Welcome to the CES Energy Solutions Third Quarter 2022 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 you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Anthony 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 third quarter MD&A and press release dated November 10, 2022, and in our annual information form dated March 10, 2022. In addition, certain financial measures that we will refer to today are not recognized under current generally accepted accounting principles. For a description and definition of these, please see our third quarter MD&A. At this time, I'd like to turn the call over to Ken Zinger, our President and CEO. Thank you, Tony. Welcome, everyone, and thank you for joining us on this Remembrance Day holiday as we honor those who gave their lives for our freedom. On today's call, I will provide a brief summary on our record financial results released yesterday, followed by our divisional updates for Canada and the U.S., along with a brief update on our international businesses. I will then pass the call over to Tony to provide detailed financial update. We will take questions, and then we will wrap up the call. I am proud to report that the third quarter of 2022 was another breakout quarter for CES Energy Solutions. For the fifth consecutive quarter, quarterly revenue increased. For the fourth consecutive quarter, it increased to a new record level, this time at CAD 525 million, with an associated EBITDA margin of 14%. I would now like to highlight several significant corporate milestones which were achieved during the Q3 of 2022. Strong results have enabled CES to raise our dividend by 25% to CAD 0.08 per share per year paid quarterly. Revenue in the third quarter reached another record-setting level, beating our previous record last quarter by 21%. This was our eighth quarter in the last nine quarters where revenue increased quarter-over-quarter. All four of the company's major business lines contributed by posting their highest revenue levels ever. EBITDAC of CAD 73 million in Q3 smashed our former quarterly record result from last quarter by just over 20% and by 74% year-over-year from Q3 of 2021. SG&A, as a percentage of revenue, came in at a very prudent 9.2%. This was the lowest percentage ever and beat our former low of 10.1% from Q1 of 2015 by almost 10%. We are currently providing drilling fluids products and service to 23.2% of the land drilling rigs currently drilling in North America as we continue to be the number one drilling fluids company in the North American land market. I will now move on to summarize some of the progress made in Q3 of 2022, as for the first time ever, we reached the milestone of being a $2+ billion annualized revenue run rate business. These past three years have presented unprecedented challenges to our business, our industry, our employees, and to the world. COVID, remote working, inflation, logistical challenges, product shortages, and labor shortages have all made their mark on everything in our world. In spite of these headwinds, CES Energy Solutions and our employees have steadfastly marched forward and grown the company's revenue and EBITDAC to all-time highs. At CES, we believe a more stable market may be in front of us. We have grown the company to a much higher revenue level and are now beginning to see the free cash flow harvest that comes with a more steady market versus the incredibly rapid growth of the past couple of years. Our working capital level has increased to CAD 666 million during the quarter to support this rapid growth. However, this is up 32% of our current annualized run rate revenue and well within our targeted historical range. Now begins the time for us to harvest the torque built into the business with our CapEx light, asset light, high surplus free cash flow business model. Tony will speak more to capital allocation plans during his portion of the call today. I will note that these comments do not mean that all is easy. As always, challenges remain throughout the business. Shortages of certain chemistries, elevated shipping and logistics costs, labor shortages, FX fluctuations, and competitor pricing pressures are all present in our business lines. However, we believe we have the best team in industry to help manage our way forward and excel in any environment. We believe that the strategic utilization of the free cash flow we have started generating and will continue to generate will improve our balance sheet while enabling consistent shareholder returns. Our outlook remains bullish for the remainder of 2022 as well as 2023. Although industry activity growth rate appears to be leveling off to a more manageable level, this is obviously a very comfortable and profitable level for CES and for our industry. We look forward to continuing to deliver strong results during Q4 of 2022 and throughout 2023. I will now move on to summarize Q3 performance in Canada. The Canadian drilling fluids division achieved our highest quarterly revenue ever in Q3. As mentioned on our last couple of calls, we have been able to hold, hire, and train sufficient staff to operate efficiently. Although this is a challenge in some areas, we remain confident in our ability to find and retain people. Today, we are providing service to 81 of the 211 jobs underway in Canada for a market share of 38.4%. This rig count has been steady throughout Q3 and into Q4. Christmas in Canada historically affects the rig count by about half for the second half of December, and we would expect no difference this year. We expect the industry to increase in early Q1 back to levels slightly higher than in Q1 of 2022. PureChem, our Canadian production chemical business, also achieved its highest quarterly revenue ever. We continue to see growing contributions from our frac chemical and stimulation groups as this sector of the Canadian