Solaris Energy Infrastructure - Q3 2023

Transcript

Operator (participant)

Good morning, and welcome to the Solaris Oilfield Infrastructure third quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I will now turn the conference over to Emily Boltryk, Director of Finance and Investor Relations. Please go ahead.

Emily Boltryk (Director of Finance and Investor Relations)

Good morning, and welcome to the Solaris third quarter 2023 earnings conference call. Joining us today are our Chairman and CEO, Bill Zartler, our President and CFO, Kyle Ramachandran, and our Senior Vice President of Finance and Investor Relations, Yvonne Fletcher. Before we begin, I'd like to remind you of our standard cautionary remarks regarding the forward-looking nature of some of the statements that we will make today. Such forward-looking statements may include comments regarding future financial results and reflect a number of known and unknown risks. Please refer to our press release issued yesterday, along with other recent public filings with the Securities and Exchange Commission that outline those risks. I would also like to point out that our earnings release and today's conference call will contain discussion of non-GAAP financial measures, which we believe can be useful in evaluating our performance.

The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release, which is posted in the news section on our website. I'll now turn the call over to our Chairman and Chief Executive Officer, Bill Zartler.

Bill Zartler (Chairman and CEO)

Thank you, Emily, and thank you everyone for joining us this morning. The Solaris team executed strongly and safely during the third quarter, with total Solaris system count flat sequentially, despite a bottoming of market activity. We generated over $23 million in Adjusted EBITDA in the third quarter, and our capital spending rate declined 20% sequentially to $17 million, resulting in another quarter of positive free cash flow. We returned $5 million to shareholders through dividends under our enhanced shareholder return framework, marking our 20th consecutive quarter of dividend payments and over $150 million returned to shareholders since 2018. I'm also pleased to share that yesterday, our board approved a dividend of $0.12 per share, representing a 9% increase and our 21st consecutive dividend.

Turning to the third quarter highlights, we maintained flat activity at 108 fully utilized systems during the quarter, as the drop in frac crews we followed was offset by the deployment of our Top-Fill systems. Our fully utilized Top-Fill systems increased by six systems to 33, a year-over-year increase of more than 250%. We followed an average of 67 frac crews during the third quarter, which was down 8% compared to the second quarter and was lower than we anticipated when delivering third quarter guidance. We believe industry activity bottomed in the third quarter, and while current activity has modestly improved, we expect average fourth quarter activity levels to be roughly flat sequentially and could be down slightly, depending on the impact from seasonality.

As we look into 2024, we expect activity to improve from current levels, and we plan to be ready for it. Independent of overall activity levels, operators will continue to push for increased efficiencies and reduce per well drilling and completions cost. Solaris has an innovative culture that has allowed us to meet and play a role in driving several of these efficiencies for our customers. Our current maintenance and upgrade program is a large part of that. During the third quarter, we took advantage of the market softness to do proactive maintenance on our fleet, which did result in some extra costs during the quarter. This maintenance involved upgrades and standardization of equipment to ensure Solaris is prepared to respond quickly to anticipated activity improvement with the highest level of system reliability and functionality.

This proactive maintenance program is currently tapering, and we expect to enter 2024 with the ability to service roughly 100 frac fleets with our upgraded sand systems, of which 60% could have multiple Solaris systems. Should the market demand it, we have additional 40 systems that could receive similar upgrades and to be deployed with customers. The continued performance of our new technology was a highlight of the third quarter. We deployed six additional fully utilized Top-Fill systems, with the AutoBlend utilization flat, which means nearly 55% of the frac crews we followed have at least two different Solaris systems on them. This was up from over 40% during the second quarter. Our Top-Fill design has established Solaris as the largest provider of belly dump compatible well site sand storage in the Lower 48.

Using our Top-Fill system, our customers benefit from higher truck payloads and faster unloading times, resulting in fewer trucks and drivers needed to supply well sites and ultimately lower cost. Our system is not only unique in its redundancy, but can also be supported by multiple electric power sources. While our Top-Fill new build program is wrapping up in the fourth quarter, we continue to see opportunities to deploy more systems. We expect to end the year with roughly 58 Top-Fill systems in the fleet. We had 33 fully utilized in the third quarter, which was well below our deployable capacity, as a number of units went through our upgrade and maintenance program. This leaves us with room to increase utilization as we continue to see interest for these units from both new and existing customers across multiple basins.

