Q3 2023 KLX Energy Services Holdings Inc Earnings Call
Greetings and welcome to the Kayo ex energy services third quarter earnings Conference call at this time, all participants already listen only mode.
Brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
A reminder, this conference is being recorded it is now my pleasure to introduce your host Ken Dennard. Thank you you may begin.
Thank you operator, and good morning, everyone. We appreciate you joining us for the KL ex Energy services Conference call and webcast to review third quarter 2023 results with me today are Chris Baker, <unk> Energy's, President and Chief Executive Officer, and Keefer Lehner executive.
This president and Chief Financial Officer. Following my remarks management will provide a high level commentary on the financial details of the third quarter.
And talk about its outlook before opening the call for your questions.
It will be a replay of today's call and that will be available by webcast on the company's website at K L X dot com.
He will also be a telephonic recorded replay available until November 21, 2023 more.
More information on to access. These replay features what was included in yesterday's earnings release. Please note that information reported on this call speaks only as of today November seven 2023, and therefore, you're advised that time sensitive information.
No longer be accurate as of the time of any replay listening or transcript reading.
Also comments on this call will contain forward looking statements within the meaning of the United States Federal Securities laws.
These forward looking statements reflect the current views of Calix management.
However, various risks and uncertainties and contingencies could cause actual results performance or achievements to differ materially from those expressed in the statements made by management.
The listener or reader is encouraged to read the annual report on Form 10-K quarterly reports on Form 10-Q, and current reports on form 8-K to understand certain of those risks uncertainties and contingencies.
The comments today will also include certain non-GAAP financial measures additional details and reconciliations to the most directly comparable GAAP financial measures are included in the quarterly press release, which can also be found on the KL ex energy website.
And now with that behind me I'd like to turn the call over to Calix Energy services, President and CEO, Mr. Chris Baker, Chris.
Thank you Ken and good morning, everyone.
Last night, we released our Q3 earnings and we are extremely pleased with our third quarter performance calix maintain margins and generated incremental free cash flow. Despite a sequential 10% decline in rig count a 7% decline in frac spread count and continued prolonged weakness in natural gas basins.
As we report Q3 it appears the rig count is trying to bottom and natural gas prices have rebounded considerably, which bodes well for future activity levels, including incremental gas directed activity into 2024.
I'll go through the highlights of our third quarter before turning the call over to keep her to discuss our financials in detail.
<unk> continues to focus on driving utilization and defending price to maximize margin and free cash flow. Our operations team has done a fantastic job all year adjusting their cost structures and maintaining pricing discipline.
Overall <unk> continues to leverage its geographic and product service line diversification to drive results are more than 2000 team members are well positioned across all major U S onshore basins to deliver our comprehensive portfolio of differentiated services and proprietary products.
We believe the quality of our team and services allows us to capture a larger share of customer spending with outsized exposure to the largest most active and best capitalized operators in the U S onshore market.
For the third quarter, we had a revenue mix that was balanced both on a geographic and product mix basis.
Geographically the business was extremely balanced in Q3 with the Rockies generating 35% of revenue up from 28% in Q2, the southwest represented 35% of revenue down slightly from 37% in Q2 and northeast mid Con represented 30%.
Sent a Q3 revenue down from 35% in Q2, we.
We saw outsized contribution from the Rockies in Q3, driven by our market, leading position and our ability to rotate additional assets and crews to the basin given the softness in our other markets Q.
Q3 is typically the most active quarter in the Rockies given the lack of seasonality.
We were able to drive utilization and pricing within the basin and the sequential increase in both revenue and adjusted EBITDA was driven by an improvement across the vast majority of our in basin product service offering, though it was led by rentals qual tubing and directional drilling.
From a product line perspective completions focused activity was responsible for 51% of Q3 revenue production and intervention was 25% and drilling was 24%.
System with reductions in rig count and Frac spread count we saw sequential activity declined across most of our P. S L, but by and large the decline with less volatile than the underlying change in those industry metrics.
