Margins Outlook
Q: What's driving margin changes from Q2 to Q3?
A: Despite achieving 26% EBITDA margins in Q2, margins are expected to be 25% in Q3 due to several factors: non-recurring MPD asset sales in Q2 won't repeat, higher infrastructure investments in Q3, and mix changes causing margin pressure. However, margins are still strong at 25%, and an uptick is expected in Q4.

Future Margin Drivers
Q: How will you achieve high 20s EBITDA margins beyond 2025?
A: Future margin expansion will be driven by technology introductions leading to increased pricing and share, fulfillment efforts improving cost absorption and lowering costs in '25 and '26, and opportunities to improve structural costs. Pricing has also been important, contributing about 20% of growth in 2023.

Free Cash Flow Conversion
Q: How will free cash flow conversion improve from 35% to 50%?
A: Improvement to 50% free cash flow conversion will come from working capital efficiencies by reducing DSOs below 25%, lowering interest costs through debt paydown, and improving tax efficiency by reducing cash taxes from 14%-15%. This combination will enhance conversion over the next three years.

Revenue Growth Outlook
Q: What's driving revenue growth in Q4 versus Q3?
A: Revenue is expected to increase substantially in Q4 due to an uplift in product deliveries as inventory built up in the first half is shipped out. Activity in Latin America is also expected to pick up. Sequential growth between Q3 and Q2 is muted, but we anticipate making up for that in Q4.

Shareholder Returns Strategy
Q: How are you approaching the share repurchase program?
A: The $500 million share repurchase over three years will be executed with flexibility, combining systematic repurchases with opportunistic buybacks when appropriate. We aim to create value rather than adhere to a rigid schedule, and there's no specific annual or quarterly target for returning approximately 50% of free cash flow to shareholders.

M&A Strategy and Focus
Q: Is your M&A strategy shifting towards larger acquisitions?
A: While strategic filters remain the same, we're open to varied scales, including larger opportunities. We're interested in enhancing offshore capabilities and acquiring technologies that offer strategic advantages, margin leverage, and longer-term value creation, such as production-oriented assets and differentiating technologies.

Debt Paydown and Interest Cost
Q: What is the plan for debt paydown and achieving better interest coverage?
A: We will continue to pay down debt in a sensible manner, aiming for a gross leverage of less than 1, but at the right cost. While no definitive timeline is provided, we expect to both reduce debt and work on lowering the cost of debt to improve interest coverage over time.

CapEx Guidance
Q: Under what circumstances will CapEx fall below 5% of revenue?
A: CapEx as a percentage of revenue will remain around 5% during an upcycle, geared towards growth. If we enter a downcycle, CapEx could decrease towards 3%, focusing on maintenance. The 3%-5% range is cycle-dependent, and we expect to stay near 5% as long as growth continues.

Latin America Outlook
Q: How is Latin America trending and what's the outlook?
A: Latin America is expected to improve sequentially, with positive indications despite some uncertainties in Colombia and Mexico. Customer planning shifts caused some delays, but we anticipate better activity in Q3 versus Q2. The region has shown tremendous growth, and expectations remain in line with prior forecasts.

Middle East Growth Trends
Q: What are the trends in Middle East markets and their impact on revenue?
A: Strong, secular activity continues across multiple countries like Saudi Arabia, Oman, Kuwait, and UAE. Growth is driven by both oil and natural gas projects, including offshore activities. New contracts like the LSTK in Saudi and integrated projects in Oman have ramped up, and we're gaining both pricing and market share.

2025 Growth Outlook
Q: Is mid-single-digit growth reasonable for 2025?
A: While we haven't provided specific guidance for 2025, we don't see the current cycle waning soon. Continued contract opportunities suggest ongoing sector growth, and while we can't specify magnitudes yet, it's reasonable to expect revenue growth as we head into 2025.

Margin Improvement Cadence
Q: How will margin improvement progress over the next three years?
A: We aim for at least 50 basis points of margin improvement annually on flat activity, driven by internal efficiencies and technology rollout. Activity increases can accelerate this improvement. There's no precise formula, but this baseline guides our expectations moving from 25% to high 20s EBITDA margins.

Liquidity and M&A
Q: How rigid is the $1 billion liquidity target concerning M&A?
A: We aim to maintain approximately $1 billion in liquidity, including the revolving credit facility, to manage risk and support capital allocation initiatives. This target is flexible enough to accommodate M&A activities while ensuring operational stability.

Potential for Reducing Share Count
Q: Will you consider reducing the share count over time?
A: There's certainly an opportunity to reduce the share count outright, which aligns with our overall thesis. We'll pursue this when it makes sense, balancing flexibility with value creation without being overly prescriptive.

International Growth Drivers
Q: Where will future international growth primarily come from?
A: The bulk of future growth is expected from the Middle East, driven by gas and offshore projects, as well as oil activities due to reservoir decline rates. Latin America also presents opportunities with focus on energy independence and exports, but the Middle East will be the predominant growth area.

Mexico Activity Shift
Q: What caused the activity shift in Mexico?
A: Customer planning around well sequences led to shifts in activity timing, pushing some operations into the latter part of the quarter. This is a normal operational change with no long-term concerns, and we expect overall Latin America activity to improve sequentially.

Impact of Houston Storm
Q: Any impact from the Houston storm in July?
A: While not detailed, we are managing the situation and any impacts are considered within our guidance and operational planning. There's an acknowledgment of the challenges but no significant concerns expressed.