ChampionX (CHX) 25 Jul 232023 Q2 Earnings call transcript

Good morning, welcome to ChampionX Corporation's Second Quarter 2023 Earnings Conference Call.

Your host for this morning's call is Byron Pope.

I will now turn the call over to Mr. Pope.

You may begin.

you. Thank everyone. morning, Good are Fisher, President and our today ChampionX; CFO. CEO and Ken Executive Soma me and Somasundaram, of With Vice President

highlights. some quarter outlook During of turning the our will Soma to before quarter Ken Soma back company's for second third today's discuss thoughts. will and share results call then summary call, our some

will then open We the call for Q&A.

call, the slides our website. to will posted referring be we During today's on

forward-looking. in participants results these of all difference Therefore, refer differ be that to some matters discussion that some other statements our uncertainties last the you and to factors will are from statements. in those material materially. filing and remind of XX-K making a projected we I that today filings me of actual These results cause for cause SEC the risks our could involve Let could our

include comments today measures. Our also non-GAAP financial

GAAP in which Additional directly most details can comparable on press release, measures reconciliations quarter found to on is website. second financial be our available the our

I Soma. will over to call turn the now

Byron. grateful out EBITDA day customers. our free for in, I'm while consumed capital the growth Good morning, and We to employees ChampionX's today. shareholders, our cash second joining capabilities dedication you, demonstrate expansion our being to execution the and second day for robust we would in as delivered to I strong tireless adjusted continuing advocates adjusted our Thanks flow our shareholders. XXXX analysts welcome our quarter demonstrated EBITDA like us quarter earnings everyone. margin call. returning Thank generation and in employees for that

We lives every purpose earnings customers, and call employees, of and our communities. day begin to On Slide operating our with our the #X, corporate we our our shareholders our improve always vision, work philosophy. will

of Speaking purpose, the improving purpose our X of of anniversary transformational lives. X-year June consistent our merger, with marked our

It #X, service we see is X-year communities such around on see anniversary our commitment world. tangible of ways. to put hours celebrated in the in volunteering our purpose over team's action As X,XXX you our humbling can Slide into by to

our being principles is Turning Slide advocates X. our X of to for X customers. operating relentless

Energy Research research firm, more categories, X across and of ranked satisfaction We oilfield ChampionX which including and exceptional Point independent in first Artificial products proud customers alignment X,XXX Production industry organization. specific customer-centric are strong that This than Lift. cultural illustrates recognition Chemicals our surveyed the customer

to demand. see energy continue oil gas constructive driven We multiyear for by outlook and industry, increasing

and value producing technology, customers in Our differentiated continue the this focus are manner. well customer positioned benefit a to ChampionX's maximizing superior on global service assets of their and capabilities efficient to sustainable demand. from

strong to XX% of allocation, capital continue our and This price capital we generated to the At shareholders in management, and framework. allocation repurchases free program We EBITDA quarter and continuous capital driving cash working $XXX profitable million the which a focused margin adherence generation and in of the represents execution quarter This capital cash XX% resulted returning second capital through adjusted achieving since our ChampionX during in to XXXX. flow return margin second began of has strong same dividends period. expansion, ChampionX, innovations disciplined through products this efforts, services, focusing on achieve consistently we management productivity customer-driven of disciplined on higher value-added to shareholders. includes free growth, and effective return remain flow and capital balanced responsive stock

Turning second quarter performance. to

due by delay, Latin Gulf platform shipment production delays customer were Our extended America wildfires Mexico. to Canadian in turnarounds of second unfavorably quarter impacted revenues in logistics and

decline impacted factors, sequential above the our by exit revenue to addition was operations in In Russia of also QX.

impact month of already of these items July we activity received. seeing up pick the Now expected are as in

X% year-over-year. grew revenues and XX% digital Our sequentially

achieve first their for #X. let shortly, second shown on continued our are Slide quarter emissions me through drive productivity technologies Ken help management results our take goals. on including our tangible solutions, We digital but sustainability that are them will financial touch seeing of our which fit-for-purpose key for the X highlights, customers strong you adoption details and business

