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Keane Group, Inc. (NYSE:FRAC)
Q1 2019 Earnings Call
May 7, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the Keane Group first quarter 2019 conference call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

For opening remarks and introductions, I will turn the call over to Kevin McDonald, Executive Vice President and General Counsel for Keane Group.

Kevin McDonald -- Executive Vice President and General Counsel

Thank you, Operator and good morning, everyone. Joining me today are Robert Drummond, Chief Executive Officer, and Greg Powell, President and Chief Financial Officer. As a reminder, some of our comments today will include forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, reflecting Keane's views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements.

The company's actual results could differ materially due to several important factors, including those risks and uncertainties described in the company's Form 10-K for the year ended December 31st, 2018, recent current reports on Form 8-K and others Securities and Exchange Commission filings, many of which are beyond the company's control.

We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Additionally, we may refer to non-GAAP measures, including adjusted EBTIDA and adjusted gross profit during the call. Please refer to our public filings and disclosures, including our earnings press release for definitions of our non-GAAP measures and the reconciliation of these measures to the directly comparable GAAP measures.

With that, I turn the call over to Robert.

Robert Drummond -- Chief Executive Officer

Thank you, Kevin and thanks, everyone for joining us on the call this morning. I'd like to start by highlighting several of our key accomplishments from the quarter. First, I'm pleased with our financial performance reflecting efficiency-driven top-tier profitability on a per-fleet basis. We generated first quarter revenue of $422 million above the upper end of our guidance and adjusted EBITDA of $64 million at the high-end of our guidance. These results were primarily driven by the resolution of new business opportunities and effective cost control.

Second, we stayed close to our customers and made strategic investments to keep a portion of our idle fleet staffed and market-ready. During the first quarter, we were awarded a new fleet under a dedicated agreement with an existing customer in the SCOOP/STACK. We are happy to help a partner and excited to reenter this key basin, where we expect to jointly drive improved efficiency.

Third, we continue to run our business in a safe and efficient manner while staying responsive to and focused on our customers. This includes controlling costs across our operations and support structure while maintaining the investments required to keep our fleet fresh. Included in this is innovation through technology and techniques to drive continuous improvement.

We also remain laser-focused on safety, a key differentiator for Keane, which enables us to operate for the caliber of customers we partner with and honors our commitment to our employees. We're off to a great start this year. We are managing risk and the wellbeing of our stakeholders even better than our industry-leading performance in 2018.

Fourth, our dedicated contacting model remains intact and continues to play out as designed. We've longed discussed how our dedicated model is a key differentiator and the benefits it affords to both parties. We believe these benefits have become even more visible as we're now seeing the relative performance delineation for Keane versus the market, including top-tier profitability per fleet.

Our partnerships enable improved completion efficiency, as demonstrated by our first quarter performance, where our combined frack and wireline completion crews improved efficiency on a sequential basis. We are pleased with our current customer portfolio. We have been proactive to secure committed work and provide a platform for executing on safety, efficiency, and continuous improvement.

As part of our efforts to constantly evaluate additional partners that are a good fit for our dedicated model, we're excited to have recently brought on Richard Vaclavik as Chief Commercial Officer of Keane. Richard is an industry veteran, having spent more than three decades at Halliburton and brings invaluable experience and customer relationships to our team.

Finally, we continue to believe in the industrial logic of consolidation. We'll remain opportunistic in pursuing additional strategic consolidation while maintaining a disciplined approach on value, fit, and maintaining the strength of our balance sheet.

Turning now to an operational update, last quarter, we discussed plans to enter the DJ Basin with a newly developed whisper fleet that meets local noise regulation. Customer interest remains high and we are currently taking delivery and mobilizing assets to the region. In the meantime, Colorado's regulatory environment is evolving, creating some uncertainty in the region. We believe our whisper fleet will provide Keane with an opportunity to enter a new basin with world-class technology and we are in the process of evaluating commercial opportunities for this asset. This should provide an earnings momentum lever for the back-half of this year.

Looking ahead, our strong first quarter results are providing momentum as we head into the second quarter as producer budgets have reset, winter has passed, and many of the industry's transitory issues are beginning to clear up.

We echo recent comments about others that pricing for completion services appears to be stabilizing. We describe this to fewer manned fleets competing for work as the industry continues to idle fleets. This is also due in part to equipment attrition and the impact of continued increases in job intensity. Additionally, we've seen an improvement in macro conditions across the industry, including a recovery in West Texas Intermediate Oil Prices.

