OIS - Earnings call transcript Q2 2022 | Oil States International, Inc.

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Operator

Welcome to the Oil States International, Inc.

Second Quarter 2022 Earnings Conference Call. My name is Jenny. I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. the to turn Pennington. now will call Ellen over I Ellen, begin. you may

Ellen Pennington

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

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

Cindy Taylor

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

demand of XX%, and revenues EBITDA quarter the the of strong and of levels increased results COVID-XX pandemic. This the before the million our of driving States. the reported improved second of the driven were quarterly and quarter short-cycle commodity revenues United and onset and led consolidated the services EBITDA in respectively, increases U.S. million, sequential to activity in price for since abroad. products XXXX, environment $XX $XXX highest consolidated first the generated company XXXX the improved and representing During XX% by Sequentially of global

improved Products of project-driven XX% from Services quarter activity. completion notable benefited our Offshore/Manufactured was our by also achievement in our in driven products production EBITDA increase land-based A Site We Well sequential sales and segment in the a second segment.

During experienced XXXX, of in frac spread the quarterly XXXX, U.S. the period increased quarter the X% the same count. sequential average in second by U.S. a to industry average the spread increase XX%. Compared over count frac

relative to Our metrics. these results strong were very industry

demand project-driven increase a book-to-bill segment coupled and with Our $XX with a sequential higher short-cycle bookings X.Xx XX% of of products. of ratio Backlog $XXX June by totaled revenues, Offshore/Manufactured revenues for Products quarterly increase XX quarterly year-to-date. million, driven yielding XX% in as our in reported X.Xx a million

coupled trends certain awards, Our were delays forecast due with below second affecting quarter bookings in backlog to foreign orders. negative in contract exchange our rate timing our

customer We sequentially expect Downhole first to reduction the products transitory half XXXX in of to X% improved decreased due perforating our bookings in the In segment, compared revenues second Technologies demand half internationally. XXXX. for of

Conference with Technology High-Temperature High-Pressure, and Merlin XXXX Managed Technology System. presented our again our two Awards Offshore Riser System Riser Handling for and Our recognized XXK Drilling by investments on technology in Spotlight were Gas the and innovation New Pressure

position operations and green that consolidated financial results expertise solution in additional review into leverages Lloyd before of newly our into the deepwater for leg addition recent branded technologies. I within now go of detail Products Renewables, tension fixed our platform technologies, most more of Additionally, is segments. to wind quarter, of which will during Offshore/Manufactured new segment, the a floating each OSI a our our discussion portfolio introduced product energy our a offering growing

Lloyd Hajdik

Thanks, Cindy, and good morning, everyone.

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

achieved As coincided which the and with pandemic. highest Cindy onset the revenues noted, EBITDA of our the COVID-XX quarter since we XXXX, of consolidated quarterly first

was $X build integrated with second levels, open purchases of market for million assets million nondeductible ended Control expense million X.X% growth our of certain our negatively handling, in systems U.K.-based $X.X the of cash. and outstanding during in control well discrete associated Our to convertible million second was as as loss a to million working with senior capital par value. against provider and activity items. impacted global deferred discount of slight fund at valuation acquisition by E-Flow $XX the $X quarter $XX a U.S. Holdings, tax tax used allowances resulting recorded instrumentation the the and notes quarter a in We Cash from quarter of

cash positive expenditures All from And flow cash of free of equipment. disposition the capital business XXXX. of as free segments property proceeds the months X cash we plus first as define generated through operating less and a were flow reminder, activities, from flow our

outstanding borrowings of million. available asset-based yielding revolving net debt amounts to $XX on liquidity million, were no ratio credit be $XX totaled facility and of with withdrawn which, to June XX%. net a together XX, our resulted $XXX million XX, our totaled available As in total under At cash capitalization of June hand, debt

on and second assets had sales disputes. segment, quarter, We issue approximately payment settle which quarter were X Additionally, all million which $X Technologies of expenditures legal million $XX.X common shares by outstanding in million and market third million. with our XXXX. recorded received were pay promissory June Downhole be during we proceeds the offset the X totaling to X.X issuance of comprises note partially accrued the of million together XX, million of in cash related invested interest the million $X agreed X.X on resolve $XX our $XX.X to capital a of our the The GEODynamics, will which value to July sellers shares made stock from the of common July of the and on stock, and

expansion. we XXXX, invest expenditures support to approximately expect $XX continued capital year in full the million For market to

