Q4 2019 Earnings Call
Thank you were holding ladies and gentlemen, your car line for the DMC Callable fourth quarter earnings Conference call. At this time, you're still gathering industry participants will get started momentarily. We thank you for your patience and I see you. Please for me on the line.
[music].
[laughter].
Good day, ladies and gentlemen, and welcome to the DMC Callable fourth quarter earnings Conference call. All lines have been placed on in listen only mode on the floor will be open for your questions and comments following the presentation.
This time and it's my pleasure to turn the floor, but to your host for today VP of Investor Relations Mr., Jeff Hi.
Hello, and welcome to de M.. She is fourth quarter conference call presenting today, our president and CEO, Kevin long and CFO, Mike Queued up.
I'd like to remind everyone that matters discussed during this call may include forward looking statements that are based on our estimates projections and assumptions as of today's date.
Our subject to risks and uncertainties that are disclosed in our filings with the FCC.
Our business is subject to certain risks that could cause actual results to differ materially from those anticipated in our forward looking statements.
She assumes no obligation to update forward looking statements that become untrue because of subsequent events.
Webcast replay of todays call will be available at AMC global Dot com. After the call. In addition, a telephone replay will be made available approximately two hours after the call.
Details for listening to the replay are available in today's news release.
With that I'll now turn the call over to Kevin long Kevin.
Thank you Jeff outstanding execution by our employees during 2019 enabled DMC to report record full year sales and earnings strong operating cash flow much improved financial position and an increase in our annual dividends.
These accomplishments came in spite of a slowdown in our primary oil and gas and market during the third quarter and an acceleration of that slow down during the fourth quarter.
Consolidated sales for the fourth quarter were $86.4 million down, 14% sequentially and down 4% versus the 2018 fourth quarter.
The results were slightly above the high end up our revised guidance range of $80 million to $86 million. The fourth quarter sales decline principally was due to a falloff in north American well completion activity, which reduced demand dining energetics, our oilfield products business.
Dynamic jokes reported fourth quarter sales of $64.6 billion, which was down 16% sequentially and up 2% versus the 2018 fourth quarter.
Sales at noble Claddagh, our composite metals business were $21.8 million down, 4% sequentially and down 20% from the 2018 fourth quarter.
Which was positively impacted by accelerated delivery of a large order for the chemical industry.
Double quite ended the fourth quarter with an order backlog of $31.7 billion.
Down slightly from the $33.2 million at the end of the third quarter.
Trailing 12 month book to Bill ratio at the end of the quarter was 1.03.
Consolidated gross margin in the fourth quarter was 35%, which was down sequentially from 36% in this third quarter.
And flat versus the 2018 fourth quarter.
Dynaenergetics reported fourth quarter gross margin of 38%.
This is 39% in the third quarter and 39% in the prior year fourth quarter.
Noble Clyde reported fourth quarter gross margin of 27% up from 26% in the third quarter and 25% in the fourth quarter 2018.
We reported consolidated adjusted operating income of $13.8 billion, which excludes $13.2 million of restructuring charges, primarily related to the closure of our manufacturing plants into him in Siberia.
$12.1 billion of the charges were non cash.
Adjusted operating income in the 2018 fourth quarter was $13.6 million.
Fourth quarter adjusted net income was $9.5 million were 65 cents per diluted share versus adjusted net income of $7 million were 46 cents per diluted share in the 2018 fourth quarter.
Fourth quarter, adjusted EBITDA was $17.6 million versus $23.2 million in the third quarter.
The up from $16.9 billion into 2018 fourth quarter.
Dynamic Dennis reported fourth quarter, adjusted EBITDA of $18.5 million, while noble Clyde reported adjusted EBITDA of $2.4 million.
For the full fiscal year consolidated sales were a record.
$397.6 million up 22% from 2018.
Gross margin improved to 36% from 34% in the prior year.
We reported adjusted operating income of $78.7 million and adjusted net income of $55.6 million or $3.75 per share.
Full year, adjusted EBITDA was $93.8 million.
