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spk00: Hello and welcome to the All States International Incorporated Fourth Quarter 2022 Earnings Conference. My name is Michelle and I will be your operator for today's call. At this time, all participant lines are listened only, but we will be accepting questions later. If you would like to ask a question during that time, you can press zero then one on your touch tone phone. As a note, this presentation is being recorded. I will now turn the meeting over to Ellen Pennington. Ma'am, you may begin.
spk01: Thank you, Michelle. Good morning and welcome to Oil State's fourth quarter 2022 earnings conference call. Our call today will be led by our President and CEO, Cindy Taylor, and Lloyd Hodgick, Oil State's Executive Vice President and Chief Financial Officer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. No one should assume that these forward-looking statements remain valid later in the quarter or beyond. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our Form 10-K, along with other SEC filings. This call is being webcast and can be accessed at Oil State's website. A replay of the conference call will be available one and a half hours after the completion of this call and will continue to be available for one month. I will now turn the call over to Cindy.
spk02: Thank you, Ellen. Good morning, and thank you for joining our conference call today where we will discuss our fourth quarter of 2022 results and provide our thoughts on the market outlook. During the fourth quarter of 2022, the company continued to show improvement as the industry expands activity to support growing energy demand, generating revenues of $202 million and EBITDA of $21 million, representing sequential increases of 7% and 30%, respectively, after excluding a third quarter 2022 litigation-related settlement gain from of $6.1 million. We were net income positive for the quarter, driven by strong activity levels in our traditional project-driven businesses, as well as from increased demand in the U.S. for our completions-oriented service offerings. We generated $14 million in cash flow from operations during the fourth quarter, with $11 million of free cash flow after deducting net investments in CapEx. Our offshore manufactured product segment revenues rose 9% sequentially with adjusted segment EBITDA totaling $18 million. Backlog increased 19% sequentially, totaling $308 million as of December 31st, driven by quarterly bookings of $152 million, which yielded a quarterly book-to-bill ratio of 1.5 times. Our fourth quarter bookings increased 32% from the third quarter and included two notable production facility project awards exceeding $20 million each with increased broad-based bookings across most product and service offerings. Further, in early February, we are pleased to report the receipt of our first contract award on our newly developed managed pressure drilling riser equipment. In our well site services segment, we achieved a 12% sequential increase in revenues and an impressive 29% sequential increase in segment EBITDA, driven by higher U.S. completion and production activity, along with enhanced customer penetration and better equipment utilization. Although the average U.S. frack spread count was flat sequentially, the average increased 9% when compared to the fourth quarter of 2021. In our downhole technology segment, revenues decreased 10% sequentially, while segment EBITDA decreased 75% due to the timing of international perforating product sales, lower integrated gun product sales mixed domestically, as several key customers delayed late-quarter startups, supply chain challenges, and inventory and receivable write-offs. Many of these issues are deemed to be transitory. Notable technological achievements realized in the fourth quarter included the successful test of OSI Minerals' deep-sea riser system at a water depth of over 13,000 feet and testing of a prototype model of our tension-legged platform design for offshore floating wind installations and water debts beyond the normal limits suitable for fixed installations. Given significant reductions in our debt, our Board of Directors approved a $25 million stock repurchase program, which extends through February 2025. Lloyd will now review our consolidated results of operations and financial position in more before I go into a discussion of each of our segments.
spk08: Lloyd. Thanks, Cindy, and good morning, everyone. During the fourth quarter, we generated revenues of $202 million, adjusted consolidated EBITDA of $21 million, and net income of $2.9 million, or $0.05 per share. We achieved our second quarter in a row of positive net income, reflective of the improvement in our operations and the overall strength of market activity. We ended the fourth quarter with $42 million of cash and generated $14 million of cash flows from operating activities. We used $3 million to fund net capital expenditures. All of our business segments were free cash flow positive in 2022, and on a consolidated basis, we have been free cash flow positive for 30 of the last 36 quarters, dating back to the beginning of 2014. As a reminder, we define free cash flow as cash flow generated from operating activities, less capital expenditures, plus proceeds from the disposition of property and equipment. As of December 31, no borrowings were outstanding under our revolving credit facility, and amounts available to be drawn totaled $92 million, which together with cash on hand of $42 million resulted in available liquidity of $134 million. At December 31, our net debt totaled $111 million, yielding a net debt to total capitalization ratio of 14%. On a leverage ratio basis, net debt to adjusted consolidated EBITDA has been materially reduced to 1.4 times at December 31. Further, on February 15, we repaid $17.3 million in principal amount along with accrued interest of our 1.5% convertible senior notes with cash on hand. With this repayment, we have no significant maturities of long-term debt until 2026. For the fourth quarter, our net interest expense totaled $2.3 million, of which $0.5 million was non-cash amortization of debt issuance costs. Our cash interest expense has a percentage of average total debt outstanding was approximately 5% in the fourth quarter. In terms of our first quarter 2023 consolidated guidance, we expect depreciation and amortization expense to total $15.3 million, net interest expense to total $2.6 million, and our corporate expenses are projected to total $10.3 million. For the full year 2023, we expect to invest approximately $25 million in capital expenditures Given customary seasonality and working capital bills in the first quarter, our free cash flow will be weighted to the second half of 2023, comparable to what we experienced in 2022 when we generated $33 million in free cash flow in the second half of the year. At this time, I'd like to turn the call back over to Cindy, who will take you through the operating results for each of our business segments.
