Exhibit 99.1
Oil States Announces First Quarter 2004 Earnings
HOUSTON, April 28 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported net income of $16.2 million, or $0.32 per diluted
share, for the quarter ended March 31, 2004 compared to net income of
$13.4 million, or $0.27 per diluted share, in the first quarter of 2003.
Reported net income included the effect of a $5.4 million income tax credit,
which reduced the tax provision calculated at statutory rates, due to the
partial reversal of valuation allowances applied against net operating loss
carryforwards. As a result, the Company's effective tax rate was 8.6% versus
previous effective rate guidance of 33%. If the Company had reported earnings
with the previously estimated 33% rate, the Company would have reported net
income of $11.8 million, or $0.24 per diluted share, without the tax credit.
The Company's first quarter results were characterized by further
improvements in its Well Site Services and Tubular Services segments, offset
by weak results in its Offshore Products segment. The Company generated
$204.2 million of revenues and $27.8 million of EBITDA (defined as net income
plus interest, taxes, depreciation and amortization) in the first quarter of
2004 compared to $185.6 million and $26.9 million, respectively, in the first
quarter of 2003.(A) Oil States' revenues and EBITDA for the quarter increased
10% and 3%, respectively, from last year's results. Strong North American
drilling and completion activity coupled with rising steel prices and
contributions from recent acquisitions led to year-over-year and sequential
improvements in the Well Site Services and Tubular Services segments. These
improvements were substantially offset by diminished results from Offshore
Products primarily due to decreased activity and revenues during the quarter,
which also led to reduced cost absorption in several of the Company's
manufacturing facilities.
During the first quarter of 2004, the Company recognized a $5.4 million
income tax benefit related to the partial reversal of valuation allowances
applied against net operating loss carryforwards. Because the Company has
generated consolidated earnings and U.S. taxable income in the three year
period since its formation and expects to generate future taxable income, the
Company reduced the allowance and recognized the benefit of a majority of its
net operating loss carryforwards. The Company recognized the benefit of
$44.2 million of its $63.2 million of available net operating loss
carryforwards during the quarter. As a result, the Company's effective tax
rate for the first quarter of 2004 was 8.6% compared to an effective tax rate
of 29.0% in the first quarter of 2003. The Company expects that the effective
rate for the full year 2004 will be approximately 30%. Capital expenditures
during the first quarter of 2004 totaled $8.9 million.
BUSINESS SEGMENT RESULTS
Well Site Services
Well Site Services generated significantly improved results during the
first quarter of 2004 due to improved activity in the U.S. land drilling
market, a strong Canadian drilling season and contributions from capital
investments and acquisitions completed in recent months. For the first
quarter of 2004, Well Site Services reported revenues of $96.1 million and
EBITDA of $23.8 million compared to revenues of $78.8 million and EBITDA of
$19.5 million in the first quarter of 2003. These results represent a 22%
year-over-year increase in both revenues and EBITDA. Within Well Site
Services, the accommodations business benefited from strong Canadian drilling
activity as the Canadian rig count increased 7% from the first quarter 2003.
The accommodations business also benefited from significantly increased
contributions from an international catering and facility management contract.
The Company's land drilling operations generated significantly improved
results year-over-year due to continued strong U.S. land drilling activity and
contributions from two newly built rigs working in West Texas. Well Site
Services also benefited from eight rental tool acquisitions completed over the
past six months. Further improvements in the segment's results were hindered
by continued weakness in the Gulf of Mexico market which negatively impacted
the workover, rental tool and Gulf Coast accommodations businesses.
Offshore Products
During the first quarter of 2004, Offshore Products reported $41.9 million
of revenues and $1.5 million of EBITDA, compared to $57.6 million of revenues
and $7.5 million of EBITDA in the first quarter of 2003. Revenues declined
27% year-over-year as a result of timing delays in deepwater infrastructure
spending. Gross margin for the first quarter fell to 17% from the 22% gross
margin in the first quarter of 2003. These lower margins were largely due to
lower overhead absorption resulting from reduced activity and unfavorable
product mix. The segment also recorded a $0.4 million foreign exchange loss
because of the decline of the U.S. dollar relative to the British pound.
However, Offshore Products' outlook improved during the quarter as backlog
grew to $76.9 million at March 31, 2004 compared to $62.6 million at
December 31, 2003, a 23% increase.
Tubular Services
Tubular Services generated $66.2 million of revenues and $4.0 million of
EBITDA in the first quarter compared to $49.2 million of revenues and
$1.2 million of EBITDA in the first quarter of 2003. Tubular Services
benefited from a 30% year-over-year increase in U.S. land drilling activity
and a significant increase in OCTG prices during the quarter, partially offset
by reduced offshore activity in the U.S. OCTG shipments were 67,300 tons in
the first quarter of 2004 compared to 56,600 tons shipped in the first quarter
of 2003. Gross margin for Tubular Services was 8.9% in the first quarter of
2004 compared to 5.9% in the first quarter of 2003. The Company's OCTG
inventory at March 31, 2004 was $59.3 million compared to $64.5 million at
December 31, 2003 and $65.1 million at March 31, 2003. As of March 31, 2004,
approximately 75% of Oil States' OCTG inventory was committed to customer
orders.
