Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group, Inc., Q2 2023 earnings call. At this time, all participants are in listen-only mode. Operator assistance is available at any time during this conference by pressing 0 pound. I would now like to turn the call over to Ms. Anna Delgado. Please begin. Thank you, Luke, and good morning, everyone. Before we begin, I remind you that during this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, based on our current beliefs and expectations, as well as assumptions made by and information currently available to Natural Gas Services Group's leadership team. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the United States Securities and Exchange Commission for the factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. In addition, our discussion today will reference certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and adjusted gross margin, among others. For reconciliations of the non-GAAP financial measures to our GAAP financial results, please see yesterday's press release in our forms 8-K, 10-K, 10-Q, furnished to the SEC. I will now turn the call over to Steve Taylor, our chairman and interim president and CEO. Steve? Thank you, Anna and Luke. Good morning, everyone. Welcome to our second quarter 2023 earnings conference call. Thank you for joining us this morning. Before taking your questions, I'll highlight our financial and operational results for the second quarter, discuss the current business environment, and provide comments on other aspects of our business. Reflecting on the quarter, total revenue and rental revenue grew when compared to both sequential and year-over-year quarters. Sequentially, our sales revenues declined, our strategically important rental revenues continued to grow at a brisk pace, reflecting our 10th consecutive quarter of rental revenue growth. Our overall gross margins improved, led by higher rental margins and lower operating expenses, operating income and net income both increased over the comparative quarters. We're starting to see the results of our 2023 capital program in our revenues, margins, and bottom lines. The overall environment in our industry continues to be positive, and we anticipate further improvement. Total revenue for the three months ended June 30, 2023, increased to $27,000,000 from $26,600,000 for the three months ended March 31, 2023, or a 1.3% increase in sequential quarters. Total revenues increased year-over-year from $19,900,000 for the three months ended June 30, 2022, for a 35% increase. The small increase in sequential total revenue was due to a $1,400,000 drop in sales revenues in the first quarter, although that was offset by an increase in rental revenues in our service and maintenance business. By the way, now and going forward, we will be referring to our service and maintenance business as aftermarket services. There is no change in the revenue components that make up this segment. Aftermarket services, or AMS, conforms closer to how our industry generally refers to it. Rental revenue increased 6% from $22,700,000 in the three months ending March 31, 2023, compared to $24,100,000 in the three months ending June 30, 2023. Rental revenue increased to $24,100,000 in the second quarter of 2023, from $18,100,000 in the second quarter of 2022, for a 33% gain over the past year. Both comparative period increases were primarily the result of the increased deployment of high horsepower rental units, higher overall horsepower utilization across the fleet, and rental price increases throughout the year. Rental revenues now compose approximately 85%-90% of our total revenues in all comparative periods. Adjusted gross rental margin increased sequentially from $11,100,000, or 49% of revenue in Q1 2023, to $12,800,000, or 53% of revenue, in the second quarter of 2023. This is a 15% increase in gross rental margin dollars since last quarter. On a year-over-year basis, our adjusted rental gross margin of $12,800,000 in the second quarter of 2023 increased approximately 42% when compared to $9,000,000 in the same period in 2022. In the comparative year-to-date six-month periods, our rental revenues have increased 33%, while adjusted gross margins grew by 42%. As of June 30, 2023, we had 1,249 utilized rental units, representing over 372,000 horsepower, compared to 1,281 rented units, representing just over 311,000 horsepower as of June 30, 2022. The net decrease in fleet units was due to the combination of a sale of rental units to a customer and the retirement of idle units, both of which happened in 2022. In spite of that, we had an approximate 20% increase in horsepower over the past 12 months. We ended the second quarter with 65.4% utilization on a per unit basis and 78.6% utilization on a horsepower basis. While unit utilization remained relatively flat, horsepower utilization increased from 77.4% in the first quarter of this year. Utilized horsepower increased 5.7% in the second quarter when compared to the year-ago period, while revenue per horsepower increased 15.5% when comparing the same periods, demonstrating the impact of the growth in higher horsepower units and the price increases we have been able to implement over the last year. Our total fleet as of June 30, 2023, consisted of 1,911 units and 473,884 horsepower, or 