CHX - Earnings call transcript Q4 2021

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Operator

Welcome to the ChampionX Fourth Quarter and Full Year 2021 Earnings Call. My name is Annette and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note this conference is being recorded. the Investor to Relations. turn President, Pope, now and 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 for During fourth the our company’s discuss results call before some turning and first back some highlights. today’s share of Soma will summary Ken thoughts. call, then outlook to Soma XXXX our quarter XXXX

the open will for We call Q&A. then

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

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

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

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

Soma Somasundaram

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

safety communities of remains our priority. and the and of Against the to turning ChampionX. for to customers global Before full the of our XXXX, their important our in our business most calendar ongoing pandemic, first our express our first employees all serving as and results, sincere gratitude which me backdrop employees health my year let focus marked dedication during

in let global deliver our tirelessly our material that me a product worked turn unlock fourth needs our that, delivered for chemical quarter to Amid improvement a COVID-XX driven healthy solid logistics by results, and have economy raw sustainably businesses. availability productivity ChampionX. continued energy customers we and and With year teams margin driven to inflation, Our performance. help challenges the strong headwinds, our technologies

and pricing the XXX on at higher sequential last achieve execution initiatives exiting points XX expansion than EBITDA basis productivity year. us year helped points Our basis margin

We also the of progress we flow full to merger cost targeted deliver further synergies in are our We cash another generation. made quarter well closing. and XX free $XXX within of cost strong of months positioned delivered the million synergies

the capital of between the our and to and X and synergy in times addition, of efforts wins net revenue our steadfast disciplined from synergy paying time transformational achieved debt XXXX million through year, to approach to this XXXX of Apergy revenue enabled nearly We XX we we legacy target fourth ratio us In efforts, to been the are of Apergy Corporation completion which this of during From the the reach new coming our quarter. in due years. to consistent years the grow merger fourth June in ChampionX spin-off expect off. to in ago quarter customer leverage four have Dover allocation, EBITDA of

by organic deliver further cycle to now as also maintains which our begin which opportunities and to shareholders pay is regular commitment pleased flexibility believe a in We the on well the dividend, down through to capital we are invest our sustainable to as M&A attractive initiating returning quarterly and debt.

slide we the and company, communities. improving which Star North on X, lives with employees, purpose-driven always number As our of shareholders customers, our is a organizational start

priority, celebrate entrepreneurs, which transition product which the Greentown the This tech the As regularly energy at employees largest together engage event of help a sustained of in America's live will how you example our business the diverse Labs, an policymakers ALLY transition. thoughtfully on on you with work, Houston a capital incubator. we workforce, to transition. communities long-term are way brought pave ChampionX we and progress me growth portfolio our energy will sponsor quick and allocating partnered our to our strategic give X, North I my energy example first toward the in evolve to leaders climate recently five update for that in in perspectives but Energy how Later is comments, in two-day the slide energy let for

maximize through to committed producing of their gas fully technology decarbonize enabling operations are customers We customers while impactful and assets. our to oil the also solutions, helping value

acquisition of of results meaningful solution results savings treatment, down approximately and shortly. fewer Tomson’s traditional technologies to customers Ken effective and quarter treatments thus efficiency transportation, footprint and needed and nano our fourth technology financial our footprint. treatment. times scale pumps to cost cost reduce scale X reducing significantly are you through This as that carbon substrate up increases a our recent time the in more our take Tomson tanks life suite Our rentals. innovative annual their carbon related for of Technologies help versus adds and customers will rig resulting

So comment. high few let just share me level a

in business leading energy growth line in top and delivered last equipment XXXX. This portfolio within our global recovery business. services organic momentum the opportunities that industry As demand cyclical growth illustrates gained for year, attractive our

particularly teams constrained overall X% fourth solid deliver improvement. the offset margin international our relatively our delivered in on and which the quarter, quarter, our during technologies productivity the supply revenue executed America, growth to chain bottlenecks, by well initiatives we flat a sales fourth pricing business. in In period, was chemical While North in sequentially