We reported cash flow from operations of $64.6 million.
Our financial performance during 2019 was driven in large part by growing customer adoption of our diners stage DS factory assemble performance assured perforating systems.
Operators and service companies across North America are increasingly reliant on these systems.
The improved well site safety enhance efficiency and reliability and drive down the cost of their well completion programs.
Today more than 20% of the perforating systems deployed in North America.
Either DS systems or controlled by our highest to intrinsically safe initiating systems.
The slowdown during the second half of 2019 reflects a shift among north Americas exploration and production companies sort of greater capital discipline and funding operations from cash flow.
Well the near term impact of this shift has been a reduction in drilling and completion activity.
We believe that change represents a critical step towards improving the long term health of our industry.
The decline in completion activity has intensified pricing pressure across much of the oil and gas industries product and service sector.
As a provider of highly differentiated products, we continue to focus on pricing discipline and on achieving margins that reflects the inherent value of our products.
This commitment as exemplified by dining energetics performance during January Twentytwenty.
When it achieved 40% gross margin.
Sales of approximately $21 million.
Diner genetics further strengthened its product portfolio during 2019 with the addition of two highly advanced perforating systems.
D. as Trinidadian DSN line are enabling well completion engineers to pursue increasingly complex well designs as they seek to enhance production volumes and lower completion costs.
Our continued investment in research and development will result in several additional product introductions during twentytwenty.
We also continue to invest in the expansion of Dynaenergetics lecture all property portfolio.
During 2019 alone.
Dan Energetics was awarded 17, new patents and filed 126 patent applications in the us in abroad.
From an IP perspective, 2019 with dining energetics, most active year ever we now hold 63 patents and 186 pending patent applications covering a total of 73 patent families.
At noble clad a successful application development program has led to several recent orders from new customers seeking to address specialized industrial design challenges.
The first quarter has brought a notable pick up.
And booking activity from both new and traditional end markets and we are optimistic 2020 will be a year meaningful sales growth at double class.
We have entered 2020 with a strong balance sheet, a very efficient organizational structure and highly differentiated product offerings offerings within both our businesses.
We're also well positioned to navigate the challenges our businesses space at both the macro and industry levels.
Im confident 2020 will be another year of strong profitability.
And cash flow.
Further improving DMC his financial straight.
Ill now turn the call over to Mike for more detail on our fourth quarter and a look at our guidance Mike.
Thanks, Kevin I'll begin with a look at our fourth quarter expenses consolidated SGN, a was $16.2 million or 19% of sales versus SGN, a $17.2 million or 19% of sales and last year's fourth quarter.
Amortization expense was $355000 or less than 1% of sales.
We ended the fourth quarter with net cash of $6.1 million as compared with net debt of $16 million at the end of the third quarter and net debt at $28 million at December 31, 2018.
Yearend cash and cash equivalents were $20.4 million total debt at December 31 was $14.3 million or debt to adjusted EBITDA leverage ratio was point too.
Turning to guidance, we anticipate consolidated first quarter sales in a range of $80 million to $84 million versus the $86.4 million were reported in 2019 fourth quarter.
Sales of Dynaenergetics are expected in a range of $60 million to $65 million versus the $64.6 million reported last quarter.
We expect Nobelclad reported first quarter sales in a range of $18 million to $19 million versus the $21.8 million reported in the fourth quarter.
Consolidated gross margin is expected in a range of 34% to 35% versus the 35% into 2019 fourth quarter.
SGN as expected range of $16 million to $17 million versus the $16.2 million reported last quarter.
We anticipate amortization expense of the approximately $350000, while interest expense should be approximately $400000.
We expect adjusted EBITDA on a range of $14 million to $15 million versus $17.6 million in the fourth quarter.
Earnings per share expected range of 50 to 55 cents versus adjusted EPS of 65 cents in the fourth quarter.
In looking at the full fiscal year, we anticipate sales will begin to improve during the second quarter based our new product introductions.
