UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

____________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2023~~March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number: 001-16337

OIL STATES INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


Delaware		76-0476605
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Three Allen Center, 333 Clay Street
Suite 4620		77002
Houston,	Texas	(Zip Code)
(Address of principal executive offices)

(713) 652-0582

(~~Registrant's~~Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

OIS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes			☒			No			☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes			☒			No			☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of ~~"large~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes			☐			No			☒

As of ~~October 20, 2023,~~April 19, 2024, the number of shares of common stock outstanding was ~~63,889,176.~~64,215,204.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Page

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Consolidated Financial Statements

Unaudited Consolidated Statements of Operations

Unaudited Consolidated Statements of Comprehensive Income (Loss)

Consolidated Balance Sheets

Unaudited Consolidated Statements of Stockholders' Equity

Unaudited Consolidated Statements of Stockholders’ Equity

Unaudited Consolidated Statements of Cash Flows

Notes to Unaudited Condensed Consolidated Financial Statements

–

Notes to Unaudited Condensed Consolidated Financial Statements

–

Cautionary Statement Regarding Forward-Looking Statements

–

Cautionary Statement Regarding Forward-Looking Statements

–

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

–

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

–

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

Part II – OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 3. Defaults Upon Senior Securities

Item 4. Mine Safety Disclosures

Item 5. Other Information

Item 6. Exhibits

Signature Page

Table of Contents

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
Revenues:
Revenues:
Revenues:	Revenues:
Products	Products	$	102,636	$	99,743		$	295,106	$	284,537
Products
Products
Services	Services	91,653		89,651			278,911		250,735
Services
Services
							167,262
							167,262
							167,262
		194,289		189,394			574,017		535,272
Costs and expenses:

Costs and expenses:

Costs and expenses:	Costs and expenses:
Product costs	Product costs	80,188		81,576			231,524		225,765
Product costs
Product costs
Service costs
Service costs
Service costs	Service costs	70,239		69,723			211,668		194,294
Cost of revenues (exclusive of depreciation and amortization expense presented below)	Cost of revenues (exclusive of depreciation and amortization expense presented below)	150,427		151,299			443,192		420,059
Cost of revenues (exclusive of depreciation and amortization expense presented below)
Cost of revenues (exclusive of depreciation and amortization expense presented below)
Selling, general and administrative expense
Selling, general and administrative expense
Selling, general and administrative expense	Selling, general and administrative expense	24,241		23,374			71,785		70,964
Depreciation and amortization expense	Depreciation and amortization expense	15,416		16,413			46,209		51,469
Other operating income, net		(1,985)		(6,750)			(2,503)		(6,852)
		188,099		184,336			558,683		535,640
Depreciation and amortization expense
Depreciation and amortization expense
Impairment of goodwill
Impairment of goodwill
Impairment of goodwill
Other operating (income) expense, net
Other operating (income) expense, net
Other operating (income) expense, net
							178,439
							178,439
							178,439
Operating income (loss)
Operating income (loss)
Operating income (loss)	Operating income (loss)	6,190		5,058			15,334		(368)

Interest expense, net	Interest expense, net	(1,928)		(2,637)			(6,378)		(7,947)
Other income, net		186		491			672		1,892

Interest expense, net

Interest expense, net
Other income (expense), net
Other income (expense), net
Other income (expense), net
Income (loss) before income taxes
Income (loss) before income taxes
Income (loss) before income taxes	Income (loss) before income taxes	4,448		2,912			9,628		(6,423)
Income tax provision	Income tax provision	(236)		(769)			(2,700)		(6,002)
Income tax provision
Income tax provision
Net income (loss)
Net income (loss)
Net income (loss)	Net income (loss)	$	4,212	$	2,143		$	6,928	$	(12,425)

Net income (loss) per share:	Net income (loss) per share:

Net income (loss) per share:

Net income (loss) per share:
Basic	Basic	$	0.07	$	0.03		$	0.11	$	(0.20)
Basic
Basic
Diluted
Diluted
Diluted	Diluted	0.07		0.03			0.11		(0.20)

Weighted average number of common shares outstanding:	Weighted average number of common shares outstanding:

Weighted average number of common shares outstanding:

Weighted average number of common shares outstanding:
Basic
Basic
Basic	Basic	62,651		62,674			62,760		61,292
Diluted	Diluted	63,060		62,676			63,135		61,292
Diluted
Diluted

The accompanying notes are an integral part of these financial statements.

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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
Net income (loss)
Net income (loss)
Net income (loss)	Net income (loss)	$	4,212	$	2,143		$	6,928	$	(12,425)

Other comprehensive income (loss):	Other comprehensive income (loss):

Other comprehensive income (loss):

Other comprehensive income (loss):
Currency translation adjustments
Currency translation adjustments
Currency translation adjustments	Currency translation adjustments	(5,749)		(11,939)			1,670		(23,758)

Comprehensive income (loss)

Comprehensive income (loss)	Comprehensive income (loss)	$	(1,537)	$	(9,796)		$	8,598	$	(36,183)

Comprehensive income (loss)

The accompanying notes are an integral part of these financial statements.

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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)


		September 30, 2023		December 31, 2022
		(Unaudited)
	March 31, 2024					March 31, 2024	December 31, 2023
	(Unaudited)					(Unaudited)
ASSETS	ASSETS

Current assets:	Current assets:

Current assets:

Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	52,904	$	42,018
Accounts receivable, net	Accounts receivable, net	189,249		218,769
Inventories, net	Inventories, net	206,541		182,658
Prepaid expenses and other current assets	Prepaid expenses and other current assets	36,015		19,317
Total current assets	Total current assets	484,709		462,762

Property, plant, and equipment, net	Property, plant, and equipment, net	279,146		303,835
Property, plant, and equipment, net
Property, plant, and equipment, net
Operating lease assets, net	Operating lease assets, net	22,002		23,028
Goodwill, net	Goodwill, net	79,399		79,282
Other intangible assets, net	Other intangible assets, net	157,077		169,798
Other noncurrent assets	Other noncurrent assets	25,687		25,687
Total assets	Total assets	$	1,048,020	$	1,064,392

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:	Current liabilities:

Current liabilities:

Current liabilities:
Current portion of long-term debt
Current portion of long-term debt
Current portion of long-term debt	Current portion of long-term debt	$	589	$	17,831
Accounts payable	Accounts payable	58,489		73,251
Accrued liabilities	Accrued liabilities	49,138		49,057
Current operating lease liabilities	Current operating lease liabilities	6,461		6,142
Income taxes payable	Income taxes payable	2,593		2,605
Deferred revenue	Deferred revenue	50,370		44,790
Total current liabilities	Total current liabilities	167,640		193,676

Long-term debt	Long-term debt	135,437		135,066
Long-term debt
Long-term debt
Long-term operating lease liabilities	Long-term operating lease liabilities	18,768		20,658
Deferred income taxes	Deferred income taxes	7,386		6,652
Other noncurrent liabilities	Other noncurrent liabilities	20,425		18,782
Total liabilities	Total liabilities	349,656		374,834

Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 77,218,035 shares and 76,587,920 shares issued, respectively		772		766
Stockholders’ equity:
Stockholders’ equity:
Stockholders’ equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 78,514,830 shares and 77,218,765 shares issued, respectively
Common stock, $.01 par value, 200,000,000 shares authorized, 78,514,830 shares and 77,218,765 shares issued, respectively
Common stock, $.01 par value, 200,000,000 shares authorized, 78,514,830 shares and 77,218,765 shares issued, respectively
Additional paid-in capital	Additional paid-in capital	1,127,443		1,122,292
Retained earnings	Retained earnings	278,955		272,027
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(77,271)		(78,941)
Treasury stock, at cost, 13,328,859 and 12,684,101 shares, respectively		(631,535)		(626,586)
Total stockholders' equity		698,364		689,558
Total liabilities and stockholders' equity		$	1,048,020	$	1,064,392
Treasury stock, at cost, 14,299,626 and 13,892,049 shares, respectively
Total stockholders’ equity
Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these financial statements.

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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~STOCKHOLDERS’ EQUITY

(In Thousands)

Three Months Ended September 30, 2023 Common
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Total
Stockholders'
Equity
Balance, June 30, 2023 $ 772 $ 1,125,647 $ 274,743 $ (71,522) $ (631,535) $ 698,105
Net income — — 4,212 — — 4,212
Currency translation adjustments (excluding intercompany advances) — — — (4,429) — (4,429)
Currency translation adjustments on intercompany advances — — — (1,320) — (1,320)
Stock-based compensation expense — 1,796 — — — 1,796
Stock repurchases — — — — — —
Surrender of stock to settle taxes on stock awards — — — — — —
Balance, September 30, 2023 $ 772 $ 1,127,443 $ 278,955 $ (77,271) $ (631,535) $ 698,364


Three Months Ended March 31, 2024	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders’ Equity
Balance, December 31, 2023	$	772	$	1,129,240	$	284,918	$	(69,984)	$	(635,401)	$	709,545
Net loss	—		—		(13,374)		—		—		(13,374)
Currency translation adjustments (excluding intercompany advances)	—		—		—		(895)		—		(895)
Currency translation adjustments on intercompany advances	—		—		—		(2,132)		—		(2,132)
Stock-based compensation expense	13		1,739		—		—		—		1,752
Surrender of stock to settle taxes on stock awards	—		—		—		—		(2,578)		(2,578)
Balance, March 31, 2024	$	785	$	1,130,979	$	271,544	$	(73,011)	$	(637,979)	$	692,318


Nine Months Ended September 30, 2023		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
Three Months Ended March 31, 2023														Three Months Ended March 31, 2023	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Total Stockholders’ Equity
Balance, December 31, 2022	Balance, December 31, 2022	$	766	$	1,122,292	$	272,027	$	(78,941)	$	(626,586)	$	689,558
Net income	Net income	—		—		6,928		—		—		6,928
Currency translation adjustments (excluding intercompany advances)	Currency translation adjustments (excluding intercompany advances)	—		—		—		1,774		—		1,774
Currency translation adjustments on intercompany advances	Currency translation adjustments on intercompany advances	—		—		—		(104)		—		(104)
Stock-based compensation expense	Stock-based compensation expense	6		5,151		—		—		—		5,157
Stock repurchases		—		—		—		—		(3,001)		(3,001)
Surrender of stock to settle taxes on stock awards	Surrender of stock to settle taxes on stock awards	—		—		—		—		(1,948)		(1,948)
Balance, September 30, 2023		$	772	$	1,127,443	$	278,955	$	(77,271)	$	(631,535)	$	698,364
Balance, March 31, 2023

The accompanying notes are an integral part of these financial statements.

~~Table of Contents~~

~~OIL STATES INTERNATIONAL, INC.AND SUBSIDIARIES~~

~~UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

~~(In Thousands)~~

Three Months Ended September 30, 2022 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity
Balance, June 30, 2022 $ 747 $ 1,108,631 $ 266,999 $ (77,850) $ (626,586) $ 671,941
Net income — — 2,143 — — 2,143
Currency translation adjustments (excluding intercompany advances) — — — (10,363) — (10,363)
Currency translation adjustments on intercompany advances — — — (1,576) — (1,576)
Issuance of common stock in connection with settlement of disputes with seller of GEODynamics, Inc. 19 10,313 — — — 10,332
Stock-based compensation expense — 1,663 — — — 1,663
Surrender of stock to settle taxes on stock awards — — — — — —
Balance, September 30, 2022 $ 766 $ 1,120,607 $ 269,142 $ (89,789) $ (626,586) $ 674,140

Nine Months Ended September 30, 2022 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity
Balance, December 31, 2021 $ 739 $ 1,105,135 $ 281,567 $ (66,031) $ (625,584) $ 695,826
Net loss — — (12,425) — — (12,425)
Currency translation adjustments (excluding intercompany advances) — — — (23,571) — (23,571)
Currency translation adjustments on intercompany advances — — — (187) — (187)
Issuance of common stock in connection with settlement of disputes with seller of GEODynamics, Inc. 19 10,313 — — — 10,332
Stock-based compensation expense 8 5,159 — — — 5,167
Surrender of stock to settle taxes on stock awards — — — — (1,002) (1,002)
Balance, September 30, 2022 $ 766 $ 1,120,607 $ 269,142 $ (89,789) $ (626,586) $ 674,140

~~The accompanying notes are an integral part of these financial statements.~~

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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

Nine Months Ended September 30,

2023

2022

Three Months Ended March 31,

2024

Cash flows from operating activities:

Net income (loss)

6,928

(12,425)

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

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization expense

46,209

51,469

Depreciation and amortization expense

Impairment of goodwill

Stock-based compensation expense

5,157

5,167

Amortization of deferred financing costs

1,344

1,416

Amortization of deferred financing costs

Deferred income tax provision (benefit)

(66)

1,295

Gains on disposals of assets

(3,335)

(1,538)

Settlement of disputes with seller of GEODynamics, Inc.

—

620

Gains on disposals of assets

Other, net

(614)

459

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

Other, net

Changes in operating assets and liabilities:

Accounts receivable

29,538

(27,745)

Inventories

(23,754)

(18,680)

Inventories

Accounts payable and accrued liabilities

(17,515)

8,873

Deferred revenue

5,580

7,496

Deferred revenue

Other operating assets and liabilities, net

2,905

2,586

Net cash flows provided by operating activities

52,377

18,993

Other operating assets and liabilities, net

Net cash flows used in operating activities

Cash flows from investing activities:

Capital expenditures

(23,370)

(13,263)

Proceeds from disposition of property and equipment

4,374

2,211

Acquisition of business, net of cash acquired

—

(8,125)

Capital expenditures

Proceeds from disposition of equipment

Other, net

(120)

(168)

Other, net

Net cash flows used in investing activities

(19,116)

(19,345)

Cash flows from financing activities:

Revolving credit facility borrowings

35,693

9,830

Revolving credit facility repayments

(35,693)

(9,830)

Revolving credit facility repayments

Repayment of 1.50% convertible senior notes

(17,315)

(6,272)

Payment of promissory note to seller of GEODynamics, Inc.

—

(10,000)

Repayment of 1.50% convertible senior notes

Other debt and finance lease repayments

(340)

(541)

Payment of financing costs

(101)

(81)

Purchases of treasury stock

(3,001)

—

Payment of financing costs

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

(1,948)

(1,002)

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

Net cash flows used in financing activities

(22,705)

(17,896)

Effect of exchange rate changes on cash and cash equivalents

330

(1,501)

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

10,886

(19,749)

Cash and cash equivalents, beginning of period

42,018

52,852

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

52,904

33,103

Cash paid (received) for:

Interest

4,353

4,605

Income taxes, net

(34)

(67)

Income taxes, net

The accompanying notes are an integral part of these financial statements.