While we're encouraged by this backdrop, we continue to plan our business under the assumption of a relatively range-bound environment. As we sit here today, we have 23 fleets deployed with most of them committed for full utilization through at least 2019, providing us with visibility and a strong baseload of cashflow.

Additionally, we have idle market-ready frack fleets providing us the ability to quickly capitalize on the upside opportunities as they arise without any additional investment. In a scenario where these incremental fleets are not deployed, we reiterate our expectations to generate more than $100 million of free cash flow in 2019 and remain committed to creating shareholder value by effectively managing our capital allocation.

With that, I'd now like to turn the call over to Greg to discuss the financials.

Greg Powell -- President and Chief Financial Officer

Thanks, Robert. Turning to our financial performance for the first quarter, revenue totaled $421.7 million, a decrease of approximately 13% compared to the fourth quarter and slightly above the high-end of our guidance, driven by the addition of a new fleet during the quarter and improvements in operating efficiencies on our best-performing fleet.

Within our completion services segment, revenue totaled $412 million. The sequential decline of 13% was driven by the factors we discussed in our guidance last quarter, including disruptions from severe weather, delays in pad readiness, and reductions in net pricing. I point out that revenue is influenced by job mix and we continue to be pleased with our top tier profitability performance on a per fleet basis. In addition, the first quarter included an approximately $20 million revenue impact associated with direct sourcing of sand by certain customers.

For the first quarter, we operated at 23 total fleets, including the addition of a new dedicated agreement with an existing customer during the quarter and when factoring in whitespace, we had the equivalent of 21 full utilized fleets.

On a fully utilized per fleet basis, annualized adjusted gross profit was $16.2 million compared to $20.9 million in the fourth quarter and in line with our guidance of between $15 million and $17 million. Revenues for our other services segment, which included our cementing operations, totaled $9.7 million for the first quarter of 2019 compared to revenue of $11.4 million in the fourth quarter of 2018.

Total company adjusted EBITDA in the fourth quarter was $64.1 million, at the high-end of our guidance range, and compared to $88.4 million in the prior quarter. I'd remind you that the first quarter results included approximately $10 million of investment in labor and maintenance costs associated with maintaining several market-ready fleets. We've benefited from this investment as we were awarded a new fleet deployment, providing momentum to our second quarter earnings and a majority of the remaining costs have been eliminated to align with the current market conditions.

Adjusted gross profit totaled $84 million for the first quarter compared to $113.9 million in the prior quarter. Adjusted EBITDA for the first quarter includes adjustments of approximately $8.1 million accounted for in SG&A, driven by $4 million of non-cash stock compensation expense and approximately $4 million related to the resolution of a legal matter from 2015.

Selling, general, and administrative expenses totaled $27.9 million for the first quarter compared to $28.5 million in the prior quarter. Excluding one-time items, SG&A totaled $19.8 million compared to $23.2 million in the fourth quarter of 2018. The higher SG&A during the fourth quarter reflects investments in technology.

Turning to the balance sheet, we remain committed to maintaining a high-quality balance sheet and liquidity profile. We exited the first qui with cash equivalence of $83.7 million compared to $80.2 million at the end of the fourth quarter. We generated approximately $58.4 million of operating cash flow for the quarter.

Capital expenditures during the first quarter of 2019 totaled approximately $50 million, driven by maintenance capex and investments in technology. For 2019, our capex budget is front-end-weighted as we invest to maximize benefits from strategic initiatives.

Total debt at the end of the first quarter was approximately $340 million net of unamortized deferred charges and excluding capital lease obligations, largely unchanged versus the fourth quarter. Net debt at the end of the first quarter was approximately $257 million, resulting in a leverage ratio of approximately 0.7 times on a trailing 12-month basis.

We exited the year with total available liquidity of $255 million, which includes cash and availability under an asset-based credit facility. We exited the first quarter with $100 million in availability in our buyback program coming off more than $105 million of buybacks completed in 2018. We did not make any additional stock repurchases during the first quarter as we continued to balance our capital allocation.

Turning now to our second quarter guidance -- for the second quarter, assets will be comprised of 23 deployed fleets. Based on our current outlook and the remaining challenges to a portion of the frack calendar, we expect to achieve utilization of approximately 90%, resulting in the equivalent of 21 fully utilized fleets to the quarter. On this pace, total revenue for the second quarter is expected to range between $400 million and $420 million, which is driven by job mix, including self-sourcing of sand rather than activity, which we expect to increase.

