OIS - Earnings call transcript Q4 2019 | Oil States International, Inc.

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Operator

Welcome to the Oil States International Fourth 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

begin. may You

Patricia Gil

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

Technologies States’ be Oil Executive Hajdik, Executive Vice Oil Ben are Vice segment. Financial and Cindy Our joined Officer; Chief States’ led Smith, and President, GEODynamics, and today Chief Executive Operations; will Taylor, call our President States’ Oil Officer; President President by and Lloyd Cragg, Downhole by of we Chris

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

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

turn Cindy. over call I to now will the

Cindy Taylor

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

quarter. reflective fourth quarter fourth the significant the of decline were issued results activity in and during Our were land-based January consistent guidance with revised in U.S. completion our

a Products project-driven grew our revenues destocking regions segments quarter. products converting their other backlog Our product result operations sequentially, during completion in services in business for with benefiting as in down and particularly was short-cycle coupled of sequentially our was inventories. of existing Northeast decline increased affected and customers Despite demand activity our from Mid-Continent the our revenues from this, segment Offshore/Manufactured the

million, at year-over-year. of totaled XX, XXXX, XX% increase Backlog December an $XXX

of afforded the year times. ratio Our segment times, averaging with continued the full X.X Despite generate fourth consolidated was business notes challenging operations Lloyd our of detail to reduce faced flow, model cash quarter, our the during position and convertible a more free of borrowings. our book-to-bill used into you each was will the financial to segments. market credit capital the I revolving further results ability XXXX our review facility before our discussion for us a structure ratio in strong repurchase and which conditions portion go of senior X.X quarter with and

Lloyd Hajdik

morning, Good Cindy. everyone. Thanks,

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

per two-plus-year-old customer $XXX earnings Our impacted by for charge debt provision share bad fourth quarter or receivable impairment on million and claiming bankruptcy were a a $X.X $X.XX noncash a goodwill million protection.

these for fourth EPS on $X.XX share. quarter per items impact The was

X%. impacted percentage with million year EBITDA Our of fourth million margin by EBITDA charges totaled bad quarter severance EBITDA of an provision. was negatively a and $X.X prior debt downsizing XXX,XXX $XX Reported and

rate in expectations that growth this goodwill $XX.XX XX% market was common The at per States from on and peers, related arising that date given other our segment, Recall Oil Technologies energy stock of valued factors, Downhole share noncash charge acquisition price with along our closing. the the decline significant of to impairment with stock our among conditions. reduced funded

in from million of a million capital value. the which in In $XX notes principal in sales, quarter, $X generated sales. repurchased in the asset par these to convertible from fourth XX% cash we expenditures, after $XX borrowings operations. CapEx million and with and We credit repaid mentioned, received senior $XX facility, million proceeds the $XX our we under at our of free in amount proceeds cash outstanding in in inclusive and revolving quarter discount flow $X flow asset We from strong million cash invested flow generation the of million resulted

For the $X Oil average discount expense XXXX, debt noncash was of our cash was debt States’ approximately million, issue which full and interest totaled $XX for million year amortization costs. cost of net X%. debt XXXX of

to flow. fourth and quarter have Since flow amounts significant continued through operations we free free the positive all and cash the generate XXXX of of been have historically two in quarters. Our cash XXXX,

conversion full approximate we an operations from is the For year free this XX% represented sales. to plus generated flow repurchased principal $XX notes which, our XX% proceeds at of flow cash and paid million XXXX yield cap. our $XX flow, par discounts on flow cash based asset credit from CapEx And million XXXX, again, outstanding and current EBITDA for cash an We cash revolving of on free in to value. amount our market free in borrowings $X facility down senior million after convertible

At our was net book XXXX XX% cash million and available hand end liquidity debt our inclusive at December XX, ratio position capitalization $XXX of totaling $X was to million. of approximately the on

we net $X and to depreciation to million, amortization million. $XX million expect $XX projected In $X expense amortization expense discount noncash of quarter approximately debt terms guidance, consolidated issue of total our costs. to And are interest first and expenses total which our is of debt total million, XXXX corporate

