Nine Energy Service Inc (NINE) 2018 Q2 法說會逐字稿

Greetings and welcome to the Nine Energy Service Second Quarter 2018 Earnings Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ms. Heather Schmidt, Director of Investor Relations.

Thank you.

You may begin.

Thank you.

Good morning, everyone, and welcome to the Nine Energy Service Earnings Conference Call to discuss our results for the second quarter 2018.

With me today are Ann Fox, President and Chief Executive Officer; and Clinton Roeder, Chief Financial Officer.

We appreciate your participation.

Some of our comments today may include forward-looking statements reflecting Nine's views about future events.

Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control.

These risks and uncertainties can cause actual results to differ materially from our current expectations.

We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC.

We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

Our comments today also include non-GAAP financial measures.

Additional details and a reconciliation to the most directly comparable GAAP financial measures are also included in our second quarter press release and can be found in the Investor Relations section of our website.

I will now turn the call over to Ann Fox.

Thanks, Heather.

Good morning, everyone.

Thank you for joining us today to discuss our second quarter results for 2018.

We had another strong quarter of growth, exceeding the midpoint of management's revenue guidance by approximately 8% and the midpoint of adjusted EBITDA guidance by approximately 9%.

This was once again due in large part to a strong financial and operational performance in Completion Solutions.

Company revenue for the quarter was $205.5 million, an approximate 18% increase over Q1 and adjusted EBITDA was $30.6 million, an increase of approximately 27% over Q1.

Incremental adjusted EBITDA margins for the company were approximately 21% and incremental adjusted gross profit margins in our Completion Solutions segment were approximately 19%.

This puts our year-to-date revenue growth at approximately 33% and adjusted EBITDA growth at approximately 64% over Q4 2017.

Throughout the first half of the year, we have seen activity and price increase across all of our Completion Solutions service lines, as well as a significant increase in our stages completed within completion tools.

This is a consequence of both the current trends we are seeing in completions with longer laterals, more stages and multiwell pad developments that have directly benefited Nine as well as our team's ability to execute at the field level.

This growth has come through activity and market share gains, especially within cementing and wireline, with number of jobs completed for cementing increasing approximately 32% year-to-date and number of stages completed for wireline increasing approximately 39% year-to-date.

We have also seen strong pricing traction in wireline, increasing approximately 16% year-to-date and continued penetration for our completion tools with number of stages completed increasing approximately 66% year-to-date.

I want to acknowledge Nine's incredible operations and sales team who have enabled these results in the field and have worked in concert with our customers to provide customized solutions that drive efficiencies and faster cycle times.

ROIC for the second quarter was 8%, up 500 basis points over Q1 ROIC of 3% and currently sits at approximately 6% for the first 6 months of 2018.

We remain on track to hit our full year 2018 target of 8%.

I will discuss takeaway capacity concerns with Q3 guidance, but I also want to address another significant bottleneck within oilfield services, which is labor.

During Q2, we increased our headcount by approximately 7%, which mirrored Q1.

And since the end of 2017, we have added over 250 incremental employees and increased our headcount by approximately 14%.

Additionally, we estimate approximately 10% to 15% in wage inflation costs have been implemented for our noncorporate employees across the company in the first half of 2018.

This is on top of approximately 16% wage inflation for the entire company in 2017.

We anticipate the majority of 2018 wage inflation has been realized during the first half of the year and clearly accounts for a great deal of additional cost, especially with onboarding, training cost and benefits.

These new employees have come on now to allow us to increase utilization within our existing equipment and prepare and train for the deployment of growth CapEx during the second half of 2018.

At Nine, we think about navigating labor constraints in many ways.

First, we uniquely benefit from our industry trends and continue to see internal efficiencies increase with our average stages per employee per month in Q2 averaging approximately 14.7 stages, an increase of approximately 40% over 2017 and an increase of 160% over 2014.

We anticipate this trend continuing as more operators transition to manufacturing mode on their multiwell pads.

We also put a conservative 2018 CapEx program in place to avoid compromising service quality for our customers and impeding Nine's reputation.

We believe strongly the quality of the crew is essential to maintaining trust of our customers, and we will not chase jobs or put equipment to work without the properly trained people.

We are confident we will be able to staff our new units with quality employees and put them to work with the plan we have in place.

Additionally, we have a differentiated culture that recognizes and rewards hard work, innovation and grit.

It is imperative that employees are recognized for these characteristics and can benefit in the growth and success of Nine.

