OIS - Earnings call transcript Q3 2021 | Oil States International, Inc.

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Operator

Welcome to the Oil States International Incorporated Third Quarter 2021 Earnings Call. My name is Hilda and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the to turn now will call Ms. over I Pennington. Ellen Ms. Pennington, you begin. may

Ellen Pennington

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

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

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

Cindy Taylor

provide call Thank you, and Ellen. on outlook. will thoughts we where conference our for and discuss quarter thank our Good earnings our morning the joining third XXXX you market

August stronger given the in adjusted consolidated EBITDA gas We fundamentals. During improvement track were million. company oil revenues and for results industry quarter million of the generated sequentially third ongoing and of through of the XXXX $X.X $XXX on

Ida landfall operations along impacted by August following coast. belt However, our XX, were negatively results its of the Louisiana on Hurricane

and storm not Our major facilities devastating did remained safe through sustain damage. this our personnel

and local late by However, Site workforce Well within closures of were temporary Services Offshore/Manufactured affected segments with restored not operations results fully Products facility power September, until our and challenges.

Gulf delays were customers We for of adjusted Ida. have one and estimated Hurricane to approximately incurred of been of impacts Mexico the in production results shipment goods the suspended not Reported the for our also in services and month.

in However, estimate and based million on benefit respectively, land of offsetting revenue Ida shortfalls EBITDA and resulted a consolidated of $X quarter increased approximately $X that third Hurricane completion we million basis the activity. U.S.

In period. Offshore/Manufactured and Fortunately, these quarters. X.X in be a as backlog Highlighting of should outlook a was with into levels by Council, Award increasing Accelerator XX% in score stronger considered going and for activity quarter reporting, ESG bookings Energy ratio significant industry the advances XXXX. yielding a are and PESA, leadership. was our economic transitory ESG future improvement, support formerly hurricane-related Technology & Products delays known recognized September the the book-to-bill our Expanding sequential increase recovered Oil segment for times in Workforce States

of we efforts before our company, very detail a into our each in position our discussion a been results Lloyd to proud consolidated have for of and segments. are more go now review and financial I As operations practices. of will recognized ESG

Lloyd Hajdik

Thanks, everyone. morning, Cindy, good

restructuring with During the inventory noncash of results a charges million of generated million and $X.X third $XX impairment severance reporting $XXX of $X.XX charges. quarterly included share. quarter, $XXX,XXX revenues million, while we The million per net or along or of loss $X.X

charges million, Cindy excluded the which and As inventory in consolidated quarter. our adjusted $X.X incurred restructuring the mentioned, impairment EBITDA totaled

XXXX September borrowings XX, and outstanding credit As our were of June revolving no asset-based under facility. XX,

on September million as hand build cash of at second compared quarter. $XX with $XX to XX, end of to million the continued We the

approximately net million yielding We the expected net full year $X.X September quarter totaled ratio million CapEx million credit for available which totaled our resulted cash XX, capitalization XXXX. with be liquidity the $XXX $XXX to compared be a during under $XX million drawn $XXX XX, facility June million revolving of third total in million in XX%. the net of spent At XX. $XX on debt to of September to As to with amount together available our debt invested hand at

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

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

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

Cindy Taylor

Lloyd. Thanks

Products a adjusted sales caused million reported in transitory which and closure our products the in of Offshore/Manufactured and of driven Louisiana $X.X sequentially, EBITDA revenue considered and This compared facility connector third segment Southeast to EBITDA of and segment in $XX $XX million is quarter Hurricane of XX% million shortfall should segment quarter of in million of be effects recouped decreased reported revenues manufacturing by Our XXXX. primarily quarters. $XX.X adjusted the Revenues XXXX, of temporary in the revenues service September. and of lower Ida second future

have as Ida, $XXX XX% and sequential a September Hurricane segment. the million adjusted Excluding million million and of revenues estimated for $XX XXXX, XX, segment $XX.X would the totaled effects respectively increase. totaled Backlog of EBITDA

quarter yielding year-to-date times bookings X.X a quarterly of ratio Third times. X.X and XXXX a ratio million totaled $XXX of book-to-bill

exceeding quarter the our notable quarters. awards we project future million major which two third During revenues in leverage project will booked $XX

regions. tied Approximately non-oil our year-to-date our projects, product bringing gas X%. Our of bookings and to third bookings non-oil quarter to and gas bookings lines based were many were third quarter X% broad and across

strategic Riser facilities initiatives, our the running new equipment, of contract, Mineral the first that multiyear third and third-party high-pressure Asian to System. qualification of pressure Asia. one successful including on utilization provides Southeast Merlin Southeast completed award The of the rental for riser the our in our several drilling a quarter proprietary customer [ph] crying During Merlin a Deepsea long-term we of our second managed equipment drilling full

