ProPetro Holding (PUMP) 8 Aug 182018 Q2 Earnings call transcript

Company Profile

Participants

Sam Sledge	Director, IR
Dale Redman	CEO
Jeff Smith	CFO
Thomas Moll	Stephens
John Daniel	Simmons & Company
Kurt Hallead	RBC
James Wicklund	Crédit Suisse
Praveen Dara	Raymond James
Sean Meakim	JP Morgan
George O'Leary	TPH & Co.
Daniel Burke	Johnson Rice
Ken Sill	SunTrust

Call transcript

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Operator

Good morning, and welcome to the ProPetro Holding Corporation's Second Quarter 2018 Earnings Conference Call. At this time all participations are in a listen only mode. A question-and-answer session will follow managements prepared remarks. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to Investor conference Relations. like Sledge, to now of Director would turn over the Sam I Please ahead. go

Sam Sledge

Thanks, Brandon and participation in good morning, everyone. call. We today's appreciate your

As quarter Yesterday our afternoon, Chief released our available today and with on for website Financial XX, we in the XXXX, announcement Dale is second Chief Smith. www.propetroservices.com. Officer, June Redman; are Jeff Officer, earnings the past, ended at Executive me which

note that morning, or this presentation posted any summarizes on our make we Please future our events projections website addition, In are covered on today's results. Litigation Securities forward-looking a Private Reform that for regarding we comments statements our call the Act. by expectations

control. subject Forward-looking advise can and the today's number measures uncertainties earnings non-GAAP the the many in in differ These cause risk of to these directly actual risks our measures results release will our to discussed earnings release. financial our from listeners of We Reconciliations included with risks non-GAAP a expectations. GAAP statements comparable our we current to and certain call, most filings factors measures. of are our and during uncertainties, review materially are the beyond to which Also, SEC. reference are

prepared Finally, have. any we remarks, after questions our answer will you may

over that, Dale. with the call I'll to So, turn

Dale Redman

call. Sam, Thanks, joining you and good morning, appreciate for today's everyone. us We

margin this was continued by and going the financial grown success utilized activity second our quarter first I'm income collaboration report quarter for of close of public and frac customer $XX.X base. to quarter, million execution Net this blue-chip EBITDA in have was a the XXX fleet revenue XX.X% of XX% of million, basis exception. with Permian $XX XX% or XXXX, our diluted significant results first year's every year’s first revenue represents which another the $XXX.X early point financial our we include demand from million, in for in the highlights higher share and increase no our results almost the quarter than Following in XXXX. $X.XX of quarter our record company. performance record our fully team per in Driving adjusted a our was Key strength outstanding second Basin, quarter. growing operations and pleased to which to improvement for that Since

performance during past in the discussed chain and XXXX in calls, year supply customer the Permian through pressure we've expect to as with a a partnerships As more side of manufacturing would pumpers we and few which transition enhance mode. be execution well differentiate

we such, environment. the succeed development clearly As the optimally results and for differentiated we service to believe this positioned strategic of our leading validity ourselves quarter efforts. of chain supply And to our offering through the second industry an speak fleet, in

to ensure efforts by and during second operations efficiencies due The Primarily percentage our customers our efforts. maximum margins of second completion incremental efficiencies driving collaboration to of was chain. partners highlighted to with in in increased close supply work. quarter Also drive their zipper or continued our further continued quarter our the flexibility and an

additional With sand to mines our regional sand. for from the West Texas, of growing see opening we demand are continuing customers in

regional as of quarter, pumped the During the second XX% sand the nearly we for quarter. XX% was to first compared

are as months customers for more been regional chain enhance locally. capacity even see more our the we expect of outlook through supply The market increase and mines, new entering cross our even sand existing sand coming for we're the With will completion has the what result mines being through both thank in of product the performance our efficiencies sourced current out-of-the-box differentiate help the rail our customers. disruptions. operations is our mitigate to risk want customers ability bottlenecks to well thereby manufacturing closer side, mode for and supply and to us flexibility chain avoid the partners their at avoiding for to team, side. In crucial well thinking the the And and environment, to I

force our will seeing allow in location. time customer our technology also focused surface innovations growing other non-productive that with services base are other We collaborate on us to third-party minimize a on and to

a first build full quarter a April. total basin, quarter where our higher more capacity second one second fleet the of at customer and quarter. the benefited existing to which We operating ended the dedicated than utilization fleet previously in under the We fleets Fleet in to use. customers of deployed. build had which also year's than The also fourth best-in-class year with we fleet capacity existing higher of plans another to expect more in our long-term dedicated XX than as beginning XXX,XXX horsepower, XXXX. of our our the horsepower of currently have fleets quarter, with from deployment XXX,XXX was as of fleet at four total horsepower This of continued deploy we frac Delaware the this for end XXX,XXX an end capacity the is of the with XXth now announced is the XXX% well horsepower X% new fleet with agreement We than XX,XXX of frac

