-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RghF3mk1qP1S4GAw+doe9fgpAJFyQzfR0UH84C/YA3x51/Yh+cf8pA14r3ZG70Z9 NxIpMkVmryHpweRRGltbqA== 0000891092-04-005284.txt : 20041102 0000891092-04-005284.hdr.sgml : 20041102 20041102100326 ACCESSION NUMBER: 0000891092-04-005284 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041101 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041102 DATE AS OF CHANGE: 20041102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OIL STATES INTERNATIONAL INC CENTRAL INDEX KEY: 0001121484 STANDARD INDUSTRIAL CLASSIFICATION: OIL & GAS FILED MACHINERY & EQUIPMENT [3533] IRS NUMBER: 760476605 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16337 FILM NUMBER: 041111822 BUSINESS ADDRESS: STREET 1: THREE ALLEN CENTER STREET 2: 333 CLAY STREET SUITE 3460 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7136920582 MAIL ADDRESS: STREET 1: THREE ALLEN CENTER STREET 2: 333 CLAY STREET SUITE 3460 CITY: HOUSTON STATE: TX ZIP: 77002 8-K 1 e19555_8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): November 1, 2004 ---------- OIL STATES INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 1-16337 76-0476605 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation or organization) Number) Identification No.) Three Allen Center 333 Clay Street, Suite 3460 Houston, Texas 77002 (Address and zip code of principal executive offices) Registrant's telephone number, including area code: (713) 652-0582 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition On November 1, 2004, Oil States International, Inc. (the "Company") issued a press release announcing its financial condition and results of operations for the three-month and nine-month periods ended September 30, 2004. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. Exhibit Number Description of Document - ------- ----------------------- 99.1 Press Release dated November 1, 2004 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: November 2, 2004 OIL STATES INTERNATIONAL, INC. By: /s/ Cindy B. Taylor ------------------------------ Name: Cindy B. Taylor Title: Senior Vice President and Chief Financial Officer Index to Exhibits Exhibit Number Description of Document - ------- ----------------------- 99.1 Press Release dated November 1, 2004 EX-99.1 2 e19555ex99_1.txt PRESS RELEASE Exhibit 99.1 Oil States Announces Third Quarter 2004 Earnings HOUSTON, Nov. 1 /PRNewswire-FirstCall/ -- Oil States International, Inc. (NYSE: OIS) today reported a 37% year-over-year increase in net income for the quarter ended September 30, 2004 due to strong U.S. drilling activity and contributions from acquisitions completed in 2003 and earlier in 2004. Net income for the third quarter of 2004 increased to $15.5 million, or $0.31 per diluted share, from $11.3 million, or $0.23 per diluted share, in the third quarter of 2003. The increase in third quarter earnings was the result of record profits at Tubular Services, the continued strength of Well Site Services and the successful execution of the Company's growth initiatives. The Company generated $251.5 million of revenues and $37.6 million of EBITDA (defined as net income plus interest, taxes, depreciation and amortization) in the third quarter of 2004 compared to $177.2 million and $23.9 million, respectively, in the third quarter of 2003.(A) Oil States' revenues and EBITDA for the third quarter increased 42% and 57%, respectively, from last year's results. Tubular Services benefited from continued strong U.S. land drilling activity, rising steel and oil country tubular goods (OCTG) prices, limited OCTG supplies and contributions from the acquisition of the U.S. OCTG distribution business of Hunting Energy Services, L.P. (Hunting), completed in May 2004. Well Site Services generated year-over-year increases in revenues and EBITDA due to strong U.S. land drilling, construction activity in the oil sands region of Canada, incremental profits from capital equipment additions and positive results from the businesses acquired in the last twelve months. These strong results