~~Table of Contents~~

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Oil States International, Inc. and its subsidiaries (the ~~"Company"~~“Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. Certain information in footnote disclosures normally included with financial statements prepared in accordance with generally accepted accounting principles ~~("GAAP"~~(“GAAP”) have been condensed or omitted pursuant to these rules and regulations. The unaudited financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair statement of the results of operations for the interim periods covered and for the financial condition of the Company at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year.

The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of such estimates include, but are not limited to, goodwill and long-lived asset impairments, revenue and income recognized over time, valuation allowances recorded on deferred tax assets, reserves on inventory, allowances for doubtful accounts, settlement of litigation and potential future adjustments related to contractual indemnification and other agreements. Actual results could materially differ from those estimates.

~~The Company revised its presentation~~In the first quarter of ~~supplemental disclosure of~~2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plug and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical segment financial data and disaggregated revenue information in Note 10, ~~"Segments~~“Segments and Related ~~Information," in the second quarter of 2023. Prior-period disclosures of disaggregated revenue information~~Information” were conformed with the current-period segment presentation.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, which are adopted by the Company as of the specified effective date. Management believes that recently issued standards, which are not yet effective, will not have a material impact on the ~~Company's~~Company’s consolidated financial statements upon adoption.

The financial statements included in this report should be read in conjunction with the ~~Company's~~Company’s audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

2. ~~Charges~~Goodwill Impairment and ~~Benefits~~Other Charges

~~During the third quarter of~~In 2023, the ~~Offshore/Manufactured Products segment recognized facility~~Company implemented initiatives to reduce future costs, which are continuing into 2024. These management actions included the consolidation, ~~charges totaling $1.6 million in connection with the ongoing consolidation~~relocation and ~~relocation~~exit of certain manufacturing and service ~~facilities~~locations as well as the realignment of operations within two of the Company’s reportable segments. The Company has also incurred legal and other related costs to enforce certain patents related to its proprietary technologies. As a result of these actions, the ~~relocation of related equipment. In~~Company recorded the ~~third~~following charges during the first quarter of ~~2022,~~2024 (in thousands):


	Offshore Manufactured Products		Well Site Services		Downhole Technologies		Pre-tax Total		Tax		After-tax Total
Impairment of goodwill	$	—	$	—	$	10,000	$	10,000	$	481	$	9,519
Facility consolidation and other charges	1,463		1,046		—		2,509		527		1,982

Goodwill

The Company does not amortize goodwill, but rather assesses goodwill for impairment annually and when an event occurs or circumstances change that indicate the ~~Offshore/~~carrying amounts may not be recoverable. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recorded.

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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Changes in the carrying amount of goodwill, by operating segment, for the three months ended March 31, 2024 were as follows (in thousands):


	Offshore Manufactured Products		Downhole Technologies		Total
Balance as of December 31, 2023	$	79,867	$	—	$	79,867
Goodwill associated with transferred operations	(10,000)		10,000		—
Impairment of goodwill	—		(10,000)		(10,000)
Foreign currency translation	(93)		—		(93)
Balance as of March 31, 2024	$	69,774	$	—	$	69,774

In connection with the first quarter 2024 realignment of the composition of two of its reportable segments discussed in Note 1, “Organization and Basis of Presentation,” goodwill of $10.0 million was reassigned from the Offshore Manufactured Products segment to the Downhole Technologies segment based on estimated relative fair values. The Company performed an interim quantitative assessment of goodwill recorded within the Offshore Manufactured Products segment as of February 29, 2024 (prior to realignment) which indicated that the fair value of the reporting unit exceeded its carrying value.

The Company also performed an interim quantitative assessment of goodwill transferred to the Downhole Technologies segment (subsequent to the realignment). This interim assessment indicated that the fair value of the reporting unit was less than its carrying amount and the Company concluded that goodwill reassigned to the Downhole Technologies business was fully impaired. The Company therefore recognized a ~~gain~~non-cash goodwill impairment charge totaling $10.0 million in the first quarter of ~~$6.1 million associated with~~2024. This impairment charge did not impact the ~~settlement~~Company’s liquidity position, debt covenants or cash flows.

Management used a combination of ~~outstanding litigation against certain service providers.~~valuation methodologies including the income approach and guideline public company comparables. The fair values of each of the Company’s reporting units were determined using significant unobservable inputs (Level 3 fair value measurements). The income approach estimates fair value by discounting the Company’s forecasts of future cash flows by a discount rate (expected return) that a market participant is expected to require on its investment.

Significant assumptions and estimates used in the income approach include, among others, estimated future net annual cash flows and discount rates for each reporting unit, current and anticipated market conditions, estimated growth rates and historical data. These estimates rely upon significant management judgment.

3. Details of Selected Balance Sheet Accounts

Additional information regarding selected balance sheet accounts as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 is presented below (in thousands):


		September 30, 2023			December 31, 2022
	March 31, 2024									March 31, 2024			December 31, 2023
Accounts receivable, net:	Accounts receivable, net:
Trade
Trade
Trade	Trade	$	137,020		$	145,540
Unbilled revenue	Unbilled revenue	26,973			29,679
Contract assets	Contract assets	26,005			42,599
Other	Other	4,310			6,177
Total accounts receivable	Total accounts receivable	194,308			223,995
Allowance for doubtful accounts	Allowance for doubtful accounts	(5,059)			(5,226)
		$	189,249		$	218,769
	$

Allowance for doubtful accounts as a percentage of total accounts receivable	Allowance for doubtful accounts as a percentage of total accounts receivable	3		%	2		%
Allowance for doubtful accounts as a percentage of total accounts receivable
Allowance for doubtful accounts as a percentage of total accounts receivable								2	%		2	%


	March 31, 2024		December 31, 2023
Deferred revenue (contract liabilities)	$	41,528	$	36,757

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(Continued)

September 30,
2023 December 31,
2022
Deferred revenue (contract liabilities) $ 50,370 $ 44,790

As of ~~September 30, 2023,~~March 31, 2024, accounts receivable, net in the United States and the United Kingdom represented ~~68%~~65% and ~~11%~~15%, respectively, of the total. No other country or single customer accounted for more than 10% of the ~~Company's~~Company’s total accounts receivable as of ~~September 30, 2023.~~March 31, 2024.

For the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the ~~$16.6~~$5.4 million net decrease in contract assets was primarily attributable to ~~$39.9~~$27.4 million transferred to accounts receivable, ~~during the period,~~ which was partially offset by ~~$23.3~~$22.0 million in revenue ~~recognized.~~recognized during the period. Deferred revenue (contract liabilities) increased by ~~$5.6~~$4.8 million in the first ~~nine~~three months of ~~2023,~~2024, primarily reflecting ~~$20.7~~$10.7 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of ~~$15.1~~$5.9 million of revenue that was deferred at the beginning of the period.

The following provides a summary of activity in the allowance for doubtful accounts for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ (in thousands):


		Nine Months Ended September 30,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Allowance for doubtful accounts – January 1	Allowance for doubtful accounts – January 1	$	5,226	$	4,471
Provisions	Provisions	23		1,237
Write-offs	Write-offs	(208)		(1,581)
Other	Other	18		272
Allowance for doubtful accounts – September 30		$	5,059	$	4,399
Allowance for doubtful accounts – March 31


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Inventories, net:	Inventories, net:
Finished goods and purchased products
Finished goods and purchased products
Finished goods and purchased products	Finished goods and purchased products	$	105,009	$	90,443
Work in process	Work in process	31,258		32,079
Raw materials	Raw materials	110,401		97,817
Total inventories	Total inventories	246,668		220,339
Allowance for excess or obsolete inventory	Allowance for excess or obsolete inventory	(40,127)		(37,681)
		$	206,541	$	182,658
	$

September 30,
2023 December 31,
2022
Property, plant and equipment, net:
Property, plant and equipment $ 886,920 $ 1,128,834
Accumulated depreciation (607,774) (824,999)
$ 279,146 $ 303,835

During 2023, certain facilities in the Offshore/Manufactured Products segment were reclassified as held for sale assets, and transferred from property, plant and equipment to prepaid and other current assets. The carrying value of these facilities totaled $17.2 million as of September 30, 2023.


			March 31, 2024			December 31, 2023
Property, plant and equipment, net:







Property, plant and equipment	$	754,882		$	754,143
Accumulated depreciation	(476,799)			(473,754)
							$	278,083	$	280,389

For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ depreciation expense was ~~$11.1~~$9.9 million and ~~$11.3~~$11.0 million, respectively. ~~Depreciation~~


	March 31, 2024						December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Other intangible assets:
Customer relationships	$	141,317	$	58,708	$	82,609	$	141,342	$	56,499	$	84,843
Patents/Technology/Know-how	70,129		35,833		34,296		70,113		34,541		35,572
Tradenames and other	52,502		20,673		31,829		52,505		19,910		32,595
	$	263,948	$	115,214	$	148,734	$	263,960	$	110,950	$	153,010

For the three months ended March 31, 2024 and 2023, amortization expense was ~~$33.3~~$4.3 million and ~~$35.9~~$4.3 million, ~~respectively, for the nine months ended September 30, 2023 and 2022.~~respectively.

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(Continued)

September 30, 2023 December 31, 2022
Gross
Carrying
Amount Accumulated
Amortization Net Carrying Amount Gross
Carrying
Amount Accumulated
Amortization Net Carrying Amount
Other intangible assets:
Customer relationships $ 141,215 $ 54,268 $ 86,947 $ 141,179 $ 47,629 $ 93,550
Patents/Technology/Know-how 69,971 33,188 36,783 69,830 29,214 40,616
Tradenames and other 52,492 19,145 33,347 52,488 16,856 35,632
$ 263,678 $ 106,601 $ 157,077 $ 263,497 $ 93,699 $ 169,798


	March 31, 2024		December 31, 2023
Other noncurrent assets:
Deferred compensation plan	$	17,637	$	17,255
Deferred financing costs	1,768		1,109
Deferred income taxes	2,137		2,211
Other	2,674		2,678
	$	24,216	$	23,253

For the three months ended September 30, 2023 and 2022, amortization expense was $4.3 million and $5.1 million, respectively. Amortization expense was $12.9 million and $15.5 million for the nine months ended September 30, 2023 and 2022, respectively.

September 30,
2023 December 31,
2022
Other noncurrent assets:
Deferred compensation plan $ 19,477 $ 17,551
Deferred financing costs 1,317 1,893
Deferred income taxes 2,274 1,517
Other 2,619 4,726
$ 25,687 $ 25,687


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Accrued liabilities:	Accrued liabilities:
Accrued compensation
Accrued compensation
Accrued compensation	Accrued compensation	$	24,783	$	33,659
Accrued taxes, other than income taxes	Accrued taxes, other than income taxes	5,142		1,865
Insurance liabilities	Insurance liabilities	3,653		4,640
Accrued interest	Accrued interest	3,288		1,784
Accrued commissions	Accrued commissions	3,226		2,302
Other	Other	9,046		4,807
		$	49,138	$	49,057
	$

4. Long-term Debt

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, long-term debt consisted of the following (in thousands):


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Revolving credit facility(1)	Revolving credit facility(1)	$	—	$	—
2026 Notes(2)	2026 Notes(2)	132,817		132,164
2023 Notes		—		17,303
Other debt and finance lease obligations	Other debt and finance lease obligations	3,209		3,430
Total debt	Total debt	136,026		152,897
Less: Current portion	Less: Current portion	(589)		(17,831)
Total long-term debt	Total long-term debt	$	135,437	$	135,066

____________________

(1)Unamortized deferred financing costs of ~~$1.3~~$1.8 million and ~~$1.9~~$1.1 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, are presented in other noncurrent assets.

(2)The outstanding principal amount of the 2026 Notes was $135.0 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

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~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

Revolving Credit Facility

~~On February 10, 2021, the~~The Company ~~entered into~~has a senior secured credit facility, ~~with certain lenders,~~ which provides for a $125.0 million asset-based revolving credit facility ~~(the "ABL Facility"~~(as amended, the “ABL Facility”), under which credit availability is subject to a borrowing base calculation.

The ABL Facility is governed by a credit agreement, as amended, with Wells Fargo Bank, National Association, as administrative agent and the lenders and other financial institutions from time to time party thereto ~~(the "ABL Agreement"~~(as amended, the “ABL Agreement”). ~~The~~In February 2024, the Company amended the ABL ~~Agreement matures on~~Facility to extend the maturity date to February ~~10, 2025~~16, 2028, with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $17.5 million.

The ABL Agreement provides funding based on a borrowing base calculation that includes eligible U.S. customer accounts receivable and inventory and provides for a $50.0 million sub-limit for the issuance of letters of credit. Borrowings under the ABL Agreement are secured by a pledge of substantially all of the ~~Company's~~Company’s domestic assets (other than real property) and the stock of certain foreign subsidiaries.

~~Since December 13, 2022, borrowings~~

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(Continued)

Borrowings under the ABL Agreement bear interest at a rate equal to the Secured Overnight Financing Rate ~~("SOFR") rate~~ (subject to a floor rate of 0%) plus a margin of 2.75% to 3.25%, or at a base rate plus a margin of 1.75% to 2.25%, in each case based on average borrowing availability. Quarterly, the Company must also pay a commitment fee of 0.375% to 0.50% per annum, based on unused commitments under the ABL Agreement.

The ABL Agreement places restrictions on the ~~Company's~~Company’s ability to incur additional indebtedness, grant liens on assets, pay dividends or make distributions on equity interests, dispose of assets, make investments, repay other indebtedness (including the 2026 Notes discussed below), engage in mergers, and other matters, in each case, subject to certain exceptions. The ABL Agreement contains customary default provisions, which, if triggered, could result in acceleration of repayment of all amounts then outstanding. The ABL Agreement also requires the Company to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 (i) in the event that availability under the ABL Agreement is less than the greater of (a) 15% of the borrowing base and (b) $14.1 million; (ii) to complete certain specified transactions; or (iii) if an event of default has occurred and is continuing.

