Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the DNOW Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Brad Wise, Vice President of Digital Strategy and Investor Relations, you may begin your conference..

Well, thank you, Rob. Good morning, and welcome to DNOW's second quarter 2024 earnings conference call. We appreciate you joining us, and thank you for your interest in DNOW. With me today is David Cherechinsky, President and Chief Executive Officer; and Mark Johnson, Senior Vice President and Chief Financial Officer.

We operate primarily under the DNOW brand, which is also our New York Stock Exchange ticker symbol. Please note that some of the statements we make during this call, including responses to your questions, may contain forecasts, projections, and estimates, including, but not limited to comments about our outlook for the company's business.

These are forward-looking statements within the meaning of the U.S. federal securities laws based on limited information as of today, August 7, 2024, which is subject to change. They are subject to risks and uncertainties, and actual results may differ materially.

No one should assume these forward-looking statements remain valid later in the quarter or later in the year. We do not undertake any obligation to publicly update or revise any forward-looking statements for any reason.

In addition, this conference call contains time-sensitive information that reflects management's best judgment at the time of the live call. I refer you to the latest Forms 10-K and 10-Q that DNOW has on file with the U.S. Securities and Exchange Commission for a more detailed discussion of the major risk factors affecting our business.

Further information as well as supplemental financial and operating information may be found within our earnings release on our website at ir.dnow.com or in our filings with the SEC. In an effort to provide investors with additional information relative to our results as determined by U.S.

GAAP, you'll note that we also disclose various non-GAAP financial measures, including EBITDA, excluding other costs, sometimes referred to as EBITDA, net income attributable to DNOW Inc. excluding other costs, and diluted earnings per share attributable to DNOW Inc. excluding other costs.

Each excludes the impact of certain other costs and therefore have not been calculated in accordance with GAAP. Please refer to a reconciliation of these non-GAAP financial measures to its most comparable GAAP financial measure and the supplemental information available at the end of our earnings release.

As of this morning, the Investor Relations section of our website contains a presentation covering our results and key takeaways for the second quarter of 2024. A replay of today's call will also be available on our website in the next 30 days.

We plan to file our 2024 Form 10-Q for the second quarter later today and will also be available on the website. Now, let me turn the call over to Dave..

Thank you, Brad, and good morning, everyone. Before I talk about the business, I'd like to recognize the perseverance of our employees through the disruption caused by two recent storms, the Derecho thunderstorms in May and the more recent Hurricane Beryl in July.

Both storms directly impacted many of our employees, causing widespread loss of power and destruction of personal property. Without hesitation, our DNOW employees selflessly stepped up, extended a helping hand and supported one another and our communities. I'm impressed with the way we came together to help one another in a time of need.

This collective response is emblematic of DNOW's culture and brings me a great deal of pride. In that same spirit of teamwork and community, in the first quarter, we joined forces with Whitco Supply, tapping into a talented team with strong leaders and technical expertise who earn deep affection from their customers.

Their supply chain design, strength in midstream, world class sales team, and keen focus on customers piqued our interest when we pursued that combination. The Whitco people and culture were a natural fit with how we've transformed DNOW to live and breathe those same cultural attributes.

During these last six months, it's remarkable to see the deep esprit de corps and cultural alignment our team share, elevating DNOW to expand our value and reach in the market to help fuel greater success together. In terms of highlights for the quarter, there were many.

We produced strong earnings, having grown revenues organically in the second quarter despite headwinds. We grew our legacy midstream business coupled with the onboarding of Whitco, where we have more than doubled our midstream coverage.

We are seeing success along our trek to double our energy evolution sales in 2024, a key element of our long-term strategy. We generated inventory velocity of five turns in the quarter, a high mark which is even harder to do in a slowing market.

We drove the best DSOs we've seen since 2020, and we produced cash when we expected to consume it given a substantial cash generating first quarter. And with our quarter execution, we more than funded the share repurchases we made in the quarter. This is great execution by our teams. And now, moving to our results.

The strength in our second quarter performance was evident against the combination of headwinds from lower gas prices, lower U.S. rigs and completions, and the unfavorable impact from the seasonal breakup in Canada.

Second quarter 2024 revenue grew sequentially $70 million, or 12% from Whitco's full quarter contribution combined with growth in International and in our legacy DNOW U.S. Energy Centers and Process Solutions businesses. We generated $50 million in EBITDA for the quarter.

