CES Energy Solutions Corp

TSX:CEU

Earnings Call Transcript 2021-Q2

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the CES Energy Solutions Corp. Second Quarter 2021 Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Tony Aulicino, Chief Financial Officer. Please go ahead.

[Anthony Michael Aulicino, Chief Financial Officer]

Thank you very much, Celine, and good morning, everyone, and thank you for attending today's call. I'd like to note that in our commentary today, there will be forward-looking financial information and that our actual results may differ materially from the expected results due to various risk factors and assumptions. These risk factors and assumptions are summarized in our second quarter MD&A and press release dated August 12, 2021, and in our AIF dated March 11, 2021. In addition, certain financial measures that we will refer to today are not recognized under current general accepted accounting policies. And for a description and definition of these, please see our fourth quarter MD&A.At this time, I'd like to turn it over to Tom Simons, our President and CEO.

[Thomas J. Simons, President, CEO & Director]

Thanks, Tony. In the face of global supply chain pressure, Canadian breakup, certain customers' resistance to pricing increases, CES is very pleased with our Q2 results. They're only possible because of our loyal customers and even more dedicated employees. On today's call, we'll provide our customary operations update for Canada, U.S. and what I'm going to start calling Oman light. We'll speak plainly about capital allocation. We'll share our optimistic outlook for CES within this operate -- within cash flow energy patch. Tony will give a detailed financial update. We'll take Q&A, and then we'll wrap up the call.I'm going to start with Canada. So Canadian mud turned in a positive EBITDA for CES through Q2. From when I began as a mud engineer in '93 in Canada, that's a huge accomplishment in this competitive market. And how did Ken Zinger and his team keep doing it? By doing deeper pad work, but same stays for the leading operators. Today we have 58 jobs. PureChem, our production chemical business in Canada through Q2 did very well for the company financially and operationally, but today faces input cost pressure and supply chain pressure. Some CapEx is going to be spent in the second half of the year that will assist and relieve some of those problems and help them meet our customers' needs, particularly in the oil sense.We're getting nice contributions through the summer from frac and stim, but that business is variable. Low CapEx fits over our infrastructure, but it's variable. We remain completely committed strategically and scientifically to these product lines throughout CES in North America. Out on Vancouver, Sialco continues to both financially and strategically contribute to CES. Thanks, guys. Clear continues scratching to keep its nose above water. It's been a long time since just it started stepping on this province's chest. These guys are keeping it up in a competitive market. We appreciate it.I'll move on to the U.S. AES delivered again strong financial and market share, 20% market share and making money. We're not chasing market share. While we are strategic, we remain committed to margin, which translates to EBITDA. Today, we have 83 jobs in the U.S.I'll move on to what I'm going to call Oman light. With substantial 1 year plus planning from intercompany people, AES has us on a project in Oman. It's a resource or tight oil play. It's deep, vast, and our history with the customer is strong and built on mutual trust. But a note of caution, it's early days for this customer for any of this to matter or needs to flow. But we know how to do our part and possibly go from this. I've been a part of this myself. I've been there, and I believe I see business upside for CES business lines beyond drilling fluids as well.I'll now move on to Jacam Catalyst in the U.S. whereas always they clip along with their quiet and very solid contribution. Market strength is highest in the Permian, which includes Texas and New Mexico. This backstops the business. We have additional, very strong contributions in the Rockies, which obviously includes the Bakken. We do business in California, Oklahoma, throughout Texas. We're working on other markets. Overall, Jacam Catalyst is a very key part of CES financially and strategically. I'm going to try and save some of the nitty-gritty for a [ Sunday's ] financial matters, Tony, which is capital allocation.But here are the headlines from me. CES will continue to set off equity-based comp grants with share buybacks. In plain English, we are not going to dilute you to pay ourselves. I'll move on to the second bullet. We're very confident with the industry and a place within it. And thus, we're proud to reinstate our dividend as a free cash flow generator within the sector, like of the early days with double this multiple, we're now paying you cold hard cash to own our equity. With this very modest percent of free cash flow generation, we believe the dividend is sustainable through cycles.We'll move on to the second bullet. We will reduce our bond when we refinance it. With cash and liquidity, we expect to create within the context of this market and enjoy before we refinance it in an appropriate time line.I'm now going to turn it over to the ace himself, Tony. Tony, please let me share my outlook on the sector and our place in it before we go to Q&A.

