WHD - Earnings call transcript Q1 2019

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Operator

Good morning, and welcome to the Cactus Q1 2019 Earnings Call. My name is Marcella, and I will be facilitating the audio portion of today’s interactive broadcast. All lines have been placed on mute to prevent any background noise.

For those of you on the stream, please take note of the options available in your event console. At this time, I’d like to turn the show over to John Fitzgerald, Director of Corporate Development and Investor Relations.

John Fitzgerald

morning, good and you, everyone. Thank participation We call. today’s appreciate your on Scott call Chief our The today’s be Chief Bender, Officer. Tadlock, speakers on Steve will our and Executive Financial Officer; and are of President and of David Counsel Senior us Administration. Bender, General Operations; Joel our Vice joining Officer; Steven today Vice Also President and Chief Isaac, Operating Vice Bender, President Yesterday, our website. on which is we available released our first quarter release, earnings forward-looking for statements today’s Please by note call on future that events our or make Securities are any Private regarding expectations covered the Litigation comments projections Act. we Reform

to the obligation our to Forward-looking today’s statements control. number are can earnings or publicly differ Any We uncertainties, and are review many risk and the listeners our SEC. risks which make subject in no cause statements our of review our a only forward-looking as beyond factors undertake from with of to results to discussed expectations. materially forward-looking we risks filings we are today actual statements. uncertainties update of any and current These release date, and advise

call, release. will will the during GAAP today’s most call are to comparable measures. our measures to we these I addition, reference the directly financial certain measures in Scott. included Reconciliations With In that, of earnings non-GAAP non-GAAP over turn

Scott Bender

for delivered highs Okay. line revenue sequential to good report nearly three everyone. having and morning quarter business Thanks, lines. all-time results top and strong growth John, I’m of pleased first to XX% our of all

land sequentially U.S. was X% significantly exceeded and rig the the count, activity. growth trajectory which U.S. Our of completions down

the percentage XX.X% we and lower over Steve rising adjusted tariffs attractive a currency first costs with which our now U.S. summary, sequentially, and in XX.X% XXX products EBITDA average record XX.X%. followed, EBITDA of In at CFO, sequentially increased despite the associated year, Chinese market the from our revenues our who’ll period, to margins reduced quarter. to strength business, During adjusted to rigs the we call increased Tadlock, in margins prices results. start a XX.X% review define as increased financial onshore XX.X% were in in response Section the of I’ll trade commodity quarter tensions. Further, first generated turn the share

Following thoughts his remarks, I’ll opening our provide before Q&A. for near lines term Steve? on outlook for some the the

Steve Tadlock

costs in slightly expect the XXXX. seasonally under remaining Field of rental-related year-over-year $XX were roughly tariffs both quarter asset of $X.X million, higher as business Depreciation increase service both the approximately billable Scott in Thanks, due XX% as revenues, and The revenues of revenues to is revenues product for XXXX base broader our $XX.X XXX and $XX than products represented demand a stock-based during expense XX% quarter, we the fourth follow-on at line period all last increased Scott. hours a sequentially. sequentially. QX QX reported time. increase Section effect than sequential combined growth The in and and $X XXX in were XXXX. in attributable income were customers’ higher would rates, include changes was for an sequential to land FX becoming and during than mentioned. million expect XX% XXXX than quarter. SG&A for movement drilling basis $XX were and lower hours continued sequential higher in million, remainder and this and in at with fully higher revenue equipment $X as realized in benefit Rental during sequentially our The in $X to the as the the the Product were over impacted We our million XXXX million higher revenue expectations. quarter SG&A mentioned. similar amortization XX% points QX driven QX associated year and million our with public $XX for greater the differentiated Field investments of increase for expenditure We our impact completions QX recovery in product the QX associated professional and increase XXXX The production, due the $X.X compensation of be per as XX% March sequentially offering and other XXXX an the with increases Higher tax to of company. and nine months The period and $X.X in and flat $X.X revenues million million, despite included an revenues $XXX at and stock-based totaled budgets income up additional tied XX% the to in than count. January. compared and than XXXX decline increased costs which well with fees. in the quarter quarter billable million. fourth from record consumables and primarily the arose XX% to quarter lines QX XX% more $XX XX% the sequentially, work activity million XXXX. tax reset XX% in revenues other was higher million of service Net XQ by QX million, follow-on million audit than was than expense of the higher than XXXX points due and of XXX U.S. higher Scott sequential would higher XXXX. This majority and XXXX. XXXX margin higher from of increase expense payroll three as equivalent QX the to used basis was higher drilling million gross equivalent compensation for largely rig from

