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DATE

Thursday, May 7, 2026 at 11:00 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Jason Long
  • Chief Financial Officer — Scott McNeely

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TAKEAWAYS

  • Revenue -- $51 million, reflecting a 16% year-over-year increase and an approximately 11% sequential decline compared to Q4 revenue of $56.8 million.
  • Adjusted EBITDA -- $44.9 million, up 16% year over year, with an 88% margin, maintaining durability and scale.
  • Net Income -- $17.9 million, a 16% year-over-year increase, with a net income margin of 35%.
  • Surface Use Royalties and Revenues -- $37 million, a 41% year-over-year increase, serving as the primary revenue growth driver, mainly from WaterBridge's DPX Kraken development and recent commercial agreements.
  • Revenue Mix -- 72% from surface use revenues, 22% from resource sales/royalties, and 6% from oil and gas royalties, highlighting low direct commodity price exposure.
  • Cash Flow from Operations -- $41.1 million, a 158% year-over-year increase, with $40.9 million in free cash flow and an 80% free cash flow margin.
  • Capital Expenditures -- $0.2 million, with minimal capital investment supporting high cash conversion.
  • Debt Repayment -- $25.2 million paid down in the quarter, with total borrowings reduced to $545 million and net leverage ratio improved to 2.7x from 2.8x last quarter.
  • Total Liquidity -- $259.7 million, including $29.7 million in cash and $230 million in available revolving credit facility capacity.
  • Shareholder Returns -- $0.12 per share quarterly dividend declared, and a $50 million share repurchase program authorized through December 2027.
  • Guidance Raise -- Full-year adjusted EBITDA guidance increased to $210 million to $230 million, reflecting $5 million higher at both ends of the range based on improved pipeline visibility and supportive market conditions.
  • Acreage Portfolio -- Over 320,000 surface acres, with nearly 50,000 added in the past year through acquisitions, emphasizing fee surface ownership and permanent control.
  • PowerBridge Digital Data Center Agreement -- One-year, $2.6 million paid option on 3,400 acres in Reeves County, enabling gigascale digital infrastructure and potential for long-duration royalty income with no LandBridge capital outlay; first power is expected late next year.
  • WaterBridge Partnership -- About 1.5 million barrels per day of midstream infrastructure sited on LandBridge land, with royalty upside tied to volume growth, and no capital expenditure required.
  • Seasonality and Revenue Cadence -- "Yes. We often see seasonality kind of exiting the year stepping into a new year as our customers kind of wrap up their capital cycles for the year and start working through the budgeting process. And so it's not atypical to see slower starts to the year. And that's what we saw this year. And to some extent, that obviously influenced kind of Q1 results.
  • Recurring Revenue Base -- Management stated the "vast majority" of revenues are recurring, with onetime surface damage payments typically leading to ongoing royalty streams.
  • Acquisition Discipline -- Smaller bolt-on deals averaging approximately $1,000 per acre were completed, with pricing "in line with what we paid historically," and a continued focus on fee-simple transactions rather than leases.
  • Project Speedway Timeline -- Phase 1 coming online this summer, with volumes expected to ramp through 2028; Phase 2 targeted for the back half of 2027, with contributions not yet factored into guidance.

SUMMARY

LandBridge Company LLC increased its full-year adjusted EBITDA guidance based on enhanced visibility into its commercial pipeline and rising demand across both legacy and emerging digital infrastructure. The company executed a significant PowerBridge digital data center agreement, securing a one-year, $2.6 million paid option on 3,400 acres targeting initial power next year and large-scale delivery by 2028. The WaterBridge partnership continued to scale, with growing volumes and royalties underpinning future revenue streams independent of commodity price fluctuations. Strategic bolt-on acquisitions expanded the surface acreage portfolio above 320,000 acres, furthering the company's fee-ownership model. LandBridge's recurring revenue streams and capital-light model positioned the business for long-term cash generation with minimal sensitivity to short-term market movements.

