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spk03: Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group Incorporated Quarter 3, 2023 Earnings Call. At this time, all participants are in listen-only mode. Operator assistance is available at any time during this conference by pressing 0-PAL. I would now like to turn the call over to Ms. Ana Delgado. Please begin.
spk00: Thank you, Luke, and good morning, everyone. Before we begin, I remind you that during this call, we will make forward-looking statements within the meaning of Section 21E of the Security and Exchange Act of 1934, based on our current beliefs and expectations, as well as assumptions made by the information currently available to Natural Gas Services Group leadership teams. Although we believe that the expectations reflected in such forward-looking statements are reasonable, We can give no insurance that such expectations will prove to be correct. Please refer to our latest filings with the United States Security and Exchange Commission for the factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. In addition, our discussion today will reference certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, and adjusted gross margin, among others. For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release in our forms 8K, 10K, and 10Q furnished to the SEC. I will now turn the call over to Steve Taylor, our Chairman and Interim CEO.
spk04: Thanks, Anna, and thank you, Luke, and good morning, everyone. Welcome to our third quarter 2023 earnings conference call, and thank you for joining us this morning. Before taking your questions, I will highlight our financial and operational results for the third quarter, discuss the current business environment, and provide comments on other aspects of our business. We had a very successful third quarter. Sequentially, our total revenue increased over 16%, with a year-over-year increase of 42%. These increases were led by rental revenues that grew by $3.6 million, or 15%, sequentially, and $9.1 million, or 49%, when compared to last year's third quarter. Sales and AMS revenue, combined being about 12% of total revenue, grew by approximately $800,000, or 28%. Sequentially, total gross margins grew by 14%. SG&A declined by over $2 million, or 41%. and adjusted operating income was up almost seven times to $4.9 million. Sequential net income increased by over four times, and EBITDA grew 19% to $11.8 million. In the comparative year-over-year periods, we saw similar growth dynamics and cost savings, and I will detail those later on the call. Our 2023 capital program is proceeding as planned, and as we have also experienced in the last quarter, It continues to show exceptional and positive financial impact. Additionally, we saw the following of our AK this morning. We have expanded our existing credit facility from $175 million to $225 million and have added a new member bank to the group. These funds will continue, will be primarily dedicated to our 2024 growth capital plans and represent continuing confidence from our banks of the results we're achieving and our plan going forward. On this call, I have Jim Hazlett joining me. Jim is our vice president of technical services and has been with NGS almost 20 years. Brian Tucker is also here and joined NGS about a month ago as president and COO. At the same time, John Bittner took over our chief financial officer duties on an interim basis. Brian and John both have extensive experience in their respective fields, and if you'd like a refresher on their backgrounds, I'll refer you to the press release we published at the time. We're glad to have all of them on our team. Now, let me jump into the review of the third quarter. Total revenue for the three months ended September 30, 2023 increased to $31.4 million from $27 million for the three months ended June 30, 2023, or a 16.4% increase in sequential quarters. Total revenues increased year-over-year from $22 million for the three months ended September 3, 2022, for a 42.3% increase. Sequentially, adjusted total gross margins increased 14% from $12.8 million last quarter. On a year-over-year basis, our adjusted total gross margin of $14.6 million in the third quarter of 2023 increased approximately 49% when compared to $9.8 million in the same period in 2022. Rental revenue increased 15% from $24.1 million in the three months ended June 30, 2023, compared to $27.7 million in the three months ending September 30, 2023. Rental revenue increased to $27.7 million in the third quarter of 2023 from $18.6 million in the third quarter of 2022 for a 48.7% gain over the past year. Both comparative period increases were primarily the result of the increased deployment of higher horsepower rental units, slightly higher horsepower utilization across the fleet, and rental price increases throughout the year. Rental revenues now compose approximately 85% to 88% of our total revenues in all comparative periods. Adjusted gross rental margin increased sequentially from $12.8 million, or 53% of revenue, in Q2 2023 to $14.2 million or 51% of revenue in the third quarter of 2023. This was a 12% increase in gross rental margin dollars since last quarter. Our gross margin percentages slipped 150 basis points due to higher than usual parts costs. We see that