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DRQ Dril-Quip

Participants
Blake DeBerry President and Chief Executive Officer
Jeff Bird President and Chief Operating Officer
James West Evercore ISI
Call transcript
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Operator

Good day. Thank you for standing by, and welcome to the Dril-Quip Q3 2021 Fireside Chat Conference Call. I would now like to hand the conference over to your speaker today, Mr. James West with Evercore ISI. The floor is yours.

James West

everyone. morning, good and Thanks, Welcome to Dril-Quip’s team. chat morning’s fireside with management this

be XXXXs was when his company three Perhaps take a further of over we modernized get from building I’m I’m company’s a together, Blake’s into and excellent covering a soon the mentioned, further Gary most shared James and to Evercore Blake DeBerry, CEO President about words impressive. successful Bird an successful founder-led I of He to before Mike will been Blake’s And the was as turn challenging Co-CEOs start-up really As augmented as President started, West at began CEO. the say Blake Co-Chairman ISI. company’s year. company periods and leader the successor and in strengthened who the Jeff with Dril-Quip Dril-Quip did two the a the Jeff one CEO Blake’s these successfully transition joined in and during when tenure tenure of and joined oilfield. the navigated today, titles from early while the few founders I’d when like company the the Jeff. and to And Larry, XXXX. unfolded. gentlemen job it has global modern highly in it have is today

some words, though, company do maybe is few comments. recap the to Blake confident in hands to here I’m So leader. quarter the of third brief Blake a say want as I leaving Perhaps, and of with good very opening start give off to a Jeff its

Blake DeBerry

quarter, the look go range, you, XXXX, as or it’s $XX covering good items and the expected, from we revenue I million hands Jeff, James, hand our EBITDA think my I has one-time side, XX was with the in range and much going company with And end to good thanks lower be – company so seeing in which progresses forward. of lower pretty million years $XX you, forward how so throughout With been at to I the the within and Dril-Quip on in impacted came depart, agree we as is to that still bookings in covered. third Thank was but the Sure. for and pressure. by tenure, have and the line, our but some margin is, respect to some the

had really another On the acquisition positive again a business group set high strong for quarter, since side, its that our tools downhole XXXX. in

a positive that’s and our getting we to their this pickup saw a pickup big focus that revenues leasing had looking of year. are our to indicator of and So consuming which always customers respect and free in aftermarket for team grow to in in inventory. flow, impending as improvement our this good activity, and is quarter-over-quarter work back a with of activity another has We been cash business Kind good forward, management quarter Dril-Quip a accelerate. the continues

levels. Additionally, customers had of positively with we’ve are conversations activity good more trending that

number request So market as quotation hearing well the for we’re as we’re particularly offshore seeing And the at rigs, and more of just positive for that signs market, the offshore the more activity happen. looking contract. rigs, duration rigs rig the quotes about for of

indicators positive are market. all of improving an those So

James West

over turn a to So, it second maybe I’ll here. for Jeff

Blake’s even may in as know think I though more office. any announced office As of out Jeff’s Everybody still that be all you the with room. not as Blake starts transition, than us soon hanging

recovering see not have the think do and improvements quarters, strength all – growth past we’ll conditions experiencing but as all what they here. when maintain Commodity several seen is leading or So activity and seen you you reason good already prices are growth are it where Mexico. such the a this particularly of in economically the charge man same the year Gulf

Jeff Bird

Yes.

James. thanks, So

Gulf think the of we Mexico, recovery Just walking of there. about see are around signs if to starting world, we

independents liner to that’s more are susceptible is Specifically, wellheads. about subsea the or received world that’s definitely market, little that out go the quarter back to we higher the XX as that last bit development come well, just back. last starting prices on Brazil received rest wellhead we’re now of right commodity XX responsive about coming We’ve the back. there definitely more and optimistic There If also exploration the a a talked tender tender we that. to hangers talk we quarter the are around so that is

optimistic we’re expect, about that. We

We sometime the in quarter expect awarded as be well. that fourth to

there. So returned. definitely XXXX Brazil of offshore is If back. it’s look yet, at it’s return. definitely Norway we at strong not but incentives is a UK, levels right lot now It’s government a very

we’re optimistic also at a either and is early well. on year, as China looking this year So that. next we’re hot, about late tender

are activity starting and that And developments be areas curtail the mainly and have greenfield Australia really Indonesia, Malaysia, at again. On conversations honest, there. are of some the large then further starting probably we’ve see we to those the COVID-related just Africa, India, distance to in to slower also, are seen the

