UNITED STATES
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): October 26, 2017
Oil States International, Inc.
(Exact Name of Registrant as Specified in Charter)
| DELAWARE | 1-16337 | 76-0476605 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| Three Allen Center 333 Clay Street, Suite 4620, Houston, Texas 77002 |
| (Address of Principal Executive Offices) (Zip Code) |
(713) 652-0582
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
| 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: | ||
| [ ] | 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)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On October 26, 2017, Oil States International, Inc. published a press release providing information regarding its results of operation and financial condition for the quarter ended September 30, 2017. The information provided in this Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended, unless specifically stated so therein.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1 Press Release dated October 26, 2017
SIGNATURE
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.
| Oil States International, Inc. | ||
| Date: October 26, 2017 | By: | /s/ Lloyd A. Hajdik |
| Lloyd A. Hajdik | ||
| Executive Vice President, Chief Financial Officer and Treasurer | ||
EXHIBIT 99.1
Oil States Announces Third Quarter 2017 Results
Third Quarter Highlights:
HOUSTON, Oct. 26, 2017 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported a net loss for the third quarter 2017 of $15.0 million, or $0.30 per diluted share, which included pre-tax charges of $0.4 million ($0.3 million after-tax, or $0.01 per diluted share) for severance and other downsizing charges and $1.0 million of additional tax expense ($0.02 per diluted share) due to the decision to carryback 2016 net operating losses against taxable income reported in 2014. These results compare to a reported net loss for the third quarter of 2016 of $10.8 million, or $0.22 per diluted share, which included pre-tax charges of $2.0 million ($1.3 million after-tax, or $0.03 per diluted share) of severance and other downsizing charges.
During the third quarter of 2017, the Company generated revenues of $164.0 million and Adjusted Consolidated EBITDA (Note B) of $9.2 million (excluding $0.4 million of severance and other downsizing charges). These results compare to revenues of $179.0 million and Adjusted Consolidated EBITDA of $16.2 million reported in the third quarter of 2016 (excluding $2.0 million of severance and other downsizing charges).
Oil States’ President and Chief Executive Officer, Cindy B. Taylor, stated, “Our third quarter results were adversely affected by Hurricane Harvey which caused widespread damage and logistical challenges in Houston and the surrounding region where we operate five manufacturing facilities and employ about 500 individuals. We were impacted by lower revenues and under-absorption of manufacturing facility costs primarily in the offshore/manufactured products segment but we also suffered some field-level downtime due to employee dislocations resulting from the storm. One of our Houston facilities experienced significant flooding and is not yet operational but was fully insured. Project work in that facility has been shifted to other manufacturing locations to meet customer delivery requirements.
"Despite transitory impacts from Hurricane Harvey, our U.S. land completion services revenues increased 6% sequentially, in-line with growth in the third quarter average U.S. rig count. Historically low levels of deepwater spending continued to impact our offshore/manufactured products segment with limited industry award activity during the third quarter. However, we were able to maintain a quarterly book-to-bill ratio of 0.99x. ”
For the first nine months of 2017, the Company reported revenues of $486.9 million and Adjusted Consolidated EBITDA of $25.0 million (excluding $2.0 million of severance and other downsizing charges). The net loss for the first nine months of 2017 totaled $47.0 million and included $2.0 million ($1.5 million after-tax, or $0.03 per diluted share) of severance and other downsizing charges and $1.0 million of additional tax expense ($0.02 per diluted share) due to the decision to carryback 2016 net operating losses against taxable income reported in 2014. For the first nine months of 2016, the Company reported revenues of $524.5 million and Adjusted Consolidated EBITDA of $41.9 million (excluding $4.6 million of severance and other downsizing charges). The net loss for the first nine months of 2016 totaled $35.8 million and included $4.6 million ($2.9 million after-tax, or $0.06 per diluted share) of severance and other downsizing charges.
BUSINESS SEGMENT RESULTS
(See Segment Data Tables)
Well Site Services
Well site services generated revenues of $77.2 million and Segment EBITDA of $7.1 million in the third quarter of 2017 compared to revenues and a Segment EBITDA loss of $46.4 million and $3.1 million, respectively, in the third quarter of 2016. Well site services revenues and Segment EBITDA increased 67% and 329%, respectively, due to a 31% year-over-year increase in the number of completion services job tickets coupled with a 20% year-over-year increase in revenue per completion services job as a result of increased activity and a more favorable job mix. Adjusted Segment EBITDA margins (Note A) averaged 9% and (5)% after excluding severance and other downsizing charges in the third quarters of 2017 and 2016, respectively. Improved utilization in the land drilling business, which averaged 34% in the third quarter of 2017 compared to only 15% in the third quarter of 2016, also positively impacted the segment’s results.
