Thank you for standing by. This is the conference operator. Welcome to the CES Energy Solutions Corporation Fourth Quarter 2021 Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero. I would now like to turn the conference over to Tony Aulicino, Chief Financial Officer. Please go ahead. Thank you, operator. 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 fourth quarter MD&A and press release dated March 10th, 2022 and in our annual information form dated March 10th, 2022. In addition, certain financial measures that we will refer to today are not recognized under current general accepted accounting policies. 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 Ken Zinger, our President and CEO. Thank you, Tony. On today's call, I will provide a brief summary on our financial results released yesterday, followed by our divisional updates for Canada and the U.S., along with a brief update on our international businesses. Finally, I will touch on a small but strategic acquisition that we recently closed on. I will then pass the call over to Tony to provide a detailed financial update and an update on capital allocation. We will take questions, and then we will wrap up the call. Before I summarize the fourth quarter in 2021 financial results, I want to start by noting how proud I am of our entire team at CES during this dynamic period in our industry. Everyone has shown great resilience and commitment through these challenging times. During my 37 years in this industry, I have never seen a market move as quickly to the upside, nor as significantly as in the past three months. Having said that, I want to emphasize that in the 16-year history of CES, we have never been as well-positioned in every way to capitalize on this potential upcoming super cycle in our industry. The rapid pace of growth has led to constant reviews of sourcing, logistics, and sales prices. I want to thank everyone for all the extra hours and energy that have been required to do our best to adapt, react, and shift as quickly as possible, once again demonstrating our nimble and entrepreneurial culture. Despite the global supply chain challenges that have affected every person in business, we have been able to continue to supply our customers with the products and services they require without fail, albeit at rising prices due to inflationary pressure that is present in every part of our business and personal lives today. The fourth quarter was a tremendous success for CES Energy Solutions. We had a record quarterly revenue of CAD 368 million, along with near record EBITDAC of CAD 47.7 million. We continued to achieve strong market shares in all of our major divisions and targeted geographic areas. Throughout Q4, CES was able to manage sourcing of products as well as the associated inflation pressure occurring due to improving commodity prices and activity levels. At the same time, we were able to largely manage margins in real time through price increases and strategic planning. Overall, the fourth quarter was a great way to close out what ended up being a great year in 2021. This brings me to the 2021 year-end results and summary. In a year that had many fits and starts, 2021 ended up being a rebound year for CES after a challenging year experienced by the entire world in 2020. 2021 was a year spent navigating supply chain headwinds through early detection and strategic investments. These investments allowed CES to service our existing customers without pause and to utilize our inventory and supply chain to win some new clients as well. Throughout the year, we continued to invest in people, technology, and infrastructure through modest targeted CapEx, while once again demonstrating the CapEx-light, asset-light characteristics of the business model throughout this cycle. All of this led to revenue of CAD 1.2 billion and EBITDAC of CAD 156 million. Both of these metrics approached our record levels achieved back in 2018 and 2019. Notably, these results, along with our future outlook, afforded us the confidence to reinstate our dividend back in August of last year and also to repurchase 3.9% of our outstanding shares. Overall, I am beyond excited about the opportunities in front of us due to the very constructive oil and gas dynamics that are shaping up for 2022 and beyond. Having said that, there are still significant near-term headwinds facing us. Although we have been able to push through price increases during Q4 and into Q1, the rate and scale in which these increases are impacting us has proven extremely difficult to predict and manage. Like everything, these raw material cost increases have been erratic and, in some cases, extreme. We are working with our teams and our customers to pass these costs along. But like some of our competitors have noted, there is a lag between agreeing to price increases and returning to normal margins. In a lot of cases, we are getting fresh increases from suppliers before we are even able to get the prior increases approved by the customer. The Russian invasion in the Ukraine, combined with almost a decade of energy policy mismanagement by Western politicians, has created a perfect storm where everything is moving in an unpredictable manner. As some of our larger competitors have previously reported, we expect the margin pressure will likely continue to exist well into the first half of 2022. Although this margin compression will inevitably lead to Q1 EBITDAC being lower than Q4's, we believe the strategy will bear fruit as we achieve the remaining increases in margins normalize. We continue to work diligently with our suppliers and our customers to stay on top of pricing and work together during these unprecedented times. I will now move on to summarize Q4 performance in Canada. Canadian drilling fluids made another strong contribution for CES in Q4. As mentioned in Q3, we were able to hire and maintain sufficient staff through our peak Q1 drilling season. Today, we have a 36.4% market share in Canada, providing service to 74 of the 203 jobs underway today. This is down from the Q1 peak count of 87 rigs out of 232 working during the second half of February. Rigs are steadily falling off now as we fade into breakup here in Canada. PureChem, our Canadian production chemical business, had a solid quarter in Q4, both financially and operationally. Each month in the quarter was once again at or very near an all-time record revenue level. Margins during Q4 were consistent as price increases were passed on to offset cost side pressure. We continue to see growing contributions from our frac chemical and stimulation groups. The other three Canadian business lines, including Sialco, Clear, and Equal, all continue to contribute to the financial and strategic success of the two primary Canadian business lines. In the United States, AES, our U.S. drilling fluids group, once again delivered very strong financial results as well as solid market share. As I always note, we are not chasing market share on either side of the border and continue to have a focus on opportunities with sustainable margins and revenues. As in Canada, our customers in the U.S. generally worked with us in Q4 to ensure that we kept up with the current cost of goods increases so that we could manage margins in real time. Today, we have a market share of approximately 17% in the U.S. with 