Q4 2023 Dril-Quip Inc Earnings Call
Operator: Good morning, and welcome to Dril-Quip's fourth quarter and full year 2023 earnings call. At this time, all participants are in a listen-only mode, and there will be a question and answer opportunity at the end of this call. As a reminder, this call is being recorded. At this time, I would like to turn the call over to Erin Fazio, Corporate Finance Director for Dril-Quip. Please go ahead
Good morning, and welcome to drove groups fourth quarter and full year 2023 earnings call.
At this time all participants are in a listen only mode and there will be a question and answer opportunity at the end of this call.
As a reminder, this call is being recorded.
At this time I would like to turn the call over to Erin Fazio.
Corporate finance director for Joe Quinn.
Erin Fazio: Please go ahead.
Erin Fazio: Thank you and good morning. We appreciate you joining us on today's call. An updated investor presentation has been posted under the Investors tab on the company's website along with the earnings press release. This call is being recorded, and a replay will be made available on the company's website following the call. Before we begin, I would like to remind you that Dril-Quip's comments may include forward-looking statements and discuss non-GAAP financial measures. It should be noted that a variety of factors could cause Dril-Quip's actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Please refer to the 4th Quarter 2023 Financial and Operational Results Announcement we released yesterday for full disclosure on forward-looking statements and reconciliations of non-GAAP measures. Speaking on the call today from Dril-Quip, we have Jeff Byrd, President and Chief Executive Officer, and Kyle McClure, Vice President and Chief Financial Officer. I would now like to turn the call over to Jeff Byrd. Thank you, Erin, and thank you all for joining us today.
Erin Fazio: Thank you and good morning, we appreciate you joining us on today's call and updated investor presentation have been posted under the investors tab on the Companys website, along with the earnings press release.
Erin Fazio: This call is being recorded and a replay will be made available on the company's website following the call.
Erin Fazio: Before we begin I would like to remind you that Joseph comments may include forward looking statements and discuss non-GAAP financial measures.
Erin Fazio: We noted that a variety of factors could cause jacobs' actual results to differ materially from anticipated results or expectations expressed in these forward looking statements.
Erin Fazio: Please refer to the fourth quarter 2023 financial and operational results announcement, we released yesterday for a full disclosure on forward looking statements and reconciliations of non-GAAP measures.
Erin Fazio: Speaking on the call today from Joseph we have Jeff Bird, President and Chief Executive Officer, and Kyle Mcclure, Vice President and Chief Financial Officer.
Jeff Bird: I'd now like to turn the call over to Jeff Baird.
Jeff Bird: Thank you Aaron and thank you all for joining us today.
Jeff Byrd: Dril-Quip delivered strong fourth-quarter results, marking a pivotal year with double-digit growth in both annual revenue and adjusted EBITDA, showcasing significant progress towards our longer-term financial, operational, and strategic objectives. Total revenue grew 17% year-over-year, and our fourth quarter organic revenue was the highest quarter achieved since pre-pandemic. Net bookings in the quarter were $123 million, an increase of $76 million sequentially and above our expectations for the quarter. There were several notable orders in the quarter.
Jeff Bird: <unk> delivered strong fourth quarter results marked a pivotal year with double digit growth in both annual revenue and adjusted EBITDA.
Jeff Bird: Showcasing significant progress towards our longer term financial operational and strategic objectives.
Jeff Baird: Total revenue grew 17% year over year, and our fourth quarter organic revenue was the highest quarter achieved since pre pandemic.
Jeff Baird: Net bookings in the quarter were $123 million, an increase of 76 million sequentially and above our expectations for the quarter.
Jeff Baird: There were several notable orders in the quarter the largest was for subsea production systems or trees for approximately $40 million.
Jeff Byrd: The largest order was for subsea production systems, or trees, for approximately $40 million. Orders for trees, as we've mentioned, tend to be very large, discrete events that can shift materially from period to period, depending on a customer's schedule. This project includes three trees plus various accessories, which will be delivered over the next two years in Australia.
Orders for trees, as we've mentioned tend to be very large discrete events that can shift materially from period to period, depending on the customer schedules.
Jeff Baird: This project includes three trees, plus various accessories, which will be delivered over the next two years in Australia.
