Good day, ladies and gentlemen, and welcome to the NOV Second Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Blake McCarthy, Vice President of Corporate Development and Investor Relations. Sir, you may begin.

Welcome, everyone, to NOV's Second Quarter 2021 Earnings Conference Call. With me today are Clay Williams, our Chairman, President and CEO; and Jose Bayardo, our Senior Vice President and CFO. Before we begin, I would like to remind you that some of today's comments are forward-looking statements within the meaning of the federal securities laws. They involve risks and uncertainty, and actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or later in the year. For a more detailed discussion of the major risk factors affecting our business, please refer to our latest forms 10-K and 10-Q filed with the Securities and Exchange Commission. Our comments also include non-GAAP measures. Reconciliations to the nearest corresponding GAAP measures are in our earnings release available on our website. On a U.S. GAAP basis for the second quarter of 2021, NOV reported revenues of $1.42 billion and a net loss of $26 million. Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA as defined in our earnings release. Later in the call, we will host a question-and-answer session. [Operator Instructions]. Now let me turn the call over to Clay.

Thank you, Blake. During the second quarter of 2021, NOV's consolidated revenue increased 8% sequentially, and EBITDA improved to $47 million, excluding the benefit arising from the cancellation of certain offshore rig projects. Operating leverage was strong at 50%, owing to cost reductions in prior periods while price increases in certain product lines help offset the inflation we are seeing in most product lines. Coming out of a pandemic which bankrupted many of our customers and eviscerated our backlog, our financial results improved but remain below acceptable levels. Nevertheless, in NOV's execution strengthened through a quarter of continuing supply chain challenges and COVID disruptions. We are pleased to see orders for both our rig technologies and completion and production solution segments rise significantly. Rig technologies posted book to bill of 138% on strengthen orders for renewables and completion and production solutions book to bill ran 167% in the second quarter. Barring another round of COVID lockdowns, we expect the market to continue to strengthen underpinned by broad economic growth, higher commodity prices and the continuing worldwide build out of an offshore wind power toolkit. The company's portfolio of technologies developed over the past several years positioned extraordinarily well to capitalize both on the oilfield recovery underway, as well as the enormous energy transition. The next five years look very, very interesting for us. Like global manufacturers across all industries, NOV experienced supply chain disruptions throughout the second quarter, and we expect these challenges to persist into 2022. Many steel mills that supply NOV bespoke metallurgies, along with petrochemical facilities and plants that supply NOV, epoxy, resins thermoplastics and elastomers are not fully up and running due to a combination of COVID, the February Texas freeze and in some cases disruptions in their own supply chains. Furthermore, transportation bottlenecks around the…

Thank you, Clay. For the second quarter of 2021, NOV's consolidated revenue rose 13% sequentially to $1.42 billion and EBITDA was $104 million or 7.3% of sales. Second quarter revenue included $74 million related to the final cash settlement and cost reimbursement from the cancellation of offshore project - offshore rig projects. Excluding the settlement revenue rose 8% sequentially to $1.34 billion and EBITDA was $47 million or 3.5% of sales. Consolidated U.S. revenue increased 27% sequentially, significantly outpacing the growth in U.S. drilling activity. International revenues excluding the settlement, improved only 1%, but we began to see international growth accelerate late in the second quarter. 50% incremental margins were the result of better absorption across our manufacturing base, better management of supply chain disruptions, price improvements in certain areas and cost savings initiatives, which have nearly achieved our target for the year. Efforts to improve capital efficiencies across the organization helped drive $177 million in cash flow from operations. Capital expenditures totaled $49 million, resulting in $128 million of free cash flow. During the second quarter, we redeemed the remaining $183 million of our senior notes due in December 2022. And we ended the quarter with $1.6 billion of cash $1.7 billion of gross debt and only $114 million of net debt. We expect working capital will continue to be a source of cash through the second half of the year. Moving on a segment results. Our Wellbore technology segment generated $463 million in revenue during the second quarter, an increase of $50 million or 12% sequentially. Revenue improved 14% in North America and 10% in international markets, as the early stages of a global recovery began to expand beyond the Western Hemisphere. An improved cost structure, higher volumes and pricing improvements more than offset inflationary costs and drove…

Thank you. [Operator Instructions] Our first question comes from a line of Ian Macpherson with Piper Sandler. Your line is now open.

