EX-99.1 2 os5709ex991.txt EXHIBIT 99.1 Exhibit 99.1 OIL STATES ANNOUNCES FIRST QUARTER EARNINGS OF $1.04 PER SHARE HOUSTON, May 3 /PRNewswire-FirstCall/ -- Oil States International, Inc. (NYSE: OIS) today reported net income for the quarter ended March 31, 2006 of $52.9 million, or $1.04 per diluted share. These results compare to $25.3 million, or $0.50 per diluted share, reported in the first quarter of 2005. Net income in the first quarter of 2006 included the recognition of a non- cash, pre-tax gain of $11.5 million, or an after-tax gain of $0.12 per diluted share, on the March 1, 2006 sale of the Company's workover services business to Boots & Coots International Well Control, Inc. (Boots & Coots) in exchange for stock and notes. Additionally, in connection with the Company's adoption of SFAS 123(R), which requires companies to begin expensing the estimated cost of stock option awards, the Company recorded pre-tax stock based compensation expense of $1.7 million, or $0.02 per diluted share, during the quarter. With continuing strong industry activity and contributions from recent capital investments and acquisitions, Oil States recognized year-over-year growth in revenues and EBITDA (defined as net income plus interest, taxes, depreciation and amortization) in the first quarter of 2006 of 49% and 77%, respectively, excluding the gain recognized from the sale of our workover services business.(A) Excluding the gain on sale, the Company generated $496.2 million of revenues and $93.0 million of EBITDA in the first quarter of 2006 compared to $331.9 million and $52.5 million, respectively, in the first quarter of 2005. Year-over-year improvements in all major business lines contributed to the record first quarter results. Well Site Services reported significantly higher revenues and EBITDA due to strong U.S. land drilling activity, contributions from Canada given a strong winter drilling season, 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 generated improved revenues and EBITDA from the ongoing recovery in deepwater development spending and the Company's continued benefit from hurricane repair and upgrade work. In addition, the outlook for Offshore Products improved as its backlog almost doubled to $220.8 million. Tubular Services reported year-over year improvements in revenues and EBITDA due to increased U.S. drilling activity and the benefit of the acquisition of Phillips Casing and Tubing, L.P. ("Phillips"), completed in June 2005. During the quarter, Tubular Services realized a 55% year-over-year increase in shipments of oil country tubular goods ("OCTG"). BUSINESS SEGMENT RESULTS Well Site Services Well Site Services reported record quarterly results in the first quarter of 2006, benefiting from a 19% increase in U.S. drilling activity (compared to the first quarter of 2005 as measured by the rig count), capital investments made over the past year and acquisitions completed in the segment. For the first quarter of 2006, excluding the gain on sale of the workover services business sold with an effective date of March 1, 2006, Well Site Services generated $190.7 million of revenues and $66.4 million of EBITDA compared to $127.6 million of revenues and $32.1 million of EBITDA in the first quarter of 2005. The 49% year-over-year increase in revenues and 107% increase in EBITDA at Well Site Services were primarily due to the acquisition of Stinger completed in May and June 2005, higher accommodations activity due to strong winter drilling activity in Canada, improving U.S. drilling and completion activity, benefits of recent capital expenditures primarily in the drilling services and rental tools businesses and improved pricing in several product lines. Workover services revenues and operating income are included for two months in 2006, ending on the March 1, 2006 sale date to Boots & Coots. The accommodations business generated $104.6 million of revenues and $29.2 million of EBITDA compared to $83.2 million and $19.8 million, respectively, in the first quarter of 2005. The accommodations business benefited from a 27% year-over-year increase in Canadian drilling activity (compared to the first quarter of 2005 as measured by the Canadian rig count) and a 30% increase in revenues from our operations in support of the oil sands developments in the region. Drilling Services reported revenues and EBITDA of $28.0 million and $13.4 million, respectively, in the first