Step Energy Services Ltd

TSX:STEP

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen, and welcome to the STEP Energy Services fourth quarter and year-end 2018 results conference call. This conference call is being recorded today and will be webcast on STEP's website, but it may not be recorded to rebroadcast without the express consent of STEP Energy Services.All amounts discussed today are in Canadian dollars, unless otherwise stated. The complete financial statement and management's discussion and analysis for the period ending December 31, 2018, were announced this morning and are available on STEP's website at www.stepenergyservices.com and on the SEDAR website.During the call, management may make projections or other forward-looking statements regarding future events or future financial performance. Actual performance, events or results may differ materially. Additional information or factors that could affect STEP's operations or financial results are included in STEP's most recent annual information form, which may be accessed through the company's website, the SEDAR website, or by contacting STEP Energy Services. Management also calls your attention for the forward-looking information and non-GAAP measures sections of the news release issued earlier today.I would now like to turn the meeting over to Mr. Regan Davis, STEP's President and Chief Executive Officer. Please go ahead, Mr. Davis.

[Regan Davis, CEO, President & Director]

Thank you. Good morning, everyone. Welcome to STEP's fourth quarter andyear-end 2018 results conference call. With me this morning, I have Michael Kelly, our Executive VP and Chief Financial Officer; Steve Glanville, our Chief Operating Officer; and Ivan Cheng, our Manager of Investor Relations and Corporate Development.We'll be providing an overview of our fourth quarter and full year results, an update of our North American operations, and we'll share our thoughts for our go-forward business outlook. We'll then open the call up to questions.So I'd like to start by stating that we're very pleased with our team's operational execution during the fourth quarter, despite very difficult industry conditions. Extreme commodity price volatility and widened differentials, specifically in Canada, caused a dramatic reduction of client activity in the fourth quarter, which then, of course, cascaded in the utilization and pricing pressure. These conditions support our cautious outlook for the remainder of the year. And as expected, we've taken steps to manage the business, including right-sizing our asset base, implementing cost-reduction initiatives across our organization.In 2018, of course, it was another transformational year for the company. We acted on our strategic priority of increasing our exposure to the U.S. market and completed the acquisition of Tucker Energy Services. The integration of Tucker is now substantially complete, and we are excited by what it adds to our company's ability to offer integrated services to the U.S.; to potentially capitalize opportunities in new high-growth basins; and, most importantly, an avenue for growth outside of Canada. I'm pleased to say that we're beginning to see the benefits of this strategy.At this point, I'll pass off the call to Michael to speak to our financial results, and I'll join back in for some comments on our outlook.

[Michael G. Kelly, CFO & Executive Vice resident]

