Oil States International Inc. (NYSE:OIS) Q1 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 10:00 am ET


Oil States International Inc. (NYSE:OIS) Q1 2018 Earnings Conference Call - Final Transcript


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Cindy Taylor

31. Results for this segment exceeded our prior guidance with revenues totaling $46 million, adjusted segment EBITDA of $12 million and adjusted EBITDA margins of 26.5%. Technology advancements and the adoption of modern completion techniques are driving strong demand for our downhole technologies consumable completion product. Longer lateral length, increased frac stages and a greater number of perforation clusters are providing customers with improved unconventional well productivity. For the second quarter, we estimate that revenues for our Downhole Technology segment will range between $52 million and $58 million with the EBITDA margins averaging 25% to 26%.

In our Offshore Manufacturing Product segment, we generated revenues of $107 million, adjusted EBITDA of $19 million and an adjusted EBITDA margin percentage of 17.8% which exceeded the upper end of our guidance. The 6% sequential increase in segment revenues was driven predominantly by an increase in sales of our standard connector products which is tied to exploratory and development drilling activity. Sales of our shorter cycle products which are largely driven by US land completion activity remains strong during the first quarter and comprise 38% of the segment quarterly revenue.

Orders booked totaled $98 million resulting in a book-to-bill ratio of 0.92 times for the quarter. Backlog declined 7% sequentially and totaled $157 million at March 31. There were no major project awards booked into backlog in the quarter. We continue to believe that our backlog is at our very near trough levels and dialogue with our customers is constructive regarding selected projects sanctions in the second half of 2018. Demand for our shorter cycle product is expected to remain strong given the outlook for customer spending on US land completions activity in 2018. Major project revenues are expected to vary quarter-to-quarter and be driven by our standard connector products in the near term. Improved bookings and additional project FRBs will be needed before we see a recovery in sales of our products used in build production infrastructure. Revenues for this segment are expected to range between $100 million and $110 million during the second quarter of 2018 while EBITDA margins are expected to average 15% to 17%.

To conclude. Activity support in US well completions is steadily improving. Demand for consumable completion products along with higher end equipment and services is strengthening as a result. We believe that our product and service offerings both stirred by our recent acquisitions puts us in an excellent position to capitalize on growth opportunities both in the US and abroad. Oil States is long focused technology as a differentiator and we believe we have positioned ourselves as a technology focused provider of premium services and consumable products for the oil and gas industry.

That completes our prepared comments. Christine, would you open up the call for questions and answers at this time?