oil field remains very active now and for the foreseeable future. Now for the United States. AES, our U.S. drilling fluids group, also achieved their highest quarterly revenue ever. As I always note, we are not chasing market share on either side of the border and continue to focus on opportunities with sustainable margins and revenues. Today, we are providing chemistries and service to 147 of the 770 rigs in the United States for a 19.1% market share. This total is up from 136 rigs and 17.8% market share at the time of our last call in August. This includes a basin-leading 29.8% market share in the Permian, which is up from 27.5 on our last call. Our second barite grinding facility, which we are constructing in the Permian Basin, continues to be on schedule and on budget. We also began shipping invert from a second Permian facility in Midland during the quarter. This was achieved with minimal CapEx and offers a logistical benefit to our customers on the east side of the Permian Basin. Finally, I am proud to report that Jacam Catalyst, our U.S. production chemical business, also achieved their highest quarterly revenue ever. Our manufacturing facility in Kansas continues to be the backbone that supports the entire business while operating at a very comfortable output level of about 60% of what we believe to be the maximum capacity. This number varies based on the ratios of the different chemistries being manufactured, with some being quicker and easier than others. Safe to say we see no capacity issues in the foreseeable future. Now for a quick update on our recent forays into international markets. We continue to actively pursue several opportunities in the Middle East, and 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 multiple potential opportunities. In conclusion, I would once again like to highlight that all four of our major divisions achieved record revenues during the third quarter of 2022. This is truly an historic accomplishment that we are extremely proud of. The busy market is obviously one of the drivers of this success, but this also showcases the great teams we have everywhere in the organization. The results in Q3 were not due to one division or area excelling. This was a balanced effort across the company in which every business group contributed. It speaks once again to the quality of the people employed everywhere in every division here at CES Energy Solutions. I want to extend my appreciation to each and every one of our employees for their commitment to the business, culture, and success of CES. It is rewarding to note that due to the growth we are experiencing, we have increased our total number of employees at CES from 1,814 at the beginning of this year to the current level of 2,105 today. This is an increase of 291 employees in less than a year or approximately 16%. As always, I wanna finish this portion of the call by thanking all of our customers for their trust and commitment to CES in good times and in bad. With that, I'll turn the call over to Tony for the financial update. Thank you, Ken. As highlighted by Ken as part of the call, CES' financial results for the quarter represent all-time high record levels of revenue, adjusted EBITDAC, and funds flow. These impressive results were realized amid continued quarterly growth in industry activity, targeted pricing increases, and disciplined spending. During the quarter, CES generated revenue of CAD 525 million and adjusted EBITDAC of CAD 73 million, representing a 14% margin. This record quarterly revenue of CAD 525 million represents a sequential increase of 21% from the previous high-water mark of CAD 434 million in Q2 and an increase of 67% from CAD 314 million in Q3 2021. Revenue generated in the U.S. was CAD 350 million or 67% of total revenue for the company. That revenue number is up from CAD 300 million in Q2 and CAD 197 million a year ago, as both of our major US divisions demonstrated record revenue levels during Q3. Revenue generated in Canada was CAD 175 million in the quarter, up strongly from CAD 134 million in Q2, as is expected seasonally with spring breakup and compared to CAD 117 million a year ago. Canadian revenues benefited from increased drilling and completions activity, year-over-year growth, and higher production volumes in general. Our adjusted EBITDAC of CAD 73 million in Q3 represented a 20% increase from the CAD 61 million generated in Q2 and a 74% increase from the CAD 42 million generated in Q3 2021. Adjusted EBITDAC margin in the quarter was 14% and in line with the 14.1% margin in Q2 as the company continued to realize increased pricing and scale associated with higher activity levels. Gross margins were slightly compressed by a combination of a temporary spike in the US dollar toward the latter half of the quarter in particular, and also some product mix dynamics. We call that our Canadian operations price in Canadian dollars, but most of their product-related costs are in US dollars, thereby resulting in margin compression until pricing is adjusted or the FX rate settles back down as it has already. We also had some high revenue product with associated lower gross margins, but minimal SG&A burden. On a consolidated basis, our low SG&A burden that Ken described was able to offset the gross margin compression to deliver EBITDA margins in the 14% range. At CES, our main financial priority continues to be cash flow generation. I am proud to report that during Q3, our FFO was CAD 49 million, a CAD 6 million increase over Q2, and a 40% increase over the CAD 35 million generated in Q3 2021. We have maintained a prudent approach to capital spending through the quarter with a net CapEx spend of CAD 15 million, representing just under 3% of revenue. We will continue to adjust plans as required to support existing business and growth throughout our divisions, and