Earnings call transcript Q1 2023

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Operator

Welcome to the Oil States International Incorporated’s First Quarter 2023 Earnings Call. My name is Brent, and I will be your operator for today's call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

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

Ellen Pennington

welcome Good call. States' Brent. you, to morning, conference Thank earnings and Oil XXXX first 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

XX-K, remain protections Before assume we that forward-looking weighed filings. later the these than the other or historical in our to please note that would by caution along quarter context statements. on those regarding Form forward-looking afforded beyond. information we the the such statements today extent No many with be valid harbor should other including contain in are law. begin, affect that disclosed we safe reliant To business, that like one remarks listeners our SEC federal the remarks information, factors of Any risks in our should

can A two conference at being continue is accessed Oil for be to call the be after hours will website. States' call call of available completion webcast, and This months. this will the of be and XX replay available

I the -- now to over turn call will Cindy. turn

Cindy Taylor

and Ellen. conference today first joining our to we for Thank Good call thoughts our and thank quarter trends will our discuss provide results addition in you, where XXXX our morning, market you on outlook comments.

strong We and our segment. mix of million. segment, of favorable representing a quarter, a our Offshore Site million, $XXX $XX sequential in Products consecutive by net first the from with EBITDA the growth X% the of and Downhole Manufactured quarter on of generated During Technologies along Services driven income demand third revenues contributions company XXXX, increase Well for generated

million, of totaling increased times. yielded our Manufactured X.X which bookings March $XXX a Offshore of million as Backlog segment X% book-to-bill quarterly of driven by quarterly ratio XX, at sequentially, Products $XXX

notable bookings quarter included three $X project each. exceeding first awards Our million

newly our first of also for contract equipment. Drilling We two the awards developed report pleased Managed receipt to our Pressure are

our by sequential a achieved segment, Site penetration frac along a EBITDA, segment the sequential driven U.S. Well despite higher related equipment customer in Services count. decrease activity X% U.S. In average utilization better enhanced spread we completions and increase in with

sequentially, segment, primarily activities. XXX%, from increased Technologies to tend margin revenues International contributions higher Downhole EBITDA with gun mix depending increased somewhat product international can sales, X% perforating vary our product sales while domestically. from segment and lumpy on In products due improved integrated customer to be sales coupled quarter-to-quarter perforating

Offshore announcement in innovation investments wind on the that designed Our design gate applications. our with Conference platform valve were jack-up our more a recipient two also of seat by and Engineering Riser Awards we the Meritorious technology are New System highlighted technology. Technology the Spotlight were once for Technology for recognized Award and active our with for MPD-Ready floating from We Energy Hart XXXX XXXX

the in Association the Industries our Ocean XXXX States Finally, of commitment in presented Oil last night, National field. recognizing Award, Seas the Culture sustained safety Safety to with Safety

into go results our more I our Lloyd each segments. of will position operations financial detail discussion a review in consolidated and before of now of

Lloyd Hajdik

good and Cindy, Thanks, everyone. morning,

of third operations generated we the share. quarter, of strength continued of and revenues reflective income net million, or the $X.X net income, first $XXX in million, the activity. overall achieved market million $X.XX $XX During adjusted and consolidated We EBITDA of our improvement positive quarter our of per of sequential

in we $XX.X of million. convertible full During interest repaid our notes, the quarter, X.X% accrued plus remainder senior totaling the

capital million and $XX in $X to net working invested addition, also fund spent million capital expenditures. In we

similar second to be first experienced half weighted XXXX, Given to customary free working cash capital of in will builds in our we quarter, what the XXXX. the flow

revolving and debt Given credit outstanding our borrowings in XX. under $X million repayment were March investments, corporate above facility the at

borrowings At liquidity the cash these $XXX million facility on repay in under to of hand million EBITDA totaled available net together debt total at which to quarter. $XX We totaled On March times ratio ratio to with of resulted leverage revolving basis, XX%. of our net million, second $XXX debt Availability $XX adjusted a March remains capitalization expect the at million, XX, yielding net a at credit XX. debt during XX. consolidated March X.X

expenditures, capital $XX expect million XXXX, to investments time at the are In on market we made. invest dependent the approximately in prevailing conditions capital

