OIS - Earnings call transcript Q2 2021 | Oil States International, Inc.

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Operator

Good morning, and welcome to the Oil States International Second Quarter '21 Earnings Conference Call. My name is Zanera, and I'll be the operator for today's call [Operator Instructions]. I will now turn the call over to Ms. Ellen Pennington. Ellen, you may begin.

Ellen Pennington

Zanera. you, Thank welcome Conference and States Quarter Second Good to Earnings Call. XXXX morning, Oil

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

safe SEC to note Before listeners remain valid statements. harbor relying that our today be month. call the including of risks being we regarding conference be that by than available be Form the the other our statements the caution that will call one contain is in law. accessed affect completion we these webcast and business, beyond. one are or No extent will that one would can information factors weighed and after the Oil historical context forward-looking replay Cindy. those and we remarks of begin, like of will should To This assume in over A protections information, filings. on the hours States' be should later to Any many afforded I website. federal half the remarks quarter now the call this with available forward-looking disclosed other such for in at please our XX-K call turn along

Cindy Taylor

Good for Ellen. joining our earnings. XXXX our morning, you you, and thank regarding Thank quarter conference call second today

and sequential each Services revenues and our Products with in our our benefited improved segments X%, increase, XX% XX%, segments results X% Offshore/Manufactured in operating of and Site EBITDA Technologies Revenues in and our the revenues segment respectively. consolidated increased Sequentially, quarter adjusted while way Downhole increased price respectively. Second environment. a Well from the led consolidated commodity XX%

for increase of the the consolidated reductions. positive a margins, allowing restructuring our achieved pay for facilities. adjusted EBITDA our reported totaled primarily exit to revenue operations benefit of growth quarter, third We the charges XXX EBITDA of X.X% quarter of $X point Adjusted EBITDA consecutive excluding coupled million Each cost of associated for revolver our also segments the certain with a operating consolidated senior basis our $XX notes. convertible resulting lease fully from in quarter. from us portion flow $XX.X Cash million million, repurchase with and off totaled

of very Riser receive Technology XXXX a before financial Technology position System. detail into our We also were Deepsea a I Offshore each go Merlin on operations of award Mineral consolidated now segments. New will to for more pleased Spotlight Lloyd our the our Conference results from review of in discussion and

Lloyd Hajdik

good everyone. and you, Cindy, morning, Thank

million results During generated quarter, our net in noncash of the of share. charges impairment along million we revenues described restructuring of $X.X with million $X.X charges, million, $XXX included as asset of second The release. per $X.XX quarterly loss while $XX lease press reporting or a

$XX.X EBITDA US activity which consolidated significantly Offshore/Manufactured improving increased revenues other the centric drove due our million, Products adjusted first levels our and Our in from quarter segment totaled to businesses. land higher in

million principal outstanding As quarter par $X.X discount X.X% at of a also revolving facility amount under credit asset-based we repaid during bought the notes all Cindy mentioned, our and senior borrowings convertible back value. our to

the on compared As to to as first related senior in quarter. million outstanding end convertible principal notes, million of $XX the million X.X% XXXX. February June XX, which amount June of of XX, the in Cash mature totaled remained $XX hand at $XX

XX%. quarter. million, available drawn totaled net At our of to amount $XXX on an liquidity was XX, debt capitalization hand, XX, be June the of facility yielding yielded ratio million million, together which, June the net revolving to net total under available with As increase of of credit $XXX debt of million, end $XX from total $XX cash the a our first

of million, For was $X.X issuance the second million $X.X costs. which expense totaled noncash quarter XXXX, our of net debt amortization interest

cash Our the was outstanding second a X% in debt as percentage quarter. total approximately of interest expense

our XXXX consolidated quarter $X.X $XX interest $X.X to our million, million. to corporate to expect expenses the this $X.X you the net Cindy, through and to in approximately take XXXX. will I'd invest who third business our like full time, back depreciation million second And and the total $XX CapEx of terms results total guidance, are during each In million operating and over amortization year expect we for quarter projected in total turn to during the expense at We total of expense segments. to spent CapEx million, call

Cindy Taylor

Thanks, Lloyd.

