NYSE:OIS
OIL STATES INTERNATIONAL, INC
A global provider of advanced drilling equipment and well servicing tools supporting the upstream oil and gas industry.
Key Metrics
Investment Thesis
Bull Case
Investors might consider OIS for its resilient operating cash flow of $45.9M which suggests underlying business stability despite reported accounting losses. The company's aggressive buyback program of $14.2M indicates management confidence in the asset and a desire to return value to shareholders. If oil prices rebound, the firm is well-positioned to capture market share with its specialized fracturing tool portfolio.
Bear Case
The company posted a third consecutive year of negative net income trends, dropping from $12.9M profit in 2023 to a loss in 2024, which raises red flags about profitability sustainability. A massive retained earnings deficit of over $273M signals accumulated losses that could limit future dividend capabilities or expansion funding. High levels of long-term liabilities relative to current assets suggest the company carries significant debt burdens that could be risky in a high-interest environment.
About OIL STATES INTERNATIONAL, INC
Oil States International Inc. provides drilling equipment, tools, and services to the oil and gas exploration sector globally. The company specializes in downhole power systems and hydraulic fracturing solutions, serving operators across North America, Europe, and Asia. Recent financials show a revenue of $692.6M with significant non-cash adjustments impacting reported net income.
Analysis
Management Discussion
Despite a slight revenue decline to $692.6M in 2024 compared to 2023, the company recorded a net loss of $11.3M driven by high operating expenses and non-cash adjustments totaling $60.6M. Cash flow from operations remains robust at $45.9M, providing necessary liquidity to fund the $14.2M in share repurchases and manage current liabilities of $157.7M. The negative net profit is largely a result of accounting adjustments rather than a complete operational failure, as operating cash generation continues to be positive.
Industry Overview
The oil services industry is cyclical and heavily dependent on global energy demand and drilling rig counts. Companies like Oil States compete with giants like Schlumberger and Halliburton, often focusing on niche segments like downhole power to differentiate themselves. The sector faces pressure from cost-cutting measures by major operators as they navigate lower commodity price environments.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $737.7M | $782.3M | $692.6M |
| Cost of Revenue | $578.6M | $606.9M | $536.2M |
| Gross Profit | $159.2M | $175.4M | $156.4M |
| Operating Expenses | $156.2M | $152.2M | $158.1M |
| Operating Income | $2.9M | $23.2M | $-1.7M |
| R&D | $3.5M | $4.5M | $5.2M |
| G&A | $96.0M | $94.2M | $95.0M |
| Stock-Based Comp | $6.9M | $7.0M | $8.7M |
| D&A | $67.3M | $60.8M | $54.7M |
| Depreciation | $47.0M | $43.6M | $38.3M |
| Amortization | $20.3M | $17.2M | $16.4M |
| Other OpEx | $56.7M | $53.5M | $57.9M |
| Non-Operating Income | $-7.0M | $-7.3M | $-6.2M |
| Interest Expense | $10.6M | $9.6M | — |
| Interest Income | $291.0K | $1.4M | $1.1M |
| Pre-Tax Income | $-4.1M | $15.8M | $-7.9M |
| Income Tax | $5.5M | $2.9M | $3.4M |
| Continuing Ops | $-9.5M | $12.9M | $-11.3M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-9.5M | $12.9M | $-11.3M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-9.5M | $12.9M | $-11.3M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $462.8M | $488.0M | $498.2M |
| Cash & Equivalents | $42.0M | $47.1M | $65.4M |
| Accounts Receivable | $218.8M | $203.2M | $194.3M |
| Inventory | $182.7M | $202.0M | $214.8M |
| Prepaid Expenses | $19.3M | $35.6M | $23.7M |
| Other Current Assets | $0 | $0 | $0 |
| Long-Term Assets | $601.6M | $558.5M | $506.9M |
| PP&E (Net) | $303.8M | $280.4M | $266.9M |
| Intangibles | $169.8M | $153.0M | $125.9M |
| Goodwill | $79.3M | $79.9M | $69.7M |
| Operating Leases | $23.0M | $22.0M | $19.5M |
| Other LT Assets | $25.7M | $23.3M | $24.9M |
| Total Assets | $1.06B | $1.05B | $1.01B |
| Current Liabilities | $193.7M | $157.3M | $157.7M |
| Accounts Payable | $73.3M | $67.5M | $57.7M |
| Current Debt | $17.8M | $627.0K | $633.0K |
| Current Leases | $6.1M | $6.9M | $7.3M |
| Deferred Revenue | $44.8M | $36.8M | $52.4M |
| Taxes Payable | $2.6M | $1.2M | $2.8M |
| Other Current Liab | $0 | $0 | $0 |
| Long-Term Liabilities | $181.2M | $179.7M | $166.8M |
| LT Operating Leases | $20.7M | $18.3M | $18.0M |
| Other LT Liab | $160.5M | $161.3M | $148.8M |
| Total Liabilities | $374.8M | $336.9M | $324.5M |
| Shareholders' Equity | $689.6M | $709.5M | $680.7M |
| Retained Earnings | $272.0M | $284.9M | $273.7M |
| AOCI | $-78.9M | $-70.0M | $-79.5M |
| Total L&E | $1.06B | $1.05B | $1.01B |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-9.5M | $12.9M | $-11.3M |
| Non-Cash Adjustments | $-34.6M | $58.1M | $60.6M |
| Working Capital Changes | $77.0M | $-14.5M | $-3.4M |
| Cash from Operations | $32.9M | $56.6M | $45.9M |
| Capital Expenditures | $20.3M | — | — |
| Cash from Investing | $-22.7M | $-25.6M | $2.7M |
| Share Buybacks | — | $6.9M | $14.2M |
| Cash from Financing | $-20.3M | $-26.7M | $-29.5M |
| FX Effect | $-682.0K | $819.0K | $-860.0K |
| Net Change in Cash | $-10.8M | $5.1M | $18.3M |
| Beginning Cash | $52.9M | $42.0M | $47.1M |
| Ending Cash | $42.0M | $47.1M | $65.4M |
Frequently Asked Questions
How does OIL STATES INTERNATIONAL, INC make money?
The company derives revenue primarily from manufacturing and selling hydraulic fracturing tools, downhole power systems, and wireline services. Key product lines include pump trucks for fracking operations, coiled tubing units, and specialized drill bits that enhance extraction efficiency in both onshore and offshore environments.
What are the main risks for OIS?
The company faces substantial exposure to volatile oil and gas commodity prices which directly impact drilling activity levels and client spending. A persistent retained earnings deficit of $273.7M and recent net losses highlight liquidity pressures and potential solvency concerns if cash flows deteriorate further. Regulatory changes regarding hydraulic fracturing in key jurisdictions like the US could severely disrupt revenue streams from its core fracking tool segment.
What is OIS's competitive advantage?
Oil States International possesses a strong moat through its proprietary downhole power technology which reduces friction and increases well productivity. The firm benefits from deep-rooted relationships with major energy service providers and a diversified global customer base that mitigates regional market volatility. Its specialized manufacturing capabilities in high-complexity hydraulic fracturing equipment create a significant barrier to entry for competitors.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.