However, it is unclear what impact macro developments, including krona virus outbreak in China will have on global economic activity in oil and gas demand.
Based on the information you have today, we expect full year 2020 sales in a range of 370 $400 million versus the $397.6 million reported in 2019.
Sales of Dynaenergetics are expected in a range of $280 million to $300 million versus the $310.4 million reported in 2019.
While novo flat sales are expected in a range of $90 million to $100 million versus the $87.1 million in 2019.
We expect full year gross margin range of 34% to 35% versus the 36% reported in 2019.
As soon as expected in a range of $60 million to $64 million versus the $65.5 million reported in 2019.
Full year amortization expense is expected to be approximately $1.3 million and interest expense is expected be approximately $700000.
We estimate our full year effective tax rate will be in a range of 20% to 29%.
We are forecasting adjusted EBITDA in a range of $80 million to $90 million versus a $93.8 million reported in 2019.
Full year net income per share as expected range of $3 to $3.30 versus adjusted net income per share through dealers in 75 cents in 2019.
We anticipate capital expenditures will be a range of $20 million to $25 million in 2020.
With that we are ready to take any questions operator.
Thank you ladies and gentlemen, if you have a question or comment on today's conference. It does star one on your Touchtone Keypad again star one for any questions or comments at this time, we ask for using a speakerphone. Please pick up your handset to provide the best sound quality.
We'll go first to Stephen Gengaro at Stifel.
Thanks, Good afternoon gentlemen.
Yes, David.
Yes.
Start.
The guidance.
We think about your full year guidance and even the first quarter to the extent you talked about.
How are you thinking about on the Dynaenergetics side the interplay between.
Pricing volumes and market share.
Okay.
When you look at our guidance the unknown.
Was primarily the completion activity going into the second third and fourth quarters.
We expect our market share to stay relatively constant.
In our pricing to stay.
Relatively constant.
Theres, a fair amount of price competition in the industry, but we're not participating in that.
Over the last two quarters, our share has been stable plus or minus a couple of percent.
And.
We don't think that.
We're going to see more intense pricing competition going forward and I don't think that the price competition that we have seen is working for others.
And so when you look at our guidance, it's primarily a focus on.
Or is driven by the estimate of what we think completions are going to be.
And the adoption of our systems.
And Kevin is there any thought as far as.
A change in curved guns per stage Peter just from.
Changes in the industry and also from the addition of the BS line.
We expect that we're starting to see that pick up we and we actually believe that's what's going to accelerate and in the second third fourth quarters of the year.
And we would expect the adoption to be up.
Yes.
15% to 20% not the adoption, but the number of guns per per stage.
Okay. Thank you and then.
One other one other question, where we will receive about your.
Sales process and I know you spent an increasing amount of time as organization talking directly to MPS versus wireline companies.
Can you give us an update on the success of that and then as part of that we think about the ability to sell the product I.
I would guess the employees, having when need piece have more power, probably a little bit easier.
Just kind of curious how that process is going and what you're seeing.
From those discussions.
We're we're seeing theres really kind of a bifurcation in the market between.
The leading GMP companies that have strong balance sheets and does that might have.
Our do have weaker balance sheets.
And and it has to do with.
Really the.
Longer term focus on safety reliability.
And operating efficiency versus just the immediate cost of completing a well and we're seeing more and more.
Of the stronger company specifying our products and we're seeing greater pull through there and then we have seen on the other end of it.
That's probably where we've we've been had less excess where where prices more focus near term.
And we're not chasing.
Volume or market share, it's more important for us to focus on.
The value that we pray for our customers and make sure that were were paid fairly for that value because that ultimately translates into the value that were trade for our shareholders.
Okay. Thank you Kevin.
Well go next to George O'leary, Tudor Pickering Holt company.
Good morning, guys.
Hi, George.
Good afternoon, sorry, I was looking at that the and.
They're going to the guidance you guys provided for the first quarter of 2019 is actually basically the exact same range $14 million to $15 million in EBITDA for the company and you guys came out quite a bit better than that when or do you get explain kind of the de dynamics that drove the beat in the first quarter of 2018 and then.