Strong bottom line performance, which was aided by $2 million in favorable items not expected to recur in the third quarter. We generated $18 million of free cash flow during the quarter, bringing the year-to-date amount to $98 million and our trailing four quarters free cash flow totaled $201 million.

In North America, onshore oil and gas activity in the U.S. is more challenging than in recent times due to E&P consolidation, low natural gas prices hampered further by a lack of natural gas takeaway infrastructure, LNG export capacity and political posturing.

Yet, we are focused on opportunities where we see growth and one area we've been focused on is midstream.

Our Whitco acquisition further expanded our business in the midstream market, a sprawling, geographically diverse network of LACT units, pumping stations, metering skids, and pipes, valves, fittings infrastructure, one that is aging and undersized for current and future demands.

The midstream market vertically complements our upstream offerings and strengthens our partnership with and importance to the key manufacturers we support.

This market provides a steady diet of day-to-day MRO business combined with a buffet of capital projects aimed at debottlenecking upstream capacity constraints through the expansion of midstream infrastructure with demand pulled through, expanded export opportunities for crude oil, refined products and LNG.

We remain excited about growing opportunities in the energy evolution space, where we are seeing more use cases of CO2 and expanded enhanced oil recovery combined with an increasing backlog of CO2 storage permit submissions to coincide with capital investments in CCUS.

Direct air capture technology remains promising, currently contributing to our revenue profile as we expect more units to be constructed to reduce the atmospheric concentration of CO2.

And in the renewable gas -- natural gas sector, our patented process technology from our EcoVapor business offers biogas and landfill gas operators the ability to treat their waste gas by removing oxygen, sulfur, and excess water to meet pipeline transfer specifications.

We are making progress in expanding our industrial adjacent markets with increased participation in the mining sector in municipal water and chemicals markets.

These target markets align well with our service areas, our current product lines, and present new demand for our process solutions, pump packages, mechanical seals and field service capabilities.

On the International front, with industry experts forecasting continued capital investment and growth and activity in regions like the U.K., Norway, Netherlands, Australia and the Middle East, we believe there is opportunity to improve the profitability of our International business as we strategically increase our focus on specific locations, products and solutions to provide the greatest value to our customers.

Now, some details on the business. In the U.S., revenue was $512 million, up $77 million or 18% sequentially from the full quarter impact of our Whitco Supply acquisition plus mid-single-digit revenue percentage increases from our U.S. Process Solutions and our legacy U.S. Energy Centers businesses. U.S.

rig counts contracted 3% sequentially, down 17% year-over-year as U.S. completions declined 4% or down 13% year-over-year, both contributing to the temporary slowdown that we're navigating.

During the quarter, additional customer consolidations were announced, and for some of our customers, those pending deals have impacted project timing, resulting in funding and approval delays or project timeline shifts.

During the quarter, activity with our supply chain services customers improved sequentially, driven by a blend of projects, well maintenance activity, and infrastructure upgrades. We expect some of these larger customers by design to curtail their level of spending in the second half, like we experienced last year.

At our Williston, North Dakota Megacenter, we consolidated a number of third-party operating yards to a single centralized yard and expect the consolidation to improve customer service and enhance efficiencies.

In the Bakken, we provided PVF to an operator, currently one-third of the way through their refrac program, an example of an operator analyzing older shale wells to improve their production through enhanced refracking techniques.

In the Northeast, we secured a new materials management and integrated supply contract with a regional utility company who market natural gas, LPG, electricity, and renewable energy solutions. In U.S. Process Solutions, demand for our products grew sequentially despite lower completions during the quarter.

Our Flex Flow H Pump rental utilization rates remained strong during the quarter, reflecting steady demand for our mobile horizontal trailer solutions used to dispose and produce water, saltwater disposal, and enhanced oil recovery applications. We are further investing in this business to capture market share and service other areas.

Our mechanical seal, industrial air packages, and pump service and repair offerings have been a key focus area for growth, and we saw notable progress in the quarter. Executing on our diversification strategy, we added a new pump manufacturer distribution agreement to expand our product offering in the municipal water market.

We provided mechanical seals and pumps to several power generation operators. In the mining industry, we secured supplier agreement from a uranium mine operator, and in the chemical processing market, we are gaining traction by increasing our presence to a large installed pump market by offering aftermarket services tied to asset maintenance.

