OIS - Earnings call transcript Q1 2020 | Oil States International, Inc.

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Operator

Welcome to the Oil States International 1Q 2020 Earnings Conference Call. My name is Johnny, 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].

call Ellen the turn now over Pennington. to I'll you may begin. Ellen,

Ellen Pennington

States' and XXXX welcome morning, First to Good Oil Quarter Call. Earnings Conference

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

our caution to information the listeners call forward-looking we factors many Oil available risks information, including other the be of filings. begin, protections in for This like Before federal Any our relying XX-K and will contain the would after the Form website. that is afforded To today one States' this available please are law. in that those A context harbor accessed such other SEC call regarding of completion extent the be our conference we we can statements. historical safe along and remarks being the on by will weighed of webcast be with note call X.X should hours remarks at month. that than business, affect disclosed be replay

I call will now over turn the to Cindy.

Cindy Taylor

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

for by that the to to builds the can due is globe on have response demand more COVID-XX industry caused and you resulting across have market rapid The global even dislocations the oil inventory been impact energy resulted. As the destruction the imagine, the massive pandemic the unprecedented. crude extreme

cuts cut in agreement the This the per million falls XX industry short-term agreed it barrels this very barrels were cuts the history, estimated months backdrop Summit far supply totaling output day to. both short-term largest May but the is and XX negative short earlier this and single two announced cushioning for demand coordinated The for extend reached to June. long-term at of duration the month, whereby nonetheless, million of OPEC+ through is Partially day, million XX destruction. per

compressing term. XXXX, Importantly, the with reductions cuts to the extended extend April supply over longer-term

the cuts, be the of impact storage manage destruction unprecedented the Given with the supply immediate of to the once globally duration better should oil get able and industry that well crude follow. beyond through constraints shut-ins we demand inadequate

of the discuss summarize to just difficult and to initiatives highlight quarter. matters plan liquidity, today with near-term navigate on the quarter, and give for shore results as to In operating, our market. important capital have our our undertaken with to mitigate conditions We first we costs, both our beyond market we discussion this you efforts conjunction thoughts you our up

on a brief to impact its like First, regarding provide global I'd COVID-XX operations. update our and

so, schedules We to work work measures. working close of principles employees have symptoms essential and implemented safety within minimize when to employees, distancing able and with cleaning an along communities do show enhanced stringent we're limiting personnel, performing include protect applied remotely, adjusting visitors mandatory our to contact, to social in which suppliers customers, the work. protocols Measures effort we adhering our guidelines, to to broader protocols, shifts other sites stay-at-home illness,

of To work. returning our the in of we and workforce to now of notified global date, only COVID-XX negative have cases confirmed testing two been two one with

wave prevent reopen a began diligence have second to critical nonessential As of maintain help to in stressed is various states our communities. how developing cases we that we it our businesses,

functional for Demand we upon to pandemic and learned. working economy, on set have based for and oil what depends gas, example intend and an this safely and our services products in fully others therefore, during we a

resulting from to taken the quarter reported We quarter. our due from Moving global impacts the on to on to various during crisis. business response large impairments COVID-XX the a loss the headline

our February. taken, first impairments excluding guidance issued the in However, results, quarter our exceeded

During basis improved sequentially the global Revenues XX, sequentially XXX Completion modestly In in various our a to XXXX, decrease Segment first our project-driven Technologies our quarter, XXX points. million, of in operations $XXX our totaled margins decreased Services supply and increased at parts revenues due X% of Products in sequentially. segment, sales Downhole and delays our margins with revenues X% basis own March chain. segment up our from were arising disruptions sequentially in points. backlog Offshore/Manufactured improving

acutely conditions quarter book-to-bill remainder segment of into first Our we for XXXX market we of the face Despite are aware our exceeding the and will XXXX. guidance, that the ratio challenging one-times. quarter approximated during

focus During we immediate needs of be know variable and to and business, costs stress a our through the preservation the periods downturn. such management the on fixed of that liquidity in

lending amend Lloyd to lenders you into will asset-based review efforts revolving with current with arrangement. credit our it our our an facility flow-based and convert taken cash

of taken in the business to declining side completions revenues, to We fall. those States, United three on significantly are our actions which to have currently significant cost the particularly shale also ties adjust in

before closely of discussion each to generation go and come. capital into position the of now will our manage I segments. of in working will Lloyd our quarters financial review results our operations debt, We and a flow in more consolidated cash detail,

