Q3石油服务与设备行业业绩预览

1、Oil Services & Equipment3Q19 Earnings Preview Part II: Setups, Hurdles & Quick TakesWere plowing ahead with 3Q19 earnings, and in this note we provide a consolidated set of earnings previews across the balance of our coverage reporting from 10/29 onwards (our first installment is available here), in

2、cluding quick takes on where we think buy-side and sell-side expectations deviate and what potential catalysts well be monitoring on the calls. A more in-depth summary of our thoughts and estimates v. consensus for each stock can be found in the interior. Thus far this earnings season has been a “co

3、ver the bad news” event, particularly for NAM onshore stocks (frac +12%, land rigs +8% v. OSX +5%) as yet another “buy the last cut” narrative is working on one-sided short positioning. Meanwhile, “safety stocks” are getting sold (FTI -10%) or at least not participating in the rally (BKR/NOV avg. -2

4、%). Were skeptical theres enough legs in this surge to sustain itself through the next few weeks of generally weak results and tougher guides. While most have flocked to international and offshore for directional improvement, offshore data points have been fairly minimal, with few large equipment or

5、ders and muted fleet updates from offshore drillers DO and RIG. Below we provide “one liners” on the previews in this report, categorized by our expected market reaction to the prints and how wed respond.3Q19 One Liners Neutral:BHGE: Expecting another uneventful quarter for Baker as the link to FY g

6、uidance has been long understood to rest on 4Q; OFS/OFE likely tread water with modest improvement in top-line and margins, but 3Q inbound should be solid; FCF conversion still in focus and 2H19 will be a key litmus test.HP: We see risk of H&P falling short of FY4Q estimates (JPMe FY4Q EBITDA -4% v.

7、 Street), though with a high degree of short interest we think negative expectations are largely reflected in the share price. Dayrates will be under increasing pressure in upcoming quarters in our view, but as long as HP maintains discipline we think the decline should be gradual. We model sufficie

8、nt FCF to cover the div through 2021, but with very little margin for error.OII: Oceaneering appears set up to deliver an in-line print this quarter though we remain cautious of longer-term estimate levels; we expect AdTech to lead the segments higher on greater non-O&G work; Projects remains the wi

9、ldcard, we model a flattish 3Q despite seasonality (and off a disappointing 2Q).DNOW: 3Q results should largely match consensus after significant negative revisions to 2H19 estimates; Process Solutions a recent bright spot but were not sure how much longer DNOW can outrun the declines in L-48 D&C ac

10、tivity; G&A mgmt. has been solid, more needed; WC conversion to FCF in focus.FI: Were expecting a neutral response to Franks print but do see a scenario where shares react favorably should the company articulate its cost-reduction strategy well; our in-line 3Q revenue implies a 1% decline q/q on fla

11、t margins (11%); were interested to see the remaining 4Q bridge to reach the stated goal of 30-50% incremental margins (JPMe 30%).North America Equity Research29 October 2019Oil Services and Equipment Sean C Meakim, CFA AC(1-212) 622-6684 HYPERLINK mailto:sean.meakim sean.meakimBloomberg JPMA MEAKIM

12、 J.P. Morgan Securities LLCDanyel J Desa(91-22) 6157-3301 HYPERLINK mailto:danyel.j.desa danyel.j.desaJ.P. Morgan India Private LimitedAndrew P Herring, CFA(1-212) 622-8585 HYPERLINK mailto:andrew.p.herring andrew.p.herringJ.P. Morgan Securities LLCCorey Mergenthaler, CFA(1-212) 622-1167 HYPERLINK m

13、ailto:corey.mergenthaler corey.mergenthalerJ.P. Morgan Securities LLCSee page 42 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware

14、that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / MRC: The print itself is fairly de-risked after a(nother) guide-down in early Sept; downside

15、risks in upstream and midstream increasingly priced into the stock; gas utes and downstream should be more stable; we expect G&A reductions to preserve margins and FCF to further de-risk the balance sheet.PUMP: We see ProPetros 3Q print at risk of a miss as we think the company will have difficulty