Jeff Byrd: We also saw incremental call-offs from Petrobras in the quarter and some large diverter orders. Total bookings for subsea products in the period were $97 million. There were also multiple significant contract wins in the quarter not reflected in our book. For example, we were awarded a three-year, $20 million Deepwater Subsea Wellhead MSA by CNOT. We want a multi-well, multi-year contract to supply subsea wellhead systems in Mexico.
Jeff Baird: We also saw incremental call offs from Petrobras in the quarter and some larger orders.
Total bookings for subsea products in the period were $97 million.
Jeff Baird: There were also multiple significant contract wins in the quarter not reflected in our bookings.
Jeff Baird: We were awarded a three year $20 million deepwater subsea wellhead MSA by Sienna.
Jeff Baird: We want a multi well multiyear contract to supply subsea wellhead systems in Mexico.
Jeff Byrd: We were awarded a second project on the North Slope of Alaska for 20 liner hangar systems through 2025. Additionally, we're off to a strong start to 2024 as we were directly awarded the contract for all of BP's subsea wellheads for another five years, and the Tullow subsea wellhead MSA has been extended for three more years. Throughout 2023, we consistently communicated that bookings may not be the most accurate metric to evaluate the current state of Dril-Quip, particularly following the recent acquisition of Great North.
Jeff Baird: We were awarded a second project on the north slope of Alaska for 'twenty Weiner Hanger systems through 2025.
Jeff Baird: Additionally, we're off to a strong start to 2024 as we were directly awarded the contract for all of Bp's subsea Wellheads for another five years and the Tullow subsea wellhead MSA has been extended for three more years.
Jeff Baird: Throughout 2023, we consistently communicated that bookings may not be the most accurate metric to evaluate the current state of real quick.
Jeff Baird: Particularly following the recent acquisition of Great North.
Jeff Byrd: The majority of our revenue is from short lead time delivery and operates on a book and ship model. This quarter will be the final disclosure of well construction and subsea service bookings in our results. Moving forward, we will continue to report subsea product bookings and add regular disclosures regarding master service agreements to reflect the evolving procurement strategies of the energy industry. We will review the new metrics in our first quarter 2024 earnings conference call. Reflecting on the accomplishments of 2023, our strategic efforts to reorganize the business into product lines, optimize our footprint, invest in wellhead manufacturing capabilities, and grow inorganically have been systematically executed thanks to the hard work and commitment of our employees. In the fourth quarter, we successfully completed the sale of our Houston Administration building, marking the end of this phase of the Footprint Optimization Initiative. The cash proceeds from this endeavor, approximately $23 million for the year, funded the investment in subsea wellhead manufacturing equipment announced in late 2022. Simultaneously, this effort has contributed to a significant reduction in operating expenses for our Houston campus.
Jeff Baird: The majority of our revenue is short lead time delivery and operate on a book and ship model.
Jeff Baird: This quarter will be the final disclosure of well construction and subsea service bookings in our results.
Jeff Baird: Moving forward, we will continue to report subsea product bookings and add regular disclosures regarding master service agreements to reflect the evolving procurement strategies of the energy industry.
Jeff Baird: We will review the new metrics in our first quarter 2024 earnings conference call.
Jeff Baird: Reflecting on the accomplishments of 2023, our strategic efforts to reorganize the business into product lines optimize our footprint.
Jeff Baird: Invest in wellhead manufacturing capabilities and grow Inorganically have been systematically executed thanks to the hard work and commitment of our employees.
Jeff Baird: In the fourth quarter, we successfully completed the sale of our Houston Administration building, marking the end of this phase of the footprint optimization initiatives.
Jeff Baird: The cash proceeds from this endeavor approximately $23 million for the year funded the investment in subsea wellhead manufacturing equipment announced in late 2022.
Jeff Baird: Simultaneously. This effort has contributed to a significant reduction in operating expenses for our Houston campus.