of we year. XX also another last units of nearly customer brings or units. this seeing start in cementing to will year-end of including later by than to month's total XXXX. cementing two total which The deployment capacity cementing our at capacity result cementing newbuild are XX higher growth more be units planned XX% newbuild needs, Driven deploy We unit, services, the other

as look that our capitalizing earlier unit on seeing opportunities first Jeff this to over turn our tubing operations We Jeff? great to in also as growth forward financial results tubing other appropriate. in more We results in discuss I'll it our well additional cementing cold as year. deployed to service was large from now offerings diameter our detail. cold are and

Jeff Smith

everyone. Thanks, Bill and good morning

to second $XXX.X fewer the from the the seasonal to services. pumping other downgrades was increase million size fleet compared the and the results improved grew XXXX. as quarter to quarter $XXX.X the approximately million of sequential in contributing quarter pressure profitability our to than first as an company's for as leading at larger well for first Looking XX% prior a quarter, Revenue

increase During with was of which depreciation excluding the pressure pumping total second revenue the of services Cost of associated amortization consistent services, the quarter for quarter XXXX. XXXX, with was XX.X% first of was quarter and along in fleet to as levels The headcount. second with primarily $XXX.X $XXX.X size due an activity the associated quarter. to and million for million compared preceding higher was increase

stock at margin $XX.X for the quarter for for the XX% to million segment expense a the of million of XX%. As XXXX. from pumping pressure remained first of and the income XX% XXXX. XXXX. of the Net The totaled cost EBITDA of stock-based $XX.X quarter quarter increased administrative compensation to General the $X.XX expense XX% million or million of revenue Adjusted as higher exclusive approximately of approximately compared XXXX. General quarter. from or the second cost the expense. was payroll Adjusted first versus attributable primarily of to was pressure quarter and quarter million quarter per and quarter second and $XX.X for revenues, as compensation million $XX.X the diluted XXXX deferred of share X.X% compared IPO services for approximately first $XX.X administrative EBITDA was XXXX approximately to increase or was the $XX for pumping flat XXXX percentage first second $XX second of diluted second with quarter share quarter per of for previous million $X.XX bonus

of Turning $XX.X the spending, of to ended balance quarter and $XXX.X and on million total debt second sheet million. the cash capital hand we with

during we higher and capital. that than During the on excess expected incurred CapEx was partially by quarter. the efficiencies operational of and record $XX.X primarily capital spending expenditures level in period QX reflecting growth our was Maintenance driven million of initiatives our maintenance which and throughput

in expect quarter efficiency based CapEx third to instituted recently normalize on new We initiatives CapEx more normalized along maintenance maintenance with metrics. the

XX, recently in of $XXX.X Finally, million million cash $XXX.X ABL. under $XX.X was including of June liquidity total expanded the and a million capacity as

previously on closing to remain his proceeds near comments. all repayment I’ll table turn the be fund for debt term that, our from towards growth With back Our future return prioritized and announced to generation cash shareholder possible Dale will it initiatives initiatives.

Dale Redman

Jeff. Thanks,

nature. financial shift not of be over our operational expect performance linear full during the we in look of contributed we significantly saw need for the the Permian, record next the remain eventual manufacturing basin efficiencies in into are believe further for and solid Permian differentiation well-positioned a the are year, XXXX of and we we operating while quarter. and and confident we strong As mode the to in The second we fundamentals in efficient And remainder do The remained we success. will continued three-month services. full the seeing transition period to

saw in second As at rate year. a of the month-over-month half of anticipating result, change the not the continued we increases we first during in XXXX half are the efficiency of

attention peers a Turning by to pressure crude takeaway infrastructure others there broader about and speculation our in significant services discussion. constraints Permian. to weakness pumping has industry due potential and been the Lately

remain to see customers would flat to takeaway about plans best-positioned relationships situation. eye that environment, mostly ongoing we customer industry will in we our are market, their our with In temporary online accommodate relative expect differentiation on a close keeping additional needs. flex months. we from peers slow be significant and differentiation While today, and long the service the for utilization a any nature as believe do pricing we execution support have given coming over in slack our resulting evolving horsepower leading our standing expect not to down extensive base. If frac coming given we blue-chip heard and of we the customers We slowdown in that to programs, we are we infrastructure our our

