Q3 2024 KLX Energy Services Holdings Inc Earnings Call
Greetings and welcome to the Calix Energy services 2024 third quarter earnings Conference call.
Speaker Change: At this time, all participants are in listen only mode.
Speaker Change: A question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host Ken Dennard with Investor Relations. Thank you. Mr. Dennard you may begin.
Ken Dennard: 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 2024 results.
Ken Dennard: With me today are Chris Baker, <unk> synergies, President and Chief Executive Officer, and Keefer, Lehner, Executive Vice President and Chief Financial Officer.
Ken Dennard: Following my remarks management will provide a high level commentary on the financial details of the third quarter and outlook before opening the call for your questions.
Ken Dennard: Will be a replay of today's call there'll be available via webcast on the company's website at <unk> Dot com.
Ken Dennard: It will also be a telephonic recorded replay available until November 15th 2024.
Ken Dennard: More information on how to access. These replay features was included in yesterday's earnings release.
Ken Dennard: Please note that information reported on this call speaks only as of today November one 2024, and therefore, you're advised the time sensitive information may 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.
Ken Dennard: However, various risks 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.
Ken Dennard: I understand certain of those risks uncertainties and contingencies.
Ken Dennard: The comments today will also include certain non-GAAP financial measures.
Ken Dennard: Additional details and reconciliations to the most direct comparable GAAP financial measures are included in the quarterly press release, which can be found on the calix energy website.
Speaker Change: And now with that behind me I'd like to turn the call over to Chris Baker, Chris.
Chris Baker: Thank you Ken and good morning, everyone.
Chris Baker: For joining our Q3 call, where we will discuss our third quarter results and provide color on market trends and calix is outlook.
Chris Baker: Starting with our Q3 results. We are pleased to report another strong quarter for calix.
Chris Baker: Our team's execution in the current market continues to be exemplary in a result came in at the high end of our <unk>.
Chris Baker: We increased Q3 guidance ranges.
We experienced further improvement over our strong second quarter results outperforming broader market macro trends specifically.
Chris Baker: Our consolidated third quarter results included a $189 million in revenue $28 million and adjusted EBITDA and adjusted EBITDA margin of 15%.
Chris Baker: Further demonstrating the overall strength of our geographic mix customer mix product service offerings and market position.
Chris Baker: Despite another consecutive sequential 3% decline in average quarterly operating U S land rig.
And a 7% sequential decline in active U S. Frac spreads calix was able to navigate the market to deliver another strong quarter.
Chris Baker: In fact, <unk> manage to generate approximately $334000 for average operated U S land rig the third highest revenue per average rig metric since we began starting to track that metric post the merger.
Chris Baker: By leveraging our geographic diversification and strong customer relationships and market position.
Continued strength of our third quarter also stands out against the backdrop of ongoing industry challenges and differentiates calix for my non diversified peers, demonstrating the merit of our strategy and our ability to execute effectively across various market conditions.
Chris Baker: Geographically the southwest represented 36% of Q3 revenue compared to 39% in Q2.
Chris Baker: The northeast mid Con represented 28% of revenue compared to 27% in Q2, and the Rockies, representing 36% of revenue compared to 34% in Q2 illustrating continued strength in our Rockies business steady performance in the southwest and a sharp rebound in the northeast mid con compare.
Chris Baker: To Q2.
Chris Baker: From an end market perspective completion focused activity continues to try approximately half of our revenue and accounted for 54% of Q3 revenue up from 51% in Q2.
Chris Baker: Production and intervention drove 25% of quarterly revenue down from 28% in Q2.
Chris Baker: And drilling drove 21% flat to Q2.
Chris Baker: Q3 had an improved completions utilization calendar and saw continued strength across our production and intervention directed solutions.
Additionally, we experienced continued positive momentum with our calix downhole technology offerings differentiated fleet of rental asset and market leading completions performance.