Thank you. Good morning, everyone.

Good morning, Ian.

Hi. I was a little surprised just at the end there, Jose, that reg tech revs to be down after the strong Q2 bookings. So maybe just a little flavor behind that plays. And then just more generally, I wanted to ask if the strength in reg tech and caps bookings in Q2 looks projectable and in the back half and whether we should start to see - to stay in revenue growth starting to kick in, as you've described two or three quarters on lag after wellbore. It looks like the Q2 orders support that, but just wanted to get more visibility in the back half of the year across those later cycle businesses.

Yeah, good questions, Ian. So really, you know, as it relates to rigs, specifically, the guidance was really for revenues that were in line with the quarter excluding the impact of the settlement, so basically flattish type guidance. And really, it's sort of corresponds with exactly the heart of the bigger question, which is the timing related to the bookings that we're receiving. So we're in the process of rebuilding some of the backlogs that got fairly well depleted last year. That takes a little bit of time. We've had a couple of quarters in a row of a nice pickup and see that trend continuing at least until the third quarter, and likely well into 2022 and beyond. But you got to bear in mind that a lot of the projects that we're booking are very large scale long-term projects that effectively have an S-curve, type revenue profile, meaning starts off very small, builds up over time, and then has a tail off as it reaches the end of the lifecycle. And again, that tends to be on average for some of these bigger projects about a two-year time horizon.

That's for the wind vessel -

As well as some of the larger projects within the caps segment.

And Ian, your second question, in terms of the outlook, is it remains pretty strong on both for rig both the wind side in terms of continuing interest by the industry and adding capacity. We've got conversations underway with several potential participants in that space, as well as potential new entrants into the offshore wind installation space and as well, on the offshore rig side. As Jose mentioned, a lot of interest in potentially reactivating rigs and upgrading rigs, and specifically adding pipe handling capabilities, automation, the OP upgrades, those sorts of things. And so our outlook remains pretty constructive for the next couple quarters.

Excellent. Thanks, Clay. So very positive not really surprising, the positive to hear that you're succeeding with your cost pass throughs in this very challenging cost and supply chain environment. The nature of these pass throughs more of a variable surcharge? Or is there some opportunity for you to put through pricing that's going to be stickier when the world eventually calms down? We don't know if that'll be later this year into next year, what have you. But just generally maybe it's too broad to generalized, but if you can. Is it a sticky price increase? Or is it more of a variable surcharge environment for your business?

That's a great question, Ian. And it really varies by product line by geography, and it has a lot to do with the supply and demand in those specific areas. What I tell you is that the freight surcharge is a much easier sell in this market and price increase. We are getting some price increases, but I think most of these are surcharges. And as Jose mentioned too, during a downturn you throw in a lot of freebies like mobilization, maybe standby as free those sorts of things. And we're calling a lot of that back. And so those were effectively price increases for us, but we're sort of taking back some of the discounts effectively that were given through the downturn. So it really varies a lot. We're hopeful that this will continue, we'll be able to do some healing, as we talked about in our prepared remarks and get margins to expand. But right now, it's just mostly sort of covering the inflation that we're seeing out there.

Okay, got it. Thanks, Clay.

You bet.

Thank you. Our next question comes from the line of Chase Mulvehill with Bank of America. Your line is now open.

Hey, good morning, everybody. I guess, firstly, just wanted to talk about orders. Obviously, orders were pretty strong in 2Q. Could you maybe just take a moment and talk about the sustainability of orders, as we get into the back half of the year? And maybe I'm not sure if you're prepared to kind of give this number or not. But if we basically add up large flexibles order and the turret order, and the wind turbine installation vessel order, like how much did that amount to? And why I'm asking this is really what I want to understand is really kind of the base order rate. And then we can kind of layer in some of the lumpy or larger orders that could hit in the back half of the year.

