Q1 2024 RPC Inc Earnings Call

Operator: Good morning, and thank you for joining us for RPC Inc.'s first quarter 2024 conference call. Today's call will be hosted by Ben Palmer, President and CEO, and Mike Schmit, Chief Financial Officer. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. I would like to advise everyone that this conference call is being recorded. I will now turn the call over to Mr. Schmit.

Good morning, and thank you for joining us for RPC, Inc. First quarter 'twenty 'twenty four conference call today's call will be hosted by Ben Palmer, President and CEO and Mike Smith, Chief Financial Officer.

At this time all participants are in listen only mode. Following the presentation. We will conduct a question and answer session and instructions will be provided at that time for you to queue up for questions I would like to advise everyone that this conference call is being recorded.

Michael L. Schmit: I will now turn the call over to Mr. Schmidt.

Schmidt: Thank you and good morning.

Michael L. Schmit: Thank you and good morning. Before we begin, I want to remind you that some of the statements that will be made on this call could be forward-looking in nature and reflect a number of known and unknown risks. Please refer to our press release issued today, along with our 2023-10-K and other public filings that outline those risks, all of which can be found on RPC's website at www.rpc.net. In today's earnings release and conference call, we'll be referring to several non-GAAP measures of operating performance and liquidity.

Yeah.

Schmidt: Before we begin I want to remind you that some of the statements that will be made on this call could be forward looking in nature and reflect a number of known and unknown risks.

Schmidt: Please refer to our press release issued today.

Schmidt: Along with our 2023 10-K and other public filings the outline those risks all of which can be found on Rpc's website at www RPC net.

Schmidt: In today's earnings release and conference call, we'll be referring to several non-GAAP measures of operating performance and liquidity.

Michael L. Schmit: We believe these non-gap measures allow us to compare performance consistently over various periods. Our press release issued today and our website contain reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. I'll now turn the call over to our President and CEO, Ben Palmer.

Schmidt: We believe these non-GAAP measures allow us to compare performance consistently over various periods.

Schmidt: Our press release issued today.

Schmidt: And our website contain reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.

Schmidt: I'll now turn the call over to our President and CEO Ben Palmer.

Ben M. Palmer: Thanks, Mike, and thank you for joining our call this morning. Before we get started, I'd like to take a moment to share some unfortunate and sad news. Our long-time head of investor relations and vice president of corporate services, Jim Landers, passed away a few weeks ago after a long and courageous battle with cancer. I worked closely with Jim here at RPC for more than 20 years, and he was a tremendous contributor to the company in so many ways. I'm sure those of you listening today who were lucky enough to work with him over the years know he was also a great friend and colleague. He will truly be missed, Powell.

Ben M. Palmer: Thanks, Mike and thank you for joining our call. This morning.

Ben M. Palmer: Before we get started I'd like to take a moment to share some unfortunate and sad news.

Ben M. Palmer: Our long time head of Investor Relations, Vice President of corporate services, Jim Landers passed away a few weeks ago after a long and courageous battle with cancer.

Speaker Change: I worked closely with Jim here at RPC for more than 20 years and he was a tremendous contributor to the company in so many ways.

Schmidt: I'm sure those of you listening today, we're lucky enough to work with him over the years. He was also a great friend and colleague.

Schmidt: He will truly be missed by all of us.

Ben M. Palmer: Shifting to the quarter, as you can see from our earnings release, the first quarter was a soft start to the year in what feels like a muted oilfield services market. Though we did not give explicit financial guidance for the first quarter, we did expect more stable EBITDA. Our activity level and pressure pumping were down modestly on a sequential basis compared to the fourth quarter of 2023, contributing to our overall results finishing below our original expectations.

Schmidt: Shifting to the quarter as you can see from our earnings release, the first quarter was a soft start to the year and what feels like a muted oilfield services market.

Schmidt: So we did not give explicit financial guidance for the first quarter. We did expect more staple EBITDA our activity level in pressure pumping was down modestly on a sequential basis compared to the fourth quarter of 2023 contributing to our overall results, finishing below our original expectations.

Ben M. Palmer: Unlike some recent quarters where we have seen more volatility in pressure pumping compared to other service lines, revenue performance was generally consistent throughout the business. However, our total revenues declined about 4%, with pressure pumping down 5% and other service lines in aggregate down 3%.

Schmidt: Unlike some recent quarters, where we have seen more volatility and pressure pumping compared to other service launched revenue performance was generally consistent throughout the business. Our total revenues declined about 4% with pressure pumping down 5% and other service lines in aggregate down 3%.

Ben M. Palmer: The frack market remains highly competitive. We have seen some fleets moving into the Permian from gassy plays, adding capacity to an already crowded base. In addition, ongoing operating efficiency gains have created additional pump hour capacity. Regarding pricing, motivation to keep assets utilized and absorb fixed costs has certainly impacted industry pricing compared to year-ago levels. We are working vigorously to control costs to be as competitive as possible in this environment.

Schmidt: The frac market remains highly competitive.

Schmidt: We are seeing some fleets moving into the Permian from gassy place, adding capacity to an already crowded basin. In addition, ongoing operating efficiency gains have created additional comp our capacity.

Schmidt: Regarding pricing motivation to keep assets utilized and absorb fixed cost is certainly impacted industry pricing compared to year ago levels.

Schmidt: We are working vigorously to control costs to be as competitive as possible in this environment.

Ben M. Palmer: We're also balancing our interest in putting our assets to work with our preference not to burn them out on low return projects. Our Tier 4 DGB fleets are highly sought after and generally serve semi-dedicated customers. Regarding our new Tier 4 dual fuel fleet, we eagerly await bringing those assets into service around mid-year and expect to have solid utilization for this new fleet for the remainder of 2024. We highlight that our operational performance on existing Tier 4 DGB assets has been quite strong.

Schmidt: We're also balancing our interest in putting our assets to work with our preference to not burn them out on low return projects.

Schmidt: Our tier four DGB fleets are highly sought after and generally serve semi dedicated semi dedicated dedicated customers.

Schmidt: Regarding our new tier four dual fuel fleet, we eagerly await bringing those assets into service around mid year.

Schmidt: And expect to have solid utilization for this new fleet for the remainder of 2024.

Schmidt: We highlighted our operational performance on existing tier four DGB assets has been quite strong.

Ben M. Palmer: For example, our gas substitution efficiency has sustained an average of above or about 65% over the past few quarters. We believe this efficiency metric is among the best in the pumping industry and demonstrates our ability to effectively operate these high-quality assets and drive value for our customers. As we have said before, we intend to continue to invest in fleet upgrades. To reiterate, when we place the new Tier 4 DGB fleet in service in a few months, we will be pulling a Tier 2 diesel fleet out of service. So we do not add to industry capacity, likely repurposing those assets in other parts of our business or keeping them as spare parts and equipment.

Schmidt: For example, our gas substitution efficiency has sustained an average or above or about 65% over the past few quarters.

Schmidt: We believe this efficiency metric is among the best in the pumping industry and demonstrates our ability to effectively operate these high quality assets and drive value for our customers.

