Exhibit 99.1
Oil States Announces Fourth Quarter 2003 Earnings
HOUSTON, Feb. 2 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported net income of $9.6 million, or $0.19 per diluted
share, for the quarter ended December 31, 2003 compared to net income of
$11.5 million, or $0.23 per diluted share, in the fourth quarter of 2002.
Reported net income included the effects of a $1.2 million after-tax charge
related to a debt refinancing completed in the fourth quarter of 2003.
Without this one-time charge, Oil States would have reported net income of
$10.8 million, or $0.22 per diluted share, for the quarter.
In the fourth quarter of 2003, the Company generated $197.4 million of
revenues and $21.0 million of EBITDA (defined as net income plus interest,
taxes, depreciation and amortization) compared to $160.8 million and
$22.8 million, respectively, in the fourth quarter of 2002.(A) North American
drilling activity increased 34.3% year-over-year which benefited several
business lines. Oil States' revenues for the quarter increased 22.7% from the
year prior. However, EBITDA decreased 7.9% as consolidated EBITDA margin fell
from 14.2% in the fourth quarter of 2002 to 10.6% in the fourth quarter of
2003. The margin decline was the result of unfavorable product mix at
Offshore Products, integration costs incurred in connection with acquisitions
and the continued lack of high margin US offshore activity.
The Company's effective tax rate for the fourth quarter of 2003 was 9.5%
compared to an effective tax rate of 22.3% in the fourth quarter of 2002. The
9.5% fourth quarter rate brings the 2003 annualized effective rate to 24.25%
which was reduced from the previously estimated annualized effective rate of
27.5% primarily to reflect reductions in Canadian statutory rates and US state
taxes. Capital expenditures during the fourth quarter of 2003 totaled
$14.5 million.
For the year ended December 31, 2003, the Company reported net income of
$44.4 million, or $0.90 per diluted share, including the effect of the debt
refinancing charge, on revenues of $723.7 million and EBITDA of $94.1 million.
For the corresponding period in 2002, the Company reported net income of
$39.7 million, or $0.81 per diluted share, on revenues of $616.8 million and
$78.7 million of EBITDA.
BUSINESS SEGMENT RESULTS
Well Site Services
In the fourth quarter of 2003, Well Site Services generated revenues of
$67.8 million and EBITDA of $13.6 million compared to revenues of
$48.1 million and EBITDA of $11.3 million in the fourth quarter of 2002.
These results represent a 40.9% year-over-year increase in revenues and a
20.1% increase in EBITDA. Well Site Services benefited from increased
activity in its accommodations and land drilling businesses. Oil States'
accommodations business experienced a year-over-year increase in revenues and
EBITDA of 76.9% and 71.5% due to a higher level of activity in Canada, the
effects of a stronger Canadian dollar and increased international
contributions. Land drilling's revenues and EBITDA increased in the fourth
quarter of 2003 by 24.0% and 102.6%, respectively, compared to the fourth
quarter of 2002 due to improved utilization, slightly improved pricing and
increased drilling efficiency. Well Site Services also benefited from three
rental tool acquisitions completed in the third and fourth quarters of 2003.
These improved results were partially offset by decreased profitability in
hydraulic workover services and rental tools which were negatively impacted by
the weak Gulf of Mexico market.
Offshore Products
Offshore Products generated revenues of $57.8 million and EBITDA of
$6.8 million in the fourth quarter of 2003 compared to revenues of
$55.9 million and EBITDA of $9.6 million in the fourth quarter of 2002. The
year-over-year decrease in EBITDA of 29.0% was the result of a decrease in
gross margins from 29.8% in the fourth quarter of 2002 to 21.0% in the fourth
quarter of 2003. Oil States experienced a decline in gross margin at several
of the Offshore Products business lines, the most significant of which was in
its lifting and mooring equipment business. The fourth quarter results were
also negatively impacted by $0.8 million of pre-tax, integration costs related
to the fourth quarter 2003 acquisition of an elastomer molding product line
and the consolidation of manufacturing facilities in Houston. Offshore
Products' backlog was $62.6 million at December 31, 2003 compared to
$72.9 million at September 30, 2003 and $100.1 million at December 31, 2002.
