SND - NASDAQ

Ladies and gentlemen, and welcome to the Smart Sand Q2 2024 Earnings Call. At this time all lines are in a listen-only mode. Following the presentation we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Wednesday, August 14, 2024. I would now like to turn the conference over to Chris Green. Please go ahead, sir.

Good morning, and thank you for joining us for Smart Sand's Second Quarter 2024 Earnings Call. On the call today, we have Chuck Young, Founder and Chief Executive Officer; Lee Beckelman, Chief Financial Officer; and John Young, Chief Operating Officer. Before we begin, I would like to remind all participants that our comments made today will include forward-looking statements which are subject to certain risks and uncertainties that could cause actual results or events to materially differ from those anticipated. For a complete discussion of such risks and uncertainties, please refer to the company's press release and our documents on file with the SEC. Smart Sand disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 14, 2024. Additionally, we will refer to the non-GAAP financial measures of contribution margin, adjusted EBITDA and free cash flow during this call. These measures when used in combination with our GAAP results, provide us and our investors with useful information to better understand our business. Please refer to our most recent press release or our public filings for our reconciliations of gross profit to contribution margin net income to adjusted EBITDA and cash flow provided by operating activities to free cash flow. I would now like to turn the call over to our CEO, Chuck Young.

Thanks, Chris and good morning. In the second quarter we continued to build off of our first quarter momentum and once again delivered strong results. Sales volume were just under 1.3 million tons in the second quarter, which exceeded our projections. 2024 sales volume for June were 15% higher than sales volumes for the first six months of 2023. Contribution margin in the second quarter improved to $19.8 million and adjusted EBITDA increased to $11.8 million. Additionally, we generated $13.5 million in free cash flow for the quarter. Due to our strong results, we are now free cash flow positive for the year through June. Importantly, we expect to remain free cash flow positive for the full year and as a direct result of our focus on generating free cash flow, we expect to announce plans to return value to our shareholders later this year. We also remain focused on managing our cost structure. We have driven down our production costs and administrative costs in the quarter. These efforts have directly resulted in improvements to contribution margin and adjusted EBITDA. We will continue to benefit from these savings initiatives in the future and remain committed to finding new ways to drive efficiency in our business. In the second quarter, we continued to execute on our long-term goals. We continue to strengthen our market-leading Northern White franchise. We continue to build market share in the Bakken and Marcellus basins through our Blair facility, we are establishing Smart Sand, as a consistent and growing supplier of Northern White sand into the Canadian market. We are expanding the markets we serve. We invested in two new terminals in Minerva and Denison, Ohio, which will open up the Utica Shale formation as a market for us. The terminals are now operational in transloading sand. We are establishing markets for our Industrial Product Solutions business. We continue to make strides with new industrial sand customers making the change to Smart Sand to meet their industrial product needs. We are laying the groundwork this year to position Smart Sand to compete for new business as industrial sand contracts come up for renewal in 2025. We remain committed to high standards of product quality and service delivery for our last mile business. We continue to strive to be the best-in-class in last mile solutions and continue to look to improve capabilities of our products and services for sand delivery and storage at the well site. Our focus never wavers from having efficient and cost effective sand production and delivery costs. In the second quarter, we implemented several initiatives to manage our labor costs, improve our plant product yields and invest in more efficient mining methods. We will maintain our focus to be a low-cost producer of Northern White sand. We will not deviate from our commitment to a strong capital structure with low debt and appropriate liquidity. Lee will provide more details later in the call, but in June, we refinanced our Oakdale equipment financing into a new four year equipment financing. We remain committed to being the premier provider of Northern White sand in North America, and we are confident that the foundation for Northern White Sand man is strong and will be durable over time. The primary frac sand markets we currently serve are the Marcellus, the Bakken, including the Canadian Bakken, the Montney and the Duvernay in Canada and now the Utica Shale Basin in Ohio. The basins are all primarily Northern White sand supplied markets. We believe these