Thanks, Regan. During the fourth quarter, STEP generated consolidated revenue of approximately CAD169 million, representing an increase of 10% over the fourth quarter of 2017. On an annual basis, consolidated revenue was CAD782 million, up 41% from last year. The main reason for the increase was the addition of the Tucker asset base, along with additional deployed coil tubing units in the U.S.Consolidated adjusted EBITDA was CAD12.3 million, or a 7% EBITDA margin, for the quarter, and totaled CAD117.6 million, or 15% EBITDA margin, for the year. STEP's results reflect the steep decline in industry activity in the latter part of the year as our clients adjusted capital spending in response to the extremely wide Canadian oil differentials and overall commodity price volatility.Now, as Regan mentioned, the fourth quarter was extremely challenged, which reinforced caution among our customers' spending plans and ultimately led to a deferral or cancellation of completion activity. This is most pronounced in Canada and was exacerbated by market access limitations.In the Lower 48, pipeline egress remained a clear near-term hurdle, which has resulted in a growing inventory of drilled and uncompleted wells. As stated in our disclosure, we've been quick to react to this downtown and have taken steps to restructure our operations and manage our balance sheet.The first was to adjust our operating fleet to meet near-term demand expectations. In Canada, this resulted in reducing active coil tubing units from 12 at the end of Q3 to 9 to begin 2019. We also reconfigured and reduced our fracturing spreads from 8 to 6. We now have fewer active spreads, with some spreads deploying more horsepower, which is a function of our current work programs.In the U.S., we also reduced active coil tubing units from 10 at the end of Q3 to 8 to begin the year. We continue to maintain our fracturing spreads at 3, which have been reduced in Q3 to match the slowdown in demand.The second initiative was implementing a hiring freeze and rebalancing our overhead and G&A headcount to match current operating levels. This included making difficult decisions and reducing overhead positions by about 13%, which is expected to result in CAD4.1 million of annual savings. This was undertaken early in Q1, and estimated severance costs of approximately CAD400,000 will be included with Q1 results.The third initiative was our focus on streamlining and optimizing our payment cycles and internal billing and collection processes. This helped in harvesting working capital during the quarter and allowing us to reduce debt by approximately CAD40 million by year-end. Today, long-term debt net of cash is sitting at about CAD230 million, which reflects our ongoing focus on managing our balance sheet. This balance will continue to change with payments cycles and working capital demands as the year progresses.The fourth measure has been ongoing efforts to manage our capital spend. In this third quarter 2018, we reduced our capital program by CAD20 million to reflect the worsening market outlook. More recently, we elected to defer spending CAD12 million of the remaining 2018 capital plan that was largely slated to reactivate select equipment. We'll be diligently monitoring market demand and activity levels to determine timing and need for this spend.Additionally, in keeping with management's conservative outlook, the board has approved a 2019 capital budget of CAD48 million, which is largely comprised of maintenance capital to sustain our current operating fleet. Maintenance capital is expected to be about 5% of revenue and will vary depending upon the amount of equipment operated in the year. Total 2019 capital spend is projected to be about CAD60 million should we elect to spend the carry-forward from 2018.And the fifth and last initiative is working with our lenders to amend our credit facility to allow us balance sheet flexibility. Firstly, this included increasing the maximum funded debt to adjusted EBITDA ratio beginning in the first quarter of 2019 to 3.5x from 3x, peaking at 4.5x in Q3 and Q4 of '19, and then ratcheting back down to 3x by the end of the third quarter 2020.Secondly, we removed the fixed-charge coverage ratio and replaced it with an interest coverage ratio, which is calculated as adjusted bank EBITDA to bank interest. And lastly, we've included an equity cure provision, which allows us to raise CAD25 million of equity and apply it to the funded debt to adjusted EBITDA ratio. The equity cure can be used twice in non-consecutive quarters. Additional details on the amended facility can be found in our MD&A or press release.Overall, we're pleased that we've been able to achieve these initiatives in a short period of time, and we're confident that these steps provide us with the flexibility needed to manage our cautious outlook. I'll now turn the call back to Regan.

[Regan Davis, CEO, President & Director]

Thanks, Mike. I'll now speak briefly to our broader market outlook and build on the outlook that Mike has touched on. Market sentiment has been negatively impacted in North America due to the fourth quarter drop in commodity prices. Clearly, our clients are now living with the discipline of capital returns. And similarly, it's evident that investors are looking for industry sustainability in the form of consistent returns and prudent capital allocation.As Mike highlighted, we've taken steps to address these priorities by making some difficult headcount reductions. We've reduced active equipment capacity, and we've reduced spending. We're confident that these measures will equip us well to operate efficiently in the current environment.Specific to our geographic segments, our outlook for Canada remains cautious, as recent client budgets underpin a commitment to spend within cash flow. This is evident by the 30% to 35% lower rig count this quarter versus last year. We expect to realize normal utilization for our manned equipment through the remainder of the first quarter. But beyond the first quarter, we have less clarity, as producers have yet to provide clear direction on their second half programs.Our outlook for our U.S. operations remains unchanged from our third quarter disclosure. We continue to expect the market for fracturing services to be challenged until Texas pipeline egress issues are alleviated. On the same token, we also anticipate short-term demand for coil tubing services should be tempered until we see improvement in completion activity.As the year has progressed, so since the start of the year, we've continued to gather more data to support the thesis that a tightening of fracturing capacity in the second half of 2019 will occur in conjunction with pipeline additions.I'd like to speak a little bit about our U.S. fracturing services, provide a few comments on the Oklahoma market. The U.S. frac fleets in service peaked in June of 2018, and since then, we've seen a declining frac count in the U.S. It has been more pronounced, we believe, in Oklahoma, and we've seen highly competitive and low -- high competitive pricing pressure and low utilization in that region. We've been successful in retaining our key clients in the area. However, their programs have altered, and the spot work in the region has also declined.So we've responded to this sort of reality in Oklahoma by focusing on fleet distribution strategy into other basins. To date, we've been able to leverage our client relationships, existing coil clients as well as the frac clients we have, and we have, in fact, completed a job in the Eagle Ford. We believe better returns are available outside the Oklahoma market, and we're actively reviewing opportunities in both South Texas and the Permian. We're able to extend into these regions given our coil business, provides a very low-cost way with existing infrastructure to support our frac operations.That concludes my comments, and I'll turn the conference over to the operator, who will open the line up for questions.

