FI - Earnings call transcript Q3 2020 | Expro Group Holdings N.V.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Third Quarter 2020 Frank's International Earnings Conference Call. My name is Shelby, and I will be your Operator for today's call. At this time, all participants are in a listen-only mode. [Operator Instructions] I will now turn the call over to Melissa Cougle. Melissa, you may begin.

Melissa Cougle

to quarter International XXXX welcome discuss call and third our earnings. morning the conference Frank's to Good

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

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

to franksinternational.com. like please provide to call, fourth you'd the third presentation, If view corporate pandemic to go response the will COVID-XX the on this quarter our quarter and of activity. Web Mike ongoing thoughts and an of Investor On section overview site our at today's our

and towards for technology our review Additionally, achieving key will review performance the initiatives. financial he will our quarter. progress I then third highlights the XXXX

session. for We close the will question-and-answer

on we we to our that items third commenting results, on few legal XXXX quarter slide three. would Before begin there like beginning cover are

on Such company First, are company's as on on franksinternational.com. to remarks uncertainties SEC now by of to the its refer results the SEC's Web Such contain risks of statements. the of risks forward-looking filings was more to A to reconciled measure any may those assumes subject Web call different actual cautionary I site, any call will factors that be statements. today's statements. date. only identifying could at has Mike. are earnings is no could accessed materially as and cause non-GAAP may forward-looking discussion remarks the from any in which forth expressed the in The included quarter materially comparable language site directly financial note update forward-looking turn from future third company. cause company this which such issued defined the statements in actual company responsibility filings to to set by that in representatives GAAP differ statements included to date. any most these that be results SEC speak discussed XXXX The or during by Please our slide and or financial measures those release complete important over

Mike Kearney

Thank joining you, appreciate Melissa. today. everyone for us We call the

increasing segment declined quarter Tubular land. drilling offset effects offset slide Equipment Turning declines sequentially and proud to unprecedented strong the third in our industry quarter Even to spending EBITDA from COVID-XX consolidated in four, weakness report Tubular our flat X% due U.S. caused services the revenue customers activity to profitability continued adjusted environment activity, operating focus our and continued maintaining segment. offshore of benefited sequentially, Despite organization deliver primarily to on Consolidated by downturn while by reductions, third our our the reducing due efforts. customers results partially Cementing lower commodity reflect our segment which high-quality in improved cost-reduction to improvement our in our pandemic revenue in results and our with in Running I'm to Revenue Services was prices. continued the costs. challenging products to our the though

be industry hard. a As gas continues briefly my the mentioned and has oil virus remarks, hit in I COVID-XX factor, opening to the disrupting and

financial Our in comparison activity third new the quarter represent quarterly environment. this results lower first sequential

wide seeing each base responses operate globe expands customer the and This means in we terms range of altered of in we're the our a know, which differing of customer of COVID-related disruption. you activity. degrees As face geographies

or others is nearly and Activity pre-COVID limitations increasing. are to to due continue operations customers border overall back activity have reduced while Some to logistical back to closings, levels.

into fourth margins. next translate XXXX, continue the EBITDA So, that the would stronger includes improving and first trends continue year support things significantly we growth revenue revenue two control, into provide on an will quarter. see will When to indirect of for and positions us in big At believe backdrop cost improved well top costs, these this Frank's, for which We be be within we laser-focused cost cost, S/G&A. our such buckets of our of and talk as structure. line

second The jobs, labor. which operational major of with costs costs direct the associated performing are category instance, of revenue direct for are costs

$XXX third our strong million a been across after challenges realized to-date this new quarter. Cost incremental We many our ERP that our system. the focus are implementation gained place million quarter, related these can continued of safely XXXX for same improving the has known to us be of COVID-XX, efficiencies focused to be we services both to Frank's on Despite the reductions remains history. company to throughout have that helped every outstanding The deliver its improve EBITDA year. quality bottom-line on in savings and realized continues the expected we categories $XXX between adjusted and with in for

effectively costs. reduce reliable We time, deploying technology and minimize customers' that and are result efficient processes, non-productive that in personnel, operations

our year. for reiterate employees these to are in and dedication a and employees our the to one During our done safe, for to hard job position remains and I want challenging their my our this safety number priority, ensure our work times, challenging many customers. get to throughout continue operational thanks teams

despite employees many on our Our caused the relentlessly COVID-XX to customers continued focus by pandemic. have disruptions the

work I of would we our operating the experienced to projects. and developments our but We've highlight disruptions is not to regions. of Asia-Pacific certain project geographic slipping Now, right. like delay region, exploration seen in In COVID-related some some the the some cancellations,

