cactus, inc. (whd) ceo scott bender on q4 2018 results - earnings call transcript
by：QY Precision 2019-10-15
Cactus, Inc. (NYSE:WHD) At 10: 00 a. m. on March 7, 2019, ETCompany participant john Fitzgerald-2018 Earnings Conference Call Director of Corporate Development and Investor Relations Brian Small, president, chief executive officer and director- Joel bend, Chief Financial Officer Steven Bender, senior vice president and chief operating officer- Steve Tadlock, vice president of operations- Vice President and CEO conference call participants Raymond James Chase muvhill David Anderson Merrill Lynch-Bank of America Loway-Barclays Citi more Stephen Martin Mahler- George O\'Reilly-Johnson Good morning, Tudor, Pickering, Holt and Company operators. Welcome to Cactus\'s fourth quarter 2018 and full-year earnings call. My name is Mary and I will facilitate the audio section of today\'s interactive broadcast. All lines are muted to prevent any background noise. For people in the stream, note the options available in the event console. I want to hand over the show to Sir at this event. John fitzgerrard, director of corporate development and investor relations. You may begin. Thank you all. good morning, everyone. Thank you for attending today\'s conference call. The speaker for today\'s conference call will be our CEO, Scott bend; And our chief financial officer, Brian smore. Joel bend, senior vice president and COO, joined us today as well; Steven bend, vice president of operations; Chief Executive Officer Steve Tadlock; There is also David Isaac, our general counsel and vice president of administration. Yesterday, we released the fourth quarter results, which we can see on our website. Please note that any comments we make on today\'s call for predictions or expectations of future events are forward-looking -- Statement covered by the Private Securities Litigation Reform Act. Forward- Some risks and uncertainties, many of which are beyond our control. These risks and uncertainties may lead to significant differences in actual results from our current expectations. We recommend that listeners review our earnings release and the risk factors discussed in our submission to the SEC. Any forward- The forward-looking statements we make today are only from today and we have no obligation to publicly update or review any forward-looking statements Look at the report. In addition, in today\'s conference call, we will refer to some non- GAAP Financial indicators. With these non Our earnings release contains the most directly comparable GAAP metrics. With this, I will transfer the call to Scott. Thank you, Scott bend. good morning, John. 2018 was an outstanding year for cactus, earning $0. 544 billion, up nearly 60% from 2017. In addition, the adjusted EBITDA was $0. 213 billion, up nearly 90% year on year. over-year. I am proud to report that we managed the transition to an upmarket company successfully and our team is excited about the future. In the fourth quarter, while challenging well-off The reasons for the record further validate our value proposition. Although our customers delayed completion more than expected, our business showed flexibility and the company\'s total revenue fell by only 7% in a row during the quarter. During this period, the average market share of our product business in the United States increased from 27 to 27. 4% to 27. 8%. In addition, we are satisfied with our ability to maintain a relatively stable profit margin in our products and leasing business. As a result, overall revenue declined by 7. 2%, EBITDA decreased by 12 in turn after adjustment. The profit margin of 7% and adjusted EBITDA decreased from 40. In the third quarter of 2018, 7% to 38. The fourth quarter of 2018 was 3%. I now transfer the call to our CFO, Brian Small, who will review our fourth quarter financial performance and will provide you with some ideas about our near future prospects after he speaks The term before starting the Q &. Brian? Thank you, Scott. good morning. Fourth-quarter revenue was $139. 33 people accounted for 8 million. 4% and 7 higher than the same period last year. As Scott mentioned, it was 2% lower than the third quarter. Drilling- The related activities are relatively flat, but the completion is- Related activities declined this quarter. Revenue from products including consumables for drilling and production is 38. Rose 1% at $78. 9 million compared with the same period in 2017 and 0. 6% lower than q3 The gross margin of 42% of products is 760 basis points higher than 2017 in the fourth quarter, 100 basis points higher in a row, but mainly due to the product mix. Rental income is $31. $2 million or $6. 7 million higher than $2017 and $6 in the fourth quarter. Decrease by 9 million in turn The reason for the reduction is that our customers will complete fewer activities in the next year. end. Although this increase compared to last year is mainly due to the increased investment in our rental fleet, enabling us to increase our market share. On-site services and other revenues for the fourth quarter were $29. 7 million is $6. 6 million higher than $2017 and $3 in the fourth quarter. 4 million lower than Q3 2018. The reason for the decline in revenue compared to the third quarter is the reduction in the billable time for our duty stations to complete related activities, and the typical fourth quarter seasonality of the quarter. Compared with last year, this change was due to an increase in service technicians and associated ancillary equipment, resulting in an increase in billable time. Revenue from field operations accounts for approximately 27% of total products and rents Related revenue for the quarter. SG&A at $10. $5 million in the quarter. 