NPK International Inc (NPKI) 2005 Q1 法說會逐字稿

With us today are Jim Cole, Newpark’s CEO, and Matt Hardey, Newpark’s CFO, who will introduce the call.

Please go ahead, Mr. Hardey.

Thank you very much.

Good morning and welcome to Newpark‘s first quarter 2005 conference call.

Counsel has insisted that I remind you to review the disclosures on page 4 of the press release so that with respect to any forward-looking statements we may make today or that were embodied in the release, that you are duly reminded of that.

If you don‘t have a copy of the press release, it is available on our website at newpark.com and for those of you who for some reason have other associates that want to listen to the call, there will be a web replay archived for about 30 days following the call.

The company was pleased to report after yesterday‘s market close earning for the first quarter of $4.9 million, equal to $0.06 a share on $129 million in revenue.

That $0.06 a share is consistent with the announcement we made a couple of weeks ago with respect to the conference that Jim was presenting at, and it was refreshing to be able to beat the number for a change.

We hope that this begins to set a new pattern for Newpark and I think Jim will have some encouraging comments on that when he reviews operations with you in just a few minutes.

Notwithstanding the $15 million sequential revenue growth from the fourth quarter, Newpark’s working capital investment in the quarter was modest.

I think it’s a testimony to our operating management who have really worked to contain working capital investment for us.

A couple of other points on the balance sheet.

You’ll notice a decline in the inventory count.

Combine the fact of the sale of DuraBase mats during the period and the consumption of barite for increased activity in our drilling fluids unit.

I’d like to point out to you that the barite costs are up about 28% year over year, principally the result of higher ocean freight rates.

The recent contractual arrangement, we think, will help stabilize that, but I think it’s important to note that the cost of barite in the quarter was up about $1.2 million net, equal to about a penny a share compared to the year ago period.

Cash flow from operations in the period of $6.9 million was used principally to fund capital expenditures within our principal operating segments.

Those capital expenditures totaled about $6.5 million and at this point is in line with our annual plan.

We think the actual spending within the established segments is likely going slow a bit across the remainder of the year.

About half of that spending was capacity expansions in markets where we think that excellent opportunities for continued growth exist.

The remainder was maintenance related.

In addition to spending in our base market, we invested $4 million in two of the new water treatment plants built with newly licensed technology that will be on stream shortly.

The first plant at Boulder, Wyoming should be up and running in just a few days.

The second plant, which will be used in coal bed methane gas operations near Gillette, Wyoming, is a fabrication that’s substantially complete and it’s about to be shipped.

So we see good progress in the development of that business.

We don’t expect, though, to see future capital investment in this product line at these levels.

These first two units were really designed to demonstrate the technology to the markets we’re trying to serve.

I think that I can say with confidence I’ve been involved since the onset in this project and we are more and more convinced with each customer we talk to, with each development in the process, that there really is something special going on here with applications far beyond the E&P market.

And I know Jim’s going to have more to say about that in just a few minutes.

We think that the business model for future plants will very likely involve prepaid capital charge by the end user because they are very highly customized to specific applications.

And that prepaid capital charge should be adequate to offset substantially all of our technology costs to put those facilities in place.

As a result, we should be able to minimize future cash investment in the segment and those prepayments should cover the acquisition costs.

As I said, Jim will cover more about the development of this new business line with you in just a few minutes.

Taking you to another spot on our map, we are now about 6 years down the road with the development of the mat market in Canada.

When we began that process, mats were essentially unknown in the Canadian E&P market.

Today, there are over 90,000 mats in use in Western Canada and Newpark has been the primary supplier to that market, a market that we think may eventually become larger in total size than the U.S.

Gulf Coast market.

In the recent quarter, we sold more than 5,000 wooden mats to Canadian E&P users and over 2,200 of our DuraBase composite mats.

I think that it’s reasonable to assume that with the increase in pipeline construction expected as a movement to growing forward north in more difficult terrains, those factors should be positive in terms of sustained future mat demand in Canada.

