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National Oilwell Varco Inc (NYSE:NOV)
Q4 2019 Earnings Call
Feb 7, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the National Oilwell Varco Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to introduce your host for today's conference, Mr. Blake McCarthy, Vice President of Corporate Development and Investor Relations. Sir, you may begin.

Blake McCarthy -- Vice President, Corporate Development & Investor Relations

Welcome everyone to National Oilwell Varco's fourth quarter 2019 earnings conference call. With me today are Clay Williams, our Chairman, President and CEO; and Jose Bayardo, our Senior Vice President and CFO.

Before we begin, I would like to remind you that some of today's comments are forward-looking statements within the meaning of the federal security laws. They involve risks and uncertainties and actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or later in the year. For a more detailed discussion of the major risk factors affecting our business, please refer to the latest Forms 10-K and 10-Q filed with the Securities and Exchange Commission.

Our comments also include non-GAAP measures. Reconciliations to the nearest corresponding GAAP measures in our earnings release available on our website. On the US GAAP basis for the fourth quarter of 2019, NOV reported revenues of $2.28 billion and a net loss of $385 million or $1.01 per share. Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA as defined in our earnings release. Later in the call, we will host a question-and-answer session. Please limit yourself to one question and one follow-up to permit more participation.

Now let me turn the call over to Clay.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Thank you, Blake. NOV's results continue to improve sequentially during the fourth quarter of 2019 as revenue increased 7% from the third quarter and EBITDA increased to $288 million or 12.6% of revenue. Despite continued deterioration of the North American market, all three of our segments increased EBITDA sequentially. On a year-over-year basis, NOV was able to post an increase in EBITDA during the fourth quarter of 2019 despite revenue being down more than $100 million in the fourth quarter of 2018. Aggressive cost reductions and facility downsizing contributed significantly to NOV's improving financial performance and Jose and I will speak more to this in just a moment.

Revenues for the full year 2019 were $8.48 billion, a 0.3% improvement from the prior year. Full-year EBITDA of $885 million declined 3% from the prior year. 2019 was a pivotal year for the energy industry. We entered 2019 with commodity and equity markets signaling strongly to market participants that growth for growth sake without commensurate returns to capital providers would no longer be tolerated. Sources of all forms of capital to the industry, public equity, private equity, bank debt, public debt became scarce and expensive as evidence for example by the collapse in trading multiples of oilfield public equities in early 2019.

At the time we interpreted this as the evaporation of a widely held narrative, gauzy conventional wisdom that a commodity price spike would someday soon lead us back to a more prosperous oilfield and save us all. Through the first four years of the downturn 2015 to 2018, this narrative was responsible, we think for a significant structural option value component in equities and asset values in the oilfield. This makes sense to me because the oil and gas industry has a 160-year history of extreme volatility and sophisticated investors recognize the corresponding option value that goes with this volatility as the leading provider of capital intensive capital equipment to oilfield service companies, we tend to watch such trends. Our customers frequently rely on external capital to buy the equipment that we provide them. And by the beginning of 2019 providers of external capital to oil and gas producers and service companies were exhausted, tired of waiting patiently for recovery that felt like you continued to slip over the horizon. So they choked back on the capital that they were previously pumping into the operations of our customers.

Our capital is to oil and gas what oxygen is to the rest of us. Petroleum is arguably the most capital-intensive undertaking of all industrial enterprises and oilfield services is probably second. Operators react quickly when you choke off their air supply. They pulled back hard on capex budgets, particularly in the US unconventional plays, resulting in a peak to trough decline of 27% in the US land rig count over the course of the year, while International and offshore projects with favorable return characteristics continued to receive FID green lights. The industry as a whole, particularly the US, finally seem to be resigning itself to the fact that commodity price spike is not going to save the day and the old way of doing business is not going to cut it. It will unfortunately be lower for longer and as the new conventional wisdom that emerged at the beginning of 2019.

I wanted to step through this perspective with you this morning, because I believe it has important implications for our company and our industry over the next few years and this perspective has guided our strategic decisions through 2019. First, with respect to the elusive recovery, through this year of capital austerity, some might say capital starvation, I've been struck by the number of conversations I have had with other oil patch all-timers [Phonetic] where we agree that this lack of capital is as bad as anytime we saw during the 1980s or 1990s. They're in light of seeds of a return to prosperity because the new grim view that has taken hold is now driving the industry to reduce its structural overcapacity, taking actions that will return this industry to health, asset retirements, facility closures, regional withdrawals, exits from businesses and consolidations got under way in earnest in 2019, while individually, none of these will heal the space, collectively they inevitably lead the industry to better disciplined pricing and shareholder returns.

NOV shared the task began materially back in 2015 when we started reducing our overcapacity facilities footprint and SG&A, but our efforts were accelerated sharply beginning in 2019 as a reality of the new market normal became apparent. Our team has undertaken many difficult decisions including pulling back from unprofitable markets and closing numerous facilities around the world, some of which had been NOV mainstays for decades. Since 2015, we have closed 483 facilities to shrink our own internal capacity to better fit market demand. We've adopted a more efficient shared services model in many regions and through the hard work of our team through this past year we've established a clear and tangible path to at least $230 million in annual cost savings as compared to the first quarter of 2019. Thus far we have obtained approximately $170 million in annualized savings, up about $82 million sequentially in the fourth quarter. And we continue to evaluate every opportunity to increase that number.

Second, every product line no matter how well established has fallen under the microscope of an in-depth returns analysis. Those do not currently meet our internal threshold have either developed a tangible plan for near term improvement or have been slotted for divestiture or closure. Ultimately 2019 was a year about building and solidifying our staying power. Operationally, we're leaner, more efficient and more agile to react to the shifts in the market. Third from a balance sheet perspective, we continue to increase the strength of our capital structure in order to maintain the flexibility to act opportunistically. During the fourth quarter, we called $1 billion in debt due in 2022 repaying a portion with cash and a portion with longer tenor notes, a new -- in a new issue that is due 2029.