markets will continue to have a strong and growing demand for Northern White sand for the foreseeable future. The basins we serve are evenly divided between oil and gas with the Marcellus and the Canada primary being natural gas markets and the Bakken and Utica being oil-focused markets. The combination of our 3 operating mines in Oakdale, Wisconsin, Claire, Wisconsin and Utica, Illinois coupled with our direct access on four Class 1 rail lines, the Canadian Pacific, the Union Pacific, the Canadian National and the Burlington Northern, uniquely positioned Smart Sand to continue to be a leading provider of Northern White Sand. Collectively, our three facilities have a combined capacity of 10 million tons annually. And as the markets grow, we have the capacity ready available to meet its growth and needs. However, we recognize that oil and gas demand for frac sand, Canada will continue to fluctuate based on current and expected prices for oil and natural gas. That is why we remain focused on being a low-cost producer. We continue to move forward on our plans to convert our Oakdale facility to hydro mining, which should reduce our operating costs in the future, and we've worked to better align our labor force for their current operational needs. We are also in the process of implementing a new ERP to provide us with access to more timely operational and financial information. We had strong demand in the Marcellus in the first quarter Demand in the second quarter in Marcellus did moderate slightly. We currently expect third quarter sales volume in the basin to be relatively consistent with second quarter but we could see a slowdown in the fourth quarter based upon current natural gas prices and expected activity. With the start-up of our new terminals, we are seeing the Utica demand increase, which should mitigate any short-term slowdown in the Marcellus. While activity in the Marcellus may slow down in the second half of the year due to current low natural gas prices. We believe the long-term demand fundamentals for natural gas supply in the United States and Canada is strong. Increasing demand from LNG export facilities and power generation for new AI data centers support the need for increased natural gas demand in the US. We expect this market to be a growing part of our business as we look out to 2025 and beyond. In contrast to natural gas prices, oil prices have remained at healthy levels. Activity in the Bakken Basin in North Dakota typically picks up in the second and third quarters, and this year has been no exception. We had strong activity in the second quarter in this basin, and we expect that to continue into the third quarter. Bakken activity usually slows down in the fourth quarter due to the onset of winter. We continue to work on increasing our market presence in the Canadian market. The first half of 2024, Canada sales have represented approximately 10% of our sales volume. We expect Canadian activity to be consistent in the second half of 2024. As we look to grow our Canadian market presence, we were looking at terminal options to establish our logistics footprint in this market. Efficient and sustainable logistics capabilities are essential to our long-term success. Our investment in our Van Hook terminal in North Dakota and our Waynesburg, terminal in Pennsylvania have been key drivers in our ability to increase our market share in the Bakken and Marcellus markets. Having controlled terminals in the basins allows us to deliver sand more efficiently, sustainably and cost effectively. Our primary objective is to deliver positive free cash flow consistently, in the second quarter, we had strong cash conversion of receivables that were built up in the first quarter, which coupled with the effective cost management and disciplined capital spending led to substantial improvement in free cash flow in the second quarter and positive free cash flow for the six months of the year. We expect to be free cash flow positive for the year. We are committed to start returning value back to our shareholders. Given our generation of free cash flow over the first six months and our expectation that we will remain free cash flow positive for the year, we expect to communicate our plans to start returning value to our shareholders later this year. We believe Northern White sand will continue to be a key product for both the energy and industrial sand markets. In the second quarter, we continued to build up our solid first quarter performance. While there may be short-term blips in natural gas basins due to current low natural gas prices, the long-term fundamentals for Northern White sand in general and Smart Sand in particular, continue to be strong. We believe no other company is better positioned to take advantage of the market for Northern White sand than Smart Sand. We couldn't have delivered these results without the hard work and dedication of our employees. I want to thank all of our employees for their continued support and dedication to Smart Sand. As always, we'll keep our employees and shareholders interest in mind in everything we do. And with that, I'll turn the call over to our CFO, Lee Beckelman.

