~~Table of Contents~~

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 March 31, ~~2023~~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 April ~~21, 2023,~~19, 2024, the number of shares of common stock outstanding was ~~64,254,578.~~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 March 31,

2023

2022

Three Months Ended March 31,

2024

Revenues:

Products

99,840

85,761

Products

Services

96,359

78,283

Services

167,262

196,199

164,044

Costs and expenses:

Product costs

78,677

64,801

Product costs

Service costs

72,058

61,803

Cost of revenues (exclusive of depreciation and amortization expense presented below)

150,735

126,604

Cost of revenues (exclusive of depreciation and amortization expense presented below)

Selling, general and administrative expense

24,016

23,833

Depreciation and amortization expense

15,256

17,817

Other operating expense, net

317

126

190,324

168,380

Depreciation and amortization expense

Impairment of goodwill

Other operating (income) expense, net

178,439

Operating income (loss)

5,875

(4,336)

Interest expense, net

(2,391)

(2,672)

Other income, net

276

1,025

Interest expense, net

Other income (expense), net

Income (loss) before income taxes

3,760

(5,983)

Income tax provision

(1,602)

(3,441)

Income tax provision

Net income (loss)

2,158

(9,424)

Net income (loss) per share:

Basic

0.03

(0.16)

Basic

Diluted

0.03

(0.16)

Weighted average number of common shares outstanding:

Basic

62,825

60,498

Diluted

63,072

60,498

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 March 31,

2023

2022

Three Months Ended March 31,

2024

Net income (loss)

2,158

(9,424)

Other comprehensive income:

Other comprehensive income (loss):

Currency translation adjustments

4,149

861

Comprehensive income (loss)

6,307

(8,563)

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)


		March 31, 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	$	15,807	$	42,018
Accounts receivable, net	Accounts receivable, net	220,202		218,769
Inventories, net	Inventories, net	196,278		182,658
Prepaid expenses and other current assets	Prepaid expenses and other current assets	18,130		19,317
Total current assets	Total current assets	450,417		462,762

Property, plant, and equipment, net	Property, plant, and equipment, net	306,134		303,835
Property, plant, and equipment, net
Property, plant, and equipment, net
Operating lease assets, net	Operating lease assets, net	23,828		23,028
Goodwill, net	Goodwill, net	79,579		79,282
Other intangible assets, net	Other intangible assets, net	165,673		169,798
Other noncurrent assets	Other noncurrent assets	24,506		25,687
Total assets	Total assets	$	1,050,137	$	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	$	527	$	17,831
Accounts payable	Accounts payable	73,478		73,251
Accrued liabilities	Accrued liabilities	35,414		49,057
Current operating lease liabilities	Current operating lease liabilities	6,528		6,142
Income taxes payable	Income taxes payable	3,719		2,605
Deferred revenue	Deferred revenue	48,969		44,790
Total current liabilities	Total current liabilities	168,635		193,676

Long-term debt	Long-term debt	138,484		135,066
Long-term debt
Long-term debt
Long-term operating lease liabilities	Long-term operating lease liabilities	20,912		20,658
Deferred income taxes	Deferred income taxes	7,143		6,652
Other noncurrent liabilities	Other noncurrent liabilities	19,445		18,782
Total liabilities	Total liabilities	354,619		374,834

Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 77,143,220 shares and 76,587,920 shares issued, respectively		771		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	1,123,876		1,122,292
Retained earnings	Retained earnings	274,185		272,027
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(74,792)		(78,941)
Treasury stock, at cost, 12,888,342 and 12,684,101 shares, respectively		(628,522)		(626,586)
Total stockholders' equity		695,518		689,558
Total liabilities and stockholders' equity		$	1,050,137	$	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 March 31, 2023		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
Balance, December 31, 2022		$	766	$	1,122,292	$	272,027	$	(78,941)	$	(626,586)	$	689,558
Net income		—		—		2,158		—		—		2,158
Three Months Ended March 31, 2024														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
Net loss
Currency translation adjustments (excluding intercompany advances)	Currency translation adjustments (excluding intercompany advances)	—		—		—		3,494		—		3,494
Currency translation adjustments on intercompany advances	Currency translation adjustments on intercompany advances	—		—		—		655		—		655
Stock-based compensation expense	Stock-based compensation expense	5		1,584		—		—		—		1,589
Surrender of stock to settle taxes on stock awards	Surrender of stock to settle taxes on stock awards	—		—		—		—		(1,936)		(1,936)
Balance, March 31, 2023		$	771	$	1,123,876	$	274,185	$	(74,792)	$	(628,522)	$	695,518
Balance, March 31, 2024


Three Months Ended March 31, 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		—		—		(9,424)		—		—		(9,424)
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
Net income
Currency translation adjustments (excluding intercompany advances)	Currency translation adjustments (excluding intercompany advances)	—		—		—		(3,580)		—		(3,580)
Currency translation adjustments on intercompany advances	Currency translation adjustments on intercompany advances	—		—		—		4,441		—		4,441
Stock-based compensation expense	Stock-based compensation expense	7		1,828		—		—		—		1,835
Surrender of stock to settle taxes on stock awards	Surrender of stock to settle taxes on stock awards	—		—		—		—		(990)		(990)
Balance, March 31, 2022		$	746	$	1,106,963	$	272,143	$	(65,170)	$	(626,574)	$	688,108
Balance, March 31, 2023

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)

Three Months Ended March 31,

2023

2022

Three Months Ended March 31,

2024

Cash flows from operating activities:

Net income (loss)

2,158

(9,424)

Net income (loss)

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

Depreciation and amortization expense

15,256

17,817

Depreciation and amortization expense

Impairment of goodwill

Stock-based compensation expense

1,589

1,835

Amortization of deferred financing costs

449

469

Amortization of deferred financing costs

Deferred income tax provision (benefit)

396

(174)

Deferred income tax provision (benefit)

Gains on disposals of assets

(210)

(543)

Other, net

550

Other, net

Changes in operating assets and liabilities:

Accounts receivable

(745)

(9,086)

Accounts receivable

Inventories

(12,802)

