We’re really excited about that, and it’s also where we have probably the maximum impact of our digital solutions.
Doug Becker: Is this a segment you could see in 3, 4 years leading the growth? Or is it just the makeup more than it probably is always a little bit of a slower growth business?
Girish Saligram: Yes. Look, I think to a certain extent, it’s going to depend on how much of it we classified that goes into the digital piece, etcetera. But I will also – look, for us, we are also trying to make sure that we are driving a less capital-intensive strategy. So for example, what we – what I think we should really look for is growth in margins and growth in cash versus necessarily just growth in top line. I’ll give you a last example, in pressure pumping, we are not going to grow the same way the rest of the market is because we are being very focused on controlling our footprint. And we also, of course, don’t have a North America price pumping footprint. But we’re also driving a strategic change and providing more engineered fluid chemistry, which has a much greater value addition and a much greater margin impact to the company.
So those are the kinds of things we are doing. So for us, I’ll really look at it more from margin impact and free cash flow impact. But look, over the next few years, we still see DRE as probably having a little bit more juice.
Doug Becker: Got it. And some of those comments kind of feed into the sustainability of CapEx running 5% of revenue based on some of the things you were wording to, I think that’s still a good target as we think about the years ahead.
Girish Saligram: Yes. Look, absolutely. We’ve talked about it now for 2 years. And look, we are steadily inched up closer to that 5%. I’m very pleased with the efficiencies our team has been able to drive in redeployment of CapEx and reuse but also shifting our business strategy to a less capital-intensive model. And that’s a big part of it. This is not about us saying we’re not going to invest enough CapEx. It’s about making a conscious and a purposeful shift in strategy and making sure that we’ve got the overall portfolio balance. And look, some product lines are much higher than 5%. Some are much lower, but that blend is what we are really looking for, and that’s where it all comes together.
Doug Becker: Makes sense. And just like the Echo deposit of segments on the execution of that, turning around really just very impressive.
Girish Saligram: Thank you. Appreciate it.
Operator: Thank you. And our next question today comes from David Anderson of Barclays. Please go ahead.
David Anderson: Hey, good morning, Girish. As you talk about the initiatives that have driven the margin expansion here, I think you have said, it sounds like we may be a little bit more than halfway through your fulfillment plant. Just want to ask this of the next steps you intend to execute over the next say 12 months to 18 months. I think you have taken a lot of manufacturing facilities, but what else is left there? Is it on the services side, on supply chain? Just kind of give us sort of a roadmap a little bit, if you wouldn’t mind just to what’s left here in this fulfillment plant?
Girish Saligram: Absolutely. Thanks for the question, David. Look, so on the fulfillment, yes, this is a fairly Herculean task. And it’s really changing the footprint of the company that’s evolved over 25 years. To a certain extent, what we call fulfillment, which is a combination of manufacturing, supply chain, our sourcing practices, our repair and maintenance, our logistics, there is never really designed for what Weatherford is today and that’s what we are doing. So, what’s left really is still a little bit more work on manufacturing, making sure that our work transfers get completed. But you are right, that’s been well underway for a couple of years. The next couple of big milestones for us really, first of all on our supply chain.
We have talked about on prior calls that we are looking to move more of our spend into lower cost regions of the world and this is something a lot of other companies did several years ago. So, we are a little bit behind, but what’s exciting is we are still able to post the margins that we do today without that benefit. So, that will actually be a much more positive impact for us. That’s well underway, we have got a terrific manufacturing facility in India and we are making sure that we are developing the supplier ecosystem around that, but also making sure we are complementing it with the right engineering support. The other piece is on repair and maintenance. This is something that we are really focused. It’s much more about improving cycle times and asset utilization.
Then it is really about taking cost out. But that improvement in cycle times and asset utilization will help in more revenue, greater fall throughs and a better return on invested capital. So, that’s really what we are doing there. We brought in a terrific leader to drive that for us and I am excited about some of the games that we are starting to see on that.
David Anderson: Okay. Thank you. And then if I can just move into kind of more of the businesses. Your two very unique product lines, they are leverage to deepwater activity in the TRS and MPD systems. And as we look at the next year or 2 years, I would think that those would both start to lead the top line growth and margin expansion considering the both rental businesses and the visibility we have on subsea and offshore rigs. So, just wondering, do you think second-half ‘24 could be the inflection on that based upon what you are having with your conversations with your customers and kind of the timing of this equipment.