And in have leaders it differentiated be as You’ve million methodical has is in well customers work years. their performance in further the believe this focused future that times our focused business rewarded and like approach we customer heard served ourselves. the offerings service we that past. with a been many us us bottom-line say The will

while both stakeholders. chain long-term. I with unwavering taking why the our is it and in DNA This We cycles throughout deeply It’s in culture other supply is succeeded through also multiple our have have near rooted ProPetro. of and confidence and by our success key partners key our long-term the supporting ongoing in part the view a customers,

up questions. it open will for we that, Operator? with So,

Operator

Thank you.

session. We begin Mall with [Operator from go Stephens. Our ahead. Tommy question first Please Instructions] question-and-answer now the comes will

Thomas Moll

Thanks question. for Good my morning. taking

Dale Redman

Tommy. Morning,

Thomas Moll

whole job revenue more called efficient out what changed, was or sand there and So, you you about can XX% and in any net little price so give of there then guys a almost there it a detail up with on how more mix as us part quarter-over-quarter that. drove from much? what not we lot contribution QX of change a that noise infer quarter-over-quarter should wasn’t also sand in

Dale Redman

can the quarter-over-quarter more the is hours XX% flat from increased from I you declined quarter was quarter increased the QX. increase that and far than those in X% And the second pump XX% pricing XX% X%. pumping The per per XX% driven fleet numbers stage as tell stages metrics. by stages for as to efficiency in QX to zipper by were vertical in in fleet an

regards but differences additional As bearing neither, between point that contribution would QX. have us and and on nothing, to to at change dramatic that this information a any I think is lead with any in from don’t QX there had sand,

Thomas Moll

plan where pretty yourselves, appear got And That’s you’ve margin. expense also second who particularly here, market like you’ve starting to you’ve of to and several different who trends. XQ the the the stepping some back share you. helpful. thank Okay, bit, players you’re strategies a market the getting at name sell model. have my got outperformed in aggressive on of folks choppy utilization price Then dedicated in spot too on competitive the in little who price got then see question, then others be very larger unfold And of

other of it impact do second you evolving guys the or these you an given are how all what think will on of extent, And what the you So, this some competitive to doing. year? over folks environment have see do half not, then,

Dale Redman

great Tommy out different lot a of of coming and Yeah, camps. lot things different question a of

I platform. what control we've think to true going we’re execution we can public said can the on since control that’s and going what our the we and brought stay We locations. to way

your day have going staying care very customers you that been business clear public on the one, nowhere. But of rest is I’ve from people. two of that taking since this the care things to your in is take think of charter the and focused just I

our focusing at and care end So, to it’s will at need we the the all the wellhead. customers things. And, And we’re location game. clear what on those about things very and I and on on that goes win outperform think execution on just going reward day, be of back the taking to with of us

Thomas Moll

you, that’s it, Got all, Thank all me. for

Dale Redman

you. Thank

Operator

question go comes ahead. Daniel Company. & with first Our Siemens John from Please

John Daniel

Good your commentary quarter it as, customers, having that your Thanks. of from fair XXXX be fleet seen full as Is cementing. on could to just quarter. impact additions on about some me yet well a your slightly QX small changes Based the of topline you the view? would not any potentially given know seem that up

Dale Redman

I a it fair out very more work think, I that but I would well is view, flat - think way. could

moved little to bit we tamper regional as a had that more You to sand.

is we which know their end, good had for the going XX% think top going the to our quarter go sand, because was customers, this news to sand of thing. I up, regional it's that's cost. lower completion one we that’s At

with would I it that. tamper So,

Jeff Smith

The other Dale John that fleet. additional we add selfXsource to in what to having is said probably QX just thing one anticipate

John Daniel

Okay.

Jeff Smith

tamper That also revenue number. would that

John Daniel

Fair to enough. Is fleet? there any EBITDA per impact

Jeff Smith

we difference there. not or any project No, would anticipate

John Daniel

Okay. I'm on And rate the that can percent just curious quarter. is the that just you expense jumped what on commentary loss going sharply on that and disposal forward? of fluid why you Jeff, some and of run this right for increase is assets elaborate if

Jeff Smith

with experienced line with Yeah. QX. things, loss also, additional, right primarily the driven comment drove of quarter-to-quarter would very higher CapEx how tell by comments XX% experienced in about Couple higher something month-by-month first That that maintenance QX, we anomaly maintenance make given ends on I many And of that we inconsistent an our on that line think kind the that’s number CapEx the had numbers. number to have you and of amount fluid share for is was numbers. a And back times what something higher previous being we those those in quarter. all, QX, of of that of to would in that regards we’ve fall maintenance goes throughput high in that can't far very maintenance we of in expect And CapEx numbers quarter. I efficiencies a CapEx in our with about But some thus basis. talked I

John Daniel

the not with Any the on that for but Okay, some me, I thank color dramatically change know to you. margins just last would the can you are don't business. the QX QX And you one then material, comment it's be deploy cementing – just helpful? what as more capacity,

Jeff Smith

better its slightly are frac, so numbers XXish were that those we range. Yes, in than somewhere – mid the

John Daniel

Thanks and good quarter. guys

Jeff Smith

John. Thanks,

Operator

comes Hallead, Our go Kurt ahead. with next RBC. from question Please

Kurt Hallead

morning. Good

Jeff Smith

Good morning, Kurt.