As of ~~September 30, 2023,~~March 31, 2024, the Company had no borrowings outstanding under the ABL Facility and ~~$16.4~~$15.9 million of outstanding letters of credit. The total amount available to be drawn as of ~~September 30, 2023~~March 31, 2024 was ~~$84.5~~$86.3 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit. As of ~~September 30, 2023,~~March 31, 2024, the Company was in compliance with its debt covenants under the ABL Agreement.

2026 Notes

The Company issued $135.0 million aggregate principal amount of its 4.75% convertible senior notes due 2026 (the ~~"2026 Notes"~~“2026 Notes”) pursuant to an indenture, dated as of March 19, 2021 (the ~~"2026 Indenture"~~“2026 Indenture”), between the Company and Computershare Trust Company, National Association, as successor trustee.

The 2026 Notes bear interest at a rate of 4.75% per year and will mature on April 1, 2026, unless earlier repurchased, redeemed or converted. Interest is payable semi-annually in arrears on April 1 and October 1 of each year. Additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture. The initial conversion rate is 95.3516 shares of the ~~Company's~~Company’s common stock per $1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of $10.49 per share of common stock). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2026 Indenture. The ~~Company's~~Company’s intent is to repay the principal amount of the 2026 Notes in cash and settle the conversion feature (if any) in shares of the ~~Company's~~Company’s common stock. As of ~~September 30, 2023,~~March 31, 2024, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

2023 Notes

On ~~February 15, 2023,~~January 30, 2018, the ~~Company's~~Company issued $200.0 million aggregate principal amount of its 1.50% convertible senior notes due 2023 (the "2023 Notes") ~~matured~~pursuant to an indenture, dated as of January 30, 2018. The 2023 Notes bore interest at a rate of 1.50% per year, and the outstanding principal amount of $17.3 million ~~principal amount~~matured and was repaid in ~~full.~~full on February 15, 2023.

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~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

5. Fair Value Measurements

The ~~Company's~~Company’s financial instruments consist of cash and cash equivalents, investments, receivables, payables and debt instruments. The Company believes that the carrying values of these instruments, other than the 2026 Notes, on the accompanying consolidated balance sheets approximate their fair values. The estimated fair value of the 2026 Notes as of ~~September 30, 2023~~March 31, 2024 was ~~$151.0~~$132.8 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $135.0 million.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

6. ~~Stockholders'~~Stockholders’ Equity

Common and Preferred Stock

The following table provides details with respect to the changes to the number of shares of common stock, $0.01 par value, outstanding during the first ~~nine~~three months of ~~2023~~2024 (in thousands):

Shares of common stock outstanding – December 31, ~~2022~~2023

~~63,904~~63,327

Restricted stock awards, net of forfeitures

~~630~~1,296

Shares withheld for taxes on vesting of stock awards

~~(206)~~(408)

~~Purchases of treasury stock~~

~~(439)~~

Shares of common stock outstanding – ~~September 30, 2023~~March 31, 2024

~~63,889~~64,215

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company had 25,000,000 shares of preferred stock, $0.01 par value, authorized, with no shares issued or outstanding.

On February 16, 2023, the ~~Company's~~Company’s Board of Directors authorized $25.0 million for the repurchase of the ~~Company's~~Company’s common stock, par value $0.01 per share, through February 2025. During the ~~second quarter of 2023, the Company repurchased 438,563 shares~~three months ended March 31, 2024, there were no repurchases of common stock under the ~~program at a total cost of $3.0 million.~~program. The amount remaining under the ~~Company's~~Company’s share repurchase authorization as of ~~September 30, 2023~~March 31, 2024 was ~~$22.0~~$18.1 million. Subject to applicable securities laws, such purchases will be at such times and in such amounts as the Company deems appropriate.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, reported as a component of ~~stockholders'~~stockholders’ equity, primarily relates to fluctuations in currency exchange rates against the U.S. dollar as used to translate certain of the international operations of the ~~Company's~~Company’s operating segments. Accumulated other comprehensive loss ~~decreased~~increased from ~~$78.9~~$70.0 million at December 31, ~~2022~~2023 to ~~$77.3~~$73.0 million at ~~September 30, 2023.~~March 31, 2024. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the exchange rates for the British pound and the Brazilian real ~~strengthened~~weakened by 1% and 4%3%, respectively, compared to the U.S. dollar, contributing to other comprehensive loss of $3.0 million. During the three months ended March 31, 2023, the exchange rate for the British pound and the Brazilian real strengthened by 3% and 2%, respectively, compared to the U.S. dollar, contributing to other comprehensive income of $1.7 million. During the nine months ended September 30, 2022, the exchange rate for the British pound weakened by 18% compared to the U.S. dollar while the Brazilian real strengthened by 3% compared to the U.S. dollar, contributing to other comprehensive loss of $23.8$4.1 million.

7. Income Taxes

~~The income~~Income tax expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 was calculated using a discrete approach. This methodology was used because changes in the ~~Company's~~Company’s results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate.

For the three months ended ~~September 30, 2023,~~March 31, 2024, the ~~Company's~~Company’s income tax expense was ~~$0.2 million~~$24 thousand on a pre-tax ~~income~~loss of ~~$4.4~~$13.4 million, which included ~~certain~~a $10.0 million goodwill impairment charge (approximately $7.7 million of which was non-deductible) and other non-deductible ~~expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets.~~expenses. This compares to an income tax expense of ~~$0.8~~$1.6 million on pre-tax income of ~~$2.9~~$3.8 million, which ~~which was negatively impacted by valuation allowances recorded against deferred tax assets as well as~~included certain non-deductible expenses and discrete tax items, for the three months ended ~~September 30, 2022.~~March 31, 2023.

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(Continued)

For the nine months ended September 30, 2023, the Company's income tax expense was $2.7 million on pre-tax income of $9.6 million, which included certain non-deductible expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets. This compares to an income tax expense of $6.0 million on a pre-tax loss of $6.4 million, which included the impact of valuation allowances recorded against tax assets as well as certain non-deductible expenses and discrete tax items, for the nine months ended September 30, 2022.

8. Net Income (Loss) Per Share

The table below provides a reconciliation of the numerators and denominators of basic and diluted net income (loss) per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ (in thousands, except per share amounts):


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
Numerators:
Numerators:
Numerators:	Numerators:
Net income (loss)	Net income (loss)	$	4,212	$	2,143		$	6,928	$	(12,425)
Net income (loss)
Net income (loss)
Less: Income attributable to unvested restricted stock awards
Less: Income attributable to unvested restricted stock awards
Less: Income attributable to unvested restricted stock awards	Less: Income attributable to unvested restricted stock awards	(82)		(41)			(135)		—
Numerator for basic net income (loss) per share	Numerator for basic net income (loss) per share	4,130		2,102			6,793		(12,425)
Numerator for basic net income (loss) per share
Numerator for basic net income (loss) per share
Effect of dilutive securities:
Effect of dilutive securities:
Effect of dilutive securities:	Effect of dilutive securities:
Unvested restricted stock awards	Unvested restricted stock awards	1		3			1		—
Unvested restricted stock awards
Unvested restricted stock awards
Numerator for diluted net income (loss) per share
Numerator for diluted net income (loss) per share
Numerator for diluted net income (loss) per share	Numerator for diluted net income (loss) per share	$	4,131	$	2,105		$	6,794	$	(12,425)

Denominators:	Denominators:

Denominators:

Denominators:
Weighted average number of common shares outstanding
Weighted average number of common shares outstanding
Weighted average number of common shares outstanding	Weighted average number of common shares outstanding	63,892		63,896			64,007		62,490
Less: Weighted average number of unvested restricted stock awards outstanding	Less: Weighted average number of unvested restricted stock awards outstanding	(1,241)		(1,222)			(1,247)		(1,198)
Less: Weighted average number of unvested restricted stock awards outstanding
Less: Weighted average number of unvested restricted stock awards outstanding
Denominator for basic net income (loss) per share
Denominator for basic net income (loss) per share
Denominator for basic net income (loss) per share	Denominator for basic net income (loss) per share	62,651		62,674			62,760		61,292
Effect of dilutive securities:	Effect of dilutive securities:
Unvested restricted stock awards		—		2			—		—
Unvested performance share units		409		—			375		—

Effect of dilutive securities:
Effect of dilutive securities:
Performance share units
Performance share units
Performance share units
Denominator for diluted net income (loss) per share
Denominator for diluted net income (loss) per share
Denominator for diluted net income (loss) per share	Denominator for diluted net income (loss) per share	63,060		62,676			63,135		61,292

Net income (loss) per share:	Net income (loss) per share:

Net income (loss) per share:

Net income (loss) per share:
Basic
Basic
Basic	Basic	$	0.07	$	0.03		$	0.11	$	(0.20)
Diluted	Diluted	0.07		0.03			0.11		(0.20)
Diluted
Diluted

The calculation of diluted ~~net income~~earnings per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 excluded ~~159~~122 thousand shares and 177 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect. The calculation of diluted net loss per share for the three and nine months ended September 30, 2022 excluded 249 thousand shares and 287209 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect. Additionally, shares issuable upon conversion of the 2026 Notes were excluded due to, among other factors, the ~~Company's~~Company’s share price.

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~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

9. Long-Term Incentive Compensation

The following table presents a summary of activity for stock options, service-based restricted stock and stock unit awards, and performance-based stock unit awards for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 (in thousands):


		Stock Options	Service-based Restricted Stock		Performance- and Service-based Stock Units
Outstanding – December 31, 2022		245	1,222		494
	Stock Options						Stock Options	Service-based Restricted Stock	Performance- and Service-based Stock Units
Outstanding – December 31, 2023
Granted	Granted	—	645		211
Vested and distributed	Vested and distributed	—	(618)		—
Forfeited	Forfeited	(87)	(15)		—
Outstanding – September 30, 2023		158	1,234		705
Weighted average grant date fair value (2023 awards)			$	8.81	$	8.66
Outstanding – March 31, 2024
Weighted average grant date fair value (2024 awards)

The restricted stock program consists of a combination of service-based restricted stock and stock units, as well as performance-based stock units. Service-based restricted stock awards ~~generally~~ vest on a straight-line basis over a term of three years. Service-based stock unit awards vest over one-year, with the underlying shares issued at a specified future date. Eighty-two thousand service-based stock units were outstanding as of ~~September 30, 2023.~~March 31, 2024. Performance-based stock unit awards ~~generally~~ vest at the end

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(Continued)

of a three-year period, with the number of shares ultimately issued under the program dependent upon achievement of predefined specific performance objectives based on the ~~Company's~~Company’s cumulative EBITDA over a three-year period.

In the event the predefined targets are exceeded for any performance-based award, additional shares up to a maximum of 200% of the target award may be granted. Conversely, if actual performance falls below the predefined target, the number of shares vested is reduced. If the actual performance falls below the threshold performance level, no shares will vest.

The Company issued conditional long-term cash incentive awards ("(“Cash ~~Awards"~~Awards”) of $1.5 million in the first quarters of ~~2023~~2024 and ~~2022.~~2023. The performance measure for each of these Cash Awards is relative total stockholder return compared to a peer group of companies over a three-year period. The ultimate dollar amount to be awarded for each annual grant may range from zero to a maximum of $3.1 million, limited to their targeted award value ($1.5 million) if the ~~Company's~~Company’s total stockholder return were to be negative over the performance period. Obligations related to the Cash Awards are classified as liabilities and recognized over their respective vesting periods.

Stock-based compensation expense recognized during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 totaled $1.8 million and ~~$5.2 million, respectively. Stock-based compensation expense recognized during the three and nine months ended September 30, 2022 totaled $1.7 million and $5.2~~$1.6 million, respectively. As of ~~September 30, 2023,~~March 31, 2024, there was ~~$8.8~~$11.8 million of total compensation costs related to unvested restricted stock awards, which is expected to be recognized in future periods as vesting conditions are satisfied.

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~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

10. Segments and Related Information

In the first quarter of 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment were integrated into the Downhole Technologies segment (see Note 1, “Organization and Basis of Presentation”). Historical segment financial data and supplemental disaggregated revenue information for the three months ended March 31, 2023 (presented below) were conformed with the current-period segment presentation.

The Company operates through three reportable operating segments: ~~Offshore/~~Offshore Manufactured Products, Well Site Services and Downhole Technologies. Financial information by operating segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ is summarized in the following tables (in thousands).

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets
Three Months Ended September 30, 2023
Offshore/Manufactured Products(1)
$ 111,043 $ 4,921 $ 17,804 $ 2,739 $ 536,263
Well Site Services 59,831 6,313 3,285 2,602 201,384
Downhole Technologies 23,415 4,030 (4,118) 541 246,329
Corporate — 152 (10,781) 150 64,044
Total(1)
$ 194,289 $ 15,416 $ 6,190 $ 6,032 $ 1,048,020


	Revenues		Depreciation and amortization		Operating income (loss)		Capital expenditures		Total assets
Three Months Ended March 31, 2024
Offshore Manufactured Products(1)	$	86,857	$	3,693	$	10,603	$	7,221	$	516,039
Well Site Services(2)	47,292		6,079		(419)		2,414		179,763
Downhole Technologies(3)	33,113		4,270		(12,079)		446		278,055
Corporate	—		153		(9,282)		11		41,958
Total(1)	$	167,262	$	14,195	$	(11,177)	$	10,092	$	1,015,815

____________________

(1)Operating income included ~~$1.6~~$1.5 million of facility consolidation charges.

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets
Three Months Ended September 30, 2022
Offshore/Manufactured Products(2)
$ 96,037 $ 5,072 $ 13,373 $ 1,620 $ 540,940
Well Site Services 60,509 6,732 2,359 4,894 205,018
Downhole Technologies 32,848 4,442 (342) 273 257,676
Corporate — 167 (10,332) 23 46,736
Total(2)
$ 189,394 $ 16,413 $ 5,058 $ 6,810 $ 1,050,370

~~____________________~~

(2)Operating ~~income~~loss included ~~a $6.1~~$1.0 million ~~gain on settlement of outstanding litigation against certain service providers.~~in facility consolidation and other charges.

