FI - Earnings call transcript Q4 2018 | Expro Group Holdings N.V.

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Operator

Hello, and welcome to the Q4 2018 Frank's International N.V. Earnings Conference Call. My name is Anaiya, and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. that is note recorded. Please Instructions] this being conference [Operator to the I turn over Mr. will now call Blake Holcomb. Blake, ay you m begin.

Blake Holcomb

fourth XXXX Thanks, Anaiya. of conference the International to Finance the and Good morning, everyone. call And and Investor to Holcomb, I'm Blake earnings. welcome Relations. Frank's quarter Director full-year discuss

and on Vice today's Chief President For President Financial we today's and Officer Officer Mike have Executive call speakers call. and Kyle Chairman, as Kearney, Chief McClure, Senior

will Q&A President that Joining Russell, posted be Tools. Mike call for this of Services Steve McCurdy, Web the we of Scott portion A to throughout and of call. Running Tubular site been refer on our President today's Kyle will Specialty presentation and has Blackhawk

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

fourth commenting cover like would quarter full-year begin items few XXXX to are we on X. results, legal Slide and there Before we beginning on our

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

Mike Kearney

opportunities, had of capital our To see industry to spending advantages. in us year. you, Blake. highlights further some with focus the provide for I full-year on results we course placed competitive toward position would which business believe over on and some recovery, the anticipated efforts improvement engineering fundamentals prioritizing the us Frank's would considerable we give our the then to Thank We appreciate quarter. Beginning of a everyone Entering of XXXX, brief fourth call. today of X, joining we over the the and summary go will Slide

million market across Our pricing, due of our control. combination segments. all million, included This financial to cost $XXX.X a significant targeted to profitability of share of EBITDA versus improved that total to was supported improvement. and and by year-over-year in led more growth business XXXX international improved XX% revenues increase higher XXXX Adjusted initiatives than a drove gains XXX% $XX.X

a and Driving hard basis was year. at or the people know has our to Operators and this the XXX our been efforts site. critical strong from time. equipment Our The for a value over call dedication, deliver financial period that on market for which prior contributed services managed market. year. an equipment share. absence generated was I they XX% us employees conservatively investment in and to company the X.X% well financial the approximate over diligence has to points than the in Frank's in to their strong has EBITDA margin best than in increase capacity the more need drive serve improved and long Frank's incremental leverage the adjusted of of to our to today's margin and financial debt increases all higher in thank qualified our any of financial operational position perspective well performance. state-of-the-art our want financial work Operators further progress revenue

continue will of in needs. our We customers' long-term to financial flexibility leverage support our

X. Slide to Turning

During we offerings. for quarter, the fourth margin continued strong see our service to demand higher

in international activity multiple also We customer from regions. benefited increased

the quarter higher growth in saw of $XXX.X XX% and increase quarter million, enjoyed captured a fourth third we from than of quarter The Gulf the share. was revenues of we was especially XXXX. U.S. operations, result where which our fourth in market full over Finally, recently benefit the quarter Mexico, additional XX%

since East to in seen which XX% level International Middle XXXX. our highest $XX.X first addition, third fourth adjusted Africa, we've due increase work the quarter, of and increased In the was quarter Europe. million, from EBITDA the in ramp-up quarter of primarily posted to sequentially revenue services XX% the

in work Revenue with from anticipated margins the onshore market growth the Middle of Mexico. saw associated with margin service segment due our the Gulf Africa. also to a growth quarter regions the XX% business The our and the services higher share to third East additional top We mix of saw U.S. in of sequential These for period. line XXXX captured majority increased continue increased revenue. to will in growth contribute also U.S. during

calm sequential a saving. Blackhawk was well X% in by work Our intervention saw segment by Collectively, Mexico, relatively Blackhawk storm impacted of Gulf revenue. a the driven primarily reduced in decline

long-time of segment sales level third Frank's. the from customer a of the highest tubular quarterly XX% Contributing in our year. revenue significant for its a recorded the was to increase order quarter Finally,

line As in orders makes of quarter, business sequential lumpy. a this relatively changes few which has larger any to given somewhat reminder,

X, our at to we Slide position to business move continue beyond the believe overall grow solid are XXXX, of into a we we as in Looking levels XXXX.

