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 and full year of 2018. With me today are Don Gawick, President and Chief Executive Officer and Jan Kees van Gaalen, our new Chief Financial Officer.

We appreciate your participation. Before we get started, I would like to direct your attention to the forward-looking statements disclaimer contained in both the news release that we issued this morning, and the related presentation both of which are currently posted in the Investor Relations section of the company's website under the corporate profile or event calendar sub headings.

In summary, the cautionary note states that information provided in the news release, the posted presentation, 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 risk 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 that they were made.

Our comments today include non-GAAP financial measures. Additional details and a reconciliation to the most directly comparable GAAP financial measures are included in our press release.

As a reminder, today's call is being webcast live, and a replay will be available in the Investor Relations section on our website. Please note that information relayed on this call speaks only as of today, February 21, 2019.

So any time sensitive information may no longer be accurate at the time of the replay. With that said, I will 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 full year and fourth quarter 2018 operational and financial results. Turning to slides 3 and 4 of the posted presentation I would like to focus on a few of our financial and operational highlights for the year.

2018 was another strong year for C&J Energy Services. We accomplished a lot despite the very challenging market conditions we experienced in the back half of the year.

We entered the year with strong operational momentum as many of our customers were in the process of increasing both completion and well servicing activities to capitalize on a growing economy and higher oil prices. I am proud to say our operational teams executed at the highest levels delivering superior service quality to our growing customer base while also achieving the best safety record by incident rates in our company's history.

Additionally we accomplished many of our strategic objectives by deploying both new and refurbished equipment in all our core product lines. Integrating the O-Tex cementing acquisition, disposing of non-core businesses, and deploying new technologies from our R&T division some of which I will speak to shortly.

We executed on the stock buyback program approved by our Board on July 31, 2018 repurchasing just over 40 million of C&J common stock in the third and fourth quarter as well protecting our strong balance sheet and liquidity position. I am proud of all of our employees efforts, our overall performance, and the annual growth and profitability our organization was able to achieve in 2018.

Staying on slide 3 and focusing on our financials, we grew consolidated annual revenue to a company record $2.2 billion and generated adjusted EBITDA of $284 million approaching the highest in company history. Through solid execution we were able to grow both revenue and profitability in all three of our operating segments in 2018 which resulted in consolidated annual revenue and adjusted EBITDA growth of 36% and 117% respectively.

Additionally we generated just over 66 million of free cash flow. Focusing specifically on our three operating segments, in our completion and services segment we grew revenue of 31% and adjusted EBITDA of 37% compared to 2017.

Fracturing revenue increased 29% year-over-year generating over $1 billion in revenue for the first time in our company's history. In all our completion businesses we deployed new or refurbished equipment and grew market share.

We also continued to focus on our strategy of partnering with efficient customers and we ended the year back at the low spots fleet count reached in the second quarter. In our well construction and intervention services segment we grew revenue approximately 150% and adjusted EBITDA of over 220% compared to 2017 largely due to the acquisition of O-Tex in late 2017 that more than doubled the size of our legacy cementing business.

And finally in our well support services segment excluding our Canadian rig services business that we divested in late 2017 and our artificial lift business that we divested in July of 2018 we grew revenue 14% and adjusted EBITDA of just over 130% primarily due to the deployment of additional equipment and disciplined pricing for our services. Turning to slide 5 and focusing specifically on the fourth quarter of 2018, many of the challenges we dealt with in the third quarter continued and intensified as we moved into the fourth quarter including high levels of customer budget exhaustion, premium takeaway constraints, and year end seasonality.

I'm very proud of our operation team's performance and how they effectively managed our asset base and cost structure in the face of these challenging market conditions while maintaining a strong focus on safety. In our fracturing business we were able to allocate equipment to customers with steady or even improving levels of activity which we saw with certain customers in the midcontinent and West Texas.

