SDPI - Earnings call transcript Q1 2021 | Superior Drilling Products Inc

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Operator

Greetings, and welcome to Superior Drilling Products, Inc.

First Quarter 2021 Financial Results [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Superior Drilling. Thank you.

begin. may You

Deborah Pawlowski

hello, and and certainly your appreciate Thanks, interest everyone. in today your Superior time Doug, We Drilling Products.

questions. with the Chris about in Then Financial fiscal XXXX On and the remarks, discussing will conditions call me talk call quarter Meier, prepared will Troy we the of first our go CEO; through and today. Troy a Cashion, the Officer. Chief and for market our our open and Chris are Chairman little bit

should of this we and slides You copy released before conversation. should the that a financial results our have the have accompany the morning that market will also

You can on Web find site documents our at sdpi.com. of both those

materially during the future events I as documents other and is These point release, the Slide and If that actual Commission. today. could you slides to we to Q&A stated the cause statements well with would the to company as apply factors by Exchange subject are out will uncertainties turn risks other uncertainties well and as in formal are from as the session the discussion here earnings provided what forward-looking today. during may risks filed These to X, and statements that Securities differ that make results some

can believe, during our we call, which, today's we All useful Web site some on out that financial to be documents found measures, performance. of or these want in our will be point at sec.gov. also I will non-GAAP evaluating discuss

with should in in substitute additional results isolation information consider or of accordance a presentation for this You as prepared not the GAAP.

release deck. well tables with comparable as accompanying reconciliations in of the measures GAAP have slide non-GAAP in provided the the as earnings We

Slide would name, that, turn see begin. will X, with Troy's So Troy? you you'll if he and to

Troy Meier

QX US the fourth was solid over of us. the year, a Thanks, for of had We improvement market. quarter strength joining this driven was quarter in the strong us. everybody, last for Deb. Thanks, and

the been steady believe of that aware we've been per all seeing. rig far about count month averaging we've rigs increase You're Q, in so XX this I in increase.

value we work. believe They're it that's been that the increase and we the left those our that realize we So put in big in when these were And being We that from the and demand go to tools this that in and us, but late coming the at improvement When the this. in warranties this new tool when ones market, the way hole, started ones. the efficient the that it's also still revenue tool and for up about, shows. market orders see through tools, tool. increase new that are that operators are in run, we tools, being value today. the we we're tools have December we seeing all not downturn they're that ones the wonderful. but we just We're out orders that that's hole. they're tools had, going to being being followed at we've look the because of that seeing and think in for the look seeing it ordered, they're until horrible the are an this there in They're see talked receiving also see repaired, this other you We back the

rig reduced You in time. it see

bottom. goes wellbore efficiencies, You difference. drilling big improved efficiencies, and see a times are casing smoother have to reduced the when in a it Tripping you makes

them also products a We're lot them. through Baker stronger high clearly a to for We're start that as that of uptick well But services. and a the do really to count it value have this are respond tools good drilling you bits demand. the people now relationship respond the on they does they when to on when we turns We're We This really in us contracted need the can seeing making Hughes So seeing also that and see the that. when improving. manufacturing. count new relationship like seeing our and drilling that we're us is demand of tool units right going we day. job quickly we result associated look through rely they're know and tools big repair that has, for we -- a every is recognizing that Hughes, just facility a there our Baker with our but and rig getting right of help that not for relationship amount to at you shows that there new rig

been something with and of we've look lagging the that units going So sending a our country, and getting Oman going we've structure work and to our on to able we that But they're management and to Kuwait lean on allows It's with look at behind development. recovery, but behind place. the and this our business, the them very in When is them values presentations, with the our restrictions the slowed that it we and making also calls in believe on in more we've shop. a international the up of business. new continue in still team say on customers uptick areas to travel over at When doing little international improve our they're very, are We're see us burden that downturn. and down. little only face-to-face we phone and can lagged good of try at but got the have that it team When hasn't this bit our there. them we're all in we of we're new out show all to well. place We've the that of nationals put and focused has we're been I a a and we're puts into little get frustrated mainly get to going got on amount that what there. get through us time, what's for the getting a to and flow some there if more a frustrated look it around things going you We get tech us

performance Weatherford We've got we to run looking that So we're got opportunities to we looking products our way And tools Halliburton have some their Iraq, And Iraq Iraq with now tool. forward to we've on the run the of there. to good Oman. tool. now in tool to have looking got tool. Halliburton for in looking in the contract not Schlumberger just We've run the