Yeah, I understand that. And thanks for the question Chase, I'm going to stop short to a quantifying the specific contribution of those categories. I will reiterate a couple things we said in our prepared remarks. One is in rigs orders, it was just a touch more than half of the orders related to wind installation vessels and our outlook there remains very constructive. And so very pleased to see those large projects moving forward and NOV's strong participation in them. And just as a reminder that depending on what parts of that vessel, those vessels will be wind that can be upwards of $80 million per vessel, if we went everything from design to jacking systems to handling equipment to cranes. But our outlook there remains very strong and believe that the world needs something on the order of two to three dozen offshore wind installation vessels. And that's working off of low-single digit base right now. And I would add that the U.S. needs Jones Act compliant wind installation vessels. And so we're building the first in in Brownsville, Texas right now and expect more to be added. And so we expect for really the next few years for that business to remain strong and robust. And then in addition, the rig equipment area, our outlook there based on specific conversations with mostly offshore customers, is constructive as well. And so we expect the next couple of quarters at least in that area to remain strong too. And then turning to completion and production solutions. Pleased to see more activity, conversations starting to heat up a little bit around some of the projects around the globe. We think that's helped by our customers' technical teams that are our guiding and specifying and procuring the hardware around these project developments, getting back in the office and interacting with each other. And I think that's helpful to our customers to actually move forward on FID-ing these projects. And so, a lot of things, as we mentioned still move to the right, but pleased to see some of those flow. And then in addition, that sort of trend is translating through our offshore drilling contractor customers, who are now much more active with us in requesting engineering work be done on their rigs looking at reactivations and upgrades that we referenced. So on the whole, hopefully we're pulling out of the big downturn from 2020 related to the pandemic. COVID still out there, still affecting our operations. But generally, I think moving into a period of much more constructive order outlook overall.

Perfect, appreciate the color. The follow up here is just really kind of when we think about the margin progression, as we kind of go through the next few quarters. Obviously, you've got a lot of friction, supply chain, raw material costs, things like that. Can you help us understand kind of how much of kind of this friction is kind of more temporary versus structural? And know how much of that structural inflation you can actually offset with higher pricing over time?

Yeah, we're pretty - generally when it comes to the inflation question, it's probably an overgeneralization. But I think oilfield services broadly, is better positioned in most industries to tackle and overcome inflation. And that's because it's such a volatile industry always has been. It's tied to the cyclicality of oil and gas, that there's a lot of awareness across this industry of pricing leverage. And so I think it's in our DNA broadly and in particular here at NOV. And so we're very tuned into our costs. We're actively managing this through conversations with our customers, it's helpful that the inflationary trends are so widely known, and that our customers are seeing it in all areas of their business as well. And so that sort of facilitates the conversation. So I'm pretty confident we can manage through this. Not to say we're not going to see some short term disruptions here there, but we'll be able to manage through the inflationary headwinds. But on the whole, we think that the outlook remains good. Things are getting more constructive. The short term headwinds that we faced in the first and second quarter, really not entirely, but clearly mostly related to COVID impacts on our fabrication operations in Asia, and the Far East on a couple specific projects that Jose mentioned, that's weighing on the margins. And frankly those continued into July into the third quarter. And so we're going to continue to see those be a little bit of a headwind and trying to manage through it. And then it's kind of the secondary effects of COVID on supply chain. So, being on allocations for fiberglass, for resins, for certain epoxies, for many of the raw materials, as well as the sub-assemblies components that we buy is a headwind as well, which is sort of a second derivative of COVID. That's a challenge as well. Those are temporary. They should dissipate when they do. Then I think we'll be able to get back to a more normalized healthier margin level and looking forward to that.

Thank you. Our next question comes from the line of Neil Mehta with Goldman Sachs. Your line is now open.

Thank you. Good morning team. So I want to start off on offshore wind. You provided the $350 million to $400 million run-rate by the end of 2022 on the call. Can you help us understand the mix there? Are you expecting to see increased wind vessel installation numbers above the $200 million? Or are there other items that we should think of incremental to the $200 million? And just in general, how should we think about the margins on those type of orders?

Hey Neil. I mean, I'm perfectly understood your question in terms of the composition. But what we're talking about there is purely related to the offshore wind installation opportunity set that is in front of us. Every month, every quarter, seems like the opportunity set has continued to grow. And so we're really pleased with the way that that business is shaping out. And we just want to make sure that people understood that we're not topping out at $250 million a year run-rate at end of this year. And that's it the opportunity set continues to grow. And we'll continue to have a nice growth profile through the course of 2022. And so that does not include the potential for other opportunities within the wind space, whether it's floating wind type opportunities, or things that we're doing related to land market related wind activities. And then, your question about the margin. I think in the past, we've said that in a lot of respects, average installation vessel for us is very similar in size as well as really margin profile to a super high spec jackup rig. So it's a nice business and a nice opportunity for us.