Lloyd Hajdik

everyone. morning, Thanks, Cindy. Good

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

asset first or impairment per of or share share unprecedented off; million Our million driven reduced this of downturn. expected results quarter written market $XX impairment; by following: share charges, by inventory duration goodwill including $X.XX $X.XX a $X and per $X.XX per a million were fixed $XXX the impairment, non-cash a the or significant

with XX%. totaled EBITDA $XX EBITDA million quarter margin first of an Our

caused by along COVID-XX years, the destruction, expectations primarily demand the given businesses, decline other global in price our the charges taken growth and of all weak couple but response that in Technologies resulting Completion to significant in industry stock among impairment peers, were goodwill segments conditions to related our market our The from, Services factors, the Downhole with from next and arising energy reduced pandemic. of

essentially $X in to In our addition, million of sale senior convertible the We expenditures. at XX% proceeds million weighted offset market In year-end from XXXX. collected with cost the first capital from par given compared cash a average repurchased to $X our amount the basis during increased in negative equipment estimated quarter, value. million remained operations, the cash quarter approximately we principal million capital flow and $X of in of neutral by $X in points outlook, notes flow discount XXX

net million discount debt first the our $X interest For expense non-cash XXXX, and amortization $X was of costs. of which quarter million, totaled issuance

was net $XXX important due credit XXXX is were understand senior which and non-cash facility to compliance our the March XXXX. borrowings increased notes from $XX our recorded debt, of ratio of in first debt million, during to of liquidity XX%, we in At asset our our leverage million At senior consisting consisted totaled March XX, of and year-end $XXX covenants. secured XX, the due It position, convertible debt-to-book primarily impairments with our capitalization revolving fully other at which, March million February XX, X.X% quarter.

of facility it amend that only convert Our leverage governing credit giving agreement our is XXXX, group to working credit our with we EBITDA to senior cash is existing covenants, the we into to debt progress to net the arrangement, outlook revolving generated facility negative are to and total through credit the an lending EBITDA. to be underlying debt asset-based the secured market a flow-based revolving Accordingly, agreement both subject leverage bank as coupled with uncertainty our covenants. level and debt regarding

rates to be borrowing to amended and a and facility on the depending receivable assets. geographic accounts our subject of differing is advance expected with location The various based age on the base inventory

expect size from $XXX and While to borrowing it million the amount has similar not covenants. not the facility amended to base $XXX range of been will finalized, contain the leverage yet we million,

of capital, At the XXXX, outstanding level. revolver cash million and times obligations, XX, excluding $XXX borrowings yielded totaled portion working compared which our to our debt lease coverage totaling March a X.X $XX under and million, net current

corporate second to terms $X approximately million which total consolidated quarter net quarter our our for expenses XXXX forecast long-term of both and and short-term and $X.X of are in the expenses approximately second amortization million, in total expense. million, Corporate expect and total to is interest guidance, In reductions we million. $XX compensation XXXX expense projected expense reflect to incentive the of non-cash, quarter depreciation $X first

XXXX range $XX We a which are of roughly during spending is to capital less to $XX expenditures. million, CapEx at than our XX% our reducing million the midpoint XXXX

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

Cindy Taylor

million XXXX primarily decreased in Offshore/Manufactured revenues first of in Thank and operations XX% we segment, our due Segment XX% compared project-driven delays in in you, the margin the EBITDA and prior chain. our the Lloyd. to of EBITDA Products due million to during in quarter. was disruptions of global segment $XX our XX% to $XX quarter. Revenues supply revenues first In sequentially generated our quarter

booked quarterly Orders totaled at our XX% nonetheless, that March it, backlog totaled backlog $XXX million $XX sequential approximately million, ratio decrease, resulting first a a reflected XX, March the million, XX, book-to-bill in increase but of XXXX. existed quarter in one-times. $XXX At of a from X% the

years, and our for cultivating required while has offshore Offshore/Manufactured in deepwater technologies XX specific leading-edge environments. highly develop the For technical segment Products expertise to working endeavored

award In clients of a help support to opportunities energy product capabilities customers. our drilling, floating and fixed should Recent potential support developments XXXX, are and us base our platform globally. wind on we and leverage military more systems, bidding diverse subsea, energy

