Oil States Announces Record Quarterly Earnings of $2.43 Per Diluted Share

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| Source: Oil States International, Inc.

HOUSTON, April 26, 2012 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported net income for the quarter ended March 31, 2012 of $135.1 million, or $2.43 per diluted share, which included a gain of $0.23 per diluted share after-tax from a favorable contract settlement in its U.S. accommodations business. These results compare to net income of $62.1 million, or $1.13 per diluted share, in the first quarter of 2011.

The Company generated revenues of $1.1 billion and record quarterly EBITDA of $256.7 million during the first quarter of 2012, which included a pre-tax benefit of $17.9 million related to a favorable contract settlement, compared to revenues of $760.4 million and EBITDA of $139.8 million in the first quarter of 2011 (EBITDA(A) defined as net income plus interest, taxes, depreciation and amortization). The 45% increase in revenues and 84% increase in EBITDA resulted from organic growth initiatives, increased deepwater spending and higher U.S. drilling and completion activity. Consolidated operating income more than doubled totaling $204.2 million in the current quarter, up from $94.8 million in the first quarter of 2011, with EBITDA margins improving to 23% in the first quarter of 2012, up from 18% a year ago. Excluding the favorable contract settlement recorded during the first quarter of 2012, operating income and EBITDA would have increased year-over-year by 97% and 71%, respectively.

Cindy B. Taylor, Oil States' President and Chief Executive Officer stated, "All of our business segments realized strong activity levels and performed very well during the quarter. On a year-over-year basis, we benefitted from expansions of our accommodations business in each of our major markets, strong revenues generated by our offshore products business and continued growth in our North American businesses."

"Occupancy levels were very strong in both the Canadian and Australian accommodations markets. RevPAR increased 8% year-over-year due to these high occupancy levels and the outlook for our customers' future worker accommodation needs continues to be positive. During the first quarter, we invested $64 million to expand our accommodations business. Backlog in our offshore products segment remained at strong levels totaling $529 million at March 31, 2012. Bidding and quoting activity remains robust, particularly for subsea products and floating production facility content in the Brazilian, West African, and Southeast Asian markets."

Mrs. Taylor concluded by stating, "Despite the recent decline in natural gas prices and resultant shift in U.S. drilling activity from dry gas regions to liquids basins, our well site services segment performed well. Our broad network of more than 55 locations across the U.S. allowed us to manage this shift in activity in terms of both personnel and equipment. Customer demand for tubulars remains strong evidenced by a 33% year-over-year increase in shipments due primarily to higher U.S. drilling activity coupled with increased shipments of OCTG destined for offshore wells."

The Company recognized an effective tax rate of 28.2% in the first quarter of 2012 compared to 27.3% in the first quarter of 2011. The higher effective tax rate in the first quarter of 2012 was primarily due to a higher foreign effective tax rate. The Company invested $101.4 million in capital expenditures during the first quarter of 2012 primarily related to the ongoing expansion of its accommodations business coupled with additional rental equipment deployed to service the active U.S. shale plays.

BUSINESS SEGMENT RESULTS

(Unless otherwise noted, the following discussion compares the quarterly results from the first quarter of 2012 to the results from the first quarter of 2011.)

Accommodations

Accommodations generated revenues of $301.8 million and EBITDA of $148.7 million for the first quarter of 2012 compared to revenues and EBITDA of $197.1 million and $75.2 million in the first quarter of 2011. Results for the first quarter of 2012 included EBITDA of $17.9 million related to a U.S. contract settlement. The settlement pertained to a U.S. mobile camp contract associated with an infrastructure project that has been delayed indefinitely. Excluding this settlement, the accommodations segment's revenues increased 44% and EBITDA increased 74% year-over-year primarily due to a 24% year-over-year improvement in Canadian mobile camp business, a 36% year-over-year organic increase in average available rooms and an 8% year-over-year increase in RevPAR due to high occupancy levels.

Well Site Services

Well site services generated revenues of $183.0 million and EBITDA of $59.0 million in the first quarter of 2012 compared to revenues and EBITDA of $140.6 million and $41.4 million, respectively, in the first quarter of 2011. Revenues increased 30% and EBITDA increased 42% year-over-year primarily due to increased U.S. drilling and completion activity coupled with expanded margins. Our rental tools business benefited from strong U.S. completion activity, the deployment of additional equipment in the active shale basins and greater service intensity. Service tickets increased 13% year-over-year and revenue per ticket increased 12% year-over-year, as the industry favored our higher specification equipment, particularly in the Bakken, Eagle Ford, Marcellus and the Permian Basin regions. The year-over-year increase in activity also led to improved cost absorption.

