Good morning. My name is Grant, and I'll be the conference operator today. At this time, I would like to welcome everyone to Pason Systems Inc. first quarter 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2. The contents of today's call are protected by copyright and may not be reproduced without the prior written consent of Pason Systems Inc. Please note the advisory is located at the end of the press release issued by Pason Systems yesterday, which describe the forward-looking information. Certain information about the company that is discussed on today's call may constitute forward-looking information. Additional information about Pason Systems, including the risk factors relevant to the company, can be found on its annual information form. Thank you. Ms. Boston, you may begin your conference. Thanks, Grant. Good morning, and thank you for attending Pason's 2022 first quarter conference call. I am joined on today's call by Jon Faber, our President and CEO. I'll start today's call with an overview of our financial performance in the first quarter. Jon will then provide a brief perspective on the outlook for the industry and for Pason, and we will then take questions. We're very proud of our first quarter results, which not only reflect a continuation of improved industry conditions, but also reflect our strong competitive positioning, significant operating leverage, and pristine balance sheet. As we look back to the first quarter of last year, we came into 2021 with recovering industry activity levels in most of our operating regions. Particularly in North America, we saw land drilling grow off the lows experienced in the third quarter of 2020. Since then, activity levels have continued to grow as we saw 57% improvements in average North American land rig counts in the first quarter of 2022 in comparison to the first quarter of 2021. Within that landscape, the company maintained its leading competitive position in North America and continued to benefit from improved pricing conditions in comparison to the challenging environment throughout the downturn. Accordingly, revenue per industry day in North America grew by 16% year-over-year from $720 in the first quarter of 2021 to $835 in the current quarter, representing the fourth consecutive quarter of sequential growth and a new record quarterly level for the company. This is also a result that is well ahead of the $738 generated during pre-pandemic activity levels in the first quarter of 2020. It is worth noting that revenue per industry day in North America will fluctuate with seasonality effects of drilling activity in Canada. Both revenue per industry day and reported revenue benefited from a strong winter drilling season in Canada in the first quarter. Pason generated consolidated revenue of CAD 74.5 million in Q1 of 2022, a 75% improvement over the first quarter of last year. North American revenue was CAD 62 million for the first quarter, a 79% improvement from the first quarter of last year, and a result that outpaced the improvement in underlying industry conditions. Activity levels in international end markets also improved, and revenue generated by the international business was CAD 10.7 million in the first quarter, a 51% improvement from the first quarter of 2021. Energy Toolbase, our emerging business in the solar and energy storage market, continues to make progress. This segment generated CAD 1.8 million in the first quarter of 2022, the highest quarterly level of revenue achieved for this segment and a 95% improvement from the level seen in the first quarter of 2021. Reported revenue for Energy Toolbase begins to incorporate revenue generated by controlled systems and related hardware sales. Pason generated CAD 33.4 million in consolidated adjusted EBITDA in the first quarter of 2022, a significant improvement from the CAD 13.2 million generated in the first quarter of last year, and a result that represents 44.8% of revenue. As the industry recovers and our outlook remains positive, we will continue to make investments and incur certain costs in anticipation of future revenue increases, primarily as it relates to equipment repairs and people. Further, we continue to grapple with difficulties in predicting timing on deliveries of capital equipment purchases and as a result, are remaining especially proactive with repairs of existing fleet and technology, which will impact adjusted EBITDA margins throughout the remainder of 2022. That said, when we compare the first quarter of 2022 to our results in the first quarter of 2020, prior to the drastic fall in activity levels, we are very proud of the fact that with 15% less North American land rigs, we have generated the same amount of revenue and adjusted EBITDA. Many of our operating costs remain fixed in nature, and our first quarter results demonstrate our operating leverage with 79% incremental adjusted EBITDA margins sequentially and 63% year-over-year. As we've previously communicated, incremental margins will fluctuate as the industry recovers and we incur certain costs in anticipation of future revenue increases. Further, as we return to pre-pandemic adjusted EBITDA margins, the seasonality effects of the Canadian drilling industry will impact adjusted EBITDA margins in the coming quarters like we've seen in prior years. As such, we expect that our first quarter adjusted EBITDA margins will be on the higher end of the expected range in the coming quarters. Net income attributable to Pason for the three