OIL STATES INTERNATIONAL INC

Previous wording

We provide a broad range of manufactured products and services to customers in the energy, industrial and military sectors through our Offshore Manufactured Products, Well Site Services and Downhole Technologies segments. In first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical financial data, supplemental disaggregated revenue and backlog information as of and for the three months ended March 31, 2023 (presented herein) was conformed with the current-period segment presentation.

Current wording

We provide a broad range of manufactured products and services to customers in the energy, industrial and military sectors through our Offshore Manufactured Products, Well Site Services and Downhole Technologies segments. In first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical financial data, supplemental disaggregated revenue and backlog information as of and for the three and six months ended June 30, 2023 (presented herein) was conformed with the 2024 segment presentation.

Previous wording

Brent and WTI crude oil and natural gas pricing trends were as follows:

Current wording

Brent and West Texas Intermediate (“WTI”) crude oil and natural gas pricing trends were as follows:

Previous wording

On February 16, 2024, we amended our ABL Facility to extend its maturity date from February 10, 2025 to February 16, 2028.

Current wording

On February 16, 2024, we amended the ABL Facility (as defined below) to extend its maturity date from February 10, 2025 to February 16, 2028.

Previous wording

In the first quarter of 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into our Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical segment financial data, backlog and other information were conformed with the first quarter 2024 revised segment presentation.

Current wording

In the first quarter of 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into our Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies. Historical segment financial data, backlog and other information were conformed with the 2024 segment presentation.

Previous wording

On April 19, 2024, Brent crude oil, WTI crude oil and natural gas spot prices closed at $87.96 per barrel, $83.79 per barrel and $1.43 per MMBtu, respectively. Additionally, the U.S. drilling rig count reported on April 19, 2024 was 619 rigs – comparable to the first quarter 2024 average.

Current wording

On July 19, 2024, Brent crude oil, WTI crude oil and natural gas spot prices closed at $85.19 per barrel, $81.43 per barrel and $1.88 per MMBtu, respectively. Additionally, the U.S. drilling rig count reported on July 19, 2024 was 586 rigs – 3% below the second quarter 2024 average.

Previous wording

U.S. drilling, completion and production activity and, in turn, our financial results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the short-term, call-out nature of our U.S. operations.

Current wording

U.S. drilling, completion and production activity and, in turn, our financial results, are sensitive to near-term fluctuations in commodity prices, particularly U.S. crude oil and natural gas prices, given the short-term, call-out nature of our U.S. operations.

Previous wording

Our Offshore Manufactured Products segment provides technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities globally, as well as certain products and services to the offshore drilling and completion markets. This segment also produces a variety of products for use in industrial, military and other applications outside the traditional energy industry. Additionally, we are investing in research and product development (and have been awarded select contracts and are bidding on additional projects) to facilitate the development of alternative energy sources, including offshore wind and deepsea mineral gathering opportunities. This segment is particularly influenced by global spending on deepwater drilling and production, which is primarily driven by our customers’ longer-term commodity demand forecasts and outlook for crude oil and natural gas prices. Approximately 90% of Offshore Manufactured Products segment sales in the first three months of 2024 were driven by our customers’ capital spending for products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as “project-driven products and services”). Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans. Such projects are generally undertaken by larger exploration, field development and production companies (primarily international oil companies and state-run national oil companies) using relatively conservative crude oil and natural gas pricing assumptions. Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to change based on short-term fluctuations in the price of crude oil and natural gas.

Current wording

Our Offshore Manufactured Products segment provides technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities globally, as well as certain products and services to the offshore drilling and completion markets. This segment also produces a variety of products for use in industrial, military and other applications outside the traditional energy industry. Additionally, we are investing in research and product development (and have been awarded select contracts and are bidding on additional projects) to facilitate the development of alternative energy sources, including offshore wind and deepsea mineral gathering opportunities. This segment is particularly influenced by global spending on deepwater drilling and production, which is primarily driven by our customers’ longer-term commodity demand forecasts and outlook for crude oil and natural gas prices. Approximately 90% of Offshore Manufactured Products segment sales in the first six months of 2024 were driven by our customers’ capital spending for products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as “project-driven products and services”). Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans. Such projects are generally undertaken by larger exploration, field development and production companies (primarily international oil companies and state-run national oil companies) using relatively conservative crude oil and natural gas pricing assumptions. Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to change based on short-term fluctuations in the price of crude oil and natural gas.