(13,090)

Accounts payable and accrued liabilities

(18,329)

(4,555)

Accounts payable and accrued liabilities

Deferred revenue

4,179

4,324

Other operating assets and liabilities, net

2,124

1,142

Other operating assets and liabilities, net

Net cash flows used in operating activities

(5,918)

(10,735)

Cash flows from investing activities:

Capital expenditures

(6,568)

(2,858)

Proceeds from disposition of property and equipment

223

869

Capital expenditures

Proceeds from disposition of equipment

Other, net

(48)

(67)

Other, net

Net cash flows used in investing activities

(6,393)

(2,056)

Cash flows from financing activities:

Revolving credit facility borrowings

27,865

367

Revolving credit facility repayments

(22,865)

(367)

Revolving credit facility repayments

Repayment of 1.50% convertible senior notes

(17,315)

—

Other debt and finance lease repayments, net

(106)

(165)

Repayment of 1.50% convertible senior notes

Other debt and finance lease repayments

Payment of financing costs

(21)

(68)

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

(1,936)

(990)

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

(14,378)

(1,223)

Effect of exchange rate changes on cash and cash equivalents

478

320

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

(26,211)

(13,694)

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

15,807

39,158

Cash paid (received) for:

Interest

485

522

Income taxes, net

(2,465)

119

Income taxes, net

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

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.

In the first quarter 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 and Related 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. ~~Details~~Goodwill Impairment and Other Charges

In 2023, the Company implemented initiatives to reduce future costs, which are continuing into 2024. These management actions included the consolidation, relocation and exit of ~~Selected Balance Sheet Accounts~~

~~Additional information regarding selected balance sheet accounts~~certain manufacturing and service locations as well as the realignment of ~~March 31, 2023~~operations within two of the Company’s reportable segments. The Company has also incurred legal and ~~December 31, 2022 is presented below~~other related costs to enforce certain patents related to its proprietary technologies. As a result of these actions, the Company recorded the following charges during the first quarter of 2024 (in thousands):

March 31,
2023 December 31,
2022
Accounts receivable, net:
Trade $ 163,360 $ 145,540
Unbilled revenue 27,849 29,679
Contract assets 27,731 42,599
Other 6,621 6,177
Total accounts receivable 225,561 223,995
Allowance for doubtful accounts (5,359) (5,226)
$ 220,202 $ 218,769
Allowance for doubtful accounts as a percentage of total accounts receivable 2 % 2 %


	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

March 31,
2023 December 31,
2022
Deferred revenue (contract liabilities) $ 48,969 $ 44,790

AsGoodwill

The Company does not amortize goodwill, but rather assesses goodwill for impairment annually and when an event occurs or circumstances change that indicate the carrying amounts may not be recoverable. If the carrying amount of ~~March 31, 2023, accounts receivable, net in the United States~~a reporting unit exceeds its fair value, goodwill is considered impaired and the United Kingdom represented 75% and 12%, respectively, of the total. No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of March 31, 2023.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 non-cash goodwill impairment charge totaling $10.0 million in the first quarter of 2024. This impairment charge did not impact the Company’s liquidity position, debt covenants or cash flows.

Management used a combination of 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 March 31, 2024 and December 31, 2023 is presented below (in thousands):


	March 31, 2024			December 31, 2023
Accounts receivable, net:
Trade	$	134,870		$	128,405
Unbilled revenue	23,815			27,756
Contract assets	41,355			46,746
Other	5,094			4,801
Total accounts receivable	205,134			207,708
Allowance for doubtful accounts	(4,369)			(4,497)
	$	200,765		$	203,211

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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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

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

For the three months ended March 31, ~~2023,~~2024, the ~~$14.9~~$5.4 million net decrease in contract assets was primarily attributable to ~~$27.8~~$27.4 million transferred to accounts receivable, ~~during the period,~~ which was partially offset by ~~$12.9~~$22.0 million in revenue ~~recognized.~~recognized during the period. Deferred revenue (contract liabilities) increased by ~~$4.2~~$4.8 million in the first three months of ~~2023,~~2024, primarily reflecting ~~$13.2~~$10.7 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of ~~$9.0~~$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 three months ended March 31, ~~2023~~2024 and ~~2022~~2023 (in thousands):


		Three Months Ended March 31,
		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	133		943
Write-offs	Write-offs	(21)		(635)
Other	Other	21		—
Allowance for doubtful accounts – March 31	Allowance for doubtful accounts – March 31	$	5,359	$	4,779


		March 31, 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	$	95,094	$	90,443
Work in process	Work in process	31,632		32,079
Raw materials	Raw materials	108,058		97,817
Total inventories	Total inventories	234,784		220,339
Allowance for excess or obsolete inventory	Allowance for excess or obsolete inventory	(38,506)		(37,681)
		$	196,278	$	182,658
	$


				March 31, 2023			December 31, 2022
				March 31, 2024
				March 31, 2024
				March 31, 2024									December 31, 2023
Property, plant and equipment, net:	Property, plant and equipment, net:

Property, plant and equipment	Property, plant and equipment	$	1,139,138		$	1,128,834

Property, plant and equipment

Property, plant and equipment
Accumulated depreciation	Accumulated depreciation	(833,004)			(824,999)
									$	306,134	$	303,835
								$

For the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, depreciation expense was ~~$11.0~~$9.9 million and ~~$12.7~~$11.0 million, respectively.


		March 31, 2023						December 31, 2022
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	March 31, 2024															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:	Other intangible assets:
Customer relationships
Customer relationships
Customer relationships	Customer relationships	$	141,259	$	49,851	$	91,408	$	141,179	$	47,629	$	93,550
Patents/Technology/Know-how	Patents/Technology/Know-how	69,925		30,537		39,388		69,830		29,214		40,616
Tradenames and other	Tradenames and other	52,497		17,620		34,877		52,488		16,856		35,632
		$	263,681	$	98,008	$	165,673	$	263,497	$	93,699	$	169,798
	$

For the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, amortization expense was $4.3 million and ~~$5.2~~$4.3 million, respectively.

