HOUSTON - Oil States International, Inc. (NYSE: OIS): Oil States International, Inc. reported net loss of $13.4 million, or $0.21 per share, and Adjusted EBITDA of $15.5 million for the first quarter of 2024 on revenues of $167.3 million.
Reported first quarter 2024 net loss included a non-cash goodwill impairment charge of $10.0 million ($9.5 million after-tax, or $0.15 per share) and facility consolidation and other charges of $2.5 million ($2.0 million after-tax, or $0.03 per share). These results compare to revenues of $208.3 million, net income of $6.0 million, or $0.09 per share, and Adjusted EBITDA of $24.0 million reported in the fourth quarter of 2023, which included facility consolidation and other charges of $1.4 million ($1.1 million after-tax, or $0.02 per share).
Oil States' President and Chief Executive Officer, Cindy B. Taylor, stated,
'Our first quarter consolidated revenues and Adjusted EBITDA decreased sequentially due primarily to the impacts of seasonality and timing of revenue recognition for our percentage-of-completion projects in our Offshore Manufactured Products segment, where revenues increased year-over-year but declined sequentially. Certain orders moved out of the quarter, resulting in segment backlog of $305 million as of March 31, and a quarterly book-to-bill ratio of 0.8x.
'Our Completion Services and Downhole Technologies businesses have begun to recover from the fourth quarter 2023 activity slow-down that the industry experienced, but progress in this recovery during the first quarter was slow. Cost control and other reduction measures are being implemented in the areas where we are experiencing lower levels of activity, particularly the gas basins, as we do not expect much recovery over the next couple of quarters.
'Our investments in technology and innovation were again highlighted by the Offshore Technology Conference, with the announcement that we are the recipient of two 2024 Spotlight on New Technology Awards for our Swift Ultra-Deepwater Connector and our ACTIVEHub platform with ACTIVELatch.
'We remain encouraged by the continued expansion in offshore activity globally coupled with enhanced competitive positioning in each of our business segments through our recent new technology introductions. Benefits of our expanded technology offering are expected to extend well beyond the next couple of years.'
Business Segment Results
In first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into our Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical segment financial data (GAAP and non-GAAP), backlog and other information were conformed with the first quarter 2024 revised segment presentation.
Offshore Manufactured Products
Offshore Manufactured Products reported revenues of $86.9 million, operating income of $10.6 million and Adjusted Segment EBITDA of $15.8 million in the first quarter of 2024, compared to revenues of $126.5 million, operating income of $24.2 million and Adjusted Segment EBITDA of $28.8 million reported in the fourth quarter of 2023. During the first quarter of 2024 and the fourth quarter of 2023, the segment recorded charges of $1.5 million and $0.8 million, respectively, associated with the consolidation of certain manufacturing and service locations. Adjusted Segment EBITDA margin in the first quarter of 2024 was 18%.
Backlog totaled $305 million as of March 31, 2024, a decrease of $22 million, or 7%, from December 31, 2023 due to the timing of bookings, which totaled $66 million, yielding a quarterly book-to-bill ratio of 0.8x.
Well Site Services
Well Site Services reported revenues of $47.3 million, an operating loss of $0.4 million and Adjusted Segment EBITDA of $6.6 million in the first quarter of 2024, compared to revenues of $51.2 million, an operating loss of $1.1 million and Adjusted Segment EBITDA of $5.9 million reported in the fourth quarter of 2023. During the first quarter of 2024 and the fourth quarter of 2023, the segment recorded costs of $0.4 million and $0.6 million, respectively, associated with the defense of certain patents related to its proprietary technologies. Additionally, the segment recognized $0.7 million in costs associated with the consolidation and exit of three facilities during the first quarter of 2024. Adjusted Segment EBITDA margin was 14% in the first quarter of 2024, compared to 12% in the fourth quarter of 2023.