[Anthony Michael Aulicino, Chief Financial Officer]

We'll do, Tom. Thank you very much, and thank you for the new indelible nick name. So CES's second quarter results demonstrated strong revenues, margins, market share and surplus free cash flow generation, underpinned by a focus on strategic investments in working capital and preservation of strong balance sheet and liquidity metrics. In the second quarter, CES generated revenue of $254 million and adjusted EBITDAC of $32 million, representing a 12.6% margin. Q2 represented another consecutive quarter of strong financial performance with revenue, EBITDAC and margins steadily improving from the depths of 2020, while market share in the U.S. drilling fluids business has continued to march up nicely towards the 20% level from 13% a year ago.Over this past year, CES has continued to consistently generate positive funds from operations, reaching levels of $23 million in Q2 and $27 million in Q1, while revenue in some divisions is actually approaching reaching distance of pre-COVID levels. CES remains confident in its ability to continue to generate material surplus free cash flow amid an improving outlook. And on August 12, the company's Board of Directors approved the reinstatement of its dividend on a quarterly basis. Accordingly, CES will pay a cash dividend of $0.016 per share on October 15 to shareholders of record at the close of business on September 30, representing a dividend yield of over 4% on an annualized basis at yesterday's closing share price.CES's reinstated dividend returns additional value to shareholders represents a conservative payout ratio and preserves the strength of the company's balance sheet while maintaining ample liquidity to fund capital allocation options, including potential growth initiatives. As industry activity levels continue to improve in the quarter, CES remained disciplined on capital expenditures, while retaining substantial liquidity and balance sheet strength. We exited the quarter with a net cash balance of $12 million compared to $18 million at the end of 2020. The decrease in cash was driven primarily by investment in strategic inventory and by the repurchase of 6.8 million shares for $10.3 million or $1.50 per share under our NCIB program.Our current net draw on our senior facility is approximately $3 million as a result of investments in working capital and the repurchase of approximately 700,000 shares since June 30. CES's Q2 revenue of $254 million represents an increase of $94 million or 59% from Q2 2020 and in line with $261 million in Q1. Revenue generated in the U.S. was $175 million or just under 70% of total revenue for the company. CES continues to participate in the improved drilling environment in the U.S. as demonstrated by our market share of 20% for the quarter.Revenue generated in Canada was $78 million in the quarter versus $38 million a year ago and $93 million in Q1. This stronger-than-expected sequential revenue level in a seasonally softer second quarter was the result, as Tom mentioned, of high activity levels in both our Canadian drilling fluids and production chemicals divisions. And in CES in the same quarter, achieved adjusted EBITDAC of $32 million, which represents a significant increase from the $8 million a year ago and in line with $34 million generated in Q1. Again, despite Q2 being a seasonally weaker quarter. Included in these results is a $3.1 million benefit recognized by CES from the Canadian Federal Government SKUs program.Adjusted EBITDAC as a percentage of revenue in the quarter was 12.6%, representing a significant improvement from the 5.1% reported in Q2 2020 as the company benefited from stronger competitive positioning, increased drilling and production levels, higher market share and the realization of efforts in 2020 to right size the business. CES has continued to maintain a prudent approach to capital spending through the quarter, with net spending of $4.5 million, representing approximately 1.8% of revenue. We will continue to adjust plans, as Tom mentioned, as required to support growth throughout divisions as industry conditions continue to unfold during the year.Right now, for 2021, we expect cash CapEx to be up to $30 million, of which $20 million is estimated as maintenance and $10 million is growth. Our balance sheet continues to benefit from the attractive structuring and maturity schedules of our credit facility and senior notes. We ended Q2 with $305 million in total debt, net of cash, comprised primarily of $288 million in senior notes, which mature in October of 2024. At June 30, we had a net cash balance of $12 million on our senior facility with a maximum available drive approximately $235 million CAD equivalent, providing us with significant availability. We remain cautiously optimistic on our outlook for the remainder of 2021 and beyond.Throughout 2020 -- the 2020 downturn and into the recovery period of the last few quarters, CES has consistently demonstrated its CapEx light and asset light decentralized business model, enabling generation of significant surplus free cash flow. As our customers increasingly regulate their business models to maintain spending within cash flows, we believe that CES will be able to leverage its established infrastructure, business model and nimble customer-oriented culture to deliver superior products and services to the industry. In its core business, yes, we'll focus on profitable growth, optimizing working capital, developing or acquiring new technologies and making strategic investments as required to position the business to capitalize on current and future opportunities.Operator, at this time, I'd like to pass it back to Tom for a summary of his views on our outlook.

