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][11] - Adjusted net income totaled $4 million, or $0.06 per share, after excluding facility exit charges of $1 million [11] - Cash flow from operations was $9 million, reversing the historical trend of negative cash flow in Q1 due to seasonal working capital [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 [11][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 fourth quarter [11][12] - Downhole Technologies segment generated revenues of $33 million with adjusted EBITDA of $2 million [12] 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 for the quarter [5][14] - Despite economic volatility and potential tariff impacts, the company anticipates that the majority of its backlog, which consists of projects outside the U.S., will remain largely unaffected [14][16] 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 [16] - Strategic actions have been implemented to mitigate potential negative impacts from tariffs, including optimizing the supply chain and adjusting pricing to customers [9][10] 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 [14][16] - The company expects strong free cash flow generation for the full year, with cash flow from operations projected to range between $65 million and $75 million [13][16] Other Important Information - The company plans to be opportunistic regarding share repurchases due to low stock prices and aims to maintain a robust free cash flow yield [16][32] - The anticipated impact of tariffs on costs is estimated to be in the range of 5% to 10% higher, particularly affecting the Downhole Technologies segment [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: Sequential improvement in Completion and Production Services - Management highlighted that the recovery in Gulf operations and cost reduction efforts contributed to improved margins, with expectations for continued positive performance [25][28] Question: Balance sheet and capital allocation strategy - Management confirmed a focus on aggressive share repurchases and debt reduction, given the current low stock price and upcoming debt maturity [30][32] Question: Impact of tariffs on costs - Management indicated that the tariff impacts are expected to be minimal, with similar cost increases anticipated across competitors in the Downhole Technologies segment [38][40]