OIS - Earnings call transcript Q2 2020 | Oil States International, Inc.

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Operator

Welcome to the Oil States International 2Q '20 Earnings Conference Call. My name is Cheryl, and I will be your operator for today's call. [Operator Instructions] I will now turn the call over to Ellen Pennington.

You may begin.

Ellen Pennington

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

will Cindy Oil led President call Officer. be Our today by President Chief Executive and Vice and Officer; Taylor, Lloyd Executive Hajdik, States' and Financial Chief States' Oil

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

Cindy Taylor

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

extreme globe unprecedented. on impact builds across we As been the industry to projected on resulting oil that inventory dislocations the rapid the pandemic the resulted. and the for market COVID-XX crude caused been The earnings by has have call, due our the demand first the quarter to global destruction energy response

sooner expected, the than was oil proved production and crude OPEC+ cuts be originally shut-ins been announced demand good. has production severe shale with destruction fairly less the for However, compliance projected. U.S. than occurred to

builds. helping Additionally, industry inventory through the destruction manage crude the XXXX, month for July and cuts oil associated additional demand OPEC+ the an through extended were

barrel. with $XX shore month market our With liquidity, to and you costs, market. oil to WTI prices you navigate these near-term improved both on give and crude per thoughts be we summarize undertaken In our we as plan on difficult our the initiatives discussion appears and this operating, of up efforts conjunction to update capital have front quarter, factors, activity mitigate conditions with approximately stabilizing, to

able I broader update its adhering COVID-XX First, Measures effort implementing work. provide like have adjusting on confirmed to to employees recovered the work majority limiting protocols in performing were applied We customers, so, enhanced COVID-XX that now sites the social close the stay-at-home other to schedules global an where are show our communities to pandemic safety cleaning back contact, remotely and implemented in we with or which global would been when operations. to do impact measures. minimize asymptomatic to and to essential Of symptoms personnel, of notified of mandatory work along and illness, employees, have within shifts protocols work. regarding and include we our to principles protect early distancing the an guidelines, suppliers in our our stringent working visitors cases workforce,

oil various However, learned had that to economic reported We continue and as apply to to lessons in intend significant have work throughout and pandemic. we this a therefore, $XX non-essential loss million place. states, the safely quarter. on and to reopen begun our cases spikes take functional services our risking maintain the recovery setback economy, products a Texas, seen during Demand depends new including diligence, in gas a they businesses for and, began and

line. weaker internal the However, our revenue results, severance forecast in at second line despite charges, our quarter being downsizing generally excluding were and with

also XX, negative. declined Segment at to totaled revenues quarter, our revenues Downhole Products sequentially. June XX% going margins EBITDA stronger revenues EBITDA sales. contrast, due our Similarly, negative. XX% were second down Technologies backlog In Completion XX% margins the project-driven in XXXX, with sequentially segment, of During million, our segment in decrease $XXX Services sequentially Offshore/Manufactured sequentially increased with a

yielding of ratio book-to-bill to a X.X ratio the $XX Our our segment year-to-date quarter bringing second for times, bookings X.X totaled million, times.

through second March periods $XX operations in liquidity million substantial cash needs During the discount. costs. face our to notes our convertible and providing end, generated our purchased we covenant financial know variable credit stress an secured of amendment in immediate management business, the million on XX, the amount To preservation the at that quarter, the that of facility from flow we be of to for fixed of focus and $XX a XXXX, during and quarter holidays

generation We taken believe of expectation during business States, the our shale those on to flow more cash the particularly the of to to were adjust manage completions segments. results cost the actions these to We that working Lloyd each debt, consolidated in significant continue and in in have operations now closely United our a fall to position capital also quarter. difficult financial before during side the our into declines, I and go the which come. have of tied very Company our discussion we'll in review free will of detail second quarters period, stabilized revenue and of a we

