OIL STATES INTERNATIONAL, INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read together with our condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and notes to those statements included in our 2024 Annual Report on Form 10-K in order to understand factors, such as charges and credits, financing transactions and changes in tax regulations, which may impact comparability from period to period. We provide a broad range of manufactured products and services to customers in the energy, industrial and military sectors through our Offshore Manufactured Products, Completion and Production Services and Downhole Technologies segments. Demand for our products and services is cyclical and substantially dependent upon activity levels in the oil and gas industry, particularly our customers’ willingness to invest capital in the exploration for and development of crude oil and natural gas reserves. Our customers’ capital spending programs are generally based on their cash flows and their outlook for near-term and long-term commodity prices, making demand for our products and services sensitive to expectations regarding future crude oil and natural gas prices, as well as economic growth, commodity demand and estimates of resource production and regulatory pressures. 23 Table of Contents Recent Developments Brent and West Texas Intermediate (“WTI”) crude oil and natural gas pricing trends were as follows: Average Price (1) for quarter ended Average Price (1) for year ended December 31 Year March 31 June 30 September 30 December 31 Brent Crude (per bbl) 2025 $ 75.87 $ 68.07 $ 69.03 2024 82.92 $ 84.68 $ 80.01 $ 74.66 $ 80.52 WTI Crude (per bbl) 2025 $ 71.78 $ 64.57 $ 65.78 2024 77.50 $ 81.81 $ 76.43 $ 70.73 $ 76.61 Henry Hub Natural Gas (per MMBtu) 2025 $ 4.14 $ 3.19 $ 3.03 2024 2.15 $ 2.07 $ 2.11 $ 2.44 $ 2.19 ________________ (1) Source: U.S. Energy Information Administration (spot prices). The third quarter 2025 average spot price of WTI crude oil declined 8% from the first quarter 2025 average following the imposition of broad-based trade tariffs by the United States on imported goods and increased crude oil production by OPEC+. These actions have led to ongoing uncertainty regarding the future effect of reciprocal and other trade tariffs on the global economy as well as the future demand for and supply of crude oil, which has negatively impacted the demand for and pricing of our products and services provided to the U.S. land-based market during recent quarters. The ultimate magnitude and duration of the trade conflict and increased crude oil production by OPEC+, and the related impacts on crude oil prices and the global economy, remain uncertain. While it is difficult for management to assess or predict with precision the broad future effect of these events on the global economy, the energy industry or the Company, management expects that it will continue to adversely affect demand for our products and services, particularly in the United States, over the balance of 2025 and possibly beyond. On October 10, 2025, an explosion occurred at one of the facilities of a major U.S. supplier of explosive powders to the perforating industry. We obtain a majority of the powders used in the production of perforating charges and related products within our Downhole Technologies segment from this supplier. We are seeking to arrange alternative sources of these materials, but we expect this supply chain disruption to potentially adversely affect our ability to produce and market perforating products in the latter part of the fourth quarter of 2025 and possibly beyond. We have implemented certain initiatives to optimize our operations and reduce future costs. These actions include: the consolidation, relocation and exit of certain operating locations; the exit of certain service offerings; reductions in our U.S. workforce as well as the realignment in 2024 of operations within two of our reportable segments. We also incurred legal costs associated with patent defense. As a result of these events, actions and assessments, our reported pre-tax results for the nine months ended September 30, 2024 included $23.4 million in non-cash goodwill, intangible and operating lease asset impairment charges as well as $11.8 million of facility consolidation and exit, patent defense and other charges. During the first nine months of 2025, we made the strategic decision to exit three additional service facilities, continued the exit of facilities closed in 2024 and further reduced headcount, incurring $8.1 million of associated pre-tax charges. During the first nine months of 2025, we sold facilities, equipment and inventory for net proceeds of $13.8 million. Additionally, during the first nine months of 2025, we purchased $20.8 million principal amount of our 4.75% convertible senior notes due 2026 (the “2026 Notes”) and $16.2 million of our common stock. On July 4, 2025, the United States enacted tax reform legislation through the OBBBA, which resulted in changes to U.S. tax and related law, including certain key federal income tax provisions applicable to multinational companies such as ours. These include, among others: the reinstatement of 100% bonus depreciation election for investments in qualifying property; the immediate deduction of domestic research and development expenditures; and manufacturing tax incentives related to goods sold outside the United States. On July 28, 2025, we amended our asset-based revolving credit facility (the “ABL Facility”) to reduce the facility size to $100.0 million, increase borrowing availability, lower interest charges and plan for the retirement of all 2026 Notes that remain outstanding at maturity in April of 2026. 24 Table of Contents Overview Current and expected future pricing for WTI crude oil and natural gas, inflationary and tariff-driven cost increases, and expectations regarding the regulatory environment in the regions in which we operate are factors that will continue to influence our customers’ willingness to invest capital in their businesses. Expectations for the longer-term price for Brent crude oil will continue to influence our customers’ spending related to global offshore and international drilling and development and, thus, a significant portion of the activity of our Offshore Manufactured Products segment. Crude oil and natural gas prices and levels of demand for crude oil and natural gas are likely to remain highly volatile due to numerous factors, including: geopolitical conflicts in Europe and the Middle East, along with associated international tensions; the moderate perceived risk of a global economic recession; the levels of domestic or international crude oil and natural gas production; technological advancements; consolidation of oil and gas producers; changes in governmental rules and regulations; sanctions; tariffs; the willingness of operators to invest capital in the exploration for and development of resources; use of alternative fuels; improved vehicle fuel efficiency; timing of capital investments in alternative energy sources; a more sustained movement to electric vehicles; and the potential for ongoing supply/demand imbalances. U.S. drilling, completion and production activity and, in turn, our financial results, are sensitive to near-term fluctuations in commodity prices, particularly U.S. crude oil and natural gas prices, given the short-term, call-out nature of our U.S. operations. Our Offshore Manufactured Products segment provides technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities globally, as well as certain products and services to the offshore drilling and completion markets. This segment is particularly influenced by global spending on deepwater drilling and production, which is primarily driven by our customers’ longer-term commodity demand forecasts and outlook for crude oil and natural gas prices. Approximately 90% of Offshore Manufactured Products segment sales in the first nine months of 2025 were driven by our customers’ capital spending for products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as “project-driven products and services”). Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans. Such projects are generally undertaken by larger exploration, field development and production companies (primarily international oil companies and state-run national oil companies) using relatively conservative crude oil and natural gas pricing assumptions. Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to change based on short-term fluctuations in the price of crude oil and natural gas. Deepwater oil and gas development projects may also be impacted by federal legislative and regulatory actions, including the OBBBA, which mandates that the Bureau of Ocean Energy Management conduct at least two offshore lease sales annually, of a minimum of 80 million acres (if available), in the Central and Western Gulf of America Planning Areas for the next 15 years. This segment also produces a variety of products for use in military, industrial and other applications outside the traditional energy industry. Additionally, we are investing in research and product development (and have been awarded select contracts and are bidding on additional projects) to facilitate the development of alternative energy sources, including offshore wind and deep-sea mineral gathering opportunities. Backlog reported by our Offshore Manufactured Products segment increased to $399 million as of September 30, 2025 from $311 million as of December 31, 2024. Bookings totaled $145 million in the third quarter of 2025, yielding a quarterly book-to-bill ratio of 1.3x (1.3x year-to-date). The following table sets forth backlog as of the dates indicated (in millions). Backlog as of Year March 31 June 30 September 30 December 31 2025 $ 357 $ 363 $ 399 2024 305 300 313 $ 311 2023 316 328 341 327 Our Completion and Production Services segment provides completion and production services in the United States (including the Gulf of America) and internationally. Prior to the sale of its drilling rigs in August of 2024, the segment also provided land drilling services in the United States. U.S. drilling and completion activity and, in turn, our Completion and Production Services segment’s results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the short-term, call-out nature of its operations. We primarily supply equipment and service personnel utilized in the completion of, and initial production from, new and recompleted wells in our U.S. operations, which are dependent primarily upon the level and complexity of drilling, completion and workover activity in our areas of operations. Our Downhole Technologies segment provides oil and gas perforation systems, downhole tools and services in support of completion, intervention, wireline and well abandonment operations. This segment designs, manufactures and markets its 25 Table of Contents consumable engineered products to oilfield service as well as exploration and production companies. Product and service offerings for this segment include innovations in perforation technology through patented and proprietary systems combined with advanced modeling and analysis tools. This expertise has led to the optimization of perforation hole size, depth, and quality of tunnels, which are key factors for maximizing the effectiveness of hydraulic fracturing. Additional offerings include frac plugs, toe valves and other elastomer products, which are focused on zonal isolation for hydraulic fracturing of horizontal wells, and a broad range of consumable products, such as setting tools and bridge plugs, that are used in completion, intervention and decommissioning applications. Hydraulic fracturing activity, and, in turn, our Downhole Technologies segment’s results, are sensitive to commodity prices, particularly WTI crude oil prices, given that lower activity may result in lower demand for our consumable products. Demand drivers for the Downhole Technologies segment include continued trends toward longer lateral lengths, increased frac stages and more perforation clusters to target increased unconventional well productivity. Demand for our completion-related products and services within our Completion and Production Services and Downhole Technologies segments is highly correlated to changes in the total number of wells drilled in the United States, total footage drilled, the number of drilled wells that are completed and changes in the completion (“frac”) count. The following table sets forth a summary of the U.S. drilling rig count, as measured by Baker Hughes Company, as of and for the periods indicated. As of October 24, 2025 Average for the Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 United States Rig Count: Land – Oil 399 403 465 441 475 Land – Natural gas and other 128 121 100 110 108 Offshore 23 16 21 15 21 550 540 586 566 604 The U.S. energy industry is primarily focused on crude oil and liquids-rich exploration and development activities in U.S. shale plays utilizing horizontal drilling and completion techniques. As of September 30, 2025, oil-directed drilling accounted for 77% of the total U.S. rig count – with the balance largely natural gas related. We use a variety of domestically produced and imported raw materials and component products, including steel, in the manufacture of our products. Beginning in the first quarter of 2025, the United States imposed new or additional tariffs, through executive orders, on a variety of imported raw materials and products, including steel and aluminum. In response to the U.S. tariffs on steel and aluminum, the European Union and several other countries, including Canada and China, have threatened and/or imposed retaliatory tariffs. We continue to monitor the effects of the ever-evolving global trade landscape, including with respect to sanctions, tariffs, existing trade agreements, anti-dumping and countervailing duty regulations and more. For example, in the third quarter of 2025, U.S. tariffs on certain steel and other metal components we import from China substantially increased the cost of those products, and President Trump has threatened additional increased tariffs on goods imported from China