Oil States International Exceeds Expectations Amid Challenges

Oil States International ((OIS)) has held its Q1 earnings call. Read on for the main highlights of the call.

The latest earnings call from Oil States International highlighted a blend of positive developments and challenges. The company exceeded revenue and EBITDA expectations, achieved record bookings and backlog, and reported strong performances across its segments. However, the call also addressed concerns such as the decline in stock price due to tariffs, potential cost increases, and pressures on the domestic market caused by weaker crude oil prices. Overall, the positive aspects and strategic mitigations seemed to balance the challenges presented.

Revenue and EBITDA Exceed Expectations

Oil States International reported impressive financial results for the first quarter of 2025, with revenues ranging from $160 million to $170 million being met or exceeded. The company’s EBITDA also surpassed expectations, reaching between $17.5 million and $18.5 million. This success was attributed to the strength in international offerings and a recovery in Gulf of America operations.

Record Bookings and Backlog

The company achieved record bookings totaling $136 million, resulting in the highest level of backlog since September 2015. The book-to-bill ratio stood at an impressive 1.5 times, indicating strong demand for Oil States’ products and services.

Positive Cash Flow from Operations

In a notable reversal of trends, Oil States generated $9 million of cash flow from operations in the first quarter, marking a positive shift from the typical negative cash flow seen in this period.

Strong Performance in Offshore Manufactured Products

The offshore manufactured products segment delivered robust results, generating revenues of $93 million and an adjusted segment EBITDA of $18 million, with a margin of 19%. This performance underscores the segment’s significant contribution to the company’s overall success.

Completion and Production Services Margin Improvement

The completion and production services segment also showed strong results, with revenues of $35 million and an adjusted segment EBITDA of $9 million. Margins improved to 25%, highlighting the segment’s operational efficiency.

Strategic Investments and Share Repurchases

Oil States utilized proceeds from asset sales to fund $9 million in capital expenditures, including a new facility in Batam, Indonesia. Additionally, the company repurchased $5 million in shares, demonstrating its commitment to returning value to shareholders.

Stock Price Decline

Despite strong operational performance, Oil States’ stock price suffered a decline due to U.S. tariffs affecting global trading partners. This created market uncertainty and impacted crude oil prices, posing challenges for the company.

Tariff Impact and Cost Increases

The company acknowledged the impact of tariffs on imported steel tubing and components, which are expected to increase costs in the downhole technology segment. However, strategic actions are being implemented to mitigate these impacts.

Potential Pressure on Domestic Market Conditions

Oil States noted potential pressures on domestic market conditions and activity levels due to weaker crude oil prices. Nevertheless, the outlook for offshore and international markets remains strong.

Forward-Looking Guidance

Oil States International maintained its full-year 2025 revenue guidance of $700 million to $735 million and EBITDA guidance of $88 million to $93 million. For the second quarter, the company expects revenues between $170 million to $180 million and EBITDA from $20 million to $22 million. The company emphasized its strategic efforts to mitigate tariff impacts and remains committed to returning cash to shareholders and investing in growth.

In conclusion, Oil States International’s earnings call presented a balanced view of its current performance and future prospects. While challenges such as tariffs and domestic market pressures exist, the company’s strong operational results and strategic initiatives provide a positive outlook. Investors will be keen to see how Oil States navigates these challenges and capitalizes on growth opportunities in the coming quarters.