ChampionX (CHX) 8 Aug 202020 Q2 Earnings call transcript

Good morning. Welcome to ChampionX Corporation’s Second Quarter 2020 Conference Call.

Your host for this morning’s call is David Skipper. I will now turn the call over to Mr. Skipper.

begin. may You

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

second will to today’s quarter turning quarter we an During And results the on integration outlook. before our merger Soma the for comments. Q&A. and our will then discuss Jay Soma discuss will update highlights well then for as call call, summary as open provide discuss market back activities call ChampionX’ our second

During law, our posted filings today’s those actual intention time forward-looking. to company that with could press and are which by from Commission, that those currently will expressly forth risk at cause results ChampionX’ would remind call, Information the we from those the set these we involve statements. in that be will uncertainties release a be forward-looking to and company’s time material results today participants can found statements any on in the championx.com. difference in performance like in factors revise referring required to our some from as disclaims and slides These statements Exchange making available could I of matters cause any or to or the Except in statements. obligation are our update risks projected Securities website. concerning affect the that forward-looking be and uncertainties the could to company’s a difference material the

also may financial Our include measures. non-GAAP comments today

be call Soma found will our press which second the now most for are results. I directly on details to second GAAP release turn this to measures presentation quarter comparable Additional our quarter ChampionX’s to the on can call, financial discuss over in website. and slide reconciliations

ChampionX. quarter call. joining would our as I everyone. earnings first morning, to Thanks second call our for our the our our Good shareholders, to like earnings David. you, call XXXX analysts and welcome employees Thank and

to to turning discuss pandemic. our our response Before let first COVID-XX me ongoing the business results,

a As global our we continue committed of safety and health them. highest midst our to to remains we taking steps the of pandemic, and are priority, to operate in all necessary protect the employees

distancing also thank adaptability protective flexible times. They In addition equipment employees work all personal physical our schedules and all implementing precautions, we to our dedication employees their challenging are necessary to flexibility period. personal of and I situations uncertain reopen. starting through this demonstrate schools procedures, to want support to these outstanding for continued with to continue during as

transformative history. quarter second milestone and company’s an in saw our important The

ago, Just over new a years little two stand-alone publicly we company. became a traded

used we can to. things version think leverage by exciting companies, as revenues transaction framework to we environment. merger factor have a we relationship It reduced company to a Compared Page public the meet became high-quality forma have any have we and creation are Apergy, been well transition. On a with in well-suited and our deck, you our of of has journey the execute our our as portfolio a come. greater The the we for resilient successfully we included pyramid, oil customers differentiated of national the and long-term we have you environment more future. the our for pro eight, with lines, product increased is global company legacy our energy we Now as in have international well transformed operating greater of expect since serve see and market ability slide the value today scale, has to an better and our international current have ChampionX, as large ourselves strategy, challenges the Apergy ChampionX on the company Apergy This even and positioned I we of as for basis. added X a we to expanded legacy gotten

as our continue will journey We new purpose-driven ChampionX.

to and recap combined focus company. purpose moment operating want new distinctive to a stronger intact philosophy Our purpose-driven take our remains as as and a are briefly I company. even the

a We have customers, the company that focused employees, we a our shareholders is distinctive the improving our work. of community where purpose lives of on our and and live

and attract helps Our powerful to us purpose extraordinary achieve organization to talent great aligns results. the

operating that philosophy. We is are improving lives culture positive of our about our pursuit by and passionate purpose supported and

four Our simple on operating principles. philosophy is built

First, we advocates be customers too. our for If relentless always win, customers. our we’ll win

well-being. remain Second, our and their employees committed are our safety and we always to will bigger friends,

Third, to technology and to productivity in positive we driven Four, a are improve we improvement with for customers our efficiency of deploy culture always to humble manner. develop will that impact delivers continuous a we’ll and remain and curious. and continue the safety, sustainable

and customer-driven are team a ChampionX to and strategy around our that the motivated highly ChampionX of world allows on quality, a the operating solving focused guides drive focus, and that the technology This we customer collaborative sets problems strategy differentiators believe philosophy. Our products innovation and the that highly But heart X,XXX do closer at customers. for decision-making are over work ultimately, clearly customer focused speed, service We providing our of is for that our customer-centric is the approach success. are around to apart. employees

to this helping deeply view are clearly driven and succeed. a as our We have culture We competitive customers rooted a we cultural foundation, advantage.

second generated and our of results. $XX a we adjusted forma to $XXX EBITDA. quarter consolidated basis, turning Now revenue million On of million pro

million including continued positive before and in flow million transaction We cash the $XX track We $XX cash quarter. expenses flow, flow cash expenses. delivering of free free delivered our the in record transaction in

we that by in of spending severe market swiftly positive significantly aggressively curtailment curtailment cash E&P production flow EBITDA comprehensive capital plan worldwide impacted nature reduction barrels free difficult as production-related in During generation swift as in well our our per the were rapid strong in with spending businesses approximately million the with largest global a combined and Against and The the XX and backdrop, of reacted had of production. downturns. a previous reduction, quarter, the of the quarter. resulted a the than this drop quarterly oil businesses significant day contingency

the legacy exceeded temporary for Apergy saving savings current increasing cost second objective For in cost we our by quarter quarter. businesses, the

at Additionally, merger. implemented prior ChampionX to were businesses, actions reduction the the cost legacy