Lloyd Hajdik

good morning, everyone. and Cindy, Thanks,

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

second and reduced share. were results charges severance per downsizing $X.XX totaling $X.X million by Our quarter or

severance Our second the charges. noted quarter downsizing excluding totaled EBITDA and million $X

operations, bankruptcy $X flow charge expenditures. generated receivables a capital offset We in cash also with million during in free We protection. for significant recorded claimed have where flow million cash quarter customers by million the $X.X from $XX

partially convertible discount our to notes $XX our in par deleveraging the value, Cindy sheet. of purchased we at principal noted, thereby senior a amount balance million XX% As

net $X was our noncash June we June XX. outlined For the methodology credit our our discount interest debt XX, to based net And issue debt ratio our amortization of the capitalization costs. and quarter liquidity totaled second amended XXXX, with and $X at which million of million, book totaled debt debt in upon expense facility. was our covenants compliance in XX%, million $XX are At

of convertible note during the purchases. net declined quarter, total the Our debt $XX inclusive million

have Our XX% comprised at a total maturity June convertible which in XX. February debt date XXXX, of our notes,

Given a govern and covenants EBITDA flow-based calculation uncertainty group the amend maintenance tied and the governed negative total XXXX, of net bank debt worked during during both that our regarding the formula coupled senior that level The accounts receivable amendment the debt-to-EBITDA, with borrowing-based be is to into quarter our cash the existing converted to with market credit outlook we revolving by to generated availability facility. one and of for million cash financial and $XXX current inventory The and XX, XXXX. On totaled debt January million XXXX. March in the portion of totaling the outstanding covenants capital, and of working $XX our June $XXX exchange million. the lease revolver the through maturity suspension credit date our to excluding a the to reduction facility compared remains obligations, net size XX, under facility in XX, of borrowings secured

In In through consolidated XXXX noncash, are depreciation to this expense terms expense our net expect environment, of we amortization $X quarter expenses projected million. total corporate to is million, approximately interest and million, guidance, third our over total $X the to $XX in take business for and of XXXX. million from $X million $XX expect to we invest the which total Cindy, spending this which you operating XX% levels our time, each down to to call At during like who CapEx turn of is in will segments. about results back approximately I'd XXXX, the

Cindy Taylor

primarily the sequentially of At Offshore/Manufactured with backlog Revenues due revenues the to quarter XX% during we Starting XX% revenues. $XXX June increased in EBITDA of in quarter. X% XX, generated segment our ratio XXXX resulting our Products totaled second decrease. EBITDA million the million, booked and in segment, Segment margin million, totaled a X.Xx. the prior in project-driven quarter to XX% quarter. second $XX $XX of book-to-bill million was sequential $XX of second quarterly a compared Orders higher

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

XX% oil revenues segment, mitigated generated bookings impact to reduction our we will XXXX our reduced or with much of of million reduced and million achieved visibility, by a and $XX excluding dramatic higher. measures revenues sequential cost the segment times decline negative fleets when the do The and downsizing be to in our charges. leading market book-to-bill driven to market massive analysts EBITDA, taken for revenues given of and $X year crude comprised revenue downsizing customer expect in Site in severance Well was lower aggressive adjusted May. severance International segment. of of prices Services U.S. Gulf blunt of margins the U.S. completions-related and business during which active decline helped approximately The lower frac number indicate decline charges and the shale-driven activity Completion second in by spreads XX sequential our activity in materially land completion late quarter, operation, in reduced low market hit the lower levels for but spending, However, the was X.X of be a that than we decremental XX% Mexico and XX% quarter believe continue XXXX, activity. ratio this Services In

year, providing until customers these announced worked segment. last contribution drilling service Mountain our rigs all late of region. in in very minimal revenue the As None rigs this to remaining of Rocky June,

our of rigs July, During working. two were

pursuing We necessitating customer are operations and support and of headcount reductions streamlining on and global closures. facility highly profitable activity focused our our base,

excluding XX% quarter have to service million and an conducting downsizing of focus completions segment, held in field Revenues XX%, generated revenues severance and sequentially, business. areas were been this our segment, decremental Downhole of Technologies and implemented. EBITDA expertise $X trials developing the of new differentiate with that cost of but in $XX to million In are loss margins charges. downsizing We savings continue proprietary will core to the given we measures declined excluding charges second States actively offerings significant and severance Oil on