Fourth, we tailored our strategy to fit a world where oilfield services customers have limited access to capital. Commercially NOV won much of this race during the period from 2006 to 2014 when we won a significant portion of the largest build out of oilfield service equipment, the industry has seen in a generation. We deliver 379 offshore new build drilling packages since 2006, for instance. So today we benefit from having the largest installed base of oilfield equipment in the world. This enormous installed base gives rise to new, attractive business opportunities that are unique to NOV. Aftermarket spares and services support, software system enhancements, the application of big data driven predictive analytics products to drive efficiencies, the evolution of mechanization to automation of processes in the oilfield for instance.

We are creating differentiated digital offerings built on over three decades of gathering big data in the oilfield through our M/D Totco products and eHawk service offerings, among others. Due to our installed base of equipment that touches nearly every well site in the world, we're uniquely positioned as perhaps the only common thread between hundreds of unique equipment suppliers with thousands of non-standardized sensor tags.

Our new product development with capital scarce and oilfield equipment oversupplied it makes less sense for oilfield service contractors to spend millions of dollars on new units, rather we see the next attractive opportunities as being smaller dollar investments that our customers can make in bigger impact enhancements that will enable them to differentiate their equipment in a crowded market place. While there will be certain large new build project opportunities that arise, even in this tough market, we will remain disciplined and will choose not to follow our competitors in doing the stupid stuff that desperate competitors inevitably do. A strong balance sheet and a large installed base of equipment requiring ongoing OEM support is the best way to write out an industry downturn. The good news for NOV is that we have both.

New product development has zeroed in on bolt-on products that carry a price tag our customers can afford, with value-added efficiency or useful life improving profile that they can justify to their shareholders. I think in terms of track ID tags for drill pipe monitoring and auto tally's on rigs. NOVOS operating system enhancements that our customers can charge their oil company customers for. New directional drilling tools like SelectShift, which have no similar peer in the marketplace, PowerBlade energy management systems, which reduce diesel consumption and carbon footprint for offshore drillers. Affordable products which can be used to retrofit existing capacity to improve its attractiveness in the marketplace.

Lastly, with respect to our outlook for the year. We're prepared to endure continued levels of reduced activity in North America with a meaningful market recovery unlikely to take hold before 2021. The kind of market that suits affordable fit for market solutions. International activity continues to be a bright spot as we enter 2020 for NOV as customers in the Middle East and other regions around the world look to harness the technologies that enable the US unconventional revolution. Where our rig technology segment is experiencing limited demand for new equipment in North America, we're scheduled to deliver multiple new rigs and rig upgrade packages this year to the Middle East as several countries in the region seek to upgrade their fleets. We are pleased with our progress on our Saudi joint venture and expect to begin delivering the first 50 modern highly efficient super-spec rigs to the kingdom in 2021.

Offshore drilling and production continues to grow at a measured pace. Our Wellstream processing business, an industry leader in production processing technologies, including monoethylene glycol regeneration units is tendering at twice the pace that it was at this time last year, indicative of greater activity in the offshore. As the world continues to learn more about the coronavirus outbreak, we're hopeful, first, that authorities around the globe were able to ease the suffering that is causing so many. We also hope that its impact on the world's economy broadly and the oil and gas industry specifically is short-lived, but we're realistic in acknowledging that globalization leaves us exposed to market uncertainty as it does for other industries. We expect our scale and global footprint will help us mitigate any direct supply chain repercussions but the situation nevertheless remains fluid in early 2020.

Finally, before I hand it over to Jose, I'd like to finish where I began. If I've learned anything from business it's to be skeptical of conventional wisdom, because collectively we are all well frequently wrong. I would be surprised to see a robust global recovery emerge in the oilfield in 2020 or even 2021, so we are managing the business accordingly. However, I do think a recovery will emerge when no one is predicting it. The only facts I know for certain is that the oil industry has seen global growth in demand for almost every single one of its 160 years, and that the industry has always been highly cyclical. The current time feels an awful lot like the 1990s, when then as now, capital providers to oil and gas were fatigued and frustrated, another period of capital starvation. And then as now the industry responded by trimming overcapacity. History doesn't repeat itself, but it does rhyme and I'm encouraged that here in the sixth year of the downturn, the oil and gas industry are serious about reducing it's structural oversupply.

There is a parallel narrative embedded in conventional wisdom about a looming energy transition. One that fully displaces fossil fuels and therefore one that likely further diminishes the option value of oilfield assets at least in the minds of some investors. While I'm confident, [Indecipherable] will transition to better forms of energy in the future, the shape and pace of that transit -- transition are probably going to surprise us all. In the near-term oil and gas remain critical fuels that play a key role in, for instance, air travel and feeding the planet. So they will be part of the energy mix for many years, perhaps generations to come. Nevertheless, an energy transition is emerging as potentially the most valuable and interesting business opportunity of the 21st century. So, there is one more small, but important element to our strategy, which is figuring out how NOV can capitalize on this and how we can make money by facilitating it. We quietly launch this initiative a few years ago to play offense rather than defense against this emerging backdrop.

We're not spending much money in this area, but I have been very encouraged by what our teams are developing and I hope to be able to share more with you on future calls about the opportunities emerging for NOV in this space. To our employees listening around the world, thank you for all that you do, your resiliency, your dedication, your hard work made a tough year a great year for NOV and Jose and I could not be more thankful to have you on our team.

With that, I'll turn it over to Jose.

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Thank you Clay. NOV's consolidated revenues increased $155 million to $2.28 billion or 7% sequentially as the continued momentum in International and offshore markets helped drive a 15% sequential improvement in international revenues, more than offsetting the impact of a rapid decline in North American activity levels during the fourth quarter. EBITDA increased $26 million sequentially to $288 million, driven by strong operational performance and continued progress on cost savings initiatives, partially offset by favorable project closeout variances from Q3 not repeating and a less favorable product sales mix in our Completion & Production Solutions and Rig Technology segments.

