Evolution Petroleum Corp Q4 FY2022 Earnings Call

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Evolution Petroleum Fiscal Year-End 2022 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. I would now like to turn the call over to Chief Financial Officer, Ryan Stash. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to our earnings call for the fourth quarter and full year fiscal 2022. I'm Ryan Stash, Chief Financial Officer. Joining me today is Kelly Loyd, Interim President and Chief Executive Officer and a member of our Board of Directors. After I cover the forward-looking statements, Kelly will review key highlights along with operational results. I'll then return to provide a more detailed financial review. And then Kelly will provide some closing comments before we open it up and take your questions. Please note that any statements and information provided today are time-sensitive and may not be accurate at a later date. Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information. These forward-looking statements are subject to risks and uncertainties that are listed and described in our filings with the SEC. Actual results may differ materially from those expected. As detailed numbers are readily available to everyone in yesterday's earnings release, this call will primarily focus on our strategy, as well as key operational and financial results and how these affect us moving forward. Please note that this conference call is being recorded. If you wish to listen to a replay of today's call, it will be available by going to the company's website or via recorded replay until December 13, 2022. With that, I'll now turn over the call to Kelly.

Thank you, Ryan. Good afternoon, everyone, and thanks for joining us for today's call. The fourth quarter marked a strong end to an exceptional fiscal 2022. And I want to thank our workforce for their continued dedication and hard work that drove the company's many accomplishments. During the 12 months ended June 30, 2022, we posted material year-over-year increases across the board, including production growth of 145%, revenue that was 233% higher, an increase of 550% in adjusted EBITDA and proved reserves that were 55% higher than year-end fiscal ‘21, including replacing more than 550% of fiscal ‘22 production. We are focused on maximizing total shareholder return and optimizing every dollar that we invest. As such, we used the significant cash flow generated by our enhanced asset base to fund our development and operational needs, maintain our strong balance sheet through a rapid reduction of debt, and pay almost $12 million in cash dividends to shareholders during the year. We are proud that our consistent and longstanding program has returned approximately $86 million or $2.61 per common share of capital since December 2013. We have strong long life and low decline assets that will continue to support a substantive quarterly dividend for the immediate and long term, benefiting our shareholders with a steady return of capital. A key highlight of the fourth quarter was the April 1st closing of our acquisition of natural gas weighted assets in the Jonah Field located in Sublette County, Wyoming, that added 42.8 Bcfe of proved reserve inventory. We also saw a full quarter of operational and financial benefit from our purchase of oil weighted assets in the Williston Basin in North Dakota that closed on January 14th. The cash flow from these acquisitions has exceeded our expectations that were in place at the time of purchase. We look forward to working closely with the operators in both locations as they effectively develop the assets and leverage operational best practices to further support the long-term sustainability of our collective businesses. These two immediately accretive transactions follow our proven acquisition playbook executed during fiscal years 2020 and 2021, with the overall combination providing enhanced diversification of our product mix and reserve categories across an expanded geographic footprint in multiple key U.S. onshore plays. Most importantly, our enhanced asset base provides for significant cash flow generation that further supports our well-established shareholder capital return program, provides a visible source of funding for future targeted strategic growth opportunities, and places us in a strong position as we move into fiscal 2023 and beyond. During the fourth quarter, we produced 7,451 net BOE per day, which was 34% higher than the 5,578 net BOE per day that we produced in the third quarter. During fiscal 2022, we benefited from higher commodity pricing and the fourth quarter was no exception. The combination of increased production and pricing, as well as prudent cost management for expenses that we can control resulted in fourth quarter adjusted EBITDA of $21.7 million, a 76% increase from the third quarter. We generated significant operating cash flow during the fourth quarter, of which we used almost $16 million to pay down debt following the closing of the Jonah Field acquisition. Since June 30th, we have paid down additional debt and have $12.3 million outstanding as of September 1st. We remain committed to quickly paying down the remaining balance under our credit facility and expect to be debt-free by the end of the second quarter of fiscal 2023, assuming we do not execute on additional acquisition opportunities before then. We also used operating cash flow to pay our 35th consecutive quarterly cash dividend of $0.10 per common share on June 30th, and are pleased to declare a fiscal first quarter 2023 dividend of $0.12 per common share to be paid at the end of September. As I mentioned earlier, our commitment to paying an ongoing substantive quarterly cash dividend to our shareholders is unwavering, as it maximizes visibility for total shareholder return, and is fundamental to our long-term investment thesis. In that light, we are pleased to announce a newly authorized share repurchase program. The Board has authorized a share repurchase of up to $25 million through December 31, 2024. We view our repurchase program as a complement to our dividend program so that we can augment our returns to our shareholders. Additionally, based on the current commodity price outlook, we don't expect the increased dividend or share repurchase program to limit our ability to complete the accretive acquisitions or participate in any drilling on our existing assets. Looking at our fourth quarter results in more detail, net production at Delhi declined 9% from the third quarter to 102.1 thousand barrels of oil equivalent or approximately 1,122 barrels of oil equivalent per day. Driving the sequential decrease was NGL production that was 36% lower primarily due to extended downtime at the NGL plant in April related to turbine issues, as well as a natural decline in oil volumes. Denbury is the operator at Delhi and they are continuing to perform conformance workovers and upgrades to the facilities. Hamilton Dome net production increased slightly to 37.4 MBOE from 37.3 MBOE in the third quarter, primarily due to a higher number of operating days during the fourth quarter. On a per day basis, production declined slightly from 415 to 411 barrels per day. During the fourth quarter we received 11 AFEs from Merit for expense in capital workovers. We will continue to support them in their efforts to restore production at previously shut-in wells, adjust water injection locations and volumes, and execute on other targeted maintenance projects. Net production for our Barnett Shale assets for the fourth quarter decreased 1% to 303.9 MBOE or 3,339 BOE per day. Diversified Energy has been very active since becoming operator last October, including running one workover rig continuously throughout calendar 2022 to-date. Fourth quarter net production for our Williston Basin assets increased 2% to 44.4 MBOE or 488 BOE per day, of which approximately 80% was oil. During April, we saw extended downtime due to severe winter weather that temporarily reduced oil production levels and impacted our fourth quarter production. In the immediate term, we continue to work closely with the operator Foundation Energy Management on high grading and expense workovers, recompletes and sidetrack drilling opportunities. Technical evaluations remain underway to assess and high grade our Pronghorn, Three Forks drilling locations. As I discussed earlier, on April 1st, we closed on our acquisition of natural gas weighted assets in the Jonah Field in Wyoming. Net production for the fourth quarter was 2,077 BOE per day, for a total of 189 MBOE. This included 1 Bcf of natural gas or 88% of the production was natural gas. The Jonah Field acquisition embodies our continued sharp focus on long life, low decline reserves that generate significant cash flow. The transaction also provides access to attractive Western markets, and we will continue to work closely with Jonah Energy and support their future development efforts in the field. With that, I will now turn the call over to Ryan to discuss our financial highlights.

