WHD - Earnings call transcript Q4 2019

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Operator

Good morning. And welcome to the Cactus Q4 and Full Year 2019 Earnings Call. My name is May, 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.

would turn I to show time, Mr. this like the to over At of IR. Development Fitzgerald, Corporate John Director and Sir, please go ahead.

John Fitzgerald

be on Thank you, in call Executive speakers participation joining Steve Officer. Tadlock, today appreciate We our our will Officer; today's Chief and and good today's are morning, call. Joel everyone. Scott of Chief Bender, Also we our Financial your us Bender, of Operations; President our Steven Bender, General and which on Senior Counsel Vice is Vice afternoon, President our and Chief Administration. Vice release, earnings website. President David issued Operating Isaac, Yesterday Officer; available and The

Please future any we events call Reform the today's for statements note, forward-looking Litigation that by covered make projections on are Private expectations comments or Securities regarding Act.

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

call, comparable measures GAAP are In non-GAAP financial our reference most directly release. measures today's will addition, measures. during non-GAAP certain included we the Reconciliations of to these earnings in

to turn Scott. over the I'll call With that,

Scott Bender

Thanks, was the John. challenging Good industry. to field US morning everyone. XXXX oil for a year

achieved impressive spending down year-on-year E&P Cactus down rig was around was US X%, count XX% the Although, results. and

previous $XXX million, year. was a XX% up Our record over XXXX the revenue

activity nearly of million, $XXX of record standpoint X% and showcase year-over-year, also of margin general flow. sustainability challenging fourth profile free free up cash The record over our flow We year-over-year. a while cash quarter, up the from reported million, $XXX XX% EBITDA

quarterly cash XX%, margins adjusted quarter EBITDA In per balance we million to was adjusted dividend million, first approximately summary, revenues fourth $XX were $XX increased $XXX share. and our of were EBITDA by our $X.XX million million, $XXX paid

the turn financial results. our Steve Tadlock, who our now I'll to will call fourth review over quarter CFO,

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

Steve? So,

Steve Tadlock

QX million revenues XX% Thanks, declined nearly of Scott. $XXX sequentially.

up were sequentially, rig QX higher part Product 'XX XX% revenues large slightly XX% than XX% year-over-year, However, drop due were revenues onshore XXXX. of in were lower a decline QX count $XX despite rig X% to million in to but from count, the at US in the XX. QX

gross greater due tariffs XOX were than XX% achieved relatively relative margins follow-through impact a basis expected. stable less was sequential Product as share. was Our of outperformance Section on market of approximately to revenues, the at

XX% the customers at completion revenues stay XXX spending order third E&P revenue. from expense $XX to reduced profit decreased lower Rental in basis were the million due decline margins to sequentially activity budgets. to depreciation quarter. industry increased on full attributable within primarily year points was down gross The curtailed Rental

XX%. QX sequentially, revenues to drop of of the XX% ratio product were seasonal would and from quarter. typical management non-productive points service margin less and expectations. represented ahead XXXX, XX% of rental-related million, basis field This time under XX% service season. to in than combined third this during the revenues slightly just QX was of due XXX other holiday Field quarter, revenues which during expect the In $XX be declined the to down Gross we

the be would QX with $X million for million million was quarter. stock-based approximately $X SG&A slightly above expense quarter. XXXX in SG&A $XX the to million compensation expect $XX.X down running at during sequentially We at

$X.X quarter to currently depreciation be XXXX approximately million. $XX.X million, expense the Depreciation million and $XX We up amortization quarter sequentially. expect totaled during expense first

quarter. third down million, $XX during revenues. the the quarter EBITDA Adjusted Fourth quarter was XX% EBITDA adjusted nearly for from of represented million $XX

public quarter. XXXX, and in in XQ of ownership percentage. should was Class at XX% in changes an stable result the A assuming the no public end in XX% relatively of This QX approximately Our our or effective was ownership tax rate

the effective this actual higher was to and blended in XXXX our tax we rate update quarter estimates Our as rate tax that prior tax revisions during slight due the rolled an return some had finalized state through to quarter.

