FI - Earnings call transcript Q1 2020 | Expro Group Holdings N.V.

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Operator

Good morning, and welcome to the Q1 2020 Frank's International N.V. Earnings Conference Call. My name is Zanera, 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 a question-and-answer session. Instructions] [Operator

turn begin. to now Alison, Alison call may you the will Ms. over Greene. I

Alison Greene

and to am morning, first of Good welcome Communications. quarter to conference Corporate XXXX discuss call earnings. I Alison Manager the Greene, Frank's International

X and Our presentation, the Chief and Executive Financial are on Cougle, Melissa President earnings Officer; Chairman, Officer. of and speakers Kearney, Senior shown today, Chief as Slide Mike Vice President

Operations. Senior throughout A will of and has today's Q&A call Vice Melissa President Steve be refer Mike on of Joining posted portion Russell, presentation we been our this for will that the website call. to

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

an industry today's oil substantially first of lower the response activity. gas pandemic, On provide quarter, and prices the Mike and call, reduced overview to will our the COVID-XX

and structure. Additionally, improvement profitability reduce and on will technology he review a our brief update to our provide our further cost efforts project highlights

performance will and financial Melissa first more initiatives. cost review a review quarter provide then of reduction our the of the in-depth

a close will question-and-answer We session. with

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

from representatives remarks expressed answers risks or to First answers by today’s those by that could remarks questions uncertainties statements. to to and the may materially call or are results refer contain company differ Such and statements. to forward-looking on or subject actual such cause implied

filings important included different assumes future date today's any statements. in complete forward-looking which SEC or may if results no from company website as materially different on website any of A risks in franksinternational.com. of our as be update the those The The the actual these filings set any to statements forth cause on accessed SEC's SEC included is be as the at only date. more its or cautionary speak factors company's to statements discussion could has forward-looking responsibility date of identifying Such specified. that company language in of

Please most any which financial by discussed non-GAAP company. XXXX in during to are was measures comparable the this financial directly quarter that measure call reconciled release the first note GAAP earnings issued defined and the

turn now call Mike. will the over I to

Mike Kearney

Thank Alison. you,

begin acknowledging by call. challenges We appreciate I and we’re the industry to pandemic facing joining the for remarks industry, prices. along our by us across the COVID-XX want unprecedented peers the we’re customers, my caused impacts our everyone falling oil with experiencing and

These events time. continue have period our us of to affected for will and quarter some first results impact

quarter prepare and very scenarios. be Our on the a will current plan number business, our to we situation evolves. actions as of proactive respond us aspect take potential to those controlling to next the recovery continue over to focused of every We're

the and implemented early apparent Turning ensure series actions the Frank's to to business became families our Slide of severity X, XXXX, of geographic customers, and outbreak our in more while COVID-XX safety the continuity. of the as their spread maintaining a employees,

rigorous safety requirements meeting We for including at quickly also same to to new control protocols costs. to employees want find and while and congratulate our adapt our ways of time to willingness ways to commitments. their customer additional I ability moved working, the

focus the laser during is first injury quarter, about safety one just the company recordable a Our welcome result has of on record. which brought

X,XXX In X.X occasion recently we single Mexico, over risen of Gulf remarkable to commitment hours celebrated Frank's with demonstrate the the man team aspects a incident we one days million Abu the of that has recordable these to ESG. records In These challenging environments. recently Dhabi, without a all without in working proud I'm incident. work. celebrated recordable year of of the company's

sheet. in position substantial cash balance have debt no be to Frank’s fact strong an due headwinds, on we continues the the excellent financial Despite and the to

better conditions strength resilient revenue financial largest us potential smaller a business, Our will us the market share Since gives in competitors base as gain market allow we the of primary weather global this our have the line than with current share withdraw. most. to to additional

