Daniel Jenkins - VP, IR Donald Gawick - President, CEO & Director Patrick Bixenman - Chief Administrative Officer and President, Research & Technology Mark Cashiola - CFO

Thomas Moll - Stephens Inc. Luke Lemoine - Capital One Securities Scott Gruber - Citigroup Alexander Nuta - Evercore ISI

Thank you, operator. Good morning, everyone, and welcome to the C&J Energy Services earnings conference call to discuss our results for the fourth quarter of 2017.

With me today are Don Gawick, President and Chief Executive Officer; Mark Cashiola, Chief Financial Officer; and Pat Bixenman, Chief Administrative Officer and President of Research and Technology. We appreciate your participation.

Before we get started, I would like to direct your attention to the forward-looking statements disclaimer contained in the news release that we issued this morning and is currently posted in the Investor Relations section of the company's website. In summary, the cautionary note states that information provided in the news release and on this conference call that speaks to the company's expectations or predictions of the future are considered forward-looking statements intended to be covered by the safe harbor provisions under the federal securities laws.

Such forward-looking statements are subject to risks and uncertainties, many of which are beyond the company's control, which could cause our actual results to differ materially from those expressed in or implied by these statements. We refer you to C&J's disclosures regarding risk factors and forward-looking statements in our filings with the SEC for a discussion of the known material factors that could cause our actual results to differ materially from those indicated or implied by such forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements for any reason, and these statements speak only as of the date they were made. Our comments today include non-GAAP financial measures.

Additional details and the reconciliation to the most directly comparable GAAP financial measures are included in our fourth quarter earnings press release. As a reminder, today's call is being webcast live and a replay will be available in the Investor Relations section of our website.

Please note that information related to this call speaks only as of today, February 22, 2018. So any time sensitive information may no longer be accurate at the time of the replay.

With that said, I'd like to turn the call over to Don Gawick, President and Chief Executive Officer of C&J Energy Services.

Thanks, Daniel. Good morning, everyone.

Thank you for joining us today to discuss our results for the fourth quarter of 2017. We delivered another quarter of increasing revenue and profitability, capitalizing on strong customer demand to capture higher pricing and maintain strong utilization levels.

We deployed an additional refurbished horizontal frac fleet to a dedicated customer in the Mid-Continent in early December, exiting the fourth quarter with approximately 615,000 horsepower deployed across 14 horizontal and 2 vertical frac fleets. However, we experienced varying degrees of year-end seasonality in our wireline and pumping business, as certain customers either substantially reduced their activity levels or deferred jobs into the first quarter of 2018.

Both revenue and profitability increased sequentially due to continued strong performance from our Texas wireline districts and across-the-board improvement in our pumping business. Our cementing business benefited from the integration of O-Tex in December and growing demand during the fourth quarter, particularly in West Texas, as we were awarded more rigs from both new and existing customers.

Our goal is to significantly increase utilization across the expanded asset base throughout 2018. In our coiled tubing business, despite some seasonality late in the fourth quarter, both utilization and pricing improved due to continued tight market conditions for large diameter units.

In the fourth quarter, we signed agreements for dedicated units with some of our most active customers in both South and West Texas. And we are currently evaluating additional dedicated agreements for our 2 newbuild units that we anticipate will be delivered early in the second quarter of 2018.

Looking at the first quarter. We experienced a ramp-up in completion activity following the new year, and demand for our core Completion Services has remained strong.

Our frac calendar for the first quarter has been fully booked, but it seems some recent gaps developed to the changes with customer schedules. As with any quarter, gaps can open in the calendar, but we expect to fill any of those that might arise based on current customer demand, just as we did for most of last year.

Our strategy of partnering with dedicated customers gives us comfort on forward visibility. And although market conditions may change, we are seeing our frac calendar for the second quarter continue to strengthen.

