Q2 2021 CES Energy Solutions Corp Earnings Call
[music].
Thank you for standing by this is the conference operator, welcome to the CES Energy Solutions Corp, second quarter 2021 results conference call and webcast.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask questions.
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I would now like turn the conference over to Tony I'll, Let you know Chief Financial Officer. Please go ahead.
Thank you very much Elaine and good morning, everyone and thank you for attending today's call I'd like to note that in our commentary today, there will be forward looking financial information and that our actual results may differ materially from the expected results due to various risk factors and assumptions.
Risk factors and assumptions are summarized in our second quarter MD&A and press release dated August 12, 2021, and in our Aif dated March 11.2021. In addition, certain financial measures that we will refer to today are not recognized under current general accepted accounting Paul.
<unk> and for a description and definition of these please see our fourth quarter M. DNA at this time I'd like to turn it over to Tom Simons, our president and CEO.
Thanks, Tony.
In the face of global supply chain pressure.
Canadian break breakup.
Certain customers resistance to pricing increases.
Yes, very pleased with our Q2 results.
There are only possible because of our loyal customers and even more dedicated employees.
On today's call, we'll provide our customary operations update.
For Canada U S and what I'm going to start calling all my life.
We'll speak plainly about capital allocation.
We will share our optimistic outlook for CES.
Within this operate within cash flow energy patch.
Tony will give a detailed financial update.
We'll take Q&A and then we'll wrap up the call.
I'm going to start with Canada.
So Canadian mud turned into positive EBITDA for Cvs to Q2.
From when I began as a mud engineers ninety-three in Canada, that's a huge accomplishment in this competitive market.
And Howard it Ken Zinger and his team keep doing it.
They do a deeper pad work saves days for the leading operators today.
Today, we have 58 jobs.
Peer can production chemical business in Canada through Q2.
Did very well for the company financially and operationally, but today faces input cost pressure.
In supply chain pressure.
Some capex is going to be spent in the second half of the year.
Will assist in relief some of those problems and help us meet our customers' needs, particularly in the oil sands.
We're getting nice contributions through the summer from fracking stem.
That business is variable low capex pitch sober of infrastructure, but its variable we remain completely committed strategically scientifically give these product lines throughout the us and North America.
Oh, and Vancouver say alcohol continues to both financially and strategically contribute to see yes.
Thanks, guys.
Clear continues scratching to keep its nose above water. It's been a long time since Justin started chirpy stepping on this problem is just.
These guys are keeping it up in a competitive market and we appreciate it.
I'll move on to the U S.
S delivered again.
Strong financial and market share, 20% market share and making money.
We're not chasing market share.
While we are strategic.
We're committed to margin, which translates to EBITDA.
Today, we have 83 jobs in the U S.
I'll move on to what I'm going to call Omar and light.
With substantial one year plus planning from intercompany people.
Yes has a solid project in Oman.
It's a resource or tight oil play its deep basked in our history with the customer is strong and built on mutual trust.
But a note of caution it's early days for this customer for any of this to matter oil needs to flow.
But we know how to do our part.
Possibly golf on this.
I've been a part of US myself I've been there and I believe IC business upside Percy S business lines beyond drilling fluids as well.
I'll now move on to Jacob catalyst in the U S.
Well, there's always they clip along with their quiet with very solid contribution.
Market strength is highest in the Permian, which includes Texas and new Mexico as Backstops. The business. We have additional very strong contributions in the walk throughs, which obviously includes the Bakken.
Did you guys can see California, Oklahoma throughout Texas.
We're working on other markets.
Overall J tin catalyst is a very key part of C S financially and strategically.
I'm going to try and save some of the Nitty gritty for Ace on these financial matters Tony.
Which is capital allocation.
But here are the headlines for me.
C E. S will continue to set off equity based comp comp grants with share buybacks in plain English, we're not going to dilute you to pay ourselves.
Well move onto the second bullet well.
We're very confident with industry Andrew.
