Select Water Solutions, Inc. (WTTR) Q1 2022 Earnings Report, Transcript and Summary

Greetings, and welcome to the Select Energy Services First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to Chris George, Senior Vice President. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Select Energy conference call and webcast to review our financial and operational results for the first quarter of 2022. With me today are John Schmitz, our Founder, Chairman, President and Chief Executive Officer; Nick Swyka, Senior Vice President and Chief Financial Officer; and Michael Skarke, Executive Vice President and Chief Operating Officer. Before I turn the call over, I have a few housekeeping items to cover. A replay of today's call will be available by webcast and accessible from our Web site at selectenergy.com. There will also be a recorded telephonic replay available until May 18, 2022. The access information for this replay was also included in yesterday's earnings release. Please note that the information reported on this call speaks only as of today, May 4, 2022. And therefore, time-sensitive information may no longer be accurate as of the time of the replay listening or transcript reading. In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States Federal Securities Laws. These forward-looking statements reflect the current views of Select's management. However, various risks, uncertainties and contingencies, could cause our actual results, performance or achievements, to differ materially from those expressed in the statements made by management. The listener is encouraged to read our Annual Report on Form 10-K, our current reports on Form 8-K, as well as our quarterly reports on Form 10-Q to understand those risks, uncertainties and contingencies. Also, please refer to our earnings announcement released yesterday for reconciliations of non-GAAP financial measures. Now I'd like to turn the call over to our Founder, Chairman, President and CEO, John Schmitz.

Thanks, Chris. Good morning, and thank you for joining us. I'm excited to be discussing Select Energy again with you today. Overall, I'm very pleased with the continued progress we have made during the first quarter, executing on our strategy of improving and bolstering our base business, advancing our technologies, sustainability, diversification efforts and executing on our strategic M&A. The first quarter saw a strong sequential revenue growth, increasing 16% quarter-over-quarter with each segment achieving revenue levels not seen since the third quarter of 2019 well before the pandemic began. We also expanded margins and continued to generate positive net income. Adjusted EBITDA increased 22% sequentially, growing to $32.2 million during the first quarter. While free cash flow during the first quarter was impacted by additional working capital build and the settlement of certain Nuverra liabilities, I feel confident in our ability to generate free cash flow over the course of 2022. Accordingly, we strategically re-initiated our efforts to return capital to shareholders with a $16 million open-market share buyback executed during the first quarter. On the sustainability front, we executed on a number of initiatives, including closing on a $270 million sustainability linked ABL, issuing our inaugural Sustainability Report and contracting additional recycling facilities and infrastructure development projects. I'll let Nick speak to the credit facility in more detail. But I'd then encourage listeners to give our sustainability report a full read, which is available on our Web site. As a market leader in sustainable water chemical solutions, we take our commitment to water stewardship seriously. We are proud of the accomplishments we have achieved to-date and remain confident in our ability to set the bar high with ambitious targets for water stewardship and safety performance accountability for the future. From a business development standpoint, we have seen a number of recent successes as outlined in yesterday's earnings release. During the quarter, we signed long-term contracts for the development of additional recycling facilities, additional gathering lines tying to existing recycling and disposal facilities, the expansion of existing recycling and disposal facilities and the activation of acquired assets that were previously shut in or underutilized. We have even obtained a long-term contract with another water midstream company to recycle their gathered produced water volumes. The scope and diversity of these opportunities is very exciting. We are starting to see the benefits of the sizable infrastructure footprint we acquired with our recent acquisitions as these new opportunities utilize legacy Select infrastructure, as well as assets we acquired from each of the complete Agua Libre and Nuverra acquisitions. The contracts range from two to 10 years and supported by acreage and wellbore dedication and minimum volume commitments or take or pay agreements. Importantly, these opportunities also span across multiple basins, including the Permian, Haynesville, Mid-Con and Rockies. We remain very focused on growing our production related revenue and adding contractual revenues through our full life cycle pipeline, recycling and disposal infrastructure. Ultimately, this will further enhance and stabilize our cash flow generation capabilities, differentiate Select from its competitors and provide additional capital allocation opportunities. We are having additional constructive conversations with our customers every day. And I believe we will continue to build on our recent success with more long-term contracts and development opportunities in 2022. On the M&A front, we closed on the Nuverra acquisition on February 23rd. We are quickly making progress with the integration of Nuverra's operation. Though, we did -- and we will see some modest operational inefficiencies and additional cost associated with the integration in the first and second quarters. We continue making progress with yard consolidation across each of the acquisitions, and have identified a significant amount of underutilized, obsolete or non-core assets within the acquired companies that we have been able to sell for cash. With more than 12 million of year-to-date cash proceeds through March, we have been able to largely self-fund our CapEx program so far this year. I think we will find more equipment and more real estate that we can turn into cash in the coming quarters as well. Looking at our strategic investments and partnerships, we made additional commitments during the first quarter of about $3.5 million between AquaNyx Midstream and Ice Thermal Harvesting. AquaNyx continues to make progress in its development strategy and provide additional complementary options for our infrastructure strategy in the Mid-Con region. Ice continues to see tremendous demand for its unique renewable thermal power solutions, and we are very excited about the potential of energy transition opportunities this investment provides. As we look forward, we will continue to look for unique opportunities to invest in and advance our technology, sustainability and diversification initiatives. While the first quarter saw a meaningful double-digit percentage increase in drilling activity, completion activity modestly lagged as the incremental drilling was necessary to replenish the dwindling debt backlog. While there remain a number of unknowns in the macro and geopolitical landscape, we expect to see more activity growth during the second quarter supported by a strong overall commodity price environment. I'll let Nick speak to our first and second quarter financial performance and outlook in more detail. But again, I am pleased with our recent financial performance, our recent acquisitions, our technology and sustainability strategy, our recycling and infrastructure projects, and our other strategic investments and initiatives. With growing activity, strong commodity prices, improved operational and financial performance, 2022 is setting up to be an exciting year for Select. With that, I'll hand it over to Nick to discuss the financial performance and outlook in more detail.

