CIVI - NYSE

Good day, and thank you for standing by. Welcome to Civitas Resources Fourth Quarter 2024 Earnings Conference Call and Webcast. My name is Georgine, and I will be your operator for today's call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please be advised that today's conference call is being recorded. I will now turn the call to Brad, Head of Investor Relations. Brad, please go ahead.

Thanks, operator. Good morning, everyone, and thank you for joining us. Yesterday, we released our fourth quarter and full year 2024 results, provided our 2025 outlook, and issued supplemental slides for your review. In addition, our 10-K was filed yesterday, and all of these items are available on our website. This morning, I'm joined by our CEO, Chris Doyle, and our CFO, Marianella Foschi, and other members of management. After our prepared remarks, which will come from Chris and Marianella, we will conduct a question-and-answer session. As always, please limit your time to one question and one follow-up so we can work through the list efficiently. We will make certain forward-looking statements today, which are subject to risks and uncertainties that could cause actual results to differ materially from projections. Please make sure and read our full disclosures regarding these statements in our most recent SEC filings. We may also refer to certain non-GAAP financial metrics. Reconciliation to the appropriate GAAP measure can be found in yesterday's earnings release and our SEC filings. With that, I'll turn the call over to Chris.

Good morning, everybody. Thanks for joining today's call. I want to start with a quick recap of 2024 before focusing most of my time on 2025 and the actions we're taking to strengthen the company. By continuing to enhance our operating performance and portfolio, reducing our costs and prioritizing the balance sheet, we're creating more durable business and better positioning Civitas to generate sustainable free cash flow for years to come. Quickly on 2024, it was a transformational year for the company. Underpinned by our high-quality assets and strong operational execution, our full year production was above plan and we beat original guidance for capital and operating costs. Over the past year plus, we built scale positions in the Midland and Delaware Basins, materially strengthening and diversifying our company. We brought in a proven leadership team with deep Permian roots. I'm very pleased with what the team has accomplished in just one year, highlighted by the following: Midland Basin well costs are down 15%; daily drilling footage is up nearly 20%; daily completion throughput is up 50%; in addition, we derisked prospective horizons and added high-value inventory across our acreage position; and all of this has been accomplished while delivering excellent safety performance. Further, we strengthened both our Midland and Delaware positions through ground game initiatives, including more than 50 trades, swaps and new leasing. And importantly, we did so with little to no cash. Yesterday, we announced a bolt-on transaction in the Midland Basin adding 19,000 acres in 130 locations. With this announcement and to offset the purchase price, we set a $300 million asset sales target for 2025, which is likely to come for the DJ Basin. Effectively, this is expected to accelerate value from the DJ in support of extending our runway in the Permian. Between the ground game and bolt-on, we've added nearly two years of future development in our Permian business unit, and extended lateral lengths and working interest across our portfolio by 5%. This was done at very attractive valuations, well below recent market transactions. Today, our Permian inventory stands at 1,200 development locations. While establishing a successful track record in the Permian, we didn't lose focus as the DJ Basin also had a strong year of performance. In 2024, we turned in-line the industry's first four-mile laterals in Colorado. These were record setters, representing the state's highest 180 day cumulative oil producers. Armed with basin leading operational capabilities, our team added high-return development locations through a combination of ground game transactions in our core areas, including Watkins and through a continual development optimization. Overall, free cash flow for the year was about $1.3 billion, and we returned more than 70% of that to our shareholders through $5 a share in dividends and a repurchase of more than 7% of our outstanding shares. All-in, we had a very successful year in 2024, and Civitas is a deeper, more durable business today. Now, let's turn to 2025 and the steps we're taking to strengthen our business. Our plan focuses on delivering the following strategic priorities. First, run the business to maximize free cash flow, built upon a leading cost structure and enhanced by sustainable capital efficiencies. Second, deploy that free cash flow to protect and strengthen the balance sheet. As Marianella will discuss further, we're prioritizing debt reduction in 2025. Third, return cash to shareholders, predominantly come from a strong base dividend this year. And finally, lead in ESG and build this long-term sustainable business as we execute on our target to further reduce our emissions. In 2025, we're level loading our capital investments compared to 2024, where the front-loaded program led to low till counts at the end of the year. While level loading impacts near-term production, this is more than offset by the long-term benefits in operating and capital efficiencies. Keeping activity levels flat in 2025 will deliver full year oil production of 150,000 to [150,000] (ph) barrels of oil per day after level loading. And we'll invest $1.8 billion to $1.9 billion split relatively evenly between the Permian and DJ Basins. This is approximately 5% lower than last year, reflecting the well cost savings our teams have delivered. Notably, our reinvestment rate in 2025 is consistent with 2024 despite WTI strip pricing being $5 lower year-over-year. As expected, our first quarter production will be low point for 2025. 80% of the sequential drop is related to natural declines in the DJ Basin following peak production in the fourth quarter. This was driven by a low till count exiting 2024 and in the first quarter of 2025, as well as severe winter weather and unplanned third-party processing downtime. We expect to grow meaningfully through the middle part of the year as new tills come online. Specific to the 2025 plan, I want to mention a few other items of note. Within our Permian program, we're increasing our allocation of capital to the Delaware Basin. Today, we have four rigs running in the Permian, two of which are in the Delaware and a third coming shortly. Nearly all of our completions in the Permian Basin will be simulfrac, leveraging the advancements our team delivered last year, improving fluid throughput by 50% versus the start of the year. And in the DJ Basin, we have two rigs running today, and we'll continue to push the limits with longer laterals. We're moving more of our production facilities to tankless operations, and our teams are operating the most efficient, lowest emission rigs and completion crews in the basin. Our 2025 plan delivers approximately $1.1 billion of free cash flow at $70 WTI, a free cash flow yield of over 20%. Maintaining a culture of performance and cost leadership is critical to building a durable, sustainable enterprise. To further enhance our business, we're streamlining our organizational structure with a 10% reduction in workforce throughout various levels of the company. These are tough decisions. We're committed to staying low cost, driving efficiencies and enhancing margins across all areas of the business. Now, I'll turn it over to Marianella to discuss the steps we're taking to accelerate our balance sheet goals.

