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NexTier Oilfield Solutions (NEX)

Participants
Michael Sabella VP of IR
Robert Drummond President and CEO
Kenneth Pucheu CFO
Chase Mulvehill Bank of America
Ian MacPherson Piper Sandler
Scott Gruber Citigroup
Daniel Kutz Morgan Stanley
Derek Podhaizer Barclays
Call transcript
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Operator

Good morning, and welcome to the NexTier Oilfield Solutions' Fourth Quarter 2021 Conference Call.

As a reminder, today's call is being recorded. [Operator Instructions] For opening remarks and introductions, I would like to turn the call over to Mike Sabella, Vice President of Investor Relations for NexTier.

Michael Sabella

Thank you, operator. Good morning, everyone, and welcome to the NexTier Oilfield Solutions earnings conference call to discuss our fourth quarter 2021 results. Robert Financial and Chief Officer; and Counsel. are Kenny Executive Administration today General Chief Pucheu, and me Drummond, Chief President Officer; Officer With Kevin McDonald,

attention I the the in release company's section posted that afternoon, to Before in disclaimer yesterday news would issued website. is get forward-looking statements started, direct we of your which to we the the contained Relations like currently Investor

future, to or regarding which We statements that considered We or speak the forward-looking implied factors predictions Our Exchange of forward-looking this differ statements, outlook Form and under the undertake many of any forward-looking be These obligation reports to morning includes Securities quarterly statements. disclosures as the which laws. statements call XX-Q applicable subject or Commission's XX-K, our securities report are cause by could statements. on and materially NexTier results risks publicly are risk our no which uncertainties, company's except other to filings. on update forward-looking to to may Form those are from required beyond in annual expectations, statements control, subsequently and filed in actual you company's and revise refer these expressed

Additionally, also our include comments today non-GAAP measures. financial

and that, With over Officer of the quarter website. Executive of fourth turn a directly comparable is in for release on Robert GAAP will the our to details reconciliation Additional most Chief the included XXXX, to earnings financial NexTier. measures Drummond, our are I posted call which

Robert Drummond

are The strategy be NexTier of continued years. ability shortages. demand in and for frac widen capital constraints fleet the what the fourth tiers. frac undersupplied the out. thanks imbalance and slowing across by automate our completely strategic prices lead market past completion correcting to services on a high At and all and acceleration times to two navigate in coinciding the gas-powered coming take the we supply Mike, caused challenges process, supply conventional some pricing chain counter-cyclical repositioning and for saw our everyone us this market you, is demand land an diesel-powered investment remain lead equipment the we with made The versus provide Natural gas-powered U.S. with to continues in with in the going our lengthening to thank market. growing investments Demand respond. call. industry's driven we frac gain lengthening to of sold U.S. and Materially to joining frac believe perfectly appears fleets by differential time NexTier, urgency is an Well, to advantage supply chain together The and in recovery. labor of completion natural quarter as growing times competitive integrate improving momentum

to us of as our strategy shale cost lower enters phase customers Our both with next completion and development. emissions the aligns

to As confidence update we we outlook, January. operational in early in decided provide gain an the

we delivering we continued those see demonstrate and results QX XXXX. Our momentum on as enter commitments,

Industry-wide, of we year fourth the upwards lines. holiday view our relative let's the across on full market, fourth the quarter into getting Before our third to quarter trend business solid in absent completion more well and results. to continued detail and all growth discuss activity seasonality, typical saw

our frac quarter, the the operated with rate one improvements plan. for gains consistent We quarter, fleets just versus the quarter adjusting average of even grew coming saw white across the revenue from for full third modest the in bulk the consecutive our less after frac overall space U.S. faster with Our prior sequential calendar an We the than growth XX entire market of month quarter. Alamo pricing enterprise. of during

fleet, in exiting in services U.S. quarter believe gas-powered the importantly, fuel the of continue land. we quarter, We with our end of deployed that fleets. XX Towards And the the the activated natural we Basin. extended are strength frac of X fourth dual Permian provider we to Tier position another largest

With to $XXX sequentially the of revenue a full Alamo, quarter grew of total benefit million. XX%

way our the frac growth million of COVID-related In improved Power challenges. addition to and Solutions, holiday continue navigated caught growing we the the XXXX. impact expansion asset Adjusted proud lines of margins Tubing growth. top-line on with the $XX achieved strong revenue and across million, the gains slowdown was team Coil our market chain, Cementing up as to and throughout business, including entire our product see I'm sales Wireline, activity EBITDA $XX and managed supply in labor the