Thanks, Kelly. As mentioned earlier, please refer to our press release from yesterday afternoon for additional information concerning our fourth quarter and full year fiscal 2022 results. My comments today will primarily focus on comparative results between the fiscal fourth and third quarters. A key highlight of the fourth quarter was a generation of $21.7 million of adjusted EBITDA, which was a 76% increase from $12.3 million in the third quarter of fiscal 2022. Fourth quarter adjusted EBITDA was $31.96 on a per BOE basis, which was 30% higher than the third quarter. We continue to fund our operations, development capital expenditures and dividends out of operating cash flow, while also paying down $16 million in debt. Supported by our solid operational and cash flow outlook, we paid a dividend of $0.10 per share in the fourth quarter, and declared an increased dividend of $0.12 per share for the first quarter of fiscal 2023 payable on September 30th to shareholders of record as of September 21. This will represent our 36th consecutive quarter or nine years of paying a cash dividend. This is highly unique in the small cap E&P space, but a clear representation of how we view the importance of returning value to our shareholders. Further evidenced by our strong cash flow generation and positive financial outlook, the Board has recently authorized a share repurchase program of up to $25 million through December 31, 2024. We expect to fund the repurchase program with working capital and operating cash flows and do not expect to incur any debt. We view the repurchase program as a tax efficient means to enhance our returns to our shareholders. Consistent with our conservative financial management, we remain squarely focused on ensuring we maintain a strong balance sheet. As of June 30, 2022, we had $8.3 million of cash and cash equivalents, working capital of $6.1 million, debt of $21.3 million and liquidity of $37 million. As Kelly discussed, we have paid down additional debt since June 30, and have $12.3 million of debt outstanding as of September 1st. We did not enter into any additional hedges beyond what was previously disclosed in our last quarterly filing. Also, we remain below the threshold on our credit facility that requires us to add any incremental hedges. Looking at the fourth quarter financials in more detail, we grew total revenue to $42 million, which was a 64% increase from the third quarter. This included oil revenue, which increased to $18.4 million due to 6% higher sales volumes, primarily as a result of the closing of the Jonah Field acquisition on April 1st, as well as a 17% increase in realized pricing; an increase in natural gas revenue to $18.5 million from $6.1 million in the third quarter, primarily due to the Jonah Field acquisition and an 80% increase in realized commodity pricing; an NGL revenue that increased to $5.2 million due to the Jonah Field acquisition. This was partially offset by decreased volumes at Delhi due to downtime at the NGL plant in April, 2022. Lease operating expenses increased from $12.1 million in the third quarter to $17.3 million in the fourth quarter. On a per BOE basis, lease operating expenses were $25.47 for the fourth quarter compared to $24.7 in the third quarter. Substantially driving the $5.2 million increase was the Jonah Field acquisition. Also contributing to the increase were higher charges in the Barnett for water hauling, chemicals, repairs, maintenance, and production taxes. General and administrative expenses increased slightly to $1.6 million from $1.5 million in the third quarter. Included in the fourth quarter was $700,000 in transaction costs and severance payments, and a $1.2 million reduction in non-cash stock-based compensation related to the forfeiture of unvested shares in connection with the severance. Net income for the fourth quarter was $14.9 million or $0.44 per diluted share versus $5.7 million or $0.17 per diluted share in the third quarter. Substantially driving the sequential increase was the Jonah Field acquisition and higher commodity prices. Adjusted net income was $15.1 million or $0.44 per diluted share compared to $7.7 million or $0.23 per diluted share in the third quarter. During the fourth quarter and full year of fiscal 2022, we invested approximately $1.8 million and $2.6 million respectively in development and maintenance capital expenditures. For fiscal 2023, we currently expect total development capital expenditures of $6.5 million to $9.5 million. This estimate includes upgrades to the Delhi central facility, workovers at Hamilton Dome, the Barnett Shale, and the Jonah Field, and low-risk development projects in the Williston Basin. This does not include the development of the Pronghorn and Three Forks. As in the past, our spending outlook may change depending on conversations with our operating partners, commodity pricing, and other considerations. So with that, I will turn the call back over to Kelly for his closing remarks.