were partially offset by significantly lower year-over- year results from Offshore Products. However, Offshore Products demonstrated sequential improvement in revenues and EBITDA as the segment continued to recover from the lag in deepwater contract awards experienced in the second half of 2003. The Company's effective tax rate in the third quarter of 2004 was 41.4% compared to an effective tax rate of 26.6% in the third quarter of 2003 which benefited from available net operating losses (NOL's) in prior periods. Capital expenditures during the third quarter totaled $17.3 million. For the nine months ended September 30, 2004, the Company reported net income of $43.8 million, or $0.88 per diluted share, on revenues of $677.9 million and EBITDA of $96.1 million. For the corresponding period in 2003, the Company reported net income of $34.9 million, or $0.71 per diluted share, on revenues of $526.3 million and $73.1 million of EBITDA. This performance represents year-over-year increases in revenues and fully-diluted earnings per share of 29% and 24%, respectively. Reported net income for the 2004 year-to-date period included the effect of a $5.4 million (or $0.11 per diluted share) income tax credit, which reduced the tax provision in the first quarter of 2004, due to the partial reversal of valuation allowances applied against net operating loss carryforwards. BUSINESS SEGMENT RESULTS Well Site Services Well Site Services generated strong earnings as U.S. land drilling and Canadian oil sands activity continued to improve, driving year-over-year improvements in the land drilling, rental tool and accommodations operations. For the third quarter of 2004, revenues and EBITDA from the Well Site Services segment were $79.4 million and $20.5 million, respectively, compared to $56.6 million of revenues and $12.5 million of EBITDA in the third quarter of 2003. This year-over-year increase in revenues of 40% and EBITDA of 64% was due primarily to contributions from acquisitions completed over the past twelve months, strong U.S. land drilling activity and capital investments made in rental tools, drilling rigs and accommodations. These increases were partially offset by decreased offshore rental tool and workover activity due to continued depressed drilling activity in the Gulf of Mexico and shut-downs in the Gulf of Mexico due to hurricanes. The accommodations business posted a 46% year-over-year increase in revenues and a 76% year-over-year increase in EBITDA as activity improved in Canada for the oil sands, manufacturing and international operations. The U.S. land drilling business had a record quarter with revenue and EBITDA up 36% and 78%, respectively, from the third quarter of 2003 as the business benefited from strong utilization, improved pricing and contributions from two newly built rigs. EBITDA from the rental tool operations increased 60% year- over-year primarily due to contributions from nine acquisitions completed over the past twelve months and investments made to expand the unit's tool offering. Offshore Products During the third quarter of 2004, Offshore Products reported $55.3 million of revenues and $5.0 million of EBITDA, compared to $59.3 million of revenues and $10.9 million of EBITDA in the third quarter of 2003. Gross margin for the third quarter fell to 19.3% from 27.3% in the third quarter of 2003 due to lower overhead absorption resulting from reduced activity and product mix. However, results for the third quarter of 2004 improved sequentially despite the recording of a $1.0 million accrual relating to a potential warranty claim associated with an international subsea pipeline project installed during 2000. Excluding this non-recurring accrual, Offshore Products would have displayed sequential improvements in gross margin percentage, as well as revenues and EBITDA. Backlog at the end of the third quarter of 2004 was $87.3 million compared to $98.7 million at June 30, 2004 and $62.6 million at December 31, 2003. Tubular Services Tubular Services reported another record quarter as