Q2 2024 Oil States International Inc Earnings Call

Thank you for standing by. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the Oil States Second Quarter 2024 Earnings Conference Call.

Ellen Pennington: At this time, I would like to welcome everyone to the Oil States 2nd quarter, 2024, earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer test. If you would like to ask the questions during this time, simply press star followed by the number one on the telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Ellen Pennington, Oil States Assistant Corporate Secretary. Please go ahead. Good morning and welcome to Oil States 2nd quarter, 2024, earnings conference call. Our call today will be led by our president and CEO, Cindy Taylor, and Lloyd Hajdik, Oil States Executive Vice President and Chief Financial Officer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. No one should assume these forward-looking statements remain valid later in the quarter or beyond. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our 2023 form 10-K, along with other recent FCC filings. This call is being broadcast and can be accessed at Oil States' website. A replay of the conference call will be available two hours after the completion of this call and will continue to be available for 12 months. I will now turn the call over to Cindy. Thank you, Ellen. Good morning and thank you for joining our conference call today where we will discuss our 2nd quarter, 2024 results and provide our thoughts on market trends. In addition to discussing our company-specific outlook comments, our 2nd quarter consolidated revenues and adjusted EBITDA increased 11% and 38% sequentially driven by increased drilling, subsidy, and production system demand and key offshore basins along with the advancement of several significant projects in our offshore manufacturer product segment. On a consolidated basis, our offshore and international revenues were up 18% sequentially while U.S.

Operator: Time now, I'd like to welcome everyone to the Oil States second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you. I would now like to turn the call over to Ellen Pennington, Oil States Assistant Corporate Secretary. Please go ahead.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answers session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you.

I would now like to turn the call over to Ellen Pennington, Oil States Assistant Corporate Secretary. Please go ahead.

Ellen Pennington: Good morning, and welcome to Oil State's second quarter 2024 earnings conference call. Our call today will be led by our President and CEO, Cindy Taylor, and Lloyd Hajdik, Oil State's Executive Vice President and Chief Financial Officer.

Speaker Change: Good morning and welcome to Oil State's 2nd Quarter 2024 Earnings Conference Call. Our call today will be led by our President and CEO , Cindy Taylor, and Lloyd Hajdik, Oil State's Executive Vice President and Chief Financial Officer.

Ellen Pennington: Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain anything, contain information other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. No one should assume these forward-looking statements remain valid later in the quarter or beyond. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our 2023 Form 10-K, along with other recent SEC filings.

Speaker Change: Before we begin, we would like to caution listeners regarding forward-looking statements.

Speaker Change: To the extent that our remarks today contain information other than historical information, please note that we are relying on the safe harbor protections afforded by federal law.

Speaker Change: No one should assume these forward-looking statements remain valid later in the quarter or beyond.

Speaker Change: Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our 2023 Form 10-K , along with other recent FCC filings.

Ellen Pennington: This call is being webcast and can be accessed on Oil State's website. A replay of the conference call will be available two hours after the completion of this call and will continue to be available for 12 months. I will now turn the call over to Cindy. Thank you.

Speaker Change: This call is being webcast and can be accessed at Oil States website. A replay of the conference call will be available two hours after the completion of this call and will continue to be available for 12 months. I will now turn the call over to Cindy.

Cynthia B. Taylor: Thank you, Ellen. Good morning, and thank you for joining our conference call today where we will discuss our second quarter 2024 Results and provide our thoughts on market trends in addition to discussing our company specific outlook comments. Our second quarter consolidated revenues and adjusted EBITDA increased 11% and 38% sequentially, driven by increased drilling, subsea, and production system demand in key offshore basins along with the advancement of several significant projects in our offshore manufactured products segment.

Cindy: Thank you, Ellen. Good morning, and thank you for joining our conference call today where we will discuss our second quarter 2024 results and provide our thoughts on market trends.

Speaker Change: in addition to discussing our company-specific outlook comments.

Cindy: Our second quarter consolidated revenues and adjusted EBITDA increased 11%.

Speaker Change: and 38% sequentially driven by increased drilling, subsea and production system demand in key offshore basins along with the advancement of several significant projects in our offshore manufactured product segment.

Cynthia B. Taylor: On a consolidated basis, our offshore and international revenues were up 18% sequentially, while U.S. land-driven revenues increased 1%. Our results in the current quarter also benefited from continued customer adoption of our newer technologies and strategic optimization of our well site services segment with the exit of certain underperforming U.S. locations. Given these initiatives, our well site services adjusted segment EBITDA increased 30% sequentially in an otherwise declining U.S. land market. During the quarter, our offshore manufactured product segment revenues increased 17% sequentially, totaling $102 million, while adjusted segment EBITDA rose 27%.

Cindy: On a consolidated basis, our offshore and international revenues were up 18% sequentially, while U.S. land-driven revenues increased 1%.

Cindy Taylor: land-driven revenues increased 1%. Our results in the current quarter also benefited from continued customer adoption of our newer technologies and strategic optimization of our well-site services segment with the exit of certain underperforming U.S. locations Given these initiatives, our well-site services adjusted segment EBITDA increased 30% sequentially and an otherwise declining U.S. land market During the quarter, our offshore manufacturer product segment revenues increased 17% sequentially, totaling $102 million, while adjusted segment EBITDA rose 27%.

Cindy: Our results in the current quarter also benefited from continued customer adoption of our newer technologies and strategic optimization of our well site services segment with the exit of certain underperforming U.S. locations.

Cindy: Given these initiatives, our well site services adjusted segment EBIDA increased 30% sequentially in an otherwise declining U.S. land market.

Cindy: During the quarter, our offshore manufactured product segment revenues increased 17% sequentially, totaling $102 million, while adjusted segment EBITDA rose 27%.

Cindy Taylor: Bookings totaled $101 million compared to $66 million received in the first quarter of 2024, yielding backlog of $300 million as of June 30 and a quarterly book to bail ratio of one time. Our bookings improvement was partially driven by our newer technology offerings, including orders for our managed pressure drilling systems. Our well-fighted services segment revenues decreased 2% on a sequential quarter basis, given the impact of lower U.S. activity along with the segments consolidation and exit over the past six months of four underperforming locations. Adjusted segment EBITDA increased 30% from the first quarter of 2024 due to stronger offshore activity in the Gulf of Mexico, along with modest market share gains in the Permian Basin.

Cynthia B. Taylor: Bookings totaled $101 million compared to $66 million received in the first quarter of 2024, yielding a backlog of $300 million as of June 30, and a quarterly book-to-bill ratio of one time. Our bookings improvement was partially driven by our newer technology offerings, including orders for our managed pressure drilling system. Our well site services segment revenues decreased 2% on a sequential quarter basis given the impact of lower U.S. activity along with the segment's consolidation and exit over the past six months of four underperforming locations.

Cindy: Bookings totaled $101 million compared to $66 million received in the first quarter of 2024, yielding backlog of $300 million as of June 30, and a quarterly book-to-bill ratio of one times.

Cindy: Our bookings improvement was partially driven by our newer technology offerings, including orders for our managed pressure drilling systems.

Cindy: Our well site services segment revenues decreased 2% on a sequential quarter basis, given the impact of lower U.S. activity, along with the segment's consolidation and exit over the past six months of four underperforming locations.

Cynthia B. Taylor: Adjusted segment EBITDA increased 30% from the first quarter of 2024 due to stronger offshore activity in the Gulf of Mexico along with modest market share gains in the Permian Basin. Our cost reduction initiatives helped yield very strong incremental margins. In our Downhole Technology segment, revenues and Adjusted segment EBITDA increased 16% and 42%, respectively, from the first quarter of 2024, driven primarily by increased completion product and international perforating sales. We will continue to focus on improving operations and allocating capital to efficiently and safely provide our customers with advanced technologies and services, while enhancing returns, reducing debt, and returning cash to our stockholders.

Cindy: Adjusted segment EBITDA increased 30% from the first quarter of 2024 due to stronger offshore activity in the Gulf of Mexico along with modest market share gains in the Permian Basin.