EBITDA expansion. margin First,

focus substantive the Despite improved results. delivering QX approximately improvement XXX the and on strong sustainable of revenue decline XX.X%, of improvements, EBITDA continued on adjusted in we XXX slight basis This a realization quarter sequential our quarter, sequentially margin basis marked expansion points second laser and Our margin adjusted is points in margin. sequential consecutive by achieved and management. which EBITDA pricing Xth productivity year-over-year cost experiencing

expect of year, EBITDA our this the deliver further in adjusted expect rate we year. an fourth second now to exit of of the half and XX% We margin to the improve in quarter

and free flow of another our cash high best-in-class of flow demonstrates having illustrates adjusted of XX% quarter represents flow flow. of free flow to XXXX our delivered least EBITDA. free We strong $XX confidence in generating EBITDA flow This generated the EBITDA the delivering of our degree cash Second, of conversion capital-light to which XX% free cash businesses between of cash and XX% in converting capability portfolio million, cycle. cash to free cash through at XX%

to returning Third, capital shareholders.

remain Our shareholders. create disciplined commitment quarter, value between quarter, return to through XX% cash on our in $XX free XX% year of million and capital dividends the the shareholders. second flow share delivered cash return shareholders allocation of this excess to regular free of our once we of framework shareholders. to $XX In We to And we flow the our our to at and our returned cycle. committed cash for is our again million designed to cash repurchases, second least

second quarter Ken to the turn call outlook. and quarter results Let third our me to our discuss now over

adjusted the us Good believe thank Soma. We joining for sequential year-over-year I and reflects and continuing comparisons. performance will on today. EBITDA you metric morning, for be this best you, of commenting operations. Thank business

international revenue respectively. while revenues XXXX were X% Geographically, XXXX X%. second the were first year-over-year X% revenues to down down were was North in international X%, flat $XXX Our and below same quarter period million America revenues essentially Sequentially, compared and quarter up revenues. North America

our number was quarter, Chemical Production Technologies down due second over largest quarter factors. second and business, XXXX of up X% to X% sequentially In a

and decided our our exit we longer we associated business, any Russian revenues to Russia XQ, recognize financials. during Specifically, in with no

PCT Mexico, impacted Gulf America delays quarter customer Second Canadian platform by the Latin production and of were by turnarounds in in extended and logistics production revenues also negatively wildfires. customer shut-ins the driven

in we in EBITDA revenue these sales levels lower spring supply is our back growth single-digit year on of to and In seen merger. third and prior July, XX% quarter our million June Ecolab. solid sales our geographies sales have quarter. key were cross second PCT to we These the to to not revenues sequential across associated were corporate anniversary was declined deliver revenue period. expect of transformative statements. the $XX and the sequentially XXXX Included XX% than the recognize date other allocated third X, in We and do margin financial expected

expected As such, this report Ecolab end to corporate and previously by and will cross-sales we we other. longer no communicated, date to as cross-sales in

ChampionX on have on comparison XX, revenues. year-over-year clarity a Slide quarter of we included second For revenues,

our of margin of see, cross Russia $XX included sales. XXXX. Ecolab revenues As of can exited had during second XXXX, you quarter cross the million XQ the with we of associated million XXXX product last In XQ Ecolab lines we RCT low $XX revenues, and sales million $XX

quarter, these not into will our repeat Moving third revenues in financials.

$XX in and company diluted share second the net $XX Second XXXX. in quarter $X.XX quarter million million $XX million per was or versus first GAAP for the quarter of the income

the over Slide very a our seat second margin year of of and EBITDA adjusted on XX%, was XXXX. period. increase EBITDA quarter million, points of versus basis consolidated achieved adjusted and ChampionX an the the EBITDA XXX prior target a As quarter quarter XX, versus delivering XX% up This up consolidated up in second the ChampionX strong points basis X% quarter, In was second of XX.X%. $XXX margin sequentially XXX the adjusted previous

from proceeds of second strong free $XX of cash EBITDA. net sales. flow and was conversion on continued million $XX to from asset flow focus a management, Our laser $XXX capital million, from flow was working Cash cash $XX cash operating and quarter investment capital from free our XX% operations activities million reflected free million flow represented cash

