OIS - Earnings call transcript Q2 2018 | Oil States International, Inc.

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Operator

Welcome to the Oil States International Second Quarter 2018 Earnings Conference Call. My name is Paulette, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note this conference is being recorded. the to turn of Gil, now Relations. Investor will call Patricia over Director I

begin. may You

Patricia Gil

Paula. you, second call. earnings States' and quarter conference Thank morning XXXX Good welcome to Oil

States' be Oil Executive Hajdik, Executive Vice Oil are Vice Financial Operations. Cindy Our joined Officer; Chief States' led and President and today Chief Executive of will Taylor, call States' Oil Officer; President President by and Lloyd Cragg, by we Chris

that forward-looking XX-K factors site. begin, remarks we those be to statements. over Any disclosed on relying the would information protections To replay Law. other I call than being today our business, to with be our call regarding that many of the by the Web remarks context Form can Harbor conference Cindy. afforded other will webcast will after filings. note extent we contain available and call. weighed now Before that our please States' caution A the the like in SEC turn Oil along one-and-a-half information, in should This hours Safe such affect is Federal listeners be the are the the of completion call historical at we risks accessed of including

Cindy Taylor

XXXX activity conference This the Thank first income diluted positive quarter year-over-year, earnings earnings of share We $X.XX. up region. vast million, XX% acquisitions us strategic our call. key thank to EBITDA up We today of improved preceding revenues shale strong per year-over-year. with you, fourth time Patricia. net second this $XXX land second the to play with all quarterly due was from the quarter the our in joining two contribution million, XXXX Good year totaling since for in delivered improvement coupled completions reported completed and you results of to our XXX% for morning of you, quarter participate of and in in $XX quarter

prices quarterly continued barrel, X% have drove sequentially quarter, levels during from WTI highest XX% $XX.XX increased Improvements average quarter, completion. year-over-year, obtained U.S. increase the segment, In to activity Flowback sequentially our our in was counts prices up rig average as XXXX. Falcon and the U.S. Services services During which in revenues Well robust the per completion the second our Site led land averaging since recent is of full in increase, which XX% benefited a and more well contribution quarter to business acquisition. completions-related from broad-based commodity

GEODynamics exceeded spot destined content bright segment, Manufactured in contributed Technology in the of our boarding results of project both a this Downhole was range our for EBITDA significant booking facility Results for the Our margins. major which In revenue significantly the acquisition of Product segment, America. of award and Offshore South production to January quarter. our segment represents the upper-end guided a

segment and times, Our second position. of a take in Lloyd our increase market consolidated comments of provide and highlights quarter book-to-bill ratio with backlog I you averaged more our details though follow sequential resulting details X%. X.X by provide will financial our results more also will outlook. on additional of

Lloyd Hajdik

morning good and everyone. Cindy, you, Thank

As results Cindy recent our Flowback. Falcon contributions quarter mentioned, of GEODynamics acquisitions our included full second quarter and from

income of second reporting generated the $XXX we $X.XX while of per During quarter, million, million, revenues net share. $X.X or

with EBITDA EBITDA of second an margin Our $XX.X percentage million, totaled quarter XX.X%.

is our balance credit we million pay of cash under down $XX and flow, $XX which CapEx, of generated flow of outstanding quarter, after During million the a revolving our to cash free used the facility. portion second free

ratio ratios was below X.X times of and and respectively. the XX, secured our times As net times, maximum X.X well leverage allowable debt our senior ratio X.XX June was of X.X times, leverage

million. $XX $XX XXXX. inclusive million, the at of million was end hand $XX first-half Our the of the and the second quarter $XXX of capital approximately expenditures million in invested liquidity cash We quarter, second in during of total on

that full-year should $XX expectation XXXX current Our CapEx range $XX for is between million. million and

Regarding the for July to of year, extended our program share program, XX, XXXX. repurchase Directors one our common Board stock

$XXX.X repurchase authorization. million the have under We remaining

consolidated terms In our we depreciation million. guidance, $XX total expense of to expect amortization third quarter XXXX approximately and

our Regarding preliminary. Falcon allocations depreciation are purchase of and Flowback amortization for expense, our still acquisitions price GEODynamics and

corporate adjustment net acquired for amortization So Further, interest there $X.X expect expense million, to expense projected could be total to to $XX.X we tangible million. assets. and some go-forward expenses and are total our