Thanks, Chris. The long-term [winners] (ph) in this business will be the companies with a strong balance sheet and a cost structure at the low end of the cost curve. Yesterday, we took meaningful steps to prioritize and protect these two items, including rolling out a new free cash flow location strategy. Our strategy is underpinned by our 2025 net debt target of $4.5 billion, which represents an $800 million reduction to year-end 2024 pro forma for the bolt-on transaction. This debt reduction will further benefit our cost structure, decreasing associated interest expense by approximately $60 million on an annualized basis or a 5% increase to our run rate free cash flow. This reallocation of excess cash will allow us to reach 1 times leverage in late 2026. Our long-term leverage target is unchanged at 0.75 times EBITDA at mid-cycle prices. While accelerating leverage reduction, we remain committed to our base dividend of $2 per share annually. As compared to our prior framework, any additional return of capital to shareholders will be opportunistic and consistent with our near- and long-term balance sheet goals. I'd be remiss not to touch on our philosophy on risk management, which further protects free cash flow. We continue to execute on our systematic oil hedge strategy, and we are approximately 40% hedged on net oil volume for 2025. As a reminder, oil accounts for approximately 80% of our unhedged revenue. Our tactical gas hedging strategy was extremely successful in 2024, especially in the back half of the year as Permian gas price volatility increased. Our Permian volumes are currently 50% hedged for 2025 and 2026, and we will continue opportunistically adding to our gas book. Ultimately, a commodity business best hedge is a low-cost structure and a fortress balance sheet. While our hedging philosophy has served us well, maintaining our top-quartile cost structure and de-risking our balance sheet are more material value drivers in the long-term. And with that, I'll turn it back over to Chris for concluding remarks.

Thanks, Marianella. Over the next three years, at the 2025 investment and production level, Civitas will generate approximately $3.3 billion in cumulative free cash flow at $70 oil. That represents two-thirds of our current market cap and allow us to meet our leverage reduction goals while also returning significant capital to our shareholders. Civitas' strength rests on our proven operating teams and our track record of performance in the lowest breakeven oil basins in the US. Our 2025 plan will advance our strategy of building a long-term durable business for our shareholders. Operator, we're now ready to take questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Gabe Daoud from TD Cowen. Sir, please go ahead.