quarter of 2006 compared to $16.9 million of revenues and $5.4 million of EBITDA in the first quarter 2005 due to improved pricing, additional rigs added to the fleet and contributions from the Elenburg acquisition which closed on February 1, 2006. During the first quarter, rental tools generated $49.6 million of revenues and $20.9 million of EBITDA compared to $19.1 million of revenues and $5.9 million of EBITDA during the first quarter of 2005. This year-over-year growth was due to the Stinger acquisition, improved pricing and increased U.S. drilling and completion activity. Offshore Products Offshore Products generated $78.3 million of revenues and $12.8 million in EBITDA in the first quarter of 2006 compared to $66.5 million and $7.7 million, respectively, in the first quarter of 2005. Gross margin percentage for the first quarter increased to 25% from 21% in the first quarter of 2005 primarily due to improved throughput in the majority of the Company's manufacturing locations, improved contribution from higher margin connector products and increased service work and repair products delivered for hurricane recovery work. At the end of the first quarter of 2006, backlog totaled $220.8 million compared to $110.7 million as of December 31, 2005, and $99.8 million as of March 31, 2005. The increase in backlog was due primarily to the receipt of two mooring system orders and orders booked for connector products related to deepwater facilities, including Akpo and Neptune. Tubular Services In the first quarter of 2006, Tubular Services reported $227.2 million of revenues and $18.3 million of EBITDA compared to $137.9 million and $15.4 million, respectively, in the first quarter of 2005. With the 19% year-over- year increase in U.S. drilling activity and the contributions of the Phillips acquisition, Tubular Services shipments of OCTG increased 55% to 126,700 tons from 82,000 tons in the first quarter of 2005. Gross margins in the first quarter of 2006 declined to 9.3% from 13.0% in the first quarter of 2005 because of static OCTG mill pricing and a higher percentage of carbon OCTG sales. The lingering negative effects of the hurricanes on Gulf of Mexico drilling activity resulted in reduced demand for higher margin seamless alloy tubulars while strong land based drilling activity increased our lower margin carbon grade sales. The Company's OCTG inventory as of March 31, 2006 was $265.8 million compared to $274.2 million as of December 31, 2005, and $142.0 million as of March 31, 2005. As of March 31, 2006, approximately 60% of Oil States' OCTG inventory was committed to customer orders. "Oil States continued to demonstrate strong, balanced growth in the first quarter of 2006," stated Douglas E. Swanson, Oil States' President and Chief Executive Officer. "Our business benefited from the strategic investments in acquisitions and capital expenditures made over the past year, improving North American drilling and completion activity, growth in our Canadian oil sands activity and continued strength in our deepwater capital equipment business. Our current expectation for second quarter 2006 earnings is in a range of $0.65 to $0.70 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, 2005 filed by Oil States with the SEC on March 2, 2006. Oil States International, Inc. Unaudited Condensed Consolidated Statements of Income (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, ---------------------------- 2006 2005 ------------ ------------ Revenues $ 496,231 $ 331,946 Costs and expenses: Cost of sales 378,233 260,653 Selling, general and administrative expenses 25,444 19,065 Depreciation and amortization expense 12,886 10,228 Other operating expense/ (income) 465 (214) Operating income 79,203 42,214 Interest expense (4,796) (2,314) Interest income 273 131 Equity in earnings of unconsolidated affiliates 684 144 Gain on sale of workover services business 11,494 --- Other income 246 (98) Income before income taxes 87,104 40,077 Income tax expense (34,188) (14,788) Net income $ 52,916 $ 25,289 Net income per share Basic $ 1.08 $ 0.51 Diluted $ 1.04 $ 0.50 Weighted average number of common shares outstanding Basic 49,208 49,669 Diluted 51,022 50,560 Oil States International, Inc. Consolidated Balance Sheets (in thousands)
