Oil States International(OIS) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Oil States International reported Q2 2025 net income of $2.8 million on $165.4 million revenue, with offshore strength and sequential Adjusted EBITDA growth offsetting U.S. land challenges Consolidated Financial Highlights Oil States International, Inc. reported Q2 2025 net income of $2.8 million on revenues of $165.4 million, showing sequential revenue growth but a year-over-year decline, with Adjusted EBITDA increasing sequentially due to strong Offshore Manufactured Products performance Consolidated Financial Highlights Table | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Q2 2024 (Thousands) | Sequential Change (%) | Year-over-Year Change (%) | | :-------------------------------- | :------------------ | :------------------ | :------------------ | :-------------------- | :---------------------- | | Revenues | $165,406 | $159,938 | $186,383 | 3% | (11)% | | Operating income | $5,277 | $5,639 | $2,045 | (6)% | 158% | | Net income | $2,811 | $3,158 | $1,301 | (11)% | 116% | | Adjusted net income | $5,401 | $3,892 | $4,391 | 39% | 23% | | Adjusted EBITDA | $21,089 | $18,732 | $21,306 | 13% | (1)% | - Net income for Q2 2025 was $3 million, or $0.05 per share[4] - Consolidated revenues of $165 million rose 3% sequentially, primarily due to strength in the Offshore Manufactured Products segment[4] - Generated cash flows from operations of $15 million[4] CEO Commentary CEO Cindy B. Taylor highlighted continued strength in international and offshore activity, driving sequential revenue and Adjusted Segment EBITDA growth in Offshore Manufactured Products, while U.S. land-based segments faced challenges from reduced activity and ongoing restructuring efforts - Consolidated results were driven by continued strength in international and offshore activity, supported by backlog growth[6] - Offshore Manufactured Products segment revenues increased 15% sequentially to $107 million, with Adjusted Segment EBITDA up 18%[6] - Operating results for Completion and Production Services and Downhole Technologies segments were challenged by an industry-wide reduction in U.S. land completion-related activity, with combined revenues and Adjusted EBITDA declining 13% and 12% sequentially, respectively[7] - U.S. land-focused restructuring efforts continued, resulting in the U.S. land-driven revenue mix declining from 36% in Q2 2024 to 28% in Q2 2025[8] - Cash flow generated was used to fund capital expenditures, reduce debt, and repurchase stock, including strategic investments in a new manufacturing facility in Batam, Indonesia, and low-impact rental riser equipment[10] Business Segment Results The company's Q2 2025 business segment results show strong sequential growth in Offshore Manufactured Products, contrasting with declines in U.S. land-based segments due to reduced activity and restructuring efforts Offshore Manufactured Products The Offshore Manufactured Products segment demonstrated strong sequential growth in Q2 2025, with increased revenues, operating income, and Adjusted Segment EBITDA, reaching its highest backlog level since September 2015 Offshore Manufactured Products Table | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Sequential Change (%) | | :------------------------ | :------------------ | :------------------ | :-------------------- | | Revenues | $106,586 | $92,596 | 15% | | Operating income | $16,989 | $14,276 | 19% | | Adjusted Segment EBITDA | $21,105 | $17,926 | 18% | | Adjusted Segment EBITDA margin | 20% | 19% | 1 p.p. | | Bookings | $112,000 | N/A | N/A | | Backlog (as of June 30, 2025) | $363,000 | N/A | N/A | | Quarterly book-to-bill ratio | 1.1x | N/A | N/A | | Year-to-date book-to-bill ratio | 1.2x | N/A | N/A | - Backlog of $363 million as of June 30, 2025, is the highest level since September 2015[12] Completion and Production Services The Completion and Production Services segment experienced sequential declines in revenues, operating income, and Adjusted Segment EBITDA in Q2 2025, primarily due to reduced U.S. land activity and ongoing restructuring efforts, including facility consolidations and workforce reductions Completion and Production Services Table | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Sequential Change (%) | | :------------------------ | :------------------ | :------------------ | :-------------------- | | Revenues | $29,424 | $34,519 | (15)% | | Operating income | $1,877 | $3,503 | (46)% | | Adjusted Segment EBITDA | $8,254 | $8,801 | (6)% | | Adjusted Segment EBITDA margin | 28% | 25% | 3 p.p. | - The segment recorded $2.2 million in non-cash lease impairment and other downsizing charges during Q2 2025 as part of ongoing U.S. land-based business restructuring[14] Downhole Technologies The Downhole Technologies segment reported sequential declines in revenues and Adjusted Segment EBITDA, along with an increased operating loss in Q2 2025, impacted by reduced U.S. land activity and charges related to facility exits Downhole Technologies Table | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Sequential