We expect our fully utilized Top-Fill system activity to improve over the next few quarters as more units become available. As our growth capital spending for Top-Fill units slows down in the fourth quarter, our total capital expenditures will decrease. As a result of this, we expect to generate significantly more free cash flow during the fourth quarter and throughout 2024. As we've said before, generating and providing shareholder returns have always been paramount to Solaris's strategy. We initiated a regular quarterly dividend in 2018, and including our dividend announced yesterday, we have paid 21 consecutive dividends since then. Earlier this year, we committed to a long-term framework for enhancing our existing shareholder returns program by returning at least 50% of free cash flow through dividends and share repurchases.

As part of this enhanced returns framework, we've raised our dividend twice to $0.12 from $0.105, reflecting a 14% year-over-year increase. The second component of this program was the initiation of a $50 million share repurchase authorization, of which we have repurchased $26 million worth, or approximately 3 million shares to date. I'd like to summarize by highlighting that our results so far in 2023 are showing success in our differentiated strategy of growing our earnings and return for frac crew we service. While we pulled forward our upgrade and maintenance program in the third quarter, we expect these temporarily higher costs to somewhat mitigate and are excited about the healthy outlook to continue to deploy incremental equipment to the market.

We expect our profitability and Free Cash Flow to trend higher as we expand our offerings per well pad and benefit from our equipment upgrades. With that, I'll turn it over to Yvonne for a more detailed financial review.

Yvonne Fletcher (SVP of Finance and Investor Relations)

Thanks, Bill, and good morning, everyone. I'll recap our third quarter financial results. We generated nearly $70 million of revenue, Adjusted EBITDA of over $23 million, and Free Cash Flow after asset sales of $6 million. We returned $5 million to shareholders and used excess cash to reduce our revolving credit facility borrowings by $6 million. Revenue in the third quarter declined 10% sequentially due to a decline in lower margin ancillary services activity, as we saw some rebundling of last mile services by pressure pumpers. System revenue was essentially flat from the second quarter, as additional Top-Fill system deployments offset the headwinds in completions activity and an outsized decline from certain spot exposed customers. As a result, our total fully utilized system count was 108 systems, which was flat from the second quarter.

The softness in frac activity drove an 8% decrease in the average number of frac crews we followed compared to our guidance for a 5% decline, which was offset by a 22% increase in Top-Fill deployments. For comparative purposes, the average Lower 48 rig count was down roughly 10% sequentially. Adjusted EBITDA declined 13% sequentially as contribution from ancillary services declined, and we incurred additional costs to enhance and maintain our systems. Excluding the impact of lower ancillary services contributions, Adjusted EBITDA declined 6%. As Bill described earlier, we took advantage of the temporary market softness to complete system upgrades and maintenance. These upgrade and maintenance efforts give us capacity to meet anticipated incremental demand with the highest level of service quality.

On a per frac crew followed basis, our Contribution Margin, excluding ancillary trucking services, was essentially flat sequentially at approximately $1.6 million on an annualized basis, and has grown over 40% year-over-year, as we have significantly expanded our equipment presence and capital invested per frac crew we are on. We believe our per frac crew profitability should benefit from additional deployments of Top-Fill systems moving forward as the last of the new builds and the systems rolling off refer become available. Our Contribution Margin per fully utilized system, when excluding ancillary trucking services, was down 7% sequentially to approximately $1 million per system on an annualized basis, driven primarily by the higher cost referenced previously. During the third quarter, ancillary services margin of approximately $1 million was down sequentially and contributed approximately 4% of total gross profit.

The decline in ancillary services margin in the third quarter was driven by a 35% decline in tons hauled due to lower underlying frac activity, a less favorable job mix, and an increase in equipment mobilizations to support maintenance and enhancements. Turning to cash and shareholder returns. Operating cash flow during the quarter was $21 million and reflected a $1 million use of cash from working capital. After total capital expenditures of $17 million and $2 million of asset sales, free cash flow after asset sales was a positive $6 million in the quarter. We used excess cash to pay down $6 million on our revolving credit facility. We ended the quarter with $3 million in cash and $37 million borrowed under our credit facility after repaying the $6 million on our revolver.

