What changed in this filing

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Item 1. Financial Statements

2022-04-29 compared with 2021-11-01 · 152 added, 371 removed, 383 unchanged (58% of the section changed)

2 unchanged sentences

(In Thousands, Except Per Share Amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Products $ 85,761 $ 61,445

7 unchanged sentences

Depreciation and amortization expense 17,817 21,520

Impairments of goodwill — — — 406,056

Impairments of fixed and lease assets — — 3,444 8,190

Other operating income, net ( 275 ) ( 652 ) ( 714 ) ( 679 )

Impairments of fixed assets — 650

Other operating (income) expense, net 126 ( 354 )

168,380 145,351

3 unchanged sentences

Loss before income taxes ( 5,983 ) ( 18,127 )

Income tax benefit 3,529 7,676 9,072 54,060

Income tax (provision) benefit ( 3,441 ) 2,317

Net loss $ ( 9,424 ) $ ( 15,810 )

10 unchanged sentences

(In Thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Net loss $ ( 9,424 ) $ ( 15,810 )

7 unchanged sentences

(In Thousands, Except Share Amounts)

September 30,

2022 December 31, 2021

39 unchanged sentences

(In Thousands)

Three Months Ended September 30, 2021 Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stockholders'

Balance, June 30, 2021 $ 739 $ 1,101,959 $ 314,479 $ ( 69,754 ) $ ( 625,489 ) $ 721,934

Net loss — — ( 13,042 ) — — ( 13,042 )

Currency translation adjustments (excluding intercompany advances) — — — ( 3,273 ) — ( 3,273 )

Currency translation adjustments on intercompany advances — — — ( 2,565 ) — ( 2,565 )

Stock-based compensation expense:

Restricted stock — 1,548 — — — 1,548

Surrender of stock to settle taxes on restricted stock awards — — — — ( 95 ) ( 95 )

Adoption of ASU 2020-06 — — — — — —

Balance, September 30, 2021 $ 739 $ 1,103,507 $ 301,437 $ ( 75,592 ) $ ( 625,584 ) $ 704,507

Nine Months Ended September 30, 2021 Common

Three Months Ended March 31, 2022 Common

Stock Additional

11 unchanged sentences

Surrender of stock to settle taxes on restricted stock awards — — — — ( 990 ) ( 990 )

Adoption of ASU 2020-06 — ( 25,683 ) 16,233 — — ( 9,450 )

Balance, September 30, 2021 $ 739 $ 1,103,507 $ 301,437 $ ( 75,592 ) $ ( 625,584 ) $ 704,507

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In Thousands)

Three Months Ended September 30, 2020 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Balance, June 30, 2020 $ 733 $ 1,117,771 $ 368,043 $ ( 83,767 ) $ ( 623,911 ) $ 778,869

Net loss — — ( 19,969 ) — — ( 19,969 )

Currency translation adjustments (excluding intercompany advances) — — — 4,624 — 4,624

Currency translation adjustments on intercompany advances — — — ( 1,267 ) — ( 1,267 )

Stock-based compensation expense:

Restricted stock — 2,089 — — — 2,089

Surrender of stock to settle taxes on restricted stock awards — — — — ( 8 ) ( 8 )

Balance, September 30, 2020 $ 733 $ 1,119,860 $ 348,074 $ ( 80,410 ) $ ( 623,919 ) $ 764,338

Nine Months Ended September 30, 2020 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Balance, March 31, 2022 $ 746 $ 1,106,963 $ 272,143 $ ( 65,170 ) $ ( 626,574 ) $ 688,108

Three Months Ended March 31, 2021 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Balance, December 31, 2020 $ 733 $ 1,122,945 $ 329,327 $ ( 71,385 ) $ ( 623,989 ) $ 757,631

5 unchanged sentences

Surrender of stock to settle taxes on restricted stock awards — — — — ( 1,500 ) ( 1,500 )

Balance, September 30, 2020 $ 733 $ 1,119,860 $ 348,074 $ ( 80,410 ) $ ( 623,919 ) $ 764,338

Adoption of ASU 2020-06 — ( 25,683 ) 16,233 — — ( 9,450 )

Balance, March 31, 2021 $ 738 $ 1,100,077 $ 329,750 $ ( 72,914 ) $ ( 625,489 ) $ 732,162

The accompanying notes are an integral part of these financial statements.

3 unchanged sentences

(In Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net loss $ ( 9,424 ) $ ( 15,810 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense 17,817 21,520

Impairments of goodwill — 406,056

Impairments of inventories 2,113 31,151

Impairments of fixed and lease assets 3,444 8,190

Impairments of fixed assets — 650

Stock-based compensation expense 1,835 2,820

2 unchanged sentences

Gains on extinguishment of 1.50 % convertible senior notes

( 4,022 ) ( 10,721 )

Gains on disposals of assets ( 543 ) ( 307 )

6 unchanged sentences

Other operating assets and liabilities, net 1,142 1,026

Net cash flows provided by operating activities 20,572 131,142

Net cash flows used in operating activities ( 10,735 ) ( 8,417 )

Cash flows from investing activities:

18 unchanged sentences

Cash and cash equivalents, end of period $ 39,158 $ 54,513

Cash paid (received) for:

Cash paid for:

Interest $ 522 $ 1,842

3 unchanged sentences

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Organization and Basis of Presentation

4 unchanged sentences

Results for the interim periods are not necessarily indicative of results for the full year.

Certain prior-year amounts in the Company's unaudited condensed consolidated financial statements have been reclassified to conform to the current year presentation.

As further discussed in Note 13, "Commitments and Contingencies," the impact of the Coronavirus Disease 2019 ("COVID-19") pandemic and the related economic, business and market disruptions continues to evolve and its future effects remain uncertain.

As further discussed in Note 11, "Commitments and Contingencies," the impact of the Coronavirus Disease 2019 ("COVID-19") pandemic and the related economic, business and market disruptions continue to evolve and their future effects remain uncertain.

The actual impact of these developments on the Company will depend on numerous factors, many of which are beyond management's control and knowledge.

It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company.

During 2020 and the first nine months of 2021, the Company recorded asset impairments, severance and restructuring charges in response to these developments as further discussed in Note 3, "Asset Impairments and Other Restructuring Items." As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

During 2020 and 2021, the Company recorded asset impairments, severance and restructuring charges in response to these developments as further discussed in Note 2, "Asset Impairments and Other Restructuring Items." As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

1 unchanged sentence

Actual results could materially differ from those estimates.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, which are adopted by the Company as of the specified effective date.

Management believes that recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.

The financial statements included in this report should be read in conjunction with the Company's audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2021.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB"), which are adopted by the Company as of the specified effective date.

Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.

In August 2020, the FASB issued updated guidance to simplify the accounting for convertible instruments and contracts in an entity's own equity (referred to as "ASU 2020-06").