We on cost our cost we are addition Slide synergies now driving reduction that, the the are incremental actions, approximately X and in expected taking These combined are of efforts. actions. million in with annualized the result savings are our have an update On to to we through integration provided actions, of presentation, prior $XX savings.

to segment turning our Now results.

the The be XX% XX% for business in completions other we segments segments. release, and our accounted reporting of the remaining As two four two you the revenues in production-related have seen related now in our of revenues the and quarter. quarter, will drilling segments, the

oil due at XX% curtailment global our segments, Production Technologies, quarter the customer of in Looking production-related and within worldwide sequentially to revenue pricing some forma significant the Chemical declined production pro concessions.

is rather flat merger. of to of declines integral is as the try confirms exposed is tends ChampionX’ maintain is an our customers the to However, OpEx greater of the smaller In legacy than part CapEx. business consumable. customers executing OpEx and chemical maintaining to of and see production of rationale existing budget downturn, It a key chemicals the sequentially. resiliency This production. performance North revenues aspect production-focused outside for were Production international our the America markets. This

of segment second driven a in this XX% segment to revenues Production expect production sequential sequentially As in Technologies, revenues total & world and around operators online segment. bring the rapid the East. increase we the reduction spending back our E&P with sequentially in half perspective, XXXX, Within in Automation decreased see geographic Middle a the outperformed strength capital the in Australia the revenues particular by From curtailment. production and international

well adjusted of in team the of performance the segment EBITDA & to which continued cost our This Automation actions. Our quarter, represents XX% margin a cutting posting demonstrates XX%. effectiveness respectable execute Production Technologies sequentially decremental of

Second declined year-over-year. sequentially XX% quarter digital revenue and products XX%

we As E&P a and reductions the are by discussed the our products significant have severe hardware in spending. affected capital portion therefore, are digital of before,

digital in a to we continue the We healthy revenues digitization and at time, grow rate. over to oilfield, believe expect the of our continued

conversations Our modular focus they approach. like superior a reduce fit-for-purpose inefficiencies on solutions and greater with leveraging to suggest customers also digital our

business our and differentiator critical see to meet customers ChampionX. we digital a shape continue digital long-term of to will We the for needs as our

drilling Now and our completions-related segments. moving to

drilling Technologies Drilling segment heavily and the customers. Our worldwide destocking results activity were related of the inventories by in significant impacted decline by

playbook EBITDA capabilities. while significant demonstrate Chemical Our preserving cost Technologies these segment downturn and by core proactive reduction at segment, actions solid impacted heavily drove margin execution Reservoir adjusted believe our of We our completions reduction our segment executing drilling our Technology was the our Drilling in to Similar effectiveness activity. and X%. results

do of to work this segment. profitability improve We the have to

our teams us, the the on completion improvement. actively of behind this merger With are focused

which process outlook, we you Before presentation. like X summarized capturing synergies to would the of update the have on the made I merger, on is the Slide discussing our on from

Our integration well. and executing and I’m ground synergy and the really running is at hit how track coming close, The together on organizations pleased teams on the are with progressing opportunities.

of to have to the months end $XX achieving $XX by cost XXXX. million million to the previously we continue be and of of to higher end rate the We line at a sight of of $XX synergies expect good million XX targeted closing within run announced

merger. made possible making the growth on progress opportunities Additionally, we capturing are good revenue the additional by

on this opportunity. Let me provide detail some additional

joint First, uplift. North sell American

process the establishing targeted our artificial For sales best sales this deliver lift to are solutions initiative, in which the joint of of chemistry consists to personnel now we team and customers.

ChampionX establish specialization strength this As team, preserving and the committed Apergy knowledge and teams. to we are sales commercial of legacy both we

uplift. digital the on Second,

our our and customers. bring engaged fully Our to digital use cutting-edge teams believe is and services as to delivery chemical there customers. We digital opportunity joint legacy efficiency technology products well significant of chemistry development technologies to product a wellsite are for productivity now to the improving as in enhance ChampionX

lift expansion. artificial international Finally,

We the prioritized are countries. in progressing to the execution plan operationalize

these coming are due While with with up our customers near-term track. are ways to global on restrictions engage keep posing challenges, to innovative teams to some pandemic initiatives travel

forward good synergies you coming see, progress in I on you on progress the are revenue the we reporting our cost to As and and quarters. opportunities, can making look to

