KLX Energy Services Holdings, Inc. (KLXE) Q2 2019 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the KLX Energy Services Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call is being recorded.I would now like to introduce your host for today's conference, Mr. Michael Perlman, Treasurer and Senior Director of Investor Relations. Sir, you may begin.

Thank you, Joelle. Good morning and thank you for joining us. Today, we are here to discuss KLX Energy Services financial results for the second quarter period ended July 31, 2019. The company’s earnings news release which was issued earlier this morning presents these results. If you haven’t received it, you’ll find a copy on our website.We will begin with remarks from Amin Khoury, Chairman and Chief Executive Officer of KLX Energy Services. Also on the call this morning is Tom McCaffrey, Senior Vice President and Chief Financial Officer.For today’s call, we have prepared a few slides to help you follow our discussion. You can find a presentation on the Investor Relations page of the KLX Energy Services website at klxenergy.com. In addition, copies of the slides are posted on our website for you to refer to.Before we begin, we have some additional information to cover. Any forward-looking statements that we make are subject to risks and uncertainties. And as always in our prepared remarks and our responses to your questions, we will rely on the Safe Harbor exemptions under the various securities acts, and our Safe Harbor statements in the company’s filings with the Securities and Exchange Commission. We will address questions following our prepared remarks. At that time, the operator will provide Q&A instructions.Now, I’ll turn the call over to Amin Khoury.