Jeff Byrd: Our investment in upgrading our subsea wellhead manufacturing equipment remains on schedule and is expected to go live in the second quarter of 2024. As previously stated, this move is expected to significantly reduce lead times and lower costs for our subsea wellhead product. In 2023, we took a significant stride in our strategic venture to broaden our well construction portfolio through the completion of our acquisition of Great North. This acquisition has swiftly proven to be financially accretive, and our progress on recognizing the announced synergies of bringing their wellhead through our international footprint and leveraging their best cost supply chain has seen early wins. Almost immediately, we received inbound customer calls asking for cross-selling content, and we've already had orders placed in regions such as the Middle East and Latin America.
Jeff Baird: Our investment in upgrading our subsea wellhead manufacturing equipment remains on schedule and is expected to go live in the second quarter of 2024.
Jeff Baird: As previously stated this move is expected to significantly reduce lead times and lower costs for our subsea wellhead product line.
Jeff Baird: In 2023, we took a significant stride in our strategic venture to broaden our well construction portfolio through the completion of our acquisition of Great Norris.
Jeff Baird: This acquisition has swiftly proven to be financially accretive and our progress on recognizing the announced synergies of bringing their wellhead through our international footprint.
Jeff Baird: And leveraging their best cost supply chain has seen early wins.
Jeff Baird: Almost immediately we received inbound customer calls asking for cross selling contexts.
Jeff Baird: And we've already had orders placed in regions, such as the Middle East and Latin America.
Jeff Byrd: On the supply chain side, we've notably completed multiple supplier qualifications for our liner hanger product line, and the first purchase orders were placed in December, while it will take several months for older inventory to work its way through the system. We are excited about these early wins toward tangible margin improvement. The macroeconomic outlook for 2024 and beyond continues to be constructive for all our sectors. Offshore project FIDs are projected to increase substantially from 2023 levels for the next two years, according to RISD. Beyond that, the discipline operators have enabled in their procurement methods in recent history has made the break-evens for those projects even more flexible, ensuring the continuity and strength of this up cycle for many more years. However, this fall, we saw some projects push out due to rig capacity constraints.
Jeff Baird: On the supply chain side, we've notably completed multiple supplier qualifications for our liner hanger product line.
Jeff Baird: And the first purchase orders were placed in December.
Jeff Baird: While it will take several months for all of their inventory to work its way through the system. We are excited about these early wins towards tangible margin improvements.
Jeff Baird: The macroeconomic outlook for 2024 and beyond continues to be constructive for all our segments.
Jeff Baird: Offshore project F. I d's are projected to increase substantially from 2023 levels for the next two years. According your eyes debt.
Jeff Baird: Beyond that the disciplined operators, who are enabled and their procurement methods in recent history have made the breakeven for those projects even more flexible.
Jeff Baird: Ensuring the continuity and strength of this up cycle for many more years.
Jeff Baird: While this fall we saw some projects push out due to rig capacity constraints. We are confident that we will begin to see contract awards accelerate in 2024 and beyond as this is resolved.
Jeff Byrd: We are confident that we will begin to see contract awards accelerate in 2024 and beyond as this is resolved. In the Canadian onshore market, we anticipate growth to come from three areas. First, increasing production from operators driving increased rental revenues from our multi-well frac connector as they support the increased off-take capacity from the new Trans Mountain pipeline coming online. Second, increasing market share, particularly in the Grand Prairie region of Canada. We are currently increasing our facility size to support anticipated growth and committed projects. And finally, we expect early green shoots of international growth, leveraging Dril-Quip's footprint in key areas such as the Middle East, Latin America, and the U.S. We continue to strategically invest in key growth markets globally.
Jeff Baird: And the Canadian onshore market, we anticipate growth to come from three areas.
Jeff Baird: First increasing production from operators driving increased rental revenues from our multi well frac connector as they support the increased offtake capacity from the new Trans mountain pipeline coming online.
Jeff Baird: Second.
Jeff Baird: Increasing market share, particularly in the Grand Prairie region of Canada.
Jeff Baird: We are currently increasing our facility size to support anticipated growth and committed projects.
Jeff Baird: And finally, we expect early green shoot international growth leveraging drill quips footprint in key areas such as the Middle East Latin America and the U S.
Jeff Baird: We continue to strategically invest in key growth markets globally.
