Enservco Corporation
Q4 2018 Earnings Call Transcript

Published: 29 Mar 2019

[Operator:]

Greetings. Welcome to the ENSERVCO 2018 Fourth Quarter and Year End Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Jay Pfeiffer, Pfeiffer High Investor Relations. Mr. Pfeiffer, you may begin.

[Jay Pfeiffer:]

Hello and welcome to ENSERVCO’s 2018 fourth quarter and year-end conference call. Presenting today for the Company are Ian Dickinson, CEO; and Dustin Bradford, Chief Financial Officer. As a reminder, matters discussed during this call may include forward-looking statements that are based on management’s estimates, projections and assumptions as of today’s date and are subject to risks and uncertainties disclosed in the Company’s most recent 10-K as well as other filings with the SEC. The Company’s business is subject to certain risks that could cause actual results to differ materially from those anticipated in its forward-looking statements. ENSERVCO assumes no obligation to update forward-looking statements that become untrue because of subsequent events. I’ll also point out that management’s ability to respond to questions during the call is limited by SEC Reg FD, which prohibits selective disclosure of material non-public information. The webcast replay of today’s call will be available at ENSERVCO.com after the call. In addition, a telephone replay will be available beginning approximately two hours after the call. Instructions for accessing the webcast or replay are available in today’s news release. With that, I’ll turn the call over to Ian Dickinson. Ian, please go ahead.

[Ian Dickinson:]

Thanks, Jay. Welcome everyone and thanks for joining our call today. Today, we issued our 2018 fourth quarter and full-year press release after the market closed. In addition to detailing our improving financial results, the release provided a few operations highlights for the year that I'd like to expand on. Following my remarks, Dustin will recap our financial highlights and then, we will be happy to take your questions. From a high level financial results perspective, we had a solid year, considering the whipsaw effect of fluctuating commodity prices. We were also impacted by a relative drop in propane sales as several large customers elected to use fuel sources other than propane supplied by us to fire the burners on our equipment. Despite these factors, our full-year revenue was the second highest in Company history, behind the record year we enjoyed immediately prior to the industry downturn. For 2018, total revenue increased 27% year-over-year to $46.9 million from $37.1 million. That included a 23% increase in our core well enhancement services and 95% increase in our relatively new but fast-growing non-seasonal water transfer business. Higher revenue and a relatively stable cost structure, drove improved profitability for the year. Our net loss improved by approximately $1 million and our adjusted EBITDA increased 29% to $4.9 million from $3.8 million. We generated $1.3 million in cash from operations in 2018, which represents a $5.3 million positive swing over the prior year. The fluctuation in commodity prices was especially acute in the fourth quarter. We entered the quarter with crude oil prices in the $75 range and got off to a very fast start with October revenue at record levels. Unfortunately, midway through the fourth quarter, $75 oil turned to $56 oil and a number of our key customers decided to temporarily suspend their fracing programs. The impact on our fourth quarter water heating revenue was significant. The good news is, oil prices have since been stabilized. And by early in first quarter of 2019, those same customers were back on track with activity levels increasing across all our basins. Our ability to grow our business and improve profitability despite the unexpected headwinds in late 2018 was due to a couple of factors, one of course was higher commodity prices year-over-year and a commensurate increase in drilling and completions activity across the basins we serve. The other was a positive impact of the process improvement initiatives we undertook that are proving to be transformative. This has