Q1 2020 Earnings Call
Thank you for your patience your conference will begin shortly once again. Thank you for your patience in please continue to standby.
[music].
Thank you and good morning, everyone. We appreciate you joining us for the MTS International Conference call and webcast to review first quarter 2020 results. As a reminder, this conference is being recorded for replay purposes.
I think today's prepared remarks, as Mike Doss CEO will also be joined by Lance Turner C. F out everybody Peterson C. O, though are the key when a portion of the call.
Before we begin I'd like to remind everyone that comments made on today's call that include management's plans intentions beliefs expectations anticipations or predictions for the future are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements are subject to risks and uncertainties that could cause the companys actual results to differ materially from those expressed in any forward looking statement.
These risks and uncertainties are discussed in the Companys annual report on form 10-K and in other reports the company files with the FCC.
Except as required by law the company does not undertake any obligation to publicly update or revise any forward looking statements.
The company's FCC filings.
We obtained by contacting the company and are available on the company's website at <unk> Dot com and on the Fccs web site at DC Dot Gov.
This conference also includes discussions of non-GAAP financial measures. Our earnings release includes further information about these non-GAAP financial measures as well as reconciliations of these non-GAAP measures to their most directly comparable GAAP measure.
We do not provide forward looking reconciliations for forward looking at non-GAAP measures, because the timing and nature of exclude items are unreasonably difficult to fully and accurately estimate.
With that I'll now turn the call over to Mike Doss.
Thanks good.
Thank you and good morning, everyone.
I will begin with a few observations on the market and then outline the measures. We've taken in response after that I will cover our financial and operational results for the quarter, followed by Q and <unk>.
In response to significantly lower prices, primarily due to the economic effects of cobot 19 U.S.
Well field activity is falling rapidly.
Today's oil prices, new well completions no longer make economic sense for nearly all operators.
Most have dramatically scale back or suspended completions altogether.
Our customers started dropping fleets in the second half of March and we ended the quarter with 17 active fleets.
We currently have for working.
In addition to fewer fleets significant pricing concessions were necessary in order to retain work.
In the near term the outlook for pressure pumping is more challenging than it's ever been we're hopeful that the economy can reopen and the next month or so which will begin to restore crude oil demand.
Combined with lower production that will be occurring over the next few months, including the analysis cuts from OPEC plus.
And shut ins due to storage being full we could see more balanced oil market in the second half.
Relative to oil gassy areas are in better shape, a current opportunities for new work or for a few between.
It's possible that lower associated gas production moves prices higher.
And if that occurs we're in a good position to work with those operators.
Given the outlook, we've taken a series of aggressive measures to reduce costs and preserve liquidity.
First we are reducing crews that no longer have scheduled work and releasing the cruise related support staff.
Second we have reduced all employee labor costs through a combination of layoffs, rolling furloughs wage and salary reductions and the suspension of our short term incentive plan.
Since February we have reduced our total company active head count by over 800 employees or nearly 65%.
Finally, we are working with all of our vendors to reduce pricing obtain temporary abatements and renegotiate fixed fee arrangements.
Many of our non labor costs are under annual arrangements and we are aggressively addressing every single one of them.
Despite the current headwinds our first quarter results held up well, even though activity began drops off the second half of March.
Revenue was 151.5 million up 6.5% sequentially, while our stage count was up 8.5%.
Adjusted EBITDA was 21.7 million.
Down from 22.7 million in the fourth quarter.
The drop in activity in March cost us about 5 million in EBITDA.
Annualized adjusted EBITDA per fleet was 5.4 million compared to 5.4 5.5 million in the fourth quarter.
Yes, Cheniere was 17.7 million down from 22.7 million in the fourth quarter with the the decline.
Driven by cost cutting measures.
Many of which had been implemented.
Even before the current downturn.
Excluding stock comp SGN eight was 14.6 million in the first quarter down from 16.9.
In the fourth quarter.
For the second quarter SGN is expected to be in the range of 11 to 12 million, excluding approximately 3 million of stock comp.
Net loss for the first quarter was 11.7 million or 11 cents per share.
Cash flow from operating activities was 13.2 million and includes an 11 million annual supply contract settlement fees offset by a working capital release of about 9 million.
Capex was 16.4 million for the quarter up from 14.9 in the fourth quarter last year. The increase was driven by front loaded purchasing of certain components.
As well as expenditures for dual fuel conversion kids.
Our total dual fuel capacity now stands at seven fleets.
