Oil States Announces Third Quarter 2024 Results

Net loss of $14.3 million, or $0.23 per share, reported for the quarter, which included restructuring and other charges totaling $18.2 million ($17.0 million, after-tax, or $0.27 per share)
Adjusted net income of $2.7 million, or $0.04 per share, excluding these restructuring and other charges (a non-GAAP measure(1))
Consolidated revenues of $174.3 million decreased 6% sequentially, driven primarily by lower U.S. land-based activity and transitory project delays in the Gulf of Mexico
Adjusted EBITDA (a non-GAAP measure(1)) of $21.5 million increased 1% sequentially
Well Site Services segment name changed to the Completion and Production Services segment following the sale of its remaining drilling rigs and exit of its flowback and well testing service offering
Generated cash flows from operations of $28.8 million
Purchased $3 million of our common stock
Board of Directors approved a new $50 million common stock repurchase authorization, which expires in October 2026

Oil States International, Inc. (NYSE: OIS):

Three Months Ended

% Change

(Unaudited, In Thousands, Except Per Share Amounts)

September 30, 2024

June 30, 2024

September 30, 2023

Sequential

Year-over-Year

Consolidated results:

Revenues

174,348

186,383

194,289

(10

Operating income (loss)(3)

(11,041

)

2,045

6,190

n.m.

Net income (loss)

(14,349

)

1,301

4,212

n.m.

Adjusted net income, excluding charges and credits(1)

2,696

4,391

5,515

(39

(51

Adjusted EBITDA(1)

21,531

21,306

23,441

Revenues by segment(2):

Offshore Manufactured Products

102,234

101,556

96,070

Completion and Production Services

40,099

46,421

59,831

(14

(33

Downhole Technologies

32,015

38,406

38,388

(17

Revenues by destination:

Offshore and international

113,856

118,625

104,750

U.S. land

60,492

67,758

89,539

(11

(32

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

Offshore Manufactured Products

19,310

14,357

15,586

Completion and Production Services

(18,267

)

(535

)

3,285

n.m.

Downhole Technologies

(3,653

)

(1,141

)

(1,900

)

(220

(92

Adjusted Segment EBITDA(1)(2):

Offshore Manufactured Products

23,303

20,131

21,708

Completion and Production Services

5,413

8,548

9,716

(37

(44

Downhole Technologies

1,078

3,114

2,646

(65

(59

___________________

(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) included intangible and operating lease asset impairment, facility consolidation and closure, patent defense and other charges totaling: $18.2 million for the three months ended September 30, 2024; $4.4 million for the three months ended June 30, 2024; and $1.6 million for the three months ended September 30, 2023. See “Segment Data” below for additional information.

Oil States International, Inc. reported a net loss of $14.3 million, or $0.23 per share, and Adjusted EBITDA of $21.5 million for the third quarter of 2024 on revenues of $174.3 million. Reported third quarter 2024 net loss included charges of $18.2 million ($17.0 million after-tax or $0.27 per share) associated with the restructuring of certain of its U.S. land-based operations, facility closures, patent defense and personnel reductions. These results compare to revenues of $186.4 million, net income of $1.3 million, or $0.02 per share, and Adjusted EBITDA of $21.3 million reported in the second quarter of 2024, which included facility consolidation charges and other credits of $3.9 million ($3.1 million after-tax, or $0.05 per share).

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

“Our third quarter 2024 results were led by offshore and international project activity and associated backlog conversion, partially offset by transitory customer delays in completion and intervention projects in the Gulf of Mexico and declines in completions-related spending by our U.S. customers. While storms in the Gulf of Mexico tempered our Completion and Production Services results this quarter, our personnel remained safe and the Company’s facilities did not sustain significant damage. We expect activities to resume in the Gulf in the fourth quarter following delays caused by Hurricane Milton.

