Q1 2025 Pason Systems Inc Earnings Call
Jenny: Good morning, my name is Jenny, and I will be your conference operator today. The contents of today's call are protected by copyright and may not be reproduced without the prior written consent of Pason Systems Inc. Please note, the advisories located at the end of the press release issued by Pason Systems yesterday must describe forward-looking information. Certain information about the company that is discussed on today's call may constitute forward-looking information.
Good morning.
Jenny and I will be a conference operator today.
Speaker Change: The contents of today's call are protected by copyright and it may not be reproduced without the prior written consent of pizza system thing.
Speaker Change: Please note the advisories located at the end of the press release issued they pizza systems yesterday, which describe forward looking information.
Speaker Change: Information about the company that is discussed on today's call may constitute forward looking information.
Speaker: Additional information about Pason Systems, including the risk factors relevant to the company, can be found in its annual information form.
Speaker Change: Additional information about pacing systems, including the risk factors relevant to the company can be found in its annual information form.
Speaker: Thank you.
Speaker Change: Thank you.
Jenny: At this time, I would like to welcome everyone to the Pason Systems Inc.'s first quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.
Speaker Change: At this time I would like to welcome everyone to the Pizza Systems' first quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.
Jenny: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you.
Speaker Change: After the Speakers' remarks, there will be a question and answer session.
Speaker Change: I would like to ask a question. During this time simply press Star then the number one on your telephone keypad.
Julian Boston: If you would like to withdraw your question. Please press Star then the number two thank you Julian Boston CFO you May begin your conference.
Celine Boston: Celine Boston, CFO, you may begin your conference. Thank you, Jenny. Good morning, everyone. Thank you for attending PASON's 2025 first quarter conference call. I'm joined on today's call by John Faber, our president and CEO. I'll start today's call with an overview of our financial performance in the first quarter, and then John will provide a brief perspective on the outlook for the industry and for Pason, and we'll be happy to take questions. I'm pleased to report on Pason's first quarter 2025 results, which demonstrates the resilience in our business through challenging industry conditions with continued growth in most segments and significant outperformance of industry conditions.
Danny: Thank you Danny.
Speaker Change: Good morning, everyone. Thank you for attending Paydowns 2025 first quarter conference call.
Speaker Change: I'm joined on today's call by John favor, our President and CEO I'll start today's call with an overview of our financial performance in the first quarter and then John will provide a brief perspective on the outlook for the industry and for pace on and well be happy to take questions.
Speaker Change: I'm pleased.
Speaker Change: To report on peso on first quarter, 'twenty twenty-five results, which demonstrates the resilience in our business through challenging industry conditions with continued growth in most segments and significant outperformance of industry conditions.
Celine Boston: Pason generated consolidated revenue of $113.2 million in the first quarter of 2025, an 8% increase from the $104.8 million in the first quarter of 2024. With this revenue, Pason generated $45.2 million in adjusted EBITDA, or 39.9% of revenue, up 7% from the $42.4 million generated in the first quarter of 2024.
Speaker Change: So on generated consolidated revenue of $113 $2 million in the first quarter of 2025, and 8% increase from the $104 $8 million in the first quarter of 'twenty 'twenty four.
Speaker Change: With this revenue pace on generated $45 $2 million in adjusted EBITDA or 39, 9% of revenue up 7% from the $42 $4 million generated in the first quarter of 2024.
Celine Boston: I'll now provide an overview of the first quarter by business unit. While U.S. drilling activity has remained relatively flat in recent months, compared to the first quarter of 2024, average rig counts in North America were down 3% year-over-year. During this time, though, Pason's North American drilling business unit grew revenue per industry day by 7% to $1,067 in the first quarter of 2025, compared to $1,000 in the first quarter of 2024. As a result, outpacing the 3% reduction in industry drilling activity, the North American drilling segment generated revenue of $75.8 million in the first quarter of 2025, which was 3% higher than the first quarter of 2024.
Speaker Change: I'll now provide an overview of the first quarter by business unit.
Speaker Change: While U S drilling activity has remained relatively flat in recent months compared to the first quarter of 2024 average rig counts in North America were down 3% year over year.
Speaker Change: During this time, though paydowns North American drilling business unit grew revenue per industry day by 7% to $1067 in the first quarter of 2025 compared to $1000 into the first quarter of 2024.
Speaker Change: As a result of outpacing the 3% reduction in industry drilling activity the North American drilling segment generated revenue of $75 $8 million in the first quarter of 2025, which was 3% higher than the first quarter of 2024.