Kurt Hallead

starting maybe for question the right. Dale So, you, with

sort obviously strong Permian, guys serving business as the the have very of clearly You well well you relationships is you customer in cycle ramping. downturn through

kind customers – Given booked if takeaway customers. indication up context with are with base takeaway customers the not the about current relationships you a your of to and – given your takeaway your your how you think Permian being customers advantage capacity those risk how do given yet take that customer What well given stuff of you of of kind able no the of you what new and build? mentioned is and know your as many already will

Dale Redman

fortunate anything takeaway work base side. business see state we platform. capacity think, speculated that going This out to acting customer for years than did, the company, had a never our years, lot any us built away for been I plant we very have have by through of it seamless, has these they is be clear on that. work our from on don’t long chatter and and and to those capacity They we takes know here navigate eight to don’t any we for becomes plan many, how you the been for customers built different folks see very their the guys each that they noise. through We and that work day time mitigated as it’s We for have much many added, Yes, pretty there, very know this the and we the on are we’re risk transparent.

Kurt Hallead

And fact Appreciate talk the follow-up kind third have through. flattish, it the did you new of progression one I Where of some that quarter being sand dynamic. and despite and crude, maybe coming questions. with fleet relate, about in that kind right. of a And part of say then revenue to you cementing that on here some revenue Okay. prior guidance the should

So, you revenue a give rate, back your just sand, a when just we of of and think frac pure kind cementing is some we percent of can flow like us your more we so sense, get what can through units? fleets run it that

Jeff Smith

a in don’t flow is effect be going at I I have to limited to time. to effect percentage we just specific what mean think sand, through, dollar to point this

Kurt Hallead

Maybe we can get...

Dale Redman

Tommy more offline, We answer give granular question. could that to

Kurt Hallead

I’ll that that. Okay, that’s Appreciate fair offline Thanks guys. enough; then. do

Operator

Our with Suisse. Jim ahead. Credit go Please comes Wicklund next question from

James Wicklund

the potential Permian I I'm you slowdown calls Dale, call, tell brought surprised you to first guys crushing. of up nobody was for the the glad part that that’s am

Dale Redman

Thanks on Jim, we us… can to always count you give

James Wicklund

tell days. to I the relatively down been the far you're Are other the you a Midlands hearing else XX%, that you of happy over have everything adding. that but you tell not fleet the gotten putting I get Delta doing you out me you XX thing little XX%, is, know to didn’t XX% are to lot dedicated if on by of from me Melting’s drop work a we’re is these where tell these know, Dallas. margins The what a you slowing have fleet with the next questions would fleets XXth that are bit is customer? you to going order? are to you having is can’t question I I has talk quarters. down knew are been XX% margin can bid couple it Can the about and

Dale Redman

Jim, there this. absolutely not question, the is in lot bidding answer down a that is to

are We pay add. this have equipment back but metrics I’ll very what be to for clear, been going

We’re not going that. to from deviate

I let This think started. a is a about game got downturn, this just is I've day clear, not other question me getting downturn. be this the

a and We’re that in fleet of got more going transition seat in XXth we’ve XXXX. into so demand the this lot

helping we’re that fiduciary The their to have company, economic I office of having what about of their care I So, something you’re any think well of working rate reducing but pricing. if others. for you’re not is, responsibility teams. economics the are the meet to them any for to returns results pricing They worry of management at can’t speak have discussions take with we’re don’t these going

James Wicklund

do which to I quarter, of increased as last pricing more is all that hear said have it every realizes through know the but basically me so we and I you reprice how of that that every gotten and answered, decline your negotiate with to let quarter there pressure out companies it you quarter going every pumping last and every works? two everybody every now is my really quarter is And the that upcycle, same the for you pricing the because need Is that follow-up prices have years customers. the years they’ve couple of spread

Dale Redman

No, sir.

to business metrics our If just here out this our the to pay take methodically that’s our - think which time what haul. helped is helped was of it's to recovery. going discussion. our think over we and plan us, customers long laid another probably a Day transparent, during develop Jim the quarter-over-quarter, at acreage back very that’s to and pricing strategy, seamless get that to people we us this And running Analyst those were I continue very we I first out met and

lot this about an change a of as ourselves. development We base. focused differentiate unbelievable and have thing we’re watch that’s over. customer over That’s structural to of so talked the and in this business It’s And we’ve listened we’ve in to Permian amazed. decades the been the with to narrative, here we’ve why

customer our of We’re seeing organization not within in our that or base. type panic