9 million higher than $2017 and $0 in the fourth quarter. 5 million lower than Q3 2018. The continuous decline was mainly due to lower professional expenses, while the majority of the increase compared to 2017 was due to additional wage expenses and other expenses related to listed companies. We expect 2019 of SG & A in the first quarter to be in the range of $12 million, in part due to professional fees and an increase in stocks --based comp. Net income was $38. Down 7 million from $43. Third quarter 6 million. Our income statement reflects Controlling and public owners of Cactus Inc. The adjusted EBITDA for the fourth quarter was $53. 5 million. This was 52. It grew by 7% over the same period last year, but fell by 12. 7% compared to 2018 in the third quarter. The adjusted EBITDA for this quarter was 38. 3% of income, compared to 33. In the fourth quarter, 4% and 40 were 2017. 7% for Q3 2018. Our actual rate for the quarter is 11. 4%. The main reason this rate is lower than the federal rate is that Controlling equity is not subject to federal tax. Our public ownership remains at 50. This quarter was 3%. Internally, we prefer to look at the adjusted earnings per share as it eliminates the impact of ownership changes throughout the quarter, it is also assumed that a public entity holds all units and their operating subsidiaries, Cactus LLC, at the beginning of the period, and the additional income tax expenses arising therefrom are related to Cactus Inc. increase in incremental revenue related The fully diluted shares expanded by about 75 shares. 3 million and effective tax rate 22. 5%, we adjusted earnings per share to $0 this quarter. $45 per share, compared to $0. In the third quarter, 52 per share fell by 14%. We estimate that the adjusted earnings per share for the first quarter will have a valid tax rate of 24%. Our cash position has increased by $28. The fourth quarter was $9 million. December 31 for 8 million. Operating cash flow for the quarter was $44. Our net capital expenditure is $13, $8 million. 7 million. In addition, we spent $1. Financial lease payments for the quarter were £ 8 million, $0. Deferred financing costs 3 million. Net working capital at the end of the fourth quarter accounted for about 26% of annualized income in the fourth quarter, slightly higher than in the previous quarters, due to the acceleration of inbound inventory shipments before this year -- Finally, in order to minimize the unrealized impact of the additional 301 tariffs we had anticipated at that time. Early signs in 2019 suggest that income-related working capital is reversing to historical levels. Our capital expenditure for the whole year is $68. 2 million is in line with our previous indications after the third quarter. Looking ahead to 2019, we expect total capital expenditure to remain at a low level of $60 million. This includes a growth capital of 45 million to $50 million for our leasing business, a large part of which is used for our new innovations. This covers the financial review and I\'m transferring you back to Scott now. Thanks, Brian. Scott. Our product business continues to be driven primarily by the total number of wells drilled, thanks to improvements in long-term trends such as more wells per drill and larger pad sizes. The number of our rigs has remained relatively stable so far this year, although the number of US onshore rigs has dropped slightly as we have successfully gained market share for new operators. It is important that our customers have resumed their completion activities and we see a more normalized level of production tree shipments, down by the end of 2018. We now believe that 2019 of our product revenue in the first quarter should bedigits quarter-over-quarter. Looking ahead, we are cautious about the overall level of drilling activity, although the number of rigs has dropped-date. With the launch of the rig contract, we expect that private and public e-commerce will reduce spending. Nevertheless, with the recent recovery in crude oil prices and the tightening of the stack spread, we believe that the deferred correction in our customer base may be softer than previously thought. Anyway, we believe we still have a good market share in 2019. In the fourth quarter, our customers expressed their willingness to drill new wells at a fairly stable rate, but were less willing to complete the drilling with lower oil prices. However, as the budget is readjusted in the new year, the growth and completion activities have exceeded the growth of our product business in the first half of the first quarter. As we look ahead to 2019, improvements in general completion activities should exceed changes in the E & P budget, largely due to large ticket services such as cost tightening and pressure pumps and sand We believe that the improvement in this context may increase our rental income around 15% in turn in the first quarter. When we step up backup efforts and deploy additional high margins, the profit margin of Q1 may fall slightly After a slowdown in the fourth quarter, pressure equipment entered the scene. When it comes to our new completion innovation, we are very satisfied with the performance and reception