"North American activity continued to be strong in the first quarter of
2004, driving solid results in our Tubular Services and Well Site Services
businesses," stated Douglas E. Swanson, Oil States' President and Chief
Executive Officer. "We experienced good activity in Canada during the winter
drilling season and improving land activity in the U.S., partially offset by
continued weakness in the Gulf of Mexico. Our Tubular Services segment
benefited from rising steel and OCTG prices, creating margin expansion
opportunities. We had a difficult quarter in our Offshore Product segment due
to reduced activity, but we believe that we have seen the trough given the
growth in our backlog as of quarter end. The outlook for each of our
businesses is improving. Although we will experience the normal seasonal
decline in our Canadian business in the second quarter, we expect continued
solid results in Well Site Services from the anticipated strong U.S. market
and growth opportunities in Canada due to future oil sands construction
activity. Tubular Services should continue to benefit from the strong U.S.
land drilling market and tight OCTG supplies. Based on our current backlog,
we believe Offshore Products will have improved results during the remainder
of 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, 2003 filed
by Oil States with the SEC on March 5, 2004.
(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 March 31,
2004 2003
Revenue $204,190 $185,577
Costs and expenses:
Cost of sales 161,297 144,968
Selling, general and administrative 14,691 13,753
Depreciation and amortization 8,572 6,458
Other expense 532 52
Operating income 19,098 20,346
Interest income 81 70
Interest expense (1,647) (1,691)
Other income 145 105
Income before income taxes 17,677 18,830
Income tax expense (1,520) (5,461)
Net income applicable to common stock $16,157 $13,369
Net income per common share
Basic $0.33 $0.28
Diluted $0.32 $0.27
Average shares outstanding
Basic 49,129 48,463
Diluted 49,754 49,099
Segment Data:
Revenues
Well Site Services $96,140 $78,838
Offshore Products 41,888 57,588
Tubular Services 66,162 49,151
Total Revenues $204,190 $185,577
EBITDA (A)
Well Site Services $23,758 $19,522
Offshore Products 1,459 7,480
Tubular Services 3,975 1,215
Corporate / Other (1,377) (1,308)
Total EBITDA $27,815 $26,909
Operating Income / (Loss)
Well Site Services $17,520 $15,080
Offshore Products (798) 5,627
Tubular Services 3,767 959
Corporate / Other (1,391) (1,320)
Total Operating Income $19,098 $20,346
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
Mar. 31, 2004 Dec. 31, 2003
Assets
Current assets
Cash $20,665 $19,318
Accounts receivable 159,004 137,484
Inventory 123,147 121,319
Prepaid and other current assets 8,811 9,956
Total current assets 311,627 288,077
Property, plant and equipment, net 201,593 194,136
Goodwill 250,374 224,054
Other intangible assets, net 7,222 5,870
Other long term assets 5,050 5,049
Total assets $775,866 $717,186
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued
liabilities $88,436 $89,243
Income taxes payable 5,142 3,020
Current portion of long term debt 853 873
Deferred revenue 8,394 4,784
Other current liabilities 2,758 937
Total current liabilities 105,583 98,857
Long term debt 174,406 136,246
Deferred income taxes 16,313 19,411
Postretirement healthcare and other
benefits 2,594 2,662
Other liabilities 5,024 4,899
Total liabilities 303,920 262,075
Stockholders' equity
Common stock 492 492
Additional paid-in capital 334,244 333,855
Retained earnings 124,975 108,818
Accumulated other comprehensive
income/(loss) 12,565 12,289
Treasury stock (330) (343)
Total stockholders' equity 471,946 455,111
Total liabilities and stockholders' equity $775,866 $717,186
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended March 31,
2004 2003
Additional Well Site Services
Financial Data ($ in thousands)
Revenues
Accommodations $62,474 $51,285
Hydraulic Workover Services 7,634 9,211
Rental Tools 15,374 10,781
Land Drilling 10,658 7,561
Total Revenues $96,140 $78,838
EBITDA (A)
Accommodations $15,453 $12,758
Hydraulic Workover Services 772 2,412
Rental Tools 4,534 2,794
Land Drilling 2,999 1,558
Total EBITDA $23,758 $19,522
Operating Income
Accommodations $13,161 $11,120
Hydraulic Workover Services (183) 1,573
Rental Tools 2,317 1,461
Land Drilling 2,225 926
Total Operating Income $17,520 $15,080
Well Site Services Supplemental
Operating Data
Accommodations Operating Statistics
Average Mandays Served (Canada only) 6,751 6,951
Average Camps Rented
Canadian Side-by-Side Camps 56 54
US Offshore Steel Buildings
(10 foot wide) 75 82
Hydraulic Workover Services
Operating Statistics
Average Units Available 30 28
Utilization 27.0% 35.8%
Average Day Rate ($ in
thousands per day) $10.3 $10.1
Average Daily Cash Margin ($ in
thousands per day) $2.1 $3.5
Land Drilling Operating
Statistics
Average Rigs Available 17 15
Utilization 90.0% 80.7%
Implied Day Rate ($ in
thousands per day) $7.9 $6.9
Implied Daily Cash Margin ($ in
thousands per day) $2.4 $1.6
Offshore Products Backlog ($ in millions) $76.9 $80.9
Tubular Services Operating Data
Shipments (Tons in thousands) 67.3 56.6
Quarter end Inventory ($ in thousands) $59,257 $65,057
Oil States International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)
Three Months Ended March 31,
2004 2003
Net income $16,157 $13,369
Income tax expense 1,520 5,461
Depreciation and amortization 8,572 6,458
Interest income (81) (70)
Interest expense 1,647 1,691
EBITDA $27,815 $26,909
SOURCE Oil States International, Inc.
-0- 04/28/2004
/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