Earnings Call Transcript - TTI Q3 2022

Operator, Operator

Good morning, and welcome to TETRA Technologies Third Quarter 2022 Results Conference Call. The speakers for today's call are Brady Murphy, Chief Executive Officer; and Elijio Serrano, Chief Financial Officer. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Serrano. Please go ahead.

Elijio Serrano, CFO

Thank you, Marlise. Good morning, and thank you for joining TETRA's Third Quarter 2022 Results Call. I would like to remind you that this conference call may contain statements that are or may be deemed to be forward-looking. These statements are based on certain assumptions and analysis made by TETRA and are based on several factors. These statements are subject to several risks and uncertainties, many of which are beyond the control of the company. You are cautioned that such statements are not guarantees of future performance, and that actual results may differ materially from those projected in the forward-looking statements. In addition, in the course of the call, we may refer to EBITDA, adjusted EBITDA, adjusted EBITDA gross margins, free cash flow, net debt, net leverage ratio, liquidity or other non-GAAP financial measures. Please refer to yesterday's press release or to our public website for reconciliations of non-GAAP financial measures to the nearest GAAP measures. These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of our complete financial results for the period. In addition to our press release announcement that went out yesterday, we encourage you to refer to our 10-Q that will be filed later today. I will now turn it over to Brady.