This guidance eliminated the requirement that the carrying value of convertible debt instruments, such as the Company's 1.50 % convertible senior notes due 2023 (the "2023 Notes"), be allocated between debt and equity components.

As permitted under the standard, the Company adopted the guidance on January 1, 2021, using the modified retrospective transition method.

Adoption of the standard resulted in a $ 12.2 million increase in the net carrying value of the 2023 Notes, a $ 2.7 million decrease in deferred income taxes and a $ 9.5 million net decrease in stockholders' equity.

The effective interest rate associated with the 2023 Notes after adoption decreased from approximately 6 % to approximately 2 %, which compares to the contractual interest rate of 1.50 %.

As further discussed in Note 5, "Long-term Debt," the Company issued $ 135.0 million principal amount of its 4.75 % convertible senior notes due 2026 (the "2026 Notes") on March 19, 2021, which have been accounted for in accordance with the provisions of ASU 2020-06.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Asset Impairments and Other Restructuring Items

In March of 2020, the spot price of West Texas Intermediate ("WTI") crude oil declined over 50 % in response to actual and forecasted reductions in global demand for crude oil due to the COVID-19 pandemic, coupled with announcements by Saudi Arabia and Russia of plans to increase crude oil production.

Demand for most of the Company's products and services depends substantially on the level of capital expenditures by the oil and natural gas industry, and these conditions caused rapid reductions to most of the Company's customers' drilling, completion and production activities and their related spending on products and services, particularly those supporting activities in the U.S.

shale play regions.

While the prices of and demand for crude oil have increased significantly since reaching record low levels in April 2020, uncertainty remains regarding the timing of demand recovery to pre-COVID-19 levels and operators' willingness to invest in U.S.

land-based drilling, completion and production activities given regulatory pressures around environmental, social and governance considerations.

Following these March 2020 events, the Company immediately implemented significant cost reduction initiatives.

The Company also assessed the carrying value of goodwill, long-lived and other assets based on the industry outlook regarding overall demand for and pricing of its products and services, other market considerations and the financial condition of the Company's customers.

As a result of these events, actions and assessments, the Company recorded the following charges during the first quarter of 2020 (in thousands):

Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

First quarter 2020

Impairments of:

$ 86,500 $ 192,502 $ 127,054 $ — $ 406,056 $ 19,600 $ 386,456

Fixed assets — — 5,198 — 5,198 1,092 4,106

Inventories (Note 4)

16,249 — 8,981 — 25,230 4,736 20,494

Severance and restructuring costs 112 — 548 — 660 139 521

During the second and third quarters of 2020, the Company further reduced its workforce and closed additional facilities in the United States and continued to assess the carrying value of its assets based on the industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):

Offshore/ Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

Second quarter 2020

Impairments of fixed assets $ — $ — $ 2,992 $ — $ 2,992 $ 628 $ 2,364

Severance and restructuring costs 322 1,315 3,544 216 5,397 1,133 4,264

Third quarter 2020

Impairments of inventories (Note 4)

$ — $ 5,921 $ — $ — $ 5,921 $ 1,243 $ 4,678

Severance and restructuring costs 288 — — — 288 60 228

As demand for most of the Company's products and services depends substantially on the level of capital expenditures by the oil and natural gas industry, these conditions caused rapid reductions to most of the Company's customers' drilling, completion and production activities and their related spending on the Company's products and services, particularly those supporting activities in the U.S.

shale play regions, until the supply/demand imbalances eased.

Following these March 2020 events, the Company immediately implemented significant cost reduction initiatives, which continued into 2021.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

During the first nine months of 2021, the Company continued its restructuring efforts, closed additional facilities in the United States and continued to assess the carrying value of its assets based on management actions and the industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):

Offshore/ Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

First quarter 2021

Impairments of fixed assets $ — $ — $ 650 $ — $ 650 $ 137 $ 513

Severance and restructuring costs 282 275 1,306 1,555 3,418 717 2,701

Second quarter 2021

Impairments of operating lease assets $ — $ — $ 2,794 $ — $ 2,794 $ 587 $ 2,207

Severance and restructuring costs (1)

— 203 2,351 — 2,554 536 2,018

Third quarter 2021

Impairment of inventories (Note 4)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In this regard, during the first quarter of 2021, the Company continued its restructuring efforts, closed additional facilities in the United States and continued to assess the carrying value of its assets based on management actions and the industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):

Offshore/ Manufactured Products Well Site Services Downhole Technologies Corporate Pre-tax Total Tax After-tax Total

Impairments of fixed assets (Note 3)

$ — $ 650 $ — $ — $ 650 $ 137 $ 513

Severance and restructuring costs 282 1,306 275 1,555 3,418 717 2,701

____________________

(1) Includes recognition of $ 1.9 million in additional lease-related liabilities associated with the exit of a long-term lease supporting the Well Site Services segment.

Additionally, during the three and nine months ended September 30, 2021, the Company recognized $ 1.2 million and $ 8.8 million, respectively, in aggregate reductions to payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") employee retention credit program.

The Company continues to evaluate any and all benefits potentially available to it under the CARES Act.

Goodwill is allocated to each reporting unit based on acquisitions made by the Company and is assessed for impairment annually and when an event occurs or circumstances change that indicate the carrying amounts may not be recoverable.

If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recorded.

The Company had three reporting units – Offshore/Manufactured Products, Downhole Technologies and Well Site Services – whose goodwill balances totaled $ 482.3 million as of December 31, 2019.

Given the significance of the March 2020 events described above, the Company performed a quantitative assessment of goodwill for impairment as of March 31, 2020.

This interim assessment indicated that the fair value of each of the reporting units was less than their respective carrying amounts due to, among other factors, the significant decline in the Company's stock price (and that of its peers) and reduced growth rate expectations given weak energy market conditions resulting from the demand destruction caused by the global response to the COVID-19 pandemic.

In addition, the estimated returns required by market participants increased materially in the Company's March 31, 2020 assessment from the assessment performed as of December 1, 2019, resulting in higher discount rates used in the discounted cash flow analysis.

Management utilizes, depending on circumstances, a combination of valuation methodologies including a market approach and an income approach, as well as guideline public company comparables.

The fair values of the Company's reporting units were determined using significant unobservable inputs (Level 3 fair value measurements).

Based on this quantitative assessment as of March 31, 2020, the Company concluded that goodwill recorded in the Downhole Technologies and Well Site Services segments was fully impaired while goodwill recorded in the Offshore/Manufactured Products segment was partially impaired.

The Company therefore recognized non-cash goodwill impairment charges totaling $ 406.1 million in the first quarter of 2020, as presented in further detail in the table above.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The Company performed its annual quantitative assessment of goodwill as of December 1, 2020, which indicated that the fair value of the Offshore/Manufactured Products segment was greater than its carrying amount and no additional provision for impairment was required.