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

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

consolidated interest expense XXXX corporate quarter amortization million $XX.X total second total and $X.X and expense depreciation our to expenses to of projected total terms are to guidance, we $XX.X expect net In million. million, our

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

Cindy Taylor

Thanks, Lloyd.

partially its of the segment demand to offset the first sequentially, revenues Manufactured compared $XXX for of and quarter quarter million Products of the $XX since XX.X% of million $XX.X fourth the first primarily due in in highest timing was an generated EBITDA by the XXXX, in Backlog XXXX. in XXXX. XXXX of the fourth level driven in decreased XX% on March quarter schedules, Our certain quarter first impact products. XXXX. to Segment project margin reaching EBITDA XX.X%, at project of quarter XX, Offshore our Revenues operating of short-cycle income by $XX.X million, X% of revenues driven higher customer segment million totaled decrease

a XXXX X.X yielding quarter quarterly totaled of million, First book-to-bill ratio times. $XXX bookings

Our quarter and broad-based were first across many lines product bookings regions.

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

investments energy sources our will to we core and alternative working and into energy clean increase As be exponentially, continues diligently translate renewable in space. the to expansion the competencies tech

offerings to the supporting multiple production bid Our bidding to floating opportunities floating development, traditional also renewable other our developments, support and fixed tech military serve, and we and us customers and base. potential markets and minerals customers, product such core wind while energy competencies for offshore involved systems, create revenue in the subsea we clean and and are opportunities globally. in entrenched These projects on to well as systems and gathering, our subsea new continue fixed drilling expand potential

Site $X we income of in segment, Well million and in $XX XX% operating the quarter of first XX% fourth margin generated million in quarter of $XX.X segment Services of of to Segment of revenues our was the the XXXX. million, EBITDA first In EBITDA XXXX, compared quarter XXXX.

a with segment discipline of the revenues led Our to United focus on seasonality experienced essentially typical Service and margin flat in sequentially. States. quarter XXXX, notwithstanding mix we fourth offering continued cost revenue higher EBITDA a the were

and focused operations in support optimizing of on pursuing profitable our base. activity global our remain customer We

to unfold focus differentiate market in expertise States As core expansion service international will completions to and segment United completions opportunities offerings. both this continue equipment in and we of enhanced deployment further areas markets, on the of our the recently to in our continue

In of first driven we international in reported and compared of EBITDA fourth the of the quarter sales $X our were segment to sales Downhole revenues of of favorable Technologies XXXX and increased $XX revenues segment, million million much margins million mix. in Strengthening $XX reported shift with quarter perforating and XXXX. in in million by the revenues a of EBITDA improved quarter $X.X segment

now inventories on to somewhat natural five-year significantly gas, and and prices are now seasonal have averages has land activities. above led oil lower five-year their for are crude year-over-year, growth completion in but recovered, and which averages gas tempering drilling the for spending Global gas within oil, for expectations US

our and support markets, product and However, in in upward which will offerings begun to further international have we offshore see global regions. an inflection service

better several last Given market Well indicators. our levels over or Site to we steady perform the of line spread activity the in and Technologies quarters, continue with Downhole utilization Services frac to segments than expect

along segment demand. increased especially Offshore with in our Products continue second are in flow the to of of grow, order XXXX, ongoing Manufactured short-cycle product levels and given expected Revenues half strong to backlog

Given we and our believe that will indicators, we upper-end achieve prior range. the of these guidance trends annual market

Now concluding comments. offer I'd like to some

concerns the strong was and market. prices system and a a followed XXXX. of by stability caused quarter drop production of This rallied over banking global countries the reaction with demand which OPEC+ the during by first cut, the oil the gas to Softening