Thanks, Ryan. Fiscal 2022 was clearly a transformative year for Evolution and its shareholders. Our Williston Basin and Jonah Field acquisitions have further diversified our product mix and expanded our operating footprint into additional prolific producing key U.S. onshore regions. Through these transactions, we have also secured further optionality to invest in low-risk organic drilling and development opportunities, while maintaining and growing production with our ongoing partners. Most importantly, these strategic and immediately accretive acquisitions provide for increased visibility for a meaningful return of shareholder capital through our longstanding quarterly cash dividend program and our newly announced share repurchase program. Our Board remains staunchly committed to maintaining and, as appropriate, increasing our dividend payout over the long term. We clearly recognize the tangible value of providing our shareholders with a consistent and substantive cash return on their investment. And we truly appreciate their support of our ongoing efforts. As in the past, we will continue to closely evaluate and execute on targeted acquisition opportunities that are immediately accretive, provide long life established production, strategically expand our base of assets, and do not result in any material dilution. Any transaction must also clearly support our longstanding thesis of providing a significant total return for our shareholders. The oil and gas industry is inherently volatile. So we will continue to take the long view and ensure we maintain a strong balance sheet that allows us to succeed through the cycle. Our corporate goal is to keep our leverage below 1x annualized EBITDA, and we're on track to pay down all of our outstanding debt within the next few months, assuming commodity pricing remains strong, and we don't execute on any further acquisitions during that timeframe. In conclusion, we believe our proven and consistent strategy of squarely focusing on the needs of our shareholders is a key differentiator for Evolution. We will continue to pursue initiatives designed to maximize total shareholder return by optimizing the value of every dollar we invest on a risk-adjusted basis, depending on where we are in the cycle. Our approach of building a targeted asset base, a PDP reserves capable of supporting cash payments to shareholders has served us well over the past decade, and will continue to benefit our shareholders for many years to come. With that, we are ready to take questions. Operator, please open the line for questions.