  • Management described seasonality and the Q1 sequential revenue decline as consistent with historical patterns and not indicative of structural issues.
  • "We have higher conviction than ever that West Texas is on its way to becoming the next major data center hub in the United States."
  • The company emphasized its disciplined M&A approach, focusing on fee-simple surface ownership over alternatives like BLM or state leases.
  • Dividend and authorized share repurchase initiatives were reaffirmed, supporting continued shareholder return priorities.

INDUSTRY GLOSSARY

  • Fee Surface Ownership: Outright ownership of land surface rights, providing perpetual control versus leasehold or temporary access.
  • Gigascale Data Center Campus: A data center facility with capacity requirements measured in gigawatts and spanning thousands of contiguous acres, built for hyperscale digital infrastructure.
  • Produced Water: Byproduct water generated from oil and gas drilling operations, often managed or transported via midstream infrastructure.
  • Surface Damage Payments: One-time fees paid to landowners when equipment or infrastructure is placed on their land, often preceding ongoing recurring payments.

Full Conference Call Transcript

Jason Long: Thank you, May, and good morning, everyone. I'm pleased to report that we began 2026 consistent with our plan and our confidence in the model with strong year-over-year growth and commercial momentum heading into Q2. Our second half 2026 growth drivers are on track. And as Scott will further detail, we are also raising our full year 2026 guidance. This decision is grounded in increased visibility and conviction in our commercial pipeline for the remainder of the year, combined with a more supportive macroeconomic environment. In the first quarter, we grew both revenue and adjusted EBITDA by approximately 16% year-over-year, achieving an adjusted EBITDA margin of 88%. Sequentially, results were softer, and that was anticipated.

Q4 was a strong quarter and Q1 is typically slower commercially as certain service-related payments, including ease of payments and new SUA execution follow the rhythm of operator activity, which is naturally weighted toward the second half of the year as E&P programs ramp. We execute commercial deals with the goal of reaching the best and most accretive terms for our business over the long term, and we remain committed to that approach. Q2 commercial activity is already tracking ahead of Q1. Our second half catalysts are developing as planned, and the macroeconomic environment has become meaningfully more supportive since we last provided guidance.

That combination of accelerating internal momentum and more constructive external backdrop gives us the conviction to raise our full year outlook, not simply reaffirm it. The softer Q1 was anticipated. The confidence behind the raise is driven by what we can see in our pipeline today. On the commercial front, we closed several bolt-on acquisitions that further enhance the scale of our position, which now encompasses more than 320,000 surface acres across the heart of the Delaware Basin, a portfolio we have intentionally built around fee surface ownership.

Owning the service outright, whether than relying on leasehold or access rights that require renewal gives us permanent control, long duration optionality for every commercial use from produced water to data centers and a compounding asset base that doesn't erode over time. That is a structural advantage, not an incidental one. That permanence is what allows us to offer multi-decade commitments to data center developers, long-duration infrastructure rights to pipeline operators and deep commercial certainty to operators who need to plan multiyear development programs. Our strategy is focused on maximizing the economic output of our surface through active land management, a fundamentally different model from the traditional passive or minerals-focused landowner.

We think of the surface as an active commercial platform, not a static asset. Surface acreage is critical for oil and gas development, power generation, digital infrastructure and more. The same acre that generates produced water royalties from an oil and gas operator may also support a fiber corridor, an electrical transmission easement and eventually a data center campus. Each layer of development makes next more valuable, better access, more infrastructure and greater certainty for the next user. That is the compounding dynamic at the heart of our model. In addition, our state line and southern positions are located on the Texas side of the Texas, New Mexico regulatory divide, an advantage that translates directly into commercial demand.