Additionally, current market conditions and consistent indications of ongoing and future customer demand have encouraged us to accelerate our fleet redeployment schedule. We now plan to have all of our horizontal frac fleets deployed by year-end, which Pat will discuss in more detail.

We also plan to deploy more equipment in both our Casedhole Solutions and well construction and intervention services businesses, all of which had profit margins in line with or better than our fracturing business in the fourth quarter. Turning to our well support services segment.

Fourth quarter revenue decreased sequentially due to the sale of our Canadian rig services business in early November and the typical seasonal slowdown. However, we have seen a marked improvement in pricing and profitability in the last few months in rig services and fluid handling.

Segment profitability was partially offset by an inventory write-down of approximately $1.6 million in our artificial lift business that is unassociated with our traditional well services business, following our strategy to focus on our core businesses as we are looking to divest our artificial lift business. During the fourth quarter in our rig services business, excluding Canadian operations, sequential rig hours and revenue declined due to seasonality.

However, sequential adjusted EBITDA increased, showing that our strategy of raising prices and focusing our operations in high-margin basins is working. West Texas continues to be one of the strongest basins for well services activity.

And despite a seasonally driven decline in both rig and trucking activity, revenue increased 4% sequentially, driven by increased plug and abandonment, special services and frac tank rental activities. Additionally, our special services business experienced higher revenue and profitability in California.

In our fluids management business, improving activity levels in West Texas and the Mid-Continent resulted in higher pricing and sequential improvement in both revenue and profitability. However, we believe that pricing will need to further increase to attract and retain additional personnel to meet improving fluids demand as production levels continue to increase.

Turning to the first quarter. We currently expect that our well services segment will continue to experience improving activity levels and profitability.

Higher oil prices and more attractive workover economics should result in increasing workover activity and helped with our strategy of high-grading our customer base and reallocating assets into areas with higher pricing and better profitability. In our fluids management business, we will focus on putting equipment to work in areas with improving fluids demand, such as West Texas and the Mid-Continent, but labor will continue to be an impediment.

We are encouraged by the initial signs of improvement within our Well Support Services segment, and our strategy remains to align ourselves with customers that understand our value proposition of providing superior service quality in the safest manner possible and to increase segment profitability to improve returns for our shareholders. In addition, we continue to look at potential strategic alternatives for our Well Support Services segment.

With that, I will turn the call over to Pat to discuss fleet reactivation and progress on certain R&T initiatives.

Thanks, Don. I will start with an update on our equipment redeployment plans.

As Don previously mentioned, we are now planning to refurbish all of our remaining stacked frac equipment of approximately 245,000 aggregate horsepower for redeployment by year-end 2018. In addition to our stacked equipment, we are planning to deploy a newbuild fleet of 20 Tier 2 pumps, with refurbished process equipment to a dedicated customer by mid-March of 2018.

And we will exit the first quarter with approximately 635,000 horsepower deployed across 15 horizontal and two vertical frac fleets. In total, we plan to deploy 7 horizontal equivalent frac fleets in 2018.

We continued to rely on our internal refurbishment capabilities, and we are also working with several third-party equipment manufacturers to meet growing customer demand. Additionally, in the second half of 2017, we started our frac pump refresh program, which started with the full refurbishment of 10 previously stacked frac pumps to be rotated into the 10 horizontal equivalent fleets that have been running throughout the previous downturn, which is included in our maintenance CapEx budget.

Our refresh program involves a complete check of all major components, the replacement of hydraulic hoses, new paint and conversion to our MDT frac controls. Although it's our goal to repair engines and transmissions, frac pumps with high hours will most likely need to have those major components rebuilt.

In addition, we have plans to refurbish several of the blenders that operated throughout the downturn. In our frac refurbishment program to reactivate idle equipment, we're removing all major components from the trailer and conducting diagnostic tests to determine if the equipment can simply be repaired or needs to be fully rebuilt.

