Liberty Energy - Earnings Call - Q1 2020

Transcript

Speaker 0

morning, and welcome to the Liberty Oilfield Services First Quarter twenty twenty Earnings Conference Call. Participants will be in listen only mode. Please note this event is being recorded. Some of our comments today may include forward looking statements reflecting the company's view about future prospects, revenues, expenses or profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward looking statements.

These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties that are detailed in the company's earnings release and other public filings. Our comments today also include non GAAP financial and operational measures. These non GAAP measures, including EBITDA, adjusted EBITDA and pretax return on capital employed, are not a substitute for GAAP measures and may not be comparable to similar measures of other companies. A reconciliation of net income to EBITDA and adjusted EBITDA and the calculation of pretax return on capital employed as discussed in this call are presented in the company's earnings release, which is available on its website. I would now like to turn the conference over to Liberty CEO, Chris Wright.

Please go ahead.

Speaker 1

Wow. Our industry has been hit with two large shocks since our last quarterly earnings call. A market share war that flooded the world with oil at the start of the second and larger shock, the COVID pandemic, which is driving by far the largest ever demand contraction for oil. This one two punch led to crashing oil prices and now growing logistical challenges to even move oil at any price. The result is an abrupt reduction in rig count and an even more abrupt curtailment of frac activity than we have ever seen.

Fortunately, Liberty was built to survive tough times. As in the last twenty fourteen to twenty sixteen downturn, we plan to emerge on the other side having deeper customer relationships with the industry's leading players, larger market share, and increased competitive advantages. Getting there, however, will involve serious challenges for our whole industry. Let's begin with what's most important, the health and safety of our people and all those that they touch. Liberty was an early mover in this area.

During February 2020, we formed a COVID nineteen response team to design and implement safety procedures and contingency plans at our customers' locations and our offices and facilities that allowed continued delivery of safe frac services while protecting the health of both our customers and employees. So far, we have had only one worker on a frac crew test positive for COVID, which he appeared to have contracted on his days off. Arriving for a new shift, he suspected that he may be infected and immediately quarantined himself and notified the crew. Texas authorities commended the actions of this individual and Liberty, and a full recovery from COVID soon followed. Liberty has continued to improve our processes to protect all folks involved.

We also have been very proactive in protecting our business during these unprecedented times. Our first step was to immediately reduce executive salaries by 20%. Subsequent reductions have reduced executive cash compensation by roughly two thirds, which will fall further cut in half during our May through July furlough program as we suspect that period will mark a very low trough in frac activity. Michael will provide more details on our headcount reductions, our first ever and deeply painful, as well as our CapEx cuts, dividend suspension and operating cost reductions throughout our business. We designed Liberty with highly variable compensation structures to allow navigation through cycles, and we are confident in navigating through this cycle.

The focal point of our actions is our customers. What does the collapse in oil prices and storage rapidly filling mean for their future frac demand? How can we help all of them successfully navigate these challenging times? How can we help them with frac design changes to become more competitive? How can we work with them to improve throughput?

We love all our customers that we worked for in 2019 and 2020, and we stand with them during these challenging times. In addition, all of our largest customers, meaning our multi fleet customers, are top tier players that we chose to align with because they have strong balance sheets, high quality assets, and most importantly, are managed by great people. All of these customers are active in the Permian Basin. They will be survivors and likely consolidators as this downturn plays out. We love the profile of our top customers.

We have grown our market share percent of their business with all our top customers this year. Industry conditions had been declining for several quarters even before the COVID pandemic. During these challenging times, operators became even more demanding on service quality, efficiency, safety, and technology solutions. All of this plays to Liberty's favor, and those trends are accelerating now as the market stresses have dramatically increased. Our first quarter results reflect both the flight to quality providers and Liberty's efforts to concentrate more of our capacity with select top tier players.

Liberty's Q1 revenues grew sequentially 19% to $472,000,000 and net income was $2,000,000 or $02 per fully diluted share. Adjusted EBITDA was $54,000,000 equating to $9,000,000 annualized EBITDA per average active frac fleet, which was all 24 of our frac fleets until mid March. This performance was driven by strong customer preference for Liberty and outstanding operational execution. Liberty's first quarter results smashed previous quarterly records for number of stages pumped and sand volume pumped, both by double digit percentage increases. Over the last twelve months, which have been far from boom times in our industry, Liberty delivered a 6% pretax return on capital employed, generated significant free cash flow and returned approximately $25,000,000 to our stockholders.

Obviously, industry conditions have dramatically deteriorated since mid March. What had been a slow grind of shrinking E and P CapEx to raise returns, combined with an oversupply of frac industry capacity has transitioned into an abrupt plunge in customer activity and demand for frac services. Today's oil prices below $20 and depending crunch for oil storage capacity have seen demand for frac services drop like a stone. The rapid drop in frac activity is understandable as many producers are forced to shut in existing production to better align supply with demand as oil storage is rapidly approaching capacity. Oil demand normally rises and falls relatively slowly as it is primarily tied to economic activity.

Never before have we seen a forced abrupt shutdown of such large parts of the global economy. The financial crisis or great recession saw a 2% to 3% drop in demand for oil spread over several months. The COVID pandemic led to a 20 to 30% drop in demand over only a few weeks. In the next few months, we expect very low frac activity in the oil basins. US oil producers are now navigating forced production shut ins due to storage constraints.

US oil production will decline rapidly due to both wells being shut in and extremely low levels of new wells coming on production. Where things go next depends greatly on how quickly demand for oil rebounds as world economies reopen and oil begins to be drawn out of storage. The pace of oil storage draws and the pace of oil demand rebound from increased economic activity will strongly influence oil prices and therefore, producer appetite for frac services. These factors may lead to an increase in frac activity later this year. Our highly flexible cost structure and strong Liberty culture allow us to adapt to whatever unfolds.

We are strongly focused on preserving Liberty culture and our competitive advantages, while always delivering superior service to our customers on-site and during periods of hiatus and frac operations. We innovated our way to success during the last downturn, and we are busy doing the same this time with inventive cost saving frac and completion design changes to active parent child well management efforts, novel equipment innovations, and software applications to optimize logistics. Michael will summarize the specific cost cutting and liquidity enhancing measures that we have undertaken. Before I turn the call over to Michael, I want to highlight several distinct advantages that position Liberty to weather this downturn and come out the other side with a stronger market position. One, top tier customers who will survive and likely own larger asset portfolios on the other side.

