Soma Somasundaram: Yes. So I think with respect to Production Chemical Technologies in particular, you will see the North American business is a very steady growth consistent business as the fluids produce continues to grow in North America, not just the oil production but the total fluids produced, both in land as well as in Gulf of Mexico. And that, combined with our continued ability to introduce new technologies, address chemical intensity increases. So you should expect our North American business, particularly the U.S. land, Gulf of Mexico type businesses to continue to increase in 2024. And with respect to our other businesses, as I mentioned, PAT and Drilling Technologies businesses, we have seen in January, the improvement in activity from Q4.
But we think that given the near-term uncertainty around, we still expect these businesses to grow and especially PAT given the digital growth. But the activity in other forms of lift could be a little bit more second half weighted. But we do expect PAT and Drilling Technologies business to show some growth in 2024 as well.
Ati Modak: And then you noted in the release that you have 60 emissions technologies, customers globally now, you also mentioned that you would look at some investments there as well. So maybe if you can provide some color on both those pieces? What does the customer mix or geographic mix look like? And is there a way to quantify the market opportunity at this point?
Soma Somasundaram: Yes. So from a 60 customer perspective, the predominant large set of those customers today are in North America. And the reason is, as you can imagine, there’s a lot of more public companies in North America and the commitments they’ve made to emission reductions. So there’s a really great mix of in North America for us. I will see large independent, mid-operators, midstream operators, so it’s really a great mix and it continues to grow. And they adopt all different types of technology. And that’s why it’s really important when you’re developing an emissions portfolio to have a suite of technologies just like we had [indiscernible] so that the customers can do a fit-for-purpose type of emissions technology picking, so we can offer them what is right for them.
And there is more opportunities growing internationally and particularly in Middle East. And so we see in the coming years that to continue to grow. Now in terms of your question around, is there a way to quantify the market. With the recent final ruling by EPA, as I mentioned, it’s a significant increase in potentially regulated facilities. So let me just say, it will grow to be a multibillion-dollar market over a period of time. It’s very hard to determine how it will go but it’s just the movement is in that right direction.
Operator: [Operator Instructions] And your next question is from Doug Becker at Capital One.
Doug Becker: Someone address the productivity initiatives but EBITDA margins were up by more than 430 basis points last year. Pricing as well as cost management played a role in that. Just want to get your thoughts if you think pricing and costs are flat, up or down this year versus last year?
Soma Somasundaram: Yes. So I would say the pricing and raw material, if we look at that price raw, we expect that to be pretty stable in 2024 from our Q4 levels. So say it another way, we don’t expect pricing to be a major contributor to the margin expansion in 2024 and we expect the raw material cost to stay stable. So productivity will play a bigger role. Now we’ll continue to opportunistically put through pricing, just like I mentioned about our freight cost increases. So we’ll opportunity as we introduce new technologies. So productivity will be the bigger driver for margin expansion in 2024, along with volume.
Doug Becker: Got it. And then jumping to North America, you’re seeing some increasing activity in January. Just if you could expand on that at all. I know in the past, PAT really doesn’t get going until February and certainly in the Drilling Technologies business with a flat rig count. It’s not obvious that we’d see a restocking on the bit side.
Soma Somasundaram: Yes. This is something we are carefully watching. You normally get this pump in January and then February and then how does that flow. I think from an activity perspective, I think from a PAT perspective, we are seeing some good signs of those moving in. But in Drilling Technologies, again, our bearings business is continuing to grow nicely. As we have noted it grew about 40% in 2023. And it’s now almost about reaching closer to 20% of our Drilling Technologies business. And we expect in Q1 that to contribute to some additional growth as well. But we are watching that trend. But so far, in Q1, the activity seems to be as we expected, with a sequential increase in PAT and DT from Q1. And in PCT also in North America, internationally, the seasonality of going down. But even in in our U.S. land business in our PCT, we are seeing the sequential increase in Q1.
Doug Becker: Sounds encouraging. Thank you very much.
Operator: Thank you. And at this time, we have no other questions registered. Please proceed.
Soma Somasundaram: Well, I want to thank you for your continued interest in ChampionX. And we look forward to talking to you in our next quarter call. Thank you.
Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines.
