Q1 2025 Oil States International Inc Earnings Call

Good morning, My name is Jamie and I will be your conference operator today at this time I would like to welcome everyone to the oil States first quarter 'twenty 25 earnings call.

Jeannie: Good morning, my name is Jeannie and I will be your conference operator today.

Unknown Executive: At this time, I would like to welcome everyone to the Oil States first quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Unknown Executive: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star pound key again.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question press the star pound key again.

Speaker Change: Ellen Pennington you may begin your conference.

Ellen Pennington: Ellen Pennington, you may begin your conference. Good morning and welcome to Oil State's first quarter 2025 earnings conference.

Speaker Change: Good morning, and welcome to oil States' first quarter 2025 earnings conference call.

Cynthia Taylor: Our call today will be led by our President and CEO, Cindy Taylor, Lloyd Hajdik, Oil States Executive Vice President and Chief Financial Officer, and Scott Moses, our Executive Vice President and Chief Operating 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 any of these forward-looking statements remain valid later in the quarter or beyond.

Speaker Change: Our call today will be led by our President and C. E O Cindy Taylor Lloyd hijacked oil States' executive Vice President and Chief Financial Officer, and Scott Moses, Our executive Vice President and Chief operating Officer before we begin we would like to caution listeners regarding forward looking statements to the extent that our remarks.

Speaker Change: Today contain information other than historical information. Please note that we're relying on the safe Harbor protections afforded by federal law No. One should assume that any of 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.

Cynthia Taylor: Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our 2024 Form 10-K, along with other recent SEC filings.

Speaker Change: As disclosed in our 2024 Form 10-K, 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 two hours. After the completion of this call and we will continue to be available for 12 months I will now turn the call over to.

Unknown Executive: This call is being webcast and can be accessed at Oil States' website. A replay of the conference call will be available two hours after the completion of this call and will continue to be available for 12 months.

Cynthia Taylor: I will now turn the call over to Cindy. Thank you, Ellen. Good morning, and thank you for joining our conference call today where we will discuss our first quarter 2025 results and provide our thoughts on market trends in addition to discussing our company specific outlook. In connection with our fourth quarter 2024 earnings conference call, we provided financial guidance ranges for the first quarter and full year 2025. We specifically guided the first quarter 2025 revenues of 160 to $170 million with EBITDA expected to range from 17 and a half to 18 and a half million. I am pleased to report that both ranges were met or exceeded during the quarter due to strength in our international offerings along with benefits of our 2024 U.S.

Speaker Change: Cindy.

Cindy: Thank you Ellen and good morning, and thank you for joining our conference call today, where we will discuss our first quarter 2025 results and provide our thoughts on market trends. In addition to discussing our company's specific outlook.

Cindy: In connection with our fourth quarter 2024 earnings Conference call, we provided financial guidance ranges for the first quarter and full year 2025, we specifically got into first quarter 2025 revenues of 160 to 117 million.

Cindy: Dollars with EBITDA expected to range from 17, and a half to 18 and a half million.

Cindy: I am pleased to report that both ranges were met or exceeded during the quarter.

Cindy: Drink than our international offerings, along with benefits of our 2024 U S land base optimization effort and a strong recovery in our Gulf of America operations, we witnessed ongoing demand in our international and offshore regions with very strong.

Cynthia Taylor: land-based optimization efforts and a strong recovery in our Gulf of America operations. We witnessed ongoing demand in our international and offshore regions with very strong bookings that totaled $136 million, leading to our highest level of backlog since September 2015 with a book-to-bill ratio of 1.5 times for the quarter. We have historically reported negative cash flow from operations during the first quarter of the year due to seasonal working capital trends. However, we reversed that trend this quarter by generating $9 million of cash flow from operations. We also received proceeds of $9 million from the monetization of equipment and inventory.

Cindy: Bookings that totaled $136 million, leading to our highest level of backlog since September 2015, with a book to bill ratio of one five times for the quarter.

Cindy: We have historically reported negative cash flow from operations during the first quarter of the year due to seasonal working capital trends. However, we reversed that trend this quarter by generating $9 million of cash flow from operations. We also received proceeds of $9 million.