910

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Other noncurrent assets:	Other noncurrent assets:
Deferred compensation plan	Deferred compensation plan	$	18,349	$	17,551
Deferred financing costs(1)		—		1,893
Deferred compensation plan
Deferred compensation plan
Deferred financing costs
Deferred income taxes	Deferred income taxes	1,518		1,517
Other	Other	4,639		4,726
		$	24,506	$	25,687
	$

~~____________________~~

~~(1)Unamortized deferred financing costs are presented as an offset to outstanding borrowing under the ABL Facility as of March 31, 2023.~~


		March 31, 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	$	15,882	$	33,659
Accrued taxes, other than income taxes	Accrued taxes, other than income taxes	3,175		1,865
Insurance liabilities	Insurance liabilities	4,976		4,640
Accrued interest	Accrued interest	3,324		1,784
Accrued commissions	Accrued commissions	2,432		2,302
Other	Other	5,625		4,807
		$	35,414	$	49,057
	$

3.4. Long-term Debt

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


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Revolving credit facility(1)	Revolving credit facility(1)	$	3,305	$	—
2026 Notes(2)	2026 Notes(2)	132,379		132,164
2023 Notes		—		17,303
Other debt and finance lease obligations	Other debt and finance lease obligations	3,327		3,430
Total debt	Total debt	139,011		152,897
Less: Current portion	Less: Current portion	(527)		(17,831)
Total long-term debt	Total long-term debt	$	138,484	$	135,066

____________________

(1)~~Outstanding borrowings under the revolving credit facility are presented net of $1.7 million of unamortized deferred financing costs as of March 31, 2023.~~ Unamortized deferred financing costs of ~~$1.9~~$1.8 million and $1.1 million as of 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 March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.

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.

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

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

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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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 March 31, ~~2023,~~2024, the Company had ~~$5.0 million of~~no borrowings outstanding under the ABL Facility ~~borrowings~~ and $15.9 million of outstanding letters of credit. The total amount available to be drawn as of March 31, ~~2023~~2024 was ~~$92.8~~$86.3 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit. As of March 31, ~~2023,~~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. Net proceeds from the 2026 Notes offering, after deducting issuance costs, totaled $130.6 million. The Company used $120.0 million of the cash proceeds to purchase $125.0 million principal amount of the outstanding 2023 Notes (as defined below) at a discount, with the balance added to cash on-hand.

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 March 31, ~~2023,~~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.

4.5. 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 March 31, ~~2023~~2024 was ~~$151.1~~$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)

~~5. Stockholders'~~6. 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 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

~~555~~1,296

Shares withheld for taxes on vesting of stock awards

~~(204)~~(408)

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

~~64,255~~64,215

As of March 31, ~~2023~~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 ~~repurchases~~repurchase of the ~~Company's~~Company’s common stock, par value $0.01 per share, through February 2025. During the three months ended March 31, 2024, there were no repurchases of common stock under the program. The amount remaining under the Company’s share repurchase authorization as of March 31, 2024 was $18.1 million. Subject to applicable securities laws, such purchases will be at such times and in such amounts as the Company deems appropriate. ~~As of March 31, 2023, no repurchases were made under this authorization.~~

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 ~~$74.8~~$73.0 million at March 31, ~~2023.~~2024. For the three months ended March 31, ~~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 three months ended March 31, 2024, the exchange rates for the British pound and the Brazilian real weakened by 1% and 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 ~~rates~~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 $4.1 million. During the three months ended March 31, 2022, the exchange rate for the British pound weakened by 3% compared to the U.S. dollar while the Brazilian real strengthened by 17% compared to the U.S. dollar, contributing to other comprehensive income of $0.9 million.

6.7. Income Taxes

~~The income~~Income tax expense for the three months ended 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 March 31, ~~2023,~~2024, the ~~Company's~~Company’s income tax expense was $24 thousand on a pre-tax loss of $13.4 million, which included a $10.0 million goodwill impairment charge (approximately $7.7 million of which was non-deductible) and other non-deductible expenses. This compares to an income tax expense of $1.6 million on pre-tax income of $3.8 million, which included certain non-deductible expenses and discrete tax items. This compares to an income tax expense of $3.4 million on a pre-tax loss of $6.0 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 three months ended March 31, ~~2022.~~2023.

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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

7.8. 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 months ended March 31, ~~2023~~2024 and ~~2022~~2023 (in thousands, except per share amounts):

Three Months Ended
March 31,

2023

2022

Three Months Ended
March 31,

2024

Numerators:

Net income (loss)

2,158

(9,424)

Net income (loss)

Less: Income attributable to unvested restricted stock awards

(42)

—

Numerator for basic net income (loss) per share

2,116

(9,424)

Numerator for basic net income (loss) per share

Effect of dilutive securities:

Unvested restricted stock awards

—

Unvested restricted stock awards

Numerator for diluted net income (loss) per share

2,116

(9,424)

Denominators:

Weighted average number of common shares outstanding

64,068

61,627

Less: Weighted average number of unvested restricted stock awards outstanding

(1,243)

(1,129)

Less: Weighted average number of unvested restricted stock awards outstanding

Denominator for basic net income (loss) per share

62,825

60,498

Effect of dilutive securities:

Unvested restricted stock awards

—

Unvested performance share units

247

—

Effect of dilutive securities:

Performance share units

Denominator for diluted net income (loss) per share

63,072

60,498

Net income (loss) per share:

Basic

0.03

(0.16)

Diluted

0.03

(0.16)

Diluted

The calculation of diluted earnings per share for the three months ended March 31, 2024 and 2023 ~~and 2022~~ excluded ~~209~~122 thousand shares and ~~298~~209 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect. Additionally, shares issuable upon conversion of the ~~Company's convertible senior notes~~2026 Notes were excluded ~~from each period~~ due to, among other factors, the ~~Company's~~Company’s share price.