Cindy Taylor: Our cost reduction initiatives helped yield very strong incremental margins. In our downhill technology segment, revenues and adjusted segment EBITDA increased 16% and 42%, respectively, from the first quarter of 2024, driven primarily by increased completion product and international perforating sales.

Cindy: Our cost reduction initiatives helped yield very strong incremental margins.

Cindy: In our downhole technology segment, revenues in adjusted segment EBITDA increased 16% and 42% respectively from the first quarter of 2024, driven primarily by increased completion product and international perforating sales.

Cindy Taylor: We will continue to focus on improving operations and allocating capital to efficiently and safely provide our customers with advanced technologies and services while enhancing returns, reducing debt, and returning cash to our stockholders. During the quarter, we generated cash flows from operations totaling $10 million, repurchased some of our convertible debt at a discount to par, and also made share repurchases. Our gross debt to EBITDA June 30 was 1.5 times and net was 1.2 times, giving us significant flexibility.

Cindy: We will continue to focus on improving operations and allocating capital to efficiently and safely provide our customers with advanced technologies and services.

Cindy: while enhancing returns, reducing debt, and returning cash to our stockholders.

Cynthia B. Taylor: During the quarter, we generated cash flows from operations totaling $10 million, repurchased some of our convertible debt at a discount to par, and also made share-free purchases. Our gross debt to EBITDA on June 30 was 1.5 times, and net was 1.2 times, giving us significant flexibility. Lloyd will now review our operational results along with our financial position in more detail.

Cindy: During the quarter, we generated cash flows from operations totaling $10 million.

Cindy: repurchased some of our convertible debt at a discount to par and also made share repurchases. Our gross debt to EBITDA on June 30th was 1.5 times and net was 1.2 times, giving us significant flexibility.

Lloyd Hajdik: Lloyd will now review our operational results along with our financial position in more detail.

Cindy: Lloyd will now review our operational results along with our financial position in more detail.

Lloyd A. Hajdik: Thanks, Cindy. Good morning, everyone.

Lloyd Hajdik: Thanks, Annie.

Lloyd Hajdik: Good morning, everyone. During the second quarter, World State's generated revenues of $186 million, adjusted consolidated EBITDA of $21 million, and net income of $1.3 million, or $2 cents per share. Our reported second quarter results included pre-tax facility consolidation exit charges of $3.5 million, patent defense charges of $1 million, and gains of $0.5 million on debt extinguishment. Excluding these net charges and credits, our adjusted net income was $4.4 million, or $0.7 per share. Our offshore manufactured product segment generated revenues of $102 million and adjusted segment EBITDA of $20 million in the second quarter. During the second quarter, charges of $1.5 million were recorded at the segment due to the consolidation of oil states as Southeast Asian operations.

Lloyd A. Hajdik: During the second quarter, Oil States generated revenues of $186 million, adjusted consolidated EBITDA of $21 million, and net income of $1.3 million, or two cents per share. Our reported second quarter results included pre-tax facility consolidation exit charges of $3.5 million, patent defense charges of $1 million, and gains of $0.5 million on debt extinguished.

Lloyd: Thanks, Cindy. Good morning, everyone.

Lloyd: During the second quarter, oil states generated revenues of $186 million, adjusted consolidated EBITDA of $21 million, and net income of $1.3 million, or two cents per share.

Lloyd: Our reported second quarter results included pre-tax facility consolidation exit charges of $3.5 million dollars.

Lloyd: Patent defense charges of $1 million and gains of $0.5 million on debt extinguishment.

Lloyd A. Hajdik: Excluding these net charges and credits, our adjusted net income was $4.4 million, or $0.07 per share. Our offshore manufactured products segment generated revenues of $102 million and adjusted segment EBITDA of $20 million in the second quarter. During the second quarter, charges of $1.5 million were recorded in the segment due to the consolidation of Oil States' Southeast Asian operations. Excluding the facility consolidation charges, adjusted segment EBITDA margin was 20% in the second quarter compared to 18% in the first quarter.

Lloyd: Excluding these net charges and credits, our adjusted net income was $4.4 million, or $0.07 per share.

Lloyd: Our offshore manufactured products segment generated revenues of $102 million.

Lloyd: and Adjusted Segment EBITDA of $20 million in the second quarter.

Lloyd: During the second quarter, charges of 1.5 million dollars were recorded at the segment due to the consolidation of Oil States' Southeast Asian operations.

Lloyd Hajdik: Excluding the facility consolidation charges, adjusted segment EBITDA margin was 20% in the second quarter compared to 18% in the first quarter. Regarding our facility planning, we have strategically relocated our Southeast Asian manufacturing and service operations from Singapore to Batam in Indonesia. which is expected to produce future manufacturing costs for a number of our global product offerings. During the second quarter, we sold our facility in Singapore and received net cash proceeds of $10 million. While construction of our long-term baton facility continues, with completion targeted for the first half of 2025, provisional operations were established in baton during the quarter, allowing us to efficiently execute both our contracted backlogs and subsequent orders during the construction base.

Lloyd: Excluding the facility consolidation charges, adjusted segment EBITDA margin was 20% in the second quarter compared to 18% in the first quarter.

Lloyd A. Hajdik: Regarding our facility planning, we have strategically relocated our Southeast Asian manufacturing and service operations from Singapore to Batam, Indonesia, which is expected to reduce future manufacturing costs for a number of our global product offers. During the second quarter, we sold our facility in Singapore and received net cash proceeds of $10 million. While construction of our long-term BATAM facility continues, with completion targeted for the first half of 2025, provisional operations were established in Batam during the quarter, allowing us to efficiently execute both our contracted backlog and subsequent orders during the construction phase.

Lloyd: Regarding our facility planning, we have strategically relocated our Southeast Asian manufacturing and service operations from Singapore to Bataan, Indonesia.

Lloyd: which is expected to reduce future manufacturing costs for a number of our global product offerings.

Lloyd: During the second quarter, we sold our facility in Singapore and received net cash proceeds of $10 million.

Lloyd: While construction of our long-term baton facility continues, with completion targeted for the first half of 2025,

Lloyd: Provisional operations were established in Batam during the quarter, allowing us to efficiently execute both our contracted backlog and subsequent orders during the construction phase.

Lloyd Hajdik: We own one remaining U.S. facility that was classified as a health-resil asset at June 30. Net proceeds from the sale of this facility, which is expected to close in late 2024, are expected to total approximately $25 million. In our well-site services segment, we generated revenues of $46 million in adjusted segment EBITDA of $9 million in the second quarter. During the quarter, the segment recognized $2 million in cost associated with the consolidation and exit of underperforming locations. Additionally, the segment recorded charges of $1 million associated with the enforcement of patents related to its proprietary technology. Excluding these charges, adjusted segment EBITDA margin was 18% in the second quarter compared to 14% in the first quarter.

Lloyd A. Hajdik: We own one remaining U.S. facility that was classified as a held-for-sale asset at June 30. Net proceeds from the sale of this facility, which is expected to close in late 2024, are expected to total approximately $25 million. In our well site services segment, we generated revenues of $46 million and adjusted segment EBITDA of $9 million in the second quarter. During the quarter, the segment recognized $2 million in costs associated with the consolidation and exit of underperforming locations. Additionally,

Lloyd: We own one remaining U.S. facility that was classified as a held-for-sale asset on June 30th.

Lloyd: Net proceeds from the sale of this facility, which is expected to close in late 2024, are expected to total approximately $25 million.

Lloyd: In our well site services segment, we generated revenues of $46 million and adjusted segment EBITDA of $9 million in the second quarter.

Lloyd: During the quarter, the segment recognized $2 million in costs associated with the consolidation and exit of underperforming locations.

Cynthia B. Taylor: The segment recorded charges of $1 million associated with the enforcement of patents related to its proprietary technology. Excluding these charges, adjusted segment EBITDA margin was 18% in the second quarter compared to 14% in the first quarter. In our downhole technology segment, we reported revenues of $38 million and adjusted segment EBITDA of $3 million for the second quarter. The Justice Segment EBITDA margin was 8% in the second quarter, compared to 7% in the first quarter.