XX% to expect invest capital expenditures. at less than midpoint which million We in the $XX during is approximately CapEx $XX our to million XXXX, roughly XXXX

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

Cindy Taylor

in inventory you, slowed valve levels. sequentially and a as EBITDA quarter. we In Thank U.S. existing reduced during our increase our generated elastomer fourth offset in million $XXX Lloyd. sales project-driven the Offshore/Manufactured primarily of customers and to X% sales million of activity products segment increased $XX revenues an segment, product Revenues due by shorter-cycle and of reduction Products partially

of compared margin XX% in was XX% prior in quarter. the quarter fourth the XXXX EBITDA Segment to

debt earlier. receivable, Our negatively by mentioned prior provision fourth Lloyd quarter results bad in on this segment a impacted year $X.X which million were

totaled of fourth XX% a quarterly the that increase X.X Our ratio December backlog X.X orders December million, a year. $XXX XXXX. XX, the of for booked a million, totaled times and from quarter booked in At ratio in $XX at resulting our XX, book-to-bill times

the technologies years, product expertise bidding are award in on or our in leverage over us XX should than required specific support we segment for floating technical development of our help levels Recent we XXXX support XXXX. With cultivating capabilities and base XXXX, develop opportunities be our wind has globally. the should diverse and our energy of clients believe to endeavored systems, In similar a For military greater bookings Offshore/Manufactured customers. environments. working deepwater and achieved to Products offshore while potential production visibility, drilling, our fixed more highly current level subsea, energy and leading-edge

were we $XX million revenues, in segment reduced a in preceding in fourth sequential $X was Services The margin and XX% spreads segment, sequential to In regions, rig which segment driven by EBITDA customer of reported in XX%, the and million of the EBITDA completion land of exhaustion, down operation, the which number XX% pronounced Site XX% generated the our decline budget frac corresponding Mid-Continent Northeast activity lower counts compared our and in were respectively. Well averaged more and quarter. U.S. average results the that where quarter,

of business market revenues. International of services our comprised completion quarter XX% activity and Mexico fourth Gulf

to the we As XX assets customers remaining our Permian, the fleet serving nine Rocky Mountain previously drilling rigs marketed in announced, rigs in reducing operations with have region. discontinued from our

support operations pursuing global our streamlining our profitable are can We where we focused and activity customer base. on highly

we our consolidated in or closed North of and on in XX%. reduced While XXXX, focusing services or American value-added services business eight our XX% by districts locations operating headcount completion

Oil actively differentiate our completions States We expertise of new products continue to and to focus developed on core areas offerings.

are We further particular international assessing the Middle opportunities with a growth focus East. in

quarter the in of in preceding activity, revenues EBITDA generated sequentially quarter. led segment in we to which land of completion the to compared segment, the XX% manufacturing Fourth fourth the $XX due Technologies to results Downhole were quarter. million continued million our U.S. X% averaged under-absorption in in EBITDA facilities. margin $X In Segment and our quarter lower decline fourth

continue We products trial commercialize new Technologies field the develop, in segment. to Downhole and

respective integrated acceptance following gaining fourth gun in switch are the customer vapor Our and system commercializations gun their addressable quarter.

group integrated amongst premium our of addition, system, formally launched been customers. has In STRATX an named initial gun

industry recent announced During wireline including new and families we two commercialization new products, the perforating of release of tool technology. charge a conference, ancillary, a shaped

customers are functionality the to highest and provide our level improved with E&P ensuring while reliability. efforts safety of where performance development flexibility, mind, increased we designed them with strive product wireline and Our in and

construction new charge During our Texas. we shaped the completed of facility in Millsap, the fourth quarter, manufacturing

while manufacturing increasing share Over few and our products the a lines market next quarters, of increase of be we across on cost number as recapturing focused other in-sourcing product XXXX. our efforts perforating our for our optimizing will we

in later quarter have been quarter as gotten as to The a quarter finalized. the deferred sure first what I’m we in XXXX witnessed start, have similar operators slow budgets after some you operations has resuming to until of first heard, have off the

of rigs. the XXXX X% XXX XXX count is rigs fourth average The first quarter U.S. currently of quarter rig average below