And our place within it.
And thus we're proud to reinstate a dividend.
As a free cash flow generator within this sector.
Like those glory days with double the multiple we're now paying cold hard cash to all their equity.
With this very modest percent of free cash flow generation.
We believe the dividend is sustainable through cycles.
Well move onto the second bullet.
We will reduce our bond when we refinance it with.
With cash and liquidity, we expect to create within the context of this market.
And enjoy a four we refinance it in an appropriate time and why.
I'm now going to turn it over to the AC self Tony Tony Please let me share my outlook.
On the sector and our place in that before we go to Q&A.
Yeah.
We'll do Tom Thank you very much and thank you for the new indelible nickname.
So see us as second quarter results demonstrated strong revenues margins market share in surplus free cash flow generation underpinned by a focus on strategic investments and working capital and preservation of strong balance sheet and liquidity metrics in the second quarter C. S generated revenue of 250.
$4 million and adjusted EBITDAX of $32 million.
Representing a 12, 6% margin Q.
Q2 represented another consecutive quarter of strong financial performance with revenue EBITDAX and margins steadily improving from the depths of Twenty-twenty, while market share in the U S. Drilling fluids business has continued to March up nicely towards the 20% level from 13% a year ago.
Over this past year C. S has continued to consistently generate positive funds from operations, reaching levels of $23 million in Q2 and $27 million in Q1, while revenue in some divisions is actually approaching reaching distance of pre COVID-19 levels.
<unk> remains confident in its ability to continue to generate material surplus free cash flow amid an improving outlook and on August 12, the company's board of directors approved the reinstatement of its dividend on a quarterly basis. Accordingly C. S will pay a cash dividend of $1.06 per share on October 15th to.
Shareholders of record at the close of business on September 30th representing a dividend yield of over 4% on an annualized basis at yesterday's closing share price.
C. S is reinstated dividend returns additional value to shareholders represents a conservative payout ratio and preserves the strength of the companys balance sheet, while maintaining ample liquidity to fund capital allocation options, including potential growth initiatives.
As industry activity levels continued to improve in the quarter C. S remained disciplined on capital expenditures.
While retaining substantial liquidity and balance sheet strength, we exited the quarter with a net cash balance of $12 million compared to 18 million at the end of 'twenty 'twenty. The decrease in cash was.
It's driven primarily by investment in strategic inventory and by the repurchase of 6.8 million shares for $10.3 million or $1.50 per share under our end CIB program. Our current natura on her senior facilities approximately $3 million as a result of investments in working capital.
And the repurchase of approximately 700000 shares since June 30th.
C S. As Q2 revenue of $254 million represents an increase of $94 million or 59% from Q2.2020 and in line with $261 million in Q1 revenue generated in the U S was $175 million or just under 70% of total revenue for the company.
<unk> C. S continues to participate in the improved drilling environment in the U S.
As demonstrated by our market share of 20% for the quarter revenue generated in Canada was $78 million in the quarter versus $38 million, a year ago and $93 million in Q1, this stronger than expected sequential revenue level in the seasonally softer second quarter was the result, as Tom mentioned.
Of high activity levels in both our Canadian drilling fluids and production chemicals divisions.
And then see us in the same quarter achieved adjusted EBITDA of 32 million, which represents.
A significant increase from the $8 million a year ago and in line with 34 million generated in Q1.
Again, despite Q2 being a seasonally weaker quarter included in these results is a $3.1 million benefit recognized by C asked from the Canadian Federal Government Skus program adjusted EBITDA as a percentage of revenue in the quarter was 12, 6% representing a significant improvement from the five point.
1% recorded in Q2, 'twenty 'twenty as the company benefited from stronger competitive positioning increased drilling and production levels higher market share and the realization of efforts in 2020 to rightsize the business.
C. S has continued to maintain a prudent approach to capital spending through the quarter with net spending of $4.5 million, representing approximately one 8% of revenue. We will continue to adjust plans as Tom mentioned as required to support growth throughout divisions as industry conditions continue to improve.