at this time, we expect cash CapEx in 2022 to be approximately CAD 50 million, comprised of CAD 25 million for maintenance and CAD 25 million for growth initiatives. We exited the quarter with a net draw on our senior facility of CAD 221 million versus CAD 182 million on June 30th. The increase was directly correlated to the working capital investments associated with the increased financial scale of the company and related revenue growth. Working capital surplus was also impacted by the significant depreciation of the US dollar quarter-over-quarter, which contributed CAD 28 million to the increase in working capital balances on revaluation of those balances held in the US. We ended Q3 with CAD 566 million in total debt, comprised primarily of CAD 288 million in senior notes maturing in October 2024, and a net draw on the senior facility of CAD 221 million, as previously mentioned. Our total debt to adjusted EBITDAC declined to 2.5x at the end of Q3 from 2.7x at Q2 and 3.0x at Q1, demonstrating our continued deleveraging trend. I would also note that our Q3 working capital surplus of CAD 666 million exceeded total debt of CAD 566 million by CAD 100 million and represented 32% of our annualized quarterly revenue, well within our targeted range of 30%-35%. At this time, I believe it is very important to highlight the relative financial positioning of the company. CES's annualized Q3 revenue grew to CAD 2.1 billion from CAD 1.0 billion just five quarters ago, commensurate with a near doubling of industry activity, improved pricing, and maintenance of strong market share. We were able to strategically use our balance sheet to support this growth by increasing our credit facility size to approximately CAD 425 million from CAD 315 million in order to provide ample liquidity to support current revenue levels and beyond. As these strong industry levels have begun to stabilize at more muted growth rates, we believe that CES's incremental working capital requirements should decline materially and usher in an era of strong surplus-free cash flow generation fueled by these record-setting revenue and EBITDAC levels. For immediate context, the current net draw on our senior facility is approximately CAD 218 million versus CAD 221 million on September 30th. However, it should be noted that since September 30th, CES made its semiannual high-yield coupon payment of CAD 9.2 million, quarterly dividend payment of CAD 4.1 million, and spent CAD 2.1 million on share repurchases. Absent these scheduled cash outflows, CES has begun to realize the surplus-free cash flow generation that Ken described. This surplus-free cash flow generation is being realized throughout most of our divisions and is also being enhanced by measurable working capital optimization. We believe that CES will generate material surplus-free cash flow amid a constructive industry outlook. In support of that view, I am pleased to announce that on November tenth, the company's board of directors approved a 25% increase to the quarterly dividend from CAD 0.016 per share to CAD 0.02 per share. Accordingly, CES will pay a cash dividend of CAD 0.02 per share on January thirteenth to shareholders of record at the close of business on December thirtieth, representing a dividend yield of 2.5% on an annualized basis at yesterday's closing price and a modest implied payout ratio of 13% of LTM distributable earnings. During the quarter, CES repurchased 550,000 common shares for CAD 1.2 million or CAD 2.20 per share under our NCIB program. Subsequent to September 30th, CES repurchased 844,500 additional shares at an average price of CAD 2.45 per share for a total of CAD 2.1 million, bringing the total year-to-date amount of repurchased common shares to 1.8 million at an average price of CAD 2.32 per share for a total of CAD 3.6 million. We continue to be optimistic about the industry outlook and CES's ability to continue its strong financial performance. This combination is key to informing our capital allocation decisions, which we evaluate on a quarterly basis. In terms of capital allocation considerations, we prioritize capital allocation towards supporting existing and new business through investments in working capital and modest CapEx projects that deliver IRR above our internal hurdle rates. We remain very comfortable with the conservative increase of our dividend, and we'll continue to revisit our policy on a quarterly basis. We will use surplus free cash flow to reduce draw levels as inflows begin to materially offset outflows. We plan to buy back at least enough shares to offset our modest equity compensation-related dilution. We will consider opportunistic purchases in the context of surplus free cash flow generation, leverage, and implied valuation levels. At this time, I'd like to turn the call back to Ken for comments on our outlook. Thank you, Tony. As you and I both noted, the Q3 results represented significant record results for revenue and EBITDA. We were also able to maintain a strong margin of 14% while simultaneously expanding our market share throughout the North American land market. Thank you to all of our employees for contributing to these spectacular results that Tony and I have had the privilege of presenting here today. I will now pass the call over to the operator for questions. Thank you. 