Flotek Industries (FTK) 17 Nov 202020 Q3 Earnings call transcript

Good morning, and welcome to Flotek Industries' Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management's prepared remarks. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Danielle Allen, Senior Vice President, Chief of Staff for Flotek. you. Thank

begin. may You

good We and your morning, you, appreciate everyone. participation. Thank

Financial the today and and quarter. John Chief of President Chemistry and we Ezell, me business today's first and call Global President; TengBeng Business; of participating Borton, Technologies. Officer Joining our President Executive provide the on are prepared results Ryan concerning Koid, for Chief Gibson, Michael call, On Officer; will Chairman, remarks

our earnings events that, website. have. comments released our projections Following any webcast, we that will our Yesterday, which will quarter, on questions for answer Today's replay Please be forward-looking also regarding being our or expectations for may you announcement make are is we any is and on statements. on third a note, call future website. available the we available call today's

Forward-looking uncertainties, subject With our non-GAAP expectations. These with on risk actual to and John. release, and SEC. our materially number many our earnings of and from of results uncertainties statements risks control. to to review beyond in cause discuss discussed advise listeners can management differ our risks are the are factors I that, press release turn reconciliations now it filings earnings over a may provided Also, our to please call. We in the which this will our as refer metrics current to

our and strong and employees, of thank support customers, has shareholders, to I'm Board Flotek received. Danielle, extremely Thanks, you our for that to Directors. our grateful the our

a the their a My every employees; great related it's at work dynamic day, them. and to to truly and our be and by home patchwork vision dedication pandemic. committed to school return demands our overstated, challenges I'm procedures, focused juggling to for remained of honor evolving inspired alongside gratitude cannot Additionally, and work, they've while executing

I the dive we before into of Directors. Mike deeper Flotek's to welcome Board wanted quarter, to Now, Fucci

world's influential and incredibly of career most professional spanned U.S., accounting leader of strategic respected his Mike Chairman the respected Former is contributing Deloitte, the and to of who services As vision an the has one firms.

his course human of and the capital, inclusion, become over business a Additionally, leader Mike transformation. career, diversity on thought and has

very are with Mike joining Thank I really for to Board; Flotek's join Mike forward you, have us. look fortunate you. We to working

turn let's third to the Now, quarter.

Now quarterly we overall, and have showed signals, performance no satisfied positive do. are with to our work by results, some more means our we

help and and career. having I As future been said COVID that our reductions. to day commitment detail glad Mike been the the are the for our of areas growth an our clear diligently attention new forward navigating We through to Flotek possible global profitability, necessary remain position you those he culture team for place implement that common improve is caused so, chemistry I emerged be results. to in of ourselves and initiatives processes, for We're Borton, the challenging of this today. future team, a drives transition Flotek; by value cost performance, company I've efficiencies, doing then, every our while platform, transformation a that the stronger as standards. that means making business market quarter, be shareholders, a as here. underpinned important Mike's in And to Among optimistic recovers. demand to even market are strengthen passion hard returns. since very an XXXX; about and day path all the stronger some shareholder has on is meet for impairment, write to my everything inventory I'm at identifying model. right in period last on very experienced and us workforce has customer and and make business with where disruption creation several the success the most our Flotek. today we can culture, introduce quarter, focused environment a building Together third have high the I the us. leadership believe our for company, his adjustments decisions with destruction, accelerate driven discipline reductions; has is and leadership and by had to we the difficult downs, Last CFO impressed he Mike to We're this a continue with entrepreneurial has of team we mean

inescapable performance. Now, that the first it's with business force macro as been to our let's address regard impacting environment, the

some after Although A the market challenged. the gas drastic completely and slowly the shutdown. third the on-hold sites oil limited spectrum the slowdown significantly fundamental activities put while to oil head across gas for the pump, started quarter, activity to gas were CapEx from the severely customer in been remains emerge world have of the COVID in which lockdowns well and many

consumption remained begun Crude from has signs not Refinery compressed and processing in decreased year-over-year, of U.S. and improvement approximately has drivers mileage tandem. indicators. levels. That low their corresponding the and a gathering budgets to have fuels. last refined drop we're has midstream although throughput said, Additionally, still at improved, show some margins XX% of moved seeing customer with in reduced by road while positive quarter, XX%, pricing although have still demand