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets
Nine Months Ended September 30, 2023
Offshore/Manufactured Products(3)
$ 303,328 $ 14,236 $ 40,147 $ 7,936 $ 536,263
Well Site Services 191,425 19,023 14,983 14,046 201,384
Downhole Technologies 79,264 12,480 (8,173) 961 246,329
Corporate — 470 (31,623) 427 64,044
Total(3)
$ 574,017 $ 46,209 $ 15,334 $ 23,370 $ 1,048,020

~~____________________~~

(3)Operating ~~income included $1.6 million of facility consolidation charges.~~

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets
Nine Months Ended September 30, 2022
Offshore/Manufactured Products(4)
$ 276,616 $ 15,651 $ 33,010 $ 3,093 $ 540,940
Well Site Services 163,500 22,059 (435) 9,360 205,018
Downhole Technologies 95,156 13,249 (3,332) 657 257,676
Corporate — 510 (29,611) 153 46,736
Total(4)
$ 535,272 $ 51,469 $ (368) $ 13,263 $ 1,050,370

~~_______________~~

~~(4)Operating income (loss)~~loss included a ~~$6.1~~$10.0 million ~~gain on settlement of outstanding litigation against certain service providers.~~non-cash goodwill impairment charge (see Note 2, “Goodwill Impairment and Other Charges”).


	Revenues		Depreciation and amortization		Operating income (loss)		Capital expenditures		Total assets
Three Months Ended March 31, 2023
Offshore Manufactured Products	$	80,505	$	4,075	$	7,698	$	359	$	502,263
Well Site Services	67,058		6,146		6,966		5,772		212,415
Downhole Technologies	48,636		4,868		1,873		425		302,271
Corporate	—		167		(10,662)		12		33,188
Total	$	196,199	$	15,256	$	5,875	$	6,568	$	1,050,137

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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ (in thousands):

Offshore/Manufactured Products Well Site Services Downhole Technologies Total
2023 2022 2023 2022 2023 2022 2023 2022
Three Months Ended September 30
Project-driven:
Products $ 45,527 $ 38,911 $ — $ — $ — $ — $ 45,527 $ 38,911
Services 30,391 23,421 — — — — 30,391 23,421
Total project-driven 75,918 62,332 — — — — 75,918 62,332
Military and other products 7,195 9,995 — — — — 7,195 9,995
Short-cycle:
Products 27,930 23,710 — — 21,984 27,127 49,914 50,837
Services — — 59,831 60,509 1,431 5,721 61,262 66,230
Total short-cycle 27,930 23,710 59,831 60,509 23,415 32,848 111,176 117,067
$ 111,043 $ 96,037 $ 59,831 $ 60,509 $ 23,415 $ 32,848 $ 194,289 $ 189,394


		Offshore/Manufactured Products				Well Site Services				Downhole Technologies				Total
		2023		2022		2023		2022		2023		2022		2023		2022
Nine Months Ended September 30
	Offshore Manufactured Products																		Offshore Manufactured Products			Well Site Services		Downhole Technologies		Total
	2024																	2024		2023	2024		2023	2024	2023		2024	2023
Three Months Ended March 31
Project-driven:	Project-driven:
Project-driven:
Project-driven:
Products
Products
Products	Products	$	116,869	$	113,853	$	—	$	—	$	—	$	—	$	116,869	$	113,853
Services	Services	79,867		71,714		—		—		—		—		79,867		71,714
Total project-driven	Total project-driven	196,736		185,567		—		—		—		—		196,736		185,567
Military and other products	Military and other products	22,157		23,104		—		—		—		—		22,157		23,104
Short-cycle:
Products		84,435		67,945		—		—		71,645		79,635		156,080		147,580
Services		—		—		191,425		163,500		7,619		15,521		199,044		179,021
Total short-cycle		84,435		67,945		191,425		163,500		79,264		95,156		355,124		326,601
		$	303,328	$	276,616	$	191,425	$	163,500	$	79,264	$	95,156	$	574,017	$	535,272

Short-cycle products and services

Short-cycle products and services

Short-cycle products and services
	$

Revenues from products and services transferred to customers over time accounted for approximately ~~66%~~67% and ~~63%~~66% of consolidated revenues for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. The balance of revenues for the respective periods relates to products and services transferred to customers at a point in time. As of ~~September 30, 2023,~~March 31, 2024, the Company had ~~$225.9~~$203.0 million of remaining backlog related to contracts with an original expected duration of greater than one year. Approximately ~~19%~~43% of this remaining backlog is expected to be recognized as revenue over the remaining ~~three~~nine months of ~~2023,~~2024, with an additional ~~51%~~33% recognized in ~~2024~~2025 and the balance thereafter.

11. Commitments and Contingencies

The Company is a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters. Although the Company can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on the Company, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise covered by insurance, will not have a material adverse effect on the ~~Company's~~Company’s consolidated financial position, results of operations or liquidity.

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Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other statements we make contain certain ~~"forward-looking statements"~~“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 (the ~~"Exchange Act"~~“Exchange Act”). Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors, including incorrect or changed assumptions. For a discussion of known material factors that could affect our results, please refer to ~~"Part~~“Part I, Item 1. Business,~~" "Part~~” “Part I, Item 1A. Risk Factors,~~" "Part~~” “Part II, Item 7. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” and ~~"Part~~“Part II, Item 7A. Quantitative and Qualitative Disclosures about Market ~~Risk"~~Risk” included in our ~~2022~~2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the ~~"SEC"~~“SEC”) on February ~~17, 2023,~~21, 2024, as well as to ~~"Part~~“Part II, Item 1A. Risk ~~Factors"~~Factors” included in this Quarterly Report on Form 10-Q.

You can typically identify ~~"forward-looking statements"~~“forward-looking statements” by the use of forward-looking words such as ~~"may," "will," "could," "project," "believe," "anticipate," "expect," "estimate," "potential," "plan," "forecast," "proposed," "should," "seek,"~~“may,” “will,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “potential,” “plan,” “forecast,” “proposed,” “should,” “seek,” and other similar words. Such statements may relate to our future financial position, budgets, capital expenditures, projected costs, plans and objectives of management for future operations and possible future strategic transactions. Actual results frequently differ from assumed facts and such differences can be material, depending upon the circumstances.

While we believe we are providing forward-looking statements expressed in good faith and on a reasonable basis, there can be no assurance that actual results will not differ from such forward-looking statements. The following are important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, us:

•the impact of the ongoing military actions in Europe and the Middle East, including, but not limited to, energy market disruptions, supply chain disruptions and increased costs, government sanctions, and delays or potential cancellation of planned customer projects;

•the ability and willingness of the Organization of Petroleum Exporting Countries ~~("OPEC"~~(“OPEC”) and other producing nations to set and maintain oil production levels and pricing;

•the level of supply of 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;

•the cyclical nature of the oil and natural gas industry;

•the level of offshore oil and natural gas developmental activities;

•the ~~impact of disruptions in the bank~~financial health and ~~capital markets, including the four U.S. bank failures which occurred in March, May and July of 2023;~~

•~~the financial health~~consolidation of our customers;

•the impact of environmental matters, including executive actions and regulatory or legislative 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;

•~~proposed~~ new rules by the SEC relating to the disclosure of a range of climate-related information and risks;

•political, economic and litigation efforts to restrict or eliminate certain oil and natural gas exploration, development and production activities due to concerns over the threat of climate change;

•the availability of and access to attractive oil and natural gas field prospects, which may be affected by governmental actions or actions of other parties restricting drilling and completion activities;

•the impact of disruptions in the bank and capital markets;

•general global economic conditions;

•global weather conditions and natural disasters, including hurricanes in the Gulf of Mexico;

•changes in tax laws and regulations;

•supply chain disruptions;

•the impact of tariffs and duties on imported materials and exported finished goods;

•our ability to timely obtain and maintain critical permits for operating facilities;

•our ability to attract and retain skilled personnel;

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•negative outcome of litigation, threatened litigation or government proceedings;

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•our ability to develop new competitive technologies and products;

•inflation, including our ability to increase prices to our customers as our costs increase;

•fluctuations in currency exchange rates;

•physical, digital, cyber, internal and external security breaches and other incidents affecting information security and data privacy;

•the cost of capital in the bank and capital markets and our ability to access them;

•our ability to protect and enforce our intellectual property rights;

•our ability to complete the integration of acquired businesses and achieve the expected accretion in earnings; and

•the other factors identified in ~~"Part~~“Part I, Item 1A. Risk ~~Factors"~~Factors” in our ~~2022~~2023 Annual Report on Form 10-K, as well as in ~~"Part~~“Part II, Item 1A. Risk ~~Factors"~~Factors” included in this Quarterly Report on Form 10-Q.

Should one or more of these risks or uncertainties materialize, or should the assumptions on which our forward-looking statements are based prove incorrect or change, actual results may differ materially from those expected, estimated or projected. In addition, the factors identified above may not necessarily be all of the important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by us, or on our behalf. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility to publicly release the result of any revision of our forward-looking statements after the date they are made.

In addition, in certain places in this Quarterly Report on Form 10-Q, we refer to information and reports published by third parties that purport to describe trends or developments in the energy industry. We do so for the convenience of our stockholders and in an effort to provide information available in the market that will assist our investors in better understanding the market environment in which we operate. However, we specifically disclaim any responsibility for the accuracy and completeness of such information and undertake no obligation to update such information.

ITEM 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with our condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and notes to those statements included in our ~~2022~~2023 Annual Report on Form 10-K in order to understand factors, such as charges and credits, financing transactions and changes in tax regulations, which may impact comparability from period to period.

We provide a broad range of manufactured products and services to customers in the energy, industrial and military sectors through our ~~Offshore/~~Offshore Manufactured Products, Well Site Services and Downhole Technologies segments. In first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical financial data, supplemental disaggregated revenue and backlog information as of and for the three months ended March 31, 2023 (presented herein) was conformed with the current-period segment presentation.

Demand for our products and services is cyclical and substantially dependent upon activity levels in the oil and gas industry, particularly our ~~customers'~~customers’ willingness to invest capital in the exploration for and development of crude oil and natural gas reserves. Our ~~customers'~~customers’ capital spending programs are generally based on their cash flows and their outlook for near-term and long-term commodity prices, making demand for our products and services sensitive to expectations regarding future crude oil and natural gas prices, as well as economic growth, commodity demand and estimates of resource production and regulatory pressures related to ~~environmental, social~~Environmental, Social and ~~governance ("ESG"~~Governance (“ESG”) considerations.

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Recent Developments

Brent and ~~West Texas Intermediate ("WTI")~~WTI crude oil and natural gas pricing trends were as follows:


			Average Price(1) for quarter ended								Average Price(1) for year ended December 31
		Average Price(1) for quarter ended												Average Price(1) for quarter ended	Average Price(1) for year ended December 31
Year	Year		March 31		June 30		September 30		December 31				Average Price(1) for year ended December 31
Brent Crude (per bbl)	Brent Crude (per bbl)
Brent Crude (per bbl)
Brent Crude (per bbl)
2024
2024
2024
2023	2023		$	81.01	$	77.99	$	86.65
2022			100.87		113.84		100.71		$	88.77	$	100.99
WTI Crude (per bbl)	WTI Crude (per bbl)
2024
2024
2024
2023	2023		$	75.91	$	73.54	$	82.25
2022			95.18		108.83		93.06		$	82.79	$	94.90
Henry Hub Natural Gas (per MMBtu)	Henry Hub Natural Gas (per MMBtu)
2024
2024
2024
2023	2023		$	2.64	$	2.16	$	2.59
2022			4.67		7.50		8.03		$	5.55	$	6.45

________________

(1)Source: U.S. Energy Information Administration (spot prices).

On ~~October 20, 2023,~~February 16, 2024, we amended our ABL Facility to extend its maturity date from February 10, 2025 to February 16, 2028.

In the first quarter of 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into our Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical segment financial data, backlog and other information were conformed with the first quarter 2024 revised segment presentation.

On April 19, 2024, Brent crude oil, WTI crude oil and natural gas spot prices closed at ~~$93.72~~$87.96 per barrel, ~~$89.12~~$83.79 per barrel and ~~$2.60~~$1.43 per MMBtu, respectively. Additionally, ~~as presented in more detail below,~~ the U.S. drilling rig count reported on ~~October 20, 2023~~April 19, 2024 was ~~624~~619 rigs – ~~4% below the third quarter 2023 average.~~

In February 2023, we repaid the $17.3 million principal amount, plus accrued interest, outstanding under our 2023 Notes (as defined below). Additionally, our Board of Directors authorized a $25.0 million stock repurchase plan, which extends through February 2025. Duringcomparable to the first ~~nine months of 2023, $3.0 million of share repurchases were made under this authorization.~~quarter 2024 average.

Overview

Current and expected future pricing for WTI crude oil and natural gas and inflationary ~~costs~~cost increases, along with expectations regarding the regulatory environment in the regions in which we operate, are factors that will continue to influence our ~~customers'~~customers’ willingness to invest capital in their businesses. Expectations for the longer-term price for Brent crude oil will continue to influence our ~~customers'~~customers’ spending related to global offshore drilling and development and, thus, a significant portion of the activity of our ~~Offshore/~~Offshore Manufactured Products segment.

Crude oil and natural gas prices and levels of demand for crude oil and natural gas are likely to remain highly volatile due to numerous factors, including: geopolitical conflicts in Europe and the Middle East, along with associated international tensions; the perceived risk of a global economic recession; ~~global uncertainties related to disruptions in the banking sector;~~ domestic or international crude oil and natural gas production; changes in governmental rules and regulations; sanctions; the willingness of operators to invest capital in the exploration for and development of resources; use of alternative fuels; improved vehicle fuel efficiency; timing of capital investments in alternative energy sources; a more sustained movement to electric vehicles; and the potential for ongoing supply/demand imbalances.

U.S. drilling, completion and production activity and, in turn, our financial results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the short-term, call-out nature of our U.S. operations.

Customer spending in the natural gas shale plays has moderated over the last ten years due to technological advancements that have led to significant amounts of natural gas being produced from prolific basins in the Northeastern United States and from associated gas produced from the drilling and completion of unconventional oil wells in the United States.

Our ~~Offshore/~~Offshore Manufactured Products segment provides technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities globally, as well as certain products and services to the offshore ~~and land-based~~ drilling and completion markets. This segment also produces a variety of products for use in industrial, military and other applications outside the traditional energy industry. Additionally, we are investing in research and product development ~~related to, and~~(and have been awarded select contracts and are bidding on additional ~~projects that~~projects) to facilitate the development of alternative energy

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sources, including offshore wind and deepsea mineral gathering opportunities. This segment is particularly influenced by global spending on deepwater drilling and production, which is primarily driven by our ~~customers'~~customers’ longer-term commodity demand forecasts and outlook for crude oil and natural gas prices. Approximately ~~65%~~90% of ~~Offshore/~~Offshore Manufactured Products segment sales in the first ~~nine~~three months of ~~2023~~2024 were driven by our ~~customers'~~customers’ capital spending for

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products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as ~~"project-driven~~“project-driven products and ~~services"~~services”). Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans. Such projects are generally undertaken by larger exploration, field development and production companies (primarily international oil companies and state-run national oil companies) using relatively conservative crude oil and natural gas pricing assumptions. Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to change based on short-term fluctuations in the price of crude oil and natural gas.

