Oil States Announces Second Quarter 2024 Results

  • Net income of $1.3 million, or $0.02 per share, reported for the quarter, which included charges and credits totaling $3.9 million ($3.1 million, after-tax, or $0.05 per share)
  • Adjusted net income of $4.4 million, or $0.07 per share, excluding charges and credits (a non-GAAP measure(1))
  • Consolidated revenues of $186.4 million increased 11% sequentially, driven primarily by the timing of conversion of orders from backlog along with modest U.S. oil-focused completion market share gains
  • Adjusted EBITDA (a non-GAAP measure(1)) of $21.3 million increased 38% sequentially
  • Received cash proceeds of $10.3 million in connection with the sale of a previously idled facility
  • Purchased $11.5 million principal amount of our 4.75% convertible senior notes at a discount and $2.4 million of our common stock

HOUSTON–(BUSINESS WIRE)–Oil States International, Inc. (NYSE: OIS):

Three Months Ended

% Change

(Unaudited, In Thousands, Except Per Share Amounts)

June 30,
2024

March 31,
2024

June 30,
2023

Sequential

Year-over-Year

Consolidated results:

Revenues

$

186,383

$

167,262

$

183,529

11%

2%

Operating income (loss)(3)

$

2,045

$

(11,177

)

$

3,269

n.m.

(37)%

Net income (loss)

$

1,301

$

(13,374

)

$

558

n.m.

133%

Adjusted net income (loss), excluding charges and credits(1)

$

4,391

$

(1,873

)

$

558

n.m.

n.m.

Adjusted EBITDA(1)

$

21,306

$

15,455

$

19,016

38%

12%

Revenues by segment(2):

Offshore Manufactured Products

$

101,556

$

86,857

$

78,647

17%

29%

Well Site Services

46,421

47,292

64,536

(2)%

(28)%

Downhole Technologies

38,406

33,113

40,346

16%

(5 )%

Revenues by destination:

Offshore and international

$

118,625

$

100,180

$

89,817

18%

32%

U.S. land

67,758

67,082

93,712

1%

(28 )%

Operating income (loss) by segment(2)(3):

Offshore Manufactured Products

$

14,357

$

10,603

$

8,838

35%

62 %

Well Site Services

(535

)

(419

)

4,732

(28)%

n.m.

Downhole Technologies

(1,141

)

(12,079

)

(121

)

91%

n.m.

Adjusted Segment EBITDA(1)(2):

Offshore Manufactured Products

$

20,131

$

15,800

$

12,994

27%

55%

Well Site Services

8,548

6,593

11,425

30%

(25)%

Downhole Technologies

3,114

2,191

4,626

42%

(33)%

___________________

(1)

These are non-GAAP measures. See “Reconciliations of GAAP to Non-GAAP Financial Information” tables below for reconciliations to their most comparable GAAP measures as well as further clarification and explanation.

(2)

In first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment were integrated into the Downhole Technologies segment. Historical segment financial data, backlog and other information were conformed with the revised segment presentation.

(3)

Operating income (loss) for the three months ended June 30, 2024 included facility consolidation and other charges totaling $4.4 million. Operating income (loss) for the three months ended March 31, 2024 included goodwill impairment, facility consolidation and other charges totaling $12.5 million. See “Segment Data” below for additional information.

Oil States International, Inc. reported net income of $1.3 million, or $0.02 per share, and Adjusted EBITDA of $21.3 million for the second quarter of 2024 on revenues of $186.4 million. Reported second quarter 2024 net income included charges and credits of $3.9 million ($3.1 million after-tax, or $0.05 per share). These results compare to revenues of $167.3 million, a net loss of $13.4 million, or $0.21 per share, and Adjusted EBITDA of $15.5 million reported in the first quarter of 2024, which included a non-cash goodwill impairment charge of $10.0 million ($9.5 million after-tax, or $0.15 per share) and facility consolidation and other charges of $2.5 million ($2.0 million after-tax, or $0.03 per share).