Schmidt: As we have said before we intend to continue to invest in fleet upgrades.

Schmidt: To reiterate when we placed the new tier four DGB fleet in service in a few months, we will be pulling a tier two diesel fleet out of service. So we do not add to industry capacity likely repurposing those assets in other parts of our business, we're keeping them as spare parts and equipment.

Schmidt: We continue to monitor the market for electric fleets, while we do see the benefits of this evolving technology. We also see some potential shifts around the ideal long term technical power source solutions.

Ben M. Palmer: We continue to monitor the market for electric fleets. While we do see the benefits of this evolving technology, we also see some potential shifts around the ideal long-term technical and power source solution. We will continue to invest in our fleet with a strong focus on upgrading to Tier 4 dual fuel. In our view, dual fuel assets have a long demand runway, and we will focus our efforts and capital in this direction until we find the risk return profile on investments in electric fleets is further in our favor.

Schmidt: We will continue to invest in our fleet with a strong focus on upgrading to tier four dual fuel and our view dual dual fuel assets have a long demand runway and we will focus our efforts and capital in this direction until we filled a risk return profile on investments in electric fleets as further in our favor.

Schmidt: Regarding how we see the next few quarters, playing out visibility remains limited, but we are certainly encouraged by the recent increase in oil prices, the WTO, reaching above $80 a barrel recently.

Ben M. Palmer: Regarding how we see the next few quarters playing out, visibility remains limited, but we are certainly encouraged by the recent increase in oil prices, the WPI reaching above $80 a barrel recently. The rally is, in part, attributed to geopolitical events, which can be, of course, unpredictable and reverse quickly, but also supported by a strong U.S. economy. If this level is sustained, we are cautiously optimistic that many of the smaller private EMPs that make up the spot and semi-dedicated pressure pumping market will steadily increase activity, while the larger EMPs stick to budgeted expenditures and exercise capital. Mike will now discuss the quarter's financial results.

Schmidt: The rally is in part attributed to geopolitical events, which can be of course unpredictable and reverse quickly.

Schmidt: But also supported by a strong U S economy.

Schmidt: This level of sustained we are cautiously optimistic that many of the smaller private e&ps that makeup the spot in semi dedicated pressure pumping market will steadily increase activity.

Schmidt: While the larger E&P stick to but stick to budgeted expenditures and exercise capital discipline.

Schmidt: Mike will now discuss the quarter's financial results.

Michael L. Schmit: Thanks Ben.

Michael L. Schmit: I will now discuss the first quarter results with sequential comparisons to the fourth quarter of 2023.

Michael L. Schmit: I'll now discuss the first quarter results with sequential comparisons to the fourth quarter of 2023. Revenues decreased 4% to $378 million, driven by a combination of moderately lower industry activity and some competitive pricing concessions, breaking down our operating segments. Technical services revenues decreased 4%, driven by pressure pumping, our largest service line within that segment. Technical services represented 94% of our total first quarter revenue. So support services were down 9% and represented 6% of our total quarterly revenue. The following is a breakdown of our first quarter revenues for our top 5 service providers. Pressure pumping, 46.6%. Downhole tools, 24.8%. Coil tubing, 8.8%

Michael L. Schmit: Revenues decreased 4% to $378 million driven by a combination of moderately lower industry activity and some competitive pricing concessions.

Michael L. Schmit: Aching down our operating segments.

Michael L. Schmit: Technical services revenues decreased 4% driven by pressure pumping our largest service line within that segment.

Michael L. Schmit: Technical services represented 94% of our total first quarter revenues. So support services were down 9% and represented 6% of our total quarter revenues.

Michael L. Schmit: The following is a breakdown of our first quarter revenues for our top five service lines.

Michael L. Schmit: Pumping 46, 6%.

Michael L. Schmit: Downhole tools 24, 8%.

Michael L. Schmit: Tubing eight 8%.

Michael L. Schmit: Cementing 7.3% Rental tools 4.2%. So together, these top five service lines accounted for 92% of our total revenue. Cost of revenues excluding depreciation and amortization during the first quarter decreased by $2.8 million to $276.6 million from $279.4 million, or a 1% decrease. Despite lower sales, total employment expenses were flat, and maintenance and repair costs increased slightly compared to the fourth quarter, contributing to margin compression. On another note, materials and supplies accounted for a higher percentage of our sales mix, which also impacted our margins.

Michael L. Schmit: To maintain seven 3%.

Michael L. Schmit: Rental tools four 2%.

Michael L. Schmit: So together these top five service lines accounted for 92% of our total revenues.

Michael L. Schmit: Cost of revenues, excluding depreciation and amortization during the first quarter decreased by $2 8 million.

Michael L. Schmit: To 276 with $6 million from $279 4 million or a 1% decrease.

Michael L. Schmit: Despite lower sales total employment expenses were flat and maintenance and repairs costs increased slightly compared to the fourth quarter.

Michael L. Schmit: Contributing to margin compression.

Michael L. Schmit: On another note materials and supplies were a higher percentage of our sales mix, which also impacted our margins.

Michael L. Schmit: SG&A expenses were $40 $1 million up slightly from $38 1 million. The increase in SG&A was due to total employment costs and was in part due to the timing of certain accruals.

Michael L. Schmit: SG&A expenses were $40.1 million, up slightly from $38.1 million. The increase in SG&A was due to total employment costs and was in part due to the timing of certain accruals. Diluted EPS was $0.13 in the first quarter, down from $0.19 in the fourth quarter.

Michael L. Schmit: Diluted EPS was <unk> 13 cents in the first quarter.

Michael L. Schmit: From 19 in the fourth quarter.

Michael L. Schmit: There were no non-GAAP adjustments to these figures. Adjusted EBITDA was $63.1 million, down from $79.5 million, with adjusted EBITDA margin decreasing 340 basis points to 16.7%. Again, there were no adjustments made to these measures for unusual items.

Michael L. Schmit: There were no non-GAAP adjustments to these figures.

Michael L. Schmit: Adjusted EPS, sorry, adjusted EBITDA was $63 $1 million down from $79 5 million.

Michael L. Schmit: With adjusted EBITDA margin decreasing 340 basis points to 16, 7% again, there are no adjustments made to these measures for unusual items.

Michael L. Schmit: Operating cash flow was $56 6 million and after Capex of $52 8 million free cash flow was $3 8 million.

Ben M. Palmer: Operating cash flow was $56.6 million, and after CapEx of $52.8 million, free cash flow was $3.8 million. We noted that the second quarter will have a heavy spend as we make final payments and accept delivery of our new Tier 4 DGB fleet. While our Guided CapEx range of $200 million to $250 million in 2024 remains unchanged, we may manage the lower end of that range depending on market conditions in the second half of the year.

Michael L. Schmit: We noted that second quarter will have a heavy spend as we make final payments and accept delivery of our new tier four DGB fleet.

Michael L. Schmit: While our guided Capex range of 200 million to $250 million in 2024 remains unchanged.

Michael L. Schmit: We may manage the lower end of that range, depending on market conditions in the second half of the year.

Michael L. Schmit: Okay.