been a challenging process for all concerns, but we have made tremendous strides in 2018, and we are beginning to see the fruits of that labor. Some of these initiatives were transparent to investors and others took place behind the scenes. As for the former, we shut down unprofitable operations, specifically our Dillco water hauling business. And we closed and/or consolidated nonstrategic fuel locations, so we could focus more exclusively on operations that hold the most promise for profitable growth. These moves eliminated approximately $750,000 and trailing 12-month EBITDA burn, which will positively impact our financial results going forward. We also acquired a significant competitor in Adler Hot Oil Service which added about 60 customers with little customer overlap, enhanced our IP portfolio, expanded our presence for the north in the strategic Bakken area and strengthened our talent pool. In the meantime, our behind the scenes initiatives, which we've been telling you about for several quarters now, are transforming how we do business. During 2018, we implemented new systems designed to optimize fleet deployment and improve communications and transparency among our desperate operating areas and our corporate headquarters. We implemented new compensation programs to provide positive incentives and allow our field teams to work more easily towards a common goal. We completed the build out of our business development team that has formalized the process by which we interact with current and prospective customers with an emphasis on leveraging our diverse service mix and selling more services to each customer. We also rounded out our executive management team during the year with the addition of Kevin Kersting, our Chief Operating Officer, and Michael McKenzie, our Corporate Controller. The purpose of these initiatives is to transform ENSERVCO into a technology-enhanced data-driven organization by replacing relatively inefficient manual processes with distributed real-time tech-based solutions. We still have work to do. Our focus in 2019 will be on improving our logistics management by completing the implementation of our electronic ticketing, dispatch, fleet diagnostic and maintenance functions. Once those systems are fully in place, they can be integrated into our accounting, payroll and CRM systems, at which time we’ll have a 360-degree digital management platform that gives us access to the most critical information in real time. We believe these initiatives will help us drive revenue and profit margins, reduce DSOs, reduce maintenance costs and extend the life of our equipment and improve customer satisfaction and employee communication, safety and regulatory compliance. I often talk to investors about our goal of platforming in ENSERVCO to make us more capable of supporting much larger business that we envision building. By putting in place exceptional team and the most modern tools, systems and processes available to us, we’re building a platform that can support significantly higher growth, both organically and through accretive M&A. Another topic I’d like to cover with investors is what ENSERVCO managed to accomplish before the industry downturn, before we implemented all these process improvements, before we doubled the size of our fleet. Those financial results with $57 million in revenue and $11.5 million in adjusted EBITDA may be old news but they are highly relevant in the context of what is possible for this Company going forward. Again, those results were achieved with the fleet roughly half the size and with the decidedly less modern infrastructure that is often stressed to the limits. So, we’re very excited about our potential achieved, significantly higher levels of revenue and profitability with our larger fleet and enhanced infrastructure. For the changes we have made, we believe reaching that potential is not simply a matter of us executing on plans to increase fleet utilization and do that in an optimized way. We saw good progress towards that end in 2018 and have carried the momentum into 2019. With that, I'll turn the call over to Dustin Bradford for a few of our financial highlights. Dustin?