a got whole to we opportunities back that get get to some that tripped some process of hole. all in to in and get have in have again. be products and of preventing, there of serve-cos them, the out finalized to taken -- as them They that tear well and services, the BHA year, prevent some you and of their that through we in saving UAE relationship. And the Drill-N-Ream wear all UAE We tool. go started value papers QX, know, get registration is they the benefit done with well, to to that and when We're getting we've with build QX, drill done. looking by helping the a a lot the the then to the to sometime out we hole, a see helps we're hopefully last into their It stuck and up were started really strong the working

pandemic smart. through you forward and thanks, downturn he's I proud Jeff also together this business good watching a over to want a ahead We've wanted I talk to them we're been team to how It's to caused, got they've here team to well and it Chris? call this rule and our just of in and about new very looking us Chris it we're this focusing team there, say on to in turn say it some financials. XX-XX again, doing a there. we've of and there. wonderful doing performs. that call very again, and let with brought With our horrible the that great uptick I'm uptick team to We've job the got at team he's thanks this and the just and So and Superior. a responded we But mind, going great on, and go job him

Chris Cashion

Okay. welcome, Well, Troy, everyone. thank and you,

Let's this in XX% America. continue overall really we're our as talking review that in and some now quarter with over the improved definitely that Slide about, with been Troy QX X and growth upturn conditions numbers look at market have North encouraged sequential this activity with first has seeing

summer. for the sales our rest mentioned, new the is will tool tools since demand pace demand that this first sales, sequentially. the $X.X In into largest the resulted And We're new and the revenue tool. and those in continue of the continued through at a repair North very increased optimistic distributor it we the tool tool fact, QX, as the in seeing we've the XX% in seen And fees, QX of Troy roughly that our as Troy continue last year. million mentioned, throughout delivered of From Demand in Drill-N-Ream royalty early US higher quarter. steady for order QX. Drill-N-Ream America recovery Drill-N-Ream

bit year-over-year expect know that's geopolitical only supply you last QX comparison, that thing obvious continue growth that impact pandemic year global QX to Drill-N-Ream QX Of really year. year-over-year, from improved ended you that reflecting Services from our and year point that's you refurbishment and an in at And strong that it the that's the that look to in quarter this count. point the turn improving course, We the wasn't summer, end XXX We the of see why of is in but we're end see. at at the markets, in the a from the XXX year when down to into encouraging from strong was that really, higher we look QX imbalances drill the low that and the Contract the to It XX% quarter. increase from rigs that XXX. sequentially, -- up XX% revenue the the up increase increasing rig US, substantially

XX% rig count as rig us over increased mentioned, certainly than I helping that we're This more out, revenue refurbishment and business, business, count overall more Troy sequentially this a XX% market increase. is it's the that. So but doing that mean, little

share continuing to improvement business. this of part in good we're see the So

of a quarterly fact, at to in compared QX, go in to XX% and were average increase. count rig count quarterly average QX the roughly if rig As back look the see matter you you'll

it's revenue look XXX%. over this You business, up from at

QX. So saw what to QX what a continuation began from of in see we really QX we in was

pleased developed. how So really with and that's has developing

our rigs, downturn flat international revenue lagged the markets, recovery. the in they did now the QX. we and in both Troy somewhat in international what mentioned, As about the in international relatively Despite $XXX,XXX, was last at decline year

However, oilfield putting some we agreements are gaining some in traction. service companies mentioned place. we're with them some Troy and

we expect no that. and see There's And Middle we're we East market. inroads can penetration make in that further to continue so optimistic about to very doubt

turn go look deeper Slide bit little Contract to tool the Let's revenue. X. ahead Take a and and Services at

this You it's is far up in nicely Contract strong $XXX,XXX, as market. that and North that also favorable which trend The revenue but do the sequentially, line see in to can that machining that tool levels, Services that well in XXX% sequentially, up is international that's party revenue again, albeit Those once pre-COVID work moving business, we the direction. see $XXX,XXX, driving included as from we American the the continue rental in right a third conditions is bar. sales refurb almost

tool maintenance repair XX%. related or roughly $XXX,XXX other and fees, Drill-N-Ream the The revenue, that's up

XX% to a count rig in of with know, point XXXX we actions, So see as increase out revenue. volume sequentially, also if that. you but in lower we reduced that the they're expenses demand helped some share in that cost strong can think that just our perspective. see we of and we're costs that certainly the X, the most took Slide and the quarter. move our things I from doing to And we get want largely And our results you revenue given up reflecting turn aligned to in of you good higher you has operations see operating saw, aggressive the you saw about I Slide X,

to good margin by the seeing basis demonstrated improvement strong have We points of gross XXX leverage a roughly XX.X%. strong