XXXX reduced levels visibility, reduced the customer believe now crude lower market bookings However, in spending, XXXX. and prices we will be lower with than oil achieved given much

quarter. in we EBITDA XX% XX% million results driven In revenue, million was sequential EBITDA of segment margin sound segment, controls preceding The reported cost during our improvement and of Well by to segment the compared Site the of our Services $XX quarter. $XX in generated a

Mexico revenues. However, Completion frac completion given reduced International and quarter cannot materially the of of the in improvement of XX% comprised U.S. expected lower be spreads and our operation. Gulf sustained, market number activity activity Services first we know sequential land

XXXX. rigs announced Permian, with given in remainder have quarter, assets $X the an negative serving from the operations in outlook additional the drilling non-cash customers year, first vertical our remaining market discontinued nine of our the As We Rocky charge rigs in we recorded reducing fleet Mountain the marketed the asset the rig last region. impairment XX for fixed for to million

early of April, working. rigs of none our marketed were As

highly are streamlining support pursuing focused global of customer We base. in our profitable operations our activity on and

we to XX% in extreme reduced sustain market in continue While or facility the business downturn. XXXX focusing in on by Sadly, headcount closed our Completion value-added North Services XX%. American these operating eight must and or this XXXX, order closures through districts of locations in our consolidated services company reductions and headcount

completions offerings. to develop core new We will products and differentiate on States' continue actively focus of expertise Oil proprietary to areas

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

First sales plugs, EBITDA quarter X% XX% and averaged revenues and quarter. improved coupled were in EBITDA compared Segment sound of our control. higher with frac to margin due to preceding the cost quarter first the in products sequentially perforating

Downhole trial our the our fourth their system following We respective switches trends gun in commercializations commercialize continue quarter. customer addressable Technologies gaining products to field segment. and Sales in acceptance and perforating develop, new integrated for are vapor late

addition, In formally system, premium was the gun integrated first named in launched quarter. our STRATX,

two including our of noted tool technology. we February, perforating charge shaped commercialization products, and release families call on new last in wireline a of announced earnings As conference ancillary the new

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

market Given these of uptake we delayed. will new the revenue weakness, that be recognize current technologies

our Given are for by operations not our Well providing of on or land who guidance declining specific spending second we customers facing rapidly Site challenges, Technologies for of Downhole segments. XXXX are the revenue Services dunning or comfortable quarter EBITDA either U.S.

so do to attempt will we However, directionally.

rig XXXX count quarter April The was was which rigs, count. XX, from The first average first X% average totaled XXXX rigs down U.S. XXX U.S. XXXX, sequentially. rig count XX% rig on the XXX quarter down

with impact all are estimates in activity, sequential which our analyst XX% segments will for short-cycle to of a U.S. negatively Completions exposure. shale-driven XX% Current calling decline

peers. expect our and results businesses are to U.S. onshore cost order consistent of As downturn. U.S. we unprecedented to dramatic the we through our with as Accordingly, manage completions our lines in we our stabilize reducing this feel that effects lower financial aggressively result, well a product of

the in and segment, average segment this we sales our ability of expected revenues, in to absorption service Products more Offshore/Manufactured the to quarter. XX% $XXX relatively on mix, in levels. our our revenues between quarter our segment second confident XX%, forecast million short-cycle depending range to position In along $XX product million and EBITDA first and margins to given with level with are We low backlog project product

to of inefficiencies. chain in four our along be X, as facilities near-term and Our reduced mandated globally margins Singapore India the due are June during to their decisions May and that governments, at other to the mitigate cost this of supply as taking compressed absorption Management by expected with we least and market with teams actions material we until issues to downturns are closures deal We respectively, during to protect health wanted summary of to as companies. XXXX. a their difficult such decline in revenue have make the expected the provide