[Dustin Bradford:]

Thanks, Ian. The fourth quarter and full-year results I will walk through, reflect the reclassification of current and prior year results of our Dillco water hauling segment as discontinued operations. Therefore, certain figures will differ from those referenced on past calls. Total revenue in the fourth quarter increased 13% to $14.9 million from $13.1 million in the fourth quarter a year ago. As Ian mentioned, a sharp decline in oil prices slowed the quarter that started out with a record October performance, but nevertheless, we still closed the quarter with modest growth in well enhancement services revenue and strong growth from our water transfer because. The well enhancement segment revenue was up 3% in Q4 to $13.3 million from $12.9 million in the same quarter last year. Well enhancement components included frac water heating of $9.6 million, up 26% from $7.6 million a year ago; hot oiling, relatively flat at $3.0 million; and acidizing, down 69% to $486,000 from $1.6 million last year. The well enhancement segment generated income of $3.4 million in Q4, down from $3.9 million the same quarter last year due primarily to lower acidizing revenue. As noted in our press release today, acidizing, which is our smallest revenue-generating distinct line, declined primarily due to a reduction in service performed for two customers in Texas and Wyoming that have been very active in last year's fourth quarter. The closure of one of our Kansas locations where we previously provided these services also contributed to the decline. On a positive note, the equipment from that Kansas location have been redeployed to other basins and we have recently won new acidizing business in several basins and we expect the segment to show growth over the long term. Our water transfer segment revenue increased nearly five-fold in the fourth quarter to $1.6 million, from $272,000. That represented approximately 11% of total revenue this year compared to about 2% of total revenue in the same quarter last year. So, we’re very pleased with the growing contribution of this relatively new service offering. Water transfer generated segment income of $216,000 in the fourth quarter compared to a segment loss of $280,000 in the same quarter last year. Total operating expenses in Q4 increased 17% year-over-year to $14.4 million from $12.3 million. This was mostly due to the additional overhead costs we absorbed with the Adler acquisition, which going forward, we expect to achieve cost efficiencies related to that business that will be reflected in future quarters. Sales, general and administrative expense increased 43% to $1.5 million from $1.0 million a year ago due in large part to $186,000 in professional fees incurred in connection with the Adler transaction and increase in cost due to the addition of Alder overhead during the fourth quarter and the higher personnel costs associated with build-out of our new business development team. Depreciation and amortization expense rose slightly to $1.6 million from $1.5 million due to the increase in fleet size coming from the Adler acquisition. Our fourth quarter net loss from continuing operations was $248,000, compared to a loss of $1.7 million in Q4 a year ago. The year-ago net loss included the impact of our fourth quarter valuation adjustment of our net deferred tax assets of approximately $1.8 million. The Q4 operating loss from discontinued operations, which represented the results of operations and cost to shut down our Dillco water hauling unit, was $268,000 versus $184,000 in the year-ago fourth quarter. Our net loss was $516,000, or $0.01 per diluted share, compared to the net loss of $1.9 million or $0.04 per diluted share in the same quarter last year. Adjusted EBITDA decreased 11% in the fourth quarter to $2.2 million from $2.5 million same quarter last year. As Ian pointed out, the delay in customer drilling and completion activity in the latter half of Q4 stalled [ph] what had began as a very strong quarter. Turning to our full year financial results. Total revenue for the full year increased 27% to $46.9 million from $37.1 million last year. Well enhancement services rose 23% to $42.8 million from $34.7 million last year. The well enhancement segment included frac water heating, which was up 48% to $27.3 million from $18.4 million; hot oiling, up 5% to $11.7 million from $11.1; million and acidizing, again, down 19% to $2.9 million from $3.6 million a year ago. Income generated by the well enhancement segment increased 13% year-over-year to $9.9 million from $8.8 million last year. Water transfer revenue increased 95% in 2018 to $4.2 million which was 9% of total revenue from $2.1 million last year or 6% of our total revenue. The water transfer segment generated income this year of $188,000 versus a loss of $538,000 in 2017. Total operating expenses were 21% higher in 2018 at $49.3 million versus $40.8 million in the prior year. This was due primarily to higher direct variable costs associated with the increased activity I just described. Sales, general and administrative expenses rose 19% to $5.2 million from $4.4 million a year ago, primarily due to the build out of the Company's business development team, higher personnel costs and professional fees incurred in connection with the Adler acquisition. Depreciation and amortization expense was up slightly to $6.0 million from $5.0 million a year ago due to the addition of the Adler equipment to our fleet. Net loss from continuing operations in 2018 improved by 15% to $5 million from a net loss of $5.9 million in the prior year. The operating loss from discontinued operations, representing the results of operations and cost of closure of the Dillco water hauling segment, declined to $848,000 from an operating loss of $973,000 a year ago. We do not expect any additional costs related to the wind down of that business. This led to a net loss of $5.9 million or $0.11 per diluted share, a 15% improvement from the net loss of $6.9 million or $0.14 per diluted share in the prior year. Adjusted EBITDA in 2018 grew by 29% to $4.9 million from $3.8 million in the prior year. ENSERVCO generated $1.3 million in cash from operations in 2018, which is a $5.3 million positive swing over $4 million in cash used in operations during 2017. The increase was largely a result of the increase in cash collections for the Company’s stronger 2017-2018 heating season as compared to the 2016-2017 heating season. I’ll close with a few stats on our balance sheet and fleet. Working capital at December 31st was $6.1 million. Our current ratio was 1.8 to 1; debt to equity was 8.6 to 1; and total stockholders’ equity was $4.6 million. We are focused on maintaining balance sheet discipline and our goal remains to delever our business over the next few years. We added 44 additional frac heating and hot oiling units to our fleet during 2018 with the Adler other acquisition. Our Q1 capital spending will primarily be related to maintenance. And for the foreseeable future, we anticipate CapEx to be in the range of $2.5 million to $3 million annually. One final note, in the first quarter of 2019, on March 15th, the patent infringement claims brought against ENSERVCO in our heat wave unit several years ago were dismissed by the U.S. district court. Consequently, we expect to incur no further legal fees related to this matter going forward and perhaps more importantly, any perceived risks associated with the lawsuit have been eliminated. And with that, we will turn the call over to the operator for questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Bhakti Pavani, Alliance Global Partners. Please proceed with your question.