During the year right now for 2020, one, we expect cash and cash capex to be up to $30 million of which $20 million is estimated as maintenance and $10 million growth. Our balance sheet continues to benefit from the attractive structuring and maturity schedules of our credit facility and senior notes we ended <unk>.
Q2 with $305 million in total debt net of cash comprised primarily of $288 million in senior notes, which which mature in October of 2024.
At June 30th we had a net cash balance of $12 million on our senior facility with a maximum available drive approximately 235 million CAD equivalent providing us with significant availability, we remain cautiously optimistic on our outlook for the remainder of 2021 and beyond.
'twenty 'twenty 'twenty 'twenty downturn and into the recovery period of the last few quarters C. S has consistently demonstrated its capex light and asset light decentralized business model, enabling generation of significant surplus free cash flow as.
As our customers increasingly regulate their business models to maintain spending within cash flows. We believe that <unk> will be able to leverage its established infrastructure business model and nimble customer oriented culture to deliver superior products and services to the industry.
In its core business, yes, we'll focus on profitable growth optimizing working capital developing or acquiring new technologies, and making strategic investments as required to position the business to capitalize on current and future opportunities.
Operator at this time I'd like to pass it back to Tom for a for a summary of his views on our outlook.
I'm going to say, what Ace Bailey said a lot less elegantly.
We like the new financial sustainable energy patch.
The sector does not need to rely on outside money anymore I.
Personally believe it.
Insulates industry from the political hatred.
But it's building on over here at C S Little Kid ourselves.
That's how it is now.
I believe we can make it because this places.
And Ron.
A group of ex private owners, who don't get themselves.
We built this company from 15 years ago.
It started with a chicken coop <unk>.
What stage mud chemicals to now have a $300 million of infrastructure assets rolling stocks of trucks.
Inventory that we turn fast enough to turn them into free cash flow, most importantly, real customers that pay.
And maybe most importantly, great training motivated employees.
But we know that treat properly and keep two crashes.
And I think a fabulous future.
So with that we're going to turn it over to Q&A.
And then after that we will wrap it up.
Thank you we will now begin the question and answer session.
Joining the question queue you May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.
You can take your phone please pickup your handset before pressing any key.
Jay Your question. Please press Star then two.
Our first question is from Michael Robertson with National Bank Financial. Please go ahead.
Hey, good morning, Tom and Tony Congrats on the strong CLARCOR and thank you for taking my questions.
Good morning.
Looks like another strong.
A strong quarter for our U S drilling fluids market share.
I assume some of those recent gains have been driven by customer mix and who is more active out there right now.
Wondering what youre seeing so far from a market share standpoint over the coming quarters, assuming activity levels continue.
Gradually pick up.
Oh I'm pretty you know it's interesting one of the well a couple of nuances I want to share with people, we do not $100 oil.
Because the customer will not pay for the input cost increases to any of the chemical companies no matter what any of the people with my job.
Out for public leathers, telling your salespeople to get that's not how the oilfield works they'll eat those letters salespeople will have to quit because they'll look like monkeys.
So we don't $100 oil because it'll screw the services, but the nuance is natural gas.
Making money for all of the customers. So we don't think the rig count in the U S is going to 800.
Because the customers are running businesses now not.
Trying to flood the market and sell their companies because there's no one to solve them too. So we're going to try and generate I think as an observer cashflow do what we just did give the money back to people and hope to catch a bit.
So we're going to benefit from the privates running rigs, we're going to benefit from a slow creep to the public's maybe inching the rig count but based on the results we just printed.
I don't think we need anything to change we're not looking to crank the dividend every quarter, we want to be a reliable payer with cash a reliable supplier really costs alone are reliable employer to people who want to slowly expand this business in a reliable way.
I like not only the bank money, because if theres another crash of a commodity in the world.
We're going to collect $100 million and be thoughtful with it because we don't know anybody any money.