The Company's remaining goodwill within the segment totaled approximately $ 76.5 million as of September 30, 2021 and December 31, 2020.

Long-lived Assets

The Company also assesses the carrying value of long-lived assets, including property, plant and equipment, operating lease assets and other intangible assets held by each of its segments (reporting units).

As a result of the March 2020 assessment, the Company concluded that certain drilling-related property and equipment held by the Well Site Services segment was impaired and recognized a non-cash fixed asset impairment charge of $ 5.2 million in the first quarter of 2020.

During the nine months ended September 30, 2021, the Well Site Services segment recognized non-cash fixed and operating lease asset impairment charges of $ 3.4 million associated with the closure of additional facilities coupled with other management actions.

During the nine months ended September 30, 2021, the segment also recorded an additional $ 1.9 million charge associated with the exit of a leased facility.

Should, among other events and circumstances, global economic and industry conditions deteriorate, the COVID-19 pandemic business and market disruptions continue, the outlook for future operating results and cash flow for any of the Company's segments decline, income tax rates increase or regulations change, climate and environmental regulations change, costs of equity or debt capital increase, valuations for comparable public companies or comparable acquisition valuations decrease, or management implement strategic decisions based on industry conditions, the Company may need to recognize additional impairment losses in future periods.

Additionally, during the first quarter of 2021, the Company recognized $ 4.8 million in aggregate reductions to payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") employee retention credit program.

Should, among other events and circumstances, the ongoing war between Russia and Ukraine escalate or spread, global economic and industry conditions deteriorate, the COVID-19 pandemic business, supply chain and market disruptions worsen, the outlook for future operating results and cash flow for any of the Company's segments decline, income tax rates increase or regulations change, climate and environmental regulations or rules change, costs of equity or debt capital increase, valuation for comparable public companies or comparable acquisition valuations decrease, or management implements strategic decisions based on industry conditions, the Company may need to recognize additional impairment losses and/or other costs in future periods.

Details of Selected Balance Sheet Accounts

Additional information regarding selected balance sheet accounts as of September 30, 2021 and December 31, 2020 is presented below (in thousands):

September 30,

2021 December 31,

Additional information regarding selected balance sheet accounts as of March 31, 2022 and December 31, 2021 is presented below (in thousands):

March 31, 2022 December 31, 2021

Accounts receivable, net:

7 unchanged sentences

Allowance for doubtful accounts as a percentage of total accounts receivable 2 % 2 %

September 30,

2021 December 31,

March 31, 2022 December 31, 2021

Deferred revenue (contract liabilities) $ 47,560 $ 43,236

As of September 30, 2021, accounts receivable, net in the United States and the United Kingdom represented 77 % and 12 %, respectively, of the total.

No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of September 30, 2021.

For the nine months ended September 30, 2021, the $ 13.4 million net decrease in contract assets was primarily attributable to $ 34.6 million transferred to accounts receivable, which was partially offset by $ 21.1 million in revenue recognized during the period.

Deferred revenue (contract liabilities) decreased by $ 0.9 million in the first nine months of 2021, primarily reflecting the recognition of $ 6.1 million of revenue that was deferred at the beginning of the period, partially offset by $ 5.3 million in new customer billings which were not recognized as revenue during the period.

As of March 31, 2022, accounts receivable, net in the United States and the United Kingdom represented 78 % and 12 %, respectively, of the total.

No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of March 31, 2022.

For the three months ended March 31, 2022, the $ 0.2 million net increase in contract assets was attributable to $ 15.3 million in revenue recognized during the period, which was substantially offset by $ 15.1 million transferred to accounts receivable.

Deferred revenue (contract liabilities) increased by $ 4.3 million in the first three months of 2022, reflecting $ 10.9 million in new customer billings which were not recognized as revenue during the period, offset by the recognition of $ 6.6 million of revenue that was deferred at the beginning of the period.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following provides a summary of activity in the allowance for doubtful accounts for the nine months ended September 30, 2021 and 2020 (in thousands):

Nine Months Ended September 30,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following provides a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

Allowance for doubtful accounts – January 1 $ 4,471 $ 8,304

1 unchanged sentence

Write-offs ( 635 ) ( 116 )

Other 136 1,158

Allowance for doubtful accounts – September 30 $ 6,260 $ 10,200

September 30,

Allowance for doubtful accounts – March 31 $ 4,779 $ 8,545

2022 December 31,

6 unchanged sentences

$ 180,886 $ 168,573

The Company recorded impairment charges totaling $ 25.2 million in the first quarter of 2020 to reduce the carrying value of inventories to their estimated net realizable value following the March 2020 decline in crude oil prices, which reduced the near-term utility of certain goods within the Offshore/Manufactured Products and Well Site Services segments.

During the third quarter of 2020, the Company recorded an impairment charge of $ 5.9 million to reduce the carrying value of inventories within the Downhole Technologies segment to their estimated net realizable value based on changes in expectations regarding the near-term utility, customer demand and market pricing of certain goods.

The Company recorded an impairment charge of $ 2.1 million in the third quarter of 2021 to reduce the carrying value of inventories within the Downhole Technologies segment to their estimated net realizable value based primarily on management's decision to exit a product offering.

September 30,

2022 December 31,

Property, plant and equipment, net:

Land $ 33,622 $ 34,968

Buildings and leasehold improvements 260,772 267,072

Machinery and equipment 240,302 239,986

Completion-related rental equipment 504,890 507,755

Office furniture and equipment 32,936 35,767

Vehicles 75,119 81,607

Construction in progress 8,059 7,207

Total property, plant and equipment 1,155,700 1,174,362

Property, plant and equipment $ 1,140,743 $ 1,151,533

Accumulated depreciation ( 810,625 ) ( 812,950 )

$ 330,118 $ 338,583

For the three months ended September 30, 2021 and 2020, depreciation expense was $ 14.7 million and $ 18.0 million, respectively.

Depreciation expense was $ 46.7 million and $ 56.6 million for the nine months ended September 30, 2021 and 2020, respectively.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

September 30, 2021 December 31, 2020

For the three months ended March 31, 2022 and 2021, depreciation expense was $ 12.7 million and $ 16.4 million, respectively.

During the first quarter of 2021, the Well Site Services segment recognized non-cash impairment charges of $ 0.7 million to reduce the carrying value of certain of the segment's fixed assets to their estimated realizable value.

March 31, 2022 December 31, 2021

Amount Accumulated

5 unchanged sentences

Patents/Technology/Know-how 78,815 34,679 44,136 78,821 33,151 45,670

Noncompete agreements — — — 16,044 14,742 1,302

Tradenames and other 53,682 15,946 37,736 53,708 15,179 38,529

$ 301,299 $ 120,660 $ 180,639 $ 300,813 $ 115,064 $ 185,749

For the three months ended September 30, 2021 and 2020, amortization expense was $ 4.9 million and $ 6.2 million, respectively.