You may have also noticed from the press release and previous releases that we recently completed acquisition of all the third party interests in our DuraBase manufacturing facility.

From an accounting standpoint, there should be no major balance sheet impacts from that other than a re-class from the litigation receivable into PP&E.

But more importantly, we will be doing the project financing on that plant that will allow the further expansion and development of the facility.

One of the results of that will be the cancellation of about $7 million of existing letters of credit that constitute part of the utilization of our bank credit facility.

And so there will be an improvement in availability under our credit facility as a result of that transaction.

And as I said, part of that financing is going to facilitate some upgrades in the facility.

We’ve had a number of projects that we were interested in pursuing for the last several years that, because of the ongoing dispute with our partner, essentially did not progress.

We are now in a position to move that forward and improve and expand the product line, and I think you’ll see some more positive news on that before the end of the year.

One final comment before I turn the call over to Jim is just to remind you that in the past 2 years, we’ve made substantial commitment, not only to compliance with the Sarbanes-Oxley requirements under 404 for internal audit, but also to do a better job in the corporate governance requirements just generally, not simply because the regulations tell us to.

We moved aggressively at the onset of that to insure that we’d be in compliance well ahead of the guidelines, and thanks to the efforts of our accounting and operation staffs at all levels of the corporation, the corporate controller and the recently formed quality assurance team in the company, that job was completed ahead of schedule and in time to meet the audit timing here at the end of the year.

It hasn’t come without cost.

And in that period, our audit compliance costs have increased by a factor of 4.

So it’s been a pretty significant drain in terms of the expense, but I’m glad to tell you that we’ve got no reportable conditions, no surprises throughout the entire process, and are quite comfortable with the results.

From a governance standpoint, Newpark has been graded out by one of the leading rating agencies as being in the 88 percentile among companies in our index market group and above the 83 percentile within our industry group which includes some fairly sophisticated larger corporations.

We have several additional initiatives underway to more clearly state certain of our governance policies and provide better disclosure, and I think with that, you’ll see Newpark sustain this sort of a ranking with respect to our governance performance.

Now with all that said, let me turn the call over to Jim for the things you really wanted to hear about in this quarter’s call.

Thank you, Matt.

I look at the first quarter’s $0.06 with mixed emotions.

I look at it as positive on a step and I look at it as kind of wistfully that we can do so much better.

And I believe that it will be simply a step up the staircase of improvement.

The $0.06 is only a fraction of the earnings power and potential of the company and I’m going to describe to you today how I believe we’ll be able to harness the remainder of that.

Those initiatives are not starting, those initiatives started a number of years ago.

And we realize we’ve been very late coming to the party and we’ve all heard the story of us reshaping the Gulf Coast that was down, and essentially introducing products and opening markets.

That’s what we’ve been doing. 2005 is payday and 2006 should continue.

As I describe the company today, I’m going to describe the 3 product lines.

But within that, I’m going to be more specific.

There’s 8 business areas within those 3 product lines and if you were to talk about it as if it were an 8 cylinder engine, I’ll tell you kind of where those cylinders are popping without being too silly about doing it that way.

I’m going to start by talking about our matting segment.

In recent years we’ve talked about it last because it has really been, has lagged, as it’s been right sized and we’ve been introducing the products.

So when you compare the first quarter of a year ago on a $400,000 loss to a $5.8 million gain on an operating EBIT basis, that’s a fairly substantial turnaround.

I do not believe this business segment has maxed out, I just think it’s on its way to better things.

Let me describe the two areas - - I call them 2 cylinders, but the 2 business areas.

It’s the rental portion of that business, the mat rental.

The second are the mat sales.

And they are both sparking, both of those cylinders are sparking.

I’m going to start though by telling you that over the last few years there have been a number of initiatives to lower the costs within the unit and redeploy people, and that will be complete this year.

Actually, we’ll be much better in the second half as we complete it, but both are in place.

