightly lower efficiencies on our active assets and lower pricing for our products and services. For the fourth quarter, stimulation services revenues were down sequentially to $403 million. About 75% of this reduction was driven by our lower number of fleets. The remaining decline was driven by slightly lower pricing for our services. The number of integrated fleets fluctuated with our active fleet count, but we continue to supply approximately 30% of our fleets with materials. Adjusted EBITDA for the segment was $58 million for the fourth quarter. This segment was impacted by approximately $10 million in shortfall payments related to our supply agreement with Flotek. The profitability per active fleet for the fourth quarter was also impacted by white space in the calendar. In the first quarter, as our focus on dedicated high-efficiency customers takes hold, we expect to improve profitability per active fleet. In general, we expect 60% to 70% incrementals on increased efficiencies when all else is equal. Proppant Production segment generated $383 million of full year revenues, which was up substantially when compared to the $90 million generated in 2022 due to the sand mines added during the year. Revenues for the fourth quarter were $93 million, down approximately 6%, driven largely by lower sand pricing. Approximately 75% of the volumes were sold to third parties during the fourth quarter, which is in line with our commercial strategy to focus on customers where we can add the most value. Adjusted EBITDA for the Proppant Production segment was $45 million for the fourth quarter. The Manufacturing segment generated revenues of $34 million, down approximately 22% from the third quarter. Approximately 83% of this segment was intercompany revenue as we expanded our third-party sales during the quarter for this segment. The decrease in sales in the fourth quarter was a continued result of stimulation services reducing purchases and focusing on utilizing inventory on hand. Adjusted EBITDA for the Manufacturing segment was $1.8 million, which was comparable to the prior quarter. This segment is also focused on reducing inventory levels and lead times on its product offering. It has been impacted as steel prices have retreated and is working through raw materials purchased in 2022. We expect to remain at these levels of profitability until it works through its high-cost inventory over the course of 2024 and starts adding lower market-priced raw materials in the second half of 2024. Selling, general and administrative costs were $59 million in the fourth quarter, down approximately $2 million, primarily due to lower stock compensation costs. This was combined with a significant reduction in acquisition-related expenses as we have made tremendous progress on the integration of the recent acquisitions. Cash capital expenditures totaled $33.1 million in the fourth quarter, down 37% from the third quarter. As we've mentioned in previous calls, when we reduce our fleet count, CapEx usually takes more time to be reduced. We are pleased with our ability to act swiftly to rightsize our spending levels to more accurately reflect the demand we are seeing from customers and we will continue to prudently evaluate our spending going forward. As we laid out in our earnings release, we expect to incur maintenance CapEx between $150 million and $200 million for the full year. In addition, we are targeting an estimated $100 million in growth capital focused on fleet upgrades and mine optimization. We believe maintenance CapEx will be approximately $3 million to $4 million per fleet per year in the stimulation Services segment. In addition, the Proppant Production segment is planning to spend approximately $30 million to $50 million in total capital expenditures for the year. We will remain disciplined with our capital allocation plans and focus on allocating capital where it can achieve the best return on investment. Operating cash flow was $42.7 million during the fourth quarter. Working capital was reduced by approximately $10.5 million while we continue to manage our receivables and payables. In addition, we saw a $35 million reduction in inventory and remain committed to utilizing our inventory on hand and expect to see continued reductions in 2024, particularly as we prepare to deploy fleets. Despite these inventory reductions, we expect total working capital to increase through 2024 as we seek to deploy additional fleets, increase efficiencies, and sell more sand. Total cash and cash equivalents as of December 31 was $25 million, including $6 million attributable to Flotek. Total liquidity at quarter end was approximately $103 million; borrowings under the ABL credit facility ended the quarter with $117.4 million. At the end of the fourth quarter, we had approximately $1.1 billion of debt outstanding, the majority of which does not mature until January 2029. Our primary objective in the near term remains generating free cash flow for delevering the balance sheet. Everyone within our organization is laser-focused on operational execution, efficiencies and providing best-in-class service to our customer. We believe this focus will improve our relative positioning within the market and lead to improved results in 2024. That concludes our formal remarks. Operator, please open the line for questions.

Our first question comes from Luke Lemoine with Piper Sandler.

Matt, with reactivating templates, it looks like you're probably displacing some competitors. Can you talk a little more about just kind of the market structure, how you're attacking this? And as you see it right now, is tenor reactivations about the right number? Or is the goal to eventually work back up to 45 fleets?

Yes. So we've added 10, and the majority of those have come in the first quarter. And so there's only 1 or 2 that were actually in Q4 that we added. And we expect to end at some point in this year, around 41%, 42%. And if the market is there, we're going to go ahead and take it to 45% and get full utilization across the platform.

