NGS - Earnings call transcript Q4 2018 | Natural Gas Services Group, Inc.

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Operator

Good morning, ladies and gentlemen and welcome to the Natural Gas Services Group Fourth Quarter Earnings Call. [Operator Instructions] Your call leaders for today’s call are Alicia Dada, IR Coordinator; Steve Taylor, Chairman, President and CEO. I will now turn the call over to Ms. Dada.

You may begin.

Alicia Dada

good and Erica you, morning listeners. Thank me statement prior allow a call. moment forward-looking following the read to to Please commencing earnings our Except Litigation forward-looking contained morning’s information provisions as to for statements the Harbor of the this Private XXXX. in in Securities the herein, Safe conference Act are and the are outlined made Reform pursuant call historical

to the Services the turn under of Natural the now CEO Exchange and Securities Commission. is Group. no differ known in but to, with such over Gas on Forward-looking statements, described future materially to the materially or cause and by Natural Services in caption Services uncertainties, regulations, Those among I actual President, reflected the expenditures. risks Steve? Having recent the The Taylor, risks filed make subsequent events periods as and to introduction the statements technologies forward-looking will other that share who Gas of Risk Factors you this loss forward-looking environmental and that and other forward-looking statements health from which to XX-K competition and Important included in new report competing limited the call of actual from may to Natural update governmental factors results. undertakes forecasted reflect to company’s things, circumstances. differ which could as and unknown or in release Gas are press otherwise, also know, Form Chairman all of in Group’s require made stated, expectations statements call are involve Natural or Group significant cause publicly not include, safety, could the through results include, conference obligation may market Steve the date capital annual results our companies factors Services this of Gas call

Steve Taylor

with XXXX quarter rental of Natural and Welcome of Alicia XXXX X% fourth Services growth we the the reported fourth the our morning, quarter. performance and quarter sequential Gas good fourth by Group’s earnings in and Erica are review. strong revenue morning. operational you, results pleased to driven This Thank in year we quarter

horsepower revenue. progress growth higher growth reallocate opportunities quarter our solid sequentially, included for performance about our continued million fleet. margin a the declined plant our high result horsepower decision revenue by in result rental to $X majority was in reducing rental of of our category, resources from Sales the core mid sales thereby to primarily the revenue While production fabrication, of

sales quarter, our for in $X.XX level margins will details was We quarter the growth the to of did XXXX. a the per potential our higher solid related of generally the initiatives, at third share a common when strategic little the quarter over sets our end quarter for were review However, expense the stage backlog results. fourth year. company I at provide since non-recurring highest have financial this we of in its performance the but which coming

sales for the an the the perspective, sales, million by quarter X% same decreased magnitude the total the compared by reported fourth decrease same primarily revenue in rental XXXX is $XX.X quarter The was XXXX. to total largely decrease of at from when quarter revenue compared to due of revenue XXXX, more looking third So, compressor of the slightly which NGS of units from decrease period revenue. fourth timing rental running of Total XXX of by of of driven the sales. revenue, From X% a had quarter XXXX. a increase to we from XXXX

at the adjusted months revenue rental sequential quarter. quarter $X.X ended X% million the comparable for $X.X to XX, as December margin, XX% gross of XXXX. the previous be percentage of Total were of XXXX year higher of period $X.X which quarter margin Sequentially, revenue by higher offset revenue ended not comparative the partially adjusted was gross general a for gross revenue of X adjusted a increased for quarters, towards XX, in margin increased December the million, X XXXX. a as XXXX. can in and in periods. increased expenses XXXX to quarter. rentals gross year-over-year fourth and attributed same relatively slight ended percentage decrease this months for an in period Selling, to shift the Adjusted XX% full mix the for The sequential remained gross from increase of the goes margin gross However, in Adjusted in December $X.X compared margin million depreciation, ended the rental our the percentage margin include just XXXX. as December XXXX million the administrative months from from XX% the for increase XX%, previous XX, X increase down for the margin business XX% was and flat XX,

over growth in As quarter was $X.XX fourth mentioned Operating quarter the income $XXX,XXX in initiatives. a of expense we per income quarter and the an share operating in of the in approximately $XXX,XXX over of third to did quarter or due non-recurring compared the fourth XXXX. fourth have $XXX,XXX breakeven to potential

