FI - Earnings call transcript Q1 2018 | Expro Group Holdings N.V.

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Operator

Welcome to the Q1 2018 Frank's International N.V. Earnings Conference Call. My name is James, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions]. being is conference this recorded. Note to I'd Blake call to the now like Holcomb. over turn may Blake, begin. you

Blake Holcomb

James. Thanks, quarter everyone, and call Blake morning, Good Director Communications. to International the Holcomb, discuss conference Frank's the Investor first of XXXX I'm and earnings. Relations welcome to

Chief President Joining and and Officer. the Chief and on Kyle and today are Mike Financial Officer me Chairman McClure, Kearney, call President Executive Senior Vice

Tubular join Running Blackhawk We Q&A Services Scott also President have call. of to B.J. McCurdy, today's Specialty of of Tools the Latiolais, portion President and

Our will presentation this has that been posted on refer call. the website we throughout to you

If you'd site the at the please Web Investors go like to to view franksinternational.com. our section of presentation,

first we beginning to there XXXX cover, results, few slide would Before the are X. like commenting on begin quarter legal on a items we

complete and set uncertainties has directly filings, call. SEC's in routinely also materially press of to today's that International distribution forward-looking remarks statements. assumes Web at may which date Such forward-looking uses by for in as the to is of on forth Web statements. company The actual results the quarter date, access filings, note as franksinternational.com. risks Please First, any discussion cause to information such a as by this may by more included There, site the measures subject could its these different quarter Frank's his earlier cautionary SEC Relations different, earnings call company of those the today. measure could update any future Such and company or statements materially the results website company responsibility Investor its on now over and during information. expressed that or our the language from this defined statements identifying Such date. posted is in Mike that GAAP issued factors section. any may are included questions channel cause XXXX contain speak which discussed SEC specified. statements. site no most representatives The important A and for financial of XXXX be as of in to forward-looking differ to refer to only in any or accessible remarks from call today's answers those risks or material to implied company's comments. a are if or answers turn call was both of the first and comparable the replay you company financial non-GAAP release, to earnings release I'll be first accessed the reconciled actual on

Mike Kearney

trending schedules. customers offshore business frequent depending Particularly U.S. the reaching continued direction. segment roughly and Services improvement Services timing its the XX% from business you, sequentially. quarter. Blackhawk on downs Blake, using benefited The some TRS as product in good the market, to also we pace U.S. the slide some for onshore onshore go outdated done first consecutive call. technology. the count segment increase get X, is business to accelerate other some rig and climb, quarter up have of with us had to activity, and our record Frank's perform forward Gulf the the benefited rigs up will to of improving on we in Mexico are in to work But fail providers quarter-to-quarter, X%. right the quarter. during instances right job overall, new The service also Beginning results. the schedules offshore U.S. requirements rig rig or seeing and I morning The the ups of segment several the began everyone third in quarter the market, work out on key and on took more that of will when deliver of setting drivers the Thank sales The The U.S. a drilling job with step on in most revenue over on a saw poorly around

construction well of as the picked services saw growth the Additionally, in about up business the in of U.S. sequentially activity offshore Gulf XX% Mexico quarter.

also We plug offering. strengthen encouraged strong abroad. international Blackhawk we're Blackhawk the growth April, in well trajectory And market, the positioned America successfully drill The and pipe remainder being is new proprietary of the we will gaining XXXX offshore in circulation drilling continue flowback the traction Asia. in to U.S. and markets. launched America technology frac of our international deployments VersaFlo, tools, by tool, In product North East and and Middle in the Europe, segment onshore in for markets. the portfolio our The and U.S. Canada, Latin which casing saw