Okay. And then you cited your February pumping analysis setting a record. You added the 10 fleets. Ladd, you talked about getting EBITDA per fleet back to $20 million to $25 million annualized just kind of look in the Stimulation segment. Is this where you guys currently are? Or when do you see this transpiring this year?

Not to put a specific date on it. We're not quite there yet, but we expect to be there in the first half.

Okay. And then maybe just one quick one. I know you're not disclosing your fleet count, but just kind of trying this roughly in 4Q, were you kind of maybe in the mid-20s and now you're in the mid-30s?

That's correct.

Our next question comes from the line of Alec Scheibelhoffer with Stifel.

To start us off, following up on the previous question, could you comment on the pricing dynamics in the market as well as the overall supply and demand related to the 10 fleet that you are reactivating, considering the recent trends in gas prices?

Yes, the market is stable, and we are adding fleets in a situation where the number of active fleets isn't increasing. This has an effect on our revenue. However, the way we manage utilization, absorb costs, and lower our per-unit costs significantly outweighs any compromises we might make on revenue. We anticipate this trend regarding costs to persist.

Got it. Appreciate the color. And then just shifting gears to the Proppant segment. I'm just wondering if you could comment on the current spot pricing for frac sand. And I guess, just kind of your exposure to that market, given your comments on contracting year-to-date or fourth quarter?

I'll defer to Matt Zinn on this one.

We're still seeing spot pricing in the 20s, depending on the market, up into the 30s in some other segments, not necessarily the Permian. And we continue to see some exposure to that market, but our focus is continuing to wire longer-term supply term agreements with customers and have a minimal exposure to the spot market as possible.

Got it. Appreciate it. If I could just squeeze one more in. I was just wondering if you could provide some additional color on your '24 free cash flow expectations and any kind of target we could think about the leverage ratio exiting the year.

So on services, I don't want to guide too aggressively, but we expect to generate a tremendous amount of free cash, pay down debt. And it's not unreasonable for us to be able to cut our debt in half this year.

Our next question comes from the line of Arun Jayaram with JPMorgan.

I wanted to ask about the pricing adjustments you made to improve utilization at the start of the fourth quarter. What has been the response from your competitors regarding your market share gains? Are you concerned that these adjustments might disrupt the pricing discipline we observed in the industry last year?

I really don't care what it does to our competitors. I don't spend a lot of time thinking about them. We're doing what's right for ProFrac. We're taking market share. We're not going to hold up pricing to their benefit and key market share to do it. We're taking our market share back. And I don't really care what it does to them. What I like is what it does for us.

Got it. And Matt, Ladd mentioned a target to get to $20 million to $25 million in EBITDA per fleet. But we're just trying to think about our modeling in the next couple of quarters? Where do you think you're at from a profitability perspective as we sit here today?

As we sit here today, we're in the high teens. I think we're looking at mid to high teens, and then before the half ends, we expect to reach the 20% to 25% range.

And maybe...

The biggest driver for it is cost absorption and utilization rates diluting our cost per unit.

Matt, can you share your perspective on the recent developments regarding several natural gas companies, including CNX, reducing their capital expenditures? How is your current exposure to natural gas, and what potential effects do you anticipate this might have on the frac and proppant segments of the business?

Yes, approximately one-third of our business is linked to gas markets. We cannot predict when the gas market will recover or how significant the decline will be, but we are committed to being patient. We strongly believe in the demand drivers that will emerge later this decade. Therefore, we are dedicated to our customer base in these regions and look forward to a substantial increase in inventory. We also hope for better commodity conditions.

Our next question comes from the line of Dan Kutz with Morgan Stanley.

Maybe just another one on the Proppant business. You guys have kind of touched on some of these points already, but just wondering if you can expand at all on some of the drivers that are contemplated in the utilization upside that you guys flagged in terms of will it be external particular basins where a lot of potential customer types, and tailwind from more Proppant per well from a well design perspective. Just wondering if you could give us any more color on the drivers of that, I think it's 65% to 75% utilization target out later this year?

We are seeing improved demand specifically for our Permian assets, along with increased utilization in that area. This is a result of both third-party and internal efforts. Our primary focus right now is to ensure that all of our customers receive excellent service and high-quality products, and we are committed to those priorities. South Texas and the Permian region are the main factors driving this increase in utilization.

Great. Thanks. Appreciate that color. And then apologies if I missed this, but wondering if you could give us an update on efrac? Kind of what your nameplate capacity is now? How many of those fleets are working? What plans are for some of the new builds that were maybe paused last year? And also more broadly, what plans are for dual fuel upgrades maybe in your 2024 budget?