Celine Boston: The segment's cost base remains mostly fixed in nature and saw lower repair expenses in the first quarter, while depreciation and amortization expenses grew year over year with increased capital expenditures recently. Further, strength in the U.S. dollar versus the Canadian dollar in the first quarter of 2025 impacted U.S. dollar sourced revenue and expenses for the segment. Resulting segment gross profit of $46.8 million in the first quarter of 2025 was 5% higher than the $44.4 million generated in the first quarter of last year, highlighting the segment's operating leverage.
Speaker Change: The segment's cost base remains mostly fixed in nature and saw lower repair expenses in the first quarter, while depreciation and amortization expenses grew year over year with increased capital expenditures recently.
Speaker Change: Further strength in the U S dollar versus the Canadian dollar in the first quarter of 2025 impacted U S dollar sourced revenue and expenses for the segment.
Speaker Change: Resulting segment gross profit of $46 $8 million in the first quarter of 2025 was 5% higher than the $44 $4 million generated in the first quarter of last year, highlighting the segment's operating leverage.
Celine Boston: Our international drilling segment faced headwinds in the first quarter, with a larger customer in Argentina reducing activity levels through a pending shift in operational focus away from conventional wells towards more unconventional drilling. The segment generated $14 million in quarterly revenue and $5.8 million in segment gross profit in the first quarter. Operating expenses for the segment are mostly fixed and were impacted by inflationary effects and changes in foreign exchange year over year. In our completion segment, IWS had 32 active jobs, up from 26 in the fourth quarter and 28 in the first quarter of 2024, while industry activity levels fell during those times.
Speaker Change: Our international.
Speaker Change: No drilling segment faced headwinds in the first quarter with a larger customer in Argentina, reducing activity levels through a pending shifts in operational focus away from conventional wells towards more unconventional drilling.
Speaker Change: The segment generated $14 million in quarterly revenue and $5 $8 million in segment gross profit in the first quarter.
Operating expenses for the segment are mostly fixed and were impacted by inflationary effects and changes in foreign exchange year over year.
Speaker Change: In our completion segment IW I've had 32 active jobs up from 26 in the fourth quarter and 28 in the first quarter of 2024, while industry activity levels fell during those times.
Celine Boston: Further, revenue per IWS day of $5,486 in the first quarter of 2025 grew by 9% from the level seen in the first quarter of 2024. I'll remind listeners that revenue per IWS day will fluctuate depending on the mix of technology adopted amongst existing customers, and further will be impacted by foreign exchange fluctuations with the US and Canadian dollar. Reported revenue for the segment was $60 million, up from $12.8 million in the first quarter of 2024, and a new quarterly record for the segment. Gross profit for the segment of $1.6 million represents operating expense investments made for the segment's current stage of growth, along with $5.6 million in depreciation and amortization expense associated with the property and equipment and intangible assets acquired on January 1st, 2024.
Speaker Change: Further revenue prior to the last day of $5486 in the first quarter of 2025 grew by 9% from the levels seen in the first quarter of 2024.
Speaker Change: I'll remind listeners that revenue per IW last day will fluctuate depending on the mix of technology adopted amongst existing customers and further will be impacted by foreign exchange fluctuations with the U S and Canadian dollar.
Speaker Change: Reported revenue for the segment was $16 million up from $12 $8 million in the first quarter of 2020 for them and a new quarterly record for the segment.
Speaker Change: Gross profit for the segment of $1 $6 million represents operating expense investments made for the segments current stage of growth along with $5.6 million in depreciation and amortization expense associated with the property and equipment and intangible assets acquired on January one 2024.
Celine Boston: Energy Toolbase, which is reported within our solar and energy storage segment, generated $7.4 million in quarterly revenue, also a new quarterly record and an increase of 98% from the 2024 comparative period, with the timing on deliveries of control system sales driving the difference year over year. The segment's revenue will continue to fluctuate with timing of these deliveries going forward. Sequentially, Pason benefited from strong Canadian winter drilling activity in its North American drilling segment and also saw growth in the company's completions and solar and energy storage segments. Revenue grew by 5% quarter over quarter as a result.
Speaker Change: Energy tool base, which is reported within our solar and energy storage segment generated $7 $4 million in quarterly revenue.
Speaker Change: Also a new quarterly record and an increase of 98% from the 2024, our comparative period with the timing on deliveries of control system sales driving the difference year over year.
Speaker Change: The segment's revenue will continue to fluctuate with timing of these deliveries going forward.
Speaker Change: Sequentially peso and benefited from strong Canadian winter drilling activity in its north American drilling segment and also saw growth in the company's completions and solar and energy storage segments.
Revenue grew by 5% quarter over quarter as a result.