250 horsepower per unit. Our average horsepower per unit has grown by 19% per unit over the last year. Notably, approximately 97% of our high horsepower fleet equipment is utilized and drawing rent. Of our $150,000,000 capital budget this year, approximately 90% of it is presently committed to long-term agreements, with a balance anticipated to be contracted in the 3rd quarter of this year. As of June 30, 2023, we have shipped and set approximately 50% of the units and horsepower anticipated in the 2023 capital expense budget. Presently, our large horsepower assets comprise approximately 17% of our current utilized fleet by unit count and over half of our utilized horsepower and current rental revenue stream. Approximately 5 years ago, NGS decided to enter the large horsepower market. At this time, with more than half our utilized horsepower and revenues emanating from larger units, I think we can say that we're an established player in this market segment. Sales revenues for the sequential quarter decreased from $3,000,000 in the first quarter of this year to $1,600,000 in the second quarter. Two-thirds of the second quarter decrease was from a non-recurring idle equipment sale that occurred in the first quarter. The balance was the typical quarterly fluctuation we experience in parts sales. On a year-over-year quarterly basis, sales revenue increased slightly from $1,300,000- $1,600,000. Our SG&A expenses increased approximately $300,000 in sequential quarters and totaled 18% of revenue. Sequentially, we reported increased operating income of $712,000 in the second quarter of 2023, compared to $402,000 in the first quarter of this year, a 77% increase. This improvement was primarily due to higher rental revenues and gross margin. Negatively impacting our operating income this quarter was a software obsolescence charge we took. Without that, operating income would have been roughly twice what we reported. In either event, with or without the software charge, operating income this year improved over the operating income of $658,000 for the 3 months ended June 30, 2022. Our net income in the second quarter of 2023 was $504,000, or $0.04 per basic and diluted share. This compares to a net income of $370,000 in the first quarter of the year, or $0.03 per basic and diluted share. In the year ago quarter, our net loss was $70,000, or $0.01. Adjusted EBITDA increased 27% to $9,900,000 from the first quarter number of $7,800,000, and increased 48% from $6,700,000 for the same period in 2022. Our cash balance as of June 30, 2023, was approximately $4,300,000. In the second quarter of this year, we realized cash flow from operations of $22,600,000, compared to $13,200,000 in the same quarter last year. At the end of this quarter, we've utilized $93,500,000 for capital expenditures, $92,300,000 of which was expended on our rental fleet. Outstanding debt on our, on our revolving credit facility as of June 30, 2023, was $100,000,000. The leverage ratio was 2.53. Our fixed charge coverage ratio was 4.17. These are both well within bounds of the covenants. The company is in compliance with all terms, conditions, and covenants of the credit agreement. Last quarter, I remarked that we thought the activity we were experiencing would continue the balance of this year and likely into 2024. Based on what we're seeing and hearing internally and from customers, we think this positive forecast continues to be correct. We are in an undersupplied market. We see little relief to it soon. Industry utilization is high. There's no appreciable capacity being added to the industry. Lead times for major components are long. Customer inquiries from established and new customers continue to flow in. We have the ability to increase prices to ensure our shareholders get a fair return. Commodity prices and future production and consumption data also seem to support present activity. It's been a long time since we've had this kind of positive dynamic in activity and pricing, and there appears to be a greater capital discipline from customers and competitors that may help sustain this environment. In the past, there was a mantra used when the industry was going through repeated boom-bust cycles. It was, and excuse my colloquial messaging, "Please, Lord, give us one more boom. We promise not to screw it up this time." It's taken a few decades for this to sink in, but maybe we have it right. There's always caution required in a volatile, commodity-based industry like ours. There will be another downturn at some point, but I think NGS has somewhat mitigated that impact with long-term contracts, good pricing, exceptionally strong customers and contracts, and long-lived equipment.... We are bullish on the industry over the next couple of years and hope to take advantage of the strong environment. Thank you for your time, and I look forward to your questions. Ladies and gentlemen, at this time, we will conduct the question-and-answer session. If you would like to state a question, please press 7 pound on your phone now, and you will be placed in the order received. You can press 7 pound again at any time to remove yourself from the queue. Our first question comes from Rob Brown with Lake Street Capital. Go ahead, please. Good morning, Steve. Hey, Rob. Just wanted to get a little bit into your comments