James Rollyson • Raymond James & Associates, Inc.

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CEO Justin Jacobs acknowledged a potential for a temporary, minor dip in rental margins due to installation expenses for new units, but he expects it would not be significant. Regarding the use of proceeds, Jacobs stated the immediate plan is debt paydown followed by funding organic growth, while also confirming that the Board is actively evaluating the timing and method for initiating a return of capital to shareholders.

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CEO Justin Jacobs projected that the rate of margin growth would slow, citing a more stable fleet mix and rising labor costs. He noted electric drive units do not materially change the margin profile beyond being large horsepower. He expressed cautious optimism about receiving the ~$11M tax refund in 2025 and confirmed the company is actively working to monetize real estate.

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CEO Justin Jacobs stated that the company has increasing confidence that the recent rental adjusted gross margin of around 61.3% is sustainable. He anticipates a modest increase in margins in the second half of 2025 due to a mix shift toward higher horsepower units. On utilization, Jacobs explained that the high-horsepower fleet is effectively 100% utilized, and the unutilized assets are almost entirely in the small and medium horsepower categories, which is a medium-term initiative to address.

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CEO John Turner responded that while it is still early, the integration of Moser Energy is going well, and Atlas sees a significant opportunity to disrupt the inefficient power market, similar to its strategy in sand. COO Chris Scholla addressed the sand market, confirming that capacity additions have peaked and some high-cost competitor mines are being idled. He stated this rationalization is long-term constructive and reinforces Atlas's advantage in total delivered cost.

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CEO John Turner and executive Chris Scholla explained that a recent fire catalyzed a comprehensive operational review, leading to process improvements and record production volumes in recent months. CFO Blake McCarthy added that while Q3 OpEx was high due to Kermit, he expects sequential improvement. He projects OpEx will trend towards the low double-digit range in 2025 with higher volumes, but the final step-down in costs will not occur until new dredges arrive in early 2026.

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President and CEO D. Childers explained that Archrock's 2025 growth is secured by a fully committed backlog, mitigating short-term impacts. He noted that even with an oil slowdown, Permian gas production is expected to grow, and Archrock's diverse basin footprint allows for operational flexibility. Regarding tariffs, Childers stated that pricing for 2025-2026 orders is locked in, and the estimated low single-digit cost impact is already incorporated into the company's 2025 guidance.

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President and CEO D. Childers clarified that the margin outperformance was primarily driven by the legacy business through strong utilization, pricing, and technology investments, not just the single month of TOPS results. He stated that margins are not only sustainable but are expected to expand further with the full integration of TOPS. Childers also projected that the allocation of newbuild CapEx to electric motor drive would increase from a historical 20-30% to a future 40-50%.

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Chief Commercial Officer Piers Middleton confirmed that pre-tender discussions for 2026 and 2027 remain active and positive. He noted that Tidewater expects to benefit from vessels moving from the North Sea to Brazil, which will tighten supply. He also mentioned that the Malaysian market is recovering, which should absorb local supply by Q3/Q4 2025, creating a favorable environment for Tidewater.

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President & CEO Quintin Kneen affirmed that the long-term outlook for 2026-2027 remains strong, viewing 2025 as a temporary "sideways movement." He expressed high confidence in the 2025 guidance, noting it was developed with more visibility and that 81% of the revenue target is already covered by existing backlog.

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Executive West Gotcher confirmed that despite lower near-term visibility, the combination of expected day rate increases and fewer drydocks should make 2025 better than 2024. CEO Quintin Kneen added that it is too early for the market uncertainty to lower seller asking prices for M&A, so the company will remain patient and focus on share repurchases.

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CEO Owen Kratz stated that Helix is actively tendering for three large P&A projects expected to begin in 2026, providing a strong future outlook despite near-term softness. Regarding capital allocation, Kratz explained that due to market uncertainty, the company is prioritizing share repurchases over M&A, as closing deals has become more difficult.

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CEO Owen Kratz indicated a high probability of M&A activity in 2025, targeting geographic expansion and the wind market where valuations have pulled back. He noted current vessel prices are too high for acquisitions. CFO Erik Staffeldt added that spot rates in Well Intervention are still increasing slightly, though not as rapidly as in the past two years, while Robotics rates are seeing strong upward momentum.