Our digital sequentially quarter. fourth grew business X% in

healthy revenues to technologies, and three adopt our quarters. continue In to less quarter. We coming XX% of our drilling drilling the business drive new in new the coming years approximately technologies, third resulting product expect technologies that for customers products pipeline of the were launches further old consecutive growth in from our than digital

our have businesses. to work price impact that to in portfolio labor Our realizations inflation increase offset experienced the material, of continued deliver logistics-related to teams diligently raw and we

margin We XXXX. to expect this our drive continued efforts expansion in

ChampionX prioritizing quality momentum beyond, of continue strong and gains on to flow margin chess delivering industry growth, profitable growth. As focused is XXXX remain free in growth earnings, and over We delivering volume. upcycle cash well-positioned the energy further

While constrain half and we year. bottom deliver availability XXXX, first confident and growth of somewhat meaningful global we margin bottlenecks supply positive we are topline expect with to growth for full line will chain material that in raw the expansion the

XX%. fourth results expect XXXX and low We over we rate through would point and the EBITDA the our progressive margin be at our to call like first quarter year our to to QX to improvement quarter margin performance turn of in the now discuss existing expect I the outlook. Ken

Ken Fisher

Good joining be will for adjusted commenting We best us. Today sequential morning, believe continuing comparisons. business Thank metric EBITDA you the thank performance you so operations. I of reflects on much. for and this

X reflects continuing the slide on As best business of seen operations. performance metric

of As growth fourth solid seen America in and experience and X, in by North a Ecolab. to we internationally, sequential material revenue Included logistics offset on cross of were constrained X% XXXX sales million was quarter challenges. revenues a our $XXX slide Geographically, were chain decline where supply revenue sequentially. by up million, million X%, availability $XX $X sales quarterly

revenue with Ecolab with sales. to previously do As supply recognize not the allocated associated to on sales to And agreements. these financial supply these statements, We cross Ecolab margin post-merger are sales and associated related other. is our EBITDA within communicated, corporate

for anniversary continue date. quarter mid-XXXX, million the $XX million quarter income quarter a third fourth of the versus $XX the through to declining sales Ecolab these at in the closing year. merger Net expect third was the in We of rate

in gain, Texas, portfolio-related facility. net income included our driven of Absent chemicals to our sequentially, segments. a gain this price realization PAT Corsicana, quarter increases Third chemical on primarily and by the selling sale increased of

and above the representing inflation continued margin increase million X% and generated was As seen slide rate. logistics XQ’s fourth a impact quarter, quarter, from primarily XX basis with with consolidated million increase. adjusted of basis XXXX activities of flow, $XX adjusted This flow margin we XX% strong delivered which on consistent EBITDA our help of our the sequentially of the the headwinds. consolidated free driven XXXX offset cash XXX product million selling our material XX.X%, delivered of X, up increases we EBITDA by delivery and raw aforementioned EBITDA. in and In points In of sequential exit guidance. $XX quarter points was favorable ChampionX outcome mix, price This and cash $XXX at operating availability the cost adjusted up

cash the Both full EBITDA. delivered flow, of we cash year, quarter the EBITDA year free to range. adjusted were million guidance For full flow also $XXX XX% free XX% full year to the XX% within the and of

million During the fourth times, And we we invested XX-month trailing milestone. our EBITDA very in to post-merger ratio debt expenditures. the target significant quarter, in $XX also fourth X reached capital of the a net quarter,

the in investment forward XXXX, X.X% in fund revenues. of capital we of to expect range Moving annualized

increase of business experience inflation. adjusted bottlenecks, $XXX constrained fourth Turning North X%, a despite the higher Chemical of North increased material declined basis was the raw growth driven period. from third supply Technologies Production The in sales by offset generated revenue million, Geographically, X% business the volumes up segments. our partially sequential in chain by was during which the strong international American to our very while Segment revenue primarily X% America up the improved XX.X%, sequentially. increase XXX point quarter. continued $XX quarter XX% third pricing, international over EBITDA was revenue customer EBITDA margin adjusted Segment sequentially. million Profitability strong on quarter.