on the spot. These products were designed with existing customers and the efficiency of on-site display exceeded expectations. We expect to generate significant revenue in the second half of this year as we believe we have developed some truly differentiated technologies. Based on our current growth capital projections for these initiatives, we believe this year The final 2019 revenue operating rate of our new innovation may be 20% higher than our current rental income operating rate. In addition, as we build an innovation team over the next few years, we continue to believe that the market opportunities for these products are as large as our existing leasing business. With this in mind, we chose not to post more details at this stage until these products are more fully marketed. We encourage you to see this relative silence as a reflection of our optimism about these products as you strive to maintain and protect your competitive advantage. On-site services driven by product sales and rental revenue were adversely affected by a slowdown in the completion rate in the fourth quarter. Traditionally, this business accounts for a high proportion of non- Annual billable hours-end holidays. Early signs in the first quarter suggest that the profit margin of the business has returned to a more normalized level in the first three quarters of 2018. Looking ahead, we expect revenue from this business to account for about 26% to 28% of our combined product and rental revenue. As mentioned earlier, we expect our full-year capital budget for 2019 to be within the $60 million range, depending on how quickly we choose to build on the above innovations. Although we will add two new highs, maintenance capital spending should not exceed $5 million and roof expansion will be minimal Specifications of the machine in the city of Bossier. With regard to tariffs, we have greatly reduced the impact of 301 tariffs, which have a tax rate of 10% on products imported from our wholly owned subsidiary Through the factors discussed in our last call, manufacturing subsidiaries owned in China. We are optimistic that the impact of tariffs will be limited, reducing the unit margin ratio of products will move forward when completely replacing the previous Tariff list. In recent days, the Office of the United States trade representative has officially announced that it has postponed the tariff originally scheduled for March 2, 2019, and the tax rate of Section 301 will remain at 10% until further notice. So, in general, according to the first two months of 2019, we expect revenue for the first quarter of all our business lines to increase compared to the fourth quarter. We are encouraged by the rebound in activity we have witnessed and are optimistic about the potential or successful deployment of our new leasing innovations. After significant growth in 2018, we are now a stronger and more balanced company while maintaining our flexibility and ability to expand our business based on market conditions. We focus on free cash flow and we focus on returns. Finally, with regard to the issue of capital allocation, given our increasing cash position, I can confirm that we have not reviewed any suitable M & A opportunities Our board did not make any decision on the dividend or potential repurchase plan. Before I ask the question, I would like to take this opportunity to congratulate Steve Tadlock, who has been appointed vice president and chief financial officer since March 15. When we transition to a public company, Steve manages a variety of corporate operations finance functions brilliantly. I would also like to thank Brian Small for his valuable contribution to the company as our CFO and our family. Over the past 19 years, Brian has developed and implemented many metrics through which we manage the business on a daily basis and maintain a focus on operating margins. As mentioned earlier, Brian simply transits full time to a new role as senior finance director, or he will oversee various corporate and operational financial process improvement plans without distracting listed companies. So I\'m going to transfer the call back to the operator and we might start the Q &. Operator? Question-and- [Answer] Operation instructions] Our first question came from Marshall Adkins of Raymond James. Your line is open. Did you hear me? Okay. Sorry. I got some feedback. Let\'s take a look at the impact of tariffs. You gave us a lot of details about what you know now. I\'m curious about some things. First of all, it\'s just your latest idea of where this ends up. I\'m not sure if you\'re more insightful than the rest of us, but it\'s a big deal for you. So I\'m just curious where do you think it\'s going? Secondly, probably, and more importantly, how do you position tariffs and competitors? I know that manufacturing in the United States may help you. But I\'m just curious, what is your position in the competitive environment given today\'s tariff situation? Scott Ben DruckerWell - In terms of the progress of all this, I think it is fair to say that we are much easier to grow to 25% than in the fourth quarter of last year. I think the evidence in this regard is what we do in terms of imports. So, as Brian mentioned, we accelerated our inventory revenue in the fourth quarter, which is expected to reach 25%- Growth to 25%. We have not taken a similar measure this year, and I think the decision of the US Trade Representative Office to postpone an