Natural Gas Services Group, Inc.

Q4 2022 Earnings Conference Call


spk_0: good morning and welcome to natural gas service of group inc fourth quarter twenty twenty two earnings conference call all participants are now with and only mode after the speakers presentation we will conduct a question and answer session to ask the question you'll need to press star followed by the number one on your telephone keypad as a reminder this conference call is being recorded oh now it to turn the call over to alicia daughter investor relations representative think you please go ahead think julian hello everyone in thank you for joining us to discuss or board you import quarter difficult twenty twenty two financial we go
spk_1: they call a being webcast on are in better relations website at india's the i dot com
spk_0: also available on the fight is are earning press release which was issued friday march thirty first
spk_1: but i am a call over i like to remind everyone that during today paul including the q and a we may make for looking statements regarding expectations of the company the fort looking statements and bob known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied on the call please read more detailed than our most recent and you report on form can kincaid and as such may be amended and or supplement it by subsequent quarterly reports that with the securities and exchange commission the statements made during of color based upon information know to natural gas services groups as of the date and time of the cloth india's a think no obligation to have they pay information presented as a call with that i'd like to turn the call over to see taylor or chairman of the board interim ceo and president steve
spk_2: that's leisure and gilliam
spk_3: than one
spk_2: welcome to our you're in two thousand and twenty two or it's conference call
spk_4: christopher dorner says more
spk_5: for take your questions or holiday for your results they were detail never preferably friday afternoon discuss the current business environment and provide comments on other aspects of our business also note that we found our annual port of and ten k with your securities and exchange commission on friday before provide the financial hides from fourth quarter and four year of tweet tweet to let me provide some contacts on the current operating environment like a broader markets energy commodities been increasingly volatile recent weeks this isn't terribly surprising given the around certainly in the broader economy we anticipate have lost to continue at least in the near term to the broader financial markets experience more stability and clear picture regarding the banking system and a reserve activity in the overall economy emerges that said was unlikely that will see the same or price exhilaration expression the past year we believe the capital discipline of exploration production companies he production restraint demonstrate bio pic plus members and the lack of near term production growth is likely to protect the market from lower supply of crude in the coming months and this weekend unexpected put opec production code is any indication we may be witnessing a new chapter in global energy economics unfold on the provide him further support roger carbon pricing on the demand side or were cautious on demand growth and in fact could see most contraction from western economies that slowdowns to be mitigated by steady increase of joined man from china as economy reopens in short while we are less optimistic about price exhilaration the coming months were relatively calm for the price will settle in somewhere in the eighty dollar range who should provide extra support for current production activity and the growth plans budget bar customers of course we're vision watch for signs of changes in supply and demand fundamentals and look to position the company to take advantage of opportunities and if i challenges that would impact operations and capital spending plans her never guess market is less impact on a business plan is fair to say where some are confounded by the lack of support for gas prices that said a perfect storm of and of an incredibly mild winter specially in europe what appears to be more muttered and us of man north america and maintenance issues are reduced lng export pass euthanized dates all had an impact on gas prices all those variables are like to return to more normal levels over time is unlikely to natural gas prices will mean flee accelerate in the near term that said regardless of the actual level of all metric as prices the dynamics of the production market for by significant opportunities for the compression business a natural gas or group in particular there's no and previous quarters of read more precious decline and commercial production increases in other production challenges arise every borough of or produced north america and around the room cars advanced techniques to reach the surface where the most important of which is compression after some major economic rigid of political surprise with could include can tape production refrain from opec that would have an impact on global energy demand we believe commodity prices should remain firm
spk_6: what should lead to grow steady growth in production spending
spk_5: and yes with their past financial discipline is well positioned take advantage of these opportunities begin this year and beyond if we're center less call for we have been and will continue to be folks operational efficiency or line of sight organic growth how to use of a high horse per market remains a strong as interfere seen a long time we announced in the court that would expand our credit solely with texas cap a bag to provide run room for future growth have been of twenty twenty two we had approximately twenty five mean dollars draw my facility and the of the first quarter this year or baghdad is rough if it five million dollars this leverage has allowed us to grow our fleet for key customers the vast majority of which is pre contract at work or largest casino are among the best kept lies and strongest companies in the expiration business were always seeking new clients his weight to expand and diverse by revenue base proposition is a nap borrower is a relatively new development development for natural gas or group we have a long track record as successfully managing our balance heat and making calculate optimistic investment decisions or borrowings