Because of this, we have and will continue to provide equity awards throughout the organization down to the field level to ensure alignment and retention within our key employees.

We know our employees drive value for Nine and are vital to our growth moving forward.

Lastly, we remain focused on growing our completion technology offering.

This is also part of our approach to having a balanced portfolio of capital-intensive businesses like coil and cementing with capital-light businesses, including completion tools and wireline.

Completion tools requires minimal CapEx and labor and will be an important focus for Nine moving forward.

Our unique strategy has not changed regarding the acquisitions of these technologies and our next quarter call will include an update on some of our most recent technology field trials.

We were extremely pleased with the continued growth and performance this quarter.

I remain confident in the team we have in place and our positioning in a market as a completions company, offering cutting-edge technology with reliable and efficient conveyance services.

With that, I would like to turn the call over to Clinton to walk through segment and other detailed financial information as well as providing updates on equipment timing and CapEx.

Thank you, Ann.

In our Completion Solutions segment, second quarter 2018 revenue totaled $185.1 million, an increase of approximately 20% compared to first quarter revenue of $154.6 million.

Second quarter 2018 adjusted gross profit was $39.1 million, an increase of approximately 18% over Q1.

During the second quarter of 2018, we completed at 1,039 cementing jobs, an increase of approximately 11% over the first quarter.

The average blended revenue per job increased by approximately 5%.

Cementing revenue for the quarter increased by approximately 17%.

We expect to receive delivery of 1 single-pump and 1 double-pump spread in Q3 and 1 single-pump and 1 double-pump spread in Q4.

During the second quarter of 2018, we completed 10,129 wireline stages, an increase of approximately 25% versus the first quarter.

The average blended revenue per stage was relatively flat.

Wireline revenue for the quarter increased by approximately 22%.

We received 2 incremental growth capital wireline units towards the back half of Q2.

And we anticipate receiving 2 incremental wireline units in the back half of the year.

For completion tools, we completed 16,807 stages, an increase of approximately 34% versus the first quarter.

Completion tool revenue increased by approximately 49%.

During the second quarter of 2018, our coiled tubing days were increased by approximately 11%.

The average blended day rate for Q2 was relatively flat.

Coiled tubing utilization during the second quarter was 87%, an increase of approximately 10%.

Coiled tubing revenue increased by approximately 8%.

We took delivery on 1 incremental 2 5/8ths unit [turns] Q2 and expect the conversion of our 2 3/8th units be completed in Q3.

In our Production Solutions segment, second quarter 2018 revenue totaled $20.4 million, an increase of approximately 6% compared to first quarter 2018 revenue, up $19.2 million.

Adjusted gross profit for the second quarter was $2.8 million compared to first quarter adjusted gross profit of $2.4 million, an increase of approximately 18%.

During the second quarter, well services had utilization of 62%, which was flat.

Total rig hours for the quarter was 48,144, an increase of approximately 4%.

Average revenue per rig hour during the second quarter was $423, an increase of approximately 2%.

During the second quarter of 2018, the company reported net income of $9 million or $0.37 per diluted share compared to net income of $1.7 million or $0.08 per diluted share in the first quarter of 2018.

The company reported selling, general and administrative expenses of $16.1 million compared to $15.4 million for the first quarter.

This increase was largely due to an increase in stock-based compensation.

Depreciation and amortization expense in the second quarter was $15.1 million compared to $15 million in the first quarter.

During the second quarter of 2018, the company's effective tax rate was 6.7%.

The effective income tax rate for the quarter was primarily attributable to changes in pretax book income and valuation allowance positions as well as tax liability in states where income is expected to exceed available net operating losses.

During the second quarter, the company reported net cash provided by operating activities of $7.9 million compared to $17.3 million in Q1.

DSO for the second quarter was 59 days compared with 57 days in Q1 contributing to the accounts receivable billed over Q1.

We remain under 60 days for the first half of 2018, and we'll be focused on getting this number back down in Q3.

Total capital expenditures were $11.6 million of which approximately 28% was maintenance CapEx.

This compared to total capital expenditures of $6.5 million in Q1.

As of June 30, 2018, Nine's cash and cash equivalents totaled $70.9 million.

With a revolver capacity of $49.3 million, Nine's total liquidity position was $120.2 million on June 30, 2018.

And now, I'll turn it back to Ann to discuss Q3.

Thank you, Clinton.