Brady Murphy, CEO

Thanks, Elijio, and good morning, everyone. Welcome to TETRA's third quarter 2022 earnings call. I'll summarize some highlights for the third quarter, a current outlook as well as provide an update on our low carbon initiatives before turning it back to Elijio to discuss cash flow, the balance sheet, income taxes, and liquidity. In the third quarter, we achieved some strong financial results but also some very key milestones regarding the strategic direction of the company, which we communicated 21 months ago following the sale of our controlling interest in CSI Compressco. We introduced our strategy to leverage our core strengths to the evolving, rapidly growing low carbon energy technologies. Starting with our financial results, our total third quarter revenue and adjusted EBITDA were $135 million and $18.6 million respectively. Adjusting for our seasonal decrease in our Northern European industrial chemicals operation, revenue and EBITDA increased approximately 75.5% and 12% from the second quarter respectively. Adjusted EBITDA excluding unrealized losses on investments of $0.5 million was $19.1 million for the quarter. Our results were led by the energy services business which grew revenue 15% and EBITDA 33% quarter-on-quarter. A compelling data point on how well we have executed on our Water and Flowback multiyear strategy is that our annualized third quarter revenue for this segment equals the full year revenue in 2018 when the average frac crew count was 441, or 35%, above the third quarter of 2022. The segment also increased adjusted EBITDA margins from 15.1% in the second quarter to 17.4% in the third quarter. Both segments, Water and Flowback services and completion fluids and products, increased their EBITDA margins from the second quarter. With regards to our strategy, we executed exclusive technology agreements for recycling produced water from oil and gas wells for beneficial reuse. These are also key enabling technologies for the extraction of lithium from our Arkansas brine leases, as well as the extraction of key minerals from operators' produced water, which has been of rapidly increasing interest from our customers. We're currently conducting a produced water beneficial reuse pilot project for one of the largest North American shale operators with many other opportunities in discussion. An additional key strategic milestone for the quarter was a positive inferred resource report which solidified the previously announced bromine and lithium brine resource estimates in our Arkansas brine leases. Our bromine inferred resource estimate was 5.25 million tons for our approximately 40,000 gross acres of brine leases and within 5% of the midpoint of the previously announced exploration target, while the lithium inferred resource estimate was 234,000 tons of lithium carbonate equivalent, or LCE, which was 26% above the exploration target midpoint for our approximately 5,000 gross acres that are not covered by an option granted to standard lithium. Now turning to the segment's Water and Flowback services, revenue of $76 million improved by $29 million or 62% year-on-year and $9.9 million or 15% quarter-on-quarter. Adjusted EBITDA of $13.2 million improved by $8 million or 158% year-on-year and $3.2 million or 33% quarter-on-quarter. This marks the highest adjusted EBITDA since the fourth quarter of 2018. Our Water and Flowback business continues to grow significantly faster than the active rig count and frac crew count while also expanding margins for the sixth consecutive quarter. Our significant market penetration is driven by three things. First is the introduction of our blue links automation, which reduces manpower by up to 40% on an integrated water management job. In today's market, when labor is tight and with growing operator concerns on safety from short service employees, this is an invaluable benefit. Second is the introduction of differentiated technology including our patented SandStorm, which has proven to be a game changer for operator flowback sand management. Third is our focus on produced water, including treatment and recycling. With increasing seismicity events, operators are moving rapidly to increase their recycling and explore alternatives to disposal. The month of September was the first month ever that our Permian operations managed and transferred only produced water with no freshwater operations. Contributing to our strong quarter was our early production facilities being online for the full quarter in Argentina, which are longer-term projects with stable, predictable revenues, margins, and cash flows. As mentioned in our previous call, we’ve received an award for an additional early production facility, which is on track to commence operations in the first half of 2023. Our fleet of advanced cyclone equipment remains at high utilization with continued market penetration and improved pricing. Our early production facilities in Argentina include our SandStorm technology, and we will continue to opportunistically add to the fleet to meet this growing demand. Adjusted EBITDA margins on our completion fluids and products segment also improved sequentially, despite the products resulting from the seasonal uplift of our Northern Europe industrial chemicals business. The improvement was led by international markets and higher shipments of TETRA PureFlow, which increased by 42% quarter-on-quarter. As a reminder, our PureFlow fluid is a high purity zinc bromide based electrolyte which is part of a rapidly growing long-duration energy storage technology. Completion fluids and products third quarter 2022 revenue totaled $59 million, increased year-on-year by 22% but decreased from the second quarter of 2022 by 21%. We remain very positive on the longer-term outlook for the offshore and deepwater markets, and our strong market position is validated by the Kimberlite Annual Completion Fluids and Wellbore Cleanup Tools Supplier Performance Report. The Kimberlite report indicated that TETRA holds the second highest market share in completion fluids in the Gulf of Mexico at 30%. Within the report, Kimberlite mentions that TETRA Technologies continues to be the top-performing supplier in the Gulf of Mexico, receiving the highest customer loyalty ratings as measured by the Net Promoter Score. This was further supported by a multiyear contract renewal for one of the most active deepwater supermajors in the Gulf of Mexico that was executed in the third quarter. As the offshore and deepwater markets continue to improve, our pipeline of TETRA CS Neptune completion fluids opportunities continues to grow. We're currently executing a smaller TETRA CS Neptune completion fluid job in the UK and have a job confirmed, expected to be delivered in the first quarter of 2023. The disruption to our European supply chain that we mentioned in the second quarter is improving and although not yet back to full production, we have growing confidence that we will be well prepared for the seasonal peak sales in the second quarter of next year. Now turning to our low carbon initiatives. During the third quarter, we announced the completion of our first inferred bromine and lithium brine resource estimation report. The technical report outlines the bromine resource across our approximately 40,000 leased acres, while the lithium resource pertains to about 5,000 leased acres, which are part of the 40,000 acres where TETRA holds the lithium mineral rights. We are currently progressing with an initial economic assessment for the bromine resource development and production from the specified 5,000 acres, which we expect to finalize by year-end. Additionally, we are putting together a detailed reservoir model and plan to drill another well on our 5,000 acres in the first quarter of 2023 to enhance our understanding of the reservoir characteristics and the estimated lithium and bromine volumes. Based on our detailed reservoir modeling results, our current plan is to drill the next well as the first of several production wells from this area. The initial economic assessment will essentially provide a business plan and projections on our bromine assets. This will mark the first time we present the anticipated revenue and margin improvements from commercializing this bromine resource. Furthermore, as highlighted in our third resource report, our research team has showcased successful pilot unit results for a direct lithium extraction process, which we will continue to verify in the upcoming months. This process will entail demonstrating each phase from lithium-rich brine production at our Smackover leases to direct lithium extraction and purification into a high purity lithium chloride solution. We firmly believe we occupy a unique position in the U.S. with access to significant resources of bromine and lithium for energy storage markets, allowing us to extract both minerals from much of the same brine production wells and pipeline infrastructure. Looking ahead to the fourth quarter, although we experienced some improvement in adjusted EBITDA margins in the third quarter, supply chain issues and inflation remain problematic, particularly concerning certain chemicals and raw materials. Key raw material prices in North America remain high, and as we deplete our annual contractual supply of bromine, we are meeting demand with spot market bromine, which will affect our margins in the fourth quarter before returning to our long-term contract supply volumes and pricing in the new year. One of our main customers for PureFlow electrolyte, Eos, announced they will be postponing some of their planned Q4 deliveries to 2023 to enable their customers to benefit from significant tax credits under the Inflation Reduction Act. While this will affect our scheduled Q4 deliveries to Eos, the long-term advantages under the Inflation Reduction Act are substantial for energy storage providers and for TETRA as a uniquely positioned U.S. supplier, which also adds to tax benefits. We anticipate these matters will be resolved as one-time events in the fourth quarter. Despite the short-term challenges, our management team and employees have excelled in steering the company in the right direction. As we look to the future, there is much to be enthusiastic about. We believe we are well positioned to maintain positive momentum, as our technology investments are yielding opportunities for growth and margin expansion into 2023. Our emphasis on low carbon energy markets, which necessitate critical minerals and chemistry expertise, is generating significant growth opportunities for the company and is already yielding financial benefits with more anticipated. Lastly, we continue to explore new markets for our existing products, which collectively enhance our earnings base and present higher growth opportunities.