“Our Offshore Manufactured Products segment revenues were flat sequentially, totaling $102 million in the third quarter, while Adjusted Segment EBITDA rose 16% to $23 million on a favorable revenue mix. Bookings increased 11% sequentially, totaling $112 million during the quarter compared to $101 million booked in the second quarter of 2024, yielding backlog of $313 million as of September 30 and a quarterly book-to-bill ratio of 1.1x. The outlook for our offshore and international project-driven business remains strong with growing market acceptance of our new technology offerings such as the integrated riser joint used in managed pressure drilling operations.

“Given the highly cyclical nature of select U.S. service lines, we made a strategic decision to close five additional underperforming gas-focused locations within our Completion and Production Services segment and one within our Downhole Technologies segment. Strategic optimization efforts in our U.S. operations along with the exit of more commoditized business lines should enhance operating margins in future periods.”

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. Additionally, following the sale of its remaining U.S. land-based drilling rigs and the exit of the flowback and well testing service offering in the third quarter of 2024, the Company’s Well Site Services segment name was changed to the Completion and Production Services segment.

(See Segment Data and Adjusted Segment EBITDA tables below)

Offshore Manufactured Products

Offshore Manufactured Products reported revenues of $102.2 million, operating income of $19.3 million and Adjusted Segment EBITDA of $23.3 million in the third quarter of 2024, compared to revenues of $101.6 million, operating income of $14.4 million and Adjusted Segment EBITDA of $20.1 million reported in the second quarter of 2024. Adjusted Segment EBITDA margin was 23% in the third quarter of 2024 compared to 20% in the second quarter of 2024.

The segment’s reported operating income in the third and second quarters of 2024 included costs of $0.4 million and $1.5 million, respectively, associated with the consolidation of certain locations and personnel reductions.

Backlog totaled $313 million as of September 30, 2024. Third quarter bookings increased 11%, totaling $112 million, compared to bookings of $101 million in the second quarter – yielding a quarterly book-to-bill ratio of 1.1x and a year-to-date ratio of 1.0x.

Completion and Production Services

Completion and Production Services reported revenues of $40.1 million, an operating loss of $18.3 million and Adjusted Segment EBITDA of $5.4 million in the third quarter of 2024, compared to revenues of $46.4 million, an operating loss of $0.5 million and Adjusted Segment EBITDA of $8.5 million reported in the second quarter of 2024. Adjusted Segment EBITDA margin was 13% in the third quarter of 2024, compared to 18% in the second quarter of 2024.

During the third quarter of 2024, the segment implemented restructuring actions in its U.S. land-based businesses to reduce costs and improve future operating margins, which included the exit of two service offerings and the closure of five additional underperforming facilities as well as associated reductions in its U.S. workforce. As a result of these and other strategic actions previously taken, the segment’s operating loss for the third quarter of 2024 included $12.9 million of non-cash intangible and operating lease asset impairment charges, $2.2 million of costs associated with the exit of underperforming service locations and $0.8 million of other restructuring charges. During the second quarter of 2024, the segment recorded costs of $1.9 million associated with the consolidation and exit of underperforming service locations. Additionally, during the second and third quarters of 2024, the segment recorded costs totaling $2.3 million associated with the enforcement of certain patents related to its proprietary technologies.

The segment’s U.S. land-based service offerings and facilities exited during the third quarter of 2024 collectively generated revenues of $9.3 million and operating losses of $17.1 million in the current quarter, which included intangible and operating lease asset impairment charges of $12.9 million, facility closure and other charges totaling $2.2 million as well as depreciation and amortization expense of $1.3 million. During the first nine months of 2024, service offerings and facilities exited in 2024 collectively generated revenues of $35.8 million and operating losses of $24.0 million, which included intangible and operating lease asset impairment charges of $12.9 million, facility closure and other charges totaling $4.6 million as well as depreciation and amortization expense of $4.2 million.

Downhole Technologies

Downhole Technologies reported revenues of $32.0 million, an operating loss of $3.7 million and Adjusted Segment EBITDA of $1.1 million in the third quarter of 2024, compared to 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. Adjusted Segment EBITDA margin was 3% in the third quarter of 2024, compared to 8% in the second quarter of 2024.