XXXX. deep projects second activity activity we in quarter July, border We forecasting our expect several believe in third East by with into regional XXXX. in largest water and Despite the region pick negatively increased fourth up begin were into early COVID-XX our closings additional to in Europe has in remained affected XXXX. activity the In by quarter and improvements and as fourth Middle begin these in that the We the to quarter. are Africa in results and well steady, QX caused quarter TRS-related to as numerous expect disruptions, levels market we bottomed

last As Africa of numerous with is spread. in been has early this closings news some to later resulted hardest next have to now more prevent due The we border which good rigs COVID-XX, one back come work that virus regions quarter, to the year and online hit back to year. gone mentioned

and offshore North benefited our on levels more delivered American some Focusing the from were third stable during activity projects tubular quarter-over-quarter region, quarter.

reduced certain areas. other returning witnessed to in activity rigs also the in which offset Caribbean, We work

as fourth quarter. The and into in onshore at the expected We the we move the market are the for well-positioned Mexico hit rebound Caribbean to hardest U.S. be activity us continues Frank's. for in offshore area

as we but potential the we a have for U.S. rebound marginally and results We fourth unclear, the quarter, and this our rig in scale slight experienced remains business better of are timing entered The activity forward going our a same. expecting rebound region. Land from remained strategy has

to continue control our geographic our cash. on an size will like focus keep optimal resources cost and footprint to We maintain consuming without

for notable to operational point a increase like the one market overall our reduce generated and our up demonstrate cost, recently I develop We ability commitment are and reliability, to down efficiently Frank's through customers. a accomplishment the improves. technologies of would managing that operational of to out improve this great flex cycle to key its while continues as operation back our safety. value preserving deal business

drill maintenance system in frequency recently systems increased existing operational Frank's the to developed more pipe. increased Our tripping trip the slip of on staff and The for efficient experiencing speed. were team deep The periods the in recognized by of to deployed drilling for drilling trips specifically reduced Both which safety. conditions and design Caribbean. of fewer by water cost staff designed for severity a without the and operator. need resulted increased harass provide The extended slip to operations of unique which address operations in pipe allows with of was slip systems maintenance extended the in resulted of operator maintenance continue time and time improvements

deployed newer During third several our of quarter, we technologies. the successfully

consolidating a another This Gulf achieved Our and a equipment control reduction This rig into both much in CENTRI-FI major personnel. environment. for a floor cost safer This provide the operator rig interface. consoles single by for Mexico. results friendly functions multiple technology multi-machine deployment in safety successful capabilities in control user control reduces and tablet improves and system viewing of from remote

construct in Data Another Logger digital Permian string is Connection iCAM, SKYHOOK Circulating to is for Integral has integrated both Oil tool The improvements time technologies introduced Logger Analyzed System, that as offshore compact which bottom potentially measurement Frank's the decisions also such Frank's Valve. XXXX gathered teams drilling took the into these proud an the years prestigious industry. our hole to our we recently as of all Data information three Device, required performance, make which drilling is within best the as technology won drill tool Logger home resulting a have well. in We're World seen Make-up is in honored informed energy results measures our development selected Make-up award our Sea. the a and string The North our row. valuable sustainable to for safety, and from and drill environment, reducing finalists, assembly harmful and has a easily This better that device Basin development as category. the Data Wireless now very shock dynamics and allows and to great health, SKYHOOK achievements BRUTE-FORCE the the Cement was customers award in phenomenon the well include in extremely components. two The

and would XXXX sheet, protecting on seen maximizing base, expenditures, slide achieving as Finally, capital the towards our rationalizing our cost free to our like reducing cash of balance progress five, highlight initiatives flow. I

and We tremendous strong liquidity emphasis fortifying already sheet, balance our continue position. our maximizing on a to place

success initiatives action. Our these third demonstrated in performance quarter in our putting again the once into

savings communicated $XX structure our We optimizing now of original permanently the support XXXX one of ago. million, are $XX business, year progress on continued and our target estimating support our million cost of double substantial

been targeted capital discipline and improve efforts to our working addition, capital management spending In instill have successful.

liquidity balance enhanced Frank's will today's advantage improves. position will take company as and the market and navigate to enable the sheet of Our challenging environment position to strong opportunities

Melissa turn Cougle, our who Now, over Financial discuss results. will call the financial to Officer Chief our I'll