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 will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question comes from Aaron MacNeil with TD Cowen. Please go ahead. Hey, morning, all. Thanks for taking my questions. I know in the past you've said, you know, you've got a lot of capacity, and you don't really need to spend to take on higher volumes of work. Obviously, we're sort of there now and, you know, you're building a second barite grinding facility. I'm sure you're doing other smaller things around the edges. I mean, generally speaking, does that still hold? Are you below your theoretical capacity, or do you think we'll, you know, need to see an uptick in growth spending to accommodate further growth from this point? Good morning, Aaron. Thanks for the question. Yeah, we think we're in good shape. We've been adding to facilities a little bit here and there as it makes sense, but these CapEx expenditures are minimal and you know, unless we got really busy in a play that we're not focused on right now or in a place we're not focused on right now, there's no need for big CapEx spends. I noted the facility in Sterling is you know, somewhere between 55% and 60% of capacity as we estimate it, but that's a variable number depending on which chemistries we're making at the time. Even if we got to a number that caused us to wanna spend some money in Sterling, it's not building new buildings and putting in new infrastructure. It's adding some kettles, adding some blending facilities, adding some reactors. The spends are quick and not significant. Along with that, you know, Well, actually there's two places where we are starting to get stressed. The Kermit facility in Texas was getting pretty close to where we were gonna have to start spending some money on it, so we strategically decided to just shift some of the production away from that facility and move it over to the east side of the Permian Basin in Midland, because we had a facility there that we were able to get going on pretty short notice and at very low cost. It was something that was sitting there, and ready to go that we were using for backup. We've shifted, you know, about right now, I think we're about 10% of what we have going in the Permian we've shifted over there, but we can move that to more like 20% or 30% as we see fit or as we get more exposure to that side of the basin. We're hopeful also that it'll generate some growth in our market share there as well because now we're gonna be logistically advantageous on that part of the play as well. Then the other one, of course, is the barite grinding facility. You know, we're pretty much we built our facility to provide about half of its production when it was fully optimized to us and half we were gonna wholesale in order to keep it going and keep our costs down. This is the Corpus Christi facility. We are now using 100% of our capacity on that one, and that's the reason that we started building the new facility in the Midland area in the Permian Basin a few months ago. It's approaching completion. We hope to have it done sometime in Q2. At that point, you know, that's probably the last piece of big infrastructure we need for the foreseeable future, especially considering the outlook on rig counts for 2023, unless something drastically changed and oil went way up. Got it. I guess maybe as a follow-up, you know, you mentioned the Middle East expansion. You know, is there a potential to put capital to work there or engage in M&A to sort of take to that business to the next level? I guess I'd- You know, point to Jacam Catalyst in the past that completely changed the makeup of the business. Like, I guess, do you think something like that is in the cards? What sort of traction would you have to see in order to kind of pursue a larger or lumpier capital outlay in markets outside of North America? Yeah, we've been. You know, we've had a lot. We've been spending time on this, and we've got some opportunities that are, you know, moving at what seems like a snail's pace, but are getting closer to fruition. We're getting some verbal awards, and we're just trying to latch on to a piece of business that's significant in order to move forward. At that point, I think, you know, we would look at an M&A piece to buy a piece of business if we felt it got us some people on the ground and some infrastructure on the ground, but it definitely would not be a swing for the fences kind of acquisition. We'd wanna get into the market, get settled, understand the market better, and then at some point down the road, if something came available, we might look at it. You know, the capital expenditure to actually get in there and get putting up some real revenue and EBITDA won't be significant, or at least that's not our plan right now. Understood. Thanks, Ken. I'll turn it over. The next question comes from Jonathan Goldman with Scotiabank. Please go ahead. Hi. Good morning, guys. Thanks for taking my question. Just a question on current supply demand and demand dynamics in the industry. Could you maybe talk about what you're seeing in terms of supply of drilling and completion chemicals, whether that's supportive right now or it's too much, too less, kind of any color around that would be great. Sure. Good morning, Jonathan. I think, you know, much like it has been for the last couple of years, there is stress on some of the supply chain. It's not on every product anymore. I mean, there was a period in Q1 where everything was in short supply, and everybody was scrambling, and everything was going up in price because of that short supply. The market's adapted. I think right now there's four major product lines that we're struggling with. You know, some of them we may be able to offset through some agreements. Some of them we may have to create alternative chemistries or alternative treatments for them. I don't think that stuff ever goes away. There's always one or two things that are in trouble around the world. As far as it being positive or negative for our business, I mean, we're one of the higher volume providers out there, so obviously, you know, we have to be more ahead of this and buy more inventory. There's nothing going on that gives us pause that we're not gonna be able to find a solution or get the chemistry. There is potentially some strategic purchasing that needs to happen, so maybe some increase