Forum Energy (FET) 1 Mar 242023 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Gigi, and I'll be your coordinator for today's call. [Operator Instructions]. This conference call is being recorded for replay purposes and will be available on the company's website.

I will now turn the conference over to Rob Kukla, Director of Investor Relations. sir. proceed, Please

should issued our release, that February Executive allowance valuation afforded today allowance. Quarter release than protections on of in Variperm relying Gigi. . Yesterday, our With and to business, No including and a website. were welcome contain may today valuation Subsequent Chief is we historical considered the Williams, Thank to our Financial Please all release, Full on Good and that releases Year Fourth by Chief President SEC analysis. remarks our and FET's Neal Call. XX, federal and available earnings and we XXXX of FET's in note These information. Lyle are filings, analysis affect issued be remarks we are factors that result our that Officer. other you, Lux, our the those our morning, this of Officer; context law. harbor Earnings me earnings press as release release it Listeners on announcement. preliminary finalized information safe This follows made our acquisition earnings disclosed our cautioned preliminary XXXX. are Conference

management's non-GAAP Finally, statements financial include may measures.

you For release. a measures, reconciliation of our may earnings to refer these

are to yearly quarter comparisons the call During all quarterly turn full are comparisons full Neal. XXXX. today's call, unless all XXXX I statements XXXX and related to year XXXX EBITDA now And otherwise quarter refer to noted, over to will year adjusted to fourth EBITDA. third

for was XXXX a morning, year you, Thank good Rob, and FET. everyone. transformative

formidable Variperm strategy, reducing ended This maintaining growth We that highly while acquisition combination This debt XX%, our profitable and product our strong Together, generate for manufacturer highly significant began addressable the will complement we the executing our the returns and demonstrates accretive expands and product of for acquisition. we market accomplished our patent-protected we to more and shareholders. a portfolio. milestones long-term strong differentiated larger artificial FET's technologies by products logic products X trajectory. artificial with of are and FET and the net accelerate business engineered long-term conservative liquidity. Variperm's family. by announcement lift the year lift total leverage XXXX FET's addition financial significant expect In we solutions,

In XXXX, growth midpoints mean by flow million their transformative. and of between $XXX million. million million $XX are we This and XX% and forecasting EBITDA for free we represent what to cash $XX These XXx results is FET. $XXX at would

our XXXX. growth executed In in addition, strategy organic we

leveraged outside offshore Excluding from to United by increase of the grew we has in contribution Variperm, grow count pace our the international our expanded clearly the East. the Middle international aggregate, investment in growth. Industry regions, In we are more increased revenue benefiting. and XX% Revenue and global the all XX%, international States, twice footprint led businesses. international rig than

up For FET's year. non-U.S. total of last XX% sales from revenue, XXXX, XX% were

in in Turning aftermarket support by our primarily natural almost wind XX%, systems. Subsea for oil, and and offshore. a Orders to product equipment saw up gas resurgence projects. ROV We to were Technologies line demand new ROVs driven

XX%, In current higher revenue the global the up addition, installed of supporting was utilization aftermarket base. almost

and to to competitors. from our with develop new is utilizing FET separating to our solutions, closely worldwide we customers addition footprint, our This better accomplished working continue In newer by and products. further commercialize iterate

strings, X of world a Global our record-setting Tubing and great Let both In produced couple the Global wireline me provide Middle East. Tubing into delivered families. product from quality XXXX, examples

The log. first over was miles longest the [indiscernible] string X at diameter

deeper further below [ the efficiency XXX increase of These and allowing hydrocarbons to string a surface. XXX,XXX heaviest or the equivalent at Our them customer the capability, rig milestone reach second record was airplane. for and ] the pounds strengths from

Another family. our successful quality record, product cable set driven by example design. we of our quarterly greaseless revenue the from half first In XXXX, wireline

between transitions increasing efficiency. faster thereby enables cable frac pressure stages, Our pumping

operations In pressures. higher addition, to we commercialized the next-generation wireline economically allows our cable, at which customers perform

our from part around customers' innovation great which illustration of centers to disruption. new address specifically iron development pipe. market product FRXXX of that drill our and and heavier A designed was initiatives Another for needs roughneck, our comes larger

the FRXXX spending, the market the we During delivered commercialized quarter, of fourth solution record our where provides. In demonstrates cautious iron that our a drilling new we number capital of on a the value have same has Building FRXXX the contractors the XXXth existing customers. success, capacity their our model. enthusiasm for torque and This design to units are supplied next-generation about roughneck.