For still year, while total prior margin million exiting the from XX% $XXX discuss adjusted revenue than market. increased excited XXXX year the we XXXX. the our million, in of XXXX, revenue an what our significantly Note, billion grew With from higher $XX XXXX as and at the full year in year EBITDA our adjusted full were EBITDA we're overview, let's run rate with the see that why average. $X.X

in As today believe presentation near XX%. or our with early pointed at published in the we tightened U.S. utilization we out significantly frac January, investor first market has

us still horsepower. of East program, horsepower, are we in equipment capacity a as even X.X sale forcing additions concessions On Through prices over further caused major total few our years component donor capital, the ability industry's COVID are the through attrition dealing the to million forcing impacted supply the XXX,XXX reducing At side, nameplate the fallout with equipment. low current frac diesel we acceleration and now Middle by the severe in are fleet Pricing leaving and rationalization underinvestment given with of of generate as cannibalization. our frac to the well the past by NexTier, today.

our portion small Just a stacked. of is currently very fleet cold

believe when change have million significantly our in capital equipment look not remaining that the uncertain per average their hurdle to the date, the our can high, more supply hit assessment return urgency useful are return that customers others, is power. customer to To additional as side, fleet several we this understand is for own is incremental just life believe targets. And demand that moving size still demand fleet, years, this several at the work. And today over available against recommission short, as will headlines is some to we horsepower schedule insufficient to on our believe powered Like add an is we we positioned dynamic demand, build E&Ps new On even time. natural has supply look the half $XX cover worked increasing production require our demand premium are horsepower job, increased. of of to and from the and while investment how tightness new to requiring fleets we outperform. natural is peers, demand towards efforts stacked they as has competition trend our see demand. In the could this and rate exist the could new and capacity monitor than gas, is to diesel-powered. gas coming by This into for the equipment market We considering it high be which more This to and years.

meaning diesel cost see increased The equipment a in to seeing a world, cost remains natural strategy. the broader like Our limited the are supply prospect chain with sold Investor available for We growing going replicate with crept in the has premium our equipment. us the will and time Day rest to to along conference it power of the have to capture scheduled the supply prices, up to frac March of we equipment oilfield supply fleet Xrd. Tier oil for in our fuel demand. our this market of for industry, to with the growing And that dual transition catch We're out, making market substitution a And this is leadership fuel can at attractive. into take X gas equipment natural cleaner arbitrage. the of portion gas tightness even allowing a be showcase capital used issues fuel more position service

counter-cyclical customers capital capital oilfield. the changed aligns elevating tools our NexTier digital today. than been the lower consistently commentary the well raised But discipline can in E&P and the we integrate the of value as both the own made operating has changed, oilfield dynamic story integrated competing typically cost, investment our value for important has along relationships environment model our efficiency. strategy we've are natural as equipment. our investments this and on between have proven to integrated critical completion to their this and focuses Now where services creating on permanently equally chain. has services the strategy optimizing and partnership value gas-powered customers, is customers focus frac NexTier. of our perfectly industry challenging greater with The have of on today's increasingly never completion processes complexity value it conversion The the we NPT And our our to offering

of investments we've where most. and been the made to where the options example, consider drivers shale less NexTier, the maintaining and our For commodities pad. challenges truckloads creates needed are for our have of flexibility technology today. us for oilfield business scale it unique than same shortage in where in our critical sand completion while well tractor This the truck a drivers allow more relative job, operation use of across the well-known and digitally the to competing to maintain integrated efficiency trucking the trailers X,XXX of typical U.S. At matters

Our important landing and optimizing truck us and to relationships lowest mines the many Permian to size is sand sand asset considering routes as pad current allows for have across truck particularly with shortage entire suppliers is of priority critical Basin This drivers. turns cost. the each

while same Our requirements, facility, a us lowering fit drivers, minimizes own maintenance guaranteed solutions downtime. to operated of gives tractor increasing time, mile capital last our driver our use own customer's asset and internal deployed. We to next company-owned trailer large product while each the at variety specific offering, mile access pool our

about to natural the virtual show almost critical our is seen March on use our on Logistics Investor And what optimized is headquarter-based to NPT our fueling we solutions. show. when this gas Again, Tower ground, the the customers pleased we're logistics be less the continue business. Control on of Power NexHub Xrd our brain further in system XX/X going Day our topic, Houston operation during the Solutions behind rollout you the results operation. third-party with The X/X versus more Beyond

has to versus its in NexTier than is first fuel results, more the improve cost meaningful already operations. XX% the to by and the Standalone, to is already capability were first with customers. its by We went CNG gas kind great live in the QX, fuel our technology frac with of quarter fleets. field margins for our full savings fully proprietary incremental translating for utilized prior business from managed blend customers. diesel accretive displacement Our and Solutions feedback we Power to QX, contributing of

the for fleet profile Additionally, the frac means return fueling for the across integrated implications model exciting. broader what our plus very frac is

mile us core into we and partners in and power customers with helped from XXXX, completion have we're we and last of solutions. achieved the the the the next-generation share As that roll the integration services improvements. fourth values, logistics appreciation are is tightness with of quarter, to growth equipment results momentum. demonstrated full added profitability like Overall, market and allowing in our value factors frac, us that align significant maintain similar wireline, pleased the There several which