James Wicklund

Okay.

for me hiring difficult but your because inflation. inflation an and in what’s friends general one months? one have last you we you Midland last notorious to how been problem the the talked seen impact in Let up, inflation measures have the last don’t people already with, they’re in stall, slow, you about over the couple has hiring work year pick sneak about been people of a

Jeff Smith

like seeing XX any we inflation, we’re their horsepower the to last in has and not months Jim, nobody doubled have. XX

and to our we’re Our work track great environment a a in. maintaining it’s well, and them happy, hiring of people great paying have people and people are record retaining

it issues So, to a inflationary And year revenue, cost we’re additional not had any as as that deviated sporadic through in the cover the of have beyond. rates with XX six at any able XX% X% revenue of in to we’ve revenue to hourly We’ve we’ve as last months we the range. increase a seeing gone any in stays move that for basis. extent payroll and not all, percent been to on

James Wicklund

very much. Dale, Jeff. you, you thank Appreciate it Thank guys.

Dale Redman

Jim. Thanks

Operator

comes Praveen ahead. with next go Our James. Raymond question Dara from Please

Praveen Dara

Hi, wanted remarks clarify the or this not, about it I a morning was throwing towards I Dale, guys. were if I the down you on of but the properly talking prepared little end down because got for efficiency percentage slow gains you suggesting year, are of could zipper second increases suggesting XX% half obviously the that that you downwards? were month revert month is or see over that we the great, the fracs to

Dale Redman

upward be of the We’re trend an not same just yarding that that saying won’t it but rate from down. change at rate

Praveen Dara

Right.

great. Okay,

got sure Just wanted to I make that correctly.

the average your you on are and tend working talked to be reported from you on customers of a long is that you was staying increasing about raising sizes they pad how [indiscernible] of could size pad kind of guys which I your guys and so that curious but guess of perspective great, I if location? some So,

Jeff Smith

on Yeah, location X probably or days and XX to at X it's XX plus. a time

Praveen Dara

play guess on and the can about you about I how me, about an could fleet electric think for build decision incremental you to kind one last how frac you from decision-making then And of here great. talk into talk Okay, that process? fleet the

Dale Redman

Yeah, a from pace guidance and answer for points it's kind gaining we the those are touching I several any have conversations inbound we've think one Obviously, XXXX of demand a spreads your add And not half first. in that ongoing. guidance, for given first capacity. on couple I'll as of of sure. we perspective

that's So going be a time. talked to different it about

Our focus is again. to And needs. with pay balance there that down customer

As call, invoicing, the and even technology actually working and but efficiency manufacturing fleets, to of as equipment hope we answers that go that talk that our of going life and think lowers that about manufacturer, opportunity we're far extends look on Probably forward as probably I mode, question electric larger into we're watching we be any with an arena, your costs, to to it's that neat increases Praveen. something lot scale. in this the this things. to not do a

Praveen Dara

quarter Yes. That's great. Thanks a lot. guys. Great

Dale Redman

Thank you.

Operator

go [Operator Instructions] JP with Sean Please Our Meakim from Morgan. next question ahead. comes

Sean Meakim

morning. good Hey, Thanks.

Dale Redman

Sean. morning, Good

Sean Meakim

customer’s pretty been your on confidence get the to ability you’ve your market. to So, Dale, product in clear

you any, not do your-end, lower maybe still customers whether this the just Or completion only with early basis? wrapping the towards issue for that concern does look you we your calendar just year to be greater see we’re seasonality some on seem an regular As year, programs up it’s utilization, have? maybe

Dale Redman

correct. that’s think I

see. we be the I disruption think only would whether

X think forward I situations going of into the even plans moving really are and our the and holidays with whether their QX. adding. all customers and But

Sean Meakim

to talked lease maybe about like profitability band basis. profitable you’re bit across And wide fleets on portfolio million is But little the on helpful. look to most? for running annualized that How fleets the fleet the a about perhaps thinking then you’re of That’s from just the fleet Okay. the the about the EBITDA across of the XX averaging today, we XXth.