Thank you, Michael, and good morning, everyone. Thank you for joining us today to discuss our second quarter financial results. During the quarter, we made initial progress in rolling out new product service lines in all three of our geographical segments. We introduced large diameter coiled tubing services, in conjunction with the proprietary HydroPull tool and our own proprietary motor bearing assembly, in both the Northeast/Mid-Con and Rocky Mountains segments. And we’re pleased with the consistent pull-through effects for our complementary asset light services.We also completed the training of the personnel required to roll out the flowback and testing PSL in one additional GEO region. In spite of these significant new PSL training and launch costs, we did manage to absorb all of these costs and still deliver a profitable quarter.Second quarter 2019 revenues were up approximately 13% as compared to the first quarter of 2019, and we’re up approximately 40% as compared to the same period in the prior year. Organic revenue growth was approximately 8%. Our Rocky Mountains and Northeast/Mid-Con segments delivered sequential quarterly revenue growth of approximately 31% and 23% respectively, while our Southwest segment revenues declined approximately 8%. Organic revenue growth for our Rocky Mountains and Northeast/Mid-Con segments were very strong at approximately 25% and 13% respectively.Our second quarter 2019 performance reflected lower activity levels, and reduced capital spending by exploration and production companies almost all of which intensified their focus on capital discipline in order to deliver announced levels of free cash flow. Additionally, severe weather conditions in the Mid-Con including severe flooding which led to impassable roads and highways began in the month of May and persisted through June, resulting in a significant decline in activity in the Mid-Con until the second half of our quarter ending July 31. The magnitude of the negative impact was approximately $8 million to $9 million of lost revenues.Our second quarter performance was also impacted by lower coiled tubing revenues, due to delays in delivery of coiled tubing spreads and lower wireline revenues in the Permian, due to our decision to not deploy these assets at prices being offered by competitors.On today’s call, we will review the current oilfield services market, discuss our second quarter 2019 financial performance, and update our guidance.Let’s begin by reviewing the current oilfield services market environment. Following a strong start to the year, oil prices were volatile in the second quarter, with a price of WTI crude trading down to below $52 per barrel in early June, a 20% decline from the prior month. The decline in oil prices erased a significant portion of the gains from the beginning of the year as investors raised concerns over subdued global growth, causing weak near term oil demand. The magnitude and the speed of the move-lower was further exacerbated by growing concerns over strong U.S. oil and gas production and rising inventories.As of today, oil and natural gas prices continued to be hampered by concerns about supply and demand imbalances resulting from slower global economic growth and robust production. North American land completion activity remains challenged, as exploration and production companies have intensified their focus on staying within their announced capital expenditure and free cash flow budgets. This has resulted in a decline in the average number of frac fleets operating nationally, and a 13% decline in the average quarterly rig count in North America since the first quarter.While we have seen the price differential for crude prices narrow in recent months due to additional pipeline capacity coming online, our customers’ completion activities have also been negatively impacted by the lack of available pipeline capacity for natural gas, as well as regulatory limits on flaring. The additional pipeline capacity anticipated to come online in the Permian and in the Bakken within the next year is expected to alleviate some of the gas takeaway capacity issues impacting both regions.Looking forward, we expect North American drilling and completion activity to decrease further in the third quarter as E&P companies scale back their activities to stay within their announced CapEx and cash flow guidance and for fourth quarter E&P activity to be somewhat further impacted as compared to Q3 by weather-related and seasonal issues as well as budget exhaustion. Despite the expected decline in activity in the third quarter, we expect KLX revenues and profitability to grow in the third quarter as compared to the second quarter. We will discuss this later as we address our guidance and the outlook for the balance of the year.Let's turn to Slide 3 and review our second quarter 2019 consolidated results. Second quarter 2019 revenues of approximately $165 million increased approximately $19 million or 13%, as compared to Q1. Organic revenue growth was approximately 8%. On a product line basis, completion and intervention services increased approximately 11% and 39%, respectively, as compared to the first quarter, while production revenues declined approximately 5%.Rocky Mountains segment revenue growth was approximately $15 million or 31%. Rocky Mountains’ organic revenue growth was approximately 25%, reflecting an increase in the number of customers served, increased activity across substantially all product lines and improved adoption rates of recently introduced proprietary tools, so a greater number of customers and a greater share of wallet.The Rocky Mountains segment also benefited from approximately $3 million of inorganic growth from an additional six weeks of Tecton flowback and testing revenues, as compared to the first quarter 2019.Northeast/Mid-Con segment delivered revenue growth of approximately 23%. Organic revenue growth was approximately 13%, again driven by a significant increase in the number of customers served and improved adoption rates of proprietary tools. The $4 million revenue contribution from an additional six weeks of Red Bone operations was more than offset by the $8 million to $9 million reduction in revenues caused by flooding and tornadoes in May and June in the Mid-Con, which resulted in six weeks of substantially reduced activity, particularly in Red Bone's primary Oklahoma market.Our Southwest segment also experienced an increase in the number of customers served, but revenue growth from new customers was more than offset by lower activity levels by certain existing customers and the negative impact from the low utilization of our wireline assets as we chose not to deploy these assets at prices being offered by competitors.Operating earnings and operating margin were $11 million and 6.7%, respectively. Adjusted EBITDA was $32 million and adjusted EBITDA margin was about 20%, adjusted only to exclude non-cash compensation expense.Gross margin, operating margin and adjusted EBITDA margin were all negatively impacted by the six weeks of substantially reduced activity in the Mid-Con and costs incurred to roll out new product service lines in all three GEO segments. Adjusted net earnings and adjusted net earnings per diluted share, adjusted to exclude non-cash compensation and amortization expense, were $9.2 million and $0.41 per diluted share, respectively.Despite aforementioned headwinds during the quarter, our operating earnings were up approximately 360%, while adjusted EBITDA was up approximately 48%. Adjusted net earnings were up approximately $8.9 million and adjusted net earnings per diluted share increased $0.40 to $0.41 per share.Let’s now turn to Slide 4 and review second quarter 2019 segment financial results beginning with the Rocky Mountains segment.Second quarter 2019 Rocky Mountains segment revenues of $63.5 million increased by approximately $15 million or 31%. Organic revenue growth was a very strong 25% driven by a significant increase in the number of customers served, increased activities across substantially all product lines and