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.
Backlog Reaches More Than Decade High
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.
Downhole and Completion Businesses Improve
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% sequentially, while segment EBITDA increased 7%.
Downhole Technologies generated $40 million in revenue and $4 million in segment EBITDA. Revenue in the business was its highest since the second quarter of 2023, aided by stronger sales of perforating and completion products and a favorable product mix.
Hajdik said volumes for the company’s shaped charges and shot guns, which are sold in the U.S. and international markets, doubled sequentially. He attributed the improvement primarily to an improving land market and customer uptake for the company’s newer precision guns and FlexOrbit products, rather than restructuring actions.
Management expects demand for perforating and completion tools to remain at second-quarter levels through the third and fourth quarters. Still, the segment faces elevated costs for tungsten, charge powder and copper, as well as supply constraints involving charge powder. The company said pricing discipline, product mix and raw-material availability will affect second-half performance.
Oil States’ Completion and Production Services operations are concentrated in the Bakken, while its Downhole Technologies products serve broader U.S. land activity. Hajdik said U.S. land activity increased modestly during the quarter, but operators remain cautious amid oil-price volatility and continued capital discipline.
Cash Flow, Balance Sheet and Capital Returns
Cash used in operating activities was $6 million in the quarter, reflecting working-capital investments tied to backlog execution, military awards and rising demand for downhole consumable products. The company invested $27 million in inventory during the first half, including long-lead materials for backlog projects and higher-cost raw materials for Downhole Technologies.
Chief Financial Officer Matt Autenrieth said Oil States expects working-capital investment to begin unwinding during the second half, supporting free-cash-flow generation. The company forecast full-year free cash flow of $35 million to $40 million, including first-half asset-sale proceeds but excluding potential additional asset sales that could add $5 million to $10 million.
Investing activities generated a $4 million cash benefit in the quarter, as $7 million in asset-sale proceeds exceeded $3 million of capital expenditures. Assets held for sale totaled $19 million at quarter-end.
Oil States retired the remaining $53 million principal balance of its convertible senior notes on April 1 using cash, credit-facility borrowings and common-stock issuance. As of June 30, the company had $20 million in cash and $18 million of debt. It repurchased $5 million of common stock during the quarter.
2026 Outlook
For the third quarter, Oil States guided for revenue of $157 million to $167 million and adjusted EBITDA of $18 million to $20 million. Full-year guidance calls for revenue of $640 million to $660 million and adjusted EBITDA of $77 million to $83 million.
Management said more than 70% of consolidated first-half revenue came from offshore and international activity, compared with about 50% in 2023. Hajdik said energy-security concerns, limited spare production capacity and the need for diversified supply should support longer-cycle investment in offshore, deepwater, subsea and international markets.
While not providing guidance for higher margins, Hajdik said Offshore Manufactured Products margins could move above 20% in 2027 and beyond if higher backlog improves manufacturing-facility absorption and is supported by a greater mix of production, pipeline, drilling and newer technology offerings.
About Oil States International (NYSE:OIS)
Oil States International, Inc is a Houston-based provider of products and services to the global oil and gas industry. Through its well site solutions and flat steel solutions segments, the company supplies critical equipment and consumables used in drilling, completion and production operations. Its well site offerings include a broad range of rental products—such as coiled tubing, frac iron, pressure control equipment and downhole tool rentals—designed to support drilling rigs and well completion crews.
In addition to rental and service offerings, Oil States International's flat steel solutions business manufactures and distributes steel pipeline and flowback products.
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