Thanks. Good morning, everyone. I was hoping, Chris, we can maybe start with the decision to shift your capital allocation strategy. I thought maybe you could, for lack of a better phrase, walk and chew gum and pay down debt and still buy back a decent amount of stock. So, maybe just a bit more color there. And you mentioned opportunistic with buybacks. What does that mean? What would you need to see to step-in?

Sure. Thanks for the question, Gabe. As we thought about setting this business up for 2025, we had a couple of options -- a number of options. And as we thought about the backdrop, the macro that's in front of us, the volatility that we've seen over the past couple of months, we know that this is the plan that's best to build a long-term sustainable business for Civitas. As you mentioned, we have a business that generates significant free cash flow, $1.1 billion in 2025. Given the volatility that we see, we think the best use of that cash flow after our base dividend is really to direct it to our balance sheet. We'll have a little bit of opportunity to accelerate that. We mentioned the $300 million divestment target to offset the acquisition that we announced yesterday. We're looking at other ways to potentially accelerate that de-levering path and give us some more flexibility and optionality, but this is about setting the company up for long-term success.

Got it. Thanks, Chris. That's helpful. And then, as a follow-up, obviously, starting 1Q slowly and expected to ramp from here. Maybe a bit more color and granularity on the ramp from here in the production trajectory? And how does that potential divestiture program impact volumes? I guess, another way is what's the amount of production you anticipate selling with this $300 million target? Thanks, guys.

Sure. First, with first quarter [oil] (ph), largely as expected, reflecting low levels of activity, as we mentioned, in the back half of 2024 and certainly into '25. A lot of that drop, as we mentioned, is in the DJ. We've restarted the engine. We have a pretty active 1Q plan of 50 to 60 tilts, followed by another active quarter in the second quarter. And you'll see, as we lay out on Slide 12, growth from the first half to the second half with that activity. In terms of the divestment, the $300 million divestment, that's TBD. We're looking at all types of assets, some assets that don't have associated production, mid-stream assets, some water infrastructure assets in the Permian, they're not significant, but looking at, first and foremost, assets that could be more valuable in others' hands. Certainly, if we see the right value, we would look to potentially accelerate some value from operating assets and producing assets, but that's certainly TBD at this point.

Understood. Thanks, Chris.

Thank you. Our next question comes from the line of

Hey, thanks for taking my question. First, with the bolt-on deal that you did in the Midland, can you just talk about where those acquired locations fit into your development plan? Are those assets you'll be getting to work on later this year, or are they more longer-dated locations? Maybe just talk about how that fits into the portfolio?

Sure. As we dug into that opportunity, certainly, we see value adjacent to our operations. We did not underwrite [stakes] (ph) across that entire acreage position. We see that activity really starting up later this year and -- but more so in 2026. The Wolfcamp A, Wolfcamp B, Wolfcamp D primary development will yield good returns that will compete for capital, but that likely doesn't set up until late this year and into next.

Thanks, Chris. And then, my follow-up is just, maybe following up on Gabe's question on capital allocation, I know the focus is now on debt reduction, but how do you think about further M&A versus potentially shifting back to a higher level of cash return? It sounds like you're going to -- you talked about reaching a 1 turn leverage target in late '26, so it sounds like they're going to -- you're going to continue paying down debt versus returning cash. Just kind of maybe how do you think about things over the longer-term, M&A versus cash return versus debt reduction?

Hey,

Great. Thanks for taking my questions.

Thank you.

Thank you. Our next question comes from the line of Josh Silverstein from UBS. Sir, please go ahead.

Yeah, thanks. Good morning, guys. Maybe just on the same point, as you hit your $800 million net -- sorry, net debt reduction target for this year, do you shift back to that 50%-plus return of free cash flow to shareholders? Is that something that you get to? Or if gas prices are a bit higher, oil prices are a bit higher, you just accelerate de-leveraging a bit more? Thanks.

It's more of the latter. We will certainly look to accelerate our balance sheet goals further, Josh. And like I said earlier, we'll be opportunistic of anything in excess of that, but our top priority, again, is hitting that $4.5 billion, with an eye to 1 times [indiscernible] next year.

Got it. Thanks. And then, maybe just on the inventory front, the [indiscernible] you've been talking about inventory in the Wolfcamp D, particularly in the Midland side. Where does that stand now? And is that in the 1,200 location count?