Two, strong relationships and communications with our customers. We are in this downturn together and we will get through it together. Three, a tight knit Liberty culture of trust and partnership that brings out the best in crisis. Four, differential performance that drives outsized demand for Liberty services. Five, strong balance sheet, built to last.

Six, loyal and committed suppliers and partners. I will now turn the call over to Michael to discuss our specific actions and financial results.

Speaker 2

Good morning, everyone. As Chris discussed, entering into 2020, industry conditions were already challenged prior to the emergence of the COVID pandemic. But we were very proud to deliver solid 2019 results and a favorable 2020 outlook on our February earnings call with solid visibility for all 24 of our current fleets and our twenty fifth fleet being fully utilized in 2020. However, the black swan event that crushed oil global oil demand and oil prices now crush demand for frac services across the domestic landscape, and oil and get all oil and gas basins have been affected. Regrettably, we announced earlier this month that we reduced our staff frac fleet count by 50%.

And first for the first time in the company's history, we had to lay off Liberty team members. The toll on separated and present Liberty employees has been dramatic, and we are truly humbled by the incredible professionalism and understanding that the Liberty family has shown through the implementation of these tough measures. With that in mind, let me start by celebrating the remarkable achievements of the first quarter, which owed everything to the hard work of the entire Liberty team. Our first quarter included a fully utilized schedule of 24 fleets that were active through mid March. Our operations team pushed efficiencies in new heights.

We pumped a company record amount of proppant and stages in the first quarter, a double digit percentage increase from our previous base. For the first quarter of twenty twenty, revenue increased 19% to $472,000,000 from $398,000,000 in the fourth quarter of twenty nineteen. Net income after tax increased to $2,000,000 in the first quarter compared to a net loss of $18,000,000 in the fourth quarter. Fully diluted net income per share was $02 per share in the first quarter compared to a fully diluted net loss per share of $0.15 in the fourth quarter of twenty nineteen. First quarter adjusted EBITDA increased 77% to $54,000,000 from $30,000,000 in the fourth quarter.

And annualized adjusted EBITDA per fleet was $9,000,000 in the first quarter compared to $5,000,000 in the fourth quarter. General and administrative expense totaled $29,000,000 for the first quarter or 6% of revenues and included one time software costs related to the ERP implementation of $1,000,000, non cash stock based compensation expense of $3,000,000, and $2,500,000 of accounts receivable allowances. Net interest expense and associated fees totaled 3,600,000.0, and income tax expense was 300,000.0 for the first quarter. We ended the quarter with a strong liquidity position with a cash balance of $57,000,000 which was down from the fourth quarter of 113,000,000 due to growth in revenue and therefore accounts receivable. At quarter end, we had no borrowings drawn on our ABL facility and total liquidity, including $2.00 $2,000,000 available under the credit facility was $259,000,000 In early March, due to the macroeconomic issues that Chris discussed and after close discussions with our customers about the likelihood of a precipitous decline in frac activity industry wide, we acted swiftly.

As we did in the last downturn, we began with substantial cut to executive pay, but the incredibly fast deterioration in the industry conditions during March and the view that the conditions will be challenging for the most of 2020 led to the announcement we made earlier this month regarding reductions in the number of staffed frac fleets and the necessity to reduce our workforce. To successfully navigate this unprecedented economic challenge, we focused on protecting the business through cash conservation, liquidity management, and maintaining balance sheet strength. We wanted to make sure that Liberty could weather the wide range of possible challenges ahead of us and to emerge on the other side stronger and well positioned to take advantage of opportunities in the future. First, we reduced our staff frac fleets in early April and unfortunately had to reduce our workforce by nearly 50% during the second quarter. We now have 12 staff frac fleets and we anticipate this will remain at 12 for the balance of the year, with flexible furloughs cutting costs when activity drops below 12 fleets.

As a result, we believe that we have structurally adjusted our cost base to align with anticipated 2020 activity outlook. We do not foresee further cuts to our staff frac fleet count at the moment, but we will manage the challenging near term market by utilizing furloughs that will adjust our direct cost of operations very quickly in parallel with customer demand. We expect annualized cost savings of 170,000,000 from reduction in force measures. Second, we suspended variable compensation and our four zero one k match from q two going forward and reduced base salaries for the executive team and other salaried employees plus reduced cash compensation for our directors. We expect an annualized cost savings of over $50,000,000 from these measures.

Third, we moved our capital expenditures to a maintenance only mode after delivery of prior capital commitments. Earlier this month, we announced a reduction in our planned twenty twenty capital expenditures to a range of 70,000,000 to $90,000,000 which is over 50% below the midpoint of our previous guidance of approximately 165,000,000 This includes approximately 33,000,000 that was incurred in the first quarter of twenty twenty. The majority of which was for technology and fleet enhancement, such as the delivery of Tier four dual fuel engines and pumps that were previously expected to be used on our twenty fifth fleet. The 2020 will also include some costs associated with this fleet, while the second half capital of 2020 capital expenditures will primarily consist of maintenance costs. This strategy will enable us to provide best in class fleet technologies for our customers who are keenly focused on prioritizing returns on each dollar of capital spending.

Customer demand for superior services have increased in the current climate and provides us with an opportunity to further solidify long term relationships with strategic customers. Fourth, we suspended our dividend. During the quarter of ended 03/31/2020, the company paid quarterly cash dividends and distributions to stockholders and unitholders of approximately $5,600,000 On April 2, we announced the suspension of future quarterly dividends for Class A common stockholders and distributions for Liberty LLC unitholders until business conditions warrant reinstatement. We believe this temporary measure to adjust our capital allocation strategy towards cash conservation is prudent to further protect our balance sheet against this uncertain backdrop. Disciplined capital deployment is a core Liberty principle, and we look forward to resuming dividend payments when appropriate.

Fifth, we are working with our supplier partners to reduce the costs of running our business. Liberty has always had a partnership mentality with our suppliers as we do with our customers. This downturn is stressful for the whole supply chain in the oil and gas industry, but this is an industry that has always thrived on working together. Our supply chain partners view Liberty as a company they can ride on to work through tough times with. And as such, in times like these, we come together across the table and productively work on cost savings.

