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News Release Oil States Announces Third Quarter Earnings of $0.88 per Share
11/4/2010 5:41:22 PM HOUSTON, Nov 4, 2010 (GlobeNewswire via COMTEX) -- Today, Oil States International, Inc. (NYSE:OIS) reported net income for the quarter ended September 30, 2010 of $46.3 million, or $0.88 per diluted share, compared to $26.6 million, or $0.53 per diluted share, in the third quarter of 2009. The Company generated $588.3 million and $100.8 million of revenues and EBITDA, respectively, during the quarter compared to revenue of $456.1 million and EBITDA of $69.0 million in the third quarter of 2009 (EBITDA defined as net income plus interest, taxes, depreciation and amortization).(A) The year-over-year improvements in revenues and EBITDA were primarily due to the improvement in North American drilling and completion activity as well as increased room capacity and earnings from our oil sands accommodations business. Consolidated operating income in the third quarter of 2010 was $70.4 million compared to $38.5 million for the corresponding quarter of 2009. "Our strategic product and service offering in key North American resource plays contributed to year-over-year growth that has outpaced the broader recovery in North American drilling and completion activity," stated Cindy B. Taylor, Oil States' President and Chief Executive Officer. "Our well site services businesses generated significantly improved results, with year-over-year revenue and EBITDA increases of 79% and 224%, respectively. The acceleration of oil sands activity continued to drive our Accommodations business, with growth also coming from our expansion of the Wapasu Creek Lodge in support of the Imperial Kearl contract." Mrs. Taylor continued, "All of our businesses improved materially year-over-year except our Offshore Products segment which was hindered by reduced backlog coming into the year. However, with the third quarter orders of approximately $164 million leading to much improved backlog, we are optimistic about 2011 activity levels for our Offshore Products group." The Company's effective tax rate for the third quarter of 2010 increased to 30.7% from 24.3% tax rate in the third quarter of 2009. The lower effective tax rate in the third quarter of 2009 was primarily attributable to the impact of the goodwill impairment taken in the second quarter of 2009 on the overall effective tax rate for the full year of 2009. The Company spent $44.9 million in capital expenditures during the third quarter of 2010 primarily related to the Accommodations segment ($28.3 million in capital expenditures) and rental tools segment ($11.3 million in capital expenditures). For the nine months ended September 30, 2010, the Company reported revenues of $1.7 billion, EBITDA of $280.3 million and net income of $124.1 million, or $2.37 per diluted share. For the nine months ended September 30, 2009, the Company reported revenues of $1.6 billion and EBITDA of $148.1 million which resulted in net income of $19.2 million, or $0.39 per diluted share. Excluding the goodwill impairment charge taken in the second quarter of 2009, the Company reported $242.6 million of Adjusted EBITDA and $102.0 million of net income, or $2.04 per diluted share for the first nine months ended September 30, 2009. BUSINESS SEGMENT RESULTS (Unless otherwise noted, the following discussion compares the quarterly results from the third quarter of 2010 to the results from the third quarter of 2009.) Accommodations Accommodations generated revenues of $127.7 million and EBITDA of $49.1 million for the third quarter of 2010 compared to revenues and EBITDA of $110.3 million and $36.3 million, respectively, in the third quarter of 2009. Accommodations revenues increased 16% and EBITDA increased 35% year-over-year due to increased capacity and improved occupancy levels at the oil sands lodges. In addition, the third quarter 2010 results benefited from the stronger Canadian dollar which appreciated approximately 6% year-over-year relative to the U.S. dollar. These year-over-year increases were partially offset by lower manufacturing sales which typically carry a lower margin. Well Site Services Well Site Services generated revenues of $125.7 million and EBITDA of $30.6 million in the third quarter of 2010 compared to revenues and EBITDA of $70.1 million and $9.4 million, respectively, in the third quarter of 2009. The year-over-year revenue and EBITDA growth of 79% and 224%, respectively, was primarily due to the 71% year-over-year improvement in North American drilling and completion activity. Rental tools generated $91.9 million and $24.3 million of revenues and EBITDA, respectively, in the third quarter of 2010 compared to revenues of $51.7 million and EBITDA of $6.5 million in the third quarter of 2009. The 78% year-over-year improvement in revenues and the 273% year-over-year