of impact Digital technologies, quarter healthy XQ pricing In the sequentially normal the seasonality seasonality our & holidays. year-end are experience normal million, will $XXX sequentially segment margin revenues realized, revenue passed of XX% Production related annually the the to actions was to X% year-over-year. improvement more sequential and increased As Automation we due in XQ and rate X% we throughout XXXX. in as declining

raw the down EBITDA fit-for-purpose The double-digit on inflation place of million, XX.X%, adjusted from segment customers drive approach quarter points the material cost was $XX digital basis increasing versus EBITDA increased focus quarter, We third down on technologies efficiencies. leveraging during was logistics to growth our modular continue cost PAT XXXX expect fourth margin pressures XX to sequentially. improve strong adoption as period. primarily experienced and X% in structures an ever and revenue

sequential driven segment the the XX-plus We expect and growth to as in delivered Technology customer the by during challenges. percent mix and grow this half during increase primarily in America down to international a labor of of EBITDA volumes. realize revenue demand in X% profile volumes business, we result $X million the customers Technologies increases margin $XX quarter, the by offset was return COVID serve Drilling as segment fourth adjusted full to up million quarter, million impact in fourth decline a price related of sequentially XXXX. to we experience a of temporary North $XX Drilling product as cost in first sequentially

million, $XX a sequential drilling improvement Technologies technologies increase US by improvement, revenue in expect and see the improvement fourth $X activity. sequentially driven quarter was EBITDA by to driven We X% Chemical international completion million, margin a the was Reservoir which well quarter. primarily Segment for quarter was million and higher our volumes adjusted higher continued first in initiatives. fourth $X the

merger the maximizing to Turning to make excellent we synergies. of on slide progress X continue presentation,

the enabling closing Our of run and joint strong strong expect a synergies, benefits functional to date. synergy cost operational efforts production and fully We is internationally. as seeing the in within annual our revenue quarter rate. $XXX We exited well of $XXX million months as synergies continue oriented synergies. achieve at momentum and US we merger in both million focus capturing us sales annualized are to fourth cost revenue XX integration On improvements targeted our

total. of our times outstanding includes our and will We EBITDA, X.X revolver cash September financial the of down debt, This ratio XX-month approximately net date times million debt third XXXX year-end and reached capacity. debt net repaid to at XX our of compared position. $XXX merger approximately progress balance the pro quarter on fourth million $XX $XXX million We of total paid details At $XXX We December one this and forma of to our hand leverage adjusted target obligations, with X.X the sheet our XXXX. front. ended of XX and XX, trailing of on the on at since time. which and then X million Slide during available liquidity, update continue

consistently quarterly allocation, since Turning and to flow a the capital to free repay to merger to to debt slide initiate shareholder a now our cash via dividend. shareholders company positioned return capital XX returns, cash disciplined approach the has deploying

our reached delivering ratio. our to on are previous target we shareholder commitment message begin We as leverage net returns

will the this cycle $X.XX We dividend energy, a are to $XX as through attractive to level of to initiating opportunities With technologies in dividend capital the our transition. we in capacity service view industry million year the growth per current the share support and margin sustainable to common of while based continues initiatives share energy continue the this high and regular M&A its reinvesting This organic approximately We reduce our per and companies leverage stock. on quarterly growth pursue sector. level, maintain competitive to dividend count. equates as for equipment

we our strong and capital liquidity Additionally, flow operating laser remain maintaining focused working position. management our and cash free on and financial delivery,

Slide a we year XXXX XX forward and margin outlook, be and our to revenue sequentially Turning of expect solid improving to growth rate.

seasonal revenue of The a chain of challenges. positive this approximately offset America, company exit our continued $XXX XQ as up in expect up quarter, our XXXX revenue XXX and of Ecolab At in is the including We from XX% quarter sequential up in we exit delayed change by in primarily the basis expect range chemical our result million year-over-year. order in Specific we revenue, a the driven automation catch activity the In rate. $XXX to the drilling-oriented points volumes, XX% to midpoint, one growth to year businesses. on million. revenue margin the expect traditional declines range, in first sales is momentum by North supply

actions, healthily price selling EBITDA is stated, synergy throughout initiatives and and As cost materials where coupled we the inflation, our margin raw productivity up catching improve ongoing to adjusted our year. expect with with

In a quarter, the we revenue improvement million. and first quarter, year-over-year midpoint, margin growth. TCT by slide million expect we continued approximately to is $XXX the range trend this the BCD. for EBITDA will their revenue prices. quarter offset the XX% seasonality that we in historic exhibit in expect $XXX XX, slide selling this partially For At have provided Please in trend, historical note appendix the one of

growth productivity and will We expect continued improved on pricing improvement. activity realize sequential revenue resume US strong and PAT

slide. We strong cash related XX% to some year our remain years, the performance We generate a provided the EBITDA with XX% will with have consistent conversion specifics in free guidance also pleased that confident of additional first ratio full range are our quarter the flow prior to and we XXXX. on the cash for we flow,

be from And you. year to pressures bottlenecks. will compensation free First outflows low that the driven and flow the annual logistics working capital quarter we the cash by have continuing for below employer and contribution range, Soma. seen materials and back point Thank expected now