We view. These results is a testament to the quality of <unk> products and services.
From a pricing perspective, it was a bit of a mixed bag as we experienced modest low to mid single digit percentage pricing declines in some of the more competitive completion oriented service lines, but this was largely offset by other surface like well, we were able to maintain or in some cases increased pricing.
The combination of our efforts to maximize utilization protect price and control costs, coupled with a 6% sequential reduction in head count led to a very strong quarter. Despite the reduction in market activity we.
We reported solid Q3 numbers, all within or slightly above our previously provided guidance revenue came in within our guidance range of $221 million and we reported 17% adjusted EBITDA margin, which is consistent with Q2 and up.
Above the top of our prior guidance range, which led to an adjusted EBITDA coming in at the very top of our implied prior guidance range at $36 $7 million.
Further our year to date nine month and LTM performance are both all time company Records. Our strategy of diversification has driven strong and relatively consistent performance. Despite the underlying market volatility.
We generated $12 6 million and free cash flow during the quarter, enabling us to meaningfully increase our reported cash position to $90 4 million, which is up $49 million year over year, we reduced net debt, 4% sequentially to $194 million, yielding a one three times net.
Leverage ratio for both Q3 annualized and L. T O as of Q3 2023.
After generating an all time high trailing 12 month, adjusted EBITDA of $152 million.
Q3's performance highlighted the strength of Calix is diversification strategy and demonstrated <unk> ability to generate strong free cash flow in a challenging market.
The recent frenzy of consolidation on the upstream side of the market cements, our view that U S oil and gas production has strong long term fundamentals. We also view consolidation of the larger operators as an opportunity for <unk> to provide our differentiated integrated offering to a smaller number of larger.
Customers.
We continue to push the envelope.
R&D efforts and have recently launched and commercialized additional proprietary products Inc.
In Q3, we launched our new line of Calix vision completion tools.
This includes the new Calix Phantom Dissolvable plug, where we experienced a 500 plus percent sequential increase in units sold and sold more plugged in Q3 than we did in the prior four quarters combined.
Our latest generation plug has seen rapid market adoption across multiple basins with leading operators. Additionally, we also commercialized a patent pending proprietary extended reach tool the <unk> Oracle SRT Oracle SRT short for smart reach technology is a true game changer.
<unk> downhole drill out tools, and it's clearly synergistic with our coiled tubing and thru tubing offerings.
The tool delivers cutting edge performance, while also enabling safer operations by the end of this week, we will have logged over 1 million downhole running feet with the Oracle S. R. T D.
These advancements will drive efficiencies and differentiated performance for our customers, which will in turn drive utilization and margins for calix.
With that I'll now turn the call over to Keefer, who will review our financial results and I'll return later in the call to discuss our outlook in greater detail Keefer.
Thanks, Chris Good morning, everyone as Chris mentioned, we reported quarterly revenue of $221 million, representing a 6% sequential decrease which is lower than the 10% sequential decline in rig count.
For comparison purposes, we reported third quarter 2022 revenue of $222 million, which was down only 50 basis points, which compared to the 20% year over year decline in rig count is a testament to the strength of our diversification strategy.
The Rockies and southwest segments. Each contributed 35% of Q3 revenue late in the Rockies by our rentals coiled tubing and Tech services product service lines and in the southwest bi directional drilling rentals and coiled tubing.
The northeast and mid Con contributed 30% led by pressure pumping directional drilling and accommodations.
Consolidated adjusted EBITDA was $36 $7 million, demonstrating our ability to successfully maximize utilization defend price and manage costs. Despite the much discussed rig count decline.
Adjusted operating income for the third quarter was $17 million.
Total SG&A expenses for Q3 was $18 $6 million.
When you back out the nonrecurring cost adjusted SG&A expense for Q3 would have been only $17 $5 million or just seven 9% of quarterly revenue.
We continue to run with one of the leanest overhead structures in the sector for a diversified business and believe we can.
