Foraco International Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 2, 2024

There are 6 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Foraco International S. A. Second Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.

Operator

This call is being recorded on Friday, August 2, 2024. I would now like to turn the conference over to Mr. Tim Bremner, CEO. Please go ahead, sir.

Speaker 1

Thank you, Lara. Good morning, everyone, and thank you for joining us on our Q2 2024 results conference. I am Tim Bremner, CEO of Foraco International and with me today is Fabian Sylvester, CFO. The news release of our results was issued this morning prior to the opening of the TSX through CNW Newswire. If for some reason you didn't receive a copy of the release, please visit our website at www.feraco.com.

Speaker 1

After the overview of the results and our comments on the quarter, we'll open the call for questions operated by moderated by our operator, Lara. As we reported in our press release, revenue for Q2 2024 was $77,900,000 compared to a record $100,100,000 in Q2 2023 with an EBITDA of $16,300,000 21 percent of revenue compared to $23,800,000 in Q2 2023 or 23.8 percent of revenue. Really important to note however, the 2 dominant regions, North America and Asia Pacific, both achieved new record performance for the quarter of $32,100,000 up 3% for 2023 $22,200,000 up 33 percent for Q2 2023 respectively and both with solid gross margin performance. This is important because it supports our strategy of focusing on long term contracts for Tier 1 customers in prime mining jurisdictions as we pivot the company away from unstable regions, including Russia, which we have now exited and some countries in West Africa. We continue to work with Tier 1 customers, which now represent 92% of our business.

Speaker 1

EV Metals remain the dominant commodity led by copper at 49% of our revenue. Our water business continues to be strong and performed well, representing 11% of our revenue for the quarter, 12% the quarter last year. And we continue with our plans to deploy the 2nd and third new generation BF 800 rotary drills later this year, both complete with automated rod handling, remote control and data acquisition capabilities making them state of the art rotary rigs. I'll now turn the call over to Fabian, who will provide a complete overview of our financial performance for the quarter. Fabian?

Speaker 1

Thank you, Tim.

Speaker 2

First of all, and as a reminder, Foracor reports in full IFRS and in U. S. Dollar. Revenue for Q2 2024 amounted to $78,000,000 compared to $100,000,000 for the same quarter last year. By reporting segment, the Mining segment represented 89% of Q2 2024 revenue and Water represented 11%.

Speaker 2

In North America, revenue increased by 3% in U. S. Dollar or 5% in Canadian to $32,100,000 for the quarter from $31,200,000 in Q2 2023. This increase is attributed to solid operational performance on ongoing long term contracts. In Asia Pacific, Q2 2024 revenue amounted to $22,200,000 making the best quarter ever with a 33% increase compared to Q2 2023.

Speaker 2

This growth is primarily attributed to increased demand and the acquisition and commissioning of NewReach. Revenue in South America amounted to $18,300,000 in Q2 2024 from $39,000,000 in Q2 2023. The region was affected by an early winter season for our high altitude project and junior company financing. In the year and year regions, revenue for the quarter was €5,300,000 compared to €13,000,000 in Q2 2023. This change is due to the company's exit from Russia and the reduction of its exposure in West Africa.

Speaker 2

In Q2 2024, the geographical activity split was North America 41% Asia Pacific 29% South America 23% EMEA 7%. During this quarter, the gross margin including compensation within cost of sales was 23% of revenue or $18,000,000 versus 26% of revenue or $26,000,000 for the same quarter last year. Most projects generated solid operating performance, which mostly offset vendor absorption of its cost. SG and A decreased by 18 percent to $5,800,000 compared to $7,100,000 for the same period last year. Operating result was 16 percent or $12,100,000 versus 19% or $19,000,000 in Q2 2023.

Speaker 2

The EBITDA amounted to 21% of revenue, equal to €16,400,000 compared to 23,800,000 or €23,800,000 in Q2 2023. I would like to take the opportunity to stress that we do not report adjusted EBITDA or any other adjustments to IFRS figures. The net results amounted to $7,800,000 or 10 percent of revenue, compared to $11,000,000 in Q2 2023 or 11%. On a 6 month basis, revenue amounted to €155,000,000 compared to €188,000,000 in H1 2023. The year to date 2024 gross profit was 22.2% versus 25% in H2 2023.

