NOW Inc.(DNOW) 首席执行官 Robert Workman 在 2019年 第二季度业绩 - 收益电话会议记录

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NOW Inc. (NYSE:DNOW) Q2 2019 Earnings Conference Call August 2, 2019 9:00 AM ET

NOW Inc.(纽约证券交易所代码:[DNOW])2019年第二季度收益电话会议2019年8月2日美国东部时间上午9:00

公司参与者

Dave Cherechinsky - Senior Vice President & Chief Financial Officer
Robert Workman - President & Chief Executive Officer

  • Dave Cherechinsky - 高级副总裁兼首席财务官
  • Robert Workman - 总裁兼首席执行官

电话会议参与者

Steve Barger - KeyBanc Capital Markets.
Walter Liptak - Seaport Global
Chuck Minervino – Susquehanna
Adam Farley - Stifel
Marc Bianchi - Cowen
Vebs Vaishnav - Howard Weil

  • Steve Barger - KeyBanc Capital Markets。
  • Walter Liptak - Seaport Global
  • Chuck Minervino - Susquehanna
  • 亚当法利 - Stifel
  • 马克比安奇 - 考恩
  • Vebs Vaishnav - Howard Weil

会议主持员

Welcome to the second quarter 2019 earnings conference call. My name is Sylvia and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]
I will now turn the call over to Senior Vice President and Chief Financial Officer, Dave Cherechinsky. Mr. Cherechinsky, you may begin.

欢迎参加2019年第二季度财报电话会议。 我的名字是西尔维亚,我将成为今天电话的运营商。 此时,所有参与者都处于只听模式。 稍后,我们将进行问答环节。 [操作说明]

我现在将把这个电话转给高级副总裁兼首席财务官Dave Cherechinsky。 Cherechinsky先生,您可以开始。

Dave Cherechinsky

Welcome to the NOW Inc. Second Quarter 2019 Earnings Conference Call. We appreciate you joining us this morning and thank you for your interest in NOW Inc. With me today is Robert Workman, President and Chief Executive Officer. NOW Inc. operates primarily under the DistributionNOW and Wilson Export brands and you'll hear us refer to DistributionNOW and DNOW, which is our New York Stock Exchange ticker symbol during our conversation this morning.
Before we begin this discussion on NOW Inc.'s financial results for the second quarter of 2019, please note that some of the statements we make during this call, including the answers to your questions, may contain forecasts, projections and estimates, including, but not limited to, comments about our outlook for the company's business. These are forward-looking statements within the meaning of the U.S. Federal Securities Laws based on limited information as of today, which is subject to change. They are subject to risks and uncertainties, and actual results may differ materially. No one should assume that these forward-looking statements remain valid later in the quarter or later in the year. We do not undertake any obligation to publicly update or revise any forward-looking statements for any reason. In addition, this conference call contains time-sensitive information that reflects management's best judgment only as of the date of the live call.
I refer you to the latest Forms 10-K and 10-Q that NOW Inc. has on file with the U.S. Securities and Exchange Commission for a more detailed discussion of the major risk factors affecting our business. Further information as well as supplemental, financial and operating information may be found within our earnings release on our Investor Relations website at ir.distributionnow.com or in our filings with the SEC.
In an effort to provide investors with additional information relative to our results as determined by U.S. GAAP, you'll note that we also disclose various non-GAAP financial measures, including EBITDA, excluding other costs; sometimes referred to as EBITDA; net income, excluding other costs; and diluted earnings per share, excluding other costs. Each excludes the impact of certain other costs, and therefore, has not been calculated in accordance with GAAP. A reconciliation on each of these non-GAAP financial measures to its most comparable GAAP financial measure is included in our earnings release.
As of this morning, the Investor Relations section of our website contains a presentation covering our results and key takeaways for the quarter. A replay of today's call will be available on the site for the next 30 days. We plan to file our second quarter 2019 Form 10-Q today, and it will also be available on our website.
Now let me turn the call over to Robert.

欢迎来到NOW Inc. 2019年第二季度收益电话会议。感谢您今天早上加入我们,感谢您对NOW Inc.的兴趣。今天与我同在的是Robert Workman,总裁兼首席执行官。 NOW Inc.主要以DistributionNOW和Wilson Export品牌运营,您将听到我们在今天早上的谈话中参考DistributionNOW和DNOW,这是我们纽约证券交易所的股票代码。

在我们开始讨论NOW Inc.在2019年第二季度的财务业绩之前,请注意我们在本次电话会议期间所做的一些陈述,包括您的问题的答案,可能包含预测,预测和估计,包括,但不限于对我们对公司业务前景的评论。这些是美国联邦证券法意义上的前瞻性陈述,基于截至今天的有限信息,可能会有所变化。它们存在风险和不确定性,实际结果可能会有重大差异。没有人应该假设这些前瞻性陈述在本季度晚些时候或今年晚些时候仍然有效。我们不承担因任何原因公开更新或修改任何前瞻性陈述的义务。此外,此电话会议包含时间敏感信息,仅反映管理层在实时通话日期的最佳判断。

我向您推荐NOW Inc.已向美国证券交易委员会提交的最新10-K和10-Q表格,以便更详细地讨论影响我们业务的主要风险因素。更多信息以及补充,财务和运营信息可在我们的投资者关系网站ir.distributionnow.com或我们向美国证券交易委员会提交的文件中找到。

为了向投资者提供与美国公认会计准则确定的结果相关的其他信息,您将注意到我们还披露了各种非公认会计原则财务指标,包括EBITDA,不包括其他成本;有时也被称为EBITDA;净收入,不包括其他费用;每股摊薄盈利,不包括其他成本。每个都排除了某些其他成本的影响,因此,没有按照GAAP计算。我们的收益发布中包含了对这些非GAAP财务指标中的每一项与其最具可比性的GAAP财务指标的对账。

截至今天上午,我们网站的投资者关系部分包含了一份报告,内容涵盖了本季度的结果和主要内容。在接下来的30天内,我们将在网站上重播今天的电话。我们计划今天提交2019年第二季度10-Q表格,也将在我们的网站上公布。

现在让我把电话转给罗伯特。

罗伯特·沃克曼

Thanks, Dave, and good morning. I want to thank each of you for taking the time to join us today. We are encouraged by our consistent year-over-year top line 2Q 2019 results, even though U.S. and Canadian rig counts declined and one of our largest customer's activity pulled back considerably due to their large pending acquisition.
Specifically, our U.S. process solutions team was able to exceed pre-acquisition second quarter 2014 revenue levels back when rig count levels were nearly double the level we're seeing today, while leveraging our full suite of products, broad support infrastructure throughout the major shale plays and by bundling opportunities with U.S. energy centers and U.S. supply chain services.
Our cross-selling of products and solutions continues to add value to our customers across a wide variety of energy and industrial products. One area of strong focus for us has been collaboration between our U.S. energy centers, U.S. supply chain services and U.S. process solutions teams, resulting in pull-through sales, new customer introductions, increased market opportunities and further market penetration.
To further these efforts we have made some recent adjustments to our sales organizations to drive top line growth, gain market share and lead DNOW strategically into the future. For the second quarter, we generated revenue of $776 million, a $9-million sequential decline and a $1-million year-over-year decline, or essentially flat, in line with our guidance.
Global rig count averaged 2,181 rigs in the second quarter, a sequential decline of 4%. Our annualized revenue per rig was $1.4 million for the second quarter of 2019. Completions were up 6% sequentially. U.S. drilled but uncompleted wells, or DUCs, averaged 8,277 for 2Q, down 2% sequentially. DUCs present a future revenue opportunity for DNOW, should the wells be completed, which should drive tank battery construction and midstream gathering systems.
An increase in completions and a decrease in DUCs provides us with opportunity for our well site kitted PVF solutions, midstream gathering products and our U.S. process solutions business' production packages. WTI averaged $60 per barrel for the second quarter, gaining upward momentum from a first quarter average of $55 per barrel. We did see WTI prices experience an upward price trend throughout the first and into the second quarter, with a pullback in May and June trading in the $50 to $60 per barrel range.
In the area of operations, we continue to optimize our footprint and inventory to capitalize on market opportunities as we scale to meet market demand. We have closed three locations year-to-date and expanded our facility footprint by adding two locations this quarter, which I will touch on later.
We're starting to see working capital benefits from our newest regional distribution center, or RDC, in the Permian that was recently added to our network. The Permian RDC investment solidifies our long-term commitment to customers in the Permian region, while providing operations with more flexibility on inventory planning, order fulfillment strategies for staging and bundling, as well as logistics solutions for our customers.

谢谢,戴夫,早上好。我要感谢你们每个人今天花时间加入我们。尽管美国和加拿大的钻井平台数量有所下降,而且我们最大的客户活动之一由于其大量未决收购而大幅回落,但我们对2019年第二季度的同比业绩持续保持一致感到鼓舞。

具体而言,我们的美国流程解决方案团队在钻机数量几乎是我们今天所见水平的两倍时,能够超过2014年第二季度收购前的收入水平,同时利用我们的全套产品,遍布主要页岩的广泛支持基础设施通过美国能源中心和美国供应链服务捆绑机会。

我们的产品和解决方案的交叉销售继续为我们的客户增加各种能源和工业产品的价值。我们关注的一个领域是美国能源中心,美国供应链服务和美国流程解决方案团队之间的合作,从而带来了直接销售,新客户推介,增加的市场机会和进一步的市场渗透。

为了进一步做出这些努力,我们最近对我们的销售组织进行了一些调整,以推动收入增长,获得市场份额并在未来战略上领导DNOW。对于第二季度,我们产生了7.76亿美元的收入,900万美元的连续下降和100万美元的同比下降,或者基本持平,符合我们的指导。

第二季度全球钻机数量平均为2,181台,连续下降4%。我们在2019年第二季度的每台钻机年度收入为140万美元。完工率比上一季度增长6%。美国钻井但尚未完成的井(或DUC)在第二季平均为8,277口井,比上一季度下降2%。如果完井,DUC将为DNOW提供未来的收入机会,这将推动油箱电池建设和中游采集系统。

完井量的增加和DUC的减少为我们的井场配套PVF解决方案,中游采集产品和我们的美国工艺解决方案业务的生产包提供了机会。 WTI第二季度平均每桶60美元,从第一季度平均每桶55美元上升到上升势头。我们确实看到WTI价格在第一季度和第二季度都出现了价格上涨趋势,5月和6月的回调交易在每桶50美元至60美元的范围内。

在经营领域,我们继续优化我们的足迹和库存,以便在我们扩大规模以满足市场需求时利用市场机会。我们今年截止了三个地点,并通过在本季度增加两个地点扩大了我们的设施足迹,我将在稍后介绍。

我们开始看到我们最新加入我们网络的二叠纪最新区域配送中心(RDC)的营运资金收益。二叠纪RDC投资巩固了我们对二叠纪地区客户的长期承诺,同时为客户提供更灵活的库存计划,分期和捆绑订单履行策略,以及为客户提供物流解决方案。