Brent concerns respectively. and gas currently bound announcement $XX barrel, Natural at However, demand and since prices per commodity at lower WTI on range $XX remained the prices storage. have prices retrenched spot crude high levels with to due

increased production gas lift natural for demand feedstock or use in the natural relatively and for U.S. sector power flat LNG longer over term. and gas However, should the prices

the the accelerated investments United States XXXX. in commodity prices Initially, shorter-cycle benefited industry which in from with -- clearly the to responded industry higher with

remain focused offerings an customer will our meet conduct the long products investments are providing in well, markets various leadership world. to demands technology We and as increase value-added services and those States international service experiencing and including globally. projects safe with operations to will time available lead and product continue now deepwater around basins in Oil in on and

In product of addition, we opportunities. in development will continue efforts in our energy transition expansion support

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

Operator

the with is [Operator from first line question Gengaro Your Stephen Instructions] Stifel.

Your open. line is

Stephen Gengaro

morning, Good Thanks. everybody.

Cindy Taylor

Hi, Stephen.

Stephen Gengaro

little seeing good. on know your was talk you Cindy, offshore book-to-bill about the bit can a what order I you're flow?

curious next visibility that far I have order bit, which flow. think think, few I'm remarks. you go as over prepared a and mentioned quarters about conversations You the you're just in should little the having you as the

Cindy Taylor

posting great a for that's No, question, Stephen. Thanks it.

our very up XXXX I'm Revenues were look And to strong. is Our XX% to bookings. bookings growing. I think so. trying about bookings back -- or things What's happening? the outlook

one book-to-bill a implies obviously north bookings. of so, And of growing

bidding has been Our broad. and robust activity

our both of Guyana are riser our but again, basins, our strong. some attention, bidding other getting there. conventional flow and systems beginning some Brazil, to course, a see in our particularly And are of and pressure Of and we're proprietary two new we're which around there's introductions, of pleased obviously, MPD product technology order activity market high very, good equipment, both with very those lot subsea very basins

play because order bid course, point of a also ratios on outlook on end the with And and side, in just bit a well. that as even strong a then, of a Those revenues. bit just just around robust are with obviously is to but we very lumpier I'll continued kind mineral time, our continue riser there's -- book-to-bill it's systems opportunities immature unique expectations this not again, for at higher

Stephen Gengaro

Great. other Thank just -- you. quick And question. my

on there end based that higher thought growing not of of the comfort? -- quite just the a I upper other fast is what Your back. the stable range, market, it to we looks offshore couple end elements you or Is are confidence the imagine maybe as of it U.S. kind at as give months because a like guidance had of piece,

Cindy Taylor

a project your That you it's award our and you ride market Offshore I We're at but But product US the land”, to very those penetration. have in range Offshore in strong significant. lift of And do it's we softening outlook, than lift need a that have you performing major think by just market backlog-driven share revenue around are from can't we comments at the the in segment. Manufactured towards driven be product upper-end all, And should flattening described always to is, definitely, introductions minimum, it'll of to around -- case, first I've two, that some increased business. the does that simple well but is But market, question that Products my new that better don't dynamics driven. not the that but overall penetration, counter fact relative again, our I the to come on of particularly half a I customer with that market. the acknowledge and appropriately, there second a we if and this introductions going say that generation for that better be just is bit, to EBITDA looked share Products. “negative in to market mentioned our hope answer utilization, gas and Manufactured And most new that's

Stephen Gengaro

you. Great. That's very Cindy. helpful, Thank

Cindy Taylor

Thank you, Stephen.

Operator

of next from question comes line Your Lemoine with Luke the Piper Sandler.

open. Your line is

Luke Lemoine

Hey, good morning.

Cindy Taylor

Hello.