Overall we experienced weakening customer demand heading into year-end that resulted in activity gaps and decreased utilization to varying degrees across most of our completions oriented businesses most significantly in our wire line and pumping businesses. Activity levels in our well construction and intervention services segment decreased during the quarter as well due to year-end seasonality and the lower overall drilling rig count.

Our well support services segment was one of the bright spots in the quarter with continued improvement in both revenue and profitability even with higher than expected levels of year-end seasonality. All of this resulted in a substantially flat consolidated revenue and adjusted EBITDA decreasing almost 14% year-over-year and consolidated revenue and adjusted EBITDA decreasing sequentially by 14% and 32% respectively.

In our completion services segment both revenue and profitability declined sequentially primarily due to customer budget exhaustion, lower activity levels, and decreased asset deployment. In our fracturing business we continued to focus on actively managing our cost structure by temporarily idling two horizontal equivalent fleets due to soft market conditions in early October.

This enabled us to minimize detrimental margins while continuing to focus on delivering excellent service quality and safety. As we have previously mentioned our strategy continues to be one of redeploying fleets to large dedicated customers, many of which we are currently working for or have worked for in the past.

By early December we were able to redeploy those temporarily idled fleets to dedicated customers that commenced the 2019 completion programs early which ultimately resulted in utilization improvement for our fracturing business by quarter-end. These redeployed fleets also allowed us to exit the fourth quarter and our third quarter exit rate of 16 horizontal and 2 vertical frac fleets deployed with the majority of our horizontal fleets dedicated at year-end.

In our wireline and pumping businesses customer budget exhaustion, higher levels of year-end seasonality and instances of inclement weather all resulted in lower activity levels in the fourth quarter. Additionally the general slowing of completion activity in the market going into year-end results and our combined wireline and pumping revenue declining by almost 18% sequentially.

In our well construction and intervention services segment both revenue and profitability decreased sequentially primarily due to customer budget exhaustion, year-end seasonality, and drilling rig count declines. All of these factors resulted in unexpected customer shutdowns in our cementing business.

In our coiled tubing business demand for large diameter coil remains strong and all of our large diameter units were deployed throughout the fourth quarter. However, overall activity levels in our coiled tubing business declined due to more severe than expected year-end seasonality especially in South Texas and the Mid-Continent.

Additionally we experienced unfavorable job mix as completion driven activity levels slowed going into year-end. In our well support services segment revenue and profitability increased sequentially primarily due to deployment of additional assets and disciplined pricing for our services.

In our rig services business we continued to deploy work over rigs into core operating markets such as California and West Texas and we exited the fourth quarter with our highest deployed work over rig count of the year. In our fluids management business we benefited from the full implementation of several contract wins from the third quarter primarily in California which were partially offset by lower activity levels in South Texas due to unexpected downtime with salt water disposal wells.

Shifting the focus to our recent technology initiatives, our R&T division continues to bring operational and cost benefits to our core service lines. In our fracturing business we have continued our initiative to improve blender life and reliability to the development and design of components that demonstrate considerable gains in operational life and reliability.

These components are being installed on our active blenders and are resulting in reduced nonproductive time and lower maintenance costs compared to the first half of 2018. Our data analytics program is making a significant impact with 11 of our fracturing fleets now streaming operational data to the cloud by our proprietary MDT control systems.

Our operations and asset integrity teams are now able to see our fleet performance data via web browser whether they are in the office or out in the field which now allows for the ability to ensure fleets are always operating at the highest levels of efficiency and safety. We continue to push new technology to lead the industry in plug and perf operations with the introduction of our true mill frac plug.

True mill frac plug has superior milling characteristics due to the compression molded components instead of filament wound parts common in most frac clubs. The true mill frac plugs create finely pulverized particles with mill that provide excellent flow back and clean out characteristics.

Additionally we have increased our perforating gun manufacturing capacity with the commissioning of our automated robotic manufacturing cell that will allow us to internally manufacture most of the guns utilized in our wireline business. The financial benefit of R&T initiatives continued to increase.

