Oil States International, Inc. (OIS) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several challenges: market uncertainty, delayed projects, Middle East conflict, and increased costs impacting revenue and profitability. Despite some positive backlog growth and offshore market activity, the softness in U.S. land markets and asset impairments weigh heavily. The Q&A highlights potential U.S. land activity increase, but overall sentiment remains cautious. The strategic plan outlines growth, but current financials show declines. Given these factors, the sentiment is negative, with expected stock price movement between -2% to -8%.
Key Financial Performance
Revenue $145 million, a sequential decline due to seasonal factors, timing of revenue recognition for percentage of completion projects, Middle East-related delays, and softness in U.S. land markets.
Adjusted EBITDA $17 million, a sequential decline attributed to the same factors affecting revenue.
Net Income $1 million, or $0.02 per share, including facility exit charges, asset impairments, and valuation allowances. Adjusted net income was $5 million, or $0.09 per share.
Offshore Manufactured Products Segment Revenue $91 million, with adjusted segment EBITDA of $19 million and a margin of 20%. Backlog increased by $73 million (20%) year-over-year to $430 million.
Completion and Production Services Segment Revenue $21 million, with adjusted segment EBITDA of $6 million and a margin of 29%.
Downhole Technologies Segment Revenue $32 million, with adjusted segment EBITDA of $1 million. Growth initiatives delayed due to Middle East conflict.
Cash on Hand $59 million as of March 31, 2026.
Backlog $430 million, a 20% increase year-over-year, supported by $84 million in bookings and a book-to-bill ratio of 0.9x.
Working Capital Investment $13 million, primarily for inventory purchases to support future backlog execution.
Net Capital Expenditures $3 million in the quarter.
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Operating Highlights
GeoLok geothermal wellhead: Received a 2026 Spotlight on New Technology Award for leveraging oil and gas technology to address challenges in high-temperature geothermal applications.
MPD Drill Ahead Tool: Awarded for enhancing operational efficiency of the MPD system, saving time and money for drilling contractors.
Offshore and international projects: 72% of Q1 revenues and 74% of last 12 months' revenues were derived from these projects, up from 66% in Q1 2025, indicating a strategic shift towards higher-margin work.
Military programs: Backlog reflects a diversified mix of offshore, international energy, and military programs, suggesting sustained spending in these areas.
Revenue and EBITDA: Generated $145 million in revenues and $17 million in adjusted EBITDA in Q1 2026, with a focus on cost control and monetization of exited facilities.
Offshore Manufactured Products segment: Generated $91 million in revenues and $19 million in adjusted segment EBITDA with a 20% margin, supported by a backlog of $430 million.
Completion and Production Services segment: Delivered $21 million in revenues and $6 million in adjusted segment EBITDA with a 29% margin.
Downhole Technologies segment: Generated $32 million in revenues and $1 million in adjusted segment EBITDA, focusing on upgraded technology and international expansion despite geopolitical delays.
Energy security and diversification: Geopolitical tensions in the Middle East highlighted the importance of energy security and supply diversification, reinforcing the company's focus on offshore and international growth.
Technology and R&D investments: Continued investments in high-specification engineered solutions and technologies to enhance performance and efficiency.
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Risk or Challenges
Geopolitical Tensions in the Middle East: Escalating geopolitical tensions have led to severe restrictions on maritime vessels transiting through the Strait of Hormuz, causing near-term volatility in commodity markets, elevated supply and logistics challenges, and increased costs.
Market Uncertainty and Delayed Projects: Global customer base facing market uncertainty has delayed existing projects and awards of new projects, impacting revenue generation and strategic execution.
Middle East Conflict: The ongoing conflict in the Middle East has contributed to contract award delays, reduced revenues, and increased costs, particularly affecting international expansion and project timelines.
Softness in U.S. Land Markets: Continued softness in U.S. land markets has negatively impacted revenue and operational performance.
Higher Raw Material and Shipping Costs: Increased costs of raw materials and shipping have impacted profitability, particularly in the Downhole Technologies segment.
Asset Impairments and Exit Costs: Noncash impairments on assets held for sale and related exit costs have affected financial performance.
Limited Visibility on Middle East Conflict Duration: Uncertainty regarding the duration and magnitude of the Middle East conflict poses risks to demand environment and full-year guidance.
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Guidance & Outlook
Market Outlook: The global oil and gas sector is poised for growth due to diminishing inventories and a growing supply risk premium. Operators are expected to increase production in lower-risk global offshore basins. The company anticipates sustained energy infrastructure and military spending due to current global events.
Revenue and EBITDA Guidance: Second quarter 2026 revenues are projected to range between $157 million and $162 million, with EBITDA expected to be between $18 million and $20 million. Full-year guidance remains uncertain due to the Middle East conflict, but an expedient resolution could support the guidance.
Offshore and International Markets: The company sees meaningful opportunities to expand its presence in offshore and international markets, focusing on subsea infrastructure, military products, and high-specification engineered solutions. Approximately 72% of first-quarter revenues were derived from these markets, with a backlog of $430 million.