on onshore we margins revenues result, Products XX% effects service and to million to expect with depending $XXX between and our feel product the we of lines a to peers. mix. Offshore/Manufactured of forecast well range million EBITDA segment, our that average consistent completions As U.S. with XX% lower $XXX U.S. and segment our expected product In businesses to

to EBITDA quarter and Site $XX with have XX%. range first short-cycle to that our by Services for Well revenues average should margins We in for expected segment million margins demand million First XX% products. hindered our been estimate segment recovery quarter slow between $XX

segment Downhole products of focused long-term technologies segment, ramp believe adoption market revenues to coming and due relatively critical on in we Technologies be types product new $XX that are between is our flat new sequentially of to and In believe million and we million will are with development our and new For research up the flat range quarter sequentially. success. technologies conclusion, first our to our that that $XX these to margins EBITDA and

a also We be environment. cost lower to that has in activity focus recognize our management

oil generation our term, that expected land-based which in to challenged and U.S. given we plans revolver concerns, prices. the globally. continue on providing a remains and global Our products pay Cash comments. have deleveraging completes to in focused operations XXXX. crude That significant with will prepared demand our meet demand States near customer services our focus continue value-added be flow off near-term pressured fully essentially remains trend to expectations are Oil to

please? you questions call Vanessa, and answers time, would up at the open this for

Operator

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

George O’Leary

Cindy. Good morning, morning, Good team.

Cindy Taylor

George. morning, Good

George O’Leary

and just yourselves integrated the or First there that question of you now out of differentiate are commercialize are going adoption offerings from market? How how the in starting you offering that integrated other do the is gun the rate out guys kind given there. push, have the and STRATX was preassembled what’s had marketing strategically, to I

Cindy Taylor

Well, thank you for that question.

say with they especially with for this a thing had fourth what think And of good think quarter I’d and I system. fact the products we on foremost. good would good been that virtue technology, both the I trials. that’s through and great is of and late STRATX by the reliability operators December, products, field wireline both companies, trials in see the say, And got I first And that trialing does, reliability reliability. the both we’ve

So now course, got now out that pick team on I there candidates our partners, we’re was basically to various with obvious efforts, trial And through initially, most that. building would ramp we’ve now early rolled system. technology we’ve products the of up likely say efforts, the focused those extremely marketing trying that sales that but

future – Clearly, quarters. a you say just a be chain watch our broad you reliability and guidance and that’s I’m and supply barn from manufacturing really to standpoint. us gave in, to why we range it need ability progress. efforts a and But standpoint into to have steady we technology but to to stampeded we a for rollout, relatively the say gives open also the be slow, QX, are doors love that we where How know It will I’d ramp pleased won��t which kind accordingly. progresses of be

in So now, we it success field forward. becomes from the and the operations point efforts that go-to-market have this

George O’Leary

always hear new interested thanks. to about and Great, technologies. then Cindy, I’m

of you a little trying product wonder business? direction you in guys expand new and on Products Offshore/Manufactured us kind that are offerings some point what know let in bit mentioned just could I business. to the for You that if

Cindy Taylor

of But again, We always sales. report structure have a of our variety R&D It’s product don’t always penetration lines. and the we in also global separately. buried we given have, that our cost

through that So even again, had cash R&D, balance these in and invest capability. the given strength generating markets, down we’ve sheet to ability flow

of will, as very to that offerings. subsea enhance lines. – our probably the it’s product my your concluding amongst been if be range, think I way in comments, say And long broad term we trying needs focused you’re So I base. only connector think over successful changing we’ve a customer is But you your we’re said it obvious the to would technology the of adapt through

focused As that stack have recertification. these out drilling reactivated capabilities we we come some so an example, capital expanding equipment inspection, of of repair, modes. on rigs our do on to And deepwater to much

have to around the talent people expand the We and our facilities well. that the and as capabilities

when in work downturn sector, in for and applications. We have reason a companies, no energy because got installations. – industrial with the well. like excess many markets as we’ve specialist offshore are win subsea shouldn’t we of we weakness expanded certainly, And capacity you’ve looked There’s

offshore to we around so effort taking are a opportunities participate in trying And well. more proactive wind as

George O’Leary

the color, very Cindy. Thank Great. for you much

Cindy Taylor

George. Thanks,

Operator

thank you. And

next our Stephen have question Gengaro We with Stifel. from

Stephen Gengaro

Good Thanks. morning.

