Innovex Downhole Solutions (INVX) 29 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

Erin Fazio	Director, Corporate Development, IR & FP&A
Jeff Bird	President and CEO
Kyle McClure	Vice President and CFO
Dave Anderson	Barclays

Call transcript

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Dril-Quip Second Quarter 2022 Fireside Chat. [Operator Instructions] At this time, I would like to turn the call over to Ms. Erin Fazio, Director, Corporate Development, Investor Relations & FP&A. Ma'am, please begin.

Erin Fazio

Howard. you, Thank Good morning. XXXX quarter chat. second fireside Dril-Quip's to Welcome

news found on and statements financial be can yesterday issued our Our release website.

These materially. guarantees As the discussion a a our will actual statements. SEC we cause this number factors conference are reminder, during assumptions. to website results the that provide course of risks filings forward could Please and and future of performance of of and call, statements differ involve not review looking a for

and income release. other to you turn know, operating As found Anderson. earnings of measures GAAP our the Dave be With GAAP can to reconciliations non I'll call in over that,

Dave Anderson

Great. Thanks, opportunity this this Research is Services at Anderson, Erin. Barclays. chat. quarter's I'd earnings to I host fireside thank name the Dave head like up for Energy morning. Good the to My Jeff

provide a second the I'm So, quarter to remainder difficulty]. questions, middle the we a which the [technical we're a should it have we going sure. for call not bit discuss and to of of but Jeff's brief fireside going topics different because maybe We're in little be to hot a series taking questions not should to pit recap summer, of of any the hour. something I'm going after

Jeff Bird

middle fireside Hi, we as sit you're the Dave. an something thanks, Thanks it. hot than for Texas, awfully fireside chat here the chat. And more in appreciate I of hosting summer. absolutely Houston, appropriate right, probably in

the one manner beginning we team, business and of the the went And First, myself, management appreciate delivering customers second Really I'd since best probably our quarter of appreciate the it is a strong and hard like thank quarters into conduct quality work in pandemic. that for this the to in the safe our employees the quarter. which and our results.

of our pleased growth EBITDA consensus products. and we number we're broad on both was based really From adjusted a and standpoint, that revenue our a with also. So beat expectations

Services, a leading You know, liked back Subsea of the levels a customers a that's over of was it XX% we're each I indicator I'll services growth the by sequentially. and as really most specifically think those. to work. just If that little fact go through of result often our about Subsea activity and Services, encouraged We coming

So ranges they're customers if that that, back you think our a online. have property about back bringing They work. customer have they're that to bringing

So start recertification and happening. we rework see to

see emerge, on that's growth fact to now real over pickup. And X% business not year. to the opportunity So talked last, of half short orders shortest over is seeing product half strong, to increase, three. that's of often the a XX% year, early that shortest We've few our next turnaround cycle quarters. probably about start Back cycle we're our like business. lot that Downhole The a And were last there. that also a an And largely tools, really indicator, business certainly half last tools and this there's and increase solid a that Downhole the nice we're we the growth was see the XX%, there. increase Saudi, the of to about first expect up East a had Mexico revenue. really as to Latin maintained orders and trend our based in translate first starting into Ecuador, that deepwater well, sequential Middle America to see Subsea was Q-on-Q there We we that's both strong, there the side, we on Q-on-Q started and and but broad specifically least,

With Dave that back I'll overall, like conversation. over solid our quarter. robust So We're again, you, a it with to pleased to thank it. a And for once turn employees.

Dave Anderson

Great, thanks, Jeff.

pretty also offshore been the we've inflection. expectation been an everybody clear this of quarter of hit has growing the same think seeing this one things But doesn't time. it's So at I

we're seeing deepwater both So jackup rigs. for lot tenders there and out of a

your what hearing just you're let's customers, kind what of with you're maybe current hearing start So from economic from environment. that

when wondering they're customers at and if other playing that are about know, global this I'm they a looking energy, and crisis way instead we're if into people kind talking energy think or all, recession, about talking You obviously, the how your are about facing of that. really see

Jeff Bird

Yes.

easy Regardless customers now. when And seeing they're of high the analysis. environment capital first maintain that's board the think that of capital half know, across our regardless gone do that we much back say, today's getting work, I of think the So have a back to oil, just an and our of it's half lower and that and at or our projects really project a look what of the inflationary look that like. pushing lot hearing NOC. to they back IOC discipline breakevens back, will pushing what pencils we're and you look economics their believe some they're environment, hey, the from are $XXX There's be? on do projects, like? market foremost, the looking customer. everybody's and oil see reevaluating doing they're the and that at, economics what back right of -- demand gone are what lot in customers $XX whether reevaluate that sharpening we discipline but of We're some it's So a size just there's actually have you know, as we're in customers, to I the folks year, it's very looking or really at year much, are the

thinking hearing anywhere the so is back things be when about, from know, they again. can direction resilient turn they're you if and to $XX when what numbers that other $XX, So, we're

I'd it's environment cautious say. a So I what think very an where optimism is much

Dave Anderson

the right million just So quarter. XX your you I of XX But I at last quick, XX look you've here. this quarter, just look if really averaged kind running around at math a was million. did orders, quarters, some silly I around

about about of kind with how potentially there? change how and sort we out these could that numbers how on and think that, So trend. you're 'XX, could what based of seeing And obviously, do thinking

your, So trend? what's month could how I sort on view XX your guess, to XX the of orders

Jeff Bird

Yes.