8.9. 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 three months ended March 31, ~~2023~~2024 (in thousands):

Stock Options Service-based Restricted Stock Performance- and Service-based Stock Units
Outstanding – December 31, 2022 245 1,222 494
Granted — 555 168
Vested — (513) —
Forfeited (82) — —
Outstanding – March 31, 2023 163 1,264 662
Weighted average grant date fair value (2023 awards) $ 9.11 $ 9.11


	Stock Options	Service-based Restricted Stock		Performance- and Service-based Stock Units
Outstanding – December 31, 2023	158	1,233		927
Granted	—	852		250
Vested and distributed	—	(556)		(444)
Forfeited	(81)	—		—
Outstanding – March 31, 2024	77	1,529		733
Weighted average grant date fair value (2024 awards)		$	6.10	$	6.10

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 ~~(39 thousand units outstanding as of March 31, 2023)~~ 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 March 31, 2024. Performance-based stock unit awards ~~generally~~ vest at the end

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OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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.

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

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

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 ~~restricted~~ 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 months ended March 31, 2024 and 2023 ~~and 2022~~ totaled ~~$1.6~~$1.8 million and ~~$1.8~~$1.6 million, respectively. As of March 31, ~~2023,~~2024, there was ~~$11.4~~$11.8 million of ~~pre-tax~~total compensation costs related to ~~service-based and performance-based~~unvested restricted stock awards, which ~~will~~is expected to be recognized in future periods as vesting conditions are satisfied.

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

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

9.10. 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 months ended March 31, ~~2023~~2024 and ~~2022~~2023 is summarized in the following tables (in thousands).

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets
Three Months Ended March 31, 2023
Offshore/Manufactured Products $ 98,199 $ 4,668 $ 11,090 $ 535 $ 548,439
Well Site Services 67,058 6,146 6,966 5,772 212,415
Downhole Technologies 30,942 4,275 (1,519) 249 256,095
Corporate — 167 (10,662) 12 33,188
Total $ 196,199 $ 15,256 $ 5,875 $ 6,568 $ 1,050,137


	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

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets
Three Months Ended March 31, 2022
Offshore/Manufactured Products $ 84,112 $ 5,330 $ 10,196 $ 902 $ 559,877
Well Site Services 48,172 7,932 (3,395) 1,548 197,077
Downhole Technologies 31,760 4,384 (1,505) 317 265,958
Corporate — 171 (9,632) 91 55,053
Total $ 164,044 $ 17,817 $ (4,336) $ 2,858 $ 1,077,965
____________________

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

(2)Operating loss included $1.0 million in facility consolidation and other charges.

(3)Operating loss included a $10.0 million 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 months ended March 31, ~~2023~~2024 and ~~2022~~2023 (in thousands):

Offshore/Manufactured Products Well Site Services Downhole Technologies Total
2023 2022 2023 2022 2023 2022 2023 2022
Three Months Ended March 31
Major revenue categories -
Project-driven products $ 39,132 $ 33,844 $ — $ — $ — $ — $ 39,132 $ 33,844
Short-cycle:
Completion products and services 17,955 13,580 65,406 45,166 30,942 31,760 114,303 90,506
Drilling services — — 1,652 3,006 — — 1,652 3,006
Other products 9,485 7,044 — — — — 9,485 7,044
Total short-cycle 27,440 20,624 67,058 48,172 30,942 31,760 125,440 100,556
Other products and services 31,627 29,644 — — — — 31,627 29,644
$ 98,199 $ 84,112 $ 67,058 $ 48,172 $ 30,942 $ 31,760 $ 196,199 $ 164,044


	Offshore Manufactured Products				Well Site Services				Downhole Technologies				Total
	2024		2023		2024		2023		2024		2023		2024		2023
Three Months Ended March 31
Project-driven:
Products	$	53,137	$	48,617	$	—	$	—	$	—	$	—	$	53,137	$	48,617
Services	25,233		24,630		—		—		—		—		25,233		24,630
Total project-driven	78,370		73,247		—		—		—		—		78,370		73,247
Military and other products	8,487		7,258		—		—		—		—		8,487		7,258



Short-cycle products and services	—		—		47,292		67,058		33,113		48,636		80,405		115,694
	$	86,857	$	80,505	$	47,292	$	67,058	$	33,113	$	48,636	$	167,262	$	196,199

Revenues from products and services transferred to customers over time accounted for approximately ~~66%~~67% and ~~62%~~66% of consolidated revenues for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively. The balance of revenues for the respective periods relates to products and services transferred to customers at a point in time. As of March 31, ~~2023,~~2024, the Company had ~~$209.9~~$203.0 million of remaining backlog related to contracts with an original expected duration of greater than one year. Approximately ~~35%~~43% of this remaining backlog is expected to be recognized as revenue over the remaining nine months of ~~2023,~~2024, with an additional ~~46%~~33% recognized in ~~2024~~2025 and the balance thereafter.

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

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

~~10.~~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, including occasional claims by individuals alleging exposure to hazardous materials as a result of the Company's products or operations. Some of these claims relate to matters occurring prior to the acquisition of businesses, and some relate to businesses the Company has sold. In certain cases, the Company is entitled to indemnification from the sellers of businesses and, in other cases, the Company has indemnified the buyers of businesses.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 ~~provided for or~~ covered by ~~indemnity or~~ 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 ~~disruptions in the bank and capital markets, including the two U.S. bank failures which occurred in March 2023;~~

•~~the impact of~~ the ongoing military ~~action between Russia~~actions in Europe and ~~Ukraine, that began in February 2022,~~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 financial health and 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;

•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
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
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
2022			4.67		$	7.50	$	8.03	$	5.55	$	6.45

________________

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

On 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 ~~21, 2023,~~19, 2024, Brent crude oil, WTI crude oil and natural gas spot prices closed at ~~$83.36~~$87.96 per barrel, ~~$77.86~~$83.79 per barrel and ~~$2.20~~$1.43 per MMBtu, respectively. Additionally, ~~as presented in more detail below,~~ the U.S. drilling rig count reported on April ~~21, 2023~~19, 2024 was ~~753~~619 rigs – comparable to the first quarter ~~2023~~2024 average.