Thank you, John and good morning, everyone. During the first quarter, our business grew across all segments, benefited by organic growth, pricing improvements and strategic acquisitions. As John mentioned, revenue increased by 16% quarter-over-quarter with each segment reaching revenue levels not seen since the third quarter of 2019. Additionally, we expanded margins and delivered positive net income. We saw a positive monthly trajectory through the quarter while our $295 million of first quarter revenue increased $40 million from the fourth quarter and $90 million from the third. Cost inflation remains a challenge. But overall, we are finding success in our ongoing integration efforts and pricing discussions. Gross margin for the company improved from 7% to 8.4% and adjusted EBITDA increased from $26.4 million to $32.2 million. Net income of $8 million was slightly below last quarter's $11.2 million due to lower other income related to bargain purchase price gains from recent acquisition. Free cash flow of negative $20.5 million reflected a substantial working capital build of $44.9 million during the quarter due to increasing revenue and acquisitions, most notably Nuverra which closed in late February. Other significant uses of cash included $18.8 million for the retirement of Nuverra's debt obligations, $16.4 million for open market share repurchases, $5.6 million in total deal cost from expenses related to our acquisitions, as well as the closing of our sustainability-linked asset-backed lending facility, $3.5 million of partnership investments and net CapEx of just $3.4 million. Ultimately, we finished the quarter with a cash balance of $27.4 million, no bank debt and approximately $215 million of total liquidity. As we look forward, we anticipate substantial positive free cash flow over the remainder of the year, as integration cost diminish, working capital levels normalize and adjusted EBITDA continues to grow. With about $15 million of gross CapEx during the first quarter, we continued to invest in new recycling facilities and gathering pipelines, among other core business assets that are identifying and liquidating substantial redundant or underutilized equipment and real estate to do so. In Q1, we monetized just over $12 million in asset sales, much of which came from our acquisitions. We've been able to streamline our operations, while capitalizing on very strong retail markets, particularly for rolling stock and real estate, allowing us to reallocate capital to our high return opportunities. On the financing front, we were pleased to close on an amended $270 million sustainability-linked asset-backed lending facility, extending the term by an additional five years. We appreciate the partnership with our lending institutions and structuring what we believe is a first-of-its-kind facility in the oilfield service industry. With this agreement, we've taken on additional accountability in regards to water recycling and employee safety, with financial incentives and penalties applicable to both. We intend to at least double our volumes of recycled water provided over the next five years and substantially outperformed the industry and our employee safety performance. Employee safety has long been a core value of our company with accountability applied throughout our management compensation structure. While water recycling alleviates demand for freshwater sources and water-stressed regions, as well as limiting waste disposal, which is particularly important in areas with seismicity concerns. While these two priorities are part of the core foundation of our approach to sustainability, we are excited about many of our other near-term sustainability initiatives, including additional technology, emissions reduction and green chemistry R&D investments. We've also begun tracking and publicly reporting many other metrics in our inaugural corporate sustainability report, which, as John mentioned was published last week. I would encourage everyone listening to access the report from the sustainability section on our website and we welcome any feedback you have as we continue our sustainability journey. As the industry continues its strong recovery and our earnings improve, we renewed our shareholder capital returns program with open market repurchases of 2.3 million shares for $16.4 million. An additional 362,000 shares were repurchased for $2.5 million as part of annual tax-related vesting activity that took place during the quarter. We expect these higher earnings to translate to higher sustained free cash flow in the coming quarters, which would provide increased opportunity to allocate more funds to shareholder returns and evaluate new or expanded options to apply to this program. Finally, before