Ladies and gentlemen, greetings and welcome to Flotek Industries' Second Quarter 2020 earnings conference call. [Operator Instruction] It is now my pleasure to introduce Danielle Allen, Senior Vice President and Chief of Staff of Flotek. Welcome Danielle. Good morning..

Thank you and good morning everyone. We appreciate your participation. Joining me today and participating on the call are John Gibson, Chairman, Chief Executive Officer and President; Michael Borton, Chief Financial Officer; TengBeng Koid, President of Global Business; and Ryan Ezell, President of Chemistry Technologies.

On today's call, we will first provide prepared remarks concerning our business and results for the quarter. Following that, we will answer any questions you may have. Yesterday, we released our earnings announcement for the second quarter, which is available on our website. Please note we have also posted a supplemental presentation on our website.

Today's call is being webcast and a replay will also be available on our website. Please note that any comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control.

These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC.

Also please refer to our reconciliations provided in our earnings press release, as management may discuss non-GAAP metrics on this call. With that I will now turn it over to John..

Thanks very much Danielle.

As we face these extraordinary times together, as a company and as a country, I am extremely grateful to our employees for their work ethic, commitment, and can do ingenuity prioritizing the safety of our employees, customers and the communities where we work is our top priority, and we continue to focus on providing a safe working environment for all under very tough circumstances.

We're fortunate to be optimally positioned in this market given our strong financial position with a little debt and a healthy cash position. Flotek is highly focused on fostering an entrepreneurial culture compromised of talented, highly motivated people with impeccable integrity. It will allow us to move ahead with speed and focus.

These characteristics of Flotek are extremely important to position our company for the future. As such, I'd like to provide updates on our leadership team and then go into further detail on the macro environment and the actions Flotek is taking particularly in terms of new growth opportunity.

The management changes, one of the most rewarding aspect of my job is identifying and developing leaders who can build a differentiated, best-in-class business that leverage extraordinary opportunity that we have before us. And we have that team.

This is a team that is entrepreneurial, who can work together to bring value to all of our stakeholders during one of the most challenging environments in history. So, I'm excited to introduce new additions to our leadership team, are helping to position Flotek for future growth.

First, I'm really excited to have Mike Borton join as Chief Financial Officer. Mike is a strong financial and operational leader who is highly experienced in building and accelerating growth for digital and Software as a Service technology companies. Another great strength of Mike is cost management.

And I think that you'll see he is very aligned with how this company is controlling the controllables. Next, we're pleased TengBeng Koid joins us in the newly created role of President of the global business where he oversees our domestic and international business development strategy for both divisions to Flotek.

One of Koid's key responsibilities is to accelerate the transition of JP3s data as a service and open doors to new markets. I really hope you'll take the time to review his credentials as they speak for themselves. It has been a joy to work with TengBeng Koid in the past as well throughout the world.

It is also a great pleasure to work with Mike and Koid again as we all work together at The Landmark and then Halliburton and I can say from experience, both of them are battle tested and their track records are impeccable. Next, I'm thrilled to announce the promotion of Ryan Ezell as the newly created role of President of the Chemistry Technology.

Ryan was most recently Senior Vice President, Operations that the company and then the time I've known Ryan, I have witnessed his determined leadership, relentless focus on operational excellence and profitability as well as his deep knowledge of Flotek Specialty Chemistries and has a PhD in Chemistry as well.

The one thing that I should say about him too is a tremendous passion for his employees, and he has been continuously getting up to the facilities invested with the people during this tough and demonstrating the leadership on the ground. I really appreciate Ryan. He is truly an asset.

And I have full confidence in his ability to lead our chemistry technology segment. I'm happy to introduce each of them to you in their new roles and you'll be hearing directly from them in the call. They round out a very strong management team.

Lastly, an important development on our Board, this morning we announced that Harsha Gadi has joined Flotek as Director and Chair of our Compensation Committee.

He brings incredible experience gained from serving as a Senior Executive of Fortune 50 companies and marquee global brands like Crawford Company, Friendly's Ice Cream Corporation, Church's Chicken, and Little Caesar's Enterprises. My favorite of course was Crystal, growing up in the South.