Celine Boston: Adjusted EBITDA of $45.2 million in the first quarter also grew from $42.1 million in the prior quarter, demonstrating the business's mostly fixed cost base and the resulting operating leverage.
Speaker Change: Adjusted EBITDA of $45 $2 million in the first quarter also grew from $42.1 million in the prior quarter, demonstrating the businesses, mostly fixed cost base and the resulting operating leverage.
Celine Boston: Net income attributable to Pason for the first quarter of 2025 was $20 million or $0.25 per share, down from $69.5 million and $0.87 per share in the first quarter of 2024, which included a $50.8 million non-cash and non-recurring accounting gain related to the acquisition of IWS. Our balance sheet remains strong and, coupled with our free cash flow generation, allows us to make growth-related investments while returning meaningful levels of cash to shareholders, continuing through periods of uncertainty. In the first quarter of 2025, net capital expenditures were $16.7 million, which includes investments in building out our valve management and automation technology offering within completions and the ongoing investments in our drilling-related technology platform.
Speaker Change: Net income attributable to pace on for the first quarter of 2025 was $20 million or 25 cents per share down from $69 $5 million.87 per share in the first quarter of 'twenty 'twenty, four which included a $58 million noncash and nonrecurring accounting gain related to the acquisition of IW less.
Speaker Change: Yeah.
Speaker Change: Our balance sheet remains strong and coupled with our free cash flow generation allows us to make growth related investments, while returning meaningful levels of cash to share.
Speaker Change: Continuing through periods of uncertainty.
Speaker Change: In the first quarter of 2025 net capital expenditures were $16 $7 million, which includes investments in building out our valve management and automation technology offering within completions and the ongoing investments in our drilling related technology platform.
Celine Boston: Free cash flow in the first quarter of 2025 was $23.2 million, compared to $11.7 million in the first quarter of 2024, with lower capital expenditures and working capital investments year over year. With this free cash flow, we returned $16.3 million to shareholders, $10.3 million through our quarterly dividend, and $6 million through our share repurchase program, ending the quarter with total cash, including short-term investments of $87.4 million and no interest bearing debt.
Speaker Change: Free cash flow in the first quarter of 2025 was $23 $2 million compared to $11 $7 million in the first quarter of 'twenty 'twenty, four with lower capital expenditures and working capital investments year over year.
Speaker Change: With this free cash flow, we returned $16 $3 million to shareholders $10.3 million through our quarterly dividend and $6 million through our share repurchase program ending the quarter with total cash, including short term investments of $87 $4 million and no interest bearing debt.
Celine Boston: In summary, we remain very well positioned to not only navigate ongoing uncertainties within geopolitical and industry conditions, but to continue to support further growth in all segments of the business while returning meaningful capital to shareholders.
Speaker Change: In summary, we remain very well positioned to not only navigate ongoing uncertainties within geopolitical and industry conditions, but to continue to support further growth in all segments of the business, while returning meaningful capital to shareholders I will now turn the call over to John for his comments on our outlook.
John Faber: I will now turn the call over to John for his comments on our. Thank you, Celine. Our financial and operating results for the first quarter of 2025 again demonstrated the strength and resilience of Pason's competitive position. Our North American drilling segment revenue increased by 3% compared to a 3% decrease in North American land drilling activity on the strength of a 7% increase in revenue per industry day to $1,067 in the quarter. The most significant driver of the increase in North American revenue per industry day was higher levels of product adoption. The compounding effect of Pason's continued outperformance against North American drilling activity is more evident when taking a longer-term view.
John Favor: Thank you Celine.
Speaker Change: Our financial and operating results for the first quarter of 2025, again demonstrated the strength and resilience of peso and its competitive position.
Speaker Change: Our North American drilling segment revenue increased by 3% compared to a 3% decrease in North American land drilling activity on the strength of a 7% increase in revenue per industry day to $1067 in the quarter.
Speaker Change: The most significant driver of the increase in North American revenue per industry day was higher levels of product adoption.
Speaker Change: The compounding effect of pace ons continued outperformance against North American drilling activity is more evident when taking a longer term view.
John Faber: Between the first quarter of 2015 and the first quarter of 2025, which represents a 10-year period, Pason's revenue per industry day has increased at a compound annual growth rate of 6.6%, while North American land drilling activity has declined at a compound annual rate of 7.1% over the same period. As a result, Pason's revenue per industry day has increased by 90% over that time period, while industry activity decreased by 52%. The impact of our progress in generating additional sources of revenue, which are not directly correlated with North American land drilling activity, can also be seen through a historical comparison.
Speaker Change: Between the first quarter of 2015, and the first quarter of 2025, which represents a 10 year period based on revenue per industry day has increased at a compound annual growth rate of 6.6%, while north American land drilling activity has declined at a compound annual rate of 7.1.