109 jobs underway. This includes a basin-leading 26% market share in the Permian. I will note that while Canada is slowing down due to breakup, AES is continuing to gain momentum as the U.S. drilling market continues to steadily climb upwards due to the high commodity price environment. Last up is Jacam Catalyst, our U.S. production chemical business. This division had another great quarter as it continued to profitably gain market share in a very competitive environment. The Permian region continues to backstop the business. However, we have additional strong contributions from the rest of Texas as well as the Rockies. Although we face significant supply chain challenges in this division as well, our manufacturing capabilities make us a reliable supplier to the basins we service. Overall, Jacam Catalyst was also able to control costs and pass through increases to protect the margins during Q4. I will now move on to a quick update on the international markets. We have completed the Oman drilling project we are participating in and are currently pursuing another project there with our local partner. Sorry, not provider. At the same time, we are also pursuing several other opportunities in the Middle East. I will comment further on these should any come to fruition. We remain focused on growth prospects in this region and are spending significant time and energy evaluating some potential opportunities. In Nigeria, our partner company, Pearl, has had some market penetration and are again looking to order additional material likely in Q2. As with the Oman business, this is a growth opportunity in the early stages of a long runway to making a meaningful contribution. Finally, I have an update on a recent business development. During Q1, we completed a relatively small but strategic acquisition of the assets of Proflow Solutions. Proflow is an offshore Gulf of Mexico production chemical company based in southern Louisiana. The company was started and managed by veterans in the offshore Gulf of Mexico market. Josh Desautels, John Davidson, and Andre Clemens and their team have successfully penetrated into the elite deepwater market through expertise, differentiated service, unique chemistries, and most importantly, hard work. We will leverage Proflow Solutions' reputation, expertise, and market share with our extensive manufacturing capabilities, technical resources, and infrastructure to accelerate our growth in a significant but untapped market for CES. The acquisition closed on February first, and we are confident it will be accretive to EBITDAC and cash flow. The accomplishments of Proflow Solutions are notable due to the uniqueness in the market of a smaller drilling company actually penetrating the technically challenging offshore market, which is usually reserved for the majors. I would like to welcome the Proflow Solutions team to the CES family as we look forward to a bright future together. In conclusion, I want to personally thank each and every one of our 1,840 employees for their commitment to the business, culture, and success of CES. As well, I want to, of course, thank all of our customers for their trust and commitment to CES in good times and bad. With that, I will turn the call over to Tony for the financial update. Thank you, Ken. 2021 represented a pivotal year for CES as we moved beyond the challenges of 2020 and used our established infrastructure, strong industry presence, dedicated workforce, and unique culture to return to strong financial results approaching record historical levels. Revenue of CAD 1.2 billion represented a 35% increase over CAD 888 million in 2020, while adjusted EBITDAC of CAD 156 million represented a 53% increase over CAD 102 million in 2020. These significant improvements were underscored by impressive gains in funds flow from operations, or FFO, of CAD 117 million in 2021, up from CAD 72 million in 2020, and market share gains throughout the company, with U.S. drilling fluids averaging 19% in 2021 versus 16% in 2020 and 13% in 2019. Our cash CapEx of CAD 29.4 million in 2021 represented a level within our original CAD 30 million guidance and consistent with our unique CapEx-light, asset-light, consumable chemicals business model throughout the cycle. During 2021, CES repurchased approximately 10 million common shares for CAD 16.2 million or CAD 1.60 per share under our NCIB program and reinstated a dividend of CAD 0.064 per share. Our fourth quarter represented record revenue exceeding the company's previous high water mark in Q1 2020, and another consecutive quarter of solid adjusted EBITDAC as surplus free cash flow generation continued to be strong amid an increasingly constructive supply and demand backdrop for the global North American energy industry. In Q4, CES generated revenue of CAD 368 million and adjusted EBITDAC of approximately CAD 48 million, representing a 13% margin. The continued positive momentum demonstrated in the quarter has been supported by improvements in rig activity, higher production volumes, selective pricing increases, and strategic procurement initiatives that are expected to continue into 2022. This Q4 revenue of CAD 368 million represents an increase of 73% from CAD 213 million in Q4 2020, and a sequential increase of 17% from CAD 314 million in Q3 2021. Revenue generated in the U.S. was $234 million, or 64% of total revenue for the company, and up from $197 million in Q3. I would note that AES continues to effectively operate on the right jobs and with the right customers as they approach pre-COVID levels and realize operational and financial torque in that business. Similarly, Jacam Catalyst, our U.S. production chemicals business, which helped carry the company through the lows of 2020, has maintained its trajectory and has now exceeded pre-pandemic levels through increased volumes and improved pricing. Revenue generated in Canada was CAD 134 million in the quarter versus CAD 76 million a year ago and CAD 117 million in Q3. Canadian revenues benefited from increased drilling and completions activity, coupled with higher production volumes and frac-related chemical sales, as revenue levels and production chemicals also surpassed pre-COVID levels and drilling fluids continued its steady upward march. CES's adjusted EBITDAC of approximately CAD 48 million in Q4 represented a 94% increase from the CAD 25 million generated in Q4 2020, and a sequential increase of CAD 6 million, or 14% from the CAD 42 million generated in Q3. Adjusted EBITDAC margin in the quarter was 13%, representing a nice improvement from the 11.6% recorded in Q4 2020 and in line with the 13.4% achieved in Q3 2021 as the company benefited from stronger competitive positioning, initial pricing increases, and increased drilling and production levels. This margin was accomplished despite increasing raw material costs that have accelerated over the recent months, in particular, as noted by Ken already. Although we have established updated pricing through Q4 and continue to do so in Q1, there is a lag between the time price increases are established and the time it takes for those price increases to take effect in order to offset increased underlying raw material cost increases. As Ken explained, this lag has become more pronounced over the past few months for CES as well as for many of our North American peers. As