CHX - Earnings call transcript Q2 2021

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Operator

Welcome to the ChampionX Second quarter 2021 Earnings Conference Call. My name is Hogue and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the Investor to Relations. turn President, Pope, now & ESG will call Byron over Vice I Mr. Pope, may you begin.

Byron Pope

and Executive Thank you. President ChampionX Somasundaram, today are Fisher, Good morning, everyone. and With CEO CFO. President and Vice me Soma Ken our of

will quarter summary During second back our company's discuss and to the thoughts. call third quarter Soma some highlights. today's share of some will Ken call, then turning for Soma results our outlook before

We open will the Q&A. then for call

slides we posted call, be will to the our today's on During referring website.

me SEC that refer all of statements. in participants I that matters Let filings to could will that in of Therefore be and These discussion difference could other risks projected some forward-looking. you the our results of we cause remind those some materially. latest to the results differ cause XX-K actual factors our material these making statements today for involve from filings our uncertainties and are

measures. may today comments Our also non-GAAP financial include

the GAAP Additional which reconciliations directly our our available quarter to press turn call Soma. financial found be over website. details in on the to measures is will release can now second on most I comparable

Soma Somasundaram

to earnings welcome today. Byron. I second you, everyone. and would our call. XXXX analysts like shareholders, Thank quarter Thanks morning, for employees us to Good our joining

the be one executed turning business and anniversary on not a of year proud year. our the that of customers me over and could results, X, first let June take merger. how Before has behalf marked towards our pulled more organization note a communities moment remarkably to transformational together well of last We

around performance. dynamic, our improving by world. our better Consistent industry, I'm to to inspired celebrated one lives, a our with turn XXXX communities unprecedented our by truly the anniversary environment market During let energy truly me recent of commitment for together. over in year With we team's we purpose. our hours purpose that, volunteering are what our was

the the line segments saw in with outperforming second of top pleased quarter, growth we market. the We are growth our all sequential momentum posted

quarter business portfolio and the attractive capacity results profile flow Our strong of generation demonstrate growth of second the further the cash free company. illustrate our global

As the positioned second ChampionX in outperform. global hold of further the beyond, half recoveries and energy is take this year and to economic industry well

to continue our We synergies target cost full target to progress cost the are make and well merger at good of XX we within on $XXX closing. deliver synergies of million the at months positioned

visit increasingly members with In addition, to customers. able field our team in-person are

We services are efforts, are very technology, with together products our combined encouraged by to customers how receptive our - our better and customers offering.

We are a purpose-driven company.

will we guiding improving sustainable We see with the competitive on always employees, is life’s our a So start customers, which source slide shareholders organization and of of advantage. number as four, of community. our culture light

we to our that speaking for solve customer it to committed feel relentless we five, improvement Aviation slide continuous employees, stakeholders So On help our problem a all to to excited impact, that is advocates, being team. we of mindset. technology are accountable know delivering hold ourselves with important of having impact Scientific being with technology and to customer welcome our for ChampionX

gas clear making As the plans energy ESG their we and transition, of highest for goals emissions, the priorities. of the their to the of our became operational it chain are have customers value one with listened respect to crystal energy companies voice reduction that greenhouse across

reduction of our our we consistent goals. is with in growth growth methane Aviation site-specific pathway will shared acquisition solutions As their and building monitoring, accelerate a emission This transition emissions continuous both before. customers leader you management portfolio monitoring achieve pathways our help with out periodic and to energy market for our Scientific regional emissions for

emission methane potential, will take as growth industry Ken second wellsite expertise leading We solution solutions. our shortly. and midstream future presence financial you with excited about our production the monitoring are and in combined Aviation's upstream detection through the and we extensive quarter Scientific results

let comments. share So few a high me level just

year top emerging cycles cash flow our a resiliency, combined line combined last the portfolio the strong as second business. international the of well land-oriented company, growth free our and robust Over American our businesses, rebound our continued in growth to power on well as global In as generation the capitalized teams our quarter, in speak shorter sales. the North

in driven production sequentially, offerings. XX% optimization grew business by growth our Digital Our strong

businesses. In were growth than in We the new second that resulting increase healthy of years are Chemical artificial our second in revenues term from of new realization, the quarter, offset technologies, lift less Technologies cost in of our old. business raw volume came Drilling quarter drive with coming material along accelerated, the customer The about the than in quarters. short Drilling adoption product impact launches and of XX% three Technologies excited in beginning price the products growth the Digital inflation technologies of will more healthy the pipeline that in

and highly by to outlook. the are synergy half our expectations volume second margin quarter call the our continued we back We of on growth, like to discuss turn third year, the and over full I to delivery confident our quarter now price deliver of improvement and in the would impact results will that Ken increases. beyond, driven