As Clay mentioned, we continue to make progress on efforts to rightsize our business and improve efficiencies across the organization and expect to realize another $24 million in annualized cost savings in the first quarter or a $6 million improvement in Q1 over Q4. We've also been reducing the working capital intensity of our business. We converted $246 million of working capital to cash in the fourth quarter and generated $473 million in cash flow from operations. After deducting $67 million of capital expenditures, free cash flow for the quarter was $406 million, bringing our second half 2019 free cash flow to $689 million, significantly exceeding our target.

Despite our expectation, the capital expenditures for NOV will increase to around $325 million in 2020 as we ramp spending on our new rig manufacturing facility in Saudi Arabia. We believe we will increase free cash flow by at least $100 million year-over-year and that working capital will be a source of cash for NOV in 2020.

During the fourth quarter, we took measures to further strengthen our balance sheet by redeeming $1 billion of senior notes due December 2022 and issuing $500 million of new senior unsecured notes due 2029. These transactions extended the maturity of $500 million of existing debt by seven years and reduced our debt by approximately $500 million, leaving us with $1.989 billion in gross debt as of December 31. Cash flow generated in Q4 allowed us to reduce net debt to $818 million at year-end. Our actions demonstrate what we've long said that defending the balance sheet is our top capital allocation priority. Our actions are designed to ensure NOV can successfully manage tumultuous market conditions and provide the flexibility to be opportunistic with compelling high return investments that we may identify.

As you know NOV has a share buyback authorization that is contingent on the company achieving gross debt to annualized EBITDA of less than 2 times. If 2020 continues to unfold as we expect, we will likely begin stock buybacks later in the year. A few housekeeping items before we dive into our segment level results. During the fourth quarter, we took $537 million in mostly non-cash impairment and other charges due to the further deterioration in North American market conditions in our ongoing restructuring efforts. Lower intercompany sales from cross segment projects resulted in a $3 million sequential decrease in revenue eliminations. In the first quarter of 2020 we expect intercompany sales to remain in line with the fourth quarter of 2019.

Other expenses increased $44 million sequentially and included $26 million in expenses associated with the retirement of $1 billion of our 2022 notes, and a $14 million increase in foreign exchange losses. And finally, while our effective tax rate may continue to be volatile over the near future, we expect our tax rate will average approximately 35% for 2020.

Moving to results from operations. Our Wellbore Technologies segment generated $764 million revenue in the fourth quarter, a decrease of $29 million or 4% sequentially. Revenues from North America declined 13%, slightly more than the fall off in drilling activity. While revenues from the segment's international operations increased 7%. Despite the decline in revenue, EBITDA for the segment increased by $10 million sequentially to $143 million primarily due to the successful implementation of cost savings initiatives and structural improvements to operational efficiency across the business units in this segment.

Our ReedHycalog drill business posted a less than 1% decline in revenue due to continued weakness in the North American market that was mostly offset by growth in most international markets and continued market share gains in the US. Our high performing bits are allowing us to gain share and preserve pricing in a competitive market. Revenues in our Downhole business unit fell 12% as reduced demand and increased pricing pressures in the North America were partially offset by higher revenues in most Eastern Hemisphere markets, despite the challenges in the North American market we continue to see healthy demand for our leading edge motor elastomer and other technologies including our SelectShift adjustable motors, which are enabling customers to complete single run wells with greater consistency and reliability.

During the fourth quarter, we helped the customer in the Marcellus Basin drill a record-setting 19,132 foot single run well. Our M/D Totco business unit realized a slight increase in revenue as the contribution from our growing number of drilling automation projects and the Norwegian North Sea more than offset a decline in revenue for M/D Totco's business in North America. Our Tuboscope business units saw revenues fall 5% sequentially. Revenue from the business units coating operations were down slightly and inspection service revenues fell 6% as lower drilling activity levels in the US and holidays reduced output from mills and outside processors.

Revenues in our WellSite Services business unit declined 12% sequentially on fewer US fluids jobs, but the units core solids control business only experienced a 5% sequential decrease in revenues. It's US operations performed in line with the 11% fall-off in drilling activity that was partially offset by growing opportunities in International and offshore markets.

We're encouraged to have begun working on several projects in the Gulf of Mexico recently, in addition to seeing rising demand overseas. Our Grant Prideco drill pipe business realized a sharp increase in revenues in the fourth quarter as we shipped large volumes of high spec drill pipe for international markets. Additionally, as was the case in the third quarter, more than 50% of the business units revenues were derived from offshore products, while orders for drill pipe in the US have been sparse over the past few quarters, customers drill pipe inventories that we hold in the US are at the lowest levels in recent history. We believe any material increase in drilling activity will require a healthy increase in orders.

Meanwhile, as international customers restock diminish inventories, we continue to see rising demand for our Delta drill-pipe connection technology. Looking to Q1 for the Wellbore Technologies segment the coronavirus, oil prices, seasonality and evolving E&P budgeting practices all remain wild cards, but at this time, we expect revenues for our Wellbore Technologies segment will decline between 6% to 12% with decremental margins in the mid 30% range.

Our Completion & Production Solutions segment generated $799 million in revenue in the fourth quarter, an increase of $71 million or 10% sequentially. Growing demand from offshore and international markets was partially offset by lower demand for completion equipment in US land markets. EBITDA increased $14 million sequentially to $96 million or 12% of sales. Incremental margins were limited to 20% as modestly higher sequential cost savings were offset by favorable credits related to the close out projects in Q3 that did not repeat in the fourth quarter. Segment began realizing a considerable increase in orders during late 2018, largely driven by offshore and international projects. This trend continued to the fourth quarter resulting in orders of $502 million and its fifth straight quarter with a book-to-bill in excess of 100%. While the project pipeline remains robust for 2020, at this point, we expect lower orders in the first quarter due to the timing of specific projects.