are the result of the up to is presently in front of us in our assessment of the future potential key customers in play in our quest to maximize returns for shareholders in the past we've been able to fund our capital cover expenses with a domination bell she cares and operating cash flow but the prison activities so strong and equipment so expensive they were only able to take advantage of the market of no borrowing also want to emphasize that these are high grade opportunities ones with long term contracts a market leading rights we are not chasing every job at all to us that said the thicket the results for the from the fourth quarter two thousand pointed tolerating for three months ended december thirty one twenty twenty two increased to twenty two and a half mean dollars than twenty two million dollars for the three months ended september thirty twenty twenty or two percent increase paul revenues increased your year from eighteen million dollars for three months in a december thirty one twenty twenty one for twenty five percent increase real revenue increased ten point four percent from eighteen point six mean dollars in three months ending september thirty tweet twenty two compared to twenty point six million dollars in the three months ending december thirty one point twenty two real revenue increased to twenty point six million dollars in the fourth quarter twenty twenty two from system the half mean dollars in the fourth quarter twenty twenty one for twenty five percent game both compared to period increases were primarily as a result the increased opponent of her horsepower really units with a fourth quarter twenty two into growth submariner by real price increases real relative strength and are now running between a five to ninety percent of our total revenues and all comparative periods
spk_7: as a december thirty one point way to we head
spk_5: one thousand two hundred and twenty one utilize really representing just overthrew here and eighteen thousand horsepower compared to twelve hundred feet from when it units representing two hundred ninety eight thousand horsepower as december thirty one twenty twenty one we're the fourth quarter was sixty five point three lose a sniper you know basis and seventy four point eight pussy utilization horsepower basis notably of our high horse park women is rented mean that everything from for horse power and larger is one hundred percent utilized utilize horsepower increased by semper soon the fourth quarter hook compared to the year ago period or revenue per horsepower increase twice and point three percent when compared to the same periods demonstrate the robust price increases we've been able to implement over the past year a template as of december thirty one twenty twenty consisted of eighty hundred and sixty nine units and just over four hundred twenty five thousand horsepower or large horsepower assets comprise approximately fourteen percent of recruit utilize sleep by unit count but the years provide approximately forty five percent of our car real revenue stream so readily city council quarters declined from one point eight million dollars in the third quarter twenty twenty two to one point three million dollars in the fourth quarter twenty twenty two billion a year over year quarterly basis sales revenue increased from one point one million dollars to one point three million dollars twenty four year comparison sell revenues increased from six point nine million dollars they point six million dollars or twenty four and a half percent increase there's no in our or his release adjusted gross will margin increase sequence me for my point six mean dollars or forty six percent of revenue and que three twenty four two to eleven point three main dollars or fifty five in a revenue in the fourth quarter twenty twenty two this represents a real gross margin increase a two point seven mean dollars are approximately thirty percent and sequence of quarters i your your basis are just really gross margin of lem point three main dollars in the fourth quarter tweet tweet two more than doubled when compared to four point nine million dollars in the same period and twenty twenty one i just really gross margin as present a riddle revenues was fit five percent of the fourth quarter twenty two into and thirty percent same period of point twenty one if anyone recalls and the first quarter call twenty two i stayed there we would achieve a least a fifty percent the adjusted gross margin in our own business by fourth quarter twenty twenty two i'm have you say we'd see did that with all the credit go and are so resources in the field that's your primary primary financial metric and i didn't excellent job he closely reporting law pre law supreme sixteen thousand dollars in the fourth quarter of last year compared to an bring loss of to her ninety four thousand dollars in the third quarter twenty twenty two the slight increase in operating loss in the current period that's primarily due to highest in a and approached me turn a thousand dollars in equipment and him toward retirements this comparison operating loss of a point two million dollars for three months ended december thirty one twenty twenty one operating income approval was primarily due to higher real revenue are real gross margins and significantly lower right down some real estate equipment retirements and awfully them tory her net loss in the fourth quarter twenty twenty two was seventy seven thousand dollars or six cents per privilege share this compared to a net loss of a thousand dollars in the third quarter the year or penny per basic and looted share du har net loss in the quarter was due to high as dna in a higher income tax rate i yeah we're quarterly basis or net loss with three months in a december thirty one twenty twenty two or seventy seven thousand dollars or six cents for basic lose share compared to a net loss of five point six million dollars of forty two cents per basic and village share for three months ended december thirty one twenty twenty one improved real revenue in gross margins where the primary contributors to the the lower net loss today compared to four years net income improved dramatically from a loss and nine point two million dollars and twenty twenty one to a favour seventy thousand dollar loss and twenty twenty two for key for tweet tweet to adjust either dollars essentially flat at some point eight mean dollars when compared to the park quarter pay increase significantly from two point three million dollars the same period
