PUMP - Earnings call transcript Q4 2018

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Operator

Good morning and welcome to the ProPetro Holding Corporation's fourth quarter 2018 earnings conference call. All participants will be in listen-only mode [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Sam Sledge, Director of Investor Relations, Mr. Sledge, please go ahead.

Sam Sledge

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

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

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

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

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

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

Dale Redman

financially the Thanks, grow most premium wellsite. with organically XXXX successful us everyone. and to year was Throughout at Sam and our we ProPetro We fleet call. continued the good in joining for differentiate another for execution today's morning appreciate you and transformational XXXX, our period ourselves history.

year-over-year net million revenue XXXX to operational in of impressive financial ProPetro across financial on go XX% and performance of times increase grew of than dedication horsepower like increased business team for higher proven, total first you XXXX million fleet resulted to by thank growing will to financial long-term XXX,XXX Driving in fleets to full on highlights allowed producers in supported and success. $XXX.X achieve XX% $X.X leading $XXX.X business with to Our more I the fleet fleets for in horsepower XXXX. We the continued levels I EBITDA and our driving more few $XXX.X from consistent, posted want million detail his adjusted increase would Jeff from but unwavering at to billion, XXX% provide a to year a the entering and model. us blue-chip has XXXX. for which in in a and utilization, our has almost focus industry than hard capacity comments, value XX everyone Permian into by their end the was across year. XXX,XXX XX the XX legacy income work

fleet of our best-in-class supply idled in and Safety many I top always all with our safety utilization of on chain ability partners. safe also especially our the and industry-leading performance space was headcount ability pleased our quarter including was the our throughout during in fourth others environment, when including the employee XXXX this important high-growth As increasing year in capacity. but enhance metrics to and legacy the employees by our operations over those that of from our of will I benefit XX% ensure remain our not end their customers to our priority only XXXX. workforce, commend operation

source of saw not customers. Looking operations. West sand increased continued also cost benefits in our customers us provides operations logistics well to drive and wellhead lower This the closer Texas quarter, our more opportunity at our by we but increased to Regional the the specifically only fourth efficiencies Sand during through adoption use in the

compared to QX. was locally of as sand our used sourced XX% During the fourth quarter, for XX% approximately we

production preference year expect given amount local now the this capacity. of grow We to sufficient customer to continue sand for regional

with XXX,XXX long-term quarter customer. Turning in quarter. the to by build result use fleet dedicated period, for XX The new deployed a horsepower capacity, fleets XXX,XXX or horsepower XX an additional fleet fourth and the the was for an early across active of fourth count fleets new we entered we average

year. two few build months, of ended our the units past cementing units customer four bringing capacity year. cementing increased a operations in new response during demand, units later We large two including with plan tubing units. current in We to also diameter In our support XX deployed addition add business, we the to to this new-build fleet our cementing legacy XXXX unit total coiled the to

of the to recently two our lateral are We be what five drilled the ranging division for and the coiled measured in efforts proud length three coiled tubing plugs laterals total Congratulations beyond almost team in redefine our tubing to can miles out Permian, their to on depth. wellsite. at accomplished longest in that report miles

adapt means, be in we've customers supports the collective, clearly would XXXX ProPetro transitory our our times on their periods our costs. and wellsite needs a As to many volatility. ensuring has cyclical for during while the validates In model pressure improvement discussed built year we an well first, outperformance to stakeholders executed pumpers squarely the model on of continued need the the needs, customer to This many that past in putting environment and short, enhanced through taking year changing long enjoy financial a expected of including business ability believe long-term would for We success. performance operational focused in is efficiencies it years. and which down differentiate themselves past, drive differentiated in view with that the

important, increased beyond. we by our to benefit services, will position and of continue our detailed for performance, pad manufacturing efficient as discussion unique full believe and company not Jeff? continued will over only our our financial our more to customers, demand but the it With to development and now highlighted throughout XXXX turn Jeff push more for shareholders mode, I