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

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

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

Cindy Taylor

Offshore/Manufactured revenues generated to the reported of $XX million in compared in of million our we first segment, to $XX and segment of $XX.X of with million XXXX. primarily revenues million and XXXX, shift Starting second EBITDA and in quarter $XX.X mix a of EBITDA Products for the increased higher segment driven sequentially revenues margins Segment first XX% of XX% while demand the quarter from increase quarter product declined XXXX. due customer by products, in of project-driven a short-cycle revenues

XX.X% as sequential in of XXXX was of in to a first first $XXX quarter second the end, XXXX. EBITDA reported Our decrease quarter from the the X% margin of quarter. compared quarter totaled XX.X% million Backlog

while XXXX quarter XXXX book-to-bill was $XX ratio quarterly Second first X.Xx, totaled bookings X.Xx. book-to-bill million, our a ratio of half yielding of

and bookings XX% of gas product quarter broad-based approximately lines bookings non-oil regions with Our to our projects. tied many second and across were

develop our to of in its our As expect forecast XXXX. do, technologies compared deepwater I foreign has half contract negative and technical, segment. Products improved noted second were required of in while first due bookings to awards, segment marks half our however, XXth what with certain This anniversary working year We bookings highly below second leading-edge backlog delays our offshore earlier, trends the of This now to endeavored the into the in is with exchange company the evolving origins coupled expertise quarter cultivating orders. XXXX affecting environments. specific and rate our Offshore/Manufactured for

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

supporting of million new we systems, while XX.X% reported first involved segment, $X.X energy customers and minerals, military million XX%. bid $X.X floating in the In of production renewable $XX floating the subsea, EBITDA XXXX, of generated drilling and revenues and XXXX. in XX.X% of quarter Services quarter XXXX other in our the subsea actively increase to and bidding fixed of Well systems an quarter clean was the quarter compared revenues reported continue incremental of globally. in to wind EBITDA our and first segment XXXX second in yielding EBITDA of We potential second to developments opportunities million multiple and support compared margins to margin offshore segment and of Site million traditional of segment customers in experiencing fixed EBITDA $XX Segment on tech

by of our operations underperforming U.S., of margin the the EBITDA operations margin in expanding and activity segment Our the levels and XXXX quarterly international quarter our second quarter regions in boosted since in third recovery XXXX service our exit represented highest to made streamline XX.X% decisions achieved offerings. XXXX, and some

segment of of pursuing profitable remain now focused base. and in margins. actions improved our are EBITDA the We support optimizing seeing operations in benefits We on customer our our activity global

reported compared million to EBITDA and of will areas As of quarter offerings. of EBITDA XXXX. in $XX international segment second focus offerings sales our market on to improved revenues Lower-than-expected are million $XX of actively service we of in decline perforating sequential to modest XXXX, we XXXX of expansion to differentiate million segment, in drove products segment quarter In in Downhole in $X.X continue markets segment developing of the core reported revenue. in $X.X our and unfold continue the of first million and the our completion expertise opportunities equipment this Technologies revenues

XXXX. perforating XXXX in second we margin Segment first X.X%, quarter believe of demand flat was with for half of However, improve in will the internationally the EBITDA products quarter. the second our

pandemic-induced caused continued to Going pandemic. the outlook and pre-pandemic spending remain our throughout disruptions and rising oil COVID-XX have comes completion out higher the access and the their on many as faces seasonal available others increases drilling challenged of chain in challenges, industry prices leading inventories to to labor commodity comments. gas shutdowns and and averages, our Global world and of market inflation X-year XXXX. below by Supply expectations

We should product service and offerings. an are our outlook further which in markets, and support seeing offshore also improved international

Technologies expect segments expected contributions. Revenues improved Services Given also expand project-driven in Downhole frac over continue the Offshore/Manufactured to growth continue Well and with demand. improvements in segment to several product our we Site count EBITDA and Products to increasing in short-cycle their our quarters, XXXX are the given spread last

end consolidated Our EBITDA million year-over-year. increasing outlook that the XXXX from to are Accordingly, will our by revenues consolidated we our $XX XXXX year full low guidance increase suggests has $XX improved full for and of approximately the XX% year million.

