OIL STATES INTERNATIONAL, INC 10-Q

ITEM 1. Financial Statements UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) Three Months Ended March 31, 2025 2024 Revenues: Products $ 100,551 $ 94,329 Services 59,387 72,933 159,938 167,262 Costs and expenses: Product costs 80,329 75,137 Service costs 42,348 56,814 Cost of revenues (exclusive of depreciation and amortization expense presented below) 122,677 131,951 Selling, general and administrative expense 22,530 22,496 Depreciation and amortization expense 12,025 14,195 Impairment of goodwill — 10,000 Other operating income, net ( 2,933 ) ( 203 ) 154,299 178,439 Operating income (loss) 5,639 ( 11,177 ) Interest expense, net ( 1,578 ) ( 2,101 ) Other income (expense), net 138 ( 72 ) Income (loss) before income taxes 4,199 ( 13,350 ) Income tax provision ( 1,041 ) ( 24 ) Net income (loss) $ 3,158 $ ( 13,374 ) Net income (loss) per share: Basic $ 0.05 $ ( 0.21 ) Diluted 0.05 ( 0.21 ) Weighted average number of common shares outstanding: Basic 60,167 62,503 Diluted 60,167 62,503 The accompanying notes are an integral part of these financial statements. 3 OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In Thousands) Three Months Ended March 31, 2025 2024 Net income (loss) $ 3,158 $ ( 13,374 ) Other comprehensive income (loss): Currency translation adjustments 5,539 ( 3,027 ) Comprehensive income (loss) $ 8,697 $ ( 16,401 ) The accompanying notes are an integral part of these financial statements. 4 OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share Amounts) March 31, 2025 December 31, 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 66,828 $ 65,363 Accounts receivable, net 183,539 194,336 Inventories, net 215,702 214,836 Prepaid expenses and other current assets 21,584 23,691 Total current assets 487,653 498,226 Property, plant, and equipment, net 268,021 266,871 Operating lease assets, net 18,406 19,537 Goodwill, net 70,058 69,709 Other intangible assets, net 122,238 125,862 Other noncurrent assets 24,359 24,903 Total assets $ 990,735 $ 1,005,108 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ 620 $ 633 Accounts payable 49,909 57,708 Accrued liabilities 31,858 36,861 Current operating lease liabilities 7,111 7,284 Income taxes payable 2,071 2,818 Deferred revenue 50,908 52,399 Total current liabilities 142,477 157,703 Long-term debt 124,728 124,654 Long-term operating lease liabilities 16,478 17,989 Deferred income taxes 5,578 5,350 Other noncurrent liabilities 18,063 18,758 Total liabilities 307,324 324,454 Stockholders’ equity: Common stock, $ .01 par value, 200,000,000 shares authorized, 80,479,690 shares and 78,605,848 shares issued, respectively 805 786 Additional paid-in capital 1,139,768 1,137,949 Retained earnings 276,818 273,660 Accumulated other comprehensive loss ( 73,993 ) ( 79,532 ) Treasury stock, at cost, 18,606,814 and 17,112,853 shares, respectively ( 659,987 ) ( 652,209 ) Total stockholders’ equity 683,411 680,654 Total liabilities and stockholders’ equity $ 990,735 $ 1,005,108 The accompanying notes are an integral part of these financial statements. 5 OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In Thousands) Three Months Ended March 31, 2025 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Equity Balance, December 31, 2024 $ 786 $ 1,137,949 $ 273,660 $ ( 79,532 ) $ ( 652,209 ) $ 680,654 Net income — — 3,158 — — 3,158 Currency translation adjustments (excluding intercompany advances) — — — 3,336 — 3,336 Currency translation adjustments on intercompany advances — — — 2,203 — 2,203 Stock-based compensation expense 19 1,819 — — — 1,838 Surrender of stock to settle taxes on stock awards — — — — ( 2,432 ) ( 2,432 ) Stock repurchases — — — — ( 5,346 ) ( 5,346 ) Balance, March 31, 2025 $ 805 $ 1,139,768 $ 276,818 $ ( 73,993 ) $ ( 659,987 ) $ 683,411 Three Months Ended March 31, 2024 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Equity Balance, December 31, 2023 $ 772 $ 1,129,240 $ 284,918 $ ( 69,984 ) $ ( 635,401 ) $ 709,545 Net loss — — ( 13,374 ) — — ( 13,374 ) Currency translation adjustments (excluding intercompany advances) — — — ( 895 ) — ( 895 ) Currency translation adjustments on intercompany advances — — — ( 2,132 ) — ( 2,132 ) Stock-based compensation expense 13 1,739 — — — 1,752 Surrender of stock to settle taxes on stock awards — — — — ( 2,578 ) ( 2,578 ) Balance, March 31, 2024 $ 785 $ 1,130,979 $ 271,544 $ ( 73,011 ) $ ( 637,979 ) $ 692,318 The accompanying notes are an integral part of these financial statements. 