as result of current Chinese trade policy. A portion of those tariffs might be overturned depending on the resolution of certain U.S. litigation. Specifically, the U.S. Supreme Court has agreed to hear a case determining whether a federal law giving the president certain emergency powers allowed President Trump to levy tariffs on nearly all goods imported into the United States through a series of executive orders. The Court is scheduled to begin hearing oral arguments on November 5, with a ruling on the challenges potentially expected at the end of 2025. We cannot predict with certainty the duration of tariffs currently in place, the impact of any new or increased tariffs, or the impact of any retaliatory tariffs. If we encounter difficulty in procuring these raw materials and component products, or if the prices we pay for these products remain at current levels or increase and we are unable to pass corresponding cost increases on to our customers, our financial position, cash flows and results of operations would be adversely affected. Furthermore, uncertainty with respect to potential costs in the drilling and completion of oil and gas wells could cause our customers to delay or cancel planned projects which, if this occurred, would adversely affect our financial position, cash flows and results of operations. Other factors that can affect our business and financial results include but are not limited to: the general global economic environment; competitive pricing pressures; customer consolidations; labor market constraints; supply chain disruptions; inflation in wages, materials, parts, equipment and other costs; climate-related and other regulatory changes; geopolitical conflicts and tensions; management’s implementation of strategic decisions; public health crises; natural disasters; and changes in tax laws in the United States and in the international markets in which we operate. We continue to monitor the global economy, the prices of and demand for crude oil and natural gas, and the resultant impact on the capital spending plans and operations of our customers in order to plan and manage our business. 26 Table of Contents Human Capital For more information on our health and safety policy and other workforce policies, please see “Part I, Item 1. Business – Human Capital” in our Annual Report on Form 10-K for the year ended December 31, 2024. Selected Financial Data This selected financial data should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes included in “Part I, Item 1. Financial Statements” of this Quarterly Report on Form 10-Q and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes included in “Part II, Item 8. Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2024 in order to understand factors, such as charges and credits, which may impact comparability of the selected financial data. Unaudited Consolidated Results of Operations The following summarizes our consolidated results of operations for the three and nine months ended September 30, 2025 and 2024 (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 Variance 2025 2024 Variance Revenues: Products $ 106,492 $ 100,798 $ 5,694 $ 314,385 $ 303,706 $ 10,679 Services 58,688 73,550 (14,862) 176,139 224,287 (48,148) 165,180 174,348 (9,168) 490,524 527,993 (37,469) Costs and expenses: Product costs 85,561 79,167 6,394 249,826 236,807 13,019 Service costs 43,085 57,422 (14,337) 126,837 173,766 (46,929) Cost of revenues (exclusive of depreciation and amortization expense presented below) 128,646 136,589 (7,943) 376,663 410,573 (33,910) Selling, general and administrative expenses 20,756 22,754 (1,998) 66,267 71,623 (5,356) Depreciation and amortization expense 12,128 13,635 (1,507) 36,051 42,528 (6,477) Impairment of goodwill — — — — 10,000 (10,000) Impairments of intangible assets — 10,787 (10,787) — 10,787 (10,787) Impairments of operating lease assets — 2,579 (2,579) 1,358 2,579 (1,221) Other operating income, net (1,098) (955) (143) (5,479) 76 (5,555) 160,432 185,389 (24,957) 474,860 548,166 (73,306) Operating income (loss) 4,748 (11,041) 15,789 15,664 (20,173) 35,837 Interest expense, net (1,773) (1,824) 51 (5,043) (5,986) 943 Other income, net 362 731 (369) 1,136 1,311 (175) Income (loss) before income taxes 3,337 (12,134) 15,471 11,757 (24,848) 36,605 Income tax provision (1,437) (2,215) 778 (3,888) (1,574) (2,314) Net income (loss) $ 1,900 $ (14,349) $ 16,249 $ 7,869 $ (26,422) $ 34,291 Net income (loss) per share: Basic $ 0.03 $ (0.23) $ 0.13 $ (0.42) Diluted 0.03 (0.23) 0.13 (0.42) Weighted average number of common shares outstanding: Basic 57,946 62,084 59,089 62,357 Diluted 58,016 62,084 59,144 62,357 27 Table of Contents Unaudited Segment Results of Operations We manage and measure our business performance in three operating segments: Offshore Manufactured Products, Completion and Production Services and Downhole Technologies. Supplemental financial information by operating segment for the three and nine months ended September 30, 2025 and 2024 is summarized below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 Variance 2025 2024 Variance Revenues: Offshore Manufactured Products Project-driven: Products $ 67,729 $ 58,164 $ 9,565 $ 195,506 $ 171,053 $ 24,453 Services 30,172 32,754 (2,582) 82,503 89,011 (6,508) 97,901 90,918 6,983 278,009 260,064 17,945 Military and other products 10,726 11,316 (590) 29,800 30,583 (783) 108,627 102,234 6,393 307,809 290,647 17,162 Completion and Production Services 27,525 40,099 (12,574) 91,468 133,812 (42,344) Downhole Technologies 29,028 32,015 (2,987) 91,247 103,534 (12,287) $ 165,180 $ 174,348 $ (9,168) $ 490,524 $ 527,993 $ (37,469) Operating income (loss): Offshore Manufactured Products (1) $ 17,603 $ 19,310 $ (1,707) $ 48,868 $ 44,270 $ 4,598 Completion and Production Services (2) 948 (18,267) 19,215 6,328 (19,221) 25,549 Downhole Technologies (3) (4,667) (3,653) (1,014) (10,783) (16,873) 6,090 Corporate (4) (9,136) (8,431) (705) (28,749) (28,349) (400) $ 4,748 $ (11,041) $ 15,789 $ 15,664 $ (20,173) $ 35,837 _______________ (1) During the three and nine months ended September 30, 2025, we recognized charges of $0.6 million and $0.8 million, respectively, within the Offshore Manufactured Products segment, associated primarily with the consolidation and relocation of certain manufacturing and service locations. During the three and nine months ended September 30, 2024, the segment incurred facility consolidation charges of $0.4 million and $3.4 million, respectively, associated primarily with the segment’s consolidation and relocation of a manufacturing and service location. (2) During the three and nine months ended September 30, 2025, we recognized charges of $2.7 million and $5.8 million, respectively, within the Completion and Production Services segment, associated primarily with the exit of service locations. During the three and nine months ended September 30, 2024, the Completion and Production Services segment recognized charges of $17.2 million and $21.1 million, respectively, associated primarily with the exit of its flowback and well testing service offering, the