a result, CES continues to expect a strong 2022. However, we expect it to be back end loaded into the second half of the year. Based on where we stand today, we expect price increases to gain traction as we move into Q2 and beyond. However, in the meantime, due to this extraordinary current environment, we expect and estimate that EBITDAC for Q1 to be approximately 20% lower than in Q4 2021. At CES, our main financial priority continues to be surplus free cash flow generation. I am proud to report that during Q4, our FFO was CAD 34 million, in line with Q3, and representing a significant increase over the CAD 17 million generated in Q4 of 2020. CES has continued to maintain a prudent approach to capital spending through the quarter, with net CapEx spend for the quarter of CAD 12 million, representing 3% of revenue. We continue to adjust plans as required to support existing business and growth throughout our divisions. For 2022, we expect cash CapEx to be approximately CAD 40 million, of which CAD 20 million is estimated as maintenance and CAD 20 million is earmarked for growth. We exited the quarter with a net draw on our senior facility of CAD 110 million versus CAD 51 million on September 30th and net cash of CAD 18 million on December 31st, 2020. The increases were primarily driven by working capital builds associated with strong increases in revenue combined with strategic surplus raw material purchases driven by the unique global supply chain environment. Our working capital surplus of CAD 460 million exceeded total debt net of cash of CAD 439 million at December 31st, 2021. Since year-end, CES has continued to realize strong demand and also invest in surplus inventory, and the current net draw on our senior facility is approximately CAD 133 million. Our balance sheet benefits from the attractive structuring and maturity schedules of our credit facility and senior notes. We ended Q4 with CAD 439 million in total debt, net of cash, comprised primarily of CAD 288 million in senior notes, which mature in 2024, and a net draw on the senior facility of CAD 110 million. We use our senior facility as a shock absorber to support the growth phases of the company to finance working capital increases associated with strong revenue growth. Conversely, when revenue growth tapers, surplus free cash flow accelerates and the draw levels decline. During more acute revenue decline phases, the facility moves from drawn to net cash very quickly, as it did during 2020 when we went from being drawn CAD 93 million at Q1 2020 to a cash position of CAD 18 million by the end of that year. In anticipation of increasing activity levels, in February, we exercised CAD 30 million of available accordion capacity for a total new facility size of approximately CAD 265 million dollars in CAD equivalent, providing ample liquidity versus current and anticipated draw levels. The increase supports the current growth phase of the company and provides flexibility as we look to refinance our bond over the coming couple of years. We are increasingly optimistic about the industry outlook and CES's ability to continue strong financial performance. This combination is key to informing our capital allocation decisions, which we revisit on a quarterly basis. In terms of capital allocation considerations, we continue to prioritize capital allocation toward supporting existing and new business through investments in working capital and modest CapEx projects that deliver IRRs above our internal hurdle rates. We remain very comfortable with our current dividend, which represents a yield of approximately 2.4% at our current share price and is supported by a very prudent payout ratio in the high teens. We continue to buy back at least enough shares to offset compensation-related dilution. As we become more comfortable with our outlook and free cash flow generation, we will revisit becoming more active in our NCIB program. Depending on valuation levels implied by our stock price, and we will be prepared to be opportunistic if the opportunity presents itself. We continue to use remaining surplus free cash flow to reduce leverage to further strengthen our balance sheet, opportunistically purchase our bonds and prepare to refinance our 2024 bond at an appropriate size in the coming years. At this time, I'd like to turn the call back to Ken for comments on our outlook. Thank you, Tony. As you noted, Q1 to date has been an extremely challenging time in our industry. While we are working through this recent extreme volatility on the supply chain and pricing front, at least activity is robust. While this has not been an easy period to navigate, we will work through it, and frankly speaking, this is a much better problem to have than the ones we were facing in March of 2020. Our team is laser-focused on the issue at hand, and we anticipate a relatively rapid recovery to more normal levels in the coming months. I'm truly excited about the remainder of 2022 and into the future. We are facing a multitude of opportunities throughout our business lines and geographical markets to improve free cash flow for our shareholders. We are very bullish on the forecasted activity in our industry for the short and midterm. If the last three months has proven nothing else, it's that the oil and gas industry will continue to play a huge part in the future of energy security throughout the world for decades to come. I am very confident that our company is uniquely positioned to support this reality and prosper accordingly for the benefit of all stakeholders. I look forward to working with our customers and dedicated employees to capitalize on this very attractive opportunity. Thank you for your time, and I'll now pass the call over to the operator for questions. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We'll pause for a moment as callers join the queue. The first question comes from Aaron MacNeil with TD Securities. Please go ahead. Hey, morning, all. Thanks for taking my questions. Maybe I'll just start with. Morning. The obvious one. Hey, morning. You know, ask the obvious one in terms of order of magnitude on the margin pressures you're seeing in Q1. I guess what I'm wondering is, can you give us some examples of what you're seeing in terms of specific inputs? You know, I guess you've been building inventories previously. So I'm just wondering if this maybe took you by surprise or if this is something you saw coming. Well, I think it's a complicated answer, Aaron. It depends which product lines we're talking about and which part of our business we're talking about. We've been building inventory, but we do burn through inventory relatively quickly. So, we are seeing effects of price increases after we build inventory. But to give you some examples of the extreme nature of the increases we've seen, you know, our highest used product in drilling fluids is a product called barite, which is a commodity. It's been constant at a set price for the last 10 years. It's kinda cost everybody the same thing, and the industry is comfortable with it, like all these products. That product has seen a 50% increase in the last six months, call it. We have other products that are high use polymers that are used in the food industry or in other industries that have moved as much as 200%. I mean, the increases we're talking about in the