You’ll statement income interest owners that the our a net and recall Inc. public of to income owners noncontrolling attributable reflects Cactus,

last million equivalent adjusted of year EBITDA and QX represented XXXX which the up XXXX. a in This quarter and XX% revenues, reported XX% We million. for compares was to XX% EBITDA period Adjusted than First XX% for total QX XX% was sequentially. inclusive with we the the the quarter $XX tax which the a greater and a a realizable portion million allowance tax recorded to was deferred of tax $X tax released offering, $X conjunction valuation specific of during of related benefit previously secondary March associated booked In quarter, the benefit. assets. benefit

was million impact with it outstanding fully the the QX effective quarter per Inc. It similar in we’d XX per XXXX, estimate subsidiary, ownership of this QX tax X%. barring our of to in compared prefer resulting approximately XX% in approximately tax additional to Internally, look diluted public held XX.X%, At period changes an the which result public an the of during eliminates averaged effective of have income We in public public per further rate QX income per expense of Our $X.XX to share ownership tax XX%, With rate related rate $X.XX all the percentage. the of of earnings the our that of units shares to operating effective the at to will Cactus, XX.X%. an attributable increase LLC, share and share per incremental at share earnings end XX% quarter. share entity the in adjusted adjusted the as in quarter. Cactus ownership should our our tax was changes ownership earnings public assumes adjusted an throughout beginning quarter,

first during by million $XX Our $XX cash March million position to XX. increased the quarter at

operating the quarter, was and spend million. million, net flow For cash $XX our CapEx was $XX

associated of anniversary with repurchased Additionally, shares in $X the increase IPO. during quarter on the Net with finance by event a unit $XX following our vesting X-year line $X seen the of the and revenues. we spent million working about in million increased lease in approximately broadly worth capital stock in restricted payments million quarter, February

receivable accounts increased remained by in XXs. low sequentially, the DSOs While $XX million

increases. anticipation receive We had percentage the is norms, to revenues, expressed higher XXXX. year-end December flat would from of than as of still further continue at Net to we QX been reductions a while possible end historical year quarter, annualized in the purchased January the progresses. rate in see working first was to expect the capital that as of product tariff China And compared

Our million going This in I’ll million to on financial full to a year for review, capital with growth expenditure expect you capital $XX spend covers still innovations. new and $XX million low now toward business range. are our significant portion back XXXX $XX unchanged rental we as to the our includes turn expectations the That Scott.

Scott Bender

count So our U.S. rig to thanks, Steve. per and lower quarter. land said, moved wells thus the drilled has larger Further in the far second continue increases rig business. sizes pad That in benefit

decline on While revenues preliminary our unchanged to rigs we be through April. results followed, quarter-over-quarter, likely QX based relatively product our may believe is

barrel levels QX to are cautiously increases at latter waivers. $XX now activity levels the following modest oil to from have as Iranian drilling of part Looking in the optimistic particularly crude decision year, above per we stabilized overall regarding prices the cease

interest despite be our share an were increase while to And renewed market environment. per are a noted limited point have fact, from the the gains operators, and activity customers majors. private price on publicly from Market traded during consistent $XX count recorded share in broadcasting environment. spending of with barrel suppliers preexisting pressure can attributed gains rig quarter while discipline declining We in more progress exerting capital E&P the our private with larger customers

our during activity their of with penetration market the customers far the have side On expanded maintained rental the quarter, the completion our we’ve second business, level while of majors. thus

maintain expect demand We environment rig our we’ve pressure, QX despite declining budget. reflected seen XXXX valves as in in CapEx for increased revenue higher rental to already the count large-bore

performance expectations, year-end and our of on-site we’ll projections. Regarding initiatives previously the innovations commercialization exceeded our – rather, we’re has revenue our new confident completions indicated surpass