Ken Fisher

Good metric for best of metric performance referencing morning. be Today the reflects us. comparisons. Thank believe joining sequential will Soma. for Thank this continuous operations. I as business you, EBITDA We adjusted you the

this in segments growth. our Geographically slide up revenues quarterly international our on million Included XX%. million increased contributing of grew all cross-sales was seven, quarter of $XXX $XX to revenue by were XXXX X% America X% or and Ecolab. line North Seen As top million of $XX with strong to second business sequentially,

agreements are recognize agreement. sales corporate these allocated associated our not transaction executed revenues these cross-supply do communicated, and previously from supply perspective. other. As on with to EBITDA are our the Within financial to with statements [ph] an post We margin merger sales Ecolab

more We expect years. approximately these rate sales for will continuous two declining

income primarily the $XXX increase of $X.X company million, delivered up million, the adjusted GAAP We a $X.X driven was XX% at flow the business $XX the by from of operating of of generated quarter net for For cash increase. cash first from million second flow We our This sequential quarter was activities and free four the volumes million EBITDA the quarter. during strong consolidated million all solid quarter delivered $XX in higher period. during segments.

million agreement. transaction Our support well contemplated schedule which separation X%. revenue ahead capital requirements flow free quarter, remains the the Ecolab. In expenditures, of to $XX cash included This cash, integration invested we of to related second from in separation services in the ratio

fund the of range X.X% to in of expect to revenues moving to capital X continue forward. investment We

quarter. the Geographically, The business to by generated of increase Turning up $XXX the international revenue our Technologies second segments. higher seasonally North Production volumes from driven in continued was X% sequential and positive quarter momentum Chemical million, sales first XX% continued X%, despite revenues sales logistics $XX grew international increased raw materials XX% costs improved Segment up on million, business. American revenues inflation. EBITDA experiencing higher while adjusted American sequentially. was some and volumes, North sequentially. Profitability

team has this announced to working earlier commercial we was adjusted the price margin Segment selling increases implement Our diligently year. customers XX%. EBITDA been with

in confident are margin realize the volumes of to of improvement the year. actions, As we second price the and impact deliver that will half we grow increase continue healthy

the have year prior rate we expect this stated, end As year's level. we previously exit above margin

of higher Controller. sequentially, Technologies, business Moving $XXX million, to trend increased Automation our they by new spending driven up XX% as customer approve. our and revenue which had Production SMARTEN continued our was Digital XX% sequentially, [ph] driven volumes to by revenue and E&P Spirit

the US during primarily Drilling the second of year. greater our cost EBITDA focus EBITDA to offset of Technologies to consecutive to adoption some experienced as increased to expect purpose second cost price quarter, million, the solutions X% VAT and maintain modular continued Segment to improve plus with drive during due improved expect was the in third leveraging continue adjusted on XX% efficiencies. In up fully customer digital we active inflation $XX Digital sequentially. time, of through We margin this placing fit segment was cost profile first quarter the are slightly period. quarter. Technologies as recount half to quarter XX%, demand, actions But versus the a their down adjusted margin inflation for increase the second increase structures customers announced a experienced

million quarter by was activity. higher $X from adjusted higher segment $XX for the sequentially million primarily by second quarter, the offset during Although the drilled outpaced by spring little was a in was Chemical increase which US XX% the recount delivered Technologies second X% million, sequentially, volumes. second bit during headwinds sequentially, Canadian up fall the increase period. and seasonal the it $X a driven a driven completion million Segment period. technologies $XX - American North of revenue Drilling quarter, well EBITDA Reservoir revenue

above As improvement second the Chemical in EBITDA breakeven, million a higher expected, by which sequential $X driven improved segment - moving Reservoir the the was volumes. Technology Technology primarily quarter

slide to transformational of Moving demonstrates towards to from that synergies we presentation, eight our merger make merger. progress synergies maximizing continue the

coordinated merger the our synergies. XX running well a to still million second of synergies the as cost as quarter and cost closing is rate. potential improvements exited benefits, $XXX across And Our We and activity of achieve we company million enabling integration to annual within the months capture date. us revenue efficiency at targeted expected $XXX

continue with to share progress this you We on will front.