months ended March 31, 2022 was CAD 18.6 million or CAD 0.23 per share, a significant increase from the CAD 4.3 million or CAD 0.05 per share generated in the first quarter of 2021. Our balance sheet remains strong and incredibly well-positioned with CAD 172 million in cash and cash equivalents at the end of the quarter and no interest-bearing debt. We continue to make investments in our core business to support increased levels of activity. In the first quarter of 2022, Pason spent CAD 4.5 million in capital expenditures relating to maintaining and refreshing our existing technology. Also, as revenue levels have increased, we've made corresponding investments in working capital while remaining diligently focused on maintaining strong collection trends. Further, in the first quarter, Pason collected a long time outstanding receivable from the IRS in the amount of CAD 12.5 million. Resulting free cash flow in the first quarter was CAD 23.6 million, a 157% improvement from the CAD 9.2 million generated in the first quarter of 2021. Pason returned CAD 8 million to shareholders through dividends and share repurchases during the first quarter, which reflected our increased quarterly dividend level of CAD 0.08 per share. In summary, we are very proud of our first quarter results, which reflect our leading market presence, our strong operating leverage through improving activity levels, and our pristine balance sheet. We continue to be in a position of excellent competitive and financial strength. I will now turn the call over to Jon for his comments on our outlook. Thank you, Celine. As Celine noted, our first quarter financial results reflected both the continuation of the growth in industry activity that we have seen since the industry bottomed in the third quarter of 2020, as well as Pason's continued strong competitive position. Pason's North American revenue per industry day of $835 in the quarter marked the first time in the company's history that this important metric broke through the $800 level. It is worth noting that both industry activity and revenue per industry day are favorably impacted by a higher proportion of drilling activity in Canada during the Canadian winter drilling season. We expect that activity will continue to grow in the U.S. and international markets in the coming quarters, while the second quarter will be seasonally weaker in Canada. Pason is well-positioned to participate in the industry's growth as customers increasingly look to utilize data to improve their operational performance through the use of automation and analytics technologies. Our confidence in continued industry growth in the short to medium term is rooted in a review of supply and demand fundamentals. Global oil demand has largely recovered to pre-pandemic levels. While there are growing concerns about weakening demand from COVID-19 lockdowns in China, high prevailing levels of inflation, and the potential impacts from central banks moving to raise interest rates, supply indicators continue to point to more significant shortages. Supply has to come from the inventory of previously produced oil sitting in storage, either in the form of refined products or crude oil awaiting refinement, from current production, from new production from wellbores that have already been drilled and which are awaiting completion, or from newly drilled wells. U.S. oil storage levels of crude and petroleum products are currently sitting at their lowest levels since the end of 2008. With 26 days of refinery demand cover, crude oil days of supply is down 20% from a year ago. The United States recently announced a plan to release up to 1 million barrels a day from the Strategic Petroleum Reserve for up to 6 months in response to elevated oil prices, putting further pressure on oil storage levels. If that plan were fully implemented, the Strategic Petroleum Reserve would be drawn down to its lowest level since 1984. Oil production in the United States remains approximately 10% below pre-pandemic levels. The inventory of drilled but uncompleted wells has now decreased every month for the past 21 consecutive months and is at the lowest level it has been in more than 8 years. While the U.S. land drilling rig count has increased by approximately 20% year to date, it remains approximately 25% below the 2019 average rig count. Supply and demand fundamentals are constructive for oil prices and drilling activity in the coming quarters. A significant supply response seems unlikely, given current challenges around the availability of labor, supply chain disruptions, and underinvestment in larger long-term development projects over the past five years. We believe that hydrocarbons will play an important role in helping meet the world's growing energy demand for many years, alongside the continued development of alternative and renewable technologies. In our solar and energy storage efforts, we are seeing revenue increases as the control system installations are commissioned and our pipeline of projects continues to grow. Across our business, we will make the necessary investments to position ourselves to realize future revenue gains. Our operating costs, most notably personnel and equipment repairs, will see increases as a result of anticipated further activity gains and prevailing inflation rates. We will invest in research and development efforts that drive continued market share and pricing improvements as we deliver additional value and functionality for customers. We continue