In February 2023, we repaid the $17.3 million principal amount, plus accrued interest, of outstanding 2023 Notes (as defined below). Additionally, our Board of Directors authorized a $25.0 million stock repurchase plan, which extends through February 2025. No repurchases have been made under the plan as of March 31, 2023.

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: ~~global uncertainties related to disruptions in the banking sector,~~ geopolitical conflicts ~~(such as~~in Europe and the ~~direction and outcome of Russia's invasion of Ukraine) and~~Middle East, along with associated international tensions; ~~sanctions;~~ the perceived risk of a global economic recession; 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. ~~Capital investment by~~

U.S. drilling, completion and production activity and, in turn, our ~~customers temporarily declined due~~financial results, are sensitive to ~~these factors and~~near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the ~~desire to generate sustainable cash flows.~~short-term, call-out nature of our U.S. operations.

Customer spending in the natural gas shale plays has ~~been limited~~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.

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.

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 ~~40%~~90% of ~~Offshore/~~Offshore Manufactured Products segment sales in the first three months of ~~2023~~2024 were driven by our ~~customers'~~customers’ capital spending for products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline ~~tie-~~

intie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as ~~"project-driven products"~~“project-driven products and 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 ~~$326~~$305 million as of March 31, ~~2023~~2024 from ~~$308~~$327 million as of December 31, ~~2022 and $265 million as of March 31, 2022.~~2023. Bookings totaled ~~$118~~$66 million in the first quarter of ~~2023,~~2024, yielding a quarterly book-to-bill ratio of ~~1.2x.~~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
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 ~~the rest of the world.~~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, which requires ongoing technological and product developments.~~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 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:
Land – Oil
Land – Oil
Land – Oil													492		483				579
Land – Natural gas and other												Land – Natural gas and other	107		119				155
Offshore												Offshore	20		21				19
	619													619		623				753

		As of April 21, 2023							Average for the
					Three Months Ended March 31,
							2023			2022
United States Rig Count:
Land – Oil			571							579		493
Land – Natural gas and other		161						155			123
Offshore		21						19			17
		753						753			633
International Rig Count:
Land								897			828
Offshore								226			193
								1,123			1,021
								1,876			1,654

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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 March 31, ~~2023,~~2024, oil-directed drilling accounted for ~~78%~~81% of the total U.S. rig count – with the balance largely natural gas related. ~~As can be derived from the table above, the average U.S. rig count for the first three months of 2023 increased by 120 rigs, or 19%, compared to the average for the first three months of 2022.~~

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 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.

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 disaggregated revenue information as of the 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 months ended March 31, ~~2023~~2024 and ~~2022~~2023 (in thousands, except per share amounts):


		Three Months Ended March 31,
				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			$	99,840	$	85,761	$	14,079
Products
Products
Services	Services			96,359		78,283		18,076
				196,199		164,044		32,155
			167,262
Costs and expenses:	Costs and expenses:
Product costs
Product costs
Product costs	Product costs			78,677		64,801		13,876
Service costs	Service costs			72,058		61,803		10,255
Cost of revenues (exclusive of depreciation and amortization expense presented below)	Cost of revenues (exclusive of depreciation and amortization expense presented below)			150,735		126,604		24,131
Selling, general and administrative expenses				24,016		23,833		183
Selling, general and administrative expenses(1)
Depreciation and amortization expense	Depreciation and amortization expense			15,256		17,817		(2,561)

Other operating income, net				317		126		191
				190,324		168,380		21,944
Impairment of goodwill(2)
Other operating (income) expense, net(3)
			178,439
Operating income (loss)	Operating income (loss)			5,875		(4,336)		10,211

Interest expense, net	Interest expense, net			(2,391)		(2,672)		281
Other income, net				276		1,025		(749)
Interest expense, net
Interest expense, net
Other income (expense), net
Income (loss) before income taxes	Income (loss) before income taxes			3,760		(5,983)		9,743
Income tax provision	Income tax provision			(1,602)		(3,441)		1,839
Net income (loss)	Net income (loss)			$	2,158	$	(9,424)	$	11,582
										Net income (loss) per share:
Net income (loss) per share:
Net income (loss) per share:
Basic	Basic			$	0.03	$	(0.16)
Diluted	Diluted			0.03		(0.16)
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			62,825		60,498
Diluted	Diluted			63,072		60,498
Diluted
Diluted

_______________

(1)During the three months ended 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 $2.1 million associated with the Offshore Manufactured Products and the Well Site Services segments’ ongoing consolidation and relocation of certain manufacturing and service locations.

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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 months ended March 31, ~~2023~~2024 and ~~2022~~2023 is summarized below (in thousands):

Three Months Ended
March 31,
2023 2022 Variance
Revenues
Offshore/Manufactured Products
Project-driven products $ 39,132 $ 33,844 $ 5,288
Short-cycle products 27,440 20,624 6,816
Other products and services 31,627 29,644 1,983
Total Offshore/Manufactured Products 98,199 84,112 14,087
Well Site Services 67,058 48,172 18,886
Downhole Technologies 30,942 31,760 (818)
Total $ 196,199 $ 164,044 $ 32,155
Operating income (loss)
Offshore/Manufactured Products $ 11,090 $ 10,196 $ 894
Well Site Services 6,966 (3,395) 10,361
Downhole Technologies (1,519) (1,505) (14)
Corporate (10,662) (9,632) (1,030)
Total $ 5,875 $ (4,336) $ 10,211


	Three Months Ended March 31,
		2024		2023		Variance
Revenues:
Offshore Manufactured Products
Project-driven:
Products		$	53,137	$	48,617	$	4,520
Services		25,233		24,630		603
		78,370		73,247		5,123
Military and other products		8,487		7,258		1,229
		86,857		80,505		6,352
Well Site Services		47,292		67,058		(19,766)
Downhole Technologies		33,113		48,636		(15,523)
		$	167,262	$	196,199	$	(28,937)

Operating income (loss):
Offshore Manufactured Products(1)		$	10,603	$	7,698	$	2,905
Well Site Services(2)		(419)		6,966		(7,385)
Downhole Technologies(3)		(12,079)		1,873		(13,952)
Corporate		(9,282)		(10,662)		1,380
		$	(11,177)	$	5,875	$	(17,052)

_______________

(1)During the three months ended March 31, 2024, we recognized facility consolidation charges of $1.5 million associated with the Offshore Manufactured Products segment’s ongoing consolidation and relocation of a manufacturing and service location.

