Oil States International(OIS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenues of $160 million for Q1 2025, meeting the guidance range of $160 million to $170 million, with adjusted EBITDA of $19 million, exceeding the expected range of $17.5 million to $18.5 million [4][12] - Cash flow from operations was $9 million, reversing the historical trend of negative cash flow in Q1 due to seasonal working capital trends [5][12] - The company generated $9 million from the monetization of equipment and inventory, which was used for capital expenditures and share repurchases [5][12] Business Line Data and Key Metrics Changes - Offshore Manufactured Products segment generated revenues of $93 million with an adjusted EBITDA of $18 million, resulting in an adjusted EBITDA margin of 19%, down from 23% in the previous quarter [12] - Completion and Production Services segment reported revenues of $35 million and adjusted EBITDA of $9 million, with an adjusted EBITDA margin of 25%, significantly up from 12% in the previous quarter [12][13] - Downhole Technologies segment had revenues of $33 million and adjusted EBITDA of $2 million [13] Market Data and Key Metrics Changes - The company experienced strong demand in international and offshore regions, leading to bookings of $136 million and the highest backlog since September 2015, with a book-to-bill ratio of 1.5 times [5][15] - Despite concerns over tariffs and potential economic downturns, the company anticipates that operations outside the U.S. will remain largely unaffected [6][8] Company Strategy and Development Direction - The company plans to focus on organic growth opportunities, research and development, debt repayment, and share repurchases to drive value for customers and stockholders [17] - The strategic sourcing of goods and materials is being assessed to mitigate potential impacts from U.S. tariffs, with a focus on maintaining operations and profitability [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for offshore and international products, despite potential pressures from domestic market conditions and crude oil prices [15] - The company maintained its annual revenue guidance of $700 million to $735 million and EBITDA guidance of $88 million to $93 million for 2025, citing strong bookings and improved margins [17] Other Important Information - The company plans to be opportunistic regarding share repurchases due to low stock prices and aims for a free cash flow conversion rate of over 40% [33] - The impact of tariffs on costs is expected to be in the range of 5% to 10%, particularly affecting the Downhole Technologies segment [37][38] Q&A Session Summary Question: Insights on bookings and backlog - Management noted that long-term development drilling programs are less affected by short-term commodity price fluctuations, indicating confidence in ongoing projects [20][21] Question: Impact of Gulf operations on margins - Management highlighted a strong recovery in Gulf operations, contributing to improved margins in the Completion and Production Services segment, with expectations for continued positive activity [26][30] Question: Capital allocation priorities - The company plans to prioritize share repurchases and debt reduction, given the current low stock price and upcoming debt maturity [31][33] Question: Tariff impact on costs - Management indicated that tariff impacts are expected to be minimal, with similar cost increases anticipated across competitors in the Downhole Technologies segment [38][40]