Enerflex Ltd. (EFXT) Q3 2020 Earnings Report, Transcript and Summary

Greetings, and welcome to the Exterran Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Blake Hancock, Vice President of Investor Relations. Thank you. You may begin.

Good morning, and welcome to Exterran Corporation’s third quarter 2020 conference call. With me today are Exterran’s President and Chief Executive Officer, Andrew Way; David Barta, Exterran’s Chief Financial Officer. During this conference call, we may make statements regarding future expectations about the Company’s business, management’s plans for future operations or similar matters. These statements are considered forward-looking statements within the meaning of the U.S. securities laws, and speak only as of the date of this call. The Company’s actual results could differ materially due to several important factors, including the risk factors and other trends and uncertainties described in the Company’s filings with the Securities and Exchange Commission. Management may refer to non-GAAP financial measures during this call. In accordance with Regulation G, the Company provides a reconciliation of these measures in its earnings press release issued earlier today, and a presentation located in the Investor Relations portion of the Company’s website. With that, I’ll now turn the call over to Andrew.

Thanks, Blake, and good morning, everyone, and thanks for joining the call today. First, I’ll discuss the third quarter highlights, then some recent developments and wins along with what we’re seeing across our global footprint before I turn it over to Dave. The third quarter came in line with our updated guidance from September, as we had originally guided to the mid-$30 million EBITDA range. This was driven by improved ECO revenue, along with continued focus on our cost structure as SG&A continues to move lower. COVID-19 continues to challenge logistics globally for many of our customers and suppliers. But during the quarter, we saw a slight improvement in our ability to move people around the world, which is continuing so far into the fourth quarter. We remain cautiously optimistic, but are closely monitoring the potential impact of renewed COVID cases around the world. During the quarter, we signed an $80 million six-year extension in Latin America that requires no incremental CapEx. This puts renewals for the region over $200 million for the year, continuing to highlight the mission-critical nature of our equipment globally. During the third quarter and nearly in the fourth quarter, we were also awarded two small ECO contracts in the region, further enhancing our commercial success. While new product bookings and new ECO orders were slow during the quarter, we are seeing a pickup in interest in tender activity as slowly increase outside North America. We continue to work on several large water projects and remain hopeful that at least one of these projects will get awarded, during the fourth quarter. Water is an integral part of our transition story, not only because it does not require incremental demand to drive growth, but also it’s important delivering enhanced environmental solutions to our customers and provides us multi-industry applications over the medium to long-term. While this year pulls the growth in this business more than we would’ve liked, as our customers stepped back to find the new normal, we continue to see new projects come onto our radar, and have started to see customers look beyond the short-term and plan for their future needs. We have a strong pipeline of both large and smaller projects with a majority of the mix related to our Middle East region. As the dust settled in the U.S., we are beginning to have a more constructive dialogue with our customers on starting additional pilots and trials to further prove out our technology. The commodity supply-demand imbalance and COVID-19 pandemic have certainly impacted our customers’ production and their cash flow, ultimately leading to many looking for ways to adjust spending over the near term. Over the past nine months, we’ve had numerous conversations with our customers on helping them navigate these challenging markets. The outcome to these discussions has resulted in solutions to mutually benefit both, Exterran and our customers taking into consideration the short-term uncertainty and balancing the longer term needs. A net result of these negotiations to-date is roughly $40 million reduction in long-term backlog, largely tied to one specific contract with the term of the agreement we’ve modified. The reduction in backlog impacts the second half of 2022 through 2028, and Dave will provide more color on this in his comments. Looking across our regions and starting in North America, clearly product bookings continue to be slow, but we are starting to see more positive conversations. And it’s a little early to say things will pick up next year as our customers are going through their budgetary cycles right now, but we all hopeful a few of these will turn into opportunities next year. We’re also extremely focused in the region on building out our AMS service offering to help to generate revenue and continue to enhance our margins. In Latin America, despite all of the difficulties, the regional space between COVID-19, geopolitical challenges and currency headwinds, we continue to have commercial success. On top of the more than $200 million of extension so far in the region, we have had a couple of small ECO wins, and we still see additional opportunities for important renewals within the coming months and quarters. Turning to the Middle East region, we continue to execute well on the projects in backlog. However, with travel limitations, it has called certain project schedules to move further to the right. Commercially in the region, we see the de-boom structure gain an additional traction, which should set us up well for additional opportunities in the coming years. There are also other large countries in the region, where we have not had a significant presence that we are currently focused on expanding in the common years to help drive additional revenue and profitability. For the Asia Pacific region, we are seeing a breakthrough for Exterran in new processing and treatment equipment, enabled by the many years of successful service support our AMS team has performed in the region. Overall, despite the industry challenges, we continue to have constructive dialogue with our customers and see a healthy pipeline of opportunities for our products and services. And with that, I’ll now turn it over to Dave.