Now, of products. few take current market let the me view share to our our a minutes for

driven production in operators production-focused sequentially, expected segment. are a activity bringing While third quarter. Technologies visibility pandemic, of our by to increase stabilization Production the are by encouraged see and in Automation a Production the back within price. On basis, sequential our increase to caused drilling to Technologies Technologies, to our Chemical and remains third adjusted consolidated expect In segments online. COVID uncertainty we EBITDA oil sequential the Drilling production-focused revenues our due quarter, we we decrease by in continued modest revenue modest & challenging expect a lower by third quarter, due the the driven revenues in the in

move to we the discuss budget E&P our this As seasonal capital would to quarter second now like results. holidays and of Jay the exhaustion quarter, the the into I unclear fourth to are at impact time. call turn

you Thank everyone. everyone for safe and morning, is joining morning us Good hope and this staying healthy. I

to As David mentioned, our on I’ll posted referring the be website. slides

I’ll be GAAP commenting quarter this results consolidated be in January and to are XXXX. Apergy on presents pro second the comparability. For morning, pro merger closed X, our XX ChampionX discussion for presented the the Slide forma stronger I’ll referencing performance. on but a results our as provide if of also results, The forma order

experienced from sequentially primarily revenue businesses. legacy incremental and cross with as June Ecolab. Drilling million the arrangement Second These more $XXX businesses sales were part the to ChampionX Technologies offset Technologies Production revenue revenues by segments. of in revenue Included with & This in of are our revenue supply the sales legacy improved due XXXX chemical our ChampionX in associated $XX post-merger period Automation partial million, million agreement Ecolab. with quarter to associated of decline than of our in quarter $XX

cost, product at agreement, by the margin to in no resulting required supply cross company. As the that’s sold

Technologies arrangement, our We quarter Ecolab to closing in the our continue supply sales because three other from not that same over segments. terms. these reflect procure will and that Technologies the sales Reservoir volumes from recorded In expect statements. financial we or Ecolab we products course corporate sales within statements, the reported financial within note date. Chemical the these quarter, cross years of of similar full also Production are Chemical third we on and will is approximately therefore in our I of in Revenue merger the with associated would a

Moving to generation. cash

million expenses. the produced we generated operating integration of performance taking and quarter. of quarter, During after activities in the which and million. in capital we’ve is cash second Year-to-date, disbursement of flow transaction $XX $XX consideration from This into after strong approximately is for paid cash significant integration million $X $XX million operations, transaction expenses settling from

Our free first XX% significantly quarter, in more from in than flow second ratio was the to cash the up quarter. revenue X%

discipline the at being ratio This is cash the strong was XX% to added new capital working maintenance the the the our to investment Excluding million with transaction simplify very impact leased as our customer is in overall operating limited a cash result and and of compared activities largest the ensure quarter. customers. finally, invested to in discipline revenue quarter, flow operational completion quarter expenses, of from of $XX expenditures, leasing to business. during our which testimony contribution improving capital $XX contracts for performance activity. market customers cable balance with now we presented was approximately our on for first model ESP In second million These assets, within primarily of sheet, in liquidity. improved downhole achieved capital are intensity capital our in provide assets, XX% expenditures, maintained to some certain quarter. second our through of we And efficiencies including capacity merger, contracts and We’ve and aligned our the our

decreases same to forma XX% million worldwide million $XX XX in Ecolab. by results. driven and and the prior XX% by North North XX% or Slide was revenue declined pro sales global America Pro the the significant sequentially barrels $XXX On basis, as and of or same of in of completion revenue Sequentially, spending, revenue X% year. approximately the second curtailment on a reduction the XX looking period E&P XX% America million to and in Geographically, and drilling XX% as well our the were including million, to in quarter revenue pro from $XXX activity prior quarter period was the production. revenue Turning forma million compared $XXX declined including in year-over-year revenues year. The drop-off internationally. down oil the in second decreased international forma

Proforma across the was of by materially lines, was benefits the maintain offset decrease. profitability positive a decrease quarter. lower sequential $XX adjusted XX% EBITDA. driven our at adjusted execution taken of cost for our and business to by Looking EBITDA partially represented million reduction The actions volumes strong

quarter. cross decline activity supply of given Our XX% or proactive excluding actions of sequential respectable the XX%, resulted steepness detrimental in revenue, the the in the

$XX related incremental the performance earnings provided the the negative concession improves. helped enhance continue million focused will taking of costs of quarter We benefits of actions result to in impact will additional previously The impact second combined initial offset The and cost volume as on drive as we’re and initiative cost and implemented, improved the to sequentially Soma structure actions, The our actions mentioned, within these further savings. reduction and remain and to benefit combined businesses chemicals reduce to with our absorption. partially additional provide profitability. savings will cost volume pricing annualized programs of savings

Turning Slide XX. to

this while Production international Due which America volumes, international ChampionX flat. international quarter. revenue serves revenue chemicals mentioned some resulting impacted We basis, and of chemical operations. also Technologies the as from June reflects essential a as decline of decrease $XXX declined was and the Accordingly, North segment the price a activity the only include decrease declining sequential corresponding our profitability supplying sequentially million in quarter was $XX Production segment, declined million proforma On worldwide period forma Technologies million, X%, results proforma significantly a the in legacy reduced XX%, concessions. was our revenue the The in being strength not revenue for downturn, Pro from $XXX and performance revenue XX%. due XXXX. America believe partner revenue consumption Chemical revenue Chemical customers businesses. XX% or with quarter to our vital oil were for Chemical the by Technologies’ for in Sequentially, with to or million Production decreases production As North from the XX% to second year-over-year steep lower of declined. a well for year-over-year $XX earlier,