Jeff Smith

I also Dale. want to and with efforts. XXXX, agree team's more Thanks, their I for not everyone in regarding extraordinary personally our could thank continued outstanding you performance

the adoption of for $XXX cheaper results sequential third from slightly decrease of to expected our as as quarter; increased fell the XXXX, the million revenue the for to $XXX.X well regional at fourth sand quarter contributing was million seasonality. compared to holiday as third quarter the specifically Looking

was fourth preceding XX.X% for compared volumes the During XXXX, compared to Cost was quarter XX.X% regional of related as driving and services, during quarter, the of quarter. decrease was primarily the services the with quarter depreciation revenue million amortization pumping total of fourth sand third $XXX.X savings. a associated pressure million the for to cheaper $XXX.X excluding and

expense third of primarily bonus totaled compared fourth XXXX. XXXX. for and fourth fees. stock-based share in EBITDA or $XXX.X per was IPO $XX.X XXXX. from $XX EBITDA higher million XX% insurance to decreased Adjusted $XX.X and the share third deferred attributable the for per quarter to for cost or of versus increased as Net from costs compensation of million approximately income The quarter. $XX.X of quarter percentage diluted of a of or the as for expense pressure quarter services XXXX. previous $XXX.X As quarter legal of $XX.X and of million the Adjusted to revenues, X% quarter approximately XX% administrative XX% million XXXX third revenue of margin increase quarter was administrative XX% the and pumping compared General quarter. fourth $X.XX was to million million approximately quarter the third pressure was General the approximately for of exclusive million pumping fourth segment in X% $X.XX XXXX the diluted for to

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

$XXX.X for During as well we spending and incurred the of $XX.X the growth on million $XXX.X Pioneer as capital. ProPetro's transaction including fourth quarter, capital million million maintenance for expenditures initiatives

cash $XXX ABL. XX, million as of million, $XXX including liquidity XXXX, and the capacity Finally, was total of December under

cash have in the generation we proceeds on that, As debt from table possible to With initiatives repayment. near-term past, I'll all Dale. prioritized turn shareholder back toward the with said it return remain future

Dale Redman

will Jeff. the Thanks, opportunity of I give transaction a with the integration transformational to Natural this Pioneer update brief Resources. take on

operations, coiled world-class acquisition horsepower and facility. a pressure on XXXX, well units closed across as including a announced previously four tubing the as frac XXX,XXX operations our collective eight XX, of maintenance As on Pioneer's pumping fleets December of and addition service we

agreement of the XX-year important, folks performance could Pioneer As professionalism that and into a our We family as strategic have at with every envelope entered than and employees. XXX the the more teammates ProPetro to new with brought service push shown we not continue the wellsite into day. be happier they operationally

provide with and Tier Pioneer about are to operation continue world-class service acreage we'll harvest years. also their as We to coming unsurpassed over the they X their expanded Permian our relationship excited

and discipline our off is strong enhanced forward they shareholders. a in the to continue look for Our supporting on we to XXXX focus capital business and customers as returns to start

pad collaboration to bifurcate Permian's partners As for more past, increasing in pressure our continue to longer the development, we will and laterals, and compete strive a believe with look our competitive and keep close to of drive in cost help changes on forward the these we Permian. returns. and continue we've volumes transition believe said competitive best consistent frac all the we will continued well will We to as with welcome in value partner continue industry, working We chain to operators to the the days Permian to global the this market. challenge down pumping the We drive scale.

it now will up We questions. open for

Operator

[Operator session question-and-answer We will begin Instructions]. now the

question, think, comes RBC. it I go ahead. Please first The with Hallead Kurt from

Kurt Hallead

Good team of superb market, and a performance kudos. on and in morning the Dale and congratulations challenging rest Jeff really

You're welcome.

you it to very positive I your to and of your So to as alluded dynamics model, business continue think business kind specifically relates model.

still helpful? us some we just the you color if general be we some can evolving wondered seem Just to bucking be hearing first things some you that are around as on, softness that, and characterization, that guys will you sense general general in through quarter, see kind give of give really how market just trend, get the us

Dale Redman

we guess that? it, Yeah, to probably is the best the answer for Kurt, way trade wouldn't that have house question best the seat we how's in and I

Kurt Hallead

of year. of guys that acquisition So very in the the the you Pioneer at closed context end deal the

incremental adding think that think revenue thinking we the I should to just how dynamic as the can if an and update of you could at stream, we that for basis full contribution for in and you be about wondering be that business? minimum about business give maybe adding year your a revenue was So what that us

Jeff Smith

guidance year, stream what consistent the at transaction I previous have think will thus project from profitability far any and this We would with for way we played to it don't previously given think that information the we to anticipate guidance has what call out that the and that closed defer had we on be when that some those and the revenue fleets was. point.