Change (%) | | :------------------------ | :------------------ | :------------------ | :-------------------- | | Revenues | $29,396 | $32,823 | (10)% | | Operating loss | $(3,992) | $(2,124) | (88)% | | Adjusted Segment EBITDA | $1,220 | $1,905 | (36)% | - The segment recorded $1.2 million in non-cash operating lease impairment and severance charges during Q2 2025, primarily associated with the exit of a leased facility[15] Corporate Corporate operating expenses for Q2 2025 totaled $9.6 million, showing a sequential decrease Corporate Table | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Sequential Change (%) | | :-------------------- | :------------------ | :------------------ | :-------------------- | | Corporate Operating Expenses | $9,597 | $10,016 | 4% | | Corporate Adjusted Segment EBITDA | $(9,490) | $(9,900) | 4% | Financial Performance Details Q2 2025 financial performance details include $1.7 million net interest expense, $15.0 million operating cash flow, $8.1 million free cash flow, and $53.9 million cash on-hand, with debt reduction and ABL facility amendments Interest Expense, Net Net interest expense for Q2 2025 was $1.7 million, including non-cash amortization of deferred debt issuance costs Interest Expense, Net Table | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Q2 2024 (Thousands) | | :-------------------- | :------------------ | :------------------ | :------------------ | | Net Interest Expense | $1,692 | $1,578 | $2,061 | | Non-cash amortization | $300 | N/A | N/A | Cash Flows The company generated $15.0 million in cash flows from operations and $8.1 million in free cash flows during Q2 2025, utilizing cash for debt reduction through convertible senior notes purchases and common stock repurchases Cash Flows Table | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Q2 2024 (Thousands) | | :------------------------------------------ | :------------------ | :------------------ | :------------------ | | Net cash flows provided by operating activities | $14,995 | $9,295 | $10,242 | | Free cash flow | $8,114 | $9,322 | $14,909 | | Purchases of convertible senior notes | $14,800 | N/A | N/A | | Repurchases of common stock | $6,700 | N/A | N/A | - Purchased $14.8 million principal amount of 4.75% convertible senior notes at 97% of par[18] - Repurchased $6.7 million of common stock, representing 2.3% of shares outstanding as of March 31, 2025[18] Financial Condition Cash on-hand totaled $53.9 million at June 30, 2025, with no outstanding borrowings under the ABL Facility, which was amended in July 2025 to increase borrowing availability, lower interest charges, and plan for the retirement of remaining Convertible Notes Financial Condition Table | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------- | :------------------------ | :---------------------------- | | Cash and cash equivalents | $53,858 | $65,363 | | Current portion of long-term debt | $108,813 | $633 | | Long-term debt | $1,916 | $124,654 | - No borrowings were outstanding under the Company's asset-based revolving credit facility (ABL Facility) at June 30, 2025[19] - The ABL Facility was amended on July 28, 2025, to provide additional borrowing availability, lower interest charges, and plan for the retirement of remaining Convertible Notes at maturity in April 2026[19] Company Information & Disclosures This section provides details on Oil States' 2025 Meritorious Engineering Award, Q2 earnings call, company overview, and cautionary language regarding forward-looking statements Industry Award Oil States was recognized by Hart Energy with the 2025 Meritorious Engineering Award for its Low Impact Workover Package (LIWP), which enhances plug and abandonment operations and safeguards aging wells using field-proven technologies - Recipient of the Hart Energy 2025 Meritorious Engineering Award for the Low Impact Workover Package™ (LIWP)[4][20] - The LIWP integrates lower riser package and emergency disconnect package technologies to create a tether-free, streamlined system for well intervention and decommissioning[20] Conference Call Information Details for the Q2 2025 earnings conference call, including date, time, webcast access, and dial-in information, were provided for stakeholders - The conference call was scheduled for July 31, 2025, at 9:00 a.m. Central Daylight Time[21] - Access to the webcast and replay is available on the Company's website at www.ir.oilstatesintl.com[21](index=21&type=chunk) About Oil States Oil States International, Inc. is a global provider of manufactured products and services to the energy, industrial, and military sectors, headquartered in Houston, Texas, and publicly traded on the NYSE under the symbol "OIS" - Oil States International, Inc. is a global provider of manufactured products and services to customers in the energy, industrial, and military sectors[22] - The Company's manufactured products include highly engineered capital equipment and consumable products[22] - Headquartered in Houston, Texas, with manufacturing and service facilities globally, and traded on the NYSE under "OIS"[22] Cautionary