Cindy: From the monetization of equipment and inventory. These cash flows were used during the quarter largely to fund capex and $5 million of share repurchases.

Cynthia Taylor: These cash flows were used during the quarter largely to fund CapEx and $5 million of share repurchases. Despite good operating results for the quarter in April, oil state stock price suffered material decline stemming from the announcement and imposition of broad-based tariffs by the United States on our global trading partners. These actions have created uncertainty in the market both in terms of individual company impacts along with the risk of broader economic consequences including the heightened possibility of a recession. These concerns, along with planned increases in OPEC plus oil production levels, negatively impacted global crude oil prices, which declined significantly in April.

Cindy: Despite good operating results for the quarter and April oil states stock price suffered material decline stemming from the announcement and emphasis and a broad based tariffs by the United States on our global trading partners.

Cindy: These actions have created uncertainty in the market both in terms of individual company impacts along with the risk of broader economic consequences, including the heightened possibility of a recession. These.

These concerns along with planned increases in OPEC, plus oil production levels negatively impacted global crude oil prices, which declined significantly in April.

Cynthia Taylor: Given this backdrop, we believe it is prudent to provide more granular information on oil states' strategic sourcing of goods and materials to aid the market in assessing potential impacts of U.S. tariffs on our operations. As a reminder, Oil States benefits from significant global diversification with broad-based operations outside the United States in essentially every major offshore oil and gas basin. In addition, a significant portion of the capital equipment which we manufacture in the United States is exported to other countries. We anticipate that a significant portion of the company's operations outside of the United States should remain relatively unaffected by the implementation of these tariffs.

Cindy: Given this backdrop, we believe it is prudent to provide more granular information on oil states strategic sourcing of goods and materials to aid the market and assessing potential impacts of U S tariffs on our operations.

Cindy: As a reminder, oil states benefits from significant global diversification with broad based operations outside the United States and essentially every major offshore oil and gas basin.

Cindy: In addition, a significant portion of the capital equipment, which we manufacture in the United States is exported to other countries. We anticipate that a significant portion of the company's operations outside of the United States should remain relatively unaffected by the.

Mentation of these tariffs.

Cynthia Taylor: In our domestic operations, we have limited reliance on imported goods, which are primarily used in our downhole technology segment. We have implemented a series of strategic actions to assess and mitigate, where possible, negative tariff impacts, including the use of temporary import bonds for key imported materials, shifting to alternate sources of supply, optimizing our supply chain to secure the most favorable treatment of imports, leveraging existing domestic supply chains, and, when necessary, adjusting pricing to our customers. Oil States imports products from foreign sources, including key raw materials and component parts such as steel forging and perforating, gun steel tubing, and other components.

Cindy: In our domestic operations, we have limited reliance on imported goods, which are primarily used in our downhole technologies segment.

Cindy: We have implemented a series of strategic actions to assess and mitigate where possible negative tariff impacts, including the use of temporary import bonds for key imported material.

Cindy: Shifting to alternate sources of supply optimizing our supply chain to secure the most favorable treatment of imports leveraging existing domestic supply chains and when necessary adjusting pricing to our customers oil.

Cindy: Oil states imports products from foreign sources, including key raw materials and component parts.

Cindy: Such as steel forgings, and perforating guns steel tubing and other components there.

Cynthia Taylor: The vast majority of our forgings come to the United States under temporary import bonds, which are free of tariffs given their re-export following U.S. manufacturing. Tariffs on imported steel tubing and other components used in the manufacture of perforating systems are expected to increase our completed gun costs. Our analysis has shown that other suppliers of perforating systems utilize similar supply chain sources and are likely to be subject to similar tariffs. As a result, we expect that these cost increases can be passed on to customers. We remain dedicated to growing our operations and strategically investing in our most profitable business areas supported by advanced technologies.

Cindy: The vast majority of our forgings come to the United States under temporary import bonds, which are free of tariffs given their re export following U S manufacturing tariffs on imported steel tubing and other components used in the manufacture of perforating systems.

Cindy: Are expected to increase our completed gun cost.