The Permian RDC and others within our system allow us to better leverage and utilize our capital invested in inventory. These benefits, combined with our employees' continued focus on optimizing inventory efficiencies, assisted with our sequential inventory reduction. We will continue to create opportunities to better tune our inventory across our network, to improve customer service, our inventory turns and our return on invested capital.
Since the formation of U.S. process solutions in 2016, which was the result of combining the acquisitions of Odessa Pumps and Power Service, we have expanded our product offering while delivering more value to our customers for process production; measurement and fluid-movement; fabricated packets such as tank battery hookups; upgrades on existing batteries; the pumping solutions for midstream crude, water, NGL pipelines and produced water disposal; gas measurement; LACTs; vapor recovery units; and ASME test and multiphase separators.
I have mentioned before that we are exploring ways to expand capacity where we have production in logistic choke points, both organically and inorganically to grow in these areas. Therefore, I am pleased to announce the acquisition of a small business at the end of the second quarter with 140,000 square feet of fabrication capacity in the Houston area for our U.S. process solutions business.
This strategic location positions DNOW closer to our Eagle Ford Permian SCOOP-STACK and Gulf Coast customers. While this business historically focused on downstream ASME vessels fractionating towers and upstream production equipment we intend to expand its capabilities to include more packages such as LACT units, instrument air packages, produced water injection skids and pipeline fluid transfer pump packages.
Furthermore, with our proximity to the Gulf Coast, we believe this facility opens additional cross-selling and bundling opportunities with our downstream and industrial business to target midstream infrastructure, LNG export terminals, chemical plants, refineries and other industrial facilities.
Also, during the quarter, we acquired territorial bolt-on business for our U.S. process solutions that provides an expansion to our exclusive territory for a key supplier, which is our pump and mechanical steel partner in certain regions. I'm excited to welcome these employees from both acquisitions to the DNOW family. We are deploying technology to enhance our quote turnaround time, customer order process, fulfillment delivery mechanisms and pricing intelligence.
To that end, we have started two significant global IT projects, one being moving our current SAP ERP to SAP's Suite on HANA platform, while also moving to Google's Cloud platform. These moves will allow us to gain processing speed and enable future scalability when we need more processing power. These moves have minimal processing impact to DNOW users, so the learning curve has been virtually eliminated and increased the ability for users to process transactions quicker for customers and suppliers. This along with continued upgrades to our branches' network bandwidth allows for reduced transaction times and greater customer experience. The expected completion for these projects is scheduled for 1Q 2020.

二叠纪RDC和我们系统中的其他人允许我们更好地利用和利用我们投入库存的资本。这些优势与我们员工持续关注优化库存效率相结合,有助于我们的顺序库存减少。我们将继续创造机会,通过我们的网络更好地调整我们的库存,改善客户服务,库存周转和投资回报。

自2016年美国流程解决方案形成以来,这是收购敖德萨泵业和电力服务的结果,我们扩大了产品范围,同时为客户提供更多的流程生产价值;测量和流体运动;制造包装,如坦克电池连接;升级现有电池;中游原油,水,NGL管道和生产水处理的泵送解决方案;气体测量; LACTs;蒸汽回收装置;和ASME测试和多相分离器。

我之前已经提到过,我们正在探索扩大产能的方法,我们在物流阻塞点生产,有机和无机地在这些地区增长。因此,我很高兴地宣布在第二季度末收购一家小型企业,在休斯顿地区拥有140,000平方英尺的制造能力,用于我们的美国工艺解决方案业务。

这个战略位置使DNOW更接近我们的Eagle Ford Permian SCOOP-STACK和Gulf Coast客户。虽然该业务历来专注于下游ASME船舶分馏塔和上游生产设备,但我们打算扩大其能力,包括更多包装,如LACT装置,仪表空气包,生产水注入滑板和管道输送泵输送泵包。

此外,由于我们靠近墨西哥湾沿岸,我们相信该设施为我们的下游和工业业务开辟了额外的交叉销售和捆绑机会,目标是中游基础设施,液化天然气出口终端,化工厂,炼油厂和其他工业设施。

此外,在本季度,我们为我们的美国工艺解决方案获得了领土固定业务,为我们在某些地区的泵和机械钢合作伙伴的关键供应商提供了扩展。我很高兴欢迎这些员工从收购到DNOW家族。我们正在部署技术以增强报价周转时间,客户订单流程,履行交付机制和定价智能。

为此,我们启动了两个重要的全球IT项目,一个是将我们当前的SAP ERP迁移到SAP的HANA平台套件,同时也转移到Google的云平台。当我们需要更多处理能力时,这些举措将使我们获得处理速度并实现未来的可扩展性。这些措施对DNOW用户的处理影响极小,因此几乎消除了学习曲线,提高了用户更快地为客户和供应商处理交易的能力。这一点以及对分支机构网络带宽的持续升级可以缩短交易时间并提供更好的客户体验。这些项目的预计完工时间定于2020年第一季度。

We've also started to migrate to a robust e-commerce solution that provides a rich customer experience by moving to SAP's Commerce Cloud solution. This online e-commerce catalog solution will integrate seamlessly with our system. It's mobile-ready and allows our customers to have more self-service options. As our market continues to grow in the e-commerce world, our scalability will be in place to be able to stay abreast of our market needs and respond quickly. Completion on this project is expected to be late 2020.
Additionally, we continue to proactively address demand for integrated digital services and have adopted several strategic platforms to provide cost-effective scalable and innovative solutions. Examples of this include RFID and GPS applications with follow-on document management and maintenance capabilities that complement our core business.
We're investing in the development of an order management system that will improve speed and reduce the learning curve associated with processing sales orders and purchase orders. The system will complement the power of our system, while allowing users to focus on customer service. We're currently piloting the system and expect to scale to an enterprise-wide order management system.
We're also reviewing internal processes and looking for areas in which we can apply artificial intelligence to more accurately forecast and automate manual processes. These initiatives will further drive the expanding customer service side of our business across all units and allow our customers access to new avenues of value cost reduction opportunities and release of trapped value.
Turning to market activity. Our U.S. energy center channel saw activity increase in the Southeast, Northeast and Rockies with declines in the Permian, Mid-Continent, South Texas and the Western region. We were successful during the quarter in expanding our products and service reach by securing a valves and MRO consumables agreement with Shell in the Permian and Gulf of Mexico and a notable large long-term agreement with Lucid Energy, a key Permian-based midstream company.
The Delaware Basin continues to be active with a number of customers, as we supply core MRO and pipe valve and fittings or PVF products to drilling contractors, oil and gas operators and midstream customers. In South Texas, we were successful in providing PVF for midstream customers for gathering and pipeline projects as well as processing facilities that have been under construction to help absorb increased takeaway capacity from the Permian to the Gulf Coast downstream market.
In the Northeast, our midstream launcher and receiver program for a major midstream customer continues to bear fruit, as we provide prepackaged staged and delivery of customer PVF kits, which increases our customers' supply chain efficiency and streamlines their order process. Our employees collaborate with multiple parties, including fabricators to ensure the material is forecasted kitted quality documents are validated and order fill rates meet agreed-upon predetermined targets.

我们还开始转向强大的电子商务解决方案,通过迁移到SAP的Commerce Cloud解决方案,提供丰富的客户体验。该在线电子商务目录解决方案将与我们的系统无缝集成。它支持移动设备,允许我们的客户拥有更多自助服务选项。随着我们的市场在电子商务领域不断发展,我们的可扩展性将能够跟上我们的市场需求并快速响应。该项目预计将于2020年底完工。

此外,我们将继续积极主动地满足对集成数字服务的需求,并采用多个战略平台来提供具有成本效益的可扩展和创新解决方案。这方面的例子包括RFID和GPS应用,具有后续文档管理和维护功能,可以补充我们的核心业务。

我们正在投资开发订单管理系统,该系统将提高速度并减少与处理销售订单和采购订单相关的学习曲线。该系统将补充我们系统的强大功能,同时允许用户专注于客户服务。我们目前正在试行该系统,并期望扩展到企业范围的订单管理系统。

我们还在审查内部流程,并寻找可以应用人工智能的领域,以更准确地预测和自动化手动流程。这些举措将进一步推动我们业务的所有部门不断扩大的客户服务方面,并使我们的客户能够获得降低价值成本机会和释放陷阱价值的新途径。

转向市场活动。我们的美国能源中心渠道在东南部,东北部和落基山脉的活动增加,二叠纪,中陆,南德克萨斯和西部地区下降。本季度,我们通过与壳牌在二叠纪和墨西哥湾签订阀门和MRO消耗品协议,以及与位于二叠纪的关键中游公司Lucid Energy签订了一项值得注意的大型长期协议,成功扩大了我们的产品和服务范围。

随着我们向钻井承包商,石油和天然气运营商以及中游客户提供核心MRO和管道阀门及配件或PVF产品,特拉华盆地继续积极与众多客户合作。在德克萨斯州南部,我们成功地为中游客户提供PVF,用于采集和管道项目以及正在建设中的加工设施,以帮助吸收从二叠纪到墨西哥湾沿岸下游市场的增加的外卖能力。

在东北地区,我们针对主要中游客户的中游发射器和接收器计划继续取得成果,因为我们提供预先包装的分级和交付客户PVF套件,从而提高客户的供应链效率并简化订单流程。我们的员工与包括制造商在内的多方合作,以确保材料得到预测,优质文件得到验证,订单填写率达到商定的预定目标。

Our line pipe business increased sequentially during the quarter due to a $9 million project, which we don't expect to recur in 3Q 2019. As for U.S. supply chain services or SCS revenue was down sequentially. The decrease in revenue is attributed to one of our top customer's reduction in spending, as they focus on completing a large acquisition. In the short-term, this will be a headwind on U.S. SCS revenue with this customer, but we are optimistic this may offer an opportunity to grow market share once the acquisition is closed.
Activity continued with other SCS energy customers in the Delaware Basin Powder River, Eagle Ford and Bakken plays. We're witnessing some SCS operators that previously constructed large multi-well pad designs, who are now reassessing their designs and configuring fewer wells per pad to minimize parent-child well interference.
U.S. SCS operator customers' orders related to steel line pipe valves, flow-back kits, packaged production equipment and electrical products. We were successful in expanding product line sales of Polypipe with one of our key SCS E&P operators. We also experienced increased activity from workovers along with scheduled projects on new gas compressor station construction. Regarding downstream and industrial activity, we executed on project and turnaround business involving PVF, mill, tool and safety products for major refineries and chemical plants.
For U.S. process solutions, we delivered significant sequential revenue improvement due to an increase in completions providing a second quarter tailwind for our U.S. process solutions business in the areas of the Permian, Bakken, Rockies and Eagle Ford. In the quarter, our strategy to grow market share for our fabricated process and production equipment business continues, as we received orders for the full suite of our packaged equipment that were shipped to North Dakota, Wyoming, Montana, Texas, New Mexico and Colorado areas. Customers range from small to large independent E&P operators and midstream companies, which represented our largest growth market sequentially for U.S. process solutions.
Our inventory stocking program targeted for the water disposal and water management industry continues to bear fruit. For water applications, customers not only include oil and gas operators in midstream firms, but are also expanding to the growing number of standalone water management companies. We are working with manufacturers to plan and provide kitted pump solutions, which offers unique value proposition to our midstream water management customers from pump packages, process and production equipment as well as actuated valves from our U.S. process solutions group.
We continue to make inroads as an engineered pump distributor, winning jobs in higher-pressure applications in the midstream pipeline booster market for crude, natural gas liquids and light-end fluids movement for gathering lines. Our customers are relying more and more on our engineering, technical and application expertise in rotating and processed equipment.

