Oil States International Fourth Quarter 2025 Earnings Call - Backlog Hits Decade High as Company Pivots to Offshore and International, Driving Cash and Margin Recovery

Colby, Conference Operator: Ladies and gentlemen, thank you for standing by. My name is Colby, and I’ll be your conference operator today. At this time, I would like to welcome you to the Oil States International Fourth Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise, and after the speakers’ remarks, there will be a question-and-answer session. If you’d like to ask a question at that time, please press star, then the number 1 on your telephone keypad to raise your hand and enter the queue. If you’d like to withdraw your question at any time, simply press star 1 again. Thank you. I’ll now turn the call over to Ellen Pennington, Vice President of Human Resources and Senior Counsel. You may begin.

Ellen Pennington, Vice President of Human Resources and Senior Counsel, Oil States International: Thank you, Colby. Good morning, and welcome to Oil States’ fourth quarter 2025 earnings conference call. Our call today will be led by our President and CEO, Cindy Taylor, and Lloyd Hajdik, Oil States’ Executive Vice President and Chief Financial Officer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. No one should assume that these forward-looking statements remain valid later in the quarter or beyond. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our 2024 Form 10-K, along with other recent SEC filings. This call is being webcast and can be accessed at the Oil States website.

A replay of the conference call will be available 2 hours after the completion of this call and will continue to be available for 12 months. I will now turn the call over to Cindy.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Thank you, Ellen. Good morning, and thank you for joining our conference call today, where we will discuss our fourth quarter 2025 results and provide our thoughts on market trends, in addition to discussing our company’s specific strategy and outlook for 2026. We are pleased to report strong fourth quarter results, with Adjusted EBITDA exceeding our guidance and quarterly cash flows from operations at historically high levels. We generated $50 million of cash flows from operations, which was used to retire an equivalent amount of our outstanding Convertible Senior Notes. Following the repayment, our cash on hand exceeded outstanding debt by $15 million at year-end. We continued to progress our multi-year strategy to optimize Oil States’ business mix in favor of operations focused in the offshore and international markets.

Our consolidated fourth quarter results were driven by backlog conversion, disciplined execution, and improved margins in our Completion and Production Services and Downhole Technologies segments, as both segments are showing positive trends following restructuring. Fourth quarter consolidated revenues increased 8% both sequentially and year-over-year, with revenue growth tempered by our strategic decisions to exit certain underperforming U.S. land-based operations. These actions have resulted in a shift in our business mix, with 77% of our revenues generated from offshore and international markets in the current quarter, compared to 72% in the prior year period. Going forward, our sharpened focus on more differentiated product and service lines should provide sustained incremental margins and cash flows to support returns to our stockholders. Our Offshore Manufactured Products segment delivered another standout quarter, with revenues and adjusted segment Adjusted EBITDA increasing 13% and 12% sequentially.

Backlog continued to increase, totaling $435 million, the highest level since March 2015, supported by bookings of $160 million, yielding a quarterly book-to-bill ratio of 1.3 times. Importantly, backlog growth included a diversified mix of offshore energy, international projects, and military product awards. In contrast, U.S. land activity remained at subdued levels during the fourth quarter. In our Completion and Production Services segment, our recent focus on high-grading technologies and service lines has translated into improved adjusted EBITDA margins and cash flow. In our Downhole Technologies segment, we are focused on market introductions of our revamped technology domestically, along with international expansion of our full product suite. Despite it being early days into these strategies, we realized improved contributions from our perforating and completion products during the quarter.

During 2025, Oil States secured multiple new contracts and successfully deployed advanced offshore technologies that reinforce our leadership in high-specification offshore and international markets. Continued adoption of our managed pressure drilling systems and the first successful deployment of our low-impact workover package demonstrated meaningful operational improvements for our customers, including reduced non-productive time, enhanced safety, and improved project efficiency. In addition, following quarter end, Oil States’ Merlin Deepsea Mineral Riser System achieved a record deployment in water depth of over 18,000 feet, or 3.5 miles below the surface of the water, underscoring our differentiated engineering capabilities and strong positioning in emerging ultra-deepwater and offshore resource applications. With our extensive portfolio of differentiated technologies, expanding margins, and strong cash generation, we believe we are well-positioned to support disciplined capital allocation and to continue returning capital to stockholders.