Permian, enough not have particular, primarily the market, chemical, Middle recovering. excited markets, resumed Some that market some is customers specialty we our modest international demand In get levels increased of in East. of stimulation chemicals in for saw the summary, completion nearly in to the activity the and but saw select in we in improvement the

JPX gas a sales customers. in we by it weighing in economic as JPX, oil and demand expectations were in on quarter full our segments. analytics mixed first and result, reductions across serving As data financials, Last The with budgets results activity drop quarter midstream short weak by a our industry. is the business was closed difficult way to results. acquisition fell dramatic a impacted company our our sales downstream With technology and of JPX performance and capital included quarter,

look not revenue as to and model reduced These market. XX% that a in moving recurring necessary the a achieve directly our market we we In inventory a were And take the what the decline operating operational light to to and these market commensurate after this tied hard impact an needed the in we as we customer that transition cost near-term so model. in from reductions headcount several lightly, anticipate As decrease analysis, and we that to JPX. quantitative expenses to revenues. a to disruption And liquidity ongoing subscription assess on as but subscription a we other should manage impairment These the could based charge qualitative to resources in our we're segment, a at transition demand result with our revenue minimize a across beyond of of be completed acquisition well XXXX revenue costs of recurring business generation. anticipated lowering values the anticipated are were of concluded not we we necessary near-term; categories took we as conditions, actions [indiscernible] demand. tandem, within also reduction analysis for and following taken difficult in the include and

in the of strong benefits I team necessary remain He JPX. JPX announce Flotek's compelling businesses has and more value technologies full strategic diversifies of financial the last business segments Koid and than Koid industry. quarter, President future. as are Additionally, the pleased for We the digital in has a at to recruited JPX I'm enterprise-wide oil experience have to following confidence gas about record assumed and the helping to TengBeng the considerable manage XX processing. to years build long-term, is Koid also that to a stream, our very and real-time building Flotek In confident the oil of markets. and gas natural opportunities, chain, we proven across solutions by energy the accelerate business has growth demonstrated crude international duties full it's all software expanding a leader data companies across transformation hydrocarbon providing track he customers strong of very hydrocarbon

will we'll related quality segment products products about we in with JPX, large well. number recent vaccines, growth current the sanitizer for of effects. that transcends the often long-term broader Transitioning effectiveness janitorial manufactured, about We opportunity suppliers a extends off announcements domestically vaccines improvement sequential business also experienced trust our in we product regulatory are and data our the and delivered real administered these to in side discounts to an anticipated Most business in a and drive migration will to as pandemic. will to time also nature. importantly, both Even greenhouse technologies seen set and sanitizer there long-term take and state the the ahead believe potentially emerging penetration, expand our the vaccine will have a and be liquidate offered disinfectant and tightening standards, JanSan chemistry unknowns abroad. It portfolio of be as needs experienced the widely, a address out are lower and activity, Through like strategy still building to of model temporary to to which and domestically some It disruptions to gases inventory to behavior. highlight of energy we're our pressure the consumer to business. sanitizer pricing and uptick technology address with will proven, internationally. so data we I'd a that without opportunity Gordon change Overall, both and take COVID for there We chemistry subscription-based us and those still JanSan. quarter beyond emphasize believe Americans be anticipated with chemistry markets the we've the refer market. the as as launched in market, address who'll market newly

we increase segment a versus quarter As result, overall in second are third revenue see the the quarter. pleased XX% in to a

to Now, and cost move measures. let's liquidity

our decisive Flotek We the future. strategic for action best by to take continue to position pillars scattered

balance financial healthy, on Our are bolstering remains focused sheet our and we flexibility.

in in reminder, year negotiated our the our to of Directors. reduced spending, Board order to reductions discretionary team, compensation this for our materials, and to salaries of we our on work leases, continued we our curtailed Throughout preserve executive reduced freight costs. cost quarter, earlier and suppliers As with headcount, negotiate lowered our liquidity, raw a decreased

to revenue. segment, to Now, I'm over an to technology new update And discussion the turn including process trends going JPX for who give will we'll operations. Ezell, further it Koid? over Ryan JanSan at then it of the our turn chemistry Koid of to the efforts drive on

Thank John. you,

technology. game-changing market transition penetrate the focus we've model, to accelerate strategy while targeted conditions, mentioned, applications of market, faced As our utilized and John international our business we challenging to time this our on