For the our income tax of our pretax upon this nondeductible year, dependant provision. will the compared income be the third level balance of the to level quarter realized primarily of and estimated tax in expense items

will between We we the non-cash second-half Longer-term, the $X.X rate And XX% report profitability. million our U.S. million. this turn to tax to who of towards our to tax as a our U.S. expect returned operations of of take the each for XXXX $X.X and the expect through in like business over rate you trend effective at have details income Cindy time, to call of back segments. I'd tax to provision corporate

Cindy Taylor

coupled with sequentially revenues Services and XX% EBITDA up completion sequential start number results Flowback contribution XX% segment increase segment. These of performed. up revenue XX% improved quarter's jobs acquisition I'll our reflect this service were services the organic from Well by legacy full improvements of These growth with offerings. with our Lloyd. Site driven the you, a quarter-over-quarter. In Thank in we results Falcon in generated

averaged benefited EBITDA the were the from in services active of well results. basins, rig land partially and by XX%, sequentially skewed U.S. activity our drilling business results. offset intensity particularly increased and Gulf and across Midcon, by lower lower Rockies Segment completion margins Our Mexico

EBITDA constraints services quarter. debt we shale the bad Despite pipeline consistent XX% reported margins across market's the completion to takeaway for U.S. incremental reserve a basins. after in continue first on sequential in were basin, adjusting Permian Our focus the the activity see capacity

expected $X,XXX which quarter for our due particular second segment to in programs upper exceeded of ends that segment XXXX. to in January acquisition labor and to a cash quarter, to XX% delays In included play. of between Results Our Site Downhole slowdown XX%. for results $XXX broad between geographic included XX, first continue The day business for risk production majority of within per the date $XX $XXX of GEODynamics in our $XX helped averaged Daily $X,XXX sequential services by XX%. revenues range day segment, We within one EBITDA margins market our this revenue with EBITDA we footprint of range shale guided and compared to and on our totaling of customers' increase, Well contribution was products margins the potential from gaps of penetration strengthen have the reported rigs increased drilling the average capacity. revenues million per EBITDA completion million, created and jobs the driven segment a Technologies mitigate operations growth inefficiencies. margins segment to million our quarter and quarter's estimate improved technology temporary should segment and full Services in drilling third million, with and completion our land leading

clusters Longer increased the Our system our links, well with engineered technique our demand by greater somewhat driving integrated completion perforating initial stages, trial advancements solutions revenues and number for Technology our unconventional are providing were gun improved of frac are strong consumable a product. productivity. of lateral customers and modern adoption field the downhole technology of completion offering. perforation tempered for timing

technology XX% EBITDA our transaction revenues million historical we For $XX segment the averaging closed we EBITDA range between third that XX% quarter, provided will Geo for estimate XX%. margin Since January, XX%. downhole have million in and we $XX with segment margin to of to expectations the

million, given strong segment, segment We margins are modestly range of $XX expanding revenues we second million, manufacture the EBITDA of EBITDA XX%. our segment quarter the offshore of of In performance. top end $XXX generated and product

exchange segment segment. was related benefited losses Harvey partially settlement insurance million offset quarter climb of margin by second a Our recorded EBITDA the in $X.X facility by the Hurricane to gain foreign

likely times to products short cycles. resulting a the Excluding exchange major the project XX% losses, booked was in revenues lower of our reduced X% EBITDA foreign product for sequential million segment a stocking driven Order totaled sales have margin predominantly in in decrease our sales due ratio guidance. book-to-bill with driven segment would been the X.X with and $XXX quarter. The by previous line of cycle gain coupled

to sanctions XXXX. vary going project remain steady shorter product for for revenues be Major their received During project and visibility major $XXX at totaled second our for destined work standard content expected the quarter XX. million to connector for expected facility project products remained is XXXX, customers production inventories. one notable sequentially South our with as floating by in driven and quarter-to-quarter through Conversations award constructive the of increased X% is our select we and are cycle near-term. regarding June Demand Backlog in America. improving customers

