Forum Energy Technologies [FET] Conference call transcript for 2022 q4
2023-02-26 23:38:03
Fiscal: 2022 q4
Operator: Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies Fourth Quarter 2022 Earnings Conference Call. My name is Gigi, and I will be your coordinator for today's call. This conference call is being recorded for replay purposes and will be available on the company's website. I will now turn the conference over to Rob Kukla, Director of Investor Relations. Please proceed, sir.
Rob Kukla: Thank you, Gigi. Good morning, everyone, and welcome to FET's fourth quarter 2022 earnings conference call. With me today are Neal Lux, our President and Chief Executive Officer; and Lyle Williams, our Chief Financial Officer. We issued our earnings release yesterday, and it is available on our website. Please note that we are relying on the safe harbor protections afforded by federal law. Listeners are cautioned that our remarks today may contain information other than historical information. These remarks should be considered in the context of all factors that affect our business, including those disclosed in FET's Form 10-K and our other SEC filings. Finally, management's statements may include non-GAAP financial measures. For a reconciliation of these measures, you may refer to our earnings release. During today's call, all statements related to EBITDA refer to adjusted EBITDA. And unless otherwise noted, all comparisons are fourth quarter 2022 to third quarter 2022. I will now turn the call over to Neal.
Neal Lux: Thank you, Rob, and good morning, everyone. Reflecting on our 2022 achievement, I am pleased to say that we exceeded expectations. And as we will discuss during today's call, I think FET is just getting started. Let's begin with some key highlights from our annual and fourth quarter results and our debt conversion. Our teams delivered strong 2022 financial results. We ended the year with the highest backlog since 2018. Revenue and EBITDA grew by 29% and 194%, respectively, on a year-over-year basis. Also during the year, we increased our gross margins by 230 basis points and doubled our EBITDA margin to over 8%. This growth reflects our operating leverage and differentiated product portfolio. In the fourth quarter, we had robust bookings and revenue growth of 35% and 29%, respectively, year-over-year. Demand for our products and solutions remained strong. EBITDA of $17 million was within our quarterly guidance range and up nearly 300% versus fourth quarter 2021. Finally, and most importantly, for the company's future performance, we were able to significantly improve our balance sheet during the quarter with the conversion of our long-term debt to common stock. The conversion marks a significant milestone for a number of reasons. First, pro forma for the conversion, our year-end net debt was approximately $83 million or 1.4x full year 2022 adjusted EBITDA, FET's credit rating was upgraded as a result of our significantly reduced leverage. Second, the conversion nearly doubled our market capitalization, and our daily trading volume has increased substantially. Both of these factors have improved our investment profile. Third, the reduction in debt decreases FET's annual cash interest payments by roughly $11 million, enhancing our free cash flow conversion. And finally, the balance of our long-term debt is now significantly below year-ending liquidity. This achievement opens up several strategic options, including share repurchases, further debt reductions and acquisitions. Lyle will discuss these options in greater detail during his remarks. In addition to strategic options, we have an incredible foundation for organic growth as a result of the attributes I listed during our earnings call in February 2022. One, our employees are key differentiators; two, industry fundamentals are expected to remain strong; three, FET is continuing to develop and launch innovative products and solutions; four, we have opportunities for significant margin expansion; and five, FET is positioned to access growing markets outside oil and gas. And now we can add a sixth attribute, a solid balance sheet bolstered with meaningful positive free cash flow. Our colleagues at FET are dedicated and focused on delivering value to the customer and the company. And as we demonstrated with our impressive bookings in 2022, customers see the value we bring through technology, innovation and quality. Today, our customers are in a good financial position because industry fundamentals are solid. While commodity prices have recently moderated, some forecasters such as the International Energy Agency, expect oil demand to surpass supply in the second half of 2023. This should put a floor under activity now and provide incentives for a prolonged energy investment cycle. While increasing industry activity provides a tailwind for growth, we want FET to grow faster than the market. To accomplish this goal, we are introducing products and technologies that our customers value. Our key components and consumable products enhance our customers' long-life assets to make energy production safer, cleaner and more efficient. For example, we recently showcased our new FASTConnect, Frac Automated Switch Technology System at a Society of Petroleum Engineers technical conference. The FASTConnect System allows service companies to perform hydraulic frac operations without a traditional zipper manifold. Through automation, our solution increases the safety of field personnel and stages completed per day while eliminating a significant portion of a manifold operating expense. In addition, the FASTConnect System significantly improves the environmental impact of a frac fleet by eliminating the grease consumed. If our system was adopted on every zipper frac fleet, we estimate operators would eliminate 18 million pounds