Q1 2025 Trican Well Service Ltd Earnings Call
And Chief Executive Officer of <unk>, well service limited. Please go ahead Mr. Fedora.
Brad Fedora: I mean, I think, you know, one of the few companies that understands our cost of capital, and it certainly is not 10 or 12%, like a lot of service companies think it is. It's much higher than that. and I think we can see that with the trading multiples quite easily, so yeah, it's tough. It's a tough hurdle, you know, when you when you're targeting, you know, 20% returns on on all your projects, whether internal or external. You've got to sort through a lot of opportunities to find those and the only way to get there is just to grind, grind, grind, grind.
Speaker Change: Good morning, Thanks to everyone for joining the call Scott our CFO will give an overview I will start by giving an overview of the quarterly results and then I'll provide some comments with respect to the quarter and our current operating conditions and what the rest of the year. It looks like and then we'll take some questions from listeners.
Trina Richards: Puckett, Trina Richards Cleveland's Cluster Mentor atriarch Speaking of friends… Hello. All right.
Speaker Change: As usual several members of our team are here with us in the room today and are available to answer any questions I will now turn the call over to Scott. Thanks, Brad.
Scott: We begin I'd like to remind everyone that this conference call may contain forward looking statements and other information based on current expectations or results for the company.
Scott: Certain material factors or assumptions that were applied in drawing conclusions or making projections reflected.
Keith Mackey: and pick your spots carefully. Yeah, got it.
Scott: It reflected in the forward looking information section of our MD&A for Q1 2025.
Brad Fedora: And just to follow up on the asset rationalization, older redundant equipment, what what meaning would you say that your Trican is in? from an asset rationalization perspective. You know, every time you... get slowdowns in the you know, we don't sell the equipment locally to our competitors, obviously. And so we try to sell spare equipment into the US or overseas. And it sort of comes in waves, you know, and you might go through six months where there's no action at all. And then, you know, all of a sudden, you get an opportunity to sell a bunch of pumps or a coil unit or something like that.
Scott: <unk> of business risks and uncertainties could cause actual results to differ materially from these forward looking statements and our financial outlook. Please refer to our 2024 annual information form for the year ended December 31, 2024 for a more complete description of business risks and uncertainties facing <unk>. This document is available both on our website.
Scott: And on SEDAR.
Scott: During this call we will refer to several common industry terms and use certain non-GAAP measures, which are more fully described in our Q1 'twenty 2021 from 'twenty five MD&A and in our Q4 2024 MD&A.
Scott: Our quarterly results were released after close of market last night and are available both on SEDAR and our website.
Scott: So with that brief summary of the quarter.
Brad Fedora: But it's, you just got to keep your eyes peeled at all times. And, you know, we are, we're almost at the stage now where from an equipment perspective where we're getting to, I wouldn't say where we want to be, but we're not that far away either.
Scott: My comments will draw comparisons mostly in the first quarter of last year and I'll provide some additional commentary about our quarterly activity and our expectations going forward.
Scott: <unk> results for the quarter compared to last year's Q1 were not quite as strong mainly due more to more competitive pricing environment combined with some inflationary cost pressures faced in the quarter.
Brad Fedora: On the real estate side, we're really close. We've really cleaned up a lot of the redundant real estate in the last few years. What have we got?
Scott: Our schedule is always subject to client readiness and weather conditions, which served to defer certain customer programs into Q2 of 2025.
Brad Fedora: I'm looking at Todd and Scott here. We've got a couple of locations left to sell. We've made very strong progress on both sides, on the asset rationalization piece and then specifically on the real estate over the last few years as we've chipped away at it. So, yeah, I think the seventh inning is probably a good metaphor. Got it.
Scott: On the cost side, we felt the effects of foreign exchange fluctuations and rail surcharges during the quarter.
Scott: Revenue for the quarter was $259 1 million with adjusted EBITDA of $61 $3 million or 24% of revenues not quite as strong as the adjusted EBITDA of 72 to $72 8 million or 27% of revenues, we generated in Q1 2024, but still solid in this environment.
Keith Mackey: And I feel like I ask this every quarter, but can you just talk about the potential ramp in LMG Canada related fracturing activity. Have you seen anything notable yet? What is the RFP process looking like? Any comments around, you know, that topic would be helpful. It's been quiet. I mean, I, I know, I think we were all hoping for this sort of step change in activity. sort of the six months before LNG became fully operational, and that hasn't been that way. You know, there's been a slow, sort of a slow grind. You know, I think some of the participants are expecting to buy gas on the market as opposed to, you know, having drilled it and produced it like we were hoping.
Scott: Adjusted EBITDA for the quarter came in at $62 3 million or 24% of revenues to arrive at EBITDA, we add back the effects of cash settled share based compensation recognized in the quarter to more clearly show the results of our operations and remove some of the financial noise associated with changes in our share price as we mark to market. These items on.
Scott: On a consolidated basis, we generated positive earnings of $31 9 million in the quarter, which translates to <unk> 17 per share on both a fully a basic and a fully diluted basis.
Scott: Try and generated free cash flow of $43 million during the quarter. Our definition of free cash flow is essentially EBITDA less non discretionary cash expenditures, which include maintenance capital interest current taxes and cash settled stock based comp.
Brad Fedora: But, you know, you are seeing and hearing about more long term, sort of robust programs out of the participants there. You know, like the, you know, there's a lot of gas behind pipe for certain of the LNG Canada participants, but some of them are still short of gas. So it's a bit of a mixture, but it hasn't been the sort of overnight step change in activity that I think a lot of people may be have been modeling.
Scott: You can see the details of this in our non-GAAP measures section of our MD&A.
Scott: Capex for the quarter totaled $12 5 million split between maintenance capital of about $8 8 million and upgrade capital of $3 7 million.
Scott: Our upgrade capital was dedicated mainly to the electrification of our fourth set of ancillary frac support equipment and ongoing investments to maintain the productive capability of our active equipment.
Scott: <unk>.
Scott: For 2025, we have an approved capital budget of $72 million, which will be focused on a mixture of ongoing maintenance capital and targeted growth initiatives, including that first set of electric ancillary frac support equipment.
Operator: Okay, I think I'll leave it there. Thanks very much. Thank you, Keith. Once again, if you have a question, please press star then 1.
Scott: Further investments in our logistics fleet and our supporting infrastructure.
John Gibson: The next question comes from John Gibson with BMO Capital Markets. Please go ahead. Morning, guys. Thanks for taking my question.
Scott: As we mentioned in our last call trike and is undertaking a significant technology modernization initiatives, starting with our base financial system and implementing an integrated ERP platform. We're modernizing our technology platform to enhance operational efficiency streamline internal processes and help position the company for future innovation and growth.
John Gibson: First one, we saw a big merger, Canadian producer merger in the Montgomery-Dubournay close. today I guess. I was wondering if...
