Exhibit 99.1
Oil States Announces Third Quarter 2004 Earnings
HOUSTON, Nov. 1 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported a 37% year-over-year increase in net income for the
quarter ended September 30, 2004 due to strong U.S. drilling activity and
contributions from acquisitions completed in 2003 and earlier in 2004. Net
income for the third quarter of 2004 increased to $15.5 million, or $0.31 per
diluted share, from $11.3 million, or $0.23 per diluted share, in the third
quarter of 2003.
The increase in third quarter earnings was the result of record profits at
Tubular Services, the continued strength of Well Site Services and the
successful execution of the Company's growth initiatives. The Company generated
$251.5 million of revenues and $37.6 million of EBITDA (defined as net income
plus interest, taxes, depreciation and amortization) in the third quarter of
2004 compared to $177.2 million and $23.9 million, respectively, in the third
quarter of 2003.(A) Oil States' revenues and EBITDA for the third quarter
increased 42% and 57%, respectively, from last year's results. Tubular Services
benefited from continued strong U.S. land drilling activity, rising steel and
oil country tubular goods (OCTG) prices, limited OCTG supplies and contributions
from the acquisition of the U.S. OCTG distribution business of Hunting Energy
Services, L.P. (Hunting), completed in May 2004. Well Site Services generated
year-over-year increases in revenues and EBITDA due to strong U.S. land
drilling, construction activity in the oil sands region of Canada, incremental
profits from capital equipment additions and positive results from the
businesses acquired in the last twelve months. These strong results were
partially offset by significantly lower year-over- year results from Offshore
Products. However, Offshore Products demonstrated sequential improvement in
revenues and EBITDA as the segment continued to recover from the lag in
deepwater contract awards experienced in the second half of 2003.
The Company's effective tax rate in the third quarter of 2004 was 41.4%
compared to an effective tax rate of 26.6% in the third quarter of 2003 which
benefited from available net operating losses (NOL's) in prior periods. Capital
expenditures during the third quarter totaled $17.3 million.
For the nine months ended September 30, 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. For the corresponding period in 2003, the
Company reported net income of $34.9 million, or $0.71 per diluted share, on
revenues of $526.3 million and $73.1 million of EBITDA. This performance
represents year-over-year increases in revenues and fully-diluted earnings per
share of 29% and 24%, 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
Well Site Services generated strong earnings as U.S. land drilling and
Canadian oil sands activity continued to improve, driving year-over-year
improvements in the land drilling, rental tool and accommodations operations.
For the third quarter of 2004, revenues and EBITDA from the Well Site Services
segment were $79.4 million and $20.5 million, respectively, compared to $56.6
million of revenues and $12.5 million of EBITDA in the third quarter of 2003.
This year-over-year increase in revenues of 40% and EBITDA of 64% was due
primarily to contributions from acquisitions completed over the past twelve
months, strong U.S. land drilling activity and capital investments made in
rental tools, drilling rigs and accommodations. These increases were partially
offset by decreased offshore rental tool and workover activity due to continued
depressed drilling activity in the Gulf of Mexico and shut-downs in the Gulf of
Mexico due to hurricanes.
The accommodations business posted a 46% year-over-year increase in revenues
and a 76% year-over-year increase in EBITDA as activity improved in Canada for
the oil sands, manufacturing and international operations. The U.S. land
drilling business had a record quarter with revenue and EBITDA up 36% and 78%,
respectively, from the third quarter of 2003 as the business benefited from
strong utilization, improved pricing and contributions from two newly built
rigs. EBITDA from the rental tool operations increased 60% 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 third quarter of 2004, Offshore Products reported $55.3 million
of revenues and $5.0 million of EBITDA, compared to $59.3 million of revenues
and $10.9 million of EBITDA in the third quarter of 2003. Gross margin for the
third quarter fell to 19.3% from 27.3% in the third quarter of 2003 due to lower
overhead absorption resulting from reduced activity and product mix. However,
results for the third quarter of 2004 improved sequentially despite the
recording of a $1.0 million accrual relating to a potential warranty claim
associated with an international subsea pipeline project installed during 2000.