Backlog reported by our ~~Offshore/~~Offshore Manufactured Products segment ~~increased~~decreased to ~~$348~~$305 million as of ~~September 30, 2023~~March 31, 2024 from ~~$308~~$327 million as of December 31, ~~2022 and $258 million as of September 30, 2022.~~2023. Bookings totaled ~~$129~~$66 million in the ~~third~~first quarter of ~~2023,~~2024, yielding a quarterly book-to-bill ratio of ~~1.2x (1.2x year-to-date).~~0.8x. The following table sets forth backlog as of the dates indicated (in millions).


			Backlog as of
		Backlog as of													Backlog as of
Year	Year		March 31		June 30		September 30		December 31		Year	March 31	June 30	September 30		December 31
2024
2023
2023
2023	2023		$	326	$	338	$	348
2022	2022		265		241		258		$	308
2021			226		214		249		260

Our Well Site Services segment provides completion services and, to a much lesser extent, land drilling services, in the United States (including the Gulf of Mexico) and internationally. U.S. drilling and completion activity and, in turn, our Well Site Services results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the short-term, call-out nature of its operations. We primarily supply equipment and service personnel utilized in the completion of, and initial production from, new and recompleted wells in our U.S. operations, which are dependent primarily upon the level and complexity of drilling, completion and workover activity in our areas of operations. Well intensity and complexity have increased with the continuing transition to multi-well pads, the drilling of longer lateral wells and increased downhole pressures, along with the increased number of frac stages completed in horizontal wells.

Our Downhole Technologies segment provides oil and gas perforation systems, downhole tools and services in support of completion, intervention, wireline and well abandonment operations. This segment designs, manufactures and markets its consumable engineered products to oilfield service as well as exploration and production companies. Product and service offerings for this segment include innovations in perforation technology through patented and proprietary systems combined with advanced modeling and analysis tools. This expertise has led to the optimization of perforation hole size, depth, and quality of tunnels, which are key factors for maximizing the effectiveness of hydraulic fracturing. Additional offerings include ~~proprietary~~ frac plug, ~~and~~ toe valve and other elastomer products, which are focused on zonal isolation for hydraulic fracturing of horizontal wells, and a broad range of consumable products, such as setting tools and bridge plugs, that are used in completion, intervention and decommissioning applications. Demand drivers for the Downhole Technologies segment include continued trends toward longer lateral lengths, increased frac stages and more perforation clusters to target increased unconventional well productivity.

Demand for our completion-related products and services within each of our segments is highly correlated to changes in the total number of wells drilled in the United States, total footage drilled, the number of drilled wells that are completed and changes in the drilling rig count. The following table sets forth a summary of the U.S. ~~and international~~ drilling rig count, as measured by Baker Hughes Company, as of and for the periods indicated.


		As of October 20, 2023		Average for the
			Three Months Ended September 30,				Nine Months Ended September 30,
			2023		2022		2023		2022
			As of April 19, 2024
				As of April 19, 2024
		As of April 19, 2024															Average for the
						Three Months Ended March 31,												Three Months Ended March 31,
							2024													2024	2023
United States Rig Count:	United States Rig Count:
Land – Oil
Land – Oil
Land – Oil	Land – Oil	477		499		581		543		543	492			483				579
Land – Natural gas and other	Land – Natural gas and other	122		128		160		143		145	Land – Natural gas and other	107			119				155
Offshore	Offshore	25		22		20		21		18	Offshore	20			21				19
	619												619			623				753
		624		649		761		707		706

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The U.S. energy industry is primarily focused on crude oil and liquids-rich exploration and development activities in U.S. shale plays utilizing horizontal drilling and completion techniques. As of ~~September 30, 2023,~~March 31, 2024, oil-directed drilling accounted for 81% of the total U.S. rig count – with the balance largely natural gas related.

We use a variety of domestically produced and imported raw materials and component products, including steel, in the manufacture of our products. The United States has imposed tariffs on a variety of imported products, including steel and

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aluminum. In response to the U.S. tariffs on steel and aluminum, the European Union and several other countries, including Canada and China, have threatened and/or imposed retaliatory tariffs. In addition, in response to ~~Russia's~~Russia’s invasion of Ukraine, governments in the European Union, the United States, the United Kingdom, Switzerland and other countries have enacted sanctions against Russia and Russian interests. The effect of these sanctions and tariffs and the application and interpretation of existing trade agreements and customs, anti-dumping and countervailing duty regulations continue to evolve, and we continue to monitor these matters. If we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase and we are unable to pass corresponding cost increases on to our customers, our financial position, cash flows and results of operations could be adversely affected. Furthermore, uncertainty with respect to potential costs in the drilling and completion of oil and gas wells could cause our customers to delay or cancel planned projects which, if this occurred, would adversely affect our financial position, cash flows and results of operations.

Other factors that can affect our business and financial results include but are not limited to: the general global economic ~~environment (including disruptions in the banking sector);~~environment; competitive pricing pressures; customer consolidations; public health crises; natural disasters; labor market constraints; supply chain disruptions; inflation in wages, materials, parts, equipment and other costs; climate-related and other regulatory changes; geopolitical conflicts and tensions; and changes in tax laws in the United States and international markets. We continue to monitor the global economy, the prices of and demand for crude oil and natural gas, and the resultant impact on the capital spending plans and operations of our customers in order to plan and manage our business.

Human Capital

For more information on our health and safety, diversity and other workforce policies, please see ~~"Part~~“Part I, Item 1. Business – Human ~~Capital"~~Capital” in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

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Selected Financial Data

This selected financial data should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes included in ~~"Part~~“Part I, Item 1. Financial ~~Statements"~~Statements” of this Quarterly Report on Form 10-Q and ~~in "Part~~“Part II, Item 7. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” and our Consolidated Financial Statements and related notes included in ~~"Part~~“Part II, Item 8. Financial Statements and Supplementary ~~Data"~~Data” of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 in order to understand factors, such as charges, credits and financing transactions, which may impact comparability of the selected financial data.

~~We revised our presentation~~In the first quarter of 2024, certain short-cycle manufacturing operations historically reported within the Offshore Manufactured Products segment (legacy frac plug and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and the current segment management structure, as well as provide for additional operational synergies. Historical financial data and supplemental ~~disclosure of~~ disaggregated revenue information inas of the ~~second quarter of 2023. Prior-period disclosures of disaggregated revenue information presented within this discussion and analysis~~three months ended March 31, 2023 (presented herein) were conformed with the current-period segment presentation.

Unaudited Consolidated Results of Operations

The following summarizes our consolidated results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ (in thousands, except per share amounts):


		Three Months Ended September 30,							Nine Months Ended September 30,
		2023		2022		Variance			2023		2022		Variance
						Three Months Ended March 31,
						Three Months Ended March 31,
						Three Months Ended March 31,
									2024
									2024
									2024							2023	Variance
Revenues:	Revenues:
Products	Products	$	102,636	$	99,743	$	2,893		$	295,106	$	284,537	$	10,569
Products
Products
Services	Services	91,653		89,651		2,002			278,911		250,735		28,176
		194,289		189,394		4,895			574,017		535,272		38,745
								167,262
Costs and expenses:	Costs and expenses:
Product costs
Product costs
Product costs	Product costs	80,188		81,576		(1,388)			231,524		225,765		5,759
Service costs	Service costs	70,239		69,723		516			211,668		194,294		17,374
Cost of revenues (exclusive of depreciation and amortization expense presented below)	Cost of revenues (exclusive of depreciation and amortization expense presented below)	150,427		151,299		(872)			443,192		420,059		23,133
Selling, general and administrative expenses		24,241		23,374		867			71,785		70,964		821
Selling, general and administrative expenses(1)
Depreciation and amortization expense	Depreciation and amortization expense	15,416		16,413		(997)			46,209		51,469		(5,260)
Other operating expense (income), net(1)		(1,985)		(6,750)		4,765			(2,503)		(6,852)		4,349
		188,099		184,336		3,763			558,683		535,640		23,043
Impairment of goodwill(2)
Other operating (income) expense, net(3)
								178,439
Operating income (loss)	Operating income (loss)	6,190		5,058		1,132			15,334		(368)		15,702

Interest expense, net	Interest expense, net	(1,928)		(2,637)		709			(6,378)		(7,947)		1,569
Other income, net		186		491		(305)			672		1,892		(1,220)
Interest expense, net
Interest expense, net
Other income (expense), net
Income (loss) before income taxes	Income (loss) before income taxes	4,448		2,912		1,536			9,628		(6,423)		16,051
Income tax provision	Income tax provision	(236)		(769)		533			(2,700)		(6,002)		3,302
Net income (loss)	Net income (loss)	$	4,212	$	2,143	$	2,069		$	6,928	$	(12,425)	$	19,353
															Net income (loss) per share:
Net income (loss) per share:
Net income (loss) per share:
Basic	Basic	$	0.07	$	0.03				$	0.11	$	(0.20)
Diluted	Diluted	0.07		0.03					0.11		(0.20)
Diluted
Diluted

Weighted average number of common shares outstanding:

Weighted average number of common shares outstanding:
															Weighted average number of common shares outstanding:
Basic	Basic	62,651		62,674					62,760		61,292
Diluted	Diluted	63,060		62,676					63,135		61,292
Diluted
Diluted

_______________

(1)InDuring the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, we recognized $0.4 million in costs associated with the defense of certain Well Site Services segment patents related to proprietary technologies.

(2)During the three months ended March 31, 2024, the Downhole Technologies segment recognized a $10.0 million non-cash impairment charge related to goodwill reassigned to the business in connection with the segment realignment discussed above.

(3)During the three months ended March 31, 2024, we recognized facility consolidation and other charges of ~~$1.6~~$2.1 million associated with the ~~Offshore/~~Offshore Manufactured Products ~~segment's~~and the Well Site Services segments’ ongoing consolidation and relocation of certain manufacturing and service locations.~~In the three and nine months ended September 30, 2022, we recognized a gain of $6.1 million associated with the settlement of outstanding litigation against certain service providers.~~

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Unaudited Segment Results of Operations

We manage and measure our business performance in three distinct operating segments: ~~Offshore/~~Offshore Manufactured Products, Well Site Services and Downhole Technologies. Supplemental financial information by operating segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ is summarized below (in thousands):


		Three Months Ended September 30,							Nine Months Ended September 30,
		2023		2022		Variance			2023		2022		Variance
						Three Months Ended March 31,
						Three Months Ended March 31,
						Three Months Ended March 31,
									2024
									2024
									2024						2023	Variance
Revenues:	Revenues:
Offshore/Manufactured Products
Offshore Manufactured Products
Offshore Manufactured Products
Offshore Manufactured Products
Project-driven:
Project-driven:
Project-driven:	Project-driven:
Products	Products	$	45,527	$	38,911	$	6,616		$	116,869	$	113,853	$	3,016
Products
Products
Services	Services	30,391		23,421		6,970			79,867		71,714		8,153
		75,918		62,332		13,586			196,736		185,567		11,169
								78,370
Military and other products	Military and other products	7,195		9,995		(2,800)			22,157		23,104		(947)
Short-cycle products		27,930		23,710		4,220			84,435		67,945		16,490
		111,043		96,037		15,006			303,328		276,616		26,712
								86,857
Well Site Services	Well Site Services	59,831		60,509		(678)			191,425		163,500		27,925
Downhole Technologies	Downhole Technologies	23,415		32,848		(9,433)			79,264		95,156		(15,892)
		$	194,289	$	189,394	$	4,895		$	574,017	$	535,272	$	38,745
								$

Operating income (loss):	Operating income (loss):
Offshore/Manufactured Products(1)		$	17,804	$	13,373	$	4,431		$	40,147	$	33,010	$	7,137
Well Site Services		3,285		2,359		926			14,983		(435)		15,418
Downhole Technologies		(4,118)		(342)		(3,776)			(8,173)		(3,332)		(4,841)
Operating income (loss):
Operating income (loss):
Offshore Manufactured Products(1)
Offshore Manufactured Products(1)
Offshore Manufactured Products(1)
Well Site Services(2)
Downhole Technologies(3)
Corporate	Corporate	(10,781)		(10,332)		(449)			(31,623)		(29,611)		(2,012)
		$	6,190	$	5,058	$	1,132		$	15,334	$	(368)	$	15,702
								$

_______________

(1)InDuring the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, we recognized facility consolidation charges of ~~$1.6~~$1.5 million associated with the ~~Offshore/~~Offshore Manufactured Products ~~segment's~~segment’s ongoing consolidation and relocation of ~~certain~~a manufacturing and service ~~locations.~~location.

(2)InDuring the three ~~and nine~~ months ended ~~September 30, 2022, we~~March 31, 2024, the Well Site Services segment recognized charges of $1.0 million associated primarily with the consolidation and exit of certain service locations.

(3)During the three months ended March 31, 2024, the Downhole Technologies segment recognized a ~~gain of $6.1~~$10.0 million ~~associated~~non-cash impairment charge related to goodwill reassigned to the business in connection with the ~~settlement of outstanding litigation against certain service providers.~~segment realignment discussed above.

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Three Months Ended ~~September 30, 2023~~March 31, 2024 Compared to Three Months Ended ~~September 30, 2022~~March 31, 2023

We reported a net ~~income~~loss for the three months ended ~~September 30, 2023~~March 31, 2024 of ~~$4.2~~$13.4 million, or ~~$0.07~~$0.21 per share, which included ~~facility consolidation charges~~a non-cash goodwill impairment charge of ~~$1.6~~$10.0 million ($~~1.3~~9.5 million after-tax, or ~~$0.02~~$0.15 per share) and facility consolidation and other charges of $2.5 million ($2.0 million after-tax, or $0.03 per share). These results compare to net income for the three months ended ~~September 30, 2022~~March 31, 2023 of ~~$2.1~~$2.2 million, or $0.03 per ~~share, which included a gain of $6.1 million ($4.6 million after-tax, or $0.07 per share) recognized in connection with the favorable settlement of a litigation matter.~~share.