Speaker Change: Percent over the same period.
Speaker Change: As a result pace ons revenue per industry day has increased by 90% over that time period, while industry activity decreased by 52%.
Speaker Change: The impact of our progress in generating additional sources of revenue, which are not directly correlated with north American land drilling activity can also be seen through a historical comparison.
John Faber: Pason's consolidated revenue of $113.2 million in the first quarter of 2025 was slightly higher than $109.3 million in the first quarter of 2013, a time when there was 2,216 active land drilling rigs in North America, compared to 785 in the first quarter of 2025. Stated differently, Pason generated higher revenue in Q1 2025 compared to Q1 2013, despite industry activity being 65% lower. In our international drilling segment, lower levels of activity in Argentina as a result of a large customer's ongoing shift from conventional assets toward more unconventional development was the primary driver of a 4% year-over-year decrease in revenue.
Speaker Change: Pesos consolidated revenue of $113 $2 million in the first quarter of 2025 was slightly higher than $109 3 million in the first quarter of 2013, a time when there was 2216 active land drilling rigs in North America compared to 780.
Speaker Change: Five in the first quarter of 2025.
Speaker Change: Stated differently peso and generated higher revenue in Q1, 2025, compared to Q1 2013, despite industry activity being 65% lower.
Speaker Change: In our international drilling segment lower levels of activity in Argentina, as a result of a large customer's ongoing shift from conventional assets toward more unconventional development was the primary driver of a 4% year over year decrease in revenue.
John Faber: The outperformance of our completion segment was even more impressive than our drilling segment. Revenue from our completion segment grew 25% from the first quarter of 2024, far outpacing a 21% decrease in the reported number of active frack spreads in the United States. We saw year-over-year increases in both our average number of IWS active jobs and revenue per IWS day in the first quarter. As we have noted in previous calls, as we continue to grow our customer base in the completion segment, we expect that revenue per IWS stay will fluctuate based on customer and job mix.
Speaker Change: The outperformance of our completion segment was even more impressive than our drilling segment.
Speaker Change: Revenue from our completion segment grew 25% from the first quarter of 'twenty 'twenty four far outpacing a 21% decrease in the reported number of active frac spreads in the United States.
Speaker Change: We saw year over year increases in both our average number of IW S active jobs and revenue per I Ws day in the first quarter.
As we have noted in previous calls as we continue to grow our customer base in the completion segment, we expect that revenue per I Ws day will fluctuate based on customer and job mix.
John Faber: In our solar and energy storage segment, energy tool base revenue increased 98% year over year from 2024 levels to $7.4 million in the first quarter. Adjusted EBITDA for the quarter totaled $45.2 million and was up 7% from 2024 levels, while an adjusted EBITDA margin of 39.9% was slightly lower than the prior year, owing to revenue contribution from the completions and solar and energy storage segments, where segment margins are lower given their current stage of development. We expect margins in these segments to expand over time as revenues increase. In recent weeks, geopolitical factors have dominated the headlines with ongoing trade disputes, changes to OPEC plus production plans, and concerns about the potential for economic recession.
Speaker Change: In our solar and energy storage segment energy tool base revenue increased 98% year over year from 2024 levels to $7 $4 million in the first quarter.
Speaker Change: Adjusted EBITDA for the quarter totaled $45 $2 million and was up 7% from 2024 levels, while an adjusted EBITDA margin of 39, 9% was slightly lower than the prior year, owing to revenue contribution from the completions and solar and energy storage segments, where segment margins are lower given.
Speaker Change: Their current stage of development.
Speaker Change: We expect margins in these segments to expand over time as revenues increase.
Speaker Change: In recent weeks geopolitical factors have dominated the headlines with ongoing trade disputes changes to OPEC plus production plans and concerns about the potential for economic recession.
John Faber: We anticipate that our customers are evaluating their capital programs in a variety of commodity price scenarios, and may make adjustments to their activity in response to changes in market prices. That said, we see a number of factors which suggest that any potential decreases in activity would likely be more modest in both depth and duration as compared to previous industry slowdowns. Today, the North American oil and gas industry is comprised of a smaller number of larger, well-capitalized producers with stronger balance sheets and less reliance on equity markets to finance their capital programs. A significant portion of current activity is directed at maintaining current production levels rather than growth, and we believe that maintenance capital is among the highest capital allocation priorities of most producers.
Speaker Change: We anticipate that our customers are reevaluating their capital programs and a variety of commodity price scenarios and may make adjustments to their activity in response to changes in market prices.