(2)During the three months ended 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 $10.0 million non-cash impairment charge related to goodwill reassigned to the business in connection with the segment realignment discussed above.

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

We reported a net loss for the three months ended March 31, 2024 of $13.4 million, or $0.21 per share, which included a non-cash goodwill impairment charge of $10.0 million ($9.5 million after-tax, or $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 March 31, 2023 of $2.2 million, or $0.03 per share. ~~These~~

Our first quarter 2024 results, ~~compare to a net loss~~reflect the impact of an industry-wide decline in U.S. well completions, driven particularly by weak natural gas prices (the average spot price for Henry Hub natural gas was $2.15 per MMBtu in the ~~three months ended March 31, 2022~~first quarter of ~~$9.4 million, or $0.16 per share.~~

~~Increased capital~~2024, down 19% from the prior-year period). The impact of the decline in investments by our U.S. customers ~~together with our internal cost control~~was partially offset by growth in offshore and ~~strict capital discipline~~international project activity and associated backlog conversion. Management continues to implement measures ~~and other corporate actions, resulted~~ in ~~significant improvements in our recent consolidated results.~~areas experiencing lower activity levels to reduce future costs.

Revenues. Consolidated total revenues in the first three months of ~~2023 increased $32.2~~2024 decreased $28.9 million, or ~~20%~~15%, from the first three months of ~~2022.~~2023.

Consolidated product revenues in the first three months of ~~2023 increased $14.1~~2024 decreased $5.5 million, or ~~16%~~6%, from the 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 higher customer demand for ~~connector, drilling~~project-driven production facility and ~~short-cycle~~connector products. Consolidated service revenues in the first three months of ~~2023 increased $18.1~~2024 decreased $23.4 million, or ~~23%~~24%, from the first three months of ~~2022~~2023 due primarily to ~~increased~~lower U.S. land-based customer spending in the U.S. shale play regions and the Gulf of Mexico. As can be derived from the following table, 64% of our consolidated revenues in the first three months of 2023 were derived from sales of our short-cycle product and service offerings, which compares to 61% in the prior-year period.investments.

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

Offshore/ Manufactured Products Well Site Services Downhole Technologies Total
Three Months Ended March 31 2023 2022 2023 2022 2023 2022 2023 2022
Major revenue categories -
Project-driven products $ 39,132 $ 33,844 $ — $ — $ — $ — $ 39,132 $ 33,844
Short-cycle:
Completion products and services 17,955 13,580 65,406 45,166 30,942 31,760 114,303 90,506
Drilling services — — 1,652 3,006 — — 1,652 3,006
Other products 9,485 7,044 — — — — 9,485 7,044
Total short-cycle 27,440 20,624 67,058 48,172 30,942 31,760 125,440 100,556
Other products and services 31,627 29,644 — — — — 31,627 29,644
$ 98,199 $ 84,112 $ 67,058 $ 48,172 $ 30,942 $ 31,760 $ 196,199 $ 164,044


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	75	%	71	%	—	%	—	%	85	%	82	%	51	%	52	%
Services	Services	25	%	29	%	100	%	100	%	15	%	18	%	49	%	48	%
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) ~~increased $24.1~~decreased $18.8 million, or ~~19%~~12%, in the first three months of ~~2023~~2024 compared to the first three months of ~~2022.~~2023.

Consolidated product costs in the first three months of 2024 decreased $3.5 million, or 4%, compared to the first three months of 2023 ~~increased $13.9~~due primarily to the reported revenue decline. Consolidated service costs in the first three months of 2024 decreased $15.2 million, or 21%, compared to the first three months of ~~2022~~2023, due to the reported revenue growth and a shift in sales mix, as well as higher material transportation, labor and other costs. Consolidated service costs in the first three months of 2023 increased $10.3 million, or 17%, compared to the first three months of 2022, dueprimarily to the impact of ~~higher revenue levels and increased labor and other costs.~~lower U.S. activity levels.

Selling, General and Administrative Expense. Selling, general and administrative expense ~~increased $0.2~~was $22.5 million ~~or 1%,~~ in the first three months of ~~2023~~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 5%, from the first three months of ~~2022, despite a 20% increase~~2023, due primarily to reductions in ~~total revenues.~~short- and long-term incentive expenses.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased ~~$2.6~~$1.1 million, or ~~14%~~7%, in the first three months of ~~2023~~2024 compared to the prior-year ~~period, driven primarily by reduced capital investments made in our Well Site Services segment in recent years.~~period. Note ~~9, "Segments~~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) Expense, Net. In the first three months of 2024, other operating income, net included, among other items, gains on disposals of equipment totaling $1.2 million and charges of $2.1 million recognized in connection with our ongoing consolidation and exit of certain manufacturing and service locations within our Offshore Manufactured Products and Well Site Services segments.

Operating Income (Loss). Our consolidated operating loss was $11.2 million in the first three months of 2024, which included a $10.0 million non-cash goodwill impairment charge and $2.5 million in facility consolidation and other charges. This compares to consolidated operating income ~~was~~of $5.9 million in the first three months of 2023. ~~This compares to a consolidated~~Excluding the 2024 charges, operating ~~loss of $4.3~~income decreased $4.5 million ~~recognized in the first three months of 2022.~~year-over-year.

Interest Expense, Net. Net interest expense totaled $2.1 million in the first three months of 2024, which compares to $2.4 million in the first three months of ~~2023, which compares to $2.7 million in the first three months of 2022.~~2023. Interest expense as a percentage of total debt outstanding was approximately 7% in the first three months of ~~2023 and 6%~~2024, compared to 7% in the first three months of ~~2022.~~2023.

Income Tax. Income tax expense for the ~~the~~ first 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 three months of ~~2023,~~2024, our income tax provision was $24 thousand on a pre-tax loss of $13.4 million, which included a $10.0 million goodwill impairment charge and other non-deductible expenses. This compares to an income tax provision of $1.6 million on pre-tax income of $3.8 million ~~which included certain non-deductible expenses and discrete tax items. This compares to an income tax provision of $3.4 million on a pre-tax loss of $6.0 million~~ for the first three months of ~~2022,~~2023, which included ~~the impact of valuation allowances recorded against tax assets as well as~~ certain non-deductible expenses and discrete tax items.

Other Comprehensive ~~Income.~~Income (Loss). Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive ~~income.~~income (loss). Other comprehensive loss was $3.0 million in the first three months of 2024 compared to comprehensive income ~~was~~of $4.1 million in the first three months of 2023 ~~compared to comprehensive income of $0.9 million in the first three months of 2022~~ 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 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 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 three 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 ~~$14.1~~$6.4 million, or ~~17%~~8%, in the first three months of ~~2023~~2024 compared to the first three months of ~~2022~~2023 due primarily to increased demand for ~~connector, drilling~~international and ~~short-cycle products.~~offshore-project driven products and services.

Operating Income. Our ~~Offshore/~~Offshore Manufactured Products segment reported operating income of ~~$11.1~~$10.6 million in the first three months of ~~2023, compared~~2024, which included the $1.5 million in facility consolidation charges discussed above. This compares to operating income of ~~$10.2~~$7.7 million in the first three months of ~~2022. This year-over-year increase was due primarily to~~2023. Excluding the ~~segment's reported revenue growth, partially offset by a shift in product sales mix and the impact of higher material, transportation, labor and other costs.~~facility consolidation charges, operating income increased $4.4 million year-over-year.

Backlog. Backlog in our ~~Offshore/~~Offshore Manufactured Products segment totaled ~~$326~~$305 million as of March 31, ~~2023~~2024 compared to ~~$308~~$327 million as of December 31, ~~2022.~~2023. Bookings during the first three months of ~~2023~~2024 totaled ~~$118~~$66 million, yielding a quarterly book-to-bill ratio of ~~1.2x.~~0.8x.

Well Site Services

Revenues. Our Well Site Services segment revenues ~~increased $18.9~~decreased $19.8 million, or ~~39%~~29%, in the first three months of ~~2023~~2024 compared to the first three months of ~~2022,~~2023, driven primarily by ~~increased~~lower U.S. customer activity ~~levels.~~levels (particularly in natural gas basins) and competitive market conditions.

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Operating ~~Income (Loss).~~Income. Our Well Site Services segment reported an operating loss of $0.4 million in the first three months of 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, compared to an operating loss of $3.4 million in~~2023. Excluding the ~~first three months of 2022. The segment's~~costs discussed above, the Well Site Services segment’s operating results ~~improved $10.4~~declined $6.3 million from the prior-year period, due to the reported ~~revenue growth and a $1.8 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 ~~$0.8~~$15.5 million, or 3%32%, in the first three months of ~~2023~~2024 from the first 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 ~~$1.5~~$12.1 million in the first three months of ~~2023, consistent with~~2024, which included the ~~results~~$10.0 million non-cash goodwill impairment charge related to the first quarter of 2024 segment realignment. This compares to operating income of $1.9 million reported in the first three months of ~~2022.~~2023. Excluding the goodwill impairment charge, the Downhole Technologies operating results declined $4.0 million from the prior-year period, due primarily to the reported decrease in revenue and lower manufacturing volumes.

Corporate

Operating Loss. Corporate expenses in the first three months of ~~2023 increased $1.0~~2024 decreased $1.4 million, or ~~11%~~13%, from the first three months of ~~2022,~~2023, due primarily to ~~higher personnel costs~~lower short- and ~~professional fees.~~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 used in operations totaled ~~$5.9~~$11.4 million during the first three months of ~~2023,~~2024, compared to ~~$10.7~~$5.9 million used in operations during the first three months of ~~2022.~~2023.

During the first three months of 2024, $21.8 million was used to fund net working capital increases, primarily due to the payment of accrued 2023 short- and long-term cash incentives and a decrease in accounts payable. During 2023, $25.6 million was used to fund net working capital increases, primarily due to the payment of accrued 2022 short- and long-term cash incentives and an activity-driven increase in inventories. ~~During the first quarter of 2022, $21.3 million was used to fund net working capital increases, primarily due to increases in inventories and accounts receivable driven by higher activity levels.~~

Investing Activities

Net cash used in investing activities during the first three months of ~~2023~~2024 totaled ~~$6.4~~$7.8 million, compared to ~~$2.1~~$6.4 million used in investing activities during the first three months of ~~2022.~~2023.

Capital expenditures totaled ~~$6.6~~$10.1 million and ~~$2.9~~$6.6 million during the first three months of ~~2023~~2024 and ~~2022,~~2023, respectively. These investments were partially offset by proceeds from the sale of ~~property and~~ equipment of ~~$0.2~~$2.3 million and ~~$0.9~~$0.2 million during the first three months of 2024 and 2023, respectively.

Within our Offshore Manufactured Products segment, we completed the consolidation of certain facilities in Houston, Texas during 2023 and ~~2022, respectively.~~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 as of March 31, 2024.

WeIncluding the planned construction of a new facility in Batam, we expect to ~~spend~~invest approximately ~~$25~~$40 million in capital expenditures during ~~2023.~~2024. In 2024, we also expect to sell the two held-for-sale facilities (in Singapore and Houston), with proceeds totaling approximately $35 million. We plan to fund ~~these~~our capital expenditures with available cash, internally generated funds and, if necessary, borrowings under our ABL Facility discussed below.

Financing Activities

During the first three months of ~~2023,~~2024, net cash of ~~$14.4~~$3.7 million was used in financing ~~activities, which included the repayment of the $17.3 million principal amount of our outstanding 2023 Notes.~~activities. This compares to ~~$1.2~~$14.4 million of cash used in financing activities during the first three months of ~~2022.~~2023, which included the repayment of $17.3 million principal amount of our outstanding 2023 Notes.