Our ~~reported~~first quarter 2024 results, ~~in the third quarter of 2023~~ reflect ~~continued growth in international offshore-project activity and associated backlog conversion, partially offset by~~ the impact of an industry-wide decline in U.S. well completions, ~~– which has been ongoing since~~driven particularly by weak natural gas prices (the average spot price for Henry Hub natural gas was $2.15 per MMBtu in the ~~start~~first quarter of ~~2023.~~2024, down 19% from the prior-year period). The impact of the decline in investments by our U.S. customers was partially offset by growth in offshore and international project activity and associated backlog conversion. Management continues to implement measures in areas experiencing lower activity levels to reduce future costs.

Revenues. Consolidated total revenues in the ~~third quarter~~first three months of ~~2023 increased $4.9~~2024 decreased $28.9 million, or 3%15%, from the ~~third quarter~~first three months of ~~2022.~~2023.

Consolidated product revenues in the ~~third quarter~~first three months of ~~2023 increased $2.9~~2024 decreased $5.5 million, or 3%6%, from the ~~third quarter~~first three months of ~~2022, driven primarily~~2023, with the impact of lower customer demand for consumable completion products in the United States, partially offset by ~~the conversion of~~higher customer demand for project-driven production facility ~~products from backlog into revenue.~~and connector products. Consolidated service revenues in the ~~third quarter~~first three months of ~~2023 increased $2.0~~2024 decreased $23.4 million, or 2%24%, from the ~~third quarter~~first three months of ~~2022~~2023 due primarily to ~~increased~~lower U.S. land-based customer ~~spending for project-driven services, partially offset by a decrease in U.S. customer demand for short-cycle services.~~investments.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ (in thousands):

Offshore/ Manufactured Products Well Site Services Downhole Technologies Total
Three Months Ended September 30 2023 2022 2023 2022 2023 2022 2023 2022
Project-driven:
Products $ 45,527 $ 38,911 $ — $ — $ — $ — $ 45,527 $ 38,911
Services 30,391 23,421 — — — — 30,391 23,421
Total project-driven 75,918 62,332 — — — — 75,918 62,332
Military and other products 7,195 9,995 — — — — 7,195 9,995
Short-cycle:
Products 27,930 23,710 — — 21,984 27,127 49,914 50,837
Services — — 59,831 60,509 1,431 5,721 61,262 66,230
Total short-cycle 27,930 23,710 59,831 60,509 23,415 32,848 111,176 117,067
$ 111,043 $ 96,037 $ 59,831 $ 60,509 $ 23,415 $ 32,848 $ 194,289 $ 189,394


Percentage of total revenue by type -
	Offshore Manufactured Products																				Offshore Manufactured Products		Well Site Services			Downhole Technologies			Total
Three Months Ended March 31																		Three Months Ended March 31	2024	2023		2024		2023	2024		2023	2024		2023
Project-driven:
Products
Products
Products	Products	73	%	76	%	—	%	—	%	94	%	83	%	53	%	53	%
Services	Services	27	%	24	%	100	%	100	%	6	%	17	%	47	%	47	%
Total project-driven
Military and other products

Short-cycle products and services

Short-cycle products and services

Short-cycle products and services
	$
By destination:
U.S. land
U.S. land
U.S. land
Offshore and international
	$

Cost of Revenues (exclusive of Depreciation and Amortization Expense). Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $18.8 million, or 12%, in the ~~third quarter~~first three months of ~~2023 decreased $0.9 million, or 1%,~~2024 compared to the ~~level reported in the third quarter~~first three months of ~~2022.~~2023.

Consolidated product costs in the ~~third quarter~~first three months of ~~2023~~2024 decreased ~~$1.4~~$3.5 million, or 2%4%, ~~from~~compared to the ~~third quarter of 2022 due to a favorable shift in product sales mix. Consolidated service costs in the third quarter~~first three months of 2023 ~~increased $0.5 million, or 1%, from the third quarter of 2022,~~ due primarily to the reported revenue ~~growth.~~decline. Consolidated service costs in the first three months of 2024 decreased $15.2 million, or 21%, compared to the first three months of 2023, due primarily to the impact of lower U.S. activity levels.

Selling, General and Administrative Expense. Selling, general and administrative expense was $22.5 million in the ~~third quarter~~first three months of ~~2023 increased $0.9~~2024, which included $0.4 million of costs associated with enforcing certain of our patents. Excluding these patent defense costs, selling, general and administrative costs decreased $1.2 million, or 4%5%, from the ~~level reported~~first three months of 2023, due primarily to reductions in ~~the third quarter of 2022.~~short- and long-term incentive expenses.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased ~~$1.0~~$1.1 million, or 6%7%, in the ~~third quarter~~first three months of ~~2023~~2024 compared to the prior-year ~~quarter, reflective of certain intangible assets reaching the end of their economic life in 2022.~~period. Note 10, ~~"Segments~~“Segments and Related Information,~~" to our Unaudited Condensed Consolidated Financial Statements presents depreciation and amortization expense by segment.~~

~~Other Operating Income, Net.~~ In the third quarter of 2023, other operating income, net included gains on disposals of assets totaling $2.8 million, partially offset by charges of $1.6 million recognized in connection with our ongoing consolidation of certain manufacturing and service locations within our Offshore/Manufactured Products segment. Net other operating income for the third quarter of 2022 included a gain of $6.1 million recognized in connection with the settlement of outstanding

~~Table of Contents~~

~~litigation against certain service providers within our Offshore/Manufactured Products segment and $0.4 million in gains on disposals of assets.~~

~~Operating Income, Net.~~ Our consolidated operating income was $6.2 million in the third quarter of 2023, which included the $1.6 million in facility consolidation charges reported within other operating income, net as discussed above. This compares to third quarter 2022 consolidated operating income of $5.1 million, which included the $6.1 million gain reported within other operating income, net, as discussed above.

~~Interest Expense, Net.~~ Net interest expense totaled $1.9 million in the third quarter of 2023, which compares to $2.6 million in the same period of 2022. Interest expense as a percentage of total debt outstanding was approximately 7% in the third quarter of 2023, compared to 6% in the third quarter of 2022.

~~Income Tax.~~ Income tax expense for the three months ended September 30, 2023 was calculated using a discrete approach. This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the three months ended September 30, 2023, our income tax provision was $0.2 million on pre-tax income of $4.4 million, which included certain non-deductible expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets. This compares to an income tax provision of $0.8 million on a pre-tax income of $2.9 million for the three months ended September 30, 2022.

~~Other ComprehensiveLoss.~~ Reported comprehensive loss is the sum of reported net income and other comprehensive loss. Other comprehensive loss was $5.7 million in the third quarter of 2023 compared to comprehensive loss of $11.9 million in the third quarter of 2022 due to fluctuations in currency exchange rates compared to the U.S. dollar which are used to translate certain of the international operations of our operating segments. For the three months ended September 30, 2023 and 2022, currency translation adjustments recognized as a component of other comprehensive loss were primarily attributable to the United Kingdom and Brazil. During the third quarter of both 2023 and 2022, the exchange rates for both the British pound and the Brazilian real weakened compared to the U.S. dollar.

~~Segment Operating Results~~

~~Offshore/Manufactured Products~~

~~Revenues.~~ Our Offshore/Manufactured Products segment revenues increased $15.0 million, or 16%, in the third quarter of 2023 compared to the third quarter of 2022 due primarily to the timing of conversion of production facility products from backlog into revenue as well as higher service and short-cycle product sales.

~~Operating Income.~~ Our Offshore/Manufactured Products segment reported operating income of $17.8 million in the third quarter of 2023, which included the $1.6 million in facility consolidation charges, compared to operating income in the third quarter of 2022 of $13.4 million, which included a $6.1 million gain recognized in connection with the settlement of outstanding litigation. Excluding the charges and prior-year gain, operating income increased $12.2 million year-over-year driven primarily by the reported revenue growth and a favorable shift in product sales mix.

~~Backlog.~~ ~~Backlog in our Offshore/Manufactured Products segment totaled $348 million as of September 30, 2023, with third quarter 2023 bookings of $129 million and a quarterly book-to-bill ratio of 1.2x.~~

~~Well Site Services~~

~~Revenues.~~ Our Well Site Services segment revenues decreased $0.7 million, or 1%, in the third quarter of 2023 compared to the prior-year period, driven primarily by lower U.S. customer activity levels and competitive market conditions.

~~Operating Income.~~ Our Well Site Services segment reported operating income of $3.3 million in the third quarter of 2023, compared to operating income of $2.4 million in the third quarter of 2022. The segment's operating results improved $0.9 million from the prior-year period, due primarily to a favorable shift in service mix and a $0.4 million decrease in depreciation and amortization expense, partially offset by increased labor, material and other costs.

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~~Downhole Technologies~~

~~Revenues.~~ Our Downhole Technologies segment revenues decreased $9.4 million, or 29%, in the third quarter of 2023 from the prior-year period, driven primarily by lower U.S. customer activity levels and competitive market conditions.

~~Operating Loss.~~ Our Downhole Technologies segment reported an operating loss of $4.1 million in the third quarter of 2023, which compared to an operating loss of $0.3 million in the prior-year period. Operating loss increased $3.8 million year-over-year due primarily to the decline in reported revenue, lower manufacturing volumes and higher labor, material and other costs.

~~Corporate~~

~~Operating Loss.~~ ~~Corporate expenses increased $0.4 million, or 4%, in the third quarter of 2023 from the prior-year period.~~

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~~Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022~~

We reported net income for the nine months ended September 30, 2023 of $6.9 million, or $0.11 per share, which included facility consolidation charges of $1.6 million ($1.3 million after-tax, or $0.02 per share). These results compare to a net loss for the nine months ended September 30, 2022 of $12.4 million, or $0.20 per share, which included a gain of $6.1 million ($4.6 million after-tax, or $0.07 per share) recognized in connection with the settlement of a litigation matter.

Increased capital investments by our customers, together with our internal cost control and strict capital discipline measures and other corporate actions, resulted in significant improvements to our consolidated results in 2023. The favorable impact of continued growth in international offshore-project activity and associated backlog conversion was partially offset by the impact of an industry-wide decline in U.S. well completions – which has been ongoing since the start of 2023.

~~Revenues.~~ ~~Consolidated total revenues in the first nine months of 2023 increased $38.7 million, or 7%, from the first nine months of 2022.~~

Consolidated product revenues in the first nine months of 2023 increased $10.6 million, or 4%, from the first nine months of 2022, driven primarily by higher customer demand for short-cycle products. Consolidated service revenues in the first nine months of 2023 increased $28.2 million, or 11%, from the first nine months of 2022 due primarily to increased customer spending in the U.S. shale play regions in the first half of 2023.

~~The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the nine months ended September 30, 2023 and 2022 (in thousands):~~

Offshore/ Manufactured Products Well Site Services Downhole Technologies Total
Nine Months Ended September 30 2023 2022 2023 2022 2023 2022 2023 2022
Project-driven:
Products $ 116,869 $ 113,853 $ — $ — $ — $ — $ 116,869 $ 113,853
Services 79,867 71,714 — — — — 79,867 71,714
Total project-driven 196,736 185,567 — — — — 196,736 185,567
Military and other products 22,157 23,104 — — — — 22,157 23,104
Short-cycle:
Products 84,435 67,945 — — 71,645 79,635 156,080 147,580
Services — — 191,425 163,500 7,619 15,521 199,044 179,021
Total short-cycle 84,435 67,945 191,425 163,500 79,264 95,156 355,124 326,601
$ 303,328 $ 276,616 $ 191,425 $ 163,500 $ 79,264 $ 95,156 $ 574,017 $ 535,272

Percentage of total revenue by type -
Products 74 % 74 % — % — % 90 % 84 % 51 % 53 %
Services 26 % 26 % 100 % 100 % 10 % 16 % 49 % 47 %

~~Cost of Revenues (exclusive of Depreciation and Amortization Expense).~~ Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) increased $23.1 million, or 6%, in the first nine months of 2023 compared to the first nine months of 2022.

Consolidated product costs in the first nine months of 2023 increased $5.8 million, or 3%, compared to the first nine months of 2022 due primarily to the reported revenue growth as well as higher material, transportation, labor and other costs. Consolidated service costs in the first nine months of 2023 increased $17.4 million, or 9%, compared to the first nine months of 2022, due primarily to the impact of higher revenue levels and increased labor and other costs.

~~Selling, General and Administrative Expense.~~ ~~Selling, general and administrative expense in the first nine months of 2023 increased $0.8 million, or 1%, from the first nine months of 2022.~~

~~Depreciation and Amortization Expense.~~ Depreciation and amortization expense decreased $5.3 million, or 10%, in the first nine months of 2023 compared to the prior-year period, reflective of certain intangible assets reaching the end of their economic life in 2022 and reduced capital investments made in our Well Site Services segment in recent years. Note 10, "Segments and Related Information,"” to our Unaudited Condensed Consolidated Financial Statements presents depreciation and amortization expense by segment.

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Impairment of Goodwill. During the first three months of 2024, our Downhole Technologies operations recognized a non-cash impairment charge of $10.0 million related to goodwill transferred to the business in connection with segment realignment discussed above. See Note 2, “Goodwill Impairment and Other Charges,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Other Operating ~~Income,~~(Income) Expense, Net. In the first ~~nine~~three months of ~~2023,~~2024, other operating income, net included, among other items, gains on disposals of ~~assets~~equipment totaling ~~$3.3~~$1.2 million ~~partially offset by~~and charges of ~~$1.6~~$2.1 million recognized in connection with our ongoing consolidation and exit of certain manufacturing and service locations within our ~~Offshore/~~Offshore Manufactured Products segment. Net other operating income for the first nine months of 2022 included a gain of $6.1 million recognized in connection with the settlement of outstanding litigation against certain service providers within our Offshore/Manufactured Products segment and ~~$1.5 million in gains on disposals of assets.~~Well Site Services segments.

Operating Income (Loss). Our consolidated operating ~~income~~loss was ~~$15.3~~$11.2 million in the first ~~nine~~three months of ~~2023,~~2024, which included ~~the $1.6~~a $10.0 million non-cash goodwill impairment charge and $2.5 million in facility consolidation ~~charges reported within~~and other ~~operating income, net.~~charges. This compares to a consolidated operating ~~loss~~income of ~~$0.4~~$5.9 million ~~which included the $6.1 million gain reported within other operating income, net, recognized~~ in the first ~~nine~~three months of ~~2022.~~2023. Excluding the 2024 charges, operating income decreased $4.5 million year-over-year.