Regardless of the outcome, all of our refurbished frac pumps will be deployed with either repaired or rebuilt engines and transmissions, cube radiators, our proprietary MDT frac controls, new lubrication and fluid systems, stainless steel fluid ends and most likely new power ends. We continued to remain focused on refurbishing all of our stacked equipment to our standard specification and returning it to the field in like-new condition.

Our primary goal remains to provide the absolute best service quality to all of our customers and to have the lowest overall cost of ownership possible. Our strategy has proven successful with the fleets we activated in 2017.

At February, the major components dropped even though we experienced increased pumping hours on a monthly basis. This strategy has enabled us to maintain our horizontal fleet size of 20 pumps in all operating basins.

In addition, our maintenance expense as a percentage of the revenue dropped by over 11% in the fourth quarter compared to the third quarter of 2017. In our Well Support Services segment, we've been executing on a program to reconfigure our high-spec 5(c) rigs with improved controls, brakes and recertification of the mast.

These rigs are in like-new condition when they complete the process. Thus far, we have converted 29 of our workover rigs and plan to convert an additional 16 in 2018.

Moving to our Research and Technology division. We continued to focus on projects designed to either enhance our operational capabilities or to reduce our overall cost structure.

In 2017, we greatly increased our production of consumables and accessories for both internal consumption and third-party sales. C&J's wireline activity growth resulted in greater demand for our internally manufactured perf guns and addressable switches.

In 2017, we increased our average quarterly production of perf guns by 31% to approximately 13,500 units per month in the fourth quarter compared to our first quarter average by having both night and weekend shifts at our R&T production facility in Houston. Despite our greatly increased production capacity, we still were not able to meet all of our internal perf gun demand, and we currently have plans to install additional production capacity in the second quarter of 2018.

We also rapidly increased the internal production of our proprietary addressable switches used in conjunction with our perf guns by our wireline business. We estimate that our internal production capabilities of both perf guns and addressable switches enhance our wireline businesses' profitability by over $8 million in 2017.

Additionally, we were able to generate almost $5 million of revenue from third-party sales, which combined with internal cost savings now provides benefits far in excess of our R&D spend. Finally, as we have previously disclosed, we have installed our proprietary MDT frac controls on all of our refurbished and newbuild frac equipment deployed in 2017.

Our MDT frac controls provide greater reliability and efficiency at a significantly reduced cost in terms of upfront capital and operational maintenance expense compared to other third-party control and software providers. In 2017, we estimate savings of almost $3 million of upfront capital costs by using our MDT frac controls.

As we continue to refurbish our stacked equipment and expand our refresh maintenance program, we will convert all of our control systems and software to our proprietary MDT frac controls, which will result in continued upfront capital savings and reduce maintenance expense, over time. With that, I will turn the call over to Mark to review our fourth quarter financials.

Thanks, Pat. Turning to our financial results.

We grew revenue 11.1% to $491.8 million compared to $442.7 million in the third quarter of 2017. Our improved financial performance yielded net income of $57 million or $0.88 per diluted share, which included a $29 million or $0.45 per diluted share tax benefit pertaining to our acquisition of O-Tex, along with a few other exceptional items detailed in our earnings press release.

This compared to net income of $10.5 million or $0.17 per share in the third quarter. Adjusted EBITDA totaled $57.3 million for the fourth quarter, a 31% increase compared to $43.9 million in the third quarter of this year.

In our Completion Services segment, we generated revenue of $399.5 million, with adjusted EBITDA of $82.3 million for the fourth quarter, improving 15.8% over revenue of $344.9 million and a 19.3% improvement over adjusted EBITDA of $69 million for the third quarter. During the fourth quarter, we experienced strong customer demand for all of our core Completion Services, and we deployed additional equipment, both of which resulted in improved financial performance.

In our Well Support Services segment, fourth quarter revenue was $92.3 million, with adjusted EBITDA of $2.7 million, compared to revenue of $97.7 million, with adjusted EBITDA of $800,000 in the third quarter. Revenue in our Well Support Services segment decreased sequentially due to the sale of our Canadian rig services business in early November and a typical year-end seasonal slowdown.