[Bhakti Pavani:]

Good afternoon, guys. Well, I just wanted to begin saying that it’s unfortunate that you had such a great start for the fourth quarter and things turned around in a downward direction. But, given that you are done with Q1 and the prices have stabilized since then, could you maybe provide some color as to the change in the drilling and completion activity that you have seen across your customers? And how should we think about the revenue from the frac water heating services?

[Ian Dickinson:]

Yes. Bhakti, it’s a good question. The timing of the downward swing in oil prices, I guess, you could say was unfortunate. It happened in mid-fourth quarter. Again, what we saw was a number of our customers delay their completions activity, which primarily affected our frac water heating business. As we moved into Q1, we saw -- as referenced here, in the prepared comments, we saw activity levels return back to -- stabilize and return back to levels that we saw prior to that downward swing. But, we did have a reramping as we got into January. But, we're quite happy with the activity levels we saw in Q1.

[Bhakti Pavani:]

Perfect. Just following up on your remarks, last year, Q1 was the strongest revenue generating quarter for you guys. Should we expect to see that kind of momentum for this year or do you think it’s -- given the activity in the industry right now and you have Adler acquisition, is that growth kind of repeatable or do you think it’s going to be a less growth compared to last year?

[Ian Dickinson:]

We don’t provide guidance. What I would tell you is that Q1, if you look back at any previous year in Company history, our Q1 tend to be our strongest quarter, and we’re seeing that same trend continue there.

[Bhakti Pavani:]

Okay. Moving on to hot oiling and acidizing business, Q2 and Q3 are kind of the slow revenue generating quarters for you guys. how well are you positioned from the revenue standpoint in the acidizing and hot oiling business?

[Ian Dickinson:]

That’s true, second and third quarters are slower than first and fourth, and that’s primarily due to the fall off in the frac water heating and then the reramp and heating that happens really in fourth quarter. In terms of how we’re positioned with our hot oiling and acidizing fleet, we’ve made a lot of progress in our efforts to deploy our fleet into the basins where we think we can drive the greatest demand in the highest unit level profitability. So, we’ve made a number of moves here during the last number of months, really starting in the third quarter of last year to position that fleet into the areas where we think we can drive a peak demand. The acquisition of Adler brings in some additional dynamics in terms of incremental customers, further positioning north and the Bakken. So, I feel really good about how we’ve got our fleet oriented right now as we head into second and third quarter. We’ve also, as I mentioned in the prepared remarks, we’ve done some things with the incentive program, try to drive some additional activity and again incentives that we think will benefit if not in any particular basin but really across all the basins, giving a little bit more incentive to our hot oil and acidizing operators to get out there, deliver the service and then look to grow those accounts through their day-to-day activities.

[Bhakti Pavani:]

Perfect. Thanks for the detailed color. Just one more, given Adler acquisition and there is limited overlap between your customers, what kind of cross selling opportunities are you seeing? And how much, if any, have you materialized to date?

[Ian Dickinson:]

Well, so we -- again, yes, we don’t have a lot of overlap in the customer base, primarily because we were strong competitors. And so, typically, it was either they won or we won. In terms of cross-selling opportunities, we have a broader service set. And so, we've been start positioning some of our other services like acidizing and water transfer with that embedded base of customers for Adler. More broadly speaking, we are working, and I mentioned this in our prepared remarks as well, to try to grow that, try to penetrate further into the customers base we have by expanding the number of services we provide. And so, it's not just us bringing incremental services into that Adler customer base, it’s really working across the entire customer base to grow that share of wallet so to speak.