Thanks, Andrew. For the quarter, we delivered EBITDA of $36 million, which was in line with the updated guidance that we provided in September, on revenue of $170 million. You’ll see in the earnings press release and in our 10-Quarter, which will be filed soon, that we have now reclassified our U.S. compression fabrication business into discontinued operations. So, all these offers [ph] are now have been restated to exclude this business from our reoccurring numbers. For the past year, we have talked about becoming a company with EBITDA margins greater than 20%. As we reported in this quarter, our adjusted EBITDA margin was 21%. This achievement is not just a function of the mix of higher margins from more reoccurring businesses, but also results in the focus of the organization drive productivity. As one example, we’ve taken out almost $30 million in SG&A costs out of our structure since 2018. We also have had strong OpEx productivity that’s reflected in gross margins. The Q3 adjusted EBITDA margin of 21% compares to 15% for 2018. While some variable costs have benefited from lower volumes, we’ve had margin rate pressure from fixed costs due to these lower volumes as well. These results and our transformation have been accomplished in what could possibly be the most difficult business environment in the past 70 years. Exiting compression was the last significant adjustment to our product portfolio. And we’re now focused on higher margin, cash-generating and returns-enhancing businesses. Back to the Q3 results from a segment perspective. Revenue for contract operations was $82 million, while gross margin was 57 -- resulting in the gross margin rate of 70%. Revenue increased sequentially, as a result of the contract adjustments which Andrew mentioned, the full quarter’s impact from the Q2 contract start-up and more overall activity during the quarter. I will add, the contract term that was adjusted, resulted in acceleration of deferred revenue and appreciation for the project, which will continue over the next two years. This may be a good time to point out and remind everyone that when we receive upfront cash reimbursements for ECO project, we amortize that over the life of the project as deferred revenue. ECO backlog at the end of the quarter stood at $1.21 billion. The backlog was down as the new contract extension was partially offset by the contract adjustment. For AMS, revenue was $30 million and gross margin was $7 million. This resulted in the gross margin rate of 24%. The revenue increase was driven by increased activity in the Asia Pacific region and Latin America. Revenue in the product sales segment was $57 million and gross margin was $3.1 million, resulting in the gross margin rate of 5%. Revenue increased sequentially driven by incremental activity in our international location. Margin increased for the quarter due to better absorption of fixed costs with increased factory activity. We continue to make strategic decisions to hold certain engineering and manufacturing costs that we deem critical going forward. And this was roughly a $1.1 million drag for the quarter. Our product sales backlog was $497 million at the end of the third quarter compared to $547 million at the end of the second quarter. SG&A expenses were $30 million, down from $32 million in the second quarter. Moving to the balance sheet. Net debt at the end of the third quarter was $488 million. Our leverage ratio is 3.5 times and compares to 3 times at the end of the second quarter. I'll also remind you that we have no near-term maturities. And our next maturity is our revolver in 2023. Turning briefly to the fourth quarter. We expect adjusted EBITDA to be in the high $30 million range. We have included guidance for CapEx and cash taxes in the earnings presentation deck. While there remains a great deal of uncertainty and variability in the business environment, we are also well into the 2021 planning process. While we're not in a position today to provide quantitative guidance, we are confident that EBITDA in 2021 will improve from the 2020 level. This will be driven by the strong ECO and product backlogs, along with the productivity and efficiencies that we've achieved over the past year. EBITDA margins will remain north of 20% as well. And with that, I'll turn the call back to Andrew for his closing remarks.