Yeah. One really interesting thing that we're hearing as well as we've described in the past, and I know you're familiar with is that the world's sort of building out this fleet to handle the much larger turbines that are going in offshore that are as tall as a 50 storey building at the hub height, and has an inadequate fleet to install that. And those sort of next generation turbines are just now being started to be built and supplied by the OEMs. The industry is already thinking about sort of the next generation beyond that. And to the extent that comes about and now we're talking about not 13-14 megawatts, but 20 or maybe 25 megawatt towers, that too is going to require even larger vessels, bigger handling equipment larger cranes and the like. And so there is a potential follow on opportunity to beyond sort of the current number of vessels that we see as being required to support the industries installation of these fixed offshore wind power generation assets.

That's really helpful. I think it sounds like the $350 million $400 million is baseline, but there's some incremental opportunities that could make this an even bigger business a bigger part of your business. The follow up is, obviously, there's been a lot of OPEC headline volatility here over the last couple of weeks. But the output is one that's very clearly positive for Middle East activity. How do you see NOV is positioned to capture the increase in activity in the Middle East? And any comments you can have around some of the conversations you're having with your customers?

Yeah, very good question, Neil. We're very excited about the Middle East in part. Because if you look back at where we have really expanded our footprint and our capabilities, it's clearly been that region, the GCC area and Saudi Arabia in particular. But our presence across the GCC is much, much larger than it was 5-6-7 years ago. And so we've invested in a number of new manufacturing and field support operations across that region. We have our joint venture with Aramco to manufacturer of 50 high spec land drilling rigs, as well as support additional offshore rig building for the region. And so I think we're really, really well positioned to capitalize on that region's move towards a higher level of activity. What we've been hearing lately through the first half of the year is sort of this accelerating interest in getting back to work there. And so there have been a number of high-profile projects that have - some of the NOCs around the region have announced that were suspended through COVID that are sort of getting back to work now. And that's an addition to sort of standard kind of oilfield day-to-day work, which shows up at NOV in the form of tenders around components that are used in operations. So I think in terms of annual or biannual tenders for bids for fishing tools for downhill drilling motors, those sorts of things. Recently, we've had inquiries from a handful of smaller service companies that work in the region around well servicing equipment. And they're being told by one of the large NOCs in the region that they need to increase their fleet of equipment to support unconventional drilling and completion activities. And so we're in conversations with them about supporting their efforts in that that. And there's not a lot going on in the land drilling space for our Rig Technology Group right now, except in that region where there's a couple of inquiries around additional land drilling assets. And so, on the whole, very excited about the outlook for the Middle East, that it's getting back to work following a big shutdown due to COVID. I will add, the region has very close ties to India. And so India's COVID situation became more tense here a couple months ago. It did affect operations in the Middle East, but hopefully we're starting to put that behind us.

Thanks, guys.

Thank you. Our next question comes from the line of George O'Leary with TPH & Company. Your line is now open.

Good morning, Clay. Good morning, Jose.

Hey, George.

I don't want to put the cart before the horse and look out too far. But just thinking about Q4'21, and the level of orders you guys ramped in this quarter. Just curious if you have any sense for how robust year-end sales could be versus history.

Georgia, we're getting a weak connection with you.

George, can you hear us?

It looks like George has been disconnected. I'll move on to our next question. Our next question comes from the line -

I was about to say sorry, George, please dial back in. We'll try to get your question answered. Sorry, Sara. Go ahead.

No problem. Our next question comes from the line of Marc Bianchi with Cowen. Cowan. Your line is now open.

Hi, Mark.

Thanks. Hey, guys. So there's several issues with the supply chain. There's inflationary pressures in terms of price in the faster stuff. There's COVID issues that you talked about sort of disrupting functionality, the supply chain. And then I suspect there's just other capacity utilization issues that have disrupted the supply chain. How much putting the pricing increase in the cost of stuff aside just the disruption to activity? And if you have to move manufacturing to another part of the world, or you have to expedite stuff from across the world to one other place, how much is that weighing on your margins right now? If I take the guidance that kind of implies like a 4% to 5% EBITDA margin for the third quarter? I'm just kind of curious if all this disruption were out of the way, what kind of margin rate will we be seeing?