Interest Expense, Net. Net interest expense totaled ~~$6.4~~$2.1 million in the first ~~nine~~three months of ~~2023,~~2024, which compares to ~~$7.9~~$2.4 million in the first ~~nine~~three months of ~~2022.~~2023. Interest expense as a percentage of total debt outstanding was approximately 7% in the first ~~nine~~three months of ~~2023,~~2024, compared to 6%7% in the first ~~nine~~three months of ~~2022.~~2023.

Income Tax. Income tax expense for the first ~~nine~~three months of 2024 and 2023 was calculated using a discrete approach. This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the first ~~nine~~three months of ~~2023,~~2024, our income tax provision was ~~$2.7 million~~$24 thousand on a pre-tax ~~income~~loss of ~~$9.6~~$13.4 million, which included ~~certain~~a $10.0 million goodwill impairment charge and other non-deductible ~~expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets.~~expenses. This compares to an income tax provision of ~~$6.0~~$1.6 million on a pre-tax ~~loss~~income of ~~$6.4~~$3.8 million for the first ~~nine~~three months of ~~2022,~~2023, which ~~was negatively impacted by valuation allowances recorded against deferred tax assets as well as~~included certain non-deductible expenses and discrete tax items.

Other Comprehensive Income (Loss). Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income (loss). Other comprehensive ~~income~~loss was ~~$1.7~~$3.0 million in the first ~~nine~~three months of ~~2023~~2024 compared to comprehensive ~~loss~~income of ~~$23.8~~$4.1 million in the first ~~nine~~three months of ~~2022~~2023 due to fluctuations in foreign currency exchange rates compared to the U.S. dollar for certain of the international operations of our operating segments. For the first ~~nine~~three months of ~~2023~~2024 and ~~2022,~~2023, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil. During the first ~~nine~~three months of 2024, the exchange rates for the British pound and the Brazilian real weakened compared to the U.S. dollar. In the first three months of 2023, the exchange ~~rates~~rate for the British pound and the Brazilian real strengthened compared to the U.S. dollar. ~~During the first nine months of 2022, the exchange rate for the British pound weakened compared to the U.S. dollar, while the Brazilian real strengthened compared to the U.S. dollar.~~

Segment Operating Results

~~Offshore/~~Offshore Manufactured Products

Revenues. Our ~~Offshore/~~Offshore Manufactured Products segment revenues increased ~~$26.7~~$6.4 million, or ~~10%~~8%, in the first ~~nine~~three months of ~~2023~~2024 compared to the first ~~nine~~three months of ~~2022~~2023 due primarily to increased demand for ~~short-cycle products~~international and offshore-project driven products and services.

Operating Income. Our ~~Offshore/~~Offshore Manufactured Products segment reported operating income of ~~$40.1~~$10.6 million in the first ~~nine~~three months of ~~2023,~~2024, which included the ~~$1.6~~$1.5 million in facility consolidation ~~charges.~~charges discussed above. This compares to operating income of ~~$33.0~~$7.7 million ~~which included a $6.1 million gain recognized in connection with the settlement of outstanding litigation,~~ in the first ~~nine~~three months of ~~2022.~~2023. Excluding the facility consolidation charges, ~~and prior-year gain,~~ operating income increased ~~$14.9~~$4.4 million ~~year-over-year due primarily to the segment's reported revenue growth and lower bad debt expense, partially offset by the impact of higher material, transportation, labor and other costs.~~year-over-year.

Backlog. Backlog in our ~~Offshore/~~Offshore Manufactured Products segment totaled ~~$348~~$305 million as of ~~September 30, 2023~~March 31, 2024 compared to ~~$308~~$327 million as of December 31, ~~2022.~~2023. Bookings during the first ~~nine~~three months of ~~2023~~2024 totaled ~~$353~~$66 million, yielding a ~~year-to-date~~quarterly book-to-bill ratio of ~~1.2x.~~0.8x.

Well Site Services

Revenues. Our Well Site Services segment revenues ~~increased $27.9~~decreased $19.8 million, or ~~17%~~29%, in the first ~~nine~~three months of ~~2023~~2024 compared to the first ~~nine~~three months of ~~2022,~~2023, driven primarily by ~~higher~~lower U.S. customer activity levels ~~during the first half of 2023.~~(particularly in natural gas basins) and competitive market conditions.

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Operating ~~Income (Loss).~~Income. Our Well Site Services segment reported ~~operating income of $15.0 million in the first nine months of 2023, compared to~~ an operating loss of $0.4 million in the first ~~nine~~three months of ~~2022. The segment's~~2024, which included costs totaling $1.0 million associated with the exit of three facilities and the defense of patents. This compares to operating income of $7.0 million in the first three months of 2023. Excluding the costs discussed above, the Well Site Services segment’s operating results ~~improved $15.4~~declined $6.3 million from the prior-year period, due to the reported ~~revenue growth and a $3.0 million~~ decrease in ~~depreciation and amortization expense, partially offset by increased labor, material and other costs.~~revenue.

Downhole Technologies

Revenues. Our Downhole Technologies segment revenues decreased ~~$15.9~~$15.5 million, or ~~17%~~32%, in the first ~~nine~~three months of ~~2023~~2024 from the first ~~nine~~three months of ~~2022~~2023 due primarily to lower U.S. customer demand for perforating and completion products.

Operating Loss. Our Downhole Technologies segment reported an operating loss of ~~$8.2~~$12.1 million in the first ~~nine~~three months of ~~2023, compared~~2024, which included the $10.0 million non-cash goodwill impairment charge related to anthe first quarter of 2024 segment realignment. This compares to operating ~~loss~~income of ~~$3.3~~$1.9 million reported in the first ~~nine~~three months of ~~2022. This year-over-year increase in~~2023. Excluding the goodwill impairment charge, the Downhole Technologies operating ~~loss is~~results declined $4.0 million from the prior-year period, due primarily to the reported decrease in ~~the segment's~~ revenue ~~as well as increased labor, material~~ and ~~other costs.~~lower manufacturing volumes.

Corporate

Operating Loss. Corporate expenses in the first ~~nine~~three months of ~~2023 increased $2.0~~2024 decreased $1.4 million, or 7%13%, from the first ~~nine~~three months of ~~2022,~~2023, due primarily to ~~higher personnel~~lower short- and ~~marketing costs.~~long-term incentive expenses.

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Liquidity, Capital Resources and Other Matters

Our primary liquidity needs are to fund operating and capital expenditures, new product development and general working capital needs. In addition, capital has been used to fund strategic business acquisitions, repay debt and fund share repurchases. Our primary sources of funds are cash flow from operations, proceeds from borrowings under our credit facilities and, less frequently, capital markets transactions.

Operating Activities

Cash flows ~~from~~used in operations totaled ~~$52.4~~$11.4 million during the first ~~nine~~three months of ~~2023,~~2024, compared to ~~$19.0~~$5.9 million ~~provided by~~used in operations during the first ~~nine~~three months of ~~2022.~~2023.

During the first ~~nine~~three months of 2023, $3.2 million was used to fund net working capital increases, with an activity-driven increase in inventories and the payment of accrued 2022 short-and long-term cash incentives in the first quarter of 2023 substantially offset by the favorable impact of a decrease in accounts receivable and an increase in deferred revenues. During the first nine months of 2022, $27.52024, $21.8 million was used to fund net working capital increases, primarily due to ~~increases~~the payment of accrued 2023 short- and long-term cash incentives and a decrease in accounts ~~receivable~~payable. During 2023, $25.6 million was used to fund net working capital increases, primarily due to the payment of accrued 2022 short- and ~~inventories driven by higher activity levels.~~long-term cash incentives and an activity-driven increase in inventories.

Investing Activities

Net cash used in investing activities during the first ~~nine~~three months of ~~2023~~2024 totaled ~~$19.1~~$7.8 million, compared to ~~$19.3~~$6.4 million used in investing activities during the first ~~nine~~three months of ~~2022.~~2023.

Capital expenditures totaled ~~$23.4~~$10.1 million and ~~$13.3~~$6.6 million during the first ~~nine~~three months of ~~2023~~2024 and ~~2022,~~2023, respectively. These investments were partially offset by proceeds from the sale of ~~property and~~ equipment of ~~$4.4~~$2.3 million and ~~$2.2~~$0.2 million during the first ~~nine~~three months of 2024 and 2023, ~~and 2022,~~ respectively.

In the second quarter of 2022, we acquired E-Flow Control Holdings Limited, a global provider of fully integrated handling, control, monitoring and instrumentation solutions. The purchase price of $8.1 million (net of cash acquired) was funded with cash on-hand.

Within our ~~Offshore/~~Offshore Manufactured Products segment, we completed the consolidation of certain facilities in Houston, Texas during ~~the third quarter of~~ 2023 and are in the process of strategically relocating our Asian manufacturing and service operations from Singapore to Batam, Indonesia. With these consolidations, two facilities are classified as held-for-sale assets within prepaid expenses and other current assets ~~at September 30, 2023.~~as of March 31, 2024.

~~With our~~Including the planned ~~purchase~~construction of ~~land and the start of construction on~~ a new facility in Batam, ~~in the fourth quarter of 2023,~~ we ~~currently~~ expect to invest approximately ~~$35~~$40 million in capital expenditures during ~~2023.~~2024. In ~~late 2023 or early~~ 2024, we also expect to sell the two held-for-sale facilities (in Singapore and Houston), with ~~expected~~ proceeds ~~ranging between~~totaling approximately $35 ~~million and $40~~ million. We plan to fund our capital expenditures with available cash, internally generated funds and, if necessary, borrowings under our ABL Facility discussed below.

Financing Activities

During the first ~~nine~~three months of ~~2023,~~2024, net cash of ~~$22.7~~$3.7 million was used in financing ~~activities, which included the repayment of the $17.3 million principal amount of our outstanding 2023 Notes and the repurchases of $3.0 million of the Company's common stock.~~activities. This compares to ~~$17.9~~$14.4 million of cash used in financing activities during the first ~~nine~~three months of ~~2022,~~2023, which included ~~a cash payment~~the repayment of ~~$10.0 million related to the settlement of a promissory note to the seller of GEODynamics, Inc. (discussed below) and the purchase of $6.5~~$17.3 million principal amount of our outstanding 2023 ~~Notes (as defined below).~~

On June 28, 2022, we entered into a settlement agreement with the seller of GEODynamics, Inc. (acquired in 2018), which provided for the full and final settlement of all amounts due under a promissory note to the seller of GEODynamics, Inc. Pursuant to the settlement agreement, on July 1, 2022, we paid the seller $10.0 million in cash and issued approximately 1.9 million shares of our common stock.Notes.

As of ~~September 30, 2023,~~March 31, 2024, we had cash and cash equivalents totaling ~~$52.9~~$24.1 million, which compared to ~~$42.0~~$47.1 million as of December 31, ~~2022.~~2023.

As of ~~September 30, 2023,~~March 31, 2024, we had no borrowings outstanding under our ABL Facility, $135.0 million principal amount of our 2026 Notes (as defined below) outstanding and other debt of ~~$3.2~~$2.9 million. Our reported interest expense included

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amortization of deferred financing costs of ~~$1.3~~$0.5 million during the first ~~nine~~three months of ~~2023.~~2024. For the first ~~nine~~three months of ~~2023,~~2024, our contractual cash interest expense was ~~$5.8~~$1.9 million, or approximately 6% of the average principal balance of debt outstanding.

We believe that cash on-hand, cash flow from operations and borrowing capacity available under our ABL Facility will be sufficient to meet our liquidity needs in the coming twelve months. If our plans or assumptions change, or are inaccurate, we may need to raise additional capital. Our ability to obtain capital for additional projects to implement our growth strategy over the longer term will depend upon our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global banking and financial markets, stakeholder scrutiny of ESG matters and other factors, many of which are beyond our control. In this regard, the effect of ~~the four~~multiple U.S. bank failures ~~which occurred~~ in ~~March, May and July~~ 2023 resulted in significant disruptions to global banking and financial markets. For companies like ours that support the energy industry, these disruptions negatively impacted the value of our common stock and may reduce our ability to access capital in the bank and capital markets or result in such capital being available on less favorable terms, which could in the future negatively affect our liquidity.

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On March ~~21, 2022,~~6, 2024, the SEC ~~proposed new~~finalized rules relating to the disclosure of a range of climate-related information ~~and risks. A final rule is expected~~(the “Rules”). The Rules were temporarily stayed by the SEC on April 4, 2024 pending judicial review. While subject to ~~be released~~ongoing litigation, these new disclosure requirements are currently effective for us beginning with the year ending December 31, 2026, phased in ~~the fourth quarter of 2023, but we cannot predict the final form and substance of the rule and its requirements at this time.~~over a five-year period. The ultimate impact on our business is uncertain ~~and, upon finalization,~~but we and our customers may incur increased compliance costs related to the assessment and disclosure of climate-related risks. We may also face increased litigation risks related to disclosures made pursuant to the rule if finalized as proposed. In addition, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders in restricting access to capital or seeking more stringent conditions with respect to their investments in us, our customers and other companies like ours that support the energy industry. For more information on our risks related to climate change, see the risk factors in ~~"Part~~“Part I, Item 1A. Risk ~~Factors"~~Factors” included in our 2023 Annual Report on Form 10-K ~~for the year ended December 31, 2022~~ titled, ~~"Our~~“Our and our ~~customers'~~customers’ operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, and reduce demand for the products and services we ~~provide"~~provide,” “The Inflation Reduction Act of 2022 could accelerate the transition to a low carbon economy and ~~"Increasing~~could impose new costs on our customers’ operations” and “Increasing attention to ESG matters may impact our business."”

Stock Repurchase Program. On February 16, 2023, the Board ~~of Directors~~ authorized $25.0 million for the repurchases of our common stock, par value $0.01 per share, through February 2025. Subject to applicable securities laws, such purchases will be at such times and in such amounts as we deem appropriate. AsDuring the three months ended March 31, 2024, there were no repurchases of ~~September 30, 2023, $3.0 million~~common stock under the program. The amount remaining under our share repurchase authorization as of ~~share repurchases have been made under this authorization.~~March 31, 2024 was $18.1 million.

Revolving Credit Facility. ~~On February 10, 2021, we entered into a~~Our senior secured credit facility ~~with certain lenders, which~~ provides for a $125.0 million asset-based revolving credit facility ~~(the "ABL Facility"~~(as amended, the “ABL Facility”) under which credit availability is subject to a borrowing base calculation. On February 16, 2024, we amended the ABL Facility to extend the maturity date to February 16, 2028.