Excluding this non-recurring accrual, Offshore Products would have displayed
sequential improvements in gross margin percentage, as well as revenues and
EBITDA. Backlog at the end of the third quarter of 2004 was $87.3 million
compared to $98.7 million at June 30, 2004 and $62.6 million at December 31,
2003.
Tubular Services
Tubular Services reported another record quarter as the strong OCTG market
environment and increasing steel prices drove results. Tubular Services
generated $116.9 million of revenues and $14.3 million of EBITDA in the third
quarter of 2004 compared to $61.3 million of revenues and $1.9 million of EBITDA
in the third quarter of 2003. Tight OCTG supplies, increasing OCTG mill pricing
and contributions from the Hunting acquisition 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 third quarter of 2003. OCTG shipments were 90,100
tons in the third quarter of 2004 compared to 69,800 tons shipped in the third
quarter of 2003. Gross margin for Tubular Services was 14.4% in the third
quarter of 2004 compared to 5.9% in the third quarter of 2003. The Company's
OCTG inventory at September 30, 2004 was $116.8 million compared to $111.6
million at June 30, 2004. As of September 30, 2004, approximately 65% of Oil
States' OCTG inventory was committed to customer orders.
"Third quarter earnings exceeded our expectations as strong results in our
Tubular Services and Well Site Services segments accelerated," stated Douglas E.
Swanson, Oil States' President and Chief Executive Officer. "Looking forward,
our current expectations are for fourth quarter earnings to be comparable to
third quarter earnings. While the OCTG market has remained strong thus far in
the fourth quarter, some margin contraction could occur in our Tubular Services
segment beginning in the fourth quarter. U.S. drilling activity is expected to
remain strong throughout the rest of the year, and we currently expect Canada to
have a strong winter drilling season. As a result, Well Site Services should
have a strong finish to 2004. Offshore Products is expected to continue to
improve from third quarter results as backlog remains strong. In addition,
Offshore Products has begun to receive inquiries and orders for repair products
and services related to production infrastructure in the Gulf of Mexico damaged
by the hurricanes. Given these factors, we are estimating fourth quarter
earnings to be in the range of $0.30 to $0.33 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.
(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,
2004 2003 2004 2003
Revenue $251,538 $177,170 $677,910 $526,310
Costs and expenses:
Cost of sales 197,521 139,355 534,833 411,653
Selling, general and
administrative 16,504 14,306 47,077 42,037
Depreciation and
amortization 9,161 6,978 26,477 20,347
Other expense / (income) 441 (162) 868 3
Operating income 27,911 16,693 68,655 52,270
Interest income 65 157 222 319
Interest expense (1,993) (1,654) (5,463) (5,020)
Other income 494 248 931 509
Income before income taxes 26,477 15,444 64,345 48,078
Income tax expense (10,964) (4,110) (20,520) (13,221)
Net income applicable to
common stock $15,513 $11,334 $43,825 $34,857
Net income per common share
Basic $0.31 $0.23 $0.89 $0.72
Diluted $0.31 $0.23 $0.88 $0.71
Average shares outstanding
Basic 49,409 48,554 49,262 48,515
Diluted 50,061 49,212 49,895 49,155
Segment Data:
Revenues
Well Site Services $79,398 $56,560 $248,388 $188,284
Offshore Products 55,268 59,303 146,096 174,050
Tubular Services 116,872 61,307 283,426 163,976
Total Revenues $251,538 $177,170 $677,910 $526,310
EBITDA (A)
Well Site Services $20,484 $12,474 $61,303 $43,907
Offshore Products 4,989 10,934 11,183 28,880