scope of what we're doing when we're talking about margin, I mean, we've been passing through significant increases to customers throughout Q4 and throughout Q1. It's just the magnitude of the increases combined with the timing on getting the increases put through is we're just having a hard time keeping up with it. In some cases, we're passing through increases or working and negotiating with customers to move through increases. While doing that, before we even get the first increase in place, we've already received a second increase. We're receiving these, you know, like everybody is, in the world right now, that they come through, and they're just announced. We get no time to react to them. We don't carry, you know, we have a large volume of product and product lines that we use every day. We don't have ample volume of every single one of them, or else we'd have $1 billion of inventory. We get hit by a lot of these right away, in real time and then try and pass them through as quickly as we can. We have, you know, we have a dedicated strategy for this for years. We've been, you know, our company, the culture of our company and the people running our company and the executives in the company are mainly from private businesses. We understand that the majors move in different ways than the small guys do. The majors have always been quick to send out pricing increases and demand increases. You know, we've been the beneficiary of that for the last 25 years by working with the customers instead and helping them get through the shock of the increase. I would say in most cases, we are able to pass everything on. Like, you know, the margin compression we've seen, it does not anywhere near represent the magnitude of the increases we've had to pass on. You know, to give you some rough numbers, 60%-70% of the customers we've been able to pass through relatively real time. The last 20%-30% of the customers, it's been, you know, we have contracts in place that we have to sit down and talk about. No one really saw, I would say, what's happened in the last couple of months coming. You know, getting around these contracts that we put in place for term through Q1 especially has been a bit of a challenge with some of the operators. We're doing what we can. We're trying to work with them. We're not demanding anything. We work for them. We appreciate the business they give us, and we're trying to find a way to get to where we need to get to, and we're getting there. You know, we've got more increases in place right now. Frankly, with the oil price kind of settling out here, or I guess it hasn't settled out, but with the volatility going up more to the downside right now, you know, we're starting to see some stabilization, so hopefully that will pass through. Now, having said that, I saw stabilization in Q3 or Q4 when we reported last time. Who knows? Like, things just move so quickly and so dramatically, it's really hard to keep up with. Aaron, I think it's important to elaborate on the other part of your question, which was related to inventory that we've been building and whether or not this took us by surprise. We were able to very effectively use our balance sheet and buy more inventory than we needed at the time during the last year, frankly. We benefited from being able to A, have that supply on hand to meet existing customer requirements and gain new customers at a lower inventory level than what we're starting to be the prevailing market rates. We continued to do very well right through Q3, Q4. What happened, as Ken mentioned, was over the last few months as pricing really accelerated again for a lot of those products, what ended up happening is we had to replenish some of those inventory categories at the new prevailing market levels. Because of standard costing, you end up having to adjust up your cost of goods that end up eroding your margins. That continues until the new price increases that are underway start to take hold with new work for us to reverse that trend in margin compression. Okay, perfect. That's a lot more detail than I was expecting, so appreciate all the candor. Maybe, Tony, one more follow-up for you on inventories. You know, I can appreciate the strategic nature of inventory builds, but you're at, you know, all-time highs for inventory, and it's a big use of your cash. Maybe you can just give us a sense of where we go from here under, you know, like your optimistic rapid growth scenario, under a more moderate growth scenario, or any other scenario that you think is relevant. Number one, we expect to grow in a commensurate level with the industry activity, growth assumptions that you would have seen year-over-year. Again, there's a big question mark about what happens in North America and in U.S. and in the Permian in particular to potentially increase those activity levels further. Just parking that, we see growth today the way we did a couple of months ago, and we expect the growth levels that you've seen in inventory builds over the last two quarters to temper. Maybe one. I'll sneak one more in, a bit of a tangent, but we've seen, you know, several large-cap and super majors announce Permian growth plans, specific Permian growth plans. I know you're not gonna get into names specifically, but I seem to recall that you guys were making good inroads with that sort of customer profile in the past. I guess I'm just wondering how we should think about how those growth plans might impact CU and maybe more broadly in terms of your public versus private customer mix is shifting over the last little while. Yeah, I'll start on that. Just high level, I read what you read from an industry perspective. Let's talk about the U.S. because most of that, over 50% of that is in the Permian. You look at different estimates even before the current geopolitical situation. Even looking at those estimates, you're looking at 25%+ increases in activity. As we said, as Ken said during the last call, we expect to grow in lockstep, if not better. In terms of private versus public, the teams did a great job, Vern at Jacam Catalyst and Richard and the team at AES to grow with the guys, especially in drilling that were more active than the others, which were the privates. The fact that we've been able to maintain strong market share indicates that we've been able to grow with those guys. However, over the recent month and even few weeks, you've seen publicly what we started to hear privately, which is even those big public guys that we have relationships with are starting to change their tone and looking to increase activity levels higher than they were talking about literally two or three months ago. So where it was private company focused three months ago, it's becoming a combination of private and public, including some of the guys that you're probably thinking about. Great. Thanks for all the answers. Turn it over. The next question comes from Cole Pereira from Stifel. Please go ahead. Good morning, everyone. Just wanted to build off of Aaron's question. It sounds like raw materials cost inflation is obviously the biggest culprit, but I mean, can you talk about maybe how supply chain or delivery issues, labor inflation, fuel inflation are having a material impact on margins as well? Yeah, I mean, obviously like the rest of the world, those things are going up for us as