Oct 30, 2026 earnings call — Backlog growth and MPD momentum
Reported revenues of $170 million and adjusted EBITDA of $20 million this quarter.
Revenue $0.2B (est $0.2B) · EPS $0.15 (est $0.12) · Next-quarter revenue outlook $0.2B–$0.2B
Key quotes
"Backlog increased to its highest level in almost 12 years, totaling $482 million, supported by bookings of $135 million, which resulted in a quarterly book-to-bill ratio of 1.3x."
"we did book an MPD rental project in the third quarter and expect a sale order here in the fourth quarter."
"For the fourth quarter, the free cash flow could range in the $15 million to $25 million range."
Analyst Q&A 4
MPD adoption and market opportunity
Q (James Rollyson · Raymond James): How does management see MPD adoption unfolding over time and the market opportunity for their system? Also, what is driving the strong book-to-bill and backlog levels and how do conversations look going into next year?
A: Management said customers have accepted MPD since its rollout and the company sells both rental and sale systems. They booked an MPD rental project in the third quarter and expect a sale order in the fourth quarter. They have built $35 million to $40 million of MPD revenue into their model and see operators asking deepwater rigs to be MPD-ready.
"in terms of kind of our market outlook for our business, our MPD business, we generally have built in about $35 million to $40 million of revenue, MPD revenues into our model going forward at very good margins, obviously" — Lloyd Hajdik (CEO)
Backlog burn and 2027 growth
Q (Stephen Gengaro · Stifel): How should we think about growth in 2027, especially U.S. land relative to drilling/completions activity? And how will the current backlog convert to revenue over the next 12 months?
A: Management said they expect revenue growth to be in line with current market estimates, with most growth coming from international and offshore; U.S. land spending is expected to be up modestly and frac spread counts modestly higher. They noted military products make up about 46% of backlog and, because of multiyear military awards, forward 12-month backlog conversion is likely around 50% to 55% versus historical 65% to 70%.
"And with the heavier weighting of the multiyear military products in our backlog, that's probably in the 50% to 55% range on the forward 12 months, October -- call it October to October or September to September now." — Lloyd Hajdik (CEO)
Pricing and capital allocation plan
Q (Joshua Jayne · Daniel Energy Partners): Are pricing discussions keeping up with inflation, and are recent orders embedding higher prices or margins? Also, how should we view the $50 million repurchase program versus potential M&A and overall capital allocation?
A: Management said there have been no reductions or concessions in pricing on the capital equipment they've been tendering and the orders they've secured, and they still guide to about a 20% EBITDA margin in that business. For capital allocation, they outlined three pillars: organic CapEx and R&D, opportunistic/selective M&A, and opportunistic share repurchases; they said they are not content with their current portfolio and will be more aggressive on M&A while also executing opportunistic buybacks under the new authorization.
"So there hasn't been any kind of reduction or concessions really in the pricing and the capital equipment side that we've been tendering and bidding and quoting and the orders that we've secured." — Lloyd Hajdik (CEO)
Free cash flow, working capital, raw material costs
Q (Charles Minervino · Susquehanna): Can you update free cash flow guidance and whether the shortfall is just a timing push into next year? Also, are raw material cost headwinds for Downhole tools improving?
A: Management said they invested in working capital and built $11 million of inventory in Q3 to support backlog and perforating projects, and they expect a release of working capital in Q4 but caution on seasonal collections. They estimate fourth quarter free cash flow could be in the $15 million to $25 million range, have $15 million of assets held for sale not expected to close in Q4 (proceeds likely carry into 2027), and said the $38 million YTD working capital build (with $31 million in offshore manufactured products) should turn; raw material cost headwinds remain but are expected to moderate in the first and second quarters of next year as access to explosive powders improves.
"For the fourth quarter, the free cash flow could range in the $15 million to $25 million range." — Matthew Autenrieth (CFO)