Thanks, Chuck. Now I'll go through some of the highlights of the second quarter 2024 compared to our first quarter 2024 results. We sold 1.27 million tons in the second quarter, a 5% decrease from the first quarter sales volumes of 1.34 million tons. Total revenues for the second quarter were $73.8 million, compared to $83.1 million in the first quarter. Total revenues were lower in the second quarter due primarily to lower sand sales volumes, lower average frac sand sales prices and lower smart system systems revenues from reduced utilization of our fleet. Our cost of sales for the quarter were $60.7 million compared to first quarter of $71.2 million, a 15% decrease. The decrease was due primarily to lower sales volumes in the quarter, coupled with ongoing cost and efficiency initiatives to reduce production costs. Total operating expense were $9.5 million in the second quarter compared to $11 million in the first quarter. The decrease sequentially was primarily due to higher incentive compensation and higher royalties from increased sales volumes in the first quarter. During the second quarter, we had a $1.3 million loss on the extinguishment of debt. This expense was related to the payoff of some equipment leases that were part of the refinancing that was completed in June. Contribution margin was $19.8 million or $15.53 per ton in the second quarter. First quarter contribution margin was $18.5 million or $13.85 per ton. Adjusted EBITDA in the second quarter was $11.9 million compared to $9.3 million in the first quarter. While sales volumes were down in the quarter, contribution margin and adjusted EBITDA both improved sequentially and due to our continued focus on managing our cost structure. Second quarter 2024 we had $14.9 million in cash provided by operating activities, which led to $13.5 million of free cash flow after we spent $1.4 million on capital expenditures. This compares to $3.9 million cash used by operating activities and a negative $5.5 million in free cash flow in the first quarter. The improvement in cash provided by operating activities was primarily due to reduced working capital requirements as sales volumes leveled out, and we had higher cash conversion of our receivables in the quarter. We ended the second quarter with $2 million in borrowings on our credit facility. Today, there are no outstanding borrowings on our credit facility. We had approximately $6.3 million in cash and cash equivalents at the end of the second quarter. Between cash and availability from our credit facility, we currently have available liquidity in excess of $28 million. In June, we completed the refinancing of our Oakdale equipment financing, along with a couple of smaller equipment financings. We refinanced this that with a new $10 million facility. This new facility amortizes over a four year term and has an implied interest rate of approximately 8.6%. Our current $20 million ABL credit facility comes due in December. We are in the process of refinancing this facility and expect to close this new facility in the third quarter. While sales volumes did moderate in the second quarter, we still delivered solid sales results and improved contribution margin, adjusted EBITDA and free cash flow. As Chuck highlighted, we do expect some pullback in the Marcellus due to lower current natural gas prices, but that should be mitigated some by expected increased volumes in the Bakken in the third quarter, as well as new sales volumes into the Utica Basin. Currently, we expect third quarter sales -- sand sales volumes to be in the $1 million to $1.2 million range. Contribution margin per ton improved to $15.53 per ton in the second quarter, we expect third quarter contribution margin to be in the $14 to $16 per ton range. We evaluate and manage our capital expenditures on a quarterly basis. With our projects planned to-date, we currently expect capital expenditures for the year to be in the $10 million to $13 million range. The increase in capital expenditures in the second half of the year from the $3 million spent through June is primarily due to the completion of projects that were started in the first half of the year. We delivered strong free cash flow in the second quarter. And while we expect quarterly free cash flow to moderate in the second half of the year, we still expect to be free cash flow positive for the year. This concludes our prepared comments, and we will now open the call for questions.

Thank you sir. We will now begin the question-and-answer session. [Operator Instructions] And we now have our first question, and this comes from the line of Stephen Gengaro from Stifel. Your line is now open. Please go ahead.

Thanks and good morning everybody. So two questions for me, and I know the first one might be hard to dissect, but I'm going to ask -- the -- you talked about some of the things you're doing on the cost side and your contribution margin per ton in the quarter and the guidance for the next quarter given the volumes is very strong. Is there any way to quantify or give us a sense maybe on a year-over-year basis or off of some level, sort of the level of sort of cost savings that are sticky that we should sort of think about as we try to model going forward.

Hi, Great, Stephen, that's kind of a hard question to quantify. But in general, I think with some of the things we are doing in terms of managing our labor to be more in line and more flexible with our operations and sales volumes, as well as the hydro mining, in particular we're doing at Oakdale and other things of that nature. But it could pitch -- on average, reduce our production cost by potentially $1 or $2 per ton on average if we are operating at a fairly high utilization.

Yes. And Stephen, what I would add to that is, I think with a lot of the removal of the yellow iron, the haul trucks and things like that and moving that to electrically driven pumps and hydro mining, as we discussed, allows us to kind of avoid some of the spikes we've seen in the past when diesel gets to $5 and $6 that provides a real headwind to us that should -- we should have mitigated kind of going forward. So it provides a little bit more of an ability to see out and not have to worry so much about that stuff.