As of March 31, ~~2023,~~2024, we had cash and cash equivalents totaling ~~$15.8~~$24.1 million, which compared to ~~$42.0~~$47.1 million as of December 31, ~~2022.~~2023.

As of March 31, ~~2023,~~2024, we had ~~$5.0 million in~~no borrowings outstanding under our ABL Facility, $135.0 million principal amount of our 2026 Notes (as defined below) outstanding and other debt of ~~$3.3~~$2.9 million. Our reported interest expense included amortization of deferred financing costs of ~~$0.4~~$0.5 million during the first three months of ~~2023.~~2024. For the first three months of ~~2023,~~2024, our contractual cash interest expense was ~~$2.0~~$1.9 million, or approximately 5%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 two~~multiple U.S. bank failures in ~~March~~ 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 second 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 common stock under the program. The amount remaining under our share repurchase authorization as of March 31, ~~2023, no repurchases were made under this authorization.~~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 March 31, ~~2023,~~2024, we had ~~$5.0 million of outstanding borrowings and~~ $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 March 31, ~~2023~~2024 was ~~$92.8~~$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 ~~3, "Long-term~~4, “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 March 31, ~~2023,~~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, 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 ~~17% and 18%~~16% of our combined total debt and ~~stockholders'~~stockholders’ equity as of March 31, ~~2023~~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, including occasional claims by individuals alleging exposure to hazardous materials as a result of our product or operations. Some of these claims relate to matters occurring prior to the acquisition of businesses, and some relate to businesses we have sold. In certain cases, we are entitled to indemnification from the sellers of the businesses and, in other cases, we have indemnified the buyers of businesses.matters.

See Note ~~10, "Commitments~~11, “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 March 31, ~~2023,~~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 March 31, ~~2023,~~2024, we had ~~$5.0 million in~~no floating-rate obligations outstanding under our ABL Facility. The use of floating-rate obligations ~~exposes~~would expose us to the risk of increased interest expense in the event of increases in short-term interest rates. ~~If the floating interest rates increased by 1% from March 31, 2023 levels, our consolidated interest expense would increase by a total of approximately $0.1 million annually.~~

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 three months of ~~2023,~~2024, our reported foreign currency exchange ~~losses~~gains were ~~$0.5~~$0.2 million and are included in ~~"Other~~“other operating (income) expense, ~~net"~~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 $4.1~~increased $3.0 million from ~~$78.9~~$70.0 million as of December 31, ~~2022~~2023 to ~~$74.8~~$73.0 million as of March 31, ~~2023,~~2024, due to changes in currency exchange rates. During the three months ended March 31, ~~2023,~~2024, the exchange rates for the British pound and the Brazilian real ~~strengthened~~weakened by 3%1% and 2%3%, respectively, compared to the U.S. dollar.

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 March 31, ~~2023~~2024 at the reasonable assurance level.

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(ii) Changes in Internal Control Over Financial Reporting

There have been no 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 March 31, ~~2023,~~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 ~~10, "Commitments~~11, “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.

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 or Programs(2)
January 1 through January 31, 2023 — $ — — $ —
February 1 through February 28, 2023 204,541 9.47 — 25,000,000
March 1 through March 31, 2023 — — — 25,000,000
Total 204,541 $ 9.47 —


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)All shares purchased during the three-month period ended March 31, ~~2023~~2024 were acquired from employees in connection with the settlement of income tax and related benefit withholding obligations arising from vesting ~~in restricted~~of stock ~~grants.~~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 March 31, ~~2023, no~~2024, $6.9 million of share repurchases ~~were~~have been made under this authorization.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

~~None.~~During the three months ended March 31, 2024, no director or executive officer adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading 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 Annual~~Company’s Quarterly Report on Form ~~10-K for the year ended December 31, 2000,~~10-Q, as filed with the SEC on ~~March 30, 2001~~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.

~~10.~~2 *+	—	~~Form of Restricted Stock Agreement under the Registrant~~'~~s Amended and Restated Equity Participation Plan.~~

~~10.~~3 *+	—	~~Form of Cash Award Agreement.~~

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)

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*			Filed herewith.
**			Furnished herewith.
+			~~Management contracts or compensatory plans or arrangements.~~

Table of Contents

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:

April ~~28, 2023~~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)


	Offshore/Manufactured Products				Well Site Services				Downhole Technologies				Total
	2023		2022		2023		2022		2023		2022		2023		2022
Three Months Ended March 31
Major revenue categories -
Project-driven products	$	39,132	$	33,844	$	—	$	—	$	—	$	—	$	39,132	$	33,844
Short-cycle:
Completion products and services	17,955		13,580		65,406		45,166		30,942		31,760		114,303		90,506
Drilling services	—		—		1,652		3,006		—		—		1,652		3,006
Other products	9,485		7,044		—		—		—		—		9,485		7,044
Total short-cycle	27,440		20,624		67,058		48,172		30,942		31,760		125,440		100,556
Other products and services	31,627		29,644		—		—		—		—		31,627		29,644
	$	98,199	$	84,112	$	67,058	$	48,172	$	30,942	$	31,760	$	196,199	$	164,044


	Offshore/ Manufactured Products				Well Site Services				Downhole Technologies				Total
Three Months Ended March 31	2023		2022		2023		2022		2023		2022		2023		2022
Major revenue categories -
Project-driven products	$	39,132	$	33,844	$	—	$	—	$	—	$	—	$	39,132	$	33,844
Short-cycle:
Completion products and services	17,955		13,580		65,406		45,166		30,942		31,760		114,303		90,506
Drilling services	—		—		1,652		3,006		—		—		1,652		3,006
Other products	9,485		7,044		—		—		—		—		9,485		7,044
Total short-cycle	27,440		20,624		67,058		48,172		30,942		31,760		125,440		100,556
Other products and services	31,627		29,644		—		—		—		—		31,627		29,644
	$	98,199	$	84,112	$	67,058	$	48,172	$	30,942	$	31,760	$	196,199	$	164,044