Earnings Call: Q2 2021

Aug 10, 2021

Good morning, and welcome to the Tidewater Reports Results for the 3 Months Ending sixthirtytwenty one. My name is Brandon, and I'll be your operator for today. Please Please note this conference is being recorded. And I will now turn it over to Mr. Wes Goecher, Vice President of Finance and Investor Relations. You may begin, sir. Thank Thank you, Brandon. Good morning, everyone, and welcome to Tidewater's earnings conference call for the 3 months ended June 30, 2021. I'm joined on the call this morning by our President and CEO, Quentin Neen our Chief Financial Officer, Sam Rubio our General Counsel and Corporate Secretary, Daniel Hudson and our Vice President in Sales and Marketing, Pierce Middleton. Operator. During today's call, we'll make certain statements that are forward looking and referring to our plans and expectations. There are risks operator. Thank you, Brandon. Thank you, Brandon. Thank you, Brandon. Thank you, Brandon. Thank you, Brandon. Thank you, Brandon. This document is available on our website at tdw.com or through the SEC@sec.gov. Operator. Also during the call, we'll present both GAAP and non GAAP of financial measures. A reconciliation of GAAP to non GAAP measures is included in yesterday's press release. And now with that, I'll turn the call over to Quintin. Operator. Thank you, West. Good morning, everyone, and welcome to the Q2 2021 Tidewater earnings conference call. Joining me in presenting our prepared remarks as usual are Pierce Middleton and Sam Rubio. I will open the call with some general commentary on the quarter. Peers will cover the markets in the various geographies in which we operate and then Sam will wrap up the prepared remarks with an overview of the income statement, OpEx, operator. And then of course, we'll open it up for questions. The second quarter is on a seasonal basis a relatively strong quarter with the 3rd This year's Q2 followed that pattern. Piers and Sam will provide the details, but globally average day rate was up, operator. Industry wide, what we saw in 2020 were activity levels coming down dramatically in the 3rd quarter operator. New contracts rolled on with lower dayrates in the Q1. Now, as activity levels are picking up again, we are beginning to claw back the dayrate operator. 2020 just as activity levels were coming down, which is not typical. That was due to payment delays from payment, which operator. As of June 30, we are trending towards normal levels. In the Q2, we had strong cash flows from that normalization. Operator. We also picked up $18,600,000 in vessel and other asset proceeds sales as we continued to high grade the fleet. Operator. Feel free to pick the metric that best suits your perspective, be it cash flow from operations, free cash flow, free cash flow before vessel disposals, It's all there in the press release. They're all positive and we have designed the business architecture incentives to keep it that way. Net debt is down to $4,500,000 We do have the maturity of the 2022 bonds in August of next year. The principal outstanding on the bonds is $135,000,000 and we're currently sitting on $151,000,000 of cash. Currently, the prepayment penalty on the bonds is $10,000,000 So we're going to be mindful of that as we evaluate refinancing opportunities over the next several months. The prepayment policy goes down approximately $825,000 per month. The decrease in activity as the full impact of the pandemic is now in the trailing 12 month figures, offset by a liquidation of working capital operator. Quarterly revenue rounds out to $90,000,000 Operating costs were slightly higher than we were anticipating, largely due to direct Related to the pandemic and vessels reactivated during the quarter. And as a result, margins were 1 percentage point below where we thought they would be for the 2nd quarter, operator. But they still reflected a pickup of more than 3 percentage points during the quarter. We came in at 29% This quarter, but we're still anticipating margins of 30% for the full year. My expectation is that the 3rd and 4th quarters will average operator. Just above 30%, but that anticipates a reduction in direct pandemic costs that have proven to be more stubborn than we envisioned at the beginning of the year. Operator. We used the cash generated in the quarter to pay off another $11,400,000 of outstanding debt. Combined with the build in cash, net debt operator. The incremental day rate margins and revenue from incremental days work should drop 100% to operating profit. This quarter's incremental operating profit was 95%. Operating leverage has cut against us the past 6 years and particularly the last year as we've done it with the pandemic, but incremental margins this year were a positive 95%. And some other assets in the 2nd quarter for $18,600,000 and we have 14 vessels left in the asset held for sale category. We did sell 12 60 foot U. S. Flag vessel that had been in layup and was facing an approximately $3,000,000 operator. But which was not classified in the asset held for sale category, I would classify that sale as an opportunistic one. Operator. We sold that vessel for a $4,000,000 book gain. At any point in time, we're willing to sell