James West

role think capital And management, discipline working do play going think activity? of you kind ordering Okay, about okay, a your to how sense. capital and makes is that customers

Jeff Bird

Yes.

in Lower home So rider think obviously the that if XX about we case.

exposure the no in almost got we’ve Lower XX. So

us. So that’s impacting really not

first where those of though start ordering have fourth probably we a their going reload do sheets balance next they’re they higher before the advantage reloading the year. in half of with the in As and year back the conversations to we customers sheet of really to commodity prices take again of see customers, half lot quarter balance

their believe customers primarily reloading balance in of the loaded loaded more our discipline IOCs of that capital and So sheets. as because result, back-end more next are a kind we some are back-end year of

James West

energy a hesitancy behavior, there And think kind seeing to Okay. you change of projects larger is sanction any this point? in are about at transition, as we

Jeff Bird

Yes.

I in little the been the there around certainly might bit a have there think more past. larger is than caution projects

be to it’s So projects. type more tie-back going brownfield

starting We some projects mentioned. see that I greenfield to of large the are

James West

Right.

You mentioned.

Jeff Bird

But more tie-back. it’s going brownfield to be

see, to the can in request it energy more specifically tenders to help around We’re carbon reduce do tenders we carbon comments and relates to more specifically starting what as the transition their in robust footprint, customers footprint. around

the was In quarter a fact, I probably last think robust. tender we got that most

to As right its questions now, that, list that robust curious see into and factors a exactly than requests. process the we’ll of clear it not very relates how tendering to be other

James West

sure. Sure,

carbon. that at least to on as I of to the today tender want of touch seem orders Well, where do What But Okay. maybe since just million back to $XX kind come are to kind and to out we late to doing be and you $XX have paying and to you do see you think orders break QX outside this this do need And million think XXXX? range? happens of range. that we’re

Jeff Bird

Yes.

So next even around fourth of quarter. the early if range the out end in we the quoting we year, at in in the high-end right of how $XX we’re – we high it’s actually lot planning project we’ll whether see dictate If days look right would the or range and to right the now, of a our the exceed middle of that XXXX customers be and lot nice high on believe, and range projects think those their largely that been that come now. got QX, million end We a about we at and QX we’ve we’ve $XX dependent million. independents of now, in, coming is in it, of independents to that range

So customer. we met with the

their that earlier at process. we think I action around this of the customer their even earlier company with were own this week actually activity gone they week, met when within amount budgeting surprised

in think year trees right see now, XXXX booking And XX% but trees booked customers still this are we expect a expect that of we to the book state XX% next a we of flux, the early standpoint. in double those number this from we’ve So year. XXXX, year, would on up a I days

it’s definitely do as about next year. we we’re out. I to be optimistic So come choppy think going

James West

Sure.

are And an you’re large any or have there projects on? makes okay, tracking Okay, sense. update

Jeff Bird

talking There’s There there two. Petrobras that is Yes. really we’re about. tender development is the

James West

Right.

Jeff Bird

that about other think is in that, And And the one believe pretty quarter. Where we awarded then We the we’re CNOOC. fourth we’re with optimistic and well-positioned actually for be will that. tender one a collaboration actually that this of is we collaboration and quarter that fourth that next and expect agreement either first large year. that quarter be our or first would year

James West

you collaboration, do you? When what say

Jeff Bird

subsea That’s collaboration. the one

We So in one provide the we’re actually with other lot provide subsea. wellhead, kit. they of case, the a in the there going

James West

Okay, great. Makes okay, sense.

your any efficiently. to the out could playing running lot to took that what since or further consider of arise firstly, the all actions are the expected cause would the focus, in year you’ve taking more So actions the involved business now? you you there you got Are cost Jeff, cost out the you and been operations And structure. scenarios last changes a way

Jeff Bird

Yes.

I cost playing as everything expected. of we We’ve think the gotten out So out, is business.

projects a actually We’re and productivity ahead are. what our year little this

at we that transformation, $XXX Obviously, $XX million the million thought we the remember trough knew we we would than that at the do of you of to little revenue. so time expect is pandemic Who If set revenue back positioned the trough the we lower when revenue, a here be EBITDA. million we $XX didn’t to thought.

to now think in we’re that more I of hold than a right So need anticipation it’s – holding it’s recovery. we unquestionable cost,

James West

Okay.

