What changed in this filing

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Item 1. Financial Statements

2022-10-28 compared with 2022-07-28 · 162 added, 139 removed, 492 unchanged (38% of the section changed)

2 unchanged sentences

(In Thousands, Except Per Share Amounts)

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

11 unchanged sentences

184,336 156,667 535,640 465,360

Operating loss ( 1,090 ) ( 17,618 ) ( 5,426 ) ( 37,380 )

Operating income (loss) 5,058 ( 16,139 ) ( 368 ) ( 53,519 )

Interest expense, net ( 2,637 ) ( 2,569 ) ( 7,947 ) ( 7,593 )

Other income, net 491 2,137 1,892 7,917

Loss before income taxes ( 3,352 ) ( 18,497 ) ( 9,335 ) ( 36,624 )

Income (loss) before income taxes 2,912 ( 16,571 ) ( 6,423 ) ( 53,195 )

Income tax (provision) benefit ( 769 ) 3,529 ( 6,002 ) 9,072

Net loss $ ( 5,144 ) $ ( 15,271 ) $ ( 14,568 ) $ ( 31,081 )

Net loss per share:

Net income (loss) $ 2,143 $ ( 13,042 ) $ ( 12,425 ) $ ( 44,123 )

Net income (loss) per share:

Basic $ 0.03 $ ( 0.22 ) $ ( 0.20 ) $ ( 0.73 )

8 unchanged sentences

(In Thousands)

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

Net loss $ ( 5,144 ) $ ( 15,271 ) $ ( 14,568 ) $ ( 31,081 )

Other comprehensive income (loss):

Net income (loss) $ 2,143 $ ( 13,042 ) $ ( 12,425 ) $ ( 44,123 )

Other comprehensive loss:

Currency translation adjustments ( 11,939 ) ( 5,838 ) ( 23,758 ) ( 4,207 )

5 unchanged sentences

(In Thousands, Except Share Amounts)

September 30,

2022 December 31, 2021

39 unchanged sentences

(In Thousands)

Three Months Ended June 30, 2022 Common

Three Months Ended September 30, 2022 Common

Stock Additional

4 unchanged sentences

Stockholders'

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

Net loss — — ( 5,144 ) — — ( 5,144 )

Balance, June 30, 2022 $ 747 $ 1,108,631 $ 266,999 $ ( 77,850 ) $ ( 626,586 ) $ 671,941

Net income — — 2,143 — — 2,143

Currency translation adjustments (excluding intercompany advances) — — — ( 10,363 ) — ( 10,363 )

Currency translation adjustments on intercompany advances — — — ( 1,576 ) — ( 1,576 )

Issuance of common stock in connection with settlement of disputes with seller of GEODynamics, Inc.

19 10,313 — — — 10,332

Stock-based compensation expense — 1,663 — — — 1,663

Surrender of stock to settle taxes on stock awards — — — — — —

Balance, June 30, 2022 $ 747 $ 1,108,631 $ 266,999 $ ( 77,850 ) $ ( 626,586 ) $ 671,941

Six Months Ended June 30, 2022 Common

Balance, September 30, 2022 $ 766 $ 1,120,607 $ 269,142 $ ( 89,789 ) $ ( 626,586 ) $ 674,140

Nine Months Ended September 30, 2022 Common

Stock Additional

8 unchanged sentences

Currency translation adjustments on intercompany advances — — — ( 187 ) — ( 187 )

Issuance of common stock in connection with settlement of disputes with seller of GEODynamics, Inc.

19 10,313 — — — 10,332

Stock-based compensation expense 8 5,159 — — — 5,167

Surrender of stock to settle taxes on stock awards — — — — ( 1,002 ) ( 1,002 )

Balance, June 30, 2022 $ 747 $ 1,108,631 $ 266,999 $ ( 77,850 ) $ ( 626,586 ) $ 671,941

Balance, September 30, 2022 $ 766 $ 1,120,607 $ 269,142 $ ( 89,789 ) $ ( 626,586 ) $ 674,140

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

3 unchanged sentences

(In Thousands)

Three Months Ended June 30, 2021 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

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

Three Months Ended September 30, 2021 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

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

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

4 unchanged sentences

Adoption of ASU 2020-06 — — — — — —

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

Six Months Ended June 30, 2021 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

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

Nine Months Ended September 30, 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

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

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

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.