On our last earnings call, we shared our expectation for approximately $20 million of EBTIDA tailwinds exiting the first quarter including $10 million related to strategic investments and market ready and staff capacity and $10 million from an abatement of activity disruption. During the quarter, our strategic investment paid off from a commercial perspective and we added a dedicated fleet while further reducing our cost.

With regards to the $10 million of whitespace in our frack calendar, we believe this will continue to impact our results in the second quarter. However, we view this as transitory and should improve over the near-term. We remain confident that certain of our customers will be successful in eliminating these bottlenecks resulting in earnings momentum over the coming quarters.

We expect annualized adjusted gross profit for the second quarter to range between $17 million and $19 million on a fully utilized per fleet basis. Layering in approximately $20 million at G&A, this would imply adjusted EBITDA between approximately $70 million and $80 million.

For our other services segment, which is made up of our cementing business, we expect second quarter revenue to be in the range of $6 million to $7 million on gross margins of approximately 10%. Given developments in the market and consistent with what we've said in the past, we've recently decided to idle cementing activity in one operating region while remaining focused where we realize more constructive economics. We'll continue to monitor the market and maintain flexibility to restart idle operations.

In summary, we're pleased with our first quarter performance. We expect earnings growth in the second quarter, including sequential adjusted EBITDA growth of 17% at the midpoint of out guidance and reiterate our expectation to generate over $100 million of free cashflow in 2019. I'd now like to turn the call back over to Robert for some final remarks.

Robert Drummond -- Chief Executive Officer

Before we open up the line for Q&A, I want to reiterate four points. First, we delivered another strong quarter with adjusted EBITDA at the high-end of our guidance. Our dedicated model of partnering with high-quality customers is delivering differentiated performance and visibility, while our unrelenting focus on safety ensures the wellbeing of our employees and customers.

Second, we're encouraged by the recent improvement in commodity prices and are well-positioned to grow as the market permits. We'll continue to stay nimble and responsive to market opportunities. Third, we are well-positioned to deliver further earnings upside to our base of top-tier profitability via improvements in the frack calendar and dry powder associated with our six idle market-ready fleets which are deployable with no additional investment. I point out that our current plan for 2019 does not include any contributions from these idle fleets.

Finally, we're committed to generating leading returns, maintaining a strong balance sheet, and allocating capital in a manner that balances growth opportunities with free cash flow. As such, we continue to expect more than $100 million of free cash flow generation in 2019.

With that, we'd like to open up the line for Q&A. Operator?

Questions and Answers:

Operator

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. Once again, that is *1 to register questions at this time.

Our first question is coming from Connor Lynagh of Morgan Stanley. Please go ahead with your question.

Connor Lynagh -- Morgan Stanley -- Analyst

Thanks. Good morning, guys. So, I wanted to confirm some of the comments you made on pricing trends. So, we saw stabilization in the quarter, I think. Last quarter, you said that you'd be pretty proactive in marketing to the market in the fourth quarter. So, is there any continued effect in the second quarter from lowered pricing or is the change in revenue purely job mix?

Robert Drummond -- Chief Executive Officer

Good question, Connor. As we stated last quarter, we want to be proactive in the latter part of Q4 and throughout Q1 in order to secure the work with our customer partners throughout the whole year of 2019. So, we set the pricing, the impact of that pricing. We called it out as $25 million in Q1 and about $5 million in Q4. It put us in a position for part of our book being set for 2019. We like being in that position. If you ask me about the market, the spot market, which we participate somewhat less.

I would say that that market, like many others have said, it's bottomed out. It gives us a bit of a playing field to use our dry powder as we get into the second half of this year to look for opportunities where we may place some fleets that are around our economic hurdles. No further impact in pricing expected from us. As far as the impact to Q1, most of that is being called out in the whitespace area.

Connor Lynagh -- Morgan Stanley -- Analyst

Makes sense. So, the market is stabilized now. Would you say the opportunities -- obviously, you guys are less involved as a stop market, but would you expect to see pricing rise there or do you think there's going to be an activity rebound? Broadly speaking, what are your thoughts on the market this year?