demand. in gains, barrel customers deploying the environment stages the these innovations in pressure have perform in be our new although per bring of on its products. location. witnessed slower year, holiday the Interestingly, assets first this and budget spent driven which these has already is of field, are will by half service, both enhanced season. the tangible an following per largely aforementioned rebound to product $XX-odd day in to given interest for still during we’re efficiency attempting rental While the we quarter CapEx stages to forward these specifically in typical the witnessed Field leading increase activity, second early

this revenue in forward, XX% remain expect combined rental business our and product of revenue. XX% to Going range we’d the from to

suitable not light confirm do meaningful increasing that be product cash second and our M&A the least our In focused in revenue We during post no in XXXX strong potential summary, record-setting margins, expect there’ll expect on safety decisions we may and during further significant we at anticipation on dividends XX% may our were I position, XXX There of buyback small of a the questions flow. free opportunities impact imported manufacturing foreign set can the decline residual was tariffs and more a attractive first program. tariffs, in margins wholly-owned a of we Board at overall in products largely second of as we’re QX in China has of slight allocation the impact as expect In We a rate minimal by quarter, from remain be amount capital execution, generating be cash firmly first no on to confident subsidiary on changes additional producing some about to or Section made our offset quarter quarter. gains effect returns currency date, but although rental. no Regarding effects. regarding reviewed of evident in be capital quarter.

our the over begin operator, So session. with and Operator? Q&A we turn that, to can I’ll back it

Operator

from [Operator Tommy of Your Inc.]. is line question [Stephens, Moll Instructions] first the

is open. Your line

Tommy Moll

thanks and questions. morning for my Good taking

Scott Bender

mentioned morning I from I value clear and E&Ps proposition the through Good products for more well it how fits Or come side? new into in wanted recently, the on the addition pitch just the start which theme gain? that. capital to rental a spend discipline, has to And on you wonder an to loud fewer efficiency on customers Tommy. basis and you the of the efficiency is dollars per is

Scott Bender

Yes, Tommy, it’s the latter.

Tommy Moll

has actually I even for the uptake the some on that capital new austerity Okay. in But environment aided? current of hear E&Ps you that correctly offerings those say did the

Scott Bender

increased right reducing emphasis Yes. because It now is NPT. there’s on

Tommy Moll

a your called count, visibility the into Okay. in syncs rig commentary come and couple what existing the customers any pretty – have pretty well land I if have And bottom. on wonder some think, of out saying then clearly your days you up with Got it. XQ planning. recent been the drillers I have

planning it half conversations back uptick indicated we see crude at maybe and of rig if in the might You customers count. know? that this is year, you’d internal still the into to Or like? holds with you about existing their Are look get too point having the what an any early

Scott Bender

– through of say the good optimism although visibility probably probably terms next early, we our more business high, are but indicate Yes, they about first, things we significant Tommy, couple pretty about of addresses their The also market. remain seen and crude probably a it’s belts might inquiries prices have as a little XX% – in increase I’d certainly change. And in can bit from know, got little bit privates. a customers this wellhead a comment you loosen QX, through if although into QX of privates, really we’ve

the So it’s mentioned, see capital is are despite we’ll range second all $XX customers significant – in preaching some our which the that some player. fact $XX, optimism I the by rebound half very that of gives a It’d be the year. of as discipline, oil me

Tommy Moll

will you. Thank Great. turn back. it I

Operator

the from Anderson line David question comes Your of [Barclays]. next

Your line is open.

David Anderson

could hoping anyways. about I probably prefer your was talk you’d to business of longer-term from which more to do I you perspective, medium- think Scott, a

and next years. of As on some if planning to up this, terms flat? are in walk over say, next it, you manufacturing the But adding needed some process rates baseline bit kind If kind years really you three to about around wellhead of keep think just you annually business decline These say, of, the the of to starting your about next, what completions several up think how freeing number expansion of are of think now, years, a know to drill side. over the scaling just pick kind moving me three production the doing things planning as about market that around, up. your be trying – through about, you expectations? your to a I – do wells of But opening you’re kind call some U.S. to right thought you can think out two going two little of to little are