with income income QX as as receivable agreement, was in million non-routine to items. other the million $XX $X.X liability with million charges in revaluation additional in related GAAP $X well XXXX, various approximately associated included which the of the tax associated net tax

earnings our $X.XX adjusted this EPS quarter an continue to share XXXX. that per $X.XX income units, with adjusted $XX share to it outstanding entity to we as of per in share shares diluted assumes QX Internally, rate net effective of at million We tax XX% in the prefer an XX%. rate public and fully and share per earnings tax of will reflect all per compared adjusted look held XXXX approximately effective estimate

the over XXst, generation strong over During $X.X free the per the we quarter, of associated still dividend and by this distribution million resulting company. cash Board payments, quarter Net $X.XX position per declared of $XX year. dividend in In the December quarterly a $XXX million of $X.XX cash of to the first flow to of during March fourth our fourth highlighting share increased dividend out from paid also million our the January, paid at share. be

at the an DSO quarter, Net was net of working As accounts source the during $XX and inventory increase sequentially receivable flow a XX decreased cash CapEx during $XX in the witnessed days $XX our days For quarter. we operating cash million. quarter, by million spend represented and capital remained expected was million

capital QX revenues range at of quarter annualized a quarter the fourth expressed working Net end working revenues a the would expect quarter. as in as percentage capital for of remain from the percentage the XX%, of was to slightly up this We of XXXX. first third

our million $XX at down million, of low In business, $XX the requirements XXXX. but The rental net from pressure to business, customer budget of in a buildout capital CapEx the we demand majority be setting of expenditure million range completions expanded international still capital customer reduced capital XXXX toward are and light response to $XX higher of on of our the budget our with our R&D will in directed equipment an facility. innovations, CapEx focus on expansion, growth and

That covers the financial you turn back and review I'll Scott. to now

Scott Bender

Thanks, Steve.

validating held challenging margins up Our our business well despite fourth further quarter model. the strength the of

points market the reached quarter, fourth record versus XX.X%, XXX higher the quarter. product moving third basis During share our a

the of figure assuming new While customers to we gaining Down more can tend efficient. to on markets customers, the not wide did continue we market period adoption with value our as look appropriately a potential product for be spectrum the work us with reflect opportunities share in changes still from become majors, to compensated for provide any provided. share

count to-date, the results hold in in on expect as and XXX margins pressure during rig XX% US the to occurred in and basis digits his product well, mentioned. to land be managing the as increase on continued QX, Product have part intensely team mid-to-high sequential down tariffs on Based that to Joel average the of rigs Cactus followed XXXX up we a likely Despite quarter-to-date. revenues focused Section our despite percentage-wise. latter be of costs. up year, previously our X% overall on to slightly being single up are market

margins product EBITDA be approximately the XX%. quarter to expect during We

the decline of in quarter, work a side budgets. rental the during the SCOOP/STACK. the particularly to within completion Overall, customers business, activity their noticeable witnessed stay fourth full-year On

and to activity despite the noted be at As the in attention indirect our have XQ levels. compromise significantly conscious prices reduced benefit lower call, strategy we seen can to value margins chase to in nor sustain innovations EBITDA our The our business our previous made ability provide. controlling decision attractive expenses the to not in of proposition

to last Historically, XX% like range the as work of is redeployment increase early we be we January. the have to anticipate weighed during expect high for which quarter, EBITDA customers in rental year, our Much XX% results sequentially. plus, in on first assets margins, reset the to budgets the Based temporarily return on quarter. quickly revenue

toward will on rental rental CapEx back in As most from That noted of CapEx spending we're capital environment. come general pairing business legacy light the directed said, offerings. of the the guidance, our reduction market reduced by growth XXXX

continue to revenue during represented fourth XX% the quarter. rental and the field of received innovations approximately well recent Our in be

noted budgets and over were of our the hopeful call, this spend the rental adoption has the we of XX% far. innovation customer we has On of increase represented dollars willingness revenue reset with last on materialized start revenue to first additional safety, our and would and innovations quarter thus to and efficiency

combined years. compared be field service quarter on to activity. product this levels this rental weighed on to from holidays, Moving XX% better segment by during non-billable quarter, anticipate of approximately the XX% fourth be should product driven service, Margin hours revenue continues but our historic field recover utilization revenue rental of to to We during the to and prior and we first the manage quarter tied increased margins the to year. during both

generation balance and of payments Once the sheet. in associated cash was million Net as our we million strong the of to added during $XX again, dividend quarter $X distributions.