Operator

comes question Please West next The from ahead. with James Evercore. go

Jason Vandal

morning. this James for on Bandel Jason actually is This

done on we've have question, a strategy. the like-minded there industry toward and you more to are peers lot first recently returns of to So shift that some some know guys players well, as out still undisciplined work have there. a you get focused but trying I also focus

with of to stack that? be to XX there environment this level if fleets can your you guys don't we how able that certain and How meet return to Given fleets you think your threshold? that will a about threshold think start customers is in are you where your XX look working, you should work meet to

Dale Redman

XX,XXX grow plus in did Well, this And space got the the recent a metrics transparency early of order transparent horsepower along to XXXX, we very and we have since were lot those -- business then model with with organically entered late had as M&A same our we to payback from we XXXX, lines Jason, the studied kind horsepower history in as always activity to that payback model. as company of built with you've and what we we've we're staying that of in Pioneer, we with XXX,XXX metrics. probably this and back

takes. So, helps run what you that it that have takes customers the this capital appreciate it that business and to really it

we would categories. So, we'll model and think, you those capital, same or with pack on economic the can want stay the you probably I equation of most I lead run started in the every business return and, discipline we think, since

how think, that. that's would we I So answer

Jason Vandal

and a proving this year as follow-up the to of with And is be business. then on that going related side integrating Pioneer assets obviously efficiencies the focus the

business for Looking focus given now do have think right the guys your scale Permian the your you forward, here? in you

Dale Redman

and basis. really good day-to-day the in and on mean, I operating a I'll it's a sitting team testament a we're to to, give spot, execute to Yeah, ability Jason, operation, their a at losing shout out any those they operating that in they to the without able to do have what and short they prowess were wellsite. integrate to did folks order XXX with what

depth this So, it that just team speaks is the to, that has think, and to unprecedented. I the ability operation

Operator

James. go comes question ahead. Narra next from The with Please Praveen Raymond

Praveen Narra

could but I competitors of what efficiency any we fourth guess could the just we the about guess see utilization saw made lot that, better or terms inefficiencies in of you -- in fourth of your lot we there seem you per have I actually increased if have seen to quarter your quarter on that didn't about start just can whatever a were you weakness, fleet help weakness bridge? and EBITDA and guys heard saw was expecting, whether could you there talk that to obviously as

Dale Redman

total very metrics the we flat I that say QX added a as use guess but we XX%. efficiencies consistent term would fleet. I zipper percentage of up stages our QX at that, also was our the XX% quarter over relative that about to was relatively -- that X%, judge I the all in fourth to stages quarter third pumped in frac we to will

the to into of at have When that there's strange X%, you you but take look considering holidays. about the seasonality nothing the that consideration. about stages probably per we're So fleet, down pumped actual

was efficiency that I sand structure is enhancement the relatively fuel, additional QX a in items, quarter-over-quarter, to flat specifically primarily we and of to profitability. our couple QX how in cost total, guess, line gained So our profitability we in driven considered that by be over

Praveen Narra

mix customers any percentage terms So, locally, we changed profitability there on you and of on those of the you those move were mentioned or in providing fuel, most is are the in XX% the sourced sand they're I versus guess, forward has guys percentage as your -- providing among and difference fleets?

