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spk01: Greetings and welcome to the Superior Drilling Products third quarter 2021 financial results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Deb Palowski, Investor Relations for Superior Drilling Products. Thank you. You may begin.
spk00: Thanks, Melissa, and hello, everyone. We certainly appreciate your joining us today as Superior Drilling Products reports on its third quarter of 2021 and talks about the progress that we're making with our strategy and growth. I have joining me Troy Meyer, our chairman and CEO, and Chris Cashin, our chief financial officer. You should have a copy of the financial results that we released before the market this morning. And you should also have the slides that will accompany our conversation today. If you don't, you can find both of those documents on our website at sdpi.com. Turning to slide two, I will point out that we may make some forward-looking statements during the formal discussion as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties are provided in the earnings release, the slides, and other documents filed by the company with Securities and Exchange Commission. All of these documents can be found on our website or at sec.gov. I want to also point out that during today's call, we will discuss some non-GAAP financial measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP with comparable GAAP measures in the tables accompanying the earnings release, as well as in the slide deck. So with that, if you would turn to slide three, I will turn it over to Troy to begin.
spk06: Thanks, Deb. Thanks, everyone. We appreciate you all taking the time to participate in the call today. As we go through this slide deck, I want you to keep in mind that some of the things that we've been working on As we talk about our quality management system, I'd like to start there. As you all know, we've been working on that for about the last year and a half. And the TQM process system in our shop, and it's performing very, very well. We've passed our year audit on the ISO 9001 and also the AS9100 test. And we're very proud of what the team has done there. And it's really starting to show a benefit both to our customers and also to our processes and our controls. So I'd like to thank our team for what they've done there. I'd also like to recognize our procurement team. They've navigated this mess that the supply chains are seeing globally. They've done a really good job and have been making sure that we've got the materials needed to fulfill our customers' orders, and they continue to look at critical stock inventories and where we're getting products from, and they're doing a really good job on that. I'd also like to recognize our HR. We've been able to identify and hire people some really good young talent. They're very alert and very aggressive and eager to learn. And I'm really proud of what we're doing there as far as bringing on some fresh talent that's going to really help us do some wonderful things going forward. So if we look at If we look at the business overall, you see there's a strong demand for our tools, not just manufacturing but in the refurbishment side of the business. We have the drilling ring. As you all know, its value is being proven every day, day in and day out, and more and more customers are understanding that value. We're seeing a very strong demand for that tool here in North America. Customers, you know, when you look at our channel partner there in DTI, they've done a fantastic job there, and they continue to bring on new customers and continue to grow that business, and that's starting to show. We're seeing a lot of new tool orders come in, and they're bringing on new customers every day, and we're very proud of what they're doing. If you look at the revenue in North America, our manufacturing team has done a fantastic job as we're now asked to produce some very complicated parts that need to be very precise for certain types of drilling systems. They're doing a wonderful job there. You know, our management team there has, again, identified some great new talent that we're bringing in to, you know, support our existing team of machinists and techs. They're doing a wonderful job there. And we're seeing that really, people are really noticing the quality that they put out and and complicated parts, they don't seem to, they enjoy the challenge, let me put it that way. So that's really becoming a very unique part of our business. You look at the PDC refurbishment activity and both the drilling ring is strong and the drill bits are strong. So again, even though we look at the rig activity those of you that have been with us since the, since the start of this whole IPO process, when we went public years ago, you know, we were at 2000 rigs close to it, like 19, 1947 or something like that. Uh, you know, and so today when we're at 550 and as busy as we are, it's, uh, it's, it's, it shows that the rigs that are, that are up and operating are drilling a lot of footage. And they're doing it very quickly and very efficiently. And the demand on tools is high. So, you know, again, that metrics that we always use at looking at the drill rig count to look at the production, how productive, how productivity is going to be going through our facility. You know, are we going to be really busy or not? And we've got to, We've got to have a new look at that because service companies, as most of you are aware, are very busy right now. And, again, our rig count is only 550 in the U.S. We look at our international part of our business. Our team over there continues to knock down barriers, and there is a lot of them. We've made some good penetration into some markets today. Our tools are performing well. We now have caught the attention of an extremely large service provider, and they're liking how the performance of the tool is working and cutting time and days off of wells. The wellbore quality, they have a lot of wellbore quality issues in the Mideast. They deal with different formations and some very tough ones. They're finding that Drilling Dream is helping them out there, and we're starting to see that business over there grow for us. We've got a management team in there that they've done a fabulous job. Even though we're very small, we've only got a very small team over there. They're doing a tremendous job, and we're starting to see some really good penetration into some markets, and we're looking for some big things from that team as we go forward. You know, we're strengthening our relationships as we look at the service companies that we deal with in the energy sector where, you know, they're the largest ones, and we're building a strong relationship with them every day. You know, we go to work with the attitude of, You know, what else can we do for these companies? Where else do they need us? And we're starting to find that there's a lot of things that we can pull away from them. And it's not really not pull away, but take that responsibility and make those parts and get them to them. And we've seen that in the third quarter. We made a lot of new products for the service companies and suppliers that are performing very, very well. So there's a lot more opportunity there, and we can talk about that in future opportunities. But with that being said, I'm going to go ahead and turn this over to Chris, and he can start going over the numbers. Chris?