These attributes, taken together, reflect a company that is more focused, more resilient, and better positioned to generate sustainable returns across industry cycles. Lloyd will now review our operating results along with our financial position in more detail.

Lloyd Hajdik, Executive Vice President and Chief Financial Officer, Oil States International: Thanks, Cindy, and good morning, everyone. During the fourth quarter, we generated revenues of $178 million, up 8% sequentially from the third quarter, and adjusted consolidated EBITDA of $23 million, representing a 9% sequential increase and at the top of the guided consolidated EBITDA range that we provided on our third quarter 2025 earnings call. We reported a net loss of $117 million or $2.04 per share, which included long-lived asset impairments, restructuring charges, and valuation allowances established on U.S. deferred tax assets. Non-cash impairments of our long-lived assets and inventory were recorded in our Downhole Technologies segment, principally related to intangible assets recorded at the date of acquisition in 2018. Our adjusted net income totaled $8 million, or $0.13 per share, after excluding these charges.

For the full year, we generated an adjusted consolidated EBITDA of $83 million, adjusted net income of $22 million, and adjusted EPS of $0.37 per share. Cash flow performance was a clear highlight during the fourth quarter and the full year, reflecting solid underlying operational performance of the company. During the quarter, we generated $50 million of cash flow from operations, up 63% sequentially. Investments in CapEx totaled $3 million in the fourth quarter, offset by $6 million in proceeds from asset sales. For the full year, cash flow from operations totaled $105 million, and free cash flow totaled $94 million, representing increases of 129% and 92%, respectively, year-over-year, and exceeding the full year cash flow guidance we provided last quarter.

We ended 2025 with cash on hand, exceeding our total debt by $15 million. Turning to segment performance, our Offshore Manufactured Products segment generated revenues of $123 million and adjusted segment EBITDA of $25 million in the fourth quarter, resulting in an adjusted segment EBITDA margin of 20%. Our backlog totaled $435 million as of December 31. We achieved a 1.3x book-to-bill ratio in the fourth quarter and for the full year. Our backlog continues to reflect a diversified mix of offshore energy, international, and military programs. Backlog strength and execution continue to support earnings visibility into 2026 and beyond, with a significant portion of our backlog expected to convert to revenues within the year.

Our Completion and Production Services segment delivered $23 million in revenues and adjusted segment EBITDA of $7 million in the fourth quarter, with adjusted segment EBITDA margins expanding to 32% from 29% in the third quarter, reflecting benefits of the restructuring actions taken in 2025. During the quarter, the segment recorded facility exit and other restructuring charges totaling $5 million. These quarterly charges will reduce in 2026 once the underlying equipment and facilities are sold. In our Downhole Technologies segment, we generated revenues of $32 million, up 11% sequentially, and grew adjusted segment EBITDA to $1.3 million. During the fourth quarter, the Downhole Technologies segment recorded non-cash, long-lived asset and inventory impairment charges totaling $112 million. Older product technology is being abandoned in favor of our revamped products.

Intangible assets established at the acquisition date in 2018 have been written down to reflect current estimates of fair market values. In January, we entered into a four-year cash flow-based credit agreement, which provides for borrowings of up to $75 million under a revolving credit facility and $50 million available under a multi-draw term loan facility, which replaced our asset-based lending credit agreement. We had $53 million in principal amount of our Convertible Senior Notes outstanding at December 31 and cash on hand of $70 million. We intend to use U.S. cash on hand and borrowings under our new credit agreement to retire these notes on or before their maturity on April 1, 2026. In addition to purchasing $71 million in principal amount of our Convertible Senior Notes in 2025-...