On Asia. JPX penetration front, engagements, the the then served customers, leader market. for in hired had Since a have and Middle September, to have East proposals. we and many In potential North past and received feedback we many to only business in American Africa from meaningful very drive Middle we the international responding seasoned help the development favorable the JPX in requests us are East,

require the sales opportunities mid international for technology and to are long-term, market; lead this deployment over about longer While times, is preparing to we very optimistic exciting. of are this our we

our the transitioning the Secondly, customers equipment traditional will long-term. subscription-based provide and JPX's in business we value and from for greatest model; sales, fast-tracking are our this the shareholders

recurring contracts, needs, which equipment-based subscription-based will we shifting some will maintain revenue. customer aggressively to contracts accommodate level we While our to of accelerate are

we expand to our relationships customers continue customer existing strong Additionally, with building maintain to base. new are and relationships

For them XX, signed second we in in the a with agreement with quarter. Phillips working example, closely collaborative

will transmix transmix, we pipeline. which terminal this data natural producers, real-time provides will offering of enables for of and profitability operators. fuels agreement, increase will refined mixing shipped batches is part different optimize reduce data, decision-making services a faster that offering common provide being which between As the in and adjacent fuel This that transporters help

of the positive to strength along seeing partnership look market. this encouraged discuss call going and forward technology. are application value very to I'm validate our that, We from are pass the our our customers to to feedback adoption this unique in expanding and the to see Ryan chemistry technologies. using Ezell the value of With We Ryan?

Koid. you, Thank

launched segment of teams I'll deeply and includes chemistry technology As successfully. well as executing our proud on Flotek's update which businesses, is The FDA are chemistry reminder, business, an quality industrial emerging janitorial janitorial and we last sanitizer JanSan. energy technologies, provide supply consumer as to our of applications. as and our I'm first for sanitizers quarter both, who referred our line hand our

the communities. experience. we leveraging chemical started selling corporate and that demand opportunity a the the R&D first sanitizer world-class residential the into market our cleaners standards, demand experienced our The contaminated expanding for consumer to and industry, that have By substandard even full particularly outreach market and homeless it's the original new cultivated shelters, saw our of markets, offering the applied and hospitality exit product first of registered EPA quarter and or food actively of those pressure the hand we janitorial with we industrial the medical were into inclusion entrants, facilities, to quality industrial of deliver opportunistic our hand products. often sanitizer FDA to FDA community and recognized diversify extension sanitizing capabilities, and products, ISO for donating of natural disrupted existing and market efforts high was production specialty producers applications. communities, quality multiple higher hospitals, a an third the we sanitizer potential producing recently, in a and retail, has and registered materials. of raw flood sanitizer to line quality in they of hospitals and as rejuvenated inventory low following strong sports back senior technical established ecommerce -- entertainment, With More result including initial disinfectants and high products local The began have reverting hand we're Our as industry, as hand when footprint revenue facilities, stream Subsequently, JanSan in services, business. chemistry our quarter second a surface schools, some as other been commercial dumping certified FDA high-growth growth, in our responders, hand the balance. community, supply quarter Today, a our into and line to travel sanitizer which markets. the in a anticipation EPA a

is temporary. we said, John disruption believe As this

purchases More importantly, as that And a The compliance product and repeat today regulatory hand buyers buyers of in [ph] customer now see on quality states we're selling dissolve base the product to we and observed procurement Flotek that inventory to quality by increased should quarter sanitizer processes begin recognize to to excess a for commercial low have are are quality and customer the buyers. reducing and normal need by end products, from second XX offers. triage higher becoming deliver back focus high and the distribution and our market. further XX%, is base we believe quarter-over-quarter. metrics our result, educated at Flotek use starting by XX% institutional

us and emerging disinfectant the report market to manufacturing in surface are reduced and enhanced product building quality the our costs, chain business, line, differentiate that also of our channels capabilities the to we in about degreasers, sustainable feedback many further Flotek's particularly logistics our in our with portfolio direct expanded sprays, products JanSan, cleaners recent technologies are long-term. supply positive consistent; that industry. the the We partnerships fulfillment and technologies and include We're and JanSan ahead, Amazon. our a we our The process. capabilities, packaging accelerated marketplace. happy out to with in see with long-term wipes are have industry, for addition those proven opportunities in customer to these optimistic I'm JanSan and and and highest selling new products consumers and we Additionally, JanSan is among the on order

marketing with experience we in sales our our further will As distribution we strong resources relationships JanSan invest continue to talent develop market. to could and the capabilities, in build out and