Cindy Taylor

Good morning, Stephen.

Stephen Gengaro

revenue and business Site you’ve guidance guidance. and the So, your margin Well referenced your

positive of that pretty revenue XQ you talk XQ. bit? incrementals a relative the to at seemed guidance I margin look to guidance about kind if Can Your

Cindy Taylor

– rapid say drivers would what than was Number pretty most if I we’re whether month. limited you about. home fingers you one, actually that nothing over that to across modestly of they tell write November, was to cost, of intra-quarter, I two be decent it’s that’s people any What that think manage October talk you always name is when a November may Well, And here. horrific. kind December as your fourth quarter a does it. ability a were there. better to always time, fall-off but get

decremental And U.S. margins operations. took in some pretty so significant we

don’t many working that rigs just you of Gulf and have issues timing Mexico. the in some always There’s

nothing then you And sequential can drilling Middle great in the in East pretty say the So, the went cycles, whether you’re or completion quarter timing headwinds issues going to say be that also, had should manage I us so there. have kind those easy. is evident quarter. that by but fourth business cycles that decline just for stabilize and it’s to able first in to I some the EBITDA, we and up not think in that given QX margins. But improve it to I’m of the in we of

Stephen Gengaro

And we working pretty then you capital, when working it’s and flow for is this we think you should evolves XXXX you. Thank cash or how neutral think But capital and maybe, think about do about Lloyd. that? how think

Lloyd Hajdik

flow this Good question. year, free we of generated Stephen. the Thanks, $XX Again, million. a lot cash

for backs But working neutral typically the on relatively $XX it flat it XXXX. about to million I project have We of in or be release. of would capital projection purposes,

Stephen Gengaro

one. Okay. and Thank you just one final

So East expansion, an have you or that organically you’d referenced think the you’d make you Middle to of that? as would be to do a do potential area envision something acquisition

Cindy Taylor

a not it and you necessarily. it’s both, it’s – depends little on of acquisition-oriented Well, how

East. a expansion, serve We’re operations our in really positioning on broader organic of range effectively focused to the Middle more clients

kind to Middle of Third, – the now, working enter we product have narrow right a line in East.

with very lines to that ventures, So, alliances. willing that, we’re work lot to leverage joint but need to a GEO’s don’t trying broader I’m those the not acquisition, to we’ve them call a of East. because existing but some sense. product products what NESR. not Much our in we third joint going other want they’re makes of to through leverage We with the Middle as an application with benefit with done parties for services delivery introduce if – work

Stephen Gengaro

you. Thank Okay.

Cindy Taylor

Stephen. Thank you,

Operator

you. Thank

RBC. Kurt We with have Hallead question next from our

Kurt Hallead

morning. good Hi,

Cindy Taylor

Kurt. Hi,

Kurt Hallead

kind And looking XXXX? of least – M&A for landscape I it was the looks markets embark pretty curious looks land States the for kind we your at in of I challenging was what now Oil potential opportunities. been perspective at Cindy, like Hey, has at varying on XXXX, on of U.S. always as least another curious, active from type as year, just how in M&A

Cindy Taylor

the creation both the probably say, I are very, incremental strong don’t takes and to to five. about in about two it want And looking many companies. of I thing two to be my high There to free I’ll ways secret public, people, with healthy, technology, are optimize and don’t companies those cash I want that. is XXX for But their private at value the And generally strong one, Number dilute for space, very And criteria. down five flows. those to have I the two, been have sad about I leverage No shareholders. shareholders. overriding criteria end clear, going my just day. be want

So, I’m take to leverage I’m not not do will of all tell going to you, my cash the incremental going on you M&A dilute and anything space, I to to we’re not commit on going flow. but

that shareholders, going And those our that tenants. with stick so to again, I’m at value we’ll two anything but available is to look brings