How what you're seeing from an activity standpoint, or a completion standpoint or customer inventory destocking standpoint.
Driving that the guidance for the first quarter of 2020, maybe what's different unless the same year over year.
Yes.
The completions in January were.
About the same year over year, it's really the.
The rate of which those completions increase in February and March where were.
You know given.
Kind of the industry specific challenges that we have in terms of balance sheets and then also.
Recently has been a overlay of.
Macro from.
From an oil pricing standpoint.
We just.
Had guided to a slower start to this year compared to last year.
And.
Ins and that's primarily whats reflecting the.
The poor performance of the company in the first quarter.
Compared to 19.
But we.
No we're fairly.
Confident that that's going to start increasing in the second and third quarter the completions.
And we do expect the perforating intensity to increase.
We are being cautious because we're forecasting.
And increase that we.
Our anticipating but haven't seen yet we didn't see that in January where a year ago, we did see.
People ordering and building more at this time for them for the balance of the first quarter.
Hi, just sounds like we also maybe.
Go ahead sorry.
Hey, George sorry about that so yes, I mean in January started the year.
Weaker last year is well February and March for a stronger we also last year.
Add a project in EMEA any EA that we pulled forward into the first quarter as well that we are sure we're going to be able to do last year, so fairly see significant there as well last year.
And that's that's very helpful context, and then.
Just.
Taking about the sales effort targeting more MPS I wonder if you could just update us strategically on how that effort is going and maybe frame what.
[music].
For synergy or customers today are actually in peace backing in your systems to the wireline folks.
Okay. So we we've added over the last.
12 months.
[music].
To our sales efforts to our marketing efforts.
Marketing development Rolls people that focus on the MP companies in particular.
To go out and explain the value that our systems trade for.
Completing a well and.
We're seeing.
The specking of our systems approaching 50%.
Which is quite an increase over the prior year.
And.
And so we we feel that that's going to work well for US is the as the year progresses and we.
The value proposition is pretty straight forward the are our products are.
[music].
A little bit more expensive, but it's it's a fraction of the savings that we.
Can create for any MP company.
Very interesting I'll sneak one more and if I could.
Thank you guys had historically guided to.
Desire to continued to increase market share and I realize the environment has changed and competition and pricing has heated up it is the guidance for kind of flattish market share year over year, just that change in competitive landscape or is there something else that's kind of driving the apprehension.
In the sale go after a couple of hundred basis points or you will achieve a couple under more basis points of market share.
In 2020 versus 2019.
So.
We're.
It's primarily context in which we're operating rather than how we're operating when we look at.
The completion activity and how that picks up.
We yeah the.
The pricing in the market is kind of all across the map right now I believe it's going to settle down.
It is not working for some of those companies and you can see it in the reported.
Performance and.
So we're just.
Being cautious and focused on.
Executing and executing well, we we do believe that with the pricing going down in some of the areas.
And our adoption of our newer products going forward that we are going to pick up a couple of percent market share, but what's really driving our guidance as the overall activity.
Great. Thank you very much for the color, Kevin and Jeff.
Once again, if you had a question or comment and Istar want on your telephone keypad, we'll move next to Jerry Sweeney at Roth capital.
Hey, good afternoon, Kevin Mike, Jeff Thanks for taking my call.
Yes, Hi, Jerry.
I apologize if any of this was hit.
Hi.
Broke connection at a dial back end, but.
Over the course of this over the course of 29 team competitors have been talking about adding from new products to compete against.
Your system.
Curious if you have had a chance to see any of these products.
We all know that you have a lot of technology embedded in your systems, but anything that material materially changes your position.
These new product rollout.
Not really I think that.
First of all we welcome the competition on systems I think that yes.
Does bring.
Greater efficiency and single source responsibility to perforating and.
And improve the safety and reliability around the well site.
What we see our some innovative and creative packaging designs coming from.
Others in the market.
However, as their packaging.