in inventory on some things if we get an opportunity to buy them. I'll say that at this point, we none of those things has happened. It's just the usual struggle that's going on right now, that's been going on for as long as I've been in the business. That makes sense. I guess, I don't know if you know the answer to this, but do you know if that's kind of a condition industry-wide, everyone kind of dealing with the same supply dynamics, getting the same sort of inputs, or is it unique by each provider? No, I think it's the prior. You know, that's the one good thing about it. Not good, but when there's a shortage out there, if we can't get it, then no one's getting it. You know, if we need it, then our competitors need it. It's just a matter of who gets more first and what price you pay for it, really. Nope, that makes sense. There's been- The second one, I guess. There's been some Sorry. Sorry, Jonathan. There's been some opportunities that we've taken advantage of where you just couldn't get a chemistry, and so you had to pivot. We've done some pivots, and that's the other thing that we can bring to our customers. I think it speaks to the market share that we're putting up. I know I talk about not talking about market share all the time, but the market share that we're currently participating in is very impressive. I think part of it is due to our adaptability. When these problems come up that people struggle with solving, where they can't get supply or they can't get a chemistry and literally cannot get a chemistry, we're very quick to pivot and find a solution that'll work at some other price and some other method. I think some other companies struggle with that, and that's part of the reason we're having such success in the market. No, definitely. I mean, that shows through in the numbers, too. Just holding onto those significant share gains since 2020. The second one for me on the working cap, DSOs seem to be high just relative to 2018 to 2020 levels. I mean, obviously, there's some supply dynamics in there and inflation as well. I just wanna know if there's any specific dynamics behind the higher DSO levels and maybe what the trajectory of that would look like going forward. Yeah, I can answer that one. That's twofold, and one of them is a really good problem, and the other one isn't. It's one that's starting to dissipate. The first dynamic is that revenue has been growing on a monthly basis and a quarterly basis at a torrid rate. When you do the math for your DSO calculation, you're using AR as part of your numerator and revenue as part of your denominator. When you're making the calculations, you're actually collecting an amount of money today that is reflective of revenues that were at lower levels a couple of quarters ago or a couple of months ago even. You're artificially inflating the DSO calculation. The other big part is that AR that we're using for our calculation is a lot of it is in the U.S. Because the FX rate in the U.S. and the spike of the US dollar, especially towards the end of Q3, the value of that AR in Canadian dollars spiked up as well, again, making that AR look higher than it otherwise would have. We expect there's some things that we're doing on the working capital front to systematically reduce that DSO number. The other thing you're gonna see is as the revenue plateaus and started to, you'll see that number improving. Also as FX flattens and it's actually changed in the other way, it'll improve the DSO number as well. No, that makes sense. Thanks, guys. I'll turn it over. The next question comes from Tim Monachello with ATB Capital Markets. Please go ahead. Hey, good morning, everyone. The first question is just on margins. You know, revenue is very strong. You pointed to some, I guess, lower margin volume work that came through in the quarter. At the same time, you know, you, I think you would agree that you're probably seeing an easing in inflationary pressures, and maybe that's not true, but if it isn't, please let me know. I'm just curious as on like a same product basis, what you're seeing for margins and how we should be thinking about margins going forward. Well, I'll jump at that one first. I think it depends if you're talking about gross margin or EBITDA margin, net margin. We're very focused on net margin. We're less focused on gross margin. We've got some business lines that historically have been a little bit smaller. Some one or two of them are new pieces of business that we picked up, and one or two of them are new business lines that we've or old business lines that we've started making a bigger dent in. These business lines have fewer touch points on our side. It's more big volume, kinda pass-through, less service-oriented business. You know, all we care about on that business is net margin, EBITDA margin. We know how to get to that, and unfortunately, that dilutes gross margin a little bit. You know, that's not something we're concerned about. We're trying to get free cash flow, and we're trying to generate earnings for our shareholders. The gross margin number is gonna move where it moves as we continue to focus on net margin. Then as far as inflation goes, yeah, like it depends on the product and the day. Obviously, FX moved a lot during the quarter, and that helps us on our overall numbers. It does hurt us in Canada, where our cost of goods goes up, and it affects the margin that gets put out. It's hard to adjust to when something like that's moving 5% up and back down again in a quarter kinda thing. We're watching it all the time, and we're comfortable with the net margin and the EBITDA margin that we're creating, and that's what we're focused on, is free cash flow to shareholders. Do the expansion service lines that you're talking about carry the same type of working capital intensity as the higher margin volumes that