to plan to spend approximately CAD 30 million in capital expenditures in 2022, though global supply chain shortages and disruptions are impacting delivery schedules. We will continue to evaluate our capital programs in the context of future opportunities to evolve our product and service offering while navigating continued supply chain challenges. We are pursuing opportunities to mitigate the impact of supply chain disruptions by strategically increasing our inventory of equipment components and parts further in advance of anticipated repairs and equipment builds. This will impact near-term working capital requirements while enabling us to be responsive to continued industry growth and to maintain the product and service advantages which underpin our leading competitive position. Our balance sheet remains strong and our free cash flow generation continues to improve. We will continue to allocate capital by making investments in maintaining our leadership position in our existing drilling related markets, positioning ourselves for future growth in new and growing markets, and returning capital to shareholders. We remain committed to returning capital to shareholders through our regular quarterly dividend, which we are maintaining at CAD 0.08 per share, and through share repurchases. We are focused on ensuring that Pason is an innovative, profitable, and responsible company. We would now be happy to take any questions you might have. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order that they are received. Should you wish to decline from the polling process, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Michael Storry-Robertson from National Bank Financial. Please go ahead. Hey, good morning, Jon and Celine. Congrats on another solid quarter here, and thanks for taking my question. Thanks, Mike. Jon, in your prepared remarks there, you just touched on the possibility of, you know, increasing inventory of equipment components to help navigate the supply chain disruption. Would you foresee that as likely becoming a sort of new normal as a buffer against, potential future disruptions? Or do you think once bottlenecks and availability issues moderate, you'd sort of revert to business as usual? Well, I think we'd revert as the supply chain situation normalized. I guess we'd have to see what that normalized environment looked like, right? What we're really talking about here is taking a longer period of time for our view of how much equipment we need to be ready to supply or through repair or new builds, and just kind of using a longer planning window. As the supply chain situation improves, we would shrink the planning window back to the historical time period we would have used. Got you. Do you sort of have a like a rough dollar value in mind as it would relate to, you know, your current business level? Yeah. I think we have a sense here that it's probably going to be in the order of, I'll call it initially CAD 10 million-CAD 15 million. The question of course, is when we can actually receive the parts that we order, right? How much will actually hit the balance sheet will be a function of the delivery schedules, which is tremendously difficult to forecast. It's not immediately clear exactly when that will hit, but that's kind of where we think we're sort of headed towards here. Got it. That's helpful color. Appreciate that. Switching gears, you often touch on what kind of rig count you're currently structured for. I appreciate that it's still a relatively small portion of the overall top line, but given the recent growth of the solar and energy storage segment, I was wondering if you could provide some similar color around, the current structure of that business. As it continues to grow, how much do you think you could push that with the existing structure and what level, I guess, you think you would, think about taking measures to increase capacity? Yeah. Interesting question, Mike. When we look at the core drilling related business, of course, we use an 18-24 month view of what the rig count might do to sort of plan what we need capacity-wise from an operating perspective, if you think about equipment and people primarily. Much of the business on the Energy Toolbase side or much of the capacity is technology related. We certainly have a growing operational team as we work to commission more projects. I would say it's probably a little bit early for us to think about, sort of a forecast for the overall industry in informing the capacity levels. The capacity levels are more informed by the growth we're seeing, right? With that control system business, the growth is gonna be a function of the installed base of energy storage assets that are out there. Part of what we're doing in that business is helping get more energy storage assets out there and layering our control systems on top of that. It's so early stage in that industry and in that business that it's not really a function of what the overall industry is doing as much as our growth rate that informs capacity questions. Got it. That's a helpful way of thinking about it. All right. Appreciate you taking my questions. I'll turn it back and jump in the queue. Thanks. Your next question comes from Keith Mackey from RBC Capital Markets. Please go ahead. Hey, thanks, and good morning. Morning, Keith. Morning. Yeah. Celine, I like how you pointed out that Q1 essentially matched the first quarter of 2020 from, you know, certainly from a revenue and EBITDA standpoint. I know