6 OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ 3,158 $ ( 13,374 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization expense 12,025 14,195 Impairment of goodwill — 10,000 Stock-based compensation expense 1,838 1,752 Amortization of deferred financing costs 332 513 Deferred income tax provision (benefit) 175 ( 1,122 ) Gains on disposals of assets ( 2,189 ) ( 1,245 ) Other, net ( 442 ) ( 300 ) Changes in operating assets and liabilities, net of effect from acquired business: Accounts receivable 12,382 1,579 Inventories 237 ( 8,909 ) Accounts payable and accrued liabilities ( 11,497 ) ( 19,355 ) Deferred revenue ( 1,491 ) 4,771 Other operating assets and liabilities, net ( 5,233 ) 135 Net cash flows provided by (used in) operating activities 9,295 ( 11,360 ) Cash flows from investing activities: Capital expenditures ( 9,158 ) ( 10,092 ) Proceeds from disposition of property and equipment 1,685 2,295 Proceeds from disposition of assets held for sale 7,500 — Other, net ( 34 ) ( 31 ) Net cash flows used in investing activities ( 7 ) ( 7,828 ) Cash flows from financing activities: Revolving credit facility borrowings 170 1,894 Revolving credit facility repayments ( 170 ) ( 1,894 ) Other debt and finance lease repayments ( 171 ) ( 154 ) Payment of financing costs ( 6 ) ( 954 ) Purchases of treasury stock ( 5,346 ) — Shares added to treasury stock as a result of net share settlements due to vesting of stock awards ( 2,432 ) ( 2,578 ) Net cash flows used in financing activities ( 7,955 ) ( 3,686 ) Effect of exchange rate changes on cash and cash equivalents 132 ( 178 ) Net change in cash and cash equivalents 1,465 ( 23,052 ) Cash and cash equivalents, beginning of period 65,363 47,111 Cash and cash equivalents, end of period $ 66,828 $ 24,059 Cash paid for: Interest $ 307 $ 306 Income taxes, net 708 599 The accompanying notes are an integral part of these financial statements. 7 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Oil States International, Inc. and its subsidiaries (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. Certain information in footnote disclosures normally included with financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to these rules and regulations. The unaudited financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair statement of the results of operations for the interim periods covered and for the financial condition of the Company at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year. 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. Examples of such estimates include, but are not limited to, goodwill and long-lived asset impairments, revenue and income recognized over time, valuation allowances recorded on deferred tax assets, reserves on inventory, allowances for doubtful accounts, settlement of litigation and potential future adjustments related to contractual indemnification and other agreements. Actual results could materially differ from those estimates. From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, which are adopted by the Company as of the specified effective date. Management believes that recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption. The financial statements included in this report should be read in conjunction with the Company’s audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2024. 2. Asset Impairments and Other Charges In 2024, the Company implemented initiatives to reduce future costs, which are continuing into 2025. These management actions included: the consolidation, relocation and exit of certain manufacturing and service locations; the exit of certain service offerings; reductions in the Company’s workforce in the United States as well as the realignment of operations within two of the Company’s reportable segments. The Company also incurred legal and other related costs to enforce certain patents related to its proprietary technologies in 2024. As a result of these events, actions and assessments, the Company recorded the following charges in 2025 and 2024 (in thousands): Offshore Manufactured Products Completion and Production Services Downhole Technologies Corporate Total Three Months Ended March 31, 2025 Facility exit charges $ — $ 930 $ — $ — $ 930 Income tax benefit 196 After-tax total $ 734 Three Months Ended March 31, 2024 Impairment of goodwill $ — $ — $ 10,000 $ — $ 10,000 Facility consolidation and exit, and other charges 1,463 1,046 — — 2,509 Pre-tax totals $ 1,463 $ 1,046 $ 10,000 $ — 12,509 Income tax benefit 1,008 After-tax total $ 11,501 8 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Goodwill 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. Management uses 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. 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. In connection with this realignment, 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. The Company performed an annual qualitative assessment of goodwill as of December 1, 2024, which indicated that the fair value of the Offshore Manufactured Products segment was greater than its carrying amount and no additional provision for impairment was required. The Company’s remaining goodwill within the segment totaled approximately $ 70 million as of March 31, 2025 and December 31, 2024. 