[Operator]

[Operator Instructions] And our first question comes from the line of Greg Colman with National Bank Financial.

[Greg R. Colman]

I just wanted to start by taking a look at U.S. fracking, continuing on with some of the commentary, Regan, you finished with. Asking a little bit more directly, we've watched quarterly revenue from fracking move steadily lower going into year-end, and you vitaled 1 of our 4 fleets in the U.S., presumably, during Q4. Has the activity in pricing in the U.S. plateaued relative to Q4, or are we continuing to see a decline going into the first part of 2019?

[Regan Davis, CEO, President & Director]

Well, I'll speak from our perspective. I think pricing has stabilized through the first quarter, but we have yet to see a material impact or increase in activity from our perspective, so we still see a relatively soft quarter for our U.S. frac business in Q1. It's important to note, consistent I think with how we viewed that business back in 2018 as well, that we continue to see opportunities emerge that we think will show up through Q2 and into Q3 and '4, so we still believe that market's going to tighten up. We think there are still opportunities to put all 4 frac fleets back to work as the year advances and, ultimately, as the year advances, hopefully be in a position to see improved pricing and margins as well.

[Greg R. Colman]

But even just staying on Q1 for a second there, when you mention that pricing has stabilized and activity hasn't decreased, that sounds to me like Q1 has at least stabilized from the decline, which we saw from Q2 to Q3 and then from Q3 to Q4. But it sounds like it's not continuing to pull back, or am I reading the tea leaves wrong there?

[Michael G. Kelly, CFO & Executive Vice resident]

Greg, it's Mike. I think that's -- we've indicated at the end of Q3 we didn't expect to see a material contribution from those operations until we started seeing the market tighten as egress issues are addressed, and we see that happening in the second to third quarter of this year. I don't think you'll see a deterioration of operations from Q4 to Q1, but I don't think you'll see a material improvement either.

[Greg R. Colman]

And it's good to see sort of the activity there sparking up outside of Oklahoma, with the Eagle Ford. I just want to get a few more details on that. Existing customer or somebody new pulling you down there? Was that a return-driven decision to kind of go down where the economics are better, or is it just sort of a first move into the Eagle Ford for diversification of geography and hopefully returns will come after activity? And are you continuing to work down there, or was that just a single completion, then you've moved back into Oklahoma?

[Regan Davis, CEO, President & Director]

I guess our initial entry into the Eagle Ford was with a relatively new client. And what we find encouraging is 1 of our legacy clients has become more active down there, and we're currently active in the Eagle Ford with 1 spread for our legacy client, so we can see ourselves having 1, possibly even 2, spreads operating in that region as the year goes on. And then as we think about the Permian, once again, we have a legacy client on the frac side that has made commitments to us as far as needing our services in the Permian as the year advances, and we have clients on the coil side that have certainly been actively talking to us about frac capacity as well in the Permian. So, again, we think as the year advances, those basins offer better economic returns, ultimately more stable levels of activity, and we see it as being an important initiative to diversify where our frac assets are operating to take advantage of that.

[Greg R. Colman]

Do they offer better economic returns today?

[Regan Davis, CEO, President & Director]

Yes, they do.

[Michael G. Kelly, CFO & Executive Vice resident]

I think if we talk about the economic returns, Greg, I think the first lever you want to pull is get utilization up, and so to be able to get the equipment active and getting a more full schedule is certainly constructive. Overall, pricing is certainly at competitive levels, and we don't expect that to change until we see some of the tension in the market start to come in as we see demand start to increase as activity starts to pick up.

[Greg R. Colman]

Moving just to Canada for a second, in the last call, we discussed the 2019 outlook, where you mentioned that in Canada you had a very busy quarter in Q1. I just to give you the opportunity to revisit that comment now that we're most of the way through Q1. Has it turned out as you expected, or better, or do you want to sort of temper that very busy quarter comment?

[Regan Davis, CEO, President & Director]

I think the quarter started late, not uncommon to what our peers have said. But once it got started, with our -- specifically, our 6 frac spreads have, I would suggest, normal utilization as the quarter has moved on. On the coil side, we've seen that market respond a little softer than we expected, so we're not seeing the utilization of the coil assets that we thought we would.