Segment profitability increased, however, due to strong demand in select core basins and higher market pricing for our services. And this was in spite of a $1.6 million inventory write-down in our artificial lift business that burdened the segment.

Compared to our third quarter results, U.S. rig hours declined 7% to approximately 92,000, while Canadian rig hours decreased by 60% to approximately 8,000 due to the sale of our Canadian rig services business.

The U.S. truck hours increased slightly to nearly 321,000.

SG&A expense in the fourth quarter was $68 million compared to $59.6 million for the third quarter. The sequential increase was driven by severance and restructuring costs associated with the divestiture of our Canadian rig services business, transaction costs associated with the O-Tex acquisition and the inclusion of SG&A expense for O-Tex during the month of December.

Looking ahead to the first quarter, we expect SG&A expense to range between $68 million and $72 million. We incurred $1.4 million in R&D expense in the fourth quarter compared to $1.7 million in the third quarter.

The sequential decrease was primarily due to slightly less spending on new product development at year-end. We expect modestly higher first quarter R&D spending as we increase new product development on certain technologies designed to enhance our efficiencies and lower our overall cost structure in our core service lines.

Depreciation and amortization expense totaled $39.9 million in the fourth quarter compared to $36.3 million in the third quarter. The sequential increase was driven by increased capital expenditures associated with equipment placed into service in both the third and fourth quarters, as well as a higher asset base stemming from the acquisition of O-Tex.

Going forward, we expect G&A expense to increase consistent with our capital expenditure program. The income tax benefit we recorded in the fourth quarter was primarily associated with accounting for the O-Tex acquisition.

For 2018, we do not expect to be a cash taxpayer, with the exception of minimal stake in a local tax exposure, and we expect our effective tax rate to be near 0. Moving to liquidity and the balance sheet.

On December 31, we had a cash balance of $113.9 million and no outstanding borrowings on our credit facility, which had borrowing capacity of nearly $180 million, resulting in total liquidity of more than $290 million. From a cash flow perspective, we generated $60.9 million from operations during the quarter, which was primarily driven by our improved financial performance.

Capital expenditures totaled $58.7 million during the fourth quarter compared to $78.9 million in the third quarter. The sequential decrease was mostly due to the timing of our capital spending program.

Capital expenditures for all of 2017 totaled $210.2 million, in line with our previous guidance. Turning to 2018.

We estimate total capital expenditures will range between $430 million and $450 million, with approximately $260 million to $275 million directed towards our fracturing business. In our fracturing business, we plan to spend $15 million to $20 million on growth, primarily to pay for our second newbuild fleet of Tier 2 pumps and refurbished ancillary equipment being delivered this month; $140 million to $145 million on fleet refurbishment, which includes all of our currently stacked horizontal frac fleets that we plan to redeploy by year-end; and $105 million to $110 million on maintenance CapEx, which includes our refresh program that Pat described earlier on the call, as well as the replacement of light-duty vehicles and tractors on many of our fleets that have been running throughout the downturn.

For all of our other service lines, we plan to spend $170 million to $175 million, with slightly over half of that focused on growth. All of the capital spending I have outlined is expected to provide excellent returns on our investment.

As we move through 2018, we will adjust our capital spending plans if customer demand or market conditions change. With that, I will turn the call back over to Don for a few closing comments.

Thanks, Mark. I am immensely proud of the many accomplishments that we achieved as a team over the course of the past year.

As I am sure you can recall, on January 6, we completed our financial restructuring and emerged from Chapter 11, a stronger company, debt-free and well-positioned for the recovery that ultimately began to unfold early in the year. Also, in early January, we switched over to our new SAP enterprise resource planning system, which migrated 7 different ERP systems across our organization to 1 technologically advanced platform.

