Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Oil States International Second Quarter 2023 Earnings Call. I would like to now turn the call over to Ellen Pennington. Please go ahead.

Ellen Pennington

Thank you, Mandeep. Good morning, and welcome to Oil States' second quarter 2023 earnings conference call.

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

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

the turn Cindy. call now will I to over

Cindy Taylor

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

basins, trends international offshore offsetting from activity Our growth and quarter reported declines in the second with U.S. shale reflect of results diverging regions. coming

expected based into $XXX X% EBITDA, XX%, timing materials. the same our backlog of of and in the confirm drilling declined offshore EBITDA respectively, EBITDA due million second to from recovery ongoing and in to $XX in from quarter slow projects delays period sequentially million U.S. of of revenues the year contributions we Despite and basins certain in activities full from revenue but upon receiving the revenues international weaker shale quarter development. and conversion increased reported sequentially our adjusted Our guidance and to last year and the by second due

Our under growth highest of manufactured since that at has backlog strong segment, offshore increased on experienced million level generated debt XX our with $XX products $XX capital facility outlook $X its repurchased operations very invested the and XXXX. maturities from million quarter, significant stock which the in second common by $XX equipment, outstanding of XXXX. is and million we hand to cash no We our until June at credit cash in repaid all supported the have of end million our of revolving flow amounts

introductions. position Our encouraged coupled by activity, extend investment product expected very gained remains to financial from future be This We our offshore continued new to is next expansion benefits cycle beyond well with years. the remain of the strong. in couple

review of in operations results position detail. now will Lloyd our more and financial

Lloyd Hajdik

Thanks, Good morning, everyone. Cindy.

consecutive fourth During million our and the $XXX of EBITDA per of revenues million, $X million consolidated net we of $XX positive income. $X.XX share. quarter We of second net adjusted or generated quarter, income reported

million, Revenues quarter. generated the in decreased X% in Offshore/Manufactured the $XX $XX quarter of revenues sequentially. segment Products segment income million $XX Our operating of and second of second million EBITDA

contractual revenue the receipts in steadily backlog backlog timing among was and of cadence influenced our material of delivery of things, the into While terms. the conversion segment by, has increased, other

segment second quarter. margin XX% However, in the despite quarter to EBITDA delays, was in XX.X% these compared first the

quarter XX% an highest from XX, $XXX XXXX. of since increase current end of million at June June quarter The level XX, its fourth backlog is totaled Backlog at the XXXX.

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

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

million, in $XX quarter. segment XX% Segment $XX our In million of million revenues the operating income and Segment Gulf customer Mexico. compared Well EBITDA was Services Northeast quarter. quarter EBITDA in primarily in Site margin $X second and XX% the revenue projects second the to of generated driven of EBITDA first of segment, in we the slippage by the and declines of larger were

out we large results the quarter. the Gulf In multi-well one international until higher service in note, the pad service activity to by third-party and the is was with sequentially with On in levels. activity in project the third a of first customer Northeast, one several in large to tempered beginning returning late quarter. quarter to of on improved pad to scheduled segment's vessels the this operations due in the completed the dry second next intervention return Mexico a second quarter by not for temporarily docking positive quarter service driven Activity

quarter of Downhole by $X for $X for $X and $XX reduction in margins Technologies spreads in reflective our segment, product Further reported revenues and of EBITDA an of million In inventory. a provision perforating million, second quarter. loss included obsolete the segment we demand the of the EBITDA were million customer noncash quarter. segment Lower driven sales and reduced operating during excess in million revenues frac the

million future quarter, the we revolving shares of credit $X repaid and stock million growth. under common in for We CapEx $XX of During $XX million in our borrowings cash and to generated million operations our repurchased from flows outstanding remaining facility. invested the $X support XXX,XXX

invest investments June at depending are adjusted the expect market made. $XX basis, of total our conditions capital the a million X.X ratio yielding capital ratio XXXX, times On net At approximately at leverage to EBITDA capitalization time expenditures was to XX. XX, $XX prevailing on million, debt XX%. totaled at net June net consolidated we in debt debt to a In

and Cindy will concluding market comments. some outlook offer Now

Cindy Taylor

countries growth elevated Thank you. The of to plus OPEC softening drop This a X-year caused are XXXX. the X-year within reaction expectations but oil activities. announced spending by the cuts. in by are was above XXXX tight year-over-year, crude early and oil commodity completion for production demand for with first U.S. in Global took a inventories seasonal prices turn during gas inventories and drilling We to leading gas, resultant market oil and for normalizing the natural average strong the followed land XXXX. thereby their prices averages quarter remain now and on tempering lower

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

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

and this to segment but see quarter, Given quarter the the of experienced has improvement will we some this the substantial improvement line EBITDA fourth material for pushed revenue in second in the top third delays year. quarter,

with our market profitable our indicators, Technologies in and bit remain our be support Site operations Well and expect as pursuing which customer in focused U.S. perform international Downhole We in activity for of to in softened land markets. both continue on optimizing a but to activity market base Services activities, do to segments have appear States global unfold, United and opportunities bottoming. We the line

to expertise to enhanced We focus equipment core recently service our the of and differentiate deployment our with continue will further areas offerings. product of on

United commodity higher in some clearly I from industry like XXXX. Initially, the States in benefited responded Now with which the concluding offer comments. shorter-cycle prices accelerated the to to industry would investments

outlook long time fundamentals the flow longer-range and around multiyear cash markets commodity and We lead deepwater world projects generation. growth drive in are basins international revenues, now prices. which investments to in up pointing experiencing upon free in in Strong an a cycle are the for based increase macro earnings will