Okay. that helps. It's obviously a very positive trend. The other question I add just quickly is when you look at the various markets you're serving, I mean, we've heard about sand pricing mostly around the Permian and some other markets. But what are you seeing kind of on the spot market? Maybe just kind of relative to what your contracted volumes currently look like?

In terms of pricing?

Yes, in terms of pricing.

I think John and -- John and Chuck can add to this, but pricing has been relatively flat. So over the last couple of quarters, we saw a good pickup in pricing through the second -- first half of last year, it kind of moderated down, and it's been relatively flat for the last couple of quarters.

Yes. I would just add to that. It is a little bit market dependent. Canada seems to allow for a little bit higher pricing in some of the markets in the US or a little bit lower pricing. But we have been in a relatively stable pricing environment now for quite a while, right? And we are not seeing kind of what we are seeing back when the market was weak, the teen -- pricing in the teens, not sustainable. We are seeing pricing kind of in the mid-20s, and we're seeing interest in contracting at those levels. And so knock on wood, the pricing seems to be -- we don't see anything that's going to take it out of that stability. Market demand and Northern White supply seemed to be still in relative balance. You've heard us say that before. And I think that going forward, we don't anticipate much of that's going to change.

And one other thing I would add is our sand and Northern White sand is heavily dependent on rail logistics. Our rail logistics setup is premier in the industry. We have the best assets.

Great. And maybe just one quick one on that. We -- and I don't know if this affects you at all, but we were hearing about the Canadian rail strike and I forget, honestly, the drop dead date. Does that have any impact on you guys?

Yes. So yes, it sounds like -- I think August 22 is the big date for that as to when they're enabled to go on strike. Now that we've been told by our rail partners that, that is going to affect primarily Canada, but that doesn't impact the Lower 48, where the bulk of our volume goes today. But yes, we are hopeful that, that gets resolved in a way that doesn't impact our operations. Similar to the rail situation in the US, a few years ago, where it went right to 11th hour and then got resolved and ended up impacting us. But Canadian market is still a growing market for us. It's certainly going to be a very important market for us. But I think that this strike, assuming it's resolved relatively quickly shouldn't have too much of an impact on us.

Excellent. Thank you for all the [feedback](ph)

Thank you. And the next question comes from the line of Josh Jayne from Daniel Energy Partners. Your line is now open. Please go ahead.

Thanks, good morning.

Hi, Josh.

Good morning Josh.

First question I wanted to ask is on the Canadian market. Could you talk about how much sand you're selling into that market today and where it could ultimately go in 2025? And then maybe just sort of a broad overview. When I look at the rig count, it's been holding up much better in Canada than the U.S. So could you talk about how much sand demand annually is coming from the Canadian market for Northern White?

Yes, Josh, right now, Obviously, it fluctuates by month and quarter, but approximately 10% of our sales are going into the Canadian market. And we do believe that, that market has good strong growth potential. It is hard to get great estimates on actual demand, but we kind of put demand currently in that market probably in the 8 million to 10 million-ton range. And we think that market could grow substantially over the next couple of years. So most of the activity is going up into Northwest Alberta, Northeast British Columbia and the Duvernay and Montney Shell and nat-gas is really being driven by the LNG export capacity on the West Coast, and we're really seeing a good pickup in activity, and we expect that to be a growing and strong market for us. So we're at 10% today, and we hope to see that grow as we get into 2025 and be at a higher percentage of that. It's hard to give you an exact number, but we expect that growing as we get into 2025 and really extend our logistics network into Canada to really be more efficient in getting our sand into that market over time.

And is there much of a difference between what you're selling just from a grade standpoint into the Marcellus versus the Canadian market. Could you talk about that a bit?

Yes, that's actually a pretty good question, Josh. So that mine that we've got up there in Blair is slightly coarser than our other reserves. But the Canadian market tends to be a little bit closer than the Lower [48] (ph) market. And so when we produce, call it, the 30-70 product for Canada, we produce a decent amount of 100 megs that we keep down here primarily. So that mine tends to be pretty balanced with Canadian demand and then being able to put kind of the 100 mesh product into the Lower 48. So it's not something we anticipated when we pick the property up, but it's something that's actually kind of interesting from a standpoint of that mine has got good efficiency, and we are able to use most of the products that we're making.