and talk year, we'll XX%. mean, this next year, year. back still and I you prices now, could environment year, expect the year talk the orders the optimistic I Obviously, there. inflationary we right a would wasn't the around and this gotten more back loaded, for a originally early have then about might be of environment year-over-year loaded, good we in and at thought that little that's the I'll just us and beginning have surprise math that we that general So doesn't it's were when to little do oil figure out up think

in. start to inflation As we saw creep

those of a online. were little Some to slower products come just

those So expect we this of know, about year-on-year. bookings our XX reflected Three half year year, kind talked the you that of would earlier expect, in you we we got up now, the XX% XX. back to about, XX in of know, we've

convert other that purchase seeing far and automatically is across board those booking. seeing, we're The that orders now we're this more and the trend seeing MSA's to not is we're

it. about think So

Let's use example. an Petrobras as

say MSA XX, You called those into want until go bookings, wellheads. XX I for the booking know, placed exploratory don't well, an off. to XX total development automatically the until they was for And they're

placed X it. would have a X, purchase back go ago, you if they order for years just X, So

activity. of translated think seeing remain we XXXX, a it's opposed So high. lot we oil constructive expect prices into are bookings. to just good about If as look It's MSA environment, will I

know, the saw Subsea that believe again year growth the we back in from would we strong coming customers next of we again. And, the up Services know, you bookings second and work. that 'XX likely expect to is indicative You quarter 'XX number to

Dave Anderson

your business some the that thought and and maybe before, I been maybe run would of ago, kind just overall that category. I'm short is cycle cycle you your -- short longer talked some few in goes about right backlog, a curious, was compares have revenue, business Subsea don't have terms through, how of Services through I those a more in would assuming I kind longer to probably through mix that that about So, talk most mentioned opportunities, which do of but years doesn't running cycle of your cycle versus of of

Jeff Bird

Yes.

straight to the don't services go might to Petrobras, backlog. to of backlog. through go just would right you're are example straight contracted that. of of clarify, There services it's to where say a Petrobras you're where of right, an revenue. that they situations just goes -- be most through So way outside most But certain

years cycle, that they service purchase can that's and could or and a on a it be months come actually could the customer tree, before purchase through they wellhead, that. short we obviously a may buy connector, service see even So

So cycles. those longer are

in XX anywhere tree think of from at for wellhead, the chain wellhead really programs on got about world, the tools. the depending a right think downhole probably -- very to it's XX-months, stocking So where about side, we've to think a constraints. from anywhere tools on And supply about now higher given going the XX that's specs XX-weeks, as downhole

And shows asked to you standpoint. or it the times like to from know, they'll or, of deepwater for immediately maybe So that's almost that up up. very much XX-weeks the something a and goes pick work that customer lead equipment at longest a the

as own XXXX. seeing we when the really And up inventory. their in businesses say that's services pick that to through downhole it's that start customers they come short work, back to tools we're that So cycle we even really didn't back work

Dave Anderson

and I if from most to part, that about for orders step-outs look? your cycle just are wellhead lines, guess meaning your seen that and fields. kind coming of your those work those along we've think I some your coming maybe the also And extensions how more of short I speaking, So field kind is generally bookings but guess kind versus of new trees. that of,

Jeff Bird

more brownfield yes. and Yes, it's greenfield,

Dave Anderson

Yes.

guess probably I So that's one.

that -- to their see about ordered of in months -- they're basically whole tree bunch So talking we you're saying FTI in XX XX front. bookings a subsea

and takes is I wellheads, be the way guess to basically, of a business more a it your It's cycle, you're a cycle event. more rest of it. 'XX the bit, longer the put So little should a and shorter of therefore environment,

Jeff Bird

exactly that's right. Yes,

If our cycle. come which you're it product line, the core on comparing in of trees, compare know, yes, wellheads, later would kind you you is, wellheads to if

don't trees customers more hold might thing some typically you with often other inventory. wellheads, a is inventory, holding hold see lot you little inventory, you a in whereas think you wellheads of The I might see

reordering. starts They'll first, some through So start work before they inventory of often is that cycle the rebound. to

Dave Anderson

now, So the speaking you of margins. realized right inventory, that -- and have your cost sort navigating concerns through of any on were terms we're and of inflations that

issues? ordered, it of terms guess, so that to those an time, in In just you those, I or almost capture is that, any the of of of inflationary any extent really stuff kind can

Kyle McClure

this -- the Jeff to have forefront to have into price. downhole bit business, it you tools split as Kyle, two of pieces, on They're the little you're shorter sort cycle. Yes, going to as getting out mentioned,

have In relatively across of late the They they're from happening, cost been were during inflation the last prices quarters. year, addition, seeing three, their product. raising four where last and sort margins sort of board service call out stable

On a in bit the side cycle. of Jeff subsea house little as mentioned the the product longer,

the to and as though not of on into pulling folks later. goes basis, that trying to part when bidding may that a the they're get seeing customer out out so part identifying now we're units So on that you're business along inventory The much pricing back the and come happening even when inventory, inflation in there are right that well, cost. where purchasing by

house. So the on we're being the side pricing of very aggressive

I other You're their tools, margin, margin that you're on product margin. stabilize specifically side, downhole growing think them the in and saying in fact, seeing

Dave Anderson

to it's most edge than as you the just little bit excited you've all XX? of activity, next know, a of But Okay, of that's least at decades. Where kind good hear. picture, leading kind got the markets and globally, to been about of you increase percolate. can active there? I starting the bigger happening thinking X you're margin starting on different last What's seeing I a are we what's the everywhere where to kind others? over more take look kind of to Maybe few kind the

Jeff Bird

Yes, very we MSA I talked that's look earlier think than back would and have it, think wellhead know, Right that I year step I calling very, orders, at now, the faster mean, I you XX obviously, we is about very, in got much if strong. the the off you anticipated. Brazil

expect we out early sometimes. tender know, them for fact, later In probably go or year you next to again