spk02: Our offshore manufactured product segment generated revenues of $105 million, segment EBITDA of $17.8 million, and operating income of $12.3 million in the fourth quarter of 2022. Revenues in the fourth quarter were up 9% sequentially due to incremental production facility revenues stemming from recent project awards along with service revenue growth. Segment EBITDA margin in the fourth quarter of 2022 was 16.9% compared to 13% when adjusted to exclude the $6.1 million litigation gain reported in the third quarter of 2022. Backlog totaled $308 million at December 31st, 2022, an increase of $50 million or 19% from September 30th, 2022. Fourth quarter 2022 bookings totaled $152 million, yielding a quarterly book-to-bill ratio of 1.5 times. Our fourth quarter bookings were broad-based across many product lines and regions, with approximately 9% of our 2022 bookings tied to non-oil and gas projects. During the fourth quarter, the segment was awarded two notable production facility project awards exceeding $20 million each. This segment has endeavored to develop leading edge technologies while cultivating the specific expertise required for working in highly technical, deep water, and offshore environments. As the world expands investment in alternative energy sources, we will be working diligently to translate our core competencies into the renewable and clean tech energy space. Recent product development should help us leverage our capabilities and support a more diverse base of customers going forward. We continue to bid on potential opportunities supporting our traditional subsea floating and fixed production systems, drilling and military customers, while also bidding to support multiple new customers and projects involved in developments such as subsea minerals gathering, fixed and floating offshore wind developments, and other renewable and clean tech energy systems globally. These opportunities create the potential for us to expand our product offerings and revenue base. In our well site services segment, we generated revenues of $68 million, segment EBITDA of $12.5 million, and operating income of $5.3 million in the fourth quarter of 2022. Segment EBITDA margin was 18% in the fourth quarter of 2022, compared to 16% in the third quarter of 2022. Our revenue growth and strong incremental margins were driven by higher U.S. completion and production activity, along with enhanced customer penetration and better equipment utilization. We remain focused on optimizing our operations and pursuing profitable activity in support of our global customer base. As market expansion opportunities continue to unfold, both in the U.S. and in international markets, we will continue to focus on core areas of expertise in this segment and the deployment of our recently enhanced completions equipment to further differentiate our completion service offerings. In our downhole technology segment, we reported revenues of $30 million and segment EBITDA of $1 million in the fourth quarter of 2022, compared to revenues of $33 million and segment EBITDA of $4.1 million reported in the third quarter of 2022. Weaker revenues and margins in the quarter resulted from the timing of international perf-grading product sales, which can be lumpy from quarter to quarter, lower integrated gun product sales mix, manufacturing labor constraints, supply chain challenges, along with inventory and receivable write-offs totaling $600,000. Now I'd like to turn our attention to market outlook. Supply chain challenges, access to available labor, and rising inflation have challenged our industry and many others over the last year or two. With higher commodity prices, demand took a hit over the last few months in 2022 and early 2023. Global oil and gas inventories recovered and are now within their five-year seasonal averages, which has led to lower commodity prices year over year, tempering expectations for growth in drilling and completion spending on U.S. land activities. However, we are beginning to see an inflection upward in international and offshore markets, which should further support our product and service offerings. Given improvements in the FRAC spread count over the last several quarters, albeit with growth slowing somewhat recently, we expect our well site services and downhole technology segments to continue to perform in line with or better than market activity indicators. Revenues in our offshore manufactured product segment are expected to continue to grow given increased levels of backlog and strong short cycle product demand. Considering these market drivers, we project that our annual revenues will grow about 15% on a consolidated year-over-year basis with EBITDA ranging from $92 to $100 million. Given typical seasonality, the first quarter is likely to be the weakest. Now I'd like to offer some concluding comments. Crude oil and natural gas prices corrected to the downside from the highs reached in early summer 2022 due to ongoing recession concerns, tightening global monetary policies, and the associated impact on commodity demand. However, despite these factors, WTI and Brent crude oil spot prices remain above $76 and $83 per barrel, respectively. with natural gas currently trading at approximately $2.30 per mm BTU. These prices, while lower than the