Soma Somasundaram

Ken. Thank you,

potential, would Before the long-term fall time, periodically to priorities completed. like which the to we slide stakeholders, update Better strategic was the growth. are from was months merger we call into your was which merger, our earnings we we with our Today, open alignment, on several on our today. soon are shared our Together turn XX At made making attention and on on I priorities have year. cultural transformational the I have XX Better questions, day the of for in to deck, of is which one, realized five you to me our stronger calls summarizes XXXX, after first let commitment even highlight done this evident the sustained portfolio the the and On Together you, progress that we progress evolve potential now

to in which Our the variants XXXX Despite by have sell our wins expand million person both customer the synergy to revenue pipeline each XX of COVID US customers, having teams continued here of been opportunities delivered extent other have joint and of production abroad. able driven in waves new has and limited to in teams efforts. our with engage oriented with

this – we cost to of we that because our within in to synergies run synergy, growing coming full at EBITDA of the on merger which material, of and were synergies realized continue things rate to Group But would evolving the committed making Technology $XXX offerings, you of growth, and able the new delivering companies, XXXX, a product We during we grow QLM we rate, XXXX focused in in $XX teams of about for investment technologies, It our laser production close. margin remain years part exited opportunities synergies $XXX headwinds, energy persisted On portfolio will two you Scientific an at expand the and [ph]. exited cost coming seen inflation is logistics at the excited XXXX drilling over million revenue run of and an and innovative we are visible years. million. reap is years. that Aviation, expect in what million annualized technologies and that to not pipeline disruptive the We and Tomson are sustained transition raw progress despite launching benefits in chemical is technologies, our throughout automation On and acquisition transition X energy year. and which have labor Technologies Technologies cost

of to detect enable in solutions lift cutters our to customers continuing reduce of solutions, of with artificial focus are improve and more friendly drilling help energy teams that the Our the diamond and chemical to environmentally reduce innovate areas operate customer’s primary productivity all their emissions, efficient footprint. that helping that efficiently, technology systems, carbon assets a digital

Regarding capital our will allocation, we discipline. maintain

in will are oriented continues further differentiated opportunities inorganic a down to energy our creation over We be debt evolve. is growth will sustain how ChampionX technology, value organic long generating a cash to technology use to Through and our pay In ability provider we term flow closing, our time. industry allocate global and strong we framework as free our dedication products full and remarkable for well-positioned delivering opportunity. our the capital And to employees our production years strong of use winner to I on attractive cycle to lives to and and both dividend to financial we With want around be world I and guide call to Again, continue all shareholders our communities. and generation, and that, not strong would your customers, to of ChampionX I for such lead free cash our focused extraordinary performance shareholders the an come. more thank flow our our open our in our purpose are improving team. could humbled XXXX the we to employees, of questions. inspired like for

Operator

Thank you.

our [Operator ahead, comes the Gruber. from session. please. now first So begin will Scott Go Instructions] We question-and-answer question

Scott Gruber

the the question. for you sounds for In exit color about my can It EBITDA, Drilling went segments taking Production in the just you think Chemicals back the margins, like provide to and a of target down Thanks color XX%? some XX% where get thinking to XX%? start the across segments just steps bounce in will emerging that year And Tech some the on the bit. to composition business

Soma Somasundaram

Yeah, sure, Scott.