由于900万美元的项目,我们的管线业务在本季度连续增加,我们预计不会在2019年第3季度重现。至于美国供应链服务或SCS收入连续下降。收入下降归因于我们的主要客户减少支出,因为他们专注于完成大型收购。从短期来看,这将成为美国SCS与该客户收入的逆风,但我们乐观地认为这可能会在收购完成后提供增加市场份额的机会。

在特拉华盆地Powder River,Eagle Ford和Bakken的其他SCS能源客户继续开展活动。我们正在见证一些先前已经构建大型多井垫设计的SCS运营商,他们现在正在重新评估他们的设计并且每个垫配置更少的井以最小化亲子井干扰。

美国SCS运营商客户的订单涉及钢管线阀门,回流套件,包装生产设备和电气产品。我们成功地通过我们的主要SCS E&P运营商扩大了Polypipe的产品线销售。我们还经历了修井活动以及新燃气压缩机站建设的预定项目。关于下游和工业活动,我们执行了涉及主要炼油厂和化工厂的PVF,工厂,工具和安全产品的项目和周转业务。

对于美国流程解决方案,由于完工量增加,我们在二叠纪,巴肯,落基山脉和鹰福特地区为我们的美国流程解决方案业务提供了第二季度的顺风,从而实现了显着的连续收入增长。本季度,随着我们收到运往北达科他州,怀俄明州,蒙大拿州,德克萨斯州,新墨西哥州和科罗拉多州地区的全套包装设备的订单,我们继续为我们的装配工艺和生产设备业务增加市场份额的战略。 。客户范围从小型到大型独立的勘探与生产运营商和中游公司,这是美国工艺解决方案的最大增长市场。

我们针对水处理和水管理行业的库存库存计划继续取得成果。对于水应用,客户不仅包括中游公司的石油和天然气运营商,而且还在向越来越多的独立水管理公司扩展。我们正与制造商合作,计划和提供配套的泵解决方案,为我们的中游水管理客户提供独特的价值主张,包括泵包装,工艺和生产设备以及美国工艺解决方案组的驱动阀门。

我们继续作为工程泵分销商取得进展,在原油,天然气液体和用于收集生产线的轻型液体运输的中游管道增压器市场中赢得高压应用的工作。我们的客户越来越依赖我们在旋转和加工设备方面的工程,技术和应用专业知识。

As noted, on previous calls, Canada remains a challenging market with egress constraints related to pipeline approvals limits on oil tanker traffic in waters from Vancouver Island to the border of Alaska, production curtailments, volatile oil and gas commodity pricing and infrastructure approval uncertainty. Despite the challenges in Canada, our Canadian team delivered solid revenue year-over-year with well spuds decreasing by 186 from 1,026 to 840.
Activity related to plant expansions in Sarnia tied to EPC projects helped gains as well as product line wins in PVF-related sales to our MRO customers. Additional increases in activity were in fabrication and midstream project work offsetting cyclical reductions in the drilling and well completions activity.
International rig count averaged 1,109 in the second quarter, up 8% sequentially. We believe international growth should start to materialize as more rigs are activated, service companies mobilize, and as EPCs tender more upstream oil and gas projects for facilities that are nearing award stage.
Growth in international rig count is encouraging as we are well positioned to participate in rig consumable or replenishment orders when newly activated rigs deplete their initial stock after deployment. International revenue contribution was led by offshore activity in the U.K. and Latin America. Jack-up rig loadouts for new builds continued during the quarter in Asia and new rig activations occurred in Mexico.
DNOW provides many of the OEM and MRO consumables used during the drilling operations of an offshore rig where we also provide an inventory replenishment model and virtual warehouses from a nearby shore-based branch in close proximity to where the rig has been deployed.
Middle East land activity softened resulting from the cyclical nature of projects that have been pushed to the second half of the year. Our U.K. Mclean Electrical group has been successful in securing orders and shipping electrical products tied to oil and gas project activity in the Middle East and former Soviet Union.
Before moving on to discuss the outlook for the rest of 2019, I'll turn the call over to Dave to review the financials.

如前所述,在之前的呼吁中,加拿大仍然是一个具有挑战性的市场,其出口限制与从温哥华岛到阿拉斯加边境的水域油轮运输的管道批准限制,生产削减,挥发性石油和天然气商品定价以及基础设施批准的不确定性有关。尽管加拿大面临挑战,我们的加拿大团队仍然实现了稳定的收入,同时钻井口数从1,026减少到840,减少了186个。

与EPC项目相关的Sarnia工厂扩建活动有助于我们的MRO客户获得PVF相关销售的收益和产品线。制造和中游项目工作的额外增加活动抵消了钻井和完井活动的周期性减少。

第二季度国际钻井平均数为1,109,比上一季度增长8%。我们认为,随着更多钻井平台的启动,服务公司的动员,以及EPC为接近奖励阶段的设施投标更多的上游石油和天然气项目,国际增长应该开始实现。

国际钻井平台数量的增长令人鼓舞,因为当新部署的钻井平台在部署后耗尽其初始库存时,我们已准备好参与钻机消耗品或补货订单。国际收入贡献主要来自英国和拉丁美洲的离岸活动。亚洲本季度新建工程的自升式钻井平台装载量持续,墨西哥新钻机启动。

DNOW提供了许多在海上钻井平台钻井作业中使用的OEM和MRO消耗品,我们还提供库存补给模型和附近岸基分支的虚拟仓库,靠近钻井平台的部署位置。

由于项目周期性推迟到下半年,中东土地活动减弱。我们的英国Mclean Electrical集团成功地获得了与中东和前苏联的石油和天然气项目活动相关的订单和运输电气产品。

在继续讨论2019年剩余时间的前景之前,我将把电话转给戴夫审查财务状况。

Dave Cherechinsky

Thanks, Robert. For the second quarter of 2019, we generated $776 million in revenue down $1 million, or essentially flat compared to the same period in 2018. Sequentially, revenue declined $9 million, or 1% landing well within the range we guided to in our first quarter earnings call. U.S. rigs declined 5% in the second quarter sequentially and when compared to the same quarter in 2018. U.S. rigs declined an additional 4% through July 26, from the second quarter 2019 average.
In the second quarter gross margins were 19.7%, down from the 20.1% level in the first quarter, and down 50 basis points from 20.2% a year ago. First half 2019 gross margins were up marginally to 19.9% from 19.8% in the first half of 2018. As we have noted, a key contributor to margin decline is hot rolled coil pricing, whose decline affects our welded pipe business, and negatively impacts our inventory replacement costs.
On the seamless side, the OCTG market continues to weaken leaving more mill capacity on the market to produce seamless line pipe. The result is a downward pressure on price as the market looks to turn higher-cost inventory into cash at lower gross margins. The sequential decline was primarily driven by product margin pressure on steel pipe while the year-over-year quarter product margin decline related to high-content steel products pipe, primarily and fitting and flanges secondarily. We expect gross margins to be choppy in the near-term as the market reacts to reduced activity levels, oil and gas commodity prices, and more directly to observe steel price declines.
Over the last few years, we experienced meaningful product price appreciation the primary driver for our gross margin gains. For example, gross margins were 16.4% in 4Q 2016, and grew steadily over seven of eight successive quarters by a total of more than 400 basis points to a record high of 20.5% in 4Q 2018.
For a few quarters in that timeframe, we enjoyed a period of premium product margins which were driven primarily by pricing gains from pipe a portion of which is the result of a favorable spread between lower inventory costs and higher replacement costs, which fueled premium product margins and provided a boost to gross margins in those periods.
Now the converse is happening. Instead of a boost, we are experiencing a gross margin squeeze as the point spread between existing inventory costs replacement costs and selling prices narrow for steel-related products. As replacement costs stabilize current inventory is exhausted and replaced with a now lower and lower market-costed items; this gross margin squeeze will relax and gross margins could grow all other things being equal.
As we have discussed, we generally expect gross margin gains in the growth environment and contrary trends in a market softening. Warehousing selling and administrative expenses or WSA was $136 million, down $3 million from the second quarter of 2018 and below our forecasted levels as we maintained our diligence around fine-tuning our model to improve the financial performance of the business.

谢谢,罗伯特。对于2019年第二季度,我们产生了7.76亿美元的收入,下降了100万美元,或与2018年同期相比基本持平。随后,收入下降了900万美元,或1%在我们第一季度引导的范围内下降收益电话。美国钻井平台在第二季度连续下降5%,与2018年同期相比下降5%。美国钻井平台从2019年第二季度的平均水平到7月26日再下降4%。

第二季度毛利率为19.7%,低于第一季度的20.1%,并且比一年前的20.2%下降了50个基点。 2019年上半年毛利率从2018年上半年的19.8%略微上升至19.9%。正如我们所知,毛利率下降的主要因素是热轧卷价格下跌,其下跌影响我们的焊管业务,并对我们的焊管业务造成负面影响。库存更换成本。

在无缝方面,OCTG市场继续疲软,市场上更多的轧机产能用于生产无缝管线。结果是价格面临下行压力,因为市场希望将较高成本的库存转化为毛利率较低的现金。连续下滑的主要原因是钢管的产品利润率压力,同时与高含量钢产品管道(主要是配件和法兰)相关的同比季度产品利润率下降。由于市场对活动水平下降,石油和天然气商品价格的反应以及更直接地观察钢价下跌,我们预计近期毛利率将出现波动。

在过去几年中,我们经历了有意义的产品价格升值,这是我们毛利率增长的主要动力。例如,2016年第四季度毛利率为16.4%,连续八个季度中连续七个季度稳步增长,总计超过400个基点,达到2018年第四季度创纪录的20.5%。

在这段时间内的几个季度,我们享受了一段时间的优质产品利润率,这主要受到管道定价收益的推动,其中一部分是由于较低的库存成本和较高的更换成本之间的有利差异,这推动了优质产品利润率并提高了这些时期的毛利率。

现在反过来正在发生。由于现有库存成本替换成本与钢铁相关产品的销售价格之间的差距缩小,我们正在经历毛利润挤压而不是提振。随着更换成本的稳定,目前的库存已经耗尽,取而代之的是现在价格较低和较低的市场成本;这种毛利率的挤压将会放松,毛利率会在所有其他条件相同的情况下增长。

正如我们所讨论的,我们通常预计增长环境中的毛利率增长以及市场疲软的相反趋势。仓储销售和管理费用或WSA为1.36亿美元,比2018年第二季度减少了300万美元,低于我们预测的水平,因为我们一直在努力调整模型以改善业务的财务业绩。

As such, when considering the locations consolidated or closed in 2018 and through the second quarter of 2019 the revenue generated in those locations approximated $6 million more in 2Q 2018 than in 2Q 2019, or $18 million more in the first half of 2018 versus the first half of 2019. While we did retain some of the revenue by servicing the activity from other locations, we were able to move resources to fund growth elsewhere and improve earnings and returns on working capital. This remains a mantra for DNOW, grow the business, while demanding improved operating efficiencies, and working capital velocity.
In the third quarter, we expect WSA to approximate $139 million per quarter as our operating expenses will expand marginally as we include the cost structure from the two new acquisitions. Operating profit was $17 million or 2.2% of revenue, a decline of $1 million year-over-year. Net income for the second quarter was $14 million, or $0.12 per diluted share, equaling the corresponding period of 2018.
On a non-GAAP basis EBITDA excluding other costs was $27 million or 3.5% of revenue for the second quarter of 2019, a decline of $2 million versus the second quarter of 2018. Net income excluding other costs was $10 million, or $0.09 per diluted share.
Other costs after tax for the quarter included the benefit of approximately $5 million from changes in the valuation allowance, recorded against the company's deferred tax assets offset by approximately $1 million in other costs after tax in the period. Our effective tax rate for the three months ended June 30, as calculated for U.S. GAAP purposes was 5.1%.
Moving to our segments. U.S. revenues were $605 million, a $5-million improvement from the second quarter of last year, amid a decline in U.S. rig activity. Looking at the distribution channels our U.S. energy centers contributed 53% U.S. supply chain services 28% and U.S. process solutions 19% of second quarter 2019 revenue.
Canadian revenues were $74 million down $1 million year-over-year. Holding out the negative impact of foreign exchange in Canada the revenue would have increased $2 million against the 22% decline in Canadian rig count and internationally revenues were $97 million the second quarter of 2019 down $5 million from a year ago, primarily driven by unfavorable foreign exchange rate impacts.
Moving on to operating profit. The U.S. generated operating profit of $16 million or 2.6% of revenue flat when compared to the corresponding period of 2018, primarily due to a decline in gross margins offset by reduced operating expenses. Canada operating profit was $1 million or flat when compared to the corresponding period of 2018 as a result of the revenue decline mentioned earlier. International operating profit was nil or down $1 million when compared to 2Q, '18 driven by the revenue decline discussed above.
Turning to the balance sheet. Cash totaled $80 million at June 30, with $74 million located outside the U.S. During the second quarter of 2019, we repatriated $13 million from our Canadian operations to repay amounts under -- borrowed under our credit facility. In the quarter, we reduced our amount borrowed on our revolving credit facility by half as we entered the quarter with $62 million borrowed and moved to a net cash position of $18 million when considering total company cash.