net available and during paid We cash of of or we million management on outstanding strong had EBITDA debt Turning have the at June and approximately rolled working times net XX the end hand adjusted compared having of total of our million now of debt our trailing capacity XX, merger since X.X And million $XX including EBITDA operating despite the liquidity then position. obligations flow our financial free this the position. revolving repaid credit to We leverage pre-pandemic quarter. times cash all facility $XXX slide second nine, pro our of $XXX strong and the X.X delivery, months at to of to maintaining XX% out total. quarter. million debt quarters. remain date, off focused highly March liquidity, capital the $XXX We At was on forma XX,

net priority our the one debt framework flow a further with on free invest margin term our time, to execute near to initiatives. continue our approximately EBITDA. growth while high reduce target to to technologies available leverage cash We our term in allocation cash excess to support using our in long using of of to And capital

our Turning to quarter outlook. third and XX slide

expect businesses. production sales the in in including range million. $XXX further operations, quarter million sequential shorter revenue and driven third $XXX international primarily improvement positive momentum is change cycle by sequential We North American continued our to the volume oriented with The of Ecolab revenues in a our in increase in cross anticipated

coupled and businesses of pace. catching initiatives improvement at inflation, be the the selling as up to oriented or cost expected we with rate recap growth productivity the we and synergy moderating expect actions, growing US from our move price into and margin year. continued ongoing our are raw to end Our continue with to benefit With materials year-over-year

EBITDA in EBITDA we third third And conversion we related million. outlook. quarter the for For the we range to have additional we range million that performance. XX% ratio remain quarter, of slide, strong with expect some will also We cash XXXX. our confident to provided this maintain to flow free On specifics flow $XXX $XXX XX% our in are pleased cash

back Soma. to Now,

Soma Somasundaram you, Ken. Thank

level expand high thoughts of for the with the which let highlights have shared to you our strategic slide of on ChampionX is previously turn international for deck, me of we you priorities you. about we how energy call like a attention we would our frame shared strategic open think we to as I which to sustained are evolves. our leveraging with your Before quarter, one how industry few questions, high our priorities, to Last sales. Today, global we the footprint positioning portfolio another growth XX

pipeline in markets NOCs, our to footprint Chemical independent to year geo our of from, an artificial customers shared leveraging the global already and upstream the by world receiving Technology reception business merger, have we our We IOCs, the with opportunity expand are into by expand. One businesses. plans of we our lift are continue our around you international key encouraged

in which seven As have our limited countries reminder, we for artificial international have Technologies Chemical strategically we the lift to market. share These a These XX% are artificial prioritized countries lift in to today. of XX% billion potential an first collectively half this presence the $X.X over in already no businesses expansion. are but to well estimated And we represent which see capture decade. countries artificial lift established,

primarily growing the the to starting XX% market lift driven area. are international see of by quarter, XX% growth. efforts and second significantly outperformed our results Automation Production in revenue In our growth We and this year-over-year, sequentially, the Technologies our artificial

Production opportunities activity our excited about start growth artificial year beyond, ahead both As international are businesses. levels we lift organic oilfield and grow next for to of and Chemical

allocation, down generating strong and level. capital our how our to we our flow we ability use debt capital guide cash to Regarding the allocate organic will to target framework cycle value will creation full continue free opportunities. And continue inorganic further pay to both to

remain sustainable mechanisms addition, the our In we path to to a committed time. return over capital of toward shareholders

shareholders, pleased as closing, term to making free winner, our I and ChampionX financial this communities. are Through to the both and I year, cash are would of employees the delivering to world generation, and shareholders flow well of lives we inspired technology, evolve. our like attractive strong our our the dedication oriented to customers, open In employees, performance to our to are opportunities and our be the strong with for continued second and progress industry very I'm lead global energy half this our on their products continues of for future. With are in team. questions. that, a our differentiated we in focused growth all humbled technology provider thank purpose our the phenomenal long We around call a is of the towards Again, such we want a and objective. ChampionX positioned to production improving

Operator

you. Thank

[Operator from a Pickering, Holt. go will the Instructions] from George ahead. We We now O'Leary question-and-answer Please begin have Tudor, session. question

George O'Leary

you Can Morning, guys. hear me?

