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OS

OIL STATES INTERNATIONAL, INC (OIS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered resilient offshore/international-driven results: revenue $165.2M, GAAP EPS $0.03, adjusted EPS $0.08, and adjusted EBITDA $20.8M, while U.S. land weakness and China gun-steel tariffs weighed on Downhole Technologies .
  • Versus S&P Global consensus, OIS posted a small miss on revenue ($165.2M vs $167.7M), EPS ($0.08 adj. vs $0.09), and EBITDA ($20.8M vs $21.0M); Q/Q was flat and Y/Y down 5% on revenue as the mix shift continued toward offshore/international projects ; estimates from S&P Global*.
  • Management guided Q4 revenue up 8%–13% sequentially and Q4 adjusted EBITDA $21M–$22M, with FY 2025 cash from operations “$100M+,” underpinned by decade‑high backlog ($399M, book‑to‑bill 1.3x) .
  • Stock narrative catalysts: backlog strength with military awards, MPD technology adoption, and deleveraging/buybacks offsetting U.S. land softness and tariff headwinds; watch Q4 book‑to‑bill (>1x expected) and pass‑through of tariff costs .

What Went Well and What Went Wrong

What Went Well

  • Offshore Manufactured Products delivered higher revenue ($108.6M, +2% Q/Q) and adjusted segment EBITDA ($22.3M, +6% Q/Q), with backlog up to $399M and bookings of $145M (book‑to‑bill 1.3x) .
  • Mix shift toward offshore/international accelerated: 75% of consolidated revenue from offshore/international in Q3 (up Q/Q and Y/Y) per CEO Cindy Taylor; Brazil production infrastructure (flex joints) and MPD systems seeing strong acceptance .
  • Cash generation and capital returns: $30.7M CFO, $23.2M FCF; $6M of converts and $4.1M of stock repurchased; cash on hand $67.1M with no ABL borrowings .

Selected management quotes:

  • “During the third quarter, 75% of our consolidated revenues were generated from offshore and international projects…” .
  • “Backlog increased to $399 million… highest level since June 2015… bookings of $145 million… book-to-bill 1.3x” .
  • “Our cash flows from operations were very strong… bringing the annual amount to $100 million plus” .

What Went Wrong

  • U.S. land activity fell (frac spread down ~11% Q/Q), pressuring Completion & Production Services (CPS) revenue ($27.5M, −6% Q/Q) and Downhole Technologies ($29.0M, −1% Q/Q) .
  • Tariffs on imported gun steel (China) sharply increased (from ~25% two years ago to ~98%, recently eased to ~88%), driving the first negative adjusted EBITDA in Downhole Technologies since COVID .
  • Consolidated revenue declined 5% Y/Y; adjusted EBITDA was down 3% Y/Y, reflecting weaker U.S. land consumables and tariff cost absorption .

Analyst concerns:

  • Timing of backlog conversion and Q4/Q1 awards “shifting to the right” with crude at ~$60 affecting near‑term cadence; 2026 seen stronger .
  • Tariff pass‑through timing and inventory digestion; management targets early next year for normalization and supply chain workarounds (e.g., assemblies in Batam, Indonesia) .
  • CPS revenue down with ongoing portfolio high‑grading; though margins rebuilt to high‑20s/low‑30s targeted for 2026 .

Financial Results

Consolidated Results vs prior periods

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$174.3 $159.9 $165.4 $165.2
Net Income ($USD Millions)$(14.3) $3.2 $2.8 $1.9
GAAP Diluted EPS ($USD)$(0.23) $0.05 $0.05 $0.03
Adjusted EBITDA ($USD Millions)$21.5 $18.7 $21.1 $20.8
Adjusted Diluted EPS ($USD)$0.04 $0.06 $0.09 $0.08

Segment revenue breakdown

Segment Revenue ($USD Millions)Q3 2024Q2 2025Q3 2025
Offshore Manufactured Products$102.2 $106.6 $108.6
Completion & Production Services$40.1 $29.4 $27.5
Downhole Technologies$32.0 $29.4 $29.0

Segment adjusted EBITDA

Segment Adjusted EBITDA ($USD Millions)Q3 2024Q2 2025Q3 2025
Offshore Manufactured Products$23.3 $21.1 $22.3
Completion & Production Services$5.4 $8.3 $8.0
Downhole Technologies$1.1 $1.2 $(0.7)
Corporate$(8.3) $(9.5) $(8.7)