as an irregularity and anticipate that these margins will recover in the fourth quarter. In the comparative year-to-date nine-month periods, our rental revenues have increased 38%, while adjusted gross margins grew by 50%. As of September 30, 2023, we had 1,233 utilized rental units, representing over 400,000 horsepower, compared to 1,196 rented units, representing just over 305,000 horsepower as of September 30, 2022. We have added over 85,000 horsepower to the fleet this year, an approximate 20% increase in total fleet horsepower. Our total fleet size just passed 500,000 horsepower in September for a total of 509,000 horsepower at the end of the quarter. During that same period, our rented horsepower grew by almost 95,000 horsepower. That's a 31% growth in utilized horsepower and equates to incremental utilization of 111%. That's a utilization number you won't see often. We ended the third quarter with 63.3% utilization on a per unit basis and 78.7% utilization on a horsepower basis. Unit utilization decreased slightly from 65.4%, primarily due to lower utilization on our small to medium horsepower fleet and the impact from lower natural gas prices. But horsepower utilization experienced a slight uptick from 78.6% in the second quarter of the year. Revenue for horsepower per month increased 13.5% over the last 12 months, demonstrating the impact of the growth in higher horsepower units and the price increases we have been able to implement over the last year. Our total fleet as of September 30, 2023, consisted of 1,947 units and 509,000 horsepower or 262 horsepower per unit. Our average horsepower per unit has grown by 22% over the last year. Notably, approximately 97% of our high horsepower fleet is utilized in drawing rent. Presently, our large horsepower assets comprise approximately 19% of our current utilized fleet by unit count, and over half of our utilized horsepower in current rental revenue streams. sales revenues for the sequential quarters decreased from 1.6 million dollars in q223 to 1.4 million dollars in the third quarter this year this decrease was from quarterly fluctuations we typically experience in compressor and part sales on a year-over-year quarterly basis sales revenues decreased from 3.1 million dollars to 1.4 million dollars This is driven by the one-time large sale of active rental equipment to an existing customer in last year's third quarter. As I've mentioned in the past, our sales activity, primarily representing compressor, flare, parts, and miscellaneous sales, had declined over the past few years due to higher customer demands for rental services, our increased outsourcing of large horsepower fabrication, and our de-emphasis of flare sales and service. This lower level of sales should continue due to the changes mentioned. There will continue to be volatility, albeit reduced. AMS or aftermarket services in our most recent two quarters have seen large increases in revenues. This is primarily due to pass-through services that we provide to or arrange for customers when installing our large horsepower units. These revenues will fluctuate with the volume of equipment set in each quarter, and they carry low pass-through margins. However, when sales and AMS revenues are combined, they represent 12% of our total third quarter revenues, where we experienced 28% growth in sequential revenues and a positive gross margin of 8.5%. Year-over-year, the combined revenues increased $250,000. Gross margins decreased, but still held at 9% of revenue. Our SG&A expenses decreased a bit over $2 million in sequential quarters and totaled 9% of revenue. On a year-over-year basis, SG&A expenses decreased over $1.2 million. This was an anticipated and welcome decline in expenses, and at 9% of revenue, which is uncharacteristically low, we think this represents a low point. Going forward, we anticipate that SG&A will normalize at a level 15% to 20% higher than this quarter, still a reasonable amount. Sequentially, we reported increased operating income of $4.9 million in the third quarter of 2023 compared to $712,000 in the second quarter this year, almost seven times higher. This improvement was primarily due to higher rental revenues along with the decrease in SG&A. On a year-over-year basis, our operating income increased to $4.9 million compared to an almost $300,000 loss in the same third quarter period in 2022. Our net income in the third quarter of this year was $2.2 million, or 18 cents per basic and diluted share. This compares to a net income of $504,000 in the second quarter of the year, or 4 cents per basic and diluted share. In the year-ago quarter, our net loss was $80,000, or 1 cent. Adjusted EBITDA increased 19% to $11.8 million from the second quarter of $9.9 million. and increased 53% from $7.7 million the same period last year. From a balance sheet perspective, our cash balance as of September 30, 2023, was approximately $200,000. In the first nine months of this year, we have generated $25.7 million in operating cash flow, which is 27% higher than the $20.2 million generated in last year's comparative period. At the end of this quarter, we spent $128.6 million for capital expenditures. 98% of this, or $126.4 million, was expended on rental fleet growth. I'll now ask John to comment on the bank facility. John?