about the positive environment and sort of demand. How do you see that impacting your capital plan, I guess, throughout the rest of this year and into next year? You know, what's sort of the visibility on that on activity? Well, it's not going to impact it too much this year because like I mentioned, you know, 90% of all that capital is contracted and committed, and we anticipate the balance, you know, coming, you know, in the, in the contract, you know, during the third quarter. That's pretty well set. You know, as far as 2024, as I mentioned, we're receiving inbound calls on, you know, customer requirements, customer needs, you know, items like that. We haven't, you know, really started to put together anything formal, you know, that we want to announce at this time on that, but certainly it looks pretty strong. We'll feel a little better, obviously, as you get towards the end of the year and people start, you know. People, I say, you know, I'm meaning customers will start publicly signaling budgets and, and announcing budgets and things like that. You know, up to that point, it's, it's, it's pretty informal, pretty much, you know, conversational as to what might or might not be required. As I mentioned, we're pretty bullish on certainly the balance of this year, because that's, that's baked in. 2024 is looking pretty strong. You know, and, and we'll, we'll see how 2024 flows into 2025, but there's already been comments made by some that, you know, customers are looking out into even 2025, primarily just because of the lead times on equipment now. You know, the tightness we're seeing in the market has caused the customer population to look out further than what's, you know, actually been required in the past. Yeah, we're getting to the point to where, you know, 2024 certainly will become a reality and 2025 will become the, you know, the next realized projection. You know, right now, no specific numbers, but, you know, we think 2024 is going to be a pretty good year. Okay, okay, great. Where are you at in terms of your sort of weighted average contract duration? I think, I think many of these high horsepower contracts were, were longer term, I guess, where, you know, what's sort of your contract duration at this point, and what's the incremental contract being signed at? Any new contracts, and that includes anything that we've, you know, got committed this year that were, you know, that has either been put out or will be put out the rest of this year, is, you know, on the, on the bigger horsepower, the 1,500, 2,500 horsepowers, is 5 years, you know, without exception. We don't need to and see any reason to go below that tenure. You know, overall, with some horsepower, you know, being put out about 5 years ago on, on 3-5 year contracts, you know, our, our average right now is in that 3-5 year range. We've actually had, you know, some contracts just go month to month over the past year or so, you know, based on some of the first stuff we put out, you know, the 3 or 4-year terms that we put out 3 or 4 years ago. Those are actually on a month to month, even, even on the, say, 1,500 horsepower range equipment. We've only had, I think, over all this time, maybe, you know, less than a handful of units, be terminated, but then they were immediately re-rented. Terminations weren't typically due to, you know, anything other than needing to, you know, move equipment around or, you know, or put it on some other locations, you know, in that respect, it wasn't due to, you know, lack of need. I think as I've mentioned in the past, these are minimum term contracts, you know. For example, the 5-year stuff we're putting out now, that's a minimum term, but that doesn't mean they come back after 5 years. That just means that's a minimum, you know, financial and contractual commitment the customer makes to get that equipment right now. We're seeing, you know, we're already seeing equipment approaching 1-2 years beyond contract term, and that's what we expected when we first entered into this, and that's playing out. You know, to answer your original question, we're in that, you know, on average, probably into that 3-5 year range across the whole high horsepower fleet. Okay, great. Then, are you seeing the market strength in the medium horsepower area as well, or is this all really a large horsepower phenomenon? It's primarily large horsepower. Yeah, there's been, the, the medium horsepower hangs in there, okay. You know, where you start getting some, some volatility more so in is, is in some of the smaller horsepower, which is primarily natural gas-directed, because it's, it's smaller, lower pressure, lower volume type equipment, and very sensitive to natural gas prices, you know, whether it's $2 or $3, which is kind of the, you know, the, the range it's running. We see more movement, you know, in and out in, in that market. The medium horsepower is single well gas lift, and, obviously, neither one of those, the small to medium horsepower are, is robust and active as a, as a large horsepower. But they tend to just kinda hang in there and go up and down a little, et cetera. That's why you see some of the, you know, just the unit utilization, flat, but the, the horsepower utilization climbing pretty aggressively, you know, primarily from the large horsepower. Okay, great. Thank