quoting the we our Additional in growth after significant in of set the before pipeline received the project, noticeable see ratio award activity. takeaway a basins the continue difficulty] shale FIDs Bidding second the quarter. U.S. one-time. and Basin, with to completion during see And remains expected are content the segment order be than strengthening book-to-bill major year in exceed conclude, products needed will production our in across field is bookings recovery focus floating during we million to to market's sanctions [technical used expect XX% deep expected Revenues continue we expected on infrastructure Despite our opportunity the activity for activity other $XXX of $XX for margins positive. third water facility operations. to between our for million services average and to XX%. capacity international product and EBITDA year the overall this a improving consistent while to major constrains we range for some XXXX, To segment Permian are quarter sales

service to and answers offerings, both That Paula, flow, comments. open augmented at completes us in for up and and the would this you on performing call have abroad. our position the cash capitalize and U.S. acquisitions product recent free Our prepared well please. our well questions strong and growth time generating are opportunities

Operator

you. Thank

first Adkins from from Instructions] Please We will begin question Marshall now go our Raymond James. session. question-and-answer comes [Operator the And ahead.

Marshall Adkins

job, completions morning, Good Nice the particularly Cindy. on side.

just Falcon have if Obviously want that? is there. on sales a Falcon kind trying What that us doing would've is in to a pricing big give and Can of start terms what outside that to been, same-store and business didn't Falcon? of you of improvement, of I'm good like onboard. just a stuff to how some So of was structurally understand due throughput the coming lot you basis I sense

Cindy Taylor

A again there, couple so Well, three so one two we had question. of call, had only benefit full everybody months the QX, month the there, we I in of course, of there. the Falcon of appreciate comments the comments on for

said we revenue well accretive that it to contribution to. you'll testing-type we and will be both incrementals growth a when the going the Of announced going get if EBITDA bit you but because as And margins, towards course are margins. that weighted be recall, current would to just we're to mix we guided change

are true. by the again, the your the those skewed morning content Falcon We So operations. question, had result incrementals. kind the questions of to acquired again all a about But versus things have year-over-year That sequentially, more given two-thirds we of revenue hit direct increase kind of driven few this three-month. Falcon about one-month was

so should holistic view. you And a that give more

the Of course, base sequential revenue to we've operations you positive as that well. have in tells our that performance

Marshall Adkins

what -- of playing was same-store it nicely that… understand were because it? drove any basis well. higher-end that were guys that driving probably little as pricing? services, know help up that catch on And your it a Just What's you sales Right. like that you me sounds I up was Was a

Cindy Taylor

product we're kind Yes, so it's that hard coverage our both our and offering of broad-based to in pinpoint that. geographic

offering. between generally product basins, I today. pricing just But it's fairly would when bit both customers sequentially, would of ticket I where power of shifting was pricing mix pricing. a have of really the flat hard being specifically describe between per that environment kind you a and quantify revenue generally on But as Our to and that's say little firm, activity with that are your we

Marshall Adkins

where bit it little any question tangible Last got What you, seeing your commentary, right you now, Permian? market saying a seeing sales Just are I've ask the guys what in just weakness are a us to the Perfect. the of it give there? Are you but in stands of there? the your Permian. customers sense me in as -- for hit

Cindy Taylor

The these pipeline across a spent first it XX% of and our an internal guidance. obviously all this doing level of of activity kind takeaway products, of But I segments our type simply also short-cycle business, to We time of on represents in we revenue. Right. generally and think about from capacity. anticipated completion our GEO. of analysis point on of business And to kind questions, total lot our we of because looked and drilling, based important services, say, off-shore Permian to kind current of light

very going is you but me I'll in that not customers and important also Permian of with. there's from to get to know, just important That we're visiting not But context feedback I it a So I say Marshall. the specific customer not XXX% had that the a slowdown at gotten tell activity, generally certainly one us, player, any that to be all material are the this there. stage. conversations is out it's I've think individual that as we type

around of in there's lot type and time. environment Now, not a obviously point And of kind but going realize expanding I again, trying what we're the I But pressure think, just really capacity. anticipate of there. got One that Permian. out some do, just coupled there, issues customers are the a you've in seeing pumpers, is issues that's fear today's to particularly with two to

of I'm to impact negative our going to business so, see don't think today, we now. And say a just I right as

Marshall Adkins

Perfect. you. Thank

Cindy Taylor

Thank you, Marshall.