average commodity prices realized in 2022, are likely to support demand increases in 2023. Initially, the industry responds to higher commodity prices with accelerated shorter cycle investments in the United States, which we experienced in 2022. We now expect to see investments pick up for long lead time projects as well, including those in international markets and deep water basins around the world. However, global monetary policies and the resultant increases in interest rates by the various reserve banks in an attempt to rein in inflation will likely have a continuing impact on demand in the near term. Oil states will continue to conduct safe operations and will remain focused on providing technology leadership in our various product and service offerings with value-added products and services available to meet customer demands globally. In addition, we will continue our product development efforts in support of emerging renewable and clean tech energy investment opportunities. That completes our prepared comments. Michelle, would you open up the call for questions and answers at this time?
spk00: Yes, ma'am. We will now are accepting questions from the audience. As a reminder, if you would like to ask a question, please press zero then one on your phone. There may be a brief delay before the first question is announced. We do have several questions in the queue. The first question comes from Luke Lemoine with Piper Sandler. Your line is open, sir. Please proceed.
spk03: Good morning, Cindy Lloyd. Good morning. Cindy, I think your consolidated guidance for 23 makes a lot of sense. Just on a couple of the pieces, I guess on the well site, you've shown substantial improvement kind of throughout 22 on the margin side. And, I mean, is this kind of level that you showed in 4Q, which we should be expecting kind of going forward?
spk02: Yeah, we're optimistic about changes and improvements, enhancements that we've made within our completion services operation. And in addition to that, we're introducing some new technology, valve technology particularly, and some 15K equipment. And so I think my reaction to that is, You know, probably 60 days, there was less conversation about weak natural gas prices and the impact on both rig counts and completion counts. And we generally still remain fairly optimistic on activity broadly, particularly in the oilier plays. That's number one. And then number two, just customer initiatives coupled with some new equipment that we're putting in the field thanks to helps us be more positive probably about land-based activity as we go into 2023.
spk03: Okay. And then in offshore manufactured products, if you talk about the order outlook, I missed it, but kind of what are you expecting for orders in 2023, you know, as far as growth and maybe, you know, kind of composition to, you know, what are you kind of seeing in the queue at this point?
spk02: You know, as you can tell, based on the quarters of 2022, it can vary up and down fairly significantly on a book-to-bill basis quarter to quarter. But we are projecting and we have our buildup quarter by quarter and do expect that we'll probably, I don't want to say generously exceed a book-to-bill of one times, but I do expect that our annual book-to-bill of 1.1 times for 2022 will will be exceeded at this point in time in 2023. And, you know, if you go to Q3, it was slightly below, Q3 of 22, slightly below a book-to-bill, followed by a 1.5 times book-to-bill. So I kind of caution everybody not to get too hung up on quarter-by-quarter movements in that ratio. We tend to think of a longer-term, at least an annual look on that ratio. But we are expecting to exceed 1.1 times, which we achieved in 2022. Okay, got it.
spk03: Thanks a bunch, Cindy.
spk02: Thank you.
spk00: Thank you. And the next question comes from Stephen Gennaro from Stiefel. Your line is open.
spk09: Thanks. Hi, Cindy and Lloyd. Amen. Two things for me to start. The first, can you remind us on the well site side, I think the U S land piece is about 70% from, from, from a prior data we had. Is that roughly correct? And should we be thinking about, or are you thinking about the international piece of well site growing faster than the domestic piece in 23? You know, I'm,
spk02: I would say it varies kind of quarter to quarter. I'd probably characterize the domestic piece varying from maybe 75% to 80%, not 70%. You go through periods where actually we had some weaker international activity probably a year ago, and we're just kind of beginning to see that pick up, and we have a more robust outlook in 2023 for international. I haven't really done the Honestly, the relative growth comparison, we're expecting both to grow, quite frankly, and probably proportional growth at this point. But I kind of go back. There's been this recent kind of overhang on North American land because of weaker gas prices. But in totality, we're still fairly optimistic about U.S. land growth. given our product service offerings, our customer positioning, and the equipment that we're putting out in the field. And so if I were to – this is swagging. I just think both of them are going to perform better year over year and probably equal. But certainly that does represent an improvement in both domestic markets as well as international.
