Exhibit 99.1
OIL STATES ANNOUNCES RECORD THIRD QUARTER EARNINGS OF $0.60 PER SHARE
HOUSTON, Oct. 31 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported a 95% year-over-year increase in net income for the
quarter ended September 30, 2005. Net income for the third quarter of 2005
increased to $30.3 million, or $0.60 per diluted share, from $15.5 million, or
$0.31 per diluted share, in the third quarter of 2004.
With year-over-year increases in profitability from all of its business
segments, Oil States' revenues and EBITDA (defined as net income plus interest,
taxes, depreciation and amortization) for the third quarter of 2005 increased
57% and 71%, respectively.(A) The Company generated $394.1 million of revenues
and $64.1 million of EBITDA in the third quarter of 2005 compared to $251.5
million and $37.6 million, respectively, in the third 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
acquisition 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 third
quarter of 2005 was 36.9% compared to an effective tax rate of 41.4% in the
third quarter of 2004.
For the nine months ended September 30, 2005, the Company reported net
income of $80.4 million, or $1.59 per diluted share, on revenues of $1.1 billion
and EBITDA of $170.2 million. During the first nine months of 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. This performance represents
year-over-year revenue and EBITDA increases of 60% and 77%, respectively. As a
result, operating income nearly doubled, increasing to $135.5 million from $68.7
million in the first nine months of 2004. 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 nine months of 2004 was 31.9%
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 third quarter of 2005, Well Site Services generated $141.5 million
of revenues and $38.4 million of EBITDA compared to $79.4 million of revenues
and $20.5 million of EBITDA in the third quarter of 2004. The 78% year-over-
year increase in revenues and 88% increase in EBITDA at Well Site Services were
primarily due to recently completed acquisitions, a 16% increase in U.S.
drilling activity, increased activity in Canadian accommodations and
contributions from recent capital expenditures primarily in the accommodations,
drilling services and rental tools businesses.
The rental tools business reported significantly improved results during the
third quarter of 2005 due to the acquisition of Stinger, improving U.S. drilling
activity and the impact of price increases, partially offset by hurricane
related disruptions in the Gulf of Mexico. For the third quarter of 2005, rental
tools contributed $40.0 million of revenues and $14.6 million of EBITDA compared
to $16.2 million of revenues and $4.8 million of EBITDA in the third quarter of
2004. Of the $23.8 million increase in rental tools' revenue and the $9.8
million increase in EBITDA, $20.6 million of revenues and $9.7 million of EBITDA
were generated by Stinger. Drilling services' revenues and EBITDA were up 88%
and 102%, respectively, from the third quarter of 2004 due to incremental
earnings from the seven rigs acquired in the Elenburg acquisition, two
additional newly built rigs added to the fleet and higher dayrates and cash
margins. Elenburg contributed $6.6 million of revenues and $2.2 million of
EBITDA during the third quarter of 2005 of a total revenue and EBITDA increase
of $11.3 million and $4.4 million, respectively, from the Company's drilling
services operations. Accommodations' revenues and EBITDA were up 59% and 26%,
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 third quarter 2005 revenues of $64.3 million and
EBITDA of $8.3 million compared to revenues of $55.3 million and EBITDA of $5.0
million in the third quarter of 2004. This 16% increase in revenues and 67%
increase in EBITDA was primarily the result of higher activity levels and
increased fixed cost absorption. Gross margin percentage for the third quarter
increased to 22% from 19% in the third quarter of 2004. At the end of the third
quarter of 2005, backlog was $119.4 million compared to $113.5 million at June
30, 2005 and $97.5 million as of December 31, 2004.
Tubular Services
Tubular Services had another record quarter generating $188.3 million of
revenues and $20.4 million of EBITDA compared to $116.9 million of revenues and
$14.3 million of EBITDA in the third quarter of 2004. These record results were
primarily due to contributions from the Phillips acquisition, increases in OCTG
pricing and increased U.S. drilling activity which strengthened demand for our
tubular products and services. Third quarter gross margin percentage was 12.3%
compared to 14.4% in the third quarter of 2004. Our Tubular Services segment's
gross margin as a percent of revenues decreased because of product mix and less
frequent and smaller OCTG price increases. OCTG shipments were 104,100 tons in
the third quarter of 2005 compared to 90,100 tons shipped in the third quarter
of 2004. The Company's OCTG inventory as of September 30, 2005 was $241.5
million compared to $189.7 million at June 30, 2005 and $123.6 million at
December 31, 2004. As of September 30, 2005, approximately 71% of Oil States'
OCTG inventory was committed to customer orders.
"Oil States had a record third quarter of 2005 as we continued to experience
strong activity in virtually all of our markets and as we enjoyed incremental
earnings from recent capital expenditures and acquisitions," stated Douglas E.
