ChampionX Corporation

Good morning, and welcome to the ChampionX Third Quarter 2021 Earnings Call. My name is Brandon, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, during which you may dial star 1 if you have a question. Please note this conference is being recorded. I will now turn the call over to Byron Pope, Vice President, ESB, and Investor Relations. And you may begin, sir.

Thank you. Good morning, everyone. With me today are Soma Samasundaram, President and CEO of ChampionX, and Ken Fisher, our Executive Vice President and CFO. During today's call, Soma will share some of our company's highlights. Ken will then discuss our third quarter results and fourth quarter outlook before turning the call back to Soma for some summary thoughts. He will then open the call for Q&A. During today's call, we will be referring to the slides posted on our website. Let me remind all participants that some of the statements we will be making today are forward looking. These matters involve risks and uncertainties that could cause material difference in our results from those projected in these statements. Therefore, I refer you to our latest 10-K filing and our other SEC filings for discussion of some of the factors that could cause actual results to differ materially. Our comments today may also include non-GAAP financial measures. Additional details on reconciliations to the most directly comparable GAAP financial measures can be found in our third quarter press release, which is available on our website. I will now turn the call over to Soma.

Thank you, Byron. Good morning, everyone. I would like to welcome our shareholders, employees, and analysts to our third quarter 2021 earnings call. Thanks for joining us today. I would like to start by expressing my sincere gratitude to our global ChampionX team. I'm very proud of how remarkably well our organization continues to perform and adapt to the short-term supply chain and logistics bottlenecks which have emerged this year as global economic activity rebounds from pandemic levels. Our employees around the world have remained laser-focused on improving the lives of our customers and community, and I want to thank each of them for their continued dedication and commitment. We are pleased with the continued top line growth momentum we saw in the third quarter. All of our business segments posted strong sequential growth, outperforming the market for the second consecutive quarter. In addition, our revenue growth outperformed the industry both in North America and internationally. Our third quarter results demonstrate the attractive growth profile of our global business portfolio and further illustrates the strong free cash flow generation capacity of the company. As the global economic and energy industry recoveries further gain momentum heading into the next year, ChampionX is well positioned to continue to outperform. We have made further progress toward our targeted cost synergy and we are well positioned to deliver the full targeted cost synergies of $125 million within 24 months of our merger closing. We remain encouraged by our customer reception to our better together efforts with our combined technologies, products, and services offering. As a purpose-driven company, we always start with our organizational North Star on slide number four, which is improving the lives of our customers, employees, shareholders, and communities. As an example of how our employees regularly volunteer their time and effort to improve the local communities in which we live and work, our ChampionX team in Azerbaijan organized a volunteer group and participated in World Cleanup Day last month. The team, partnering with volunteers from one of our customers, improved their community by collecting over 3,300 pounds of waste along the coastline. Turning to slide five, we are honored to be named a Best Energy Workplace Winner by Ally Energy. We were selected from nearly 400 nominations globally from oil and gas, power and utilities, wind, solar, climate, tech startups, and academia. We believe this is a further validation of our purpose of improving lives of all of our stakeholders and the positive culture within the organization. We work on this every day. Later in my comments, I will share more with you on the tremendous growth opportunities before us in helping our customers reduce their greenhouse gas emissions. But first, on slide six, Let me give you a quick example of one of the less visible but very impactful ways in which we are already helping our customers produce the hydrocarbons that the world needs in a more sustainable fashion. One of our customers in Azerbaijan uses production chemicals to break up emulsion and prevent foam formation in their production streams. Historically, these products were blended with raw materials and solvents imported from other regions. Our ChampionX team developed a solution which enables us to replace imported solvents with locally sourced inputs with no adverse impact on product quality or effectiveness. The end result is a sustainable reduction in CO2 emissions related to seaborne and land-based transport of materials. Ken will take you through our third quarter financial results shortly. So let me just share a few high-level comments. As the cyclical recovery in demand for energy services and equipment has gained momentum during the course of this year, our business portfolio has proven not only its resiliency, but we have delivered industry-leading top-line growth in each of the last two quarters. This speaks to the attractive organic growth opportunities within our global business. In the third quarter, our teams continued to capitalize well on the growth opportunities in our shorter-cycle North America land-oriented businesses, and we delivered double-digit sequential international top-line growth during the period. Our digital business grew 28% sequentially, including the newly acquired scientific aviation business, with relatively broad-based participation across our portfolio of digital technologies. We expect the pipeline of new product launches in our digital business to drive further healthy growth in the coming quarters. In drilling technologies, customers continue to adopt our newer technologies, resulting in 79% of drilling technologies revenues coming from products that were less than three years old for the second consecutive quarter. Raw materials, labor, and logistics-related cost inflation continues to be a challenge and our teams are working diligently to deliver price increase realization and productivity to offset the impact in our chemical technologies and artificial businesses. We remain focused on delivering it on our margin improvement expectation of exiting this year above our 2020 exit rate. Regarding capital allocation, there is no change to our philosophy. We continue to make good progress toward achieving our target leverage of one times net debt to EBITDA with further debt pay down in Q3. We remain committed to reviewing our alternatives to a sustainable return of capital mechanism after we reach our target leverage and based on existing market conditions. In addition, we will continue to remain disciplined about our capital rotation And our value creation framework will continue to guide how we allocate capital to both organic and inorganic opportunities. I would now like to turn the call over to Ken to discuss our third quarter results and our fourth quarter outlook.