spk_8: and twenty twenty one
spk_5: oh no se ne expenses or fourth quarter twenty twenty two or possibly four point eight million dollars it to me and are increasingly year ago period and an increase her price for seven thousand dollars the third quarter twenty twenty two these increases are primarily travel to severance our time expenses as well as other costs for later exact to transition process me these past are extraordinary and for terminator you expect him to significantly decreased by into this year as una is likely to fluctuate oh nice several quarter duty trailing transition costs and the overall growth our business but we are acutely focused on his expenses anticipate bring them back into the thirteen to fifteen percent of revenue razor we have historically experienced i guess as of december thirty one twenty twenty two was approximately three point four main dollars but twenty five million dollars as danny under a revolving credit salty in twenty twenty we realize cash flow from operations twice and point eight million dollars and you sixty five point one million dollars for cattle expenditures fits the main dollars of which was expanded on a rental flights the side note for those of you keeping track of the saga of are elusive eleven mean our tax refund or has been some progress we've been lobbying the advocates offs of rs and recently had a conversation with the service there is movement but government speed movement in a refund or family and dollars had to go through an audit to it is estimated take another year to complete mind you this is on top of the almost three years we've already been waiting it's part of that we are celebrating the fact that it appears a real person exists of our ass that acknowledges we have a valid slang as indicate earlier the compressor market remains strong and we can take a seat man for new compression years largely in the high horse pairings we are likely to continue to level expand our fleet to meet demand is lysis expansion me or return expectations i started to change based on market conditions and very building opportunities we expect our annual cap a budget this year to be nice i mean dollars this may fluctuate due to the number of actual contract was secure our contract projections are assessment of a spec bills me to pursue we think this is a realist figure this time before take your questions the covered closing thoughts first is no like tank a fall on friday or audit know their weakness in controls relate or accounting for work in progress or with the how categorize certain weapon inventory for so long term assets as well as how and when we spend certain weapon and tory his weakness the city about you reclassification was a result of a lack of control policy resulted in the misclassification certain wip inventory as a result we have made adjusting journal entries to correct errors and work that are cutting staff next are alters and consult to address this issue and plane developing appropriate controls to prevent position the teacher visibly the recent changes are accounting and finance team and our side from our newest our odds are for medicaid future errors overall we are pleased with the progress made over the past twelve months or the noise around a jacket transitions could have been a distraction and yes was able to remain focused on the business of growing our company and serving our customers which is reflected in solid growth our financial on pretty metrics there is now or five years ago have been a transition to a company focused on large part by compression that transition continues and is no earlier continues to go and important star story or a half our real revenue now come from high was car compression a large horse power equipment is a key component or margin growth the know last year the last quarter we're now fabricating twenty five hundred horsepower compression packages the largest us in our fleet and continued to gain traction with those units of well as other categories a large horse power equipment we currently have fifteen contract these very large packages this a significant as contain laird are large harper offerings with a broad range of existing and new customers with an eye towards protests lotteries mystery markets we can taste i will contract with a premium right and term
spk_2: contain improvements a service and availability loud and advance to continue and we believe it's extent of the twenty five hundred horsepower market
spk_5: also in a decent our traditional compression business we can teach see up taste for by compression related to methane reductionist his could have received a boost from the a place reduction act costello early in the game or technology she knowing reduce the carbon footprint of our compression equipment is she create operating in texas his seat for those engaged in their business about twenty twenty three could be a pivotal year for this emerging business on a governess lisa from a board of directors continue to engage in the starts for and a chief executive and chief financial officers that said the team and i will contain folks on the up to the head of us we are energized by daily activity him and are excited about the future of our company i'm grateful jt faircloth in his one step using on here though and how balance serve finance and accounting group and as always am currently grateful and proud of the entire and yes team for dedication efforts and making this not only a great energy compression company they're great place to come to work everyday thank you and i look for the your questions
spk_0: as a reminder to ask a question please pass star followed by the number one on your telephone keypad to a guy a question please post or one again opposed to just a moment to compile a key on a roster our first question comes from rob brown thumb like street capital please go ahead you line up and
spk_9: like modesty
spk_10: hi rob
spk_11: ah just what if you give a little bit more color on the demand environment for high horse power the city at fifteen contracts in place but ah how is that the new ah sales activities panel and and how's the
spk_12: awesome environment guess
spk_5: now fifteen contractor or just twenty five hundred horsepower years to yell at a brand new market penetration for us
spk_2: yo the