Operator

from go Please from comes ahead. Suisse. Jim Credit question next The Wicklund

Jim Wicklund

regardless morning, important. performance of what's Good guys. in quarter, that's today so quarter, Good good stock the the

Cindy Taylor

Thanks, Jim

Jim Wicklund

question And oil know in answered, of down. put it's the to an industry the on are elephant room, Marshall's got don't you we we I going as But which know to kind slow companies somewhere. the and

call inevitability. say up three say, our of do, activity by like let's can tomorrow feeling you looks "Okay, companies this cutting there's and XX%, Cindy. we're so And What

We'll that. that, up a of pick as about What you do it Sorry to the mitigate it later." can impact company happen? should

Cindy Taylor

here, but demand; comment got or other question, demand make excited better the of the is that basins. in get improving would too not I some we've first strong developing appreciate I I fairly --

that to effort it's in in theory reduced about degree. basin, goes movable. put there large in would much readily you hard that one, materially Number so Our so the is overtime XX% in more equipment to chasing to us rigs but the we down. to is gut mitigate And of because tell my pen paper, XX% instincts have working again would the overtime that environment Permian, that with activity a

other as is, we're hire labor. The to thing in-basin struggling, everybody

base got house So costs we're them to actually hiring means which move out people in there. of we've basins, an

right cost that explained. is environment say some lower that slows thought you I very well-positioned generally natural beauty But out is so move I'd cost mitigation And the we're based. one hypothetical basin are elsewhere. at we there heavily some of potentially on a equipment, will one have the just think be do allocation and having that and people in to so will go that Permian overall there broad focused Jim. so than capital if activity now, And that we there And process that

Jim Wicklund

Amen. fill? On many you're that have currently do to how trying you people, open positions

Cindy Taylor

job it's give in looking just XXX either quarter, to XXX Chris, services going of completions bid color, won't that room. I basin. finger have, can frustrating we But at say, the hired harder excited pretty on jobs basin or educated get last for truck field shows and over look the But personnel highly tough. the I'm certified me, mightily that the an that substantial you're I'm put and et are in personnel you're a -- employees know the just if abandonment experienced next but fairly field it, this I'll and lost we you so we quarter higher a to struggling industry I find, at But for workers, that's in engineer for I kind little are and and petroleum number, worker the untold right. number. in you if we can't now, BOT a as over of drivers, those my cetera. a but he's An bit

Jim Wicklund

guys. Thanks lot. So a it, that Cindy. on perspective a Thanks, puts great

Cindy Taylor

Jim. you, Thank

Operator

Our JPMorgan. ahead. next question Please comes Meakim from from go Sean

Sean Meakim

Thank you. morning. Good

Cindy Taylor

Sean. Good morning,

Sean Meakim

expecting I visibility think And way could above-one months. back-half? hit Do this our XX the for to if So, year. much was see bit better thoughts awards you're next the highlighted a the to next you book-to-bill little that that product major into over we hoping more on the getting is get sizable of not -- Does necessary maybe awards of we any is in times year? mean of in Cindy,

Cindy Taylor

you couple of it's you we a content of production for award know, high There positive, number two the trending the projects don't was That talk is it I'll takes, that and event. heard believe, first lot and everybody that developing of So, I Asia fourth infrastructure and be favorable, infrastructure. about things the good heightened people definitely as one, see interest, tell major a be Brazil, there, welcome quoting because that's and of We of a technology types Gulf but tieback almost few when quarter that more our it's years. XXXX, in I've in activity. Southeast to award A level are a welcome. opportunities different us, from puts Mexico kind later to or of is was some absent little bidding the got smaller very, since, seen improved. just we've very there's lot on side course, overall that's bit XXXX the in are a market. so activity going of activity honest, known just but to production

because expect second-half, it orientation. be type orders that they're development largely course, at we be we by standard And our our As expect, multiyear least projects we those of driven which connector will the in specifically, QX one. relates or to to, major classify field book-to-bill

there. see in little slow a We QX QX. a pickup were bookings Our in

little pick is to we again QX seen to bit. project connectors that that got and short stocking, down is over trending customer timing, bit a But quarter. couple your But predicated of all what cycle. is expect book-to-bill years. better In similar addition little a on we up. what the predicated, award we've this a is which that short question, major of of more standard our think is not Again, It's than cycle products, not underlying again, one, last

