Exhibit 99.1
Oil States Announces Second Quarter 2004 Earnings
HOUSTON, Aug. 2 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported strong year-over-year earnings growth for the
quarter ended June 30, 2004 due to continued strength in North American
drilling activity and the impact of acquisitions completed during 2003 and
early 2004. Net income for the second quarter was $12.2 million, or $0.24 per
diluted share compared to net income of $10.2 million, or $0.21 per diluted
share, in the second quarter of 2003.
The second quarter earnings growth was primarily due to significantly
increased earnings in its Tubular Services segment and continued strong
results from its Well Site Services segment. The Company generated
$222.2 million of revenues and $30.7 million of EBITDA (defined as net income
plus interest, taxes, depreciation and amortization) in the second quarter of
2004 compared to $163.6 million and $22.3 million, respectively, in the second
quarter of 2003.(1) Oil States' revenues and EBITDA for the second quarter
increased 36% and 38%, respectively, from last year's results. Tight supplies
of oil country tubular goods (OCTG), rising OCTG prices, improving U.S.
drilling activity and contributions from the May 11, 2004 acquisition of the
U.S. OCTG distribution business of Hunting Energy Services, L.P. (Hunting) led
to record results in the Tubular Services segment. Strong North American
drilling and completion activity continued to drive solid earnings in the Well
Site Services Segment. Offshore Products experienced lower revenues and
EBITDA on a year-over-year basis due to reduced activity levels, but generated
significant improvements sequentially and experienced continued growth in its
backlog from year end 2003.
The Company's effective tax rate in the second quarter of 2004 was 39.8%
compared to an effective tax rate of 26.4% in the second quarter of 2003 due
to the benefiting of available net operating losses (NOL's) in prior periods.
Capital expenditures during the quarter totaled $11.9 million.
For the first half of 2004, the Company reported net income of
$28.3 million, or $0.57 per diluted share, on revenues of $426.4 million and
EBITDA of $58.5 million. For the corresponding period in 2003, the Company
reported net income of $23.5 million, or $0.48 per diluted share, on revenues
of $349.1 million and $49.2 million of EBITDA. This performance represents
year-over-year revenue and EBITDA increases of 22% and 19%, respectively.
Reported net income for the 2004 year-to-date period included the effect of a
$5.4 million (or $0.11 per diluted share) income tax credit, which reduced the
tax provision in the first quarter of 2004, due to the partial reversal of
valuation allowances applied against net operating loss carryforwards.
BUSINESS SEGMENT RESULTS
Well Site Services
Revenues and EBITDA from the Well Site Services segment in the second
quarter of 2004 increased 38% and 43%, respectively, compared to the second
quarter of 2003. Contributions from acquisitions completed over the past
twelve months, strong overall North American drilling activity and moderate
pricing gains were the primary factors contributing to these year-over-year
increases. For the second quarter of 2004, Well Site Services reported
revenues of $72.9 million and EBITDA of $17.1 million compared to revenues of
$52.9 million and EBITDA of $11.9 million in the second quarter of 2003.
Although impacted by the typical spring break-up in Canada in the second
quarter, the accommodations business generated year-over-year increases in
revenues and EBITDA due to expanded activity in the oil sands area of Alberta
and contributions from an international catering and facility management
contract. The Company's land drilling business continued to perform well and
profited from the investment in two newly built rigs, which were placed into
service in Texas during December 2003 and February 2004, respectively.
EBITDA from the rental tool operations increased 87% year-over-year primarily
due to contributions from nine acquisitions completed over the past twelve
months and investments made to expand the unit's tool offering.
Offshore Products
During the second quarter of 2004, Offshore Products reported
$48.9 million of revenues and $4.7 million of EBITDA, compared to
$57.2 million of revenues and $10.5 million of EBITDA in the second quarter of
2003. Revenues declined 14% year-over-year as a result of delays in contract
awards for deepwater infrastructure projects. Gross margin for the second
quarter fell to 20.3% from 26.6% in the second quarter of 2003. These lower
margins were largely due to lower overhead absorption resulting from reduced
activity and product mix. However, the results for the second quarter of 2004
did represent a significant sequential increase in earnings compared to the
results reported in the first quarter of 2004 as Offshore Products began to
recover from the lull in deepwater project awards. On a sequential basis,
Offshore Products revenues and EBITDA increased 17% and 225%, respectively.