Including availability under our revolver, we ended the third quarter with approximately $41 million of available liquidity. Our year-to-date operating cash flow after asset sales was $66 million and covered our year-to-date dividends of $15 million by more than 4x. In addition to the regular dividend, operating cash flow also covered the majority of our $55 million in capital expenditures after asset sales. We borrowed on our facility during the first half of 2023, primarily to fund $26 million of opportunistic share repurchases and remaining capital expenditures not covered by operating cash flow. The accelerated return of cash to shareholders in the first six months of the year was a result of our confidence in the continued free cash flow generation that we expect to increase significantly in the fourth quarter and into 2024.

We expect to continue using excess cash towards strengthening our balance sheet and shareholder returns. With that, I'll now turn the call over to Kyle to discuss our outlook.

Kyle Ramachandran (President and CFO)

Thanks, Yvonne, and good morning, everyone. I'll start today by sharing our fourth quarter guidance and give a preliminary outlook on 2024. We continue to see strong demand for our new technology offerings and a path to increasing equipment margins. Our activity levels have modestly improved from what we believe was the market's bottom in the third quarter. We expect our total system count in the fourth quarter to be flat sequentially and could be down slightly, depending on the impact from seasonality. Absent any significant customer mix changes, we expect fourth quarter contribution margin per fully utilized system to be flat, excluding the contribution from ancillary trucking services. As our maintenance spending begins to normalize, we should see a decrease in cost per system, which could potentially be offset by the impact of seasonality.

We expect contribution from ancillary trucking services to be flat to modestly down sequentially, assuming some seasonal impacts on flat activity levels. SG&A in the fourth quarter is expected to be around $6.8 million. For our capital expenditures outlook, following the initial build-out of our Top-Fill fleet, our capital spending rate has decreased significantly, which we expect will yield significant cash flow over the coming quarters. For the fourth quarter, we expect capital expenditures to decrease roughly 40% sequentially to approximately $10 million, resulting in full year 2023 capital expenditures to now be around $67 million, which is at the low end of our previously guided range of between $65 million and $75 million.

In addition to the $2 million in asset sale proceeds we received in the third quarter, we have an agreement in place to sell additional assets no longer used for $3 million. To summarize our fourth quarter outlook, we expect free cash flow to be up significantly. Adjusted EBITDA is expected to be roughly flat, net of CapEx of approximately $10 million. Free cash flow, excluding changes in working capital, should be approximately $13 million in the quarter. We expect to use this cash to continue to pay our dividend, opportunistically look to repurchase shares, and strengthen the balance sheet. Our initial expectation for capital expenditures in 2024 is between $15 million and $20 million, which reflects more than a 70% decrease from our capital spending in 2023.

This range includes some level of continued growth capital spending, as we remain committed to getting in front of operators with solutions that address the changing nature of frac operations, while also maintaining a disciplined approach. The strategic investments we've made in our business in the last few years have been instrumental in fueling earnings growth, allowing us to grow cash returns to our shareholders. Our customers place a high premium on technologies that enhance safety, automation, and cost efficiency, and these are the areas we're focused on. With that, we'd be happy to take your questions.

Operator (participant)

We will now begin the question and answer session. To ask a question, press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question will come from Luke Lemoine with Piper Sandler. You may now go ahead.

Luke Lemoine (Managing Director)

Hey, good morning. You guys have had really good tech adoption, even in a falling market this year. If I look this year and just kinda do the simple system per frac fleet ratio, this has increased kind of from 1.4 to 1.5 to 1.6. Bill, you talked about you have capacity to follow 100 fleets with upgraded systems, and this question might be a bit tough since there are a number of variables, but where do you think system per frac fleet ratio could kind of head over the, you know, maybe next 12 months to year-end 2024, as you, you know, have systems that can be deployed?