COVID-XX around centered and submit complete to the complete In drill, working of clients projects related responsive our markets, work we're to reduces with operations all locations. with an and scopes that continue response recent offshore a to see of COVID-XX the time global technology while be to and oil our customers safety our We're offering in wells. hard the dealing our to our company adapting we price the and disruptions, case, impacts challenges. In

will as are delayed, degree a stability. believe is being oil relaxation there as of restrictions While we of COVID-XX some price commence some projects soon starter most new and

market Middle QX of this East year. We and share activity markets. in new gains awarded five-year a contract generally region, start-up activity in were TRS including in scheduled this late key strong, recently TRS increased to has significant remained

operators The Our programs. drilling been operations delayed. temporarily to with is although slowing in been major Africa and their have impacts seen good key concerns suspending oil several negative COVID-XX awarded we've several or price have contracts related startups news

and anticipated projects of Newly to both in the are at West East XXXX. awarded Africa half start-up multi-year latter

year. two COVID-XX. have projects four impacts A delays offshore CapEx resilient major to region, activity Within budgets. generally drilling warm project customers and to response out with our COVID-XX Offshore project are America rigs some revisions and proved rig proceeding with stacked downward initially some in associated awards increases of and cancellations with to offshore with relatively from XXXX Caribbean core programs North South a limited in postponements last American

anticipated Frank's second we with XXXX. But of rig to full operational to the capacity QX, in half return a fifth in committed

Cementing tool which of Frank’s. project, huge a service work been is Our the XXX% win multi-rig recently this for awarded division for Equipment has

are prioritized the and everyone a with to around projects undergone engineering we Frank’s and recently Technology the the us and innovation enable purpose. key to voice more mantra knows, and has will footprint customer our a of land be have the that differentiator ensure division has significantly of realignment a levels been U.S. responsive technology contracted by our always has market downsizing responded As accordingly. staffing for

opportunity. high Simply R&D put, a product invest likelihood of when will we very development contract either aggressively and business a is there or in committed

We will better technology in speculative develop continue not build but come solutions, work and with engage will customers projects. they to will to

contractors hour safety XX who with highly our and focus remotely Our based operators can for drilling keeps various additional can well shift of the most our onboard personnel hands Offshore is as employees focused out multitask Frank's fewer per and persons of board Both of customers each and upwards as its on jobs. slot are equipment, free, operated zone. million operators $X cost Red year. on compliment as help

to development goals, while we’re And development still reduce all now be will XX% our to meeting scaled R&D costs create have plan R&D focus. year-over-year. we We able

pleased to the significant during of that designation of of an this XXXX dropped finalist Oil and for stand the As Engineering following its poses additional Rack to technology, enhancing threat recognition our example will Meritorious building risk year The World operations recipient as in significantly at Special of stands of a achieved report Console Innovation. disrupt I'm the Hart's Award safety Tubulars joints Awards, March or the safety Back Frank’s operations.

a Tubulars. prevents Mechanical stands pre-programmed programming various doubles, the the Frank's breaking down with world unplanned through guides tubular is of operators regions in the that of Rack triples, deployed been or of release building and of quadruples successfully capable sequence. Back It has or Console

intensified and in up our efforts X, earnings response we've release, to the our Slide our as initiatives on to conditions. mentioned has in to cost Turning detailed our sheet flow, press Frank's current our call our cost cash maximize protect earlier and reduce balance reduction scaled structure. examine To and

profitability gain actions improvement the knowledge already We’re projects will leveraging and progress. the in we accelerating

rationalization We're intensifying of and capital discipline. applying even our expenditures greater

three over only quarters. for place. renewed have to have of a there enabled will initiatives since underlying this new months. over which All containment made two capital challenges And And planned CapEx contracts us Melissa progress the cost XXXX revisited of individually. moment, jumpstart last significant more that have provide onset has the in we on the been in last actions industry the expenditures detail are these we sanctioned