HI segments were a new bit side, to across particularly Isolation On by our part or we Middle long-term contract during that logging are other technologies These provide generated helps applications. or measurement of broaden while Tool. relationships nonproductive awarded loads vibrational Tool customers the HI with our time key the our time, the The extend a strategy and Harmonic our rig. and drilling technologies land reduces on to Tool deploy in prevent the Frank's drill and the East

some quarters. support declines drag some in coming expected Lastly, due projects completion in the costs the growth mobilization was revenue the and a of first in that to higher international segment Europe, quarter will

for however, this international projects expected designated do to believe segment in and operations for discuss our of initiatives. throughout will as see While commence projects benefits we more anticipate the in FID that some updates to full XXXX will strategic We XXXX not is contracts XXXX, the the until year. some these comparison to new relatively the now I'll market year XXXX flat be beyond. do,

In performance costs our organized I've about our units. portfolio QX, technology improved actions of organization, profitability. strengthening talked around taking our months, several past and our newly key early the the our drive business began and under expanding reduce we Over points optimizing leadership our to to strategy financial

unit and Our respective profitability top tasked their business have leaders growing line with controlling been by costs. of improving businesses revenues

with accountability of place. And progress in standards business high this have accountability-focused our structure. in I'm pleased We unit early

As our targets announced you'll our and we in of in cost G&A February achieve revenues. reduction intention cost recall, to

reduction full basis. our a target equates levels. million year XXXX annualized G&A, to is from XX% an This For about $XX on

So roughly executed half on far, this we have goal. of

to equates of goal. side, full We of end by $XX On the of from line is targets point which around believe This basis reduction million, XX% to track gross these we annualized cost are we to improvement of the now revenue cost this XXXX our a XXX XXXX. target year also about levels. have margin realizing of sight on

these our As part of initiatives, the of and strategy. process analyzing we're and footprint go-to-market in rationalizing the geographic

various the projects. when shifted will deepwater longer-timeline deploy cost-effective The more the equipment does, aware, each are do shorter-term across It's response, resources exploratory optimal overhead As does which and these support in becoming slowed to areas not It forward pullback we presence. down our people, our have of size to cost country complete and in in has that past our scope work call operational and years. projects return. you mean capital-intensive, our in product have for This unclear more however, lines a not our favor determining few projects of and meaningful and development considerably equate a current evaluating a countries. will of industry service geographic we're bases manner. large-scale In a location-by-location. reduction presence ability going organization in and the agile We're in

in complexity require the secondly, do profitability as side to you pricing reasons: there lower we've sophisticated the know, technology; activity, first, drop pricing. deepwater Since for that for side. revenue coin, services much the another decline is not of our seen As significantly that's seen the wells and competitor we've and X beginning

work share. We are we award turning see lowest based to lower on bidder. have to we're components the market technology strong areas solely in projects on increased with where going the And beginning down prices

to Our quality are technology, valuable reliability discount. service record, deeply safety too and

Our day understanding competitor are about leading results. poor each bargain-basement more pricing customers to

efficiency aligned use will us. the These Frank's constructing acknowledging customers technology, that possible are require that a We strong of want and I'll be now the provide and the to to results operational of benefit turn relationships the with in call customer partner will Kyle the well. have the customers over extend that with during will the well to safety, Kyle? life the wells quarter. increased technology with improved best that through integrity financial additional with details on

Kyle McClure

everyone and you, Thank on good the Mike, morning call. to

revenue Services completion Slide sequentially Europe on I'll at Services down International the was of $XX Middle segment X. can East. or slowdowns and X% be in the $X attributed with the first decline million The to million. to quarter in Looking roughly start in work International results,

Services for $X from $X.X loss of new Latin pickup quarter. partially this quarter in in and mobilization the previously in offset during was decrease first higher the and Europe EBITDA by million cost fourth in However, of higher-than-expected the The International the roughly down margin Adjusted mentioned Canada by XXXX. was was driven work quarter Africa work the the million, America.