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

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

in cleantech opportunities multiple offshore an other and subsea bid traditional wind continue to while potential fixed new minerals, award floating involved subsea, experiencing our We to drilling increase segment reported revenues $XX clients in segment million systems, $X.X XXXX of the in to production million Technologies developments, support million on bidding the of Downhole reported actively million our and clients segment military EBITDA adjusted energy EBITDA and renewable of and compared in adjusted of In and we globally. in $XX second systems quarter of of $X.X quarter supporting XXXX. third revenues

were we In revenues demand X% delays, toe segment generated revenues $XX to delays year-over-year, our driven in for improved Quickstart and increased Services customers. orders segment for product While X% Well Offsetting increase down our revenues valves. due sequentially, line these severance perforating restructuring our Site our activity, driven product whilst of customer completions by of sequentially customer in SmartStart XX% by adjusted increase U.S. international the impacted some and international and lagged. XXXX excluding periods. of segment reported improvement Ida land-based the comparable million X% activity sequential of in service EBITDA ongoing in to charges was demand quarter Hurricane third the The in and increased Mexico adversely $X.X in sequentially million revenue also Gulf a

our have EBITDA Ida, effects of of global in Hurricane the We would and operations activity respectively. million our $X.X segment on profitable revenues Excluding streamlining in totalled customer focused adjusted base. pursuing million and estimated $XX support remain

actively service offerings. appeared are below U.S. and to to but in disruptions to to their our offerings to easing. We seasonal higher in this on improved completion pre-pandemic along domestic increase COVID-XX continue expertise focus prices be in supply international developing and areas in spending. with oil Global will hamper markets, challenges activity an of service leading customer inventories core chain differentiate now these continue segment averages, five-year commodity disruptions are

all experienced X% the the U.S. quarter sequential XXXX increase of impacted third quarterly spread our During frac industry favourably of the average count which a in segments.

we fourth favourable product U.S. and should in XXXX, service month trends the our support the offerings. are to to As which continue of into now see we a regions, shale quarter continue

some results the bookings of and award revenues sequentially in segment in a projects of grow tamper perspective, However, to XXXX Southeast Products for a Offshore/Manufactured amount and expect the in revenues in manufacturing likely fourth service Louisiana coupled to we Offshore/Manufactured strong increased with XX% XXXX. our or quarter facilities. basis, of our products ratio segment. fourth From is expect Products on time generated a depending to entering consolidated in our a holiday expected to the sales, the Revenues short-cycle during greater, fourth by quarter timing Offshore/Manufactured backlog repair U.S. our are the currently the quarter led levels quarter, of plus On expected book-to-bill we expected achieve one recovery in downtime given activities, segment several Products higher sequentially grow

will $XX continue with inventories unexpectedly the leadership pandemic to XX, extensive oil oil spot leaving X% with impacted barrels globally. disruption economic focused approximating to value-added which have five-year concluding will winding offer service million Crude like crude lingering products services delta product responded COVID $XXX.X September conduct available with remain to U.S in some inventories per activity, inventory WTI of to and during Hurricane hospitalizations Already case at I'd reduced about regions, our output. the XXXX meet decline. on technology demands U.S. negatively and further but range. the declining Well barrel. Sites be global with and customer and on Now to appears were prices operations counts offerings certain the comments. considerably Ida’s various below by crude has oil grew uncertainty site expanding and as providing in is

support up time, will at Hilda, In the call emerging investment addition, in opportunities. of comments. and our answers open for prepared our you continue energy completes development questions cleantech renewable efforts would That we product this please? and

Operator

a Instructions] have MacPherson Sandler. question from We Piper Ian [Operator you. from Thank

Ian MacPherson

Good and morning, Lloyd. Cindy

Cindy Taylor

Hi, good morning, Ian.