Scale further while continuing to drive down G&A expense as a percentage of revenue.
Q3, net income and diluted earnings per share were $7 $6 million.47, respectively.
Adjusted net income and adjusted diluted EPS were $8 $2 million.51, respectively.
Turning now to a review of our segment results I'll begin with the Rockies there.
Rocky Mountains segment third quarter revenue was $77 million, representing a 16% sequential increase and a 16% increase over the prior year quarter.
The sequential increase in revenue was attributable to increased revenue across most product service lines, but led by coiled tubing rentals in directional drilling where we experienced favorable Q3 seasonality and improved utilization as well as maintained or increased pricing.
The Rockies experienced a strong increase in profitability adjusted operating income for the third quarter was $17 $7 million adjusted EBITDA was $23 $3 million compared to second quarter, adjusted EBITDA of $17 million and 35% higher than $17 $3 million in the prior.
Year quarter.
The sequential increase in profitability was driven by reduced white space and an increasing contribution from our higher margin services throughout the D J, Wyoming and Bakken led by coiled tubing rentals and pressure pumping.
Moving now to our southwest segment, the southwest experienced a 14% year over year increase in revenue generating revenue of $77 $8 million in Q3.
The year over year revenue increase was driven by the Q1 2023 acquisition of Greens, which has been a major success for calix.
The sequential decline in revenue was driven by lower pricing and utilization across our drilling and completion product lines Q3, adjusted operating income for the southwest segment was approximately $5 million and adjusted EBITDA was $11 $8 million.
As a reminder, the Greens business is now fully integrated within our southwest segment with Q3 being the second quarter, a full revenue and margin contribution.
We have also successfully action $3 million of annualized cost synergies.
Northeast mid Con Q3 revenue was $65 $8 million, a 24% decrease relative to Q2, driven largely by reduced activity and moderate modestly reduced pricing in our frac business, where we continue to run two spreads pumping 17% fewer stages in Q3 compared to Q2.
And lower pricing and utilization across our broader drilling and completion service lines driven by the market disruption and the gasior areas within this segment.
Segment adjusted operating income for the third quarter was just over $5 million and adjusted EBITDA was $11 $4 million for the quarter.
At corporate our adjusted operating income and adjusted EBITDA losses for Q3 were $10 $9 million and $9 $8 million respectively.
Corporate adjusted EBITDA loss improved by 3% sequentially and 17% compared to Q3 2022.
Demonstrating our ability to layer in acquisitions.
And realized significant economies of scale as a core tenet of our M&A thesis and we have seen the dramatic benefits play out over the last few deals.
I'll now turn to our networking capital cash flow and capitalization or.
Our third quarter 2023, cash balance was $90 $4 million up 10% from $82 $1 million in Q2.
The sequential increase in cash was largely driven by our ability to efficiently convert adjusted EBITDA to free cash flow.
Networking capital was approximately $85 million as of Q3.
We reduced net debt, 4% sequentially ending the quarter with a net debt balance of $193 $7 million.
Based on annualized Q3, and LTM results, we have a net leverage ratio of just 1.3 times.
We ended the third quarter with roughly $155 million in liquidity consisting of $94 million of cash.
And availability of $64 $4 million under our September 2023, ABL borrowing base certificate.
We did not issue shares under our ATM in Q3 and have not issued any shares to date in 2023.
Also of note Archer limited announced last week that they exited there roughly 900000 share position in cadillac's as part of their refinancing, thereby materially reducing any overhang and calix shares.
Our share count remains at $16 4 million shares.
Now turning to Capex.
Capital expenditures for the third quarter were approximately $17 $8 million and were primarily focused on maintenance spending across our various segments.
Going forward, we maintained total capex guidance for 2020 three to be in the range of $45 million to $55 million, but currently expect to come in at the top end of that range.
This spend will be primarily focused on maintenance spending with approximately 80% supporting ongoing operations and the remaining capex earmarked for reactivation and growth focused on quick payback projects across our rentals frac rentals directional drilling and wireline business amongst others.
