Q4 2020 NCS Multistage Holdings Inc Earnings Call
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Good morning, ladies and gentlemen, and welcome to the fourth quarter 2020, and see a smooth line speeds earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time if anyone.
Should require assistance during the conference. Please press Star then zero on your Touchtone telephone.
A reminder, this conference call is being recorded I would now like to turn the conference on working through your house, Mr. Ryan Hummer CFO you may begin.
Yes.
Thank you Jerome and thank you for joining NCS multi stages fourth quarter and full year 2020 conference call. Our call today will be led by our CEO, Robert Nipper and I will also provide comments.
Before we begin today's call we would like to caution listeners that some of the statements that will be made on this call could be forward looking and to the extent that our remarks today contain information other than historical information. Please note that we're relying on the safe harbor protections afforded by federal law and such.
Such forward looking statements may include comments regarding our future expectations for financial results and business operations and are subject to known and unknown risks and uncertainties, including with respect to the COVID-19 pandemic and its impact on the global economy oil demand and our company.
I'd like to refer you to our press release issued last night, along with other public filings made from time to time with the SEC that outline those risks.
I also need to point out that and today's conference call. We refer to adjusted EBITDA free cash flow and free cash flow less distributions to noncontrolling interest as well as net working capital, which are all non-GAAP financial measures. We use these measures because they allow us to compare performance consistently over various periods without regard to costs associated with our current cash.
Capital structure and in a manner that we believe better reflects our operating performance.
Our press release and the updated Investor presentation posted yesterday, which are both available on our website NCS multistage dot com provide reconciliations of these non-GAAP financial measures to the nearest GAAP financial measure.
Ill now turn the call over to Robert.
Thanks, Brian and welcome to our investors analysts and employees joining our fourth quarter 2020 earnings conference call I hope that everyone listening today is healthy and safe.
I'll review some of our key accomplishments during 2020 review our strategic priorities for 2021 and briefly discuss the outlook for each of the U S Canadian and international markets.
After that Brian will discuss our fourth quarter results in more detail and speak to our guidance for the upcoming quarter I will then provide closing remarks.
First I want to thank our employees and it's through the hard work dedication and ingenuity of our people and we were able to navigate the challenging conditions and that we faced during 2020 and it takes the effort of the entire team to position us to achieve our near and long term objectives.
We continue to help our customers optimize their operations and maximize the value of their assets by bringing them on efficiency, enabling technologies supported by our service capabilities.
Our focused product and service offerings.
Delivered tangible value to our customers and key examples from 2020 and early 2020 include the following.
Within fracturing systems, we recently set a record for NCS, completing a 250 stage well in the Montney and a single tool run utilizing our ship Frac close method to optimize profit placement. This was part of a three well pad with over 600 sleeves, and which we helped our customer precisely place 99 five per.
And on the planned proppant volume.
Our terrorists leaves for waterflood applications and allow for greater control of water injection and therefore sweep efficiency.
Both of these products have begun to increase and Canada recently, we are actively working to expand the product line.
Our purple seal frac plugs from repeat precision per box customers with efficiencies and pump down and drill out times, while our factory assemble purple seal express system that combines our frac plug with a setting tool reducing on site HFC risk during plug and perf operations.
We have developed a new treasurer deployment system, which is optimized for sample frac operations, allowing us to provide our customers with valuable information and these highly efficient completions.
We've also seen continued uptake of our new value oriented tracer diagnostics offering that removes personnel from a location and reduces the overall cost of wellbore clearance diagnostics.
Within well construction, our airlock system provides our customers with greater assurance of land and casing and extended reach laterals optimizing field development cost.
The technology can also reduce casing running time, providing a net savings during the customer.
We had our first airlock system installations, and Saudi Arabia, and 2020, and we've been successful and bundling airlocks systems with other well construction products and North America.
We provided both sliding sleeves, and tracers and international geothermal test with deeper energy production Corp. During the fourth quarter and are excited to be partnering with them. This work is part of deeper on this project to develop a 20 megawatt geothermal power facility and southern Saskatchewan and.
