NGS - NYSE

Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group First Quarter 2022 Earnings Call. At this time, all participants will be in a listen-only mode. Your call leaders for today's call are Alicia Dada, IR Coordinator and Steve Taylor, Chairman, President and CEO. I would now like to turn the call over to Ms. Dada. You may begin.

Thank you, Bailey, and good morning, every one. Please allow me a moment to read the following forward-looking statement prior to commencing our earnings call. Except for the historical information contained herein, the statements in this morning's conference call are forward-looking and are made pursuant to the Safe Harbor provisions as outlined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, as you may know, involve known and unknown risks and uncertainties and which may cause Natural Gas Services Group's actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market share through competition or otherwise; introduction of competing technologies by other companies and new governmental safety, health or environmental regulations, which could require Natural Gas Services Group to make significant capital expenditures. The forward-looking statements included in this conference call are made as of the date of this call, and Natural Gas Services undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, but are not limited to, factors described in our recent press release and also under the caption Risk Factors in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission. Having all that stated, I will now turn the call over to Mr. Stephen Taylor, who is President, Chairman and CEO of Natural Gas Services Group. Stephen?

Thank you, Alicia and Bailey, and good morning, everyone, and welcome to NGSG's First Quarter 2020 Earnings Review. Last evening, we issued a press release announcing our first quarter financial and operating results and filed our annual report on Form 10-Q with the U.S. Securities and Exchange Commission. The release and filing can be found on our website. This morning, we also issued an additional press release announcing my decision to retire as President and Chief Executive Officer of the Company. While no big like decision is easy, and there's never a perfect time for this type of transition, after 17 years at the helm of Natural Gas Services Group, this feels right. In consultation with our directors, we felt the Company's business was in a good position, and we have worked through most of the COVID-related issues, providing a good opportunity for transition. While my day-to-day responsibilities will slow a bit, I will remain Chairman of the Board of Directors while continuing to work closely with key customers of the Company and will serve as an adviser during the transition. Most importantly, I remain a significant shareholder and will continue my commitment to doing everything I can in my role to build shareholder value. I'm happy to say that our lead independent director, John Chisholm, has agreed to step in as the Interim President and Chief Executive Officer. John is the former President and CEO of Flotek and New York Stock Exchange listed Oilfield Service concern and the Co-Founder of ProTechnics, a leading reservoir characterization technology company that is now owned by core laboratories. John's willing us to step in should provide both comfort and confidence as it does for me about the future of our company. John and I work closely together in the transition, and I pledged to him my unwavering support and anything he needs. While John is traveling today, he will join us for some introductory comments during the end of the call. That said, I'm pleased to take a more detailed look at the first quarter results to what we believe is a solid start to 2022. As noted in our earnings release, our overall business has continued to grow both sequentially and on a year-over-year basis. Year-over-year, total revenue grew 11%, with our flagship rental business leading the way. Sequentially, total revenues also grew 13%, primarily due to a strong sales quarter. Our core rental compression business continued to gain market share from our upstream customers with our fifth consecutive quarter of rental revenue growth. Compression rental revenue grew 4% sequentially and approximately 12% on a year-over-year basis, primarily driven by an increase in active rental horsepower. As anticipated on last quarter's call, we recorded a reduction in rental expenses from the highs experienced last year, especially in the fourth quarter. Sequentially, rental expenses declined 20% from the fourth quarter peak. While we, like everyone, are experiencing inflationary and supply chain pressures across the business, we are pleased with our cost reduction efforts. We do realize, however, that we still have work to do to meet our goal of 50% adjusted margins on our rental business by the end of 2022. Our compression sales business experienced a good quarter with sales revenue up almost $1.8 million over the fourth quarter of 2021, with adjusted gross margins of 31% during the quarter. We have not yet seen a change in demand from our traditional upstream customers, and those sales were recorded from them this quarter. Instead, sales this quarter were driven by non-traditional energy customers. This includes various types of projects that we are developing an expertise in, and we should see increasing sales volume from this energy transition segment in the future. Now let's look at the financial details of the quarter. From a total revenue perspective, NGS reported total revenue of $20.3 million for the first quarter of 2022. This is a $1.9 million or 11% increase from the same quarter in 2021, as a result of a $1.8 million increase in rental revenues with $180,000 or 7% increase in sales. When comparing consecutive quarters, we had an increase in total revenues of 13%. This is driven by a $1.8 million increase in sales and a $650,000 increase in rental revenues, which were slightly offset by a little over $100,000 decrease in our service and maintenance revenues. While our sales revenues fluctuate quarter-to-quarter, our rental revenues have grown consistently, 4% and 12%, respectively, in both sequential and year-over-year quarters. Significantly, NGS has increased rental revenue the last five quarters in a row. Total adjusted gross margin, which does not include depreciation for the three months ended March 31, 2022, increased to $8.9 million from $8.6 million for the same period ended March 31, 2021. Adjusted gross margin for the three months ended March 31 was 44% of total revenue. The increase in margins for the quarter were due to increased margins on compressor sales primarily. Sequentially, adjusted gross margin for the first quarter of 2022 increased to $8.9 million from $4.3 million in the prior quarter. As a percentage of revenue, adjusted gross margin also increased to 44% this quarter compared to 24% in the prior quarter. If you recall, in the prior quarter, the majority of the gross margin pressure was from increased rental costs due to higher mobilization, commissioning and start-up costs and to a lesser extent, an increased level of unabsorbed costs in our manufacturing shops. While we, like everyone, are experiencing inflationary pressures across the business, we are pleased with our cost reduction efforts and anticipate further improvement throughout the year. Sales, general and administrative expenses decreased 5.5% and 10.7%, respectively, in year-over-year and sequential periods. Year-over-year, we realized lower stock compensation and non-cash deferred compensation expense with a reduction in non-cash deferred compensation expense also driving the sequential reduction in SG&A. Operating income for the first quarter of 2022 was $382,000 compared to a loss of $369,000 in the first quarter of 2021. This increase is due to an increase in sales margins as well as a slight decrease in SG&A and depreciation expense. Sequentially, operating income increased to $382,000 in the first quarter of 2022 from an operating loss of $8.2 million in the fourth quarter of 2021. This increase in comparative quarters is primarily due to the aforementioned lower sales and rental margins and higher SG&A in Q4. Loss on retirement of units from our fleet of $3.1 million and the inventory write on loss of just over $200,000. Our net income after tax for this quarter was $337,000. This compares to a net loss of $394,000 in last year's first quarter