This mentality is the same whether it's our sand partners or our legal and accounting service providers. We're expecting input cost reductions that will range from 10 to 30% depending on the specific cost line. Sixth, in the beginning, in late April, implemented a temporary measure of employee furlough plans in the fields and corporate office. Corporate furloughs will reduce personnel cost portion of g and a by almost 50% from the rich current reduced levels during what we believe will be the worst of the downturn. The second quarter and the early third quarter time frame.

Operationally, we will have the flexibility to furlough fleets as the work schedule demands, And this will allow us to react quickly to adjust our cost structure down or up as the frac calendar demands. We believe these steps set up Liberty to weather the storms that are in front of us and to be successful preparing to take advantage of future opportunities. We are managing the business, pursuing a free cash flow positive strategy for the remainder of 2020 and we project to end the year with a greater cash balance than at the end of the first quarter. As Chris discussed, the imbalance in the oil supply and demand has created a challenging market for fracs. We are committed to our strategy of disciplined growth and returning capital to shareholders, but this requires us to protect the business first in an unprecedented downturn.

The depth and duration remain uncertain, but we are confident that we have taken the necessary actions to manage through the downturn. Importantly, we are well positioned to react quickly to a rebound in frac demand activity. In these challenging times, we will take this opportunity to work diligently with our customers on providing the best in class service and engineering solutions and expect to emerge in a strong, more favorable position with high market share and more entrenched relationships with our operators. We're deeply focused on being the foundation of a strong domestic energy industry. And with that, I will now turn the call back to Chris before we open for Q and A.

Speaker 1

Thanks, Michael. My heartfelt thanks to the Liberty family for their actions during these extremely challenging times. It is with heavy hearts that Liberty had its first ever layoffs. Our hearts go out to these Liberty family members who were integral parts of building our company. We look forward to the days when we can welcome them back to Liberty.

Thanks to all Liberty team members plus our customers and suppliers who have worked closely together to safeguard the health and safety of everyone during the pandemic. Nothing ever trumps the health and safety of our people. Your efforts have been tremendous, and we are proud of our record so far. But we can't take our eyes off this ball. Thanks also to the health care workers and first responders across our country as they lead from the front in battling the pandemic.

I want to end with a few broad thoughts on energy and data points from the recently released EIA report on US energy supply and demand in 2019. First, 2019 was the first year since 1957 that The US produced more total energy than we consume. This is a huge milestone. The two fastest growing sources of energy supply in 2019 were oil and gas. In fact, oil and gas supply just a hair below 70% of US total energy consumption in 2019, an all time high for market share.

Our industry is critical in enabling today's world, particularly our modern health care system. We are also central to the world's COVID mitigation efforts from supplying the raw materials for PPE, personal protection equipment, and other critical hospital supplies to literally fueling hospitals, transportation, and the rest of our economy. Hanged up, everyone. We are needed. We'll now open the line for questions.

Speaker 0

We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. The first question comes from Blake Gendron with Wolfe Research. Please go ahead.

Speaker 3

Hey, good morning, guys. Thanks for taking my questions. The first is on working capital. On the prior downturn, you guys were growing fairly substantially, so it wasn't an appreciable source of cash. But embedded in your free cash flow positive outlook for the remaining three quarters of this year, just wondering how we should think about the key components of working capital, as contributors to, to cash flow.

Speaker 2

Yes, Blake. Thanks very much. Yes, we will actually have a significant generation of cash from working capital. As you saw, we've built receivables pretty significantly in Q1 as we fuel growth. And I think you'll see that we'll be able to mine that as we go through the year.

And obviously, we are targeting balancing cash flow before working capital as closely as possible to zero as well.

Speaker 3

Okay. Makes sense. And sticking with the working capital theme here, appreciate your comments about aligning yourselves with top tier customers. I would say, though, pushback from investors is that your position in the Rockies and the Bakken, you have some challenged customers up there in the current commodity tape. So I'm just wondering what you're doing to mitigate bad debt risk.

Do you have AR insurance? And if so, what percentage of your receivables are covered by insurance at this time?

Speaker 2

Yeah. No. We take it we have a close relationship with all of our customers. We do not have AR insurance, so we have no coverage on that at this present point in time. But, yeah, currently, you know, as everybody did, we instituted the new guidance around looking at receivables in the first quarter.

And as you saw, we took about a 2 and a half million dollar allowance. 1,000,000 of that was related to a small customer that, you know, filed a year over a year ago, we're finalizing that date. So really, when we took a look at our receivables, we put about a million and a half dollar allowance on them. So we feel pretty comfortable where we are at this present point in time. That's it.

You know, the market is changing very, very quickly for, you know, some of the E and P operators.

Speaker 3

Understood. Appreciate the comments. Thanks, guys.

Speaker 4

Thanks, Blake.

Speaker 0

Our next question will come from Chris Voie with Wells Fargo. Please go ahead.

Speaker 5

Wondering if you can give a little update on your view for the Lower 48. There's a wide range of estimates on how low activity is going to go. I guess you guys are expecting to be able to maintain 12, but with some flexibility if it gets worse. Can can you give any color on what you're expecting for the industry at this point given the visibility that you have?

Speaker 1

Yes, Chris. Look, the the the next few months will be extremely low frac activity in the oil basins. The gas basins clearly will hold up better, but oil basin frac activity I mean, you're shutting in wells to figure out where you're gonna put oil, you have to have special reasons to be fracking them. And a number do, but there'll be very low frac activity in the next three months, and we absolutely will not be keeping 12 frac fleets busy during the next three months. The 12 frac fleets is sized to where we expect will probably be towards the end of this year.

We don't know how this rebound unfolds, but I think it's likely that the bottom in frac activity is the next three months.

Speaker 5

Okay. That's helpful. Thanks. And then on a follow-up, historically, you guys have had a stance on M and A where you would be open to buying assets, but wanted to preserve the culture of the company and not acquire operating companies. This is, you know, a pretty extreme situation now.

I'm curious if your view has shifted at all in terms of opportunistically acquiring anything or other product lines. Just

Speaker 6

maybe if we could

Speaker 5

get an update on m and a and if there's been any shift in how you see it right now.

Speaker 1

You know, I I think in the last certainly, in the last call, I don't know, before that, you know, as the market gets weaker and things get dislocated, that's a more likely time for Liberty to do something. Now it's still a high bar. You know, it's gotta it's gotta work. It's gotta be additive on a per share value. We've gotta be comfortable with the cultural risks involved.