spk_5: gail how we classify as large a horse part for her horse power up in the the for her horse power is very robust for so now those and rebuilding some more and like respect those be contracted as a roll off the move up into the fourteen feet and fifty her horse power range equipment and same thing are words totally sold out in that respect to rebuilding more than fifty her horse power units up in the l in again most oh well for high horse or fifteen hundred horse or twenty five hundred force for that matter the the majority of that equipment eighty five ninety percent of it is already contracted so yo obviously the market is very robust add yeah this point in time we don't have anything in the yard airplane is been building around three contract or yellow in that point horse power little the have some some spec he has been built in there to this pretty pretty popular yeah there but damn your they so the demand is is great right now a we anticipated and stay that way you are projections and term projections key a fair amount of a big horse power needed a second half a year and into next year and he of the opec move this weekend but do nothing to hurt that and pry enhanced that so i would expect that the big horse power just continues on yell and telling unless we see some disruptive
spk_13: them
spk_11: factor in it that yeah right now we we sit has been pretty positive okay great
spk_14: it and then that the cut backs expectation that ninety five million is
spk_15: your how much of that is from that twenty five hundred horsepower market
spk_16: that he it am
spk_5: t in louis cafe my head
spk_4: that's probably
spk_5: you a third to half of it's decision is right there no they're pretty expensive so
spk_11: yeah in in the third to half it feels somewhat of a range but damn you can depends on how the rest of the other the don't schedule comes out tehran the of fitting her horse or yard or bent towards for for and horse like that but he of the give yeah
spk_5: yeah rough idea dare say thirty five feet per cent i was going to that bickerstaff
spk_2: if
spk_5: and me talked about penis growth in the rent on fourth quarter add my price increases did he up to the for for the price increases are or will that is flow through a twenty three a drive drive growth twenty three
spk_2: yeah we we had some additional increases you wanted this year yeah would report on the next call but damn not think we're more at a good point right now now any further
spk_5: price increases we see or to temple mount will produce be a result of them cost of goods going up either you're either the equipment itself or yeah we have contain inflation is supply chain issues the just inflationary impacts from i'm from those items that them
spk_11: from the point of of market driven or
spk_5: yo induce price increases that we may just choose to do with the like we're okay worry all right now
spk_0: and again anything further will be just due to cost goods or costs of service
spk_17: okay they can turn it on get bankrupt
spk_18: next question comes from pete sullivan from that group please go ahead go on is open
spk_5: hey thanks i keep up it wasn't looking to change it much a change in rented compressors you come on that that you still have any smaller or power units coming back you from the feel there should be a bigger than your recent cut backs and ninety five million tax plan should be a pretty consistent qaeda to the increasing increasing the total number of rented compressors in the field any increase in the well he increase in the fleet is gonna be obviously primarily driven by larger horsepower stuff any increase in arena compressors
spk_2: yeah would just be dictated by utilization which we expect the high horse power is i should stay high the the
spk_5: and i think the medium horse power with price state
spk_16: fairly steady
spk_5: the only risky to utilization pie be in a smaller horse power which is primarily driven by gas markets but we haven't seen it with the your drawdown and gas price we haven't seen a whole lot of our return that we had some return last year due to price increases with we expected the and i was the operated to like the lower gas price but damn we have seen i am
spk_7: yeah i'll a lot of equipment come back due to their think the only yet remember the gas prices fell
spk_19: but it didn't fall below wars been for a decade yoga when up your mid to the end of last year it has come back down but you can't came back down of our was as hell just a low price with all being used to for a long time so if he if you look at it on ya just a point to point bases list pretty bad if look get the
spk_5: yeah the the trend last year to it's pretty much business as usual young gas prices just doesn't do much there's just lot of gases country yeah so we don't we don't see a whole lot right there
spk_20: as we have
spk_21: see some weakness in pricing on it
spk_5: but that's about it that not a whole lot of sense the turned equipment the or this point anyway you're in up our kind of
spk_2: expand on that little bit
spk_5: yeah i've had comic bow august yeah yeah you get this sam yeah you gotta get this line of credit and a take off some debt ever had and and people are married to have but it's been ten twelve years ago am hey ya you do this and ya and now or prices had gone down corsican backup they get by she's gone down effect you gonna be all my gosh you're what what the heck's going on and am if you look at our overall fleet e o
spk_4: about twenty five percent of our revenues driven by natural gas activity
spk_5: so it's pretty small yeah used to be ten years goes one hundred percent and with this large horse part of hers caisson are we starting to start shifting our revenue towards oh come on economics versus your natural gas commodity economics and so only roughly twenty five cent of our revenues driven by pure natural gas activity and the other know seventy five percent is a gym by all mainly due to ah we the gas lift operations at a lot of producers have started doing based on your with the shell production so yep you look a gas prices something our yard love to go to five or ten dollar don't think it's going to anytime soon
spk_2: but any variation in that gas price has a limited effect on a what we're doing has no effect on our catholics fans of really don't reinvest in that damn that smaller market which is driven by natural gas primarily your our our of our investment goes into the all market now oreo the both
