Oil States International(US:OIS)2025-02-21 20:48Financial Performance - In 2024, Oil States International reported revenues of $692.6 million, a decrease of 11.5% from $782.3 million in 2023[24]. - The operating loss for 2024 was $1.7 million, compared to an operating income of $23.2 million in 2023, reflecting a decline of $24.9 million[24]. - Net loss for 2024 was $11.3 million, down from a net income of $12.9 million in 2023, representing a decrease of $24.1 million[24]. - Cash flow from operations decreased by 18.9% to $45.9 million in 2024 from $56.6 million in 2023[24]. - The Completion and Production Services segment reported a revenue decline of 32.4% to $163.9 million in 2024 from $242.6 million in 2023[178]. - The Downhole Technologies segment's revenue decreased by 17.2% to $130.8 million in 2024 compared to $157.9 million in 2023[178]. - Consolidated total revenues decreased by $89.7 million, or 11%, in 2024, with $74.4 million, or 83%, of this decrease concentrated in service offerings and locations exited by the Completion and Production Services segment[185]. - Consolidated service revenues decreased by $73.7 million, or 20%, in 2024, primarily due to lower U.S. land-based customer investments and competitive market conditions[186]. Segment Performance - The Offshore Manufactured Products segment generated 44% to 57% of consolidated revenue, with a backlog of $311 million as of December 31, 2024, down from $327 million in 2023[33]. - The Completion and Production Services segment accounted for 24% to 31% of consolidated revenue, primarily driven by U.S. well completion activity[36]. - The Downhole Technologies segment contributed 19% to 25% of consolidated revenue for the years ended December 31, 2024, 2023, and 2022[40]. - The Offshore Manufactured Products segment revenues increased by $16.2 million, or 4%, in 2024, driven by increased demand for international and offshore-project driven services[199]. - The Completion and Production Services segment revenues decreased by $78.7 million, or 32%, in 2024, primarily due to lower U.S. customer activity levels and the exit of underperforming service offerings[202]. - The Downhole Technologies segment revenues decreased by $27.2 million, or 17%, in 2024, attributed to lower U.S. customer demand for completion and perforating products[205]. Impairment and Charges - The company incurred $24.6 million in non-cash impairment charges and $13.7 million in facility consolidation and exit costs[20]. - The company recognized a goodwill impairment charge of $10.0 million in the Downhole Technologies segment and intangible asset impairments totaling $10.8 million in the Completion and Production Services segment in 2024[95]. - The company recognized a non-cash impairment charge of $10.0 million related to goodwill in the Downhole Technologies segment in 2024[191]. Capital and Investments - The company amended its senior secured credit facility to extend the maturity date to February 16, 2028, with a $125 million asset-based revolving credit facility[22]. - A new $50 million common stock repurchase authorization was established, replacing the previous program, which expires in October 2026[24]. - The company is investing in research and product development for alternative energy sources, including offshore wind and deep-sea mineral gathering opportunities[167]. Regulatory and Compliance Issues - The company is subject to stringent environmental and occupational health and safety laws, which may impose significant compliance costs[53]. - The company has incurred and will continue to incur operating and capital expenditures to comply with environmental regulations, which historically have not materially affected operations[56]. - The federal Bureau of Land Management finalized a rule requiring operators to capture 100% of gas produced from wells and pay royalties on lost gas, which may increase costs for operators[60]. - Regulatory agencies have imposed additional requirements related to induced seismicity, affecting operations in states like Oklahoma and Texas, potentially leading to increased operational costs[61]. - The EPA's 2015 National Ambient Air Quality Standard for ground-level ozone may require new emission controls, increasing capital expenditures and operating costs for the company and its customers[62]. - The company faces increased compliance costs due to new methane emissions regulations, including a federal fee on GHG emissions and enhanced monitoring requirements[63]. - Compliance with stringent environmental laws may require significant capital expenditures, potentially reducing demand for the company's products and services[112]. Market and Economic Conditions - Demand for the company's products and services is heavily dependent on capital expenditures in the oil and gas industry, which are currently uncertain due to regulatory pressures[65]. - A prolonged reduction in exploration and production activities could adversely affect equipment utilization, revenues, and profitability for the company[67]. - The company may experience competitive pressures and reduced prices for its products and services due to an oversupply resulting from uncertainties in crude oil demand[66]. - Ongoing military actions in Europe and the Middle East could lead to volatility in crude oil and natural gas prices, affecting demand for the company's products and services[77]. - The average price of Brent crude oil for 2024 is projected at $80.52 per barrel, while WTI crude oil is expected to average $76.61 per barrel[156]. - The average price of Henry Hub natural gas for 2024 is projected at $2.19 per MMBtu, a decrease from $2.53 in 2023[156]. Workforce and Operational Challenges - The company employed a total of 2,439 full-time employees as of December 31, 2024, with 60% in Offshore Manufactured Products, 18% in Completion and Production Services, and 19% in Downhole Technologies[45]. - The company is experiencing challenges in attracting and retaining key personnel due to high demand and limited supply in the U.S. shale regions, which may increase costs and impair growth potential[71]. - Supply chain disruptions could adversely affect the company's ability to manufacture, transport, and sell products, impacting financial results[70]. - The company is exposed to risks from inflation in wages, materials, and transportation costs, which could increase the overall cost structure and affect profitability[84]. Strategic Initiatives and Future Outlook - The company may seek acquisitions to gain strategic advantages, but integration risks and potential increases in debt could adversely affect operations[82]. - The company plans to monitor global economic conditions and customer capital spending to manage business operations effectively[174]. - The company has set a goal to reduce GHG emissions and is exploring alternative energy systems, including solar power, to mitigate its environmental impact[121]. Shareholder Information - The company has not declared or paid any cash dividends since its IPO in 2001, and future dividend payments will depend on financial conditions and board discretion[144]. - As of February 14, 2025, there were 61,760,608 shares of common stock outstanding, with 150 record holders[143]. - Oil States International, Inc. reported a 5-year cumulative total return of $31.02 as of 2024, compared to $41.63 in 2023, indicating a decline of approximately 25.5%[148]. Cybersecurity and Risk Management - Cybersecurity threats are evolving and increasing in frequency, posing risks to the company's operational technology systems and sensitive data[73]. - The company maintains an information security team and conducts regular audits to assess and manage cybersecurity risks[133]. - Cybersecurity threats are a significant concern, with risks including malware, ransomware, and unauthorized access, which could disrupt operations and lead to reputational damage[128].