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Oil States Announces Fourth Quarter 2023 Results

  • Net income of $6.0 million, or $0.09 per diluted share, reported for the quarter
  • Consolidated revenues of $208.3 million increased 7% sequentially, driven by higher offshore and international activity
  • Adjusted EBITDA (a non-GAAP measure(1)) of $24.0 million increased 2% sequentially
  • Offshore/Manufactured Products segment revenues increased 24% sequentially to $137.9 million – the highest level reported since the fourth quarter of 2015
  • Offshore/Manufactured Products segment backlog totaled $333 million as of December 31, with quarterly bookings of $120 million
  • Invested $3.9 million in share repurchases during the quarter
  • Extended the maturity date of our ABL Facility to February 16, 2028

Oil States International, Inc. (NYSE: OIS):

 

Three Months Ended

 

% Change

(Unaudited, In Thousands, Except Per Share Amounts)

December 31,

2023

 

September 30,

2023

 

December 31,

2022

 

Sequential

 

Year-over-

Year

Consolidated results:

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

208,266

 

 

$

194,289

 

 

$

202,434

 

 

7

%

 

3

%

Operating income(2)(3)

$

7,830

 

 

$

6,190

 

 

$

3,273

 

 

26

%

 

139

%

Net income

$

5,963

 

 

$

4,212

 

 

$

2,885

 

 

42

%

 

107

%

Diluted earning per share

$

0.09

 

 

$

0.07

 

 

$

0.05

 

 

29

%

 

80

%

Adjusted EBITDA(1)

$

23,978

 

 

$

23,441

 

 

$

20,542

 

 

2

%

 

17

%

 

 

 

 

 

 

 

 

 

 

 

 

Revenues by segment:

 

 

 

 

 

 

 

 

 

 

 

Offshore/Manufactured Products

$

137,935

 

 

$

111,043

 

 

$

105,107

 

 

24

%

 

31

%

Well Site Services

 

51,208

 

 

 

59,831

 

 

 

67,689

 

 

(14

)%

 

(24

)%

Downhole Technologies

 

19,123

 

 

 

23,415

 

 

 

29,638

 

 

(18

)%

 

(35

)%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) by segment:

 

 

 

 

 

 

 

 

 

 

 

Offshore/Manufactured Products(2)

$

25,152

 

 

$

17,804

 

 

$

12,258

 

 

41

%

 

105

%

Well Site Services(3)

 

(1,102

)

 

 

3,285

 

 

 

5,300

 

 

n.m.

 

 

n.m.

 

Downhole Technologies

 

(6,711

)

 

 

(4,118

)

 

 

(3,337

)

 

(63

)%

 

(101

)%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Segment EBITDA (a non-GAAP measure(1)):

   

Offshore/Manufactured Products

$

30,295

 

 

$

24,442

 

 

$

17,751

 

 

24

%

 

71

%

Well Site Services

 

5,903

 

 

 

9,716

 

 

 

12,516

 

 

(39

)%

 

(53

)%

Downhole Technologies

 

(2,877

)

 

 

(88

)

 

 

1,042

 

 

n.m.

 

 

n.m.

 

___________________

(1)

Adjusted EBITDA and Adjusted Segment EBITDA are non-GAAP measures, see “Reconciliations of GAAP to Non-GAAP Financial Information” tables below for reconciliations to their most comparable GAAP measures as well as further clarification and explanation.

(2)

Operating income in the fourth and third quarters of 2023 included charges of $0.8 million and $1.6 million, respectively, associated with the Offshore/Manufactured Products segment’s ongoing consolidation of certain manufacturing and service locations.

(3)

Operating loss in the fourth quarter of 2023 also included $0.6 million, associated with the defense of certain Well Site Services segment patents related to proprietary technologies.