Speaker 2

The year to date 2024 EBIT was €24,700,000 or 16 percent of revenue, compared to 17.5 percent or €33,000,000 in the same period last year. As a percentage of revenue, the year to date 2024 EBITDA was 22% compared to 23% in the same period last year. In H1 2024, the working capital requirement was $23,500,000 compared to $14,000,000 for the same period last year. This increase is the result of increased activity in North America and Asia Pacific. CapEx amounted to $10,000,000 in cash compared to $14,000,000 in cash in H1 2023.

Speaker 2

This CapEx is related to the acquisition of 3 large rotary rigs. At June 30, 2024, our net debt including lease obligation amounted to €78,900,000 versus €85,000,000 at March 31, 2024 and €65,200,000 at December 31, 2023. I will now hand the call back to Tim for his closing remarks. Tim?

Speaker 1

Thank you, Fabian. The outlook for our industry remains strong and supported by the vision of our customers and strong metal prices. Our strategy is to focus on Tier 1 customers, copper, related EV metals and water, while we pivot the company towards making more stable jurisdictions and maintain good financial performance. We'll achieve this good financial performance by continuing to be a service provider of choice, particularly on technically challenging projects that require innovative and efficient drilling solutions, 1st class equipment and top personnel. And finally, we are well positioned to react rapidly to changes in market conditions, especially in Latin America without the restraints of a tight labor market or supply chain issues as was experienced in the past.

Speaker 1

Thank you for listening. And I'll now turn the call over to Lara, who will take the first question from our listening audience. Lara?

Operator

Thank you, sir. Our first question comes from the line of Gordon Wilson from Paradigm Capital. Go ahead please.

Speaker 3

Hey, good morning everyone. Can you please elaborate on the pivot in terms of the timeframe expected to remobilize these drill rigs? And what's how far up the ladder you're moving in terms of juniors versus seniors?

Speaker 1

Sorry, how far up the ladder we are to what, Gordon?

Speaker 3

Well, you're talking about more stable jurisdictions. Does this also include, say, more stable clients in terms of juniors versus seniors?

Speaker 1

So let's deal with the first part of your question and where we are in the pivot. So as we mentioned before, we've exited Russia, so that is complete. And we've also exited some of the West African nations that have that we're not permitted to work anymore. And those assets are being moved both from countries in West Africa and elsewhere. And it takes time to mobilize drills via hoisted freight into the new jurisdictions.

Speaker 1

And when they get to the new jurisdictions, the power requirements on electrical drills and returning them to prime condition and making them certified for work in the field. And that takes time. And then we need to look for the correct opportunity that suits the rigs that we have available in the application. So the repivot is underway. It has been underway for since Q1 and the equipment has been moved and it is being repaired.

Speaker 1

We're looking for opportunities to redeploy those assets absolutely as quickly as we can. Now with respect to your question about the seniors versus the juniors, the senior customers provide the opportunities for long term contracts at the pre feasibility or life of mine stage. We can't this is right in the sweet spot of our strategy. And that is something that unfortunately the juniors cannot offer. And it's been our strategy to focus on that part of the mine lifecycle for a considerable period of time.

Speaker 1

We're not stratifying any customer as a preferred customer one over the other, not at all. We look at every project on its own merits, be it a senior customer or a junior. And listen, there's been lots of great junior opportunities in the past for Foraco, which we've responded to and done well. So that's where we're at.

Speaker 3

Well, for these stable jurisdictions, I mean, we still have within South America, Chile, Peru, Argentina with billions expected in drilling in the coming decade. Is that a large part of your focus or are we talking about a complete remobilization here?

Speaker 1

Latin America is by definition for us stable jurisdiction, and it's a great jurisdiction. And the reasons for the changes in the top line for the company in those jurisdictions has already been stated. The customers that we were working for on a high altitude projects opted to suspend those operations and that's their choice, it's their schedule when they did. That may not have happened for others, I don't know. And certainly the junior sector, especially in the lithium market, went through some changes beginning late last year and we've been affected by that.

Speaker 1

But as we stated in the press release, we anticipate and expect fully expect this change in revenue to be temporary. So Latin America is absolutely filled with top tier customers with long term projects and it is not a jurisdiction that we are leaving, not at all. And as I mentioned in my comments, we've got a lot of capacity in that region, ready to go, crude and we can ramp up very, very quickly in all three jurisdictions that we work for in Latin America.