Those of US and Texas can appreciate this is fully winterized based on low power.
While our revenue earned from the applications that support renewable energy and electrification initiatives are small at this point, we are exploring ways to utilize our existing technology and research and development capabilities to participate and opportunities serving the energy transition thing.
We deliver all our products and services through and exceptional and highly trained field operations team and support our customers' operations, we operating a safe and efficient manner and all we do with our commitment to safety and extends to our employees and our customers.
We finished 2020 with no recordable incidents and have continued that record into 2021.
While activity levels were lower our employees faced new challenges such as closing down operations consolidating facilities and all of the other challenges related to working in the midst of a global pandemic I'm very proud of the entire team for staying focused on working safely during this time.
Another significant achievement for the team was that we recently passed our annual ISO quality audit without a single recommendation or finding this is almost unheard of and speaks not only to the dedication and focus that the organization has on safety and best practices, but to the quality of our systems and people as well.
2020 was a challenging year for us.
And we're not alone in that regard.
Our team rose to the occasion to meet the challenge, we made hard choices that led to material reduction and our workforce and changes and our organizational structure and our supply chain we.
We closed two field locations and relocated our U S Assembly operations to better align with supply chain partners, we were able to reduce our SG&A expense in 2020 over $29 million or 33% as compared to 2019 and expected SG&A will decline further in 2021.
And 2020, we reduced our gross capital expenditures to approximately $2 million and generated over $1 million and asset sale proceeds and reducing our net capex to $1 million.
We also took steps to enhance our liquidity, including amending our revolving credit facility. We ended 2020 with a stronger balance sheet and we had at the end of 2019 and Christian our cash balance by over $4 million, while reducing debt by over $7 million, resulting in a net cash position of $9 8 million at the end of the year.
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One final highlight for the fourth quarter and for 2020 was a settlement.
And final court judgment related to our historical litigation with Diamondback as discussed and the last quarter during the fourth quarter repeat precision received over $23 million and cash and was also granted ownership of the patent related to our disposable setting tool.
As a reminder, NCS invested approximately $16 million and repeat precision through our initial investment and the joint venture and 2017 and our subsequent earn out payment in 2019.
Through the end of December of 2020, NCS has received nearly $26 million and distributions from our peak, while still retaining our 50% ownership position. It has been a great investment for us.
Turning now to 2021, our strategic priorities for the year are straightforward.
And as a technology company, we will continue to bring tangible value to our customers through our differentiated product and service offering.
And this we aim to commercialize new products that will facilitate both near term opportunities and position us for long term growth within oil and gas industry and serve and energy markets more broadly.
We look forward to discussing some of the new products. We are working on as they are proven out during field trials and launched commercially.
Second we will continue to strive to have revenue performance that exceeds underlying industry activity trends and each of the U S, Canada and international markets.
And we're focused on growing our international business International increased from 8% to 11% of our total revenue last year, and we expect international revenue to grow as a percentage of our total revenue again in 2021.
And finally, we aim to generate free cash flow and 2021, our capital light business model facilitates free cash flow generation through our ability to generate free cash flow and 2021 will depend on the rate of growth and the business through the year and the resulting working capital needs to support it.
I will now briefly review the market environment, and our current strategies and each of our geographic markets, starting with Canada. Our current expectation for full year industry activity is flat to modestly lower drilling activity and the first quarter as increased seasonally as expected from the fourth quarter of 2020, but millions more than 30 per.
<unk> lower than last year's first quarter.
We believe that we are well positioned to grow our revenue in Canada, and 2021 as compared to 2020, despite our expectation for slightly lower levels of industry activity.
Our sales and business development team and Canada is exceptional and has remained highly engaged with our customers throughout the pandemic.
They are delivering our strategies and Canada to cross sell our products to existing fracturing systems customers commercialize new products and grow our market share and underpenetrated regions, including the Montney.