For the full year, we now expect capex to be in the range of 30 to 35 million and we'll be looking for ways to reduce that further if this environment persists.
We ended the first quarter with just under 200 million of cash and net debt of 238 million.
During the quarter, we repurchased 22.6 million of our term loan due 2021.
At a discount of 2 million that leaves.
67.4 million remaining.
On the term loan along with 370 million of notes due 2022.
We continue to work with our advisors on liability management alternatives. The goal remains the same find the optimal mix of discount capture maturity extension and liquidity preservation.
Our average active fleet count was 16 in the first quarter compared to 16.5 in the fourth quarter.
As I mentioned earlier, we ended the quarter with seven fleets today, we have for working with two in West, Texas, One in South, Texas and one in the northeast.
Currently expect to averaged three to four active fleets in the second quarter.
We completed 431 stages per fleet in the first quarter, our highest level ever.
Due to our crews and customers working together to achieve more pumping hours per day more pumping days per month.
Looking forward to the second quarter, our stages per fleet will be choppy given customer scheduling gas.
While our active fleets have been running at about 85% utilization in the second quarter, we expect utilization to fall to the 50% to 60% range.
Despite that I have full confidence that our crews will continue to perform as efficiently.
Each and everyday they are on location.
We pride ourselves on being a nimble company that adapt quickly the changing business conditions. However, this environment is especially challenging even that are low point in 2016, we still had 11 fleets operating.
Currently the gross profit contribution from the three to four fleets that we have working is not expected to offset all of the fixed costs and our cost of sales, which means that we will likely have slightly negative gross profit in the second quarter.
[noise] that plus SGN a expense means that we will have negative EBITDA, which we expect to be in the area of 13 to 15 million plus or minus.
Given unexpected working capital release of about 20 million, we expect to be roughly cash flow breakeven in the second quarter.
Looking to the second half as the year the outlook is far too uncertain to give even rough guidance, but suffice to say that if conditions current conditions persist we will be in a cash burn situation.
Lastly, I'd like to conclude with a few comments on the health and safety of our employees.
Even with all the changes that are happening safety remains our top priority.
We have a contingency plan in place should we see a direct impact from cobot 19 on our work sites. Fortunately, we do not have any confirmed cases within our employee base to date that we are aware of.
We were taking all necessary precautions with social distancing.
Based coverings cleaning office closures and remote working Brescianini staff where possible.
That's all I have for prepared remarks, operator lets please go to.
QNX.
Okay.
If you'd like to register a question you compress the one followed by the foreign your telephone and you'll hear three tone from technology request. If your question has been answered you wish to withdraw you can press one three.
Again, that's one four to ask a question one moment please.
The first questions from Dhruv Carafano from Tudor, Pickering, Holt and company. Please go.
Hey, guys. Thank you for taking my questions.
So start what portion of your cost reduction measures were reflected in your Q1 results and then what's the Doron amount you expect to achieve and buy at what point in the year.
And ER segment, what percentage of your cost savings are structural or fixed worse is a pure variable cost reductions and then are there any incremental structural costs you could remove.
The facility consolidation et cetera over the coming months.
Yeah.
Oh, a I'll try to answer that so it in terms of what amount of cost reductions. We're in the first quarter I'd say.
The majority will be in the second quarter. Although we did we did see I I'd, probably pega to 25% in as I think about DNA. Some of this puts us up between DNA and kind of operating expenses.
Yeah. Our DNA is expected just roughly 2019 was 85 that number should.
Come down closer to 50 million for Twoq 2020, So the run rate in Q1 is a little higher but as Mike mentioned, we would expect that to come down.
In the kind of 11 12 per quarter range.
So thats DNA on the operating expense front you know.
The cost reductions are going to be massive on the operating expense, but a lot of those are going to be variable costs and so you know you're talking about well over $100 million, but but a lot of that is because we're laying down fleets.
And so it's it's hard to think of it in that terms I think you know we are reducing the fixed costs.
And how we operate but but at the lower level of activities. It's also hard to quantify so the way we're thinking about as more of a bottoms up as opposed to kind of bridging from the cost structure that we had run in 15 to 20 fleets if that makes sense.
Yeah, we're looking at every single cost a bottoms up a and try to minimize that so.
I think did I did I catch all the parts of your question.
Yeah, Yeah. That's that's Super helpful. And then secondly are you having any dialogue with customers about activity coming back both these track holidays.