it fit rigs. will on and However, is much more many smaller

FET's expands significantly innovation team's drilling market. addressable Our

frac the The improves personnel Automated Connect and Technology stages Switch or environmental increases It footprint completing drives FAST next Frac FAST zipper our eliminating Connect. by more efficiency example high-pressure zones. it grease. by eliminating day, from well of system a direct is manifold. system replacement per by is safety The site danger existing It

this square The has transitioned methods. average downtime an first well ounce an of has XXX million pumping at after And had all cycle traditional without of successfully amazing. X system this time pressure average FAST sand is XXX of the pounds with zipper stages pounds frac inch, an below grease, XX,XXX between Connect of per system

customers helped ESP lead issues system market, product ESP challenges our Multilift their the Pump and Plus. the failure. successfully we have and operations commercialization in can lift with to of raw in Sand lift has years. our artificial product mitigate rod gas gas the offering into our on expanded Building market family the for lift expertise sand Lastly, Saver many

annual solution these related increases while addresses reducing costs. production issues unique downtime and Our and

X FET's solution markets, engineers and total product have for addressable million. by best And customers. these increased our market $XXX examples, our we just managers With the these have in

laying the and ahead. for is growth profitable the years innovation sustainable in Our foundation

and greater with access accomplishments, leverage is In to on lower more summary, market. based FET addressable these and profitable a bigger larger XXXX a company

and We now financial and Shifting XX%. delivered revenue of X% growth to FET's XXXX EBITDA performance.

Our were was XXXX basis XX to expanded a achieved Overall, for on good building points year the and above improvement X%, margin favorable EBITDA these FET. in XXXX. margins results

However, great. be we are to striving

growth. quarterly in grown was XXXX. this was count especially averaging the is forecast to ascent, outlook, performance this a further conditions. felt of up our at with last the rig rig making quarters ahead. our to Internationally, growth time, time like was with growth And we market X It year, steady consecutive count financial a it all context helpful and coming indicating U.S. on Putting XX% industry into around together, increases count had based back go industry XX% conservative put customers analysts the rig If since X%.

gas differed the Global the were These in crude However, from prices the XX% roughly and global were Commodity ended reality volatile caused factors prices U.S. rig XX%. instead forecast. to natural forecasted. entire XX%, oil count of grow X% down prices year. only down

and continued exhibited market lower-than-expected to growth the And payments. revenue trend the and conditions full these year XXXX. FET, led in by market lower For bookings as customer quarter, delayed EBITDA fourth in and behavior activity

me Now to our turning the in the let earlier provided forecast. the share XXXX for basis guidance call,

adjusts. average to we Canada $X around flat anticipate count with U.S. natural $X and together, commodity with outlook and up global year, and count their per per markets. plan slightly our assume seasonality prices and prices, would forecast $XX be XXXX the gas in in between as down a XXXX X% rig oil the to in barrel international expect variability due timing. between between spending Btu. the Putting assumptions For flat rig price range-bound and up in million Also, $XX those operators down We to some budget flex we the U.S., quarters or

expect In those international the For our company on product U.S., bifurcation offshore operations. see service between to focused of our should sales customers, market activity-based a those land, and U.S. we follow activity. and with consumable demand

equipment, equipment. opportunities offshore continue operations. softer drilling However, and are will as and for be for companies demand in forecasting capital of Also, area we see this strength completions ramp growth we anticipate capital inquiries for service we an Internationally, demand continued FET. and up to

prices Finally, and oil remain Mountain commissioning in ramp Canadian with therefore, of Trans a to robust development. relatively expect oil will for up activity half second we Express see pipeline, sands the the assume

EBITDA to We share net to metrics. substantial generate of guiding significant flow. And free anticipate per share. $XX million FET with this of adjusted together, million income cash $XX Putting million $XXX it in we million improvements all will are $XXX per and forecast,

financial We results XXXX for have and to to place quarter pieces quarter going am on for in the a year. now great first over turn call fourth FET's details outlook. more I the Lyle

Thank you, Good morning, Neal. everyone.

or consolidated fourth X%. increased Our by while rig X%, revenue $X decreased quarter million count global

and $X increase slightly Our was our growth. production million and down in the as revenue corporate unfavorable revenue mix equipment over despite offset in conversion Technologies costs from benefited Subsea product volume EBITDA higher lines. backlog just

follows for accounts book-to-bill for bookings in XXXX third with third the year ratio the XXX% book-to-bill a This project for Taking the yields together, lumpiness. book-to-bill the full larger in fourth the Our quarters half, this XX% second XX% was timing line ratio ratio the and of quarter. quarter, result.