[Operator:]

Our next question comes from Jim McIlree, Chardan Capital. Please proceed with your question.

[Jim McIlree:]

So, the acquisition of Adler, I would assume, would result in firming prices, but the downturn in activity would offset that. I’m just wondering, which of those would be dominating. Is the greater share getting you better prices than the reduced activity is creating?

[Ian Dickinson:]

Jim, just to clarify your question, are you referencing fourth quarter timeframe, are you more referencing forward-looking?

[Jim McIlree:]

Thank you. I’m interested more in the forward-looking, but if you comment on Q4 as well that would be fine.

[Ian Dickinson:]

Yes. So, I think to answer the question, it’s a good one. With the downturn inactivity in the latter part of fourth quarter, my view of that is it had less to do with what the net price of oil was and had more to do with the rapid swing and the timing of it being in late fourth quarter. Most of our customers have exhausted their CapEx budget by that time and had oil prices still be in that low 70 range, high 60 range. Often times, we will see our customers will capital over and stay on schedule, their completion schedule. The timing of such kind of pullback delayed some of that activity. And so, as we moved into Q1 and oil prices were in that mid-50 range and they've improved from there, we’ve seen activity level return, both as a response to stabilizing oil prices, but also the refresh of the New Year and heading into a new budget year. I really see those as distinctly different in terms of what we might be able to do on the pricing side. As primary competitors, we are -- we eliminate some of the competing that we've been doing. A lot of our customers require -- and most of our customer base in terms of predominately where our revenue comes from is from the larger E&Ps. And they certainly care about pricing, but they more care about quality of service, safety track record, redundant equipment. And both Adler and in ENSERVCO, legacy Adler and ENSERVCO checked all those boxes. And so, when we ended up competing against Adler, it oftentimes came down to pricing. So, we think it's a collective Company's benefit that we’re not going to be competing with Adler, that we've removed that dynamic from the market. In terms of increased pricing, more generally speaking, I think there will be opportunities. It depends a bit on basin and customer. But, we’re looking for those opportunities, not only to enhance our margins, but also to bring up broader set of services to bear, which helps drive greater margins for us, and the efficiency of having multiple services engaged. So hopefully, Jim, that answers your question. But…

[Jim McIlree:]

It kind of sounds like you've eliminated some pricing -- potential pricing pressure, but it's not like a huge -- it's not like it's going to be a huge increase in prices that will just start benefitting you. It's more of a maybe at the margin and all dimension of some price pressure, is that a fair way to think about it?

[Ian Dickinson:]

Yes. I think that's probably fair. I mean, we work individually with our customers and we are fairly transparent. And we are adding additional folks to our team. And as everybody I think knows, it’s a very competitive environment out there in terms of hiring qualified TDL drivers. And so, we do think that we will continue to see increase in pricing, partially offset by some increase in labor costs. But, I do think we’re in a stronger position in terms of supporting our customers in the basins we serve and making sure that as we do as we are doing that where there is opportunity to increase pricing, we’ll certainly do that.

[Jim McIlree:]

Right. And Ian, in your prepared remarks, you were talking about a software system or systems that would give you greater capabilities for managing the business as well as selling more to existing customers. My question is, when is that complete, and were there incremental costs that in order to deploy that that will go away that's meaningful or conversely, will it create incremental costs that are going to be -- that would result in higher OpEx that's meaningful?

[Ian Dickinson:]

Yes. So, in late 2017, we installed ELD systems in every one of our revenue producing pieces of equipment and that's the nature we stay in compliance with e-logs. But as part of that implementation, what that allows you to do is sort of tracking incremental data really at no incremental cost. The implementation of electronic ticketing is riding on that backbone sort to speak in terms of the service provider for the ELBs also has these other modules. And so, it's really not one large cost that we've incurred last year other than the implementation of those services and also kind of the monthly subscription costs. The incremental e-ticketing and the dispatching and the other things are modules that are available under the agreements that we have and small incremental cost increases. But, it's riding the technology platform we already have largely implemented. It’s really designing those dispatch fields and the e-ticketing fields. Largely, right now, and this is true broadly across the oilfield, we have a lot of paper ticketing. And so, moving to an electronic invoicing, electronic ticketing will help just expedite the process of getting signed off invoices cut and sent to our customers. So, again, these systems are not expensive. This is not like a major ERP system implementation. This is technology we already have in place, or just realignment of the -- of how we're using the source systems we have in place today.