16、shielding itself from slowing completions activity towards the end of the quarter. However, we believe the stock has been overly punished by investor concerns over potential new negative disclosures, and think company commentary may prove better than Street expectations.VAL: This is set to be a vola

17、tile quarter for EBITDA (JPMe $18m, -69% q/q) mostly due to contract expiries and costs pushed into 3Q. Given last weeks FSR, there are limited opportunities for an upside surprise in our view.NBR: Expecting an in-line print this quarter as we think slowing U.S. activity and intl challenges are well

18、 reflected by estimates. Into 2020, however, we see few growth levers for NBR, leaving us skeptical if sufficient FCF can be generated to make much progress deleveraging the balance sheet near-term.NESR: Were modeling a sequentially flat quarter on revenue and EBITDA on a seasonally slow 3Q; still e

19、xpect FY revenue growth of +25% as some of 3Q work gets pushed to 4Q; long-term view unchanged, believe NESR will continue to broaden its scope and footprint in a growing MENA market.NE: We think the quarter will be straightforward as NE clears a low bar; we estimate EBITDA of $55mm (-41% q/q). Mean

20、ingful updates since the last FSR seem unlikely, so we dont see much to inspire investor confidence, aside from a smart CFO hire or surprise Paragon settlement.Cautious:WHD: Following FTIs Surface guide-down (on NAM headwinds) we cautiously approach Cactus 2H19 prints; were expecting an in-line 3Q,

21、with revenue down 6% q/q, but see risks to 4Q estimates amidst a pervasive NAM slowdown and tariff impact (Products margins -300bps q/q); Rental slightly offsets market weakness with new products, but the real push comes in 1H20.LBRT: We think Libertys 3Q print could be challenged as weakening frac

22、demand becomes evident. We see downside bias to our 4Q expectations as the effect of yearend E&P budget exhaustion could be quite severe for LBRT and peers, and affirmation of such could pressure the stock.WTTR: We are cautious on Selects 3Q results as worsening NAM completions demand will likely we

23、igh on the companys core Water Services offerings, potentially setting up a miss v. consensus. The 4Q outlook could benefit from positive guidance on the New Mexico fixed infrastructure asset coming online, but we still think the risk to our estimates is skewed to the downside.FRAC: Keane looks posi

24、tioned for an in-line quarter as sell-side expectations largely align with our own for the company to meet the lower-end of guidance. However, we think the bridge to 4Q Street EBITDA looks challenged (JPMe$63mm v. Street $66mm), and think the companys outlook will likely call for a reset lower.NINE:

25、 We expect NINE to face a series of well-telegraphed headwinds in the near-term, which are likely already reflected in shares (-75% YTD v. -17% OSX); management candor around the worsening environment has reset expectations and further reinforced investor focus on 2020 and upcoming product launches;

26、 we anticipate a negative bias to shares until more clarity on the timing of the new product launches is reached.NCSM: Anticipating an in-line print this quarter but see downside risk to 4Q estimates; U.S. budget exhaustion and a sluggish Canadian rig count could combine for a worse 4Q decline than

27、the prior year; new product launches and continued International growth should support margin expansion but we expect both to be largely 2020 events.3Table of ContentsTOC o 1-2 h z u HYPERLINK l _bookmark0 3Q19 Earnings Calendar5 HYPERLINK l _bookmark1 Diversifieds6 HYPERLINK l _bookmark2 Baker Hugh

28、es6 HYPERLINK l _bookmark3 Capital Equipment9 HYPERLINK l _bookmark4 Cactus Wellhead9 HYPERLINK l _bookmark5 Oceaneering International11 HYPERLINK l _bookmark6 NCS Multistage Holdings13 HYPERLINK l _bookmark7 Energy Distributors15 HYPERLINK l _bookmark8 NOW Inc.15 HYPERLINK l _bookmark9 MRC Global17