any vessel if the present value is in excess of our bull market recovery scenario, which Which was the case in this sale. Based on the recovery in the market that we see beginning to unfold in the second half of twenty twenty one, operator. I am very much looking forward to getting out of managing a fleet of layup vessels. In those vessels that do not merit reactivation at this time, but based on our internal forecast of the recovery, they should be reactivated in due course operator. And ultimately more than justify this investment. Those vessels that don't meet this criteria are classified as assets held for sale. Operator. As our perception of the recovery and the cost of reactivations change, vessels will move in and out of the assets held for sale category. During the Q2, we moved 1 vessel out of the asset held for sale category and into the active category. Vessels and layup cost us $3,800,000 in the 2nd quarter, which is down 30% from the 1st quarter cost, but it's still an annualized cost operator. $15,000,000 per year. Removing this burden by gainfully employing or disposing of these assets will add that 15,000,000 operator. Cash flow in addition to the operating profit from those vessels that go back to work. As part of this ongoing work to high grade the fleet, we are also focused enhancing the connectivity and data capture and analysis capabilities of our active vessels, providing our operations team with valuable insight that allows us to operate more efficiently, reducing fuel usage and our Scope 1 emissions. Operator. We have demonstrated that shore power systems have also been very effective at reducing emissions while in port. So we are installing several more on vessels operator. The operating imports that offer the necessary infrastructure to support this technology. This operational data and these positive results are enabling closer operator. This data also provides customers with the justification to increase day rates to support those continued investments. Operator. Our G and A costs went up for the first time in 10 quarters. Our annualized G and A expense for the Q2 was 67,000,000 operator. We mentioned on the last quarter call that G and A will begin to rise a bit as we go through the remainder of 2021, as we Have begun to fill some open positions and we anticipate travel expenses coming back as we get further along into the pandemic recovery. Operator. Our big cost focus in 2021 is optimizing the cost of dry docks and minimizing the cost of vessels in layup. As I mentioned earlier, we reduced the annual run rate operator. And lay up by 30% during the Q2 from $21,000,000 down to $15,000,000 It's a combination of operator. Activating the vessels, disposing the vessels and reducing the cost per day of the vessels in layup. The cost per day of vessel in layup went down 16% operator. And the reduction in the number of vessels in the fleet makes up the remainder to get to the overall dollar reduction of 30%. Operator. We now anticipate dry dock costs for 2021 to be approximately $24,000,000 as we are planning to reactivate more vessels than we originally thought we would at the beginning operator. This is a good development, but it brings with it additional costs. In addition, the 2nd quarter drydock costs came in at approximately $4,000,000 Which was less than the $9,000,000 we were anticipating to spend, the dry dock savings in the second quarter isn't a cost efficiency, it's just a cost that has been delayed into the 3rd quarter. Operator. So the Q3 will now be our heavy drydock quarter for the year as we reactivate more vessels than we originally budgeted and perform more Form dry docks were originally slated for the Q2. We're now anticipating approximately $13,000,000 of dry dock costs in the Q3. Operator. Global utilization and day rates are increasing. Reactivations are also increasing. The active vessel count prior to the 2020 pandemic, the best Quarterly record we had since the 2014 oil price collapse was the Q2 of 2019. In that quarter, we had revenue of $124,000,000 from 163 working vessels with active utilization of 79% and an average day rate of $10,442 operator. This year's Q2, we had 118 vessels working, average utilization of 78% and an average day rate of 10,435. We're definitely off the pandemic close, but to get back to the highest revenue we have prior to the pandemic, we need to put all the remaining vessels back to work operator. And push day rates up another $1200 per day, which I feel confident will happen as we go through the next 18 months. Operator. When we get there, the high grading of the fleet that we have been doing over the past 30 months should demonstrate the revenue and earnings generation capability of the fleet. Operator. Similar revenue with 10% fewer vessels results in a higher overall profitability. I continue to anticipate it will be the Q1 of 2022 Before we get back to where we were at from a supply and demand perspective when the pandemic hit and then a year to push dayrates in market share, operator. If the market continues at its current pace of recovery, we should see quarterly revenue number by the end of 2022 Comparable with that previous record quarter in 2019. Pandemic driven inefficiencies, which we estimate cost us 5% of revenue are still impacting us. This is factoring through our full year margin guidance of 30%. Each wave of the pandemic has created different challenges, although they can all be generalized as increased cost associated with safely moving people around the world. The latest challenge is the Delta variant and its impact on the Middle East. Last quarter was Mariner from India. We continue to respond to the circumstances presented, but that 5% of revenue cost still looks like it operator to be with us for the remainder of 2021. That's a quick overview of the quarter. I will now hand the call over to peers for an update on the vessel market and the various operator. Thank you, Quintin, and good morning, everyone. While the supply demand balance globally Remains challenging, primarily due to the overhang of potential vessel supply. We are starting to see some green shoots of recovery in the majority of the regions in which we operate. Operator. We continue to see both increased levels of tendering and inquiry from our clients, particularly for our larger PSP fleet, which appears to bode well going into next year. As we move into the second half of the year and into 2022, the primary factor for the industry to achieve a long operator. And sustainable recovery is discipline, not just from Tidewater, but also from all the stakeholders in our industry. Operator. The industry is at an inflection point that will require discipline from a vessel reactivation, commercial and operational perspective operator. Tidewater recognizes its place in leading the industry to judiciously reactivate vessels in response Economically attractive opportunities, incremental to the current supply demand balance. Discipline anchored in responding to improving market fundamentals will allow us to continue to maintain our working fleet and to continue to maintain and take care of our dedicated team at Mariners who has endured many challenges throughout the pandemic. Operator. We believe that a disciplined approach to responding to market signals will ultimately lead to a long term and sustainable recovery for the whole industry. Sam will talk in greater detail on some of the numbers. But as we look at the Q2 of 2021 compared to the same period last year, We do believe we continue to see positive trends pointing towards a recovery in rate and utilization levels, although not perhaps as quickly as we would all like. Operator. On a global basis, active utilization across the whole fleet was up 4% to 78% compared to the Q2 2020 and the average stack fleet down from 64 ships in Q2 2020 to 44 ships in Q2 2021. Operator. Average rates, while slightly down from $10,799 per day in Q2 2020, was still an impressive $10,435 per day in Q2 2021, which was also a $500 per day increase from last quarter. Globally, we had 118 active vessels working in the Q2 of 2021, with a total fleet of 162 ships operator. Our Middle East, Asia Pacific region continued to deliver consistent results in Q2 2021, operator. With active utilization for the quarter jumping 13% from 76% in Q2 2020 to 89% in Q2 2021. Operator. Our average rates in the region also increased to $8,593 per day compared to $8,009 per day in Q2 2020. Going forward, we still expect to see a continued pickup in demand going into Q3 and Q4 of this year as we start to see a number of new tenders being released from some of our long term established clients in the region. To West Africa, where average day rates for the region were 8,500 dollars per day, a decrease of $200 per day from the previous quarter, but active utilization did increase 7% from last year's quarter operator. From 55% to 62%. West Africa continues to struggle with day rates, but we are beginning to see more positive utilization levels, Which in turn should allow us to start pushing charter rate levels as we move into next year. In the Europe and Mediterranean region, operator. Q2 2021 saw an improvement in average rates compared to Q2 2020 from $12,689 per day operator. $13,005 per day and active utilization creep up above 90% from 89% for the same period last year. Operator. We also decreased the stacked fleet from 17 ships in Q2 2020 to 8 ships in Q2 2021. As mentioned on the last call, we continue to see solid improvements in the region, both in the North Sea and the Met as activity improves. Operator. And in addition, by year end, we will have added another hybrid battery powered vessel to our fleet in the Mediterranean as we continue to offer our customers around the world operator. Active utilization was down 12% compared to Q2 2020, but average day rates for the quarter were up slightly from 12,800 and The STACK fleet, however, was reduced from 17 vessels in Q2 2020 to 13 ships in Q2 2021. The region still faces challenges in 2021, but we have started to see a significant tightening in the Jones Act market for larger boats operator. And expect that tightening to help improve utilization and charter rates as we move towards the end of the year and into the first half of twenty twenty two. Thank you. And over to Sam. Thank you, Pierce, and good morning, everyone. I I would like to take you through our financial results and also discuss some key points that make up these results. My discussion will focus operator. I'll now turn the call over to the Q2 of 2021 compared to the Q1 of 2021. As noted On our press release filed yesterday, we reported a net loss for the quarter of $29,500,000 or $0.72 per share. Operator. Our revenue for the quarter of 2021 was $90,000,000 This is $6,400,000 or 8% more than the Q1 of 2021. Operator. Active utilization at 78% was slightly higher than the previous quarter. Average day rates also increased 4% operator. From Q1 to $10,435 per day, in addition, our active vessel count for the quarter increased by 2 to 118. Operator. Gross margin percentage for Q2 also increased to 29% compared to 26% in Q1. Operator. We continue to feel the ongoing impacts of the COVID-nineteen pandemic in each of our operating areas. Operator. However, the increase in overall commercial activity is a positive sign to what we feel will be an active second half of the year. Operator. Vessel operating cost for the quarter was $64,000,000 an increase of $3,200,000 from Q1. Operator. The increase is due mainly to higher Mariner salary and travel costs and higher supplies and consumables resulting from the reactivation of 7 vessels in the quarter. In addition, we also incurred over $600,000 of Mariner severance costs related to our Brazil area. Operator. As we continue to wind down our activity in Brazil, several vessels came off higher and did not return to service. In the Q2 of 2021, we recorded a $1,000,000 credit to our net view from affiliates accounts receivable balance. This is related to our Angola joint venture as part of the current expected credit loss evaluation. In addition, in Q2 2021, no vessel impairment charges were recorded. We sold 7 vessels and other assets in the 2nd quarter Proceeds of $18,600,000 and recorded a net loss of $932,000 on these sales. Operator. For the year, we have sold 13 vessels and other assets for proceeds of $29,600,000 operator. And we reported a net loss of $2,900,000 on the sale of these assets. Our operating loss of $20,200,000 improved by $6,100,000 from operator. Due mainly to the increase in revenue, the affiliate credit loss and the decrease in loss on sale of assets. Operator. This is offset somewhat by the increase in operating expenses as we realize the effect of reactivation on our vessels and ongoing COVID related expenses. G and A costs for the quarter was $16,800,000 an increase of $700,000 from Q1 operator. Due to higher professional fees, higher salaries and benefits as we fill some corporate positions that were vacant in previous quarters. Operator. G and A cost control continues to be a primary focus. Our annualized G and A expense for the Q1 was $64,000,000 This has increased to $67,000,000 in Q2. On our prior call, we targeted 2021 G and A cost to be $68,000,000 which is still our target. In the quarter, we had $4,000,000 of deferred drydock costs compared to $2,700,000 in Q1. Q2 was supposed to be a heavy drydock quarter. Operator. However, some projects slipped into Q3, which we now anticipate will be the heaviest drydock quarter for the year. Operator. We anticipate Q3 dry dock costs to be $13,000,000 and full year 2021 costs to be $24,000,000 operator. The full year estimate has increased by $4,000,000 from our previous estimate, due mainly to the accelerated reactivations of vessels in our West Africa, Europe and Mediterranean regions. In the quarter, we also incurred $700,000 in capital expenditures. We anticipate the full year 2021 spend to be $7,000,000 Free cash flow continues to be a key focus for us. And once again, we achieved free cash It was achieved primarily by generating $4,900,000 in cash from operating activities and asset sales proceeds of $18,600,000 operator. Since the beginning of the pandemic, starting April 1, 2020, we have generated over $113,000,000 of free cash flow. Operator. On previous calls, we talked about collection challenges related to a good customer of ours in Mexico. Our balance with Pemex Approximately $26,000,000 at the end of 2020. We are pleased to report that their payment patterns have improved in 2021. Operator. At the end of Q1, their AR balance was $24,000,000 and had since decreased to $15,000,000 as of June. The remaining balance is still a bit high compared operator. And based on that, we remain optimistic that we will get this balance normalized over the next few months. Operator. In Q4 of 2019, we began reclassifying vessels on our balance sheet from property and equipment to assets held for sale. Operator. And at that time, we reclassified 46 vessels. In 2020, we added another 30 vessels to assets held for sale operator. And we sold 53, leaving a balance of 23 at year end. During the Q1 of 2021, we sold 3 more vessels, operator. That's another 3 from the active fleet for approximately $11,000,000 In the second quarter, we sold 5 vessels and 2 more from the active fleet for 18,100,000 operator. Also in the Q2, we reactivated 1 vessel from our asset tail from sale back to active, operator, leaving us with 14 vessels with a book value of $17,000,000 remaining in this category. As mentioned in our previous call in 2020, we repaid just under $100,000,000 of debt and eliminated EBITDA to interest covenant in our indenture and comms loan for the remainder of 2021. We continued this effort in the Q1 of 2021 repurchasing another $11,800,000 of the bonds in the open market and paying down $14,600,000 of our tranche debt. Operator. In the Q2 of 2021, we paid down another $11,400,000 of our tranche debt, leaving us with a net debt balance of $4,500,000 operator. A decrease of $21,100,000 from the end of Q1 'twenty one. We continue to evaluate our options in the bank and debt operator. Capital markets with regards to refinancing bond maturity in 2022. Our current balance at June 30 is 135,000,000 operator. We already have more cash today than the bond maturity balance and we fully intend to continue to be free cash flow positive. As such, we are confident in our ability to manage our debt maturities. And now I'd like to focus on the performance in the regions. Operator. Our Americas region reported an operating loss of $4,900,000 for the quarter compared to an operating loss of $1,700,000 in Q1 'twenty one. Operator. The area reported revenue of $23,500,000 in Q2 compared to $26,200,000 in Q1. The area reported operator. Three less active vessels in the quarter. Active utilization for the quarter was 76% compared to 80% in the prior quarter. Operator. This was offset somewhat by day rates increasing from $11,865 per day in Q1 to 13,160 operator. As mentioned previously, the region incurred over 600,000 Mariner Servants costs operator. And we continue to wind down the activity in Brazil. Our Middle East Asia Pacific area reported operating income of $266,000 for the quarter operator. In Q2 compared to 84% in Q1. Day rates increased marginally from 85.06 operator. In addition, G and A costs in the area also decreased due to an adjustment made operator. Our Europe and Mediterranean region reported an operating loss of $2,000,000 in Q2 compared to a loss of $8,000,000 in Q1. Operator. We saw revenue increase by 52 percent to $22,500,000 in Q2 compared to $14,700,000 in Q1. Operator. The area operated 4 more active vessels in the quarter and active utilization increased to 91% in Q2 compared to 81% in Q1. Operator. And we also saw day rates increase 9% from $11,960 per day in Q1 to $13,005 per day in Q2. Operator. Our West African region reported an operating loss of $5,400,000 in Q2 compared to a loss of $6,800,000 in Q1. Revenue for Q2 was $16,900,000 compared to $15,600,000 in Q1. The area operated 2 more active vessels in Q2. Operator. Active utilization increased to 62% in Q2 from 60% in Q1. However, day rates decreased by 2% from 8,000 operator. With the exception of the Americas, several vessels came off contracts in the early part of the second quarter and they're not returned to work, particularly in Brazil and the Caribbean areas. In Brazil, we continue to wind down our operations, which also impacted the region's results. We did see significant improvements operator. In the Europe and Mediterranean region, which was anticipated and positive improvements in West Africa and Middle East and Asia Pacific regions. As mentioned previously, we continue to remain impacted by the current COVID challenges. However, we are encouraged with the positive commercial signs we are beginning to see in operator. And we believe the activity will continue to strengthen as we progress through the year. With that, I will now turn the call back to Quentin. Operator. Thank you, Sam. Brandon, let's just go ahead and open it up for questions. Thank you, sir. And we'll now begin the question and answer operator. Operator. And on the line from Evercore ISI, we have Andres Menocal. Please go ahead. Operator. So this is more of a high level question. I appreciate all the color you provided on the call. Operator. I guess qualitatively and quantitatively, what are you seeing from your customers in terms of activity levels and conversations reference. Just saying that, just given that budgets are looking to be solidified towards the back half of the year, so operator. I'm curious to understand what's important in your view that end of the year into next year might be operator. Certainly, I'll start off and then I'll let Pierce follow-up with some more details. Operator. Really, I haven't seen this much tendering activity in about 18 months. Tendering activity does not Always mean that it's going to end up being either new work, sometimes they're tendering for For vessels that are already in the market and trying to reprice, okay. But I would say that the pickup that you saw in the numbers in the second quarter operator. For the North Sea is a good demonstration of the pickup that we're seeing in Africa as we go through the second half of 'twenty one operator. Piers, why don't you provide some more direct color with some of the contracts that you have? Operator. Yes, of course. Simon, I think specifically in Africa, which obviously is I think we've spoken very openly about How much has suffered as a region over the last 12 to 18 months? We're seeing a significant pickup in tender inquiries from our This is being retendered, but actually new contracts as well in new areas, which is driving the market. And specifically, as I sort of mentioned, on the larger platform supply vessel We're seeing a lot