Speaker 3

Okay. Thank you very much.

Operator

Thank you. Our next question comes from the line of Stephen Green from Ordinance Capital. Go ahead please.

Speaker 4

Hi, Stephen. Hi, how are you doing?

Speaker 1

I'm well, thanks.

Speaker 4

I guess I understand that this is a pivot and I hope it's purposeful and has a result of I mean, when do we think that we're going to start growing revenues again? And the 40% utilization rate, I mean, that's significant. That's like that's quite low compared to where the mid high 50s. I mean, I know you say you're moving rigs to different jurisdictions. Are these rigs going to get employed quickly in these new jurisdictions?

Speaker 4

And I know you were concentrating, you said, on South America. Have we identified business there that we're going to that we were trying to new business we're getting there? I just understand how we're going to get from the pivot and hopefully this doesn't mean we're pivoting to a smaller company. I hope we're pivoting so we can start recognizing seeing growth again.

Speaker 1

We're certainly not pivoting towards a smaller company. Absolutely not. If we look at the utilization rate, which is running at 40% and if we look at the utilization by segment of rig distribution, it varies considerably. The rotary rigs, for example, are running at 80% utilization rate, which is the theoretical maximum. And they continue to be in high demand.

Speaker 1

In Latin America, when we're working for some of the juniors, that's relatively short holes. They've required multiple rigs to get the work done as quickly as they can. The same in high altitude projects that were shut down early. These are multi wheel projects that take advantage of the limited window to get the work done. And then those were suspended early.

Speaker 1

So it's really just a combination of the mix of customers and the work. It's not a function of a difficult market in Latin America. It's not a function of our performance, not at all. The tender pipeline is robust. The outlook for all regions is very good.

Speaker 1

So I'm not concerned about that.

Speaker 4

So you think that having the capacity in Latin America now, the business is there. It sounds like the market is weak, but you just haven't taken advantage of that market yet?

Speaker 1

No. And again, I need to stress, Stephen, that the early winter was the biggest impact. And we had some pretty big projects in Chile and Argentina that when you shut down 2 months earlier than expected and last year we didn't have that at all. That has an impact. And it's just unfortunately kind of a one off.

Speaker 1

The market in all three areas is very good. The tender pipeline is there. And as we emerge from the winter season back into drilling season, I'm very confident that the rigs will go back to work. It's the rigs are not broken, the people aren't gone. It's a matter of us remobilizing and getting back to work.

Speaker 4

All right. And do you foresee I know we got the dividend. Thank you very much. Do you foresee another special dividend or will this do you think the company will be buying shares back to return shareholder capital versus the dividend? What do you see for some capital strategy going forward?

Speaker 1

So as we've stated in the past, we apply the company's policy, shared capital policy as determined by the Board, which aims to distribute 3% of market cap provided that there are certain conditions met. Number 1 is that we're always going to maintain a minimum $30,000,000 in cash. We're going to make certain that our gross debt does not exceed next year's EBITDA. And the dividend distribution is going to be not more than 1 third of the remaining free cash after CapEx in interest. So what that all means is that end of year and we apply the capital allocation test, the Board will at that time reevaluate the opportunity to pay a dividend in the following year.

Speaker 1

So we need to wait till year end, apply the capital allocation policy and see where we're at. But it is strictly a matter of applying that policy.

Speaker 4

I just want to go back one time to this pivot strategy because I mean, when do you see we were doing I mean, our run rate is down, I don't know what percentage, but when do you see that we're getting back to growth, not just from these quarters, but from where we started? I know there are record revenues in 2023, so maybe it's hard to starting the comparisons are hard. But I mean, when do you see us turning back to revenue growth and then we'll be profitable?

Speaker 1

That's a tough question to answer. What I can say is we're not seeing anything from our customers that is giving us concern going forward. In other words, the market in the good jurisdictions, North America, Latin America, Australia, Asia Pacific and parts of West Africa. It's good. I mean, it's fine.

Speaker 1

We are putting 2 more rotary rigs to work this year, which will significantly add to our capacity in water. When the junior market is breathing fresh oxygen, that is going to mop up a lot of the capacity in some of our smaller rigs, which are pretty much single purpose for that type of work. And I don't have a crystal ball into what the markets are going to do with the juniors. But with gold where it is and EV and copper where it is, one would think that they would be well funded and extremely busy. So it depends to an extent on that.