Thanks, Dave. As we look beyond 2020 and into next year, we continue to see the year to be a growth year driven by backlog execution, additional productivity and cost controls. We are strongly focused on building additional momentum in our water business, growing aftermarket services and expanding our new product development to help enable and enhance our total product offering. We will control what we can control and we'll adjust quickly and swiftly, if needed, as we have shown, we are capable of doing over the past couple of years. All of this leads to the focus on protecting the core of our business, which means managing our cash flow to protect our balance sheet while allowing us to continue to invest in the business in the coming years. As we near the completion of the compression divestiture, the cleanup of our portfolio will largely be complete from this leg of our transformation. The areas of focus I laid out for 2021 will drive improved backlog, enhanced margins and better returns over the medium to long term. Our strong backlog gives us visibility heading into 2021 and the opportunities we see in the coming 12 months provides confidence for the years to come. And with that, I'll now turn the call back to the operator. Thank you.

[Operator Instructions] Our first question comes from Kyle May with Capital One Securities.

Hi. Good morning. I have a two-part question about the contract operations business to get started. One, can you give us any color about how the renewal in Latin America compares to the previous rate in terms? And then, two, you had mentioned some contract adjustments and increase in activity. Just wonder if you can give us any more details around the changes there and how we should be thinking about that?

Yes. Good morning, Kyle. First of all, the renewal that we saw during the quarter was pretty consistent with the renewals that we've had year-to-date. In terms of the commercial terms of those contracts, we see no changes to our current outlook. And as you can see in the last few quarters, we've seen a fair amount of productivity and a lot of great work done by our teams in the regions to continue to enhance our margins in ECO. So, we really don't see any changes on a go-forward, and the contract renegotiations were very, very successful as it pertains to that particular contract that you referred to. In terms of the other contract that you referred to and also just specifically on overall negotiations, it's very clear, not just for ourselves but the whole industry have been through a multitude of challenges this year. And really early in March-April timeframe, we had a lot of customers throughout the industry, not just from ECO, but I'd say just generally asking if we could work through with their particular profile of hydrocarbons that they're producing and see if we can come up with ways to either produce them in a more productive way, are there opportunities that we could maybe change some of the construction of the facility in order to produce a different type of output from maybe less dry gas, more liquids. And so, we've had a lot of discussions throughout. And throughout the past six months, we're almost complete with those discussions. We had the one that I've mentioned in the call, certainly Dave can give you a little bit more color, but we did have one contract that we were able to negotiate that changed the term of that contract. And that specific contract had some issues that they were working through as it pertains to their offload capabilities and who has taken some of that gas. And so, we're able to renegotiate both the scope and the term in order to come up with the right solution really for both parties. So, overall, I'd say a very strong outcome for Exterran and a very good outcome for our customers. And certainly, our teams around the world, both in Latin America and the Middle East and also in Africa really worked hard during the last few months, during real difficult times to try to navigate and help customers, be it some of the contracts that I referred to in my prepared remarks that are product contracts, that maybe have moved slightly to the right. We've been able to negotiate and work with our customers to make sure that the projects are still flowing adequately. Our engineering teams have embraced a lot more technology to be able to provide solutions real-time with customers. So, we've had a lot of activity where we've been able to keep pace with all the engineering deliverables that we've had to do, whereas in the past, you will have required people to be in offices together. So, just a lot of changes, a lot of challenges that we've successfully navigated. And, we feel very good at the overall outcome going into the fourth quarter and into 2021.

Got it. Okay. That's very helpful. And then, for my next question, Dave, I appreciate the preliminary thoughts on 2021. And I realize there's still a lot of uncertainty ahead, but just wonder if you can give us any additional thoughts or goal posts of how we should think about framing up next year, and maybe any color around -- initial thoughts on CapEx?

Yes. I think, again, we said that -- you're exactly right, I think, there's a lot of variables right now that we are working through and hope that some of those things are settled in the coming months. Obviously, COVID being one, as Andrew said, it impacts projects. And as you know, we had the big project we announced in the first quarter. And it's heavily dependent soon on our people getting on that site. So obviously, COVID is a challenge. So hopefully, we'll get more clarity we'll give you more guidance around revenue and margins and EBITDA. I think, from a capital standpoint, again, we're being, as you can imagine, very thoughtful about our investing. We're focused on investing in high quality opportunities, whether that's capital or working capital type investments. And at this point, we have very little capital that's committed for next year. And I think in terms of our final view on capital, it will depend on any attractive project opportunities that we see between now and the start of next year. And we've mentioned there are some water projects that are out that we're involved in, and so, some of that may come down our final guidance to how those projects are awarded.

