What changed in this filing

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Item 1. Financial Statements

2024-04-26 compared with 2023-10-27 · 145 added, 194 removed, 367 unchanged (48% of the section changed)

2 unchanged sentences

(In Thousands, Except Per Share Amounts)

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

2023 2022 2023 2022

Three Months Ended March 31,

Products $ 94,329 $ 99,840

7 unchanged sentences

Depreciation and amortization expense 14,195 15,256

Other operating income, net ( 1,985 ) ( 6,750 ) ( 2,503 ) ( 6,852 )

Impairment of goodwill 10,000 —

Other operating (income) expense, net ( 203 ) 317

178,439 190,324

1 unchanged sentence

Interest expense, net ( 2,101 ) ( 2,391 )

Other income, net 186 491 672 1,892

Other income (expense), net ( 72 ) 276

Income (loss) before income taxes ( 13,350 ) 3,760

12 unchanged sentences

(In Thousands)

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

2023 2022 2023 2022

Three Months Ended March 31,

Net income (loss) $ ( 13,374 ) $ 2,158

7 unchanged sentences

(In Thousands, Except Share Amounts)

September 30,

2024 December 31, 2023

33 unchanged sentences

Total stockholders’ equity

692,318 709,545

Total liabilities and stockholders’ equity

$ 1,015,815 $ 1,046,486

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

3 unchanged sentences

(In Thousands)

Three Months Ended September 30, 2023 Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stockholders'

Balance, June 30, 2023 $ 772 $ 1,125,647 $ 274,743 $ ( 71,522 ) $ ( 631,535 ) $ 698,105

Net income — — 4,212 — — 4,212

Currency translation adjustments (excluding intercompany advances) — — — ( 4,429 ) — ( 4,429 )

Currency translation adjustments on intercompany advances — — — ( 1,320 ) — ( 1,320 )

Stock-based compensation expense — 1,796 — — — 1,796

Stock repurchases — — — — — —

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

Balance, September 30, 2023 $ 772 $ 1,127,443 $ 278,955 $ ( 77,271 ) $ ( 631,535 ) $ 698,364

Nine Months Ended September 30, 2023 Common

Three Months Ended March 31, 2024 Common

Stock Additional

5 unchanged sentences

Balance, December 31, 2023 $ 772 $ 1,129,240 $ 284,918 $ ( 69,984 ) $ ( 635,401 ) $ 709,545

Net income — — 6,928 — — 6,928

Currency translation adjustments (excluding intercompany advances) — — — 1,774 — 1,774

Currency translation adjustments on intercompany advances — — — ( 104 ) — ( 104 )

Stock-based compensation expense 6 5,151 — — — 5,157

Stock repurchases — — — — ( 3,001 ) ( 3,001 )

Surrender of stock to settle taxes on stock awards — — — — ( 1,948 ) ( 1,948 )

Balance, September 30, 2023 $ 772 $ 1,127,443 $ 278,955 $ ( 77,271 ) $ ( 631,535 ) $ 698,364

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

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

Net income — — 2,143 — — 2,143

Net loss — — ( 13,374 ) — — ( 13,374 )

Currency translation adjustments (excluding intercompany advances) — — — ( 895 ) — ( 895 )

Currency translation adjustments on intercompany advances — — — ( 2,132 ) — ( 2,132 )

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

19 10,313 — — — 10,332

Stock-based compensation expense 13 1,739 — — — 1,752

Surrender of stock to settle taxes on stock awards — — — — ( 2,578 ) ( 2,578 )

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

Balance, March 31, 2024 $ 785 $ 1,130,979 $ 271,544 $ ( 73,011 ) $ ( 637,979 ) $ 692,318

Three Months Ended March 31, 2023 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Equity

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

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

Net income — — 2,158 — — 2,158

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

Currency translation adjustments on intercompany advances — — — 655 — 655

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

19 10,313 — — — 10,332

Stock-based compensation expense 5 1,584 — — — 1,589

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

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

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

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 income (loss) $ ( 13,374 ) $ 2,158

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

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

Depreciation and amortization expense 14,195 15,256

Impairment of goodwill

Stock-based compensation expense 1,752 1,589

2 unchanged sentences

Gains on disposals of assets ( 1,245 ) ( 210 )

Settlement of disputes with seller of GEODynamics, Inc.