Saudi our there So than four remain Middle or weeks If that. of in well. diverter that's in connector much humming as downhole was would grow even our there business to expected. and half earlier relates and service we've and from I some ago expect five the business, it of we as tool to have East, revenue had year equipment some on And to I turned along both strong Saudi there back is the the

that's think well. doing it's economic actually Look, a Norway there, we scheme encouraging remain So strong. drilling. There's

So that's good as well.

slowest probably the back. is to Asia-Pac come

Although we online rigs been see said about rework if and start that think to there. an recertification our come Services, increase having as we to did back start Subsea in

that's So really that plays curious from hear regulatory overall, looking want customers Guyana, Back they're you you for the certainty. to that's I the certainty. that's you new work, is, [Guyana], know, in think if out, think, there kind to right how now looking I say I think would see they regulatory I working know, often is they're and what really be our most legislation at, through of I'll about what

So they be the the out the that'll next they're come going working now. to to environment legislation of out And over right in years. XX operating know perhaps X itself

Dave Anderson

Let's XX you if and mentioned we're not to and, business talk this relates those touched was the Could the thinking it but big is it it really on structure? are of different of Brazil? about sort back those for is wellheads, bit circle breath. You today to bad. I kind as in to bit cycle, business hold not the and a about you. And about you more last you I'd little the contract guess versus a little love of kind talk dig can MSA, MSA's a about how before what our and before

as backlog through, little me it's Just work help than before. through and flow a kind understand how those of you different

think down break to I for it'd be us. that helpful

Jeff Bird

different it's than thanks, -- a really really lot Yes, Dave, it's before.

delivered place upswing, they think orders. then you they big And back know, very, orders. you against if orders, purchase to, go purchase very, I we the purchase and place those last large very

the purchase into But thinking the for certain orders, to against contract a about. the minimum both that you're in a kind environment that they in placed there amount MSA optimism of as then well. call and of that went backlog. we're an off that And wellhead service. So min/max equipment minute purchase today, they it's And includes up those typically they orders the contract. those In a have

a contract actually the above don't minimum we from a recognize like recognize extent until do the that, recognition we'll when what a off will call So standpoint, but there's to is sign minimum, happens. we anything that a minimum,

it announcement when So minimum help see into that? only go backlog the balance backlog, about us backlog, of it's go Petrobras but you XX as into into it off. wellheads with called clarify immediately an would would Does go the doesn't from that

Dave Anderson

does. It

horizon? how essentially, all on essentially will another it that next wellheads, you're gone by through of should then MSA your So the Is about year. commentary XX those backlog, have read early

Jeff Bird

of the them the through XX XX% XX% before They tender, it do remaining -- may next get will way over backlog, the right. XX are probably think not already will through months. Yes, happen through about their all I to are already they

I of to expect you Right. or know, way XX% want they're out So probably XX% when back the the out would they that's way tender to when through that, go that of again. contract, through

quite event that be be digital be easily. just it some a won't -- cutover. There'll won't So Right?

Dave Anderson

out and that and the typically that opportunity Could So the name market talk jackups market, where think the that evolution about Saudi don't fact, that opportunity? sort of, a until like, of that comes you to being fit there, of of course, story at you offshore and And drill same prototypes you this kind talk tendered as the mind? I big about not this time, a guys was know a about are that your there? talk Could do I'm you little kind that all for jackup first recently. the a that you part bit of really Saudi in Eastern could we of of market? see Middle is remember part fairly and cup please? We assuming being but In in is

Jeff Bird

a because reason fairly is Yes, thought TIW. and wouldn't large market really as that bought that presence have Dril-Quip with got the when we really, you a of we it

TIW downhole always So market in that's really presence market. had and that has tools very a strong that Saudi

know, There the RAMCO. we're, market you we the we're Liner we're So serving one that -- key of Hanger players do. of in at one key

know, from time sell It's our in are looking at conversations about time Liner add more really and mentioned, a Saudi, of to vendors as businesses, And there. far, a the with we you largest opportunities. we looking sub-mudline, that -- connectors from had RAMCO, chain. smaller we diverse market, will concerned as will I in we you time. Hanger but because sell supply So market in significant will we sell to they're up that time RAMCO And know, they're business to think by you ramp surface just the

Dave Anderson

to is so days. been Saudi So assuming the Historically, today, qualified, that RAMCO. that -- Is what that wellhead not are it's things I'm work? for you to in How different accomplished? does you're these qualified -- easy get very are get not but very something you're on on trying

assuming a I'm bit flexibility little So there's maybe more there.

Jeff Bird

easy not qualified. it's to say to right you're Yes, get

So we're qualified diverters. on

we're market. wellhead, well. I yet. the We're think qualified on surface for Hanger as through wellhead on the not surface working qualification Primarily qualification we're us, and of wellhead some on side, Liner sub-mudline

yet. We are working on that, but qualified we're not

Dave Anderson

those seeing that shoots markets any market? going. -- was bit did Nigeria anything get like Are West to and I'm have signs, Is of longer that you green or in happening I little starts. that kind Africa. taken know and a now been always Okay. fits sort of it's One market you assuming Angola mention

Jeff Bird

early very are hadn't material the it's days, Yes, but seeing in while next not activity anything early would really that where in XX activity there, we a be -- very months. to seen we but X

Dave Anderson

then maybe today, a could as there particularly just And of discuss out X-horse that competitive Okay. seeing race a dynamics well you a sort you're the while. for

if recovery kind here, don't wondering compared at of an know to outlook -- anything there's helpful. from I Just but of Maybe would I competitive if of versus competitor terms just the changed recovery to part the prior the we're kind there recovery know out has be such but of this what's -- early all? gleaned be behavior in

Jeff Bird

Yes.