Services to U.S. Turning X. on Slide

increased under just to revenue quarter XX% First million. $XX

customers the meaningful materials increases uncertainty, procure to This X. We're activity and market to year. expected potential product Tubular also to for slide improvement in of improvement fourth the fourth up flat by million was U.S. quarter Wrapping was better first a the services have $X of ahead due the of to was volumes construction recent activity and in first the intervention $XX caused and Revenue consecutive quarter attributed up, and is Mexico XXXX. $X.X the seasonally in from offshore relatively revenue ramping-up Total revenues. of Services improvement first segment. the higher months. segments additional XXXX some in the was results. internationally, sales million, Sales came quarter XX% U.S. also new The up XX% offset revenue our cost Onshore quarter XXXX. being the with number leading quarter business. for sales contribution million. offshore improving the quarter. the U.S. margin coming lower was seeing Gulf the up for markets. in during into the the by work. fourth million, U.S. shows The customers down that increases revenue The the tariffs mix. First of conditions quarter in quarter the schedules Slide $XX EBITDA large grew from EBITDA Adjusted market are $XX EBITDA quarter setting from did $X well in a revenue XX% some million, Revenues reported in activity, sequentially. adjusted over EBITDA was lower not international from U.S. increases improved due just of XX% Sales for Adjusted $X.X shifting drive backlog size the up with overall first market from rig pickup services price The in bids from well Offshore costs sequentially. in in sequentially Adjusted and revenues inventory third XXXX steel pipe business margins corporate the in pushed fourth increase the revenue were to quarter the segment year-over-year. an Mexico million, lower the weaker intervention Blackhawk quarter to X Tubular on of in and nearly increased Gulf onshore sequentially in of was from driven into declines current Blackhawk current million recur seasonal were XXXX received and well due product for to up the sequentially was record loss lower due

offset Slide revenues East. to Adjusted Services by mobilization increased lack quarter was expected. than first support the lower line in the support activity lower To Services Europe higher due offshore the sequentially, also mentioned were X% operations. the had international the to international margins. was as about offshore the costs down U.S. what segment segment EBITDA expansion. improved with were continued and impacted some and in we is summarize Overall impacting financials by as cost was storms quarterly on TRS segment Blackhawk previously was lower The well ramp typically international of by relatively Blackhawk margins intervention to higher the had related expansion in for expected cost a X. Middle we and driven flat the international U.S. declines

investments growth as the was and flow we in seasonal over First quarter cash of operations the sequentially in just payables from $X million strategic slowdown timing some initiatives. a to $XX related quarter XXXX. as from made was equipment down million CapEx saw we collections for

tools We $XXX continue short-term select TRS new balance build better we and shape during ended and on and no drilling expect international the to see expand cash CapEx to trend in that debt. Blackhawk year We million technology further commercialize our higher sheet the with as the tools markets. and investments quarter essentially and to

based We expect projections. throughout the to on cost improve see revenue reduction growth year cash flow and

we see towards Europe. Conversely, our from segment in quarter. growth back are CapEx market. my higher the current some some I'll levels, trending in up driven digits move expect segment likely cash tubular is of ending low QX to to America, close on work the we revenue increases and total and moved balance Revenues given flat million international year, rigs However, digits revenues $XX to couple expect a this mid-single of to progress revenue color is see out, exit Latin roughly The scheduled lower Services as Overall, double QX segment see U.S. be lower to in XXXX by to while the should Blackhawk QX. in second with is plans in in customers be by what Canada comments the provide toward million company $XX year-over-year. To into improvements expected some quarter-over-quarter. we a

adjusted over before in range see call I'll total final the the the the comments for to contribution actions. we at some Q&A. incremental improved Mike turn for expect open would Looking margins XX% company from call XX% benefits now cost international initial due to back to we the to and to EBITDA,