Lloyd: Additionally,

Lloyd: The segment recorded charges of $1 million associated with the enforcement of patents related to its proprietary technologies.

Lloyd: Excluding these charges, adjusted segment EBITDA margin was 18% in the second quarter compared to 14% in the first quarter.

Lloyd Hajdik: In our downhill technology segment, we reported revenues of $38 million in adjusted segment EBITDA of $3 million for the second quarter. Adjust the segment EBITDA margin was 8% in the second quarter compared to 7% in the first quarter. During the second quarter, oil states generated $10 million in cash flows from operations and received $10 million in proceeds from the facility sale. Cash was used to find capital expenditures of $6 million, purchased $11.5 million principal amount of our four and three quarter percent convertible senior notes at a discount, and buy back $2.4 million of our common stock.

Lloyd: In our downhole technology segment, we reported revenues of $38 million and adjusted segment EBITDA of $3 million for the second quarter.

Lloyd: The Justice Segment EBITDA margin was 8% in the second quarter.

Cynthia B. Taylor: And during the second quarter, Oil States generated $10 million in cash flows from operations and received $10 million in proceeds from the facility sale. Cash was used to fund capital expenditures of $6 million, purchase $11.5 million principal amount of our 4.75% convertible senior notes at a discount and buy back $2.4 million of our common stock. Now Cindy will offer some market outlook and concluding comments.

Lloyd: compared to 7% in the first quarter.

Lloyd: And during the second quarter, oil states generated $10 million in cash flows from operations.

Lloyd: and received $10 million in proceeds from the facility sale.

Lloyd: Cash was used to fund capital expenditures of $6 million.

Lloyd: Purchase $11.5 million principal amount of our 4.75% convertible senior notes at a discount and buy back $2.4 million of our common stock.

Cindy Taylor: Now, Cindy will offer some market outlook and concluding comments. Despite some concerns about oil demand in China and the possibility of OPEC Plus ceasing voluntary production cuts in 2025, crude oil pricing has remained relatively stable over the first half of the year, generally in the $75.85 per barrel price range, which has provided our ENP customers a predictable environment for planning and sanctioning major offshore investment. And international projects, stable oil prices, and a strong long-term outlook for natural gas and LNG demand support significant levels of capital investment and offshore field development led by the U.S., Latin America, Asia, and Africa.

Cynthia B. Taylor: Despite some concerns about oil demand in China and the possibility of OPEC Plus ceasing voluntary production cuts in 2025, crude oil pricing has remained relatively stable over the first half of the year, generally in the $75 to $85 per barrel price range, which has provided our E&P customers a predictable environment for planning and sanctioning major offshore and international projects. Stable oil prices and a strong long-term outlook for natural gas and LNG demand support significant levels of capital investment in offshore field development led by the U.S., Latin America, Asia, and Africa. Major subsea OEMs continue to experience significant backlog growth as a result of orders for subsea production systems.

Lloyd: Now Cindy will offer some market outlook and concluding comments.

Cindy: Despite some concerns about oil demand in China and the possibility of OPEC Plus ceasing voluntary production cuts in 2025,

Cindy: Crude oil pricing has remained relatively stable over the first half of the year, generally in the $75-$85 per barrel price range.

Cindy: which has provided our E&P customers a predictable environment for planning and sanctioning major offshore and international projects.

Cindy: Stable oil prices and a strong long-term outlook for natural gas and LNG demand support significant levels of capital investment in offshore field development.

Cindy Taylor: Major sub-C OEMs continue to experience significant backlog growth as a result of orders for sub-C production systems. We expect this trend to positively influence our business and future booking. Growth trends continue to look favorable given the level of offshore capital investment, our bidding and quoting activity, new product introductions, along with strong levels of bookings and backlogs.

Cindy: led by the U.S., Latin America, Asia, and Africa. Major subsea OEMs continue to experience significant backlog growth as a result of orders for subsea production systems.

Cynthia B. Taylor: We expect this trend to positively influence our business and future bookings. Growth trends continue to look favorable given the level of offshore capital investment, our bidding and quoting activity, new product introductions, along with strong levels of bookings and backlogs. However, second quarter U.S. land activity levels declined despite favorable WTI crude oil prices.

Cindy: We expect this trend to positively influence our business and future bookings.

Cindy: Growth trends continue to look favorable given the level of offshore capital investment, our bidding and quoting activity, new product introductions, along with strong levels of bookings and backlogs.

Cindy Taylor: Second quarter, U.S. land activity levels have declined despite favorable WTI crude oil prices. Even with lower activity levels and weak natural gas prices, production and inventory levels have remained high, leading to a more challenging land market given current industry dynamics. We expect U.S. land drilling and completion spending over the balance of 2024 to remain at or near current levels. We expect our well-fighted services and downhold technology segments to perform in line with market activity indicators, which are weighted to U.S. land activity. The consolidation and exit of underperforming locations and the implementation of additional cost control measures should provide tangible margin benefits in subsequent quarters as assets are redeployed to more favorable operating locations.

Cindy: Second quarter U.S. land activity levels have declined despite favorable WTI crude oil prices.

Cynthia B. Taylor: Even with lower activity levels and weak natural gas prices, production and inventory levels have remained high, leading to a more challenging land market. Given current industry dynamics, we expect U.S. land drilling and completion spending over the balance of 2024 to remain at or near current levels. We expect our well site services and downhole technology segments to perform in line with market activity indicators, which are weighted to U.S. land activity. The consolidation and exit of underperforming locations and the implementation of additional cost control measures should provide tangible margin benefits in subsequent quarters as assets are redeployed to more favorable operating locations.

Cindy: Even with lower activity levels and weak natural gas prices, production and inventory levels have remained high, leading to a more challenging land market.

Cindy: Given current industry dynamics, we expect U.S. land drilling and completion spending over the balance of 2024 to remain at or near current levels.

Cindy: We accept our well site services and downhole technology segments.

Cindy: to perform in line with market activity indicators, which are weighted to U.S. land activity. The consolidation and exit of underperforming locations and the implementation of additional cost control measures

Cindy: should provide tangible margin benefits in subsequent quarters as assets are redeployed to more favorable operating locations.

Cindy Taylor: We are benefiting from the continued adoption and deployment of our new technologies, including our proprietary active seat valves within our well-fighted services segment. Within our downhold technology segment, we expect to see further market penetration with the recent introduction of our new Epic portfolio of perforating systems. Considering market dynamics, we are able to confirm our adjusted EBITDA guidance of $85 to $90 million for 2024. In terms of free cash flow generation, we expect to generate approximately $40 million in free cash flow during 2024, which excludes the planned fourth quarter U.S. facility sale and remains in line with prior guidance, implying a free cash flow yield of 10 percent or greater.

Cynthia B. Taylor: We are benefiting from the continued adoption and deployment of our new technologies, including our proprietary active seat valves within our well site services segment. In our downhole technology segment, we expect to see further market penetration with the recent introduction of our new EPIC portfolio of perforating systems. Considering market dynamics, we are able to confirm our adjusted EBITDA guidance of $85-$90 million for 2024. In terms of free cash flow generation, we expect to generate approximately $40 million in free cash flow during 2024, which excludes the planned fourth quarter U.S. facility sale and remains in line with prior guidance, qualifying a free cash flow yield of 10% or greater.

Cindy: We are benefiting from the continued adoption and deployment of our new technologies, including our proprietary active seat valves within our well site services segment.

Cindy: Within our Downhole Technology segment, we expect to see further market penetration with the recent introduction of our new EPIC portfolio of perforating systems.

Cindy: Considering market dynamics, we are able to confirm our adjusted EBITDA guidance.

Cindy: of 85 to 90 million dollars for 2024.

Cindy: In terms of free cash flow generation, we expect to generate approximately $40 million in free cash flow during 2024, which excludes the planned fourth quarter U.S. facility sale and remains in line with prior guidance.

Cindy Taylor: We will continue to maintain disciplined capital allocation priorities by judiciously investing in growth capEx and organic research and development opportunities to drive additional technology differentiation. We will continue to evaluate debt reduction opportunities, share repurchases, and targeted acquisitions.