And so that's all we're looking at is a business, we're not trying to go to 30% market share in the U S and not make money off the 10% and it's not the 10% that you won't make money on its the 20% you have that you'll destroy.
We know that from being private owners, that's the wisdom, we get from building. This company I'll, just say instead of a centralized businesses that hire people in seats to take over from things they bought but they chased off the older. So that's our competitive advantage. That's our business. It's why will no long.
Telling our competitors why do we have the work that they do kind of operations call them are never Gonna regime. That's why the call was short we have the work we need to keep it. So we can make money and give it to the people on this call.
Got it that's helpful color.
Do you do.
You'll be able to.
Most of the gains.
You know sort of picked up in recent quarters.
It's up to the customer if they won't let us make money.
Well, we might go to 18% but.
I don't think they can add days to their legs.
All the competitors can keep losing money.
I don't think the integrators will enable them.
We're not taking the work that are losing money, we went down from 22 to 'twenty because theres some customers.
And we're not paying our people they won't work if they don't get paid those differences in the U S and Canada for six years. It was risky to work in the oil patch in Canada and there was just no work. So there's a nuance there that you get from people with my job of calling out some of the customers and the D. L. B.
I don't know Michael we're going to do the best we can we're going to try and make money, but to try and meet the customers' needs. There's a reason we pushed into Oman, because baidu is trying to push the oilfield out of the U S. While he was demanding more oil is obviously talking out of both sides of his mouth, we can all see.
But we can't change it so they won't go both ways.
But natural gas is kind of a nice hedge for everyone. On this call we have south Texas revenue now, although we didnt have a year ago because of that and that's built into our results were not going to tell every one word is because our competitors are going to go chase. It we'll try and offer a product for 10 cents.
Your line item less because of the terrible on the week and that's how they get the work. So we're going to keep our cards close to the best try and give everyone better results keep the work.
We're not changing.
Fair enough.
Thanks.
Just switching gears.
The international opportunities.
Was wondering if you could provide a bit more color there, particularly in Oman.
I appreciate it's early days, but was interested in sort of what that operation would look like to better understand how it may serve as a platform for future opportunities in the middle East.
I think you should track down the customer.
And I ask them, but if they can make oil.
We hope to stick around and build off of it.
A big back story to it it's premature to say it because it might not happen, we don't give guidance.
If everyone's no one Lou for class 16 years in the market.
We try not to sell too much hope, but I've been over there.
I've been over there before other people have been over there we've been poking at those we either sponsor or as we call. It in the oilfield that will let US go over there and not start $20 million in the hole and build the fill the Greens and hope they come because they don't cause they know your song and they have you were there.
I want you just isn't that big blue, but at the end of the day.
If the oil companies can't loci oil flow.
We can't change that there won't be a platform. So it's too early to say and I'm not speaking on behalf of the customer they can speak for themselves.
Alright fair enough Paul listen I appreciate the color and thanks for taking my questions I'll turn it back.
Thanks, Michael.
The next question is from Josef Schachter with Schachter Energy Research. Please go ahead.
Good morning, Tom and Tony and congratulations on the quarter and also reinstating the dividend.
Two questions for me when you're talking to customers in Canada, and the states for business.
Business in now.
You know heading into Q4, and then Q1 are you getting much.
Increase our volumes did you see coming more jobs and how is the pricing discussions going in terms of starting to see some recovery of the cost increases or maybe expanding margins.
It's different in each country Joseph.
Customers I'd say I mean, you know as much as we do about this because you cover both sides E&P and service.
<unk>.
60%, 70% of their money I'll go back in the ground the rest, yes as a generalization.
Pay down debt pay a dividend pay variable.
But they've got task will come gas lots of soil hedges are falling off so cash flows going up. These places are slow moving money. Some of the big guys are pretending they're not energy producers now they're usually from Europe. So they're talking about a you know, let's say the play with both ways I want to be respectful.
Well, we work for them.
The work for them or solving the problems were better than the big guys that are centralized who can't figure it out on the rig.