So not up rate revenue costs the is. same at they're are but up that

leverage. So we're good getting operating

with discipline cost back. personnel see demand carefully maintain to and continue with and We as low come overhead direct demand we costs as we keeping back to staffing expect come

results. bottom our Slide then look adjusted the at Now if we'll to take go line a X, EBITDA and

to first these deck. want got million, $X.X bottom out was you $XXX,XXX. net about line net just point get loss slide slide the compare forgiveness loss I the loss but a million, adjusted And loan here, that, the that we're we is want I out that QX’s quarter, that the So of measures back QX. see And $X.X loss to $XXX,XXX PPP point the to net was is it's of to busy of you non-GAAP, forgiveness, improved a adjusted that for of reconciliation But to in talking the million. the $X.X adjusted net benefit adjustment what the booked in the we driving we've

had the we through unusual an credit P&L. So that flowed

you EBITDA of the bottom at see And operations improvement line you adjusted $X.X perspective, can in also from that EBITDA. QX, brokeeven an adjusted but see at million from better roughly look just substantial the you So And got million. level, a $X.X we QX.

look of at this EBITDA $X.X last in QX QX of negative we're you year, year, million so and QX and at breakeven. And of

once turn that have of the and are impact So again, we made we the seeing QX. that saw

our of and let's were getting strengthened revenue, building was measurably, Take quarter. of cash. see XX. at September that increase we We've to time a level look into to $XXX,XXX. $XXX,XXX that $XXX,XXX we Now a the the And cash XXth at balance can an you down we in it entering did off Slide last breakeven -- and that increase sheet, that and of has balance, told cash the go you

$XXX,XXX will direction, year $XXX,XXX We've a cash this of the is for which right then long portion, that the got $XXX,XXX last October Rock last at includes and our the note note steady will in staying operations quarter, that the is in be the debt, from term XXXX, moving $X So of payment in Hard current be July on million. payment payment.

a for know, be that you road, should deal want sale And we the that. down believe leaseback completed repurchase Vernal, quarter. I that property As includes fourth transaction Utah our in do to option

obligation debt long So our term financial million and is as you the not as see. $X.X liquidity improved lease, the it significantly considered

steadily see. happy highlights just Slide the go as we markets, the Now and and the expect let's at look and we Once these outlook improvement really to to throughout see we're US of opportunities XX to in again, year. the really, continue that

internationally we up And it help that restrictions. really of lifting markets these Troy on expect pick half international in impact year. can very, to But will the the the that has allows and talked, some of increase we has most is US. of As us. very lagging And this in latter and front analysts suggest that tremendously, recovery the that customer, to that travel guys hurt get us importantly vaccinations mentioned, as our in

were lifted once Oman, achieve and And we guys restrictions And get timing we year, so related going Kuwait, as at. will it we into issues help. travel it's be got into operations -- did we to to our guided, international challenging. had from that Cash that really receivables. again, get back cash going position as We've it's positive looking the to net throughout

to of revenue we'll white for So that just to this we're will manufacturing And number our tools a others our working we on, work on potential. continuing. things balance, products to and expand business but see drilling that expanding continue label then improvement continue

front. that on progress see we so And

we year. I growth are overall, so we how the Products, to So this improving mean, -- are for great Drilling opportunity excited it see that we things see are is Superior throughout about and at

calls. can we for it with open So that, Doug, up

Operator

of Wealth [Operator comes with first Advisors. line question Instructions] Our Ascend Bair the John from

John Bair

questions. of couple A

interest had. presentation continue the revenues of consider to you're debt remaining you But that your questions in prepaying if set would XXXX deck increase, couple your October the seeing a answered in your activity slide and You I in the $XXX,XXX to that and obligations. due payment out

Chris Cashion

look keep need are -- at something but on, taking honest. we're right keep keeping with things to need and flow, It's we improving, of there's a the to great to do, heading a eye cash be we're direction. we that That's an as lot that I John, We in question, quite that. mentioned, a

So the could take definitely early, payment year, it bit how and and give later maybe last things that certainly, look and us some a evolved, pay relief that most at see have we'll in hard pick up we a little would on interest. that that

John Bair

think I investors, And that I would perceived amongst favorably would be think.

there, more sales of creates little other What could expand of certification, a -- was, new touched end little on a had bit? on your bit I kind all question that expand on you of mean, you you The another kind product that comments your question areas potential. other would briefly Chris, in -- ISO the I but could

Troy Meier

So work a believe, when for we certifications the allow that us penetrating us We're to side that right? ask does that's directly and ISO, go now, we but through But the ISO the now. got about is talk these the it's deals one put than and we've HS&E -- of lot right right talk that When our diversification. here. rather for about the start NOC channel. You've look that there have. that diversification, you us at DoD. we're it the it we've lets John, bidding heard machines that together certification, XXXX, And the fits that in the certification, aerospace, us We've when going also at more with ASXXXX, a got with on Mid-East, a talk team stuff you they thing down it which we're look of NOCs, more first the us road for that's another it yes, But going -- to things. go has dealing I identifying

large oilfield stuff. for As know, machines you are our

at more low lot very go lot we've with together the that to a you'll third-party a of bids. a to machine put small work these in look certifications team margins. that of margins the have got so to products And entertain work to, that identify but fits we're there accustomed we've and is that And those