As always we continuously review capex levels and drivers to identify current trends are determined inefficiencies based on prevailing market conditions.
During Q3, we sold approximately $5 million in assets at the end of the third quarter, we still had $2.3 million of assets held for sale reflected on our balance sheet.
As we look to the remainder of 2023 and begin to think about 2024, our focus remains on maximizing free cash flow and further reducing net debt all while being prudent stewards of capital as we pursue additional value creating M&A.
I'll now turn the call back to Chris who will provide some additional color on the current market as well as our current outlook.
Thanks, Keefer before we wrap up I'd like to share some additional detail on our outlook and strategy.
We expect a bit of a slowdown in Q4 due to seasonality and budget exhaustion, but we believe the market activity is trying to find the bottom as we look to 2024, we are confident the <unk> platform is as well positioned as ever to ultimately benefit from increased customer activity and consolidation.
Whether due to our lean cost structure additional asset capacity, our deployment of cutting edge technology. The <unk> platform has material intrinsic upside even in a moderately increasing market.
As we enter the fourth quarter, we've seen consolidated rig count decrease an incremental 90% compared to a Q3 average of 649 rigs WCS prices currently in the low eighties, which is flat with Q3 average and approximately 10% below quarter Ed.
While natural gas price hovers around it very constructive $3 30 so.
Our public customers have been incredibly disciplined regarding growing production and have leveraged a tremendous operating efficiencies afforded to them, but their service providers to their benefit, but ultimately the strength of underlying commodity prices should drive strong returns for our customers and in return additional service activity relative.
Q3 2023 levels.
Consistent with prior guidance, we expect full year 2023, adjusted EBITDA to be in the range of $140 million to $150 million and.
That the business will continue to perform well due to our focus on crude utilization and pricing in order to drive margin and free cash flow.
Given our revenue and margin expectations combined with our Capex guidance, we expect strong free cash flow generation in 2023 and continued strong free cash flow generation in 2024.
As we look to 'twenty 'twenty four there are several bright spots. In addition to what we expect will be a rebound in underlying activity from these current lows.
First we entered into a 12 month contract with a leading operator, which will baseload 'twenty 'twenty four activity for a practice.
Could pave the way to underpinning the development of our third mid Con Frac spreads.
Second we have launched an integrated TNA offering in the Rockies and are looking to scale that business in response to customer demand and legislative fresher.
Third we are taking delivery of two new fully electrified wireline units augmenting our whisper series of electric completions equipment in Q4 for which we have strong customer demand.
And fourth the previously mentioned technological advancements could prove to be a material differentiator in 2024 and beyond.
We are executing on an exciting go to market strategy and expect market adoption to increase materially as we progress into 2024.
We're just now working through our accused at our customers likely will not set budgets until January or February but based on our latest customer conversation. We're excited about 2024.
Finally, our M&A strategy will continue to focus on accretive deleveraging opportunity.
The market is becoming more active on the sell side. However, Oss consolidation is still being outpaced by our E&P customers. We believe this is due to depressed market multiples in the sector, but we continue to believe that <unk> offers counterparties and attractive opportunity to execute on the value creating.
And ultimately time their exit via a well capitalized liquid public stock.
We have a strong track record of integration and synergy identification and realization and believe we have the right foundation and capitalization to continue to execute on our strategy actively pursuing accretive and synergistic M&A opportunities to grow and scale our existing platform.
In summary, I'd like to thank each and every calix team member for their continued commitment to safety and execution across all aspects of our strategic initiatives.
Their hard work is once again translated into strong financial performance.
Looking ahead, we will continue to proactively manage our portfolio of assets to maximize our results with a focus on generating meaningful free cash flow, which we believe will set calix up for an exciting 2024 and beyond.
With that we'll now take your questions operator.
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Your first question comes from John Daniel with Daniel Energy. Please go ahead.
Hey, guys. Thank you for having me.
