Oil States International, Inc. (NYSE:OIS) Q4 2022 Earnings Call Transcript

And so, if I were to — it is a slagging, I just think both of them are going to perform better year-over- year, and probably, equal. But certainly that does represent an improvement in both domestic markets, as well as international.

Stephen Gengaro: Thank you. And when we think about the Offshore Manufactured Products, we should — maybe just this kind of leads into a more general question. But when you think about the backlog and the strength in orders you saw recently, will that business grow, where does that fit in relative to the total revenue guidance you gave as far as about the same greater or worse? And I am just kind of curious what you are thinking on margins in that business for 2023

Cindy Taylor: Yeah. So

Stephen Gengaro: given what you know about the backlog?

Cindy Taylor: Again, we are pretty optimistic, we will see growth in all three segments. There it’s slightly, I will call it, proportionately higher growth coming from Offshore Manufactured Products, and part of that is, I mean, we just had a book-to-bill of 1.5 times in Q4. So that’s going to lead into some products certainly. And those are our production facility core products that we are confident in our performance, our margin achievement, our delivery timeframes, those types of things. So it’s a good not only a high book-to-bill, it’s a good content in that order book that leads me fairly positive. We also exited, as I mentioned in my comments, with growth on the service side and services typically carry pretty good margins overall.

We have to — the good news is that the one other thing on a consolidated basis that means your incrementals are going to be just a little bit lower than that they might be with just an isolated improvement in completion services once more of a rental service model, once manufactured product sale model put that into context, but our margins show real improvement from Q3 to Q4, and again with the product mix and the throughput, we don’t see any adverse impact to our margins at all going forward.

Stephen Gengaro: Thank you. And then just one final one from me, I guess, I am going by each segment. On Downhole Technologies, can you talk about the competitive landscape? As we have heard, I mean, I know you are aware of some of the lawsuits, which were out there from one of your competitors, the management changes at that company. But what is the competitive landscape on kind of the newer integrated guns versus the machine shops buying components and how your business kind of fits into that dynamic?

Cindy Taylor: Yeah. I think that’s a great question. On — this is the smaller segment of our business. But on the integrated gun side, there is very good customer acceptance of the integrated gun systems that most third-party providers do provide in some capacity or form. And so I think that’s a trend and that’s a focus for us, I think, as you realize, and importantly, we are working on all the reliability side of that equation to make sure it is an extraordinarily reliable product to our customers, that is a key focus for us. As far as the landscape, there are — there were certain legal determinations made that I think eases some of the uncertainty around the industry adoption and performance perforating systems generally, you can go read the lawsuit outcomes yourself, I am sure as others can.