improvement in EBITDA were primarily due to the increased U.S. drilling and completion activity, particularly in the key shale play regions such as the Marcellus, Bakken, Haynesville and Eagle Ford basins, combined with improved product mix and improved pricing. Drilling services generated revenues and EBITDA of $33.9 million and $6.3 million, respectively, in the third quarter of 2010 compared to $18.4 million of revenues and EBITDA of $2.9 million in the third quarter 2009. The year-over-year increase in revenues and EBITDA was due to an overall increase in rig utilization to 73% in the third quarter of 2010 from 40% in the third quarter of 2009. The positive utilization impact, coupled with higher dayrates, contributed to the 84% and 115% increases in revenues and EBITDA, respectively. EBITDA margins improved from 15.9% in the third quarter of 2009 to 18.6% in the third quarter of 2010, as higher utilization levels allowed for improved daily cash margin year-over-year. Offshore Products The Offshore Products segment generated revenues and EBITDA of $102.4 million and $17.3 million, respectively, in the third quarter of 2010 compared to $131.8 million of revenues and $23.3 million in EBITDA in the third quarter of 2009. Offshore Products revenues and EBITDA declined year-over-year primarily as a result of lower beginning backlog levels and reduced shipments of subsea pipeline and drilling rig and vessel equipment. Gross margin for Offshore Products improved to 27.4% in the third quarter of 2010 from 25.1% in the third quarter of 2009 primarily due to improved margins in connector products. Backlog increased 23% sequentially to $264.4 million at September 30, 2010 from $215.7 million at June 30, 2010. Significant awards during the quarter included connector orders for Petrobras' Papa Terra TLP project and fairlead orders for Chevron's Jack/St. Malo project. Tubular Services Tubular Services generated revenues of $232.5 million and EBITDA of $12.4 million during the third quarter of 2010 compared to revenues of $143.9 million and EBITDA of $7.2 million in the third quarter of 2009. Tubular Services' OCTG shipments were up 76% year-over-year with 118,500 tons shipped in the third quarter of 2010 compared to 67,500 tons shipped in the third quarter of 2009, exceeding the 67% year-over-year increase U.S. drilling activity. Gross margin as a percent of revenues was essentially flat year-over-year at 6.9% in the third quarter of 2010. The Company's OCTG inventory increased sequentially by 10% to $341.0 million at September 30, 2010 in support of program work for customers. The MAC Group Acquisition On October 15, 2010, the Company announced that it had entered into an agreement whereby Oil States proposed to acquire all of the shares in The MAC Services Group Limited at a cost of A$3.90 per share. The MAC Services Group supplies accommodations services to the coal mining, construction and resource industries. The MAC currently has 4,606 rooms in six locations in Queensland and Western Australia and upon completion of the acquisition will become part of the Company's Accommodations segment. The scheme arrangement is subject to Australian court and shareholder approval, among other conditions. A scheme booklet will be distributed to shareholders of the MAC and is expected to contain unanimous support for the transaction from The MAC board, barring a superior offer, and an expert's opinion that the offer price was fair and reasonable and the deal was in the best interests of the shareholders, except in the case of a superior offer. The acquisition is expected to close by the end of Q1 2011. 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. The Oil States International, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6058 For more information on the Company, please visit Oil States International's website at http://www.oilstatesintl.com . 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" and "Risk Factor" sections of the Form 10-K for the year ended December 31, 2009 filed by Oil States with the SEC on February 22, 2010 and the "Risk Factor" section of the Form 10-Q for the three months ended June 30, 2010 filed by Oil States with the SEC on August 5, 2010. In addition, the previously announced acquisition of The MAC Services Group Limited includes additional risks and uncertainties including, among other things, the risk that the Scheme of Arrangement is delayed or does not close, including due to the failure to obtain governmental approvals or to achieve shareholder approval or other closing conditions, the risk that the businesses will not be integrated successfully, the risk that any synergies or other benefits from the combination may not be fully realized or may take longer to realize than expected, and disruption from the combination making it more difficult to maintain relationships with customers, employees or suppliers.