Robert Drummond -- Chief Executive Officer

You need some sort of fluctuation in activity to move price one way or the other, typically. I would say what's occurred in the market, I think, is a number of competitors like us have idle fleets that have taken some rating capacity off the market, which is a positive and probably, the resulting factor has been the stabilization. As far as an increase, perhaps it's going to take an increase in overall activity related to the oil price environment, where recount actually goes up a bit. It's hard to predict that. It would be difficult to make a living in that area predicting that, but you would say the operator's cash flows are supported by the increase in oil price.

What they end up doing in the second half of the year with that is yet to be determined, but I would say generally, optimistically, trending upwards would be what I would say, but we don't participate in it as routinely and as day to day. We cannot reiterate that us taking the actions that we took in Q1 put us in an excellent position to be able to project $100 million in free cash flow that we're still standing behind as we go in the middle of Q2 right now.

Connor Lynagh -- Morgan Stanley -- Analyst

There's probably a joke in there somewhere about making a living predicting these things, but I'll leave that and check back.

Robert Drummond -- Chief Executive Officer

Thanks, Connor.

Operator

Thank you. Our next question is coming from John Daniel of Simmons & Co. Please go ahead.

John Daniel -- Simmons Energy -- Analyst

Hey, guys. Can you just remind me what portion of the fleets are dedicated and then the customers that are dedicated, what are telling you for Q4? How do you manage that if they're dedicated? Do you expect a slowdown? I know it's a long way's off, but I'm just trying to get a sense for how you'll manage should we slow down.

Robert Drummond -- Chief Executive Officer

So, John, what we've said in the past is that a majority of our 23 deployed fleets are dedicated. I think the customer base that we operate with has been one that's very clear to use about what our plans were going to be, even in Q4 if last year as they rejected it in 2019. So, they haven't wavered from that. I would argue that they would probably stick to that plan pretty well. As we get into Q4, though, the holiday impact is out there and it's variable and it's difficult to predict.

So, I think it depends a little bit upon what the macro and oil price is doing at that particular time and on the frack efficiency and how well we consume the inventory. If you get toward the end of the year and they're at the end of their inventory, there will be a decision point at that point. I think our current guidance would say we would expect to see a slight typical holiday slowdown in Q4, but nothing major and nothing that is guided at this point by anybody that I know of.

John Daniel -- Simmons Energy -- Analyst

Last one for me on the other services, just how you are approaching that, the other areas where you operate and having to redeploy assets, consolidated within that segment, your thoughts on where you take that from there.

Robert Drummond -- Chief Executive Officer

We mentioned a bit on our last call that we were looking at our cementing business, for example. During the latter part of Q1, we took the position to idle our cementing business -- I mean, idle it. We idled all of the pump units there. The reason we did it was similar because the macro there was a little bit different than what we had been planning.

From a margin perspective, we were able to improve our Q2 margin protections by getting rid of the area that was delivering losses, essentially. That's an example of deployment. Otherwise, I would say we still see the benefit, the industrial logic around consolidating this fragmented space that we work in.

So, they're still very solid. We kind of believe that we've had typically and get into an environment that we're kind of projecting that relatively flat from where they're at right now and through the years, the ability for individual companies to differentiate on profitability and overall performance enables it to be better evaluated and perhaps that gives you a scenario where the value of the synergies become more apparent and at a one-plus-one of a combo can be greater than two. We feel like that's still part of the way we think about it.

John Daniel -- Simmons Energy -- Analyst

Safe to say pressure pumping will still be the focal point from M&A opposed to wireline or cementing?

Robert Drummond -- Chief Executive Officer

Yes. We like being very focused in US land in the completion space. We do like the pairing of our wireline with our frack fleets because statistically, it's proven that we're much more efficient significantly so, statistically, when we pair ourselves together. So, sticking to our strengths and more or less focused in that area, we think it's a good place to be, especially with the outlook as positive as it is, we think, and the oil price improvement, the space that we are in is a space that the globe is going to have to go to for production increases in the future.

We like where we re, especially the fact that we have a customer base that allows us to protect the balance sheet and keep our fleet fresh and ready to go with six fleets in our mix today that we can deploy with no capex investment. It gives us a chance to take advantage of whatever macro upside occurs, whether it be in the latter half of this year or early in 2020.

John Daniel -- Simmons Energy -- Analyst

Okay. Appreciate your time, guys. Thank you.

Operator

Thank you. Our next question is coming from Tommy Moll of Stephens. Please go ahead.

Tommy Moll -- Stephens -- Analyst

Good morning. Thanks for taking my questions. I wanted to ask about the capex you have earmarked for some strategic initiatives, particularly in terms of digital and down hole. Any more details or updates you could offer there?

