Oil States International, Inc. recently released their consolidated results for the third quarter, showcasing growth in backlog and successful project execution. The company remains well-positioned to benefit from the preference of oil and gas operators towards offshore projects with higher production, slower decline curves, and lower breakeven commodity prices. In the third quarter, 75% of their revenues were generated from offshore and international projects, marking an increase both sequentially and year over year. This shift reflects their strategy to focus on offshore and international project-driven content for long-term growth and higher margins.
Their offshore manufactured products segment performed well, with revenues increasing by 2% sequentially and adjusted segment EBITDA rising by 6% due to product and service mix. The backlog grew to $399 million, reaching high levels since June 2015. Strong bookings of $145 million, a 29% quarter-over-quarter increase, contributed to a book-to-bill ratio of 1.3 times. Despite a decline in US land completion activity during the period, the company’s US land-based optimization efforts have led to year-over-year EBITDA growth in their Completion and Production Services segment.
In terms of financials, the company saw a significant increase in cash flow from operations to $31 million, a 105% sequential increase, and generated $23 million of free cash flow. Their ongoing deleveraging efforts are expected to unlock additional equity value for stockholders as they pay off their convertible senior notes at maturity in April 2026. The company is focused on optimizing operations, making targeted investments in high-performing businesses, and leveraging cutting-edge technologies for growth. Their managed pressure drilling (MPD) system exemplifies their commitment to improving operational safety and performance levels.
Oil States International, Inc. was honored with two energy workforce and technology council safety awards during the quarter, showcasing their dedication to health, safety, and environment incident rate improvement. The company’s core priorities include growing their offshore and international presence, managing volatility in US land activity, and driving significant cash flow generation. Looking ahead, the company expects an 8% to 13% sequential increase in fourth-quarter revenues and anticipates fourth-quarter adjusted EBITDA to range from $21 million to $22 million. Cash flows from operations are projected to improve, reaching a total of $100 million plus for the year.
Overall, Oil States International, Inc. is strategically positioned for market opportunities, focusing on differentiated cash flow conversion rates and industry-leading free cash flow yield. By advancing next-generation technologies, building backlog with strong margins, executing with discipline, reducing debt, and returning cash to stockholders, the company aims to provide a compelling investment opportunity for stakeholders.