Mike Kearney

Thanks, our our slide prepared of priorities several close recap Kyle. strategic I'll XX. To remarks, on

most rationalization long-term QX, eligible growth areas our the and the by end all the consolidation. analysis service critical completed believe are geographic across locations for We of First, we current have will several to of product for lines. or footprint determine

of lines will and through in execute existing growth in to Blackhawk, continue of realize significant offerings recovery, a drilling can be Even profitability. market these will growth and These important the drivers we tubulars to expansion on areas. customers. Second, international high-potential international tools and available service products offshore slow our incremental Frank's making

select we in increase our products and take of services advantage areas. of the to pricing Third, opportunities

are We win-win will also conserve that that purely to elect projects for and personnel Frank's. price-focused and not offer customer target for technology economics opportunities and our the

market. than rigs share focused in share of be on wallet will We rather of the

our mutually delivery. with increase and targets beneficial Lastly, we acquisition will continue lower to indirect with made that and have joint conversations be service arrangements of where venture complement our that can partners, can portfolio potential will revenue cost growth

development allow We are customer. the that under of also optimistic technologies for differentiation to offering further will our

show increases the for potential can risks fewer and customers preference which provide, differentiated a technology poses injury. strong automation Our we of

services. roadmap our now will to our lead to margins we'll line the turn James, We current improved and for products over you questions. are for confident

Operator

Crédit Suisse. our And Instructions]. Wicklund [Operator of James you comes Thank first question from

James Wicklund

Good morning guys.

have Mike, So hit we bottom?

Mike Kearney

a tell mixed don't it's you, think I as out have. to market you Yes, I know, we Obviously, need there.

have increases off our some but markets. nice in a little that markets some of we're seeing have bit, some We geographic tailed

on balance, trending-up say, of slight from see, on through end the we a year. the So now I'd

So that's good news.

James Wicklund

-- anymore have down really feel starting to going better don't good, Not to feel works. is you

And I going second Okay. But usually weakness be there seasonally, some and first will works. understand quarter quarter all. to

enough America. Latin Mobilization Latin you Okay, of to a on be good of number that out? hopefully you mentioned America charges, finding charge What's mentioned a and times in on bottom. called and congratulations luck, mobilization going has

Kyle McClure

scopes there, Yes, equipments And of our Guyana, mobilizing market coast down get good additional pick as the of some Well, sort -- right obviously That's we Trinidad, before Brazil. now this for down Suriname, to east work we're is a we up work crews us. there that got Kyle. and down we've off of lot in a work.

James Wicklund

revenues I right? of course investing would the America year. growth, mean, over year of be that that, assume, one of and things And Latin this in the next because drives higher this I you're

Kyle McClure

work for an we markets been us investment very some a gross this investment IOCs something up pick on us the time. honestly. And and good an so is market is got we are is some work attractive has we this level, markets, standpoint. for that These more these going to Yes, no-brainer as find this for margin different from in for us, more attractive quite offshore

James Wicklund

We me. much all you like believe do, What's as as that just on in West... going

Mike Kearney

Yes, aren't percentage they're big cost can aren't these massive close progress. when massive breakeven fairly dollars. But point, But to increases. you're showing massive not costs. would is these say the insignificant costs. I really Caribbean continued But area show that operating

little training, just But to there. a there's some And There's it people, for good tools of there, down it. reason a creates down get the bit headwind. a future so the

James Wicklund

a And a Is with at me seen West nice It's good Africa? being on could balance all there time you to Africa? going have what's West green any shoots sheet. tell in

Kyle McClure

I we've a would sideways. one of that's internationally as a going kind these that rig rig right seeing pros out now. down and now. is Africa not sort – here. the real call in, is We're one one up call a Quite There now. it, of of as not Mike and of I'd one West West a of rig sort that's cons coast in mixed Africa mentioned, out bag got shoot green going there's some of trend some right lot honestly, kind just right

Operator

of Byron Our Pickering, Holt. Pope next Tudor, questioner,

Byron Pope

guys on opportunities a it's case the pretty got such remind that coming see floaters, characterize mobilization about. it? those you've question, that long tender can line such that us way to Just to you deepwater have have when assuming this are Could time you quarter? sight was of fair good such a I'm Is as you there since for secured when board talk just a been been offshore work costs

Kyle McClure

and I and out Or on months of that tender, in sudden, weeks. and you mobilized. if you're budgeting know some say, you have mean, competitor a rig forecast displacing you get XX and looking within It embed to that you're rehabbed There can come, I'll start process. particular want are all a a that equipment you, your depends.