spk09: Thank you. And when we think about the offshore markets, manufactured products, please. And maybe just this kind of leads into a more general question, but when you think about the backlog and the strength in orders you saw recently, will that business grow at the, where does that sort of fit in relative to the total revenue guidance you gave as far as about the same, greater or worse? And I'm just kind of curious what you're thinking on margins in that business for 23, given what you know about the backlog. Yeah.
spk02: Again, we're pretty optimistic we'll see growth in all three segments. There is slightly, I'll call it, proportionally higher growth coming from offshore manufactured products. And part of that is, I mean, we just had a book to bill of 1.5 times in Q4, so that's going to lead into some product certainty. And, you know, those are our production facility core products that we're confident in our performance, our margin performance. achievement, our delivery timeframes, those types of things. So it's not only a high book to build, it's a good content in that order book that leaves me fairly positive. We also exited, as I mentioned in my comments, with growth on the service side, and services typically carry pretty good margins overall. You have to... The good news is that the one other thing on a consolidated basis, that means your incrementals are going to be just a little bit lower than they might be with just an isolated improvement in completion services. One's more of a rental service model. One's a manufactured product sale model. Put that into context, but our margins showed real improvement from Q3 to Q4, and again, with the product mix and the throughput, we don't see any adverse impact to our margins at all going forward.
spk09: Thank you. And then just one final one for me, and I guess I'm going by each segment, but on downhole technologies, can you talk about the competitive landscape? Because we've heard, I mean, I know you're aware of some of the lawsuits which were out there from one of your competitors and the management change at that company, but what is the competitive landscape on kind of the the newer integrated guns versus the machine shops buying components and how your business kind of fits into that dynamic?
spk02: Yeah, I think that's a great question. This is the smaller segment of our business, but on the integrated gun side, there is very good customer acceptance of the integrated gun system that most third-party providers do provide in some capacity or form. You know, and so I think that's a trend and that's a focus for us, I think, as you realize. And importantly, we're working on all the reliability side of that equation to make sure it is an extraordinarily reliable product to our customers. But it's a key focus for us. As far as the landscape, there were certain legal determinations made that I think have eases some of the uncertainty around the industry adoption and performance of perforating systems generally. You can go read the lawsuit outcomes yourself, I'm sure, as others can. But I think it's a more level playing field going forward is how I would characterize it. The domestic market has remained competitive, particularly with a lot of the wireline companies insourcing some of their perforating gun systems generally. But by us concentrating more on our key products, concentrating on the integrated gun system, it allows us to be more efficient on the manufacturing side without a new gun development, a new size, a new shooting panel, blah, blah, blah, specific to every customer. I think the market is settling down into very reliable products that can be manufactured on a more consistent basis. That will help us from an efficiency standpoint going forward. I would mention the other, I think, key driver for this business going forward for us is international expansion and penetration. Those markets have historically for us been tied to P&A, but we're expanding on the more original completion side of the business, and it tends to be some of our more proprietary pieces of equipment, whereas land U.S. still has a decent amount of commoditized components that are sold into it. And as I mentioned in my comments, the domestic mix was much more commoditized in Q4, and we just don't make as much money on that. So again, think about integrated gun systems. I think the industry competitive landscape is more leveled. now, and we're seeing some decent international expansion opportunities. Those are going to be the keys for this business and for us going forward.
spk09: Great. No, that's great color. Thank you, Cindy.
spk00: Thank you, Stephen. Thank you. And the next question to cue comes from Kurt Howley with a benchmark company. Sir, you may proceed.
spk07: Hey, good morning. Hi, Kurt.
spk02: Good to hear from you.
spk07: Yeah, great, great to be on again. I always appreciate the color. So I just wanted to maybe circle back again just on the overall outlook for 23. And you mentioned that the offshore manufacturer product business will probably, you know, have faster revenue growth than WellSight and Downhole. And then just kind of focusing maybe on WellSight and Downhole, do you think those two would grow comparable on a year-on-year basis or, you know, will one grow faster than the other based on your customer mix and product mix and everything else?
