Saurabh Pant: Yes. Soma, I think, basically I’m thinking of how should we think about the level setting expectation for revenue growth from a 2024 perspective? Because North America has, like you said, has some cross current activity would be improving on a leading edge basis. But on a full year basis, maybe you can expand on that how do you see North America behaving in 2024 and then international and offshore should be doing well, right? So how should we think about top line as a whole for 2024 versus 2023?
Soma Somasundaram: Yes. Saurabh, let me start by saying, we do expect a positive growth both in North America as well as internationally in 2024. Now, given what we have seen in terms of the Q3 slowdown and now the Q4 slowdown, the seasonal slowdown, I think the base in Q3, particularly for U.S. land, that’s kind of lowered a bit, right, from what we had assumed. So as we go into Q4, like I said, I think we will see in, as we go into next year, you will see in North America the Q1 revenue to be sequentially better Q4 to Q1. And then it’ll progressively get better into Q2 and Q3. So for me, it’s a – again, Q4 of next year is too early to predict right now. But I do expect a positive growth in North America. So what we are seeing right now is a temporary situation in that respect, nothing in our customer conversations is telling us that 2024 is going to be a – is not going to be a growth year in North America.
Saurabh Pant: Okay, perfect. No, Soma that’s helpful. And then just one quick follow-up on the PAT side of things, because there’s obviously a seasonal element, year-end slow down, budget issues, all of that stuff. But I’m just thinking, is there also an element and how important is it? If you are thinking about the lag effect of lower D&C activity, right, lower completion activity on production, there’s obviously a little bit of a lag especially on the ESP side of things. How should we think about just that lag effect versus seasonality? Because that would tell us how quickly things recover in 2024 that’s the reason I’m asking?
Soma Somasundaram: Yes. Saurabh. I think, intellectually and logically, we definitely we see there should be a lag effect, right? But we have tried correlating this multiple times, whether it is a three-month lag, six-month lag, nine-month lag and we have tried doing that. And it’s a little harder to pin down, how much is the lag effect because of couple of things. Number one is, as you know, the ESP which is the primary business that tend to get impacted by completion slowdown. Customers tends to run ESPs two times and three times into the same well nowadays. So sometimes it’s very hard to kind of it’s not one-to-one. So it’s always been a bit harder to really quantify exactly how the lag effect works. But I do agree with you that there is a lag effect.
And – but it’s just hard to quantify and predict. And we saw that in, because as we got into September, we clearly could see our ESP installed rate starting, where how we entered the quarter in Q3 and how we exited the quarter in Q3 was lower.
Saurabh Pant: Okay. Okay. Okay. No, Soma I know you’ve talked about the secondary tertiary [ph] installations in the past, so that obviously offsets it to some extent. But no, that’s helpful. Okay, Soma, thank you. I’ll turn it back.
Soma Somasundaram: Sure, Saurabh. Thank you.
Operator: Your next question comes from the line of Doug Becker from Capital One. Please go ahead.
Doug Becker: Thank you. Soma, continuing with PAT, the company received top marks in the Kimberlite Artificial Lift Survey. But the growth in PAT has been a little bit slower than I would’ve thought, even factoring in the U.S. activity dip, given that some others have talked and pointed to lift as an area of strength. So really just wanted to get your thoughts on the competitive landscape within the lift and if there’s any market share shifts taking place there?
Soma Somasundaram: Yes. So I think Doug, the – in – from a competitive landscape standpoint, I think if you look at the market kind of differentiated in – if you look at the two major forms of lift – in artificial lift, which is the ESP, and the rod lift. So when you look at the ESP market landscape, I think our competitive position remains strong there. And we feel the activity is the major driver behind any type of slowdown we see. Now, when it comes to rod lift, there’s a lot of players in rod lift, especially when you go to the lower end of it, particularly in components and repair shops and so on and so forth. So sometimes in rod lift, you will see some pricing pressures and issues in the fringes, you will see.
But the way we focus on a rod lift is in terms of the type of value we provide. So when I look at our own data, I don’t see a lot of market share loss per se. There are some in the fringes. But I wouldn’t call that as the biggest driver for the – any type of slowdown in growth. It’s largely an activity driven. And we have today in the U.S. as you know, Doug, we have a pretty good market share position in all forms of lift. In some of the lift categories, we are the leading share position. But if you look at across all lift positions, we have really good market share positions. So I think I would say that the growth issue which we are experiencing in the second half year, it’s largely an activity issue.
Doug Becker: That’s helpful context. One last one. Just curious if there’s been any nuance in or change to the revenue CAGR you talked about from 21 to 25 at the Analyst Day high single digits, still plenty of time, but wondering if this year has maybe shaded or maybe the high end less likely?
Soma Somasundaram: Yes. So Doug, if you look at 2023, if we normalize for the various elements such as Russia exit the cross sales exit – terminating as well as the some of the res – product line exit we did as part of our RCT restructuring, if we normalize for all of that. And at the midpoint of our guidance, it’s somewhere in the 4% in 2023, is up 4% or slightly better. So when you look at that, obviously, when we gave our high single digit CAGR, we weren’t expecting the second half this level of activity weakness than what we expected, right? So, which makes it harder, right, in other, because if we are starting with a lower year than we anticipated. So it makes it harder. But we are not giving up on that. But I will acknowledge that it makes it harder given that we start with a 4% as the first year.
Doug Becker: Yes. Makes sense. Thank you, Soma.
Soma Somasundaram: Thanks, Doug.
Operator: There are no further questions at this time. I’d now like to turn the call back over to Mr. Soma for any closing remarks.
Soma Somasundaram: Well, thanks everyone for joining today’s call. And we look forward to talking to you in our next quarter’s earnings call. Thank you and have a great day.
Operator: Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.