During the third quarter of 2024, the segment implemented actions to reduce costs and improve future operating margins, which included the exit of an underperforming location as well as reductions in its U.S. workforce. The segment’s operating loss in the third quarter of 2024 included costs of $1.2 million associated with an operating lease asset impairment, workforce reductions and a customer bankruptcy.

Corporate

Corporate operating expenses in the third quarter of 2024 totaled $8.4 million.

Interest Expense, Net

Net interest expense totaled $1.8 million in the third quarter of 2024, which included $0.3 million of non-cash amortization of deferred debt issuance costs.

Income Taxes

During the third quarter of 2024, the Company recognized tax expense of $2.2 million on a pre-tax loss of $12.1 million, which included unfavorable changes in valuation allowances recorded against deferred tax assets and certain non-deductible expenses. The Company recognized a tax benefit of $0.7 million on pre-tax income of $0.6 million in the second quarter of 2024, which included favorable changes in valuation allowances recorded against deferred tax assets and certain non-deductible expenses.

Cash Flows

During the third quarter of 2024, cash flows provided by operations totaled $28.8 million and capital expenditures, net totaled $4.8 million. Net debt (total debt less cash and cash equivalents) was reduced by $20.5 million as a result.

The Company purchased $2.8 million of its common stock in the third quarter. As of September 30, 2024, the Company has repurchased $12.4 million of its common stock under a Board approved program. On October 24, 2024, the Company’s Board of Directors terminated the Company’s existing share repurchase program and replaced it with a new $50 million authorization which expires in October 2026.

Financial Condition

Cash on-hand totaled $46.0 million at September 30, 2024. No borrowings were outstanding under the Company’s asset-based revolving credit facility at September 30, 2024.

Conference Call Information

The call is scheduled for October 30, 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 Reports 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

Nine Months Ended

September 30, 2024

June 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Revenues:

Products

100,798

108,579

102,636

303,706

295,106

Services

73,550

77,804

91,653

224,287

278,911

174,348

186,383

194,289

527,993

574,017

Costs and expenses:

Product costs

79,167

82,503

80,188

236,807

231,524

Service costs

57,422

59,530

70,239

173,766

211,668

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

136,589

142,033

150,427

410,573

443,192

Selling, general and administrative expense

22,754

26,373

24,241

71,623

71,785

Depreciation and amortization expense

13,635

14,698

15,416

42,528

46,209

Impairment of goodwill

—

10,000

—

Impairments of intangible assets

10,787

—

10,787

—

Impairments of operating lease assets

2,579

—

2,579

—

Other operating (income) expense, net

(955

)

1,234

(1,985

)

(2,503

)

185,389

184,338

188,099

548,166

558,683

Operating income (loss)

(11,041

)

2,045

6,190

(20,173

)

15,334

Interest expense, net

(1,824

)

(2,061

)

(1,928

)

(5,986

)

(6,378

)

Other income, net

731

652

186

1,311

672

Income (loss) before income taxes

(12,134

)

636

4,448

(24,848

)

9,628

Income tax benefit (provision)

(2,215

)

665

(236

)

(1,574

)

(2,700

)

Net income (loss)

(14,349

)

1,301

4,212

(26,422

)

6,928

Net income (loss) per share:

Basic

(0.23

)

0.02

0.07

(0.42

)

0.11

Diluted

(0.23

)

0.02

0.07

(0.42

)

0.11

Weighted average number of common shares outstanding:

Basic

62,084

62,483

62,651

62,357

62,760

Diluted

62,084

62,704

63,060

62,357

63,135

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands)

September 30, 2024

December 31, 2023

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

45,984

47,111

Accounts receivable, net

182,536

203,211

Inventories, net

221,134

202,027

Prepaid expenses and other current assets

29,257

35,648

Total current assets

478,911

487,997

Property, plant, and equipment, net

267,388

280,389

Operating lease assets, net

21,601

21,970

Goodwill, net

70,439

79,867

Other intangible assets, net

129,866

153,010

Other noncurrent assets

25,936

23,253

Total assets

994,141

1,046,486

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current portion of long-term debt