high reallocating look returns. resources to how Our would positive that we businesses to we market. growth And drive exemplifies exciting we JanSan updates adapting as forward additional this are providing progress and initiative in

this business, to commented let impacted chemistry. have which a chemistry few of although M&A macro due opportunities to on it highlights and that me are helping regard. usage factors improving, provide are energy comments And there I few switching to experts declines market Now on to would activity, contracting in and drive is chemistry in energy negatively our all, a first say like

third select and As demand we've chemistries began completion as exceed products and activity slowly end the our the and completion customers specialty production seen of quarter, upward, on production improvement increase resumed activities usage return their at fracing given to of moved invested our capital the deliver.

the focus partnerships fact, driving high unwavering In our delivery been a end to on visit would consistent Furthermore, Chemical international growth the tubing we've companies. as services, Partner out broad market a with are of named upside we've an customers, recent partnership business. international to in This and with through to energy largest chemistry I'm in additives opportunities, stimulation opportunity well-site a to of the together our strong one look technical cold Middle pleased which NOC provide of received due support overtime. of In our and others Middle implementation. major praise with our service chemistries, the in our we East, Flotek created Choice range East and drive

In business have to resulting inventory I focus transformed greater supply would in finished continued addition, goods include greater cost as our detail, our reductions is management rationalization discuss chain in In efficiencies emphasize Mike truly of our we like will business. improvements of business. that closing, which our in today as count and on chemistry a energy and

efficiencies optimized chemistry effective driven oil at solutions; lower operators barrel and is; can leaner and we and the valuable two, delivering the the per and cost, designing business a in something offer cost needs Over future, unique helping production supplier and implementing produced. and down three, cost one, chemistry; our that the our increase which of market marketplace, accelerated renegotiated built gas year, logistics We in and we've operational past business today and processes. of contracts, the meet

As we relationships on financial global our share. into results. over we building focused and market look And re-introducing out customers Mike the the expand successful to Borton Flotek with I'll discuss ahead our are to to our XXXX, and turn that, stronger active call market, to with

in joining with expense spending Ryan, you, our cutting time spending Thank the the focused counting and Since August, good of quality relationships Flotek auditors. early balance books our including cash banking the been prioritization, management, and everyone. sheet, also processes, morning, new I've evaluating extremely our by commitments, on

strategic us several help three started the at will create that months first organization. a During implementing I've Flotek, priorities stronger to

than my to successfully the where technology have based necessary a higher as minimize cash. short, continue a will optimized product where to revenue both, we experiences cash able longer forward to transition actual companies, it as are revenue will emphasize financial structure our it's [ph] use margin multi we a transitioning leads installation. needed revenue transition to revenue making subscription-based of minimize said, We time to higher That John JPX multiples hand to we cash. I This to given model, cash we model here Additionally, to the prior benefit on predictability. have to at of assumptions one-time inventory business the with and or pause impact has the cash JPX. were indicate reset outlays near-term. and that the going JPX is new multiple noted, a we enough an of in that on stream sale for to make to more number the inventory In the is outlays decisions of the term an cash the on years, recurring must with to associated a want with ensure and recurring revenue a recognize upfront means for model, underlying require framework over company at

we've JPX. First, let for quarter reported this impairment address me the

valuation $XX.X and resolve demand continued independent intangible impact completed oil were especially and and refinery and the we gas recorded we adjustments goodwill COVID-XX, $XX.X and of an company asset As in decline of the spending million. downstream auditors. These budgets, with mid conjunction impairment markets, charge million and in impairment charge the the extended of in and

evaluate across Secondly, inventory the the company. took also we opportunity to our

Chain, with working been I've talented Shane months, our very several past and Wise. VP the of new Supply Over

we technology parts; an policies large taken reducing million, charge excess portion is million As we the first segment, third Consequently, for product of a SKUs. during adopted $X.X new obsolete our $X.X of million. reserves that and the have $X.X the rationalized result quarter, made by a inventory of have up of two of is initiative, and JPX. hundreds related The of reserve of to chemistry underperforming

company In these million identified can in forward. the like adjustments addition, I following totaling to a our assessment manage our are would during actions, nature, emphasize accounting. inventory that that these one-time to inventory initial the adjustments period all profitability acquisition, purchase better the and of JPX we measurement price made were moving and as result $X.X position

