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News Release Oil States Announces Second Quarter Earnings of $0.71 Per Share
8/3/2010 4:26:13 PM HOUSTON, Aug 3, 2010 (GlobeNewswire via COMTEX) -- Today, Oil States International, Inc. (NYSE:OIS) reported net income for the quarter ended June 30, 2010 of $37.5 million, or $0.71 per diluted share. Second quarter 2010 net income increased 78% over second quarter 2009 net income of $21.0 million, or $0.42 per diluted share, which excludes the $94.5 million goodwill impairment charge ($1.70 per diluted share after taxes) taken in June 2009. The Company generated $594.5 million and $88.1 million of revenues and EBITDA, respectively, during the current quarter compared to revenue of $456.3 million and Adjusted EBITDA of $60.2 million in the second quarter of 2009 (EBITDA defined as net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the goodwill impairment charges.).(A) The significant year-over-year growth in revenues and EBITDA was primarily due to increases in North American drilling and completion activity which had a positive impact on Well Site Services and Tubular Services as well as increased room capacity and earnings from the Company's oil sands accommodations. Consolidated operating income in the second quarter of 2010 was $57.8 million compared to $31.3 million for the corresponding quarter of 2009, excluding the goodwill impairment charge taken in the rental tool business during the second quarter of 2009. "We benefited from the recovery in North American drilling and completion activity over the period. We also generated strong year-over-year growth in earnings as we continued to profitably expand our oil sands accommodations business," stated Cindy B. Taylor, Oil States' President and Chief Executive Officer. "Our drilling, rental tools and tubular services businesses generated significantly improved results primarily due to the 61% year-over-year increase in the U.S. rig count. Despite lower year-over-year revenues and backlog, our Offshore Products segment generated strong margins during the current quarter due to strong project execution and a favorable product and service mix." Mrs. Taylor continued, "As we look towards the second half of 2010, we expect our oil sands accommodations business to continue to grow with planned capacity increases at our Wapasu Creek and Conklin lodges. Given our recent bidding activity, we see the potential to grow our Offshore Products backlog over the next six months as international deepwater activity remains strong. However, the Gulf of Mexico deepwater moratorium could cause continued delays in deepwater award activity domestically." The Company recognized an effective tax rate of 30.6% in the second quarter of 2010 compared to a 5.0% tax benefit in the second quarter of 2009. The tax benefit in the second quarter of 2009 was attributable to losses reported in the quarter and was adversely impacted by a significant amount of the goodwill impairment charges which were non-deductible for tax purposes. Excluding the goodwill impairment, the effective tax rate for the second quarter of 2009 would have approximated 24.0%. The higher tax rate in the second quarter of 2010 is primarily related to an increased proportion of domestic earnings which are taxed at higher statutory rates. The Company spent $38.9 million in capital expenditures during the second quarter of 2010 primarily related to the accommodations segment. The Company currently expects to spend approximately $219 million in capital expenditures during the full year of 2010, primarily to expand its Canadian oil sands accommodations. For the first half of 2010, the Company reported revenues of $1.1 billion, EBITDA of $179.6 and $77.7 million of net income, or $1.49 per diluted share. For the first half of 2009, the Company reported revenues of $1.1 billion and EBITDA of $79.1 million which resulted in a $7.4 million net loss, or $0.15 per diluted share. Excluding the goodwill impairment charge taken in the June 2009, the Company would have reported $173.7 million of Adjusted EBITDA and $77.1 million of net income, or $1.55 per diluted share. BUSINESS SEGMENT RESULTS (Unless otherwise noted, the following discussion compares the quarterly results from the second quarter of 2010 to the results from the second quarter of 2009. In order to present a more meaningful comparison of the Company's operating results, the second quarter 2009 results exclude the goodwill impairment charge.) Accommodations Accommodations generated revenues of $122.0 million and EBITDA of $41.5 million for the second quarter of 2010 compared to revenues and EBITDA of $88.4 million and $34.8 million, respectively, in the second quarter of 2009. Accommodations revenues increased 38% and EBITDA increased 19% year-over-year due to increased capacity and improved occupancy levels at the oil sands lodges coupled with the stronger Canadian dollar which appreciated approximately 14% year-over-year relative to the U.S. dollar. These