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News Release Oil States Announces Fourth Quarter Earnings of $0.78 Per Share
2/22/2010 8:04:46 AM HOUSTON, Feb 22, 2010 (GlobeNewswire via COMTEX) -- Today, Oil States International, Inc. (NYSE:OIS) reported net income for the quarter ended December 31, 2009 of $39.9 million, or $0.78 per diluted share, on $528.7 million of revenues and $90.1 million of EBITDA (EBITDA is defined as net income plus interest, taxes, depreciation and amortization) (A). This compares to net income of $6.0 million, or $0.12 per diluted share, on $901.1 million of revenues and $77.3 of EBITDA reported in the fourth quarter of 2008. Excluding the impact of the $85.6 million in goodwill impairment charges taken in the fourth quarter of 2008, net income decreased 54% year over year, from $1.72 per share to $0.78 per share, primarily due to reduced North American drilling and completion activity which impacted both demand and pricing for our products and services.
"Our accommodations business continued to show substantial year-over-year growth due to investments in the Canadian oil sands region made over the last several years," stated Cindy B. Taylor, Oil States' President and Chief Executive Officer. "This strength in our accommodations business helped mitigate the severe declines in our tubular services, rental tool and drilling businesses." Mrs. Taylor concluded, "We generated operating cash flow of $453 million in 2009 which was partially utilized to reduce outstanding borrowings under our credit agreement. As a result, we had no amounts outstanding under our revolving credit facility and had $90 million of cash at year end. Despite a very difficult year in 2009, we were able to generate free cash flow and make growth investments. We enter 2010 well positioned to take advantage of investment opportunities which may arise as well as fund our significant, planned Canadian oil sands expansion." For the full year 2009, the Company reported revenues of $2.1 billion and EBITDA of $238.2 million which resulted in $59.1 million of net income, or $1.18 per diluted share. Excluding the goodwill impairment charges taken in the second quarter of 2009, the Company reported $332.7 million of Adjusted EBITDA (Adjusted EBITDA is defined as EBITDA excluding the goodwill impairment charges) (A) and $140.4 million of net income, or $2.79 per diluted share, for 2009. For the full year 2008, the Company reported revenues of $2.9 billion and Adjusted EBITDA of $581.3 million which resulted in net income of $298.6 million, or $5.81 per diluted share, excluding the impact of the fourth quarter 2008 goodwill impairment charges. Including the goodwill impairment, the Company reported EBITDA of $495.6 million which resulted in net income of $218.9 million, or $4.26 per diluted share, for the full year 2008. BUSINESS SEGMENT RESULTS (Unless otherwise noted, the following discussion compares the quarterly results from the fourth quarter of 2009 to the results from the fourth quarter of 2008. In order to present a more meaningful comparison of the Company's operating results, the fourth quarter 2008 results exclude the goodwill impairment charges in the drilling and tubular services business units.) Well Site Services Well site services generated revenues of $222.6 million and EBITDA of $66.4 million in the fourth quarter of 2009, compared to revenues of $235.7 million and Adjusted EBITDA of $80.1 million in the fourth quarter of 2008, representing year-over-year declines of 6% and 17%, respectively. The decrease in EBITDA was primarily due to the 42% reduction in U.S. drilling and completion activity and the resulting reduction in utilization and pricing for our rental tools and drilling rigs. These decreases were partially offset by increased activity in the Company's Canadian oil sands accommodations. The accommodations business reported revenues of $140.9 million and EBITDA of $50.7 million for the fourth quarter of 2009 compared to revenues and EBITDA of $94.6 million and $35.3 million, respectively, in the fourth quarter of 2008. Accommodations revenue increased 49% and EBITDA increased 44%. The fourth quarter 2009 results included camp manufacturing revenues of $22.1 million and minimum contract guarantees of $10.4 million, compared to $1.5 million of camp manufacturing revenues and $8.3 million in minimum contract guarantees in the fourth quarter of 2008. The Company continues to operate certain of its oil sands lodges under firm, guaranteed occupancy contracts which generally contribute stronger margins when recognized. However, such minimum guarantee revenue is dependent on customer occupancy levels which are uncertain. Rental tools generated $57.0 million of revenues and $11.7 million of EBITDA in the fourth quarter of 2009 compared to revenue of $97.0 million and EBITDA of $30.5 million in the fourth quarter of 2008. These year-over-year declines were due to decreased completion activity related to North American natural gas wells which was down 51% year-over-year, leading to decreased demand and pricing for our services. The fourth quarter 2009 EBITDA included $2.6 million in state gross receipt tax refunds and a favorable lawsuit settlement which occur infrequently. Drilling services generated revenues of $24.7 million and EBITDA of $4.0 million in the fourth quarter of 2009 compared to $44.0 million and $14.2 million of revenues and Adjusted