Exhibit 99.1
OIL STATES ANNOUNCES SECOND QUARTER EARNINGS OF $0.49 PER SHARE
HOUSTON, Aug. 1 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported a 104% year-over-year increase in net income for the
quarter ended June 30, 2005. Net income for the second quarter of 2005 increased
to $24.9 million, or $0.49 per diluted share, from $12.2 million, or $0.24 per
diluted share, in the second quarter of 2004.
Oil States' revenues and EBITDA (defined as net income plus interest, taxes,
depreciation and amortization) for the second quarter of 2005 increased 61% and
75%, respectively, from last year's results as each business segment generated
improved operating results.(A) The Company generated $358.5 million of revenues
and $53.6 million of EBITDA in the second quarter of 2005 compared to $222.2
million and $30.7 million, respectively, in the second quarter of 2004. The
improved results were primarily generated by increased volumes and prices at
Tubular Services, increased accommodations activity in the oil sands region of
Canada, increased U.S. drilling activity and incremental results from capital
expenditures and acquisitions completed over the past twelve months.
Tubular Services benefited from continued strong U.S. land drilling
activity, limited oil country tubular goods ("OCTG") supplies and the
acquisitions of the U.S. OCTG distribution business of Hunting Energy Services,
L.P. ("Hunting"), completed in May 2004, and of Phillips Casing and Tubing, L.P.
("Phillips"), completed in June 2005. Well Site Services generated increased
revenues and EBITDA due to strong U.S. land drilling and Canadian oil sands
activity, capital investments made in the past year and contributions from the
Elenburg and Stinger acquisitions completed in the first half of 2005. Offshore
Products also improved significantly year-over- year as volumes and margins
expanded with the recovery in deepwater development spending. The Company's
effective tax rate in the second quarter of 2005 was 36.9% compared to an
effective tax rate of 39.8% in the second quarter of 2004.
During the second quarter of 2005, Oil States completed three acquisitions
which were all financed with debt. In May 2005, the Company completed its
acquisition of Stinger Wellhead Protection, Incorporated, and affiliated
companies and intellectual property, (collectively "Stinger") for its rental
equipment business line which is included in the Well Site Services segment.
Stinger provides wellhead isolation equipment and services, which are utilized
during pressure pumping operations. In the Tubular Services segment, the Company
acquired Phillips in June 2005. Phillips distributes OCTG, primarily carbon ERW
(electronic resistance welded) pipe, predominantly in Texas. Also during June,
the Company completed the acquisition of Noble Structures Inc., a Canadian
accommodations manufacturer, to augment its manufacturing capabilities to meet
customer demand, particularly in the oil sands region of northern Canada. Total
consideration paid for the three acquisitions was approximately $129 million,
including debt assumed, with $89 million attributed to the Stinger acquisition,
$31 million attributed to Phillips and $9 million attributed to Noble. In
addition to the acquisitions, the Company spent $16.7 million in capital
expenditures during the second quarter of 2005 primarily focused on the
Company's land drilling, rental equipment and accommodations operations.
For the first half of 2005, the Company reported net income of $50.1
million, or $0.99 per diluted share, on revenues of $690.4 million and EBITDA of
$106.1 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. This performance represents year- over-year revenue and
EBITDA increases of 62% and 81%, respectively. As a result, operating income
more than doubled, increasing from $40.7 million in the first half of 2004 to
$84.2 million in the first half of 2005. The 2004 year-to-date results included
the Company's recognition of a $5.4 million income tax benefit related to the
partial reversal of valuation allowances applied against net operating loss
carryforwards. The effective tax rate in the first six months of 2004 was 25.2%
compared to 36.9% during the same period in 2005. The Company expects that the
effective rate for the full year 2005 will be approximately 35% - 38%.
BUSINESS SEGMENT RESULTS
Well Site Services
For the second quarter of 2005, Well Site Services generated $126.8 million
of revenues and $30.1 million of EBITDA compared to $72.9 million of revenues
and $17.1 million of EBITDA in the second quarter of 2004. The 74%
year-over-year increase in revenues and 76% increase in EBITDA at Well Site
Services were primarily due to recently completed acquisitions, a 15% increase
in U.S. drilling activity, increased activity in Canadian accommodations and
contributions from recent capital expenditures primarily in the accommodations,
land drilling and rental equipment businesses.
The rental equipment business reported significantly improved results during
the second quarter of 2005 due to the acquisition of Stinger, improving U.S.
drilling activity and the impact of price increases. For the second quarter of
2005, rental equipment contributed $31.2 million of revenues and $11.6 million
of EBITDA compared to $17.1 million of revenues and $4.7 million of EBITDA in
the second quarter of 2004. Of the $6.9 million increase in rental equipment
EBITDA, $4.5 million was generated by Stinger during May and June 2005. Land
drilling's revenues and EBITDA were up 78% and 93%, respectively, from the
second quarter of 2004 due to incremental earnings from the seven rigs acquired
in the Elenburg acquisition, an additional rig added to the fleet in Texas and
higher dayrates and cash margins. Elenburg contributed $1.7 million of EBITDA
during the second quarter of 2005 of a total EBITDA increase of $2.9 million
from the Company's land drilling operations. Accommodations' revenues and EBITDA
were up 87% and 36%, respectively, due primarily to increased activity in the
oil sands region of Canada, partially offset by reduced international facility
management activity. Accommodation's gross margin percentage was lower during
the quarter due to a greater percentage of revenues being generated by
manufacturing activities, which generally earn a lower margin than accommodation
rental and service activities.