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

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

recent commercialization tool wireline earnings on shaped charge and technology. noted families the a including conference new of of we two also products, calls, ancillary As perforating new release announced

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

the with market of our U.S. all sequential count, exposure. regions Baker the we rigs, it count down new Hughes forward in recognize experienced Notably, decline bottomed data we slow, XXX improvement upon a market we The XX% end from the history. the first be to late in point month second revenue in we the end dataset continue was saw will look was the U.S. which the shale frac XX% weakness, in market to spread rig the the recovery have, which impacted believe down average of average the U.S. the XXXX June. negatively activity Based Given the quarter, third sequentially. in but industry quarter. that reaching segments some technologies And of short-cycle uptake that quarter in shale-driven completions some quarter. U.S. of these XX% modest the was of lowest to second

completions that will economic associated activity the it's activity believe in associated late we in be, trajectory trough with and quarter to we the uncertainty hard third the the given that pandemic's had shutdowns COVID-XX While average in what a continuing. predict are May,

we our million segment, sequentially Products of with indications, XX%, that segments Services Site on our revenues mix. project quarter. Well ability our range confident relatively to segment we more to million our the depending and to In and expected given believe $XX in We our second customer despite absorption to product be third current along April our the low on with and based the segment strongest Technologies level quarter revenues, are XX% average levels. and in will up and being both forecast flat EBITDA Downhole However, of fairly backlog mix position to margins current revenue between month this sales short-cycle Offshore/Manufactured service $XX product

costs that by expected in are compressed reduced as issues as to other Various XX% an actions the as have to cost CapEx have segments, activity and will the decisions of well. executive downturns, with mitigate approximately continued the SG&A by we respectively, reduced due total the created taken in to in health chain wanted million. operating this, or reduced other Downhole salary teams including XXXX. during reduced Technologies reduced been market will approximately of companies. reduced be year-over-year globally such absorption to pandemic. of material and to XX% of Our addition reductions Management been approximately reductions $XX decline deal spending since roughly continue year. salary make XX% supply Well to management, has protect the in have be we compensation. to Discretionary inefficiencies difficult their Headcount revenue long-term We near-term to date margins experienced COVID-XX headcount has our the be Direct eliminated. provide in has update to since and to and taken the XX% with short-term year in been beginning beginning the in line Site declines. Services personnel, substantially

update reduce our of the we previously updated to estimate costs Of $XXX $XXX our and of up goods an is SG&A. million. which we As program, by roughly sold is will the cost-out XX% that relates cost forecasted remainder the XXXX million, to now from total total,

that believe are of to nature. the fixed to in XX% XX% reductions continue cost We

of concluding Now We believe coupled terms we free credit revolving comments. the liquidity to shoring offer substantial strong with progress I'd generation our facility. made quarter that flow cash some up with like to amendment second our in

position this manage strong Our downturn. will capital working us help through

products open capital this continue earlier, and very Cheryl, up to and operations have comments. and generation at questions That providing value-added please? our we I in call come. conduct will remain manage mentioned globally. and our States working would time, customer the to on continue meet Oil Company during we flow period, to safe debt, will demands focused answers and for As to prepared services you completes quarters that cash stabilized a the difficult the we'll believe

Operator

[Operator Sean question from first Instructions] from Our comes JP Morgan. Meakim

Sean Meakim

the be? of cost of to to alignment the So be the bit the say, need that to margins may It'd all comments. thank addressing as more prepared progress what next, you get where reality? just you keep over you give terms for all you where the digging, process evaluating do quarters, And as need you, kind in on a feedback elaborate great your in see opportunities market to, how X evaluate you basically further of with then X maybe to to current they

Cindy Taylor

be Sean, happy to do I'll that.

quantified upping Of quarter to we that to Services to rate and decline Completion this choice what honest. familiar course, kind of Downhole the no given think I is in extraordinarily from totally the course, is, of just call increase of obviously, that million. we with. our call first the Technologies, immense on have be call, And everyone current There's $XXX