Yeah. Thanks, Josh. It is in the 1,200 location count. We had about 10% of our program last year really delineating to Wolfcamp D, North, South, East, West. Excited about the results that we've seen. Just as excited with the capital performance that the team delivered, where you're seeing about 10% higher capital for 15% more productive wells. And so, what we're seeing is the D will compete for capital. We're stepping up our D development this year, probably about 20% of our Permian program. And so, excited to see with additional swings at the play that we can tighten those capital costs even further and continue to repeat the strong well performance. But D is certainly in there. I wouldn't say it's our primary target like the Wolfcamp A, Wolfcamp B on the Midland side and Wolfcamp A and 3rd Bone on Delaware, but it's certainly very exciting for us, and happy to allocate some capital towards it in 2025.

Great. Thanks, guys.

Our next question comes from the line of Neal Dingmann from Truist Securities. Sir, please go ahead.

Hey. Thanks for the time. Good morning. Chris, my first question maybe for you or Sam. Just a little bit like you just talked about on the Midland side, my question is more on the Delaware side. Seems like you're just now sort of getting after that. Based on what you're seeing now after re-permitting and doing some things there, are the opportunities there -- I guess, I'd say, is the opportunity set as good now as ever you've seen when you were initially looking at it? Or maybe just talk about how you see that side? And what type of activity we could expect maybe in the latter part of this year and going to next year in the Del?

Sure. Thanks for the question, Neal. As we thought about allocating capital between Midland and Delaware, we really wanted to shift to the higher-return Delaware inventory, but we saw real opportunity to further optimize development. Previous operator was willing to drill shorter laterals. We had a team that got in there and said, hey, we could take a one-mile well and turn it into a two and greatly increase capital efficiency and increase the returns of that program. It was going to take some time, like, not only for the ground game to work itself through the system, but also then to re-permit. Now, that's behind us. The team has done a great job building up that position and optimizing the opportunity over there. And so, we're allocating more capital to the Delaware, which is fantastic to see. As a year, last year, we had about 20% of our tills come out of the Delaware. This year, about 40% of our activity is going to be pointed there. So, we're leaning in there. And as you know, Lea County is where the two rigs are currently. We're really excited about the opportunities there and look forward to getting those wells online. But kudos to the team to take the time to do the right things, go through the steps to further enhance the returns, and we're ready to deploy capital over there. So, excited what we're seeing.

Got it. And then just lastly, just a little minor third-party issue. I'm just wondering when it comes to sort of midstream infrastructure, all that, do you all feel pretty good now where you sit on -- pretty nicely, you haven't had really virtually any issues, seems like over in the DJ side recently. I'm just wondering now when you look at both sides, do you feel pretty good about infrastructure going forward?

Yeah. We -- unfortunately, we had the third-party issue in the first quarter. Alongside weather, it's probably a couple thousand barrels of impact to the DJ. So, we certainly hit it, but the team did a really good job of finding multiple outlets and minimizing the impact of the third-party processor issue. And we worked around it, but we were down for about four, six weeks. And so, we feel good with where we are. As you know, in the Permian, Permian is much a water and gas business, with oil as a secondary product there. And so, the team is out front ahead of all our tills and getting our water placed, and feel good about our ability to execute and deliver our '25 plan.

Great details. Thanks, Chris.

Thanks, Neal.

[Operator Instructions] Our next question comes from the line of Scott Hanold from RBC Capital Markets. Sir, please go ahead.

Yeah. Thank you, all. My first question is just on effectively the reset of the outlook in 2025 and beyond. Could you talk through the process of making the decisions you all did? Obviously, making some hard decisions here, but like, what were some of the other options? And obviously, your path here you're taking is one option. Did you look at others like larger M&A divestitures as was discussed out in some market reports? Could you just talk about like some of the options you looked at and the decision and thought process into the 2025-plus plan?