Jeff Byrd: In particular, in Saudi Arabia, we have established an in-kingdom operating team, are investing in a new facility, preparing technologies for qualification, and building out manufacturing capabilities. In Latin America, specifically Mexico, we are investing in a larger facility to accommodate accelerating demand for our liner hangar and onshore wellhead offering. In West Africa, we are putting operating structures in place to support new contract awards in Ghana, Namibia, and the Ivory Coast.
Jeff Baird: In particular in Saudi Arabia, we have established an in kingdom operating team are investing in a new facility preparing technologies for qualification and building out manufacturing capability.
Jeff Baird: In Latin America, specifically, Mexico, we are investing in a larger facility to accommodate accelerating demand for our liner hanger and onshore wellhead offerings.
Jeff Baird: In West Africa, we are putting operating structures in place to support New contract awards in Ghana, Namibia and the Ivory Coast.
Kyle McClure: Before turning the call over to Kyle for some color on our 2023 financial results and 2024 outlook, I would like to thank our exceptionally talented and committed team here at Dril-Quip. The success we achieved in the fourth quarter and throughout 2023 is a direct result of your hard work. Thank you, Jeff, and good morning, everyone.
Speaker Change: Before turning the call over to Carl for some color on our 2023 financial results and 2024 outlook I'd like to thank our exceptionally talented and committed team here at dwell quit.
Carl: The success, we achieved in the fourth quarter and throughout 2023 is a direct result of your hard work style.
Carl: Thank you, Jeff and good morning, everyone.
Kyle McClure: As Jeff highlighted, the company delivered strong fourth quarter and full year results, demonstrating continued progress on our business initiatives and reflecting the initial stages of a multi-year upcycle in the international and offshore markets. Looking at our results, fourth quarter revenue was $126.3 million, an increase of 31% year-over-year and 8% sequentially, driven by activity increases in subsea services in Brazil, Europe, and Australia, and the impact of a full corridor of Great For the full year 2023, revenue was $424.1 million, an increase of 17% year-over-year. Great North contributed $35.2 million to the year.
Carl: As Jeff highlighted the company delivered strong fourth quarter and full year results demonstrating continued progress on our business initiatives and reflecting the initial stages of a multiyear up cycle in the international and offshore markets.
Speaker Change: Looking at our results fourth quarter revenue was $126 3 million, an increase of 31% year over year, and 8% sequentially driven by activity increases in subsea services in Brazil, Europe, and Australia, and the impact of a full quarter of great North.
Speaker Change: For the full year 2023 revenue was $424 1 million, an increase of 17% year over year.
Speaker Change: Great North contributed $35 2 million to the year.
Kyle McClure: Looking at the segment results, sub-c products and sub-c service revenue increased 2% and 7% compared to the previous year, respectively. While we encountered challenges related to rig availability and FPSO delivery timing earlier in 2023, the fourth quarter showed increased activity, resulting in a 76 million increase in bookings quarter over quarter. Included in that, as Jeff mentioned, is approximately $40 million related to the subsea tree order that we will be recognizing in revenue over the next two years. The well construction segment's revenue grew 70% year over year, reflecting the addition of Great North and activity increases in Latin America and Saudi Arabia. Embedded within the well construction segment is the legacy TIW business, which is exiting 2023 with a $100 million annual run rate ahead of schedule. Gross margins were 27.4% during the fourth quarter and 27.3% for the full year.
Speaker Change: Looking at the segment results subsea products, and subsea service revenue increased 2% and 7% compared to the previous year respectively.
Speaker Change: While we encountered challenges related to rig availability and F. P. S O delivery timing earlier in 2020.
Speaker Change: Fourth quarter showed increased activity, resulting in a $76 million increase in bookings quarter over quarter.
Speaker Change: Included in that as Jeff mentioned is approximately a $40 million related to the subsea tree order that we will be recognizing in revenue over the next two years.
Speaker Change: Yeah.
Speaker Change: The well construction segment revenue grew 70% year over year, reflecting the addition of great North and activity increases in Latin America, and Saudi Arabia.
Speaker Change: Embedded within the well construction segment is the legacy T IW business, which is exiting 2023 with a $100 million annual run rate ahead of schedule.
Speaker Change: Gross margins were $27 four during the fourth quarter and $27 three for the full year.