In April, we completed an underwritten public offering delisting on the New York Stock Exchange, and we renegotiated and expanded our credit facility. As the recovery took hold, we increased our employee base from a low of 4,700 to just over 6,000 employees at year-end 2017.

As a testament to the loyalty of the C&J family, almost 800 of those additions were rehires and returned to C&J after the market upturn. We are certainly glad to have all of them back.

Throughout the years, our workforce continued to grow. We focus on the company's commitment to employee engagement and development by launching new employee initiatives, reinstating benefits and compensation lost during the commodity price downturn.

We created new programs, such as the employee relief program, which was established to help our 194 employees who've suffered substantial losses and financial hardship due to hurricane Harvey. In November, we completed our first strategic acquisition for our newly reorganized company with the purchase of O-Tex.

That acquisition escalated us to the #4 overall oilfield cementing services provider and #2 in the Permian Basin. We also welcomed more than 450 O-Tex employees to the C&J family.

And finally, in the fall, we rolled out a strong bold new logo and brand to reflect the values, goals and purpose of the new C&J Energy Services. We believe our 2017 accomplishments reflect our core values of empowering our employees, doing the right thing, demonstrating resilience and delivering every time.

This commitment to quality and integrity in all things guides our decisions and strategy as we strive to create long-term value for our shareholders. Finally, I want to thank all of our employees for their hard work and dedication.

We know that your efforts are behind all that we have accomplished over the past year. And we are thankful to have such an incredible group of talented and passionate people committed to making our company the very best in the industry.

Thanks again for joining our call today. We appreciate your interest in C&J.

Operator, we are now ready to open the call to questions.

So just to start off on pressure pumping. How does -- how did pricing trend from Q3 to Q4?

And as we get into the new year here, what does the market feel like for you there?

Yes. So throughout the fourth quarter, we continued to see pricing improved, and we managed to, in fact, continue to align ourselves with some customers, where not just on the pricing side, but the efficiency side, we continued to see better utilization.

So overall, pricing was up, utilization continued to improve, and quite frankly, the financials were up nicely. We're seeing that continue into the first quarter as well.

Okay, great. And then shifting over to Well Support Services.

It looks like good up into the right move across-the-board in pricing and utilization, both in Q4 and into Q1. As we look out into Q1 and beyond this year, where do you think we're going to end up in terms of margins for that segment?

Yes. And one thing I would like to really stress is that, for the first time now since the downturn, I can honestly say that I've got some real optimism around the Well Support Services group.

We've definitely seen a change in the tone and tenor from the customer base. One thing we heard repeatedly through last year is, that, until we saw our six handle on the commodity price, people were not optimistic that we would see much impact on the business.

Now that we've seen it over the -- really, since the beginning of '18, we are seeing an increase in activity. We're seeing acceptance of the rate increases that we're passing onto the market, and we really are starting to see the margins improve.

So we're currently sitting in the high single digits on a fully burdened basis for the Well Services group. The expectation is that we get solidly into the double-digit EBITDA margins for the 2018 year.

Okay, great. And then you mentioned strategic alternatives for this segment.

And I guess, I would see attention there because on the one hand, as you just mentioned, Don, there's optimism here with crude hanging in the 60s. You're getting good and improving pricing utilization.

On the other hand, there is, I think, good industrial logic for consolidation with these assets. So just at a very high level, as you think about the alternatives, are you leaning, one way or another?

Or can you give us any insight into how you think about your future as a player or not in these businesses?

Yes. One of the things that we are doing is we're continuing to really focus this business so that it is definitely profitable and contributing, overall, to the financial health of C&J.

As a result of that, quite frankly, the business, overall, has been shrinking in absolute terms. Certainly, in a relative basis for the rest of the portfolio, it continues to be a smaller and smaller part of what we're doing, but we're positioning ourselves right now to where the company is solidly profitable.

It's a true contributor to C&J as a whole and something that stands on its own as a very good business. Looking out at the marketplace, though, as you say, the consolidation issue is one that looms out there.