Their ops people have figured that out finally.
So visibility, let's say, 60% of cash flow goes in the ground right, Canada is not in a position to.
You go to 250 drilling rigs.
Until some of the operators allow supply chain.
To let us pay people to take the risk to come back a little so this is not allocated to the case in the states.
Canada.
The rig crews are sold grew but we need 24 hour mud engineers, all the rigs that used to be able to go there for four hours to.
To keep the rig out of trouble mix the product get them three days later stuck in the hole.
It's changed we have to babysit the mix so the inventory keep them out of trouble, where literally carrying sacks, but we didn't used to.
Well, we have to pay the people more to take the risk to come back into the sector.
And we have certain operators that expect us to show up with a sharp pencil. Despite no shipping companies are turning the screw on the whole globe.
We tend to lose that.
That's why we don't $100 oil because they won't even let us pay people 300 Bucks a day more of that come back into a sector that has burdened the nimble and not through the sectors falls, but through boulos calls.
So we're trying to bridge that divide a lot of customers are working with the vendors. That's why we had a good quarter I wanted to be clear, we're very grateful to those customers. Although people with my job feel the same way that other services group some of the bigger places to let the supply chain guys.
Help them win so we can put a better person on that rig to keep the weight Corrado trouble or the sector is not going to 250 rigs. Despite the cash to put them to work because they don't want to get stuck in the hole and then what.
I'll need to accrue the rig so there's some nuances here Joseph we're gonna if we just keep putting this quarter up I'll be really happy.
Okay, I'm going to the international side are you sending people to Nigeria in Oman, but not building a base because you don't want to put you mentioned $20 million of capital that the customer has gone through over the barrel.
Do you or you're just finding people over with a with the product or.
How much of an in house are there where would the people be staged and Ah man.
At some point doesn't need a base.
Specifically, Nigeria as production chemicals, it's half of Molson breakers and half the other stops so it protects production.
Hmm.
No people.
It's sue cans out of Houston.
It's to a company that does the work on the ground, but competing against big integrated so there's they're competing against manufacturers they need a manufacturer to give them technical advice.
Shout out to our Chief Technology Officer. He went from scientists to BD took in his words.
It looks fast to you guys just took ever.
Ever in the background.
So way to go to Dave Horton.
We would have more product on the ground, except because of the shipping issues. There's a couple of sequins tied up in Houston zero people at risk zero capital at risk Joseph zero product at risk, it's elbow grease and we're all about working 24, seven silver cool with that.
As far as Oman, I personally was there a S people where their Canadian supply chain.
U S supply chain are actively doing Wilson, just so people understand their business.
Products from all over the world.
We finished it in North America, and sell it to North American operators, a north American operator.
In Oman, we will.
Working for them, we have in Oman.
Family that as infrastructure, there that we can work off of weak.
We can buy certain commodities at market, it's kind of a protective market.
Market price so is one.
<unk> kept everyone out by pricing them at 1.2 it.
It took for ever to get us to markets.
We're at market.
On the work.
I'm not talking about the play that's the customer's play not all play I can only talk about our parks and warn everyone. If there's no if they can't make the play works it's nothing.
So we are actively selling work we have one single person there who's already Omani.
I spent a bunch of time of a year. This year. So the two other aes people.
We believe in the play because we believe in the ability of the customer to find oil before it's out of the ground based on their income.
Credible success. So we're just going through what do they call cause that's Europe C. S forever and that we bet on the horses that win so that's the story.
One more for me M&A activity with some of the weaker competitors you know having financial difficulties and you have a strong balance sheet do you see potential of any smaller or medium sized tuck under across your platform.
Well they wanted to ascribe a bunch of value to making no money.
Well, we're not giving our valuable ways, so not really.
Okay.
Okay. That's it that's it for me, thanks, very much and again congratulations.
Nice to see the dividend again.
Thanks for sticking with the sector and the thoughtful questions.
Yeah.