Brad Fedora: that has impacted your activity level schedule or client base as we move forward or is it still a little bit too early? No, I mean generally I would say it's positive for us. We worked for both companies. On the cementing side, you know, the combined coal... won't run as many rigs as the two individuals were in aggregate. So, you know, we'll lose some rigs from on the cementing side, but, you know, probably pick up more frack work.
Scott: The investment for 2025 is still anticipated to be approximately $10 million, which will be presented as a component of G&A expense in accordance with IV for respiratory standards.
Scott: Balance sheet remains solid we exited the quarter with positive working capital of approximately $159 million, including cash of $4 1 million.
Scott: With respect to our return of capital strategy, we repurchased and canceled two 5 million shares under our <unk> program for the first quarter. Subsequent to Q1 2025, we've repurchased and canceled an additional six 6 million shares and we continue to be active with our buyback program when market prices are at levels that provide for a favorable investment opportunity.
Brad Fedora: So. You have to expect these things. I think we've done a really good job of... being closely aligned with the companies that are likely to buy versus sell. And this, you know, this is a perfect example of that. We had worked more for for white cap than we did for bear and from a revenue perspective, just because the fracking is so much bigger than the spending.
Scott: We've repurchased and canceled 11 7 million shares to date.
Scott: Presenting approximately 61% of the 2024 25 and CIB program.
As noted in our press release, the board of directors approved a dividend of <unk> <unk> per share.
Scott: Dividend the distribution is scheduled to be made on June 32025 to shareholders of record as of the close of business on June 13th 2025, and I would note that the dividends are designated as eligible dividends for Canadian income tax purposes.
Brad Fedora: But, you know, we're I don't you know, we're not. It's it is what it is. We you have to expect something like that happening a couple of times a year. So we're not not worried about it at all.
Scott: So with that I'll turn things back to Brad Okay. Thanks, Scott.
John Gibson: Okay, got it.
Brad Fedora: You've previously spoken for NAPE for M&A and you pointed to cementing as needing more scale. Is this a line you could focus on in terms of acquisitions or even grow a fleet organically? Yeah, we have spare, sorry, John, that you said so many, right? Yeah. We have spare capacity, spare equipment capacity, we don't have the staffing capacity. So we are going to continue to try to grow it in the eastern areas that we had previously been active in. And we'll just have to sort of slowly but surely staff up. And, you know, maybe we'll have to open up a base or a couple of field locations or something like that to provide support.
Scott: As a reminder, my comments will include.
Speaker Change: As we mentioned in our last call trike, and as I'm, taking a significant technology modernization initiatives, starting with our base financial system and implementing an integrated ERP platform. We're modernizing our technology platform to enhance operational efficiency streamline internal processes and help position the company for future innovation and growth.
Scott: Q1, 2025 commentary and some forward looking looking statements for the rest of the year. So I remind you to go to our website and read our disclaimer.
Scott: On page two of our Powerpoint presentation, our investor presentation. So overall Q1 went pretty much as forecast I would say there was no surprises really at all.
Speaker Change: The investment for 2025 is still anticipated to be approximately $10 million, which will be presented as a component of G&A expense in accordance with IRS reporting standards.
Scott: Similar activity levels to Q4.
Scott: We're very fortunate that our customer list is really made great strides in the last few years.
Speaker Change: Balance sheet remains solid we exited the quarter with positive working capital of approximately $159 million, including cash of $4 1 million.
Scott: With respect to level loading to work throughout the year and so we're not experiencing nearly the same volatility from quarter to quarter that we grew to expect in the past and it's.
Brad Fedora: But yeah, I'm not terribly optimistic on the M&A side and cementing, there's only a few key players in Canada. And I don't get the sense that any of them are for sale. But you know, we, we have active files on every one of our competitors and every one of our divisions. You know, so we were always looking at everything. So, you know, anything's possible, but it. I think we can sort of rely on as part of a business plan is to complete M&A in any division, frankly.
Speaker Change: With respect to our return of capital strategy, we repurchased and canceled $2 5 million shares under our <unk> program for the first quarter. Subsequent to Q1 2025, we've repurchased and canceled an additional $6 6 million shares and we continue to be active with our buyback program when market prices are at levels that provide for a favorable investment opportunity.
Scott: Great from our perspective with respect to planning and staffing et cetera.
Scott: Always Q1 experienced the usual weather.
Scott: Breakup issues, but nothing that we hadn't already built into our forecast activity.
Scott: Activity levels held I would say pretty well through all the news with respect to political instability and tariffs.
We've repurchased and canceled 11 7 million shares to date representing.
Speaker Change: Approximately 61% of the 2024 25 and CIB program.
Scott: And we're really.
Scott: And I'll talk more about tariffs later on but I really would say that that has not significantly impacted our business at all at this time.
Speaker Change: As noted in our press release, the board of directors approved a dividend of <unk> <unk> per share dividend.
Speaker Change: The dividend the distribution is scheduled to be made on June 32025 to shareholders of record as of the close of business on June 13th 2025, and I would note that the dividends are designated as eligible dividends for Canadian income tax purposes.
John Gibson: Okay, got it.
John Gibson: Just a quick one to end here. Is $10 million a good front right over the next few years to think about for technology investments? Or should we see that sort of step down in years two and three? I mean this project is going to be a multi-year project as we go forward so there will be some spend next year as we work our way through it. I mean I would use that as a run rate for now and then we can adjust it as we go.
Scott: In General there was Scott mentioned, there was a little bit of pricing pressure, which really I think as a result of sort of a Q4 hangover for some of our competitors that has really slowed down.
Scott: Going into the end of the year and I would say that pretty much is stabilized for now we always have to keep an eye on that.
So with that I'll turn things back to Brad great. Thanks, Scott.
Speaker Change: As a reminder, my comments will include.
Scott: Ever sort of know where your competitors are at from.
Speaker Change: Q1, 2025 commentary and some forward looking looking statements for the rest of the year. So I remind you to go to our website and read our disclaimer IDEXX.
Scott: From a pricing perspective, but I would say in general it's it seems to have stabilized and the same with costs.
John Gibson: Okay, great. Thanks, guys.
Operator: I'll turn it back.
Speaker Change: On page two of our Powerpoint presentation, our investor presentation. So overall Q1 was pretty much as forecast I would say there was no surprises really at all.
Scott: We've talked about this in the past.
Scott: Costs have really pretty much stabilized we're starting to see you.
Brad Fedora: This concludes the question and answer session, I would like to turn the conference back over to Mr. Fedora for any closing remarks. Okay, thank you everyone for your time. If you have any more questions, you know, please call as we are available for today and the rest of the week. If any other questions come up. Thank you again.
Scott: Even some reductions with respect to fuel with the carbon tax in.
Speaker Change: Had similar activity levels to Q4.
Scott: Fuel surcharges and as other items that are they do go up every year, but I would say the rate of change on costs.
Speaker Change: We're very fortunate that our customer list is really made great strides in the last few years.
Scott: Basically.
Speaker Change: With respect of level loading their work throughout the year and so we're not experiencing nearly the same volatility from quarter to quarter that grew to expect in the past and that's it.