Swanson, Oil States' President and Chief Executive Officer. "Although difficult
to quantify, the hurricanes disrupted our Gulf Coast operations, causing a $0.02
to $0.04 per share reduction in our operating results. With activity for our
Gulf Coast businesses beginning to recover from the storm interruptions, we
expect fourth quarter earnings to be in a range of $0.60 to $0.65 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 Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenue $ 394,140 $ 251,538 $ 1,084,555 $ 677,910
Costs and expenses:
Cost of sales 308,267 197,521 853,631 534,833
Selling, general and
administrative 22,441 16,504 62,165 47,077
Depreciation and
amortization 12,253 9,161 33,697 26,477
Other expense /
(income) (87) 441 (394) 868
Operating income 51,266 27,911 135,456 68,655
Interest income 77 65 313 222
Interest expense (3,857) (1,993) (9,313) (5,463)
Other income 545 494 1,037 931
Income before income taxes 48,031 26,477 127,493 64,345
Income tax expense (17,723) (10,964) (47,045) (20,520)
Net income applicable
to common stock $ 30,308 $ 15,513 $ 80,448 $ 43,825
Net income per common share
Basic $ 0.62 $ 0.31 $ 1.63 $ 0.89
Diluted $ 0.60 $ 0.31 $ 1.59 $ 0.88
Average shares outstanding
Basic 48,925 49,409 49,436 49,262
Diluted 50,108 50,061 50,442 49,895
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Sep. 30, Jun. 30, Dec. 31,
2005 2005 2004
----------- ----------- -----------
(unaudited) (unaudited) (audited)
Assets
Current assets
Cash $ 17,329 $ 25,360 $ 19,740
Accounts receivable 250,867 219,844 198,297
Inventory 334,590 280,233 209,825
Prepaid and other current assets 4,755 5,284 7,322
Total current assets 607,541 530,721 435,184
Property, plant and equipment, net 290,319 283,140 227,343
Goodwill 340,784 336,645 258,046
Other intangible assets, net 13,979 14,862 7,108
Other long term assets 13,370 11,007 5,931
Total assets $ 1,265,993 $ 1,176,375 $ 933,612
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued
liabilities $ 179,886 $ 185,228 $ 159,265
Income taxes payable 10,084 9,227 5,821
Current debt 3,937 3,476 228
Deferred revenue 29,016 26,235 25,420
Other current liabilities 2,280 1,421 2,296
Total current liabilities 225,203 225,587 193,030
Long term debt 403,038 351,582 173,887
Deferred income taxes 37,570 38,285 28,871
Other liabilities 8,713 8,284 7,800
Total liabilities 674,524 623,738 403,588
Stockholders' equity
Common stock 503 501 496
Additional paid-in capital 348,292 345,970 338,906
Retained earnings 248,628 218,320 168,180
Accumulated other comprehensive income 24,363 18,163 22,759
Treasury stock (30,317) (30,317) (317)
Total stockholders' equity 591,469 552,637 530,024
Total liabilities and stockholders' equity $ 1,265,993 $ 1,176,375 $ 933,612
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenues
Accommodations $ 67,173 $ 42,339 $ 215,356 $ 139,523
Drilling Services 24,005 12,751 60,599 34,530
Workover Services 10,349 8,143 29,712 25,683
Rental Tools 40,010 16,165 90,296 48,652
Well Site Services 141,537 79,398 395,963 248,388
Offshore Products 64,345 55,268 194,695 146,096
Tubular Services 188,258 116,872 493,897 283,426
Total Revenues $ 394,140 $ 251,538 $ 1,084,555 $ 677,910
EBITDA (A)
Accommodations $ 12,982 $ 10,308 $ 42,356 $ 32,791
Drilling Services 8,778 4,345 20,083 10,420
Workover Services 2,084 1,009 6,097 4,025
Rental Tools 14,601 4,822 32,084 14,067
Well Site Services 38,445 20,484 100,620 61,303
Offshore Products 8,342 4,989 23,997 11,183
Tubular Services 20,417 14,348 54,239 29,091
Corporate / Other (3,140) (2,255) (8,666) (5,514)
Total EBITDA $ 64,064 $ 37,566 $ 170,190 $ 96,063
Operating Income / (Loss)
Accommodations $ 9,479 $ 7,468 $ 32,803 $ 25,034
Drilling Services 7,282 3,522 15,984 7,999
Workover Services 1,108 41 3,189 1,117
Rental Tools 10,861 2,348 22,472 6,913
Well Site Services 28,730 13,379 74,448 41,063
Offshore Products 5,885 2,678 16,649 4,696
Tubular Services 19,801 14,123 53,069 28,452
Corporate / Other (3,150) (2,269) (8,710) (5,556)
Total Operating Income $ 51,266 $ 27,911 $ 135,456 $ 68,655
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended
September 30,
---------------------------
2005 2004
------------ ------------
Supplemental Operating Data
Accommodations Operating Statistics
Average Mandays Served 7,385 7,257
Average Camps Rented
Canadian Side-by-Side Camps
US Offshore Steel Buildings 17 12
(10 foot wide) 147 129
Hydraulic Workover Services
Operating Statistics
Average Units Available 30 30
Utilization 30.7% 28.8%
Average Day Rate ($ in thousands per day) $ 12.4 $ 10.3
Average Daily Cash Margin ($ in
thousands per day) $ 3.7 $ 2.2
Land Drilling Operating
Statistics
Average Rigs Available 26 17
Utilization 91.0% 94.1%
Implied Day Rate ($ in thousands per day) $ 10.8 $ 8.7
Implied Daily Cash Margin
($ in thousands per day) $ 4.2 $ 3.1
Offshore Products Backlog ($ in millions) $ 119.4 $ 87.3
Tubular Services Operating Data
Shipments (Tons in thousands) 104.1 90.1
Quarter end Inventory ($ in thousands) $ 241,543 $ 116,831
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,
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net income $ 30,308 $ 15,513 $ 80,448 $ 43,825
Income tax expense 17,723 10,964 47,045 20,520
Depreciation and amortization 12,253 9,161 33,697 26,477
Interest income (77) (65) (313) (222)
Interest expense 3,857 1,993 9,313 5,463
EBITDA $ 64,064 $ 37,566 $ 170,190 $ 96,063
SOURCE Oil States International, Inc.
-0- 10/31/2005
/CONTACT: Cindy B. Taylor of Oil States International, Inc.,
+1-713-652-0582/
/Web site: http://www.oilstatesintl.com /