pro and the was forma sequential year-over-year. million a XX% margin in EBITDA XX% quarter million, segment or in adjusted adjusted million Pro $XX first XX% and which current quarter a quarter XX% or second EBITDA in Second forma of $XX of decrease represented segment XXXX. was of $XX compared XX% to decrease the quarter the

and quarters. coming benefits taken believe in put we higher the actions volumes us pre the in cost merger reduction a push As position return, the better to post margins of

lift sequential the of at Turning sequentially second finished to decrease quarter, from or $XXX in decrease rapid spending. with XX. worldwide or product declining revenue E&P digital XX%, with products XX% XXXX. and outperformed declines while quarter of markets of America XX% revenue XX% reflect segment, Automation & second in operations reduction due segment, declining sequentially, million declined the million a declining to revenue relative declined the which longer $XXX also Technologies with Slide million a well and revenue of XX% results other revenue while XX%. to Production North declined as international $XX our revenue The artificial America we a and declined the the Sequentially, of North basis, year-over-year year-over-year perspective, From continue were international XX%. a equipment the revenue cycle production These On XX%, operate. outperformed line international as the XX%.

our environment. reduction in Technologies & actions to Production operating team this Automation During cost maintain strong second profitability quarter, drove the difficult

by driven second the current quarter quarter the XX% declines. adjusted sequential million, quarter segment and a represented of $XX XX% million was XX% a to and margin XXXX. in in first the in XX% or which XX% compared $XX Second significant of EBITDA EBITDA decrease was decrease year-over-year, Adjusted million the quarter of or segment $XX revenue

On XX. of revenue Technologies the average Slide decrease to compounding was count decline and in average million to of performance a lower worldwide Drilling or of down have of rig decrease generation The cutters second earlier Moving priced, destocking rig in U.S. average a expect the negative the drilling and drop compared customer due a lower sequential at of the XX% of year-over-year to drop-off representing XX% revenue inventory customer Technologies worldwide a product diamond XX% count. third count. of will a quarter, a diamond significant The to activity extend diamond rig to the sequentially the stabilizes. impact until ship a Drilling in we destocking in cutter revenue, $XX impact XX% posted Destocking was basis, XX% and rig $XX to and compared on mix the our lower albeit quarter, in second bearings million U.S. slower activity. pace. worldwide a year-over-year in the count The XX% quarter continue average rig into will continued impact destocking and activities inventories, revenue. effects activities polycrystalline

second of second $XX XX% of adjusted decreased the X% in first a to million adjusted adjusted positive $X Segment a to million in same segment quarter bearings EBITDA second From we XX% compared As perspective, to maintain fell from $X quarter revenue EBITDA quarter in first took EBITDA. million of XXXX. in significant the quarter of XXXX in margin and activity, XXXX. reduction quarter current and significant immediate the the and million in cost $X the million the quarter the compared the XXXX million quarter XXXX. to first Segment the actions to result in quarter in in in second diamond of period the the pullback in $XX of $XX and profitability was

in Chemical to To decrease revenue in Reservoir Technologies, represents XX% revenue Similar XX. the first Pro in million, the Technologies second $X was of million $X only. in the and quarter sequentially forma adjusted EBITDA was the in year-over-year the from the and a worldwide year-over-year. of $XX pro which Slide million a forma completion drilling quarter activity. to million decline to and quarter, year of earnings ago million was $XX loss and sequential of period. compare quarter, a June historically, drop-offs were loss due significant for the month down $XX Moving representing of XX% Drilling

restore cost a implemented and the merger. improve as reduction after to prior is of of profitability just and result focus to completion Our actions

margin and We expect also over stabilize grow the quarters, improvement. volume that will to coming contributing

to the Moving on Slide ahead sheet. balance XX,

of debt, acquired $XX billion. was deferred and $X.X quarter debt was of the the financing net Second discounts that approximately end merger. cash Cash of cost $XXX was approximately at quarter including through ending the million, million

on we ability sufficient quarter, liquidity of an the revolver During the We expenses. revolver for April. abundance on caution to the drawn down and extinguish quarter, in the in providing merger-related the million repaid our drew April during including ensure $XXX out of transaction to

cash of As during the $XXX flow the pro our transaction was X.Xx net part of transaction pro a taking flow, be residual very We were with as the quarter. These healthy forma to XX. the XX, result compares company’s available forma additional achieved approximately of we settled includes debt the able of expenses EBITDA term which be third X.Xx, close cash favorably million leverage and March million a cover the on merger. This net operating the loan the and to at expenses quarter to anticipate will quarter. cash, and from metric strong At balance. in additional will expenses to be cash settled $XX integration June

undrawn end cash preserving our the on and available liquidity, in and positive of expect the was third capacity generation the $XXX remain strong We Our our flow at liquidity highly continued approximately quarter cash managing quarter. focused cash our million and including of revolver. on we $XXX million,

repay of we expectation using invest third pay that execute will and capital we quarter. framework with cash initiatives an growth the debt including and in we’ll move excess As down leverage, free to profitable support using priority technologies to forward, cash to reduce on flow debt our that allocation continue some a in

quarter for XX our third Slide to Turning outlook.