So look. Yes. We are approached all the time on all sorts of things. That, you know, it's not impossible, but a deal has really gotta be compelling for shareholders of Liberty.

Speaker 7

K. Thanks. I'll turn it back.

Speaker 0

Our next question will come from Chase Mulvehill with Bank of America. I

Speaker 8

guess I just want to follow-up on Chris' question here on the M and A side. And obviously, it needs to be compelling. But when you think about the compellingness of potential acquisition, how do you think about the consolidation versus kinda adding incremental services, whether it's kinda completion related services or or other?

Speaker 2

You know,

Speaker 1

I I don't know that we have any any new color there. You know, frac is is is by far and away the largest, and I would say, central service of onshore unconventional production. That's our focus. Something enables that, something you know, it's gotta have synergies and strength in growing and building our frac business, making it better. We're still focused, guys.

Speaker 8

Okay. Alright. And then, you know, through this downturn, I mean, obviously, last downturn, you know, the strategy was to take market share and expand the customer base. Is there any change as we think about this downturn as to your strategy?

Speaker 1

You know, probably no wild changes, but look. This downturn is different. The last downturn sort of ground lower and lower. Right? So we had a certain amount of capacity and it was outperforming others.

And so as activity ground lower among our existing customers, we incrementally added customers to keep our capacity full. This this is not ground lower. This drove off a cliff because it was beyond our industry. Right? Our economies got forcibly shut down.

That creates a massive dislocation. And when frac fleets are getting pushed out of the market super fast, prices collapsing, so simply impractical for us in any reasonable way. You know, could we have kept all our you know, maybe. But that that that was not that was not the strategy or goal at all we took here. Our goal here, number one, was to do everything possible we could to help all of our existing customers navigate a massive disruption.

So that's technical things, that's performance, that's all sorts of business partnership things, help on COVID plans and pandemic. So one of the things that has happened already is growing our market share among our existing customers. As as things rebound, I think we'll see a lot of capacity and probably a number of competitors go out of the marketplace. So when there's opportunities to add customers that we think will be good Liberty partners and positive for us, I suspect you'll see some of that. But our goal, as it always is, is to build the long term value of every share of Liberty stock.

Yeah. We said in our comments, yeah, certainly, we expect we will have a larger market share. That in itself is not the goal. The goal is to build our competitive advantages, deliver something differential. And when there's increased pull on that on that service quality and that differential product, that probably will lead to market share gains.

Speaker 8

Our

Speaker 0

next question will come from Waqarah Saeed with AltaCorp National.

Speaker 6

Or Capital. You. Good morning.

Speaker 2

Good morning, My

Speaker 6

my question is how many crews do you have working as of today?

Speaker 1

So we we never give specific numbers on what's going on. And it and in fact, you know, today might be a different answer than a week ago or a week from now. But I will say, activity has dropped dramatically. So it it is a small number. It is certainly single digits.

And it'll it it may drop lower. It's probably gonna bounce around. You know, there are a number of players, strong, great players, good balance sheets, gonna sell oil, you know, at the wellhead in low single digit prices. Why do it? Why do it?

So we yeah. There's low activity like now. We're not out trying to twist anyone's arm to convince them to do stuff now. If there's lead times, if you've got a big pad and you gotta drill it out, you know, when you start fracking, that oil is not gonna come to market for, you know, two to four months. But, you know, it's low activity right now, Waqar, but, you know, we've built a business and arranged our cost structure that however people decide to play these next three months, we're we're good with that.

We just stay in constant communication, figuring out how we can plan and be supportive for whatever comes next.

Speaker 6

K. Then in terms of your CapEx budget for 70 to $90,000,000, you know, what number of active fleets is embedded in that number? Is you know, any any guidance there?

Speaker 2

Yeah. We can I mean, think that number was better embedded around the 12 fleets running sort of, you know, a slightly slower proportion of that for the balance of the year? I think there's definitely opportunity that we will reduce that CapEx number as we execute. But again, we wanna make sure that everybody's got conservative estimates as to what we will execute on for your models. Okay.

Speaker 6

Now with the given what's going on with supplies and everybody else, what's your maintenance CapEx per fleet? And how does that compare now versus, you know, what what it was a year ago?

Speaker 2

Yeah. Really, we're you know, as you say, you know, we came into the with a budget of around 3,000,000 of fleet for this year, at the beginning of this year, when we were gonna be fully active for '24. That changes. Right? I mean, again, maintenance CapEx is basically the replacement of engines, transmissions, and power ins.

Obviously, some of that is as we're not running all of our fleets is able to be deferred. Right? So, you know, if an engine blows up, we can put that pump on the bench, and we can use one of the ones that, you know, wasn't being utilized before. So of order though, over the next two years, it's going to average around about 3,000,000 per active active frac fleet. But, you know, can we defer some of that over the next nine months into 2021?

Yes. So that's it's a the great thing about the service industry, it's a very flexible business.

Speaker 6

K. And then just a final question there, Chris. You have a pretty good handle on the Bakken, DJ, you guys have done work in the Permian. Given what you're seeing in terms of completion activity, how do you see the decline rates in those basins? And any thoughts on where the production could go there in these basins?

Speaker 1

Yes. They're down. Significantly downward. And Carr, as as you know, the further away you are and the higher your transportation costs, right, everyone's reading about the Bakken. Clearly, the Bakken is pinched first.

Frac activity declined there first. Shut ins are happening there first. As oil prices compress, those extra differentials from basins further away from the Gulf Coast, they they you know, on a percentage wise, those differentials become a bigger deal. So things compress certainly in downturns, low oil prices, Rockies get hit first and get hit worse. That's that's no different this time.

It's not just a basin thing though. Within certain basins, you know, some customers some customers have refineries and dedicated transportation and offtake agreements at their own refineries. You know, they're in a different position to people with different offtake, different ways they market their crude and move their crude. So it's variable, but I think you will see a large contraction in oil production in virtually every base driven simply by economics. If I'm a strong balance sheet, why would I take $4 at my wellhead if I can shut in that production and wait two or three months?

So I think you're gonna see US production artificially contract rapidly. Because as storage tanks get near full, we simply have to have today's supply equal to today's demand. Today's demand is artificially compressed. Although it started to bounce back the last couple weeks, but only at a slow pace. So then you'll see that.

Then I think the next phase after that is you'll see people bring production back on. And at the same time, you'll probably see people start to frack. They'll be looking ahead two or three months. You know, what is where do we believe oil prices and oil demand is gonna go? And it and it'll come back.