Technology and Product Development: Continued investment in technologies and capabilities to enhance performance, improve efficiency, and support energy delivery in complex environments. Recent awards for new technologies like the GeoLok geothermal wellhead and MPD Drill Ahead Tool highlight the company's focus on innovation.
Capital Allocation and Financial Strategy: The company plans to maintain a focus on margin performance, cash flow generation, and prudent capital allocation. Free cash flow is expected to improve over the balance of 2026 as working capital normalizes and assets held for sale are monetized.
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Shareholder Return Plan
Share Repurchase Program: The company retired the remaining $53 million principal amount of its convertible senior notes on April 1 using a combination of $25 million of cash on hand, borrowings of $25 million under the revolving credit facility, and the issuance of 529,000 shares of common stock. The company also mentioned its intention to opportunistically repurchase additional common stock in the future.
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Key Q&A
Q:Can you talk about what you're seeing in the offshore markets in terms of order flow and growth in offshore activity? Are there any markets where you have greater exposure?
A:The markets are global in scope and scale. There is an uptick in activity in Latin American markets (Guyana, Brazil, Suriname), as well as West Africa, Southeast Asia, the North Sea, and the Gulf of America.
Q:Do you think the Iran war and broader Middle East conflicts will lead to a material rise in U.S. land activity? What about pricing within the U.S. land?
A:There is an expectation of increased U.S. land activity, led by private operators followed by public E&Ps. U.S. land activity is incremental for the company as 75% of revenues come from international and offshore markets. Pricing is also expected to increase, with services provided in Completion and Production Services, frac work, extended reach technology, frac plugs, and perforating seeing increased activity.
Q:If the business grows significantly in the second half and next year, what preparations are needed in terms of labor, facilities, and supply chain?
A:The company has sufficient manufacturing capacity, including a facility in the U.K. and a new facility in Batam, Indonesia. Labor adjustments can be made by adding shifts, and there is capacity to increase throughput with the existing labor base.
Q:What is the confidence level for revenue conversion from the recent backlog, particularly in Offshore Manufactured Products, given macro uncertainty?
A:Historically, backlog conversion in Offshore Manufactured Products has been about 70%. With longer-duration military product contracts, the conversion rate may be 50%-60% over the next 12 months. The company has confidence in backlog quality and expects a book-to-bill ratio of 1x or greater for 2026, with no concerns about cancellations.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses were detailed and addressed the questions directly.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Ahead Tool
Drill Ahead
East conflict
GeoLok wellhead
Lloyd
MPD Drill
Middle East
Offshore
Oil States
Technology
application
asset sale
award
bill ratio
book bill
borrowing credit
challenge
credit agreement
delay
energy infrastructure
energy security
event
facility
flow credit
hand borrowing
impairment asset
market uncertainty
product
project
revenue segment
segment revenue
OIS Transcript
Oil States International, Inc. (OIS) Q1 2026 Earnings Call Transcript
Unknown5-5
The earnings call reveals several challenges: market uncertainty, delayed projects, Middle East conflict, and increased costs impacting revenue and profitability. Despite some positive backlog growth and offshore market activity, the softness in U.S. land markets and asset impairments weigh heavily. The Q&A highlights potential U.S. land activity increase, but overall sentiment remains cautious. The strategic plan outlines growth, but current financials show declines. Given these factors, the sentiment is negative, with expected stock price movement between -2% to -8%.
Superior Plus Corp. (SPB:CA) Q4 2025 Earnings Call Transcript
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The earnings call presents a mixed outlook. Financial performance is flat, with pricing erosion but stabilization in recent months. Product development shows potential growth with new hubs and contracts, but challenges exist in organic growth and inventory levels. The market strategy includes diversification, yet uncertainties remain in achieving financial targets. Shareholder returns are flexible but affected by debt priorities. Overall, the sentiment is neutral, reflecting both opportunities and challenges without significant positive or negative shifts.
Oil States International, Inc. (OIS) Q4 2025 Earnings Call Transcript
Positive2-20
The earnings call highlights strong financial metrics, with improved EBITDA margins and a decade-high backlog. The company's strategic focus on offshore growth and technology differentiation, alongside a robust book-to-bill ratio, supports optimism. Positive guidance and cash flow projections further bolster sentiment. However, some management responses lacked clarity, slightly tempering enthusiasm. Overall, the sentiment remains positive due to strong growth prospects and strategic initiatives.
Oil States International, Inc. (OIS) Q3 2025 Earnings Call Transcript
Unknown10-31
The earnings call reveals mixed signals: strong cash flow and backlog, but challenges like tariffs and revenue decline in U.S. land-based activity. Optimistic guidance on future cash flow and backlog supports a neutral sentiment. However, unclear management responses and negative EBITDA in the Downhole Technologies segment temper positive aspects. Given these factors, stock price movement is expected to remain stable in the short term.
OIS Report
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