Operator seem to be indicating the adult bill they'll add activity in the backdrop. There are very late 2020 are you hearing any of this chatter and does it seem jewelry didnt seem hopefully predicated on a higher crude oil prices more specifically do you starting from the treated for fleets in Q2 do you have any high level thoughts on how.
That active fleet count might trend through the rest of the your as you may see.
He brings you bought him sometime over the next few months.
Yeah.
Unfortunately, the environment, it's just way too fluid to really get the those kinda conversations with confidence and when we are talking with several operators and I think that that's all of their plans are predicated on a recovery and crude oil prices. So.
If we see higher crude oil prices sooner than though the resume activity.
But there's just so much uncertainty that we really don't have any guidance on the second half at this point I think for the foreseeable future. We think things are going to be depressed just given the supply demand situation with the oil.
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But I mean, I think operators are looking they come back as soon as they can but it has to be profitable and obviously make economic sense for them.
Yes.
That's all have thank you.
The next questions from Stephen Gengaro from Stifel. Please go ahead.
Thanks, Good morning, Joan.
Bob words do two things if you don't want the first just to touch on comment you made about about utilization wanted.
It's been running at about you said about 85% of your thinking you know 50 ish percent.
In the short term 50 to 60 I think you said is that.
50, or 60% utilization of the three to four fleets.
Good how should we thinking about that.
It is and so you know for US a fully utilize fleet is one that works what 26 27 days plants is that when we consider fully utilized.
And so there's just so many gaps in the calendar spaces, a couple of weeks off between jobs and so forth on the three to four fleets that we have operating that is there just less utilize than they would normally be.
Okay makes sense and then as we think about the second half and not knowing obviously what activity is going to look like.
Given.
Given what you're doing from a from a cost cutting perspective.
Where do you think you need to be.
Short of be cash flow breakeven in the second half in terms of.
Either number fleets or EBITDA per fleet or something.
Is there a.
Guideposts, you give us.
They help answer that or not.
That is that's a tough question I'll make some comments last you can weigh in as well.
Just roughly speaking.
As I mentioned on the call other prepared remarks that we'd given some really significant price concessions basically taking it down to just a nominal amount of gross profit so.
Even if we were to add say six fleets at that level of gross profit I think we would.
Probably be close that we'd be.
Probably closer to breakeven EBITDA at around 10 fleets at the gross profit per fleet that we're currently operating at if that makes sense.
I think if we were to see some resumption of that magnitude and ER and activity I'd like to think we could.
Recover some on the price, which would help matters further.
That.
Park with what you think like Yeah, I think that makes sense that ultimately that the company was not built to be able to scale up to 20 fleets in down to three fleets and and so were you know we're working on that scalability, but that'll take some time.
Okay, and then just as just as a final follow up to that yes, you're in a line coming down to 11 or $12 million quarter.
That.
How much what piece of that as activity driven and what pieces sort of just effectively.
Largely srecs so in other words as we think about the back after 2021, well that number revert back towards the high teens <unk> assuming activity starts to rebound.
But I think you're probably looking at 50 50, I mean, there there there are some components in there that that will increase but but the structural components will contain will stabilize and so I'm thinking 50 50.
And a lot of their dependent we count because it at 10 sleep like might like Mike illustrated I wouldn't expect a much of an increase.
At all but but when you get into kind of a 20 plus fleet and thing you'll start to see some of the.
The variable costs in there.
Okay. Good thank you.
The next question is from line of Andre Ginsburg with R.W. Pressprich. Please go ahead.
Hi, guys. Thanks for taking my question I Hope you're also seeing healthy.
Just to clarify around the op actually expense question show I'm going to answer it another way maybe you know it will help quantify shelf show. It's you had zero for each running well what would be the fixed costs. So on the operating spend side and then.
Is there like a a I think you're almost alluding to like a step up schedule on fixed cost depending on the number a of.
Fleets that are actually running are you able to quantify either of those trust.
Yeah. It you know there's there's a lot of nuances that that question, but I think that at zero fleets.
I would expect a fixed cost portion to be probably in the five to 10 million range.
Okay and then.
As you start to pick up activity.
Like what I was alluding to with the step up schedule is that like the right way to think about it.
Like if you have five fleets running that edge I know, there 10 or 20 million in fixed cost for example.
No no I think the the fixed costs are mostly related to either fixed.
Fee arrangements or contractual arrangements.
And so it wouldn't really scale up at all in fact, some of the costs are the same at 28 fleets as they are for fleets and those are the ones that were obviously working on a to reduce as we as we progress throughout the year.