EBITDA, respectively, in the fourth quarter 2008. These year-over-year declines in drilling services were primarily the result of substantially reduced drilling activity in the Permian Basin and Rocky Mountain region leading to lower pricing, utilization and cash margins. Offshore Products Offshore products generated $127.1 million of revenues and $24.5 million in EBITDA in the fourth quarter of 2009 compared to $141.4 million of revenues and $25.6 million in EBITDA in the fourth quarter of 2008. The year-over-year declines in revenue and EBITDA are primarily due to reduced activity related to drilling rig products and services, partially offset by improved revenues and margins on connector and subsea products. Backlog totaled $206.3 million at December 31, 2009 down from $252.7 million at September 30, 2009 and from $362.1 million at December 31, 2008. The decline in backlog was primarily due to postponements, cancellations and deferrals in project awards as our customers managed through the global economic crisis in 2009. Tubular Services During the fourth quarter of 2009, tubular services generated revenues of $179.0 million and EBITDA of $6.9 million compared to revenues and Adjusted EBITDA of $524.0 million and $63.9 million, respectively, in the fourth quarter of 2008. Tubular services' OCTG shipments decreased 47% to 88,500 tons from 166,200 tons in the fourth quarter of 2008. Gross margins in the fourth quarter of 2009 decreased to 5.2% from 12.8% in the fourth quarter of 2008 primarily due to the 36% year-over-year decline in our recognized revenue per ton shipped. The Company's OCTG inventory decreased to $265.7 million compared to $289.4 million at September 30, 2009 and $396.5 million at December 31, 2008. Oil States International, Inc. is a diversified oilfield services company. With locations around the world, Oil States is a leading manufacturer of products for deepwater production facilities and subsea pipelines, and a leading supplier of a broad range of services to the oil and gas industry, including production-related rental tools, work force accommodations and logistics, oil country tubular goods distribution and land drilling services. Oil States is organized in three business segments -- well site services, offshore products and tubular services, and 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 Company will be hosting a conference call to discuss the results for the fourth quarter of 2009 on Monday, February 22, 2010 at 11:00 am Eastern time. This call is being webcast and can be accessed at Oil States' web site at http://www.oilstatesintl.com. Participants may also join the conference call by dialing (800) 446-2782 and using the passcode of 26201391. A replay of the conference call will be available one hour after the completion of the call by dialing (888) 843-8996 and entering the passcode of 26201391. This press release contains and the associated conference call will contain 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 and within the Company's subsequent SEC filings.
Oil States International, Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- ----------------------
2009 2008 2009 2008
--------- --------- ---------- ----------
Revenues $528,715 $901,056 $2,108,250 $2,948,457
Costs and expenses:
Cost of sales and services 404,451 702,100 1,640,198 2,234,974
Selling, general and
administrative expenses 36,916 37,504 139,293 143,080
Depreciation and
amortization expense 31,246 26,863 118,108 102,604
Impairment of goodwill -- 85,630 94,528 85,630
Other operating income (2,424) (928) (2,606) (1,586)
--------- --------- ---------- ----------
Operating income 58,526 49,887 118,729 383,755
Interest expense (3,551) (5,169) (15,266) (23,585)
Interest income 30 805 380 3,561
Equity in earnings of
unconsolidated affiliates 268 868 1,452 4,035
Other income / (expense) 220 (212) 414 5,684
--------- --------- ---------- ----------
Income before income taxes 55,493 46,179 105,709 373,450
Income tax provision (15,460) (40,026) (46,097) (154,151)
--------- --------- ---------- ----------
Net income 40,033 6,153 59,612 219,299
Less: Net income attributable
to noncontrolling interest 140 119 498 446
--------- --------- ---------- ----------
Net income attributable to
Oil States International,
Inc. $39,893 $6,034 $59,114 $218,853
========= ========= ========== ==========
Net income per share
Basic $0.80 $0.12 $1.19 $4.41
Diluted $0.78 $0.12 $1.18 $4.26
Weighted average number of
common shares outstanding
Basic 49,751 49,622 49,625 49,622
Diluted 51,218 49,806 50,219 51,414
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
December September December
31, 30, 31,
2009 2009 2008 (B)
---------- ----------- ----------
Assets (audited) (unaudited) (audited)
Current assets
Cash and cash equivalents $89,742 $61,281 $30,199
Accounts receivable, net 385,816 361,549 575,982
Inventories, net 423,077 485,304 612,488
Prepaid expenses and other
current assets 26,933 13,730 18,815
---------- ----------- ----------
Total current assets 925,568 921,864 1,237,484
Property, plant and equipment,
net 749,601 726,877 695,338
Goodwill, net 218,740 217,627 305,441
Investments in unconsolidated
affiliates 5,164 4,893 5,899
Other non-current assets 33,313 35,335 54,356
---------- ----------- ----------
Total assets $1,932,386 $1,906,596 $2,298,518
========== =========== ==========
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
liabilities $208,541 $190,385 $371,789
