OIS - Earnings call transcript Q3 2019 | Oil States International, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Oil States International Third Quarter 2019 Earnings Conference Call. My name is Vanessa, and I will 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].

the to turn Gil, host now Relations. Investor will call your over Patricia I

Patricia Gil

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

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

our our protections we the would XX-K that SEC other To like to Any today regarding than context afforded affect listeners other along statements. such that on in we the many note filings. the begin, caution the be in factors that Safe weighed those law. forward-looking Form historical extent Harbor by of including we remarks relying please our information contain Before with information, remarks federal business, should disclosed risks are

accessed replay for be This and of can being States' after the available and be and the will call month. Oil conference completion call A call will webcast available half the hours be at website. one a is one of

now over turn the Cindy. will to I call

Cindy Taylor

third call. us to you, you XXXX joining Thank you in today quarter conference our and to morning of earnings for participate thank Patricia. all Good

second reported our that quarter line third earnings we Our results call. in quarter guidance with the conference in with provided market the for were largely connection to the

but guided were to we deepwater-driven were activity many overall range, benefited to operation guidance While our U.S. exceed service EBITDA. improvement. our margins revenues of allowing the later the oilfield from in companies, were midpoint resilient on our at other our the of and quarter activity declines land-based the our upper end at fairly and lower international end, witnessed us Similar

costs contributing execution in strong can each the EBITDA our cost Each more detail and third to lower, control. quarter in I an sequentially, attributed segments operating increase sequential through to EBITDA. operational will three be later were sequential results improvement, were to which of XX% in go while our contributed call. revenues flat Our the to segment's

highlighted has cash As on and flow no have I calls, generated our this consistently quarter after exception. free previous is CapEx company

from $XX us of $XX which revolving allowed cash credit million million, flow million in expenditures. down after the spending pay facilities to totaled operations borrowings Our on capital $XX quarter,

you debt in resulting Lloyd? in will you to detail. ratio reduce net will XX% with more this As a Lloyd debt-to-book we have see, September at in consistently continued of XX. capitalization review XXXX,

Lloyd Hajdik

Thanks, Cindy and good morning, everyone.

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

quarter third million reduce in our negatively per $X.XX earnings of to the drilling Our were value charge share, the by fixed carrying $XX non-cash business. impairment assets impacted services or

XX%. margin of Reported continue adjust third an industry Our was $XX of by with downsizing better negatively our million EBITDA EBITDA and percentage outlook. impacted structure totaled EBITDA with the to our as align global $XXX,XXX we to rightsize operations cost and also severance quarter charges,

quarter. in resulting invested in As Cindy flow million million generated cash $XX generated from capital in flow operations free expenditures, mentioned, in and we million of $XX $XX the cash

outstanding On cash down from flow the cash credit year-to-date have of million facility. after CapEx generated and million basis, have free flow which operation $XX we $XX in revolving is under paid our borrowings

our we discount quarter, value. to during convertible in XX% a par notes $X third the repurchased of the addition, In million at senior principal amount

we quarter of to have through XXXX, the significant historically operations have XXXX of amounts the the million. cash cash $XXX Our our on million, available of ratio quarter capitalization position liquidity totaling our net and of two generate $XX flow positive end cash inclusive third hand quarters. XX, all was free been Since approximately flow. in September book free the and third and at debt continue was to XX%,

position quarter. second liquidity $XX since Our the million, of end the increased

consolidated of of discount terms total which $XX million expense and is non-cash approximately depreciation and of net $X costs. expect million. to million our Further, amortization to amortization XXXX guidance, interest debt we fourth debt $X.X expense quarter issue total In we expect

Our are quarter $XX million. projected approximate capital million. expenditures corporate should expenses $XX.X to total Fourth

in our capital for As provide early expenditures on we amortization expense are depreciation we budget initial stages expectations important next XXXX, process for it's and for color some and to of believe year. our

with with $XX million drilling For amortization XXXX. lower $XXX million land full write-down of expect our we expected the is third carrying quarter investments XXXX, in capital last of the Further combined years, levels the the to few over on in year approximately and our expense in rigs investing CapEx. value the depreciation approximate

time, over this segments. who I'd for call back will each operating through to business at turn you take the Cindy, our to like the results And of