Cindy: implying a free cash flow yield of 10% or greater.

Cynthia B. Taylor: We will continue to maintain disciplined capital allocation priorities by judiciously investing in growth CapEx and organic research and development opportunities to drive additional technology differentiation. Additionally, we will continue to evaluate debt reduction opportunities, share repurchases, and targeted acquisitions. Now, I would like to offer some concluding comments.

Cindy: We will continue to maintain disciplined capital allocation priorities by judiciously investing in growth CapEx and organic research and development opportunities to drive additional technology differentiation.

Cindy: We will continue to evaluate debt reduction opportunities, share repurchases, and targeted acquisitions.

Cindy Taylor: Now I would like to offer some concluding comments. We remain focused on optimizing our operations and pursuing profitable activity in support of our global customer base. As market opportunities unfold both in the U.S. and in international and offshore markets, we will continue to focus on core areas of expertise with the deployment of our recently enhanced equipment and technologies to further differentiate our product and service offering. Our core competencies are well entrenched in the markets we serve, and we continue to bid on potential opportunities supporting our traditional subsea, floating and fixed production systems, drilling and military customers, while also bidding to support multiple new customers and projects involved in development such as deep sea minerals gathering, fixed and floating offshore wind, carbon capture and storage, geothermal applications, and other renewable and clean tech energy opportunities.

Cynthia B. Taylor: We remain focused on optimizing our operations and pursuing profitable activity in support of our global customer base. As market opportunities unfold both in the U.S. and in international and offshore markets, we will continue to focus on core areas of expertise with the deployment of our recently enhanced equipment and technologies to further differentiate our product and service offerings. Our core competencies are well entrenched in the markets we serve, and we continue to bid on potential opportunities supporting our traditional subsea, floating, and fixed production systems, drilling, and military customers, while also bidding to support multiple new customers and projects involved in developments such as deep sea minerals gathering, fixed and floating offshore wind, carbon capture and storage, geothermal applications, and other renewable and clean tech energy opportunities.

Cindy: Now I would like to offer some concluding comments.

Cindy: We remain focused on optimizing our operations and pursuing profitable activity in support of our global customer base.

Cindy: As market opportunities unfold both in the U.S. and in international and offshore markets,

Cindy: We will continue to focus on core areas of expertise with the deployment of our recently enhanced equipment and technologies to further differentiate our product and service offerings.

Cindy: Our core competencies are well entrenched.

Cindy: and the markets we serve and we continue to bid on potential opportunities.

Cindy: supporting our traditional subsea, floating, and fixed production systems.

Cindy: drilling and military customers, while also bidding to support multiple new customers and projects involved in developments such as deep sea minerals gathering, fixed and floating offshore wind,

Cindy: Carbon Capture and Storage

Cindy: geothermal applications, and other renewable and clean tech energy opportunities.

Cindy Taylor: These new energy transition opportunities create strong potential for us to expand our products and service offerings and our revenue base over the longer term. Oil states will continue to conduct safe operations and will remain focused on providing technology leadership in our various products and service offerings, with value-added products and services available to meet customer demands globally.

Cynthia B. Taylor: These new energy transition opportunities create strong potential for us to expand our product and service offerings and our revenue base over the longer term. Oil States will continue to conduct safe operations and will remain focused on providing technological leadership in our various product and service offerings, with value-added products and services available to meet customer demands globally. That concludes our prepared comments. Eric, would you open up the call for questions and answers at this time?

Cindy: These new energy transition opportunities create strong potential for us to expand our product and service offerings and our revenue base over the longer term.

Cindy: Oil States will continue to conduct safe operations and will remain focused on providing technology leadership in our various product and service offerings.

Cindy: with value-added products and services available to meet customer demands globally. That completes our prepared comments. Eric, would you open up the call for questions and answers at this time?

Cindy Taylor: That competes our prepared comments.

Unknown Executive: Eric, would you open up the call for questions and answers at this time? And as time, I would like to remind everyone, in order to ask a question, please press star, followed by the number one on the telephone.

Operator: At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number 1 on your telephone keypad. Your first question comes from the line of Jim Rollyson with Raymond G. Please go ahead.

Eric: At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number 1 on your telephone keypad.

James Rollyson: If there's a question that comes from the line of Jim Rollyson with Raymond James, please go ahead. Good morning, Cindy and Lloyd. Good morning. Good morning, Jim.

Speaker Change: The first question comes from the line of Jim Rollyson with Raymond James.

James Michael Rollyson: Hey, good morning, Cindy and Lloyd. Good morning, Jim. Cindy, it was obviously great to see a nice sequential rebound in the offshore manufactured products business, which kind of falls in line typically, I guess, with your seasonal factors. But curious about, you know, kind of the orders and backlog, and as you see that over the back half of the year, how are you thinking about kind of revenue and margin trajectory based on the timing of what's in backlog today? Kind of a similar trend to last year or something different?

Eric: Please go ahead.

James Michael Rollyson: Hey, good morning, Cindy and Lloyd.

Cindy Taylor: Cindy was obviously great to see a nice sequential rebound in the offshore manufactured products business, which kind of falls in line, typically I guess, with your seasonal factors, but curious with, you know, kind of the orders and backlog and as you see that over the back half of the year, how are you thinking about kind of revenue and margin trajectory based on kind of the timing of what's in backlog today, kind of a similar trend to last year or something different? You know, clearly, if you kind of look at the guidance, to some degree, the revenue and trajectory, I'll call it over the next couple of quarters.

Lloyd: Good morning. Hi, Jim.

Lloyd: Uh, Cindy, it was obviously great to see a nice sequential rebound in the offshore manufactured products business, which

Speaker Change: kind of falls in line, typically, I guess, with your seasonal

Speaker Change: factors but curious with you know kind of the orders

Speaker Change: And backlog and as you see that over the back half of the year, how are you thinking about kind of revenue and margin trajectory based on kind of the timing of what's in backlog today? Kind of a similar trend to last year or something different?

Cynthia B. Taylor: You know, clearly, if you kind of look at the guidance, to some degree, the revenue and trajectory, I'll call it, over the next couple of quarters looks, you know, I'm going to call it strong, but fairly level, given that our bookings to date are at.9 times. And so, a lot of the momentum we're seeing, I would say, carries into 2025. Again, I don't know if we made comments about our bookings outlook, but we still expect our overall book-to-bill to be north of one, which implies greater than a one-time book-to-bill for the second half of this year.

Speaker Change: You know, clearly, if you kind of look at the guidance, to some degree, the revenue and trajectory, I'll call it, over the next couple of quarters looks, you know, I'm going to call it

Cindy Taylor: You know, I'm going to call it strong, but fairly level given that our bookings to date are at 0.9 times. And so a lot of the momentum we're seeing, I would say, carries into 2025.

Speaker Change: Strong, but fairly level, given that our bookings to date are at .9 times. And so a lot of the momentum we're seeing, I would say, carries into 2025. Again, I don't know if we made comments about our bookings outlook, but we still expect our overall book-to-bill to be north of one, which implies greater than a one-time book-to-bill for the second half.

Cindy Taylor: We, again, or I don't know if we made comments about our bookings outlook, but we still expect our overall book to be north of one, which implies greater than a one-time book to build for the second half of this year. And again, I think that sets up very well for 2025. I haven't looked at my individual quarters in terms of revenue generation, but again, embedded in our guidance, a lot of the activities going to be driven by offshore and international. No surprise there, based on the overall macro-environment that we're looking at. And that implies strong results for this particular segment.

Cynthia B. Taylor: And, again, I think that sets up very well for 2025. I haven't looked at my individual quarters in terms of revenue generation, but, again, embedded in our guidance, a lot of the activity is going to be driven by offshore and international. No surprise there, based on the overall macro environment that we're looking at, and that implies strong results for this particular segment.

Speaker Change: This year, and again, I think that sets up very well for 2025. I haven't looked at my individual quarters in terms of revenue generation, but again, embedded in our guidance, a lot of the activity is going to be driven by offshore and international. No surprise there, based on the overall macro environment that we're looking at, and that implies strong results for this particular segment.