been Services of cost the essentially has reduced line been Lloyd Short-term Direct mentioned, approximately already since year-over-year. and eliminated XXXX. As the be activity in Well reduced year reduced has reduced XX% for of Site Downhole will will be have Technologies beginning operating been approximately by by as the CapEx approximately headcount Headcount this declines. well. year. XX% in with since SG&A XX% incentives segments beginning our

to deferred been substantially reductions and including long-term Discretionary for have in salary executive XXX(k) or plan eliminated. management, salary has addition in reductions other taken matches Our and reduced Various have short-term immediate compensation spending personnel, future. compensation. been the suspended

actions When and Of goods the believe to is in of summarize at XX% are taken, $XXX by to SG&A. fixed estimate relates reductions XXXX. XX% we nature. that of sold estimated XX% XXXX our cost of We the cost that total, we when cost million that will compared to XX% reduce impact we

this sheet to up asset-based arrangement. a comments. with can We an shoring to like of that amendment our we concluding planned our offer downturn we flow-based working believe With safe strong in position. revolving and liquidity making progress with some terms through our substantial are I'd believe of that balance the lending credit capital cash manage we facility Now position, extreme conversion

environment. to generation States cost will remain recognize and be that to value-added top To sheet stability. that and to cash focused balance near-term We with conduct management operations meet Oil activity primary end, and capital services customer in focus safe demand products on working flow a continue a plans has priority manage to this lower remains providing secure will globally.

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

Operator

you. Thank

George, first may question will And is begin. We begin the now question-and-answer from George Instructions] O'Leary. session. [Operator our you

George O'Leary

Good Good morning, morning, Cindy. Lloyd.

Cindy Taylor

Good morning, George.

George O'Leary

now, are who've and at there seems you're of quarter. clearly, some in holiday, the calling is at oil has activity some seen activity there's of those sometime there's like a completions plans a starts this Just adding demand anyone right in to impacts more curious, fall a seem it i.e., E&Ps frac point? as little higher some kind But normalize any hopeful evidence we're oil seeing expectations, price-dependent a abates. hope fourth of Or just seeing the little prices, activity and crude in embedded back does what off bit you the mentioned late Have but COVID cliff that the add it bit any crude chatter, to year, tangible back? moment,

Cindy Taylor

have that. Well, service period I discussion mean, any I realize time. providers impossible for it's down think industry to we E&P assume right customers I just almost all and extended obviously, an to now think of an shut fully the that is alike

United all we'll reopenings, of businesses out because think are And this to would the States to evolving. as simply beginning just positive begin unprecedented hopeful so early downturn. little this are energy as do a And of not industry, I of is the gradual the stated believe I whole, the several that clearly, I as Friday. And more nonessential say, things that a feel we come

specific harder your faster are question, and come than And to than basins doing more different others. draconian have actions operators down others. different But

as So trend it's like down than plays. basins a areas this hard quite some very come the just hard other little at feeling gas of to not resilient more say, point Permian as The pinpoint any than has are the type to Bakken. of oil

I think you dependent time. that I returning but of trends, that early activity and too, We, point George, very as are QX, it's maybe exist familiar again, know the are that facts at hearing on very some circumstances as in And indications with.

on fairly And live a so going balance the we to are have we as to and of at hope we take have through if we actions extended can't so least XXXX. rely today through downturn,

George O'Leary

That's business this some I market. if very type helpful that's a do to And then as is And in frame what cut wondering color. was if CapEx the to could you an CapEx probably obviously that thing CapEx does spend prudent maintenance contemplate guys running today. impressive view the of you longer and it if So about there that Are where make will? deploying rigs, CapEx continue maintenance underperforming no businesses be a like of forward? doesn't guys other implies sense some that businesses, capital exit? what is to and may you some just things then might going you