3 unchanged sentences

(In Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net loss $ ( 12,425 ) $ ( 44,123 )

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

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

Depreciation and amortization expense 51,469 62,086

Settlement of disputes with seller of GEODynamics, Inc.

Impairments of inventories — 2,113

Impairments of fixed and lease assets — 3,444

12 unchanged sentences

Other operating assets and liabilities, net 2,586 3,376

Net cash flows provided by (used in) operating activities ( 10,035 ) 13,933

Net cash flows provided by operating activities 18,993 20,572

Cash flows from investing activities:

7 unchanged sentences

Revolving credit facility repayments ( 9,830 ) ( 31,782 )

Payment of promissory note to seller of GEODynamics, Inc.

Issuance of 4.75 % convertible senior notes

1 unchanged sentence

( 6,272 ) ( 125,952 )

Other debt and finance lease activity, net ( 359 ) 119

Other debt and finance lease repayments, net ( 541 ) ( 55 )

Payment of financing costs ( 81 ) ( 7,785 )

6 unchanged sentences

Cash and cash equivalents, end of period $ 33,103 $ 67,561

Cash paid for:

Cash paid (received) for:

Interest $ 4,605 $ 2,785

13 unchanged sentences

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 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 3, "Asset Impairments and Other Charges and Benefits." 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.

7 unchanged sentences

Under the terms of the purchase agreement, the Company may be entitled to indemnification for certain matters occurring prior to the acquisition.

The E-Flow acquisition was accounted for using the acquisition method of accounting, based on the Company's preliminary estimates of the fair value of assets acquired (primarily long-lived intangible assets and goodwill) and liabilities assumed in the acquisition.

The E-Flow transaction was accounted for using the acquisition method of accounting, based on the Company's preliminary estimates of the fair value of assets acquired (primarily long-lived intangible assets and goodwill) and liabilities assumed in the acquisition.

E-Flow's results of operations have been included in the Company's consolidated financial statements and have been reported within the Offshore/Manufactured Products segment subsequent to the closing of the acquisition.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Asset Impairments and Other Restructuring Items

Asset Impairments and Other Charges and Benefits

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.

2 unchanged sentences

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

In this regard, during the first six 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):

In this regard, 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 Well Site Services Downhole Technologies Corporate Pre-tax Total Tax After-tax Total

7 unchanged sentences

Severance and restructuring costs — 2,351 203 — 2,554 536 2,018

Additionally, during the three and six months ended June 30, 2021, the Company recognized $ 2.8 million and $ 7.6 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.

As further discussed in Note 12, "Commitment and Contingencies," on June 28, 2022, the Company settled its disputes with the seller (the "GEO Seller") of GEODynamics, Inc.

("GEODynamics"), which was acquired in 2018, including the full and final settlement of all amounts due pursuant to the GEO Note (as defined below).

As consideration for such settlement, on July 1, 2022, the Company issued the GEO Seller approximately 1.9 million shares of its common stock (having a market value of $ 10.3 million on the date of issuance) and paid the GEO Seller $ 10.0 million in cash.

In connection with this settlement, the $ 17.5 million carrying value of the GEO Note and accrued interest of $ 2.2 million was extinguished on July 1, 2022.

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.

Third quarter 2021

Impairment of inventories (Note 4)

$ — $ — $ 2,113 $ — $ 2,113 $ 444 $ 1,669

Severance and restructuring costs 256 352 129 — 737 154 583

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.

In August 2022, the Offshore/Manufactured Products segment settled outstanding litigation against certain service providers in exchange for cash totaling $ 6.9 million.

In connection with this settlement, the Company recognized a gain of $ 6.1 million (net of legal and other related costs) in the third quarter of 2022, which is included in other operating income, net.

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-induced 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 incur other costs in future periods.

OIL STATES INTERNATIONAL, INC.

2 unchanged sentences

Details of Selected Balance Sheet Accounts

Additional information regarding selected balance sheet accounts as of June 30, 2022 and December 31, 2021 is presented below (in thousands):

Additional information regarding selected balance sheet accounts as of September 30, 2022 and December 31, 2021 is presented below (in thousands):

September 30,

2022 December 31,

8 unchanged sentences

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

September 30,

2022 December 31,

Deferred revenue (contract liabilities) $ 50,732 $ 43,236

As of June 30, 2022, accounts receivable, net in the United States and the United Kingdom represented 74 % and 14 %, respectively, of the total.

No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of June 30, 2022.