We also repurchased a total of $17 million of our common stock, representing about 5% of shares outstanding as of January 1, 2025. We will remain opportunistic with additional purchases of our common stock as we continue to prioritize returns to shareholders. Now, Cindy will offer some market outlook and concluding comments.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Thank you, Lloyd. Before looking ahead, I want to briefly reflect on what we delivered in 2025. Over the year, we executed according to our strategic priorities by expanding our offshore and international exposure, growing backlog to a decade-high level, strengthening margins, and generating substantial free cash flow while de-leveraging the balance sheet. Our results and accomplishments reflect disciplined execution across the organization, with meaningful progress in repositioning Oil States for more durable performance across industry cycles. As we look ahead into 2026, we believe we are well-positioned to build on that progress. Our offshore manufactured product segment backlog continues to grow, and our business mix is increasingly weighted towards offshore and international markets with longer cycle visibility, stronger margins, and more favorable cash flow characteristics. Our balance sheet strength provides additional flexibility, allowing for prudent capital allocation.

While U.S. land activity is expected to remain relatively subdued, we believe the actions we have taken over the last couple of years, including high-grading our portfolio, sharpening our technology focus, and maintaining disciplined execution, have provided a more resilient operating model. Now, let’s discuss guidance for the full year 2026 and the first quarter individually. We expect 2026 full year revenues to range between $680 million and $700 million, and full year EBITDA to range between $90 million and $95 million, both metrics up meaningfully year-over-year. As a reminder, our first quarter is historically our weakest quarter in terms of revenue, EBITDA, and cash flows due to the timing of order releases, material deliveries, and working capital uses.

Our first quarter guidance calls for revenues in a range of $150-$155 million and EBITDA of $18-$19 million. Cash flows from operations are expected to remain strong in 2026 in a range of $60-$65 million, down from 2025 due to expected working capital builds. Investments in CapEx of $20-$25 million are planned for 2026. Across the business, our priorities remain consistent: advancing differentiated technologies and services aligned with customer needs, driving margin durability, generating free cash flow, and delivering long-term stockholder value creation. We entered 2026 as a more focused, financially flexible, and cash-generating company, which is being recognized by investors, leading to stock price appreciation as the market has begun to understand and embrace our strategic initiatives.

With a strong balance sheet, expanded margins, and a growing offshore and international footprint, we are confident in our ability to continue the momentum achieved in 2025. That concludes our prepared remarks. Colby, please open the call up for questions.

Colby, Conference Operator: Thank you. We will now begin the question-and-answer session. We please ask, if you would like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. If you’d like to withdraw your question at any time, you can press star one again. We’ll pause just for a moment to compile the roster. Your first question comes from Stephen Gengaro with Stifel. Your line is open.

Stephen Gengaro, Analyst, Stifel: Thanks, and good morning, everybody.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Good morning, Stephen.

Stephen Gengaro, Analyst, Stifel: So, 2 for me. 1, I think is probably pretty straightforward. On the Completion and Production side, has the restructuring, or at least, that’s the wrong word, but the exiting of underperforming businesses, is that completely reflected in kind of the 4Q revenue run rate levels?

Cindy Taylor, President and Chief Executive Officer, Oil States International: I think the answer to that is yes. I’m kinda... I’m gonna let Lloyd kind of do a little back of the envelope for me as we talk about that. Just to make a comment, we have reported, and you have seen fairly significant EBITDA add backs throughout the year on a quarterly basis, and just think of that as runoff of operations, closing of facilities, severance costs, et cetera, as you exit facilities. And so one of the key things I’m focused on is mitigating that and reducing that as we go forward. Those adjustments will continue probably through the first half, but be much lower than what you have seen. And two comments there, you’ll see probably an increase overall in assets held for sale. That’s clear messaging that those facilities have now been exited.

The workforce, the machinery, the equipment, the inventory has been relocated, and those are being prepped for sale and disposition. But as you know, there’s gonna be ongoing property taxes, insurance, utilities, until we monetize those. So on the balance sheet, I think it separates assets held for sale, which approximates $17 million. And then there’s still a handful of operating facilities yet to be fully exited. Just know there’s a lot of inventory and equipment yet to be monetized, but we are in process, and again, that will be much less significant than what we have seen in the past. And importantly, Stephen, if you look at our year-over-year EBITDA margins, you should notice material improvement as we have progressed. You have to look at adjusted EBITDA, obviously, because we’ve had the drag of exiting these.

I believe, Lloyd, what were our EBITDA margins in Q4?