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

focused operations customer services to value-added will product meet the leadership available conduct globally. providing and safe in runway service our and competitive technology and products will continue demands extend technologies sustainable advantage. will with to remain for on States Market-leading offerings Oil various

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

Operator

We Gengaro from the Stifel. from a question Stephen Please go have ahead. line [Operator of Instructions]

Stephen Gengaro

-- about commentary based of far bridge those maybe get sort Cindy, the and on when from am half I guidance. first imagine I I your offshore numbers. and by it's that the macro products but as and mostly into prepared myself a -- to thinking this to bridge think manufactured start, think second So driven that we to I in right? guidance the that as year Is get comments, about I missed might half little full full of the year your bit have the to

Cindy Taylor

of with easier by absolutely to backlog backlogs we and the development scheduled runway You're that It's all into have, quarter. those correct. turns that see we've

And one, land feel so count had down XX% Obviously, completion we confident pretty we've on so. softer with about. about X% down about rig or that comp

projecting really the in at that a second of off this recovery not year And the so of time. we're of point half

to transition multi-well in the times you from in Well pad Site a timing based We here, somewhat customer leg pad. view. large Although Northeast. QX down say conversations, our a our large a for XX-well that And then in the had we on customer went from I it's there's some that we sense have really do new degree, sense between not softer a and could

And at activity. well bit it to a customer from slowdown how indicative say So pad you look just Or depends of next it. always only? the well is you a timing it a that now on of XX a is X shift did of little

happen. And for had and dry vessels down then third-party some docking were in we that those Gulf, intervention things the

it's back market to forecast combination the the I the flat, we of look softening, softened here way the Northeast. work, meaning I things at nonetheless, So and be and on pads other is have indicators essentially things two mentioned i.e., there a in work on intervene recover of a go go but have which could kind kind there. vessels to activity we'll from back do land, of to the little But

our -- well Site we're flat then on product as generally saying our as affect just some segment Well both and But we've And so of Technologies Downhole balance, got new here, segment. from which introductions. kind

Stephen Gengaro

some bit? Well or that, of And were headwinds the in weigh a we margins Cindy, the in about quarter, environment those half related. that second in mix the a think guess, up revenue little EBITDA timing Did like follow I recovering even on on margin? just second Site they should to -- is flat

Cindy Taylor

of Gulf very the higher. obviously come is intensity And a tends margins. high-end, anything in the margins then That's accretive because assessment Mexico better. better pad, a definitely absorption on of cost fair are we you And do site multi-well equipment the large Yes. at anytime to because forward do the is

you're hit a Site And the for because just absolutely mix of first little quarter margins the right, on our top bit line. so EBITDA Well decline and from both

Stephen Gengaro

plateauing of one we're seeing kind that improvement in suggest potentially concrete -- actually mentioned I about some of think we're up have to that. activity is oil comfort already. talk anything being bottoming, the you but can the anything U.S. anything you mean, seeing something on to stronger they sounds that that potentially. even quarter And so said bottom? conversations I land $XX, which helps. I supports But know know some about, competitor seasonally back you and because a visibility like give we It fourth yesterday others Are from

Cindy Taylor

based services, disproportionately the this their would what know, public, I have would say GEO, the came releasing tell a regions in weighted tell activity. committed and really our softening of concrete we're gut some feel, a I you are mean, so working in? softening. were of us I think probably hit have are work private conversations, back from do pressure terms And hard pumper. from in of we're customers things And customers I my individual half plans. that say, broad-based, on our We're to year comes not because lot they case don't and say can will customers Well, instincts our them other that wireline far what up in that more in with more to though, the you what would fairly quarter and customers, say ours more and work of transitory. as you therefore, I were stretch. and in I'll And give the to where we'll completion this a indications too that's my But these than out. of you me private you held for evidence, are in first hit major be we of customer rigs well, anything world are I

Stephen Gengaro

about one had and half quarter, this 'XX fourth a don't And the the very the especially is into When in I read orders, Products embedded the of a products more, X year? quarters we in in business back business, mind you think start if to last half of the we can pricing/margins very first in there those Offshore/Manufactured second then half. the offshore -- good margin strong year, you of anything orders, progression think,

Cindy Taylor

a Yes. they built a think cost the bit we mix I'm for doing were this EBITDA that margin I us, little to revenues perspective continual QX. of XX% The up improvement key on and absorption. our if off we you've my in and margins XX.X%, in seen accreted from I backlog, head, were QX both top lower believe as --

progress, the caveat, a remind I Only would because I'll is does on we on you, little third-party those our backlog build was as bit our revenue just mix we pass-through improving are with depend lot around and So some standard reasonable. there. of have backlog And caution margins connectors. QX it the holding them and you a

not is of obviously, accretive mix the margins, that day. end good the so overall, necessarily And at the

So should strong bit a there of a lend our is growth top always the trends itself backlog line us, for of but there's hedge the and margins. good, mix little and to

Operator

remarks. Taylor turn [Operator over to would call for like I closing to Instructions] now the Cindy

Cindy Taylor

hold to this call morning. a All we right. picked day I realized busy this Thank very you, Mandeep.

I appreciate all further great soon. a through have of you of quarter. to the in, to those you look that rest you season so the next we of conversations forward and hope throughout you. the as dialled we'll we And couple of progress do Thank I talk weeks, have earnings

Operator

does This for gentlemen. today's and ladies Thank you, call. your you Thank conclude participation.

disconnect. You now may

Oil States International (OIS) 27 Jul 232023 Q2 Earnings call transcript