Cindy Taylor

high-end low a mind it's are our XX-plus in though, upgrading job really where scale, question, as think, that a done of always I in Offshore/Manufactured manufacturing the these picture, fantastic and levels global Products but big years over CapEx I we've keep for putting as say, the place good machinery. footprint and us. of very last well facilities new is huge

which an the that we very The high. post-acquisition expansion. our GEO, just same shop not actually call, did needs charge of needs that true particularly our maintenance I we is thought Downhole So make ongoing are appropriate, for Technologies what needed segment, investments manufacturing

we you're of safe it previously that as today view bringing that much the fairly in-house. I capital outsourced again, because basically so And invested capacity

low maintenance the very as feel as that I getting Completion But Services. manufacturing just not done operations having still a there. about it for we are intensity, high-end again, So needs and great spent they for, CapEx us, the capital are good again, behind that

that nine left are only You not rigs but drilling, we've mentioned working. currently got

there's is to So CapEx balance other drilling. no manufacturing the than and really Completion CapEx virtually The dedicated Services. maintenance

any today, when we fall product it And to of exactly exited be environment. going draconian and to frame of line. not none to But completions maintenance need an be that cliff it the occurring, your what a don't point, certainly XX%? that CapEx Is going XX%? as us know, individual much have off I would activity And time in fairly is it comment. be obvious is

downturn honest is this the with thing. you And be get we and the clarity business what commit when that between shale just get through activity and capital out for allocation we international U.S. U.S. maintenance have about is talk what what cannot of massive figure you, we a long-term And this I'll CapEx, deepwater market so to until come lot of what out we resilience of the to like shale as looks on is

George O'Leary

That’s very over. turn I’ll helpful color. back it Cindy,

Cindy Taylor

Thank another question? you. you, talking is Johnny, Good there George. to

Operator

Our is next Stephen, from may question begin. Stephen. you

Cindy Taylor

Hi, Stephen Gengaro.

Stephen Gengaro

Hi, is everybody you? hope how are I well.

Cindy Taylor

all are Thank healthy. We you.

Stephen Gengaro

Can the normalize – of second and maybe probably this do the give there's pieces. we I and sequential is sharpest, about you where about a this beyond to lot probably how in you the Site the cost know be moving maybe decrementals are range you kind that, second hard Downhole think they even for drop the the for it, on on front. When quarter, of of but a ever Well I guidance one a any might little top sharper Good. clearly, can And us the on quarter? of give know it's you off could segments? see maybe bit. talk aggressive think actions specifics, we taking

Cindy Taylor

other answer. we'll exactly is the I've the out me as we why ones absolutely to savings clear are again, the can trying we you revenue cost And because we four, to I directional I'll best. impact. is of are be first and you tried everybody the your done they is we figuring for understand give When elusive best going what tell calls, rigs what but week to have guidance. are call what people at to heard let the losing we But why every the XX-plus trajectory those could, all, also the of that's to best on tell be last are hardest Well, questions,

will is this teams number without And hardest But have like saying, done. one, it environments only simply that we've headcount been say just management turmoil thing in which I goes since the do adjust mid-March. this, we

to are in reductions these have are come early into And bridge let quarter. them people severance that point so unemployment Clearly, time. so go, that no to pay benefits trying are the at second largely in the not offered being to insensitive we this

to QX. feel of just cost these of get that therefore, you until And savings benefit weighted are know out those So the don't you full savings headcount.

for top more say, project of, no, that guys I it we the QX actions decrementals XX% XX%. normalized we the as revenue what be as could just try we will of decrementals because I range we've higher of and the projected, to And up going the that a XX% generation. to terms trend the that QX, that I'll mentioned, I of to we've line. the business period in and then to of think in you, decline be and to reasons I because So points they EBITDA Once you back think of that would rate told in I in call they XX%. the leave be of the through to kind our weakest initiatives just more to But, cost in get taken, seen are than range

QX, I But compared lost many of just our company early pointed updated yet. an that not for out, the you are XX% rig count, models already. March. not we've if to it's XX average April average There the have their at since analysts look

you give meaningful be has in that already in, and adjusted provided about notes. than but give more you that is prepared our would I've thought I I factored if to absolutely guidance I information So could

