Greetings, and welcome to the KLX Energy Services Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Zach Vaughan with Dennard Lascar, Investor Relations. Thank you, Zach. You may begin..

Thank you, operator, and good morning, everyone. We appreciate you joining us for the KLX Energy Services conference call and webcast to review second quarter 2023 results. With me today are Chris Baker, KLX Energy's President and Chief Executive Officer; and Keefer Lehner, Executive Vice President and Chief Financial Officer.

Following my remarks, management will provide a high-level commentary on the financial details of the second quarter and outlook before opening the call for your questions. There will be a replay of today's call that will be available via webcast on the Company's website @klxenergy.com.

And there will also be a telephonic recorded replay available until August 24, 2023. More information on how to access these replay features was included in yesterday's earnings release.

Please note that information reported on this call speaks only as of today, August 10, 2023, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.

Also, comments on this call will contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of KLX's management.

However, various risks and uncertainties and contingencies could cause actual results, performance or achievements to differ materially from those expressed in the statements made by management.

The listener or reader is encouraged to read the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies. The comments today will also include certain non-GAAP financial measures.

Additional details and reconciliations to the most directly comparable GAAP financial measures are included in the quarterly press release, which can be found on the KLX Energy website. And now I'll turn the call over to KLX Energy Services' President and CEO, Mr. Chris Baker.

Chris?.

Thank you, Zach, and good morning, everyone. We are very pleased with our second quarter performance.

We drove sequential improvement in adjusted EBITDA, adjusted EBITDA margin and free cash flow despite a weakened macro environment, driven by continued commodity price volatility and an 11% rig count reduction, nominally reducing our second quarter revenue by only 2%.

More importantly, our diversification enabled us to drive strong sequential results in the face of a challenging market backdrop. Q2 net income was $11.4 million compared to $9.4 million in Q1, an increase of 21% sequentially.

Adjusted net income was $13.1 million, a 14% sequential increase and adjusted diluted EPS was $0.81, which was also up sequentially. Adjusted EBITDA increased 4% sequentially to $39.7 million compared to $38.2 million in Q1 and adjusted EBITDA margin was 17%, which represents the strongest second quarter adjusted EBITDA margin since 2019.

KLX generated $47 million in free cash-flow during the second quarter.

We upsized and amended our ABL agreement pushing back maturity and increasing liquidity, and we reduced net debt 17% sequentially to $202 million, yielding a 1.3x net leverage ratio for both Q2 annualized and LTM as of Q2 2023, after generating an all-time high LTM adjusted EBITDA of $152 million.

We attribute our strong performance to the strength of our team in the field and our diversification, both geographic and on a product line basis. Our presence and reputation across all major U.S.

onshore basins coupled with our portfolio of services across the well life cycle positions us well for the most active and best capitalized customers in the sector and enabled us to deliver a strong second quarter.

Additionally, our improving margins and financial results in the face of a declining market bears witness to the quality and commitment of our team in the field and leadership throughout the organization. Despite an approximate 11% decline in rig count, we experienced relative strength across our completion and production and intervention PSL.

In particular, we saw a greater than 5% revenue improvement in our Technical Services business, driven by the strength in our fishing business and step change advances in our through Tubing technologies that we continue to build upon.

A 3% increase in our rental service line driven by continued strong customer demand for our fleet of latest generation BOPs and tubulars among other items and a 66% revenue increase in our frac rentals business driven by Green's activity as well as significant market penetration in the Rockies.

This rotation of activity to higher-margin product and service lines enabled us to increase margins across the KLX platform in the face of a modest overall revenue decline.

On the pricing front, we endeavored to maintain pricing to the detriment of utilization, which partially contributed to the sequential decline in our revenue, along with reallocating assets to more attractive basins.

However, with that being said, we were not immune to pricing pressure as the market remains fragmented and many peers were not properly focused on returns.

Inherently, service providers are more willing to chase price in order to backfill near-term white space and people-intensive service lines and the market saw numerous drilling and completion delays in Q2 as customers reduced active rigs and frac spreads.

Based on our recent customer conversations, along with the strength in underlying commodity prices, the market appears to be bottoming in Q3 and we are excited about Q4 and 2024 as we believe the market pendulum will again swing in favor of a more balanced market for service providers.

