What changed in this filing

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Item 1. Financial Statements

2023-04-28 compared with 2022-10-28 · 109 added, 301 removed, 353 unchanged (54% of the section changed)

2 unchanged sentences

(In Thousands, Except Per Share Amounts)

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

2022 2021 2022 2021

Three Months Ended March 31,

Products $ 99,840 $ 85,761

7 unchanged sentences

Depreciation and amortization expense 15,256 17,817

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

Other operating income, net ( 6,750 ) ( 275 ) ( 6,852 ) ( 714 )

Other operating expense, net 317 126

190,324 168,380

3 unchanged sentences

Income (loss) before income taxes 3,760 ( 5,983 )

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

Income tax provision ( 1,602 ) ( 3,441 )

Net income (loss) $ 2,158 $ ( 9,424 )

8 unchanged sentences

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)

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

2022 2021 2022 2021

Three Months Ended March 31,

Net income (loss) $ 2,158 $ ( 9,424 )

Other comprehensive loss:

Other comprehensive income:

Currency translation adjustments 4,149 861

Comprehensive loss $ ( 9,796 ) $ ( 18,880 ) $ ( 36,183 ) $ ( 48,330 )

Comprehensive income (loss) $ 6,307 $ ( 8,563 )

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

3 unchanged sentences

(In Thousands, Except Share Amounts)

September 30,

2023 December 31, 2022

39 unchanged sentences

(In Thousands)

Three Months Ended September 30, 2022 Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stockholders'

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

Nine Months Ended September 30, 2022 Common

Three Months Ended March 31, 2023 Common

Stock Additional

5 unchanged sentences

Balance, December 31, 2022 $ 766 $ 1,122,292 $ 272,027 $ ( 78,941 ) $ ( 626,586 ) $ 689,558

Net loss — — ( 12,425 ) — — ( 12,425 )

Currency translation adjustments (excluding intercompany advances) — — — ( 23,571 ) — ( 23,571 )

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, 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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In Thousands)

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 )

Net income — — 2,158 — — 2,158

Currency translation adjustments (excluding intercompany advances) — — — 3,494 — 3,494

2 unchanged sentences

Surrender of stock to settle taxes on stock awards — — — — ( 1,936 ) ( 1,936 )

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 Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Balance, March 31, 2023 $ 771 $ 1,123,876 $ 274,185 $ ( 74,792 ) $ ( 628,522 ) $ 695,518

Three Months Ended March 31, 2022 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Balance, December 31, 2021 $ 739 $ 1,105,135 $ 281,567 $ ( 66,031 ) $ ( 625,584 ) $ 695,826

4 unchanged sentences

Surrender of stock to settle taxes on 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

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

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

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

Net income (loss) $ 2,158 $ ( 9,424 )

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

Depreciation and amortization expense 15,256 17,817

Settlement of disputes with seller of GEODynamics, Inc.

Impairments of inventories — 2,113

Impairments of fixed and lease assets — 3,444

Stock-based compensation expense 1,589 1,835

Amortization of debt discount and deferred financing costs 1,416 1,839

Amortization of deferred financing costs 449 469

Deferred income tax provision (benefit) 396 ( 174 )

Gains on extinguishment of 1.50 % convertible senior notes

( 157 ) ( 4,022 )

Gains on disposals of assets ( 210 ) ( 543 )

Other, net 17 550

Changes in operating assets and liabilities, net of effect from acquired business:

Changes in operating assets and liabilities:

Accounts receivable ( 745 ) ( 9,086 )

3 unchanged sentences

Other operating assets and liabilities, net 2,124 1,142

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

Net cash flows used in operating activities ( 5,918 ) ( 10,735 )

Cash flows from investing activities:

1 unchanged sentence

Proceeds from disposition of property and equipment 223 869

Acquisition of business, net of cash acquired ( 8,125 ) —

Other, net ( 48 ) ( 67 )

3 unchanged sentences

Revolving credit facility repayments ( 22,865 ) ( 367 )

Payment of promissory note to seller of GEODynamics, Inc.

Issuance of 4.75 % convertible senior notes

Purchases of 1.50 % convertible senior notes

( 6,272 ) ( 125,952 )

Repayment of 1.50 % convertible senior notes

Other debt and finance lease repayments, net ( 106 ) ( 165 )

13 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED 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.

As further discussed in Note 12, "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 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.

4 unchanged sentences

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, 2022.

