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Good day, ladies and gentlemen, and welcome to the Cactus Third Quarter 2018 Earnings call. All lines have been placed on mute to prevent any background noise. For those of you on the stream, please take note of the options available in your event console.
At this time, I would like to turn this over to Mr. John Fitzgerald, Director of Corporate Development and Investor Relations. Sir, the floor is yours.
Thank you, and good morning, everyone. We appreciate your participation in today's call. The speakers on today's call will be Scott Bender, our Chief Executive Officer; and Brian Small, our Chief Financial Officer. Also joining us today are Joel Bender, Senior Vice President of Chief Operating Officer; Steven Bender, Vice President of Operations; and Steve Tadlock, Chief Administrative Officer. In addition, David Isaac is joining us, having recently joined Cactus as General Counsel.
Yesterday afternoon, we issued our third quarter earnings release, which is available on our website. Please note that any comments we make on today's call regarding projections and our expectations for future events are forward-looking statements covered by the Private Securities Litigation Reform Act.
Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risk 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. Any forward-looking statements we make today are only as of today's date and we undertake no obligation to publicly update or review any forward-looking statements.
In addition, during today's call, we will reference certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release.
So with that, I'll turn the call over to Scott.
Thanks John, and good morning to everyone. Before we commence our comments regarding the quarter, I want to take this opportunity to acknowledge and welcome two additions to our management team. John Fitzgerald, who provided the introduction this morning. He's joined us from Barclays as Director of Corporate Development and Investor Relations. David Isaac, most recently Vice President and General Counsel for Rockwater Energy Solutions joined us in the same capacity with extensive experience in Human Resources and Corporate Governance. These two key appointments provide critical skillsets required as we complete the transition from a private to a public company.
Moving on to our operating results, I am pleased to report a strong third quarter having delivered top line sequential growth of just under 9% with revenues in all three of our business lines up by 89% from the second quarter.
Our growth meaningfully exceeded the trajectory of the U.S. land rig count which is up only 1% sequentially. During the period, average market share in our products business which we defined as percentage of rigs followed increased from 26% to 27.4%. And we're also able to deploy incremental rental equipment to our existing customers. The quarter again highlighted our ability to execute as we're able to drive higher margins for the business.
Our operating results once again exceeded our expectations and here are few of the highlights. Revenues rose 8.7%, adjusted EBITDA increased 11.1%, and adjusted EBITDA margins rose from 39.8% to 40.7%. It was a solid quarter we are proud of reported 43record results.
I'll now turn the call over to Brian Small, our CFO to review our third quarter financial results. Following his remarks, I'll provide you with some thoughts on the outlook for the near term before opening the lines for Q&A. Brian?
Thanks Scott. As Scott mentioned. Q3 revenues at 150.7 million or 56.9% higher than the equivalent period last year and 8.7% higher than in the second quarter. Our growth was largely consistent across the business with all three of our business lines up to 8% to 9% sequentially.
Product revenues at 79.4 million or 47% higher than the equivalent period in 2017 and 8.3% higher than Q2. Product gross margin at 41% was 410 basis points higher than Q3 last year and 240 basis points higher than Q2 this year. The improvement was due largely to greater volume of higher volume wellhead and production equipment and the continued successful execution offer supply chain strategy.
Rental revenues at 38.1 million were 16.9 million greater than last year's third quarter and 3.2 million higher than Q2 this year. The increase is attributable to growth in the capacity of our rental fleet.
Field service revenues in Q3 at 33.1 million were 12 million higher than Q3 '17 and 2.8 million higher than Q2 '18. Higher revenues versus the second quarter was driven by an increase in billable hours for our work. Field service revenues continue to represent approximately 28% of our combined product and rental revenues during the quarter.
SG&A came in at 11.1 million for the quarter and was 4 million higher than Q3 '17 and 1.2 million higher than Q2 '18. The sequential increase was primarily from higher payroll expense related to increased headcount, as we successfully recruited personnel to support our growth, as well as additional requirements associated with being a public company.
Net income came in at 43.6 million up from 41.5 million in Q2. Our income statement reflects the net income attributable to the non-controlling interest owners and public owners of Cactus, Inc.