Cindy: Our analysis has shown that other suppliers of perforating systems utilize similar supply chain sources and are likely to be subject to similar tariffs as a result, we expect that these cost increases can be passed onto customers.

Cindy: We remain dedicated to growing our operations and strategically investing in our most profitable business areas supported by advanced technologies. We will also continue to focus on the return of cash to our stockholders.

Cynthia Taylor: We will also continue to focus on the return of cash to our stockholders.

Lloyd Hajdik: Lloyd will now review our operating results along with our financial position in more detail. Thanks, Cindy. Good morning, everyone. During the first quarter, we generated revenues of $160 million and adjusted consolidated EBITDA of $19 million. Our adjusted net income totaled $4 million, or $0.06 per share, after excluding facility exit charges of $1 million. Our offshore manufactured product segment generated revenues of $93 million and adjusted segment EBITDA of $18 million in the first quarter. The adjusted segment EBITDA margin was 19% in the first quarter compared to 23% in the fourth quarter. In our Completion and Production Services segment, we generated revenues of $35 million and adjusted segment EBITDA of $9 million in the first quarter.

Cindy: Todd will now review, our operating results along with our financial position in more detail.

Todd: Thanks, Andy and good morning, everyone during.

Todd: During the first quarter, we generated revenues of $160 million.

Todd: <unk> consolidated EBITDA of $19 million.

Todd: Our adjusted net income totaled $4 million or <unk> <unk> per share after excluding facility exit charges of $1 million.

Todd: Our offshore manufactured products segment generated revenues of $93 million and adjusted segment EBITDA of $18 million in the first quarter.

Todd: Adjusted segment EBITDA margin was 19% in the first quarter compared to 23% in the fourth quarter.

Todd: In our completion and production services segment.

Todd: We generated revenues of $35 million and adjusted segment EBITDA of $9 million in the first quarter.

Lloyd Hajdik: Adjusted Segment EBITDA excluded facility exit charges totaling $1 million. Adjusted segment EBITDA margin was 25% in the first quarter compared to 12% in the fourth quarter, reflective of significantly higher activity in the Gulf of America and a continued focus on cost reduction. In our downhole technology segment, we generated revenues of $33 million and $2 million of adjusted segment HVDA in the first quarter. As Cindy mentioned earlier, we generated $9 million of cash flow from operations and received $9 million of proceeds from asset sales. Cash flows were used to fund $9 million of CapEx and $5 million of share repurchase.

Todd: Adjusted segment EBITDA excluded facility exit charges totaling $1 million.

Todd: Adjusted segment EBITDA margin was 25% in the first quarter.

Todd: 3rd% to 12% in the fourth quarter reflective of significantly higher activity in the Gulf of America and.

Todd: And our continued focus on cost reduction.

Todd: Our downhole technologies segment, we generated revenues of $33 million and $2 million of adjusted segment EBITDA in the first quarter.

Todd: As Cindy mentioned earlier, we generated $9 million of cash flow from operations.

Todd: Received $9 million of proceeds from asset sales.

Todd: Cash flows were used to fund $9 million of Capex and $5 million of share repurchases.

Lloyd Hajdik: Of the quarterly CapEx spending, $3 million was associated with our new Batam, Indonesia facility. Cash Flows from Operations is expected to range between $65 million and $75 million for the full year, and Plan Cap-X is expected to total $25 million.

Todd: Quarterly Capex spending $3 million was associated with our new <unk>, Indonesia facility or <unk>.

Todd: Cash flows from operations is expected to range between $65 million and $75 million for the full year and planned Capex is expected to total $25 million.

Lloyd Hajdik: Given the expected strong free cash flow generation, we plan to be very opportunistic regarding share repurchases given our currently low stock price.

Todd: Given the expected strong free cash flow generation, we plan to be very opportunistic regarding share repurchases given our currently low stock price.

Cynthia Taylor: Now Cindy will offer some market outlook and concluding comments. Despite recent economic volatility and the prospect of higher tariffs, we continue to see strong demand for our offshore and international products and services, which has led to our highest level of backlog in a decade. Given that the majority of our offshore manufactured products backlog consists of projects outside the United States, we anticipate that the import of key raw materials will largely be unaffected by potential new tariffs.