[Thomas J. Simons, President, CEO & Director]

I'm going to say what H. Bailey said a lot less elegantly. We like the new financial, sustainable energy packs. The sector does not need to rely on outside money anymore. I personally believe it insulates industry from the political hatred that is building. And over here at CES, it will kid ourselves. That's how it is now. And I believe we can make it because this place is built and run by a group of ex-private owners who don't kid themselves. We built this company from 15 years ago that started with a chicken coop that stage mud chemicals to now having $300 million of infrastructure, assets, rolling stocks of trucks, inventory that we turn fast enough to turn into free cash flow.Most importantly, real customers that pay and maybe the most important, great, trained, motivated employees that we know to treat properly and keep through crashes, and I think a fabulous future.So with that, we're going to turn it over to Q&A. And then after that, we'll wrap it up.

[Operator]

[Operator Instructions] Our first question is from Michael Robertson with National Bank Financial.

[Michael Storry-Robertson]

Looks like another strong quarter for U.S. drilling fluids market share. I assume some of those recent gains have been driven by customer mix and who is more active out there right now. So just wondering what you're seeing and hopeful for from a market share standpoint over the coming quarters, assuming activity levels continually to gradually pick up?

[Thomas J. Simons, President, CEO & Director]

I'm pretty -- it's interesting. One of the -- well, a couple of nuances I want to share with people. We do not want $100 oil because the customer will not pay for the input cost increases to any of the chemical companies, no matter what any of the people with my job put out for public letters telling your salespeople to get. That's not how the oil field works. They'll eat those letters. Salespeople will have to click because they'll look like monkeys. So we don't want $100 oil because it will screw the services. But the nuance is natural gas is making money for all the customers. So we don't think the rig count in the U.S. is going to 800 because the customers are running businesses now, not trying to flood the market and sell their companies because there's no one to sell them to. So they're going to try and generate, I think as an observer, cash flow, do what we just did, give the money back to people and hope to catch a bid.And so we're going to benefit from the private's running rigs, was going to benefit from the slow creep of the publics maybe inching the rig count. But based on the results we just printed, I don't think we need anything to change. We're not looking to crank the dividend every quarter. We want to be a reliable payer of cash, a reliable supplier to the customer, a reliable employer to people. We want to slowly expand this business in a reliable way. I like not owing the bank money because if there's another crash on a commodity in the world, we're going to collect $100 million and be thoughtful with it because we don't owe anybody any money. And so that's all we're looking at as a business. We're not trying to go to 30% market share in the U.S. and not make money off the 10%. And it's not the 10% that you won't make money on. It's the 20% you have that you'll destroy.And we know that from being private owners, that's the wisdom we get from building this company. I'll just say, instead of the centralized businesses that hire people and suits to take over from things they bought, but they chased off the owner. So that's our competitive advantage. That's our business. It's why we're no longer telling our competitors, why we have the work that they don't on our operations call and are never going to resume. That's why the call was short. We have the work. We need to keep it, so we can make money and give it to the people on this call.

