Oil States International ((OIS)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Oil States International’s recent earnings call painted a picture of resilience and strategic adaptation, with strong performances in offshore and international markets. Despite the challenges faced in U.S. land-based activities, the company demonstrated robust growth and a solid backlog, highlighting its ability to navigate complex market conditions effectively.
Strong Offshore and International Performance
The company reported that 72% of its consolidated revenues were derived from offshore and international projects, showcasing strategic growth in these areas. The Offshore/Manufactured Products segment was a standout performer, with a 15% sequential revenue increase and an 18% rise in adjusted segment EBITDA. The backlog reached $363 million, marking the highest level since September 2015, underscoring the company’s successful expansion in these markets.
Positive Cash Flow and Deleveraging
Oil States International achieved a 61% sequential growth in cash flow from operations, generating $8 million in free cash flow. This financial strength allowed the company to repurchase $7 million in common stock and $15 million in convertible senior notes, moving closer to a net debt zero position, which is a significant milestone in its financial strategy.
Meritorious Engineering Award
The company received the prestigious 2025 Meritorious Engineering Award from Hart Energy for its innovative low-impact workover package. This award highlights Oil States’ commitment to enhancing subsea plug and abandonment operations, reinforcing its reputation for engineering excellence.
Improved Financial Guidance and Strong Bookings
Oil States maintained its full-year EBITDA guidance of $88 million to $93 million and projected strong cash flow from operations between $65 million to $75 million. The company reported a book-to-bill ratio exceeding 1, indicating continued strong bookings and a positive outlook for future growth.
Decline in U.S. Land-Based Activity
The company faced significant declines in U.S. land drilling and completion activity, with an 8% decrease in rig count and a 14% decrease in frac spread count. These declines were attributed to weaker crude oil prices and broader macroeconomic uncertainties, impacting the company’s land-based operations.
Revenue Declines in Certain Segments
Sequential quarter revenue declines were reported in the Completion and Production Services and Downhole Technologies segments, with reductions of 15% and 10%, respectively. These declines were primarily due to the industry-wide reduction in U.S. land-based activity, reflecting broader market challenges.
Strategic Exit and Restructuring Costs
In response to the challenging U.S. land-based market, Oil States exited three additional land-based facilities and reduced its U.S. land-focused workforce. This restructuring incurred facility exit, severance, and other charges totaling $3 million, as the company streamlined its operations to focus on more profitable areas.
Forward-Looking Guidance
Looking ahead, Oil States International emphasized its strategic focus on offshore and international markets, projecting third-quarter revenues of $165 million to $170 million and EBITDA of $21 million to $23 million. The company maintained its full-year EBITDA guidance and updated its revenue guidance to reflect the streamlining of U.S. land operations. With a robust backlog and strong book-to-bill ratio, Oil States is well-positioned for incremental revenue and earnings growth over the remainder of 2025.
In conclusion, Oil States International’s earnings call highlighted a company adept at navigating market challenges while capitalizing on growth opportunities in offshore and international markets. Despite setbacks in U.S. land-based activities, the company’s strategic focus and financial prudence position it well for future success, with strong bookings and a solid backlog underpinning its optimistic outlook.