the strong OCTG market environment and increasing steel prices drove results. Tubular Services generated $116.9 million of revenues and $14.3 million of EBITDA in the third quarter of 2004 compared to $61.3 million of revenues and $1.9 million of EBITDA in the third quarter of 2003. Tight OCTG supplies, increasing OCTG mill pricing and contributions from the Hunting acquisition were the primary factors for this increase. In addition, Tubular Services also benefited from the overall year-over-year increase in drilling and completion activity, as the U.S. rig count increased 13% from the third quarter of 2003. OCTG shipments were 90,100 tons in the third quarter of 2004 compared to 69,800 tons shipped in the third quarter of 2003. Gross margin for Tubular Services was 14.4% in the third quarter of 2004 compared to 5.9% in the third quarter of 2003. The Company's OCTG inventory at September 30, 2004 was $116.8 million compared to $111.6 million at June 30, 2004. As of September 30, 2004, approximately 65% of Oil States' OCTG inventory was committed to customer orders. "Third quarter earnings exceeded our expectations as strong results in our Tubular Services and Well Site Services segments accelerated," stated Douglas E. Swanson, Oil States' President and Chief Executive Officer. "Looking forward, our current expectations are for fourth quarter earnings to be comparable to third quarter earnings. While the OCTG market has remained strong thus far in the fourth quarter, some margin contraction could occur in our Tubular Services segment beginning in the fourth quarter. U.S. drilling activity is expected to remain strong throughout the rest of the year, and we currently expect Canada to have a strong winter drilling season. As a result, Well Site Services should have a strong finish to 2004. Offshore Products is expected to continue to improve from third quarter results as backlog remains strong. In addition, Offshore Products has begun to receive inquiries and orders for repair products and services related to production infrastructure in the Gulf of Mexico damaged by the hurricanes. Given these factors, we are estimating fourth quarter earnings to be in the range of $0.30 to $0.33 per diluted share." Oil States International, Inc. is a diversified solutions provider for the oil and gas industry. 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, hydraulic workover services and land drilling services. Oil States is organized in three business segments -- Offshore Products, Tubular Services and Well Site 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 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 herein are based on 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, 2003 filed by Oil States with the SEC on March 5, 2004. (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. Oil States International, Inc. Statements of Operations (in thousands, except per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Revenue $251,538 $177,170 $677,910 $526,310 Costs and expenses: Cost of sales 197,521 139,355 534,833 411,653 Selling, general and administrative 16,504 14,306 47,077 42,037 Depreciation and amortization 9,161 6,978 26,477 20,347 Other expense / (income) 441 (162) 868 3 Operating income 27,911 16,693 68,655 52,270 Interest income 65 157 222 319 Interest expense (1,993) (1,654) (5,463) (5,020) Other income 494 248 931 509 Income before income taxes 26,477 15,444 64,345 48,078 Income tax expense (10,964) (4,110) (20,520) (13,221) Net income applicable to common stock $15,513 $11,334 $43,825 $34,857 Net income per common share Basic $0.31 $0.23 $0.89 $0.72 Diluted $0.31 $0.23 $0.88 $0.71 Average shares outstanding Basic 49,409 48,554 49,262 48,515 Diluted 50,061 49,212 49,895 49,155 Segment Data: Revenues Well Site Services $79,398 $56,560 $248,388 $188,284 Offshore Products 55,268 59,303 146,096 174,050 Tubular Services 116,872 61,307 283,426 163,976 Total Revenues $251,538 $177,170 $677,910 $526,310 EBITDA (A) Well Site Services $20,484 $12,474 $61,303 $43,907 Offshore Products 