Jeff Bird

don’t add spot quarter This rack. is a is, from of bunch out in, to just honest a two costs a now quarter bunch of be quarters that and this to and that we recovery find costs want we underway, or be cut next

So we’re of as cost of the right to now, where in excess result probably cycle. now $XX are million we we holding million estimate right a that $XX

James West

Okay.

Jeff Bird

monitor the triggers. on question to continue into way We’ll what by your that specific

million looking million a $XX to $XX range. We’re at

range, that cost have I at mid-part see pull. – of need the start even range triggers think to we that we the react end accordingly of standpoint. a the or We from are that of if to to we’ll low what mid-end know orders

it. We’re be thoughtful just to trying about

James West

Right.

of in materials of and you impacts? some and to of to And What rising about prices. impacts are business? okay. the And mitigate a there’s been those investors in lot you media on trying Okay, terms certainly, seeing that conversation the rising freight are how side amongst your

Jeff Bird

So the downhole divide let subsea. between me tools, business and

cycle right. and On short tools that a the is side, business, downhole

times. lead XX-week are those So

have we much cases, we see impact price on much And quicker those around quicker. the that. pass in to So the

downhole business, and immediately been successful we’ve around gone out increases with tool So largely around price the that. we’ve

because lot from runway XX got side, We’ve be longer On subsea a the months. lead anywhere around to times XX those can XX that. to

a largely, And subsea we So side. there will believe passing see largely as increases along be well. see side XX% the on are price what we subsea we’ll on that we is, the we successful increase

that you’d if – problems in a and to also Freight impact little inflation but we seeing is in story One So that expect see in prices story. routes modes, the don’t time is horizon. odd freight. see And really different you will. that a availability of it’s two escalation obviously, short just short an freights alone, with freight we’re

in find because might situations We So can some ocean, we something end airfreighting ourselves we and we can’t. the we oceans out go where get up normally somewhere.

end Our we airfreighting. it, and customer needs the available not ocean modes up

have And a do as mode so result that normally expensive and might cases to of more inflation, as freight, use inflation use having it than just in we relates well. we a is some

James West

Right.

I’d future figure working their Gary to always then I have on they to and the business big still time guys part can you’re far? Dril-Quip’s putting was the mentioned impact on you and subsea that that the those probably the a had with And efforts. project thus remember they with one want arrival, credit. Historically, the okay. what’s go to they do and collaboration back your spending And before of some with better. your I CNOOC. business. collaboration What’s did it But Jeff, collaboration that’s as just part say you’ve Larry expectations? Okay,

Jeff Bird

Yes.

in collaboration. the award, few we result know a to Norskan award because we’ve Proserv that amount for look Proserv money earlier going we a least Proserv there’s So and going considerable a a candidly the to next direct result will direct one the have is we’re trees a largely to right were at ourselves if agreements get did happened collaboration in where really invest The over year, back Proserv look the controls that really collaboration the got that more to if is and found to out months, providing announced And you up be holding And that’s level. was to that and of BHP we position have benefit agreement. cost excess the going that’s you that come us. two major be at where BHP XX of of out our of there that controls that

just that’s of might So pass obviously, pass-through is how at a we example of that’s lower there controls of that, downside one you believe working is that’s that and working. through that so some The impact margin expect. normally than those

keep go up largely BHP on have mind, will passing the a so care Just said essentially and to One and one with sit don’t is one many they margin collaboration out contract. and there, jointly lose will that’s cases. how what we good to make in depends that the subsea customers that and to by every opportunities little BHP. Other and so the speak, we understand wants way through subsea down separately recently the to example but in as contract, through one contract month well butt it we joint wellheads a that. around end are kick customer we signed will we where better, bid and bit

because that example and times with wellheads. collaboration. and them It’s So just them. a bid is fourth we taken be separately, There bid off XX lead part the we’ve a CNOOC with doesn’t of one It of could and well while we a this likely the to are immediately, win. bid that’s happen will take opportunity the first little where the quarter opportunities to so bid XX-week cycle see as on good

James West

Okay.