moving into segment guidance, I'll touch on our strategic M&A activities. There is no doubt that our 2021 acquisitions contributed meaningfully to the bottom line this quarter and we have confidence the legacy Nuverra operations will soon as well as we consolidate them into our systems and operations. We are removing duplicative costs and inefficiencies, while we initiate highly accretive and targeted investments around much of the acquired infrastructure. We still expect to complete the bulk of our integration and consolidation efforts by the end of the summer, which should drive further profitability over the course of the year. Looking at the segments individually, the Water Services segment grew its revenues by 16% in the first quarter to $164 million, while advancing gross margins to just over 16%. Carefully increased fuel pricing through the quarter especially leading up to and following the Russian invasion of Ukraine was a significant headwind. However, we were able to put it in place pricing adjustments to recapture much of this going forward by the end of the quarter. Looking forward to the second quarter, we expect 8% to 12% revenue growth for this segment with some continued modest improvements to margins resulting from integration efficiencies and pricing improvements. Water Infrastructure revenue grew by 25% to $59 million in the first quarter as recycled volumes increased through recently constructed facilities in our New Mexico pipelines reported meaningful growth. However, gross margin slipped slightly to 24% as integration efforts, as well as maintenance upgrades and other investments around acquired infrastructure necessitated taking some facilities offline for periods of time, while winter weather impacted some operations especially in the Bakken. Second quarter is typically seasonally weaker in the Bakken. However, the full quarter contribution of Nuverra assets coupled with the return to service to some upgraded facilities should increase the segment's revenues in the second quarter by 5% to 10% with increased gross margins in the mid-to-high 20% range. Additionally, our recent business development effort should continue to drive revenue improvements over the coming quarters as new projects and expansions are brought online. The Oilfield Chemicals segment consolidated its recent market share gains with a revenue increase of 7.5%, while growing gross margins nearly 200 basis points to 14.4%. Raw materials costs and supply chain disruptions remain significant challenges. However, our team has been quite successful at dynamically adjusting pricing as quickly as terms have permitted. In spite of these challenges, we expect the local Chemicals segment to demonstrate generally stable financial performance in the second quarter relative to the first, with modest room for upside. Looking at SG&A, acquisition-related costs accounted for about $3.6 million of our total SG&A of $28.3 million during the first quarter. Absent another major transaction, we anticipate transaction and integration-related costs will decline in the coming quarters. For the remainder of 2022, SG&A should settle modestly lower between this quarter's total and the $25.2 million of SG&A reported in the fourth quarter of 2021. Our continued strong growth at minimal levels of net CapEx demonstrates the value of our recent acquisitions and operational leverage of our asset-light business model. While our pipeline of high-return investment opportunities remains robust, the speed and success with which we have monetized acquired or redundant assets to date at attractive valuations, while increasing our revenues and margins enables us to lower our 2022 net CapEx guidance from $50 million to $70 million to $45 million to $60 million. Generating robust free cash flow will be our top priority for the remainder of 2022. This level of targeted net CapEx when combined with continued pricing and activity growth and a reduction of working capital needs amid continuing integration efforts provides us with additional opportunities to build on our recent allocation of funds for shareholder returns. In addition to cash flow and return of capital, we are also intently focused on return on capital and anticipate continuing to generate solid positive net income in 2022. We've made considerable progress in consolidating strategic assets at attractive valuations, while bolstering liquidity and diversifying our earnings capabilities. Select is a recognized leader in providing sustainable water and chemical solutions and we seek to convert this leadership into sustained, enhanced valuations for our investors through disciplined investing in capital management. Thank you. And with that, we'll open it up to questions. Operator?