Other, net ( 300 ) 17

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

Changes in operating assets and liabilities:

Accounts receivable 1,579 ( 745 )

3 unchanged sentences

Other operating assets and liabilities, net 135 2,124

Net cash flows provided by operating activities 52,377 18,993

Net cash flows used in operating activities ( 11,360 ) ( 5,918 )

Cash flows from investing activities:

Capital expenditures ( 10,092 ) ( 6,568 )

Proceeds from disposition of property and equipment 4,374 2,211

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

Proceeds from disposition of equipment

Other, net ( 31 ) ( 48 )

4 unchanged sentences

Repayment of 1.50 % convertible senior notes

( 17,315 ) ( 6,272 )

Payment of promissory note to seller of GEODynamics, Inc.

Other debt and finance lease repayments ( 154 ) ( 106 )

Payment of financing costs ( 954 ) ( 21 )

Purchases of treasury stock ( 3,001 ) —

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

21 unchanged sentences

Actual results could materially differ from those estimates.

The Company revised its presentation of supplemental disclosure of disaggregated revenue information in Note 10, "Segments and Related Information," in the second quarter of 2023.

Prior-period disclosures of disaggregated revenue information were conformed with the current-period presentation.

In the first quarter of 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plug and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies.

Historical segment financial data and disaggregated revenue information in Note 10, “Segments and Related Information” were conformed with the current-period segment presentation.

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

1 unchanged sentence

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, 2023.

Charges and Benefits

During the third quarter of 2023, the Offshore/Manufactured Products segment recognized facility consolidation charges totaling $ 1.6 million in connection with the ongoing consolidation and relocation of certain manufacturing and service facilities and the relocation of related equipment.

In the third quarter of 2022, the Offshore/Manufactured Products segment recognized a gain of $ 6.1 million associated with the settlement of outstanding litigation against certain service providers.

Goodwill Impairment and Other Charges

In 2023, the Company implemented initiatives to reduce future costs, which are continuing into 2024.

These management actions included the consolidation, relocation and exit of certain manufacturing and service locations as well as the realignment of operations within two of the Company’s reportable segments.

The Company has also incurred legal and other related costs to enforce certain patents related to its proprietary technologies.

As a result of these actions, the Company recorded the following charges during the first quarter of 2024 (in thousands):

Offshore Manufactured Products

Well Site Services

Downhole Technologies

Pre-tax Total

After-tax Total

Impairment of goodwill

$ — $ — $ 10,000 $ 10,000 $ 481 $ 9,519

Facility consolidation and other charges

1,463 1,046 — 2,509 527 1,982

The Company does not amortize goodwill, but rather assesses goodwill for impairment annually and when an event occurs or circumstances change that indicate the carrying amounts may not be recoverable.

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

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Changes in the carrying amount of goodwill, by operating segment, for the three months ended March 31, 2024 were as follows (in thousands):

Offshore Manufactured

Downhole Technologies Total

Balance as of December 31, 2023 $ 79,867 $ — $ 79,867

Goodwill associated with transferred operations

( 10,000 ) 10,000 —

Impairment of goodwill

— ( 10,000 ) ( 10,000 )

Foreign currency translation ( 93 ) — ( 93 )

Balance as of March 31, 2024

$ 69,774 $ — $ 69,774

In connection with the first quarter 2024 realignment of the composition of two of its reportable segments discussed in Note 1, “Organization and Basis of Presentation,” goodwill of $ 10.0 million was reassigned from the Offshore Manufactured Products segment to the Downhole Technologies segment based on estimated relative fair values.

The Company performed an interim quantitative assessment of goodwill recorded within the Offshore Manufactured Products segment as of February 29, 2024 (prior to realignment) which indicated that the fair value of the reporting unit exceeded its carrying value.

The Company also performed an interim quantitative assessment of goodwill transferred to the Downhole Technologies segment (subsequent to the realignment).

This interim assessment indicated that the fair value of the reporting unit was less than its carrying amount and the Company concluded that goodwill reassigned to the Downhole Technologies business was fully impaired.

The Company therefore recognized a non-cash goodwill impairment charge totaling $ 10.0 million in the first quarter of 2024.

This impairment charge did not impact the Company’s liquidity position, debt covenants or cash flows.