As we look ahead to Q3, we anticipate the seventh sequential quarter of growth for both revenue and adjusted EBITDA.

We expect total revenue between $208 million and $216 million and consolidated adjusted EBITDA between $34 million and $37 million.

The midpoint of this range implies approximately 16% adjusted EBITDA growth quarter-over-quarter and adjusted EBITDA incremental margins of approximately 75%.

Completion Solutions is expected to be the driver of growth for the company through organic market share gains, better Canadian market conditions and the addition of capital equipment in cementing and coiled tubing.

The company continues to progress and grow as we anticipated.

I would like to address concerns around Permian takeaway capacity.

We have not received any indication from our customers of a potential slowdown in activity and, with what we know today, do not see any significant impact on our business throughout the remainder of 2018.

We understand the situation is dynamic and these circumstances can change.

We will continue to monitor and communicate with our customers, but we feel confident that the operators we work for are prepared for takeaway challenges and will remain on track with their current 2018 budget.

We have purposely maintained our broad North American footprint with exposure to every major basin in the U.S. today as well as selected into service lines driven less by equipment capacity and more by performance and value proposition.

We continue to prove sustainable value by increasing efficiencies and helping our customers realize faster cycle times and lowering overall well costs.

As operators continue to concentrate risk and spend with multiwell pads, extended laterals and more stages, service selection for reliable downhole technology and conveyance providers has become critical for meeting production targets and ensuring safe and efficient operations.

The Permian will remain an extremely important basin for Nine and we are committed to servicing our customers for the long term.

We are working closely with them on their long-term plans and will not change or shift our strategy out of the Permian for what we see as a temporary constraint The Permian is one of the most prolific basins in the world as many of the largest E&Ps have made significant long-term investments in the play, and we will continue our relentless focus on gaining market share there.

We continue to look at potential M&A and organic growth opportunities.

We remain on track to meet our 2018 ROIC target of 8%.

I will continue to reiterate Nine's focus on being good stewards of capital and how seriously we take the partnership with all of our constituents.

Before we open it up for Q&A, I want to welcome Darryl Willis to Nine's Board of Directors.

We are honored and excited to bring Darryl's unique perspective as a 25-year veteran within oil & gas to Nine.

Darryl currently serves as Vice President at Google Cloud and was recently highlighted in a Wall Street Journal for helping forge relationships between Silicon Valley and the energy industry, to drive technology and better utilize data.

We are confident he will be invaluable to the future growth at Nine, both through his leadership abilities and technology expertise.

We will now open up the call to Q&A.

(Operator Instructions) Our first question comes from the line of Sean Meakim with JP Morgan.

So Ann, the volume growth has been very impressive.

And so I thought maybe we could just spend a little more time digging into the margin progression as we go through the rest of the year.

You highlighted in your prepared comments labor inflation seems to be a bit more front-end loaded this year, I guess, given all the ancillary costs tied to recruiting and training.

So maybe you could just help us think about the puts and takes in the back half of the year around pricing, operating efficiencies and then perhaps, some of these labor costs that you're so concerned about.

How we think about that progression on the margin side for the back half of the year?

Sure.

So I would tell you that we're anticipating good margin progression in Q3 and a lot of that, as I said earlier, that wage inflation was very front loaded in H1 '18.

So where we -- what we did not anticipate, Sean, is coming into 2018, we thought we'd taken the majority of that wage inflation in 2017.

We certainly didn't anticipate being this aggressive with unemployment already in the U.S. and the 3.9% is certainly one metric.

But when you look at unemployment rates among men in the U.S., it's 3.4%.

So I think we underestimated the pressure that would put on the wage inflation.

We're pretty confident this year we've taken that.

I do think as an industry that's going to come in fits and starts, if we continue to see pressure on that unemployment number.

We're also, obviously, seeing consumer price index moves.

So I think we're just generally in an inflationary environment.

And again, this industry the last time we saw a boom was used to unemployment rates up over 8%.

So this is new for us.

And I think we'll see it be lumpy, but for this team, we're not anticipating those increases, those similar increases in H2 '18.

That's going to help the margin quite a bit.

On the churn side, the hiring, we have added year-to-date 14% of our new employees.

But the challenge for Nine, which continues to be a challenge, is that we've got 60% to 65% churn rate at the short-service employee level.

So that means that we're spending a lot of money on onboarding and training that's impeding those financials.

That will continue, we have forecasted that to continue.