Cindy Taylor

margin represented This generated of third Products segment Thank and the a XX% we during $XX in Starting in segment segment, you, of quarter. Lloyd. of X% sequential a increase our segment revenues revenues million, and EBITDA. with Offshore/Manufactured a $XXX EBITDA increase EBITDA segment X% sequential million,

driven revenues facility project-driven at absorption the cost Our with products sales higher revenue coupled by an other increase improved improved in were level. and results and services

project delivered EBITDA during quarter years. of products next Our military over incremental for at segment be the result. to few a XX%, We strong the were received notable XXXX as award margins one third

sequential quarter ratio totaled XX, ratio the September a in our since totaled in times. X.X in highest times. which is reported increase $XXX our totaled a X.X $XXX XX, of booked X% book-to-bill backlog our million, XXXX. At and resulting backlog backlog Year-to-date million, orders book-to-bill March Our

additional is and production progress into as facility we content for pipeline constructive awards floating XXXX. remain subsea project major conversations developing for Customer visibility favorably and

cost-reduction benefits segment results in we $XXX the completion These compared million markets and revenues, with reported that generated measures. continued Gulf improved customer million of $XX averaged In Services along benefited EBITDA Well segment in services of international to our margin the XX% and in Mexico, from activity of the a preceding XXXX quarter. in of EBITDA the quarter Site segment, third XX%

our services business, sequentially. flat completion our were revenues In

EBITDA third of work, the business quarter our mix and Gulf reflecting completion margins XX% services XXX%, However, incremental cost-reduction for and of improved revenues. which comprised international the were initiative of Mexico our

a to operations, Permian operations During the the we services third to the units for of our ongoing drilling demand reduce particularly decision plans rigs, reduce weakness with XXXX, following our fleet made the of to strategic review of XX reflecting in our quarter customer drilling Basin. vertical scope nine drilling in from rigs

a a fleet nine Mountain will As the charge in reported non-cash $XX.X region. of serve in to remaining million. services Rocky our drilling rigs customers our impairment The result, business continue

of million quarter. third Downhole in EBITDA and segment, In the generated $X we Technologies million of our revenues $XX segment

XX%, to EBITDA were experienced as X% in declines the the segment revenue preceding Segment considerably, margin the compared later activity sequential While levels improved EBITDA quarter. segment realized lower was quarter. in customer third

As product reminder, XXXX associated design segment changes. of write-off second EBITDA inventory $X.X million with a margin new quarter negatively was impacted by

integrated gun that operational we the switch on mode standard released provided preferences. Vapor gun proprietary customer addressable to sized lease is configurable speed our and month. fire versatility our systems in switch progress a and uniquely system The or vapor run gun flexibility with newly our be be is and an filled, to needs rapid Regarding with system operator architecture offering, benefits improving pleased the switch. intrinsically addressable integrated provides vapor can wireline efficiencies. to integrated this of of were providing design, meet open The earlier an

for are vapor to requirement market a system, offering progressing exceed integrated lowest addition premium integrated by the other the the Site. of trials system, system the gun gun to In field offerings Well which today handling Stratech we our designed is all on on

to forward and We commercialize needs and set our the designed a expect gun meet efficiency reliability, to offerings by Stratech look integrated best providing their individual year-end of to performance. customers System for

to outlook our for the market the thoughts now share fourth on would I like quarter.

you rigs. third rig average X% the As is count realize of below currently all XXX quarter of U.S. the

businesses impacted these exhaustive As and our coupled lower lines and with and rig impact we downtime likely product a expect budgets. of be to result, holiday weather, customer negatively by onshore seasonal counts the U.S.