KPIs and mix

KPIQ2 2025Q3 2025
Backlog ($USD Millions)$363 $399
Bookings ($USD Millions)$112 $145
Book-to-Bill (x)1.1x 1.3x
Revenue by Destination – Offshore/International ($USD Millions)$119.1 $123.4
Revenue by Destination – U.S. Land ($USD Millions)$46.3 $41.8
Cash from Operations ($USD Millions)$15.0 $30.7
Free Cash Flow ($USD Millions)$8.1 $23.2
CapEx ($USD Millions)$10.3 $8.7
Cash on Hand ($USD Millions)$53.9 $67.1
Share Repurchases ($USD Millions)$6.7 $4.1
Convertible Notes Purchases ($USD Millions)$14.8 $6.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Revenue (Sequential Growth %)Q4 2025N/A+8% to +13% sequentially Introduced
Adjusted EBITDA ($USD Millions)Q4 2025N/A$21–$22 Introduced
Cash from Operations ($USD Millions)FY 2025N/A$100M+ Introduced
Book-to-Bill (x)Q4 2025N/A>1.0x expected Introduced
CapEx cadenceQ4 2025N/A“Lower end” in Q4 per Q&A Clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1 2025)Current Period (Q3 2025)Trend
Offshore/international demand & backlogBacklog $363M; bookings $112M; offshore segment strength Backlog $399M; bookings $145M; military awards; >1x Q4 B2B Improving
U.S. land restructuring & CPS marginsActions continue; CPS adj. EBITDA margin 28% CPS adj. EBITDA margin 29%; target high‑20s/low‑30s into 2026 Margin up; revenue down
Tariffs impactApril WTI drop tied to broad tariffs; monitoring sourcing/pricing Gun‑steel tariffs hit Downhole; EBITDA negative; rate ~98% now ~88% Headwind persists
Technology: MPD systemsMPD IRJ adoption; collaboration with Seadrill Safety awards; continued MPD acceptance Adoption building
Brazil production infrastructure>$25M deepwater award; multi‑year local projects Flex joint technology demand in Brazil (Petrobras) Strong/stable
Free cash flow & capital returnsCFO positive; buybacks; converts retired FY CFO $100M+ guide; further buybacks/converts planned Strengthening

Management Commentary

  • Strategic mix shift: “We remain focused on… growing our offshore and international presence… and driving meaningful cash flow generation.” .
  • Outlook: “Fourth quarter consolidated revenues should increase 8% to 13% sequentially, and… adjusted EBITDA… $21 million to $22 million.” .
  • Tariffs: “Gun steel tariffs… 98% rate came down to 88%… material increases… industry will have to pass on to customers if tariffs hold” .
  • Capital allocation: “We purchased $6 million of our convertible senior notes… and $4 million of our common stock… We intend to remain opportunistic” .

Q&A Highlights

  • Backlog timing: Awards “shifted to the right” with lower crude; Q4 book-to-bill >1x expected; 2026 stronger on project timing .
  • Tariff headwind: Downhole EBITDA negative largely due to gun‑steel tariffs; inventory digestion expected; pass-through over ~6 months; exploring Batam assembly to reduce burden .
  • CPS margins: High‑grading largely complete by year‑end; aiming high‑20s/low‑30s EBITDA margins in 2026 despite lower revenues .
  • Cash flow: FY CFO “$100M+”; Q4 implied strong CFO and FCF with lower capex .

Estimates Context

MetricQ3 2025 ActualConsensus (S&P Global)*Surprise# of Estimates*
Revenue ($USD Millions)$165.2 $167.7*−$2.5M (−1.5%)*4*
Adjusted EBITDA ($USD Millions)$20.8 $21.0*−$0.2M (−1.0%)*—
Adjusted EPS ($USD)$0.08 $0.09*−$0.01 (−11.1%)*3*
  • Sequential: revenue flat vs Q2 ($165.4M), adjusted EBITDA −1% Q/Q, adjusted EPS $0.08 vs $0.09 in Q2 .
  • Year-over-year: revenue −5%, adjusted EBITDA −3%, adjusted EPS up from $0.04 in Q3 2024 .
  • Q4 2025 consensus: revenue $182.0M*, EBITDA $22.3M*, EPS $0.10*; guidance implies modest operational build from Q3 [GetEstimates]*.

Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Backlog and bookings momentum (399M; 1.3x book‑to‑bill) support Q4/Q1 trajectory and 2026 growth; watch award timing and conversion cadence .
  • Mix shift to offshore/international (75% of revenue) is structurally positive for margin and cash conversion; Brazil flex joints and MPD systems are key drivers .
  • Near-term headwinds: U.S. land consumables soft and tariffs on gun steel pressuring Downhole margins; management expects pass‑through and mitigation over ~6 months .
  • Capital returns and deleveraging are tangible: buybacks and converts repurchases continue, with strong FY CFO ($100M+) reinforcing balance sheet flexibility .
  • Trading setup: Modest Q3 miss vs consensus, but Q4 guide (>1x B2B; revenue +8–13%; EBITDA $21–$22M) may underpin estimate stabilization/upward revisions; monitor tariff developments and FX/commodity volatility [GetEstimates]*.
  • Medium term: CPS margin high‑grading to high‑20s/low‑30s and offshore project cycle should lift consolidated profitability into 2026 .
  • Risk checks: Tariff policies, U.S. activity trough, project timing “shift right,” and potential conversion delays; mitigation via diversified backlog and international manufacturing capacity (Batam) .
Notes: All document-based figures include source citations. Estimates marked with * are from S&P Global consensus.