[Michael Storry-Robertson]

Got it. That's helpful color. Do you think you'll be able to keep most of the gains that you've sort of picked up in recent quarters?

[Thomas J. Simons, President, CEO & Director]

It's up to the customer. If they won't let us make money, then we might go to 18%. But I don't think they can add days to their rigs. I don't think the competitors can keep losing money. I don't think the integrators will enable them. But we're not taking the work and losing money. We went down from 22 to 20, position customers that won't pay, and we're not paying our people. They won't work if they don't get paid. There's differences in the U.S. and Canada for 6 years. It is risky to work in the oil patch in Canada, and there is just no work. So there's a nuance there that's different. People with my job are calling out some of the customers in the DOB. I don't know, Michael. We're going to do the best we can. We're going to try and make money. We're going to try and meet the customers' needs.There's a reason we pushed the [ Norman ] because Biden is trying to push the oilfield out of the U.S., while he's demanding more oil. He's obviously talking out of both sides of his mouth. We can all see that, but we can't change it. They want it both ways. So -- but natural gas is kind of a nice hedge for everyone on this call. We have South Texas revenue now that we didn't have a year ago because of that. And that's built into our results. We're not going to tell everyone where it is because our competitors are going to go chase it and try and offer a product for $0.10 a line item less because they're terrible on the rig, and that's how they get the work. So we're going to keep our cards close to the vest, try and give everyone better results, keep the work, and we're not changing.

[Michael Storry-Robertson]

Fair enough. That's helpful color. Just switching gears to the international opportunities. I was wondering if you could provide a bit more color there, particularly in Oman. I appreciate it's early days, but was interested in sort of what that operation will look like to better understand how it may serve as a platform for future opportunities in the Middle East?

[Thomas J. Simons, President, CEO & Director]

I think you should track down the customer and ask them, but if they can make oil, we hope to stick around and build off of it. There's a big back story to it. It's premature to say it because it might not happen. We don't give guidance. If anyone is knowing new for the last 16 years in the market, we try not to sell too much hope. But I've been over there. I've been over there before. Other people have been over there. We've been poking at things. We have a sponsor, as we call it, in the oil field that will let us go over there and not start $20 million in the hole and build the field of dreams and hope they come because they don't because they know you're sunk and they have you where they want you. And this isn't that beginning.But at the end of the day, if the oil company can't make the oil flow, we can't change that, and there won't be a platform. So it's too early to say, and I'm not speaking on behalf of the customer. They can speak for themselves.

[Operator]

The next question is from Josef Schachter with Schachter Energy Research.

[Josef I. Schachter, Author & President]

Congratulations on reinstating the dividend. Two questions for me. When you're talking to customers in Canada and the States for business and heading into Q4 and then Q1, are you getting much increased volumes that you see coming, more jobs? And how is the pricing discussions going in terms of starting to see some recovery of the cost increases and maybe expanding margins?

[Thomas J. Simons, President, CEO & Director]