Todd: Sony will offer some market outlook and concluding comments.

Todd: Despite recent economic volatility in the prospect of higher tariffs, we continue to see strong demand for our offshore and international products and services, which has led to our highest level of backlog and a decade given that the majority of our offshore manufactured products backlog consists of.

Todd: <unk> outside the United States, we anticipate that the import of key raw materials will largely be unaffected by potential new tariffs.

Cynthia Taylor: Although domestic market conditions and activity levels could come under pressure during 2025, due to weaker crude oil prices, we expect our results and profitability to hold up reasonably well, given a solid offshore and international outlook, combined with margin improvement across our US land-driven businesses, given the actions undertaken in 2024. During our fourth quarter 2024 earnings conference call, we provided revenue guidance for the full year 2025 of $700 to $735 million dollars and full year EBITDA guidance in a range between $88 and $93 million. Based upon our strong bookings in the first quarter, improved completion and production services margins, and information we know about market conditions today, we are not changing our annual guidance.

Todd: Although domestic market conditions and activity levels could come under pressure during 2025 due to weaker crude oil prices. We expect our results in profitability to hold up reasonably well give a nice solid offshore and international outlook combined with margin.

Todd: Improvement across our U S land driven businesses given the actions undertaken in 2024.

During our fourth quarter 2024 earnings conference call. We provided revenue guidance for the full year 2025 of $700 million to $735 million and full year EBITDA guidance in a range between 88 and 93.

Todd: <unk> million based upon our strong bookings in the first quarter improved completion and production services margins and information we know about market conditions today, we are not changing our annual guidance.

Cynthia Taylor: Our guidance for the upcoming quarter suggests revenue will be generated in a range of $170 to $180 million, with EVADA ranging from $20 to $22 million.

Todd: Our guidance for the upcoming quarter suggests revenue will be generated in a range of $170 million to $180 million with EBITDA, ranging from $20 million to $22 million.

Cynthia Taylor: Our low net debt levels and robust free cash flow provides investors with an attractive opportunity for stock ownership in a company with peer-leading free cash flow yield. Our capital allocation priorities are well defined. We plan to invest in organic growth opportunities, to fund research and development to sustain competitive advantages, to pay off our remaining debt, and to fund share repurchases. We aim to drive exceptional value for our customers and generate strong returns for our stockholders in the process.

Todd: Our low net debt levels and robust free cash flow provides investors with an attractive opportunity for stock ownership in a company with peer leading free cash flow yield our capital allocation priorities are well defined we plan to invest in organic growth opportunities to.

Todd: Research and development to sustain competitive advantages to pay off our remaining debt and to fund share repurchases, we aimed to drive exceptional value for our customers and generate strong returns for our stockholders in the process.

Todd: Yeah.

Unknown Executive: That completes our prepared remarks.

Todd: That completes our prepared remarks, Jamie would you open up the call for questions and answers at this time.

Jeannie: Jeanne, would you open up the call for questions and answers at this time? At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Todd: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Todd: Pause for just a moment to compile the Q&A roster.

Todd: Okay.

Todd: Yeah.

Todd: Your first question comes from the line of Jim Rollyson with Raymond James. Please go ahead.

Jim Rollyson: Your first question comes from the line of Jim Rollyson with Raymond James. Please go ahead. Hey, good morning, everyone. And congrats on a nice quarter given everything going on. Thanks, Jim. Indy, first of all, you know, great bookings quarter, obviously, leading to backlog being at the kind of cycle high, which is which is great. So congrats on that. You know, as we've gone through earnings season so far, there's obviously a lot of uncertainty about how the rest of the year might play out. But one theme I've kind of heard recurring is longer cycle projects internationally and especially offshore seem to be proceeding and just curious.

Jim Rollyson: Hey, good morning, everyone and congrats on a nice quarter given everything going on.

Todd: Thanks, Jim.

Todd: Cindy first of all great bookings quarter, obviously, leading to backlog being at the.

Speaker Change: Hello cycle high which is which is great. So congrats on that.

