OIS

Analyst Note: Oil States International, Inc. (OIS)

Date: 2026-06-13 Current Price: $7.95

1. Structural Readiness

• Conservative Entry: Not yet defined (requires breakout confirmation).
• Aggressive/Pre-Breakout Entry: Not recommended for conservative sizing; requires strict risk management if traded as a pre-breakout speculative position.
• Breakout Level: Not yet defined (requires price to close above the consolidation high).
• Current Price: $7.95.
• Extension: Not applicable (price is within the consolidation range, not extended above the breakout level).
• ATR Context: Current ATR is 4.2% (High). This indicates elevated volatility, which is consistent with the "Cyclical Recovery" archetype but requires careful position sizing to avoid whipsaw during the forming phase.

2. Thesis Layer

• Thesis Classification: Tactical / Setup-Led.
• Macro Context: There is no named secular thesis attached to this specific setup as of 2026-06-13. The investment case is not driven by a specific long-term macro narrative (e.g., "Energy Transition" or "AI Infrastructure") but rather by the structural quality of the business cycle and the technical setup.
• Judgment Criteria: The conviction must be derived entirely from the setup quality (the forming coil structure) and the underlying business fundamentals (backlog health, deleveraging, and margin expansion) rather than an external macro tailwind.

3. Business Overview

Oil States International, Inc. is a global provider of manufactured products and services to the energy, military, and industrial sectors. As of the latest reporting period (Q1 2026), the company operates through three distinct divisions:

• Offshore Manufactured Products: The primary growth engine, delivering capital equipment for floating production platforms, subsea pipelines, and drilling vessels.
• Completion and Production Services: Provides well site services including frac valves, wireline support, and blowout preventers.
• Downhole Technologies: Delivers perforation systems and engineered consumables for unconventional well productivity.

Key Operational Metrics (as of May 5, 2026):

• Backlog: The company reported a backlog of $430 million as of March 31, 2026, which management described as "near a decade-high level." This represents a slight decrease from $435 million at year-end 2025 but remains significantly elevated compared to $311 million at year-end 2024.
• Book-to-Bill: The first quarter of 2026 saw bookings of $84 million against a bill of roughly $93 million (implied), yielding a book-to-bill ratio of 0.9x. Management reiterated a view that the full-year book-to-bill ratio should be 1x or greater.
• Revenue Mix: Approximately 72% of Q1 revenues and 74% of revenues over the last 12 months were derived from offshore and international projects.
• Segment Performance: The Offshore Manufactured Products segment led performance with $91 million in revenues and an adjusted segment EBITDA of $19 million, representing an adjusted segment EBITDA margin of approximately 20%.
• Capital Structure: On April 1, 2026, the company retired $52.7 million of its 4.75% convertible senior notes using a mix of cash on-hand ($25.5M), revolver borrowings ($25.0M), and stock issuance (529,428 shares). This action materially delevered the balance sheet.
• Cash Flow: Management expects free cash flow to improve over the balance of 2026 as working capital normalizes through backlog conversion and assets held for sale are monetized.

4. Archetype and Conviction Stack

• Archetype: Cyclical Recovery.
• *Fit:* The company is transitioning from a period of capital discipline and deleveraging (evidenced by the 2026 note retirement) into a phase of backlog conversion and margin expansion. The high backlog levels and strong offshore demand (74% of revenue) align with a cyclical upturn in offshore capex.
• Valuation Context:
• Forward consensus EPS for FY1 is $0.435, and FY2 is $0.657.
• At a current price of $7.95, the stock trades at approximately 18.3x FY1 EPS and 12.1x FY2 EPS.
• Conviction Stack:
• Thesis Strength: Moderate. The setup is tactical, not secular. The "Cyclical Recovery" label is descriptive of the industry phase, not a guaranteed catalyst.
• Evidence Quality: High. The evidence base is robust, citing specific backlog figures, segment margins, and balance sheet actions from Q1 2026 earnings and filings.
• Structural Quality: Strong. The backlog is near decade highs, and the company has successfully reduced debt. The 20% EBITDA margin in the offshore segment demonstrates pricing power and operational leverage.
• Rerating Potential: Moderate. If the book-to-bill ratio hits the 1x target and the backlog converts to revenue as expected (30% in H2 2026), the multiple could expand from current levels, but this is contingent on the technical breakout.

5. Invalidations, Strengtheners, and Gaps

• Invalidation Triggers:
• A significant deterioration in the book-to-bill ratio below 0.8x in subsequent quarters, indicating a loss of order momentum.
• A failure to monetize assets held for sale or a stagnation in working capital normalization, which would delay the expected FCF improvement.
• Strengtheners:
• A confirmed breakout above the consolidation range with volume expansion.
• Reiteration or upgrade of the full-year book-to-bill target to >1.1x.
• Further margin expansion in the Offshore Manufactured Products segment beyond the current 20% EBITDA margin.
• Evidence Gaps:
• Q2 Actuals: The evidence provided is from Q1 2026 (May 5, 2026). Actual Q2 results (ending June 30, 2026) are not yet available as of the event date (June 13, 2026), creating a small window of uncertainty regarding the immediate execution of the guidance ($157M-$162M revenue).

PRIVATE ANALYST CALL

Judgment: Speculative Confidence: medium Key evidence: Backlog near decade-high at $430M with 20% EBITDA margins in offshore segment; successful retirement of $52.7M convertible notes reducing leverage; management guidance for full-year book-to-bill of 1x or greater. Key risks: Book-to-bill ratio failing to reach 1x target; offshore capex spending slowing due to macro energy price volatility; technical setup remaining in "forming" state without breakout confirmation. Expected path: Management expects backlog conversion to drive revenue growth in H2 2026 and FCF improvement as working capital normalizes; technical structure requires a breakout above consolidation to confirm the cyclical recovery thesis. Expected horizon: 3 to 6 months for the setup to resolve (breakout or invalidation) and for backlog conversion to impact earnings.