Management used a combination of valuation methodologies including the income approach and guideline public company comparables.

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

The income approach estimates fair value by discounting the Company’s forecasts of future cash flows by a discount rate (expected return) that a market participant is expected to require on its investment.

Significant assumptions and estimates used in the income approach include, among others, estimated future net annual cash flows and discount rates for each reporting unit, current and anticipated market conditions, estimated growth rates and historical data.

These estimates rely upon significant management judgment.

Details of Selected Balance Sheet Accounts

Additional information regarding selected balance sheet accounts as of September 30, 2023 and December 31, 2022 is presented below (in thousands):

September 30,

Additional information regarding selected balance sheet accounts as of March 31, 2024 and December 31, 2023 is presented below (in thousands):

2024 December 31,

8 unchanged sentences

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

2024 December 31,

Deferred revenue (contract liabilities) $ 41,528 $ 36,757

OIL STATES INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30,

2023 December 31,

Deferred revenue (contract liabilities) $ 50,370 $ 44,790

As of September 30, 2023, accounts receivable, net in the United States and the United Kingdom represented 68 % and 11 %, 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, 2023.

For the nine months ended September 30, 2023, the $ 16.6 million net decrease in contract assets was attributable to $ 39.9 million transferred to accounts receivable during the period, which was partially offset by $ 23.3 million in revenue recognized.

Deferred revenue (contract liabilities) increased by $ 5.6 million in the first nine months of 2023, reflecting $ 20.7 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $ 15.1 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, 2023 and 2022 (in thousands):

Nine Months Ended September 30,

As of March 31, 2024, accounts receivable, net in the United States and the United Kingdom represented 65 % and 15 %, 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, 2024.

For the three months ended March 31, 2024, the $ 5.4 million net decrease in contract assets was primarily attributable to $ 27.4 million transferred to accounts receivable, which was partially offset by $ 22.0 million in revenue recognized during the period.

Deferred revenue (contract liabilities) increased by $ 4.8 million in the first three months of 2024, primarily reflecting $ 10.7 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $ 5.9 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, 2024 and 2023 (in thousands):

Three Months Ended March 31,

Allowance for doubtful accounts – January 1 $ 4,497 $ 5,226

1 unchanged sentence

Write-offs ( 135 ) ( 21 )

Allowance for doubtful accounts – September 30 $ 5,059 $ 4,399

September 30,

Other ( 5 ) 21

Allowance for doubtful accounts – March 31 $ 4,369 $ 5,359

2024 December 31,

6 unchanged sentences

$ 210,189 $ 202,027

September 30,

2024 December 31,

3 unchanged sentences

$ 278,083 $ 280,389

During 2023, certain facilities in the Offshore/Manufactured Products segment were reclassified as held for sale assets, and transferred from property, plant and equipment to prepaid and other current assets.

The carrying value of these facilities totaled $ 17.2 million as of September 30, 2023.

For the three months ended September 30, 2023 and 2022, depreciation expense was $ 11.1 million and $ 11.3 million, respectively.

Depreciation expense was $ 33.3 million and $ 35.9 million, respectively, for the nine months ended September 30, 2023 and 2022.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 December 31, 2022

For the three months ended March 31, 2024 and 2023, depreciation expense was $ 9.9 million and $ 11.0 million, respectively.

March 31, 2024 December 31, 2023

Amount Accumulated

7 unchanged sentences

$ 263,948 $ 115,214 $ 148,734 $ 263,960 $ 110,950 $ 153,010

For the three months ended September 30, 2023 and 2022, amortization expense was $ 4.3 million and $ 5.1 million, respectively.

Amortization expense was $ 12.9 million and $ 15.5 million for the nine months ended September 30, 2023 and 2022, respectively.

September 30,

For the three months ended March 31, 2024 and 2023, amortization expense was $ 4.3 million and $ 4.3 million, respectively.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2024 December 31,

5 unchanged sentences

$ 24,216 $ 23,253

September 30,

2024 December 31,

8 unchanged sentences

Long-term Debt

As of September 30, 2023 and December 31, 2022, long-term debt consisted of the following (in thousands):

September 30,

As of March 31, 2024 and December 31, 2023, long-term debt consisted of the following (in thousands):

2024 December 31,

7 unchanged sentences

____________________

(1) Unamortized deferred financing costs of $ 1.3 million and $ 1.9 million as of September 30, 2023 and December 31, 2022, respectively, are presented in other noncurrent assets.