Our Gulf Coast rental business, while the volumes were not up from a year ago, pricing was up 28% from $0.85 a square foot in the way we rent these mats by the square foot, to $1.12.

The high point for rental was $1.27 in 2001 and we will not exit the next couple of quarters without matching it.

We’ll be back up at that level.

In fact, we closed out the quarter at that level since we improved through the quarter.

And that difference is a significant difference, as it’s 100% bottom line.

Another market that we worked in the rental business as we developed the application of matting throughout the United States - - many customers do not want to buy.

They don’t have a full use all the time, so it’s seasonal or it’s project basis, and by and large it’s in the utility business.

A year ago in the first quarter, we did $500,000 worth of business in that market.

In the last quarter we did $3.4 million.

It is the most premium price of all our rentals.

And so that combined with the improvement in the Gulf Coast was a happy portion for the rental business as that began to really fire for us.

The DuraBase sales, which we sold just under 3,900 units, for $6.4 million, more than double a year go, profits were up.

But those are markets that we have basically been nurturing and working with over the last number of years.

We believe that DuraBase sales will continue to develop and in the month of April, we sold slightly over 2,700 mats and we don’t think we’re done for the quarter yet.

So I think that you’ll see continued improvement in the mat sales business.

Markets are growing.

The experience with the matting is growing.

We think that the age of matting around the world is yet to be proven.

In the Canadian market that Matt described to you, as part of that sales market because we’re not in the rental business.

The sale of 2,200 DuraBase and 5,000 wood mats, and as we developed the first mats in Canada 6 years ago, now we’re at a market of 90,000 and believe that market will double again by cause of activity.

We are the primary supplier.

We will see continued growth in that market also.

We’ll also be expanding the product line as we go forward.

We’ve learned an awful lot about matting over the last 3 to 4 years and the applications around the world.

Thos of you that think that this business is topped out, think again.

This one’s coming.

The second business is our fluids business and there are 4 areas within that, or 4 cylinders that I’ll discuss with you.

Beginning, we did just better than $82 million or $327 million annualized.

The margin was a disappointing 8.3 and I’m going to describe why. 6.8 million of operating income.

Our guidance, if you look at our web page, we tell you that we believe we’ll do 342 million for the year at 12% And I’ll describe that gap and how we make that up and how we go forward and I’ll describe it by each one of the key areas.

Let me start in the Gulf Coast.

The Gulf Coast averaged 60 rigs operating that we operated for our customer base in the first quarter as compared to 36 a year ago.

So it’s up about 67% in rigs operating.

We had increased our customer base, our market position.

We don’t have to go out and get new business, we just have to manage what we have efficiently.

And the 2 events that occurred in the quarter of note, I think that will bode well for future quarters, were that barite price increase that ramped up over ocean prices.

We rolled our inventory, we got hit with a 28% higher price of inventory.

Cost us a net $1.2 million which cost the business about 3.5 bottom line margin points.

That’s net of pricing but the pricing lagged because of contract wars throughout the process, so it will lag through the second and into the third quarter, but we’ll be closing this gap as we go through the year.

This is occurring to all mud companies so we’re not alone.

So if others don’t talk about it, it’s because they’re ignoring something that’s significant to the industry.

And this is - - we all get our oil the same places, we all ship it by the same ships, and they’re experiencing the same ramp up.

We have stabilized the price going forward and by the way, in the quarter we used 133,000 tons of barite in the Gulf Coast which is quite a mountain of rock.

And we have to have it.

It’s a necessary evil for weighting

The other point for the first quarter which we’ll be happily turning around strongly was in those 60 rigs, 3 or 4 rigs generally consume about 25% of revenue.

Those are deep water rigs.

They are higher margin, higher revenue, substantially higher than the average.

We only did 44.5 million of the $33 million the first quarter, substantially down.

Normally we would do about $9 million within that activity.

We have 5 customers, only one and a fraction were working in first quarter.

We’re now on 4 rigs that are working offshore.

You’ll see that go up.