you're putting through? They're different business lines. One, like, without identifying what they are, a couple of them do and a couple of them don't. You know, one of them is very high volume. We make sure that we work into our cost of goods, the cost of carrying the inventory. All these business lines that are more pass-through revenue are pretty quick pay kind of scenarios where we have deals on these business line that are commensurate with the risk we're taking on the inventory. Okay. Are you seeing any pricing, like net pricing traction with customers, or is that sort of plateauing or have plateaued? I think we've had, like, we've had tremendous pricing success with customers. Like, the last week I mean, there's customers we've gone to 5x in the last year with significant increases. There are some that have been two or three. It was a fight in Q1 when our margins weren't good, and it's a fight today when our margins are better but not as good as everybody would probably like to see. It's a competitive space. I would say the operators, the oil companies, are in a different situation with equipment where there's a finite supply, and they kinda take it on the chin and have to accept what they have to accept to get what they need. With us, they choose to spend their time fighting with us. It's an ongoing battle, and it. I don't know when it's gonna end. Hopefully, things just stabilize, so we don't have to keep doing it. Okay. That's really helpful. The next line of questioning I have is just around capital allocation. Good to hear that the harvest mode is underway. The dividend increase, you know, seems almost a little bit symbolic in respect, just given the size of the free cash flow that you're probably gonna see next year. I'm just curious what the playbook is, what the other message to shareholders is, and what they should expect next year in terms of growth in returns to shareholders and deleveraging. Like, are there goalposts that you're looking for in KPIs where you're kinda gonna move more aggressively towards distributions to shareholders? We've been pretty consistent in terms of the buckets of the capital allocation. Point taken, that increase in the dividend, although conservative, probably less than we could have done, is very symbolic. We wanted to wait until we saw that surplus free cash flow waterfall starting to happen. What I will say is that you will see some natural de-leveraging, as in the background, we will continue to buy some shares, we will continue to look at our dividend. In terms of at what point do we have very serious discussions about really amplifying some of those other return mechanisms, it'll probably be when we pierce towards that 2x debt EBITDA level. If we're in that 1.5-2x, we're gonna take a serious look at significantly using some of those other levers. Tim, we're starting to see the free cash flow as a bunch of you on the call predicted. I think what we need is another good quarter of understanding it, understanding the trajectory before we can be more definitive on the allocation. Okay. That's really helpful. Then just the last one for me. I'm just curious around, you know, commissioning that new barite facility. Is that gonna unleash, I guess, or more job capacity, and some market share in the Permian? Or is that, you know, just basically building capacity for future growth and allowing for third-party sales? We didn't build it because we see a whole pile of business suddenly coming our way that we're gonna have to support. We built it to support the business we have. But yeah, it's a big strategic advantage. You know, one of the main barite grinders in the United States just sold their barite facilities, grinding facilities to another major barite supplier in the United States. So the access to barite is dropping down to a very few number of people who can actually grind and supply, and that is something we're based in. So that's something that we're gonna participate in, and I think there'll be tailwinds from that for sure. That's why we're doing it. Got it. Thanks a lot. I'll turn it back. The next question comes from Keith Mackey with RBC Capital Markets. Please go ahead. Hi, good morning. Maybe Tony, if we could just start out on working capital again. You mentioned that you're undergoing some working capital optimization initiatives. Can you maybe just give us a little bit more context on what those might be, and if they will have an impact potentially on that 30%-35% of revenue rate that you've historically been in? Yeah. Those are like, it's just a focus from the top on working capital. As we talked about in the last few quarters, we were unable to focus as much as we wanted on working capital optimization just because we were growing as much as we did, growing annualized revenue from CAD 1 billion to CAD 2 billion in just over four quarters. Really, to start, there's some blocking and tackling, triaging of the larger accounts, focusing on AR and streamlining the billing and collection methodology. There's some technology that we've employed there to marry our ERP, for example, to the customers' payables portals. That's from a technical perspective. There's also been some very focused hiring of capabilities to accelerate that on the AR and DSO side. On the DSI side, we are looking at inventory levels. We did have to buy more than we needed and carry higher inventories than we have historically to give us a buffer during the really challenging supply chain period that we've gone through over the last couple of years. We're not out of the woods yet, but we are getting a little bit more efficient in those carrying levels in terms of volumes. Is that gonna give us a breakout of that 30%-35%? I really don't know yet. You got to appreciate that when you're doing $2 billion of revenue and $2.1 billion on an annualized basis, any