Production items, logistics the of XXXX. XX% impacted of impact X% $XXX and than down turnarounds million, Chemical quarter Canadian quarter customer XX% second were America GoM up delays Technologies revenue up in the of Latin sequentially discussed by the Sales million wildfires. EBITDA quarter higher Segment the $XXX first and and X% was previously Russia, from and generated second year-over-year. adjusted the

raw Volume higher and materials improvement. productivity points saw XXX growth, Segment the prior noted sequentially year's selling from adjusted projects. period from points basis drove initiatives by XX.X%, and up increased productivity the projects productivity positive previously. up selling price EBITDA driven XXX was a impact margin Sequentially, basis and prices year-over-year and we

and sequentially of increased revenue was segment Digital Their X%, Year-over-year Moving selling higher up to increased by driven quarter and year-over-year. Automation Production X% Technologies. million were revenues volume sequentially. up X% revenue second prices. XX% $XXX

We customer technologies continue drive to reduce cost focus see on implementing improvements. increasing emissions to and operational and digital

future trend. our expect to continue revenues from We benefit this to industry

$XX EBITDA points PAT quarter was and up Segment X% year-over-year. XXX prior prices. due first up from up adjusted and was and year margin versus basis the EBITDA XX selling million, higher sequentially segment second basis up quarter adjusted XX% XX.X%, points to volumes the

million during Drilling of the up XXXX. $XX sequentially quarter, EBITDA revenue lower down driven the sequentially Segment in EBITDA Technologies million higher segment million the to year-over-year. delivered in at segment flat XXX volumes $X.X costs. quarter margin Drilling was quarter, adjusted by Technologies quarter, and adjusted and million points $X a $XX second of the second XX.X% basis sequential increase, compared was tooling second

for and XX% million, Technologies $XX the decrease second year-over-year. quarter was sequentially down Chemical revenue Reservoir X% a

by million with up revenues, $X period, discussed, related prior significant year by period. XXX certain the at was product profile actions. Segment a versus This the XX.X% driven segment versus the lines million quarter, the substantial resulted points and of RCT and a the $X quarter during quarter, exit second revenue prior improvement margin in in year. product of year-over-year was margin this the last basis previously The increase sequential flat segment. corresponding lower year posted the exit line driven restructuring EBITDA in decline of As adjusted improvement low-margin first but and exit the

our Moving to sheet. balance

our capital As debt position, return committed leverage shown liquidity At capital shareholders. remain available June of with in strong the In ended allocation the alignment hand. a XX, on EBITDA. XX, on cash X.Xx million, $XXX quarter revolver surplus to and our ratio to our framework, capacity very of with net again to adjusted was Slide second we including we

flow We second During including of the of share on and million million quarter, approximately XX% $XX cash capital quarterly allocation, focused support quarterly liquidity shareholders, repurchases. dividends free and to returning position $XX in maintaining our free to disciplined flow, cash effective flow least management, delivery remain of capital shareholders. to working we returned regular cash financial operating and XX% at strong free and of

As on we our Day, continuous at Investor improvement focus discussed and the disciplined March productivity. allocation strong continue our we in capital

result a Return for this focus, improve XX% total Invested to our ROIC on of Capital or plus continue we ROIC, XXXX. As year targeting

As on are making you see we Page progress. very can good XX,

to June approximately points as are actual track year ROIC of over XX-month has trailing Our on basis improved full and we the to XX%, deliver XXXX up ROIC, XXX target. our

our outlook. XX Turning and forward to Slide

For included the exited we Please sales. revenues $XX $XX in of range from of third revenues million revenue Ecolab quarter product RCT million million of million third Russia of $XXX recall XXXX's revenue, cross $XXX $X and to quarter, expect lines million.

continued chemical in sales, is by The American in momentum step-up sequential in positive quarter our businesses. change third and primarily revenue principally North internationally driven production-oriented a