It's different in each country, Josef. The customers, I'd say -- I mean, you know as much as we do about this because you cover both sides, E&P and service. It's 60%, 70% of their money will go back in the ground. The rest, this is a generalization. Pay down debt, pay a dividend, pay a variable. But they've got cash flow from gas, not just oil. Hedges are falling off. So cash flow is going up. These places are swimming in money. Some of the real big guys are propending they're not energy producers now. They're usually from Europe. So they're talking at them, let's say, they're playing it both ways. I want to be respectful. And we work for them. We need to work for them. We're solving their problems. We're better. The big guys that are centralized and can't figure it out on the rig, and their ops people have figured that out finally.So visibility, I'd say, 60% of cash flow goes in the ground. Canada is not in a position to go to 250 drilling rigs until some of the operators allow supply chain to let us pay people to take the risk to come back into this. This is not the case in the States. In Canada, the rig crews are so green that we need 24-hour mud engineers on rigs that used to be able to go there for 4 hours to keep the rig out of trouble, mix the product and not get them 3 days later stuck in the hole. It's changed. We have to babysit the mixing, the inventory, keep them out of trouble. We're literally carrying sacks that we didn't used to, but we have to pay the people more to take the risk to come back into the sector.And we have certain operators that expect us to show up with a sharp pencil despite knowing shipping companies are turning to screw on the whole globe. We can't change that. That's why we don't want $100 oil because they won't even let us pay people $300 a day more to come back into a sector that has burned them and burned them, not through the sector's fault, but through you know who's fault. So we're trying to bridge that divide. A lot of customers are working with the vendors. That's why we had a good quarter. I want to be clear. We're very grateful to those customers. I know people with my job feel the same way at other services. We reached some of the bigger places to let the supply chain guys help them win so we can put a better person on that rig to keep the rig out of trouble or the sector is not going to 250 rigs, despite the cash to put them to work because they don't want to get stuck in the hole and they won't even crew the rig. So there's some nuances here, Josef. We're going to -- if we just keep putting this quarter up, I'll be really happy.

[Josef I. Schachter, Author & President]

Okay. Going to the international side, are you sending people to Nigeria and Oman, but not building the base because you don't want to put as you mentioned, $20 million of capital that the customers got through over that barrel? Do you -- are you just sending people over with the product? Or how much is -- and how -- are there -- where would the people be staged? And would you, at some point then need a base?

[Thomas J. Simons, President, CEO & Director]

Specifically, Nigeria is production chemicals. It's half emulsion breakers and then half the other stuff, so it protects production. No people. It's [ C10s ] out of Houston. It's to a company that does the work on the ground. They're competing against big integrators. So there's -- they're competing against manufacturers. They need a manufacturer to give them technical advice. Shout out to our Chief Technology Officer. He went from scientist to BD. It took, in his words, it looks fast to you guys. This took forever in the background. So way to go to Dave Horton. We would have more product in the ground, except because of the shipping issues, there's a couple of C10s tied up in Houston. 0 people at risk. 0 capital at risk, Josef. 0 product at risk. It's elbow grease. And we're all about working 24*7, so we're cool with that.As far as Oman, I personally was there. Yes, people were there. Canadian supply chain and U.S. supply chain are actively doing this and just so people understand their business. We bring product from all over the world. We finish it in North America and sell it to North American operators. A North American operator is in Oman. We're working for them. We have an Omon family that has infrastructure there that we can work off of. We can buy certain commodities at market. It's kind of a protected market. If market pricing is 1, they've kept everyone out by pricing them at 1.2. It took forever to get us to market. We're at market. We're on the work.I'm not talking about the play. That's the customers playing out our play. I can only talk about our part and warn everyone. If there's no -- if they can't make the play work, it's nothing. But we are actively selling work. We have 1 single person there who is already Omani. I spent a bunch of time there earlier this year. So there're 2 other AES people. We believe in the play because we believe in the ability of the customer to find oil before it's out of the ground based on their incredible success. So where is this going? Where'd they go? Because that serves CES forever. And that we bet on the horses that win. So that's the story.

[Josef I. Schachter, Author & President]

Good. One more for me. M&A activity with some of the weaker competitors having financial difficulties and you having a strong balance sheet, do you see potential of any smaller or medium-sized tuck-unders across your platform?

[Thomas J. Simons, President, CEO & Director]

Well, they want to ascribe a bunch of value to making no money. And we're not giving our value away, so not really.

[Operator]

The next question is from Matthew Weekes from IA Capital Markets.

[Matthew Weekes, Equity Research Associate]

I was just wondering, first of all, if you could provide a little bit of color on sort of the strength in Canada during the quarter. Rig counts were solid. It was quite a good quarter there. Was there -- was it a material impact from the exports to Nigeria or on the revenue side where there is some kind of input cost pass-throughs to customers that ended up being really margin neutral in the end? Or what was sort of the cause there?