So again, I anticipate a nice margin uplift that you'll see in Q3 and Q4.

The other issue is we're continuing to step into efficiencies with our customers.

The Permian basin is still in what I would call the second inning of the multiwell pad environment.

So if you look at the Northeast, you've got kind of 5 to 6 wellheads on average per pad.

We're seeing really more about 3 in the Permian.

As you know, they were slow to start even in their move from vertical to horizontal.

So we see that as a very good forward trend for the company and that will continue to drive margin as well as the stage counts in those lateral lengths continuing to extend.

So all of that is a really great setup for us for the back half.

We've had 66% growth in completion tools year-to-date.

We expect good and continued market penetration in completion tools.

We've added -- about 20% of our customer base is new, just this year after tremendous customer growth last year.

So again, when you can save a customer $150,000 to $200,000 per well, just because you can drill out 120-plus of your plugs with 1 drill bit trip, those are all the things that are driving this business.

So we're excited about where we see the margin going in Q3 and I would also say in Q4.

All that feedback, I think that's really helpful.

And I want to maybe drill in a little bit more on that, on the completion tools portion.

To some degree, that's going to dovetail into the margin story to the extent that your completion tools business, which has a stronger margin profile, is likely picking up some of the -- some positive mix.

Could you maybe just give us a little bit more detail?

I'm looking for some granularity on how much of the share gains that you're seeing are being driven by new customers versus greater wallet within your existing customers?

And I know it's -- we have to wait another quarter for a proper update on the field trials, but I was curious if there was any teaser you can offer us with respect to the time line there.

Sure.

So I am going to punt the back half of that question to Q3 because we've consistently said we'll update on field trials in Q3.

But again, we've made, I think, great progression on, as you would call it, increasing the wallet within existing customers.

We've been very pleased with that.

And that's because, particularly on the isolation tools, the drill out, we're just saving so much time.

And as you know, time is money and like I said on average per well, we're seeing just on the drill out $150,000 to $200,000 savings.

We saw one of our operators come out and talk about $400,000 of savings per well with completion tool and completion conveyance efficiencies.

So again, 20% new customers and also great organic growth within our existing customers.

So I'm not sure what other detail you're looking for, Sean.

I'm happy to provide it if, for some reason, I didn't answer your question.

No, I think you did.

I was just looking for generally the trend between new versus existing customers and then specifically which product lines are helping you to drive those shares.

Yes, I will say year-to-date, the trend has been better than we had anticipated, and we expect that going forward.

Our next question comes from the line of James Wicklund with Crédit Suisse.

A little bit along the same lines of cementing and wireline and coiled tubing.

You're adding capacity; you got a couple of more units due in a couple of those lines through the rest of this year.

Activity is not going through the roof.

So that would assume you're displacing someone.

Are these regional moms-and-pops that you're gaining market share on or that you're displacing especially in those areas?

Or are these bigger guys who aren't paying attention?

Or can you talk about how other than the fact that you're just damn good and all, how are you and who are you displacing in the field with your gains in market share?

I would say a lot of it is big folks.

I think we saw the majority of the micros mom-and-pops fall off a while back and that's just because, again, the multiwell pad environment.

These operators are concentrating risk and the legitimacy of that very large small mom-and-pop community that existed in '13 and '14 has just gone more by the wayside.

I mean, they're always, what I'll call, ankle-biters, but they're there every day willing to do work at a very low cost.

The problem is, as you know, you can go to embark on a coil job and it's one ticket price that can quickly turn into, for an operator, $1 million if it goes badly.

So the cost of picking a cheap Charlie on the front end is pretty ginormous for these operators.

I would say most of our operators have been focused on total cost of ownership versus on a unit cost basis.

And so to answer your question, a lot of big folks we're displacing, 70% of our Permian revenue, over 70% of it comes from 6, what I'll call, very large E&Ps and the other 30% comes from pretty large public E&Ps.

So we think we're working for the biggest, best, most efficient.

They keep us on our toes.

They challenge us.

We challenge them.

And I think collectively, we're getting better as we work with them to find out solutions, not just for nonproductive time, but also flat time.

So if you've got 15 minutes of flat time on a wellhead because you're reheading your cable, how do you get rid of that?

How do you reduce that?

I mean, we're really measuring this stuff in micro increments now, Jim.

So those folks that aren't there and can't do that and can't do it consistently just don't have a place at the table.

Excellent.