Chris Baker: Our safety record continues to be industry, leading with continued scale ex record low total recordable incident rate.
Chris Baker: These technological capabilities combined with our operational expertise and geographic footprint spanning key base and contribute to our best in class competitive positioning with the largest less active customers in the market.
I'll now turn the call over to Keefer to review our financial results in greater detail and will return later in the call to discuss our outlook and optimism for 2025.
Chris Baker: Keefer.
Keefer Lehner: Thanks, Chris Good morning, everyone.
Keefer Lehner: As Chris mentioned, we reported Q3 revenue of $189 million, representing a 5% sequential increase from Q2.
Keefer Lehner: Our consolidated Q3, adjusted EBITDA was $27 $8 million up 3% sequentially with an adjusted EBITDA margin of 15%, which was consistent with Q2.
Keefer Lehner: On a consolidated basis, the sequential increase in revenue was driven by improved crew utilization and increased activity with higher contributions from our Rockies and northeast mid Con segment and within those are coiled tubing and pressure pumping product service lines drove a majority of the sequential improvement respectively.
Keefer Lehner: The southwest and northeast mid Con segment contributed 36% and 28% of Q3 revenue respectively.
Keefer Lehner: Late in the southwest by our directional drilling rentals and Frac rentals product service lines and then the mid con by our pressure pumping accommodations and directional drilling offerings.
Keefer Lehner: The Rockies contributed 36% led by a coiled tubing rentals and tech services.
Keefer Lehner: Total SG&A expense for Q3 was $21 $2 million when you back out nonrecurring costs adjusted SG&A expense for Q3 would have been $18 $6 million or just nine 9% of quarterly revenue.
Keefer Lehner: The cost structure changes, we implemented in Q2 related to insurance and third party professional fees continued to benefit us in Q3.
Keefer Lehner: These cost reductions are expected to continue through the remainder of 2024 and beyond.
Keefer Lehner: Now moving to our segment results.
Keefer Lehner: For the Rocky Mountains segment revenue operating income and adjusted EBITDA were $67 $9 million $9 $7 million and $16 $6 million, respectively for the third quarter of 2024.
Keefer Lehner: This represents a 10, 6% sequential increase in revenue over the second quarter of 2024, largely due to incremental activity and mixed movement on pricing depending on the underlying P. S. L.
Keefer Lehner: Operating income and adjusted EBITDA.
Keefer Lehner: Decreased sequentially by 8% and 3%, respectively, driven largely by a shift in PSL mix, including reduced rental activity due to short term customer scheduling issues, along with slightly elevated costs related to asset relocation and redeployment that we do not expect going forward.
Keefer Lehner: In the southwest region, which includes the Permian and Eagle Ford revenue operating income and adjusted EBITDA were $68 $6 million $700000 and $8 $7 million, respectively for the third quarter of 2024.
Keefer Lehner: This represents a slight 2% sequential decrease in revenue, which slightly outpaced the decline in underlying our regional rig count and frac spread count of approximately 3% and 16% respectively.
Keefer Lehner: Segment operating income and adjusted EBITDA decreased by 73% and 16% respectively. Due largely to a short term shift in PSL mix driven by customer scheduling, including reduced revenue across our completion production and intervention solutions offset by increased revenue from our drilling solutions.
Keefer Lehner: Yeah.
Keefer Lehner: In the northeast mid Con segment revenue operating income and adjusted EBITDA were $52 $4 million $2 million and $11 million, respectively for the third quarter of 2024.
Keefer Lehner: This represents a 7% sequential increase in revenue driven largely by increased completions activity.
Segment operating income and adjusted EBITDA increased by 180% and 70%, respectively, largely due to higher activity levels reduced white space within our completions P. S L.
Keefer Lehner: And our successful implementation of operational and cost management of fishy efficiencies within the segment.
Keefer Lehner: At corporate our operating loss and adjusted EBITDA loss for Q3 were $11 3 million and $8 $4 million, respectively. Corporate adjusted EBITDA is expected to remain at similar levels going forward.