634

627

Accounts payable

55,506

67,546

Accrued liabilities

39,978

44,227

Current operating lease liabilities

7,295

6,880

Income taxes payable

2,616

1,233

Deferred revenue

34,742

36,757

Total current liabilities

140,771

157,270

Long-term debt

124,643

135,502

Long-term operating lease liabilities

19,392

18,346

Deferred income taxes

5,291

7,717

Other noncurrent liabilities

19,238

18,106

Total liabilities

309,335

336,941

Stockholders’ equity:

Common stock

786

772

Additional paid-in capital

1,135,634

1,129,240

Retained earnings

258,496

284,918

Accumulated other comprehensive loss

(66,595

)

(69,984

)

Treasury stock

(643,515

)

(635,401

)

Total stockholders’ equity

684,806

709,545

Total liabilities and stockholders’ equity

994,141

1,046,486

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

Nine Months Ended September 30,

2024

2023

Cash flows from operating activities:

Net income (loss)

(26,422

)

6,928

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

Depreciation and amortization expense

42,528

46,209

Impairment of goodwill

10,000

—

Impairments of intangible assets

10,787

—

Impairments of operating lease assets

2,579

—

Stock-based compensation expense

6,408

5,157

Amortization of deferred financing costs

1,168

1,344

Deferred income tax benefit

(2,798

)

(66

)

Gains on disposals of assets

(2,956

)

(3,335

)

Gains on extinguishment of 4.75% convertible senior notes

(515

)

—

Other, net

(614

)

Changes in operating assets and liabilities:

Accounts receivable

21,173

29,538

Inventories

(18,406

)

(23,754

)

Accounts payable and accrued liabilities

(17,554

)

(17,515

)

Deferred revenue

(2,015

)

5,580

Other operating assets and liabilities, net

3,624

2,905

Net cash flows provided by operating activities

27,684

52,377

Cash flows from investing activities:

Capital expenditures

(23,309

)

(23,370

)

Proceeds from disposition of property and equipment

15,411

4,374

Other, net

(431

)

(120

)

Net cash flows used in investing activities

(8,329

)

(19,116

)

Cash flows from financing activities:

Revolving credit facility borrowings

22,678

35,693

Revolving credit facility repayments

(22,678

)

(35,693

)

Purchases of 4.75% convertible senior notes

(10,846

)

—

Repayment of 1.50% convertible senior notes

—

(17,315

)

Other debt and finance lease repayments

(481

)

(340

)

Payment of financing costs

(1,119

)

(101

)

Purchases of treasury stock

(5,149

)

(3,001

)

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

due to vesting of stock awards

(2,596

)

(1,948

)

Net cash flows used in financing activities

(20,191

)

(22,705

)

Effect of exchange rate changes on cash and cash equivalents

(291

)

330

Net change in cash and cash equivalents

(1,127

)

10,886

Cash and cash equivalents, beginning of period

47,111

42,018

Cash and cash equivalents, end of period

45,984

52,904

Cash paid (received) for:

Interest

4,206

4,353

Income taxes, net

2,695

(34

)

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA

(In Thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2024

June 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Revenues(1):

Offshore Manufactured Products

Project-driven:

Products

58,164

59,752

58,169

171,053

152,241

Services

32,754

31,024

30,391

89,011

79,867

90,918

90,776

88,560

260,064

232,108

Military and other products

11,316

10,780

7,510

30,583

23,114

Total Offshore Manufactured Products

102,234

101,556

96,070

290,647

255,222

Completion and Production Services

40,099

46,421

59,831

133,812

191,425

Downhole Technologies

32,015

38,406

38,388

103,534

127,370

Total revenues

174,348

186,383

194,289

527,993

574,017

Operating income (loss)(1):

Offshore Manufactured Products(2)

19,310

14,357

15,586

44,270

32,122

Completion and Production Services(3)

(18,267

)

(535

)

3,285

(19,221

)

14,983

Downhole Technologies(4)

(3,653

)

(1,141

)

(1,900

)

(16,873

)

(148

)

Corporate

(8,431

)

(10,636

)

(10,781

)

(28,349

)

(31,623

)

Total operating income (loss)

(11,041

)

2,045

6,190

(20,173

)

15,334

___________________

(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. Additionally, following the sale of its remaining U.S. land-based drilling rigs and the exit of the flowback and well testing service offerings in the third quarter of 2024, the Company’s Well Site Services segment name was changed to the Completion and Production Services segment.