Sean Meakim

slowdown about that. with helpful. think should in services, on Thank in we thinking the guidance, the mix to Permian. about how for completion back-half That's you And then potential very your the respect

anything seen discounting haven't you international? helping noted your pickup thinking but how reflect You've Does activity, it's maybe the formulate some in also Just potentially any lower guidance of yet. the guidance? about mix,

Cindy Taylor

Yes, I all the a bit you given quarter-by-quarter. intervention. in told up of little That'll think down it's We've a be little towards of more above. Mexico weighted pop tends be -- Gulf a and to

a Second to quarter little be happened bit down.

Mexico. in is in But discussions. the Middle again East context can more our of in activity services waiting margin our light more do the up forecast we just then the to this of what It's totality, customer trending size be a favorable of of And course, -- kind is best expansion. in time. of forecast U.S. quarter which in on the land and point is appears with going revenue we're forecasting we completion bit modestly. within Gulf growth of of the at of is international Third

Sean Meakim

Got it.

you. Okay, great. Thank

Cindy Taylor

you, Sean. Thank

Operator

question from Fargo. comes Our ahead. from Jud Please go Bailey next Wells

Jud Bailey

Thanks. Good morning.

Cindy Taylor

Hi, Jud.

Jud Bailey

margins next on to for guidance technologies; A the XX%. XX% Cindy. for are Hey, quarter downhole question

about quarter wanted the little XX% margin how could for your there being is or down quarter? just you did progression it of the into thoughts a next get maybe to anticipated did, than that drive kind this think You second to margins if the was just more that step do anything quarter? helped conservative had we of What I quarter. kind margin this on

Cindy Taylor

obviously, a the like the -- give Yes, of that. than like comment can quarter-by-quarter. honestly the I longer-term we I the to I range finally quarter. question, time because, was to end we point predicated like on GEO margins. move given XX% will strength to I range upper I that of XX% on guidance than transaction know period of the keep it to capitulated And And XX% we that second longer top when and that. the for really percentage do quarter, a did

We comments. I it about have our -- prepared and talked in I think

lines We that and product expanding to productive nicely, capacity have are that. added certain facilitate we've some

just are testing field well lagged Our engineered introduce switch. plan very little those to we are the perforating that as bit positively, things gun solutions and during second-half our a this addressable an have All as of factoring we integrated solution year.

of the failure last capacity. end as quarter's range it's to by business or want going by accommodate line expectations, we're continue can increase the day, last never perpetuity, the at of expand to So expectation, set that we we sequential up month I've yes, taking a I exceeded productive performance the for the margin in margins just that the and again viable but expanded experience saying to top to that. margin my

drivers will there. a have I Permian think it U.S. activity. you Again small know the key it's largely and we therefore the but there, towards be weighted exposed international content to

And things. of so, drive that will kind

kind through as the to that's made we're care of what but it waiting things we situations, a it exactly relates to lot when would acquisition. thought continues the we course for of business Of

Jud Bailey

business? the Could has perhaps things your earlier one for far step side us more project forward little year? getting on of back of to progressed anticipated had a path this If about offshore sense year on conversations above kind like move that do kind optimistic of just standpoint. big so are the appreciate of I in the more you of and give you 'XX big and what is just of progressed a thinking kind kind project falling follow-up how terms for we the look in feels to manufactured color. up Okay, products. back you have it on My be book-to-bill us can more towards, year. on the and start How really from like It XXXX opportunity for Are mean walk maybe project-specific through XXXX? you think how a award