Oil States International, Inc. reported net income of $6.0 million, or $0.09 per share, and Adjusted EBITDA of $24.0 million for the fourth quarter of 2023 on revenues of $208.3 million. Reported fourth quarter 2023 net income included facility consolidation charges of $0.8 million ($0.7 million after-tax, or $0.01 per share) and patent defense costs of $0.6 million ($0.5 million after-tax, or $0.01 per share). These results compare to revenues of $194.3 million, net income of $4.2 million, or $0.07 per share, and Adjusted EBITDA of $23.4 million reported in the third quarter of 2023, which included facility consolidation charges of $1.6 million ($1.3 million after-tax, or $0.02 per share).

For the year ended December 31, 2023, the Company reported net income of $12.9 million, or $0.20 per share, and Adjusted EBITDA of $87.8 million on revenues of $782.3 million. The full-year 2023 results included facility consolidation charges of $2.5 million ($2.0 million after-tax, or $0.03 per share) and patent defense costs of $0.6 million ($0.5 million after-tax, or $0.01 per share). These results compare to a net loss of $9.5 million, or $0.15 per share, and Adjusted EBITDA of $74.0 million on revenues of $737.7 million reported in 2022. The 2022 results included a gain of $6.1 million ($4.6 million after-tax, or $0.07 per share) recognized in connection with the settlement of litigation.

Oil States’ President and Chief Executive Officer, Cindy B. Taylor, stated,

“For the oil and gas industry, the year 2023 can be summarized as a year in which North American activity started to moderate, while international and offshore growth strengthened. Our fourth quarter results reflect those trends with our Offshore/Manufactured Products segment revenues growing 24% sequentially, boosted by a 39% sequential-quarter increase in project-driven revenues. This significant growth was substantially offset by the impact of declines in U.S. land-based completion activity due to an approximate 20% decline in the price of crude oil during the quarter along with continued weak natural gas prices. Despite the reduction in U.S. activity levels during 2023, Oil States reported positive operating and net income for a sixth consecutive quarter.

“We concluded the year with strong year-over-year revenue and Adjusted EBITDA growth, positive net income and free cash flow contributions, lower net debt and enhanced cash returns to stockholders.”

Business Segment Results

(See Segment Data and Adjusted Segment EBITDA tables below)

Offshore/Manufactured Products

Offshore/Manufactured Products reported revenues of $137.9 million – the segment’s highest revenue level since the fourth quarter of 2015, operating income of $25.2 million and Adjusted Segment EBITDA of $30.3 million in the fourth quarter of 2023, compared to revenues of $111 million, operating income of $17.8 million and Adjusted Segment EBITDA of $24.4 million reported in the third quarter of 2023. During the fourth and third quarters of 2023, the segment recorded charges of $0.8 million and $1.6 million, respectively, associated with the ongoing consolidation of certain manufacturing and service locations. Adjusted Segment EBITDA margin in the fourth quarter of 2023 was 22%, consistent with the third quarter of 2023.

Backlog totaled $333 million as of December 31, 2023, a decrease of $15 million, or 4%, from September 30, 2023 but an increase of $25 million, or 8%, from December 31, 2022. Fourth quarter 2023 bookings totaled $120 million, yielding a quarterly book-to-bill ratio of 0.9x and a full-year ratio of 1.1x. During the fourth quarter of 2023, the segment received a notable production facility project award exceeding $10 million.

Well Site Services

Well Site Services reported revenues of $51.2 million, an operating loss of $1.1 million and Adjusted Segment EBITDA of $5.9 million in the fourth quarter of 2023, compared to revenues of $59.8 million, operating income of $3.3 million and Adjusted Segment EBITDA of $9.7 million reported in the third quarter of 2023. During the fourth quarter of 2023, the segment recorded $0.6 million of costs associated with the defense of certain patents related to its proprietary technologies. Adjusted Segment EBITDA margin was 12% in the fourth quarter of 2023 compared to 16% in the third quarter of 2023 given year-end and holiday activity declines.

Downhole Technologies

Downhole Technologies reported revenues of $19.1 million, an operating loss of $6.7 million and an Adjusted Segment EBITDA loss of $2.9 million in the fourth quarter of 2023, compared to revenues of $23.4 million, an operating loss of $4.1 million and an Adjusted Segment EBITDA loss of $0.1 million reported in the third quarter of 2023. 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 fourth quarter of 2023 totaled $9.5 million.

