10-K: Oil States International Reports $109M Loss in 2025

Oil States International, Inc. reported a net loss of $109.4 million for the fiscal year ended December 31, 2025, driven by significant asset impairments and U.S. land-based operational restructuring.

Summary

• A net loss of $109.4 million ($1.86 per share) was reported for 2025, significantly wider than the $11.3 million net loss ($0.18 per share) in 2024.
• The 2025 net loss included $132.6 million ($130.9 million after tax, or $2.23 per share) in charges, primarily from non-cash long-lived and other asset impairments, U.S. land-based operational restructuring, and valuation allowances on U.S. deferred tax assets.
• Consolidated total revenues decreased by $23.6 million, or 3%, to $669.0 million in 2025 from $692.6 million in 2024.
• Excluding the impact of exited operations, consolidated revenues increased by $36.9 million year-over-year.
• The Offshore Manufactured Products segment's revenues increased by $33.2 million, or 8%, in 2025, driven by international and offshore project-driven connector, crane, and drilling products.
• The Completion and Production Services segment's revenues decreased by $49.4 million, or 30%, in 2025, due to the exit of underperforming U.S. land-based service offerings and lower U.S. land-based activity levels.
• The Downhole Technologies segment's revenues decreased by $7.4 million, or 6%, in 2025, attributed to lower U.S. customer activity levels and competitive market conditions.
• Cash flow from operations totaled $105.1 million in 2025, a substantial increase from $45.9 million in 2024.
• The company materially delevered by purchasing $70.8 million principal amount of its 4.75% convertible senior notes due April 1, 2026.
• 3.3 million shares of common stock were repurchased for $16.6 million during 2025.
• Backlog in the Offshore Manufactured Products segment grew to $435 million as of December 31, 2025, from $311 million as of December 31, 2024, with a book-to-bill ratio of 1.3x in 2025.
• U.S. tariffs on certain steel and other metal components imported from China substantially increased product costs in 2025.
• The United States enacted tax reform legislation, the One Big Beautiful Bill Act (OBBBA), on July 4, 2025, which includes the reinstatement of 100% bonus depreciation, immediate deduction of domestic research and development expenditures, and manufacturing tax incentives for goods sold outside the U.S.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report due to the substantial net loss, significant asset impairments, and overall revenue decline, particularly in U.S. land-based operations. Despite some positive developments in offshore backlog and cash flow from operations, the company's financial performance and market underperformance are concerning.

Positives

• Offshore Manufactured Products segment revenue increased by $33.2 million, or 8%, in 2025 due to increased international and offshore project-driven demand.
• Backlog in the Offshore Manufactured Products segment increased to $435 million as of December 31, 2025, from $311 million in 2024, with a strong book-to-bill ratio of 1.3x.
• Cash flow from operations significantly improved to $105.1 million in 2025, up from $45.9 million in 2024.
• The company materially delevered by purchasing $70.8 million principal amount of its 2026 Notes.
• Repurchased 3.3 million shares of common stock for $16.6 million, demonstrating commitment to shareholder returns.
• Operating results, excluding charges and gains, improved by $13.5 million year-over-year, driven by reduced depreciation and growth in offshore and international activity.
• A new Cash Flow Credit Agreement was entered into on January 28, 2026, providing $75.0 million under a revolving credit facility and $50.0 million under a multi-draw term loan facility, replacing the existing ABL Agreement and maturing in January 2030.
• The OBBBA tax reform legislation enacted on July 4, 2025, includes favorable provisions such as 100% bonus depreciation, immediate deduction of domestic R&D, and manufacturing tax incentives.
• Currency translation adjustments contributed $13.3 million to other comprehensive income in 2025, primarily due to the strengthening of the British pound and Brazilian real against the U.S. dollar.

Negatives

• Reported a net loss of $109.4 million in 2025, a significant increase from the $11.3 million net loss in 2024.
• Consolidated total revenues decreased by $23.6 million, or 3%, in 2025.
• Incurred $121.1 million in non-cash asset impairment charges and $11.6 million in facility exit and other charges in 2025.
• The Downhole Technologies segment reported a substantial operating loss of $124.3 million in 2025, including $112.7 million in non-cash impairment charges.
• The Completion and Production Services segment's revenues decreased by $49.4 million, or 30%, in 2025.
• U.S. land-based operations were negatively impacted by a 15% decline in the 2025 average spot price of West Texas Intermediate (WTI) crude oil from the 2024 average, following increased crude oil production by OPEC+.
• The imposition of broad-based trade tariffs by the United States led to increased costs for certain products manufactured in the U.S.
• Corporate expenses, excluding charges and credits, increased by $1.6 million year-over-year, primarily due to higher performance-based incentive costs.
• The company's 5-year cumulative total return significantly underperformed its customized peer group, the PHLX Oil Service Sector index, and the S&P 500.