Greg Powell -- President and Chief Financial Officer

So, the first comment I'd make is that capex is front end-weighted. So, the capex plan for the year of $140 million, which we reiterated in the release, $100 million of that is maintenance capex and $40 million is strategic. Of that $40 million, we probably spent about $25 million in the first quarter and we'll spend $90 million of the $140 million in the first half and then $50 million in the second half. That's just so we can get on these initiatives earlier in the year and maximize the returns. I'd say it's consistent with what we've said in the past.

Our technology strategy is around three legs of the stool. It's around digital. It's around surface technology and down hole. So, a piece of that $40 million is the whisper fleet we put out in the first quarter. There are other well-side efficiency investments we're making on articulating arms to speed up the transition time between well heads and then some additional investments that we're proving out that are proprietary, but they're all around either driving more efficiency, more pump time minutes in a day or reducing our cost to deliver service.

Tommy Moll -- Stephens -- Analyst

Any idea when we may get more detail on some of the proprietary investments? We don't want to go too far down that road today, but when should we expect to learn more from you about how that's going?

Greg Powell -- President and Chief Financial Officer

I think we'll share it over time. We're on this kind of two to three-year journey to take out, as I said before, 20% to 30% of our operating cost. It's going to be ratable as we go through that process. As soon as we have things we can share that don't jeopardize our competitive situation, we'll share with you guys in the right form.

Tommy Moll -- Stephens -- Analyst

Thanks, Greg. I wanted to follow-up on the level of interest you have in the DJ. Could you characterize for us what the dynamics are in that basin just from a competitive standpoint, how far along you are in your customer conversations? Most likely you go in with an existing customer, a new customer, anything you can share, and maybe also in terms of timing when we might hear an update from you.

Robert Drummond -- Chief Executive Officer

Good question, Tommy. Obviously, with recent regulatory evolution in Colorado, maybe it introduces a little bit of uncertainty if the customers work through that. The customer interest for us remains very high. We're currently deploying that fleet into the region now with an experienced crew. We've had some recent marketing customer events in Denver because you can imagine the customer is getting ready to make a change from a vendor he's probably already pretty well happy with. It's important he can kind of touch the assets and make people look into the local management.

So, that's a process we're going through right now. We're very encouraged. I would say it's a second half of the year event and I would point out that in our current forecast, our run rate for the second half of the year, we don't have any of that in there, just to be conservative. We're happy with the fleet. This is new technology and it's exciting. We're looking forward to internet basin and I feel like we're walking into a bit of welcome arms, just they're a little cautious as they sort out the changes that are occurring in the market there.

Operator

Once again, ladies and gentlemen, if you do have a question, you may press *1 on your telephone keypad at this time. Our next question is coming from Mark Bianchi of Cowen and Company. Please go ahead.

Marc Bianchi -- Cowen and Company -- Analyst

Thank you. First, I wanted to ask about this additional $10 million of tailwind that you guys have been talking about. It sounded like during the first quarter, this was kind of a pad readiness and weather issue if I have it right. Now, it sounds like maybe the pad readiness is continuing here into the second quarter. I'm curious if you can talk about in a little more detail what's driving that and if you have any line of sight to getting it resolved.

Robert Drummond -- Chief Executive Officer

I'll start out by just speaking to the whitespace, which we've attributed a bit of that impact to. We're not trying to factor in any kind of improvement in the rate of the cadence that we typically have with our customer partners. We're dealing with a little bit of atypical bottlenecks that have been in a situation where you plan to be on a schedule at a certain rate and then well access issues occur that didn't keep us on that cadence.

So, how does that play out from here is that we work closely with our customers and we can see that getting back to their normal cadence is on the horizon. It's difficult to say at this particular time to say exactly when. Greg, would you comment a little bit about how much of that is built in, perhaps, of the band of our guidance.

Greg Powell -- President and Chief Financial Officer

Yes, it was $20 million of tailwind we mentioned coming out of 1Q, the $10 million we achieved, which was a combination of putting an additional fleet to work for an existing customer and then eliminating some extra carry costs we had in the system. That $10 million has been delivered in the second quarter guidance.

The other $10 million, I'd say at the high end of our EBITDA guidance range, we guided $70 million to $80 million. To get to that high end of that range, we're going to need some of that whitespace to dissipate is the way I would think about it. Then the remaining portion of that whitespace would be incremental for future earnings as they're mitigated.