Texas provides a more consistent and favorable permitting environment for produced water disposal, which means operators and midstream companies prioritize Texas side service acreage. We are structurally positioned to benefit from this dynamic for the foreseeable future. Our relationship with WaterBridge is a genuine structural advantage. WaterBridge operates one of the largest water midstream networks in the Delaware Basin and approximately 1.5 million barrels a day of that infrastructure sits on our land today with additional permitted capacity on our land continuing to grow to enable future development. That gives us a front-row seat to basin activity, deep operator relationships and the ability to continuously identify and convert commercial opportunities that others simply cannot see.

It's a compounding dynamic as WaterBridge grows, so does our royalty base, and that growth does not require us to deploy capital. Beyond oil and gas, our active management approach continues to open new commercial opportunities. This quarter, we announced an agreement with PowerBridge for the lease and development of the Alpha Digital data center campus in Reeves County, Texas. PowerBridge has the option to lease up to 3,400 acres for a gigascale campus, a category of hyperscale digital infrastructure that requires hundreds to thousands of acres of contiguous land, co-located power and long duration site control. Initial power delivery is expected next year with large-scale generation coming online in 2028.

We aren't disclosing specific economic terms at this stage, but the structure is consistent with our model, a long-duration lease with royalty economics that scale with development with no capital outlay required from LandBridge. This is an important milestone and a clear validation of our thesis. West Texas is an ideal location for data centers, low-cost power, abundant water, fiber connectivity and a favorable permitting environment. And critically, data center developers require certainty, certainty of long-term land control, utility corridor access and the ability to expand the footprint as their needs grow. Our fee-service ownership model provides exactly that. Leasehold positions are acreage held on shorter term or renewable tenants cannot offer a multi-decade campus commitment. We can.

Approximately 10 gigawatts of capacity has been announced in the region over the past 2 years, including the Alpha Digital campus. We have higher conviction than ever that West Texas is on its way to becoming the next major data center hub in the United States. The PowerBridge agreement demonstrates the value of our acreage and commercial relationships and reflects our capital-efficient asset-light model. We retain ownership of the surface and monetize it through long duration lease economics that scale with development. By layering multiple commercial uses on the same acreage, we grow revenue without additional capital investment.

Alpha Digital is one of several advanced commercial opportunities in our pipeline and the state of the pipeline today is the primary basis for our guidance raise. Our model is designed for exactly this moment, the convergence of energy infrastructure demand, digital growth and land-constrained development in the Permian Basin and the macro environment is, if anything, accelerating that convergence. I look forward to sharing more as these partnerships develop. Now let me hand it over to Scott, who will walk through the numbers behind our updated outlook.

Scott McNeely: Thank you, Jason, and good morning, everyone. As Jason discussed, we delivered strong year-over-year growth in Q1 and are building momentum as we move through 2026. That momentum, combined with the state of our commercial pipeline and an improved macroeconomic backdrop gives us the confidence to raise our full year 2026 adjusted EBITDA guidance to $210 million to $230 million, an increase of $5 million at both the low and high end of the range. This reflects 2 key considerations. First, increased visibility and conviction in our commercial pipeline for the remainder of the year as we have better line of sight into committed and near committed activity in Q2 through Q4 than we did when we initially set guidance.

And second, a macroeconomic environment that has become more supportive of basin activity levels since our last communication. The structural resilience of our fee-based model provides the floor and our commercial pipeline provides the upside that justifies taking the range higher. First, the clearest demonstration of our model's quality this quarter was cash generation. Cash flow from operations was $41.1 million and free cash flow was $40.9 million, representing a 158% increase year-over-year and a free cash flow margin of 80%. $0.80 of every revenue dollar converting to free cash flow, on minimal capital investment is the structural output of a business built around owning the surface and letting our customers fund the infrastructure.

That dynamic does not change with commodity prices or quarterly activity patterns. In the first quarter, we reported total revenue of $51 million, a 16% increase year-over-year. Net income was up $17.9 million, also up 16% year-over-year with a net income margin of 35%. The primary revenue growth driver was surface use royalties and revenues, which increased 41% year-over-year to $37 million, reflecting royalties from WaterBridge's DPX Kraken development, new easement payments and broader commercial activity across our surface. Sequentially, revenue declined approximately 11%, coming in at $51 million compared to $56.8 million in Q4.