of range be million and sequential backlog improved project benefit expected segment, mix. growth we Products convert Offsetting absorption. to the Segment products and segment over million headwinds, levels revenues to revenue convert by facility and our EBITDA Products major we average Offshore/Manufactured our U.S. into revenue. are as starting a depending XX% we to Offshore/Manufactured expect to level, In higher cost generated from service higher between greater and which $XXX time $XXX margins will in EBITDA backlog on by buoyed revenues XX% forecast

and We Well revenues XX% EBITDA estimate for between should to million Services fourth million $XXX $XX segment with margins segment average XX%. that to our expected range Site quarter

margins expected our from to revenues reduce we to average drilling to our to expected million XX% decision completion important land separate range for our and provide is $XX million EBITDA it believe $XX fleet, services with business guidance to XX%. to Given

will between $XX our lower Technologies believe and range revenues Downhole we segment, to averaging customer XX%. expected our decline to sequentially that For X% quarter segment and activity due with levels fourth EBITDA million margins $XX million

segments continue our while In conclusion, to we managing to capture opportunities tightly future position cost. market

enhanced deliver Offshore/Manufactured baseline the costs of provides our into higher By going revenue visibility improved revenue we XXXX forward. growing a to margins Products backlog able segment are absorb segment, Our beyond. and and in generating better

U.S. based my given be quarter, land above. the fourth Our comments will operations in challenged

from pressure United weakening business, However of internationally our States incremental that revenue in operations to we services to capture completion expect land-based U.S. scope some the activity. to of of we continue the face expand our outside mitigating

All flow, to shareholders. We the returns strive cost, our research in of continuing support reducing long our service segments free product on for while controlling offerings the leverage which our and and development cash remain diligent generate as over technologies we new focused remain positive to of sustained generate our term.

time? Vanessa for open answers questions That up completes prepared and call please comments, you at the would this our

Operator

Instructions] Holt. first Tudor, with [Operator Pickering, from our question We George have O'Leary

George O'Leary

guys. morning Good

Cindy Taylor

Hi George. morning. Good

George O'Leary

guys then design of and really working Wanted shots the nice hear on more seems per off stage what kind start the think is, we side the Cindy to system that with to get your well and more executed. progress can you just and guns that are contrasting it's E&P vapor to are perf shorter you whereby perforating clusters be on better static comparing

length the the segment and there? walk Is matter? between that gun does those differences perforating kind that thought us of of Just each systems of through part how process then much help two

Cindy Taylor

industry you I are mean shorter Well our trends guns by customers. for absolutely hit preferred sure, on but

if obviously will moved obviously system norm, new vapor the static into as that needs customer you that system. would accept be and both just to but to that have we in and basically, the so response the And integrated

those So trend permeate or industry whether think of all of integrated. just future offerings conventional are that as the an that will

George O'Leary

wanted that to to perspective and that through know I just to the when as necessarily think Gulf to you can Okay. on from be services encouraging that then see That's crop work work through you very side, like kick guys think of going Is of going the XXXX completion that in. line crops it good of work And more a for sight of near-term helpful. and work there up? international dialogue type it's up. around was it Mexico looking more not work forward? is I

Cindy Taylor

indicator, an in and to and at it's relative the progression quarter second use grew at in this Mexico the always quarter end Yes. waiting that international you George just the predict point exactly the of Gulf percentage waiting a would of had quarter international up. XX% XX%. XX%. year I we in kind and of as came of hard this and plus It out Gulf that for to the first where Mexico

shale on also balance continue And our not is to are of and that U.S. that both We've that's we'd having services into base international Obviously, I good the expand Technologies seeing got you're the initiatives these with reflective a basins strategy. our as So point internationally. well. exposure completion out Downhole of operation. just would a that like segment permeate which to efforts of

you're in that but see the So getting trend if the line that East, Middle balance. the we're think at you whether or some good visibility strides you is towards U.S. never I can great look making

George O'Leary

it Downhole by segment's onshore this their be Is point. might just of American that have that imagine as in then guidance market. about business that would that Technologies seeing more. one especially historically destocking some you contributing A just as to of to Great. analyze I That's the of North the relates customers, revenue sneak at quarter-over-quarter And eventually... that compression inventories complained lot helpful. super in folks

Cindy Taylor

like lot not say necessarily to you have each something a that just I'm like When going feels at I so and company at it to kind a think we look of of consumables. that with inventory of I are everybody. affects our individually -- manufacturing think that these truly just-in-time assume process good destocking downhole

much modest into reality there wellsite be we're significant centers, us. is the pretty issue if the is I that and straight selling a but see And to and amount don't ship might for a book you're distribution

of today relative of will ordering QX. the an maybe that sometimes at activity early may count rig I it's the so down wellsite X% Again the indicator. say to precede some the average is work

So, the into that see the unusual I early Technologies those period. to these don't rigs the holiday think of quarter Downhole going saw in that indicators it's of portion down latter particularly some

George O'Leary

Thanks for the color Cindy.