Bill Zartler (Chairman and CEO)

I think, you know, it depends on the denominator here. If we can put all 100 to work, it's 1.6+ the blenders. If, in fact, we're seeing frac rebound by 15%, 10%, 15%, 20% next year, and you've got 80, 85 systems, I think we'll have a higher utilization out of the Top-Fill than we will our full systems count, so that you'll see that closer to 1.7, 1.8, if I do the division right. I think it sort of trends on, on really how many we put to work. We're slowing down the spending on Top-Fill, so that, you know, that's limited to the 58 we've got, you know, that'll be manufactured by the end of the year at this point.

Luke Lemoine (Managing Director)

Okay.

Bill Zartler (Chairman and CEO)

That make sense?

Luke Lemoine (Managing Director)

And then, Bill, I think you said... Yeah, yeah, that makes sense. Yeah, I mean, multiple variables here. I think you said you added six Top-Fill systems, and you were running 33 in 3Q, but I think that was just running 33. You had more because you talked about being at 58 by year-end. How many do you currently have at kind of September 30th?

Kyle Ramachandran (President and CFO)

Just under 55, so maybe 53 at the end of September. Yeah, we're wrapping up the manufacturing plan here in the fourth quarter. You know, in the third quarter, there were a fair number of systems that did come in for some upgrades. Just the context here, and we had it in the prepared remarks. This business, this offering, you know, is very nascent, but yet we've really manufactured at a rapid rate to meet market demand. And, you know, like any other new product, there's certain components that, as we've run the system out in the field, we've realized there's some upgrade opportunities to enhance reliability, throughput, et cetera. So we've kind of-

working through that in the third quarter and a little bit in the fourth quarter, such that, you know, by the end of this year, we feel like we'll be in a position where the availability of those systems will be higher, allowing us to drive that 33 fully utilized number up.

Bill Zartler (Chairman and CEO)

Yeah. And you got to remember, the 33 is a fully utilized number on a trailing basis. So as we've been making and releasing them, you know, we're catching up to that.

Luke Lemoine (Managing Director)

Okay, got it. And then maybe just one more. I think the CapEx for 2024 was, you know, a good bit lower than probably anyone anticipated as you, you've kinda got the fleet prepared for 2024 and 2023. That aside from, you know, probably more dividend increases, you know, what are the other kind of plans for cash flow, Kyle?

Kyle Ramachandran (President and CFO)

Yeah, I mean, as we announced yesterday, you know, we're very excited to continue to show per share dividend growth. We've got, you know, I think $37 million of debt on the balance sheet as of the end of the quarter. We'll continue to use Free Cash Flow to trim that balance down. And then, obviously, opportunistic buybacks worked well in the first half of the year, and we'll continue to evaluate those opportunities. You know, there's a lot of opportunity to reload the balance sheet. Obviously, we came into this program with a significant amount of cash on the balance sheet, which allowed us to really hit the ground hard in terms of developing and manufacturing the Top-Fill.

You know, reloading the balance sheet, we think, is prudent, whether it's organic or inorganic opportunities that come across the transom.

Bill Zartler (Chairman and CEO)

Yeah, and Luke, our R&D effort is ongoing, and we're continually evaluating stuff, and I think at times we'll seize the opportunity when we find a product line that really seems to work like this, and we'll continue to try to innovate and find better ways to improve our customers' operations.

Luke Lemoine (Managing Director)

Okay, perfect. Thanks for the time.

Bill Zartler (Chairman and CEO)

Thanks, Luke.

Operator (participant)

Our next question will come from Stephen Gengaro with Stifel. You may now go ahead.

Stephen Gengaro (Managing Director)

Thanks. Good morning, everybody. I think the first question, and you talked a little bit, Kyle, about the fourth quarter. What are you guys, I think, tend to get a little bit of an early look into frac fleets going back to work. What are you seeing just kind of in the market right now as far as pressure pumping activity potentially increasing? I mean, we've heard some frac guys talk about a little bit of, maybe even a little bit of improvement in the fourth quarter and kind of recovery in 2024. What are you guys seeing, like, in over the next few months as far as deployments? I know you've built some seasonality into your guidance, but as far as actual assets going back to work, what are you, what can you add?

