Q3 2020 Solaris Oilfield Infrastructure Inc Earnings Call
[music].
Good morning, and welcome to the Celerity oil third quarter 2020.
Earnings Conference call.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation will be opportunity to ask questions.
Please note that this event is being recorded.
I'd now like to turn the conference over to Ms., Eva on Fletcher Senior Vice President of Investor Relations. Please go ahead.
Moving and welcome to the Solaris third quarter 2020 earnings Conference call I am joined today by our chairman and CEO Bills Art, LER, and our president and CFO Colorada Chondral.
Before we begin I'd like to remind you of our standard cautionary remarks regarding the forward looking nature of some of the statements that we will make today.
Such forward looking statements may include comments regarding future financial results and reflect a number of known and unknown risks.
Please refer to our press release issued yesterday, along with other recent public filings with the Securities and Exchange Commission the outline those risks I.
I would also like to point out that our earnings release and today's conference call will contain discussion of non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation. This additional information should not be considered in isolation or as a substitute substitute for results prepared in accordance with GAAP.
Reconciliations to comparable GAAP measures are available in our earnings release, I'll now turn the call over to our chairman and CEO filler.
Thank you your lawn and thank you everyone for joining us today.
I'd like to begin this morning by saying, Thank you to our employees I recognize how challenging this environment is good and then just the presence of a global pandemic and unprecedented industry downturn, you have adapted well to the rapidly changing needs of our customers New work safety guidelines organizational changes without missing a beat in continuing to provide safe first in class.
Our service.
Our efforts have helped us navigate this downturn, while continuing to generate cash and maintain a debt free balance sheet. This is quite an accomplishment I'm very proud to share it with the investment community today.
Thank you again for your flexibility commitment and hard work and I'm excited to see what this team can accomplish on the other side of this.
Now turning to our third quarter results Soleris had an increase in fully utilized systems of 70% generated over $20 million in revenue had adjusted EBITDA of approximately $3 million or seventh quarter of positive free cash flow and paid our eightth consecutive quarterly dividend. Despite the continued challenging environment.
Our customers returned to a modest level of completions activity during the quarter. That's been deneke related lockdowns were lifted and oil prices recovered modestly. This drove a 70% increase to 34 year fully utilized systems for the third quarter up from 24 fully utilize systems in the second quarter. This increase was primarily driven by increased completions active.
City in the Permian Basin, which saw the sharpest activity pull back in the second quarter and was the first to rebound in the third quarter.
While we are active in nearly all basins, we're positioned well in the Permian and benefited from this trend in the quarter.
Today, our overall activity is running slightly higher than the third quarter average however, a seasonal holiday impact could drive a decline as we approach year end. Therefore, we expect our fourth quarter activity could be flat to up modestly. We also acknowledge that crude prices had taken a significant dip recently and should they remain at these levels. There are some down.
Inside risk to fourth quarter activity levels.
Well it is still early to make a call on next year's activity. Many of our customers have expressed intentions to Ed Frac crews next year, if crude prices hold closer to $40 level should other operators set budgets to maintain oil and gas production levels, we'd expect overall industry activity levels as well as ours to increasing 2021.
However, the pace and ultimate level of increase is still an unknown as many operators likely prioritize balance sheets examine dividend policies and digest recent M&A activity as they plan for 2021 and beyond and the pace of economic recovery in crude price volatility remains a risk.
What is more certain for the coming years is that operators and service companies alike will continue to focus on increasing operational efficiencies to maximize cash flow. We firmly believe that companies that can provide the most efficiencies will be the ones that will be most successful.
One of the ways in which the industry will achieve efficiency will be through the use of data analytics and software with the end goal of using machine learning to further automate processes utilize predictive maintenance and essentially do more with less.
During the quarter, we helped many of our customers achieve new sand throughput records for a single day and sustained over multiple frac jobs.
Well, there's equipment was developed with efficiency and safety improvement in line from the very beginning one of our core beliefs is that well built reliable equipment, coupled with information that automation will provide the next leap and efficiency gains and all of our product enhancements in R&D efforts to share the scope.
Looking at software as an example, soleris was a pioneer in developing our original prop you software solution, which initially provided our customers with profit inventory visibility.