guidance our Our annual range X%. $XX million EBITDA therefore, is, $XX of million, consolidated bringing midpoint up to guided the

some I'd offer Now like to concluding comments.

the activity. with crude inventories the Following demand the by down response destruction pandemic, expanding global to have caused natural now economic gas COVID-XX unprecedented and considerably U.S. oil drawn

As July was Natural XXX these concerns, crude hurt period which is in natural below the trillion inventory barrels, X-year totaled below totaled oil recent XX% occurs. million downside the gas the prices U.S. which cubic which to feet, it to XX, in Despite average. was for and expected inventory gas X.X storage to X-year and oil if trends, recession weeks corrected about demand due the same of X% about crude average. ongoing

industry this However, WTI and MMBtu, of the are accelerated remains is activity favorable at States, year. supporting investments to per we continued Initially, United experiencing. currently prices gas above in prices trading the per approximately barrel for which $X.XX shorter-cycle the $XX higher balance commodity with crude spot responds oil natural

with and in we States will areas. Although continue pick longer in time operations investments deepwater meet for projects services to and lead available long term remain technology in expect well, to products as our service focused product offerings globally. and to providing on Oil safe leadership demands conduct those various including customer up nature, will value-added

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

Operator

have question Gengaro. a Instructions] We from [Operator do Stephen

Stephen Gengaro

if mind. don't So two me, for I you things guess

talked of Can the quarter for flowing expectation second you improvement progresses? you and the first, a the just the Products The see year. about through bookings talk in on little year that in the types the bit Offshore/Manufactured back projects sort the you and of visibility as of about half

Cindy Taylor

still in opportunities we're longer-term Yes. July. already actively We both of slippage detailed we that probabilities and a very there, of keep is projects awards list in And bidding assign are the fact, month in, as typical, the going. still are really those. timing. seeing projects have we they're near-term in some the But to The come and what of

a have there QX definitely we was slipped when QX. And couple to quarter-by-quarter a basis. so kind just from that on of projections And

the terms XXXX. some Gulf would of to but visibility the both lot project at strong are upside I'm predominantly, tied would So queue Brazil new also and get our nothing We opportunities looking again, those are negative as say, get major the selected are oriented. product of in is market. we there. to And going facility Most A Mexico. of an some balance that NPD of through equipment the of and Guyana those to as in example production riser technology of

Stephen Gengaro

about in incrementals digging think Products given Site. converts we quarter. deeply any can Offshore/Manufactured think third in incrementals into Great. too but then And the should when Okay. And How color how the you had sort third the backlog without we the and give good of specifics, you there? about Well really on quarter

Cindy Taylor

we that our acquire we of connectors. And Well, our if of in because element services as higher-margin going products QX we revenue some products. get will, that to then Products, in attach from major specialized and of depending mix the a from is some Offshore of are guided of a our margin we pass-through that. both upon to always you to remember comments, lift a products, piece issue be It increases, our an pass-through example on will if connector sequentially compared QX. Those lower the average pipe and there

in both a issue generally are going the all in QX. first we just of But mix it's XXXX a view. strong We in achieved speaking, very margins So mix the acceptable that half forward. very my had

which improvement though there's continue, So to forecast. still mentioned that that beginning sequentially, come in the topline are awards month our call to but in in internal our expect the of again, And as even I based X should down get we my I on we'll the healthy in margins north door, book-to-bill these of be see And again, some we're July. view. of they

say, importantly, As it would of strong XX%. to think going but flow. lines XX% I incrementals. free to all kind of XX%. Historically, Site level, see these Services, business to very, to you'll incrementals I great. continue them Well incrementals. normalize I'll now at strong are And be And nonetheless, range, think don't be cash they're generating we'll That see that our relates very have

Stephen Gengaro

are then sold capacity. pressure And about from growth Well think we sort follow-up. We've rates just Great. how of should one hearing impacting been big Is Most out. the pumpers adding much that Site? guys in effectively that the not of they're