Third quarter adjusted EBITDA was 61.3 million. This was 79.5% greater than the equivalent period last year and 11.1% up compared to Q2 '18. Sequential incremental adjusted EBITDA for Q3 represented 50.7% of the incremental revenue the period.
Adjusted EBITDA for the quarter represents 40.7% of revenues, which compares to 35.5% in Q3 last year and 39.8% for Q2 this year.
Our effective tax rate for the quarter was 15.8%. The primary reason for this rate being lower than the federal rate is that the profits of the non-controlling interest are not subject to U.S. federal tax. The effective rate increase versus Q2 '18 given the following offering completed in July, which increased our public ownership from 35.3% to 50.3%. We would expect the effective tax rate for the fourth quarter to be approximately 12.5%.
Internally, we prefer to look adjusted earnings per share as it eliminates the impact of changes in ownership throughout the quarter. Assuming the public entity held all units and its operating subsidiary Cactus LLC with fully diluted shares expanding of approximately 75 million and an effective tax rate of 24.5%. Our adjusted earnings per share this quarter was $0.52 per share compared to $0.46 per share in Q2, an increase of 13%.
Our cash position increased by 13.6 million during the third quarter to 42 million at September 30. For the period, operating cash flow was 41.6 million and our net CapEx spend was 23.1 million. Additionally, we spent 1.7 million on financial lease payments in the quarter and 1.6 million for tax distributions is to pre-IPO members.
Networking capital at the end of the third quarter came in a 23% of third quarter annualized revenues. We expect this percentage may increase slightly in the fourth quarter as we accelerate inbound shipments before the event to avoid possible additional Section 301 tariffs.
We accelerated our CapEx for the quarter and now believe that our CapEx for the full year will be in the range of 65 million to 70 million above our prior indication of 60 million. As with inventory items, we have and expect to continue to prove forward shipments in response to potential tariff changes and direct additional capital towards our new completions and additions in the fourth quarter.
That covers the financial review. I will now turn you back to Scott.
Thanks Brian. At our core, we remain a manufacturer of highly engineered and differentiated consumable products with exposure to drilling, completion and production phases of the wells life cycle. Our products business continues to be primarily driven by the total number of wells drilled and secular trend surrounding increase rig efficiency, including more wells per rig and batch drilling.
Whereas our market share growth in the first two quarters of 2018 was adversely impacted by increases in the rig count from smaller operators with whom we do less business. We believe we'll benefit from several of our large clients adding rigs that have been released by these smaller operators. As a result, we expect we could see 5% or more growth in our rigs followed versus the Q3 average by the end of the year.
So while we remain steadfast in our goal to gain market share with majors, we continue to be highly successful with larger independents with significant drilling campaigns. We believe there remains further room for product growth on this front due to our compelling value proposition.
In order to better respond to growth in our products business, we spent approximately $2 million in the third quarter, an addition to roughly $3 million spent in the second quarter to expand and enhanced our domestic manufacturing facility in Bossier City, Louisiana. In addition, we completed the acquisition of a new facility Hobbs, New Mexico for just under $5 million, which is just recently begun to service the Delaware Basin. This highlights our continued faith in Permian activity growth particularly in the Delaware, once takeaway issues are resolved late next year.
During the early part of the third quarter, we were able to increase the appointment of rental assets given the strong demand from our customers. However, at this point in the fourth quarter, we see three main factors at play which are reducing demand. First, in areas outside the Permian, we're seeing evidence of exhausted budgets and already achieved production goals. In the Northeast, Eagle Ford, SCOOP/STACK and Bakken, customers have arrested completion activity for the year or have reduced crews with plans to increase in 2019.
Secondly, in the Permian, we're not seeing evidence of budget exhaustion from our core customers but we are seeing postponements to new completions starts driven by delays on location for a variety of reasons. Although we continue to generate revenue on the pads that are taking longer, this trend affects our utilization and our ability to use the staged equipment to take on new work with existing clients or pursue new clients.
And finally, consistent with historical seasonal softness in Q4, we see customer slowing activity and postponing frac well starts. As we've noted before, this part of our business provides the least visibility into customers' plans, but all signs point to moderation in Q4 in favor of increases in the beginning of 2019.
For all these reasons, we believe our rental segment could be down as much as 15% sequentially from the third quarter. Field service which is driven by both products sales and rental revenue will likewise be impacted by the completion slowdown.