Jeff Smith

month-by-month, sometimes next. bottom. on can one you the basis, I a a top is But and the the is what’s also there quarter-by-quarter month As between the bottom that tell difference top the

why the that’s looking fleet to kind best of at an average at way probably the is it evaluate. So looking and per board across

Sean Meakim

Okay.

is like sound there didn’t tremendous it said, variance. you maybe If

Jeff Smith

No. tremendous it It’s a does vary not variance, month-by-month. but

Sean Meakim

thing guys. next anything good. you, going on? Sure, Very on else Okay. job is Thank

Dale Redman

Sean. Thanks

Operator

next Please O'Leary Our George Company. from with TPH question & ahead. go comes

George O'Leary

guys. Good quarter. morning, Good

Dale Redman

George. Thanks

George O'Leary

quarter-over-quarter were efficiencies in certainly guess, fleets might I do pumped for How many to XX fleets now impressive the still doing XX-hour XX-hour to customers? hours that have convert guys you impressive or XX% was work increase your to all be you the see. doing in able your

Jeff Smith

is majority all XX hours. The

and So, we’ve high on percentage very, a operating XX-hour it's now. very got

George O'Leary

large have for possibly customers? with And long-term guys guys there curious are any that at you agreements discussions But well you executing least to contracts certainly from you just you as your in dedicated those the our and on clearly themselves contracts There versus is some Okay. for talked serving historically, then in we've some very the the the operators continued? well a on walk now. type hearing performance longer-term average customers up to just shop. And guys field. we're there bifurcation certainly feedback is And at potential is potential update the

Jeff Smith

eight been now, George, years. long-term, working were we've when of talk the people working for last you these majority for

we'll already type customers proven to with If you're long commitment of So, as to what this think base do or continue on its us. would has work our efficiently, side I to are think opportunities we whatever very kind safely, execute And have I there out to customer This need base. contract, we're are them we open comfortable them. customer with And those where with as equation we their be the of that. going that's of so. where we

the when push. base. if which trying comfortable a from we're It's than that very side better We're customer in we're terms comes something not operating we're lot that's So with to issue. it with forcing this that

George O'Leary

or I'll I could. Jeff Dale the Dale, question. appreciate I sneak Right, one if one you, more for of

that on Just side. maintenance program the

kind of changing the Is going just smooth handle the changes the on you may do changing guess, some it specifically reduce you itself You bit do? elaborate that meddlers, out blocking that guys program aiming forward. maintenance. planning made program and to changing I a to in you you little it changes that tackling that way said or as maintenance there, vendors what could guys are of you or

Just that curious color on what front? from

Jeff Smith

we and think frankly. through products analysis of the really of in vendors first the last the Yeah, I quite gone year, the program longer that product of a half us very initiated whose and selling detailed a they're

some come third fruition I think will to the that quarter. here in of

in those on some equipment some to I are evaluating operate that technology experimenting And save perhaps help save CapEx products, gear we've horsepower problems failure dollars. fleets to balancing we and the to also addition of maintenance actually identify also thus across a monitoring us and with think some added some potentially us In dollars. some would lower advance permit

George O'Leary

much very guys. Thanks

Jeff Smith

Thank you.

Operator

from Our with Daniel Burke Please comes next go Rice. ahead. Johnson question

Daniel Burke

Yeah, guys. good morning

Dale Redman

morning. Good

Daniel Burke

Jeff, of Hey CapEx or go and X% about with the forward expectations topic talked you one. swing those that that Does with of the more pump mean appropriate But rev maintenance hours last still stay is mark revenues when the ratio? maybe normalizing. lower one sand

Jeff Smith

We're on this tell not we first our time. changing pretty you point at much were on in right that quarter mark. guidance I the will that

change place initiatives come higher year to a half year. a And booking we're numbers not with first so that or point in above that. But will of for backing are on half year-to-date in probably second we the put we year. basis, quarter fruition that on to in than was total the guidance the of the Second the that that think We're here our the that.

Daniel Burke

or small guess loss point. quarter? adjust non-fluid the in And I Can the end second discuss it. Got on you just related disposal a

Jeff Smith

generates loss as is dispose a mean very, small prior the of things, occasion, on end power engines, replacement. as life prior book you've have bad other it of asset small. to it amount in transmissions obviously you’re many that with actually component we end of some its now retire some higher transmission that its replacement and on just or to pumps life. operational, replace Meaning with to to power going model anytime we got sale. very It's a And related depreciated have have the I or of an end But engine actually and a

Daniel Burke

the share in at as six size, different, pressures you helpful there, look learnings that’s any Delaware timeline it’s pad maybe one I one to us, softer experience months can last Got a have as of or the size ramp then how question. over stage it, last and much pumps. you guys with you whether But location, mean your nine

Dale Redman

pumped higher There sand it little is and pressure. a step pounds of in up a prefer

with that’s far us areas issues, the we’re in just concerns, cause working. So or to Nothing the difference the Delaware.