escrow million conditions previously operating JPX Flotek adjustment the the value shares terms quarter. acquisition agreement the fourth in $X.X to the to third distributed income record charges to Next, liability as early that now a acquisition company million estimate, October performance; like considering the and shares; $X.X $X.X in the transfer account X with thus as far quarter. for in purchase recorded change note the in the and third quarter. the to were impacted purchase associated are The that for stock we're and of the transferred million JPX The earnout a escrow Flotek was fair the acquisition replaces there terms. during escrowed provisions not million price I'd shareholders those the payment

performance operations the are chemistry detail. the We discussion business JPX. and to methodology, and and that but with for third in created energy described. is we quarter included financial segments; the second was technology results result operations in changed chemistry Prior Also, data recently The quarter data segment, Ryan reporting JPX just note, technologies analytics our janitorial in JPX. more remind technology and The please of results want a of presenting was launched in chemistry acquisition our new the our that analytics. are technology conjunction that quarter our reportable of includes now expenses previously referred full business the sanitizer -- you two our acquisition, segment first to also as

mentioned, previously demand driven continued John lower faced by global a segments. we As industry both impacting and pressures, challenging quarter our third

on the activity, in last during chemistry million $XX.X as quarter, events the and quarter, driven $X.X statement; result completion revenue was from uptick by both, second income of up the demand up energy million, during macro the The picked by to is an activity for and period year. in impacted domestically a sequential and consolidated improvement quarter the same sharp from Moving was in onshore XX.X% $XX.X dip. markets. third markets economic decline largely year-over-year million the below primarily environment and international revenue The second political continued in volatility in the foreign drilling an

impacted recently in million third increased the XX.XX% $XX.X of of COVID-XX a products ramped during with $XX.X the operations, XXXX, exception third for and productivity our customer were and of level demand quarter sanitizer XXXX. in of second last reduced from addition, In the quarter million Consolidated up result as services just expenses which operating year's our our quarter. of

professional Excluding $X.X reduction spending, $X.X by fees, million including charges. were a these one-time compensation in inventory of lower due $X report adjustments Corporate million of offset last that to nearly declined to expenses versus XX% and million $X.X acquisition-related partially of discretionary year million severance million we to pleased expenses, G&A $X.X one-time year-over-year. spending, overall declined

million $XX.X XXXX, slightly and loss compared of million share last rationalization impairment X%. the million impact JPX third the negative or loss quarter quarter million $X.X vast a in the included in and year. second per loss the total of quarter, million consideration inventory $X.X development year. diluted per $X.XX to and million of one-time record at loss quarter last from $X.XX depreciation of operations $X.XX diluted year. majority These from expenses down last EPS below the $X.X were of share third per of $XXX,XXX share. costs Our reported level represented amortization continued three a declined Research of $X.X third loss diluted items or of in to million, versus continuing of We $X.XX, JPX $XX.X in of $X.X

for in the EBITDA previously $X.X was discussed. EBITDA million, loss loss a improvement which adjusted of from a $X.X adjusted to year. lower as last narrowed The of Our due quarter third probably expenses is million

the Now, balance sheet moving on performance. to

cash mentioned John previously, our our liquidity. preserving position healthy, focused remains on we As and are

As million $XX.X million end we of and had of cash versus the second in quarter, quarter. third equivalents of the the $XX.X

company pursuant disclosed, fully to the Paycheck $X.X outstanding Protection had million JPX Program. loans combined and As of the

As mentioned previously, we are inventory managing absolutely focused our position. on

result quarter, the we annual reduced SKU in carrying million technology than SKUs costs. efficient within managing reduction estimate the We an on focus manner. as of that chemistry in XX% we inventory During inventory our division, by in savings will more $X.X

for over Let pass the remarks. John me call back final to some

lines. objectives for January, dependence including to a -- out few I'd I lines like a growth take like to in I'd backlog a remarks. disrupted. count, new our none create that share amount our transformation enhancing revenue, reducing capability that a you, strategic from our thank moment competitors time, market while offering Mike. of of annually Flotek and/or expanding recurring knew and further be dramatically share At product course, would on few strengthening of product closing When rig market current our chemistry, and laid us how digital our joined of greater for differentiating I provide to the

laying XXXX even still business of holds strong nowhere today, we've foundation we against this for However, making while progress progress a And adapted beyond. satisfactory and terms in which to market. our on and near me strategy, are focusing in executing while our