basis point improving in that 30%-35% metric is gonna pay dividends. I think you're gonna see a solid number there going forward and hopefully improvements. Can I add to that? Maybe just that the 30%-35% number that we throw out is a range that we've been in always other than significant downturns. It's, as long as things keep stable, the improvements will probably stay within that ratio or that percentage. Maybe we get to the lower side of it. Got it. Thanks for the comment. Now, Ken, one of your bigger customers is talking about doing more exploration in the Utica Shale. I think they're starting with an initial program, about 20 wells, which might be a rig. Can you just talk a little bit more about what you're seeing in that area, maybe in the context of your current US job mix, and what you think your capacity could be if we start to see a lot more activity in that area? Sure. Yeah. I mean, the customer you speak of, we've been in contact with as well. You know, obviously, it's early days, nothing's been awarded, but historically, we do a high percentage of their business, and so I'd be surprised if we don't participate in some way in that. As far as infrastructure and people in the area, you know, it's been a depressed market due to a lot of reasons, gas prices and takeaway issues primarily. It may be the area sees an uptick. We haven't noticed it yet. Our activity's been pretty constant up there. As far as capacity goes, I mean, we have a high level of capacity in the area. We have two facilities in the area that we have historically serviced the Marcellus and the Utica with. When we bought FMI back in 2010, 2009, that was their busy area. That was the reason that we bought them. It wasn't the Permian. The Permian is something we did after the fact as we saw attention shifting there. They were dominant in that market. Should that market get more active again, we will definitely be, and we already have the infrastructure and people to manage it. Okay, thanks. That's it for me. I'll turn it back. Thanks, Keith. The next question comes from John Gibson with BMO Capital Markets. Please go ahead. Good morning, all. Just had one. On market share, I know it jumps around quarter to quarter, but the job count figures you touched on in Q4 apply a jump next quarter. I mean, it's obviously up in Q3. Wondering if there's anything that's changed with you or your competitors that could allow for a sustained higher market share across either Canada or the U.S. in 2023. I mean, I think it's probably a lot of it is to do with customer mix, the customers we have getting busier. It's also a little bit to do with all the supply stuff and the people shortages that are going on. I mean, I don't like to brag too much about our people, but I can't think of an example where we've let people down. Now I'm gonna probably get a whole bunch of calls from customers now telling me things. As far as I know, we haven't let anyone down, we haven't missed any balls, and we've provided good service. Our customers that we're working for are getting busier and getting the rigs. Yeah, like, when the first quarter that I reported was in March this year for Q4, and I think we were kinda 21% of the US market, and today we're over 23%, or sorry, the North American market, and today we're over 23%. It's been a steady grind up. We're always working. But I will say that, you know, you talk about margin or the other. I've had some questions today about margin. You know, lately we've had to knowingly submit bids for some work for customers we were working with, that didn't meet the criteria that they wanted for low pricing. You know, we've lost a couple of pieces of business because we're just not willing to take what they're getting. Anybody who thinks that we're leaving money on the table or we should be getting a lot more, I mean, these are the kinds of examples that we're dealing with daily, where, you know, customers are telling us what they're willing to pay, and if we're willing to work for it, we will. There is a line where if we can't get proper returns, we will walk away. Great. Appreciate the color, and congrats on the quarter. Thank you. The next question comes from Josef Schachter with Schachter Energy Research. Please go ahead. Good morning, Ken and Tony. Congratulations on the great quarter and dividend increase. A lot of the questions have been answered. The one left I had was the international offshore business. You almost talked about it every quarter of the impact from onshore or offshore. Have you seen any more improvement in that in the most recent quarter in terms of business that you're booking for, you know, Q4 and going forward? Yeah, I think we're focused on the Proflow acquisition we did back earlier this year. One of the reasons for that is that offshore market is different than the land market in North America. There's only a couple of providers out there, both on drilling rigs and on production chem. I think that those companies print better overall numbers or margins and reflect better overall margins and numbers largely because of that space where they don't really have much competition. The two of them are able to get a much better return. That's why we wanna enter the market. Having said that, it's a tough road to get there. We continue to have slow, solid growth with the company that we acquired. Together, we've just submitted another big bid, so hopefully we can pick something up. That kind of business is hard to break into, and it's a long road to get there. On the drilling fluids side, you know, we've done some jackups over the years, but we don't do any of that floater business. That's just like international business. I think there's strong margins because there's fewer competitors. We'd like to get into it, but there's also big costs on the drilling fluids side anyway to getting