Yeah, thanks for the question, Scott. So first, as we thought about setting 2025 up, we had a couple of different paths just with the business as is. As we've talked about in the past, the level of activity in 2024 was not in maintenance level to support 160,000 barrels of oil a day. In addition to that, it was very front loaded, which really stopped the engine towards the end of the year. And so, one option that we had was to increase activity and maintain 160,000 barrels of oil a day. As we looked at the -- and considered the volatility and the macro that we're seeing currently, we didn't think it was the right thing to double down, invest a couple of hundred more million dollars to maintain 160,000 barrels of oil a day. We believe the best thing for the business long-term was to reset to the 150,000 to 155,000, fuel out capital and hit that maintenance level of $1.8 billion to $1.9 billion. In terms of question around the larger M&A [perhaps] (ph), we won't comment specifically on any rumors out there certainly, but I will say that this is a team that is focused on long-term -- creating a long-term sustainable business that generates significant value for our shareholders. If there are opportunities to accelerate some of that value and that's any asset, not just DJ or just Permian, if there's an opportunity to accelerate value for our shareholders, we will certainly take it very seriously. I will say, as evidenced by the $300 million divestment target, we are out there looking for ways to identify assets that could be more valuable in others hands and use that to offset what we thought was really attractive bolt-on in the Midland Basin, and really a rotation to extend the runway into the Permian. So, I think more to come on that front, Scott, but a lot of work and a lot of diligence to go into laying out this plan is the best path for this company long-term.

Yeah. Maybe to play a little bit off some of the latter comments there. I mean, obviously, potentially, the investors seem like they're going to be targeting some -- more so in the DJ, and you've obviously bolted-on to the Permian. So, as you look at your inventory runway of 1,200 Permian locations, I mean, is -- a couple of questions here. One, how do you comfortably do you feel with your inventory duration of what you would view as core wells? And do you see yourselves becoming more of a Permian company over time?

Yeah. I'd like to say we're a returns company, and whether we get those returns from the DJ or the Permian, that's what we'll go after. We see the opportunity in the Permian really to scale our business. We saw the opportunity to scale our business and diversify it. In terms of the 1,200 locations, we're sitting about eight or nine years of stay-flat inventory. We've talked about wanting to extend that. Again, given the macro where it is, I feel very comfortable with where we are and our ability to really focus -- refocus and send excess free cash to our balance sheet without the need to really participate in what have been extremely competitive asset transactions there in the Permian. In the DJ, it was interesting not just through ground game, but relooking at a brand new or continually improving capital operating structure and what the team has been able to do to expand tiers out more than replacing inventory that we sold and that we drilled in the year, I think was a great achievement for the team. But we're sitting there with eight-plus years of stay-flat inventory as well. Now, as we get further down the dispatch curve, is the capital efficiency of those last couple of years the same as the next five? No, probably not. But we do have a team that is demonstrating the ability to drive additional efficiencies to take returns, whether it's extending laterals or optimizing completion designs to take lower returns and improve those with time. And so, we feel very comfortable that this is a plan that is sustainable, that will deliver sustainable free cash flow and allow us to achieve all of our balance sheet goals and, at the same time, return significant capital to our shareholders.

Our next question comes from the line of Leo Mariani from Roth Capital. Sir, please go ahead.

Yeah. I wanted to follow-up a little bit about some of your comments around M&A. Clearly, you talked a little about divestitures, but just curious, you mentioned very competitive Permian markets, but in kind of a perfect world, is there a pretty healthy appetite for the company to try to add inventory in the Permian through M&A?

Yeah. I would say our number one goal for 2025 is hitting that net debt target at the end of the year, the $4.5 billion. As we're doing with the bolt-on in Midland, rotating out predominantly DJ-developed assets to fund that, we'll see if there are similar opportunities to do that. But our number one focus given the inventory duration that we currently have and given the macro that we see is really taking that excess cash to the balance sheet first and foremost. And we'll continue to look for ways to accelerate our de-levering and to accelerate our returns to our shareholders, but our number one focus this year is that $4.5 billion net debt target.

Okay. And then just jumping over to the LOE side. LOE, obviously, went up here in 4Q. Just trying to get a sense, was a lot of this driven by the Permian, or did you all also see healthy increases in the DJ?

Yeah, you always see in the DJ and the Permian with winter LOE jump up a little bit. The 4Q really was led by higher LOE than expected in the Permian winterization projects, a little more active workover plan, and we'll see that continue into the first quarter before it moderates back. But we take this very seriously. And this is -- our cost structure as we think about cash G&A and cash LOE, that's a differentiator for any company in a commodity business. It's why we made some of the hard decisions that we made recently to reaffirm and reestablish and sustain that low cost stance. And so, specific to your question on 4Q, it was really winter related, and workover activity, but team is working through that and will get us back into top-quartile cost structure. We're very comfortable with that.