The next question is from Matthew Weekes from I E capital markets. Please go ahead.
Good morning. Thank you for taking my questions I was just wondering first of all.
Can you provide a little bit of color on sort of the strength.
During the quarter, you know rig counts where were solid.
It was quite a good quarter there was was there.
Was it a material impact from the exports to Nigeria or on the revenue side, where there are some kind of input cost pass throughs to customers that that ended up being a really margin neutral in the outdoors.
What what was sort of the cause there.
International was immaterial financial.
It's more directional, but we want to share it didn't move the needle one little bit in fact, my airfare and hotel probably made us lose money not that I stayed at the Taj Mahal, but we didn't make any money just so everyone knows we havent made any money yet we haven't lost a bunch, but it wouldn't change anything.
Okay.
Okay. Thank you.
Any inflation pass throughs at all.
What we're trying to get them, but it's walkable.
The whole work whatever the government so.
Massive inflation everywhere and you can read the news the ships tied up outside of Los Angeles, I mean ocean freight.
It's seven or eight times to tie up the sea container than it was 15.18 months ago.
And every single supplier to every single sector.
Is not exempt premise because we're a manufacturer in North America, we are working hard to get around that but the storm in Houston.
Effected the oilfield.
It affected the ability to make certain products to treat certain chemistries I'm not telling anyone what they are here.
We're keeping up we're winning new business because work our supply chain people and ops people are doing an incredible job of balancing that and willing to work where competitors are falling down and that's all I'm, saying.
But it's.
Matthew it's tight it's very tough it's part of how we had a good quarter Theres no outliers idle state that are one offs, but in some businesses Theres always outliers, we're big enough to have them all the time.
We'll probably have one in Q3, that's up one what's down and they'll kind of wash out I've done. This a long time. That's all it is always going to go we're gonna have one grilling job. It takes lost circulation or a kick in a quarter. We don't know what's one it'll be that's why we carry inventory it'll get next sooner or later don't break it before it gets mixed.
Okay understood. Thank you for the commentary on that.
Just one more for me its just a confirmation I just wanted to confirm.
The drilling numbers that were mentioned earlier in the prepared remarks was it 58 jobs today in Canada and 83 in the U S is that correct.
Correct correct.
Okay. Thank you very much that's it for me I'll turn the call back.
Okay.
The next question is from Tom Monticello from <unk> capital markets. Please go ahead.
Hey, good morning, guys.
[noise].
Some of the I mean, most of the commentary on the call. So far has spoken to the resistance from customers to accept pricing increases and understanding that I guess the inflationary aspects of this up cycle are unprecedented.
You also have a tightening market from a supply demand perspective for services and I would assume that most of your competitors given their outwards dance around.
Maintaining margin profiles.
Would have a sort of similar you two pricing increases as yourselves. So do you think or is there any reason that you think that through the cycle as activity improves.
That your leverage over customers won't also improve.
Well I've done this since 93.
If you ever hear me say I have leverage over the customer put a bullet in meat.
Or my customer will it does not work like that ever if we ever have bad arrogance in here management should be fired by the board in one second we do not have leverage we work with their pleasure, we scratch and Claude and make this money that is our culture. It will.
Ever change.
Okay and in past calls you said you know you don't really need pricing increases you need you.
No no no.
No no no okay.
Our subs going up and Costless scratching and clawing to get it paid for that's why I don't mean to sound energy, we do not $100 oil.
Because it will eat everyone's lunch because people will barely let us pay someone that hasn't worked at six years in Canada, how do they convince their family to come back into this rocket knowing Trudeau wants people to drive electric cars places they can't even get to on a pay for gas.
To get elected.
How do they convince their family to go work on a drilling rig as a mud engineer.
Right.
They've got six years ago.
Loss.
And take out risk for their family. So the ask here that the D OBO printings.
Please let us pay the person what it takes to take the risk we're not ripping you off it's real.
The price increase we're not immune just because we make the molecule doesn't mean, we can make the input.