X muted say took aggressive we we in and early impact I so margin that enough, will those kind And really of action, thankfully businesses. decremental the

error see month better holding than clearly, Now the shutdown was obviously, call, horrific April, in improvement as quarter. and not a I this based later indications, I QX up the a with bit noted activity But a driven. May is on and progression we little you the early customer what had bit on see we started only in also should in to say

As short-cycle it even and well businesses my offshore by relates exacerbated more as it's Technologies products, to business Downhole destocking. customer like as

and today. businesses, won't suggest that show I hit than but second is that be the improvement I but know cost costs, should be that the to us. a any should obviously, And got that taken in a what QX. a there based with the be such actions, up some and those end size from quite of flat on took combination in were behind closures QX those facility we've from less saw lot of it feedback But severance to QX won't severance view of relative customers so more aggressively. we what we say we conversations And facility will of early or dramatically we quarter closure

put find as be in we're of to activity try whether virtually as up as through effective remotely, more half traveling, to to somewhat We're So more do segment, the that But as and business as that the than with that is we to of just efficiencies will. as backlog, proved things to cost example, there. that with course, there's action we but it also find working bookings be behind doing being an to Offshore/Manufactured trying us efficiencies. there watch progress benefit as rather and Products now to we have our I long but continuing manufacturing what has more kind trajectory second that expect holds trying resilient,

I As this dramatic trying that to if you more the maintain We're we that we And throughout headcount overhead push has management high-quality, made like things. has line generally strong if down about progress on team feel XX%. had came extensive at front. Obviously, could mentioned, benefit downturn. we've come SG&A, a will. item, But to shove, do

for, to I manufacturing costs. I'd manufacturing for you are efficiencies, that call looking enhance individual to be going focus us will, are We which our look them, facilities to deeper say forward. manufacturing, and manufacturing unabsorbed continue opportunities at the But initiative level, going to facility with help would more if

Sean Meakim

uses guess, is generate about net you part the is guess just of the that the of get. And in free that but a the part of a clearly, key cash to and debt opportunistically really quarter, reduction being really best some how outcomes reduction of, strategy, buying of a that had you the in debt regardless range success of for given of see just cash. back part confidence level there. strong convert, maybe you helped some And your free I items talk cash I able

of forward? and going ongoing cash an still So capability uses be in then what that market challenging maybe

Cindy Taylor

at off, Yes. than I'm add are the we the miss prepared even think during free much to American releases benefited to more we given I'll quarter. additional early part activity our had that call, I in uncertainty We But decline working comments, today the Lloyd particularly But the commentary, around globally just you by we from just flow comments my our were anything we any him that of quarter, will, at were address pandemic. and start tone North a comfortable cash and in if on COVID-XX of actions I shale completed you asking capital looking can and rate front. seeing, tell if strong the quarter. very that the

we in progress, month detailed will we itself quarter, As that do from business with envision in payment Products addition Act We we'll some to And in working just our benefit as third CARES added in two the some very expect the benefit some that call, strong capital done QX. NOL continue and benefit some in timing some our about quarter. from had contracts have on kind the forecast. first of revenue very bottoms-up of benefit to things. had in then One military is we a quarter We a third talked Offshore receivables. lend carrybacks June get, along do particularly we

to million. bare total when in you cash addition, will, that minimum, we've there. the and But approximate be of operations. CapEx already flow have for so $XX not again, looking we done. commentary say, that, about, And cut if across a to $XXX expect million I'd the for Lloyd And adding year, from what that we I'm for total looks to year including

in reducing intently deleveraging that, the amounts converts with we But the revolver totality delever obviously. is below total. continue to under that discount -- that to true amount, well, trying tried you're allows reduce face outstanding in it importantly, see you That's delevering. we've to will a focus why because us at bought in and as So we're that on to us

Lloyd Hajdik

Sean, is absolutely Yes. Cindy correct.

Sean Meakim

Very good.

a I year. the you cash think flow lot generate that's need runway sort of this more

the So thanks for feedback.