well. You know, I would say the inventory build that we participated in, last year, towards the end of last year, was more directed at securing supply to make sure we didn't run short of things. We accomplished that with the inventory, and we continue to accomplish that because it's really a whack-a-mole scenario as we lose the ability to deliver product from overseas that we would traditionally have bought there and have to ship to more expensive North American suppliers who are at capacity but letting us in at a higher price. It. You know, those things. It's all across the board we're getting hit. I mean, I think I can speak to container freight. I mean, there's another number that's astronomical, 500% increase since January of 2021. That's like 478% is what we calculate we're spending more now on a container coming from China than we were. It's everything. Fuel in the trucks. Shortage of trucks. I mean, we were talking about this yesterday with the guys. We're having a hard time getting, you know, half-ton, three-quarter-ton, one-ton trucks. We've got hyper spending on maintenance for the vehicles we have in the fleet that would normally, in a normal market, have been flipped over already and we'd be out of them, but we can't find new ones. Labor costs, you know, I can't tell you how many raises we've approved lately trying to keep people working for us as everyone gets opportunities to work elsewhere, or proactively to try and keep people in their chairs. Yeah, fuel costs. The container cost speaks to the biggest story, which is that when I look at a price list in any part of the business, it's not the same as it was six months ago. Our cost of goods has moved up on every single item that we touch, and we've been passing those on at the fastest rate we can. I think as we get into Q1 reporting, you'll hear this more and more. I mean, it's a problem across the world and across the industry. Yeah, the pressure's everywhere. Okay, got it. That's a great color. Thanks. Acknowledging there's obviously a lot of volatility and unknowns in the market right now, but as we think about the lag between pricing and cost inflation, is it fair to say that if we're thinking about margins getting back to Q4 levels by Q3 2022 and then maybe some expansion thereafter, is that sort of a reasonable timeline? Yeah, I think that's how we see it. Yeah, that's exactly how we're targeting it. Maybe even, I mean, I don't wanna overpromise, but maybe even quicker to see. It just depends if the increases keep happening. I mean, every time we think we have it under control, and when we get our next increase put through, we'll be ahead of the game. Something else happens, and we get behind again. You know, right now, looking at what we're looking at, that's how we see it as well. Just to step back on that, margins are important obviously, but. The even more important thing to not lose sight of is activity levels are going up and revenue levels are going up. Although margins are gonna be compressed during at least Q1 and get better as Ken mentioned towards the end of the year, the level of surplus FFO, surplus free cash flow and FFO that we're gonna be generating, which is what we focus on primarily, is gonna continue to grow through the year. Okay, perfect. Thanks. Just going back to your comments on barite, is it fair to say then that the cost inflation is maybe worse in drilling fluids than production chemicals, or is it fairly even between both? And is there any real material differences between Canada and the United States? There's some material difference between Canada and the United States just due to logistics and supply. Like, being closer to the port in Houston takes some of that cost off. The fact that we have barite grinding in Corpus gives us a big advantage there as well. Definitely a difference there. No, I mean it's across the business. I noted that. I guess I can give you. I've got some cost impacts here. I'll give you some on the production chem side, the big one being MEA. I mean, that's a high use product that we have, probably our highest. If you can get it, which has been a huge challenge that we've navigated to manage to keep up to it, I mean, we're seeing a 125% increase on that product. I mean, I can go down the list here on both sides of the business, and I don't see numbers that are, you know, less than kind of twenties on% increases. Everything is up. I'm getting good at saying this because I've been having a million meetings with procurement departments at our customers. You know, they don't wanna hear the increases, but they're everywhere. It's just no. They're, it's been whack-a-mole. We're just trying to keep up with them. They keep coming, and they come out of left field a lot of time. The food industry is a problem. I mean, capacity for xanthans and specialty polymers, guar is up, FR is up, PHPAs are up. All the chemistries in our raw materials are up. It's just, we're just trying to keep up with it. I would go so far as to say that we do a better job of procurement or as good a job of procurement as anybody in the industry, and that's what we're seeing. For the smaller customer or smaller suppliers, I'm sure they're having nightmares, and wholesalers are probably having nightmares because I don't know how they're putting them through fast enough either. Got it. To note that, everyone is doing it. Like, it's across the industry. We're not the only ones. Yep. Yep, for sure. I appreciate the color there. That's all for me. I'll turn it back. Thank you. The next question comes from John Gibson with BMO Capital Markets. Please go ahead. Morning all. I think we've touched on the margins and cost increases enough here, but I'll maybe shift gears a little bit. Just looking at the acquisition you did in the quarter. Wondering how much of your existing business and infrastructure could overlap with the offshore space. Well, the infrastructure we were set up in Louisiana already with a small piece there doing some shelf work, but this acquisition gets us access to deep water. I mean, they're on 21 platforms. Something that, you know, frankly, we aspire to do and we've been working towards, but getting in with a customer to get an opportunity on one of those things is a very rare occurrence, and that's what we like most about this acquisition. These are guys with credibility. They have a real company. They've been doing good work for a big customer, a couple of big customers offshore. So it actually complements what we have there, and we complement them as well because they were using a wholesaler to buy their material. We now can produce. We are working towards crossing out all the products that they are buying from the wholesaler and all. We are almost there. We'll be able to supply them with their own chemistry. As they look to evolve new chemistries and new solutions, they now have a big infrastructure behind them with labs and Ph.D. chemists and all the things that the CES name brings with it. The other thing it does, it gives us credibility. Some of the majors, when they do their RFPs in the United States, they wanna be able to get service everywhere in North America, and that includes Gulf of Mexico. When you can't check the box that you can service rigs or you have some existing business in the Gulf of Mexico, you can't bid on those projects. If you