Our Fiber Glass Systems business unit posted an 8% sequential improvement in revenues, achieving the highest levels of revenue in its history. Increased deliveries of spoolable pipe from our new manufacturing plant in Dammam, Saudi Arabia and marine scrubber system components needed to retrofit vessels for IMO 2020 compliance, drove the sequential growth but was partially offset by rapidly contracting demand in North America where orders decreased 15% sequentially. We expect the need for additional scrubber systems to remain robust with experts estimating that owners of shipping vessels can achieve paybacks on their investments in less than a year based on current price spreads between low-sulfur and traditional bunker fuel.

Our Intervention and Stimulation equipment business realized a 3% sequential increase in revenue on strong year end shipments of coiled tubing and wireline units. However, margins decreased roughly 100 basis points on a less favorable product mix as revenues from pressure pumping aftermarkets parts and services declined to a level that is less than half its recent highs. Results from this business unit remain depressed due to the structural overcapacity of the North American completions market. However, the business continues to advance it's technological leadership by assisting our customers and finding new less capital intensive ways to improve profitability for themselves and their end customers.

Our FracMaxx, Big Bore, QuickLatch and frac hose products are examples that are lower cost solutions for improving operational efficiencies and safety in a cash-constrained environment. Business is also focused on pursuing opportunities in other markets such as the Middle East, Latin America and China where the development of tight and unconventional natural gas formations is driving equipment needs that mirror what is used in North America.

In the fourth quarter we booked and delivered a large package of high pressure equipment to an operator in Northwestern China, where there has been a rapid increase in the amount of hydraulic fracturing activities, and as therefore experiencing a corresponding increase in demand for high-pressure Flowline equipment in the Chongqing and Jiangyin gas fields.

Our Process and Flow Technologies business unit realized revenue growth in each of the unit's major product lines. The unit's production midstream product offerings saw a sequential decrease in demand in North America that was more than offset by large shipments of pump packages to India and an uptick in sales of production chokes, including the first batch of chokes built in our new manufacturing facility in Dammam, Saudi Arabia.

Business unit also realized its third straight quarter of improved results from its offshore market-focused Wellstream Processing and APL mooring product offerings, primarily driven by growing LNG related activity. Headlining the order book was a monoethylene glycol regeneration and reclamation unit for an LNG project in Mozambique and in order for our newly developed electrostatic coalescer technology EPACK that will be installed at the Equinor, Johan Sverdrup.

Tendering activity for the offshore market remains the strongest in recent memory, which is reflected in the business' ability to post a book-to-bill in excess of 150% and which should begin to allow for incremental pricing improvements during the year. Our subsea flexible pipe business posted a 15% sequential increase in revenues, but at low flow through as the market for flexible pipe remains very price competitive.

Bookings improved from the third quarter generating a book-to-bill of 134% and included more than 56 miles of flexible pipeline systems for a project in the North Sea. Our team continues to use as technology advantages to focus on higher value-add projects.

For the first quarter of 2020, we expect revenues from our Completion & Production Solutions segment to decline 10% to 15% sequentially with decremental EBITDA margins in the upper 20% to lower 30% range. Our Rig Technologies segment generated $759 million in revenue in the fourth quarter, an increase of $110 million. A sharp increase in land rig equipment sales, including sales of older inventory at low margins and improved progress on offshore projects drove the 17% sequential improvement in revenue. However, an unfavorable shift in product mix together with old inventory, we've moved at a discount were only partially offset by cost savings, which limited incremental margins and resulted in a $7 million increase in EBITDA to $112 million or 14.8% of sales.

Orders declined $10 million or 5% to $211 million in the fourth quarter and the total segment backlog at year end was $2.99 billion. Sharp improvement in land revenues resulted from a significant increase in year end equipment deliveries and better progress on land rig projects.During the fourth quarter, we booked orders for six land rigs destined for multiple customers in the Middle East with three of the rig orders specifying our NOVOS control system. We are seeing NOCs more frequently pushing their contractors to provide high-spec land drilling rigs that can meaningfully improve performance and operator returns. The growing number of international operators pursuing development of tight gas formations is accelerating the demand for this equipment.

And similar to what we're seeing in our Intervention and Stimulation Equipment business unit, the equipment these customers are seeking is beginning to look like the high-spec equipment found in West Texas. We've seen this in Argentina for several years and are now seeing customers across the Middle East and Asia pursue 1,500 horsepower rig packages with three gensets that are almost identical to what we're selling into the US.

During the fourth quarter, we also realized a substantial increase in revenues from deliveries of offshore capital equipment and from improved progress on our offshore wind construction vessel projects. We continue to see gradual improvement in offshore markets, with steady demand for rig equipment and technology upgrades as well as a growing opportunity set for our marine construction business, including replacement cranes for FPSOs, equipment for pipelay vessels and additional offshore wind construction vessels.

NOV continues to leverage our core competencies to assist in the development of solutions that help our customers reduce their environmental footprint, while also improving operational efficiencies. In the fourth quarter, we introduced our PowerBlade Hybrid system that is currently being installed on a rig in the Norwegian Continental Shelf. PowerBlade allows drilling contractors to reduce their carbon footprint and fuel costs by recycling the captured energy back into the rig. We estimate that the PowerBlade system will allow the drilling contractor to reduce diesel consumptions by 771,000 gallons per year, saving them $1.75 million in cash, reducing 110 tons of NOx emissions per year and reducing their carbon footprint or CO2 emissions by 6,200 tons per year.

Revenues from our rig aftermarket operations were flat sequentially, due to a decrease in spare part sales that resulted from budget exhaustion that sit in with our customers near the end of the year. Additionally, the significant increase in the number of rigs enrolled in our total cost of ownership programs moderates the Q4 uplift we've historically seen in our service and repair operations. We've increased the number of offshore rigs in our programs to 83 at year end and an increase of over 2.4 times since the end of 2018.

In the first quarter of 2020, we expect lower deliveries of capital equipment to be partially offset by a slight increase in aftermarket sales, resulting in a 10% to 15% sequential decrease in revenues and a 100 basis point to 300 basis point reduction in EBITDA margins. While we know there is much more work to be done in 2020, We were pleased with the strong finish to 2019 and the progress the organization made on key initiatives throughout the year. Actions taken by the talented hard working employees of NOV allowed us to balance our efforts to reduce costs and improve operational efficiencies with advancing our technologies and supporting our customers with cost effective solutions. Those actions have NOV well positioned for the future.