There are several of us here, we hope that he introduces us there which every good Southern Board knows really well, perhaps not well known to some of you on the West, but he's energetic and a passionate leader who cares deeply about the companies and organizations which is affiliated and we launched our sanitizer business.

We're really grateful for his depth of knowledge in that market, and the insights and relationships within key market segments, who need these high-quality products, and we look forward to leveraging that network from for Harsha. Now let's go to probably the least pleasant part of anybody's stock in this quarter and that's the macro environment.

Throughout this earning saving, you've undoubtedly heard about the extraordinary challenges that the oil and gas market has experienced, resulting from demand destruction due to response by governments to COVID-19 and oversupply in the market which was exacerbated by the Saudi-Russia price Board. We've seen prices free fall.

The levels unforeseen with gasoline demand falling by approximately 45% in April alone. US refinery utilization dropping below 70% caused by a sharp reductions in travel and by early May, operators announcing budget with us into more than 40% with some setting even more dramatically.

I'll not spend too much time telling you what you already know, but it was an incredibly difficult quarter, one of the most challenging that I've witnessed in my career. However, in this environment, yet to seek out opportunities for improvement and control what you can control and that's been our team's focus.

We're certainly not amused at the macro environment conditions and to the challenges presented by COVID; however, we are adapting to our customers' needs by focusing on areas to diversify our business away from rig count and drill bit, and capturing distinctive opportunities in the digital transformation of the energy industry and leveraging our strong Specialty Chemical capabilities to produce FDA registered high-quality sanitizers and surface cleaners, both of which are complementary to Flotek's Industries leading chemistry applications and are permanently domestically sourced supply for these leaded products.

Liquidity in the cost measures, I'd like to address as well as we position ourselves for the future, we've also taken quick and decisive actions guided by our strategic pillars to preserve our liquidity and financial flexibility. We have a healthy balance sheet with little debt outstanding.

We have been disciplined in our approach to our capital allocation. Back, we've evaluated several inorganic opportunities over the past several months. And we passed on multiple acquisition opportunities that look appealing and we're complementary to our business.

But what it required us to take on additional debt in some cases substantial that we pass on all of these and enhanced side, that seems to be the right decision.

We continue to take further steps to strengthen our balance sheet position, and it's called out numerous initiatives ranging from a reduction in workforce to lowering compensation to cutting back discretionary spending.

In addition, we are focused on inventory rationalization and believe we will have opportunities to improve our liquidity as we go forward. Mike will provide a more detailed discussion on liquidity shortly.

Digital transformation and this is a topic you see in almost every research report, energy customers are accretionly looking to access actionable real-time data and insights as they have an impactful business outcome which really is a euphemism for improved profitability.

As noted in the recent in-depth study by Evercore June 2020 in our digital transformation, more than 90% of energy executive survey believe that technology and digital transformation will play a critical role in improving their profitability, providing cost savings, and they are noted as key drivers for adoption to improve their business.

With our recent acquisition of JP3, an innovative data technology company, we are helping our customers accelerate their digital transformation through real-time composition of valuation data necessary to manage crude oil and natural gas processing in the digital age.

The acquisition of JP3 provides compelling strategic and financial benefits, as it diversifies Flotek's business across all segments of the hydrocarbon value chain, from the wellhead to refined product terminals.

As we talked about at the time of purchase, JP3 has seen a 58% CAGR over the past four years, and it helps to insulate us from the volatility of rig count. However, it has not been immune to the challenging market conditions, particularly sharp decline seen in the refined fuel product demand.

As a result, its top line revenue was significantly impacted in Q2 by near halt of its clients capital spending. Despite the difficult market conditions, JP3 is maintaining its customer base, winning both repeat business from existing customers and securing several orders from new customers.

We are confident that there is a strong market need for JP3's unique data offerings, given the deep customer wealth that we have and are confident that is oil and gas demand ramps up, we expect to see a corresponding rebound in our sales, and the key reason why we recruited Koid.

I'm going to turn it over to him to share more about the growth opportunities here at Flotek. Great pleasure, that I introduce you to TengBeng Koid, President of Global Business.

Koid?.