by to larger due fluctuating to placed comparative periods as is into revenues lower horsepower more in expenses. unit than being due revenues, sales variability service rental to positive Higher while the are displacement. income caused fabricated revenue they in and total again depreciation the operating expenses units lower Our normally usual due SG&A

by startup depreciation. the increased units growth associated forward income. higher and in demonstrate scheduling, This in deployment almost timing was revenue consumed differences to horsepower of equipment XX% almost due the being are that of this, some experience of anomaly totally is The caused between the revenues variation place take after lower of and build. activities and XXXX rental by To rental the commissioning deployment corresponding our receipt We income. and continued our and horsepower higher to revenue between

schedules high permanent natural market a X% deployed varied collected delays positive phenomenon forward now. only we should until fleet of of such and capital are that These moving being income good higher more and on horsepower to and quarter place timing which effect a and a in higher news have The right delays new into beginning rental to are cycles. startup is here the longer commissioning due every costs revenue equipment gains. variability Additionally, is horsepower not aforementioned

December income same in Looking period tax non-cash net compensation, related of for we at a to net income for ended adjustment of XXXX due compared $XXX,XXX the net to for income, to months XXXX. reported million expense the XX, $XX.X three executive loss the

tax period $XXX,XXX. net the for Excluding expense, adjustment income the was

for XXXX Excluding three of $XXX,XXX tax was benefit our of months XXXX, the fourth income fourth at December XX, third the act $XXX,XXX $XX.X Sequentially, quarter ended in from tax the of in million quarter year, net net $XXX,XXX. we net of the income income last compared adjusted flat XXXX. XXXX adjusted quarter to the in the

quarter the of compared per a XXXX. fourth diluted to loss XXXX, the the posted $X.XX share company For of in $X.XX

the diluted Excluding been the fourth non-cash in income $X.XX tax per quarter, earnings share. have would adjustment

quarter earnings per quarterly XXXX Excluding diluted earnings decreased flat. Sequentially, the share $X.XX. year-over-year tax were benefit, fourth

somewhat from $X.X million the million quarter’s to comparing $X.X taxes, this from unpredictable $X quarter and from $X.X revenue of the primarily expense NGS when that parts a the current revenues for to in When contracted by The adjustment of can considerable interest primarily third of XXXX, XX% of and the part ended preference revenue that revenues in drop earnings a for large of million a third million space $X swings previous fabrication reallocation. fourth as slightly aforementioned decline However, for income in months $X.X year fabrication order the quarter, in EBITDA flare the compared for to total to the before XX% shift or the depend quite $X XXXX, to revenues quarter gross XX% million, rental amortization percent ago. compressor $X.XX. quarter this sales quarter sales fell be was tax per with slight off can revenue XXXX margin December XXXX fourth a of decreased three share million sales times the depreciation increase excluding by bit nature million Total same due was compared $X.X down of of $X.X a due large that sales Earnings a The was period compressor to the due aftermarket our XX% but for total period-to-period. the basis, were of XXXX. increased and allocation year-over-year diluted can third quarter Fourth There XXXX and averaged about compared revenue we year for for of be space EBITDA XX% sales unpredictable this in to year-over-year uncertainty and changes periods. can the to million. saw variation same a decreased of and of sales million somewhat compressors, XX% sales the all in period gross to $X.X quarter which in XXXX the in XXXX. period year quarter average to but floor part also On and sales fourth decrease too. due period in sequential margin sales million market margins $X.X revenue sales which the XXXX. scheduling period. our of on about bidding, Compressor fabrication. business to due activities to The for often in margins cause sales to includes customer the the the roughly time revenue significantly have comparative sales XX, quarter flares quarter

in third This backlog $XX in of approximately $X XXXX. and $X Our backlog QX XXXX to million. of approximately the quarter million XXXX. million of was in sales This XX, is as of highest the QX, we compares had sales since QX have million backlogs December $XX

to our rental $XX.X million sequentially increased for to quarter with results, We XXXX. XXXX and full year pleased and of the fourth the XXXX year-over-year compared for continue revenue rental of be with

year was the in growth. rental X%. revenue sequential Year-over-year, recent acceleration The revenue rentals revenue highest rental XX% of quarterly the quarter rental rental increased quarter versus we increased and revenues seen the in XXXX fourth increasing Additionally, fourth quarterly an XXXX. of with have since XXXX X%, full XXXX