Thank you [Operator Instructions]. Our first question is from Ian McPherson with Piper Sandler.

John, you mentioned that or Nick, you may have said that the goal is to double your recycled volumes over the next five years. Where is that mix today? And maybe for Select and where do you think the total industry is on the percentage of frac water that's recycled? And I guess, what's the value capture opportunity for Select, as you ramp up to a higher mix going forward? I assume that there's going to be probably more of a value-add opportunity for you in that journey than maybe there has been in your legacy water services business?

And just to make clear on that facility, the target there is an absolute volume amount. We did little bit over 25 million barrels last year. And so it's tracking that beyond 50 million barrels within that time frame. As far as the overall mix, about 15% we estimate of our current overall handled water volumes would be produced recycled water there. So obviously, we think that percentage mix will increase as a number while we increase the overall volumes. Probably about a 1/4 of the overall handled water would be termed fresh and the rest being brackish or industrial sourced water as far as what we handle.

Just to expand on what Nick said a little bit. As you're well aware, the percentages that operators are using or the industry is using very significantly by region. So it really starts with the Permian where you have high water cuts, you have disposal challenges. And so we're seeing operators really move quickly towards producing treated produced water. I'm not sure exactly where we are in terms of the overall market, but it wouldn't surprise me at all for us to be north of 50% using that type of volume. You move to some more like the Northeast and you have a lot of -- you have produced water being used on lot of fracs, but relatively small amount given the production there. And then you have other basins that have keep disposal and access to fresher brackish water that really haven't migrated to produced water yet. We do think that the lessons learned in the Permian that we've implemented and others on recycling are going to be applied to other basins, they just haven't fully transformed yet.

And the one thing -- it was part of your question, Ian, but the value to Select is not only the value around this asset base that we've just put together and added to the asset base we got, but once you put these asset bases together, they really complement each other in a meaningful way when you think about what they can do and be used for. But the other piece of it is as the industry has converted from fresh to produced, if you will, the water has gotten dirtier and chemistry is very important when you apply it to make that water source usable, as well as chemistry is very important when you actually use the water and the frac process being a dirtier water solution is chemistry. So we think it's a really big value with what we're trying to accomplish here at Select.

And then I was also going to ask on your -- Nick, on your second quarter guidance, Chemicals trending a little bit flatter into Q2 than the water businesses. Could you eliminate what's behind that? And then how do you see the leverage of the Chemicals business into the up cycle beyond Q2 and maybe what's keeping it -- what's holding it back a little bit here in the second quarter?

I'll kind of start off and then let Nick clean me up. I think as you think about Chemical revenue, it's important to realize that we were up over 20% top line from Q3 to Q4. So while we were up modestly in Q1, I think it was 6% or 7% still looking couple of quarters back, it's up meaningfully. And then if you compare back to '18 or '19, Q1 was actually the high watermark for our chemicals revenue. So we're pretty pleased with where we are today, that's not to say that we don't expect it to continue to grow and really for the reasons that John just mentioned, as the industry uses more produced water and requires more complex chemistry, it really fits well into our strength and what we want to do. So we do expect it to continue to grow and largely because of the shift we're seeing that we've been talking about.

Our next question is from Tom Curran with Seaport Research Partners.

Nick, for Water Services, how have the acquisitions changed that division's cost structure? And which should be its main inflationary pressure and supply chain challenges going forward? In the last up cycle, pre-pandemic the gross margin target for Water Services was in the high 20s. What should it be now?