The ABL Facility is governed by a credit agreement, as amended, with Wells Fargo Bank, National Association, as administrative agent and the lenders and other financial institutions from time to time party thereto ~~(the "ABL Agreement"~~(as amended, the “ABL Agreement”). The ABL Agreement, as amended, matures on February ~~10, 2025~~16, 2028 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $17.5 million.

As of ~~September 30, 2023,~~March 31, 2024, we had ~~$16.4~~$15.9 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement. The total amount available to be drawn as of ~~September 30, 2023~~March 31, 2024 was ~~$84.5~~$86.3 million, calculated based on the then-current borrowing base less outstanding letters of credit.

2026 Notes. We issued $135.0 million aggregate principal amount of 4.75% convertible senior notes due 2026 (the ~~"2026 Notes"~~“2026 Notes”) pursuant to an indenture, dated as of March 19, 2021 (the ~~"2026 Indenture"~~“2026 Indenture”), between us and Computershare Trust Company, National Association, as successor trustee. The 2026 Notes will mature on April 1, 2026, unless earlier repurchased, redeemed or converted.

The 2026 Indenture contains certain events of default, including certain defaults by us with respect to other indebtedness of at least $40.0 million.

See Note 4, ~~"Long-term~~“Long-term Debt,"” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding the 2026 Notes. As of ~~September 30, 2023,~~March 31, 2024, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

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2023 Notes. On February 15, 2023, our ~~1.50% convertible senior notes due~~ 2023 ~~(the "2023 Notes")~~Notes matured and the outstanding $17.3 million in principal amount was repaid in full.

Our total debt represented 16% ~~and 18%~~ of our combined total debt and ~~stockholders'~~stockholders’ equity as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, respectively.~~2023.

Contingencies and Other Obligations. We are a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters.

See Note 11, ~~"Commitments~~“Commitments and Contingencies,"” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Off-Balance Sheet Arrangements. As of ~~September 30, 2023,~~March 31, 2024, we had no off-balance sheet arrangements.

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Critical Accounting Policies

For a discussion of the critical accounting policies and estimates that we use in the preparation of our condensed consolidated financial statements, see ~~"Part~~“Part II Item 7. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. These estimates require significant judgments, assumptions and estimates. We have discussed the development, selection, and disclosure of these critical accounting policies and estimates with the audit committee of our Board of Directors. There have been no material changes to the judgments, assumptions and estimates upon which our critical accounting estimates are based.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, which are adopted by us as of the specified effective date. Management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our consolidated financial statements upon adoption.

~~Item~~ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk refers to the potential losses arising from changes in interest rates, foreign currency exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility.

Our principal market risks are our exposure to changes in interest rates and foreign currency exchange rates. We enter into derivative instruments only to the extent considered necessary to meet risk management objectives and do not use derivative contracts for speculative purposes.

Interest Rate Risk. We have a revolving credit facility that is subject to the risk of higher interest charges associated with increases in interest rates. As of ~~September 30, 2023,~~March 31, 2024, we had no floating-rate obligations outstanding under our ABL Facility. The use of floating-rate obligations would expose us to the risk of increased interest expense in the event of increases in short-term interest rates.

Foreign Currency Exchange Rate Risk. Our operations are conducted in various countries around the world and we receive revenue from these operations in a number of different currencies. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in (i) currencies other than the U.S. dollar, which is our functional currency, or (ii) the functional currency of our subsidiaries, which is not necessarily the U.S. dollar. In order to mitigate the effects of foreign currency exchange rate risks in areas outside of the United States (primarily in our ~~Offshore/~~Offshore Manufactured Products segment), we generally pay a portion of our expenses in local currencies and a substantial portion of our contracts provide for collections from customers in U.S. dollars. During the first ~~nine~~three months of ~~2023,~~2024, our reported foreign currency exchange ~~losses~~gains were $0.2 million and are included in ~~"Other~~“other operating ~~income, net"~~(income) expense, net” in the consolidated statements of operations.

Accumulated other comprehensive loss, reported as a component of ~~stockholders'~~stockholders’ equity, primarily relates to fluctuations in currency exchange rates against the U.S. dollar as used to translate certain of the international operations of our operating segments. Our accumulated other comprehensive loss ~~decreased $1.7~~increased $3.0 million from ~~$78.9~~$70.0 million as of December 31, ~~2022~~2023 to ~~$77.3~~$73.0 million as of ~~September 30, 2023,~~March 31, 2024, due to changes in currency exchange rates. During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the exchange rates for the British pound and the Brazilian real ~~strengthened~~weakened by 1% and 4%3%, respectively, compared to the U.S. dollar.

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ITEM 4. Controls and Procedures

(i) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) of the Exchange Act. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2023~~March 31, 2024 at the reasonable assurance level.

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(ii) Changes in Internal Control Over Financial Reporting

During the three months ended September 30, 2023, certain processes and controls were modified in connection with our Downhole Technologies segment migration to an enterprise resource planning system used by our Offshore/Manufactured Products segment. We do not believe that such modifications materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no ~~other~~ changes in the ~~Company's~~Company’s internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended ~~September 30, 2023,~~March 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

The information with respect to this Item 1 is set forth under Note 11, ~~"Commitments~~“Commitments and Contingencies."”

ITEM 1A. Risk Factors

"“Part I, Item 1A. Risk ~~Factors"~~Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 includes a detailed discussion of our risk factors. The risks described in such report are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may materially adversely affect our business, financial conditions or future results. ~~Except as described below, there~~There have been no material changes to our risk factors as set forth in our ~~2022~~2023 Annual Report on Form 10-K.

Adverse developments affecting the financial services industry, such as events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect the Company's current and projected business operations and its financial condition and results of operations.

Events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about such events or other similar risks, have in the past and may in the future lead to acute or market-wide liquidity problems. In addition, if any of the Company's customers, suppliers or other business counterparties are unable to access funds held by such a financial institution, such parties' ability to pay their obligations to the Company or to enter into new commercial arrangements requiring additional payments to the Company could be adversely affected.

Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the U.S. Department of Treasury, Federal Deposit Insurance Corporation ("FDIC") and Federal Reserve Board have announced a program to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other needs of financial institutions for immediate liquidity may exceed the capacity of such program. Additionally, the Company maintains cash balances at third-party financial institutions in excess of FDIC standard insurance limits, and there is no guarantee that the U.S. Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of such banks or financial institutions, or that they would do so in a timely fashion.

Access to funding sources and other credit arrangements in amounts adequate to finance the Company's business operations could be significantly impaired by the foregoing factors that affect the Company, any financial institutions with which the Company enters into credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.

The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on the Company's current and projected business operations and the Company's financial condition and results of operations. These risks include, but may not be limited to, the following:

•~~delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets;~~

•~~inability to enter into credit facilities or other working capital resources;~~

•~~potential or actual breach of contractual obligations that require the Company to maintain letters of credit or other credit support arrangements; or~~

•~~termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.~~

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for the Company to acquire financing on acceptable terms or at all. Any decline in available funding or access to cash and liquidity resources could, among other risks, adversely impact the Company's ability to meet operating expenses or other obligations, financial or otherwise, result in breaches of the Company's financial and/or contractual obligations, or result in violations of federal or state wage and hour laws. In addition, any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by the Company's customers, vendors or suppliers. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors, could have material adverse impacts on the Company's liquidity and its current and/or projected business operations and financial condition and results of operations.

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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) None.

(c)

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

~~Period~~

~~Total Number of Shares Purchased(1)~~

~~Average Price Paid per Share(1)~~

~~Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs~~

~~Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans orPrograms(2)~~

~~July 1 through July 31, 2023~~

—

~~21,998,595~~

~~August 1 through August 31, 2023~~

—

~~21,998,595~~

~~September 1 through September 30, 2023~~

—

~~21,998,595~~

~~Total~~

—


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(2)
January 1 through January 31, 2024	188,635	$	6.59	—	$	18,133,096
February 1 through February 29, 2024	218,942	6.10		—	18,133,096
March 1 through March 31, 2024	—	—		—	18,133,096
Total	407,577	$	6.33	—

________________

(1)NoAll shares ~~were~~ purchased during the three-month period ended ~~September 30, 2023.~~March 31, 2024 were acquired from employees in connection with the settlement of income tax and related benefit withholding obligations arising from vesting of stock awards. These shares were not part of a publicly announced program to purchase common stock.

(2)OnIn February ~~16,~~ 2023, ~~the Company's~~our Board of Directors authorized $25.0 million for the repurchases of ~~the Company's~~our common stock, par value $0.01 per share, through February 2025. As of ~~September 30, 2023, $3.0~~March 31, 2024, $6.9 million of share repurchases have been made under this authorization.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

During the three months ended ~~September 30, 2023,~~March 31, 2024, no director or executive officer adopted or terminated a ~~"Rule~~“Rule 10b5-1 trading ~~arrangement"~~arrangement” or ~~"non-Rule~~“non-Rule 10b5-1 trading ~~arrangement"~~arrangement” (as each is defined in Item 408 of Regulation S-K) related to securities of our company.

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ITEM 6. Exhibits


Exhibit No.		Description

3.1	—	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the ~~Company's~~Company’s Quarterly Report on Form 10-Q, as filed with the SEC on July 27, 2023 (File No. 001-16337)).

3.2	—	Fifth Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the ~~Company's~~Company’s Annual Report on Form 10-K, as filed with the SEC on February 17, 2023 (File No. 001-16337)).

3.3	—	Certificate of Designations of Special Preferred Voting Stock of Oil States International, Inc. (incorporated by reference to Exhibit 3.3 to the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended December 31, 2000, as filed with the SEC on March 30, 2001 (File No. 001-16337)).

10.1*+	—	Form of Performance Award Agreement under the Registrant's Amended and Restated Equity Participation Plan.

31.1*	—	Certification of Chief Executive Officer of Oil States International, Inc. pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2*	—	Certification of Chief Financial Officer of Oil States International, Inc. pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

32.1**	—	Certification of Chief Executive Officer of Oil States International, Inc. pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934, as amended.

32.2**	—	Certification of Chief Financial Officer of Oil States International, Inc. pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934, as amended.

101.INS*	—	XBRL Instance Document

101.SCH*	—	XBRL Taxonomy Extension Schema Document

101.CAL*	—	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	—	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	—	XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	—	XBRL Taxonomy Extension Presentation Linkbase Document

104	—	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

---------


*			Filed herewith.
**			Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

OIL STATES INTERNATIONAL, INC.

Date:

~~October 27, 2023~~April 26, 2024

By:

/s/ LLOYD A. HAJDIK

Lloyd A. Hajdik

Executive Vice President, Chief Financial Officer and

Treasurer (Duly Authorized Officer and Principal Financial Officer)

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Three Months Ended September 30, 2023	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
Balance, June 30, 2023	$	772	$	1,125,647	$	274,743	$	(71,522)	$	(631,535)	$	698,105
Net income	—		—		4,212		—		—		4,212
Currency translation adjustments (excluding intercompany advances)	—		—		—		(4,429)		—		(4,429)
Currency translation adjustments on intercompany advances	—		—		—		(1,320)		—		(1,320)
Stock-based compensation expense	—		1,796		—		—		—		1,796
Stock repurchases	—		—		—		—		—		—
Surrender of stock to settle taxes on stock awards	—		—		—		—		—		—
Balance, September 30, 2023	$	772	$	1,127,443	$	278,955	$	(77,271)	$	(631,535)	$	698,364


Three Months Ended September 30, 2022	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
Balance, June 30, 2022	$	747	$	1,108,631	$	266,999	$	(77,850)	$	(626,586)	$	671,941
Net income	—		—		2,143		—		—		2,143
Currency translation adjustments (excluding intercompany advances)	—		—		—		(10,363)		—		(10,363)
Currency translation adjustments on intercompany advances	—		—		—		(1,576)		—		(1,576)
Issuance of common stock in connection with settlement of disputes with seller of GEODynamics, Inc.	19		10,313		—		—		—		10,332
Stock-based compensation expense	—		1,663		—		—		—		1,663
Surrender of stock to settle taxes on stock awards	—		—		—		—		—		—
Balance, September 30, 2022	$	766	$	1,120,607	$	269,142	$	(89,789)	$	(626,586)	$	674,140


Nine Months Ended September 30, 2022	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
Balance, December 31, 2021	$	739	$	1,105,135	$	281,567	$	(66,031)	$	(625,584)	$	695,826
Net loss	—		—		(12,425)		—		—		(12,425)
Currency translation adjustments (excluding intercompany advances)	—		—		—		(23,571)		—		(23,571)
Currency translation adjustments on intercompany advances	—		—		—		(187)		—		(187)
Issuance of common stock in connection with settlement of disputes with seller of GEODynamics, Inc.	19		10,313		—		—		—		10,332
Stock-based compensation expense	8		5,159		—		—		—		5,167
Surrender of stock to settle taxes on stock awards	—		—		—		—		(1,002)		(1,002)
Balance, September 30, 2022	$	766	$	1,120,607	$	269,142	$	(89,789)	$	(626,586)	$	674,140


	September 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Other intangible assets:
Customer relationships	$	141,215	$	54,268	$	86,947	$	141,179	$	47,629	$	93,550
Patents/Technology/Know-how	69,971		33,188		36,783		69,830		29,214		40,616
Tradenames and other	52,492		19,145		33,347		52,488		16,856		35,632
	$	263,678	$	106,601	$	157,077	$	263,497	$	93,699	$	169,798


	Offshore/ Manufactured Products				Well Site Services				Downhole Technologies				Total
Three Months Ended September 30	2023		2022		2023		2022		2023		2022		2023		2022
Project-driven:
Products	$	45,527	$	38,911	$	—	$	—	$	—	$	—	$	45,527	$	38,911
Services	30,391		23,421		—		—		—		—		30,391		23,421
Total project-driven	75,918		62,332		—		—		—		—		75,918		62,332
Military and other products	7,195		9,995		—		—		—		—		7,195		9,995
Short-cycle:
Products	27,930		23,710		—		—		21,984		27,127		49,914		50,837
Services	—		—		59,831		60,509		1,431		5,721		61,262		66,230
Total short-cycle	27,930		23,710		59,831		60,509		23,415		32,848		111,176		117,067
	$	111,043	$	96,037	$	59,831	$	60,509	$	23,415	$	32,848	$	194,289	$	189,394