EX-99.1 2 os3953ex991.txt EXHIBIT 99.1 Exhibit 99.1 OIL STATES ANNOUNCES RECORD THIRD QUARTER EARNINGS OF $0.60 PER SHARE HOUSTON, Oct. 31 /PRNewswire-FirstCall/ -- Oil States International, Inc. (NYSE: OIS) today reported a 95% year-over-year increase in net income for the quarter ended September 30, 2005. Net income for the third quarter of 2005 increased to $30.3 million, or $0.60 per diluted share, from $15.5 million, or $0.31 per diluted share, in the third quarter of 2004. With year-over-year increases in profitability from all of its business segments, Oil States' revenues and EBITDA (defined as net income plus interest, taxes, depreciation and amortization) for the third quarter of 2005 increased 57% and 71%, respectively.(A) The Company generated $394.1 million of revenues and $64.1 million of EBITDA in the third quarter of 2005 compared to $251.5 million and $37.6 million, respectively, in the third quarter of 2004. The improved results were primarily generated by increased volumes and prices at Tubular Services, increased accommodations activity in the oil sands region of Canada, increased U.S. drilling activity and incremental results from capital expenditures and acquisitions completed over the past twelve months. Tubular Services benefited from continued strong U.S. land drilling activity, limited oil country tubular goods ("OCTG") supplies and the acquisition of Phillips Casing and Tubing, L.P. ("Phillips"), completed in June 2005. Well Site Services generated increased revenues and EBITDA due to strong U.S. land drilling and Canadian oil sands activity, capital investments made in the past year and contributions from the Elenburg and Stinger acquisitions completed in the first half of 2005. Offshore Products also improved significantly year-over-year as volumes and margins expanded with the recovery in deepwater development spending. The Company's effective tax rate in the third quarter of 2005 was 36.9% compared to an effective tax rate of 41.4% in the third quarter of 2004. For the nine months ended September 30, 2005, the Company reported net income of $80.4 million, or $1.59 per diluted share, on revenues of $1.1 billion and EBITDA of $170.2 million. During the first nine months of 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. This performance represents year-over-year revenue and EBITDA increases of 60% and 77%, respectively. As a result, operating income nearly doubled, increasing to $135.5 million from $68.7 million in the first nine months of 2004. The 2004 year-to-date results included the Company's recognition of a $5.4 million income tax benefit related to the partial reversal of valuation allowances applied against net operating loss carryforwards. The effective tax rate in the first nine months of 2004 was 31.9% compared to 36.9% during the same period in 2005. The Company expects that the effective rate for the full year 2005 will be approximately 35% - 38%. BUSINESS SEGMENT RESULTS Well Site Services For the third quarter of 2005, Well Site Services generated $141.5 million of revenues and $38.4 million of EBITDA compared to $79.4 million of revenues and $20.5 million of EBITDA in the third quarter of 2004. The 78% year-over- year increase in revenues and 88% increase in EBITDA at Well Site Services were primarily due to recently completed acquisitions, a 16% increase in U.S. drilling activity, increased activity in Canadian accommodations and contributions from recent capital expenditures primarily in the accommodations, drilling services and rental tools businesses. The rental tools business reported significantly improved results during the third quarter of 2005 due to the acquisition of Stinger, improving U.S. drilling activity and the impact of price increases, partially offset by hurricane related disruptions in the Gulf of Mexico. For the third quarter of 2005, rental tools contributed $40.0 million of revenues and $14.6 million of EBITDA compared to $16.2 million of revenues and $4.8 million of EBITDA in the third quarter of 2004. Of the $23.8 million increase in rental tools' revenue and the $9.8 million increase in EBITDA, $20.6 million of revenues and $9.7 million of EBITDA were generated by Stinger. Drilling services' revenues and EBITDA were up 88% and 102%, respectively, from the third quarter of 2004 due to incremental earnings from the seven rigs acquired in