Oil States’ President and Chief Executive Officer, Cindy B. Taylor, stated:

Our second quarter consolidated revenues and Adjusted EBITDA increased 11% and 38% sequentially – driven by higher project-related activity within our Offshore Manufactured Products segment. Our U.S. land revenues in the current quarter reflect our decision to exit a number of underperforming operations within our Well Site Services segment in addition to a 3% sequential-quarter decline in the average rig count.

In the second quarter, our Offshore Manufactured Products segment revenues increased 17% sequentially totaling $102 million, while Adjusted Segment EBITDA rose 27% to $20 million. Bookings totaled $101 million during the quarter compared to $66 million booked in the first quarter of 2024, yielding backlog of $300 million as of June 30 and a quarterly book-to-bill ratio of 1.0x.

Revenues reported by our Well Site Services segment decreased 2% on a sequential quarter basis, given the impact of lower activity and the segment’s exit of four underperforming locations in the United States over the past six months. Adjusted Segment EBITDA increased 30% from the first quarter of 2024 – reflective of higher customer activity in the Gulf of Mexico and the Permian Basin along with various cost reduction initiatives.

Our Downhole Technologies segment revenues and Adjusted Segment EBITDA increased 16% and 42%, respectively, from the first quarter of 2024, driven primarily by increased completion product and international perforating sales.

We continue to focus on improving operations and allocating capital to efficiently and safely provide our customers with advanced technologies and services, while enhancing returns, reducing debt and returning cash to our stockholders. Strong cash flows from operations totaling $10 million allowed for convertible debt and share repurchases in the quarter.”

Business Segment Results

In first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into our Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical segment financial data (GAAP and non-GAAP), backlog and other information were conformed with the revised segment presentation.

(See Segment Data and Adjusted Segment EBITDA tables below)

Offshore Manufactured Products

Offshore Manufactured Products reported revenues of $101.6 million, operating income of $14.4 million and Adjusted Segment EBITDA of $20.1 million in the second quarter of 2024, compared to revenues of $86.9 million, operating income of $10.6 million and Adjusted Segment EBITDA of $15.8 million reported in the first quarter of 2024. The segment recorded charges of $1.5 million in both the second and first quarters of 2024, associated with the ongoing consolidation of certain manufacturing and service locations. Adjusted Segment EBITDA margin was 20% in the second quarter of 2024 compared to 18% in the first quarter of 2024.

Backlog totaled $300 million as of June 30, 2024. Second quarter bookings totaled $101 million, compared to bookings of $66 million in the first quarter – yielding a quarterly book-to-bill ratio of 1.0x (year-to-date ratio of 0.9x).

Well Site Services

Well Site Services reported revenues of $46.4 million, an operating loss of $0.5 million and Adjusted Segment EBITDA of $8.5 million in the second quarter of 2024, compared to revenues of $47.3 million, an operating loss of $0.4 million and Adjusted Segment EBITDA of $6.6 million reported in the first quarter of 2024. The segment recognized $1.9 million and $0.7 million in costs associated with the consolidation and exit of underperforming locations during the second and first quarters of 2024. Additionally, during the second and first quarters of 2024, the segment recorded costs of $1.0 million and $0.4 million, respectively, associated with the defense of certain patents related to its proprietary technologies. Adjusted Segment EBITDA margin was 18% in the second quarter of 2024, compared to 14% in the first quarter of 2024.

Downhole Technologies

Downhole Technologies reported revenues of $38.4 million, an operating loss of $1.1 million and Adjusted Segment EBITDA of $3.1 million in the second quarter of 2024, compared to revenues of $33.1 million, an operating loss of $12.1 million and Adjusted Segment EBITDA of $2.2 million in the first quarter of 2024. Reported results in the first quarter of 2024 included a non-cash goodwill impairment charge of $10.0 million, recorded in connection with the segment realignment discussed above.

Corporate

Corporate operating expenses in the second quarter of 2024 totaled $10.6 million.

Interest Expense, Net

Net interest expense totaled $2.1 million in the second quarter of 2024, which included $0.3 million of non-cash amortization of deferred debt issuance costs.