Okay, got it. And, maybe one more for me. I believe you mentioned that you're nearing the exit of the U.S. compression fabrication business. Can you give us an update on timing of the close for that and use of proceeds?

Sure. So Kyle, we've had a great working relationship the past few months during this transaction with Compass. And we're pleased to say that actually, as we speak, we're in the middle of closing today. So, by the end of close of business this evening, the business will be closed. The transaction will be complete, and Compass will be the proud owner of Exterran's compression manufacturing business here in the North America. And so, it's pure timing that it happened today. We're in the middle of it, as we speak. And we're hoping that by the end of play today, it will be moved on, and the team will be in great hands with Compass, and we certainly look forward to working with them and transitioning here over the next couple of months, as we support their needs. But today is the day that, that's planned to close.

Got it, okay. Congratulations on getting that one done. And, I’ll turn it back.

Our next question comes from Doug Becker with Northland Capital Markets.

Andrew, you mentioned one of the Middle East water services contracts is still expected to be awarded by year-end. Would this be for services or equipment? And just any color around the remaining hurdles from getting those across the finish line?

Yes. Good morning. We actually have a number of contracts that we're currently negotiating. The pipeline for our water business is still strong. I would say that during the summer timeframe, there were a number of contract negotiations that stalled, mainly because of the challenges that it brings with our customers coming together with their decision-makers and our ability to get face-to-face with our customers. So, there are a number of contracts that's still working its way through. I wouldn't say there's any hurdles or stumbling blocks. As always, in some of these contracts, you need to do a lot of work upfront on making sure that you've got the right technical profile of the actual water profile and what actually needs to get done. So, all of that technical evaluation really certainly took place during late spring, early summer. I really hope that in the fourth quarter here, in the next couple of weeks, one of the projects out of the few that we're negotiating will come through. They're both equipment and services. And so, it's a combination of equipment that we would provide and services that would be on a long-term basis. And so, we're very hopeful here that, that will happen. And as soon as it does, we look forward to communicating and let you all know.

Perfect. Dave, maybe just to follow up a little bit on, I'll call it the cash flow or free cash flow thoughts as we think about fourth quarter and next year. I appreciate that the Middle East project is going to be a use of working capital, but debt still increased -- net debt still increased a little bit more than I was expecting. Can you just maybe give a little more color on what you're thinking for free cash flow in the fourth quarter? And is it fair to say that barring something really unforeseen that free cash flow is positive next year?

Yes. So, on wrapping up this year, and Kyle had asked the question, proceeds from the sale of the compression business, obviously, we'll take that and pay down the revolver. We also have our interest -- some interest payment in the fourth quarter as well. And we're focused on cash flow in a major way. And I think if you look at the third quarter, what drove the increase in debt was substantially due to capital investment and a couple of the projects in the Middle East that we're in the process of wrapping up. And as I said earlier, we don't have a significant amount of committed capital in terms of growth capital for next year, at this point. We just have, what I'll call, the residual of a few of the project awards where we're completing those projects, and then it will be dependent upon where some of these other projects go. And we're focused on also, traditionally, we would use the revolver to initially fund these projects and then kind of make decisions from there. And, as we move forward, certainly the opportunity, however, I would also say we're being thoughtful about the ways that we can continue to be successful in going forward. I mean we're not at a point where we're concerned like some that are having challenges at the operating lines. This is more about how much we have available for growth type projects. And again, there's lots of different structures and ways to do that. Some of it comes down to customer negotiations. We've had projects where we've had substantial reimbursements upfront from customers. So, there's lots of ways to get at this. And for us, it's being prudent about the balance sheet, but also taking advantage of high-return opportunities that we see and be as creative and thoughtful as we can around kind of accomplishing both, keeping a prudent balance sheet, but also taking advantage of these opportunities where customers are looking for us to help them with -- solve a problem. Again, we haven't finalized next year. And some of it frankly depends on that -- the project award we got in the first quarter, that Middle East project, is as we said from the start, it's come out of a hybrid project. It's got some AMS and product sales to it. And that schedule will be critical in determining kind of our cash profile for next year, it's -- where it's predominantly a product sale. So therefore, it's got a working capital element to it. It will really depend on the schedule, which we're continuing to work through. And again, that is almost 100% COVID-related in terms of what's kind of caused the uncertainties there. If project is going to go forward, we're continuing to work on, as Andrew said. But the real spending starts when we start procuring the major equipment and get to the site and start working through the civil side of that. And again, that will depend -- that’s a working capital use for next year. It's just a question of how much. And at this point, it's just too early to provide you too much more color on that. So, the next year, as I said, committed growth CapEx is a fairly small number. We will have a working capital use in this project. But again, the schedule will depend on the COVID-related issues being resolved. And then, with this particular customer, there are prepayments as well or some progress payments on the way, and those two will kind of have to come together for us to give you the working capital information for modeling and planning purposes.