For the six months ended June 30, 2022, the $ 3.1 million net increase in contract assets was attributable to $ 30.1 million in revenue recognized during the period, which was partially offset by $ 26.7 million transferred to accounts receivable.

Deferred revenue (contract liabilities) increased by $ 4.6 million in the first six months of 2022, reflecting $ 16.2 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $ 11.2 million of revenue that was deferred at the beginning of the period.

The following provides a summary of activity in the allowance for doubtful accounts for the six months ended June 30, 2022 and 2021 (in thousands):

Six Months Ended June 30,

As of September 30, 2022, accounts receivable, net in the United States and the United Kingdom represented 75 % 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, 2022.

For the nine months ended September 30, 2022, the $ 3.0 million net decrease in contract assets was attributable to $ 30.4 million transferred to accounts receivable, which was partially offset by $ 27.6 million in revenue recognized during the period.

Deferred revenue (contract liabilities) increased by $ 7.5 million in the first nine months of 2022, reflecting $ 22.7 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $ 14.8 million of revenue that was deferred at the beginning of the period.

The following provides a summary of activity in the allowance for doubtful accounts for the nine months ended September 30, 2022 and 2021 (in thousands):

Nine Months Ended September 30,

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

2 unchanged sentences

Other 272 136

Allowance for doubtful accounts – June 30 $ 5,166 $ 7,698

Allowance for doubtful accounts – September 30 $ 4,399 $ 6,260

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30,

2022 December 31,

6 unchanged sentences

$ 181,628 $ 168,573

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,

3 unchanged sentences

$ 305,067 $ 338,583

For the three months ended June 30, 2022 and 2021, depreciation expense was $ 12.0 million and $ 15.6 million, respectively.

Depreciation expense was $ 24.6 million and $ 32.0 million, respectively, for the six months ended June 30, 2022 and 2021.

For the three months ended September 30, 2022 and 2021, depreciation expense was $ 11.3 million and $ 14.7 million, respectively.

Depreciation expense was $ 35.9 million and $ 46.7 million, respectively, for the nine months ended September 30, 2022 and 2021.

During the first and second quarters of 2021, the Well Site Services segment recognized non-cash fixed and operating lease asset impairment charges of $ 0.7 million and $ 2.8 million, respectively, associated with the closure of additional facilities coupled with other management actions.

During the second quarter of 2021, the segment also recorded an additional $ 1.9 million charge associated with the exit of a leased facility.

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amount Accumulated

7 unchanged sentences

$ 283,398 $ 109,216 $ 174,182 $ 300,813 $ 115,064 $ 185,749

For the three months ended June 30, 2022 and 2021, amortization expense was $ 5.3 million and $ 5.3 million, respectively.

Amortization expense was $ 10.4 million and $ 10.5 million for the six months ended June 30, 2022 and 2021, respectively.

For the three months ended September 30, 2022 and 2021, amortization expense was $ 5.1 million and $ 4.9 million, respectively.

Amortization expense was $ 15.5 million and $ 15.4 million for the nine months ended September 30, 2022 and 2021, respectively.

September 30,

2022 December 31,

5 unchanged sentences

$ 26,297 $ 32,889

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30,

2022 December 31,

7 unchanged sentences

$ 51,691 $ 43,401

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-term Debt

As of June 30, 2022 and December 31, 2021, long-term debt consisted of the following (in thousands):

As of September 30, 2022 and December 31, 2021, long-term debt consisted of the following (in thousands):

September 30,

2022 December 31,

Revolving credit facilities (1)

Revolving credit facility (1)

2026 Notes (2)

3 unchanged sentences

Promissory note — 17,534

17,534 17,534

Other debt and finance lease obligations 3,581 4,123

3 unchanged sentences

____________________

(1) Unamortized deferred financing costs of $ 2.3 million and $ 2.7 million as of June 30, 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 June 30, 2022 and December 31, 2021.

(3) The outstanding principal amount of the 2023 Notes was $ 19.5 million and $ 26.0 million as of June 30, 2022 and December 31, 2021, respectively.

(4) The promissory note was settled on July 1, 2022.

See Note 12, "Commitments and Contingencies" for additional discussion.

Revolving Credit Facilities

(1) Unamortized deferred financing costs of $ 2.1 million and $ 2.7 million as of September 30, 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 September 30, 2022 and December 31, 2021.

