NCS Multistage Holdings, Inc. (NCSM) CEO Robert Nipper on Q4 2020 Results - Earnings Call Transcript
NCS Multistage Holdings, Inc. (NASDAQ:NCSM) Q4 2020 Earnings Conference Call March 2, 2021 8:30 AM ET
Ryan Hummer - CFO
Robert Nipper - CEO
Conference Call Participants
Tyler Zurcher - Tudor, Pickering Holt
John Daniel - Daniel Energy Partners
Chris Voie - Wells Fargo
Good morning, ladies and gentlemen, and welcome to the Fourth Quarter 2020 NCS Multistage Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time [Operator Instruction]. As a reminder, this conference call is being recorded.
I would now like to turn the conference over to your host, Mr. Ryan Hummer, CFO. You may begin.
Thank you, Jerome. And thank you for joining NCS Multistage’s fourth quarter and full year 2020 conference call. Our call today will be led by our CEO, Robert Nipper, and I will also provide comments. Before we begin today's call, we would like to caution listeners that some of the statements that will be made on this call could be forward-looking. And to the extent that our remarks today contain information, other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. Such forward-looking statements may include comments regarding our future expectations for financial results and business operations, and are subject to known and unknown risks and uncertainties, including with respect to the COVID-19 pandemic and its impact on the global economy, oil demand and our company. I'd like to refer you to our press release issued last night, along with other public filings made from time to time with the SEC that outline those risks.
I also need to point out that in today's conference call, we refer to adjusted EBITDA, free cash flow and free cash flow less distributions to non-controlling interest as well as the net working capital, which are all non-GAAP financial measures. We use these measures because they allow us to compare performance consistently over various periods without regard to costs associated with our current capital structure and in a manner that we believe better reflects our operating performance. Our press release and the updated investor presentation posted yesterday, which are both available on our Web site, ncsmultistage.com provide reconciliations of these non-GAAP financial measures to the nearest GAAP financial measure.
I'll now turn the call over to Robert.
Thanks, Ryan, and welcome to our investors, analysts and employees joining our fourth quarter 2020 earnings conference call. I hope that everyone listening today is healthy and safe. Today, I'll review some of our key accomplishments during 2020, review our strategic priorities for 2021 and briefly discuss the outlook for each of the US, Canadian and international markets. After that, Ryan will discuss the fourth quarter results in more detail and speak to our guidance for the upcoming quarter. I'll then provide closing remarks.
First, I want to thank our employees. It is through the hard work, dedication and ingenuity of our people that we were able to navigate the challenging conditions that we faced during 2020, and it takes the effort of the entire team to position us to achieve our near and long term objectives. We continue to help our customers optimize their operations and maximize the value of their assets by bringing them efficiency enabling technologies supported by our service capabilities. Our focused product and service offerings deliver tangible value to our customers. Key examples from 2020 and early 2021 include the following. Within fractured systems, we recently set a record for NCS, completing a 250 states well in the Montney in a single tool run, utilizing our shift frac closed method to optimize profit placement. This was part of a three well pad with over 600 sleeves in which we helped our customer precisely place 99.5% of the planned profit volume.
Our tariff sleeves for waterflood applications allow for greater control of water injection and therefore, sweep efficiency. Sales of these products have begun to increase in Canada recently, and we are actively working to expand the product line. Our PurpleSeal frac plugs from Repeat Precision provide customers with efficiencies and pump down and drill out times, while our factory assembled PurpleSeal Express system that combines our frac plug with a setting tool reduces on-site HSE risk during plug and perf operations. We have developed a new tracer deployment system, which is optimized for simul frac operations, allowing us to provide our customers with valuable information in these highly efficient completions. We've also seen continued uptake of our new value oriented tracer diagnostics offering that removes personnel from the location and reduces the overall cost of wellbore clearance diagnostics. Within well construction, our AirLock system provides our customers with greater assurance of landing casing and extended reach laterals, optimizing field development cost. The technology can also reduce case and running time, providing a net savings to the customer. We had our first AirLock system installations in Saudi Arabia in 2020, and we've been successful in Bundling AirLock systems with other well construction products in North America.