of grease from their well sites per year. The environmental improvement would be astounding. The total addressable market in the United States for this solution is between $300 million to $500 million. As an asset-light manufacturer with an international footprint, we address key markets around the world. A great example is a recent electrostatic desalter system award from one of the largest national oil companies in the world. The system will utilize FET's edge desalting technology and for mix, our high-efficiency multiphase technology. The contract has a value of approximately $25 million, with potential for meaningful subsequent awards. I'm extremely proud of everything we accomplished in 2022, but it's time to focus on 2023. As I mentioned earlier, I'm excited about FET's future. Long-term, market fundamentals remain strong. Supply and demand imbalances will continue to fuel the need for more investment. However, there are mixed views on where the U.S. rig count goes from here. We anticipate moderate rig count growth during the year with the trajectory to be determined. However, equipment utilization and service intensity will remain at high levels. Our customers are telling us they are sold out and have essentially no spare capacity. As their older equipment wears out, customers are upgrading and replacing it with more efficient and advanced capital items from our product catalogs. As we demonstrated in 2022, increased demand for our differentiated products will enable us to further grow our EBITDA margin. The international markets are ramping up and FET will be there to participate in the growth. Historically, international revenue has been between 40% to 50% of total revenue. As international markets grow, so do we. And I believe that FET has a unique advantage with an optimized global footprint with a select number of manufacturing and distribution hubs that can strategically supply our customers with the products and solutions they need anywhere in the world. In addition, we can service nearly every oil and gas producing country without spending any additional capital or adding roofline. We can ship anywhere. The offshore market is also heating up. Through 2022, the offshore drilling rig count has increased meaningfully. Service intensity of offshore operations exceeds land-based activity and drives additional demand for FET products. In the near term, this reactivation should benefit our drilling capital products for mud systems and tubular handling operations. Over the longer term, growing subsea activity should drive demand for our world-class and inspection ROVs and related products. With the opportunities we see in front of us, I am confident we can deliver revenue and EBITDA growth and generate strong free cash flow in 2023. We therefore expect EBITDA to be in the range of $80 million to $100 million and free cash flow of $20 million to $40 million. I will turn the call over to Lyle for more detail on fourth quarter results, outlook for the first quarter of 2023 and our capital deployment options.
Lyle Williams: Thank you, Neal. Good morning, everyone. Overall, FET's fourth quarter financial performance met or exceeded our expectations. Revenue of $191 million beat the top end of our guidance. At 5% growth, we outpaced the U.S. rig count as demand for our products and services remained strong. EBITDA of $17 million fell within our guidance, although our incremental profitability did not meet our expectations. During the quarter, two projects, one in our Subsea Technologies and one in our coil tubing product lines, generated unfavorable cost variances totaling over $2 million. Shifting to our operations. Each of our business segments posted increased revenue for the fourth quarter. Drilling and downhole segment revenue was $81 million, up 7%, led by higher demand for drilling handling tools and capital equipment. Our drilling, downhole and subsea product lines all increased revenue. Drilling and downhole segment orders increased by 19%, with a book-to-bill of 108%, driven by strong demand for drilling capital, handling tools and bearings. This momentum should continue as global rig count grows, particularly outside the U.S. The segment currently generates roughly 50% of its revenue from international sales. Despite the revenue growth, segment EBITDA decreased $2 million compared with a strong third quarter. Subsea project costs and increased freight expenses partially offset the revenue growth. Unfavorable product mix and year-end production variances also impacted performance. Completions segment revenue was $74 million, a 3% increase with higher demand for pressure control equipment as well as radiators and power ends supporting pressure pumping activity. Quality wireline revenue grew 7%, breaking the revenue record set last quarter. Bookings for the Completions segment were $81 million, up 3%, resulting in a book-to-bill ratio of 110%. We secured a number of Jumbotron radiator orders that will be paired with environmentally friendly dual gas blend engines for frac fleet upgrades. In addition, we received a sizable order for pressure control equipment destined for international markets. These awards were partially offset by lower orders for stimulation and coiled tubing products, following large project bookings we received in the third quarter. Completion segment EBITDA was $9 million, down $1 million. Higher revenues were offset by unexpected project costs in coiled tubing, unfavorable sales mix and higher freight costs. In our production segment, revenue was $36 million, up 5%, primarily led by higher demand for production equipment. Production segment bookings were $47 million for the quarter, comparable with the third quarter. The book-to-bill ratio remained strong at 130% as demand for our surface processing equipment and technology continues. Production