因此,在考虑2018年和2019年第二季度合并或关闭的地点时,2018年第二季度产生的收入比2019年第二季度多出600万美元,比2018年上半年多出1,800万美元。 2019年的一半。虽然我们通过为其他地区的活动提供服务确实保留了部分收入,但我们能够转移资源以资助其他地方的增长,并提高盈利和营运资本回报。这仍然是DNOW的口头禅,增长业务,同时要求提高运营效率和营运资本速度。

在第三季度,我们预计WSA每季度约为1.39亿美元,因为我们的运营支出将略有扩大,因为我们包括两项新收购的成本结构。营业利润为1700万美元,占收入的2.2%,同比下降100万美元。第二季度的净收入为1400万美元,或每股摊薄收益0.12美元,相当于2018年同期。

按非美国通用会计准则计算,不包括其他成本的EBITDA为2019年第二季度的2700万美元或3.5%的收入,比2018年第二季度下降200万美元。不计其他成本的净收入为1000万美元,或每稀释0.09美元分享。

本季度的其他税后成本包括估值准备变动带来的约500万美元的利益,与公司的递延所得税资产相比,在该期间的税后其他成本中抵销约100万美元。根据美国公认会计原则计算,我们截至6月30日的三个月的有效税率为5.1%。

转到我们的细分市场。由于美国钻机活动减少,美国收入为6.05亿美元,比去年第二季度增加了500万美元。从分销渠道来看,我们的美国能源中心贡献了53%的美国供应链服务,占28%,美国工艺解决方案占2019年第二季度收入的19%。

加拿大的收入为7400万美元,同比下降100万美元。考虑到加拿大外汇的负面影响,收入将增加200万美元,而加拿大钻井平台数量下降22%,国际收入为2019年第二季度的9700万美元,比一年前下降500万美元,主要是由于外国人不利汇率影响。

继续营业利润。与2018年同期相比,美国的营业利润为1600万美元,占收入持平的2.6%,这主要是由于运营支出减少抵消了毛利率的下降。由于前面提到的收入下降,加拿大的营业利润与2018年同期相比为100万美元或持平。与上述收入下降推动的第二季度相比,国际营业利润为零或减少100万美元。

转向资产负债表。 6月30日现金总额为8,000万美元,其中7,400万美元位于美国境外。在2019年第二季度,我们从加拿大业务中遣返了1300万美元,用于偿还我们信贷额度下的欠款。在本季度,当我们进入本季度时,我们将循环信贷额度借入的金额减少了一半,借入了6200万美元,并在考虑公司总现金时转为净现金头寸1800万美元。

At June 30, 2019, our total liquidity from our credit facility availability, plus cash on hand was $586 million. Our debt-to-capital ratio was 5% at June 30. Working capital excluding cash as a percent of revenue from the second quarter of 2019 was just under 21%.
Accounts receivable were at $496 million at the end of the second quarter, down $17 million sequentially improving DSOs to 58 days. Second quarter inventory levels were $598 million, resulting in improved inventory turn rates to 4.2. Accounts payable were $336 million at the end of the second quarter with days payable outstanding unchanged sequentially at 49 days.
Net cash provided by operating activities was $69 million for the second quarter with capital expenditures of approximately $3 million, resulting in $66 million in free cash flow in the quarter. We are a working-capital-intensive business. Our employees are focused on providing value-added products and supply chain solutions by out-delivering and out-servicing the competition, while finding ways to meaningfully speed up collections, reduce purchase, quantities and safety stock values, an aspiration enabled in this static atmosphere and to optimize our operational footprint, so that we can continue to generate free cash flow in this environment.
And now, I'll turn the call back to Robert.

在2019年6月30日,我们的信贷额度和手头现金的总流动资金为5.86亿美元。我们的债务与资本比率在6月30日为5%。不计现金占2019年第二季度收入的比例不到21%。

截至第二季度末,应收账款为4.96亿美元,下降了1700万美元,使DSO持续改善至58天。第二季度库存水平为5.98亿美元,导致库存周转率提高至4.2。截至第二季度末,应付账款为3.36亿美元,应付账款天数连续不变,为49天。

第二季度经营活动提供的净现金为6900万美元,资本支出约为300万美元,本季度实现了6600万美元的自由现金流。我们是一个营运资金密集型企业。我们的员工专注于提供增值产品和供应链解决方案,通过向竞争对手提供外包和服务,同时寻找有效加速收集,减少采购,数量和安全库存价值的方法,在这种静态氛围中实现愿望并优化我们的运营足迹,以便我们可以在这种环境中继续产生自由现金流。

现在,我将把电话转回罗伯特。

罗伯特·沃克曼

Thanks, Dave. Let's wrap up with the outlook for the third quarter and the rest of 2019. Looking ahead, the most recent report from the EIA showed a trend of a lower number of wells drilled, an increasing trend in completions and a slight drawdown of DUC inventory during the last quarter.
With WTI trading in the mid-50s, we expect our customers to continue to exercise capital discipline and focus on operating within free cash flow generation. If completions activity grows, we could see continued benefit from our U.S. process solutions business for modular rotating, production, measurement and process equipment. This would also benefit our U.S. supply chain services and U.S. energy centers for demand for PVF especially as applies to midstream gathering projects that would be required to get oil, gas and water to their final destination.
However, general industry expectations are for softening in the second half of 2019. And as I said earlier, one of our largest U.S. supply chain services operator customers announced they will be closing a major acquisition in 3Q, '19. This will put downward pressure on our U.S. supply chain services revenue for the remainder of the year as our customer continues exercising capital allocation austerity in preparation for the pending combination.
In Canada, where political controversies and takeaway issues persist, the rest of 2019 will remain a challenge. As we exit the seasonal breakup period, we do expect a modest topline Canada incline. We remain cautious however, about our Canadian operations due to the continued rig declines and political uncertainty.
Looking ahead internationally, we're seeing more rig activations, more jack-up and floater tenders materializing, continued increase in offshore activity in Europe and Mexico, an uptick in land-based activity in Australia and more production facilities quoting activity tied to capital projects. Recent and planned FID approvals and offshore rig contract announcements indicate that the worldwide offshore markets are poised for a long-term recovery and that should produce topline improvements for our international segment in 2020 and beyond as customers work through inventories and move from exploratory to development activities.
Given these scenarios and recognizing the opaque view we have into our customers' second half 2019 budgetary plans, we reaffirm our original guidance for the full year to be flat, revenues to low-single-digit-percentage decline. We will continue to focus on maximizing gross margin percentage in a choppy price environment, work to improve our working capital turns and generate positive free cash flow.
Before I move on to recognize one of our dedicated employees, I'd like to summarize, the progress we've made in the execution of our strategy. We continue to optimize our footprint, focus on margin discipline in a challenging U.S. land market, identify opportunities for enhancement in areas related to our quotation process as well as pricing, improving our operating efficiencies, further investing in technology, optimizing our inventory and sourcing strategy in response to import tariffs on steel products, reducing working capital as a percentage of revenue and leveraging our acquisitions through enhanced cross-selling of products in bundled product and service offering as evidenced by generating $66 million in free cash flow in the quarter.

谢谢,戴夫。让我们结束第三季度和2019年剩余时间的前景。展望未来,EIA的最新报告显示钻井数量较少的趋势,完井的增加趋势以及DUC库存的略微缩减上个季度。

随着WTI在50年代中期交易,我们希望我们的客户继续行使资本纪律,并专注于在自由现金流生成中运营。如果完井活动增加,我们可以看到我们的美国流程解决方案业务继续受益于模块化旋转,生产,测量和工艺设备。这也有利于我们的美国供应链服务和美国能源中心对PVF的需求,特别是适用于将石油,天然气和水送到最终目的地所需的中游采集项目。

然而,一般行业的预期是在2019年下半年软化。正如我之前所说,我们最大的美国供应链服务运营商客户之一宣布他们将在2009年第三季度完成一项重大收购。随着我们的客户继续实施资本配置紧缩措施以准备待定的组合,这将对我们的美国供应链服务收入产生下行压力。

在加拿大,政治争议和外卖问题依然存在,2019年剩下的时间仍然是一个挑战。当我们退出季节性分手时,我们确实预计会有一个适度的加拿大倾斜线。然而,由于持续的钻井平台下滑和政治不确定性,我们对加拿大的业务保持谨慎态度。

展望国际,我们看到更多的钻井平台活动,更多的自升式钻井平台和浮标招标实现,欧洲和墨西哥的海上活动持续增加,澳大利亚陆地活动增加以及更多生产设施报价与资本项目相关的活动。最近和计划的FID批准和海上钻井平台合同公告表明,全球离岸市场已准备好实现长期复苏,并且随着客户通过库存工作并从探索性发展到开发活动,这应该会在2020年及以后为我们的国际部门带来一线改进。 。

鉴于这些情景并认识到我们对客户2019年下半年预算计划的不透明观点,我们重申我们对全年的原始指引持平,收入降至低个位数百分比。我们将继续专注于在波动的价格环境中最大化毛利率,努力改善营运资金周转率并产生积极的自由现金流。

在我继续认识我们的一位敬业员工之前,我想总结一下,我们在执行战略方面取得的进展。我们继续优化我们的足迹,专注于在具有挑战性的美国土地市场中的保证金纪律,识别与我们的报价流程和定价相关的领域的机会,提高我们的运营效率,进一步投资技术,优化我们的库存和采购策略响应对钢铁产品的进口关税,减少营运资本占收入的百分比,并通过增强产品和服务产品的交叉销售来利用我们的收购,这可以通过本季度产生6600万美元的自由现金流来证明。

We made progress on these objectives all while simultaneously moving DNOW to a net cash position, which provides additional optionality in the event that one of the many companies we'd like to add to our differentiated product and service offering becomes viable like the two small acquisitions we closed this quarter. With successful execution of our strategy, we expect continued improvement towards free cash flow generation and creating greater shareholder value through continued expansion and consolidation.
With that, let me recognize one of the employees, whose daily hard work and dedication enable us to deliver on our promises. This month Debbie Croterfield [ph] will celebrate 44 years with DNOW. She is the cash manager in our treasury department residing in our corporate office in Houston. Debbie is a native Houstonian and upon graduation began her career with National Supply, one of the many companies that makes up the DNOW we know today as a file clerk in accounts payable.
Debbie has contributed through various positions within the finance department through her tenure from AP, credit, payroll and in '01, moving into the treasury department. Debbie is always one of the first in our corporate office each morning. She looks forward to going home to her husband Frank and her three dogs as well as watching their daughters' Heather and Makala's [ph] dogs too. Weekends often find Debbie visiting family in Chapell Hill and Brenham Texas, home of Blue Bell ice cream. Thanks Debbie for your continued dedication and service to DNOW.
Now let me turn the call over to Sylvia to start taking your questions.