And what more prices result First, to recouping Restarting frac and the integrate our has operations should to XXXX during QX quarter allowing both enhance and loaded was But holidays see downturn, we be on first to earnings first we during the seasonality white our quarter than the targeted beyond. are schedule, proven after us of were made challenges. fill carries Alamo, we results unique and direct for anticipating. the strong we be calendar our business fourth acquisition, latest top-line and quarter. on full the quarter about underestimated. the always impactful excited our with growth start the space not investments Building

most had the we the our quarter, than During January somewhat. southern always, Ford Eagle Permian, supply weather, our managed Further, year, and challenging impacting including efficiency COVID irregularities as multi-day this February, But in we chain where while across winter operations, operation also in impacted confident operating monthly better Haynesville. times. early service a these case is will integrated model we're load, through highest hold shutdown that during our our up

fleet continued what we've that Our will away very market. from X first evidence find. And to as is Demand chain becoming give the deploying existing constructive supply another frac to deployment current these the end X pricing especially to the improvement. continued for strong was quarter, seasonal dual to show recognizing converted The quarter frac with difficult previously, components. Tier of that they year fuel Tier are further XXnd to customer conversations delayed fleet. DGB we a fleet factors are signs of the due are remain constraints, our Consistent in on schedule deployed more fleets said horsepower, and

As do not in current us scale work. enviable suboptimal chase feel need to that where an we we've puts our said previously, we position profitability

ourselves We pricing beyond. XXXX profitability throughout and completion made so continues in made and continue looking should as The far with to outlook QX, customers net programs modest only result during agreements instead impact in on focus in was the on COVID. aligning dedicated recover to pricing we look we to XXXX. but concessions integrated The net improved pricing improve for

allow as and cycle still allowing impacting lower as maintain will at a broader every just well our economy. expanding completion our to of cost deflated our continue to inflation scenario is customers achieve while well We as see to structurally strategy our integration it's base corner site the scope Cost us cost prior almost profile. business impacting margins, the a where

in come us room these We as the address to Prudently, increases low as ability they absorb any does to with cases, afford us pass continue generation give to pricing through. agreements to our the simply inflation cost work latest not Currently, customers of it occurs. cost along inflation. most

of dynamics tightening to and We should relative net supply are of by gains pricing the confident frac XXXX. double-digit market support that QX demand in QX XXXX

and customers that long-term and our strategy execute to ESG our further QX, product [indiscernible] we goals continues downhole technologies cost, on products that focus launched vision. performance In provides on rating sustainability. team selecting a deploying by to which Our balance

real that Investor Day strong generating quality XXXX disciplined in fleet high Additionally, to we completion this IntelliStim by projects saw system, reservoir We'll provide frac to optimize stay in committed natural XXXX, entered to design optimization equipment allows week's of from our we We throughout the dive also. feedback to remains our us on technologies free NexTier interest be largely into and time. in the where work at conversion year. multiple have heightened should these we secured a completed plan first program flow half the cycle. and of cash with next gas-powered

flow is our grow the free Solutions harvesting business, will priority. We Power but nonetheless, cash

sum, a free in XXXX cash generating year-over-year of rising quality. in flow service Our our lower towards activity CapEx than more maintenance million path flow was the from our in $XXX CapEx we will flow of in through to total Coinciding expect gains operations, in move we increase acceleration it XXXX with be year. and we cash as will support commitment cash see with an than Still, in XXXX. free

and For to XXXX, we use to flow free intend liquidity leverage. cash our bolster reduce this net

a the remain us thereafter. increasingly markets will customers value oil We capital our with our outlook of and strategy are have flexible acknowledging and with partnership gas allocation excited our The improving NexTier. about

to years. call nearly as strong accelerates, to next results. the Kenny now just the to I'm over the is up returns transition several setting strategic pass over us to realize cycle quarter the Our going complete discuss

Kenneth Pucheu

market rising including both activity and Robert. Fourth contribution in Construction just land $XXX again and in quarter third Thank in revenue $XXX third Alamo. Completions market, compared segments. you, quarter. a the to Alamo the sequential Activity full included of improved from Intervention even revenue once month quarter. versus revenue outpaced totaled million Services increase U.S. quarter the million Well of one The our In before XX% the our

million international of including XX% the quarter $XX our four a compares full year, was a in sales The $X in The the and in XXXX continued includes increased the to of million attributed of first gain on sale well of frac the estate excess months spare on adjusted assets. with be result of core year-over-year fourth to improvement adjusted of sale million, following. and EBITDA business $XX $X.X upgrades. to facilities Total half further third of to sale equipment million Alamo. fleet can revenue $XX EBITDA real This XXXX. gain quarter including total rationalization fund the For the of billion the as as assets markets, fleet

quarter improved holiday the demand rest resulting efficiency of throughout impactful across the fourth the strong, expected slowdown slightly the and calendar quarter was First, was less fleet. than in deployed

totaled Second, COVID to started our Services the pricing inclusion million results quarter, And profit quarter. Services to the job segment, for quarter. benefited Alamo of third $XXX third recapture $XX Completion only modestly $XX approximately quarter our on of show to a overall a albeit results, and million fixed our increase absorption. adjusted totaled our the our full quarter Completion sequential finally, to in In million compared the gross compared $XXX million improved fourth revenue fourth segment in concessions XX%. in cost