Lloyd Hajdik, Executive Vice President and Chief Financial Officer, Oil States International: Thirty-two percent.

Cindy Taylor, President and Chief Executive Officer, Oil States International: 32, and again, much more indicative of the go-forward level of activity that we have. And I’ll also point out what, generally what we have left is, you know, our extended reach technology, which is very differentiated in the marketplace, and that is largely, of course, a land-based operation, not only in the United States, but also in Canada, supporting operations there. Our Gulf of Mexico operations, which is wireline and production services, support activity, and then our international equipment as well, largely dedicated to the Middle East. And we do have residual operations in the Bakken area that is a bit more, a bit less competitive, I will call it. And so that is our focus going forward.

And again, revenues will be down, but you’ve already seen that margins go up, indicating the very marginal nature that we were getting from both previously in 2023, 2024, flowback operations in some of our frac and isolation assets that we felt compelled to exit. And the good thing is, you’re, you’re not only reducing some of the low margin or no margin activity, you’re gonna mitigate CapEx, achieve higher margins and free cash flow in the process. So, I’ll let Lloyd add anything to that.

Lloyd Hajdik, Executive Vice President and Chief Financial Officer, Oil States International: Yeah. Thanks, Cindy. So, Stephen, to your, to your question, so in the fourth quarter, there was about $1 million of revenues from the exited operations. And just as a frame of reference, for the full year 2025, of the $669 million of consolidated revenues, about $21 million were derived from those exited operations.

Stephen Gengaro, Analyst, Stifel: Great. That helps. Thank you. And then, you created more questions in my mind, Cindy, but I’ll ask one and then get back in line. When we think about the backlog levels in the Offshore Manufactured Products business, obviously, you’ve had great order flow, overhead absorption should clearly help. Is the embedded margin profile materially better right now than it was exiting the year twelve months ago?

Cindy Taylor, President and Chief Executive Officer, Oil States International: I just look at... We’ve had. If you look through our decades of history in that business, we have consistent, I would call it, overall margin improvement. But as you know, there’s a lot of things that go into that. One is the mix that you have, across your global operations. Again, we’re not a single product-focused company. Some enjoy higher margins than others, depending upon the competitive landscape and the proprietary nature of the equipment. The second one, of course, is, absorption and utilization of our various facilities around the world. Now, that being said, you know, we are targeting fairly consistent margins on a blended basis for 2026, but on, you know, strong revenues at the end of the day. And so, mix could alter that to the benefit, as an example.

Absorption could give, create some upside there as well. And, you know, we have taken initiatives to, for the long term, to improve our overall margin performance, particularly with the new facility that we now have up and running in Batam, Indonesia, that is, you know, got kicked off last year, but certainly is not yet at the revenue run rate that we think it’s capable of. And then, in addition to that, we are evaluating bringing in a broader range of products being manufactured out of that facility. And again, it’s hard to say that there’s no such thing as just next quarter is gonna be up to the right, but these are all embedded strategies that over the course of time, will elevate that, overall.

And I think most importantly, as you point out, it’s a backlog-driven business, and despite growing revenues, we had a book-to-bill in 2025 of 1.3 times that we’re very proud of, and our indications and our outlook are that we will exceed a 1.0 book-to-bill again in 2026. And so again, I think the trends are there, but this business is not the cyclical up and down that you see in North American-based businesses. But I think if you look at our performance over a continuum of 5-10 years, you’re gonna say it’s been rather impressive.

Lloyd Hajdik, Executive Vice President and Chief Financial Officer, Oil States International: Yeah. We’ve had a book-to-bill in excess of one for the past five years on a year-by-year basis.

Stephen Gengaro, Analyst, Stifel: Okay. Great. Thank you. Just, just one quick one, and I’ll get back. The—this, the CMP margins in the quarter, is there anything funky in that 32% that we should be thinking about? I know you have Stephen now in the first quarter, but that’s a fairly healthy number and a fairly good number to kind of base forward assumptions off of.

Cindy Taylor, President and Chief Executive Officer, Oil States International: I think it is, in reality.