improved adoption rates of proprietary tools including the HydroPull in combination with our proprietary motor bearing assembly and dissolvable plugs. Our Rocky Mountains segment also benefited from approximately $3 million of inorganic growth from an additional six weeks of Tecton flowback and testing revenues.The Rocky Mountains segment has also built on its differentiation in technology and efficiency by having completed the roll out of greaseless wireline and a fully addressable plug and play disposable gun system. Operating earnings and operating margin were approximately $9 million and 14%, increases of approximately 200% and 770 basis points respectively as compared to Q1. Adjusted EBITDA increased approximately 80% on the 31% increase in revenues, resulting in adjusted EBITDA margin of approximately 25%, that was up 690 basis points as compared to the first quarter of 2019.Let’s turn to Slide 5 and review our second quarter Northeast/Mid-Con segment performance. Second quarter 2019 Northeast/Mid-Con segment revenues of $48.1 million increased by approximately 23%. Organic revenue growth was approximately 13% driven by an increase in the number of customers served and improved adoption rates of proprietary tools. The $4 million contribution to revenues from the additional six weeks of Red Bone operations was more than offset by flooding and tornadoes in May and June in the Mid-Con, which resulted in six weeks of substantially reduced activity and a negative impact on revenues of approximately $8 million to $9 million.More importantly, operating efficiency and operating earnings were severely impacted by the near stoppage in activity for a number of customers during the flooding and its aftermath. And as a result, operating margin was a depressed 8.1%. Adjusted EBITDA did increase 14% to $11 million as compared to the first quarter but the adjusted EBITDA margin of 22.9% was also negatively impacted by the impact of the severe weather conditions. Exclusive of weather-related negative impacts, Northeast/Mid-Con segment operating margin and adjusted EBITDA margins were likely have approximated July operating and adjusted EBITDA margins that were in excess of 11% and 25%, respectively.Let's turn to Slide 6 and review the second quarter results for the company's Southwest segment. For the second quarter, Southwest segment revenues decreased approximately 8%, driven primarily by lower activity levels by existing customers and lower utilization of wireline assets as we chose not to deploy these assets at prices being offered by competitors. The Southwest segment is also incurring the additional costs of rolling out flowback and testing services, greaseless wireline and the fully addressable plug and play disposable gun system in the Permian that we have already successfully rolled out in the Rocky Mountains segment.The Southwest segment also continues to incur costs to support the rollout of the coiled tubing product service line in both the Mid-Con and in the Rockies. While quarter-over-quarter spend declined with a number of our existing customers due to their reduction in activity, we have successfully broadened our footprint within our customer base and have added approximately 30 new customers in the Southwest segment during the quarter.Despite the lower Southwest segment revenues and significant new PSL rollout costs, operating loss of $1.6 million improved by approximately $2.4 million and adjusted EBITDA of $5.1 million improved by $1.9 million or approximately 59%, as compared to the first quarter of 2019.Now, let's take a moment and review our financial position on Slide 7. As of July 31, cash on hand was approximately $92 million. Total long-term debt of $250 million less cash resulted in net debt of approximately $158 million and the company's net debt to net capital ratio was approximately 29%. Our net debt to adjusted EBITDA leverage ratio was approximately 1.3 times. There were no borrowings outstanding under the company's $100 million credit facility for the three months ended July 31, 2019.Cash flow provided by operating activities was approximately $8 million, while capital expenditures in the current period were approximately $27 million, reflecting investments related to the company’s strategy to expand recently acquired product service lines in additional geographic segments.In spite of expected further coiled tubing delivery delays, by the end of the fourth quarter, the company expects it will have received all on order large diameter coiled tubing spreads, and therefore, to have completed the intensive capital investment phase of our strategy to use large diameter coiled tubing in conjunction with certain proprietary tools to pull through a broad range of asset light services for the company's customers in all geographic segments.As a result of the completion of the intensive capital investment phase of the company’s strategy, in 2019, we expect to generate strong free cash flow in 2020. In fact as we look towards 2020, we will be servicing a larger number of customers in each GEO region, delivering a broader range of services to those customers as we garner a larger percentage of customer spend, while delivering strong free cash flow.Let’s now briefly review our guidance. We expect E&P spending to be somewhat lower in the third quarter, as customers remain focused on staying within their announced capital spending and free cash flow targets. We expect fourth quarter activity to somewhat lower than Q3 activity, due to weather-related and seasonal effects. Nevertheless, we expect KLX third quarter 2019 revenues to increase approximately 3% over the immediately preceding quarter.We expect fourth quarter 2019 revenues to be slightly lower as compared to third quarter revenues due to weather-related and seasonal effects. Our revenue growth in 2019 has been negatively impacted by delays in delivery of large diameter coiled tubing spreads from the manufacturer. We expect further significant delays in the delivery of this equipment. However, all five of these new large diameter coiled tubing spreads are expected to be received by the end of the fourth quarter of 2019 bringing our total large diameter coiled tubing spread count to 13 units.The start up, training and launch costs of the large diameter coiled tubing and flowback and testing PSLs have been a drag on margins, particularly in the Southwest segment which has supported coiled tubing launch costs in both the Rockies and the Mid-Con segments. While we expect a substantial pickup in margins in Q3 for the company overall, we will continue to incur the start up costs through the end of Q1 of 2020. Thereafter, we expect the significant improvement in margins and profitability as well as strong free cash flow throughout the year.Let’s walk through our third quarter guidance in more detail, please turn to Slide 8. Revenues are expected to be approximately a $170 million in Q3, an increase of approximately 3% as compared to the second quarter of 2019 and an increase of approximately 38% as compared to the same period of the prior year. GAAP net earnings and GAAP net earnings per diluted share are expected to be approximately $9 million and $0.40 per diluted share with each increasing approximately a 150%. EBITDA is expected to be approximately $30 million while approximately 18% of revenues reflecting an increase in EBITDA of approximately 9%.Adjusted EBITDA is expected to be approximately $35 million or approximately 21% of revenues, reflecting increases of approximately 10% and approximately a 100 basis points as compared to the second quarter of 2019. Net earnings and net earnings per diluted share, adjusted to exclude non-cash compensation and amortization expense are expected to be approximately $15 million and approximately $0.65 per diluted share increasing approximately 63% and approximately 59% respectively as compared to the second quarter of 2019. Return on invested capital is expected to be approximately 15%.With that, I will now turn the call back over to Michael for the Q&A portion of this morning's call.