Unknown Executive: Perfect.

Cynthia B. Taylor: Perfect. Yeah, just looking for confirmation.

Unknown Executive: Yeah, just looking for confirmation there. So appreciate that.

Cindy Taylor: And on the well-flight services and dental technologies, you mentioned, similar to in the past, your revenue is kind of performing line with activity, but clearly some of the kind of internal things you're doing on the cost side and managing operations that weren't performing have obviously paid through in margin benefits this quarter.

Speaker Change: Perfect, yeah, just looking for confirmation there, so appreciate that.

Cynthia B. Taylor: So appreciate that. And on the well site services and download technologies, you mentioned, similar to in the past, your revenues kind of perform in line with activity, but clearly, some of the kind of internal things you're doing on the cost side and managing operations that weren't performing have obviously paid through in margin benefits this quarter. And you mentioned just that growth as you continue to work on those things. Any sense of kind of how you're thinking about the magnitude of potential margin expansion and the, you know, kind of flattish from here outlook?

Speaker Change: and on the well site services and downhole technologies.

Speaker Change: You mentioned, similar to in the past, your revenues kind of perform in line with activity, but clearly...

Speaker Change: Some of the kind of internal things you're doing on the cost side and managing operations that weren't performing have obviously paid through in margin benefits this quarter.

Cindy Taylor: And you mentioned just that, growing as you continue to work on those things.

Cindy Taylor: Any sense of kind of how you're thinking about magnitude of a potential margin expansion and the kind of flatish from here outlook?

Speaker Change: And you mentioned just that growing as you continue to work on those things. Any sense of kind of how you're thinking about magnitude of potential margin expansion and the, you know, kind of flattish from here outlook?

Cindy Taylor: Yeah, so Jim, I'll take that.

Lloyd A. Hajdik: Yeah, so Jim, I'll take that. So when we're looking at well site services with us closing some of these underperforming locations, you know, we could see that the, you know, the margins overall are getting into the low to 20% range. Ibiza margins.

Cindy Taylor: So when we're looking at well-sight services with this, closing some of these underperforming locations, we could see that the margins overall getting into the flow at a 20% range, even on margins. Okay. Yeah, no, that's very healthy.

Speaker Change: Yeah, so Jim, I'll take that. So when we're looking at well site services with us closing some of these underperforming locations, you know, we could see that the, you know, the margins overall getting into the low to 20% range.

Lloyd A. Hajdik: Yeah, no, that's very healthy. And what are you thinking about for downhole technologies? Because that obviously had a, you know, improved quarter as well from a few different

Cindy Taylor: And what are you thinking about for dental technologies because that obviously had improved the quarter as well from a few different things? Yeah, so high single digits, low double digits. On EBITOM. Yep.

Speaker Change: EBITDA margins. Okay. Yeah. No, that's very healthy. And what are you thinking about for downhole technologies? Because that obviously had a, you know, improved quarter as well from a few different things.

Lloyd A. Hajdik: Yeah, so high single digits, low double digits.

Lloyd A. Hajdik: On EBITDA, Mark. On EBITDA, Mark. Yep, yep.

Speaker Change: Yeah, so high single digits, low double digits.

James Michael Rollyson: Yep, yep, perfect. Well, I appreciate that. I'll turn it back to someone else next question. Thanks, Jim.

Unknown Executive: Yeah, perfect. Well, I appreciate that.

Speaker Change: On EBITDA, Mark. On EBITDA. Yeah.

Unknown Executive: I'll turn it back to some of the next question. Thanks, Jim.

Mark: Yep, yep, perfect. Well, I appreciate that. I'll turn it back to someone else next question.

Stephen Gengaro: The next question comes from Line up. Stephen Gengaro with Steve, please go ahead. Thanks. Good morning, everybody.

Operator: The next question comes from the line of Stephen Gengaro, with Steve...

Speaker Change: Thanks, Jim.

Speaker Change: The next question comes from the line of Stephen Gengaro with Stephen.

Stephen David Gengaro: Thanks. Good morning, everybody.

Speaker Change: Please go ahead.

Stephen David Gengaro: So just quickly to clarify, Lloyd, were you suggesting well site margins in the low 20s in the second half of the year? You're Yeah, I was trying to just make sure I understood that correctly. Yes, yes. Okay, great. Thank you.

Lloyd Hajdik: So just quickly to clarify, Lloyd, did you, were you guys suggesting well-site margins in the low 20s in the second half, in the second half of the year? Is that, was that your? I was trying to just make sure I understood that correctly? Yes.

Stephen David Gengaro: Thanks. Good morning, everybody.

Stephen David Gengaro: So just quickly to clarify, Lloyd, were you suggesting well site margins in the low 20s in the second half of the year? Was that correct?

Stephen David Gengaro: I was trying to just make sure I understood that correctly.

Lloyd Hajdik: Okay. Great. Thank you.

Lloyd A. Hajdik: I guess two things for me. First, Cindy, you've been watching this market for a long time like I have, and we've been kind of consistently frustrated by the lack of US activity growth on the land side. And I know there are M&A reasons and the gas market's been soft, but do you see anything else there? And maybe what do you think about maybe the catalyst or what needs to happen to get any kind of recovery on the US land side, even if it's several quarters out?

Cindy Taylor: I guess two things for me. First, you see, you've been watching this market a long time, like I have, and we've been kind of consistently frustrated by the lack of US activity growth on the landside. And I know there's M&A reasons and the gas market's been soft, but what do you see? Anything else there? And, and maybe how do you think about, you know, maybe the catalyst or what needs to happen to get kind of recovery on the US landside, even if it's, you know, several quarters out. Yeah.

Lloyd: Yes. Yes.

Speaker Change: Okay, great. Thank you. I guess two things for me. First,

Speaker Change: Cindy, you've been watching this market a long time like like I have and we've been kind of consistently frustrated by the lack of U.S. activity growth on the land side and I know there's M&A reasons and the gas market's been soft but what do you

Speaker Change: Do you see anything else there and maybe how do you think about, you know, maybe the catalyst or what needs to happen to get kind of a recovery on the U.S. land side, even if it's several quarters out?

Cynthia B. Taylor: Well, you know, first and foremost, embedded in my comments is just the statement that if you look back over the last 15 months, maybe 18 months, activity on land is down kind of 20-plus percent. It's kind of shocking, quite frankly.

Cindy Taylor: Well, you know, first and foremost, embedded in my comments is just the statement: you know, if you look back for the last 15 months, maybe 18 months, activity on land is down kind of 20 plus percent. It's kind of shocking, quite frankly. And yet, despite that, we're producing record levels. And the way I look at that, you know, I don't do basin-by-basin analysis, but certainly there are a lot of analysts that do that say productivity per foot is flat to down in most of the basins. And so it is my opinion that a lot of this M&A activity is four years towards the resource play and being able to move from two-mile laterals to three.

Cindy: Yeah, well, you know, first and foremost, embedded in my comments is just the statement, you know, if you look back for the last 15 months, maybe 18 months,

Cindy: Activity on land is down kind of 20 plus percent. It's kind of shocking quite frankly.

Cindy: And yet, despite that, we're producing record levels, and the way I look at that, you know, I don't do basin-by-basin analysis, but certainly there are a lot of analysts that do that say productivity per foot

Cynthia B. Taylor: And yet, despite that, we're producing record levels. And the way I look at that, you know, I don't do basin-by-basin analysis, but certainly there are a lot of analysts that do that say productivity per foot is flat to down in most of the basins. And so it is my opinion that a lot of this M&A activity is more geared towards the resource play and being able to move from two mile laterals to three.

Cindy: is flat to down in most of the basins, and so it is my opinion.

Cindy: that a lot of this M&A activity is more geared towards the resource play and being able to move from two mile laterals to three. And you know, when you do that, the real answer is you're just drilling and completing a lot of available footage.

Cindy Taylor: And, you know, when you do that, the real answer is you're just drilling and completion, completing a lot of available footage. And we're benefiting from that. And so this quote-unquote efficiency measure gets a little more elusive when you're talking about productivity per foot versus just extended laterals. It's all good for the operator. But again, I think we and everybody else believe that production is going to turn at some point. And the question that I, age-old question, is when does that happen? But clearly, in my opinion, 2025 kind of spells a different level of overall production as some of these decline curves hit.