Operator

Thank you.

Gengaro comes from Stifel. Stephen question from next Our

now open. Your line is

Stephen Gengaro

is for I everybody me. morning. X guess hope well. Good doing I things

-- you cost given in you the given a XQ exclude on going revenue in cuts have flat what's see on is, the given could commentary environment, that second first side? revenue, and on, charges quarter, -- put a could the I would see if your you rise severance mean, cost place the margins been bit The in

Cindy Taylor

you a consistently in Yes. We practice We allow of adjust adjusted of And giving claiming press and costs, were across the EBITDA". to board. in to it about the these to the to downsizing is make pretty back information which the things you bankruptcy "adding cost get course, QX. full don't expect addition you we lot to this benefit try of severance measures give hit hard we also relatively $X.X reduction And customers by of million release. in do and protection,

incrementals really logic of twofold; effectively as in that QX. you'll decrementals, long one, who did that think, these good But as harsh knows, generate that's number of strong we come or So thoughts of have we that revenue I do, to get you out incrementals tells when But that the internal and got environment all mitigate we as revenue. forecasts. this. you again, you kind you pretty the itself We've very efforts QX right? the QX, think lend our progress, we pretty as should own Whether

Stephen Gengaro

some market the saw of sort demand with they tough well systems? think And -- I sort traction seeing That's given think now, bring as gain do and efficiencies allow efficiencies the traction side, we this? but bring inclination -- the then of will you those particularly systems helpful. there components they right Are systems, those to to as sort out of you come Downhole obviously, mean, you of the you of is the do as any the STRATX, as Great. customers of vapor. mentioned opposed Or to traditional early on buy you you

Cindy Taylor

past towards your are accurate, We do in integrated number more and sell migrating Well, the systems. and have one. I comments are think components

are customers And draconian we see I that both So so looking to work cheaply. quite your activity frankly, in from a to environment we both. accurate comments benefit our that very faced, do and, continue think like are

you have when in I think brief do market short-term lose components, you migration been will. activity completion measure quarter. always it's a hard might if I to share of say, XX% so a back to will there And over

did outperform QX to track. industry metrics on perforating we we However, the in relative that

what much relative integrated gaining our did And in decline And new other so we than QX. decline. in were tells QX or I products of at share some to we look that terms me rate is peers generally competitors. how those were is at better of And of speaking,

Now bit in there's a an and because U.S. extraordinarily our and driven I international gaining little that difficult totality, activity of both vapor STRATX have a mix is there do we while activity But this in there. that gun share. market believe are

Operator

Our O'Leary & next Pickering, Holt from question comes from Company. Tudor, George

George O'Leary

wrong, mentioned, if and this that office your working on you today. you But side. actually off the call I'm pardon fighter As at the on mentioned I completion beginning of get guys in I me very think a you're because drove innovations some the

focused looking to you're you problems Completion you're Just of side be what any what share color Services the on the solve, color Any specifically interesting. super would if types curious on, and side? there could innovation

Cindy Taylor

it a a And Thank is equipment where our Yes. market price. of extended piece named you really step the of we George. premium many commands use extended are, I jobs, product enhancements are existing them, an as that. I'll call and but premium initially, line, clearly the efforts share and think have harsher example. I'll of leading ongoing in course, offerings. that times, technology Tempress these I out reach type have that that, It's laterals, But we you, these while our asked reach our appreciate

really And and And some It's But technology, maintenance It's existing the of in valve along international to on the leverage of a example. so have well. technology. in laterals. eliminate to as you what as we'd in know, share is. it name. also And terms customer are and adapt Again, ways experienced we complicated we uses helps what to penetration mid-range to and by find well, couple but upkeep can But it's mid-range trying looking examples. that's into our to to is mid-range-type it know we're very trying base. leading we're the do patented broader And have around offerings in but helps are oscillator. Tempress George. But technology very fluidic technology same we laterals that's which equipment. efficient a it introduce we're we mitigate like so the efficient newly own reduced market that are regions, us sand more range those those of Those operators, also obviously we our a migration, lines, our examples, or international regions have an