Finally, this business traditionally has higher non-billable hours, due to holidays and we would expect that typical margin compression during the fourth quarter. Notwithstanding any short term decline in completion activity, we continue to work towards the goal of building a larger moat around our rental business, similar to what we've achieved on the wellhead side.
During the quarter, we made significant progress with regards to our new completion innovations. We expect all 4 innovations to be in field trials within the next 30 to 45 days and remain confident in the commercial viability of these operations, as they address both nonproductive time and the need to reduce human intervention. These innovations are complimentary and not alternatives to our existing rental offerings, as they replace or enhance existing methods of flow control at the wall side.
The total market opportunity for these new innovations could likely exceed that of our current rental offerings with similar returns. We expect to have further details regarding the commercial acceptance of these innovations following the fourth quarter with the potential build out of our fleet in response to anticipated customer demand in 2019. So while we have yet to set our 2019 capital budget, the total expansion of our rental fleet with an emphasis on the build out of these new innovations will likely be in the same ballpark or below our 2018 anticipated spending of $45 million to $50 million in rental related assets. We anticipate no substantial roofline expansions in the coming year.
Regarding tariffs, while Section 232 steel tariffs implemented prior to the third quarter of not directly impacted our operations. We witnessed increased input cost as domestic suppliers raise the price of steel. We were successfully able to minimize any resulting negative margin impact.
In late September, the USTR finalized Section 301 tariffs on $200 billion of Chinese imports with an initial rate of 10%, which will impact the bulk of items we bring in from our Chinese supply chain. We expect a negligible impact on our results. Should negotiations between the U.S. and China fail to resolve the outstanding trade issues by year-end, these light of tariffs could rise to 25% a possibility if we continue to discuss with our customers. And as much as China provides the vast majority of the imported pressure control equipment into this market, we expect to remain competitive.
In summary, we now expect Q4 revenues to be broadly in line with Q3s, but EBITDA could decline by as much as 10% from our record Q3 results, due to the temporary reduction of completion activity and the usual seasonal impact on field service margins. As I mentioned the 3 main factors affecting our rental revenue decreases for the fourth quarter are temporary in nature and expected to reverse in early 2019, while we anticipate continued growth in our recount next year.
In addition, we remain excited about the potential for the successful deployment of our new rental innovations to further enhanced growth, are caused by sharing how very proud we are of our associates and their ability to execute during the third quarter. Our differentiated products as a period level of service have a well position to gain further market share, despite the aforementioned temporary slowdown in activity.
Finally, our board has continued to discuss capital allocation options for 2019, but it's not a made no final decision.
And with that, I'll turn it back over the operator, so that we may begin Q&A. Thank you. Operator?
Thank you. [Operator Instructions] And our first question comes from the line of George O'Leary from Tudor, Pickering, Holt & Company. Your line is open.
Good morning, guys.
Hi, George.
The incremental on the products side are really strong and I appreciate that the color on selling higher in the well heads in production trees during the quarter helping that business out. But I wondered if you could expand a little bit on the strategy around the supply chain side what you guys are specifically doing there and how that's benefiting margins for the products business?
George we spent I guess the last 18 months trying to enhance our ability to bring product in from the Far East. So to a large extent you're seeing the benefit of that.
Got it. That's helpful and makes sense I was just curious there was anything incremental you guys were doing on the sourcing side of is it just an extension it sounds like the latter, the color you guys provided around Q4 is definitely helpful. But I think about the puts and takes there you seem to indicate in the release that the products side of the business will continue to grow understandable at the frankly most would be a little bit soft? Do you expect the revenues to affectively fully offset there and then what about the services side of the equation?
Broadly speaking we expect that our product business revenue wise will offset the anticipated reductions in our frac rental business. I think that clearly just taking this the next step and I know you're interested, the margins of course the margin implications will lead us to an overall decrease in our Q4 although not nearly as severe as I think most people expected.
All right. Well, thanks for the color guys. I'll turn it back over.
Our next question comes from the line of Scott Gruber from Citigroup. Your line is open.
Yes. Good morning.
Good morning.
Couple of questions on the new technology, how should we think about the cadence with which you commercialized the four new innovations based on your commentary it sounds like they're all going to commercialize rather simultaneously next year. Is that the right way to think about it?