year-over-year increases were partially offset by reduced minimum guarantees in the oil sands lodges, lower manufacturing sales and decreased mobile camp revenues and margins. Well Site Services Well Site Services, consisting of rental tools and drilling services, generated revenues of $113.3 million and EBITDA of $26.0 million in the second quarter of 2010 compared to revenues and Adjusted EBITDA of $64.5 million and $5.8 million, respectively, in the second quarter of 2009 excluding the rental tool goodwill impairment. The year-over-year revenue and EBITDA growth of 76% and 344%, respectively, was primarily due to year-over-year increases in activity and margins from the Company's rental tool business. Rental tools generated $79.1 million and $20.8 million of revenues and EBITDA, respectively, in the second quarter of 2010 compared to revenues of $53.6 million and Adjusted EBITDA of $5.7 million in the second quarter of 2009, excluding the goodwill impairment charges. These year-over-year improvements were primarily due to increased U.S. drilling and completion activity, particularly in the key shale play regions such as the Marcellus, Bakken and Eagle Ford regions, as well as a recovery in activity in the Barnett shale region. In addition, the rental tools group benefited from improved product mix, better fixed cost absorption and improved pricing in some regions. Drilling services generated revenues and EBITDA of $34.1 million and $5.2 million, respectively, in the second quarter of 2010 compared to $10.9 million of revenues and EBITDA of $0.2 million in the second quarter 2009. The year-over-year increase in revenues and EBITDA was due to an overall increase in rig utilization to 73% in the second quarter of 2010 from a low level of 21% realized in the second quarter of 2009. The positive utilization impact helped absorb fixed costs allowing for improved daily cash margin year-over-year. Offshore Products The Offshore Products segment generated revenues and EBITDA of $106.0 million and $18.9 million, respectively, in the second quarter of 2010 compared to $122.5 million of revenues and $20.3 million in EBITDA in the second quarter of 2009. Revenues declined year-over-year at Offshore Products as a result of lower subsea products shipments with the completion of an order for the Block 15 project in West Africa during the fourth quarter of 2009 and generally due to a lower year over year backlog. Margins in Offshore Products improved year-over-year primarily due to a favorable foreign exchange gain variance of $1.5 million year-over-year coupled with strong revenues from higher margin drilling related products. Backlog totaled $215.7 million at June 30, 2010 which was down 2% from $220.6 million reported as of March 31, 2010 but up 5% from $206.3 million reported as of December 31, 2009. Tubular Services Tubular Services generated revenues of $253.3 million and EBITDA of $9.7 million during the second quarter of 2010 compared to revenues of $180.9 million and EBITDA of $6.8 million in the second quarter of 2009. Tubular Services' OCTG shipments were up 93% year-over-year with 134,900 tons shipped in the second quarter of 2010 compared to 69,900 tons shipped in the second quarter of 2009. Volumes were up substantially year-over-year due to a 61% year-over-year increase U.S. drilling activity. Sales volumes in 2009 were negatively impacted by lower rig count levels and the significant over supply of OCTG industry inventory during 2009. Gross margin as a percent of revenues declined modestly to 5.2% in the second quarter of 2010 from 5.3% in the second quarter of 2009 as revenue per ton decreased 27% year-over-year as the industry absorbed the significant over supply of OCTG in the U.S. market over the past twelve months. The Company's OCTG inventory at June 30, 2010 was essentially flat sequentially at $310.4 million. Oil States International, Inc. is a diversified oilfield services company. With locations around the world, Oil States is a leading supplier of a broad range of services to the oil and gas industry, including remote site accommodations, production-related rental tools, oil country tubular goods distribution and land drilling services as well as a leading manufacturer of products for deepwater production facilities and subsea pipelines. Oil States is publicly traded on the New York Stock Exchange under the symbol OIS. For more information on the Company, please visit Oil States International's website at http://www.oilstatesintl.com. The Oil States International, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6058 The foregoing contains forward-looking statements within the meaning of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. The forward-looking statements included therein will be based on then current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry and other factors discussed within the "Business" section of the Form 10-K for the year ended December 31, 2009 filed by Oil States with the SEC on February 22, 2010.