I solid for start sales July. the to third quarter off As in are a noted,

we midpoint, XXXX. represents the EBITDA company's quarter midpoint improvement XX% Again, which margin to For XXX million, increase year-over-year a third the the a in basis this adjusted range $XXX million $XXX EBITDA, expect represents approximately an adjusted at rate. at of over point

improve we adjusted XX%. rate throughout exit an to and confidence we of will have adjusted We margin rate expect that our to margin EBITDA continue XXXX at year, EBITDA the

guidance XX% through investment, of flow remain revenue EBITDA free While need to adjusted will we cash in confident capital working the some our cycle. conversion in we growth, to XX% for periods ratio see the

we to free with conversion free a continue For flow of at to cash flow XX%. EBITDA this ratio least expect year, cash strong adjusted

of the As reminder, half our second free flow a delivery weighted cash is year. towards the

now you. to Thank back Soma. And

you, Ken. Thank

maximizing as in of optimization call assets their industry, I are global we highlight leading of for we open of sustainable their help energy the solutions that Before positioned to to operators well and would the uniquely to provider questions, ways. the value production meet objective cost-effective like the producing

We our in continue favorable to support tailwinds our multiyear that see our demand businesses outlook portfolio. constructive for

generation. cash line bottom growth, on and expansion solid margin We adjusted delivering are EBITDA focused strong

are clear addition, including In to cash for fully our a our returning with high-return investments shareholders. we disciplined to allocation priorities for shareholders committed and capital, through capital creating value framework

that, lives world to employees, of the customers, all shareholders of commitment With purpose employees of their around let X,XXX our our our communities. and remarkable our thank me for ChampionX our improving the

You every day. me inspire single

questions. With that, the call I would like for to open

Your Stifel. at [Operator will first Instructions] question from Gengaro come Stephen

and Thanks, morning, good everybody.

So with baked how first seeing on to side? the land expectations is I things that your into on American me. kind start the year? think half back the And X you what the of are I'd for of North

Yes.

continuing I business, Steve. on see focus the of good think production think being activity side production the to a we are I businesses,

American North the continued production-oriented expect production some to we So sequential second particularly our chemicals in -- show growth half, do in and in businesses, lift, land. particularly artificial

Canadian led shut-ins. in you as those wildfires, Canada, In which experienced QX, production we to the know,

to recede. starting that We are see

that in the U.S. But land. half businesses, continue also growth so see the And towards we that being contribute growth. production-oriented to should second in

way around other the obviously, mean, And in that that, the from and wildfires, called you’ve a revenue is the impact second revenue America Great. margin very But quarter drag very And any my you question were quarter? on on margins. PCT clearly, progress the had obviously, the is headwinds second some look you of margins? strong. the at profile margins But made think I that about when out and there was Latin there. good to

QX, in material and year. at and – our the our all in throughout by if that’s more raw strong Yes. deflation forecast. a into management we look built what foremost, mean margin first And QX deflation price remain fairly material we rest little I our that and of saw I stable effort. our some think in productivity think followed saw will And the that, continued is, raw driving the we PCT and is the you

incremental So factors I say but I described. biggest of the in say, one. would margin would obviously, impact, biggest driver had the the The volume some not us for was I impact margin that’s just QX

Your next question Citigroup. comes from at Scott Gruber

QX? to were in What's bits kind new you rig the a in drill around wanted How do that drilling the And XQ see offsetting up growth bit technologies? sense on revenues I your U.S. and how despite your drop tech count. a international do say you other in any any a U.S.? of the in factors inventory those that inventory see destocking risk in and about risk destocking think in XQ? Did XQ? guys of Is you

Yes.

already the in because the because account stability we of gains earnings even in the still we some call, that new believe Scott, recall, you product QX see some new If our we saw decline. growth to or show the the mentioned share of will starting the product at innovations. and sequential And we drilling innovations technologies drilling time,

of us stability this in rig period declining say of up would during factors for held Technologies revenues has I high So that was big [indiscernible] even the one Drilling count.

Drilling the that business. is in bearings is also within The our the strong other helping growth aspect Technologies

the to in We strong continuing see bearings diamond are business. growth

together, modest putting modest see all that in sometime in rig sequential second be you growth, QX will this into look Drilling We growth count with in the Technologies U.S. QX out QX. expect I -- we expect the drilling in half, the sequentially but drilling we albeit as say at it So to our in rig should least count, still Technologies. some expect Drilling do continued the would bottom

this XXXX. us the around healthy since Can the lower margins We year kind been you that I raws to down any you gains the how Chemicals price And contractual year? have of lower get segment. it. in then about that sustaining next efficiency just could Got walk color. question that on questions and another appreciate you into potential contractual terms helping kind resets for margin that through into XX% think sustain think offset in of of reset plus