With that, we'll now open the call to questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Byron Pope with Tudor, Pickering, Holt & Company. Your line is now open.

Byron Pope -- Tudor, Pickering, Holt & Co -- Analyst

Good morning, guys.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Hi Byron.

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Hi Byron.

Byron Pope -- Tudor, Pickering, Holt & Co -- Analyst

Clay recognizing the extra uncertainty injected into the market by the recent pullback in Brent prices, could you just frame for us at a high level, how you think about the international growth drivers among the three business segments again just at a high level?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes. We're -- big picture, North America, we expect to I think like everyone else to enter a slowdown -- continued slowdown in activity and we're preparing for that. But we're more -- much more encouraged overseas and in offshore markets in particular. So that continues to move higher and what we're hearing from our customers is that they're moving forward with a lot of projects that they've been working on reducing costs and engineering and over the last several years and so excited about that for 2020.

And then the Middle East has continued to remain very active and as you're well aware, we've increased our presence in those markets and are encouraged by the needs that our customers have there for equipment and technologies that NOV provides. So generally, North America drifting down in offshore and international moving up. Current oil price volatility notwithstanding, Byron.

Byron Pope -- Tudor, Pickering, Holt & Co -- Analyst

Thanks. And then my second question, just again in qualitative terms, could you -- as you think back on the five incremental NOV growth drivers -- growth opportunities that you guys laid out back at the 2018 Analyst Day, just from your perspective, how things are progressing. Again notwithstanding the near term North America headwinds, but just how those have played out relative to your expectations?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Well, the main thing I'm most proud of is our continued investment in technologies and products through the downturn and we certainly highlighted that in our Analyst Day, which was well over a year ago and in a very different sort of commodity price environment, but I look back on the progress we've made really since the downturn started. I think you know we've probably introduced more new products and new technologies than any of our peers out there. We launched our NOVOS, sort of test rig at the very end of 2014 and that's been responsible for dozens of products and technologies. We've come out with very impactful digital solutions through this time period. Predictive analytics for BOPs, for example, are NOVOS operating system, our GoConnect digital products, things like that and so I think we've balanced the cost cutting in the retrenchment that has been necessary with continuing to invest in the long-term future of the company and the technologies that are going to make that happen. And so, I'm very proud of our organization in terms of progress on these things and I think a lot of ways through the downturn we've been focused on addition to efficiencies and getting better working capital management. I'm really laying the foundation for what the next up cycle looks like.

Byron Pope -- Tudor, Pickering, Holt & Co -- Analyst

Thanks, Clay. Appreciate it.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

You bet. Thank you, Byron.

Operator

Thank you. Our next question comes from Tommy Moll with Stephens Inc. Your line is now open.

Tommy Moll -- Stephens Inc -- Analyst

Good morning and thanks for taking my questions.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Good morning, Tommy.

Tommy Moll -- Stephens Inc -- Analyst

So I wanted to touch on the portfolio review that you've been undertaking for some time now. It's clear, it's a returns driven analysis that you're running through. And so my question is, as you're evaluating, what to keep and what to prune? How many years forward are you willing to look for a business line or a unit to hit the kind of returns that you'd like to see to keep it in the portfolio? And the reason I'm asking is, clearly, offshore and international have some momentum, but we need to play that forward for some reasonable time horizon to get comfortable to where you're willing to underwrite? So anything you could do to help us frame that up would be helpful?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes, that's a great question. I'm going to let Blake chime in here in a minute, because he's heading up this effort. But, I would say, it depends on the potential to achieve what we always aim at in the application of capital, which is a defensible business that has a demonstrable competitive advantage over the long haul is the ultimate goal. And so when we look at these different businesses and kind of the current state of affairs and the current state of their markets and so forth we take a view necessarily on what's the likelihood and probability that we'll get to that state, that defensible competitive advantage in a reasonable period of time. And so I would say, our patience level is somewhat dependent upon the potential payoff and attractiveness of that particular business opportunity, but it's really kind of opportunity by opportunity that we evaluate this.

Blake McCarthy -- Vice President, Corporate Development & Investor Relations

Yes Tommy, I think we touched on this last quarter but this is not just a quantitative exercise but also qualitative. And so we just take a step back and say like, oh, if this business is below the return threshold but it's been bouncing along the bottom of the down cycle and we could see a clear tangible path to the orders have completely pivoted on this one-and-done a full 180. We're not going to sell at the bottom of its earnings potential.

Now I will say, we have quite touched upon our patience level for a lot of these that did all below the threshold, we were able to implement some discrete action plans that are in process right now that we will reevaluate. And most of these action plans only take about three to nine months. So it's just more self-help, which is part of our job is managing these businesses. And those that we find are to be unfixable, those will be evaluated for divestiture or just pure exit.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes that's our first inclination is around -- we're paying to fix these things and run these things. And so are there steps we can take first. So that's probably where our default is for businesses that fall below the threshold initially.

Tommy Moll -- Stephens Inc -- Analyst

Very helpful. Thank you both. And as a follow-up, I wanted to double back on the international and offshore outlook. Again, looks like we'll be up for 2020 versus the prior year just in terms of the addressable market there. Are there any particular aspects where you think NOV could maybe outperform the broader market business lines or parts of the world where you're most excited that you would call out for us?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes. Probably what we're -- we're certainly well known for drilling equipment offshore rigs, all things with drilling. What's probably less well known by investors on Wall Street is the fact that we've sort of quietly assembled a really interesting portfolio of products that are more focused on production going into FPSOs, fixed platforms, processes around production in terms of sand separation, oil water separation, monoethylene glycol regeneration units things like that. And so I'm really, really proud of that portfolio. And I think there's really interesting opportunities that are going to continue to emerge in the offshore where NOV is likely to play maybe a little larger role than we would have in a prior upturn.