Ken Fisher

Yes, we George. morning, hear fine. you Good can

George O'Leary

me? Can you hear

Soma Somasundaram

you, hear George. can We

Operator

O'Leary. the next Gruber to from We'll Scott Citigroup. The Mr. We go question. have comes lost to question seem from

Scott Gruber

Yes, good morning.

Ken Fisher

Scott. morning, Good

Scott Gruber

in detection here? could potential from What emissions market very growth do you E&P this is generating of years? the So given developments you on for five be to the type opportunity How detection three you do What's intriguing, the think see revenues emission side. the ChampionX say developing?

Soma Somasundaram

Yes, Scott.

pathways the was opportunity. we oil sustainable as are with you XX this gas are energy methane for emissions the may transition. We are know, potent these for of on type clearly, plants growth are about we recall we very monitoring we about call, exploring, or them And shared and three it emphasis excited pathways we an sources emissions in talked all previous our of know, production called idea the one production decarbonisation And you methane monitoring. emissions it emissions. greenhouse behind customers one is our equivalent of and The and midstream dioxide and [ph] wellsites methane of number all priority than E&P are for more and we carbon pipeline emissions times shared

our midstream we clearly So to, is access a our - of the that an and area we have can wellsites given make number where this and wellsite we and the feel solutions, help production customers presence the difference. a of

have the from a Aviation. wellsite. you be know, production we able everything to airborne you have all at installations, with well tell we So opportunity as solution, to with based, the are to mid I as Aviation, the monitoring the Scientific across Aviation clear, excited we they independence, work acquire have especially they drone the to And know, tier advantage have early the continuous will that a that suite area. Scientific as And of largest solutions. with well full large Scientific the that in as mover from see could the done, board,

about So that. we excited pretty are

view, the from grow and seeing that our You to And customers from really about to market on really, this solution. that requests fast area. know, - it's wanting know in the are going our is the going more just to we

a the may production perspective, $X,XXX you you the it, to site, uptake analyze market, the addition the that, when equipment. require solutions. know, related you to quantifying an And to of and with $X,XXX, say, going the have ongoing see are let's wellsite in worth between think pleased market, and, interest about business very been adoption you typical just in the monitoring stream the area, analytics - to you the of and have from on know, We revenue

wellsites So, if even type of this million emitting in if are getting the there, of about you because same think not US have the way. when you conservatively, you place, wellsites all know, wellsites in in about, think conservatively, XX% the equipment even alone, you

XXX,XXX on can in billion, be term. You plus market, know, can near billion $XXX at a be wellsites, million low the to dollars anywhere the end, between,

And things this we a so where area will that is clearly see really fast. grow

So, obviously, are you acquisition. we know, one into month the

pleased by are We this.

how can how So, – hopefully that the idea the you know, an growth gives the market, size and growth of you happen. can of, the

Scott Gruber

And It's does. appreciate It Yes. I certainly that. exciting.

side, Given routed the of do to the more buy point you capture like the out capture to this and in need opportunity? front at either on really you? feel or to and acquisition is go you internal capabilities opportunity the still to your technology some portfolio Digital the out own Or do develop

Soma Somasundaram

Yes. Scott. Great question,

with We already time. are to there to think so we make solutions. our of from because service out of addition full an you I know, field the can good it have a a think have a offerings that But we've we period we very and be, given initial a suite one of of the sure will of service will build other network. start technology offerings, two production have are And capability, that additional some but great organically, around I I might initial service standpoint, would - but we require, that say, wellsite continuously solution, what over or do. may know, And with which covering we do looking you we

Scott Gruber

Thank Got it. [indiscernible] Soma. you.

Soma Somasundaram

Scott. Thanks,

Operator

Mr. back. O'Leary And you. Thank

take O'Leary. Please his ahead. ahead Mr. and go go Let's question.