Another penny a share and about 3 margins points of bottom line to that business unit were affected in the absence of deep water.

We’ve been awarded the work, have the contracts, they just for shipyard reasons - - work over, tide back, other types of maintenance, were not actively drilling.

But they’re picking up now.

The Gulf Coast profitability base - - it’s there.

We’ve got the customers.

We have the deep water work.

We will close down there.

We will not make up the first quarter loss in the first couple of quarter, but we will not experience that in the latter part of the year.

So there is a loss that we’ll have in that period for this ramp up of barite that we have not covered yet by pricing.

But the profitability and the position we have, we’ve built a real position in that market.

The second area of significance for drilling fluid is the Central Region which encompasses the Rockies, Oklahoma and West Texas.

A year ago we were operating 84 rigs in that market.

The first quarter of this year 108.

In April we’ve average 121 rigs There’s a seasonality factor in that market and the first quarter was affected by that.

A year ago, the 121 in April compares to 98.

So we’re up about 24% in rig activity over a year ago and we’re up about 13, about 12% first to second quarter as we play through the seasonality.

That operation was strongly profitable, has been.

It’s really been the strongest part of our business over the last several years and we believe that the second quarter will be sequentially stronger than the first and you’ll see an up tick in profitability and revenues coming out of the Central Region based on activity and contracts and the investment that’s been made there which we’ll be paying off as we go through the rest of this year.

The third area is Canada.

And Canada was plagued by two issues this year.

They’re down 1.8 million from last year.

Perhaps our biggest disappointment, however, let me discuss the two features which will be made up.

One is an early breakup, and though we work in the areas, we don’t do a lot of shallow work.

We do the deeper work.

It affected us more than some of the other companies may be reporting.

The other breakup cost us several million dollars of revenue, but we also rolled out an exciting product that we’ve been working on for a number of years called New-100 Internal Phase.

It’s a New-100 system and that system has consistently and continues to drill the deep gas well.

Deep gas meaning 3,000 to 4,000 meters, in Canada at 30+% rate of penetration faster.

We have a little sign, “drill two, get one three”, drill three, get one.

Actually we did three at first and realized that we were understating it.

The same rig, same bit, same everything, we drill them faster.

By the time we get to the third rig, and put them on line, it’s so compelling a story that we’re really penetrating the market with all the players.

We have 8 units out now, systems, and we believe by the end of the second quarter when we go back to work up there, we’ll double that number.

Very good revenues.

The effect though, of the margin, is because it’s an oil with our water-based system, the New-100 Internal Phase we basically don’t - - we make a low margin on the first system because it’s predominantly oil.

But after that, it’s the additives.

You sell the additives which are very high margins.

So as we roll forward, you’re going to see a substantial increase in margins, but the first quarter was impacted by the margins as we rolled the systems out

We have, by far, the best product.

Nothing matches it.

It’s proprietary and you’ll see very substantial improvements in Canada as we focus and as the customers focus on this product.

I also want to go back to the Gulf Coast and say that we are led in oil markets particular to Gulf Coast by our FlexDrill deep drill systems.

We have without question the best water based system that‘s available in the world and that’s been proven by people that come from around the world to see what we’ve got.

And we’ll be expanding that system out and we use that in the Gulf Coast.

Let me go to the last and that’s our foreign.

We’ve been introducing our water based systems in foreign markets.

We’re up in the first quarter over last year.

Not substantially, but up.

We will continue to grow in the Mediterranean markets because we have contracts that are coming on line.

However, even more significantly, a number of new contracts in new markets should be forthcoming this year, so we’ll see foreign, which is by far the largest growth business in the world in the market, begin to up tick as we - - but we’re only going to be led there with the use of a water based system.

We’re not going for oil and commodity products.

So we’ll see.

I think that you step back from drilling fluids, all four areas, Central was our strongest that kind of led the charge.

But as we go into the second and third quarters with the deep water work, with getting the price back on barite, the Canadian market rolling out the New-100 system, and with the expansion of our contracts foreign, you’ll see sharply increased results from the fluids business as we go forward.