Cindy Taylor

you, George. Thank

Operator

Thank you.

have our next question JPMorgan. from We Meakim with Sean

Cindy Taylor

Sean. morning Good

Sean Meakim

Thanks, hey good morning.

to system talk on So, you on sounds about for expectations it. you've these new suite commercial congrats Cindy integrated very Downhole and the I maybe the of cycle in I system? folks the think ready customers with systems know Can trial getting first interesting. sales

what would that be pricing I think to detail more including strategy helpful on part is some penetration of and your extent market Just strategy?

Cindy Taylor

certainly system from personnel prefer made our more gun preference conventional already in the first kind we're strategy and vapor and what their And just talk of a offerings. the integrated of And to to and from market them to maybe loading responding organization around just we system. let's the hearing we're that's systems our gun appreciate all, that that there open remain what about and I customer-focused customize much. shop wiring allows the very simply basically gun where beyond wireline of architecture say investments company question I customers to is step systems some Well, put would a is

System, we forward, preference. immediate you believe be for that will move as Stratech be of kind we but are not depending the state-of-the-art on The again, who industry may your

vapor is us addressable ramp I take question think the to line. while the So, system I a a first does that chain. thing We've is out. first. appreciate which introduced also new your We're switch, get going But to supply it product little which

in this will progress kind So, XXXX. of meaningful more sales towards

the ramp it we than ramping chain say near-term wrote and that switches sure And got off to might the you right, we cautious in but the switch why be we marketing and example tweaking Stratech switches, feel bit up we more be to don't -- one vapor QX that and communication for in anything word like didn't quicker? say System like shooting really as field have will our progressing we panels Well, trials supply belt. I were that the kind quarter we'd and we under debug, couple the to want an of use and throughout and from but little I the a more a

anticipate kind this we so And that process of late finalizing quarter.

So, it getting of as really the staff the with engineering of staff technology very where fourth the quarter. efforts pleased more us into enter but a definitely and are we we XXXX, into is our

Sean Meakim

The very see. improvement That's feedback. to you, certainly helpful Cindy. margins in Tech Thank Downhole were nice

any impact You mentioned the Did after XQ? the margin in write-off that of have XQ. on the switches boosting

that just we pricing XQ guidance there else in as mix margins there of should is anything looking basically in for or absorption or you is the terms that fixed then offered at consider? And cost

Cindy Taylor

it's fixed. really Well,

our all, products good incremental. of pretty First some carry

and fixed we'll yes, very, mean we I'm incrementals a talking So, reduced on to we're a outsourcing start in-sourcing topline manufacturer very that. versus really continue We lot to rather eager decrementals, cost. that efficient our there do anything I doing become manufacturing than manufacturing evaluating and to efficiencies can the working its

top yet. switches. really line in on had related coming absorption, that's But is had the just if benefit, mere us QX we fact a no the that And the cost but fixed we bit no to sales hurts down question

think that little enter to us hard – rational but you fourth prospectively. point. perfectly, just are gave So, but of – you right product very we this we kind a gave as margins help The at we this guidance particularly we margin predict it's environment now this will in is new quarter, the is what

Sean Meakim

lot, Understood. Thanks a it. Cindy. Appreciate

Cindy Taylor

Thanks, Sean.