Stephen Gengaro, Analyst, Stifel: Okay.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Now, we may have had a one-off facility or equipment sale gains. Honestly, I don’t remember in that level of detail quarter by quarter. There have been some facility sale gains of some consequence every quarter as we’ve exited all of this. But we are comfortable with EBITDA margins for that business in kind of the 30 to, I don’t know, 33%, 34% range.

Stephen Gengaro, Analyst, Stifel: Great. Thanks, and congrats on all the progress.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Thank you.

Unknown, Conference Moderator/Operator Assistant: Thanks, David.

Colby, Conference Operator: Next question. Your next question comes from the line of Jim Rollyson with Raymond James. Your line is open.

Jim Rollyson, Analyst, Raymond James: Hey, good morning, Cindy, Lloyd, everybody.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Good morning.

Jim Rollyson, Analyst, Raymond James: Great job on the way you finished out the year for sure. Curious, just to circle back to your answer on Stephen’s question. You know, he was talking about backlog margins, and obviously, in part of that answer, you talked about just book-to-bill being north of 1x, 5 years in a row. And it’s interesting because, you know, offshore spend kinda took a little bit of a dip as we kinda went through the last 18 months or so, and yet you guys have continued to crank out well above 1x type of order flow. And as we maybe pulse back up in offshore, at least that’s the expectation as we go into late 2026, 2027, 2028. I’m just curious, you know, you go back, look at historical levels, you’re at 10-year highs, but you’ve been higher.

I’m curious if the revamp of spend offshore over the next couple of years or so continues to drive well north of 1x backlog to where, you know, 2, 3 years out, you’re back to the old highs from several years ago. I’m just kinda curious how things are shaping up with the macros trending, the spend levels trending, your product line is trending. Like, are we just gonna keep going up into the right for the next couple of few years?

Cindy Taylor, President and Chief Executive Officer, Oil States International: Well, all I can say is I certainly hope so. But no, I wanna drill down and give you a little more color on that answer. I would say, first of all, seems like our—I can’t even remember the last peak. Backlog is probably 2014-

Jim Rollyson, Analyst, Raymond James: It was.

Cindy Taylor, President and Chief Executive Officer, Oil States International: at the peak market time frame, so well over a decade ago.

Unknown, Conference Moderator/Operator Assistant: $600 million.

Cindy Taylor, President and Chief Executive Officer, Oil States International: I would go and say, you know, number 1, we have the same global footprint that we had then. 2, we actually have added two very new enhanced facilities, one being in our U.K. operations, it’s near Edinburgh, and 2, our new Batam facility. So one could say that from a facility and manufacturing footprint, footprint perspective, we’re actually more capable than we were a decade ago. Limitations could be some amount of labor, but, you know, typically we’ve been able to flex over time. It all depends on timing and magnitude of the ramp that we are hypothetically talking about. But I wanna point out, you know, 2025, it’s easy to say, "Well, how did you do the 1.3 book-to-bill and, and what was not a heroic spending environment?" I think that’s your question.

I want to remind everybody, we have brought new products to market, and in particular, our MPD assets. That didn’t exist a decade ago, and we are continually trying to enhance the offering we provide to our customers globally. That being one, and I point to the MPD, I could also point to our mineral riser system. This is a completely new operation that didn’t exist, you know, 10 years ago, dedicated to trying to find these rare earth metals and minerals to support electrification, you know, basically at the end of the day. And so those things are additives, and they both could absolutely grow as we progress into the next 5-10 years. We have invested in things that have no revenue yet or not substantial revenue, including our offshore wind platform.

We’re doing a lot of bidding and quoting, and we don’t have any anticipation in our 2026 results that we would have revenue at this point in time. So it creates some long-term, I will call it, upside potential for the business. Yeah, Lloyd reminded me, we just with increased defense spending, as you know, Jim, we’ve oftentimes had a military revenue stream. It’s generally been in the range of kinda 10% of the segment, OMP segment revenues, and we got a healthy amount of military awards this year, particularly late in the year, that was non-oil and gas spending related. So again, I, I’ve kind of spoken to the broad base of the product line and the exposures that we have.