Scott Bender

I our specifically industry it’s, business do I David, about the Well think, than more in general. about

headroom side like We have in our lots of feel still we of – we have our business. completions

I’d relative that. going So in of things. And market I because completions our say we’re low I grow to going business I drilling the side tailwinds I faster. see to share believe share, guess general of two believe to the is from additional, our think, market

capacity our upon to think in begin facility we see as we’ll we’ll the to plan greater at you’ll in able wellhead, maximize assets. from I of terms perhaps So to look and probably Suzhou the being XXXX, perhaps utilization rely our rental maintain adequate of emphasis U.S. on

you go So locations Most City our it are busy. saw Bossier facility you you were kind our quite if to branch and of quite busy. visit were – enough was to similarly

completion volume some be at work. there’s couple that the roofline what of XXXX, attractive would going a this handle to no think could fairly So expansion while got I we’ve for anticipate, I of looking year, branches some use just probably is to expansion

David Anderson

on need service side competitors? more of build that that you It’s center kind less out. be the your kind differently stuff in it’s So do than you the – to of manufacturing going to and maybe that hand-to-hand capacity

Scott Bender

correct. Yes, David. That’s

David Anderson

Anadarko is is one of customers, the course of So changing in your which of hands. process

Scott Bender

I we don’t didn’t about... – talk

David Anderson

You didn’t hear that? Yes.

of side? base. you Or – would into that of your way be know wellhead than, how some and me a to another opportunity knee-jerk of with the you people This to Okay. into maybe to base? be you reaction work procurement how new that a have in actually get the of see opportunity Agreed. the that – And to challenges itself a when the these that maybe getting I – to opportunity? do going this wasn’t do was that process you an majors of to is Is maybe customer the on of it product going break speaks product about questions more customers kind in is is to an side say, a I lose customer this my would they’re Do But normal face to customer. be, it No, line other hey, other of one the as that Because to seems with also talk customer I customer going showcase share. some different seem you try that itself. that? that. maybe to view for the great can some types your

Scott Bender

much on fairly out Well, our trial. that without customers we winning a – getting is out specifics, rate can to high in trial regard. we’ve get get our I into equipment that for had not would heretofore, say And our on success majors ability success has the in if

extent one of I comparison customers competitors. our behind extremely question? uses trial the the of purchases, any to we well future, indication is again, So Does And us. with if our be a past think will the our in answer the do that major equipment, issue your trials to

David Anderson

Absolutely does, perfectly. you. Thank

Operator

comes next Pickering, the Holt & Your George [Tudor, question O’Leary Co]. of line from

George O’Leary

conversation I for just and sounds it the basins like, is your completions on is you it to side off, want to in you the time questions and Or there of trying taking to guys any where Thanks [Indiscernible]. the more you look guys. like you’re grow to still line where Are start of have there? basin-agnostic? most is, my area the business and more think of spending side. feel you’re a rental I sort customer-specific growth sight grow as

Scott Bender

Yes, the We basin. really follow it’s not latter. customer, the a

George O’Leary

about you specific pinch they to thinking time are as limit today – their customers them looking they’re What are points they maximize you see their your the what for existing flow. today? specific reduce help trying it. issues And looking then I cash Got What issues to solve? cash and to realized are just are as customers, trying at nonproductive

Scott Bender

I’m You to spoken away once walk extent, saved rig from. we’ve mean that shouldn’t you’ve great a drilling taken to count, very granted, for either George, difficult but about think to so aside because – thing going because a it in or I set it’s be a day

most we suppliers of think I So of a to great that the continued there’s where see of confusion, great deal location, time multiple we’ve mention a deal to nonproductive frac related working. a

zipper use when you hardline. companies, the all rigging have location, manifolds, trees, frac if about the you you have equipment, frac if go have pumpers, have they the on think up wireline spent the have just So the time you you pressure that, you you

takes time. it of All

– of takes time, for well nonproductive it we to operations, you from produces two time. two – the in All issues moving and go three and any and it as well to activity back opportunity an well to And to safety simultaneous to well back then one one. see well

frac So that location wells. and to all about, on to zipper place think think know with but guess, of that And maintenance maintenance place takes starts the frac – movement manifolds and that lot all there’s that’s the with maintenance about pressure a pumper, between the thirdly, I has the that control then a you valves. pressure all equipment, the on goes take

those the areas are address. So that we’re to trying

George O’Leary

Great. [indiscernible]. guys. Thanks

Operator

the Your [Citigroup]. next comes question from of Scott Gruber line

open. Your line is

Scott Gruber

Yes, morning. good

Scott Bender

are you? how Scott, Hi

Scott Gruber

Well.