I’m not sure we’ll get back to the 12% margin from the start.

We may, but I think we have a chance of holding our guidance because I think we’ll exceed the revenues enough to offset any margin erosion we got from the barite.

That’s kind of the discussion of those 4 business areas.

We have over the last several years, have built a good company.

The way we work, we’re world class and we have accomplished over 20%, approximately 20% or slightly above 20% in the North American rig activity.

And basically we do not have to gain market share at this point.

We’ve got the market, we’ve got the customers, we have the product.

It’s now hunker down and let’s show some numbers And I think we’ll be able to do that.

The third area is environmental We had a weak first quarter.

Primarily our activity was down, our barrels received were down by about 100,000 barrels from what had been more normal.

During this period, we changed our process for recycling, and in that process we had to defer some revenues.

Some jobs we did not take because we were in the process of changing and it tool longer than we thought but it’s in place now.

We will pick up that market, our share of that market strongly as we go forward in the second quarter and it’s already occurring in April.

That cost us about a half a finish year about $700,000 in the quarter.

So we’ll see that one, not only because activity has increased particularly in the key barge market where we have a dominant position, but also because the activity will be up and we’ll be back in with our normal about 2/3 of that market share in the quarter.

Short breakup season.

We were down in Canada but also effectively in the environmental market we were expensing the start up of this new technology that Matt described to you, our water treatment.

And we basically have been - - it’s taken a lot of work over the last year We concentrated a lot of the effort in the first quarter and I’ll just describe it very quickly to you But we’re rolling out, we’ll be operating next week, we believe, in the Jonah-Pinedale, Boulder, Wyoming.

It will be the first application where we’re actually flowing under permit, we’ll be flowing the water onto for use in the North America.

Second plant will be coming in June and that’s for coal bed methane. 20,000 barrels a day plant, 19.6, but that’s close to 20.

And those are two of the markets that we had targeted.

The third market that we’re targeting is in the Sag-D heavy oil market in Canada and by June we’ll be testing a number of water streams.

It’s by far the largest market and it carries the extra benefit of we can save the BTUs.

It’s about 40 cents a barrel and every barrel that they have to raise the temperature to boiling and we can process it at boiling.

It will be the most lucrative and the largest market of the 3 and we are very excited about that as are a number of operators who are waiting for us to get up there and sample and have a unit that will be sampling and showing them the results.

It’s a very large market.

We have the license for this, this very proprietary technology.

It’s a technology when you first see it, you say it’s too good to be true and therefore we’ll [inaudible] it’s not.

And as we’ve been over a year working with it, it actually is better than we presented to start and it has more applications than just the ones we’ve described and we have more markets.

We will not run out of market any time soon, it’s huge.

Each of the sub-markets are applications.

And if you want to learn more about this, I think it’s www.newparkwater.com.

We have a web page.

It’s the application of solo chemistry which allows - - creates extreme heat and temperatures and pressure instantaneously.

In about 7/100 of a second.

I’ve been corrected a number of times.

I used to say 1000th of a second.

It does it on flow with large volumes and it causes chemical reactions and chemical changes that would be impossible without the technology.

It would take months.

And it does it without any external energy source.

It’s created within the reactor.

It is proven over 15 years and we’re very blessed to have the opportunity to introduce it into these markets.

And this is why we spent some of the money in the environmental rolling this out and the Gulf Coast will improve substantially in the next quarter and I don’t think you’ll see a lot of result the next quarter out of the water treatment, but I think stand by for the coming years because this will perhaps be our biggest product line to have that opportunity.

And with that, I just want to summarize and say that $0.06 was a starter set.

I think our existing product without water will all improve next quarter.

We’re looking for better numbers.

I think the third quarter will be better than the second and I think that you’re going to see a different Newpark than you’ve seen the last few years and we’ve been preparing the table for this banquet.

And with that, we’ll open it for questions.

[OPERATOR INSTRUCTIONS].