But sorry for the long winded answer, but yes, the Rockies are gonna be hit earlier and hit a little harder than the other basins. But these same impacts will be across all the basins, and we will see multiple millions of barrels a day come out of US oil production this year.

Speaker 6

Thank you, sir. Thank you.

Speaker 1

Thanks, Waqar.

Speaker 0

Our next question will come from John Daniel with Simmons. Please go ahead.

Speaker 7

Hey, guys. No longer Simmons, but that's okay.

Speaker 1

That's fine.

Speaker 7

Chris, great quarter, by the way, in light of the market. So congratulations there. But let's assume that you get back to the steady state of 12 fleets running, call it effectively all 12. And knowing that you're probably adversely giving financial guidance in this market. But what's a reasonable range from an EBITDA per fleet in in that scenario?

Speaker 1

Yeah. Wade, you see, yeah, it's certainly way too early to say to say that, John. You know, the pricing dropped hard. It's it's probably bottomed. Right?

You know, just fleets have to get pushed out of the marketplace. Price and customer preference are the two mechanisms that do that, that decide which fleets get pushed out. You know, we we know with this very little activity, it really comes down to customer preference. But then pricing likely has bottomed. And then as activity increases, you know, that's the force that'll drive price back up.

But we're gonna be in a challenged market this year and, you know, for it could be several quarters. I suspect it'll be several quarters. So, you know, I we don't have any crystal ball, so I don't I don't have any particular prognostication on what EBITDA per fleet will unfold over the next few quarters. It'll be low, and it'll probably start to move up. You know, we we worry more about the right relationships, the right balance sheet, the right competitive advantages, the right customers, you know, the times to to reap cash from our assets, that that's not 2020.

That's that's building in 2020 to set that up.

Speaker 7

Fair enough. And then in terms of working with the right customers, obviously, a lot of them are gonna take the frac holidays next couple months. But do you feel like you have firm visibility that those crews come back later this year, or is it just, you it's know, what they think they're gonna do, but they don't really know what they're gonna do?

Speaker 1

Yeah. No one knows exactly what we're gonna do what they're gonna do. Because there's so many and, John, as you know as well as I do, there's so many just moving pieces. Right? The single biggest one is how does the economy rebound?

How does oil demand come back? And then what happens with oil supply around the world? You know, with this period of low price, what stress does that cause to push oil out? So, really, activity will come back when oil prices and the ability to hedge future oil prices improves. You know, what what right now, it's it's takeaway in in short term prices.

But no. So people have everyone's got plans or ideas. We're constantly talking, but everyone's really gonna watch and follow what the data says.

Speaker 7

Got it. And then just last one sort of theoretical big picture for me is you kinda have a a clean slate right now. Are there any things that you want to do differently with Liberty going forward when the market eventually recovers?

Speaker 1

Well, there's lots of things we talk about. There's lots of technology efforts we have going on, and and only a few amount of them we talk with. But but to us, I would say, really, it's doubling down or deepening what we've already said. You know, the way to get better in this industry is partnerships. Long term partnerships with customers to be able to flex together.

You know, when when the price of everything changes, the optimal design changes. Right. New desire for new technologies. Hey. If we can cut 20% out, you know, and, you know, and move oil production this way, that may make sense in a depressed price, but it may not make sense in a high price.

So for for us, it's just to keep getting better, but not just internally in our doors, but in our partnership, with our customers, with our major suppliers. So I I guess I got a nothing answer for you.

Speaker 7

That's that's alright. Just I'd try. Alright, guys. Thanks a lot for your time.

Speaker 1

Thanks, John.

Speaker 0

Our next question will come from Ian MacPherson with Simmons. Please go ahead.

Speaker 9

Thanks. Good morning. Thanks for all the answers today. Chris, I I mean, this is more of a compliment, but Liberty has strike me as an experienced cold stacker of equipment, and now you're you're marketing half of your your fleet for this year and, you know, for some quarters. What have you picked up with regard to the dos and don'ts from your competitors across the industry with parking equipment for a long time?

And how do you envision your plans for your idle your your cold idle equipment, you know, through this downturn?

Speaker 10

Ian, it's Ron. Yeah. We obviously, that's not something we've we've had to do in our past, but we have a we have an incredible operations team. They knock it out of the park in the field each and every day, and these are guys who have been in this industry a long, long time and know how to take great care of an asset. So we have confidence in the plans they're putting in place to take those assets and cold stack them for the foreseeable future and ensure that those assets are ready to go when we're ready to put them back in the field.

So they've laid out a comprehensive plan as to where those assets are going to live in our world, what's going to be done to them to ensure that they're ready to go. And we have the utmost confidence that when we need those assets, they'll be ready to perform like Liberty assets always have.

Speaker 9

Okay. Thanks, Ron. Is it fair to assume that your marketed fleets now are more concentrated around your your clean fleets and quiet fleets?

Speaker 1

Yeah. Look. I I would say in this downturn, right, that the the more assets are gonna be in the stronger players. Yes. Interest interest in that stuff absolutely is growing.

So, yes, that's a higher percent. Activity in general is gonna migrate to to Texas, you know, through this downturn. Our market share or percent of our assets in the Permian will grow quite meaningfully during this downturn. But but we'll, you know, we'll stand behind all of our customers. But, yeah, I I think a migration towards next generation fleets absolutely is in progress, and and the downturn is not changing that.

Speaker 9

Thanks, Chris. And it it's been danced around a little bit on during the conversation this morning, but how much do you think this most recent leg down has impacted I won't ask you to talk about your price book, but just a more industry wide observation. How much do you think this latest kick in the shins has impacted industry pricing from, you know, January to today?

Speaker 1

Oh, meaningfully. Meaningfully. You know, look. It's it's think think think of our customers that they're getting way less than half per barrel of oil today than they were getting four months ago. You know, their their margins, their activities compress, so everything compresses.

All input costs compress, margins compress. So, yeah, it's it is it's meaningful.

Speaker 9

Good enough. Good enough. Thanks for all the answers. Appreciate it.

Speaker 1

Thanks, Ian. Appreciate it.

Speaker 0

Our next question will come from Sean Meakim with JPMorgan. Please go ahead.

Speaker 11

Thank you. Good morning.

Speaker 2

Good morning, Sean.