I guess the first one is on the Frac side.
I heard you correctly, you said, you've got the two oh and potentially a third getting ready to go on the mid con.
Is that right yes.
Yeah. Good morning, John you broke up a little bit, but I think die Bank I guess you were asking if we stay at two spreads operating in the mid con.
Yeah, and then the third I think you think I thought you said you had a third that might be going on in there, but I'm curious just really your views on the mid con it tends to be more privates and independent independent if I'm not mistaken and just what you're seeing from those operators right now.
Yeah, Great question. So we do still have the two spreads and we had two spreads operating in the mid con or all of <unk> as you might imagine we did have a fair amount of white space honestly, primarily due to drilling delays and we had a few clients. They finished their programs early really driven by completion efficiencies.
But we we elected to maintain staffing given incremental work in late Q3, and Q4, but we maintain staffing to those two spreads are look we're very accustomed as you well know the legacy roots of our business. There on the pressure pumping side is really the mid con and the Rockies, so where a contract until that customer space, we like that customer.
Spot pricing was down somewhat but we really think that the contract. We entered into allows us to base load activity drive efficiency gains and hopefully margins with with limiting white spaces, we get into 2024.
And to your last question on the third.
So we do have still have the small spread in the Rockies, where we're operating in our cement business right that was very active in the third quarter and I think what we made reference to in our prepared remarks was the baseload and lack of white space, depending on how the market plays out in 2024, we think sets us up well that with if we elect to stand up.
The third spread we'd be be ready to do so, but we have not done that yet.
Got it and then the last one for me because I got a bad connection if you guys wanted to accelerate and bring on more of the electric wireline units are what what are the lead times on those.
The lead times are volatile as what the lead times are so it depends on the components.
These two new too.
Two new units they were completely refurbished from the ground up those were about six months.
The latest Intel would be three to four months, but you know that's a moving number.
Fair enough. Thank you for including me.
Absolutely I appreciate the questions.
Next question, Steve <unk> with Sidoti <unk> Company. Please go ahead.
Good morning, Chris Keith Alright, Thanks for taking my questions. This morning, I wanted to ask about the strength of margins in the Rockies I know, it's seasonally stronger trying to get your sense.
Outside of seasonality, how sustainable those margins are and I know the rig count didn't decline as much in certain areas as opposed to the gas plays but what's the difference in how you are able to price them regionally in the Rockies versus.
Southwest.
Marcellus.
Yes, good morning, Steve and Great question, I think look it's as you well know operating leverage is kind of like gravity. It. It always works right and that's what we saw in the Rockies. This quarter candidly, we saw some of that last year, we got a great team and a great presence in the Rockies win and that really spans all the way through the Bakken right.
And so [laughter].
The reality is at this rig count and this activity base across most areas.
Operating leverage or negative operating leverage can really impact a given month or a given basin and that's what we saw in the third quarter, we had more white space in the mid con in the southwest segment, especially around the Haynesville and the Eagle Ford than maybe we anticipated negative operating leverage danford and put a damper on those margins, whereas in the rock.
We saw a lot of activity and we were able to redeploy some assets and mobilized some assets to to cover off on additional work and so margin expansion with that operating leverage of the Rockies is also to your point more impacted by seasonality and weather last year in 2022, the Rockies performance in <unk>.
Q4 was stellar it was as strong as I think we've ever seen it.
And that was really due to pent up demand for our technical services and rentals business in particular, especially on the production oriented side of fishing.
Et cetera, and so look we'll see how the fourth quarter plays out but.
We're very confident 2024 plays out exceptionally well in that business.
Great and as my follow up on the northeast mid Con I know, it's only early November so it's early to be having these conversations but.
The recovery in natural gas prices, the sort of interest in the additional LNG export capacity that's coming.
Trying to get your sense in your conversations with customers, so far and I know it's early.
You know with the new contract year when are you expecting to see some sort of a pickup in those plays in our U.
Confident right now in a pickup in activity in those plays.