During of XXXX internal power put further processes into improving business. more driving to efforts cost full our we the significant fully to up earnings leverage our and

streamlined we As global our on future initiatives, are our improved footprint of laser driving part strategic efforts ensure to returns. focused our

more to markets. and in that Most can drop in analysts quickly targets. land we see rig market so the We year business, U.S. much the the since of gradual we then U.S. projects market overall of remain the back. offshore prices the of to profitability. have continue well-positioned quote to While discipline sustained than our we increase XXXX. predicted the recovery. the land Regardless a is it's in that our reacts the and count our cost, land beginning of careful optimistic eye in to always stabilized. expect pass only for the a In on strength have activity on half business bounce XXXX trajectory and our hard offshore particular, U.S. are first profitability to keep meet contrast, but In Oil mission

through in and share go-to business I to a environments. in Given wells provider share Frank's to gain remain that running grow XXXX, significant the This services tubular backdrop, for bit continue now look allows more market outlook position year. And complex differentiated for will the our through discuss us solutions. detail. challenging market to our last best-in-class we

VERSAFLO our operations. tool For drive onshore casing market enhances demand example, casing that and which TRS running acceptance and accelerates in floor we seen have increasing safety for rig fill-ups tool, debuted its rapid U.S. of customer efficiency. safely also a top mechanical and operations, circulation

XXXX, in grow plans further For markets. deepwater its and TRS to international business

of automation personnel to focus well will from rig We on center. continue removal and

in we XXXX, the key during international expansion. the have priorities discussed Blackhawk was for As past,

plans to As most of Last into focused as U.S. XXXX, and This efforts, the revenue products Blackhawk its markets a more will doing customer than in our jobs certifying tools during to international allow significant XXXX. XXXX meet additional its Blackhawk expansion further services. XX international us result onshore materially business of through well its in and made markets Blackhawk on during in expansion its stringent requirements. doubled as also grow countries. progress continue into year, its market sales increasing

ensure We unique our well forward the business our environments, to tubular and ability integrity to in site. personnel implement technology-based on also and on look Customers reduce growth of work number in harsh in rely engineer solutions that develop, XXXX.

operational the now financial Kyle So turn over during the details call with additional results to on provide that, and quarter. Kyle? the to I'll

Kyle McClure

can we I'll results, portion Q&A. on outlook quickly number this touched so XXXX get materials a segment already of Mike to As move and the to the of

the results, Africa, as of jump as in the to $XX The revenue first kicked-off Europe, gains our increases roughly in in on Europe in go in Slide million, Africa activity X, to incremental some $X Middle-East segment segment services saw quarter the we work addition in nice was XX%. international growth fourth the sequentially XX% quarter and let’s roughly into as services million revenues QX International levels the margins experienced Middle-East. to closer million $XX.X up the So or EBITDA be in fourth approximately third timeframe, can and ahead services double-digit million. starting attributed with $X for from segment. up Adjusted the to was international new won recently the and we

to market changed nice few to real extremely QX from has heading in feel call, like the are positioned during mentioned we We As well we spot levels advantage thinking segment. offshore in a XXXX bright this international as of take and the the a into past nothing step-up XXXX, months. that see continued

XXth be growth. This items. a Turning the worth X. of during in sequentially. revenue services growth quarter XX% quarter $X.X rate which to roughly two $XXX,XXX Fourth EBITDA Adjusted to in entire market activity recent revenue fourth from more for million. grew largely U.S. XX% share business segment to business the X% resulted due services increased marks drilling sequentially. quarter, The decline sustained $XX a to Slide to the also the loss than consecutive an nearly was million, quarter revenues revenue U.S. onshore certain can U.S. rising on U.S. during saw was the of was in Fourth attributed This U.S. approximately a basins gains. quarter. The little onshore quarter quarters' the due up services offshore

segment increased repair as support we've maintenance the growth. continued as this certain well costs and expenses, segment, this First, seen in nice in to had recently, areas increased have as improvements margin labor in step-up we

related we in the some see completed restructuring that few to a which experienced we corporate again. discrete quarter, projects not Secondly, expenses entity legal and will

with associated corporate expense this reminder, international here. the of well running a a As segment overhead as significant houses expenses as our segment, U.S. portion reside and our services

