HOUSTON - Oil States International, Inc. (NYSE: OIS): Oil States International, Inc. reported net income of $4.2 million, or $0.07 per share, and Adjusted EBITDA of $23.4 million for the third quarter of 2023 on revenues of $194.3 million.
Reported third quarter 2023 net income included facility consolidation charges of $1.6 million ($1.3 million after-tax, or $0.02 per share). These results compare to revenues of $183.5 million, net income of $0.6 million, or $0.01 per share, and Adjusted EBITDA of $19.0 million reported in the second quarter of 2023.
Oil States' President and Chief Executive Officer, Cindy B. Taylor, stated, 'Our third quarter results benefited from growth in offshore and international spending, with significant sequential and year-over-year increases in offshore-project activity and backlog conversion. However, our quarterly performance was tempered by an industry-wide decline in U.S. well completions which has been ongoing since the start of 2023. We believe the U.S. activity declines were triggered by weaker commodity prices in effect earlier this year. With currently improved commodity pricing, we expect U.S. activity to recover into 2024.
'Reported revenues in our Offshore/Manufactured Products segment rose 18% sequentially and 16% year-over-year to $111 million in the third quarter of 2023 - the segment's highest revenue level since the fourth quarter of 2016. Segment backlog increased for a fifth consecutive quarter totaling $348 million as of September 30 - benefiting from our customers' increased planned investments in traditional and non-traditional offshore projects outside the United States. We received two notable project awards in the third quarter, including a production facility equipment order and a contract for our Merlin Deepsea Mineral Riser System designed for use in harvesting seabed minerals at extreme water depths. These minerals are critical components for the development of large-scale battery technology. The segment's bookings totaled $129 million, yielding a quarterly book-to-bill ratio of 1.2x.
'The receipt of another contract award for our Merlin Deepsea Mineral Riser System this quarter demonstrates the industry's recognition of our expertise and the technologies we have developed to enable pathways toward a lower-carbon multi-source energy mix to meet growing global energy demands. We are connecting the energy future by leveraging our rich oil and gas heritage in the support of additional energy sources while augmenting our core technologies, setting the stage for longer-term growth.
'Our continued investments in technology and innovation were also recently recognized by Gulf Energy, with our Active Seat Gate Valve receiving the 2023 Gulf Energy Information Excellence Award for Best Production Technology. This proprietary valve-technology provides operators with exceptional sealing performance while substantially reducing the amount of heavy grease used during valve operations and personnel intervention at the wellhead.
'In the third quarter, we generated cash flow from operations of $14 million and invested $2 million in net capital expenditures. With no short-term debt outstanding, cash on-hand increased to $53 million during the period. We expect to enhance our liquidity position and reduce our net debt in future quarters.
'We remain very encouraged by the continued up-cycle in offshore and international activity, customer acceptance of our recent technology introductions and growing backlog levels in our Offshore/Manufactured Products segment coupled with an improving commodity price environment.'
Business Segment Results
Offshore/Manufactured Products
Offshore/Manufactured Products reported revenues of $111.0 million - the segment's highest revenue levels since the fourth quarter of 2016, operating income of $17.8 million and Adjusted Segment EBITDA of $24.4 million in the third quarter of 2023, compared to revenues of $94.1 million, operating income of $11.3 million and Adjusted Segment EBITDA of $16.0 million reported in the second quarter of 2023. During the third quarter of 2023, the segment recorded charges of $1.6 million associated with ongoing consolidation of certain manufacturing and service locations to gain operational efficiencies. Adjusted Segment EBITDA margin in the third quarter of 2023 was 22%, compared to 17% in the second quarter of 2023.
Backlog totaled $348 million as of September 30, 2023, an increase of $10 million, or 3%, from June 30, 2023 and $90 million, or 35%, from September 30, 2022. The current quarter-end backlog is at its highest level since December 31, 2015. Third quarter 2023 bookings totaled $129 million, yielding a quarterly book-to-bill ratio of 1.2x (1.2x year-to-date).
Well Site Services
Well Site Services reported revenues of $59.8 million, operating income of $3.3 million and Adjusted Segment EBITDA of $9.7 million in the third quarter of 2023, compared to revenues of $64.5 million, operating income of $4.7 million and Adjusted Segment EBITDA of $11.4 million reported in the second quarter of 2023. Adjusted Segment EBITDA margin was 16% in the third quarter of 2023, compared to 18% in the second quarter of 2023.
Downhole Technologies reported revenues of $23.4 million and an operating loss of $4.1 million while Adjusted Segment EBITDA was essentially breakeven in the third quarter of 2023, compared to revenues of $24.9 million, an operating loss of $2.5 million and Adjusted Segment EBITDA of $1.6 million reported in the second quarter of 2023.
Corporate
Corporate operating expenses in the third quarter of 2023 totaled $10.8 million.
Interest Expense, Net
Net interest expense totaled $1.9 million in the third 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 $4.4 million during the third quarter of 2023. In the second quarter of 2023, the Company recognized tax expense of $0.9 million on pre-tax income of $1.4 million.
Cash Flows
During the third quarter of 2023, the Company generated cash flows from operations of $13.6 million and invested $6.0 million ($2.3 million net of proceeds from sales of property and equipment) in new equipment to support future growth.
Financial Condition
Cash on-hand increased $10.5 million in the quarter, totaling $52.9 million at September 30, 2023. No borrowings were outstanding under the Company's asset-based revolving credit facility (the 'ABL Facility') at September 30, 2023. Liquidity (cash plus borrowing availability) totaled $137.4 million at September 30, 2023, with amounts available to be drawn under the ABL Facility totaling $84.5 million.
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, 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.
Contact:
Lloyd A. Hajdik
Executive Vice President
Oil States International, Inc.
Tel: (713) 652-0582
OIL STATES INTERNATIONAL, INC. 