George O'Leary

Cindy. helpful, Very

If out? color taken you've back even business there? of costs that out come those you back costs have come your about things where segments, the three Any if maybe think the don't up, and structural have actually of to the some variable the that when across and cycle of majority costs structural

Cindy Taylor

rate in divisions bit of Services that it been rapid I that would decline more is of occurred. weighted honest. has build kind it's broad-based. where But as the I've at said, just as generally My be of course, because it Technologies towards I up. Site totality. looked a describe now, I'll Downhole And and Well right

is are, facility But I fixed?" really to reinvest where it's variable, have reopen so and and that I that tough "Okay, say, permanent. also no obviously, as And those what say I intentions what have facility, to is an eliminated or is a example,

step layers, We many new to people have and here, challenge out that companies people going other in mid-level just taken management younger to we we're don't, up. so like

of costs more viewing permanent, we're the obviously, those as system. So out

very And those. so been identify we've to about trying diligent

have and us, new example, in And it we helps also to case programs, some program with maintenance, be the we cost. existing and helps i.e., was really COVID initiatives in health, an quality, what employees. telematics identification that put us of you lot system maintenance, training of preventative they've that areas with and as vehicles in to onboarding comes leveraged intent terms pre-COVID, layering OIS incremental shove, can on place out us find safety, Scout of new us management environment, you It honestly push help have via management It but helped were its but fleet without into, with employees. a already place an

looking we So us they to And to to did programs. hiring on more and it's lot of in with efficiencies serve and you not are is use that you We're travel in sitting because certainly which to say the systems, I that resources given better add, we and And if the flex stages call, are we're manufacturing on Products. Technologies of resilient will, virtual that headcount need more future say areas. our Offshore/Manufactured our think the things more regions in we're And environment. Products across pre-COVID, on should but benefiting your capacity the cross-segment manufacturing as globe just in operating to those efficiencies for quarters. looking, a means globally, come leveraging onboarding Offshore existing again, Downhole backlog. our I'll do And software can those between and opposed training programs more early I implemented laurels customers this and

Operator

Markets. Hallead from question next from RBC comes Kurt Capital Our

Kurt Hallead

more hesitant just going was wondering directional out on Well could on your color I to appreciate first, I impact what Downhole perspective. profession on and you given commentary be, sure the revenue X context know in or margins credits you to kind Technologies and you revenue into progress? Services wanted credit which all your kind I I the the I or from you and Site those as you then give to... on of be segments, want Cindy, follow-up, of stabilization kind kind viewpoints and of give EBITDA give appreciate But cost info just bit that. dynamics, little potentially out terms margin in us the -- specific kind quarter. a out of and of on if provided make do in also the may I of color to of we ranges, cost may third the

Cindy Taylor

-- hear of I in cut progression Well, means of and I of did in heard Kurt, ask I'm that EBITDA bit. Was terms Downhole correctly? that tiny is you importantly, I But think kind what what Site Well a sorry, you incremental future just that margins. revenue and

Kurt Hallead

Cindy. Yes,

the was it or context to the And correctly. with to to cost give make respect wanting in gist out the credits sure really we credit of got You programs.

Cindy Taylor

Okay.

commented, I program, were been of it the a XX% Services believe, international has again, in product have both Gulf Completion lot they parallel of in a out about of our you. Again, line. and cost remember, And the reductions I lot On terms exposure. got magnitude. I Mexico of almost

So in you'd than lower Downhole XX%. be bit a of have probably that their expect the Technologies to headcount where reductions range been little just

out strong QX, incrementals relates up. is, right But completions you obviously, as will suggest the come rig as get of guidance our to that to list, the so revenue anybody a fun that for now, watch as let you a much forecasters But had XX%. just are be of the back if goal system. creep just terms again, that. But is not you obviously, But again, in cost count it the as diligently flat can all of that this. into do So don't we quarter we to maybe be that once should that, down

right And our quarter. in was guidance the again, remember, so a strong April still month now,

Obviously, but in QX. at exit anywhere the be magnitude flattish So had to quarter. we'll and the have relative we up downsizing probably we'll won't that we near charges, the be not second severance from least rate,

hope X talking quarter. for I just question. to more that a lend the through your addressed through in that So breakeven that result segments third those

Kurt Hallead

at EBITDA Breakeven the results line?