If oil is 100 box somehow on paper would be 70.
Okay understood I guess, Mike Mike.
Point around pricing I guess on the net basis, but.
What I was really trying to get at it was like when you look at that let's say.
You know pricing doesn't increase.
And you're able to get.
Similar question to what you're getting today on a net basis.
Do you think margins improve based on operating leverage you still see solid operating leverage in the business.
Well I hope I was very respectfully careful that we're not chasing market share.
So.
We hope we have customers that pay for results.
Not line item.
What they care about their case toll costs.
We think we do because we held 20%.
Which is pretty close to 22.
Just turnkey dividend back on so we believe it.
So we're just we're voting with their feet.
Okay got it but I mean.
<unk>.
Yeah.
But that's the answer.
Okay.
Yeah.
Okay.
What do you mean operating leverage like.
We're not chasing the haynesville to not make money in that 30 rigs and figure out somehow that's going to help like well look at the people that have the work and look at their results. They keep printing a huge loss how do they flipping that with more work that loses money.
<unk>.
The group of US running this place ran private businesses.
Your tax liquor socks when that happens.
Okay understood. Thanks, guys.
Once again, if you have a question. Please press Star then one.
Our next question is from Keith Mackey with RBC. Please go ahead.
Hey, good morning, and thanks for taking my question I, just just curious you mentioned Tom that you.
You may spend a bit more capital in the back of the back half of the year on some things that will work.
Strategically or just improve the business just curious if you could give us a bit more color on what that what that might be and how youre thinking about.
How about the decision to proceed or not.
It's been contemplated all your key it's inside the brackets, we have guided.
And we're not going to disclose the products for competitive reasons, but you won't get sticker shock later on the number.
Got it makes sense and just on on maintenance capital, so kind of around that 20 million number.
Just curious if you if.
If you see that changing throughout this year or next given given them.
Lower demand or lower requirement for treater trucks and things like that just given the mix of wells that you're that you're treating these days.
No I'm not a production expert.
Drilling expert what's kind of out of the game.
Thank over time gradually ships.
But you know we've got a lot of stuff now so we've got to keep it up to date.
We got a lot of pick ups. So maybe the number of slides I don't know Tony what do you think to.
Two to five just before but we're growing business keep so this is kind of on the spot, but maybe 10 of growth.
Slides 15 because.
We can make more money spending five in the business and trying to buy stock all the time.
I'll, let you answer Tony.
Yeah, no just to weigh and actually that's a thoughtful question and I think the.
Underpinning consideration is the fact that.
Revenues at about $1 billion run rate, we did $1.3 billion.
The guys did a really good job of maintaining all of our stuff plants equipment et cetera, and you're right because of those secular trends.
The transition to a higher percentage of wells being represented by <unk>.
Multi well pad drilling and sites and improve logistics things like trader Kraft demand as a percentage of overall work will come down.
Alright, and we don't want to hang our hats on it but I think you're onto something that we're frankly watching very closely.
Because we would like for it to stay at 20, and maybe come down a bit the other thing just like other cost inflation areas that where we're not immune to is the very tight trucking market in North America and the world has experienced over the last year. So it'll be interesting and we're all watching and the guys are making all the right decisions.
Real time in their divisions doing the best and using partners on on the on the vehicle spends but until some of that inflation is off I think we're not going to know for sure. If I had to guess I would guess, we stay at 20 or maybe come down a bit.
Got it.
Okay. That's it for me thanks very much.
This concludes our question and answer session I will hand, the call back over to Tom Simons for any.
Closing remarks.
Well I'm going to wrap up the call by saying.
Thanks to our customers and employees for helping us produce a great quarter.
We're really pleased to be returning cash to shareholders.
Coming out of Covid like everyone. In this sector were really happy oil storage didn't fill in receivables convert it to cash where all the vendors.
We look forward to the next call.
To give an update.
And we'll wrap up the call with that.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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Yeah.
Yeah.
Okay.