consolidation and exit of certain underperforming service locations, and the defense of certain patents. (3) During the nine months ended September 30, 2025, we recognized charges of $1.2 million within the Downhole Technologies segment, associated primarily with the exit of a leased facility. During the three and nine months ended September 30, 2024, the Downhole Technologies segment recognized charges of $0.6 million associated primarily with the exit of an underperforming location. Additionally, during the nine months ended September 30, 2024, the segment incurred a $10.0 million non-cash impairment charge related to goodwill reassigned to the business in connection with the realignment of operations between segments. (4) During the three and nine months ended September 30, 2025, we recognized severance charges of $0.3 million within Corporate operations. For further discussion of charges recognized during the three and nine months ended September 30, 2025 and 2024, see Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion. 28 Table of Contents Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024 We reported net income for the three months ended September 30, 2025 of $1.9 million, or $0.03 per share. The reported third quarter net income included charges of $3.6 million ($2.8 million after tax, or $0.05 per share) associated primarily with the exit of U.S. land-based facilities and personnel reductions. These results compare to a net loss for the three months ended September 30, 2024 of $14.3 million, or $0.23 per share, which included charges of $18.2 million ($17.0 million after tax, or $0.27 per share) associated with the restructuring of certain of its U.S. land-based operations, facility consolidations and closures, patent defense and personnel reductions. Our results of operations for the third quarter of 2025 reflect the impact of management’s decisions to exit certain underperforming locations and service offerings in the United States, as well as the effect of a reduction by operators in U.S. land-based activity levels due to lower crude oil prices, competitive market conditions and increased U.S. tariffs. These impacts were partially offset by stronger offshore and international project activity, supported by backlog growth over recent quarters. Revenues . Consolidated total revenues in the third quarter of 2025 decreased $9.2 million, or 5%, from the third quarter of 2024 due primarily to our exit of underperforming service offerings and locations over the past 15 months and lower U.S. land-based activity levels. Excluding the impact of exited operations, consolidated revenues increased $7.2 million, or 5%, year-over-year. Consolidated product revenues in the third quarter of 2025 increased $5.7 million, or 6%, from the third quarter of 2024, with the impact of higher customer demand for project-driven products partially offset by reduced U.S. customer demand for completion and perforating products. Consolidated service revenues in the third quarter of 2025 decreased $14.9 million, or 20%, from the third quarter of 2024. This decline was concentrated in the United States – driven by our exit of certain underperforming service offerings and locations and an industry-wide reduction in land-based activity levels. The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended September 30, 2025 and 2024 (in thousands): Offshore Manufactured Products Completion and Production Services Downhole Technologies Total Three Months Ended September 30 2025 2024 2025 2024 2025 2024 2025 2024 Project-driven: Products $ 67,729 $ 58,164 $ — $ — $ — $ — $ 67,729 $ 58,164 Services 30,172 32,754 — — — — 30,172 32,754 Total project-driven 97,901 90,918 — — — — 97,901 90,918 Military and other products 10,726 11,316 — — — — 10,726 11,316 Short-cycle: Products — — — — 28,037 31,318 28,037 31,318 Services — — 27,525 40,099 991 697 28,516 40,796 Total short-cycle — — 27,525 40,099 29,028 32,015 56,553 72,114 $ 108,627 $ 102,234 $ 27,525 $ 40,099 $ 29,028 $ 32,015 $ 165,180 $ 174,348 By destination: Offshore and international $ 102,660 $ 94,189 $ 12,984 $ 10,639 $ 7,712 $ 9,028 $ 123,356 $ 113,856 U.S. land 5,967 8,045 14,541 29,460 21,316 22,987 41,824 60,492 $ 108,627 $ 102,234 $ 27,525 $ 40,099 $ 29,028 $ 32,015 $ 165,180 $ 174,348 As a percentage of total: Offshore and international 75 % 65 % U.S. land 25 % 35 % Cost of Revenues (exclusive of Depreciation and Amortization Expense). Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) in the third quarter of 2025 decreased $7.9 million, or 6%, compared to the level reported in the third quarter of 2024. Consolidated product costs in the third quarter of 2025 increased $6.4 million, or 8%, from the third quarter of 2024 driven primarily by higher project-driven sales volumes, lower fixed cost coverage in our U.S. manufacturing operations and increased tariff costs. Consolidated service costs in the third quarter of 2025 decreased $14.3 million, or 25%, from the third quarter of 2024, due to lower revenue levels and strategic actions implemented in our U.S. land-focused operations to improve reported results. 29 Table of Contents Selling, General and Administrative Expense. Selling, general and administrative expense was $20.8 million in the third quarter of 2025. This compares to an expense of $22.8 million in the third quarter of 2024, which included $1.3 million of costs associated with enforcing certain of our patents. Excluding these patent litigation costs, selling, general and administrative costs decreased $0.7 million, or 3%, from the third quarter of 2024, with the impact of lower professional fees and bad debt expense partially offset by higher incentive-based compensation expense. Depreciation and Amortization Expense. Depreciation and amortization expense decreased $1.5 million, or 11%, in the third quarter of 2025 compared to the prior-year quarter. Note 10, “Segments and Related Information,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q presents depreciation and amortization expense by segment. Impairments of Intangible Assets. In the third quarter of 2024, as a result of our decision to exit an underperforming service offering, our Completion and Production Services segment recognized non-cash impairment charges of $10.8 million to reduce the carrying amount of its long-lived intangible assets to estimated fair value. See Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated included in this Quarterly Report on Form 10-Q for additional discussion. Impairments of Operating Lease Assets. In the third quarter of 2024, management made strategic decisions to exit five leased service locations within our Completion and Production Services segment and one within our Downhole Technologies segment. As a result of these decisions, our Completion and Production Services and Downhole Technologies segments recognized non-cash impairment charges totaling $2.6 million to reduce the carrying amount of the related operating lease assets. See Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion. Operating Income (Loss). Our consolidated operating income was $4.7 million in the third quarter of 2025, which included $3.6 million in charges associated with facility consolidations and exits and other management actions. This compares to third quarter 2024 consolidated operating loss of $11.0 million, which included $13.4 million in non-cash intangible and operating lease asset impairment charges and $4.8 million of facility consolidation and other charges. Excluding these charges, operating income increased by $1.1 million year-over-year, with the impact of the decline in revenue and increased tariffs offset by actions taken to improve U.S. land-based operating results and lower depreciation and amortization expense. Interest Expense, Net. Net interest expense totaled $1.8 million in the third quarter of 2025, which compares to $1.8 million in the same period of 2024. Interest expense as a percentage of total debt outstanding was approximately 7% in the third quarters of 2025 and 2024. Income Tax. Income tax provision for the three months ended September 30, 2025 and 2024 was calculated using a discrete approach. This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the three months ended September 30, 2025, our income tax provision was $1.4 million, which included the impact of valuation allowance adjustments recorded against deferred tax assets, certain discrete tax items and other non-deductible expenses, on pre-tax income of $3.3 million. This compares to an income tax provision of $2.2 million, which included the impact of changes in valuation allowances recorded against deferred tax assets and certain non-deductible expenses, on a pre-tax loss of $12.1 million for the three months ended September 30, 2024. Other Comprehensive Income (Loss). Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income (loss). Other comprehensive loss was $1.3 million in the third quarter of 2025 compared to other comprehensive income of $9.6 million in the third quarter of 2024 due to fluctuations in currency exchange rates compared to the U.S. dollar which are used to translate certain of the international operations of our operating segments. For the three months ended September 30, 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 third quarter of 2025, the exchange rate for the British pound weakened compared to the U.S. dollar while the Brazilian real strengthened compared to the U.S. dollar. In the third quarter of 2024, the exchange rates for the British pound and the Brazilian real strengthened compared to the U.S. dollar. 30 Table of Contents Segment Operating Results Offshore Manufactured Products Revenues. Our Offshore Manufactured Products segment revenues increased $6.4 million, or 6%, in the third quarter of 2025 compared to the third quarter of 2024 due to increased international and offshore project-driven product revenue, supported by backlog growth over recent quarters. Operating Income. Our Offshore Manufactured Products segment reported operating income of $17.6 million in the third quarter of 2025, which included $0.6 million in facility consolidation and relocation charges. This compares to operating income in the third quarter of 2024 of $19.3 million, which included $0.4 million in facility consolidation and other charges. Excluding these charges, operating income declined $1.5 million year-over-year driven primarily by a shift in product and service mix and a gain of $1.0 million recognized on the sale of property and equipment in the prior-year period. Backlog. Backlog in our Offshore Manufactured Products segment totaled $399 million as of September 30, 2025, with third quarter 2025 bookings of $145 million and a quarterly book-to-bill ratio of 1.3x. Completion and Production Services Revenues. Our Completion and Production Services segment revenues decreased $12.6 million, or 31%, in the third quarter of 2025 compared to the prior-year period, driven by the exit of underperforming service offerings and facilities over the past 15 months and lower U.S. land-based activity levels. Excluding the impact of exited operations, revenues increased $3.8 million, or 16%, year-over-year – driven primarily by higher customer activity levels in the Gulf of America and the Rocky Mountains. Operating Income (Loss). Our Completion and Production Services segment reported operating income of $0.9 million in the third quarter of 2025, which included charges totaling $2.7 million associated primarily with the exit of service locations and personnel reductions. This compares to an operating loss of $18.3 million in the third quarter of 2024, which included charges totaling $17.2 million associated with facility consolidations and exits, the defense of patents and other management actions. Excluding these charges, the Completion and Production Services segment’s operating results improved $4.7 million from the prior-year period, primarily reflective of the segment’s U.S. land-based restructuring efforts. Downhole Technologies Revenues. Our Downhole Technologies segment revenues decreased $3.0 million, or 9%, in the third quarter of 2025 from the prior-year period, driven primarily by lower U.S. customer activity levels. Operating Loss. Our Downhole Technologies segment reported an operating loss of $4.7 million in the third quarter of 2025. This compares to an operating loss of $3.7 million in the third quarter of 2024, which included charges totaling $1.2 million associated with the exit of a facility, personnel reductions and a customer bankruptcy. Excluding charges, the Downhole Technologies operating results declined $2.2 million year-over-year, driven by the decline in revenues, lower manufacturing volumes and increased tariff costs. Corporate Operating Loss. Corporate expenses increased $0.7 million, or 8%, in the third quarter of 2025 from the prior-year period due primarily to higher incentive-based compensation expense, as well as $0.3 million of severance charges in the third quarter of 2025. 31 Table of Contents Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024 We reported net income for the nine months ended September 30, 2025 of $7.9 million, or $0.13 per share. The reported first nine months net income included net charges and credits of $7.8 million ($6.1 million after tax, or $0.10 per share) associated with the restructuring of certain of our U.S. land-based operations, facility consolidations and closures, personnel reductions and debt extinguishment. These results compare to a net loss for the nine months ended September 30, 2024 of $26.4 million, or $0.42 per share, which included net charges and credits of $34.6 million ($31.6 million after tax, or $0.51 per share) associated with the restructuring of certain of its U.S. land-based operations, facility consolidations and closures, patent defense, personnel reductions and debt extinguishment. Our results of operations for the first nine months of 2025 reflect the impact of management’s decision to exit certain underperforming locations and service offerings in the United States as well as the effect of a reduction by operators in U.S. land-based activity due to lower crude oil prices, competitive