Dale Redman

we fleets since course, source with No, but of it it think had of actually Pioneer they the QX, probably self-sourcing. consistent, QX, were transaction I XX very didn't change change are four out in we will QX, going sell into those

lot change, sand market, full well. as had, access contracted got didn't market on the percentage prices to spot buy that of got we spot the So extent we the volumes that declined to benefit have the also a the finally we was the and we obviously

those all standpoint. us benefited from profitability So, of a

Praveen Narra

And efficiencies, could tremendous, you squeeze job in so one a release in mentioned the more you've of, terms with tremendous just XXXX pleased I you was seen far, in, in did you're if that press guys stay we can it, can upon of XXXX frac same mid-XXs improve, efficiencies do terms kind percent, the improve this at of level we year, how actually zipper in last keep or that? can we look

Dale Redman

do we and Yes, and has we can, who with for increase a do, to to lot we think ability working that efficiency. to their you're of continue

I and efficiency. our So, supply yes chain stay move inclusive, everyone's our on customers and we upward on very that are think with all team to and ability and confident our Praveen, comfortable just partners

Operator

The go next question Please George O'Leary comes Tudor, Pickering, from with Holt. ahead.

George O'Leary

in have, impressive the I Pioneer guys off guess item is thinking with your super on to to I that you understanding to a to have just provide I when guess, in the wonder in? I that start quiver about works agreement pricing forward. drives wiggle more of place that that impressive super kicks in going have the could you if really wanted some is kind contract, that contract area mechanism within mechanism my pricing extent, can color how and pricing that

Jeff Smith

of years we history pricing would got George, those answer handle guys. with of we've I is, X.X I how that think how

to answer built in we have X.X are to-we that equipment to best guaranteed the to for look, way this are I allowed pay years. think there that we in things is, X

the done is a ability in lot the better this of confidence us enhances XX-hour contract just more. to to even under gives the thing that profitability more And way team's look that's think get period, other I a pricing. at that

win-win being So I of hope that's very not this of I both that's walk and to arrangement. with confident vague, away a possible that but want everybody sides the is this equation type on

George O'Leary

Pioneer understanding, they about spoke Pioneer's Maybe bit an good call, guys, sense to this very about secondarily standpoint then sticking my contract earnings makes heard helpful. transaction. I is it That's think bogey which so just that on of little that question they from the of historically, you looks in-house rolling the from that you learnings this day, you want transaction, good and any with together highly guys cost and from going day, an perspective execution maintenance this flowing a and a I might And going just bringing the for that me. from metric talked to forward, to CapEx lot hours of pumped, achieve changes in any whatever revenues, X% we've to do their to at, guys but R&M a savings some they have think seen I all and will standpoint potential that able repair you efficiencies fleets point per kind maintenance all from all is think, per it facility be a a stages forward, repair And of year? you you look up and

Dale Redman

little put horsepower that of on practices the what see handle but enhance acquisition we I we've that I'll take that's your and we're across the two both some To what was George, entities premature, across that great thought the an in spectrum but let confident general. both or companies best being Jeff seeing. and the say to that to a probably horsepower. from it's very because would operational we repair And best feel standpoint could first practices question, the both that maintenance, would benefit of we'll number a implemented take enhancement,

Jeff Smith

we a I to of call, kind up think we of affected X% last given the upon of absolutely that to to upped line guide probably kind percentage and did based bit self-sourcing revenue needed had revenue; I sand, historically guidance, George, priced guidance quarter's that Yes, little to on correct X%. of conversion regional by kind dramatically that a lower was that being go you're

our a think and and where very that, considering percentage fleets with of the now Pioneer kind the guidance $X guidance sand the to got is would we've that that year fleet and we've of we an a tell continue per and to actually higher self-sourcing, we XX% percentage we can about would were for guidance and of also per being now revenue we percentage that and $X the per given of But ever-increasing give will year obviously million convert fleet of of much kind We have includes be I got fleet we have per like have given regional give that thought, consistent dollar of fluid prospectively that more amount ends is some to to that fluid given that's comprise I number. fixed ends that that, you XXXX. million and

Operator

The comes go Please from with next question Stephens. Moll Tommy ahead.