These efforts showed up and our fourth quarter 2020 Canadian results with a sequential revenue increase of 279%.
Net increase is from an artificially low base influence by a later than normal emergence from spring breakup and 2020, but the momentum has carried into early 2021.
The performance is a team effort and we are.
Developing the right products, leveraging our technology center and our sales and operations teams are working seamlessly and to deliver the kind of results I discussed earlier for our customers.
And the U S. Our current expectation is that industry capital spending will be flat to 10% lower and in 2021 and then in 2020.
With that drilling and completion activity will increase on a sequential basis as we progress through the year.
We currently expect that our U S revenue will be lower and the first quarter of 2021 and in the fourth quarter of 2020, primarily related to decreasing activity at repeat precision.
Repeat loss of market share with existing customers and late 2020, as we've seen competitors, reducing price into what we believe to be unsustainable levels, especially going forward. If there is continued pressure on raw material prices. During the first quarter. We've already gained some share back due to performance issues experienced by our competitors and we were caught.
Absent that we will continue to increase our market share.
Our products and services deliver value beyond the sales price and customers are recognizing that.
While we leave our efficient manufacturing and supply chain and would allow us to compete on price with even the most aggressive competitors, which used to balance fair pricing with world class products and service delivery for our customers. We will continue to monitor the market and make decisions accordingly.
Late in the fourth quarter and into the first quarter repeat also experienced growing pains related to our new plug design that we had introduced performance for the new design, while robust was below the high standards that we hold ourselves to and we've since modified the design and have seen the performance improvements we expected.
We've since gained work with new customers and are participating and increasing activity with existing customers.
Revenue has been improving as we progress through the first quarter, though with our high exposure to the Permian basin through our high exposure to the Permian Basin, we were materially impacted by disruptions from the recent winter storm, we expect that repeat we will return to sequential growth and the second quarter of 2021.
Outside of repeat the recent increase in commodity prices provide us with additional opportunities within our tracer diagnostics product line.
Which some customers view as more discretionary as well as our fracturing systems product line as many of the areas, where sliding sleeves and deliver clear benefits to our customers and the U S such as and the Central Basin platform and the powder River basin and have a breakeven oil price that is below current strip pricing and a populated with private operators, who have been adding activity in recent months.
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We believe the industry capital spending outside of North America will increase slightly in 2021 as compared to 2020, but that the increases will be weighted to the second half of the year with.
We continue to grow on international customer base with our international operations, representing a greater share of our overall business over time.
The North Sea remains an important market for us and we continue to grow our presence and the middle East.
Mentioned ourselves Air-lock systems, and Saudi Arabia earlier, and we also recently completed our first fracturing systems job and the UAE.
We have a successful contract and partnership in place and Oman and expect to participate in that market with additional product lines and with additional customers and 2021.
In addition activity has resumed and areas that were subject to extended COVID-19 related shutdowns, including Argentina and China.
While we believe we can outperform industry activity based on the value proposition with our products and services, we remain committed to cost discipline and supporting our gross margins and managing capital expenditures and SG&A.
We believe the investments and initiatives over the past several years, including our investment and repeat precision and our technology center provide us with opportunities for capital efficient growth.
And the increased cash flow free cash flow over time.
Maintaining our cost position is critical given the current industry environment.
And a very competitive competitive industry and one in which the activity levels for our customers continued to be depressed as compared to historical levels. We have taken the difficult steps to rightsize our operations for the current market environment, and we'll be ready to react if industry conditions change.
Ill now ask Ryan to discuss our financial results in more detail Brian.
Yes.
Thank you Robert.
As reported and our earnings release fourth quarter revenues were $27 $4 million, 47% lower than the prior year's fourth quarter on.
On a sequential basis revenue in the fourth quarter was 68% higher than revenue and the third quarter, reflecting the continued recovery in completions activity and the U S and the typical seasonal improvement in Canada we.
We delivered sequential revenue increases of 21% and the U S and 279% and Canada, partially offset by a 35% sequential decline internationally.