This call, large which keep to Last last million order, of CapEx. our $XX going speculative are units horsepower through that full first We shops on XX presence receipt horsepower January, expand large mentioned mentioned in build continue to additional of in call we order addition to large the our I approximately order will the quarter I XXXX. XXXX. in the represents fabrication and in

their end the of spec towards been however this plan to in have and units All build. XXXX. more We do for of year those now advance contracted into build

as quarter large significant totaled of classified unit but take XXXX, up in quarter. This this of As couple is increase strategic XX, ago quarter fleet demonstrates to were one. our per X,XXX our fabrication we on average growth think horsepower in To a horsepower a years units X and at on large down addition rental year’s of XXXX, average was a rates with is essentially in of quarter Rental horse increased keep per X,XXX will horsepower XX%, Compared market are December makeup a last an of horsepower. fourth I chose the we in of of quarter our XX% flat third utilized marginally we XX%, continued full almost an have December size be secured XX%. power the margins basis a end or basis. direction space. third from correct gross the rental the from additional what margin Fleet X% gross shift compressors

added This in XX horsepower fleet increased the XX%. total fleet new have XX,XXX that horsepower horsepower, of represents being while Over an of totaled large X% rented with that horsepower, months, category. past increase units XX% XX we in has our

quarter in to utilization measured this units to saw and climbed last at XX% X% horsepower as this an from utilization by quarter, grew X% of end sequentially. utilized Our rental from while increase unit-based XX% year-over-year XX% quarter XX% We quarter.

year-over-year range we million, rivalry XX% have million $XX XXXX is X% of of, to XXXX year raised rental While that the estimate our of sequentially. $XX XX% contracted. Of that $XX to with to in last be XX% on direct We quarter that, to increased start there the horsepower of been million is already compression CapEx a contracted. business sight higher rental approximately CapEx end. Based additional and and running this, line in horsepower Of the our compression million in we almost the $XX $XX million. estimate has $XX.X in million field a and

our XXXX just our of This compared cash a and strong to million flow new XX% $XX over sheet, $XX vast and being horsepower office. especially at about the from balance balance XXXX the is market amount are fourth Positive in in Overall, since total bank cash activities invested December XX, to results debt a operate. $XX.X cash XXXX million rental net volatile Moving equipment operating of down our million. given as majority for corporate the quarter for is was environment remains compression $XXX,XXX new with our higher our in of XXXX, increase cash $XX.X XXXX with flow. pleased which we and million we beginning

evaluate provides intrinsic the have both sheets and to balance of continued as opportunities. We we significant industry which in growth one advantage the extrinsic strongest a competitive

the be and make for opportunities. evaluating afraid not patient disciplined said but we will As be will have we commitments in to opportunities, right meaningful before, we

to to take in and of opportunities. continue we right believe the compelling place have flexibility advantage We tools

We also which Moreover, counterparties. capital approximately continue with managing $XXX have funded additions which is us compression of for equipment to are backed well. million is rental nearly at contracts XXXX on served capital currently solid market by conservative XX% spending our equipment, our above focus we over has rates XX% the in of we long-term fleet. self capital Since

continue. we are volatility markets the commodity in However will certain

We also Gas be XXXX to solid are Services Group. that is looking year the Natural for confident

Forecast which horsepower. continue grow exists to in at plays, require key additional completions compressional resource will will

optimistic compression horsepower growth support for XXXX are including in our pleased with year. higher growth offerings Our in coming the our and existing we contracts outlook our performance All-in-all, new for prepared enthusiastic about that’s lines open months especially so Erica, in our remarks, given questions. the our coming prospects start my please the any for end to the year. strong of the continued

Operator

Capital. this first Brown [Operator state Ladies will your Instructions] time from Please gentlemen, Rob the Our we Street conduct comes question-and-answer and from at question question. session. Lake

Rob Brown

Steve. morning Good

Steve Taylor

Hi Rob.