Thank you, John. It's a great pleasure to be here and to work with John again. I've been involved in digital solutions in the oil and gas industry for over 30 years and for the past 10 years, I was leading a company that help midstream oil and gas companies enhance the business operations through digital transformation.

With JP3, we have a unique and differentiated game changing technology that I believe will transform the oil and gas companies through the continuous collection and analysis of real-time data. JP3 has 22 patents with another 16 patents pending.

Since joining about a month ago, I have had the opportunity to speak to several existing customers and also a number of potential customers. Their responses have been overwhelmingly positive. The various use cases that JP3 technology has been applied created significant value for our customers.

One example of such value creation is the reduction of refined products transmits for pipelines and terminal operators which we have since then signed a data as a service cooperation agreement with Phillips 66. As part of this agreement, we will jointly market such services to all the refined fuel transportation operators.

Phillips 66 has already started the ball rolling on this cooperation and as they arrange meetings at several refined fuel pipeline operators. It's great to have our customers selling for us and that is a testament to the value that our technology delivers. Other examples of use cases includes crude blending and competition tracking.

In the area of competition tracking, we are enhancing our offering, the capabilities to measure CO2, to meet the need for natural gas custody transfer requirements, and to support our customers ESG efforts. As we have previously discussed, JP3's focus in the past has been in the North American market.

Since coming on board about five weeks ago, we have started exploring growth in the international market. We had significant interest in JP3's highly differentiated technology from several countries in Middle East, Africa, and Asia.

The conducted presentations to this companies including to the largest oil and gas company in Middle East and one of the largest gas pipeline operators in India.

We are taking actions to address exports and other regulatory compliance, including international standards certification to ensure that JP3 technology will be ready to be launched internationally in 2021. I'm excited a lots of opportunities to take this business to a different level and the total addressable market is huge.

With that, I'll turn the call over to Ryan who will discuss our other growth engines..

Thank you, Koid. I'm pleased to announce the launch of Flotek's line of FDA quality sanitizers and disinfectants for industrial and personal consumer applications.

Our initial efforts were cultivated as a result of community outreach that began in the first quarter when we started producing it donating sanitizer to local communities, first responders, hospitals, schools, homeless shelters, and senior residential communities.

Subsequently, we recognized the opportunity to diversify our revenue stream into a rejuvenated high-growth potential market, which is a natural extension of our Specialty Chemistry experience. This enabled us to leverage our chemical production capabilities and maximize utilization of our existing facilities.

Thus, in Q2 we launched and are actively selling FDA registered sanitizer products into multiple markets, including hospitals and medical facilities, the travel and hospitality industry, food services, e-commerce and retail, sports entertainment, and other industrial and consumer markets.

In order to develop this business, we applied our existing competitive advantages of innovating and delivering differentiated chemistries, our ISO certified manufacturing capabilities, our strong supply chain management, efficient production capacity, and an R&D footprint that is highly respected in energy and chemistry business.

Applying our technical abilities in R&D skills, we're able to offer high quality FDA registered products. And as you know, more than 100 hand sanitizers are being pulled from the market due to regulatory violations at the FDA's Directive. Quality is more important than ever if you want to be a long-term major player in this market.

Flotek offers, high-quality American made products to stand out in the marketplace, the active components that make up our sanitizer our pharmaceutical grade and are sourced here in the United States. Our liquid and gel products are formulated in Houston and blended in our facilities in Texas and Oklahoma.

Given the flexibility of our business model, we've been able to quickly pivot our manufacturing operations by leveraging the exact same chemistry and facilities we already utilized in the energy chemistry technology business, thereby minimizing the need for entry-level capital investment for such a large potential, revenue opportunity.

Our sanitizer initiative exemplifies how we are adapting and reallocating resources to businesses that will drive greater returns given its low-cost, high-margin profile.

And our current assets have total blending capacity of 2.1 million gallons of specialty chemistries on a monthly basis, which includes both energy chemistry technologies and sanitizer product lines. Furthermore, the hand sanitizer market was nearly $3 billion in 2019.

And all other markets had stalled growth of 1400% from December of 2019 to February of 2020 due to COVID pandemic demand, market experts still anticipate healthy market growth rates in excess of 7% even in a post COVID world, and we look forward to providing additional updates as we expand our sales in this exciting new market.

