管理層發言
Hello, everyone. Thank you for joining us, and welcome to the Oil States 2Q '26 earnings call. I will now turn the conference over to Ellen Pennington, Senior Counsel and Vice President of HR. Ellen, please go ahead.
Thank you, Trevor. Good morning, and welcome to Oil States' second quarter 2026 earnings conference call. Our call today will be led by our President and CEO, Lloyd Hajdik, and Matt Autenrieth, Oil States' Executive Vice President and Chief Financial Officer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. No one should assume that these forward-looking statements remain valid later in the quarter or beyond. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our 2025 Form 10-K and Form 10-K/A, along with other recent SEC filings. This call is being webcast and can be accessed at Oil States' website. A replay of the conference call will be available 2 hours after the completion of this call and will continue to be available for 12 months. I'll now turn the call over to Lloyd.
Thanks, Ellen, and good morning, everyone. Thank you for joining our conference call today, where we will discuss our second quarter of 2026 results and provide our thoughts on market trends, in addition to discussing our company-specific strategy and outlook for the remainder of the year. As we progress through 2026, our end markets continue to be influenced by a combination of constructive long-term fundamentals and ongoing near-term uncertainty. During the second quarter, commodity prices remained volatile, driven largely by geopolitical developments, supply disruptions, and moderated expectations for global economic growth. Conflict in the Middle East region continues to impact our operations and again contributed to certain contract award delays. Notwithstanding these and other award delays, we achieved a book-to-bill ratio of 1.2x. While these dynamics have tempered near-term revenue conversion in our project-driven businesses, they do not change our long-term offshore and international opportunity set. The need for secure and diversified energy supply continues to drive longer-cycle deepwater investment as well as incremental land-based activity levels. We believe that national oil companies and major operators will refocus on increasing production capacity, making multi-year investments to meet global energy demand once the Middle East disruptions settle down. In the United States, customer activity rose modestly as operators continued to demonstrate capital discipline and prioritize operational efficiency and return of capital to stockholders. During the second quarter, we generated revenues of $157 million and adjusted EBITDA of $19 million, up 8% and 14% sequentially. These increases were driven in large part by growth within our Downhole Technologies and Completion and Production Services segments, favorable mix and disciplined execution. Our strategy remains focused on higher-margin, differentiated products and technologies within the markets we serve. Over 70% of our consolidated revenues generated in the first half of 2026 were driven by offshore and international activity, which is a substantial increase from around 50% in 2023. This strategic shift in business mix has positioned Oil States well for sustained growth in future months and years. Our Offshore Manufactured Products segment generated sequential revenue growth with strong segment EBITDA margins. Production platform and connector products, as well as higher service activity, provided positive uplift in the quarter. Backlog increased to its highest level in more than a decade, totaling $451 million, supported by bookings of $114 million, and a quarterly book-to-bill ratio of 1.2x. Based on our bidding, quoting, and order visibility, we reiterate our view that our full-year book-to-bill ratio should be 1x or greater. Our Completion and Production Services segment reported sequential revenue and segment EBITDA growth coupled with a strong margin profile, which is the direct result of our efforts to high-grade the portfolio of technologies and service lines within this segment. In our Downhole Technologies segment, revenue and segment EBITDA improved materially, supported by stronger perforating and completion product sales and favorable product mix. Headwinds remain elevated related to charge powder availability and raw material cost increases, which are pressuring margins. Continued pricing discipline and inventory management remain priorities. With our extensive portfolio of differentiated technologies and a diversified footprint across the major global basins, we believe we are well positioned to support our customers' evolving needs. We will continue to invest selectively in technologies that improve performance, efficiency, and reliability in increasingly complex operating environments. Matt now will review our operating results along with our financial position in more detail.