I think our facilities are in good place, and importantly, you know, we, we just recently were seeing some larger bid opportunities come in that in the past you might say, "Well, what’s, what’s the CapEx required? What’s the working capital investment that you have to make?" But having the strength of our balance sheet as we move into the next decade is also, I think, going to prove beneficial to us.

Jim Rollyson, Analyst, Raymond James: Appreciate all that color, and that actually brings up my follow-up question, which is on the balance sheet and cash flow. So you’re in a position now, you have more cash than you have debt, with that coming due April first. So you’ll be in basically close to debt-free, certainly net debt-free, here soon. And if I did my math right, Lloyd, you’re kind of zeroing in around $40 million of free cash flow, and I presume that’s before asset sales, ’cause Cindy, you talked about the assets held for sale growing to $17 million. So you could very well be, depending on the timing of that, somewhere in the $50+ million free cash flow range. I’m curious, as you just get past-...

The debt repayment on the convert, do you deploy the majority of your free cash flow back to shareholders and share repurchases, or do you go on offense at all? Just, you know, now that you’re in a much better shape than you were two or three years ago, just curious kind of how you think about the balance sheet and the ability to use that.

Lloyd Hajdik, Executive Vice President and Chief Financial Officer, Oil States International: Yeah. Thanks, Jim. And your math is correct. And now the $40 million is just free cash flow, excluding potential proceeds from asset sales could boost that. And in terms of deploying the free cash flow, share repurchases, we’ve been very public. We had $17 million last year. After we pay the debt off, we should be opportunistic in buying back more shares, and obviously, have more optionality to look at M&A as a result.

Cindy Taylor, President and Chief Executive Officer, Oil States International: And I’ll tag in to Lloyd’s comment. I mean, as we get more globally diversified, we’re gonna look to look, comparable companies would be on our target list more so than anything that’s obviously kind of land-based U.S., because that’s the pivot we’ve made. We’ve made some good, very good small tuck-ins there, but they are kind of few and far between. So I think in the near term, you’re gonna see us focused on shareholder returns via share repurchases, but, you know us, we’re continually looking for good tuck-ins across the globe that fit our product suite and our capabilities, and that won’t stop, obviously. But it is nice to have a currency that is not a deterrent to getting things done.

Lloyd Hajdik, Executive Vice President and Chief Financial Officer, Oil States International: Correct.

Jim Rollyson, Analyst, Raymond James: Yep, absolutely. And then just one last thing, just for a little color. Just, we don’t often talk about military products because that’s not your core focus, but it’s clearly been a beneficiary to your bookings and even your free cash flow, thanks to timely government payments. With an administration that’s seemingly willing to spend more money on the defense side, maybe just a reminder of kind of what you provide there and maybe how you think about the outlook, given the strong back half of 2025 as we go into 2026 and 2027?

Cindy Taylor, President and Chief Executive Officer, Oil States International: Well, these are legacy products that we’ve supplied to the military for as long, long as I’ve been here, quite frankly. But, it’s an adaptation, honestly, of some of our flex joint technology, that these are used in sound and vibration dampening applications on submarines. So it’s exposed to the Navy, obviously. And again, I’m always like: How do I grow this base even more? And the Navy has been very good about doing R&D and engaging with us on R&D on differing technologies. And so we do hope to work together to expand that product offering. But I think the main thing is, this is what I will call a legacy product we’ve had for many years. There is ebbs and flows, depending upon the defense spending and the investments made by the U.S. government.

But, we also have some small orders that we are beginning to get from the Australian defense sector, and so hopefully, ways to grow that even further. But it’s a good little base of business for us that... And, you know, working for the government requires really, really high standards. So I think that’s a testament to the strength of our quality processes and our manufacturing, overall.

Jim Rollyson, Analyst, Raymond James: Great. Appreciate all the color, guys. Thanks. Thanks again.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Thank you.

Lloyd Hajdik, Executive Vice President and Chief Financial Officer, Oil States International: Thanks, Jim.

Colby, Conference Operator: Your next question comes from the line of Josh Jané with Daniel Energy Partners. Your line is open.