Speaker Change: As we've gone through earnings season, so far there's obviously a lot of uncertainty about how the rest of the year might play out, but one theme I've kind of heard recurring as well.

Speaker Change: Longer cycle projects internationally, and especially offshore.

Speaker Change: Seem to be proceeding and just curious I mean, you're just coming off a great bookings quarter, but in.

Cynthia Taylor: I mean, there's coming off a great booking score, but in conversations with your customers at this stage, curious what y'all are seeing, you know, from a willingness to proceed with plans that were already in progress, given kind of what's happened on the macro just maybe about bookings over the course of the rest of the year. Oh, thanks, Jim. It's a great question. And you know, you've been doing this a long time as I have, and typically development drilling programs that are multi year in nature, don't depend on short term movements up and down in the commodity price.

Speaker Change: <unk> with your customers at this stage I'm curious what you all are seeing for.

Speaker Change: From a willingness to proceed with plans that were already in progress given kind of what's happening on the macro just maybe about bookings over the course of the rest of the year.

Jim Rollyson: Oh, Thanks, Jim It's a great question and <unk> been doing this a long time as I have and typically development drilling programs that are multi year in nature.

Jim Rollyson: Hand on short term mid next up and down in the commodity price and so I think it says a continuation of that pain quite frankly, and again Nathan more development drilling programs that are decades long if not exploratory programs and again, it's always the short cycle.

Cynthia Taylor: And so I think this is a continuation of that theme, quite frankly. And again, these are more development drilling programs that are decades long. It's not new exploratory programs. And again, it's always the short cycle weighted to U.S. shell that tends to be the quickest to flex up in a recovery and down in a softening. And so I think we're seeing that play out significantly as we go forward. Now, if I comment about our strong bookings, first of all, we're obviously thrilled to see that come early in the year, particularly in the first quarter. A lot of this really exemplifies what I'm talking about, which is the major subsidy equipment, production equipment that we offer the market, led by Brazil.

Jim Rollyson: <unk> two U S shale that tends to be the quickest to flex up.

Jim Rollyson: And a recovery in down that much and so I think we're seeing that play out.

Jim Rollyson: Significantly as we go forward now.

Jim Rollyson: Our strong bookings are as follows obviously thrilled to see that come late in the year, particularly in the first quarter a lot of that really exemplifies what I'm talking about which is the major subsea production.

Jim Rollyson: Production equipment that we offer in the market.

Speaker Change: And Barbara L D.

Cynthia Taylor: They are the deepwater leader globally, and that really benefited us in the quarter and will continue to benefit us throughout not only this year, but future years. And I'd say we are also beginning to see early benefits of the strategic investment we made in our new baton facility on our connector products. Again, that is a trend we expect to continue. And then other than that, we are expanding and broadening our service and refurb and repair business around a larger installed base that really is supported by our global operations. And so I think that gives you the color of not only the successful bookings we had, but how we got it to a book-to-bill north of one in connection with our last quarter call.

Speaker Change: Deepwater leader globally, and that really benefited us in the quarter and we will continue to benefit us throughout.

Speaker Change: Not only this year, but future here.

Speaker Change: I'd say, we are also beginning to see early benefits.

Speaker Change: <unk> investment we made in our palm consolidate on our connector products again manage that trend we expect to.

Speaker Change: To continue and then other than that we are expanding and broadening our service.

Speaker Change: And we target and repair business around a larger installed base.

Speaker Change: Supported by our global operations.

Speaker Change: I think that gives you the color.

Speaker Change: The successful bookings.

Speaker Change: I'll begin the call.

Speaker Change: On that we added to our book to Bill North of one in connection with our last quarter call and always when you have a strong quarter like that.

Jim Rollyson: And I always say, when you have a strong quarter like this, that guidance gets a lot more comfortable as we progress. And that would be on the back of higher revenues, which obviously implies greater year-over-year revenue. Absolutely appreciate the color there.

Speaker Change: <unk> gets a lot more comfortable agile graph and that will be on the back.

Speaker Change: Well, Indonesia, which obviously implies greater year on year bookings.

Speaker Change: Absolutely I appreciate the color there and maybe since you brought up the short cycle stuff.