there's been some differences in the mix between the Canadian and U.S. rig count across those two quarters, b ut what else is there that might maybe suggest the underlying EBITDA generation potential of the business, the business has changed versus, you know, versus two years ago? Yeah, good question, Keith. I think the key driver is a couple things. I think if you think about top-line revenue trend of today, we've seen significant improvements over the last few years. We've talked a little bit about the fact that a lot of that is U.S. market share driven, and to the point where we've achieved record market share levels for the company, and we've been able to sustain those. I think from a cost structure perspective, too, if you look at the difference between the first quarter of 2020 and the first quarter of 2022, thinking back to the first quarter of 2020, although it was a reflection of higher activity levels. Even before the news of COVID-19 started spreading more widely, I think there was lots of uncertainty around kind of near-term outlook for the industry, with some talks around some pricing wars on Russia and OPEC+. I think within that landscape, we were already kind of in a tightening of cost structure scenario, where I think in contrast, in this quarter, we're looking at kind of building cost-based mode for a more positive outlook. Which, when you think about it in that way, it actually makes it more impressive that we're back to pre-pandemic margins in this context. Got it. How about the international margins in that context? Gross margins in that segment pretty strong, this quarter. How should we be thinking about that going forward? Yeah, the international business is, as I say, the cost structure, we were able to take some costs out of there as we went through the pandemic. It, while we will see cost increases come back as a result of activity continuing to increase in most of those international markets, I don't think there's anything abnormal that I would sort of point to as any expectation other than regular additions to the cost as the industry or the revenue side grows. Got it. One final one. Certainly a strong cash balance and have had so for quite some time. With industry activity improving, margins expanding, you know, when maybe does cash build take a backseat to some other uses of cash, whether it be increased shareholder returns, acquisition, organic growth, or other? Well, if I can change your question maybe a little bit, Keith. Cash build isn't a priority. I think cash build is a function of your ability to execute on ideas you have in a specific time, right? When you look at the first priority for capital allocation is always, first and foremost, to make sure that the existing drilling-related business maximizes its performance in the sphere of opportunity that it has, right? I think in that area, we've probably been challenged to make the investments we would want to by some of these supply chain concerns. We'll make some investments both on the inventory side to try to address some of those. Some of our aspirations on kind of new equipment builds have probably been slower than we might have hoped as a result of the supply chain side. We've always sort of said if we saw opportunities, either organically or inorganically, to add value to shareholders, we would look at those. The timing of those and both the identification and the pursuit of those is always a little bit uncertain, right? There's always a bit of a cash build effect while you're looking at opportunities. We continue to prioritize return to shareholders, both through the regular dividend and through share repurchases, albeit at a lower percentage of overall Free Cash Flow than historically. We would've talked about this, I think, in the last few quarters, with a view towards having capital available for pursuing opportunities. Got it. Maybe just one follow-up on that, if I were to ask it a slightly different way. Do you have a minimum cash balance in mind? Or is it, as you say, just an output of how the business is going? Well, we would have a minimum cash balance in mind if the business didn't change in any way, shape, or form. When you're looking at opportunities to do things, that may change the profile of the business, right? I think historically, we've said for the business today as it is, we believe it should be a net cash business because there's very significant operating leverage, and it's probably somewhere in the order of CAD 50 million-CAD 75 million that you would want for the existing business to withstand the volatility of the industry. Now, beyond that, it's a question of what is the profile of the business in terms of what's the appropriate capital structure. Perfect. Okay. Thanks very much. That's it for me. Good. Thanks, Keith. Your next question comes from Cole Pereira from Stifel. Please go ahead. Hi. Good morning, everyone. Celine, you had some good commentary on the gross margin front in terms of having to be more proactive with R&M. I'm just trying to figure out between that inflation, I mean, was that much of a factor in Q1 results? Or, say, if we were at similar activity levels later in the year, are we gonna see some degradation versus Q1? Yeah, it's a good question, Cole. I mean, we've said in recent quarters we will be incurring more costs, and I mean, particularly as it relates to repairs. We did see repair costs in the first quarter, but I would say probably not to the extent that we were hoping, and some of