I appreciate that. Is it fair to say that you'll be free cash flow positive, borrowing some pretty obviously high-return investments that were outside looking in, we can appreciate. Is that a fair statement?

Again, this project -- and I keep pointing back to the large projects. It is a big project, as we said. It's over $350 million top line. And so, just normal working capital considerations would suggest as a fairly substantial working capital investment. And so, I'm not going to go that far yet until we can kind of see all the pieces. And so, we kind of need to finalize the plan and get to a final schedule on this particular project before we can get real specific. But again, just kind of a little of a heads up. There is a working capital component there, and we've got to work through that and work through not only the schedule, but how the customer progress payments work into our spending plan, if you will.

Sure. And then, just one last one on the guidance. I think, it was for upper 30s in terms of EBITDA for the fourth quarter. Just any particular variables we should be keeping an eye out for just for the business?

No. I would say, it's normal business. As we've said in the prepared comments, we've seen some kind of a step forward, two steps back, three steps forward when it comes to COVID. We've been able to get people into certain regions and countries easier than we had. That's helped certainly the AMS. It's helped on some of these projects that we've been working on. But, I would say, for the most part, we've tried to as usual anticipate all the variables that we can think of and kind of blended to get to that point. There's certainly some pluses and minuses in there, but it kind of all lead us back to that similar zone.

[Operator Instructions] Next question comes from Tim Monachello with AltaCorp Capital.

Hey. Good morning, everyone. Just a couple of questions. I guess, I'm understanding that we've kind of looked at 2020 CapEx a little bit already. But, excluding growth projects, just knowing where your contracts are rolling and what might be needed to sign renewals next year, where do you see sustaining CapEx coming in for 2021, excluding growth?

Yes. I think, on a sustaining, there's nothing that's going to cause us to deviate significantly from -- we've in the past been kind of in that $20 million to $30 million kind of other than growth. So, that includes Corporate IT, would include kind of anything tied to a CapEx maintenance or some of the small things, we do have renewals. So, I absolutely don't see that changing. I think, we can firmly state between $20 million and $30 million for maintenance and others, as we call it. I think, that's a pretty hard and fast number. Now, it's a pretty big range, but we'll fine-tune that with the plan. So, that piece, I think, should be very consistent with what we've traditionally seen.

Okay. So, a fair assumption, you'd be free cash positive before growth and working capital investment in 2021?

Yes. I think, that's a fair way. Yes, that's definitely a fair way of thinking about it. I mean, we're not -- it's kind of a -- two angles to this. We're not a business that when volume declines, as tremendous amount of working capital unwinds because we're not a distributor, we're not an item type seller. So, a lot of our inventory is more tied to projects and supporting our AMS and supporting our ECO business. But again, it means also in a normal course, when volumes start returning, we don't have a tremendous working capital investment either. So, it really is going to come down to it, as it always does, is the investment we're making in projects, which again, we also have the ability to rattle that as we need to, and we're going to be trying to be as balanced and prudent as we can in terms of those opportunities versus protecting the balance sheet.

Got it. In terms of the Q4 guidance, in the presentation, I think it says high $30 million EBITDA, which is sort of in the middle of the preliminary range that you had provided previously. Curious, just what the gives and takes are there? What got it from the -- what might influence it up to the higher end, or if you think high -- or sorry, high-30s is sort of where we really should expect it? And was the high end based on sort of a better progression of the Middle Eastern project, or how should we think about that?