spk_5: monday's about fluctuate was a better commodity from the standpoint that others there's less dense stay low august it way to go high you go low because back into a fairly normalize damn range of times young and then yeah you look at what's happened yeah on the my macro aspect from ma'am he that the banking and is the trades and stuff like that they continued to go up and whatever the fed you're doing inflation and everything else him there's all kinds of countervailing wins on that but damn your interest rate we've we've got a good damn banking group ham behind us
spk_4: yeah tc beason there is there some big banks in there are they did a lot of due diligence on our projections and financials and an account with our plans
spk_5: i'm human and we have some nominal your leverage requirement young we don't ever in our projects and see go about three to one in a downturn we are typically protected by longer terms and in the higher rates on that so know whether it's a with his death you're looking at or just the other normal fluctuations in the business yeah those contract have to have get you through those and and yeah we didn't you have you ever have to we'll do something on honest ratio others yeah there are your present later it's freshwater thirty tractor and things like taking go for viral infection and vice versa yeah if if need be so yo the afraid say of the is something we watch who have watched it ten years haven't had to
spk_4: but now with the cap x were for spending your will generate a higher level cash neighbor's dog and i are projection look very good and strong and the banks agree with that so you're all those factors now what is yellow commodity prices are in shreds are we pretty well got a good handle on it and for like we're
spk_17: either naturally hedged or an or can get hedges and place if from your peers be a problem so
spk_5: your long answer to a short question i guess but damn you're from the the to my prices and and macro interest interest rate environment with a group pretty good shape the and get one one or follow push on that the compressor that you are retiring and and be a neuroscientist it's more an accounting change when you choose to retire those units but it will there could be any residual value in the retired units at all or do they just simply go to scrap book now potential pros feeds long term for you i'm the other ones we retired in queue for we're all smaller units yeah pretty close to the end of of their the peaceful life and and actually useful like as yahoo like at the retires much big by really care but ya it's a is the cost of
spk_22: read the oh overhauling south the rebuilding something back up to usable
spk_23: potential and then the or what your potential economic benefit from her idea what you're going to be and so ya that drives guzzles is to we we were time i two thousand dollars worth which was actually
spk_5: about hundred feet your to her units he also a one much of a of a ride down for the number of units but out their primary smaller gonna have fleet we typically
spk_24: well
spk_5: it was like obtain kid who can store yeah we we have enough scattered around will have to feel guys strip off any partially can reuse
spk_25: and then yo
spk_2: if we don't think we're gonna use him to refurbish are real
spk_5: reply will i time or scrap but your one example of your application is what we now last year some
spk_17: electric
spk_26: motor conversion geo take some two hundred two hundred fifty horse class compressors took the answers are those actually rebel some the engines to reuse and into like about his arm and and yeah we're we're building up some lighter dry patches so your we we squeeze what are juice we can out that that lemme
spk_0: and the or before we just as the ya that the rest out of scrap yard
spk_27: what thank you thank you thank you keep
spk_28: the game thanks type
spk_29: i next question comes from just and jacobs from now red cap it all please go ahead go on as out that
spk_4: ponce de vito on hey justin get you the while for hey taken the time hair and
spk_30: couple last couple of categories the questions only stark half back ah the catholics numbers are surprisingly large at thirty million dollars and most recent quarter delicate probably do something around know thirty nine hours and first quarter and ninety five million for the coming year
spk_31: can you give me a description go kind of as of year and advocates only have a detailed info
spk_5: l what how many units are in the process of getting built a key break out by the or twenty five hundred horsepower twelve or thirteen hundred horsepower for her war started college try get a sense of what what are the the fleet is gonna come online the time of year i'm yeah yeah from up for me get bounced standpoint says a mess we have twenty five man at the end of twenty two young fit for me in the city que on this year so it's we just spent thirty million dollars go in in he won we've spent twenty five million dollars and key for could we had it is euro death begin a fourth quarter last year we're anticipating each quarter going forward
spk_32: about twenty twenty five million dollars yeah so no que tu je three to four now and up at that point five million plus nine five man or hundred and twenty million dollar
spk_5: det balance at the end of this year i am now
spk_16: what that's made up of in
spk_5: if you'll mm can be a little
spk_33: begun on the counts of equipment mention the fifteen
spk_5: yeah twenty five hundred horsepower units
spk_16: yeah i don't want to give too much away to your than the nefarious one's listening in but damn
spk_5: yeah the the balance the majority of the remaining go going
spk_2: to the remaining
spk_5: capital is pity her horse units am
spk_2: and that's gonna be
spk_5: yo a price half of the budget have a total budget yeah so that set your use one hundred and twenty million dollars
spk_4: and in a balance between that and the twenty five hundred horse years you can be done of four hundred horse spam rain so it boils down to for her horse pity her horse and twenty five hundred horse and
spk_5: yoda the of the four hundred gonna be
spk_4: roughly ten percent yellow the
spk_5: picking her horse is roughly pity percent in the balance is twenty five hundred
spk_4: limit let to go to a different direction i'm all in cost right now for ah a twenty five hundred horsepower what what a one of the compressor not just the compressor the overall piece of equipment to get out the field what the capital costs for that practically the package yeah it's it's gonna run in the