The outlook for Offshore Products continued to improve as backlog grew to
$98.7 million at June 30, 2004 from $76.9 million at March 31, 2004, a 28%
increase.
Tubular Services
Tubular Services generated record quarterly results with the strong OCTG
market environment. Tubular Services generated $100.4 million of revenues and
$10.8 million of EBITDA in the second quarter of 2004 compared to
$53.5 million of revenues and $1.5 million of EBITDA in the second quarter of
2003, as revenues almost doubled and EBITDA had a six-fold increase on a year-
over-year basis. Tight OCTG supplies, increasing OCTG mill pricing and
contributions from the Hunting acquisition completed May 11, 2004 were the
primary factors for this increase. In addition, Tubular Services also
benefited from the overall year-over-year increase in drilling and completion
activity, as the U.S. rig count increased 13% from the second quarter of 2003.
OCTG shipments were 84,600 tons in the second quarter of 2004 compared to
60,900 tons shipped in the second quarter of 2003. Gross margin for Tubular
Services was 13.0% in the second quarter of 2004 compared to 5.9% in the
second quarter of 2003. The Company's OCTG inventory at June 30, 2004 was
$111.0 million compared to $59.3 million at March 31, 2004. The majority of
the inventory increase stemmed from the acquisition of over $40 million of
OCTG inventory from Hunting during the quarter. As of June 30, 2004,
approximately 62% of Oil States' OCTG inventory was committed to customer
orders.
"We are very pleased with earnings for the second quarter of 2004," stated
Douglas E. Swanson, Oil States' President and Chief Executive Officer. "Our
tubular distribution business provided the majority of the uplift in earnings
both on a sequential and year-over-year basis. Benefiting from tight OCTG
supplies in the U.S., rising OCTG prices and contributions from the recently
completed Hunting acquisition, our Tubular Services segment had stronger
revenues and higher margins than initially forecasted. Other than the typical
impact of spring break-up on our Canadian operations, activity in our Well
Site Services segment remained strong during the quarter due to continued
robust drilling activity in the U.S., other than the Gulf of Mexico shelf
activity, and growth in the oil sands region of Northern Alberta Canada. In
addition, our Offshore Products business improved from a weak first quarter of
2004 with sequentially increasing revenues, margins and backlog."
"Looking forward, we expect continued strong earnings in the third quarter
of 2004. Tubular Services is expected to have another strong quarter given
current mill pricing for OCTG and low inventory levels. North American
exploration and development activity is expected to remain at current or
improved levels, driving continued strong results for the Well Site Services
segment. Based on the current backlog levels, Offshore Products should
continue to recover in the second half of 2004. Given these factors, we are
estimating 2004 earnings to be in the range of $1.00 to $1.10 per diluted
share."
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 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, 2003 filed
by Oil States with the SEC on March 5, 2004.
(1) 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 Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenue $222,182 $163,564 $426,372 $349,141
Costs and expenses:
Cost of sales 176,015 127,331 337,313 272,298
Selling, general and
administrative 15,883 13,977 30,573 27,731
Depreciation and
amortization 8,744 6,911 17,316 13,369
Other expense / (income) (107) 114 425 166
Operating income 21,647 15,231 40,745 35,577
Interest income 75 92 156 162
Interest expense (1,822) (1,675) (3,470) (3,366)
Other income 292 157 437 262
Income before income taxes 20,192 13,805 37,868 32,635
Income tax expense (8,037) (3,651) (9,556) (9,112)
Net income applicable to
common stock $12,155 $10,154 $28,312 $23,523
Net income per common share
Basic $0.25 $0.21 $0.58 $0.49
Diluted $0.24 $0.21 $0.57 $0.48
Average shares outstanding
Basic 49,248 48,527 49,189 48,495