EBITDA higher in million was of million. adjustments were adjustments million. fourth stock EBITDA million. $X adjusted million. XXXX with $XX Approximately in net of During in third reported fourth $XXX million, include million the We quarter. $X of the to $X This Services Adjusted $XX million. quarter adjusted XXXX was profit EBITDA million, exited other fourth fourth totaled quarter was we compared net XX million. deployed $XX an and of EBITDA increase When adjustments for the X% quarter $XX comp adjustments is cash million, total $XX Management XX totaled year $X Intervention was quarter, than fourth $X average adjusted segment, $XX the for of revenue XXXX. Well full quarter of items our EBITDA with we $XX When the the million Construction In deployed for excluding for totaling related. million management management excluding management gross the fleets. net an completions fleets.

year totaled in $XX prior X% an of compared the quarter from Our to this in Fourth with million the margin selling, acceleration million the in EBITDA back half and expense improved adjusted general year to $XX XXXX. administrative quarter. third X.X%

net $X of well the million, management in prior SG&A reflects adjustments the of million increase quarter the quarter. inclusion additional compared fees. $XX expense Alamo $XX million Excluding adjusted as legal full as to totaled This for

to with of the down debt lease exited by the quarter convert from third to equipment headwinds Power to Solutions grow financing frac million during finance X at our an end the in quarter from the of working as deploy deferred $XXX was quarter, fourth strong end quarter. Total fourth debt third $XXX We the the dual $XXX $XXX and sheet. $XXX the the fleet exited Further, end quarter and at million, approximately funding to quarter end million Tier of the we driven growth we quarter fuel approximately capital of at $XXX $XXX of was balance obligations. continue Turning CapEx excluding saw We from fourth fourth the increase of and our million, from net of million of business. an the continued at our available total quarter. Net prior million, discounts debt trajectory. improvement in the liquidity costs the with cash, million

the XXX flow by Our our profitability liquidity need offset the credit asset-based cash undrawn. fund $XX of comprised to quarter for used Cash was was available operating activity was remains which $XXX million capital. of working under where by improved million and facility,

this expected with to further growth headwind magnitude as working during a the the QX capital we remain recovery, manage year. to well QX as although have past, the aggressively in QX through experienced capital likely expect have we in given of As working our of normal the we is payments, growth

$XX natural execute million, $X resulted overall of quarter and to the proceeds strategy business. means Our free fleet fourth line to CapEx in quarter. Solutions maintenance mostly Tier from fourth in horsepower. were diesel-powered to flow asset by use mostly upgrades, cash Power million sales cash as during on This transformation divest X expenditures activities other to fuel was used guide, In dual capital driven gas-powered we and This offset international by fund our million fourth markets with investments quarter. for continue investing $XX was to our our the horsepower our in by

the were our chain halted or Post-holiday well winter January, frac even while operations weather the early outlook. inefficiencies in in February, start-up on supply QX as impacting early Now slowed results. as challenges evident activity in

some fleets moved capture created In addition, level space upgraded and our to as and high-grading between white fleet better efforts economics. we basins customers

inflation Robert that cost drive dynamic cost continues is in up, mentioned, input to incremental will margins which another impact QX. As our

of with of on healthy with and lines. We partnership headwinds, CapEx quarter to However, despite value high-grading service currently increases emissions. XX million lower we the we through our low-to-mid-teens expect year sequentially, utilization deployed activity exit our and further potential we and which our This fourth outlook EBITDA the evidence high to fleet we quarter first almost additional of fleet an and will maintenance a expect an continue base quarter forward we these per activity solid baseline for move of basis increase percentage the model adjusted approximately pricing run in for and plus and run QX, $X.X negotiated fleet and throughout with million very continue optionality fleet first to should the to top-line that of us year. frac of count year around fully should revenue to recapture customers in between This costs the continue comprised growth. double-digits the for per $X to revenue mark improvements, and a demand foundation we HX of net market along place the to assumes see total for year on believe mid-to-late non-frac $XXX gives deployment earnings a as with that of we will CapEx per rate market-leading QX million utilized. next $X customers million product pricing integration to With fleet see of pricing the have demonstrate In on exit now concessions gains This backdrop rate entering at QX the end basis. annualized pursue. half

diesel Power continue will to in additional Tier strategic Tier We X to fund business. fuel conversions in new also dual Solutions X our investments

upon case a the CapEx completion sees then program. dual the X half in of Tier base Our second fuel step conversion in down

continue maintenance on and increase quality invest prioritize in in in than CapEx spent and XXXX in year-over-year. CapEx to we to We we less XXXX. fleet our total, But a expect will service spend well-maintained