Full year revenue for 2020 of $107 million represented a 48% reduction as compared to 2019.
Gross profit, which we define as total revenue less total cost of sales, excluding depreciation and amortization expense was $11 7 million and the fourth quarter or <unk>, 43% of revenue. This compares to $26 1 million or 50% of revenue and the prior year's fourth quarter.
However for a sequential comparison, our gross profit was $6 1 million or <unk>, 37% of revenue and the third quarter, our gross margin.
Percentage increased sequentially, primarily due to the increase in revenue, which led to better absorption of fixed costs and the benefits from actions taken to rationalize our field service footprint and to improve our manufacturing efficiency.
Yes.
Selling general and administration administrative costs during the quarter were $10 $6 million and the fourth quarter, which was $11 $6 million or <unk>, 52% lower as compared to the prior year's fourth quarter, and also $1 $8 million lower than the third quarter of 2020.
On a reported SG&A includes share based compensation and certain nonrecurring expenses, including certain litigation costs and severance expenses.
And the fourth quarter, we reported a 0.9 million benefit related to litigation costs as approximately $1 6 million of net litigation expense was classified into a new line item, reflecting the gain on the settlement and connection with Diamondback.
Speaking to that we recorded a gain on patent infringement settlement of $25 $7 million during the fourth quarter, which reflects the cash and other assets received net of litigation costs and insurance proceeds.
Our adjusted EBITDA for the fourth quarter, which excludes the gain on patent infringement settlement was $3 million as compared to $8 3 million and the prior year's fourth quarter.
This represented an improvement of $5 $1 million as compared to the third quarter.
Full year adjusted EBITDA for 2020 was $2 2 million as compared to $28 $2 million for the full year 2019.
During the fourth quarter, our depreciation and amortization expenses $1 1 million.
And our net income attributable to Noncontrolling interest was $15 $15 $3 million during the quarter, reflecting profitability at repeat precision and.
And the fact that repeat was the direct beneficiary of the patent infringement settlement.
Turning now to cash flow items and the balance sheet.
Cash flow from operations for the fourth quarter was $26 million and our net capital expenditures for the fourth quarter were negative <unk> $1 million.
Reflecting asset sale proceeds in excess of purchases.
And as a result free cash flow for the quarter was $20 7 million and was $34 1 million for the full year.
At December 31, 2020, we had $15 5 million and cash and total debt of $5 8 million.
With our revolving credit facility Undrawn.
At December 31, our borrowing base under the credit facility was $11 million and repeat precision had access to over $9 million and borrowing capacity that is separate from our revolver.
<unk> had what net working capital of $54 6 million at December 31.
Turning now to a few points of guidance for the first quarter of 2021.
We currently expect first quarter total revenue to be roughly in line with the fourth quarter of 2020.
Based on the factors that Robert mentioned earlier, we expect our U S revenue and the first quarter to be between $6 $5 and $7 5 million.
We expect our international revenue and the first quarter to be between one and one $5 million.
And we currently expect that revenue and the first quarter, and Canada will increase to 19% to $25 million with the range, reflecting uncertainty as to the timing and onset of weather driven spring breakup.
With a decline in activity and pricing pressures and the U S. We currently expect our gross margin for the first quarter to be between 35% and 40%. This.
And this gross margin guidance also reflects inventory adjustments associated with the product redesign and Robert mentioned at repeat precision.
And we expect our reported SG&A inclusive of share based compensation and non recurring items to be between 12% and $13 2 million and the first quarter.
This includes approximately $2 $4 million and share based compensation and approximately $1 million and litigation expenses.
Our share based compensation and is expected to be slightly higher than in prior quarters, primarily due to our use of cash settled incentive awards, which are re measured quarterly and upon vesting and which reflects the and price and our increase and our share price since the end of 2020.
We expect our first quarter depreciation and amortization expense to be approximately $1 $1 million and our net interest expense to be zero point $2 million, which reflects primarily unused facility fees and the amortization of debt issuance costs given that we are undrawn on our revolver.