Income Taxes

During the second quarter of 2024, the Company recognized tax benefit of $0.7 million on pre-tax income of $0.6 million, which included favorable changes in valuation allowances recorded against deferred tax assets and certain non-deductible expenses. The Company recognized tax expense of $24 thousand on a pre-tax loss of $13.4 million in the first quarter of 2024, which included a $7.7 million non-deductible goodwill impairment charge as well as other non-deductible expenses.

Cash Flows

During the second quarter of 2024, cash flows provided by operations totaled $10.2 million and capital expenditures totaled $5.8 million. The Company sold an idle facility and certain other equipment for proceeds totaling $10.5 million in the quarter.

The Company purchased $11.5 million principal amount of its 4.75% convertible senior notes at 94% of par and $2.4 million (543 thousand shares) of its common stock in the second quarter. A total of $15.8 million remains available under the Company’s share repurchase authorization, which extends through February 2025.

Financial Condition

Cash on-hand totaled $25.2 million at June 30, 2024. No borrowings were outstanding under the Company’s asset-based revolving credit facility at June 30, 2024.

Conference Call Information

The call is scheduled for July 29, 2024 at 9:00 a.m. Central Daylight Time, is being webcast and can be accessed from the Company’s website at www.ir.oilstatesintl.com. Participants may also join the conference call by dialing 1 (888) 210-3346 in the United States or by dialing +1 (646) 960-0253 internationally and using the passcode 7534957. A replay of the conference call will be available approximately two hours after the completion of the call and can be accessed from the Company’s website at www.ir.oilstatesintl.com.

About Oil States

Oil States International, Inc. is a global provider of manufactured products and services to customers in the energy, industrial and military sectors. The Company’s manufactured products include highly engineered capital equipment and consumable products. Oil States is headquartered in Houston, Texas with manufacturing and service facilities strategically located across the globe. Oil States is publicly traded on the New York Stock Exchange under the symbol “OIS”.

For more information on the Company, please visit Oil States International’s website at www.oilstatesintl.com.

Cautionary Language Concerning Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among others, the level of supply and demand for oil and natural gas, fluctuations in the current and future prices of oil and natural gas, the level of exploration, drilling and completion activity, general global economic conditions, the cyclical nature of the oil and natural gas industry, geopolitical conflicts and tensions, the financial health of our customers, the actions of the Organization of Petroleum Exporting Countries (“OPEC”) and other producing nations with respect to crude oil production levels and pricing, the impact of environmental matters, including executive actions and regulatory efforts to adopt environmental or climate change regulations that may result in increased operating costs or reduced oil and natural gas production or demand globally, consolidation of our customers, our ability to access and the cost of capital in the bank and capital markets, our ability to develop new competitive technologies and products, and other factors discussed in the “Business” and “Risk Factors” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and the subsequently filed Quarterly Report on Form 10-Q and Periodic Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,
2024

March 31,
2024

June 30,
2023

June 30,
2024

June 30,
2023

Revenues:

Products

$

108,579

$

94,329

$

92,630

$

202,908

$

192,470

Services

77,804

72,933

90,899

150,737

187,258

186,383

167,262

183,529

353,645

379,728

Costs and expenses:

Product costs

82,503

75,137

72,659

157,640

151,336

Service costs

59,530

56,814

69,371

116,344

141,429

Cost of revenues (exclusive of depreciation and amortization expense presented below)

142,033

131,951

142,030

273,984

292,765

Selling, general and administrative expense

26,373

22,496

23,528

48,869

47,544

Depreciation and amortization expense

14,698

14,195

15,537

28,893

30,793

Impairment of goodwill

10,000

10,000

Other operating (income) expense, net

1,234

(203

)

(835

)

1,031

(518

)

184,338

178,439

180,260

362,777

370,584

Operating income (loss)

2,045

(11,177

)

3,269

(9,132

)

9,144

Interest expense, net

(2,061

)

(2,101

)

(2,059

)

(4,162

)

(4,450

)

Other income (expense), net

652

(72

)

210

580

486

Income (loss) before income taxes

636

(13,350

)