Operator

James. have our with Raymond we Narra And question Praveen from next

Praveen Narra

morning. good Hey,

Cindy Taylor

Praveen. Hi,

Praveen Narra

Downhole lumpy the year terms have revenues of where I been Technologies, guess has speaking gone. margins how on and this in pretty

we should of we some project rollouts? normalized be XXXX as what get and – go how these incremental we into So think that about should product

Cindy Taylor

market, would because about first think like products is do cost products the as and throughout you go that on And revenue be of XXXX. any price. I a ramp of you here terms volume fixed to tell absorption. It to bringing incrementals kind with major the we of are we're new let's see cost that that. from And improving business, of the won't to immediate therefore be fixed margins bring-up say, to you volume I'll all, that sequentially drivers, a in new absorption not and that probably will dependent both going just that are shock helps going two hand-in-hand

all some will temper pricing We've seen some generally the market I think of that those in incremental. pressures

XX% the would more implications kind a it's assuming to what's XX% probably But I the what's of activity pricing ramp bring early to of that incrementals think range mix. think healthy if the are XX%. And and from quarters, So, to tension steady I and say, of a again, to the year-end, all of I level is reasonable. XX% between there, I we're in that the going get – in volume

Praveen Narra

have Products I maybe guys think we that? go held about Okay. for XQ should we What how you expecting can Last about short for well. the as Offshore/Manufactured product-driven the – it guess, revenue then increase, up if cycle think That's And pretty XXXX of helpful. into the short segment year, also piece to and are very the we start then do and we guide

Cindy Taylor

again just a – that's question. Praveen, great a

that business, periods. are but with our at major prior levels in well you Son, us backlog know projects supports backlog consistent follow our you margins and ramping

basis in about decline sequentially in going revenues our very there's a though to – guidance, both but in even absorption. similar and short at our the impact talking similar to our completion up the U.S. we're we're is to Again, cost decremental, activity. plus, Downhole exposed So very line. and in the Embedded tempering That another to does a because EBITDA, on our plus. that leads services better is in Technologies be a global short it factor cycle, on it cycle line in land-based also what

So, U.S. be while it could improving activity up we as much kind as land. of not reestablish up once on

Praveen Narra

very you guys.\ Thank needed. I all That's much. Good quarter, Great.

Cindy Taylor

Praveen. Thanks,

Operator

you. Thank

next our have Kurt We Markets. question with Capital Hallead RBC from

Kurt Hallead

morning. good Hey,

Cindy Taylor

Hi, Kurt.

Kurt Hallead

much color. so for the Thanks all

that. guess the focus of be my Cindy. part would always I appreciate really business. I You here the provide on Offshore/Manufactured

about You for talked the subsea for – pipeline content. feeling visibility about increased visibility or good and specifically floating

kind what general sense have of there kind kind of kind of to Just you a feel you some you as regions some any what dynamic see of us beyond maybe is just XXXX say additional whether this not trying from? pinning of legs momentum building not some or there? for of sense coming see to there do give even trying maybe And to into corner get

Cindy Taylor

start just It production offshore that and promising. a our division project do chart five Scott and XXXX, who based showed Board content very three the major of years but XXXX, on Moses, in kind seen us quoting bidding facility of of the was just announcements, we've terms interesting. We in look meeting next that had activity in Yeah. it lag leads was and XXXX to

specific Brazil. weighting is are we're course Right the now these very seeing of again, so And projects.

of some the more going Obviously to say Sea I bit in be Southeast ones the but the base past contributing in Gulf are having really of imminent are as with and smaller South Asia prospects but said the Guyana will a opportunity kind little some America. weight they're North broader the Mexico I of

Kurt Hallead

reasonable out backdrop -- color. of the next a north you head that year at you And kind think with of that Appreciate book-to-bill you to feel a do dynamic pretty you X.X as think you. well? get as then point assumption Got this it's can as into

Cindy Taylor

levels bookings and I'd terms terms of should just we QX in behind me before to in Well, first expect have of like at similar facts a to budgeted through say -- QX be to just all that in of overall I we hadn't give ratio. gone the -- book-to-bill but I

a on only you better is the core false but least of on we're however give not bread-and-butter which bidding formal guidance kind I'll process of XXXX, projects. obviously best-performing formal on production at that and budgeting quoting go our activity that's once through infrastructure, seeing guidance better some we

about excited we're So that.