Kurt Hallead

that. that growth ambitions Appreciate And international the have on right? of opportunities. mixed internationally relative you’ve being you number looks differential it. the and will And let’s already context, generous. then the that I footprint, seen some there on international had U.S. show international that’s know very Cindy, same follow-up like question And an to Got a In the markets prior to, just to probably have a results say, companies expand it that

you when for and free mitigation risk cash you look a internationally, dynamic? us give a insights through-cycle on growth prospects how some from return at think flow So, and the that standpoint from about can you

Cindy Taylor

question, perspective, business management market don’t incredible XX been necessarily how with the been is I’ve perspective, of some a is and development, assets both work our my always probably. chain and sales knows I Well, manufacturing, my you footprint on supply don’t company at challenges, invaluable. I talent middle-management things I make think for Because brings for missteps. that’s we’ve lot you that to this and of Entering think global very know I team operations greatest fact having team, a of from a that there internationally, think international hit years on fully XX the everybody one but interesting a that appreciate.

globally, go that think, We’ve that’s going we you, the also tell of decision, consequence. from have got assets. when an from the that doing incredibly and that to private products will And we’re that us challenging. in that’s I I sanctioned just upfront not very ability into, I the of the, we and just in is for experience There’s transaction smaller FCPA, make of you businesses the a leverage found companies, particularly globally, we embedded programs market that that founder things that’s been of any global negotiated expect fact greatest is to about to one have GEO whereas And one very, requires to cost. you’ve do misstep compliance, an don’t the a any And market from I before, attractive import/export, ease a always when but lot us the risk footprint we think company, asset have level have. with a services

Kurt Hallead

Yes. Great you. insight. Thank

Cindy Taylor

Thanks, Kurt.

Operator

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

Praveen Narra

Hey, good morning.

Cindy Taylor

Hi, Praveen.

Praveen Narra

restocking wanted But be talk to I inventory guess embedded the to at the about that expecting I on we expecting short-cycle you whether we how when when of XQ that in the bookings stronger you’re guidance, rest XXXX. great then profile first. any the touch margin year? segment can it? look perhaps Offshore/Manufactured XXXX, about of It’s progress hear Products what on piece the throughout even for XQ’s also, think than does of And you’re can

Cindy Taylor

these at and generation. And our specific a customer no this the And restocking flow conversations have just will great cash year. the recovery think message has be base. say gotten our later are We again, to industry comes guidance in I embedded question. very free on we clear, And in with Well, this it point. is

promised is cash particularly the they shock our to same trying down, just doing cash in So bringing like can generate you flow. did exact everybody free operations, it at Lloyd pull levers receivables, that looking shouldn’t flow, free the thing, are customers that on

first. shock major in quarter, anybody of here the of shouldn’t that continues fourth the destocking in was So it initiatives the inventory one customer

they more on are we much thing, have to team, don’t as past. just-in-time the the did in They they about as supplying inventory. to going I’m other maybe my kind brag of really And carry know good

it So will come.

products’ to at not margins. therefore, we guidance, with it QX, are at do right inventories stay in It business, on all. in have deepwater levels You to But to but in operations very, we’re cycle offshore build our expecting our now. very project-oriented has the lower-guided short low and nothing

Praveen Narra

to Okay. to. back alluding come And George Downhole was to what then on – George’s the Technology question,

In really manufactured of think are do as kind product how lost potential as of that then customers also, of the about terms you the that a start recapture half we a XXXX how of Or getting second you of have it see profile as share, we is out? XXXX, trialed for the the that market when integrated think Should absorption more story? impact of to it rollout? better guys And recapture margin does facilities? of

Cindy Taylor

up in QX look Even on of this starting guidance, guidance, be clear. just And of range revenues, perforating you if predicated you’re to up. the at from is improvement QX our that and rollout

people think And to And when again, I lot so way a share. we about talk have any going guidance given we’re didn’t integrated came we to year. of say simplest says gun, we’ve last The you that market up.

throughout some to off as of start early this start at then I we’ll will having to the year. integrated other at hoped how more zero a Now – business, we’re is us in sales that of for market the a of away side so getting the from to progress the and shift all can’t tell this tell to fresh and think expected you, ramping gun point that on component than sales we means degree, start you and that is quarter. there integrated kind it time

or margin very to you margin to the Clearly, have volume. we margins. accretive at products, got to are But what contribution easy all of gross it’s look call

do progression contribution Downhole good but progression, products the all in so margin And revenue of to in, the degree, have from or ties you segment. margin incrementals some

Praveen Narra

Okay. Thank you.