And we’ll go first to the site of John Tasdemir.

Go ahead, your line is open.

Good morning, guys.

Another good sequential improvement.

Just, Jim, because you were talking about the water last, the water treatment, how - - I know it’s still early in the stage of the game and you’ve got these 2 plants that are kind of introducing to the market.

Will we see any contribution from these early stage operations?

I mean, are you charging?

How are you charging for them?

Are you charging them on a per barrel basis or is it just kind of a take a look at this kind of a thing?

John, we’re charging on a per barrel basis.

On Pinedale we’re opening it to all the operators and so we charge several dollars a barrel for processing.

And then in the coal bed methane, it will be a dedicated plant to the customer for their volumes.

And so it’s - -

Is it too early to start assigning a revenue and margin dollars to those?

I think it will be better to give us another quarter and get them on ground.

We have our models now, but because it’s new enough, I think our models are too heavy in cost because I think we’re overstaffed.

We’re very automated and so, we’ll learn more in - -give us a quarter or two and I think we’ll have more plants to announce also, so you can see the build up in it.

We’ll have real numbers that we can be more precise.

I gotcha, just the early growing pains to get things going.

This hasn’t been painful.

Now you’ve actually done a great job of going through each of the segments.

Just going through my model on the seasonality of it sometimes, and I know second quarter, particularly with Canada being soft, sometimes we see sequential declines in the second quarter from your joint fluid business and maybe from your waste business.

Can I address that a moment?

We have -- the systems we have out for New-100 will work right through breakup.

And so that will, those systems are so lucrative and revenue and as we go margin, that we believe we’ll hold Canada up without that loss or that big decline you usually see in breakup.

Okay.

And then on the waste disposal business, you mentioned that 100,000 barrel decline and then picking back up in June.

So we can assume there that we’ll start to see a recovery in the amount of volumes?

I think the way we look at it, John, is without the decline, we’d have been in the 850, 870 range and I think that we’ll be - - I think we’ll be in the 850 to 900,000 barrel range for the quarter.

We’ll be back up and a lot of it now depends if we continue to see the margin.

And every indication the margin market is staying up so that’s a big driver for us.

Yeah, I also saw the revenue per barrel was up quite a bit, but that could have been just a function of the lower volume perhaps?

There’s a bit of that.

Pricing has stayed up, but a portion of that is that the barge market comes in a little lower and that’s where we had the biggest decline in the barge market.

The biggest portion of that decline came in that market and so we play it out.

If the barge market had been normal, we’d have been down about probably $0.25 to $0.30 a barrel.

We lost most of our volumes in that heavy solid market where we do most of our recycling.

Gotcha.

Makes sense then.

And so can you talk about how you’re improving margins there?

And I guess I would expect probably - - I guess on average your margins in 2004 are about 12.5%.

I guess we’ll slowly start to ramp back up to that level throughout the year?

We think that’s very doable.

Okay, and then finally, on the mat, the square feet that you installed was pretty high.

The 4.4 million square feet.

Is that sustainable or is there some kind of seasonality there?

I think there’s 2 factors.

We think it’s sustainable but there is a bit of a seasonality in the winter time.

In parts of Texas it dries out and you lose a little bit.

We think we’ll make it back up because we see a fair amount of march work which is much heavier mat market coming.

But we have initially placed our goal at 16 million for the year, 4 a quarter.

But the activity level is actually above that in rigs.

So I think that we’ll, I think we can sustain that level.

Actually, we wouldn’t want to go from 16 to 20 because we balanced it.

We don’t want to put the inventory investment in, so we’ve got to have pricing.

Yeah, I gotcha.

Makes sense.

All right.

That’s all I have.

Thanks, guys.

We’ll go next to the site of Howie Slinker.

Go ahead please.

Hello, everybody.

I have a few questions.

That $0.40 in Canada, that’s Canadian dollars I take it, really $0.32 U.S. per barrel?

That would be correct.

I just wanted to clarify that.