and a net loss of $5.6 million in the fourth quarter of 2021. We reported earnings per diluted share of $0.03 for the first quarter of 2022 compared to a loss of $0.03 per diluted share in the first quarter of 2021 and a loss of $0.42 per diluted share in the fourth quarter of this year -- I mean fourth quarter last year. EBITDA is defined as earnings before interest, taxes, depreciation and amortization, and our adjusted EBITDA excludes inventory allowances, fleet retirements and stock comp expense, all of which are non-cash. Adjusted EBITDA for the three months ended March 31, 2022, was $6.8 million, an increase from $6.5 million for the same period in 2021. Adjusted EBITDA also increased approximately $4.5 million sequentially from $2.3 million last quarter to $6.8 million in this quarter, primarily due to lower costs and improved margins. Total sales revenues, which, as a reminder, includes compressors, flares and product sales, was $2.9 million this quarter. This is an increase from $2.7 million year-over-year and from $1.1 million last quarter. The change in the year-over-year quarters is due to normal volatility in the various sales components, but the sequential growth is attributable to the completion of two good revenue high-margin transitional energy compression projects. For this current quarter, we had a total sales adjusted gross margin of $907,000 or 31%. This compares to gross margin of $95,000 or 4% in the first quarter 2021 and negative gross margins of $750,000 in the last quarter. First quarter 2022 compressor-only sales increased slightly to $2 million from $1.9 million in the first quarter of 2021. We did not record any compressor sales in the fourth quarter of 2021. Compressor-only sales margins were $621,000 for the three months ended March 31, 2022, compared to a loss of $136,000 for the same period a year ago and a loss of $1 million last quarter. As mentioned, we have not seen an increase in demand from our traditional upstream customers for purchase compression. And as far as our customers are concerned, capital allocation seem to have shifted for rental compression to rental compression rather than allocating capital to owning compression. We have, however, seen increases in interest and demand from non-traditional energy providers and are working to build those relationships. With the completion of this quarter's transitional energy projects, our sales backlog as of March 31, 2022, dropped to $100,000. However, even though as mentioned, sales projects are scarce, our compressor rental backlog has filled that gap with almost $24 million of compressors being built or scheduled to be built through the balance of this year. Rental revenue in the first quarter of 2022 was $17.1 million compared to $15.3 million in the first quarter of 2021, an increase of 12% year-over-year. For the sequential quarters, rental revenue grew $17.1 million from $16.5 million last quarter, an increase of 4%. Rental adjusted gross margins this quarter were 46%, a 3% or $285,000 decrease from the 53% gross margin we saw year-over-year, a significant $3 million increase from the 30% gross margin last quarter. As previously noted, our fourth quarter 2021 margins were impacted by non-repetitive deployment and commission expenses as well as initial oil and antifreeze fills, which can be significant, especially in larger horsepower. While we eventually recover those costs, the recognition of the expense and the reimbursement of sites were from time to time, result in cost revenue mismatches like those that we experienced last year and particularly in the fourth quarter. It is to be above where we are encouraged by a sustained oilfield activity, it has created significant additional personnel expense. Not only has our headcount increased to meet new equipment demand, wages are rising and overtime is prevalent as finding qualified employees, especially in the Permian, is challenging. Hiring rotating employees from outside the Permian also results in higher training, living with provide room and board and travel costs as well as new equipment and transportation expenses. These inflationary pressures are reflected in our Q1 2022 results. We are working to retain these cost increases and to the extent possible, increase rental rates to offset some of these cost increases. As mentioned in the past call, we have instituted an 8.5% price increase on our rental customers that was generally effective May 1. Obviously, no one likes price increases, but ours have pretty universally been met with acceptance. We still have some increase to implement, but the majority have been accomplished. Rental fleet size at the end of March 22 totaled 2033 compressors or over 421,000 horsepower, which also reflects an addition of 10 units or approximately 3,100 horsepower in the first quarter. Over the past 12 months, we have added 60 new fleet units, totaling approximately 17,600 horsepower with the majority of that horsepower being classified in our large horsepower category. As of March 31, 2022, about 45% of our utilized horsepower is made up of compressed units that are in excess of 400-horsepower per unit. We announced our large horsepower strategy about five years ago with the intent of shifting the NGS rental fleet profile towards larger horsepower and simultaneously minimizing the small horsepower component of the fleet. This is driven by recognition that the large horsepower market offered greater growth opportunities, while the small horsepower fleet was becoming commoditized by the mom-and-pop operators. Currently, our rental fleet is approximately 45% large horsepower and 18% small horsepower. The balance is in the medium horsepower segment of our fleet. We're continuing our growth in large horsepower. And as you may know, the vast majority of our capital dollars go to larger horsepower equipment. So while the Company will continue to penetrate this market, I think we can say the transition to a large horsepower provider has been successful. The strategy accomplished. Our horsepower utilization is approximately 73% and unit-based utilization was approximately 63% at the end of this quarter. On a unit basis, utilization was approximately 63% at the end of this quarter compared to 62% last quarter and 56% a year ago. Our capital expense for new gas compressor rental fleet units in the first quarter, which does not include work in progress, was approximately $8.1 million. With $100-plus dollar oil prices and $6-plus gas prices, it's no surprise that we are seeing increased activity of our customers, primarily in the Permian Basin this year. To address that, we have revised our capital expenditure budget up to approximately $30 million to $35 million of growth compression CapEx this year. This increase, and in fact, the large majority of the total capital budget is for large horsepower compression, for which approximately 90% has already been contracted at market-leading rates and terms. From a balance sheet perspective, we continue to have no debt outstanding at the end of the first quarter, with our cash balance at the end of the first quarter at $16.4 million. This compares to cash a year ago of $30.7 million and last quarter of $22.9 million. In addition to funding our capital expenditures and cash flows from operations, we utilized $2.9 million of cash to repurchase over 246,000 shares of our common stock on the open market this quarter and $10.8 million worth over the past year. This equates to 7.3% of our outstanding shares. Our average purchase over the course of 2022 is $11.88 per share, well below our calculated intrinsic value and below our current price. In spite of our strong capital spending on committed rental equipment and our stock buyback program, our cash balance in all comparative quarters has continued relatively steady due to our ability to deliver strong operating cash flows. Combination of our cash balance and untapped credit line continues to provide ample liquidity in nearly every consumable scenario. We generated positive net cash flow from operating activities in this quarter of $5 million or 25% of our quarterly revenue. This is a strong cash flow conversion. Before a few closing comments and taking your questions, I would like to introduce John Chisholm the incoming Interim President and Chief Executive Officer. John is traveling today but he wanted to take a moment to introduce himself. John, I appreciate you taking the time to join us today, and welcome to the team.