Diluted 49,869 49,153 49,812 49,126
Segment Data:
Revenues
Well Site Services $72,850 $52,885 $168,990 $131,724
Offshore Products 48,940 57,160 90,828 114,748
Tubular Services 100,392 53,519 166,554 102,669
Total Revenues $222,182 $163,564 $426,372 $349,141
EBITDA (1)
Well Site Services $17,061 $11,912 $40,819 $31,433
Offshore Products 4,735 10,466 6,194 17,946
Tubular Services 10,768 1,457 14,743 2,671
Corporate / Other (1,881) (1,536) (3,258) (2,842)
Total EBITDA $30,683 $22,299 $58,498 $49,208
Operating Income / (Loss)
Well Site Services $10,164 $7,031 $27,684 $22,111
Offshore Products 2,816 8,510 2,019 14,137
Tubular Services 10,562 1,231 14,329 2,190
Corporate / Other (1,895) (1,541) (3,287) (2,861)
Total Operating Income $21,647 $15,231 $40,745 $35,577
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Jun. 30, Mar. 31, Dec. 31,
2004 2004 2003
Assets (unaudited) (unaudited) (audited)
Current assets
Cash $22,721 $20,665 $19,318
Accounts receivable 143,564 159,004 137,484
Inventory 180,938 123,147 121,319
Prepaid and other current assets 7,341 8,811 9,956
Total current assets 354,564 311,627 288,077
Property, plant and equipment, net 203,585 201,593 194,136
Goodwill 255,101 250,374 224,054
Other intangible assets, net 8,044 7,222 5,870
Other long term assets 5,351 5,050 5,049
Total assets $826,645 $775,866 $717,186
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued
liabilities $117,894 $88,436 $89,243
Income taxes payable 6,557 5,142 3,020
Current debt 5,472 853 873
Deferred revenue 7,018 8,394 4,784
Other current liabilities 2,491 2,758 937
Total current liabilities 139,432 105,583 98,857
Long term debt 178,236 174,406 136,246
Deferred income taxes 18,366 16,313 19,411
Postretirement healthcare and
other benefits 1,915 2,594 2,662
Other liabilities 5,578 5,024 4,899
Total liabilities 343,527 303,920 262,075
Stockholders' equity
Common stock 494 492 492
Additional paid-in capital 335,946 334,244 333,855
Retained earnings 137,130 124,975 108,818
Accumulated other comprehensive
income 9,870 12,565 12,289
Treasury stock (322) (330) (343)
Total stockholders' equity 483,118 471,946 455,111
Total liabilities and stockholders'
equity $826,645 $775,866 $717,186
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended June 30,
2004 2003
Additional Well Site Services Financial
Data ($ in thousands)
Revenues
Accommodations $34,710 $25,332
Hydraulic Workover Services 9,907 8,142
Rental Tools 17,113 10,371
Land Drilling 11,120 9,040
Total Revenues $72,850 $52,885
EBITDA (1)
Accommodations $7,030 $5,293
Hydraulic Workover Services 2,244 1,424
Rental Tools 4,711 2,526
Land Drilling 3,076 2,669
Total EBITDA $17,061 $11,912
Operating Income
Accommodations $4,405 $3,419
Hydraulic Workover Services 1,260 560
Rental Tools 2,248 1,128
Land Drilling 2,251 1,924
Total Operating Income $10,164 $7,031
Well Site Services Supplemental
Operating Data
Accommodations Operating Statistics
Average Mandays Served (Canada only) 6,110 3,337
Average Camps Rented
Canadian Side-by-Side Camps 8 6
US Offshore Steel Buildings
(10 foot wide) 89 86
Hydraulic Workover Services
Operating Statistics
Average Units Available 30 29
Utilization 33.5% 31.2%
Average Day Rate ($ in thousands
per day) $10.8 $9.9
Average Daily Cash Margin
($ in thousands per day) $3.3 $2.7
Land Drilling Operating
Statistics
Average Rigs Available 17 15
Utilization 90.0% 90.0%
Implied Day Rate ($ in thousands per day) $8.0 $7.4
Implied Daily Cash Margin
($ in thousands per day) $2.3 $2.3
Offshore Products Backlog
($ in millions) $98.7 $80.2
Tubular Services Operating Data
Shipments (Tons in thousands) 84.6 60.9
Quarter end Inventory ($ in thousands) $110,985 $72,568
Oil States International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Net income $12,155 $10,154 $28,312 $23,523
Income tax expense 8,037 3,651 9,556 9,112
Depreciation and amortization 8,744 6,911 17,316 13,369
Interest income (75) (92) (156) (162)
Interest expense 1,822 1,675 3,470 3,366
EBITDA $30,683 $22,299 $58,498 $49,208
SOURCE Oil States International, Inc.
-0- 08/02/2004
/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 ERP