(2) The outstanding principal amount of the 2026 Notes was $ 135.0 million as of September 30, 2023 and December 31, 2022.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Unamortized deferred financing costs of $ 1.8 million and $ 1.1 million as of March 31, 2024 and December 31, 2023, respectively, are presented in other noncurrent assets.

(2) The outstanding principal amount of the 2026 Notes was $ 135.0 million as of March 31, 2024 and December 31, 2023.

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.

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.

The Company has a senior secured credit facility, which provides for a $ 125.0 million asset-based revolving credit facility (as amended, the “ABL Facility”), under which credit availability is subject to a borrowing base calculation.

In February 2024, the Company amended the ABL Facility to extend the maturity date to February 16, 2028, 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.

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.

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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Borrowings under the ABL Agreement bear interest at a rate equal to the Secured Overnight Financing 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.

4 unchanged sentences

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

As of September 30, 2023, the Company had no borrowings outstanding under the ABL Facility and $ 16.4 million of outstanding letters of credit.

The total amount available to be drawn as of September 30, 2023 was $ 84.5 million, calculated based on the current borrowing base less outstanding borrowings and letters of credit.

As of September 30, 2023, the Company was in compliance with its debt covenants under the ABL Agreement.

As of March 31, 2024, the Company had no borrowings outstanding under the ABL Facility and $ 15.9 million of outstanding letters of credit.

The total amount available to be drawn as of March 31, 2024 was $ 86.3 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit.

As of March 31, 2024, 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.

5 unchanged sentences

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 September 30, 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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024, 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 Notes bore interest at a rate of 1.50 % per year, and the outstanding principal amount of $ 17.3 million matured and was repaid in full on February 15, 2023.

Fair Value Measurements

1 unchanged sentence

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 September 30, 2023 was $ 151.0 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 2026 Notes as of March 31, 2024 was $ 132.8 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 2023 (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 2024 (in thousands):

Shares of common stock outstanding – December 31, 2023 63,327

1 unchanged sentence

Shares withheld for taxes on vesting of stock awards ( 408 )

Purchases of treasury stock ( 439 )

Shares of common stock outstanding – September 30, 2023 63,889

As of September 30, 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.

Shares of common stock outstanding – March 31, 2024 64,215

As of March 31, 2024 and December 31, 2023, 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 repurchase of the Company’s common stock, par value $ 0.01 per share, through February 2025.

During the second quarter of 2023, the Company repurchased 438,563 shares of common stock under the program at a total cost of $ 3.0 million.

The amount remaining under the Company's share repurchase authorization as of September 30, 2023 was $ 22.0 million.

During the three months ended March 31, 2024, there were no repurchases of common stock under the program.

The amount remaining under the Company’s share repurchase authorization as of March 31, 2024 was $ 18.1 million.

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

2 unchanged sentences

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

Accumulated other comprehensive loss decreased from $ 78.9 million at December 31, 2022 to $ 77.3 million at September 30, 2023.

For the three and nine months ended September 30, 2023 and 2022, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the nine months ended September 30, 2023, the exchange rates 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 $ 1.7 million.

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.

Accumulated other comprehensive loss increased from $ 70.0 million at December 31, 2023 to $ 73.0 million at March 31, 2024.

For the three months ended March 31, 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the three months ended March 31, 2024, the exchange rates for the British pound and the Brazilian real weakened by 1 % and 3 %, respectively, compared to the U.S.

dollar, contributing to other comprehensive loss of $ 3.0 million.

The income tax expense for the three and nine months ended September 30, 2023 was calculated using a discrete approach.

During the three months ended March 31, 2023, the exchange rate 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.

Income tax expense for the three months ended March 31, 2024 and 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 September 30, 2023, the Company's income tax expense was $ 0.2 million on pre-tax income of $ 4.4 million, which included certain non-deductible expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets.

This compares to an income tax expense of $ 0.8 million on pre-tax income of $ 2.9 million, which which was negatively impacted by valuation allowances recorded against deferred tax assets as well as certain non-deductible expenses and discrete tax items, for the three months ended September 30, 2022.