Thank you, Lloyd, and good morning, everyone. During the second quarter, as Lloyd mentioned, we generated revenues of $157 million and adjusted EBITDA of $19 million, representing sequential increases of 8% and 14% respectively. We reported net income of $6 million, or $0.10 per share, which included charges associated with the extinguishment of our convertible senior notes, facility exit charges, and executive transition costs, which were partially offset by a gain on the disposal of a facility (audio gap). Excluding these charges and credits, our adjusted net income totaled $8 million, or $0.14 per share. Turning to the segment performance, our Offshore Manufactured Products segment generated revenues of $93 million and segment EBITDA of $18 million in the second quarter, resulting in a segment EBITDA margin above 19%. Our backlog totaled $451 million as of June 30, an increase of 5% sequentially, and 24% from June 30, 2025. This is our highest reported level of backlog in over 10 years. We achieved a 1.2x book-to-bill ratio in the quarter. Our growing backlog continues to reflect a diversified mix of offshore and international energy projects as well as military programs. Our Completion and Production Services segment generated $24 million in revenues and segment EBITDA of $7 million in the second quarter, resulting in a segment EBITDA margin of approximately 27%. Revenue and segment EBITDA increased 13% and 7% sequentially. In our Downhole Technologies segment, we generated revenues of $40 million and segment EBITDA of $4 million. Second quarter revenues were at the highest level since the second quarter of 2023. Results improved significantly on stronger perforating and completion product demand and favorable product mix. Input costs for our shaped charges remain elevated, particularly the cost of tungsten, explosive powder, and copper. Second half trajectory will depend on continued pricing discipline, product mix, and raw material availability. Cash used in operating activities totaled $6 million in the second quarter, reflecting continued working capital investments tied to anticipated growth, the execution of backlog, especially for military product awards, and increasing demand for our downhole consumable products. Investing activities provided a cash flow benefit of $4 million during the quarter. Proceeds from asset sales totaled $7 million, which more than offset the $3 million of capital investment made during the quarter. We remain focused on continuing to monetize our remaining assets held for sale, which currently total $19 million. As discussed on our first quarter earnings call, Oil States retired the remaining $53 million of principal amount of our convertible senior notes on April 1 with a combination of cash, borrowings under the credit facility, and the issuance of our common stock. As of June 30, the company had $20 million of cash on hand and $18 million of outstanding debt. Our strong balance sheet and ample liquidity continue to provide flexibility to invest in organic growth and R&D, and to return capital to stockholders. During the second quarter, we repurchased $5 million of our common stock, and we will remain opportunistic with additional share repurchases as we continue to prioritize returns to stockholders.
Thanks, Matt. As we look ahead, the broader energy backdrop continues to support our strategic focus. While near-term operator timing can vary, particularly in our project-driven offshore and international businesses, we continue to see customers sanctioning new field developments and investing in project opportunities where Oil States has built deep expertise and a strong competitive position. With ongoing supply disruptions, commodity prices remain volatile, reflecting geopolitical uncertainty and evolving OPEC+ production policies. Inventories in several regions remain well below historical norms, and spare production capacity remains concentrated among a limited number of producers. Longer term, energy security concerns are expected to continue supporting investments in domestic resource development, offshore and international production, export infrastructure, and LNG projects. Taken together, these factors continue to reinforce our core strategy of offshore, deepwater, subsea, and international investment. We believe these markets will remain constructive for Oil States over the longer term. Our strategy remains unchanged: partner closely with our customers, solve their technical problems, and deliver differentiated engineered products, services, and technologies that support reliable energy supply. Across our portfolio of products and services, we continue to make targeted investments in technologies and capabilities that strengthen execution, improve operating efficiency, and enhance reliability in the environments where our customers operate. As we carry out this strategy, we will remain disciplined in how we manage the business for our stakeholders, with continued attention to cash generation and prudent capital allocation. Our focus is on leveraging our technologies to drive growth, converting firm backlog into revenue, continuing to improve margins, and working capital conversion. While our bookings and backlog continue to grow to decade-high levels, a large part of the bookings awarded over the last year have been tied to multi-year military product contracts. Conversely, certain drilling, connector, and production facility product orders have lagged from a timing perspective. We expect to receive these orders in the third and fourth quarters of 2026, but the delay in receiving these awards will push some revenue recognition into 2027 that was originally expected in 2026. With that in mind, our third quarter guidance calls for revenues in the range of $157 million to $167 million, and adjusted EBITDA of $18 million to $20 million. Our full-year guidance is expected to range from $640 million to $660 million of revenue and $77 million to $83 million of adjusted EBITDA. Customer schedules and timelines, geopolitical conditions, and the timing of the contract awards continue to create quarter-to-quarter variations in our results. Even so, our current backlog and the breadth of opportunities across numerous business lines support our confidence in future earnings growth. We see compelling opportunities to strengthen customer relationships and continue shaping the portfolio toward higher-value, technology-driven offerings. The longer-term offshore deepwater subsea and international opportunity set remains constructive, and our backlog continues to reflect that demand. Incremental land-based activity could also provide an uplift. Oil States is well positioned with a focused portfolio, a resilient operating base, and a strong capacity to generate cash. Supported by a disciplined strategy, a healthy balance sheet, and meaningful exposure to long-cycle markets, we believe the company has a solid foundation for continued progress. This concludes our prepared remarks. Trevor, please open the call up for questions.