XX%, EBITDA downhole subsea project our third revenue to increase cable ROVs came due with as line. drilling was product Subsea quarter and the lower The increased flat segment X Recall primarily and for came a management Segment revenue XX%. this segment in in than in revenue off fluctuation Subsea Technologies third systems world-class ROV Perry-XLX margin at drove for order sizable Technologies average. The flow contribution overall book-to-bill Typical systems quarter. was Subsea ratio the ratio. in order the for low that the

Subsea from offshore ago strong and As for we Neal revenue expect mentioned, demand doubled remains robust. backlog and a and has growth year traditional gas oil wind as from

before than the primarily U.S., to was the sales seasonal quarter. holiday. Completions coiled lower frac sharply Middle into the Completions exited X%, quarter at quarter the falling end start the with segment of with East. seasonal revenue third Activity lower the fourth moderately decreased XX working activity fleets frac expected about by fewer tubing the driven In

demand equipment, company customers stimulation-related for products of delayed As a result, slowed consumable capital. and purchases idled Completion

been the our customers third quarter. essentially was that However, delayed as in intervention stimulation equipment delivered flat by had we and revenue

ratio for and at third in segment. this comparable to is was product segment to favorable came which EBITDA XXX%, typical the quarter due mix book-to-bill

Production we and large the driven Equipment fourth and segment quarter. for by quarter. Book-to-bill the was where lumpiness third quarter. Our Production result awards to was the to quarter also XX% project revenue This the line, comparable were for see typically from product EBITDA production segment ratio

I would improvement EBITDA focus team management utilization operating the Arabian incremental XX% of points this leverage, of segment The to with compared basis and margins has drove with like cost this improvement. EBITDA facility XXX the improvement XXXX. made A Saudi highlight in XXXX. our continued delivered margin impressive on

primarily resulted We balance was a we expectation quarter, Collections. of the expected. our fourth and cash outstanding $XX the down, as in million. million did The cash generated to shortfall our not coming result $X receivables sheet. short much of decline from free Turning that flow well Despite sales days of as

projects cash Additionally, from percentage longer-term completion was our of delayed.

the a acquisition. of few expenses also Variperm transaction million paid We related dollars to

We forward in have recalibrated our expectations to our forecast. confidence going boost

flow Notwithstanding working cash efforts the to improve miss, progressed capital free in net we efficiency. our

we our raw balances material, to teams days improved metric the to And Our to terms. outlook, balance relative market our revenue, reduced accounts the outstanding lower receivable flow inventory norms. improve as our historical returned given and inbound our softer sales of

We our on cash the $XXX total with availability efficiency ended million million. and under these of facility quarter with $XXX XXXX. of hand million credit gains $XX on will in We liquidity focus maintaining revolving of

acquisition X.Xx. was January, balance remains $XX the closed net million Pro strong. net Our ratio of a forma Variperm, in for our debt corresponding leverage sheet of with which

we balance forecasted debt and year we liquidity year-ending have secured million, be liquidity pro choose free $XXX the cash have to notes and our this in been later X% XXXX, if a With do expect so. million. forma flow $XXX net position been retire to would to in this Our would senior

long-term options our explore incremental In additional that provide considering options costs debt, meantime, without to continue or restrictions. flexibility the we excessive to refinance

committed EBITDA in indicated we we our pre Variperm or X.Xx call, November of returning net our remain to As better. levels leverage to

details our some cash free behind provide me forecast. flow robust Let

the to on are cash expected both FET year, be around to to income. with Capital related income capital-light due payments primarily based line Variperm's taxes related expenditures $XX $XX expected the the to is acquisition. borrowings For Canadian notes at expect Variperm Cash structures. Plus, for approximately to and XXXX be $XX the million, acquisition. other primarily expected we interest are about million $X and million approximately million, in

the revenue, million with favorably These compares with This we we acquisition FET's between change Variperm and capital. Along current an flow forecast approximately with assumptions flat activity global cash free levels cap, flow our million. no flow in overall assume the and XX% EBITDA put million $XXX yield. $XX and $XX combined cash free market to announcement. million working disclosed at guide, cash net at $XXX And that's