Luke Lemoine

ago? consistently fairly but times. first strong stock XX%, then couple your above might (ph) you years past could about that months but your Cindy. your in a [choppy] just Question backlog be margin Hi, book-to-bill, down the diverse, tough, a seeing Maybe bookings finished pretty only XX of be little on X maybe the and can versus comment since XX profile talk you're to

Cindy Taylor

would keeps space mystery. thinking trading we you, be actually in gift Thank I stock entered is X% sure. on X% For that a always because this X% a to beat the Stock this on say on giving morning EBITDA. up our Luke.

also does the So, our carry meaning, other semi-proprietary great what manufacturer great it's confusing, these a one, expertise backlog history therefore equipment. of lines, and certainly, we're oriented product that into subsea strong have bit side in is number particularly but around on booking but that, and margins, to equipment, FlexJoints SCR, more we a our the includes

is So good the mix. a in backlog mix

for to hope our going If see products. do forward. We margins continued will happens, that perform the ongoing demand well short-cycle

Luke Lemoine

all right. Cindy. Okay, Thanks,

Cindy Taylor

Thanks, Luke.

Operator

of [Operator Instructions] the from Your Kurt next Hallead with line question is Benchmark.

Your line is open.

Kurt Hallead

Hey, good morning.

Cindy Taylor

Kurt. Hey,

Kurt Hallead

Hey.

kind quick follow-up Cindy. of a Just here,

You've and given kind of interesting reference point range beat the that about achieving being your what made was? EBITDA guidance. guidance stock the to about for And quarter your you an it way the higher-end the a you us could maybe made the down just is, of remind conviction

Cindy Taylor

million range I increased an believe with revenue was of $XXX EBITDA $XX year-over-year it XX%-plus of to million.

Kurt Hallead

the EBITDA see is great. at appreciate million, $XX $XX there out Yes. Okay, million. that. consensus, I I

scratcher sure point, point, I'd All echo changed. today. it's head for a has clearly, So Luke's nothing right. your

being have at a of point of here, different but listened the conference technologies when equipment bake what's when is level, a Are pull lot for aggressive least pricing. and -- of financially some seems where entering of calls the instances than demand of that players it's So a the to a always going some airtime are these discussed gaining some be question MPD kind supply pull dynamics start on I've new to at around penetration concept, that in greater how around MPD far say quarter. would demand because number I just to this market is, on we so a clearly number situations opportunity? players a -- demand the the market referenced you focal bakes be it different of kind equipment. broad kind see to question of then

wondering just without you give that was secrets. giving much I any So state up color can us as around you if as

Cindy Taylor

trying are compete comments that standard your appropriate. with think to equipment in market. I will no, not that I is we MPD say Well, very are the

both change control be to ours lighter, lower to components. defined cost, easier have We out pressure

I that's So believe than think what don't and award we valves. the I just seat equipment think way. if is at it call alternative” offering in look to I better market. about our the a on equipment the as out that is therefore active like we that this got look that equipment this suitable competition of mousetrap, an lower as much technology marketplace want “better pricing. MPD therefore, at more you to a OTC around it enhanced gate and And don't standard

It can valve rapid You enhanced that say, another much is just and well, valve market a that's differentiated is gaining go in frac acceptance. that equipment. more

again, think price. will competition So equipment don't equipment I lower of that as on these

Kurt Hallead

you are And that's Products product around back whatever speaking, Okay, kind Manufactured generally that then your of you for your play great. to dynamics look market to maybe circling and in Offshore outperform reference, line. varying

of will so. level data the it’s going years offshore couple course next over that up be recently highest FIDs over of So XX% I in be years, that or their XX the along to think some of or we've something the lines suggests so seen of

kind a kind dynamics there just wanted it your kind you years, it framework kind Just book activity. your around activity next to and of of question the few business? substantial are lead infrastructure in of out And order to then be, into over increase overarching of deepwater drilling relates of remind increase billion put Can FTI drilling $XX question? could is, track sort the what that and subsea we've the seen subset business deepwater an us of as lag that about talking is would look, is FID

Cindy Taylor

the to we subsea highly the of that side they because business the Yes, I selected i.e., are think is the to weighted TechnipFMC trends that things infrastructure our more risers seeing go side, are equipment our have for equation. fields, drilling, correlated on we but subsea the more will and MPD that infrastructure new increase you will, development side of production on if weighted

doing well, business Doug's TechnipFMC at well will say perform always proportionately when I is So, also. we

Kurt Hallead

could looks both the Yes, oil of they're very on it Site side there [indiscernible] and going basically just And frac at stable ticking the you awesome. pricing. like one I but on taking gas basins the drillers the business, add said referenced hold on to if up at are least. Well place have line Land more, Okay, the the Services. natural maybe as to margin companies is

a Just kind you to product may price in of curious as your lines of of are acting what in be from terms seeing some competitors your how standpoint?