Your first question is coming from John White with ROTH Capital Partners.

Congratulations on the very strong results for the quarter. And just in terms of timing, have additional acquisitions been put on hold until you find a permanent CEO or could we see an acquisition before a new CEO is appointed?

So, really appreciate the question, John, and appreciate you coming on here because we know you are a valued follower of our stock and help us and help people understand it. So really appreciate the question. Listen, the timing of an acquisition really will be – or a potential acquisition really will be based on whether that acquisition exists. In other words, there's a pretty wide gap between sellers and buyers right now. The bid-ask has sort of spread. But if the right deal were to come about, there's no reason to think we couldn't act on it if it required to be that case in a timely manner. I hope that makes sense. Listen, the goal is to get our CEO search done in an efficient manner and make sure we get the right person in place. But that said, if an acquisition happens before that is finalized, and it's something that's highly accretive, we'll be happy to go ahead and go forward with that.

I appreciate that answer. And I appreciate your kind words on my coverage. I would conclude by saying, very nice move on the increase dividend and the stock buyback. I don't think I wasn't expecting and I don't think investors were expecting an increased dividend and not as large an increase in the dividend as was announced, and I wasn't expecting, and I don't think any investors were expecting a stock buyback, especially of the size that was announced. So kudos to you for moving on those capital return items for shareholders. And with that, I'll pass it on back to the operator.

Your next question is coming from Donovan Schafer with Northland Capital Markets.

I was pleased with the results because it appears there are more fields and more assets to manage now. However, I see this as an above-average level of production challenges due to winter weather impacts in the Williston area. The NGL plant in Delhi was down, and Denbury faced issues with CO2 injection from their reservoir. As a result, production numbers came in lower than I expected. Fortunately, this was offset by improved pricing differentials. In the Jonah Field, you're receiving a nice premium compared to Henry Hub, while many peers sell at a significant discount due to transportation costs. Additionally, I was surprised to see the oil pricing differential close significantly this quarter, compensating for some of the challenges. Despite the production headwinds, the expectation of better West Coast pricing for natural gas and potential improvements in the Williston's pricing basis seem noteworthy. Overall, would you say this reflects above-average production challenges? Every quarter has issues, which is part of the business, but it seems like this quarter presented particularly notable challenges that were ultimately offset by favorable differentials. Is that an accurate characterization?

Thank you for the question, Donovan, and for joining the call. It’s great to talk to you. I believe you’re correct. On the production side, we faced some challenges with NGLs at Delhi and with oil in the Williston due to weather issues in April and a windstorm in June. However, differentials performed well. We experienced some pricing benefits in Delhi, which improved our differentials there, and the performance in Williston was solid on the well side. We were particularly pleased with the results from Jonah, as our expectations upon acquiring that asset have materialized. We have seen a premium to Henry Hub, which we anticipated, and we expect this trend to continue, especially as we move into the winter months. Overall, we were satisfied with the differentials, despite some production challenges. This aligns with our strategy of diversifying our asset base, as having assets in various geographic areas and commodities allows us to balance production impacts. We are hopeful this trend will persist in the future.

On the West Coast, I'm sharing my perspective from Los Angeles, where I've been experiencing Flex Alerts from the California independent service operator. With the increasing integration of renewables, there may be a need for more peaking plants. Recently, Governor Gavin Newsom proposed state ownership of a natural gas plant to prevent its shutdown and ensure an emergency backup. Regarding the Jonah Field acquisition, do you expect this trend to persist? Are you anticipating continued pricing differentials when selling into the Opal hub, which is more Northwest? Have you noticed any widening in those differentials through July, August, and September, or has that already been reflected in the fourth quarter results? What are your thoughts on this?

Yes. I want to mention that we recently took over the field, and we're currently marketing on a six-month contract, covering both summer and winter. We are actively seeking winter contracts, so we should have a clearer understanding of winter pricing by next quarter. I hope it will be better than our summer pricing. Historically, our assets have achieved a premium over the Northwest Pipeline, which has performed well against the Henry Hub. Therefore, we remain optimistic and hopeful for the winter months, anticipating an even better premium than what we experienced in the summer.