increase to 25% indefinitely was validated. That\'s why Brian mentioned that he felt our working capital ratio would return to normal in the coming period. So I think the short answer is that this is not a priority in my opinion in terms of the areas that we focus on. We helped in the fourth quarter, to some extent, with the three factors that we talked about in our last call, and I don\'t think I need to think about them anymore. Marshall, what\'s your next question? How do you position in the competitive landscape? Let\'s say it stays at 10%. How are you positioned compared to all major competitors? Most of our major competitors depend on China. As we said before, there is one in China Still have a competitive advantage. Even at 25%, we think it has a competitive advantage. As you know, they\'re not a lot of US manufacturing plants, you mentioned about half of what we do, and half of the cost of the goods we sell is related to bosil, about half of the cost of our products is related to China. So in this regard, I think we are in good shape. This is not to say that we can replace China with bosiye city. We do not have enough capacity to do so. You know, one of our main competitors has a manufacturing plant in Western Europe. Our view is that although it will not suffer from the risk of tariffs in China, it may not be competitive with China. Other major competitors, and of course second-and third-tier suppliers, are very, very dependent on China. My gut feeling is that Joel is likely to have a discussion about it, and as far as China is concerned, we may be exposed less than the next batch of suppliers. Joel beenderwe is. I think our supply base in China is doing a good job. We have also looked at other countries. We once again conclude that we do this again, and over the last few years we have done this repeatedly, we have looked at other options and the tariffs are still at 10% or 25%, there is still a cost advantage in importing your products from China, which is where we continue to expand the supply base. Marshall aginsperf. This is a very helpful guy. The last question for me is the same one. Looks like we will get some pretty If you go back to the historical level of working capital built Your growth in the fourth quarter should lead to fairly healthy growth, with only free cash flow this year. Is this the right way to think about it? Marshall, Scott Bentley thinks you\'re in the right direction. The next question comes from Chase Mulvehill at Bank of America Merrill Lynch. Your line is open. Good morning! So I guess - I want to go back to the tour guide. Obviously this is a very positive guide, would you mind and- What do you think of the profit margin for each segment in the first quarter? Scott bendwell, I mean, I\'m not really what I want to do, but I \'d be happy to give you some ideas. Maybe it\'s a directional chase. I mean, it\'s a little lower. Is it down a little in general? For rent and products, profit margins should drop slightly, says Scott BenderI. I think their service should be greatly improved. Of course, the service now 26%, 27% of what we do. I think, I think there are two reasons why we have a realistic approach to rental profits. fold. We did introduce some rental items in the fourth quarter, just like inventory, to avoid a potential tariff increase of 25%. Secondly, what I would say is that over the past 60 days, the product mix in our traditional rental fleet has changed and we expect it to change in the future. This means that we rely heavily on the rental supply chain in the Far East. Some of the items we expected were underserved in the summer and became less and less, items in our inventory -- The existing stock of high pressure valves is much more demanding of them. So we focused a lot of attention on redeploying those assets, and I can tell you that we have been doing this for quite some time, and we have reflected at the end of 2016, whenever we have a fairly strong growth in our rental valve demand, when we start to harvest assets that we already have in stock, in addition to buying new assets, the cost of repair will always increase. As far as the product is concerned, as we begin to roll out the pre-coding, the compression of the profit of the product is largely expected The tariff inventory we talked about earlier, as well as the increasing proportion of inventory flowing through sales costs, is flowing at higher tariff application costs. Chase Moon Hill Rocky Kay Maybe you can help us, I don\'t know if you know this, but in the fourth quarter, how much is the high tariff cost in the fourth quarter, and how much do you expect in the first quarter? I don\'t think I can answer this question. Are you comfortable, Brian? I don\'t know. we broke it down. Obviously, Brian small, you can see that for Q1 2019, basically full Q1 time, the new Q1 2019 will launch the product at the tariff price, in a broad sense, maybe 50 for Q4-50 -50% pre- Post 50% tarifftariff. Scott bentland chase, I hope we can be more precise, but we don\'t really track it. Chase in Muthu Hills No, good. And I guess - We were thinking- You give some good top-level guidance here, especially for products and rentals, but back to the product side, what do you think your market share looks like in terms of products? Scott bendley thinks the situation has improved slightly. Chase Moon Hill Rocky KayRight. The last one, I turned it over. You know, I think we\'re all very excited about what you \'ve accomplished in terms of completion, and I know you don\'t want to talk too much about it. But maybe, can you talk about the barriers to entry for what you are doing, what model I mean, how comfortable you are with barriers to entry, do you feel like you have a competitive model, can you maintain this business? Scott bendso, I might have Steven respond to that. Steven bienderyes, I think our goal in these areas of achieving innovation is to build a similar model around our rental products that we love -- There is no doubt that many of our drilling products are now focused on completion efficiency, and we are deliberately opaque to these technologies because we do not want to tip. However, some of these technologies are developed on the basis of existing technologies. So the customers we see come to us and want to try to do better, some of the technologies are brand new to the industry. Therefore, we are in a unique position to work with our customers to develop these products. So, if I don\'t answer this question in more detail, it\'s hard for me to answer, but what I\'m saying is that this is a focus of the finished part of our business, which was previously reserved only for the wellhead, I think you will see a similar level of innovation drilling in terms of leasing. Scott bend ChaseLet me just - I \'d like to elaborate a little bit. So - Then we can move on. The business model of Cactus has always been innovation and execution, so you can\'t innovate without execution, I don\'t know how much of our model is due to innovation in drilling and innovation in execution, but if you don\'t need good innovation If you can\'t arrive on time and can\'t provide enough service. So, this is the same philosophy that we have, yes, these are- We believe that these innovations are highly differentiated, but do not minimize the importance of the Cactus execution model. The next question comes from David Anderson at Barclays. Your line is open. Scott, David andsonwell, this is a kind of teasing about the new product here, so I think we just need to trust you and stay a little patient here. On the other question, I would like to ask the questions on the wellhead side, since 2011, you have basically gained a share every quarter, actually increasing every year. As you said, I believe service is a big part of it, but I also have to think that you have to attribute a bunch of your share proceeds to different products, which is very suitable for unconventional ones. I think that raises the question, what are your big competitors doing? We did not really hear them on this issue. I mean, should we think that means they don\'t really close the technology gap at all. I don\'t think they have tried it. I mean, you gave us some ideas. What color do you see in terms of market competition? David Scott Bend Someone asked me before a few calls what kept you from sleeping at night, and I said there were two things that kept me from sleeping at night, safe and our competitors. So, yes, our competitors see what we are doing, thanks in part to the fact that we are now a public company and you have to assume, we always assume that they are doing their best to close the gap. This is part of what drives us to continue to innovate. So we\'re talking about frac innovation, but I want to give you some comfort from this call that we haven\'t stopped innovating in terms of wellhead products. So, the shorter answer is, yes, they are responding. I think the overall performance of the industry is probably better than it was two years ago in large part because they thought we were successful, but it just made us work harder. David Anderson was a little curious if I could work a shift on your fracking tree side. Obviously, I think, this is another obviously different party business. Where are you discussing today how to take advantage of your fracking tree assets? Do you have 100% utilization? The thing is, I\'m just a little curious, I know this is a place where you\'ll spend some capital on the rental fleet there, but can you give us a rough feel, see how much it has grown in the past year and how much will it grow this year? I mean, it\'s 10% this year and 10% next year? I\'m not asking for numbers, just giving me some numbers in the approximate range of how you see business growth? David, are you asking questions about investment? . . ? David Anderson. Well, I know this is one of the areas where you have been spending money on building these plants. I\'m just a little curious though you can post some numbers in this area today. How much larger today than last year? For example, at the end of this year, how much do you think will be done to solve this market? Scott BenderMr. Tadlock asked us to respond. Thank you, Steve Tarlock. At the end of 2017, the total PP & E Rent was approximately $85 million, and at the end of 2018 it was approximately $0. 