George O'Leary

question. about about cut ask as out, internet guys. My right, was the that, to Sorry I

color commentary if business. by the wonder I The moving of pieces you was could on strong. very some is that, kind geographic guidance incremental QX underneath helpful. Just provide

How that think But you Technologies. Production and out? about Chemicals? on touched plays PAT Drilling do You what

Soma Somasundaram

Yes. we increases. businesses are aspects are inflationary extremely - and top George, the in we momentum executing I well, price pleased think our the line top because thank teams same with and know, the we I mentioned, time, associated the they as to the you our want growth, line at navigating,

side, look activity. you the given segments momentum when show as board, all the at short QX, So across starting we American well our the cycle expect both international the in to of grow North to as

So we going Chemicals is international expect recovery. benefit of grow. to from their Production all continued them to

about So we feel really good that.

to should segments you expect show of our think I So, all growth.

on Now, great I this. teams mentioned, navigating side, material the raw our doing job are as

to are price that we the making associated pressure continuing say focused the stay have so sure And will manage But we inflationary on also that, we and I levers. multiple increases.

productivity In our addition to that we on, delivery. are working everything from effort, price increase, synergy includes

growth, is, margin the should some the think can have as increase, of confident point, levers. is of our we well the end acceleration about towards price starts And scenarios multiple in was I top line done see. the the step And top of delivery you feel you given excited that, inflation based So margin the see year, you as in the it as year, - you inflation a next are thing business, at know, when beginning we we growth. really up expectations, whether on our given other the easing, about line our know, other

we So, margin while to are the there, raw got navigate that inflations and multiple improvement. second deliver levers half that on near term material

that. about good really feel we So

George O'Leary

commercialized remind July, the up of in chemical Thank the, it merger rolling of what strategic kind how Can Very is smart people the attack that the line And for that that that'll market And us, and interested are offering time the and differentiated? be pretty much. opportunity something subtle skid frequently a that the kind brought was of in. and then helpful. and its plan out? the all of in was so solution, [ph] you just presentation, around you clearly then

Soma Somasundaram

absolutely. Yes,

know, know, of our injected at well idea optimization, sure still around the chemicals. know, as significant smart as the optimization, of type And you also well think a you to injection chemicals of the ESG the make second the last both are the for associated doing mile to know, injection implications aspect skid you we a that the perspective and on it. that is customers, chemical think, expenses, injection you right as from this inject I impact a time. smart it's right sure make And [ph] operating are when the demand, and quantities the chemical right has their three using go common the practice skid of and trucks of with is that, you

skid injection avoid going which will those through. and can if and, all eliminating the of be safety trucks So, need the environmental on type we focused these implications, has, plants, treatment for again, smart the

the So we forth. for injection have customers on, chemical eliminating treatment treatment these now, - you plant and of are who right these objective so piloting with skids plant, know, need so

a no our the know, as there the as access that electric market, including solar from everything the will combining digital, with packs, power so pump software, hardware associated expertise, power So has injection is the optimize. typical will mechanical all fittings and to available pack, the which domain chemistry, controller if skid, with required, a with to as well smart that a control embedded skid and intelligence which given power our tanks, as complete well given you include to and have our the

the pleased skids, the progressing. of pack whole the it that's with and very we way are So is

mentioned again, digital I of growth. So the this products, a as my pipeline comments, in they the should deliver healthy should prepared

George O'Leary

guys. Soma. Thank Thanks, you,

Soma Somasundaram

Thank Thank you. you. Operator

next question Anderson Barclays. Our comes from David from

David Anderson

Soma. morning, Good Hi,

you artificial to is about Just of decade the think had bigger Ecolab to has had couple kind a kind are that know talk XX% internationally. XX% of over could geez, you wondering you lift I right, sort in the we've contracts you this comment the months, the kind - on. your maybe and contract heard international artificial smaller about that I I think end there been one if I from footprint ideas over had a where of of wqas behind companies. market countries I you of service the East made Middle there, a share about what there. ton of some one in of of the of leverage by seen last that of ChampionX today? going I are But you process back if talking think penetration, you the you out to six of were working kind

