Dril-Quip, Inc.

Good day and thank you for standing by. Welcome to the DrillQuip First Quarter 2022 Fireside Chat. I would now like to hand the conference over to our speaker today, Mr. Tom Curran from Seaport Research Partners. Sir, please go ahead.

Thank you. Greetings, everyone. Welcome to DrillQuip's First Quarter Fireside Chat. I am Tom Curran, the Senior Energy Technology Analyst at Seaport Research Partners and And joining me this morning from management are CEO Jeff Byrd and CFO Kyle McClure. I'm going to pass the mic to Jeff, who will provide a brief summary and touch on some highlights of the results released last night, and then we'll turn to what will be a deep and expansive discussion.

Jeff? Thanks, Tom, and thanks for hosting the fireside chat this morning. Looking forward to a robust conversation. Before I jump in, I'd like to say thanks to the global team for continuing to execute in the quarter, specifically our new business leaders, our new product line business leaders, Don, Bruce, and Steve, as they've started to lead their respective teams in moving from what's largely been a functional organization since the founding of the company to a more product-oriented company. We continue to be very pleased with the opportunities we see as a result of this reorganization. We believe in the second half of the year we'll start to see specific improvements in our ability to service our customers and also an improvement in our cost position as we go into the second half of the year and really we exit 2022 and head into 2023. So just a thanks to those three people and their respective teams as well. Looking at the quarter, Q1 was really middle of the fairway quarter. with what we had talked about a couple months ago. Bookings were in line, continued strong bookings, definitely larger than what we saw in the middle of the pandemic, so pleased with that. Revenue and EBITDA met expectations. Free cash flow was a headwind, but we always knew that was going to be a headwind going into the quarter. We've got some one-time payments that always happen in the first quarter of the year, so that's always a challenge. We'll see that bouncing back, I think, later in the year. If you step back and look geopolitically, obviously a challenging environment for a lot of people in Ukraine and Russia right now. So as we look at the resulting inflation, the story continues to be – inflation continues to be an area of keen focus for us. and our business leaders as we try to match price increases with inbound inflation. And it's really hand-to-hand combat right now if we think about inflation and what we're seeing there. And despite the inflation headwinds, though, the environment overall is very constructive for increased spending. So we're still very optimistic about the order intake over the balance of the year and look forward to a more robust discussion with you, Tom. Thanks.