Cynthia B. Taylor: And, you know, when you do that, the real answer is you're just drilling and completing a lot of available footage. And we're benefiting from that, and so this quote-unquote efficiency measure gets a little more elusive when you're talking about productivity per foot versus just extended laterals. It's all good for the operator, but again, I think we and everybody else believe that production is going to turn at some point. And the age-old question is, when will that happen? But clearly, in my opinion, 2025 kind of spells a different level of overall production as some of these decline curves hit. That's number one.

Cindy: and we're benefiting from that and so this quote-unquote efficiency measure gets a little more elusive.

Cindy: When you're talking about productivity per foot versus just extended laterals, it's all good for the operator. But again, I think we and everybody else believe that production is going to turn at some point.

Cindy: And the age-old question is, when does that happen? But clearly, in my opinion,

Cindy: 2025 kind of spells a different level of overall production as some of these decline curves hit. That's number one.

Cynthia B. Taylor: Number two is just natural gas. Anyone that really debates the long-term contribution and benefit from both natural gas and LNG will come. And if you get kind of the double trigger, if you will, between natural gas activity and an improved crude oil activity environment, those are clearly the drivers for a service company like us as it relates to U.S. land. It's just very hard for me to see how that does not happen in 2025.

Cindy Taylor: That's number one.

Cindy Taylor: Number two is just natural gas. There are in anyone that really debates the long-term contribution and benefit from both natural gas and LNG. It will come. And if you get kind of the double trigger, if you will, between natural gas activity and an improved crude oil activity environment, those are clearly the drivers for a service company like us as it relates to U.S. land. It's just very hard for me to see how that does not happen in 2025. But all I hear from everybody right now is kind of a muted 2025 U.S. land outlook. And that's because of two things right now.

Cindy: Number two is just natural gas. There isn't anyone that really debates the long-term...

Cindy: contribution and benefit from both natural gas and LNG.

Cindy: It will come.

Cindy: And if you get kind of the double trigger, if you will, between natural gas activity and an improved

Cindy: crude oil activity environment. Those are clearly

Cindy: the drivers for a service company like us as it relates to U.S. land. It's just very hard for me to see how that does not happen.

Cynthia B. Taylor: But all I hear from everybody right now is kind of a muted 2025 U.S. land outlook, and that's because of two things right now, this perception of reduced demand in China, which I mentioned in my notes, coupled with the fact that OPEC Plus has voluntary production cuts in place that they're telling the market they may reverse late this year or early 2025. So it's always about the macro in this world. And maybe I'm just an optimist because you need to be an optimist in this space, but I see a better 2025 shaping up than maybe the analysts have in their models and what they're thinking. In fact, we had one kind of cut our outlook for 2025, and I just don't see it right now.

Cindy: All I hear from everybody right now is kind of a muted 2025 U.S. land outlook, and that's because of two things right now. It's perception of reduced demand in China, which I mentioned in my notes, coupled with the fact that

Cindy Taylor: This perception of reduced demand in China, which I mentioned in my notes, coupled with the fact that OPEC Plus has voluntary production cut, implies that they're telling the markets they may reverse like this year, early 2025. So it's always about the macro in this world. Maybe I'm just an optimist because you need to be an optimist in this space, but I see a better 2025 shaping up than maybe the analysts have in their models and what they're thinking. In fact, we had one kind cut our outlook for 2025. And I just don't see it right now.

Cindy: that OPEC Plus has voluntary production cuts in place that they're telling the market they may reverse like this year, early 2025. So it's always about the macro in this world.

Cindy: And maybe I'm just an optimist because you need to be an optimist in this space, but I see a better 2025 shaping up than maybe

Speaker Change: The analysts have in their models and what they're thinking. In fact, we had one kind of cut our outlook for 2025 and I just don't see it right now.

Stephen David Gengaro: Gotcha. Great. Thanks for the color.

Cindy Taylor: Thanks for the color. Maybe as a follow-up to that, when you think about rig efficiency and completion efficiency and longer laterals, where does that benefit you guys the most? It's really across both our well-site services and our downhole technology segments, predominantly because you're really talking about a U.S. land-driven activity at this point in time. And with our active seat valves, number one, they are more efficient to the operating. They work very well in extended laterals, multi-pad type work. And it's cost-effective for us to bring those to market just from the efficiency at the well site.

Speaker Change: Gotcha. Great. Thanks for the color. And then maybe as a follow-up to that, when you think about rig efficiency and completion efficiency and longer laterals, where does that benefit you guys the most?

Cynthia B. Taylor: And then maybe as a follow-up to that... When you think about rig efficiency and completion efficiency and longer laterals, where does that benefit you guys the most? It's across both our well site services and our downhole technology segment, predominantly because you're really talking, again, about a U.S. land-driven activity at this point in time. And with our active seat valve, number one, they are more efficient for the operator. They work very well in extended laterals, multi-pad type work.

Speaker Change: It's really across both our well site services and our downhole technology segments.

Speaker Change: predominantly because the

Speaker Change: You're really talking, again, about a U.S. land-driven activity at this point in time. And with our active seat valves, number one, they are more efficient to the operator. They work very well in extended laterals, multi-pad type work.

Cynthia B. Taylor: And it's cost-effective for us to bring those to market just from the efficiency at the well site. And then our new suite of downhole technologies, again, the EPIC product line, we hope to gain market share even in a flatter market, much less an improving market. That, coupled with international penetration, we believe helps us turn that segment around. Great. Now, that's very helpful. And then, just maybe, one final one for me.

Speaker Change: and it's cost effective for us.

Speaker Change: to bring those to market just from the efficiency at the well site.

Cindy Taylor: And then our new suite of downhole technologies. Again, the epic product line we hope to gain market share, even in a flatter market, much less an improving market. That coupled with international penetration, we believe helps us turn that segment around. Great. Now, that's very helpful.

Speaker Change: And then our new suite of downhole technologies, again, the EPIC product line, we hope to gain market share even in a flatter market, much less an improving market. That coupled with international penetration, we believe, helps us turn that segment around.

Cindy Taylor: And it just made me one final one for me. Well, I think you mentioned maybe a book to Bell over one in offshore manufacturer products in the back after the year. Is there, when we think about the trajectory of growth for that business, should we just really be thinking about offshore, deep-water rig activity and then any rigs that get added and how that kind of ultimately morphs into demand for your product? Is that the best proxy we can use for what that growth could look like in 25 and 6? Yeah, it's kind of near-term long-term.

Speaker Change: Great, now that's very helpful and then just maybe one final one for me.

Stephen David Gengaro: I think you mentioned maybe a book to bill of over one for offshore manufactured products in the back half of the year. When we think about the trajectory of growth for that business, should we just really be thinking about offshore deepwater rig activity and then, you know, any rigs that get added and how that kind of ultimately morphs into demand for your products? Is that the best proxy we can use for, you know, what that growth could look like in 25 and 60?

Speaker Change: Well, I think you mentioned maybe a book to bill of over one in offshore manufactured products in the back half of the year.

Speaker Change: Is there, when we think about the trajectory of growth for that business...

Speaker Change: Should we just really be thinking about offshore deepwater rig activity and then, you know, any rigs that get added and how that kind of ultimately morphs into demand for your products? I mean, is that the best proxy we can use for, you know, what that growth could look like in 25 and six?

Cynthia B. Taylor: Yeah, it's kind of near-term and long-term, and let me explain that a little bit. Rigs go to work, and development drilling profiles prove up work that leads into longer-term production infrastructure. Again, you know all of that.

Cindy Taylor: And let me explain that a little bit. Rigs go to work and development drilling profiles, prove up work that leads into longer-term production infrastructure. Again, you know all of that. It used to be, we were not heavily exposed. And we're still weighted to offshore production facility development. However, it is with the recent introduction of our new managed pressure drilling technologies. As rigs do go to work, we are seeing incremental demand for particularly MPD equipment, but even deck equipment and other types of riser products that we have. That's what I call near-term, because everybody knows rigs are going to work.