Cindy Taylor

to Northeast projections the I that of I a number market. not to That's in total we XX up we're rigs is know, personally talking the many I count. as, gas that necessarily the gas And pretty of that not totality, really Haynesville. Haynesville. about, the rig big might pretty natural that market believe think for about Yeah. gas well. exposed that XX% as Haynesville. this But all, analysts don't the gas particularly around of we're drop Well, holds the count [indiscernible] the oil the by rig basins Haynesville. just in the exposed as in first We're

not realize just EBITDA. and in to business equipment locations, land is have a a than at That's And pretty our conversation. that nominal don't that's so, that easily is a different business see -- worked land-based impact significant i.e., and more five But have. capital-intensive hit can given the drilling, really I pumpers, point this business I'm between I've not time. are past for the obviously, mobilized our we just material minimizing increase out to revenues the our there, my rate there. lifetime, and this in it And pressure you the businesses

supply-demand warm on bullish while with bullish helps the it was don't -- LNG this I down. they going term, to being for and very the long I'm a LNG facilities that's that see degradation natural factors of -- but there, in -- in winter like in ones the just online, back of here. come I the with pretty one there's back mean, balance significantly are even particularly Freeport gas activity I'm long again, were imbalanced that just again, for And number a a a major term. And

Kurt Hallead

Cindy. color. appreciate Thanks, I Great. the

Cindy Taylor

Thank Kurt. you,

Operator

question Daniel of Daniel the Energy John Partners. is next with from Your line

is line Your open.

John Daniel

Good you? How Lloyd. are and morning, Cindy

Cindy Taylor

Hi, John.

Lloyd Hajdik

Hi, John.

John Daniel

Hi.

transition. with me. your an product stock to a when good guys I you from just I'm the it, to understand you for to time service product coming you go or it, execute -- might education idea, (ph). helpful. on broadly generation more or But from comments. idea then the to the on products wasn't is color respect new to trying energy when do And at Just any they very speak of transition-related services, would to up for you an that development for we've First, here's sort Cindy, say of prices. be gotten customer like and come that or that try idea [Kurt] work? appreciate Question I says is team the your that an so? new with market, is on it speaking, where This can bring

Cindy Taylor

Yeah, frankly, market I a mean, developed everything we quite got of technology. time at our but our are that end the team. And knows do is well. the Globally, internally to responsive longevity to market varies. of our these very the customers day, We've

oil have, in systems conditions riser And you that minerals, leg of deepwater you're are got that's from operating to you going deepsea have knowledge to you environments. answer but gas and to expertise if i.e. be just explain, an and and so, adapting in in meaning, conventional terms up a an I adapting

example. that as to a an so, market was bit And quicker

for bit have system We're for didn't systems around though MPD in frankly. But deepwater working as to it. is I market recognized probably long can taken MPD new product been quite in contrast even just as that because us. portfolio MPD deepwater we've for because well has been little our we a an it's a that system before just introduction longer,

deepwater decades for However, again our with know all the drillers we've and worked capabilities. they

get products to we're beginning those so, market. to And

our take And anywhere no is, and with us now, have to take equipment in offshore TLP wind. improved industry what it. longer wind The and you world. the floating we the that's is operations going floating say, piece one to can designed whole going we've systems there around virtually it's the to are do system Right benefit longer need that that of

new the we very areas completely as is can it's this leasing And in talk the So technology. early the about, stages. even very, of

having we're contractual So around XXXX. about talking not floating until revenue really wind

they've So those immature are markets got very and to develop.