3. Details of Selected Balance Sheet Accounts Additional information regarding selected balance sheet accounts as of March 31, 2025 and December 31, 2024 is presented below (in thousands): March 31, 2025 December 31, 2024 Accounts receivable, net: Trade $ 109,505 $ 128,167 Unbilled revenue 23,466 22,242 Contract assets 47,870 40,101 Other 5,469 6,440 Total accounts receivable 186,310 196,950 Allowance for doubtful accounts ( 2,771 ) ( 2,614 ) $ 183,539 $ 194,336 Allowance for doubtful accounts as a percentage of total accounts receivable 1 % 1 % 9 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) March 31, 2025 December 31, 2024 Deferred revenue (contract liabilities) $ 50,908 $ 52,399 As of March 31, 2025, accounts receivable, net in the United States and the United Kingdom represented 65 % and 18 %, 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, 2025. For the three months ended March 31, 2025, the $ 7.8 million net increase in contract assets was primarily attributable to $ 20.6 million in revenue recognized during the period, which was partially offset by $ 12.9 million transferred to accounts receivable. Deferred revenue (contract liabilities) decreased by $ 1.5 million in the first three months of 2025, primarily reflecting the recognition of $ 13.0 million of revenue that was deferred at the beginning of the period, partially offset by $ 10.9 million in new customer billings which were not recognized as revenue during the period. The following provides a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2025 and 2024 (in thousands): Three Months Ended March 31, 2025 2024 Allowance for doubtful accounts – January 1 $ 2,614 $ 4,497 Provisions 167 12 Write-offs ( 12 ) ( 135 ) Other 2 ( 5 ) Allowance for doubtful accounts – March 31 $ 2,771 $ 4,369 March 31, 2025 December 31, 2024 Inventories, net: Finished goods and purchased products $ 111,855 $ 110,850 Work in process 34,647 34,539 Raw materials 108,565 108,421 Total inventories 255,067 253,810 Allowance for excess or obsolete inventory ( 39,365 ) ( 38,974 ) $ 215,702 $ 214,836 March 31, 2025 December 31, 2024 Property, plant and equipment, net: Property, plant and equipment $ 738,354 $ 734,548 Accumulated depreciation ( 470,333 ) ( 467,677 ) $ 268,021 $ 266,871 For the three months ended March 31, 2025 and 2024, depreciation expense was $ 8.3 million and $ 9.9 million, respectively. 10 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) March 31, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Other intangible assets: Customer relationships $ 122,950 $ 57,406 $ 65,544 $ 122,859 $ 55,534 $ 67,325 Patents/Technology/Know-how 70,297 40,996 29,301 70,206 39,699 30,507 Tradenames and other 47,739 20,346 27,393 47,729 19,699 28,030 $ 240,986 $ 118,748 $ 122,238 $ 240,794 $ 114,932 $ 125,862 For the three months ended March 31, 2025 and 2024, amortization expense was $ 3.8 million and $ 4.3 million, respectively. March 31, 2025 December 31, 2024 Other noncurrent assets: Deferred compensation plan $ 17,640 $ 18,245 Deferred financing costs 1,490 1,619 Deferred income taxes 1,992 1,964 Other 3,237 3,075 $ 24,359 $ 24,903 March 31, 2025 December 31, 2024 Accrued liabilities: Accrued compensation $ 13,398 $ 22,350 Accrued taxes, other than income taxes 2,354 1,234 Insurance liabilities 3,647 3,383 Accrued interest 3,022 1,555 Accrued commissions 3,540 3,237 Other 5,897 5,102 $ 31,858 $ 36,861 4. Long-term Debt As of March 31, 2025 and December 31, 2024, long-term debt consisted of the following (in thousands): March 31, 2025 December 31, 2024 Revolving credit facility (1) $ — $ — 2026 Notes (2) 122,702 122,505 Other debt and finance lease obligations 2,646 2,782 Total debt 125,348 125,287 Less: Current portion ( 620 ) ( 633 ) Total long-term debt $ 124,728 $ 124,654 ____________________ (1) Unamortized deferred financing costs of $ 1.5 million and $ 1.6 million as of March 31, 2025 and December 31, 2024, respectively, are presented in other noncurrent assets. (2) The outstanding principal amount of the 2026 Notes was $ 123.5 million as of March 31, 2025 and December 31, 2024 . 11 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Revolving Credit Facility 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. 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 (as amended, the “ABL Agreement”). The ABL Facility matures on 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. customer accounts receivable and inventory and provides for a $ 50.0 million sub-limit for the issuance of letters of credit. 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 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. 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. The ABL Agreement also requires the Company to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 (i) in the event that availability under the ABL Agreement is less than the greater of (a) 15 % of the borrowing base and (b) $ 14.1 million; (ii) to complete certain specified transactions; or (iii) if an event of default has occurred and is continuing. As of March 31, 2025, the Company had no borrowings outstanding under the ABL Agreement and $ 16.2 million of outstanding letters of credit. The total amount available to be drawn as of March 31, 2025 was $ 62.1 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit. As of March 31, 2025, the Company was in compliance with its debt covenants under the ABL Agreement. 2026 Notes 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. The outstanding 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. Interest is payable semi-annually in arrears on April 1 and October 1 of each year. Additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture. The initial conversion rate is 95.3516 shares of the Company’s common stock per $1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of $ 10.49 per share of common stock). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2026 Indenture. The Company’s intent is to repay the principal amount of the 2026 Notes in cash and settle the conversion feature (if any) in shares of the Company’s common stock. As of March 31, 2025, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met. 12 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. 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 2026 Notes, on the accompanying consolidated balance sheets approximate their fair values. The estimated fair value of the 2026 Notes as of March 31, 2025 was $ 122.1 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 123.5 million. 6. 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 three months of 2025 (in thousands): Outstanding Shares of common stock outstanding – December 31, 2024 61,493 Restricted stock awards, net of forfeitures 1,874 Shares withheld for taxes on vesting of stock awards ( 457 ) Purchases of treasury stock ( 1,037 ) Shares of common stock outstanding – March 31, 2025 61,873 As of March 31, 2025 and December 31, 2024, the Company had 25,000,000 shares of preferred stock, $ 0.01 par value, authorized, with no shares issued or outstanding. On October 24, 2024, the Company’s Board of Directors terminated the Company’s existing common stock repurchase program and replaced it with a new $ 50.0 million authorization for the repurchase of the Company’s common stock, par value $ 0.01 per share, through October 2026. Subject to applicable securities laws, such purchases will be at such times and in such amounts as the Company deems appropriate. During the three months ended March 31, 2025, the Company purchased 1.0 million shares of common stock under the programs at a total cost of $ 5.3 million. The amount remaining under the Company’s current share repurchase authorization as of March 31, 2025 was $ 36.0 million. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, reported as a component of stockholders’ equity, primarily relates to fluctuations in currency exchange rates against the U.S. dollar as used to translate certain of the international operations of the Company’s operating segments. Accumulated other comprehensive loss decreased from $ 79.5 million at December 31, 2024 to $ 74.0 million at March 31, 2025. For the three months ended March 31, 2025 and 2024, 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, 2025, the exchange rates for the British pound and the Brazilian real strengthened by 3 % and 8 %, respectively, compared to the U.S. dollar, contributing to other comprehensive income of $ 5.5 million. 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. 7. Income Taxes Income tax provision for the three months ended March 31, 2025 and 2024 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. 13 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the three months ended March 31, 2025, the Company’s income tax expense was $ 1.0 million, which included the impact of certain discrete tax items and other non-deductible expenses on pre-tax income of $ 4.2 million. This compares to an income tax expense of $ 24 thousand, which included the impact of a $ 10.0 million goodwill impairment charge (approximately $ 7.7 million of which was non-deductible), discrete tax items and other non-deductible expenses on a pre-tax loss of $ 13.4 million for the three months ended March 31, 2024. 8. 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 months ended March 31, 2025 and 2024 (in thousands, except per share amounts): Three Months Ended March 31, 2025 2024 Numerators: Net income (loss) $ 3,158 $ ( 13,374 ) Less: Income attributable to unvested restricted stock awards ( 114 ) — Numerator for basic net income (loss) per share 3,044 ( 13,374 ) Effect of dilutive securities: Unvested restricted stock awards — — Numerator for diluted net income (loss) per share $ 3,044 $ ( 13,374 ) Denominators: Weighted average number of common shares outstanding 62,049 63,883 Less: Weighted average number of unvested restricted stock awards outstanding ( 1,882 ) ( 1,380 ) Denominator for basic net income (loss) per share 60,167 62,503 Effect of dilutive securities: Performance share units — — Denominator for diluted net income (loss) per share 60,167 62,503 Net income (loss) per share: Basic $ 0.05 $ ( 0.21 ) Diluted 0.05 ( 0.21 ) 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. 9. Long-Term Incentive Compensation The following table presents a summary of activity for service-based restricted stock and stock unit awards, and performance-based stock unit awards for the three months ended March 31, 2025 (in thousands): Service-based Restricted Stock Performance- and Service-based Stock Units Outstanding – December 31, 2024 1,513 1,033 Granted 1,407 265 Vested and distributed ( 668 ) ( 467 ) Forfeited — — Outstanding – March 31, 2025 2,252 831 Weighted average grant date fair value (2025 awards) $ 5.37 $ 5.37 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 vest on a straight-line basis over a term of three years . 