So as you're aware, there's a higher production component there, some of that's around fluid hauling. And so fuel was a big inflationary challenge for the current quarter, given what we saw in the underlying crude price and diesel prices and where they -- how much they moved during the quarter. So long-term target, we think that mid-to-high 20s can be achieved. Certainly, we have continued integration, consolidation, the overlapping footprint of these organizations that we've acquired with legacy Select operations. There's certainly some more room to integrate there. I think we do have more opportunity around the transfer of produced water and recycled water. That's a higher value opportunity there than the legacy freshwater. You have more complex operations, more blending on the fly, a higher safety and environmental component to those operations. And so that becomes a service that fewer companies are able to do effectively and give the major confidence on. Automation has been a significant investment of ours even in the down cycle of recent years here. We've been able to reduce cost through that, as well as improving safety and overall complexity of operations and the types of jobs we're able to perform with automated equipment. So I'd say mid-20s, high-20s, that's achievable, it's not going to be next quarter. It's probably not going to be the quarter after that, but we can get there.

And then for CFFO, working capital was a massive draw on cash in the first quarter. You had foreseen and forewarned us that directionally it would be negative and your hardly alone working capital build has been a widely seen phenomenon across cash flow results this earning season and that makes sense as to why it would be the case for you and many of your peers. Quarter-by-quarter, how should we expect working capital to progress over the remainder of 2022? And when should we see those big upsurges into positive territory that should enable you to finish positive for the full-year?

So as I mentioned, we expect positive free cash flow over the remainder of the year. We expect net working capital as a percentage of our revenue to decrease over that time, but that's not to say that the absolute value of working capital will decrease given the positive tailwinds we see around revenue. So the first quarter, the acquisitions typically takes us 60 days or so to integrate the billing systems and move tickets out to operators from legacy acquired operations into the Select system. So certainly, there's a significant amount that was stranded accounts receivable as of the end of our quarter. We expect to work through that in Q2 and then it becomes more of a revenue-related phenomenon and dynamics. So second quarter onward, positive free cash flow, you can see the difference between the adjusted EBITDA growth that we anticipate and the net CapEx guidance that we give. In first quarter, we had a couple, I guess you could call them one-offs around deal costs, the ABL refinancing, the tax vesting on shares, those are relatively small numbers, but certainly a little bit of cash consumed in those transactions there. And so we will see a very positive dynamic here as we shift into the later quarters.

Our next question is from Don Crist with Johnson Rice.

It sounds like you got to work pretty quickly once you incorporated the recent acquisitions on exploiting some low-hanging fruit. Can you talk about what further opportunities there may be out there from a low-hanging fruit perspective to boost operations in the next quarter or two?

So Don, the asset base that we've acquired has largely been underinvested in for various reasons. And so we've built the team around that asset base to go out and try to make investments in it. That's why you've seen some deferred maintenance and some CapEx. It's also part of the reason you've seen some of our success on these projects. We delivered a couple of recycling facilities. We've had been able to tie in some pipeline to dispose the wells, so you take a disposal well and you turn it into a disposal system. Those conversations are ongoing. We have a backlog of projects that we're readily working that are in various stages. And I would say that I expect us to continue to be able to deliver on the projects similar to the ones that we announced this quarter throughout the duration of the year.

I'd also add to that on those acquisitions. We do have the asset base like we said, they really want you layer in these assets across it by the various companies and the ones that we owned. But then we also, as Nick said, we have eliminations. We ended up with two yards or three yards in the same town. We're consolidating those yards, getting that efficiency, selling the real estate, same way with just the pure asset base of the equipment, the yards are full of stuff and we're going to use what we need and can get efficiency out of it and we're going to sell assets that are not need or noncore. And so got good movement there, too, Don.

That's all positive. And there's been a lot of market chatter recently, particularly in the Permian that water either freshwater or disposal capabilities could be a pretty big issue as we move into kind of mid-'23. Are you seeing any urgency amongst the E&Ps out there to partner with somebody like Select to make sure that their water needs are met going into '23?

We are seeing that, so the recycling facility we announced in Lea County in Mexico was with an operator that we've worked for in the past and have another recycling facility with. And so they had a good experience with the first one. They wanted to make sure they could secure the disposal solution, as well as a produced water solution for their completions. And so it was a rent and repeat system. I think we're going to continue to see more opportunities with our existing operator base. We -- the biggest issue is certainly the Permian from water sourcing and disposal standpoint. You've got the seismicity concerns that are spurring or cycling. You have movements from ESGs moving away from fresh and even brackish water towards producing treated produced water. So we're seeing more interest in getting more -- having more discussions on those topics than we did a year ago. But frankly, they're occurring beyond the Permian as well. So we've got opportunities. We announced the expansion of our facility up in the DJ. We have projects going on really throughout Texas outside of the Permian, where we're continuing to work on these solutions with operators as well.

