EX-99.1 2 ex99-1.txt TO BUSINESS AND ENERGY EDITORS: Oil States Announces First Quarter Earnings of $1.31 per Share HOUSTON, April 29 /PRNewswire-FirstCall/ -- Oil States International, Inc. (NYSE: OIS) today reported net income for the quarter ended March 31, 2008 of $66.5 million, or $1.31 per diluted share, compared to $52.5 million, or $1.05 per diluted share, reported in the first quarter of 2007. Oil States recognized year-over-year growth in revenues and EBITDA (defined as net income plus interest, taxes, depreciation and amortization) of 25% and 28%, respectively, in the first quarter of 2008.(A) Significant year-over-year improvements in our oil sands accommodations business, increased profitability in our Offshore Products segment and contributions from two rental tool acquisitions completed during the third quarter of 2007 along with increased activity in Tubular Services led to revenue and EBITDA growth in the first quarter of 2008. During the quarter, the Company generated $601.2 million of revenues and $125.8 million of EBITDA compared to $480.5 million and $98.0 million, respectively, in the first quarter of 2007. Consolidated operating income in the first quarter of 2008 was $101.3 million compared to $82.9 million for the corresponding quarter of 2007. The Company recognized an effective tax rate of 32.7% in the first quarter of 2008 compared to 34.1% in the first quarter of 2007. The lower effective tax rate in the first quarter of 2008 was primarily due to lower tax rates applicable to foreign income. The Company spent $60.8 million in capital expenditures during the first quarter of 2008 primarily related to expansions to our rental tool operations and on-going construction of the recently announced Conklin Lodge as well as continued expansion at Wapasu Lodge, both of which serve customers in the oil sands region of Canada. BUSINESS SEGMENT RESULTS (Unless otherwise noted, the following discussion compares the quarterly results from the first quarter of 2008 to the results from the first quarter of 2007.) Well Site Services For the first quarter of 2008, Well Site Services generated revenues of $265.6 million and EBITDA of $97.6 million, compared to $178.1 million and $74.0 million, respectively, in the first quarter of 2007, representing year-over-year increases of 49% and 32%, respectively. The increase in EBITDA was primarily due to improved results from the oil sands accommodations and contributions from the two rental tool acquisitions closed in the third quarter of 2007, partially offset by lower margins from the Company's drilling and rental tools operations. The accommodations business reported revenues of $146.3 million and EBITDA of $60.9 million, for the first quarter of 2008, compared to revenues and EBITDA of $93.6 million and $39.1 million, respectively, in the first quarter of 2007. Accommodations revenue and EBITDA each increased 56%, primarily due to contributions from additional room capacity at our major oil sands lodges, which was up over 70% from ending first quarter 2007 capacity levels. Drilling services generated revenues and EBITDA of $36.8 million and $11.2 million in the first quarter of 2008, respectively, compared to $30.9 million of revenues and EBITDA of $12.7 million in the first quarter 2007. The year-over-year improvement in revenue was due to higher pricing and drilling rig additions made in 2007, but was offset by lower utilization in the Rockies caused by seasonal weather issues and by higher operating costs. Rental tools generated $82.5 million of revenues and $25.5 million of EBITDA in the first quarter of 2008 compared to revenue of $53.6 million and EBITDA of $22.2 million in the first quarter of 2007. This year-over-year growth was primarily due to two acquisitions completed in the third quarter of 2007, partially offset by softness in a few regional markets, isolated project delays and start-up costs in Mexico. Offshore Products The Offshore Products segment reported revenue and EBITDA of $126.9 million and $24.1 million, respectively, in the first quarter of 2008, compared to $119.0 million of revenues and $20.4 million in EBITDA in the first quarter of 2007. Offshore Products' revenues were up 7% and EBITDA was up 18% year-over-year primarily due to the mix of higher margin bearing and connector products and improved margins on drilling equipment deliveries. Backlog totaled $383.5 million at March 31, 2008 which represented a 6% increase from the $362.2 million reported as of December 31, 2007. Tubular Services Tubular Services generated revenues of $208.8 million and EBITDA of $10.1 million during the first quarter of 2008 compared to revenues of $183.4 million and EBITDA of $8.4 million in the first quarter of 2007. Tubular Services' revenues increased 14% year-over-year while OCTG shipments increased 24% to 127,100 tons in the first quarter of 2008 up from 102,600 tons shipped in the first quarter of 2007. Partially offsetting the volume increase was lower realized revenues per ton which decreased 8% year-over-year. However, during the quarter, OCTG manufacturers announced several price increases which take effect during the second quarter of 2008. Gross margins in the first quarter of 2008 were flat year-over-year at approximately 6%. The Company's OCTG inventory level at March 31, 2008 was $190.4 million which was essentially flat with the December 31, 2007 level of $191.4 million, but down significantly from the March 31, 2007 level of $251.4 million. "Our lodges and mobile camp equipment working in the oil sands region of Canada were significant drivers of our growth in the first quarter of 2008," stated Cindy B. Taylor, Oil States' President and Chief Executive Officer. "We are realizing the benefits of our capital expenditures made in our accommodations business as is reflected in our record results for the quarter. Additionally, margins improved in our Offshore Products segment which supports global deepwater infrastructure development. With the current tightness in OCTG supply coupled with recently announced mill price increases and surcharges, we expect our Tubular Services segment to generate stronger margins and profits in the second quarter of 2008. Our current expectation for second quarter 2008 earnings is in a range of $0.90 to $0.97 per diluted share considering the normal seasonal declines in activity in our Canadian based operations." 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 -- 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, 2007 filed by Oil States with the SEC on February 22, 2008. Oil States International, Inc. Unaudited Condensed Consolidated Statements of Income (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2008 2007 Revenues $601,247 $480,516 Costs and expenses: Cost of sales 445,085 355,803 Selling, general and administrative expenses 32,107 27,324 Depreciation and amortization expense 22,728 14,419 Other operating expense / (income) (11) 79 Operating income 101,338 82,891 Interest expense (5,227) (4,842) Interest income 922 926 Equity in earnings of unconsolidated affiliates 1,495 542 Other income 220 114 Income before income taxes 98,748 79,631 Income tax provision (32,281) (27,170) Net income $66,467 $52,461 Net income per share Basic $1.34 $1.06 Diluted $1.31 $1.05 Weighted average number of common shares outstanding Basic 49,422 49,268 Diluted 50,900 49,994 Oil States International, Inc. Consolidated Balance Sheets (in thousands) Mar. 31, 2008 Dec. 31, 2007 Assets (unaudited) (audited) Current assets Cash and cash equivalents $31,235 $30,592 Accounts receivable, net 463,538 450,153 Inventories, net 357,352 349,347 Prepaid expenses and other current assets 24,284 35,575 Total current assets 876,409 865,667 Property, plant and equipment, net 640,499 586,910 Goodwill, net 401,950 391,644 Investments in unconsolidated affiliates 26,163 24,778 Other noncurrent assets 59,557 60,627 Total assets $2,004,578 $1,929,626 Liabilities and stockholders' equity Current liabilities Current portion of long-term debt $179,975 $4,718 Accounts payable and accrued liabilities 232,213 239,119 Income taxes 9,472 43 Deferred revenue 54,697 60,910 Other current liabilities 1,082 121 Total current liabilities 477,439 304,911 Long-term debt (B) 326,456 487,102 Deferred income taxes 44,473 40,550 Other liabilities 12,191 12,236 Total liabilities 860,559 844,799 Stockholders' equity Common stock 523 522 Additional paid-in capital 407,590 402,091 Retained earnings 757,180 690,713 Accumulated other comprehensive income 60,540 73,036 Treasury stock (81,814) (81,535) Total stockholders' equity 1,144,019 1,084,827 Total liabilities and stockholders' equity $2,004,578 $1,929,626 Oil States International, Inc. Segment Data (in thousands) (unaudited) Three Months Ended March 31, 2008 2007 Revenues Accommodations $146,258 $93,553 Rental Tools 82,492 53,639 Drilling and Other 36,804 30,918 Well Site Services 265,554 178,110 Offshore Products 126,922 119,039 Tubular Services 208,771 183,367 Total Revenues $601,247 $480,516 EBITDA (A) Accommodations $60,906 $39,077 Rental Tools 25,466 22,222 Drilling and Other 11,220 12,750 Well Site Services 97,592 74,049 Offshore Products 24,129 20,436 Tubular Services 10,124 8,353 Corporate / Other (6,064) (4,872) Total EBITDA $125,781 $97,966 Operating Income / (Loss) Accommodations $52,808 $34,992 Rental Tools 17,631 17,482 Drilling and Other 6,053 9,994 Well Site Services 76,492 62,468 Offshore Products 21,446 17,608 Tubular Services 9,521 7,734 Corporate / Other (6,121) (4,919) Total Operating Income $101,338 $82,891 Oil States International, Inc. Additional Quarterly Segment and Operating Data (unaudited) Three Months Ended March 31, 2008 2007 Supplemental Operating Data Land Drilling Operating Statistics Average Rigs Available 35 32 Utilization 74.5% 72.4% Implied Day Rate ($ in thousands per day) $15.5 $14.8 Implied Daily Cash Margin ($ in thousands per day) $4.5 $6.5 Offshore Products Backlog ($ in millions) $383.5 $373.4 Tubular Services Operating Data Shipments (Tons in thousands) 127.1 102.6 Quarter end Inventory ($ in thousands) $190,366 $251,449 (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: Oil States International, Inc. Reconciliation of GAAP to Non-GAAP Financial Information (in thousands) (unaudited) Three Months Ended March 31, 2008 2007 Net income $66,467 $52,461 Income tax expense 32,281 27,170 Depreciation and amortization 22,728 14,419 Interest income (922) (926) Interest expense 5,227 4,842 EBITDA $125,781 $97,966 (B) As of March 31, 2008, the Company had approximately $177.2 million available under its revolving credit facility. SOURCE Oil States International, Inc.