Okay. That's helpful. Thanks. I wanted to ask sort of a follow-up on supply-demand. You mentioned in your prepared remarks, the market is balanced and there was a question on pricing. But when I think about capacity today at Oakdale, let's just call it, nameplate is 5.5 million tons. Based on today's staffing levels, what's the maximum amount of sand you believe you could sell today as product? And could you just give us a reminder of how much you would have to produce to arrive at that number of tons sold?

Yes. So we talked a little bit about some of the changes made particularly in Oakdale with going to hydro mining and whatnot. And so where we are today versus getting the $5.5 million, it's not a substantial increase in staffing. There is some increasing increase in staffing, but we've got 5 dry plants in Oakdale, 2 wet plants, and we operate to varying degrees, all of those plants all the time. So to increase that doesn't require doubling the staff or any of that kind of stuff at Oakdale. There'll be a little bit of increase in variable costs there to do that, but it's not a 2x thing. It's adding a handful of staff here and there just to move to full 24-hour operation, 7 days a week and not shutting plants down. So we think that, that's a really good tailwind for us as market demand increases. At Blair, it's kind of a similar story. Blair is a single -- it's got 2 dry plants and 1 wet plant, all on-site with the rail there. And so both of those sites are well positioned to be able to add incremental volume without huge capital expenditure and without having to add a ton of variable cost with employees and whatnot.

Additionally, Josh, the reserve at Oakdale really lines up well with what the market demand is. So that's probably our premier asset.

For sure. And just to follow up, I guess, a little bit deeper. I think what I'm trying to get at is if nameplate is 5.5 million tons, and that's what you could produce I guess I just want to better understand your yield is not going to be 100% on that, right? And so when we think about supply-demand in the market, I'm just trying to understand what the maximum, I guess, that could actually be produced product from the mine or based on where you are staffing today, if that helps frame the question a little better.

Well, Josh, we don't get into specific of the yields by plant. But generally, you can think about that we're probably in a 70%, 80% yield on average. And so getting up to 5.5 million tons in terms of the sand we'd be producing, you can kind of do the math from that. But again, also, -- we look at our assets on an integrated basis. So it's not just Oakdale and maximizing its capacity, maximizing the value of all three of our assets in total. And we have 10 million tons of total capacity. And so actually, Oakdale and Blair can are very synergistic because they can serve some of the same markets. So depending on what the best rail accesses, et cetera, or what the mix of our sand is in terms of sales, we can toggle sales back and forth between the two of those. So it is not necessarily the MAX volume that Oakdale can do, it's a combination of our assets and what we can get to on a combined basis relative to the market demand for the particular product.

Yes. And Josh, what I would add to that is just kind of at a point in time. But in February this year, wholesale produced beyond the 5.5 million tons in February, right? So -- from a run rate perspective, Oakdale can do it. It's just -- it's market demand and things like that. But Oakdale does have a really good ability to flex even in months that aren't particularly favorable weather-wise like February. So it does have that ability.

Yes, I think it's fair to say with our current staffing, we could be -- we could get our sales volumes up north of 7 million tons with maybe an incremental 5% to 10% increase in staffing. And we can get beyond that and get much closer to our nameplate capacity, but that would require an incremental investment probably in people and a bit of equipment.

Understood, thank you guys for the answers. I will turn it back.

As we go to those higher levels, things like adding additional terminals, which we have plans to in Canada right now, things like that additionally help because we need the throughput for the sand all the way through to the basin.

Okay, thanks.

Thanks Josh.

Thank you. And the next question comes from the line of Bruce Geller from Geller Ventures. Your line is open. Please go ahead.

Hi, good morning gentlemen. You mentioned the sales or the beginning of sales into Utica in the second half. Any sense you can provide of the tonnage levels to expect in the second half of this year into that basin. And also in terms of the profitability, will it be similar to the rest of the business? Or are there start-up costs that we should anticipate with those sales in the second half?