Lloyd Hajdik

morning. Good

Ian MacPherson

you in versus a follow and looks bucket terms that and drilling, like? and see of in Cindy, its in doing rental is managed along rollout new sale I capability that, or for mentioned product pressure coming opportunity what how the you're to expanding on of terms model what up a wanted that

Cindy Taylor

testing over year market and one-off expand able be to to our integration to various doing offer We're some been opportunities customers complete been this which integration we also you package equipment for and ongoing. Right now, will, this customers. working actively allowing on a qualification riser which to equipment obviously this quarter is completed to we've well us MPD the on our important joint looking the if have riser we to at our suite,

I the So this to the rental, months, but sale this we're would but and it’s far but are we generally order award, obviously sale that's six effort, stage. subject expecting at ultimate just is to say model. turn model, with this far could obviously into various fairly fairly say this advanced like point that it with within customers say I'd an a more of I'd progressed At this a at point next

Ian MacPherson

then impacts that. good Great. past in a looks like recovery storm moving QX. And the see, it's Thank nice it have you in you QX to for

a and could products Thanks. You your expected on check well be a then I on well. probably that? look well that bit growth we lead as that QX ask will if would that as could double-digits said expecting I get in margins presume segments sequential you incremental maybe sanity way. comment would about to the that for wanted as little the other

Cindy Taylor

was hurricane out of delayed do outlook timing I positive, these delayed I I worry and of so easier I'd which strong. that to Downhole Thanksgiving what segments It's our the our and that do one we in to throughout way, we also do obviously because in the picking have switch we're project number what two, Offshore/Manufactured of it's holidays that land. for recovery up, XXX% so back. Site know also hurricane recovery period. Mexico. number as well some for revenue backlog as at that through what that's Christmas segments agree on Products the facilities, gradually expect lost is was clearly of a own and this say agree were our QX lead major to both with we're overall services, turning and because all some and the Gulf scheduled Technologies like then of the of Yes, are from that the outlook Well and not we position look our don't looks always going not expecting It's is light and really the forecasting,

I our positive activity, in we recover kind in trends particularly so up that we land and pick QX. Middle through in notes, of as quick based East to we're my and a gradually mentioned Mexico well, very the expect in And lagged So Gulf by as U.S. international, the of areas. thinking gradual get offset international

what QX expect our there's I say as little because look So Well guess the too. mind for in there a of for would we it I tempering a got into incremental good of market, we strong I those other two segments while revenues in do bit Site services, factors

Ian MacPherson

margins thoughts thanks, insights any great Cindy. for quarter That's on or incremental the well? And as then lastly,

Cindy Taylor

mid incremental heavier normally our can be Site tends product with to the on XX% and downhole leading that range of Well you in Offshore/Manufactured in again, increase. more terms I'd are for for kind so Products incrementals in at a services looking portion be to be XX of margins range the margins revenue range. line The Our the of to teens know, margins the XX% significant XX% depending Those contributions. also as I'm revenue and

we're in but which mid-teens a to more margin. have will So, again Products of weighting this Offshore/Manufactured incremental totality,

Ian MacPherson

Cindy. Thanks understood. I

Cindy Taylor

Ian. you, Thank

Lloyd Hajdik

Thanks Ian.

Operator

Thank comes you. [Operator from Instructions] Gengaro Stephen Stifel. The next question from

Stephen Gengaro

morning. good Thanks,

Cindy Taylor

Stephen. morning, Good

Stephen Gengaro

lost on the $X couple and from them storms. any highlighting of I’m those when you're about of that one, follow million I Is layering just sure, talking to you're make the to incrementals before that Ian’s EBITDA just of A trying up fair? of things, in recovery your, believe question,

Cindy Taylor

normal of talking -- any to period margin, falls I'm if just it's its in incremental EBITDA get I'm that you you bottom-line, because normally the recovery not time incrementals revenue on just answering that. the and correctly at

Stephen Gengaro

the quarter? they as Yes, what could could higher But you of so profitability a in is, bit hurricane incrementals. I'm in the guess -- you're talking third impact lost I asking it normal be layer the