In 2018, and 2019, we scaled it into an application called Solaris lens, which has grown into a suite of features that bring more data analytics and efficiency opportunities to a customer's fingertips not just for sand, but also chemicals. These.
These enhancements mean, our customers can now see she wellsite event history, such as the number of stages. They pump that day, the average sand pump per stage or time between stages, while also giving us real time data analytics to manage the supply chain and help us perform for preventative maintenance.
We're continuing to evolve the system's capabilities and expand the data analytics. We provide we have recently partnered with Amazon Web services to help us achieve these goals, we work closely with Amazon to enable soleris lens to provide storage and analytics of trillions of events per day up to a thousand times faster than a server and the fracs.
The cost of traditional relational databases. These data time series when fully integrated are able to provide the backbone for data driven frac improvements.
There's continued making these investments in software and other R&D projects. During the downturn was also done it with strict capital discipline cost control and focus on cash generation.
Our capital expenditures should end the year in year $5 million, which is a small fraction of what we've spent in prior years. When we were building the business. Our costs are also down significantly both at the field level and the corporate level. We achieved this primarily in the second quarter by reducing headcount, eliminating non essential spend and working with our vendors.
During the third quarter, we shifted focus to looking at ways, we can get even more efficient going forward and our team has also done a fantastic job, making sure we collect the cash we earn as a result, we've had another quarter of positive free cash generation.
Our current cash balance remains above $60 million or approximately $1.36 per share despite having gone through the toughest downturn and the industry's history can in continuing to invest in our business and paying shareholders a consistent dividend.
As we've stated before our free cash flow and conservative approach to our balance sheet provide us with the flexibility to be measured in our capital allocation and avoid the need to potentially overreact to short term changes in the industry landscape.
Sharing our excess cash with the shareholders that helped build our business continues to be important for us.
Lastly, I'd like to offer some thoughts on what Solaris role in the much talked about energy transition.
We view on gas is a vital resource in the global economy, and expect demand to increase as the world gets back to normal we believe that oil and gas will remain competitive in the global energy picture by using technology to continue lowering its cost curve and carbon footprint. This is something that has been core to Solaris it's since its inception.
Everything we're focused on is about how to help our customers develop their reserves using the least amount of resource as possible our work towards increasing automation, improving well site safety and reducing waste are all things that will both help lower the cost of energy as well as its total carbon footprint lower cost and lower carbon footprint go hand in hand, and I would.
Bet against this industry's ability to achieve both with that I will turn it over to Carl.
Thanks, Bill and good morning, everyone. During the third quarter, we generated over $20 million of revenue adjusted EBITDA of over $3 million and positive free cash flow of approximately $2 million. We averaged 34 fully utilized systems deployed to customers, which represents a 70% sequential increase.
Total revenue increased to 120% sequentially driven by an increase in activity as well as an increase in last mile services, which as a reminder has a large trucking revenue component that can be multiples higher than the rental contribution from a typical system, but contribute similar margins on a dollar basis.
Over the course of the quarter, we deployed a total of 65 profit systems, which worked with varying degrees of utilization in the third quarter. Our calculation of 34 fully utilized systems reflects a number of equivalent systems that generated revenue every day in the quarter, which we believe is the best measurement for modeling purposes.
Total assay in a cost for the third quarter were approximately $4 million inclusive of non cash stock based compensation for the fourth quarter of 2020, we expect total machine eight to be approximately flat at $4 million inclusive of the normal quarterly expensing of noncash stock compensation.
During the quarter, we generated a GAAP net loss of $3.3 million or 12 cents per share adjusted pro forma net loss for the second quarter was $4 million or nine cents per share.
As a reminder, adjusted pro forma net income or loss adjusted for nonrecurring items and also assumes a full exchange of all class B shares for class a shares frame more comparative period over period presentation.
Please refer to our press release issued last night for a full reconciliation of adjusted pro forma net income.
Operating cash flow was approximately $3.7 million in the quarter and after total capital expenditures of approximately $1.3 million, our free cash flow was a positive $2.3 million for the quarter. We returned a total of approximately $5 million to shareholders in the second quarter in the form of dividends, which is flat with the.