14 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Service-based stock unit awards ( 149 thousand outstanding as of March 31, 2025) vest over one year , with the underlying shares issued at a specified future date. Performance-based stock unit awards 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. 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. Conversely, if actual performance falls below the predefined target, the number of shares vested is reduced. If the actual performance falls below the threshold performance level, no shares will vest. The Company issued conditional long-term cash incentive awards (“Cash Awards”) with targeted values of $ 1.4 million and $ 1.5 million in the first quarters of 2025 and 2024, respectively. 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 $ 2.9 million for 2025 awards and from zero to a maximum of $ 3.1 million for 2024 awards, limited to their targeted value 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, 2025 and 2024 totaled $ 1.8 million and $ 1.8 million, respectively. As of March 31, 2025, there was $ 14.0 million of pre-tax compensation costs related to service-based and performance-based stock awards, which will be recognized in future periods as vesting conditions are satisfied. 10. Segments and Related Information The Company operates through three reportable operating segments: Offshore Manufactured Products, Completion and Production Services and Downhole Technologies. Financial information by operating segment for the three months ended March 31, 2025 and 2024 is summarized in the following tables (in thousands). Three Months Ended March 31, 2025 Offshore Manufactured Products Completion and Production Services (1) Downhole Technologies Corporate Total Revenues $ 92,596 $ 34,519 $ 32,823 $ — $ 159,938 Costs and expenses: Cost of revenues (exclusive of depreciation and amortization expense presented below) 66,915 26,905 28,857 — 122,677 Selling, general and administrative expense 8,635 1,996 1,999 9,900 22,530 Depreciation and amortization expense 3,608 4,272 4,029 116 12,025 Other operating (income) loss, net ( 838 ) ( 2,157 ) 62 — ( 2,933 ) 78,320 31,016 34,947 10,016 154,299 Operating income (loss) $ 14,276 $ 3,503 $ ( 2,124 ) $ ( 10,016 ) $ 5,639 Capital expenditures $ 4,823 $ 3,525 $ 791 $ 19 $ 9,158 Total assets (as of March 31, 2025) 506,530 147,665 268,139 68,401 990,735 ________________ (1) Operating income included $ 0.9 million of facility consolidation charges. 15 Table of Contents OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Three Months Ended March 31, 2024 Offshore Manufactured Products (1) Completion and Production Services (2) Downhole Technologies (3) Corporate Total Revenues $ 86,857 $ 47,292 $ 33,113 $ — $ 167,262 Costs and expenses: Cost of revenues (exclusive of depreciation and amortization expense presented below) 63,501 39,814 28,636 — 131,951 Selling, general and administrative expense 8,558 2,526 2,283 9,129 22,496 Depreciation and amortization expense 3,693 6,079 4,270 153 14,195 Impairment of goodwill — — 10,000 — 10,000 Other operating (income) loss, net 502 ( 708 ) 3 — ( 203 ) 76,254 47,711 45,192 9,282 178,439 Operating income (loss) $ 10,603 $ ( 419 ) $ ( 12,079 ) $ ( 9,282 ) $ ( 11,177 ) Capital expenditures $ 7,221 $ 2,414 $ 446 $ 11 $ 10,092 Total assets (as of March 31, 2024) 516,039 179,763 278,055 41,958 1,015,815 ________________ (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, “Asset Impairments and Other Charges”). The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended March 31, 2025 and 2024 (in thousands). Offshore Manufactured Products Completion and Production Services Downhole Technologies Total 2025 2024 2025 2024 2025 2024 2025 2024 Three Months Ended March 31 Project-driven: Products $ 59,124 $ 53,137 $ — $ — $ — $ — $ 59,124 $ 53,137 Services 24,424 25,233 — — — — 24,424 25,233 Total project-driven 83,548 78,370 — — — — 83,548 78,370 Military and other products 9,048 8,487 — — — — 9,048 8,487 Short-cycle products and services — — 34,519 47,292 32,823 33,113 67,342 80,405 $ 92,596 $ 86,857 $ 34,519 $ 47,292 $ 32,823 $ 33,113 $ 159,938 $ 167,262 Revenues from products and services transferred to customers over time accounted for approximately 62 % and 67 % of consolidated revenues for the three months ended March 31, 2025 and 2024, respectively. The balance of revenues for the respective periods relates to products and services transferred to customers at a point in time. As of March 31, 2025, the Company had $ 248.3 million of remaining backlog related to contracts with an original expected duration of greater than one year. Approximately 44 % of this remaining backlog is expected to be recognized as revenue over the remaining nine months of 2025, with an additional 32 % recognized in 2026 and the balance thereafter. 11. 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. 