But I wouldn't expect it to scale up with fleet count.
Okay. Okay. Thank you and then she you guys mentioned you had four active suites are currently.
Just trying to getting indication what's really the then mixing those are those all diesel ones all or most of those to the dual fuel ones you've been transitioning to.
Yeah, we've got just a three of them or conventional diesel and one of them as tier two dual fuel.
Got you, Okay, and then last questions from me. So you guys mentioned the hospital increase.
Related to drilling for Nat gas if the associated if the decrease in associated gas levels supports you'd probably see the commodity <unk> is that a speculation or if you had like a high level conversations you've done your clients about that.
No. Its most is primarily a speculation yeah I think that Theres, a general expectation that we could see some recovery in gas and so we want to make sure that dedicated in the right resources to cover the Marcellus and the in the Haynesville in the event that occurs.
No that doesn't make sense such different mine. Thanks for the color guys.
Sure you walking center.
And as a reminder, if you'd like to acute for question you can press one for.
Your next question from one of David Honeycutt from a Monday pioneer just got.
Hi, guys. Thanks for taking the question I'm just a quick one on the term loan repayment could you just walk us through the thought process behind that in the context to preserve liquidity.
And then I guess more importantly, what the plan has to deal with the remainder of the load and also the notes given the cash flow is gonna be getting materially worse over the next couple of quarters. Thanks.
Yeah, I'll make few comments so the the repayment that we did it's really been our basic strategy to target. The term loan first it is the nearest maturity and so we did that payments repurchases in the market. We didn't capture some discount as I mentioned not as much discount as we would you anticipate and this market.
So that was all kind of pre crisis pre pre mid March.
And so the plan remains you know to to try to resolve the term loan try to capture more discount on the term loan as I said, that's the the nearest maturity.
And I think that will then we'll we'll target the notes next but last do you have any other.
That's on the.
Yeah, I mean, ultimately, we're looking at all options and and pursuing what what makes the most sense.
Okay. I guess, so should we expect you to on a quarterly basis going forward to keep.
Buying in the term loan or that will be subject to whatever the operating cash flow it looks like.
I think it'll it'll be subject to a.
The outlook cash flow.
The the direction of the company in the board and and the execution of our liability management strategy. So it's hard to say at this point.
Got it thank you.
The next question is from the line of John Daniel from Daniel Energy. Please God.
Hey, guys, thanks for putting in.
If you said this in your prepared remarks, Mike I totally missed it I apologize, but can you just talk to what the geographic exposure is.
Today, and you know if we sort of languishing this crappie market for a few quarters, what might that geographic exposure beat.
Three to four quarters.
Sure.
Little bit difficult to answer so I'll just have to give kind of my my gut feeling at this point yeah. It was where we are a good graphically.
I mentioned to in West, Texas, and actually I made a slight mistake there one of them as in Utah currently working there one in West, Texas, one in South Texas, one in the northeast So that's where we have our fleets working currently.
I think with oil I think still has a lot of downside to it and I think that there are companies that are still reacting and she'll slowing in winding operations down I just don't see.
Much activity for the next couple of quarters and oily all the areas and then that could obviously change with that with what goes on with the macro.
And I mentioned also on one of the questions I think the gassy areas have more potential and so we are dedicating resources to those to those areas.
Okay, but do you see it yes.
I hate that put in August and putting on spots I apologize, but D. What's the optimal scaled that maintain a a base of operation and a geographic area. I know you don't want to cut and run after just a couple of months, but just how do you think about that that makes sense sure.
Yeah. It does.
I think it if they're very minimum I'd like to keep to fleets to keep an operating districts.
The justify an operating district, yeah, obviously more fleets right make a lot more skewed.
But I think we're dealing with some extraordinary situations right now so at the northeast remark that one fleet.
Not optimal but I do think theres potential there, so rather than and shut it down because it's not critical mass I don't I don't think that makes sense are currently.
Okay, and I, obviously, I know you guys would be regularly talk into your clients, but do they.
And I know there in crisis mode right now, but do they appreciate what's about to happen to them.
Yes companies like yourself can't maintain scale and start pulling out like what that they rave about their service costs can you know declines but that change is rapidly when there's only one or two people bidding for the work in the future Im just curious if you could speak to that.
Yeah, well I'm actually helpful that happened.
But I don't think our clients or.
Particularly interested in that I think that they kinda take for granted that there's a lot of service companies out there that are all.
