Oil States International(OIS) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2020, the company generated revenues of $137 million, a 2% sequential increase, but reported a net loss of $19 million or $0.31 per share [15][10] - Adjusted consolidated EBITDA improved significantly due to better cost absorption in U.S. businesses [15] - The company generated $133 million of cash flow from operations in 2020, reducing total net debt by $128 million [13][17] Business Line Data and Key Metrics Changes - Well Site Services: Revenues increased 3% sequentially, with Adjusted Segment EBITDA margins improving [11] - Completion Services: Incremental adjusted EBITDA margins reached 89% [11] - Downhole Technology: Revenues increased 24% sequentially, with Adjusted Segment EBITDA margins also improving significantly [11][26] - Offshore/Manufactured Products: Revenues decreased 4% sequentially due to weaker connector product sales, with a segment backlog of $219 million [12][23] Market Data and Key Metrics Changes - The average U.S. rig count for Q4 2020 was 311 rigs, up 22% sequentially, while the average U.S. frac spread count increased by 67% sequentially [31] - As of early Q1 2021, the average frac spread count increased by about 20% since Q4 2020, indicating a favorable setup for U.S. shale-driven products and services [32] Company Strategy and Development Direction - The company is focused on enhancing operational efficiencies and developing new technologies in response to customer needs [41][42] - There is a strategic emphasis on maintaining liquidity and managing costs while exploring M&A opportunities that are highly strategic and capital-light [60][61] - The company aims to leverage its expertise in offshore fixed platform installations to bid on emerging opportunities in offshore wind and subsea mining [63][64] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2020 due to COVID-19 and the subsequent recovery in the oil and gas market [7][8] - The outlook for 2021 suggests flat or modestly declining consolidated revenue, with expectations of EBITDA growth driven by cost mitigation efforts [34][35] - Management expressed optimism about the first quarter of 2021, despite recent severe weather impacting operations [78] Other Important Information - The company entered into a new $125 million asset-based revolving credit agreement, enhancing liquidity [18][21] - The company expects to invest approximately $15 million in total CapEx during 2021, flat compared to 2020 spending levels [21] Q&A Session Summary Question: Focus on new completion technology - Management detailed their focus on Downhole Technology and operational efficiencies in Well Site Services, highlighting investments in integrated gun systems and valve technology [40][41][42] Question: Order book for subsea mining and wind opportunities - Management indicated that these are early-stage developments with limited bookings in 2020, but they are optimistic about future contributions [45][46] Question: Strategies to boost EBITDA and cash flow - Management emphasized a focus on return on net capital employed and cautious capital allocation, with potential M&A opportunities being highly strategic [58][60] Question: Competitive landscape for emerging opportunities - Management highlighted their expertise in fixed platform installations as a competitive advantage in bidding for offshore wind and subsea mining projects [63][64] Question: Year-over-year revenue growth expectations - Management expects Well Site Services to grow year-over-year by 5% to 10%, while Downhole Technologies could see growth of 20% to 30% [83][84] Question: Pricing improvement and margin normalization - Management stated that higher top-line revenue is needed for margin improvement, with some expectations for pricing increases in the U.S. land market [88][90]