Yes, the technology that has been used for four years in that market, it's not really challenging.
Our.
Integrated switch detonator.
And it doesn't have the same safety and operational benefits.
We.
We feel that there was more to gain as the for US is market moves towards systems.
And that's kind of why we welcome the competition.
Because it does help.
So the market for systems, and we feel that our product line stands on its own and as and his integrate.
Competitive position.
Got it.
Speaking of.
Just additional technology things like that.
Trinity.
Yes.
Obviously, the traditional thought energetic.
Saves on manpower efficiencies and helpful safety, but we've also started talking a little bit about enhanced oil recovery with some of these newer products.
Any data quantitative or qualitative few can enter Jack conversation on on that.
We're just seeing the Trinity.
Work its way into the marketplace. It was in or just in the second half of.
19.
The adoptions picking up that informations, just starting to come in.
It's still a relatively small part of our overall.
DS.
Systems.
Business, but that's something that probably by the second or third quarter, we'll be able to.
Share more information on.
Got you know we're careful right now because it's a small group that we're developing that are working with.
And there's proprietary information there.
Understood and then.
Maybe for Mike EBITDA guidance 80 to 90 million for 2020, I think you said your Capex 25 million.
This paints a picture potentially free cash flow.
40, 550 million is that sort of in the ballpark, obviously, there's some working capital.
But that may actually be a positive at least in the near term.
2020, any any thoughts.
From scratch.
Yes, yes, Jerry I think at 20 to 25.
Million on Capex, and given that adjusted EBITDA range that I provided free cash flow and call it the $30 million to $40 million range. After.
After the Capex of 20 to 25 million so.
Maybe just a little bit of working capital drag there.
Okay got it any thoughts on obviously instituting a dividend.
Earlier, this year and I think that was a vote of confidence in your balance sheet.
Got some next on metrics return on invested capital balance sheet cash positive improving.
Free cash flow is going to be.
Nice to share potential buybacks or anything like that in terms of capital allocation.
Yeah, we expect as Mike was saying have a good cash year, and we're going to be building cash and.
No.
Yes.
It's basically a discussion that we're going to have with our board as we go forward.
How best to use that cash we have a couple of growth opportunities that we see in front of us and but it's important for us to return value to our shareholders and so I would expect us to.
Increase our.
Targeted.
Yield.
Yes from where we are which would also.
Raised the dividend overtime.
Got it okay I'll jump back in line. Thank you.
Just a final reminder to star one if you had a question or comment well move next to Edward Marshall at Sidoti and company.
Hey, guys. Good morning, how are you are good afternoon.
I'm just curious.
Hey.
So I'm just curious when.
Usually you talk about slowdowns, good environment for share gain and you're kind of looking at a constant.
Sure.
20, Twond and curious as to.
How that discussions going with your customers and maybe why not why arent you being a little more optimistic kind of on the share gain during that spin.
Vitamins that you've seen success for in the past.
Okay.
I think it gets to that bifurcation, we would expect our shares going to increase with the stronger S&P companies in the marketplace that are.
Looking longer term.
And and theirs.
Some part of the market where there is.
What appears to be nearer term desperation, if you own and has to do with where balance sheets are weathers any MP company or a service company.
And so it's kind of.
Targeting in growing our base with.
With a different type of customer going forward.
Hi.
A lot of this has to do with pricing and not chasing.
Prices that don't make sense for us.
And yes, we have in the.
Low to mid Twentys market share in terms of revenue, but I think that our market share as much higher than that if you just rolled up the reported operating income of the companies in this market and it's really the operating income market share. This most important to us.
Got it okay.
Okay. Thanks, very much for your comments.
And with no other questions holding I'll turn the conference back to Mr., Kevin long for any additional or closing comments.
Yes, Thank you everybody for joining.
Today, we expect so I'm sorry.
Yes, we did I just saw one question come in yes, certainly we'll go to Jim brilliant Sentry management.
Hi, guys.
Yes, Hi, Jim.
Good afternoon.