Operator

Thank you.

We have our Cowen. next with Bianchi question Marc from

Marc Bianchi

a right, margin. to in first heard first improve the you level to really from quarter last just Cindy, sounds wanted about the if clarify just it there, I Offshore/Manufactured the short you. Product it’s thank the function like Hey, of cycle. I conversation

So because and that’s we of count short to that picks if the in throughout the it we activity flat, to way remainder activity, year. think margin. probably fair is Is think that describe bounces a Otherwise, up of if upside rig cycle it? range the

Cindy Taylor

Absolutely Marc. correct,

Marc Bianchi

Okay.

the had one to picture about the I we think of Downhole. you’re do rig on a cost supply you for opportunity bigger count the from talked as overall? other structural in, just then chain And But the relates for how that the materially the footprint some company doesn’t you great. think businesses Okay, about stuff here? about program cost the that other for as a maybe more meaningful occur improve could And

Cindy Taylor

may we question, think completion cost your be responding. on towards market sitting pointing not I Well, been been conscious years. of conditions services heavy We’ve the of with a couple structure over have and last not you but

I drilling. hope some was profitable this coming example perfect about on to that doesn’t product think clear market got – is you that say, from district At lines look back. comments for point, and our it’s – focus we’re like consolidations

So exiting. in product Other we’re just lines. non-profitable the exiting are space people

So that. done obviously, we’ve

is manufacturing these cost think cost think I we need need bit focus out to little to of U.S. new in technology infrastructure, operations. the continue, optimization, on out to a and the I and facility innovation offerings new facility these that obviously, rollouts, the which product both around lean from me leverage we commercialization new on a sense different that pieces product And standpoint important absorption, now. the that products. from optimization, acceleration we with here right geographic is a to really focused But are that and standpoint

segments, revenue say, not of are have run find They customers. some safe, they going more are our But scrap, that would purchasing, will. opportunities we’re reduced But on headcount, organization still again, for But for there’s reliable be, I’m to optimization, the necessary name you across have. focused to it. efficiency can field reducing opportunities a between you efficient, our to And chain, we look that really manufacturing importantly, to is if what operations generators. I lot supply

cost-focused body that’s have my is. be I language as to market. said in summary anyway, And so really my where comments, this you But in

Marc Bianchi

Okay.

I that in that, just here quarters, where you’re we that do margins initiatives Well of EBITDA guess rig count? you talking I about? high help number ultimately past kind the the could at need with if over of Or get look think got from So through of up we’ve kind Site the teens. Is these completions

Cindy Taylor

I think EBITDA. But we be from going generate help need And we’re be revenue operations these help rig certainly certainly we the some again, some that’s we’ll we you. high-teens some CapEx-intensive significant assume Again, to honest be need count, but to unrealistic that cash go cost-conscious, to kind of – for business with to other to time. to not flow back And focus more generation. maintenance the margins at point free in has and maintenance it’s business.

focus and here EBITDA that we’re free cash on acute flow. is there generating an ensuring So

Marc Bianchi

I turn very will Thanks Right. back. Right. it much.

Cindy Taylor

who – it’s value-oriented Marc, expand focus to to bit little high maybe ones on more customers, further. your higher-margin just and And money, now product proprietary to are where a granular a Again, good investing right go that’s your just on we going actually And have back line. by that visibility by CapEx the district, go. is going region, by and product critical the be to focus lines, very to

to we So allocate know capital that prospectively. where

Marc Bianchi

Cindy. Thanks, Great.

Cindy Taylor

Thank you.