Speaker 1

We continue to look and develop relationships with new Tier 1 customers. I've mentioned that in the past. Pardon me. That is very much in our focus because they are providing the stability that we see in North America and Australia. So we are actively working on new relationships with new Tier 1 customers.

Speaker 1

I've mentioned in the past that gold is a sector that we need to be a little bit heavier weighted in. So I'm confident in our strategy, Stephen, that despite this adjustment in top line that our strategy is sound. We maintained our profitability. So that means that the company is not broken, the performance is not broken, pricing is good, we're doing well. It's really just a matter of market and then some of the interruption because of our pivoting.

Speaker 1

And it's the right thing to

Speaker 4

do. Right. In the past years, you always you had you were contracting these large contracts. I think like last couple of years ago, it's like a $60,000,000 contract over 3 whatever 3 years. And those the kind of contracts you're looking for, those long term deals?

Speaker 4

And are they out there?

Speaker 1

Yes, they are. It's pretty tough to announce a $60,000,000 contract every year because once you've announced it, you've got 3 years to work through it. So there's tends to be not so many announcements. But yes, that's very much the focus that we've got. We have an excellent reputation.

Speaker 1

We are we're well known in the Tier one secondtor. We are known to be able to give a predictable result. And when those opportunities come along and they are out there, we will respond to them and put our best foot forward and hopefully retain that work.

Speaker 4

And in South America, what is the like is who's down there besides is it mostly independents or is it the big companies like you, Major,

Speaker 1

There's it's a very fragmented landscape with respect to drillers. There are the main providers, Veraco Major, the Boart Longyear and there are some local national companies in each country, which are working each exclusive to those countries. And then there's a whole host of smaller operators, owner operators that have got 2, 3 and 4 rigs, just like in North America and also in Asia Pacific. So it's a pretty fragmented landscape. Generally speaking, the smaller owner operators are not qualified to participate in the Tier 1 space that we go after.

Speaker 1

One reason is they don't have the available rigs. They may have 5 or 6 rigs and they would all be occupied in one project. They don't have the sophisticated operating profile with respect to health and safety. So they can't meet the standard that some of our customers, in fact, all the senior customers now require. And they don't have the high caliber people that necessarily have the training and the qualifications to be able to work for Tier 1s.

Speaker 1

So if you look at who is eligible for that, that narrows down the field considerably to 3 or 4 suppliers in each region that we would compete with.

Speaker 4

All right. So you're going to take business from hopefully by consolidating or taking business from some of these smaller ones or you still pretty much when you go head to head you're going against the big ones,

Speaker 1

the other 2? I think, Stephen, the best place to get new business is to go after new opportunities. Those are always prime. I mean, there's no incumbent on-site. It's a wide open opportunity.

Speaker 1

Those are the ones that we train our sites on the most. The second strategy that we have is look at customers that are having their work done, but perhaps are falling behind. And we offer the opportunity to add rigs and help them catch up on schedule. Not necessarily displacing the incumbent, but helping them get up get back on track. And in doing so, we have an opportunity to demonstrate how we perform.

Speaker 1

And when we have that opportunity to demonstrate our ability, more times often than not, we end up taking more and more market share on that particular project. So there's a little bit of creep. We are not low cost leaders. We don't go in and steal jobs. That is not a good strategy and is completely out of line with our profitability model.

Speaker 1

So we are not in that end of the market.

Speaker 4

Okay. Well, I just I mean, I can I don't want to come across like I'm I mean, this is a great company, but we've had 2 quarters? And I thought after the last quarter that we might resume growth. I didn't really I guess I didn't understand the pivot strategy was to get smaller to grow.

Speaker 1

And again, I don't want to belabor the point, but the pivot strategy is temporary. You can't pivot the company and not be affected. But that's not the biggest influence here. The biggest influence, again, as I pointed out, was the tough winter that we had on particular projects. And these didn't affect some of our competitors.

Speaker 1

It didn't. I'm not going to generalize that winter was horrible down there because not everybody was affected. And then we had a number of junior customers that we were working for that paused. And that means that combined with the pivot, there was that adjustment in the top line. Will we recover from that?

Speaker 1

Absolutely.