Jeff Bird

first year. quarter year, next quarter this of Fourth

James West

guys thinking you exploring collaboration about are other line and partners? product imagining, And

Jeff Bird

Yes.

of or traction That’s So downhole three One through on to one collaboration bit subsea two sell opportunities part I really that around there but the other think starting gain little as already is a are traction side, starting the liner we’re where hangers. more specifically is well. hangers there. now, but to that behind there agreement. tool Liner we we’re wellheads Schlumberger, right gain is

manufacturers If we’ve of lot you got capture, energy opportunity, terms tree. in a have work opportunity last which tree expect good going nice that a VXTe water many shallow there would provide really through in VXTe tree to And offering larger and trees – don’t shallow large large is And and the to carbon enterprises after another water think on the cases about it is other projects manufacturers. other of we transition. much is storage those then around with

in we’re those partners conversations well. as So with

So trees. those around two next and are VXTe the opportunities something probably CCUS specifically water shallow

James West

drill Okay. to hear. downhole speak to your on in so tool Great another That’s the recently third quarter. rent, great. business the quarter I did record

you longer-term growth improvements are what’s in what making So How markets? could the happening? driving key these targets do drive and what’s the you what are business? And in goals progress to this And do? business –

Jeff Bird

Yes.

downhole him everywhere world a couple in And around tools. last We’ll So were around specifically those we the make brought regions. we around brought we looked is compete at money end where those the we playing of in the XX decided Steven that and around candidly. XX in months in specifically months, He America, can’t reasons or never on Latin those regions. We we in exited deepwater. East, Middle regions specifically just there

in We’re each regions. in, we’ve place put then in in very regions. general those addition of focused And in managers stocking we’ve programs those each brought on to those that, new of

investment downhole allow XX% year-on-year specific just just we expect respond regions we’ve in about in geographies got ourselves XXXX our $XXX year-on-year. quickly up that not that to got be million I got. SKUs downhole again million I we’ve it’s We’ve think I made year, next allows some XXXX tools, tools, around right. SKUs those getting to to we the XX% the but $X downhole – going in a and $XXX in see insight on customers. with would So in million that to and to think think beyond, up target we’re us another revenue million as mean $XXX investments In we’ve inventory of but to this necessarily, that be tools, inventories year, to in inventory us

I SKUs. think to that getting thinking some about next that geographies into different after is different going take and piece some

James West

sense. Makes family installations. the and technologies, because And they let’s maybe of the a products conversation and bookings success? Maybe the on a in has talk seeing VXTe we’re how to verdict beginning of little changed? e-Series okay. to post-trial lot talk success an Okay, see maybe bit update can also you are which about some And

Jeff Bird

that, BigBore in – Let’s with wellhead honest. wild BigBore be our I’ll we’ve which more is IIe. start success to on on And and seen IIe,

would we XX% the getting fact, of expect to by year we’re orders to next all IIe. that of XX% incoming BigBore In end for the be

there is wide many of product, wellheads So well. makes acceptance product. reasons, you that been number it get manufacturing obviously, has technology one for makes your a but of when easier inventory as it great, great easier, that That’s through of just going

we’ve we’re that that installs then the On gain on starting to XPak, and And starting in we’re done connector, market on well. DXC traction installs Norway, seen good see three to we’ve two, acceptance two on in XPak around and as deepwater in DXC connector. the pretty Norway

about think is IIe way probably XPak. but you ahead, DXe and a following if So that BigBore is

an VXTe, right install, the on largely now. expect of we you fourth about next this year drilled we first to that VXTe, the dependent that’s If It’s think quarter would hope well have year. quarter maybe being of

very do on Walter If candidly, well we’ve quickly. Oil and largely think works well, that. Gas out I depends how would forward see that that that I then looks. it’s that talked that think about it already move we’ll And

to IOCs as is can second. lot customers in industry you VXTe, a want be in conversations the appreciate, our first already there but of, We’re to I other be and around with large

think install looking everyone’s I the so at opportunity. anxiously And for that

So from and got you large the that customers, at VXTe. the would working pull the about technology IOCs get trifecta in those in that from then triangulate We’ve prove install think standpoint, we’re really the the with how major subsea looked if quarter. happening really a they’ve it success we three it’s one it’s to so fourth and of things

James West

Okay.

sense. makes Okay,

working R&D think guys that going launched business spend Now, kind projects are you’ve you the of the products, how your about e-Series forward. are queue in next the do in what type of on? Since you

Jeff Bird

that I’m little So things joked one the on seat. being of in working about a you

James West

Right.