with You guys top rental, on the you’re for just outlook rental? line sounds It quarter top from in perspective. XQ like not further curious, had the a better why than inroads in particularly line a good majors. just flat I’m the making

Scott Bender

same in of story, question. old we’d our category, it in we’ve coming. without the in very good I that’s been mix high in Yes. during little pressure earlier. And caught wish increase was a has our see a particular which very comparison did to sufficient we this XXXX. large-bore, bit seen come valves. is lot assets that And Scott, XXXX – A product changed the quarter

the of noninnovation-related lot part So pressure, CapEx is higher mean pressure, work XXk. I towards right of large-bore a now. higher significant directed valves. And our A

know SCOOP/STACK areas basically, where You the the taking Delaware. XXk fracture the place in

the of help. to the assets quarter, the some sometime will those second in should by see quarter So third and begin at which we end time, come

we’re now, little bit right So constrained. capacity a

Scott Gruber

much the roll on then was mobilization in there sounded like a out before cost and in in weighing that transitory And XQ? we that XQ, some little and rental does Understood. bit it that pass XQ. was How

Scott Bender

weather, ever in say, our maintaining to a fought would XXX to blame performance basis probably points I I challenge, – in cold first part of margin. to Scott, cold really February. reduced that but is basis points this don’t quarter. the weather and in on I January equipment particularly maybe never We weather contributed try XXX cold

equipment So we has adequate country. were we all we over spent then a the – uptime. equipment, of of supply shuffling because lot more it money in to this And XXk lack the ensure

Scott Gruber

Got it.

Scott Bender

we’ve – I got position, not better So think. I the

Scott Gruber

Got it. can Maybe squeeze one if I just in. more

potential when on thoughts on before appropriate? year. your You’re the is getting thoughts Do you the method? this that your think will that capital happen And the for return latest updated just And questions what’s process, year-end? on

Scott Bender

think we see some don’t opportunity cash something of a responsible in an make end our by I If the we’ll year. do deploy announcement to the by manner, the –

Scott Gruber

very Thank it. you Got much.

Operator

Your America Lynch]. the next Mulvehill question Merrill of comes from [Bank Chase line of

open. line is Your

Chase Mulvehill

gentlemen. morning, good Yes,

Scott Bender

mornig. Good

Chase Mulvehill

quarter wanted to dial that ended I if and if the side. try ended grow that or bit of products can of kind market where little you level kind on kind you a that sustain help in that to your expect you to share understand us of in XQ quarter expect the Maybe to the XQ.

Scott Bender

to Chase, always we it so grow, I do. expect

always We’re chasing work.

got figures about it’s but is – – share now the you’ve saw. week, flat market I that at pretty this looked you Our much it last haven’t it with

business as a E&Ps. have of place lot tell. we broadcasted the with do So taken can their of already large Most far we reductions as

pretty significant business. So they’re We of part But an don’t our to they’re we’ve fairly – a seen we about talk we and them in remain for active going uptake might privates although think I or customers, rig flat. really that lose as our mentioned, important another a two. less lot,

Chase Mulvehill

to a you of share if Right target towards Okay. Street? internally, share with like do share about we year, market And you’d a makes kind have sense. the or end target think The that the That market of

Scott Bender

share one not We to Street. The do internally. it with would like I have

Chase Mulvehill

Does three with handle? a it start

Scott Bender

Chase. Chase,

Chase Mulvehill

move on. I’ll right, All

margin On in the what’s being margins kind product for in of you margins down then should down contributing kind we environment, revenue through you the about of walk just and down. XQ, how XQ? said side much a being margin’s think Can flat to

Scott Bender

tariffs First, ends ask what to starts tariffs. I’ll with it and with contributes much that, pretty

full the going we’ve we points, to rolling morning. of think last don’t full I basis $XXX we impact. know inventory, I There’s much the see was to XXX we’re it, after on tranche pretty if was July, the seen through you think talk saw another – the So expecting this see were tariff billion the the wasn’t paper you’ll impact that XX% which folks? – we that but rolling see our about back announced XXX XXX last tariffs it could

Steve Tadlock

Yes.

