Oil States International Q3 Earnings Call Highlights

Key Points

• Oil States delivered improved third-quarter results: Revenue rose 8% sequentially to $170 million and adjusted EBITDA increased 6% to $20 million, beating guidance as Offshore Manufactured Products and Downhole Technologies gained momentum.
• Offshore backlog reached a nearly 12-year high of $482 million, up 21% year over year, supported by deepwater energy and international projects. However, only about 50%–55% is expected to convert to revenue within 12 months because of the longer duration of military-related work.
• Management expects continued growth but faces execution and market risks: Fourth-quarter guidance calls for $172 million–$184 million in revenue and $20 million–$23 million in adjusted EBITDA, while raw-material costs, U.S. land-market softness and project-timing variability remain headwinds. The board also authorized a new $50 million share-repurchase program through October 2028.

Oil States International NYSE: OIS reported third-quarter 2026 revenue of $170 million and adjusted EBITDA of $20 million, representing sequential increases of 8% and 6%, respectively, as growth in its Offshore Manufactured Products and Downhole Technologies businesses exceeded the company’s guidance.

The company recorded net income of $3 million, or $0.05 per share, including executive transition, facility exit and other charges. Adjusted net income was $8 million, or $0.15 per share, according to Executive Vice President and Chief Financial Officer Matt Autenrieth.

President and CEO Lloyd Hajdik said the company’s business mix has shifted increasingly toward offshore and international markets. Those activities accounted for 72% of consolidated revenue during the first nine months of 2026, compared with about 50% in 2023.

Offshore backlog reaches nearly 12-year high

Oil States’ Offshore Manufactured Products segment generated third-quarter revenue of $104 million and adjusted segment EBITDA of $19 million, for an 18% adjusted EBITDA margin. Revenue rose sequentially, though margins declined modestly because of a greater mix of lower-margin product and service offerings.

The segment’s backlog rose to $482 million as of Sept. 30, up 7% from the prior quarter and 21% from a year earlier. The company said it was the highest reported backlog level in almost 12 years. Third-quarter bookings totaled $135 million, producing a 1.3-times book-to-bill ratio, while the year-to-date ratio was 1.2 times.

Hajdik said the backlog is supported by offshore and international energy projects, as well as military programs. He told analysts that nearly 90% of the company’s $333 million in bookings during the first nine months of 2026 was related to offshore energy projects, compared with significant military-related bookings in 2025.

“Most of it is focused on offshore and deep water,” Hajdik said of the company’s outlook for booking momentum. He cited expected engineering, procurement, construction and installation spending over the coming five years as supportive of the deepwater market.

Military products account for roughly 46% of current backlog, management said. As a result of the longer-duration nature of those projects, Oil States expects about 50% to 55% of backlog to convert into revenue over the next 12 months, compared with its historical conversion range of approximately 65% to 70%.

Segment results reflect U.S. land softness and downhole growth

The Completion and Production Services segment reported revenue of $23 million and adjusted segment EBITDA of $6 million, resulting in a 26% margin. Revenue declined 5% sequentially and adjusted segment EBITDA fell 7%, which the company attributed to changes in customer activity in U.S. land-based markets.

Despite the revenue decline, Hajdik said the segment’s margin profile reflected the company’s efforts to focus the business on proprietary Extended Reach Tools, Gulf of America operations and selected international markets.

Downhole Technologies generated $42 million in third-quarter revenue and $4 million in adjusted segment EBITDA. Revenue increased 6% sequentially across all major product categories and reached its highest level since the first quarter of 2023.

Management said segment profitability continued to face pressure from elevated costs for tungsten, explosive powders and copper used in shaped charges. The sequential EBITDA comparison also was affected by a non-recurring tariff refund benefit recorded in the second quarter and a change in sales mix.

Hajdik said the raw-material pressures are expected to remain a headwind through the fourth quarter but could begin moderating during the first and second quarters of 2027 as the company gains improved access to explosive powders.

MPD opportunity and capital allocation priorities

The company continued to highlight its managed pressure drilling, or MPD, technology as a growth opportunity. Oil States booked another MPD rental project in the third quarter and expects to receive an MPD sale order during the fourth quarter, Hajdik said.

Management’s forward model assumes approximately $35 million to $40 million in MPD revenue at what Hajdik described as “very good margins.” The company sells and rents systems, including its Integrated Riser Joint technology. Hajdik said operators are increasingly requesting or requiring drillships to be MPD-ready.

Oil States also said it sees longer-term opportunities in subsea intervention, including well maintenance, workover and decommissioning applications, as well as deep-sea mineral gathering systems.

During the first nine months of 2026, the company invested $38 million in inventory to support backlog execution and increasing demand for downhole consumable products. It spent $10 million on capital expenditures and received $13 million in proceeds from asset sales. The company reported $14 million in remaining assets held for sale in its prepared remarks, while management later said it had approximately $15 million of such assets and did not expect related cash proceeds in the fourth quarter.

Oil States established a new cash flow-based credit facility, retired its convertible senior notes and maintained a net cash position during the first three quarters. It also repurchased $9 million of common stock. Following the expiration of its prior authorization, the board approved a new $50 million, two-year share repurchase program running through October 2028.

Hajdik said the company’s capital-allocation priorities include organic capital expenditures and research and development, selective acquisitions and opportunistic share repurchases. He said Oil States continues to evaluate acquisition opportunities and is “probably being a little bit more aggressive” in reviewing potential deals than in the past.

Fourth-quarter outlook

For the fourth quarter, Oil States forecast revenue of $172 million to $184 million and adjusted EBITDA of $20 million to $23 million.

Autenrieth said the company expects fourth-quarter free cash flow of $15 million to $25 million. He said working capital investment, including an additional $11 million of inventory built during the third quarter, has supported the company’s growing backlog and raw-material needs. Management expects a working-capital release in the fourth quarter but cautioned that year-end customer collections can slow seasonally.

Hajdik said customer schedules, project timelines, geopolitical conditions and contract-award timing may create quarterly variability. Still, he said the company believes its backlog, offshore exposure and differentiated technology portfolio provide support for future earnings growth.

About Oil States International (NYSE:OIS)

Oil States International, Inc is an energy services and equipment company that supports oil and natural gas exploration, drilling, completion, production and infrastructure activities. The company serves operators, drilling contractors and other energy-industry customers through two primary areas: Well Site Services and Offshore/Manufactured Products.

Its Well Site Services business provides equipment and services used during the completion and production phases of a well. Offerings include completion and workover services, well testing, rental tools, frac water management and related support services.

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