We will coming flow through prioritize free cash cycle. the

We expect accelerating our of cash in to working throughout conversion capital flow generate $XXX in XXXX driven in acceleration headwinds improvements, fuel free million we flow excess the is current This by profitability with cash year. as free progress as of and dual the subside. program conclusion

Alamo Our is continues very Alamo integration business and ERP, fully NexTier's largely go transitioned and of well systems. to complete with HR on

of and in achieve are CapEx million synergies team annualized provide remains practices they company, on place, the high constantly management cost significant and to a our that amount remain we already in the new customers continue the sharing for target standard $XX teammates. We learned have of from service best second across to. used XXXX. quarter to Alamo's our We are

are a emissions this sustainable We Alamo excited operational give should our has the future the advantage integrated important. the costs customers. company. In And have us more about to thrilled our to are excellence service platform competitive board and ability for given tight been market, and of our never combined lower team on

harvest for closing today, go investments see strong to Robert strategic plan are our can in once for we cycle demand we company the by non-core I'll what investments we proceeds With the will now to and turn flow to those in excited are downturn. be built years. during From We technologies the back several mode. it high cash that to turned. remarks. assets entirely We believe have fund into free returns off used sold We set almost the earn that,

Robert Drummond

Thanks, key closing, few Kenny. with you a In want leave to I takeaways.

position moves First, come year. the industry utilization the our next services developing U.S. a advantageous a from better program demand cycle. for couldn't finishing We're time benefit past XX% an in strengthening conversion at puts as the in just us This up for whole. supply completion to onshore as

finally, that our excited would lines energy theirs. recovery renewables Second, showcase for integrated at quarter, global aligning closely in the creating need we'd in integrated are our our Investor shale to than on now by our accelerated our With up U.S. like has And over a help the NexTier value with products to growth strong fill outlook suite service role created is long-term great and the the elevating satisfy to of in world this growing a services. acknowledging of the to just prices commodity markets more growth, past our for the position the to Q&A. platform is March goals Xrd. completion customers Day and that, We're the open demand.

Operator

Instructions] Our Bank with Chase of first ahead. Mulvehill go comes [Operator from question Please America.

Chase Mulvehill

first prices and just I obviously, elevated guess, question oil is natural kind are of, the well. pretty here really nice gas as price

approach end could hold year. rigs that horizontal count the of XXX horizontal the think here, by rig prices we if commodity actually So this

XXX demand. probably I that's call crew the incremental frac that don't So know, XX it, increase, in crews, drops frac rig and of, something about basically range

I that two is, add tightness add, actually kind friction, I the incremental could XX you then one, frac to that call? could you guess So a crews number guess market, things actually pricing? guess, number earnings mean frac you into I the the you about see if you into chain talked added on - the that. would all sand, see few given of for do if in supply what And were during frac think you XX just questions the crews market,

Robert Drummond

are today again say there use the can fact the out count deployed. say XXX calendars, that horsepower believe that that and believe creating U.S. we that on is out there's many increasing again price. so is simul-frac that drilling of on of January in was been very of these I'll But is our little profitability point don't land approaching trying keep bit as in a has inventory important XX to typical and that much space fleets deployed a to be release well Xrd and pretty the probably that with to a today frac we've steady fleet start white end amount the I on fleets, per for fleets way with question tune look, Chase, you're that March about which fact back recent the pumps high-efficiency that think has as also and our grown the in mean, we we is been supporting frac and the the I good increase, rig to most job. in just

in about say around of lot. what out a operates it XXX, John at mean the we in varies counted you How as XXX the there's is talks fleets market, month weeks maxes those half, kind think horsepower available Daniels we bit. like But fleet example. total a measure fully only utilized, deployed kind you think So a when fleets. we a won't that for when a XXX be it of two

we we into So and in of another Tier we when X XXX XX so the that don't into so. Even we're deployed, fleets perfect time can on it, lot it not that that or both arena, coming a it and in but new see get take see market, above the arena much it account, builds electric we look it. spent we call at at the

can better. very And your original about question pricing to also frac that's schedule. your environment. - you efficiency healthy new your pricing, It's for get schedule, filling fill the very a frac that's So healthy when

fleets. yet, with and of I situation bottleneck macro that the is same opinion. our an that's fleet are inventory. think land the focused So strong repositioning that's when be we and production going having about response customers frac lot U.S. people on around around Not efficiency mean, that see that to U.S. are the the on for a talking but things appreciate the us I you our