Elijio Serrano, CFO

Thank you, Brady. Adjusted EBITDA for the third quarter was $18.6 million in comparison to $18.7 million in the second quarter, but was up 24% from $15 million in the third quarter of last year. The third quarter included mark-to-market losses of $548,000. Without the mark-to-market losses, adjusted EBITDA in the third quarter was $19.1 million. The second quarter included mark-to-market losses of $710,000. For those of you doing modeling, the fluid segment results include adjustments of mark-to-market gains from our holdings in standard lithium and carbon fleet; corporate and other includes the mark-to-market loss of $733,000 from our holdings in CSI Compressco. The third quarter included $2.7 billion of non-recurring charges and expenses. This compares to $4.7 million in the prior quarter. Cash from operating activities was $2.1 million. Capital expenditures, net of cash proceeds from the sale of assets, were $12 million, compared to $10.3 million in the second quarter. Free cash flow, or cash from operating activities after capital expenditures, was negative $9.8 million in the third quarter. We expect total year capital expenditures in the $40 million range, which includes previously noted investments in SandStorms with payback significantly better than 18 months, and in early production facilities in Argentina with strong margins. And we expect that the client vitals project will be back within a two-to-three-year period after the startup of those facilities. Working capital consumed $8.6 million in the third quarter compared to $4 million of cash generated in the second quarter. As we mentioned in our prior call, we expected to build inventory for significant deepwater international projects coming up in the fourth quarter and expect that third quarter free cash flow to be negative, but the fourth quarter should exhibit improvement. Free cash flow this year should be in the mid to high-single-digit million dollars, even after taking into account significant costs that we're incurring in Arkansas while drilling our test well during the resource study, the front-end engineering design study, and the initial economic assessment. This demonstrates the value of having a strong EBITDA and free cash generating oilfield services and industrial business to fund the startup costs of our low carbon initiatives in the Smackover formation in Arkansas, without having to issue diluted equity or incur debt to do so. Total debt outstanding was $154 million at the end of September, while net debt was $129 million. At the end of the quarter, our net leverage ratio was 1.7 times, an improvement from 1.8 times at the end of the second quarter. Liquidity at the end of the third quarter was $92 million. Liquidity is defined as unrestricted cash plus availability under our revolving credit facility. At the end of the third quarter, unrestricted cash was $25 million and availability under our credit facilities was $67 million. We have now been positive at the profit before tax level for three consecutive quarters, generating GAAP profit before taxes of $12 million. This is a good time to remind everyone that we have significant federal tax loss carryforwards in the United States, which can offset approximately $440 million of future profits. Keep in mind that if our oil and gas and industrial chemical businesses continue to improve, we look forward to creating more income from the incremental bromine and lithium from our acreage in the Smackover formation. This will allow us the opportunity to achieve a very high conversion of profit before taxes to cash flow from operations and to fund or quickly pay back some of the expected investments in our low carbon initiatives. The $1 trillion bipartisan infrastructure bill and the over $400 billion Inflation Reduction Act passed earlier this year contain several grants and loan programs that we believe are very applicable to what we'll be doing to bring lithium and bromine critical minerals in this Smackover formation to market and to build and expand manufacturing capacity to support battery storage. We are very engaged and are having dialogues with the Department of Energy and will be applying for government grants and loans to support our upcoming investments. We will report the progress of this initiative in the future as key milestones are achieved. Nonetheless, we expect to end this year with liquidity of around $100 million and anticipate generating significant free cash flow in 2023 and 2024 to fund a significant portion of our expected bromine investment. When we publish the bromine initial economic assessment in December, we'll essentially be communicating our bromine business plan with forecasted capital investments and expected returns on capital. As Brady mentioned, we'll be doing the same later in 2023 for lithium. We are very focused and have a high sense of urgency to bring both the bromine and the lithium assets to market as demand and the returns are already there from others already producing these key minerals. To demonstrate how those in the lithium business are benefiting from high lithium prices and strong market demand, let me give you an example of such returns. SQM, a publicly traded global lithium producer, increased their lithium EBITDA from $41 million in the second quarter of last year to $1.2 billion in the second quarter of this year. A 30 times year-over-year increase in quarterly lithium EBITDA is a result of the high market prices. Their lithium revenue increased from $163 million in Q2 of last year to $1.8 billion in Q3 of this year, an 11 times increase. These types of returns and high profits being achieved in the market by lithium producers, while we hold significant lithium and bromine assets in Arkansas, explains why the TETRA management team is highly focused on getting these assets to market to create what we believe will be significant shareholder value in the coming years. When you combine the above numbers that others are achieving with our significant tax loss carryforwards to minimize our cash taxes, you can understand our focus and sense of urgency to take advantage of market conditions. I encourage everyone to read our news release that we issued yesterday, and the SEC filing for all the supporting details and additional financial and operational metrics. I’ll turn it back over to Brady.