Speaker Change: That said, we see a number of factors, which suggests that any potential decreases in activity would likely be more modest in both depth and duration as compared to previous industry slowdowns.
Speaker Change: Today, the North American oil and gas industry is comprised of a smaller number of larger well capitalized producers with stronger balance sheets and less reliance on equity markets to finance their capital programs.
Speaker Change: A significant portion of current activity is directed at maintaining current production levels rather than growth.
Speaker Change: We believe that maintenance capital is among the highest capital allocation priorities of most producers.
John Faber: The outlook for natural gas is more favorable than it has been for many years, with expectations of demand growth related to LNG projects coming online and increased power demand related to data center requirements to support artificial intelligence applications. We also anticipate that any capital reductions would be more proportionate between drilling and completions activity than in previous downturns, given that the current inventory of drilled but uncompleted wells appears to be at or near its minimum sustainable level. In that context, we expect Pason to continue to outpace industry activity and deliver strong financial results. Both our drilling and completions businesses benefit from increasing complexity in drilling and completions operations.
Speaker Change: The outlook for natural gas is more favorable than it has been for many years with expectations of demand growth related to LNG projects coming online and increased power demand related to data center requirements to support artificial intelligence applications.
We also anticipate that any capital reductions would be more proportionate between drilling and completions activity than in previous downturns given that the current inventory of drilled but uncompleted wells appears to be at or near its minimum sustainable level.
Speaker Change: In that context, we expect base on to continue to outpace industry activity and deliver strong financial results.
Speaker Change: Both our drilling and completions businesses benefit from increasing complexity in drilling and completions operations.
John Faber: As customers continue to pursue automation and analytics efforts, including leveraging artificial intelligence applications and the establishment of real-time operating centers, access to consistent, reliable, high-quality data is increasingly important for both drilling and completions operations. Pason's experience over more than four decades in serving the data needs of the drilling market provides us with the ability to make meaningful advancements in helping customers access data across the entire well construction process. The gains we have made in increasing North American revenue per industry day in our drilling segment and expanding our customer base while maintaining a strong revenue per IWS day in our completions business should translate into continued outperformance against industry conditions.
Speaker Change: As customers continue to pursue automation and analytics efforts, including leveraging artificial intelligence applications and the establishment of a real time operating centers access to consistent reliable high quality data is increasingly important for both drilling and completions operations.
Speaker Change: Based on his experience over more than four decades in serving the data needs of the drilling market provides us with the ability to make meaningful advancements in helping customers access data across the entire well construction process.
Speaker Change: The gains we have made in increasing north American revenue per industry day in our drilling segment and expanding our customer base, while maintaining a strong revenue per I Ws day in our completions business should translate into continued outperformance against the industry conditions.
John Faber: Our innovative new drilling mud analyzer provides continuous real-time readings of critical drilling mud parameters, and we are seeing higher adoption of our automation product. Our well site automation products provide valuable safety and efficiency benefits for customers in their completions operations, and we are working closely with customers to develop compelling data management solutions for the completions market, benefiting both operators and service companies. Our capital allocation priorities are driven by a focus on return on invested capital. Today, our highest expected returns on capital come from the organic investments we are making to continue the growth of our completion segment, coupled with the ongoing rollout of the Mud Analyzer in our drilling-related business.
Speaker Change: Our innovative new drilling mud analyzer provides continuous real time readings of critical drilling mud parameters and we are seeing higher adoption of our automation products.
Speaker Change: Our well site automation products provide valuable safety and efficiency benefits for customers and their completions operations and we're working closely with customers to develop compelling data management solutions for the completions market benefiting both operators and service companies.
Speaker Change: Our capital allocation priorities are driven by a focus on return on invested capital.
Speaker Change: Today, our highest expected returns on capital come from the organic investments, we're making to continue the growth of our completion segment, coupled with the ongoing rollout of the mud analyzer in our drilling related business.
John Faber: We continue to expect to spend approximately $65 million in capital expenditures in 2025. We will continue to pursue disciplined shareholder returns over time through our regular quarterly dividend and share repurchases. We aim to consistently deploy capital to share repurchases through market cycles, thus buying back larger numbers of shares during periods of market weakness and less shares when the market is stronger. We are maintaining our quarterly dividend at $0.13 per share. We favor flexibility to continue repurchasing additional shares over higher dividends for incremental shareholder returns in the current environment of uncertainty. We evaluate our capital program with a focus on increasing revenue, generating free cash flow, and creating value for shareholders over time, rather than simply in response to prevailing near-term industry conditions.
Speaker Change: We continue to expect to spend approximately $65 million in capital expenditures in 2025.