Cynthia Taylor: And maybe since you brought up the short cycle stuff, you know, your CPS business had a pretty remarkable sequential improvement. And I think you noted part of it was from the cost efforts you guys have been doing for a while now and then Gulf of America benefits. Maybe if you could parse out kind of how the sequential impact was just between the cost side and the Gulf.

Speaker Change: Our Cps business had a pretty remarkable sequential improvement and then I think you noted part of it was from the cost efforts you guys have been doing for a while now and then Gulf of Mexico America.

Speaker Change: Benefits, maybe if you could parse out kind of how the sequential impact was just between the cost side in the Gulf and as we think about this going forward over the rest of the year, how sustainable are margins in that realm or better in <unk> and how are you seeing the golf on hold at this point.

Cynthia Taylor: And as we think about this going forward, over the rest of the year, you know, how sustainable our margins in that realm were better? And how are you seeing the Gulf unfold at this point?

Speaker Change: Well I'll get them, all laid off comments and ask lawyers.

Cynthia Taylor: Well, I'll give some lead off comments and ask Lloyd or Scott to pitch in, you know, with supplemental type feedback. But, you know, we came out of the hurricane season in the third quarter with lower Gulf revenues, and that perpetuated throughout the fourth quarter as well. So we were pleased to see some recovery in our Gulf operations. This is more differentiated equipment, high-end technology that's out in the marketplace, and it tends to support higher margins as a result. And so I'll also tell you that part of our basic guidance will be dependent on upcoming activity in the Gulf, which we are seeing continuing today.

Speaker Change: And in our supplemental type feedback beds.

Speaker Change: We can model by hurricane season in the third quarter with slower golf revenues and net to Apache weighted throughout the fourth quarter as well hopefully we're pleased.

Speaker Change: Formerly Calgary and our golf operations.

Speaker Change: Jankovic.

Speaker Change: Adding technology, that's out in the marketplace and it tends to sit.

Speaker Change: Support power margins as already built and so I'll also tell you that part of our.

Speaker Change: The guy that will be dependent on drilling activity in the Gulf, which we are seeing continuing today.

Cynthia Taylor: So that's on a positive note. You know, we have done, I think, a good job throughout 2024 of making decisions around the product and service lines that we wanted to remain in and, importantly, allocate capital to, which you have to do in that business, CPNS. And so a lot of that was behind us, but there were still some fixed cost things to get out of, i.e. leases and buildings, and you've got to relocate equipment from one basin to new basins. And so it's been ongoing, but I will tell you that throughout the first quarter, we're beginning to be on the downside of those types of efforts.

Speaker Change: On a positive note.

Speaker Change: We have done.

Speaker Change: Good job throughout 2020 for making decisions around the product and service lines. We wanted to remain in and importantly, allocate capital T, which you have to do in that business DNS.

Speaker Change: And so.

Speaker Change: So a lot of that was behind US I think it was.

Speaker Change: Scale.

Speaker Change: Fixed cost.

Speaker Change: Things to get out of I think an ballgames and.

Speaker Change: All you got to relocate equipment from one basin to new basins and say, it's been ongoing but I will tell you that throughout the first quarter, we are beginning to be on the downside.

Speaker Change: Those types of ballparks, I will say that our I think our CPM <unk> margins for the quarter remember.

Cynthia Taylor: I will say that I think our CPNS margins for the quarter, if I remember correctly, let Lloyd correct me if not, were in the 25 percent range. And so they really did recover strongly. I won't guarantee that level, but our goals were obviously 20-plus percent as we entered the year. So I'm really pleased to see that improvement, not only in CPNS. We saw some also in downhole technologies.

Speaker Change: Remember correctly, let me correct a lot we're in the 25%.

Speaker Change: Range and so they really don't recover strongly I won't guarantee that level, but our goggles, where obviously 20 plus percent as we enter a year or so really pleased to see that improve not only in <unk>. We saw some all following downhole technologies.

Cynthia Taylor: But I think if I look forward, it's very important to get all this transitional stuff behind us.

Speaker Change: I think if I look forward very important to get all of this transitional stuff behind us.

Speaker Change: Oh.