29、 HYPERLINK l _bookmark10 Smid-Cap Services19 HYPERLINK l _bookmark11 Franks International19 HYPERLINK l _bookmark12 Liberty Oilfield Services21 HYPERLINK l _bookmark13 ProPetro23 HYPERLINK l _bookmark14 Select Energy Services25 HYPERLINK l _bookmark15 National Energy Services27 HYPERLINK l _bookmark

30、16 Keane Group29 HYPERLINK l _bookmark17 Nine Energy Services31 HYPERLINK l _bookmark18 Land Drillers33 HYPERLINK l _bookmark19 Helmerich & Payne33 HYPERLINK l _bookmark20 Nabors Industries36 HYPERLINK l _bookmark21 Offshore Drillers38 HYPERLINK l _bookmark22 Valaris plc38 HYPERLINK l _bookmark23 No

31、ble Corp403Q19 Earnings CalendarTable 1: 3Q19 Earnings CalendarEARNINGS RELEASE - 3Q19CONFERENCE CALL - 3Q19 COMPANYTICKERREPORTSTATUSTIMECALLCALLDIAL-IN NUMBER PASSCODE DATEDATETIME (ET)/ IDNabors IndustriesNBROct-29ConfirmedAft-mkt30-Oct11:00(888) 317-60039724939Liberty Oilfield ServicesLBRTOct-29

32、ConfirmedAft-mkt30-Oct10:00(833) 255-2827Baker HughesBKROct-30Confirmed06:4530-Oct09:00Cactus WellheadWHDOct-30ConfirmedAft-mkt31-Oct10:00(866) 670-22039897427Oceaneering InternationalOIIOct-30ConfirmedAft-mkt31-Oct11:00Noble CorpNEOct-30ConfirmedAft-mkt31-Oct09:001-833-245-96536469144ValarisVALOct-

33、31ConfirmedBef-mkt31-Oct10:00+1-855-239-3215MRC GlobalMRCOct-31ConfirmedAft-mkt01-Nov10:00412-902-0003NCS Multistage HoldingsNCSMNov-05EstimateProPetroPUMPNov-05EstimateFranks InternationalFINov-05ConfirmedBef-mkt05-Nov11:00(888) 771-437149117879Superior Energy ServicesSPNVNov-05ConfirmedAft-mkt06-N

34、ov09:00888-317-60035519413NOW IncDNOWNov-06ConfirmedBef-mkt06-Nov09:00National Energy Services ReunitedNESRNov-06ConfirmedBef-mkt06-Nov08:001-877-407-0312Keane GroupFRACNov-06ConfirmedAft-mkt07-Nov08:30(877) 407-9208Select Energy ServicesWTTRNov-06ConfirmedAft-mkt07-Nov10:00201-389-0872Nine Energy S

35、erviceNINENov-11EstimateBef-mkt11-Nov10:00877 524-8416Helmerich & PayneSource: Bloomberg, company filings.HPNov-15ConfirmedAft-mkt15-Nov11:00866-342-8591Helmerich5DiversifiedsBaker HughesSchedule Details. Release: Wed 10/30 6:45am; Call at 9am; WebcastOur Take: We expect another mostly benign 3Q for

36、 Baker, with in-line numbers and well-worn bridge to FY guidance, particularly in TPS (the company also tweaked guidance mid-quarter, further de-risking surprises). In a sharp contrast to its large cap peers, the companys limited exposure to NAM D&C activity and outsized long cycle mix relieves us f

37、rom lamenting the decline of the North American rig count in this note. Relative value investors crave the stability in BHGE earnings expectations amid the “Watched Pot Never Boils” cycle and NAM activity shortfalls; we are mostly aligned with BHGE consensus through 2021 while our estimates are on a

38、verage -16%/-27% for SLB and HAL 2020/2021 EPS. Weve viewed this bull camp as only having one foot in the bandwagon over the summer though, awaiting the next slug of GE stock. The GE secondary earlier this month relieves some pressure (we dont expect another round until post-4Q results though the wi

39、ndow reopens in December), but generalists seem to have cooled on the name (note the -11% discount required to complete the secondary). The shares have been consistent outperformers over the past year and BHGE is executing well, but its FCF yield is fairly pedestrian while sentiment towards energy e

40、xposure continues to wane. Bridge to FY TPS guidance following familiar path: Following a similar trajectory we saw in 2018, we expect 3Q TPS revenue to be flattish, with a little help on margins (+70 bps q/q), with the big uplift coming in 4Q when we expect our $2bn top line to bridge the gap to FY

41、 guidance. So far 80mpta has been sanctioned since 4Q18 with a number of projects inching closer to FID (e.g. Costa Azul, Driftwood, Qatar). Even if some do get pushed (which we believe is reasonable) for now the LNG “feast” cycle continues. As weve long called out, FCF conversion is key to the inve

42、stment case for BHGE and 2H19 is a critical test to show the business can deliver, though admittedly more weighted to 4Q19. OFS/OFE mostly treading water in 3Q, though nice orders booked look solid: We expect solid q/q progress for OFS in 3Q as BHGEs mix towards intl and production services mitigate

43、s much of the challenges of its peers; thus we model solid q/q top line (+3%) and margin progression (+50 bps). In OFE, we expect LSD revenue progression and flat-to-up margin, with the quarter punctuated by the announced order for the Balder X project in the North Sea. Var Energi (majority owned by

44、 ENI) awarded the integrated SPS/SURF/EPCI contract to BHGE and Ocean Installer for 16 SPS. Next tranche of GE shares likely comes in 2020: An interesting wrinkle to the latest GE secondary was the 90 day blackout period (v. prior 180), though we suspect selling OFS stock in mid-December will be tri

45、cky; thus we assume a February timeframe is more viable. More critically for BHGE (soon to be rechristened BKR as GEs share has fallen below 50%), corporate costs will be elevated near term as the two companies transition off shared services ($110mm/qtr run-rate for now).6Table 2: 3Q19 Key Operating

46、 Metrics, JPMe v. Consensus3Q19Operating DetailsEstim ates3Q19e Street v. StreetGrow th q/qJPM e StreetGrow th y/yJPMe StreetConsensus Revisions1mDelta3mDeltaEPS (Adjus ted, diluted) Adjusted EBITDATotal Revenue$0.24$0.247667586,1326,1232%21%19%6%5%2%2%n/an/a5%4%8%8%($0.01) (14)(31)-5%-2%($0.03) (31

47、)7-10%-4%1%0%0%0%EBITDA Margin12.5% 12.4%10 bps50bps 30bps-40bps -50bps-20bps-50bpsTable 3: 4Q19 Key Operating Metrics, JPMe v. Consensus4Q19Operating DetailsEstim ates4Q19e Street v. StreetGrow th q/qJPM e StreetGrow th y/yJPMe StreetConsensus Revisions1mDelta3mDeltaEPS (Adjus ted, diluted) Adjuste

48、d EBITDATotal Revenue$0.36$0.379459236,7536,603-3%48%52%23%20%10%8%40%44%11%8%8%5%($0.00) (8)(38)-1%-1%-1%($0.01) (11)(15)-3%2%2%-1%0%EBITDA Margin14.0% 14.0%0 bps120bps 120b ps-100bps -100bps0b ps-10bpsTable 4: 2019 Key Operating Metrics, JPMe v. Consensus2019Operating DetailsEstim ates2019e Street

49、 v. StreetGrow th y/yJPM e StreetConsensus Revisions1mDelta3mDeltaEPS (Adjus ted, diluted) Adjusted EBITDATotal Revenue$0.95$0.983,0563,03224,493 24,341-2%50%53%6%5%7%6%($0.01) (24)(40)-1%-1%0%($0.02) (17)165-2%1%1%-1%1%EBITDA Margin12.5% 12.5%0 bps-10bps -10bps-10bps-20bpsSource for all tables: Com

50、pany reports and J.P. Morgan estimates. Note: $ in millions except where noted.7Table 5: Baker Hughes Quarterly Earnings: JPMe v. Sequential/Annual CompsRe venue Breakdow nMix3Q19e2Q19q/q3Q18y/yTurbomachinery and Process Solutio23%1,4301,4052%1,3893%Oilf ield Services55%3,3543,2633%2,99312%Oilf ield

51、 Equipment12%7126933%63113%Digital Solutions10%6366321%653-3%Total Revenue100%$6,132$5,9942%$5,6668%Operating Incom e Breakdow nMix3Q19e2Q19q/q3Q18y/yTurbomachinery and Process Solutio 29%14813510%13212%Oilf ield Services51%26423313%23114%Oilf ield Equipment3%181427%6197%Digital Solutions17%86842%10

52、6-19%Segment Operating Income100%$516$46611%$4759%Corporate(110)(105)5%(98)13%Merger, Restructuring, Impairment & Other(35)(90)-61%(95)-63%Total Adjusted Operating Incom e$406$36112%$3778%Total D&A (incl. in COGS & SG&A)(360)(360)0%(353)2%EBITDA7667216%7305%Margin12.5%12.0%46 bps12.9%-39 bpsNet Fina

53、ncial Expense(57)(56)2%(55)4%Equity Income (Loss) & Other00-(79)-100%Income Before Taxes34930514%24343%Income Taxes(98)(88)11%(115)-15%Tax Rate28%28.9%47.3%Net Incom e13110426%7867%EPS (Adjusted, diluted)$0.24$0.2021%$0.1929%Diluted Shares (Avg)5355154%41429%Operating Incom e Margins3Q19e2Q19q/q3Q18

54、y/yTurbomachinery and Process Solutions10.4%9.6%78 bps9.5%88 bpsOilf ield Services7.9%7.1%74 bps7.7%16 bpsOilf ield Equipment2.5%2.0%48 bps1.0%155 bpsDigital Solutions13.5%13.3%19 bps16.2%-275 bpsSegment Operating Margin8.4%7.8%65 bps8.4%4 bpsTotal Adjusted Operating Incom e6.6%6.0%60 bps6.7%-3 bpsI

55、ncre/Decremental EBIT MarginsQ-QeY-YaY-Yevs. JPMeTurbomachinery and Process Solutions55%40%40%0%Oilf ield Services34%9%9%0%Oilf ield Equipment20%15%15%0%Digital Solutions40%122%122%0%Total Operating Income33%6%6%0%Orders Summary3Q19e2Q19q/q3Q18y/yTurbomachinery and Process Solutions1,8591,983-6%1,55

56、220%Oilf ield Services3,3573,2663%3,01111%Oilf ield Equipment71261715%55329%Digital Solutions6936881%62910%Total Orders6,6206,5541%5,74515%Balance Sheet & Cash FlowMetrics3Q19e2Q19q/q3Q18y/yCash from Operations67159313%240180%Capex(269)(238)13%(242)11%Free Cash Flow40235513%147174%Net Debt4,0504,010

57、1%2,52860%Source: Company reports and J.P. Morgan estimates. $ in millions except where noted.8Capital EquipmentCactus WellheadSchedule Details. Release: Wed 10/30 AMC; Call: Thurs 10/31 10am ET 866-670- 2203 x9897427.Our Take: Coming into the print Cactus has been nothing if not resilient, with the

58、 shares outperforming the OSX (+4% YTD v. -17% OSX), and a top-line that outpaced the U.S. land rig count through 1H19. However, the headwinds in 2H seem to be only growing stronger and while we model an in-line 3Q we see a downward bias to estimates in 4Q. Despite new product initiatives we believe

59、 the accelerating pace of NAM activity declines pared with tariff-related costs will weigh heavily on 2H19 results. That said, we see this as a potential air pocket for Rentals, as we expect the new products to grow market share over time. On the quarter, we model a sequential decline on top line (-

60、6%) and gross margins (-130 bps). Products pricing seems stable (having a small piece of the well cost helps), though the 7% decline in rig count through the quarter will weigh on revenue. The larger concern in Products is margin; we model a 300bp decline and expect a further 200bps in 4Q as WHD abs