我们在实现这些目标的同时,同时将DNOW转移到净现金状态,如果我们想要为我们的差异化产品和服务提供的众多公司中的一家变得可行,就像两次小型收购一样,这提供了额外的选择性。我们在本季度结束了。通过成功执行我们的战略,我们预计通过持续扩张和整合,可以持续改善自由现金流的产生并创造更大的股东价值。

有了这个,让我认识一位员工,他们每天的辛勤工作和奉献精神使我们能够兑现我们的承诺。本月Debbie Croterfield [ph]将与DNOW共同庆祝44周年。她是我们位于休斯顿公司办公室的财务部门的现金经理。 Debbie是一名土生土长的休斯顿人,毕业后开始了她的职业生涯,National Supply是我们今天所知道的DNOW的众多公司之一,他们是应付账款的文件职员。

黛比通过她在美联社,信贷,工资单和01年进入财务部门的任期,在财务部门担任过各种职务。黛比每天早上都是我们公司办公室中的第一个。她期待着回家给她的丈夫弗兰克和她的三只狗,以及看着他们的女儿的希瑟和马卡拉的[狗]狗。周末经常会发现黛比访问Chapell Hill和Brenham Texas的家庭,这里是Blue Bell冰淇淋的故乡。感谢Debbie继续为DNOW奉献和服务。

现在让我把电话转到西尔维亚,开始回答你的问题。

问答环节

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Steve Barger from KeyBanc Capital Markets.

谢谢。 我们现在开始问答环节。 [操作员说明]我们的第一个问题来自KeyBanc Capital Markets的Steve Barger。

史蒂夫巴格

Hey good morning guys.

嘿早上好。

Dave Cherechinsky

Good morning.

早上好。

史蒂夫巴格

Just first Robert, on the customer slowdown waiting for the acquisition to close, any way to quantify what that took away from the quarter and what do you expect for 3Q there?

首先是罗伯特,关于客户放缓等待收购的结束,任何方式来量化本季度的收益以及您对第三季度的期望是什么?

罗伯特·沃克曼

I expect more of the same. There's just a lot going on there, so we had a pretty significant pullback, and I say significant. I mean it's in the millions in that quarter and I expect it again and again. But it's going to be $5 million to $10 million a quarter.

我期待更多相同。 那里有很多事情,所以我们有一个非常显着的回调,我说重要。 我的意思是那个季度的数百万,我一次又一次地期待它。 但每季度将达到500万至1000万美元。

史蒂夫巴格

Okay. So pretty big, yes. And I just want to start with the two acquisitions. It's really good to see you back in the market. Any more detail on how long it'll take to bring that capacity on to support process organic growth and maybe what those acquisitions look like in terms of revenue and margin?

好的。 非常大,是的。 我只是想从这两次收购开始。 很高兴见到你回到市场。 有关将这一能力用于支持流程有机增长需要多长时间的更多细节,以及这些收购在收入和利润方面的表现如何?

罗伯特·沃克曼

Well, they both have a different story. The story with the one we acquired in Wyoming is that they are -- they have a particular territory that's outside of ours, but adjacent to it where they distribute exclusively for Flowserve and that's our partner in almost all of our regions on ANSI centrifugal pumps and mechanical seals.
So being able to pull our -- their -- some of their products into ours, for example, mechanical seals. We didn't have the mechanical seal line and now we get it, should help grow but it's going to take a quarter or two to get traction on that.
The other acquisition was -- we've -- in Casper where we do all this construction or this fabrication, many of the facilities are assembly shops but several of the facilities are feed shops. And so we have a facility that does nothing but skids and it feeds the final assembly shops.
And we have two facilities that build spools both carbon and stainless and they feed the assembly shops. Well the big feed shop we have is the ASME vessel shop and it also feeds other shops. And right now we had a choke point there because of demand and so our delivery times were getting extended to the point that it was costing us potential future revenue because customers couldn't wait that long, and so we had to come up with a solution for it and fortunately for us this one presented itself and it was a lot more economical for us than doing a greenfield expansion and the customer is -- the owner of that facility had already declared that business non-core, and they had spent several months winding that business down.
So we have to -- we're going to take us a couple of quarters to wind that business up. So I don't expect anything material from those two acquisitions in three and four, but we're really excited about what 2020 could hold once we get these things integrated.

嗯,他们都有不同的故事。我们在怀俄明州获得的这个故事就是它们 - 它们有一个特定的区域在我们之外,但它们在那里专门为Flowserve分配,而且它是我们在ANSI离心泵和我们几乎所有地区的合作伙伴。机械密封。

因此能够将我们的 - 他们的 - 一些产品拉到我们的产品中,例如,机械密封。我们没有机械密封线,现在我们得到它,应该有助于增长,但需要花费一两分钟来获得牵引力。

另一项收购是 - 我们 - 在卡斯珀,我们做所有这些建筑或这种制造,许多设施是装配车间,但其中一些设施是饲料店。因此,我们拥有一个除了滑行之外什么都不做的设施,它可以为最终的装配车间供货。

我们有两个设施,可以生产碳纤维和不锈钢卷轴,并为装配车间供货。我们拥有的大型饲料店是ASME船舶商店,它还供应其他商店。而且由于需求,我们现在有一个阻塞点,所以我们的交货时间已经扩大到我们未来的潜在收入,因为客户不能等那么久,所以我们不得不提出一个解决方案对于我们而且幸运的是,这个人出现了,它比我们的绿地扩张更客观,而且客户是 - 该设施的所有者已经宣布业务非核心,他们已经花了几个月把业务扯下来。

所以我们必须 - 我们将带我们几个季度来推动这项业务。所以我不希望三次和四次这两次收购产生任何重大影响,但是一旦我们将这些东西整合在一起,我们真的很高兴看到2020年的情况。

史蒂夫巴格

That sounds great. So this just furthers the thought process about being able to take more share with processes as those ramp up?

这听起来很不错。 因此,这进一步推动了思考过程,即随着这些过程的增加,能够更多地分享流程?

罗伯特·沃克曼

Absolutely. And plus most of our current U.S. process solutions business is all upstream and midstream. There's a little bit of downstream but not much. This business has a great reputation with a lot of the downstream customers with fractionating towers and other things that go into chemical plants and refineries, so being able to build on that and tie it in with our downstream industrial business to try to generate the same success in that area that we have on the upstream piece with the energy centers is pretty exciting as well.
But at the end of the day also it makes us more competitive, because now logistics will cost us less to compete in the Delaware or the Midland or the Eagle Ford because we're in closer proximity.

绝对。 此外,我们目前的大多数美国流程解决方案业务都是上游和中游。 有一点下游但不多。 这项业务在许多下游客户中享有很高的声誉,其中包括分馏塔和其他进入化工厂和炼油厂的东西,因此能够在此基础上建立并将其与下游工业企业联系起来,以试图取得同样的成功 在那个区域,我们在能源中心的上游部分也非常令人兴奋。

但是在一天结束时它也使我们更具竞争力,因为现在物流将使我们在特拉华州或米德兰或鹰福特的竞争成本更低,因为我们距离更近。

史蒂夫巴格

Yeah that's good. And the balance sheet is in, obviously, great shape at what's hopefully closer to a cycle bottom than not. As your team's looking at acquisitions, is the focus more on deals that plug holes in the geography or more about finding or adding to the niche product lines that you have that provide the differentiation?

是的,这很好。 显然,资产负债表的形状很好,希望更接近周期底部。 当您的团队正在考虑收购时,重点更多的是那些堵塞地理位置的交易,还是更多关于寻找或增加您所提供的差异化利基产品线的交易?

罗伯特·沃克曼

Yeah, our strategy hasn't changed over the many years. We're really looking for expansion of products and services that we can provide our customers because that benefits the rest of our business.
So, for example, in supply chain we have several operators who have outsourced their procurement and inventory management to us and the more we can expand into the products that they consume regularly and add value by reducing their cost as opposed to just marking up purchases from another supplier, the more valuable we become to them and the longer and stickier those relationships can be.
So we're really looking at high barrier to-entry stuff. It's not hard to go open a branch somewhere if you're selling pipe valves and fittings or MRO supplies and all you need is a little bit of inventory and some good employees and you can start competing.
To get into what we do in the process solutions business is not an overnight thing and it would require a lot of capital. So, we're really looking to expand our product breadth and to acquire higher barrier to entry businesses that have accretive EBITDA margins.

是的,我们的战略多年来没有改变。我们真的在寻求扩展我们可以为客户提供的产品和服务,因为这有利于我们的其他业务。

因此,例如,在供应链中,我们有几家运营商将采购和库存管理外包给我们,我们可以越多地扩展到他们定期消费的产品,并通过降低成本来增加价值,而不是仅仅标记购买另一个供应商,我们对他们的价值越高,这些关系就越长,越粘。

所以我们真的在寻找高门槛的东西。如果您正在销售管道阀门和配件或MRO供应品并且您需要的只是一些库存和一些优秀的员工并且您可以开始竞争,那么在某个地方开设分店并不难。

要了解我们在流程解决方案业务中的工作并非一蹴而就,而且需要大量资金。因此,我们真的希望扩大我们的产品范围,并获得具有增加EBITDA利润率的更高门槛的企业。

史蒂夫巴格

Got you. And then just one last one is, does integrating these two small acquisitions slow down the M&A hunt, or do you have enough bandwidth to continue looking for those things while you go around your daily business?

有你。 然后最后一个是,整合这两个小型收购是否会减慢并购的速度,或者你有足够的带宽来继续寻找这些东西而你在日常业务中?

罗伯特·沃克曼

No there's been no slow -- we didn't put anything on hold or slow down our team that does M&A, so I see these having almost no impact on opportunities that may present themselves to allocate capital for M&A.

不,没有缓慢 - 我们没有搁置任何东西或减缓我们进行并购的团队,所以我看到这些对可能出现的并购资金的机会几乎没有影响。

史蒂夫巴格

Okay, and just one more. What's your comfort zone in terms of size for potential deals?

好的,还有一个。 对于潜在交易,您在大小方面的舒适度是多少?

罗伯特·沃克曼

We're really not shy about size. In fact we prefer large over small honestly, because it takes resources in corporate and beyond and like IT and HR and legal. It takes almost the same amount of work to complete a small deal as it does a big deal and big deals move the needle. It's just we haven't found one yet that we wanted to acquire where we could come to terms with what they expected for the business.

我们真的不害羞。 事实上,我们更喜欢大而小的老实说,因为它需要企业内外的资源,以及IT和HR以及合法的资源。 完成一笔小交易需要几乎相同的工作量,因为它做了大量的事情并且大笔交易触动了针头。 只是我们还没有找到一个我们希望获得的地方,我们可以达成他们对业务的预期。

史蒂夫巴格

Got it. Thanks. Nice job.

得到它了。 谢谢。 不错的工作。

罗伯特·沃克曼

Thank you.

谢谢。

会议主持员

And next question comes from Walter Liptak from Seaport Global.

接下来的问题来自Seaport Global的Walter Liptak。

罗伯特·沃克曼

Hey, Walt.

嘿,沃尔特。

Walter Liptak

Hi thanks. Very good morning guys. Good morning, Robert.

你好谢谢。 早上好。 罗伯特,早上好。

罗伯特·沃克曼

Good morning.

早上好。

Walter Liptak

I wanted to ask you about the sales outlook for the back half. And I guess the question is we've seen the volatility in the last few days and I guess during the quarter around oil prices and the customers staying really tight on their budgets and cash flow. Are we underestimating what the second half could look like? Because you've got the $5 million to $10 million per quarter with the customer rolling off plus this weakness. What are the offsets to get the growth? We're seeing process solutions grow and it sounds like international could grow but I'm wondering if you can help us bucket those or quantify them so we understand how the second half is going to be flat to only down mostly opportunity [ph]?

