Natural Gas Services Group, Inc. (NGS) Q1 2013 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group First Quarter Earnings Release Conference Call. [Operator Instructions] Your call leaders for today's call are Lindsay Naylor, IR Coordinator; and Steve Taylor, Chairman, President and CEO. I would like to now turn the call over to Ms. Naylor. Ms. Naylor, you may begin.

Thank you, Ross, and good morning, listeners. Please allow me to take a moment to read the following forward-looking statement prior to commencing our earnings call. Except for the historical information contained herein, the statements in this morning's conference call are forward-looking, and they are made pursuant to the Safe Harbor provisions as outlined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, as you may know, involve known and unknown risks and uncertainties, which may cause Natural Gas Services Group's actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market shares through competition or otherwise; the introduction of competing technologies by other companies; and new governmental safety, health or environmental regulations, which could require Natural Gas Services Group to make significant capital expenditures. The forward-looking statements included in this conference call are made as of the date of this call, and Natural Gas Services Group undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, but they are not limited to, factors described in our recent press release and also under the caption Risk Factors in the company's annual report on Form 10-K filed with the Securities and Exchange Commission. Having all that stated, I will turn the call over to Steve Taylor, who is President, Chairman and CEO of Natural Gas Services Group. Steve?

Okay. Thanks, Lindsay, and thanks, Ross, and good morning and welcome to everyone to Natural Gas Services Group's First Quarter 2013 Earnings Review. I'm glad to report that we started the year with a good quarter. In fact, one that I call robust. I'll start off the review by reminding everyone that we had a substantial nonrecurring sale of rental compressors in the first and second quarters of 2012 that will affect the year-over-year quarterly comparisons. The top line impact was little over $5 million higher-level of revenue in the first quarter of '12 when compared against the current quarter. However, we have been able to replace a fair amount of that compressor sales revenue with compressor rentals and flare sales. Although the top line is mixed, shift to these higher-margin product lines and some strong segment margins has enabled us to report higher levels profitability, whether it is gross margin, operating income, net income or EBITDA. On an apples-to-apples basis, net of the nonrecurring revenue, the quarterly comparisons will be even more impressive. We were happy with our ability to reduce our cost of goods sold by 22% and report a 14% increase in net income in spite of a 9% revenue difference. Now let's move to the numbers. Look at total revenues. In the year-over-year quarters, the first quarter of '13 revenue decreased 9% to $24 million from $26.4 million in the first quarter of 2012, with the decline due to the aforementioned nonrecurring sales of some rental fleet equipment in the first quarter of 2012. Have we narrowed the effect of the nonrecurring revenues, our total revenues would've grown by 13% year-over-year. For the sequential quarters of the fourth quarter 2012 compared to the first quarter of this year, total revenues increased a little over $400,000. Breaking this down, compressor sales were up a little over 17% or about $800,000, our rental revenues were 7% higher. But a major impact was a $1.2 million decline in flare sales. This reflects a large year end 2012 rush to deliver this equipment to the field, but year-over-year flare sales were still 2/3 higher this quarter than the first quarter of 2012. Comparing this current quarter to the first quarter 2012, in spite of the decline in revenue, total gross margin increased 9% from $11.2 million to $12.2 million. This is primarily driven by strong margins in our compressor sales business. Overall gross margin increased from 43% to 51% of revenue, a very strong overall margin. Sequentially, gross margin increased about $800,000 to $12.2 million or about 7%. SG&A increased only nominally in the year-over-year and sequential quarters and continues to run in the 8% average range of revenue in all periods. Looking at the operating income. Compared to the year-over-year quarters, our operating income reflect a 9% increase from $5.6 million in the first quarter of 2012 to $6.1 million this current quarter. Sequentially, operating income increased over $600,000 or 11% and climbed from 23% to 26% of revenue this quarter. In the comparative year-over-year first quarters, net income increased 14% from $3.5 million last year to $4 million this year. Comparing the fourth quarter 2012 to the first quarter of this year, net income was up $400,000 or 12% of $4 million, a healthy 17% of revenue. EBITDA increased 13% from $9.4 million in the first quarter of 2012 to $10.7 million in the current quarter. Sequentially, EBITDA increased $1.1 million or 11% when compared to the fourth quarter of 2012. EBITDA ran a 45% of revenue this quarter. On fully diluted basis, earnings per share this quarter was $0.32 per common share, an increase of 10% or above comparative year-over-year and sequential quarters. Looking at total sales revenue in the year-over-year quarters, total sales revenues, which includes compressor, flare and parts sales, fell from $12.4 million in the first quarter of last year to $7.8 million in the first quarter of 2013. This comparative decrease was due totally to the nonrecurring sale last year. Without that event, our sales