least participate a There offshore coming in market we drilling is by activity. as area contributing projects activity, really at amount is What of hope for we to that stand the to but U.S. capital activity. in of certain having as major that bit segments down of largely that can improvement opposed contributing is all an so because a equipment being well. land that are weighed We land-based a stabilization

positioned more think about acknowledging I feel immediate, see XXXX be good may They're And that. But it as get others. that, we some on really overall. right than of take to based supply-demand are just it about now, we I anyway, positive them, for fundamentals mid-year basic maybe where visibility I won't feel to

I recover areas offshore bases, very beginning And see, Lower next think that. and both I'll year. we'll to are believe, stabilize low I the XX acknowledge off international

Kurt Hallead

Great. Good. more if in on capital allocation. just then one squeeze I And

see dynamics to at M&A for your that get this quite share You versus a M&A-related I type guys debt provided how update juncture? and repo things you reduction bit to an as year. an you guys next but tend for versus outlook temperature curious know to of already see CapEx on just

Cindy Taylor

that important convert know obviously, a throughout balance to most concerned cash us. XXXX the the X.X% about is all sheet we've our shareholders that's down done question that simply having interest rate. quite No, pay We're think And at frankly, from carries not want our real understand you what revolver. particularly I debt as

optionality. we dramatically service. there a are I'll our think in we and in little just that operations get go the differentiator healthy otherwise, a further free are of And quite M&A debt we or very the healthy company seen be not call we're from going keeping has are We and very pretty sheet. that a do number that not it a because as that as of more as levers cash balance hadn't will frankly revolver our think many it's right more lot nearly down And and of that. flow to CapEx, when less deal we we And we to now secure to space, companies damages paid

I'll the we probably frankly hadn't as in seen also we puts be say, would list, interested from on doing just M&A of and anything quite of it an perspective lower lack much opportunity much as anything.

you'll Obviously, So, debt for to continue are are an we near term, evaluating. see that paydown. us share option repurchases constantly

-- I transaction. Particularly, the geo pride took great years when saying, incremental XXXX the outstanding net any have and been we I've we in in from of I company feel shares exception the here with XX acquiring real public didn't

when got was million that shares. XX The shares. was market dramatically about stock X.X we did up we've transaction valued So incremental it, loved and that at

price of shares lower lost decent us amount unequivocally. So a carefully share buy I a me, allocation front against from it I'll will at can capital much take repurchases stage that not back it's M&A. that above and evaluated say other priorities on be

shareholders. with all We're also meeting our of major

I wouldn't a of either. dividend necessarily think some CapEx, eliminate flow time we sustainable I therefore, point very cash the and thought after at in have free

those organic shareholders both able flow. to But and comes listen fund first. have And development I priorities. growth research say think possibility, been again to we're of to we to and what things as they out but always uniquely and have always view our try I'll weigh of cash free positioned we that always

So necessary funding talking I'm capital priorities R&D. about really allocation and growth CapEx after

Kurt Hallead

that. Appreciate Cindy. Thanks Fantastic.

Cindy Taylor

Kurt. Thanks,

Operator

Thank you.

next is Marc Our Cowen. from with question Bianchi

Cindy Taylor

Marc. Hi,

Marc Bianchi

progression Thank you. back for you about fourth that Hi, Cindy. I talked to go order wanted the quarter just to Offshore/Manufactured. for

be to any that? level Or like a I -- sort but this anything if we healthy if is I'm going able about are to here, kind -- Sounds there's XXXX? recurring think it's that might run curious in contemplated be that of rate into of we don't awards as head number a pretty at large

Cindy Taylor

of question, and we'll in we -- forecasted think define in but do there one that's have order we we mean good do Yeah, I million that QX. one excess I large predict a as have $XX

Marc Bianchi

the seems And look but about helpful. that's going XX%, here, you decremental at on. a just some If the -- on reasonable Site. at then That's of the guidance have Well okay. I Okay, it which on cost midpoint cutting implies

weakness, if in I that could would curious seeing have more the up? there's you that conservatism. how pricing there's offset to shape and cost maybe the cutting cold left cutting dynamics terms cost talk just in you're thought more part opportunity I'm maybe what's perhaps pricing the of