I companies our Frank’s It's is substantial great to continue a we storm, meeting and survived to top think high our degree service would concluding industry provider. many over as the value cycles the very pose While and a has risk list. market list, and of low death sheet. unknowns we of large to effectively our uncertainty the last COVID-XX of we're short how current will to to ask perfect maintaining related In the the that at each in outstanding employees. of while of you the and proud position And ensure conditions a needs and customer's my near-term, very, thoughtfully balance years, no continue respond weather cash will remarks, history XX on

proud. be employee you’re If

there bad. the a ask news easy always get survive, always remember, in you're will of that flurry good has just It's Frank's If to I times in customer, you only hear thrive. and we we're and you bad lost but not every day, for

now QX the Officer financial turn results. will to discuss over the Cougle, I will Melissa Chief who call Financial

Melissa Cougle

Mike. you, Thank

to XXXX, quarter first XXXX. $XXX Referring Slide the the during we was of which revenue, first generated and of both down the X, of quarter quarter previous million from

last the contract new call, planned we a start-ups As on the anticipating in discussed with this were quarter later year. decline

showing significantly deliveries delayed. during addition some impacted of that The was pipe customer shutdowns period. QX related anticipated Tubulars that for early planned our from as business to saw impacts quarter fourth a were XX% to the of decline occurred this decline, we most COVID-XX our segment In March XXXX were

million to begin including by QX was $X.X that adjusted EBITDA cost ramp-up Our factors several and work during for impacted anticipated totaled QX. was contract

had losses significantly light than current We in market higher our the that also conditions. expected with reserves were credit anticipated of current associated

the quarter. totaled These million $X.X reserves in

of during concluded These on cash was results various first liquidity, lived our long assets, a assumptions impairments and operating the during of the of macro on for our and was our reported intangible of balance which used impairments largest the quarter, the in intangible supporting the goodwill. our to impact million million it analysis Given in revisit the core had a both assets to occurring net quarter. looking significant loss the events $XX sheet. first flows necessary first million $XX company non-cash at impact quarter the $XX significant The

collections combination March. property as payments, for and bonus a well the of to month outlays due including was factors, customer taxes, This as of poor during severance

focus April. were improved re-engaging payments strong receivables placed between March we again on April, of customers by month once collected XX% ensure to flowing the and During and

the represented and million, the commitments also of $XX on this made $XXX As of CapEx company the The end. affected cash quarter, which had of free equivalents cash flow and from our spent April, largely XXXX. cash a company million million month $XX approximately during end prior

the planned them approximately and for year We our expenditures reducing by have reassessed XX%.

revenue the we Turning to TRS that was adjusted EBITDA drilling our and expected IO contract QX. startups several revenues wells both of as sequentially X, anticipating planned programs until were new and were period much decline declined between Slide and year-over-year, not had

see with commodity However, and during we COVID-XX related reactions, the did onset of March, price impacts declines.

onshore affected U.S. over were levels. XX% Our year prior operations with revenue notably falling most from

adjusted including associated by well this costs in these as certain one-time reserves credit was Latin as startup with TRS affected the America revenue new operational loss costs EBITDA declines, as materially pronouncements. quarter certain the accounting

counts and rig period significant onshore March declines seen U.S. weekly since monitoring in the XX. additional have We’re

We to these will continue respond aggressively to declines.

our line $XX.X segments adjusted presented delayed for as as in anticipated a or million EBITDA, the technologies. cancelled as X, both was deliveries first revenue Technologies were the Tubular of of with well million on $X.X series QX our quarter In Drilling Tubular Slide

We base remain believes opportunities to that segment XX%. cost margins international our our company were for above The able growth Technologies keep strong. in Drilling this and reduce

program the our the market prior-quarter for will X, to continued Equipment related current U.S. Mexico. However, U.S. of given million, they Gulf Concluding Slide of delayed quarter revenues circumstances. in declines Cementing and a from onshore drilling the segments decline be in the was likely XX% $XX.X predominantly on changes