So those not really how see to And to good you of strategy, that take contracts you that saw also out kind what kind that you of that on the I'd the love just going. kind kind be, of maybe your take a of kind pricing your get comment or of sort Is to on where was on of of where wanted there. ended as like, don't up. because I have those just sense pricing,

Soma Somasundaram

Dave. morning, Good Yes.

clarify, know, have internationally, So and we already Argentina in particularly just presence you areas like and to Australia, artificial Colombia. and Oman, and some as

the the $X.X specific size, for is seven billion to framing incremental seven countries, around initial commentary So the the the focus of market countries.

products incremental limited So have lift presence have no where really or either our footprint, chemical good where in artificial these seven the a countries technologies in our market.

position $X.X represent XX% market countries. countries the countries in artificial will in think a get market And we in framing seven to So share. a these as that is, be seven the XX%, these about to we to seven billion lift,

So framing. the that's

progress really So good on we it. are making

customers, job, But because of which teams see forth, not when a you time driven business qualify international make I grew slowness lift joint and were cases, ability customer. and in even and to As getting we are know, pretty at the our of to because and how is look much right? before, what able the you they in can remotely, for call so the artificial a on would some during approve, of PAT that, internationally. to the pandemic and you by largely there being our results said that, visits is bit really it, working through so doing nice And

winning for So these But want countries. we seven reasons, competitive because unless understand seven you are those contracts. to not I talk a talk about to the we I lift. we are countries. say are seven position pleased again, And artificial would our countries, these can in that which on with seeing have But that focused of that the growth are Dave what are in are seeing business in evidence you is we international and we about

David Anderson

So that it challenges kind Is what are order of how Kind approvals, that to the some you kind have think sort hurdles what is you're there, it are to the some footprint? brand when get get targeting of get just past? of there. to to getting market share that of it of recognition? about in of the country Is you'd

Soma Somasundaram

service and lift, whether Chemical aspect capability Yes, brand helped. Technologies recognition you brands standpoint, since From is Harbison-Fischer, we And the the great ground. I where in existing gold question. they a know, the us confident Dave, for of key standard you that or that's Lift, that have some capability you know is, comfortable we know, there that, The the that making footprint is local a enough sure issue. on as feel – have fortunately, artificial think like it's service Norris not on ground, so the that can customers Oil an

there accelerates is add incremental, have local capabilities place. So a things artificial ability in existing service to we can since support structure business - in to legal there - is place, do in like, place, including it lift footprint ability quickly, is it an there our we HR already is entity

areas, will moving in I And reopens building will more more market service have that that And I the the think just think that's business locally, So moving and - the you're as accelerate. you think Technologies Chemical I see our much you quickly. making up this capabilities key. the business you locally these and locally, to support is and this is where able capability capability do have sure

David Anderson

have that countries seven of And had those you you already mentioned, kind infrastructure just on correct? ground, a the already presence you there,

Soma Somasundaram

immediately with that's they market we our can lines countries business footprint exactly those our Technologies have Chemical participate. chose That's lift And And right. have already particularly - good artificial why place. because that product in

David Anderson

Okay. Soma. you, Thank

Soma Somasundaram

Dave. Thanks,

Operator

Thank you.

question of America. Mulvehill from next Chase from Our comes Bank

Chase Mulvehill

everybody of think on larger it morning. share on there's with couple market questions a of bit side a side. i little cap guys I to Chemical good of Chemical there kind all some trying Hey, of forces out international, the the international. some the competitive knows that on start take guess for

in if maybe of maybe announced the just know today, about large also some to of recently it of of But one on of seeing price. Oman. push a you've largest you sounds able diversified some know, tenders then, tenders? what kind competitive large talk service that tender market that you're how the like pricing you out it talk companies the about kind Obviously can in been So there I award is? the you're in seeing the

So update you're an the what on give dynamics? seeing of kind the side, competitive from international Chemical there. just And us

Soma Somasundaram

Yes. Chase.