The prior quarter.
Over the last two years, approximately $68 million or roughly half of our cumulative free cash flow has been returned to shareholders in the form of dividends and share repurchases.
We ended the quarter with approximately $61 million in cash the slight decrease from the $64 million cash balance at the end of the second quarter was primarily due to a smaller amount of cash generated coming off the industry activity trough combined with a payment of our quarterly dividend.
Turning to our outlook as Bill mentioned, we anticipate activity can be flat to up modestly in the third quarter as many operators continue to complete wells in their inventory and could decrease activity as we approach the holidays.
We anticipate some operating expense increase as well have a full quarter of some of the personnel and other expenses added late during the third quarter and we continue to expect SGN aid to run at approximately $4 million.
We also expect to remain discipline on capital spending we are lowering our guidance for capital spending for the full year 2020 to the low end of our guidance range at approximately $5 million.
As we think about our future more broadly we believe slashed is uniquely positioned to take advantage of many opportunities we have a low cost structure no debt and excess cash in the balance sheet, many R&D opportunities and we pay a dividend.
We will continue to opportunistically and thoughtfully evaluate both organic and inorganic growth opportunities and remain committed to returning cash to our shareholders.
With that we'd be happy to take your questions.
Well now begin the question and answer session.
Yes. Good question you May proceed Star then one on your Touchtone phone.
Using a speakerphone please pick up your handset before pressing the keys.
Withdraw your question. Please press Star then too.
This time, we'll pause momentarily to assemble the roster.
First question comes from Georgia, O'leary with TPH <unk> Company. Please go ahead.
Morning Delmonico.
Enjoy direction.
Just <unk> with accurate system count up 70% during the quarter, which was quite impressive bill your comment that you're seeing or record system volumes that screen intriguing to me I'm. Just curious if you could frame how much sand is moving through your systems today from from a throughput standpoint and.
Maybe give us an historical context as to how that's changed over time and just tell us what that implies about system efficiency, maybe versus the competition or some other metrics that you guys track.
Okay Catalina, yes.
Yes, George I'll jump on that one yeah. It's a great point I think in their early days, we identified sand intensity going up as as a pretty significant trend and obviously, that's driven the underlying growth in our business, but we continue to see more of it every day the notion of the time of Fracs that are going on today.
The high grading of the Frac crews that are operating today. We went from 350 400, Frac crews 200 to 120 Frac crews working today. So every crew is more efficient better trained equipments being taken care of so the pump pump hours per day, just keep going up.
So where does that translate for our business is in into throughput into our systems. So.
For the most part we rent our equipment and so our customers pay a fixed cost to run our equipment. So every every time they increase their throughput rate they are actually paying less for our equipment on a dollar per ton equivalent basis, and so we did see roughly a 70% increase in the number of fully utilized systems deployed.
But I'd say when we look at the actual total throughput that went through our systems, it's going to be higher in the quarter than the 70% you know roughly anywhere from call it 20% to 40% more loads or volumes of sand likely went through our systems.
In the quarter versus the second quarter clearly in the second quarter, we saw people slow down they're intensities and just try to make it through what was obviously a very difficult quarter for everyone. But we are seeing we are seeing volumes go up on a daily basis in each of our systems and the big value that we provide is.
Is a large buffer directly at the blender in a very reliable system, that's been tested and proven to work very well and a very simple process sand gets loaded into the silos and that's effectively.
Gravity fed into the blender with the assistance of a couple of notes and then further from that.
As this intense he keeps going up we've driven significant automation into the operation of the system. Historically, you would have somebody that physically operated the system looking into the blender Hopper and we've automated that through our auto Hopper system that we've talked about in the past and what we're seeing with the all hopper system.
As a significant ramp up in adoption among our clients.
During these times people are always looking for ways to save more money reduce people on location make it safer et cetera, and so we have customers running our system from the data van and so as we see trends going forward, we see fewer people and we see intensity continues to go up and technologies like Solaris is auto Hopper and other things we're working on I think we will.
Really proved to be valuable to both operators as well as pumpers.
Yeah, I'd add a little bit that George So we did see an increase in the.