Cindy Taylor

kind that's step again be that. would again, and we to book-to-bill. versus reality what question, to with of expected and the XXXX intellectually one ask we in happy better out look do a great just disappointing were just -- is are line at cancellation do what if or that was we at And appreciably back and I Yes, and to that. to I to the If the deferral the I'm others. off whether than the wanted knock being honest, ball park, The got, it's

that we got bottom I wanted, are do is we've the basis, again, we kind as And in so. go weren't earlier I'll offshore/deepwater ordering been to and is a I to coming at almost it kind in and under And exactly days and sense -- I so, guidance. outperform our in that call our on to generally think like taken right, doesn't can't award analysts of for appear of that's you the projects completion but some a date not percentage quarter from and but be get off factor have look that intact. forecast everybody it's and that color material booking of headline that a back things fundamental a and bidding The few one to actually remind industry. forecast, ahead a overall about can that, clarity. fact of that thought, things of months materially quarter timing but a hope these revenue it is least six this tweaking positive we it there's out that specifically activity get some to improving; for quoting and more to kind of allow to to guidance until shifting out tweaking noticeable what these might you in certainly revenue recent come than on us award our of there's a at felt forecasts, was other we engineering I and want our

years, give couple and that than that last addresses us revenues, time a that more the your favorable over been are question convert trends to to if they So bill but macro the of little had backlog fully. obviously

Jud Bailey

you're are it incremental And sounds this I'll your Yes, starts developing the year? the guess fits that going towards sounds you add that kind more experienced I for of as on helps. -- more of many that it is visibility you up kind opportunities despite and 'XX, optimistic year like getting

Cindy Taylor

focused That is getting at heavily this that, project comment. time on our in do fair our simply will, a for very our we and point more backlog really outlook achievability, I'm XXXX, estimate. the comfortable to more put, And solidify and of if you tried major but all to we're XXXX on

Jud Bailey

color, Thanks Okay. the for turn it I'll back. Cindy.

Cindy Taylor

Jud. Thanks,

Operator

Our comes Simmons. Macpherson go Please from ahead. from question next Ian

Ian Macpherson

morning. Good thanks. Hey,

I expectations fleet drilling broader in part been guidance most answered, side well exposure a the contribution on of I for of bit there think you my speak of questions can the given your to just have joint and the to margins as the but rig a the your in for was there quarter, the wondering setback the your was what rig for are Permian and flattening that's been count, well QX? QX, side, outlook second witnessed for results and leads

Cindy Taylor

Yes, you bet.

a kind what generally are to, But Permian, horizontal quarter, little happened well issues or don't we're were permitting we footing no horizontal do we the well solid the drilling again for by we to we the I'd more a because looking bit slowdown as our if have business. ground; disappointed. call of but of to efficiency work overall to switching blip in move able of levels, before disposal drilling the there, the that the and segment, as surface drilling that doing there's was have reduces tophole and reason type if and and really that in -- there's efficiently And particularly we that that be that leg. working tell next of customers between it won't we any we there. improve other that more so driven That quickly just so setting job as relates saltwater of support third I'll as obviously are the anticipate do to side you a We what bit wells

Ian Macpherson

how then visibility to fourth this given I how factor a slowdown, to beyond reasonable quarter been at Okay. as is regard the Thanks, XX ago, I suppose, just a you kind for of lower looked to no quarter I Cindy, helpful. broader you guess activity for Permian, but this say, but QX ask point? a you year to said flattening you a guess broader would in that's this pulp customer activity beaten with the would QX in your today activity would compare And from from flattening it of visibility indications

Cindy Taylor

wish visibility Ian, business; if long-term so quarter callout would had we a are business. do is I as good Well, not, a and because in long this I about commitments my say that more I I

to speculating I'm to have. I different to up so locked multi-quarters. And not for punt going to I their than It's equipment would me. to it that be somebody And get have answer any

Ian Macpherson

I will have not I shall pass but it debate taken here. Right, for answers thanks the anyway, on.

Cindy Taylor

Ian. Thanks,

Operator

question next Please Pickering ahead. Our comes go Tudor, O'Leary from George Holt. from

George O'Leary

morning, Good guys.