Amortization expense was $ 15.4 million and $ 18.7 million for the nine months ended September 30, 2021 and 2020, respectively.

September 30,

For the three months ended March 31, 2022 and 2021, amortization expense was $ 5.2 million and $ 5.2 million, respectively.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2022 December 31,

5 unchanged sentences

$ 30,288 $ 32,889

September 30,

2022 December 31,

7 unchanged sentences

$ 41,541 $ 43,401

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Long-term Debt

As of September 30, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):

September 30,

As of March 31, 2022 and December 31, 2021, long-term debt consisted of the following (in thousands):

2022 December 31,

1 unchanged sentence

2026 Notes (2)

131,506 131,291

2023 Notes (3)

6 unchanged sentences

____________________

(1) Presented net of $ 0.6 million of unamortized deferred financing costs as of December 31, 2020.

Unamortized deferred financing costs of $ 2.9 million as of September 30, 2021 are presented in Other noncurrent assets.

(2) The outstanding principal amount of the 2026 Notes was $ 135.0 million as of September 30, 2021.

(3) The outstanding principal amount of the 2023 Notes was $ 26.0 million and $ 157.4 million as of September 30, 2021 and December 31, 2020, respectively.

(1) Unamortized deferred financing costs of $ 2.5 million and $ 2.7 million as of March 31, 2022 and December 31, 2021, respectively, are presented in other noncurrent assets.

(2) The outstanding principal amount of the 2026 Notes was $ 135.0 million as of March 31, 2022 and December 31, 2021.

(3) The outstanding principal amount of the 2023 Notes was $ 26.0 million as of March 31, 2022 and December 31, 2021.

Revolving Credit Facilities

On February 10, 2021, the Company entered into a senior secured credit facility with certain lenders, which provides for a $ 125.0 million asset-based revolving credit facility (the "ABL Facility") under which credit availability is subject to a borrowing base calculation.

Concurrent with entering into this facility, the Company's former senior secured revolving credit facility (discussed below) was terminated.

On March 16, 2021, the Company entered into an amendment to the ABL Facility that permitted the Company to incur the indebtedness represented by the 2026 Notes.

Concurrent with entering into this facility, the Company's former senior secured revolving credit facility was terminated.

On March 16, 2021, the Company entered into an amendment to the ABL Facility that permitted the Company to incur the indebtedness represented by the 2026 Notes discussed below.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The ABL Facility is governed by a credit agreement, as amended, with Wells Fargo Bank, National Association, as administrative agent and the lenders and other financial institutions from time to time party thereto (the "ABL Agreement").

5 unchanged sentences

Quarterly, the Company must also pay a commitment fee of 0.375 % to 0.50 % per annum, based on unused commitments under the ABL Agreement.

The ABL Agreement places restrictions on the Company's ability to incur additional indebtedness, grant liens on assets, pay dividends or make distributions on equity interests, dispose of assets, make investments, repay other indebtedness (including the 2023 Notes and the 2026 Notes), engage in mergers, and other matters, in each case, subject to certain exceptions.

The ABL Agreement contains customary default provisions, which, if triggered, could result in acceleration of all amounts then outstanding.

The ABL Agreement places restrictions on the Company's ability to incur additional indebtedness, grant liens on assets, pay dividends or make distributions on equity interests, dispose of assets, make investments, repay other indebtedness (including the 2023 Notes and the 2026 Notes discussed below), engage in mergers, and other matters, in each case, subject to certain exceptions.

The ABL Agreement contains customary default provisions, which, if triggered, could result in acceleration of repayment of all amounts then outstanding.

The ABL Agreement also requires the Company to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 for specified periods of time:

2 unchanged sentences

or if an event of default has occurred and is continuing.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

As of September 30, 2021, the Company had $ 16.5 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of September 30, 2021 was $ 61.4 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit.

As of September 30, 2021, the Company was in compliance with its debt covenants under the ABL Agreement.

Former Revolving Credit Facility

Until its termination on February 10, 2021, the Company's former senior secured revolving credit facility was governed by a credit agreement which was scheduled to mature on January 30, 2022.

On June 17, 2020, the Company entered into an omnibus amendment to the credit agreement, under which lender commitments were reduced in exchange for the suspension of certain financial covenants through March 30, 2021.

The following provides a summary of the more significant provisions of the Company's former revolving credit facility.

Prior to June 17, 2020 From June 17, 2020 to February 10, 2021

Lender commitments $ 350 million $ 200 million

Interest rate on outstanding borrowings (1) :

LIBOR based borrowings LIBOR plus a margin of 1.75 % to 3.00 %

LIBOR plus a margin of 2.50 % to 3.75 %

Base-rate based borrowings Base rate plus a margin of 0.75 % to 2.00 %

Base rate plus a margin of 1.50 % to 2.75 %

Commitment fees (2)

0.25 % to 0.50 %

0.375 % to 0.50 %

____________________

(1) Based on the ratio of the Company's total net funded debt to consolidated EBITDA.

(2) Based on unused commitments under the credit agreement.

On March 19, 2021, the Company issued $ 135.0 million aggregate principal amount of the 2026 Notes pursuant to an indenture, dated as of March 19, 2021 (the "2026 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

As of March 31, 2022, the Company had $ 19.6 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of March 31, 2022 was $ 51.0 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit.

As of March 31, 2022, the Company was in compliance with its debt covenants under the ABL Agreement.

On March 19, 2021, the Company issued $ 135.0 million aggregate principal amount of its 4.75 % senior convertible notes (the "2026 Notes") pursuant to an indenture, dated as of March 19, 2021 (the "2026 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

Computershare Trust Company, National Association, assumed the role of trustee as of March 1, 2022.

Net proceeds from the 2026 Notes offering, after deducting issuance costs, totaled $ 130.6 million.

3 unchanged sentences

Additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture.

The initial conversion rate is 95.3516 shares of the Company's common stock per $1,000 principal amount of 2026 Notes (equivalent to an initial conversion price of approximately $ 10.49 per share of common stock).

The initial conversion rate is 95.3516 shares of the Company's common stock per $1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of approximately $ 10.49 per share of common stock).

The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2026 Indenture.

The Company's intent is to repay the principal amount of the 2026 Notes in cash and settle the conversion feature in shares of the Company's common stock.

Noteholders may convert their 2026 Notes, at their option, only in the following circumstances:

(1) if the last reported sale price per share of the Company's common stock exceeds 130 % of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the "measurement period") in which the trading price per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of the Company's common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on the Company's common stock, as described in the 2026 Indenture;

or (4) if the Company calls the 2026 Notes for redemption, or at any time from, and including, January 1, 2026 until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares of common stock, at the Company's election, based on the applicable conversion rate(s).