I I wouldn't call. It a complete re bundling, but the last mile solution or are they actually handle the sand and do it on a dollar per ton basis, and then those specific instances we saw a fairly significant on the high end of calls range a increase of sand throughput per set a silo. So no. The throughput overall, we think from an industry perspective was up significantly.
We feel our systems above 70%.
Okay. That's very helpful framing. Thank you both and then.
The fourth quarter outlook commentary just curious if that's more predicated on discussions with customers just given that comment clearly ended the quarter high they started that you're saying you're still above the average system count.
Or that you had in the third quarter as we sit here today and is that flat to modestly up more more predicated on customer discussions or just hey, we typically see seasonality, let's throw little dose of conservatism in the guidance and just be prudent and practical.
Or you know and have crude oil prices recent crude oil prices I like that also factored end just trying to think through.
And how you guys have thought about that and then sorry to ask a bunch of questions in one but could you define modest for US just so we have some sense of what that upper bound might be.
Well I think in Georgia, you you hit the nail it we just don't know going into December what things look like obviously, we have an election coming up we have prices with good pretty fairly extreme volatility over the last few weeks I mean, we are seeing you know through October significantly better than a quarter.
And and we just don't know what we say in December there's no specific customers that said, where we're going to take a holiday through through Christmas and kind of conversations happening at this point.
So Carl you're going to add to that.
I think that's that's right.
Okay. That's super helpful. And then the cash war chest that you guys have built up is a is very impressive and clearly you mentioned in your opening remarks, you want to keep returning excess cash to shareholders. How do you think about priorities for that cash balance above and beyond the dividend.
Is it kind of that given all the uncertainty for now kind of hunker down and play defense or is there anything on the op Ed side that you guys are thinking about with respect to that cash.
You know George.
Yeah go ahead.
I would just say we were always thinking about offense we.
We view the growth of this business in the downturn of 14 15 that was that was driven by solid activity and we played offense and developing new technologies and we're continuing to do that today. So you know our R&D and dollars are going into enhancing our current offering as well as developing further offerings.
That can continue to play to the themes that we've we've benefited from from an automation standpoint from a improvement in equipment and technology to be fit for today's Frac, we're pretty uniquely positioned where we're sitting behind you know roughly 35 plus percent of the blenders currently working in the.
You asked today, so we see a lot and so that just gives us a unique perspective and so we've got you know one of the areas. We've actually increased from a personnel standpoint during the downturn has been on the engineering front. So we believe that dollars going into prudent R&D investments make sense now you can see in the capex numbers that we're not spending a ton of money.
Doing it but we are putting a lot on the whiteboard.
Having a lot of discussions with customers to make sure that we're.
We're we're at the forefront of technology development, where we really sit at the core which is what we refer to as the backside. So the low pressure side of the well site, where water sand chemicals are all coming together before they hit the pumps.
So that that's something we're going to continue to pursue a and then from an M&A perspective obvious.
Obviously, we've seen a tremendous amount of consolidation as of late in the upstream world I'm, a little bit in the services side and where we look for for opportunities is where we think we can do something a little bit different whether it's integrating with the software that we alluded to in the data that we alluded to earlier in the prepared remarks or something that.
Really fits uniquely with with what we have so we're being very cautious and we have been we've only really done one on M&A transaction in the last couple of years, which is very modest, but we've got our eyes wide open.
Thanks, very much for the color.
Thank you next question comes from Jacob Lundberg of Credit Suisse. Please go ahead.
Hey, good morning, guys. Thanks for taking the question I wanted to start off if you could just touch on any changes you've seen in the competitive landscape, obviously been a pretty volatile environment. The last couple of quarters.
No.
No.
How do you how do you expect ongoing M.P. consolidation to affect your business or how has that so far and then call on your comments earlier I think I heard you say that you guys are sitting behind 35% plus a blenders, maybe reading a little too much into it but I think the normal commentary do you guys have said is like around.
Third share.
Summit, maybe implies up a little bit do you think you've been gaining share or just mix shift.
Well, Jack I hate to say it but I think you asked three different questions there I'm not [laughter].
One of the <unk> Yeah working backwards you know 35% was is you know its ranges every day inside I wouldn't read too much into that but I think you know from it goes back to your first question, which is what is.