Tommy Moll -- Stephens Inc -- Analyst

Thank you. That's all for me. And I'll turn it back.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Chase Mulvehill with Bank of America. Your line is now open.

Chase Mulvehill -- Bank of America Merrilll Lynch -- Analyst

Hey, good morning. So I guess, Clay you talked a bit about kind of energy transition. And so I'm just kind of curious, if you can kind of flush it out a little bit more here and kind to talk about your strategy toward energy transition and maybe organically what you're doing? And then also maybe on the M&A side?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes. First I'd say that we have a presence in this space going back many years and in fact many decades with respect to geothermal for instance where you probably be hard pressed to find a geothermal well that doesn't have NOV technology involved with it anywhere in the globe. And then secondly, I think last year we had a couple of announcements around offshore wind installation vessels, which is a space that NOV has a very -- has a market leading position in terms of the technologies and vessels install offshore wind turbines. And so we've been in renewables for going back a long time.

My comments in the prepared remarks though really are just to let you know that we're thinking about other ways to participate in this and viewing it as potentially a terrific business opportunity. When I think about energy, energy really is all about infrastructure, about capital deployment, historically pivoting from one form of energy to another is sort of a decade long process, but involves enormous amounts of capital, it involves project execution, it involves application of technology, it involves creative ideas. NOV has a lot of those in abundance. And so I do think there's a role here that we can play and in helping make that happen.

But what I want to stress is we're aiming at capital returns coming out of that at the opportunity to develop technologies and services and methods that help in that transition, but also earn excellent returns for our shareholders. And so that's how I'm framing this. I don't have a lot more to add to that other than what I said earlier some ideas in the space that we think are unique that potentially can turn into a really interesting and profitable businesses, and -- but we -- I generally don't -- won't get into the details until we're earning -- making revenue with these things.

Chase Mulvehill -- Bank of America Merrilll Lynch -- Analyst

Okay, great. Thanks Clay. I guess, if we kind of come to the supply chain a little bit and think about the coronavirus. You mentioned it a little bit there's, obviously, a direct impact and maybe some direct -- indirect impact as we think about the supply chain being so interconnected. Is there a certain segment that we should look at and try to understand better about the impact from what's going on over in China? And then help us understand how much of that is actually in your guide on their Blake?

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Hi, Chase. It's Jose. I'll fill this and Clay can chime in. But no it is a situation that is evolving rapidly and it's something that we're monitoring very closely. So I think our base exposure to this is more from a supply chain standpoint than it is from a customer revenue opportunity set. But as we did talk about in some of the prepared remarks, China is an emerging and growing market for our end products, in which we're having more and more success with our differentiated technology offerings.

We do have a very global and diversified supply chain. But as we sit here today and we're looking at an extended shutdown of the China New Year holiday system that is impacting our ability to produce certain products to a certain degree. At this point, we still have a lot of latitude to make up lost ground. But if this were to extend much longer, there are areas for instance within our Fiber Glass business where we have limitations in terms of the amount of resin that's on the ground at our manufacturing plants right now. So there's some risk there but so far so good. Similar type of exposure related to drill pipe manufacturing, other businesses to a lesser extent, but so far, we think our team is managing through it pretty effectively. But still a lot of uncertainty related to the extent to which this will impact operations.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes. And those are sort of first order impacts, I'm equally concerned about second quarter impacts, which is the impact that this has on global demand for oil, what it's done in the commodity price markets. And go to the point kind of what it does to the psychology of oil and gas producers as they think about, how much to drill in 2020. So, it's -- as we said, the situation remains very fluid.

Chase Mulvehill -- Bank of America Merrilll Lynch -- Analyst

Yes. Understood. All right. I will turn back over. Thanks.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Thank you Chase.

Operator

Thank you. Our next question comes from Scott Gruber with Citigroup. Your line is now open.

Scott Gruber -- Citigroup -- Analyst

Yes. Good morning.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Hi, Scott.

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Hi, Scott.

Scott Gruber -- Citigroup -- Analyst

Turning to C&P, how should we think about the C&P margin profile over the course of 2020 I'm just thinking about the interplay between the mix shift in the revenue stream toward more international and offshore, but also the cost out program. I know, you don't want to provide too many specifics beyond one quarter out, but just any general color on how that margin profile should progress given that interplay?

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Yes, Scott, it's Jose. I'll start-off on this one. So, we're not going to really deviate from the typical way we describe in terms of thinking about margin progression for the cap segment, which is really think of it in terms of incremental margins, basically dollar dropping between $0.25 to $0.35 down to the EBITDA line. And obviously that is dependent on the mix of the business and really what you're getting at is with the decline that we're seeing in demand for equipment in the North American market, and the solid growth that we're seeing overseas, particularly for offshore markets.

Typically, some of those offshore projects in the early phases of recovery have been slightly more challenged from a margin perspective. But as Clay alluded to, and I think we touched on a couple of times during our prepared remarks, with the amount of tendering activity, we think we're starting to now see more opportunities for pricing improvements. But here, as we stand today, you also need to think about the latency time associated with some of these offshore projects, where they sort of reside in our backlog, a bit longer than the shorter cycle North American-centric product offering. So what's going through converting to revenue right now is to a large degree stuff that was booked 9, 12 months ago. And so as we start capturing better pricing, we should see the incremental margin profile improve along with being further supported by the cost-cutting initiative efforts that we have under way.

Scott Gruber -- Citigroup -- Analyst

Got you. But overall, for the year do you think that we should be thinking about that are lighter than normal margins? Or given some of the pricing trends you end up doing closer to the normal incremental for the year?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

I think on a blended basis, it's more -- there's a lot of puts and takes here.

Jose Bayardo -- Senior Vice President and Chief Financial Officer

A lot of parts and pieces. So I would assume fairly normal.