In 2018 we realized $19 million in cost savings from the products we supplied into our operations which was a 40% increase in savings compared to 2017. The products developed by our technology team are fit for purpose for the shale market and meet high quality standards as can be attested by our success in selling to third party customers.

The sales of our technology products increased by 140% compared to 2017 exceeding over $30 million. As we turn our attention to the first quarter we believe the outlook is mixed.

We expect our consolidated financial results to be flat to slightly down sequentially primarily due to market softness in several of our core businesses offsetting the improvement in our fracturing business. As customer budgets have been reset and oil prices have firmed we expect continued utilization improvement in our fracturing business especially considering the majority of our horizontal fleets were dedicated as we entered the first quarter.

Additionally several of those dedicated fleets are with large efficient customers that have accelerated activity levels as we have moved into the New Year. These improvements in our fracturing business give us growing confidence that our completion services segment results will likely bottom in the first quarter and should gradually improve through the rest of 2019 despite the competitive pricing environment.

With that said in our wireline and pumping businesses we still anticipate lower overall activity levels as many of our customers in our Northern operating basins have delayed completion activities until late in the first quarter due to inclement weather. Additionally the gradual ramp in industry completion activity and expected lower overall drilling rig count in the first quarter will most likely negatively affect the business in our well construction and intervention services segment.

However, we do expect additional improvement in our well support services segment from new customer agreements and increased market share in our core markets of California and West Texas that we recently achieved. With that I will turn the call over to J.K.

to review our year-end and fourth quarter financials then I will wrap up today's call with additional thoughts on the 2019 operating environment.

Thanks Don and good morning everyone. Turning to slide 6 in the slide deck.

We posted with our earnings release this morning and focusing on our consolidated results fourth quarter revenue was essentially flat year-over-year. However, it decreased 14% percent sequentially to 491 million.

We generated an adjusted net loss of just over $18 million in the fourth quarter or a loss of $0.27 per diluted share. This compared to adjusted net income of approximately $20 million or $0.31 per diluted share in the prior year period and adjusted net income of approximately $11 million or $0.16 per diluted share in the prior quarter.

For the fourth quarter of 2018 we generated adjusted EBITDA of just over $49 million, a decrease of 14% year-over-year and 32% sequentially. Now turning to slide 8 and focusing on the business segments.

Completion server segment revenue decreased 15% year-over-year and 21% sequentially to approximately $293 million in the fourth quarter of 2018. That meant adjusted EBITDA decreased 39% year-over-year and 33% sequentially to $44 million in the fourth quarter of 2018 Now turning to slide 9 well construction and intervention services segment revenue increased 66% year-over-year, the decrease 2% sequentially to approximately $94 million in the fourth quarter of 2018.

Segment adjusted EBITDA increased 60% year-over-year but decreased 9% sequentially to approximately $16 million in the fourth quarter of 2018. The year-over-year increase was largely due to our acquisition of the O-Tex cementing business in late November 2017.

Now turning to slide 10, well support services segment revenue increased 13% year-over-year and 5% sequentially to $1040 million in the fourth quarter of 2018. Segment adjusted EBITDA increased just under five times year-over-year and increased 19% sequentially to $13 million in the fourth quarter of 2018.

Turning to slide 11 and moving to expenses we decreased SG&A expense approximately 27% year-over-year to 15 million in the fourth quarter which was essentially flat on a sequential basis. The year-over-year reduction was mostly due to reductions in compensation expense, acquisition related costs, non-core business divestiture costs, restructuring costs associated with our Chapter 11 reorganization, and general corporate overhead.

Looking ahead to the first quarter we expect SG&A expense to range between 54 million and 58 million. This is driven largely by short and long term incentive plans accrued for at targets in this quarter.

Depreciation and amortization expense increased 59% percent year-over-year and 44% sequentially to just over 63 million in the fourth quarter of 2018. The increase was driven by capital expenditures associated with new and refurbished equipment placed into service during both the third and the fourth quarter of 2018.