Going on in our space in terms of a competitive standpoint, we've seen several of the same companies go through restructuring process. The majority of them have been chapter 11, so they're they're coming they're coming back around with a less debt on their balance sheet or no debt on our balance sheet. So that's gone on we haven't seen any new entrant.
It's really a material amount of late and where I think where we've got the edge is we've got the ability were were just focused on this really the backside as I talked about we're not running at another business alongside of it. So we've been able to continue to invest R&D dollars to continue to differentiate and add to the offerings I think.
That's kind of where the competitive landscape sits we haven't seen any consolidation there at this point of significance silk, obviously picked up the arrows up business last year early this year.
So that's kind of where that sits and then from an M. P. Consolidation standpoint, you know, it's it's always a question of.
Who do you work for today and are they being acquired are they're acquiring we work for such a large diversified group of folks that we're always going to have some some wins there and some potential losses, there and sometimes it's just neutral and so when we kind of look at the landscape of whats happened transpire Oh.
Sure I'd say the last.
Two months in the M&A standpoint from operators.
Our from the piece I'd call it neutral really.
Okay.
And then as a follow up I'll I'll try and keep it to just just one any any color on a working capital efforts from from Threeq you guys touched on it in the prepared remarks, but it's obviously notable to see working capital as a slight source of cash in a quarter. When you grew revenues as much as you as you did on any any comments there.
Were particularly interested in kind of the sustainability of where we're sitting today on a on a on a cash conversion cycle basis or any any other metric you guys used to judge a working capital would be curious on your thoughts around sustainability at current levels.
Yeah, well certainly in the second quarter, we saw significant unwind in our accounts receivable balance significant efforts to collect there more of that in the third quarter increment of working capital intensity standpoint, we're not going to be buying a bunch of inventory is activity stands up ER as activity increases rather.
We've got our inventory is the sand and chemicals systems that are sitting ready to go to work today. So there isn't a ton of working capital build associated with growing our business clearly the accounts receivable part of our business will will grow but nothing of significance.
Okay. Appreciate I appreciate the color. Thanks.
Thank you the next question.
Comes from Stephen Gengaro of Stifel. Please go ahead.
Thanks, and good morning, gentlemen.
Works Oh.
A lot has been I've been asked here, but there's there's two things that I was thinking about I was curious if you could address the first is it.
In a world where lets say were in 2022, and you've had more consolidation on the PC side, there's been some frac companies that have either consolidated or go away in or is there sort of fewer and larger and he's on both sides of the business.
How does that affect your.
Well I think we're already sitting at a pretty significant sizable position in in our space and what we do so I think we're we're already have significant scale.
We've been successful at being an independent provider to both operators and pressure Pumpers and so you know some healthy balance of large consolidated pressure pumpers large consolidated operators, but with some independent service companies that can provide.
Provide differentiated technology that can help keep everybody I'm sort of playing fair I think is probably a pretty healthy piece to have into the market clearly if we see.
A lower for longer activity level in the U.S. and indeed, San storage market, it's likely that you'll see either.
Either consolidations.
Consolidation through transactions or consolidation through attrition in the market, we're clearly seeing that in the pressure pumping side and so we would expect to see something similar in the sand management side.
Thank you and then.
The other question is is when you when you look at.
The revenue in the quarter and I I'm pretty sure that you think you're just in your remarks I missed the beginning but there's a.
Our revenue growth is faster than the deployed systems growth and I think a lot of that is sort of transportation related revenue.
[music].
Correct is there any is there any thoughts on on capturing out internally is it too capital intensive.
Taking the cash you have you you suggested that it's it's not a business you want to be in his or is that continued to be the case. It is there.
Are there any bottlenecks to not only get it just.
I know you've addressed it because it is a question I get from some investors I figured I'd ask you all on the call.
It's a question that we ask ourselves a frequently do we own trucks or do we just partner with folks that run trucks better than we do and I think we continually come back to the answer that were good at what we do at the well site. We're good at making that equipment better or not you know geared up and we're not experts at running truckloads, a sand around how we manage that we manage the fleet.