Scott Gruber -- Citigroup -- Analyst

Okay. And then maybe, if you could just give us a quick update on the rental initiative that you guys really push forward a couple of years ago, particularly on the drilling tools side of the business but even more broadly just an update on the rental model initiative particularly as the international markets pick up further in 2020?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Scott, you're talking about our drilling tools business, the rental -- we have a couple of rental business around, I think you're talking about the investment we've made in directional drilling technologies, rotary steerables and SelectShift. And we'd tell you that we're continuing to gain traction in that. We've got three different rotary steerable tools in the marketplace including what we think is the lowest cost, a very highly differentiated rotary steerable tool.

Our SelectShift motor that we introduced last year, which is the adjustable bent-housing motor that could be adjusted downhole. A very large operator in the US is testing that this week. We've had a lot of excitement around that. MWD tools also that we have in the space. So we're continuing to make progress in here, but that strategy was built on the recognition that unconventional drilling -- unconventional shales really rely on geosteering on horizontal drilling and it is a kind of enabling and key technology for unconventional technologies -- or unconventional shales that NOV has an opportunity here to be a larger provider of technology into that space.

Jose Bayardo -- Senior Vice President and Chief Financial Officer

And maybe one thing I'd just add just so there's no confusion about it. So, as Clay mentioned, there's a number of areas where we do provide rentals of equipment. The space that we're talking about is a combination of both rentals and sales, but just want to make it clear, that we're somewhat agnostic on that. But what we do want to make clear is that this is not a service that we are providing. We are enabling those directional drilling service companies out there.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes.

Scott Gruber -- Citigroup -- Analyst

Got it. Appreciate the color.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

You bet. Thank you.

Operator

Thank you. Our next question comes from Kurt Hallead with RBC Capital Markets. Your line is now open.

Kurt Hallead -- RBC Capital Markets -- Analyst

Hey, good morning everybody.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Hi, Kurt.

Kurt Hallead -- RBC Capital Markets -- Analyst

Hey, Clay, thanks for that historical perspective resonates with me, that's for sure. So in the context of what you guys see going forward? And Clay, yes, NOV's always been at the forefront of evolving on the technology front and creating some value propositions that ultimately oil companies and service companies find useful. You threw out that teaser about some things that you're working on in the hopper. Can you maybe elaborate a little bit, maybe give us a little bit more of a teaser as to what kind of value propositions you may be looking at for the next leg of growth for NOV?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

On renewables, I'm going to demur on that. On the -- are you talking about renewals, or you're talking about traditional oilfield, Kurt?

Kurt Hallead -- RBC Capital Markets -- Analyst

Well, I'll go wherever you want to take it, Clay. So if you want to demur on renewables, that's fine.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Well, as a matter of fact, we like -- we much prefer to talk about things that are in the marketplace that are starting to get traction. And so in terms of what I'm most excited about really, the predictive analytics products that we introduced a few years ago continue to gain traction. I think Jose referenced the growing number of rigs in our programs. We're monitoring equipment and able to predict in advance operational challenges before those happen.

NOVOS operating system for drilling rigs both land and offshore is gaining a lot of traction and really beginning to contribute meaningfully. Our wired drill pipe IntelliServ data transmission, Downhole data transmission technology combined with machine learning and artificial intelligence is improving results for operators. In fact there's a great article in this month's Journal of Petroleum Technology about what we've done for US driller in space. And so I again, just to reiterate could not be more proud of sort of the enhancements that we have going on. And those are actually just a few of many, many things that NOV has introduced through the downturn.

Kurt Hallead -- RBC Capital Markets -- Analyst

Got it. And then just a follow-up in the context. I appreciate that color by the way. In the context of the capital allocation you indicated that if all goes well you could be potentially in a position to kind of restart a share repo program. Just kind of curious as to the decision framework between the say the share repo versus maybe bumping the dividend a bit. Any insights would be appreciated on that front?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Well, thank you. Yes with respect to where our stock has been trading, we think there's good value in that and have gone through that in a great detail with our board. We'll continue to look at it by the way. But we're -- I think the way we view that right now is that share repurchase is preferred, but the key thing is that our capital priorities remain unchanged in all of our -- you look back to 2019 all of our actions were really geared toward continuing to improve. We implement a lot of cost savings that are driving better EBITDA. We refinanced and paid down a lot of our debt. And so we're continuing to work toward being in -- achieving the credit metrics that we talked about that will pave the way for a greater level of capital return to shareholders.

Kurt Hallead -- RBC Capital Markets -- Analyst

Okay. Thanks. Appreciate that.

Operator

Thank you. Our next question comes from Sean Meakim with JP Morgan. Your line is now open.

Sean Meakim -- JP Morgan -- Analyst

Thank you. Good morning.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Good morning, Sean.

Sean Meakim -- JP Morgan -- Analyst

Maybe I'll try to ask the prior question just with the different angle. So in terms of the free cash guide for 2020 and uses of that cash. So we noted buybacks could be coming earlier this year, obviously dividends well covered, capex may be a bit elevated this year but that's discrete, very specific. You've also in effect supplemented some of your capex spend with technology, bolt-ons over time has been a big part of the strategy this cycle in particular, is something like $200 million a good run rate for bolt-ons. Just I'm trying to capture other uses of cash that could come before the buybacks in '20?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes. That's a great point, Sean. We're always looking at opportunities in the M&A space. And I think we've been pretty transparent about that. And so what I'd say is in 2019 and this sort of fits with my prepared comments around the fact that oilfield assets and equities have gotten a lot cheaper in the current environment. And so we're always looking at kind of what's the next best application of NOV's shareholders' capital and to the -- and that M&A outlook changes from time to time as we kind of work through the year.

Blake McCarthy -- Vice President, Corporate Development & Investor Relations

Yes, Sean, this is Blake here. I'd just like to add that we both Clay and our board gives us the flexibility like we don't have a run rate on like a target for acquisitions for a year. Every acquisition is an individual investment decision that we raised that we also compare relative to the investment in our own stock. So at this point like I think there's a lot of opportunities out there. It's a very crowded field of sellers right now and a very limited set of buyers. So we think that there could be some attractive valuations out there but we're going to be very, very patient.