Looking ahead to the first quarter we expect D&A expense to range between 61 million and 65 million. Staying on slide 11, due to the softness in the equity markets and the consequential negative impact on our market capitalization in the fourth quarter, our annual goodwill assessment prompted us to record a non-cash impairment of 146 million for the full write down of goodwill associated with our well construction and intervention services reporting unit.

Additionally we recorded a non-cash 21.4 million charge on the retirement of certain fracturing, cold tubing, and well servicing assets that we deemed to be obsolete and with challenged economics for further refurbishment based on current market conditions as well as prevailing customer preferences. From a tax perspective as we previously reported, due to our significant NOL position we expect that we will not be a cash tax payer in 2019 and for the next few years outside of nominal state and local taxes.

We also expect our effective tax rate to be close to zero. Now turning to slide 12.

Looking at the cash flow we generated 78 million of free cash flow in the fourth quarter of 2018 by cutting costs, reducing capital expenditures, and managing working capital. Capital expenditures decreased 25% sequentially to just under 67 million in the fourth quarter of 2018.

For the year capital expenditures totaled 311 million which from the midpoint resulted in a 29% decrease to our original 2018 capital expenditure budget announced in February highlighting our disciplined approach to capital deployment. For $2019.00 we expect capital expenditures to range between $140 million and $180 million.

We're just under 70% of that focused on the maintenance of our deployed equipment. We plan to spend just above 15% of our 2019 capital budget on growth oriented expenditures that will be focused on our most profitable, highest return businesses.

In our coiled tubing business we have placed an order for two additional large diameter units that should be delivered in the third quarter of 2019. We plan to fund our capital expenditures through operational cash flow and we once again to reiterate that we will stay focused on achieving one of our main strategic objectives for 2019 generating free cash flow.

During the fourth quarter we purchased approximately 20 million or just over 1.4 million shares of C&J common stock in the open market transactions at an average price of $13.85 per share. C&J stock repurchases were made as part of the company's 150 million stock repurchase program announced on August 2, 2018.

Now on slide 12, and moving to liquidity and the balance sheet, our cash balance was approximately 136 million at the end of the fourth quarter. Additionally we had no borrowings outstanding on our credit facility which had 235 million of borrowing capacity resulting in total liquidity of just over 370 million at year-end.

As Don highlighted no matter what your operating environment looks like for us in 2019 our financial philosophy is focused on generating targeted returns, maintaining a disciplined capital deployment strategy, protecting our strong balance sheet and liquidity position, and generating free cash flow. With that I will turn the call back over to Don for a few closing comments.

Thank you J.K. With the United States now being one of the world's top oil producers with many of our largest customers having invested heavily in U.S.

shale over the past several years we expect activity levels to gradually improve throughout 2019. We believe this will happen as long as oil prices remain fairly range bound and don't decrease significantly.

Many of our customers have expressed to us that the current $50 to $55 oil environment is right in line with the budgeted expectations. Clearly we welcome the recent improvement in oil prices but we acknowledge that continued to oil price volatility could create negative headwinds for most if not all of our businesses.

With that said even as our customers stay disciplined and live within cash flow we still see ample opportunities to deploy equipment and service our customers growing needs. In fact a few of our largest customers especially in West Texas have voiced a desire to continue growing their rig count throughout 2019 despite the current volatile oil price environment.

As we get further into the year stable commodity prices, the growing dock well count, and the elevation of persistent takeaway constraints especially in West Texas should present future revenue opportunities for our company as most of our customer base should be in a good position to increase activity levels. No matter what the environment looks like in 2019 we will stay focused on generating targeted returns, lowering capital spending, and generating free cash flow.

In closing I want to thank our employees for their continued hard work and dedication. Despite the challenging market conditions that we faced in the back half of the year our employees stayed focused on meeting our customer's needs and delivering our products and services with high service quality and safety.

Their hard work and dedication enabled us to be successful in 2018 and positions us well for continued success in 2019 and beyond. Thanks again for joining us on our call today and we appreciate your interest in C&J.