can, you don't get looked at with real credibility. That was another big reason we like this, 'cause now we have credibility, and we now meet every standard required to bid on every piece of work that comes up in North America. On top of that, we think we can grow this. We think the companies that they work for will continue to grow. That will continue to grow our resume, and we'll be able to apply that to other customers. Okay, great. Thanks. Looking at your international platforms in Oman and Nigeria, how have the first few quarters gone in terms of expectations versus what you originally expected? Do you expect maybe a material contribution from these businesses in 2022 or 2023? Yeah, I mean, it really depends on what. You know, we got some exciting stuff going on over there. I would say, first of all, I'll start with expectation. It went, we had high hopes for the Oman stuff continuing, but as far as how it's gone to date, it went accordingly. It's just the project is over, and we are in between stuff now and looking for another project to get on. Think we'll get one. But we do have some big opportunities in the Middle East that we're chasing. If one of those connects, I mean, it will be immediately meaningful. It's just we don't have insight yet as to whether or not we're gonna win those. We are confident, but you know, nowhere near ready to say we're about to have a big home run in the Middle East. We'll let you guys know as soon as we hear something that is positive. As far as Nigeria, it's proceeding as planned. I mean, it's a small company we're helped getting going. Vern and Dave Horton participated in a webcast with them and their customers to show the expertise that CES brings to Africa with the supply that we're giving the service company there. It went really well. You know, they're placing more orders. They're starting to get to break into some markets. You know, that's a very early stages operation, so neither one is meaningful in any way. They're the doorways to get somewhere. We're focused on it. We're looking at every opportunity that comes along, and we think we've got a couple that look really good. Great. Thanks. Last one for me. Can you maybe talk about competitor bidding across North America? Are you seeing any predatory bids or is everyone kind of on board with these significant cost increases we're seeing? Well, as I mentioned, I've spent a lot of time in the last couple of months talking to procurement guys and managers. If you believe everything they say, every other company is not increasing prices. If we don't put the increase through on our side, then we won't keep the work. You know, we do have insight into those companies and yeah, we're seeing it everywhere. I think guys are waiting to be predatory. If we try and hammer something through with a customer, I'm sure somebody would step in and say, "Yeah, I'll do it for less," or, "I'll keep my prices stable." Their ability to do that will be limited. All it means is they'll get the work and then in a month they'll have to raise their prices too. The moves have been so dramatic, it's just, it's impossible to absorb this stuff and no one is. Okay, great. That's all for me. I'll turn it back. Thanks. The next question comes from Andrew Bradford with Raymond James. Please go ahead. Thanks. Good morning, guys. Morning. Thanks. I'm wondering. Like, I do wanna come back to margins, and I'm sorry to do this. I think you've done a good job explaining the macro setting that you're in. But some of the numbers that are getting thrown around, it's hard to get context for this. You know, you talk about barite is up 50%, some polymers are up, you know, by a factor of two or three times. Can you help me bring it up to sort of the line item that we see in the financial statement? Like, if it'd be possible to describe this, like how much of your unit costs moved higher? You know, assuming a steady mix or if you just wanna maybe talk about in drilling fluids, for instance, the same well that you might be working on in a given play, you know, on a per day basis, like how much of a% increase have you seen in your cost that you are trying to pass through to your customers, over the last few weeks? When we go to the customer with the increase letters, we also bring the backup along with us, which shows the net impact of the particular increases to the overall well cost that we charge. You know, generally speaking, 15%-25% is the number that gets added. Okay. That gives good context. I appreciate that. Secondly, early in the preamble, I think, Tony, you were describing the lag, how it's the lag between these input costs and realizing on the pricing. I think you did a good job explaining this because you're getting prices that are moving while you're in discussions about other input cost changes. But I'm just wondering, has the lag itself changed? Like, is it, you know, is it the amount of time it takes to get the price increases through different, like, shorter or longer? Or is it just that, you know, you got this rapid fire situation of, you know, various prices moving on you as you're trying to get price increases through? I think it's more of the latter. Like, I think it's just been the rapid fire nature of it and the extreme nature of it that's been the problem. The lag, it varies by customers and by business line. You know, we got some increases. In a lot of cases, we've given three price increases to customers already, every time thinking we've corrected the problem and then every time finding out we had not shortly thereafter because something else went up. I'll talk to the drilling fluid side. I mean, the lag can be significant, right? It can be six weeks, two months to get something pushed through, when you bid on a pad, for instance, and they go in and drill all the surface holes on a four-well pad, and then they drill all the rest of the wells in order, intermediates and then main holes sometime or the entire thing. Anyways, when that pad starts, you've submitted a bid price and, you know, for sure the AFE is built off that, and the operator always asks, you know, I won't say always, but almost always asks for you to hold the prices for the pad. Well, that pad can take you a month to drill, depending on the well, sometimes six weeks. That's not including the week or two it takes to get to them, explain the increases, get them to work it through their procurement departments and accept the increases. You're set up for that increase. You know, in 6 weeks. In the meanwhile, we've got all this inventory going out the door where we know replacement cost is much higher than that. That's what I. When I talk about strategy, that's our strategy, is to support our customers in that fashion, to help them. I would say 90% of them are appreciative of that, and that will pay dividends in bidding season in the springtime in Canada, and in the United States, it's paying dividends right now. You know, there's that outlier 10% that you just can't make happy, so you just gotta keep hammering on it and finding a solution that works for both of you. You know. Thanks for that. Then my last question just relates to capital spending. You know, I noticed that you had your capital, your growth capital spending or expansion capital is quite light still compared to where it was prior to in 2019. You know, there's