Cindy Taylor

I'll say hand. and potential is control Yeah. that generating our in our ability time. that are to revenue have through They retain there at some field first point time we to honestly cost over

around our important maintain workers our managing So district while make, time field, of hard in field over critically field of lot hands management been i.e., obviously. a to the efforts the managers managers, had it's layers and regional very the feel decisions to but we

one. that So statement is

don't not are I variable-based be. actually a will XX% XXX% We company. in necessarily decrementals never of that We're weak think anyway.

terms element out a there shops that to is cost field. day fixed the in there people So are well in facilities, as warehousing, of both be the district managers, as every absorbed

our appropriate I So to are close decrementals right, monitored measured that pretty in based I think guidance you. and top-line your they I we think guidance on gave that are the

Marc Bianchi

comment And pricing? of just the Okay. on trajectory any

Cindy Taylor

tell going company other to a never it But is don't you there that's I below we think one breakeven. marketed products have competitive. really is service than

at And reasonable margin. -- actually and so a

equipment you always at not noneconomic, is bidding and we're sit stack to we've losses. here to And because tell going jobs so I'm going we've -- that not

this do, responsive protect challenges make company And lower prices to tough better trying that and as from sheets so and -- but are respond them to help that's also balance of say but crude the help be that to shareholders. customers wells we the the -- and don't company our strained and through time day we're and of a them our have at service we to what health it have end to honestly make facing

product but certain through there. competitive that So as cash just under to and product certain it's continue flow. It's a pressures, lines line sure price investment for I'm to every us simple the environment out on put incumbent upon are that as just there managers free returns it's work and And been simply have generate that that.

Marc Bianchi

yes. free Yes, flow Well, good quarter. this cash

very back. it turn thanks much. So, I'll

Cindy Taylor

Thanks Marc.

Operator

Thank you.

question Wells Cole with Our is from Fargo. next Sullivan

Cole Sullivan

morning. good Hi

Cindy Taylor

Hi Cole.

Cole Sullivan

On be quarter. we got and in kind seem for we margins Offshore that range Products guidance and to fourth Manufactured XX.X the of

will As category. we get improving guys year? help as next booked we that early award and towards can cycle margins of maybe Is you quarter kind military project-driven revenues have maybe as look into this needed the to next other what's kind year short products back XXXX, that of XX% stabilize the

Cindy Taylor

I think Lloyd, since up. I end our backlog I'm so of the am the since of year the XXXX? right XX% end Yes, looking -- is at

Lloyd Hajdik

Year-over-year.

Cindy Taylor

year-over-year. Yes,

favorable stabilization things behind And the direction our -- to we're drives products. got need the of our -- in some headwinds all that's if we I land execute, so those products don't moving in you short-cycle absorption those want drive doing to on it's backlog I a we're throughout U.S. get words, other on bag to And -- we project-driven in will I both come now up. good. I us which I facilities. do need what to so in to say What really are margins but my get got

Cole Sullivan

seeing XQ? then And of parts the obviously specifically? right. saw XQ? factoring XQ. side What is you are Gulf Mexico but and guess on lower completion international breaking pointing Obviously, And are are was Thank moving guys we there fairly U.S. that you some what then resilient what of down resiliency I then in land in All land of side looks is kind in and in guidance the drove things XQ in like the for the you that. in services,

Cindy Taylor

sequentially land Cole clear U.S. just Yes. operations to be And very QX. was down in

However competitors by Gulf than just really led implemented results relative it QX to That early of market. was to will and you more international the in very offset rig count our I signals improved with coupled if frankly cost prudent Mexico measure this good year some and thought to activity. signals to relative

and but there. So, that drivers Gulf proud international improved were Mexico of control activity, cost of

QX? we're the And count will about Again, every with you're you about coupled rigs. know getting holiday what to is up when XX% week wake rig what year-over-year be down So, likely get -- down seven now you say I and nine that softness. we okay report

for that really QX. that's what's embedded in So, guidance

Cole Sullivan

it you. Thank turn right. back. All I'll

Cindy Taylor

Thanks.