Cindy Taylor

work my is support. completion do I'll to tell frac we get do what where equipment underutilized expand -- And share market you trying to some of I'm business. in and services the

frac fleet, growth So resistance the if labor. market much any not there's it's there, it's so more

extent frac there's -- perspective. base. fleets the that is our products has work. we're if products. but the so hindered bit say little it frac active delays recovery, would through a from a these grow I And off labor it labor have some the the revenue the I getting it's the going to area we of on getting for one well. would we're it just while it's managing But to greatest our And to think I is think sufficient ground better delays more that challenge demand Downhole i.e., And a kind it fleets of process, of difficult be consistently could there, as improving,

Stephen Gengaro

the at Can from that one the or mentioned international maybe. international it it, size you quarter? how all, either Now of impacted delays quantify follow-up you quick

Cindy Taylor

now, when right recall had do that And we GEODynamics, we tied are X% or we bought XX% expanding. mix only I to they activity. What international

work. headway, can newer So were the with but the just quarter-by-quarter. you all. steady also the contributor a have I'll these get good operations. also, it's and don't revenues, P&A state you P&A initiatives quality work say not associated that And our at you generally And initially, they know, need products broad-based are where it's then we dependent as largest the established job to whether cement not we're on making routine international it's go, of

they to the be tend on P&A lumpy And side. so

we -- completion shaped particularly and routine Now share, market are initiatives our for making charges headway have also getting operations, we expand more to and there.

right and all. at so And is tied evolving. still lumpy. waiting negative Again, about a of nothing now, a just think here we're in new of this certain in P&A But bit that areas which activities, window right of penetration to market now kind little is

we're In that fact, taking internationally. think see positive very share to I it's

Operator

from question a have Mitchell. We Sean Instructions] [Operator

Unidentified Analyst

Cindy, sorry, just quick. really

-- little your times -- the commentary supply What your side are supply the today kind to or still on Could I'm challenges. lead as the on product comments a terms provide anything your guessing talked -- in on the it of manufactured you offshore you're on of opening maybe in You on chain on offshore just bit can or about anything relates macro biggest products? manufacturing chain seeing challenges side? you

Cindy Taylor

say would we are example. mention crisis, Russia-Ukraine very as projects access certain on power down comes the forgings issues, and do what Europe, an ability to just in not that. cost the high I to of And there with heart major to

activity more and reductions. hearing more about You're

in ammonia But the facilities of that in to something sources these certainly watch. the I think we production good is cost market. of was it's said, now, had some massive heard being I in but light right one the excessive last getting because a disruption reduction powering of that forgings, the

Technologies real a for but mentioned of say switches on You like the at example, challenges sure wanted commentary our availability us. if are an as just and Downhole would also anything reasonable Products. again, I'm not access like much challenge. that's freight Offshore/Manufactured business, that, In chip-related, things surprisingly, some is I global business, not you specifically our cost of those

more design materials, alleviate so monitoring we're them but managing that is And for back, those very an face, Well think on our much are carefully of solutions so it's labor. we're And inventory this those. Site issue point. at and one critical trying again, of to about engineer through supply we not challenges those if items. I I chain -- to many and But go

Unidentified Analyst

this the And turn kind that conversations 'XX. customer I -- just companies on well? -- Well larger their of talking of a far into Site, on they're lot you then frac have maybe about mean Are really so call the turned as quarter seeing

Cindy Taylor

caveat. I'll a have yes to with say

And so ours is they typically and talking wells have multi-pad, need activities to to understand call-out work. availability that for customers our be bigger us and securing But projects. that their high-end multiple type

job so are locking big for them, but with business, are that us particularly And they X it's giving will to. that up do or flowback pads there visibility, upcoming. nor usually top shorter job, say a work capacity not customers, need bigger they're isolation to continual have just they're the cycle the extent we in this be If necessarily

a kind bag of it's service upon So mixed depending offering.

Operator

Instructions] [Operator

Cindy Taylor

it further no screen, questions. incredibly busy there's today. We acknowledge it's looks from Jenny, Okay. our like

I reporting. think I understood XX% this XXX week, there's S&P the of about

So for that it. appreciate we join, those could of you

to the to luck our as might and a of through quarter progresses. rest expect questions that we you earnings it look forward We the Take Good look we talking forward go lot review care. website. any to And that. and to season, from arise the back follow-up off

Operator

you Thank this participating. for concludes you. conference. Thank Ladies today's and gentlemen,

disconnect. now may You

Oil States International (OIS) 30 Jul 222022 Q2 Earnings call transcript