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

Good morning and thanks for taking my questions

Good morning Tommy.

So wanted to start off on CAPEX specifically where you're highlighting the 30% reduction for maintenance on a per fleet basis for frac. Can you help us understand what some of the drivers are there to be able to bring that down and then to the extent that it's got to do with your cloud based analytics system, any more details you could give us on that and whether you think you may ultimately deploy it across more fleets would be helpful, thank you?

Yes, so we're seeing really the fruits of some of the investments we've made over the last couple of years in our fleets where we did a tremendous amount of upgrading. You know we referred to last year as not just a refurbishment program for a number of our fleets but also an ongoing upgrading of fleets in the field.

So we've really gotten fleets high graded at this point. We're seeing the fruits of that bear out in terms of a lower overall maintenance costs and we certainly are continuing to focus on the notion of analytics, predictive maintenance, and really optimizing what we're doing from a cost perspective in terms of overall ongoing cost to keep the fleet running at an optimal level.

In addition we've had a number of R&T projects over the past well and we continue to have several more coming up that have lowered our operating costs on an ongoing basis. So those efforts are really starting to pay off.

We're certainly seeing a decrease on our ongoing maintenance cost on a per fleet basis.

Okay, thank you Don and then as a follow-up I want to make sure I'm hearing you correctly on completion services bottoming in Q1, I think the takeaway from that is revenue and EBITDA likely down versus utilization for frac which should be up quarter-over-quarter. So am I correct -- hearing you correctly there and if so is the takeaway just there's been a price reset that's going to run through the P&L starting this year?

Yes, so there's several moving parts there with respect to that segment. You're correct on the frac portion.

We really saw what we think was the bottom in frac in Q4. We've seen our utilization start to improve.

Largely -- there are a couple of reasons but largely because we've continued to move more and more fleets into a dedicated basis. So we exited Q3 with six fleets working in the spot.

We exited Q4 with only three. We anticipate by the end of this quarter we'll have no more than one and possibly no fleets working in the spot.

So clearly we've seen the bottom on frac. It tends to lead in terms of the completion services so it heads down first and it heads back up first.

We're seeing wireline and pump down be a little bit behind in the cycle as they have been really kind of bottoming this quarter. We're already seeing some good signs though the things are turning.

And so if you take the segment as a whole we really do expect to see fairly flattish revenues and slightly down EBITDA's. And again due to some of that pricing reset that we did see in the Q4 with the slowdown in the market but as the business starts to pick back up and we move into the next several quarters we anticipate seeing pricing start to move up again especially in the second half.

Okay, thank you that's helpful and that's all for me.

Thanks Tommy.

Good morning. I guess a quick follow up to that, if we think about where CAPEX your maintenance CAPEX per fleet is today.

Where does that sit today and where ultimately do you think you can get it?

Well, I think the advent of the MPT [ph] controls and the monitoring in the true to cloud services. I think I'm going to provide a much better level of predictive maintenance on our equipment.

Obviously, the fact that we have seven new or refurbished fleets which are really upgraded fleets now in our fleet and our continuing program in terms of reducing further MPT on the well side. So well handled by our operational team.

I'm going to drive that down further. In terms of any firm numbers, we would not be surprised if we could drive it down a third or a half $1 million per fleet but obviously that is also depending on the increased demands put on the equipment by increasing volumes of sand in terms of the pumping schedules.

Okay, and if you decrease that by half a 1 million where does that get you to now?

Probably 3 million per fleet per year or slightly lower.

Okay, alright. And then if we think about potential reactivation forward, what kind of EBITDA per fleet would you need before you kind of think about reactivating fleets?

Yeah, so we -- our current thinking for this year's it's unlikely that we see enough of the pricing rebound barring some unforeseen huge ramp up in commodity prices that would be big enough to justify. But we're still sticking with our general target of high teens to 20ish million of EBITDA per fleet per year.