market conditions and increased U.S. tariffs. These impacts were partially offset by stronger offshore and international project activity, supported by backlog growth over recent quarters. Revenues. Consolidated total revenues in the first nine months of 2025 decreased $37.5 million, or 7%, from the first nine months of 2024 reflective of our exit of underperforming service offerings and locations and lower U.S. land-based activity levels. Excluding the impact of exited operations, which generated $12.7 million and $64.3 million of revenues in the first nine months of 2025 and 2024, respectively, consolidated revenues increased $14.1 million year-over-year. Consolidated product revenues in the first nine months of 2025 increased $10.7 million, or 4%, from the first nine months of 2024, with the impact of higher customer demand for connector, crane and valve products partially offset by a reduced U.S. customer demand for completion and perforating products. Consolidated service revenues in the first nine months of 2025 decreased $48.1 million, or 21%, from the first nine months of 2024. The majority of this decrease was in the United States – reflective of our exit of certain underperforming service offerings and locations and an industry-wide reduction in land-based activity levels. The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the nine months ended September 30, 2025 and 2024 (in thousands): Offshore Manufactured Products Completion and Production Services Downhole Technologies Total Nine Months Ended September 30 2025 2024 2025 2024 2025 2024 2025 2024 Project-driven: Products $ 195,506 $ 171,053 $ — $ — $ — $ — $ 195,506 $ 171,053 Services 82,503 89,011 — — — — 82,503 89,011 Total project-driven 278,009 260,064 — — — — 278,009 260,064 Military and other products 29,800 30,583 — — — — 29,800 30,583 Short-cycle: Products — — — — 89,079 102,070 89,079 102,070 Services — — 91,468 133,812 2,168 1,464 93,636 135,276 Total short-cycle — — 91,468 133,812 91,247 103,534 182,715 237,346 $ 307,809 $ 290,647 $ 91,468 $ 133,812 $ 91,247 $ 103,534 $ 490,524 $ 527,993 By destination: Offshore and international $ 287,521 $ 268,363 $ 37,852 $ 35,703 $ 23,334 $ 28,595 $ 348,707 $ 332,661 U.S. land 20,288 22,284 53,616 98,109 67,913 74,939 141,817 195,332 $ 307,809 $ 290,647 $ 91,468 $ 133,812 $ 91,247 $ 103,534 $ 490,524 $ 527,993 As a percentage of total: Offshore and international 71 % 63 % U.S. land 29 % 37 % Cost of Revenues (exclusive of Depreciation and Amortization Expense). Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) in the first nine months of 2025 decreased $33.9 million, or 8%, compared to the first nine months of 2024. 32 Table of Contents Consolidated product costs in the first nine months of 2025 increased $13.0 million, or 5%, compared to the first nine months of 2024 due primarily to the reported increase in product revenue as well as an unfavorable shift in product sales mix. Consolidated service costs in the first nine months of 2025 decreased $46.9 million, or 27%, compared to the first nine months of 2024, due to lower revenue levels and the strategic actions implemented in our U.S. land-based operations to improve reported results. Selling, General and Administrative Expense. Selling, general and administrative expense totaled $66.3 million in the first nine months of 2025. This compares to an expense of $71.6 million in the first nine months of 2024, which included $2.7 million of costs associated with enforcing certain of our patents. Excluding these patent litigation costs, selling, general and administrative costs decreased $2.7 million, or 4%, from the prior-year period, due primarily to lower bad debt, marketing, information technology and commission expenses. Depreciation and Amortization Expense. Depreciation and amortization expense in the first nine months of 2025 decreased $6.5 million, or 15%, compared to the prior-year period. Note 10, “Segments and Related Information,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q presents depreciation and amortization expense by segment. Impairment of Goodwill. In the first quarter of 2024, our Downhole Technologies operations recognized a non-cash impairment charge of $10.0 million related to goodwill transferred to the business in connection with the realignment of operations between segments. See Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Impairments of Intangible Assets. In the first nine months of 2024, as a result of our decision to exit an underperforming service offering, our Completion and Production Services business recognized non-cash impairment charges of $10.8 million to reduce the carrying amount of its long-lived intangible assets to estimated fair value. See Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion. Impairment of Operating Lease Assets. In the first nine months of 2025, management continued its restructuring efforts to reduce costs in its U.S. land-based operations, which included the decisions to exit two leased service locations. As a result of these decisions, our Completion and Productions Services and Downhole Technologies segments recognized non-cash impairment charges totaling $1.4 million in connection with its exit of leased locations. In the first nine months of 2024, management made strategic decisions to exit five leased service locations within our Completion and Production Services segment and one within our Downhole Technologies segment. As a result of these decisions, our Completion and Production Services and Downhole Technologies segments recognized non-cash impairment charges totaling $2.6 million to reduce the carrying amount of the related operating lease assets. See Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion. Operating Income (Loss). Our consolidated operating income was $15.7 million in the first nine months of 2025, which included $1.4 million in non-cash operating lease asset impairment charges as well as charges totaling $6.8 million associated with facility consolidations and exits and other management actions. This compares to a consolidated operating loss of $20.2 million in the first nine months of 2024, which included $23.4 million in non-cash goodwill, intangible and operating lease impairment charges and $11.8 million associated with facility consolidations and exits, patent defense and other management actions. Excluding these charges, operating results improved by $8.8 million year-over-year, driven primarily by a $6.5 million decrease in depreciation and amortization expense, growth in offshore and international activity and actions taken to improve our U.S. land-based operating results. Interest Expense, Net. Net interest expense totaled $5.0 million in the first nine months of 2025, which compares to $6.0 million in the first nine months of 2024. Interest expense as a percentage of total debt outstanding was approximately 7% in the first nine months of 2025 and 2024. Income Tax. Income tax provision for the first nine months of 2025 and 2024 was calculated using a discrete approach. This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the first nine months of 2025, our income tax provision was $3.9 million, which included the impact of changes in valuation allowances recorded against deferred tax assets, certain discrete tax items and other non-deductible expenses on pre-tax income of $11.8 million. This compares to an income tax provision of $1.6 million, which included the impact of a $10.0 million goodwill impairment charge, other non-deductible expenses and unfavorable changes in valuation allowances recorded against deferred tax assets, on a pre-tax loss of $24.8 million for the first nine months of 2024. 