(3) The outstanding principal amount of the 2023 Notes was $ 19.5 million and $ 26.0 million as of September 30, 2022 and December 31, 2021, respectively.

Revolving Credit Facility

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 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.

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").

The ABL Agreement matures on February 10, 2025 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $ 17.5 million (excluding the GEO Note discussed below).

The ABL Agreement matures on February 10, 2025 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $ 17.5 million.

The ABL Agreement provides funding based on a borrowing base calculation that includes eligible U.S.

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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 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 (i) in the event that availability under the ABL Agreement is less than the

OIL STATES INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

greater of (a) 15 % of the borrowing base and (b) $ 14.1 million;

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

(ii) to complete certain specified transactions;

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

As of June 30, 2022, the Company had $ 18.6 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of June 30, 2022 was $ 61.8 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit.

As of June 30, 2022, the Company was in compliance with its debt covenants under the ABL Agreement.

As of September 30, 2022, the Company had $ 17.6 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, 2022 was $ 79.9 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit.

As of September 30, 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 % convertible senior notes due 2026 (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.

5 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 the 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 $ 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.

As of June 30, 2022, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

As of September 30, 2022, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

On January 30, 2018, the Company issued $ 200.0 million aggregate principal amount of its 1.50 % convertible senior notes due 2023 (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.

As of September 30, 2022, $ 19.5 million principal amount of the 2023 Notes remained outstanding.

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 the 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 $ 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 2023 Notes in cash.

As of June 30, 2022, $ 19.5 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 and six months ended June 30, 2022 and 2021, with non-cash gains reported within other income, net (in thousands):

As of September 30, 2022, none of the conditions allowing holders of the 2023 Notes to convert, or requiring us to repurchase the 2023 Notes, had been met.

The following table provides a summary of the Company's purchases of outstanding 2023 Notes during the nine months ended September 30, 2022 and 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 June 30,

2022 $ 6,454 $ 6,429 $ 6,272 $ 157

2021 6,400 6,337 5,952 385

Six Months Ended June 30,

Nine Months Ended September 30,

2022 $ 6,454 $ 6,429 $ 6,272 $ 157

4 unchanged sentences

Promissory Note

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

In connection with the 2018 acquisition of GEODynamics, Inc.

("GEODynamics" and the "GEODynamics Acquisition"), the Company issued a $ 25.0 million promissory note (the "GEO Note") that bore interest at 2.50 % per annum (subject to adjustment) and was scheduled to mature on July 12, 2019.

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

The Company asserted indemnification claims against the GEO Seller, and the GEO Seller filed a breach of contract suit against the Company and one of its wholly-owned subsidiaries alleging that payments due under the GEO Note were required to be repaid in accordance with the terms of such note.

The Company asserted indemnification claims against the seller of GEODynamics (the "GEO Seller"), and the GEO Seller filed a breach of contract suit against the Company and one of its wholly-owned subsidiaries alleging that payments due under the GEO Note were required to be repaid in accordance with the terms of such note.

The Company incurred settlement costs and expenses of $ 7.5 million related to such indemnification claims, and as of June 28, 2022 had reduced the carrying amount of such note in the consolidated balance sheet to $ 17.5 million, which was its then-current best estimate of what was owed after set-off for such indemnification matters.

On June 28, 2022, the Company agreed to a settlement of all disputes that arose with the GEO Seller, including the full and final settlement of all amounts due pursuant to the GEO Note.

See Note 12, "Commitments and Contingencies" f or additional discussion.

As further discussed in Note 12, "Commitments and Contingencies," on June 28, 2022, the Company settled its disputes with the GEO Seller, including the full and final settlement of all amounts due under the GEO Note.

Pursuant to the settlement agreement, on July 1, 2022, the Company paid the GEO Seller $ 10.0 million in cash, issued approximately 1.9 million shares of its common stock (having a market value of $ 10.3 million) and extinguished the $ 17.5 million carrying value of the GEO Note along with accrued interest of $ 2.2 million.

Fair Value Measurements

1 unchanged sentence

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 June 30, 2022 was $ 19.0 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 19.5 million.

The estimated fair value of the 2026 Notes as of June 30, 2022 was $ 123.8 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 September 30, 2022 was $ 19.1 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 19.5 million.

The estimated fair value of the 2026 Notes as of September 30, 2022 was $ 110.4 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 135.0 million.

Stockholders' Equity

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 six months of 2022 (in thousands):

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 2022 (in thousands):

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

Issuance of common stock to seller of GEODynamics, Inc.