<unk>.
Q4, you actually.
EBITDA kind of outperformed what your revised guidance was.
What.
What was that due to.
Yes, I think.
On a on a on a couple of you know he just go down the piano I think we outperformed most lines, but we also had a favorable tax rate.
The fourth quarter our adjusted.
You TR was 25 and a half a percent.
Versus a full year, 28%. So we've got a lot on that on the tax line and.
And I was looking everywhere at the EBITDA lines.
Yes on any of that.
So on on that on the EBITDA we.
Certainly outperformed on the on the margin versus the guidance.
Okay and.
And then did you say that January of 2020.
Dynaenergetics to 21 million and 40% gross profit.
Did I hear I did.
And what we're seeing is that does some of the.
Cost savings that we have through.
Our fourth quarter restructuring are already entering their way into our income statement.
And.
I was quite pleased with that performance, which is why we mentioned that.
Too and that highlights if you will not only how quicker or our organization response to market situations, but also the fact that it's a technology driven business with.
Good margins and and.
Hi, variable cost versus fixed costs, and really getting the margins for our products is more important than just the absorption.
Well clearly you've done a great job on margin so congratulations on that.
And then can you expand a little bit I think you made the comment that you expect that guns per string to be up 15% to 20% I think I heard that right I can you expand on that and what you're looking at through the remainder of the year.
That respect of volumes will be gun volumes for you should be.
A bit higher than.
I guess due to the.
Trinity line in the.
Yeah, we see.
Beginning in the second index.
Starting to accelerate.
Yeah, being up 15% to 20%.
More of guns.
Per stage going from say an average of.
10 to 12.
And and we're starting to see that take hold right now that the conservative guidance has to do with.
The completions themselves being down.
And and that's the number of guns per string is that unique to you or do you see that in the industry.
I believe it's in the industry I think that we're in the forefront of an enabling that with our.
Product lines because of the.
The the optimize lengths of our perforating guns.
And.
So I would put us at the forefront of that and as our Trinity.
Starts to take hold as the year progress as we could see that accelerate dramatically.
I would like to note too that.
The new products that were forecasting were already in the market with today.
We're just being conservative and how fast they take hold.
Right. So how far you are so your be out way beyond pilot on some of these new products new products, you're expanding that into the marketplace not just beyond.
A handful of customers. This is now expanding and it's just a matter of.
Your conservativism is a matter of the overall uptake from a completions not.
Not so much the technology.
Correct I mean, we look at the E.A. information on completions, which is.
To be.
Fairly accurate.
And completions were still down in January compared to where they were in December.
And in the CIA.
Information had completions down 13% in the fourth quarter compared to the 2019.
Third quarter.
And so we.
And that's really the the if you will though.
The line of sight that we have going into the beginning of the year.
And and as I'm sure everybody on the phone is well aware oil has pulled back.
From where it was at the beginning of the year insight and you add in.
Yes, the concern in some of the balance sheets and all activity and.
I think this is a time to be conservative in terms of how we look at the.
Growth of the year at how it accelerates.
Okay, great. Thank you.
Yes.
No I guess one lab.
Yes go ahead.
Sorry, Oh press Star, one again, I Arnie tomato the Q.
Okay.
Yeah, and some of your line is open again sorry.
Okay.
Thank you.
You said that there's some growth opportunities.
That you're looking at is care to expand on that or is that something here.
Not.
Yes.
We actually are we'll be introducing some new products as the year goes on that our new product markets. So it's really organic growth.
And some of the investments we need to make for capacity at the time that those products are ready.
Okay, and would that be above and beyond that 20 to 25 or is that inclusive.
Included in that estimate.
It's included in that estimate and and.
And yes, there they have to do with the completion spring from ballistic release tools to setting tools.
And there these products are already in the market to being trial.
Oh, okay.
And.
So when when would you expect those to go beyond trials and be available to.
The general.
The market.
Third quarter.
Q3, okay.
Okay.
And what kind of.
Market addressable market would that be addressing.