As Jason discussed, this was anticipated and reflects 3 factors: the strength of Q4 2025, the general quarterly lumpiness of certain service-related payments and the seasonally slower pace of commercial agreement activity in Q1. Revenue declined modestly across all 3 categories. Surface use royalties and revenues were down 6%, resource sales and royalties declined 9% and oil and gas royalties were down approximately 5%. The operating and commercial environment in the basin has improved. And while we expect that to support activity levels over the mid- to longer term, our direct commodity exposure remains limited regardless with oil and gas royalties representing approximately 6% of year-to-date revenue.

Adjusted EBITDA for the quarter was $44.9 million, up 16% year-over-year with an adjusted EBITDA margin of 88%, consistent with the prior year quarter and reflective of the durable high-margin nature of our model. On a sequential basis, adjusted EBITDA declined broadly in line with revenue. Capital expenditures were $0.2 million and net cash used in investing activities was $2.1 million. On the financing side, we repaid $25.2 million of debt in the quarter, demonstrating continued balance sheet discipline. We ended the quarter with total liquidity of $259.7 million, comprising $29.7 million of cash and approximately $230 million of available borrowing capacity under our revolving credit facility.

Total borrowings outstanding were $545 million as of March 31, down from $570 million at year-end. Our net leverage ratio was 2.7x at the end of the quarter compared to 2.8x last quarter, and we have no near-term maturities. On capital allocation, we remain focused on 3 priorities. Our first priority is accretive M&A. We closed strategic bolt-on acquisitions this quarter and have added nearly 50,000 surface acres over the past year, all while maintaining disciplined underwriting criteria. Our M&A criteria are anchored on fee surface ownership. We are building a compounding permanent asset base. We are not interested in acreage that requires periodic renewal and provides only temporary commercial control.

That discipline may mean we pass on transactions that others pursue, but it means every acre we add strengthens our long-term platform rather than simply growing our headline acreage count. Secondly, we are focused on maintaining balance sheet strength, where we continue to target a long-term net leverage ratio of 2 to 2.5x. Third and finally, we are committed to shareholder returns. This quarter, we declared a $0.12 per share dividend, continuing our track record of quarterly distributions since our IPO. As a reminder, we previously announced that our Board authorized a $50 million share repurchase program, which we were able to deploy opportunistically through December 2027.

In closing, LandBridge delivered strong year-over-year growth across revenue, net income and adjusted EBITDA in Q1, consistent with our internal plan. We are raising full year guidance to $210 million to $230 million, reflecting increased confidence in our commercial pipeline and a more supportive macroeconomic backdrop. The foundation we have built, fee and surface, durable contracted cash flows, a model that requires minimal capital to grow is what makes that confidence sustainable. Thank you. Operator, please open the line for questions.

Operator: [Operator Instructions] Your first question comes from the line of Derrick Whitfield with Texas Capital.

Derrick Whitfield: With your increased 2026 guidance and the updates coming out of WaterBridge today, it's clear you guys are very excited about the opportunity you have ahead of you this year. As we think about really Project Speedway Phase 1 and the timing for which you guys would reach functional peak utilization, could you offer some color around that? And then also just when you think about Project Speedway Phase 2, when could that really start to contribute into your outlook?

Scott McNeely: Yes. Derrick, good to hear from you. So Speedway Phase 1 comes online this summer, certainly far from being 100% utilized at that point in time. We expect volumes on Speedway to ramp effectively from this summer through 2028. And so as we sit today, back half of the year, obviously excited about the traction we have with Speedway Phase 1, and we see continued demand for that pipeline, including new interruptible, call it, volumes that we could potentially capture on the WaterBridge side increased royalties over to LandBridge. But there's a lot of room to grow beyond the back half of this year.