Ben M. Palmer: During the quarter, we spent nearly $10 million on share repurchase, of which $7.5 million was under our buyback program. And we paid $8.6 million in dividends. Thus, we return more than $16 million of capital to our shareholders between our cash dividend returns and our buyback. We continue to maintain a debt-free balance sheet with a strong cash position of $212 million at quarter end. We remain proud of our healthy financial position, a function of our ongoing discipline and conservative approach.

Michael L. Schmit: During the quarter, we spent nearly $10 million on share repurchases.

Michael L. Schmit: Of which $7 5 million was under our buyback program.

Michael L. Schmit: And we paid $8 6 million in dividends.

Michael L. Schmit: Thus, we returned more than $16 million of capital to our shareholders between our cash dividend returns and our buyback program.

Michael L. Schmit: We continue to maintain a debt free balance sheet with a strong cash position of $212 million at quarter end.

Michael L. Schmit: We remain proud of our healthy financial position a function of our ongoing discipline and conservative approach.

Michael L. Schmit: We're also pleased to share that subsequent to the end of the quarter, we received a $52 million tax refund, including interest from the IRS. This week.

Ben M. Palmer: We're also pleased to share that, subsequent to the end of the quarter, we received a $52 million tax refund, including interest, from the IRS this week related to past actions. I'll now turn it back over to Ben for some closing remarks.

Michael L. Schmit: Related to past tax years.

Michael L. Schmit: I'll now turn it back over to Ben for some closing remarks, thanks, Mike.

Ben M. Palmer: So looking ahead, we are encouraged by oil price trends and optimistic about an uptick in rates. This should translate into improved activity, which would hopefully be accompanied by disciplined pumping capacity management in the marketplace. We also see potential for increased activity by smaller EMPs as a fallout from the wave of M&A in the larger M&A space, the EMP space, excuse me.

Ben M. Palmer: Looking ahead. We are current we are encouraged by oil price trends and optimistic for an uptick in rig count.

Ben M. Palmer: This should translate into an improved activity, which would hopefully be accompanied by disciplined pumping capacity management in the marketplace.

Ben M. Palmer: We also see potential for increased activity by smaller E&ps is a fallout from the wave of M&A in the larger M&A space E&P space.

Ben M. Palmer: As mergers and acquisitions close, we see possible non-core asset divestitures, with the acreage moving into the hands of our customers. We would be well positioned to capitalize on this trend, given our deep customer relationships. We are strong not only with spot and semi-dedicated customers in pressure pumping, but our other service lines have excellent relationships with both small and large EMCs.

Ben M. Palmer: As mergers and acquisitions close we see possible noncore asset divestitures with acreage moving into the hands of our customers.

Ben M. Palmer: We would be well positioned to capitalize on this trend given our deep customer relationships.

Ben M. Palmer: We are we are strong not only with spot and stimulated dedicated customers in pressure pumping, but our other service lines are excellent relationships with both small and large e&ps.

Ben M. Palmer: We continue to be presented with opportunities to use our strong balance sheet to grow the business. We're confident that, in time, we will find attractive acquisitions to increase our scale, bolster our service lines, broaden our customer relationships, and, of course, provide a solid return on capital. As we said last quarter, we are patient buyers and believe a potential silver lining to current industry conditions will be the availability of attractive acquisition targets.

Ben M. Palmer: We continue to be presented with opportunities to use our strong balance sheet to grow the business. We're confident that in time, we will find attractive acquisitions to increase our scale bolster our service lines broaden our customer relationships and of course provide a solid return on cash.

Ben M. Palmer: As we said last quarter, we're patient buyers and believe a potential silver lining to current industry conditions will be the availability of attractive acquisition targets.

Ben M. Palmer: In the meantime, our balance sheet is quite strong, affording our $0.04 per share of quarterly cash dividends and opportunistic share buybacks. If, over time, we maintain an elevated cash position, we would likely assess options to return additional capital to investors at an accelerated pace. In closing, I want to reiterate that in an often volatile market, our discipline remains consistent, with a focus on financial stability and long-term shareholder returns. And thank you to all our employees who work tirelessly to deliver high levels of service and value to our customers. Thanks for joining us this morning. And at this time, we're happy to address any questions.

Ben M. Palmer: In the meantime, our balance sheet is quite strong.

Ben M. Palmer: Our <unk> per share quarterly cash dividend and opportunistic share buybacks.

Ben M. Palmer: If over time, we maintain an elevated cash position, we would likely assess options to return additional capital to investors at a at an accelerated pace.

Ben M. Palmer: In closing I want to reiterate that and often volatile market. Our discipline remains consistent with our focus on financial stability and long term shareholder returns.

Ben M. Palmer: And thank you to all our employees, who worked tirelessly to deliver high levels of service and value to our customer.

Speaker Change: Thanks for joining us this morning and at this time, we're happy to address any questions.

Speaker Change: Thank you we will now begin the question and answer session.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you have been called upon to ask a question and are listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star 1 to join the queue. Your first question comes from Stephen Gengaro with Stiefel. Please go ahead.

Speaker Change: If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Speaker Change: If you would like to withdraw your question simply press Star one again.

Speaker Change: If you have called that are called upon to ask a question and are listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Again, Please press star one to join the queue.

Speaker Change: Your first question comes from Stephen <unk> with Stifel. Please go ahead.

Stephen David Gengaro: Thanks, good morning everybody. So a couple of questions. Can you talk about the overall pressure pumping market? Like, so I'm thinking about the competitive landscape, and we talked about the competitive pricing environment, and how you think about either holding assets back or marketing assets at current price levels? And also, how do you think that evolves over time as far as the pricing structure is concerned?

Stephen: Thanks, Good morning, everybody.

Stephen: Good morning.

Stephen: So a couple for me I think just first can you talk about the just the overall pressure pumping market.

Stephen: So I'm thinking about the competitive landscape I mean, you talked about competitive pricing environment and how you think about.

Stephen: Either holding assets back or or or marketing.

Stephen: Assets at at current price levels.

Stephen: And also how do you think that evolves over time as far as the pricing structure.

Stephen: Okay.

Ben M. Palmer: Stephen This is Ben.

Ben M. Palmer: Stephen, this is Ben. Good question. We, we... We're going to exercise a lot of discipline, and we have exercised discipline. We have clearly, compared to a year ago, there has been some degradation in pricing, and that's clearly affected our results, but we talk about it often. We do have some floors that we've established. We're not bidding on everything at those floors today, but we're going to remain disciplined. We're not going to burn out our equipment.

Ben M. Palmer: Good question.

Ben M. Palmer: Yes.

Ben M. Palmer: We.

Ben M. Palmer: We're going to exercise a lot of discipline have exercised discipline, we have clearly compared to a year ago. There has been some degradation in pricing thats clearly.

Ben M. Palmer: Our results.

Ben M. Palmer: But but we talk about it often we do have some.

Ben M. Palmer: Floors that we've established.

Ben M. Palmer: Bidding everything at those floors today.

Ben M. Palmer: Today.

Ben M. Palmer: But we're going to remain disciplined we're not going to burn out of our burn out our equipment.