Yeah we really anticipated rolling them out, one of the time but things don't always work out the way we hadn't planned, so now looks like they're going to roll out simultaneously. I would say that we're going to we're modeling I guess some benefit from those innovations in the second quarter of next year and the reason for that is that we have some supply chain constraints for a portion of these innovations that we can produce internally. So think about Q2.
Got it. Just some additional color on the markets size, if I heard you correctly the opportunity here the addressable market could be bigger than the addressable market for your existing rental assets is that correct and how should we think about that multiplier?
Well I don't know that let me qualify that. I don't know that the total market is going to be larger but because in our frac business, there are certain customers with whom we don't expect ever to be able to do business because we're not low bid. I think about these innovations as having many fewer competitors, so it's not nearly, I think as we discussed we're trying to build a moat around this business. So in terms of our addressable market we do view that the potential revenue from these innovations could be in excess of the revenue for our legacy frequently equipment.
And I think the quote previously was that on a per pad basis the revenue up to be 40% bigger, if memory serves. But the number of pads you think you can capture it sounds like it is larger. Is that correct?
Well let me just let me say that, I'm really not thinking about it in those terms right now. I'm thinking more about the revenue per pad that we believe we can generate from these innovations versus the revenue per pack our frac treason are steppers. And that number significantly exceeds the latter. I think that in terms of our penetration because of the vastly more differentiated features in these products we might actually be able to increase our market share for those features beyond the less than 10% we enjoy now in our legacy business.
Yeah, I appreciate the color.
Our next question comes from the line of James Wicklund from Crédit Suisse. Your line is open.
Good morning, guys. I guess I'm a little behind the curve here. What are these four innovative, features, capabilities that you're commercializing? What obviously in your frac rental equipment but one of these innovations do?
If you're not behind the curve we've been very circumspect in terms of disclosing the nature of these for compellingly.
I haven't missed anything, I've I feel better now. Can you just describe them in some broad general terms as to what they do?
Steven, you want to open a color to that.
Yeah. Good morning, Jim. It's - the whole theory behind these innovations was to reduce nonproductive time on the frac side and remove human intervention from the exclusion zone, so when we looked at causes of nonproductive time not related to frac trees or zipper manifolds, we started to take down the list and we've developed these products that we think would most meaningfully addressed the causes of nonproductive time.
So we can figure out on our side what the big - biggest causes of nonproductive time are we get some idea what they might be able to do right?
Probably, there you go.
Okay. I'm going to do our homework up that's all right. My follow-up if I could if you noticed in Q3 that you exceeded your expectations. And we all know that Q4 isn't a very good proxy run rate for the following years. I'm just curious the stock market this morning doesn't seem to particularly be as well about you beating your expectations as you are. Any feedback yet on what the issue is, that people are just expecting you do a hell of a lot better than your expectations? Do you have any idea?
Well Jim. I really don't think that.
Just - answer question for - it's general I guess.
Your future depends upon your answer. Yeah I mean I think sense of the market maybe focus a little bit more than we are on the fourth quarter. And I think we're looking forward and excited to the potential for 2019.
Yeah Jim, I think that's really obviously the market hadn't been very favorable light to any of us in the sector. I think that is correct. Really, everybody knows that Q4 is not going to be Q3 and so perhaps because we've done as well as we have people may have expected our Q4 to exceed our Q3. I think it's clearly a product shipments that will but not much we can do in terms of the completion activity.
And I want to emphasize that most of the decline we're going to see in completion activity, is more the result of budget exhaustion. We're really not seeing the impact of takeaways in the Permian with our existing customer base. We are seeing some pretty serious delays in terms of starting new pads which is impact as we mentioned our utilization. So if I think about 2019 and I'm without disclosing the customers, I'm thinking now of 4 or 5 customers who have almost reduced their crew count to one of a zero from maybe 3 or 4 and have confirmed they're going to get back to work in Q1, so it's not a very efficient way to run a business but it is what it is.
Okay, Joel. It's very helpful. Thank you very much. Good great quarter.
And the next question comes from the line of David Anderson from Barclays. Your line is open.
Hi, David.
Hi, good morning. So Scott you talked about I know you have a say a budget for next year some push on their, I'm just more curious just in general you talk about frac stacks business and sounds like it's a little light in the fourth quarter but besides that me you've generally been completely sold out in this frac stacks business. Can you talk about how you think about that cadence for next year I mean clearly you have to build more of this.