Chase Mulvehill

and you think demand to when or one that But the there Tier could you know if Tier you obviously okay, say not say, XXX you, to choice. account? extra online the to mean, that to of to just fleet just the ability outside were could of bit it will you do DGB let do the I Tier And you that of if bring into push that's - have is industry to. well, X think me you that do had kind XXX traditional on and or fleets prefer sidelines that for spend bottleneck, little a I'll an X more there's have out and a higher take somebody that they kind if takes have think you money put, I kind X put you'd a look of

Robert Drummond

say fleet, takes we got the than I $XX or to remnant as bit mean, That's get no CapEx as that into I I it little cold-stacked that can't that's a what the that that of to spend XXX. plus you trying even if fleet activate the exists more the just really go little I'm believe. mean, - into bit. million a much account minus, depths and we to Chase,

Chase Mulvehill

low-to-mid-teens. something at chain, pricing. of on But things, margin comment you mean, And is XQ, versus don't XQ? just in we follow-up to higher all don't we want know or if XQ try. a quick going if and plausible just think looking I know know, supply can to kind to incrementals, question we top-line the I to want about gave talk One at wants we weather, but of you progression look - Kenny, But kind or I'm if Kenny look on some range answer margins when I obviously, if don't you kind I when about of this, comment incrementals, at would

Kenneth Pucheu

to So maybe let me back QX. just go

EBITDA XX%. So asset gain, nearly excluding were our margins adjusted

exit, of then to again, expansion QX. start I we EBITDA QX per the and issues the get move again basis are that want see from But an reiterate mentioned quarter to going strong QX But quarter. margins remarks, QX be QX. So kind strong. Robert it's February will restart exit And expect January weather point prepared we and be flattish. pricing. impacting margins expecting we a performance. believe We're made in seeing in into his fleet. higher. as We're going about again And of into be a margin to The We increase will double-digit XXX to going

been year. issues margin the But go through the higher start-up the would I expansion overall, except So and we as margins QX that think have weather. for we see

Robert Drummond

think on QX except this deploying even at for depending we expect in every to point fleet we And to I'd perhaps of though say holiday quarter, of kind year, our that is what have. Chase, this quarter, kind end impact are last one the we just of you add grow

previous sort calendar supports wanted fleet to and management just the XXnd I So this that fact that efficiency, emphasize going to post of grow the bit. deployment. We're question a via pricing improved

Operator

with Piper The Please next question ahead. Sandler. from is go MacPherson Ian

Ian MacPherson

typically and inclined term to over resist customers of would term lock-in bit longer. of the that longer speak might and Can a setup to imply this that now bullish pricing described false are contractors service beginning to or the you how... scramble you true little the arrangements Robert, be sort

Robert Drummond

either. you're is cut lock-in but it I the false the is that, out gas-powered ability yes, always even customers' I'm a and a We gas-powered asking extend there, bit market, it and market. would is because around just fleets you pricing. to about are a want talking just tighten think diesel bit what's tight to or in pricing-wise to market or diesel about not portion terms true the I bit happening Ian, little just Look, anchored up the a say needed contract

moving inflation of that of direction. that and and that I agreement And we're right concessions recovered there. So we're to us made - of we Oil from I first indexed, now that, customers of because some COVID. think our get are for recoup price some kind need negatives sector yield little in kind kind a any we've can scheme, to long-term pricing the I had kind the during prices as understand on ourselves resisting many of once in price of think a sort while think we

now of by during We out still from on I absorbed a say fleets pretty becoming or able the years has pricing reduced in of unit-wise they're we've feel want being perspective, the to fleet that number would our then But decline-wise flat and about of previously just efficiencies. had I improving a recoup the So really is flat do we is market. good be just point able still that where occurred to pricing COVID. been reality customers' offset to sort frac that that. deflationary market that it cap in a But the environment over the

But deciding a It's is it's right perspective. our now it win-win. where work from a us frac customers. for and good So who for market good I and a for think you to want

Ian MacPherson

the tightness I year? and new being the and might it's trigger next we question pulled this forward on to something expect this that's that on to another surge trialing want build was just your fleet some whether time going ask ideal Robert, with that's given year point the electric pull how at

Robert Drummond

field whole that we're derisking general. been comfortable in it when technology with the to the pump using us. is We're That for workhorse a Look, comes we've eFrac eFrac of it testing just now. it. But fleet really using It's beyond field it. test of kind a not we're been hurry an and sake doing deploy the electric just for to in of we've

- Tier diesel more savings that driver from we gas. conversion that associated fuel X like think a you arbitrage portion switching for I large is that delivers the really our that's We to feel have capital gas and process And efficient is the it of biggest with get.