Robert Drummond -- Chief Executive Officer

It's not really something we're worried about, but it's certainly something that's difficult to predict exact timing.

Marc Bianchi -- Cowen and Company -- Analyst

Just to make sure I have the message here, Greg, the $80 million would assume getting all of that $10 million back, just to think about where you might be heading into the third quarter if you're able to get all that.

Greg Powell -- President and Chief Financial Officer

I would say if we get to the $80 million, we'd get about half of it and then there will be another $5 million of opportunity on top of that moving forward.

Marc Bianchi -- Cowen and Company -- Analyst

Okay. Great. And then high capex -- you went through some of the detail with Tommy. I think at the last quarter call, it said like the maintenance level is around $100 million. As we go into 2020, do you anticipate $100 million being the maintenance level plus or minus whatever we think on activity? Then should we be also layering another $40 million of this growth for the two to three-year cost out program you're talking about?

Greg Powell -- President and Chief Financial Officer

I think that's probably right. The maintenance capex is variable and it's based on about 4.5 million fleets. So, the $100 million on 22 would be solid. The strategic investment will just depend on how we improve up this technology and what we look at on our return profile. There's always some number of, whether it's 20 million, 30, million, 40 million of strategic initiatives that we think have a supportive return profile that would probably be prudent to model.

Marc Bianchi -- Cowen and Company -- Analyst

Okay. Great. Thanks. I'll turn it back.

Operator

Thank you. Our next question is coming from Stephen Gengaro of Stifel. Please go ahead.

Stephen Gengaro -- Stifel Financial Corp. -- Managing Director

Thank you and good morning, gentlemen. Two questions, one may be to partially follow-up on what Mark just asked. When you think about the current pricing environment that you're seeing that you're living within right now, would it be reasonable to add that complete $10 million back and say that's where the range would be on a gross profit per fleet basis if you kind of stayed at current pricing and got that $10 million back? Is that a reasonable proxy?

Greg Powell -- President and Chief Financial Officer

I think that's right. I think that's exactly right. With stable pricing, mitigation of the whitespace, that's kind of the earnings power of the current fleets we have working.

Stephen Gengaro -- Stifel Financial Corp. -- Managing Director

Okay. Great. Thank you. And then as a follow-up, when we think about adding incremental fleets back into the mix, what would be the key drivers and parameters for you to do that?

Greg Powell -- President and Chief Financial Officer

We talk about an economic threshold where our breakeven -- we look at breakeven cashflow, not just the P&L. So, if you get to $8 million gross profit of fleet and then you have to take care of maintenance capex and cover your G&A, that gets you to break even. We have no interest in running our fleet and treading water just to break even.

Then our book is running at $17 million GP per fleet on the second quarter. So, somewhere between that $8 million and $17 million, you have to look at how strategic the customer relationship is, the opportunity to grow it. Those are the way we think about the bookends. We have no interest in putting fleets off the fence that breakeven just to practice.

Robert Drummond -- Chief Executive Officer

I would add that I called out that we had added a new Chief Commercial Officer to our team and I would say four, five, six months ago, we began a more strategic effort in sales to go find the next set of customers that are motivated by the dedicated model and are focused on efficiency like we are and like we are with our current partners.

So, take that band that Greg described and how that strategically fits for the future opportunity for us is that would be the logic we would use and place in those fleets. And in no case, going into for the sake of market share, our very solid book gives us the flexibility not to have to do that.

Stephen Gengaro -- Stifel Financial Corp. -- Managing Director

Very good. Thank you for the color.

Operator

Thank you. At this time, I'd like to turn the floor back over to Mr. Drummond for closing comments.

Robert Drummond -- Chief Executive Officer

Thank you very much. We appreciate your interest in Keane. Thanks again for joining us on this call this morning. In closing, I want to thank all the hard-working Keane employees for their dedication day in and day out, helping our customers be successful. Thank you and I hope you all have a great day.

Operator

Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines at this time and have a wonderful day.

Duration: 38 minutes

Call participants:

Kevin McDonald -- Executive Vice President and General Counsel

Robert Drummond -- Chief Executive Officer

Greg Powell -- President and Chief Financial Officer

Connor Lynagh -- Morgan Stanley -- Analyst

John Daniel -- Simmons Energy -- Analyst

Tommy Moll -- Stephens -- Analyst

Marc Bianchi -- Cowen and Company -- Analyst

Stephen Gengaro -- Stifel Financial Corp. -- Managing Director

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