the that in protecting that, believe remarks than Scott, we foremost, just to of to we solid emphasize my growth. expect our But of quality of because focus inflationary in as a XXXX, deliver on in will want margin we is be and margins growth, mentioned I segments be expect, environment more I also expansion. just first So our really year important. The really, fully is participate all prepared and volume the the it to

margin So because there our continue well. are things control within executing to expansion which margin we are will on prioritize expansion, control that we can in as

higher a our Technologies digits. given Technologies, margin cycle, our closer Drilling single terms in I you given given high drive you tends know, in when Drilling spending would a clearly Technologies aspects at side. of Technologies Production in to drilling percentage, the so will XXXX, percentages. as growth lead in to look normal lead we significant so say recovery expect clearly expected so that And So, Chemical Drilling clearly grow it the our revenue growth to incremental incremental expansion

be incrementals pricing on the we improvements And primarily to than driven the our will so chemical technologies, higher usual, but production by we which see. – expected

also should to to and & should short grow Automation Chemical in our nice should you the being in it you know expect Technologies So given our we see Followed the a being synergies, contribute US we nicely margin that business, expansion cycle XXXX. is our international business good Production Production market. revenue markets growth Technologies, by expect

be in incremental, So tends lift for we the normal expect artificial which to high-XXs business. a

our about So that's segments the margin how participate we and each how will in of it. expansion think

Scott Gruber

that the I color. that chemical an relative us you you've to all a pricing can appreciate today just And provide inflation lag. sits of there's in where seen, update obviously, terms

you So round you when probably fully you Is year. some to the, know, all those of XQ inflation know, segment start you the inflation year, saw the in pricing, know, another financials? be inflation coming to there more reflect and and reflected there's the offset last the price will increases will year-to-date then

Soma Somasundaram

and me a pricing and outside you oil team they know first in Yeah. all, know, Technologies the Chemical thank the this us raw know, laser struggling that and to in you companies inflationary let the Scott, chemicals terms performance, and specialty this opportunity when with availability, material executing of know, especially, the industry. of are And other chemical shows you know take chemical the you focused well-publicized that, see clearly you of, on pressures our companies on you differentiated and are that. topics also gas

So this. I'm on focused in very is our how executing team grateful

We will the have we have already including in price forth increases from which QX. executed, ones the put we –

to price exit increases. additional you the We will material see raw see know, are new starting we QX, you our inflationary pressures, barring cover any time that, should by

low have in to into should, in where you point the then I QX, QX margin and prepared the reflected, PCT so very increase. that start see remarks ChampionX margin progression, progression, you as as progression So the will the we will reflect should, should we get QX much be QX, margin that as that will continuing the expect QX, margin our seeing starting getting progression said

Operator

our Mulvehill of Go ahead, And is question Chase next of Bank America. from please.

Chase Mulvehill

free hit kind of lot on have I excess to cash. dividend going can initiated nice you're the here. we to dividend, the guess if really I see guess, of a

that of hit you've ratios that targeting. been leverage kind – You've your

have time, even we and and between M&A you're some allocate You debt over how buybacks? that maybe debt you this think but pay going year, that down down, how flow excess paying – mentioned more with to about the about should cash free

Soma Somasundaram

equipment in some and to that With firepower Above Chase, the confident M&A attractive A, opportunities to feel keep – B, that both to. we the we through paydown sustain level oilfield which side, and level capital respect to the growth share follow we will services dividend, repurchase, our market own we value really want research able of research we will pleased own the has dividend shown commitment our that can enhancing capital to the of We allocation. particularly at to on and are that cycle. the within it's in deploy dividend our shows part we our this the through not oilfield competitive debt we Yeah. we’re to to continue services dividend. is being the sector, are organically it's see institute as continued continue And have that provided, point. further

Chase Mulvehill

and two target PCT XX% of know the teens follow-up kind ask scenarios for don't and Okay. going I PCT I in was can those possible kind of play in a and prepared mean, on but year? it's if lot the a mention know this but we've there. term just the and – I think doing if revenues think remarks guess obviously, to kind OPEC PCT? you just could color year margin I'm PCT comment this frame – about revenue that of – it I better. heard I back appreciate you you target? coming talked out you of I to year the you don’t I And if up be would that things? And hit certain be do longer or outlook – would – and then, low the you But and international how got could this So for again, in that heard that

Ken Fisher

let on PCT. Chase, saying, are by me in Yeah margin focused very – we margin start expansion the that the

year be will exit EBITDA hitting margins. that not in our PCT of We this in XX% That's today. plan in terms margin not

in recovery of lot projections we growth scenario, historically and normal high-single to growth looking a history revenue the have cycles terms work and growth. have done shown of PCT at digits the the In type of a revenue closer

are that, high-single the digits is our So growth is volume prioritizing important. we expecting also that are high we because over And I important. revenue of expansion Chase, margin is to us up want that's we year the what And this thing for for pricing other growth. mention just do that believe realization type quality

just quality volume. we are So over over, prioritizing, of growth

all that, target digit more appropriate feel we the and high the business. of to – with is closer that, recovery normal for So PCT high-single