Adjusted EBITDA around fall-through our with million revenue our mentioned sheet. declined Mike from declines. further protecting $X.X efforts balance associated cost previously these and containment

and business cash activity required categories working three with capital customer place right us of labor have maximizing and focus management. even our and sizing identified costs flows, Current and a reductions on align to non-labor on CapEx reductions, projected expenditures to primary closer have conditions. scrutiny cost workforce including containing We to

X%, XX, costs total savings. Turning of part initial reduced million by profitability labor $XX Slide actions, over we already our to as compensation in have providing improvement

an workforce incremental to savings related changes $X labor reductions, million. also provide that benefit addition capturing and compensation of In will to we’re savings

in need We forthcoming relation reduce will to labor from have to be completed our total by reduce levels, to costs continue more in to and and the that cost have additional attuned than XXXX business we actions will XXXX XX% activity.

on as Our containment as initiative operational expenditures. structure G&A cost reducing is second focused expense well

discounts and closely with or engaged terms purchase and improved planned to examining orders eliminate actively opportunities our open and to reduce find vendors defer, expenditures. are negotiating We’re

newly Force a formed orders reviewing purchase have Task We each week.

April curtailed are PO which the R&D average. associated spend XX% in Mike compared efforts the our to recent trailing addition earlier. by to with XX-months mentioned These Our in division, technology spend reductions savings

Capital and generation a working is of the management expenditure for flow our goal full-year and effort capital cash we’re free toward working XXXX. third positive

collections We have intensified and through month in marked our noted our accounts collections of during customer increase receivable active cash a engagement April. the

a review XX% a which CapEx reduction comprehensive in Our in planned XXXX. budgeted capital resulted spend expenditures underwent for

and efforts coming we identify executive further over has for the reduced inventory been by also team secure leading pipe. of and large and these purchases commitments have our months. engaged continue during for will The We XX% to highly senior savings diameter all

we reductions of of we to in savings cash spend downturn XXXX. to than from for in strive $XXX the our commitment base, to reiterate, our as million overall these To of XX% This control cost year-over-year costs free combination demonstrates positive for result flow this strong in in XXXX more our expect initiatives equivalent excess levels.

suspensions over we QX material provide for quarters some may and declines place. begin program early the are coinciding results and troughing bottom and expectation that activity late program continue previously both startups. remain for drilling in forward, to activity is and already likely looking of anticipate with in Offshore do anticipate QX our announced a will a effect top in And delays next We will gradual line as toward international contract that improvement U.S. our two

the we for will that, With now line open questions. your

Operator

& George go from [Operator Instructions] ahead. And our Company. from comes first O'Leary TPH question Please

Your line is open.

George O'Leary

we too one kind Mike, awards I actually is hand. back little what pockets are those on interesting. think what for specifically was in could this Melissa, some look the as of driving would of but, rearview are of I thought but guys if wonder based but And in XXXX. any geo I you your of on in you will you touched prove bit know share the the markets resilient most more there of last on have that deck, guys. that growth And you you end markets Oman resilience a be you helpful. already contract geo comments one the are others at some mentioned super

Mike Kearney

take to I've got us help that's also one. So Russell operational And question, the Steve since with great Q&A. here a that we'll let Steve

Steve Russell

Oman. we've share the to through in we've thanks some George. in Yes, market some contractual noted there as forecasting marked just win we've resilience geographies forwards Particularly a in morning, but East, Mike various and see. what we up Middle here, we seen additional in not pretty Yes, of see good in picked difference Saudi addition decent awards, been the the

disruptions work we and into here see end those the to activity other The going we to we've where the strength here QX, place QX market. in of back at some coming COVID rates some more due rigs had Caribbean, see reductions that is but

environment. are those in a of bright So a challenging couple spots generally

George O'Leary

that's All How I markets how onshore helpful. right, if seeing price COVID versus reaction guys what of XXXX? to internationally far velocity offshore wondered that's of and thus and lower markets oil and behaving then impacts? differently versus you all seeing kind can of that's, contrast onshore the and is offshore compare just what out, in the crude delta played in markets you're in kind you're And

