Oil States International Q2 Earnings Call Highlights

Oil States International Q2 Earnings Call Highlights

Q2 performance improved: Revenue rose 8% sequentially to $157 million and adjusted EBITDA increased 14% to $19 million, supported by stronger Downhole Technologies and Completion and Production Services results. Offshore backlog reached a more-than-decade high: Offshore Manufactured Products backlog increased 24% year over year to $451 million, though delayed project awards are expected to shift some revenue from 2026 into 2027. Management maintained its outlook: Oil States expects 2026 revenue of $640 million-$660 million and adjusted EBITDA of $77 million-$83 million, while forecasting $35 million-$40 million in free cash flow as working-capital investments unwind.

Oil States International NYSE: OIS reported second-quarter revenue of $157 million and adjusted EBITDA of $19 million, representing sequential increases of 8% and 14%, respectively, as growth in its Downhole Technologies and Completion and Production Services businesses supported results. The company reported net income of $6 million, or $0.10 per share. Excluding charges related to the retirement of convertible senior notes, facility exit costs and executive transition expenses, partially offset by a gain on a facility disposal, adjusted net income was $8 million, or $0.14 per share.

President and Chief Executive Officer Lloyd Hajdik said the company continues to navigate volatile commodity prices, geopolitical developments, supply disruptions and moderated expectations for global economic growth. Conflict in the Middle East contributed to delays in certain contract awards, although Oil States recorded a quarterly book-to-bill ratio of 1.2 times. “While these dynamics have tempered near-term revenue conversion in our project-driven businesses, they do not change our long-term offshore and international opportunity set,” Hajdik said.

Oil States’ Offshore Manufactured Products segment generated $93 million in second-quarter revenue and $18 million in segment EBITDA, for an EBITDA margin above 19%. Segment backlog stood at $451 million as of June 30, up 5% sequentially and 24% from a year earlier, marking the company’s highest reported backlog level in more than 10 years. Bookings totaled $114 million during the quarter, and backlog includes a diversified mix of offshore and international energy projects as well as military programs. Hajdik said the company expects its full-year book-to-bill ratio to be at least one times. However, management said some anticipated orders for drilling, connector and production-facility products have been delayed, including connector orders expected in the Middle East. The company expects those awards in the third and fourth quarters, but said the timing delays will shift some revenue previously expected in 2026 into 2027. Hajdik said approximately 48% of the company’s backlog is tied to military contracts. More than $100 million in military product awards received in the third and fourth quarters of 2025 are multi-year orders expected to convert into revenue over four to five years. As a result, Oil States expects roughly 55% of its backlog to convert into revenue over the next 12 months, compared with a historical conversion rate of 65% to 70%. Management said ongoing military orders could total about $25 million to $30 million annually, excluding larger block awards. The company’s Block 6 military awards are expected to begin contributing revenue in 2027.

The Completion and Production Services segment posted second-quarter revenue of $24 million and segment EBITDA of $7 million, producing an EBITDA margin of approximately 27%. Revenue rose 13% sequentiall...