Now, I'll turn it back to John..

Thank you, Ryan. Although our energy-focused business model has been impacted in the short-term due to pause in demand related to COVID 19 and price restructuring of oil, we are confident that our strategy is intact and that the initiatives that we've outlined to better position our company for the future.

We have a long-term vision to have a platform that optimizes profitability all the way from the reservoir to the refined products final destination. Our innovative chemistry enhances the ultimate recovery of reserves.

JP3's data creates a new dimension for profitability by measuring the injected chemistries effectiveness and by JP3 joining our company, they have the capital available to them to really expand that business and grow into the international markets, and our new sanitizer business offers us a high-growth opportunity that leverages our existing chemical production capabilities and a new market.

Now we know that it is difficult to determine when the world will return to normal and given the risk of a second wave of COVID cases, potential lockdown, and continued high levels of unemployment, there's a lot to consider, but we are preparing our team, as we adapt to diversify our operations to mitigate the risk faced by the oil and gas market.

And while we say that, it's really exciting, we do have cameras that monitor our facility in Marl-Oklahoma. Here over the last few weeks, if you look at the floor, Ryan and I were talking about the number of forklifts, and the activity it is picking up and the number of pads for the energy chemistry that we are producing and delivering.

So it's pretty exciting to see that even on the energy chemistry side, momentum is beginning to re-emerge. So our focus really is to take all of these capabilities and to build shareholder value with the goal to rapidly return to profitability by offering premium, differentiated solutions to our market.

At this point, I think it's a good opportunity to let our finance team know that we no longer have an interim CFO named John Gibson, we have the real deal and Mike, I'm going to turn it over to you..

Good morning, everyone. It's great to be here. Its day four and I'm excited about the potential of Flotek and to bring a fresh vision based on my experience in the SaaS and technology space. I look forward to speaking with our shareholders in the days ahead and understanding your perspectives.

Given our recent acquisition of JP3 last quarter, we are now presenting our results in two reportable segments, chemistry technologies and data analytics. The chemistry technologies segment was previously referred to as the energy chemistry technology segment, but now includes our recently launched sanitizer operations that Ryan just described.

The data analytics business was created in conjunction with the acquisition of JP3. Please also note that the second quarter results only includes business operations for JP3 as of May 18, 2020.

It's important to make you aware that we may need to make adjustments to our cash flow statements related to the sale of the Florida Chemical Company to ADM in February 2019 and the related escrow accounts. We are thoroughly reviewing our previously filed financial statements to see if new clarifications are needed.

However, we do not anticipate at this time that there will be any impact on our earnings or cash position. And we expect to file our 10-K around August 17. With a strong financial team in place and a new order, we are confident that we will be able to address this issue in the most efficient manner possible.

As John previously discussed, we faced a challenging second quarter driven by significant industry pressures impacting both our segments. Let's first discuss the income statement. During the second quarter, consolidated revenue was $8.9 million compared to $34.7 million during the same period last year and below first quarter of $19.4 million.

The sharp decline in revenue is largely a result of continued volatility in the macro environment for US onshore drilling and completion activity impacted by the political and economic events in foreign markets.

Furthermore, COVID19 impacted our productivity, as a result reduced customer demand in our service and products with the exception of our sanitizer operations. Consolidated operating expenses were $11.6 million in the second quarter of 2020, down 69.5% from last year's level of $38.1 million in the second quarter last year.

The decline was primarily due to lower cost of sales due to reduced revenues and a reduction in freight, personnel, and travel and entertainment expenses. We continue to work on expense reductions to improve supply chain and operational efficiencies and negotiate a memo [ph] to our terpene contract in February.

These actions will enable us to manage our inventories, although significantly lower going forward resulting in additional operating efficiencies. Corporate G&A was at $5.4 million versus $6.1 million last year due to a reduction in head count and discretionary spending and lower stock-based compensation and professional fees.

Our depreciation and amortization expense declined $1.7 million to $0.5 million in the second quarter versus $2.1 million last year. Research and development costs were at $1.6 million in the second quarter, down $2.1 million last year.