If the Company elects to deliver cash or a combination of cash and shares of common stock, then the consideration due upon conversion will be based on a defined observation period.

As of March 31, 2022, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The 2026 Notes will be redeemable, in whole or in part, at the Company's option on or after April 6, 2024, at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of common stock exceeds 130 % of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice.

If specified change in control events involving the Company as defined in the 2026 Indenture occur, then noteholders may require the Company to repurchase their 2026 Notes at a cash repurchase price equal to the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest.

Additionally, the 2026 Indenture contains certain events of default, including certain defaults by the Company with respect to other indebtedness of at least $ 40.0 million.

As of September 30, 2021, none of the conditions allowing holders of the 2026 Notes to convert, or requiring the Company to repurchase the 2026 Notes, had been met.

On January 30, 2018, the Company issued $ 200.0 million aggregate principal amount of the 2023 Notes, pursuant to an indenture, dated as of January 30, 2018 (the "2023 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On January 30, 2018, the Company issued $ 200.0 million aggregate principal amount of its 1.50 % senior convertible notes (the "2023 Notes") pursuant to an indenture, dated as of January 30, 2018 (the "2023 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

Computershare Trust Company, National Association, assumed the role of trustee as of March 1, 2022.

The 2023 Notes bear interest at a rate of 1.50 % per year and will mature on February 15, 2023, unless earlier repurchased, redeemed or converted.

The initial conversion rate is 22.2748 shares of the Company's common stock per $1,000 principal amount of 2023 Notes (equivalent to an initial conversion price of approximately $ 44.89 per share of common stock).

The initial conversion rate is 22.2748 shares of the Company's common stock per $1,000 principal amount of the 2023 Notes (equivalent to an initial conversion price of approximately $ 44.89 per share of common stock).

The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2023 Indenture.

The Company's intent is to repay the principal amount of the Notes in cash and settle the conversion feature in shares of the Company's common stock.

The initial carrying amount of the 2023 Notes recorded in the consolidated balance sheet was less than their principal amount, in accordance with then-applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that did not have a conversion feature.

The Company recorded the value of the conversion feature as a debt discount, which was amortized as interest expense over the term of the 2023 Notes, with a similar amount allocated to additional paid-in capital.

As a result of this amortization, prior to the Company's adoption of the ASU 2020-06 revision to accounting guidance for convertible instruments effective January 1, 2021, the interest expense recognized on the 2023 Notes for accounting purposes was based on an effective interest rate of approximately 6 %, which was greater than the cash interest the Company is obligated to pay.

See Note 2, "Recent Accounting Pronouncement," for discussion of ASU 2020-06, which changed the Company's method of accounting for the 2023 Notes upon adoption.

The following table provides details with respect to the carrying amount of the 2023 Notes in the consolidated balance sheets as of September 30, 2021 and December 31, 2020 (in thousands):

September 30,

2021 December 31,

Principal amount of the liability component $ 25,969 $ 157,369

Unamortized discount — 12,308

Unamortized issuance costs 204 1,819

Net carrying amount of the liability component $ 25,765 $ 143,242

Net carrying amount of the equity component n.a.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following table presents the Company's purchases of outstanding 2023 Notes during the three and nine months ended September 30, 2021 and 2020, with non-cash gains included within other income, net (in thousands):

The Company's intent is to repay the principal amount of the Notes in cash and settle the conversion feature, if any, in shares of the Company's common stock.

As of March 31, 2022, $ 26.0 million principal amount of the 2023 Notes remained outstanding.

The following table provides a summary of the Company's purchases of outstanding 2023 Notes during the three months ended March 31, 2021, with non-cash gains reported within other income, net (in thousands):

Principal Amount Carrying Value of Liability Cash Paid Non-cash Gains Recognized

Three Months Ended September 30,

2021 $ — $ — $ — $ —

2020 17,200 15,425 9,483 5,942

Nine Months Ended September 30,

2021 $ 131,400 $ 129,974 $ 125,952 $ 4,022

Three Months Ended March 31,

2021 $ 125,000 $ 123,637 $ 120,000 $ 3,637

Since December 31, 2018, the Company has purchased a cumulative $ 174.0 million principal amount of the outstanding 2023 Notes for $ 152.8 million in cash.

Promissory Note

In connection with the 2018 acquisition of GEODynamics (the "GEODynamics Acquisition"), the Company issued a $ 25.0 million promissory note that bears interest at 2.50 % per annum and was scheduled to mature on July 12, 2019.

In connection with the 2018 acquisition of GEODynamics, Inc., (such company, "GEODynamics" and such acquisition, the "GEODynamics Acquisition"), the Company issued a $ 25.0 million promissory note that bears interest at 2.50 % per annum (subject to adjustment) and was scheduled to mature on July 12, 2019.

Payments due under the promissory note are subject to set-off, in full or in part, against certain indemnification claims related to matters occurring prior to the GEODynamics Acquisition.

1 unchanged sentence

The Company has incurred settlement costs and expenses of $ 7.5 million related to such indemnification claims, and believes that the maturity date of such note is extended until the resolution of such indemnity claims and that it is permitted to set-off the principal amount owed by the amount of such costs and expenses.

Accordingly, the Company has reduced the carrying amount of such note in the consolidated balance sheet to $ 17.5 million as of September 30, 2021, which is its current best estimate of what is owed after set-off for such indemnification matters.

Accordingly, the Company has reduced the carrying amount of such note in the consolidated balance sheet to $ 17.5 million as of March 31, 2022, which is its current best estimate of what is owed after set-off for such indemnification matters.

See Note 11, "Commitments and Contingencies."

2 unchanged sentences

The Company believes that the carrying values of these instruments, other than the 2023 Notes and 2026 Notes, on the accompanying consolidated balance sheets approximate their fair values.

The estimated fair value of the 2023 Notes as of September 30, 2021 was $ 24.6 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 26.0 million.

The estimated fair value of the 2026 Notes as of September 30, 2021 was $ 132.9 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 135.0 million.

The estimated fair value of the 2023 Notes as of March 31, 2022 was $ 24.9 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 26.0 million.

The estimated fair value of the 2026 Notes as of March 31, 2022 was $ 146.7 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 135.0 million.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stockholders' Equity

The following table provides details with respect to the changes to the number of shares of common stock, $ 0.01 par value, outstanding during the first nine months of 2021 (in thousands):

Common and Preferred Stock

The following table provides details with respect to the changes to the number of shares of common stock, $ 0.01 par value, outstanding during the first three months of 2022 (in thousands):

Shares of common stock outstanding – December 31, 2021 61,378

Restricted stock awards, net of forfeitures 674

Shares withheld for taxes on vesting of stock awards and transferred to treasury ( 238 )

Shares of common stock outstanding – September 30, 2021 61,376

As of September 30, 2021 and December 31, 2020, the Company had 25,000,000 shares of preferred stock, $ 0.01 par value, authorized, with no shares issued or outstanding.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Shares withheld for taxes on vesting of stock awards ( 161 )

Shares of common stock outstanding – March 31, 2022 61,891

As of March 31, 2022 and December 31, 2021, the Company had 25,000,000 shares of preferred stock, $ 0.01 par value, authorized, with no shares issued or outstanding.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, reported as a component of stockholders' equity, increased from $ 71.4 million at December 31, 2020 to $ 75.6 million at September 30, 2021, due to changes in currency exchange rates.