Tommy Moll

the now basin, on market Permian, what's view the to wanted in got the in the that completions with outlook pumper largest start on. into I you've pressure your good you're going a

around you a and keep it end capital XX anyway. some about to again, you've the said, That able through crews above aware started that. of to an the broke eventually guys respond hearing quickly busy lot impact or have got out. market to your all Then we're been lot back have is last to as more operators when a be got of you of extent discipline at year You oil XX, below now started saw budget coming

platform it extent between you rest? do how lot would know So how continue the expect what currently divergence curious see and to you of to I'd you will your unfolds a and and the be year do think characterize to

Dale Redman

answer, in to a I'll give a lot things but Yes, those few there's question a Tommy of shot. of that

time road. the you've kind some with us So, the on you've of spend management talk, team heard

not and throughout want year, to I of -- going think shareholder operations seed day-to-day hook this wagon also it's basis XX-year asset the this that to going efficient going game, XXXX to game, the to deliver customers and game. execute lot -- is and going watch day-out a they're the return XXXX a reward to day-in fleets that be way what from and see efficient going And equipment and clear, the very to their a people they're them where to And different XX- we've them location is our on and can frac metrics operations. you're to win you're need capital discipline, and next I on these we payback what them deliver that's location very on of over with the the completion location. allow the provide on over things. to seeing. our we're and to And a is customers that's over award be people view with it, people to

shops, way going able what's So, going execute we other we're and not about are. for we worry that's their on apologize can't business being either in the to to

hope questions, that be some to efficient being I location. you're So, answers rewarded on for going but your of

Tommy Moll

the Understood insight. and appreciate

more question. As a to a type I follow-up, wanted turn model to

a got average guys And of P&L. relating in also a called lot on hit ranges fleet? the CapEx few a out You've average release you Pioneer count, that'll moving QX, of the Can contribution pieces even you growth then per items. some to just primarily EBITDA sense fleet give in the us

we've just for sense 'XX what growth the So, CapEx the component be the would for or looks give you existing like? us fleets, but your maybe of total a just maintenance what on guide can budget got

Jeff Smith

guidance when being them, QX, And about think, we operational. horsepower would announced this got XX.X to fleets given the and it we the and being that gave guidance. of for think, we active the acquisition, that point, in I QX I in ramp up not that XX Yeah, of Pioneer kind change at we

CapEx, kind fleets CapEx, nothing regard cementing would gave what the this maintenance at the in On on additional to an release on payback fleets different growth any of one reason CapEx. Pioneer time, So, would The you any the that, behind that. reinforce plan units slightly experienced in the those all our yeah, we on and have guidance announced, From we metrics there the past I but growth given two legacy information guidance that's the really we're don't going be diameter that to additional tubing to believe on. amount. standpoint, the in EBITDA is the today give considerable that coiled and that QX. CapEx of we large than With we we've would be unit, may only as I fleets, have legacy fleets point said,

Tommy Moll

And a those Jeff? what be on three just ballpark units, might the number for

Jeff Smith

You'd be between of neighborhood in $XX the somewhere to million $XX million.

Operator

The comes with from Citi. Please next question Scott go ahead. Gruber

Scott Gruber

additional Jeff, some EBITDA on color similar on versus just legacy color stages being pricing? the fleet any movement some to the in XQ, provide can you more of impacts

Jeff Smith

movement There I any the of any had biggest really sand, regional was substantial conversion the on big only pricing wasn't pricing. in pricing. driver change the that mean, effect we in to was

all profitability really percentage sand drove price able higher That's that the fuel that our and providers. the arrangements at, regional of additional renegotiated acquire of really that we were regional came So, driven what with was well the sand QX. in to fuel as profitability by that some as

Scott Gruber

you're quarter up so where just is XQ? on you sounds on While to the about sounds I that, similar was referring less expecting was little efficiency strong to good, bit, previous trying drivers relative a EBITDA what I'm behind have you just degradation -- any comments to that mention in fleets the that talking seasonality, that to the efficiency maybe pricing I And like it per where like more saw in the to that should with start your XQ, legacy fleet it the is XQ. that be expectation the

Jeff Smith

a mean, fleet. possible efficiency experienced it's and stages QX what per little you uptick for far quoted zipper I I above that an percentages uptick in the, we -- as what in get as

of in XX% actually sand really a could would the of projection our probably an additional increasing So, in But, perhaps to above to yeah, and a that than structure, toward anticipate that drive as in well. cost we other or guidance mean regional little add we I toward profitability, give that any movement bit that. itself it's percentage the little early probably to too quarter QX had

Scott Gruber

allocated you year, different fair? side know there's frac have pump. testing technology is a that I It guys growth the any of to to And sounds been this on not style CapEx new be going like

Dale Redman

Yeah.