the Elenburg acquisition, two additional newly built rigs added to the fleet and higher dayrates and cash margins. Elenburg contributed $6.6 million of revenues and $2.2 million of EBITDA during the third quarter of 2005 of a total revenue and EBITDA increase of $11.3 million and $4.4 million, respectively, from the Company's drilling services operations. Accommodations' revenues and EBITDA were up 59% and 26%, respectively, due primarily to increased activity in the oil sands region of Canada, partially offset by reduced international facility management activity. Accommodation's gross margin percentage was lower during the quarter due to a greater percentage of revenues being generated by manufacturing activities, which generally earn a lower margin than accommodation rental and service activities. Offshore Products Offshore Products reported third quarter 2005 revenues of $64.3 million and EBITDA of $8.3 million compared to revenues of $55.3 million and EBITDA of $5.0 million in the third quarter of 2004. This 16% increase in revenues and 67% increase in EBITDA was primarily the result of higher activity levels and increased fixed cost absorption. Gross margin percentage for the third quarter increased to 22% from 19% in the third quarter of 2004. At the end of the third quarter of 2005, backlog was $119.4 million compared to $113.5 million at June 30, 2005 and $97.5 million as of December 31, 2004. Tubular Services Tubular Services had another record quarter generating $188.3 million of revenues and $20.4 million of EBITDA compared to $116.9 million of revenues and $14.3 million of EBITDA in the third quarter of 2004. These record results were primarily due to contributions from the Phillips acquisition, increases in OCTG pricing and increased U.S. drilling activity which strengthened demand for our tubular products and services. Third quarter gross margin percentage was 12.3% compared to 14.4% in the third quarter of 2004. Our Tubular Services segment's gross margin as a percent of revenues decreased because of product mix and less frequent and smaller OCTG price increases. OCTG shipments were 104,100 tons in the third quarter of 2005 compared to 90,100 tons shipped in the third quarter of 2004. The Company's OCTG inventory as of September 30, 2005 was $241.5 million compared to $189.7 million at June 30, 2005 and $123.6 million at December 31, 2004. As of September 30, 2005, approximately 71% of Oil States' OCTG inventory was committed to customer orders. "Oil States had a record third quarter of 2005 as we continued to experience strong activity in virtually all of our markets and as we enjoyed incremental earnings from recent capital expenditures and acquisitions," stated Douglas E. Swanson, Oil States' President and Chief Executive Officer. "Although difficult to quantify, the hurricanes disrupted our Gulf Coast operations, causing a $0.02 to $0.04 per share reduction in our operating results. With activity for our Gulf Coast businesses beginning to recover from the storm interruptions, we expect fourth quarter earnings to be in a range of $0.60 to $0.65 per diluted share." 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, 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, 2004 filed by Oil States with the SEC on March 2, 2005. (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, -------------------------- -------------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Revenue $ 394,140 $ 251,538 $ 1,084,555 $ 677,910 Costs and expenses: Cost of sales 308,267 197,521 853,631 534,833 Selling, general and administrative 22,441 16,504 62,165 47,077 Depreciation and amortization 12,253 9,161 33,697 26,477 Other expense / (income) (87) 441 (394) 868 Operating income 51,266 27,911 135,456 68,655 Interest income 77 65 313 222 Interest expense (3,857) (1,993) (9,313) (5,463) Other income 545 494 1,037 931 Income before income taxes 48,031 26,477 127,493 64,345 Income tax expense (17,723) (10,964) (47,045) (20,520) Net income applicable to common stock $ 30,308 $ 15,513 $ 80,448 $ 43,825 Net income per common share Basic $ 0.62 $ 0.31 $ 1.63 $ 0.89 Diluted $ 0.60 $ 0.31 $ 1.59 $ 0.88 Average shares outstanding Basic 48,925 49,409 49,436 49,262 Diluted 50,108 50,061 50,442 49,895
Oil States International, Inc. Consolidated Balance Sheets (in thousands)