Thank you, Amin. I will now turn the call over to Joelle for the Q&A portion of today's call. Joelle will provide instructions on how to ask a question. Joelle?

Thank you. [Operator Instructions]. Our first question comes from Brad Handler with Jefferies. Your line is now open.

Maybe I would appreciate if you could speak a little bit more to what's going on in the wireline business in your Southwest region. It does sound like there’s competitive threats and I guess I'm happy to tee up. What feels like is probably what you're offering as a solution to that by -- with greaseless wireline and then your preassembled perf guns. But if you could just kind of speak to that? And maybe in a sense what allows it to get better, more significantly enough better or do you foresee -- maybe in addition to what I was just suggesting from a more proprietary standpoint, do you foresee moving assets out of that region, because it’s simply -- it's just too competitive for the long run?

There is too much wireline supply and insufficient demand in the Permian and you got a lot of irrational prices for wireline services in the Permian. We've chosen not to deploy our assets at the prices being offered by competitors. We know a lot of folks that are basically running their equipment into the ground and generating cash flow. We are deploying some of those assets to other regions, where we have better capacity demand and better pricing environment. But we expect that in the long-term we will have to offer a complete range of our services to our customers in the Permian.So we will return -- we will retain a certain amount of wireline capacity but we are going to choose to keep it sideline until such time as we can generate a reasonable return on our investment in those assets.

Got it. So, again you used the term running it into the ground, so you assume that after some period of time, it’s -- what is unsustainable, the pricing needs to move higher or else too many companies won't be able to offer the services long-term. Something along those lines?

Exactly, right. And then we have -- you know that there are a couple of companies teetering on the brink at this point in time and they are basically running their assets for cash flow and we choose not to do that. And we want a reasonable return on assets for our investors. And so we've got a couple of regions here where we have really strong organic growth, I mean 25% and 13% is very strong organic growth, and we are increasing our customer count. We are increasing our penetration and share of wallet. And customers are really growing market share and delivering excellent results.In the Permian, there is -- particularly with respect to wireline, there is just way too much capacity, insufficient demand and the status of some of the competitors in that environment are such that they’re running those assets for cash flow.

If I pivot to look at the second half of the year and get at your guidance a little bit, it’s easy to see potential weakness in natural gas and NGL-related activity in the second half, which would obviously address Northeast/Mid-Con region. You’re talking about weakness, that’s a lot of other different nature in the Permian. Maybe help us think a little bit about regions in terms of your guidance and nevertheless where your opportunity lies please?

I think -- so the gas play in the Northeast region quite are gas-related revenues for the company, are about 17% of revenues, and we do expect a significant reduction in activity related to gas in the Northeast. Our segment is the Northeast/Mid-Con segment offsetting that. We got really strong operations in the Mid-Con. I mean we have 13% organic growth in spite of having lost $8 million to $9 million in revenues. That’s negative revenue impact from the tornadoes and flooding during that six weeks during the quarter from May through mid-June. So very strong growth, a large increase in the number of customers and significant increase in share of wallet.Now while rig count is way down in the Mid-Con as you know, we are doing pretty well there. We introduced coiled tubing services during this past quarter and the pull through that we’re getting from the coiled tubing service is consistent with our expectation and our strategy. So, we do expect the segment to do well during the quarter -- during the third quarter notwithstanding the substantially negative impact from the Utica and Marcellus gas plays.