Mar. 31, Dec. 31, Mar. 31, 2006 2005 2005 ------------ ------------ ------------ (unaudited) (audited) (unaudited) Assets Current assets Cash and cash equivalents $ 11,999 $ 15,298 $ 21,188 Accounts receivable, net 302,296 274,070 214,766 Inventories, net 368,687 360,926 230,712 Prepaid expenses and other current assets 14,074 13,450 6,019 Total current assets 697,056 663,744 472,685 Property, plant and equipment, net 305,866 310,452 242,686 Goodwill, net 330,431 339,703 272,014 Investments in unconsolidated affiliates 31,730 2,265 1,334 Other noncurrent assets 47,138 26,708 12,446 Total assets $ 1,412,221 $ 1,342,872 $ 1,001,165 Liabilities and stockholders' equity Current liabilities Accounts payable and accrued liabilities $ 197,129 $ 214,504 $ 143,695 Income taxes 27,482 7,023 10,226 Current portion of long-term debt 3,566 3,901 576 Deferred revenue 33,243 34,046 27,798 Other current liabilities 3,814 3,223 438 Total current liabilities 265,234 262,697 182,733 Long-term debt (B) 406,007 402,109 219,323 Deferred income taxes 38,936 35,259 32,299 Other liabilities 8,392 8,823 7,708 Total liabilities 718,569 708,888 442,063 Stockholders' equity Common stock 507 504 499 Additional paid-in capital 357,581 350,667 343,691 Retained earnings 342,909 289,993 193,469 Accumulated other comprehensive income 23,202 23,137 21,760 Treasury stock (30,547) (30,317) (317) Total stockholders' equity 693,652 633,984 559,102 Total liabilities and stockholders' equity $ 1,412,221 $ 1,342,872 $ 1,001,165
Oil States International, Inc. Segment Data (in thousands) (unaudited) Three Months Ended March 31, ---------------------------- 2006 2005 ------------ ------------ Revenues Accommodations $ 104,589 $ 83,194 Rental Tools 49,588 19,057 Drilling Services 28,018 16,854 Workover Services (C) 8,544 8,490 Well Site Services 190,739 127,595 Offshore Products 78,272 66,491 Tubular Services 227,220 137,860 Total Revenues $ 496,231 $ 331,946 EBITDA (A) Accommodations $ 29,206 $ 19,838 Rental Tools 20,859 5,889 Drilling Services 13,413 5,375 Workover Services (C) (D) 14,418 1,021 Well Site Services 77,896 32,123 Offshore Products 12,794 7,744 Tubular Services 18,298 15,401 Corporate / Other (4,475) (2,780) Total EBITDA $ 104,513 $ 52,488 Operating Income / (Loss) Accommodations $ 25,359 $ 17,092 Rental Tools 16,893 3,263 Drilling Services 11,781 4,173 Workover Services (C) 1,789 74 Well Site Services 55,822 24,602 Offshore Products 10,065 5,268 Tubular Services 17,818 15,145 Corporate / Other (4,502) (2,801) Total Operating Income $ 79,203 $ 42,214 Oil States International, Inc. Additional Quarterly Segment and Operating Data (unaudited) Three Months Ended March 31, ---------------------------- 2006 2005 ------------ ------------ Supplemental Operating Data Accommodations Operating Statistics Average Mandays Served 9,567 9,225 Average Camps Rented Canadian Side-by-Side Camps 74 64 US Offshore Steel Buildings (10 foot wide) 175 119 Workover Services Operating Statistics (C) Average Units Available 29 30 Utilization 35.8% 33.5% Average Day Rate ($ in thousands per day) $ 14.0 $ 9.4 Average Daily Cash Margin ($ in thousands per day) $ 5.3 $ 1.9 Land Drilling Operating Statistics Average Rigs Available 27 23 Utilization 88.7% 86.0% Implied Day Rate ($ in thousands per day) $ 12.8 $ 9.6 Implied Daily Cash Margin ($ in thousands per day) $ 6.4 $ 3.3 Offshore Products Backlog ($ in millions) $ 220.8 $ 99.8 Tubular Services Operating Data Shipments (Tons in thousands) 126.7 82.0 Quarter end Inventory ($ in thousands) $ 265,846 $ 141,989 Oil States International, Inc. Reconciliation of GAAP to Non-GAAP Financial Information (in thousands) (unaudited) Three Months Ended March 31, ---------------------------- 2006 2005 ------------ ------------ Net income $ 52,916 $ 25,289 Income tax expense 34,188 14,788 Depreciation and amortization 12,886 10,228 Interest income (273) (131) Interest expense 4,796 2,314 EBITDA $ 104,513 $ 52,488 (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. (B) As of March 31, 2006, the Company had approximately $87 million available under its revolving credit facility. (C) Reflects two months' results for the workover services business, which was sold to Boots & Coots International Well Control, Inc. effective on March 1, 2006. (D) Includes the $11.5 million non-cash, pre-tax gain from the sale of the workover services business to Boots & Coots International Well Control, Inc. SOURCE Oil States International, Inc. -0- 05/03/2006 /CONTACT: Cindy B. Taylor of Oil States International, Inc., +1-713-652-0582/ /Web site: http://www.oilstatesintl.com /