分析師問答
Your first question comes from Connor Jensen of Raymond James.
It was nice to see the backlog reach its highest level since 2015. Given the optimism across the industry around a ramp in offshore heading into the next few years, we'd love to hear about how pricing and margins are trending across those new orders you guys are picking up.
Thanks, Connor. Good question. I would say in terms of the margins, they're accretive to the existing awards that are in backlog. Overall, and for the segment, we guide to an overall EBITDA margin of around 20%. A little bit lighter this quarter, 19.3%, but kind of right at that 20% level. Historically, if you look back where we had higher levels of backlog, even dating back, call it 10 years ago, we had reached quarterly EBITDA margins of the low 20s, so 22%, 23%, and I could see us achieving that, not this year, but certainly in 2027 and beyond as our backlog continues to grow, buoyed by the more traditional production facility pipeline and drilling-type content.
Got it. And then it was impressive to see Downhole Technologies post its strongest revenue in several years this quarter. How much of that improvement reflects the restructuring benefits you guys had in the segment versus an improving U.S. land market? And then how sustainable are those margins from here?
I think it's more currently an improving land market. Frac spread count was up quarter-over-quarter, rig count was up, so you think about completion-related activity. In terms of volumes for us, when I looked at our shaped charges and our shotguns, which are largely sold in the U.S. as well as international, those volumes doubled quarter-over-quarter. The restructuring efforts that we've done over the prior year or two — and I wouldn't call them restructuring so much as a revamp of our product line within perforating, introducing our new Flex precision guns and Flex Orbit — have had tremendous customer uptake. So the demand for both perforating and completion tools, which are effectively plugs and toe valves, really ramped up in the second quarter. We're expecting for the third and fourth quarter that not a continued ramp, but certainly maintenance at these levels that we've experienced in the second quarter.
Got it. I'll just sneak one more in here. You noted working capital was a headwind to free cash flow in the quarter. How do you expect the free cash flow to trend in the second half? And then what are the key drivers to getting that back to positive free cash flow?
Yes, Connor, we expect free cash flow for the full year to be $35 million to $40 million. Now, that includes proceeds from asset sales in the first half of the year. What it doesn't include is any incremental asset sales in the second half of the year, which could provide an additional $5 million to $10 million of free cash flow. With regards to working capital, in the first half of the year, we invested $27 million in inventory. That's primarily two things. One, it's long lead-time materials that we invested in for the execution of projects from our backlog. And two, it's rising input costs for raw materials in our Downhole Technologies segment. We expect that working capital investment to begin to unwind in the second half of the year. That's going to be a critical driver of free cash flow generation in the back half of the year.
Our next question comes from the line of Jawad Bhuiyan with Stifel.
I guess could we just understand your guys' expectations for order flow for the balance of the year for the offshore manufacturing piece? And I guess, how should we think about the backlog conversion rates for that business? And how much of that existing backlog is likely to convert to revenue this year and also next year?
Absolutely. So in terms of our bookings for the second half of the year, we're watching certain drilling connector products and production facility type orders that we expect to come in, and I mentioned in the notes, here in the third and fourth quarter. Those have been delayed, quite frankly, since the beginning of the year. The Middle East disruptions have caused some of these award delays, specifically connector product orders that we'd expected to sell into the Middle East. We have not received those orders yet. We do expect to receive those, so I think that's all based on timing, not on fundamentals of demand. In terms of backlog conversion, I mentioned this on our first quarter call and in the notes here, we did receive over $100 million of military product awards in the third and fourth quarter of 2025. Those are multi-year orders that will unwind or convert to revenue over the next four to five years. Today about half of our backlog, actually 48%, is tied to military. Historically, our conversion rate of backlog converting over the forward 12 months has been in that 65% to 70% range. Now with these multi-year military product orders, that's going to weight down to about 55% currently, but that's still strong given we have these multi-year orders that are rolling out and converting to revenue, as well as the anticipation of these other orders coming into backlog for the year, which drives my commentary of a book-to-bill ratio above 1 for the full year.