Interest Expense, Net

Net interest expense totaled $1.8 million in the fourth quarter of 2023, which included $0.5 million of non-cash amortization of deferred debt issuance costs.

Income Taxes

The Company recognized tax expense of $0.2 million on pre-tax income of $6.2 million during the fourth quarter of 2023. In the third quarter of 2023, the Company recognized tax expense of $0.2 million on pre-tax income of $4.4 million.

Cash Flows

During the fourth quarter of 2023, the Company generated cash flows from operations of $4.2 million and invested $7.3 million ($6.4 million net of proceeds from sales of property and equipment) in new equipment to support future growth.

The Company also repurchased 563 thousand shares of its common stock for $3.9 million during the fourth quarter of 2023. A total of $18.1 million remains available under the Company’s share repurchase authorization, which extends through February 2025.

Financial Condition

Cash on-hand decreased $5.8 million during the quarter, totaling $47.1 million at December 31, 2023. No borrowings were outstanding under the Company’s asset-based revolving credit facility (the “ABL Facility”) at December 31, 2023. Liquidity (cash plus borrowing availability) totaled $123.2 million at December 31, 2023, with amounts available to be drawn under the ABL Facility totaling $76.1 million. On February 16, 2024, the Company amended its ABL Facility to extend the maturity date to February 16, 2028.

Conference Call Information

The call is scheduled for February 20, 2024 at 10:00 a.m. Central Time, is being webcast and can be accessed from the Company’s website at www.ir.oilstatesintl.com. Participants may also join the conference call by dialing 1 (888) 210-3346 in the United States or by dialing +1 (646) 960-0253 internationally and using the passcode 7534957. A replay of the conference call will be available approximately two hours after the completion of the call and can be accessed from the Company’s website at www.ir.oilstatesintl.com.

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”.

For more information on the Company, please visit Oil States International’s website at www.oilstatesintl.com.

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, 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, 2022 and the subsequently filed Quarterly Reports on Form 10-Q and Periodic Reports on Form 8-K. 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.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,

2023

 

September 30,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

Revenues:

 

 

 

 

 

 

 

 

 

Products

$

123,444

 

 

$

102,636

 

 

$

101,027

 

 

$

418,550

 

 

$

385,564

 

Services

 

84,822

 

 

 

91,653

 

 

 

101,407

 

 

 

363,733

 

 

 

352,142

 

 

 

208,266

 

 

 

194,289

 

 

 

202,434

 

 

 

782,283

 

 

 

737,706

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Product costs

 

97,291

 

 

 

80,188

 

 

 

81,606

 

 

 

328,815

 

 

 

307,371

 

Service costs

 

66,405

 

 

 

70,239

 

 

 

76,891

 

 

 

278,073

 

 

 

271,185

 

Cost of revenues (exclusive of depreciation and amortization expense presented below)

 

163,696

 

 

 

150,427

 

 

 

158,497

 

 

 

606,888

 

 

 

578,556

 

Selling, general and administrative expense(1)

 

22,400

 

 

 

24,241

 

 

 

25,074

 

 

 

94,185

 

 

 

96,038

 

Depreciation and amortization expense

 

14,569

 

 

 

15,416

 

 

 

15,865

 

 

 

60,778

 

 

 

67,334

 

Other operating income, net(2)

 

(229

)

 

 

(1,985

)

 

 

(275

)

 

 

(2,732

)

 

 

(7,127

)

 

 

200,436

 

 

 

188,099

 

 

 

199,161

 

 

 

759,119

 

 

 

734,801

 

Operating income

 

7,830

 

 

 

6,190

 

 

 

3,273

 

 

 

23,164

 

 

 

2,905

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(1,811

)

 

 

(1,928

)

 

 

(2,333

)

 

 

(8,189

)

 

 

(10,280

)