Steve Russell

and picture, core I distinction complex the is out Yes, what between offshore in What would appreciate a the there. call the so it's internationally markets. remote a markets you as seen markets can quite we've

sort a markets. we've remote So number of got of

African So of the just the out countries short-term around there's or COVID markets you restrictions. and Caribbean I'm a projects of U.S. crew been latter to were where International if those because the land, I related We see sure referring half to do and getting here back primarily in work to of land. that the lot year. some not Land mentioned again, of On going in are closed that disruption COVID these equipment

International for think for again, strong looking year. this mentioned us I the spot focused for a East very forwards Middle on I us has been is land which for

George O'Leary

That's for great. more Okay, helpful one then just me. And color. very

about capital was from a are if guys year? we year the benchmarks talked there an collections perspective, receivables April guys accounts and that in of kind were the of from progresses You that I quite achieve improvement little you guideposts I for working management DSOs as mentioned, inventory any bit for trying you or down wonder bogeys, watch if work any perspective, any in to there the wondered impressive. a kind could were

Mike Kearney

start pick locations without up belaboring invoice on invoicing seems it, George, is and on changing quite it’s almost all issue, starts you've are their it. contract, And of I'll then in it with globally. sign payables it that, customers Yes. really got complex a the that We DSO number like a let monthly. systems, reducing Melissa you term.

get And or we the can't sometimes next because XX days an pay yes says, for where system. you delays gee we're XX controlling we operator the

can a out making the AR our continuum correct So collections. I be be months, pays. over the door, the rest and I working really, focus slow sometimes. going of particularly can as it's customer on complex. tell management your next But really if the of they contracting, then activities, team and it working few with really getting sure gets sloppy to I said, capital from to you, the invoice management, And I'm But personally

want you from continuum. every that side. add to we're way. complicated the along piece if of know, to I work a it's your don't going So Melissa, And something

Melissa Cougle

the of collections the greatly March. really the a would mobilize of I able reverse were I task from work could in to try said, as impacted as that And in home reinforce April. month Mike to of month to quickly everything that we paradigm think trend think force largely I we kind the

we I lot to DSO stay resources we're you and of we of receivable engagement level optimism think to apply top lot But we will further high a on be can improve the capital internally needing there's I resources it. we of the continue free-up from faced to on that will the the and side. a further a lot with if of where if customer keep side, that apply working think at

also CapEx mentioned in towards that is out around You us. which remarks I my I'll pipe piece the to sweep big about even commitment say, a inventory, more for asked the inventory, of

"Well, So like I of we've at away as feel look of also and we year. really looked it task force of sort the for any rest of what took that But really part that's relates to is the all it. And do we PO inventory, the mentioned, the at that that we saying, our So in right? deploy needs, to that we we space this well makes economic as today location?" my equipment equipment between from of it to it as piece Steve sense could try CapEx. and hey, where applies just was this regions, freed office think to up inventory I

taking to a that We So one different tools has efficiently. pass. come for year planning than our very and more utilizing were the

available. a our that larger comes CapEx. to that and tried pieces we we've applies location for every well for and think be look up inventory so equipment everywhere see as And need every really to And what as a is of I our in nimble piece of time every

Operator

not the Mike Please I'm further And questions ahead. at time. Mr. Kearney. turn this like Instructions] to go over would any to [Operator showing I call you. Thank

Mike Kearney

providing International like call quarter. bye. Frank's your I'd forward thank thanks joining much. Yes, Good the us on And today we everyone to another update and and look next to for in interest very

Operator

ladies today's thank Thank And you you gentlemen, you. Thank this conference. participating. for concludes and

disconnect. now may You

Expro (XPRO) 12 May 202020 Q1 Earnings call transcript