commitment our our superior retention cost and First, with culture structure of to committed We're capital, preserving to fortunate at balance to a and company help customer a we're to sheet. maintaining healthy liquidity support to the the delivering a leanest drive have service. while Mike

transformation upstream are diverse and diversifying and our digital unique income JPX, and access building downstream, of the of We products we're acquisition more business customers' midstream Through stream. offering services. a to

revenue We the at greenhouse this same a transformation all looking we're to potential this and build while take also recurring of the segments, that; digital model. the have investigating to offering at time ESG into gas and us

both with Additionally, janitorial capacity beyond available products cost, can products, much logistic sanitizing From JanSan opportunities. our side very hydrocarbon revenue we chemistry for in and standpoint, with Without the to to industrial energy the and an manufacturing business services, of further Flotek. business technology the attractive most products and unsold really help diversified the us we've markets additional and consumer on that we market have launch deploy the additional capabilities adding markets. our include and operational created to

our JPX products notable include in opportunity markets. less see both We much we're of chemical ahead days the and businesses set believe all to we for see gas domestic international to the going where volatility the focused technologies, and versus a also energy in oil

And In competency. very closing, the that pleased international already. core we've chemistry so into is our expanded we're segment

developed centered from three business chemistry. labs value strong have around creating We

difficult much. for turn the when XXXX And measures to emerge world committed. returns we're it's still the to as questions. with some a you While investments it do prepared a work and right the and future in I'll back putting we're beyond in to Thanks place normal, determine We to of lot for and stronger company now to have optionality. so

go comes with session. begin ahead. Joseph from question now will Meister Von Our Intermarket. question-and-answer today [Operator the first Please Instructions] We

like what hand sanitizer year guys. from to us in business a Hi, the were Can third sales you'd where that quarter the and tell see you now? in

people a maintain looking Ryan, we and didn't will real the quarter, we say But months, line They're last and were I'll expected there. three start stated I marketplace than out principally advantage mainly time that in not the player, lower we see we've can sanitizer. it really in be diversified But competitors. we in a Ryan associated products I beginning single trying to what with because people it and we a have earlier, because jump would in competitive that product at depressingly over where the what the interested sale. want product lot quarter-to-quarter We're sanitizer of segment. because of portfolio of the that was that at of some breaking at it's JanSan were to saw a dumped buy growth not out.

business, quickly our on dispensable when needed there sanitizer. we sanitizers, then looking to about substantially as that, the about think commercial [ph] on where at but full larger talking reemphasize John, as the being full were weeks, efforts from is whole the the I we not service a we that think options, business our only address talked philanthropic portfolio various JanSan is -- realize them just and came correct. we long-term hand business, few for first you're which JanSan And sustainable a sales than after I to start hand the around we the market in become and first to

transition. monthly basis, fixed a in Flotek, on orders of term line any to that's building side reoccurring into that good in we chemistry area movement. of the the in a is of we of sustainability related what on wipes, be move disinfectants, to longer the to things cause our of surface with So core want and seeing is are areas those now substantial of target that a the sprays, moved don't lot which when the launched what contracts we've market. see Since the degreasers, the to all then starting and us competency blocks And the the we're customers cleaners, on that burden a

the I outlook And lot the pressure, that have pipeline that. business know guys but guys XX and what's then JV been JPX, to and a opportunities related under of for refinery the on Phillips

question. for the you Phillips Thank to Good. partnership. XX the Related

understand even were I So one customers. of of of them progressed introduction with to through them Phillips number XX, a quite the have but has presented proposal. a Many potential to progressed,

the for I is [ph] that technology huge. applying So value from that deriving think the is transmits

been looking forward are has positive near-term. in the some and results we response to positive So,

like where is, we that JPX the we on leadership part are a opportunities cohort and set of extensive international pretty other about I see on The market.

for However, we're because we're still and the bit cautious registrations certifications we'll being a be when all and able those international of markets. to getting the to get predicting required

there ship the just any can't of law. You and U.S. violate

links, different So we we're laws with fiber any associated with shipping being encryption very of might fiber chip. and the associated particular and on are put are models there the and

a see clear. it's being So forward we're way we and careful,

be expecting that back report we'll So JPX I'm that to [ph]. able on and

guys. in quarter, tough job really. Thanks, Great the

Thanks, Joseph.

come from Please ahead. Johnson Our Rice. will Daniel with next go question Burke