Lloyd Hajdik: Do either of the two want to add anything to that? Cynthia, just confirming your comments about the Gulf being the major driver of the improvement quarter over quarter, Q1 over Q4, certainly, with the strong recovery we saw in the Gulf operation. I'm looking kind of across the rest of the year, we expect that to continue.

Speaker Change: Do either of the two you want to add anything to that.

Speaker Change: Cindy just just confirming your comments about the golf being the major driver of the improvement quarter over quarter Q1 over Q4, certainly with the recovered strong recovery, we saw in the Gulf operations.

Speaker Change: We're looking kind of across the rest of the year, we would expect that to continue and to your point, yes. The EBITDA margin was about 25% in the first quarter, and we're targeting 20% or slightly above that for the full year for the segment.

Lloyd Hajdik: And to your point, yes, the EBITDA margin was about 25% in the first quarter, and we're targeting 20% or slightly above that for the full year for the second. Gotcha.

Speaker Change: Got you and if I could sneak one last quick one is just your balance sheet is obviously in fantastic shape.

Jim Rollyson: And if I could sneak one last quick one in, it's just your balance sheet is obviously in fantastic shape. And Lloyd, correct me if I'm wrong, but you're kind of targeting free cash flow conversion rates of 40 plus percent.

Speaker Change: Lloyd correct me, if I'm wrong, but you're kind of targeting free cash flow conversion rates of 40 plus percent as you generate free cash over the balance of the year, which is normally or better periods of time.

Lloyd Hajdik: As you iterate free cash over the balance of the year, which is normally your better periods of time, you know, how do you think about kind of the buckets of repurchasing shares that are even more depressed now than when you started the program versus maybe attacking a little bit more of the convert that's been below par and matures in April of next year versus just parking cash for a maybe slightly more uncertain environment? Yeah, so I'll go ahead and take that first. So in terms of where the stock price is today, I would expect us to be opportunistic and fairly aggressive in share repurchases with our free cash flow.

Speaker Change: How do you think about kind of the buckets of repurchasing shares that are even more depressed now than when you started the program versus maybe attacking a little bit more of a convert that's that's been below par and matures in April of next year versus just parking cash for a maybe slightly more uncertain environment.

Speaker Change: Yes.

Speaker Change: Yes, so the algorithm.

Speaker Change: I'll take that first so from in terms of are where the stock price is today I would expect us to be opportunity to mystic and fairly aggressive in share repurchases and with our free cash flow I think the same question was asked on the February call I don't think our investors when I was sitting on cash at this juncture with such a low stock price.

Lloyd Hajdik: I think the same question was asked on the February call. I don't think our investors want to be sitting on cash at this juncture with such a low stock price. To your point also, with the convert trading below, you know, 3 to 4 percent below par at 96 or 97, there is some opportunity there to try to buy some of those back in ahead of the April 1, 2026 maturity date. But I would say from a capital allocation priority, it's share repurchases and debt reduction leading into next year's maturity. Gotcha. Got it.

Speaker Change: To your point also with the convert trading below 3% to 4% below par at 96 or 97.

Speaker Change: There is some opportunity there to try to buy some of those back in ahead of the April one 2026 maturity date, but I would say from a capital allocation priority is share repurchases and debt reduction leading into next year's maturity.

Speaker Change: Got it got it thanks very much guys for the color.

Unknown Executive: Thanks very much, guys, for the call. Thank you. Again, if you would like to ask a question, press star, then the number one on your telephone keypad.

Speaker Change: Thanks, Dan.

Speaker Change: Again, if you would like to ask a question Press Star then the number one on your telephone keypad.

Sean Mitchell: And your next question comes from the line of Sean Mitchell with Daniel Energy Partners. Please go ahead. Good morning, guys. Thanks for taking my question. Lloyd, maybe, I know you mentioned, or you guys talked a little bit about the tariffs, maybe the potential impact. It sounds like it's minimal at this point from what you know today. Is it, is there any way to handicap, is that a 5% lower, or is it 10%, or 5% higher, 10% higher on cost? Have you done any kind of back of the envelope there? Well, we're working on that. I'd say it's probably in that range.