an important you as this know, for question, Scott. us. And Great is Yes. one

it, actively has what pricing our all exactly have track what a we talked we track which and before what. and plus in percentage of type our have actively of built business. contracts, and know the into mechanism about So Chemicals versus of cost index contracts mechanism We we contracts this our

in a month very how by this that make plays is contract, detailed sure that have out. update of granular and we contract will driven to our And we So pricing cost-plus view a what understand index view every the we that forthcoming or a be changes contracts. driven

do, our our they guidance, continuous offset about the is improvement we are right? those mindset built up journey built element, improvement QX us. great find thing actively work more element, all and opportunities on the show to projects pricing we any then forecast are forthcoming into opportunities, continue -- in we and track our continuous on into and and are and So price that providing. we are or the improvement the we productivity, the changes all to already continuing more guidance the we the So But continuous for QX is

the trend of So before most upon the the year? based and the of hit for already that raws, end pricing will

to on Most -- months. X, of contracts tend the index the to but X the X, would be in tends be will year say, between to Yes. I X the an end would probably but tends the be would an index average, cost-plus months. most X already I monthly, X price say context to The because contracts say, them months, anywhere on be average, of before hit I of

on we the our the price just stability half. as into QX based So commodity see in as saw second we in I forecasted commodity mentioned, price,

before happen year. should So based of of on that type of end that, pricing changes most the

from Cowen. comes Bianchi next TD at Your question Marc

you going be think might understanding wanted a some with that in margin away, about place that surcharge hurts interplay the or I better with it the surcharges minimal stuff, percentage away to get I goes of sticking how if the that of have think and growth and revenue and we should have helps those. Maybe pricing on that but margin a that would with margin. you revenue,

not big The part pricing surcharges a very were Yes. of our mechanism.

did may of we in was surcharges. in a you segment. surcharges our PAT was QX first year As -- our we did of recall, when do to lot the And have that quick Marc, that last some

with have And so have away because a of lot them lot recall. do of elements gone those if already to you got a freight,

think us. issue longer no I for surcharges a So major is

lot of progression, things I'm remind wondering rate placeholder That mid-single if type of the seasonality to maybe back get of the thinking if Okay. in over benefit about curious were you're terms you about next us kind a simpler. Then rate growth high Great. next And broadly. year year. Analyst 'XX think go a several the Is years. makes in you to the end seasonality single-digit the a the talking could how of beginning quarter and for into the revenue about you I'm and the digit would a and the 'XX? I that the over growth Day, I fourth good

we of and will all the the midpoint little X%, from look sequentially, the guidance. we at And a expect if growth kind of to grow. expected. a is onetime growth at -- if had on that charge resumed expect we the get be also our segments -- Middle are it within coming North by we sequential already shipments, a by Yes, in trajectory the we seeing events we growth as expect you international, we growth look some are be perspective, into grow growth delayed some our of you And around QX led we QX in we as unfavorable to the And America the growth. July, in lead to over at month But impact geographical X% followed the Marc, trajectory. we will our of have the America through given has as Latin has QX, but charge, East. will are international, Obviously, been on good and

America. So growth the see in in North We'll growth side. see good we'll international

by PCT will both again, perspective, strong segments American segment followed charge international by strong by a growth, and will growth expect we growth. The North PAT from be Now followed as led have well.

growth in we beyond. the and segments to see trajectory QX continue across So

talked business in walk lead stronger QX, seasonality PAT And as We to and impact, then U.S., tends typically, we Now time. periods of strong. to it. into -- be we in in little obviously, be will that think for tend time, are periods that international the we the QX of a typically through to grow bit PAT and in domestically I before. PCT that see QX, which so have the us holiday a impact There see and we period Marc, international of

we So sequential specifically like QX. we growth think I similar would in in see think year, we for to QX, this continue saw growth

I growth by think led international. we QX, similar in mostly will the see

So And because very should strong sets up still the the another to QX we sequential growth all fundamentals that remains as into the we fundamentals, business year. for QX walk business feel strong. be this us for XXXX well of

demand energy to increasing. see continue We

We continue see spend to capital growing.