Speaker 11

So Chris, I was hoping maybe to come back to, you know, I wanna say the m and a question, but the m and a topic from a different perspective. So, you know, for for a long time now, multiple cycles, pressure pumping has been the fastest growing product line in all of oilfield services. It's also been the most fragmented with the weakest market structure. If you were to fast forward a couple years ahead, let's say even beyond the next twelve to eighteen months, it could be quite difficult. Do you see this as a time frame in which it's realistic to suggest that frac could consolidate to a point where it has a healthier market structure?

So, you know, I recognize to the extent that Liberty may or may not be a participant in that consolidation over time that you still have a willingness if the parameters and returns meet your thresholds. But I'm thinking more at an industry level, is it realistic to think that in a world in which large cap diversified services or formerly large cap are not necessarily interested in being consolidators in this product line, can the relatively smaller or midsized players in this space consolidate to what's a healthy market structure? Love to just kinda hear your thoughts on what's realistic and what are kind of the the the probability distribution of outcomes for this this market over the next, you know, eighteen to thirty six months?

Speaker 1

So, Sean, my short answer is yes. I I think we we we believe that that's exactly what will happen. No no no insight in how that will come about, but I believe that happens. I think you characterized our industry to pass very well. Incredible growth.

Shale revolution has transformed the world. Frac has been the engine behind it, grown massively. But as I use the analogy, like the .com revolution, awesome for the world, not awesome for the participants in the business in the last decade. But but we had some positive trends already. And one is higher specs for equipment, next generation fleets.

There's a huge interest in that. Just a higher bar around performance and safety. That was bleeding capacity out. That was that was causing the lower tier players to shrink and become under stress. Obviously, stresses are very significant right now, so I I very much subscribe to your premise.

I think we will have dramatically fewer players in the space two years from now, dramatically increased concentration, and fundamentally a better business. That will take time. That will be an ugly process. There'll be bankruptcies. There'll be mergers.

There'll be just shutdowns of business lines. We've already seen that twice. At at least two companies already just got out of business and parked the trucks. So, yeah, yes. I I think as painful as these downturns are, and this one's a unique one, it will lead to some very positive structural changes in our industry.

And I think the industry as a whole, what overall might be smaller two years from now, I I think the competitive marketplace and structure of the business will be meaningfully better.

Speaker 11

I appreciate that. So then the other thing I would posit to you is that, historically, this business has never been able to fix itself from a supply perspective. Right? The supply tends to be pretty sticky. So meaning that where we've seen step changes in utilization, it's it's the demand.

Either demand underwhelms the supply for a reason, or in some cases, there's been a step change in demand while stripping supply. It's been many years since that was the case, but we have seen it. As you think about that consolidation scenario, you know, is there is there a threshold of demand that we need to see eventually? Or, again, thinking nothing about the near term, but on an intermediate to long term basis, what types of thresholds of of crude demand or something along those lines would you need to see in order to get the industry back to where it's functioning at a healthier level? Again, just more of a hypothetical, but I'd like to hear of how you see that that piece on a intermediate or long term basis.

Speaker 1

Yeah. We we we have talked about that a fair amount. You know? And, of course, the the the honest answer is we we don't know. We simply don't know.

But if you look at world oil production, the way it's going from right now, there's not much growth, and there's a lot of countries that are meaningful oil producers that are in trouble. So I think if you look forward, looking past the next two years, I don't know how fast oil demand is gonna bounce back from COVID. No one knows, and and we certainly do not. But I think the call on US oil is likely to be meaningful in the next three to ten years. I think our industry overall will be smaller, fewer players, maybe even gross CapEx dollars, I doubt, ever get back to twenty fourteen levels.

I doubt that. The, you know, total industry frac fleets, you know, might only be 200 or 250 fleets three or four years from now. Remember, fleets are getting higher efficiency and bigger throughput, so that can still do a lot of work. But the new technology and the higher level of performance, there's just a lot of incumbent players that I I don't think there'll be a spot for on the other side. And you're right.

Our industry historically has been very bad at managing supply on this end. That's absolutely true, which is why the weaker conditions we had last year and the weaker conditions we expected to have this year and and as you and I have talked, we view that productive. The lower quality players literally were, you know, were going cash flow negative, and capacity actually was leaving our industry. I thought this might have been our first year where demand might have been flattish without the we would still would have a fourth quarter fall off. Demand might have been flattish, but the market was gonna incrementally get better because the lower quality players and older tier equipment was just getting pushed out.

But, yeah, to have meaningful discipline, we probably gotta have a smaller number of players in a more consolidated sector. And I do believe we do believe in a couple years, we we should have something like that.

Speaker 11

That's really helpful. I'll have the chew on there. Thank you, Chris.

Speaker 1

Thanks, John.

Speaker 0

Our next question will come from Conor Lina with Morgan Stanley. Please go ahead.

Speaker 12

Yes. Thanks. I was wondering if you guys could sort of help us put together all the moving pieces on your margin. It sounds like you've got a lot of, you know, flexibility built into your structure now. You're also expecting some input cost savings.

If we were to look at second quarter and say, you know, activity is six fleets or activity is 12 fleets, how different would your gross profit margin? And maybe I was just focused there to keep it simpler or or put a different way. Would you expect your incremental margins look

Speaker 2

like relative to I think yeah. I kinda see a little bit too much detail, but the reality is, you know, I think the way we set up our flexibility other than fixed district over here, you know, gross margins, just gross profit margins will stay relatively flat. So if you take the fixed cost of the fixed district cost out, you know, they will be, you know, relative relatively flat whether we're running three fleets or nine fleets. And, no, we're not gonna be running 12 fleets in q two. So I think that's the case.

Obviously, you've then got a significant difference in your g and a absorption and you fix, your district over here. It's the key thing there. I think that's that's generally how it's again, the the filler policy is gonna be we were working, we'll have crews working. I've got six you know, I've got nine fleets working. We're gonna have, you know, of order, know, 800 people out there in the field working.

You know, if we've got four fleets working, we're gonna have of order three fifty. So I think that that's gonna be a key thing.

Speaker 12

Try to keep

Speaker 13

it flexible. Yeah.

Speaker 12

That makes sense. And and could I ask, when you when you combine the impact of the price degradation for yourselves, but also the input cost degradation, how much would that have affected gross profit margin absent these sort of overhead absorption effects?

Speaker 2

Sure. Just too I it is so far too many variables in the account. Connor, for us to talk about the comments on.