Offshore/Manufactured Products
Offshore/manufactured products generated revenues and Segment EBITDA of $86.9 million and $13.8 million, respectively, in the third quarter of 2017 compared to revenues of $132.7 million and Segment EBITDA of $29.5 million in the third quarter of 2016. Revenues and Segment EBITDA decreased 35% and 53% year-over-year, respectively, due to lower contributions across most of the segment’s product and service lines, particularly those tied to major deepwater project sanctions. Lower major project revenues were partially offset by a 59% improvement in sales of our shorter-cycle products (elastomer and valve products), which continued to benefit from expanded U.S. land-based activity. Segment EBITDA margin was 16% in the third quarter of 2017 compared to a margin of 22% realized in the third quarter of 2016. Third quarter 2016 margins benefited from the larger number of major projects in process or nearing completion during the period. Backlog totaled $198 million at September 30, 2017 compared to $202 million at June 30, 2017 and $199 million reported at December 31, 2016.
Income Taxes
The Company recognized an effective tax rate benefit of 21.1% in the third quarter of 2017 compared to an effective tax rate benefit of 35.8% in the third quarter of 2016. The lower effective tax rate benefit in the third quarter of 2017 was primarily attributable to a shift in the mix between domestic pre-tax losses and foreign pre-tax income compared to the prior-year period and additional valuation allowances provided against deferred tax assets recorded in certain domestic and foreign jurisdictions. Further, the Company recorded $1.0 million of additional tax expense due to the decision to carryback 2016 net operating losses against taxable income reported in 2014, which will result in the loss of certain previously claimed deductions.
Financial Condition
As of September 30, 2017, $15.6 million was outstanding under the Company’s revolving credit facility, while cash on hand totaled $65.9 million. Total availability under the facility as of September 30, 2017 was $146.5 million (net of standby letters of credit totaling $21.6 million), which is less than the full amount of the facility due to limitations imposed by the maintenance covenant of 3.25 times trailing twelve months Consolidated EBITDA, adjusted for certain non-cash items.
Conference Call Information
The call is scheduled for Friday, October 27, 2017 at 10:30 am ET, and is being webcast and can be accessed from the Company’s website at www.ir.oilstatesintl.com. Participants may also join the conference call by dialing (800) 446-1671 in the United States or by dialing +1 847 413 3362 internationally and using the passcode 45846163. A replay of the conference call will be available one and a half hours after the completion of the call by dialing (888) 843-7419 in the United States or by dialing +1 630 652 3042 internationally and entering the passcode 45846163.
About Oil States
Oil States International, Inc. is a global oilfield products and services company serving the drilling, completions, subsea, production and infrastructure sectors of the oil and gas industry. The Company’s manufactured products include highly engineered capital equipment as well as products consumed in the drilling, well construction and production of oil and gas. The Company is also a leading provider of completion services to the industry. Oil States is headquartered in Houston, Texas with manufacturing and service facilities strategically located across the globe. 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 www.oilstatesintl.com.
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of Section 27A 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 energy service industry and other factors discussed in the "Business" and "Risk Factors" sections of the Form 10-K for the year ended December 31, 2016 filed by Oil States with the Securities and Exchange Commission on February 17, 2017.
| OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Revenues: | |||||||||||||||
| Products | $ | 67,339 | $ | 109,312 | $ | 223,269 | $ | 323,566 | |||||||
| Service | 96,709 | 69,694 | 263,648 | 200,944 | |||||||||||
| 164,048 | 179,006 | 486,917 | 524,510 | ||||||||||||
| Costs and expenses: | |||||||||||||||
| Product costs | 50,593 | 75,345 | 160,252 | 227,855 | |||||||||||
| Service costs | 78,596 | 60,421 | 219,697 | 173,125 | |||||||||||
| Selling, general and administrative expense | 26,843 | 30,388 | 84,055 | 90,854 | |||||||||||
| Depreciation and amortization expense | 26,788 | 29,848 | 82,552 | 89,666 | |||||||||||
| Other operating (income) expense, net | (589 | ) | (1,370 | ) | 374 | (4,098 | ) | ||||||||
| 182,231 | 194,632 | 546,930 | 577,402 | ||||||||||||
| Operating loss | (18,183 | ) | (15,626 | ) | (60,013 | ) | (52,892 | ) | |||||||
| Interest expense | (1,147 | ) | (1,364 | ) | (3,370 | ) | (4,124 | ) | |||||||
| Interest income | 73 | 119 | 243 | 321 | |||||||||||
| Other income | 207 | 32 | 477 | 462 | |||||||||||
| Loss from continuing operations before income taxes | (19,050 | ) | (16,839 | ) | (62,663 | ) | (56,233 | ) | |||||||
| Income tax benefit | 4,019 | 6,021 | 15,708 | 20,474 | |||||||||||
| Net loss from continuing operations | (15,031 | ) | (10,818 | ) | (46,955 | ) | (35,759 | ) | |||||||
| Net loss from discontinued operations, net of tax | — | — | — | (4 | ) | ||||||||||
| Net loss attributable to Oil States | $ | (15,031 | ) | $ | (10,818 | ) | $ | (46,955 | ) | $ | (35,763 | ) | |||
| Basic net loss per share attributable to Oil States from: | |||||||||||||||
| Continuing operations | $ | (0.30 | ) | $ | (0.22 | ) | $ | (0.94 | ) | $ | (0.71 | ) | |||
| Discontinued operations | — | — | — | — | |||||||||||
| Net loss | $ | (0.30 | ) | $ | (0.22 | ) | $ | (0.94 | ) | $ | (0.71 | ) | |||
| Diluted net loss per share attributable to Oil States from: | |||||||||||||||
| Continuing operations | $ | (0.30 | ) | $ | (0.22 | ) | $ | (0.94 | ) | $ | (0.71 | ) | |||
| Discontinued operations | — | — | — | — | |||||||||||
| Net loss | $ | (0.30 | ) | $ | (0.22 | ) | $ | (0.94 | ) | $ | (0.71 | ) | |||
| Weighted average number of common shares outstanding: | |||||||||||||||
| Basic | 49,978 | 50,222 | 50,190 | 50,158 | |||||||||||
| Diluted | 49,978 | 50,222 | 50,190 | 50,158 | |||||||||||
| OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands) | |||||||
| September 30, 2017 | December 31, 2016 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 65,864 | $ | 68,800 | |||
| Accounts receivable, net | 210,218 | 234,513 | |||||
| Inventories, net | 173,447 | 175,490 | |||||
| Prepaid expenses and other current assets | 26,464 | 11,174 | |||||
| Total current assets | 475,993 | 489,977 | |||||
| Property, plant, and equipment, net | 508,743 | 553,402 | |||||
| Goodwill, net | 268,917 | 263,369 | |||||
| Other intangible assets, net | 50,105 | 52,746 | |||||
| Other noncurrent assets | 25,597 | 24,404 | |||||
| Total assets | $ | 1,329,355 | $ | 1,383,898 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Current portion of long-term debt and capitalized leases | $ | 492 | $ | 538 | |||
| Accounts payable | 44,768 | 34,207 | |||||
| Accrued liabilities | 47,632 | 45,333 | |||||
| Income taxes payable | 1,031 | 5,839 | |||||
| Deferred revenue | 22,588 | 21,315 | |||||
| Total current liabilities | 116,511 | 107,232 | |||||
| Long-term debt and capitalized leases (1) | 19,061 | 45,388 | |||||
| Deferred income taxes | 4,592 | 5,036 | |||||
| Other noncurrent liabilities | 22,914 | 21,935 | |||||
| Total liabilities | 163,078 | 179,591 | |||||
| Stockholders’ equity: | |||||||
| Common stock | 627 | 623 | |||||
| Additional paid-in capital | 748,581 | 731,562 | |||||
| Retained earnings | 1,086,518 | 1,133,473 | |||||
| Accumulated other comprehensive loss | (56,810 | ) | (70,300 | ) | |||
| Treasury stock | (612,639 | ) | (591,051 | ) | |||
| Total stockholders’ equity | 1,166,277 | 1,204,307 | |||||
| Total liabilities and stockholders’ equity | $ | 1,329,355 | $ | 1,383,898 | |||
(1) As of September 30, 2017, the Company had $146.5 million available under its revolving credit facility (net of standby letters of credit totaling $21.6 million), which is less than the full amount of the facility due to the maintenance covenant of 3.25 times trailing twelve months Consolidated EBITDA, adjusted for certain non-cash items.
| OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) | |||||||
| Nine Months Ended September 30, | |||||||
| 2017 | 2016 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (46,955 | ) | $ | (35,763 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Loss from discontinued operations | — | 4 | |||||
| Depreciation and amortization | 82,552 | 89,666 | |||||
| Stock-based compensation expense | 17,023 | 15,938 | |||||
| Deferred income tax benefit | (2,224 | ) | (28,264 | ) | |||
| Provision for bad debt | 257 | 759 | |||||
| Gain on disposals of assets | (526 | ) | (445 | ) | |||
| Amortization of deferred financing costs | 608 | 585 | |||||
| Other, net | 62 | 689 | |||||
| Changes in operating assets and liabilities, net of effect from acquired businesses: | |||||||
| Accounts receivable | 26,909 | 68,193 | |||||
| Inventories | 5,912 | 15,600 | |||||
| Accounts payable and accrued liabilities | 11,811 | (18,588 | ) | ||||
| Income taxes payable | (4,789 | ) | (2,987 | ) | |||
| Other operating assets and liabilities, net | (14,323 | ) | 2,392 | ||||
| Net cash flows provided by continuing operating activities | 76,317 | 107,779 | |||||
| Net cash flows used in discontinued operating activities | — | 3 | |||||
| Net cash flows provided by operating activities | 76,317 | 107,782 | |||||
| Cash flows from investing activities: | |||||||
| Capital expenditures | (20,331 | ) | (23,893 | ) | |||
| Acquisitions of businesses | (12,859 | ) | — | ||||
| Proceeds from disposition of property, plant and equipment | 1,125 | 1,026 | |||||
| Other, net | (631 | ) | (1,534 | ) | |||
| Net cash flows used in investing activities | (32,696 | ) | (24,401 | ) | |||
| Cash flows from financing activities: | |||||||
| Revolving credit facility borrowings (repayments), net | (26,578 | ) | (59,731 | ) | |||
| Debt and capital lease repayments | (403 | ) | (398 | ) | |||
| Purchase of treasury stock | (16,283 | ) | — | ||||
| Issuance of common stock from stock-based payment arrangements | — | 367 | |||||
| Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock | (5,305 | ) | (3,950 | ) | |||
| Net cash flows used in financing activities | (48,569 | ) | (63,712 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | 2,012 | (1,852 | ) | ||||
| Net change in cash and cash equivalents | (2,936 | ) | 17,817 | ||||
| Cash and cash equivalents, beginning of period | 68,800 | 35,973 | |||||
| Cash and cash equivalents, end of period | $ | 65,864 | $ | 53,790 | |||
| OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES SEGMENT DATA (In Thousands) (unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Revenues: | |||||||||||||||
| Well Site Services - | |||||||||||||||
| Completion Services | $ | 61,015 | $ | 38,975 | $ | 167,577 | $ | 116,748 | |||||||
| Drilling Services | 16,162 | 7,375 | 39,120 | 14,016 | |||||||||||
| Total Well Site Services | 77,177 | 46,350 | 206,697 | 130,764 | |||||||||||
| Offshore/Manufactured Products - | |||||||||||||||
| Project-driven products | 22,698 | 76,541 | 89,615 | 234,440 | |||||||||||
| Short-cycle products | 37,781 | 23,766 | 110,872 | 63,033 | |||||||||||
| Other products and services | 26,392 | 32,349 | 79,733 | 96,273 | |||||||||||
| Total Offshore/Manufactured Products | 86,871 | 132,656 | 280,220 | 393,746 | |||||||||||
| Total revenues | $ | 164,048 | $ | 179,006 | $ | 486,917 | $ | 524,510 | |||||||
| Operating income (loss): | |||||||||||||||
| Well Site Services - | |||||||||||||||
| Completion Services (1,2) | $ | (9,933 | ) | $ | (20,450 | ) | $ | (38,960 | ) | $ | (66,251 | ) | |||
| Drilling Services (2) | (3,235 | ) | (5,641 | ) | (11,239 | ) | (19,697 | ) | |||||||
| Total Well Site Services | (13,168 | ) | (26,091 | ) | (50,199 | ) | (85,948 | ) | |||||||
| Offshore/Manufactured Products (1,2) | 7,334 | 22,867 | 27,460 | 67,854 | |||||||||||
| Corporate | (12,349 | ) | (12,402 | ) | (37,274 | ) | (34,798 | ) | |||||||