$XX Adjusted segment XXXX million of XXXX, EBITDA and XXXX, of a XX.X% ratio of quarter first and improvement production a reported of sequentially, increased the of of yielding but quarter compared the by quarter. connector of the $X and in revenues to $XX revenues EBITDA sequentially, equipment $XX segment Products June short-cycle decrease of XXXX. of our adjusted million from quarter Offshore/Manufactured noticeable $XXX platform, also the EBITDA in was book-to-bill Our in segment totaled Revenues XX, coming compared XX% XXXX. products million and of margin products. Backlog our for million adjusted sales at to primarily sales achieved military in quarter the second driven segment X.Xx X% reported second first fixed XX.X% with million of of

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

help our we diverse customers base be expands energy going our world us Recent the of forward. renewable in investment clean the expand alternative and competencies into diligently will leverage more developments space. capabilities a core sources, to tech and support working As product should

our were and new award experiencing potential subsea clean bookings quarter systems, while our our to developments fixed production reported Approximately military other million revenues revenues opportunities to reported and and XX%. million $X quarter we renewable quarter offshore the second segment, EBITDA of of million Downhole on adjusted support $XX segment and of systems in clients million projects, first bid segment to globally. tied tech and year-to-date and drilling EBITDA traditional increase minerals, XXXX. continue of of bidding clients non-oil subsea, and of supporting in in the non-oil involved to We an gas adjusted actively $XX of bookings compared floating the second $X Technologies XXXX, and bringing energy gas wind X% in to multiple In

Our X% revenues completions United sequentially, in States. increased in perforating by product line the an increase driven activity

the weather-induced increase pandemic. sequential base. Gulf driven while flat bit of was our international We customers levels, revenues increased million. continue $X.X focused In segment in sequentially quarter and activity margin global we on to stoppages. EBITDA the Mexico operations of facility and resulting while work effects Our improved revenues COVID-XX Well as the under-absorption Site adjusted our from Services EBITDA to by previous land generated our segment, suffered million, a U.S. $XX quarter of ongoing address revenue in remained The X% our with of streamlining remain pursuing customer the profitable support to activity due

customer improved ease. to these expertise to in Oil will this pricing offerings return core improved actively areas domestic markets, beginning US spending. Global continue activity while their increase developing are are disruptions inventories and in to business. levels, pre-pandemic is to of focus We to disruptions segment and hamper spurring in continue an but continue COVID-XX differentiate States' on oil international service completions to

for was all industry favorably XX% up quarter quarterly first XXX rigs, XXXX. of compared rig our was frac impacted US average quarter which count Similarly, the a spread XX% segments. increase The XXXX US the count, the sequential second in experienced to average of the average which

offerings. US, average. optimism into trending gives month that third a in the compared product the quarter third the we now quarter to are spreads and which see count increase roughly we by to XX As the spread of quarter us the increasing second are driven shale or our with frac should US continuing This support is favorably, favorable trends XX% XXXX, service

sales our bookings improvements expect and XXXX. quarter activities. book-to-bill given a service we a in than grow consolidated with X% Site we in we Services X% the our their growth revenues continue segment count, greater sequential frac Given to to of On EBITDA our increased in Offshore/Manufactured a achieve quarter strong expect third expected segments expanding Revenues Offshore/Manufactured XXXX to contributions. Products product and Technologies are trend of ratio basis, modestly sequentially the of third in to segment spread expected third the short-cycle Products grow of Downhole Xx the to and XXXX. From perspective, repair expect in quarter Well

that for the are increased our to will full year guidance Accordingly, completions $XX adjusted of We believe our year we EBITDA consolidated range US XXXX. million million full $XX given from activity. levels raising

impacted energy growth around July pandemic demand. Now has to variant during comments. remains and month Delta prospects the hospitalizations. offer negatively and uncertainty concerns negative of the COVID-XX concluding the around and Resolution due uncertain I'd on the impact This potential to trends some new cases like worsening of equities given

grew recover of remain to inventories COVID-XX following OPEC+ to appear prices second oil harsh million and $XX Crude to offerings customer to conduct per stabilized the crude by the with range. the and will various U.S. XXX our considerably we services which States providing will technology reached U.S. earlier value-added X% month. as X-year the inventory operations have meet is the demands focused range ultimately XX, product in products Oil safe of leadership barrels the agreement effects oil as and However, continue about July this service in in at $XX barrel quarter, the during below leaving pandemic. supply on globally from

efforts and would for energy will Zanera, That answers our at In time? continue addition, this and we product opportunities. open renewable the investment emerging clean prepared support call tech completes up comments. our questions you to development