Previous wording

Backlog reported by our Offshore Manufactured Products segment decreased to $305 million as of March 31, 2024 from $327 million as of December 31, 2023. Bookings totaled $66 million in the first quarter of 2024, yielding a quarterly book-to-bill ratio of 0.8x. The following table sets forth backlog as of the dates indicated (in millions).

Current wording

Backlog reported by our Offshore Manufactured Products segment decreased to $300 million as of June 30, 2024 from $327 million as of December 31, 2023. Bookings totaled $101 million in the second quarter of 2024, yielding a quarterly book-to-bill ratio of 1.0x (0.9x year-to-date). The following table sets forth backlog as of the dates indicated (in millions).

Previous wording

The U.S. energy industry is primarily focused on crude oil and liquids-rich exploration and development activities in U.S. shale plays utilizing horizontal drilling and completion techniques. As of March 31, 2024, oil-directed drilling accounted for 81% of the total U.S. rig count – with the balance largely natural gas related.

Current wording

The U.S. energy industry is primarily focused on crude oil and liquids-rich exploration and development activities in U.S. shale plays utilizing horizontal drilling and completion techniques. As of June 30, 2024, oil-directed drilling accounted for 82% of the total U.S. rig count – with the balance largely natural gas related.

Previous wording

This selected financial data should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes included in “Part I, Item 1. Financial Statements” of this Quarterly Report on Form 10-Q and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes included in “Part II, Item 8. Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2023 in order to understand factors, such as charges, credits and financing transactions, which may impact comparability of the selected financial data.

Current wording

This selected financial data should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes included in “Part I, Item 1. Financial Statements” of this Quarterly Report on Form 10-Q and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes included in “Part II, Item 8. Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2023 in order to understand factors, such as charges and credits, which may impact comparability of the selected financial data.

Previous wording

In the first quarter of 2024, certain short-cycle manufacturing operations historically reported within the Offshore Manufactured Products segment (legacy frac plug and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and the current segment management structure, as well as provide for additional operational synergies. Historical financial data and supplemental disaggregated revenue information as of the three months ended March 31, 2023 (presented herein) were conformed with the current-period segment presentation.

Current wording

In the first quarter of 2024, certain short-cycle manufacturing operations historically reported within the Offshore Manufactured Products segment (legacy frac plug and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and the current segment management structure, as well as provide for additional operational synergies. Historical financial data and supplemental disaggregated revenue information as of and for the three and six months ended June 30, 2023 (presented herein) were conformed with the 2024 segment presentation.

Previous wording

The following summarizes our consolidated results of operations for the three months ended March 31, 2024 and 2023 (in thousands, except per share amounts):

Current wording

The following summarizes our consolidated results of operations for the three and six months ended June 30, 2024 and 2023 (in thousands, except per share amounts):

Previous wording

We manage and measure our business performance in three distinct operating segments: Offshore Manufactured Products, Well Site Services and Downhole Technologies. Supplemental financial information by operating segment for the three months ended March 31, 2024 and 2023 is summarized below (in thousands):

Current wording

We manage and measure our business performance in three distinct operating segments: Offshore Manufactured Products, Well Site Services and Downhole Technologies. Supplemental financial information by operating segment for the three and six months ended June 30, 2024 and 2023 is summarized below (in thousands):

Previous wording

(1)During the three months ended March 31, 2024, we recognized facility consolidation charges of $1.5 million associated with the Offshore Manufactured Products segment’s ongoing consolidation and relocation of a manufacturing and service location.

Current wording

(1)During the three and six months ended June 30, 2024, we recognized facility consolidation charges of $1.5 million and$3.0 million, respectively, associated with the Offshore Manufactured Products segment’s consolidation and relocation of a manufacturing and service location.