[Thomas J. Simons, President, CEO & Director]

International was immaterial financial. It's more directional that we want to share. It didn't move the needle in one middle bit. In fact, my airfare and hotel probably made us lose money. Not that I stayed in the Taj Mahal, but we didn't make any money, just so everyone knows. We haven't made any money yet. We haven't lost a bunch, but it didn't change anything.

[Matthew Weekes, Equity Research Associate]

Okay. And were there any inflation pass-throughs at all?

[Thomas J. Simons, President, CEO & Director]

Well, we're trying to get them, but it's whac-a-mole. I mean the whole -- whatever the government is saying is massive inflation everywhere. You can read the news. There's ships tied up outside of the Los Angeles. I mean, ocean freight is 7 or 8x to tie up a sea container than it was 15, 18 months ago, and every single supplier to every single sector is not exempt from this. Because we're a manufacturer in North America, we are working hard to get around that. But the storm in Houston affected the oil field. It affected the ability to make certain products to treat certain chemistries. I'm not telling anyone what they are here.We're keeping up. We're winning new business because we're -- our supply chain people and ops people are doing an incredible job of balancing that and winning new work where our competitors are falling down, and that's all I'm saying. But it's -- actually, it's tight. It's very tough. It's part of how we had a good quarter. There's no outliers. I don't think that are one-offs. But in some businesses, there's always outliers. We're big enough to have them all the time. And we'll probably have one in Q3 that's up, one that's down and they'll kind of wash out. I've done this a long time. That's how it's always going to go. We're going to have 1 drilling job that takes loss circulation or a kick in the quarter. We don't know which one it will be. That's why we carry inventory. It will get mix sooner or later. Don't break it before it gets mixed.

[Matthew Weekes, Equity Research Associate]

Okay. Understood. And just one more for me. It's just a confirmation. I just wanted to confirm the drilling numbers that were mentioned earlier in the prepared remarks. Was it 58 jobs today in Canada and 83 in the U.S.? Is that correct?

[Thomas J. Simons, President, CEO & Director]

Correct. Correct.

[Operator]

The next question is from Tim Monachello from ATB Capital Markets.

[Tim Monachello]

Is some of the -- I mean, most of the commentary on the call so far has sort of spoken to the resistance from customers to accept pricing increases and understanding that, I guess, the inflationary aspects of this up cycle are unprecedented. You also have a tightening market from a supply demand perspective for services. And I would assume that most of your competitors, given their outward stance around maintaining margin profiles would have a sort of similar view to pricing increases as yourself. So do you think -- or is there any reason that you think that through the cycle as activity improves that your leverage over customers won't also improve?

[Thomas J. Simons, President, CEO & Director]

Well, I've done this since '93. And if you ever hear me say I have leverage over the customer, put a bullet in me or my customer will. It does not work like that ever. If we ever have that arrogance in here, management should be fired by the board in one second. We do not have leverage. We work at their pleasure. We scratch and claw to make this money. That is our culture. It will never change.

[Tim Monachello]

Okay. And in past calls, you said you don't really need pricing increases you need to keeping the [ deep ] pricing?

[Thomas J. Simons, President, CEO & Director]

No, no. No, no. Our stuff is going up in cost. We're scratching and clawing to get it paid for. That's why -- I don't mean to sound Edgy. We do not want $100 oil because it will eat everyone's launch because people will barely let us pay someone that hasn't worked in 6 years in Canada, how do they convince their family to come back into this racket knowing true though wants people to drive electric cars, places? They can't even get you on a tank of gas to get elected. How do they convince their family to go work on a drilling rig as a mud engineer at a rate that they got 6 years ago or less and take that risk for their family? So they've asked here that the [ DLDO print ] is. Please let us pay the person what it takes to take the risk. We're not ripping you off. It's real.We need the price increase. We're not a new -- just because we make the molecule, doesn't mean we can make the input. If oil is a 100 box, somehow on paper be 70.