Language Concerning Forward-Looking Statements The report includes cautionary language regarding forward-looking statements, emphasizing that such statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations, and the company undertakes no obligation to update them - Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially[24] - Risks include changes in tariffs, oil and natural gas supply/demand/prices, exploration activity, global economic conditions, geopolitical conflicts, customer financial health, OPEC+ actions, supply chain disruptions, environmental matters, customer consolidation, and access to capital[24] - Readers are cautioned not to place undue reliance on forward-looking statements, and the Company undertakes no obligation to update them[24] Consolidated Financial Statements The consolidated financial statements present the company's Q2 2025 operational results, financial position, and cash flow activities for the three and six months ended June 30, 2025 Consolidated Statements of Operations The Consolidated Statements of Operations provide a detailed breakdown of revenues, costs, and expenses, leading to net income (loss) for the three and six months ended June 30, 2025, compared to prior periods Consolidated Statements of Operations Table | (In Thousands, Except Per Share Amounts) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues: | | | | | | | Products | $107,342 | $100,551 | $108,579 | $207,893 | $202,908 | | Services | $58,064 | $59,387 | $77,804 | $117,451 | $150,737 | | Total Revenues | $165,406 | $159,938 | $186,383 | $325,344 | $353,645 | | Operating income (loss) | $5,277 | $5,639 | $2,045 | $10,916 | $(9,132) | | Net income (loss) | $2,811 | $3,158 | $1,301 | $5,969 | $(12,073) | | Diluted Net income (loss) per share | $0.05 | $0.05 | $0.02 | $0.10 | $(0.19) | Consolidated Balance Sheets The Consolidated Balance Sheets present the company's financial position as of June 30, 2025, compared to December 31, 2024, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheets Table | (In Thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | ASSETS | | | | Total current assets | $487,654 | $498,226 | | Property, plant, and equipment, net | $273,674 | $266,871 | | Total assets | $993,745 | $1,005,108 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $260,451 | $157,703 | | Long-term debt | $1,916 | $124,654 | | Total liabilities | $303,107 | $324,454 | | Total stockholders' equity | $690,638 | $680,654 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows outline the cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2025, compared to the same period in 2024 Consolidated Statements of Cash Flows Table | (In Thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash flows provided by (used in) operating activities | $24,290 | $(1,118) | | Net cash flows used in investing activities | $(6,916) | $(3,198) | | Net cash flows used in financing activities | $(29,110) | $(17,236) | | Net change in cash and cash equivalents | $(11,505) | $(21,923) | | Cash and cash equivalents, end of period | $53,858 | $25,188 | Segment Data The Segment Data provides a detailed breakdown of revenues and operating income (loss) for each business segment: Offshore Manufactured Products, Completion and Production Services, and Downhole Technologies, for the three and six months ended June 30, 2025, and comparable prior periods Segment Data Table | (In Thousands) | Q2 2025 Revenues | Q1 2025 Revenues | Q2 2024 Revenues | Q2 2025 Operating Income (Loss) | Q1 2025 Operating Income (Loss) | Q2 2024 Operating Income (Loss) | | :-------------------------------- | :--------------- | :--------------- | :--------------- | :------------------------------ | :------------------------------ | :------------------------------ | | Offshore Manufactured Products | $106,586 | $92,596 | $101,556 | $16,989 | $14,276 | $14,357 | | Completion and Production Services | $29,424 | $34,519 | $46,421 | $1,877 | $3,503 | $(535) | | Downhole Technologies | $29,396 | $32,823 | $38,406 | $(3,992) | $(2,124) | $(1,141) | | Corporate | N/A | N/A | N/A | $(9,597) | $(10,016) | $(10,636) | | Total | $165,406 | $159,938 | $186,383 | $5,277 | $5,639 | $2,045 | - Offshore Manufactured Products operating income for Q2 2025 included $0.3 million in charges related to facility consolidation and relocation[32] - Completion and Production Services operating income (loss) for Q2 2025 included $2.2 million in costs associated with consolidation and exit of underperforming service offerings and locations[33] - Downhole Technologies operating loss for Q2 2025 included $1.2 million in costs primarily associated with the exit of a leased facility[34] Reconciliations of GAAP to Non-GAAP Financial Information This section provides reconciliations of GAAP to non-GAAP financial measures, including Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted Net Income, and Free Cash Flow, for enhanced performance analysis Adjusted EBITDA This section reconciles GAAP net income (loss) to Adjusted EBITDA, a non-GAAP measure used by management to assess debt servicing