124 billion. I think we mentioned about $50 million in rental capital spending for 2019, which gives you some insight into the total. Because the factory is different, we really don\'t consider a single factory. We always think about total income and return. David AndersonThat\'s helpful. I think it\'s the last question. We \'ve just heard that Chevron and Exxon have just launched their analyst day, highlighting the Permian project, and maybe you can talk about how exactly this has changed your market, maybe what is the difference between this customer in terms of the technology they need and nutrition E & Ps? What is the pricing of procurement? Obviously, this is a shift for your customer base; Just curious what exactly does cactus mean in the next few years? Let me tell you first, David. We love our current and potential customers but I think if I tell you that we find e-commerce that is independent and large open deals embrace our innovation more passionately, there will be no secrets or surprises. So when we made a suggestion, we got a better reception. Chevron or XTO customer base. What I\'m trying to say is -- So in terms of drilling. What I want to say is that on the frac side, on the completion side, we don\'t think that the ioc is very receptive to innovation. David andsonso, can you help me understand why on the one hand they like innovation, on the other hand the business you do is surprised by the difference between the two? Scott bendley doesn\'t want- This is a very, very personal feeling for me. Professional international oil companies are just more adventurous. So in terms of drilling, if the things they use are not damaged, the rig will not be shut down, they are unlikely to accept the change, or the independents will take execution for granted, because they are very, very critical for non-performing vendors, they will pay more attention -- At least in our short history, they are more focused on improving efficiency and are willing to take the risk of trying something new. So I think it\'s really a risk profile, in fact, the customers who do business with us may be flat organizations, and fewer committees and drilling have always been a very, albeit, it\'s still very impressive. item - Although it represents 1% or 1. 5%. In contrast, on the frac side, I think you may know that there is a maintenance issue with our frac pads, and maintenance issues with frac tree or other vendors can cause a failure The impact on the economy. Therefore, due to the low failure rate or reliability, professionals believe that, In terms of potential returns, the risk of such a change is minimized. So, on the one hand, you have a product that may not crash, but promises to save rig time, and on the other hand, your product is more prone to reliability problems in fracking locations. The next question comes from JB Lowe at Citi. Your line is open. Good morning, guys. Just a follow- Questions about the profession. The more you accept I think, you\'re talking to guys, is it possible for you to use the frac aspect of the business as a pull on the frac aspect of the business How do you do it by having them talk about your mind? Scott bederwe is trying every day. It\'s okay with two different departments. Two different departments, you have the drilling department; You have a finished and production department. This is very helpful, but it would be better to start with a customer who is used to it We have MSA with him. You have a record of safety and reliability. This makes it easier to sell online. However, our market penetration rate or lack of market penetration can certainly not prove this. Okay, look for you. And then it\'s just about- You mentioned that your 2019 export rental income may be 20% higher than your 2018 export rental income due to new innovations. Let\'s say if your traditional frac business is flat or- Will the growth rate in innovation be greater, which means that the traditional side will become smaller? Scott bederit doesn\'t think our traditional rental business will- Our traditional leasing business will not be affected. The next question is the lines of Tommy More from Stephens. Your line is open. Good morning, thank you for answering my question. So recently you Including this morning, you mentioned that you are planning to add two more CNC machines in Bossier. So I think it\'s 16 in total. Formally, if you continue to occupy the wellhead market share as in recent quarters and years, which allows you to make any changes in Bossier\'s utilization, or ask different questions, how long is the runway, have you seen before that there may need more growth capital spending there, or is it far enough that it\'s still hard to say at this point? Steve Tarlock Last year, we basically made this decision to provide additional capacity for the decline in some orders and to continue to maintain additional capacity for rental capital expenditures. I think we are in good shape. I really don\'t feel like we\'re getting much in terms of further requests. I would like to say that the current operating capacity of the facility is about 60% to 65%. I do need medical machine tools right now, but Scott talked about some changes with the rental capital expenditure fleet in order to be able to provide some higher pressure valves. Tommy MollOkay. That\'s helpful. Thank you. And then as a follow-up Up, there has been quite a bit of discussion about the impact of tariffs on profits, and then there is a discussion about how you can mitigate that impact to a certain extent by pushing some orders forward in the fourth quarter. If 1Q\'s profit is going to be hedge a bit, should we expect this trend to continue to 2019? Brian SmallI thinks you won\'t see more pinch. Tommy MollOkay. Brian smallthat\'s not very eloquent. Our next question comes from the Martin Mallory Line at Johnson Rice. Your line is open. Good morning, Martin Mallory. Just look at the new product. Rental. When you are constantly increasing over the course of the year and adding on-site personnel related to these products