On April 14, 2022, the Company acquired E-Flow Control Holdings Limited ("E-Flow"), a U.K.-based global provider of fully integrated handling, control, monitoring and instrumentation solutions.

The purchase price of $ 8.1 million (net of cash acquired) was funded with cash-on-hand and is subject to customary post-closing adjustments.

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 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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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

First quarter 2021

Impairments of fixed assets (Note 4)

$ — $ 650 $ — $ — $ 650 $ 137 $ 513

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

Second quarter 2021

Impairments of operating lease assets (Note 4)

$ — $ 2,794 $ — $ — $ 2,794 $ 587 $ 2,207

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

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Details of Selected Balance Sheet Accounts

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

September 30,

Additional information regarding selected balance sheet accounts as of March 31, 2023 and December 31, 2022 is presented below (in thousands):

2023 December 31,

8 unchanged sentences

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

September 30,

2023 December 31,

Deferred revenue (contract liabilities) $ 48,969 $ 44,790

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,

As of March 31, 2023, 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 March 31, 2023.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2023, the $ 14.9 million net decrease in contract assets was attributable to $ 27.8 million transferred to accounts receivable during the period, which was partially offset by $ 12.9 million in revenue recognized.

Deferred revenue (contract liabilities) increased by $ 4.2 million in the first three months of 2023, reflecting $ 13.2 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $ 9.0 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 three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Allowance for doubtful accounts – January 1 $ 5,226 $ 4,471

1 unchanged sentence

Write-offs ( 21 ) ( 635 )

Other 272 136

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

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30,

Allowance for doubtful accounts – March 31 $ 5,359 $ 4,779

2023 December 31,

6 unchanged sentences

$ 196,278 $ 182,658

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,

2023 December 31,

3 unchanged sentences

$ 306,134 $ 303,835

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.

September 30, 2022 December 31, 2021

For the three months ended March 31, 2023 and 2022, depreciation expense was $ 11.0 million and $ 12.7 million, respectively.

March 31, 2023 December 31, 2022

Amount Accumulated

7 unchanged sentences

$ 263,681 $ 98,008 $ 165,673 $ 263,497 $ 93,699 $ 169,798

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,

For the three months ended March 31, 2023 and 2022, amortization expense was $ 4.3 million and $ 5.2 million, respectively.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2023 December 31,

5 unchanged sentences

$ 24,506 $ 25,687

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30,

____________________

(1) Unamortized deferred financing costs are presented as an offset to outstanding borrowing under the ABL Facility as of March 31, 2023.

2023 December 31,

8 unchanged sentences

Long-term Debt

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

September 30,

As of March 31, 2023 and December 31, 2022, long-term debt consisted of the following (in thousands):

2023 December 31,

2 unchanged sentences

132,379 132,164

2023 Notes (3)

19,473 25,802

Promissory note — 17,534

Other debt and finance lease obligations 3,327 3,430

3 unchanged sentences

____________________

(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.

(1) Outstanding borrowings under the revolving credit facility are presented net of $ 1.7 million of unamortized deferred financing costs as of March 31, 2023.

Unamortized deferred financing costs of $ 1.9 million as of December 31, 2022 are presented in other noncurrent assets.

(2) The outstanding principal amount of the 2026 Notes was $ 135.0 million as of March 31, 2023 and December 31, 2022.

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.

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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1 unchanged sentence

Borrowings under the ABL Agreement are secured by a pledge of substantially all of the Company's domestic assets (other than real property) and the stock of certain foreign subsidiaries.

Borrowings under the ABL Agreement bear interest at a rate equal to the London Interbank Offered Rate ("LIBOR") plus a margin of 2.75 % to 3.25 % and subject to a LIBOR floor rate of 0.50 %, or at a base rate plus a margin of 1.75 % to 2.25 %, in each case based on average borrowing availability.

Since December 13, 2022, borrowings under the ABL Agreement bear interest at a rate equal to the Secured Overnight Financing Rate ("SOFR") rate (subject to a floor rate of 0 %) plus a margin of 2.75 % to 3.25 %, or at a base rate plus a margin of 1.75 % to 2.25 %, in each case based on average borrowing availability.

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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 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.

2 unchanged sentences

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

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.

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

As of March 31, 2023, the Company had $ 5.0 million of outstanding ABL Facility borrowings and $ 15.9 million of outstanding letters of credit.

The total amount available to be drawn as of March 31, 2023 was $ 92.8 million, calculated based on the current borrowing base less outstanding borrowings and letters of credit.