Keefer Lehner: Turning to our balance sheet cash flow and capitalization.
Keefer Lehner: We ended the quarter with a cash balance of $83 million and liquidity of $126 million, including $43 million of availability not borrowed on our September 2020 for borrowing base certificate.
Keefer Lehner: Our ABL and senior secured notes both mature in the fall of 2025, the ABL matures in either August or September 2025, based on a springing maturity on our senior secured notes mature on November one 2025.
Keefer Lehner: Now that the call premium has fallen away and given our strong operating performance and momentum optimism around 2025, and a Q3 annualized net leverage ratio below two times, we're actively considering our options to refinance our capital structure in a constructive manner.
Keefer Lehner: Q3 capital expenditures were $21 million Q3 will be our highest capex quarter, mainly due to lumpy timing of early 2024 orders and is not indicative of a normalized level of quarterly capex for <unk> at this activity level.
Keefer Lehner: Net capex defined as Capex less asset sales was approximately $18 $4 million for the quarter.
Keefer Lehner: Looking ahead, we expect full year 2020 for capex to be in the range of $55 million to $60 million with approximately 80% of full year capex to be earmarked for maintenance expenses.
Keefer Lehner: Capex net of asset sales for the year to date period is approximately $40 million.
Keefer Lehner: Of which only $30 million as maintenance oriented.
Keefer Lehner: Our capital allocation strategy supports our high return proprietary product lines via prudent disciplined spending while maintaining our existing asset base to ensure we can meet the demands of our customers most challenging projects.
Keefer Lehner: Overall, our focus remains on maximizing margins generating free cash flow further deleveraging and maintaining the financial flexibility necessary to effects of effectively execute our strategy.
Speaker Change: I'll now I'll now hand, it back to Chris for his outlook and concluding remarks.
Chris Baker: Thanks Keefer.
Chris Baker: We look ahead, we believe our diversified portfolio and adaptable business model have positioned us well to navigate the market.
Chris Baker: We're well positioned with the right customers in the right basins to continue capturing market share and driving improved performance into 2025.
Chris Baker: Building on this strong foundation it is worth reflecting on our journey.
Chris Baker: The results we've delivered over the past few years demonstrate the hard work and dedication of the calix team.
Chris Baker: We've successfully realigned our customer base refocused our operations to ensure in basin scale upgraded our asset fleet launched cutting edge proprietary technology and consistently demonstrated market leading performance and execution.
Chris Baker: We've also delivered differentiated financial performance compared to peers during a time when the industry activity levels and market conditions have softened from the rig count peak in Q4 of 2022.
Chris Baker: For perspective over the trailing 24 month period, <unk> generated approximately $240 million of adjusted EBITDA and reduced net debt by over 20%.
Chris Baker: As we think about current and future market dynamics. It is important to consider the broader industry trends.
Despite near term volatility the longer term outlook for oil and natural gas should continue to support sustained level of capital investment and activity.
Chris Baker: While drilling and completion efficiencies have driven productivity gains year to date in the onshore U S market, we're observing a potential plateau and those efficiency improvements.
Chris Baker: Our peers have noted there is an expectation of an outsized impact from budget exhaustion and seasonality in the later part of this year, partly due to these efficiency gains.
Chris Baker: However in 2025, we anticipate the efficiency gains are likely to stabilize making it challenging to envision continued production increases based on the current activity set.
Chris Baker: This doesn't necessarily indicate a dramatic uptick in U S activity, but it does suggest the potential for growth on.
Chris Baker: On the gas side, we continue to believe that LNG export in data center, driven demand will lead to incremental gas directed activity <unk>.
Speaker Change: Given these drivers we believe calix is well positioned due to our outsized exposure to the larger operators are unwavering focus on operational excellence and a proven ability to adapt quickly to evolving market conditions.
Speaker Change: Looking ahead to our seasonally slower Q4 and into 2025.