to line a I'd by items highlighting close the questions. like to few opening before

potential we of impact the Australia. others, at and The work to Chinese are equipment the the associates we both resumed closely majority continue of Regarding to our chain, shipments monitor associated supply our and with to like back US Coronavirus.

region and albeit trucking work and Most a lower at levels. of than our the shipping suppliers have to have in well previous resumed returned as

our which of Fortunately, hundreds close disruption is of our a miles of and key the suppliers the away Wuhan. located within proximity plant, majority center are to from

the we March. US advantage XXXX Should the expect we largest which by occur, current operating on facility expanded the in manufacturing Based have our to information, do of manageable dedicated further end in of XXXX. industry, and return to levels delays production the we

current While global we've lead recent ground results on recent a inventory quarter in chain, China. disruption favorable China and for have more supply focus chain been than rather higher demand the would prolonged interruptions. existing supply capacity likely levels cost to impact on improvements industry by shifting US, the financial likely our material we impact Based oil it E&Ps also may worldwide. the the developments in the expect to be The first shutdown the in to encouraged don't witnessed and would

Switching levels be to US the year-over-year. It's customer activity. to are anticipated secret field spending XXXX down no oil

oil market backdrop field remain other inflation the reason in regarding as of Thus, outperform However, outperform the reduced to for uncertainties ability services. ample downturns. while operators drilling demand optimistic we global macro to provide activity spending previous in surrounding year caution, and levels should our this oil cost segments due we for have

expand in the US. of Internationally, XXXX, and strategy targeted markets as will developing the and our resources opportunities continue to we to outside in identifying we apply bear business believe fruit viable

of rates return oil creating allocation, strategy returning seen shareholders field balanced capital committed We've long-term of we recent the emerge cash the a firms M&A capital remain to investing and through appropriate. opportunities one high of in and Regarding service more value with on flow months cash few react as opportunistically. to the structure to front stockholder remain at

capital M&A and margins However, on focus we're evaluate same careful ROCE. other through lens deployment, to with a review forms the of

team is we'll Our business and management decisions with regarding our make continue to this line. closely the aligned in shareholders

that ability want associates our year dedicated to continued to confident for team, This and record drove another Cactus. I company in for in thank Finally, our of their their focus a unique immensely proud achievements their succeed. commitment is and

to turn Operator? begin Q&A back over the that, session. we I'll our it operator and may With

Operator

question O'Leary. [Operator from of Your sir. is first Instructions] you, the Thank George line

open. now is line Your

George O'Leary

kind on morning, Good the quarter. go increased It's guys. share seem of looks share in side guide first a your progresses mind? for is as kind of if reaching the are you to Scott. morning, on product there may out a I market the year very there numbers, market which and Super the guys so trajectory be business the at what you product side. more impressive or market impressive to point the topped you if share Good guys curious of like wonder in

Scott Bender

opening about George, happy opportunities team up. while we happy see Cactus that historically, feels, and are downturns have been the to I the we're the downturn, not about think beneficial we

George O'Leary

for QX as is And the rentals then, super Okay. well. guidance encouraging

quarter-on-quarter, wrong. I I'm correct if said, me XX% think you

last So, scrubbing there. share incremental or commercialized clearly, more share is taken guys legacy some Is that that the of market newer the more products products you year, that driver?

Steve Tadlock

percentage back base, it's the utilize And to end high a George, innovations. reflection both our higher they of of it's work. customer customer base, tend base, the customer of getting really Yes. particularly our to a that and

George O'Leary

And you a expansion. provide That Okay. the international you mentioned an guys wonder update makes lot I of then could if there. sense. us just

well. of what if Middle as particular, you target deploying for of broadened the Australia. there In guys are I think the was you at you guys are CapEx and you into some scope kind a East looking

So just update an curious on international? for

Scott Bender

But, I'm going in -- to last Australia we're countries now. I right we're as the our that is talk not call, said about beyond George, well the Yes. yes, upon. focusing really focus

George O'Leary

guys. Thanks very much

Scott Bender

Thanks, George.