So line little it's of cost, you which a bit that you different on if tender, with sort of will. sight depending a have

Byron Pope

see tenders, green of those it guys as got the But shallow won't you FIDs you've of jack-up to really you markets, benefit the these some you're relates starting until whether XXXX. that those say speak just geo impact some water where you to to increased of could Then realize shoots activity? in I

Kyle McClure

And would for I one. we're Yes. I'll activity. more to B.J. But look yes, a this seeing in say general, lot

think I probably as internally, to we relates we've could never it say busier activity. tender been

channel seeing a encouraging. activity of in maybe geo he's And in – the from it's volume on think I standpoint, markets. what let B.J. and I'll chime some

Burney Latiolais

seeing East, the activity we're the East regards with jack-up the the in for process. markets. Far So Middle tendering increased It's to

bit more more little So and take away we're from hold work land-based of of the some now. operation getting a and more jack-up seeing to the beginning

Byron Pope

if then is you year, or Kyle, Can out And us with comment regard this the it there? and EBITDA the I former? for being comment revenues question to last versus that as last international a flattish could, year just me, quick to relates help

Kyle McClure

EBITDA geo expect slightly winners you sort related tell and up that. tell margins have to We've you would I it's revenues. some markets, you obviously that over line, I losers within amongst would of on some the we be to got the primarily – 'XX. would

pretty our the right be analysis, certain squeezing will footprint we're gross point I on for certainly margin analysis, up. through at you're year-over-year. revenues segment we nice in for within country of line them sort some flat. market also pricing would some are think now. I to we out focus also start analysis, But markets offshore now. returns margins profits But sort us be primary look time, there additional attractive this I of that getting in in right Like market As said, the seeing go to say resetting

of and so back other each battling they're sort forth. And

or profitability in As overall, I resetting we work, markets in in challenging. we up to see that market be seeing pick up pricing that also segment little bit a some nice we're think rather. that's certain But

Operator

from Gibney Joe Capital of question Next One.

Joe Gibney

in you embedded a the Blackhawk, market know guys had update you're there, some out get growth give just sort as question equipment a eager of called your I Sea, on I a status have of certification curious was in I some double quarter-over-quarter into. products the that you new could process low if specifically markets. digit. the of North to on

in in closer Just are seeing timing. lift on for that we on embedded that an that? some Just that updated Or is XQ? there we're look of

Scott McCurdy

Scott McCurdy. is This

could I X should earlier, tools of some the take completed just just we the name then of we're awarded will market for number seeing producing should over on. the the world. international and we those gets a rest speaking, in to generally the the of some uplift footprint later different those largely efforts subject to in operate next advantage an certified end I going be would being we months, have any obviously, with approvals company. demand third quarter, the X But within to that by markets. all And more you're have the Specific in there say generally period. that designs work and of throughout as think different be able certification out But to certifications, the

Joe Gibney

Is internationally. targeted that. you question that in just where your look portfolio same just as touch the of then a here a you of review know in of quoted ascertain on you it a XQ, U.S. And little I Mike, to for we the the was strategy, could on just bit your footprints then of targeted cleaning I But looking U.S. up at lower? onshore bit, most U.S. curious initiatives efficiency seems incremental stand trying kind ballpark? onshore if where take it Kyle, your margins on little a margins maybe Is business. at some things kind on U.S. the in onshore. And onshore. incremental broader sits more

Kyle McClure

for U.S. talked incremental past we've onshore. gross here last sort QX. we've margin job is you various the the been want level, that's I'll basins, field gross the right, picking for I sort Kyle. that as the on the quarters is think, XX% seeing running done particular to this standalone X that. at about, That margin margin team take or additional question in XX% XX% XX% the to incrementals. that see the incremental as at a in of margin to Again, We into business to what range. for going incremental well that in a pricing call business, up Yes, if time and time in there to from margin, that's it as the has nice But business X so call of it