We provided both sliding sleeves and tracers in an international geothermal test with Deep Earth Energy Production Corp during the fourth quarter and are excited to be partnering with them. This work is part of Deep Earth’s project to develop a 20-megawatt geothermal power facility in Southern Saskatchewan. As those of us in Texas can appreciate, this is fully winterized baseload power. While our revenue earned from the applications that support renewable energy and electrification initiatives is small at this point, we are exploring ways to utilize our existing technology and research and development capabilities to participate in opportunities serving the energy transition theme. We deliver all our products and services through an exceptional and highly trained field operations team that support our customers' operations.
We operate in a safe and efficient manner in all we do with the commitment to safety that extends to our employees and our customers. We finished 2020 with no recordable incidents and have continued that record into 2021. While activity levels were lower, our employees faced new challenges, such as closing down operations, consolidating facilities and all of the other challenges related to working in the midst of a global pandemic. I'm very proud of the entire team for staying focused on working safely during this time. Another significant achievement for the team was that we recently passed our annual ISO quality audit without a single recommendation or finding. This is almost unheard of and speaks not only to the dedication and focus that the organization has on safety and best practices, but to the quality of our systems and people as well. 2020 was a challenging year for us and we're not alone in that regard. Our team rose to the occasion to meet the challenge. We made hard choices that led to material reduction in our workforce and changes in our organizational structure and our supply chain.
We closed two field locations and relocated our US assembly operations to better align with supply chain partners. We were able to reduce our SG&A expense in 2020 by over $29 million or 33% as compared to 2019 and expect that SG&A will decline further in 2021. In 2020, we reduced our gross capital expenditures to approximately $2 million and generated over $1 million in asset sale proceeds, reducing our net CapEx to $1 million. We also took steps to enhance our liquidity, including amending our revolving credit facility. We ended 2020 with a stronger balance sheet than we had at the end of 2019, increasing our cash balance by over $4 million while reducing debt by over $7 million, resulting in a net cash position of $9.8 million at the end of the year.
One final highlight for the fourth quarter and for 2020 was a settlement, the final court judgment related to our historical litigation with Diamondback, as discussed in the last quarter. During the fourth quarter, Repeat Precision received over $23 million in cash and was also granted ownership of the patent related to our disposable setting tool. As a reminder, NCS invested approximately $16 million in Repeat Precision through our initial investment in the joint venture in 2017 and a subsequent earn out payment in 2019. Through the end of December of 2020, NCS has received nearly $26 million in distributions from Repeat, while still retaining our 50% ownership position. It has been a great investment for us.
Turning now to 2021. Our strategic priorities for the year are straightforward. First, as a technology company, we will continue to bring tangible value to our customers through our differentiated product and service offering. In this, we aim to commercialize new products that will facilitate both near term opportunities and position us for long term growth within the oil and gas industry and serving energy markets more broadly. We look forward to discussing some of the new products we are working on as they are proven out during field trials and launched commercially. Second, we will continue to strive to have revenue performance that exceeds underlying industry activity trends in each of the US, Canada and international markets. We are focused on growing our international business. International increased from 8% to 11% of our total revenue last year, and we expect international revenue to grow as a percentage of our total revenue again in 2021. And finally, we aim to generate free cash flow in 2021. Our capital light business model facilitates free cash flow generation through our ability to generate free cash flow in 2021 will depend on the rate of growth in the business through the year and the resulting working capital needs to support it.
I'll now briefly review the market environment and our current strategies in each of our geographic markets. Starting with Canada. Our current expectation for full year industry activity is flat to modestly lower. Drilling activity in the first quarter has increased seasonally as expected from the fourth quarter of 2020, but remains more than [3%] lower than last year's first quarter.
We believe that we are well positioned to grow our revenue in Canada in 2021 as compared to 2020 despite our expectation for slightly lower levels of industry activity. Our sales and business development team in Canada is exceptional and has remained highly engaged with our customers throughout the pandemic. They're delivering our strategies in Canada to cross sell our products to existing fracturing systems customers, commercialize new products and grow our market share in underpenetrated regions, including the Montney.
These efforts showed up in our fourth quarter 2020 Canadian results with a sequential revenue increase of 279%. That increase is from an artificially low base, influenced by a later than normal emergence from spring breakup in 2020, but the momentum has carried into early 2021. The performance is the team effort. We're developing the right products, leveraging our technology center, and our sales and operations teams are working seamlessly to deliver the kind of results I discussed earlier for our customers. In the US, our current expectation is that industry capital spending will be flat to 10% lower in 2021 than in 2020. But that drilling and completion activity will increase on a sequential basis as we progress through the year. We currently expect that our US revenue will be lower in the first quarter of 2021 than in the fourth quarter of 2020, primarily related to decreasing activity at Repeat Precision. Repeat loss of market share with existing customers in late 2020, as we have seen competitors reducing pricing to what we believe to be unsustainable levels, especially going forward, if there is continued pressure in raw material prices.