revenues would have increased 11% year-over-year. For the sequential quarters, total sales revenues fell $500,000 this quarter from $8.4 million in the fourth quarter of 2012. This decline was mainly attributable to a $1.2 million sequential drop in flare sales. Overall gross margin, however, increased from 33% to 38% of revenue in the sequential quarters, and was mainly driven by higher profitability in our compressor sales business. Looking at compressor sales alone. In the current quarter, there were $5.2 million. This compares to $10.7 million in the first quarter of last year. And without the effects of the nonrecurring sale, they would have been essentially flat. I do want to highlight the fact that compressor sales posted a 29% gross margin this quarter. Sequentially, compressor sales increased $800,000 or 17% higher than last quarter. Our compressor sales backlog at the end of the first quarter was $4 million to $5 million, and we think our total compressor sales this year will be around $10 million to $11 million. Rental revenue had a year-over-year increase of $2.3 million or 17% from $13.7 million in the first quarter of 2012 to $16 million for this current quarter. Gross margins were 57% of revenue this quarter, compared to 60% last year. Our rental margins tend to run between 57% and 60% depending on the quarter. And since we expense and don't capitalize any maintenance or overhaul costs, margins can move depending on the level of make-ready overhaul expanse we incurred during any particular period. This is typically a positive indicator because we are getting equipment ready to go to the field. Sequentially, rental revenues grew 7% to $16 million this quarter. We ended the first quarter of the rental fleet unit utilization at 79% and horsepower utilization at 80%. Along with, and as a driver of these utilization increases, we felt that it's significant that the number of net rental contracts started in the first quarter of this year was the highest quarterly number since 2008. Also of interest is that while this quarter was again denominated by oil shale installations, we also saw a combination of vapor recovery units and a few dry gas installations that resulted in a more varied mix than what we have seen in a while. Fleet size at the end of March was 2,328 compressors. This is a net addition of 49 compressors year-to-date on a capital spend of $7.7 million this quarter. Between 35% to 40% of our active fleet is now deployed in oil shales and liquids-oriented plays. This is up from about 1/3 of the fleet last quarter. I mentioned last quarter that newly implemented EPA regulations are driving the increased use of small horsepower, low-pressured compressors called VRUs, vapor recovery units, to the capturing of vapors from oil storage tanks, and that we were successful to win that contract to supply this type of equipment to a major operator in one of the new oil shale basins. This type of equipment is right up our alley as far as it being smaller, wellhead type horsepower and we anticipate more activity in this realm. In fact, we were successful on another VRU contract this quarter in a different basin. We don't expect much revenue out of it this year, but do anticipate a ramp-up in 2014. A point here is that new EPA statutes are influencing how our customers operate, is driving greater use of small compressors and flares. Going to the balance sheet, our total short-term and long-term debt was $900,000 as of March 31, 2013, and cash in the bank was a little over $31 million. Our cash flow from operations through the first 3 months of this year was $10.9 million. Now generally from a market perspective, with a geographic asset or commodity focused, we think NGS is exceptionally well positioned in our core rental business. Geographically and from an asset view point, we're in a balance of dry gas and wet liquid plays, we presently have a 60-40 fleet mix split between gas and oil. Our moving into new basins the last couple of years has proven profitable, and we see the growth continuing. Concerning the traditional gas basins, we have been through a 4-year drought. No growth, but no deterioration either. But we are starting to see some interest in dry gas compression again. There's certainly not a rush to the door and I personally don't think we will see too much activity until the coming winter, but it's more than what we've seen for a long time. Oil, of course, is the driver. And although there are predictions all over the map as far as pricing and activity, I tend to think it will stay strong enough for NGS to grow with -- over the near term. The newest driver is, as I mentioned, the new EPA regulations that are to be implemented over the next year or 2. We've seen a bit of business from this and I think it will continue to grow. As most of you know, it can be volatile until we see the real impact on our customers and their approach to operating under them. So whether you're talking gas economics, oil economics or no economics, we have the EPA. NGS will be able to get more than our fair share of the available growth. Although there's a lot of noise around rig count declines, predictions about lower oil prices and the continuation of relatively low gas prices, our high utilization and net contract gains demonstrate our against the tide progress in our core rental business. The compressor sales business is still the fuzzy part of the picture for us. This quarter demonstrates that we can take a fairly large decline in compressor sales revenues and still drive overall margins and profits higher. To sum it up, our shift towards rentals and away from sales over the past few years is playing out positively and as we predicted. That's the end of my prepared remarks, and I'll turn the call back to Ross for questions anyone might have.