Restricted stock awards, net of forfeitures 776

Shares withheld for taxes on vesting of stock awards ( 162 )

Shares of common stock outstanding – June 30, 2022 61,989

As of June 30, 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.

Shares of common stock outstanding – September 30, 2022 63,902

As of September 30, 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

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

Accumulated other comprehensive loss increased from $ 66.0 million at December 31, 2021 to $ 77.9 million at June 30, 2022.

For the six months ended June 30, 2022 and 2021, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the six months ended June 30, 2022, the exchange rate for the British pound weakened by 10 % compared to the U.S.

Accumulated other comprehensive loss increased from $ 66.0 million at December 31, 2021 to $ 89.8 million at September 30, 2022.

For the nine months ended September 30, 2022 and 2021, currency translation adjustments recognized as a component of other comprehensive loss were primarily attributable to the United Kingdom and Brazil.

During the nine months ended September 30, 2022, the exchange rate for the British pound weakened by 18 % compared to the U.S.

dollar while the Brazilian real strengthened by 3 % compared to the U.S.

dollar, contributing to other comprehensive loss of $ 23.8 million.

During the six months ended June 30, 2021, the exchange rate for the British pound and the Brazilian real strengthened by 1 % and 4 %, respectively, compared to the U.S.

dollar, contributing to other comprehensive income of $ 1.6 million.

During the nine months ended September 30, 2021, the exchange rate for the British pound and the Brazilian real weakened by 1 % and 5 %, respectively, compared to the U.S.

dollar, contributing to other comprehensive loss of $ 4.2 million.

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended June 30, 2022, the Company's income tax expense was $ 1.8 million on a pre-tax loss of $ 3.4 million.

Income tax expense in the second quarter of 2022 was negatively impacted by valuation allowances recorded against U.S.

tax assets as well as certain non-deductible expenses.

This compares to an income tax benefit of $ 3.2 million on a pre-tax loss of $ 18.5 million, which included certain non-deductible expenses, for the three months ended June 30, 2021.

For the six months ended June 30, 2022, the Company's income tax expense was $ 5.2 million on a pre-tax loss of $ 9.3 million.

Income tax expense in the first six months of 2022 was negatively impacted by valuation allowances recorded against U.S.

For the three months ended September 30, 2022, the Company's income tax expense was $ 0.8 million on a pre-tax income of $ 2.9 million.

This compares to an income tax benefit of $ 3.5 million on a pre-tax loss of $ 16.6 million, which included certain non-deductible expenses, for the three months ended September 30, 2021.

For the nine months ended September 30, 2022, the Company's income tax expense was $ 6.0 million on a pre-tax loss of $ 6.4 million.

Income tax expense in the first nine months of 2022 was negatively impacted by 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 $ 5.5 million on a pre-tax loss of $ 36.6 million, which included certain non-deductible expenses and discrete tax items, for the six months ended June 30, 2021.

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 six months ended June 30, 2022 and 2021 (in thousands, except per share amounts):

This compares to an income tax benefit of $ 9.1 million on a pre-tax loss of $ 53.2 million, which included certain non-deductible expenses and discrete tax items, for the nine months ended September 30, 2021.

Net Income (Loss) Per Share

The table below provides a reconciliation of the numerators and denominators of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share amounts):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net loss $ ( 5,144 ) $ ( 15,271 ) $ ( 14,568 ) $ ( 31,081 )

Net income (loss) $ 2,143 $ ( 13,042 ) $ ( 12,425 ) $ ( 44,123 )

Income attributable to unvested restricted stock awards ( 41 ) — — —

Numerator for basic net loss per share ( 5,144 ) ( 15,271 ) ( 14,568 ) ( 31,081 )

Numerator for basic net income (loss) per share 2,102 ( 13,042 ) ( 12,425 ) ( 44,123 )

Effect of dilutive securities:

Unvested restricted stock awards 3 — — —

Numerator for diluted net loss per share $ ( 5,144 ) $ ( 15,271 ) $ ( 14,568 ) $ ( 31,081 )

Numerator for diluted net income (loss) per share $ 2,105 $ ( 13,042 ) $ ( 12,425 ) $ ( 44,123 )

Denominators:

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Weighted average number of unvested restricted stock awards outstanding ( 1,222 ) ( 1,001 ) ( 1,198 ) ( 1,030 )