I with end envelope next what's to continue the think, efficient and be think that's more will our discussions that the way lower we thing wellsite we're and the working conversation. probably manufacturers. on pushing well to the And on I those cost always

Operator

Bank comes America go of ahead. Merrill The Please Lynch. next with question Mulvehill from Chase

Chase Mulvehill

follow-up gave, a guess does quick be include the PXD required you kind CapEx, maintenance the of that CapEx that on XXXX on I the CapEx that incremental might any fleet?

Jeff Smith

guidance, Well, as of that maintained. kind given PXD well was fleet extremely we've previous

So, step we one spend It having starting got money was with maintained. backwards we and -- and operational. it's we're well not like to not have get it. there extra up going to it Today,

Chase Mulvehill

the you the the talk eighth mean, on if started on I deployment, could and you fleet about PXD timing up seventh fleet then fleet? the maybe

Dale Redman

the we their wouldn't be and on going work be need first it. fleets with at is XX.X That's their plans what going decision. forward, we'll guidance. quarter, look you we'll we'll they to when it give through average any working way would the I PXD them And with Probably are.

Chase Mulvehill

frac and you sand in-basin a contracts contracts. any? sand the about talking of any your there of yet? We've you're that heard renegotiated sourcing. Basin renegotiated Have Have some renegotiations market quick out then you sand And you follow-up know for frac Permian in just the

Dale Redman

the scale ask. have, about usually beat and good have we before that chain we Yes, platform they Chase. the with partners Really, and having us very us proactive we supply the are news the

we're our our from good for on were that they moved sand well -- really been position So, arrangements pricing in or really, down with in costs to movements there south where that side the vendors some volumes have those move and our our contract customers.

Operator

go Blake from comes question Gendron next with ahead. Research. Please The Wolfe

Blake Gendron

you trying with the you're Pioneer the given that, should how implicitly of your moving would of had one the with. replicate some to Delaware, know I you on that in model you you've kind the it that relationship give there on think other success this work I First, you're differentiated about is with with, customer that or just commercial assume through press the you can release. update strategy an that us how customers of rest the you is, replicate that exposure we deal Can longer-term particular how kind think, a working of forward?

Dale Redman

Blake, the on philosophically ran our always way Yes, nail we've the head and the you hit business. that's

So want dictate to or how message Board. street our it their to probably will to they customers the

to we'll So, mean, their really following been it. here. nothing on our have when they're customers for for ask about through ask. going good changed help horsepower, commitments something they us not It's with I pay

those No. be Yes. in a there base and really execute. And they But customer about it something our to we're ability feel if out good we're position So we're Is our than willing really good here, things? that, more customers some think this participate. to could with want of I pushing?

So, I'm your your that I that's but question, by going dictated trying to to be answer not hope customer.

Blake Gendron

then be it's margin step we think if And that those if and fleet services of profitability service cementing are inflection the hit are additive point then in have cementing about of you guys to coil is start standpoint? growing, the frac a at lines, it going we you a growing to from or and step [indiscernible] the from your we where of for guys lines, kind service those kind look specifically independently specifically

Dale Redman

metrics in areas. think existing those customers of have and additional managers that serve in in very consistent actually confident I think happen those capital mean, we in we are The divisions that tool driven good and the very spend payback kind inflection to additional consider that's we I our our two too I box there at exceptional. No, those they businesses to decision an and margins tools feel to point produce our be we've hit to very all, are

a it's sound So, good investment.

Blake Gendron

finally, housekeeping. And just then a

pay debt as I a know capital all not here, allocation noted that You levered. down you're

So leverage to are the to what's the proper business, for completely you balance sheet? a debt-free trying get

Dale Redman

as We'd free portion That debt a think temporary took get we any just any evaluate with growth don't, like once that a and announced for CapEx additional to absent to little does, from, would we relationship I what yes, really a Try that's where we that ongoing opportunities price. transaction basis about, to like CapEx of Pioneer a type beyond be to of some the bit type dry strategic we repaid. another powder state, is probably constant possible that, that get of develop, that would growth on to come with more cash on on what be as with again, is acquisition we've honest, customer. We some talked much strategic keep if going an it to additional might beyond relationship -- basis.