Ben M. Palmer: There's been a bit of volatility here recently. There have been some people dropping down, trying to quote-unquote take advantage of the spot market and the semi-dedicated market, so we're seeing some of that taking place. I don't know if that's an indication of some others having some pressure on their businesses, but it's something that our team is very agile, very in tune with the market. We're participating in a lot of opportunities, and as I said, we're going to remain disciplined.

Ben M. Palmer: There has been a bit of volatility here recently.

Ben M. Palmer: There have been some people dropping down trying to trying to take the quote unquote take advantage of.

Ben M. Palmer: Spot market in the same dedicated market. So we're seeing some of that taking place I don't know if that's an indication of some others, having some pressure on.

Ben M. Palmer: Their businesses.

Ben M. Palmer: But.

Ben M. Palmer: But it's not been that.

Ben M. Palmer: Our team is very agile.

Ben M. Palmer: Very in tune with the market.

Ben M. Palmer: Dissipating and a lot of opportunities.

Ben M. Palmer: And as I said, we're going to remain disciplined certainly I think the market to get to it to get better we're going to obviously have to see increased activity, we're going to see some of that capacity absorbed.

Ben M. Palmer: Certainly, I think the market, to get better, we're going to obviously have to see increased activity. We're going to have to see some of that capacity absorbed so that the service companies can have a little bit more control over the pricing, and demand rising to the point where we can realize a bit more. We're working really, really hard with our customers. You know, we're our own worst enemy with how efficient we're being.

Ben M. Palmer: To wear.

Ben M. Palmer: The service companies can have a little bit more.

Ben M. Palmer: Troll over over the pricing demand rising to the point, where we can.

Ben M. Palmer: Realize a bit more.

Ben M. Palmer: Alrighty.

Ben M. Palmer: Working really really hard with our customers.

Ben M. Palmer: We're our own worst enemy with how efficient we're being.

Ben M. Palmer: Our efficiency measures, when we look back over the last 12 months, our efficiency is up considerably on our fleet. And unfortunately, again, in this environment, it's not necessarily translating immediately or directly into better financial results, but I think that's consistent with everybody. We're just in a, not unusual, I mean, this is a normal market, right? It's a highly competitive market. We'll work through it. We're prepared to take more significant steps, steps if we need to, but right now, we feel that, you know, the revenue from pressure pumping was down slightly more than some of the other service lines, but, you know, the margin change or indication was similar. I mean, pressure pumping is not the only...

Ben M. Palmer: Our efficiency measures when we look back over the last 12 months our efficiency is up.

Ben M. Palmer: Considerably with with our fleet.

Ben M. Palmer: And unfortunately again in this environment is not necessarily translating immediately or directly into better better financial results, but I think that is.

Ben M. Palmer: I think thats consistent with everybody we're just in.

Ben M. Palmer: We are not.

Ben M. Palmer: Not unusual I mean, this is a normal market right, it's a highly competitive market.

Ben M. Palmer: And.

Ben M. Palmer: And.

Ben M. Palmer: We will we'll work through it we're prepared to take more significant.

Ben M. Palmer: Steps, if we need to.

Ben M. Palmer: But right now we.

Ben M. Palmer: We feel that we have talked about pressure pumping revenue was down slightly more than some of the other service lines, but but the margin change or indication was similar pressure pumping is not the.

Ben M. Palmer: It's not a contributor to any decline or an outsize contributor to changes in our operating performance. So everybody, on a relative basis, we're talking about a fairly small change in revenues. And so there's some volatility in their pressure pumping group, but it hung in just fine, as you would expect it with a kind of single, mid-single-digit revenue decline. So we're not displeased with the quarter. I think we're more disappointed with the environment, that it wasn't a little bit stronger coming out of the quarter.

Ben M. Palmer: It is not the contributor to it.

Ben M. Palmer: In any decline or an outsized contributor to changes in our operating performance. So everybody on a relative basis, we're talking about a fairly small change in revenues.

Ben M. Palmer: So there.

Ben M. Palmer: There is some.

Ben M. Palmer: Some volatility in their pressure pumping pressure pumping group again, just fine as you would expected with us with us.

Ben M. Palmer: Single mid single digit revenue declines.

Speaker Change: We're not displeased with quarter I think we're more more disappointed with the environment that it wasn't a little bit stronger coming out of the coming out in the fourth quarter.

Ben M. Palmer: Thanks, and I apologize for jumping on a little late, but when just looking at others from an activity level perspective, it feels like there's maybe modest growth in 2Q sequentially, just coming off of kind of early year inefficiencies in white space. Are you seeing the same thing into the second quarter? Any thoughts on that?

Speaker Change: Thanks, and I apologize because I jumped on a little late but when when just looking at others.

Speaker Change: Commentary from an activity level perspective.

Speaker Change: It feels like there is maybe modest growth in <unk> sequentially, just coming off of kind of early early year inefficiencies in white space are you seeing the same thing in the second quarter are you any I mean any thoughts on that.

Ben M. Palmer: Again, it's highly volatile. I wouldn't say we're seeing any strong indications up or down. It's sort of bumping along...

Speaker Change: Yes.

Speaker Change: It's again, it's highly volatile I wouldn't say, we're seeing any strong indication up or down.

Speaker Change: Sort of bumping along.

Speaker Change: At this point.

Stephen David Gengaro: Okay, great. Thank you for the details.

Speaker Change: Okay, great. Thank you for the details.

Speaker Change: Sure. Thank you Steve.

Speaker Change: Your next question comes from Don Crist with Johnson Rice. Please go ahead.

Donald Peter Crist: Your next question comes from Don Crist with Johnson Rice. Please go ahead.

Donald Peter Crist: Good morning, gentlemen.

Donald Peter Crist: Morning, gentlemen. I wanted to ask about, you know, non-pressure pumping activities. You know, obviously, they held up a little bit better than pressure pumping during the quarter. But are you seeing as competitive a market in, say, coil or downhole tools as you are in pressure pumping? I know pressure pumping is significantly competitive in the Permian, but, you know, obviously, your other services are in other basins. Just curious about demand there.

Donald Peter Crist: I wanted to ask about about.

Donald Peter Crist: Non pressure pumping activities.

Donald Peter Crist: Obviously, they held up a little bit better than pressure pumping during the quarter, but are you seeing as as.

Donald Peter Crist: Competitive a market and say coil or downhole tools as you are and.

Donald Peter Crist: Pressure pumping I know pressure pumping is significantly.

Donald Peter Crist: Competitive in the Permian, but you know obviously your other services or in other basins, just curious about demand there.

Ben M. Palmer: Don, let me make a comment and then I'll have Mike take it over. I just want to reiterate that pressure pumping, again, did not contribute outsized to the decline in EBITDA. It was fairly consistent across the board.

Speaker Change: Yes, good Don Let me Matt comment then I'll have Mike take it up I just want to reiterate that pressure pumping did again did not contribute outsized.

Speaker Change: The decline in EBITDA it was fairly consistent across the board, Mike can speak to downhole tools and some of the other service lines.

Michael L. Schmit: Mike can speak to Town Hall Tools and some of the other service lines.