33 Table of Contents Other Comprehensive Income . Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income. Other comprehensive income was $13.3 million in the first nine months of 2025 compared to other comprehensive income of $3.4 million in the first nine months of 2024 due to fluctuations in foreign currency exchange rates compared to the U.S. dollar for certain of the international operations of our operating segments. For the first nine months of 2025 and 2024, currency translation adjustments recognized as a component of other comprehensive income were primarily attributable to the United Kingdom and Brazil. During the first nine months of 2025, the exchange rates for both the British pound and the Brazilian real strengthened compared to the U.S. dollar. This compares to the first nine months of 2024, when the exchange rates for the British pound strengthened compared to the U.S. dollar while the Brazilian real weakened compared to the U.S. dollar. Segment Operating Results Offshore Manufactured Products Revenues. Our Offshore Manufactured Products segment revenues increased $17.2 million, or 6%, in the first nine months of 2025 compared to the first nine months of 2024 due primarily to increased demand for the segment’s international and offshore project-driven connector, crane and drilling products. Operating Income. Our Offshore Manufactured Products segment reported operating income of $48.9 million in the first nine months of 2025, which included $0.8 million in facility consolidation and relocation charges. This compares to operating income of $44.3 million in the first nine months of 2024, which included $3.4 million in facility consolidation and other charges. Excluding these charges, the Offshore Manufactured Products segment’s operating income increased $2.1 million year-over-year due primarily to the reported revenue growth. Backlog. Backlog in our Offshore Manufactured Products segment totaled $399 million as of September 30, 2025 compared to $311 million as of December 31, 2024. Bookings during the first nine months of 2025 were $393 million, yielding a book-to-bill ratio of 1.3x. Completion and Production Services Revenues. Our Completion and Production Services segment revenues decreased $42.3 million, or 32%, in the first nine months of 2025 compared to the first nine months of 2024, driven primarily by the exit of underperforming U.S. service offerings and facilities and lower U.S. land-based activity levels. Excluding the impact of exited operations, which generated revenues of $12.7 million and $64.3 million, respectively, in the first nine months of 2025 and 2024, revenues increased $9.3 million year-over-year. Operating Income (Loss). Our Completion and Production Services segment reported operating income of $6.3 million in the first nine months of 2025, which included charges totaling $5.8 million primarily associated with the exit of service locations and personnel reductions. This compares to an operating loss of $19.2 million in the first nine months of 2024, which included charges totaling $21.1 million associated with facility consolidations and exits, the defense of patents and other management actions. Excluding these charges, the Completion and Production Services segment’s operating results improved $10.2 million from the prior-year period, due primarily to a $5.4 million reduction in depreciation and amortization expense and implemented cost reduction measures. Downhole Technologies Revenues. Our Downhole Technologies segment revenues decreased $12.3 million, or 12%, in the first nine months of 2025 from the first nine months of 2024, driven primarily by lower U.S. customer activity levels and competitive market conditions. Operating Loss. Our Downhole Technologies segment reported an operating loss of $10.8 million in the first nine months of 2025, which included charges totaling $1.2 million primarily associated with the exit of a leased facility. This compares to an operating loss of $16.9 million reported in the first nine months of 2024, which included the $10.0 million non-cash goodwill impairment charge related to the segment realignment in the first quarter of 2024 and $1.2 million in charges related to the exit of a facility, personnel reductions and a customer bankruptcy. Excluding charges, the Downhole Technologies segment’s operating results declined $3.9 million from the prior-year period, due primarily to the decrease in activity levels, lower fixed-cost coverage and higher U.S. tariffs. Corporate Operating Loss. Corporate expenses in the first nine months of 2025 increased $0.4 million, or 1%, from the first nine months of 2024, due primarily to the incurrence of $0.3 million of severance charges. 34 Table of Contents Liquidity, Capital Resources and Other Matters Our primary liquidity needs are to fund operating and capital expenditures, new product development, general working capital needs and debt repayment, including the repayment of the 2026 Notes prior to their maturity on April 1, 2026. In addition, capital has been used to fund share repurchases and fund strategic business acquisitions. Our primary sources of funds are cash flow from operations and proceeds from borrowings under our ABL Facility and, less frequently, capital markets transactions. Operating Activities Cash flows from operations totaled $55.0 million during the first nine months of 2025, compared to $27.7 million generated by operations during the first nine months of 2024. During the first nine months of 2025, $9.9 million was provided by net working capital decreases, which includes increases in deferred revenues, accounts payable and accrued liabilities, partially offset by the unfavorable impact of increases in inventory and accounts receivable. During the first nine months of 2024, $13.2 million was used to fund net working capital increases, primarily due to an activity-driven increase in inventories, the payment of accrued 2023 short- and long-term cash incentives in the first quarter of 2024 and a decrease in accounts payable, partially offset by the favorable impact of a decrease in accounts receivable. Investing Activities Net cash used in investing activities during the first nine months of 2025 totaled $14.5 million, compared to $8.3 million used in investing activities during the first nine months of 2024. Capital expenditures totaled $28.2 million and $23.3 million during the first nine months of 2025 and 2024, respectively. These investments were offset by proceeds from the sale of property, equipment