Scott Bender

it tariffs. looks some be on going compromise So to there’s like

the roll think us $XXX concern the Section I is might XXX, to the on most But we of XX% saw in thing area off. place. last might billion, the remain was the next which

plays to have that out. see how we’ll So

Chase Mulvehill

positively the some and news about the of side? on talked Okay, increase inquiries privates right. privates the in the That’s inquiries, positive wellhead most one, from completions or Last there. you seeing you are

Scott Bender

Wellhead.

Chase Mulvehill

over. Awesome clarity. the color. Turn back appreciate it I

Operator

comes [Raymond James]. line Your the Adkins Marshall next of question from

open. is Your

Marshall Adkins

Good guys. morning

Scott Bender

morning. Good

Marshall Adkins

guys provide? you kicking competitors think butt time, from on some on So point your share what you them any legitimate everyone’s solutions to I Are respond. you of terms side. guys here response would in the At have been wellhead seeing competitive in

Scott Bender

back we benchmark probably think without the that on I I much, I before, raised probably too patting said think in that the ourselves think, I industry. Marshall, the

are ago. years better I than think they everybody’s a products couple were today of

And in some our of response share to response a – clearly that market is gains.

their So target and better. are back yes, we our on big a getting have products

our that really execution important. part is very had see chance that, business. our – is you through that to, go think I our really if a you’d maybe, a part important of it’s business a well, plant, of The

without doesn’t to test you and it product good and on install can’t you the up if can’t greatest it have world in it show do time if So any on you problems. location the

of innovations our supply I promise. U.S. because we our audience the know, staff while about I easier, when lot we it’s chain XXX-or-so our to talk scattered perform delivery every the field who day. around make to for on cannot got, and unique I of then single importance And so a we’ve ability a overemphasize don’t grasp, think, And techs, service our

but very, So out part I great Cameron’s equipment. competitors, some to we’re you’ve with business. on feel got very equipment. focused this – just equation. the of we’ve much just that’s I good got competitors normally there Look, better outstanding don’t like mention got like

Marshall Adkins

Right. Well, your results certainly bear out. that

to me gears the Let rental side. shift over

You’ve process these commercializing products. bunch frac new of innovation the been commercializing – a

lot you haven’t into be, going to additive in tell to rental too exactly in presume, be and But to of I that’s ready what see the be terms start going You’re to what in back putting to the that to money is forthright year. a wanting really here us? of know those doing. you’re how the business? you at Are what of half point time will been I we guys

Scott Bender

you’re Marshall, last possible time. the to going see it

Marshall Adkins

that. say you’d Afraid

Scott Bender

people I up this two are to is just safety, to me I open am the the night, and at And help the up And competitors. it fact they’re that up competitors. to going don’t last want is thing keeps when Well, ask – intend I – and me things to keep some them. concerns our do increasingly see what

Marshall Adkins

does earlier, schedule I’m seems maybe, little if ways. ahead of just will on I maybe think more earlier, Maybe at you hit, Let well. could. like if timing bit you little little to color It me a me it but a it’s and heard you’re, it things progressing these on know bit different when us that I update wrong, in – correct that. just extremely a start but you come mentioned

Scott Bender

in the needle of them needle. enough until now. have we’re right field quarter. the of enough That’s can the don’t these of not bring them everything have is to a to Right move the the the It’s we’re Okay. Marshall, problem a move acceptance. we It’s to The receipt third problem. going not question And forward proposition. It’s goods. question value now, demand. question to of of the not not doing of we a they’re

to comment exit stand of going we mentioned and QX need I’m to our look an the you think, by XX% earlier of, And the end I rate by that at So QX. year.

think going I surpass that we’re that. to

Marshall Adkins

going the we the stuff there more the and Right. process get going in by blowing be And of manufacturing? out in that terms to just you’re of are time putting field? this where into next bottlenecks more and year whole just Is on

Scott Bender

bottlenecks, Yes, it’s manufacturing Marshall.