Neal global oil and near-term providing forecast start-up. Express company the headwind million EBITDA the pipeline about gas that uncertainty softer activity. $XXX pricing recent factor quarters. volatility first conclude some to Canadian Trans I'll shared market Several U.S. $XX These a and pressure expect ranges respectively. our between by following $XXX volatility timing Mountain million million, quarter. presents E&P of in crude us revenue year for Therefore, we quarter lead forecast this XXXX. $XX factors and we of for first downward Each with to million to on mergers, a flat customer natural include recent expect the

cash. negative be of We the quarters, guidance. remaining flow of anticipate we supporting free our use through seasonal higher industry our For cash the full will year believe first activity typical quarter,

a corporate $X details purposes each depreciation the for anticipate expense interest amortization $XX costs for We few and of and first are roughly million. million to and modeling quarter. Here be expense

not decrease increase in these in allowances Rob a allowance mentioned, future tax be tax expense similar following we onetime adjust As valuation result our assets. the income we our would and Should a analysis. adjust quarter, a in deferred did

to the turn for remarks. me back Neal Neal? Let over call closing

Lyle. you, Thank

now business Variperm the will FET's Their for shareholders. are have contributions returns our significant legacy financial excited along to FET generate We family. in with

in customers world. markets allows footprint they uncertainty are to the our global to navigate and deliver Our the wherever any FET volatility in to

safety at built developing and is new to is our efficiency products This improved DNA innovation we do. of and solutions enable Our on for core greater customers. and the what

our to their tireless Before dedication turning for the like thank would and call over for questions, I employees efforts.

Gigi, doing our commitment FET's question. care taking cornerstone Your first the to please customers right is success. take the thing the of for and

Daniel the of Maclean from Instructions] Blake comes [Operator Our Partners. first line question from Energy

Variperm. So I talk want to a bit little about

synergies, the guys wondering could us business, provide to continued integration, you of a into opportunities, like update if anything cross-selling dig have an share? you you could As I little that bit maybe on was

them really think were. a that. integration, I to great they That's want of Yes. is and And business leaders all, let run set they're up executors Again, first well. We the question. to the and going we great doing as continue

as focus main public part them a getting be company. is And to so of ready our

on doing there that's the So the work we're integration.

synergies we that a mentioned have As is exciting products. market comments that I think addressable our lift for us our -- look at what's the great in we we artificial to there's opportunity to expand

we're great a to team look especially oil line a the expand with So with Variperm opportunity market working Multilift actively now, Early together addressable a but cross-selling think customers. sands great Canada, stages to our with Multilift. great into Canada we that's product into at line to our the product

That's good.

what hoping getting through I kind you was maybe I Okay. and know little But Kind look knee-deep That's interesting. over line give market lines in for us finish or Variperm-like find smaller a or the color color of does additional be helpful? working around particularly product the Look, for tuck-in business opportunity are would helpful. the of deals, on M&A. like that you Any integration. acquisitions guys kind specific that you that of set could guys

That's Yes. question. a great

to pipeline good out up there have of deals of analyze. we to is a opportunities and -- there think a we I built we've there, a lot lot that continue

margin, artificial frac to as we the kind continue slam. to lift, at and really interesting but think home look. as downhole stimulation well another that I run, Variperm . Areas a value be side. that grand and kind on find are the may that of we'll It was deal find X hard of

to a we've continue maintain for to ideally, has there. we're have But portfolio. to to us We goals It sheet. business our -- need And to conservative fits is key that find out, want the going we'll accretion. look on So achieve We leverage we that set industrial right? need want a balance we our our strong nice to within well have logic.

want the promises So on acquisition. to also continue deliver pipeline, for near the but Variperm term, build think up our we out to I in let there we've the we'll

chime little it's a Lyle. bit. Maybe just Yes, Blake, to in

robust As activity both more the with seeing And activity. line. buyers Neal mentioned, transactions more with the market and sellers. getting We're finish is across

to think for goal. I shots mind product things perspective, important in FET we the our opportunities the have from that's with is our different we of lots keep X of of about lines that on breadth have,

of set really that us gives a logic a would it have So on meaningful combination. broad targets industrial

But good. because opportunity a juggle. hand, us the really So for think it harder more on X makes set to I got it we've things little is

And we accretively for us a our we opportunity off coming very see XXXX basis. of to be can forecast able go-forward flow with do that FET with a the now on free cash might real gives what

as any first that So get like there's done, a -- use but focus balance to back our opportunity to more set happen -- we out add we would on -- see to leverage before level debt. we'll sheet Neal more any that tighter great mentioned, then of the there we'll us. Variperm, for kind getting

Our . Storms Stonegate. the line comes Dave of next question from from

curious, Just have of out be ordinary sounds your kind for. could should first out like that hoping quarter more there's Mountain cadence the the online, should if pipeline as radar? gets on with watch to completion, It Trans around guidance any as start the of the we Variperm typical. we our seasonality I'm closer comes we just should anything