Yes, I'll answer the second question first. In terms of profitability, it's relatively consistent on a pricing basis, but it is actually our terminal, so one of the opportunities we're having is shifting from third-party terminals to our terminal and over time. Typically, we can operate a terminal at lower cost than a third-party. So actually, our net margins through that business over time should be better. Pricing is relatively consistent because we are going to be running the terminal at a lower overall cost. In terms of volumes, we don't give specific volumes by basin. So we do expect to pick up and that activity, I think in the second half of the year, what we gained in the Utica, we might see some reduction in the Marcellus. But over time, we think it's going to be additive. And I think one way to think about it over time, we would hope that the Utica could get up to levels in the next year or 2 that at least up to the Canadian levels or higher in terms of what we're selling in Canada in terms of percentage of our sales.

That's great. Very exciting. You also mentioned in the press release the expectation of increased activity in 2025. Can you give some insight as to the visibility you're seeing on that? And what gives you the confidence there? And is that also saying that you would expect tonnage in 2025 to be an improvement over 2024?

We haven't given any guidance on 2025 yet, Bruce. So we're not going to get into that. But I would say that we -- as Chuck highlighted in his comments, and I think this is very consistent with what you're hearing with other players out in the market. There is a real belief that demand for natural gas is going to grow in particular related to the LNG export capacity that's coming online over the next 3 years to 5 years as well as the incremental demand for power generation to support a lot of this data center activity. And we think natural gas is going to be a big part of those drivers for that. And I think that's going to lead to good incremental demand for natural gas, which could really helps us in terms of the activities and some of the basins that we operate in. So we see good growth. It is a little too early to give any kind of guidance of 2025, but we would expect that activity. Gas prices are relatively low right now. I think that's mitigating some of the activity in the second half of this year. But if this expected demand starts to pick up, we think over the next ‘25 and going on in '26 and '27, that should be leading to good strong demand growth and the Marcellus and other natural gas regions, which we have a very strong market position in to that.

I'd also add as we add terminals with unit train where they can receive unit trains, usually, our volumes follow that. So -- and that's kind of like what we're working on right now.

Great. That's very encouraging. I also had a clarification question on the free cash flow generation. You said that you expect to be free cash flow positive for the year, you are free cash flow positive through the first half of about $8 million. I was confused if you were whether or not you were saying you expect to generate additional free cash flow in the second half of the year on top of the $8 million generated in the first half?

Yes. Again, it's a little hard to define how much free cash flow we may generate in the second half of the year, depending on volumes and kind of activity and how our working capital shifts happen on a quarterly basis. So we don't get into specifics about the actual generation in the number over the second half of the year, but we do expect to be free cash flow positive for the year.

Okay. And along those lines, you mentioned some initiatives for capital return to shareholders being discussed sometime in the second half. Just curious what in particular you're considering? Is it a dividend, share repurchase or some combination thereof that you're currently contemplating?

I think right now, we're open and we're considering what the various options would be, and looking at to kind of your question in terms of what -- how we believe our cash flow generation is going to be and the consistency of that. Does it kind of determine the best approach in terms of starting to deliver value back to the shareholder in a combination of a dividend and/or shareholder repurchase. So we haven't fully finalized our thoughts on that. We are still focused on moving towards bringing share -- value back to our shareholders. You got to remember, last year we bought back 11% of our shares. So we didn't actually start that process in 2023. And right now we're just evaluating the best opportunity on a go-forward basis in terms of how we think we're going to do it more consistently going forward. So that's something we'll probably have more detail on hopefully later this year, at our next earnings call, but I think we're open and we are evaluating all the various options.

Great. Well, I really appreciate those initiatives on shareholders' behalf. I think that's terrific idea, and that is appreciated. I do have one final question. In the past, you've discussed targeting industrial end markets that are not necessarily oil and gas related, just other end market opportunities for your -- for your sales. I'm curious how the initiatives in that regard are going? And if you can provide any insight on that going forward?

Yes, sure. So yes, so our industrial initiatives continue. We've installed cooling and blending capabilities at our Utica mine and we continue to grow that market. It's an interesting market and something that we're relatively excited about from a margin perspective. From a volume perspective, it will likely be -- it will never be kind of what frac volumes are, but it is a business that we've invested time, effort and money into, and we expect it to continue growing.

All right. Thank you and best of luck.

Thanks Bruce.

Thank you. And we don't have any further questions. I would now like to hand the call over back to Chuck Young for closing remarks. Please go ahead, sir.

Thanks for joining our second quarter earnings call. We look forward to speaking with you again in November.