[Dustin Bradford:]

Jim, I’d add that one of the ways that we look at that investment is, we expect that it would pay for itself and reduce day sales outstanding with our customers, other efficiencies within the business. So, while there may be some incremental OpEx, we should see more than an offset with an interest expense on our net borrowings and there's other inefficiencies and soft savings.

[Jim McIlree:]

Okay, great. That’s helpful. I mean, just when you talk about changing those kind of systems, I just think of companies implementing SAP systems, which are always costly and time consuming, and it's always worse than how they imagine it. But, it sounds like this is a completely different implementation. It's also -- it's complete. It's not -- we're not kind of still working this out. This is something that was completed last year.

[Ian Dickinson:]

Yes. In terms of that hardware being implemented, and then turning up of these modules. Yes, it's very, very different than SAP ERP system implementation. This should be fairly straightforward for us. And it's not new science. This is technology that’s oil fields [ph] today. We just need to adopt it on the platform that we already have in place.

[Dustin Bradford:]

Right. And that hardware and the software associated with it is fully reflected in our 2018 results all year.

[Jim McIlree:]

And is there a burden on getting Adler under the same system or they’re already operating…

[Ian Dickinson:]

They're already on the same system, the underlying pedigree system that we have in place. And so, there's no incremental lift associated with Adler.

[Operator:]

Our next question comes from Ed Woo, Ascendiant Capital. Please proceed with your question.

[Ed Woo:]

My question is more on M&A. Is the Adler acquisition pretty much complete, fully integrated that you're ready to take on another acquisition, or what’s the M&A outlook in terms of valuation for an opportunity?

[Ian Dickinson:]

Hi, Ed. Thanks for the question. And to answer the first part of that, largely, we've completed the integration with Adler, but there are some things that we determined we would not take on until the season that we're in right now, winds down. So, there's a few other incremental steps, there is some other cost efficiencies and things that we're working through. But, in terms of the teams working together, we've integrated the accounting and finance functions. We largely have the folks in the -- in terms of leadership. When we've got the teams really coordinating at a customer level, there are few things that we will do, like I mentioned, as we get into the second and third quarter in terms of standardizing the brand and a few other things in that regard. In terms of the broader M&A outlook, as we’ve mentioned in the again prepared remarks, we're going to be opportunistic in terms of incremental M&A. We're going to be incredibly thoughtful and disciplined in the way we approach that. But, at this stage, it is something that as a company we’re focused on, we think that there will be opportunities potentially in calendar 2019, but that will be left to be seen.

[Ed Woo:]

Have you seen any major changes in valuations for companies in your sector or has it been relatively stable?

[Ian Dickinson:]

Yes. I don’t know if I have a perspective to share with you on that, Ed. I think, it probably depends quite a bit on the company and the space it runs specifically, but I don’t have a kind of insight into where those valuations sit.

[Ed Woo:]

Great. And then, moving onto just the overall outlook for oil. I mean, you mentioned that the volatility that was just as bad as the absolute low price. Do you think that the volatility in oil will continue? How are you thinking this is going to stabilize for the rest of the year?

[Ian Dickinson:]

Well, nobody knows. And I think my general view is that oil prices will be relatively more stable in the environment that we’re in today versus if you go back to 2014. I think, in terms of North America and the shale basins, they've proven their resiliency. And we’ve largely become the default producers. So in general, I think the bands in which all trades will be narrower than they were maybe three plus years ago. But as I've mentioned a number of times, as long as we see oil I think $50 or above, we’ll have the background environment for us to meet or exceed our objectives around utilization. The timing of the downswing in oil prices in late fourth quarter certainly did have some impact. But in general, we anticipate seeing oil prices in that mid $50 to $60 range for 2019, pretty close to what we’ve seen as consensus.