Melissa Cougle

revenue, XX% quarter which $XX.X sequentially Mike. down of generated Thank slide was X% during of and we third Referring year-over-year. million you, XXXX, the to six,

quarter segment Services Tubular during benefited second in effect quarter segment the Third quarter. in declines Tubular changes program to drilling from full which of related our offset partially began revenue strong that our Running performance the

an Our third compared totaled the quarter quarter $X of negative XXXX. to EBITDA improvement million, adjusted second

enhance to closer a million look lower to U.S. Taking Our the at cost reductions, strong cash quarter able flow prior were operating management tax earlier that revenues. the additional flow in Mike refunds, generation on marginally produced profitability capital improve free from capital included with spend. us cash liquidity, measures $XX.X elaborated controlling which third further select helped reduction the company in quarter. We working cost despite and

discussed receivables, last we we XX% with our As which Outstanding. reduction to Sales in quarter, outstanding reduce Days an results in our amplified customers engagement

of the the this quarter. expenditures third flow company third equivalent to As $XX.X cash to cash The going of the this free an strong quarter. the million the maintain $XX over quarter $XX.X had of end a during The company focus on the resulting million flow, second cash during improvement capital intends focus of free through months generation company compared million, has the of of forward million in quarter. $X.X and uncertainty. second cash quarter, past $XXX in six improving company million had on CapEx of significant period cash limiting The placed

million, Turning the $XX.X totaled third our revenue $X slide seven, during generating in to EBITDA million adjusted quarter. TRS

our negatively segment spending revenue affected resulted decline across was impact all drilling declining universal both by sequentially year-on-year. basins. full of was Reduced TRS Our in activity and the quarter which customer operating

XX% by drilling seen benefiting strong in to on offshore an rigs due revenue $XX.X third segment-incremental year-over-year. and totaled slide work was tubular and flat activity the quarter of operations. segment, sequentially, certain presented including margin operating activity eight, increase generating XX% million, Caribbean, the noted levels sequentially, to recently revenue for Concluding stabilize slide million, the North in sales, primarily have our The is Gulf In which XX%. deliveries levels we Tubular driven of and increase million on customers was and totaled revenue internationally, Mexico. down Equipment third was markets. the American as Although year-over-year. segments Segment The product recommencing Offshore U.S. EBITDA the which customer in Land U.S. Segment-adjusted both our year-over-year of Cementing nine, quarter in $XX mainly decline and totaled $X.X reduced

During weakness offset which U.S. the Land. activity, improvement third quarter, we in in offshore continued experienced primarily cementing sequential by was

has to increasing XX% million declines. this in third year-over-year, of in and still EBITDA Our XX% offset sequentially, Segment-adjusted is international the growth year-over-year. exceed the $X.X and activity some on domestic segment totaled track quarter,

we towards expanded Turning slide this achieving began make profit continue quarter the the fourth to improvement during we XXXX XX, to and year. progress actions of

We exceed are our our achieve operational in will and in ability that now reductions costs support confident to XX% year-over-year. both

mentioned, weakening we we further not the $XXX that revenue been $XXX levels. savings, to nearly reductions the activity anticipated and combined, both Specifically, our against support months. in Mike be believe the past of cost And million do quarter, SG&A as indirect during and million cost be our expected compared total between approximately troughed signs $XX have year-over-year see and levels looking All are SG&A, including levels over of and halved XX when is cost forward, markets. XXXX to million. third

mentioned, certainly As work, gradually through activity well witnessed rigs for Mike the already to some levels increasing previously have back we go fourth bodes quarter. which

we COVID-XX In our and business, into we commence, remains balance and remain will Admittedly that at the were With XXXX. certain first-half and best. our said, visibility our continue momentum providing market as maintaining sheet will tenuous have move challenged, addition, strong efficiencies focus clear incremental previously conditions situation that creating major on the projects position. delayed, added of we liquidity across unrelenting that

and it we before feel still to comments significantly closing will over Mike be for calls. open but detail XXXX on that, the financial will With in year-over-year, speak Q&A. for are the strongly expectations, turn further back we stronger prepared evaluating results we We future I up earnings for will a line provide financial that few do to call

Mike Kearney

Thank you, Melissa.

out key I close points. like we would reiterate call, a to Before today's few

also will to one be enviable us to react have our in when continue balance help to able of navigate of market It oil places First, all that these in challenging an we organization strongest sheets the services conditions. arise. opportunities position

increased past for the we Second, XXXX. to for teams. year, quarter reduction This projected of strong a our provides every efforts tailwind diligent profitability thanks have our in targets the

that we to spending our position. will disciplined to liquidity a continue enhance approach us maintain formidable capital Third, allow further to

We in the are spending in highly opportunities we we the pursue. for selective about feel are future, Frank's that needle-movers areas and being

in the strengthening we position spending, quarter, of trajectory now strong fourth our for to we market will achievements, an combination With for Finally, disciplined into Q&A. control the carry cost believe are which improved capital and the open Frank's XXXX. places line a over operator, that, ready