Kyle McClure: Full year gross margins improved 73 basis points, largely due to our ongoing initiatives across the organization to drive operational efficiency, although partly offset by some supply chain headwinds and international startup costs in our legacy well construction product line. Selling, general, and administrative expenses increased 8% compared to the full year 2022, which was driven by the addition of Great North expenses and severance. Engineering expenses were $12.6 million for the full year 2023, increasing approximately $1 million compared to 2022. The year-over-year increase is attributed to increased testing and qualifications related to specific international customer requirements, primarily in Brazil and the Middle East. The rigorous testing that our teams have been able to perform this year directly correlates to new contract wins, particularly around our ceiling technology for Petrobras.
Full year gross margins improved 73 basis points, largely due to our ongoing initiatives across the organization to drive operational efficiency.
Speaker Change: Partly offset by some supply chain headwinds in international start up costs in our legacy well construction product lines.
Speaker Change: Selling general and administrative expenses increased 8% compared to the full year 2022, which was driven by the addition of great north expenses and severance.
Speaker Change: Engineering expense was $12 6 million for the full year 2023 increased approximately 1 million compared to 2022 a.
Speaker Change: The year over year increase is attributed to increased testing and qualifications related to specific international customer requirements.
Speaker Change: Primarily in Brazil, and the Middle East.
Speaker Change: A rigorous testing that our teams have been able to perform this year have directly correlated to new contract wins, particularly around our sealing technology for Petrobras.
Kyle McClure: Profitability improved during the quarter with adjusted EBITDA coming in at $16.5 million, an increase of $4.2 million sequentially and $6.3 million from one year ago. For the full year, adjusted EBITDA was $46.5 million, an increase of 56% year-over-year. The increase in Adjusted EBITDA year-over-year can be attributed to leverage on incremental revenues and the acquisition of Great North in the third quarter of 2029. Free cash flow was $14.5 million for the fourth quarter of 2023, an improvement of $37.3 million year-over-year. Cash provided by operations was $7.7 million, and free cash flow was negative $24.9 million, for the full year 2020. However, cash provided by operations increased $44.5 million compared to the full year 2022.
Profitability improved during the quarter with adjusted EBITDA coming in at $16 5 million, an increase of $4 2 million sequentially and $6 3 million from one year ago.
Speaker Change: For the full year adjusted EBITDA was $46 5 million, an increase of 56% year over year.
Speaker Change: The increase in adjusted EBITDA year over year can be attributed to leverage on incremental revenues and the acquisition of great North of third quarter of 2023.
Speaker Change: Free cash flow was $14 5 million for the fourth quarter of 2023, an improvement of $37 3 million year over year.
Speaker Change: Cash provided by operations was $7 7 million and free cash flow was negative $24 9 million for the full year 2023.
Speaker Change: Cash provided by operations increased $44 5 million compared to the full year of 2022.
Kyle McClure: The increase was driven by improvements in our profitability and cash conversion cycle and the receipt of a U.S. tax return. CapEx in the fourth quarter of 2023 was $11.6 million and $32.6 million for the full year of 2023, the majority of which were related to investments in manufacturing equipment and rental tools.
Speaker Change: The increase was driven by improvements in our profitability and cash conversion cycle and the receipt of a U S tax rate but.
Speaker Change: Capex in the fourth quarter, 2023 was $11 6 million and $32 6 million for the full year of 2023.
Speaker Change: The majority of which were related to investments in manufacturing equipment and rental tools down work already secured.
Kyle McClure: Our balance sheet continues to be incredibly strong, with ending cash and cash equivalents of $217 million at year-end, allowing us the flexibility to continue to invest in creative, organic, and inorganic opportunities across the spectrum while continuing to manage our longer cash conversion cycle of our subsea products. Before concluding today's conference call, I'll review our high-level 2024 financial outlook. We expect revenue to increase 15-20% over 2023. Q1 revenue is expected to be in the range of $105 to $110 million.
Speaker Change: Our balance sheet continues to be incredibly strong with an ending cash and cash equivalents of 217 million at year end, allowing us flexibility to continue to invest in accretive organic and inorganic opportunities across the spectrum.
While continuing to manage our longer cash conversion cycle of our subsea products business.
