Exhibit 99.1
OIL STATES ANNOUNCES FOURTH QUARTER 2004 EARNINGS
HOUSTON, Feb. 8 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported a 62% year-over-year increase in net income for the
quarter ended December 31, 2004. Net income for the fourth quarter of 2004
increased to $15.5 million, or $0.31 per diluted share, from $9.6 million, or
$0.19 per diluted share, in the fourth quarter of 2003.
Oil States' revenues and EBITDA (defined as net income plus interest, taxes,
depreciation and amortization) for the fourth quarter of 2004 increased 49% and
72%, respectively, from last year's results due to the continued strength of
Tubular Services and Well Site Services segments coupled with the realization of
returns generated from capital investments and acquisitions completed earlier in
2004.(A) The Company generated $293.1 million of revenues and $36.0 million of
EBITDA in the fourth quarter of 2004 compared to $197.4 million and $21.0
million, respectively, in the fourth quarter of 2003. Tubular Services benefited
from continued strong U.S. land drilling activity, limited oil country tubular
goods ("OCTG") supplies and benefits 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 increased revenues and EBITDA due to
strong land drilling and Canadian oil sands activity, benefits of capital
investments made in the land drilling and accommodations businesses and positive
results from businesses acquired in the last twelve months. The growth realized
in our Tubular Services and Well Site Services segments was partially offset by
lower year-over-year results from Offshore Products which generated weaker
margins due to the mix of projects completed and higher costs incurred. The
Company experienced a $2.1 million year-over-year increase in SG&A expense in
the fourth quarter of 2004, $1.0 million of which resulted from higher costs
associated with Sarbanes Oxley compliance.
The Company's effective tax rate in the fourth quarter of 2004 was 36.4%
compared to an effective tax rate of 9.5% in the fourth quarter of 2003 which
benefited from available net operating losses (NOL's) in prior periods. Net
income for the fourth quarter of 2003 included the effects of a $1.2 million
after-tax charge related to a debt refinancing completed in that period. Capital
expenditures during the fourth quarter of 2004 totaled $21.9 million.
For the fiscal year ended December 31, 2004, Oil States reported record
results, generating $59.4 million of net income, or $1.19 per diluted share, on
revenues of $971.0 million and EBITDA of $132.1 million. For the 2003 fiscal
year, the Company generated net income of $44.4 million, or $0.90 per diluted
share, on revenues of $723.7 million and EBITDA of $94.1 million. This
performance represents year-over-year increases in revenues and fully- diluted
earnings per share of 34% and 32%, respectively.
BUSINESS SEGMENT RESULTS
Well Site Services
Well Site Services generated strong earnings as activity in its major
markets remained robust. Year-over year improvements in revenues and EBITDA were
experienced in each business line within Well Site Services during the fourth
quarter of 2004 such that revenues and EBITDA increased 31% and 57%,
respectively, from the fourth quarter of 2003. For the fourth quarter of 2004,
revenues and EBITDA from the Well Site Services segment were $88.5 million and
$21.3 million, respectively, compared to $67.8 million of revenues and $13.6
million of EBITDA in the fourth quarter of 2003. This year-over-year increase
was primarily due to improved margins in the rental tools and accommodations
businesses which benefited from capital investments and acquisitions completed
over the past twelve months.
Accommodations' revenues and EBITDA were up 29% and 58% due primarily to
increased utilization, expanded capacity and economies of scale in the oil sands
region of Canada. Land drilling's revenues and EBITDA were up 24% and 12%,
respectively, from the fourth quarter of 2003 due to additional rig capacity and
slightly higher cash margins as two incremental rigs were added in 2004 and the
Company was able to moderately increase pricing. However, utilization suffered
during the fourth quarter of 2004 due to 16 total days of downtime related to
wet weather conditions, higher than normal holiday shutdowns and 19 days of
repair downtime on one rig. Revenues and EBITDA from the rental tool business
were up 59% and 106%, respectively, from the fourth quarter of 2003. Our rental
tool operations grew through acquisitions, totaling $39.5 million in
consideration, which were completed in the first and second quarters of 2004 and
from deepwater tool investments made during 2004.
Offshore Products
Offshore Products reported revenues of $60.7 million and EBITDA of $4.9
million during the fourth quarter of 2004 compared to revenues of $57.8 million
and EBITDA of $6.8 million in the fourth quarter of 2003. Offshore Products
results were lower on a year-over-year basis due to lower margin projects in our
activity mix in addition to costs and inefficiencies associated with the
consolidation efforts at two major manufacturing facilities. These factors
resulted in gross margin of 16.1% in the fourth quarter of 2004 compared to
21.0% in the fourth quarter of 2003. Backlog as of the end of 2004 was $97.5
million compared to $87.3 million at September 30, 2004 and $62.6 million at
December 31, 2003.