Risks

• Demand for products and services is substantially dependent on volatile capital expenditures in the crude oil and natural gas industry.
• Inability to compete successfully with other companies, including larger multi-national firms with greater financial and technical resources.
• Consolidation of customers and competitors may lead to reduced capital spending, pricing concessions, or increased market share for rivals.
• Disruption of the supply chain, including raw materials, parts, and transportation, due to inflation, tariffs, trade disputes, or military actions, could adversely affect manufacturing and sales.
• Inability to employ and retain a sufficient number of key personnel, especially during periods of high activity or due to competition from alternative energy sectors.
• Failure to develop new competitive technologies and products in a market characterized by continual technological advancements.
• Security threats, including cybersecurity attacks (e.g., ransomware, phishing, deepfakes), could lead to unauthorized data access, operational downtime, and reputational damage.
• Dependence on significant customers, where the loss of one or more or their inability to meet obligations could adversely affect results.
• Ongoing military actions in Europe and the Middle East, and the risk of military action in South America, could cause market disruptions, supply chain constraints, increased costs, and project delays or cancellations.
• Climate events such as hurricanes, floods, and prolonged cold weather can disrupt operations, supply chains, and cause physical damage to assets.
• Inability to control the inherent risks of identifying and integrating acquired businesses, potentially leading to increased debt or equity dilution.
• Adverse effects of inflation and increases in tariffs on imported goods, which may not be fully passed on to customers.
• Inability to access capital and credit markets on affordable terms, impacting liquidity and growth strategy.
• Backlog in the Offshore Manufactured Products segment is subject to unexpected adjustments and cancellations, and may not be fully realized as revenue or profit.
• Contractual risks in developing, manufacturing, and delivering products under fixed-price contracts, including cost variations, liquidated damages, and warranty claims.
• Exchange rate fluctuations could adversely affect U.S. reported results of operations and financial position.
• A severe prolonged downturn could negatively affect the value of goodwill and other intangible and long-lived assets, leading to impairment charges.
• International operations expose the company to unique risks such as expropriation, capital controls, currency fluctuations, sanctions, and political instability.
• Violations of export control restrictions could result in significant sanctions, fines, or loss of export privileges.
• Explosive incidents arising from dangerous materials used in the Downhole Technologies segment could disrupt operations, cause bodily injuries and property damages, and lead to loss of licenses.
• Inadequate insurance for potential liabilities, including litigation risks, environmental contamination, and business interruption.
• Inability to protect intellectual property rights or potential litigation if another party claims infringement.
• Laws, regulations, and executive actions regarding hydraulic fracturing could increase costs, impose operating restrictions, or reduce demand for products and services.
• Legislative and regulatory initiatives related to induced seismicity could result in operating restrictions or delays in drilling and completion activities.
• Imposition of laws, executive actions, or regulatory initiatives to restrict, delay, or cancel leasing, permitting, or drilling activities in deepwaters.
• Exposure to numerous environmental laws and regulations that may lead to significant costs and liabilities, including for accidental releases of pollutants.
• Significant costs in complying with stringent occupational health and safety requirements.
• Risks arising out of the threat of climate change, including increased operating costs, limits on oil and natural gas production areas, and reduced demand for products and services.
• The Endangered Species Act (ESA), Migratory Bird Treaty Act (MBTA), and other wildlife protection laws could limit operations or customer development activities.
• Increasing attention to sustainability and environmental matters may impact business, reputation, access to capital, and talent retention.
• The Inflation Reduction Act of 2022 (IRA 2022) could accelerate the transition to a low carbon economy and impose new costs on customers' operations, despite some provisions being postponed by the OBBBA.
• Changes to applicable tax laws and regulations, such as the OECD Pillar Two framework, may result in additional income tax liabilities.

Future Outlook

The company expects approximately 50% of its Offshore Manufactured Products backlog as of December 31, 2025, to be recognized as revenue during 2026. It anticipates continued high volatility in crude oil and natural gas prices and demand due to geopolitical conflicts, global economic recession risk, production levels, technological advancements, industry consolidation, regulatory changes, sanctions, tariffs, and alternative fuels. U.S. drilling, completion, and production activity will remain sensitive to near-term commodity price fluctuations. The Offshore Manufactured Products segment's activity will be influenced by global spending on deepwater drilling and production, driven by longer-term commodity demand forecasts. The company is investing in research and product development for alternative energy sources, including offshore wind and deep-sea mineral gathering opportunities. Demand for the Completion and Production Services and Downhole Technologies segments is highly correlated to U.S. well drilling, footage, and completion activity, and sensitive to WTI crude oil prices, with Downhole Technologies also influenced by trends toward longer lateral lengths, increased frac stages, and more perforation clusters. The company cannot predict with certainty the duration or impact of tariffs or retaliatory tariffs, and uncertainty regarding drilling and completion costs could cause customers to delay or cancel projects. Management believes current liquidity, cash flow from operations, and the new Cash Flow Credit Agreement will be sufficient to meet liquidity needs for the coming twelve months, including the full retirement of the 2026 Notes by April 1, 2026. The ability to obtain capital for debt repayment, liquidity, and growth strategy over the longer term will depend on future operating performance, financial condition, and capital market availability. Regulatory developments like the OBBBA mandate offshore lease sales, and the Secretary of the Interior has proposed a National Outer Continental Shelf Oil and Gas Leasing Program with numerous sales through 2031. The OBBBA has postponed the methane emissions charge until 2034, and the EPA has extended compliance deadlines for methane and VOC emissions. The FWS is also set to finalize critical habitat for the Rices whale by July 2027.