Cindy Taylor

Right. Right.

Lloyd Hajdik

you are Kurt, there?

Operator

your answer to next question? looks like that does moving the am disconnected. his line is on Kurt, It question. I

Cindy Taylor

great, you. sounds Cheryl. Thank That

Operator

Morgan Stanley. question from Our next comes Lynagh Connor from

open. now is line Your

Connor Lynagh

negative up margins EBITDA if I field a wondering, both I think issue Services that's either the volume sort XXXX Completion more could relatively margins the the we that you pricing we of Yeah, was some I held the broad thanks. Good the any rewind there? a we not that's or But it had in well. segments the in characterize from clock Just was was if general color should of be than negative to again downturn, pricing aware trends issue, and wondering whether Downhole? morning. you Completion case business. guys of see basically was driving in did of the those

Cindy Taylor

Yes. some worse decline, one fairly to environment followed where to just years. in it's challenge declines. been, dramatic an the in and only of without a activity be efficient in the had we troughed ever is your very this Very by activity-driven revenue this We've I we'd flows, respects adapt And pickup be quarter. the XX% businesses already interesting to were rate both you United, you, question. been in relative say of seen a question. where XXXX. had like ebbs I'd because decline I can severe we've of across to XX% had for one before, quarter, lose duration. be to because of world, point, We We've your activity to activity these most while cases, a different no And dramatic to not in got a And in in with to but honest February

the cost as I lose And to not base And this you margins. We of have, and will do and we reduce well, to is reduce. pricing of which to to we've so it. have do, hard a try but we overhead, your kind cost already reductions, really activity call course, can't do had It's what lean which pressure it. that's level, at stabilize have we

reduce You can't it XX%.

a price I the totality, but fairly similar, general would of lower lower kind I in seeing it. are answer. you're environment, margins think say, of kind environment probably necessity. That's broad-based But cost of So actually

to were drilling importantly, thought their all than And are are costs are do expectations. down they read and and second that they to notes costs quarter. coming completion the relative in many are lot LOE a the doing you their If out, better E&P of going down

significant cost a this draconian we industry move of you've as environment. And fairly so had compression pretty through

Connor Lynagh

cases, in you've line not Got both it. helpful. got, single it's That's product certainly guess businesses. I

think mix. pretty recovery decrementals, be mix drive in way Obviously, a major mix normal any improvement there of here severely can of terms altered would Is we things us but type all and is margins be in shift should incremental over there to those major segments that we to by another markets, any past either of one incrementals or that couple model? relative shift trended point the the you would we that aware have potential in the As about occurred of? think lower quarters if and that's

Cindy Taylor

Offshore/Manufactured Well, resilient more all, global reach just of think stepping has the and I broadly, Products business of backlog. back our diversification, been largely first because business

some which probably the extent most quickly is inventory you immediately and because it's on U.S. of just just Completion so of year it again, comments say of downside thing because product Completion as and of downturn, rate international the that is. that just and Gulf And the that held I the other as now And the XX% plug particularly particularly alone, that at like operations, Technologies, the of and customers responds destocking very that expect, have revenue can the the look over decline obviously, is proportionately for sometimes the and the as nature if going total segment side the of the work Mexico of side land impacted, they're generally Services Wellsite to faster to sits by to also because and although harder activity had on is they you exacerbated I Downhole call for lines business oftentimes land of to segmental Downhole have true the revenue favor well. or people U.S. be changes. last it mix, so, up Services in same inventory, the you almost on is out do, business, because, not would very

that hope not question. activity. lost course, in of I I'd say, answered your of get then just So let's X But quarter's

we important is and have of strategy things, allocate most such One capital. management the do teams, to as that

to I with were we're shale other feeds to the going come. the trying next what all over going the question is share markets the not wrestle term. quarters is is to So quarter? U.S. And longer that And happen that real think to What's addressing the, whether where to global in challenge we're we long term? be