Brady Murphy, CEO

Okay. Thanks, Elijio. In closing, our earnings from our base business continue to improve while the significant upside from our Arkansas resources and low carbon energy opportunities become more defined. While the frack crude count isn't likely to materially change before 2023, we believe our North American land business can continue to increase EBITDA margins and capture more share. The global offshore completion fluids business is subject to longer cycle recovery, but we're pleased with the project awards we've captured this year and expect this market to continue growing at an even higher pace in the coming years, with deepwater projects providing significant upside to TETRA through our high-value offerings for this market, including Neptune. With that, we'll open it up for some questions.

Operator, Operator

Our first question comes from Stephen Gengaro from Stifel.

Stephen Gengaro, Analyst

So a couple of things for me. The first is probably pretty straightforward. When you look at, I mean, the consensus has about $21 million in EBITDA in the fourth quarter. I know the quarter we just reported had some gains and stuff. How do you see the bridge in the two segments between the third and fourth quarter? Like how, what are the positives and negatives? I mean, I understand seasonality, but how should we be thinking about the progression just for the fourth quarter?

Elijio Serrano, CFO

A couple of items to consider, Stephen. One of them is we think that our onshore business, Water Flowback, will continue to do well and the EPS in Argentina will continue to do well. Brady mentioned that Eos made an announcement yesterday that they would be pushing quite a bit of revenue originally scheduled in Q4 into 2023 to take advantage of some tax credits. That clearly will have an impact on us as it'll push some of our expected sales to them that we were ramping up quite nicely in Q4 into 2023. So I expect that will be a bit of a headwind. Then I think we continue to see some inflation on raw material prices, but at the same time, we do have some nice big projects coming online overseas, especially in South America. So those are the items that I think you should take into account when considering the Q4 projections.

Stephen Gengaro, Analyst

Okay. And when you mentioned EOS, is that a sequential drop or is it just not growth?

Elijio Serrano, CFO

For the onshore?

Stephen Gengaro, Analyst

For the Eos, you mentioned that they were pushing revenue after 2023.

Elijio Serrano, CFO

Yes, that'll be a sequential decline.

Stephen Gengaro, Analyst

And then the other maybe bigger picture question, as we sort of think about free cash generation, and you have these projects that you're evaluating and thinking about funding, how should we think about or how do you think about CapEx versus the need to generate free cash and reduce leverage in a world where the service peers have no debt and are starting to give cash back to shareholders? I know you're in a different spot because you have these significant growth opportunities, but how do you sort of balance those two?

Elijio Serrano, CFO

We made some significant investments for early production facilities in Latin America this year. We don't expect that level of investment to occur in 2023 or likely 2024. Those are going to generate some very, very high margin returns. We also made quite a bit of investments in SandStorms that are showing strong returns. We expect that CapEx next year will be below the $40 million that we had this year. I mention the types of returns we are seeing in the lithium business by others. They're incredibly strong. We're going to continue to generate free cash flow and pay down debt to have the capacity to fund from cash-on-hand the initial bromine investment or to have capacity on a revolver to fund those investments. So at this point, generating as much free cash as we can, use it to fund the initial part of the bromine. Then we can evaluate the lithium second after that.

Operator, Operator

We'll now take a question from Tim Moore from EF Hutton.

Tim Moore, Analyst

Brady, you mentioned that purchasing bromine on the spot market due to continuous supply chain shortages. I'm trying to wrap my head around maybe gross margin in the fourth quarter with that impact. Can you also provide an update on the Finland calcium chloride plant disruption? How far along is that getting back to normalization? Or is that more of a spring 2023 time horizon?

Brady Murphy, CEO

Sure. So regarding the bromine, you're probably well aware, we do have a long-term supply agreement to provide our bromine. Because our business was so strong in the first half of this year, we will consume the supply volumes that we are committed to ahead of schedule. Unfortunately, what that leaves us with in the fourth quarter, because we still have great opportunities as this market is still in the early stages of recovery, is that we have to go to the spot market for bromine. Now that will affect our margins as Elijio indicated in the fourth quarter, but we see that as a one-time issue that will affect this in the fourth quarter, and certainly not going into 2023 as we resume back to our contractual supply and volumes from our existing contract. Again, the longer-term, I think it points to why we are so focused on developing the Arkansas resources, because that will give us a significant uplift in volumes of bromine to help us not only with our completion fluids business for future growth but also for the energy storage side of things. As for the calcium chloride plant, we've continued to make progress. We heard from the second quarter, which had a significant impact on us from nearly complete supply disruption due to the Russian-Ukraine conflict. As we progress through the year, we're not at full capacity yet, but we're likely at 70 to 80% of where we would like to be, and we're making progress each quarter. We’re quite confident that we will be at full speed by our second quarter peak sales seasons that we need to take advantage of.

Tim Moore, Analyst

Is there any update on whether you've shipped out calcium chloride for that six-month order you received from the international lithium processor?

Brady Murphy, CEO

We continue to deliver; that was a fairly sizable order. So it was not all shipped at one time. We continue to have monthly deliveries to meet that commitment. We'll have completed that order before the end of the year. Then we will reassess where orders stand for next year with this supplier and others that are potentially using this same process.

Tim Moore, Analyst

I'm glad you won that initial made an order. Just switching gears to your early production facilities in Argentina. We know that the first one was online for the full quarter. You mentioned on the call that the second one comes online next year. Can you give us a rough sense of the revenue potential there on an annualized basis between the facilities when both are running? Is it going to be $15 million to $20 million?

Elijio Serrano, CFO

We have two units operational. They both came online in early July, and they operated essentially for the full quarter. That third one is expected to come online either at the end of Q1 or the beginning of Q2. So that'll be the third one that we have out there. The revenue is actually not as significant as we'd like, but the margins are very strong given that they're a bit capital intensive. So it's more on the margin enhancement and the margin dollars that it's bringing than the revenue associated with it.

Tim Moore, Analyst

And another question I have was, it might be too early to even comment on this. But I'm just wondering, as your customers in E&P begin to do their capital allocation budgets, which probably started last month, is there any initial read on how much the spending increase could be next year for E&P and CapEx? Given that strong oil prices and gas prices are holding up so well this year?

Elijio Serrano, CFO

Yes, we're expecting increases in the high to double digits, around the 10% level. Another way that we track that is through the frack companies, the service companies in terms of the frac fleet additions they're bringing back into the market. According to our calculations, that's running close to that 10% level of additional frack crews. Right now, the market is constrained by available frack crews. We believe that will help next year in terms of increasing overall E&P spend as growth opportunities for us in North America. As for international, I think it's a little too early to tell, but clearly, the international markets will likely exceed that 10% growth, and we'll have a much clearer picture in our next earnings call after the E&P companies announce their budgets.