spk_5: two point seven five three million dollars
spk_34: okay and what is the fifteen hundred now
spk_4: those are in the that same thing about mean dollars cheaper go well let me say one have to one point seven five million
spk_5: for those those have had as one up a little better their recollection from in l a year to go public two years ago those are more a million two million a quarter totally inflation going started yeah we start gonna city her horse the a pile of us four years ago ya they were
spk_4: there are one point one million dollars roughly
spk_30: yeah
spk_28: gonna qualify
spk_5: okay i could probably back into lie
spk_35: or any of the twenty four twenty five hundred horsepower as of year and were any those out in the field of that the ghosts and fourteen that you had contracted
spk_36: no no they're being built
spk_4: with the expectation time alone they go a field am it's gonna be a
spk_5: his second half i'm in a it's hard to nail down cause similar stuff shift around but it's say it's a key three to four sort of them timeframe okay i'm yeah i did i give a ill you want
spk_37: look good
spk_5: yeah i guess it in in he had the these are these a big cap acts numbers here and we look at a at the earnings call a year ago you know he told shareholders it's dec twenty twenty five million ah and said twenty twenty five million to get sixty five million last year with the ninety five million this year and it just try get it i support for shareholders are saying and what the plan is and there are we going here on capital outlay and i appreciate them that the competitive concerned you have in terms of breaking out your number of units but it's very difficult the project and what what even dogs can be generate our lives in the coming year and specifically the piling without some better detail or kind of the l or on each of these units and any what the fleet is gonna look like
spk_38: yeah in in afghanistan sand and we've got obviously a detail schedules on when
spk_5: we have when things are anticipated come out your and for sales given by change every two weeks based on customer drive young demand and move gotten contracted with custard sometimes yosef things round move
spk_39: it's in from behind things like that
spk_5: in i appreciate what you're saying i just am hesitant to put out too much detail as as messenger from a competitive standpoint as people know when and where an hour so they can get your most as fence goes the permian
spk_4: the so it's a it's am
spk_40: yeah i'm trying to think through and in in maybe come up with a better way to to give a yes a clearer picture but at the think if you
spk_4: yeah i don't want to break down exactly when certain you for coming out with cetera and
spk_41: yeah sometimes just the other the quarterly spanned and up the i went to while ago
spk_5: go is hi better the best detail i can give you a that going into this dismay is that many units isn't our standards yoga it's hard to project even our growth of that but
spk_42: but i get into much detail them and little hesitant
spk_5: i will let the me have no question what are the you look forward beyond that in the twenty twenty four what level of catholics can we expect in twenty twenty that is if it yeah i'm a i'm just i understand the building spree is gonna continue and that it's gonna make then
spk_43: yeah
spk_4: yeah they'll put our was just went to put er det bound to the hundred twenty main athena of the year and assuming no no interim pay down or anything and we gotta hundred seventy five me and commitment yarbrough by smells matterhorn forty me so presuming we get the i'll get to the the brumbies goes it was only five that leaves about fifty five million dollars l not if nothing else changes as to what's let on that commitment the
spk_44: yeah the two thousand twenty four capex budget gun
spk_5: pride to panel really what happens que three and queue for as far as what other owners command in on on more horsepower round equipment for a hard he was real hard nosed possible say right now in a me as if nothing else you could say well as he taught me in there we run our commitment right but death of you via time would have higher a bit off onto and getting could could get more if if the market demanded more well the having a jet the band bush matter yeah yeah but just push that and apres i second i mean if you're saying that you've got these these twenty five hundred that are coming on some time in the second half ah i'm he made it either does heading up like a maybe it's not their delays and issues getting out there and and cute warrior ago you had significant issues an incremental costs and getting on a new cook an atlas feel the self that's my question here is that kind of all plays into then capital structure as he said ah you know one hundred twenty million dollars by year and ah you know that that so slightly like and blow what your mark gap is currently that's a pretty material change and drag you gotta one hundred and twenty five million dollar uncommitted accordion on top of that i just don't know where you got from a capital perspective i am trying to get understanding of have you know thinking forward not just one
spk_45: court or even three quarters how much more depth and of youngsters
spk_5: yeah well ya projections show that are debt would peak and this is based on twenty twenty three yeah from what we see and then the others you quimby and said needed ah yes and me robin yeah generate and toy for obviously yeah
spk_4: you have a four year of of whatever put in the second half yard debt would peak and about the fourth quarter of the here in in
spk_46: i can say is the or what we see from a stag standpoint now based our projections now and whoa
spk_47: yeah what we see from the market in the borrowings i and then your the the dot com and in yeah
spk_48: starts pain that down and when we would have the depths paid down in a couple years after that that static i know and i know you question is will our no dynamic our know what you're going on next year it's real hard to say was going on next year owes them
spk_49: if the mortgage stay strong
spk_50: yeah it could be
spk_42: he he can be another knife i mean dollars maybe