Speaker Change: Before concluding today's conference call I'll review, our high level 2024, our financial outlook.
Speaker Change: We expect revenue to increase 15%, 20% over 2023.
Speaker Change: Q1 revenue is expected to be in the range of $105 million to $110 million.
Kyle McClure: We expect revenue to ramp up throughout the year as the strong Q4 subsea product bookings start to roll in, and our well construction deepwater liner hanger business continues to gain traction in Brazil and beyond. Adjusted EBITDA for the full year is between $65 and $75 million. Subsea product bookings of 200 to 225 million, representing growth of 5% over 2023 subsea product bookings of 217 million. As a reminder, we will be discontinuing the inclusion of well construction bookings next year and only including orders for our subsidy products. For additional context, as we shift disclosures, Q4 bookings will be the sub-C product segment only for $97 million, and tree awards were approximately $43 million in 2023, which occurred all in the 4th quarter. We anticipate approximately $35 million in tree awards for 2024.
Speaker Change: We expect revenue to ramp up throughout the year as the strong Q4, subsea product bookings start to roll through in our well construction deepwater liner hanger business continues to gain traction in Brazil and beyond.
Adjusted EBITDA for the full year of $65 million to $75 million.
Speaker Change: Subsea product bookings of $200 million to $225 million, representing growth of 5% over 2023, subsea product bookings up $217 million.
Speaker Change: As a reminder, we will be discontinuing the inclusion of well construction bookings next year and only including orders for our subsea products segment.
Speaker Change: For additional context, as we shifted disclosures Q4 bookings will be the subsea products' segment only were $97 million.
Speaker Change: Tree awards were approximately $43 million in 2023, which occurred all in the fourth quarter, we anticipate approximately 35 million of tree awards for 2024.
Operator: CapEx is expected to return to normalized levels of 3-5% of revenue in 2024, which will include the final expense relating to our investment in our Houston manufacturing equipment of approximately $7 million. Free cash flow is expected to be positive in 2024. Q1 is seasonally challenged and expected to be a net use of cash. With that said, we'd now like to open the line for any questions. Operator?
Speaker Change: Capex is expected to return to normalized levels of 3% to 5% of revenue in 2024, which will include the final expense related to our investment in our Houston manufacturing equipment of approximately $7 million.
Speaker Change: Free cash flow is expected to be positive in 2024, she wanted seasonally challenge and expect it to be a net use of cash.
Speaker Change: With that said, we'd now like to open the line for any questions operator.
Operator: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question. You may press star 2 if you would like to remove your question from the list. For participants using speaker equipment, it may be necessary to pick up your handset before pressing start.
Speaker Change: Banking at this time, we will be conducting our question and answer session.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the therapies.
Operator: One moment, please, while we pause for questions. Thank you. We have a question from Eddie Kim with Barclays. Your line is live. Hi, good morning.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you.
Speaker Change: We have a question from Eddie Kim with Barclays. Your line is life.
Eddie Kim: Hi, Good morning, Yeah, really strong bookings in the fourth quarter here and.
Jeff Byrd: You know, really strong bookings in the fourth quarter here. And just sorry if I missed it, but could you provide the subsea product bookings for full year 2022 and 2023? Just want to see how that compares to the 24 guide of 200 to 225 million. Yeah. Hey, good morning. Good morning, Eddie. This is Jeff.
Eddie Kim: Sorry, if I missed it but could you provide the the subsea product bookings for full year 2022 and 2023 just wanted to see how that compares to the 24 guide of 200.
Eddie Kim: $225 million, Yeah, I E. The hey, good morning, Good morning, Eddie This is Jeff.
Jeff Byrd: The number in 2022 and 2023 was about flat at call it 215, 217, somewhere in that range in both 2022 and 2023. So the 2024 number, if you think about that as a midpoint, would be flat with the high end being 225. I think the one notable thing about that is what's not included in those bookings numbers, which are the MSAs that we're pretty consistently now signing. So if you think about the BP MSA that I mentioned, that five-year extension, those are about 20 to 25 wellheads a year that don't go into our bookings numbers until they're called off, and the value of that would be, you know, call it $15 to Well, as right now, they're really working through customer property. We expect them to start reordering late this year or early next year. So that is the nuance.