For the three months ended March 31, 2024, the Company’s income tax expense was $ 24 thousand on a pre-tax loss of $ 13.4 million, which included a $ 10.0 million goodwill impairment charge (approximately $ 7.7 million of which was non-deductible) and other non-deductible expenses.

This compares to an income tax expense of $ 1.6 million on pre-tax income of $ 3.8 million, which included certain non-deductible expenses and discrete tax items, for the three months ended March 31, 2023.

OIL STATES INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2023, the Company's income tax expense was $ 2.7 million on pre-tax income of $ 9.6 million, which included certain non-deductible expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets.

This compares to an income tax expense of $ 6.0 million on a pre-tax loss of $ 6.4 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 nine months ended September 30, 2022.

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, 2023 and 2022 (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, 2024 and 2023 (in thousands, except per share amounts):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income (loss) $ ( 13,374 ) $ 2,158

9 unchanged sentences

Effect of dilutive securities:

Unvested restricted stock awards — 2 — —

Unvested performance share units 409 — 375 —

Performance share units — 247

Denominator for diluted net income (loss) per share 62,503 63,072

2 unchanged sentences

Diluted ( 0.21 ) 0.03

The calculation of diluted net income per share for the three and nine months ended September 30, 2023 excluded 159 thousand shares and 177 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, 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 earnings per share for the three months ended March 31, 2024 and 2023 excluded 122 thousand shares and 209 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

Additionally, shares issuable upon conversion of the 2026 Notes were excluded due to, among other factors, the Company’s share price.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2023 (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, 2024 (in thousands):

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

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Forfeited ( 81 ) — —

Outstanding – September 30, 2023 158 1,234 705

Outstanding – March 31, 2024 77 1,529 733

Weighted average grant date fair value (2024 awards) $ 6.10 $ 6.10

The restricted stock program consists of a combination of service-based restricted stock and stock units, as well as performance-based stock units.

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

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

Service-based stock unit awards vest over one-year , with the underlying shares issued at a specified future date.

Eighty-two thousand service-based stock units were outstanding as of September 30, 2023.

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 based on the Company's cumulative EBITDA over a three-year period.

Eighty-two thousand service-based stock units were outstanding as of March 31, 2024.

Performance-based stock unit awards vest at the end

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of a three-year period, with the number of shares ultimately issued under the program dependent upon achievement of predefined specific performance objectives based on the Company’s cumulative EBITDA over a three-year period.

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

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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 and nine months ended September 30, 2023 totaled $ 1.8 million and $ 5.2 million, respectively.

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

As of September 30, 2023, there was $ 8.8 million of total compensation costs related to unvested restricted stock awards, which is expected to be recognized in future periods as vesting conditions are satisfied.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock-based compensation expense recognized during the three months ended March 31, 2024 and 2023 totaled $ 1.8 million and $ 1.6 million, respectively.

As of March 31, 2024, there was $ 11.8 million of total compensation costs related to unvested restricted stock awards, which is expected to be recognized in future periods as vesting conditions are satisfied.

Segments and Related Information

The Company operates through three operating segments:

In the first quarter of 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment were integrated into the Downhole Technologies segment (see Note 1, “Organization and Basis of Presentation”).

Historical segment financial data and supplemental disaggregated revenue information for the three months ended March 31, 2023 (presented below) were conformed with the current-period segment presentation.

The Company operates through three reportable operating segments:

Offshore Manufactured Products, Well Site Services and Downhole Technologies.

Financial information by operating segment for the three and nine months ended September 30, 2023 and 2022 is summarized in the following tables (in thousands).

Financial information by operating segment for the three months ended March 31, 2024 and 2023 is summarized in the following tables (in thousands).

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

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

Offshore Manufactured Products (1)

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Well Site Services (2)

Downhole Technologies 23,415 4,030 ( 4,118 ) 541 246,329

Corporate — 152 ( 10,781 ) 150 64,044

47,292 6,079 ( 419 ) 2,414 179,763

____________________

(1) Operating income included $ 1.6 million of facility consolidation charges.