4,989 10,934 11,183 28,880 Tubular Services 14,348 1,948 29,091 4,619 Corporate / Other (2,255) (1,437) (5,514) (4,280) Total EBITDA $37,566 $23,919 $96,063 $73,126 Operating Income / (Loss) Well Site Services $13,379 $7,315 $41,063 $29,426 Offshore Products 2,678 9,063 4,696 23,200 Tubular Services 14,123 1,761 28,452 3,951 Corporate / Other (2,269) (1,446) (5,556) (4,307) Total Operating Income $27,911 $16,693 $68,655 $52,270 Oil States International, Inc. Consolidated Balance Sheets (in thousands) Sep. 30, Jun. 30, Dec. 31, 2004 2004 2003 Assets (unaudited) (unaudited) (audited) Current assets Cash $23,538 $22,721 $19,318 Accounts receivable 161,763 143,564 137,484 Inventory 194,665 180,938 121,319 Prepaid and other current assets 7,178 7,341 9,956 Total current assets 387,144 354,564 288,077 Property, plant and equipment, net 212,941 203,585 194,136 Goodwill 256,322 255,101 224,054 Other intangible assets, net 7,675 8,044 5,870 Other long term assets 5,456 5,351 5,049 Total assets $869,538 $826,645 $717,186 Liabilities and stockholders' equity Current liabilities Accounts payable and accrued liabilities $122,352 $117,894 $89,243 Income taxes payable 12,940 6,557 3,020 Current debt 5,961 5,472 873 Deferred revenue 7,280 7,018 4,784 Other current liabilities 2,341 2,491 937 Total current liabilities 150,874 139,432 98,857 Long term debt 185,515 178,236 136,246 Deferred income taxes 19,984 18,366 19,411 Other liabilities 7,687 7,493 7,561 Total liabilities 364,060 343,527 262,075 Stockholders' equity Common stock 495 494 492 Additional paid-in capital 337,298 335,946 333,855 Retained earnings 152,643 137,130 108,818 Accumulated other comprehensive income 15,359 9,870 12,289 Treasury stock (317) (322) (343) Total stockholders' equity 505,478 483,118 455,111 Total liabilities and stockholders' equity $869,538 $826,645 $717,186 Oil States International, Inc. Additional Quarterly Segment and Operating Data (unaudited) Three Months Ended September 30, 2004 2003 Additional Well Site Services Financial Data ($ in thousands) Revenues Accommodations $42,339 $29,001 Hydraulic Workover Services 8,143 7,679 Rental Tools 16,165 10,504 Land Drilling 12,751 9,376 Total Revenues $79,398 $56,560 EBITDA (A) Accommodations $10,308 $5,872 Hydraulic Workover Services 1,009 1,145 Rental Tools 4,822 3,011 Land Drilling 4,345 2,446 Total EBITDA $20,484 $12,474 Operating Income Accommodations $7,468 $3,798 Hydraulic Workover Services 41 240 Rental Tools 2,348 1,528 Land Drilling 3,522 1,749 Total Operating Income $13,379 $7,315 Well Site Services Supplemental Operating Data Accommodations Operating Statistics Average Mandays Served 7,257 5,599 Average Camps Rented Canadian Side-by-Side Camps 12 11 US Offshore Steel Buildings (10 foot wide) 129 77 Hydraulic Workover Services Operating Statistics Average Units Available 30 29 Utilization 28.8% 30.6% Average Day Rate ($ in thousands per day) $10.3 $9.4 Average Daily Cash Margin ($ in thousands per day) $2.2 $2.2 Land Drilling Operating Statistics Average Rigs Available 17 15 Utilization 94.1% 91.6% Implied Day Rate ($ in thousands per day) $8.7 $7.4 Implied Daily Cash Margin ($ in thousands per day) $3.1 $2.1 Offshore Products Backlog ($ in millions) $87.3 $72.9 Tubular Services Operating Data Shipments (Tons in thousands) 90.1 69.8 Quarter end Inventory ($ in thousands) $116,831 $73,190 Oil States International, Inc. Reconciliation of GAAP to Non-GAAP Financial Information (in thousands) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Net income $15,513 $11,334 $43,825 $34,857 Income tax expense 10,964 4,110 20,520 13,221 Depreciation and amortization 9,161 6,978 26,477 20,347 Interest income (65) (157) (222) (319) Interest expense 1,993 1,654 5,463 5,020 EBITDA $37,566 $23,919 $96,063 $73,126 SOURCE Oil States International, Inc. -0- 11/01/2004 /CONTACT: Cindy B. Taylor of Oil States International, Inc., +1-713-652-0582/ /Web site: http://www.oilstatesintl.com / (OIS) CO: Oil States International, Inc. ST: Texas IN: OIL SU: ERN ERP -----END PRIVACY-ENHANCED MESSAGE-----