segment EBITDA was $2 million, up $1 million primarily on increased volume, favorable sales mix and operating leverage in our production equipment product line. EBITDA margins at 4.7% continue a positive improvement trend, bettering the 3.5% in the third quarter. The segment will drive margin improvement through operating leverage, continued cost management and focusing on higher-margin, emission reduction and alternative energy applications in the longer term. Inventory management has been a key focus area for us. In the first quarter 2022, we proactively built inventory to buffer our customers from the supply chain disruptions many companies faced. As the year progressed, we challenged our operations to normalize inventory levels and increase turns. Supply chain performance remains volatile, and in some cases, put a strain on our margins and ability to deliver. For example, due to the supply chain challenges in the fourth quarter, we expedited materials in support of commitments made to our customers. This accounted for most of the higher freight expenses I mentioned earlier. In addition, throughout 2022, steel price inflation and availability impacted margins in our coiled tubing and production equipment product lines. We struggled to increase prices to offset this inflation due to competitive dynamics and in the case of production equipment due to the long lead time between our receipt of orders and ultimate shipment. We expect these steel and freight impacts to normalize through 2023. Free cash flow of $45 million was a highlight for the quarter. This result includes $32 million from our November 2022 sale-leaseback transaction. These proceeds are over 10x greater than the new annual lease commitments. This accretive transaction furthers our ability to improve returns. Excluding the leaseback proceeds, our quarterly free cash flow of $13 million was negatively impacted by large customers who delayed payments at year-end. In large part, because of this free cash flow generation, we ended the quarter with $51 million of cash on hand and $156 million of availability under our fully undrawn revolver. Liquidity increased by $60 million from September to a total of $207 million. With this level of liquidity, we could retire our long-term debt today while leaving ample dry powder to fund operations. The strength of our balance sheet highlights the transformative nature of the debt conversion and our 2022 financial performance. We continue to believe FET shares are undervalued as we trade at a discount to other equipment manufacturing peers. Therefore, in the fourth quarter, we repurchased just over 100,000 shares at a discount to last Friday's closing price. Comparing this price with our $80 million to $100 million 2023 guidance implies a valuation of 4.2x to 5.3x EBITDA, with many of our peers trading at 7x to 10x 2023 expectations. We believe our stock has compelling upside. Now let me share with you our first quarter forecast. Neal discussed how we see the markets going forward and provided our 2023 EBITDA guidance earlier in the call. We anticipate modest growth progression in the U.S. and stronger international activity growth through the year. Thus far, 2023 U.S. rig activity has been relatively flat and international activity is in the process of ramping. Therefore, in the first quarter, we expect revenue of between $180 million to $200 million and EBITDA of between $16 million and $20 million, with these values increasing each quarter throughout the year. We expect first quarter free cash flow to be negative $20 million to $30 million. Expected payments of management cash incentives and property taxes as well as accrued interest related to converted notes will be partially offset by cash flow from EBITDA and net working capital improvements. Let me provide a few details for modeling purposes. In the fourth quarter, corporate costs were flat with the third quarter coming in a little better than expected. In the first quarter, we expect corporate costs to be in line with the fourth quarter, interest expense to be $5 million and depreciation and amortization expense of roughly $8 million. We expect full year capital expenditures of approximately $15 million and cash income taxes of $5 million to $7 million. Let me shift my attention to our capital deployment alternatives. With a rightsized capital structure, ample liquidity and improving free cash flow, we are evaluating several options for deployment of our cash through a lens of improving our financial metrics and maximizing returns. One option is to repay our long-term debt or repurchase additional shares. Relative to other alternatives, debt repayment yields a modest return. Share repurchases are more attractive at current levels. However, we are limited by our indenture to an additional $5.9 million of share repurchases. Another option is funding for organic growth. Our plan for 2023 includes significant organic growth driven by market share gains and new product introduction. Funding for this growth is already included in our healthy free cash flow forecast. We will continue to seek and evaluate additional organic investment opportunities to generate outsized returns. Finally, as another option, accretive M&A transactions could further transform our product portfolio. The market for transactions has improved, with many sellers exploring strategic alternatives. We look for transactions with good industrial logic and that are accretive to our earnings. Importantly, we are committed to maintaining reasonable net leverage, and we'll use an appropriate mix of cash and equity to achieve this goal. In short, the conversion of our debt not only enhances our story today, but it also opens a number of investment opportunities to gain greater rates of return. I will now turn the call back over to Neal. Neal?