Previous wording

(2)During the three months ended March 31, 2024, the Well Site Services segment recognized charges of $1.0 million associated primarily with the consolidation and exit of certain service locations.

Current wording

(2)During the three and six months ended June 30, 2024, the Well Site Services segment recognized charges of $2.9 million and$3.9 million, respectively, associated primarily with the consolidation and exit of certain underperforming service locations and the defense of certain patents.

Previous wording

(3)During the three months ended March 31, 2024, the Downhole Technologies segment recognized a $10.0 million non-cash impairment charge related to goodwill reassigned to the business in connection with the segment realignment discussed above.

Current wording

(3)During the six months ended June 30, 2024, the Downhole Technologies segment recognized a $10.0 million non-cash impairment charge related to goodwill reassigned to the business in connection with the segment realignment discussed above.

Previous wording

Our first quarter 2024 results, reflect the impact of an industry-wide decline in U.S. well completions, driven particularly by weak natural gas prices (the average spot price for Henry Hub natural gas was $2.15 per MMBtu in the first quarter of 2024, down 19% from the prior-year period). The impact of the decline in investments by our U.S. customers was partially offset by growth in offshore and international project activity and associated backlog conversion. Management continues to implement measures in areas experiencing lower activity levels to reduce future costs.

Current wording

Our second quarter 2024 results of operations reflect the impact of the growth in offshore and international project activity and associated backlog conversion, partially offset by a decline in natural gas focused investments by our U.S. customers, competitive market conditions and management’s decision to exit certain underperforming locations. Management continues to implement measures in areas experiencing lower activity levels to reduce future costs.

Previous wording

We reported a net loss for the three months ended March 31, 2024 of $13.4 million, or $0.21 per share, which included a non-cash goodwill impairment charge of $10.0 million ($9.5 million after-tax, or $0.15 per share) and facility consolidation and other charges of $2.5 million ($2.0 million after-tax, or $0.03 per share). These results compare to net income for the three months ended March 31, 2023 of $2.2 million, or $0.03 per share.

Current wording

We reported a net loss for the six months ended June 30, 2024 of $12.1 million, or $0.19 per share. The reported first six months net loss included: a non-cash goodwill impairment charge of $10.0 million ($9.5 million after-tax, or $0.15 per share) and facility consolidation and other charges of $6.9 million ($5.5 million after-tax, or $0.09 per share), partially offset by non-cash gains of $0.5 million ($0.4 million after-tax, or $0.01 per share) associated with debt extinguishment. These results compare to net income for the six months ended June 30, 2023 of $2.7 million, or $0.04 per share.

Previous wording

Revenues. Consolidated total revenues in the first three months of 2024 decreased $28.9 million, or 15%, from the first three months of 2023.

Current wording

Revenues. Consolidated total revenues in the first six months of 2024 decreased $26.1 million, or 7%, from the first six months of 2023.

Previous wording

Consolidated product revenues in the first three months of 2024 decreased $5.5 million, or 6%, from the first three months of 2023, with the impact of lower customer demand for consumable completion products in the United States, partially offset by higher customer demand for project-driven production facility and connector products. Consolidated service revenues in the first three months of 2024 decreased $23.4 million, or 24%, from the first three months of 2023 due primarily to lower U.S. land-based customer investments.

Current wording

Consolidated product revenues in the first six months of 2024 increased $10.4 million, or 5%, from the first six months of 2023, with the impact of higher customer demand for project-driven production facility products partially offset by a decline in U.S. customer demand for completion and perforating products. Consolidated service revenues in the first six months of 2024 decreased $36.5 million, or 20%, from the first six months of 2023. This decrease was concentrated in the United States – driven by lower land-based customer investments (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming locations during the first six months of 2024, partially offset by higher offshore and international service activity.

Previous wording

Cost of Revenues (exclusive of Depreciation and Amortization Expense). Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $18.8 million, or 12%, in the first three months of 2024 compared to the first three months of 2023.

Current wording

Cost of Revenues (exclusive of Depreciation and Amortization Expense). Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $18.8 million, or 6%, in the first six months of 2024 compared to the first six months of 2023.