Steve, thank you, and thanks to each of you on the call for taking the time and having an interest in Natural Gas Services Group. I won't take a lot of your time. I want to spend just a minute to let you know I'm excited about the opportunities ahead at NGS. That said, what is most important this morning is to acknowledge and thank Steve for his incredible effort over the last 17-plus years in the pilot seat at NGS. As I said in the press release this morning, when Steve arrived at NGS, we were a small, obscure compression company, located on the boroughs of Midland. Today, due to Steve's resilient leadership, NGS is consistently acknowledged as a leader in oilfield compression and more importantly, one of the few oilfield service concerns that has maintained financial strength and stability throughout the last oilfield cycle. Very simply, Steve is the epitome of what a good corporate leader should be. He has left the Company. He has led in better shape than when he founded. For that, Steve, all NGA stakeholders are grateful for your service and your effort, and I look forward to working with you as Chairman as we continue to move NGS forward into the future. While there is no hippocratic oath in the oilfield, my mission as the Interim President and CEO is, first and foremost, to do know hard. My goal is to build on Steve's leadership, be a good steward of capital and look for opportunities across the spectrum to grow the reach and success of NGS. In the coming weeks, we will talk more about our objectives for the balance of 2022. However, today, we will focus on Steve's success and the details of the first quarter successes. I look forward to visiting with many of you soon. Again, Steve, thank you for your nearly two decades of service. On behalf of all the associates customers and shareholders of natural gas services, we are beyond grateful for your service. As you mentioned, I'm traveling. I'll turn it back to you, my friend, Steve, to answer questions. And again, what a job?