Yes. I think it's -- again, as we go about developing our guidance, and I think we've talked about this on a couple of quarters ago, we try to think about every scenario, maybe too many scenarios and try to come up with kind of our expected blended case of how we think about it. So, I think we're anticipating more normal business environment, thinking through the impacts of second wave of COVID and what that could mean and how that could affect us. I think, it's a pretty balanced view. And I wouldn't say, there's anything that we're particularly worried about, other than just the normal business environment, which is certainly been challenged in the last 12-plus months. So, I think it's a fairly balanced view that we feel pretty good about that and there's some opportunities or some puts and takes in that, but we still kind of end up in that similar same spot.

Okay. Got it. So, would some of that Middle Eastern project then shifted into 2021 that you'd...?

Yes. So that project, as we said, was a very large project. So, the initial schedule was two years type schedule. I mean, this is a long project. And so, we've definitely seen the project slide to the right. And as Andrew said, we have been successful, and we're completing all of our engineering deliverables and a lot of the initial sourcing for the schedule. I think, what's critical for us and the customer is to be able to get to that site and start doing basically the civil work, so site preparation. And that's the part that's been difficult. And so, that's caused the schedule to move. So, we are recognizing revenue for that project this year. It's less than what we initially would have anticipated, given the initial schedules that we'll see if that slipped forward into 2021, and there's actually -- this project will go into 2022 at this point.

Okay. Got it. And then, last one for me. Earlier in October, we saw the Argentina government come out with a gas stimulus program. You're hoping to attract about $5 billion over the next couple of years to invest in increased gas production. Are you guys seeing any positive impact from that program even on the horizon or just on the fringes as it's sort of early stages?

Yes. I would say, there's been a lot of excitement in Argentina as the [indiscernible] discovery. And it's been very slow. There was a lot of comments early on about the billions of dollars that were going to flow. And that's been much slower than, I think, initially, people would have thought. But, we are seeing renewed interest. I think, it's kind of good and bad news. The good news is there's certainly a need. There's an opportunity there. The challenge is going to be, is the capital available in-country for people to make those investments. I think, it's very public that one of the largest -- the NOC there has said that they see a big opportunity to invest. And the question is, how is it financed? So, as we look at it, we think there's a good opportunity for us in terms of equipment, potentially ECO deals, but it's one that we need to move cautiously and carefully, and just given the environment there, and you've got certainly enhanced concerns around currency devaluation, and potentially some enhanced concerns around customers and credit risk and so forth. So, we do think that we've got -- we always have -- we've been there for so long. We've got renewals happening there all the time. As we mentioned earlier this year, we had a big renewal. We've got more things coming up in the future with renewing contracts, and we're confident in and getting through those. And, I think that there'll be more opportunities in 2021 because we are having some of those initial conversations with customers that frankly will come down to the particulars of those projects as to whether or not there are things that can materialize and there are things that are -- make sense for us to be involved in.

So, I'm glad that you guys -- that you pointed out sort of inherent risk in operating in Argentina and how you think about them today? And obviously, most of the capital investment in Argentina as years past and the risk profile has changed. So, has the view on returns from those projects changed, I guess thresholds and/or I guess, contract structure, or how do you think about new capital investments in Argentina going forward?

Yes. I would say -- certainly, with the investment base we have there, nothing has really changed. I mean we have just phenomenal customers there and phenomenal relationships, so I think, at least from our perspective. And we've added customers over the years there, new kind of emerging customers. And we I think have had enjoyed quite a good success in the country. But, it does put the environment there. It does cause you to be very thoughtful about risk management in these projects. But, going forward, we have certainly core competencies, and we have a team in Argentina that probably would rival any company. So, we've got this great asset there and people and processes and our history that we're going to continue to leverage, but we'll leverage in a way that makes sense for us. And we're actively working with customers and certainly for us, it's understanding not only their operational needs, but their other needs from a financial standpoint and a contracting standpoint, and again, try to work to a mutual success. And I think we'll have some more successes there as we move forward. So, we're definitely seeing an increase in, call it the dialogue with customers around things. But in the end, it needs to make sense for both of us to be able to move forward.

There are no further questions at this time. I'll turn it back to management for closing remarks.

Okay. So, thank you everyone for dialing in today and allowing us to give you an update of where we are. I'd also like to finish by thanking all of our employees that have really gone above and beyond the last few months working through some pretty difficult situations globally. Thanks for everything that you're doing. And we look forward to updating you all at the end of the fourth quarter. Thanks. And be safe. Bye-bye.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.