For Speedway Phase 2, really looking to bring that online to solve for back half of 2027 operational needs. Clearly, nothing has been kind of voiced over or contemplated as we think through the guidance or the messaging of the Street on that just yet. But obviously, as we're forming up our expectations for 2027 and it's time to deliver guidance, we'll certainly speak to the contribution from that project and the expectations.

Derrick Whitfield: Great. And then maybe shifting over to the power gen and data center macro environment for the Permian. You guys have been very intentional with your releases to date. Given the recent Alpha Digital announcement and some of your peers messaging heightened urgency year-over-year among the hyperscalers, could you help frame how that opportunity has changed for you guys over the last 6 months, last year?

Scott McNeely: Yes, absolutely. We sat down and started speaking to the benefits of West Texas as it relates to data centers late '23, early '24 working through the IPO process. We were engaged in outreach with all the major players, hyperscalers and data center developers kind of coming off of our efforts there. And it was a bit of an education effort. But if you look at the last 6 to 12 months, we've seen sentiment just grow so meaningfully where we sit today, we're engaged with discussions and negotiations and documentations with virtually every hyperscaler that's out there in some capacity.

And so West Texas has certainly been validated as the place to go for these large-scale data center projects, and we're very happy with where we are in the mix. As you put it, we're being very thoughtful about making sure that we get to those right milestones before we step out and speak publicly, particularly as it relates to engagements with some of these larger counterparties, but we're excited to do that when we get to that point.

Operator: Your next question comes from the line of John MacKay with Goldman Sachs.

John Mackay: I wanted to start on the acreage acquisitions, maybe 2 parts to this one. First, we've seen the larger deals from you guys, but these are kind of newer, smaller bolt-on. Is there a right cadence to think about for what you guys can do on this smaller deal size? And on a related note, you paid something around $1,000 an acre, let's say, on average for this. Just any commentary on what that looks like against the broader market would be helpful.

Scott McNeely: John, good to hear from you. We have been and will continue to be focused on these smaller tuck-in acquisitions. We think through coring up critical areas of our footprint when there's opportunities to fill in the gaps or expand the contiguous nature of certain positions we have, we're absolutely going to execute on that, and we'll continue to do so. As you mentioned, the price per acre here kind of remains competitive and in line with what we paid historically for similar surface positions. And as it sits today, we have no reason to believe that's going to change.

John Mackay: All right. That's clear. I appreciate that one. Second for me is just going back to kind of the quarter versus the full year guide. I understand there's some timing dynamics here. It does still imply a kind of decently higher, let's say, 2Q through 4Q run rate versus first quarter. Are there any kind of bigger chunkier pieces you want us to have an eye on? And then more broadly as part of that, if you think about the run rate for the balance of the year, how much of that is actually kind of ratable quarter in, quarter out revenues that you get from your contracts versus, let's say, cycling on new commercial deals each quarter?

Scott McNeely: Yes, John, you cut off there for a second, but I think you were implying -- effectively you're asking what is driving Q2 through Q4 expectations. We've got -- we've got 3 primary tailwinds. The first, obviously, just better visibility and conviction on the opportunity set, particularly on surface revenues relative to where we're at the beginning of the year. And then coupled with that is just growth in that opportunity set. And so there's no discrete, call it, chunky or lumpy projects that I would call out just yet to the extent or would we get those across the finish line, we'll obviously be eager to share that with the market.

But it is a pretty, call it, mixed and diverse group of opportunities and customers there that we're working through. Now the second piece is just better visibility on produced water volumes and the read-through on royalties there for LandBridge. Now we've seen just greater demand, both on the WaterBridge side as it relates to produced water handling volume needs for the back half of the year, but also with our third-party partners. And so again, that's just more read-through on the royalty piece that will provide some upside for LandBridge.

