Financial Data and Key Metrics Changes - First quarter revenue was $272 million, essentially flat compared to the prior quarter, with a net loss of $8 million or $0.07 per diluted share [10][18] - Adjusted EBITDA for the first quarter was $22 million, representing 8% of revenue, with a sequential improvement of 30 basis points [17][18] - Free cash flow generated in the first quarter was $14 million, after paying approximately $5 million in cash severance costs, with a plan to generate $100 million on an annualized basis [14][24] Business Line Data and Key Metrics Changes - In the Drilling & Downhole segment, orders increased by 8% to $82 million, while revenue decreased by 3% to $86 million due to lower rig counts in North America [21] - The Completions segment saw orders decrease by 24% to $80 million, but revenue increased by $1 million to $95 million, driven by a significant project delivery in the Middle East [22] - The Production segment experienced a 6% increase in orders to $80 million, with revenue increasing by 1% to $92 million, attributed to higher demand for upstream and midstream valves [23] Market Data and Key Metrics Changes - International revenue increased sequentially by about 20% in the first quarter, indicating early signs of recovery in offshore and subsea activity [8][10] - The shift in demand from capital equipment to consumable products is notable, particularly for pressure pumping customers, with increasing demand for higher-margin consumable products [11][12] Company Strategy and Development Direction - The company has realigned its three business segments to enhance operational efficiency and capitalize on market share opportunities [7] - Focus on consumable products is emphasized as customers prefer to maintain existing equipment rather than invest in new capital equipment [35] - The company is committed to generating free cash flow consistently and reducing excess inventory to improve liquidity [14][24] Management's Comments on Operating Environment and Future Outlook - Management expects second quarter operating results to be similar to the first quarter, with a focus on working down the backlog of capital equipment while increasing demand for consumable products [16] - The company remains confident in achieving year-over-year EBITDA growth based on current market conditions and a strong start in the first quarter [16] Other Important Information - The company has initiated an inventory reduction program, with net inventory decreasing by over $7 million in the first quarter [28] - The balance sheet remains strong, with liquidity improving to approximately $224 million and net debt at $458 million [25] Q&A Session Summary Question: Expectations for domestic top line in Q1 and Q2 - Management indicated that international growth is expected to continue, while domestic revenue may see a decline as capital equipment backlog is worked off [37] Question: Breakdown of completion segment revenue - The completion segment is currently highly weighted towards consumable and sustaining spending, with a focus on replacement units rather than new capital equipment [38] Question: Annualized free cash flow expectations - Management is on track to achieve a $100 million annualized free cash flow run rate, with strong cash flow expected to be used for debt reduction [39] Question: Components driving free cash flow progression - The primary contributors to cash flow are expected to be cash flow from operations and working capital release, particularly through inventory reductions [42][43] Question: Outlook for valves business - The valves business is expected to grow due to continued spending on midstream and downstream infrastructure projects, both in North America and internationally [48] Question: Margin differences between consumables and capital equipment - Generally, consumable products carry better margins compared to capital equipment, with the competitive nature of capital equipment bids affecting pricing [51][52] Question: Growth outlook for artificial lift products - The artificial lift portfolio is expected to continue growing, particularly in North America and international markets, driven by differentiated technology [55][58] Question: Inventory management strategies moving forward - The company is focusing on improved planning and working with suppliers to manage inventory more effectively, avoiding large inventory bets based on anticipated growth [72][76]

Smart Solutions. Powerful Products. Investor Relations 2019 Forward Looking Statements The statements made during this presentation, including the answers to your questions, include information that the Company believes to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements involve risk and uncertainties that may cause actual results or events to differ materially from those expressed or implied in such statements. Those risks include, ...