Tubular Services 14,348 1,948 29,091 4,619
Corporate / Other (2,255) (1,437) (5,514) (4,280)
Total EBITDA $37,566 $23,919 $96,063 $73,126
Operating Income / (Loss)
Well Site Services $13,379 $7,315 $41,063 $29,426
Offshore Products 2,678 9,063 4,696 23,200
Tubular Services 14,123 1,761 28,452 3,951
Corporate / Other (2,269) (1,446) (5,556) (4,307)
Total Operating Income $27,911 $16,693 $68,655 $52,270
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Sep. 30, Jun. 30, Dec. 31, 2004 2004
2003
Assets (unaudited) (unaudited) (audited)
Current assets
Cash $23,538 $22,721 $19,318
Accounts receivable 161,763 143,564 137,484
Inventory 194,665 180,938 121,319
Prepaid and other current assets 7,178 7,341 9,956
Total current assets 387,144 354,564 288,077
Property, plant and equipment, net 212,941 203,585 194,136
Goodwill 256,322 255,101 224,054
Other intangible assets, net 7,675 8,044 5,870
Other long term assets 5,456 5,351 5,049
Total assets $869,538 $826,645 $717,186
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued
liabilities $122,352 $117,894 $89,243
Income taxes payable 12,940 6,557 3,020
Current debt 5,961 5,472 873
Deferred revenue 7,280 7,018 4,784
Other current liabilities 2,341 2,491 937
Total current liabilities 150,874 139,432 98,857
Long term debt 185,515 178,236 136,246
Deferred income taxes 19,984 18,366 19,411
Other liabilities 7,687 7,493 7,561
Total liabilities 364,060 343,527 262,075
Stockholders' equity
Common stock 495 494 492
Additional paid-in capital 337,298 335,946 333,855
Retained earnings 152,643 137,130 108,818
Accumulated other comprehensive
income 15,359 9,870 12,289
Treasury stock (317) (322) (343)
Total stockholders' equity 505,478 483,118 455,111
Total liabilities and stockholders'
equity $869,538 $826,645 $717,186
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended
September 30,
2004 2003
Additional Well Site Services
Financial Data ($ in thousands)
Revenues
Accommodations $42,339 $29,001
Hydraulic Workover Services 8,143 7,679
Rental Tools 16,165 10,504
Land Drilling 12,751 9,376
Total Revenues $79,398 $56,560
EBITDA (A)
Accommodations $10,308 $5,872
Hydraulic Workover Services 1,009 1,145
Rental Tools 4,822 3,011
Land Drilling 4,345 2,446
Total EBITDA $20,484 $12,474
Operating Income
Accommodations $7,468 $3,798
Hydraulic Workover Services 41 240
Rental Tools 2,348 1,528
Land Drilling 3,522 1,749
Total Operating Income $13,379 $7,315
Well Site Services Supplemental
Operating Data
Accommodations Operating Statistics
Average Mandays Served 7,257 5,599
Average Camps Rented
Canadian Side-by-Side Camps 12 11
US Offshore Steel Buildings
(10 foot wide) 129 77
Hydraulic Workover Services Operating
Statistics
Average Units Available 30 29
Utilization 28.8% 30.6%
Average Day Rate ($ in thousands per day) $10.3 $9.4
Average Daily Cash Margin ($ in thousands
per day) $2.2 $2.2
Land Drilling Operating Statistics
Average Rigs Available 17 15
Utilization 94.1% 91.6%
Implied Day Rate ($ in thousands per day) $8.7 $7.4
Implied Daily Cash Margin ($ in thousands
per day) $3.1 $2.1
Offshore Products Backlog ($ in millions) $87.3 $72.9
Tubular Services Operating Data
Shipments (Tons in thousands) 90.1 69.8
Quarter end Inventory ($ in thousands) $116,831 $73,190
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,
2004 2003 2004 2003
Net income $15,513 $11,334 $43,825 $34,857
Income tax expense 10,964 4,110 20,520 13,221
Depreciation and amortization 9,161 6,978 26,477 20,347
Interest income (65) (157) (222) (319)
Interest expense 1,993 1,654 5,463 5,020
EBITDA $37,566 $23,919 $96,063 $73,126
SOURCE Oil States International, Inc.
-0- 11/01/2004
/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