Cindy Taylor

George. Hi,

George O'Leary

I interesting services just I driven tend of in third so remarks the it I and and maybe the think U.S. driving that a quarter Anymore there you that, to for think business, was noted growth it that more wonder if highlighted specifically? international an quarter uptick thought third business are all little On growth that I interesting. -- side, regions for you the I more is the the is in what you color your we mean activity. think completion prepared international provide in could

Cindy Taylor

to to sorry of is our runs earlier, elaborate a I the that bit specifically, business. I as say international to Middle Well, mentioned for activity East. I'm you let since weighted more going Chris but would And he most

Chris Cragg

continued expect George. completion morning, Yes, reasonable always International strengthening Yes, been a in has we part services. international. of good

of because concentration got in hit Middle of some we East, holidays. quarter, the Second religious our with

kind So that we continue from think should and to of here. stabilize strengthen

be So again, forward. for long continue we business a it's part to it a of contributor and time, been key a our us going to will think

Cindy Taylor

just add everybody international color might of for the from revenue be And you think… Gulf I combined, Mexico the contribution phone on

Chris Cragg

XX%… than Less

Cindy Taylor

for or XX% so, reference… about It's just

Chris Cragg

stabilize, and begins historically business, onshore that into of it's what due But it the recover to been, the was -- back higher back George. in has falling kind reverting on past it decline to but the to

George O'Leary

any are your that, but online, when all on play to? potentially tool helpful the may very profitability of guess, that to capacity, you and capacity-constrained due of the two, those that I one, and is for the to portion come then And manufacturing online? increase of own or underlying timing currently a that margins assume improves the once business, capacity impressive guess, how the Should out? in-house revenue that's then, I And color. color the Great, we are downhole And guys looking outsourcing as side, somewhat what quarter. increased going come

Cindy Taylor

capacity segments we enhance you Well, again, productive our to party third the well as got mid-year product been able perforation of and have the know, capacity probably lines able again, But have as so -- have until produced we we the different in internally -- as product for kind won't have where there our side product to we is been on products. engineered year. next both solutions produced we can't really completion come

year. event we able latter tend capacity we get until more really on of that Meaning product next the of And themselves to But And comes new us type line this will growth lend that were course margins to. business of that incremental. is all we to flex need in think high in our on. So I matters. the volume new to sustain capacity be the the our

help margin will our So us my profile view volume overall expand in term. longer

George O'Leary

and Cindy team. very much Great. Thanks

Cindy Taylor

Thanks.

Operator

Cowen. Marc from comes question go Bianchi next Please Our from ahead.

Marc Bianchi

thank Hi, you.

was up the some -- latter following expansion something for with else? George's there; the question has Just increase downhole that associated here for -- with or CapEx is increased CapEx on the

Cindy Taylor

business. more came of much -- with off Chris' XXXX our We remember, higher CapEx. It's really for

technology XXXX. But Some own course this of CapEx standpoint expansionary at opportunities into would one, are that have maintenance see We standpoint. of safety very advance what which is we of to low we constantly bled and kind capabilities well. for of business our the view trying an as from the that -- and both responsive in two large I site efficiency a Number and been well at performing growing our need buckets. customers of levels majority to

certain that want tweaks our to call and to modification they are there it equipments we will So make. I

activity. we focused not CapEx. sky slowdown services a if sense falls increase in We completion have as part It increase incremental But in entirely. some Obviously, for the rather quickly. some also got hope But had massive and to in anticipated worries everybody not those plans would It's customer out We demand. most can a take that for I it responding positive modify is that small work. it's inquiries CapEx. is again you the the fairly

Marc Bianchi

good to Okay. That's hear.

of some there. to recent it were in conversation meeting. revolves more towards constrain what kind XXXX a it magnitude of and some walk making of that… factors happens are kind I timing certainly of make of and think going through I you are that around be investment downhole we capacity like perhaps substantial What sort What us could planning decision? the looking port for sounded at the had the you we But considering think you Could at?