Okay. Thanks, John. Thanks for the kind words. I look forward to working with you as we transition going forward. John has been on the NGS Board for over a decade and is very familiar with the Company. I've known John from my Halliburton days, and that's been over 20 years, and he is a very capable executive. In my new position as Chairman, I'll be able to assist and advise where I can and help maintain and grow our vital customer relationships. My holdings in NGS exceed 5% of the outstanding shares. So I want to assure everyone that I'm committed to the ongoing success of the Company. If you know the joke about the chicken and the pig, it reflects my sentiments: in a ham-and-egg breakfast, what's the difference between the chicken and the pig? The chicken provides the eggs, but is only merely interested in the quality of the breakfast. However, the pig provides the ham and is vitally and irretrievably committed. I'm the pig. I've got skin in the game. Now for final comments. We had a good quarter, and I think the building blocks are in place to capitalize on the opportunities before us, primarily being our large horsepower strategy. Rental revenues have grown quarter-to-quarter over the past year, and this quarter was especially successful compared to the industry. Our sales revenues were good this quarter, and I think there are nontraditional transitional energy opportunities that we can take advantage of. As we demonstrated what we said last quarter, our costs are getting under control, and our margins are expanding. And last but not least, commodity prices are finally cooperating. There are certainly challenges, cost and supply chains are the priorities, but we have plans in place to address those. Natural Gas Services Group remains one of the few oilfield companies with a strong recurring rental stream, no debt, a significant cash position and the ability to consistently generate meaningfully -- meaningful operating cash flows. I'm grateful for the efforts of our employees and their continued efforts as we work to make 2022 another successful year for Natural Gas Services Group. Maybe that's the end of my prepared remarks, and I'm ready to take questions now. So if you would, please open the phone lines.

And our first question will come from Rob Brown with Lake Street Capital. Rob, please state your question.

Just touching a little bit on the sales at first here in the energy transition business, what's sort of the driver there? And is that a market that you should be continuing? Or is this hard to say at this point?

Yes. I'm not going to tell you the exact type of projects just from a competitive standpoint, but they're -- I guess there's nothing exotic in transition projects. So, it's along the lines of what everybody is looking at as far as driving natural gas from, say, transitional sources. The -- as I mentioned on the call, the projects are typically high revenue, high-margin type projects. They tend to be somewhat specialized either using exotic metals, high pressures, things like that. And that's -- those are areas we built our kind of our niche expertise in the sales business over time. So we're well positioned to take advantage of those. We're continuing to pursue projects like that. We've got some bids out. We haven't heard. We're going to be doing some other stuff. But it's hard to say. It's hard to project what that business is going to be like. I mean, yes, the traditional sales business has been volatile for all 17 years I've been here. So this transitional energy business is maybe the same. It's just hard to predict right now, especially with it in this is nascent infancy. But we think there's opportunities out there. We think we're well positioned and well qualified to take advantage of them. So, we're going to kind of have to develop them to a greater degree to a higher volume and see where it comes out. But it's -- I think we're in good shape for them. We've done some in the past year, so we're going to continue to develop that piece of the business.