In the last mile business, and we've beefed up that organization to the point, where we do think its profitable and it makes sense and at this point. Our view is that it's not time for us to own a trucking company be successful, but what we do for our customers.
Oh, great. Thanks, and then just one final one any any update on the chemical side I know, it's a it's a slow market. These days, but any update on any progress traction outlook there.
Yeah, we had a system working with the customer throughout the third quarter I'm very happy with the results that that customer is probably got work kicking off latter half of the fourth quarter. So we expect to get something back out there and today, we have a chemical system working for another customer. So yeah, we still feel good about it as Weve discussed.
The value proposition from an operational standpoint from a logistic standpoint is very clear.
And ultimately we do feel like we will get to a point, where we get more of them deployed but just what I like to always say is we've got.
Several of them in the inventory today ready to go and doesn't require incremental capital to put them out.
Okay, great. Thank you gentlemen.
Thanks. Thanks.
Thank you. The next question comes from John Hunter Cowen. Please go ahead.
Hey, good morning, Bill and Kyle.
Morning, John.
So I I just had kind of a question about.
Your outlook for profitability I guess your margin per system. It seems like with flat activity. Your margin per system would be kind of flattish I guess on the fourth quarter or because you did note some costs coming back to kind of wait or in Fourq here. So just curious how you're thinking of a profitable.
Profitability there.
It's obviously, a moving target as activity goes up we will have some additional costs that come through but I think where where we came out in the third quarter as far as the profitability per system. If you will I think thats, probably a good good number to be using here as we talk about a.
A flat to modest outlook for the fourth quarter.
Got it.
Okay, and then you know the.
The press release and I guess your prepared comments note some cautious optimism about activity recovery on 2021.
Is that based on you know your customer conversations today do you see customers talking about adding systems early in the first quarter and then do you think you.
You know some of that maybe dial back a little bit given what the commodity prices down.
Well, it's I think certainly going Oh go ahead bill.
David It's you know it will float with the commodity price somewhat but but we have had specific conversations with customers that they believe they're going to add back systems in the <unk> and the <unk>.
24 warrant.
We're active in the gas basins as well as the oil basin. So there is a level of of gas activity in the Marcellus and Haynesville that we will we will see and I think we see that stabilizing or as well or growing. So I think we're cautiously optimistic but most conversations we have about next year or that we will see but you know an uptick in that.
Pivoting.
Great I appreciate it thanks, I'll turn it back.
Thank you. The next question comes from Ian Macpherson of Simmons. Please go ahead.
Good morning, Bill Kyle you just touched on the first thing I wanted to ask about it certainly good to have some basin diversity right now and we've had so much divergence recently with Sky and gas do you think build there is.
A material amount of upside price elasticity with with gas directed.
Activity too to offset the crude weakness right now or do you think that oil is oil activity is more commodity price sensitive in general than the gas basins are.
Well I think it's it is more it is going to be a little more volatile the gas prices have been moving its moved up some it's moved down some I think the magnitude of lids moves hasn't been quite as volatile as oil and we anticipate it being stay well I think you will not if oil stays in 30 and gas goes to three you will see a net loss of activity next year.
You're not the gas will not make up for the significant down a downdraft in crude price.
Okay.
This has also been sort of.
He's done a little bit in prior questions, but really I think what.
What I wanted to ask a little more bluntly with regard to the consolidating upstream sector is.
Where.
Do you have a strategic view of where your 30 33, 35% share should go is it something that you plan towards is it something that you you can plan towards with with the way your your marketing efforts are.
Structured along within the team or or do you think that you need to.
Take what the market gives you as the market evolves.
Well I think we we we really don't look at market share as our goal. Our goal is customers you know on a single one off basis, whether it's direct to operators, whether its director pressure pumpers and some combination of both.
That we go after and convincing them that the value that we add to their operations. You know is significant and worth worth the effort. So the market share is really a fall out of the math of let's go get customers and we can demonstrate that we're going to be a reliable provider of services for them and it's going improve their operations and we go out of them one at a time and.
And that's that's really how we fundamentally approach it.
Understood. Thank you Bill.
Thank you next question comes from Christopher <unk> of Wells Fargo. Please go ahead.