Speaker Change: For Q4, we expect a sequential decline in revenue of approximately 10% to 14% primarily led by the upcoming winter holidays and customer budget exhaustion adjust.
Speaker Change: Adjusted EBITDA margin during Q4 is expected to range between nine and 13%.
Speaker Change: Yeah.
Speaker Change: While we anticipate the seasonal Q4 activity declined due to an extended Thanksgiving break in late December slowdown we are encouraged about 2025.
Speaker Change: Q3 was our strongest quarter of the year and September was our strongest month of the year.
Speaker Change: We are actively engaged with new and existing customers on 2025 plans and these conversations have been very constructive and indicate incremental positive commercial momentum for 2025.
Speaker Change: This along with an expected nonrecurring.
Speaker Change: Q1, 2020 for safety and weather events should underpin a strong year over year growth steady expanding margins and expanded free cash flow generation.
Speaker Change: Excluding the transitory impact in Q1, our annualized Q2, and Q3 combined adjusted EBITDA total approximately $110 million illustrating calix is earning capacity.
Speaker Change: Right.
Speaker Change: Market softness.
Speaker Change: We are optimistic about 2025, and this view is underpinned by latest customer feedback and what we know today.
Speaker Change: Vigilant about the macro market volatility such as ongoing geopolitical tensions commodity price volatility.
Speaker Change: Corresponding shifts in customer spending patterns.
Speaker Change: As I mentioned earlier <unk> is much more nimble and able to be proactive and responsive to market conditions.
Speaker Change: As such we are better able to manage our cost structure and offerings across various market environments.
Speaker Change: In summary, we believe calix stands apart from its peers with a performance driven technologically differentiated offerings.
Speaker Change: Employee safety record and premier job execution.
Speaker Change: These capabilities combined with our geographic footprint contribute to our best in class competitive position.
I'd like to thank our customers and shareholders for their continued support of <unk> and most importantly, our team members for their central role in our collective successes.
Speaker Change: With that we'll now take your questions operator.
Speaker Change: Thank you.
Speaker Change: Now be conducting a question and answer session.
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Speaker Change: One moment. Please so we poll for questions.
Thank you and our first question today is from the line of Steve <unk> with Sidoti and company. Please proceed with your questions.
Good morning, Chris Good morning, Keefer, Thanks for all the detail on the call.
Chris Baker: Good morning, Steve.
Steve: I wanted to start with the to me the positive surprise was your strengths in northeast mid Con, obviously that had been trending.
Steve: One direction for several quarters following the rig count and completion activity. This quarter, we saw a much better revenue sequentially in margins.
Question is Mrs.
Steve: Specifically, one off how sustainable that is.
Steve: Any kind of commentary you can give us around northeast mid con from the corner.
Speaker Change: Yeah. Appreciate the question Steve to your point revenue was up 7% is predominantly as I think Keith mentioned in his prepared remarks, driven by pressure pumping flowback in <unk> and we definitely saw a lot of margin expansion I think that's kind of a tale of two tapes. It was continued right sizing earlier in the year of arc.
Speaker Change: Quite a haynesville operation.
Speaker Change: And then it was overall revenue expansion a few slice b G O between the Midtown in the northeast the northeast business also saw less white space in Q3 than it actually did in Q2.
Speaker Change: We just had some completions calendar issues in Q2, so I definitely think it was more normalized.
Speaker Change: And then likewise in the Midtown or accommodations business, all doing well and of course pressure pumping was up.
Fairly materially quarter over quarter.
Speaker Change: Okay.
Speaker Change: Perfect and then switch to the Rockies, where I know in <unk>, you had a really positive mix shift maybe a little bit down this quarter can you talk a little bit about that shift.
Speaker Change: Yeah, I think to your point the Rockies had a lot of pent up demand coming out of the train transitory issues that we saw in Q1.
Stand downs et cetera in Q2.