1,420

(12,714

)

5,180

Income tax benefit (provision)

665

(24

)

(862

)

641

(2,464

)

Net income (loss)

$

1,301

$

(13,374

)

$

558

$

(12,073

)

$

2,716

Net income (loss) per share:

Basic

$

0.02

$

(0.21

)

$

0.01

$

(0.19

)

$

0.04

Diluted

0.02

(0.21

)

0.01

(0.19

)

0.04

Weighted average number of common shares outstanding:

Basic

62,483

62,503

62,803

62,493

62,814

Diluted

62,704

62,503

63,174

62,493

63,161

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands)

June 30, 2024

December 31, 2023

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

25,188

$

47,111

Accounts receivable, net

203,694

203,211

Inventories, net

217,347

202,027

Prepaid expenses and other current assets

22,587

35,648

Total current assets

468,816

487,997

Property, plant, and equipment, net

270,878

280,389

Operating lease assets, net

22,825

21,970

Goodwill, net

69,789

79,867

Other intangible assets, net

144,505

153,010

Other noncurrent assets

24,365

23,253

Total assets

$

1,001,178

$

1,046,486

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current portion of long-term debt

$

616

$

627

Accounts payable

62,322

67,546

Accrued liabilities

38,493

44,227

Current operating lease liabilities

6,711

6,880

Income taxes payable

1,184

1,233

Deferred revenue

34,404

36,757

Total current liabilities

143,730

157,270

Long-term debt

124,339

135,502

Long-term operating lease liabilities

18,864

18,346

Deferred income taxes

5,657

7,717

Other noncurrent liabilities

18,199

18,106

Total liabilities

310,789

336,941

Stockholders’ equity:

Common stock

786

772

Additional paid-in capital

1,133,282

1,129,240

Retained earnings

272,845

284,918

Accumulated other comprehensive loss

(76,162

)

(69,984

)

Treasury stock

(640,362

)

(635,401

)

Total stockholders’ equity

690,389

709,545

Total liabilities and stockholders’ equity

$

1,001,178

$

1,046,486

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

Six Months Ended June 30,

2024

2023

Cash flows from operating activities:

Net income (loss)

$

(12,073

)

$

2,716

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization expense

28,893

30,793

Impairment of goodwill

10,000

Stock-based compensation expense

4,056

3,361

Amortization of deferred financing costs

841

892

Deferred income tax provision (benefit)

(2,299

)

997

Gains on disposals of assets

(1,355

)

(561

)

Gains on extinguishment of 4.75% convertible senior notes

(515

)

Other, net

(379

)

(267

)

Changes in operating assets and liabilities:

Accounts receivable

(2,335

)

39,042

Inventories

(16,436

)

(21,197

)

Accounts payable and accrued liabilities

(9,504

)

(25,924

)

Deferred revenue

(2,353

)

8,237

Other operating assets and liabilities, net

2,341

653

Net cash flows provided by (used in) operating activities

(1,118

)

38,742

Cash flows from investing activities:

Capital expenditures

(15,881

)

(17,338

)

Proceeds from disposition of property and equipment

12,751

690

Other, net

(68

)

(66

)

Net cash flows used in investing activities

(3,198

)

(16,714

)

Cash flows from financing activities:

Revolving credit facility borrowings

22,619

35,592

Revolving credit facility repayments

(22,619

)

(35,592

)

Purchases of 4.75% convertible senior notes

(10,846

)

Repayment of 1.50% convertible senior notes

(17,315

)

Other debt and finance lease repayments

(318

)

(226

)

Payment of financing costs

(1,111

)

(95

)

Purchases of treasury stock

(2,374

)

(3,001

)

Shares added to treasury stock as a result of net share settlements

due to vesting of stock awards

(2,587

)

(1,948

)

Net cash flows used in financing activities

(17,236

)

(22,585

)

Effect of exchange rate changes on cash and cash equivalents

(371

)

959

Net change in cash and cash equivalents

(21,923

)