We're think right I in it's with X-horse if us forget on situation. that them along relying that's standpoint, to probably for them, a tendering OneSubsea, So race. Obviously, wellheads. with win on it a subsidy in agreement a last of It's about from business to with a say regard, we've don't collaboration you're than actively to but cycle. different where I order we're work kind there. that one tag competitive mean, up we'll got the

collaboration did I'd to where time And our are really also those bid quiet two call what We we'll partners. with well. time Aker agreements as from

EPCI completely of Aker with or and still in So that if very of rest wellheads to the either would Petrobras competitive And there are And sense. separately then, typically plenty from customers, OneSubsea about obviously, we're bundle. trees their that EPCI we the go the look, there. you tender large think bid, on included extent makes that,

Dave Anderson

a maybe for the but probably about of Kyle. guess probably out. of bit over I I talk see you more wondering quarter you more talking So financial kind kind if about of capital was the how maybe second slide could playing I just kind allocation, to second if it's

top line the about you be hoping kind you're year-end, land down kind Could what and of next 'XX. for where setup year for where of us kind of the is help margin starting will growth and narrowed targets. of plane kind incremental point our by You're talking to

Kyle McClure

Yes.

what less. I As half, think to QX and in I think we or about QX probably QX, the back about somewhat being more had similar

they're be important But or the or QX, as or orders they margin revenue to us expect the of I where make be the get house. and so $X of QX those will more tree talked that for would a in there relates less are be line pretty to bottom particular I difference treat think start line here on lumpy big critical of to those expect Jeff very that with and it because of QX, are more can less orders size, process. kind the bookings But about in to side I numbers sort in hitting the QX. QX million are terms to booking

too roll our CapEx touch this the to up we XX, to we're turn months budgets so us forth. next as customers plans time for in in at bit little Page starting point here As on probably getting to from and that a couple of and early

hesitant at be I'd So a little jump point. 'XX to bit into this

Dave Anderson

of cash the half. free expectations, the Okay. pretty And cash some from about then in confidence up good flow you terms second that building talked

of bit things One kind people up. that's the earnings a been that has during building and come of builds quite up working capital

about things and the So maybe looks together those two cash flow half. kind how talk second of in free

Kyle McClure

million a XX% in numbers. to cash into QX, X% We're our all revenue couple that for X% for items and pretty as we've then a pick that. incremental on back had in free negative $XX and have and X% yield of $XX year-to-date, $XX expect we would up seen We to stuck will, in sticking been come revenues nicely probably to working in I with we AR terms I drag one-off yield to of free five think, you million, here We been positive a QX, up sequential we the has X% there drive if to to expect kind AR. flatten million a Q-on-Q, in $XX decline to second out capital of in a a back half. up to cash still expect year. guidance would million February half we've cash. front pretty We'd QX of come as to pieces that second talked $XX QX about in growing strong of bit back expect margins, bookings out that free CapEx

of ticking we're think I the as we year. half hit all the those back of

I we a talk just about As about think that. early it's think to 'XX, little too

Dave Anderson

Okay.

good. Sounds

of the Help years. most you you've little commentary a talking bit business few a last different done the things Sort recent consumable capital about the wellheads you've me Some of of what for trees understand have your than most. the couple M&A, over of And and kind been type pretty sense makes business. been of and you've on offshore-driven equipment, business?

direction So in I is that imagine market. you to that would continue go? the there's a opportunities lot of

the So you in does that take direction to or we business? places think other are go this

Jeff Bird

Yes.

focused a David, looking this it's that adjacent year, spent We've roofline build the of hear I temperature. can organic more as I'd gone right, a balance or I the should bit to -- high an we've next, little X of party. kind the and high it thinking of on the XX and sure we'd that new our necessarily think side. We've it, we've thinking down on, about, M&A. be as engineered over through Kyle right, that lot working around you third get right? more detail talked making last call this have, work energy wellhead You sure structure. really obviously, the I now. two, left the standing expertise energy about, about of think, we up talk over expect of tree. that that we and organization. areas as year. making manufacturing doesn't capability, final We're the we're a could need narrowed quarter, to pressure, Think actually a about engaged capital on manufacturing We've But get the a we to footprint be we a be or got actually as to for Dril-Quip three months markets at. highly start amount D&A in something bit investment a It on think it awful let So fair about we'll our that going fair exit you'll mean, do a to we right But we're I'll our to little of be

Kyle McClure

it well think pillar Jeff if space our the We're in be going in to put next to this earlier. next side We're here we've couple Jeff growth as to going mentioned, going positioned a board house of get to with have be is from to Dril-Quip They're us probably out We've strategy But through stepping energy the be touched of here going them pin want gathering could in our big through forward. here. it it's weeks inorganic D&A and going of principles the and and M&A we're got here. and we be it, the a got together. take -- do I months, energy, couple we our to pretty of organic about what we're here, the thinking process as adjacent. guiding in talk But could to do think market Jeff communicate help on there this how touched to that we when on then

as highly touched spaces. ship, we've well that And what step specified and how it's we energy release -- inorganic on are footprint the those up internally the got adjacent to, is Jeff the the plenty going much in enough you us three months. three do the this drop investment still a to and items, taking that be bring mentioned, We engineered of that We going value sales, and the point property to are reorganization, little we being standing DNA a we rationalization. for if from to capability connection organization. -- We're TBD, bit able will, work inside to and those manufacturing going but where probably have and on very a out for marines morning next energy pretty streams X

spending point organic at in still a but just what see forward we're a TBD it because our long-winded this a market. the for beyond know it's we lot of growth it's basically going effort on in we So answer, saying time, it's critical path