Rob Brown

horsepower that are now Just about markets wanted to on still environment, year kind a demand the self you the in color earlier more kind a in are get little we seeing of the same strong? from the on it is of of high or accelerate taking your and matter more

Steve Taylor

are market sort the is accelerating I I pretty making market little, it’s penetration guess good and a of we strong into. think

Just of XX% to didn’t of utilized we X% years the of a fleet horsepower horsepower and are up ago couple any have big. this we of and now is

we we and think or for anticipated go. it’s units don’t add I too. So to as five quarters I have to contract more as have capturing space of accelerating mentioned as shops our and the that as units are speculative market And much even secured are we more booked additional we four the in more in try next

the are quarters the solid but have from year. staying good maybe, accelerating it’s certainly of got in And higher horsepower So and we certainly in contracts I have next some last couple that think we the us those busy, announced. keeping

Rob Brown

new is did but you I how many may contract, many have CapEx, that? this, many Okay. on million you how said win, $XX think this in units how I And missed units

Steve Taylor

Yes.

You say, horsepower or all XX didn’t didn’t units, it’s miss of the it’s because bigger I XX units X,XXX units units. it,

Rob Brown

then And talked I or good. adding think are adding Okay, did units? – find some third-party you you capacity about to you build capacity

Steve Taylor

is six market them to have months We it. about of and of up of out that’s capacity working outsourcing going all do do to actually and and and work are shaving a it. think We some with looked the things, the but premiere we some are secured we our to this at part and fabricator let we what are peak went we

Rob Brown

little kind you covering question the it market, the of the wanted sounds of last are of how improvement? how on kind horsepower that’s improvements non-high that’s quarter and as well, that utilization a the kind there to does raise like trends of And poise Okay. what bit of then sort see, kind

Steve Taylor

normal X would high planned utilization horsepower, The points point, faster get X a horsepower – horsepower than that’s that. the went the up utilization unit up went this the be and

consider X then a quarters stay much, or anticipate utilization And the That X larger were X off maybe still that to these range, fluctuate we get say they of gas, in more companies compression anything, unit horsepower what properties. been I it’s to the horsepower starting good the rental pretty has in points So see been and pickup, for the building. make as in vary so kind and backlog, there it’s is wellhead rates X same, in hard a or utilization. still about essentially lift properties but typically mature market medium which many so gas decent year, the selling change but

some give there etcetera. optimization that shifting going on are sold like properties deals typically etcetera, equipment you guys more always when of is smaller those So in and to

have had growth we set although got year, although four the lot So a have about segment. fair that first net quarters we or equipment, in amount probably half of the back, a growing of of have we three

So I to stay good. it’s think going

generating on give go lagged for were just competitors as didn’t okay have you We us more were we our downturn, little that’s tend like have to pricing landscape but EPS we due the or because which to us with, market think the comparative on waiting some that primarily knew that has has, have. operating of it and and low we frankly results We a the utilization kind maintain what in a down share and than good. we probably pricing, on the been we our kept

All that are. general mid we a that and come attractive combined the into start pricing are on more we is have pricing, basis I a So that horsepower. think up I perking to to relative that up market, certainly the now little our point now makes think seen pricing the

if quite growing three no a can move, growing, that’s the CapEx our to all which we mentioned get once CapEx big obviously mid is we And horsepower where the horsepower well is going, of great. this so story, last – I and that’s quarters but is two, starting this growth

So, good. if and pretty returns to up start really incrementally get on that pile

and our think come So horsepower its from that way. perspective anticipated started mid own we that into continuing

Rob Brown

I Excellent. Thank over. you. will turn it

Steve Taylor

Rob. Thanks Okay.