Mark, it's a great question. It's extraordinarily difficult to answer. Other than to say, we go through intensive detailed reviews with 18 business units, every quarter, and I would tell you, it came up in every single business unit. And we spent a lot of time talking about it, because it's kind of everywhere. The shutdown of the global economy in 2020, it's hard to overstate how disrupted that's been to a tightly wound global supply chain. And we're seeing it kind of all over the place. That's not to say we're not managing through it, I think our folks are doing a great job covering inflation with price increases and surcharges, like we talked about earlier. They're doing a great job finding alternative ways to meet the needs of our customers find alternative suppliers. Our scale is really helping out here a lot. But, it's sort of a really, really extraordinarily challenging time coming off of an extraordinarily challenging event. But what I would say is the allocations in certain raw materials, the difficulty of getting certain sub-components, and the difficulty of getting integrated circuit boards are more challenging than just the straight costs that we're seeing. The cost like I said, we're more or less able to cover that through pricing and surcharges. But it's the disruption because, we need all of the parts to the modules that we put together the products that we deliver, before we can deliver that. So we're short one component, well that disrupts our production schedule and is a problem. So I would add to that, this global supply chain that was so tightly well pre-pandemic, was really facilitated by a robust ecosystem of industrial suppliers and distributors. And in 2020, they all found their business under a lot of pressure. And so many of them depleted their inventories as well. And so in sort of normal times, you have industrial distributors of steel of all these components of sub-assemblies in the like, who would absorb shocks from either the production side of things, to the extent shocks would arise from time to time or on the demand side of things. Tut they performed a very important sort of shock absorber function. And when they depleted their inventories in 2020, and inventories are still very, very lean. They took out sort of one of the shock absorbers that that that NOV and other industrial manufacturers relied upon. And so that's another sort of factor that's exacerbating the challenge here. But very, very proud on NOV's ability to manage through this to creatively work through new solutions and to access what we need where we need it, and to try to stay ahead of the challenges. And like I said, I think we're getting better at it. Q2 was a little better than Q1. And so we're working our way through it.

Yeah. Super. I mean, I guess related to that, and Chase asked the question earlier about order progression. And I think you guys mainly responded to rig. But just in terms of caps. I mean, is this issue, the supply chain issue something that we should think about maybe limiting the caps order progression in third and fourth quarter? Or could we still see the 400 to 500, kind of level that you did this quarter?

We remain pretty bullish on demand. The oil fields kind of waking up in - North America got back to growth, late 2020. Sort of the inflection that we feel like we're moving through now is the international markets. And thus to some degree, offshore markets as well are feel like they're starting to go up. And so we remain optimistic about orders for caps through the back half of the year.

Great. Thanks so much, Clay.

You bet. You bet. Thank you.

Thank you. Our next question comes on the line of Veb Vaishnav with Coker & Palmer. Your line is now open.

Hi, Vebs.

Hey, how you doing? Thank you for taking my question. So maybe if I try to think about what is the underlying profitability of the business, not today? Obviously, we are still trying to improve on an activity and everything. But if I think about, let's say, in next two-three years, can we get back to the 15% plus EBITDA margins we saw back in 2013 to 2015, given how much costs we have taken out?

I'm going to stop short of forecasting that, but you look back at our long-term track record, which Vebs, I know you're familiar with. And we've demonstrated very strong profitability in better parts of the cycle. And so I think that's very - it's not hard to construct a scenario where we get back to 15% EBITDA margins. We're also very focused on return on capital, I will tell you at that level, and a little higher level of revenue, we would be earning very good returns on total book capital, which is obviously our goal. And so, yes, a lot of structural, heavy lifting since the first quarter of 2019, we've taken out nearly $850 million of costs, which are structural costs. And so our business is a lot better, it's a lot more efficient as well, as we've made all these investments in digital capabilities, in new automation capabilities and renewables capabilities and the like. And so, I think the company's really pretty well positioned to deal with a better market. And I know everybody's aware of this, but probably worth noting. We just moved through a year work, that's all record low levels of rig activity dating back when records began being kept in world war two negative oil prices. I mean, it's just an extraordinarily historically bad downturn in the oil field. And so we're coming off of that. And so we're a long way from being in the good part of the cycle, but looking forward to getting there and generating a lot better financial results.