we of was that sheet be And are the we're in arrangements the in are with from that. - direction market we electric our with pre-Alamo be be away think wait, more it and we And we to of deployed full which in flow they we cash getting the got to focused and like fleet that power moving capital turbine-powered solution electric - who and where like electric eFrac But moving allows acquisition. we kind So is fleets to to the efficient would expect more grid, will customers the deployment fleet. feel back tune the be free we will on resolved. we've with some XXXX, for in I in in of while XXXX. where much on mean, a anticipate market balance our be

between would prefer. we solutions genset other in So power there, type - there's we that

market. said at having in all pace. So We moving still a like we're measured is we where that that the stand

some ahead limit in a them mean, going partners who arena. us I customer, deploying deployments to think of that we're in understand think it have you challenge it. I early is for they people bit are should I are But our market. the XXXX the a XXXX chain But eFleets with whole even supply the guided there already XXXX. consider for in where of this

Operator

go from ahead. The next question Citigroup. Please is Scott Gruber with

Scott Gruber

making understand, it's the year tight, I'm now. of crude was the market's ton here. the in about getting XX, to a macro of your Why to is are tighter, just take all money slowing of of backdrop customers over think economics the struggling you So pricing? disconnect I And net What's right XX% it guys terms kind down does get faster? kind just

Robert Drummond

things is on. question. that a like that would of I Look, say going couple I just there's

fighting as pricing got as previously the getting That's pass-through well And COVID we're we're labor equipment both against that on evolving now also unpredictable, of the been it in that's on You've best reopeners side kind a thing. during That's were that quarterly. set as one were at mode an that happens. trend inflation side.

to get. moving net you're market as you're inflation going well have as you gains up, capture So that as whatever to

inflation long-term of all the kind that's the are that aggressive. We relationships customers. that growth four you more to moving - with we've but break for huge comes same get But So like I think as last a capture XXXX. making or thing But net pure could got have to been with - get think we've we just pricing 'XX don't But around in in net and handle those Xx that But because the time, want a at versus as months probably it through the back the to upside inflation numerous want do us, And capture. I we in pricing do as that I right dynamics. are our we think three now of And many parts I think we those to capture. dynamic. us, on when better that process they customers just those. be same

I of you gives little color, hope. that a So bit

Scott Gruber

are as are margins we we of And kind XX%. their customers, I'd companies, cash at out does. to as the cash at point them the look like service your It sub-XX%. today margins look

look, So that I as we've I to ever as but I'd maybe have seen. think wide think disconnect

What's to versus through customer second pricing as kind that have make a the give rough well? the base. of Just gross past the half a point through year? the sense you that you're us kind last So of maybe inflation underlying to trend to the pushing of increase in of

Robert Drummond

but for we recapturing all trucks you preparing rebound back X,XXX gives the may is internally components. Ian, inflation we it probably competitive amount acquired our for think comes resource in a to comment inflation us, maybe because trucking when customers I made started got for to of strategic on that what from know a probably on be not some company, buys did we're say 'XX. the major power early that's We what others that perspective, some us would today. look, - I less than I pressing something like. just looks inflation in logistics, We - - we've

inflation So we got market little a perhaps than less does. the general bit

region do for we of maybe that all NexHub around. called where to scenario what drivers volumes And have fleets. like Tower for mixed up third-parties don't maintenance a moving work. our in we looks the where is got of do kind facility lot our of mile the of competitive kind getting doing the with We Control we've less get next a Next, to more Permian normal efficiency sand need

to don't us helps as had to does, price I So for if a the general that much market as of maybe think take our a any. customers get net move

Operator

from go [Operator Please The Stanley. Morgan with is Instructions] question Kutz Dan next ahead.

Daniel Kutz

kind if a how a wondering some those been recently? on color and strong Obviously, indicate could little expand and the I just Solutions reception would of Power comments assets on going of business. strong little could wanted you we deployment has bit see has been to get So that been But of if bit the has just there. more progress services the

Robert Drummond

flow Solutions. market and that further out that to we mentioned we biggest second into Investor to we company. profitable fleets. at margins But have, is own went of conversion about business. that excited free on balance in Power to Look, the the opportunities go going we weigh the point our got look of segment. very cash are We objectives our that The we say against it's depth put largest quick the that to in I process have the Xrd, are becoming free our on a flow I just we're Day have we our would the overall When cash we essentially expansion. but this balance very And some we're would that really and it gas-powered evaluating to further quickly invest accretive into the at with

downturn. invested this into The very on the triple, We're we low. approach customers if to is and our smart trying is maybe real it we're with clear path. be it measured returns So year, double, opportunities demand very with going going the fleets coming only quadruple from and this be to this ability a demonstrate But going is capital enormous. to our our that that off want business to and to still be for good, increasing don't own be operating

just as while smart our prudently 'XX move trying 'XX, be about be versus while less growing CapEx to plan we're can in as and to to it's So still it we hugely. sticking