Speaker Change: Q3 actually wasn't down that much as more flat. It's just to your point the mix shift are the incremental revenue there was predominantly driven by really D D.
Speaker Change: [noise] tubing, and wireline, which are inherently lower margin product lines, but our tech services at our rentals platform held in well you just didn't see the incrementals on the slight incremental revenue.
Speaker Change: Got it.
Speaker Change: When you think about cash flow this quarter outside of.
Speaker Change: The elevated capex in this quarter, you actually would have been a pretty good cash flow quarter.
Speaker Change: Could you help us out and how Youre thinking what's your target for year end in terms of can you get close to breakeven if the weather breaks your way positively obviously in <unk>.
Speaker Change: Yeah.
Speaker Change: So I think look with regards to <unk>, specifically where quarterly reporting.
Speaker Change: Give me a bit earlier this year than normal this quarter. So I think our estimate range is a bit wider maybe than usual <unk>.
Speaker Change: Well, 12% sequentially topline last year this year seems a bit similar.
Speaker Change: Some of the caveat being we got midweek holidays with with Christmas on a Wednesday. So as you know operators are more prone to taken all extended holiday days, what we typically see is our drilling services hold then well drilling rigs continue that just they really act with completions roll a little bit and production and intervention services role.
Speaker Change: A bit more severely than the first two P. S L, which can kind of pressure margin that being said look this year.
Speaker Change: The Rockies in the forecast on the P&I side, it's holding in thus far exceptionally well the Rockies has been warmer than usual.
Speaker Change: And so you know I think our range on margin, maybe candidly a bit conservative.
Speaker Change: Or anything else on free cash flow on the cash flow side.
Speaker Change: Yeah.
Speaker Change: Related to Capex starting there.
As you noted on the Q3 Capex was outside that with a little bit lumpy, there and I think as we discussed in the prepared remarks.
Speaker Change: It is at an elevated level, that's not reflective of what we view as normalized capital spending for this level of market activity. So we do expect to see a normalization.
Speaker Change: Capital spending in Q4.
Speaker Change: Implicitly, we're kind of guidance for Q4 Capex and.
Speaker Change: $5 million to $10 million range to get to the full year 2024 number.
Speaker Change: That we've guided to and then the only other thing I'd point out as you think about Q4 cash flow is that we do have a coupon payment.
Speaker Change: November one.
Speaker Change: So that does hit in the fourth quarter as well.
Speaker Change: Because as you transition to thinking about 2025.
Speaker Change: The cash flow trends.
Speaker Change: Clear up.
Speaker Change: I think as we're thinking about next year.
Speaker Change: Chris will probably get into it and get a little bit in his prepared remarks.
Speaker Change: We are expecting.
Speaker Change: Constructive ground from a top line and free cash flow perspective, as you think about five five.
Excellent. That's my last question for you Chris is when you start thinking about 2025 I share. Your optimism you ticked off a lot of the positive points in terms of the LNG export capacity, that's coming power consumption. That's rising maybe protect production efficiency plateauing that being said a lot of people are sort of pushing the.
Speaker Change: Recovery to the right a bit.
Speaker Change: How as you go into budget season, and planning for Capex next year, how do you plan for that knowing that there is an expectation that improvements coming timing remains very challenging.
Chris Baker: Yeah. So I think there's probably three different legs to that stool first.
Speaker Change: If you omit the Q1 transitory quarters, we've already talked about and look at just Q2, plus Q3 annualized run rate <unk> on 110 million annualized run rate for adjusted EBITDA. This year and some of Thats product line mix shift as we've talked about some of it is strategic positioning and realignment.
When you look at Q3 performance for Calix, when we talked about this I believe last quarter, we generated $334000 per average operating rig in North America, that's the third highest.
Speaker Change: Revenue per operated rigs since the merger with <unk> and calix.
Speaker Change: Generally it's almost $50000 of adjusted EBITDA per average rate.