Our pump packages, mechanical seals, and field service is a fungible offering, enabling opportunities for diversified growth and revenues across various industrial adjacent markets. In Canada, revenue was $56 million for the quarter, lowered 15% sequentially as expected, primarily due to the impact breakup has during the quarter.

In the quarter, we noted several wins in industries that helped diversify outside our core market. We secured a three-year agreement to provide vendor-managed inventory for a steel manufacturer and won a notable project with an independent power producer on top of the current day-to-day MRO business.

We added a new Alberta based operator who plans to ramp up activity in the oil sands area and executed a three-year PVF MRO contract with an oil and gas producer. For International, revenue was $65 million, up $3 million, or 5%. The increase in revenue during the quarter was primarily attributed to Middle East projects.

Revenue with major oil and gas operators improved sequentially, with a majority of revenue coming from brownfield projects as opposed to new infrastructure builds. Electrical products continue to be the majority of products sold by our International segment, followed by pumps, valves, and industrial and safety products.

A couple of notable projects include an FPSO project in Australia, an LNG project in Southeast Asia where we supplied valves and fittings. And finally, in Norway, we secured a supply agreement contract from an OEM to provide electrical cable for facilities and new builds. And now, a few comments related to energy evolution.

Over the last few quarters, we've been delivering PVF products tied to a large scale gas gathering project that will transport natural gas and redeliver it to the Gulf Coast markets, including for LNG export. The scope of the project includes a carbon capture portion that will permanently sequester up to 2 million tons of CO2 annually.

Across the U.S., we provided PVF products, customers used to upgrade existing infrastructure to eliminate methane atmospheric leaks. Many of these initiatives are tied to customer managed greenhouse gas reduction programs.

We are making inroads into the mining sector by providing pumps and pipe valves and fittings products into the soda ash mines and the extraction of lithium to support growth in battery production. Through MacLean International in the U.K., we provide an assortment of PPE tools and electrical cable for a variety of offshore wind projects.

We also expanded our sales efforts and secured orders for tools, harnesses and electrical cable for a new offshore wind customer base in the Netherlands. Moving to our DigitalNOW initiatives, our digital revenue as a percent of total SAP revenue was 48% flat sequentially.

With a major midstream customer, we completed systems integration, data visualization, and a punch-out e-commerce catalog project. The enhanced integration will drive a more user-friendly and efficient method of sourcing and procurement for the products we offer to support their operations.

With our AccessNOW automated and unattended inventory control system, we were able to reduce costs and overall operating expenses for a customer at a downstream chemical facility. And switching to M&A, a key part of our growth strategy, DNOW is in a great position.

We remain debt free with $197 million in cash on our balance sheet and $579 million in total liquidity. That affords a multitude of options to organically and inorganically grow the company and increase value to shareholders.

We are in various stages of engagement with multiple targets in our pipeline and are focused on accretive deals, where we are the natural operator and where we can add value and increase the contribution of the acquired firm. With that, let me hand it over to Mark..

Thank you, Dave, and good morning, everyone. Total second quarter 2024 revenue was $633 million, up 12% or $70 million from the first quarter of 2024. EBITDA, excluding other costs or EBITDA for the second quarter was $50 million, or 7.9% of revenue. U.S.

revenue for the second quarter 2024 totaled $512 million, a $77 million increase or 18% higher than the first quarter of 2024. Year-over-year U.S. revenue increased $56 million or 12% from the second quarter of 2023. The U.S. sequential revenue increase was driven by the full quarter contribution of Whitco paired with U.S.

growth in both Energy Centers and Process Solutions in the quarter. U.S. Energy Centers contributed approximately 74% of total U.S. revenue in the second quarter, and U.S. Process Solutions contributed approximately 26%.

In Canada, for the second quarter, revenue totaled $56 million, a decrease of $10 million, or 15% from the first quarter of 2024, as expected due to seasonal breakup.

International revenue for the second quarter of 2024 was $65 million, up $3 million, or 5% sequentially, primarily from projects in the Middle East not expected to repeat in the third quarter.

Gross margins declined 110 basis points from the first quarter of 2024 to 21.8%, with about half the change attributable to declining steel pipe prices, product and project mix, and competition intensity, and the other half primarily resulting from the impact of acquisition purchase accounting flushing out in the second quarter for inventory step-up to fair market value.