Lastly, during the quarter, we worked diligently to complete the integration of the Greens acquisition that was announced in March.

Green's proprietary wellhead protection, flowback and well testing services, provide synergies with our existing frac rental and flowback offering, delivering our customers a more comprehensive product offering in the Permian and Eagle Ford basins.

As of this week, I'm excited to announce that we have completed the Greens integration, fully implementing the previously disclosed synergies, and we continue to focus our attention on additional accretive consolidation opportunities.

Q2's performance highlighted the strength of KLX's diversified and integrated product service offering and demonstrated KLX's ability to generate strong free cash flow in a challenging market.

We continue to make technological advancements across our platform, driving utilization of our existing assets and providing more efficient, differentiated services to our clients. We believe Q3 will in hindsight be viewed as a minor dip in the overall recovery trend for oilfield services onwards into 2024.

With that, I'll now turn the call over to Keefer, who will review our financial results, and I will return later in the call to discuss our outlook in greater detail.

Keefer?.

Thanks, Chris. Good morning, everyone. As Chris mentioned, we reported quarterly revenue of $234 million, representing a nominal 2% sequential decrease, but outpacing the 11% sequential decline in rig count.

On a product line basis, drilling, completion, production and intervention services contributed approximately 25%, 54%, 12% and 9%, respectively, to revenues for the second quarter of 2023, which is largely consistent with Q1 despite the addition of Greens.

Northeast Mid-Con contributed 35% of Q2 revenue led by our pressure pumping, directional drilling and accommodations product service lines. The Southwest contributed 37%, led by directional drilling frac rentals and coiled tubing and the Rockies contributed 28%, led by rentals, coiled tubing and tech services.

We saw a material sequential shift in geographic revenue contribution as the acquired Greens business is fully contained within our Southwest segment and Q2 2023 was the first quarter, reflecting a full three-month contribution from Greens.

Additionally, we were very pleased to have experienced our sixth consecutive sequential improvement in adjusted EBITDA to $39.7 million, overcoming pricing pressures along with the much discussed commodity price volatility and rig count decline.

Adjusted EBITDA increased approximately $22 million over the second quarter of 2022 and $1.5 million sequentially. The sequential increase was driven largely by a shift in product service mix, less weather seasonality in the Rockies in Q2 and the roll-off of a portion of the payroll and unemployment taxes that burden Q1.

Adjusted operating income for the second quarter was $21.3 million. This was up 1% sequentially and represents one of the strongest quarterly results in KLX history. Total SG&A expense for Q2 was approximately $22 million.

When you back out the nonrecurring costs, adjusted SG&A expense for Q2 would have been only $21 million or just 8.8% of quarterly revenue. Q2 net income and diluted earnings per share were $11.4 million and $0.71, respectively. Adjusted net income and adjusted diluted EPS were $13.1 million and $0.81, respectively.

$13.1 million of adjusted net income is our highest quarterly result since Q3 of 2018 and the second highest quarterly result in Company history. Turning now to a review of our segment results, I'll begin with the Rockies. The Rocky segment's second quarter revenue was $66.4 million, representing a 2% decrease over first quarter 2023.

Adjusted operating income for the second quarter was $11.9 million. The slight decrease in revenue was attributable to a shift in product line mix as well as a slight decrease in activity in the DJ in Wyoming, which was partially offset by an increase in the Bakken.

Despite a slight revenue decline, we experienced a strong sequential increase in profitability. Adjusted EBITDA was $17 million compared to first quarter adjusted EBITDA of $15.5 million.

The increase in profitability was driven by reduced white space and an increase in contribution from our higher-margin services throughout the DJ, Wyoming and Bakken, led by rentals, tech services and frac rentals.

Moving now to our Southwest segment, the Southwest experienced a 17.6% sequential increase in revenue, generating revenue of $86.3 million in Q2.

The increase in revenue was primarily driven by a full quarterly contribution from the Greens acquisition, which is 100% contained within this segment, offset by a slight decline in the KLX based drilling and completions businesses. Q2 adjusted operating income for the segment was $8.1 million.