ability, fund capital expenditures, and compare operating performance, by adding back interest, taxes, depreciation, amortization, impairments, and certain charges, while subtracting gains on extinguishment of convertible notes Adjusted EBITDA Table | (In Thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------- | :------- | | Net income (loss) | $2,811 | $3,158 | $1,301 | $5,969 | $(12,073) | | Interest expense, net | $1,692 | $1,578 | $2,061 | $3,270 | $4,162 | | Income tax provision (benefit) | $1,410 | $1,041 | $(665) | $2,451 | $(641) | | Depreciation and amortization expense | $11,898 | $12,025 | $14,698 | $23,923 | $28,893 | | Impairments of operating lease assets | $1,358 | — | — | $1,358 | — | | Facility consolidation/closure and other charges | $2,301 | $930 | $4,426 | $3,231 | $6,935 | | Gains on extinguishment of 4.75% convertible senior notes | $(381) | — | $(515) | $(381) | $(515) | | Adjusted EBITDA | $21,089 | $18,732 | $21,306 | $39,821 | $36,761 | - Adjusted EBITDA increased 13% sequentially from Q1 2025 to Q2 2025[3] - Adjusted EBITDA is a non-GAAP measure providing useful information for debt servicing, capital expenditures, and comparing operating performance[36] Adjusted Segment EBITDA This reconciliation details Adjusted Segment EBITDA for each business segment, a non-GAAP measure derived from operating income (loss) by adjusting for other income/expense, depreciation, amortization, impairments, and specific charges, providing a clearer view of segment-level operational profitability Adjusted Segment EBITDA Table | (In Thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------ | :------- | :------- | | Offshore Manufactured Products: | | | | | | | Operating income | $16,989 | $14,276 | $14,357 | $31,265 | $24,960 | | Adjusted Segment EBITDA | $21,105 | $17,926 | $20,131 | $39,031 | $35,931 | | Completion and Production Services: | | | | | | | Operating income (loss) | $1,877 | $3,503 | $(535) | $5,380 | $(954) | | Adjusted Segment EBITDA | $8,254 | $8,801 | $8,548 | $17,055 | $15,141 | | Downhole Technologies: | | | | | | | Operating loss | $(3,992) | $(2,124) | $(1,141) | $(6,116) | $(13,220) | | Adjusted Segment EBITDA | $1,220 | $1,905 | $3,114 | $3,125 | $5,305 | | Corporate: | | | | | | | Operating loss | $(9,597) | $(10,016) | $(10,636) | $(19,613) | $(19,918) | | Adjusted Segment EBITDA | $(9,490) | $(9,900) | $(10,487) | $(19,390) | $(19,616) | - Offshore Manufactured Products Adjusted Segment EBITDA increased 18% sequentially[6] - Completion and Production Services and Downhole Technologies combined Adjusted EBITDA declined 12% sequentially[7] Adjusted Net Income (Loss), Excluding Charges and Credits This reconciliation presents Adjusted Net Income (Loss) and Adjusted Diluted Net Income Per Share, excluding specific charges and credits, to provide a clearer view of the company's underlying operating performance by removing the impact of non-recurring or non-operational items Adjusted Net Income (Loss), Excluding Charges and Credits Table | (In Thousands, Except Per Share Amounts) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------------ | :------ | :------ | :------ | :------- | :------- | | Net income (loss) | $2,811 | $3,158 | $1,301 | $5,969 | $(12,073) | | Impairments of operating lease assets | $1,358 | — | — | $1,358 | — | | Facility consolidation/closure and other charges | $2,301 | $930 | $4,426 | $3,231 | $6,935 | | Gains on extinguishment of 4.75% convertible senior notes | $(381) | — | $(515) | $(381) | $(515) | | Total adjustments, net of taxes | $2,590 | $734 | $3,090 | $3,324 | $14,591 | | Adjusted net income, excluding charges and credits | $5,401 | $3,892 | $4,391 | $9,293 | $2,518 | | Adjusted diluted net income per share, excluding charges and credits | $0.09 | $0.06 | $0.07 | $0.16 | $0.04 | - Adjusted net income totaled $5 million, or $0.09 per share, excluding restructuring charges and credits[4] - Adjusted net income, excluding charges and credits, is a non-GAAP measure used to compare operating performance across periods[41] Free Cash Flow This section reconciles net cash flows provided by operating activities to Free Cash Flow, a non-GAAP measure, by adjusting for capital expenditures and proceeds from asset dispositions, providing insight into the cash available for debt reduction, share repurchases, or other discretionary uses Free Cash Flow Table | (In Thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------- | :------- | | Net cash flows provided by (used in) operating activities | $14,995 | $9,295 | $10,242 | $24,290 | $(1,118) | | Less: Capital expenditures | $(10,322) | $(9,158) | $(5,789) | $(19,480) | $(15,881) | | Plus: Proceeds from disposition of property and equipment | $2,532 | $1,685 | $177 | $4,217 | $2,472 | | Proceeds from disposition of assets held for sale | $909 | $7,500 | $10,279 | $8,409 | $10,279 | | Free cash flow | $8,114 | $9,322 | $14,909 | $17,436 | $(4,248) | - Generated $8.1 million of free cash flows in Q2 2025[18] - Free cash flow is a non-GAAP measure that helps assess the cash available after capital expenditures[44]