Speaker Change: And your next question comes from the line of Sean Mitchell with Daniel Energy Partners. Please go ahead.

Sean Mitchell: Good morning, guys. Thanks for taking my question.

Maybe I know you mentioned are you.

Sean Mitchell: You guys talked a little bit about the tariffs may be the potential impact it sounds like it's minimal at this point from what you know today is it.

Sean Mitchell: Is there any way to handicap is that of <unk>.

Sean Mitchell: 5% lower or is it temporary or 5% higher 10% higher on cost have you done any kind of back of the envelope there.

Sean Mitchell: Well, we're working on that I'd say, it's probably in that range I'm looking at Scott and he is nodding his head yes.

Lloyd Hajdik: I'm looking at Scott, and he's nodding his head yes. Okay. Again, we mentioned on the conference call, it's really, the impacts are really around in the downhole technology segment, specifically to the perforating business with the importation of the gun steel components, end plates, subs, et cetera, that our other competitors in this space are importing essentially from the same sources. So us and our competitors will be looking at similar price increases or cost increases that all things being equal would adjust in our selling prices to our customers. Got it. And then maybe just Yep, go ahead.

Sean Mitchell: And again, we mentioned on the conference call is really.

Sean Mitchell: The impacts are really around in the downhole technologies segment, specifically to the perforating begins with the importation of the gun steel components.

Sean Mitchell: Components in place subs et cetera that are other competitors in this in this space are importing essentially from the same sources, so us and our competitors will be looking at similar price increases or cost increases that.

Sean Mitchell: All things being equal would adjust in our selling prices to our customers.

Sean Mitchell: Got it and then maybe I'll just.

Speaker Change: Yes go ahead.

Sean Mitchell: Yeah, I'll start and I just wanted to add.

Lloyd Hajdik: No, Sean, I just wanted to add, remember that the perfecting side of our business is a smaller piece of the business in totality. And a lot of what we need to do is just focus on the big picture for the total company, not an individual segment. And we're not going to say we're not affected by these, but we are not seeing some of the material impacts that someone that is solely reliant on imports for How do you get your business out there? Equipment vested for US use, right? Yeah. Okay. All right.

Speaker Change: Remember that inside of our business is a smaller piece of the dedicated in totality in a lot of what we have today, let's just focus on the big picture for the total company not an individual segment as well.

Sean Mitchell: We're not going to say.

Sean Mitchell: And that age, but we're not seeing some of the material and tax that someone that is solely reliant on imports for.

Sean Mitchell: Got it.

Sean Mitchell: Equipment destined for Usu slide.

Sean Mitchell: Yes, Okay alright.

Sean Mitchell: I'll turn it back. Thanks, guys.

Sean Mitchell: Alright, I will turn it back thanks guys.

Sean Mitchell: That concludes our Q&A session for today I will now turn it back over to Cindy Taylor for closing remarks.

Unknown Executive: That concludes our Q&A session for today.

Cynthia Taylor: I will now turn it back over to Cindy Taylor for closing remarks. Thanks to all of you for your ongoing interest in oil states and the work that you do to understand the drivers of our business, especially in volatile industry periods. We look forward to future discussions as we execute our strategy.

Speaker Change: Thanks to all of you for your ongoing interest in the oil and the work that you've been to understand the drivers of our business, especially volatile industry carry as we look forward to future discussions as we execute our strategy.

Cynthia Taylor: Take care, and I hope you have a good earnings season for the remainder. Bye-bye.

Sean Mitchell: Sure and I Hope you have a good earnings statement by the reminder.

Bob: Hi, Bob.

Bob: This concludes today's conference call you may now disconnect.

Unknown Executive: This concludes today's conference call.

Unknown Executive: You may now disconnect.

Bob: [music].

Bob: Yes.

Bob: Yeah.

Bob: Okay.

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Bob: Mhm.

Bob: Yeah.

Bob: [music].

Bob: Okay.

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Bob: [music].

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Bob: Okay.

Bob: Sure.

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Bob: Sure.

Bob: Yeah.

Bob: Okay.

Bob: [music].

Bob: Yeah.

Bob: [music].