Speaker Change: The team has done exceptionally well and when you roll that forward as we sit here today to your point crude pricing has been episodic itself and as of late they've rebounded yesterday with some of the news out of the market and gas pricing Hasnt recovered as quickly as everybody thought due to some of the LNG facilities delays et cetera, that'd be it.
Speaker Change: Said the gas demand for all the reasons you reference data center LNG et cetera is around the corner. The forward strip when you get to the midpoint of next year is highly constructive and stays that way as far out as you can see in the strip with a three handle plus if not a fore handle and so.
Speaker Change: I'm already aware of kind of high single digit rig count adds in the Haynesville in the fourth quarter and in early January of next year.
Speaker Change: So when you add that and couple that with <unk>.
Speaker Change: Numerous customer wins that we've had in many of our other P. S. LS in the oil basins.
Speaker Change: We view next year as a as an up year overall, and we think we're going to start off with the first quarter, Oh I'm kind of a high note. So as we've talked about it doesn't take much incremental drilling.
Speaker Change: Drilling and completion demand from oil directed activity with our footprint and our geographic diversification to really drive incremental free cash flow and so as of now we expect 2025 revenue to be up 5% to 10% probably minimum.
Speaker Change: And we will firm up that guidance, when we get into our fourth quarter announced that and we kind of believe Q2 and Q3 margins are fairly normalized for 2025 type year in to keep first point.
Speaker Change: It's very early we haven't finalized the budget process, yet by any stretch, we're just kicking it off real time.
Speaker Change: We would expect 2025 growth maintenance capex to probably be somewhere in the $40 million to $50 million range and so your last question given investments. We've made to date, we don't have a lot of pent up capex need to stand up incremental assets and so I think we're very ready to go if and when.
Speaker Change: That incremental activity does come up come to fruition.
Speaker Change: Fantastic Chris I appreciate all the detail thanks Keefer.
Chris Baker: Absolutely I appreciate Steve.
Speaker Change: Okay.
Speaker Change: Our next question is from the line of Blake Mclean with.
Speaker Change: Daniel Energy Partners. Please proceed with your question.
Hey, good morning, guys. Thanks for taking my call.
Speaker Change: Yeah, Good morning Blake.
Blake McLean: So thanks for all the great color on your sort of cautious optimism for 25 mm one of the one of the things it's been a headwind obviously its been D&C efficiency gain and you guys talking about plateauing in improvements and stabilization there I'd love for you to just <unk>.
With a little bit on that and what youre seeing and maybe dig a little deeper for us.
Speaker Change: Yeah look it's a great question. When you think about we always kind of say you can't drill a well or complete a well in a day right or you can't drill them in zero, Okay, and I think we've seen that in some of the efficiency gains are.
Not just service time to drill and complete wells and bringing them online as you know, but it's also.
Those days relative to the production, you're receiving out of the well and so as we think about operators coming out of non core situations trying to scratch additional whether it's animal fracs lateral length et cetera, we candidly think we're exceptionally well positioned when you think about our coiled tubing platform et cetera, and so part of part of our <unk>.
Speaker Change: <unk> has to be and we talked about this with the team all the time is to get properly compensated by our customers and partner up and show them. The Kpis show them the data to drive incremental pricing for the efficiency that we're deliberate and I think in certain business lines and certain P. S.
Speaker Change: We've done that exceptionally well and others, there's probably room to go in and candidly. Those are those are opportunity sets for the first part of next year and conversations we're having internally around customer outreach discussions kicked candidly, we try to move price based off of performance and efficiency gains.
Speaker Change: And I think there's a performance and efficiency gains can assist in those conversations.
Speaker Change: Got it.
Speaker Change: Got it that makes sense.
And then the other the other my other question was around another headwind, we've had which is consolidation.
Speaker Change: And you guys are in a unique position there maybe you could give us some color on your conversations with these larger consolidated upstream entities anything maybe you would point to in terms of how they're focusing on technology or a higher spec equipment or safety or some of the things that might give you an edge there.