And there would have to be where the customer that had a very rich inventory of activity and then commit to us for a period of at least a year with that kind of margin. So yeah, I think it's going to take a little while maybe for the industry to get back to that with our current outlook.

But we do anticipate prices starting to move up certainly as we go through the year and especially the back half.

Okay, and then in 1Q and in your outlook were kind of flattish to down a little bit for overall I guess, that's an EBITDA number. You know what kind of.

Per fleet is included in that kind of one Q. outlook you know what kind of plausible range do you have.

So we did in the mid 6 range, low to mid 6 range for fleets on average and in Q4 bear in mind we had a couple of fleets that we shut down early in the quarter and then started back up for the last month of the quarter in those. The anticipation going forward is that the numbers continue to improve from that point and head in the right direction.

Leading edge pricing today is certainly better than that but we'll have to move at getting all of our fleets closer to the high end of the range.

Chase obviously pricing is important that utilization of the fact is nearly as important if not very important at the end of the day. So the fact that we expect to end the first quarter with largely all of our fleets dedicated by one is really going to help in terms of avoiding whitespace subject obviously to the customers getting their ducks in a row.

Yes, so if you think about just utilization and ignore kind of pricing and hold it flat, is it plausible to get 10 million of annualized EBITDA per fleet without any pricing?

Definitely.

Okay, I will turn it back over, thanks gentlemen.

Thank you Chase.

Yes, good morning

Good morning Scott.

The reduced maintenance cost per spread which is just great to hear, we're hearing similar things from a few others with these next gen monitoring systems know really leading to a material extension and an hours of useful life between major referrer been replace events in particular for the transmission of power and assuming you're seeing gains on this front and that's contributing to the reduction in cost can you comment and put out some color on just the amount of hours you're able to squeeze out of the key components between major refurbish and placed events with the analytics you are doing?

Yeah again Scott, it's still early days. We're saying it continuing to improve so ultimately I'm not sure where we can get but we're certainly headed in the right direction.

The power inside of the equation quite frankly we're still waiting to kind of evaluate just how well we do there. We made some major upgrades working with our third party suppliers and we're really improving what we're seeing for performance with their next gen equipment.

So I'll wait to comment on the hours that we're seeing but we're really seeing it improve dramatically from what we had seen him in 2018. In terms of the major component numbers again, it's a little bit early just to see how far we can take that but we are definitely seeing improvements across the line in terms of the major components.

Some of the things that we've done over the last few years like changing out what we've done in terms of cooling systems etc as well, have really improved obviously the life of our engines for instance and again early to say how big an impact that's going to be but it's significant already and moving up in the right direction. So as we get a little bit further into the year we can probably start commenting a little more specifically on what kind of improvements we've seen a year-on-year basis.

But early on it's already quite impressive.

Great, we will wait for that color. And you may have answered this in Chase's line of questioning, I may have missed it, but what growth in stage count are you expecting within frac in 1Q versus 4Q?

Actually we didn't get into that with Chase. In terms of overall count I don’t know that we had a number to give you.

I would expect we will certainly be up at least something in the mid to high single-digits. But we can get back to you on that one.

Okay, and just on well support. None of you guys are consistently producing double-digit EBITDA margin, it sounds like the demarked position continues to improve here and how should we think about the margin trajectory and that segment over the course of 2019?

I would say the kind of your slow and steady improvement you saw in 2018 you should expect to continue to see through about 2019. Not moving too quickly but relentlessly moving higher.

Just one last one, bringing more rigs to the market, making sure that our rig team is delighted in terms of customer performance and safety. Jack is doing a wonderful job on the well support services business grinding it slowly higher by quarter.

Got it, good to see. And one last one for me, non-cash compensation expense in 1Q, [indiscernible]?

Approximately 5 million of it is part of the accruals there.

Got it, thank you.

Thank you Operator. I just want to thank everyone for joining us today on the call and for your continued interest in C&J and we look forward to speaking with you again after the first quarter.

Thank you.