Cindy Taylor

lost going point really think up. you in to that revenue closed expecting absorption just got my a certain is, basically this you're you pick that your don't absorption, at a the you've you'll not amount Meaning if back up sense? that's some make pick not to I'm margin, answer Does its but Yes, time, there's effects. that month, a at normal for answer, is facility recover I the that of

Stephen Gengaro

you. That does. Thank

we and also, this not COVID slow that Or anything least quarter. side, others, of be the Downhole international issues? there and international And two on quarter as transportation behind ballpark the I sales is the just on of think, a is and So that there you for is anything Is in or at one if kind mentioned you average about? behind the range it both sort Downhole? or of piece can thinking should what kind

Cindy Taylor

in just because are place. these Well, the lumpier the of all, of first of nature, orders kind first

distribution type month. base So a broad it's multi-client not every

operational the line and and a good the what any may these is lot get of range you you'll products forecast ultimately perforating or and sequentially, it's this so it, plans And did is do recall, of more were work be so, not just there specific as and part really that probably that need, really at a all. in was projects if P&A huge in you is effect for I international this atypical cement the revenue, don't our decline job, this is It's a to not a having not it's while if bit trend of… and

Lloyd Hajdik

year-to-date. XX% to XX%

Cindy Taylor

are margins for Yes, projects and They come us. XX% year-to-date. larger very typically XX% do good to one-off at they

Stephen Gengaro

what of far competitors, growth maybe your looking even, XX% this of as in ballpark pricing Well have commentary side you small plus sort big for any set like? are sort of dynamics spending lot are well? Great, on the on a services XXXX, and as benchmark And Site as the that upstream

Cindy Taylor

I both going at and forward our think we the being capital day. to terms Stephen, and end of in product are, I we're say focused in the we allocate line, people very and would of where our want regions really

and really to possible. does want sure it trying because require best it product in I the capital, we're tend we're be offering high to our So to areas grade here allocating

pretty And because process. with the opportunity space. products offset question are to We've cost, pricing cover familiar indicator. it's think this material do range not get expanded just I I bottom-line been customers which actively And to increased clearly we've our about and labor to so broader dollars that's feel costs, more some in good incremental pricing mark, Obviously, need our to to you of bring set. the of these our so, a a XX%, key of in goal the get activity on an very with. to some cost, working incremental customers is We

Stephen Gengaro

Great, thank you.

Cindy Taylor

Good to Stephen. you. you, talking Thank

Operator

Thank you.

Our Daniel question next Energy Partners. from Daniel from comes John

John Daniel

thanks Cindy Lloyd, for putting and morning in. Good

Lloyd Hajdik

Good morning.

John Daniel

Not Don't tomorrow meeting excited and segment staff you, have XXXX if from and for the would numbers most the a question a a in for had be office, number. heads but just who why? three all the you had

Cindy Taylor

wonderful a That's question.

segment but looking I think to where just much were everybody, than heads, not generally, XXXX we in Offshore/Manufactured forward workforce Products. our is more our

in Of lot what are of as it's of performance improvement course, we supporting, activity, number heavy the a quoting you particularly Moses there's good. is And terms market the But seeing, that, product global very bidding share call, our obviously very the the are line, not addition that a of and with quite these our have. breadth in associated to terms where given we the one, broad terms do helps that strong, is facilities I well. that Scott mentioned in know which infrastructure, manufacturing production of but in and of amount is of based backlog regions on we're who product the just line, in

sector spending the always incremental that benefit he's should us capital going fairly say strongly. to in So

so, in a And there, tells improve that's the near highlight think that us pickup We've there's into as term. nothing but certainly XXXX. some U.S. won't land enjoyed I in out probably further activity activity, based we already go that

to And to particularly your so workforce, be has a able wants anybody business up opportunities and strong to bit. running again, offer picked that a

And cuts of benefits. harsh are most in the downturn during some COVID-induced were restored of the the have restored, -- XXXX. in process cut, restoring We down pay that we've

it whole a converts So a the that does has and that really about that marry to such and Lloyd our with maturity don't dealing we've no banks, forth outstanding that quite a bringing seeing. be yeoman's debt new had improvements to work facility frankly, the the as up we revenue no and activity lift and done But XXXX. with gradual we're maturity consequence until have near-term credit company, under

as team go certainly, a optimistic XXXX. management So more a much we're into company and as we

John Daniel

all guys. Thank that's I Okay, had. you,

Cindy Taylor

Thanks, John.