Yeah, Great question, what I would say is there are two distinctly different markets still tied to the LNG story and the natural gas story clearly the midcon and the Haynesville specifically, we've seen a lot of rig count roll. There. So operators have duct more wells as we go through 2023, and we're definitely seeing a slot.
I'll I'll categorize it as a slight pick up in completions activity in Q4, and we're having discussions in the haynesville around rig ads in 2024, I don't think we see the same pick up in the northeast in Q4 that we do in the Haynesville, partially just due to winter weather seasonality et cetera, but look where we're bull.
<unk> when it comes to the natural gas outlook, we talked about this at your conference previously 2024, if you look at the forward strip is highly constructive on the gas side, and we're hearing more and more positive feedback and outlook from commodities traders and others that 2025 is actually looking very strong.
At this point, so I think we've got some wind at our sale when it comes to the gas side of the business.
Excellent Thanks, Chris.
I appreciate it Steve Thank you.
Once again, if you would like to ask a question. Please press star one on your telephone keypad.
Next question, David Marsh with singular research. Please go ahead.
Hey, guys. Thanks for taking the questions. So just touching on the guidance.
Previously you guys had provided both revenue and.
EBITDA margin guidance. The last revenue guidance you had provided was a range of 900 to 950 million for the year is that still.
Range that is achievable at this point.
So I think David I'll jump in and Keefer can jump in as well. This is Chris good morning, Thanks for the question well.
Well, we updated in our prepared remarks with full year guidance.
The full year, adjusted EBITDA guidance, and EBITDA and cash flows what matters right. So is $140 million to $150 million and so when you think about on a year to date basis were approximately $1 14 that guidance didn't really change all that on a full year basis over last quarter right and so the mid point of the.
Full year is is essentially equal to our prior guidance and consensus so nothing's really changed there we just get an update the revenue number.
Got it got it and then I guess as my follow up could you. Just can you just give us a refresh on the credit facility where were termed out to right now and you know any activity around that that you guys might possibly.
We pursue in terms of extension and you know with regard to the cash I mean.
Do you guys look for opportunities to you know.
Perhaps pay down that maybe a little bit to reduce interest expense in the interim.
Or is there something you know, particularly positive about our holding cash and I was able to earn more interest income from holding cash.
And then you know when you're paying in interest expense.
Yeah. Good question happy to jump in here and I'll address your second question first go a little bit out of order.
As it relates to cash and uses of free cash flow.
Clearly, we think through Optionality, there, we're continuing to focus on reduction of net debt.
And building free cash.
To continue to evaluate opportunities to use cash in both organic and inorganic initiatives as we think about growing the business.
And we'll continue to evaluate opportunities to pay down the ABL at this point in time, we've elected to build cash you can see from the face of the income statement, we are generating pretty substantial interest income today on our cash balance.
So we're kind of more than offsetting the <unk>.
ABL and cash interest.
Josh balance that we have today, but that is something that we do continue to evaluate them as it relates to the broader capital structure.
We've got two pieces of of of that paper out there. The ABL on the notes both mature in the fall of 2025, the ABL has a springer inside of the notes, but they they mature roughly two years from today. So I think we're in a really good spot based on Q3 annualized results LTM results.
<unk> the business is performing exceptionally well, we've kind of more than grown back into capital structure.
Our net leverage ratio today is one three times Moody's came out last week and upgraded our outlook to positive.
So everything in that regard continues to head in the right direction.
But we still have two years of tenure left our call premium just dropped down to 102 and seven eights as of November one.
So I would expect you know over the next year or so we're going to start to look harder around opportunities to refinance.
The capital structure of the business.
But we're just going to be patient and make sure that we execute a refinancing opportunity that makes the most sense for calix and best positions us to continue to execute on our growth strategy going forward.
Thanks Keith.
Thanks, David So we've gotten a couple of questions since the call started via email from some folks Chris you mentioned numerous benefits from the Oracle SRT. So can you elaborate more on that I think people are interested there.