Speaker Change: Oh, it's a great question. We are I think we had it in our prepared remarks, but we were just recently named a service provider of choice in one specific P. S. L that I won't mention here for competitive reasons.
Speaker Change: For one of the Blue chip majors.
Speaker Change: Across all of North America, due to our ability to deliver high specs in stack equipment with redundancy capabilities and primarily due to our safety initiatives and our safety scores that we've seen this year and so we've seen a number of the.
Speaker Change: <unk> to your point in the in the E&P space, bringing together a number of their service providers and I think the general consensus in takeaway is that the larger consolidators would like see fewer service providers rather than more.
Speaker Change: And that's for a whole host of reasons that you're all too familiar with when it comes to number of invoices the ability to bundle services and packages, but worse, what I think we're seeing more and more today is the ability.
Speaker Change: I have a sort of a requirement of a service company to bring technology bring inspect equipment that way the only way you can drive those efficiencies we've talked about in your prior question is to eliminate N. P. T eliminate safety stand downs like we saw last year.
Speaker Change: Pacifically in the Rockies et cetera, so that you have that uptime and ability to drive those efficiencies and so I think <unk> is exceptionally well positioned and that that's a topic in a selling point that we make to our clients and candidly.
Speaker Change: It's one of the reasons outside of just a lack of capital to.
Speaker Change: To deploy into the RFS space that we've seen from private equity firms as they shifted their focus along with insurance demands and inflationary pressures on some of the smaller mom and Pops that we candidly think we're positioned very well to garner more market share, which has been what's driving that revenue per rig count metrics up in the face of seven quarters.
Speaker Change: All lines, but also position us as an M&A counterparty and consolidate or.
Speaker Change: Within the space in certain certain product lines.
Speaker Change: Well a good.
Speaker Change: Good stuff. Thank you went there at the end, let me just sneak one more in.
Speaker Change: How do you how do you think about the opportunities in the marketplace for consolidation going forward. How do you think about approaching M&A deals what's a good deal what makes it get deal what are you looking for.
Speaker Change: Yes, I think you got it.
Speaker Change: Two different questions.
Speaker Change: What makes a good deal is strategic fit industrial logic, and hopefully a bit of synergy value.
Speaker Change: As we've looked at across the landscape. This year, we've seen more dead deals in late 'twenty three in an early 24, what I would deem really high quality companies and.
Speaker Change: And it's been a bit surprising and so I think theres still a number of opportunities out there to reengage as you get into 2025, and we're dead deals for a whole host of reasons, but we saw those kind of throughout the year.
Speaker Change: Predominantly tied to bid ask spread issues et cetera, I think there'll be somewhat of a capitulation in the market.
Speaker Change: As you know <unk> multiples have kind of expanded as consensus estimates of role.
And our pitch to the Counterparties as well.
Look there is theres a lot of pent up opportunity in KL X the share price.
Speaker Change: Refi post M&A opportunity set if you extract value take equity.
Our share price and that's an accretive deal it's deleveraging it really sets up well for a counterparty to be out of time their exit utilizing a calix shares we're not gonna be acquirers. We we've said it time and time again, we're not going to lever up to be an all cash or acquire or we've seen that blueprint.
For lack of success in the space, we'd rather, allowing counterparties with equity. So they are aligned with the outcome of the deal over the next three to four or five years, and that's kind of how we set up an opportunity set.
Speaker Change: Good stuff, Chris Keith Thanks, very much for the time this morning.
Blake: Thank you Blake.
Speaker Change: Thank you. This concludes the question and answer portion of the call I'll now hand, the call back to Chris Baker for closing remarks.
Chris Baker: Thank you once again for joining us on this call and for your continued interest in <unk>. We look forward to speaking with you again next quarter.
Speaker Change: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference.
Speaker Change: Your lines at this time and have a wonderful day.