Dave Anderson

XX years. probably Dril-Quip, debt There's long on balance as I this sheet. think Dril-Quip So I've never covered as been any known I've

So all areas my to change these and this you potential growth? of about, take talking willing of does some is of things strategy? finance new thought that first that on debt Are you're the to

Kyle McClure

that we Yes, string on very of not view want here. to continue big an to of our debt of healthy maintain very develop type at capability cash helps but anticipate that organic generate more would scenarios probably standpoint, we I quite We We as through juncture. obviously. a a is think little would bang than any it. be it very that our honestly, this a deal. time over now balance critical business, we'll entertain be Thinking And pearls these the something from to inside a M&A -- cash probably be bit sheet asset, don't free one about would wouldn't programmatic we company. right in balance It a taking need

not on balance share we $XX right? to our making today think buyback, healthy us at been that, Give methodology. think cash us shareholders sheet, this a it million continue for year least back our that's to as we're that free But relates thematic hold done to want we've on we've I balance -- this a something That's to as there. we would I around good juncture. cash entertain got probably pretty options at pushing in sure that

Dave Anderson

tried. I I right. All tried.

shifting he talked when I that and maybe of dynamics been an it like you opportunistic, that. some a of it's I the always trees about trees mean, but the over little your opportunity towel opportunity It I kind area throwing seem essentially about On in as essentially, something might they talking areas, mean, know talked business the M&A an tree of subsea the area seems time big in that to work. an said about competitors feels like a moving is the it I that interested of this competitive Is on geez, pretty you of, sort side, side. mean have would years. I I subsea, sort say, on on can't last big should bit be of remember make subsea one I where sort right we're and other I'm see now. would tree can't interesting market. guess,

this going the steadier more So forward? discolor part to opportunistic of business of is more a

Jeff Bird

two some Tree, got that decent early a from use in We're called We've we in leverages same really the get win continue water do then that SBTE in on shallow tree sometime shallow We'll first that we're new technology. think tree trees. aspects: we'll at SPT capture. That of that to Yes. share We got online trees We've water. think our year. is one about looking the bringing carbon that. tree from next a

Street. that ultimately think as our So of becoming CCU

project become our the sell you're those likes and of we trial that So we a Aker the the the that's that team optimistic we we'll But that's say to to on as to trees, deepwater offering well. is midsize that likes with opportunistic EPCI certain to projects water, there, Obviously, or capture going when tree right competitive. that and versus of OneSubsea players shallow way. a We're gets up smaller look a ultimately carbon tend believe we're at tree on new when it large to on the be size, we've the tree deepwater. developing got

Dave Anderson

are sense. That over pillars to move sense. going years. some little several of that I'm a That to the growth potential makes next here makes shift the on to bit

think particular. that the it's would approaches downhole would be building the taking, three, line, and you're be E-Series business; some the One will just be product you're in of which out. collaboration I three two,

the the you collaborations place transition. separately, collaboration, way other you great to bucket? your it great there transition -- opportunities this Are collaboration contemplating? talk earlier So to start And I what would the energy a areas is there? side you maybe announced in year then exposure that here. collaboration, maybe guess, talk increase this maybe just Can it you about Aker see how about other Could to start energy you be like with the there? talk about, the out came that weren't this And

Jeff Bird

Yes.

a I time. had period So we've specifically, as of Aker it for relates mean, with ongoing to Aker, conversation

didn't agreement, we as a that agreement. standpoint. almost number that a the and this that bring guys that think immediately they afterwards with good realize CCUS. you're signing We water the upon aware, were at looked the was We year offering earlier saying, approach play were overall wellhead signed hey, I as in the had to market from treat thought to us they customers got going of CCUS they an we've match both that you to shallow going

nice So both ourselves for Aker presented and opportunities some it's from that. really and separately us for

hired that expect there. ramped In we're our project. fact, spending really million see feed next And Endurance feed, but $X sometime on late week, year. next talking now. Aker, closely about projects the to hit next we'll $X jointly week. next until annualized and year. wouldn't that with Northern We're We first large We've deliver FID working that. Friday, to We're though, project probably order We wouldn't CCUS small on the first on we'll Aker very next until wouldn't up with that expect deliver located folks. a We've million

other of other two with little those, with the we we there side a go hopefully, haven't throwing market are those. working companies about come We there, and at are that three public Dave. gone or more transition will companies a so number -- But energy out on to on cautious to we're the names

Dave Anderson

or -- not guess, one about entirely in would of design I'm sure. understand here. fully surface sort trying wellheads I on don't here. some I'm I'm when the guess just should not are the on CCUS. full of design, seabed -- been first wellheads, to I installed we've put just we I ground the time expect be the they're first something trying to I'm maybe assuming a those different however, expect there obviously, and you the the know talking When trees to these projects, Christmas So on

Jeff Bird

first It We on probably expect project. the and depends late on until, the first depends 'XX. 'XX think, in wouldn't orders on project. It conservatively orders sometime I expect first that revenue

sometime So 'XX. install in first probably

Dave Anderson

here? are targeting Is only markets areas potential from see other kind a potential collaboration? that's market. of you that What start that carbon Okay. of you planning the of on. there perhaps more kind we'll we'd full kind and you're getting here? it then area get just for I'm other -- you what of sure even there, And this Are see is that hopefully,

Jeff Bird

Yes. the far most by I immediate. mean, CCUS obviously, is

standpoint, as areas from temperature of than a a something at high like nascent hydrogen, number look play we as but there's the pressure, think could more high I much CCUS that's where example, we market.