Management Comments

• "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."
• "We believe that our success depends upon our ability to employ and retain key personnel with both technical and business expertise."
• "We believe that cash on-hand, cash flow from operations and borrowing capacity available under the Cash Flow Credit Agreement will be sufficient to meet our liquidity needs in the coming twelve months, including full retirement of our 2026 Notes upon maturity on April 1, 2026."
• "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."

Industry Context

StockSavvy.ai notes that the energy sector continues to grapple with significant volatility in commodity prices, geopolitical tensions, and evolving regulatory landscapes, particularly concerning environmental and climate change initiatives. The company's mixed performance, with growth in offshore segments offset by declines in U.S. land-based operations, reflects the broader industry trend of shifting capital allocation towards more stable, longer-term offshore projects while U.S. shale activity faces headwinds from price declines and increased capital discipline. The impact of OPEC+ production increases and trade tariffs highlights the global interconnectedness and external pressures on the oilfield services market.

Comparison to Industry Standards

• The company's 5-year cumulative total return (December 31, 2020 to December 31, 2025) was $134.86 for $100 invested, significantly underperforming its customized peer group (Archrock, Inc., Core Laboratories N.V., Expro Group Holdings N.V., Forum Energy Technologies, Inc., Helix Energy Solutions Group, Inc., Innovex International, Inc., NPK International, Inc., Oceaneering International, Inc., ProPetro Holding Corp., RPC, Inc., Select Water Solutions, Inc., and TETRA Technologies, Inc.) which returned $196.02.
• The company also underperformed the broader PHLX Oil Service Sector index, which returned $181.73 over the same period.
• The company's performance lagged the general market, as represented by the S&P 500, which returned $196.16 over the five-year period.

Corporate Governance

Legal Proceedings

• 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.
• Management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise covered by insurance, will not have a material adverse effect on the company's consolidated financial position, results of operations, or liquidity.

Stakeholder Impact

• Shareholders: Negative impact from the significant net loss, substantial asset impairments, and underperformance relative to market and peers. Share repurchases offer some mitigation.
• Employees: Reductions in the U.S. workforce due to restructuring actions, but a stated priority to retain experienced employees and invest in training.
• Customers: Increased capital investments by offshore and international customers, but a decline in U.S. land-based investments. Potential project delays/cancellations due to tariffs and cost uncertainty.
• Suppliers: Potential for supply chain disruptions and increased costs for raw materials, such as steel, due to tariffs.
• Creditors: Positive impact from deleveraging through note purchases. The new Cash Flow Credit Agreement provides enhanced liquidity and a longer maturity profile.

Next Steps

• Full retirement of the remaining 2026 Notes upon their maturity on April 1, 2026.
• Continue to seek opportunities for offshore and international business expansion.
• Strategically optimize U.S. land-based operations.
• Market new technology offerings.
• Invest in research and development.
• Fund organic capital expenditures to enhance cash flows, leverage cost structure, and increase stockholder returns.
• The Bureau of Ocean Energy Management (BOEM) is mandated to conduct a minimum of thirty lease sales in the Gulf of America through 2040, with at least two annually for the next 15 years.
• The Secretary of the Interior issued a proposed National Outer Continental Shelf Oil and Gas Leasing Program in November 2025, which includes 34 sales through 2031.
• The FWS is to finalize critical habitat for the Rices whale by July 2027.

Key Dates

Recommendation

The company reported a substantial net loss of $109.4 million for 2025, a significant widening from the previous year, primarily due to over $100 million in non-cash asset impairment charges. While the Offshore Manufactured Products segment showed growth and a healthy backlog, this was severely offset by a 30% revenue decline and a massive operating loss in the U.S. land-based Downhole Technologies and Completion and Production Services segments. The company's stock has significantly underperformed its industry peers and the broader market over the past five years. Persistent challenges in U.S. land markets, commodity price volatility, and ongoing geopolitical and regulatory risks, coupled with increased costs from tariffs, suggest continued headwinds. Despite deleveraging and share repurchases, the overall financial performance indicates a deteriorating outlook, making a "Sell" recommendation appropriate for seasoned investors.

Keywords

Oilfield services, Offshore drilling, Completion services, Production services, Downhole technologies, Energy sector, SEC filing, 10-K, Financial results, Asset impairment, Operational restructuring, Capital expenditures, Crude oil prices, Natural gas prices, Trade tariffs, Corporate governance, Risk management, Sustainability, Environmental regulations, Cybersecurity, Capital markets, Debt, Share repurchase