Operator

next question from your question. Sullivan. Please Tate comes state Our

Tate Sullivan

I the you. higher mentioned but I the rental your depends HP to revenue Hi, XX% full the the rental those for it point horsepower being collected, is units, all know morning. it know for Steve. what on details, collecting thank from start the is full of revenue? Good you higher Thank location average timeline you

Steve Taylor

months from goes It X to X typically.

expensive So familiar very once stuff big them, coolers up there to them, build very not REM if this kit there on this is are units. a are XXX,XXX operator, engine everything takes the is and between install it’s on construction more the you time, you expensive move these is from lot but to and and onside I more fitting is the pounds, stuff. of just this, with compression this self mean, ways, piping all

pretty it’s more market, coming you that So in. a but that in in knew that’s have longer big do money this what get to cycles going production. involved We get

X of commissioning mean you rent So have is rather like X you right equipment minimum until we and Day thing good X obviously we XX% but get terms scheduling, gathered any typically our delay don’t I out the month some will rent. later, the months but is we now XX% once on are the full startup being rent it a and full form that’s to about would a And have X, stuff starts. the start given of what see until X certainly that, of seeing is in about full now, only the other

have once though, give even the term may the starts. So for rents, we full rent equipment we interim standby some full

at rates the standpoint are not from anything So lower looking are giving term when a we for these we bit. little marginally up

Tate Sullivan

Okay.

of the it share potential out ‘XX orders that can terms the for schedule mean give…? – In how I if going if what you your the is like field, previous is consistent can or schedule delivery you look it’s every I deploying into the is doors mean cadence

Steve Taylor

don’t we certainly and is sort everything pinpoint, on that highly planned Yes. gets on variable. a everything if operator. just to pattern roughly this slides. units quarter. got we exact a that’s probably XX do four over the the And I you by stuff wanted sure I am but I But we the got fabrication I what time else schedule of remember going to next – X have quick give. may you probably of well a schedule And way number else the could months that’s I might we something number, say something through want like schedule wide lead that’s number could best it X mean variance, ten can way, slide change from a they pretty when pretty but you now off, and wide you that slide want to know I if is revenue have where to calculate it’s get in this that And is point always the and quarters

Tate Sullivan

that Okay. then for and growth additional based was I jump you. fabrication me mentioned press securing one Thank is will something initiatives, or you release on I and space it else? back And think strategic more

Steve Taylor

was to it we some No, we I say external to from is at all and a look expense. equivalent, but credit about want did some it’s over I that hire we incur to share, that four, us, little it’s advisors which need opportunities just $XXX,XXX would actually, $X.XX and

Tate Sullivan

understood. Okay,

the much detail. Thank Steve for Okay. you very

Steve Taylor

Okay. Thanks Tate.

Operator

question from comes Please state question. Kyle Our your next May.

Kyle May

good Steve. Hey, morning

Steve Taylor

you? how Kyle, Hi are

Kyle May

of again quick the Good. year? of at rental to just you get end things One compressor one size was the going, what the say fleet can the

Steve Taylor

Yes.

here, see, me look Let’s let X,XXX, X,XXX.

Kyle May

should be other need forward? be going fourth Got of mindful there about tax thing going can it. quarter, give one the you was anything that I with in color and to anymore us we on curious on if Thanks. adjustment what’s the And

Steve Taylor

the is over so and a an than from maybe in will a the over longer you – period expense a book quarter, we but it’s a require got it’s them of so right, these quarter. to booked the with one-time standpoint a auditors have, the tax in it’s not problem adjustment, No, expense quarter, the recurring some it’s and

the that’s did. required that just a adjustment we it’s one-time So book us to and what auditors so

Kyle May

then one the you for Okay, the about already of seeing how on are got takes maybe couple that spec some quarters are long more with last to you talked a a it. getting lot looking it you XXXX? about making and then contracted, last for at building are over And like me, you sounds headway of as units talk it get units under those environment can spec bit you contract those your and little on thoughts in maybe maybe