Josh Jané, Analyst, Daniel Energy Partners: Good morning. Thanks for taking my questions. First one, Cindy, maybe you could just give us a walk through the offshore world geographically, where you see the most opportunities, and how you’re positioning yourself for a continued growth, given that backdrop, and maybe even highlighting some of the facilities that you’ve mentioned, and how, you know, increasing utilization there could ultimately play into, you know, growing your market share moving forward, as my first question.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Yeah. Well, the great thing, we do have a global base of operations, and the first thing I’d say, that’s not gonna shock you at all in saying that Brazil has been and will continue to be a very strong base, and Petrobras is the larger kind of deep water player and investor in the world right now. We’ve got a great base there, good, strong leadership in country, and we’ve been there for, you know, over 20 years. So it’s not like a new market entrance that experiences the vagaries of working internationally, and so I feel very good about that. And we’re really trying to expand all of our capabilities and bring all of our total company products and services into that market. Again, it won’t shock you that Guyana is another strong base of operations when I look to the south.

Southeast Asia has been a legacy foothold for us for decades, you know, from Singapore and now more manufacturing in Batam, Indonesia. But that, you also pick up Australia with the, that kind of presence, I will call it. Emerging activity, not really emerging, probably recovering activity, beginning in West Africa. I’m trying to think of any real basin that is not showing more activity. I would say most of our Middle Eastern activity right now is on land, really not offshore. Anything else I’ve missed there?

Lloyd Hajdik, Executive Vice President and Chief Financial Officer, Oil States International: Actually, for Southeast Asia, for more the product side.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Yes. Yeah, Southeast Asia. Again, and that’s not just O&P. We’re trying to do the best that we can in Middle East, as an example, introduce our frack equipment into the market. Our through tubing into the market and, perforating across the world. There’s been a dual strategy on recovering the perforating market. One is an improved product offering that we can offer to the domestic market, and I will check the box. It’s kind of been hard to get into the market, given the weakness we’ve seen on land, U.S., over the last two years. But the technology is there, and so thankfully, we’re positioned well, going forward, and then international expansion has been the second tier of that.

I’d say right now, there’s various target markets internationally, but the lead for our perforating equipment is gonna be Middle East and likely both Brazil and Southeast Asia. But that’ll evolve over a few years. It won’t happen immediately, but we’re gonna, we’re optimistic to show improvement there in that perforating business as well. But just think of us as doing the best that we can to expand the full breadth of our product and service offering on a global basis through the installed base that we have in the market.

Josh Jané, Analyst, Daniel Energy Partners: That’s, that’s helpful. Thanks. And as my follow-up, just, I wanna follow up on one of the questions about the 2015 backlog. So maybe offer your thoughts on where you believe we stand in the offshore cycle for your business, ’cause we’ve obviously had some white space over the last couple of years. But do you think where you sit today is more a reflection of, you know, the lull of activity in the last 18-24 months and some catch up there? Or do you believe we are sort of in the early stages of, you know, 5-, 7-, 10-year offshore cycle, just with where capital is moving?

Because I also see, you know, and you mentioned it in your—in your, in one of the answers, you know, when you have riser systems, NPT, military, that also wasn’t in your, your backlog back then. So it seems like you do have a lot of room to grow and run, just in that, in that business from where we were previously.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Yeah. No, I mean, I think to be in this business, you have to believe in the macro, i.e., the long-term demand for crude oil and natural gas, which I do. I always have. Again, the U.S. land and flex quicker, up and down, and so the reduced activity you’ve seen to date is simply because crude prices have dipped, you know, close to or below $60 a barrel. And so that has put a dampening effect on international and deepwater activity, too. And I think that’s where the quote, unquote, "white space" has come in. I think the different recognition, though, is that we are clearly underinvesting for the long term, if you believe in the ultimate demand for crude oil, and I think everybody recognizes that.

And the second thing I’ll tell you, there’s just such a long lead time, when you talk about particularly deepwater and international activity, that I think there’s a recognition we’ve got to get going. And a lot of, you know, it’s very public to follow the offshore rig companies, and you see white space on the drilling cycle, you take that as an indication of weaker activity. We’re beginning to see those white spaces, gaps be filled in, and so rig equipment will tend to lead the recovery, and that can be riser systems, MPD systems for us, the things that we offer, as well as kind of the upgrade and service cycle, around that equipment. But it all feeds deepwater infrastructure, which again, that’s kind of a bread and butter for us, that plays into our more proprietary products.

