Oil States International, Inc.

Welcome to the Oil States International Third Quarter 2020 Earnings Conference Call. My name is Adrienne, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star and 1 on your touch-tone. I'll now turn the call over to Ellen Pennington. Ellen, you may begin.

Thank you, Adrienne. Good morning and welcome to Oil State's third quarter 2020 earnings conference call. Our call today will be led by Cindy Taylor, Oil State's President and Chief Executive Officer, and Lloyd Hajdik, Oil State's Executive Vice President and Chief Financial Officer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, Please note that we are relying on the safe harbor protections afforded by federal law. No one should assume that these forward-looking statements remain valid later in the quarter or beyond. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our Form 10-K, along with other SEC filings. This call is being webcast and can be accessed at the state's website. A replay of the conference call will be available one and a half hours after the completion of this call and will be available for one month. I will now turn the call over to Cindy.

Thank you, Ellen. Good morning to each of you and thank you for joining us today to participate in our third quarter 2020 earnings conference call. As we discussed on our second quarter earnings call, we believe that U.S. shell-driven activity while at historic low levels was stabilizing as we entered the third quarter with crude oil prices improving off the horrendous levels witnessed in the second quarter. Some of the early quarter momentum stalled as COVID cases began to increase in several jurisdictions. As a result, U.S. completions declined early in the third quarter but steadily improved, albeit off a low base, in the latter half of the quarter, ending the quarter down 11% sequentially in terms of the average BRAC spread count. Crude oil prices stabilized around $40 per barrel for much of the third quarter and now tend to trade around COVID-19 trends and stimulus talks in Washington. In conjunction with our discussion of the quarter, we plan to update you on our actions taken to shore up liquidity give you our thoughts on near-term market conditions and summarize our efforts to mitigate costs, both capital and operating, as we begin to navigate the early stages of a U.S.-led market recovery. Our third quarter results were generally in line with our internal forecast and the limited guidance that we were able to provide other than our offshore manufactured product revenues, which were below our previous guidance due to delays in customer activity and timing of orders. During the third quarter, our well site services revenues were up 3% sequentially and EBITDA margins improved. In our downhole technology segment, revenues also recovered and were up 25% sequentially with EBITDA margins exiting the quarter in positive territory. In contrast, revenues in our offshore manufactured product segment decreased 17% sequentially due primarily to weaker connector product sales. Segment backlog at September 30, 2020 totaled $227 million, a decrease of 3% sequentially. Our segment bookings increased sequentially, totaling $70 million, yielding what appears to be an industry-leading book-to-bill ratio for the third quarter of 0.9 times. During stress periods in our business, we know that the immediate focus needs to be on the preservation of liquidity and the management of variable and fixed costs. To that end, we had an exceptional quarter generating $87 million of cash flow from operations With our significant free cash flow, we materially delevered during the quarter, reducing our total net debt by $92 million. We believe that we have managed the company effectively during a very difficult period and will continue to closely manage our debt, working capital, and cash flow generation in the quarters to come. Lloyd will now review our consolidated results of operations and financial position in more detail before I go into a discussion of each of our segments.