Stephen Gengaro

helpful. that's very No,

to any maybe but the quarter market. you customers' prepared The you seeing are two in to as seeing the side, quickly just money you the the these And components about But and have think are X? You short-term? any just good of at we I mix color. any always know look and the Downhole Have had seen shifts shift? back products you or give on you new on buying some going go to when in in remarks, are we that any save the work commentary next that

Cindy Taylor

say, the long-term would integrated systems offering. think. do the just systems component there would are be really certain more to as much cost, preferred suppliers not on And fairly that I going I particularly again, that you think on as we are aggressive cutting the commoditized think are

longer-term, provide we which, the think However, more prove still safer, integrated systems end that long-term to do be well. the efficient, cost-effective more day, reliable the will at operations of as

believe don't strategies really share because we of necessarily market this and So shifts that adjust backwards downturn.

Stephen Gengaro

the thanks Great, color. for

Cindy Taylor

Thanks, Stephen.

Operator

Our Sean can Meakim. Sean, begin. next you from call comes

Cindy Taylor

Sean. Hi,

Sean Meakim

Hi, initiative. cash the your appreciate the cetera.? an for the et XXXX? cash have impact is that Cindy. reductions, around with feedback in much How severance, I cost estimate you associated a all of Do cost-out

Cindy Taylor

Yes, Okay. was I'm it gave $XXX you sorry. right? of million, I think We kind that

Lloyd Hajdik

million. $XXX

Cindy Taylor

we it it's looking if cost literally And just the be sales cost in expect be plus add up SG&A, I'm of Lloyd, to two down of at to you million. $XXX XXXX sales, of total the

out to annual we if we fixed of could continue, the We impact that, did guess, were of So the what versus variable to are be would the point, best I to think greater. your it that. components split

know component, focused time fixed percentage million predominantly year. is you if again, I what the on, for want are take So which the this people the $XXX

Sean Meakim

appreciate I that.

could severance piece facility was at biggest may oftentimes get to trying associated was I what is the with be closures, one-time guess there. that the I payouts be clarify, to So

kind Just to be. sense outcome trying cash what a of get one-time of would

Cindy Taylor

probably for not didn't material range understand Yes. to that $X the total, and fully. that, in I your the It's I question of it's apologize relative million.

Sean Meakim

revolver. I we far Thank It with you sheet guess, guys be thinking And asset in to respect be about that working No, and thinking update cash you to the sales pertains to I the for should the that along can with next, anything generation we be great balance obviously, else appreciate that respect then to as quarters? management. are it that. about done or two anything Anything to detail. capital respect was to six else get else should say, from with

Cindy Taylor

proceeds think to the together have Well, exited I this business highlighted the sale the only time, cash first of rigs George's in response The question, rigs points remaining. the my I nine Permian quarter. now, comments, right That earlier We we one lines at on. small the that maybe I tie have those was in Lloyd for if rigs. are came point think during of that focused in

And those so But it the if we sales. sold the even it, amount equipment to an plan for immaterial is received operate be prospectively. cash of would

North product we longer-term Completion At we're we the that in point time, see did we to and COVID-XX, not prior making continue any to this have will that evaluate Services lines the not market how returns, American cash-on-cash as over shift.

of asset in we time, in exit way that, sales. without So point so this nothing really are not planning the to other business at lines

mention, Lloyd total really step I break if if You to down. have realize highlight, just screen a it you you back, to debt, really do on tried and need I did you headline

Lloyd as said, revolver, Our was...

Lloyd Hajdik

$XX million.