Speaker 4

No problem. Do they need I mean is it a matter of they run out of financing or they because the markets have been strong in gold and copper. They don't have they can't afford the financing rates. I mean, because interest rates are up what stops them from doing their projects?

Speaker 1

So let's talk about lithium. I mean, lithium prices were down. Lithium was in the news and we have some exposure to lithium in Latin America. So those customers now they didn't run out of money. They saw the uncertainty going forward with metal prices.

Speaker 1

And I think they did the responsible decision and put the burn rate of free cash through drilling on pause and said, well, let's just slow down a bit. There's no rush to the finish line on this thing. Let's just pause. And I think that was the responsible thing to do. And we're already seeing the recovery in the lithium.

Speaker 1

Lithium has got a great future. The world needs lithium. There's no question about that. So for them, it wasn't a matter of running out of money. It was a matter of them and in my opinion, doing a responsible thing with the price and the not to say, but just I don't want to call it uncertainty because that's not the case, but adjustment of the lithium market temporarily.

Speaker 1

All

Speaker 4

right. Well, hopefully you can leave us with some optimism. Hopefully, in your closing comments, you can leave us with some optimism, because I really feel like sometimes when the companies nothing's worse than no growth.

Speaker 1

So by comparison when the market really did change. And I had we had the junior we had the senior mining companies. We had a number of rigs on long term projects and they suspended it. This absolutely is not happening. Absolutely not.

Speaker 1

And I've got tremendous amount of confidence in our business going forward. I think that we are on the cusp of a much better market going forward. And I'm only repeating what our senior customers are telling us that they say the outlook based on everything that we all read in the news, the forecasted copper deficits, the need for copper, the demand, not only for electric vehicles, but also for AI and whatever is real. So we're not in a metals crisis. No.

Speaker 1

Okay. All right.

Speaker 4

Well, thank you for all your hard work. And of course, I appreciate it. I just wasn't expecting 2 quarters, but hopefully the next quarter will return to where we expect for Otco to be.

Speaker 1

Yes. We'll look forward to talking to you in October.

Operator

Thank you.

Speaker 4

Thank you.

Operator

Our next question comes from the line of Don Angelo Volpe from Beacon Securities. Go ahead please.

Speaker 5

Hey, good morning guys and thank you for taking my question. Hi, good morning. Hey, how's it going? Yes, so just first question for me. I just want to point towards North America.

Speaker 5

Congratulations on the record revenue there. But last quarter, you guys indicated that you were in active discussions or final steps with the Tier 1 client to drill for gold here. Was this added and that was was that contributing to the revenue increase for the quarter? Or are you guys still in discussions and kind of when can we see that come through?

Speaker 1

So the revenue does not include any new gold customer. That is very much still on my as part of my North American strategy. And we are continuing to pursue that relationship going forward. So no, it does not include it in that. Okay.

Speaker 1

Are we hopeful for

Speaker 5

contribution in the second half of this year or it's just kind of it's a wait and see approach?

Speaker 1

Look, it's a what we're going after is a large technical project. And I'm not going to speculate on the decision that the customer is going to make, but that's only one project. So and there's many other senior gold customers. And when we're moving into we're moving assets and we're getting ready to respond to new tenders that we know are going to come out from senior gold miners that we will respond to. So what I can say is that I am very confident that based on our track record, the quality of the work that we do and the reputation that we have around the Tier 1 table, our Tier 1 customers table that it's only going to be a matter of time before we enter into that space in a meaningful way.

Speaker 1

I'm very confident of that.

Speaker 5

Okay. Thank you. And then just moving over to the water

Speaker 1

Sorry? Yes. Go ahead.

Speaker 5

Okay. I was just going to move over to the Water segment. Just saw good margin gross margin improvement. I think you guys were at like 17% last quarter. Are we expecting to remain around these levels?

Speaker 5

Or are we expecting it to kind of normalize back to call like the 25% mark? And can you talk about the pipeline for water activity?

Speaker 1

So with respect to margins, we are very focused on margin, not only maintaining margins, but improving margins. We work on long term projects and we have an opportunity to optimize productivity, in other words, increase it and manage our costs. And when you're on a long term project, you don't have to remobilize. There's a lot of opportunity to do that. Everybody can do a little bit better if you put your mind to it and put some effort into it.