[Ed Woo:]

In terms of volatility, is it ideal to keep prices within a very narrow band or wide of a bag you think it becomes disruptive to the industry?

[Ian Dickinson:]

Well, so, let's keep in mind, about 50% of our revenue comes from production and maintenance related services that don’t react to swings in oil prices, quite the same as drilling and completions work. We've got about 50% of our work, which is completions related, so your frac, heating and water transfer. Again, it really depends on -- talking about these ranges, it depends. You have look at the basin and then you have to understand your customers specifically in terms of what their plans are based on different oil prices. So, understanding breakeven, how our customers are positioned in the different basins; it's really a more complex kind of analysis of what we think those swings -- the impacts will be. But, in general, I think, we'll see relatively stable prices here in 2019. But, the industry, you can't predict and we'll see fluctuations, we might see sharp downturns and sharp increases. In general, we're set up to respond to really any of it. We’re a nimble company with a really well-distributed footprint in terms of the basins that we're in. So, I feel very good about how the Company is positioned to absorb really almost anything the industry can throw our direction.

[Operator:]

Our next question comes from Mike Madden, [ph] private investor. Please proceed with your question.

[Unidentified Analyst:]

I was just wondering, as far as the first quarter, what have weather conditions been like? Can you talk about the heating season, as far as -- has it been conducive to business conditions, how long is it lasting or is it kind of wrapped up here, and how does that compare year-over-year?

[Ian Dickinson:]

Yes. So, I guess, stepping back here a little bit. When you think about the heating season, we have what we call our shoulder season, right, which is, think about October and November as we're ramping into colder weather. And as you get out towards the end of the season and later, March and April, and sometimes into May, those are our shoulder seasons, and those tend to react more to how quickly it gets cold and how rapidly it warms up. And then, you really got to look at the basins we're in. So, Oklahoma, for example is a shorter season versus North Dakota, which is a much longer season for the obvious reasons, it’s much colder up there longer. In general, this was a -- it was kind of a typical weather winter. Once we ended the middle of the winter, we don't really concern ourselves with fluctuations and temperature, it’s more on, again, those shoulder seasons. And we saw a nice start to the season and it's left to be seen in terms of how the season is going to wrap up. We can get a decent 10-day forecast. But, then, you're predicting weather and who knows. But, we're generally quite happy with the weather we saw. And every winter, the sun angle is down, temperatures get cold, water gets below that 50-degree mark, it gets below freezing at night, our equipment goes to work. So, we're going to see pretty good consistency year-over-year. It's just a bit on the shoulder seasons, how quick we start, and how quickly it ramps down. And we make assumptions based on what we've seen historically, somewhere in that average.

[Unidentified Analyst:]

Sure, yes. So, I guess, we're kind of entering the period where ramp [ph] out of it. That looks more or less favorable that did last year. I mean, given how far in the quarter -- and that shoulder season?

[Ian Dickinson:]

Yes, it's been typical winter weather and we're starting to see the typical warm-up across the basins. There's been nothing that's been a major shock to us.

[Unidentified Analyst:]

Got it. And then, any other color you can kind of provide on just the first quarter, given we are pretty much through it?

[Ian Dickinson:]

I would just say, as we mentioned again the prepared remarks, we saw return to the activity levels we anticipated prior to the downturn in oil prices in the fourth quarter. And so, we're quite happy with the activity levels. And I think, we've got a solid Q1. We're still executing again.

[Operator:]

We have reached the end of our question-and-answer session. And I will turn the call back over to Ian Dickinson for closing remarks.

[Ian Dickinson:]

Thank you. I appreciate everybody making time for the call today and for your attention and the good questions. We look forward to talking to you again in May, and will give you some more clarity on how first quarter shaped up, and we can have a few points of conversation around Q2. And so, thanks again for everybody's time. Have a nice afternoon.

[Operator:]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.