| Total operating loss | $ | (18,183 | ) | $ | (15,626 | ) | $ | (60,013 | ) | $ | (52,892 | ) | |||
| OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION – SEGMENT EBITDA AND ADJUSTED SEGMENT EBITDA (A) (In Thousands) (unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Well Site Services: | |||||||||||||||
| Completion Services: | |||||||||||||||
| Operating loss | $ | (9,933 | ) | $ | (20,450 | ) | $ | (38,960 | ) | $ | (66,251 | ) | |||
| Depreciation and amortization expense | 15,679 | 17,230 | 48,400 | 52,789 | |||||||||||
| Other income (expense) | 133 | 107 | 412 | 618 | |||||||||||
| EBITDA | 5,879 | (3,113 | ) | 9,852 | (12,844 | ) | |||||||||
| Severance and other downsizing charges | 175 | 683 | 1,077 | 1,833 | |||||||||||
| Adjusted EBITDA | $ | 6,054 | $ | (2,430 | ) | $ | 10,929 | $ | (11,011 | ) | |||||
| Drilling Services: | |||||||||||||||
| Operating loss | $ | (3,235 | ) | $ | (5,641 | ) | $ | (11,239 | ) | $ | (19,697 | ) | |||
| Depreciation and amortization expense | 4,454 | 5,629 | 14,283 | 18,053 | |||||||||||
| Other income (expense) | 44 | — | 48 | 1 | |||||||||||
| EBITDA | 1,263 | (12 | ) | 3,092 | (1,643 | ) | |||||||||
| Severance and other downsizing charges | — | 160 | — | 160 | |||||||||||
| Adjusted EBITDA | $ | 1,263 | $ | 148 | $ | 3,092 | $ | (1,483 | ) | ||||||
| Total Well Site Services: | |||||||||||||||
| Operating loss | $ | (13,168 | ) | $ | (26,091 | ) | $ | (50,199 | ) | $ | (85,948 | ) | |||
| Depreciation and amortization expense | 20,133 | 22,859 | 62,683 | 70,842 | |||||||||||
| Other income (expense) | 177 | 107 | 460 | 619 | |||||||||||
| Segment EBITDA | 7,142 | (3,125 | ) | 12,944 | (14,487 | ) | |||||||||
| Severance and other downsizing charges | 175 | 843 | 1,077 | 1,993 | |||||||||||
| Adjusted Segment EBITDA | $ | 7,317 | $ | (2,282 | ) | $ | 14,021 | $ | (12,494 | ) | |||||
| Offshore/Manufactured Products: | |||||||||||||||
| Operating income | $ | 7,334 | $ | 22,867 | $ | 27,460 | $ | 67,854 | |||||||
| Depreciation and amortization expense | 6,404 | 6,712 | 19,091 | 17,977 | |||||||||||
| Other income (expense) | 30 | (75 | ) | 17 | (157 | ) | |||||||||
| Segment EBITDA | 13,768 | 29,504 | 46,568 | 85,674 | |||||||||||
| Severance and other downsizing charges | 253 | 1,104 | 946 | 2,635 | |||||||||||
| Adjusted Segment EBITDA | $ | 14,021 | $ | 30,608 | $ | 47,514 | $ | 88,309 | |||||||
| Corporate: | |||||||||||||||
| Operating loss | $ | (12,349 | ) | $ | (12,402 | ) | $ | (37,274 | ) | $ | (34,798 | ) | |||
| Depreciation and amortization expense | 251 | 277 | 778 | 847 | |||||||||||
| Other income (expense) | — | — | — | — | |||||||||||
| EBITDA | (12,098 | ) | (12,125 | ) | (36,496 | ) | (33,951 | ) | |||||||
| Severance and other downsizing charges | — | 5 | — | 5 | |||||||||||
| Adjusted EBITDA | $ | (12,098 | ) | $ | (12,120 | ) | $ | (36,496 | ) | $ | (33,946 | ) | |||
| OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (In Thousands) (unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net loss from continuing operations | $ | (15,031 | ) | $ | (10,818 | ) | $ | (46,955 | ) | $ | (35,759 | ) | |||
| Income tax benefit | (4,019 | ) | (6,021 | ) | (15,708 | ) | (20,474 | ) | |||||||
| Depreciation and amortization expense | 26,788 | 29,848 | 82,552 | 89,666 | |||||||||||
| Interest income | (73 | ) | (119 | ) | (243 | ) | (321 | ) | |||||||
| Interest expense | 1,147 | 1,364 | 3,370 | 4,124 | |||||||||||
| Consolidated EBITDA (B) | 8,812 | 14,254 | 23,016 | 37,236 | |||||||||||
| Adjustments to Consolidated EBITDA (1,2): | |||||||||||||||
| Severance and other downsizing charges | 428 | 1,952 | 2,023 | 4,633 | |||||||||||
| Adjusted Consolidated EBITDA (B) | $ | 9,240 | $ | 16,206 | $ | 25,039 | $ | 41,869 | |||||||
