Oil States International, Inc.

Good day, everyone, and welcome to the Oil State's third quarter 2023 earnings call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. To remove yourself from the queue, it is star 1 again. I would now like to turn the conference over to Ellen Pennington. Please go ahead, ma'am. Thank you, Lisa.

Good morning, and welcome to Oil State's third quarter 2023 2023 Earnings Conference Call. Our call today will be led by our President and CEO, Cindy Taylor, and Lloyd Hodgick, Oil Estate'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 for two hours after the completion of this call and will continue to be available for 12 months. I'll 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 third quarter 2023 results and provide our thoughts on market trends in addition to discussing our company-specific outlook comments. Our third quarter results benefited from growth in offshore and international spending with significant sequential and year-over-year increases in offshore project activity, and backlog conversion. However, our quarterly performance was tempered by an industry-wide decline in U.S. well completions, which has been ongoing since the first quarter of 2023. We believe U.S. activity declines were triggered by weaker commodity prices in effect earlier this year. Our third quarter consolidated revenues and adjusted EBITDA increased sequentially by 6%, and 23% respectively, driven by higher offshore and international activity. Year-over-year consolidated revenues and adjusted EBITDA grew by 3% and 7% respectively. The sequential and year-over-year improvements reflect significant project-driven growth within our offshore manufactured product segment, where revenues increased 18% sequentially and 16% year-over-year, totaling $111 million in the third quarter, the segment's highest revenue level since the fourth quarter of 2016. Segment backlog increased for a fifth consecutive quarter, totaling $348 million as of September 30th. We are benefiting from our customers' increased investments in traditional and alternative energy offshore projects outside the United States. We received two notable project awards in the third quarter, including a production facility equipment order destined for Brazil and a contract for our Merlin DC mineral riser system designed for use in harvesting seabed minerals at extreme water depths. The segment's bookings totaled $129 million, yielding a quarterly book-to-bill ratio of 1.2 times. Our continued investments in technology and innovation were recognized earlier this month by Gulf Energy with our active seat gate valve receiving the 2023 Gulf Energy Information Excellence Award for Best Production Technology. This proprietary valve technology provides operators with exceptional sealing performance while substantially reducing the amount of heavy grease used during valve operations and personnel involved in intervention at the wellhead. We generated cash flow from operations of $14 million in the third quarter invested $2 million in net capital equipment and have no short-term debt outstanding. With cash on hand totaling $53 million at September 30th and no significant debt maturities before 2026, our financial position remains very strong. We expect to further enhance our liquidity position and reduce our net debt in future quarters. We remain encouraged by the continued expansion in offshore activity, coupled with future benefits to be gained from our new product introductions, including our managed pressure drilling system, our Merlin deep-sea mineral riser system, and our active-seat gate valve technology, among others. This international offshore-focused investment cycle is expected to extend well beyond the next couple of years. As it relates to U.S. land-based activity, with currently improved commodity pricing, we expect U.S. activity to recover in 2024 from current levels. Lloyd will now review our results of operations and financial position in more detail.