Leo, substantially all the increase quarter-over-quarter were driven by Permian, like Chris discussed. Rockies or DJ was actually flat quarter-over-quarter. I think, as we see -- as we look out, we have a cash or a LOE target that's probably going to be somewhere in between Q3 and Q4 that were, like Chris discussed, quite a bit of one-time items in the fourth quarter that won't be recurring. But all in high-$9s on a per BOE basis, which we believe is peer-leading for our asset base.

Thanks.

Thanks, Leo.

Thank you. Our next question comes from the line of John Abbott from Wolfe Research.

Hey. Good morning, and thank you very much for taking our questions. So, with the focus here on free cash flow, maximizing that, could you speak a little bit about the trajectory of how you see future cash taxes over the next three-year period of time? And when do you see yourself paying sort of the alternative minimum tax? What's your latest thoughts on cash taxes?

Thanks, John. So, this year, cash tax guidance $10 million to $30 million, it's going to be fairly flat into 2026, maybe a little bit higher, closer to the high end of this year's range next year. As far as AMT, we don't hit AMT until around $80 a barrel. So, there's nothing additional to model pursuant to AMT.

Appreciate it. And then, Chris, I mean, the focus right now is on de-leveraging the balance sheet. You're looking at the commodity environment. But as you sort of sit down and think about your inventory, let's say the commodity environment improves and you are -- what is your willingness to actually grow at that period of time, having lowered your oil guide at this period of time? You only have so many years of production. What would you do? Would you add a rig? How do you think about growth if there were -- if there was a change in the commodity and price environment?

Yeah. Thanks for the question, John. If the macro completely flips and it's very bullish towards the end of this year or into next, we will be responsive to that macro environment. We like this plan as we roll it forward, the ability to generate sustainable free cash and take that to the balance sheet. If we saw solidifying of the commodity price instead of backwardating into the $60s, some more solid foundation, you could see us potentially lean in a little bit on activity, but only if we're well advanced of our balance sheet targets for the year and for longer-term. So, this is a team that will continually look at ways to further optimize the way we allocate capital. And as things shift like that, we will be responsive and not overreact, but certainly responsive to the macro. And given the success that both the DJ and the Permian teams have had over the past year really replacing and extending inventory, we have the option to lean in a little bit. All eyes right now are focused on that $4.5 billion year-end target.

Appreciate it. Thank you very much for taking our questions.

Thanks, John.

Our last question comes from the line of Noah Parks from Tuohy Brothers. Sir, please go ahead.

Hi. Good morning. You did touch a bit earlier on the potential for increased oil volatility. And, I think you mentioned that, in a way being conservative with activity and CapEx is sort of the first line of defense against that. But do you have a general view on volatility over the next few years? I mean, leaving total Black Swan events aside, do you sort of anticipate increasing volatility or volatility maybe sort of settling down over the next few years?

Yeah. I think, first, I would say what we've seen is pretty significant volatility, right? Oil was $80 a month ago, now it's backwardated into the $60s. We'll see if that continues, right? And we're not going to sit here and prognosticate which way that will go, but I will say the first line of defense before even activity levels and taking a more conservative approach to capital allocation is affirming and establishing a low-cost structure. Again, it's something we spend a lot of time on. And again, looking at some of the difficult decisions we've made really to solidify that peer-leading cost structure, to us, that is the first defense against that volatility.

Great. Thanks a lot. And, just to clarify something on the guidance, some of the sensitivities shown in the slide, since the free cash flow has so much upward sensitivity with commodity price, I just wanted to double check, the $1.1 billion, I think it is a free cash flow estimate at $70. That would not count the $550 million in delayed compensation you're paying for Vencer since that was cost incurred last year, if I have that right. Is that right?

That's correct. That's just clean free cash flow. No, the $475 million deferred acquisition with Vencer, that was already paid, and that was just paying down debt we had at the end of the year. So, it doesn't impact the $1.1 billion free cash flow in any way.

Great. Thanks a lot.

Thanks, Noah.

Thank you. That concludes our Q&A session. I will now turn the call back to Brad for closing remarks.

Really appreciate everyone for joining us today for the Q&A session. Mae and I are certainly around the next several days for additional follow-up. We look forward to seeing you on the conference circuit here over the next couple of weeks, and we hope you have a great day.