Oil States International, Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ----------------------
2010 2009 2010 2009
--------- -------- ---------- ----------
Revenues $588,347 $456,103 $1,715,225 $1,579,536
Costs and expenses:
Cost of sales and services 448,602 353,845 1,324,594 1,235,747
Selling, general and
administrative expenses 37,142 33,964 109,479 102,377
Depreciation and
amortization expense 30,410 30,193 92,088 86,863
Impairment of goodwill -- -- -- 94,528
Other operating expense
/(income) 1,803 (439) 1,116 (181)
--------- -------- ---------- ----------
Operating income 70,390 38,540 187,948 60,202
Interest expense (3,534) (3,613) (10,505) (11,714)
Interest income 134 27 316 350
Equity in earnings of
unconsolidated affiliates 80 250 144 1,184
Other income 17 91 587 193
--------- -------- ---------- ----------
Income before income taxes 67,087 35,295 178,490 50,215
Income tax expense (20,609) (8,594) (53,988) (30,637)
--------- -------- ---------- ----------
Net income 46,478 26,701 124,502 19,578
Less: Net income attributable
to noncontrolling interest 132 122 436 357
--------- -------- ---------- ----------
Net income attributable to
Oil States International,
Inc. $46,346 $26,579 $124,066 $19,221
========= ======== ========== ==========
Net income per share
Basic $0.92 $0.54 $2.48 $0.39
Diluted $0.88 $0.53 $2.37 $0.39
Weighted average number of
common shares outstanding
Basic 50,282 49,653 50,108 49,584
Diluted 52,538 50,153 52,304 49,886
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
September December
30, June 30, 31,
2010 2010 2009
----------- ----------- ----------
Assets (unaudited) (unaudited)
Current assets
Cash and cash equivalents $138,380 $102,948 $89,742
Accounts receivable, net 377,644 383,309 385,816
Inventories, net 504,773 471,719 423,077
Prepaid expenses and other
current assets 27,944 24,470 26,933
----------- ----------- ----------
Total current assets 1,048,741 982,446 925,568
Property, plant and equipment,
net 784,315 758,644 749,601
Goodwill, net 219,321 217,737 218,740
Investments in unconsolidated
affiliates 5,617 5,226 5,164
Other noncurrent assets 30,915 30,960 33,313
----------- ----------- ----------
Total assets $2,088,909 $1,995,013 $1,932,386
=========== =========== ==========
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
liabilities $237,682 $233,974 $208,541
Income taxes 3,365 3,771 14,419
Current portion of long-term
debt (B) 161,716 159,874 464
Deferred revenue 60,296 58,763 87,412
Other current liabilities 2,701 3,115 4,387
----------- ----------- ----------
Total current liabilities 465,760 459,497 315,223
Long-term debt and capital
leases (B) 7,904 8,012 164,074
Deferred income taxes 61,942 54,816 55,332
Other noncurrent liabilities 14,728 14,863 15,691
----------- ----------- ----------
Total liabilities 550,334 537,188 550,320
Stockholders' equity
Common stock 538 535 531
Additional paid-in capital 494,401 483,546 468,428
Retained earnings 1,084,181 1,037,835 960,115
Accumulated other
comprehensive income 52,353 28,912 44,115
Treasury stock (93,746) (93,702) (92,341)
----------- ----------- ----------
Total Oil States
stockholders' equity 1,537,727 1,457,126 1,380,848
Noncontrolling interest 848 699 1,218
----------- ----------- ----------
Total stockholders' equity 1,538,575 1,457,825 1,382,066
----------- ----------- ----------
Total liabilities and equity $2,088,909 $1,995,013 $1,932,386
=========== =========== ==========
Oil States International, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended
September 30,
--------------------
2010 2009
--------- ---------
Cash flows from operating activities:
Net income $124,502 $19,578
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 92,088 86,863
Deferred income tax (benefit) provision 920 (12,774)
Excess tax benefits from share-based
payment arrangements (2,126) --
Loss on impairment of goodwill -- 94,528
Equity in earnings of unconsolidated
subsidiaries, net of dividends (144) (1,184)
Non-cash compensation charge 9,687 8,614
Accretion of debt discount 5,388 5,016
Other, net (733) 2,087
Changes in working capital (76,197) 149,547
--------- ---------
Net cash flows provided by operating
activities $153,385 $352,275
Cash flows from investing activities:
Capital expenditures (120,952) (78,164)
Proceeds from note receivable -- 21,166
Other, net 1,925 (1,760)
--------- ---------
Net cash flows used in investing
activities (119,027) (58,758)
Cash flows from financing activities:
Revolving credit repayments, net -- (264,528)
Debt and capital lease repayments (357) (4,839)