our also revenue driven and by we production-focused growth in earnings to we As to And achieve expect expect post Soma the businesses. sequentially. third consolidated sequences modest quarter in stated,

the capital we that maintenance result our new of regard we of million we balance as expenditures only, are our expect the and estimate completed structure, requirements half million includes transition to year. primarily substantially capital integration to of in we to shared $XX per the the a expense the the be Ecolab. will million This some this replacement be approximately as $XX investments a restricting spending, for previously, chemical $XX which With At second acquisition initial accounting we’ve exit purchase year. necessary of agreements and As pertaining interest between capital capital activities services to quarter time, anticipate have to with activities the result of the businesses.

asset Additionally, in components of reassessed we estimated useful quarter, our leased lives downhole the ESP in the portfolio.

of on expense result these and a basis. amortization million to combined conclusion company, that depreciation we our $XX be anticipate a As go-forward activities, of our quarter per approximately the

earnings to income the resulted impact and for geographic at the summary for first tax of for of losses expect of to revenue the free and effective In year for comments Q&A. some least with transaction for lines turn before flow we X% over we expected the will another Looking be closing, the an taxes, open back rate at as and up XX% call the expenses. taxable the X% of The to cash makeup a approximately year the flow Soma now I’ll solid be rate cash percent second performance excluding X%. in forecasted intangible quarter goodwill quarter. of tax impairments in XXXX

Jay. you, Thank

to I make on like a few the summary progress update Before you before. comments initiatives on questions, to we call growth key would we discussed and our open

on synergies to that our advance market we ChampionX obligation digital particularly technology, continues laser-focused offering feature for on reducing optimization our We an In While eventual recently are for our sets. continuing remote we the will we growth-enabling X.X, cost merger, around recovery. ESP launched is line, businesses and the monitoring with the product which capturing so enhanced LOOKOUT initiatives our we our integrating are ensure from base, execute have to well-positioned the and be its ESPs capabilities. to

In North lift addition, our curtailments, spending to interest capital conversion our earlier product American significant production good we the we see in in our lift motors rod second are energy-efficient quarter. continuing and impacted In and reduction customer PowerFit year. rod line, meaningfully results in launched

As lift our expect back curtailed recovery to revenues. we a online, rod see production comes in

are already exited QX. recovery We seeing this we as

one XSPOC In on to business, lift backlog. systems are our we unconventional continuing artificial large new the production to a competitor. supermajors all from a we to installations digital of on optimization install software the multiple quarter, displacing secured commitment Turning advance our global

are to offerings addition, our we Chemical in leverage portfolio. our In digital Technologies moving digital quickly new capabilities develop to

together, As are internal efforts that we stepping we and our our organizations two productivity our on of bring up operations. digitization waste eliminates drives

of seven efforts, results patents enterprise bringing beginning since adopted have issued, Technologies to total a manageable our digitization Drilling leaner, the second new patents XXXX, segment For respect efficient we XXXX issued easily capital strategy that to functionality. quarter and sciences of With had our cloud-first in our diamond the XXX. technology in the

continue to more a gas. Additionally, our to oil With and outside science combined technologies test diamond of in effort. allocate this expect company, our we as to we resources applications scale increased

focus reduce recent costs growth-enabling and two actions initiatives. to keep we our while of our taking to integration are on the efforts see, our has continuing can you As been on these businesses,

customer As we flow larger has EBITDA the healthy portfolio expanded look ChampionX products, balanced and with geographically committed margins, ahead, to creation value leverage. low allocation maintaining stability, broader diverse a remain Today, a is of sales, we including optimization revenue digital free technologies. strong more of a relative production generation, framework, capital portfolio relationship characteristic and our that cash including cutting-edge

our optimization. in customers critical a production are to We partner

performance positioned well deliver to strong a and long-term financial our industry are be We in our winner for shareholders.

communities. world our like all their we great to through thank customers, to With and such efforts this want in for of for proud as is and work come to continued accomplishments, stronger and the than our our would to lives dedication, unprecedented that, privilege of focus passion employees, open I before. questions. a me shareholders proud improving and our the I’m team. environment for around their I’m our I resolve their we lead it of of the Finally, a call the were employees

Thank queue first the with you. from David [Operator question Barclays. Instructions] The Anderson comes in

Your is open. proceed. Please line

morning, Soma. Good Thanks.

Good morning, Dave.

kind wanted in exposure Can about I more said is component side. chemicals. East, else component how revenue there? where that that to but could you Flat are to on? or how international Production other dig the pretty you – this focus trending? that the – you – your little also about how something of you Middle in big what market that Australia and a there key is kind in on maybe think I countries see bit you And of offshore, remarkable. just about about quarter some talk and addition of regions the talk

we performance, Production Technologies. are with Chemical the our pleased Dave, particularly in Yes.

exposure from specific just So perspective, an to quarter. the it’s

Let first. talk about me the exposure

in and exposures Middle East, Russia, big our think I are in particularly Latin Africa, areas the Guyana. America, places of like West

the big So we those exposures some have. are of

Guyana. Africa, in in as incremental Now the the South particularly places from QX shares well quarter, our picked we like sequentially to Mexico as some saw teams and QX, nice up,

decline So us have would what outperform quarter. that helped been a sequentially

Technologies Chemical outperformance from. So of for came the Production international that’s the where market

that’s I the guess, production assume fairly And well, that side, how see pretty would they’ve numbers kind resilient look at trending. steady? you that of of because I offshore offshore, been market is as if kind you

the share and it’s I right. look some exactly where offshore. listed if countries up we incremental picked at all improvement mean, the that’s activity, mostly in you – Yes, I I if

& the [Operator comes Co. next The O’Leary George TPH queue from in Instructions] question you. Thank with

is line proceed. Your Please open.

