Mike Schmit: Yeah, we certainly hope so. I mean, obviously, we haven’t seen that right now in this quarter. But our hope is if things stay where they are, that some of the smaller players and privates will get more active in the second half of the year and will benefit then. But that’s certainly our belief.
Ben Palmer: That’s exactly right. Yes, our results, given our customer base and where we are, might be a little more volatile than some others. But certainly that gives us opportunity to the upside, right? So there may be a little bit more downside, but there’s opportunities to the downside. We definitely think that’s the case. Great question.
Stephen Gengaro: Good. Thanks. Thank you again, gentlemen.
Ben Palmer: Thank you, Steve.
Mike Schmit: Thanks.
Operator: Your next question comes from Chuck Minervino with Susquehanna. Please go ahead.
Chuck Minervino: Hi, good morning. I was just wondering if you could provide a little bit more color on kind of the pricing situation in frac right now. You talked about some competitive pricing. Do you think it’s kind of bottoming here or is it still kind of trying to find its bottom? Just wanted to try to get a sense of where we are in that. And also kind of tied to that, you mentioned some frac fleets coming in from gas basins. Has that stopped or do you expect that will continue as well?
Ben Palmer: Chuck, it’s all in flux. I mean, we are hopeful that we’re reaching a trough or a bottom. As I indicated, we’ve got our stated price at which we won’t work below. We’re not bidding everything at that particular price level. So we’ll see. If at some point we’re not winning anything at the level at which we’re bidding it, we’ll have to take more dramatic steps. But we’re hopeful that the industry will be rational and appropriately rational and we are monitoring it very closely and I can tell you that you know competition — all of industries we compete in, all of the oilfield services is incredibly competitive, our customers do an incredible job exploiting the fact that they have lots of choices and if our industry can show some discipline, it would be more disciplined.
But it is competitive. This is capitalism. So we understand that. And so we’re hopeful we’re reaching that point. It may help with some of the smaller players who, at the very low end of the market, that they’re probably bidding more aggressively, but they’re going to be wearing out their equipment and perhaps don’t have the capital to be able to invest back in the fleet like others do, like us. So we’re trying to be very mindful. We don’t want to burn our equipment up. We want to be in a position, obviously, to generate a nice return on our investments, so we’re not going to dip down too low. But we’re hoping things will shake out and there’ll be some improvement. There’s obviously a lot of focus on e-fleet market. A lot of investment going in at that upper end of the market.
Have to believe that competition there is intensifying as well. And so it’s an ever-changing market. Technology is changing constantly. We’re hearing of new types of technology that are different, innovative, and could be quite interesting, which is one of the reasons we haven’t at this point tried to go into electric technology in a big way because it is changing. It is changing, and it is evolving. And as we noted in our comments, what the ideal or appropriate configuration for the equipment and the ability to get power sources is evolving and changing. Lots of people are spending a lot of time coming up with viable solutions that hopefully at the appropriate time we will be able to exploit. But at this point, we’re monitoring that market and feel good about our position in the market that we focus on.
Mike Schmit: And I’ll add, in relation to your question about potentially more fleets from gassy basins moving in, the Permian or other areas, I mean, gas prices have been pretty low for a while. So we don’t anticipate there’s a lot more movement that could happen, because we don’t think there are a lot of fleets left in gassy basins that are not working. So if they’re at this price, we don’t anticipate there to be incremental movement.
Chuck Minervino: Got it. And then just one more. If you can just talk me through a little bit the free cash flow outlook for the year here, it sounds like maybe the CapEx number might be coming down a little bit. Also, you mentioned a tax refund coming in, and I guess a little bit of the moving parts there with EBITDA as well.
Mike Schmit: Well, we did receive the tax refund. That came in this week, actually. So that was good. And we said if things slow, we would move to the lower end of the range. Obviously, we’re hopeful that’s not the case. But we have flexibility in that spend, I guess, with the point there. So if things are good, we’ll definitely spend the money and we’ll continue to invest our businesses. As you know, we have a very strong balance sheet. We’ve got over $200 million in cash. And so we’re not concerned currently about our ability to generate cash for the rest of the year and meet all of our CapEx needs. And we still will plan to — we think we have plenty to do an acquisition if we find the right one and also return cash to our shareholders. So not a lot of concerns. The comment on CapEx is just that’s a lever we can pull to ensure that we do continue to generate the cash we need to for our plans.
Ben Palmer: Our plans this year include some, I’ll call them, strategic investments. We don’t have a tremendous amount of specific growth capacity investments, but we’re making a lot of targeted strategic investments in different parts of the business that we think are, obviously, we think is appropriate and are going to pay off. That’s part of what’s driving our number this year. But we can manage down. Certainly, the capitalized maintenance would come down naturally if activity levels were to fall. That one would kind of manage itself, if you will. So the upper end of that $200 million, $350 million has some quote unquote, extra stuff in there that is incremental. So that’s really not our annual run rate at this level of activity. It’d be something closer to the lower end of the range.
Chuck Minervino: Got it. Thank you.
Ben Palmer: Thank you.
Operator: [Operator Instructions] Seeing no further questions in the queue, I will turn the call back to Ben Palmer for any closing remarks.
Ben Palmer: Thank you, operator, and thank you everybody for joining us this morning, and we look forward to catching up again soon. Take care.
Operator: This will conclude our conference call. Please note a replay of today’s call will be available on marineproductcorps.com within two hours following the completion of this call. Thank you for your participation. You may now disconnect.