Offshore Products
Offshore Products reported improved second quarter results with revenues of
$63.9 million and EBITDA of $7.9 million compared to revenues of $48.9 million
and EBITDA of $4.7 million in the second quarter of 2004. This 30% increase in
revenues and 67% increase in EBITDA was primarily the result of higher activity
levels and resulting increased fixed cost absorption. Gross margin percentage
for the second quarter increased to 22% from 20% in the second quarter of 2004.
Backlog totaled $113.5 million at June 30, 2005 compared to $99.8 million as of
March 31, 2005 and $97.5 million as of December 31, 2004.
Tubular Services
Tubular Services had another record quarter generating $167.8 million of
revenues and $18.4 million of EBITDA compared to $100.4 million of revenues and
$10.8 million of EBITDA in the second quarter of 2004. These record results were
primarily due to contributions from the Hunting and Phillips acquisitions,
increases in OCTG mill pricing, continued tight supply of OCTG and increasing
U.S. drilling activity. Second quarter gross margin percentage was 12.7%
compared to 13.0% in the second quarter of 2004. OCTG shipments were 100,600
tons in the second quarter of 2005 compared to 84,600 tons shipped in the second
quarter of 2004. The Company's OCTG inventory at June 30, 2005 was $189.7
million compared to $142.0 million at March 31, 2005 and $123.6 million at
December 31, 2004. As of June 30, 2005, approximately 78% of Oil States' OCTG
inventory was committed to customer orders.
During the second quarter, the Company completed the sale of $125 million of
2 3/8% contingent convertible senior notes. The Company used $30 million of the
net proceeds of the offering to repurchase 1.18 million shares of its common
stock and, as a result, had 48,888,454 shares of common stock outstanding as of
June 30, 2005. The remaining net proceeds were used to repay its $25.0 million
bridge loan secured in connection with funding acquisitions in the second
quarter of 2005 and to repay approximately $66.0 million of borrowings under its
revolving credit facility. The Company's total debt to total capitalization
ratio was 39.1% as of June 30, 2005. Subsequent to June 30, 2005, the Company
sold an additional $50 million of the 2 3/8% contingent convertible senior notes
subject to the underwriter's option, which the Company had granted at the time
of the initial sale of notes. Net proceeds of $48.5 million from the additional
sale of notes were used to repay borrowings under its revolving credit facility.
Including the effects of the additional sale of notes, the Company as of July
31, 2005 had approximately $121 million available under its revolving credit
facility.
"Oil States had an outstanding second quarter of 2005 due to increasing U.S.
drilling activity, growth in oil sands activity and realization of contributions
from our recent capital expenditures and acquisitions," stated Douglas E.
Swanson, Oil States' President and Chief Executive Officer. "We were extremely
pleased with the contributions from the Stinger, Phillips and Noble transactions
closed during the quarter, and are excited about the expanded growth
opportunities that these strategic acquisitions present. We were also encouraged
to see the continued improvement in our Offshore Products segment as our backlog
and the prospects for deepwater spending continued to improve. Looking forward,
the second half of 2005 holds substantial promise for Oil States with expected
strong North American drilling activity, increasing deepwater spending and
growth in the oil sands region of Canada. Our current expectations for third
quarter earnings are in the range of $0.50 to $0.55 per diluted share."
Oil States International, Inc. is a diversified oilfield services company.
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, 2004 filed by Oil States with the
SEC on March 2, 2005.