The ballistic release tools, it's actually very small market is.
Which we've made smaller through the operating efficiency of our of our products.
So that that's not going to be necessarily meaningful from a revenue standpoint, however, it's an important.
Tool.
As part of the completion string and the design of our products that we feel that would be a.
Good value for customers.
The setting tool.
It's probably a.
A larger market and we'll we'll see a greater impacted our our revenues probably beginning in the fourth quarter as we introduce it in the third quarter.
Regarding the size of the market I.
Would hold off on that until we have the data that comes back from our trials.
Okay fair enough okay. Thank you.
And well my back of the Tommy Mall with Stephen.
And Tom Your line is open.
Good afternoon, and thank you for taking my question.
Yes, Hi, Tommy.
Yes, I wanted to start on the perforating market.
For the full year.
Kevin.
As you have come to arrive at your outlook for Dynaenergetics, there's some offsetting factors and the underlying market.
For printing equipment, where you've got.
Capital discipline from the end.
End user.
But then Conversely, you have perforating intensity.
Increasing.
So on underlying your outlook.
Is the market flat up or down for perforating volumes.
For the industry overall not specific to you guys.
Yes, I think we would say that it's flat you've got completions that are.
Yes.
Going to be down in the 10% to 15% range and then you have a pickup and.
Operating intensity in the.
Yes, 15% range, they kind of offset one another.
And.
And so the the.
The variable in terms of the dollar value of the market is pricing.
And.
Well I said earlier I don't see further declines there the average price going into.
2020 is has been lower than the average price going into 2019, and so that would have impacted that market in the.
Yes for most companies in the in the probably the.
5% to 7% range.
And.
And so that would be impacting the dollar value.
And we expect our share to stay relatively constant we price our products.
Based on.
Our margin expectations.
As well as but we are influenced by the.
The relative.
Premium over other products in the marketplace. So it does have an impact on our.
Our revenue, but we feel we've seen that.
And so so this market is really more about.
When does the.
Completion start to kick it back in.
We saw greater drop in there.
In the fourth quarter and in January and we expect for.
The full year and the gun intensity, increasing and in order to to see the revenue.
Come back at the operating.
Area that we were for 2019 and you can actually see that if you. If you took the.
The following three quarters of.
2020 from what we've guided for the first quarter you can see a pickup that we're forecasting in the balance of the year.
And and that's exactly where I wanted to follow up with was on the cadence throughout this year.
I want to make sure it Kevin that.
Better than the outlook you're assuming.
A pickup from some of the product introduction that are already in the market, but that those are separate from what you referenced a minute ago is the growth opportunities from a holistic sunsetting tools, which won't have a meaningful impact until 2021 did I hear you correctly on that.
You did.
Okay.
I wanted to ask about China and potential Corona virus impacts you referenced it in your earnings release or not I presume you met as they may pertained to oil demand I was just curious for from a supply chains.
Endpoint.
For either Nobelclad or Dynaenergetics.
Do you see any any risk there.
Not in our guidance no.
And were fairly self sufficient in terms of our production.
There is a large order that we're working on and noble Clyde or China, but we don't feel that.
That's going to be negatively impacted by the krona virus. So we we.
It's really as you mentioned that it's the macro impact on demand and oil pricing and what that does too.
Drilling and completion.
That's just.
And uncertain at this point in time.
Okay.
That is all for me. Thank you for taking my questions I'll turn it back.
Okay.
Mr. Long it appears we have no other questions holding.
Okay I appreciate.
The interest that everybody as in our company and joining us on todays call I would like to thank our employees for.
Just a an outstanding year in 2019.
And the technology and.
Opportunities that we have going into 2020 and beyond and actually we believe with our strong balance sheet and the work that we're doing.
Across both companies from specifying our products, it's going to service, while going forward and so we look forward to updating.
Everybody who's on the phone and.
Our employees as the year goes on so thank you.
Ladies and gentlemen that will conclude today's conference. We thank you for your participation you may disconnect at this time and have a great Dane.
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