And then maybe just one more from me and I guess I feel like I should ask a little bit about bigger picture and from your relatively fresh out of the gate kind of look standpoint too, as a standalone entity anyway. So your initial guidance for 2019 was in the order of 200 million, I think it was $200 million of adjusted EBITDA. If I'm taking sort of a stab at fourth quarter based on your comments, you’re now reining that into something more like a 120 million, 125 million of adjusted EBITDA. The oil price hasn’t necessarily been that different than what you were outlining in terms of the basis of your guidance, right? But obviously a number of other things have happened this year. And so I guess maybe you could speak to, in a sense what -- and sort of how to reassure -- in a sense how to reassure us that your current guidance is really sort of on target, there’s something that we’re going not wake up six months from now and say “Oh, wow, that was wrong for X or Y or Z reasons as well,” but that it is just that much more solid I guess?

Oh, we should talk about X, Y and Z, right?

I guess, if you can, I mean it’s obviously the unknowns, right? But it’s…

So see we’ve got -- I mean coiled tubing spreads are a very large revenue generator and also is a great deal of pull through. We’ve had delivery delays which have already impacted revenues during the second quarter, but we've now pulled all the revenues from five coiled tubing spreads, large diameter coiled tubing spreads out of our guidance for the full year. Those spreads generate, when they are up and running and operating, something in the neighborhood of $1 million to $1.2 million per month per unit together with the pull through effect, okay? So, not having that resource in the company and we did discuss this by the way in the -- I think it's both in the news release and in the script, we will be receiving those and we are enthusiastic about that and we're also very happy with the quality of the equipment we're getting. But we’ve moved all of those revenues out of our guidance and we still have in our guidance the receipt of the five units but at the very end of the year. And we will have the negative impact of the use of cash to buy those assets, but the revenues from those assets really won't come in until 2020.I would think that the good news there is that we would expect strong growth in both revenues, expanding margins and substantial free cash flow since the intensive capital investment phase of our strategy will have been completed. I mean what is our strategy about? It's about differentiating ourselves from the moms and pops that offer some of the services which we offer in order to -- by spending on capital assets that moms and pops are not necessarily able to do.So, being able to offer our customers coiled tubing and wireline services along with non-frac pressure pumping, pulls through the thru-tubing business and it pulls through the nitrogen business and it pulls through a number of other services and it’s really important part of our strategy.So, our expectation is that we will have completed, as I say, the intensive investment capital phase of our strategy and be in a different place in 2020, with all of our are GEO regions offering a broad range of services to our entire customer base in each of those regions.The other impacts on revenues or our guidance for this year of course would be the weather impact. I mean there’s not much that we can do about that, it’s an $8 million to $9 million hit because of the tornadoes and that is why and why could happen at some other period in some other location. Hurricanes, tornadoes, flooding are not things that we can control, blizzards or whatever. We did try to quantitate the impact for you, it’s about $8 million to $9 million of revenues, but it’s a much more important impact on operating earnings and EBITDA margins.And finally, the wireline thing is that that's our own issue. That's our decision not to deploy those assets, which negatively impacts revenues and that could happen in any GEO region at any time.

Thank you. [Operator Instructions]. And our final question comes from John Watson with Simmons Energy. Your line is now open.

On the coiled tubing side I wanted to follow up on your commentary for the five units that have been delayed. Do you have customers in place for those five units already? And can you also speak to the level of oversupply, undersupply in the large diameter coiled market and maybe compare and contrast that with what you’re seeing in wireline?

Yes, the new coiled tubing assets do have very specific customers to which they are expected to be employed. The coiled tubing assets are -- some of those assets are used on a dedicated basis round the clock, 24/7, for certain customers and some of the coiled tubing assets are used on a spot basis for multiple customers that are close to one another geographically.Obviously, the highest utilization comes from dedicated use of the large diameter coiled tubing spreads. There is a shortage of large diameter coiled tubing assets in the 2-5/8 inch range, undoubtedly. We’ve got customers who are begging us to bring that equipment online and we’re late with it because we just don’t have the equipment yet. We have one additional dedicated customer that we expect in the Permian who would like to have the assets, but there’s competition for the assets between regions that already have customers lined up. So the issue that we have right now is allocating our new coiled tubing assets, as they become available to us, to bring into the market. But it’s a very different picture than the wireline situation.