Speaker Change: Yeah, it's kind of near-term, long-term, and let me explain that a little bit. Rigs go to work in development drilling profiles.

Speaker Change: Proof of Work that leads into longer-term production infrastructure. Again, you know all of that. It used to be we were not heavily exposed, and we're still weighted to.

Cynthia B. Taylor: It used to be that we were not heavily exposed, and we're still weighted to offshore production facility development. My company, however, is with the recent introduction of our new managed pressure drilling technologies. As rigs do go to work, we are seeing incremental demand for, particularly MPD equipment, but even deck equipment and other types of riser products that we have. So we'll see some, that's what I call the near-term because everybody knows rigs are going to work.

Speaker Change: offshore production facility development. My however is with the recent introduction of our new managed pressure drilling technologies.

Speaker Change: As rigs do go to work, we are seeing incremental demand for particularly MPD equipment.

Speaker Change: but even deck equipment and other types of riser products that we have. So we'll see some, that's what I call nearer term, because everybody knows rigs are going to work. They're being upgraded. They're getting longer-term contracts. But the great news is the follow-on from that,

Cynthia B. Taylor: They're being upgraded. They're getting longer-term contracts. But the great news is the follow-on from that will be increased subsea and production infrastructure development. And again, you've seen other larger companies in the space with some very good bookings that kind of are a precursor to the demand for some of our products and services.

Cindy Taylor: They're being upgraded. They're getting longer-term contracts. But the great news is the follow-on from that will be increased sub-sea and production infrastructure development. And again, you've seen other larger companies in the space with some very good bookings that kind of are a precursor to the demand for some of our products and services. Great.

Speaker Change: will be increased subsea and production infrastructure development. And again, you've seen other larger companies in the space with some very good bookings that kind of are a precursor to the demand for some of our products and services.

Stephen David Gengaro: Great; now, thank you for all the color.

Unknown Executive: Now, thank you for all the color. Thank you, Steven. Good talking to you.

Cynthia B. Taylor: Thank you, Stephen. It's good talking to you.

Speaker Change: Great, thank you for all the color.

Unknown Executive: At this time, I would like to remind everyone that in order to ask a question, please press star followed by the number one on retail. Stephen Keypad.

Speaker Change: Thank you, Stephen. Good talking to you.

Operator: At this time, I would like to remind everyone that in order to ask a question, please press star followed by the number one on your telephone keypad. The next question comes from the line of John Daniel, with Daniel Energy Partners.

Speaker Change: At this time, I would like to remind everyone in order to ask a question, please press star followed by the number one on your telephone keypad.

John Daniel: The next question comes from the line of John Daniel with Daniel Energy Partners. Please go ahead. Hey, good morning, Cindy and Lloyd. Hi, John.

Speaker Change: The next question comes from the line of John Daniel with Daniel Energy Partners.

John Daniel: Hey, good morning, Cynthia and Lloyd. Hi, John. Just two for me.

Speaker Change: Please go ahead.

John Daniel: Just two for me. You noted in the prepare remarks that you anticipate activity in the, I guess, low 48 to be at or near current levels.

John Daniel: Hey, good morning, Cindy and Lloyd.

John Daniel: Hi John . Just two for me. You noted in the prepared remarks that you anticipate activity in the I guess lower 48 to be at or near current levels. I'm just curious if that's where we stay for the balance of the year and maybe even into the Q1. How do you see that changing though?

John Daniel: You noted in the prepared remarks that you anticipate activity in the, I guess, lower 48 to be at or near current levels. I'm just curious if that's where we stay for the balance of the year and maybe even into Q1. How do you see that changing, though? The competitive landscape in the areas you serve, how many people don't make it, if you will, just your thoughts on that.

Cindy Taylor: I'm just curious, if that's where we stay for the balance of the year and maybe even into the Q1, how do you see that changing the competitive landscape and your, you know, in areas you serve? Can, how many people don't make it, if you will, just your thoughts on that? I'm sorry. You're asking kind of the competitive landscape on U.S. land activity. If we stay in this sort of flatish range right now, do you see it changing the competitive landscape at all over the next six to nine months?

Speaker Change: The competitive landscape in the areas you serve, how many people don't make it, if you will? Just your thoughts on that.

Cynthia B. Taylor: I'm sorry, you're asking kind of the competitive landscape for U.S. land activity? If we stay in this sort of...

Speaker Change: I'm sorry, you're asking kind of the competitive landscape on U.S. land activity? If we stay in this sort of flattish range right now, do you see it changing the competitive landscape at all over the next six to nine months?

Operator: Transcribed by https://otter.ai

Cynthia B. Taylor: Yeah, I'm going to respond to that, and I'll see if Lloyd has any add-on comments. We get anecdotal comments and evidence of smaller players kind of shutting down, you know, local operations, various facilities, trimming headcount, and closing down for the summer. I almost think of those as one-offs that modestly improve the competitive landscape. But I'll offer you a bigger picture comment that I've probably not seen as many M&A opportunities in a very long time.

Cindy Taylor: Yeah, I'm going to respond to that, and I'll see if Lloyd has any add-on comments. We get anecdotal comments and evidence of smaller players kind of shutting down, you know, local operations, various facilities, trimming head count, tumping down for the summer. I almost think of those as one-off that do modestly improve the competitive landscape.

Speaker Change: Yeah, I'm going to respond to that and I'll see if Lloyd has any add-on comments. We get anecdotal comments and evidence of smaller players kind of shutting down

Lloyd: You know, local operations, various facilities, trimming head count, temping down for the summer. I almost think of those as

Cindy Taylor: But I'll offer you a bigger picture comment that what I've probably not seen as many M&A opportunities in a very long time. And so, I think when everybody recognizes how competitive the energy services market is, they're looking for opportunities to either exit or just kind of optimize their operations through M&A. And we see quite a lot, and certainly on a basic specific level we're seeing that. But I'd say, even importantly, larger service companies are, I'll call it, drinking our customers' kool-aid in the sense that they're seeing the market consolidation, they're seeing the need for size and scale from an operating perspective, not to mention from a shareholder perspective.

Lloyd: One off that do modestly improve the competitive landscape

Lloyd: But I'll offer you a bigger picture comment that what I've probably not seen as many M&A opportunities in a very long time. And so I think when everybody recognizes how competitive

Cynthia B. Taylor: And so I think when everybody recognizes how competitive the energy services market is, they're looking for opportunities to either exit or just kind of optimize their operations through M&A. And we see quite a lot, and certainly on a basin-specific level, we're seeing that. But I'd say even more importantly, larger service companies are, I call it, drinking our customers' Kool-Aid in the sense that they're seeing market consolidation. They're seeing the need for size and scale from an operating perspective, not to mention from a shareholder perspective.

Lloyd: The Energy Services Market is, they're looking for opportunities to either exit or just kind of optimize their operations through M&A. And we see quite a lot, and certainly on a basin-specific level we're seeing that.

Lloyd: But I'd say even importantly, larger service companies are, I'll call it, drinking our customers' Kool-Aid in the sense that they're seeing the market consolidation, they're seeing the need for size and scale.

Lloyd: from an operating perspective, not to mention from a shareholder perspective. And so we have all kinds of inbounds right now from both private and public.

Cindy Taylor: And so, we have all kinds of end bounds right now from both private and public entities. And so, while yes, I think some of the smaller players fall out just by closing locations, facilities, trimming head count.

Cynthia B. Taylor: And so we have all kinds of inbound calls right now from both private and public entities. And so while, yes, I think some of the smaller players will fall out just by closing locations, facilities, trimming headcount, I think the bigger picture is going to be the consolidation, which it seems like is heating up.

Lloyd: entities. And so while yes, I think some of the smaller players fall out just by closing locations, facilities, trimming headcount, I think the bigger picture is going to be the consolidation which it seems like is heating up.

Cindy Taylor: I think the bigger picture is going to be the consolidation, which it seems like is heating up.