Jeff: The number in 2022, and 2023 was about flat at call. It $2 15 to 17 somewhere in that range in both 2022 and 2023. So the 2024 number if you think about that as a mid point would be flat with the high end being $2 25.
Jeff: I think the one notable thing about that is what is not included in those bookings numbers, which are the msas that.
Jeff: We're pretty consistently now signing so if you think about the BP MSA that I mentioned that five year extension those are about 20% to 25 Wellheads a year.
Jeff: That don't go into our bookings number until they're called off and the value of that would be you know call it $15 million to $20 million annually when they start reordering well right now they are really working through customer property, we expect them to start reordering late this year early next year.
So that that is a nuance. We just think this is probably a better way to be more clear.
Jeff Byrd: We just think this is probably a better way to be more clear to those following the stock that this is directly tied to sub seeding the book. Yes, yep, got it. Great, and then just a quick follow-up. The 24 wells that you just announced for the Woodside Trion Development Offshore Mexico, is that going to be included as part of subsidy bookings in the first quarter, or was that booked in the fourth quarter? That was an MSA in the fourth quarter and will be called off over the next year or two probably. So that's the challenge.
Jeff: Those following the start that this is directly tied to subsea bookings right now.
Speaker Change: Yes, yes got it.
Speaker Change: Great and then just a quick follow up the 24 wells that you just announced for the Woodside try on development offshore Mexico is that going to be included as part of our subsea bookings in the first quarter or was that booked in the fourth quarter.
Speaker Change: That was an MSA in the fourth quarter and will be called off over the next year or two probably so that's the challenge that we signed we sign an MSA right. It's a nice it's a nice award, but you know in.
Kyle McClure: We signed an MSA, right? It's a nice award, but you know, in the past, that would have just hit us a big splashy number in the fourth quarter, and now that's just not the way that... things are contracting. Right, right, okay, understood. Yeah. And then just my follow-up question is on the margin guide for this year. Excuse me.
Speaker Change: In the past that would have just hit as a big splashy number in the fourth quarter and and now that's just not the way that.
Speaker Change: Things are contracted.
Speaker Change: Right Okay.
Speaker Change: At least for our products.
Speaker Change: Yes.
Speaker Change: This is my follow up is are on on the margin guide for this year excuse me yeah in the slide deck last quarter. You had said you were targeting kind of 15% to 18% EBIT margins for 2024, but the midpoint of your guidance implies around 14% for this year. So just wondering if you could help us understand the delta there.
Kyle McClure: In the slide deck last quarter, you said you were targeting a kind of 15 to 18 percent EBITDA margins for 2024, but the midpoint of your guidance implies around 14 percent for this year. So just wondering if you could help us understand the delta there. Are some cost savings going to be lower than anticipated this year? Or is this, you know, a reflection of recent bookings coming in at maybe lower prices than you anticipated? Just any color there would be great.
Speaker Change: Or are some cost savings can be lower than anticipated. This year or is this a reflection of kind of recent bookings coming in at maybe lower pricing than you anticipated just just any color there would be great.
Kyle McClure: Yeah, Eddie, it's Kyle. I would tell you that the difference between those two notes is probably just timing on productivity initiatives inside the company right now. Things have probably moved out a quarter or so on some productivity concepts that we are moving forward on.
Speaker Change: Yeah, Eddie as Kyle I would tell you that the difference between those two numbers is probably just timing on productivity initiatives inside the company right now things have moved.
Speaker Change: Moved out a quarter or so on some productivity concepts that we are moving forward on it.
Operator: Okay. Okay, more time, related to timing. Okay, understood. That was all I had. Thank you for the call, and I'll turn it back. Thanks Eddie. Thank you. As we have no further questions in queue at this time, this will conclude today's conference call. Thank you for participating, and you may now disconnect.
Speaker Change: Okay, Okay more time timing related okay.
Speaker Change: Okay understood that was all I had thank you for the color and I'll turn it back thanks Eddie.
Speaker Change: Yeah.
Speaker Change: Thank you.
We have no further questions in queue at this time.
Speaker Change: This will conclude today's conference call. Thank you for participating and you may now disconnect.