Superior Drilling Products, Inc. (AMEX:SDPI) Q3 2023 Earnings Call Transcript

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We had a booth in there. And our booth, it was highly successful. We had a lot of people coming in that wanted to know about the tool and how it was going to be helpful for them. And we had the technical support staff that can talk to these people. And it was really neat to see. So I think that answered your questions, both on the domestic and the international front. And if not, let me know.

Dick Ryan: It certainly did. Just a follow-up, so to get that sales momentum kicked in, is that something you’re going to do internally? Or will that take more of a partnership path?

Troy Meier: We’re looking. I mean we’re doing it through the technical side internally right now, but we look at it as we’re really planting the seeds. We’re planting the seeds in these groups at a high level. And it’s strong seeds. When we go in there with our offset reports, our drilling offset reports, they’re very impressive. And we’ve never had that group that could do that presentation to a very technical side of these NOCs. So it is still getting out there and making people aware of the Drill-N-Ream and the benefits they are, but we’re also looking forward to a very professional organization that can come in and say, we’re very good at the sales and marketing side of things, and we really appreciate what you’ve all done, let’s get going.

Dick Ryan: You look at North America, your tool revenue held pretty well versus the rig count, as both you and Chris mentioned. And in your slides, you talked about the distributor continuing to improve market share. Can you give us specifics on what you’re seeing with the DNR and the market share in North America?

Troy Meier: Sure. What we see is there’s a competitive landscape out there and the operators, no matter how good their bottom line is looking, they’re always working you on price and they’ll use a competitive tool to try to get you to bring down price. And that threat is always there. But one of the things that our strategic partner has done here in North America is they’ve held that price. And what they’ve seen is the operator will run Brand X, and give it a run or two, but then they come back to Drill-N-Ream. They always come back to Drill-N-Ream. The performance is noticeably different. And so that model is out there now. We know that somebody is going to try to get to bring down the pricing at the Drill-N-Ream demands, and we may lose a few rigs for a month or two, but then they come back.

And that’s been what we’ve seen throughout this year. And our channel partner has actually been able to grow market share through this down cycle. We talked about it being 15% down in Q3. But on a year-over-year, as of today, it’s down 20%, and they’ve done a great job increasing their market share.

Dick Ryan: And on the Contract Services side, kind of flat sequentially, was there a meaningful contribution from the second customer in Q3?

Troy Meier: No. Not in Q3, it was really us. Everybody, all these large ServCos, pride themselves on their bits, of course. And to have a third-party to do what we do is really unique. And so when we started this with them in Q3, it was kind of just testing the waters with us: can we do what we say, do we have a quality service, are our products going to perform well. Their product is going to perform well once we work on them. And the answer, to that, it’s been great. They’re very impressed with our turnaround time. They’re very impressed with the performance that they see with their products once we have serviced it. So we’re looking to grow that relationship stronger in Q4. We’ll see an uptick in units coming into our facility we have, and we look to really to really push that hard as we start off the new year.

Operator: [Operator Instructions] As there are no further questions, I would now hand the conference over to the management for any closing comments.

Troy Meier: Again, thanks, everybody, for joining us. We look forward to our Q4 call, and we look forward to talking with you all again here, and have a wonderful rest of your week.

Operator: Thank you. The conference of Superior Drilling Products has now concluded. Thank you for your participation. You may now disconnect your lines.

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