Operator

our Stephen first from from Gengaro Stifel. And Instructions] [Operator comes question

Stephen Gengaro

So don't two if mind. things, you

in of might yet. I sort looking about any there's trends you about, at of in seeing business And incrementals positive these pricing could you're curious the be talk first, that from in downhole we The you Cindy, quarter. kind if if and under-absorption that talked, was levels, just the the

Cindy Taylor

in our in lot Technologies charge lightning by We facilities. weather Margins shaped a called-out segment are These had negatively strikes our shutdowns. manufacturing Downhole impacted events. of were

that, would quarter. of to there's inefficiencies general power with line pricing But So bit add a inflation. coupled the the a in in lack product there's that perforating of I

So our margins through a is more little QX modestly with we manage QX very outlook as effects. sequential of in those now in right kind of improved upside kind

Stephen Gengaro

how on of profiles. and far divestitures as forward Do in just a sort as your long-term you envision referenced sort the you of on remarks strategic you of capital going you the anything your best your nature? of sort or just return growth that of in in any allocate businesses as with release press of this growth -- focusing would strategy envision or And sort

Cindy Taylor

the an of marginal X capital we subproduct indirect believe operations line throughout our focusing all exiting and doing on we're first cost. to very months, are very trim of good reported or going that As at to and most see leased the of associated to and really no benefit assessing line we're adjustments kind as both region confident you get kind allocate our trying we're to virtually this are is returns, few or facilities we utility. example, there EBITDA, can where best longer -- product it And have with but of out and

So prospectively again, the report help stronger those margins product individual costs lines overall. eliminating

look businesses that will to or EBITDA business, a trimmed positive make is out don't making they exit say are there's of not that no. the a So big contributions. We've answer like

us lot of return. for and thresholds. a I company to employees We And this some good we to -- now. the the are the capital news so higher think and And behind going set is is allocate the

what and for therefore to controlled years, is in this decade, destroying equipment, about last the think too think saying many at going share we're I'm wrong be pricing. going done growth forward. capital I allocate industry much And don't has I capital that market to least alone

Stephen Gengaro

hearing even North in curious growth throw We're more on -- America businesses relative relative XXXX, and rate, could I your and thoughts market a or pretty CapEx in we just about least to growth environment, if that -- rates how then and it's XX%-ish in of looking the markets at this general? not And more. XX%, if that sort to the more of possible. or your the should upstream is in one likely In think

Cindy Taylor

of my So a portfolio. of their far. they're Typically, of lot that. early think manage much economic supported increase do as there this mentioned I less one, activity do XXXX, year, that, And And in current well. I in as privates generally privates lot of comment are don't you've those to I notes. it's thus half activity at And to a -- them continued see public it's driven in couple generally decision-makings. an And agree based one, by my Number second pricing even and a as larger think for on than based that, I beneficial on track companies customers, as lower is, I guess the by again, seen would improvement, add say WTI we much these we I pricing, many our indications public I'd hedged of levels. hedging from things. with current And at investing levels the

So as it XX% in overall off, support thesis to those hedges rate your seems a roll certainly industry growth CapEx. of

say of kind that's one. So number I would

cost utilization strong. we've you leverage and if Completion put in incrementals, our we've got, very, at us, look benefit initiatives that all going get of example, were coupled these I Services the line you're to For plans they leverage, an the activities very product place. as with revenue rationalization And think

in downhole good products should think strong forward. and a do quarter I offshore Services going So Completion those had in business. our both be We incrementals

a I well of for improve. I the there that QX there's think forward. continuing XXXX. we go a outlook fairly is quite large And lot going our mentioned book-to-bill in about projects expectations in to bodes Xx north pipeline of the that

product at initiatives incrementals have COVID-induced strong put line point, X expectation So of single gone through we've pretty is because my place this quarters last the bring will in this and challenge. that every really XXXX that forward the over as in improves been

Operator

to the this further Ellen. back like time. you. we Thank no And at turn over call have to questions I'd

Cindy Taylor

the appreciate your earnings Cindy. want you. wish just This and our continue all good the luck to interest We thank Thank I Oil for you States I of wish as the season. of and the deeply joining all do call you remainder today. dedication you your I in is you continued of through support best. industry.

Operator

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

may You now disconnect.

Oil States International (OIS) 31 Jul 212021 Q2 Earnings call transcript