spk02: They're similar, but we have a modestly higher growth rate on completion services, you know, partially due to some supply chain challenges that are unique to downhole, shortages of switches right now, shortages of powder. There's just a number of headwinds, particularly in the late part of 2022, early part of 2023, that while we have growth in all three segments, the lower to the higher would be downhole followed by well site services with the highest one offshore manufactured products. And again, the blended average is an estimated 15% year-over-year increase in consolidated revenues, if that's helpful.
spk07: Yeah, that is. Thanks. Appreciate that. So, you know, Sydney, you always are pragmatic about, you know, business dynamics and kind of the outlook. And, yes, natural gas is, you know, not very conducive, you know, in terms of investor psychology or prospective activity. But I'm kind of curious then as you kind of look at the dynamics at play is, you know, The confidence you have, obviously oil basins holding up better than natural gas, but is there something kind of specific to your customer base that will maybe shield you a bit from potential decline in gas activity? That's question number one. Question number two, then, is you typically get some churn in assets or business, and there's going to be decline in natural gas activity. There's going to be a movement to these oil basins, which historically it's kind of created some asset on asset competition and some pricing pressure. So just want to get your perspective on how you're shielded and if you think there's going to be asset on asset competition like we've seen in prior cycles.
spk02: Now, those are all very valid and timely questions, Kurt, but obviously we're very attuned to our customers and to market concerns and the impact of pricing, which we all know very well. And so I'm going to echo some of what is on the street in saying that I think that one, given the growth in the rig count in the Haynesville in 2022, has set up higher production in that basin, number one. It has a higher break-even, at least from all the research I've done, than the Northeast market. And so I do think that basin is more sensitive to activity declines. That's number one. There are plenty of analysts out there estimating what kind of decline we might be looking at. But with this massive switch over the last 15 years or so, rig count dedicated to oil and basins, the overall gas count is probably percentage-wise about 20%. And I do think that the weakness we'll see is likely in the Hainesville. People are speculating maybe 20 to 30 rigs off a basis of 73 rigs operating in that market. So that's not a huge impact on total rig count. I do think that the Northeast holds up better, and it's a narrow customer base up there that we know well, and typically our work there is highly complex, multi-well pads. I really don't see a significant change in that Northeast market as it relates to our operations. The next part of your question is, if in fact you do lose some 20 or 30 rigs in the Hainesville, does that create downward price pressure in other basins? And I'll just be honest, for the type of equipment that we have, we don't believe that is the case. And I will also say, our equipment has been a bit different. We haven't been pushing 90% utilization and pressing day rates materially in 2022, unlike maybe other product offerings where the equipment has been tighter. And for that reason, you may have some market shifts, but you may also just have an improvement in certain other basins offset by some weakness in the Hainesville. But in totality, particularly with our international and our Gulf of Mexico exposure, I'm not going to say I'm totally sanguine about it, but I'm not heavily concerned either.
spk07: That's great. Great call. I really appreciate it. Thanks. Thank you.
spk00: Thank you. And if you do have a question, you may press 01 on your phone at this time. Once again, to ask a question, please press 01 on your phone at this time. The next question in the queue comes from Sean Mitchell with Daniel Energy Partners. Sir, your line is open. Please proceed.
spk05: Hi, Cindy Lloyd. Good morning, and thanks for taking my question.
spk04: You mentioned, I think, earlier in the comments or maybe in the Q&A, just supply chain challenges with labor and materials.
spk06: I think you alluded to the switches and powder on materials. But anything else on supply chain or labor that we should be concerned about in 23, number one, or is anything really getting better on the margin?
spk02: You know, another fantastic question, and I will say that we have been able, it's been a lot of effort behind it, but we have been able to increase our headcount in the completion services side of the business, which helps us manage our work better. I'm not necessarily having to move people from one geography to the other and alleviate some of the overtime pressures we've had on our workforce in completion services. So I'd say a little more favorable trend in completion services. We are still struggling to hire in our manufacturing facilities in the downhole side. That's been part of the challenge where working on and facing at this point in time. And other than that, I'd say that we, like everybody else, had to make labor cost increases during 2022. But we don't expect necessarily the need to make proportionally the kind of increases that we saw in 2022 to attract and retain the labor that we have. So I feel like some of the pressure has moderated, but there's still pockets. We still are dealing with very low unemployment levels and just have to work through it.