spk06: Thank you, Steve, and good morning, everyone. The outstanding balance on our current revolving credit facility as of the end of Q3 was $128 million. Looking at our two financial covenants, the leverage ratio at the end of Q3 was 2.71, and our fixed charge coverage ratio for Q3 was 2.78, both giving us comfortable cushion of these ratios as compared to the required levels in our credit agreement. And the company is in compliance with all terms, conditions, and covenants in the credit agreement. As Steve mentioned earlier and as you may have seen in our announcement this morning, we have secured an increase in the total commitment of our credit line of $50 million from our bank syndicate. We accessed this additional commitment using the accordion feature contained in our existing credit facility. The total commitment amount was the only change to the credit facility with all terms remaining the same, particularly our borrowing rate which currently is SOFR plus the spread based upon our net leverage ratio, which at the end of Q3, the spread, the interest rate was SOFR plus 3.5%. We continue to have units being delivered through the first half of 2024, so we will look to utilize the additional capital for our capital requirements beginning in the second half of 2024. With that, I'll turn it back over to Steve for some closing comments.
spk04: Okay. Thanks, John. This past year, essentially since we've incurred our debt balances, I've had requests from shareholders to provide a greater level of detail as to our forward plans, otherwise known as guidance. As you know, guidance is always a risky area, and I equate it to what can happen in a football game with a forward pass. There are three possibilities. The pass is completed, it's not completed, or it's intercepted. Therefore, you have a one in three chance of being successful. Guidance will either be high, low, or right on the number. Again, one in three. In spite of that, I think it's a fair request. That said, we're issuing our first set of guidance for revenue and EBITDA for 2023 and 2024. These numbers, along with the quote unquote color provided in my prior comments, should allow everyone to assemble their own models with a higher degree of accuracy. For 2023, we anticipate the four-year revenues will end up between $110 million and $116 million, and EBITDA will range between $37 million and $39 million. In 2024, revenue is projected to be $130 million to $140 million, with EBITDA between $50 million and $60 million. Note that the 2024 guidance does not reflect any impact of the 2024 CapEx program. But we will update that as soon as we announce details of next year's capital program. So, we've not only dipped our toe into the water, we're now up to our neck. All I ask, be kind. From a macro perspective, the factors supporting hydrocarbon production and pricing appear to be intact. There are certainly countervailing winds, notably the recent weakness in crude price. But overall, the hydrocarbon economic environment seems to be favorable. We've avoided the once-predicted 2023 recession. OPEC seems ready to defend any further weakness in the construction of a peaceful LNG export facility as the Gulf continues. It's never smooth sailing, but we think 2024 and into 2025 will continue to be a good environment for NGS. We are in an undersupplied gas compression market, and it appears that it will continue into next year. Industry utilization continues to be at very high levels. And listening to others' earnings calls, there is very little, if any, incremental capital being planned to mitigate the dearth of gas compression equipment. Lead times for major components continue to stretch out. As NGS goes forward, we will endeavor to pre-contract equipment with long terms and required returns before we commit to building it. As we have done in the past, this will ensure our committed capital returns. We intend to pick our customers. This isn't meant to be a loose statement, but NGS has a lot to offer from our service capabilities to superior equipment and runtime to technology. Capital is limited, and we want to make sure the customers going forward with us appreciate the value we deliver and are looking for strong partners, as we are. We're a bullets on our industry and our opportunities. With our capital availability, long-term contracts at exceptional rates, and good counterparties, We're in an enviable position to take advantage of the strong environment. Thanks for your time. I look forward to your questions.
spk03: Ladies and gentlemen, at this time we will conduct the question and answer session. If you would like to state a question, please press 7 pound on your phone now and you will be placed in the queue in the order received. You can press 7 pound again to remove yourself from the queue. You are now ready to begin. Our first question comes from Tate Sullivan with the Maxim Group. Go ahead, please.
spk04: Hey, Steve.
spk03: Yeah, great to hear. Hi, Tate.
spk05: I mean, the first time, is it in history with the forward guidance? I mean, is that something that made the banks more comfortable, or can you talk about your discussions with them and how they get comfortable with your growth plans, too?
spk04: No, I mean, it didn't come from the banks, truly. I mean, the bank obviously has confidential, you know, forward projections and things like that. So they have plenty of information to make their decisions on. But as I mentioned, it's primarily, you know, shareholders that, you know, want additional information. And, you know, with the debt load we've taken on, which, you know, we have not ever had this level of debt before, you know, I felt like it was a fair request. It took me a couple quarters to come around to it. But no, we just wanted to go ahead and try to give a better picture of the future and what we plan on doing with the money and the results we see.
spk05: And then can you repeat one of your colleagues who said that the leverage ratio at the end of the quarter and then Did you sort of somewhat imply, based on what you were already constructing, maybe a pause in CapEx in the first half of 24, or did I misinterpret that?