Michael L. Schmit: Yeah, I mean, our other non-pressure pumping lines were down 3% on average. So, you know, the customer mix is a little different in those for us as well. So they were kind of more in line with the overall industry. We're also, as you know, spread out into various basins where our pressure pumping is really kind of more heavily concentrated in the Permian. So, you know, we have that diversity which helps those a little bit as well. So overall, the impact wasn't as strong in those, but, you know, it's been indicated that they were down slightly also.

Michael L. Schmit: Yes, I mean, they were down 3% on average our other non pressure pumping line. So the customer mix is a little different and those for us as well.

Michael L. Schmit: So they were kind of more in line with the overall industry. We're also as you know it's spread out in various basins.

Michael L. Schmit: Where our pressure pumping is really kind of more heavily in the Permian So yes.

Michael L. Schmit: We have that diversity, which helped those a little bit as well. So overall the impact wasn't as strong in those but as Ben indicated they were down slightly also.

Ben M. Palmer: It's really sitting back and looking at the performance for the quarter. Again, we're talking about mid-single-digit changes in revenues, and so the numbers and the margins can move around quite a bit with that small of a revenue change. The downhold tool's continuing to do well. We've come out with some new technology that we're really excited about and is working now (inaudible).

Michael L. Schmit: Israeli sitting back and looking at <unk>.

Michael L. Schmit: Performance for the quarter again, it was again, we're talking about mid single digit changes in revenues and so that can.

Michael L. Schmit: Yes.

Michael L. Schmit: <unk> and the margins can move around quite a bit with that small revenue change the downhole tools.

Michael L. Schmit: Continuing to do well, we've come out with some new technology that we're really excited about.

Michael L. Schmit: And working now.

Michael L. Schmit: I'll add too that our CapEx spend is spread across all our service lines, too, so we are making some investments in other than just the new DGB fleet in our other service lines also, so we expect those to pay off for us as the year goes on and in future years.

Michael L. Schmit: Strategically.

Michael L. Schmit: Determine the pricing for that particular, new tool that we think again grades a lot of efficiencies for our customers. So it's sort of a.

Michael L. Schmit: It's a mixed breath blessing. So we're looking at our pricing strategy, there and look forward.

Michael L. Schmit: Some of those.

Michael L. Schmit: The results coming through in next few quarters.

Speaker Change: Yes, again, not outsized changes or differences between the various service lines.

Ben M. Palmer: I appreciate that color. And can you remind us on the coil side, are you pretty much doing new drill outs? Or are you doing some kind of, you know, work over work on oil wells, etc. I'm just trying to drive, you know. Are you seeing any kind of pickup in coil?

Speaker Change: Ill add to our Capex spend is spread across all our service lines too so where we are making some investments in our other than just the new DGB fleet in our other service lines also so we expect those to pay off for us as the year goes on and in future years.

Speaker Change: I appreciate that color and can you remind us on the coil side are you pretty much doing new drill outs or are you doing some kind of.

Speaker Change: Workover work on oil wells et cetera, I'm, just trying to drive.

Ben M. Palmer: give not necessarily a neutral out perspective.

Speaker Change: Are you seeing any kind of pick up in coil.

Ben M. Palmer: Now, Drill Outs is certainly the largest component of that business's revenues. We do have a special project which is starting up very soon using some of our other specialty tools with coil tubing to do some P&A work that happens to be out in California. You wouldn't believe how difficult it is to start to do business in California, or maybe you would.

Speaker Change: It's not necessarily a new drill out perspective.

Speaker Change: We now drill out is certainly the largest component.

Speaker Change: Of that business revenues in that business, we do have a special project, which is starting up.

Speaker Change: Very soon using some of our.

Speaker Change: Some of our other specialty tools with coil tubing to do some P&A work.

Speaker Change: That happens to be out in California.

Speaker Change: You wouldn't believe how difficult it is to start to do business in California, or maybe you would but.

Ben M. Palmer: But we're looking forward to that. That could be a nice opportunity to expand and diversify coil tubing for us and add some nice incremental revenue. But otherwise, overall, I mean, it's a very appropriate question. There's not a significant amount of other coal tubing work out there at this point.

Speaker Change: Yeah, but we're looking forward to that could be a nice opportunity to expand and diversify.

Speaker Change: Coiled tubing for us and add some nice.

Speaker Change: Increment incremental.

Speaker Change: Revenue.

Speaker Change: But otherwise overall I mean, it's very appropriate question. There is not a significant amount of other coiled tubing work out there out there at this point in time.

Speaker Change: Okay.

Donald Peter Crist: Okay, I'll get back in queue. I appreciate the question or the answer. Thank you. Yeah, thank you.

Speaker Change: I'll get back in queue I appreciate the question or the answer thank you.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Sean Mitchell with Daniel Energy. Please go ahead.

Sean Mitchell: Your next question comes from Sean Mitchell with Daniel Energy. Please go ahead.

Sean Mitchell: Hi, guys. Thanks for taking the question.

Sean Mitchell: Hi guys, thanks for taking the question. Just wondering, as we look, you alluded to the kind of M&A and the E&P space, and I think you're right that activity should pick up as some of these assets get consummated by these folks in the end, and you get some splinters for some of these smaller, private guys. But what are the smaller guys saying, or the private guys saying? Because it seems like crude oil above 80 is coming down and continuing to come down. What they are saying is that the key driver here is that they don't have acreage to drill, or is it because the economics seem to make a ton of sense today at 80 above 80?

Sean Mitchell: Just wondering as we look at you alluded to the kind of M&A in the E&P space.

Sean Mitchell: And I think youre right that activity should pick up as some of these assets.

Sean Mitchell: Get consummated by these folks in.

Sean Mitchell: Get some splinters for some of these private smaller guys, but what are the smaller guys, saying or the private guys, saying because it seems like crude above 80 service costs coming down and continuing to come down.

Sean Mitchell: What are they saying is like the key driver here is it they don't have acreage to.

Sean Mitchell: To drill or is it because the economics seem to make a ton of sense today at 80 above 80.

Speaker Change: Great question Sean.

Ben M. Palmer: Great question, Sean. Be honest with you; I can't tell you that I personally have talked to a lot of these guys. But just on an overall basis, it's the same sort of thing with the price of oil where it is. It's kind of a mixed blessing, right? I mean, everybody's showing their discipline, and that's great.

Speaker Change: Yes.

Speaker Change: The honest with you I can't tell you that the.

Speaker Change: Personally I've talked to a lot of these gas, but it just on an overall basis at same sort of thing with the price of oil where it is this kind of a mixed blessing right.

Speaker Change: Everybody show discipline in Thats, correct, hopefully that that will result in some more stability, maybe the cycles won't be quite as severe maybe we're not seeing the uptick, but maybe we're not going to see a whole lot of significant downward pressure from here hopefully if everybody here.

Ben M. Palmer: Hopefully, that will result in some more stability. Maybe the cycles won't be quite as severe. Maybe we're not seeing an uptick, but maybe we're not going to see a whole lot of significant downward pressure from here. Hopefully, if everybody can show some sufficient discipline on the oil field services side, it should translate into a better operating environment. So I don't have an answer for you, but it's a great question

Speaker Change: Sufficient discipline on the oilfield services side, it should translate into a better a better operating environment. So I don't I don't have an answer for you, but it but it's a great question.