certain wind I at XX,XXX turbines out figured to And industry where the the work to so, in are manufacturing next five we're trying it are just get yet say what as vessels, always said we're tactical, take key where lot or conferences, aspirational, a does develop. deploy hasn't I’ve where the is the the installation years the where engineering, are yet. to sides, facilities, of

can it applications. a But we've before. done not a think-tank, We're into new to technologies so, something do And span we're range. long develop what is obviously never create trying existing to trying

expertise to that our more faster have market than we doesn't that be so, And efficient the time should one and have. someone

John Daniel

sets? as in team three [indiscernible], drawing things, or solutions of ideas trying Just board on enough. to from on things with are focused like you years terms now opportunity like the three to... Fair trying come XX are five to And was your there four or and up

Cindy Taylor

focused these to internally obviously, and been very things manufacture on we've size, can our Given we that manage we long-term. want

our work conventional facilities well. positioning markets handle to to technology able in as new we're be type as well as So emerging key both of any

John Daniel

you me ask letting for questions. you Thank Okay.

Cindy Taylor

Thank No. you, John.

Operator

is question Capital Doug the One. Becker next Your of line from with

open. Your line is

Doug Becker

Thanks.

year-over-year. similar mentioned probably is Lloyd cash last a perspective, So States up flow me story negative free didn't negative means plummets I free surprise it year, the on growth flow there was a given cash was cash my a first think versus that seasonality. that on Oil is to free quarter, From which flow trajectory on in results. free cash normal Bloomberg flow

year? detail more guess flow I a So go question free the could about is, cash little this the outlook you into just

Cindy Taylor

And We experienced that's anything. have then a capital size, quarter capital it guided never as shareholders revenue, our payments let had material out pay as is just this. much with to relative going coupled any you're I'll write-off, working normally growing every but want, Lloyd to Yeah, we we've But what or should incentive which finish, anything to else. first build. we working

you I at look So that, if file will while XX-Q. our

it's that press full statement. disappointing release me. cleanest File cash XX-Q is -- but to flow This again had. EBITDA. We of the cash in one First one don't quarters. -- results add the our it's It's we've do tonight, to kind backs all, of of a of the best

no We to these the extraordinarily relative headlines have quarter debt that maturities XXXX. little capture fact we well performed don't And till this expectations.

And have QX”. the in again, capital cash no into got so, “negative working tonight and I'll I concerns. flow we free perfectly well it. sleep And about

fact, our within did little budgets. better what internal we a bit than In

give free think company. as flow Lloyd for misinterpretation the of a that. are year, again, be we on cash you more where But will can it's We positive details and I just a

Lloyd Hajdik

to one, cash exactly free is look I exactly quarter one flow. last the free the quarter flow negative at right. cash year from Cindy Doug, we're of When Yeah. same,

like First convert. the use and of to we quarter she repayment used as said capital working incentives well the with mention to investments, fund heavy not as cash the long-term short-term

cash flow things significantly the those expected And of our positive. be cash flow of view. balance are All the in free -- positive year then, to

Cindy Taylor

in effective which reported on I'm haven't we the Doug, morning, $X.XX it normalize than a Zacks we share came $X.XX headline only i.e., Yeah. tax over a we year. EPS out tried we a missed long a rate of other and share, XX%, we higher non-cash had saw And glad that. with that rather terms the time. ready. I'm this earnings said

most to total a overreaction get if I stock. this think ever our nothing is say parse a chance to on again, we really So through, people

Lloyd Hajdik

question. No

Doug Becker

sense me. comments Your to the makes I time. appreciate

Cindy Taylor

Thank you, Doug.

Operator

to time. are at will the There turn this no back questions call Cindy Taylor. now I further

Cindy Taylor

the I it's just thank in the the in is I -- we'll there's all because business say And us Guys, But for and week we today our stock of conversations rest earning performance forward to well, to, and season dialing talk the you. everybody company. I'd particularly misinformation to soon. important better and I this heaviest Thank we with obviously, like the to want of know the hope some very future you. just look of season, you of about feel earnings goes price morning.

Operator

Ladies this and gentlemen, call. conference concludes today's

now disconnect. may You

Oil States International (OIS) 28 Apr 232023 Q1 Earnings call transcript