And then finally, obviously, it's a very different macro backdrop today relative to where we were at, at the beginning of the year during budgeting and that more constructive E&P environment over the near to medium term is just driving an increased demand on the resource side, both on sand and supply water. So there are a number of different items feeding call it, our increased enthusiasm for the year, and we would expect that to continue. Now as you kind of think through the cadence or kind of the regular way or repeatability of these revenue streams, the vast majority of the revenue we get is going to be recurring in some fashion.

We obviously do get the surface damage payments that sometimes can be these onetime payments. But the point we've made in the past, and it certainly still holds true today is you really need to think of that as a great, call it, forward-looking indicator of repeatable revenue to come. And a good example of that is going to be improved water handling infrastructure is installed on our surface, whether it's by WaterBridge or others. There will be those onetime upfront damage payments, but that's going to translate into recurring revenue and royalty streams, hopefully, perpetually over time. The same holds true for a lot of other types of infrastructure on our land.

So again, while a lot of this is going to be repeatable kind of recurring revenue, to the extent we do get those onetime payments, I would be -- I would encourage you to remember that, that is typically just one piece of what is going to be a very recurring revenue stream thereafter.

Operator: Your next question comes from the line of Alexander Goldfarb with Piper Sandler.

Alexander Goldfarb: Jason, just a question on your production down there in the Delaware and Permian or I guess I should say Midland. Clearly, there's a demand for U.S. production with what's going on in -- over in Iran. But as people ramp up production, how quickly does it flow through to you guys as far as revenue? Meaning like if there's suddenly a lot more drilling, a lot more use of sand and [ frac ] and all the fun stuff, how quickly does that translate to revenue for you?

And then the second part of that question is how much of your -- when you look at your different revenue businesses, how many of them do you think are directly related to increased energy production versus other uses that happen longer over a longer period of time versus instantly like, hey, we need more oil to ship overseas, what have you?

Jason Long: Yes. I'll take -- I appreciate it, Alex. I'll take the first one. So if you think about just the payments associated with increased oil and gas activity, you've got damages right off the bat. So when they're moving a rig on location, they're paying damages. You've got fees for pipelines, right of ways, et cetera. And then that obviously gets accelerated into the produced water once the wells are completed. So we start to see that revenue trickle in over time and then a large portion of it on the latter part of the well's life.

Scott McNeely: Yes. I would just add, when you look at our revenue mix today, roughly 22% of our revenue is going to be on that resource side, and that is going to be the piece that's most meaningfully kind of tied to that new development on the upstream side. But that's somewhat by design because the remainder of our business or rather on the surface side in particular, which is 72% of our revenue, that is going to be the more recurring rent lease production type exposed royalty and revenue streams that just have much more longevity to it.

So as we've said from the beginning, we've always been very, very focused on maximizing those surface use revenues and royalties just given the stickiness and the longevity. And while we certainly like that 22% we get on the resource side, at the end of the day, that has always been secondary to the surface given we like having that long-term production exposure, not that short-term development exposure.

Alexander Goldfarb: Okay. So if I understand you correctly, basically round numbers, 20% of your revenue could see an impact of increased production in terms of what's going on over in Iran, where 70% is more stable and less likely to be near-term impacted by that. Is that correct?

Scott McNeely: I would frame it more as about 20% of our revenue is going to see an immediate impact due to an increase in development activity. The remaining 70% could see some uptick, but the benefit of that uptick is it is more prolonged because it is production driven. So even if development starts to taper back a bit, you still get the benefit of that long-term kind of rent royalty stream that comes from the production exposure versus that drill bit exposure.

Alexander Goldfarb: Okay. The next question is on PowerBridge. I don't think you guys disclosed any economics or what the -- if there was an upfront, I guess, what the upfront deposit was. But can you just give a little bit more color on some of the terms and what the upfront payment is and how long they have to engage and such?