Kyle Ramachandran (President and CFO)

Yeah, obviously, you know, commodity prices have been very supportive on a relative basis, so that, that's certainly making everybody feel pretty positive. You know, on the frac side, obviously, there's been tremendous consolidation, and I think as you're starting to see some earnings come out, that there are sort of a bifurcation developing in the space. So those that maybe had a lower activity third quarter may have opportunities to pick up some of the spot work, but we're definitely seeing sort of differentiation there. One of the themes that we continue to see is just pure efficiencies, you know, so people doing more with less. So that theme, I think, ultimately has a little bit of downward pressure on the total demand for capital equipment, not necessarily throughput. So we're not forecasting any sort of significant increase in 2024.

We do think it is modest from an overall activity standpoint, but, you know, we're, we're cautious as to the overall market outlook. What we've been able to demonstrate, I think, is an ability to grow in a market that just doesn't have a ton of organic growth and capital equipment. We've been able to capture more rig count, more share, through the new technology. And, you know, one of the things that's happened over the last 12 months in our business is our last mile business has declined just from an overall volume standpoint. So that's a pretty big piece of leverage or torque that we do have.

We don't see it increasing here in the fourth quarter significantly, but if we look back 12 months ago, that was a pretty significant driver in our business that's not here today. To grow there, doesn't require capital for the business outside of working capital. Got the team in place to make that happen, and they've been very successful in providing a high-quality service to our customers. So that's an opportunity we're excited about as well.

Stephen Gengaro (Managing Director)

Thanks. So are you, if I sort of dissect it into frac fleets followed and sort of total fully utilized systems because of the penetration of the new technologies, are you thinking in the fourth quarter—because what I was thinking was you would have some increased penetration of the AutoBlend and the Top-Fill, but your guidance would suggest then the frac fleets followed actually comes down again, which seems counterintuitive to what I'm hearing as far as a little more frac activity. That's what I'm trying to triangulate.

Kyle Ramachandran (President and CFO)

Yeah. I think you hit it on the head. You know. But our guidance implies, you know, a slight modest activity reduction, but offset by the new technologies that we as we continue to show.

Stephen Gengaro (Managing Director)

Okay. All right, good, and then, and we can sort of trend from there. And then just the follow-up, when we think about... And this kind of gets funky, and Yvonne did a good job, I think, of breaking this out for us. But when you think about, you strip out ancillary services, underlying pricing trends for the well site storage systems and AutoBlend, should we think about them as being pretty stable into next year?

Kyle Ramachandran (President and CFO)

Yeah, I mean, we're just kicking off sort of next year discussions with customers, so, you know, we look forward to talking about that, you know, probably next quarter. But as we mentioned in the prepared remarks, we are deploying significant OpEx and CapEx into the systems to bring them up to a, the next level of standard. So I think that message is resonating with customers, but obviously, those discussions are very fluid.

Stephen Gengaro (Managing Director)

Great. I think that is all for me. Thank you.

Operator (participant)

Our next question will come from John Daniel with Daniel Energy Partners. You may now go ahead.

John Daniel (Founder and President)

Thank you. Good morning. Just one for me. Bill, you touched briefly on R&D in response to Luke's question. Are there any interesting ideas or concepts that you guys are kicking around today? And if so, how quickly could you bring one of those to market?

Bill Zartler (Chairman and CEO)

There are always interesting ideas. It's the question whether they're commercial or not, John.

John Daniel (Founder and President)

Yeah.

Bill Zartler (Chairman and CEO)

We tend to wait till we're really ready to talk about them. You know, we, especially with the situation we'll have the balance sheet in and the cash situation and our team and our own manufacturing, we can respond very quickly with opportunities at work. I think the Top-Fill is a great example of that being-

John Daniel (Founder and President)

Right.

Bill Zartler (Chairman and CEO)

going from none of them, you know, a year, year and a half ago, to having, you know, 35—33 working last quarter, and, you know, that's moving up. So, I think we can go quickly if we find something that makes sense.

John Daniel (Founder and President)

Okay. Can you just-

Yvonne Fletcher (SVP of Finance and Investor Relations)

Maybe a different way to look at it, John, is if you look at the CapEx guidance of $15 million-$20 million, maintenance CapEx for us, typically $10 million-$15 million a year.

John Daniel (Founder and President)

Right.

Yvonne Fletcher (SVP of Finance and Investor Relations)

So that suggests there is more CapEx in the budget for next year.