Other income, net

 

177

 

 

 

186

 

 

 

1,423

 

 

 

849

 

 

 

3,315

 

Income (loss) before income taxes

 

6,196

 

 

 

4,448

 

 

 

2,363

 

 

 

15,824

 

 

 

(4,060

)

Income tax (provision) benefit

 

(233

)

 

 

(236

)

 

 

522

 

 

 

(2,933

)

 

 

(5,480

)

Net income (loss)

$

5,963

 

 

$

4,212

 

 

$

2,885

 

 

$

12,891

 

 

$

(9,540

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

$

0.09

 

 

$

0.07

 

 

$

0.05

 

 

$

0.20

 

 

$

(0.15

)

Diluted

 

0.09

 

 

 

0.07

 

 

 

0.05

 

 

 

0.20

 

 

 

(0.15

)

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

62,483

 

 

 

62,651

 

 

 

62,678

 

 

 

62,690

 

 

 

61,638

 

Diluted

 

63,004

 

 

 

63,060

 

 

 

62,768

 

 

 

63,152

 

 

 

61,638

 

________________

(1)

Selling, general and administrative expense for the three months and year ended December 31, 2023 included $0.6 million of costs associated with the defense of certain Well Site Services segment patents related to proprietary technologies.

(2)

Other operating income, net for the three months ended December 31, 2023 and September 30, 2023 and the year ended December 31, 2023 included facility consolidation charges of $0.8 million, $1.6 million and $2.5 million, respectively, associated with the Offshore/Manufactured Products segment’s ongoing consolidation and relocation of certain manufacturing and service locations. Other operating income, net for the year ended December 31, 2022 included a gain of $6.1 million related to the Offshore/Manufactured Products segment’s settlement of outstanding litigation against certain service providers.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(In Thousands)

 

 

December 31, 2023

 

December 31, 2022

 

(Unaudited)

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

47,111

 

 

$

42,018

 

Accounts receivable, net

 

203,211

 

 

 

218,769

 

Inventories, net

 

202,027

 

 

 

182,658

 

Prepaid expenses and other current assets

 

35,648

 

 

 

19,317

 

Total current assets

 

487,997

 

 

 

462,762

 

 

 

 

 

Property, plant, and equipment, net

 

280,389

 

 

 

303,835

 

Operating lease assets, net

 

21,970

 

 

 

23,028

 

Goodwill, net

 

79,867

 

 

 

79,282

 

Other intangible assets, net

 

153,010

 

 

 

169,798

 

Other noncurrent assets

 

23,253

 

 

 

25,687

 

Total assets

$

1,046,486

 

 

$

1,064,392

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

627

 

 

$

17,831

 

Accounts payable

 

67,546

 

 

 

73,251

 

Accrued liabilities

 

44,227

 

 

 

49,057

 

Current operating lease liabilities

 

6,880

 

 

 

6,142

 

Income taxes payable

 

1,233

 

 

 

2,605

 

Deferred revenue

 

36,757

 

 

 

44,790

 

Total current liabilities

 

157,270

 

 

 

193,676

 

 

 

 

 

Long-term debt

 

135,502

 

 

 

135,066

 

Long-term operating lease liabilities

 

18,346

 

 

 

20,658

 

Deferred income taxes

 

7,717

 

 

 

6,652

 

Other noncurrent liabilities

 

18,106

 

 

 

18,782

 

Total liabilities

 

336,941

 

 

 

374,834

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common stock

 

772

 

 

 

766

 

Additional paid-in capital

 

1,129,240

 

 

 

1,122,292

 

Retained earnings

 

284,918

 

 

 

272,027

 

Accumulated other comprehensive loss

 

(69,984

)

 

 

(78,941

)

Treasury stock

 

(635,401

)

 

 

(626,586

)

Total stockholders’ equity

 

709,545

 

 

 

689,558

 

Total liabilities and stockholders’ equity

$

1,046,486

 

 

$

1,064,392

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income (loss)

$

12,891

 

 

$

(9,540

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization expense

 