Okay. Great. And then on the rental side, it sounds like demand has picked up quite a bit. Maybe some further color. Are you seeing just the peer dry gas business picking up as well? And I guess the CapEx increase that you guided to, where -- what's driving that? And what areas are driving that?

Yes, we're seeing pickup in all areas. Obviously, the Permian is the primary for anybody in the oilfield nowadays, and that's primarily driving our large horsepower growth and activity, but we're seeing some pickup in the dry gas areas. Obviously, with $6 gas, which we haven't seen in years, I actually never thought we'd see it again, that's sort of got the interest of operators that are either there that want to be there. So we're -- you look at areas like the Barnett Shale, which has been flat to down for a decade. And all a sudden, we're seeing a little more drilling, but we're seeing some customers start to pick up some compression and do some more things. So it's not a land rush at this point. There's -- the operators still are pretty conservative with their dollars and what they're going to do and where they're going with it, but we're seeing some pickup in the Barnett, Central Texas and Appalachia and stuff like that. Now the CapEx part of your question, that is driven by large horsepower. Like I mentioned, I think, 90%, 95% of that is large horsepower and about the same is already contractual, it's committed. So what we're building in the increase were just talked about our committed projects already signed up at good rates and good terms. So that CapEx driver is going to be horsepower. It has been for last three or four years, but it's continuing that way. From a small horsepower and even a medium horsepower standpoint, we really don't need to spend any CapEx on that. We've got adequate inventory of equipment that we can just make ready and put out, and that's what we're doing for it. There's very little call for CapEx in that medium to small horsepower range, which has been by design over time. So majority of our capital goes to high horsepower, it matches our strategy. And as I mentioned, we've been successful in implementing that strategy growing into that piece of the market and intend to continue it.

Okay. Great. And then on the margin improvement, I know there's sort of one-time costs in Q4, but is this a good margin level? Or how do you get this margin level in terms of rental? How do you get this margin level to increase? Is it pricing? Or are there things you can do on the cost structure?

It's going to be all the above is going to be higher revenues, can be lower cost and there's going to be some price increases. So nowadays, with upward pressures on cost from inflation, supply chain issues and stuff like that, I mean, you've got to use every lever you've got. I mentioned the price increase we've put in place, about 8.5% on May 1. We've still got some others to implement. But we got a lot of them in. So, we've got to have these price increases to do some of these cost increases. And then additional horsepower just to add incremental revenue to our established infrastructure and obviously, cost reductions. So again, all that stuff they continue those margins up. And as I mentioned, as I committed to the last quarter's call, we intend to be at gross margin on the rental side by the end of the year, we're at 46% now. So, the trajectory is in the right direction. And so in spite of cost and supply chain issues, we intend to hit that mark and that's how we're going to do it.

And our next question comes from Tate Sullivan with Maxim Group.

Steve, congratulations on your next steps and a great transition for the next year to the Chairman spot and continue to be customer facing.

Yes. Thank you.

And then regarding facing customer and the customer mix as well, I mean, you ended -- you had 79 customers in the first quarter, down slightly, are you seeing some smaller customers that are a bit more aggressive than the larger customers? Or can you please comment on your customer mix in general? Has it changed in the last year?

Most of the growths we're seeing from our CapEx and revenue standpoint are larger customers because it is larger horsepower stuff. And it's pretty expensive to bills. It's a decent operating expense for the operator. So it takes a larger company to typically stand that staff and employ this equipment and things like that. So most of the CapEx drive and most of the revenue drive are larger customers. Now where we're seeing smaller customers kind of come back in a little bit is in these dry gas areas where over time. Not surprisingly, those have migrated down to smaller customers. And again, as I mentioned, the smaller equipment, the smaller areas or smaller customers, that stuff has tended to become commoditized over the past decade, and that's why we've moved out of it quite a bit over those periods. But we are seeing those guys kind of pop up a little more. And so, the small to medium customers are the ones kind of driving some of the just pure natural gas activity that we're seeing. It's not -- as I mentioned, it's not a big deal right now. I think over time, we'll still see some growth in that area. But if you want to try to split the customers up, it's the small to medium ones in the natural gas plays and then, say, some larger, medium and large customers in the oil plays.