Thanks, Good morning, So just to check the box on on pricing it looks like it's pretty much on track pretty stable versus the prior quarter. Obviously I think you had the same price books in 2017, and a bit of a concession in the first quarter, but yeah. Just just to confirm any shifts going forward and then do you expect any impact I kind of read.
Late into the.
M&A on the customer side related to more higher quantity discounts going forward just curious what your view is there.
Yeah, I think the pricing we saw in the third quarter is probably roughly where we see the mix coming out in the fourth quarter. Its it is driven you know as a function of mix not only price so got to keep that in mind. It multiple multiple variables and then from a consolidation standpoint, I don't that we're not forecasting any reduction in.
Rates do you do higher.
Peers, if you will in the pricing matrix.
Matrix.
Okay. Thanks, and then second question do.
Do you have any technology projects on the horizon or other kind of build outs or maintenance that could drive higher run rate Capex and 21 or should we assume that it's going to stay pretty close to these levels going forward.
I think from a maintenance standpoint now there's there's no you know deferred maintenance that would be associated with ramping up the systems of any significant magnitude.
And from a technology standpoint, yes, I mean, we are constantly working on new technologies and if we develop something that's got and eat home that provides good economic return to us and more important and just as important good economic return for our customers. We we feel comfortable in deploying capital and that there's there's nothing today that's coming.
So, but we've got stuff that you get tested in the field and the third quarter and will have further testing in the fourth quarter. So we're constantly out trying to figure out new ways to to grow.
Okay, well with that in mind, you get maybe a range.
It could range for Capex next year, but again.
No I don't I don't think we're going to give any guidance on that at this point, but.
But yeah, I think where we are from a maintenance standpoint, where we were this year is probably a fair number to be here.
Great. Thank you.
Thank you again, if you have a question. Please press Star then one.
Next we have a follow up from Stephen Gengaro of Stifel. Please go ahead.
Hi, Thanks for taking more and more.
Just quickly on the sand mitigate dust mitigation side, it's a topic that's come up recently again I know the Osha regulations or they think its June of next year.
How weird is the issue in general and.
How is the is your solution.
Better or worse than then the containers.
So we really have two points of of transfer of sand right, you're taking it from a truck and then when it goes either into the silo or from the box. It goes into a stack and then from that unit.
Into the Blender Hopper so the the first piece the movement of saying from a truck into the silo or movement of sand from a box to stored box, there's really no and mission. If you will we designed our system. Many years ago to address that we've got very large dust collectors that sits at the top of it.
Our Silas defines our collected and then they're dropped back into the silo and ultimately pump downhole.
Where do you have an exchange is when the sand leaves our system and goes into the Blender Hopper, which typically is in open container with or as an open a piece of equipment that is exposed to wind could be exposed to rein in.
And what we've done with the auto Hopper system is weve eliminated the need to keep that piece of equipment open historically it was kept open because people physically would look into the hopper to see what the level was and they would increase or decrease the rate of sand based on the level in the hopper and by using Autohop are we actually use.
The consumption rate within the blender to determine how much sand, we're going to deliver into the hopper. So you no longer need anyone there. So what that allows you to do is to enclose the one piece of clear exposure, which is in the hopper at the blender. So it's in a piece of equipment. That's generally controlled by the the pressure pumper and with our.
Technology, what we've been able to do is in close that area, which ultimately is is the fix.
Right, but do you think you Claire.
Yeah, and then to be clear you know, it's the regulations have been known for quite some time and we have been very focused on it and.
And working with our customers and collaboration to make it happen.
Thank you.
Thank you next question, it's running things a B. Riley Securities. Please go ahead.
Hey, good morning, guys.
Morning.
Thanks for all the color so far I guess, just one more for me so commodity prices will obviously play a role but he doesn't have the downturn. We've already had this year you think it's plausible to say that the normal holiday seasonality might not be as pronounced this year.
Well not in recent moves here.
It's certainly plausible and we certainly hope that that's the case, but you just got to plan or you know what what has been a historical trend over the last few years.
Got it thanks guys.
Thank you. This concludes our question answer session [laughter] bought like the time the conference back over to Mr. bills aren't there for closing remarks.
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