you. I'll turn it over. Thanks, Rob. Thank you very much. Our next question comes from, Hale Hoak with Hoak and Company. Please go ahead. Hale? Hello? I'm sorry, Hale Hoak, please go ahead, ask your question. Hey, Steve. Hey, Hale. Congrats on a nice quarter. As you and I have talked in the past, I'm excited and supportive, supportive of your growth plan, and the transition of, of the business and the balance sheet. The one thing that I think would be helpful for people, though, is if you could maybe work your way into giving a little bit more guidance or return information on the capital that you're spending. You know, it, it seems like you're on a run rate to maybe exiting the year at close to $50,000,000 of, of EBITDA. You know, maybe on the, on the next quarterly call, you could give some guidance on what you're seeing for 2024 and your growth plans. Based on our math, you know, and compared to your peer group, you know, this could be a $15 or $20 stock at some point, and I think it's gonna be easier to get there if you could maybe articulate guidance and growth CapEx plans. Yeah. No, good point. We're sensitive to that, and we're, you know, getting the models tightened up so we can give, you know, reliably, a little more detail and, and granularity in some of that stuff. You know, we've traditionally not given a whole lot of guidance from that. Usually, the, the context of the, of the remarks will give people enough information, but, but you're right. It's, you know, with the, the debt, the, the large amounts of capital, et cetera, it's, you know, something we need to be a little more expansive about. We will. We're working towards that, recognize that, and, yeah, we will give a, you know, additional color on, in that respect next quarter. That sounds great. Congratulations again. Okay, thanks a lot. Thank you very much. Again, if you have any questions, please go ahead and ask them by pressing 7 pound. That's 7 pound. Our next question comes from Tim O'Toole with Petra Capital Partners. Go ahead, please. Good morning, Steve. How are you? Hey, Tim. Good. You? I'm quite well. Actually, I'd also like to, I mean, I, I usually don't dial in and, and, and speak during these things, but I'd like to also congratulate you on executing your this plan and also kind of on your positioning as you came into this cycle. Clearly, you had, you know, a very solid balance sheet to start this, this effort with, kind of unlike a lot of your peers who, who, you know, have carried historically a lot of debt, which I think constrained them in terms of being able to, to really invest in this cycle. Couple of things that I'd like to get a little more color on if, if, if we can. One is that, you know, I know that, that labor, especially skilled labor, in the Permian especially, but probably a lot of the oil basins, has remained, you know, fairly tight. I think it's becoming a little more manageable, and you're, and, and you're getting paid for it a little bit better. However, I gotta believe it's still on the tight side, and I'm wondering if you could characterize, maybe you, you, you haven't been able to slice and dice the data this way, but I wonder if you could characterize, the, the kind of run rate of, of what might be excess expenses because of the, you know, the high activity level and the fact you probably have to, continue to contract for, for some of the labor to put all these, these compression, sets in place? Yeah, you're right. Labor continues to be tight. We're able to keep up with it, but it is a, you know, it's more of a battle than it has been in the past, just from the point of, you know, finding people and bringing them on, et cetera. In the Permian, and it's tight everywhere, but it's not as bad as out here. You know, we've got operations in different parts of the country, and, you know, you're always looking for good people, and, you know, having a little turnover in, in some areas, but, you know, it's, it's exceptional out here. This is, you know, you've got the most active oil field in the US and, and one of the most active in the world here, and, you know, with two towns of 150,000 people each. You know, so there's not a big labor pool, and it's been, it's been exhausted for a little bit. I think the last official figures I saw, you know, the unemployment's about 2%. When you're down to that, you know, that number, you're essentially fully employed because those 2%- Right are really not the ones you want coming in. Right. You know, we're having to, you know, look a little harder and, you know, and, and a little wider too, because most of what gets hired now are rotators or commuters, you know, people that we have to bring in from, you know, outside the area. You know, you know, Louisiana, Oklahoma, you know, various other places. And these are the service techs, you know, these are the field guys that maintain the equipment and keep it running, and primarily the, the higher horsepower, technicians that are, you know, harder to find. You gotta, you gotta look in different places all the time and, you know, and we do that. We're able to keep up, but it is a, you know, approaching a full-time job, just to do that. Of course, you know, you. An environment like that drives, cost, labor cost. You know, we do have an impact from that. You also have an