And one just quick one last one for me. On the share repurchase, it was a little bit unclear in your 10-K how much availability you had left to buy more. Are you kind of maxed out or fully utilized on that today?

I'll speak as of March 31st. So we had authorization of $25 million there. And so there is some room left in that authorization.

Our next question is from John Daniel with Daniel Energy Partners.

Michael, I think you were the one that mentioned of a healthy backlog of potential projects. And I'm just curious if all of them came to fruition, can you kind of frame what that CapEx potential could be? And how quickly could you deliver on all of those projects?

That's a good question, John. From a 2022 standpoint, if all of them came to fruition, we would not be able to execute them all this year in terms of construction and certainly not from a billing standpoint. And as you know, the projects, they're never done until the ink is dry on the paper. So we have some that we rank as really high probability. We feel very good about occurring in this year and others, kind of the outside chance, it's lower probability conversations have been going slower, but they could turn on a dime and materialize this year or early next year. In terms of the exact dollar amount, I'm not sure what the probability of weighted total of all of them would be. What I would say is the large variance we provided in CapEx for this year is largely project-driven. So if we -- to hit the high end of that range, the projects that we have a high likelihood of occurring and in being able to execute this year would need to materialize to hit the low end of that range, you're probably not going to have meaningful projects occur and spend occurring this year.

There's something else that's very important to understand is when you think about recycling disposal pipeline opportunity to put assets together and make them more valuable to the customer base than they were by singular by stand-alone. If you're looking at projects and thinking about these contracted positions that we're being able to execute, the most expensive piece of that project is what we bought in these transactions. It's still [indiscernible].

In some of the other businesses that we follow, you heard about long lead times on engines, transmissions. I've got a dumb question for you guys, but if you look at things that you purchased from a growth CapEx perspective, where are your longest lead time issues today? Do you have any?

So the longest lead time, it really varies, but I would say that anything that involves the chips that you've heard about with vehicles, that's still tight and that's still a major delay. We're having to really plan in advance for all of our equipment purchases. We're having to be proactive from everything from vehicles to engines to pipe really across the board and it's forcing us to engage with the customer earlier than we have historically in the past to make sure we can hit uptime and production times. So it's a challenge, but there's also a bit of an opportunity there in terms of giving us a little more visibility in bringing people to table sooner than -- from a planning standpoint than we may have otherwise.

And John, I might add, it's certainly more of a challenge than what we've seen historically. But as we look around the oilfield and to some of the other time lines there of very significant assets where you're talking 12 months, 18 months around different types of operations, we're by and large not there yet. So we're pretty asset-light. We were not ordering a lot of highly overengineered overseas type equipment that you can see a year or more. And so we're making it work pretty well here.

But to that point, I mean, some of the automation equipment, which wouldn't be overly engineered or incredibly specific, I mean we've seen nine-month lead times on some of that. So if I had to pick a single item, it would probably be some of the stuff around automation.

And then just a last one for me. I'm not asking some specifics on M&A necessarily, I'm curious like what -- you guys have done a lot of deals, you're now focused on integration. How much deal for are you still seeing today on the M&A front? Is it accelerating? Has it moderated? Can you just give us some subscription of what you're seeing in terms of deals being brought to you?

There's certainly a lot of deals being brought to us, all the sellers looking to monetize. But as you mentioned, our focus for these coming quarters here is really on integration and bringing the value out, improving the margins and driving value and the operations. I'm sure there will be a time where we look around more as we grow the industrial segment particularly, but that's not something where we're very active on currently with lot of the ideas and deals we're seeing. It's organic expansion, investing in the infrastructure we've acquired and streamlining the operations.

We have reached the end of our question-and-answer session. I would like to turn the call back over to management for closing remarks.

Thanks, everybody for participating today, listening in or asking questions. We appreciate and as we said, we're pretty excited about the forward movement we got here going through '22 and into '23. So thanks again and look forward to talking next quarter.

Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.