Tubular Services
Tubular Services generated strong results in the fourth quarter of 2004 as a
tight OCTG market environment and strong U.S. drilling activity drove results.
Tubular Services generated $143.9 million of revenues and $12.7 million of
EBITDA in the fourth quarter of 2004 compared to $71.7 million of revenues and
$2.1 million of EBITDA in the fourth quarter of 2003. Gross margin was 10.4%
compared to 5.6% in the fourth quarter of 2003. Tubular Services also benefited
from increases in OCTG mill pricing during the 2004 quarter, contributions from
the May 2004 Hunting acquisition and the overall year-over-year increase in
drilling and completion activity, as the U.S. rig count increased 13% from the
fourth quarter of 2003. OCTG shipments were 97,800 tons in the fourth quarter of
2004 compared to 81,700 tons shipped in the fourth quarter of 2003. The
Company's OCTG inventory at December 31, 2004 was $123.6 million compared to
$116.8 million at September 30, 2004 and $65.0 million at December 31, 2003. As
of December 31, 2004, approximately 60% of Oil States' OCTG inventory was
committed to customer orders.
"Our fourth quarter results demonstrate the many growth opportunities which
are afforded by the strength of our North American businesses and the diversity
of our product and service offering," stated Douglas E. Swanson, Oil States'
President and Chief Executive Officer. "Looking forward, our current
expectations are for the first quarter of 2005 earnings to be up significantly
from first quarter of 2004 due to seasonally strong Canadian winter drilling
activity, continued strong U.S. drilling activity, contributions from
acquisitions completed over the last twelve months and benefits from our
expansionary capital investments, including investments made in support of
activity in the oil sands region of Canada. In addition, Offshore Products and
Tubular Services are expected to have improved first quarters on a year-
over-year basis. Given these factors, we expect first quarter earnings will be
within a range of $0.38 to $0.43 per diluted share and full year 2005 earnings
within a range of $1.15 to $1.40 per diluted share."
On January 31, 2005, the Company amended its existing revolving credit
facility with its current group of lenders. Under the terms of the amendment,
Oil States increased the facility to $325 million from $250 million and extended
the term of the facility through January 2010. The amendment also adjusted
several covenants and lowered borrowing rates across the pricing grid.
The Company is in the process of drafting its Form 10-K, and it expects to
file the Form 10-K in March 2005. As a result, the financial information
contained herein should be considered preliminary until such time as the Company
receives its financial audit and internal control audit reports from its
external auditors and files its Form 10-K for the year ended December 31, 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 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 Twelve Months Ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenue $ 293,102 $ 197,370 $ 971,012 $ 723,681
Costs and expenses:
Cost of sales 239,805 161,460 774,638 573,114
Selling, general and
administrative 17,733 15,672 64,810 57,710
Depreciation and
amortization 9,511 7,558 35,988 27,905
Other expense / (income) (407) (217) 460 (215)
Operating income 26,460 12,897 95,116 65,167
Interest income 141 70 363 389
Interest expense (2,204) (2,910) (7,667) (7,930)
Other income 26 519 956 1,028
Income before income taxes 24,423 10,576 88,768 58,654
Income tax expense (8,885) (1,001) (29,406) (14,222)
Net income applicable to
common stock $ 15,538 $ 9,575 $ 59,362 $ 44,432
Net income per common share
Basic $ 0.31 $ 0.20 $ 1.20 $ 0.92
Diluted $ 0.31 $ 0.19 $ 1.19 $ 0.90
Average shares outstanding
Basic 49,532 48,688 49,322 48,529
Diluted 50,424 49,406 50,027 49,215
Segment Data:
Revenues
Well Site Services $ 88,519 $ 67,777 $ 336,907 $ 256,060
Offshore Products 60,695 57,847 206,791 231,897
Tubular Services 143,888 71,746 427,314 235,724