Scott: Returning to normal compared with sort of the post Covid era, where we see big changes from quarter to quarter and year to year I would say, it's more more what we're all used to with just tiny changes from from year to year.
Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Speaker Change: Great from our perspective with respect to planning and staffing et cetera.
Scott: On the fracturing side no changes, we're still very disciplined we operate seven.
Speaker Change: Always Q1 experienced the usual weather.
Speaker Change: Breakup issues, but nothing that we hadn't already built into our forecast.
Scott: Frac crews.
Scott: That means that we're running about 60% of our total horsepower comparison to some of our competitors that are operating at capacity they've even added equipment to this basin, which is a.
Speaker Change: Activity levels held I would say pretty well through all the news with respect to political instability and tariffs.
Speaker Change: And we're really.
Speaker Change: And I'll talk more about tariffs later on but I really would say that that has not significantly impacted our business at all at this time.
Scott: Again, it's unbelievable.
Scott: But we will continue to be we will continue to be disciplined and make sure that the.
Speaker Change: In General there was Scott mentioned, there was a little bit of pricing pressure, which really I think as a result of sort of a Q4 hangover for some of our competitors that had really slowed down.
Scott: The equipment is making money as we've talked about before this equipment only have so many hours on it theyre approximately seven year assets and so you can't sort of car two or three years out of those seven years to to not make money in and sort of hide behind high utilization.
Speaker Change: Moving into the end of the year and I would say that pretty much is stabilized for now we always have to keep an eye on that.
Speaker Change: Sort of know where your competitors are at from from.
Scott: So we'll pick our spots carefully and make sure that we provide a return to our shareholders. Every time, we put a piece of equipment to work.
Speaker Change: From a pricing perspective, but I would say in general it's it seems to have stabilized and the same with costs.
Scott: Our.
Speaker Change: We've talked about this in the past.
Scott: Our operations are still very focused on the montney, the duvernay and the deep basin I don't anticipate that will change as everybody knows LNG is months away and so I think.
Speaker Change: Costs are really pretty much stabilized we're starting to see.
Speaker Change: Even some reductions with respect to fuel with the carbon tax in fuel.
Scott: We're going to continue to be focusing in northwest, Alberta, and northeast B C going forward.
Speaker Change: Fuel surcharges and as other items that are they do go up every year, but I would say the rate of change on cost is based.
Scott: As we've been talking about before on the cementing side really.
Speaker Change: Basically.
Scott: Again, I think I'm.
Speaker Change: Returning to normal compared to the sort of the post Covid era, where we're seeing big changes from quarter to quarter and year to year I would say, it's more more what we're all used to with just tiny changes from from year to year.
Scott: Im repeating myself here, but we're very happy with the performance of this division.
Scott: Clearly the technical leader in Canada and cementing.
Scott: Very wide extensive customer list.
Scott: And really the only reason the companies arent using us as were either not present in those operating areas just due to a shortage of people and equipment.
Speaker Change: On the fracturing side no changes, we're still very disciplined we operate seven frac crews.
Scott: But really it's probably a price issue and we don't make any apologies for that.
Speaker Change: That means that we're running about 60% of our total horsepower.
Speaker Change: Parison to some of our competitors that are operating at capacity, they've even added equipment to this space and which is <unk>.
Scott: But we're viewed as a technical leader and certainly if you are in the some of the trickier plays like the Duvernay, we have a 75% market share in that and that play thanks to our expertise.
Speaker Change: Again, it's unbelievable.
Speaker Change: But we will continue to be we will continue to be disciplined and make sure that the.
Scott: We operated at very high utilization throughout Q1 and continue to in Q2, I think we're about 10 rigs higher now than we were at this time last year.
Speaker Change: The equipment is making money as we've talked about before this equipment only so many hours on it.
Speaker Change: Approximately seven year assets, and so you can't sort of car two or three years out of those seven years to to not make money in and sort of hide behind high utilization. So we'll pick our spots carefully and make sure that we provide a return to our shareholders. Every time, we put a piece of equipment to work.
Scott: I would say overall, we still sort of target to have about a 35% market share in the overall basin and Thats just because.
Scott: Some of the plays we're just we're not active in and are not yet anyway.
Scott: And we target to hold a 50% market share in the Montney and deep basin.
Scott: A higher in the Duvernay as I discussed we are starting to move back into some of the heavier oil plays that we had.
Speaker Change: Our.
Speaker Change: Our operations are still very focused on the montney, the duvernay and the deep basin I don't anticipate that will change.
Scott: Band it around Covid, just due to lack of staffing.
Speaker Change: Everybody knows LNG is months away and so I think.
Scott: And that will take time.
Speaker Change: We're going to continue to be focusing in northwest, Alberta, and northeast B C going forward.
Scott: But again those customers.
Scott: Can view.
Speaker Change: As we've been talking about before on the cementing side, we're really.
Scott: Our expertise with respect to blends in equipment and they see the value offering in that very easily.
Speaker Change: Again, I think I'm repeating myself here, but we're very happy with the performance of this division.
Scott: Sure.
Scott: Just a shadow toward group, we recently submitted a 9000 meter liner which is the longest in Canadian history.
Speaker Change: Clearly the technical leader in Canada and cementing.
Barry: Barry why the extensive customer list.
Scott: And this is an indication of these wells just get deeper and longer in the horizontal section in.
Barry: And really the only reason the companies arent using us as were either not present in those operating areas just due to the shortage of people and equipment.
Scott: Your ability to deal in these operating conditions becomes more and more important timber, we're certainly seeing that in our market share. So.
Barry: But really it's probably a price issue and we don't make any apologies for that.
Scott: Great job to everybody in our cementing division.
Barry: But we're we're viewed as a technical leader and certainly if you are in that some of the trickier plays like the Duvernay, we have a 75% market share in that and that play thanks to our expertise.
Scott: On the coil side, knowing and echo some similar comments, we're making great progress in the coil division we've been focused on growing this now for a few years, we have intermittent starts and stops, but I would say generally it's going quite well, we're still disciplined on this where we're operating sort of seven eight coil crews so lots of room for growth of this division.
We operated at very high utilization throughout Q1 and continue to in Q2.
Barry: Apple 10 rigs higher now than we were at this time last year I would say overall, we still sort of a target to have about a 35% market share in the overall basin and Thats just because.
Scott: Q1 was our largest revenue quarter ever and we had utilization over 70, 570%.
Scott: So that was a big win I think recycled over 1 million meters of pipe and yet we only had downtime of one 6% so great.
Barry: Some of the plays we're just we're not active in or not yet anyway.
Barry: And we target to hold a 50% market share in the Montney and deep basin.
Scott: Great job from our coil division we saw.
Scott: Sort of a joint venture with a company called <unk> and they have a multi directional tool for for clients operating in some of the heavier oil multi leg areas of the of the province.
Barry: And a higher in the Duvernay as I discussed we are starting to move back into some of the heavier oil plays that we had abandoned around COVID-19 just due to lack of staffing.
Scott: We completed our first job it was an overwhelming success. So we're looking for some market share growth around that going forward as well.