Yes, fuel efficiency remains a significant trend in the industry and has become a strong demand driver for us. We're not fully utilizing our electric fleet yet, but we expect to be this year. This relates to how much operators spend on diesel and our goal to minimize those costs while increasing margins, benefiting everyone involved. Regarding our electric fleet, we anticipate reaching full utilization this year as we collaborate with operators who are very interested in a comprehensive solution that includes gas, power generation, and our electric fleet. We have started to achieve considerable success in offering this as a bundled solution and expect it will help us achieve full utilization this year.

Our next question comes from the line of John Daniel with Daniel Energy.

Matt, in the press release, when you note the big step-up in the pumping hours in January and February, is that a function of just less white space on the calendar? Or is there something from a job design, which is letting you get more hours per day? Or both?

It's more associated with calendar efficiency. I mean our crews are amazing. We get out regardless of customer type, we're usually pumping 20, 20-plus hours every single day that they have available to pump. But the question is, is that 18 days per month? Or is it 28 days per month? Right. And so going in working with customers on their program, making sure that we're aligning our interest with the right customers. And when you look at our revenue per pump hour, we recognize that we have to be a little bit more competitive with customers that can give us 28 or 30 days a month of pumping. But what we see from getting more pump hours per month and the dilutive effect on our cost structure, it's more than worth it for us to come in and provide some top-line concessions.

Okay. So I'm trying to translate here. It sounds like you would think you've got a better customer mix today than maybe four to five months ago. Is that a fair statement?

We appreciate all of our customers. However, the customers that provide us with a high percentage of pumping days per fleet have reached an all-time high. This is the best calendar efficiency we have ever observed from our customer base.

Okay. I got another one here, and this is not meant to be a gotcha question, but when you talk about full utilization later this year, are you assuming the U.S. working frac crew count for the whole industry is growing? Or is this more of an increased market share?

When you consider the industry, we faced our own challenges in 2023. As we enter 2024, we have some shortcomings to address, but overcoming these will enable us to outperform our competitors just by stabilizing the business to where it always should have been. We anticipate this improvement will occur regardless of overall market conditions.

Okay. And then one final question from me. This is probably more for Matt regarding sand. Can you talk about any inquiries related to sand in the latter half of the year from the Haynesville mines? Are they starting to discuss that, or is it too early?

We're constantly talking to our customers about their timing. I don't know that there's necessarily an RFP season for that region, so to speak, but we are closely aligned with all the major operators in that basin, and we're talking to them regularly about their upcoming programs and where they think their activity may shift based on gas pricing.

Our next question comes from the line of Tom Curran with Seaport Research Partners.

Matt Zinn, thank you for joining the call. Good to know you a little bit better. Opening question for you. Could you share some color on the nature of where the CapEx spend will be going for Alpine this year when it comes to your own budget?

We evaluate all our CapEx based on improving utilization or lowering cost structure. So improving reliability or lowering the cost of manufacturing. So that's our key focus is where our demand is and where we can lower cost or improve reliability. So the places that we have growth opportunities are where we're going to have the most bang for our buck.

Could you provide the current utilization percentage at the end of the quarter? Additionally, as you aim to increase utilization to over 70%, what do you anticipate the division will be between internal operations, supporting ProFrac's expected fleet expansion, and third-party sales? Lastly, how do you foresee the transition from your current utilization to the targeted increase beyond 70%?

Approximately two-thirds of the ramp is external customers and one-third of the ramp is internal, just rough numbers. We continue to see strong demand based on our footprint in the Permian with large operators that have drilling programs, completion programs that spread across the basin, and we continue to see strong demand as we've reached out to those customers about their operations.

And at this point, Matt, would you say you've got all that demand in hand in whatever different forms it might exist, contracts, dedicated acreage, here mutual interest, whatever the nature of how you've secured that demand, you have it and it's just a question of executing from here on the third-party side?

We have a line of sight, and we're currently negotiating supply agreements as we speak, an assumption on a certain percentage of those being executed goes into that number. And then we'll execute like we have for years and years.

Our next question comes from the line of Don Crist with Johnson Rice.

Just one question for me. I remember from past conversations that the utilization of the sand plants was somewhere in the 50-ish percent before you acquired performance. Is that pretty good kind of bogey to start with and kind of where do we think it's going to go year-over-year as we kind of ramp towards that 65% to 75%?

Yes, our historical utilization of our mines has been around 50%. As we have become more focused on third-party agreements, that's where the ramp comes from.

And this concludes our question-and-answer session. I would like to turn the floor back over to management for closing comments.

Thank you, operator. The takeaway today is that we are aggressively focused on growing value for all stakeholders. And we have a plan to get it done. We look forward to sharing our successes in the coming quarters as we increase utilization and drive improved results. We look forward to speaking with you again on our next call.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.