Cindy Taylor

two sure our I downhole your we question; if the the middle expansion both parts in encompassed Millsap, the our on that there, that for number am understanding unchanged. in is And Nebraska also region were have campus of capital but am and technologies not there in part CapEx -- plans guidance. is do I one,

saying, And we services in are increase And so, technology technologies. this downhole correct that yes, for you modified were also downhole addressing the at you that's haven't not expansionary in completion again I planned modest CapEx We just the our capital segment. guidance. more in have thought stage. But

Marc Bianchi

like XX not a sounds bigger capital, to the impression next slot okay, that. maybe there in expansionary was maybe come terms was but of under over that's Okay, case. maybe the thanks it months the I for

Cindy Taylor

guidance. No, it's in our

Marc Bianchi

Okay, okay.

quarters? Can meaningful there. Just would a know pickup price a in component the takes range. on are margins here right nice implies I labor well about seeing is hearing from cost see what side, it? drive a one XX% over you through talk puts guidance are as like the you looks cost the last us me the of couple inflation. are kind We now next of and Curious you just what of kind that in incrementals

Cindy Taylor

Well, calculated incremental had the margin. independently I

on is the product you puts are takes. put basin major that going out in lower So our one be technology. comment and the And is commuting our But testing. there what XX% to out It's -- to is I back of capture than a Obviously, tools, and but isolation margin am flow and basin lower going to good again, bit activity I reach our there. margin say the are in not they of mix significant, basin. proprietary wall would going historically kind or in labor is and extended

than could my the more always of will service a which is our earlier, in we Jim it depending bad relative play you be when -- product mix far to And earlier for and quarter's not a kind are off when have margins very if there. broad-based to both in the anticipating mix basin it's basin and that they that. work just comments that's predicated all are be. we what competitive line just widely mix be I give other, but Wicklund But it vary would And So competing what's guidance, a the that on growing upon factor. that is can books to product a think Jim tagging they regional on of kind activity, movement we depending thing

Marc Bianchi

it turn great. Okay, I'll back. Thanks Cindy.

Cindy Taylor

you. Thank

Operator

from next Our from ahead. question Robinson. Sill go comes SunTrust Please Ken

Ken Sill

you. Thank

Permian. I have the think asked enough on we questions

one that two accelerating. to the month six One concerns and optimism about international really see So, between suggests said my an getting I of wondering But questions. in for experience my you lag order start to starting there getting And time a was your internationals revenue. better. was is -- book takes

see be or is revenues really XXXX, really to year, going you XXXX you… in do more to acceleration a is more expect backend it better XXXX huge do or or While weighted a

Cindy Taylor

cycle the is product our improvement sure short us I we products. it to as expectation more I Those a product an of make want typically are and the are there and a contribution and right can comes But now business we But in drivers product lot time. that to everybody little I -- months it's major six think term content for major behind shorter manufacture you some accelerates a near lead what products are receive we with just of projects work. have the have start our XXXX, see work term those. shorter on within is material near you when what realized we revenue have recognition cycle connector relates what service and our term there. big guided term you in revenue there to on associated engineering. And the which to the therefore side the than standard larger

service So that But it's expanded to of again, yes, can really I leg project term but other be for backlog up that what short come weighted products, see work. can near for with a am is and looking cycle. major acceleration the military of going kind I

Ken Sill

the What's Okay. on set outlook you job obviously M&A? -- guys your look for like M&A. great done And then further opportunity a have for does what

Cindy Taylor

But active. been. people thing say they is GEODynamics Falcon would good and we when on like right acquisitions. we know the are have as them never acquisitions I dependent to as particularly are been have Well, do we our

that anything certainly I these look there's of But things we to lot don't of lots terms say have is that the would to And a that look get the can still see we opportunities do opportunity things process here, better so in that to remains And to and set would like shareholders times think marketplace. of at. get at robust I but us we and just it say assess we we in for results days. from generally to to lever long-term,

Ken Sill

Thank great. you. Okay,

Cindy Taylor

you. Thank

Operator

further [Operator remarks. call closing for are Instructions] company we time. to back I this the the questions And now at no showing will turn

Cindy Taylor

joining forward report. a really you I lot on in we we kind never the these it's to will know think our year had takeaway you We today. in thank appreciate worry of the to people is Okay, and ensuing is earnings capacity, just week Paula. very you work look We being through about will the things. all of us that. say weeks for will our kind with when the a business all dull, back-half earnings just of but suddenly you Permian we great, of of conclude and I been Thanks call. crowded

the good calls, and luck have with great rest of great August. the great week, So, summer, a

Operator

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

Oil States International (OIS) 30 Jul 182018 Q2 Earnings call transcript