Speaker 12

Okay. Fair enough. Worth a try. Last one for me. It's could you could you quantify, and I apologize if I missed this, but just how significant the drop in g and a we should expect in the second quarter is from the actions you've taken there?

Speaker 2

Yeah. I mean, it's fairly significant. Right? We are we will be of order. And it's a onetime cost in the first one, but, you know, of order 30%.

Speaker 12

Alright. Perfect. Thanks, guys. Thanks, Connor.

Speaker 0

Our next question will come from Marc Benicci with Cowen. Please go ahead.

Speaker 11

Thanks.

Speaker 2

Hey, Marc.

Speaker 14

Hey. Hey, guys. You know, recognize we don't know where things are gonna go from here, but I was curious if you could just talk about April, and maybe, you know, what the fleet count and profitability kinda looked like, and then maybe we can make our own assumptions about what happens in in the next couple months.

Speaker 1

Mhmm. Yeah, Mark. I mean, again, we we won't give any details, but you can imagine things I said go off a cliff, but it's not a completely vertical cliff. Right? It's a very more like a five seven climb than a five ten.

And so there's some time period as it runs down that cliff. So if we went into the April, we'd have, you know, much higher flat fleet count. So certainly, the fleet count is gonna be meaningfully higher in April than it's gonna be, you know, in May and June. Right.

Speaker 14

Okay. And reasonable to think that the profitability per fleet would also be following that trend?

Speaker 2

Oh, yeah. You've got fixed cost absorption that'll, you know, that that that obviously changes massively when you get down to very, very low fleets running.

Speaker 11

Yep. Okay. In terms of the

Speaker 14

sort of geographic distribution of the fleets, I mean, you guys have been focused on the oily basins and been pushing towards Permian over the past couple of years. But, you know, there is a bright spot right now, it seems like, in the gas basins where you historically haven't had exposure.

Speaker 2

How do

Speaker 14

you think about the opportunity there or interest in repositioning some fleets as a result of some of those dynamics?

Speaker 1

We've been approached by gas players for the last few years and maybe even more recently. We've watched those basins. Obviously, they're they're they're awesome. Change the world natural gas supply. But they've been the the reason we didn't go into the gas basins to begin with was it's just simply easier to produce gas than oil.

So the The US was just so gas rich, and we still are. And that and the ramp up and productivity of wells was just simply awesome. But it meant, you know, really a falling market for five, at least five years that's been shrinking frac market in the in the gas basins, but still sizable, but shrinking. But, yeah, have those markets maybe bottomed as as demand for fracking them? There's a good chance they have.

So, yeah, the the macro there is definitely more attractive to us now than it's been in the past. But, you know, the caveat to that is we tend to move slowly. Right? We're about customers and relationships and partnerships. And so, you know, it's it's it's possible.

It's not imminent. It's very possible that nothing happened. We don't move into a new base in for another year or two. Probably, we eventually will. But, you know, our focus right now, for sure, top focus by far is our existing customers.

How do we get grow our market share with them and help them not just survive, but thrive on the other side of this downturn? And we're getting a lot of inbound calls from customers that have providers that that have sketchier futures. And so, you know, we are starting dialogues with different players. That's a plus. But, yeah, that's about all can say.

But I I agree I agree very much, Mark, with your comment that the the the relative performance of the gas basins through this downturn is definitely gonna be better. And, yeah, those basins don't look the way they did years ago.

Speaker 11

Okay. Great. Thanks, Chris. That's helpful, perspective. I'll turn it back.

Speaker 1

Thanks. Thanks, Mark.

Speaker 0

Our next question comes from George O'Leary with Tudor Pickering Holt and Company. Yes.

Speaker 15

Just going to try to get it at something I think some others are trying to get at earlier. But from a higher level perspective, it sounded like the lion's share of the free cash flow for this year is gonna come from kind of a a working capital unwind as as revenue is expected to decline. And then I thought I heard a comment earlier in the prepared remarks that was along the lines of trying to run the rest of the business at or above cash flow breakeven. So one, did I hear that correctly? And should I think of that cash flow breakeven at which you're trying to keep the business at or above as an adjusted EBITDA, less maintenance CapEx level?

Or or how should we think about that?

Speaker 2

Yeah. George, I mean, that's exactly right. I mean, you know you know, the target obviously is to make sure that, you know, you're you're earning enough of your fleets, you're absorbing your g and a, you cover your maintenance capital. You know, there is no guarantee that that is gonna be possible this year. I mean, you know, again, we don't know where the market is going for the next few months.

And then how quickly the rebound is gonna happen. You know, when do the restrictions get lifted, when does oil demand get back? But obviously, that's the way you want to in these sorts of days and ages, this that's the way you wanna manage your business for this, what I would consider, almost like a standstill where you're building building the foundations for where, for what you're gonna take advantage of into 2021 and to rebound.

Speaker 15

Got it. Got it. That's super helpful. And then sticking with the geographic line of questioning in the last few questioners, how do you think your geographic distribution of fleets will look versus what it's kinda historically more or less looked like, you know, over the next six, twelve months? And then to the point on fixed district overhead, is there any opportunity to reduce that, whether it's via eliminating consolidating facilities, lowering your lease rates or real estate fees?

Is is there is there a way you can reduce costs structurally on that front?

Speaker 1

George, I'll I'll let Mark I'll let Michael take the cost side of that. But on the geographic basin, yeah, there's no doubt our the the geographic distribution of us was changing already. Right? We weren't shrinking in the Rockies, but we were growing in the Permian. Permian's biggest no.

In q q one, Permian's the biggest basin we have. And, well, it's and certainly, it will become not just our biggest basin, but by far our biggest basin through this downturn. Yeah. Just add more more assets in Texas. A larger percent of our activity will be in Texas than the Rockies this year and next year than before, but I could have said that in '19 and '18 as well.

But an accelerated geographic transformation is happening. Not leaving any of the Rockies basins. There are huge and important long term partnerships. We're here for the we're here for the count. We got great relationships there, and I've it's fantastic operations.

But a greater percent of activity is gonna be in Texas and so are we.

Speaker 2

And, George, when I talk about the the cost side of it, you know, we've you know, obviously, we don't have, like, huge numbers of legacy sort of inactive basins that a lot of the historical players have. You know, again, we've been very, very focused. And so, you know, the areas that we have set up shop in and we kind of work in, we can continue to work in. That said, we are working on bringing down our fixed cost for the balance of the year, pretty Working with basically real estate providers and a number of other fixed cost providers, whether it's insurance and other providers to try and bring down those fixed g and a cost. We have no, you know, we have no sort of clarity onto that.