Denominator for basic and diluted net loss per share 60,704 60,317 60,601 60,207

Net loss per share:

Denominator for basic net income (loss) per share 62,674 60,377 61,292 60,264

Effect of dilutive securities:

Unvested restricted stock awards 2 — — —

Denominator for diluted net income (loss) per share 62,676 60,377 61,292 60,264

Net income (loss) per share:

Basic $ 0.03 $ ( 0.22 ) $ ( 0.20 ) $ ( 0.73 )

Diluted 0.03 ( 0.22 ) ( 0.20 ) ( 0.73 )

The calculation of diluted net loss per share for the three and six months ended June 30, 2022 excluded 264 thousand shares and 306 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 six months ended June 30, 2021 excluded 437 thousand shares and 468 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.

The calculation of diluted net income (loss) per share for the three and nine months ended September 30, 2022 excluded 249 thousand shares and 287 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, 2021 excluded 394 thousand shares and 444 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 from the calculation of diluted net income (loss) per share for the three and nine months ended September 30, 2022 and 2021 due to, among other factors, the Company's share price.

OIL STATES INTERNATIONAL, INC.

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Long-Term Incentive Compensation

The following table presents a summary of activity for stock options, service-based restricted stock and stock unit awards and performance-based stock unit awards for the six months ended June 30, 2022 (in thousands):

The following table presents a summary of activity for stock options, service-based restricted stock and stock unit awards, and performance-based stock unit awards for the nine months ended September 30, 2022 (in thousands):

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

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Forfeited ( 143 ) ( 12 ) —

Outstanding – June 30, 2022 247 1,222 630

Outstanding – September 30, 2022 245 1,221 630

Weighted average grant date fair value (2022 awards) $ 6.50 $ 6.51

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Service-based restricted stock awards generally vest on a straight-line basis over a term of three years .

Service-based stock unit awards generally vest at the end of a one-year period.

Service-based stock unit awards ( 39 thousand units as of September 30, 2022) vest at the end of a one-year period, however the underlying shares are not issued until a specified future date.

Performance-based stock unit 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.

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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 six months ended June 30, 2022 totaled $ 1.7 million and $ 3.5 million, respectively.

Stock-based compensation expense recognized during the three and six months ended June 30, 2021 totaled $ 1.9 million and $ 4.7 million, respectively.

As of June 30, 2022, there was $ 10.2 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.

Stock-based compensation expense recognized during the three and nine months ended September 30, 2022 totaled $ 1.7 million and $ 5.2 million, respectively.

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

As of September 30, 2022, there was $ 8.5 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.

OIL STATES INTERNATIONAL, INC.

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

Financial information by operating segment for the three and six months ended June 30, 2022 and 2021 is summarized in the following tables (in thousands).

Financial information by operating segment for the three and nine months ended September 30, 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 June 30, 2022

Three Months Ended September 30, 2022

Offshore/Manufactured Products (1)

$ 96,037 $ 5,072 $ 13,373 $ 1,620 $ 540,940

Well Site Services 60,509 6,732 2,359 4,894 205,018

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

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Offshore/Manufactured Products $ 69,003 $ 5,662 $ 1,764 $ 677 $ 525,894

Well Site Services 45,998 9,531 ( 5,250 ) 2,203 210,601

42,056 10,642 ( 11,590 ) 1,877 216,498

Downhole Technologies (2)

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

Corporate — 238 ( 7,618 ) 408 80,309

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________________

(1) Operating loss included non-cash operating lease impairment charges of $ 2.8 million.

(1) Operating income included a $ 6.1 million gain on settlement of outstanding litigation against certain service providers.

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

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

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Offshore/Manufactured Products (1)

$ 276,616 $ 15,651 $ 33,010 $ 3,093 $ 540,940

Well Site Services 163,500 22,059 ( 435 ) 9,360 205,018

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Offshore/Manufactured Products $ 206,520 $ 16,688 $ 7,645 $ 1,932 $ 525,894

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Downhole Technologies (3)

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

Corporate — 621 ( 25,526 ) 977 80,309

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________________

(1) Operating income included a $ 6.1 million gain on settlement of outstanding litigation against certain service providers.

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

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 six months of 2021.

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

See Note 3, "Asset Impairments and Other Charges and Benefits," 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 2022 and 2021.