Steve Taylor

It’s not – units one per committed last well, the schedule, for the missed in so about XX to XXXX we had we month had. it addition call, actually about you scheduled unit other think contracts I spec in

more the the we XXXX too to venture just if balance shop would that’s year yet. It’s one zero then spec in XXXX in maybe taken. into month on million, would that’s we secure think now in we of five that have I units, looking we are got probably another any addition go might probably ones. XXXX think going ahead XX even But to now to replicate $XX to haven’t we spec more the looked much guess, contracts at good, other $XX what of are XXXX. and but XXXX, we into when into at for million this at now now We were we dependent outside or build another those becoming space some end because four we Right at Right but try have more look roughly a we looking little. just XX

about the and you anything year, issue on components, you’ve things. contracted engines June has remember and into got fall X-month typically Now, we everybody to deliveries or because get next is compressors now the July, got essentially

it’s happen, get a until not revenue piece or is So, to even contract that in not happen to if July, XXXX. you going June going

for a is some we’re for, have what – this and months about So, securing then X which this getting or contracts more secure whole lot start we’ll March, X year, half and to room we last year for got of the months so XXXX. we’ve don’t

maybe last one answer year the roughly XXXX. the in a this and short, of So, cut month into quarter

In addition to we else anything secure.

Kyle May

helpful. Okay, Thanks got Real Steve. it. lot, a

Steve Taylor

Kyle. Thanks, Okay.

Operator

question next Dearnley. Please your state Richard question. Our comes from

Richard Dearnley

How – morning. Good

Steve Taylor

Hi, Dick.

Richard Dearnley

bucket you How in rehab fourth the many units quarter? make-ready did in the

Steve Taylor

gosh. Oh

Richard Dearnley

give about or Like, XX that the was take it been you’ve running?

Steve Taylor

the on. that the the thought hold have got – I I and as much number, I in but answers here. about I you we exact the of did twice but had the I’ve about all did it fourth in about as afterwards, don’t might quarter We did No, third but have to – give the ran expense quarter, I I have number needed don’t units.

Richard Dearnley

so would in the – and tell and you twice it XX you third did expense was the more if Well, you did fourth XXX that quarter, the if me quarter? in did odd

Steve Taylor

to what, I’ll to that be now. backlog Yes, right yes, little like sounds I’ll a strong, rental say – that I high you in mean, number. continues roughly, that I’ll need need just that tell probably dig I’ll a – more, but we are

Richard Dearnley

And the are aren’t make-readies they? mid-horsepower range, the in Right. largely

Steve Taylor

all brand big Yes, is sir. new. horsepower the Yes,

Richard Dearnley

Yes.

make-ready a As guess about units – only have that can of make with my one and calculation, that bit you used? be more inventories of which a about ready is right you then that year

Steve Taylor

got still We’ve utilized. units. XX% what for got We’ve X,XXX

including flat. I as horsepower, if mentioned probably small mid-horsepower just about just before that market the not the right it’s talking you’re range You’re kind but of

So, the that with in out. to growth the needs it fleet equipment and market before that be refurbished being present mid-horsepower goes all

utilization and something thing around the small plus exactly, kind is, we hopefully horsepower horsepower medium getting utilization say climbing large say a that’s course. One And right, utilized. It’s right. fleet our be that year might XX% small, fleet keeps XX%. to just to is into when The – XX%, it got like and horsepower. that across remember medium or is mid-horsepower XX% XX% whole It of The be you horsepower half but large might a hard that. You of range. lays

it of horsepower, it’s that frankly, drags kind down. utilization a So, small overall

Richard Dearnley

I like like got but I that capacity Right, it the it of that’s adds? how feel sounds then understand. kind – does capacity, what third-party And right, flexible, –

Steve Taylor

times lead issue need the it engines if and think significant primarily. on I compressors we be like can it. we The long is always the Well, equipment, mentioned

a to and that but pieces. something got in their here you want and they ship to to because flexible and thing sit the specs. I do stuff they right, don’t we’ve it’s say it count on our still June, and And order we you ordered in can’t So, parts them and because March degree, just fabricate, so have

as out. as flexible months X it’s months So, there’s X long or

Richard Dearnley

Okay, okay, thank you.

Steve Taylor

Okay. Dick. Thanks,

Operator

next Wangler. comes your Our Please question. from question Jason state

Jason Wangler

Hey, morning, good Steve.