60,778

 

 

 

67,334

 

Stock-based compensation expense

 

6,954

 

 

 

6,852

 

Amortization of deferred financing costs

 

1,798

 

 

 

1,886

 

Deferred income tax provision

 

226

 

 

 

2,020

 

Gains on disposals of assets

 

(4,075

)

 

 

(2,856

)

Gains on extinguishment of 1.50% convertible senior notes

 

 

 

 

(176

)

Other, net

 

(1,001

)

 

 

2,066

 

Changes in operating assets and liabilities, net of effect from acquired business:

 

 

 

Accounts receivable

 

17,132

 

 

 

(35,443

)

Inventories

 

(19,793

)

 

 

(17,364

)

Accounts payable and accrued liabilities

 

(11,743

)

 

 

18,183

 

Deferred revenue

 

(8,033

)

 

 

1,554

 

Other operating assets and liabilities, net

 

1,441

 

 

 

(1,654

)

Net cash flows provided by operating activities

 

56,575

 

 

 

32,862

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(30,653

)

 

 

(20,266

)

Proceeds from disposition of property and equipment

 

5,253

 

 

 

5,877

 

Acquisition of business, net of cash acquired

 

 

 

 

(8,125

)

Other, net

 

(186

)

 

 

(211

)

Net cash flows used in investing activities

 

(25,586

)

 

 

(22,725

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Revolving credit facility borrowings

 

35,816

 

 

 

10,090

 

Revolving credit facility repayments

 

(35,816

)

 

 

(10,090

)

Repayment of 1.50% convertible senior notes

 

(17,315

)

 

 

(8,450

)

Payment of promissory note to seller of GEODynamics, Inc.

 

 

 

 

(10,000

)

Other debt and finance lease repayments

 

(457

)

 

 

(732

)

Payment of financing costs

 

(128

)

 

 

(105

)

Purchases of treasury stock

 

(6,867

)

 

 

 

Shares added to treasury stock as a result of net share settlements

due to vesting of stock awards

 

(1,948

)

 

 

(1,002

)

Net cash flows used in financing activities

 

(26,715

)

 

 

(20,289

)

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

819

 

 

 

(682

)

Net change in cash and cash equivalents

 

5,093

 

 

 

(10,834

)

Cash and cash equivalents, beginning of period

 

42,018

 

 

 

52,852

 

Cash and cash equivalents, end of period

$

47,111

 

 

$

42,018

 

 

 

 

 

Cash paid for:

 

 

 

Interest

$

7,867

 

 

$

8,339

 

Income taxes, net

 

1,263

 

 

 

534

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

SEGMENT DATA

(In Thousands)

(Unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,

2023(2)(3)

 

September 30,

2023(2)

 

December 31,

2022

 

December 31,

2023(2)(3)

 

December 31,

2022(4)

Revenues(1):

 

 

 

 

 

 

 

 

 

Offshore/Manufactured Products

 

 

 

 

 

 

 

 

 

Project-driven:

 

 

 

 

 

 

 

 

 

Products

$

72,870

 

 

$

45,527

 

 

$

44,187

 

 

$

189,739

 

 

$

158,040

 

Services

 

32,875

 

 

 

30,391

 

 

 

27,254

 

 

 

112,742

 

 

 

98,968

 

 

 

105,745

 

 

 

75,918

 

 

 

71,441

 

 

 

302,481

 

 

 

257,008

 

Military and other products

 

10,439

 

 

 

7,195

 

 

 

9,459

 

 

 

32,596

 

 

 

32,563

 

Short-cycle products

 

21,751

 

 

 

27,930

 

 

 

24,207

 

 

 

106,186

 

 

 

92,152

 

Total Offshore/Manufactured Products

 

137,935

 

 

 

111,043

 

 

 

105,107

 

 

 

441,263

 

 

 

381,723

 

Well Site Services

 

51,208

 

 

 

59,831

 

 

 

67,689

 

 

 

242,633

 

 

 

231,189

 