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three and six months ended June 30, 2022 and 2021 (in thousands):

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three and nine months ended September 30, 2022 and 2021 (in thousands):

Offshore/Manufactured Products Well Site Services Downhole Technologies Total

2022 2021 2022 2021 2022 2021 2022 2021

Three Months Ended June 30

Three Months Ended September 30

Major revenue categories -

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2022 2021 2022 2021 2022 2021 2022 2021

Six Months Ended June 30

Nine Months Ended September 30

Major revenue categories -

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$ 276,616 $ 206,520 $ 163,500 $ 127,604 $ 95,156 $ 77,717 $ 535,272 $ 411,841

Revenues from products and services transferred to customers over time accounted for approximately 64 % and 61 % of consolidated revenues for the six months ended June 30, 2022 and 2021, respectively.

Revenues from products and services transferred to customers over time accounted for approximately 63 % and 63 % of consolidated revenues for the nine months ended September 30, 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 June 30, 2022, the Company had $ 141.6 million of remaining backlog related to contracts with an original expected duration of greater than one year .

Approximately 26 % of this remaining backlog is expected to be recognized as revenue over the remaining six months of 2022, with an additional 41 % recognized in 2023 and the balance thereafter.

As of September 30, 2022, the Company had $ 168.1 million of remaining backlog related to contracts with an original expected duration of greater than one year .

Approximately 15 % of this remaining backlog is expected to be recognized as revenue over the remaining three months of 2022, with an additional 50 % recognized in 2023 and the balance thereafter.

Commitments and Contingencies

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

During 2021 and the first nine months 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.

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

On June 28, 2022, the Company entered into a settlement agreement (the "Settlement Agreement") with the GEO Seller, related to the matters discussed above (the "Settlement"), including the full and final settlement of all amounts due pursuant to the GEO Note ($ 17.5 million in principal amount outstanding as of June 28, 2022) and related accrued interest.

Pursuant to the Settlement Agreement, the Company and the GEO Seller agreed to the resolution of such disputes through, among other matters, (i) the payment by the Company of $ 10.0 million in cash to the GEO Seller and (ii) the issuance by the Company of 1,909,722 shares of its common stock to the GEO Seller (having a market value of $ 10.3 million on the date of issuance).

On June 28, 2022, the Company entered into a settlement agreement (the "Settlement Agreement") with the GEO Seller, related to the matters discussed above (the "Settlement"), including the full and final settlement of all amounts due pursuant to the GEO Note ($ 17.5 million in principal amount and accrued interest of $ 2.2 million outstanding as of June 28, 2022).

Pursuant to the Settlement Agreement, the Company and the GEO Seller agreed to the resolution of such disputes through, among other matters:

(i) the payment by the Company of $ 10.0 million in cash and (ii) the issuance by the Company of 1,909,722 shares of its common stock (having a market value of $ 10.3 million on the date of issuance).

The payment and issuance of common stock were made on July 1, 2022.

In connection with the execution of the Settlement Agreement, the Company recognized a non-cash settlement charge of $ 0.6 million in the second quarter of 2022.

The final settlement will be reflected in the third quarter of 2022.

In August 2022, the Offshore/Manufactured Products segment settled outstanding litigation against certain service providers in exchange for cash totaling $ 6.9 million.

C autionary Statement Regarding Forward-Looking Statements

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

• the impact of the ongoing military action between Russia and Ukraine, that began in February 2022, including, but not limited to, supply chain disruptions and increased costs, government sanctions, and delays or potential cancellation of planned customer projects;

• the impact of the ongoing military action between Russia and Ukraine, that began in February 2022, including, but not limited to, energy market disruptions, supply chain disruptions and increased costs, government sanctions, and delays or potential cancellation of planned customer projects;

• 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;

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• physical, digital, cyber, internal and external security breaches and other incidents affecting information security and data privacy;

• our ability to access and the cost of capital in the bank and capital markets;

• the cost of capital in the bank and capital markets and our ability to access them;

• our ability to protect and enforce our intellectual property rights;

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• the other factors identified in "Part I, Item 1A.

Risk Factors" in our 2021 Annual Report on Form 10-K.

Risk Factors" in our 2021 Annual Report on Form 10-K, as well as in "Part II, Item 1A.

Risk Factors" included in this Quarterly Report on Form 10-Q.

Should one or more of these risks or uncertainties materialize, or should the assumptions on which our forward-looking statements are based prove incorrect or change, actual results may differ materially from those expected, estimated or projected.

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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