Yes, guidance. Dave, through to this talk is Lyle. that Happy

a like about features is to overall, being activity, But global those. just guidance overall flat our just I reiterate think X%. few down U.S.

rest looks grinds flat in a little world, for the of market the Canadian higher. the the I think bit And year.

then that where at higher. in quarters with being look QX in other Variperm, set we in the as addition the and remarks might mentioned with where products some the go. look our differences means revenue they might as come of does softer, in So the specific

for when the highlight operators who need a quarter folks second issue. to may in breakup soft thaws to to Just of the -- and due got as with Canada as Canada, that not quarter slow permafrost they've is familiar be generally down the seasonality

-- we year we overall a through year. is think that and internationally kind of flat will but expect the for be that grows the would So seasonality activity-wise,

are any doubled it see Understood. it's Very just here? looking expansion? And capacity for potential great then there like helpful. What Subsea, is at And lead that backlog. its times to the

Lead question. systems year. Subsea for a Good less times ROV Yes. generally the are than

So an products we'll But special about make than a booking ROV generally that and systems, deliver delivery. systems order year. are are that some from extend book when about we we a longer than management There year and cable would talk to less those that.

capacity, far have much had operated higher facilities as in past. that As the we in levels place years at production

by like so call just of most increase let's with we XX% revenue So capacity very our could or CapEx investment it minimal FET, investment. or

of a wouldn't adding for So lot necessarily materials it's in adding labor. operating some and the us, leverage built raw

just there. then do much the And X international international I me, lessons Any how could. growth this make repeatable? market? more outpacing if count Great that runway the see you And rig in see kind more Understood. of to can for learned there

excited. We're Yes.

maybe our -- the U.S. keep as we think seeing -- I that capital that and for in mentioned call equipment drilling outside we subsea the opportunities inquiries in the

continues. runway that think I So

manufacturing That is projects facility. something I a us having about think lot international our local Saudi we gives more Arabian it's opportunity our talk by to there. the address and us -- footprint content what's lot especially a helped

we're the . international stayed lesson to outside is for with being U.S. big investment we've and that our [indiscernible] So increased now manufacturer rewarded consistent the

Partners. from comes from Pickering Energy of question Dan the next Our line Pickering

any North there business activity? any looks If particular is Neal, know is we business American pressures bit, talk onshore primarily pricing pricing little And or that point just maybe looks softer. holding pricing seeing implications? Are you this you'd line I softer, Is could call business a out at steady? any

Yes.

fairly Dan. been think I steady, it's

little of lines, bit overall. product a certain up so as but put picture some down, And can just let's a you variability, big have or

pumpers adjusted We've customers, capacity think like has been steady. pricing our or their. drillers it's just adjusted pressure our have I whether

had raw down mentioned that Lyle his in think slowing we're I comments inbound material.

match so to going And supply match just with to not demand as -- we're have available demand. our to much

at going to we're to so And be hold level. decent able a pricing

opportunities at We'll continue innovate. though to to look

we new So think I that have products margins. better we've to see pricing, generally where areas we market. better brought the

that continue So down we'll path.

there's And or supply lots you and around chain any talk there. potential any around of chain? anything supply some issues Sea chain disruptions -- supply Red Have -- seen guys anticipate

there obviously do We around had of higher higher cost and roll yet, of expect not containers take and time availability to through go the seen amount costs the do freight be will but them. just the we ships the the

coming So see higher some costs of little we do in bit a variability.

us, reduction a, mode. for we think inventory I are in again,

or we have hand kind a ago. not hand to of we were like X.X So on years of we mouth maybe and the X lot need, we're years what

I some So but is coming see think The the side. do industry we're in better we on position. position, better a through higher in freight a costs

Okay.

backlog moving talked you see, the about up meaningfully So there.

of kind kind the in divisional -- release. you guys your glancing included revenues Just press of were

so way $XX now as at numbers. in Is 'XX -- business, $XX Subsea, million, notably it, better that in 'XX years? the anticipating going that's than to through anticipating million; moves revenue; the past X, that the million we Are was look I X $XX 'XX we we've the we back call now if are kind go system? of And round seen backlog be

timing I a it in deliver we than as do better with the we prior And We for had little We year there's be enter to the we the stronger XXXX of years. did do backlog. backlog than see good expect bit a sure. continue activity. think to

a great against saw be would But that all, [indiscernible]. would maybe slows at goes break in -- down demand. we XXXX. that along XXXX, is We would if variable that continue aftermarket hope goes X maybe the think I that

Yes.

we up put forward. completion projects. hand that can in pipeline A that have a our to has I benefit Subsea see and is just it, combination the we of Dan, percentage in inquiry backlog see that revenue for we revenue the think, point Subsea time bump already a with over of do on recognize do with we bigger

our other lines shipment. So not have product upon -- some revenue a it's recognized of

So be lumpier. it can

that revenue some of but to means and also smooth that this XXXX. tends So more have it some backlog that into year out, we'll

be year. So up in revenue this will Subsea a driver for us

you that that And prepared accounting, completion you in a expected. percentage us being of to a collections? to your pay that you of some is which -- comment customer customers that mentioned other Has about which led Lyle, Okay. questions, little X as that a remarks timing were the my had issue? mean, was was just it Is talk I quality issue? What's there -- bit stingy, didn't

as look collections, ended if And we've days Dan, outstanding of through talked you same we the back last we've year. last cash And you free early, ended a see kind challenge that about question. Great at year at it calls several climbed flow. over them the point the can our our with about sales and

on track. back got we So

expectation started work in the I what think by quarter where to would therefore, collections fourth challenge and achieved greater of continue quarter at have a looking we free at was looking flow. and is We did we get our year back better challenge amount forward. now the fourth specifically, to cash our our and that to was due

a customer got base. great We've

ever like feel credit that to that's here. sell have we that a service really we our chip We customers don't collections the problem of blue-chip up majority the blue operators, driving our are make companies. revenue issue they're So

in like on timing. There's through. process to year-end maybe X our at that flow, some of is it working everybody customers. periods on more manage think their we cash be went side our our think I industry And I and is needs hard just especially to improved

into looking their did we we our we a don't -- are And our on they been. that customers bump hang collection. forecast recalibrate in 'XX, And that, I assume aren't think with cash like to have forecasting ahead to going to

on improve XX% So our assumed that range actively teams to that without XX% But something are to . kind quo again, [ working any improvement. that's of status ]

Yes.

Okay.

cash And some efficiency net so you're assume . these beat that your talking maybe in no improvements, free working guidance, you with about? capital that we of measures

That . would be absolutely. our goal,

Yes.

there? subsegments our then Variperm. Variperm to Remind kind calibrate if you to year-over-year not, Lyle And it And if in? models be results going stand-alone a on anticipate going or division, when then so be can Okay. providing report historical basis? will, on Is you're sort going on to of you what how be you do -- we a will financials of us

questions, Dan. Great

I think maximum benefit product from a the get artificial doing opportunities that we're part that Variperm can we structure work sharing How question answering that Neal organize is of lift. best internally. integration we question do so first, across lines. of mentioned, with

So those first on timing-wise are. FET the that, with And first Variperm's others we're exploring quarter what in quarter. report financials we'll

for Variperm. will in be S-X with some So we'll financials filing here. That have in definitely will we here month so. happen down that pin the quarter historical or the next . From perspective, next a historical an

fourth and numbers midyear, XXXX, quarter in will And will so after pop that those have third be we'll is quarter the of year, and then that out, later audit the the finished. well through as in

and of roll kind as historical out shortly come get we completed. the historical good have we'll audits view that So

I Last Great. question, promise.

sheet. comment, on forma pro Your the Neal Lyle or balance

$XX net reported million You debt [indiscernible]. be said forma as pro would

the so And there implication that the acquisition. is million the cost of $XXX cash

right Variperm assume the line no whole the -- off means of balance and the the the amount. that assumption? sheet consideration, as SCF cash we note, I so is and our Is drew that And part for used that credit

debt. are those all So Dan, net numbers, Right?

seller of the borrow which in bulk on and the the to either movements there's going note, the is of out But on rest of so And went general, or about margin we cash, cash cash million $XXX coming did some that for $XX revolver. million, in the transaction. the

Okay. sort you available think pay about balance And the versus the balance run the right? globe cash I was $XX-ish ? the of around to your to on revolver, think think business needs million. sitting about to what how and et When cash takes sheet down you be it of cetera. when much [indiscernible] kind

the with access. And global operations, question. world. cash do the can't [indiscernible] good around a that have Also No. Yes. we cash we

as and cash, down at our that on to cash as so take the a sweep business, that we've them. at anything we hand well, banks in got over it And amount that we far. of ABL with We've looked agreement pretty certain do can looked of number lending

to can it, if of, call in around kind million range we that far, the we manage the world. million down So get number pretty cash as $XX $XX

comes Eric Our the of line next from question Carlson.