So as example, now. its I'd almost much characterize do more we because infancy CCUS a things that R&D an opposed right in of development to which is as extension it's product and already high

Dave Anderson

under geothermal for be about areas there this could like opportunity other be Any for thinking geothermal an where was translatable.

Jeff Bird

market very, Yes. What at We geothermal market through a geothermal. said challenging. we commoditized But connectors accidentally pipe. looked is geothermal it and I'd is and we find pretty very selling to the

there, but more out that product it's be pursue going much something we'll aggressively versus a and participate opportunistic So build we'll whole line to around.

our investment small there. would be I think pretty

Dave Anderson

shifting over the tools. And Okay. to downhole

the involved that Could growth you You you right there. had kind has talk happens, get pretty this bit you it's little as always tools something business out talked shorter of and you heavily. come that kind some about is things about developing think are Maybe -- I quarter a get saying because good these Dril-Quip the been on in happening. here -- is pretty in you're a got about tools that a downhole just how talk on these of cycle

there is you see than that's something the tools in opportunity? changed that about there going that little different see you past? about will cycle think So growth have a forward the to something Is downhole better bit this you maybe see a more business

Jeff Bird

Yes.

had So acquisition overall was the tool be the and is back to business. downhole immaterial go substantial TIW But a as obviously time, to what XXXX but downhole back business. really a Dril-Quip clearly, was I would and of business. of predates more tool it, understand if in the me, this you you if beginning go before, pretty it Obviously,

think now I might different we around is the stocking what now have materially than programs been specific the the that's very past in thing have world.

in go stocking they've to if you Saudi. got and our a program business, So talk

candidly, program we've tried what's a to that's we can got respond So And effective that challenging you ground there, quick-turn opportunity got on got with just the and when the where We've in in stock. So especially a in stocking We've logistics Mexico past, stocking right? very with the there. think around manufacturing. program there's very I world, stocking I effective in not key programs today, where Ecuador. out actually a inventory in real their market was markets, see not

Saudi. a the qualification. issues around get lot worked thing is The salary hard qualified our number sizes some in other of of We and of very in a you to kit pointed out

expect Saudi. amount well lot next We're from year a Saudi. of in going standpoint, of So working in positioned we're back Hanger would in through a a now half right inventory We restocking Liner year. this fair into Saudi of the and

short-cycle quick needs company be when bought I turnaround nature XXXX, the to -- And on how appreciate Liner we really that Hangers. we those just So is the the in we of think didn't understand fully perhaps it. company

Dave Anderson

downhole potential that? Is mean capacity tools say of building out in of to of activity. you have programs, stocking the kind you saying by advance the that and capacity When what that you meet essentially you basically are those you're markets

Jeff Bird

Yes.

about on You've -- industrial think on the as my got that go if to manufacturing inventory a back chain it back customer where the inventory to got pulls supply about I our think the signals inventory, ground, you've as to to for. have have restock it compound then And right? our days, ground. and the to So those as

to and pull certain a then you on got the immediately. can ground compound, can have your put kit You've certain that sizes in that on customers

out that figure they're solution. a don't have different to going you If kit,

Dave Anderson

work I your that. you that in is I'm you're it ready, get -- thinking have there? what you you was opportunity you out done mean, so -- just business next is thing don't an competitors about I what about have that say, because if to the to not seeing see have if not don't do you're

Jeff Bird

with the that. of bit by we shouldn't Liner a our number of a lost little is be There way, supply Hangers. What competitors is

will Schlumberger Liner It market. So buy really us. from on Liner Halliburton a Hangers buy will the us, Hangers from depends

that the on that in the at the service we've way. things And customer the ground. -- making lot our And gives on So in business, sure quality, think bats ground. and more service quality, that a servicing we've the right customers, us the inventory yes, improved you're dramatically I matter inventory and with two got having

Dave Anderson

-- of and speaking downhole Mexico of activity had pickup in kind activity Schlumberger offshore. and work this a hand-in-hand So more a I'm that levels had just more goes of big Schlumberger, assuming with of offshore. sort Gulf they big tools

Jeff Bird

our a and tool but business way, that call -- nearly healthy not that keep amount international business from within I of downhole land, land Lower right? you'd downhole trees, wellheads mind, healthy Well, by is tool of There's amount there's XX, the a in expect what the business. fair deepwater not international a there's

Dave Anderson

wouldn't thought I land. International that. have Well,

see Okay. you kind just of markets That's of sort interesting. Are the Or stocking, have you a I you guess there off as those ideally any positioning, kind the that biggest you you're sort said, you of of that particular suited number the countries think rattled for? countries. opportunity presumably? of Are

Jeff Bird

Ecuador, Brazil XPak as Petrobras to it about emerge starting in DE think you is with think MSA I them. Saudi, Really, for with the an Mexico,

MSA. it's on is what's that XX think systems I

We and certainly us a when we it other supply might -- then that's competitor that we'll us. where for they'll you'll -- see to it those view of but the supply are about So sell typically the some markets think install as equipment as markets, those markets. you core

Dave Anderson

Okay.

in year. put if your business. And I'm have just -- for I'm should XXXX, for you this a we out wrong, presuming I correct growth should growth next in me expectations you -- you year? in had double-digit business expecting number So this curious, XX% don't be this

Kyle McClure

growth. where tremendous coming Yes, obviously year this an we seen and a nice year they've of for would this business in area And growth They really double-digit some is 'XX. had 'XX. expect sure the on out