and assets held for sale of $13.8 million and $15.4 million during the first nine months of 2025 and 2024, respectively. Financing Activities During the first nine months of 2025, net cash of $39.4 million was used in financing activities, which included the purchase of $20.8 million principal amount of our outstanding 2026 Notes for $20.3 million in cash and the repurchase of 3.2 million shares of our common stock (or 5% of our common stock outstanding as of January 1, 2025) for $16.2 million. This compares to $20.2 million of cash used in financing activities during the first nine months of 2024, which included the purchase of $11.5 million principal amount of our outstanding 2026 Notes for $10.8 million in cash and the repurchase of $5.1 million of our common stock. As of September 30, 2025, we had cash and cash equivalents totaling $67.1 million, which compared to $65.4 million as of December 31, 2024. As of September 30, 2025, we had no borrowings outstanding under our ABL Facility, $102.8 million principal amount of our 2026 Notes outstanding and other debt of $2.6 million. Our reported interest expense included amortization of deferred financing costs of $1.2 million during the first nine months of 2025. For the first nine months of 2025, our contractual cash interest expense was $5.0 million, or approximately 6% of the average principal balance of debt outstanding. We believe that cash on-hand, cash flow from operations and borrowing capacity available under the ABL Facility will be sufficient to meet our liquidity needs in the coming twelve months, including full retirement of our 2026 Notes upon maturity on April 1, 2026. If our plans or assumptions change, or are inaccurate, we may need to raise additional capital from other sources. Our ability to obtain capital to repay debt, for general liquidity needs and for additional projects to implement our growth strategy over the longer term will depend upon our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global banking and financial markets and other factors, many of which are beyond our control. For companies like ours that support the energy industry, disruptions affecting the availability of capital have in the past and may in the future negatively impact the value of our common stock and may reduce our ability to access capital in the bank and capital markets or result in such capital being available on less favorable terms, which could negatively affect our liquidity. In March 2024, the SEC finalized rules relating to the disclosure of a range of climate-related information (the “Rules”). The Rules were temporarily stayed by the SEC in April 2024 pending judicial review, and in March 2025, the SEC announced it would end its defense of the Rules. Litigation challenging the Rules was held in abeyance in March 2025 and remains in 35 Table of Contents abeyance until the SEC reconsiders the challenged Rules by notice-and-comment rulemaking or renews its defense of the Rules. Although the SEC’s rules are unlikely to become effective, certain states have enacted or are considering the adoption of similar rules. Thus, the ultimate impact on our business is uncertain, and we and our customers may incur increased compliance costs related to the assessment and disclosure of climate-related risks. For more information on our risks related to climate change, see the risk factors in “Part I, Item 1A. Risk Factors” included in our 2024 Annual Report on Form 10-K titled, “Our and our customers’ operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, and reduce demand for the products and services we provide,” “The Inflation Reduction Act of 2022 could accelerate the transition to a low carbon economy and could impose new costs on our customers’ operations” and “Increasing attention to ESG matters may impact our business.” Stock Repurchase Program. In October 2024, our Board of Directors authorized $50.0 million for repurchases of our 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 we deem appropriate. During the nine months ended September 30, 2025, $16.2 million in repurchases of common stock were made under this program. The amount remaining under our share repurchase authorization as of September 30, 2025 was $25.1 million. Revolving Credit Facility. Our senior secured credit facility provides for an 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 (amended July 28, 2025 by that certain Fifth Amendment to Credit Agreement and First Amendment to Guaranty and Security Agreement) 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 Agreement matures on February 16, 2028. See Note 4, “Long-term Debt,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding the ABL Agreement. As of September 30, 2025, we had $13.4 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, 2025 was $73.2 million, calculated based on the then-current borrowing base less outstanding letters of credit. 2026 Notes. We issued $135.0 million aggregate principal amount of the 2026 Notes pursuant to an indenture, dated as of March 19, 2021 (the “2026 Indenture”), between us and Computershare Trust Company, National Association, as successor trustee. As of September 30, 2025, we have purchased a cumulative $32.3 million principal amount of the 2026 Notes for $31.1 million in cash, with $102.8 million principal amount outstanding. The outstanding 2026 Notes will mature on April 1, 2026, unless earlier repurchased, redeemed or converted. The 2026 Indenture contains certain events of default, including certain defaults by us with respect to other indebtedness of at least $40.0 million. See Note 4, “Long-term Debt,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding the 2026 Notes. As of September 30, 2025, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met. Our total debt represented 13% and 16% of our combined total debt and stockholders’ equity as of September 30, 2025 and December 31, 2024, respectively. Contingencies and Other Obligations. We are a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters. See Note 11, “Commitments and Contingencies,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion. Off-Balance Sheet Arrangements. As of September 30, 2025, we had no off-balance sheet arrangements. 36 Table of Contents Critical Accounting Policies For a discussion of the critical accounting policies and estimates that we use in the preparation of our condensed consolidated financial statements, see “Part II Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024. These estimates require significant judgments, assumptions and estimates. We have discussed the development, selection, and disclosure of these critical accounting policies and estimates with the audit committee of our Board of Directors. There have been no material changes to the judgments, assumptions and estimates upon which our critical accounting estimates are based. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, which are adopted by us as of the specified effective date. Management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our consolidated financial statements upon adoption.