Adjusted EBITDA was $14.8 million for the second quarter compared to first quarter adjusted EBITDA of $10.2 million. The dramatic increase in profitability was driven by an elevated contribution from the higher-margin Greens acquisition. Now to wrap up the segment discussion with the Northeast and Mid-Con.

Northeast Mid-Con Q2 revenue was $81.3 million, a 17% decrease relative to Q1, driven largely by a shift in job mix in our frac business, where we continue to run 2 spreads at strong utilization and lower pricing and utilization and our broader drilling and completion service lines driven by the market disruption and the gas focus areas within this segment.

Adjusted operating income for the second quarter was $12.6 million and adjusted EBITDA was $18 million for the quarter. At corporate, our adjusted operating income and adjusted EBITDA losses for Q2 were $11.3 million and $10.1 million, respectively.

The corporate adjusted EBITDA loss improved by 10% sequentially, demonstrating our ability to layer in acquisitions and realize significant economies of scale. This is a core tenet of our consolidation thesis and we have seen the dramatic benefits play out over our last few deals. I'll now turn to our net working capital, cash-flow and capitalization.

Our second quarter 2023 cash balance more than doubled sequentially to $82.1 million from $39.6 million in Q1. The sequential increase in cash was largely driven by normalization of our working capital and our ability to efficiently convert adjusted EBITDA to free cash flow.

As a reminder, Q1 cash flow was impacted by a variety of working capital timing issues, which have since been resolved. We continue to proactively manage working capital and convert cash flow as quickly as possible. Net working capital was approximately $76 million in Q2, down 34% from Q1 as DSO and DPO normalized post those Q1 anomalies.

We reduced net debt 17% sequentially, ending the quarter with a net debt balance of $201.7 million. Based on annualized Q2 and LTM results, we have a net leverage ratio of 1.3x.

Total debt outstanding as of June 30 was $283.8 million, which was in line with our Q1 balance as we did not draw on or pay down the ABL nor did we execute any additional 3(a)(9) exchange transactions.

We ended the second quarter with $143.7 million in total liquidity, consisting of $82.1 million of cash and availability of $61.6 million under our June 2023 ABL borrowing base certificates.

As previously announced, we entered into an agreement in June to upsize and amend our ABL facility, resulting in considerable financial flexibility, better liquidity and an extension on our debt maturity profile.

We consider the amendment to be an important step that enables KLX to continue its focus on free cash flow generation, deleveraging and further accretive consolidation. Additionally, the amendment gives us ample runway and flexibility to advantageously cover the Company's bond refinancing needs over the next 24 months.

We exited the second quarter of 2023 on our strongest financial footing since 2018. We did not issue shares under our ATM in Q2 and have not issued any shares so far this year. Our share count remains at 16.4 million shares.

Now turning to CapEx, Capital expenditures for the second quarter were approximately $16 million, and we're primarily focused on maintenance spending across our various segments.

Going forward, we now expect total CapEx for 2023 to be in the range of $45 million to $55 million, down approximately 20% from our previous guidance range of $60 million to $70 million due to current market conditions.

This spend will be primarily focused on maintenance spending with approximately 80% supporting ongoing operations and the remaining CapEx earmarked for reactivation and growth focused on quick payback projects. As always, we reassess capital spending in real time based on prevailing market conditions.

During Q2, we sold approximately $3 million in assets and at the end of the second quarter, we still had $2.3 million of assets held for sale reflected on our balance sheet.

As we look to the remainder of 2023 and begin to think about 2024, our focus remains on maximizing free cash flow and further reducing net debt, all while being prudent stewards of capital as we pursue additional value-enhancing consolidation.

I'll now turn the call back to Chris who will provide some additional color on the current market and our outlook for Q3 and the remainder of 2023..

Thanks, Keefer. Before we wrap up, I'd like to share some additional detail on our outlook. KLX's diversification should help us navigate any near-term market disruption and dislocation.

We are well positioned to manage these disruptions given our competitive positioning and ability to take a portfolio allocation approach to managing our assets across a diverse product line and geographic footprint. . Yes, the second quarter was choppy with a larger decline in rig count than expected.

Still, we work to outperform market trends and May result set a new monthly record for monthly KLX adjusted EBITDA. Activity softened in June and as we enter the third quarter, we've seen consolidated rig count decrease an incremental 8% compared to a Q2 average of 719 rigs.