Chase Mulvehill

Okay. I'll Got it over. Thanks Soma. it. back color Appreciate the there. turn

Operator

Pickering Okay. question next the please. And Go Holt. Zurcher Taylor comes with from Tudor, ahead, and

Taylor Zurcher

Hey, taking allocation, on asked already a one, Ken, little I for my first Soma question. I deeper My answered on and thanks capital and M&A. wanted but bit just to dig

tuck-in a recently with least deals and and number done recently of one You've of I at traditional in sort type the oil bolt-on angle. gas space the ESG

just quite flexibility. or gas all at M&A bit forward, of should oil just largely a potential moving how relative opportunities looking type you thinking you've focus, allocation legacy sort about focus you be energy at that pretty So be we type, curious think versus forward but might might from a about should, look as how and deals we we the done, the moving transition small, do capital a have size over focused a, from and few just a last been of also them

Thank just of your might So we near-term horizon? come you. deals over some, see some the if curious, chunk

Soma Somasundaram

Taylor. Sure.

It of are first So growth over of ability there we part emission areas period. starts let the the as three at opportunities, to before, management. start we – the with type are longer have the of energy with one me transition sustain through the distinct said have, we as our looking terms time in longer

management a that in emissions deals today, this So it's there companies the you've because make seen be not nascent smaller to starting companies of deals, lot tends a area. because startup to in that emissions scale and we large have environment And side. very this is generally

we So looking those and continuously making at are evaluating acquisitions.

So ones. these smaller tends to be

We are digital also offerings. continue to want to expand our

also should looking reciprocating assets in as where enhancing to can digital such our oil to adjacent look and and industry. offering rotating in of our type industrial the help the at we where the be assets, engines used. you both similar markets, continue us gas technologies compressors are and So exist digital see customers at But opportunities and

we some adjacencies. at is industrial opportunities have well. element we then will So talked look the there And as about third

we So making at look deals. at that's area – look an will

consistent and make the that mentioned will are clearly, – opportunities But gas there the as in we But highly oil will to us those value before, are with that the for opportunities and – Now, evaluate bar higher synergistic those value framework. I high want enhancements. in sure evaluate we sector, lens. we to that they is us, because our creation with provides

size down some of the X type But with – even us years. also with conscious times debt. more we’re we does in we give that But want what deal opportunity of of chunkier want than pay clearly, are right arises last to flexibility I have deals, pleased couple we of a continue do the the terms we little it leverage. would the to done net where the to the if be to say In that, achieving the

Taylor Zurcher

Thanks for My – on that. Okay. follow-ups Very helpful. synergies. on revenue

but – America. over some of but largely weighted – the momentum some had You nice XXXX, towards North course

could a get have – on you should what into potential and you're relates it more relates the we you're activity here as us it side So hoping synergies as on into XXXX, potential revenue to in international international question seeing the as And XXXX. hearing synergies revenue my and for to you're international just backdrop. I’m is getting seeing constructive we frame what

Soma Somasundaram

Yeah, sure.

they’ve these work take that to COVID again this our the so given you synergies, First I've restrictions. know, let the been proud global way to together sales found executing of team. opportunity acknowledge ways revenue in me

I of $XX in had, $XX the we driven and $X So if for of the and couple as cycle be you at it you businesses a to US. reasons tend the that US, of from that of nature, of million mix. business nature. more of in are to for One cycle tends that long kind be what know, we international came US came the is short And wins look new delivered XXXX, there of mean, out the million outside it million from US

And Clearly, rates to and get know, able reason the related able in-person So the meetings, vaccination progressed as teams a access bit be one the together as with second as COVID. the you meet do or to that's in more reason. the well customers. to to higher US restrictions are XXXX is

the other So into that, well to in gives know execute you could on as ability that you in our at to it international are the encouragement, teams a which more opportunities enabled often as of execute, revenue the pace given me higher each able out know, our with lot teams of lot US. a that customers. we validates the so more our meet with as move where What US,

will opportunities this I execute think pipeline when on pipeline, more on and the it shows to coming synergy look revenue to synergy think the us revenue think years, synergies gives years, revenue grow. encouragement their ability I more the and coming And to confidence opportunities that, I this the will it continue internationally. at grow. I that Taylor, continue in

Operator

next Piper comes the question And Macpherson from Ian Go Sandler. please. ahead, with Okay.