Offshore Products

Offshore products generated revenues and EBITDA of $185.7 million and $36.1 million in the first quarter of 2012 compared to revenues and EBITDA of $128.4 million and $20.1 million in the first quarter of 2011. Revenues and EBITDA increased 45% and 80% year-over-year, respectively, primarily due to high manufacturing activity, improved revenue mix oriented towards production equipment and connector products sales, combined with improved cost absorption.  Backlog totaled $529 million at March 31, 2012 compared to $535 million reported at December 31, 2011 and $416 million reported at March 31, 2011.  Backlog additions during the quarter included a large subsea pipeline equipment order in Brazil.

Tubular Services

Tubular services generated revenues of $428.5 million and EBITDA of $23.5 million during the first quarter of 2012 compared to revenues and EBITDA of $294.3 million and $13.5 million, respectively, in the first quarter of 2011. Revenues and EBITDA improved 46% and 74% year-over-year, respectively, primarily due to the 33% year-over-year increase in OCTG shipments, which exceeded the 16% year-over-year increase in U.S. drilling activity and was driven by increased activity in the Permian and Eagle Ford basins along with a recovery in demand in the Gulf of Mexico.  Gross margin as a percent of revenues in the first quarter of 2012 increased to 6.3% from 5.9% in the first quarter of 2011 primarily due to product mix and industry pricing. The Company's OCTG inventory increased 13% sequentially to $473.1 million at March 31, 2012 based on strong customer demand.

Oil States International, Inc. is a diversified oilfield services company and is a leading, integrated provider of remote site accommodations with prominent market positions in the Canadian oil sands and the Australian mining regions. The Company is also a leading manufacturer of products for deepwater production facilities and subsea pipelines as well as a provider of completion-related rental tools, oil country tubular goods distribution and land drilling services to the oil and gas industry. 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 are 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 in the "Business" and "Risk Factors" sections of the Form 10-K for the year ended December 31, 2011 filed by Oil States with the SEC on February 17, 2012.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
     
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
  THREE MONTHS ENDED
  MARCH 31,
  2012 2011
     
     
Revenues  $1,098,992 $760,441
     
 Costs and expenses:    
 Cost of sales and services  795,797 574,398
 Selling, general and administrative expenses  47,739 43,708
 Depreciation and amortization expense  50,665 45,151
 Other operating expense  544 2,408
  894,745 665,665
 Operating income  204,247 94,776
     
Interest expense, net of capitalized interest  (17,944) (10,249)
 Interest income  297 1,013
 Equity in earnings of unconsolidated affiliates  420 51
 Other income  1,735 143
 Income before income taxes  188,755 85,734
 Income tax expense  (53,283) (23,383)
 Net income  135,472 62,351
Less: Net income attributable to noncontrolling interest  407 274
 Net income attributable to Oil States International, Inc.  $135,065 $62,077
     
Net income per share attributable to Oil States International, Inc. common stockholders     
 Basic  $2.63 $1.22
 Diluted  $2.43 $1.13
     
 Weighted average number of common shares outstanding:    
 Basic  51,430 50,936
 Diluted  55,557 54,852
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
     
CONSOLIDATED BALANCE SHEETS
(In Thousands)
     
  MARCH 31, DECEMBER 31,
ASSETS 2012 2011
  (UNAUDITED)  
     
Current assets:    
 Cash and cash equivalents  $70,651 $71,721
 Accounts receivable, net  842,970 732,240
 Inventories, net  727,824 653,698
 Prepaid expenses and other current assets  23,681 32,000
 Total current assets  1,665,126 1,489,659
     
Property, plant, and equipment, net  1,624,072 1,557,088
Goodwill, net  470,990 467,450
Other intangible assets, net  125,507 127,602
Other noncurrent assets  62,070 61,842
 Total assets  $3,947,765 $3,703,641
     
 LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Current liabilities:    
 Accounts payable and accrued liabilities  $372,789 $348,957
 Income taxes  32,398 10,395
 Current portion of long-term debt and capitalized leases  32,549 34,435
 Deferred revenue  69,620 75,497
 Other current liabilities  6,567 5,665
 Total current liabilities  513,923 474,949
     
 Long-term debt and capitalized leases (B)  1,169,012 1,142,505
 Deferred income taxes  101,211 97,377
 Other noncurrent liabilities  26,672 25,538
 Total liabilities  1,810,818 1,740,369
     
Stockholders' equity:    
 Oil States International, Inc. stockholders' equity:    
 Common stock, $.01 par value, 200,000,000 shares authorized, 55,189,013 shares and 54,803,539 shares issued, respectively, and 51,633,572 shares and 51,288,750 shares outstanding, respectively  552 548
 Additional paid-in capital  562,075 545,730
 Retained earnings  1,585,651 1,450,586
 Accumulated other comprehensive income  99,617 74,371
 Treasury stock, at cost, 3,555,441 and 3,514,789 shares, respectively  (112,489) (109,079)
 Total Oil States International, Inc. stockholders' equity  2,135,406 1,962,156
 Noncontrolling interest  1,541 1,116
Total stockholders' equity  2,136,947 1,963,272
 Total liabilities and stockholders' equity  $3,947,765 $3,703,641
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
     