Sep. 30, Jun. 30, Dec. 31, 2005 2005 2004 ----------- ----------- ----------- (unaudited) (unaudited) (audited) Assets Current assets Cash $ 17,329 $ 25,360 $ 19,740 Accounts receivable 250,867 219,844 198,297 Inventory 334,590 280,233 209,825 Prepaid and other current assets 4,755 5,284 7,322 Total current assets 607,541 530,721 435,184 Property, plant and equipment, net 290,319 283,140 227,343 Goodwill 340,784 336,645 258,046 Other intangible assets, net 13,979 14,862 7,108 Other long term assets 13,370 11,007 5,931 Total assets $ 1,265,993 $ 1,176,375 $ 933,612 Liabilities and stockholders' equity Current liabilities Accounts payable and accrued liabilities $ 179,886 $ 185,228 $ 159,265 Income taxes payable 10,084 9,227 5,821 Current debt 3,937 3,476 228 Deferred revenue 29,016 26,235 25,420 Other current liabilities 2,280 1,421 2,296 Total current liabilities 225,203 225,587 193,030 Long term debt 403,038 351,582 173,887 Deferred income taxes 37,570 38,285 28,871 Other liabilities 8,713 8,284 7,800 Total liabilities 674,524 623,738 403,588 Stockholders' equity Common stock 503 501 496 Additional paid-in capital 348,292 345,970 338,906 Retained earnings 248,628 218,320 168,180 Accumulated other comprehensive income 24,363 18,163 22,759 Treasury stock (30,317) (30,317) (317) Total stockholders' equity 591,469 552,637 530,024 Total liabilities and stockholders' equity $ 1,265,993 $ 1,176,375 $ 933,612
Oil States International, Inc. Segment Data (in thousands) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Revenues Accommodations $ 67,173 $ 42,339 $ 215,356 $ 139,523 Drilling Services 24,005 12,751 60,599 34,530 Workover Services 10,349 8,143 29,712 25,683 Rental Tools 40,010 16,165 90,296 48,652 Well Site Services 141,537 79,398 395,963 248,388 Offshore Products 64,345 55,268 194,695 146,096 Tubular Services 188,258 116,872 493,897 283,426 Total Revenues $ 394,140 $ 251,538 $ 1,084,555 $ 677,910 EBITDA (A) Accommodations $ 12,982 $ 10,308 $ 42,356 $ 32,791 Drilling Services 8,778 4,345 20,083 10,420 Workover Services 2,084 1,009 6,097 4,025 Rental Tools 14,601 4,822 32,084 14,067 Well Site Services 38,445 20,484 100,620 61,303 Offshore Products 8,342 4,989 23,997 11,183 Tubular Services 20,417 14,348 54,239 29,091 Corporate / Other (3,140) (2,255) (8,666) (5,514) Total EBITDA $ 64,064 $ 37,566 $ 170,190 $ 96,063 Operating Income / (Loss) Accommodations $ 9,479 $ 7,468 $ 32,803 $ 25,034 Drilling Services 7,282 3,522 15,984 7,999 Workover Services 1,108 41 3,189 1,117 Rental Tools 10,861 2,348 22,472 6,913 Well Site Services 28,730 13,379 74,448 41,063 Offshore Products 5,885 2,678 16,649 4,696 Tubular Services 19,801 14,123 53,069 28,452 Corporate / Other (3,150) (2,269) (8,710) (5,556) Total Operating Income $ 51,266 $ 27,911 $ 135,456 $ 68,655
Oil States International, Inc. Additional Quarterly Segment and Operating Data (unaudited) Three Months Ended September 30, --------------------------- 2005 2004 ------------ ------------ Supplemental Operating Data Accommodations Operating Statistics Average Mandays Served 7,385 7,257 Average Camps Rented Canadian Side-by-Side Camps US Offshore Steel Buildings 17 12 (10 foot wide) 147 129 Hydraulic Workover Services Operating Statistics Average Units Available 30 30 Utilization 30.7% 28.8% Average Day Rate ($ in thousands per day) $ 12.4 $ 10.3 Average Daily Cash Margin ($ in thousands per day) $ 3.7 $ 2.2 Land Drilling Operating Statistics Average Rigs Available 26 17 Utilization 91.0% 94.1% Implied Day Rate ($ in thousands per day) $ 10.8 $ 8.7 Implied Daily Cash Margin ($ in thousands per day) $ 4.2 $ 3.1 Offshore Products Backlog ($ in millions) $ 119.4 $ 87.3 Tubular Services Operating Data Shipments (Tons in thousands) 104.1 90.1 Quarter end Inventory ($ in thousands) $ 241,543 $ 116,831 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, --------------------------- --------------------------- 2005 2004 2005 2004 ------------ ------------ ------------ ------------ Net income $ 30,308 $ 15,513 $ 80,448 $ 43,825 Income tax expense 17,723 10,964 47,045 20,520 Depreciation and amortization 12,253 9,161 33,697 26,477 Interest income (77) (65) (313) (222) Interest expense 3,857 1,993 9,313 5,463 EBITDA $ 64,064 $ 37,566 $ 170,190 $ 96,063
SOURCE Oil States International, Inc. -0- 10/31/2005 /CONTACT: Cindy B. Taylor of Oil States International, Inc., +1-713-652-0582/ /Web site: http://www.oilstatesintl.com /