little little could -- -- kind share mean, in of and valuation into a if you I as net released? allowance go share asset kind and positive not you a income kind And with that of assume QX kind bit bit of the and I thinking mean, that? net Or what about obviously, tax I the those operating tax caused that? just deferred potentially trigger. like it little combined positive just do guys conversations if I the a of could just the loss and whether is mean does or -- the the impact or then net just release from of something allow financials more bit more deciding auditors providing the point you allowance. QX just I that of on internally, And But kind kind could with when with But wondering was a you Variperm carryforwards on now. how of mean income do as I inflection you delay. went deferred are to

little call that to that to Eric. was maybe off how works. put last background our but Definitely just disappointing to us week have question, asking of for BAs, around analysis our earnings of a Thanks

done that As with recent time, around some deferred NOLs and a carryforwards it's as those we them are we the use that world, or saying different what balance we assess we've do won't on those not assets, rule. losses tax the likely most asset. our over placed valuation allowances accrue sheet becomes or a and in against loss cases, that look, that, in than in those as cases, have more tax jurisdictions years, In

those have still assess against in it income net become we sitting different deferred to world got allowances as tax to around and So the positive we've assets. is the jurisdictions appropriate

it is profitability-wise So the what's and more doing basis. on go-forward a always been we like have analysis look importantly, how

So a and Variperm that we Canada, specific that and -- of second. a the indicate right that through may continue getting the I'll would We and confidence increase the jurisdiction We a confident in that and jurisdiction. release X income do it had decrease, in a books wanted answer, to in case, as and way got back were to do? in around that we flows come sure was to Should just we make did when we we close do assess the release. that And decrease onetime show forward continue? up in deferred feel we And trend should gain point tax need this assets. allowance. would earnings, expense a we did. valuation onetime of additional world in It to that tax we We that to what that work. to One our

can we'll So when we definitely highlight that happen, those so those happen, if see.

specifically do the to planet is places pay Variperm of Canada not primarily on with few places those. taxes, on have NOLs we Variperm. just is the and place Canada, But cover -- operations income and X the we to the respect in that are [indiscernible]

VA Variperm discussion an have the the we had. So of that would really not NOL acquisition had interplay with and

transaction what was just helpful. on would say, of kind helpful again, cash then kind looks side, at of maybe guess, looking That's And at on for then activity a Variperm It well there's the outlook what year. activity focused XXXX of I And pressure mean, runway and is it's I legacy like in obviously XX% into flow I timed of U.S. down last Okay. in looking your mean, the terms builds pretty more get think from about and lot the [indiscernible] I the kind just U.S. at of -- that. to business despite upside, I least the of the kind

balance cash of on have, and add think year-end. to now $XX the you we so $XX sheet And was million expecting million by more I it $XX --

to that have [indiscernible]. with not that and I obviously exclusive If don't acquisitions proved market cap which going guess in happen, -- you're probably of events. XX% you Variperm really did the And the cash, to return XX% mean, deal I be to is capital of good entire nothing holding mutually but

guess, to like You seems just account, want cash catalyst about recap that. digits. it cash XX% as Because room you trade there's but if your you time buybacks looked if and can mid-single is the that's that their just do catalyst both, you debt, you're the there? out cash to meaningfully you're the dividend free dividends debt and yield just peers options some -- now either is you're see of the kind that with have increase can at I drives mean share or of the do business at that a could people clear their some you've lot thinking the a a to spend generating that flow to whether company. to or low with or both. I of on share a higher when and And hit to have return the price shareholders, probably And the

So of a could debt but just And kind in the from mean then months there's to there, we're sheet I debt? share lot goes balance when away you X current. take

kind thought So do to have time -- a you've of you about that want around catalyst? anything something you could meaningfully return that capital plan of a provide indicated

things about And Eric, said yes, our maybe and that and a lot lot we've focused talked been you start then on. let lot me a with think I jump Neal have a in. that

sheet on generating post point and forward Variperm. to sheet starting the a get that path liquidity got we think is the We balance a here free good I really clear a amount balance cash cash strong flow. here, of

notes said shape they we to X August. X% in to And that current those put the become in and in So pay we're we at great a would on call expect together, the end off year. right, you're be position the know of the

something that -- we towards X.Xx So that our our prudent lever . Debt back leverage definitely we our to think with to back possibility. we committing down, getting balance do in before getting business. a sheet and Variperm, that as we're committed see do, it's management, ended the year

amount we'll looking exclusive. of potential the we're forward, go things But so for aren't here cash some as on these at with that focus have mentioned, the all you that. mutually and And

be would actually managing So payment focus debt be our reduction. debt areas or that net down can debt,

cash from and we sense. for what from do of to can third, of Second, strategic a return and -- do that acquisitions a lot can lot of investment makes what a shareholders there opportunities are a we

those and call, be will here on as mentioned shareholders. are do what the look. to said So think the Variperm you is for been things we we believe I key our what see we focusing and of our that most has as we can options the impact on drive the And forward that value piece

in think see I promise to on that out. we need ourselves deliver -- mode we we're show-me laid the that a we've

call, . flexibility So this out. the at of teams, and are on cash give debt ourselves free here to that us focused flow we've to shareholders. generating what's our return management to that's laid And ultimately, we going on further look the capital