[Operator Instructions] Our first question comes from Brian Uhlmer from Global Hunter.

I was -- I wanted to dig a little bit deeper on the VRUs and kind of chat on what percent of revenues, give or take right now, it is. And how do you see that progressing as we move forward through 2014? And maybe just a little bit more color on the magnitude of the contracts you received and -- number one. And number two, is it just building some inventory to get ready to deliver in 2014 due to mandates? Or why there's no revenue until we hit 2014?

Well, revenues right now from it are still pretty relatively small and less than 5%. It's still a fairly new phenomena. If you recall, the first contract we had was only November of this year. So it's still pretty new sort of wave. We're not building any inventory anticipation of it. These regulations are kicking in over the next year or 2, various pieces and parts of it. So there's -- we think there's going to be some time to adjust, unless we get down towards the real end of the implementation phase from the EPA and then, of course, we maybe rush at that point. But it's too hard to tell right now as I mentioned in the comments. Still pretty variable and volatile and certainly I think to do with the government, especially EPA is probably not something I'd bet the farm on. But we think it's coming. We don't think the rules and regulations will be watered down too much or maybe delayed too much. And certainly, there is some industry pushback on that, justifiably too. Because there's -- a lot of these installations applications, there's no real dollar economics to it. But we're -- we think we're well positioned again. This is stuff that's small horsepower, low pressure, right up our alley as far as our main-staying the fleet and things like that. So we're starting to see some of that stuff move out, as I mentioned before, and we think it'll continue. We think we'll be very well positioned to the point of -- we know how to build this stuff, we've got some of it, we know how to operate it. So we think we'd be the logical first choice for a lot of operators.

Here's a -- you said you had an addition of, I believe, 43 additional compressors in the rental fleet. What is the -- what does the horsepower makeup look like now compared to -- you're even trending upward since kind of falling off last year in terms of your average horsepower makeup. What does it look like now currently?

Yes, it's 49 compressors this quarter. And it's around about the same as what we've seen in the past. Now these are newbuilds. And we actually put out more compressors on new contracts, some of them come with the yard, which obviously drove the utilization up. But on the newbuilds, they're still running in that 100 -- our average is still in the 135 to 140 overall fleet wise. The newbuilds are still typically running in the 200 horsepower nominal size, plus or minus 10% or 20%, still predominately oil shale driven from the newbuilds standpoint.

Okay. With that in mind, what led to the margin expansion versus our expectations anyway? Was that a pricing gain or just a better utilization of existing assets?

On the rental side?

Yes. Yes, sir.

Yes. Well, yes. I think the pricing is continuing to roll in. We had a price increase October 1 on our fleet on the new set going out. So I think that will continue to roll out just depending on how fast you get the equipment out on a quarter-by-quarter basis. So I think we're still seeing some of that. And we're -- our guys are in -- sales guys in the field are pretty good at trying to push that for opportunities, market opportunities trying to get that pricing up. So I think, as part of that -- and some of it just could be as our utilization plans will get a little better just operating margin from that point, a little more density, things like that.

The next question comes from Joe Gibney from Capital One.

Just a question on the compressor sales margin in the quarter. 29% is pretty high. Just curious -- is it just higher horsepower mix in a particular quarter? Should we still be thinking about our low 20% forward margin expectation as we have in the past?

Yes. I would still kind of keep that 20% range. I mean, it is extraordinarily high and I want to highlight that a little bit. We had some pretty high spec stuff come in and it was -- in a lot of times, it's just the luck of the draw, some of the stuff. You can -- if you're not careful, high spec can really hurt you. But if you watch it pretty close and bid it right, you can come out okay, which obviously we did. So there's maybe some high spec stuff driven. We were able to get in there and get some good efficiencies going, keep the floor loading up and the throughput to the shop's good. And that's what helps a lot because that drives then your effective unit burden rates. So there's things like that, that we just hit it all right this quarter. But yes, I'm pleased, don't look for that every quarter. I think we still need to be looking in that typical 20% range. And if we get quarters like this, it was just a little icing on the cake.