Daniel Burke

enough. Fair

Okay, all color. you, right that Dale I appreciate guys. Thank

Dale Redman

you. Thank

Operator

question Anderson, Dave with from go comes ahead. Our Barclays. Please next

Unidentified Analyst

I And I there concern budget is just is a kind is expected you think revise may industries. earlier think to guess number E&Ps the ahead but going is already they driving, greater Hey the to of efficiency you three, the that Couple customer it productions you most base. beating Two, their case that quarter your spending around this on Dale, those expected. this that, further seems with bit see and one, so do prices questions of answer have than you budgets been your I - question, on this like think or little up. what do

Dale Redman

with running don’t announcements coming some what out seeing particular we little of big at and us that’s higher that customer you expected. probably are expanding a a are than that have, of issue, efficiency think obviously in budgets. their and level the and the base, Dave we Yes, think The all I real industry high a is this

do main basis for speak see perspective the cannot and people micro to horizon slowdown we within see I think I perpetual from goal a QX, your of in do peer group. we on here, other for any customer equipment down not that laying our probably us.

Unidentified Analyst

all I stickiness and little primarily take think or as dedicated we pay, obviously Separate there you’re thing dedicated is that, all the if – fleets, but question, clearly recognize are bit I fleets all not on is your think talk I the relationship, of of about. agreements your could a on same you dedicated wonder this

if some someone to you -- give wondering, That I the your I comes am and guess of sure and as efficiency lower that – is others. am just think Can terms customer one getting your up. customer pricing. for lower of supply pricing the I XX% something how In from chain customers come I example concur talk am I because you but about in to always think what maybe customer about you cruise, some, dedicated stickier there the I the of a have a other a dedicated talk drops seen why standpoint. talk how, is that you’re bit point from little could But differently kind relationship pricing why you where we benefits? can bringing view about customer, about some is model

Dale Redman

They I never where plan you wonder we collaborated And build we base. our platform. historically of knew were. our look think business, important if with built had this was its customers, to our they was what pricing to how the the They services. transparency. and be, transparently most we equipment is customer could cycle methodically here, crest complete us [ph] thing helped this going for That through their they

this XX-ish We for customer have running base. of the XX fleets

a doing We’re pushing we the in and we not completion, their a on at operations in as this and been execute time, which people the have of profound, are long part price manner one quarter-over-quarter as basis. our

to that to to margin that business. internally we And And like we’ll does says. control and have can’t business We’re expand everybody or continue we that help, invest looking to get run had else way. our our to

We’re going be to in help willing customer way be hope this and going and to base market the we some is be, overtime exceed small to what expectations. to successful have it’s

hope or confuse that’s So, lot in way that methodology. I of helps a our understand stuff, help but some

Unidentified Analyst

customer are more makes at trying kind getting of your what of that's think I I what and lot. of be trying think No, a work to and is, which than them, you you’re through more to you're extension saying a partner

Jeff Smith

That when over be goes future this And on. not and in going, others. time uncertainty mode. evident, much today, continuing producer advantage can. as as can, It’s it a company the he it’s the it of service are taking we structural and advantage like producer, as the change, of or have old the about of is and manufacturing more company to see we we service model as she where the when do can the taking where paradigm we’re we And,

Unidentified Analyst

with said in you if talking about. are surface innovation Can Dale, you’ve not expand talking know your about collaborating prepared other remarks, efficiencies. technology sure, to you what what exactly you’ve I talked there? minimize you’re on I’m about

Dale Redman

between is things, up stages. off. and helps The Couple providers much on get wireline in wellhead speed technology of which some that’s helping more there the efficiently process

different The a movers of other surface wellhead to systems another the mean to have manifold biggest two that wellhead, of the are the one, to the innovation one is stages. change standpoint. where particular today to not well Those I from us allow another see from one during iron

Unidentified Analyst

innovations coming Are are the that there pipe seeing out there? more you these down of

Dale Redman

is think We so, think and we industry. very this innovative a

Sometime as as it rate very adapts innovative quickly. not fast the of change like would mainly we and is but it’s

continue. So, that will

Unidentified Analyst

Dale, appreciated. thanks. much Great, David.

Operator

Our comes Sill Please next SunTrust. from Ken ahead. question go with

Ken Sill

end, the very interesting in work Nice call.

like on stuff this should it as revenue lives of see in depreciable maybe is have here maybe on a some loss as the or be assets, more losses just we this higher happens these change far It a should of consistent driven percentage on lumpy disposal. that of this assets. On more kind sounds is indication disposable got or trend an we’ve because was these

Jeff Smith

believe thus where -- in I today think seen quarter the third think, the said, already what and quarter. far one I the sit We kind from we I that of but this we’ve more third of the revenue back the as quarter normalizing anomaly. see numbers these number actually in to we’ve X% given We always to was second to. something that guidance the quarter closure

it more think of a trend, throughput amount had second by the in the quarter. that of don’t necessarily second probably So, was certainly was highly but driven quarter we high we that anomaly

Ken Sill

and loss disposal because in wondering the the which your what was sold. goods cost that’s on buried line R&M Yeah, is line I is of

run -- was because out popped losses. was and of -- kind out the triggering the faster dispose something it stuff So, of that’s

after it You replacing. write

Jeff Smith

That's Correct. correct.