Income taxes 14,419 10,555 52,546
Current portion of long-term
debt 464 446 4,943
Deferred revenue 87,412 117,872 105,640
Other current liabilities 4,387 850 1,587
---------- ----------- ----------
Total current liabilities 315,223 320,108 536,505
Long-term debt (C) 164,074 192,657 449,058
Deferred income taxes 55,332 55,691 64,780
Other noncurrent liabilities 15,691 12,445 12,634
---------- ----------- ----------
Total liabilities 550,320 580,901 1,062,977
Stockholders' equity
Common stock 531 530 526
Additional paid-in capital 468,428 463,920 453,733
Retained earnings 960,115 920,222 901,001
Accumulated other
comprehensive income /
(loss) 44,115 32,403 (28,409)
Treasury stock (92,341) (92,341) (91,831)
---------- ----------- ----------
Total stockholder's equity 1,380,848 1,324,734 1,235,020
Noncontrolling interest 1,218 961 521
---------- ----------- ----------
Total equity 1,382,066 1,325,695 1,235,541
---------- ----------- ----------
Total liabilities and equity $1,932,386 $1,906,596 $2,298,518
========== =========== ==========
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ----------------------
2009 2008 2009 2008
-------- -------- ---------- ----------
Revenues
Accommodations $140,871 $94,612 $481,402 $427,130
Rental tools 57,046 97,041 234,121 355,809
Drilling and other 24,651 44,023 71,175 177,339
-------- -------- ---------- ----------
Well site services 222,568 235,676 786,698 960,278
Offshore products 127,118 141,385 509,388 528,164
Tubular services 179,029 523,995 812,164 1,460,015
-------- -------- ---------- ----------
Total revenues $528,715 $901,056 $2,108,250 $2,948,457
======== ======== ========== ==========
Adjusted EBITDA (A)
Accommodations $50,725 $35,335 $178,559 $156,223
Rental Tools (D) 11,693 30,535 37,477 111,224
Drilling and other (D) 3,990 14,196 10,066 68,096
-------- -------- ---------- ----------
Well site services (D) 66,408 80,066 226,102 335,543
Offshore products 24,528 25,598 92,029 100,357
Tubular services (D) 6,944 63,913 44,578 172,086
Corporate and
eliminations (7,760) (6,660) (29,976) (26,724)
-------- -------- ---------- ----------
Total Adjusted EBITDA (D) $90,120 $162,917 $332,733 $581,262
======== ======== ========== ==========
Adjusted operating income / (loss)
(D)
Accommodations $40,077 $27,210 $140,665 $120,972
Rental Tools (D) 1,154 20,860 (3,316) 75,787
Drilling and other (D) (2,842) 8,521 (16,345) 40,200
-------- -------- ---------- ----------
Well site services (D) 38,389 56,591 121,004 236,959
Offshore products 21,763 22,624 81,049 89,280
Tubular services (D) 6,300 62,800 41,758 169,333
Corporate and
eliminations (7,926) (6,498) (30,554) (26,187)
-------- -------- ---------- ----------
Total adjusted operating
income (D) $58,526 $135,517 $213,257 $469,385
======== ======== ========== ==========
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended
December 31,
------------------
2009 2008
-------- --------
Supplemental operating data
Land drilling operating statistics
Average rigs available 37 37
Utilization 52.5% 79.1%
Implied day rate ($ in thousands per
day) $13.8 $16.4
Implied daily cash margin ($ in
thousands per day) $2.7 $5.5
Offshore products backlog ($ in
millions) $206.3 $362.1
Tubular services operating data
Shipments (tons in thousands) 88.5 166.2
Quarter end inventory ($ in thousands) $265,718 $396,462
(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. Adjusted EBITDA is a non-GAAP measure which excludes the goodwill impairment charges recognized in the fourth quarter of 2008 and the second quarter of 2009. 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 Twelve Months
December 31, Ended December 31,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net income $39,893 $6,034 $59,114 $218,853
Income tax expense 15,460 40,026 46,097 154,151
Depreciation and
amortization 31,246 26,863 118,108 102,604
Interest income (30) (805) (380) (3,561)
Interest expense 3,551 5,169 15,266 23,585
-------- -------- -------- --------
EBITDA $90,120 $77,287 $238,205 $495,632
Goodwill impairment -- 85,630 94,528 85,630
-------- -------- -------- --------
Adjusted EBITDA $90,120 $162,917 $332,733 $581,262
======== ======== ======== ========
Three Months Ended Twelve Months
December 31, Ended December 31,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Operating income $58,526 $49,887 $118,729 $383,755
Goodwill impairment -- 85,630 94,528 85,630
-------- -------- -------- --------
Adjusted operating
income $58,526 $135,517 $213,257 $469,385
======== ======== ======== ========
(B) Adjusted to reflect the retrospective application of APB 14-1 accounting for existing convertible notes effective on January 1, 2009. (C) As of December 31, 2009, the Company had approximately $479.7 million available under its revolving credit facility. (D) The fourth quarter and full year 2008 results exclude (i) the $22.8 million goodwill impairment charge taken in the drilling business and (ii) the $62.9 million goodwill impairment charge taken in the tubular services business; and consolidated EBITDA and operating income for the fourth quarter and full year 2008 exclude the total $85.6 million goodwill impairment charge. In full year 2009 results, rental tools, well site services and consolidated EBITDA and operating income exclude $94.5 million goodwill impairment charge taken in the second quarter of 2009. 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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