Operator

MacPherson Simmons. Ian our We next with question have from

Ian MacPherson

generation as more more Thanks. is look the recent I a Cindy, the to call free it States. your consistent, very revolver. table? that you’ve dividend with we’ve But option on paying thought of say, you Have might that specificity cash, possibility given on what this Oil terms about very of you And that and dividend quarters like still you the more the maybe timing? throughout – – in down year Good and the have and morning. know been for looking a at of you talked in obvious given

Cindy Taylor

kind year, discussion attract Yes. beginning shareholders. Ian. do outreach and to, returns pay career, the was But shareholders, this effort shareholders. But point. we’re a Great people for the at has seeing last that that. a The say, question, of our be generating and hear you dividend. and didn’t evolved And market made top over in four concerted we’re clearly shareholder to very of it most services is our used months to We can big thing interested energy shareholders my more more particularly more and a the working more it

free mentioned his in call the XXXX. starting cycle, back our of Lloyd generation through flow consistency cash

said, been – quarters period in had not six-year we’ve five free that or he five- think we’ve I only cash where generative. two roughly flow

it’s felt the make be unless I it in generally sense. to massive think have my with and done slightly said later. convert, We feel the it this the down focusing It reduction just by budgets, bit off And on were Gosh, we $XX paid it’s rig the people – premature. allocate count of like to paid comments, we in I in the it timing does I million sooner so buying year-over-year I would to is activity over as uncertainty U.S. front center around And the our and But be of only, a up to my like and revolver – seemed to year. the around mind. like a XXXX. I optics still most it like some fall-off did than likely likely of end through XX% XXXX. end are in

outlook just time. it kind with in you’ll more fall-off of about felt XXXX, hear again, and it QX that. in activity right wasn’t the into So But the the maybe

Ian MacPherson

understand. I Yes.

to corporate to miss follow-up makes was Lloyd, a down there appreciate the I segment I going I if also, And sorry could repeat. sorry, was you I’m I’m did also and for and a if for ask think had guide year it. call. I’m of the sense. that asking in that But step big us expense fourth I’d in quarter, CapEx, a about full then I

Lloyd Hajdik

Sure, full Ian. XXXX. for $XX Full accruals year less quarter, down XXXX. reset the were that’s incentive to largely for which It’s CapEx, million, year. of for $XX in QX gave a million higher XX% year guided that’s them we kind range And lower I of a going expenses QX. adjust – We on the the be is really in corporate compensation roughly but just why than to fourth full a not

Ian MacPherson

you. Thank it. Got

Operator

with our have from Sean we next And Meakim question JPMorgan.

Sean Meakim

you. morning. Thank Good

Cindy Taylor

Good Sean. morning,

Sean Meakim

see So out. to technology the got Downhole, good Cindy, in you’ve rolling that

looking for. You’ve got the you were reliability

And pricing said. we which E&Ps you volume parts so integrated to some talk are who clearly, really you’re for that term, near on about smaller systems, ramping AFE. the going as focus Can of the focused be emphasizing

So costs. new less more market, about yours there’s budgets like activity hear typically of while course, drive the products rigs, and are smaller you And coming where pieces on that completion of and limited. E&P into the frac

pricing what around integrated coalesces that of like for all how systems? looks curious those Just

Cindy Taylor

is to our should mean, offering that I going believe to the so technology the customers. for we’re are it Well, don’t intend systems we we guns be a for – We and want – there. integrated clear, value leader these premium create

also the customers the run. going bring – And to whole point so well reliability. we’re Again, that, certainly not the to and degree money up customers these And you in to that reason the the bottom. for the no chase that. to saving with high really to end form efficiencies long There’s the is price of do the and

think again, as stable these of differentiated products pricing. So more command should that

Sean Meakim

seeing you are in the marketplace And competition? among the anything different

Cindy Taylor

to everybody pricing so. ways is cost systems and to trying I – the There’s out say customer. to look, wouldn’t reduce find

you always products, providers service the higher company, stay pressure, is breadth apply So services, going technology, to Site wide whether Well there’s a on commoditized or to of price have Downhole, where differentiated offerings. available. we, as to have tried a but why That it’s it’s offshore always more more

be we like not foolish. multitude you of a this see customers, the Now or not see kind suppliers, pumping competitive, where and price that – we’re excuse pressure be, pressure will in offering but of to have like me, in you and is we operations. We I wireline know pumping see