Ken Sill

And then another question I have got.

build customers help this. your Just philosophically, to so

at a not down, are with, several I a or it is customers of cheaper. is And those strategy gets motivator. a pricing, bad that happens. aren’t powerful self-selects it I to I so are slowdown, that’s a your guess like you what is get go greed prices you’re rate they're not going part You coming of know to all that at the return, pushing talk pumping looking pressure customers But with as your temporary enough of look we’re correction. just, working we’re if

Dale Redman

is making in to view cash that a I them this got money views a That's them. $XX the understand $XX doing differentiation -- don’t free we’ve good and play just of reprice wanting us I and equipment allow those and help and to equipment pricing. we They of a and years philosophical it. the is we for to answers. work have million of to pay on and these all been got And a everybody think people. if that’s providing who us run consistency, That's view all X visibility And basis. companies. how These time. and it’s to we've and who costs We driving we problem fleet businesses E&P service boat what it like this. in two years with We've basis lot which good for don’t things that. EBITDA for everything those what's plan been customer companies. the on ways do takes to But the is flow There seeing customers simplistic us long a is an how run are, mean you’re have got to with has drive our million pay we've to quarter-over-quarter, it a

Ken Sill

with question, to guys segment? It out this another the doesn't start you before reward agree as does me. makes and the sense risk it to Fairly other cementing how be Final on big business breaking one. all us have

Dale Redman

obviously. right frac the they the cementing now segment operating endorse segment mean frac actually did or I the

before as we be while And break quite out a a would cementing so, separate segment. would it

Ken Sill

of it thought, All question. Okay. you. thank I That's but right, what kind asks

Dale Redman

Thanks Ken.

Operator

ahead. & [Operator go Please Instructions] Company. Our next with from Simmons John question a Daniel is follow-up

John Daniel

a I'm here. softball Hey Dale. going draw long-winded of you bit a question to

line one your with of George's unlike views in nonetheless. Someone what but observations, George's

argue that that or my can created are impact profitability emerging equally fleet with metrics companies efficiencies and potential But one efficiencies all about that not we expect. impression. some industry are horsepower frac not impression the my your there concerns and So, as relative would of support on might frac comparing much and we worry need all as it's utilization these also

efficiencies? fact in is providers we frac relative everybody these a And suggests frac are industry then me not faster seeing So, we equally, first, profitability if such that the again tell it all your on it's across efficiencies efficiencies, now your thoughts? apply created are Specifically, fracking just those thoughts utilization because problem? to potential fair second, is

Dale Redman

to are long question. It's that not not a pretty frac and equal. all I created teams point answer of way think the all best softball your horsepower John,

Just as all E&Ps issues. same don't the of views have lot a on

I time going on horsepower it little a think will when to they efficiency don't That run be you to repair would is to answer and as harder do is be location. have much we that how continue routine maintenance.

And that's is to a answer have So others to going efficiency here it The really way adapt. cause pointed of and all probably the as out. is that very adjust us good more helping willing economics for are for thing be are all our of more efficient customers. the us the better all ball. succeed. the and to And And are, the us they

not as I do a So, bad at and thing. not, as a do efficiency company look we

that things all. there. That's not may so we we're look at And at efficiency. is probably good tail not a anybody So, going this to be if that push way the assign to

John Daniel

they they you, their expand And or they provider are maybe come when need some customers coming mill that. And with alluded opportunities for you in you But because wondering change. company that's potential want call about I'm now XXXX in at good. a about frac will end you're because just. day had to some Because is earlier another as program, and the it to I'm going they've if you the if E&P to of talking the expansion. bad the you

Dale Redman

work add John, do well. on to going But execute to It's want it's and Yeah, because that not day-out. of helped of seamlessly I people that's to historically are because trying we're a that share location. the as to really that with to capacity ability only think we're on market There they simple, gain And one. day-in someone continue lot our

John Daniel

That's guys. you for all enough. Thank your Fair time. Okay. have, I

Dale Redman

John. you, Thank

Operator

to back conference remarks. and answer turn This the any concludes our like session. to closing question Dale over I'd Redman for

Dale Redman

and helped that perpetual to Thank customers supply people you. reiterate, to partners. chain, day. our great people Have our and I like thank a just bless. want and thank And have our all like Again, build God luck, that the again I good help

Operator

you concluded. attending The now Thank presentation. conferences for today's

You may disconnect. now

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