Downhole Technologies

 

19,123

 

 

 

23,415

 

 

 

29,638

 

 

 

98,387

 

 

 

124,794

 

Total revenues

$

208,266

 

��

$

194,289

 

 

$

202,434

 

 

$

782,283

 

 

$

737,706

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

Offshore/Manufactured Products

$

25,152

 

 

$

17,804

 

 

$

12,258

 

 

$

65,299

 

 

$

45,268

 

Well Site Services

 

(1,102

)

 

 

3,285

 

 

 

5,300

 

 

 

13,881

 

 

 

4,865

 

Downhole Technologies

 

(6,711

)

 

 

(4,118

)

 

 

(3,337

)

 

 

(14,884

)

 

 

(6,669

)

Corporate

 

(9,509

)

 

 

(10,781

)

 

 

(10,948

)

 

 

(41,132

)

 

 

(40,559

)

Total operating income

$

7,830

 

 

$

6,190

 

 

$

3,273

 

 

$

23,164

 

 

$

2,905

 

________________

(1)

The Company revised its supplemental disclosure of disaggregated revenue information in the second quarter of 2023. Prior-period disclosures of disaggregated revenue information were conformed with the current-period presentation.

(2)

Operating income for the three months ended December 31, 2023 and September 30, 2023 and the year ended December 31, 2023 included facility consolidation charges of $0.8 million, $1.6 million and $2.5 million, respectively, associated with the Offshore/Manufactured Products segment’s ongoing consolidation and relocation of certain manufacturing and service locations.

(3)

Operating income (loss) for the three months and the year ended December 31, 2023 included $0.6 million of costs associated with the defense of certain Well Site Services segment patents related to proprietary technologies.

(4)

Operating income for the year ended December 31, 2022 included a gain of $6.1 million related to the Offshore/Manufactured Products segment’s settlement of outstanding litigation against certain service providers.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL INFORMATION

ADJUSTED EBITDA (A)

(In Thousands)

(Unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,

2023

 

September 30,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

5,963

 

$

4,212

 

$

2,885

 

 

$

12,891

 

$

(9,540

)

Interest expense, net

 

1,811

 

 

 

1,928

 

 

 

2,333

 

 

 

8,189

 

 

 

10,280

 

Income tax provision (benefit)

 

233

 

 

 

236

 

 

 

(522

)

 

 

2,933

 

 

 

5,480

 

Depreciation and amortization expense

 

14,569

 

 

 

15,416

 

 

 

15,865

 

 

 

60,778

 

 

 

67,334

 

Facility consolidation charges

 

825

 

 

 

1,649

 

 

 

 

 

 

2,474

 

 

 

 

Patent defense costs

 

577

 

 

 

 

 

 

 

 

 

577

 

 

 

 

Settlement of disputes with seller of GEODynamics, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

620

 

Gains on extinguishment of 1.50% convertible senior notes

 

 

 

 

 

 

 

(19

)

 

 

 

 

 

(176

)

Adjusted EBITDA

$

23,978

 

 

$

23,441

 

 

$

20,542

 

 

$

87,842

 

 

$

73,998

 

________________

(A)

The term Adjusted EBITDA consists of net income (loss) plus net interest expense, taxes, depreciation and amortization expense, facility consolidation charges, patent defense costs and loss on settlement of disputes with the seller of GEODynamics, Inc., less gains on extinguishment of 1.50% convertible senior notes (the “2023 Notes”). Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles (“GAAP”) and should not be considered in isolation from or as a substitute for net income (loss) or cash flow measures prepared in accordance with GAAP or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Adjusted EBITDA as a supplemental disclosure because its management believes that Adjusted EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The Company uses Adjusted EBITDA to compare and to monitor the performance of the Company and its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. The table above sets forth reconciliations of Adjusted EBITDA to net income (loss), which is the most directly comparable measure of financial performance calculated under GAAP.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL INFORMATION

ADJUSTED SEGMENT EBITDA (B)

(In Thousands)

(Unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,

2023

 