Jeff Bird

really, really earnings between what our looking as And and person call. a seat, is, in hope it’s new February I now, I’d earnings But February call. have that

products, We’re money coming got spend believe on specifically now in we’ve our talking on focused in we’ll opportunity continue carbon about real allocation. a It’s money on to keenly capture, we a got we’ve innovation, transition. out R&D We’ll We we’re R&D, real to believe continue spend geothermal. right energy opportunity core those won’t invest we are that in about areas are two think transition as what specifically normal like in not opportunities. spending And real meeting of we energy are continue percentage those our two. growth but February R&D around to we’d on that our talk R&D we that to

James West

firm That How a you starting obviously our approaching Perfect. is topic Dril-Quip next a approaching next because house are week. you are by today. in resources Top my technology – was the your comparing technology benefits big how that do to leads question, Design with your Green advantages to them? customers? And energy what transition? have as alternative campaign and are the that been resonating key And XX

Jeff Bird

did resonates from earlier, the reduction that I so well footprint products, start going targets board with nicely we’ve of we’re where IOCs customers. be got and well really an some just energy And into about deal summer great fact, e-Series the very in to about larger customers. across carbon And transition are through specific our where that with the a plays it we’ve We by our is, received Green around standpoint. I’ll very that’s – in honest, independents the that. mentioned every Design, and interested by opportunity even NOCs, that that very of in tender specifically Yes, spend talked been

the we just those in no energy anything we the on to pay attention landed are through regret think not easy to is capture transition. gain of that that’s say major What traction say the went It’s kind regrets where Mark we for really bets else. to and of we you each short the won’t if the can carbon term. we verticals, will So us. geothermal. around no It’s

someone We end me. are lead person directly – we hire energy that works at did for transition

transition. We are And lot manufacturing early continue that is don’t to we look have finding interestingly, them a opportunities. of phase some at capability. every companies other I’d vertical energy where characterize is There and

James West

Right.

Jeff Bird

have and often so this And got inbound those scale manufacturer. type to tender. I opportunity. I’m companies going I’ve about are to get say, the a win calls that this we of I’m idea. hey, up no

they’re VP And so engineers meeting. for contract a to our ops people manufacturer we’re got literally companies with that And a for we are looking and not the meeting like looking Manufacturing, our just We’ve be those of and companies. where our partner.

We’re really happens. that company get in when a looking stake the to

And going will. risk a bet, to company. very, up if manufacturing resources we we’re time setting do We’ll that’s of small companies very our no bet, low and leverage if and not it’s manufacturing what successful, to those capability here. is look for piece our you very it’s that it’s a get us. low for great If So in if energy successful invest

we’re thinking how really now. about that’s energy transition So right

James West

Okay, okay, makes sense. that

some minutes perhaps, the sheet to So, couple turning maybe here. balance of a of items for

allocation the way there over or point quarters? we’re for debt, you could return that no cash M&A? an several balance that there cash, substantial next are opportunity to been Is shareholders sheet other for it’s into upturn. Forge’s always you cash? this thinking about going opportunity How Is yet, potentially capital at

Jeff Bird

upturn. R&D and without We on of we the that Yes, $XXX working next estimate we an – strategy cash where estimate the capital is our million allocation maintain unlike not debt, look, same months. business, even $XXX to in few I over the need strategy, any mean million to we’re

leaves that excess cash. amount the fair So of

as thinking that did the quarter quarter We’ll But to little third out our We’ll the thoughtful M&A buyback. stock that, beyond there. in looking we’re be we and I buyback. where how we around there. saw more want in and more might always fourth some bit be go be opportunities opportunities thoughtful A at about around if well. You be always

industry now, unquestionable some now. in it’s level revenue we in right secret the right the for a And and seven, It’s in need that of companies that scale in think It’s that. eight, that a are we’re name consolidation. not size we’re at same six, at not spot. I alone we’re issue us today. that We could both our

at looking as an right an well. like. intentional amounts clear honest then things energy very probably do transition February around and look other constantly much about these And And what are these thoughtful one of be And but might clear need that partnerships. a we’re meeting to where about a is is M&A, also is the to I’m capital going of things in I what how might collaboration look we as opportunities. we articulating those But and more that example. be the be think So industry the we going about to talked where invest not to exactly just all allocation small there an for now, in CEOs a in OFS from agreement with those view gauge little early get days, might where their more our piece opportunities companies, are strategy is energy doing be and One where transition But always being recovery, strategy. to a of be aggressive might we M&A collaboration how standpoint. about much early

James West

Okay.

this guys flow And the improvements revenue the the year. between to lot to choose Okay. moving of a higher flow that free working well. positive direction target. here? Do capital hear. X%, trends as expect you cash in working and cash a you been continue capital And targets Good have Purely for then the than

you those? So about maybe can talk

Jeff Bird

Yes.