I'm curious about the Inflation Reduction Act and its focus on carbon capture and storage. Denbury is providing CO2 for the Delhi Field, but it's sourced from a naturally occurring CO2 reservoir rather than a coal plant. Are there incentives for potentially expanding the Delhi Field in stages, where each phase could be treated as a standalone capital expenditure project? Would the Inflation Reduction Act offer benefits in this scenario, or does it only apply if CO2 is sourced from a coal plant?

I mean. So Ryan, I'll take it. So Donovan, the answer to that question is it remains to be seen, right? A couple parts of it, right, CO2, I guess you would have to consider fungible if it goes into the same line. So we need to figure out, is our connection to the green line. Do we actually get credit for some percentage of that or not? It's something we're looking into for sure though.

Yes. I mean, I think with, as far as the Reduction Act, it’s specifically, right? I mean it extended the 45Q sort of credit, right? And that's something, as Kelly said, we're doing some work around. And really, I mean, we're hopeful Denbury has been in the process. So I think we said in the past of getting Delhi certified as a carbon capture field, and there's a whole process around it, they've done it with one or two other fields, and they're doing it with Delhi too. Once that happens, then the next step would be, are they going to actually start taking to Kelly's point, industrial CO2 from the contracts they've signed, and then green line as well. And so we're a little ways off on that. But we're certainly looking at that pretty closely. And if there is a benefit for us to take a 45Q credit, with any CO2 that gets a question in the field, we're certainly going to do that.

It's not like the act was passed and we all overlooked some hidden advantage, prompting us to celebrate. Rather, it's a gradual process that unfolds step by step.

I would say Donovan, at this moment, we have not assigned any value to that. It doesn't mean that may not change, but I would value Evolution based on its other components at the moment.

That makes perfect sense to me. Regarding the share repurchase program, the capital expenditure for 2023 appears to be a healthy figure compared to what we've typically done. As a non-operated participant, this can lead to benefits beyond just the apparent dollar amount, as it includes the minority stake in all activities taking place. However, this still seems relatively small compared to the cash I currently have or expect your company to generate. If we don’t see acquisitions happen, does that lead to a quicker decision on buybacks? Additionally, with the upcoming 1% tax on buybacks, which I believe may not take effect this year, do these factors affect your strategy, possibly giving us more confidence in the near-term execution of buybacks? Companies often establish these programs without obligation to act, so I'm interested in your thoughts on this, especially regarding capital spending versus cash generation and the potential small tax impact. Any insights would be appreciated.

Yes, I will take questions. I believe the first step in authorizing the program from the Board’s viewpoint is to provide us with an additional tool for returning value to shareholders. We considered this to be a suitably sized program for the cash flow outlook and our ability to execute it. Naturally, we will be somewhat limited by the 10b-18 rules, which dictate how much we can buy on any given day. There are inherent limitations imposed by the SEC, but we plan to scale the program based on our assessment of the intrinsic value of the stock compared to its market value and other opportunities available to us. We perceive a significant potential for generating free cash flow, and we still believe that even with the buyback program and the dividend increase, we have sufficient resources to pursue acquisitions. However, as the market evolves, we may adjust our approach. Additionally, we are mindful of pending SEC regulations, including the excise tax, which we have considered along with other reporting obligations at the SEC, as these will introduce some dynamics moving forward. Implementing this program is something we are eager to do.

Just the point is, listen. We needed to start somewhere. We need to make sure that it fits as a complement to our total shareholder return program. So, that's where we started. And as Ryan said, it's very dynamic, it's fluid, it's going to be something we revisit on a fairly continual basis to make sure we're doing the best.

I'm thinking about the different approaches to returning value to shareholders, specifically regarding dividends. You're aiming to establish a consistent dividend supported by a strong reserves base over the long term. It's important to retain enough cash flow to grow and maintain that dividend while increasing your reserves. This can be done either organically, like in the Williston Basin, or through asset acquisitions and buying other companies, each with varying valuation multiples that would enhance your reserves. The share buyback program can also be seen as a strategy to repurchase a larger portion of your own production. If the company is undervalued compared to its reserves, you can pursue another company or asset for acquisition, develop your own reserves, or further stretch the dividend by reducing the number of shares outstanding. This effectively increases the reserves per share by buying back shares, providing larger ownership of the existing reserves for remaining shareholders. Were you able to evaluate these various sources of production?

These are exact type of conversations we have at the Board level. I mean there are going to be times where we think our most accretive acquisition is going to be our shares and we want to have the opportunity to take advantage of that, so.