We reported a net loss from continuing operations of $9.6 million or $0.14 loss through the share in the second quarter of 2020, compared to a loss of $0.8 million or $0.22 loss per diluted share last year.

The loss of $9.6 million include a $0.6 million gain on disposal of long-lived assets willing to buying out the remaining term of the corporate headquarters lease for significant discount as we moved all of our employees who the existing Proto Global Research and Innovation Center at the end of June.

Our adjusted EBITDA for the second quarter was a loss of $6.8 million, which narrowed from the loss of $9.4 million in Q2 last year. The improvement in adjusted EBITDA is primarily due to the lower expenses as previously discussed.

We want to also point out that our EBITDA nearly flat versus last quarter, an improvement of over the 54% sequential decline in sales, demonstrating our progress in driving operational efficiencies. Now, we move to our balance sheet performance. As John mentioned previously, our cash position has been healthy.

As of June 30, 2020, we had cash equivalence of $59.9 million versus the $80.3 million in the first quarter.

So bridge the gap, there are four key factors that impacted our cash position; one, an outflow of $25 million cash payment for the acquisition of JP3; two, an inflow of $6.6 million that reflected our claim to the remaining balance of the January escrow related to sell the Florida chemical to ADM; three, an inflow of $4.8 million cash related to the paycheck protection program loan as part of the shares act and four an outflow of $1 million related to the lease termination of our corporate headquarters.

We also received a $6.3 million cash refund including interest in July related to the net operating loss carried back provision of the recent act the CARES Act. Now, let me pass over the call back to John for some final remarks..

I appreciate that Mike, kind of hard to be the new guy with three days on the job and be thrown onto a call, so I appreciate you jumping in here. As we look forward, there is still ongoing uncertainty around the market environment. We do not intend to offer any guidance at this time and hopefully not in the future as well.

Last quarter, however, we did discuss our intent to be break-even this fiscal year, which were based on our best estimates at that time.

Given the prolonged impact of the pandemic and the near halt in capital spending in the energy sector, we now believe that achieving breakeven during the fiscal year is going to be increasingly unlikely though it is still our goal.

We remain incredibly entrepreneurial and agile as we pivot our strategy towards growth-oriented businesses while leveraging the strength of our differentiated business model and our financial flexibility.

As I close, I'd like to thank everyone for joining us on our earnings call today, and I do want to particularly thank our finance team, Elan [ph], Kent, Misty and - I mean, they have - [indiscernible] have really been troopers here working with me and have given it their all, I just want to particularly call them out and say thanks.

In a challenging period for us and for the industry given the unprecedented volatile market conditions, we've taken swift actions to adapt to the environment, focus of business, and to really grow our top line and enhance our profitability.

Furthermore, we've been aggressively cost cutting to mitigate the decline in margins and position us to succeed in the future, and I hope you took that away from Mike's comments as to how much of our EBITDA we retained even with the tremendous drop in revenues.

We remain excited about our recent acquisition of JP3 and that will help accelerate our digital transformation strategy complementaring our chemistry applications business. Our announcement today to build a premium great sanitizer operation exemplifies how we are naturally extending our core business to growth areas.

We believe that these two growth initiatives will position our company for market share gains and provide a bright future for the company. We appreciate the support of our shareholders. We love working for you. We thank our employees and partners for their hard work as we navigate through this crisis.

We continue to want to update you as we move forward, and we will be continuously finding our growth initiatives in calls to come. With that Danielle, I want to turn it back. And let's take some questions..

Excellent. Thank you, for your remarks today gentlemen. [Operator Instruction] We'll take our first question this morning from Daniel Burke at Johnson Rice. Please go ahead, Daniel..

Yeah. Good morning guys..

Good morning, Daniel..

Let's see. John, I understand visibility is not great at this point and recognize that given guidance is a challenge and you address that directly, but still we look at Q3 completion activities ticking up, your new initiatives.

I would imagine we'll make some incremental contribution, is there any reason not to think that top line should be up sequentially in Q3?.

Well, I get up every day with a prayer from top line to be larger every quarter from here going forward. And a belt really intends to give any, but there would be no reason to believe that, we are not going to be well positioned in the market as it recovers. And so, Koid is working hard on the JP3 front.

I think some of the biggest opportunities there for us, our international as you highlighted.