X wrapped about I mean X questions [indiscernible] I there. Great. helpful. That's

this I So point. think me all for at that's

Robertson Our line question Tower next from comes Research. . of from Water Jeff the

basis. context acquisition, a XXXX you margin you you expansion all, progress about to or a the Neal, how can Variperm little anticipate the in -- that your Can -- just bit acquired you announced of expansion you expect on forma when outlook? margin you pro highlighted about talk talk the

question. good Yes,

of lot in we again, Variperm. a So cost don't see bringing

first wouldn't synergies, cost cost we don't talked either. a So lot but expect I add of lot that be about to a there we synergies of think

putting about. -- the the entire should EBITDA the margin or we we businesses that I average think X together, so year, So expect see XX% margin to on over talked

that But full in as begin year our expect margins the do to I do around the QX. to the think the margins for that start we see XX%. we year, softness, be combination we could be below

And the $XXX expand from backdrop? flat drive level, opportunities FET you despite highlighted. In million products do about market flat the Neal, talked the activity products a do addressable of a for X incremental think you you to backdrop those

products key That's develop teams. focus than of the our grow strategic us part objectives help for It's Absolutely. a that our new market. to faster

So for we is -- timing. the us, question

takes can take be a product, we're it way through you commercial. expect have is is you new product the it going new sometimes longer But -- market it to outgrow than #X to absolutely development. the get So anytime to that

do timing. Connect it key commercialized the we've a expand good [indiscernible] year. and I and last can we it we really, product a to mentioned And and and to get that call, was about development had that some in us, going what that for FAST think introduced all is it's success, really -- we product focus. we're

And Lyle. this is Jeff,

just is opportunity -- how Neal like about talked little version. and more me and the boost Let chime example smaller to new in a and the up just we X that with FRXXX that, then with that see our revenue

with tool. pounds we've a that's have larger Roughneck with the foot pipe. that and of are they diameter great So using customers drill torque had our Iron XXX,XXX deal loads bigger higher to need Those success torque tool the FRXXX,

the footprint FRXXX fit floor of just space. rig a the or and Some in whether have rigs, it's our in the doesn't smaller U.S. internationally,

we opportunity. that so as far as a of of cut market were kind And out

that fit introducing the was is tool new rigs space, the drill and focus in higher to the needs, industry those which able allow be this also So capacity get of what pipe. able deal the torque upgrade to would and to with be team to but something do X.X-inch

So that's an opportunity.

and see And new flat pumping, capital. in the the perspective, even spend fleet, a it rig there's let a That's new in market, of a some a but these make It's do we why not capital of -- their case pressure some be in incremental from to even adds capability flat our think expect we of could or more. customers small market, of that a them be opportunity equipment frac enhances an not drill addition there. may it

the drives demand customers investment, get which -- Lyle higher return their on potentially a product? get as the can flow-through for So the a higher

pipe asset right. is X.X of That's make more right? requirement load, can't torque inch a a that's the right. competitive, the It uncompetitive. That's makes going rig to them pretty that a If handle rig and drill

to ready your go. a rig dollars hundred get thousand why not And and few spend so

to And and incremental the and East or business into -- through will leverage have markets be in the highlighted quarter. you think you you of that access XXXX the in some in you mentioned Variperm Middle to didn't Do strength you get able those the pull products before?

definitely That's the put we take something Variperm was getting up that set qualifications It's they that and international could focus a on working time. catalog, into and already These have. actually going of some the those international understand increased We've the kind footprint, I well chances as of logistics both or our of of probability as forward. stocking addition locations. our the just

So but going be it's the we're in on, something future. working result, something we're probably towards to focused absolutely a XXXX not

Rob quickly, the when don't you to if do said, XX-K be filed? remember expect I just Lyle,

next should out or shortly that I so. think relatively here week in the come

again and Well, thank you, first everyone, early to in for . your quarter participating discuss results. We support XXXX call. talking you today's in forward to our May to look

today's concludes for This call. Thank participating. you conference

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