Sure, understood. The only other one I had was on price increases on your rental fleet. I know you just went through mid-single-digit kind of scale price fleet wide. So what's next? I now you've talked a little bit about some signs of life on the gas side and price increases on your -- the existing installed fleets, which will be more gas oriented. It's probably more customer specific and basin specific and takes more time and selectivity. But just curious to what's next and potentially to maybe move price a little bit higher on other portions of your fleet that maybe aren't necessarily liquids directed.

Right, yes. That's what we're going to try to do. Throughout the rest of this year and certainly into '14, just -- and you are exactly right, being a little more strategic. The majority of the fleet still is gas focused. We've still got a relatively low gas, natural gas price. We'll probably have a little better luck towards the end of the year, certainly we're starting to identify where we think we've got some strength where we can move some that price on the installed fleet. But I'm anticipating a little higher gas price towards the end of the year -- just due to summer and I don't want anybody to think that's the prediction because I don't predict gas price anymore. But just generally, it'll tend to go up in the winter time. So I think we'll get a little more there, too. So yes, we're going to try to move that a bit. It is going to be by customer, by geography, by equipment and things like that for a strong end markets who have got a little better opportunity, then maybe some new markets we'll move into and try to penetrate.

Next question comes from Ian Breusch from Private Capital.

A quick question on the -- I know in the past couple of quarters you alluded to the fact that, on the manufacturing side, that you may be getting close to capacity and just wonder if you have an update on when you may be bringing some additional manufacturing capacity online. How much of that would cost? How that would be paid for in cash, debt, some combination of that?

Well, Ian, more than likely. And one of the things we're looking at is we've got 2 fabrications facilities, one here in Midland that is typically predominately dedicated to rental compression and one in Tulsa that typically drives a lot of the custom fab stuff. And what we're looking at really is bringing Tulsa more into maybe the rental side of it, a bit more -- we used them for a little, I guess, swing -- swing capacity sometimes when we needed more rentals and things like that. But what we're kind of looking at maybe trying to essentially bring them up a little more on the rental side and it depends a lot on what our backlog is on the sales side there. But as I mentioned, backlog is $4 million, $5 million. We think the sales are going to be kind of just a flat year for that. But as I said, imagine we will probably have $10 million or $11 million in sales. We had a pretty good first quarter but probably flat now at $2 million or $3 million a quarter going forward. And with that, we've got some opportunity to shift more of that floor space to rentals up there. So that's we're going to looking at. I'm a little reluctant to go out and buy a new fab space, brick and mortar, because it -- as I've seen in the past, it can really hurt you if you don't need it. We look at that first. We are also thinking about the potential outsourcing if we're going to find the good dedicated outsourcer to do some of that stuff. So we've got some plans in mind as to how we can get some additional swing capacity through -- through the company.

Okay, great. And then any thoughts if expanding capacity -- if that's something that's needed and it's not going to require a huge cash outlay? Any thoughts on uses of cash as it continues to build on the balance sheet?

Well, what we'll do is this market, it's -- we generally think it's up. The only question is what's the slope up. Was it a 10% grower or 20% grower. And really if you look at a 10% to 15% grower, that's part of where we're in today, $30 million capital year. If you go into a 15% to 20% or higher grow, it incrementally grows pretty quickly. So from the cash standpoint, we're going to use that as a buffer if we see the market accelerate a little more and we need a little more and we need more cash in our -- than our operating cash, so it would be balance sheet cash to really ramp up the rental side of it. And -- but again, if we get 18, 24 months down the road and then we're still generating cash and we see those -- we don't see any further need for that or any other activity we might need the cash for, then we'll look at something from a shareholder standpoint. But we're going to watch it here for 1.5 years or so just to make sure what this market is doing.

The next question comes from Jeffrey Kerr from Kerr Financial Group.

I think I might have missed this. Did you say the sales -- you wrote down $10 million or $11 million. Is that quarterly or what was that...?

No. No, for the year.

So $10 million or $11 million in compressor sales. So is this -- and there's $4 million to $5 million in backlog, right, Steve, is that?

Right.

So that's going to move just gradually out and as long with $10 million to $11 million in sales.

Yes. What we're thinking is we're in May now. We had about $5 million sales first quarter and we think that's just going to -- the first quarter, we had a lot of equipment coming in. If you remember, fourth quarter of '12, we had a rush, a pretty good quarter on that, too, from the point of people trying to get equipment out and done. And we had some backlogs stuff that finally we were able to recognize revenue on because we got it shipped. And really, first quarter was kind of an overlap from that, too. We had lot of units finish up. We've got a backlog there closer to $5 million than $4 million right now. We probably got further out there that we see pending jobs and about double that right now. That's one you're getting that $10 million from, I'm not taking any other number out of the year. Now if something else comes up, certainly that could go higher. But right now, what we're looking at is about that level. And again, that kind of fits into what we're talking about the rental side. If we need more capacity, we're going to have to take some from Tulsa. And so that would again fit in with this -- the sales number we're talking about.