Accumulated other comprehensive loss is primarily related to fluctuations in currency exchange rates compared to the U.S.

Accumulated other comprehensive loss, reported as a component of stockholders' equity, primarily relates to fluctuations in currency exchange rates against the U.S.

dollar as used to translate certain of the international operations of the Company's operating segments.

For the nine months ended September 30, 2021 and 2020, currency translation adjustments recognized as a component of other comprehensive loss were primarily attributable to the United Kingdom and Brazil.

As of September 30, 2021, the exchange rate for the British pound and the Brazilian real compared to the U.S.

dollar weakened by 1 % and 5 %, respectively, compared to the exchange rates at December 31, 2020, contributing to other comprehensive loss of $ 4.2 million reported for the nine months ended September 30, 2021.

During the first nine months of 2020, the exchange rate for the British pound and the Brazilian real compared to the U.S.

dollar weakened by 2 % and 29 %, respectively, compared to the exchange rate at December 31, 2019, contributing to other comprehensive loss of $ 12.7 million reported for the nine months ended September 30, 2020.

For the three months ended September 30, 2021, the Company's income tax benefit was $ 3.5 million on a pre-tax loss of $ 16.6 million.

This compares to an income tax benefit of $ 7.7 million on a pre-tax loss of $ 27.6 million, which included certain non-deductible expenses, for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, the Company's income tax benefit was $ 9.1 million on a pre-tax loss of $ 53.2 million, which included certain non-deductible expenses.

This compares to an income tax benefit of $ 54.1 million on a pre-tax loss of $ 503.7 million, which included non-cash goodwill charges (approximately $ 313.1 million) and other expenses that are not deductible for income tax purposes, for the nine months ended September 30, 2020.

The impact of these non-deductible expenses in 2020 was partially offset by a $ 16.4 million discrete tax benefit related to the carryback of U.S.

net operating losses under the CARES Act.

Accumulated other comprehensive loss decreased from $ 66.0 million at December 31, 2021 to $ 65.2 million at March 31, 2022.

For the three months ended March 31, 2022 and 2021, currency translation adjustments recognized as a component of other comprehensive loss due to exchange rate movements were primarily attributable to the United Kingdom and Brazil.

During the three months ended March 31, 2022, the exchange rate for the British pound weakened by 3 % compared to the U.S.

dollar and the Brazilian real strengthened by 17 % compared to the U.S.

dollar, contributing to other comprehensive income of $ 0.9 million.

During the three months ended March 31, 2021, the exchange rate for the British pound strengthened by 1 % compared to the U.S.

dollar while the Brazilian real weakened by 8 % compared to the U.S.

dollar, contributing to other comprehensive loss of $ 1.5 million.

For the three months ended March 31, 2022, the Company's income tax expense was $ 3.4 million on a pre-tax loss of $ 6.0 million.

Income tax expense in the first quarter of 2022 included the impact of valuation allowances recorded against U.S.

tax assets as well as certain non-deductible expenses and discrete tax items.

This compares to an income tax benefit of $ 2.3 million on a pre-tax loss of $ 18.1 million, which included certain non-deductible expenses and discrete tax items, for the three months ended March 31, 2021.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net Loss Per Share

The table below provides a reconciliation of the numerators and denominators of basic and diluted net loss per share for the three and nine months ended September 30, 2021 and 2020 (in thousands, except per share amounts):

The table below provides a reconciliation of the numerators and denominators of basic and diluted net loss per share for the three months ended March 31, 2022 and 2021 (in thousands, except per share amounts):

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net loss $ ( 9,424 ) $ ( 15,810 )

11 unchanged sentences

Diluted ( 0.16 ) ( 0.26 )

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The calculation of diluted net loss per share for the three and nine months ended September 30, 2021 excluded 394 thousand shares and 444 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

The calculation of diluted net loss per share for the three and nine months ended September 30, 2020 excluded 560 thousand shares and 595 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

The calculation of diluted net loss per share for the three months ended March 31, 2022 and 2021 excluded 298 thousand shares and 500 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

Additionally, shares issuable upon conversion of both the 2023 Notes and the 2026 Notes were excluded due to, among other factors, their antidilutive effect.

Long-Term Incentive Compensation

The following table presents a summary of activity for stock options, service-based restricted stock awards and performance-based stock unit awards for the nine months ended September 30, 2021 (in thousands):

The following table presents a summary of activity for stock options, service-based restricted stock awards and performance-based stock unit awards for the three months ended March 31, 2022 (in thousands):

Stock Options Service-based Restricted Stock Performance-based Stock Units

3 unchanged sentences

Forfeited ( 122 ) ( 12 ) —

Outstanding – September 30, 2021 388 993 420

Outstanding – March 31, 2022 266 1,264 591

Weighted average grant date fair value (2022 awards) $ — $ 6.53 $ 6.53

2 unchanged sentences

Performance-based stock awards generally vest at the end of a three-year period, with the number of shares ultimately issued under the program dependent upon achievement of predefined specific performance objectives.

The performance objective for performance-based awards granted in 2021 is the Company's cumulative EBITDA over a three-year period.

The performance objective for outstanding awards granted in 2020 and 2019 is the Company's EBITDA growth rate over a three-year period.

The performance objective for performance-based awards granted in 2022 and 2021 is the Company's cumulative EBITDA over a three-year period.

The performance objective for outstanding awards granted in 2020 is the Company's EBITDA growth rate over a three-year period.

In the event the predefined targets are exceeded for any performance-based award, additional shares up to a maximum of 200 % of the target award may be granted.

1 unchanged sentence

If the actual performance falls below the threshold performance level, no restricted shares will vest.

During the first quarters of 2021 and 2020, the Company issued conditional long-term cash incentive awards ("Cash Awards") of $ 1.5 million and $ 1.5 million (adjusted for forfeitures), respectively, with the ultimate dollar amount to be awarded ranging from zero to a maximum of $ 3.1 million for the 2021 Cash Award and from zero to a maximum of $ 3.0 million for the 2020 Cash Award.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the first quarters of 2022 and 2021, the Company issued conditional long-term cash incentive awards ("Cash Awards") of $ 1.5 million and $ 1.5 million, respectively, with the ultimate dollar amount to be awarded ranging from zero to a maximum of $ 3.1 million for both the 2022 and 2021 Cash Awards.