Sean Meakim -- JP Morgan -- Analyst

Got it. Thank you for that. That's helpful feedback. And then -- so well done to see all the efforts on working capital start to come through and convert the cash and that's been a top priority especially for Jose. So with the 4Q results and your expectation that working capital will be a source of cash again in '20, just curious to get any updated thoughts on seasonality as we go through the year in terms of working capital? And then just how you're targeting working capital efficiency by the end of 2020 or '21, maybe any updated thoughts around working capital to sales or DSOs inventory turns DPOs etc?

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Yes. I don't think we'll get super granular in terms of specifying the targets. But what I would like to spend just a moment talking about is that what we are seeing is a lot of good progress and a lot of good momentum by a lot of hard-working people across the organization. We've been at it a while but obviously the results really started to come through in the second half of 2019. And we have a lot more work to do, but with the momentum that we have and opportunities that we've identified, we're confident and our ability to harvest more cash from our working capital and just become a lot more capital efficient as we progress through 2020.

So we finished 2019 with that working capital to revenue run rate just a tiny bit over 30%, which was a good outcome for us. Now what we're really going to be focused on during 2020, and you asked the question related to seasonality. It's really going to be more focused on the average level of working capital intensity really throughout the life of the organization. So a lot of progress through the course of the year, but if you look at the average for 2019, average the starting balance sheet and ending balance sheet apply the total annual revenue to it that was 37%. So we're trending in the right direction. But we certainly want that average to come way down during the course of 2020 and that would put us at a Q4 run rate that will be better than where we finish this year.

Sean Meakim -- JP Morgan -- Analyst

Fair enough. That's really helpful. Thank you.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

You bet.

Blake McCarthy -- Vice President, Corporate Development & Investor Relations

Thanks, Sean.

Operator

Thank you. Our next question comes from Vebs Vaishnav with Scotiabank. Your line is now open.

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Hi, Vebs.

Vebs Vaishnav -- Scotiabank -- Analyst

Hey, good morning and a very good quarter. I guess just a clarification. You guys talked about $230 million of cost savings is -- I guess I just want to confirm that that's comparable to the $200 million number earlier that you had guys guided to?

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Yes. Yes, we found another $30 million in annualized. Both those numbers are annualized cost savings as compared to our structure in the first quarter of 2019.

Vebs Vaishnav -- Scotiabank -- Analyst

Got it. Okay. C&P orders, you talked about it could be somewhat lower in 1Q. Can you just talk about what kind of visibility do you have beyond that and that's both for C&P orders and Rig Tech orders? Can we sustain what we saw by in the first Q? Can we sustain what we saw in 2019?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Well, Q4 was I think our fifth quarter in a row of book-to-bill north of 1 for completion and production solutions. A lot of these orders particularly for offshore projects, we have a lot of lead time into because there's a lot of work that goes into them, sometimes there's Feed studies behind them things like that. And so a lot of the near-term, the downturn that we expect in Q1 in orders in Completion & Production Solutions, it's really just the timing of how those things fall.

And -- but that, notwithstanding, what I'm most encouraged about is the fact that our tendering activity across the portions of Completion & Production solutions that are focused on the offshore remains very strong. I think we mentioned that our PFT Group, for instance, the pipeline there is twice what it was a year ago. And so it feels to us like the offshore infrastructure is continuing to move forward and that's a really good backdrop I think to move into 2020 with respect to orders for Completion & Production Solutions.

Vebs Vaishnav -- Scotiabank -- Analyst

Great. And maybe just one last question for me. And on the guidance for Wellbore. So, it sounds -- it seems like yes you guys did like only down revenues 4% versus guidance of 5% to 7%, so like not very different from the guidance. You talked about North America only declined 11%. So, never spectacular in 4Q. I was a little surprised by the guidance of down 6% to 12% for 1Q. I think like you talked about China and could have an impact. Could you just elaborate like what is guiding that and how should we think about North America versus international in the guidance?

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes, part of the overachievement in Q4 was a higher drill pipe sales than we had expected going into the quarter. Part of our expectation for Q1 is that turns around. That's a little lumpier than some of the other businesses within Wellbore Technologies.

Jose Bayardo -- Senior Vice President and Chief Financial Officer

And I'd also add you look at the guidance across the Board related to the sequential decline from Q4 to Q1, we do look back the last couple of years in terms of the fall off that we've had from Q4 to Q1. Feels like that the E&P budgeting process both within North America and the international markets is getting a little bit more prolonged and gets -- certainly gets amplified when you add in a pullback in commodity prices and the fears related to the coronavirus. So, that is certainly factored in to an extent into the Q1 guidance.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Yes, one more thing. We like a lot of business for instance has seasonality exposure in Russia and the Rockies and places like that. So, it's just -- our expectation is that that will all contribute to Wellbore Technologies moving down in Q1.

Vebs Vaishnav -- Scotiabank -- Analyst

Got it. That's very helpful. Thank you for taking my call.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

You bet. Thank you.

Operator

Thank you. That concludes our question-and-answer session. I would now like to turn the call back over to Clay Williams for any further remarks.

Clay C. Williams -- President, Chairman, and Chief Executive Officer

I want to thank everyone for joining today. And in particular I want to take the opportunity once again to thank any employees that might be listening frankly -- to thank you for the great job that you're doing so. Have -- hope everyone has a great weekend. Thank you.

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]

Duration: 62 minutes

Call participants:

Blake McCarthy -- Vice President, Corporate Development & Investor Relations

Clay C. Williams -- President, Chairman, and Chief Executive Officer

Jose Bayardo -- Senior Vice President and Chief Financial Officer

Byron Pope -- Tudor, Pickering, Holt & Co -- Analyst

Tommy Moll -- Stephens Inc -- Analyst

Chase Mulvehill -- Bank of America Merrilll Lynch -- Analyst

Scott Gruber -- Citigroup -- Analyst

Kurt Hallead -- RBC Capital Markets -- Analyst

Sean Meakim -- JP Morgan -- Analyst

Vebs Vaishnav -- Scotiabank -- Analyst

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