(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 Six Months Ended
June 30, June 30,
---------------------- ----------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenue $ 358,469 $ 222,182 $ 690,415 $ 426,372
Costs and expenses:
Cost of sales 284,711 176,015 545,364 337,313
Selling, general and
administrative 20,660 15,883 39,725 30,573
Depreciation and amortization 11,215 8,744 21,443 17,316
Other expense / (income) (93) (107) (307) 425
Operating income 41,976 21,647 84,190 40,745
Interest income 106 75 236 156
Interest expense (3,144) (1,822) (5,457) (3,470)
Other income 446 292 492 437
Income before income taxes 39,384 20,192 79,461 37,868
Income tax expense (14,533) (8,037) (29,321) (9,556)
Net income applicable to common
stock $ 24,851 $ 12,155 $ 50,140 $ 28,312
Net income per common share
Basic $ 0.50 $ 0.25 $ 1.01 $ 0.58
Diluted $ 0.49 $ 0.24 $ 0.99 $ 0.57
Average shares outstanding
Basic 49,651 49,248 49,644 49,189
Diluted 50,593 49,869 50,561 49,812
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Jun. 30, Mar. 31, Dec. 31,
2005 2005 2004
----------- ----------- -----------
(unaudited) (unaudited) (audited)
Assets
Current assets
Cash $ 25,360 $ 21,188 $ 19,740
Accounts receivable 219,844 214,766 198,297
Inventory 280,233 230,712 209,825
Prepaid and other current assets 5,284 6,019 7,322
Total current assets 530,721 472,685 435,184
Property, plant and equipment, net 283,140 242,686 227,343
Goodwill 336,645 272,014 258,046
Other intangible assets, net 14,862 7,111 7,108
Other long term assets 11,007 6,669 5,931
Total assets $ 1,176,375 $ 1,001,165 $ 933,612
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
liabilities $ 185,228 $ 143,695 $ 159,265
Income taxes payable 9,227 10,226 5,821
Current debt 3,476 576 228
Deferred revenue 26,235 27,798 25,420
Other current liabilities 1,421 438 2,296
Total current liabilities 225,587 182,733 193,030
Long term debt 351,582 219,323 173,887
Deferred income taxes 38,285 32,299 28,871
Other liabilities 8,284 7,708 7,800
Total liabilities 623,738 442,063 403,588
Stockholders' equity
Common stock 501 499 496
Additional paid-in capital 345,970 343,691 338,906
Retained earnings 218,320 193,469 168,180
Accumulated other comprehensive
income 18,163 21,760 22,759
Treasury stock (30,317) (317) (317)
Total stockholders' equity 552,637 559,102 530,024
Total liabilities and stockholders'
equity $ 1,176,375 $ 1,001,165 $ 933,612
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues
Accommodations $ 64,990 $ 34,710 $ 148,183 $ 97,184
Drilling Services 19,739 11,120 36,594 21,778
Workover Services 10,872 9,907 19,363 17,541
Rental Equipment 31,229 17,113 50,286 32,487
Well Site Services 126,830 72,850 254,426 168,990
Offshore Products 63,859 48,940 130,350 90,828
Tubular Services 167,780 100,392 305,639 166,554
Total Revenues $ 358,469 $ 222,182 $ 690,415 $ 426,372
EBITDA (A)
Accommodations $ 9,536 $ 7,030 $ 29,374 $ 22,483
Drilling Services 5,931 3,076 11,305 6,074
Workover Services 2,992 2,244 4,014 3,017
Rental Equipment 11,594 4,711 17,483 9,245
Well Site Services 30,053 17,061 62,176 40,819
Offshore Products 7,912 4,735 15,655 6,194
Tubular Services 18,421 10,768 33,822 14,743
Corporate / Other (2,749) (1,881) (5,528) (3,258)
Total EBITDA $ 53,637 $ 30,683 $ 106,125 $ 58,498
Operating Income / (Loss)
Accommodations $ 6,233 $ 4,405 $ 23,324 $ 17,566
Drilling Services 4,528 2,251 8,701 4,477
Workover Services 2,006 1,260 2,081 1,076
Rental Equipment 8,348 2,248 11,611 4,565
Well Site Services 21,115 10,164 45,717 27,684
Offshore Products 5,496 2,816 10,764 2,019
Tubular Services 18,123 10,562 33,268 14,329
Corporate / Other (2,758) (1,895) (5,559) (3,287)
Total Operating Income $ 41,976 $ 21,647 $ 84,190 $ 40,745
Oil States International, Inc.
Additional Quarterly Operating Data
(unaudited)
Three Months Ended June 30,
-----------------------------
2005 2004
------------ ------------
Supplemental Operating Data
Accommodations Operating Statistics
Average Mandays Served 6,048 6,110
Average Camps Rented
Canadian Side-by-Side Camps 8 8
US Offshore Steel Buildings
(10 foot wide) 126 89
Hydraulic Workover Services
Operating Statistics
Average Units Available 30 30
Utilization 36.3% 33.5%
Average Day Rate ($ in
thousands per day) $ 11.0 $ 10.8
Average Daily Cash Margin ($ in
thousands per day) $ 3.8 $ 3.3
Land Drilling Operating Statistics
Average Rigs Available 25 17
Utilization 82.8% 90.0%
Implied Day Rate ($ in
thousands per day) $ 10.4 $ 8.0
Implied Daily Cash Margin ($ in
thousands per day) $ 3.4 $ 2.3
Offshore Products Backlog ($ in
millions) $ 113.5 $ 98.7
Tubular Services Operating Data
Shipments (Tons in thousands) 100.6 84.6
Quarter end Inventory ($ in
thousands) $ 189,724 $ 111,585
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,
---------------------- ----------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net income $ 24,851 $ 12,155 $ 50,140 $ 28,312
Income tax expense 14,533 8,037 29,321 9,556
Depreciation and amortization 11,215 8,744 21,443 17,316
Interest income (106) (75) (236) (156)
Interest expense 3,144 1,822 5,457 3,470
EBITDA $ 53,637 $ 30,683 $ 106,125 $ 58,498
SOURCE Oil States International, Inc.
-0- 08/01/2005
/CONTACT: Cindy B. Taylor of Oil States International, Inc.,
+1-713-652-0582/
/Web site: http://www.oilstatesintl.com /