Speaker 1

So that's our plan and it's an ongoing one. With respect to the water market, this is a market that we are almost at full capacity in certain jurisdictions. And as we have rigs come available, they are going to go to work. So we have a 3rd and a 4th rig that we are mobilizing in the second half of this year, which are already booked. And as I mentioned earlier in the call that rotary fleet is at about 80% utilization.

Speaker 1

And the rotary rigs give us the largest revenue per rig of anything in the fleet. So I'm quite bullish on the water market.

Speaker 5

Okay, great. Thank you for taking my questions and I'll hop back in the queue.

Speaker 4

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Steve Caremer from Player Securities. Go ahead please.

Speaker 4

Good morning guys. Hi Steve. Hi. Just

Speaker 1

on the utilization here, so running at 40% through Q2. You said most of the rigs out of the unstable jurisdictions have now been moved. Just curious if that 40% utilization we saw in Q2 is an absolute floor that we should see going forward? And if you can comment on where utilization is now and where you expect it for the rest of the year? Sure.

Speaker 1

So the utilization rate is a change, is a combination of our repivot. And it's also a combination of the adjustments that we've had in certain markets, the junior market, for example, if you will. So we are in the midst of transporting rigs now between jurisdictions and we're optimistic that those rigs will be back to work before the end of the year. We're moving to areas some are already spoken for, we know they're going to go to work, it's only a matter of time. The other idle rigs, the ones that were locked up for the winter, we know they will restart in Q3 and Q4 because we have signed contracts and commitments for our customers to do so.

Speaker 1

So those will recover. Notwithstanding a catastrophe for the industry, I don't see the utilization rate decreasing, no. It's but I don't have a crystal ball for what's forward, but no, I don't see it getting any lower. And again, as we put 2 more rotary rigs to work, that will have a big impact on the top line, but it could barely move the needle on the utilization. Remind everybody that utilization rate is one metric, but not always the most rate is one metric, but not always the most meaningful.

Speaker 1

Okay, great. Just on the Latin America, the delays due to the early winter. Is there any costs associated with that, that will be borne by yourselves or are there any are those costs pushed through to the ultimate customer? No, I mean, and again, this there was always planned to be a winter shutdown. That was the intention.

Speaker 1

When is it going to snow? Nobody knows. But our agreements provide for the change in operating to standby. And it's just a matter of implementing those terms and conditions, which are spelled out in the contract and we're compensated. So it's not like we got a surprise, we're not going to get a fair cost, absolutely not.

Speaker 1

We put together a fair and comprehensive agreement that's in the best interest of both parties and protects the profitability of our company. And that's evidenced by the margins, which are only affected by some unabsorbed costs due to the utilization. Because remember, depreciation is included in our margins. If you looked at an adjusted gross margin, you'd see that they're virtually identical to where they were. So there's been no margin erosion.

Speaker 1

Good. Okay. Just one more for me on the 3rd and 4th rigs coming later on this year. Are they expected to head to Australia? One is on its way.

Speaker 1

I'm not sure where it is on the boat, but it's on its way and it will be outfitted in Australia and will be at work before the end of the year. What I'm really pleased to report is the first one that we sent to Australia, which is and Australia is a particularly particular jurisdiction in that the requirements for equipment are very rigid and specific. And our 1st new generation rig that went in was extremely well accepted by the crew. They absolutely love it. It's a much smaller package.

Speaker 1

It's 30% more powerful than any rig that we've been using. It can drill a much larger diameter hole and our customer loves it. And everybody is looking over the fence and saying we want 1. So I'm really excited to get number 2 and number 3 down there as quickly as we can.

Speaker 4

Great. That's all I had guys. Thanks.

Operator

Thank you. There seems to be no further questions at this time. I'd now like to turn the call back over to Mr. Brammer for any final closing comments.

Speaker 1

Thanks very much, Lara. No, I just want to remind everyone that FORACO strategy is quite deliberate and planned, And we are very focused on the Tier 1 jurisdictions and the senior customers and improving the top line. We're very much focused on that. And as I mentioned earlier, the combination of the pivot of the company, the winter conditions and the change in drilling activity with some of our customers, as we said in the headline of our press release, we believe is temporary. So I appreciate all of the interest and have no further comments and appreciate it.

Speaker 1

And thank you very much for your attention everyone.

Operator

Thank you, sir.

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