Barry: But that will take time.
Barry: But again those customers.
Barry: They can view.
Barry: Our expertise with respect to blends in.
Scott: And again, we have great fuel margins in this business. We just don't have the scale that we are hoping for and so as we continue to grow this business divisional earnings and return on invested capital in our coil Division will we will get to a level that we're happy with them and I think we are.
Barry: And they see the value offering in that very easily.
Barry: Just a shadow tour groups, we recently submitted a 9000 meter liner which is the longest in Canadian history.
Barry: And this is an indication of these wells just get deeper and longer in the horizontal section in.
Scott: On our way.
Scott: So just for the rest of 2025 I'll make some comments and we were happy with Q1, we're happy with Q2 to date.
Barry: Your ability to deal in these operating conditions becomes more and more important timber, we're certainly seeing that in our market share. So.
Scott: <unk> been some movement of course, given commodity prices and just some of the political issues in the news, but nothing too significant work, we're forecasting 2025 to be quite level loaded.
Barry: Right job to everybody in our cementing division.
Barry: On the coil side, knowing and echo some similar comments, we're making great progress in the coil division we've been focused on growing this now for a few years, we have intermittent starts and stops, but I would say generally it's going quite well, we're still discipline. The nest, where we're operating sort of 708 coil crews so lots of room for growth of this division.
Scott: We're closely closely watching oil and gas prices and just we're on the lookout for potential delays or reductions in our customers' programs, especially on the oil side.
Scott: And there has been delays, but nothing nothing significant there is always delays every year, there's pads moving pads getting canceled pads getting added.
Barry: Q1 was our largest revenue quarter ever and we have utilization over 70, 570%.
Scott: And if you are not building that kind of volatility into your forecast.
Barry: So that was a big win I think recycled over 1 million meters of pipe and yet we only had downtime of one 6% so great.
Youre missing something and so I think we have a very realistic view of this industry.
Scott: And we build and lots of room for movement, both in and out of the program. So.
Barry: Great job from our coil division we saw.
Barry: Sort of a joint venture with a company called <unk> and they have a multi directional tool for for clients operating in some of the heavier oil multi leg areas of the of the province.
Scott: We're expecting 2025 to be very similar to 2024 from an activity level. There is some pricing pressure.
Scott: And just some uncertainty around commodity prices and so that always means there is a little bit of panic in the system.
Barry: We completed our first job it was an overwhelming success. So we're looking for some market share growth around that going forward as well.
So that pricing pressure will lead to slightly lower margins like we saw in Q1, but still we're still operating at levels that were really happy with our goal is to hit return on invested capital of 20% every year and.
Barry: And again, we have great fuel margins in this business. We just don't have the scale that we are hoping for and so as we continue to grow this business divisional earnings and return on invested capital in the coil Division will will get to a level that we're happy with them and I think we're well on our way.
Scott: We're at those levels today, so in general I would say even if this is a bit of a sidestep for the rest of 2025 are still we're still happy with the financial returns, we believe or we provide a premium service offering.
Barry: So just for the rest of 2025 I'll make some comments and we were happy with Q1, where we're happy with Q2 to date.
Scott: We pursued the clients that value that and they look for operating efficiencies. They look for something other than just price.
Barry: <unk> been some movement of course, given commodity prices and just some of the political issues in the news, but nothing too significant work, we're forecasting 2025 to be quite level loaded.
Scott: And we try to align ourselves with those customers and today, we've been really successful.
Barry: We're closely closely watching oil and gas prices and just we're on the lookout for potential delays or reductions in our customers' programs, especially on the oil side.
Scott: Our top 10 customers have probably been with us for 10 years or more.
Scott: And it's.
Scott: Because it works out for their for their wells and an incremental production et cetera. So they do what is best for them and so far that's worked out really well for us.
Barry: There has been delays, but nothing nothing significant there is always delays every year, there's pads moving pads getting canceled Pat getting added.
Scott: Strip, especially on the gas side strip pricing is very economic levels and so we're fairly optimistic on gas activity for the rest of the year.
Speaker Change: In your view.
Barry: Kind of volatility into your forecast.
You're missing something and so I think we have a very realistic view of of this industry.
Scott: All of our customers are in great shape from a balance sheet perspective.
Barry: And we build and lots of room for movement, both in and out of programs. So.
Scott: We will spend their money wisely and methodically.
Scott: So we're expecting that.
Barry: We're expecting 2025 to be very similar to 2024 from an activity level. There is some pricing pressure.
Scott: Sort of a slow <unk>.
Scott: <unk> of what they've been doing.
Scott: Year to date in past year. So we think this year looks very level loaded compared to last year and it's at similar levels. The Duvernay is working out.
And just some uncertainty around commodity prices and so that always means there's a little bit of panic in the system.
Barry: So that pricing pressure will lead to slightly lower margins like we saw in Q1, but still we're still operating at levels that were really happy with our goal is to hit return on invested capital of 20% every year and.
Scott: <unk> to build momentum.
Scott: Very service intensive, especially on the Frac side.
Scott: Long reaches on cementing and coil.
Scott: So it's great for our business, it's a great opportunity to sort of showcase our technical expertise.
Barry: We're at those levels today, so in general I would say even if this is a bit of a sidestep for the rest of 2025 are still we're still happy with the financial returns, we believe or we provide a premium service offering.
Scott: And we're getting great response from our from our customers in that play on the tariff side. There was there was lots of news lots of fears about what would happen clearly the 10% tariffs on oil and natural gas going into the U S did did not did not get implemented however, the Canadian government did put in some <unk> tariffs around the auto and steel.
Barry: We pursued a clients that value that and they look for operating efficiencies. They look for something other than just price.
Scott: <unk>, which is affecting our business and really the main issue there is on sand.
Barry: And we try to align ourselves with those customers and today, we have been really successful.
Scott: There's tariff center sort of ranging in the $10 per ton.
Barry: Our top 10 customers have probably been with us for 10 years or more.
Scott: Range I would say, it's a little lower than that but so far we're sort of modeling and $10 per ton and that came into effect in early March.
Barry: And it's.
Barry: Because it works out for their for their wells and an incremental production et cetera. So they do what's best for them and so far it's worked out really well for us.
Scott: As industry groups that are lobbying to have that removed. The idea is that there is no sort of plan b, we can't access that sand from Canada, there just isn't enough capacity.
Barry: Script, especially on the gas side strip pricing is very economic levels and so we're fairly optimistic on gas activity for the rest of the year.
Scott: So we think it's an unfair tariff at this stage and we're hoping to get that reversed.
Barry: All of our customers are in great shape from a balance sheet perspective.
Scott: You can see how that goes the tariffs have had minimal effect on cement and chemical products and most of that is locally sourced.
Barry: We will spend their money wisely and methodically.
Barry: So we're expecting that there's sort of a slow <unk>.
Scott: <unk>.
Scott: We purchased about $70 million to $80 million of cement and chemical products every year.
Barry: Continuation of what <unk> been doing year.