Downhole Technologies
Downhole Technologies reported revenues of $33.1 million, an operating loss of $12.1 million and Adjusted Segment EBITDA of $2.2 million in the first quarter of 2024, compared to revenues of $30.6 million, an operating loss of $5.7 million and an Adjusted Segment EBITDA loss of $1.4 million reported in the fourth quarter of 2023. Reported results in the first quarter of 2024 included a non-cash goodwill impairment charge of $10.0 million, recorded in connection with the first quarter 2024 segment realignment discussed above. Included in the fourth quarter of 2023 results were provisions for excess and obsolete inventory totaling $1.3 million.
Corporate
Corporate operating expenses in the first quarter of 2024 totaled $9.3 million.
Interest Expense, Net
Net interest expense totaled $2.1 million in the first quarter of 2024, which included $0.5 million of non-cash amortization of deferred debt issuance costs.
Income Taxes
During the first quarter of 2024, the Company recognized tax expense of $24 thousand on a pre-tax loss of $13.4 million, which included a $7.7 million non-deductible goodwill impairment charge as well as other non-deductible expenses. The Company recognized tax expense of $0.2 million on pre-tax income of $6.2 million in the fourth quarter of 2023.
Cash Flows
During the first quarter of 2024, cash flows used in operations totaled $11.4 million and capital expenditures totaled $10.1 million ($7.8 million net of proceeds from sales of equipment) primarily due to the purchase of land for the new Batam, Indonesia manufacturing facility.
Financial Condition
Cash on-hand totaled $24.1 million at March 31, 2024. No borrowings were outstanding under the Company's asset-based revolving credit facility (the 'ABL Facility') at March 31, 2024. The Company amended its ABL Facility during the quarter to extend the maturity date to February 16, 2028.
Industry Awards
2024 Spotlight on New Technology Awards from the Offshore Technology Conference
Ultra-Deepwater Connector
Oil States' Swift Ultra-Deepwater Connector offers oil and gas operators a unique integrally machined anti-rotation mechanism that allows for hands-free makeup and is designed to prevent connector breakout in extreme and fatigue-sensitive ultra-deepwater conditions. This metal-sealing casing/conductor connector features integral ratchet anti-rotation as a standard component with no loose parts such as the tabs, keys and screws common on traditional anti-rotational connectors. The advanced ratchet anti-rotation mechanism allows hands-free running of the connector eliminating personnel in the red zone, reducing safety risks associated with dropped objects and personnel hazards related to the make-up of traditional large diameter conductor connectors.
o Remote Wellsite Monitoring and Control Solutions
Oil States recently introduced its ACTIVEHub platform with ACTIVELatch technology to address operators' needs for remotely monitoring and controlling their frac locations to provide an efficient, safer and more environmentally friendly wellsite. The ACTIVEHub platform is a communication and control center that is designed to provide real-time information and control across the entire wellsite. ACTIVELatch is a key component of the ACTIVEHub system, and is the industry's first, battery-operated 'wireless latch.' Our ACTIVELatch is a 5 1/8-in. 15,000 psi, remotely operated wellhead connection that is designed to allow an operator to make and break the wireline connection to the well wirelessly via the ACTIVEHub communication and control system without bulky cables or hydraulics. The component's wireless capability removes personnel from the red zone for greater wellsite safety.
About Oil States
Oil States International, Inc. is a global provider of manufactured products and services to customers in the energy, industrial and military sectors. The Company's manufactured products include highly engineered capital equipment and consumable products. Oil States is headquartered in Houston, Texas with manufacturing and service facilities strategically located across the globe. Oil States is publicly traded on the New York Stock Exchange under the symbol 'OIS'.
Cautionary Language Concerning Forward Looking Statements
The foregoing contains 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. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among others, the level of supply 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, general global economic conditions, the cyclical nature of the oil and natural gas industry, geopolitical conflicts and tensions, the financial health of our customers, the actions of the Organization of Petroleum Exporting Countries ('OPEC') and other producing nations with respect to crude oil production levels and pricing, the impact of environmental matters, including executive actions and regulatory 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, consolidation of our customers, our ability to access and the cost of capital in the bank and capital markets, our ability to develop new competitive technologies and products, and other factors discussed in the 'Business' and 'Risk Factors' sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.
Contact:
Lloyd A. Hajdik
Tel: (713) 652-0582
OIL STATES INTERNATIONAL, INC. 