Speaker Change: And.

Ben M. Palmer: And I think a lot of people are talking about 2025 and gas prices and all that. I'm starting to look forward to 2025, and hopefully, things will maybe get a little bit better in the rest of this year, and we can look forward to a little bit stronger 2025. But we'll just have to see how some of these new companies shake out. They're still working on many of the best years haven't taken place yet.

Speaker Change: I think a lot of people are talking about 2025 and.

Speaker Change: And gas prices and all that everybody is starting to look forward to 'twenty five.

Speaker Change: Hopefully hopefully maybe get a little bit better than the rest of this year and we look forward to a little bit stronger.

Speaker Change: 2025, but.

Speaker Change: But we'll just have to see how the how some of these.

Speaker Change: New companies shake out.

Speaker Change: They are still working on many of divestitures haven't taken place yet so a lot of those management teams, probably arent getting ahead of themselves right.

Ben M. Palmer: So a lot of those management teams probably aren't getting ahead of themselves, right? They've got to first close and integrate some of those transactions before they get to work and start making some phone calls and sending out RFPs.

Speaker Change: Clothes and navigate some of those <unk>.

Speaker Change: Transactions before they get to work and start making some phone calls and sending out rfps.

Sean Mitchell: Thanks for that. And then maybe one more, just as you think about the consolidation in the EMP space, I know you guys are looking for opportunities in the service space. Are things picking up there in terms of consolidation opportunities? Kind of where do you see...

Speaker Change: Yes.

Speaker Change: Thanks for that and then maybe one more just as you think about the consolidation in the E&P space. I know you guys are looking for opportunities in the service space.

Speaker Change: <unk> picking up there in terms of consolidation opportunities and kind of where do you see.

Speaker Change: The best opportunities today for you guys.

Michael L. Schmit: you guys. Yeah, I can start.

Speaker Change: Yes.

Speaker Change: I can start this is Mike.

Michael L. Schmit: This is Mike. We're always looking. We're getting a lot of opportunities, you know, coming across our desks. It's just finding the right one at the right price and, you know, the right fit. We think we are, we will be successful in finding some good opportunities that make sense, but we're definitely actively looking for opportunities, and there are a lot of them out there, so I don't know, Ben, if you want to add to that. Yeah, yeah.

Michael L. Schmit: We're always looking we're getting a lot of opportunities coming across our desk. It's just finding.

Speaker Change: Right one at the right price and.

Speaker Change: Yes, the right fit we think we are.

Speaker Change: We will be successful in finding.

Speaker Change: Some good opportunities that make sense, but we are definitely actively looking at.

Speaker Change: Opportunities and there are a lot of them.

Speaker Change: Out there selling our Beth you want to add a lot.

Ben M. Palmer: A lot have been presented. We've had discussions with several. I think seller expectations on valuation are still...still haven't...

Speaker Change: A lot have been presented we have had.

Speaker Change: Discussions with several.

Speaker Change: Think seller.

Speaker Change: Seller expectations on valuation or still still haven't.

Ben M. Palmer: lined up. But we're going to remain disciplined, right? We don't like to do transactions just to do transactions. Yep.

Speaker Change: Okay.

Speaker Change: Lined up.

Speaker Change: But we're going to remain disciplined right, we don't like to do transactions just to do transactions.

Michael L. Schmit: And so, but I think, especially, I think, you look at our results, and it's not, again, not what we wanted it to be, but I think we'll see that others in the space are, you know, the results are not where they want them to be either. So I think, and the privates are seeing the same thing, you know, with some of our discussions with some of the privates, private oilfield service companies, you know, I think they're feeling the pressure, and I think that, you know, we'll see what happens in the future. I think that the environment will get better, that is, for finding some people who maybe will be a little more accommodative or reasonable, whatever you want to say, and maybe those will come our way.

Speaker Change: Yes.

Speaker Change: And.

Speaker Change: So I think.

Speaker Change: Yes, especially I think you'd look at our our results and it is not yet not what we wanted it to be but I think we'll see that others others in the space.

Speaker Change: The results not where they want them to be either.

Speaker Change: So I think and the privates are seeing the same thing with some of our discussions with some of the profits.

Speaker Change: Postal service companies.

Speaker Change: They are they are feeling the pressure in <unk>.

Speaker Change: I think that.

Speaker Change: I think you I think that environment will get better that is for finding some people who may be will be a little more accommodative or reasonable wherever you want us to say.

Speaker Change: And maybe those will come our way but.

Speaker Change: We are we're focused on some of our other some of whom some of our service lines, where we have nice market share.

Ben M. Palmer: But we're focused on some of our service lines where we have a nice market share. Pressure pumping, we're open to an opportunity. Some of the smaller pressure pumping companies, you know, sometimes, the condition of the equipment and things like that can be an issue. But we're seeing multiple, multiple, multiple opportunities. You can imagine people would love to merge their company into our balance sheet. So we have to be mindful of that as well. All right, guys.

Speaker Change: Pressure pumping we are open to.

Speaker Change: An opportunity some of the smaller pressure pumping companies.

Speaker Change: Sometimes you have to.

Speaker Change: The condition of the equipment and things like that can be can be an issue.

Speaker Change: But but we are seeing multiple multiple multiple opportunities you can imagine people would love to merge their company and our balance sheet.

Speaker Change: Yes, we have to be we have to be mindful of that as well.

Sean Mitchell: All right, guys. Thanks.

Speaker Change: Alright, guys. Thanks.

Speaker Change: Thank you Sean.

Speaker Change: Your next question comes from Stephen <unk> with Stifel. Please go ahead.

Stephen David Gengaro: Your next question comes from Stephen Gengaro with Stiefel. Please go ahead.

Stephen David Gengaro: Thanks. I just wanted to follow up. And I don't think you said this earlier in the call. When you look at the active fleets you have now, and I think you have 10 horizontal fleets in total, can you just give us kind of where the fleet count was during 1Q and where you expect to be during 2Q? Like, were they active and just underutilized, or has something been kind of... taking off the marketed fleet short term?

Speaker Change: Thanks.

Stephen: Wanted to follow up.

Stephen: And I don't think you said is earlier in the call. When you look at the active fleets you have now and I think you have 10 horizontal fleets in total can you just give us kind of where the fleet count.

Speaker Change: <unk> and where you expect to be <unk> like were they active in just under utilize or has anything been kind of <unk>.

Speaker Change: Take it off the marketed fleet short term.

Michael L. Schmit: Yeah, so they were all active during the quarter, but that said, just the utilization wasn't, you know, exactly where we would want it. We typically don't give the exact kind of utilization percentage, but obviously, our newer Tier 4s were utilized a lot more than some of the other fleets, but we're still fully staffed, not as staffed as we were this time last year, but enough that, you know, if the work's there, we can get them going.

Speaker Change: Yes, so they were all active during the quarter, but that said just utilization wasn't exactly where we would want it.

Speaker Change: We typically don't give the exact kind of utilization percentage, but.