We expect our gross capital expenditures for 2021 to be between one and $2 million slightly below our gross capital expenditures of $2 2.002 million 20.
We continue to evaluate business opportunities that may support additional capital investment if we weren't and move forward with such opportunities. They would have attractive cash on cash return profiles and enhance the earning power of our business.
I'll now hand, it back to Robert for closing remarks.
I will now close with a couple of brief comments.
Our industry continues to face significant challenges, especially in North America as customer activity remains low with customers prioritizing flat production and free cash flow generation over production growth.
And I believe NCS is positioned to succeed in this environment, we deliver a focused portfolio of technologies that help our customers operate more efficiently and optimize the value of their assets.
We are pursuing accretive growth, including and international markets, which we expect to continue to grow as a percentage of our total revenue in 2021.
We are focused on maintaining the structural benefits from the cost reduction actions that we took during 2020 and our capital spending remains restrained.
We maintain a capital light business model, which facilitates free cash flow generation and is supported by a strong balance sheet.
We are prioritizing free cash flow and have the right capital structure and liquidity in place and.
Cash and investments and working capital are required to support the revenue growth.
And bringing innovations to our customers we have made substantial investments to develop our intellectual property and we continue to work to enforce and defend our intellectual property to ensure we make a proper return on those investments that we've made.
And with that operator, we'd like to take some questions now.
Ladies and gentlemen, if you have a question at this time. Please press star and then the number one key on your debt still telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Your first question comes from the line of Taylor and Archer.
And two door Pickering Holt your line is open.
Hey, Good morning, guys first question is on on the U S.
Q1 guidance would imply some some fairly meaningful top line.
Degradation and Q1 and it sounds like part of that to repeat precision.
And what you talked about and the prepared remarks, and I suspect part of that is the winter storm here. So I was just hoping you could give us a little bit more color and kind of parse through the moving pieces as to why the top line and.
And is expected to be down so much and Q1.
Yes, that's exactly right.
Primarily repeat precision and then.
We had lost a week because of the storms and our repeat revenue is primarily in the Permian. So it was.
Primarily repeat.
So there were a couple of things that I mentioned in the prepared remarks about repeat precision on the top line.
And.
It was it was just those two items on the pricing pressure and the fourth quarter increased actually from what we had seen.
And we were hopeful that pricing pressure had somewhat stabilized and the mid to late Q3 timeframe, but then as we came into Q4, we began to see competitors that were dropping price pretty extremely and and as I. Also said, we think that theres value beyond the sales price of our <unk>.
For our customers, while we keep and maintain a very close eye on what the pricing is and the marketplace, we and.
And to continue to work with customers and they appreciate the value. So we did lose some customers during the quarter now some of those customers, we worked with to bring them back online, but some of them, we haven't because theyre working at substantially lower prices or we have competitors that are.
Another thing that impacted that I've mentioned.
The impact of the first quarter and part of the fourth quarter was the new tool that we've come out with so we developed a new composite plug or a redesign if you will of our existing products and.
And we literally have thousands of brands and this tool and Phil and we began to notice over time.
Debt, we were having an issue and it was it was a fairly small percentage of the runs that we had but it's not something that we had experienced in the past and we virtually had zero of these types of events and they're real events for customers. So at that point, we had almost where you and the process of switching over from.
From our.
And free product the composite plug that we'd been running before to this new plug and so we had to make a pretty strong pivot and pull all of that inventory back in and ramp up manufacturing to get product of the previous product and into the field. So thats, mostly complete now and we're just building back and building back the customer base from that.
So it was a fairly significant hit.
And that we're going to be taken for the first quarter.
But we've already seen come back from that and as I said earlier.
Expect to continue the.
Sequential quarterly growth.
Precision and the second quarter.
Okay. That's very helpful. Thanks for that Robert maybe sticking with the U S.
It seems like the trend towards a more Simon <unk> is continuing to increase and I was wondering if you could maybe talk about how that impacts your business and I know you have a bunch of different.
