ChampionX Earnings: Lower-Than-Expected U.S. Drilling and Completions Contribute to Guidance Miss

ChampionX’s third-quarter results fell short of expectations mainly due to lower-than-expected drilling and completions activity across North America. More than half of the firm’s revenue comes from the United States, and the firm has quite a bit of exposure to shorter-cycle U.S. markets. The average active rig count in the U.S. dropped 10% during the quarter, while new well completions declined about 8%. This led to a significant shortfall in revenue and operating income, falling short of the guidance midpoints by $35 million and $13 million, respectively. We’re lowering our fair value estimate to $32 per share from $33 following the results. We are maintaining our no-moat rating.