Neal Lux: Thank you, Lyle. 2022 was a transformative year for FET. We executed at a high level and achieved what we set out to do. So to the FET team, thank you, and job well done. The markets remain tight, equipment utilization and service intensity are at high levels and significant investment will be needed over the coming years. FET will be there to provide our customers with the technology and solutions they need to operate in this up cycle. Similar to last year, we have set high expectations that I am confident our people will deliver on. We are excited about what we can do in 2023. Gigi, please take the first question.
Operator: Our first question comes from the line of John Daniel from Daniel Energy Partners.
John Daniel: Good morning. Thank you for squeezing me in. Just two questions for you. The first is on your prepared remarks, you talked about opportunities with conversions, and I missed part of this, so I apologize. But is that just the radiators or is there other content that you all are participating in? And then is it - color around whether it's accelerating, steady, just near-term thoughts.
Neal Lux: Sure. Good question, John. Good morning. On the upgrades that we're seeing, the radiators are a big part of that. Just nearly every new engine will put a new radiator. And generally, they're choosing to go with the GHT Jumbotron option, which is, again, one of the best radiators in the business. In addition to that, there's opportunities for power ends that we are supplying as well. And then finally, as the upgrades continue, we are seeing more and more customers utilize our flexible hose and manifold solutions. So those are going hand in hand. I think our acceleration or speed is really dependent on upstream of what's going on in supply chain of us from deliveries of engines to the packagers that put everything together. So bookings are there, and I think it will just go through the year to see how well the supply chain delivers. But we're prepared, we're ready on that side to deliver.
John Daniel: Okay. And then one final one for me, and I'll let others in. On the M&A, would you characterize your looking - are these tuck-in opportunities? Or would you look to do something more transformative? And then are you casting a wide net, if you will? Or are you trying to - is there certain one or two product services that you're keen on bringing in the portfolio? Just a little bit more color on that.
Neal Lux: Yes. Great question. I'll start, and I'm sure Lyle will add in. For those who followed FET, we've always been an M&A company. We've always looked at different opportunities. And we're open to both a tuck-in acquisition or a transformative acquisition if it can meet our criteria. And really the key there is, it has to be accretive and be a good strategic fit. So areas that we really like are those in artificial lift or areas where we can consolidate with existing product lines like controlling our completions. Also, we want to have acquisitions that improve our financial metrics, improve our EBITDA margins, free cash flow profile. And then finally, we want to maintain and reduce our net leverage. So if we can get the right deal done with cash or look to an appropriate mix of cash and stock. And again, we're open to using equity. We think our stock is undervalued, but we need to have a partner that sees the same value as well.
John Daniel: Okay, fair enough. Thank you all very much.
Neal Lux: Thanks, John.
Operator: Thank you One moment for our next question. Our next question comes from the line of .
Neal Lux: Good morning, Eric.
Unidentified Analyst: Good morning. Congrats on another good quarter. Just a couple of quick questions. So are the sale leaseback proceeds required to go to the debt similar to what happened on 12/31/2020 with the valves business?
Neal Lux: Good. Okay. I understand your question. Good question. And no, they're not. There are carve-outs within the indenture that allow us to use that cash kind of on a per transaction basis. So we've got some good cover there, and we do not have a requirement to return that cash back to bondholders.
Unidentified Analyst: Okay. That's helpful. And then just when you think about the debt a little bit, I mean, what is kind of your ideal level? And then, I mean, are there opportunities in the market? I mean, I know rates have increased, but the current rate on the debt isn't - I mean, phenomenal by any means. Are there opportunities to refinance that, reissue, stuff with - I mean, gets less restrictive covenants? Or I mean, have you looked into that at all?