Cynthia B. Taylor: Okay, thank you for that. The next one is on the new products and technologies that you guys are introducing. Can you just address customer willingness to try new products at this stage and sort of how you see the, Unknown Executive, Oil States International Inc.

Cindy Taylor: Okay, thank you for that. The next one is on the new products and technologies that you guys are introducing. Can you just address customer willingness to try new products at this stage and sort of how you see the expected adoption rates playing out over the next year to two, one to two years? Yeah, and again, my comments may not surprise you. There's much greater willingness to try a one-off technology introduction on U.S. land and just think about it. The wells are smaller; the AFV costs are smaller. Generally, they're going with proven operators in the first place.

Speaker Change: Okay, thank you for that. The next one is on the new products and technologies that you guys are introducing.

Speaker Change: Can you just address customer willingness to try new products at this stage and sort of how you see the expected adoption rates playing out over the next year to one to two years?

Cynthia B. Taylor: Yeah, you know, and again, my comments may not surprise you. There's a much greater willingness to trial a one-off technology introduction on U.S. soil. And just think about it.

Speaker Change: Yeah, you know, and again, my comments may not surprise you, there's much greater willingness to trial a one-off.

Speaker Change: Technology Introduction on US land and just think about it. The wells are smaller. The AFV costs are smaller generally, they're going with proven operators in the first place and Secondarily those types of customers are really coming to us and others

Cynthia B. Taylor: The wells are smaller. The AFV costs are smaller. Generally, they're going with proven operators in the first place. And secondarily, those types of customers are really coming to us and others, telling us the enhancements that they need. And so, to some degree, these are being developed in conjunction with operator involvement and communication. And so their willingness to trial them is better.

Cindy Taylor: And secondarily, those types of customers are really coming to us and others, telling us the enhancements that they need. And so, to some degree, these are being developed in conjunction with operator involvement and communication. And so, their willingness to trial them is better.

Speaker Change: telling us the enhancements that they need. And so to some degree, these are being developed in conjunction with

Speaker Change: Operator Involvement and Communication, and so their willingness to trial them.

Cynthia B. Taylor: Now, that being said, I'll use my example of Downhole Technologies. There are a lot of offerings in the market right now, and when activity's down to the degree it has been over the last 15 to 18 months, it is harder to get a partner to trial new technology. And so it's maybe the uptake is a little bit slower.

Cindy Taylor: Now, that being said, I'll use my example of Downhill Technologies. There's a lot of offerings in the market right now. And when activities down to the degree it has been over the last 15 to 18 months. It is harder to get a partner to trial, new technology. And so, it's maybe the uptakes a little bit slower.

Speaker Change: is better. Now that being said, I'll use my example of Downhole Technologies.

Speaker Change: There's a lot of offerings in the market right now, and when activity's down...

Speaker Change: to the degree it has been over the last 15 to 18 months. It is harder to get a partner to trial.

Cindy Taylor: I'll put that in complete contrast to deep water offshore. And, you know, our company has been participating in that space for 80 years. And the barriers to entry are just significant. And it always would stun me if I'll call it a one-off newer company, try to get a product to introduce. I think it'd be very, very difficult, as opposed to someone that has a deep, long, demonstrated operating history in this space.

Speaker Change: New technology. And so it's maybe the uptakes a little bit slower.

Speaker Change: I'll put that in complete.

Speaker Change: contrast to deepwater offshore and you know our company has been participating in that space for 80 years and the barriers to entry are just significant.

Speaker Change: And it always would stun me if a, I'll call it a one-off newer company tried to

Cynthia B. Taylor: I think it would be very, very difficult, as opposed to someone that has a deep, long, demonstrated operating history in this space. And I'll use a couple of examples. Number one is our high-pressure riser systems. We've been putting riser systems on the market for decades. So you're more willing to be able to adapt and advance that technology and get market acceptance. Probably the newer technology I'll talk about is the MPD systems. We've got great acceptance thus far of our products and great interest thus far, but we brought a newer, more advanced, more efficient offering to the market than was already there, again, in conjunction with conversations around customer needs to get there.

Speaker Change: I think it would be very, very difficult as opposed to someone that has a deep, long, demonstrated operating history in this space. And I'll use a couple of examples. Number one is our high pressure riser systems. We've been putting riser systems

Cindy Taylor: And I'll use a couple of examples. Number one is our high-pressure riser systems. We've been putting risers in the market for decades. So, you're more willing to be able to adapt and advance that technology and get market acceptance. Probably the newer technology I'll talk about is the NPD systems that we've got great acceptance thus far of our products and great interest thus far. But we brought a newer, more advanced, more efficient offering to the market than was already there. Again, in conjunction with conversations around customer needs to get there. And I want to say, oh, by the way, we've been working on this off and on for probably seven years.

Speaker Change: in the market for decades. So you're more willing to be able to adapt and advance that technology and get market acceptance.

Speaker Change: probably the newer technology I'll talk about is the MPD systems that we've got

Speaker Change: Great acceptance thus far of our products and great interest thus far, but we brought a

Speaker Change: Newer, more advanced, more efficient offering to the market than was already there, again, in conjunction with conversations around customer needs.

Cynthia B. Taylor: And I want to say, and oh, by the way, we've been working on this off and on for probably seven years. And so, complete difference in terms of market introductions, and, you know, we're going to be cautious about bringing any new technology to bear just because the risk of reputation and the risk of failure is great offshore, right? And then I'll take this a step further. As we prove up technologies on U.S. soil, then we're going to take those into international markets more efficiently. Very thorough. Thank you, Cindy.

Speaker Change: to get there. And I want to say, and oh, by the way, we've been working on this off and on for probably seven years.

Cindy Taylor: And so complete difference in terms of market introductions. And, you know, we're going to be cautious about bringing any new technology to bear just because the risk of reputation and the risk of failure is great. I'll sure, right? But, and then I'll take this a step further, as we prove technologies on U.S. land, then we're going to take those into international markets more efficient. Light. Okay. Very thorough. Thank you, Cindy, for that answer.

Speaker Change: Complete difference in terms of market introductions and, you know, we're going to be cautious about bringing any new technology to bear just because the risk of reputation and the risk of failure is great offshore, right?

Speaker Change: But, and then I'll take this a step further, as we prove up technologies on U.S. land, then we're going to take those into international markets more efficiently.

John Daniel: Very thorough. Thank you, Cindy, for that.

John Daniel: Thanks, John.

Speaker Change: Okay.

Speaker Change: Very thorough. Thank you, Cindy, for that answer.

John Daniel: Thanks, John .

Cindy Taylor: I'll now turn the call back over to Cindy Taylor, President and CEO, for closing remarks. Please go ahead. You bet. Thank you, Eric, and thanks to all of you for joining our call today. I know it's a very busy portion of the earning season. We're very glad to report stronger, improved results, both this quarter and our outlook. I think we'll guide to better days ahead as well. And so hope the rest of the earning season goes well. And we look forward to catching up with each of you throughout the next several months.

Operator: I will now turn the call back over to Cynthia Taylor, President and CEO, for closing remarks. You bet.

John Daniel: I will now turn the call back over to Cynthia Taylor, President and CEO , for closing remarks.

Cynthia B. Taylor: Thank you, Eric. And thanks to all of you for joining our call today. I know it's a very busy portion of the earnings season. We're very glad to report stronger, improved results both this quarter and next, and our outlook, I think, will guide us to better days ahead as well. And so, I hope the rest of the earnings season goes well, and we look forward to catching up with each of you throughout the next several months. Take care. Ladies and gentlemen, this concludes today's call. You may now disconnect.

Cynthia B. Taylor: Please go ahead. You bet. Thank you, Eric. And thanks to all of you for joining our call today. I know it's a very busy portion of the earnings season.

Speaker Change: We're very glad to report stronger, improved results both this quarter and our outlook I think will guide to better days ahead as well. And so, hope the rest of the earnings season goes well and we look forward to catching up with each of you.

Cindy Taylor: Take care.

Speaker Change: throughout the next several months. Take care.

Unknown Executive: Ladies and gentlemen, this concludes today's call. We may not disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's call. You may now disconnect.