That's very helpful.

And my follow-up, if I could, you had mentioned that you have a relentless focus on gaining market share in the Permian.

And you followed that right away with talking about being good stewards of capital and aiming at 8% ROIC.

The concern about gaining market share at the expense of margins has plagued a couple of companies in this space here of late.

How do you balance that relentless focus with the good steward and the ROIC?

And I know it's an obvious question, but which one wins?

Yes.

So obviously, with Nine, ROIC is always going to take precedence.

We are big believers that it's a very comprehensive metric and that will drive the business.

When we think about, specifically your question about gaining market share in the Permian relative to price and value, again, our value proposition is not driven and our pricing is not driven by capacity constraints or lack of it.

So it's not just how much of the equipment is at surface, but it's really completion intensity.

So whether it's Pac West or Spears, 18% to 32% stage count growth from '17 to '18, those are the type of metrics that we look at.

What's happening with the lateral length, what's happening with the stage count, what's going on downhole, so it's not just the number of completions, but it's really how are we effecting the completions downhole.

So that helps us deploy equipment and drive margins on both for our operators as well as ourselves.

So it's not as simple of an argument as kind of spot pricing for additional frac capacity.

I think also, Jim, when you step back on the broader market and you kind of think about 10.8 million barrels a day or so coming out of U.S., 31% to 32% of that coming from the Permian.

We've got about 1 million barrels coming on by the end of '19, a big chunk of that's got to come from the Permian.

Now, obviously, we've got the takeaway constraints that the market seems to be dealing well with as far as accelerating the Sunrise and Cactus II ramp, but this is a critically important basin and the call on NAm shale is huge.

We were 13% of global spend last year.

We're already going to be estimated to be 18% of that spend this year.

So if we weren't so confident that North American shale is going to be a critical piece of this supply game, then maybe we'd be less bullish on that basin, but it's prolific, it's necessary.

Nine's not going anywhere.

We're going to stay the course out there.

Our next question comes from Jud Bailey with Wells Fargo.

A question just to circle back on another -- I guess, another margin question, Ann.

If you could maybe give us some color, the different products lines maybe within Completion Solutions.

Are there any margin trends that are notable in terms of ones that may be performing better than expectations or ones that may be underperforming due to some of the cost inflation you highlighted or other issues?

Just be curious to get your sense of how to think about the margin trajectory within the various product lines?

Yes.

I would say the one that's most differentiated is certainly completion tools, because you just don't have a labor component.

So if you think about the fact that we're at 3.9% unemployment, diving down to maybe 3.6% according to the Fed next year, that's going to continue to tighten, it'll continue to be a bad problem for the industry.

So that's why we're focused on increasing the profile of our revenue and shifting more of it towards completion tools.

So that one, Jud, is going to be very differentiated from a margin perspective because you don't have the labor component with wage inflation beating against it.

The wireline, cementing, coil, all very nice margins, very pleased with that.

I would say, on the production side, we see that as remaining fairly flat.

I would also say with the way that we're developing the Delaware basin as an industry, we could see workover completions activity coming down in the future and starting to see those wellbores filled up with degradables or dissolvables really reducing the safety factor from frac hits out there.

So that would be the one service line I would see, when I look into the future, relatively flat from where we are due to the fact that we don't see the 24-hour work picking up in the same pace that we've seen in the past in the industry prior to the evolution of dissolvables.

Okay, all right.

My follow-up is just thinking about kind of looking forward, a big part of the Nine story, as you kind of alluded to earlier, has been good partnerships with top-shelf E&Ps.

And so you've kind of grown with -- in good partnership with your customers.

Given that, as you think about next year, I'd be curious to get your thoughts or what kind of conversations you may be having for customers in terms of incremental kind of asset deployments on a longer-term basis.

Is there a way you can help us think about what you're seeing from your customer base and what they may be needing from you kind of beyond this year and into the next couple of years?

Yes, it's a great question.

I think it's early for us to answer that question.

We are working with them.

We're also, obviously, working here internally at Nine to cast that cap spend relative to theirs.

So I think we feel good about 2019's activity.

As I said, we're going to push that top line more towards completion tools and you'll continue to see us do that.

But we feel very good about where we fit in the market and what our customers are communicating to us.

But it's still too early for me to give you a 2019 solid look right now.

Our next question comes from the line of George O'Leary with Tudor, Pickering, Holt & Company.