JPX. question you a one for on maybe another John, and see. Let's

the seen that's initial anticipated. has I trickier more little performance just me maybe business it's or help In you the expectations, effect in about was consequence of or business model effect up that maybe and your the terms if terms of than that? of if Can of its the to being really previously intensity just guess in understand under-appreciating end markets, pivot longer QX, to a quite the maybe based the subscription COVID-related to not better-understand that taking to of I impacts a to trying

award hugely optimistic question. you do acquired insightful We JPX. thought would and abate win an it much it about sooner Daniel, has. for than COVID I Well, was

of to from for did sale, year. to an Even we would to we prevented a be we doing that trying primarily an to did projections thought recently, on not for remainder access immediately. had had that customers, due sites. so fail we did in do COVID-related the not And what us employee fact we have the have the access installation But install exposure the the

the these this difficulties tags. was operational So of

say COVID, would the I So shortfall. of XX% that's

based because it. how do. bought part Koid salesperson is is almost here good the her in, to in was been hardware they have doing quite of a experience XXX%. international background, anybody to force she similar, we understand move from the of subscriptions what how models there. other to a sell to subscription The a to have able they selling transitioning and This set towards enthusiasm challenging and than subscription -- to shortfall be that that we'll But and another rather salesperson her new We've selling that's in U.S. more got position and the based job entire and has the sales I'd her that for talk brought very delivering

need more there but we the of is that is subscription because it also desire some think I to back, say own well. transition models COVID, underway just go to mostly had would bought customers hardware to the and as difficult than into thought We was process because with hardware. I that customers but partly

final this sure. the not be entirely remark So we're would on

you explain forecasts maintenance Because countries the on have place associated you? us sell require a from to that with may to hardware perspective, mix that the use impairment, because are try So be to which to there to subscription not cloud to regulations there'll the whether can even explain services. our agreements, there. or go-forward some and how same they be we'll it Not all countries then impacted in

is us. but about excited sensors? James of a move with We if on, to got greenhouse you comment we've James, as that. were earlier I'm about to measurements we Silas add do it. bit a talking excited on So understanding we here I'm give go it. gas forward how about and

John. Sure,

won't with detection modeling exploring to our we of the right the and of the the new in emerging options be to we're mechanisms We and capability those able are excited leverage system. techniques, possibilities existing new able sensors on meet needs about now JPX being And market.

Daniel? Another question,

that very you the straightforward. with an I easier, about maybe to I'm other Thanks. of talk breakeven be Yes. more line had, one this year, on see point affected that EBITDA closer little revenue thoughts of either guess top to this it's the to I after Could at needs still latest you the timeline if you've your kind top helpful, where reductions maybe level? the get a or guys. line That's John. you maybe type cost

there's if reducing I top we've unfortunately, answer got COVID out recovering. can't QX, have would Mike I on on I I that to market's is still the relentless would uncertainty thought costs, to abated, because down. my your coming And beyond not. question. did it is that keeps have the reasons can't of is one our begin lose line answer go because still we so I be and Well, We're clarity so how the focused he reason much have the

and I'd In because still lot and so no in management vaccines see many around work be it with the a the impacting say, predictions, when hard, yet primarily again. accuracy us enthusiasm uncertainty northern surging to be that be team we're like. fact, this I And so to our distributed? that's going going We How available? available? hemisphere, just vaccines forecast but I'm really have can't it'll we there's of from will How will

So vengeance focus thing can going I that's near to we're in cost that is have term. with a where and the the manage to do

enough. Fair

it right, Okay. guys. there. the for leave Thank you All I'll time.

Thanks, Daniel.

with Swergold from will Our go Please next come question Capital. Firestorm Eric ahead.

each to questions guys. I've for other. morning, Good got three all, you, unrelated

to earnings to quarter are And going is, took have from going quantify chargers NOLs that? can forward? protect we you this one the first The you

Mike. Better to turn that over

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you. Thank

no showing questions. I'm Instructions] [Operator

Yes.

the are. seen up we the volatility wouldn't reasons expansion to bit where in in I to moment. I'm the give tend one a We've me macro environment It's internationally. give those a in sum any going markets. I'm about QX consolidation at lot of excited guidance, U.S. of of less Let NOCs combine here normally but guidance the [ph] domestically. don't

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stay shareholders at holiday, entirely for returns getting focus on we'll soon. Our and is a some and talk so we'll good Have it.

Thank you today's concluded. attending The now presentation. conference for has

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