Speaker Change: We will continue to pursue disciplined shareholder returns over time through our regular quarterly dividend and share repurchases.
Speaker Change: We aim to consistently deploy capital to share repurchases through market cycles, thus buying back larger numbers of shares during periods of market weakness unless shares when the market is stronger.
We are maintaining our quarterly dividend at <unk> 13 per share.
We favor flexibility to continue repurchasing additional shares over higher dividends for incremental shareholder returns in the current environment of uncertainty.
Speaker Change: We evaluate our capital program with a focus on increasing revenue generating free cash flow and creating value for shareholders over time, rather than simply in response to prevailing near term industry conditions.
John Faber: Our balance sheet remains strong. At March 31st, we had $87.4 million in total cash, including short-term investments, and positive working capital of $122.1 million.
Speaker Change: Our balance sheet remains strong at March 31st we had $87 $4 million in total cash, including short term investments and positive working capital of $122 $1 million.
Speaker: We would now be happy to take any questions. Thank you.
Speaker Change: We would now be happy to take any questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one you touched on.
Speaker: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the 1 on your touchtone phone.
Speaker: Should you wish to cancel your request, please press the star followed by the If you are using a speakerphone, please lift a handset before pressing any. Once again, that is star one should you wish to ask a question.
Speaker Change: Should you wish to cancel your request. Please press the star followed by the channel if you're using a speaker phone. Please lift the handset before pressing any case.
Speaker Change: Once again that is star one should you wish to ask a question.
Keith Mackey: Your first question is from Keith MacKey from RBC. Your line is open. Hi, good morning. Just maybe wanted to start out on, on. I just wanted to start out on the tariff front. Certainly a big topic of conversation, this reporting cycle.
Speaker Change: Your first question is from Keith Mckey trauma RBC. Your line is now open.
Speaker Change: Hi, good morning.
Keith Mckey: Just maybe one.
Speaker Change: Ron.
Speaker Change: Yeah.
Speaker Change: I just wanted to start out on the tariff front.
Speaker Change: Certainly a big topic of conversation this reporting cycle can you run through any of your potential exposure and if you've done any work on a potential dollar amount that you think could be impacted.
John Faber: Can you run through any of your potential exposure and if you've done any work on a potential dollar amount that you think Pason could be impacted? Yeah, thanks, Keith. So of course, we're watching this situation very closely, much like many companies are, as you know, it continues to evolve very significantly. So based on what we know today, we in our business, we do manufacture and repair things on both sides of the border, Canada and US, for use on both sides of the border. But I'll say we do have some flexibility around both where and when those things happen.
Speaker Change: Yeah. Thanks, Keith So of course, we're watching this situation very closely much like many companies are as you know it continues to evolve very significantly and so based on what we know today, we in our business, we do manufacture and repair things on both sides of the border are Canada and U S.
Speaker Change: For use on both sides of the border, but I'll say, we do have some flex some flexibility around both where and when those things happen and so those are things that we're keeping in mind as we plan going forward, we did pull forward a little bit of capital expenditures in the first quarter and in advance of some potential tariffs and so we've been proactive on that front where to the extent we could be.
John Faber: So those are things that we're keeping in mind as we plan going forward. We did pull forward a little bit of capital expenditures in the first quarter and in advance of some potential tariffs. And so we've been proactive on that front where to the extent we could be. But given what we know today, we don't expect and don't believe that the total impact for us in the context of additional CapEx would be overly significant. But we will continue to monitor as things evolve with our very skilled supply chain team. Okay, that's very helpful.
Speaker Change: But given what we know today, we don't expect and don't believe that the total impact for us in the context of additional capex would be overly significant but we will continue to monitor as things evolve with our very scaled supply chain team.
Speaker Change: Okay. That's very helpful and just on the completion side, certainly a nice improvement year over year in revenue.
Keith Mackey: And just on the completion side, certainly a nice improvement year over year in revenue and understanding the market softness during that same time.
Speaker Change: I understand the market softness during that same time.
Keith Mackey: Can you talk a little bit more about the drivers of that? Is it oil versus gas? Is it new customers versus existing customers buying more products or increasing adoption? Just any color you can give us that might help determine the sustainability of that revenue level and the potential growth.
Speaker Change: A little bit more about the drivers of that.
Speaker Change: Oil versus gas is it new customers versus existing customers buying more products or increasing adoption.
Speaker Change: So any color you can give us that might help determine.
Speaker Change: The sustainability of that revenue level and the potential growth.
Speaker Change: Growth from here would be helpful.