Scott: Probably less than 10% of those are affected by reciprocal Canadian tariffs. The one thing we are keeping an eye on is coil, we do buy coil under the U S. And there is talk about tariffs increasing the cost of that coil by as much as 25%. So we'll see we don't have to buy any more coil until late in the year.
Barry: Year to date in past year, or so we think this year looks very level loaded compared to last year and it's at similar levels. The Duvernay is working out.
Barry: <unk> to build momentum, it's very service intensive, especially on the Frac side.
Barry: Long reaches on cementing and coil.
Scott: We'll just keep we'll just keep an eye on that going forward.
Barry: So it's great for our business, it's a great opportunity to sort of showcase our technical expertise.
Scott: On the sand logistics side.
Barry: And we're getting great response from our from our customers in that play on the tariff side. There was there was lots of news lots of fears about what would happen clearly the 10% tariffs on oil and natural gas going into the U S did did not did not get implemented however, the Canadian government did put in some <unk> tariffs around the auto and steel.
Scott: Still an area of focus for US we think it's a great opportunity.
Scott: For us given our given our fleet and our logistics expertise.
Scott: I think it is going to become a larger and larger part of the overall efficiency of our customers programs and.
Scott: The profitability of the services that we provide is it going to be more tightly linked to logistics last mile logistics is essential to extracting profitability from the increasing sand volumes and I'd use these analogies before but.
Barry: <unk>, which is affecting our business and really the main issue there is on sand.
Barry: Where there is tariffs that are sort of ranging in the $10 per ton.
Barry: Range I would say, it's a little lower than that but so far we're sort of a modeling and $10 per ton and that came into effect in early March.
Scott: We are 50 to 100 railcars of sand being pumped into a single well. These days. So you can imagine from a trucking perspective, what that means.
Barry: As industry groups that are lobbying to have that removed. The idea is that there is no sort of plan B, we can't access at sand from Canada, there just isn't enough capacity.
Scott: Giving some of the the distances that we're dealing with and so we've been.
Scott: Steadily building, our logistics department like our trucking department with experienced professional drivers.
Barry: So we think it's an unfair tariff at this stage and we're hoping to to get that reversed.
Barry: You can see how that goes the tariffs have had minimal effect on cement and chemical products and most of that is locally sourced.
Scott: We've been building, what we think is sort of the best from a trailer equipment perspective.
Scott: And I think it's paying off we have the largest logistics department and Canada, and I think a lot of our customers really see the value in that and what I mean by that is when you have a b train of sand showing up on location every 10 to 12 minutes and being dumped into the store onsite storage and pumped down the well any.
Barry: We repurchased about $70 million to $80 million of cement and chemical products every year.
Barry: Probably less than 10% of those are affected by reciprocal Canadian tariffs. The one thing we are keeping an eye on is coil, we do buy coil out of the U S. And there is talk about tariffs increasing the cost of that coil by as much as 25%. So we'll see we don't have to buy any more coil until late in the year.
Scott: <unk> and that schedule can mean big delays.
Barry: We will just keep we'll just keep an eye on that going forward.
Scott: And so we have hundreds of <unk>.
Scott: Truckloads of sand showing up in a very sort of 24 to 36 hour period, and so your ability to sort of perfectly time and plan that out.
Barry: On the sand logistics side.
Barry: Still an area of focus for US we think it's a great opportunity.
Scott: Can avoid a lot of downtime for your customers, which is very expensive and so.
Barry: For us given our given our fleet and our logistics expertise.
Barry: I think it's going to become a larger and larger part of the overall efficiency of our customers' programs.
Scott: I think they see the value in what we do and it's been paying off.
Scott: Okay.
Scott: Okay.
Barry: And the profitability of the services that we provide is it going to be more tightly linked to logistics last mile logistics is essential to extracting profitability from the increasing sand volumes and I've used these analogies before but we have 50 to 100 railcars of sand being pumped.
Scott: We're still looking at various technologies. The ultimate goal is 100% natural gas fueled operations in the field.
Scott: And I don't think I'm going to go through this in detail and I've talked about this before we are we are going to be trialing.
Scott: Our first 100% natural gas engine.
Scott: This summer and it should be ready in the second half of this year and we're combining it with some proprietary transmission technology that will allow us to pump at variable rates, the big challenges with 100% natural gas engines as they run at a constant rate, which is not applicable for what we do for a living we need to build.
Barry: To a single well. These days so you can imagine from a trucking perspective, what that means.
Barry: Actually giving some of the the distances that we're dealing with and so we've been.
Barry: Steadily building, our logistics department like our trucking department with experienced professional drivers.
Scott: So to wrap up and down and change pumping pressures change pumping rates and so we've spent a lot of time and money on a on a proprietary transmission technology to help us deal with the constant rate of the engine, but with variable transmission speeds and so we will we will trial it out in the second half of this year.
Barry: We've been building, what we think is sort of the best from a trailer equipment perspective.
Barry: And I think it's paying off we have the largest logistics department and Canada, and I think a lot of our customers really see the value of that and what I mean by that is when you have a be training of sand showing up on location every 10 to 12 minutes and being dumped into the store onsite storage and pumped down the well any.
Scott: We're the best at it to successful when you combine those 100% natural gas engines with our electric ancillary equipment, we will be operating at essentially 100% natural gas on location, which is a big win from our customers from an emissions and fuel cost perspective. So.
<unk> and that the schedule can mean big delays.
Barry: And so we have hundreds of.
Barry: Truckloads of sand showing up in a very sort of 24 to 36 hour period, and so your ability to sort of perfectly time and plan that out.
Looking forward to seeing how that how that works out and in the meantime, we will continue to deploy our tier four DGB technology.
Barry: Can avoid a lot of downtime for your customers, which is very expensive and so.
Scott: Our electric ancillary equipment, so until we get to a 100%, but the ultimate goal is to operate with 100% natural gas fueled operations in the field.
Barry: I think they see the value in what we do and it's been paying off.
Barry: Okay.
Scott: We're still obviously very excited about LNG, Canada coming online that should be in the summer and once at full capacity, we will be <unk> over 10% of the natural gas production in Canada, which clearly will have a positive impact on pricing and I think a lot of our customers are looking forward to that.
Barry:
Barry: We're still looking at various technologies. The ultimate goal is 100% natural gas fueled operations in the field.
Barry: And I don't think I'm going to go through this in detail I talked about this before we are we are going to be trialing.
Barry: Our first 100% natural gas engine.
Barry: This summer and it should be ready in the second half of this year and we're combining it with some proprietary transmission technology that will allow us to pump at variable rates, the big challenges with a 100% natural gas engines as they run at a constant rate, which is not applicable for what we do for a living we need to build to.
Scott: The Montney continues to stand out.
Scott: One of the best place if not the best play in North America on a relative basis compared to the the upside of that play from a drilling and reserves perspective.
Scott: We think we're only in the sort of the second third inning at the most when you compare it to the U S plays that are on the down that are on the downslope of their lifecycle.