Total Revenues $ 293,102 $ 197,370 $ 971,012 $ 723,681
EBITDA (A)
Well Site Services $ 21,346 $ 13,606 $ 82,649 $ 57,513
Offshore Products 4,859 6,788 16,042 35,668
Tubular Services 12,717 2,136 41,807 6,755
Corporate / Other (2,925) (1,556) (8,438) (5,836)
Total EBITDA $ 35,997 $ 20,974 $ 132,060 $ 94,100
Operating Income / (Loss)
Well Site Services $ 14,403 $ 7,819 $ 55,466 $ 37,245
Offshore Products 2,529 4,650 7,225 27,850
Tubular Services 12,476 1,998 40,928 5,949
Corporate / Other (2,948) (1,570) (8,503) (5,877)
Total Operating Income $ 26,460 $ 12,897 $ 95,116 $ 65,167
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Dec. 31, Sep. 30, Dec. 31,
2004 2004 2003
------------- ------------- -------------
(unaudited) (unaudited) (audited)
Assets
Current assets
Cash $ 19,740 $ 23,538 $ 19,318
Accounts receivable 198,297 161,763 137,484
Inventory 209,825 194,665 121,319
Prepaid and other current
assets 4,553 7,178 9,956
Total current assets 432,415 387,144 288,077
Property, plant and equipment,
net 227,343 212,941 194,136
Goodwill 258,046 256,322 224,054
Other intangible assets, net 7,108 7,675 5,870
Other long term assets 5,931 5,456 5,049
Total assets $ 930,843 $ 869,538 $ 717,186
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
liabilities $ 159,265 $ 122,352 $ 89,243
Income taxes payable 5,821 12,940 3,020
Current debt 228 5,961 873
Deferred revenue 25,420 7,280 4,784
Other current liabilities 2,296 2,341 937
Total current liabilities 193,030 150,874 98,857
Long term debt 173,887 185,515 136,246
Deferred income taxes 26,102 19,984 19,411
Other liabilities 7,800 7,687 7,561
Total liabilities 400,819 364,060 262,075
Stockholders' equity
Common stock 496 495 492
Additional paid-in capital 338,906 337,298 333,855
Retained earnings 168,180 152,643 108,818
Accumulated other comprehensive
income 22,759 15,359 12,289
Treasury stock (317) (317) (343)
Total stockholders' equity 530,024 505,478 455,111
Total liabilities and stockholders'
equity $ 930,843 $ 869,538 $ 717,186
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended
December 31,
-----------------------------
2004 2003
------------- -------------
Additional Well Site Services
Financial Data ($ in thousands)
Revenues
Accommodations $ 50,475 $ 39,166
Hydraulic Workover Services 7,874 7,507
Rental Tools 18,265 11,507
Land Drilling 11,905 9,597
Total Revenues $ 88,519 $ 67,777
EBITDA (A)
Accommodations $ 11,115 $ 7,043
Hydraulic Workover Services 519 513
Rental Tools 6,401 3,102
Land Drilling 3,311 2,948
Total EBITDA $ 21,346 $ 13,606
Operating Income
Accommodations $ 8,600 $ 4,569
Hydraulic Workover Services (477) (369)
Rental Tools 3,811 1,417
Land Drilling 2,469 2,202
Total Operating Income $ 14,403 $ 7,819
Well Site Services Supplemental
Operating Data
Accommodations Operating
Statistics
Average Mandays Served 6,252 6,115
Average Camps Rented
Canadian Side-by-Side Camps 26 25
US Offshore Steel Buildings
(10 foot wide) 132 84
Hydraulic Workover Services
Operating Statistics
Average Units Available 30 30
Utilization 27.0% 25.8%
Average Day Rate ($ in
thousands per day) $ 10.6 $ 10.5
Average Daily Cash Margin ($ in
thousands per day) $ 1.7 $ 1.9
Land Drilling Operating
Statistics
Average Rigs Available 17 15
Utilization 87.7% 91.0%
Implied Day Rate ($ in
thousands per day) $ 8.6 $ 7.6
Implied Daily Cash Margin ($ in
thousands per day) $ 2.6 $ 2.5
Offshore Products Backlog ($ in
millions) $ 97.5 $ 62.6
Tubular Services Operating Data
Shipments (Tons in thousands) 97.8 81.7
Quarter end Inventory ($ in
thousands) $ 123,555 $ 65,026
Oil States International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net income $ 15,538 $ 9,575 $ 59,362 $ 44,432
Income tax expense 8,885 1,001 29,406 14,222
Depreciation and amortization 9,511 7,558 35,988 27,905
Interest income (141) (70) (363) (389)
Interest expense 2,204 2,910 7,667 7,930
EBITDA $ 35,997 $ 20,974 $ 132,060 $ 94,100
SOURCE Oil States International, Inc.
-0- 02/08/2005
/CONTACT: Cindy B. Taylor of Oil States International, Inc.,
+1-713-652-0582/
/Web site: http://www.oilstatesintl.com /
(OIS)