September 30,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

Offshore/Manufactured Products:

 

 

 

 

 

 

 

 

 

Operating income

$

25,152

 

 

$

17,804

 

 

$

12,258

 

 

$

65,299

 

 

$

45,268

 

Other income, net

 

44

 

 

 

68

 

 

 

693

 

 

 

358

 

 

 

638

 

Depreciation and amortization expense

 

4,274

 

 

 

4,921

 

 

 

4,800

 

 

 

18,510

 

 

 

20,451

 

Facility consolidation charges

 

825

 

 

 

1,649

 

 

 

 

 

 

2,474

 

 

 

 

Adjusted Segment EBITDA

$

30,295

 

 

$

24,442

 

 

$

17,751

 

 

$

86,641

 

 

$

66,357

 

 

 

 

 

 

 

 

 

 

 

Well Site Services:

 

 

 

 

 

 

 

 

 

Operating income (loss)

$

(1,102

)

 

$

3,285

 

 

$

5,300

 

 

$

13,881

 

 

$

4,865

 

Other income, net

 

133

 

 

 

118

 

 

 

711

 

 

 

491

 

 

 

3,207

 

Depreciation and amortization expense

 

6,295

 

 

 

6,313

 

 

 

6,505

 

 

 

25,318

 

 

 

28,564

 

Patent defense costs

 

577

 

 

 

 

 

 

 

 

 

577

 

 

 

 

Adjusted Segment EBITDA

$

5,903

 

 

$

9,716

 

 

$

12,516

 

 

$

40,267

 

 

$

36,636

 

 

 

 

 

 

 

 

 

 

 

Downhole Technologies:

 

 

 

 

 

 

 

 

 

Operating loss

$

(6,711

)

 

$

(4,118

)

 

$

(3,337

)

 

$

(14,884

)

 

$

(6,669

)

Other expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

(86

)

Depreciation and amortization expense

 

3,834

 

 

 

4,030

 

 

 

4,379

 

 

 

16,314

 

 

 

17,628

 

Adjusted Segment EBITDA

$

(2,877

)

 

$

(88

)

 

$

1,042

 

 

$

1,430

 

 

$

10,873

 

 

 

 

 

 

 

 

 

 

 

Corporate:

 

 

 

 

 

 

 

 

 

Operating loss

$

(9,509

)

 

$

(10,781

)

 

$

(10,948

)

 

$

(41,132

)

 

$

(40,559

)

Other income (expense), net

 

 

 

 

 

 

 

19

 

 

 

 

 

 

(444

)

Depreciation and amortization expense

 

166

 

 

 

152

 

 

 

181

 

 

 

636

 

 

 

691

 

Settlement of disputes with seller of GEODynamics, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

620

 

Gains on extinguishment of 1.50% convertible senior notes

 

 

 

 

 

 

 

(19

)

 

 

 

 

 

(176

)

Adjusted Segment EBITDA

$

(9,343

)

 

$

(10,629

)

 

$

(10,767

)

 

$

(40,496

)

 

$

(39,868

)

________________

(B)

The term Adjusted Segment EBITDA consists of operating income (loss) plus other income (expense), depreciation and amortization expense, facility consolidation charges, patent defense costs and loss on settlement of disputes with the seller of GEODynamics, Inc., less gains on extinguishment of the 2023 Notes. Adjusted Segment EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation from or as a substitute for operating income (loss) or cash flow measures prepared in accordance with GAAP or as a measure of profitability or liquidity. Additionally, Adjusted Segment EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Adjusted Segment EBITDA as supplemental disclosure because its management believes that Adjusted Segment EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The Company uses Adjusted Segment EBITDA to compare and to monitor the performance of its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. The table above sets forth reconciliations of Adjusted Segment EBITDA to operating income (loss), which is the most directly comparable measure of financial performance calculated under GAAP.

 

Contacts

Lloyd A. Hajdik

Oil States International, Inc.

Executive Vice President, Chief Financial Officer and Treasurer

(713) 652-0582

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