[Michael G. Kelly, CFO & Executive Vice resident]

Just as an overall comment, though, I think that you've seen us manage our operating capacity well from Q3 to Q1. That would really -- if we looked at our bookings towards the end of Q3, early Q4, we would have seen a pretty full calendar. We didn't expect all that work would necessarily get done given the commodity price volatility and the outlook shift that we saw that was so dramatic in Q4. And so we did adjust our fleet, and we're seeing that -- based on the level of utilizations, as Regan was saying, with our frac fleet, we feel like we got the right number, but it would be lower than what we would have expected at the end of Q3 given the calendar we had at that time.

[Greg R. Colman]

So if I can kind of read through that, Mike, it sounds like lower expectations than you previously said. However, you're managing your costs in that environment.

[Michael G. Kelly, CFO & Executive Vice resident]

Yes. I think it's really important to get your operating capacity right, and we certainly worked hard with our customers to try and gain some visibility of what their Q1 plans would be. It was challenging for them, as you can well expect with commodity prices moving as violently as they did through the quarter, and so we did work proactively, expecting that we would see some softening. We've seen it, and we've seen very good levels of utilization on the equipment that we have staffed.

[Operator]

And our next question comes from the line of Josef Schachter with Schachter Energy Research.

[Josef I. Schachter, Author & President]

Just 1 question on the operational side and 2 or 3 on the accounting side. Given the extended winter here in Western Canada, are you seeing -- and with natural gas prices over CAD3.00 for eco spot, are you seeing a little extra business at the end of the quarter from some companies that have the ability to react in the short term, both for the coil and the fracking side, before breakup?

[Regan Davis, CEO, President & Director]

It's a good question, Josef. The answer to that is yes. Very little new additional opportunities have surfaced, but there have been a couple. We have -- yes, we've been presented with opportunities to look at new work, and we've made the very tough decision not to chase those opportunities because it would require activating some additional equipment, and we're just not prepared to do that in this environment. So, yes, there has been a select increase in activity as the quarter looks to close out, but nothing that would motivate us to want to put more equipment in the field.

[Josef I. Schachter, Author & President]

On the accounting side, you mentioned that you're going to have a headcount cut of 12%. You show in the AIF 1,630 professionals -- 1,047 in Canada, 581 in the U.S. Does that take into account those cuts, or the 12% is going to happen in Q1 and lower those numbers?

[Regan Davis, CEO, President & Director]

So those -- that comparison was from Q3 to where we were at the time we made the cut, so that would have been reflective of the Q3 opening numbers, if you like, to when we made the cut in mid-January. Those numbers are largely unchanged to the end of the year -- or the end of the quarter, pardon me.

[Josef I. Schachter, Author & President]

And the second thing is in the inventories, you have -- I'm just going to pull up the numbers here. You have the coil tubing kind of flat. You have sand and chemicals flat-ish. You have a big increase in spare equipment and parts. Any reason for that CAD15.4 million versus CAD2.6 million?

[Regan Davis, CEO, President & Director]

That number is going to fluctuate as we go through, and certainly bringing the Tucker asset base online and additional operating centers would have increased that number. What we're seeing is the -- as you expect when activity fluctuates, we've seen an increase in some long lead-time critical parts, and so it's important that we maintain an appropriate level of inventory on some of those engines, transmissions and fluid ends so that we can get them to support our fleet. So you will see those numbers move around reflecting those 2 items.

[Josef I. Schachter, Author & President]

And the last one from me is on goodwill. You took a goodwill impairment of CAD46 million in the fourth quarter for the year. You still have CAD90 million of goodwill on the balance sheet. Can you walk through the issues there of how you made the decision for taking CAD46 million and not the whole amount?

[Regan Davis, CEO, President & Director]

It's a great question. I think that the process you undertake is a fairly well-defined one. We worked with our public accountants and their business valuation teams. The model that you generate has a range of possible outcomes, which can support various levels of write-offs, and what we tried to do is find the most realistic near-term, medium-term outlook for that business, which suggested that we needed to write down the goodwill by that amount.

[Josef I. Schachter, Author & President]

So if the business stays at these kinds of levels, there won't be any further, but if we do see further deterioration, then this might be revisited again in a year from now? Is it an annual kind of revisit?

[Regan Davis, CEO, President & Director]

Yes, you do revisit it annually, unless there's some indication of an impairment on a quarterly basis. Then you would look at it again. So as you said, if the business performs as we think it will, there will be no further need, but if something changes in that macro environment or our specific performance, we will have to review that.