Warehousing, selling and administrative, or WSA, for the quarter was $105 million, up $4 million sequentially, primarily related to the Whitco full-quarter contribution, partially offset by approximately $2 million in favorable WSA quarterly impacts not expected in the third quarter.

We forecast the third quarter WSA level should approximate $107 million and could lower towards $103 million in the fourth quarter. In the second quarter, we reported $9 million of depreciation and amortization expense, and for the third quarter 2024, we forecast depreciation and amortization to be approximately $8 million.

Now, moving to operating profit. In the second quarter, total company operating profit was $33 million. Respectively, the U.S. generated $28 million, Canada delivered $2 million, and International contributed the remaining $3 million in operating profit in the second quarter of 2024. Interest income in the period was $1 million.

Now, moving to income taxes. In the second quarter of 2024, DNOW's income tax expense was $8 million and $16 million year-to-date. Our effective tax rate, as computed on the face of the income statement was 25.8% year-to-date 2024. We estimate our 2024 full-year effective tax rate will be approximately 27% to 28%.

From a cash income tax perspective, we're not expecting to pay U.S. federal cash income taxes in 2024 due to available net operating loss carry-forward. Net income attributable to DNOW Inc. for the second quarter was $24 million, or $0.21 per fully diluted share. And on a non GAAP basis, Q2 2024 net income attributable to DNOW Inc.

excluding other costs, was $28 million, or $0.25 per fully diluted share. Moving to the balance sheet. At the end of the quarter, we had a cash position of $197 million in zero debt. Cash increased by $9 million in the second quarter, driven by our cash generation from operating activities, partially offset by stock repurchases in the quarter.

We ended the second quarter with total liquidity of $579 million, comprising our net cash position of $197 million and $382 million in additional credit facility availability. Our existing $500 million revolving credit facility extends into December 2026, providing DNOW with immediate access to capital under the facility.

Ending accounts receivable was $403 million, a decrease of $7 million from the first quarter. Days sales outstanding, or DSO, was 58 days at the end of the second quarter, the lowest level since the fourth quarter of 2020.

And inventory was $399 million at the end of the quarter, a decrease of $29 million from the first quarter, with a quarter annualized turn rate of 5.0 times. Accounts payable was $278 million at the end of the second quarter, a decrease of $61 million from the first quarter, primarily based on timing and volume of inventory purchased in the period.

And for the second quarter of 2024, working capital, excluding cash as a percentage of annualized second quarter revenue was 16.4%. The second quarter cash provided by operating activities was $21 million and $211 million for the trailing four quarters ending June 30, 2024.

We invested $3 million in capital expenditures in the second quarter of 2024, bringing our second quarter free cash flow to $18 million. We continue to execute on our share repurchase program that is authorized through December 31, 2024 and repurchased $10 million under the program in the second quarter.

As of June 30, our cumulative repurchases under our $80 million authorized share repurchase program totaled $67 million.

Our commitment to growing the company through accretive, organic and inorganic growth remains a key priority while also having the ability to repurchase shares opportunistically as we use the tools in our capital allocation framework to generate attractive shareholder returns without deviating from our disciplined approach to balance sheet management.

We continue to be debt-free to keep cash flow generation a top priority. And with that, let me turn the call back to Dave..

Thank you, Mark. Now, switching to our outlook for the third quarter and full year 2024. In the U.S., we expect activity to be lower sequentially as U.S. operating rigs and completions are expected to be muted due to weak gas prices in addition to customer budget throttling and tentativeness around upcoming U.S. elections.

In Canada, we expect growth from the second quarter as more favorable weather patterns afford increased activity. Internationally, we expect activities to be lower sequentially due to project timing.

Taken together, we expect DNOW's third quarter sequential revenues to be flat to down 5% from Q2 '24 with EBITDA to approximate 7% of third quarter revenues.

And for the full year 2024, revenue could increase in the low-to mid-single-digit percentage range compared to full year 2023, and our 2024 full-year EBITDA percent could approximate 7% to 7.5% of revenue. Free cash flow for 2024 could approach $200 million.

We have a legacy of supporting our customers for the past 160 years, and the long-term outlook remains strong as we are positioned to capitalize on market opportunities despite slowing activity advantaged by the solutions we offer today, underwritten by our strong balance sheet.