我想问你关于后半部分的销售前景。 我想问的是,我们已经看到过去几天的波动性,我猜在本季度油价和客户的预算和现金流非常紧张。 我们低估了下半场的样子吗? 因为每个季度你都会有500万到1000万美元的客户,因为客户已经下滑,加上这个弱点。 获得增长的补偿是什么? 我们看到流程解决方案在增长,听起来国际化可能会增长,但我想知道你是否可以帮助我们解决这些问题或量化它们,以便我们了解下半部分将如何平衡到仅仅大部分机会[ph]?

罗伯特·沃克曼

Well, there's no doubt -- well let's put it this way. If you've listened to the earnings calls of all the drillers and if you've listened to the earnings calls of all the frac companies that do the completions and you take them at their word activity is going to be soft. The rigs are getting stacked out and frac plates for the most part are getting put in yards somewhere.
So for us to deliver on our commitment for the year, we're going to have to outperform the market. Now so far we've been outperforming the market and we're pretty excited about it. But I expect some shifting in our revenue in 3Q and 4Q between the groups and I'll let Dave give you some thoughts, but like process solutions had a huge growth period, or huge growth quarter; I expect them to still perform well, but they may have some pullback because we had a lot of projects go through in 2Q. But Dave you want to give some of your thoughts on it?

嗯,毫无疑问 - 好吧,让我们这样说吧。 如果您已经听取了所有钻探人员的收入电话,并且如果您已经听取了所有进行完成工作的压裂公司的收益电话,那么他们会接受他们的话,那么活动就会很软。 钻井平台越来越多,压裂板大部分都放在码头的某处。

因此,为了实现我们对今年的承诺,我们将不得不超越市场。 到目前为止,我们已经超越了市场,我们对它非常兴奋。 但我预计各组之间在第三季度和第四季度的收入会有所变化,我会让Dave给你一些想法,但是像流程解决方案有一个巨大的增长期,或者是一个巨大的增长季度; 我希望他们仍然表现良好,但他们可能会有一些回调,因为我们在第二季度完成了很多项目。 但戴夫你想提出一些想法吗?

Dave Cherechinsky

Yeah, I'll give some segment view. First of all, in terms of the outlook, I think there's -- we usually have a pretty good feel for the forward quarter. But this time I think there's more unknowns than knowns. While we're pretty confident, Canada's going to emerge from breakup and we will grow in Canada, we may not see the kind of growth we normally see in Canada.
And given the timing of projects in international, we think we'll grow sequentially in international, but that's like Robert says, that's one of our lumpiest most project-oriented segments.
And then in the U.S., U.S. energy is probably going to be flattish. And process solutions had its best quarter since we acquired those two main acquisitions. That's one of the things we're really proudest about in the quarter is how process solutions just shined in the quarter. We expect some correction to that in the third quarter. We don't expect them to grow sequentially.
And then finally with supply chain, while we have some puts and takes there we do expect some growth there. So some -- the U.S. market is going to be flattish for us and Canada and international are going to pull us up a little bit, but there are like I said there are more unknowns than knowns. So that's kind of where we're at.
We generally see the third quarter as our best quarter of the year. The third quarter this year we expect will be better. But it may be more on the first quarter range or it may be a little higher. So -- and then the fourth quarter, we for the last several years have seen a sequential decline and we expect a similar decline in the fourth quarter like we -- the customer like to see. Walt, are you there? Sylvia, you want to move on?

是的,我会给出一些细分视图。首先,就前景而言,我认为 - 对于前进季度我们通常会有一种非常好的感觉。但这一次我认为还有比知情更多的未知数。虽然我们非常有信心,但加拿大将从分手中脱颖而出,我们将在加拿大成长,我们可能看不到我们通常在加拿大看到的那种增长。

考虑到国际项目的时间安排,我们认为我们将在国际上顺序发展,但就像罗伯特所说的那样,这是我们最笨重的项目导向部分之一。

然后在美国,美国的能源可能会持平。自从我们收购了这两项主要收购以来,流程解决方案的表现最佳。这是我们在本季度真正最值得骄傲的事情之一,那就是过程解决方案在本季度如何闪耀。我们预计第三季度会出现一些调整。我们不希望它们按顺序增长。

然后最后是供应链,虽然我们有一些看跌期权,但我们预计会有一些增长。所以有些人 - 美国市场对我们来说将是平淡无奇的,而加拿大和国际市场将会拉近我们一点点,但就像我说的那样,有许多未知数而不是已知数。这就是我们所处的位置。

我们通常认为第三季度是我们今年最好的季度。今年第三季度我们预计会更好。但它可能会在第一季度范围内更多,也可能会更高一些。所以 - 然后是第四季度,我们在过去的几年中出现了连续下滑,我们预计第四季度会出现类似的下滑,就像我们 - 客户喜欢看到的那样。沃尔特,你呢?西尔维娅,你想继续前进吗?

Walter Liptak

I'm sorry I muted my phone.

对不起,我把手机静音了。

David Cherechinsky

Oh, there you are.

哦,你在这儿。

Walter Liptak

I'm sorry about that. Yes, I just had one more for you. On the pipe costs, how are you guys doing on inventory? And with pipe prices coming down, what's the revenue impact from that in the back half of the year?

对不起,我很抱歉。 是的,我还有一个给你。 关于管道成本,你们在库存方面做得怎么样? 随着管道价格的下降,今年下半年的收入影响是什么?

David Cherechinsky

Well that's a very good point, because we've seen pipe prices come down quite a bit this year and that has a double effect of, it brings down revenue levels obviously even if you sell the same tonnage of pipe and it puts margin pressure on us and our competitors. So we don't know if pricing has stabilized for pipe. It doesn't seem like it has. If the general market declines and if pipe prices continue we could see downward pressure on gross margins.
We're trying to manage our inventory very tightly to mitigate or to negate the negative impact of commodity deflation. We're trying to price aggressively, while we continue to take market share and we believe we are. But our customers are smart and there's kind of product abundance right now, so they're going to be really looking for better cost and better priced material.
So gross margins could come under continued pressure, but we're going to try to hold it like it is right now, but there are a lot of market forces that may impact that. So that's an issue given revenues being down in the fourth quarter and flattish to up a little bit in the third quarter combined with gross margins could bring our bottom line numbers down a little bit in the second half.

嗯,这是一个非常好的观点,因为我们看到今年管道价格下降了很多,并且有双重影响,即使你卖掉相同吨位的管道也会明显降低收入水平,并且会给利润带来压力我们和我们的竞争者。所以我们不知道管道的价格是否稳定。它似乎没有。如果整体市场下滑,如果管道价格继续上涨,我们可能会看到毛利率下降的压力。

我们正在努力管理我们的库存,以减轻或抵消商品通缩的负面影响。我们正试图积极定价,同时我们继续占据市场份额,我们相信我们是。但我们的客户很聪明,现在有丰富的产品,所以他们真的会寻找更好的成本和更优惠的材料。

所以毛利率可能会承受持续的压力,但我们会试着像现在这样持有它,但是有很多市场力量可能会影响到这一点。所以这是一个问题,因为第四季度收入下降,而第三季度收入略有上升,加上毛利率可能会使我们的下半年收益率下降一点。

Walter Liptak

Thanks guys.

多谢你们。

David Cherechinsky

Thanks, Walt.

谢谢,沃尔特。

会议主持员

The next question comes from Chuck Minervino from Susquehanna.

接下来的问题来自Susquehanna的Chuck Minervino。

David Cherechinsky

Hey, Chuck.

嘿,查克。

Chuck Minervino

Hi, good morning guys. Just -- yes I was hoping to touch a little bit more on that gross margin path a little bit as well. I think you touched on it in the prior question a little bit. I mean, it sounds like you're kind of anticipating some further deterioration there. As you mentioned in the opening remarks that you've seen as low -- on the gross margin side kind of back in 2016 in that 16% range kind of peaked up last year around 20.5%.
Is that what you think the general range is? And I mean, do you think we could be heading back to 16% or do you think we're more likely heading more like to an 18% number? Just kind of the scenarios that kind of get you around that range as we kind of think about forecasting that for the next couple quarters or even the next couple years here?

嗨,早上好。 只是 - 是的,我希望稍微触及一点毛利率路径。 我想你在之前的问题中略微提到了它。 我的意思是,听起来你有点期待那里的进一步恶化。 正如你在开场致辞中所提到的那样,你看到低价 - 在2016年的毛利率方面,16%的范围在去年达到峰值,大约为20.5%。

这是你认为的一般范围吗? 我的意思是,你认为我们可能会回到16%,或者你认为我们更有可能更倾向于18%的数字吗? 就像我们考虑预测未来几个季度甚至是未来几年的情况一样,这种情况可以让你在那个范围内徘徊?

David Cherechinsky

Yes, the floor is much higher than 16%. We could be at the floor. I'm just saying that there are forces, if you think about it, the sentiment has kind of eroded during the year and in the last 24 hours, it may have eroded twice what it did during the whole rest of the year. So that's just a reality we have to deal with. If things get tighter in the quarter and customers are buying less and as inventory -- everyone's trying to offload there'll be some downward pressure, but that's not necessarily the case.
If the market grows in the third quarter or our sales grow in the third quarter, we could see flatness in gross margins. So to answer your first quarter, we're not anywhere close to 16%. We're going to be in the 18% and higher and 19% probably for the year 19%-plus. But we really don't know what kind of gross margin erosion. Our models have it pretty flat through the rest of the year flat at the 2Q level. But of course like that's subject to change.

是的,地板远高于16%。 我们可以在场。 我只是说有一些力量,如果你想一想,这种情绪在一年中被侵蚀了,在过去的24小时里,它可能已经被侵蚀了一年中其余时间的两倍。 所以这只是我们必须处理的现实。 如果本季度情况越来越紧张,客户购买量越来越少,而且作为库存 - 每个人都试图卸货,那将会有一些下行压力,但情况并非如此。

如果市场在第三季度增长或我们的销售在第三季度增长,我们可以看到毛利率持平。 所以要回答你的第一季度,我们不会接近16%。 我们将达到18%和更高,19%可能是19%-plus。 但我们真的不知道什么样的毛利率受到侵蚀。 我们的模型在第二季度的其余时间里都非常平稳。 但当然,这可能会发生变化。

罗伯特·沃克曼

And then don't forget some of the pressure is competitive which it is what it is, but some of it's just due to falling steel prices. So we turn our inventory four times a year plus, so we can work through that inventory pretty quick and then the replenishment inventory is going to be a lower-cost inventory. So if we ever have a gross margin percent this year that starts with an 18% handle I'm going to be super surprised.

然后不要忘记一些压力是有竞争力的,它是什么,但其中一些只是由于钢铁价格下跌。 因此,我们每年将库存转换四次,因此我们可以非常快速地完成库存,然后补货库存将成为低成本库存。 因此,如果我们今年的毛利率达到18%,我将会非常惊讶。

David Cherechinsky

Yes.

是。

Chuck Minervino

Got it. That's helpful. And then just a separate question. Canada in the quarter was quite a bit better than we thought and I think Dave in your remarks just a little bit earlier, you kind of talked about how there might be some pressure in the U.S. but being brought up a little bit by Canada. That sounds to me like a little bit different -- I mean I guess we were under the impression that Canada was going to be fairly weak this year. So it sounds -- and down quite a bit. Am I mistaken in that or have things changed for you a little bit in Canada? And if so kind of what was that? Just the Q2 numbers are pretty good and it sounds like at least for the year, it's going to be maybe better than you maybe were originally expecting.