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
     
  THREE MONTHS
  ENDED MARCH 31,
  2012 2011
     
Cash flows from operating activities:    
Net income  $135,472 $62,351
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  50,665 45,151
Deferred income tax provision  1,727 4,883
Excess tax benefits from share-based payment arrangements  (5,175) (4,439)
Gains on disposals of assets  (1,326) (315)
Non-cash compensation charge  4,399 3,424
Accretion of debt discount  2,035 1,895
Amortization of deferred financing costs  1,800 1,390
Other, net  (18) 201
Changes in operating assets and liabilities, net of effect from acquired businesses:    
Accounts receivable  (105,007) (35,798)
Inventories  (71,062) (28,499)
Accounts payable and accrued liabilities  21,445 (10,948)
Taxes payable  33,731 4,010
Other current assets and liabilities, net  (1,469) (7,094)
Net cash flows provided by operating activities  67,217 36,212
     
Cash flows from investing activities:    
Capital expenditures, including capitalized interest  (101,402) (92,609)
Acquisitions of businesses, net of cash acquired  ---- (212)
Proceeds from sale of equipment  1,636 625
Other, net  (1,189) (1,241)
Net cash flows used in investing activities  (100,955) (93,437)
     
Cash flows from financing activities:    
Revolving credit borrowings and (repayments), net  29,941 50,757
 Term loan repayments  (7,526) (3,785)
 Debt and capital lease repayments  (2,183) (298)
 Issuance of common stock from share-based payment arrangements  6,775 6,377
Excess tax benefits from share-based payment arrangements  5,175 4,439
 Other, net  (3,425) (2,741)
Net cash flows provided by financing activities  28,757 54,749
     
Effect of exchange rate changes on cash  3,966 3,177
Net increase (decrease) in cash and cash equivalents from continuing operations  (1,015) 701
Net cash used in discontinued operations – operating activities  (55) (78)
Cash and cash equivalents, beginning of period  71,721 96,350
Cash and cash equivalents, end of period  $70,651 $96,973
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT DATA
(In Thousands)
(Unaudited)
       
    Three Months Ended March 31,
    2012 2011
       
 Revenues       
 Rental tools    $135,554 $107,531
 Drilling services     47,407  33,105
 Well site services     182,961  140,636
 Accommodations     301,820  197,099
 Offshore products     185,720  128,441
 Tubular services     428,491  294,265
 Total revenues    $1,098,992 $760,441
       
 EBITDA (A)       
 Rental tools    $46,286 $34,186
 Drilling services     12,753  7,249
 Well site services     59,039  41,435
 Accommodations     148,677  75,242
 Offshore products     36,145  20,075
 Tubular services     23,538  13,527
 Corporate and eliminations     (10,739)  (10,432)
 Total EBITDA    $256,660 $139,847
       
 Operating income / (loss)       
 Rental tools    $33,794 $24,389
 Drilling services     7,459  2,235
 Well site services     41,253  26,624
 Accommodations     119,025  48,973
 Offshore products     32,501  16,750
 Tubular services     22,421  13,046
 Corporate and eliminations     (10,953)  (10,617)
 Total operating income    $204,247 $94,776
 
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
ADDITIONAL QUARTERLY SEGMENT AND OPERATING DATA
(Unaudited)
       
    Three Months Ended March 31,
    2012 2011
       
 Supplemental operating data   
 Lodge/village revenues ($ in thousands)  $196,773 $132,721
 Other accommodations revenues ($ in thousands) (1)   105,047  64,378
 Total accommodations revenues ($ in thousands)  $301,820 $197,099
       
 Average available lodge/village rooms   17,634  12,970
 Lodge/village revenues per available room  $123 $114
       
 Offshore products backlog ($ in millions)  $529.3 $415.5
       
 Rental tool job tickets   12,509  11,079
 Average revenue per ticket ($ in thousands)  $10.8 $9.7
       
 Tubular services operating data   
 Shipments (tons in thousands)  205.4 154.4
 Quarter end inventory ($ in millions)  $473.1 $351.7
       
 Land drilling operating statistics   
 Average rigs available  33 33
 Utilization    87.7% 71.4%
 Implied day rate ($ in thousands per day)  $17.8 $15.3
 Implied daily cash margin ($ in thousands per day)  $5.0 $3.6

(1) Includes contract settlement revenue for the quarter ended March 31, 2012.

(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 and should not be considered 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.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In Thousands)
(Unaudited)
       
    Three Months Ended March 31,
    2012 2011
       
 Net income    $135,065 $62,077
 Income tax provision   53,283  23,383
 Depreciation and amortization   50,665  45,151
 Interest income   (297)  (1,013)
 Interest expense   17,944  10,249
 EBITDA   $256,660 $139,847

(B) As of March 31, 2012, the Company had approximately $738 million available under its credit facilities.

Company Contact:
Bradley J. Dodson
Oil States International, Inc.
713-652-0582