Our priorities are, first, to finance and seize organic growth; second, to execute on strategic and tuck in margin accretive acquisitions; and third, to opportunistically repurchase shares, a program which we intend to complete by year end.

We will invest and grow our core market, capture additional revenues from the growth in investments tied to energy evolution, and diversify our customer base by targeting revenue from additional industrial markets while driving efficiencies across our business. And finally, I'd like to close with where we began with our employees.

I was fortunate to spend a couple of days in Wyoming at one of our brightest growth locations. We opened a new facility situated in the heart of the town, designed with a customer focus set up for educating our customers on the products and services we provide.

At the grand opening, we had over 130 customers, suppliers, employees, the mayor and the town council; a true community event. One of the council members, an obvious fan of our team, shared some of his thoughts about who we are.

Some of the sentiments shared, which speaks to our culture as a whole, include to be leaders requires creating lasting partnerships with our customers, our communities and our suppliers. The steadfast force keeps the wheels of each of our local industries and communities turning and fusing the lifeblood into our local communities and our company.

We cherish, admire and celebrate our employees who are dedicated, skilled and passionate to delight the customer who work tirelessly to help solve complex challenges. Our employees do more than sell steel products and the components to help our customers extract, gather, transport, process, and market traditional and new energy to the world.

Our employees build bridges. Bridges that span not only between businesses, but also between innovation and tradition and between aspirations and achievements. We are building our bridge to the future and the solutions we offer today forge the promise of progress, the resilience of our communities, and the spirit of collaboration.

We are architects of possibility, engineers of growth, partners for sustainability, and stewards of lasting impact. For all the women and men of DNOW, our opportunities are abundant to take DNOW to a bright future and to build bridges that connect the reality today to the promise of tomorrow. With that, let's open the call for questions..

[Operator Instructions] Your first question comes from the line of Nathan Jones from Stifel. Your line is open..

Good morning, everyone..

Good morning, Nathan..

Good morning..

I think I'd just like to start off asking a question about, what's changed for you guys over the last six months. We started off the year expecting some low growth, I guess, for the business. And now ex-Whitco, we're kind of looking more at minus 10.

I think I know a number of drivers here in terms of what's going on in the market, but maybe you can talk about, what's changed in your view of the market over the last six months and how that played out in terms of your order rates during the year and specifically in the second quarter and into the third quarter..

Okay. That's a good start-off question, Nathan. In terms of what's changed, so far this year, in fact for some time last year, we saw rigs decline much of the year. I think they dropped about 20% in 2023 compared to the prior year, and they continue to drop this year.

As you know, that's one of the key barometers ultimately of the revenue opportunity for the company. In parallel to that activity, or those metrics are completions trends, completions have been down for several quarters.

And if you recall, over the last four quarters, perhaps not just DNOW, but industry participants have been calling for a bottom for rig count declines and completions, which just simply hasn't occurred yet. So, we've seen further erosion in activity around completions and rig counts.

And the current expectations are that may bottom in the second half of the year or early in 2025. So, that gives us pause as to where we invest, how we resource the business, how we manage expenses, and those things. But our view is, we believe, temporarily changed.

We think we've got some green shoots going -- or some bright spots going into next year, but that's been the kind of evolution in our thinking..

That was actually going to be my follow-up question. You said that in your answer, and you said in your prepared remarks as well, that you think this is temporary.

Can you talk about why you think it's temporary and what those green shoots are?.

Well, I think sure, some things we believe are true, or at least being talked about. Oil demand is growing, for one thing. We think that accrues to our benefits. Export LNG opportunities are going to be growing in '25 and 2026. We're well poised to capitalize on that. We think there is a tentativeness or a timidity by some about the U.S. elections.

And I think once the decision is made or the U.S. citizens render a verdict, I think we'll see some tentativeness ease. Gas futures are expected to be in the $3 plus range and we'll benefit from that next year. Interest rate cuts we think is -- I think most people think is imminent. That should grease the economy.

Steel prices, while they've been declining for many quarters, we're starting to see some manufacturers talk about longer lead times and higher utilization rates. We believe that suggests an improved or less lower product availability and we'll be well poised to run the supply chain better than the average participant out there. Plus, energy evolution.