[Tim Monachello]

Okay. Understood. I guess my point around pricing increases, I guess, on the net basis. But what I was really trying to get at was like when you look at that, let's say, pricing doesn't increase, and you're able to get similar pricing to what you're getting today on a net basis. Do you think margins improve based on operating leverage? Do you still see solid operating leverage in the business?

[Thomas J. Simons, President, CEO & Director]

Well, I hope I was very respectfully careful that we're not chasing market share. So we hope we have customers that pay for results, not line item. Did they care about their case full of costs? We think we do because we held 20%, which is pretty close to 22%. We just turned the dividend back on. So we believe it. So we're just -- we're voting with our feet. But I mean, we -- that's the answer. But I mean operating leverage, like we're not chasing the Haynesville to not make money in at 30 rigs and figure out somehow that's going to help. Like we look at the people that have the work and look at their results, which you're printing as huge loss. How are they flipping that with more work that loses money? Like the group of us running this place ran private businesses. New tax returns sucks when that happens.

[Operator]

[Operator Instructions] Our next question is from Keith MacKey with RBC.

[Keith MacKey, Analyst]

Just curious, you mentioned, Tom, that you may spend a bit more capital in the back half of the year on some things that will strategically or just improve the business. Just curious if you can give us a bit more color on what that might be and how you're thinking about the decision to proceed or not?

[Thomas J. Simons, President, CEO & Director]

It's been contemplated all your key. It's inside the brackets we've guided. And we're not going to disclose the products for competitive reasons, but you won't get sticker shock later on the number.

[Keith MacKey, Analyst]

Got it. Makes sense. And just on maintenance capital. So kind of around that $20 million number. Just curious if you see that changing throughout this year or next, given the lower demand or lower requirement for treater trucks and things like that, just given the mix of wells that you're treating these days?

[Thomas J. Simons, President, CEO & Director]

No, I'm not a production expert. I'm a drilling expert that's kind of out of the game. I think over time, it gradually shifts. But we've got a lot of stuff now. So we're going to keep it up to date. We got a lot of pickups. So maybe the number of slides, I don't know, Tony, what do you think? 2 to 5?

[Anthony Michael Aulicino, Chief Financial Officer]

Yes. Just…

[Thomas J. Simons, President, CEO & Director]

But we're growing business, Keith. So this is kind of on the spot. But maybe 10 of growth slides to 15 because we can make more money spending 5 in the business than trying to buy stock over time. And I will let you answer, Tony.

[Anthony Michael Aulicino, Chief Financial Officer]

Yes. Just a way, and actually, that's a thoughtful question. And I think the underpinning consideration is the fact that revenues at about $1 billion run rate, we did $1.3 billion. The guys did a really good job of maintaining all of our stuff, plants, equipment, et cetera. And you're right. Because of those secular trends like the transition to a higher percentage of wells being represented by a multi-well pad drilling and sites and improved logistics. Things like treater track demand as a percentage of overall work will come down. And we don't want to hang our hats on it, but I think you're on to something that we're frankly watching very closely because we would like for it to stay at '20 and maybe come down a bit.The other thing, just like other cost inflation areas that we're not immune to is the very tight trucking market than North America and the world has experienced over the last year. So it will be interesting, and we're all watching. And the guys are making all the right decisions, real-time in their divisions, doing the best and using partners on the vehicle spends. But until some of that inflation is off, I think we're not going to know for sure. If I had to guess, I'd guess we stay at 20 or maybe come down a bit.

[Operator]

This concludes the question-and-answer session. I'll hand the call back over to Tom Simons for any closing remarks.

[Thomas J. Simons, President, CEO & Director]

Well, I'm going to wrap up the call by saying thanks to our customers and employees for helping us produce a great quarter. We're really pleased to be returning cash to shareholders coming out of COVID. Like everyone in this sector, we're really happy, oil stores didn't fill and receivables converted to cash for all the vendors. We look forward to the next call to give an update, and we'll wrap up the call with that.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.