But how do you kind of plan out kind of your year-end 2019, if you kind of don't really call the hippie but is there going to be yet. But you certainly get the sense are all coming back to just help me kind of walk through kind of your thinking in terms of putting more cap on the business and kind of reaching out to more customers replace?
So yes the most difficult part of our business to forecast as you know because of the lack of visibility in our relatively low market share. But I think that that broadly speaking we think that Q1 for frac rentals will look more like Q3 and Q4, we think that by Q2 you're going to begin to see some of these new innovations begin to monetize. I also feel like we've just begun to approach customers that that heretofore we've been unable to approach because of capacity, I think you're going to see in fact we've added 3 new frac customers already, their work will commence in November.
In terms of additions to our to our legacy frac business, they'll be maybe 40%, maybe 35% of what they were in 2018, the vast majority of our spend will be on new innovations for next year.
And your it's seem to like the best business for you or the best customer for you are those who are on the larger pads, I mean it seems if I think about your well head business you're doing a vacation it seems like it's all sort of potentially, the real value comes from the pad side. Can you just talk is kind of generally speaking kind of what percentage of your customers this kind of tough question but what percent of your customers now are kind of doing the pads or larger pads and as we think about next year, we're hearing about these bigger programs picking up from some of these majors really pushing larger pads and clearly the Permian is a little bit further behind in the pad, just kind of talk about that and kind of where that business is heading for you in terms of the pad size?
Okay. So that's a good question and I wish I had the answer to it. But I know that the vast majority of our customers are engaged in pad drilling, I look at Joel, Steven and see if they have any you think you've quantify that, if I think about our top customers, very few customers that are dealing single well pads with the exception of maybe some exploratory stuff in the Delaware. We are seeing much more the manufacturing nature in the main point in the basin. But I think we'll see customers move more to manufacture type well construction Delaware, STACK/SCOOP multi-well, Marcellus is multi-well, Bakken multi-well, South Texas multi-well, so I can't quantify it by percentage but it is.
Delaware Basin is multi-well for us, it's really - and the beauty of the Delaware for us is the Delaware is the biggest user of our recently rolled out 40 system.
So presumably with these pads getting bigger and bigger and bigger guys come out there. You should see better visibility into next year out assuming terms because you just talked about kind of biggest problem is the lack of visibility is sort of the hope and do you think the next year or two you should get a better and better sense of what that visibility is and help kind of manage your business because seems to be it's a problem throughout the industry is that obvious isn't your issue but we're seeing across sort of the supply chain and services nobody seems to know what their customers are doing these days?
We have a really good idea as we've mentioned before about plans for our products business. We get - we do get drilling schedules and the drilling departments have been very, very supportive of our need to forecast and of course that's because it impacts their cost of their wellhead products. I would say that we still lack good visibility on the frac side, although for perhaps top 10 customers, we have far better visibilities day then we will get 6 months ago.
So I mean I haven't really thought about it yet this question. But I think that overall you're probably right, we're going to we will be able to get a much better visibility in 2019 and 2018. And just a comment about pad size, our products makes sense with a pad size of 3 or more, doesn't have to be an 8 well pad or 10 well pad, it just needs to be more than two for it to make sense.
Okay. And presumably all these new innovations you're talking about likewise in that same kind of relay are sort of designed around those kind of 3 or bigger pads?
Absolutely.
Thank you very much, Scott. I Appreciate.
Our next question comes from the line of Kurt Hallead. Your line is now open.
Hey, good morning.
Good morning, Kurt.
Doing well, thanks so much and thanks for all the color you're providing, very helpful. So, Scott, I'm curious as there's been a lot of discussion on this call about pad sizes and how that could favorably impact the opportunities for taxes going forward, you know we've heard a number of different things from varying sources as to you know what it was, what it could be going to, so I figured I'd take this opportunity and have you educate us on you know what is the average pad size use the on a go forward basis and what would that represent in terms of overall percentage increase and then you know how do you map that back to your potential to increase your share if you will on the well head business going into next year?
I'm going to say the average pad size is, it's really basin, specific. In the Permian, 3 is probably the right number. In the areas of the Rocky the DJ we see pad sizes that are much larger than that, South Texas is probably larger than 3 on average, Marcellus larger than 3 on average, it's basically 3 to 6.