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

Three Months Ended September 30, 2022

Offshore/Manufactured Products (2)

$ 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 (3)

Corporate — 167 ( 10,332 ) 23 46,736

33,113 4,270 ( 12,079 ) 446 278,055

____________________

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

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

Nine Months Ended September 30, 2023

Offshore/Manufactured Products (3)

$ 303,328 $ 14,236 $ 40,147 $ 7,936 $ 536,263

Well Site Services 191,425 19,023 14,983 14,046 201,384

Downhole Technologies 79,264 12,480 ( 8,173 ) 961 246,329

Corporate — 153 ( 9,282 ) 11 41,958

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(1) Operating income included $ 1.5 million of facility consolidation charges.

(2) Operating loss included $ 1.0 million in facility consolidation and other charges.

(3) Operating loss included a $ 10.0 million non-cash goodwill impairment charge (see Note 2, “G oodwill Impairment and Other Charges”).

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

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$ 196,199 $ 15,256 $ 5,875 $ 6,568 $ 1,050,137

_______________

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

OIL STATES INTERNATIONAL, INC.

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NOTES TO UNAUDITED CONDENSED 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, 2023 and 2022 (in thousands):

Offshore/Manufactured Products Well Site Services Downhole Technologies Total

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended March 31, 2024 and 2023 (in thousands):

Offshore Manufactured Products

Well Site Services Downhole Technologies Total

2024 2023 2024 2023 2024 2023 2024 2023

Three Months Ended September 30

Three Months Ended March 31

Project-driven:

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Military and other products 8,487 7,258 — — — — 8,487 7,258

Products 27,930 23,710 — — 21,984 27,127 49,914 50,837

Services — — 59,831 60,509 1,431 5,721 61,262 66,230

Total short-cycle 27,930 23,710 59,831 60,509 23,415 32,848 111,176 117,067

$ 111,043 $ 96,037 $ 59,831 $ 60,509 $ 23,415 $ 32,848 $ 194,289 $ 189,394

Offshore/Manufactured Products Well Site Services Downhole Technologies Total

Short-cycle products and services

— — 47,292 67,058 33,113 48,636 80,405 115,694

Nine Months Ended September 30

Project-driven:

Products $ 116,869 $ 113,853 $ — $ — $ — $ — $ 116,869 $ 113,853

Services 79,867 71,714 — — — — 79,867 71,714

Total project-driven 196,736 185,567 — — — — 196,736 185,567

Military and other products 22,157 23,104 — — — — 22,157 23,104

Products 84,435 67,945 — — 71,645 79,635 156,080 147,580

Services — — 191,425 163,500 7,619 15,521 199,044 179,021

Total short-cycle 84,435 67,945 191,425 163,500 79,264 95,156 355,124 326,601

$ 86,857 $ 80,505 $ 47,292 $ 67,058 $ 33,113 $ 48,636 $ 167,262 $ 196,199

Revenues from products and services transferred to customers over time accounted for approximately 66 % and 63 % of consolidated revenues for the nine months ended September 30, 2023 and 2022, respectively.

Revenues from products and services transferred to customers over time accounted for approximately 67 % and 66 % of consolidated revenues for the three months ended March 31, 2024 and 2023, 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, 2023, the Company had $ 225.9 million of remaining backlog related to contracts with an original expected duration of greater than one year .

Approximately 19 % of this remaining backlog is expected to be recognized as revenue over the remaining three months of 2023, with an additional 51 % recognized in 2024 and the balance thereafter.

As of March 31, 2024, the Company had $ 203.0 million of remaining backlog related to contracts with an original expected duration of greater than one year.

Approximately 43 % of this remaining backlog is expected to be recognized as revenue over the remaining nine months of 2024, with an additional 33 % recognized in 2025 and the balance thereafter.

Commitments and Contingencies

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• the level of offshore oil and natural gas developmental activities;

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

bank failures which occurred in March, May and July of 2023;

• the financial health of our customers;

• the financial health and consolidation of our customers;

• the impact of environmental matters, including executive actions and regulatory or legislative efforts to adopt environmental or climate change regulations that may result in increased operating costs or reduced oil and natural gas production or demand globally;

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

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

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

• the availability of and access to attractive oil and natural gas field prospects, which may be affected by governmental actions or actions of other parties restricting drilling and completion activities;

• the impact of disruptions in the bank and capital markets;

• general global economic conditions;

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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