during $XXX,XXX EBITDA was to the Slide Turning the Mexico. quarter of Blackhawk the to shifted of Gulf the to the segments at million during sits this the down X, Total was to from large or intervention versus $X.X This slightly $XX.X end million, in revenue almost segment in this roughly somewhat approximately let's the was manufacturing Revenue due in Adjusted XX. Slide up Sequential $XXX,XXX, adjustments. offshore for in number EBITDA in well is down adjustments. the TRS on sales intervention of largely in was decreased third activity up as segment million look segment, was results. due offset the primarily quarter sequentially quarter. a a which inventory costs, to $X third from product of higher million to which with pipe $X.X up was due large lower from QX. XX% XX.X% in contribution our QX. $XX.X few tubular our tubular some sales reduced inventory Adjusted orders take the a year Wrapping-up year-end segment million, well sales also quarter quarter quarter by revenue, the and Blackhawk due revenue third

our changed in as onetime we to as segment volatility robust end U.S. segment commercialize to in strong The million generally see were Slide and orders was across the regions nothing the of as we has will XX%. represented up activity On higher with the slight a expect call, sequentially adjustments, EBITDA and the of range segment financial customer And all revenues in see we last the on payrolls had expect my introduce will XXXX I $X.X increased on certain out XX% would up Adjusted in few seeing previously internationally of color of sequentially the segment improved. to new to companywide market and thinking, significant on due with and should a has minimum The shipping QX. segment results. tubular summarize Blackhawk growth some driven in business, they is commodity the significant segment some growth Blackhawk growth XXXX the side, XX, well staffing business, services XX% reiterate step-up with coating growth in price inventory season. in as ahead XX% products to year end revenue see let international drop a storm sentiment even from corporate the of comments, U.S. by expected for expenses land quarter basis. and see as TRS to the growth as Turning strong growth markets. close with as the as the has To provided continue business during me we services on quarterly up the the tubular basis, the large

to a on to the and We to slightly our up Mexico and see and expect the working the 'XX, timing to plans And U.S. gradual And better the we then segment see expect see will down to perspective, XXXX. from the business as improve are customers other take land as specifically open to XX% slightly XX% depending versus house. of all the what not be Obviously, excellent on there. XXXX. of like QX 'XX we and expect the growth The be we're from growth backlog as expect From extent but range we mix. materially profitability we margins will in up position the and Gulf up the would with businesses market a to in we don't year be to incremental in offshore not this international that, be the the to subject U.S. to feel the services Q&A. of call revenue a throughout international materializing, QX we of are inside projects to advantage their see on

Operator

Thank [Operator you Instructions].

question comes Urban Please Seaport go-ahead. Global. Mike Our from from first

is Your open. line

Mike Urban

from pretty your like sounded you it have year. that of So view guidance to optimistic the continue

words for So we saw I based the have but we've guys expected? move volatility may had aren't in the and folks question. fourth you offshore it in the markets in that you sounds mouth, quarter. their answered international the some projects But on And like not my think continuing back to seeing your put or to commodity previously that dial forward expectations as

Mike Kearney

the I've No, and relationships. customer the overall I him I'll of speaks that's, it service, let exactly the, comment. think right. frankly But got Steve stability long-term quality to good here,

So Steve, color you to provide additional want on any that.

Steve Russell

long-term. most of you contracts are think quite I our

what's out we've planning half So of a so got projects first sight these after coming international going certainly there, position into big good have XXXX. stretch And contractual into we line of obviously, these the for it.

optimistic XXXX going forward. fairly still we're yes, So on

Kyle McClure

business, is countries rapidly unrepresented to that going currently internationally. got growing, I’d Blackhawk be also add the which we've

to we robust growth so pie here are the expected think business. pretty the they That’s in international see XXXX. another piece And about some of as

Mike Urban

us color just give up on bit on you of international of on year Blackhawk. midway could do the you you this internationally the that a on And last give growth, Blackhawk? point from and the And in some what following last on year color, if if quantify expect rollout? little growth terms qualitative you Where stand the and that color

Scott McCurdy

the of We it the part the about piece about we coming I fourth XX% increased business, the than from nice But out that was international. revenue year, in of doubled saw of over year. guess So more finished actually with course it second international XX%. question. your We of Last the quarter, growth. the

Kyle as up over a the well some pretty the expectation XXXX So say we course growth in a set for as part that's mentioned year. And our saw year. a of foundation I nice trend pretty next growth would of substantial significant good the for

Operator

Thank you.

question line comes ahead, your Simmons. is next Please Ian open. from Our from Macpherson go

