FI (2021 - Q2)

Welcome to the Q2 2021 Frank's International N.V. Earnings Conference Call. My name is Vanessa, and I'll be your operator for today's call. Thank you, so much for standing-by. I will now turn the call over to Melissa Cougle. Melissa

Good morning, and welcome to the Frank's International conference call to discuss our second quarter results. Our speakers today, as shown on slide 2 of the earnings presentation, are Mike Kearney, Chairman, President and Chief Executive Officer; and myself, Melissa Cougle, Senior Vice President and Chief Financial Officer. A presentation has been posted on our website that we will refer to throughout this call. If you'd like to view this presentation, please go to the Investors section of our corporate website at franksinternational.com.

Thank you, Melissa. We appreciate everyone joining us for the call today. Turning to slide 5. We delivered solid second quarter results, with adjusted EBITDA increasing 85% sequentially. Total revenue also improved 14% from the prior quarter. Our profitability has continued to improve each quarter, since we initiated our profitability improvement plan. These actions, as well as our general business recovery, resulted in adjusted EBITDA margins of 12%, which are the highest margins achieved since the beginning of 2016. Customer activity levels have continued to increase across all of our segments and geographies, starting with revenue growth of 8% sequentially in our Tubular Running Services segment. In our Tubular segment, revenue increased 42% sequentially, with strong tubular deliveries and higher drilling tool activity, including an international tubular delivery. Although, we experienced a pullback in our Tubular segment in the first quarter, we did see the expected improvements in both domestic and international tubular deliveries in the second quarter and believe the second half of the year will bring more steady progress, barring any unplanned delays in deliveries.

Thank you, Mike. Referring to slide 9. During the second quarter, revenue increased 14% sequentially showing strong growth. We experienced improvements across all segments and regions during the quarter with increasing activity levels globally and improved penetration of our newer product lines. The company was able to translate these increases into significantly improved profitability with adjusted EBITDA of $12.4 million, an increase of 85% from the prior quarter. This strong performance is due to Frank's historically high operating leverage with additional benefit from our cost improvements made and the adoption of higher-margin technology packages.

Thank you, Melissa. Before we close out today's call, I would like to reiterate a few key points. First, we are very excited about our planned combination with Expro Group, which is expected to close by the end of the third quarter. The teams of both respective companies are dedicated to creating one of the strongest oilfield service companies in the industry and providing some of the most innovative solutions to our customers globally Second, Frank expects to experience additional improvement in the second half of the year, as we maintain a strong line of sight on additional rig deployments and project start-ups. Finally, we will continue to focus on operational execution, capital discipline and cost reduction efforts, which has enabled us to maintain one of the strongest balance sheets in the oilfield services space. This enviable position puts the new combined company on solid footing as it progresses through the integration process and positions itself for future growth and expansion. As we approach the closing of the Expro merger, I would like to reiterate my continued thanks to all of our employees for their hard work and dedication to the Frank's organization. Your unselfish drive to excel, even through the difficulties brought about by COVID has enabled our organization to stay focused on providing the absolute, best service quality for our customers and safety for our employees. We look forward to updating you on our progress in the near future as a combined entity. Many thanks to everyone on the call, for your continued interest in Frank's. We hope you enjoy the rest of your day. Goodbye.

Thank you. Ladies and gentlemen, this concludes our conference. We thank you for participating. You may now disconnect.