Operator

you. Thank

from Our Howard Vebs Vaishnav next with Weil. is question

Vebs Vaishnav

was and continuation Hey a the one quarter, on of guess Well just Site think it's morning good a question. I especially the good congratulations pretty question and awesome. last I

all, if So, seems you is I'm it correct and up and on international like Mexico the doing correctly sustainability? like math a that almost -- my color of first XX%. what's driving if provide that plus just if like Gulf of was math Can

Cindy Taylor

overall count Well, activity, I front don't have all of it, my the industry at look you stats me up always Gulf the caution rig I Mexico. of when in but and in is

it I up think In last and just fact rigs were time saying active higher. I I about and was XX%. caution -- it's looked yes Gulf everybody XX% U.S.

speaking, of is but Gulf improved but particularly put is Just we've our base with know and international in generally also activity, Mexico the activity in and their initiatives in East the into off activity activity Middle place a of weak of improving, taken to coming lot our that's expand around around Saudi. a very then and specific and just it them

percentage the you think of improving completion didn't relative drivers of And the international so right, of those than services maybe are Mexico Gulf I total the the just other relative of real my and didn't it. improvement. I I math to revenue. the Again do do

Veb Vaishnav

sustainable like as it's going forward well... sounds And it

Cindy Taylor

is. it Yes end was I'm the that your believe We of Absolutely. sorry question.

Veb Vaishnav

Okay.

if can much you of Downhole one like that say think I it the international? how is is -- about Technology Just follow-up,

Cindy Taylor

some time, is of it about maybe but last international P&A smooth That was revenue. that now X%, out the looked these if lumpier and call contribution. at vary can more The X% international Right I total I there will it, little -- of I'll you related as very this just are say.

also Mexico, Argentina trying that say well. as and North in Sea we However aggressively are predominantly the expand East, to but I'll with number Middle initiatives

new Of the course initiatives that have but East, kind of some is base more now, Mexico. around markets our and new that Sea Middle Argentina North we and

Veb Vaishnav

Thanks. Okay.

Cindy Taylor

You bet.

Operator

Capital And Hallead thank a Kurt follow-up we It with question Markets. seems from you. have RBC

Kurt Hallead

and component the some expense going correctly. make non-cash I just Lloyd please? Hey piece referenced for then want you be of morning. one to of you think sure me million understood interest you to good about guidance that. there repeat $X.X to that was I Could I that referenced

Lloyd Hajdik

Yes absolutely Kurt.

QX for and So expense $X.X discount. the cost for is non-cash interest amortization total estimate the is $X million million of which about debt issue the of debt

Cindy Taylor

that its value feature, that to this to accrete you rules the there force $XXX over put to feature up face basically of a life. a clarify converge just conversion that of so And million -- accounting is convert you amount conversion

try that definitely forget just it's it's non-cash fairly about to interest always small. some So I because out our point people cash a item carry,

that cash day, available end the to oppose as debtholders. the of flow so its allows at to And true shareholders

Lloyd Hajdik

Kurt item debt year-to-date. the debt and issue discounts cash we the $X.X for million a have separate flow in And the line statement costs

expense expense. So between and cash delta that's interest interest the total

Kurt Hallead

million That's quarter, in $X.X though would the That million guys apples-to-apples Okay. that $X.X you the $X.X reported correct? million helpful. compare third is with just

Lloyd Hajdik

Yes, correct.

Kurt Hallead

Thank Awesome. you. Okay.

Operator

Instructions] [Operator

Cindy Taylor

be like sounds Vanessa there Okay. might not any.

Operator

That's correct.

Cindy Taylor

businesses I think just all I'll busy importantly I focus of very with very confident I it's I want ill-defined of always oftentimes I'm to flow that of reading and our overused success think it's generation. our all about an term. consistent based close long-term like this came technology I strategic Okay mix I our sustainability a morning, earnings and out cash report was for close. leadership, But States the free a on the and you in just to our say and just day. but thought know Oil

we all questions move forward regarding you discussions to Thanks the we're them to you. quarter XXXX. we have of and As as to follow-up look always, into should receptive future

Operator

today's you and participating. this conference. Ladies you. Thank gentlemen concludes for Thank

disconnect. You may now

Oil States International (OIS) 25 Oct 192019 Q3 Earnings call transcript