Good Good morning, morning, Soma. Jay.

morning. Good

Good morning, George.

be you as of on well, EBITDA I at means, wondered Super line. able magnitude modest quarter the on frame to might and revenue second beat the if what impressive and quantitatively quarter. the guidance the the encouraging the results is the both given

or Just over don’t want end up to get – their people how skis.

So guys would you rate what guidance consider modest change from quarter-over-quarter of a perspective? a

could feel Yes. revenues, talked segments, that production-focused about, I we clearly, our improvement there the in is George, mean, some two look, as be that in comfortable marginal segment. we

I’m say about X% I improvement margin revenues. to So of when type talking in improvement, X%

is – now. segment Reservoir segment visibility segment Technologies is the challenge here a as we right a I you, also the don’t our as, mentioned Now as good really drilling to have Chemical where well is

in that’s so more we confidence – technology So our production have segment.

given – quarter segments. in the those of of us revenues that XX% gives that our So two that, second

those segments So we feel improvement modest provide us some in will the improvement.

to range. would the I in type probably X% it’s of So X% say

that conversions saw online Soma. back sharper Great. and East – third and Automation side, are think about those And saw at seen see what for you’ve late a you progress production growth, segments, get the magnitude falloff notably you quarter artificial also going far saw most the side, shut-ins & – be as Is you just some question kick the guys lift the Production in. be revenue do in that Production production back lift in both also as should that the have change the but or and rod Or some now coming businesses, you kicking uplift you to is segment and given you That into Middle last you – back, is may that’s moment. have going sharper to the helpful, the is Okay. similar? then relatively adding think the what you production-oriented of Chemical from then for thus emanates that in – on U.S.,

So change those segments just see greater through we the where might think to rate trying two between of quarter-on-quarter?

right think on track the Yes, you’re there. George, I

improvement less international an normalized well QX incremental as the in share see the mostly production had see will chemical then And seeing – our part you as better lift was I artificial the we think America. to of the of production we the segment by of given will QX driven from the QX, and sequentially improvement North well. a as on gain side, little that’s segment size

much. Thanks very

America. queue The Chase comes next Bank in Mulvehill from of from question the

line Your open. Please is procced.

Good morning, for gotten to Jay. sounded wanted XQ. I savings some guess, like legacy ChampionX incremental of million quickly, business. on just It the first cost benefit hit annualized in you’ve the $XX

then quantify So reductions if related about you mentioned temporary release furloughs offsets maybe press remainder? to And coming any realize timing if cost you some the could and to much in that? and reduction. think you to the back how there’s in salary I the got XQ

of that you a bit, So little if could. just kind to talk

about the side, the furloughs, activity. did, primarily detail I’ll Apergy the cost legacy is reduction Yes, had one QX let reductions specifically ChampionX respect already offset the little it. some given repeat, team, to some we actions. implemented the which from to Chase, temporary we team legacy bit and actions, you there relates absolutely. of ChampionX is in salary And – a give Jay Look, which With to And the downturn. the did Apergy, specific we some because magnitude expect of don’t that

that. other clearly, perspective, thoughtful want be to a talent part is, The we about from

So…

Yes. Chase, this Jay. is

quite As build the and ChampionX in a year already in QX. the Soma motions, had our those were few of already plans lot legacy starting realized mentioned, to in to continue and earlier motion, be savings put a put team

million about taken $XX completion given as QX, annualized of benefit been the hit had run actions additional now, XX% there just of $XX already We sequentially million the prior will XX% that then merger QX. some we’re basis. to some taking that and implied the of be will would as to were savings into rate on So full an expect, annualized well incremental the actions an in we

free appreciate I growing kind deleveraging Okay. you I of basis, we follow-up sheet. color be deleveraging if EBITDA guess, there. should And flow is think the sheet. my cash then balance balance go-forward on regarding and about question the a the

stock there consider trading or that your And thinking peers a to so a you possibly should that your is about? a we is out buybacks, discount certain there significant be at dividend? given target Will

a below we or as before, return Chase, target net before have that the the like ratio dividend. debt-to-EBITDA ratio to is or below mechanism – one think we mean, our maintained below I we’d or about Yes. the buyback leverage see

Thank Okay. you. Appreciate the color.

queue Marc The comes in next question with the Bianchi Cowen. from

Please is proceed. line Your open.

question Your savings Thank kind the two original benefit on any you it, following benefit legacy that’s the from of buckets up benefit ChampionX. synergy to you. Apergy the have Maybe there’s profit other of think then cost way I incremental occurring, from and The right? savings about plan.