still sort of a lump that came through in the fourth quarter. I think that relates to the Nisku facility bill, is that correct? That is correct, yes. Okay. Is that And that- Sorry. I was just gonna say, that relates to the MEA product that I talked about. That's a high use. That's a scavenger. That upgrade in Nisku was because last year when we saw all the shortages coming, we just didn't have enough inventory on the ground to get a safety stock level beyond about five days, and we knew we were headed for trouble. We put a bunch of money into the Nisku facility to get our storage level capability and blending capability up to meet what we saw as an upcoming demand. You know, as we talked about last quarter, there was a real problem with supply. One of our major com... Our biggest competitor in Canada was unable to supply, and we had to pick up some of their work and, you know, do some stick handling to try and support them as well as the existing customers. Yeah, that's what that piece of CapEx was, and that was well spent money. Okay. Any color you can provide on the CAD 20 million plan for 2022? Yeah, I'll start on that. We were very deliberate in the language. That CAD 20 million of growth CapEx is earmarked for growth CapEx. That's a little bit of a combination of catching up on some required improvements and increases to support the growth that we're seeing in general for the year. A nice little chunk of it, in the CAD 6 million-CAD 8 million range, is the potential expansion of our barite grinding capabilities. We're looking to do that in Texas and being very strategic to help AES capitalize off of the growth that they've been seeing and that we expect them to see in 2022. Every time we're able to do that and run more product through those facilities, we're able to do so more and more efficiently by putting more volume through, which we're expecting to see and which we're starting to see right now. As we do that, we're able to have a bigger volume over fixed costs, thereby reducing our unit costs. That again is one of our levers to improve COGS in a very important product like barite. Great. Cool. What capacity is your Corpus Christi mill at now? It's I mean, we've been running it at max capacity here the last few months. It's about 35,000 tons. This additional facility, when we get around to having it completely planned out and ready to come online, it'll add about 15,000. It'll add about a 50% bump to that volume. Sorry. Are you just sort of thinking about adding an additional train to the Corpus Christi facility, or is this going somewhere in a different location? We're investigating that right now. Probably makes sense to do it somewhere else, but we're investigating that right now. At one time, you were thinking about adding barite capacity in the Northeast. I assume that's not on the table still at this time. That's correct. Okay. I think that's it for me. Thank you very much, guys. Thanks, Andrew. The next question comes from Tim Monachello from ATB Capital Markets. Please go ahead. Hey, good morning, guys. Morning, Tim. Not sure if this margin, peripheral margin horse is dead yet, but I'll give it another kick. It seems that the reported numbers and the guidance for Q1 and perhaps Q2 being lower is both a combination of a real cash impact as pricing for products that you're buying is outpacing what you can sell them for. But there's also an impact that has to do with the accounting around standard cost accounting and you know, you might actually have some inventory here that is a lower cash cost and you're selling it for higher but reporting it at a higher cost. So I'm curious what the split would be and what you know, the comparative impact on EBITDA will be compared to cash flow. Again, it's tough to give you a specific percentage, but let me- I don't wanna get into the details to provide more information than we need to, but to summarize it, the impact to the accounting margin and the COGS will be higher than the impact to cash flows. Cash flows won't be affected as much as EBITDA will. Like, is it close or is it, like an order of magnitude, do you think? I don't think it's an order of magnitude, but it's not equal. Okay. I just wanted to touch on the acquisition, this first acquisition, you know, this company's done in a long time, and stepping into the offshore market. Obviously you think that you can probably leverage the infrastructure you have behind you and the scale. I'm curious if you could provide, I guess, some near-term boundaries around the financial impact this could have and maybe some longer term ones where you think it could go. Yeah. As we said, as Ken said, this is a very strategic but small acquisition. It's not going to move the needle from a quantum perspective on revenue and EBITDA today. That's not to say that it's not generating acceptable and frankly accretive margins and cash flows because it is. The bigger thing is what Ken said, putting the machine behind it and Vern and his team working with the Proflow team to extend that business and grow into something. It's not gonna be significant from a consolidated perspective this year, but we expect it to start contributing nicely towards the end of this year and into 2023 and beyond. The offshore market is a great market, and these guys did a fantastic job developing a reputation that Vern and the current Proflow team are gonna work to improve with the support of the entire company. Okay, that's helpful. And then I guess as you look at the peripheries of your business and start to look at, I guess, adjacent markets or service lines, what else are you looking at? Or give me some ideas maybe of different markets that are attractive. The markets that are attractive, frankly, in that ancillary, in those ancillary spaces are ones that frankly we've already worked in. Mike Hallat, who runs our Sialco division, who you know, has already been manufacturing products that get sold into the cosmetics industry, the fragrance industry, automotive lubricant industry. We're starting with what we know well and how we can grow that. That's where we're focusing initially. However, as we've talked about a little bit before, we are taking a very strategic and deep dive approach to take a look at the overall market opportunities in those adjacent markets. Looking at the personal care, market, looking at the biosurfactant market and a few others, but these aren't flash in the pan projects. We're taking very deep dives to understand those, and frankly, probably doing the same work that you've done, which is looking at some of the very big guys that are competitors, especially in Europe, that serve our energy end markets, but are actually selling into some of those end markets that I mentioned. Those are the types of markets, and you've probably looked at the other end markets that guys like Clariant and Solvay are selling into, and we're doing exactly the same thing. Okay. That's really helpful, guys. I'll turn it back. Appreciate the details. The next question comes from Keith Mackey with RBC. Please go ahead. Hi. Good morning. Morning. Good morning. Ken, you mentioned that the current environment must be pretty tough on smaller providers. It's certainly challenging for all. Does the current environment where you've got smaller competitors and you've got some customers unwilling to accept