WTI price is currently $84, which is 14% above Q2 average and 18% above quarter end and natural gas price touched $3 yesterday for the first time since March.

For the third quarter, we expect modest softening of our results, but the business will continue to perform well as we maximize crew utilization and pricing in order to drive margins and free cash flow.

As we look out to full year 2023, we will continue to proactively manage our portfolio of assets to maximize our results in the face of market volatility and basin rotation with a focus on generating meaningful free cash flow.

Ultimately, the strength of commodity prices should drive returns for our customers and ultimately, additional underlying activity, but it takes time for the market to respond to changes in commodity prices and our public customers are showing tremendous capital discipline and restraint.

We expect Q3 revenue to be in the range of $215 million to $230 million, and adjusted EBITDA margin to be in the range of 14% to 16%. We have also updated our full year 2023 guidance.

As Keefer mentioned, we reduced full year CapEx guidance by approximately 20% to a range of $45 million to $55 million as we have deferred 2023 growth CapEx in light of the current market environment. Given the meaningful reduction in capital spending, we are commensurately modifying our full year revenue and adjusted EBITDA guidance.

Full year 2023 revenue is expected to be in the range of $900 million to $950 million and adjusted EBITDA margin in the range of 15% to 17%.

Given these margin levels and our modified CapEx guidance, we expect continued strong free cash flow generation over the remainder of 2023 and believe there will be minimal impact on full year free cash flow expectations.

Lastly, on consolidation, KLX has a long history of accretive inorganic growth and further to our go-forward strategy, we continue to actively pursue accretive and synergistic consolidation opportunities to grow and scale our existing platform.

We continue to believe KLX is the counterparty of choice for potential consolidation partners, both private and publicly traded due to our integration and synergy track record.

In summary, I would like to thank our over 2,200 dedicated team members for their commitment to safety and their focus on providing our customers continued top-tier execution in the field and market-leading technology and products.

And I would also like to thank our stakeholders who continue to show confidence in our efforts as we strive for excellence each and every day. With that, we will now take your questions.

Operator?.

[Operator Instructions] Our first question comes from David Marsh with Singular Research. Please proceed with your question.

Hey, good morning, guys, and thanks for taking the questions. First, I just wanted to ask the great job on the gross margin side.

Is this kind of a new level for you guys that you feel like you can maintain going forward? Or do you even think that there might possibly be a way to continue to grow it a little bit from here?.

Yes, David, it's a great question. I think Keefer kind of alluded to a number of puts and takes in the prepared remarks. We're very proud of where the gross margin settled out, where EBITDA margin settled out.

The big driver in Q2 was the rotation to our higher-margin product lines like we talked about and then to my earlier point, Keepers commentary around various costs rolling out of the system, unemployment taxes, FICA, FUTA, SUTA, et cetera.

And so those costs, by and large, are out of the system for the balance of the year now, and we'll continue to reduce over time. I think the question really becomes, why we updated guidance is what happens with white space, crew utilization, et cetera. The reality of the situation is 2023 has not played out like everybody thought it would.

Everybody was calling for kind of a tepid 50 to -- 40 to 50 rig increase. Reality is we've lost 120 rigs on a year-to-date basis. And of course, the gas market has been challenging. That being said, everybody is very bullish gas next year.

And so as we think through the go forward, we would think that the recent strength in commodity prices will have a positive impact on activity. And we think that the private operators who basically led the rig count decline on a year-to-date basis, they typically react quicker, throttle activity quicker.

And we think they will stand up some incremental activity if commodity prices remain strong, but there is always a lag. So how does that position KLX and to your point, the margin question, look, the reality is all the credit of our 2Q performance goes and our LTM performance for that matter goes to the team in the geo regions and the areas.

And we're very proud of those results. I think the question becomes, does the product line mix change as activity presumably increases. The benefit that we have is we're well advantaged to take advantage of increased demand on the drilling and completion side.

So even if the production and intervention side may be degraded on a percentage basis, which might lower overall margin, you would expect that to come in concert with increased revenue perhaps above the guidance range.

So I'll kind of wrap up with saying, look, when you're in transition periods of markets like this, customer delays, especially with any single multi-well pad can have outsized impacts on very tight ranges because it impacts multiple KLX services, but the name of the game is to manage our cost structure to remain flexible.