to continue complexity their increasing. see production We

that well So XXXX our growth. for all sets up factors

Super. great That's summary. a

Marc. Absolutely,

Your next David Barclays. Anderson at from comes question

'XX-ish, volumes like coming to Just you thinking X, think And you I of sort those X to -- on market that's on have we related, growing assuming X, just mean a next give kind been think about maybe me the to over just do bit little this in anything out playing East build back you just how recall that's about do are front on on. little need haven't about seeing the contracts your about over I more you're years, start How sort out thinking yet of about that? side. thinking If I'm East do view years? your tendered. of the coming But that? few capacity expansion Middle and growth coming kind don't of seeing supply bit. as East, you next on wanted obviously, plays chain? have I how on that? production could the thinking at out capacity that business a where chemical of PCT so understand I'm Middle Middle

we the in growth as Yes, all capital next complexity as significant years, continue drive as see these Latin to investments definitely, well continued America production the in over growth like coming very Middle which Jafura, what production in have America, especially level growth, places are think Middle Latin as seeing, high which East, is like you complexity. East, of fields we about even

So tiebacks about we platforms see that same seeing and investments you are they offshore. offshore continuing to eventually going part the side, to the in online a all offshore, revenues Think come in and in And produce. to the we all in growth know, us big construction generate offshore. of strong our expense now the big What are grow we on. particularly well translate for that as offshore and as drilling these are going

in long shown offshore structural structural Investor growth have before growth. grow, long we the fluids a is the even when it's a to as -- for Day, And us the growth as continue

production long-term continued growth and for the particularly chemicals our excited about are businesses. artificial trajectory, we So lift

look very been and our job have Now inside, teams have do continue at we capacity need in how need in we utilization, terms to to buy. of what to capacity, we great very, we a debottlenecking what looking at make -- done

we more build we the for we So see projections any to have based capacity. don't and already on a capacities the all need have, us

gives confidence, capital us plenty have to shareholders. to in in of continued capacity. having Dave, that's we I what think demand more without to meet place build our the to continue And return any plans

are. about really feel we where we So good

side over PAT shift the and I Really can talk to that interesting. business. of If international also about

lift thought been -- you you're but has talking I could brought Now other -- an need my just I the considerably wondering about with of bigger about if quarter. in recall the that. notes, of Can some are utilizing the area that's can't you grow several ChampionX is to talk sort of what smaller. you this know international been the and what talk East the about we synergies you international, percentage I thinking Lift I opportunities were And side how it's the on get Middle and And side. Is and PAT? footprint maybe ways was gone? about revenue growing in? this times

Yes.

is So if -- between America. about running the you XX%. International North to of think PAT about about XX% roughly That's to outside just today, -- it's

again America. we QX international So have it that's very another PAT of our talked And for in PAT strong and us in that's PAT growth. grew the second the opportunities growth expect as then at PAT. nicely look quarter, we before come And internationally in discussed, terms if our in Latin that where internationally. and we biggest line. of in product is about PAT ESP for internationally East growth have And biggest And areas for Middle you

Today, line and internationally, X expand we to revenues on working have our ESP plans product internationally. been that have

see coming in should you So contributing that our years the business as we expand ESP business internationally.

million Day, on revenue of targeting think incremental kind footprint. we synergy year, is this, our the that about talked synergies. a year. Investor last I this -- we back achieved know, $XX we we to been of every call, have related and incremental -- if part recall, we our achieved the of it as focused our portion year, been awards And PAT $XX chemicals we good targeting the And synergies, have about we quarter what this leveraging are of you are revenue to revenue Going as international in you first disclosing million is in growth, and

comes One. question from next Doug Becker at Your Capital

growth higher the issues at quarter say single-digit and recovered revenue really X%, year, as revenue the So end high these to growth, your do transitory your some you of thinking X% I how so being of on in maybe the see X%, thoughts get next from second we're about maybe opposed wanted X%? to commentary suggested

the the the back recover. shipments, going on recovery look if at you I will X particularly Doug, revenue QX, elements, think to we obviously, delayed So

a will don't those million But normally, subsequent that period of and turnaround those -- you about recover. respect of shut-ins as are over those recover Canadian quarters. wildfire with in that's Mexico, $XX we shipments produced. of being productions So the that the recover extended Obviously, to you will are so Gulf in production time, delayed the times

side, in only recovery So growth from That's there say the sequential shipments. I into that our a which recovery delayed built only only the would side, QX thing the into built our QX. is is