As of March 31, 2023, the Company was in compliance with its debt covenants under the ABL Agreement.

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 Computershare Trust Company, National Association, as successor trustee.

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

The Company used $ 120.0 million of the cash proceeds to purchase $ 125.0 million principal amount of the outstanding 2023 Notes at a discount, with the balance added to cash on-hand.

The Company used $ 120.0 million of the cash proceeds to purchase $ 125.0 million principal amount of the outstanding 2023 Notes (as defined below) at a discount, with the balance added to cash on-hand.

The 2026 Notes bear interest at a rate of 4.75 % per year and will mature on April 1, 2026, unless earlier repurchased, redeemed or converted.

3 unchanged sentences

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 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 $ 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 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

Nine Months Ended September 30,

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

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

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Promissory Note

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 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.

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.

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

As of March 31, 2023, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

On February 15, 2023, the Company's 1.50 % convertible senior notes due 2023 (the "2023 Notes") matured and the outstanding $ 17.3 million principal amount was repaid in full.

Fair Value Measurements

The Company's financial instruments consist of cash and cash equivalents, investments, receivables, payables and debt instruments.

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, 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.

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

The estimated fair value of the 2026 Notes as of March 31, 2023 was $ 151.1 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 UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 nine 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 three months of 2023 (in thousands):

Shares of common stock outstanding – December 31, 2022 63,904

Issuance of common stock to seller of GEODynamics, Inc.

Restricted stock awards, net of forfeitures 555

Shares withheld for taxes on vesting of stock awards ( 204 )

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.

Shares of common stock outstanding – March 31, 2023 64,255

As of March 31, 2023 and December 31, 2022, the Company had 25,000,000 shares of preferred stock, $ 0.01 par value, authorized, with no shares issued or outstanding.

On February 16, 2023, the Company's Board of Directors authorized $ 25.0 million for the repurchases of the Company's common stock, par value $ 0.01 per share, through February 2025.

Subject to applicable securities laws, such purchases will be at such times and in such amounts as the Company deems appropriate.

As of March 31, 2023, no repurchases were made under this authorization.

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 $ 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.

Accumulated other comprehensive loss decreased from $ 78.9 million at December 31, 2022 to $ 74.8 million at March 31, 2023.

For the three months ended March 31, 2023 and 2022, currency translation adjustments recognized as a component of other comprehensive income were primarily attributable to the United Kingdom and Brazil.

During the three months ended March 31, 2023, the exchange rates for the British pound and the Brazilian real strengthened by 3 % and 2 %, respectively, compared to the U.S.

dollar, contributing to other comprehensive income of $ 4.1 million.

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

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

dollar, contributing to other comprehensive loss of $ 23.8 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.

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

The income tax expense for the three months ended March 31, 2023 was calculated using a discrete approach.

This methodology was used because changes in the Company's results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate.

For the three months ended March 31, 2023, the Company's income tax expense was $ 1.6 million on pre-tax income of $ 3.8 million, which included certain non-deductible expenses and discrete tax items.

This compares to an income tax expense of $ 3.4 million on a pre-tax loss of $ 6.0 million, which included the impact of valuation allowances recorded against tax assets as well as certain non-deductible expenses and discrete tax items, for the three months ended March 31, 2022.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 $ 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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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):

The table below provides a reconciliation of the numerators and denominators of basic and diluted net income (loss) per share for the three months ended March 31, 2023 and 2022 (in thousands, except per share amounts):

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income (loss) $ 2,158 $ ( 9,424 )

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Unvested restricted stock awards — —

Unvested performance share units 247 —

Denominator for diluted net income (loss) per share 63,072 60,498

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Diluted 0.03 ( 0.16 )

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The calculation of diluted earnings per share for the three months ended March 31, 2023 and 2022 excluded 209 thousand shares and 298 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

Additionally, shares issuable upon conversion of the Company's convertible senior notes were excluded from each period due to, among other factors, the Company's share price.

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 nine months ended September 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 three months ended March 31, 2023 (in thousands):

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

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Forfeited ( 82 ) — —

Outstanding – September 30, 2022 245 1,221 630

Outstanding – March 31, 2023 163 1,264 662

Weighted average grant date fair value (2023 awards) $ 9.11 $ 9.11

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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 ( 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.

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.

Service-based stock unit awards ( 39 thousand units outstanding as of March 31, 2023) vest over one-year , with the underlying shares issued at a specified future date.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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.