During the first quarter, we've already gained some of the share back due to performance issues experienced by our competitors, and we are confident that we will continue to increase our market share. Our products and services deliver value beyond the sales price and customers are recognizing that. While we believe our efficient manufacturing and supply chain would allow us to compete on price with even the most aggressive competitors, we choose to balance fair pricing with world class products and service delivery for our customers. We will continue to monitor the market and make decisions accordingly. Late in the fourth quarter and into the first quarter, Repeat also experienced growing pains related to a new plug design that we had introduced. Performance for the new design, while robust, was below the high standards that we hold ourselves to. We have since modified the design and have seen the performance improvements we expected. We have since gained work with new customers and are participating in increasing activity with existing customers.
Revenue has been improving as we progress through the first quarter. Though with our high exposure to the Permian Basin or through our high exposure to Permian Basin, we were materially impacted by disruptions from the recent winter storm. We expect that Repeat will return to sequential growth in the second quarter of 2021. Outside of Repeat, the recent increase in commodity prices provide us with additional opportunities within our Tracer Diagnostics product line, which some customers view as more discretionary as well as our fracturing systems product line as many of the areas where sliding sleeves can deliver clear benefits to our customers in the US, such as in the Central Basin platform in the Powder River Basin, have a breakeven oil price that is below current strip pricing and are populated with private operators who have been adding activity in recent months.
We believe that industry capital spending outside of North America will increase slightly in 2021 as compared to 2020, but that the increases will be weighted to the second half of the year. We continue to grow our international customer base with our international operations, representing a greater share of our overall business over time. The North Sea remains an important market for us and we continue to grow our presence in the Middle East. I mentioned our sale of AirLock systems in Saudi Arabia earlier, and we also recently completed our first fracturing systems job in the UAE. We have a successful contract and partnership in place in Oman and expect to participate in that market with additional product lines and with additional customers in 2021. In addition, activity has resumed in areas that were subject to extended COVID related shutdowns, including Argentina and China.
While we believe we can outperform industry activity based on the value proposition of our products and services, we remain committed to cost discipline, supporting our gross margins and managing capital expenditures and SG&A. We believe the investments and initiatives over the past several years, including our investment in Repeat Precision and our technology center, provide us with opportunities for capital efficient growth and increased free cash flow over time. Maintaining our cost position is critical given the current industry environment. We're in a very competitive industry and one in which the activity levels for our customers continue to be depressed as compared to historical levels. We have taken the difficult steps to rightsize our operations for the current market environment, and we'll be ready to react if industry conditions change.
I'll now ask Ryan to discuss our financial results in more detail. Ryan?
Thank you, Robert. As reported in our earnings release, fourth quarter revenues were $27.4 million, 47% lower than the prior year's fourth quarter. On a sequential basis, revenue in the fourth quarter was 68% higher than revenue in the third quarter, reflecting the continued recovery in completions activity in the US and the typical seasonal improvement in Canada. We delivered sequential revenue increases of 21% in the US and 279% in Canada, partially offset by 35% sequential decline internationally.
Full year revenue for 2020 of $107 million represented a 48% reduction as compared to 2019. Gross profit, which we define as total revenue less total cost of sales, excluding depreciation and amortization expense, was $11.7 million in the fourth quarter or 43% of revenue. This compares to $26.1 million or 50% of revenue in the prior year's fourth quarter. However, for a sequential comparison, our gross profit was $6.1 million or 37% of revenue in the third quarter. Our gross margin percentage increased sequentially, primarily due to the increase in revenue, which led to better absorption of fixed costs and the benefits from actions taken to rationalize our field service footprint and to improve our manufacturing efficiency.
Selling, general and administrative costs during the quarter were $10.6 million in the fourth quarter, which was $11.6 million or 52% lower as compared to the prior year's fourth quarter and also $1.8 million lower than the third quarter of 2020. Our reported SG&A include share based compensation and certain nonrecurring expenses, including certain litigation costs and severance expenses. In the fourth quarter, we reported $0.9 million benefit related to litigation costs as approximately $1.6 million of net litigation expense was classified into a new line item, reflecting the gain on the settlement in connection with Diamondback. Speaking to that, we recorded a gain on patent infringement settlement of $25.7 million during the fourth quarter, which reflects the cash and other assets received, net of litigation costs and insurance proceeds.
Our adjusted EBITDA for the fourth quarter, which excludes the gain on patent infringement settlement, was $3 million as compared to $8.3 million in the prior year's fourth quarter. This represented an improvement of $5.1 million as compared to the third quarter. Full year adjusted EBITDA for 2020 was $2.2 million as compared to $28.2 million for the full year 2019. During the fourth quarter, our depreciation and amortization expense was $1.1 million and our net income attributable to noncontrolling interest was $15.3 million during the quarter, reflecting profitability at Repeat Precision and the fact that Repeat was the direct beneficiary of the patent infringement settlement.
Turning now to cash flow items and the balance sheet. Cash flow from operations for the fourth quarter was $20.6 million, and our net capital expenditures for the fourth quarter were negative $0.1 million, reflecting asset sale proceeds in excess of purchases. As a result, free cash flow for the quarter was $20.7 million and was $34.1 million for the full year. At December 31, 2020, we had $15.5 million in cash and total debt of $5.8 million with our revolving credit facility undrawn. At December 31st, our borrowing base under the credit facility was $11 million and Repeat Precision had access to over $9 million in borrowing capacity that is separate from our revolver. NCS had net working capital of $54.6 million at December 31.
Turning now to a few points of guidance for the first quarter of 2021. We currently expect first quarter total revenue to be roughly in line with the fourth quarter of 2020. Based on the factors that Robert mentioned earlier, we expect our US revenue in the first quarter to be between $6.5 million and $7.5 million. We expect our international revenue in the first quarter to be between $1 million and $1.5 million. And we currently expect that revenue in the first quarter in Canada will increase to $19 million to $20.5 million, with the range reflecting uncertainty as to the timing and onset of weather driven spring breakup. With the decline in activity and pricing pressures in the US, we currently expect our gross margin for the first quarter to be between 35% and 40%. This gross margin guidance also reflects inventory adjustments associated with the product redesign Robert mentioned at Repeat Precision. We expect our reported SG&A, inclusive of share based compensation and nonrecurring items, to be between $12.2 million and $13.2 million in the first quarter. This includes approximately $2.4 million in share based compensation and approximately $1 million in litigation expenses.
Our share based compensation is expected to be slightly higher than in prior quarters, primarily due to our use of cash settled incentive awards, which are remeasured quarterly and upon vesting and which reflects the increase in our share price since the end of 2020. We expect our first quarter depreciation and amortization expense to be approximately $1.1 million and our net interest expense to be $0.2 million, which reflects primarily unused facility fees and the amortization of debt issuance costs, given that we're undrawn on the revolver. We expect our gross capital expenditures for 2021 to be between $1 million and $2 million, slightly below our gross capital expenditures of $2.2 million in 2020. We continue to evaluate business opportunities that may support additional capital investment. If we were to move forward with such opportunities, they would have attractive cash on cash return profiles and enhance the earning power of our business.
I'll now hand it back to Robert for closing remarks.
I'll now close with a couple of brief comments. Our industry continues to face significant challenges, especially in North America as customer activity remains low with customers prioritizing flat production and free cash flow generation over production growth. I believe NCS is positioned to succeed in this environment. We deliver a focused portfolio of technologies that help our customers operate more efficiently and optimize the value of their assets. We are pursuing accretive growth, including in international markets, which we expect to continue to grow as a percentage of our total revenue in 2021. We are focused on maintaining the structural benefits from the cost reduction actions that we took during 2020 and our capital spending remains restrained. We maintain a capital light business model, which facilitates free cash flow generation and is supported by a strong balance sheet. We are prioritizing free cash flow and have the right capital structure and liquidity in place if cash and investments and working capital are required to support revenue growth. And bringing innovation to our customers, we have made substantial investments to develop our intellectual property, and we continue to work to enforce and defend our intellectual property to ensure we make a proper return on those investments that we've made.
And with that, operator, we'd like to take some questions now.
[Operator Instructions] Your first question comes from the line of Tyler Zurcher with Tudor, Pickering Holt.
First question is on the US. The Q1 guidance would imply some fairly meaningful top line degradation in Q1. And it sounds like part of that is Repeat Precision what you talked about in the prepared remarks and I suspect part of that is the winter storm year. So I was just hoping you could give us a little bit more color and kind of partially the moving pieces as to why the top line is expected to be down so much in Q1? Thanks.
Yes, that's exactly right. It's primarily Repeat Precision, and then we basically had lost a week because of the storms. And our Repeat revenue is primarily in the Permian, so it was primarily repeat. So there were a couple of things that I mentioned in the prepared remarks about Repeat Precision on the top line. And it was just those two items. I mean, pricing pressure in the fourth quarter increased actually from what we had seen. We were hopeful that pricing pressure had somewhat stabilized in the mid to late Q3 time frame. But then as we came into Q4, we began to see competitors that were driving price pretty extremely. And as I also said, we think that there's value beyond the sales price of our products to our customers. While we keep and maintain a very close eye on what the pricing is in the marketplace, we intend to continue to work with customers that appreciate the value. So we did lose some customers during the quarter. Now some of those customers we've worked with to bring them back online, but some of them, we haven't because they're working at substantially lower prices or we have competitors that are.
Another thing that impacted that I mentioned, the beginning to impact the first quarter and part of the fourth quarter, was the new tool that we come out with. So we developed a new composite plug or a redesign, if you will, of our existing product. And we literally had thousands of runs of this tool and field. And we began to notice over time that we were having an issue. And it was a fairly small percentage of the runs that we had, but it's not something that we had experienced in the past. I mean, we virtually had zero of these types of events and they're real events for customers. So at that point, we had almost -- well, we were in the process of switching over from our pre product, the composite plug that we have been running before, to this new plug. So we had to make a pretty strong pivot and pull all of that inventory back in and ramp up manufacturing to get product of the previous product into the field. So that's mostly complete now, and we're just building back the customer base from that. So it was a fairly significant hit that we're going to be taking for the first quarter, but we've already seen come back from that.
And as I said earlier, we expect to continue the sequential quarterly growth with Repeat Precision in the second quarter.
And maybe sticking with the US, it seems like the trend towards more simal fracs is continuing to increase. And I was wondering if you can maybe talk about how that impacts your business. I know you have a bunch of different products you offer in the US market. But just at a high level, how that trend kind of impacts your business? And then secondarily, in the US I imagine coiled tubing pricing has got to be somewhere near historic lows right now, which I suspect is a good read through towards your fracturing solution. So just curious if you could kind of comment on where coiled tubing pricing is at and how that might impact your business? And then secondarily, the trend towards more simul-fracs and how that might impact your business in the US moving forward?
For simul-fracs, that really affects our tracer product line and Repeat Precision to some extent. For the tracer product line, what we did is it's a very intensive operation. So it requires a number of things to happen at the same time on location, especially for the Tracer Diagnostics product line. So we would have two to three people on location at a time versus one in the past. And we're monitoring multiple flow streams to make sure that we're getting the right chemicals in the right concentrations in the right stages. So we developed, I think I mentioned in the prepared remarks that we had developed some technology to make that process easier. So that was very quickly developed in anticipation of our first job that we did. We put it out on the location and it's worked well. What simul-fracs have the opportunity to provide for us with Tracer Diagnostics and with composite plugs is that it's a more intensive revenue stream potentially. So as more customers switch over to simul-fracs. I mean, obviously, it's going to be more product sales in a shorter period of time. So we certainly look forward to that.
And then on your comments around coiled tubing pricing, yes, I've never seen coiled tubing pricing as low as it is today. I mean it's just crazy at those prices. And it is a bit of a tailwind for us, but it's not the primary tailwind for us right now. I mean, oil prices are the primary tailwind.
As I mentioned earlier, in sub $50 environment, the areas that benefit the most from using pinpoint stimulation and sliding sleeves in the completions, those are areas where there's not much activity going on. And so now as we find ourselves in an environment that is bumping 60 pretty regularly, we're seeing that activity pick up for multiple customers in multiple basins. So that's really the biggest tailwind for us is commodity prices.
Your next question comes from the line of John Daniel with Daniel Energy Partners.
Just one question, y ou noted in the prepared remarks about the raw material increases that you're seeing. Can you just walk us through sort of the drivers and the magnitude of these increases and then the time lag between when you can actually go back to customers to sort of recoup some of that?