Tubular Services
During the fourth quarter of 2003, Tubular Services generated revenues of
$71.7 million and EBITDA of $2.1 million compared to revenues of $56.8 million
and EBITDA of $3.5 million in the fourth quarter of 2002. Tubular Services'
revenues increased 26.3% on a year-over-year basis, benefiting from the 31.1%
increase in US drilling activity in the fourth quarter of 2003. As a result,
Tubular Services shipped approximately 81,700 tons of OCTG in the fourth
quarter of 2003, a 44.1% increase from the 56,700 tons shipped in the fourth
quarter of 2002. Gross margin for Tubular Services was 5.6% in the fourth
quarter of 2003 compared to 8.8% in the fourth quarter of 2002. The gross
margin in the fourth quarter of 2002 was favorably impacted by a very
profitable, non-recurring order. OCTG inventory at December 31, 2003 was
$64.5 million compared to $72.7 million at September 30, 2003 and
$60.4 million at December 31, 2002. As of December 31, 2003, approximately
58% of Oil States' OCTG inventory was committed to customer orders.
"The fourth quarter saw strong activity in Canada and on land in the US,
which positively impacted our Well Site Services and Tubular Services business
segments," stated Douglas E. Swanson, Oil States' President and Chief
Executive Officer. "These improved North American land results were partially
offset by the Gulf of Mexico offshore market which remained depressed,
hampering our workover and rental tool operations' results. Offshore
Products' fourth quarter results were down from the record results posted over
the previous six quarters. Looking forward, we expect 2004 to be a record
year in Canada which will benefit our Well Site Services segment. Well Site
Services and Tubular Services will also benefit from expected high levels of
land activity in the US. Given our year-end backlog and the current
visibility of large offshore development projects, we expect Offshore Products
to be sequentially down in 2004."
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 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, 2002 filed
by Oil States with the SEC on March 13, 2003.
Oil States International, Inc.
Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Revenue $197,370 $160,814 $723,681 $616,848
Costs and expenses:
Cost of sales 161,460 123,454 573,114 487,053
Selling, general and
administrative 15,672 14,903 57,710 51,791
Depreciation and
amortization 7,558 6,441 27,905 23,312
Other expense / (income) (217) 200 (215) 132
Operating income 12,897 15,816 65,167 54,560
Interest income 70 114 389 469
Interest expense (2,910) (1,690) (7,930) (4,863)
Other income 519 513 1,028 867
Income before income taxes 10,576 14,753 58,654 51,033
Income tax expense (1,001) (3,292) (14,222) (11,357)
Net income applicable to
common stock $9,575 $11,461 $44,432 $39,676
Net income per common share
Basic $0.20 $0.24 $0.92 $0.82
Diluted $0.19 $0.23 $0.90 $0.81
Average shares outstanding
Basic 48,688 48,342 48,529 48,286
Diluted 49,406 49,083 49,215 48,890
Segment Data:
Revenues
Well Site Services $67,777 $48,095 $256,060 $209,842
Offshore Products 57,847 55,911 231,897 190,638
Tubular Services 71,746 56,808 235,724 216,368
Total Revenues $197,370 $160,814 $723,681 $616,848
EBITDA (A)
Well Site Services $13,606 $11,326 $57,513 $44,166
Offshore Products 6,788 9,559 35,668 33,619
Tubular Services 2,136 3,515 6,755 6,550
Corporate / Other (1,556) (1,630) (5,836) (5,596)
Total EBITDA $20,974 $22,770 $94,100 $78,739
Operating Income / (Loss)
Well Site Services $7,819 $6,904 $37,245 $27,372
Offshore Products 4,650 7,745 27,850 27,249