Do you think it's a linear thing? Or do you -- or it's just going to be depending how the market demand is?

On the sales side?

Yes.

Yes. There is nothing linear about that business. I'll tell you what. You can look at every quarter going back 8 years, and it's just up and down, up and down, just very jagged. So it's real hard to predict. As I've mentioned, kind of still fuzzy for us and we tend to shift towards rentals anyway. We think it's a better business sort of the margins and positioning. So if we end up with more sales out, and we still could, that's fine. We'll report on that every quarter and keep the backlog updated. But right now, we're kind of seeing that $10 million, $11 million. And if we -- and with that, we're looking more on the rental side, maybe having the capacity to upsize that if need be.

I guess a point of clarification. That $10 million, $11 million is total for the year or the last 3 quarters?

Total for the year.

Total for the year. Okay. The -- in flare. A big drop off in flare, but you said that the explanation being the rush of orders in the fourth quarter. Any outlook? I mean , will it -- kind of will demand return a little bit in that area?

Yes. Well, as I mentioned, there was a rush and certainly Q1 fell off. But Q1 was still about 2/3 higher than Q1 of '12. So the trend is still up. We just had -- we had a little spike there on Q4, people. If you remember last year, everybody's worrying about, "What's going on, what's the tax regime and everything else?" A lot of stuff moved forward, compression, flares, everything. So just a spike-up and now it just resumed the regular, I think, the regular trend up because the flare business still looks pretty vigorous.

VRU contract. Is that a new relationship?

No. It's -- well, in that basin, it is, yes. But we deal with this customer in other places.

Okay. Can you give us, I guess, some more detail how that VRU works? Is it something that's planned? Or is the -- do the EMP guys know ahead of time that they're going to need this? Or is it -- how do those regs get applied, I guess?

Yes. The regulation and, I can miss some of these days, but the regulation was essentially, I think, proposed October 11 to take place, be effective October 12. And then by October 13, you had to have some of the stuff starting to go in. Now the regulation has been pushed to April 14. So there is a 6-month delay on it. So operators do know what the regulations are and for -- that they're going to need to do something. Now there's -- as with any of these regulations, there's a lot of parameters in it as to how it affects you and whether it applies to you and everything else. But the operator generally knows in the area they're in. And it's typically going to be in these oil or oil shale plays, especially oil shale, associated gas because this is what they're trying to control, just gas emissions off these oil tanks. So if, for example, you're in the Niobrara, that's in that oil shale play out there, there's -- that's a typical one of the Bakken or stuff like that. So they'll typically know. They might not know down to location by location, but they generally know what they needed to do. We're starting to see these contracts we got. I think it's an indication that bigger players are starting to plan on this stuff. Because it's going to be every well that falls into that regulation going forward. Now the smaller guys aren't. I think they are still going to see how the regulation plays out. Maybe if it extended longer, maybe the threshold is bad or something like that. It's the typical, "I don't like it, so I'll wait until I see what happens." So again as my caution, we're seeing some of it. I think it's going to grow. It's very hard to say how fast it's going to grow or if there's a delay in it or anything else. But I think it's coming again. As I mentioned a while ago, it's just the slope of the growth is the question.

Got you. Maybe -- but the way to maybe think about that is it could increase the pie for the industry overall.

Right. Yes, this is a market that wouldn't even -- I mean, it was there, but you didn't have to do anything because before you let the gas vent, and now you have to capture it. So yes, it's a totally new market for compression. And as far as I say, I think we're going to be a prime beneficiary because this is equipment we're very familiar with.

Right, right. Okay, great. And one final comment is just that would encourage you to return to the comments that you used to do and I think that it's a little bit misty so I'll just pass on.

Okay, my political comments.

Let's say, it was one battle. It's not the war. There was...

No, I know. I know. And I've been warming up to it a little more Jeffrey, and so you never know.

[Operator Instructions] We have a question from Dustyn Owen. Dustyn Owen - Sidoti & Company, LLC: Looks that we'll give a shot to the Tulsa folks, I guess. And following the final comments. It would be interesting to hear some more of that commentary at the end. But I'm sorry if I missed it, get back to the compressor growth in the quarter, I guess, and that I got the utilization number there, but sorry if I missed it.