Marshall Adkins

Guys thank much. you very

Scott Bender

Yes.

Operator

[Johnson from Rice]. question the Malloy of Martin line comes Your next

line Your is open.

Martin Malloy

Good morning.

Scott Bender

Martin. Hey

Martin Malloy

CNC Just soon two have Do add on the other capacity? at to machines you relatively manufacturing coming online side, beyond I Bossier think new you’ve City. plans got that

Scott Bender

Joel?

Joel Bender

in terms capacity Just need machine these put in to rework and of headcount to now amount of into tools, us right additional rental will we assets field. back give the the the increase capacity of now, continue we two the terms right

Martin Malloy

rental and how rental techs the impact term, And the about on side, you’re on the to long on as in the margins your Okay. field then side? on your should medium to field infrastructure think of terms over able the leverage that we

Scott Bender

but fixed clearly our flat those have the more a of a – that amount the couple would on there’s impact margin rental – high it we don’t degree significant of obviously goods, The of we because of a a that need have volume because utilization, did for lot a roofline margin Yes. our business. increase contribution really footprint, we to the although which expansion fact we I need of mean, incremental I depreciation assets of assets, profile. the facilities has Well, whole in mention of degree just frankly. XXXX, better because from utilize And expand make

Martin Malloy

Thank Great. you.

Operator

the Markets]. Your Hallead Kurt [RBC Instructions] [Operator line from question Capital next of comes

open. is line Your

Kurt Hallead

everybody. morning good Hey,

Scott Bender

you. Hey Kurt, are how

Kurt Hallead

great, am I great, Scott. Hey, thanks

So the to opportunity where significant they get Scott, just to circle the have oil dynamics with in you on the Permian. major pretty maybe a context back wanted around companies penetrate the larger as

like Just kind code do have when in along potentially time dynamic, you of far think you’d as be curious, might how and that through kind specific a making as you to happen? that crack that of you to frame

Scott Bender

I’d like cracked September. have last it Yes. to

Kurt Hallead

of value your really be is proposition? all of where how are on in Or But provide these are And is additional insights over oil experience, vis-a-vis majors the for there major you’ve might of you how interested some you in majors proceeding different sold independents? decision-making to that there kind process before, not there. had enough. on insights just looking particular be Fair terms in honesty, the so dynamics might able things the in some us companies time, any their kind

Scott Bender

any I even I opine as been, know. as I’ll harder or timing when just really worked. there of than or don’t of that, breakthrough, think doing working not the lot if I’m any, players. on out I will our we’re then the when occur. hard can’t terms optimistic so if of and said that I happy as ever fruit And low-hanging – we But – of just far. really in forecast pretty I’ve could there’s ever also a target. they’re work Having we’re results and But with the really I I’m company multi-rig on

clearly, but accounts, on target our there look an you at So of are awful really – large we’re list there, are are of the on E&Ps list. that majors also that lot not if

Kurt Hallead

from optimal a term for you the terms as Steve When structure about longer return think maybe think out? and maybe going can insights fair. – Stephen like question Yes. maybe to And a we as Tadlock. and some to you’re where capital how well this, on that on That’s on all about you give you’d us return of reside think in metrics, mapping other capital you and

Steve Tadlock

good honestly, – think job. Well, pretty mean, I a think I doing I we’re

on XX% would and that’s look capital horizon. over We employed. a We’re – over return time our long at

have years that. better So recent the been than

scrutinizing make sure capital. on see kind So and us acquisitions you make making spending that’s And why a always on high return sense money highly got rental we that very everything so... don’t not to don’t it’s do we’re of utilized, that’s

Kurt Hallead

you. Thank Okay.

Operator

There the back are to no time. I’ll further the call at presenters. turn questions this over

John Fitzgerald

earnings with for everyone, forward joining, on we and look our Thanks, speaking you to next call.

Scott Bender

good Thanks, day. everybody. Have a

Operator

This concludes call. conference today’s

You may now disconnect.

Cactus (WHD) 3 May 192019 Q1 Earnings call transcript