into that space. On the production chem side, it's lower cost, more supply agreements once you figure out the problems, and then some intermittent servicing when there is an issue. We feel like it's if we're gonna get into one side or the other, the production chem's gonna be the one we're gonna have a better time with. Now, in terms of the area that it's working, is that mostly Gulf of Mexico, or is that also looking at the North Sea or, you know, offshore Brazil? How big of an, you know, of a place, you know, or format do they have right now in terms of markets or access? It's just the Gulf of Mexico. International business is a different animal, and that's, you know, we're taking steps there in the Middle East to try and gain some land business there first. I would suggest that unless it was a very good customer who had a very high level of confidence in us, it would be really tough to get anything offshore. That would be like a third step after we got offshore in the Gulf. Super. Okay. Ken, Tony, thanks very much, and congratulations again. Thank you, Josef. Thank you. Thank you. The next question comes from Michael Robertson with National Bank Financial. Please go ahead. Hey, good morning, gents. Congrats on a solid quarter, and thanks for taking my question. Just one for me at this point. You know, obviously, you guys have been focused on your sorta core markets given the supportive nature of that backdrop. Was wondering if there's any updates or if you're making any inroads in, you know, sorta nontraditional spaces, be it like cosmetics or what have you. Yeah. We have been looking at those opportunities. I'd say we've probably spent the last year doing deep dives in specific end markets that have included things like biosurfactants, personal care. We've taken a look at some of the chemistry behind carbon capture as well. What I'd say, Michael, is we are in information gathering mode, and that's starting to shift to a better appreciation of our divisional groups and our technology folks on what we can actually do. I think it's been a real eye-opener to find examples where we can use our chemistry, but we haven't seen any significant progress in terms of revenue generating abilities yet. There are a couple that we're gonna go down the path of, and this is like a multiyear journey where we'll start off organically and maybe in a few years, if we like one of those markets, you'll see something bigger. Cool. That's a interesting call or commentary. We'll keep an eye out for updates on that down the road. Again, appreciate you taking my question. I'll turn it back. Once again, if you have a question, please press star then one. The next question comes from Richard Evans with Mara River Capital Management. Please go ahead. Oh, Hi. I just wanted to follow up a little bit on the working capital side. You seem to be targeting 30%-35% working capital to sales. If we look at your biggest U.S. direct peer, they manage to run their business closer to sort of 20% to sales, which is, you know, quite a lot of cash. I'm just wondering why you feel you need to be sort of 10 points structurally higher on working capital to sales than they do. Yeah. Richard, I'd have to look at their specific numbers. What we're talking about has been our historical level. We have some great peers out there, and if you don't mind, I assume who you're talking about is probably ChampionX, is that right? Yep. Yeah, they're a great company. However, one of the things that's a little bit different about our two businesses is the end markets that we serve. Almost all of their chemistry gets sold into the production chemical end market. Ours, we've been on record in the past of saying, is approximately 50% drilling fluids and 50% production chemicals. As many of the analysts on this call know, the working capital requirements and the cash conversion cycle associated with the drilling fluids industry is much higher and much longer than the production chemical cash conversion cycle. That's the main reason, Richard. Okay. On the flip side, 'cause it's very important, 'cause what we're talking about is important, it's cash. On the flip side, the cash investment requirements, CapEx requirements, are much lower for the drilling fluids business than the production chemicals business. As Ken said earlier, that's what we're squarely focused on. Okay. Why is, for somebody less familiar with the industry, why is the working capital higher for drilling versus production? Yeah. Really simply, and again, that's the first question from every analyst when they start covering us. There's different reasons, but the main one is the following. We bring to a well site or a production chemical job, and we'll either get or we'll drop off a tote with a bunch of chemistry. We drop that off, and we bill the client immediately. We wait to collect. In drilling fluids, we continue to bring product to the well site as they're drilling the well and completing the well. That process can take a few weeks. It's only at the end of those few weeks that we sit down with the customer to reconcile exactly what was used. At that point, we're able to bill them. Okay. That's the main difference. Okay, great. Thanks for clearing that up. As there are no further questions in the queue, this concludes the question and answer session. I would like to turn the conference back over to Ken Zinger for any closing remarks. Thank you. With that, I'll wrap up this call by saying thank you to all of our customers and to our employees for helping us produce another record quarter. We're not only pleased with our current position in the market but also very optimistic about our future. We look forward to speaking with you all again during our Q4 "2022 update" in March of next year. Thanks to all for your time today. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.