Speaker Change: Obviously, our newer tier for us.

Speaker Change: We utilized a lot more than some of the other fleets but.

Speaker Change: We're still fully staffed.

Speaker Change: Not not as staffed as we were this time last year, but.

Speaker Change: If.

Speaker Change: If the works there we can get them get them going so.

Michael L. Schmit: So we haven't taken any down, and in the current environment, we have no plans to set any aside at the moment, other than the one that we'll take when the new Tier 4 comes on board. You know, as Ben said, we're not going to add capacity. We'll take a Tier 2 down when that one comes on board later this quarter.

Speaker Change: We haven't taken any down in the current environment and have no plans to set an ESI at at the moment.

Speaker Change: Yes.

Speaker Change: So that's number one.

Speaker Change: New tier four comes onboard as Ben said, we're not going to add capacity will take a chair to bandwidth that when it comes on board later this quarter.

Stephen David Gengaro: Okay, thank you. And then one more. When we think about the bigger players, they talk all about these long-term arrangements and, for lack of a better word, some level of contracted assets with some big EMPs. When you think about your fleet, your strategy, how does that impact you? I mean, it seems there's been consolidation, so there are probably more bigger players. But does that give you kind of an advantage when things ultimately turn out with the smaller players and available assets? Like, how should we think about the short and long-term implications of kind of consolidation and a lot of players going after sort of term contracts and how that impacts you?

Speaker Change: Okay. Thank you and then one other.

Speaker Change: When we think about.

Speaker Change: The bigger players right. They talk all about these long term arrangements in for lack of a better word some level of contracted assets with some big E&ps.

Speaker Change: When you think about your fleet and your strategy, how does that impact you I think it seems to be there's been consolidation satisfied more bigger players.

Speaker Change: But does that give you kind of an advantage when when things ultimately turn with the smaller players and available assets or how should we think about the the short and long term implications of kind of consolidation and a lot of players going after sort of the term contracts and how that impacts you.

Ben M. Palmer: Yeah, we certainly hope so. I mean, obviously, it's, it's, we wouldn't see that, we haven't seen that, you know, right now in this quarter, but our hope is, you know, as things stay where they are, that, you know, some of the smaller players and private investors will get more active in the second half of the year and will benefit then. But you know that's certainly our belief.

Speaker Change: Yes, we certainly hope so I mean, obviously.

Speaker Change: It's we will see that we haven't seen that right.

Speaker Change: Right now in this quarter, but our hope is.

Speaker Change: As things if things stay where they are that some of the smaller player.

Speaker Change: Players in privates will get more active in the second half of the year and will benefit then, but that's certainly our belief and thats exactly right yes.

Ben M. Palmer: That's exactly right, yes, I mean our results given our customer base and where we are might be a little more volatile than some others, but certainly that gives us opportunity for the upside, right? So there may be a little bit more downside, but there's opportunities for the downside. We definitely think that's the case. Great question.

Speaker Change: Yes, I mean, our results given our customer base and where we are might be a little more volatile than some others, but certainly that gives us opportunities as upside right. So there may be a little bit more downside, but there's opportunities to the downside, we definitely think thats good.

Speaker Change: <unk> great question.

Stephen David Gengaro: Good. Thanks. Thank you again, gentlemen. Thank you, Steve. Thanks.

Speaker Change: Thank you again gentlemen.

Speaker Change: Thanks.

Speaker Change: Your next question comes from Chuck <unk> with Susquehanna. Please go ahead.

Chuck Minervino: Your next question comes from Chuck Minervino with Susquehanna. Please go ahead.

Chuck Minervino: I was just wondering if you could provide a little bit more color on the kind of pricing situation in FRAC right now. You talked about some competitive pricing.

Chuck: Hi, good morning.

Chuck: Good morning.

Chuck: I was just wondering if you could provide a little bit more color on kind of the pricing situation in Frac right now you talked about some competitive pricing.

Ben M. Palmer: Do you think it's kind of bottoming here, or is it still kind of trying to find its bottom? Just wanted to try to get a sense of where we are in that. And also, kind of tied to that, you mentioned some FRAC fleets coming in from gas basins. Has that stopped, or do you expect that will continue as well?

Chuck: Do you think it's a it's kind of bottoming here or is it still kind of trying to find its bottom just wanted to try to get a sense of where we are in that and also kind of tied to that you mentioned some some frac fleets coming in from gas basins has that stopped or is do you expect that will continue as well.

Ben M. Palmer: It's all in flux. I mean, we are hopeful that we're reaching a trough or a bottom. As I indicated, we've got our stated price at which we won't work below. We're not bidding on everything at that particular price level, so we'll see. You know, if at some point we're not winning anything at the level at which we're bidding it, we'll have to take more dramatic steps. But we're hopeful that the industry will be rational and appropriately rational, and we are monitoring it very closely.

Chuck: Chuck.

Chuck: It's all in blocks I mean, we are hopeful that.

Speaker Change: We're reaching a trough or a bottom as I indicated we've got our stated price of which we won't work below we're.

Speaker Change: We're not bidding everything at that particular price level.

Chuck: So that we will see if at some point, we're not winning anything at the level at which we're bidding it will have to take more more dramatic steps.

Speaker Change: But we're hopeful that the industry will be rational.

Speaker Change: And appropriately rational and and will and we are monitoring it very closely.

Ben M. Palmer: And I can tell you that, you know, competition, all of the industries we compete in, all of the oilfield services are incredibly competitive. Our customers do an incredible job exploiting the fact that they have lots of choices.

Speaker Change: And I can tell you that competition.

Speaker Change: All of the industries, we compete in all of oilfield services is incredibly competitive.

Speaker Change: Our customers do an incredible job.

Speaker Change: Exploiting the fact that they have lots of choices.

Speaker Change: And.

Ben M. Palmer: And, you know, if our industry could show some discipline, it would, or more discipline. But it is competitive, you know; this is capitalism, so we understand that. And so we're hopeful we're reaching that point. You know, it may help with some of the smaller players who, you know, at the very low end of the market, are probably bidding more aggressively, but they're going to be, you know, wearing out their equipment and perhaps don't have the capital to be able to invest back in the fleet, like others do, like us.

Speaker Change: Yes.

Speaker Change: If our industry can show some discipline that we have wood or more disciplined but it is competitive.

Speaker Change: Capitalism, but we understand that and.

Speaker Change: So we're hopeful we're reaching that point it may help with some of the smaller players who.

Speaker Change: At the very low end of the market that they are probably bidding more aggressively.

Speaker Change: But theyre going to be wearing out their equipment and perhaps don't have the capital to be able to invest back in the fleet.

Ben M. Palmer: So we're trying to be very mindful. We don't want to burn our equipment up. We want to be in a position, obviously, to generate a nice return on our investment. So we're not going to dip down too low, but we're hoping things will shake out and there'll be some improvement.

Speaker Change: Others do like us.

Speaker Change: So we're trying to be very mindful, we don't want to burn our equipment up we want to we want to be in a position obviously to generate a nice return on our investment. So we're not going to we're not going to dip down to ly, but we're hoping things will shake out and know there'll be some improvement off obviously a lot a lot of focus on the.