spk04: The leverage ratio, I think, was 2.7-something, maybe 7.3, but 2.7 in that area. And I'm not sure I understood on the first quarter 24 what we – What we've got is some of the capital from the 23-3 plan will roll over into the first part of 24 necessarily just from the point of equipment being finished up, the capital being committed, say, in Q4. But with lead times and build times and everything else, we won't get some of that equipment until Q1 and a bit of it into Q2. We're using – so that's essentially some of the capital from 23 falling over into 24 from the point of being spent, but being built into two different timelines. So I think that's what you're referring to.
spk05: Okay, yeah. And then just a quick last one for me is a counting question on capitalizing the practices of capitalizing the interest expenses, but then you had interest expense on the income statement.
spk04: this quarter are you changing the practice in terms of capitalizing interest no uh the practice stays the same but there you know there is some variability in how much you capitalize um it's not all uh you know capitalized so there's some you know and i you know i'll refer you to you know, the accounting department on this. I don't know all the particular details, but there is a variability in how much you can and cannot capitalize by quarter. Okay. All right. I'll keep an eye on it. Okay. Thank you very much, Steve. Okay. Thanks, Dave.
spk03: Thank you very much, Mr. Sullivan. Our next question comes from Mr. Rob Brown with Lake Street Capital Markets. Go ahead, please.
spk02: Hi, Steve. Hey, Rob. First question is on the capital spending. Could you update us on what CapEx you plan to spend this year? And then I know you didn't say 24, and I think your guidance did not include the capital spending in 24, but how does 24 CapEx look?
spk04: Yeah, the capital we're – the announced capital budget this year was $150 million. dollars um you know and that'll all be spent as i mentioned it's all you know committed uh from 2024 we haven't announced that yet um you know obviously we wanted to get um you know some capital commitments in place before we started uh going too far afield on that and now we've got that um you know we want to confirm your customer desires uh and stuff so you know that'll take us uh We think it'll only take us within the next 30 days to see where we are from that standpoint of what customers want what. As I mentioned, we're high grading and prioritizing the customers we want to build for and work for. When we have a more definitive number, we'll announce that. Obviously, there's additional $50 million in capital available, whether all that is committed pretty quick or we spread it out or we end up getting more is still a question up in the air. But we'll announce a little more detail on that. We just got the capital committed, obviously, yesterday and that's today. So we're going to start working on placing it now.
spk02: Okay, great. And then I think you're alluding to it a little bit, but the demand environment sounds strong. What are you sort of hearing kind of from customers at this point? It sounds like you've got more demand than you can fulfill, but just sense of the demand environment and the visibility into 24.
spk04: Well, I mean, demand continues strong. It's not just us. I mean, the whole the whole gas compression rental industry is doing pretty well. You know, you can just listen to calls of other public companies in the gas compression space to tell that. So, you know, the market continues strong. You know, some people even talking in 2025, and that's primarily just because equipment deliveries have stretched. You know, they were you know, into the 6 to 9, the 9 to 12. And, you know, now generally you're probably talking 12 plus months, you know, to get equipment. So, you know, necessarily you're talking into the end of next year, you know, on into 2025. So we see it as strong. You know, we think it'll, you know, be a good year also. And I want to point out, you know, it's the $50 million increase in our accordion It could mean a lot of money, but it pales a little when you had $175 million already drawn and committed. But with the deliveries, we're essentially talking about a second half of 24. If you order equipment today, it's about when you're going to get it. So right now, our view of the capital budget for 24 is a second half. We do, as we just talked about with Tate, we've got equipment coming out in Q1 and Q2. they'll continue to be placed in generated rentals. So we're talking to customers essentially about the second half of the year. So we're pretty close to that beginning of 2025 also. So we think the demand is there. We've been talking to our customers, and they say it is. So as soon as we have more definitive demand news for you on, you know, the capital program 24, we'll put it out. But, yeah, we're pretty confident of demand.
spk02: Okay. Great. And just to clarify on guidance, and you probably don't want questions on guidance after just giving it, but did that guidance include, I think you said it did not include sort of the 24 capital plan in those numbers. That would be sort of on the current capital plan and not much of incremental capital. Is that right?