Barry: So to wrap up and down and change pumping pressures change pumping rates and so we've spent a lot of time and money on a on a proprietary transmission technology to help us deal with the constant rate of the engine, but with variable transmission speeds and so.
Scott: Adrian plays like the Montney, the Duvernay, just look better and better every year in comparison.
Scott: And I think our customers are looking forward to being positioned as well as they are.
Barry: We will trial readout in the second half of this year over the best suited to successful when you combine those 100% natural gas engines with our electric ancillary equipment, we will be operating at essentially 100% natural gas on location, which is a big win from our customers from an emissions and fuel cost perspective. So.
Scott: And when you combine that with LNG exports, not just LNG, Canada, but wood.
Scott: Wood fiber and other facilities that are that are close to being online we.
Scott: Think the next five to 10 years in Canada look fantastic, we don't we're not changing our strategy, we're not changing our focus we're going to continue to.
Barry: Really looking forward to seeing how that how that works out and in the meantime, we will continue to deploy our tier four DGB technology.
Scott: Developed technology and standout as a differentiated service provider, but we're very very happy to be in this basin with especially with the customer base that we have.
Barry: Our electric ancillary equipment, so until we get to a 100%, but the ultimate goal is to operate with 100% natural gas fueled operations in the field.
Scott: We're still focused on generating free cash flow, maintaining a conservative balance sheet I think as Scott had mentioned, we we still subscribe to a differentiated return on capital strategy through the dividend and the buyback we do buy we do view the buyback as sort of internal M&A and so we'll scale it up and down.
Barry: We're still obviously very excited about LNG, Canada coming online that should be in the summer and wants a full capacity, we will be exploring over 10% of the natural gas production in Canada, which clearly will have a positive impact on pricing and I think a lot of our customers are looking forward to that.
Scott: Accordingly to what the opportunities are out there on the corporate side and where we are from a share price perspective, and I think we'll just continue to pull on those levers as efficiently as possible.
Barry: The Montney continues to stand out as one of the best place if not the best play in North America on a relative basis compared to the the upside of that play from a drilling and reserves perspective.
Scott: I'm not afraid to use our bank lines, it'll be spine something really attractive.
Scott: As always we operate effectively at little to no debt and so we have lots of capacity, if we find something interesting.
Barry: We think we're only in the sort of the second and third aiming at the most when you compare it to the U S plays that are on the down that are on the downslope of their lifecycle. The Canadian plays like the Montney Duvernay, just look better and better every year in comparison.
And we'll just continue to evaluate M&A opportunities against our in CIB and our dividend going forward, but we expect to continue our differentiated strategy with hopefully growing dividends and lots of buybacks.
And I think our customers are looking forward to being positioned as well as they are.
Scott: And our corporate priorities have not changed we want to build a resilient sustainable and differentiated company that everybody is proud to work out.
Barry: And when you combine that with LNG exports, not just LNG, Canada, but.
Barry: Wood fiber and other facilities that are that are close to being online. We think the next five to 10 years in Canada look fantastic. We don't we're not changing our strategy, we're not changing our focus where can they continue to <unk>.
Scott: Want to invest in high quality growth.
Scott: And equipment.
Scott: We want to upgrade wherever we see the opportunity to set ourselves apart from our competitors and provide a consistent return of capital to our shareholders through the dividend and the NCI b when appropriate and so we're going to continue to maintain a clean balance sheet lots of financial discipline.
Barry: Developed technology and stand out as a differentiated service provider, but we're very very happy to be in this basin with especially with the customer base that we have.
Barry: Sure.
Scott: And just execute our plan over the next next few years.
Speaker Change: We're still focused on generating free cash flow, maintaining a conservative balance sheet I think as Scott had mentioned, we we still subscribe to a differentiated return on capital strategy through the dividend and the buyback.
Scott: So I think I'll stop there operator, we'll go to questions.
Scott: Okay.
Scott: Yes.
Scott: We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request.
Barry: We do buy that we do view the buyback as sort of internal M&A and so we will scale that up and down.
Speaker Change: Accordingly to.
Speaker Change: To what the opportunities are out there on the corporate side and where we are from a share price perspective, and I think we will just continue to pull those levers as efficiently as possible, we're not afraid to use our bank lines it'll be spine something really attractive.
Scott: We're using a speakerphone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.
Speaker Change: First question comes from Keith <unk>.
Speaker Change: As always we operate effectively at little to no debt and so we have lots of make capacity, if we find something interesting.
Mackey: Mackey with RBC capital markets. Please go ahead.
Keith Mackey: Hey, good morning, and thanks for taking my questions.
Speaker Change: And we will just continue to evaluate M&A opportunities against our in CIB and our dividend going forward, but we expect to continue our differentiated strategy with hopefully growing dividends and lots of buybacks.
Speaker Change: Brian Since you mentioned return on invested capital I figured I would start there in Q&A.
Speaker Change: Target of 20% it looks like the last couple of years from your presentations.
Speaker Change: And our corporate priorities have not changed leader, we want to build a resilient sustainable and differentiated company that everybody is proud to work at.
Speaker Change: <unk> from the low Twenty's too.
Speaker Change: High teens.
Speaker Change: So just curious.
Speaker Change: What does the path back to 20% look like to you.
Speaker Change: Want to invest in high quality growth.
Speaker Change: Market to improve or their internal levers you can pull.
Speaker Change: And equipped.
Speaker Change: Equipment.
Speaker Change: We want to upgrade wherever we see the opportunity to set ourselves apart from our competitors and provide a consistent return of capital to our shareholders through the dividend and the NCI b when appropriate and so we're going to continue to maintain a clean balance sheet lots of financial discipline.
Speaker Change: To get back to 20% return on invested capital.
Speaker Change: Paul I mean pricing as you can imagine can move that number from the high teens to low twenties really quickly.
Speaker Change: The other thing that we've been doing a really good job of is just getting rid of all of the redundant and spare assets that exist, sorry assets and real estate that exists in this company.
Speaker Change: And just execute our plan over the next next few years.
Speaker Change: So I think I'll stop there operator, we'll go to questions.
Speaker Change: You know how the calculation works if you reduce the asset base your denominator shrinks and makes the.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
Speaker Change: The returns higher so.
Speaker Change: So we have a lot of.
Speaker Change: Redundant real estate.
Speaker Change: Old equipment in every division that we actively try to dispose of whenever we get the opportunity.
Speaker Change: We'll hear a tone acknowledging your request.
Speaker Change: You are using a speaker phone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.
Speaker Change: And we.
Speaker Change: We will just continue to make this company operate as efficiently as possible I mean I think.
Speaker Change: One of the few companies that understand our cost of capital.
Keith: First question comes from Keith.
Speaker Change: <unk> <unk> with RBC capital markets. Please go ahead.
Speaker Change: And it certainly is not 10 or 12%.
Speaker Change: A lot of service companies think of this.
Keith: Hey, good morning, and thanks for taking my questions.
Speaker Change: It's much higher than that.
Speaker Change: Brad since you mentioned the return on invested capital I figured I would start there the Q&A.
