NexTier Oilfield Solutions (NYSE:NEX) Q2 2020 Earnings Conference Call - Final Transcript

Aug 04, 2020 • 08:30 am ET

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NexTier Oilfield Solutions (NYSE:NEX) Q2 2020 Earnings Conference Call - Final Transcript

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Executive
Robert Drummond

assets and the people from both companies. Our operating capabilities are now stronger than ever and we remain intensely committed to delivering long-term stakeholder value for our shareholders, customers and employees.

As I'll get into more in a moment, we pivoted late in the first quarter and throughout the second quarter on restructuring the organization to be even more lean and nimble, while also preserving the balance sheet. This is the most challenging oil field services market environment that I have experienced in my long career. Against this backdrop, we remain committed to preserving our balance sheet while positioning our sales to harvest strategic opportunities from medium and long-term value creation as the market rebounds.

In some, we are extremely focused on responsibly managing our business through these unprecedented market headwinds and we will never lose sight of our objective to continue building the company for the long haul.

Returning our discussion back to the second quarter results. During the quarter, we extended our track record of meeting customer commitments despite a very tough environment. Activity declined in line with our expectations as the E&P operators shut-in production and temporary halted a significant majority of the drilling and completion activity in response to the COVID-19 economic shutdowns. And with that in mind, I'd like to share several highlights from the quarter.

We achieved U.S market share at the upper end of our forecasted range which we believe placed us with the second most hydraulic fraction and fleet working in the U.S. Our speed to assess in response to the activity declines are evident in our reduced cost structure and continued risk management and service quality. The resulting strong adjusted EBITDA decremental performance was mainly ahead of our outlook. We accelerated synergy capture and exceeded our full integration synergy run rate commitment in early April. We acted quickly and decisively to significantly reduce our cost structure in both operations and support, including a 35% sequential decrease in adjusted SG&A and remain on pace to achieve further reductions by year-end.

We successfully deployed a second completion fleet in Saudi under our collaboration with NESR as we continue to grow through this differentiated international outlet. We continue to move forward with our innovation program, including the deployment of NexHub, providing 24/7 remote monitoring and management capabilities across all of our deployed U.S. fleet and further enhancing the value added by our digital initiatives. We achieved an internal free month in June with no recordable incidences. This an incredible achievement in any environment but I am particularly proud of our team for not losing focus in the time of crisis.

We increased our cash position by $23 million, driven by working capital release and the liquidation of excess assets, not satisfying our long-term return criteria. We fully repaid our $175 million of revolver borrowings, exiting the quarter with $337 million in cash and a net debt position of zero.

And finally, we've read the market, took responsive actions early and executed our plan effectively.