Oil States International, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended June
June 30, 30,
-------------------- ----------------------
2010 2009 2010 2009
--------- --------- ---------- ----------
Revenues $594,532 $456,334 $1,126,877 $1,123,433
Costs and expenses:
Cost of sales and services 469,482 361,692 875,992 881,902
Selling, general and
administrative expenses 37,183 33,768 72,336 68,413
Depreciation and amortization
expense 30,600 28,647 61,678 56,670
Impairment of goodwill -- 94,528 -- 94,528
Other operating expense /(income) (486) 935 (687) 258
--------- --------- ---------- ----------
Operating income / (loss) 57,753 (63,236) 117,558 21,662
Interest expense (3,500) (3,856) (6,971) (8,101)
Interest income 103 4 181 323
Equity in earnings of
unconsolidated affiliates 34 475 64 934
Other income / (expense) (192) (59) 570 103
--------- --------- ---------- ----------
Income / (loss) before income
taxes 54,198 (66,672) 111,402 14,921
Income tax (expense)/benefit (16,590) 3,303 (33,379) (22,044)
--------- --------- ---------- ----------
Net income / (loss) 37,608 (63,369) 78,023 (7,123)
Less: Net income attributable to
noncontrolling interest 131 117 303 235
--------- --------- ---------- ----------
Net income / (loss) attributable
to Oil States International, Inc. $37,477 ($63,486) $77,720 ($7,358)
========= ========= ========== ==========
Net income / (loss) per share
Basic $0.75 ($1.28) $1.55 ($0.15)
Diluted $0.71 ($1.28) $1.49 ($0.15)
Weighted average number of common
shares outstanding
Basic 50,146 49,581 50,021 49,549
Diluted 52,455 49,581 52,188 49,549
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
December
June 30, March 31, 31,
2010 2010 2009
----------- ----------- ----------
Assets (unaudited) (unaudited)
Current assets
Cash and cash equivalents $102,948 $77,326 $89,742
Accounts receivable, net 383,309 396,841 385,816
Inventories, net 471,719 471,306 423,077
Prepaid expenses and other
current assets 24,470 16,020 26,933
----------- ----------- ----------
Total current assets 982,446 961,493 925,568
Property, plant and equipment,
net 758,644 764,467 749,601
Goodwill, net 217,737 219,779 218,740
Investments in unconsolidated
affiliates 5,226 5,195 5,164
Other non-current assets 30,960 32,162 33,313
----------- ----------- ----------
Total assets $1,995,013 $1,983,096 $1,932,386
=========== =========== ==========
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
liabilities $233,974 $218,263 $208,541
Income taxes 3,771 4,706 14,419
Current portion of long-term
debt (B) 159,874 158,069 464
Deferred revenue 58,763 72,811 87,412
Other current liabilities 3,115 4,557 4,387
----------- ----------- ----------
Total current liabilities 459,497 458,406 315,223
Long-term debt (C) 8,012 14,998 164,074
Deferred income taxes 54,816 54,316 55,332
Other noncurrent liabilities 14,863 15,806 15,691
----------- ----------- ----------
Total liabilities 537,188 543,526 550,320
Stockholders' equity
Common stock 535 534 531
Additional paid-in capital 483,546 478,234 468,428
Retained earnings 1,037,835 1,000,358 960,115
Accumulated other
comprehensive income 28,912 52,700 44,115
Treasury stock (93,702) (93,289) (92,341)
----------- ----------- ----------
Total stockholders' equity 1,457,126 1,438,537 1,380,848
Noncontrolling interest 699 1,033 1,218
----------- ----------- ----------
Total equity 1,457,825 1,439,570 1,382,066
----------- ----------- ----------
Total liabilities and equity $1,995,013 $1,983,096 $1,932,386
=========== =========== ==========
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Six Months Ended June
June 30, 30,
------------------- ----------------------
2010 2009 2010 2009
-------- --------- ---------- ----------
Revenues
Rental tools $79,119 $53,629 $146,622 $125,354
Drilling and other 34,137 10,861 64,538 28,145
-------- --------- ---------- ----------
Well site services 113,256 64,490 211,160 153,499
Accommodations 121,956 88,400 267,489 230,232
Offshore products 106,005 122,511 208,998 250,510
Tubular services 253,315 180,933 439,230 489,192
-------- --------- ---------- ----------
Total revenues $594,532 $456,334 $1,126,877 $1,123,433
======== ========= ========== ==========
Adjusted EBITDA (A) (D)
Rental tools (D) $20,799 $5,674 $35,690 $19,267