The to receivable through closer down of number number a especially shrinking as This sort like been the accounts fourth specifically great That’s mean to is yet. the there, things that on past trend it head back days into year. Question a payments like recovery year. higher. seen ever of are but large are whether So back not We legs We’ve a back I’ve XX% of yes, we specifically things that’s in inventory X% quarter, that reduction improvement around there inventory continue and And we’ll several that, in a to trending won’t they see lift. much got a invoice a tougher quarter. getting a nice certainly huge this progress starting year. just is I commented our to beginning. and lot this to, gets they dues getting we tougher projects get and do we’re times time did that. really next and be

sit that they time material fourth use can scour in have will comes a see those to how to three the that’s It’s believe and continue quarter. every get in we on starting next that You’ve will orders. traction. into an year. a in five We got existing to continue literally believe to incoming We room team get the and people we of incoming orders, order

So, AR from level see year, off opportunity an start we’ll next to standpoint.

even that In fact AR rebounding if we see we be year. an start inventory for things next growth. And would us might opportunity would to hope continue

We’re out payable. tapped accounts probably on

multiple be are. orders bit that number low beyond can will to we’d million, we’re think now. focus a to they a we expand we’ve have you start if challenging quarters But year. of continue capital very got to to now little is of see going expect $XXX on DPO but are nice flow right next be cash will – right we a working burn where It I a really

James West

expectation. do million perfect looks below expect CapEx a or That on your current you that? we’re thinking Okay. makes $XX you that million moves upturn. up $XX range? to to like you run in Do trend? Either that How you think it’s think sense rate an about are good How

Jeff Bird

– to kind $XX normal. that although, Yes, million, it that’s in $XX below we will of probably will million come probably a

that kind you characterize CapEx, that typically that much. of around we’ve was I as our think if sustaining will,

the We if manufacturing make XX, right we that there. are But at need months that anything probably might next XX talk that investments we’d material. see but about to over in we we looking position anything now sure correctly, footprints don’t our have more XX, make February, to that’s

James West

inventories. And Sure. then

how good recovery more going last going is still when improvements competitive some are order And think inventory and have quarter. mentioned around inventory, be as they inventory. advantage Because I happens as this you You there Are guard don’t guys well? third be this off it’s a that to about there? caught do to

Jeff Bird

Yes.

the each orders amount we in of the just I’ll in of get there. talked specific be have can I those. in, is downhole investment be it we’ve Where there’ll or we think It’s quarters got the that incoming so. we because really, anything, the inventory the in targets, there next quarters about where about to now so those come didn’t orders, opportunity, each about XX quarters going this advantage. and around but key specific invested out I the is is competitive we like quarter over So choppy do the talk We right One, be regions two-fronts. interesting made right don’t six timing. talked tools, there in

revenue So increase. that we’re the see we’ve out to starting pushed

I think now improve the been that’s next the turns the is put out there. right to opportunity inventory starting on

get X a right that of do like revenue in So I’d a I’m to downhole expense the to that to or not at it X-turn. now. tool inventory right now, X.X going we’re turn But on sitting

little slower that. So I’m willing a on to go

standpoint, and Just to being revenue we’ve that wellheads XX% to year. IIe the XX% about talk orders next to about BigBore I think it of XX of get our from a end from wellheads If increase. by subsea X we XX% gone

We’re those really left. that from on do stock we focused wellheads how four are

James West

Right.

Okay.