spk04: yeah yeah the numbers for 24 are pretty much you know pretty close to a static model um and and again just like i mentioned um you know even ordering stuff today you know this is november i mean we're we're into q4 so you know once we get the customer uh requirements and and do all this stuff you know you're into the end of the year maybe a little in the you know sooner in q4 depending on what we can do and the sizes we're buying. But yeah, that number does not include any incremental capital into it other than what's bleeding over from, you know, 23. You know, so, and you can tell from the guidance, that's still going to be a pretty strong year even with that incremental capital in there.
spk02: Okay, great. And then last question on margins. You had a little comment margin compression this quarter. You said it should return, but was that any one-time stuff or just sort of the natural in and out of the business?
spk04: No, nothing in particular. It just had some high expenses in the quarter. Sometimes you get that. Sometimes you get low expenses. Sometimes you get high. There's no rhyme or reason to it sometimes. Nothing extraordinary, but we do think we'll see a you know, back on the trend we want. I don't want to steam my neck up too far, but, you know, probably 200 or 300 basis point improvement in rental margins, I think, in Q4. If you're lucky, you already got me giving more guidance. What the heck.
spk03: All right. Thank you. I'll turn it over. Okay. Thanks, Rob. Thank you very much, Mr. Brown. Again, if you have any questions, please feel free to press 7-pound so you can ask your question. Again, that's 7-pound on your phone. We have Mr. Tim O'Toole with Tetra Capital. Go ahead, please. Good morning, Steve. How are you?
spk04: Hey, Tim. Good. You?
spk07: I am well. I was kind of trying to decide what quip to use this morning, but it seems like you've accomplished an awful lot in your retirement, maybe as much as you did in the prior 10 years running the company. I mean, congratulations.
spk04: Well, I don't know if that's a compliment or not, is it?
spk07: Well, I know. It sounds a little left-handed. I'm sorry. I just mean it as a compliment, though.
spk04: Sorry. It's a backhanded one, but I'll take it.
spk07: All right. Yeah, a little left-handed. Sorry about that. um you know i'm trying to so a couple of things that i'm kind of curious about i'm not sure if you can slice and dice it this way but um if you look at your what you consider large horsepower um fleet uh i'm trying to get some sense of what the age of the that part of the fleet is um because i think the you know the kind of the book value the depreciated value let's say of stuff that's older than that and smaller than that is probably know close to nothing it's probably not quite nothing yet um but it also seems to me that you um have spent you know a few hundred million dollars of cash flow over let's say the the years prior to uh you know 23 and then you spent another 150 million so you know on on large horsepower you know very much in demand um equipment and um so it seemed to me that your your fleet age for the um for the larger horsepower stuff the stuff that's so much in demand would be relatively young do you have an assessment of that even if it's a rough thumbnail um yeah i mean it is pretty young and you gotta remember yo um
spk04: to coin a phrase for youth is in the eye of the beholder, I guess it's beauty, but, uh, um, you know, on this bigger horsepower, especially the, well, particularly the 1500 horse and 2500 horse, we've got 25 year book lives on those, you know, so that's, those are bigger, um, heavier, longer live equipment. So when you look at, youth, you can look at just finite years. You can look at relative to the age. But either one, we've got a pretty young big horse for our fleet. I would dare say the youngest, if not one of the youngest. And I know we've got a relatively smaller fleet than the bigger competitors. But we started moving into the 1,500 and 2,500 horse, which is becoming you know, kind of the bulk of our large horsepower fleet, um, four or five years ago. So at the outside, you know, we've got, we've used up 20% of life on the oldest big horsepower units. Um, so it's pretty small. So, you know, that's one of the advantages of the big horsepower market, just having such long live equipment. It's, uh, you can get multiple payouts on it over, over its, um, over its life. So we have a relatively young fleet in that, um, in that horsepower range.
spk07: Okay, great. Thank you. Um, and so I'm trying to, you know, it's a little difficult comparing with the peers because you have, you know, a smaller, um, smaller kind of old fleet, but then you actually have, you know, a very fresh and you're able to put capital to work in the, in this, uh, in the younger, bigger horsepower equipment. So I did a little math on just what you actually have rented. Oh, I know what, so another question is what does the new horsepower of equipment, what does it cost per horsepower? That's been going up over the last couple, three years pretty significantly and I'm wanting to get updated on that.
spk04: Yeah, it has gone up quite a bit. We were looking back at some four or five-year-old prices and kind of scares you and makes you long for the old times, right? But generally today, you probably see, and I'm talking about primarily 1,500, 2,500 horse, but you'll get some of the smaller horsepower in this range. You're into the roughly $1,100 to $1,200 per horsepower range. Okay.
