OIL STATES INTERNATIONAL, INCOIS
OIL STATES INTERNATIONAL, INC Income Taxes Disclosure
Income Taxes
Consolidated income (loss) before income taxes for the years ended December 31, 2024, 2023 and 2022 consisted of the following (in thousands):
| 2024 | 2023 | 2022 | |||||||||||||||
| United States | $ | (27,024) | $ | 3,793 | $ | (22,489) | |||||||||||
| Foreign | 19,172 | 12,031 | 18,429 | ||||||||||||||
| Total | $ | (7,852) | $ | 15,824 | $ | (4,060) | |||||||||||
Components of income tax provision for the years ended December 31, 2024, 2023 and 2022 consisted of the following (in thousands):
| 2024 | 2023 | 2022 | |||||||||||||||
| Current: | |||||||||||||||||
| United States | $ | — | $ | — | $ | 155 | |||||||||||
| U.S. state | 555 | 1,135 | 1,191 | ||||||||||||||
| Foreign | 5,207 | 1,572 | 2,114 | ||||||||||||||
| 5,762 | 2,707 | 3,460 | |||||||||||||||
| Deferred: | |||||||||||||||||
| United States | (1,822) | 2,061 | 266 | ||||||||||||||
| U.S. state | (281) | (721) | (12) | ||||||||||||||
| Foreign | (253) | (1,114) | 1,766 | ||||||||||||||
| (2,356) | 226 | 2,020 | |||||||||||||||
| Total income tax provision | $ | 3,406 | $ | 2,933 | $ | 5,480 | |||||||||||
A reconciliation of the U.S. statutory income tax provision (benefit) to the total income tax provision for the years ended December 31, 2024, 2023 and 2022 is as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| U.S. statutory income tax provision (benefit) | $ | (1,649) | $ | 3,323 | $ | (853) | |||||||||||
Impairment of goodwill | 1,619 | — | — | ||||||||||||||
| Effect of foreign income taxed at different rates | 1,400 | (425) | 1,895 | ||||||||||||||
| Foreign income subject to U.S. taxes | 1,214 | 931 | 1,876 | ||||||||||||||
Utilization of U.S. foreign tax credits | (1,373) | (1,460) | (291) | ||||||||||||||
| State income taxes, net of federal benefits | 502 | 962 | 89 | ||||||||||||||
Changes in valuation allowances against tax assets (see Note 16) | 760 | (2,010) | 19 | ||||||||||||||
| Non-deductible compensation | 1,449 | 1,390 | 627 | ||||||||||||||
Other, net | (516) | 222 | 2,118 | ||||||||||||||
| Total income tax provision | $ | 3,406 | $ | 2,933 | $ | 5,480 | |||||||||||
The significant items giving rise to the deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows (in thousands):
| 2024 | 2023 | ||||||||||
| Deferred tax assets: | |||||||||||
| Foreign tax credit carryforwards | $ | 3,423 | $ | 12,614 | |||||||
| Net operating loss carryforwards | 14,147 | 21,065 | |||||||||
R&D credit carryforwards | 3,880 | 2,895 | |||||||||
| Inventories | 8,456 | 11,523 | |||||||||
| Operating lease liabilities | 4,337 | 4,334 | |||||||||
| Employee benefits | 4,292 | 4,442 | |||||||||
Deferred revenue | 8,088 | 6,437 | |||||||||
| Other | 7,835 | 7,569 | |||||||||
| Gross deferred tax asset | 54,458 | 70,879 | |||||||||
Valuation allowance (see Note 16) | (22,088) | (29,638) | |||||||||
| Net deferred tax asset | 32,370 | 41,241 | |||||||||
| Deferred tax liabilities: | |||||||||||
Property, plant and equipment | (8,895) | (14,337) | |||||||||
| Intangible assets | (21,009) | (26,542) | |||||||||
| Operating lease assets | (3,108) | (3,632) | |||||||||
| Other | (2,744) | (2,236) | |||||||||
| Deferred tax liability | (35,756) | (46,747) | |||||||||
| Net deferred tax liability | $ | (3,386) | $ | (5,506) | |||||||
| 2024 | 2023 | ||||||||||
| Balance sheet classification: | |||||||||||
| Other non-current assets | $ | 1,964 | $ | 2,211 | |||||||
| Deferred tax liability | (5,350) | (7,717) | |||||||||
| Net deferred tax liability | $ | (3,386) | $ | (5,506) | |||||||
The Company had U.S. state NOL carryforwards as of December 31, 2024 totaling $161.1 million, of which $8.9 million were attributable to the acquired GEODynamics operations and subject to certain limitation provisions. As of December 31, 2024, the Company had NOL carryforwards related to certain of its international operations totaling $27.9 million, of which $7.4 million can be carried forward indefinitely. As of December 31, 2024 and 2023, the Company had recorded valuation allowances of $13.9 million and $17.7 million, respectively, primarily with respect to foreign and U.S. state NOL carryforwards.
As of December 31, 2024 and 2023, the Company’s foreign tax credit carryforwards totaled $3.4 million and $12.6 million, respectively. During 2024 and 2023, $4.3 million and $5.0 million, respectively, of the Company’s foreign tax credits expired, and the offsetting valuation allowances were reduced. The remaining foreign tax credits will expire, if unused, in varying amounts from 2025 to 2029. As of December 31, 2024 and 2023, the Company had recorded valuation allowances of $3.4 million and $11.9 million, respectively, with respect to foreign tax credit carryforwards.
As of December 31, 2024 and 2023, the Company’s U.S. research and development tax credit carryforwards totaled $3.9 million and $2.9 million, respectively, which will expire, if unused, between 2032 and 2044. As of December 31, 2024, the Company had a valuation allowance of $2.0 million (nil as of December 31, 2023) with respect to research and development tax credit carryforwards.
The Company files tax returns in the jurisdictions in which they are required. These returns are subject to examination or audit and possible adjustment as a result of assessments by taxing authorities. The Company believes that it has recorded sufficient tax liabilities and does not expect that the resolution of any examination or audit of its tax returns will have a material adverse effect on its consolidated operating results, financial condition or liquidity.
Tax years subsequent to 2013 (except for 2016) remain open to U.S. federal tax audit. Foreign subsidiary federal tax returns subsequent to 2018 are subject to audit by various foreign tax authorities.
The total amount of unrecognized tax benefits as of December 31, 2024 and 2023 was nil. The Company accrues interest and penalties related to unrecognized tax benefits as a component of the Company’s provision for income taxes. As of December 31, 2024 and 2023, the Company had no accrued interest expense or penalties.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.