Jeff Bird

telling big order you’re what to is, And when of to you we’re customers talk we faster. it going get and if small these one four

going Your to faster. lead better, you’re going get time it be is to

push be saying inventory the going four, can. to of going as we more And This to take You do exclusively chain, order just every customers to hold of Because something our myself be to more candidly be of customer the it’s almost can back. not It’s wellheads. in it’s supply helps four those are one those see they And how competitive get them I honest. expensive. as looking longer. much all

stocking So have sales monthly what On where we we operation we that’s decide program. what stock doing of might planning, from just just a call and basis we’re inventory one other example a we places. in strategically

with do area going is is we’ll keep intentional like we a that tools So tree do downhole very wellheads doing. block, intentional we’re with a connector very that, area that to something we that a keep or but that might doing might

James West

Okay.

would and like? Okay. How profile the then, quarter do margins? margin think look What little more think of you out. a we fourth should potentially And terms in normalized think revenue about maybe further

Jeff Bird

Yes.

third honest. So much very if we to look like quarter going think about quarter the fourth to it’s be

a the deeper fact quarter in look we the In get third be number, we’re a into it little bit, like into million a down numbers bigger be fourth plus big that but And we but let’s get now, much that really grand orders looks number, when or revenue quarter. like minus honest, become dependent you not more change, so at scheme the XXXX. on of as it’s things, $X

So we right trends that the those XXXX pandemic. really experience or in we’re middle in saw the low of now, in

XXXX, of EBITDA. we back that and experience of think XXXX. that that But or half orders next through our next year-on-year. We’re get completion. half I and do I manifest about of be looks and year mean starting talk early largely to we I up XX%, percentage starting to immediately year the orders revenue what year, incoming next will likely to If like XX% being that, won’t to start in That get revenue about trend flow in that’s revenue until manifest back some honest. and

from So uptick. revenue a

James West

Okay. And then normalized margins, margins?

Jeff Bird

Yes. Normalized margins.

I think, the into back to get we expect low-XXs.

talking margins. you’re product If

James West

Right.

last Okay, it your is with Dril-Quip. follow-up fireside I call another thoughts. Blake, sense. Parting last to have that. this do makes chat, question

Blake DeBerry

Okay.

James West

shareholders employees, investors Parting thoughts and for fans, directors.

Blake DeBerry

Yes.

as me before years said of in I’ve We incredible last It’s this the earlier oilfield is today. which is – been it’s ride. an were the those in a XX services, XX like So XX talking CEO. so Dril-Quip

to I’ve with. that people start my and with more office the the and I’ve mementos things to I do saved cleanup have As worked to that

and taking continent and I comfortable our right the believe and I feel And so living and it’s and with outgrow Board future. my my of I shareholders, world reasons stepping of here, this all oh passports, on been, a actually with Jeff, and world. appreciate I that’s Dril-Quip the every certainly one employees on has say the pulled out incredible all we team travel our comfortable and now. positioned of been about the is I board the all over Antarctica, to the ride the so and an got I’ve I market. I’m working really customers good over been stack feel optimistic mean god

James West

Good.

Blake DeBerry

go I’m forward. the optimistic of

James West

But we’re well. as optimistic,

our is today, her have of good you meeting same But off namely not wife finish Blake. fortune then, CEO I’m the of didn’t your know business. the chat got job and I she to description. sure so maybe recently So, I

plans your future? for are what So the

Blake DeBerry

Yes.

I live built and in out lives years Central a – she that, and six for have business now runs there, over operational wife Texas. and that’s my We run. a she So in little to a it’s winery for vineyard been

don’t then, you job that. that to excited your cleaning I so about agreed are and define the was And said, tough And down position retain stepping So for for had of to is at times responsible let about negotiator. I let and several new when title that she But duties told She very like a boss negotiate me was you’re the finally other. me a winery. did she’s I talking your think CEO going pretty me means to I she much. electrical

So…

James West

scary. sounds Other

Blake DeBerry

bathroom. looking parts the first do yes, time. And more But, soccer I up spend other pretty just scary, play something grandkids has my going The I’m particularly time in today just a to forward the for when with together. little watch to to

more and make just have So family wine. life yes

James West

Blake. a plan, That’s good

you best now run well me run the at well. going and you as have. company, So, Blake Blake as it’s Dril-Quip here, and Jeff, move had stewarding forward Congratulations great on say you great to as CEO. to because a as of is luck you we as

it So we’ll give a go.

Jeff Bird

it. to forward look I

James West

I go today, that Absolutely. Well, call. for we’ll the ahead with in and and think thanks listening everybody end

Jeff Bird

James. you, Thank Alright.

Blake DeBerry

Thank you James.

James West

guys. Thanks,