得到它了。 这很有帮助。 然后只是一个单独的问题。 加拿大在这个季度比我们想象的好多了,我认为戴夫在你的言论中稍早一点,你谈到美国可能会有一些压力,但加拿大有点压力。 这对我来说听起来有点不同 - 我的意思是我认为我们认为今年加拿大将会相当疲软。 所以听起来 - 而且相当多。 我错了,或者在加拿大为你做了一些改变? 如果有那么多的话呢? 只是Q2的数字相当不错,听起来至少在今年,它可能会比你原先预期的更好。

David Cherechinsky

Yes. Canada has shrunk two years in a row, but we're very much holding our own there. Rig count declined in Canada in the second quarter 22% and our revenues are essentially flat. We believe we're gaining market share there. And I talked -- or Robert and I talked a lot about process solutions being one of the stars in our quarterly results; Canada is certainly up there. So we feel confident about Canada. We almost always see a third quarter emergence from breakup recovery. We expect to grow -- and so that's why we expect to grow in the third quarter. We don't expect to grow at the same kind of rates we normally would into the third quarter, but we'll grow there. So while the market's shrinking I think we're taking share and it's showing in our numbers.

是。 加拿大连续两年缩水,但我们非常关注自己。 第二季度加拿大的钻机数量下降了22%,我们的收入基本持平。 我们相信我们在那里获得了市场份额。 我谈到了 - 或者罗伯特和我谈了很多关于过程解决方案是我们季度业绩中的明星之一; 加拿大肯定在那里。 所以我们对加拿大充满信心。 我们几乎总是看到第三季度出现分手复苏。 我们预计会增长 - 这也是我们预计第三季度增长的原因。 我们预计不会像第三季度那样以同样的速度增长,但我们会在那里增长。 因此,虽然市场萎缩,但我认为我们正在分享并且它在我们的数字中显示出来。

罗伯特·沃克曼

No doubt about it.

毫无疑问。

Chuck Minervino

That's great. And is the Canada business -- I mean is the rig count still the best proxy for you guys there or are you selling into some other markets there that maybe aren't as rig-exposed and maybe tracking the rig count isn't quite the best way to do that?

那很棒。 并且是加拿大的业务 - 我的意思是钻井数量仍然是你们那里的最佳代理商,或者你们在那里的某些其他市场销售的东西可能不像钻井平台那样可能跟踪钻机数量并不是 最好的方法吗?

罗伯特·沃克曼

It's -- that market has got -- there's several pieces of market in that market. So obviously from the upstream piece, we really track closer to well completion -- oh not well completions -- spuds and wells drilled. Then you get into the oil sands, which is a whole other animal and then we're really, really big into the midstream market in Canada. So there's a lot of things that affect our Canadian revenue.

这是 - 市场已经有了 - 市场上有几个市场。 显然,从上游部分来看,我们真正追踪完井 - 哦,不完善 - 钻井和钻井。 然后你进入了油砂,这是另一种动物,然后我们真的非常,非常重视加拿大的中游市场。 因此,有很多因素会影响我们的加拿大收入。

Dave Cherechinsky

Yes. I mean rig counts isn't correlated like it would be in the U.S. but it's a barometer. And so we look at it as one of our kind of bellwethers for what we should be earning in terms of revenues up there.

是。 我的意思是钻井平台计数与美国没有关联,但它是一个晴雨表。 因此,我们将其视为我们应该在收入方面获得的收入之一。

Chuck Minervino

Thanks a lot guys.

非常感谢你们。

Dave Cherechinsky

Thank you.

谢谢。

会议主持员

Our next question comes from Nathan Jones from Stifel.

我们的下一个问题来自Stifel的Nathan Jones。

亚当法利

Hey this is Adam Farley on for Nathan.

嘿这是亚当法利为内森。

罗伯特·沃克曼

Okay.

好的。

亚当法利

I just wanted to turn back to U.S. process solutions. Obviously a real good quarter outperformed the market and you guys are likely taking share. I was wondering if you could give an update on the turnkey solution for tank batteries? How is it being accepted and particularly in the Permian and then maybe some of your growth expectations there?

我只想回到美国的工艺解决方案。 显然,一个真正优秀的季度表现优于市场,你们可能会分享。 我想知道你是否可以更新坦克电池的交钥匙解决方案? 它是如何被接受的,特别是在二叠纪,然后可能是你的一些增长期望?

罗伯特·沃克曼

Yes so we're gaining traction and what I mean by that is, when we first started out attacking these other shale plays that they had never operated in before by using the Odessa Pumps infrastructure, we were getting tested.
Somebody would order 20 LACT units or somebody would order 20 oil and gas/water separators or whatever which would go to 20 different pads instead of buying the full kit for a pad.
And then it grew and then we had one customer that actually went the full enchilada and ordered everything on the well site; loved it so much ordered four more. That particular customer is having some issues right now just with production and living within cash flow so they've not reordered any more than the 5.
But what we have seen is some other customers that are ordering instead of -- if there's 12 pieces a kit on a tank battery they went from ordering 1 to ordering 2 to ordering 3 to ordering 4 and so we're making traction there. Not as fast as I want, but the order intake volume from those customers is still really high because they're ordering certain pieces of our kit to go to like 5, 10, 15, 20 well pads as opposed to just a single well, all the kit on the one well pad.
So from a revenue perspective, it's not disappointing. Just from the check-the-box perspective more customers are adopting, it's on its way there and it's headed in that direction and they're adding more and more kit, but we're still looking for a full adoption and we're not quite there yet.

是的,所以我们正在获得牵引力,我的意思是,当我们第一次开始攻击他们以前从未使用敖德萨泵基础设施进行过的其他页岩活动时,我们正在接受测试。

有人会订购20个LACT装置,或者有人会订购20个油和气/水分离器或任何可以进入20个不同垫的东西,而不是购买完整的垫子。

然后它增长了,然后我们有一个客户实际上去了完整的辣酱玉米饼馅并在井场点了一切;很喜欢这么多订购了四个。那个特定的客户现在正处理一些问题,只是生产和生活在现金流中,所以他们没有重新排序超过5。

但我们所看到的是其他一些客户正在订购而不是 - 如果有12件装在坦克电池上的套件,他们从订购1到订购2到订购3到订购4,所以我们在那里做牵引力。没有我想要的那么快,但是来自这些客户的订单量仍然非常高,因为他们订购了我们的套件的某些部件,而不是仅仅一个井,就像5,10,15,20井垫一样,一个井垫上的所有套件。

因此从收入角度来看,这并不令人失望。只是从更方便的角度来看,更多的客户正在采用它,它正朝着这个方向前进,它正朝着这个方向前进,他们正在增加越来越多的套件,但我们仍然在寻求全面采用而我们不是还没有。

亚当法利

Okay, that's helpful. And then I found your comments around midstream water pretty interesting you know produced water is likely to increase in the shale plays and investment's probably going to be needed there to address that. Could you just talk about how that midstream water market is developing and then how DNOW directly benefits from it? Thanks.

好的,这很有帮助。 然后我发现你对中游水的评论非常有趣,你知道在页岩区可能会增加产水量,并且可能需要投资以解决这个问题。 您能谈谈中游水市场的发展方式,以及DNOW如何直接从中受益吗? 谢谢。

罗伯特·沃克曼

Well it's -- as you can imagine if you're going to be in the water business, whether you're an oil company, a midstream company or a pure water-management company you've got to have pumps. And we have -- especially in the Delaware -- well pretty much all the way from the Eagle Ford to the Bakken we're the largest pump distributor in those spaces.
So there's a lot of benefit there because we have high-quality brands that customers want and then the real benefit is those pumps have to be connected with pipe valves and fittings and valves and actuation and so by bringing our process group in with our energy group and bringing the entire package, it becomes easier for that particular target customer to work with us because they have less vendors to deal with and we have the brands and the products they're really most interested in which is which multiplex pumps are we going to -- do they want?
Which HPumps do they want? Which ANSI centrifugal pumps do they want? And when you can meet that demand the pipe valves and fittings become a secondary conversation. Whereas if you didn't have that they would just be bidding you out on pipe valves and fittings against everybody else who has pipe valves and fittings. So it's a nice growth market for us and I expect a lot from it.

嗯 - 正如你可以想象的那样,无论你是一家石油公司,一家中游公司还是一家纯水管理公司,你都必须拥有水泵。而且我们 - 特别是在特拉华州 - 几乎从Eagle Ford到Bakken,我们是这些空间中最大的泵分销商。

因此我们拥有许多优势,因为我们拥有客户想要的高品质品牌,然后真正的好处是那些泵必须与管道阀门和配件以及阀门和驱动相连接,因此我们的工艺组可以与我们的能源集团合作并且带来整个包装,特定目标客户与我们合作变得更容易,因为他们有更少的供应商需要处理,我们拥有他们真正最感兴趣的品牌和产品,我们将采用哪种多功能泵 - 他们想要吗?

他们想要哪些HPump?他们想要哪种ANSI离心泵?当你能满足这种需求时,管道阀门和配件成为次要的对话。然而,如果你没有,那么他们只会向管道阀门和配件出价,对付其他拥有管道阀门和配件的人。所以这对我们来说是一个不错的成长市场,我期待它的很多。

亚当法利

All right. Thanks for taking my questions.

行。 谢谢你回答我的问题。

会议主持员

Our next question comes from Marc Bianchi from Cowen.

我们的下一个问题来自Cowen的Marc Bianchi。

Marc Bianchi

Hey, thanks. If I'm hearing you guys right, it sounds like you're expecting U.S. to kind of be flat in the third quarter and I was hoping you could go through the details a little bit more.
It sounded like, if I kind of take what we've heard from some of the OFS companies that you talked about HP Patterson talking about rig counts being down high-single digits I think Patterson's completion activity is down 10% in the third quarter.
So is that the kind of market outlook that's underlying your expectation for flat? And then also I think there was a supply chain customer that you mentioned that slowdown. So if you could just help us kind of bridge all that, it would be great?

嘿,谢谢。 如果我听到你们说得对,听起来你们期望美国在第三季度保持平稳,我希望你们能够更详细地了解一下细节。

听起来好像,如果我从一些OFS公司那里听到的话,你谈到HP Patterson谈到钻井数量高达个位数,我认为Patterson的完井活动在第三季度下降了10%。

那种市场前景是否与您的预期持平? 然后我认为有一个供应链客户,你提到减速。 所以,如果你能帮助我们解决所有问题,那会很棒吗?

Dave Cherechinsky

Well, we talked about U.S. energy being flattish; it could be up or the U.S. could be up -- the U.S. energy is looking flattish to us because as Robert mentioned in his opening comments, we had a $9-million order -- pipe order that won't recur. So that's something we'd have to overcome for the U.S. energy group to grow.
We think supply chain will be up like we said and process solutions down, so that's going to be the major drivers for the quarter. Again that's going to be -- we talked about winning some new customers. Depending on the timing of when those revenues materialize that could be some uplift in the third quarter as well.

好吧,我们谈到美国的能源是平淡的; 它可能会升起或者美国可能会升起 - 美国的能源对我们来说看起来很平淡,因为罗伯特在开场评论中提到,我们有一笔900万美元的订单 - 管道订单不会再发生。 因此,这是美国能源集团必须克服的事情。

我们认为供应链将像我们所说的那样上升并处理解决方案,因此这将成为本季度的主要推动因素。 这将是 - 我们谈到赢得一些新客户。 取决于这些收入实现的时间,也可能在第三季度有所提升。

罗伯特·沃克曼

Basically in a declining market which is pretty much what the drillers and the completion companies have stated on their earnings calls the last three weeks, we're hoping to flat or up slightly to overcome the market, but that's going to require taking share like we have been.