And is it going from 3 to 6 to like 4 to 10, 4 to 8, I mean what he what do you expect to see based on your discussions with the customer base?
You know I don't think there's been really any indication from our customer base about increasing the number, the pad size. But again our products make sense it to plus, so whether it's 3, 4, 5 it really - the only difference for Joel is that he wakes up one morning ask to ship out 6 that's well ahead and instead of having to ship out 3. So it produces a little bit of stress on our supply chain. And thank goodness for Bossier City in that regard. And I think the other point that maybe is misunderstood, those customers who have these 12 and 15 well pads really approach them like they're discrete for 3 well pads or 5, 3 well pads, things like that. I don't really think it's - we don't really think about the increase in pad sizes, only in terms of the volatility in terms of shipments.
Got it. Okay, that's great info, I appreciate that. You know second question I had on the tariff front, all right with Section 301 and obviously no one really knows how, what's going to evolve and whether it's going to be another 25% tariff places. But just along those lines, right can you give us some additional insights on how you have managed the process and how you plan to manage the process to mitigate the higher tariffs and mitigate the impact on your margins?
I'd love to do that but I'm not going to do it.
Okay, fair enough. Thanks.
I think look, surprised to say we have it under control, we have - I have absolutely no concerns about certainly about this year and early next year if the tariffs go to 25%, I think we have an excellent strategy in place to mitigate the impact on our absolute EBITDA.
Got it. And if I may just follow-up one final, if you want, I don't get too far into this call, but in the context of your guidance you provided for the fourth quarter and revenue drop coming in the rentals and field services business, I guess it's safe to assume that all the margin degradation will occur in those two businesses?
Yes.
Okay, that's all I needed. Okay, thank you so much, appreciate it.
Our next question comes from the line of Sean Meakim from J.P. Morgan. Your line is open.
Thanks. Hey, good morning.
Good morning, Sean. How are you?
Doing well, thank you. Can we talk a bit more about market share for the wellheads business, maybe just you know the results in third quarter and your forward expectations, are you driving while a share with an existing customers versus you know those big chunky opportunities on the majors where you had really good traction on the rental side, could you maybe just get a little more granularity of how you see things there?
Okay. You know I really don't want to give guidance for 2019, but I can tell you broadly. The average I think price of a wellhead is slightly is going up slightly and it's really more to do with higher pressures and maybe the increased percentage of our 4-string systems in comparison to say Q3, so we're seeing bigger systems, higher pressure systems on the one hand. In terms of absolute rate growth, we are anticipating picking up some pretty chunky rig additions by the end of this year and into the first quarter of next year. So you're going to see market share growth and I think you'll also see as I said higher pressure a larger bore wellheads.
Thank you for that. That's helpful. And then I guess, could you elaborate on how you expect the process could evolve for a major type of customer as opposed to your existing base of independence, meaning the adoption rate or kind of the trial phase and taking a while share for a new customer, could you maybe just elaborate on how that process could evolve, how can you different from what you've experienced with your traditional customers?
It's clear, it will clearly be smaller with majors Sean, than it is with even the very large independents. And you know the reason for that is their ability to make decisions is they're simply not as flexible in terms of their decision making as a major. So more hurdles I guess to jump over when it comes to majors.
And then once you get in and get some traction, do you think that does that also create more opportunity or just as it still have a slow grind once you've proven yourself to a degree?
It will be slower than it has been with the large independence.
Okay, fair enough. I appreciate the feedback.
And the next question comes from Martin [indiscernible]. Your line is open.
Good morning. I was wondering if you could maybe speak about international opportunities down the road and potential timing of those.
Marty, I would look at anything for 2019, I wouldn't begin to look for any meaningful international revenue contribution to the 2020.
Okay. Thank you.
And you know I apologize for not giving you maybe more clarity on that, but this is a very competitive business we're in.
Okay.
You don't have any more questions at this time. I will now hand the call back over to Mr. Fitzgerald. Sir, please continue.
I just like to thank everyone for joining the call and for their interest in Cactus and we look forward to seeing you on the next one. Thank you.
Ladies and gentlemen that concludes today's conference call. You may now disconnect. Have a great day.