John Daniel (Founder and President)

Okay. And as you, you know, have ideas that come to fruition, how often are those ideas being brought to you by a customer saying, "You know, we've got a problem, how do you help us fix it?" Versus you guys identify. I'm just trying to get a sense for what—how much customers bring to you in terms of opportunities.

Bill Zartler (Chairman and CEO)

I think there's, it's probably, it's mixed. I'd say it's probably a quarter to a third, quarter and a half, maybe coming from customers, and the other part are coming from our pretty experienced engineering and R&D team. I know we're working on a couple right now that have more customers' ideas.

John Daniel (Founder and President)

Okay. Thank you. I appreciate your time.

Operator (participant)

Again, if you have a question, please press star then one. Our next question will come from Don Crist with Johnson Rice. You may now go ahead.

Don Crist (Equity Research Analyst)

Morning, guys. I wanted to kind of follow up on the, on the demand. As you have deployed more kinda Top-Fill systems, it feels like your demand is stabilized and, and is getting more stabilized as, as people move towards more belly dump systems. Can, can you just talk about kinda customer pull-through and, and kinda your base load of demand now? It feels like it's not really moving around with the rig count the way that it used to in the past. Can you just expand on that a little bit?

Bill Zartler (Chairman and CEO)

If I think I understand the question right, I mean, we do have customers that have adopted the Top-Fill and are very happy, and that will be a continued part of their program for, you know, at least the future we can see. Most of those customers were existing Solaris customers, but several were not, that have decided that this is their better long-term solution with the combination of our silos and the Top-Fill unit. So, you know, I think the market is in, you know, we've seen stable by most of the majors, with some are a little lower and some are slowly increasing, but you've had some pretty decent swings in the private operators, and the spot activity levels have been fairly volatile in the market over the last year.

And so I think that's driving maybe some of the swings that are less predictable.

Don Crist (Equity Research Analyst)

Well, yeah, I guess the genesis of my question was, it feels like in past quarters, you were much more influenced by rig count and frac crew counts, but it feels like you're a lot less impacted these days, given your increased offering.

Bill Zartler (Chairman and CEO)

Yeah, I think we're penetrating with more revenue and margin per frac fleet. Number of followed is probably pretty close to the market within some band.

Don Crist (Equity Research Analyst)

Okay. I appreciate the color. Thanks.

Bill Zartler (Chairman and CEO)

Yes, sir.

Operator (participant)

Our next question will be a follow-up from Stephen Gengaro with Stifel. You may now go ahead.

Stephen Gengaro (Managing Director)

Thanks. Just a quick one. When you think about consolidation among the E&Ps and what we've seen recently, anything specifically or in general that impacts your share opportunities?

Kyle Ramachandran (President and CFO)

Yeah, I think just one quick comment here, I'm sure Bill will have a view. You know, as there's continued consolidation, you're entering into more sophisticated buying decisions, if you will, with the larger operators, and looking—many of them looking for sort of nationwide service providers. I think what we've done, particularly over the last 12 months, is expanded our footprint. The Rockies has been an area where we've grown significantly in the last year. Through consolidation, I think we continue to be seen as a lower 48 service provider. We're not a regional-based provider for, you know, a small sort of operation. I think that in some ways, plays to our favor.

But obviously, one of the things we've seen in different M&A contexts, there's always puts and takes, and sometimes referred to as cat people and dog people. People like different technologies, and so you have opportunities to win in those consolidation events, and sometimes it comes at a bit of risk or loss. So it's somewhat difficult to handicap in every situation, but on balance, I think we are established as a very well a mature service provider that can grow with the larger operators.

Stephen Gengaro (Managing Director)

Got it. Great. That's good color. Thank you, gentlemen.

Kyle Ramachandran (President and CFO)

Thanks.

Operator (participant)

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

Bill Zartler (Chairman and CEO)

Thanks, Anthony. I'd like to conclude our call by thanking all of our employees, our customers, and suppliers for their continued support of Solaris. Our team has done a tremendous work in helping our customers realize the benefits of safer, lower cost, reliable, automated solutions we provide. We remain constructive on the long-term commodity and North American outlook, and are confident that we will continue to deliver on our earnings growth and cash strategy. Thank you. Stay safe.

Operator (participant)

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