Steve Taylor

Jason. Hey,

Jason Wangler

it said with to like you on wanted the the mentioned Just get but maybe starting better in the a kind side? competitors’ the to to higher, pricing market it you bit, where see side, as just utilization kind firm of kind the question, pricing previous sounds going ask utilization of you taking likely of up of kind on

Steve Taylor

market up a this to we bit, that, and more typical mentioned, much we’ve macro phenomena. model. the downturn, depends tighter, a view but of overall, of tight, the But the general starting do, stuff, drop of even little – is Yes, that’s big to didn’t is in on because our medium utilization that’s as the suffers than I kind very to see we’re what a too, getting in tighten we’ve obviously, in a seen seen horsepower the know – happen. little never it we have it’s pricing going that as this little We a industry take

We’re okay with it.

as So, down much pricing. go we didn’t in

so, everybody went further, up got they’ve So, some. catch to else

closing that. even everybody comes catch now, seeing where as let we’re gap we’re though the And that of gap up us we’re as up raising kind business of us the that to XX% general pricing And the catch the more up, X% to to is else so because going is at industry our least right we close what obviously getting price seeing what premium. on we’re are we’re is normal on to market staying

when still comes So, the think it’s right. together great plan

Jason Wangler

Right.

Steve Taylor

general at So, we’re that’s just want we’re what seeing, we industry a increase to where making we’re of stay and that able in kind point. in pricing, profit

gauge years, we to increasing ones we’ve on on. for need we models use some pricing which we’re hold to and and just Now obviously, like go we on up done models some which can utilization

most We shotgun. a lost downturns we else to of board out got is everybody these our a But across our pinpoint pricing or approvals see the lot for haven’t. whatever. remember of money throughout gone we’ve So, a consistently there, of – competitions and XX% is more

the that’s difference. So

a on coming The little firming to win seeing able So, we’re more then pricing service, our we’re that’s ours able we’re hold I right and now is and in better with some why mid-horsepower. to close think jobs. to

Jason Wangler

thinking Okay. That’s timing XX as sales to kind rest is be talking on the what this side? the you just of I helpful. just the that, squeeze year, kind finish that, that it months, we of And guess, then on so fabrication of into we should are what’s backlog

Steve Taylor

be Yes, to probably million backlog. a X-month quarter will mean, that XX it’ll quarter – X-month, X X to I

Jason Wangler

Okay.

Steve Taylor

I space quicker we’ve mentioned that, we where being lot A sales horsepower rental times so throughout, but on out. very particular of units we’re because want rental slot more obviously these as allocated just going we than to these fabrications, units big

essentially. it’ll I think be throughout this the year of X rest So, to a X –

Jason Wangler

– appreciate I Okay.

Steve Taylor

go to. we we add it to as And hopefully

Jason Wangler

well Okay, yes, – you well, the can space, if find

Steve Taylor

Yes.

Jason Wangler

I appreciate it. Steve. Thanks,

Steve Taylor

Okay. Jason. Thanks,

Operator

question Tate comes Sullivan. Please question. Our state your next from

Tate Sullivan

thanks. Hi, quick couple of follow-ups. A

Steve Taylor

Hi.

Tate Sullivan

door with same lift, mostly medium is the larger gas that out the comment? You you horsepower door, the mentioned going is horsepower if the out can

Steve Taylor

existing wellhead horsepower our or lifting bigger all or the lift, wells, we’re horsepower the XX where or more gas lift, you yes, you’re lifting wells, maybe two lift centralized is fleet. XX and deploying building is be the gas and is, difference it’s gas what gas units gas might essentially so medium but the Yes, from big one –

Tate Sullivan

pretty a the Okay, years? any previous meaningful XX-K little highlight preview of to that thanks. are And mix changes can or conservative you customer

Steve Taylor

everybody, customer count, around XX to XX. we’ve think and around to year XX about up our a looking from that XX, No, yesterday was increased we’re at mean, ago, I I I think

is So, out, downturn broadening the a base too. little customer back shrinks of in course, a it

– is customers, I but number it no of now. any So setting the there’s right on we’re don’t shifts major and in concentration growing, not customer records but think

Tate Sullivan

Okay, thank good of rest the you very day. much, Steve. a Have

Steve Taylor

Thanks, Tate.

You too. it. Appreciate

Tate Sullivan

Thanks.