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CEO Owen Kratz indicated that while budgeting is ongoing, initial views show a 2025 improvement for the Shallow Water segment, potentially returning to its historical $40-$60 million EBITDA range. CFO Erik Staffeldt added that 2025 free cash flow should improve, projecting it could be in the $200 million range, with CapEx between $70-$80 million. Kratz reiterated the capital allocation priorities as growth investments, share repurchases, and building cash reserves, noting a softer market could present more rational M&A pricing.

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President and CEO Girish Saligram detailed that cost savings come from headcount reductions, cuts to discretionary spending, and efficiencies from their multi-year fulfillment network modernization. Looking ahead, Saligram stated that even in a flat market, they believe they can improve margins by 25-75 bps annually over the next 2-3 years through ongoing productivity gains.

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CEO Girish Saligram stated that while Weatherford believes in Mexico's long-term potential and will be well-positioned for a recovery, the immediate focus is on margins and cash flow, maintaining a prudent approach to risk. EVP and CFO Arun Mitra addressed the capital return program, noting that the company is already ahead of its run-rate commitment for share buybacks and will continue to be opportunistic. However, he stressed a holistic approach to capital allocation that also includes debt paydown and potential M&A.

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CFO John Griggs clarified the revenue per horsepower metric was skewed by the divestiture of low-margin noncore assets and would have otherwise increased. CEO Mickey McKee confirmed that leading-edge pricing still commands a 15-20% premium over the fleet average. McKee also explained that new technologies, such as condition-based maintenance, are expected to extend service intervals and drive tangible margin expansion over time.

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CEO Mickey McKee estimated that spot prices for new units are currently 20-25% higher than the fleet average, driven by increased capital and labor costs. He also stated that while the goal is to return overall fleet utilization to the high-90% range (e.g., 99%+), the focus remains on securing 'the right utilization' with quality customers and contracts, not just utilization for its own sake.

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CEO John Schmitz, CFO Chris George, and EVP of Strategy Mike Lyons detailed the Colorado venture as a high-margin, long-term resource development opportunity with contracts potentially lasting 50 years. They noted that while paybacks are longer, the returns are expected to be very competitive. Regarding the Water Infrastructure segment, Chris George confirmed that the 2025 exit growth rate would be substantially higher than the full-year average, with the second half potentially doubling the full-year growth rate. He also expressed confidence in maintaining margins in the 50-60% range after a temporary dip in Q1.

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CEO John Schmitz stated that the long-term margin profile for the Water Infrastructure business is expected to be in the 50% to 60% range. CFO Chris George added that margin drivers include increasing utilization on existing assets, efficient integration of acquisitions, and accretive new contracts. Regarding the revenue run rate, George framed the growth in terms of returns on capital investment, pointing to the ~$150 million in growth capital slated for the segment, which is expected to generate returns consistent with a 3-to-4-year cash-on-cash payback and mid-to-high 50s margin profile.

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CEO William Hendricks explained that performance-based contracts are gaining traction, particularly with mid-tier E&P customers, and drive value through operational efficiencies and the pull-through of additional services. Regarding natural gas, Hendricks noted that while customers are measured in their 2025 plans, the long-term macro outlook for 2026 and beyond is very favorable due to growing LNG and industrial demand, suggesting a future need for more activity.

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CEO Clay Williams detailed margin drivers, citing improved backlog quality in the Energy Equipment segment and cost-saving initiatives in the Energy Products and Services segment. CFO Jose Bayardo suggested a 50 to 150 basis point margin improvement was a reasonable possibility for 2025. Regarding capital returns, Bayardo confirmed a strong free cash flow outlook and stated that with the balance sheet restored, NOV expects to return the "vast majority" of its excess free cash flow to shareholders in 2025.

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Chairman, President and CEO Clay Williams confirmed strong demand for flexible pipe, with deliveries extending into 2026 due to FPSO supply chain constraints. He noted that while the near-term is more challenged, NOV has strong momentum from its backlog and is bullish on deepwater and international unconventional projects, with North American gas being a potential positive catalyst for 2025.

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