Operator

[Operator next Instructions] ahead. Gengaro from Stephen Stifel. Please comes with The question go

Stephen Gengaro

ones. Two quick

mentioned four first, fleets clarify, are I The it your XX you just you for, sand of think legacy is sourcing correct? to

Jeff Smith

the exactly It opposite. is

Dale Redman

Just out are the opposite, they out self-sourcing XX. on the source XX We of the four of XX.

Stephen Gengaro

got -- you that but they baked are the exactly. you as away contracts or I that do that are or two? those Yes, how into the that customers these through go see year backwards, will shift Do see or shifting we more or next toward

Dale Redman

it see don't shifting, Stephen. We

we're serving product the the we've situation fine customers years move several over been think I that with the in that does and company that with shift direction, that they to we them. in But to good with pretty of trust over in we'll know, last You not regional where But that we've transitioned think position something have what want to as our we're we're life accordingly. a we they about if us stewards where be of direction. in concerned and again confident we're are sand. adjust a I But if it's demonstrated that

Stephen Gengaro

follow-up. as out? that any line. the any of there parameters then chance smooth to there depreciation in to thought non-cash Is sort understand asset a is shift the And a disposal I or just cost it's

Jeff Smith

time. from at what We practice we've wouldn't the been doing. change this Not

on far as goes, your modeling being can as you relatively plan mean, I So, consistent.

Operator

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

Ken Sill

One to behavior, is closely dedicated gap sincerest much not to way. where work and big more in performance with of you your but somebody your try some guess and model to different do customers. change peers? we flattery I we're you better much great a saying their getting question of more am do more this are I the ask think you a margins, to you form between in so it of can how there's there in and moving going Copying are peers more of guys

Dale Redman

we XX-hour not can do that. need customers that's our what probably -- what What something just others we that's attention not take on probably done much in just, and to spend I we we of care doing. get a we're focus Ken period pay really, time we really, to on, with it really business is, our and

customers of that out care that. us at that's and your not built look, we on probably pretty our we'll platform well we I'm do we've focus take that's, we got and and being about question, let what we to as answering will served and what talk continue best do the to do but, the So,

I to think And think I answer would how handle it. your I that's question. way better that's a

Ken Sill

It's tough I've detailed anyway. answer more a of question to another a got question.

margin? or cited is was fuel is your are different quarter contract is a fuel So, margin customer change for a of better a your things margins plus your with that how, generally understanding one on your costs is My you a supplier, sustainable this now? pass-through relationship in with that fuel

Dale Redman

to piece that able rental pricing is some margin price that's site equipment a absolutely some service I were accumulated having but correct transaction we the we a much that pretty Pioneer bring component price now able better to quoted and what to relatively we've is consistent, leverage you're a do cost mean, I the that's mean, to and of announced the of negotiate the some that, the after and is relates that the size plus that No, there I that piece fuel especially of total they were think on.

Ken Sill

guess, going ask expect of business and I'm I to costs? units or to finally, break-even. volume ask, how way cover one can other break-even then kind units to services cementing we do coiled or overhead the move is many when that And need enough that for to tubing crews have to to you

Dale Redman

category, with during tubing and flip coiled lies do projections division, there other in the actually actually in project you I positive. will time we point amassed some services at that that see real there, XXXX, the that to profitability the our show mean, within the scale we've that

Ken Sill

got. all great. I Okay, That's

Dale Redman

pressure pumping. in is Cementing

have that effect So, on. an wouldn't

Ken Sill

is so separate -- business, and a Thanks. unit separate is right? the buried Yes, coiled tubing cementing

Dale Redman

Okay.

Operator

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

Dale Redman

tuning all Appreciate have today you several day in see you in and great a and months.

Operator

This conference has now concluded. Thank you for presentation. attending today's

may You now disconnect.

ProPetro Holding (PUMP) 27 Feb 192018 Q4 Earnings call transcript