Operator

question next of is Your line Meakim. Sean from the

line Your now is open.

Scott Bender

Good morning, Sean.

Sean Meakim

Thanks. Good morning.

the Scott, situation the the pursue much mitigate leaves for capacity helping be third-party to options. the clearly an it? could to outcome, a just impact which more the so sustain in very elaborate to is Coronavirus margin around one a you So, question product you out it City Bossier you could would in less minds that alternatives flex This frame I and number rather negative capacity think, extended try with of on appreciate on maybe volumes period, Chinese and in investors,

Scott Bender

just more details for a the Joel that New remind chain. is we that and Year recognized long long supply Sean have time to always I'm been our into in but Well, about Okay. really chain, doing get Joel disruptions this caused to supply let Chinese going

So alternative we we stocks Joel City's have the outside heaved address and China. available our ample I'll sourcing it and of during inventory the But up Bossier the US. let in so fourth on capabilities quarter

Joel Bender

Okay.

facility So shift. strong China probably in business we're and have certainly to area, business, for and or capacity right -- of that potential the inventory certainly, machining The significant about a we've think, of a brought from us part additional at so. terms in mainly be we with second continues the XX% we a the shift and the provided the machining to City adding really third in in the the there, amount part a capacity of Bossier plenty lot of the assets has additional assembly in of people to of adding increase I now,

chain of of addition, In the our supply China. outside expanding we've outside and been US

I we particularly looking in products coming developments other want ever right But don't we have some have sources speak from play, been have have and on do been which So to came tariffs going places we now. their the about at alternate specifics. -- these we since this point, in sources into at

the to US, base the really again, have we our to if it, gap follow And US. like pretty supply levels addition, like China, in we've just news Scott In but us now additional in from I'd up I'm comfortable need encouraging with help said, inventory some we there. right on had

work problem. drivers guess, Scott been an loading moving that issue, able been majority -- and vessels been Our not and of are shipments since, guys we've has fortunate our Trucking majority been US. not guys critical as vessel the problem has made the we've has to port shipments secure are the February the to seen suppliers and work, getting I into but the mentioned, was the facility, freight trucks a port to goods, back and departures a we've then our our are middle of are and about since come of back deliveries into Australia to the

kind US seen far at and the I we So China I've so we encouraged need I'm disruptions manage of if to. in can what like from feel the really

Sean Meakim

period, be mix alternative perspective that margin that can and sources sourcing changes? impact scenario we other the how margins a Thank really -- lot virus of such more so think you of margin should say a that for in That And we that. extended on sufficient these of as mitigate dire you helpful. if expecting about we take of the if should mix, an or these together, more feedback a terms then are from -- for pressure that we impact the in is situation investors all there'll a

Scott Bender

Sean, a business are very with -- China do few we China. areas compete there and can in look, is there the reason that for in world

percentage So maintain will to the margins. struggle extent, China represents smaller long-term, a to naturally

in the I that's this more consumable just as throughout think it's of not as world. and the the concern everyone products so that's source just us, to the worldwide for much be not of US, the and it's for and has business for is much China

frankly, the margins the issue been world's gets what I'm take understand the ability it care and margin business about of disruption, upon you will years of themselves If be this I'd My impact. feeling dear then materially thinking based that will I've more So saying, enough more in the supply to produce be products. scarce an consumable

Sean Meakim

Right. very well is That Thanks, point taken. Scott.

Scott Bender

John. Thanks,

Operator

Your is Scott of next question from the line Gruber.

line now Your open. is

Scott Gruber

Good Yes. morning.