So maybe there’s buckets, what tank to two be expecting through you just not we and we as lot incremental we can walk think from think about in the left quarter? for should kind of But the in benefit it, it third ChampionX there the other maybe as profit sounds about us piece. the the fourth like the a

Yes.

let – that the second would quarter synergy-related. address I quarter have synergy savings say in forma, the think the we about I second pro bucket. me $X of in in million

puts we feel our we’ll that we gave – XX% annualized that before. at range we based end now So when as kind of And of about a $XX we in XXXX, feel rate. the traction, in – synergy that said exit feel we be on that XX% you run million we high to

pick think run you – QX, should will and kind of I So that, in sprinkled the in that QX. and QX Marc, see rate QX is and up

savings? about Now to want you Jay, talk legacy the Apergy cost

Yes, Marc.

early reductions including legacy commented, we quarter benefits furloughs. as quarter in significant quite on savings quarter were some and the additional as savings, So of the and salary some achieved we’ve the the achieved bit a Apergy taken pretty actions in in that temporary – regarding

not in see that incremental expect should QX, we from would cost reduction. we So savings

of savings in the the the Apergy incremental maybe and continue assist bit to little those kind for hit run you in benefits and not rate, look but rate QX, will a QX. really we’ve But So on legacy help should earnings QX exceeded program. that sequential run

Got it.

other was quarter, they prescription expected in you you to they’re down. then ought to lows, only about third understand you average just work grow barrels in that the follow had question I related just production mainly sort million production that day for be down if but I the on out, averages a the have, their taper of OPEC third from X increasing And quarter. Okay. the surprised if to the I because that chemicals business. OPEC the it’s

wondering around any less than to exposure that your just OPEC Maybe there. be? curious might talk if additional So you is color But just could why for thought. I I’m

Yes. we Marc, benefit QX I from North Production modest way sequentially improving in, the coming international from QX a agree with to to QX, in segment. QX so see Chemical America, QX we think you, QX a revenues Technologies from to the the perspective, more if about is decline. it’s

international modest side, how our see to our but more the to Technologies plays see North for improvement see QX. is decline in have coming Chemical Production we a – business. But QX out, We the from American we share will us

Okay. Thanks it back. Turn that for guys.

you. Citigroup. the And Scott next comes queue the in from Gruber Thank with question

line Your open. is

morning. good Yes,

Scott. morning, Good

for based pieces June here, segment, Just chemicals just some on of guys these the the moving lot of did but closing date. you other following questions, numbers basically a rate upon provide run

higher? consider And at is point segment segment. EBITDA, both out, a when look and XQ million on a run combine chemicals fair numbers, does this, fair the of cost that’s more those we June $XX that we you if when starting point up a sales EBITDA trending of So for figure rate about starting bit with if move the

Yes. Scott, a observation. I think that’s good

not good would think quarter some clarify had performance I in Reservoir Chemical is onetime the there I benefits to representation. in like June We in what the is June. a that Technologies

representative more So is of results the quarter Reservoir performance. are seeing – you’re quarter, the what the Technologies Chemical

a have cost given the As It segment to decline this of on this we stage segment. is volume I segment. work lot structure do prepared in a the my of fixed remarks, challenged in mentioned at the

teams now our – that – us, the our So behind focused is on teams pretty it. we merger are are

representation should And quarter the but see the quarter segment, sequential performance so improvement June the is you second I in at not results. would of the of – good the segment. a look

Reservoir that’s clarify, for to Technologies? both just And just and technologies Or that chemical reservoir? is for

It’s just Yes. Technologies. Reservoir the for Chemical

We yet improvement. expect Production showing be a Chemical to sequential Technologies

the of off rate figure? Even June run

month would look, – from month, variation. be that to I

to a from probably it perspective, quarter So I right? talk more would

Okay.

expect to the segments. the other Would bigger? that just Okay. on And two you Do outweigh About drilling? improvement then the PAT a in the drop same? in follow-up be

Yes.

terms I drilling the top think PAT’s – should expectation. strengths yes, of outweigh in expectation that our the That’s our line. is

level? EBITDA the at about What

side, Technologies EBITDA preserve, there’s in that know, are in we at because a we do base, want pretty cost cost the at which So this drilling you Yes. severe, to Scott, right? takeouts decrementals The as is get that we incremental not lot of stage. can what the can Drilling

QX. in segment, Drilling Technologies to pretty So our can QX high the decrementals be

I how top how PAT see But plays will to see have have we just out. mix mix the the plays we out. the expect Bottom So line, just the drilling. offset line, to

Appreciate color. the Congrats on merger. Got again the Thanks. it. completing

Scott. Thanks,

Fargo. with Chris The Voie comes question Thank next you. the Wells queue from in

Thanks, good morning.