As a key part of our long-term growth strategy, we're gaining traction there. We expect that to grow. We had about $30 million energy evolution sales last year. We expect that could double this year. So those are the things that underpin our confidence going into next year..

Okay. Thanks for taking my questions..

You're welcome..

[Operator Instructions] Your next question comes from the line of Jeff Robertson from Water Tower Research. Your line is open..

Thank you.

Dave, on the energy evolution, did you say $60 million of potential revenue in 2024?.

I did, Jeff..

And do you have a view on -- based on what you're seeing from projects or customer inquiries, of where that could go in 2025?.

We don't right now. I mean, what we think is -- what we're seeing is a significant ramp-up in quotes, which to me is only suggesting more interest around budgeting and those kinds of things. And we're seeing more orders, and the more orders matriculate into sales in 2024, like we said.

How that translates, what the timing is going to 2025, I don't think we have a good feel for that quite yet, Jeff..

With respect to revenue per rig, I think you -- revenue per rig was about 15 -- or $1.5 million in 2Q '24. It looks like in the U.S., it was quite strong.

Are you seeing market share gains in the U.S.? And with respect to consolidation, do you think as companies get together and maybe adjust their supply chain management practices, that creates market share gains or maybe increased wallet share gains with some of your customers?.

Yes. I think the phenomenon that we're slowly beginning to see is as the -- our economy in our oilfield kind of focused space slows down, we're seeing some of our smaller competitors, and they tend to be the competition we fight against day-to-day. They're being a little more careful. They're making some reductions. They're liquidating inventory.

And as that's happening, our large customers are consolidating. And only a few distributors can adequately come up with the product requirements and pricing arrangements and geographic breadth to service those consolidated customers. We think that accrues to our benefit.

So -- but now there's a period of time, once these big companies come together, where there's a -- there's kind of a tiptoeing around who's going to do what. There tends to be a delay in projects, things get deferred. We believe we're feeling that right now, and we think that will abate in the coming quarters.

But -- so we think we're taking market share. We think long term, those customer consolidations work to our benefit, and we want to be poised to capitalize on it..

And lastly, with respect to your midstream footprint -- excuse me, with the Whitco acquisition, are you seeing increased activity as midstream companies look to try to debottleneck the gas network? And I think Waha gas in West Texas was way negative yesterday, and there's obviously a lot of gas that seems to be stranded from a market standpoint.

Is that driving activity that you think you'll see in 2025 and 2026 even?.

Yes, Jeff. This is Brad. I'll take that. And maybe Dave or Mark can add additional color. But absolutely, we're seeing, certainly with the associated gas produced in the Permian, with Waha prices being well below a $1, some challenges to move that gas to the Gulf Coast market.

So we've seen a couple of announcements that's come out recently to help alleviate, the large amount of associated gas there to help with additional takeaway capacity. That's going to take, probably, a year to two years to add additional capacity. And I think the Matterhorn pipeline was delayed a little bit.

I think LNG export capacity had some additional delays to be able to grow that, out of the Gulf Coast with delays with Freeport LNG. So, I think over the next, six to 12 months, I think we'll start to see some more relief there.

Really, the question is, will the, you know, dry gas basins come back into play and be able to get, some of that either dry gas from the Haynesville to the Gulf Coast markets? And can we get an increased takeaway capacity from the Permian and Eagle Ford to the Gulf Coast markets as well? So what we think long term, demand sets up well, for gas for us to be able to export LNG.

And so, DNOW sits in a good position to be able to capitalize on the midstream sector with our legacy business and with our Whitco business. We think we've got many of those basins I've mentioned as well as additional ones covered with our current service model and access to new customers that you mentioned -- that I mentioned earlier with Whitco.

Also think that in Canada, where hopefully we'll see some additional relief in LNG out of the West Coast there may be in the next couple of years. So again, long term, I think it sits up well.

Short term, I think we're trying to alleviate some congestion and look for additional takeaway capacity to help drive incremental rig count demand tied to natural gas..

Thanks, Brad..

And there are no further questions at this time. Mr. Brad Wise, I'd turn the call back over to you..

Okay. Well, thank you for your questions today and your interest in DNOW, and we look forward to talking to everyone on our third quarter call scheduled for November later this year. With that, I'll turn it back to the operator to conclude our call..

This concludes today's conference call. You may now disconnect..