spk07: Yeah, I was using sort of 1150, and I think that was kind of guesstimating on earlier coverage.
spk01: Okay, great.
spk07: Yeah, so this is, you know, I did a little bit of, you know, calculator calisthenics, if you will, and you have 400,000 horsepower rented right now, and your fleet is obviously bigger than that, but you have some of that older stuff that is still, you know, underutilized. Um, when the gas markets come back, you know, perhaps a lot of that stuff goes to work or you can, or you can kind of, um, you know, trim the, uh, fleet out a little bit. But, um, but if I put an 11, you know, a replacement value, which is obviously not, you know, strictly speaking, correct. But if I put a replacement value on the, um, on the 400,000 that you're renting right now at what current prices per horsepower would be, and they take the debt out, I come up with a number that is, something on the order of $26 a share. I, I, you know, is that, am I, is that dreaming way too heavily or is that, um, is that starting to get, are we starting to get close to, to a reality with that kind of a number?
spk04: Well, you know, we've got a tangible book of around 19, 19 and a half dollars a share. Um, so, you know, That delta between your number and a tangible book is $6 or $7. So, you know, what, 25%, 30%, roughly something like that. I don't know. It's hard to say because you've got the smaller equipment you're down into the 60, 70 horsepower rotary screws and, you know, low-pressure, low-volume stuff that doesn't carry as much value on it up into the $2,500 range. horsepower, four-stage gas lift equipment, which is premium equipment, right? And it's got our technology in it, your emissions technology and operating technology and stuff like that. So you've got a pretty wide range. The 1,100 to 1,200 is what is current on the big horsepower. You probably can't put that on the smaller horsepower we've got. I don't know exactly what the right number would be on average. We'd have to look at that. To me, 25% difference in your number and our number probably isn't as far as adjustment. It's not everybody's going to have a different view of value. I wouldn't argue you're too much down. I'd say you may be a little high, but you know, 19 and a half is a real number. So that's, you know, that's when you got to gauge from.
spk07: Well, yeah, but that is also a historic number based on a whole lot of the equipment being, you know, it purchased, you know, many years ago at 900 or less per horsepower. Right. So that's what I'm trying to do a little bit is if someone wants, wanted to replace your fleet, not to mention kind of your, your backlog, your, your customer base, you know, your, your, um, your support, um, support equipment and personnel, you know, they have to pay something like my number to get there and get an active rental suite. But, you know, anyway, it's really just some, again, calculator calisthenics. And I appreciate you walking me through that. No problem. That is it for me for the time being. Let's see if someone else has some questions. Thanks.
spk04: Okay. Thanks, Tim.
spk07: Good to talk to you.
spk03: And good to talk to you, by the way. Thank you very much. And our last question is from Mr. Tate Sullivan again with Maxim Group. Go ahead, please.
spk05: Thank you, Steve. Just a quick follow-up. The guidance for 23, it implies a slight, I think, quarter-over-quarter decrease in revenue. Is that mainly maybe because service and maintenance, less service and maintenance revenue in 4Q or any other dynamics going on in the current quarter? that could cause a quarter to a quarter decline.
spk04: Yeah, there's probably, imagine the service and AMS, those jumped quite a bit, you know, a couple, not a couple million, but a million or so on one of them, things like that. So there's going to be, we've set a lot of equipment and that number tends to be a little higher. So, you know, any lower impact would be, in that range like you say okay um and and that service and that that is that larger numbers mainly um related to when you deploy the larger compressors in the field to confirm is that correct yeah exactly um you know that's um it's a lot of pass-through you've got low margin because you know passengers typically are lower margins so it's a lot there's There's freight costs in there to freight the equipment out. There's installation costs, setup costs, and stuff like that. So a lot of times we'll do that for the operator if they don't have the desire or the experience to do it. We'll just pass it through to them. Thank you, Steve.
spk03: OK. Thanks, Dave. Thank you very much. And we don't have any other questions.
spk04: OK. Thank you, Luke. Thanks for everybody's questions. We appreciate everybody's support. I certainly want to thank all of our employees. They obviously are the ones that did the real lift and work on these numbers, and we get to brag about them. So I want to thank all of our employees and supervisors who got in the field doing the hard work. Thank you, everybody, for participating in our call. We look forward to updating you on our progress in the next quarter. Thank you.
spk03: Thank you, everyone. And this concludes today's conference call. Thank you for attending.
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