Thanks. And maybe in the same vein, given how we are changing business, more revenues coming from the wind vessels. I don't know if it changes the margin profile. But if I think about the free cash flow margins longer term, how should we think about NOV's free cash flow margins, the free cash flow over sales, given that -

We've been liquidating working capital through the downturn. And one of the things that we're most proud of is the fact I think we're a lot better at working capital management, which is generating good free cash flow for the business. But as Jose mentioned, we're down in to the high 20% range as a percent of annualized run-rate. Revenue run-rate now for working capital expect further improvements and expect working capital to continue to be a source of cash. And so it's really those processes and those disciplines that are embedded in the business now that I think will help maximize performance in a better market environment.

Yeah. The other thing, I might Vebs, is it maybe not sure you're getting at this your question at all or not. But something to be aware of is, we've historically been a very, very capital efficient business. Clay, I talked about the improvements that we've made structurally related to the focus that we've had on working capital. But also as you sort of alluded to the changes in our business and the portfolio that will occur over time related to the energy transition. One of the things that we're really excited about is the ability to leverage our existing skill sets, as well as our existing asset base to capitalize on those opportunities. So really, no --virtually no incremental capital required to pursue those opportunities. And while this year frankly, our capital spend was higher than it otherwise would have been because of one unique opportunity with the Saudi rig manufacturing plant, we expect to remain back in the 2.5% to 3% capital expenditures to revenue run-rate, type spending going forward.

I think that's a good point. Thank you for taking my questions, gentlemen.

You bet. Thanks, Vebs.

Thanks, Vebs.

Thank you. Our last question will come from a line of Stephen Gengaro with Stifel. Your line is now open.

Thanks. Good morning, gentlemen. Two things. One following up on the prior line of questioning. The balance sheet is obviously in good shape, you're generating cash? How do you think about the uses of cash as we go forward here over the next one to two years?

Yeah, good question, Stephen. And look, I think we've been pretty clear in the - not so distant past and we've been pretty consistent over the last several years regarding how we think about capital allocation hierarchy. And, we continue to remain very focused on achieving our gross debt-to-EBITDA target of two times or better over time. However, as you pointed out balance sheet are in great shape. And you can really be, I guess rest assured that we're not going to stockpile excessive of cash as we move forward in time. So, our outlook seems to improve day-by-day, which is wonderful. But given that we're only one quarter removed from breakeven EBITDA, there's still a little bit more work in healing that we want to have come into the equation. And there is still as we've talked about, during this call some uncertainties related to the emergence of the Delta variant that keeps sort of rearing its head and causing some disruptions. But feels like everything's headed in the right direction. And really ultimately, it's going to depend on the trajectory that takes hold in 2022 and beyond. So, if it's a very, very steep trajectory, we might have some working capital needs that we need to fund. Or we could end up in a position where we have quite a bit of excess capital that we'll need to and will return to shareholders. Also, we maintain a strong balance sheet for a number of reasons, but one of those reasons is to be able to remain - to maintain our ability to play offense, even in the depths of a downturn, which I think we've done pretty effectively over the last several years. Clay highlighted a lot of the new products and technologies that we've been working on and developing. And it's their time to shine and in improving market opportunity. So we want to continue to be opportunistic as it relates to being able to fund high return investment opportunities. And so, we really are thinking about it. But being one quarter away from EBITDA it's probably a little premature to outline, a specific plan to return capital. But it certainly is something that we review just about every quarter with our board. And that conversation will remain a good topic.

Yep.

Great, thanks. And then just one other quick one. On rig systems, the non-backlog, revenue in the quarter was pretty strong in the second quarter. Is there anything that I should be reading into that as far as going forward? Or was there anything that that push that number up artificially in the quarter?

Yeah, after market was up a little bit? And as we mentioned, our bookings for spare parts, mostly offshore been up double digits last few quarters.

Okay, great. Thank you, gentlemen.

Thank you, Stephen. You bet. Thank you.

Thank you. This concludes today's question-and-answer session. I will now turn the call over to Clay Williams for closing remarks.

Thank you, Sara. We appreciate everyone joining us this morning. Look forward to updating you on our third quarter results in October. So have a great rest of the week. Thank you.

Ladies and gentlemen, this concludes today's conference call.