John Faber: Sure, Keith. Of the specific things you mentioned, I would say it's probably not so much related to oil versus gas. You'll recall last year we talked about two major dynamics that had been headwinds for that business. One was the natural gas price. One was also the M&A activity for some of the larger customers that IWS had been working with. I think we are starting to see a little bit of positive effects from some of that M&A transaction starting to settle out and people working on capital programs with the pro-forma entities going forward. That would have contributed a little bit in the first quarter.
Speaker Change: Yeah sure. It keeps all of the specific things you've mentioned I would say, it's probably not so much related to oil versus gas you'll recall last year, we talked about two major dynamics that have been headwinds for that business. One was the natural gas price. One was also the M&A activity for some of the larger customers that AWS.
Speaker Change: I've been working with I think we are starting to see a little bit of positive effects from some of that M&A transactions starting to settle out and people working on capital programs with the pro forma entities.
Speaker Change: Sort of going forward, so that would have contributed a little bit in the first quarter and then we've been adding new customers as well. So that's been it's been positive too.
John Faber: Then we've been adding new customers as well, so that's been positive.
Keith Mackey: Okay, that's it for me. Thanks for watching. Okay, thanks, Keith. Thank you once again.
Speaker Change: Okay. That's it for me thanks very much.
Keith Mckey: Okay. Thanks Keith.
Speaker Change: Thank you once again, please press star one should you wish to ask a question.
Speaker: Please press star 1 should you wish to ask a question.
Aaron MacNeil: Your next question is from Aaron MacNeil from TD Cowen. Your line is now open. Thanks for taking my questions.
Speaker Change: Our next question is from Aaron Macneil from TD Cowen. Your line is now open.
Aaron MacNeil: Good morning, all thanks for taking my questions here.
John Faber: Bye Aaron. Maybe I'll just piggyback on Keith's second question. You know, as we look ahead, like, are you seeing green shoots in terms of new customer additions or the potential for growth with existing customers in the current market? And maybe just, you know, are there any capacity bottlenecks or constraints? I think we'd say, Aaron, that we're certainly encouraged about the opportunity, both on the new customer side and the expansion with customers that we're currently working with. And I will be careful to say that if we are in a period of a little bit more uncertainty in the market, that tends to slow the adoption of new technology.
Aaron MacNeil: Well, maybe I'll just piggyback on Keith's second question.
As we look ahead like are you seeing green shoots in terms of new customer additions or the potential for growth with existing customers in the current market.
Aaron MacNeil: And maybe just.
Aaron MacNeil: Are there any capacity bottlenecks or constraints.
Aaron MacNeil: On the pace on side that we should think about in the near term.
Aaron MacNeil: I didn't think we'd say that we're certainly encouraged about the opportunity both on the new customer side and the expansion with customers that we're currently working with.
Aaron MacNeil: I will be careful to say that if we are in a period of a little bit more uncertainty in the market that tends to slow the adoption of new technology. So.
John Faber: So we're certainly encouraged, but I don't know that I would qualify it as a green shoot in terms of something that we think will be significant in the next couple of quarters. But certainly all the base of what you want to see in terms of more customers using your products on more jobs and using more of your product on each job, all of those dynamics feel quite positive in the current instance as we sort of look at that business. There's no real constraints that we would see within the organization today. Clearly, we're able to use some of our operational folks from the drilling side to help with some of the installation on the completion side.
Aaron MacNeil: We're certainly encouraged by the older what I would qualify it as a green shoot in terms of something that we think will be significant in the next couple of quarters, but certainly all the base of what you want to see it in terms of more customers using your products. So on more jobs and using more of your product on each job all of those dynamics feel quite positive.
Aaron MacNeil: In the current instance, as we are we sort of look at that business Theres no real constraints that we would see a within the organization today clearly we're able to use some of our operational folks from from the drilling side to help with some of the installation on the completion side. So on the the people related side, we feel okay.
John Faber: So on the people related side, we feel OK, and we continue to deploy capital to building equipment to make sure we're available to serve as opportunities come up. Okay, makes total sense.
Aaron MacNeil: We continue to deploy capital to to building equipment to make sure we're available to to serve as opportunities come up.
Speaker Change: Okay makes total sense. This is maybe a bit of an oddball question, but you've spoken to the outperformance relative to the rig count in North America over the past 10 years can you speak to the potential longer term opportunity in Argentina, and I guess, just specifically like what would be the potential difference in average revenue.
Aaron MacNeil: This is maybe a bit of an oddball question, but you've spoken to the outperformance relative.
John Faber: Can you speak to the potential longer term opportunity in Argentina? I guess, just specifically, like, what would be the potential difference in average revenue per day in terms of the hardware on, you know, a drilling rig targeting conventional wells versus unconventional wells? Sure. I can kind of give you just a general feel, Aaron. For a lot of years, our overall revenue per day in the Argentinian market would have been quite a bit lower because it would have been a very left skewed distribution of rates. So we would have had a lot of rigs on the conventional assets using only a portion of the product suite.