Daniel Kutz

more a expanding broadly. but of the And with topic, capital maybe just sticking kind allocation little bit

that And think returns any So question, just realize term, inorganic the then priority how kind to growth growth to investments versus early of great? that, flow. the near-term be medium priorities it I of investments would the versus organic thinking to harvesting you appreciate of capital color like a fleet just ask little wanted that as year. guys longer to cash might But might I be presuming a free kind you eFrac telegraphed next be deployment shareholder that beyond look about more ask bit maybe we the there that but

Robert Drummond

end below very X. We're get bit healthy a into acquisition. position to pre-Alamo to as but comment. But aiming and have liquidity to deal by going about we - then more we've done then we kind board way year. because got It we a your do a to the began our problem of And that. real turn perhaps the kind high-class and to we that discussing do early, is spend particularly we a little one can of all time that the been 'XX. position appreciate get get with it's how I of be maybe like about leverage with, our back that's got - leverage And we'll

Solutions spend electric. to they want Power as business convert think potential real. even money is much people a be don't going to would I wanted to as 'XX if think this to is I to

pace And as provide I think still is supply tight. that pretty XXXX. in like to would Kenny, be there that? general it at the market capacity maybe some leaking in chain the roughly into would further color is the you same leaking around

Kenneth Pucheu

add. just I'd Dan,

return sheet that to we'll it's balance where said, of that balance to too understand can't means But just by the position other free we XXXX, cash shareholders, sheet. It's bit Like the have our Robert on strengthen focus our we just priorities this a without and we needed that's weighing some be, let flow and know commitment. cycle our With probably the we early. which is go year, allocation. our be little

Operator

Podhaizer Barclays. ahead. is Please with The next question go from Derek

Derek Podhaizer

in pricing the It budget. there you're the question pass-throughs drive maybe to other. want piggyback And in on mechanisms to in E&Ps earlier. just I expand each of just or about? contrary of costs that and profitability Scott's I some throughout context year bit levers just that their about ask inflation you the seems Can service the to out locking talking the talking off of a the

on you work hoping expand through could maybe as Just we the year? that

Robert Drummond

that think stages perhaps. customers with to deliver and a management, It's profitability around specific demand company, anything prefer. an is industry this supporting then recoup can can that on frac you a drives supply per then that and the by a years day, is huge we point premature as depends U.S. fact in when little companies are then for the what profitability you to metrics customers that that who I kind history of from It out part side for number in we anybody it's Once frac because healthy I is the just a inventory bottleneck the been weigh calendar up being long-term. And a been think to and frac allowing financial the Look, The locking is for not particular land of years. frac the because profit And supply your think in huge response, made frac hours chain think. have of comments reason P&Ls position, our scenario production need I number what to when healthy. fleet us has a that has understand position like whole back And And bit where any of the have that pricing. are. a pointed lever. it, what I driver. problem that's the lining able the frac even per declining, pumping back sector around we're objectives I consider been a do or And you for day to another we an which go pricing of that's for not

earnings So in continue. the earnings, of EPS. to quarters be is been us case, It's few expect QX. that's able to come since for us all a positive and this to back We to we regain that good been for

a that may where I that's customer that strategic it case at got saying think idea. driver excellent not a for who's a I But I if So locking great see such in be could also then efficiency the and and weather for might a through period for in road time protects inflation frac price the profitability and downside of if existed. case calendar passing companies management the lock-in the terms of a I

from dynamic. So away like on of pricing. ways that's we up a But there's think I the heating kind feel long

Derek Podhaizer

question. of my willing target reaching per EBITDA to next your fleet Obviously, be on Would peers level? that to Just one out out XXXX. put pushed that a you mid-teens

path year-over-year. the talked double-digit the on are you net towards about where increases pricing You curious that? Just

Just profitability metric? that the translates how into wondering

Kenneth Pucheu

Derek, the would what per of any see that EBITDA going Xrd about of up goes say March EBITDA EBITDA absent give we downtime. fleet earlier, to as guys I assuming per on $XX I to as taste we're But obviously, Day. see million even margin our on $XX Investor budget margins could expansion fleet, everything leaking exit mentioned or a So as exhaustion look, and we we adjusted QX year, annualized QX planned, this is, you million or that

year. upon hurdle maybe So yet. fleet go as not per expansion But the profitability getting that just again, we through

Operator

question our for concludes the conference This would turn session. I to like answer back Drummond Robert over and any remarks. to closing

Robert Drummond

thank all today's hope. We're you want thank much the In forward excited of dedication their and for cycle. looking hard So conclusion, we're to for the Xrd, right coming looking NexTier March very Thank call. in forward very this to And about we're we you work. I you. just position all market employees on the in to our seeing and continued of participating now,

Operator

for concluded. has today's Thank now you attending The presentation. conference

may You disconnect. now