Issuance of common stock from
share-based payment arrangements 14,165 2,237
Excess tax benefits from share-based
payment arrangements 2,126 --
Other, net (1,406) (505)
--------- ---------
Net cash flows provided by (used in)
financing activities 14,528 (267,635)
Effect of exchange rate changes on cash (143) 5,333
--------- ---------
Net increase in cash and cash equivalents
from continuing operations 48,743 31,215
Net cash used in discontinued operations
-- operating activities (105) (133)
Cash and cash equivalents, beginning of
period 89,742 30,199
--------- ---------
Cash and cash equivalents, end of period $138,380 $61,281
========= =========
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ----------------------
2010 2009 2010 2009
--------- -------- ---------- ----------
Revenues
Rental tools $91,856 $51,721 $238,477 $177,075
Drilling and other 33,869 18,380 98,408 46,525
--------- -------- ---------- ----------
Well site services 125,725 70,101 336,885 223,600
Accommodations 127,719 110,299 395,208 340,531
Offshore products 102,376 131,761 311,375 382,271
Tubular services 232,527 143,942 671,757 633,134
--------- -------- ---------- ----------
Total revenues $588,347 $456,103 $1,715,225 $1,579,536
========= ======== ========== ==========
Adjusted EBITDA (A) (D)
Rental tools (D) $24,285 $6,517 $59,976 $25,784
Drilling and other 6,284 2,918 16,823 6,076
--------- -------- ---------- ----------
Well site services (D) 30,569 9,435 76,799 31,860
Accommodations 49,107 36,308 148,433 127,833
Offshore products 17,286 23,296 51,636 67,500
Tubular services 12,424 7,191 28,776 37,634
Corporate and
eliminations (8,621) (7,278) (25,313) (22,214)
--------- -------- ---------- ----------
Total Adjusted EBITDA
(D) $100,765 $68,952 $280,331 $242,613
========= ======== ========== ==========
Adjusted operating
income / (loss) (D)
Rental tools (D) $14,446 ($4,030) $29,219 ($4,469)
Drilling and other 487 (3,697) (2,565) (13,504)
--------- -------- ---------- ----------
Well site services (D) 14,933 (7,727) 26,654 (17,973)
Accommodations 37,679 26,575 116,347 100,588
Offshore products 14,570 20,553 43,278 59,287
Tubular services 12,003 6,580 27,514 35,458
Corporate and
eliminations (8,795) (7,441) (25,845) (22,630)
--------- -------- ---------- ----------
Total adjusted operating
income (D) $70,390 $38,540 $187,948 $154,730
========= ======== ========== ==========
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended
September 30,
-------------------
2010 2009
--------- --------
Supplemental operating data
Land drilling operating statistics
Average rigs available 36 37
Utilization 72.9% 39.9%
Implied day rate ($ in thousands per
day) $14.0 $13.8
Implied daily cash margin ($ in
thousands per day) $3.0 $2.7
Offshore products backlog ($ in
millions) $264.4 $252.7
Tubular services operating data
Shipments (tons in thousands) 118.5 67.5
Quarter end inventory ($ in
thousands) $340,965 $289,447
(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 a benchmark 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:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2010 2009 2010 2009
--------- ------- --------- --------
Net income $46,346 $26,579 $124,066 $19,221
Income tax provision 20,609 8,594 53,988 30,637
Depreciation and
amortization 30,410 30,193 92,088 86,863
Interest income (134) (27) (316) (350)
Interest expense 3,534 3,613 10,505 11,714
--------- ------- --------- --------
EBITDA $100,765 $68,952 $280,331 $148,085
========= ======= ========= ========
(B) As of September 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 September 30, 2010, the Company had approximately $476.5
million available under its revolving credit facility.
(D) The rental tools, well site services and consolidated EBITDA
and operating income for the nine months ended September 30, 2009
exclude $94.5 million goodwill impairment charge taken in the
second quarter of 2009.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2010 2009 2010 2009
--------- ------- --------- --------
EBITDA $100,765 $68,952 $280,331 $148,085
Goodwill impairment -- -- -- 94,528
--------- ------- --------- --------
Adjusted EBITDA $100,765 $68,952 $280,331 $242,613
========= ======= ========= ========
Operating income $70,390 $38,540 $187,948 $60,202
Goodwill impairment -- -- -- 94,528
--------- ------- --------- --------
Adjusted Operating
Income $70,390 $38,540 $187,948 $154,730
========= ======= ========= ========
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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