Oil States International(OIS) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported consolidated revenues of $178 million for Q4 2025, an 8% increase both sequentially and year-over-year [10] - Adjusted consolidated EBITDA for Q4 2025 was $23 million, representing a 9% sequential increase and at the top of the guided range [10] - The net loss for the quarter was $117 million, or $2.04 per share, which included long-lived asset impairments and restructuring charges [10] - For the full year, adjusted consolidated EBITDA totaled $83 million, with adjusted net income of $22 million and adjusted EPS of $0.37 per share [11] - Cash flow from operations for Q4 was $50 million, up 63% sequentially, and for the full year, it totaled $105 million, representing a 129% increase year-over-year [11] Business Line Data and Key Metrics Changes - The Offshore Manufactured Products segment generated revenues of $123 million in Q4, with adjusted segment EBITDA of $25 million, resulting in a 20% adjusted segment EBITDA margin [12] - The Completion and Production Services segment delivered $23 million in revenues and adjusted segment EBITDA of $7 million, with margins expanding to 32% from 29% in the previous quarter [13] - The Downhole Technologies segment reported revenues of $32 million, an 11% sequential increase, with adjusted segment EBITDA growing to $1.3 million [13] Market Data and Key Metrics Changes - The backlog increased to $435 million, the highest level since March 2015, with a book-to-bill ratio of 1.3 times [7][12] - The company noted that 77% of revenues were generated from offshore and international markets, up from 72% in the prior year [6] Company Strategy and Development Direction - The company is focused on optimizing its business mix towards offshore and international markets, aiming for sustained incremental margins and cash flows [5][6] - The strategy includes high-grading technologies and service lines, with a focus on differentiated product offerings to enhance margins [7][8] - The company plans to continue returning capital to stockholders while maintaining a disciplined approach to capital allocation [8][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for crude oil and natural gas, indicating that underinvestment in offshore infrastructure could lead to future growth opportunities [76][78] - The company anticipates full-year 2026 revenues to range between $680 million and $700 million, with EBITDA expected between $90 million and $95 million [17] - The first quarter of 2026 is expected to be the weakest in terms of revenue and cash flows due to timing factors [18] Other Important Information - The company ended 2025 with cash on hand exceeding total debt by $15 million [11] - A new four-year cash flow-based credit agreement was established, providing for borrowings of up to $75 million [14] - The company repurchased $17 million of common stock in 2025 and plans to remain opportunistic with additional purchases [15] Q&A Session Summary Question: Completion and Production side restructuring impact on Q4 revenue - Management confirmed that the restructuring and exiting of underperforming businesses are reflected in the Q4 revenue run rate levels, with a focus on reducing ongoing costs related to exited operations [24][25] Question: Backlog margins in Offshore Manufactured Products - Management indicated that the embedded margin profile is expected to improve, with consistent margin improvement targeted for 2026 [30][31] Question: Outlook on offshore spending and backlog growth - Management expressed optimism about the potential for backlog growth as offshore spending is expected to increase, supported by new product offerings and enhanced facilities [46][47] Question: Balance sheet and cash flow deployment post-debt repayment - Management stated that after debt repayment, the focus will be on share repurchases while also considering M&A opportunities [56][58] Question: Military products and defense spending outlook - Management highlighted the legacy military products and the potential for growth in this segment due to increased defense spending [60][62] Question: Geographic opportunities in the offshore market - Management identified Brazil and Guyana as strong bases for operations, with ongoing efforts to expand capabilities in Southeast Asia and West Africa [68][70]