Mike Kearney

in Yes, of evaluation grabs still standpoint, up from talk a now places is We a everything in around strategic world, so quite ago about in the year bases. than less or few X we're looking many international for at. a we're the terms what because of terms but

The well. On that have others. been looking last as two. than to at the more our profitability have over some better. are improving bases year the side, volume much and better clearly, going look we're margins Things But domestic or of

at to going look we're take So as a that well.

wanted we Permian others. employees profile. do terms We've if may, in in thing We just, hot, to cost one great the locations. employees Obviously, a these in got redeploy the we'll short. reduce area, is people we very we So to of right

deployed market smart internationally. it going be But just is our well as to about we the answer how at to look as domestically I just get overall the base way want possible. we're best we sure we short and think approach So resource the make

Operator

Mike Instructions] [Operator we And have question a Seaport of Urban from also Global.

Michael Urban

underlying Clearly, good plans the that just the morning. kind Blackhawk embedded you're to And to like terms a around relative where ramp the targeting, might Could growth rollout? overall the international kind -- your business, revenue in Thanks, there. the sort of for you Blackhawk internationally? metrics us either of Blackhawk nice you the remind about of there's be of

Kyle McClure

Yes.

this I'll give So Kyle, is to and Scott.

in year. be XX% XXXX in this coming $XX come last that we business year talked and growing year-on-year About this we in the XX% And As this maybe of expect that revenue we to geo that base Scott is let to of see the million about sort markets I'll about call, off internationally. the coming. up going pull-through of growth range talk half a

Scott McCurdy

Yes, And in or in Caribbean, a that got over correct. I all our new work near-term we've starting Canada, opportunities the had we've up area, up, was you've increase the presence. I are where few widespread. And either now, next Mexico months. mean, say starting up now would Europe, Asia America, got then right throughout fairly that's activity Latin starting

line. presence a to would footprint, we the existing And be leverage goal market obviously and build product can makes where every so it And Blackhawk much said, business existing easier the in we great I advantage where that's sense. trying the like or that have to expand

Michael Urban

business in count onshore you decline should pull-forward more then then continue offshore less as that some just experienced is line with being think the to market? rig the or that in and And we U.S., about the the in of

Kyle McClure

said more QX. overall overall in we U.S. in or bit think got, rig onshore market less The the there. I Yes, we little onshore, pulled been trending a count land we on with has the

overall I the looking of driven we what we're think being segment talked down, QX, being offshore at sort about by space. in that the

I think feel think some for as initially about did But think well. quarter, I right good there better bets or here pick we that in a we through probably feel as I the so work a additional month bit now here we around that now. right think we're QX. Services probably we our -- feel pretty about U.S. And I hedging we up

Michael Urban

you. all questions. Okay, the great, those Thank were

Mike Kearney

the you. your questions. Appreciate thank That's all interest. Well, Okay.

the to market Frank's And expertise overall our as have a customers. value the in the optimistic and better we So value And we're technology that add Frank's. we overall mentioned, financial trends execute position. we in our strategy. into strong to on to for becoming on translates more have our ability this and performance

So thanks very talk you. on next and you joining call. much And quarter. we'll attention today the Thank us for to your

Operator

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

disconnect. now may You

Blake Holcomb	Director of Investor Relations and Communications
Mike Kearney	Chairman and President and Chief Executive Officer
Kyle McClure	Senior Vice President and Chief Financial Officer
B.J. Latiolais	President of Tubular Running Services
Scott McCurdy	President of Blackhawk Specialty Tools
James Wicklund	Crédit Suisse
Byron Pope	Tudor, Pickering, Holt
Joe Gibney	Capital One
Mike Urban	Seaport Global

Expro (XPRO) 11 May 182018 Q1 Earnings call transcript