spk_5: now don't know that yeah i had stadium thought number out there because it could be fifty million dollars or could be twenty five million dollars a pair of think your we have big recession next year and things fall down it's it's it's just hard to say i have to you oh really take a stab at at something that really heavy basis in fact for right now as far as you what next years ago with like look get our money yeah i'm out let me go to a different topic here which is the as dna increase ah look at twenty twenty two at thirteen point six million which is an increase of of two point nine million dollars versus last year you know all this increases cute rank you for on fourth quarter you run it for a of oh of as dna two questions for your first is one of the components of the seven hundred thousand dollar sequential increase in for cute repute or and then second question as one of the components of the two million dollars recent cute boy earlier okay palmer differences in in the year over year
spk_51: our
spk_52: the
spk_5: your retirement severs severance expenses and young and pregnancy oh it as my retirement agreement and and then john chisholm a severance expenses zeal that the interim there so we had them you had higher costs their over me and dollars on that there were double salaries in there from a c o standpoint
spk_53: sorry for about six months we've had their hired ministry salaries go around hundred forty or fifty thousand dollars
spk_54: there we had damn bad hundred thousand dollars higher software expenses
spk_4: and about three hundred thousand
spk_2: that way about half million dollars higher consulting and our stock expense is so as year of year
spk_55: now see coin chile
spk_5: i'm
spk_37: the young
spk_5: consulting and deferred cop again rant about them five hundred thousand dollars higher health insurance is lynn over her thousand dollars higher stock bathroom thousand hire an immense administrative them
spk_56: and sours also so your vet the majority out the majority of it is as emitting diodes service transition cost of your my yo
spk_4: retirement agreement come back and john be an interim for
spk_5: six months in there and the associated expenses there and then and hired ministers showers and some higher and stuff where cost what were the arkansas as that the be over the world war the nature of the consulting expenses we had them you can sound like a mrs a young the accounting side we've had some
spk_4: ah i don't have the search expenses fell into any one of those i have to check on that there may be que one the expanse
spk_5: and you some yeah some this contract contract male selma some expenses week
spk_4: terminated
spk_5: that's what am i follow question does is you know where it where the search spent leno the public that multiple thirty two that allows am i was hoping at least that that thank you for that sounds like that actually maybe at you want to that incremental austrian like them yeah the it doesn't look like the the search expenses are in i didn't
spk_4: adam fact the search expand i had don't check for sure about think the search expenses are in
spk_29: you have to queue for think they will
spk_4: show up in keyuan and inside of admitting the a we're still going to have some been tailing off of some transition expenses our the rest the year he arguing that the as no more in in shape and and down as were yum yum
spk_5: i get other people and and and other people out yeah i don't like that you're gonna go up a little bit bankers you're going to see if you have a banner ah your no retirement agree and text editor that we're hitting in a lab of cute three and you for it can be there and que wants to lie so yeah that will not get them but that that giantism ceo expenses are are all totally and them q or last year and than a yeah i think amount of consults expenses are there to and really the are is your expenses on come down so there's gonna be that you can be so just assertions would kick in there can be small setting and savings or two
spk_4: yeah and it's goes big picture that i look at the end up to three queue for your company adjusted ebitda went up twenty thousand dollars on what more mental you tell the a lesson
spk_57: you can't die the at the top economic gap
spk_5: yeah
spk_4: i'll get the could he have a company leave it on que three to queue for i mean when at five thousand dollars
spk_5: so you're run a profit increase which is it material getting completely eaten up by as dna and i'm trying to figure out in l one of the new units are coming in and one or that a but outlawing any of that ft in a while appellate that very difficult as he up what you alex like the the yeah yeah i know yeah you're right that there was a disappointment in and these results at the yellow the very good operating results goddamn you're cute out by some other transition
spk_4: no sarah's her time expenses
spk_5: and it's an hour it i know it we don't break those out publicly yo on the as dna but that cl just looking forward and see what's coming off and what may become an i was young thank how an hour would be a yard that we see would be search expenses yeah the week we think will still be able to get down into that thirteen to fifteen percent stark or range as will be approached him toward the end of the year but certainly in am next year i'm thankful my that lot better shape of their eyes and trolling once admittedly
spk_4: cap on the guess that last question i briefly i am is gonna audit function questions around a company and as a material week is an a k can you do our described the issue a little bit yeah is is
spk_5: primarily balance sheet issue there is some somewhere that shit have been yell at classified as long term as as vs inventory and that was the biggest yeah there are some
spk_49: primary it was engine compressor build parts yo step been built in i was classified wrong there's also some vehicle and software expenses
spk_2: the rounded out that the majority or compressor components in cost that damn just meet you
spk_5: or just miss classified on the balance sheet but the dead galle i think you let another place you have brought in accounting consultants to or that any partially to address at least partially what as the dishes
spk_4: yeah to help us some well
spk_5: the issues were address bar or auditors and damn our own personnel we did damn employ a in accounting consultant to help us yeah