Our next call comes from the line of Jeff Robertson with Water Tower Research, LLC.
Lloyd, you mentioned getting back to around 22% potentially in the OMP segment in adjusted EBITDA margin. What is the mix of products that could drive that? And how does that relate to what you're seeing in or what you expect to see in your order book?
I want to be clear we're guiding to our goal for this year of a 20% EBITDA margin. I'm not guiding to a higher margin this year. My commentary was that at higher levels of backlog, which drives better absorption in our manufacturing facilities, you could drive EBITDA margins above 20%. That mix of backlog would be in our traditional subsea and production products, and now drilling products with our introduction of our new managed pressure drilling system over the last two years. Those types of products and new technologies we've developed, as well as one of the newer suites of technology, our Low Impact Workover Package that's in development and should come to market next year, are expected to be accretive with very good margins. You could see margins move above 20% in those circumstances, but I'm not guiding that for this year.
Thank you. And with respect to your customer conversations, do you get any sense that customers might be trying to move projects around within their portfolios given what's going on in the Middle East, or is it still too new with people trying to figure out how that situation settles?
There's a shorter-term, medium-term, longer-term conversation to be had. Focusing on the medium-term, national oil companies and major operators are focused on developing resources in more secure environments outside of the Middle East disruptions. That favors deepwater. With our product set specifically in Offshore Manufactured Products, we're well suited to participate in what we expect to be a deepwater upcycle over the next three to four years, really rolling out 2027 through 2030. Energy security is front and center for these operators. Spare production capacity is limited to a handful of operators. Deepwater, because it's long-life reserves and typically lower break-evens than some land resource plays, will be a focus for operators.
Our next question comes from the line of Josh Jayne with Daniel Energy Partners.
I wanted to go back to the military business. Could you speak to your outlook specifically for orders for that business, not only for the second half of this year, but also into 2027? You just alluded to the strength that you had in Q3 and Q4 of last year, but what's the outlook for orders over the back half of this year and into 2027, and how the conversations evolving for incremental orders?
Great question. Our military product orders are large block-type orders. The U.S. Navy lets out these orders over a block. We are now in Block 6, and these are multi-year, four- to five-year orders. That's why you see large dollar amount awards that will come into backlog every three to five years. Ongoing, we have military product orders every week, though they're not likely to be at the magnitude of the $100 million to $110 million block award we booked last year. There's ongoing military product activity in the $25 million to $30 million a year range, if not a little bit more. The large block awards sit in backlog and convert to revenue over the next four to five years. These Block 6 awards will really start generating revenue in 2027. We're wrapping up the last vestiges of the Block 5 awards that we booked probably five years ago.
Okay, thanks. And then it sounds as if, just listening to your calls over the last couple of years, it sounds like you're as confident or increasingly confident in the non-offshore business maybe at any point over the last two years? Could you just speak to your outlook for the U.S. land businesses, where geographically you're seeing pockets of strength, and if oil basically doesn't move from here, does the outlook still continue to improve for that business over the next 12 to 18 months?
We believe it does. It was up modestly in the second quarter and modestly in the first half. Operators, both private and public, are being careful given the volatility in WTI prices — we've been as low as $74, as high as $95, now around $80 to $85 — so that volatility drives careful capital decisions. In the U.S. land regions in which we operate, specifically Completion and Production Services, we operate in one region up in the Bakken where we have strong customers, strong people, and strong equipment. We're committed to that basin. Within Downhole Technologies, we sell perforating and completion products and tools into the U.S., and demand has clearly picked up. U.S. land is still about 25% of our consolidated revenues, so it's very important to us. We see growth in the business and modestly rising demand in the U.S., especially as natural gas and LNG exports are expected to increase starting next year.
I will now pass the call back to Lloyd for closing remarks.
Thanks, Trevor. Thank you again for joining us today and for the thoughtful questions. We appreciate the continued engagement and interest in our company. Looking ahead, we remain focused on the execution of our core strategy to drive consistent performance and maintain a disciplined approach to capital allocation. We believe these efforts strategically position Oil States well for the opportunities ahead. Thanks again, and have a great rest of your day.
This concludes today's call. Thank you for attending. You may now disconnect.