The ultimate dollar amount to be awarded for the 2022 and 2021 Cash Awards is limited to their targeted award value ($ 1.5 million) if the Company's total stockholder return were to be negative over the performance period.

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, 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.

The Company issued conditional long-term cash incentive awards ("Cash Awards") of $ 1.5 million in the first quarters of 2023 and 2022.

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

The ultimate dollar amount to be awarded for each annual grant may range from zero to a maximum of $ 3.1 million, limited to their targeted award value ($ 1.5 million) if the Company's total stockholder return were to be negative over the performance period.

Obligations related to the Cash Awards are classified as liabilities and recognized over their respective vesting periods.

Stock-based compensation expense recognized during the three months ended March 31, 2023 and 2022 totaled $ 1.6 million and $ 1.8 million, respectively.

As of March 31, 2023, there was $ 11.4 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segments and Related Information

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

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 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

Downhole Technologies 32,848 4,442 ( 342 ) 273 257,676

Corporate — 167 ( 10,332 ) 23 46,736

Total $ 189,394 $ 16,413 $ 5,058 $ 6,810 $ 1,050,370

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

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

Downhole Technologies (2)

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

Corporate — 238 ( 7,618 ) 408 80,309

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

________________

(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.

Financial information by operating segment for the three months ended March 31, 2023 and 2022 is summarized in the following tables (in thousands).

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

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Offshore/Manufactured Products $ 98,199 $ 4,668 $ 11,090 $ 535 $ 548,439

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

Well Site Services 67,058 6,146 6,966 5,772 212,415

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

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

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

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

127,604 31,641 ( 26,693 ) 7,410 210,601

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

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

Corporate — 171 ( 9,632 ) 91 55,053

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

________________

(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.

(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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 September 30

Major revenue categories -

Project-driven products $ 38,911 $ 25,294 $ — $ — $ — $ — $ 38,911 $ 25,294

Completion products and services 15,036 11,544 53,928 42,714 32,848 25,527 101,812 79,785

Drilling services — — 6,581 3,284 — — 6,581 3,284

Other products 8,674 7,138 — — — — 8,674 7,138

Total short-cycle 23,710 18,682 60,509 45,998 32,848 25,527 117,067 90,207

Other products and services 33,416 25,027 — — — — 33,416 25,027

$ 96,037 $ 69,003 $ 60,509 $ 45,998 $ 32,848 $ 25,527 $ 189,394 $ 140,528

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended March 31, 2023 and 2022 (in thousands):

Offshore/Manufactured Products Well Site Services Downhole Technologies Total

2023 2022 2023 2022 2023 2022 2023 2022

Nine Months Ended September 30

Three Months Ended March 31

Major revenue categories -

6 unchanged sentences

$ 98,199 $ 84,112 $ 67,058 $ 48,172 $ 30,942 $ 31,760 $ 196,199 $ 164,044

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.

Revenues from products and services transferred to customers over time accounted for approximately 66 % and 62 % of consolidated revenues for the three months ended March 31, 2023 and 2022, 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, 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 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.

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 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.

As of March 31, 2023, the Company had $ 209.9 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 2023, with an additional 46 % recognized in 2024 and the balance thereafter.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

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.

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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.

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.

Following an internal review, the Company voluntarily disclosed this matter to U.S.

Customs and Border Protection ("CBP") and, in December 2020, reached an agreement with CBP to settle this matter for $ 7.3 million.

The Company asserted indemnification claims for such settlement amount and related costs of $ 7.5 million against the GEO Seller and pursed its right to set-off such amounts against payments due under the GEO Note.

As of June 28, 2022, the Company had reduced the carrying amount of such note in its consolidated balance sheet to $ 17.5 million, which was the Company's then-current best estimate of what was owed after set-off for such indemnification matters prior to the settlement of the counterclaim described below.

In August 2020, the GEO 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 GEO Note were not repaid in accordance with the terms of such note.

Additionally, the GEO Seller alleged that it was entitled to approximately $ 19.0 million in U.S.

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

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

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

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 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.

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 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:

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

• the impact of disruptions in the bank and capital markets, including the two U.S.

bank failures which occurred in March 2023;

• 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;

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• general global economic conditions;

• global weather conditions and natural disasters;

• global weather conditions and natural disasters, including hurricanes in the Gulf of Mexico;

• changes in tax laws and regulations;

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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