spk_4: yeah right up some the young clearly right up some fine easier without a better for for a third party to the funding for the as you see in the in the cater to a pin all more details to singling him there so that was the extent of the accounting
spk_58: consulting we used on that primary to help us some clearly defined exactly what it was but my we we allow ours had found
spk_59: i'm a net author your earnings were delayed your call was rescheduled on to this morning as the second time this happened in the last year actually taught me about why the earnings were the late
spk_5: is primarily just sent the transitions going on yoga interim chief how and and
spk_0: and then with the atom
spk_60: with the earnings and earth i knew we had a essentially have most adams come back again and and attest to the the fines also you're in time it's switch archers what you did last year he the the prior alters have them has some review responsibility on that so that tickles
spk_61: oh the whole process took a little longer than we had anticipated and to we held off the call me a we announce ten days ago or so we held our to make sure everything was was done obviously other their friday was the deadline for the case where you hadn't put that out in their earnings and and meal happy holidays so it was that it was a lot of transition and then just for conserve some of the issues of showed up a material witness and and plus we have to set auditors helpless
spk_29: yeah how cats are better better get ready bachelor might not adams was a factor in the like
spk_61: well only only from the point that they had to combat can and and yeah
spk_11: review and and attached to yoga
spk_5: what they dunk as they were there are part of last year yeah what i used i'm i'm saying the back with they want the order you got a transition air they was i sell gone through all that transit and plus not having a bolt and see about that a method impact
spk_37: yes are definitely
spk_5: yeah i did that actually gonna got an uppercut okay thanks just i next question can somehow somehow can company to go headliners out there a state are you they'll get you going well thanks i know this old todd transition of your retirements got dragged on longer than he wanted and been a little messier than you wanted but i'm appreciate your stabbing back and and and seeing it through i'm curious ah yeah it seems like there's so much going on of the company you know is that prior color mean i mentioned you spent almost year and tire market cap and cap accent tom meet you know as it relates to that it if if you're spending one hundred fifty of callbacks between twenty twenty two and twenty twenty three i'm using round numbers and i know you're hesitant to give guidance which i totally appreciate but is there any kind of direction directional number is that you want us to think about on ah come on a back i know one john shazam wasn't bald i think he was talking about cat five your paybacks or twenty percent returns i mean can we think of this hundred fifty million of callbacks over two years adding thirty million of incrementally but i once it's all up and running or is there any range you're willing to give us yeah
spk_62: and in the returns we are looking at your year
spk_29: you're in the right ballpark we're looking at your five to six year to film equipment fat six year yoking cash on cash a bags am
spk_11: neon summer little higher but the are them
spk_63: are below the fifteen to twenty percent range of some up marv or up into the her twenty to twenty five percent range so that the the returns like good from a
spk_29: he does standpoint again with i'm sorry
spk_4: yo toeing the line of of getting guidance or or projections but damn
spk_64: yo
spk_5: a pinkie a think the am you'll see die even doll returns in line with what that yeah party secure pay out shows up to sophia if you can look at that time
spk_65: that that cat bags or thank you
spk_5: your we'll take that capek number and like that five six year pay back and and be pretty close to what we thank you but i was going to me
spk_66: ah thanks i'm
spk_5: and i guess at getting back to your transition it you know there's obviously a ceo search going on but there's also ah some new director is being proposed it it seems probably a possible to probable to me that you have a different looking board and the next three months it seems
spk_2: fair and reasonable to me that ah those potential new director should have some input on who your new ceo is are you willing to stick around for three to six more months and let the board vote a car before a new ceo is committed by a potentially are a smaller and
spk_5: boulder border of the out the existing board
spk_4: was young
spk_29: sony from the from the same perspective that i'd
spk_61: step back and when john need to step down
spk_11: i'm
spk_5: ya gotta his own i'm people couple of times i've got a pretty good steak in the camp now over your five percent myself so i'm your entered intimately an intricately involved and how the seal the company operates in the returns given an inserted a divide arrived through the share price so ya yeah i serve at the pleasure the board i would serve longer the pleasure the board if if need be i'm not gonna you're my my agreement in june thirtieth and oh and at that point for pretty agreement neo the the
spk_29: you're the ceo and president duties ceo transition they can transition earlier to depend on what the search fans but the other that be the
spk_5: the grimaces as last date but ya if if the company and the board deemed necessary i'm not
spk_0: and that disconnecting my phone on july one notices i've seen both can be a long time he of would feel like we built a pretty solid foundation of staff and and looks like rather young pretty good jumper up points on this stuff so now i'm joan
spk_5: i started the pleasure the board know either either on your moving out outer are staying and whatever the circumstances may be board terms is best well the board serbs at the pleasure of the shareholders and by your an extremely i shareholder and ah are from is your largest shareholder and for i would love to see you stick around and let the new board shake out i mean it's quite
spk_2: possible a probable that there is to new directors added
spk_5: and i think that those people should have input on on the ceo
spk_67: important to me enough the current board tries to ram through a new ceo before the annual meeting i'd be extremely disappointed
spk_0: yeah

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