Cindy Taylor

$XX million.

of we have And working don't believe that surprises? working that X.X some risk the we going on are of at Probably, we we are year. but significant wouldn't million. healthy we any which be going the independents. for customers collect a the companies get Again, for view, receivables. capital Will some that get we provided they're that, then Our aged cash capital. is largest think magnitude you $XX to working times best is this capital work to in amount, my some release NOCs, if look IOCs, We of at certainly just

were incurred of about NOLs to in, provide involved, lot of prior we've to the that forced the $XX we Act with second addition in place carry applies comes tell programs right type I now, obviously, will our those relief before, back in size I'm say, to previously years, that looking a and the to been pretty of really ability I carry the always that this one assumed to that put But forward. half is companies whereas only In year. nice the is to very and that, to and have CARES businesses, you million

on is and that inflows repaid. of on more but coming equipment of of we the to needs will the of refunds are puts helpful. out be sales some takes And so cash be consequence. it in course, that unusual kind maybe of not But And working those not CARES terms release, tax counting Act, capital the the any are something of any

Sean Meakim

it. Got you, Cindy helpful very Thank It's recap.

Cindy Taylor

Thank you.

Operator

begin. Our Kurt, may from next is you question Kurt Hallead.

Kurt Hallead

Hi, good everybody. morning

Cindy Taylor

Hi, Kurt.

Kurt Hallead

in everybody And glad hear respective that are to families doing well.

Cindy Taylor

you. Thank

You too.

Kurt Hallead

of of back you're kind follow-up to had negotiations ratios that the of Thank to questions couple ABL, doing you. around the coming related the I a that. some for

first dynamic, on interest of Or ratio. I'm kind So cash-only curious interest Is Lloyd? based coverage the that number? the is total that the on just about, portion, the expense is

Lloyd Hajdik

is cash in on the the facility. the existing expense, be That coverage will but not that's interest in amended Interest facility. ABL

Kurt Hallead

on then said And you Right. the...

Cindy Taylor

on we've than year that's convert revolver been bonds honestly, now $X we that discount. then cash back convertible the a never is even the of close because, of bought million less on those to rate is a And interest cash again, because interest but some course, the at

Lloyd Hajdik

times, been three The minimum and inception. since is double-digits we've

Cindy Taylor

Yes.

Kurt Hallead

with does And helpful. the ratios, the at into or That's just that leverage coverage does all come that Great. play in right. ratios curious? tax All refund,

Lloyd Hajdik

net just reduces debt. It

Kurt Hallead

then… And okay. Yes,

Cindy Taylor

I March in credit. as we of our expect debt mean, million. I net told end to get tax And $XX million $XX you, the at was

comfort. a again, gives amount us good So of that

Lloyd Hajdik

borrowings. revolver respect Net debt to with the

Cindy Taylor

Correct.

Kurt Hallead

for decremental Thank some thanks least us Great. lastly, that. think to through around downturn. for Cindy, context then, you this at margins providing it. how the And much so just go we as about Got

be you and that I on on activity aggregate in or an want EBITDA the take those So if negative quarter. I could revenue levels it sure dynamics. third underestimate on and basis, my I take assumptions don't always those second to own margins, make EBITDA and appears overestimate

So directionally, is world probably on that you're at now? looking how the things right out play based will how

Cindy Taylor

think go are factor do to any But possible the that quarter, We of we can great everything second in have in we severance it's when significance. modestly negative, doing you not happen. I not but that

Kurt Hallead

XX% to to could that cost-savings When "normalize" one last then just Is you to benefits? XX% the the range. And XX% decrementals that second Great. after the of follow-up. quarter, exclusive potentially XX% indicated the

Cindy Taylor

more be line product would decrementals. That Yes.

Kurt Hallead

for that Okay. Awesome, Thank color. you right.

Cindy Taylor

Thank you.

Operator

we do At Instructions] questions. [Operator further this not have any time,

Cindy Taylor

companies Everybody and we want through this of high-integrity my appreciate the We to to season. energy hope continue believe work. to follow difficult is to need Oil know of I you it's while it end all successful to I and better tough, support your a week, going these days specifically, that I challenges. to that a We can you just look joined have collectively you through I in forward right. for earnings your a industry all that makes of very be the busy this of to extend a All our the the for healthy, ahead. States. and you. time one guys way all unprecedented have. that say It's great And us, the to call, industry always thanks do week lot care. we're commitment all we Take

Operator

gentlemen. and ladies you, Thank

call. conference today’s concludes This disconnect. now Thank may you for You participating.

Oil States International (OIS) 1 May 202020 Q1 Earnings call transcript