Tubular Services 1,998 2,864 5,949 5,442
Corporate / Other (1,570) (1,697) (5,877) (5,503)
Total Operating Income $12,897 $15,816 $65,167 $54,560
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
Dec. 31, Sep. 30, Dec. 31,
2003 2003 2002
Assets
Current assets
Cash $19,318 $15,001 $11,118
Accounts receivable 137,484 135,462 116,875
Inventory 121,319 132,584 118,338
Prepaid and other current assets 9,956 6,958 9,475
Total current assets 288,077 290,005 255,806
Property, plant and equipment, net 194,136 179,704 167,146
Goodwill 224,054 217,525 213,051
Other long term assets 10,919 8,838 8,213
Total assets $717,186 $696,072 $644,216
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued
liabilities $89,243 $92,263 $84,049
Income taxes payable 3,020 5,700 1,229
Current portion of long term debt 873 841 913
Deferred revenue 4,784 7,885 8,949
Other current liabilities 937 841 1,402
Total current liabilities 98,857 107,530 96,542
Long term debt 136,246 126,369 133,292
Deferred income taxes 19,411 19,859 18,303
Postretirement healthcare and
other benefits 2,662 2,739 5,280
Other liabilities 4,899 4,393 3,220
Total liabilities 262,075 260,890 256,637
Stockholders' equity
Common stock 492 486 485
Additional paid-in capital 333,855 328,605 327,801
Retained earnings 108,818 99,243 64,386
Accumulated other comprehensive
income/(loss) 12,289 7,189 (4,921)
Treasury stock (343) (341) (172)
Total stockholders' equity 455,111 435,182 387,579
Total liabilities and stockholders'
equity $717,186 $696,072 $644,216
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended December 31,
2003 2002
Additional Well Site Services
Financial Data ($ in thousands)
Revenues
Accommodations $39,166 $22,146
Hydraulic Workover Services 7,507 6,550
Rental Tools 11,507 11,658
Land Drilling 9,597 7,741
Total Revenues $67,777 $48,095
EBITDA (A)
Accommodations $7,043 $4,107
Hydraulic Workover Services 513 918
Rental Tools 3,102 4,846
Land Drilling 2,948 1,455
Total EBITDA $13,606 $11,326
Operating Income
Accommodations $4,569 $2,266
Hydraulic Workover Services (369) 128
Rental Tools 1,417 3,584
Land Drilling 2,202 926
Total Operating Income $7,819 $6,904
Well Site Services Supplemental
Operating Data
Accommodations Operating
Statistics
Average Mandays Served 3,592 3,361
Average Camps Rented
Canadian Side-by-Side Camps 25 12
US Offshore Steel Buildings
(10 foot wide) 84 105
Hydraulic Workover Services
Operating Statistics
Average Units Available 30 27
Utilization 25.8% 28.6%
Average Day Rate ($ in
thousands per day) $10.5 $9.2
Average Daily Cash Margin ($ in
thousands per day) $1.9 $2.9
Land Drilling Operating
Statistics
Average Rigs Available 15 14
Utilization 91.0% 85.4%
Implied Day Rate ($ in
thousands per day) $7.6 $7.2
Implied Daily Cash Margin ($ in
thousands per day) $2.5 $1.6
Offshore Products Backlog ($ in millions) $62.6 $100.1
Tubular Services Operating Data
Shipments (Tons in thousands) 81.7 56.7
Quarter end Inventory ($ in thousands) $64,526 $60,367
Oil States International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)
Three Months Ended Twelve Months
December 31, Ended December 31,
2003 2002 2003 2002
Net income $9,575 $11,461 $44,432 $39,676
Income tax expense 1,001 3,292 14,222 11,357
Depreciation and amortization 7,558 6,441 27,905 23,312
Interest income (70) (114) (389) (469)
Interest expense 2,910 1,690 7,930 4,863
EBITDA $20,974 $22,770 $94,100 $78,739
(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.
SOURCE Oil States International, Inc.
-0- 02/02/2004
/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