I that, fact, spent say those very in countries. with maintain yesterday and continuing teams, our would in our and pleased they position are, leadership with sales to I'm how In focused I international

perspective, are international from recovery the with we we So seeing. you know, pleased are

So, in in in revenues saw than PCT North which, clearly, fact, sequential our the revenues grew in American business. we business, our our the PCT revenues, growth international international faster

through. our on our momentum see are we value to proposition are making very and customers sure our with that we on customers. starting to good Competitively, know, you it's executing come So focused that

companies, the we one So service announcement of it. of by are recent made the aware

incumbent not that We that in account. in are

as you as on share execute So, as well. we are to share defending our well, are very gains well, we know, know, you continuing incremental

are our you executing. pleased outperforming Technologies it's growth, I So think with how look I Chemical we at Production, And our know, own say are would market. the I teams I that think I'm, when

Chase Mulvehill

Soma. the perfect. Really, Appreciate color,

the a international follow up quick As sticking theme. on is

line the know, companies. figured confidence kind bit the production definitely companies diversified totally increase And a diversified you that of of is services of some next of - related drilling different some your that of year Some digits have confidence comes that some kind I other would basis. back on a services of little OPEC have production top is is and that some double realized than have they completion online. you percentage next the outperform But kind portfolio year noted more I would larger related can the know, service

increase your of kind you are on basis? look top double-digit I trying to So guess, a can percentages international maybe year-over-year to how XXXX, out line comfortable that

Soma Somasundaram

at, go starting Yes, said on when at constructive, around growth obviously, then OPEC going there, will much look recently suppliers, our I So, environment, think opportunities when own guidance that, we and efforts are are macro and But say not you into provide the as from we to I'm international internal to are look they momentum the we see. – you we the announcements And more market this. Chase, I know, know, know, about PAT XXXX the XXXX. that, I feeling that talked having you you

outperforming very feel in I the market the international growth. good So about

synergy market leveraging think I revenue also positioned global expand addition momentum, our ChampionX, and well sales outside, ability are incremental to and in the opportunities we to So given unique we footprint. to have the the

we market. feel outperform that I the really good can So

Chase Mulvehill

All I'll Good over. hear. turn right. Soma. to Thanks, it back

Soma Somasundaram

Thanks, Chase.

Operator

Thank you.

next Bianchi Our Marc comes question Cowen. from from

Marc Bianchi

in margins would Hi, higher have the thank the you. correctly, for If and the here for company year the the well PCT year-over-year quarter. whole message I'm exit, as fourth as interpreting

is, raw increases, up it's get to the it what know, to would quarter, have in then on Correct be So going we of that quite PCT to kind Whether like if implemented, And price the wrong. here the so sometime the bit among case, XXXX? assume look assuming highest third of fourth margin you that follow the me no segment? the make change need progress a just incrementals or for quarter that that's that's as in materials, four. fully you to I the if is

Soma Somasundaram

think, Marc, rates. exit with PCT We whole rate QX, - I a year last the year question. higher company your and margin me do with exit than last Yes, I expect let to mean, first start

in in have you're a your will very assumption PCT third quarter. the healthy incremental that right So

help - us as And costs inflation of think eases, already hold, productivity, the also price I we also cost, our so XXXX. more improvement right, mentioned, mentioned, pre-pandemic segment, is in Marc productivity, volume including What and as, past PAT as margin the expansion you are - really price if look know, the implementing. the at its margin get expansion. margin take XXXX levers, good the increases And, about delivery, price you I we that given levels, that feel the and other and synergy I'm growth as to the I continued the that as well, our the pleased the will continues as

that execute So, in that expansion really I margin XXXX well expansion, XXXX, we we healthy can positioned a are on well. think margin as

last very that. - So, on we the whole for be our see think focused exit rate are I and much PCT, to And you company, should year. better both this year, than in the

Marc Bianchi

Thank great. Okay, you.

evolution be you raw ease. the raw going mentioned if screen in I'm expectation some to try and that materials and up us gives some to pull easing going on to what of 'XX, confidence think on that watching, terms remind you there's there? just materials, discussion, that be something you into earlier I should to I Can Following what my

Soma Somasundaram

Yes.