As has Jeff been last Saudi markets operating mentioned, us in And for a few in. market they're the key years. the

it's the too. in growth this service, good really product a same nice and a nice across expect business, would we margins So board. It's got business

mentioned base I here off so. of X months good inflation As the the to last really a in job earlier, they've six done or fighting

Jeff Bird

are the will, couple If the get was if back getting see business. Dave, because that to pre-acquisition, not to back the million to go you of back over glory about that as -- million. but can We've of industry, $XXX that next you back days, easily you may talked XXX getting those $XXX years

Dave Anderson

Next $XXX million? year,

Jeff Bird

maybe. my now couple suspect leaders right? Yes, maybe right on next -- of downhole I years sliding. phone exit, the Over tool the

Dave Anderson

longer of keep I guidance to out me the more you. Well, talking for to get

you guys -- little faster. a bit and make So

you're thinking the about this market? that the see there board's Or Is let's prospects that fits out equipping where niche a and sort on technology to how expansion some kind of sort gap? third the big move in filling it you you Now are here. the a part of you E-Series this of what trial. is product -- growth in is? of The of of exactly the line do longer the leg of talk Can this about --

Jeff Bird

Yes.

five products number really reducing that about really brought is of for a the all just costs So the we our customers. to years. or It's over four last E-Series market

Dave Anderson

are about of of longer do? the this you the How prospects thinking sort

Jeff Bird

Yes.

use reducing brought for that So of customers. for the five carbon four customers, a about of they to really market They footprint individually. over costs we can the can or years. E-Series all or number really It's them reducing products our last products the our suite is use entire just certainly

right So them now, see individually. than used not we're more often

a in think the seen our I inventory orders with in MSA you I talked had Petrobras and the there. exit for all the way. if that well high It's traction being we XPak E-Series a So think those traction which in of E-Series We've The about towards there. about fatigue pretty connector Mexico. I the ways, included but on wellheads. number helpful in from I got this and by is gravitating about connector. happy pretty of of Gulf already increasingly, the We've XX% year DE, is standpoint, We're happy seen that. about with -- quoted that early days, E-Series, DXC talked about wellheads all And we're talked Norway. as on adoption We -- customers think probably of we've wellhead see us we've a that about numbers. probably that

We a matter right [indiscernible] of as have to one actually fact. now, headed

the that's to tree products. about that bit a early which starting see uptick then days, very of one water is just an more shallow as but So that we're little that I well. extension will be of talked And SBTE, on E-Series

Dave Anderson

relying said connector think pitch What So on say Series? the or DXC you you're it but point this on -- e-Series? efficient, Jeff, selling is what's more to want a would of that I what's the sort to Why customer they offering? it's the E wellhead

Jeff Bird

the also so it's we're about. means It's just carbon as cost. things. time, a three product One Yes, that talking fewer And less is on trips really it's depending well. fewer reduction footprint trips,

trips to into and less doing carbon fewer well. makes equipment trips, increasingly, that questions as math a their different that footprint you And So helps as start reduce to process around tendering this depending carbon them if build get what start then you form just products on less their customers reduce carbon we're seeing well. that we of series footprint And do and can footprint. them help our

Dave Anderson

Okay sense. makes that

Jeff Bird

and in where get competitive more the the think see expect more math, I years. to can difficult that couple calculation but It's next to it the and of you over goes

Dave Anderson

quite don't there of last extent. a the bit this favorite talk organization. certain made build way to I fly operationally, the was you've of itself of on set know So sort I I a kind terms Dril-Quip of know, your section the just the want the sort up subject, operational changes I from frankly some of bought my business viewing Probably to would - about Jeff, here, just footprint in

some today guess path you you years you where your of I such of where terms just working structure, up of What terms come maybe your operational are in are around. optimal made thing? there kind changed kind you've that few in last of changes you - in is the terms adjusting there You've you of are of Could in to, if in done? bring us to date are a they of on sort really efficiency,

Jeff Bird

the when earlier every lost there observation in announced CEO, We - we're my you in we made now from much rep added more and is got those the handoffs lot focused and time. in time in was a what I time very salesperson, the expense, It that And product start let's money with getting the And well, Yes, the yes know, between used changes of became be to past. year very, sales is inventory. you time added manufacturing, something to time step is candidly. time as engineering functional.

We're of in in And leaders for so the product into process product We've we're the reorganizing of people. those process really co-locating got groups. groups. those

You've our days. campus been on

So functions and improved obviously, is of that the out different how will we're into us large spread co-locating We how and people make product the campus be you groups. those process the can in know those communication efficient. - between make more believe

We've the candidly, we we've of got least we XXX divest campus those. identified at As that on relocate on campus, XXX acres today. can

already. release in said So I our think we

right is those of now. one contract under expect We

Our to I mean the forge unique this right year. this close talked that expect now. expect lot other of And our contract a we'd well. close under that. about not is we've And this to be actually year least of contract We'd benefit if as in properties facility the we're at two we of properties. under own that really year, probably

that reducing goes line, get also we roofline, expense we actually reduce it. So proceeds that having roof we're with cash only but not able from to the are

a bit. incoming the $XX in, now. million our $XX in bit. would $XX all take given not about a a reinvest $XX cash $XX more we're was confident and million So it's and higher that it to it, going interest Clearly cash. market we've but It about of to of $XX little we're in And manufacturing. manufacturing. some to $XX narrowed that of million right to pretty million million invest we range million expect It's of little that that up We're rates. to tightened But million it take cash

Kyle McClure

is tack understand getting line the when across here. talked profitability by I'd on portfolio line Jeff true - there, product organization income about statements thing product other the The