China in line same mentioned stay produced in was XX% heard to commentary, during questioning, that rough of the on China Just the percentage wellhead the XQ? of I volume

Scott Bender

we Bossier capacity was now where in are. terms XX% at That right of

we just have things our trying Bossier of that that room GAAP for we're to requirements, [ph], nature. additional near-term indicate So at

Scott Gruber

And much China. in XQ of volume your wellhead roughly how produced was

Scott Bender

half About it. of

Scott Gruber

sounds your you given it the like looking And to were diversify situation you already supply that chain. that tariff

level, Just four an diversification out exposure want years, five of things call years, from how years, three retain down want would the out, from but road? you a balance the a look big as obviously, perspective, do just lowest high to of it, three cost, you years four China, in you years, kind to how

Scott Bender

Sean, years think from I'm to now I is question, this important sorry, China five to except Scott, don't today. that to prepared will that business it say than that years answer less hopefully be four or we're really

Operator

next our question have from We Moll. Tommy

Your line is now open.

Tommy Moll

for but budget that your gross thanks for taking know catch my down you to questions. and year. of all upcoming I the Steve, Good capital shift us wanted capital? several -- them. initiatives, the pieces Could mentioned didn't morning different there were the I of I your CapEx conversation for to break you

be there detail any additional Thanks. So you offer could would helpful?

Steve Tadlock

Sure.

expecting talked are that the then million Australia to would would the -- the million And we that's facility address $X XXXX, general to maintenance for $X R&D budget the at for look rental. we whether infrastructure, about. roughly rental be expansion million to on branch you spend $X improvements on $XX if $XX think million items, I about million that $XX and International million and remainder, goes which really or So

that's when equipment and the and million of from we talked rental. about down last the year we about higher innovations Some pressure that significantly $XX were on

Tommy Moll

then, be following the any timeframe, some up incremental specifically, as the you requirements or SG&A we should that year revenue should may side International earlier, on like cost be just kind revenue of to not budget we that roofline be tailwinds about incremental in side And thinking in anticipate mentioned may on when capital baked the front the for anything we starts or into this any any the of spending of kind -- your anticipate hit? or XXXX maybe

Scott Bender

Yes.

SG&A we've additional of SG&A may mentioned take to So be probably at of SG&A wouldn't it will different, hopefully, and additional be. stage, incur will this deal before, I contemplates business. care already to require International I our extraordinarily CapEx a Roofline XXXX expansion. level slightly of an roofline to our devoted Tommy, be anticipate great But and I that particularly high begun budget wise, it think, doesn't

Operator

line question next Malloy is Martin of from the Your [ph].

now Your open. is line

Unidentified Analyst

quarter. Good morning. Nice

Scott Bender

Thank you, Marty.

Unidentified Analyst

not On maybe, about of you might -- products about countries, talk when and in about terms timing the and getting talking but revenue? speaking the could maybe specific see certified International initiatives, we process us to

Scott Bender

Yes.

on vendor end process out mentioned Most list, is, call, in compete that's the think, the the a on at of I tenders the being tender. So the come to of step able I in approved course, the first year. of last getting

XXXX. deliveries XXXX of for there'll be the will So in end

ought about might any impact terms in you that, ad-hoc Now of but see some orders or come larger revenue in XXXX. we drop large think to before in

on just of the of business. What's not business. don't the at look we strength market the and about how think International because of terms commodity the We're simply we side focus this good. very In

approach countries, of to, who any that invest market the I'm or imagine wellheads want a not buy are lot would a can money. commodity not we don't take be in throughout there NOCs So the And but which in you still that that type to going that conventional their world NOCs talk would buying. time about I again,

Unidentified Analyst

Can for on multiple rental maybe year, I'm any prepared product I side, talk new about product last in we that you this the introductions you if year. Okay. if should introductions sorry look And remarks? then missed the new had

Scott Bender

Yes. we're working We've few right now. got quite on that a

premature try about probably when to it's to commercialize for will me think a in But we little moving test. the those. I we're field estimate

several the and have in we frac completion yes, the products side. and side So, new in the both wellhead

Operator

the [ph]. from Blake is Gendron question of Next line

Your now line is open.