And so into we’ve the pricing forward feel our guidance. we and our into about good pretty budgets built

Sean Meakim

So very completion customers adjustments. in within helpful talk some are in tight? these we’ve past, That when Got your it. context. any sense. seen makes about can In shifts you the preference budget That’s through go as we mix services, budgets shift

where isolation they lower within customers. hand, It’s cost are we’ve seen value shifting on periods what creates So pressure of your perceive a the control. years. one tool as number demonstrated to the wellhead But customers for over

that prices Just are And mix of the you seeing the portfolio? impacting those in is changes completions portfolio? any within some of parts

Cindy Taylor

to that more our activity tools in isolation But bit isolation the don’t customers the an I’ll in some rig technology dramatically, Tempress use – the part customers of ones, of I’d from as best leading And differentiated are get it. extended specifically, Mid-Con, field. question. a say, the decline go of through and QX Technology, double pretty terrific back reach, in recognize and I a back is market other With that most particularly you fact of performs cost-conscious a does some you mix a customers our cycle. kind pain that’s some well love got whammy so little mentioned decline. the Again, Other It’s my count example. cut It of use share. the value, absolutely

because everybody small is no markets. who there’s from and in lower get, competition good But for kinds depending fundamental back, with go these better technology unfortunately. we But more does I my swings, have investing markets on So in capital, single premise one you that down answer independents. to to of worked differentiated the you can is majors can

Sean Meakim

Thank Got it. Great. Cindy. you,

Cindy Taylor

Sean. Thank you,

Operator

We have Fargo. Cole question our Wells next with from Sullivan

Cole Sullivan

Hi good morning.

Cindy Taylor

Cole. Hi,

Cole Sullivan

that year? XXXX. the the opportunity XXXX mentioned a product could being or the this production of in or that parts awards you mix? offshore that On is moving drive pipeline, could floating be order part at of some it bigger are above of And What areas

Cindy Taylor

if opportunities project-specific that of I day. for – to outlook, But is at have we’re very much kind products. were that that platform of the fixed end on to looking generalize guidance my We the a outlook I supports you forward

for opportunities. the and not well we year developments in year side, in for in we that more on some support platform military-type looking pipeline going floating both Brazilian last certainly as also good the Upside this facilities. had the then subsea is as a surprisingly, of have And awards. towards penetration and get lot Southeast Asia. products if expect of installation can be a tied of wind kind market, to further on fixed A We’re opportunities of production good terms me Guyana, pipeline – more weighting is subsea floating

Cole Sullivan

first offshore And products. on Okay, in pretty XQ ramp fair was continue inbounds there The Is step of higher quarters revenue notable you the then flattish of expectation with the do in one side kind project-driven XXXX? XQ. XQ enough. guys we on on the saw and on the a after to quarter – Or in the more kind in flattish of to expect that there? sort

Cindy Taylor

gave revenue We looking I Lloyd million, to for Yes. it specific million call. $XXX validation. guidance was $XXX the I’m believe on to

major modest a step tied is our short to there’s So projects. cycle, not to that down

Cole Sullivan

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

Cindy Taylor

Cole. Thanks,

Operator

further Instructions] have [Operator remarks to any Would we like no add seems queue. you It in conclude? closing before questions we

Cindy Taylor

file who but to there’s Thank we extend to in to than business, want let no I’ll you, of know you, incredibly of for later to today. dialed tell do to get weeks tomorrow. I Vanessa. an just other on our still I plan my just couple you. been it’s Certainly. appreciation all you busy have come XX-K more and you

it should any you if So data, find wants of you there. supplemental

week hope season. and I you of great earnings a through balance have it you. the the make Thank all So

Operator

gentlemen, participating. our Ladies you. concludes thank And and for this you thank We conference.

now may disconnect. You

Oil States International (OIS) 20 Feb 202019 Q4 Earnings call transcript