Speaker Change: And I think we can see that with the trading multiples quite easily.
Speaker Change: So it's a tough.
Speaker Change: Targeted 20% it looks like the last couple of years from your presentations.
Speaker Change: It's a tough hurdle.
Speaker Change: When you are targeting.
Speaker Change: 20% returns on on all your projects, whether internal or external.
Speaker Change: Move from the low Twenty's.
Speaker Change: You've got to sort through a lot of opportunities to find those and the only way to get there. It's just a grind.
Speaker Change: So just curious what does the path back to 20% look like to you.
Brian: Brian grind and grind.
Speaker Change: Market to improve or their internal levers you can pull.
Brian: And pick your pick your spots carefully.
To get back to 20% return on invested capital Yeah, Paul I mean pricing as you can imagine can move that number from the high teens to low twenties really quickly.
Speaker Change: Yeah got it and just to follow up on the.
Brian: Rationalization.
Brian: I mean equipment, what inning would you say that youre trying to get us in there.
Speaker Change: The other thing that we've been doing a really good job of is just getting rid of all of the redundant and spare assets that exist CRE assets and real estate that exists in this company.
Brian: From an asset rationalization perspective.
Speaker Change: Hello, Yes.
Speaker Change: <unk>.
Yeah seven.
Speaker Change: You know how the calculation works if you reduce the asset base your denominator shrinks and makes the.
Speaker Change: Every time you use.
Speaker Change: Get slowdowns in the we don't solve the equipment locally to our competitors, obviously and so we tried to solve spare equipment into the U S or overseas.
Speaker Change: The returns higher so.
Speaker Change: We have a lot of.
Speaker Change: Redundant real estate.
Speaker Change: All equipment and every division that we actively try to dispose of whenever we get the opportunity.
Speaker Change: It sort of comes in waves.
Speaker Change: You might go through six months, where Theres no action at all and then.
Speaker Change: All of a sudden you get an opportunity to sell a bunch of pumps or a coil unit or something like that but it's.
Speaker Change: And.
Speaker Change: We will just continue to make this company operate as efficiently as possible I mean I think.
Speaker Change: You just got to keep your eyes peeled at all times.
Speaker Change: One of the few companies that understand our cost of capital.
Speaker Change: We are we're almost at the stage now where.
Speaker Change: And it certainly is not 10 or 12% like a lot of service companies think of this.
Speaker Change: From an equipment perspective, where we're getting to.
Speaker Change: We can say, we're we want to be but we're not that far away either and on the real estate side.
Speaker Change: It's much higher than that.
Speaker Change: And I think we can see that with the trading multiples quite easily.
Speaker Change: We're really close we've really cleaned up a lot of the redundant real estate in the last few years, what do we got I'm looking at Todd and Scott here, We've got a we've got a couple of locations left to sell.
Speaker Change: So it's a tough.
Speaker Change: It's a tough hurdle when you.
Speaker Change: When you are targeting <unk>.
Speaker Change: 20% returns on on all your projects, whether internal or external.
Speaker Change: Too.
Speaker Change: Small and yes, we've made very strong progress on both sides on the asset rationalization piece and then specifically on the real estate over the last few years as we've chipped away at it. So yes, I think <unk> is probably a good a good metaphor.
Speaker Change: You've got to sort through a lot of opportunities to find those in and the only way to get there is just a grind.
Speaker Change: <unk> grind.
Speaker Change: And pictures to pick your spots carefully.
Speaker Change: Yes got it.
Speaker Change: Yeah got it and just to follow up on the <unk>.
Speaker Change: I feel like I ask this every quarter, but.
Speaker Change: Thats rationalization.
Speaker Change: Can you just talk about the.
Speaker Change: Equipment.
Speaker Change: Potential ramp in LNG, Canada related fracturing activity have you seen anything notable yet.
Speaker Change: What inning would you say that your trade cases in there.
Speaker Change: From an asset rationalization perspective.
Speaker Change: P process looking like.
Speaker Change: Yes.
Speaker Change: Yes, Evan.
Speaker Change: Any comments around.
That topic would be helpful.
Speaker Change: You know every time you use.
Speaker Change: It's been quiet.
Speaker Change: Yes, slowdowns in the EU, we don't celebrate the equipment locally to our competitors, obviously and so we tried to solve spare equipment into the U S or overseas.
Speaker Change: I know I think we're all hoping for this sort of a step change in activity.
Speaker Change: For the six months before LNG became fully operational and that hasnt been that way.
Speaker Change: It sort of comes in waves.
Speaker Change: It's been a slow start.
Speaker Change: You might go through six months, where Theres no action at all and then.
Speaker Change: Sort of a slow grind.
Speaker Change: I think some of the participants are expecting to buy gas on the market opposed to.
Speaker Change: All of a sudden you get an opportunity to sell a bunch of pumps or a coil unit or something like that but it's.
Speaker Change: Having drilled it and produce it like we were hoping but you are seeing and hearing about more long term sort of a robust programs.
Speaker Change: You just got to keep your eyes peeled at all times.
Speaker Change: We are we're almost at the stage now where.
Speaker Change: From an equipment perspective, where we're getting to.
Speaker Change: Out of the participants there.
Speaker Change: I would just say we want to be but we're not that far away either on the real estate side.
Speaker Change: There's a lot of gas behind pipe for certain update LNG, Canada participants, but some of them are still short of gas. So it's a bit of a mixture, but it hasnt been sort of overnight step change in activity that I think a lot of people may be had been modeling.
Speaker Change: We're really close we've really cleaned up a lot of the redundant real estate in the last few years, what do we got I'm looking at Todd and Scott here, We've got a we've got a couple of locations left to sell at two two.
Speaker Change: Small, yes, but we've made very strong progress on both sides on the asset rationalization piece and then specifically on the real estate over the last few years as we've chipped away at it. So yes, I think <unk> is probably a good a good metaphor Keith.
Speaker Change: Yes.
Speaker Change: Got it.
Speaker Change: Okay.
Speaker Change: I'll leave it there thanks very much.
Speaker Change: Thanks Keith.
Speaker Change: Once again, if you have a question. Please press Star then one.
Speaker Change: Yes got it.
Speaker Change: The next question comes from John Gibson with BMO capital markets. Please go ahead.
Speaker Change: I feel like I ask this every quarter, but.
Speaker Change: Can you just talk about the.
John Gibson: Good morning, guys. Thanks for taking my question.
Speaker Change: The potential ramp in LNG, Canada related fracturing activity have you seen anything notable yet what is the RFP process looking like.
Speaker Change: First one we saw a big merger.
Speaker Change: Any producer merger in the Montney Duvernay close.
Speaker Change: Today, I guess I was wondering it.
Speaker Change: Is that.
Speaker Change: Any comments around.
Speaker Change: Sure.
Speaker Change: The level of schedule or client base.
Speaker Change: That topic would be helpful.
Speaker Change: It's been quiet.
Speaker Change: Or is it still a little bit too early.