Sure Ken I. Appreciate the question look our vision from the outset was to develop a next generation smart tools that not only had performance benefit, but also inherent safety benefits as well as the potential to reduce strength for tea in coiled tubing as well as wear and tear on other asset components there.
The economic benefit of drilling and completion efficiency gains is largely accrues to the benefit of the operator, while the increased cost of equipment wear and tear is candidly accrued to the detriment of the service company due to the equipment cycle times et cetera, and so you know the reality is it's paramount.
No that O F S companies find ways to share and the efficiency gains to benefit margin across every service line that we operate in and.
And as we look at Oracle SRT. It really has the potential to extend coiled tubing string life, which is inherently margin enhancing while also simultaneously, bringing technology benefits to bear for the customer and so we will provide more benefits on the technology down the road, but we're really excited about the opportunity set that's.
Good if we got another one I'm talking about the longer laterals as kind of a buzzword today with what's your experience and expectation of continued adoption of the four mile laterals.
Great question and it's it's definitely in the news and we see people setting records.
We continue to see operators experiment with a whole host of lateral links and configurations and while theres discussions and we're in discussions with operators. All four milers. We believe that most operators are building their business to be really a manufacturing mode to drive efficiencies and find ways to improve.
Ultimate recoveries of oil and gas and in their well bores.
In certain basins. The reality of the situation is a $4 create incremental risk for operators, where they would prefer.
Their means to drive recovery, so whether that landfill to three or four milers KL excess prepared to adapt and assist our clients with successful drilling and completion programs or complex wells. We recently were instrumental in the completion of a highly technical horseshoe well or actually two highly technical horseshoe wells.
In the Permian, which led to impressive results for that client and so well depth records are nice. The reality is we're focused on serving our clients with consistent execution of highly technical wells, while maximizing margins for our stakeholders overseeing.
Linked records that being said look lastly, calix is diversified suite of products and services really allows us to address all of these different distances as well as configurations.
We also got one talking about the outlook.
Based on early customer guidance. It appears 'twenty 'twenty four spending will be flat to slightly up year to year, you want to comment on that.
Sure I think look there's been significant shaped to 2023, just like there was in 2022.
And we would expect some shape to 'twenty four similar to Steves question earlier in the call just based off the constructive nature and forward strip on the natural gas side. So.
So we would expect from what we're hearing thus far is.
<unk> is flat to slightly up spending a.
Which should ultimately lead to improved year over year results for KLA and I think that's due to four specific points, we've got intrinsic upside in our incremental asset base. We have already talked about some of the high points of Frac contract base loading that service line as well as the introduction of additional.
It'll Whisper series electric wireline units that we think we can deploy at attractive rates and then lastly, further penetration of <unk>.
All of the technologies, we've talked about thus far including our Gen. Three now rebranded Dissolvable plug the Phantom Calix.
Calix Phantom Dissolvable.
Anything you want to add keefer before we it looks like we are.
We're done with the email questions and people online and on the call Yeah, and just to follow up on the plug side I think certainly as you see this trend towards longer laterals, that's clearly going to drive a need for increased consumables per wellbore, which ultimately is going to be a benefit for calix suite of products and certainly our flood business.
As Chris mentioned, we announced the launch of our latest Gen. Phantom plug we've seen tremendous market response, so far in the third quarter.
So we've worked with numerous leading operators across multiple.
Multiple basins, where we've seen strong market adoption of our new <unk> technology.
Customer feedback has been really strong to date.
We did mentioned in the prepared remarks that our dissolvable plug sales were up.
North of 500% quarter over quarter and based on October results.
Strong <unk> sales have continued into Q4, and we would expect this trend to continue as we work into 2024 as well.
Yeah absolutely.
So that's it okay final comments Chris.
Thank you once again for joining us on the call today and your interest in <unk> Energy services, we look forward to speaking with you again next quarter. Thanks.
Thanks, everyone.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect. Your lines should have a wonderful day.
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