Ben M. Palmer: Obviously, a lot of focus on the E-Fleet market, a lot of investment going in at that upper end of the market. I have to believe that competition there is, you know, going to be a big part of that, and it will intensify as well. And so, it's an ever-changing market. Technology is changing constantly. We're hearing of new types of technology that are different, innovative, and could be quite interesting, which is one of the reasons we haven't, at this point, tried to go into electric technology in a big way because it is changing, right?

Speaker Change: The fleet market a lot of investment going in it that that upper end of the market have to believe that competition. There is.

Speaker Change: Intensifying as well.

Speaker Change: And.

Speaker Change: So.

Speaker Change: It's an ever changing market technology's changing constantly.

Speaker Change: We're hearing of new types of technology.

Speaker Change: There are.

Speaker Change: Current innovative and could be quite interesting, which is one of the reasons we haven't.

Speaker Change: At this point tried to go into electric technology in a big way because it is changing right. It is changing and it is evolving and as we noted in our comments.

Ben M. Palmer: It is changing, and it is evolving. And as we noted in our comments, the ideal or appropriate configuration for the equipment and the ability to get power sources are evolving and changing. Lots of people are spending a lot of time coming up with viable solutions that, hopefully, at the appropriate time, we'll be able to exploit.

Speaker Change: What the ideal or appropriate configuration for the equipment and the and the ability to get power sources is evolving and changing.

Speaker Change: Lots of people are spending a lot of time coming up with viable solutions that hopefully at the appropriate time, we will be able to exploit.

Speaker Change: At this point, we're monitoring that market and feel good about our position in the market that we focus on.

Michael L. Schmit: And I'll add in relation to your question about potentially more fleets from gassy basins moving in to Permian or other areas, gas prices have been pretty low for a while, so we don't anticipate there's a lot more movement that could happen because we don't think there are a lot of fleets left in gassy basins that, you know, are not working. So if they're at this price, you know, we don't anticipate there to be any incremental movement.

Speaker Change: And I'll add in relation to your question about.

Speaker Change: Potentially more fleets from gassy basins, moving in the Permian or other areas.

Speaker Change: <unk> prices have been pretty low for a while so we don't anticipate there is a lot more movement that could happen because we don't think there are a lot of fleets left in gassy basins that.

Speaker Change: Are not working there.

Speaker Change: At this price.

Speaker Change: Anticipate there to be incremental movement.

Michael L. Schmit: Got it. And then just one more, if you could just talk me through a little bit about the free cash flow outlook for the year here. It sounds like maybe the CapEx number might be coming down a little bit. Also, you mentioned a tax refund coming in, and I guess a little bit of the moving parts there with EBITDA as well.

Speaker Change: Got it.

Speaker Change: Then just one more if you can if you could just talk me through a little bit.

Speaker Change: The free cash flow outlook for the year here it sounds like maybe the capex number might be coming down a little bit.

Speaker Change: Russell you mentioned tax refund coming in.

Speaker Change: And I guess, a little bit of the moving parts, there with with EBITDA as well.

Michael L. Schmit: Well, we did receive the tax refund that came in this week, actually, so that was good. And, you know, we said if the... if things went well, we would move to the lower end of the range. Obviously, we're hopeful that's not the case. But I mean, we have flexibility in that spend, which I guess was the point there. So if things are good, we'll definitely spend the money, and we'll continue to invest in our businesses.

Russell: Well, we did receive the tax refunds that came in this week actually set so that was.

Russell: Good and.

Russell: We said if if the.

Russell: If things slow we would move to the lower end of the range on obviously, we're hopeful that not the case.

Russell: I mean, we have flexibility in that spend I guess is the point there.

Russell: So.

Russell: If things are good we'll definitely spend the money and continue and will continue to invest in our businesses. As you know we have a very strong balance sheet, we've got over $200 million in cash and so.

Michael L. Schmit: As you know, we have a very strong balance sheet. We've got over $200 million in cash. You know, we're not concerned currently about our ability to generate cash for the rest of the year and, you know, meet all of our CapEx needs, and we, you know, still will plan to. We think we have plenty to do in acquisitions if we find the right one and also return cash to our shareholders.

Russell: We're not concerned currently.

Russell: Yes.

Russell: About our ability to generate cash for the rest of the year and.

Russell: <unk> meet all of our Capex needs.

Russell: Yes, it's still planned.

Russell: We think we have plenty.

Russell: To do an acquisition if we find the right one.

Russell: Also returning cash to our shareholders. So not a lot of concerns that the comment on Capex is just that's a lever we can pull.

Michael L. Schmit: So not a lot of concerns that the comment on CapEx is just that it's a lever we can pull to ensure that we do continue to generate the cash we need to for our plans. Our plans this year include some, I'll call them...

Russell: To ensure that we do continue to generate the cash we need to for our plans. Our plans. This year include some I'll call them strategic investments, we don't have a tremendous amount of.

Michael L. Schmit: Our plans this year include some, I'll call them, strategic investments. We don't have a tremendous amount of specific growth capacity investments, but we're making a lot of targeted strategic investments in different parts of the business that we think are, obviously, appropriate and are going to pay off. That's part of what's driving our number this year, but we can manage it down. Certainly, capitalized maintenance would come down naturally if activity levels were to fall.

Russell: Specific growth capacity investments, but we're making a lot of targeted strategic investments in different parts of the business that we think are obviously, we think is appropriate and we're going to pay off that's part of what's driving our number this year, but we can manage down certainly the capitalized maintenance would come down naturally if activity levels waterfall.

Michael L. Schmit: That one would kind of manage itself, if you will. So the upper end of that 250 has some extra quote-unquote extra stuff in there that is incremental, so that's really not our annual run rate at this level of activity. It'd be something closer to the lower end of the range. Got it. Thanks.

Russell: That when we kind of manage itself if you will.

Russell: So.

Russell: The upper end of that 250 has some quote unquote extra stuff in there that.

Russell: Is incremental so that's really not our annual annual run rate.

Russell: At this level.

Russell: The level of activity it would be something closer to the lower end of the range.

Speaker Change: Got it thank you.

Speaker Change: Sure. Thank you.

Speaker Change: Again, if you would like to ask a question. Please press star one now.

Operator: Again, if you would like to ask a question, please press star 1 now. If there are no further questions in the queue, I will turn the call back to Ben Palmer for any closing remarks.

Speaker Change: Seeing no further questions in the queue I will turn the call back to Ben Palmer for any closing remarks.

Ben M. Palmer: Thank you, operator, and thank you everybody for joining us this morning, and we look forward to catching up again soon. Take care.

Ben M. Palmer: Thank you operator, and thank you everybody for joining us this morning, and we look forward to catching up again soon take care.

Operator: This will conclude our conference call. Please note that a replay of today's call will be available on marineproductcorps.com within two hours following the completion of this call. Thank you for your participation. You may now disconnect.

Speaker Change: This will conclude our conference call. Please note a replay of today's call will be available on marine product clips dotcom with two hours. Following the completion of this call. Thank you for your participation you may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].