Operator

from Our Instructions] comes next from John [Operator Daniel Energy. Daniel question

John Daniel

picture a got just pricing. I no Cindy, is one here. questions, couple big on modeling first But of questions

pricing And have and of curious they current OFS just great many and relationships just it responding I'm E&P relates telling You them how unsustainability company you to the what long-term executives. to were are as you? with

Cindy Taylor

of right. customers have the saw, where the how as some E&P are out relationships to trying And price many you're works. would fragmented said both in You're this their flipped crazy $XX service that on but side. payment, customers of the the customers have Probably in And going wayside all we interest E&P crude there. with an honestly, go you're to I lowest dialogue. and U.S., industry But highly facing recognize out that your degree, lot more unsustainability however, of the say, I issues, if side differentiated you're and to I'm is E&P by got and international, and course, on challenges. figure but I if and we the offshore high the are. make their the oil, that, I capitalized the honestly, more we're bankruptcies, well tracking so have leverage contract problems, highly fragmented. to friendships, even a forget own think do are own more own that negative, focus they've their we not sympathetic

consolidated, come this, money we much with more after space. PE real into supply end fundamentally of the support will think Street is, I without So we which as up question chain we Wall a do the flowing as stronger out well

And this. QHS on when customers, so tough to do a to you're hold focus We through can. downturn be but we conversations are for good higher what on to we partners do struggling be everybody like try technology, everything can to possibly and quality, our

John Daniel

Fair Okay. enough.

any had they if seeing yet sympathy for Just you.

right curious business when or to And do opportunities? with those opportunities, deal. is which time much any, be time, big will of on touch the a did big just I'm rightsizing is how presumably small? You being the whether fragmentation, pursue think assessing M&A you, aggressively hopefully behind spent all market you on some if

Cindy Taylor

do just I'll it. Well,

big we traditionally anything pretty exercise likely try obviously, a the went premium. landscape And from to few done as takeaways do. will fact, we and a In that through that to exercise there is stock-for-stock just low-to-no just just about that get assess are here

nature integration have the to convention and really one; the can around that have number kind strong thereof. you the of combination, it, do two, to you So number of strategic derisk

in so in profiles enterprise transactions different of space, gets of that lot did a of potential value to a the everybody near-term that couple downturn the we an that limits the And I and much the exercise cash automatically net leverage think but doesn't with position. have vastly side it in -- an on or severe activity, leverage a someone in have because that is you is equity who versus leverage hit more extent

stock-for-stock then, these So again, that exchange hurts the really it with are transactions, be the to background ratio. going

should will, to a or deals the wrongly, So you'll you're personally more easier space, is on are think to if in individual of XX whole XX multiples say, to But see the value those leaning litany much service struggling we not XXXX, a just times. and it or XXXX rightly restructure. that's believe in conclusion, saw and than of months value range of going next we basis, of until you several that E&P these the companies. some of towards an either reserve X see XXXX? it companies delever this people I are my And service a And I companies very and opinion, is track is -- or we to most companies, on

so And done. get hard those to deals are

see than me, to intellectual it's But it. I happening restructuring. now. just monitor of we'll much it, stimulating watch exercise we'll don't a somewhat So other

Operator

[Operator Instructions]

Cindy Taylor

It like concluded. we're right? sounds that Cheryl. Is right, All

Operator

queue. I no in questions show Yes. further

Cindy Taylor

for Thank for right. and All in. you hosting of thanks call, Cheryl, you all our dialing to

last I day. be in As come I reports knew saw would the and it today, extraordinarily night busy

that, you Thank of in the in to quarters good all and come. so luck And much. be we'll with so touch

Operator

ladies you conference. Thank participation. your thank gentlemen. you, This today's And for concludes and

You disconnect. now may

Oil States International (OIS) 1 Aug 202020 Q2 Earnings call transcript