that's just the difficulty of timing predictability on repair costs. T hose are impacted similarly to capital expenditures by supply chain challenges that we're seeing across all sectors. So there will be some catch-up in the coming quarters on repair costs. I mean, what I'll say is it's probably hard to envision that we'll match first quarter margins in the next couple quarters, and then especially when you layer on the seasonality effects of the Canadian business as well. Okay. Perfect. That's helpful. Thanks. Some commentary around the larger revenue number from pricing gains, product adoption, market share gains or maintenance. I'm just wondering, can you sort of rank those in order of magnitude, or was it kind of, fairly equal across the board? It's always a function of all of those. I would say the bigger driver likely came from what we would think of as kind of revenue per EDR day, more so than market share, if you think about this quarter. Like, clearly the market share has gotten to the highest level in the company's history, and we've been able to consolidate and hold on to those gains. It's probably a function more of a more favorable pricing environment, but also a more favorable adoption environment. One of the things we see in significant downturns is that people will get by with a little bit less equipment, and we sort of get a re-adoption effect on some of the existing equipment, in addition to the adoption of new products. I'd say it's probably been more a function of you know, both a more favorable pricing environment and an adoption environment as things get better. Okay, great. That's helpful. Thanks. Coming back to some of the comments on supply chains and labor, we've obviously heard this from a number of your peers, and I mean, the general message seems to be that, you know, it might moderate growth, but it's not going to fully stop it. I mean, is that sort of consistent with how you're thinking about your business? I think that's very consistent with how we think about it. In fact, the greatest moderator today feels like it might be the labor for some of our customers, right? Equipment supply chain, we probably have a different challenge than some of our customers simply because we have a competition for much more technology types of equipment and components. I would say that the overall industry growth rate is moderated at this point, I think by the labor availability, particularly for some of our customers. Okay, perfect. That's all for me. Thanks. I'll turn it back. Yeah, thanks, Cole. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by one. Your next question comes from John Gibson from BMO Capital Markets. Please go ahead. Morning, Jon and Celine. Congrats on the strong quarter. Thanks, Jon. Just on your revenue per day number, can you maybe quantify how much of the increase is due to pricing increases versus say, market share or product adoption? Yeah. I think I would just reference back to the answer I just provided, Cole, that probably a little bit more came from the things that drive revenue per day, kind of both a more favorable pricing and adoption environment, more so than market share in this quarter. We've sort of held on to the market share gains we've had, but we're probably a little bit flatter on the market share side and a little more coming from pricing and adoption. Okay, great. I'm gonna stick with pricing here. I n previous quarters, you know, kind of spoke to it still being below pre-pandemic levels. Where are we at now, relative to pre-pandemic or even relative to prior peak activity levels? It's always a little bit tricky to say because you're looking at sort of the realized price you're getting and the number of pieces of equipment that people are taking in. That's really how we think about the revenue per day, more so than independently, you know, versus list price. Clearly, the pricing environment has become more favorable, and so we've been able to get, back to closer prices than we would've seen before, but it's always a function of both of those. Got it. Sorry to keep harping on this, we're hearing from some of your drilling peers that they can push pricing from here despite, you know, some pretty significant increases lately. Is this also the case for Pason? Well, it's never been the case for us, Jon, that we look to push it as far as we can because of the environment, right? We've always tried to be quite disciplined, both in terms of prices going up and prices going down, and we've looked more so to deliver additional benefits and features for customers. I do think all supply or service sectors, and frankly probably across the entire economy, is gonna have to look to see prices go higher as a result of just prevailing inflation, right? The cost of business is going higher. I don't think we would look to sort of exploit an opportunity, more so than keep pace with the, what's going on inflation-wise, and then deliver additional features and functionality for customers for more price. Okay. Fair enough. Congrats again on the great quarter. I'll turn it back. Thanks, Jon. There are no further questions at this time. Please proceed. Thanks so much. I appreciate you taking the time to join our call this morning. As always, we appreciate your interest and your support. If you have any further questions, feel free to reach out to Celine or myself, and otherwise, we'll look forward to speaking to you after the second quarter. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.