Ryan Oviatt: Yes. Great question. I will provide comments and also let Cam do the same. But overall, we have talked a lot about the growth in the demand for liquefied natural gas. And those plants are being built around the U.S. and even globally and they are going to require a lot of natural gas feed to come to those. We think the U.S. is very well positioned to be able to supply that and even to supply a large portion of what the world is going to need. And to your question, the specifics, how does that benefit Profire. Our systems are used equally on natural gas wells as much as on oil. And even in certain geographies have a larger uptake of the number of our systems per well and infrastructure. And the infrastructure is also a key part of that as they build out more pipelines to supply these LNG facilities.
Those need heaters in various stages and processes as well. So, the infrastructure plus the ongoing well supply and demand is all where our products are utilized. We also see some opportunity to bring additional product to market in that type of environment and to continue to support that as well for Profire. Cam, do you want to add anything?
Cameron Tidball: Yes. Just, I guess add to one of your questions. We don’t really need to add new products per se, except for, of course the evolution as we update controllers and things like that. That being said, we do look at new products that we could either build ourselves or obtained through acquisition that we think would be a value to the natural gas markets. The great thing about natural gas production globally, really, is that when it’s a natural gas well and if it’s a shale well, which most of it comes from, the decline curves on shale they are – they happen. Are they getting a little better, yes. But overall, they decline and therefore the output of those wells decreases, which drives the need for more drilling, completion, more heaters, as Ryan talked about, as we get into the spaces where we feed these LNG terminals, we feel that whole feedstock, you are going to need more natural gas.
If you need more electricity, you are going to need more natural gas. And natural gas ratio to heaters overall, for example, in the Northeast of the United States and some shale plays in Canada, the BMS-2 well ratio is higher than, say, that of traditional conventional or even shale oil wells in places like the Permian. That being said, we know that the Permian is getting part of the term gas here. So using the industry, it’s getting more and more gas that’s going to come out of the Permian. And so we look for opportunities of, well how can Profire expand its exposure in the Permian. It’s a strong territory for us, but we think that it can be even stronger for us. So, that might be a place that we look for, whether it’s adding a small or a larger presence, more product offerings specialized to that area.
But kind of looking at all the things above, but overall, as kind of Ryan mentioned, that gas, that feedstock that we are going to need for the future for energy North America has the best opportunity to fill those needs, and we are positioned well without a lot of expansion to capitalize on it.
James McIlree: Okay. Thank you. That’s helpful. And Ryan, I know you talked about the working capital early in the call, but I am just – I am still struggling with what’s going on here? Is it something that we should expect for there to be, I am going to call it permanent or semi-permanent levels of inventories that are higher than what we have seen pre-COVID. Is that just – I should just get used to it?
Ryan Oviatt: Yes. No, good question. Inventory is something that I think we struggle with at times as well. And certainly, the pre-COVID, post-COVID has had an impact on our business, and I think many other businesses to where gone are the days of just-in-time inventory. And we were even in the days of just-in-time inventory. We are always accused of having too much inventory. We certainly don’t believe that we have too much inventory now nor do we back in those pre-COVID days either. But with the supply chain challenges, the uncertainty, economic and political that we find ourselves in the landscape these days globally, we probably are going to carry higher levels of inventory. We are also still in a period of transition from our older legacy system, the 2100 to the 2200 and still waiting on full stabilization of the supply chain for that transition.
So, we have built more inventory at the 2200, we have got more of it on hand. But we are still – we are getting close or we are doing better in the fact that, that supply chain for the 2200 seems to be stabilizing more. The products availability, the quality of the product coming in for that system, which has allowed us to build product and get more products on the shelf, and now we can start to transition customers over to that product. The key challenge that we have kind of in our business, which maybe is unique to us a little bit, is it’s not good for us to constantly switch which system we are selling to an individual customer. They don’t want us to sell a bunch of 2200s to them this month and the next month, sell a bunch of 2100s to them.
They want to be able to shift to the newer product when they can continue to get that product. So, that’s part of that transition for us where we are building the quantities on hand, and we are firming up the supply chain and having enough confidence that through 2024, we will be able to continue to produce that product reliably and have enough of it that we can start to fully transition customers over. So, I think that’s probably the biggest thing that we are seeing right now as to why inventory hasn’t just dropped back down to, say, the $9 million or $10 million that we had pre-COVID. So, that’s going to take a little while longer. But like I said, we are seeing sizable improvements in that 2200 supply chain environment, and we are looking forward to through Q1 and even throughout 2024 of being able to transition more customers over to that and decrease the quantities of the 2100 that are being produced.
Again, there is – we still have to see how the supply chain handles that and what other curve balls we may get in that timeframe. But that’s one of the bigger things. And as we do that, I am optimistic that we can bring the inventory levels back down lower than where they are today. But hopefully, if we continue to see growth in activity and demand, we may have to still have higher these levels of inventory, but as a percentage of total revenue on an annual basis, it would hopefully come down a little bit.
James McIlree: Okay, great. Thanks a lot guys. That’s it for me.
Ryan Oviatt: Thanks Jim.
Operator: [Operator Instructions] There are no further questions in the queue. I would like to hand the call back to management for closing remarks.
Cameron Tidball: Thanks everyone for joining us on our call today and thank you for all your continued support. As always, we are available for any discussions or questions you may have. Also to mention, we will be participating at Three Part Advisors IDEAS Conference in Dallas next week on November 16 and look forward to seeing many of you there. Thank you and have a great day.
Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