Ian Macpherson

got just Gulf this the I a perspective of good the Gulf bit be get our all I to you've for offshore Gulf lack the terms what of And order Mexico. of you're Mexico of Mexico participation we've very required outlook recovery. your wanted growth catch-up will in in without offshore little for what with a been international revitalized on in to activity? seeing and the by And obviously, favorable guess of Mike, outlook surprised

Mike Kearney

That's thank a I asking good person. you and the for one, wrong

production of a projections rigs will need I in You the to seeing soften. Gulf But that We're major to big of continue come the to operators. the some phase. some have developments think the ask

it's We dedicate to can't what operators going So directly they the a do are challenge. to do.

got to we've the best market So get best probability and share the that can. try and sit to we back

any don’t a comment to have I or So, know of folks to if Steve that. add the other

Steve Russell

you just in side in looking whole rigs area, think because to that, got Suriname. around. French obviously, deepwater the markets got of look opening down I got that Guiana, Gulf, because and Mexico you've removing in outside operators And you've

you don't quite see you're of where obviously amount areas. in in Gulf, those a So seeing necessarily the huge excitement bit excitement other of

Ian Macpherson

the you've a not it's penetrating story market to in share us Gulf to XXXX market as underrepresented Mexico, you know market we share easy international and And have segments how but understand take it's or market deepwater well? the of combination for then to favorable of that as market exactly understand continue been Would you and a internationally. say in you're well. expect as really geographies also you the share outgrowing But I had in

Steve Russell

case-by-case we course on look will basis. a of think I Yes, projects at

grabbing that to share. don't little detriment and of have out going on give will there coming bit picking-up share some margins bit projects ship. see share. We the little of us to But more sight we projects obviously want to by primarily a into that line in QX carrying share we've do We already a year-on-year, the us and market more captured because

Operator

Instructions] Hallead comes Please from you. Our Kurt Thank from next RBC. question ahead. go [Operator

open. line Your is

Kurt Hallead

and at the appreciate the growth when to I revenue the I'm color full prospects for everything point. So year. look curious this you

you sense business segment would your not from full expect, look correctly, order four the you've to would take growth you I you But growth given rank make I'm would for if was sure When standpoint. general think hearing can things expect relative misinterpreting. how think the you on a out revenue not segments, some I at you things wondering year?

Kyle McClure

I our think look by you the in terms and U.S. having then segment Blackhawk then international by take services at ordering. followed is second, most coming a dollar in business revenue of our tubular overall service followed growth

Kurt Hallead

that then And from that correct? well follow a Is standpoint should percentage as well. as probably

Kyle McClure

That’s correct.

Kurt Hallead

And out get terms the that then this profitability and of up past, desire for you I how sense segment thrown to million XX target $XX know your in year? potential the the on million. us for feel EBITDA give improvements to you or bucks Can you've in year about potentially your approaching

Kyle McClure

$XX this I year get going think stretch. million that's to of to a to a be bit

come cost efficiencies of it's operational disciplined and combination control. continued think I to to a going through have pricing,

is everything hit range all today, we cylinders, to would as But would to at I XX services at XX line I Blackhawk got hitting year. think expect of end as require getting their here. to international cost that our look to I we numbers, high getting think internationalized, focus be I outlook the this going to continue on well as think containing the

Mike Kearney

at does million to least target. had pretty U.S. at side the the land you U.S. in initially So look not $XX of go three back Gulf out, very Mexico set reversals least. We've if million on EBITDA $XX some months, we

top know So we're up end range, to of the to thinking as going that it's I Kyle be there, mentioned. tough at you're get

if range, our we of even be into can doubling that So to low get EBITDA. the going end we're

pretty of offshore. in is people flat we say are that lot So market a a

that ashamed half not if of range. can million we're $XX So get the into we lower

Operator

Thank you [Operator Instructions].

line next is go from Please from ahead your comes open. Byron Pickering question Pope Our Tudor Holt.