(1) Operating income (loss) and Consolidated EBITDA for the three months ended September 30, 2017 included severance and other downsizing charges of $0.2 million related to the completion services business and $0.3 million related to the offshore/manufactured products segment. Operating income (loss) and Consolidated EBITDA for the nine months ended September 30, 2017 included severance and other downsizing charges of $1.1 million related to the completion services business and $0.9 million related to the offshore/manufactured products segment.
(2) Operating income (loss) and Consolidated EBITDA for the three months ended September 30, 2016 included severance and other downsizing charges of $0.7 million related to the completion services business, $0.2 million related to the drilling services business and $1.1 million related to the offshore/manufactured products segment. Operating income (loss) and Consolidated EBITDA for the nine months ended September 30, 2016 included severance and other downsizing charges of $1.8 million related to the completion services business, $0.2 million related to the drilling services business and $2.6 million related to the offshore/manufactured products segment.
(A) The terms EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA consist of operating income (loss) plus depreciation and amortization expense, and certain other items. EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA are not measures of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for operating income (loss) or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA as a supplemental disclosure because its management believes that EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA provide useful information regarding its 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, Adjusted EBITDA, Segment EBITDA and Adjusted Segment 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 tables above set forth reconciliations of EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA to operating income (loss), which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles.
(B) The terms Consolidated EBITDA and Adjusted Consolidated EBITDA consist of net loss from continuing operations plus net interest expense, taxes, depreciation and amortization expense, and certain other items. Consolidated EBITDA and Adjusted Consolidated EBITDA are not measures of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net loss from continuing operations or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Consolidated EBITDA and Adjusted Consolidated EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Consolidated EBITDA and Adjusted Consolidated EBITDA as a supplemental disclosure because its management believes that Consolidated EBITDA and Adjusted Consolidated EBITDA provide useful information regarding its 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 Consolidated EBITDA and Adjusted Consolidated EBITDA to compare and to monitor the performance of the Company and 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 table above sets forth a reconciliation of Consolidated EBITDA and Adjusted Consolidated EBITDA to net loss from continuing operations, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles.
| OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES ADDITIONAL QUARTERLY SEGMENT AND OPERATING DATA (unaudited) | |||||||
| Three Months Ended September 30, | |||||||
| 2017 | 2016 | ||||||
| Supplemental operating data: | |||||||
| Offshore/Manufactured Products backlog ($ in millions) | $ | 198.1 | $ | 203.0 | |||
| Completion Services job tickets | 4,970 | 3,802 | |||||
| Average revenue per ticket ($ in thousands) | $ | 12.3 | $ | 10.3 | |||
| Land drilling operating statistics: | |||||||
| Average rigs available | 34 | 34 | |||||
| Utilization | 33.6 | % | 15.3 | % | |||
| Implied day rate ($ in thousands per day) | $ | 15.4 | $ | 15.4 | |||
| Implied daily cash margin ($ in thousands per day) | $ | 1.6 | $ | 0.8 | |||
Company Contact:
Lloyd A. Hajdik
Oil States International, Inc.
Executive Vice President, Chief Financial Officer and Treasurer
713-652-0582
Patricia Gil
Oil States International, Inc.
Director, Investor Relations
713-470-4860