There's a lot of regulatory work that needs to be done for us to sell those internationally to include registration and ECCM numbers and other technical activities needs to be done, but we are on that path right now and Nick Bigney is here with us and working on the legal aspects, Ryan and the sanitizer business.

The demand there is strong, and we continue to see opportunity there. So that was a reasonably poor quarter. So I'm happy to set the bar there, so that we should be above that, but that's about all the guidance I can give you Daniel on that..

Understood, I think that's helpful. As a recap, so 2.1 million gallons a month of blending capacity across chemistry, can you talk about what your maybe your utilization is now and maybe what utilization was like, I guess that capacity over maybe a trailing two or three-year perspective.

Just to give us take us back to a time when the energy market was a bit more healthy..

Well, when the market was a lot healthier you probably see this utilizing a lot more of the capacity than we are now.

We're a little reluctant to give the capacity number, the utilization number, Daniel, because we are entering a new market, and we really don't want our competitors to know how much we can produce and at what margins and because we do think there is some competitive strategies there in the sanitizer business emerging, we're trying to learn.

But in the past, it probably had capabilities probably as much as 30% greater with the way that we increased capacity now is really, really simple. The capacity we're stating is an eight-hour day.

And so if you can take a look at our facilities and the sooner that they could be run 24 hours a day, probably with maintenance and other things calculated, at the end of the 24 hour day, we could probably hit somewhere in the mid 70s for total utilization of those facilities, and in a perfect market, and I'm hoping that Koid and Ryan can drive us towards complete utilization on a 24 hour period.

But right now, we're just quoting an eight hour a day Marleau Waller facility capacity number, and hope we can start talking about how we're expanding beyond the eight hours is as the markets improve..

Got it, that's helpful. And then maybe a last one, just on JP3, good to see the progression in the initiative with Phillips 66 as highlighted in the press release in this morning. Can you talk about just sort of it was touched on in the comments, but sort of next steps here? I mean is Phillips 66 the logical first customer.

If so, when do we see that conversion perhaps already a customer decent size, but I just want to understand a little bit of the timeline from this point forward there?.

I'm going to turn it over like Koid and match up in here, but I'll start out by saying we are pretty excited. We're going to go look at a new ASG's solution associated with JP3 where we're trying to, to have the ability with third-party sites or to look at CO2 and have customers coming in this week to look at that.

We think that that the ESG market sort of bolted on to where we are, is going to be tremendous for us and match modifying the desktop so that we can really sort of provide all of that I think it's already a pretty good shape.

But Koid, so how do you see that open up?.

Thank you, John. We so with Phillips 66 have implemented the technology across all their refined fuel pipelines and terminals, and they see the significant value, and that's why they believe the - in this partnership that we're embarking. They have started the lineup customers for us to present, actually jointly present.

In fact, the first one will present on Monday next week, the first customer that they have lined up, and there are few others that are lining up as well.

They're lining up these meetings with senior level of this at our customer locations, so that we really excited about this and then having a customer being testimony to the value that we deliver and being able to present jointly with us to other customers..

Okay, great. Well, thank you guys. I appreciate the comments I'll leave it there..

Thank you..

Daniel. Thank you for your question this morning. Next, we will hear from Eric Swergold from Firestorm capital. [Operator Instructions] Mr. Swergold, good morning..

Good morning, Eric Swergold here. John on behalf of the shareholders thanks for taking the machete to the cost structure of Flotek and doing exactly what you said you're going to do when you came in and took the job. Thanks, also, today, for introducing us to the team as new as they are, it's nice to hear from some of the new people.

I've got two questions, the first is, can you give us some idea of the size of the NOLs that we've got on Flotek's balance sheet, because it seems like when you return to profitability, it could be a very long time before we're paying any taxes..

Mike, why don't you jump in?.

Yeah. Good morning. So as we talked about earlier, we had roughly around a little over 49 at the end of the last year. We used some of that to get a nice cash inflow back from the federal government, we received that in July.

We also think - so it's around 43 net after that and then we think we're generating about the same through the first six months of the year. So we're probably over 80. We don't actually look at and that's great detail yet, but we're probably in the 80 million range today..

