Ladies and gentlemen, thank you for standing by and welcome to the KLX Energy Services Fourth Quarter 2019 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Ryan Tyler, Vice President, Corporate Development, Financial Planning and Analysis. Thank you. Please go ahead sir.

Thank you, Shannon. Good morning and thank you for joining us today. We are here to discuss KLX Energy Services financial results for the fourth quarter ended January 31, 2020. For comparative purposes, we have presented our financial results adjusted to exclude costs associated with the company's major downsizing program, new product service line introduction and related cost. These costs are collectively referred to as costs as defined. The company's earnings news release, which was issued earlier this morning, presents our results. If you haven't received it, you'll find a copy on our website. We will begin with remarks from Amin Khoury, Chairman and Chief Executive Officer of KLX Energy Services; also on the call this morning is Tom McCaffrey, Senior Vice President and Chief Financial Officer. For today's call, we have prepared a few slides to help you follow our discussion. You can find our presentation on the Investor Relations page of the KLX Energy Services website at klxenergy.com. In addition, copies of the slides are posted on our website for you to refer to. Before we begin, we have some additional information to cover. Any forward-looking statements that we make are subject to risks and uncertainties and as always in our prepared remarks and our responses to your questions you will rely on the Safe Harbor exemptions under the various securities acts and our Safe Harbor statements and the company's filings with the Securities and Exchange Commission. We will address questions following our prepared remarks, at that time the operator will provide Q&A instructions. Now, I will turn the call over to Amin Khoury.

Thanks, Ryan and good morning everyone. Thank you for joining us today to discuss our fourth quarter and full year financial results. I’d like to adhere from the script for a couple of moments given what’s happened over the weekend and do a quick analysis or review of where we were earlier in the year, where we are now and how the outlook may have changed here. So, during the first half of the year, we were operating at about $622 million annualized revenue run rate with an adjusted EBITDA margin of about 19% that’s after all corporate cost allocations. By the fourth quarter of this year, revenues of $99 million roughly, represented an annualized run rate of about $395 million. That’s about a 38% lower annualized run rate, and more importantly, our first half EBITDA margin of 19% adjusted EBITDA margin decreased to about 1.5% of revenues. So, first half versus where we were running in the fourth quarter dramatically reduced activity. We have a business which is gaining market share. It’s gaining new customers. It’s gaining share of customer spend with solid businesses and essentially all of the important Shale Plays, but which cannot perform well at Q4 E&P activity levels. Management is doing what we can in this environment. We’ve reduced headcount by 360 people or about 22% and we’ve attacked cost in every aspect of our business. We substantially strengthened and broadened our service offerings in each of our geo regions and we expect to be able to continue doing so, but at current activity levels industry consolidation is an absolute imperative. The announcement over the weekend that the [Saudis] will cut prices and increase output to gain share will not only bring Russia to its [knees] it will also bring the U.S. oil and gas…

Thank you, Amin. I will now turn the call over to the operator for the Q&A portion of today's call. Operator will provide instructions on how to ask questions. Shannon?

[Operator Instructions] Our first question comes from John Watson of Simmons Energy. Your line is open.

Thank you. Good morning.

Good morning, John.

I appreciate it’s an increasingly fluid situation, but I was hoping you could speak to your approach to costs and how you might be able to further cut costs in 2020 given the macro backdrop?

Well, I think you’re asking us to discuss plans that we haven’t yet developed this morning based on activity over the weekend. Look, we have attacked cost in every part of our business. From the end of the second quarter, we have reduced our headcount by 360 people or 22%. Now, we’ve added a certain number of employees to implement our coil tubing strategy and we’re currently in the process of rolling out the last of our five new coil tubing spreads. And at the heart of our strategy is to pull through our asset light services based on the coil tubing assets. So, there are many coil tubing companies, but none of them go to market with a range of asset light services and thereby pulling through a higher margin services and there are lots of companies moms and pops that offer some or many of the services which we offer in specific geo regions, but they don’t have the capital or position to be able to offer both coil tubing spreads – services and the pull through that goes along with this. We are implementing our strategy. It’s a strategy that we absolutely know works. Question is, what will the level of demand be? So, we have really built solid businesses in each of the Shale regions, which we serve, and we have been gaining share consistently adding customers and gaining share of customer spend. So, we know that our strategy works, but in the current demand environment, current meaning the fourth quarter demand environment there’s not much we can do really to further reduce costs. We had cut cost to the point where we could offer the services in quality, fashion and with environmental and help environmental and safety concerns at a minimum level, meaning that we have to maintain a certain level of safety and a certain level of quality and to do so, we’re basically near a cash flow breakeven. That’s where we were in the fourth quarter. If demand further declines, which it appears that it will based on what’s happened over the weekend, we’ll be developing further plans to further reduce headcounts and capacity in the near term to deal with what is very likely to be a significant reduction, further reduction in E&P activity and investment in the near coming months.

Okay. Great. Thank you for that. I appreciate it. That’s a difficult situation. On a similar front and understanding it’s subject to change, but can you help us think about the 2020 CapEx budget?

Well it’s going to be dramatically reduced as compared to the 2020 budget. You’re talking about our next fiscal year. So, our next fiscal year CapEx will be dramatically reduced from the 70 million or so that we invested in CapEx this year. I don’t want to actually give a number this morning, because I think it’s all subject to change and we will be looking very, very hard at every single CapEx requests.

Okay. Great. I appreciate that. It is not an easy question. Thanks for taking a [stab] at both of mine. I’ll turn it back.

Thank you. And I’m currently showing no further questions at this time. I’d like to turn the call back over to Ryan Tyler for closing remarks.

Thank you, Shannon and thank you to everyone for participating on this morning’s call. We look forward to speaking to you again next quarter. Bye.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.