Drilling and other 5,155 171 10,539 3,158
-------- --------- ---------- ----------
Well site services (D) 25,954 5,845 46,229 22,425
Accommodations 41,546 34,809 99,326 91,525
Offshore products 18,900 20,267 34,350 44,204
Tubular services 9,741 6,777 16,352 30,443
Corporate and
eliminations (8,077) (7,460) (16,690) (14,935)
-------- --------- ---------- ----------
Total Adjusted EBITDA
(D) $88,064 $60,238 $179,567 $173,662
======== ========= ========== ==========
Adjusted operating
income / (loss) (D)
Rental tools (D) $10,395 ($4,084) $14,772 ($439)
Drilling and other (1,070) (6,313) (3,052) (9,808)
-------- --------- ---------- ----------
Well site services (D) 9,325 (10,397) 11,720 (10,247)
Accommodations 31,300 25,770 78,668 74,014
Offshore products 16,087 17,548 28,708 38,734
Tubular services 9,297 5,967 15,512 28,878
Corporate and
eliminations (8,256) (7,596) (17,050) (15,189)
-------- --------- ---------- ----------
Total adjusted operating
income (D) $57,753 $31,292 $117,558 $116,190
======== ========= ========== ==========
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended
June 30,
------------------
2010 2009
-------- --------
Supplemental operating data
Land drilling operating statistics
Average rigs available 36 36
Utilization 73.3% 21.3%
Implied day rate ($ in thousands per
day) $14.2 $15.5
Implied daily cash margin ($ in
thousands per day) $2.4 $1.3
Offshore products backlog ($ in
millions) $215.7 $302.8
Tubular services operating data
Shipments (tons in thousands) 134.9 69.9
Quarter end inventory ($ in thousands) $310,431 $296,222
(A) The term EBITDA consists of net income plus interest, taxes, depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles. You should not consider it in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The Company uses EBITDA to compare and to monitor the performance of its business segments to other comparable public companies and as one of its benchmarks for the award of incentive compensation under its annual incentive compensation plan. The following table sets forth a reconciliation of EBITDA to net income, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles:
Oil States International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2010 2009 2010 2009
------- --------- -------- --------
Net income / (loss) $37,477 ($63,486) $77,720 ($7,358)
Income tax provision 16,590 (3,303) 33,379 22,044
Depreciation and
amortization 30,600 28,647 61,678 56,670
Interest income (103) (4) (181) (323)
Interest expense 3,500 3,856 6,971 8,101
------- --------- -------- --------
EBITDA $88,064 ($34,290) $179,567 $79,134
======= ========= ======== ========
(B) As of March 31, 2010 and as of June 30, 2010, the Company's 2 3/8% Contingent Convertible Senior Notes, net of unamortized discount, were classified as a current liability because certain contingent conversion thresholds based on the Company's stock price were met at that date. (C) As of June 30, 2010, the Company had approximately $477.3 million available under its revolving credit facility. (D) The rental tools, well site services and consolidated EBITDA and operating income for three months and six months ended June 30, 2009 exclude $94.5 million goodwill impairment charge taken in the second quarter of 2009. Adjusted EBITDA and Adjusted operating income are presented to provide a more meaningful comparison of the earnings of the business lines excluding the goodwill impairment charges which are considered to be infrequently occurring.
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2010 2009 2010 2009
------- --------- -------- --------
EBITDA $88,064 ($34,290) $179,567 $79,134
Goodwill impairment -- 94,528 -- 94,528
------- --------- -------- --------
Adjusted EBITDA $88,064 $60,238 $179,567 $173,662
======= ========= ======== ========
Operating income / (loss) $57,753 ($63,236) $117,558 $21,662
Goodwill impairment -- 94,528 -- 94,528
------- --------- -------- --------
Adjusted Operating Income $57,753 $31,292 $117,558 $116,190
======= ========= ======== ========
This news release was distributed by GlobeNewswire, www.globenewswire.com SOURCE: Oil States International, Inc. CONTACT: Oil States International, Inc. Bradley J. Dodson 713-652-0582 |
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