So you have over $1 share in NOLs..

That's pretty close and we did bring it down a little bit by taking advantage of the CARES Act and going back and collect in that $6 million there Eric, but I think that was appropriate thing to do..

Yeah. And the second question is respect to JP3 and this new data as a service business. This is a segment that's new to me and probably new to most of us as shareholders, and I'm wondering is it contemplated as JP3 really a platform for further acquisitions in the data as a service business, or is this a one-off..

It's a great question, and we bought it because we thought it was a platform, their analytics and how they look at crude and crude analysis, it is the transformation of the energy industry from using gravity as a measurement to using composition as a measurement and it's, there are so many different avenues of that that are available to us.

Eric, so if I'm a refiner, one of the most important things that I do is maintain consistency of feedstock coming in and so who do I buy from and how do I blend that, so that I have continuous feedstock. So the whole of the upstream side of the business and how they can figure that buying is exciting and how we could participate in that.

The ESG component is really exciting to us, analyzing minor components that are costly to them and the refinery and working on automation and robotization based on that data, so we're looking at a lot of different companies.

We just need to - to be honest, where I'd like to focus on at the moment would be making JP3 really profitable and winning some of the accounts that we think are imminently possible here between now and the first of the year particularly on the internationalization side and on the sanitizer business, I think Ryan is just doing an outstanding job there.

So I do think it's an acquisition opportunity in sanitizers, just a straight growth engine for us, but it also has new products [indiscernible]..

Great and then if I could throw in one more third question, even though I only said two.

The executive compensation for yourself and the rest of the team appears to be a big payoff at $7, which is 4.5 times where the current share prices, can you give us a little bit into your thinking of having such a - such a shareholder friendly executive comp structure where you've got to make a ton of money for all of us before you guys really make good money for yourselves..

Well, I'll reverse it a bit and say, how are you going to keep us all together after we hit seven Eric. So I think - I'll give you some idea of the confidence of the people I have in the room here, we're beginning to talk about what do we do after we get to seven.

So it's - I mean we are clearly focused on that because that's our compensation program reward.

And so I think the thing that I would like to say about the culture of this company is high integrity, highly focused on shareholder value creation and that we're trying to do that through everything that we do, and customer satisfaction is what drives that.

We want customers that are absolutely delighted and that rolls over into our new business plan with sanitizer as well. I think we've got the team that does cost, I mean. Mike is a cost cutting machine to and creating value. So I think it's one thing to take cost out, it's another thing to keep it out.

And so having a financial leadership, they can help us sustain that I think is critical as we go forward but pretty, pretty excited about the whole of the team and we're getting there. We still got a few historical issues to work out that we noted in the press release, but thanks it happened 18 months ago.

I'm hoping Mike and the team can manage those and that will allow us to focus really on the growth and get with that seven bucks of share..

All right, go get them guys, thanks..

Thank you..

Ladies and gentlemen, thank you for your questions today. Gentlemen, we have no further questions from the audience. I'll turn it back to our leadership team for any additional or closing remarks..

Well, I just want to thank all of you for joining us on the call. I really look forward to hearing more from Ryan, his ability to manage logistics and supply chain in order for us to create a new business and really create a really profitable new business.

It's just been outstanding and I think the more you listen to him the more confident that you'll get. I think you more confident you'll get in Koid and Matt as we go forward on the JP3 side as well.

The whole tranche makes opportunity, which is kind of a piece of jargon for most people and all shares, but it's multiple products and a product line back to back. So you have diesel and you have gasoline then you have jet fuel and it's how do you make sure you don't have mixing on that and measuring it in seconds instead of hours.

And so I mean it's a real opportunity to keep them from losing money as a result of allowing too much mixing and so that's a direct profit generator for our customers.

Our ECP business, we are beginning to get started back on the rigs and that's pretty exciting as our core customers go back to work and we work towards the diversification of our customer base there. It's just a lot of good things going on and I appreciate you guys owning shares and supporting us and we really enjoy working for you.

With that, I'll just say, thank you, and we'll see you soon..

Ladies and gentlemen, this does conclude today's session. We thank you all for your participation, you may now disconnect your lines and we hope that you enjoy the rest of your day..