Tim Moore, Analyst

Terrific. That's a great peek, and thanks for that information. One other final question actually just came to mind. You mentioned the desalination produced water pilot project with a customer. Do you think that could be commercially viable in the third quarter of next year?

Elijio Serrano, CFO

Yes, this pilot is actually going to be completed within a 30-day window. We've already tested the results with our own pilot at our West Memphis facility. So we're very optimistic; we will achieve the results. It's really more about setting it up on location, with the equipment operating in real-time with this customer's produced water. After that 30-day trial, we have full expectations that we will be entering into a commercial contract. We have a significant number of other customers wanting to set up pilots of a similar nature, but we'd like to get this first one completed first, and then get a commercial arrangement in place before moving forward.

Operator, Operator

We now have a follow-up question from Stephen Gengaro from Stifel.

Stephen Gengaro, Analyst

Thanks. You mentioned in the press release earlier about your supply agreements and the need to buy bromine on the spot market. I imagine that's driven by strong demand. Where this year have you seen sort of the strongest demand that's been different from prior years that's driven you to this position? And how do you see that unfolding going forward as far as your contracted volumes versus what you need in 2023?

Brady Murphy, CEO

Yes. Great question, Stephen. We’ve had some very good awards this year. The Brazil market hasn't fully benefited us yet because those awards and contracts are just getting started. However, we’ve had to build inventory well ahead of those contracts starting. In the Gulf of Mexico, we’ve had great market wins validated by the Kimberlite report. We also had to build product ahead of time before a lot of that activity starts. We've seen good wins in the North Sea and even in the Middle East, where we've noticed the offshore market in Saudi Arabia really picking up. So when you combine those four markets and what we’ve had to do to prepare inventory for many of these ramp-ups, that’s where we’ve consumed our normal or ongoing supply agreement ahead of schedule. We don't expect to see that type of pressure going into next year, but if we do, that’s great because it means we’ll have more demand. We would then channel more of our completion fluids to high-margin opportunities like Neptune and take advantage of that.

Stephen Gengaro, Analyst

So when we think about the impact of those contracts, as you build inventory going into next year, should completion fluids margins be creeping higher next year because of the caliber of the contracts we've invaded?

Brady Murphy, CEO

That should be the case, Stephen. We've not provided guidance for next year yet, but we’d like to ensure we understand the full E&P spend budgets. However, based on the visibility we have into our contracts and the awards we’ve secured this year, as well as the Neptune opportunities, I would fully expect that.

Operator, Operator

Our next question comes from Martin Malloy from Johnson Rice. Please go ahead, Martin.

Martin Malloy, Analyst

Good morning. I had two questions. The first is on EOS and their announcement yesterday. They also talked about retooling their factory to prepare for the Z3, their next-generation battery coming out. That was supposed to be commercially introduced and that would impact more in the second half of ‘23. Could you talk about your expectations for the sales of PureFlow in the first half of next year compared to the second half?

Brady Murphy, CEO

Yes, I don't want to give too much color until Eos has their call and gives more guidance as it relates to that. But obviously, we've been working very closely with them, with their current technology as well as their E3. We believe the E3 will be, from what we know, a much more streamlined production process, quicker to ramp up type of technology, which will allow our electrolyte flow to grow even faster than what we were able to achieve with our current technology given its complexity. The only thing we will communicate is that as they've announced, they've pushed a lot of their Q4 sales into next year. We’ll let them provide more detail on how they plan to roll out their units for next year.

Martin Malloy, Analyst

Okay. And with respect to carbon-free, can you talk about the outlook for potential calcium chloride sales in light of the Inflation Reduction Act and some benefits for carbon capture?

Brady Murphy, CEO

Yes. We remain in active dialogue with the carbon-free management team regarding our own site selection, first customer contracts, capital raises, and so on. We’re encouraged by the progress they're making in their technology. We don't believe it will represent a revenue opportunity for us until late 2023 at best, but likely 2024. We believe that many of the funds available from the Inflation Reduction Act or the bipartisan bill could also apply to carbon-free but potentially also to us as we create proper production facilities dedicated to each of their carbon capture operations.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Murphy for any closing remarks.

Brady Murphy, CEO

Thank you very much for your participation today. This will conclude our third-quarter earnings call. Thank you.