Neal Lux: We have, Erik. And I think probably the first highlight is - or first comment would be looking back, leverage on a pro forma basis at the end of the year would have been 1.4x, so down to a reasonable level. I think as we think long term, we want to make sure that we think about our debt in relation to our working capital, specifically things like receivables. In the event that there's ever a market slowdown, we want the ability to have those receivables monetize and be able to manage our debt load. So we feel like we're at that level now and have a comfortable level of debt. And clearly, with our liquidity on hand, we're in really great shape. I think on the positive note, the debt markets for our industry have improved dramatically. In the last - end of last year and beginning of this year, we saw some debt deals get done in the public markets on the high-yield side, in particular and see - and so we've seen debt capital come back into the space. I think that being said, our quantum of debt is still relatively small. And so that makes it challenging to find alternatives that might be out there. We've got plenty of runway on our indenture. The debt is not due until 2025. So there's no burning platform that says we need to resolve that today. So we'll keep our eyes open and watch the markets and see if there is an opportunity to, as you say, reduce our interest load or find less restrictive debt. But I think as today, what we have feels like a pretty good piece of paper.
Unidentified Analyst: Okay. Great. I guess my last question would be, I mean, just - I mean, you guys kind of touched on kind of the relative value of the equity to peers. And when you see - and I guess you kind of answered my question already by saying there's only so much you can actually put equity buybacks at this point. But the convertible debt holders now becoming equity holders, I'm not sure that they're necessarily long-term equity holders, but there's been a few filings with a few of those debt holders that now own approximately 10% a piece. So there's - I think there's two holders out there that probably own 20% equity. It's just an interesting dynamic given the fact that the equity seems incredibly cheap and there's probably people willing to let it go at what probably long-term equity holders wouldn't let it go. Mostly a comment rather than looking for your remarks, but I mean it would be great to be able to find some liquidity to take those guys off the table.
Neal Lux: Definitely agree with that, Erik. One of the things that we have seen is the change - marked change in our average daily trading volume. If we go back to the fourth quarter, we traded about 30,000 shares a day. And so far in the first quarter, we traded 3x that, over 90,000 shares a day. So we've seen a marked increase in that and that came about the time of our debt conversion. So there's clearly more activity. That's a good thing we believe for our stock to get more liquidity for investors in. Also, I think if you think about our new shareholders, any of those who want to move out of the stock, the market is more liquid than it was before. So that should provide some opportunity to be able to do that.
Unidentified Analyst: Well, I appreciate it. Thanks guys.
Neal Lux: Thanks Eric.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Dan Pickering from Pickering Energy Partners.
Dan Pickering: Good morning, guys. Thanks for doing the call today. I guess I want to come back, Neal, your comment around sort of M&A. You indicated - and Neal and Lyle, I think you both talked about this, but you indicated accretive as one of your measures. Is that accretive to - is it EBITDA margin? Is it net income? How - what metric are you thinking about there just so we can kind of gauge as you move ahead?
Neal Lux: Accretive to EBITDA margins, Dan.
Dan Pickering: Got it. Okay. And I -
Neal Lux: A good strategic fit, that's the key. We're not - we wouldn't look to do M&A just to get bigger, but we want to have the right strategic fit and obviously improve our financial metrics.
Dan Pickering: Sure. And so accretive to EBITDA margins, I assume that also means you'd look for things if you're granted, you're trading at cheap valuations, but you'd look for something that would be accretive on an EV to EBITDA basis as well?
Neal Lux: Correct. Yes.
Dan Pickering: Okay. You talked a little bit about the areas that you'd focus in terms of your product lines. Do you think - I mean maybe cast for us, while you said the markets are better, if you think about sort of your chalkboard of things that you're evaluating in terms of potential acquisitions, do they skew more international versus domestic? And are the numbers - I mean the number of opportunities, is it up notably or flattish? Just kind of give us some color there.
Neal Lux: Sure. So I think generally, the opportunities we've seen have been more U.S. focused. However, with the age of the companies that we're looking at, they would be ideal to ramp up and utilize our international footprint to expand sales. So I think that would be a key business logic and synergy we would look for there. And Lyle looks at the deals every day and maybe can comment on the rate of change we've seen.
Lyle Williams: Yes. Dan, I'd say we've seen activity level pick up pretty meaningfully here over the last several months, more private companies looking to find an opportunity here in this market. We've talked about it before, but there are number of private equity firms who've been in their deals for quite a while, and they're starting to see this as a market where maybe they should do something. When we think kind of types and areas of focus, kind of a couple areas there. One, we feel like we've proven and could be a very logical consolidator of space. So about this time last year, we announced our acquisition of Hawker Well Works, relatively small business but fit within our drilling products and allow us to consolidate a really neat niche in the well services market. Another example of what we might look for is things that have technology. And we've mentioned before, but a key way we think we drive margins higher in the future is through the deployment of new technology in our products. So couple of areas, whether that's a consolidation of space or new technology. And the last criteria, I would say, is looking at things that would be more attractive to us, are more well count driven rather than aimed at the more capital end of our specter that, that would be another criteria to look at.