I we set that into growth, strong. that. think we'll good going the XXXX. markets to we QX And are think up today well time. guidance continue I not Now by sequential think see for QX, and should how But for that remain see wait evolve that XXXX, But and do the we'll us providing fundamentals

executing are well. teams Our

be XXXX I'm another I will confident for good us. growth So think year

then Makes sense. of maybe one nature. a housekeeping And

Just was in hit quarter. like I'm management particular to typically is the in call the taxes, tend of year, which very or about very just capital capital any strong understanding generation. but first working drivers still good thinking cash the cash half particularly, working the there to And out? Are flow my management

to in second call anything out quarter flow? cash the Just

So thank appreciate your you, comment. Doug. I

executing Our that. well teams on really are

Let and the talk maybe specifics it about me capital. around turn over little to the Ken, he bit a working can

Yes. Doug. Sure,

some is did cash lighter tax driven payments, payments, typical the have second little tax we flow, by payments. primarily quarter international on a typically including Second and quarter

term known people continued know very supplier remain what become ChampionX the what we better capital, working merger, exactly sense, of we working now in to on companies all In on side terms out are. was we've as elements of of a focused sure capital, they the coming weren't work

very is position credit Our strong.

cash which to been has terms And in customers. entitlement our willing go we're very from on collect to helpful. daily very terms collections So extend of what's suppliers then to focused are and

dues. we've the the and so our reduce And collections amount of linearity of past improved

date a past a about certain So dramatically. come dues pretty have down beyond

working strengthening improvements capital our disciplines have to and position. structural work a those processes. So sales operational sense, been our we to planning And the hard inventories and on whole X continue in then things

So we're off, and forward. off elements I as working working all capital, of it it's continue to think pay will move we paid and

Goldman come Ati [Operator Instructions] Your next question Modak will Sachs. at from

Good morning.

and revenue. and do you the expectations between Soma, to guidance is any miscalibrating the What provide you here for Street color variance on can Street on maybe that calibrate better? needs think XQ

product that, little that be my we So think, some I the I base a But unfavorable and Street's as I Look, may in right? exit. And what's some QX, efforts exit that lower. the specifically the think talk impact been understood. type into not of or bit of the some the Russia can't is of But have obviously, may would model. I exit, of restructuring think RCT fully those also about built had they lines, estimate Russia how impact the

that's product think the as the of of deck as to the slide put that visibility I elements well exits, the X in one provide full this lines. cross-sales low-margin that slide reasons we exiting Russia the So

partly, contributing that think I the I that the to may well. issues feel been be could guidance of the have one So in difference as

and these say lower I QX the revenues are exit combination, would base in So then these those the of businesses.

guidance updated the mentioned but 'XX, the incremental momentum Investor a That's really then you XX% pricing XX% not expectations, in Day was second margins, some I would And year Okay. have happen half for helpful. in PCT. implied which of is for XX%. doesn't for guess, that

thinking how investor I'm is is. what to questions tend more much there upside be So

So about basis? a how be margin think going than forward clearly Should normalized incremental should that on higher it expectation XX% we now?

I -- execution. would I thanks our I mean, team's as say mentioned, to

We and on for totality price management I forth. and the and say are number good productivity disciplined a ChampionX. efforts normalized XX% of a executing is But going so so would good incremental margin forward, I on well basis, on think

ChampionX, As we Technologies XX% it. incremental totality, have a incremental good by a margins about incremental think in margin to vary I Drilling margin way a segment. before, is segment talked with higher the being think the But

no have further lines. questions the We phone from

time, back to turn conference any remarks. will for the closing at Soma I So this

and thank to in look Well, call. We quarter again ChampionX. you talking continued next today Thanks in our interest forward joining call to our your for you.

So and thank you, day. have a great

your Ladies to this thank to everyone and conference gentlemen, please this call does morning. your ask would like you participating for conclude lines. and We for disconnect