And so I think that's what we do very well. I'm a huge baseball fan. We speak to our team every month and say, guys, focus on winning every single month. And baseball, if you win every inning, you win the game, it's real simple. And that's what our team is focused on is winning every month, and that continues to lead to outsized quarters..

That's really helpful, Chris. And then my second question, Keefer, you mentioned SG&A would have been closer to about $21 million in the quarter. It's still a little bit higher than where you had been, but obviously, you brought on some new assets and some new folks.

Do you think there's still some more efficiencies to be run out there? Or do you think that the 2021 range is kind of more where you're going to be as we roll forward?.

Yes, Dave, good question. I think we're really proud with the way we've managed the cost structure coming out of the downturn and then through the integration process with Green. So I think if you think about the normalized Q2 G&A level and kind of that 20% to 21% range, I think that's consistent with where we'll be on a go-forward basis.

We're going to be able to continue to scale the business, both organically and inorganically without adding much from an incremental G&A perspective..

That's a good news story right there. Last question for me and I'll yield to some other folks. Obviously, the cash balance has grown to a really nice and very respectable number here, but you're not getting paid a lot sit in cash.

So my question is, what's the intended use of the cash? And in particular, with regard to that, are the bonds callable here anytime in the near term? And could you do a partial call on the bonds of some of that cash and maybe reduce that leverage and net interest expense a little more?.

Yes. Thanks for the question. I'll jump in here. We have had, I think, tremendous success at generating free cash flow on a year-to-date basis. Certainly, if you think quarter-over-quarter, cash more than doubled. We are sitting as of $630 million at north of $82 million of cash on hand.

I would say that thanks to the Fed, you actually can make a decent return on a cash balance today. So we actually do have some nice yielding cash accounts available to us.

And I think from a strategic perspective, when we think about what are we most focused on as a team and as an organization, it's first and foremost, it's continuing to generate free cash flow. It's continuing to reduce our net debt. Obviously, we built cash this last quarter. We drove net debt down to just over $200 million.

Our leverage ratio is now down to 1.3x on both the last quarter annualized as well as an LTM basis. So I think we're sitting on really firm footing from a capitalization standpoint. . And lastly, we're going to continue to look to grow the business inorganically.

And we've got the Greens integration in the rearview at this point that went exceedingly well. We were happy to get that done on a pretty expedited time line. And we're back to looking at additional opportunities to continue to scale and grow the platform.

The ABL extension and amendment and upsize that we put in place this past quarter also provides us a tremendous amount of flexibility. We increased the deal by 20% and pushed our maturity out to line up with our bonds.

So we think we're really well positioned from a free cash flow generation standpoint and flexibility and tenor standpoint as you think about the capital structure today..

So is there anything you can do with the bonds early in terms of like a partial call or no?.

So the bonds are callable today, it's at a premium..

And does it step down to par at some point in the next 12 months?.

Yes..

Okay. All right.

And it's -- you can do a partial, correct, if you wanted to?.

Well, you could always tender for a portion if you elected to..

Right. Yes.

Well, nobody is going to want to give them up?.

Look, I think with our capital structure today, I think we're going to have a wide range of options and opportunities as we think about our ability to refinance the capital structure. But we're on really sound footing.

We have a strong cash balance, strong free cash flow generation, and we're exiting the quarter with right around a 1.3x leverage ratio..

Sure, sure. Yes, I would agree..

Our next question comes from Luke Lemoine with Piper Sandler. Please proceed with your question..

Hey, good morning.

On the growth CapEx reduction, could you talk a little bit more about where and what investments were trimmed?.

Sure. We talked about this a little bit last quarter, if you recall. I mean, Candidly, we continue to experience delays in deploying capital, specifically in our rentals business, somewhat in our DD business around tubulars, mud motor steel products.

And then, of course, everybody has discussed the well-known issues around the engine side of the business, right, engine and power ends for various frac pumps, pump down pumps, coiled tubing units, et cetera. Last quarter, we talked about the deferment of approximately $12 million to $15 million, we're calling a growth CapEx.