Lloyd Hajdik

John. Thanks,

Operator

have [Operator question you. We a Thank from Ian Instructions] Piper from followup Sandler. MacPherson

Ian MacPherson

products, international, looking for is where just the at consensus a your growth on assumption? say be positive I Thanks OFS was likely followup. backlog book-to-bill [ph] fair I John's products higher there I the so than if your to for but for and would you're a one year-on-year assume be, quite ending visibility your would question that be reflecting times XXXX, would QX, backlog would be would spending also for in growth

Cindy Taylor

it Yes, is.

Ian MacPherson

Yes.

Cindy Taylor

well we're about the our outlook part for as the It's also segment backlog. U.S., Shell forms which all of dependent as a the in sales, short-cycle product on services. driven again, by optimistic activity But

seems a think right we're and So backlog much more opportunity things XXXX potential, but to direction, be moving create favorable are you to in the will, lot the segment, if I there. really in set that dependent, a doing

Ian MacPherson

coping the happened experience booking based how Cindy hyperinflation the what's risk the see, then get you product continue, Q&A as that that, we of next all into frame next the as more into second bids how taken margins variability do conversion? in as this half on year's it's bookings as we margins next has you And how products can the half And think would do described think of prior or in backlog with to you year, just and you've been lastly, in of then you've year? as your well? then first with it how pricing year the Do you you're with for

Cindy Taylor

think can they I No, continue.

Our six are in i.e. bids range a in XX these XX but of of this months, shorter lot to are term the months. longer segment, some

a these robust a risk are management process projects We into lead where these lot of bid them. good are the have items of amount time. certain specifically that with place costs to bidding in A only fixed long go for bids behind

from on we're say phase these other dramatic a perspective, to projects. the would to phase risks going the not I ourselves between and in subject bidding execution management Now, risk words,

worry So great should a margin I don't consequence as you there. about the have think and bookings backlog in erosion

typically escalated the recurring longer of months, projects materials risk Now a -- we're sometimes advance on years the then some quarters, basis. have bid is, in and dramatically. having And are these

is the of and that the of higher And this are then an of or customer material they becomes come go calls and the materials original more that between expression escalated, of operator interest just board Some terms back the then redesigns, costs firm involved? risk good quoting, indication had it engineered an are drawings some the And we've with concrete. equipment the to because are the are drawing because upon escalation. bidding it is with of costs of developing the as The in a interest these have say, there instances the that still firm economic where to on to example still down project? alternative is of to of

So of not I quoting process, activity. taking in incremental but on a more lot risk bidding say our it's would complex we're a and

Ian MacPherson

down come than orders? bit? forthcoming proceed rather been there and the tapping an of any with has not expectation later brakes relief cost is will customers with a placing then the -- cost little there for a cost evidence and And bit orders sooner waiting they'd Or Okay. to be

Cindy Taylor

for and cash significant. they're higher, the just much operators normalize, flows to I than later I go under into free their development years. finding a price but is And these mention proceed is to been these rather and think sooner lot not they'd of ways think have again,

unless the lot get marginal cetera. et to a And so, lead are more not first continue These the time. long region A prospect our broadly, projects are quoting are was is the Guyana, bidding prolific no green in likely project South very light a American of place. going to Petrobras, that it and in

as as not currently. about worried I'm we're that at the that least So ones bidding

Ian MacPherson

Makes you, it. sense. Thank Cindy. I Appreciate

Cindy Taylor

Thank you, Ian.

Operator

Thank no this show moment, you, at further we questions.

Cindy Taylor

thank the you one, hosting for Hilda, all thank call, who in some today and to you participated call two asked our and you us. of clarifying questions of

be thoughts close going connection through I XXXX our refined can't care. to cycles have all budget Go Take Astro will We [ph]. forward look and obviously year hope resist call. and our with quarter great sharing a in fourth day end and saying on I more you our

Operator

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

You may now disconnect.

Oil States International (OIS) 1 Nov 212021 Q3 Earnings call transcript