(2)

Operating income for the three months ended September 30, 2024 and June 30, 2024, and the nine months ended September 30, 2024 included facility consolidation charges of $0.4 million, $1.5 million and $3.4 million, respectively, associated with the Offshore Manufactured Products segment’s consolidation and relocation of certain manufacturing and service locations and other cost reduction measures. Operating income for the three and nine months ended September 30, 2023 included facility consolidation charges of $1.6 million associated with the Offshore/Manufactured Products segment's consolidation and relocation of certain manufacturing and service locations.

(3)

Operating income (loss) for the three months ended September 30, 2024 and June 30, 2024, and the nine months ended September 30, 2024, included $15.9 million, $1.9 million and $18.5 million, respectively, in costs associated with consolidation and exit of certain underperforming locations. Additionally, during the three months ended September 30, 2024 and June 30, 2024, and the nine months ended September 30, 2024, the segment incurred $1.3 million, $1.0 million and $2.7 million, respectively, of costs associated with the defense of certain Completion and Production Services segment patents related to proprietary technologies.

(4)

Operating loss for the nine months ended September 30, 2024 included a non-cash goodwill impairment charge of $10.0 million, recognized in connection with the 2024 segment realignment. Additionally, during the three and nine months ended September 30, 2024, the segment incurred $0.6 million in costs associated primarily with the exit of an underperforming location.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL INFORMATION

ADJUSTED EBITDA (A)

(In Thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2024

June 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Net income (loss)

(14,349

)

1,301

4,212

(26,422

)

6,928

Interest expense, net

1,824

2,061

1,928

5,986

6,378

Income tax provision (benefit)

2,215

(665

)

236

1,574

2,700

Depreciation and amortization expense

13,635

14,698

15,416

42,528

46,209

Impairment of goodwill

—

10,000

—

Impairments of intangible assets

10,787

—

10,787

—

Impairments of operating lease assets

2,579

—

2,579

—

Facility consolidation/closure and other charges

4,840

4,426

1,649

11,775

1,649

Gains on extinguishment of 4.75% convertible senior notes

—

(515

)

—

(515

)

—

Adjusted EBITDA

21,531

21,306

23,441

58,292

63,864

________________

(A)

The term Adjusted EBITDA consists of net income (loss) plus net interest expense, taxes, depreciation and amortization expense, impairments of goodwill, intangible and operating lease assets, and facility consolidation/closure 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.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL INFORMATION

ADJUSTED SEGMENT EBITDA (B)

(In Thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2024

June 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Offshore Manufactured Products:

Operating income

19,310

14,357

15,586

44,270

32,122

Other income (expense), net

(20

)

314

Depreciation and amortization expense

3,631

4,247

4,405

11,571

12,555

Facility consolidation/closure and other charges

354

1,547

1,649

3,364

1,649

Adjusted Segment EBITDA

23,303

20,131

21,708

59,234

46,640

Completion and Production Services:

Operating income (loss)

(18,267

)

(535

)

3,285

(19,221

)

14,983

Other income, net

723

157

118

767

358

Depreciation and amortization expense

5,749

6,047

6,313

17,875

19,023

Impairments of intangible assets

10,787

—

10,787

—

Impairments of operating lease assets

2,092

—

2,092

—

Facility consolidation/closure and other charges

4,329

2,879

—

8,254

—

Adjusted Segment EBITDA

5,413

8,548

9,716

20,554

34,364

Downhole Technologies:

Operating loss

(3,653

)

(1,141

)

(1,900

)

(16,873

)

(148

)

Depreciation and amortization expense

4,121

4,255

4,546

12,646

14,161

Impairment of goodwill

—

10,000

—

Impairments of operating lease assets

487

—

487

—

Facility consolidation/closure and other charges

123

—

123

—

Adjusted Segment EBITDA

1,078

3,114

2,646

6,383

14,013

Corporate:

Operating loss

(8,431

)

(10,636

)

(10,781

)

(28,349

)

(31,623

)

Other income, net

—

515

—

515

—

Depreciation and amortization expense

134

149

152

436

470

Other charges

—

Gains on extinguishment of 4.75% convertible senior notes

—

(515

)

—

(515

)

—

Adjusted Segment EBITDA

(8,263

)

(10,487

)

(10,629

)

(27,879

)

(31,153

)

________________

(B)

The term Adjusted Segment EBITDA consists of operating income (loss) plus other income (expense), depreciation and amortization expense, impairments of goodwill, intangible and operating lease assets, and facility consolidation/closure and other charges, less gains on extinguishment of 2026 Notes. Adjusted Segment EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation from or as a substitute for operating income (loss) or cash flow measures prepared in accordance with GAAP or as a measure of profitability or liquidity. Additionally, Adjusted Segment EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Adjusted Segment EBITDA as supplemental disclosure because its management believes that Adjusted Segment 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 Segment EBITDA to compare and to monitor the performance of 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 Segment EBITDA to operating income (loss), which is the most directly comparable measure of financial performance calculated under GAAP.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL INFORMATION

ADJUSTED NET INCOME (LOSS), EXCLUDING CHARGES AND CREDITS (C) AND

ADJUSTED NET INCOME (LOSS) PER SHARE, EXCLUDING CHARGES AND CREDITS (D)

(In Thousands, Except Per Share Amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2024

June 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Net income (loss)

(14,349

)

1,301

4,212

(26,422

)

6,928

Impairment of goodwill

—

10,000

—

Impairments of intangible assets

10,787

—

10,787

—

Impairments of operating lease assets

2,579

—

2,579

—

Facility consolidation/closure and other charges

4,840

4,426

1,649

11,775

1,649

Gains on extinguishment of 4.75% convertible senior notes

—

(515

)

—

(515

)

—

Total adjustments, before taxes

18,206

3,911

1,649

34,626

1,649

Tax benefit

(1,161

)

(821

)

(346

)

(2,990

)

(346

)

Total adjustments, net of taxes

17,045

3,090

1,303

31,636

1,303

Adjusted net income, excluding charges and credits

2,696

4,391

5,515

5,214

8,231

Adjusted weighted average number of diluted common shares outstanding (E)

62,412

62,704

63,060

62,648

63,135

Adjusted diluted net income per share, excluding charges and credits (E)

0.04

0.07

0.09

0.08

0.13

___________________

(C)

Adjusted net income, excluding charges and credits consists of net income (loss) plus impairments of goodwill, intangible and operating lease assets, and facility consolidation/closure and other charges, less gains on extinguishment of the 2026 Notes. Adjusted net income, excluding charges and credits is not a measure of financial performance under GAAP and should not be considered in isolation from or as a substitute for net income (loss) as prepared in accordance with GAAP. The Company has included adjusted net income, excluding charges and credits as a supplemental disclosure because its management believes that adjusted net income, excluding charges and credits provides investors a helpful measure for comparing its operating performance with previous and subsequent periods.

(D)

Adjusted net income per share, excluding charges and credits is calculated as adjusted net income, excluding charges and credits divided by the weighted average number of common shares outstanding. Adjusted net income per share, excluding charges and credits is not a measure of financial performance under GAAP and should not be considered in isolation from or as a substitute for net income (loss) per share as prepared in accordance with GAAP. The Company has included adjusted net income per share, excluding charges and credits as a supplemental disclosure because its management believes that adjusted net income per share, excluding charges and credits provides investors a helpful measure for comparing its operating performance with previous and subsequent periods.

(E)

The calculation of diluted adjusted earnings per share for the three and nine months ended September 30, 2024 included 328 thousand shares and 292 thousand shares, respectively, issuable pursuant to outstanding performance share units.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030426442/en/

Lloyd A. Hajdik Oil States International, Inc. Executive Vice President, Chief Financial Officer and Treasurer (713) 652-0582

Oil States (NYSE:OIS)
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