impact from essentially having to, you know, feed and, and shelter whoever you bring in. Sure. It's a room and board thing. You know, the incremental, say, the premium cost on doing this, and I'm just talking about the Permian, I'm not talking about the whole company, 'cause that would dilute the cost a bit. Just from the Permian standpoint, you know, I'd estimate based on, say, premium labor costs and mobilization, demobilization costs for people, it's, you know, it would be in the 15%-20% range, you know, of our, of our labor cost out here. It's, you know, it's appreciable and, you know, we, we, we pay attention to it and, and, and try to manage it, but it's very hard to mitigate it. You know, it's such a competitive market. You pretty much... If you want good people, you pretty well have to, you know, target them and, and, you know, pay them what they are, you know, what the market is, a little above and, and, you know, get them, get them on the payroll. Well, part of the genesis of the question, and I don't know if you can put some color on this, it's maybe you're on the early side to ask the question in terms of when it's likely to normalize. You know, at your activity level in terms of setting new equipment is obviously extraordinarily high this year, probably stays fairly strong going into the first half of 2024, I'm gonna guess. At some point, that should normalize and doing, and kind of managing logistics and personnel should become operationally a little easier. Not necessarily cheaper, but better to optimize, you know, and be able to manage your costs down a little bit. I'm wondering if you have a sense for kind of that timeline, and again, you know, maybe on a quarterly run rate basis, what might be excess? Is it, you know, is it $1,000,000 of excess expense a quarter? Is it, you know, a few hundred thousand dollars, or is it even more than $1,000,000? You know, again, getting very, getting very precise on that would probably be a challenge, but I'm wondering if you have a bit of a feel in terms of... 'Cause I'm just trying to obviously get a sense for what things look like as you go through the middle of next year. I gotta believe that, that some of these operating costs start to abate a little bit. Yeah. You know, costs from a labor standpoint, I don't really see much relief on that for really a couple of years. 'Cause I had mentioned, you know, 2023 is, is busy. We already know the, the whole year is active and essentially sold out. We're thinking 2024 is gonna be busy too. As long as it is, there's gonna be a pull on labor. Especially, you know, we'll know it's getting better when we can start finding local people, but that's a long way away. You know, we're still gonna be having to bring in people to supplement the small labor force here. I don't see really much abatement in labor pressures for, you know, probably a couple of years. You know. Mm-hmm ... contingent upon the activity remain like we think it's gonna remain. Okay. You know, and then over time, it will. Unless you get, you know, some upset in the interim that leads to a, a downturn, which can happen, but we don't anticipate it. I think we've still got, you know, 18-24 months of, of labor pressure on some of that, and labor availability too. Okay. You know, from a finite number standpoint, you know, it probably is, you know, from, you know, a total labor standpoint, you know, $1,000,000 probably would not be, be too far off. Okay ... if you're thinking about the 15%-20% premium. Okay. All right, cool. Great. Actually, there's a related question. I think you alluded to this, perhaps in the, you know, last quarter or the quarter before, but SG&A is running around 18%, I think, of, of revenues, and I think you've mentioned that should settle out to a, to something more like 14%, if I'm remembering correctly. Do you have some sort of a timeline on that? I'm not even sure if my numbers are, are correct. I'm going by recollection, not notes at this point. Yeah. No, we, we anticipate Q3 and 4 being lower. You know, there's some legacy costs that, the last of which we, you know, we experienced in Q2, those are gone. You know, I think the-- and I don't, I don't remember exactly. I think I might have even, probably shouldn't even, you know, get myself in trouble here. I think I'd even talked about maybe 12% or 13% in the past, but, I'll take your 14% since we're at 18%. All right. No, we'll see, we'll see those come down Q3 and Q4. Okay, great. You know, this is a kind of a quick question on some of the numbers. There's a couple of things I want to try to work through that are numbers related. One is the, the software impairment. You know, you kind of called out enough information to back into something, but it kind of looks like the accounting earnings might have been around $0.09 or $0.10 without that, although I'm not sure how the tax affect that number exactly. Does that sound about right? Well, the, I think the software impairment was $720,780. $780, yeah. If you just take the $780, you know, divided by, you know, you know, roughly, you know, we got about, you know, what? 12,500,000 -13,000,000 shares. You know, just that quick math, and I'm not representing any of it, you know, being pre-tax or tax or whatever, but that's six-. Right. You know, that's $0.06. Okay. You know, it is, it is an appreciable charge. Yeah, yeah. Okay. All right. Yeah, it wasn't kind of, you know, it wasn't kind of set out as a kind of a normalized number, so I was just trying to, trying to get a sense for that because the, the stock is still fairly inefficient and not broadly covered. You know. Right. Getting, getting numbers off of, you know, off of, a research base is not, is, is still challenging. Another question... Yeah, okay, a couple of things. Another is, and I think you alluded to this, and, and maybe I have this number right, but I've been trying to look at your fleet as kind of a, a, a tale of two fleets, really, although you break it down into small, medium, and large. I kind of look, you know, the rest of the industry and, and you yourselves are, are benefiting from this trend in high horsepower stuff. You, you demark that around 400 horsepower. If you looked at the fleet above 400 horsepower and below 400 horsepower, the fleet above 400 horsepower, did you say that the utilization rate for that part of the fleet is 97%? Yes. The stuff that's smaller, so, so your medium and small horsepower, what would be the utilization on that part of the fleet? It's probably no better than 50%, I would guess, or probably in that, that approximate range. No, it's, it's in the 60%-65% range on the small and medium. It's not horrible. It's just not where we want it. Right. You, you have been, you have been kind of culling that a little bit, but you're, you're doing it judiciously and not, you know, not writing it down, not taking $0.20 on the dollar, but taking kind of, you know, $1.00 on the, on the book or something, as I recall. Yeah. Yeah, the utilization numbers can be a little misleading from a couple of standpoints. You know, from number way, though, you know, number one. You know, everybody seems to calculate it differently. Mm-hmm. Some of us do it the same, some of us do it differently, but, you know, you can, you know, you can read people's 10-Qs and 10-Ks and see how they calculate. There's some differences there. You know, ours, you know, we just, you know, we're not smart enough to get fancy with it. We just take what we owe and, and, you know, compare it against what's running, and that's the, that's the utilization, right? You know, nothing- Right. Nothing fancy about it. Okay. Also from a, you know, financial perspective, you may look at, you know, 60%-65%, you know, that's, you know, what's the, you know, the, the financial impact of that? You know, from a, when you look at the book value of this equipment, just about all of our small horsepower is depreciated out. There's, there's little book value, even on the books, on, on a lot of that stuff. The medium horsepower, generally, we're probably about two-thirds depreciated on, on that stuff. You know, you've got, we've got a lot of units in that small and medium horsepower, you know, from a unit standpoint, just not as much horsepower. And really the, you know, the, the, the book value impact is, is relatively small, too. Right. We have, you know, over time, culled out certain sizes, either, you know, that had gotten down to much lower utilization that didn't make any sense, you know, or some areas that we just had more in the fleet than we thought, you know, was, was prudent. Okay, great. There's, you touched on something before, and if, you know, let me know if I can get back in the queue if there are people, you know, in the queue. You touched on this before. You put in a big slug of equipment for specifically one particular customer a handful of years ago. I think you said 3, 4, 5 years ago. Some of that stuff has come off of their long-term contracts. Still utilized, they're still very busy, as I understand things, and still heavily Permian weighted. So that stuff is still being utilized. One of the things that I was wondering about, and maybe you could fill this in, is that if you were to take, you know, one of those pieces of equipment, let's say a 1,500 horsepower unit, you basically could put that because the market's so tight, you could put that to work at, at probably higher rates than it certainly went in at to begin with. One of the dynamics I'm wondering about as we get through this period of, of putting new equipment into, into service and then renewing those contracts down the line with some of your, your, your newer customers, is what would be if you looked at that 1,500 horsepower unit, if you were to do some maintenance CapEx on that unit and then place it in another long-term contract, let's say five years, what would that dynamic look like? In other words, your, your, your, your annualized recurring revenue from the new contract would be higher by something, maybe 20%. I don't know what the number is. That maintenance number, would it be 10% of the original cost of the equipment? You know, what's the order of magnitude of that? Then what would be the cost to set that into a new location and thus a new contract? Well, the, you know, the easy question first, the cost to move it from one location to another is borne by the customer. We don't have any financial impact from that. You know, our impact from that is primarily manpower, right? You know, helping them get it out, helping them reset it up, and stuff like that. That's primarily a customer expense. You know, from the point of if you have a unit coming off that's, say, been on contract for, you know, three or five years or, you know, maybe it's gone month to month and, and, they don't need it anymore, we can put those out at higher rates. Those, you know, those rates vary, but, you know, typically, if you, if you go to, you know, maybe a 3 or 4-year-old one, you know, those rates now are probably 20%, maybe even 25% higher on, on, some of these units. Definitely they would go out at the higher new rate. Now, you get that, but we're also, you know, getting some of those rates up, too, because you can look back at those older rates and, and know that you've got... Okay, you know, you fixed your capital expense back then, and, and you're set there, but all the other, you know, maintenance and operating costs have, have gone up. We all know the inflation environment and, you know, supply chain issues and stuff like that, and, you know, all that's gone up. We are, you know, going back on all those contracts and asking the customers for increases and, and being successful. It's not. You know, it's, it's, everybody understands what's going on, you know, obviously, the suppliers and, and the customers, too. To, you know, protect and preserve and hold on to that equipment, you know, it's just more expensive to do it for the customer, and us, too, because you know, we've got these costs we've got to pay. Sure. We're not just, we're not just waiting for stuff to come off, and then we raise the rate. We are trying to be, you know, proactive in going back, and getting that, you know, from, from what we've got there. You know, from the maintenance standpoint, when you pull, you know, a, a unit off, you generally, you know, need to go through it to make it ready for the next contract from a point of, you know, certainly, you know, tune-ups, you know, from the point of, of making them, you know, runnable. Typically, you know, you need some sort of, major or minor overhaul. Those costs can vary, you know, all over the board. I don't want to, you know, say how much of, you know, how much it might be, but if you're, if you're into a 20% rental, increase, say, you get one off, raise your rate 20%, it goes to the next contract. You know, you're the overall impact from a maintenance standpoint is not going to be different than if it just stayed on the location, because after so many hours, whether it's at that location or it's moved or some other location, after so many hours, you're going to do maintenance on it. Mm-hmm. You know, you might just do it a little quicker if it comes off, you know, 10,000 hours before it was scheduled. It's just a, you know, cost of money, essentially. It's not a, it's not a really maintenance cost. It's just you might have to do it a little quicker to get it out to the location than you otherwise would. Okay. One of the things I'm trying to be able to model a little bit, and, and let's talk about this for a minute, is that if I look at your trailing four quarters of discretionary cash flow, which is, which is the metric that a lot of your compression peers use for a variety of reasons. One is that in some cases, they're supporting dividends that are- Yeah. You know, they need to cover, so they- You know. - they utilize that as a coverage, basis also. You know, basically, one of my points, as you may recall, is that, that discretionary cash flow is really your accounting earnings, and, and over the last 5 or 6 years, you haven't shown much in the way of accounting earnings, but you've generated a ton of internal capital, from your operations, from your discretionary cash flow, that you've, you've recycled and reinvested into, into the newer fleet that you're able to deploy at this point. To get to that discretionary cash flow number, you know, I, I'm, I try to look at and try and, and I'm trying to back into some sort of a maintenance CapEx number, which would include some of the maintenance CapEx on, on the trucks and, and your, your, your facilities, but also, you know, the kind of stuff on the bigger, on the bigger machines that you'd have to invest to, to reset something into a five-year contract. Your, your fleet is still new enough, so there's probably not a ton of that in there yet, but at some point over time, that'll, that'll become part of the model. I don't, you know, I don't know if you can kind of verify this, but it seems like your discretionary cash flow over the past four quarters has been on the order of about $35,000,000 -ish, and that equates to something like $2.80 a share. My internal model said something like $2.60-$2.80, but that also suggests that maybe, you know, for 2023, that also suggests that you may run a little higher than that this year, but also be able to grow that next year. I don't know if you, if you have the numbers to be able to verify whether that $2.80 number is kind of a good number or, or, you know, a ways off. I also wonder if you'll start to look at discretionary cash flow as a metric, just because your other compression peers do, and it does seem like a, a germane, you know, a germane, metric. Yeah. Yeah, I, I hesitate to hazard a guess right now on the discretionary number you've got, Tim. You know, I can, you know, dig into it a little more and get back to you on, you know, on how we're looking at it. Okay. Yeah, it is a, it is a, a valid and good number to, you know, to, to watch and, and keep an eye on. As you, as you note, a lot of our competitors do it from the point of, you know, a couple of them are MLPs. That's very important to, you know, the limited partners. You know, and it, you know, shows coverage on dividends, coverage on debt, et cetera. You know, we haven't had to use it too much in the past because we didn't have either. You're right, it's, it's, it's one we watch closely. Of course, it, you know, discretionary cash flow, certainly in times of high activity like now and, you know, potentially going forward, you know, it, it gets eaten up. Becomes less discretionary, right? It gets eaten up pretty quick by just activity and CapEx. Let me, you know, dive into the numbers a little more with you off-offline, and we can, we can talk through that one. Okay. No, I appreciate that, and I would, I, I would love to follow up in the next couple of weeks. To Hale's point earlier, you know, the, the, the peers are trading, you know, I think Archrock may be at 7 or 8 times discretionary cash flow, and I think Kodiak, who just came public, is probably in the 6-ish number, I want to say. You're, you know, at $10.50 or whatever it is today, on my numbers, that's- it's sort of 4 times, so it's a number of multiple points away. It, it does seem to be, you know, a number that the, that the industry focuses on. I am going to... Steve, thanks very much for the feedback, and I, I would look forward to chatting with you in the next couple of weeks. I'm going to jump off because there may be some more people that want to ask questions, and I've, I've been on for a bit. Appreciate the, the, the feedback, and we'll look forward to just talking again soon. Okay, we're good. Thanks, Tim. Thank you. Thank you very much. Our last question comes from Kyle Krueger with Apollo Capital. Go ahead. Go ahead, please. Thank, thank you for taking my question, Steve. Hi, Kyle. Hi. The balance sheet transformation has been nothing short of dramatic, of course. Mm-hmm. I have a follow-up to Mr. Hoch's question on, you know, on, on return. Presumably, looking at the horsepower and the fact and the, and the utilization on the high horsepower stuff you're putting out, would indicate that you're putting this stuff out on, on, on, on 5-year fully paid leases, with, with, with good credit, which is a great model. The only thing to solve for is, what is the, the corporate return hurdle, that you are imputing into that, number 1? That's, that's my first question. What, what's your return bogey in those, those 5-year full payout leases? The second thing is, is, are you protected at all, against inflation on the inputs that you guys are required to provide over that period of time? Yeah, I'll tell you the last- Thank you. ... question first. Some contracts have inflationary protection and, you know, but, but frankly, most don't. The ones that don't, we actually have not had any trouble getting price increases. You know, I, I think those are good to have, but even if you have, just like any contract, even if you have something in there and the market doesn't agree with what you're doing, for example, you can have inflationary increases, but if the market is slow, activity is slow, things like this, you may have the contractual ability to go and ask for something, but you probably don't have, in reality, the, the, you know, the market ability to go in there and ask for it from the point that your customer may not accept it. You know, I think contractually gives you a little more leverage, but it does not prevent you from getting your cost where they need to be. Number 1, you can go in, certainly after the expiration of contracts. That's not very satisfying when you have 3-5 year contracts. Typically, those 3-5 year contracts on what we've seen-... you know, the last few years, you can go in and ask for and justify price increases that will keep us whole. Although most of our contracts don't have it, we are starting to put more and more in. We haven't been impacted negatively by not being able to get in the price increases we want. You know, from the, from the corporate hurdle on what we want to do, you know, interest rates now, you know, you can look at those, and hopefully, they're mitigating somewhat. We'll see. You know, it depends on what people think about what Federal Reserve may do. You know, that's into the, you know, 8%, 9%, 10% realm, probably 8% or 9% currently. Certainly, you've got to factor that into, you know, that plus the return you want. You know, and we'll give more color on that, you know, in the third quarter call, just like Hale had mentioned. I think that's a, that's a valid comment, and we'll, we'll go into a little more detail on, you know, what we see as the returns, you know, what, what the returns implied by, the price we're charging and things like that. Hello? Mr. Krieger, do you have any follow-up? No. Thank, thank you very much, Steve. Appreciate it. Yeah. Thank, thanks, Kyle. Thank you very much. Mr. Taylor, we don't have any further questions. Okay. Thanks, Luke. Thank you, everybody, for participating in our call. I look forward to updating you on our progress in the next quarter. Thanks again. This concludes today's conference call. Thank you everyone for attending.