Curious given one, it's been a big part of the Nine story historically and two, our understanding that there's a lot of assets up for sale at this point.

But just on the M&A front, I wonder how you might characterize that landscape.

And I guess, from some others we've heard, there is a lot up for sale, but it's maybe not all of the best quality.

But I'd be curious, what your all's take on that is?

Sure.

No, it's a great question.

I think I said on the last call I'd be disappointed if we didn't do any M&A this year, I'll be disappointed if we don't do any M&A this year, so same comments as last quarter.

There's always a lot of stuff up for sale.

This team is extremely focused on adding only excellent teams that also have either very defensible positions or technologies that are additive to the Nine team.

So we've got a very, very tight filter.

We do think there are some excellent teams out there that we'd be honored to partner with.

So we're excited about the M&A landscape, but there is also, as you mentioned earlier, a ton of stuff for sale that we think doesn't warrant the premium that's being asked.

Great, that's very helpful color.

And then there's been a very acute focus by sell side and buy side on what's going on in the Permian basin.

You guys have nice a presence across multiple business lines in other areas.

I wondered, if you could maybe speak to any green shoots you're seeing in basins outside of the Permian basin and any potential areas where the growth is maybe less attractive or we may even some contraction.

Just talk to me a little bit about non-Permian basins and activity across your business lines.

Yes, sure.

It's a great question.

I mean, I think when we look across the spectrum, if you look year-to-date, you've kind of had 20% rig count increase in the Permian, 22% in the Bakken.

So it's a nice growth there.

The Haynesville, 7%, but still, we're gaining lots of market share there.

The nice one for us has been the Eagle Ford, which is only up 14% year-to-date on rig count, but lots of operators going after that nice Brent crude pricing.

So that's been really great for us.

The MidCon and the Niobrara relatively flat, but those are still areas that we're very interested in.

I think we've said many times we're building a sustainable company, OFS, as many people know and those invested in it, it's a knife fight.

And in order to mitigate the risks of that knife fight, you've got to be diversified geographically as well as relative to service lines.

So we're still very interested in some of these other basins, but we've seen some nice uplift and that's certainly helped us as well.

(Operator Instructions) Our next question comes from the line of John Watson with Simmons & Company.

Ann, we've heard about a potential slowdown in activity in Appalachia.

I guess this is a follow-up to George's question.

But is that something you have seen or are expecting in the back half of the year?

That's a great question.

This year, we've put about 35% new customers up in the Northeast.

We're really dominant up there.

There have been a couple operators that have dropped frac crews.

We've navigated that.

We've started -- we started looking at that problem, frankly, several months ago.

And we feel we are successfully through that, and it will have no impact on our forecast.

So we're still very confident about where the ramp that we had anticipated early on this year in the back half of the year.

So through that, I think you've certainly heard us and large caps come out and talk about that.

But again, that's going to sting frac more than it will us.

You've really got to find the rat trail through these mine fields early and the team up there has been -- has done a fabulous job of that.

So intact, and our forecast remains exactly where we thought it would be.

Okay.

Perfect.

That's very helpful.

And then as your return on invested capital highlights, you're realizing solid returns across a number of different business lines.

I wouldn't think all of your competitors have similar returns, but are you seeing increased competition or new entrants for cementing, wireline or coiled tubing given where returns are today?

That's a great question.

I would say in cementing, we really haven't seen new entrants.

I mean, that's just a -- it's got a strong capital barrier to entry.

It's also got a strong technical barrier to entry.

So we've got some good competition out there, but we really haven't seen new entrants there.

We've seen, again, good coil competition, but that was already in place.

And wireline has a much lower capital barrier to entry, so sometimes you'll see people come in and then they quickly get out when they realize how darn hard it is to execute consistently in that business.

So to answer your question, not a ton of new entrants.

My own personal view and this is just a personal view is that the downturn in 2015 and '16 and '17 really devastated the credit availability for those new startups.

So the revolvers that people blinked and got in '12, '13 and '14, that revolver capacity is just not as readily available for new startup OFS companies.

So that gives all of us that are already firmly planted a little bit more of an advantage over the startups.

There are no further questions at this time.

I would like to turn the call back over to Ms. Fox for any closing remarks.

Thank you for your participation in the call today.

I want to thank our amazing team of employees, our E&P partners and our investors.

Thank you.

Thank you.

This concludes today's teleconference.

You may disconnect your lines at this time.

Thank you for your participation.

And have a wonderful day.