Hungry for work, it's been that way for quite some time and I still feel like there would be their expectation even.
Even at this persists for a few quarters.
But if you have any other.
On that totally totally agree okay.
Yeah, Okay, guys well good luck there. Thank you.
There's a follow up from White, Stephen Gengaro with Stifel. Please go ahead.
Hi, Thanks, Thanks, gentlemen.
Just quickly.
Obviously, when we're thinking about the balance sheet going forward do you.
Can you do shed any light on kind of your plans of attack here under different scenarios as we kind of moved through the next 12 to 18 months.
Yeah, I'll take a I'll take a stab at that its.
Yeah, there's really a lot of uncertainty because then we are negotiating and we are.
Working with our advisors and our board to try to figure out what what's optimal I mean, we definitely want to come out of this.
However, long this downturn is nine months 12 months, maybe beyond that we want to come out of this with a sustainable capital structure.
So we know that we need to push out maturities, we know that lead to preserve liquidity during this time.
And I'm trying to work all of those objectives. There's there's just so many alternatives that were evaluating its hard to give much guidance other than what the end goal is that we would like to achieve.
Okay. That's fair I, just figured I would I'd ask you know.
Oh, what kind of watch us things unfold here thanks for your color.
Sure.
The next questions from one of scan mean L. King from independent credit Research. Please go ahead.
Hi, good morning, Thanks for taking my questions.
First I'd like to.
I would like kind of did you purchase this term loan after.
You hit hard to your restructuring adolescence only before.
It it was independent of.
Of.
Of the hiring of the restrictions that we've been working with advisors for I think I think we mentioned it on the last call.
So it's it's we've been working with advisors for a while it's just that the environment changed therefore.
We are strategy has to change.
Alright, and then.
In regards to the second.
Corn or cash flows.
Your cash flow from working capital we also.
Sort of Americans your gross proceeds as Jenny.
Do you expect to still generate a breakeven cash flows after paying off the coupons with the bonds or before appealing.
It'll be it'll be before based on kind of what we laid out I think I think Mike mentioned kind of a negative 13 to 15 EBITDA.
You have a little bit of Capex and there you have the working capital offsetting that and then the a and.
And then the semiannual coupon payment will be in Q2.
So again the data it looks like the second quarter will should should be probably a bottom hole.
All debacle.
In the <unk>.
The industry.
You'd be industry gradually sell them sort of turning around.
Got it.
And the second quarter, which would have no of course, I know one homes hypothetically.
What kind of working capital how steep would be your cash need in working capital.
During the recovery.
So I'm trying to understand what kind of liquidity needs and it's going be bonds in your operations.
Yes, this and yeah I mean is.
Yeah. It's a good question I, you know I view the the.
The magnitude of the working capital needs as as steep as the industry rebounds. In so you know if if we were to paint a picture that you'd have a very very sharp recovery, which I don't think is kind of what we're hearing and seeing.
Then we would we would need a steep working capital, but my my expectation is it would be gradual the market remains an oversupply situation.
Even at demand levels, you know six to nine months ago and so.
At these new levels.
I don't expect a significant ramp up in pricing or has really really steep return of pressure pumping fleets, but.
But we will be monitoring that obviously.
And you don't expect who don't truncated because the economy as well.
Moving prices, our north American some free B. Braun sharply as well.
No, we're not losing that split.
Your conversations with your customers into Q right sort of.
Sure.
That's exactly right. That's our current expectation you know I think we were dealing with the situation where you know we're likely to have a lot of large shut ins in the U.S. storage is full and.
It really depends on the shape of the of the demand recovery, but for a period of time, we're going to have a surplus of inventory that needs to be worked off and so you know we're not enough. It if they didn't have to be incorrect. In this ends up being a sharp recovery than great will adapt to it and and certainly take advantage of it but we're not really anticipate.
And that.
Anytime in the foreseeable future.
Right then burned a lot of ominous ominous conversations and did you hear about future abuse fracking industry.
Right and that's where you said you know predicting because not.
Hello money.
For shareholders know agree learners no corneal on and so.
What kind of probability.
And your clients are assigned.
To the gradual.
Decline futures.
Increase you're on track in this country.
I'm not asking about what you consider I'm asking what's your conversations with your customers sort of indicated how significant this probabilities.
Yes.
Yeah. So we didn't have a lot of conversations with clients, but really haven't had those kinda conversations just to be honest I mean were we.