Okay, that’s helpful. I guess more near term, $8 million to $9 million of lost revenue from Mid-Con weather during the quarter. The revenue guidance implies your revenues are up somewhere around $5 million quarter-over-quarter. So the sequential increase that you’re contemplating for 3Q, the majority of that is making up for what you lost from the Mid-Con weather in 2Q. Am I thinking about that correctly?

Well we do expect the Mid-Con to be stronger and the Mid-Con itself to be stronger in Q3, but we expect Northeast revenues to be down in Q3, right? So our Northeast/Mid-Con segment is -- comprises both the Northeast which is gas-related and the Mid-Con which is of course oil and gas, but primarily oil. And so, the increase that we’re forecasting in Q3, I think is, is in spite of what we expect to be substantially lower activity levels in terms of both drilling and completions in the third quarter and I think you probably heard that from all of the OFS companies that have reported.

Right, absolutely. To that point, we’re three weeks through August at this point. Can you give us an update on how August is trending relative to maybe the 2Q average monthly results?

August is not even finished yet, August is not finished yet. We don't see anything unusual in August but we won't report on August until it's finished, if we report on August as a single month at all. So, I can't comment on our August numbers, except to say, we don't see anything unusual in August that I know of.

Okay. Okay. And then lastly, the Rockies were very strong and you gave some nice color on that in your prepared remarks. Obviously, just curious if there is anything else to share, anything else we should be aware of heading into the back half of the year in that region, given the strength you saw in 2Q?

Well we certainly have seasonal or weather-related issues in the Rockies in the fourth quarter, right? I mean you always have really tough weather, snow, maybe blizzards who knows what. So, we expect somewhat lower revenues in Q4 than we expect to report in Q3, but there's nothing else in particular that I would comment on that. And by the way, organic revenue growth in -- you’ve called out the Rockies because of the 25% organic revenue growth, which I guess is different than any other company that's reported, any other OFS company reporting anywhere but we had essentially the same result in the Mid-Con -- the Northeast/Mid-Con segment, because we had 13% organic revenue growth in spite of having lost $8 million to $9 million in revenues because of the tornadoes and floods, which really took us down for about six weeks.So I mean we've got a very strong business and our strategy seems to be working. We've got the issues to deal with in the Permian, the wireline issues to deal with the Permian but we have got two of our three segments that are really humming right now.

Thank you. And the final question will come from Simon Wong with Gabelli & Company. Your line is now open.

You mentioned that your capital adjustment program is coming to an end this year. Do you have a preliminary CapEx number for 2020?

No, not yet. We didn’t say it’s coming to an end. We said the intensive capital investment phase is coming to an end. So, this year we will spend close to $100 million in total, $20 million to $25 million in maintenance but the balance is all growth CapEx, which we won't experience the benefit from until 2020 and beyond. We will continue to offer new capital equipment to our customers and replace worn capital equipment and so on and so forth. But the level of expenditures will be dramatically lower than the level of expenditure which we have in 2019.

Okay. And then in relation to the stock repurchase authorization you announced two or three weeks ago, do you have the timeline on that or what’s your thinking about that?

Yes. There is no specific start date or end date and there is no specific timeline on that program. But given that we expect strong free cash flow in 2020 and given that we now have a cash balance of $92 million and an unused $100 million credit line, we think that it’s a very good investment for the company to buy back its shares with the share price depressed as it is currently.

Okay, one more -- last question. Is there anything in the new product side in the pipeline that you can talk about?

It’s a good question. I think that given that we’re rolling out so many new tools as we speak, I think we just assume not to talk about additional ones. I mean we started up the sales of our dissolvable plugs, that’s going pretty well and contributed to growth in the quarter, particularly in the Rocky Mountains segment. They HydroPull tool together with our Havok motor bearing assembling in conjunction with our coiled tubing is pulling through a lot of additional service revenues. So we’ve got a lot of new stuff that we are working through currently. So, I just assume not to talk about things that we haven’t yet introduced into the market. By the way, the last quarter we did mention the toe sleeves and the liner hangers and some of those products which we sell as part of our DHPS product line together with the dissolvable plugs. So there’s a lot of -- there are a lot of new products which we are delivering into each of our GEO segments.

I think with that our call has come to a close. We wish all of you a very good day and thanks for participating in our earnings call.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program and you may all disconnect. Everyone, have a wonderful day.