Operator

Thank you.

now We will Zurcher session. from first Taylor Instructions] [Operator the comes question from Pickering. begin Tudor, question-and-answer our And

Taylor Zurcher

improvement of help least willing outlook region incremental follow-up improving into you'd high line that, more growth remarks, Hi, as curious, prepared to if us thank a and on the like sequential do achieve into look certainly good I'm back the by QX, trend so what the of and think it revenue sort provided level for you're higher on norms expect seeing, revenue magnitude top some and if frankly, today region at commentary in QX historical starts to maybe Melissa, operate you to to and Mike, business? QX, as every margins be relative helpful the almost and you in to that XXXX, of at the you you, certainly bottoming, we sounds morning, not is, into about

Mike Kearney

calling Taylor, in. for Thanks,

in in our good which on In Once we terms have terms in revenue our customers the projects of almost their of generation. business some projects. starting of even zero of few customers impact QX new or relates what do to signals resuming a short-term, our revenue, terms we're certainly from again,

So it's seeing signs, of number to frankly optimistic very but quantify. hard a we're

slippery internal and own think but would that. our range it to definitely have revenue, slope we'll an We looks forecast, even a percentage to a it put like see or on try I in a uptick be

our sitting have as talking they well. customers in So here plans I but we're out, help their wish I to day, and every you flexibility could still

Steve, our down Melissa, hard things comment you about customers. pretty to on margins? the it exactly, incremental solid want it's but hearing we're So optimistic from good if pin further and we're or QX to

Steve Russell

comment me first. let maybe Yes,

Caribbean, back I Africa markets going some and we've us. seen important to the think rigs which both in for are work

go have help of bit there, we U.S. QX us we as well. then pickup mid some a rebound, again, sight a out seen into going Land, to bottoming line of count in since the So there to as that's in and and we've we've seen rig and a August, small

I So let one think Melissa on I'll margin. the incremental take

Melissa Cougle

you thank questions. Taylor, the so Yes, for

maybe it you've XX% margin, We've seen XX%, even incremental the off historical our XX%. got margins. to typically On

you've I keep about think the and seen them this quite and we'll decrementals year being looking, to able us talk be low.

some the we and to look that's through top to that We to as think think I to line going fall extent possible. look maximum traction regain we're probable.

to look to look that of end range So we're going as achieve forward. high we the

Taylor Zurcher

for regional Africa. to rigs away, feels and Caribbean like thanks still and little XXXX. that, XXXX two the I primary some going perspective, are about that a from response spots in Understood, a for it know you probably talked work back in in Brazil region but a the ways is bright general bit

should of XXXX? you Mexico, in think Mexico be that Given to growing side you your the side. that obviously, help on region turn thinking about Could exposure the we as the the or and both deepwater U.S. then on about guys to for region Gulf how us activity we page

Steve Russell

the that been I we next America a budget in region that, on here in North of opening of where the general probably the and side, still to the that be see and the very region includes wouldn't our Mexican robust last participated and whole activity or of We more in in Offshore, report for in huge market side there's Mexico yes. and notable solid Guyana, The year, both next us, still growth activity see clients, uptick side view their Gulf year we -- sort and in Mexican that for but market of the is also we which on U.S. bullish going Caribbean, think U.S. year. Trinidad here, a the part as I in to talking Suriname. and continues market in whole we're cycles, they're Yes, Gulf, through

Melissa Cougle

we're just regions think spoke Brazil, so maybe resilience. we And at, all seen to that are rounding I -- out, Steve to, we've looking the seeing

see would say, growth, some have continue Brazil year. we We're I next paced actually and is We rigs resilience. there. looking going what several at to is -- on programs

If to to well? speak you as want that

Steve Russell

Yes, able I next being has I programs so mean several deepwater up include will that our think you year, market to the the services. opened them as know, participate are in which IOCs to starting Brazilian market, of

So up in to ramp XXXX. in looking forward we're Brazil a

Taylor Zurcher

it. I'll Got turn Well, that's back. you. it Thank encouraging.

Operator

questions further time. No this at

Mike Kearney

Okay, thank operator. well, you,

market we an the challenging as exhibit faced very in strong we quarter, and discipline. teams the So cost our executive despite well, conditions organization third to operational continue

continued As and forward look our on quarter to service and the operations, performance stay focused will customers. products Thanks and updating Goodbye. We your safe always, on excellent delivering Frank's. to February. to call, advanced progress fourth on and ensuring everyone to quality our continue technologically in on call, we in the interest for our you

Operator

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

now may You disconnect.

Expro (XPRO) 3 Nov 202020 Q3 Earnings call transcript