Operator

your Urban. Mike Please from state next comes question. Our question

Mike Urban

morning. Good Thanks.

Steve Taylor

Hey Mike.

Mike Urban

Hi.

with outsourced both? function rental or – in Is primarily the that production – and or stuff, So, shakes that how here. the be going could you’re capacity it it a be the equipment is to more sales that schedules of little out fabrication this layering a

Steve Taylor

units. it those right time and are going that be be Those that to putting bigger start to much horsepower going it’s take the shop – big X,XXX horsepower, really It’s primarily the impacts much when now so so room the ones you up through.

we We take little most a can you we’re just but that’s to that’s space in us bigger So it’s slot fit big stuff. the help. much time so manner, the needed that in up, our outsource they positive shock it better, those – ones can i.e. and where a say most sales, the a to looking of medium take you the in disrupting disrupt so because what there’s horsepower, primarily

Mike Urban

Okay.

I really I have but necessarily? be CapEx So margin obviously, then pay have sale I guess, equipment equipment slightly that’s going impacted to means and I higher the these maybe third-parties shouldn’t going, guess, you where much, your mean, margin things, to your you’re shouldn’t affected sale was would be some otherwise, just stuff

Steve Taylor

are the on again at stuff, little little remember, that a XX% X-year exactly. right, pay Right, yes, XX% to minus the and quarter industry. outsource look but in mean, by more a We obviously, absorb more to something journey, range, that that But, I cost highest we’re and stay will that’s course life. a But got think X% the we’ve in rentals have so, still plus those and X% varies. of margin margins or X-year or over returns to good the still the we’ll

Mike Urban

question, if guess, I Yes, missed it. I makes then, of apologize sense. just kind one And housekeeping

You fleet the end horsepower gave of the unit the what us count year? the the at end year, the at of was

Steve Taylor

I I gave you that, didn’t. but Not sure

was it think around XXX,XXX XXX,XXX I or horsepower.

I’ve I’m looking okay, that’s horsepower, XXX,XXX somewhere, – think the sure I horsepower. in but notes, so got here yes, I’m it XXX,XXX almost here

Mike Urban

the Okay, was for – me, unit cool. year, that at then the a utilization last And one basis, of that’s end on number basis, XX% right? on horsepower XX% a

Steve Taylor

Yes, sir.

Mike Urban

Of the average.

for all Thank me. that’s Okay, you.

Steve Taylor

Mike. Thanks, Okay.

Operator

question question. comes Our state from Please next Dearnley. your Richard

Richard Dearnley

quickie newbies. for a Just relative

large horsepower. be the to or largely your running mantra cash versus – there what the what’s the because you it dollar about the want running go work sales are Could rent – about is flow medium talk comment large Your on economics higher medium hand-in-hand neutral does of since new we – with the the there? buying

Steve Taylor

they it’s the big. mean, we past saw rental we’re just what the It’s has and on the right and, just big in how perspective really pursuing want to in simply the horsepower market I has Well, – get small horsepower primarily customer sale of now a medium the it. concentration from ordered course, been and and medium

too are So, a the much requirements. impact perceive how those of from customer just wants one to really not horsepower the they getting their what really rentals, It’s there’s other. and spending one, big they’re number pretty operate off in to popular stuff involved lots capital an and time, buying well capital than this a drilling on this because better operator all of compression. that The

in that’s horsepower bigger and them, specialized that. that lot things field to So – like takes important a more technicians the

become So medium rental want stuff, lot people a rental just sometimes but it. popular. medium stuff horsepower, more big the to rented, And got again, horsepower we’ve of buy

to and on how come do. want in depends So, orders what the they just it

Richard Dearnley

Right.

thank Okay, you.

Steve Taylor

Thanks, Dick.

Operator

no further [Operator questions. Instructions] this time, At we have

Steve Taylor

look Thanks, vision appreciate morning you this Okay. to forward I thank this everybody forward quarter. a call. you. XXXX. We time growing your again to and next Erica, look Thank on joining with and for

Operator

today’s conference Thank for call. you This concludes attending.

Natural Gas Services (NGS) 14 Mar 192018 Q4 Earnings call transcript