And then following up Rob's question from earlier. You mentioned the nontraditional purchasers of your compressors. Can you -- what was sales backlog? And can these non-traditional energy customers be potentially rental customers? So, two questions, please.

The sales backlog, I'd say, is only $100,000, like we finished up a couple of big projects this quarter. If you recall, we reported no compressor sales last quarter. And this is the volatility of the sales piece we've always talked about. Although there are no revenues recorded, that didn't mean we weren't building stuff. And obviously, we were building these projects that we were able to book this quarter. So the backlog is admittedly small. But as I mentioned, we've filled in our shops now with a lot of rental committed rental equipment on the large horsepower side. The non-traditional business right now is pretty much a sales type business and not a rental business. And that's really because there are so many government incentives in that arena that actually, these guys are swimming in money. They're getting extraordinary prices for their gas on a per Mcf basis. So money always has bounced, right? But sometimes it seems like there's not a whole lot of bounce in some of this stuff, that's obviously tax payer-driven and tax-driven. So right now, it's pretty much of a sales-type market. And some of that stuff, we're okay with it being a sales market. When you get into some of these areas to where you have some ultra-high pressures or you have some very corrosive gases, that doesn't make very good rental equipment because it's highly specialized. If you ever get it back, it never goes out. So you've got to spend money on it to refurbish it and refabricated, actually. So right now, we're okay with the B&A sales market. Obviously, the ups and downs are part of sales. But as we develop it, we'll learn more where there may be rental opportunities, if any. Some of the maybe more recurring revenues we see out of that business is maintenance. We can sell the equipment, but a lot of these people we're dealing with are not familiar with, say, heavy-duty oilfield-type equipment like this. And although they need it, they're not familiar with it. They don't know how to operate and things like that. So we're starting to see some inclines of some decent maintenance revenues out of some of the stuff. So right now, it's a sales market, but the recurring revenue seems to be potentially some maintenance activities. But that's right now. We'll see how it develops, and we'll be aware -- try to be aware of rental opportunities. But again, will they come or not will also depend on whether we want to do them or not. This just may be primarily a sales market.

And our next question comes from Kyle Krueger with Apollo Capital.

Yes, thank you for taking my question. Stephen, any -- is there a plan or a search underway to find a permanent replacement for the CEO position?

The Board has put together a plan on going forward. Obviously, with the Interim title, John's not expected to be a 5- or 10-year sort of person. John is imminently qualified to come in and take the day-to-day. Obviously, I'll assist all I can. But the Board is -- got the plan to put John in there, and we'll be looking for someone to be more permanent. Now again, when that permanent person comes in is a matter of question right now, but these are plan in place. So that's really I can't predict anything beyond -- from a timing standpoint, anything beyond John's interim now. And right now, we're just focused on the transition going forward.

Okay. As long-time CEO and a major shareholder, you're very closely identified with the Company with your departure. Let me ask this, has the Board considered an outright sale of the Company?

That's -- the Board, and I've been on the board 17 years, too, we always consider what might come up, what people approach us with and things like that. That's certainly our responsibility as a Board. There's no current discussions of selling the Company, putting it up for sale or things like that. But I'd be remiss as Chairman I think the Board would be remiss, if we didn't say that if an irresistible opportunity comes along, we've got to look at those things. Now sometimes, there are just some opportunities turn out being resistible. We've seen some of that in the past. But right now, the focus of the Board and the Company is really to grow the Company, as we've mentioned. Make the transition, I'll be -- I'm going to be Chair through another year. So certainly, I'm here to help John transition, providing assistance he wants, concentrate on a few particular areas. But no, the current discussions aren't a sale. The current discussions are growing the business and looking at opportunities to continue to grow it.

And there are no further questions at this time. I will turn the call back over to Mr. Taylor.

Okay. Thank you, Bailey. Although, I'll continue to be involved with the Company, I want to thank everyone I've had the pleasure of getting to know over these past years. Obviously, that includes all our employees, customers and suppliers, but it also includes the investor community, investors and analysts. I learned a lot from everyone. I consider most friends, and I look forward to staying in touch. Again, thank you for joining us on our quarterly conference call. I appreciate your time this morning. Where you're likely to hear a different set of voices next time, we are confident that the future of Natural Gas Services Group is bright. Thank you.