I Chemical let propylene, but in particularly, to top very obviously, dive we three. three bar left, for in special me our the we raw lines, is monitor XX into think, track are let and raw top rods. Technologies the the quality the the ethylene, materials mentioned particularly you I which product three, Marc in, and share artificial particularly addition closely And the used steel, us, me with methanol, are steel like in that, as top that, our – materials,

monitor other elements The right. [ph] freight we also is

the lot that on looking monitor us of, we these back forward question those some you in Obviously, at the the plants. bring the how by in Gulf them, full and taken get time to trying get a that quarter, in Coast, all those we those fourth capacity to and quarter. are operate So know, the you most closely. the some should if very, gives storm we look tightness market, now the types things indices, back very plants, But could going of are the what know, drove of winter there if not be of plants offline, first to feel you forecasts operate also, of depend easing. We to things of forecast. To the confidence of the they and - were will

the are there terms some that So factors be of those ease of more confidence giving us the, inflation. in are could

Now, for also margin are that, we reason that not on clear let be me our expansion. be to depending

mentioned expansion. we margin for working I levers are on before, As multiple

are And, of as of always believe, we we you end we I could year. control some that's at think ChampionX, Technologies, really helps believe we material the have what in we always what get doing. there we the particularly well, Chemical raw easing with to we can that why pressure, to are So, hopefully our But and execute. control be feel on

Marc Bianchi

helpful. very much. very Thank Yes. Its you

Soma Somasundaram

Marc. Thanks,

Operator

you. Thank

next question [indiscernible] comes from Our

Unidentified Analyst

Hey, taking and you good thank for morning, my questions.

think cash good on job you I obviously, Soma, working guys flow you profile, very very have a capital. good, guys free a strong done very have

International, about NIM think about, working DSOs international think think not should than revenues American so international from more that about sales? we think to As capital case. of do here need Typically, that's on, how improving maybe North on But been I the to has more [ph]. we we

So if on you just that. could help

Soma Somasundaram

have we that, morning, are question particularly we free are Good Yes. profile built our the way. with Vaishnav. that on is very here. the Thanks for Look, and profile portfolio focused of our and pleased flow we cash

Depending which quarter, quarter from growth quarter, with will feel good free conversion have be EBITDA, shared the on some You to and to depending XX% going on XX% about the variation. always cash always the you. be know, from some to variation, we, we there we there's profile, flow

that's at So, working it is, for over Ken? turn XX% then let I to you the detail the capital. good would to know, some say that Ken a year, on additional specifically number. to address And you should me the XX% look

Ken Fisher

were EBITDA. Soma. to cash XX% free confident on of the Thanks, We XX% very flow from conversion guidance the

working as that we For we account took capital gave the year, guidance. into

But side, have you'll hard the similar need making have for work margin sure the some pull. more see, on we So to we you'll other as on levers grows, that you know, business working capital.

So interface continuing - automation side to continue will digitalization help us the then well. and DSO with work – side, as on of BPO the work help our the customers of to the

for the cash to business, which in capital look overall, support from will continued that XX% working I flow free XX% rate. the EBITDA So improvement conversion of performance

Unidentified Analyst

ways. maybe And have to I think we That's tried helpful. different ask

So I'll more one maybe it on try just time PCD.

mid we single is it revenue about did, guidance overall digits on But revenue growth. call growth. so like PCT And X%

bps a fair way be a is least XQ growth margin thinking like half think to if I improvement one thinking should So accelerate - Is XXX at need monkey see to just improvement, and bps margins, XQ, in math, Would that if, And from doing get my should how we that least, in maybe about the of maybe another XXX about well, fair? maybe just like if couple XQ, at progresses? into of second XQ. get XQ. rate we

Ken Fisher

improvement quarter margin should mean, in the see step up you a quarter Yes, to think in I in from margin PCT I the from fourth PCT. quarter a margin, look, second quarter and third third quarter to nice fourth then further

some XX, So coming QX. from the to look QX at you you QX know, you midpoint. at ways, up at rightly step in company half right, the Because QX, for ChampionX, will in pointed know, out, and it, frequently be both the from the is at you know, to our second we margin QX

So through good last way We a really rate a exiting good be PCT. are that's coming of in the already, you a there's know, step year's, think up it. And about right? at to to going

Unidentified Analyst

thanks for my question. All taking right,

Ken Fisher

Yes.

Operator

Thank show this moment, questions. other you. we At no

Byron Pope

in day. a So you, ChampionX. talking you Thank thanks, earnings again look everyone and for we And our to to have QX forward your interest continued in call. great

Operator

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

You may now disconnect.

ChampionX (CHX) 29 Jul 212021 Q2 Earnings call transcript