Dan Pickering: That's helpful. And then just to try and understand expectations or set expectations. So we've got - the balance sheet is much better. We've got cash. We've got a lot of liquidity, but wrap this all together in terms of your comfort, we can - I guess, we can use some debt for acquisitions if you wanted equities on the table. But roll that all together, what do you think your size-wise, if you exited '23 with - is it $100 million worth of deals is a good year? Is it $200 million? I mean I'm just trying to understand kind of sizing comfort level with leverage, comfort level with using equity. It all rolls into kind of how much do you think you can do?
Neal Lux: Yes. I think there's - Dan, we have - we're looking at a lot of target today, but we want to have the right deal. And as we look, we have to find a partner that sees value in our equity as well. And so that's a kind of, that's a key kind of a key screen there is they have to understand that we're undervalued and they have to see that the value in that if we're to do a deal. Yes.
Lyle Williams: Yes. And I think the other way to think about this use of the capital, Dan, is to focus on returns. A floor of returns would be just retiring our long-term debt. As Erik asked earlier, we've got a 9% coupon on that. So we get an okay return, but our job is to find better returns. And so how much capital can we deploy that's really going to move the needle on returns, on margins and things like that. So I don't think we want to get bigger just to get bigger. We want to get bigger to get better and that will be our focus.
Dan Pickering: Right.
Neal Lux: And I think going back to the good strategic fit being accretive, improving our financial metrics, we're open to tuck-in deals, multiple tuck-in deals or potentially a transformative one.
Dan Pickering: Thank you. And it's a great opportunity to be thinking about playing offense as opposed to playing defense where the whole industry has been for a while. I want to come back to the kind of forward look in terms of - you've guided us to $80 million to $100 million of EBITDA for 2023. Some of us may have more optimistic expectations around rig count or whatever it is. When we think about incremental margins, is that 30% target still the right target given some of the things you're seeing on cost supply chain, et cetera?
Neal Lux: Yes, Dan, just as a reminder, we've talked about kind of incremental margins being north of gross margins and kind of in net 30% to 40% with the high end of that coming with a lot of incremental price. I think as we look at this year, I would guide us towards the lower end of that range. Really, we see not as many opportunities for price increases with the market being a little softer, primarily in the U.S. And I think our big push for incremental margins could come from our newer and more innovative products where we provide a lot more value to our customers and could capture more of that in terms of margin. So out of the gate for this year, I think it's probably more in that low end range, 30% is definitely achievable on a full year basis, and we would look to do that or better.
Dan Pickering: Okay. And while you indicated the cost - the freight expediting, et cetera, would moderate as we move through 2023, do you think we'll still see some impact to that in Q1?
Neal Lux: I do. I do. I think we'll see that in Q1. And really, if we think about the length of some of our supply chains or like our - some of our costing on an average cost basis, it takes a little while to get that steel inflation that we saw heavily in 2022 out through the back end of the snake year in 2023.
Dan Pickering: Got you. And so net-net, rolling all this together, I think I heard, although we're going to burn cash in Q1, remind me again, I heard $20 million to $40 million for 2023 in aggregate, your expectation, including cash taxes, working capital, all of the dynamics that you see so far?
Lyle Williams: That is correct, yes.
Dan Pickering: So it was $20 million to $40 million? I was looking at my notes and Iâ¦
Lyle Williams: Yes, $20 million to $40 million free cash flow for 2023.
Neal Lux: And again, on our current valuation, a really good cash flow yield for the year.
Dan Pickering: Yes, absolutely. Well, good luck finding those opportunities and congrats on the debt conversion, that was really important, and the balance sheet looks in great shape. I appreciate it very much. Thanks.
Neal Lux: Thank you, Dan.
Lyle Williams: Thanks Dan.
Operator: Thank you. I would now like to turn the conference back to Neal Lux for closing remarks.
Neal Lux: Thank you for joining the call today. We are excited about FET's future and look forward to even better days to come.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