The performance measure for these Cash Awards is relative total stockholder return compared to a peer group of companies measured over a three-year period.

1 unchanged sentence

The obligations, if any, related to the Cash Awards are classified as liabilities and recognized over the vesting period.

Stock-based compensation expense recognized during the three and nine months ended September 30, 2021 totaled $ 1.5 million and $ 6.3 million, respectively.

Stock-based compensation expense recognized during the three and nine months ended September 30, 2020 totaled $ 2.1 million and $ 5.3 million, respectively.

As of September 30, 2021, there was $ 7.5 million of pre-tax compensation costs related to service-based and performance-based stock awards, which will be recognized in future periods as vesting conditions are satisfied.

On May 11, 2021, the Company’s stockholders approved the Amended and Restated Equity Participation Plan of Oil States International, Inc., which provided for a 4.5 million increase in the number of shares authorized for issuance under the plan.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Stock-based compensation expense recognized during the three months ended March 31, 2022 and 2021 totaled $ 1.8 million and $ 2.8 million, respectively.

As of March 31, 2022, there was $ 11.0 million of pre-tax compensation costs related to service-based and performance-based stock awards, which will be recognized in future periods as vesting conditions are satisfied.

Segments and Related Information

The Company operates through three operating segments:

Offshore/Manufactured Products, Downhole Technologies and Well Site Services.

Financial information by operating segment for the three and nine months ended September 30, 2021 and 2020 is summarized in the following tables (in thousands).

Offshore/Manufactured Products, Well Site Services and Downhole Technologies.

Financial information by operating segment for the three months ended March 31, 2022 and 2021 is summarized in the following tables (in thousands).

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Offshore/Manufactured Products $ 84,112 $ 5,330 $ 10,196 $ 902 $ 559,877

Downhole Technologies (1)

25,527 4,226 ( 5,035 ) 378 275,095

Well Site Services 48,172 7,932 ( 3,395 ) 1,548 197,077

Corporate — 238 ( 7,618 ) 408 80,309

Total $ 140,528 $ 19,657 $ ( 16,139 ) $ 3,666 $ 1,091,899

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets

Three Months Ended September 30, 2020

Offshore/Manufactured Products $ 78,674 $ 5,401 $ 3,875 $ 686 $ 541,661

Downhole Technologies 31,760 4,384 ( 1,505 ) 317 265,958

18,713 5,701 ( 12,594 ) 78 294,768

Well Site Services 37,372 12,930 ( 13,872 ) 1,579 253,881

Corporate — 171 ( 9,632 ) 91 55,053

Total $ 164,044 $ 17,817 $ ( 4,336 ) $ 2,858 $ 1,077,965

________________

(1) Operating loss included a non-cash inventory impairment charge of $ 2.1 million.

(2) Operating loss included a non-cash inventory impairment charge of $ 5.9 million.

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2021

Offshore/Manufactured Products $ 60,609 $ 5,469 $ 1,071 $ 463 $ 534,819

Downhole Technologies (1)

77,717 13,136 ( 8,945 ) 658 275,095

Well Site Services (1)

39,550 11,468 ( 9,853 ) 3,330 229,968

Corporate — 621 ( 25,526 ) 977 80,309

Total $ 411,841 $ 62,086 $ ( 53,519 ) $ 10,977 $ 1,091,899

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets

Nine Months Ended September 30, 2020

Offshore/Manufactured Products (3)

$ 264,782 $ 16,505 $ ( 82,202 ) $ 2,208 $ 541,661

Downhole Technologies 25,430 4,389 ( 1,615 ) 83 280,320

74,743 16,904 ( 216,395 ) 2,892 294,768

Well Site Services (5)

161,173 41,334 ( 181,746 ) 6,554 253,881

Corporate — 194 ( 9,365 ) 244 79,312

1 unchanged sentence

________________

(1) Operating loss included a non-cash inventory impairment charge of $ 2.1 million.

(2) Operating loss included non-cash fixed and lease asset impairment charges of $ 3.4 million.

(3) Operating loss included non-cash goodwill and inventory impairment charges of $ 86.5 million and $ 16.2 million, respectively.

(4) Operating loss included non-cash goodwill and inventory impairment charges of $ 192.5 million and $ 5.9 million, respectively.

(5) Operating loss included non-cash goodwill, inventory and fixed asset impairment charges of $ 127.1 million, $ 9.0 million and $ 8.2 million, respectively.

(1) Operating loss included a non-cash fixed asset impairment charge of $ 0.7 million.

See Note 2, "Asset Impairments and Other Restructuring Items," and Note 3, "Details of Selected Balance Sheet Accounts," for further discussion of these and other charges and benefits recognized in first three months of 2021.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

See Note 3, "Asset Impairments and Other Restructuring Items," and Note 4, "Details of Selected Balance Sheet Accounts," for further discussion of these and other charges and benefits recognized in first nine months of 2021 and 2020.

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Offshore/Manufactured Products Downhole Technologies Well Site Services Total

2021 2020 2021 2020 2021 2020 2021 2020

Three Months Ended September 30

Major revenue categories -

Project-driven products $ 25,294 $ 41,004 $ — $ — $ — $ — $ 25,294 $ 41,004

Completion products and services 11,544 3,664 25,527 18,713 42,714 34,893 79,785 57,270

Drilling services — — — — 3,284 2,479 3,284 2,479

Other products 7,138 4,200 — — — — 7,138 4,200

Total short-cycle 18,682 7,864 25,527 18,713 45,998 37,372 90,207 63,949

Other products and services 25,027 29,806 — — — — 25,027 29,806

$ 69,003 $ 78,674 $ 25,527 $ 18,713 $ 45,998 $ 37,372 $ 140,528 $ 134,759

Offshore/Manufactured Products Downhole Technologies Well Site Services Total

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended March 31, 2022 and 2021 (in thousands):

Offshore/Manufactured Products Well Site Services Downhole Technologies Total

2022 2021 2022 2021 2022 2021 2022 2021

Nine Months Ended September 30

Three Months Ended March 31

Major revenue categories -

6 unchanged sentences

$ 84,112 $ 60,609 $ 48,172 $ 39,550 $ 31,760 $ 25,430 $ 164,044 $ 125,589

Revenues from products and services transferred to customers over time accounted for approximately 63 % and 62 % of consolidated revenues for the nine months ended September 30, 2021 and 2020, respectively.

Revenues from products and services transferred to customers over time accounted for approximately 62 % and 62 % of consolidated revenues for the three months ended March 31, 2022 and 2021, respectively.

The balance of revenues for the respective periods relates to products and services transferred to customers at a point in time.

As of September 30, 2021, the Company had $ 153.2 million of remaining backlog related to contracts with an original expected duration of greater than one year .