So it’s kind of a long-winded way of answering a question that I believe we’ve underinvested. We’re going to have to commit capital, and then you’re gonna argue, where does it come from? The last 20 years, all of the increased production has come from U.S. shale efficiency, or can’t say all, but I bet 90% has been. There is the perception that those incremental growth is waning, and therefore, you’ve got to look at other basins around the world to provide the supplies. I think that plays into our manufacturing capabilities and the equipment that we offer over the long term.

Josh Jané, Analyst, Daniel Energy Partners: Thanks. And then I’ll just squeeze one more in, if I may, just because the news is out this morning. It sounds as though the Supreme Court struck down Trump’s sweeping tariffs, and so there could be, you know... I mean, I guess there are a lot of things up in the air, but there could be an impact reversing the tariffs coming in 2026 or 2027. Could you just remind us what your impact was? And then that’ll be my final question. Thank you.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Yeah, I would just say that, so much of what we do in the Offshore Manufactured Products segment is destined for international locations, that we benefit from temporary import bonds. I’ll just say it’s incredibly difficult to claim those, but generally, O&P hasn’t suffered too much in the way of tariffs. The one that hit us front and center, in particularly mid-year 2025, was on perforating, because we and everybody else source gun steel out of China. We do bring it in the U.S. The value add from the machining and finishing is done here in the U.S. It is much more difficult to, one, identify whether those guns are going domestically or internationally, how much of that gun body would be subject to tariffs.

We really got hit pretty hard on our cost of goods sold because of orders in place that all of a sudden the tariff rate went from 25% to 98% about mid-year. So part of our improvement in kind of our perforating operation was delayed because of tariffs. So I’ll just call it welcome news that the go forward might be a more predictable cost structure going forward. And again, with weaker market in the U.S. and a lot of competition that came into the market, it was very hard to pass those costs on to our customers. So again, more stability in our supply chain and lower tariff costs would be favorable, but it would really be reflected predominantly in our perforating side of our business.

Unknown, Conference Moderator/Operator Assistant: Thanks for taking my questions. I’ll turn it back.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Thanks, Josh.

Unknown, Conference Moderator/Operator Assistant: Your next question comes from the line of Stephen Gengaro with Stifel. Your line is open.

Stephen Gengaro, Analyst, Stifel: Thanks, and thanks for taking the follow-up. Just, I know this came up a little bit earlier, Cindy. When we think about potential additions to your portfolio, is there any geographic region we should be thinking about? Like, would it have to be offshore international, or would you do something on U.S. land that made sense? Is it... I’m not sure it’s common, any product lines, but how should we think about it?

Cindy Taylor, President and Chief Executive Officer, Oil States International: Well, what we’re looking for is just differentiated, technology differentiated, opportunities, whether that’s an organic investment or through M&A. And you know, you and I have been doing this a long time. It’s real hard for me to think of the things that are truly differentiated on land that can’t be replicated in short order. And it’s always been a challenge for us because we do all the diligence, all the upfront R&D work, patent the technology, and then it’s amazing how quickly companies come in and then you’re. It’s like, do I sue them? It’s gonna cost me probably $5 million-$10 million to do so, or. You know, it’s just a tough business to have long-standing differentiated technology. And so I’m not saying no, I’m saying it’d be very selective.

Stephen Gengaro, Analyst, Stifel: Great. Thanks for the color.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Thanks, Steven.

Unknown, Conference Moderator/Operator Assistant: With no further questions in queue, I’d like to turn the conference back over to Cindy Taylor for closing remarks.

Cindy Taylor, President and Chief Executive Officer, Oil States International: Thank you all for your time today and for all the thoughtful questions. We remain focused on executing our strategy, strengthening our portfolio, and maintaining discipline around future capital allocations. We look forward to catching up with all of you as the year progresses, and I’ll just offer a thanks again for joining us today.

Unknown, Conference Moderator/Operator Assistant: This concludes today’s conference call. You may now disconnect.