Previous wording

Consolidated product costs in the first three months of 2024 decreased $3.5 million, or 4%, compared to the first three months of 2023 due primarily to the reported revenue decline. Consolidated service costs in the first three months of 2024 decreased $15.2 million, or 21%, compared to the first three months of 2023, due primarily to the impact of lower U.S. activity levels.

Current wording

Consolidated product costs in the first six months of 2024 increased $6.3 million, or 4%, compared to the first six months of 2023 due primarily to the reported product revenue increase. Consolidated service costs in the first six months of 2024 decreased $25.1 million, or 18%, compared to the first six months of 2023, with the impact of lower U.S. activity levels and implemented cost control measures partially offset by facility consolidation and exit costs incurred in 2024.

Previous wording

Selling, General and Administrative Expense. Selling, general and administrative expense was $22.5 million in the first three months of 2024, which included $0.4 million of costs associated with enforcing certain of our patents. Excluding these patent defense costs, selling, general and administrative costs decreased $1.2 million, or 5%, from the first three months of 2023, due primarily to reductions in short- and long-term incentive expenses.

Current wording

Selling, General and Administrative Expense. Selling, general and administrative expense was $48.9 million in the first six months of 2024, which included $1.3 million of costs associated with enforcing certain of our patents. Excluding these patent defense costs, selling, general and administrative costs were consistent with the first six months of 2023.

Previous wording

Depreciation and Amortization Expense. Depreciation and amortization expense decreased $1.1 million, or 7%, in the first three months of 2024 compared to the prior-year period. Note 10, “Segments and Related Information,” to our Unaudited Condensed Consolidated Financial Statements presents depreciation and amortization expense by segment.

Current wording

Depreciation and Amortization Expense. Depreciation and amortization expense decreased $1.9 million, or 6%, in the first six months of 2024 compared to the prior-year period. Note 10, “Segments and Related Information,” to our Unaudited Condensed Consolidated Financial Statements presents depreciation and amortization expense by segment.

Previous wording

Impairment of Goodwill. During the first three months of 2024, our Downhole Technologies operations recognized a non-cash impairment charge of $10.0 million related to goodwill transferred to the business in connection with segment realignment discussed above. See Note 2, “Goodwill Impairment and Other Charges,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Current wording

Impairment of Goodwill. During the first quarter of 2024, our Downhole Technologies operations recognized a non-cash impairment charge of $10.0 million related to goodwill transferred to the business in connection with segment realignment discussed above. See Note 2, “Goodwill Impairment and Other Charges,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Previous wording

Operating Income (Loss). Our consolidated operating loss was $11.2 million in the first three months of 2024, which included a $10.0 million non-cash goodwill impairment charge and $2.5 million in facility consolidation and other charges. This compares to consolidated operating income of $5.9 million in the first three months of 2023. Excluding the 2024 charges, operating income decreased $4.5 million year-over-year.

Current wording

Operating Income (Loss). Our consolidated operating loss was $9.1 million in the first six months of 2024, which included a $10.0 million non-cash goodwill impairment charge and charges totaling $6.9 million associated with facility consolidations and exits, and patent defense. This compares to consolidated operating income of $9.1 million in the first six months of 2023. Excluding the 2024 charges, operating income decreased $1.3 million year-over-year.

Previous wording

Interest Expense, Net. Net interest expense totaled $2.1 million in the first three months of 2024, which compares to $2.4 million in the first three months of 2023. Interest expense as a percentage of total debt outstanding was approximately 7% in the first three months of 2024, compared to 7% in the first three months of 2023.

Current wording

Interest Expense, Net. Net interest expense totaled $4.2 million in the first six months of 2024, which compares to $4.5 million in the first six months of 2023. Interest expense as a percentage of total debt outstanding was approximately 7% in the first six months of 2024, compared to 7% in the first six months of 2023.

Previous wording

Income Tax. Income tax expense for the first three months of 2024 and 2023 was calculated using a discrete approach. This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the first three months of 2024, our income tax provision was $24 thousand on a pre-tax loss of $13.4 million, which included a $10.0 million goodwill impairment charge and other non-deductible expenses. This compares to an income tax provision of $1.6 million on pre-tax income of $3.8 million for the first three months of 2023, which included certain non-deductible expenses and discrete tax items.