spk06: And then maybe one more, just as we think about some of your larger competitors across the board have obviously talked about deep water and international inflecting. In fact, one of the largest probably competitors in the industry said that they feel like you're in the early stages of a resurgence and a meaningful growth in 23 and deep water. Is that, I mean, it sounds like if I'm reading the tea leaves on your guide here of 15%, most of that, I think it sounds like you're leaning towards the offshore and international markets.
spk02: Yeah, we're seeing in our own product lines growth across all three year over year, but it is weighted more towards offshore manufactured products. And to some degree, our visibility is pretty good on order flow and activity because it's weighted towards production infrastructure, meaning we know what's going on in the basins of Guyana, Brazil, A lot of those developments are already well underway. Now it's up to us to bid effectively and get our proportionate share of the awards that are there. And I think when you talk about more of the enthusiasm, you may be talking about actual drilling, new drilling and new prospects, i.e., the deepwater drillers getting some improvement in both utilization and in rates, number one. And we've just had an absolute dearth of exploratory drilling for five decades now in deep water. And I think people are recognizing that even some of our politicians recognize that you actually need some crude oil and natural gas to supply the energy needs of the world. And whatever reason we can debate all day long about why activity has slowed as badly as it did certainly transitional investments and other things took the front and center. And I think Russia-Ukraine crisis and the shortages of energy going into the European continent created a different awareness and a different appreciation of the needs that we have, not only in this country but in the world. And you're just seeing a resurgence of activity that has been really delayed for a long time, quite frankly. But as it relates to my business, the visibility around these development drilling profiles in kind of that Atlantic Basin area, but particularly Brazil and Guyana, are pretty visible at this point in time.
spk05: Great. That's great, Keller. Thanks, Cindy.
spk02: Thank you, Sean. Good to see you next week.
spk00: And the next question in the queue comes from Stephen Gingaro from Stiefel. Your line is open, sir.
spk09: Thanks. Just one follow-up. You mentioned, I think, the buyback. And I'm just curious, Cindy, how are you thinking about utilizing it? Is it opportunistic? Is it going to be some kind of program system? And how are you thinking about that versus other capital allocation opportunities?
spk02: Yeah, I appreciate that question. We're going to start out slow, i.e., the quantum system. It's not that big, and we recognize that. We are at a net debt to EBITDA ratio at the end of 2022 of 1.4 times, so I'd say we're much more comfortable. You all know we had a stub period on our first convert that matures this month, and in fact, we've already paid that off. It was about $17 million, so following that, We have no maturity until the next convert comes up, 2026. I can't remember what month in 2026. But the point of that being the industry outlook, our backlog development, our free cash flow history, and our outlook for free cash flow suggests, yeah, you can now begin a more thoughtful approach to cash return to shareholders. We do plan to be opportunistic, and I think in our comments, you know, we always build significant working capital in the first quarter, and that is coupled with the fact that we just bought in the 17 millions of the maturing convert. So kind of early part, probably not going to see a lot of share repurchases. Even last year, the bulk of our free cash flow was generated in the second half of the year. I see the same trend occurring in this year. And so I think it's important to have the authorization in place. We do want to be opportunistic. And, you know, as recently as four months ago, you know, our stock was depressed for reasons unknown. And it's done better over the last 90 days, I'll call it. But I just think we're going to be thoughtful and smart. An absolute given is that smart... Organic investments will always be first. We feel like that's factored in our CapEx program. Lloyd told you we're estimating an increase from $20 million to $25 million in 2023. We could flex that if the opportunities present themselves, and again, that will always be first and should be. Tuck-in acquisitions, we're just not seeing a whole lot right now, but just like we did the small ESC acquisition in first or second quarter last year, that is performing very well compared to the acquisition economics. And if we have those opportunities, they too would be evaluated against share repurchases. So long-winded way of saying we're in a better spot and a much different spot than we were two years ago. We're confident in our liquidity position and we know our shareholders are interested in some path towards So that's our focus right now. But, again, long-winded way of answering. We're going to be opportunistic, particularly in the first half of the year.
spk09: Great. Thank you, Cindy.
spk02: Thank you, Stephen.
spk00: And then we have no further questions at this time, so I'll turn the call over to Cindy Taylor for closing remarks.
spk02: Thank you for hosting today, Michelle. And thanks to all of you for your continued interest in oil states and your support. to the company. We do look forward to future discussions as the year progresses, and we're pleased to say there's actually going to be some investor conferences coming in the next three or four months, and so it'll be great to see people in person. In the meantime, I hope you have a great weekend and the balance of the earnings season, and we'll be in contact soon.
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