We are dealing kind of what a bit of a crisis management really as an industry right now and so I think the focus is really just more on the near term.
I think theres, a general recognition that the costs need to get reducing the industry in order to remain competitive.
And I do think that production likely will will be lower than where it peaked out and just to create a more sustainable situation.
In P. and access to a to be able to provide decent returns to shareholders and it certainly hasn't been.
That way for the last five plus years, but perhaps this crisis will.
Well give an opportunity for a for things to consolidate to become lower cost more efficient and and so forth.
Okay.
Good luck guys. Thank you very much.
The next question from one of the inputs from Morgan Stanley. Please God.
Hey, Thanks, Good morning, So I just wanted to kinda confirm what your marketed capacity is that right. Now I believe you guys said that you'd you'd laid down nine fleets exited one Q with seven suites and the guidance is for three to four fleets at.
At 50% to 60% utilization, so like I just kind of.
Wanted to understand around the furlough component art is it that you have seven marketed fleets.
But you know the crews that aren't working or through furloughed, and even I guess going to level deeper for the three to four fleets that you expect to be working into Q.
Did the furloughs kick in at the times that those fleets have white space or is it more that goes through to poor piece would kind of incur labor cost for the full quarter and I apologize if any that you guys have addressed and he's already but.
Appreciate any color there.
Sure I'll try to answer a part of your question then and you can let me know if I think the for sale. So in terms of marketed fleets it's really.
We have fleets that we could put to work for.
Any number of opportunities that come our way and so.
You could say, we have several marketing fleets, but they're not staff and so what we have staffed or the for fleets that are working and they are going to incur an entire quarters worth of labor costs.
Yeah, I think there in the there in that scheduling gaps overtime will be less but for the most part you know entire quarter of labor costs for a for each of those fleets. We did have one standby fleet. That's working at a reduced wages that's available on very short notice or an opportunity that a that we're working on.
But but other than that you know, we don't really keep excess crews on staff a in hopes of in hopes of work. So if we do see a resumption of activity or recovery.
Yeah, we will do similar to what we did a coming out of the last downturn. It will deploy a fleet probably every 30 to 45 days.
Which is a time it would have required to get the fleet and good work in order to make sure that we have a quality staff a quality crude that we can deploy.
Got it answers thanks, a lot that in what.
No. That's that's really helpful color Yep.
And then so.
Appreciate the comments on the fixed cost component of cost of sales.
Was wondering if if you guys could kind of unpack the variable side or if theres any color you can give there in terms of what you maybe percentage wise labor per fleet is first is repair and maintenance versus materials and specifically on the repair and maintenance was one.
Thing if you guys had like a good well what your assumptions are for repair and maintenance for.
Our fleet in kind of a normalized scenario and then also if there's any potential room for saving there maybe you know from from pulling parts off of some.
Some of the stack fleets for replacement so just any color on around the variable component will be really helpful.
Yeah, I'll make a starting to Lance you can correct me if I'd say I think so in terms of labor, it's about $450000 a month or per fleet and that's like I say more fleets. We got more cruise that's roughly the cost of accrue in terms of repairs you know six $700000 a month.
Under normal conditions to and just in terms of repair expense a lot of that is fluid in related probably half of that is fluid and related.
Maybe a little less than that I think during this time what were shrinking crews, we do tend to to see some deflation and repair costs, just simply because some of the major repairs and other things you're not doing so I would anticipate tween, maybe three to 400000 hours a month.
In kind of this depressed scenario.
And in terms the other direct costs, maybe $300000 a month, but definitely varies.
Based on the fleet or we providing sand containers and covering that lease that would be considered a direct costs.
And a high pressure iron and other other direct costs around 300000 a month.
So you can just multiply by three for the quarterly figures on on that that's.
Little bit more detail than we normally have given but those are those are rough estimates in terms of materials sand the chemicals fuel.
You know, it's almost we just ignore those we don't put margin on them Oh, we don't provide fuel and hardly any fleets anymore.
Surface sand or customers 90, 95% of our customers are now providing sands.
It really varies quite a bit but for US is just simply a pass through really the same thing for chemicals very little if any markup [noise].
Great. That's a that's really helpful color. Thanks, a lot guys I'll turn it back.
There are no further questions at this time I'll turn it over to Mike Doss for closing comments.
[laughter] aren't well. Thank you everyone for your interest in Fts I.
We look forward to speaking you speaking to you again next quarter.
That does conclude the conference call for today, we thank you for your participation and he can now disconnect your lines.
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