Okay. That's very helpful. I'll leave it here and take the rest of my questions offline. Congratulations on the quarter, and great job on the dividend increase.

Your next question is coming from David Locke at Old Mammoth Investments.

First off, I'd like to thank you and Bob and the Board for heeding the message of the market and pausing your acquisition activity a little bit and accelerating the shareholder returns. You are getting nicely rewarded for it today, which is nice to see.

Well, thank you. That is our job. First and foremost, make sure we're setting the company up for long-term success and evaluating what are the best options to invest, what is ultimately shareholders' capital in the highest return to them. So that's for sure the way we look at things.

So a couple of CapEx questions, if you wouldn't mind. The first thing is the numbers that you gave in the press release, which looks like just sort of blocking and tackling things on the existing assets. Would you expect that, that would be enough investments to hold your production plus or minus flat from here?

No, I mean, I think that's a great question. And I would say from a production standpoint, it's probably what we budgeted at least is just what's known, right? And that's to your point, a lot of workovers, blocking and tackling, kind of return to production. There's a little bit of development in there. And I think we mentioned, in the Williston, not on the full development of the Pronghorn and Three Forks locations that we're still valuing with our partner Foundation. But there is some with some other sidetrack drilling there. So I wouldn't say that in and of itself is going to be enough to keep production completely flat, but we do think it's going to help the rest to decline as we've seen from diversified in the Barnett Shale and specifically, and we certainly think it's going to help out in the Williston.

Okay. So if I'm thinking about like maintenance CapEx, I should add something to that, to the budget for fiscal 2023?

I think that's fair. If you're considering the maintenance capital number, which can come from drilling, organic opportunities, or asset acquisitions we've made in the past, you would need to include a bit more capital to determine a true maintenance capital amount.

Okay. And then, moving on to the potential development plan in the Williston, what sort of a timeline for making that decision, to what extent are equipment and humans and not to make that happen available? And then do you guys have to make any internal investments in people to make that happen or will that essentially also get covered by your operating partner?

That's a great question with many details. As you know, there are various possibilities here. Our operating partner might want to ramp up drilling more aggressively than we do, or it could be the other way around. We're collaborating closely with Foundation to determine the best plan that works for everyone. This makes it challenging to provide a definitive answer, as the outcome can influence our approach. I want to emphasize that we are actively evaluating larger opportunities like Pronghorn and Three Forks. This is a continuous assessment, and we will communicate when the time is right. Additionally, there are Bakken vertical recompletes and potential development opportunities that we could pursue together. There is competition for funding, and ultimately the best plans will prevail, which is our goal.

That makes total sense. To the extent that a rather large bunch of AFEs show up on your lap, either by your election or theirs, how would you approach that? Financially, would you try to hedge any of the future production or just sort of sit back and say, you know what, we've got a lot of cash flow so we can absorb the risk if we drill these wells, but then commodity prices fall?

We would need to discuss this further, but generally speaking, if we choose to proceed with drilling, it will be because the project stands on its own merits given our expected commodity pricing. The Board typically prefers to remain unhedged because we believe investors are looking for exposure to the commodity markets. Our responsibility is to perform well when prices rise and to manage effectively when prices fall. Therefore, we prefer to avoid hedging unless absolutely necessary.

I would just like to add that we will drill within our cash flow. We won't exceed our cash flow for drilling, so we won't be taking on debt that would require us to hedge for repayment. As mentioned, we will assess the economics at a lower price than the current market, but we won't proceed with a project unless we believe it is viable, and it will be within our cash flow.

Okay. So then I should think of growth kind of as any sort of internal drilling growth, you guys will fund internally. And then to the extent that you do acquisitions, you'll probably go out and utilize some external capital subject to that 1x EBITDA constraints that you sort of self-impose on yourselves?

I can say this, it's not a horrible way to look at it.

Thanks a bunch. I for one was expecting the increase for what it's worth. Maybe I was the only one. But I'm really glad and congrats on the performance of the stock today.

We appreciate everyone for being here and taking the time to listen and participate in our call. We appreciate your continued support of efforts to enhance our long term value and maximize our total shareholder return. As always, please feel free to contact us if you have any additional questions. Ryan and I and our team here look forward to formally speaking again when we report our first quarter fiscal ‘23 in November. So thanks, again. Really appreciate it, guys.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.