Ian Macpherson

Good morning, everyone. Thanks.

Soma Somasundaram

Good morning, Ian.

Ian Macpherson

me speak see case XX% given growth be you it of strike that Soma, this doubt for maybe PAT still line But I not to PAT, the, elasticity business, line as quite but in yeah, part we'll the could top think would the would that's to crude. that here front the be XX, as roughly technologies, year. not surge area lower of don't of higher would, care to I if as still can it, the in business, the top underappreciated know as dominant oil demand I the I melt think you much and the prices kind of month that size especially but it with that's drilling used of up an strip, now, there's only, PAT it much to

your the given I So to booking business know, for this your higher deck? line that maybe higher, for you the top price year, oil wanted expectations get

Soma Somasundaram

big the America. first it's Ian, are that PAT is correct business you Yeah, of are, in in know, in range part plus the of all, XX% North you the today, America, you North the

know, close business to short cycle look this business. you last it XXXX, so at is You if and XX%, year, a grew right,

activity business Right. this that the grows. well that to know will extremely we when So respond

much you going to So the activity. in be growth is how there know, is, question the

ability grows. that extremely as demonstrated feel the that grow comfortable to with this question, your and this we team will So grow, activity have answer to activity business with, nicely

to So or that at will short is is being that hard how really it's play if nature for conservative whether with us a growth grow this increases, year activity the XX% is forecast of we whether that. cycle XX% full business what are looking or business XX% and increases dramatically spending this absolutely, But this out. can

for it's XXXX feel like business kind we this today growth appropriate think mid-teens. of So to about

Ian Macpherson

right. helpful questions Thanks. My a initiation. conservative color the Okay. and Thanks, I I with conservative, all the and helpful. today with, appreciate were seemingly That's All appreciate dividend answered bent. and other

Operator

And Mann Sachs. with is Goldman [ph] from Go next ahead, question please. Neil

Unidentified Analyst

and sheet’s on thanks returns capital I in leverage to for your your good Soma, insights its shape, way back today. here EBITDA. get morning, below the very levels Good want all clearly to point, balance guess times the X

you're dividend You've sounds tuck-in and but some like M&A, it's it initiated do nature. to a here in going more

the going it So cash like sheet sounds given balance still have left you're where over. to is,

sustains? I'm actually repurchase so be M&A in cash? figure that excess share trying the constructive of cash do that – dividend growth? do if unit to Is to value do with going what excess the Or introducing to is beyond think you there's you incremental the deployed a environment And out program

Soma Somasundaram

Sure, Neil.

industry, our think sustain deploy paying further firepower growth more. the once organic that in respect enhancing. share our mentioned down of say, the debt. pay down continue because pay I our and – cash, the which opportunities, what it to on then I so I value that dividend do is would we’ll allocation the – pay M&A priorities, have I on think that think services, down to with in I I that's not excess analysis what will further before – I think, mix in I enhance continue like capital With the to I've repurchases That’s And cyclical our capital opportunities, debt we – before, further been mentioned down think we with do as – say would oilfield – like shows Neil. pay further down what nature would own debt, to we we given that of the

Unidentified Analyst

we Thanks, And conversations you seeing international some growth thoughts markets. into path the that some there listed, customer in latest we catch As the XXXX. lighter up US? just you're on but outside follow-up was expected, little a saw, the thinking having Soma. we your the could Take is than of us with were of be having are here potential bit what crude XQ

Soma Somasundaram

Yeah. Absolutely, Neil.