402

Cash and cash equivalents, beginning of period

47,111

42,018

Cash and cash equivalents, end of period

$

25,188

$

42,420

Cash paid (received) for:

Interest

$

3,899

$

4,060

Income taxes, net

1,346

(1,475

)

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA

(In Thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2024

March 31,

2024

June 30,

2023

June 30,

2024

June 30,

2023

Revenues(1):

Offshore Manufactured Products

Project-driven:

Products

$

59,752

$

53,137

$

45,455

$

112,889

$

94,072

Services

31,024

25,233

24,846

56,257

49,476

90,776

78,370

70,301

169,146

143,548

Military and other products

10,780

8,487

8,346

19,267

15,604

Total Offshore Manufactured Products

101,556

86,857

78,647

188,413

159,152

Well Site Services

46,421

47,292

64,536

93,713

131,594

Downhole Technologies

38,406

33,113

40,346

71,519

88,982

Total revenues

$

186,383

$

167,262

$

183,529

$

353,645

$

379,728

Operating income (loss)(1):

Offshore Manufactured Products(2)

$

14,357

$

10,603

$

8,838

$

24,960

$

16,536

Well Site Services(3)

(535

)

(419

)

4,732

(954

)

11,698

Downhole Technologies(4)

(1,141

)

(12,079

)

(121

)

(13,220

)

1,752

Corporate

(10,636

)

(9,282

)

(10,180

)

(19,918

)

(20,842

)

Total operating income

$

2,045

$

(11,177

)

$

3,269

$

(9,132

)

$

9,144

________________

(1)

In the first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment were integrated into the Downhole Technologies segment. Historical segment financial results were conformed with the revised segment presentation.

(2)

Operating income for both the three months ended June 30, 2024 and March 31, 2024 included facility consolidation charges of $1.5 million, associated with the Offshore Manufactured Products segment’s ongoing consolidation and relocation of certain manufacturing and service locations.

(3)

Operating loss for the three months ended June 30, 2024 and March 31, 2024 included $1.9 million and $0.7 million, respectively, in costs associated with consolidation and exit of certain underperforming locations. Additionally, during the three months ended June 30, 2024 and March 31, 2024 the segment incurred $1.0 million and $0.4 million, respectively, of costs associated with the defense of certain Well Site Services segment patents related to proprietary technologies.

(4)

Operating loss for the three months ended March 31, 2024 included a non-cash goodwill impairment charge of $10.0 million, recognized in connection with the segment realignment.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL INFORMATION

ADJUSTED EBITDA (A)

(In Thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,
2024

March 31,
2024

June 30,
2023

June 30,
2024

June 30,
2023

Net income (loss)

$

1,301

$

(13,374

)

$

558

$

(12,073

)

$

2,716

Interest expense, net

2,061

2,101

2,059

4,162

4,450

Income tax provision (benefit)

(665

)

24

862

(641

)

2,464

Depreciation and amortization expense

14,698

14,195

15,537

28,893

30,793

Impairment of goodwill

10,000

10,000

Facility consolidation and other charges

4,426

2,509

6,935

Gains on extinguishment of 4.75% convertible senior notes

(515

)

(515

)

Adjusted EBITDA

$

21,306

$

15,455

$

19,016

$

36,761

$

40,423

________________

(A)

The term Adjusted EBITDA consists of net income (loss) plus net interest expense, taxes, depreciation and amortization expense, impairment of goodwill, and facility consolidation and other charges, less gains on extinguishment of 4.75% convertible senior notes (“2026 Notes”). Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles (“GAAP”) and should not be considered in isolation from or as a substitute for net income (loss) or cash flow measures prepared in accordance with GAAP or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Adjusted EBITDA as a supplemental disclosure because its management believes that Adjusted EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The Company uses Adjusted EBITDA to compare and to monitor the performance of the Company and its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. The table above sets forth reconciliations of Adjusted EBITDA to net income (loss), which is the most directly comparable measure of financial performance calculated under GAAP.

Contacts

Lloyd A. Hajdik

Oil States International, Inc.

Executive Vice President, Chief Financial Officer and Treasurer

(713) 652-0582

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