Oil States International, Inc.

Hello and welcome to the All States International Incorporated Fourth Quarter 2022 Earnings Conference. My name is Michelle and I will be your operator for today's call. At this time, all participant lines are listened only, but we will be accepting questions later. If you would like to ask a question during that time, you can press zero then one on your touch tone phone. As a note, this presentation is being recorded. I will now turn the meeting over to Ellen Pennington. Ma'am, you may begin.

Thank you, Michelle. Good morning and welcome to Oil State's fourth quarter 2022 earnings conference call. Our call today will be led by our President and CEO, Cindy Taylor, and Lloyd Hodgick, 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 Oil 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 continue to be available for one month. I will now turn the call over to Cindy.

Thank you, Ellen. Good morning, and thank you for joining our conference call today where we will discuss our fourth quarter of 2022 results and provide our thoughts on the market outlook. During the fourth quarter of 2022, the company continued to show improvement as the industry expands activity to support growing energy demand, generating revenues of $202 million and EBITDA of $21 million, representing sequential increases of 7% and 30%, respectively, after excluding a third quarter 2022 litigation-related settlement gain from of $6.1 million. We were net income positive for the quarter, driven by strong activity levels in our traditional project-driven businesses, as well as from increased demand in the U.S. for our completions-oriented service offerings. We generated $14 million in cash flow from operations during the fourth quarter, with $11 million of free cash flow after deducting net investments in CapEx. Our offshore manufactured product segment revenues rose 9% sequentially with adjusted segment EBITDA totaling $18 million. Backlog increased 19% sequentially, totaling $308 million as of December 31st, driven by quarterly bookings of $152 million, which yielded a quarterly book-to-bill ratio of 1.5 times. Our fourth quarter bookings increased 32% from the third quarter and included two notable production facility project awards exceeding $20 million each with increased broad-based bookings across most product and service offerings. Further, in early February, we are pleased to report the receipt of our first contract award on our newly developed managed pressure drilling riser equipment. In our well site services segment, we achieved a 12% sequential increase in revenues and an impressive 29% sequential increase in segment EBITDA, driven by higher U.S. completion and production activity, along with enhanced customer penetration and better equipment utilization. Although the average U.S. frack spread count was flat sequentially, the average increased 9% when compared to the fourth quarter of 2021. In our downhole technology segment, revenues decreased 10% sequentially, while segment EBITDA decreased 75% due to the timing of international perforating product sales, lower integrated gun product sales mixed domestically, as several key customers delayed late-quarter startups, supply chain challenges, and inventory and receivable write-offs. Many of these issues are deemed to be transitory. Notable technological achievements realized in the fourth quarter included the successful test of OSI Minerals' deep-sea riser system at a water depth of over 13,000 feet and testing of a prototype model of our tension-legged platform design for offshore floating wind installations and water debts beyond the normal limits suitable for fixed installations. Given significant reductions in our debt, our Board of Directors approved a $25 million stock repurchase program, which extends through February 2025. Lloyd will now review our consolidated results of operations and financial position in more before I go into a discussion of each of our segments.