Jawad Bhuiyan

Jawad Bhuiyan of Stifel Financial Corp. inquired about the sales expectations for the DynaEnergetics segment in the second half of the year relative to the broader market. He also asked about the impact of the growing market trend towards oriented perforating guns on DMC's business.

Answer

CFO Eric Walter projected that activity in DynaEnergetics' primary U.S. markets would decline in the second half, consistent with the broader oilfield services space, with some potential for higher international sales. CEO James O'Leary acknowledged that oriented perforating is a market trend and confirmed DMC has a competitive product, but stated it does not fundamentally alter market dynamics, which are primarily driven by energy prices.

Asked about the second-half sales outlook for the Dyna segment and the impact of the industry trend towards using oriented perforating guns.

Answer

The company expects Dyna's U.S. sales to decline in the second half, in line with the broader market, with only a potential partial offset from international sales. While they have a competitive product for oriented perforating, they do not see this trend as significant enough to overcome the weaker overall energy market.

Jawad Bhuyan, on behalf of Stifel, questioned the Canadian occupancy trends for the third quarter, asking for signs of stabilization or improvement following weakness in billed rooms and turnaround activity.

Answer

CEO Bradley Dodson stated that Q3 has so far been a continuation of Q2's performance. He indicated that achieving the guidance outlook depends on expected turnaround activity materializing in the coming months. Dodson concluded by noting that there are general signs of stabilization in the Canadian market.

Asked for details on product margins, the impact of the Maryland facility, the future margin outlook, and the company's approach to maintaining charger uptime across its network.

Answer

Executives confirmed that Q3's high 36% gross margin is sustainable due to the focus on Blink-manufactured products and they are exploring further expansion. They explained that uptime is excellent for their owned-and-operated chargers, while for third-party-owned chargers, they proactively work with site hosts to encourage maintenance or take over the units.

Jawad Bhuiyan asked for details on product margins, the impact of the new Maryland facility, the outlook for margins over the next several quarters, and the current charger uptime across the installed base.

Answer

COO and CEO-elect Michael Battaglia addressed the questions, noting the strong 36% gross margin in Q3 was driven by a favorable mix towards Blink-manufactured products. He stated the company is comfortable with its 33% full-year target, with potential upside from margin expansion opportunities like its partnership with Stable Auto and a continued shift away from third-party products. Regarding uptime, he differentiated between Blink-owned chargers, where uptime is excellent due to direct control and financial motivation, and chargers owned by third-party site hosts, which presents an industry-wide challenge that Blink addresses through proactive outreach and takeover options.