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 covered by insurance, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity. 16 Table of Contents C autionary Statement Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q and other statements we make contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors, including incorrect or changed assumptions. For a discussion of known material factors that could affect our results, please refer to “Part I, Item 1. Business,” “Part I, Item 1A. Risk Factors,” “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk” included in our 2024 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 21, 2025. You can typically identify “forward-looking statements” by the use of forward-looking words such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “potential,” “plan,” “forecast,” “proposed,” “should,” “seek,” and other similar words. Such statements may relate to our future financial position, budgets, capital expenditures, projected costs, plans and objectives of management for future operations and possible future strategic transactions. Actual results frequently differ from assumed facts and such differences can be material, depending upon the circumstances. While we believe we are providing forward-looking statements expressed in good faith and on a reasonable basis, there can be no assurance that actual results will not differ from such forward-looking statements. 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 impact of changes in tariffs and duties on imported materials and exported finished goods; • the ability and willingness of the Organization of Petroleum Exporting Countries and other producing nations (“OPEC+”) to set and maintain oil production levels and pricing; • the level of supply of and demand for oil and natural gas; • fluctuations in the current and future prices of oil and natural gas; • the level of exploration, drilling and completion activity; • the cyclical nature of the oil and natural gas industry; • the level of offshore oil and natural gas developmental activities; • inflation, including our ability to increase prices to our customers as our costs increase; • the impact of disruptions in the bank and capital markets; • the financial health of our customers; • the impact of the ongoing military actions in Europe and the Middle East, including, but not limited to, energy market disruptions, supply chain disruptions and increased costs, government sanctions, and delays or potential cancellation of planned customer projects; • the impact of environmental matters, including executive actions and federal, state and local 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, such as previous attempts to prohibit or otherwise limit new exports of liquefied natural gas (“LNG”), hydraulic fracturing, and lease development; • 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; • general global economic conditions; • global weather conditions and natural disasters, including hurricanes in the Gulf of America (formerly named the Gulf of Mexico); • changes in tax laws and regulations as well as volatility in the political, legal and regulatory environments in connection with the new U.S. presidential administration; • supply chain disruptions, including as a result of the adoption of or increase in tariffs, or the threat thereof; • our ability to timely obtain and maintain critical permits for operating facilities; 17 Table of Contents • our ability to attract and retain skilled personnel; • our ability to develop new competitive technologies and products; • fluctuations in currency exchange rates; • physical, digital, cyber, internal and external security breaches and other incidents affecting information security and data privacy; • the cost of capital in the bank and capital markets and our ability to access them; • our ability to protect and enforce our intellectual property rights; • negative outcome of litigation, threatened litigation or government proceedings; • the potential for future federal or state requirements related to the enhanced disclosure of a range of climate-related information and risks; • our ability to complete the integration of acquired businesses and achieve the expected accretion in earnings; and • the other factors identified in “Part I, Item 1A. Risk Factors” in our 2024 Annual Report on Form 10-K, as well as in “Part II, Item 1A. Risk Factors” included in this Quarterly Report on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should the assumptions on which our forward-looking statements are based prove incorrect or change, actual results may differ materially from those expected, estimated or projected. In addition, the factors identified above may not necessarily be all of the important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by us, or on our behalf. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility to publicly release the result of any revision of our forward-looking statements after the date they are made. In addition, in certain places in this Quarterly Report on Form 10-Q, we refer to information and reports published by third parties that purport to describe trends or developments in the energy industry. We do so for the convenience of our stockholders and in an effort to provide information available in the market that will assist our investors in better understanding the market environment in which we operate. However, we specifically disclaim any responsibility for the accuracy and completeness of such information and undertake no obligation to update such information.