Current wording

Income Tax. Income tax benefit (provision) for the first six months of 2024 and 2023 was calculated using a discrete approach. This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the first six months of 2024, our income tax benefit was $0.6 million on a pre-tax loss of $12.7 million, which included a $10.0 million goodwill impairment charge, other non-deductible expenses and favorable changes in valuation allowances recorded against deferred tax assets. This compares to an income tax provision of $2.5 million on pre-tax income of $5.2 million for the first six months of 2023, which included certain non-deductible expenses, discrete tax items and a favorable change in valuation allowances recorded against deferred tax assets.

Previous wording

Other Comprehensive Income (Loss). Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income (loss). Other comprehensive loss was $3.0 million in the first three months of 2024 compared to comprehensive income of $4.1 million in the first three months of 2023 due to fluctuations in foreign currency exchange rates compared to the U.S. dollar for certain of the international operations of our operating segments. For the first three months of 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil. During the first three months of 2024, the exchange rates for the British pound and the Brazilian real weakened compared to the U.S. dollar. In the first three months of 2023, the exchange rate for the British pound and the Brazilian real strengthened compared to the U.S. dollar.

Current wording

Other Comprehensive Income (Loss). Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income (loss). Other comprehensive loss was $6.2 million in the first six months of 2024 compared to comprehensive income of $7.4 million in the first six months of 2023 due to fluctuations in foreign currency exchange rates compared to the U.S. dollar for certain of the international operations of our operating segments. For the first six months of 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil. During the first six months of 2024, the exchange rates for the British pound and the Brazilian real weakened compared to the U.S. dollar. This compares to the first six months of 2023, when the exchange rates for the British pound and the Brazilian real strengthened compared to the U.S. dollar.

Previous wording

Revenues. Our Offshore Manufactured Products segment revenues increased $6.4 million, or 8%, in the first three months of 2024 compared to the first three months of 2023 due primarily to increased demand for international and offshore-project driven products and services.

Current wording

Revenues. Our Offshore Manufactured Products segment revenues increased $29.3 million, or 18%, in the first six months of 2024 compared to the first six months of 2023 due primarily to increased demand for international and offshore-project driven products and services.

Previous wording

Operating Income. Our Offshore Manufactured Products segment reported operating income of $10.6 million in the first three months of 2024, which included the $1.5 million in facility consolidation charges discussed above. This compares to operating income of $7.7 million in the first three months of 2023. Excluding the facility consolidation charges, operating income increased $4.4 million year-over-year.

Current wording

Operating Income. Our Offshore Manufactured Products segment reported operating income of $25.0 million in the first six months of 2024, which included $3.0 million in facility consolidation charges. This compares to operating income of $16.5 million in the first six months of 2023. Excluding the 2024 charges, operating income increased $11.4 million year-over-year.

Previous wording

Backlog. Backlog in our Offshore Manufactured Products segment totaled $305 million as of March 31, 2024 compared to $327 million as of December 31, 2023. Bookings during the first three months of 2024 totaled $66 million, yielding a quarterly book-to-bill ratio of 0.8x.

Current wording

Backlog. Backlog in our Offshore Manufactured Products segment totaled $300 million as of June 30, 2024 compared to $327 million as of December 31, 2023. Bookings during the first six months of 2024 totaled $167 million, yielding a year-to-date book-to-bill ratio of 0.9x.

Previous wording

Revenues. Our Well Site Services segment revenues decreased $19.8 million, or 29%, in the first three months of 2024 compared to the first three months of 2023, driven primarily by lower U.S. customer activity levels (particularly in natural gas basins) and competitive market conditions.

Current wording

Revenues. Our Well Site Services segment revenues decreased $37.9 million, or 29%, in the first six months of 2024 compared to the first six months of 2023, driven primarily by lower U.S. customer activity levels (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming service locations during the first six months of 2024.