[Operator]

And our next question comes from the line of Ian Gillies with GMP.

[Ian Brooks Gillies]

As we headed through the fall, you had put a fair bit of credence in some of the new customer additions heading into Q1, and you've talked a bit about activity, but I guess probably more importantly, could you maybe talk about how, I guess, the margins are performing with that work and how operations are going just given the significance?

[Regan Davis, CEO, President & Director]

You bet. Thanks for the opportunity to discuss this a bit. We did highlight that our outlook as we looked into 2019 was not constructive, and that motivated us to want to ensure we were aligned with clients with larger programs, and specifically clients that we felt would have programs that would be active through 2019 and through the second quarter. I think those programs have been influenced, as all programs have, by commodity prices that occurred through the fourth quarter. However, they still represent a steady level of activity for us, and we're very pleased to have that relationship and that opportunity kind of on our books. Specific to the margins, what I can say is we have -- we had a very detailed pricing model that allowed us to put the costings in the bid proposal in place, and we've been actively doing look-backs against that model, and to date, that activity is actually meeting our return expectations. So what that suggests, to be a little more specific, this models incorporates actual -- it includes maintenance capital. It includes an accrual for long-term overhaul costs. And on a book value basis, we obviously have positive returns, but, more importantly, on a replacement value basis, we still have positive returns, and that, hence, is meeting our expectations.

[Ian Brooks Gillies]

And the other part in Canada that I guess surprised me a little bit was some of the deceleration in coil activity. You briefly mentioned some of the dynamics playing out in that. Is it just customers are completing wells differently and are requiring different equipment at the well site? Is it increased competition? I'm just trying to, I guess, get a better understanding of why utilization fell out the way it did from Q3 to Q4 in Canada.

[Regan Davis, CEO, President & Director]

Steve is sitting here. He's happy to take that question.

[Stephen Glanville, COO & VP of Operations]

I guess if we look back at Q4, what we saw, obviously, was there was some deferral of capital, but when it comes to utilization on coil, we did see somewhat of maybe a completions shift. We're seeing a few more, I would say, plug-in versus integrated services where we have coil and frac on location, which, of course, would reduce somewhat of utilization that we've seen, as well as some efficiencies that we've gained with some new technology on our coil tube in milling has actually sped up some of our milling times, so less days on location. But we are seeing -- from a competitor perspective, we're not seeing any additional major capacity added to the mark. We're actually seeing some competitors leaving the space. When we look into Q1, we are -- it did have a slow start of utilization for the coil tubing side. We have seen that pick up modestly, so definitely seen a little bit better utilization in the back half of Q1 on the coil tubing side of the business.

[Ian Brooks Gillies]

In the release, you talk about getting your first fracs off in the Eagle Ford and potentially moving some -- shifting some equipment around from Oklahoma into other basins. How do we think about capital investment required if you want to do that? I mean, will you have to flex that CAD50 million higher to get there, or do you think you can use the existing bases in Texas, if that's where you were to go, to run these businesses?

[Regan Davis, CEO, President & Director]

Good question, Ian. Yes, certainly our plan is to leverage the coil operating bases we have in those areas. They have some in mid-staff. They have shop space, they have yard space, so we're able to seed these businesses with the benefit of those operating bases. Ultimately, as you can imagine, kind of 1 crew in every basin is not necessarily a prudent, efficient strategy, so as we look forward, we'd be looking to have 2 to 3 spreads in any given basin, ideally, and that at some point may require a little bit of a larger operating footprint. But for 2019, we have no plans to spend capital on any facility infrastructure.

[Ian Brooks Gillies]

And then I guess a last one from me. As you think about -- I mean, I know there's some idle horsepower in the U.S. at this point, but there's also some in Canada. At what point, I mean, would you like to make a decision on what to potentially do with that equipment in Canada? I mean, it could certainly help increase some economies of scale in the U.S.

[Regan Davis, CEO, President & Director]

Really good question again, and I think we've been clear, literally, since the time we bought Tucker that we envision the possibility of moving 1 spread from Canada to the U.S., and the way the market behaved, we've put that on hold, but we still envision that opportunity. And frankly, again, as the client discussions continue as this year advances, it's very possible that we do send that 1 spread to the U.S. We'll, obviously, have to be very mindful of maintaining enough scale here in Canada to help service our larger clients, but we do think we have the opportunity to pull 1 spread out of Canada.