Some of it is, as you will definitely understand is also redeployment CapEx where you're standing up certain assets. And we evaluate those decisions constantly and in real time in concert with the market. And so to date, we've deferred a number of projects in this budget just out of prudence as we watch year-to-date rig count fall.

And so as we look at the bucket today, it's about $15 million of CapEx. That ties out to the reduction in overall guidance. And it spans multiple product lines that should the market strengthen, we'll still have pretty attractive paybacks.

But so that would include accommodations, that includes some initiatives on the DD side, that includes standing up the third frac spread as well as various other product lines.

And so the other thing I would add that ties to your question on CapEx is, if you recall last quarter, we stated that Greens had some delayed CapEx, and we intended on refurbing some of their existing fleet, both on the automotive side and the equipment side.

And so that initiative has already substantially been undertaken and that incremental CapEx is included in the updated range. So I just want to clarify that as well..

Zach, I'll now turn the floor over to you..

Thanks, Rob. John Daniel wasn't able to join the call today. He's traveling, but he sent in some questions and I'll ask those on his behalf now. [Interpreted] Congrats on the strong Q2 despite market volatility.

As you look out to the rest of 2023, which service lines are you getting the most inquiries for Q4?.

Great question. John, we can catch up offline as necessary. But as you well know, we're candidly in constant conversations with customers about ongoing completion schedules, drilling schedules, et cetera, long before the recent run-up in commodity prices. So it doesn't really feel like much has changed yet is how I'll caveat it.

That being said, look, we've got clients in the Haynesville that are either picking up rigs, driving needs for our accommodations business or discussing standing up frac spreads, late September, early October that will drive incremental need for our frac rentals and flow-back business.

And I know I referenced the Haynesville because that's been the focal point for so many people. That being said, we have started to have some conversations and are hearing some chatter about incremental rigs on the DD side as well as incremental frac activity in Q4. Elsewhere, we won some dedicated wire-line work in Q4.

We've got several comprehensive drill-out packages that include our BOPs, tubulars flow-back, et cetera, that we've won in Q4 in other basins. And then we've also been dedicated various clients, coiled tubing and through Tubing package work for drill outs in Q4. So we're very excited about that with some technologies we're bringing to bear.

And then I guess lastly, we've seen some uptake in adoption on our new Gen 3 dissolvable plug. So we're excited about that. So I think what it shows is the discussions are really a product portfolio allocation approach, and we're seeing opportunities across the full product line..

[Interpreted] Great.

And then as you ponder new deals, are you targeting any specific business lines or geographies?.

No, it's a good question.

I think we addressed this last quarter as well, but when you know we have historically on numerous calls, when you think about our regional and service line offering diversity, we're not really myopically focused on any one basin in our product line and think there's a fertile opportunity set for consolidation and needed consolidation across a number of PSLs.

To Keefer's point earlier, strategic fit, valuation, leverage profile, industrial logic technology and maybe most importantly, culture and then synergy value, of course, the drivers especially in the case of public to public deals where the synergy value can be material. What I will say is deal flow has picked up of late.

We're reviewing numerous opportunities. The question I think really is what happens to sell our expectations. And we've seen this all too often, sellers prefer to hold on in the face of any sign of an up cycle or commodity price strengthening, hoping to outperform on a relative basis.

The reality is they'd be better off on a through-cycle basis, taking equity or some portion of equity, realizing valuation uplift from the combined synergies and then timing their exit as they realize the cycle upturn to the extent it plays out like they think it will.

And I guess on that point, valuation is the other major hurdle by and large, most small to mid-cap companies are trading at very modest multiples by historical standards. And while there are a select few outliers in both directions, the majority of companies are trading at 2 to 3x.

And so I've heard more management teams this quarter kind of limit the point publicly than I probably ever have before. And I think a lot of that angst is tied to convincing private equity backed and private operators to execute on consolidation opportunities at low multiples despite the need for consolidation across the market.

So we've got a great track record. We think KLX provides liquidity where sellers can better time their exit. And we think we've got a great platform for driving consolidation and a great team here to realize the benefits. So we'll see how the market plays out..

Okay. And then that concludes our question-and-answer segment. Now I'll turn it back over to Chris for closing comments..

Thank you, Zach, and thank you once again for joining us on the call today and your interest in KLX Energy Services. We look forward to speaking with you again next quarter..

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day..