基本上在一个下跌的市场,这几乎是钻井公司和完成公司在过去三周的盈利报告中所说的,我们希望平稳或略微上涨以克服市场,但这需要像我们一样获取股票 已经。

Marc Bianchi

Got it got it. Okay that's really helpful guys. Thanks. And my second question is on just the working capital. You've done a great job here to get the ratio to sales down to below 21% this quarter.
I would suspect that you get some more working cap release throughout the back half of the year, if kind of the overall is flat to down. But how do you think of it in the context of that 20.8% that you delivered this quarter as we roll through the back half?

得到它了。 好的,这真的很有帮助的人。 谢谢。 我的第二个问题是关于营运资金。 你在这里做得很好,本季度销售比率降至21%以下。

我怀疑你会在今年下半年获得更多的工作上限,如果总体情况持平或下降的话。 但是你如何看待你在本季度推出的20.8%这个背景下我们如何看待它?

Dave Cherechinsky

I think we'll see similar or better working-capital-to-revenue ratios. We do think revenues will be down a bit in the second half, so we'll see receivables -- the opportunity to generate more cash from reduced receivables. Because the market is flat to down and it's really a little bit easier to gauge inventory SKU quantity requirements, we'll be able to pull out more inventory.
So we're living in the space that the second half free cash flow is as good or better than the first half free cash flow. And we always want to get our working capital as a percent of revenue closer to 20%; we're making nice progress there. So we've got all hands on-deck to really accelerate the movement of working capital and liquidate as much as we can and enable us to gain market share. So that's kind of where we're at right now.

我认为我们会看到类似或更好的营运资本与收入比率。 我们确实认为下半年收入会有所下降,因此我们会看到应收账款 - 从减少的应收账款中获得更多现金的机会。 因为市场是平稳的,而且实际上更容易衡量库存SKU数量要求,我们将能够提取更多库存。

因此,我们生活在下半年自由现金流与上半年自由现金流一样好或更好的空间。 我们总是希望将营运资本占收入的百分比接近20%; 我们在那里取得了很好的进展。 因此,我们全力以赴,真正加快营运资金的流动,尽可能地清算,使我们获得市场份额。 这就是我们现在所处的位置。

Marc Bianchi

Great. Thanks very much. I will turn it back.

非常好。 非常感谢。 我会把它还给我。

Dave Cherechinsky

You’re welcome.

别客气。

会议主持员

Our next question comes from Vebs Vaishnav from Howard Weil.

我们的下一个问题来自Howard Weil的Vebs Vaishnav。

Vebs Vaishnav

Hey good morning. I guess the process -- the sorry supply chain -- understand what you're talking about on the existing one customer. But if I'm not mistaken you were working on getting one other large customer into supply chain. Any progress on that or either for that one customer or how you think about adding more customers to your supply chain?

嗨,早安。 我想这个过程 - 抱歉的供应链 - 了解您在现有客户身上所谈论的内容。 但如果我没弄错的话,你正在努力让另一个大客户进入供应链。 对于那个客户或者您是如何考虑在供应链中添加更多客户的任何进展?

罗伯特·沃克曼

Yes that's -- as you -- I think as we've discussed before that is our longest-cycle sell because it requires a huge culture shift in the particular customer that you're targeting and not all customers meet that model.
So, if you've got a smaller pool of customers that actually have all of the indications that -- based on their culture, their size, their facilities, their concentration in certain plays all that stuff it limits the customers. And we have -- we always have two or three customers that we feel like are just right around the corner, but they always seem to take three months, six months, nine months, 12 months.
So, we have several conversations going on. I hope that we're surprised soon with another win, but really it's just so hard to forecast that because it takes the CEOs and the CFOs, and EVPs of Ops and the VPs of procurement all to finally take the big plunge so. But then again the other four were the same way and we got them across the finish line so it's not impossible. It's just a really hard sell.

是的 - 就像你一样 - 我认为正如我们之前所讨论的那样,这是我们最长周期的销售,因为它需要在你所针对的特定客户中进行巨大的文化转变,而不是所有客户都满足这种模式。

所以,如果你有一个较小的客户群实际上有所有的迹象 - 根据他们的文化,他们的大小,他们的设施,他们集中在某些戏剧所有这些东西限制了客户。我们有 - 我们总是有两三个客户,我们觉得他们就在附近,但他们似乎总是需要三个月,六个月,九个月,12个月。

所以,我们正在进行几次对话。我希望我们很快就会因为另一场胜利而感到惊讶,但实际上很难预测,因为它需要首席执行官和首席财务官以及运营的执行副总裁和采购副总裁等所有人最终都要大肆采取行动。但是接下来的其他四个是同样的方式,我们让它们越过终点线,所以这并非不可能。这只是一个非常难卖的东西。

Vebs Vaishnav

Got it, okay. On M&A you guys did do M&A. Can you just talk about how you are thinking going forward? Is it mostly going to be in Permian or are there more that other product lines that you can you are thinking about from an M&A perspective?

知道了,好的。 在并购方面,你们确实做过并购。 你能谈谈你如何思考未来吗? 它主要是在二叠纪还是更多的其他产品线,你可以从并购的角度思考?

罗伯特·沃克曼

Yes, so as it applies to U.S. process solutions which is typically where we would be doing M&A, it's about expanding product lines or expanding to geographies where we don't currently service. So -- or don't -- or we don't have a big presence in that particular group.
So, I would love to go out and do some large M&A actions with companies that would expand our product lines in that particular group but they're hard to come by. So, these legal bolt-ons deals that we're doing that carry low risk, that are -- don't consume a lot of cash that really we can plug them into the network and grow them rapidly because they don't have our network that's kind of where we've been headed.
But the minute that a larger one becomes viable and the stars align and we -- our bid-ask spread shrinks to zero as far as what they expect and what we're willing to pay, I couldn't get Dave to write the check quick enough.

是的,因此它适用于我们通常会进行并购的美国流程解决方案,它涉及扩展产品线或扩展到我们目前没有服务的地理位置。 所以 - 或者不 - 或者我们在那个特定的群体中没有大量的存在。

因此,我很乐意与那些扩大我们在该特定集团的产品线的公司一起做一些大规模的并购行动,但他们很难找到。 因此,我们正在做的那些具有低风险的法律限制交易 - 不消耗大量现金,我们可以将它们插入网络并快速增长,因为它们没有我们的 网络就是我们前进的方向。

但是,当一个较大的一个变得可行并且星星一致并且我们 - 我们的买卖差价缩小到他们所期望的和我们愿意支付的零时,我无法让Dave写支票。 足够快。

Vebs Vaishnav

Got it, okay. And maybe one margin question. So, gross margins have come down like 40 bps each of the last two quarters. You guys talked about how we are seeing a softening market and more pressure on gross margins. Any help you can give around like well should we use -- should we assume the similar decline in gross margins or how should we think about for the third for the next couple of quarters?

知道了,好的。 也许是一个保证金问题。 因此,过去两个季度的毛利率都下降了40个基点。 你们谈到我们如何看待市场疲软以及毛利率压力更大。 我们应该使用的任何帮助 - 如果我们假设毛利率的类似下降,或者我们应该如何考虑接下来几个季度的第三个?

Dave Cherechinsky

Yes, I wouldn't assume a similar decline, although that could happen. They could be flat. I mean it's going to matter on many things -- who the customers are, what the product mix is, do steel prices continue to decline, are we able to quickly liquidate our over-costed inventory?
And I talked in my opening comments about how we've got kind of a squeeze on margins right now because steel-related products those product costs are coming down so our margins are squeezed there. And as we turn our inventory we'll be able to eliminate that squeeze and bring margins up to that element of gross margin.
So, that's a very hard thing for us to gauge. There are some headwinds like steel price declines in a market that's kind of soft, so those are not favorable to gross margin gains, but we're doing all we can to mitigate any further erosion of gross margins and we'll just have to see how that plays out.

是的,我不会假设类似的下降,尽管可能会发生。 他们可能是扁平的。 我的意思是它会影响许多事情 - 客户是谁,产品组合是什么,钢材价格是否继续下降,我们是否能够快速清算我们过度成本的库存?

我在开场评论中谈到了我们现在如何对利润率造成压力,因为钢铁相关产品的产品成本正在下降,因此我们的利润受到挤压。 当我们转向库存时,我们将能够消除这种挤压,并将利润率提高到毛利率。

所以,这对我们来说非常困难。 市场中的钢价下跌存在一些不利因素,因此那些不利于毛利率增长,但我们正竭尽所能减轻毛利率的任何进一步下滑,我们只需要看到 这怎么样。

罗伯特·沃克曼

Yes, that's probably one of the single hardest items for us to forecast because you have thousands of employees out there processing millions of transactions and we try to give them all the tools we can to help them push price.
Like we have a system that helps them recommend price based on the market they're in and the replacement cost of materials and all that other stuff so it's really difficult. Like there's several quarters in the last 12 that if you had asked like can you grow margins 70 basis points? I'd say no and we went over that.
And then we had another quarter where it went up 170 basis points and I never would have forecast that. I didn't think we'd be at 19.7% right now personally. So, it's just a really hard number to forecast.
But if you believe some of the pipe manufacturers that have already reported -- I have not found any evidence of this but these are people who do this for a living, they expect hot-rolled coil to increase throughout the rest of the year. If that does that'll completely change our perspective on gross margin percent. So, we'll see how that goes but definitely inflation's great but inflation I'm sorry deflation and a competitive slowing market is what puts the biggest squeeze on margins.

是的,这可能是我们预测的最困难的项目之一,因为您有数千名员工在那里处理数百万笔交易,我们会尽力为他们提供帮助他们推高价格的所有工具。

就像我们有一个系统可以帮助他们根据他们所处的市场价格和材料的替代成本以及所有其他东西来推荐价格,所以这真的很难。就像过去12年中的几个季度一样,如果你问过,你可以获得70个基点的利润吗?我会说不,我们就过去了。

然后我们有另一个季度,它上升了170个基点,我从来没有预测过。我不认为我们现在个人的比例为19.7%。所以,这只是一个非常难以预测的数字。

但如果你相信一些已经报道过的管道制造商 - 我没有找到任何证据证明这一点,但是这些人以此为生,他们预计热轧卷将在今年剩余时间内增加。如果这样做,那将完全改变我们对毛利率百分比的看法。所以,我们会看到这是怎么回事,但绝对是通货膨胀很大但通货膨胀我很抱歉通货紧缩和竞争放缓的市场是利润率最大的压力。

Vebs Vaishnav

That's very helpful. Thank you for taking my questions.

这非常有帮助。 感谢您提出我的问题。

罗伯特·沃克曼

Thank you.

谢谢。

Dave Cherechinsky

Thanks Vebs.

谢谢动词。

会议主持员

Ladies and gentlemen, we have reached the end of our time for the Q&A. I will now turn the call over to Robert Workman CEO and President for his closing statements.

女士们,先生们,我们已经到了问答时间的尽头。 我现在将致电罗伯特·沃克曼首席执行官兼总裁,致闭幕词。

罗伯特·沃克曼

Thanks everyone for dialing into our call today and thank you to all our employees who helped us put out some amazing results and we look forward to talking to you in about three months regarding our 3Q results. Thanks.

感谢大家今天拨打我们的电话,感谢所有帮助我们取得惊人成果的员工,我们期待在三个月左右与您讨论我们的第三季度结果。 谢谢。

会议主持员

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.

谢谢。 女士们,先生们,今天的会议结束了。 感谢您的参与。 您现在可以断开连接。

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