We've been in talks with several different potential partners. We're continuing to look for a deal that makes sense for both sides and that perhaps allows that consolidation to handle to -- sorry, to occur.

And one of the things that -- there are several possibilities, but I can see there being some potential combinations, whereby, we're still involved from an equity perspective in the entity if a deal is made. If there's no deal to be made, though, we're very confident that we can have that business as a solid part of the portfolio going forward.

So we're looking for opportunities, but the right one has to come along and it has to make sense for us.

If you have it in front of you, could you help us out with the revenue breakdown by product line that you typically give in your 10-Q?

Sure. For both segments?

Yes, please.

Yes. For Q4, starting with hydraulic fracturing, it was $246.8 million.

Wireline services was $67.4 million; pumpdown, $26.1 million, giving Casedhole Solutions a total of $93.4 million. And the completion segment was $340.3 million.

Sorry, that's historical. Then including a little bit of third-party revenue from R&T of $2.9 million gets you to $343.2 million for the segment.

And then on the Well Services side, we have $51.1 million for rigs, $30.5 million for fluids, special services at $8.8 million, with a total of $90.5 million. And then we include artificial lift of $1.8 million, you come in at $92.3 million.

And then I'll just add cementing and coiled tubing as well. Cementing came in at, where is that number, $34.4 million; coiled tubing is $21.9 million.

Okay, great. And then on your '18 CapEx spend, do you think you can fund this with cash on hand and operating cash?

Or will it have to be a dip into the revolver?

Yes. There's a good chance in the first quarter and second quarter, we will dip into the revolver some.

We are expecting to be able to pay that down fairly quickly before the end of the year, but I'd say it's likely we'll dip into the revolver a bit to fund the growth.

I just want to dig into the CapEx a bit more. I think you stated $140 million, $145 million on refurb.

How much of that is related to the restart program, and how much is directed at upgrading your active fleet?

On the $140 million to $145 million, that's 100% refurb of idled fleet that we're deploying this year. And then separately, the $105 million to $110 million of maintenance is ongoing maintenance CapEx to extend the life of our existing active equipment.

Got you. So any refurbing of the active would fall under the maintenance bucket?

That's correct, as long as it stays in service. If we pull it out of service, it would go into refurb.

But the refresh program that Pat referenced in his section of the call, that is all going to that $105 million to $110 million of maintenance CapEx.

Got you. And are you able to quantify the refresh program?

I'm trying to gleam how much is kind of ongoing normal maintenance and how much is extraordinary maintenance in 2018.

It's about $25 million to $30 million on the refresh.

Got you. And turning to Well Support.

If crude prices hold around this range, how should we think about top line growth in Well Support in 1Q? And then if you could provide some goalpost for 2018, that will be great.

Just give me one second here.

Yes, just give us a second.

So overall, for the segment, we're not looking at a lot of top line growth. As Don said, we've been focused on rightsizing the business and bringing it to good profitability such that we start seeing solid double-digit margins.

So we're really looking at very nominal growth in the -- from a top line perspective year-over-year in the segment.

This is Alex on for James. Could you repeat the CapEx guidance by segment again, or by cost category?

The $140 million to $145 million, or what was stated in the script?

No, what was stated in the script, total CapEx, and then that falls between each cost bucket?

Yes, so the total was $430 million to $450 million, with $260 million to $275 million of that being directed towards fracturing. And in breaking down frac a bit more, we've got $15 million to $20 million of that $260 million to $275 million that steadily spin on growth for the new fleet of Tier 2 pumps and the backside equipment that we're refurbing to go along with it.

Then $140 million to $145 million on fleet refurbishments for frac, $105 million to $110 million on pure maintenance CapEx to maintain the fleet and frac. The rest of the business lines are $170 million to $175 million.

That includes growth maintenance and refurb.