And through rationalization, in kind Jeff as roof of process the footprint helping rationalization. that. that's we're we're as understand, mentioned, And so going line doing of

Just who's and energy. our not to well who's need we and doing focus where

Jeff Bird

make Yes and we to investments. need where

Kyle McClure

okay. Yes,

Dave Anderson

the on to like I've So way Jeff, go the fully it seller been there. Walker] and days, of some the you up back a been finally a brought It's I talking sort forging. a grasp [Mike my forging model you integrated - side, gosh, about have never sounds to

changes be but So somewhere shifting buyer forward? your was sort happen, there about how Will this – the years this it know ago, a is still do say, Can fully new get else? from from the from work getting how of business integrated fully your did it it you model or sort today. of you what going from going does talk - whoever it I to just what XX you essentially forgings

people, Europe I'd thinking about not talk that? a So because from lot you of course, probably easy. forgings it I the or forging? the about sure think to know them where to a I'm so how differences between you're - is, about you can I least and comes that's want for next you're but love getting of understand of at sourcing lot the how just thing man,

Jeff Bird

of being at Obviously, - lead we're got Italy, Italy. those. the around Yes, on-site forging those candidly forging America growers months sources moved of in so North world, got have months largest suppliers chain ago, of XX we but the those outside at time that looking North to But ago. do forgings. forging really the of sources honest, Dave, always cost We've for two the looking our we probably it's in not about forge We've XX supply America. forging be forgings

a a So There's the on that buying in of it buyer as another a property today will as when forge operate as we won't matter and it campus the it forge. operate today, got make that's forge not they're strategic that fact. sale interested we've

Dave Anderson

you. thank Okay,

Jeff Bird

I million had is year operating probably going the and these we Yes, there. were before we low we quoted about that, peak, our had At million interesting £XX numbers the - point, a probably there. through thing in £X going through

an to million economic make from potential estimate buyers year there bought As look for to going their standpoint that facility, they at forged that to have £XX a is them. in that work had through we

So these forge and look, professional guys suppliers, - are right.

even So at million. presumably £XX

the think awfully to million, are contend - of to you experiencing you shut correctly. $X get now. million quoted But worth £X we a I companies I down when that the work. It's we hard million remember Now it's lot it's we that could forge, ago And I make of few worth to that. a when savings, the have as to down supply think continuity years if $XX quoted annualized

Dave Anderson

'XX, might of a that made have pretty like Yes makes something in makes to mean, lot I sense. sense going hard see 'XX, but how sense forward. 'XX, that

Jeff Bird

and sense. make fair 'XX it's people the now a right, say those it forward, made Yes because it it tight that doesn't going just to then you're in was to not But a very 'XX bad was decisions 'XX, decision and chain, supply right?

Dave Anderson

Great.

about and efficiencies and that of this all you're taking the targeting. you're into thinking account So

an about But months, out squeeze of everything done what's normalize I expansion such let's and can end kind settled of you not concept. margin thinking easy you know you where here? your normalized sort kind it's of this do not sort are sure? that's target day? how the forward operational can XX What - of think business So margins of months means, down whatever When fast gross sort is XX of now of

Kyle McClure

Yes.

these XX here we're kind to shrunk would made I'm we to road down XX We to call are mid-XXs, has the would on investments kind sit in manufacturing expect say, today kind the roofline expect, of made. here. it, we us ballpark reorganization, investments As property manufacturing over math of the of months going kind to and be get the our in is Between expectation the that's working is, Jeff that in investments. time what footprint of mid-XXs mentioned, off the of rationalization,

work to to in on that internally, expect mid-XXs. streams the of would be other line we we've addition In that gross got margin going kind

Dave Anderson

target. good good. that's a That's Okay

on are efforts decarbonization some companies of of kind ambitions some recent We of the on targets X service together. some kind last Scope Jeff? now. the about your question you're that maybe those don't that necessarily So expand other have Scope on just ESG kind along highest a you're kind your Scope the question of lines right What just your that off kind you're But of on is targets here of of think another maybe and X working side, doing on? X own of on talk efforts about footprint and things ESG trying -- don't

Jeff Bird

good that Yes Scope X in gas. X so and look, got renewable Scope gas strategy -- as out X to specific Scope handle as Houston some emissions. we've we've relates around and X it We've even got and identified and targets electricity greenhouse well. gone X reduction a here on We've fairly implemented Scope our

install. solar a have We

Singapore our they're about almost efforts line in size all solar our you in is is right If reduction. Houston in of other panels half cutting putting of the number top out that roof went the Singapore. you'd buildings you into half of on see if consolidating here Obviously, our now, of X larger a probably to optimization and facility this our of opportunities, significant the footprint think

targets understand both a work and very X. Scope So we've Scope X lot set done and clear around to of

Dave Anderson

lot I Kyle, the thank for the opportunity much hosting Jeff, questions That gentlemen. all Well, had, a this. for you makes sense. that's of very

just happening market. subjects lot next of the in kind all touched her of think obviously on about over I we the a every

different to a trying handle are just get are out, things obviously people on think of markets happen at kind how times. playing I different

So percolating clearly, below of there's, the just Dril-Quip a the story. surface on lot things

for today. you thank gentlemen, opportunities very much, So giving the

Jeff Bird

Yes. lot, a little in And see York. think month in we'll a over New Thanks I a Dave. you

Dave Anderson

that. to forward looking right That's

Jeff Bird

Okay. Thanks, Dave.

Kyle McClure

Dave. Thanks

Dave Anderson

Okay, Thank guys. you.

Operator

the concludes you conference. today's Well, in thank for program. This participating

disconnect. wonderful a Everyone, You day. may have now

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