Approximately 21 % of this remaining backlog is expected to be recognized as revenue over the remaining three months of 2021, with an additional 38 % recognized in 2022 and the balance thereafter.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

As of March 31, 2022, the Company had $ 152.0 million of remaining backlog related to contracts with an original expected duration of greater than one year .

Approximately 35 % of this remaining backlog is expected to be recognized as revenue over the remaining nine months of 2022, with an additional 35 % recognized in 2023 and the balance thereafter.

Commitments and Contingencies

During the first nine months of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded.

However, the effect of the COVID-19 pandemic and related economic, business and market disruptions remains uncertain.

The most direct and immediate impacts that the Company continues to experience is decreased demand for and pricing of its products and services due to lower activity levels by its customers resulting from the reduction in the demand for crude oil, market pressures driving increased capital discipline and, to a lesser extent, supply chain disruptions.

During 2021 and the first quarter of 2022, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded.

However, the effects of the COVID-19 pandemic and related economic, business and market disruptions continue and the macro outlook remains uncertain.

The most direct impacts that the Company continues to experience are decreased pricing for its products and services due to the timing and rate of activity increases, market pressures driving increased capital discipline by its customers, supply chain disruptions, labor market constraints and inflation in wages, materials, parts, equipment and other costs.

While the prices of and demand for crude oil have recovered from the lows seen in the initial stages of the pandemic, further outbreaks or the emergence of new strains of the COVID-19 virus could result in the reimposition of domestic and international regulations directing individuals to stay at home, limiting travel, requiring facility closures and imposing quarantines.

Widespread implementation of these or similar restrictions could result in reductions in the prices of and demand for crude oil and thus, the demand for the Company's products and services, as well as delays in or inability of the Company to fulfill its contractual obligations to customers, logistic constraints, increases in the Company's costs, workforce shortages and unavailability of raw materials.

The Company continues to monitor the effect of COVID-19 on its employees, customers, critical suppliers and other stakeholders.

The ultimate duration of the COVID-19 pandemic, the resulting governmental restrictions and the related impact on the prices of and the demand for crude oil and the United States and global economy and capital markets remains uncertain.

Widespread implementation of these or similar restrictions could result in commodity price volatility, reduced demand for the Company's products and services, as well as delays in or inability of the Company to fulfill its contractual obligations to customers, logistic constraints, increases in the Company's costs and workforce and raw material shortages.

The Company continues to monitor the effect of the COVID-19 pandemic on its employees, customers, critical suppliers and other stakeholders.

The ultimate duration of the COVID-19 pandemic, along with resulting governmental restrictions and related impacts on the prices of and demand for crude oil, the global economy and capital markets remains uncertain.

The Company is a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of the Company's products or operations.

2 unchanged sentences

Although the Company can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on the Company, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by indemnity or insurance, will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Following the GEODynamics Acquisition in January 2018, the Company determined that certain steel products historically imported by GEODynamics from China for use in its manufacturing process were potentially subject to anti-dumping and countervailing duties.

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Additionally, the Company believes that its agreements with the Seller allow it to set-off such amounts against payments due under the $ 25.0 million promissory note and that, because the Company has asserted indemnification claims, the maturity date of such note is extended until the resolution of such claims.

Accordingly, the Company reduced the carrying amount of such note in its consolidated balance sheet to $ 17.5 million as of September 30, 2021, which is the Company's current best estimate of what is owed after set-off for such indemnification matters.

Accordingly, the Company reduced the carrying amount of such note in its consolidated balance sheet to $ 17.5 million as of March 31, 2022, which is the Company's current best estimate of what is owed after set-off for such indemnification matters, but without considering the outcome of the counterclaim described below.

In August 2020, the Seller filed a breach of contract suit against the Company and one of its wholly-owned subsidiaries in federal court alleging that payments due under the promissory note are required to be, but have not been, repaid in accordance with the terms of the note.

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federal income tax carryback claims received by the Company under the provisions of the CARES Act.

On February 15, 2021, the Seller dismissed the federal lawsuit without prejudice and refiled its lawsuit in state court.

On September 20, 2021, a motion by the Seller for partial summary judgement was dismissed.

The Company denies the validity of these breach of contract claims and plans to vigorously defend against this lawsuit.

On February 15, 2021, following the federal magistrate's report and recommendation that the federal district court dismiss the Seller's lawsuit for lack of federal jurisdiction, the Seller dismissed the federal lawsuit without prejudice and refiled its lawsuit in state court.

On September 20, 2021, the state court denied the Seller's motion for partial summary judgement.

In December 2021, the Company filed a counterclaim against the Seller alleging material misrepresentations and breaches of warranties by the Seller with respect to GEODynamics' liability for anti-dumping and countervailing duties.

The Company denies the validity of the breach of contract claims asserted by the Seller and is vigorously defending against this lawsuit.

Subsequent Events

On April 14, 2022, the Offshore/Manufactured Products segment acquired E-Flow Control Holdings Limited ("E-Flow"), a global provider of fully integrated handling, control, monitoring and instrumentation solutions.

E-Flow, founded in 1988, provides a broad range of engineering, design, manufacturing, installation and commissioning services to its customers in the energy industry.

The purchase price of $ 8.6 million, which is subject to customary post-closing adjustments, was funded with cash on-hand.

C autionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other statements we make contain certain "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.

This Quarterly Report on Form 10-Q and other statements we make contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act").

Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors, including incorrect or changed assumptions.

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The following are important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, us:

• public health crises, such as the Coronavirus Disease 2019 ("COVID-19") pandemic, which has negatively impacted the global economy, and correspondingly, demand for crude oil;

• the ongoing impact of the Coronavirus Disease 2019 ("COVID-19") pandemic;

• the ability and willingness of the Organization of Petroleum Exporting Countries ("OPEC") and other producing nations to set and maintain oil production levels and pricing;

• the level of supply of and demand for oil and natural gas;

• the level of supply of and demand for oil and natural gas, which has been impacted by the ongoing war between Russia and Ukraine that began in February 2022;

• fluctuations in the current and future prices of oil and natural gas;

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• the impact of environmental matters, including executive actions and regulatory or legislative 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;

• proposed new rules by the SEC relating to the disclosure of a range of climate-related information and risks;

• political, economic and litigation efforts to restrict or eliminate certain oil and natural gas exploration, development and production activities due to concerns over the threat of climate change;

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• general global economic conditions;

• global weather conditions and natural disasters, such as Hurricane Ida which negatively impacted our and our customers operations in southeast Louisiana and the Gulf of Mexico in September 2021;

• global weather conditions and natural disasters;

• changes in tax laws and regulations;

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• our ability to timely obtain and maintain critical permits for operating facilities;

• our ability to find and retain skilled personnel;

• our ability to attract and retain skilled personnel;

• negative outcome of litigation, threatened litigation or government proceedings;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements