Lloyd Hajdik: Yeah. Alec, so, in 2023, we used working capital of $21 million. With revenues up, we gave guidance on about 5%. I kind of would expect working capital to be fairly consistent with 2023, maybe slightly less. And again, in the first quarter of last year, 2023, we used $26 million of working capital. First quarter is typically — as Cindy mentioned, is typically the heavier use of cash quarter with the next — the rest of the year cash flow positive. So, forecasting, say, $15 million to $20 million of working capital in 2024. In terms of the CapEx, I guess, we are kind of forecasting around $40 million. That’s gross CapEx, including the lion’s share of the construction costs associated with the Batam facility. As Cindy mentioned, we’ve got the proceeds of the Singapore facility in our forecast or in our budget, and that will offset the lion’s share of the CapEx needs for Batam.
And that’s how we arrive at roughly the $40 million of free cash flow for the year, again, only including the Singapore facility. If you add in the potential proceeds from the Houston Ship Channel, that could be in the $60 million range.
Unidentified Analyst: Got it. It’s great color. Thanks for the time and for taking all my questions. I’ll turn it back.
Cindy Taylor: Thanks, Alec.
Lloyd Hajdik: Thanks, Alec.
Operator: We have our next question from John Daniel from Daniel Energy Partners. Your line is now open.
John Daniel: Hey, good morning, Cindy and Lloyd. Thank you for including me.
Cindy Taylor: Good morning, John.
John Daniel: First, sort of a big picture, it’s a two-part question, and one — first part is a big picture. But just Cindy, your thoughts on U.S. landscape in light of the E&P consolidation and the impact of the business? And then, the second part is just given all of the E&P consolidation, how does that influence your willingness to either invest growth CapEx in the U.S. or prosecute domestic M&A?
Cindy Taylor: I think that is a fantastic question, John. I’m not surprised by that. But our focus is to try to stay high technology and I’ll say as asset light as we can. And a lot of these new technology rollouts really achieve our objectives as well as the objectives of our customer base. And so focus around active seat valves and automation are keys for us to do both of those things because, it’s hard to be in the service business and support these large customers without a broad range of equipment, but with that carries high labor costs, high R&M costs, and high CapEx. And we tend to not want to do all of that because of the cyclical nature of the business. And so, we are trying to stay niche, I’ll call it, in our product and service offerings.
We’re more likely to de-emphasize growth in M&A around this piece of the business, particularly if we view it as a more commoditized market with few barriers to entry, which quite frankly is about all of the transactions we have seen heretofore. If there are unique technologies that are more asset-light or manufacturing in support of U.S. land, yes, we would be interested in looking at those. Just to-date, we haven’t seen a lot, if that’s helpful.
John Daniel: Okay. That’s helpful. And then, I just have a labor question. But clearly, natural gas basins are weak. And that’s probably going to result in the OFS space rationalizing costs to try to preserve margin, which generally has an impact on the labor market. But we also all kind of expect those [gassy] (ph) markets to take off in ’25, hopefully, as LNG comes online. So just the push and pull of how do you deal with labor in those isolated markets and being ready to ramp…
Cindy Taylor: Yeah, you’re absolutely right. I’ll call it labor, but another key area of focus for this business are the associated costs that go with labor, all of your travel, your hotels, your vehicle costs, leasing, gasoline, per diems. And so, I obviously prefer to focus on the ancillary cost. If my labor utilization is low, maybe I just let them sit at home. Don’t make them drive to the shop and then when they drive to the shop, they start doing R&M on equipment, so you have a double whammy in a low revenue environment. I do not — I really want to focus on labor retention for all the reasons that you talk about. We’re really diligently working with our customers because, as you know, several of these natural gas plays are thinly supported by customers, i.e., the Northeast.
There just aren’t that many big customers working up there, so we really do need to retain a certain amount of work with the ones that we have to support a core labor component. But we are absolutely going to have to look at out of basin labor support in the oilier regions and do what we can. The key question for us right now is do we have to cut the work week down from historically an average of about 60 hours of work week to lower levels just to sustain our labor through 2024. And that is the acute focus we have right now. But labor is essential. And I think our customers recognize that, not a lot matters when prompt nat gas is $1.61.
John Daniel: Right, makes sense. Well thank you for indulging my questions today.
Lloyd Hajdik: Thanks, John, See you later this week.
Lloyd Hajdik: Thanks, John.
John Daniel: Yes, ma’am.
Operator: [Operator Instructions] Looks like we don’t have any questions as of the moment. I’d now like to hand back over to Cindy for closing remarks.