Yes, so we haven't seen the increase in material prices affect us yet because we do buy in bulk. So we're good for now, and potentially through the end of the year. But we do expect to start seeing, market prices start to come up in the back half of the year. I mean if you just look at scrap prices right now, I think they're at historical highs. And there's demand factors that are driving it a bit. Just on supply shortages and shutdowns around the world and some of the plants or the mills. So for our business, we don't expect that we're going to get the impact from them probably not this year, but we do expect to see that impact hit the industry before the end of the year. And in some cases, I mean, it's speculation now and how much that's going to be. But based on the conversations that we're having, I mean, it could be in the teens, high teens of increase, in some cases for some of these materials.
And then I'll slip one more in, you noted a new tool that was introduced sort of a 30,000 foot question here, but like how is the customer willingness to look at new products, I mean, coming out of the down cycle, say they're interested in learning more or they're reticent and they want to stick with what they know for now?
Well, I can tell you that customers don't try things just because it's been technology anymore, and I think that's been the case for a number of years. So it really depends on what the potential price for the technology is and how good of a job that we do in creating that value proposition for the customers. So for instance, the new tool that I told you that we developed earlier that we had the hiccup on, that one customers took it almost immediately. It's a composite plug. It had less material in it than other composite plugs. There was also the hope that being able to eliminate something in the neighborhood of 15% to 25% of the plug material on each plug would speed up time between plugs and drill outs and things like that. Unfortunately, that particular design didn't work the way we had hoped that it would. So we quickly got it out of the market. But there is a design between that one and our existing design, there is an opportunity to get there. Just to get back in the market quickly, we made the decision not to develop that one. Let's just go back to what we have been doing with a couple of modifications to it and get back in the market. But customers are, I would say, for the most part, if there's an opportunity to become more economical for the customer, the customers will try the new technology as long as they believe that they can manage the risk.
Your next question comes from the line of Chris Voie with Wells Fargo.
Just want to check on the margins front. I think you guided to 35% to 40% in the first quarter. Just curious if you can describe what that might have been if it wasn't for the expected inventory adjustment and to help us think about what margins might get to in the second half of this year. Obviously, there's some 2Q headwinds with Canada. But just if you could just walk through some of those parts?
I'd say there are two factors really in thinking about the gross profit margin guide for Q1. There is one piece, obviously, associated with the inventory actions that we've taken. The other piece has to do generally with mix. So with the Repeat in the US being a slightly lower part of the revenue in the Q1 guide relative to Q4 actuals and with Canada being a slightly larger percentage, mix probably drives that, call it, maybe two thirds, one third of the difference between Q4 into Q1, two thirds of which would be mix, one third of which would be around the specific actions with Repeat and around the inventory. So with that, certainly, we do believe that as we get to the back half of the year that we can get back to a margin profile that's kind of mid to high 40% as the US business, particularly Repeat, continues to get on sequential growth path and as we get to the summer quarters, which are generally higher activity quarters for the international operations as well.
And then just curious if you can talk about the backdrop right now for M&A and combinations. Obviously, when activity is shifting in a big way, it gets tricky. But what's the tone of discussions right now in the industry?
Well, I can tell you there are discussions now, where in the first half of 2020 -- well, actually, most of 2020, we were all attendant to our businesses, trying to prop up our balance sheets, take care of whatever we need to take care of. But I think that for a large part of the industry has -- that's been completed, and now we're all starting to think about what needs to happen, which is consolidation. I mean I don't think anybody could disagree that there's too many service companies out there to support the business that we're going to have going forward. So it's just a matter of finding the right opportunities, the ones that make sense and that can be accretive. So I would expect to see those conversations continuing and start to see some activity around consolidation at some point this year.
[Operator Instructions] I'm showing no further question at this time. I would like to turn the conference back to Robert Nipper.
Thank you, operator. On behalf of our management team and our Board, we'd like to thank everyone on the call today, including our shareholders and the research analysts who cover NCS, but especially our employees. I truly appreciate the enormous effort that our people are putting in and the sacrifices made by everyone at NCS to support the company and each other through this challenging market environment. We continue to operate safely with zero recordable incidents in 2020 and thus far in 2021. Our team continues to provide excellent service to our customers and is developing new products and services that will enable our customers to be more successful. While early, we are also pursuing opportunities to utilize our products and services in markets outside of oil and gas. Our people have done a tremendous job in managing the many challenges that come from the impacts of the COVID-19 pandemic on their lives, as well as its impacts on our industry and company. We are only as good as our people and I believe that we have the best team in the industry. We appreciate everyone's interest in NCS Multistage, and we look forward to talking again on our next quarterly earnings call in May. Thank you.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.
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