Speaker Change: No I think we're all hoping for this sort of a step change in activity.
Speaker Change: I mean the.
Speaker Change: Generally I would say it's positive for US we worked for both companies.
Speaker Change: For the six months before LNG became fully operational and that hasnt been that way.
On the cementing side.
Speaker Change: The combined co.
Speaker Change: It's been a slow.
Speaker Change: Sort of a slow grind.
Speaker Change: Won't run as many rigs as the two individuals were in aggregate. So we'll lose some rigs from us on the cementing side, but.
Speaker Change: I think some of the participants are expecting to buy gas on the market as opposed to.
Speaker Change: Having drilled it and produce it like we were hoping but you are seeing and hearing about more long term sort of robust programs.
Speaker Change: It will probably pick up more frac work so.
Speaker Change: You got to you have to expect these things in.
Speaker Change: I think we've done a really good job of.
Speaker Change: Out of the participants there.
Speaker Change: Being closely aligned with the companies that are likely to buy versus sell.
Speaker Change: There's a lot of gas behind pipe for certain update LNG, Canada participants, but some of them are still short of gas. So it's a bit of a mixture, but it hasnt been sort of overnight step change in activity that I think a lot of people may be had been modeling.
Speaker Change: This is the perfect example of that.
Speaker Change: We had worked more for for white cap than we did for bearing from a revenue perspective, just because of the fracking is so much bigger than the spending but yes.
Speaker Change: Yes sure.
Speaker Change: Yes.
Speaker Change: I don't we're not.
Speaker Change: Got it.
Speaker Change: It is what it is you have to expect something like that happening a couple of times a year. So we're not worried about it at all.
Speaker Change: Okay.
Speaker Change: I'll leave it there thanks very much.
Speaker Change: Thanks Keith.
Speaker Change: Once again, if you have a question. Please press Star then one.
Speaker Change: Okay got it.
Speaker Change: You've previously spoken for it.
Speaker Change: And that play for M&A and you pointed to submit tickets many more scale as this aligns you could.
Speaker Change: The next question comes from John Gibson with BMO capital markets. Please go ahead.
Speaker Change: Focus on in terms of acquisitions are great flavor.
Fleet organically.
John Gibson: Alright, guys. Thanks for taking my question.
John Gibson: Yes, we have spared sorry, John that you said some anyway.
John Gibson: First of all we saw a big merger in any producer merger what needed to really close.
Speaker Change: Yes, we have spare capacity.
John Gibson: Today, I guess I just wanted it.
Speaker Change: Their equipment capacity, we don't have the staffing capacity.
John Gibson: Is that has impacted your activity level schedule or client base per quarter or is it still a little bit too early.
Speaker Change: So we are going to continue to try to grow it in the eastern areas that we had previously been active in.
John Gibson: No.
John Gibson: Generally I would say it's positive for US we worked for both companies.
Speaker Change: And we'll just have to sort of slowly but surely staff up.
Maybe we'll have to open up a base a couple of field locations or something like that provides work but.
John Gibson: On the cementing side.
John Gibson: The combined coal.
Speaker Change: Yes, im not terribly optimistic on the M&A side, and cementing Theres only a few key players in Canada, and I don't get the sense that any of them are for sale, but.
John Gibson: Won't run as many rigs as the two individuals were in aggregate. So we'll lose some rigs from us on the cementing side, but.
John Gibson: Probably pick up more frac work so.
Speaker Change: We have active files on.
John Gibson: You got to you have to expect these things in.
Speaker Change: Every one of our competitors in every one of our divisions.
John Gibson: I think we've done a really good job of.
Speaker Change: So we were always looking at everything so anything is possible, but it's not something.
John Gibson: Being closely aligned with the companies that are likely to buy versus sell in.
John Gibson: A perfect example of that.
Speaker Change: I think we can sort of rely on as part of our business plan is to complete M&A and any division frankly.
John Gibson: We had worked more for for white cap than we did for bearing from a revenue perspective, just because of the fracking is so much bigger than the semantic but.
Speaker Change: Okay got it just a quick one to answer.
John Gibson: Yes sure.
Speaker Change: 1 million a good run rate over the next few years to think about for technology investments or should we see that.
John Gibson: Got.
John Gibson: It is what it is you have to expect something like that happening a couple of times a year. So we're not worried about it at all.
Speaker Change: Sort of stepped down.
Speaker Change: Two three.
Speaker Change: Yes.
Speaker Change: It's better.
John Gibson: Okay got it.
Speaker Change: Okay.
Speaker Change: Yes.
John Gibson: You've previously spoken periods.
Speaker Change: See the Glen if I got it there but I.
John Gibson: And that pay for M&A in your budget to submit tickets gaining more scale as the cell lines you could.
Speaker Change: This project is going to it's going to be a multi year project as we go forward. So there will be some spend next year.
John Gibson: In terms of acquisitions or grow the fleet organically.
Speaker Change: As we work our way through it I mean, I would use that as a run rate for now and then we can adjust it as we go.
John Gibson: Yes, we have spared sorry drove that you said some anyway.
Speaker Change: Okay, great. Thanks, guys I'll turn it back.
John Gibson: Yes, we have spare capacity.
Speaker Change: Okay.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Mr. Fedora for any closing remarks.
John Gibson: Fair equipment capacity, we don't have the staffing capacity.
John Gibson: So we are going to continue to try to grow it in the eastern areas that we had previously been active in.
Speaker Change: Okay. Thank you everyone for your time.
John Gibson: And we'll just have to sort of slowly but surely staff up.
Speaker Change: If you have any more questions. Please call us we are available.
John Gibson: Maybe we'll have to open up a base a couple of field locations or something like that to provide support but.
Speaker Change: For today and the rest of the week if any other questions come up thank you again.
John Gibson: Yes.
Speaker Change: This brings to a close today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
John Gibson: Terribly optimistic on the M&A side and cementing there's only a few key players in Canada, and I don't get the sense that any of them are for sale, but.
John Gibson: We we have active files on.
John Gibson: Every one of our competitors in every one of our divisions.
So we were always looking at everything so anything is possible, but it's not something.
John Gibson: I think we can sort of rely on as part of our business plan is to complete M&A and any division frankly.
John Gibson: Okay got it just a quick one to add to your 10 million a good run rate over the next few years think about crew technology investments or should we see that sort of step down.
John Gibson: Certainly two and three.
John Gibson: It's better.
John Gibson: Okay.
John Gibson: Yes.
John Gibson: See the glass side out there, but I.
Speaker Change: This project is going to it's going to be a multi year project as we go forward. So there will be some spend next year as we work our way through it I mean, I would use that as a run rate for now and then we can adjust it as we go.
John Gibson: Okay, great. Thanks, guys I'll turn it back.
Speaker Change: Okay.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Mr. Fedora for any closing remarks.
Speaker Change: Okay. Thank you everyone for your time.
Speaker Change: If you have any more questions. Please call us we are available.
Speaker Change: For today and the rest of the week if any other questions come up thank you again.
Speaker Change: This brings to a close today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].