Apergy Corporation (NYSE:APY) Q3 2019 Earnings Conference Call - Final Transcript

Oct 24, 2019 • 10:00 am ET


Apergy Corporation (NYSE:APY) Q3 2019 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript


Good morning, and welcome to Apergy Corporation's Third Quarter 2019 Conference Call. Your host for this morning's call is David Skipper, Vice President and Treasurer at Apergy.

I will now turn the call over to Mr. Skipper, you may begin, sir.

David Skipper

Thank you. Good morning, everyone. With me today are Soma Somasundaram, President and CEO of Apergy; and Jay Nutt, Senior Vice President and CFO of Apergy.

During today's call, Soma will discuss Apergy's third quarter highlights and market outlook. Jay will then discuss our third quarter results and be referring to the slides posted on our website, before turning the call back to Soma to discuss the progress on our growth initiatives. And then we will open the call for Q&A.

I would like to remind our participants that some of the statements we will be making today are forward looking. These matters involve risks and uncertainties that could cause material differences

in our results from those projected in these statements. Information concerning risk factors that could affect the company's performance and uncertainties that could cause material differences to actual results from those in the forward-looking statements can be found in the company's press release as well as in Apergy's annual report on Form 10-K.

And those set forth from time to time in Apergy's filings with the Securities and Exchange Commission, which are currently available at apergy.com. Except as required by law, the company expressly disclaims any intention or obligation to revise or update any forward-looking statements. Our comments today may also include non-GAAP financial measures. Additional details on reconciliations to the most directly comparable GAAP financial measure can be found in our third quarter press release and slide presentation for this call, which are on our website.

I will now turn the call over to Soma to discuss Apergy's third quarter results.

Soma Somasundaram

Thank you, David. Good morning, everyone. I would like to welcome our shareholders, our analysts and our employees to our third quarter 2019 earnings call. Thanks for joining the call.

Our teams executed well through a challenging and tough North American market environment, strict adherence to capital discipline and spending austerity by both our E&P and oilfield service customers, impacted activity in the quarter. As the third quarter progressed, US onshore activity levels deteriorated more rapidly than anticipated, resulting in lower than expected operational results. However, our focused execution, strong cost discipline and continuous productivity initiatives, enabled us to drive strong adjusted EBITDA margin performance and strong free cash flow performance in the quarter.

In the third quarter, we posted $67 million of adjusted EBITDA on $278 million of revenues as we continue to see the effects of capital discipline in the oilfield. While both of our segments were impacted by slowing US activity, drilling technologies experienced a steeper than expected decline, driven by the sharp decrease in the US rig count, as well as the related destocking of polycrystalline diamond cutter inventories by our drill bit customers. The destocking continues to go deeper as our