price increases, I'm sure you'll always have that, but does that dynamic have you thinking about M&A a little bit more and potentially getting on the front foot as, you know, an opportunity in the current challenge to exercise your footprint and capacity to consolidate the market a little bit more in either Canada, U.S., drilling fluids or production chemicals? Yeah, I think that's something we're always looking at, and it's definitely something that's crossed our minds as we've gone through this. No matter what, we have to get pricing up. We haven't felt pressure from anyone. I shouldn't say that, but it specifically hasn't been a problem with smaller companies or having more choices by the operator to drag our margins down. It's just been trying to get increases through, and it's the same problem all of us are facing. I mean, maybe come break up in Canada and as the bid season opens up in the summer down in the U.S., you know, maybe there will be some pressure there, and that would be a time to take a deeper dive on it. We've always got a couple of smaller companies that we're watching that are competitors. You know, I don't know that it solves the problem at present. The problem at present is dramatic increases in everything. Yeah. Got it. Was the Q1 acquisition? Sorry if I missed it. Was that cash or shares? It was cash. Yeah, a small acquisition, but it was cash. Okay. Is that embedded in the CAD 40 million or should we be thinking about that as a small incremental? Yeah, you should be thinking about that as a small incremental. When you see our Q1 financials, you'll have more granularity. When we talk about CapEx, we don't include M&A in that number. Got it. Tony, you exercised the accordion feature on the bank line this quarter. As you know, working capital has come up. I know you've talked about that leveling off potentially as the steepness in revenue and the revenue growth also levels off. How should we read the exercise of the accordion feature? Is it nice to have, necessity or just a little bit more detail there would be helpful. I think you should read it as responsible financial management. It's my job and my team's job to make sure that the company has the liquidity that they want, and it's our job from a governance perspective to make sure that we have ample liquidity, which is demonstrated by our current and anticipated draw versus the total CAD 260 now, that CAD 262.5 that we have access to. It's really being able to have that level of comfort, have the ability to support the business, i.e., if there's an opportunity to make a strategic purchase of something from an inventory perspective, we do not want to stifle the capabilities of the procurement teams across Canada and the U.S., number one. Number two, also, and you've asked questions before, I believe, about the bond refinancing that we don't have to do for a couple of years. However, we likely will be reducing the size of that bond, and when we do, we'll be in whatever position we're gonna be in from a draw perspective. It's responsible to make sure that if we want to reduce the size of that bond and we want to put some of that that delta onto our line, that we have ample opportunity to and capacity to do that so that it'll be at a lower level and it's going to get repaid, whereas with the bond it's fixed. Does that answer your question, Keith? Operator, I think we may have lost Keith. If he joins back again, please move him up to the top. Oh, Tony. Tony, sorry. Hey, sorry. I was on mute. Thanks for that. Yeah, no worries. Just finally, what margin does that Q1 EBITDA guidance imply? Look, if I told you that, then you would know exactly what we think revenue is going to be, and I don't want to do that, but I would continue to do what you're doing in terms of assumed activity level increases in Q1 versus Q4. I gave you again. It's not carved in stone, but we wanted to be transparent and tell you what we think, which is approximately what could be a 20% decrease in EBITDA level from Q4 2021, so you could do the math on that. Then after that, Keith, I'd encourage you to use your revenue levels to back into a margin. I don't think margin's as important as cash generation and our ability to work through this current extraordinary environment that we believe is temporary, and we're gonna start getting out of it in Q2 and beyond. Got it. Thanks for the color. We'll turn it back. Once again, if you have a question, please press star then one. The next question comes from Josef Schachter from Schachter Energy Research. Please go ahead. Thanks very much. Good morning, Ken and Tony. Congratulations first on a great year and a great performance through, you know, throughout the quarters. My first question is for Tony. We see that the receivables almost doubled in the year on a 35% increase in revenues. Are we seeing customers delaying their payment schedules? Is that one more thing that's gonna require you to have a little more flexibility on working capital? Yeah, not at all. That's not happening at all. Like you nailed it. The reason for that big increase in working capital was commensurate with the big increase in revenue year-over-year. Okay, there's no lag in terms of payment schedules at all? No, not that we're seeing. Okay, good. Two questions, Ken, on the macro side. With your expertise, as you mentioned in polymers, the industry, of course, you know, where do you find oil? You know, it's like real estate, location, and where you have reservoirs that are performing right now, and a lot of companies are talking about increasing productivity with polymer floods. Are you in that business? With the science skills you have in your labs across the country, or, Ken, in the States, is that a business that you see becoming significant to you in the years ahead? It's something that we're always looking at. We participate in a small way. The problem with that space is the big companies generally work with the big companies on that. Like, we don't manufacture polymers. We buy polymers from manufacturers. The big guys like SNF go direct on that business to the oil company. It's hard to get in the middle of that. Okay. The next one is, Biden seems to be opening doors to Iran and Venezuela and potentially moving sanctions out. There's probably gonna be a lot of need there. Is that something that you might look at, once the operating rules are out in the open? Is that something that, you know, given it could be a very high margin business that you might look at? I think like we always talk about, we'll look at everything. You know, hard to believe that's the solution to this is to work with in those jurisdictions. That's if the opportunity is there, we'll evaluate them, measure the risk, and then make a decision. Okay. That's it for me. Thanks again. Thanks, Josef. This concludes the question and answer session. I'd like to turn the conference back over to Ken Zinger for any closing remarks. Well, thank you everybody. I'm gonna wrap up the call today by saying thank you to our customers, our employees for helping us produce another great quarter. We're really pleased to be in a strong financial position and returning cash to shareholders coming out of COVID. We look forward to speaking with you again during our Q1 update in May. Thank you, everybody. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.