Unidentified Analyst

question opposite market taking I understand the the Good team way going my question. for It's in now, in but the the Sean's it, Chinese would on morning. currency the easy we could the just hate into actually harping different if opportunity Thanks keep China, to constraints but I'm to about to in given think there potentially obviously manufacturing liquidity way. a cost put ask government more trucking Thanks. on shift issue which be given blue a you the actually and sky later maybe market. further And abates tailwinds that year? in some could of to or

Scott Bender

the So I you're up, and the government this China asking if spur battle I'm question, fighting read understand issues let's the trying health morning paper say, is we loosens and to economy. their between if all sure your

I face be loosens if and lazy risk. we approach So is up is problem that don't say man's this emphasis the would more, see to that on China this more China what past

of you terms company. how So, in think about our think I

become be case may -- the by future certainly in is dependent end this still not years. view to Our year, in less years. upon the future of in China but the That

Unidentified Analyst

US bankruptcy as fourth like equipment oil continues one in the your to just quarter Okay, had customer that some here, capital issues back peers, issues with seems makes on and debt And they the in pull expense. sense. modest bad from secondly, then, of it

to versus and customers. creditworthiness maybe respect that can Just your approach commercially exposure solvency thing? aligning And independent with wondering and of larger to how you smaller yourself then if idea respect an you sort customer of with us give

Scott Bender

result, scrutinizing extremely just when receivable maybe specifics aggressive monitor had question. list But them of as customers we our their of time let And our we've it I'll from some that extremely the Steve of the at Well, to terms comes occurred in very limits aggressive we your high impact credit we have a We're address are collection. bankruptcies a both the the minimal and in at closely. industry. to add level,

I Steve? think ahead, Go we published.

Steve Tadlock

to activity et the I cetera, generally, are we're we on our decks E&P with mids how it much. to Yes. publish jump our These for on very should mid-E&Ps, they time, through based you -- which large us, mean, frac not in is. investor this large vigilant ship QX we expect XX%, we're and kind not and numbers not on expect private or work they of mean, hoops it. based E&Ps, will under about kind the side, cash we giving credit monitoring getting deal over. paid I majors, all in particularly about kind privates, XX%. that's just upfront like, a overall change to just to And on I'm Majors little side, deliver XX%. about and environment demand way But of but If get of if we're mostly. the us expect is XX%, limits, then that's paid and we're Scott said,

Operator

Kurt from is question next Your line the of [ph].

now line is Your open.

Unidentified Analyst

for if look your at XXXX. of baseline Good kind you as morning. curious Scott, you view

revenue for XX% that in well, mentioned total to represented are going rental of the have quarter the You first business. about so technologies the new represent, far

be XXXX out total? for look year, contribution what in the the revenue you do for the you rest new could of As think technology

Scott Bender

fourth thought despite on this was, proposition was face frac our in than significant be I frankly to value the going we but better the it know, another location. to customers, quarter reluctance think it I a dollar spend You from

march progresses. XX% year So the about percentage barring we'll that, I up to think, that as continue

Unidentified Analyst

the run incremental quarter SG&A really the about related that color. higher the about the was rate then but the great that indicate the XXXX. in course follow-up, just quick Okay, did $XX of great. be That's meaningful and SG&A million. here throughout one to not first And That's expansion International discussion being you than

through of fair that fair? year and related is much the all incremental incremental that hold International SG&A will So say to SG&A is it then that the rest is pretty the expansion, to

Scott Bender

No, it's not fair.

a compensation. of is is other related International, stock-based is to component the there that So it

of fair explained say, to -- public is let we and I will I February because we way to invest, can So in we'll peak? Steve XXXX we went of think, it but the you,

Steve Tadlock

Yes. our We should terms come we [ph] in And terms We SVC year some and of can just and driving be and then so just fourth some we then activity. next when grants adjust in in IPO that's of that in peaking adjusted off, as activity. also of reduced down SG&A have this extra out year quarter, EBITDA. coming the levers were reduced vigilant we pull

So naturally a kind we're more we as of again little SG&A. growing would expect

Operator

Your the is from of line Praveen question next [ph].

Your line is now open.