Scott McNeely: Yes, happy to. So it is a 1-year option. They paid $2.6 million for that option. It is for 3,400 acres in Reeves County and one of our positions there. They are planning to bring on up to 2 gigawatts of initial power generation capacity with the ability to scale beyond that. So it's something we're very happy about. They're targeting bringing first power online late next year. And so it is quite quick to move. But again, I think this is a real reflection of the benefit of the ecosystem. It's a real reflection, I think, of PowerBridge's kind of capabilities, obviously, led by Alex Hernandez.

He's an incredibly well-known capable leader in the space, and we're really happy to partner with them on this.

Alexander Goldfarb: Okay. So the $2.6 million that was recognized in the first quarter?

Scott McNeely: That's right.

Alexander Goldfarb: Okay. And then are there any lease payments from now until late '27 or there's no payments until late '27?

Scott McNeely: The payment structure will pivot should they execute on the option and converts to a lease. And so when that time comes, we will obviously circle back to the market and speak to the terms there.

Operator: Your next question comes from the line of Charles Meade with Johnson Rice.

Charles Meade: I'm wondering, Scott, you approached this question in an earlier answer. But on the subject of acquisition, so you guys have attracted a lot of, I guess, copycat or competitors with the success you've had in the Delaware Basin. So I'm wondering if you could talk about how the complexion maybe has or hasn't changed on the acquisition front and whether -- I think you said that the price hasn't really gone up, but maybe are there more people in the room? Or just what's changing on your -- what are you seeing change on the acquisition front?

Scott McNeely: Yes. Charles, good to hear from you. We haven't seen much in the way of impact just yet. I mean just as a reminder, and we alluded to this in the prepared remarks, we've been very focused from day 1 on acquiring that key surface acreage. It's very important to us to get that title rather than like BLM or state leases as an alternative. And so when you think of just the focus that we've had on that, there really just hasn't been, call it, many counterparties that have stepped in and really look to compete in that regard. It put us in a good spot today, though.

We think that there's just much -- the economics of that position is just going to be much better than the alternative, and we've been able to build that position, obviously, to over 300,000 acres. I think if we were to step into a situation where we were looking to acquire BLM or state leases, there are others kind of looking to grow that a bit. But for all the reasons we've discussed over the last several years, that's not a focus of ours.

Charles Meade: Got it. Got it. That makes sense. And then, Scott, you also alluded -- I believe you alluded earlier in your prepared comments about the normal seasonality in commercial agreements. Can you talk about what -- can you kind of decompose what's going on there? Is this just companies that maybe it takes a while to organize their priorities with the new capital budget? Or is this -- or what's the seasonality there? And is that something we should expect going forward?

Scott McNeely: Yes. We often see seasonality kind of exiting the year stepping into a new year as our customers kind of wrap up their capital cycles for the year and start working through the budgeting process. And so it's not atypical to see slower starts to the year. And that's what we saw this year. And to some extent, that obviously influenced kind of Q1 results. The second piece I kind of flagged there, and I do think this is important is at the end of the day, when we work through really driving and creating value for this company, particularly on the surface side, ultimately, we're not focused on what quarter a particular agreement gets signed.

And that's going to lead to a little bit of ebb and flow in terms of when that revenue is recognized. And there's going to be times where that very clearly works to our advantage. We saw a fantastic fourth quarter exiting the year. There's going to be time just depending on when contracts are signed, if it's the next quarter that it just ends up having a little bit of lumpiness to it. But I think what's important to keep in mind and something that we've said from the get-go is the wins and losses of this company are not measured quarter-over-quarter. This is about generating year-over-year compounding growth. I think we continue to do that.

We'll continue to do that going forward regardless of the seasonality and other kind of shorter-term nuances that we just talked through.

Operator: There are no further questions at this time. I will now turn the call back to Scott McNeely for closing remarks.

Scott McNeely: Yes. Thanks again for everyone's participation this morning. We, as always, appreciate your thoughtful questions and your support. Look forward to staying synced us, and please feel free to reach out if we can be helpful.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.