Products, you offer and the U S market, but just at a high level, how that trend kind of impacts your business and then secondarily and the U S and I imagine coiled tubing pricing has got to be.
And somewhere near historic lows, right now, which I suspect is a good read through towards toward your fracturing solution. So just curious if you could kind of comment on where coiled tubing pricing is at and how that might impact your business and then secondarily.
The trend towards more simulcast <unk> and how that might impact your business and the U S moving forward.
Yes for some on Fracs.
That really affects our tracer product line and repeat precision to some extent.
For the Treasury product line.
What we what we did is it's a very.
Intensive operation. So it requires a number of things to happen at the same time on location, especially for for the furniture diagnostics product line. So we would have two to three people on location and at a time versus one and the past and.
And we're monitoring multiple flow streams to make sure that we're getting the right chemicals and the right right concentrations and the right stages.
And so we developed I think I've mentioned in the prepared remarks that we had developed.
Some technology to make that process easier and so that was very quickly developed.
And anticipation of our first job that we did and we put it out on the on the location and it's worked well.
What at what time will perhaps have the opportunity to provide force with tracer diagnostics and with composite plugs is that it's it's a more intensive revenue stream potentially so as more customers.
Switchover to <unk> Fracs, I mean, obviously, it's going to be.
More product sales and a shorter period of time, so we certainly look forward to that.
And then on your comments around coiled tubing pricing, yes, I've never seen CT tube and pricing as low as it is today.
It's just crazy at those prices and it is a bit of a tailwind for us, but it's not the primary tailwind for US right now on the oil prices are the primary tailwind as I mentioned earlier and.
And Ah.
$50 environment.
The areas that benefit the most from using pinpoint stimulation and sliding sleeves and the completions.
Or areas, where theres not much activity going on and so now as we find ourselves and in an environment that is bump and 60 pretty regularly.
We are seeing that activity pick up for multiple customers in multiple basins. So that's really the biggest tailwind for us is cash.
Bodily processes.
Understood and that answered my questions. So I'll turn it back thank you.
Thanks.
Your next question comes from the line of John Daniel with Daniel and Energy Partners. Your line is open.
Hey, guys. Thanks for putting me in.
Just one question related revenue.
Sure.
Were on the curve increases that you assume.
And just walk us through sort of the drivers.
And the magnitude of these increases.
The time lag between when the price will go back with customers growth sort of recoup some of that.
Yes, John and good morning.
So we haven't seen the material prices.
The increase and material prices affect us yet because we do buy in bulk so we're good for now and.
Potentially through the end of the year.
But we do expect to start seeing on market prices start to come up and in the back half of the year and if you just look at scrap prices right now.
I think they are at historical highs.
And so and then we have theres demand demand factors that are driving it a bit just based on supply shortages and and shutdowns around the world and some of the.
The plants are the mills, so for our business we.
We don't expect that we're going to get the impact from them.
Probably not this year, but we do expect to see that impact hit the industry before the end of the year and and some cases.
Speculation now and how much that is going to be but based on the conversations that we're having I mean, it could be and.
And the teens high teens.
The increase in some cases for some of these materials.
Got it and then I'll just slip one more and you noted on your tool that was introduced.
And sort of a 30000 foot question here, but like how risky.
Customer willingness.
To look at new products coming out of the down cycle or is there would you say there is are there instead and learning more or the radisson and they want to stick with what they know for now.
Well I can tell you that customers don't try things just because it's new technology anymore and.
I think thats been the case for a number of years. So it really depends on what the potential price for the technology is and how.
Good of a job that we do.
And creating that value proposition for the customers. So for instance, the new tool that I told you that we developed earlier that we had the hiccup on.
That one customers took it almost immediately.
On deposit plug.
It had less material in it and then other composite plugs and there was also the.
The hope that that being able to eliminate.
Something in the neighborhood of 15% to 25%.
The plug material and each plug wood, which speed up time between plugs and drill outs and things like that on.