spk02: Okay. Thank you, Troy, and welcome, everyone. Let's continue our review by turning to slide six, where we provide an overview of our revenue growth. You can see that in Q3 revenue grew 5% sequentially and 130% year over year. This was largely supported by our North America business where we have seen increases across the board, as Troy alluded to, in all of our businesses. Drilling tools, sales, royalty and repair fees, higher contract services revenue, everything progressing really nicely. We are benefiting from an increasing rig count as we ended the quarter with an average U.S. rig count of 497 for the quarter, up 10% from the second quarter of 2021, and nearly double the level from the average in the third quarter of last year. Of note, the U.S. rig count is in that mid-500 level that Troy mentioned, specifically on October 29th, 544, and as of last Friday, 550. Additionally, we are seeing higher demand for the drilling ring given it supports the efforts of operators to improve rig efficiencies. That's the value proposition that we've demonstrated and continue to demonstrate. We continue to be optimistic that the recovery that we have seen so far this year will continue at a steady pace and support growth in the fourth quarter, as well as provide nice momentum as we head into 2022. International revenue growth demonstrates growing market penetration, including our strengthened customer relationship that Troy just highlighted. The international rig count quarterly average has now increased over the last three quarters, and that average was up 5% sequentially in Q3. Overall, our international revenue was up 14% sequentially and 22% year over year. While this is not at the level of growth that we see in North America, we continue to see positive developments and are gaining traction with our strategy internationally. We believe we are going to further penetrate these markets as we partner with global oilfield service companies and benefit from increased market activity as well as new product development efforts. Now let's turn to slide seven and take a little deeper look at tool and contract services revenue. The year-over-year improvement in contract services reflects higher PTC bit refurbishment work from an increasing rig count and the expansion of products we manufacture for our long-term legacy partner. Tool sales and rental revenue were up measurably since last year's quarter as our distributor's drill and ring tool fleet both expands and is upgraded with replacement tools. However, sales were down slightly in the quarter, $284,000. sequentially, which does reflect a lumpy order pattern that we have seen with the recovery. Troy will talk to the strength we are seeing right now in new tool orders in this quarter and when we follow up with opportunities. Of note, international revenue is also included in this revenue line item as we are renting our tools in the Middle East. Other related tool revenue, which includes the drilling ream maintenance and repair fees, as well as royalties, was up $357,000, or 31% sequentially. This increase demonstrates the market demand for the drilling ream in North America. Now, as you can see on slide eight, we are maintaining our cost discipline as we've been able to effectively manage inflationary pressures while continuing to invest to support current and expected demand. Like many others, finding employees has not been easy, and our teams are working hard around hiring and training. Our efforts regarding improving the onboarding process and leveraging our senior staff experience with new processes and quality management programs is paying off. We've been able to fill a number of positions and move staff up the learning curve, including specialized high-end PDC bitraisers. staffing will continue to be a focus area as we move forward. In total, third quarter operating expenses were up a modest 3.5% sequentially, mostly due to cost of international sales. As a result of our cost control efforts and given the higher demand in the market, we generated operating income of $163,000 in the quarter, the second straight quarter of positive operating income. further validating the progress we're making. This compares with the significant operating loss in last year's comparable period. We can see that further on slide nine when we look at our bottom line and adjusted EBITDA results, both of which have improved significantly over last year. Our earnings per share was break even in adjusted EBITDA, which we use as a measure of operational performance was $853,000 or 23.9%, another strong EBITDA quarter for us. These results clearly demonstrate the strong leverage we have on higher volume in this business. Now please see the supplemental slide at the back of this presentation deck that has the reconciliation table from GAAP net loss to non-GAAP adjusted EBITDA. Now let's go to side 10, where we highlight our balance sheet which has continued to strengthen with lower debt levels. The company generated $878,000, almost $900,000 in cash from operations during the year-to-date period, and our cash balance at the end of the quarter was $2.5 million, up from $2 million at the end of 2020. Long-term debt, including the current portion, at the end of the quarter was $2.6 million, which reflects... a principal payment of $750,000 made on the hard rock note during the quarter. We now have just one remaining $750,000 principal payment due on that note, which is payable next year in October. So that's October 2022 is the due date for that last principal payment. Finally, after the quarter closed in October of this year, the company completed an equity offering of 1.7 million shares. priced at $1.15 per share, resulting in net proceeds of approximately $1.7 million. We felt that the timing was appropriate to raise some capital to support our expected growth opportunities. So with that, I'm going to turn the presentation back to Troy to wrap up with a review of our outlook and opportunities. Troy?
spk06: Thanks, Chris. So as we go to slide 11 and we look at our opportunities, going forward. One of the things that I'd like to mention is we're going to continue to bring on some staffing. We've got a lot of training of personnel that we're currently doing. We've got a lot of maintenance that we've got to get done. We've got, as we look at the strong demand that's currently being placed on our manufacturing and PDC side of the business we'll address that and we've got like I said some really good talent that we've brought on we're really happy with the with the how that they're picking up some of the critical portions of our manufacturing so when we look at North America we believe that we're going to have some great opportunities going forward as we like i was saying earlier we've identified other product lines that we can pick up that that fit in our wheelhouse you know when you look at when you look at the manufacturing our manufacturing capabilities we've got large machines that do very that are capable of doing very complicated and precise parts and we're we're identifying those all the time we're still looking at diversification We've got some good things that we're doing there when we look at going in away from the oil and gas sector to bring in this diversification portfolio into our company. We're still going down that road, and it's moving ahead very well. International, we've got a strong tool fleet over there now. We've got a fleet in multiple countries. And we've got some good, strong performance going on in those countries, and we've made some really strong allies with some large service companies. So we're looking for international to really, really show us some good growth in 2022. So we'll keep on plugging through this, and I think our fourth quarter is going to be strong in the manufacturing and repair right now it is and i would believe it it's going to continue to stay that way i do want you to understand that that's that's uh not usually what happens in in oil and gas industry we usually see a slowdown in q4 as it seems like rigs have drilled their quotas and we're not seeing that this year we're seeing you know customers demanding our repairs getting through our shop and ordering new tools. So the typical lay down and slow down of rigs this time of year is not happening. So with that being said, I'm going to go ahead and turn it over to questions and answers.
spk01: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Dick Ryan with Collier Securities. Please proceed with your question.
spk03: Thank you. Troy, you mentioned kind of catching the attention of one large service provider internationally. Is this somebody new and can you expand on it a little bit or is this one of the major service providers that you had been working with that is becoming a little more active?
spk06: It is. It's the largest service provider. And we started working with them in 2Q and showing them the benefits of the drill and ream product line on an international stage. They've used it here and are familiar with it here in the U.S. and they've enjoyed the benefits of it. But when you go international, as you know, it's like dealing with a whole new company And we've been able to show them some tremendous benefits with the drill and ring. And they've now been giving us more and more rigs to supply. And we're looking forward to some really good opportunity with them as we roll into 2022 and throughout 2022. We've even made a few tools available custom for certain applications for them, and it seems to be very beneficial for them.
spk03: Which countries are you now generating revenue from internationally?
spk06: We've got Kuwait, Oman, the UAE. The UAE, we still have a process that we've got to go through. that right now we're analyzing the amount of work that we'll give versus the time and money it's going to take us to bring on another quality system. And we also have some tools in Iraq that will be going in the hole. That's a new area for us that has some extreme challenges. But if you look at our traditional – Revenue has been coming from Kuwait, and we brought on Oman. We are now looking at Saudi. We're bringing tools. We're manufacturing and shipping tools there now. And then we also, again, have an inventory ready to rock in the UAE. So those are the countries we're currently in.
spk03: What challenges are there? Can you reach across these borders with service and repair, or do you have to be located in each one? How is that shaken up?
spk06: So the challenge, the biggest challenge we currently have is still COVID-related. They are still in a major lockdown. You know, we were penetrating Kuwait very well up until second quarter of last year when they shut everything down. Um, and so when you see, you know, you may, you may see 25 rigs shown in Kuwait, but that doesn't mean those 25 rigs are really drilling as efficiently as they can be drilling. I mean, they're, they're very short staffed in, in all of these countries that the expats that have typically come from Canada, from the U S from England, uh, to, to support these drilling efforts, um, they're not willing to go through the COVID criteria of going in and being, you know, you've got to isolate for two weeks. There's a lot of restraints that are still being placed on the workers over there. So when you look at 25 rigs in Kuwait, you're really seeing rigs that are probably performing about 50%. A lot of them have gone to just going to work over rigs, working over existing wells because they cannot find the personnel to drill, to keep these wells and to be able to drill 24-7. When we look at the challenges that we have going across borders, we're getting better at that. We're learning a lot about logistics. Our team has done a really good job there as far as shipping tools in and out. It doesn't seem to be the hassle that it was as we're getting more and more known over there. We get people that are willing to participate and not just stall you. That seems to happen a lot. Things just take a long time, and there's a lot of steps that you've got to take to get even the simplest things done. But we're finding ways around that, and we're getting a lot more efficient at that. We can repair tools, to answer that part of your question. We are still looking to put a repair facility in Dubai. The issues that we have with that right now, we've identified our facility. We're excited about getting moved in and we've got most of that equipment ready to go and be put in there. We just got to identify a team that can travel in and out for training and still meet the COVID restrictions that are placed on even in Dubai. But we have got what we call a level one repair service can be done. We do that in Kuwait. We do that in Oman. And that's simply just checking the threads, the connections on either end of the tool. We do a mass particle test, make sure there's no cracks in the tool. And this is all after the tool's been run. We also have a dull grade evaluation that takes place. On these tools, we're able to have our team in Dubai, and they can dograde tools in Oman. They can dograde tools in Kuwait. Our management has set up a really good web-based system so that when we see the tool, we can dograde it right online, and that's working very efficiently. I think when we look at international and the challenges that we're going to face in 2022, it's mainly going to be COVID-related. The team is very well trained now, and we've got some good offset results of the performance of our tool, and we're ready to share that with every drilling contractor over there. So it's the challenges will, will, will be still COVID related.
spk03: Okay.
spk06: Thanks.
spk03: One last one on contract services. Looks like you're seeing expanded opportunities with Baker. What, what could that mean? You know, as you look down the road.
spk06: You know, if you look at contracted services, it's, it's not just us doing third party machine work. That's, That's not what we want to be known as. I mean, our team is extremely good at it, making high-quality, complicated parts like we've talked. However, we identify those parts that add additional value to our organization. So we take parts that we machine in the machine shop, and then we take those over to the PDC uh side of our company where we do the hard facing application the brazing application just like it was if if a tool was coming in to to be repaired so when you when you look at the the third party that that portion of our business we're really doing a good job identifying those parts that we can turn key new parts that we turn key not just machine but we turn to the whole part. They give us that part and they want that thing ready to go down the hole when we give it back to them. So it's a larger process and gives us a lot more opportunity to capture additional revenue. And that's what we're identifying that's very exciting. We take those parts that are machined in the machine shop, we take them over into the PDC side of the business, it's hard-faced, it's grazed, it's ground, it's inspected, it's painted, and it's shipped as a complete turnkey part. So there's a lot of opportunity there, and I think you'll see it in 2022 as we start bringing on some additional service companies that are really excited about the opportunity of us supporting their growth.
spk03: Okay, great. Thank you, and congratulations on the good execution and the outlook going forward. Thanks.
spk06: Thank you.
spk01: Thank you. Our next question comes from the line of John Baer with Ascend Wealth Advisors. Please proceed with your question.
spk05: Thank you. Good morning, Troy and Chris.
spk06: Good morning.
spk05: Nice quarter and nice momentum. Troy, at the end of your prepared comments, you mentioned that you're not seeing the traditional fourth quarter slowdown by the E&P companies. And I'm wondering if you're also hearing from them of perhaps a step up in their activities given the fact that duck inventory has been drawn down quite a bit?
spk06: Yes. You know, what we typically see is this started happening probably around Oh, I would say, you know, when we started really seeing some drilling efficiencies, and I'm going to say it's been, you know, for the last 10 years, we would, you know, they have their drilling budget, and they're going to drill 36 wells with this rig, and those wells should finish up, you know, sometime in December. Because of the efficiencies that they've gained through not just, you know, the efficiencies of of being able to pump more fluid down the holes, to put more weight on your bottom hole assembly, to top drives, what they have done, being able to figure out how to drill the curve. All of these efficiencies every year have gotten better and better and better. And so we'd always get to, typically we get about to October and they say, well, we've drilled our budget. We're going to lay down rigs, but we'll be looking to pick them back up in January. this is, this is not the story today. And it's like I say, it's been a long time since, since I've heard of companies wanting to add tools in, in the fourth quarter and get ahead of their repairs in the fourth quarter. Typically they wait until, you know, January hits and then they slam us hard. But they're not with that. They're not doing that this year. I, so I, I think we're going to continue to see rig count climb. I think it's going to be a slow growth. I think that the challenge that the industry has, just like every industry has right now, is finding personnel that can man those rigs and can get those tools to the rig and can service those tools when they come in from the field. So I think we're going to see a slow, steady growth pattern continuing through the fourth quarter because nobody can afford to lose hands right now. And so they're keeping their personnel and they're keeping them busy and they're going to continue to drill. And how they manage that budget, I guess we'll see come Q1. But we're not seeing any slowdown at all. I mean, we're extremely busy right now. We had a little bit of a breather. first part of October. It seemed like people were trying to catch up. Our customers were trying to catch up and we were like, hey, what's going on? And they've assured us that there's no slowdown on their end and now we're starting to see that in our facility. We're very busy with new products and also repaired products and they're asking us to do more and more, and that's very nice to see this time of year.
spk05: So it sounds sort of like because of the labor issue, you can't really ramp up rig count as fast as maybe they might want to, which is no big surprise. It sounds like their drilling budget dollars are going farther because of the efficiencies of using your tool, so therefore maybe they're looking ahead into the first quarter of 2022 and saying, hey, we want to get these tools lined up that we'd be able to use in activities? Is that kind of a way to look at it?
spk06: It is a way to look at it. And I think, you know, again, if you look at over the last 10 years and the step changes that we've made in drilling tools and drilling practices, you know, where we were able to take, you know, days and weeks off of wells and by changing things or offering new tools, those efficiency gains are now much smaller. So they're able to forecast a budget now. I think when they forecasted their drilling budgets in 2021, they were a lot more precise at knowing what they needed to drill this. and there wasn't those big efficiency gains that they've seen in years past, they're drilling, you know, super efficient right now. But I think, you know, they, they, they've captured all those big gains and, and it's to the point now where, you know, they're, they're, they're pretty much drilling as fast as you can connect pipe. And, um, and so I don't know, um, I just think you haven't seen them big efficiency gains throughout this year that are going to say, oh, every well we're now taking a week off of, which means by the time we get to, you know, October, November, December, we've drilled that, you know, we've drilled our budget up. So I think that, yeah, so I think that's what we're seeing.
spk05: Okay. And I'm wondering, are any of your products or any of your materials that you're manufacturing, is there any capability or thought of utilizing 3D printing to manufacture some of your stuff? And then the last one would be any ability to raise prices for some of your products. That's it for me.
spk06: Thanks. So 3D printing, we've looked at that. When we look at most of what we do are very large parts. And so To get that into a 3D printing realm, they're just not there yet. Small, complicated stuff that's tough to machine, 3D printing works very well. Stuff that's 10 feet long and weighs 3,500 pounds, not so much. We do look at 3D printing. We've got a very talented group of I don't like to call them machinists. I don't like to call them technicians. They're a lot more than that. Everyone we have in our manufacturing facility, they design, they run the CAD, they run the CAM, they run all the post processors that they created. These guys are a very unique, talented group of people. When they see something like that, that they think that we can make better on a 3D printer, They bring it to our attention right now, but to this point in time, we haven't been able to justify the 3D printing process. But we continue to look at it. Sorry, what was your second question?
spk05: The second one was just any ability given the demand and cost of raw materials and so forth. any ability to raise prices on any of your services or the products?
spk06: Yeah, I think what you're going to see is throughout the industry is going to be in 2022 the ability for the service companies to increase their prices. I think the E&Ps are all preparing themselves for it. It has to happen. I mean, when you look at When you look at steel alone, since March, there has been five price hikes on steel, just since March. And, you know, we're working on a – looking at turnkey and a process for a very large company. And when we got evaluating this and what we could do it for and what their expectations were for us to do it for, we were way – we were way off their mark. And when we realized that what they were going off of were still prices that were, you know, nine months old, we said, no, you guys got to do it. You've got to research your still prices much better than that because they've gone up a lot since then. So it's gone up so fast that even, you know, the people that are looking to have us start turnkey in product lines, They need to understand the cost within their organizations much better because it's rising so rapidly. We've done a good job. We've identified processes. One of the things that we did that I'm super excited for is, you know, we typically would get a big round bar stock of steel when we make the drilling tools, and then we've got to do a lot of machining to get the near net shape. that we finalize and then start milling all the cutter locations into that. And we've been able to identify forgings now where we're able to, these large tools, we're able to get them into our process. As a matter of fact, the first ones are supposed to show up next week, saving us all kinds of time. And so we're buying the steel by the weight, but we don't have to spend all of that time When you look at a drilling tool, you're turning about 55% to 65% of that bar stock is turned into scrap chips. And we're able to eliminate that time and the money that it takes to buy that bar. We're able to really efficiently get what we need in our door and spend a lot less time machining it We're excited to see how that benefits the company. I think it's going to benefit us greatly.
spk05: Great. Thanks for taking my questions.
spk06: You bet.
spk01: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. Our next question comes in line of John Sturgis with Oppenheimer and Company. Please proceed with your question.
spk04: Nice progress, gentlemen. I'm just curious. I didn't see an R&D line in the press release, and I was just curious. I knew you probably didn't do a lot the past 18 months, but I'm just curious. Is that area picking up for you, doing your own?
spk06: No. We still intend on getting our R&D going. We've got that Strider tool that we've talked about for years that's so close, and we've got it. The coil tubing strider, it's a product that we're looking forward to getting out there. But, John, the biggest issue that we have right now is we've had to totally take our R&D team and put them into our manufacturing to support what we've got going on there up until we get individuals trained. You know, we've got some great things that we're looking to still do with R&D. you know, the oil field could very much use. We have bought some power sections for, you know, metal-on-metal power sections, which is going to really be that step change in technology for downhole motor performance. And we've brought those units in, and we're ready to do some modifications on those units to plug them into our strider tool. to take that to where that tool can generate a lot higher margins. We just have been shorthanded and the guys in R&D, even though it's a skeleton crew, they're top notch and we need them right now to support the demand on our manufacturing. We've got things as we look at becoming more efficient, right? As we're doing more and more repairs all the time, we've got to find ways to do it much better. So just because we don't have that guy in R&D looking at, you know, finishing that Strider part line, he's actually right now we've got a team in that's building a sandblasting systems within our operations in Vernal, to make that much more efficient. So the traditional, you know, bring them in and parts wash them and put them into a media blaster is totally changing with, you know, we've got two rooms constructed. We're building the railing system in those rooms so that when these trucks come in with these heavy, long tools, we manage them with this railing system. We bring them in. We do the media blast much more efficiently, and we eliminate the whole parts washing section of that procedure. So the R&D group is busy just supporting and making us more efficient, but also supporting making sure that we're getting the tools out that our customers are demanding we get out. But we'll get back into R&D. I would imagine it's going to be sometime looking at second quarter 2022. I'm really hoping by then we've staffed up and we've trained well enough that we can pull a couple of these individuals back in and finish up that Strider product line and then get on to the next one.
spk04: Right. That was good color. I appreciate it. You bet.
spk01: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Meyer for any final comments.
spk06: I just want to say thanks everyone for taking the time to join us today and we're excited about what's going on and we're excited what 2022 is going to bring and I look forward to visiting with everybody I think we've got a good runway ahead of us. So with that being said, thank you very much and appreciate you all attending. Have a wonderful weekend.
spk01: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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