Well, yes. It's a 7% revenue, sequential revenue gain. Dustyn Owen - Sidoti & Company, LLC: I'm sorry. Unit growth.

49 units. We have 49 new units added to the fleet first quarter. And then utilization is up to 79% on a unit basis.

And our next question comes from Matt Beeby from Williams Financial.

Question, a follow-up to one of the earlier questions. Are you seeing any appetite for increased term as far as the operators may be sensing that you might be pushing on prices? Or is everything still going out under the standard 6-month contract?

We've been pushing the term for, really, probably 12 to 18 months. So we're getting more 12-month contracts out there, but really not from a pricing perspective. I don't think the operators are looking out for that because we're essentially the ones pushing it more so just for a little more stickiness to the contract. Yes, I don't -- we haven't seen -- don't detect anything from a operator wanting longer term just to avoid price. I think they'll typically just try to negotiate it if it comes about and worry about it ten.

Maybe a better way to ask, what percent or what kind of -- is your mix of the term contracts that you've got for the rest of the year, i.e. what's your backlog visibility through 2013?

On the rental side?

Yes, that's rental.

There's not a whole lot of visibility on that. That's the only visibility we have. On the rental side of the business, different from the sale side, rental operators are typically used to being able to get rental equipment within 3 to 4 weeks. So that's about as far as you can see out now. Obviously, when we're making projections to build equipment and now we're having to make projections out, 6 plus months, sometime approaching 9 months because equipment's getting tighter. We are -- we don't -- some of that, we've got -- we're getting contracted from operators, but some of it we're not. If you go back about 2 years ago, probably 90%, 95% of the equipment we were ordering, forecasting to build was precontracted. But your deliveries on equivalent, probably only about 3 months. Now you have 6 to 9 months in some of the stuff and we're having to take a little more of a crystal ball look at -- it's prior 50-50 deal now as to what we need to order. Because operators just aren't going to -- they're not going contract that far out on rental stuff. It will take a chance on finding it. So we're having to do that. So really for me, a long answer to maybe a shorter question from a backlog rental perspective, we don't have a whole lot of visibility on that, probably no more than 4 to 6 weeks really as to what people are contracted there.

Okay. Well, one more really real quick one. I think -- can you just talk about where most of the units went that you've put out into the field this quarter? And is there any increased appetite for a play like Utica, Bakken, some of the other areas?

It was a smattering. It's pretty broad, as I mentioned. We saw oil shale stuff, we saw some VRU stuff and we saw some dry gas stuff. And the dry gas stuff was pretty much of a minimum, but minimum is more than we've seen a long time. So really, we had stuff go out into the Niobrara and to the Granite Wash, still a majority being in these liquids plays and a little into -- now a little into the Utica. And then yes, that's probably of the majority of it. And then just a little dry gas in San Juan in Barnett.

And maybe just a quick follow-up there. Is it that you saw more of a dry gas component or is it basically same quarter-over-quarter? You mentioned the dry gas interest being a little bit greater. Is it a reflection? And what you saw in the last quarter more of a reflection going forward if you [indiscernible] coming?

No, it's -- we really haven't seen any up to this quarter. And again, I don't want to make a big deal out it because, really, there's not a whole lot. The only reason I mentioned it is it's first time in a while. Now I do think -- you missed this last call, too. I think it's going to be -- I think I anticipate a little more of a tailwind from dry gas business this year where we've had none for 4 years. So just a little breath will be a tailwind, but I think as gas price goes forward and, of course, gas prices are down over the last a couple of weeks by 10% and everybody freaks out over that. But that's no big deal. We're in the shoulder season. Gas prices are always volatile in the shoulder season. But as we start getting towards fall and winter, I think that will be an interesting time to see if this price gets back up over $4, and think it might. And then I think then, we'll have some surge in there because the thing is, we'll be going into -- presumably have winter, which typically we do. We're going into a winter with a decent gas price and the operator will have some assurance that you'll have a few months of a decent gas price. When -- now when you're coming off winter and going into summer, and you have a $4.20 or $4 gas price, that's well and good. But you're typically going into a lower price in a seasonal environment. So I'm thinking, I'm looking more towards the end of the year to really see how the gas price moves. I think it may move up. And that's where I think -- if we get a tailwind on the dry gas side, it'll be at the end of the year.

[Operator Instructions] And at this time, there appears to be no further questions.

Okay. Ross, thanks for your help. I appreciate everybody joining on the call, and I look forward to talking to you next quarter. Thank you.

This concludes today's conference call. Thank you for attending.