Previous wording

Operating Income. Our Well Site Services segment reported an operating loss of $0.4 million in the first three months of 2024, which included costs totaling $1.0 million associated with the exit of three facilities and the defense of patents. This compares to operating income of $7.0 million in the first three months of 2023. Excluding the costs discussed above, the Well Site Services segment’s operating results declined $6.3 million from the prior-year period, due to the reported decrease in revenue.

Current wording

Operating Income (Loss). Our Well Site Services segment reported an operating loss of $1.0 million in the first six months of 2024, which included charges totaling $3.9 million associated with facility consolidations and exits, and the defense of patents. This compares to operating income of $11.7 million in the first six months of 2023. Excluding the 2024 charges discussed above, the Well Site Services segment’s operating results declined $8.7 million from the prior-year period, with the impact of the decrease in U.S. land-based revenues partially offset by implemented cost control measures.

Previous wording

Revenues. Our Downhole Technologies segment revenues decreased $15.5 million, or 32%, in the first three months of 2024 from the first three months of 2023 due primarily to lower U.S. customer demand for perforating and completion products.

Current wording

Revenues. Our Downhole Technologies segment revenues decreased $17.5 million, or 20%, in the first six months of 2024 from the first six months of 2023 due primarily to lower U.S. customer demand for perforating and completion products during the first quarter of 2024.

Previous wording

Operating Loss. Our Downhole Technologies segment reported an operating loss of $12.1 million in the first three months of 2024, which included the $10.0 million non-cash goodwill impairment charge related to the first quarter of 2024 segment realignment. This compares to operating income of $1.9 million reported in the first three months of 2023. Excluding the goodwill impairment charge, the Downhole Technologies operating results declined $4.0 million from the prior-year period, due primarily to the reported decrease in revenue and lower manufacturing volumes.

Current wording

Operating Loss. Our Downhole Technologies segment reported an operating loss of $13.2 million in the first six months of 2024, which included the $10.0 million non-cash goodwill impairment charge related to the first quarter of 2024 segment realignment. This compares to operating income of $1.8 million reported in the first six months of 2023, which included a $1.0 million non-cash provision for excess and obsolete inventory. Excluding the charge discussed above, the Downhole Technologies operating results declined $6.0 million from the prior-year period, due primarily to the reported decrease in revenue and lower manufacturing volumes.

Previous wording

Operating Loss. Corporate expenses in the first three months of 2024 decreased $1.4 million, or 13%, from the first three months of 2023, due primarily to lower short- and long-term incentive expenses.

Current wording

Operating Loss. Corporate expenses in the first six months of 2024 decreased $0.9 million, or 4%, from the first six months of 2023, due primarily to lower short- and long-term incentive expenses.

Previous wording

Cash flows used in operations totaled $11.4 million during the first three months of 2024, compared to $5.9 million used in operations during the first three months of 2023.

Current wording

Cash flows used in operations totaled $1.1 million during the first six months of 2024, compared to $38.7 million generated by operations during the first six months of 2023.

Previous wording

During the first three months of 2024, $21.8 million was used to fund net working capital increases, primarily due to the payment of accrued 2023 short- and long-term cash incentives and a decrease in accounts payable. During 2023, $25.6 million was used to fund net working capital increases, primarily due to the payment of accrued 2022 short- and long-term cash incentives and an activity-driven increase in inventories.

Current wording

During the first six months of 2024, $28.3 million was used to fund net working capital increases, primarily due to an activity-driven increase in inventories, the payment of accrued 2023 short- and long-term cash incentives in the first quarter of 2024 and a decrease in accounts payable. During the first six months of 2023, $0.8 million was provided by net working capital decreases, with the favorable impact of a decrease in accounts receivable and an increase in deferred revenues, substantially offset by an activity-driven increase in inventories and the payment of accrued 2022 short-and long-term cash incentives in the first quarter of 2023.

Previous wording

Net cash used in investing activities during the first three months of 2024 totaled $7.8 million, compared to $6.4 million used in investing activities during the first three months of 2023.

Current wording

Net cash used in investing activities during the first six months of 2024 totaled $3.2 million, compared to $16.7 million used in investing activities during the first six months of 2023.