And second, in your cap ex, you spent about $2 million a system for the water treatment facility.

How quickly can you get that back?

Or stated another way, how are you going to finance it?

Well, we said we financed out of cash flow and one system is 1.1, a little over $1 million, and the other is going to be closer to 4, so we’ve got a little to spend on it.

And how do we get it back?

We get it back by charging the customer on the contract.

But in the future, as we go to some of these markets, we’ll actually have a capital charge up front because they’re a lot bigger than we are, and so we’ve talked to customers about putting, paying for a capital charge.

We never sell the units, but we operate them on capital charge which will reduce the amount of capital investment we have to make.

You mentioned that in the IBIA and that’s why I asked.

Yep.

After the first two units, hey, the first two units, it was too good to be true.

That’s okay.

We’ve got to prove that it is true.

Let’s go a little further on this.

Suppose you go to Devon Energy or Western Gas or Anadarko, or anybody up there, and say we have a unit that’s going to cost $2 million.

Are they going to give you a $2 million check?

Are they going to spread it over 5 years?

I mean, discuss it.

Oh, sure.

Absolutely.

And let’s just say that I don’t want to answer the question only because everyone will vary a bit depending on the length of contract, the complexity of the unit, etc.

All are mobile units so we can move them.

But it will vary by each market.

The point is the concept.

Just stay with the concept.

A capital charge to allow us to basically bring the technology forward.

We will actually build it, pay for the building of the units and when they’re there and operating, then we’ll get our capital charge up front.

If it’s a 5 year contract, it will be over a 5 year period where we’ll recapture the majority of our capital.

So then you’re going to need some money if you build several of these because you’re not going to get all the money on day one from all the customers.

We’re not looking to blanket the world and you can only build a certain number at a time, so it’s okay.

We can handle it.

And if we’ve got a lot of units out there and they start generating a lot of cash flow, don’t worry about it.

We can handle it.

Can this be used on regular oil wells, not coal steam gas wells, not SAG-D wells?

In which regard?

Somehow recapture any liquids that you would expect or not?

No.

And besides, these things work more efficiently in volume.

You go where you have concentrated volume.

They’re not units that go out there beside a group of pumpers or something like that.

Okay.

I’ve got a whole bunch of questions that I’ll ask another time and I would not like to take everybody’s time, so why don’t I give you a call tomorrow?

There’s a zillion conference calls today and then I’ll follow up.

Matt Hardey, give him a call.

And by the way, you’re asking good questions.

Matt and I traded e-mails last night late, so I’ll give him a call tomorrow when the conference calls dissipate.

That’s fine, Howard.

Okay, thanks, Matt.

Thanks, Jim.

Thank you and next we’ll go to the site of Jason Sulch.

Go ahead please.

Yeah I want to talk about the mat deals.

It says mat deals rose by $6 million.

What was the total amount of mat sales?

And is that something that is consistent number or is that going to be like it has been in the past?

Sometimes you have them and sometimes you don’t?

Jason, it’s $6.4 million, I think, if my number is correct.

That was 3,800 or 3,900 mats.

We’ve got 2,700, we’ve got - - I think what’s happened is we used to have 1 or 2 or 3 people who priced out and we were hoping.

Now we’ve got 15 or 20 so we just continue to expand the market around the world.

There is a lumpiness to it.

I wish I could say it’s a smooth deal like rentals or something else, but its’ not.

But I think that we have increased our probability of having a better flow because we’re in so many more markets with so many more applications ad that’s what we’ve been doing the last number of years.

Okay.

Thanks a lot, Jim.

Looks good.

Hey, tune in next quarter.

We’ll get better.

Thank you.

And once again, to ask a question please press the star and one on your touchtone phone.

It appears we have no further questions, gentlemen.

I’d like to turn it back over to you

We thank you for joining us today.

For you that have been around awhile, we thank you for your patience.

And I’m confident your patience will be rewarded this year.

Thank you very much.

Bye-bye.

This concludes today’s conference call.

You may now disconnect.