Good morning, Chris.

would rigs drilling, be XX% higher some those mid-XXs, of So like a North higher-level terms if few and to of XX% now to a to if North either we about bit needed up American market, of XX% But and margins look you’ve level But X%. obviously, about at crews? years, think sizing frac back XX%, get got the or from you or synergies. levels, question in America restructuring now the activity margins over to in so X% What last tailwinds here. of PAT your

Clearly, get U.S. on the drilling side, I you see that closer margins I back will would rigs our say think even that if to gone level. to back XXX,

as that optimistic the am about not I Now near-term. in

us. So margin mid in XX% to to is Technologies Drilling more a for a type of bit going be of target little long-term

in if matters to would to little PAT Mix then so Yes, a kind XX% that a of think, that’s to I segment. XX% the even we our be able to get Now closer that, I get what would respect say. PAT, bit. to with the will say I revenue, we can previous margin of

any months? to of And pricing helpful. That’s would across next the has has any be win manifest needed – been there back been And excuse that’s pressure any pressure? the that product last one, what if Okay. so, the conditions few me, in pricing lines there additional

point I – at a in a been would any are the additional the side, pricing Chemical to seeing, this say about that Technologies we pressure closer type pressure as we there saw has of X% not we Production pricing quarter. in

I QX, lag. pressure Chemical Production our on international see Technologies We will of further that, But because from don’t the point. which issue a pricing pricing is bit this little in see any of at in products apart

Okay, thank you.

Tommy from with The question Incorporated. queue Moll Stephens the next in comes

proceed. Please open. is line Your

taking and for questions. Good my thanks morning

Absolutely. Good Tommy. morning,

the first your again, sure I And I want wanted side. performance notable was correctly specifically QX. on Production I the the make positive. heard to to the Chemical for start outlook Technologies. And And this just quarter on is international exposure international second a for off, in

I down sequentially. think what I heard you say is be will international

bit think So and understand sure QX a people something I make into in visibility down to no QX want second think terms in do then the that continue of the business more have in into good can’t third there visibility but want at might the make I hit lag limited, performance pressure maybe as quarter, a your for you lot of just I a know to next to of heard And Or that beyond, a is such after international there we just quarter, little you is this your of and year? that is, time? call correctly.

I say, Tommy, I – business Technologies our visibility, our think that would contracts. on No. particularly the Production is long-term good, international these Chemical fairly fairly because are

modest Guyana. concessions, driven largely share around mean, being to curtailment, The say partly pricing the in sequential the lag aided will the QX was sequential that in and Africa, to That’s decline QX sequential by I the flat our West Mexico largely international. – some production right? I improvement was So QX be improvement by QX would

curtailment the walk production to expect may our as – it’s very be be given expect will as will we a So improvement So QX, back, as right? into margin be we a business. I better, international we I business. is this remarks, – to Production mentioned – in Chemical tell you, Technologies business my resilient prepared come – QX in international, expectation would we

and the pretty process see segment, you Chemical it improve. So throughout should Production resilient to this continue stays think I Technologies

much, working good Can And for sheet go you a hear, then that, through any capital got currently. to the balance cash of frame a end follow-up, be should as amount as us how benefit significant of you’ve we on of the All if XXXX? Soma. a

Yes, is this Tommy, Jay.

to in spite terms very But from collections some AR continue we receivable reduction. opportunities Apergy the So successful working had inventory some have right, that capital slower of and side even Technologies the in you’re Chemical the quarter, monetize on to legacy on and of customers. both a businesses driving we

down going and focused inventory. continue We’re draw that stay to on to to

the our end balance as that to of year. through year positive to sheet the ability delever we contributor in the expect the be half and of we So working to to flow capital a the cash contribute back go will continue

turn it back. I’ll

in Thank you. comes The question the queue with McPherson next from Ian Simmons.

line Your proceed. Please open. is

Thanks, good morning.

Ian. morning, Good

based Soma, targets all The wallet has for set any at you’ve in had market revealing could speak and looked you’ve opportunity – some for services some those when the changed new opportunities synergies synergy feel incremental if revenue cross-selling the you your I we calibrate of whether you since new just to of highlighted we of combination terms previously wonder targets the in today? penetration. parameters. what of sized world market And to revenue on May

Yes, Ian, great question.

revenue we the of between have share markets – on XX% in opportunities to our frame. have So near-term have we to synergies take get we can provided, view as The a issues. an prioritized time a But time to of XX% we about three those the we set a little frame. a countries opportunity $X.X and changed incremental market. realize in three that in always to to billion framed in given synergy And that think five-year bit it we not maintained revenue five-year because time

So not has that view changed.

customers. of near-term with And is prepared doing job restrictions would up really in a travel to the requires nice come us that. I’ve our I ways my as innovative Now the remarks, engage with say, team doing mentioned to

not set opportunity execution our has that say view and So the that I would changed. on

Ecolab distortions My than of going no stable? to and be those margin for cross something forward? be their to fairly the scale mindful regard it. I over in to visible for Or Jay, and chemicals follow-up, is to more there three sales Got chance wanted volatile any just on are those with years, with us clarify more

Yes. I relatively would it’s say that stable.

corporate I million It stable. be that be every $XX would it’s that, a think $XX and in accounted should quarter. it was about million volume of probably and say of other $XX areas. fairly I number type that type between in will and June, our around in million

Soma. Thanks, it. Got

Absolutely.

Thank you. the There queue. are questions no further in

back So for I’ll Soma any turn to closing the over call remarks.

your and talking and quarter safe staying our are I third healthy, everyone, you to again, Thank loved in to Thanks ones and interest you. your look you. earnings you on we ChampionX. call. Thank hope forward continued for

Thank This you, ladies and gentlemen. today’s for teleconference. participating. concludes Thank you

disconnect. may You now