Speaker Change: Per day in terms of the hardware on drilling.
Speaker Change: Drilling rig targeting conventional wells versus unconventional wells.
Speaker Change: Yeah sure I can kind of give you just a general feel are in for for lot of years. Our overall revenue per day in the argentinean market would've been quite a bit lower because it would've been a very left skewed distribution of of rates. So.
Speaker Change: So we would have had a lot of rigs on the conventional assets using only a portion of the product suite and so you'd be talking about revenue per day, probably measured in the sub $500 range as you start to move towards unconventional as you start to adopt more technology like in terms of both the numbers of products you use but also.
John Faber: And so you'd be talking about revenue per day probably measured in the sub $500 range. As you start to move towards unconventionals, you start to adopt more technology in terms of both the numbers of products you use, but also the number of instances of each product as you get into more complex wells. And then you start to see day rates that start to mirror more of what we see on the North American side, which is, you know, closer to that $1,000 a day. So it is a material shift when you move from the conventionals to the unconventionals.
Speaker Change: The number of instances of each product as you get into more complex wells and then you start to see day rates that start to mirror more of what we see on the North American side, which as you know closer to $1000. A day. So it is a material shift when you move from the conventionals to the unconventional.
Aaron MacNeil: And then maybe I'll just sneak one more in if that's okay.
Speaker Change: Okay.
Speaker Change: Gotcha, and then maybe I'll just sneak one more in if that's okay, John you've spoken confidently about it.
John Faber: John, you've spoken confidently about ASOM's ability to make counter-cyclical decisions.
Speaker Change: <unk> ability to make a counter cyclical decisions as it relates to capital spending and growth and I think you just have your hands busy or you had sold sorry with with the organic opportunities that you have today, but what about the potential for M&A is there just any technology out there that you think would be complementary to the pace on platts.
John Faber: I don't expect you to just have your hands full with the organic opportunities that you have today, but what about the potential for M&A? Is there just any technology out there that you think would be complementary to the PASON platform? Is an acquisition something you'd consider or is that just not on your radar? It's certainly not something we're looking for. We think we have lots of opportunities to grow the business today. I think today, when we look at the suite of M&A opportunities, the most attractive opportunity we see in M&A is our own shares. We see lots of growth opportunity for the business and the shares are not trading at high prices.
Speaker Change: Carmen is an acquisition of something you'd consider or is that just not on your radar right now.
Speaker Change: It's certainly not something we're looking for we think we have lots of opportunities to grow the business today I think today when we look at the suite of M&A opportunities. The most attractive opportunity we see in M&A as our own shares we.
Speaker Change: We see lots of growth opportunity for the business and the shares are not trading at high prices and so if we were going to do M&A. That's the most attractive opportunity. We see is internal M&A I E share repurchases.
John Faber: And so if we were going to do M&A, that's the most attractive opportunity we see is internal M&A, i.e. share repurchases.
Speaker Change: Okay.
Speaker: I'll turn it.
Speaker Change: Thanks, Paul I'll turn it back.
Speaker: Thanks, Aaron.
Speaker Change: Okay. Thanks, Brian.
Speaker: Thank you.
Speaker Change: Thank you, ladies and gentlemen, once again should you wish to ask a question kindly press star one.
Speaker: Ladies and gentlemen, once again, should you wish to ask a question, kindly press star 1.
Speaker: There are no further questions at this time.
Speaker Change: There are no further questions at this time I will now hand, the call back over to Jon Faber part of closing comments.
John Faber: I will now hand the call back over to John Faber for the closing comments. Perfect. Thanks very much, Jenny. And thanks for those who have joined us for our call today. We certainly appreciate your interest and your continued support. If you do have other questions, you can certainly reach out to Celine or myself at any point. We would welcome your calls.
Speaker Change: <unk>.
Speaker Change: Perfect. Thanks, very much Jenny and thanks for those who have joined us for our call today.
Speaker Change: Certainly appreciate your interest and your continued support if you do have other questions. You can certainly reach out to selenium or myself at any point, we would welcome your calls and otherwise we will look forward to speaking to you with you again in August following the release of our second quarter results. Thanks, very much and have a great day.
Jenny: And otherwise, we will look forward to speaking with you again in August following the release of our second quarter results. Thanks very much and have a great day. Thank you.
Speaker Change: Thank you ladies and gentlemen, the conference has now ended thank you all for joining you may all disconnect your lines.
Speaker: Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.