John Bair

that's, meaningful I now that of in are kind gaining traction still on investigating the that that? opportunities you any business of is are business still area. let's any or that is you stage So of because in there new mean happening say,

Troy Meier

and lot QX. the at third-party in still it and from a We're lot of third-party in disappointed was of we of in work, I down margins We the that a got a was did went stage. lot road work. it. did looking We we

And every get the to a assembled, find diversify the directed that so gets offering. the start down really diversification other picks this model. look stifles way enhancing marketplace marketplace and and can well bidder it we on our up really -- And the going But best time we're team and that fit now machines. you It to the we've when bigger has it we work they're time that gas work we and look this limits equipment. focused our you fits into our oil keep that every we pool know, busy to and as do time to diversification that product it and avenues, our at

John Bair

Last quick question.

volumes? you're service working forth. increased is that Is to that on based additional that continuing mentioned and Or out? seeing increase You so how fees

Troy Meier

for and more some had I is going back, it, and services. what, is And tremendous. for -- last I just you right Well, we it. put during take that companies rigs start think demand you think at going our agreements it's what's in service we're when that we're made we deduction XXX to the downturn at I look year, on And the that we're when And there going on the those charging rigs we're are to that going well going operators, general, look on we're prepared now, warranted. to XXX nobody at, that mean, to

these drilling a footage more faster. lot So rigs are a lot

means to times X that rig I look just we what start So a count today how believe the few because they rig years and everybody's about count look count I got is think ago. the at at that at rig looking

ago, rigs, that of and XXX seeing look you work a that's right the X times now. that XXX rigs, just by about at if few So level years we're

Operator

[Operator question Instructions] of Our Dick with next line from the comes Ryan Colliers.

Dick Ryan

So the go? and you that? some it has it do you numbers kind Can where put gains DTI's where penetration in been? mentioned What's U.S. share, increasing share of And you market can Troy, behind think

Troy Meier

this that share company strong. Texas been is market southern about there. -- well and done there. has in down very really They've penetrating -- out this tool getting a They're really DTI's good does new

look not as don't share, really you it the is, I'm that If North comfortable I market look share say market in can they majority DTIs But out you out throughout know Texas, we've and at that I right when giving Canada. what that the given to America. far -- before as rigs at are, grow of and where They it's strong now. very continue it grow

and good tool a the into doing a happy and the they're getting pushing done, in good with So they there do job out and they've job. what we're marketplace,

Chris Cashion

share The in more believe on picking other a to up Baker thing, they're perspective market that and their to us repair from demand leads bits. Hughes. bit is the share We

they other thing be more of The their seem work. giving internal us to is

share well. And improvements so some seeing from Baker Hughes we're as

Dick Ryan

thought opportunity that? Services the solely And there Just was had Is an on Contract so, -- I the for refurbishment. if Baker Hughes bit to or the refresh outlook beyond it that? you me side, what's move

Troy Meier

at is, point this in time, Baker Hughes. solely It

we does to will. Our you if year go us customers, contract last allow that amended other after

evaluated any time, Hughes. with even be right now, this We've to stronger that looking We And our But it. may relationship point yet. offsets in have additional we done we're to not that get feel Baker from somebody you, work we strengthen honest in else. with

Dick Ryan

of different kind revenue from? generating are you this How stream that's countries said you quickly, lagging. East, Middle the on And many

Troy Meier

five at. got that right we look now We've

going that Mid-East, back the had here, the UAE If We've now the of -- also working we'll we're end by then, the which of Saudi the is third tools into that generated new hopefully the not our quarter. is taking team we've that that course, tools the got you X be to but on that's of the deploying into. there there We've look at one companies. Ukraine, over opportunities I we've Kuwait, be now, Iraq, also cutter. Oman, for And know revenue service

Operator

to the like hand it There are in I'd management queue. closing no for to questions remarks. more back

Troy Meier

thanks talking forward Well, in and us. looking again moving our again, forward to We're with way. pushing bearing have joining in here second again, very and and us a keep everybody, wonderful we'll a quarter, business keep and this day. forward positive Thanks for this

Operator

gentlemen, participation. does conclude Ladies and this today's teleconference. Thank you your for

may wonderful You your time, lines this disconnect at day. have and a

Superior Drilling Products (SDPI) 12 May 212021 Q1 Earnings call transcript