of activity in the Med, Africa from our side and I think going into the Caribbean, Guyana, Suriname next year as well, we're starting to see a pickup there as well. So overall, there's very positive signs operator. Great. Thank you, Seth. Operator. Another question. In terms of efficiency gains in your fleet and I mean certain number of Investments in time and effort these past couple of years into your systems and infrastructure and to operator. Yes, the fleet operating at a higher level, what inning do you feel like you're in in terms of getting to that target stage and what's in the pipeline operator for the kind of initiatives you can further implement to continue increasing those efficiency gains that we've seen this past year and a half. Operator. That's a good question. So I'll throw out the 6th inning and then I'll tell you why I think it's a 6th inning. So operator. The most effort over the past few years has really been in the shore based infrastructure system. So So making sure that we are as efficient as we can be and as scalable as we can be on a G and A footprint perspective. But we're just beginning to touch the vessels themselves. Operator. And on the vessels themselves, it's a little bit different. It's not just the operational efficiency, but it's the fuel efficiency. Operator. It's the fidelity and the transparency of data coming from the performance of the vessels that allows us to go back to our customers and say, hey, operator. You want to reduce the Scope 1 emissions? This is the data we're seeing from this type of vessel. This is how you're operating the vessel. This is what you can do to improve upon that So that you can improve your scope 1 emissions our scope 1 emissions as well. So as a result, I think that we're Probably in the 6th inning, I'd say that the majority of the work on the shore base is done. We're probably 20% into operator. It's great to see older vessels getting sold and that net profit being started, the cash flows operator. Can you describe what you're seeing in the A and D market? And is there any concern that some of the vessels that are being supposed to operator. You know it's operator. The one vessel that we opportunistically sold in the Q2, she was operator. Good vessel, but she was facing a $3,000,000 reactivation. And so we were waiting for market conditions to come around operator. And I see reactivation costs for vessels that are in layup, particularly those operator. It didn't work during the pre pandemic period. So post-twenty 14, they haven't been working. Operator. We've gotten rid of most of those vessels because the reactivation costs on those vessels is approaching $5,000,000 or more per vessel. Operator. So the reactivation of vessels is always a threat in this industry. Operator. But the costs are getting so high for those vessels that weren't working during the pre pandemic period that I don't believe in a lot of them will get reactivated. But operator. Again, we'll see how that plays out. We're definitely focusing our fleet on the more on the higher end vessels. So The larger vessels, more modern vessels, which we believe will command a higher day rate overall, be more fuel efficient and less costly going forward. Operator. Understood. Just two more questions if I may, just more pertaining to the financials. Operator. As we look to the 2022 notes being retired and repaid next year, what is the right amount of capital or cash that you I think the business needs in order to operate and do you feel like you have everything you need in place in order to do that? Is there a chance that you have to operator. Capital Markets to in order to get to that kind of run rate level of cash on the balance sheet. Operator. Well, the frictional amount of cash that we need in order to run the business is about $30,000,000 So that's the base level we need for working capital in general purposes. What we've been doing with our existing Cash balance is just having a backup of liquidity. And so we'll continue to have backup liquidity sources, whether that's going to be in the form of operator. Of revolving debt capacity or just cash on the balance sheet, it all depends on what the capital markets are open for. Historically, the bonds Let us have a revolver with its own collateral. So we've been using cash on the balance sheet as our liquidity source. Operator. As we retire the bond, we may refinance into something else or we may go into a revolving debt capacity for liquidity purposes. But operator. Absolute question is how much cash do we need to run the business and about $30,000,000 or so? That's correct. And then I'd want a minimum of about $70,000,000 worth of liquidity, just in case. Understood. And then just the last If I may, this just pertains to taxes. How should I think about cash taxes going forward for operator. Is there anything that I should be aware of there? No, I mean, I would operator. I would say that they're going to remain relatively flat. I mean, we currently our cash tax is about $12,000,000 to $13,000,000 a year operator. Operator. Okay. It looks like no further questions at the moment. I will now turn it back to Quentin for closing remarks. Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.