Again, these are costs that are generally not as flexible, but the part of it being a worldwide pandemic and a worldwide economic collapse, it is it is actually much more much easier to have those conversations with those providers. And I think they look at this present point in time like they could be fruitful, but we have no details.

Speaker 15

Thanks very much, guys.

Speaker 1

Thanks, George.

Speaker 0

Our next question will come from Frank Repenhagen with Concentrix.

Speaker 11

Chris, Michael, Ron, just a

Speaker 4

quick thank you to you and the entire leadership team for really walking the walk. We all know that furlough is the last resort and disrespect you guys for cutting your own comp and really leading on culture. So thank you. And then,

Speaker 6

Chris, just say, if you wouldn't

Speaker 4

mind commenting, I mean, there's obviously been a rapid push for ESG and conversion to renewable energy over the last couple of years. How do you see this pandemic impacting the pace of that or fundamentally changing any of those variables?

Speaker 1

You know, Frank, I'm I'm not sure that it fundamentally changes anything. Certainly, the short term, you know, when unemployment's low, when things are good, you know, people people the focus is tend to grow on issues not as immediate. And so certainly right now, you know, what are people worried about most? A job. Their income is shrinking, low cost energy, you know, reliability.

So, you know, maybe there's a little bit of of of slowing of that. You know, there's a shrinkage in total capital to be invested. But I I don't I don't know that it fundamentally changes the the outlook there. You know, as I said, the the the the past trends are just different. I I I made that point.

Oil and gas as a percent of total energy supply to The US was a higher percent last year ever, not in the last five years or two ever. So, you know, the the the the the the energy transitions are very slow. In fact in fact, the world another way to look at it, the world's never had an energy transition. The amount of energy we get from from just biomass, it has not gone down. The world consumption, you know, trees and sticks and wood that powered the world, that has not shrunk actually.

And we added another layer on top of it. All the additional energy sources to date have always been additive with actually no displacement at all. That that is changing a little bit right now. Coal looks like it its total usage right now is sort of plateaued. It may actually shrink a bit.

It looks like it will shrink. So we'll see a little bit of displacement from it's still the dominant source of worldwide electricity. Coal, dominant. Gas is is taking market share in the largest percent of any other source there. Wind is also taking electricity market share.

But, again, those when I say cool dominant for electricity, electricity is 19% of world energy. 81% of the energy humans consume has nothing to do with the electricity grid or electricity. So in any case, you know, I I think it changes people's focus in the short run. But is it a long term trend changer? I I I would guess not.

Thank

Speaker 4

you. I'll turn it back.

Speaker 1

Thanks, Frank. Thanks.

Speaker 0

Our last question will come from Tom Curran with B. Riley FBR. Please go ahead.

Speaker 13

Good morning, guys. Thanks for So squeezing me in too

Speaker 11

I'm I'm curious. When we get to

Speaker 13

the other side of this chasm and oil consumption and and customer behavior and spending starts to normalize, what is the one technology, if possible, that you would have wanted to either add or that you already have but would ideally have significantly augmented?

Speaker 1

Well, look, I I I would say there's there's two two sides of that. One, and you've heard us talk about it, and and these efforts progress, is how to fundamentally change wear and tear on pumps. That's something we've worked on for years. That work is moving forward. And so, yeah, by the other side of this, might we have a fundamentally different way or or or at least fundamentally change the cost structure of maintaining and operating pumps?

That's very possible. That's the single biggest operating cost. And so, yes, might we have a fundamental change in that by the other side? I think I think there's very reasonable chance of that. And the other you know, there's lots, but the other has been the massive stuff we've done in big data and analysis.

You know, as the industry is thinned out and leaned up, a lot of the technology and research and effort on frac has disappeared. You know, people people love to say, hey. We're we're a manufacturing company now. And there's a lot of manufacturing like things about what we do in the oil and gas business. But the the rocks underground were not built in a factory.

There's enormous heterogeneity and variability in the rocks, the fluids, the stresses, the faults, the cracks. These are very complex systems that are two miles through the earth. So the the the smart engineering big data analysis optimization is huge. And that's I think Liberty's made big strides in that in the last nine years, and I think we'll make huge strides in the next nine years. But again, it's fundamentally a harder problem than big data for Amazon customer behaviors.

They get a certain number of SKUs and a certain number of of transactions. We don't know everything about the rock. The rock changes as you take fluids out of it and you put sand into it. So it's a very complicated problem that requires empirical data. And the empirical data that has to be normalized through these heterogeneities.

So, anyway, that's a big problem, but I do think, you will see, yeah, a few years from now on the other side of this, meaningful advancements there as well. Those are probably the two I would highlight.

Speaker 13

And then just as as a quick follow-up there, and and, Ron, if you have thoughts of

Speaker 3

your own on it, I

Speaker 13

I'd I'd be, you know, interested in hearing them. But when it comes to m and a, would you be open, to a bolt on mainly or purely driven by technology? And and if we were to see that, would it most likely be in in that second category, Chris? You know, big data, maybe industrial Internet of things related?

Speaker 1

Ron will take that one.

Speaker 10

Yes. Absolutely. I think both of those areas would be of interest to us. Think we've always said that where opportunity arises that fits with our core the ability to make our core business better, which is frac, without detracting too much attention from being focused on frac, we would be interested in that. And so whether that was a technology provider that did something to improve the asset we put out in the field, or the ability of those assets to operate at a lower cost base, we would be interested in that.

And absolutely on the data side of things, we continue to find ways to innovate there. If we could find a unique partner that was a great fit for Liberty, we would absolutely consider that.

Speaker 13

That's good to hear. Good luck. Thanks for taking my questions.

Speaker 1

Yeah. Great question, Tom. That sounds like you've been in a few of our, our internal meetings. Take care.

Speaker 0

This concludes our question and answer session. I would like to turn the conference back over to Chris Wright for any closing remarks.

Speaker 1

Great. Thank you. We we went long today, but, obviously, these are these are very different times. We appreciate everyone's interest in the dialogue and that. We wish everyone's family to be safe and get through this and get our lives back back moving forward again.

Thank you all for your time today.

Speaker 0

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.