[Operator]

[Operator Instructions] And we do have a follow-up question from the line of Greg Colman with National Bank Financial.

[Greg R. Colman]

I just had a couple little things, just on modeling or accounting or whatnot. You had a little allowance for [ doubtful ] accounts, but it was rising in the quarter to just under CAD3 million. Can you give us a little indication as to the geography business segment -- 1 account, many accounts? Is this something that we need to be paying attention to, or is this just kind of Q4 was gnarly and you're putting it out there?

[Michael G. Kelly, CFO & Executive Vice resident]

Greg, it's Mike. It's certainly something we pay attention to. Collections is a big part of our day-to-day focus. We haven't seen a real deterioration on our DSO in either Canada or the U.S. The teams are doing a very good job monitoring it. That would have been related to 1 account in the Canadian operations, and that's now fully provided for.

[Greg R. Colman]

And the credit agreement -- good to see the amendments there. Are there any notable 1-time costs associated with the changes that we should be watching for and modeling for in your Q1 results?

[Michael G. Kelly, CFO & Executive Vice resident]

Yes, it would be about a -- it's about a $1 million fee to put this[Audio Gap]

[Greg R. Colman]

And then just keeping on the debt, your effective interest rate in Q4 I think was about 5.3%. Given the changes and increased flexibility, and as your trailing 12-month EBITDA is going to deteriorate as we go forward just with the big EBITDA quarters falling off, is it reasonable for us to be thinking a rate maybe 100, 150 basis points higher than that in 2019?

[Michael G. Kelly, CFO & Executive Vice resident]

I wouldn't go a full 100 to 150. The leverage we have to pull there is we can rely more on our (indiscernible) portion of the facility, which drops our boring costs by 80 to 90 bps. And so I think you'll see it -- as you go through Q1 results, you'll see a greater reliance on that, but I think your net increase might be in the 25 to 50 basis points.

[Greg R. Colman]

And then, just lastly, this is a clarity question, Mike. I think in your prepared remarks, you mentioned debt net of cash of CAD230 million. Did I hear that right? Was that as of today or as of year-end?

[Michael G. Kelly, CFO & Executive Vice resident]

As of yesterday, yes, and so that -- really, we provided that number in our [ AF ], and I wanted to focus on it on the call. This is an ongoing focus of ours, is to actively manage our balance sheet and actively manage our credit facility. That will fluctuate with working capital demands and payment cycles, but we do see that as being an active focus for us.

[Greg R. Colman]

So just to be clear, your net debt has fallen by CAD30 million since the end of 2018 to today?

[Michael G. Kelly, CFO & Executive Vice resident]

It's moved down to CAD230 million, correct, and that's debt net of cash.

[Greg R. Colman]

But from CAD260 million as of the balance sheet for Q4.

[Michael G. Kelly, CFO & Executive Vice resident]

Correct.

[Greg R. Colman]

And then just sort of 1 last one, which is a little bit bigger. Regan, the pricing strategy is something we come back to every now and again, but quick history lesson -- when we were talking in the last conference call, you cited low success rate in early 2019 followed by an adjusted pricing strategy that allowed you to win a lot more work going into year end of 2018. Are you still comfortable with that as the environment continues to change, or has your view refined or moderated as the dynamic industry plays out?

[Regan Davis, CEO, President & Director]

Yes, I'm happy to talk to that. Again, I think we saw, as we were moving through 2018, we were not having a great success rate securing new work with our pricing strategy, so we altered that into the back half, again, recognizing that we were contemplating a softer outlook for 2019, and what I can say is I believe certainly we are -- we've kind of stabilized our pricing. We are in no way motivated to want to compete on price anymore. I mentioned in an earlier question that we didn't pursue the opportunity to chase additional work because that would have required activating some additional equipment, so I think what you should expect from us as the year goes on is we're going to have a very tough time moving -- or putting more equipment into the market until we see pricing improvement. But I think as a whole, I think the market pricing in Canada and, frankly, in the U.S. as well has stabilized.

[Operator]

Thank you. And that does conclude today's question-and-answer session. I would like to turn the call back to Mr. Regan Davis, President and Chief Executive Officer, for any further remarks.

[Regan Davis, CEO, President & Director]

I guess we'll close the call out by saying thank you for joining us, and certainly we're available offline here, too, if there are additional questions, to any of the people that were listening to the call.

[Operator]

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