Byron Pope

region. the services. I if it one you recall overall, relates question East, region correctly, just to international your the And largest region I second the the Frank's I Middle been historically and for want U.S. Europe, to want has to have U.S. if think call behind call just if think that you the I Africa a

going Europe, that And growth international described incremental the when Africa line on and guys helpful? help. guys drivers services you of like to It Europe year untapped. give have that you just more Africa wins this both are for on region robust color some which international color But the you in just the East, markets Middle those would and top growth? services drive Could have so the just will you sounds contract within be that growth

Steve Russell

we quarterly But increases. up allocations side, nice till of incremental carry around pick spotty a marketed Those effectively on of European which QX. has long-term picked basis. and we market the Africa, obviously, are drove year. will carry East, We we some XXXX. count a is again in Africa where did on given think In contracts contract will up the which that saw in been Angola, pick some bit are story the the Saudi UAE Middle Norway end the out the I that on actually The those QX, rig here. a through outlook Arabia in through in share so up the on

a So go that points. few and quarterly can come around

Operator

now Our go open. is comes from Please your question next ahead from line Eduardo Royes Jefferies.

Eduardo Royes

the particularly year. hit Blackhawk, bit is of the the around It's Took in I little growth and question My think been margins. a very second expansion the obviously, a with lumpy. big in of half

maybe about there. 'XX whole, it's Blackhawk a with trajectory can So can I lumpiness more tougher as the internationally. margin for How you obviously of think the XXXX exiting especially just perspective just as any like you some get some scale Thanks. offer we said,

Kyle McClure

pick first to we’re segment. to up that methodology XXXX, that not of will Kyle, part in is the getting the Blackhawk course. allocation 'XX of of will up year burning changed that cost about profitability cost in he address last that let year, additional how internal to second We we talk disclosures an I picked expects Starting question so will This terms Scott for of Scott our there. and in half. this what burning our let have amount and was And I I

Scott McCurdy

shift increase and some too, the would that some So just the in thing in expertise, cost. product I if some few look sales. investments in did say new But some biggest and expected product some But development XXXX. particular to Gulf Kyle's and unexpected all We you at is point, have so fourth our in start there testing did we've a has making quarter the adding slide also in been have jobs in engineering, internationally. some around weakness paying been international will dividends infrastructure you

should I every the for year, and normal hurricane U.S. those those incremental made over the be should as volatility international and and of in increase as think increase, growth pretty those course land covered, see season of quarter we've investments like much Gulf then we the see we things based and that. expect year. the the course the margin margins on we volumes good But the over

Eduardo Royes

well think curious through. just really activity, I you not land, see think still most enough pricing a much guys. we maybe it most here. going pressure? its see Is follow-up weakness in I I pricing been that you may thinking think relates increases softness guys seeing to to people to that have likely obviously, as down guess slightly my And U.S. some we’re

dynamics some it, the about concerned or or we’re And onshore? at curious that’s in pricing flat of that’s if XX% down about talking just if you're U.S. land rig spending in counts down thanks. the So U.S. all dynamics competitive

Kyle McClure

two that me pieces. into Let put

one land services business. inside two Blackhawk businesses, U.S one We inside and have of of

business, services TRS little in. levels been what markets this bit on we’re about participating activity see they they our we'd penetrating likely to and year-on-year in new been out of historically to Scott terms the a there. where he'll upon their have haven’t and talk I'll based think plans I flattish flit seeing

Scott McCurdy

But for land. position, say U.S. predict as right about far in very still now up There we for are it's that underrepresented talking us that’s say overall to would rigs. every I would are market as rig. is difficult picking dropping others fairly customer I

sure are Oklahoma. for We unrepresented Permian in the area,

And just almost regardless provides a into great reasonably growing for as market still of as long so it's opportunity us. solid, those,

We driver interest great rotating while in for have had casing cementing, which more customer us. is a

products, provide that rollout are third-party well as and as service different so service products at the unique many as We the a in well company don't consolidate site, customers have position new the personnel. have to to

a advantage So is we which consolidate have. lot a of we unique that things,

number is have some, count rig comfortable make the even there that us if of a factors fall So that we does nice got pretty growth opportunity.

of some as in that from is just XXXX run growth rate And well.

Operator

Thank you.

to at remarks. I'll We now back for have this Kearney no turn call further questions the Mike time. closing

Mike Kearney

results for pleased fourth quarter and Yes, thanks. year with XXXX. interest I would we are like to thank everybody for full their in Frank's. conclude, To our

optimistic XXXX. our for outlook really about are We

performance apprised today. for Again, and to time operational forward as everyone sustained strong a keeping company through growth targeted the for of on progress Our and places year. of to your efforts profitability. We bolster the us look financial thanks our move we the footing

Operator

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

now may You disconnect.

Expro (XPRO) 25 Feb 192018 Q4 Earnings call transcript