Okay. So I think previously, you guys have said $10 million to $12 million to reactivate the idle cold-stacked fleets.

Why has that increased so much?

This is Pat. A lot of costs comes from the auxiliary equipment.

We're now at the point where we have to buy light vehicles for all the fleets and we're having to purchase new tractors to get the fleets back out onto the well side, as well as some of our other axillary equipment. And the process equipment all has to be completely refurbed that we have remaining up against the pins.

Okay. So it's basically just that incremental, call it, I don't know, $50 million, you'd say, as mostly blenders and ancillary equipment?

That's a large portion of it. The pump portion of it is pretty much along with our prior guidance, but it's really the support equipment that is driving that up.

And the $10 million to $12 million was an average across the entire idle fleet. As we're moving into the older equipment, that range is moving up, so that's part of what's driving it as well.

Okay. About $10 million to $12 million is on the cold-stacked stuff.

And then how much of CapEx is for O-Tex?

For cement, in total, it's about $40 million.

$40 million? Okay.

And then, I guess, one more of the cost side. G&A, I guess, why isn't that decreasing in 1Q, given some of the onetime adjustments in 4Q?

Yes. There's a few things going on in the first quarter.

One is, we're pulling in a full quarter of O-Tex G&A. Fourth quarter only had one month.

And from a payroll tax perspective, the reset button gets hit at the first of the year. So in Q1 and part of Q2, we'll see some pretty significantly escalated payroll taxes.

And then we've got -- we issued our annual stock grant in December, mid-December, and we're seeing a full quarter affected of escalated expense as a result of that in the first quarter. Those are primary drivers.

Moving on, I guess, to operations. Are you guys able to share the stage, kind of, in the quarter for frac?

Yes. We can give that to you, off-line, Alex.

Okay, cool. So as we look forward into '18, I mean, is 10% revenue per stage increases on net pricing something that's reasonable in your view?

Yes, that's reasonable.

Okay. And should we see an entire 10% fall to the margin line?

I guess [indiscernible]?

Yes, a good portion of it will. Some of it will certainly be taken up with some increase in costs, but we're continuing to be able to pass cost increases that we're seeing on the customers quite rapidly.

And in fact, we're seeing some continued strength in terms of pricing, overall. So we're still on a position right now where we are able to get a net price increase, moving forward.

Okay. So call it like the EBITDA per stage or gross income per stage was about high teens, then we could expect that to increase by, call it, 5,000?

Somewhere in the middle single digits, I think, is reasonable.

Thank you, Operator. I just want to thank everyone for being on the call today.

I really do want to stress that we feel like we've seen a pretty dramatic increase in the overall business and in the market. If you'll recall, as we went through the third quarter call, we really had come out of a third quarter where the pricing was still in the mid to high 40s.

The day we were doing the third quarter call, we'd only been above $50 in terms of oil price for about 4 weeks at that point. Since then, we're obviously -- we've moved up into the 60s.

We've seen the reaction from our customers. We're seeing what their plans are for the year in terms of capital and overall activity.

Intensity continues to increase. Lateral lengths are increasing.

Sand pump is increasing. Perforations per stage is increasing.

So we really felt like we would follow-up on what we've been telling the market for some time, that if we saw an opportunity to accelerate our deployment of stacked equipments, that we'd go ahead and move on it. We feel like now is the time to do that.

We'll monitor the market very carefully. If conditions do change for the negative, we'll adjust, and obviously, that will bring down our capital spend significantly for the year.

But at this point, we feel like getting the equipment deployed, getting it active with the kind of margins that we're seeing and the kind of payback that we're seeing, quite frankly, across the entire completions product lines makes a lot of sense. And we really feel good about the fact that we are getting the kind of financial returns that we are.

And getting more of the equipment out in the field this year is going to set us up for what we think will be a very, very good 2019. So with that, I'd like to thank everyone for tuning in today, and I look forward to speaking with you after the first quarter.

Thank you.