in terms of profit margins, what impact will it have? Steven bendino, in fact, all of our existing personnel operate these technologies on site, so no additional service is required. Martin Marlow is good. And then - Scott bederand also offers the moat if you can appreciate it. As a result, the incremental cost of the customer will not include additional personnel as the competitive product does. Martin Marlow is good. And a follow- Question, just, this has been asked twice, but just on IOCs, do you think it is a matter of time for them to test and accept your wellhead products, will you start to see more progress in the end? Scott bentwell, yes, Martin, this has been asked many times, not just twice. The majors - The IOCs that this team is interested in May have 125,135 US rigs, OK. There are a few other places there, but I think they have caught all the attention. We will not stop working if we do not try to support these prospects. The next question is George O\'Leary from Tudor, Pickering, and Holt. Your line is open. Good morning, guys. I just asked a question. You guys tend to work very well with your clients and I think it\'s a deficiency Admire part of your story. As E & Ps introduces more cash flow and return-centric business models, is there any change in the project they want to work with you in another way, have a keen concentration in any area that increases or reduces non-efficiencyProduction time? It\'s a very good question, George, Scott bendso, I have to answer, but there are two answers. First, the non-proliferation treaty The focus on the non-proliferation treaty continues to increase, and we see this as a positive thing. It\'s hard to quantify, but it exists. Therefore, it makes a suggestion to the technology to solve this problem -- More striking, please forgive me. This is the side of the equation. As you might imagine, when the price of oil falls to $45, this collaboration tends to be procurement-oriented. Procurement is not interested in talking about the NPT and is more interested in talking about prices. Of course, this is not very constructive for the business, although it provides us with some introductions that we may not have before, as it did in 2016 and 2015. So we\'re going to be introducing on any basis, whether it\'s discussing prices or discussing innovation, because of the introduction and introduction, so I hope I can be clearer. But it really came. I think the level of interest comes from two different areas. George o\'learyno, this is a very helpful color and I certainly appreciate it. And then from- You guys gave good colors in turn on the rental guideover- Q. first quarter of 2019. I was thinking- Maybe you can analyze what you think of this. The impressive growth rate, compared to the most significant low level we saw in December, is a potential completion activity improvement, and how many of them are likely to be market share? Perhaps talking only about January will be helpful for December and February for January. Then, when we look at 2019, don\'t be too short, you mention that you \'ve done it and might actually get some other moving parts of the finish aspect, so, if you can talk about your views on the pace of completion in 2019 and that progress. Thank you very much for any color there. Scott bend asked me to talk to you about the rhythm of completion. So we saw - In the following OK, I\'ll talk about all of this and let Steven add my speech. We saw some customers who had just leveled their fracking staff by the end of the year. As a result, we saw a return to this situation in January, but also saw a growth in market share in January. I don\'t think we went back to quantify the extent of market share growth, nor the extent of market share growth, but went back to any normal level of activity, but, you defined that. But I am happy to say that while we usually think that our share of the frac market is 10% or less, we are happy to say that we are now in the north of 10%, 15% of the South may be more than our north but there is no doubt that our market share has increased from the frac leasing aspect of our business. In terms of rhythm, well, you know what I\'m thinking -- I mentioned this at the last investor meeting and I would like to remind you not to look at these ducks as you did before. I think there are a lot of DUCs that might never be done. I think most of our customers want to maintain a certain degree of DUCs in stock due to flexibility and efficiency. You know all this. So the question is, what improvements will this bring and how it will be reflected in the additional completion activities. We just don\'t think it\'s going to be a huge benefit, though I think we all think there will be some improvement in the completion activities for the third and fourth quarters. I don\'t think it\'s going to be as big as a lot of people might have mentioned, it\'s not going to be a panacea, but to be honest, you know, we\'re happy to focus on our capital investments, slowly increase our market share and rely on our innovation to build the moat. So I think we are looking for more stable growth of the frac rental business. No further questions. Mr. John fitzgerrard, I\'ll transfer the phone to you. John FitzgeraldThanks thank you all for joining and we look forward to talking to you on our next call. Everyone can enjoy your spring break. Thank you. This is the end of today\'s conference call. Thank you for joining us. You can disconnect now.