talked I think particularly like, supply XXXX so couple these are propylene, are where, materials about we quick primary example, next the starting raw of positive – materials we to in that business and growth in of methanol, give in particularly what Like prepared examples type our raw things are by raw things chemicals growth, about, but you before of in type like the we the To the of constrained of material we the said set know we for are the the bottlenecks. phosphorus. continued you first to the half international remarks linked improve, year a raw there about is very – in near-term availability chain XXXX. availability, are when that see, right, in material issues ethylene, you is of think materials – more

is detergents. the in skin into and gets various important raw But other emulsifiers that material that surfactants, compound phosphorus but corrosion industries, the formulations, inhibitors yellow is multiple on it so and material, it yellow is and phosphorus example, not spend, so important an including a goes products, For an highest in raw care while used also is forth. including

gone material and this and on the and products in restrictions and curtailments global significant there have is of China, been the So demand, supply type raw so a of supply, energy these lot is China, you up whether it of source has significantly know, forth. the for so

So right, particularly be this availability, I skin multiple similar the and that's an mean, in and mono a is example of gets know, global care in so used ethanol, industries another and again forth. material will on one that so demand, material raw you products

and is demand not Singapore material. example, near-term, a in are we that for material constraint as of QX, In the constraints times think so Africa, Selling the taking bottlenecks, some much the seeing is of much the transportation, lead it's these the for is, I in between what raw and for longer the as So availability our logistics extended. time

picked product when our some there. up to, be, to from up like get thing, get So facilities you or where at on to we Algeria get finished – Same and couldn't our couldn't pick in look areas customers the get of Libya, customers time. they

we we in bottlenecks in in But supply and really So near-term availability chain side, ease demand supply part the nicely and is and We kind growth look of half. the these chain expect raw see to international it's part growing do really, availability what first more at the the – we constraining material the it in a look, of growth. the raw material international what the market. when strong pretty

of signs it. seeing are We

it ease. So will see we will

still Hope So growth really gives that result some in will Neil. we a that's solid feel, why, XXXX. we color in

Unidentified Analyst

A Soma. good lot of color. Thank you,

Operator

ahead. comes question next go from Please Vaishnav Palmer. Mr. & And from Okay. Coker

Vaibhav Vaishnav

about can can EBITDA could be, consumption missed, speak that Are I XX% for in that can Maybe that think it you, flow be free conversion you I cash if to apologize. capital about given we or we to XXXX, the happen XXXX? thinking But can still XX% below should level? how we working

Soma Somasundaram

Vaibhav, I'll So and opening can some some more make comments you color. give Ken

for it so over turn working know, said some definitely – of that raw chain but we of XX% pressure then capital to achievable a number, you still the things of terms see I'll in feel past, the in year. Ken some material Ken. supply the top in XX% And we the working, of remarks, because As is you about some availability talked the prepared to year will for

Ken Fisher

employee from know, my cash that mentioned in some a expect point, No, be EBITDA XQ’s XQ’s there's flow and free three that to I the low, our low Yeah. quarter. back you were, we XX% continuing comp that into employer the been quarter, last over would remarks years it's XX% or range, conversion in typically almost that that lower if fall you four usually look the years, contributions to

the one. that's seeing specific in-transit things on Soma you we inventory mentioned. the some have then And from a impact So of are

to you sense, normal know, So feel capital but that as that, capital. first to a the point, quarter, move, in remarks, be XX% range the some we said that for year the of, our we your that's in grow the XX% we as achieve in my And that that working will confident know, you I in is can business, kind won't business will that, delivery. within of cadence have working be to you because you invest

of So how we focused that. optimize to on do be each element we very continue

Vaibhav Vaishnav

free but if shareholder to target maybe you were We before of around net And we've returns? million aiming debt we can of you still flow on have that call, debt, comfortable talk debt one about target cash we EBITDA called maybe have the about about the we reached level out $XXX a like times would already use, additional for. there is like that think talked

Soma Somasundaram

at down we dividend good further that, through gives sustained growth and debt. As in pay you the know we feel lot about the optionality can be opportunities invest that we still as we us level and this that to the have cycle you of and a mentioned, mentioned, looked attractive know

take is I stay think there to And on will be think board going up a and reconsider something So are at that that reason will the it, then if path. that we reconsider I point. to

Vaibhav Vaishnav

right. my Thanks for taking All questions. Okay.

Soma Somasundaram

Absolutely.

Operator

And this more no are at Okay. there time, questions.

Soma Somasundaram

interest XXXX, you. again in you to call. Well, We look thanks to call. your we and appreciate full know, our earnings joining speaking for you year our Thank next forward QX, earnings and

Operator

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

now You disconnect. may

ChampionX (CHX) 10 Feb 222021 Q4 Earnings call transcript