Unfortunately that particular design didn't work the way, we would hope that it would and so we quickly got it out of the market, but there is there is a design between that one and our existing design there is an opportunity to get there.
Just to get back into market quickly, we made the decision not to develop that one let's just go back to what we had been doing with a couple of modifications to it.
And get back and the market, but customers are.
I would say for the most part if there's an opportunity to to become more economical for the customer the customers with new technology as long as they believe that they can manage the risk.
Right. Okay. Okay. I. Appreciate you guys. Let me get located on console you bet John Thanks.
Your next question comes from the line of Chris <unk> with Wells Fargo. Your line is open.
Thanks. Good morning, just wanted to check on the margins front I think you've got it to 35% to 40%.
And the first quarter just curious if you can describe what that might have been if it wasn't for the expected inventory adjustment and to help us think about what margins might get too and the second half of this year. Obviously there is some.
<unk> headwinds with Canada.
If you could just walk through some of those parts.
Sure. Chris This is Ryan I'd say, there are two factors really and thinking about the gross profit margin guide for Q1, Yes. There is one piece obviously associated with.
The inventory actions that we've taken the other piece has to do generally with with mix, so with with the repeat and the U S being a slightly lower part of.
The revenue and in the Q1 guide relative to Q4, actuals and with Canada being a slightly larger percentage.
Mix probably drives that.
Yes.
Call. It maybe two thirds one third of the difference between Q4 into Q1, and two thirds of which would be mix, one third of which would be around the specific actions with repeat and around the inventory.
So with that.
Certainly we do believe that as we get to the back half of the year.
That we can get back to a margin profile, that's kind of mid to high 40% as the.
And the U S business, particularly repeat continues to get on the sequential growth path and as we get to the summer.
Summer quarters, which are generally higher activity quarters for the international operations as well.
Okay. Thanks, that's helpful and then.
I'm just curious if you could talk about the backdrop right now for M&A and combinations.
Obviously when activity is shifting and a big way gets tricky, but.
What's the tone of discussions right now and the industry.
Well it is.
And I can tell you there are discussions now.
And the first half of 2020 will actually most of 2020, we were all.
Turning to our businesses trying to prop up our balance sheet take care of whenever we need to take care of but I think that.
For a large part of the industry has and Thats.
And then completed and now we're all starting to think about what needs to happen, which is consolidation and I don't think anybody could disagree that there's too many service companies out there to support the business that we're going to have going forward. So it's just a matter of finding the right opportunities to ones that makes sense and that can be accretive.
So.
I would expect to see those conversations continuing and start to see some activity around debt consolidation at some point this year.
Great. Thank you.
Thanks, Chris.
Again, ladies and gentlemen, if you have a question at this time. Please press star and then the number one key on your debt still telephone. If your question has been answered or you restarting lumpy remove yourself from day can you. Please press the pound key.
Again, ladies and gentlemen, if you have questions at this time. Please press Star then the number one key on your Touchstone telephone.
I'm showing no further question at this time I would like to turn the conference back to Robert Nipper.
Thank you operator on.
On behalf of our management team and our board and we'd like to thank everyone on the call today, including our shareholders and the research analysts who cover NCS, but especially our employees are truly appreciate the enormous effort that our people and putting in and the sacrifices made by everyone at NCS to support the company and each other through this challenging market environment, we continue to operate safely.
And with zero recordable incidents in 2020, and dust far and 2021 on.
Our team continues to provide excellent service to our customers and is developing new products and services that will enable our customers to be more successful. While early we're also pursuing opportunities to utilize our products and services in markets outside of oil and gas.
Our people have done a tremendous job on managing the many challenges that come from the impacts of the COVID-19 pandemic on their lives as well as <unk>.
And its impacts on our industry and company.
We are only as good as our people and I believe and we have the best team and the industry. We appreciate everyone's interest and NCS multistage and we look forward to talking again on our next quarterly earnings call and May. Thank you.
Okay.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.
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