Unidentified Analyst

competitively here to think, guess space. I some commentary guess, guys. equally of I morning, Good as in the China the clarify as I because, disadvantaged wanted I of it almost being everybody

how think a China. of us much to industry the to So, margin comes along sense it I XXX% per do not unit? you to you're you product then And give I pass affects of of going how supply wellhead as think could out but you be able guess, know anything,

Scott Bender

way and question mind be very is going as this it's XX% think, XX% would and you to a the trying bring to think all may mean, certain I'm about that our I'm that's XX% through say my north comes, products Joel competitors. of wing good people So, of out. I definitely it of I

from I Sometimes out produce to we know they to other finished tends products bring forgings have into countries a bring that there. competitor out.

greater and at would least I than XX% say, it's that. So probably

Joel Bender

the any significant So, pricing the then impact -- and to in about your upward until is important you're supply question margin going becomes see more this not environment tight.

with us. be degree appears signs showing a lesser our some ample both inventory maybe now say, to right to So competitors. there yes, larger And of with probably,

Unidentified Analyst

that's the of makes few product innovations of about the we everything, on the Can you think getting cross-selling of potential, sense. how trended side, market then then the compared about some on. addressable Right, also your you're addressable talk innovation and working of And but know market to past that I you new quarters, has when potential mentioned current site? over the the it's that ahead well those number

Scott Bender

protect the you be a protect So this existing on a a business. will always least -- margins. line. be wellhead product that mousetrap. or way building know side introducing moat we a really products to by It's our new at mousetrap better we But retain a of continuing is upgrades have we'll to around the having It's try to customers. It's better a to philosophy with company's our wellhead way consistent

streams, to rather revenue have perhaps that think we ensure any So allow it to about and to new margins. -- up to not going it's protect it's good open us going continue

next your cross-selling grade Between your guess, their high that I -- and was in was customers they markets the but location. number other tend seen assume suppliers I grade to frac that fair high opportunities wellhead, it's to we've down and opportunities. say, what reduce not suppliers of on question? really, What more Oh, only

think, as our be seem in seen you've I and very regard. in So it constructive to before that business, downturn

Operator

Your of [ph]. Dushkin next Matt the question line is from

open. is line now Your

Unidentified Analyst

to grow maybe doors circling to back an Can look M&A targeting up. on you acquisition? portfolio talk be Just segment the you which maybe where opening the guys may through or you may

Scott Bender

don't want this. really Matt, to I about talk

but to frank, be our of looking, deals -- that because there coming kind know you not the -- don't way, actively we're they're we are out act deals, think, I that well-advertised. the

to the it that don't down from and understand prefer say, probably, artificial from everybody consumable to that. secret stay products. in like hole And anywhere there's that it's to well seems the never range next lift. in made very lift fair until we they downhole think, sector. to greatest mousetrap we I they I because says So margins been always I [ph] really don't of some I I lift But a the And do love have away very disappointing artificial like transactions and don't. M&A area. artificial particular

I'd So of in area. prefer something artificial I probably those lift say would two, the

be business, we make engineer I mean, we like the the product. the want product and product able to to but

we lot anything makes a public… the And short so that's is, answer then office So sense this seen really we there far. but us is since haven't more coming went into that to

Unidentified Analyst

And…

Scott Bender

it those just, fact. but are could I wish the I helpful, more be

Unidentified Analyst

of you with No, of No, actually with would This extremely get no. on your just it's like on And it lift. why I actually businesses. some some so do much? follow-up helpful. color opportunities that kind see mean I'll you cross-selling type

Scott Bender

and buy buy customers be same artificial who products relationship, they lift departments, different end-user downhole but mean, our the that I may products products, buy Yes. same it's the business. it's

Unidentified Analyst

and Okay, back. it ahead that's And go turn helpful. will I

John Fitzgerald

the and right. All for joining speaking you to call. Thanks, everyone, appreciate participation your look with quarter. We over today's next forward

Scott Bender

Thanks, everybody.

Operator

presenters. gentlemen, Thank for conference today's this Thank you, and concludes you participating. Ladies call.

You may disconnect. now

Cactus (WHD) 29 Feb 202019 Q4 Earnings call transcript