Exhibit 99.1
OIL STATES ANNOUNCES SECOND QUARTER EARNINGS OF $0.88 PER SHARE
HOUSTON, Aug. 2 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported net income for the quarter ended June 30, 2006 of
$45.3 million, or $0.88 per diluted share. These results compare to $24.9
million, or $0.49 per diluted share, reported in the second quarter of 2005.
With continuing strong activity and contributions from recent capital
investments and acquisitions, Oil States recognized year-over-year growth in
revenues and EBITDA (defined as net income plus interest, taxes, depreciation
and amortization) in the second quarter of 2006 of 29% and 57%, respectively.(A)
The Company generated $463.4 million of revenues and $84.1 million of EBITDA
in the second quarter of 2006 compared to $358.5 million and $53.6 million,
respectively, in the second quarter of 2005. Year-over-year improvements in Well
Site Services and Offshore Products contributed to strong second quarter
results. Well Site Services reported significantly higher revenues and EBITDA
due to high levels of North American drilling activity, capital investments made
in the past year and contributions from the Stinger acquisition completed in May
2005. Offshore Products also generated significantly improved revenues and
EBITDA due to the acceleration in deepwater development spending by its
customers. In addition, the outlook for Offshore Products continued to
strengthen as backlog increased 27% during the quarter to $280.6 million.
Tubular Services reported a year-over-year improvement in revenues due to
increased U.S. drilling activity and the benefit of the Phillips acquisition
completed in June 2005. EBITDA for Tubular Services was slightly lower than the
prior year as a result of lower margins and product mix.
The Company also benefited from a reduced effective tax rate during the
second quarter of 2006 due to statutory rate changes, primarily in Canada. These
rate changes benefited second quarter earnings by $2.3 million, or $0.05 per
diluted share. As a result, the Company recognized an effective tax rate of
32.2% in the quarter compared to 36.9% in the second quarter of last year. The
Company currently expects the effective tax rate to approximate 36% for the
remainder of 2006.
For the first half of 2006, the Company reported net income of $98.2
million, or $1.92 per diluted share, on revenues of $959.6 million and EBITDA of
$188.6 million. 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. This performance represents year-over-year revenue and
EBITDA increases of 39% and 78%, respectively. As a result, operating income
increased 77% to $149.2 million in the first half of 2006 from $84.2 million in
the first half of 2005. Net income in the first half of 2006 included the
recognition of a non-cash, pre-tax gain of $11.3 million, or an after-tax gain
of $0.12 per diluted share, on the sale of the Company's workover services
business to Boots & Coots International Well Control, Inc. (Amex: WEL).
BUSINESS SEGMENT RESULTS
Well Site Services
Well Site Services generated strong second quarter results due to year-
over-year improvements in North American land activity and contributions from
capital investments and acquisitions made over the past year, partially offset
by the sale of the hydraulic workover business completed in the first quarter of
2006. For the second quarter of 2006, Well Site Services generated revenues of
$154.0 million and EBITDA of $54.3 million compared to $126.8 million and $30.1
million, respectively, in the second quarter of 2005. The 21% year-over-year
increase in revenues and 81% increase in EBITDA at Well Site Services resulted
from several factors including the acquisition of Stinger completed in May 2005,
stronger accommodations activity in Canada, improving U.S. drilling and
completion activity, benefits of recent capital expenditures primarily in the
drilling services, rental tools and accommodations businesses and improved
pricing in several product lines, the most significant of which was in drilling
services. These results were partially offset by the conversion of the Company's
investment in its workover services business (which accounted for $10.9 million
in revenues and $3.0 million in EBITDA in the second quarter of 2005) to equity
accounting with the sale of the business to Boots & Coots in March 2006.
The accommodations business generated $75.0 million of revenues and $19.7
million of EBITDA compared to $65.0 million and $9.5 million, respectively, in
the second quarter of 2005. The accommodations business benefited from improving
activity in the oil sands region of northern Canada, a 12% strengthening of the
Canadian dollar against the U.S. dollar and the realization of increased
revenues from standby fees and guarantees of $3.8 million, or $0.05 per diluted
share, in its Canadian accommodations business. These improvements were
partially offset by lower international facility management activity due to
contract completion and the completion of a major expansion project by an oil
sands customer. Drilling services reported revenues and EBITDA of $32.2 million
and $15.4 million, respectively, in the second quarter of 2006 compared to $19.7
million of revenues and $5.9 million of EBITDA in the second quarter 2005 due to
improved utilization and pricing, more advantageous contract terms and rig fleet
expansion (added three new rigs since June 15, 2005). During the second quarter,
rental tools generated $46.8 million of revenues and $18.4 million of EBITDA
compared to $31.2 million of revenues and $11.6 million of EBITDA during the
second quarter of 2005. This year-over-year growth was due to the Stinger
acquisition, improved pricing and increased North American drilling and
completion activity.
Offshore Products
During the second quarter of 2006, Offshore Products generated record
quarterly results, reporting $93.7 million of revenues and $17.9 million in
EBITDA compared to $63.9 million and $7.9 million, respectively, in the second
quarter of 2005. Gross margin percentage for the second quarter increased to 27%
from 22% in the second quarter of 2005 primarily due to increased activity and
fixed cost absorption in the majority of the Company's manufacturing locations,
increased contributions from the connector products and rig equipment businesses
and improved activity and margins in the subsea pipeline business. Backlog
continued to increase, totaling a new record of $280.6 million at June 30, 2006
compared to $220.8 million at March 31, 2006 and $110.7 million as of December
31, 2005.
Tubular Services
Tubular Services reported revenues of $215.7 million and EBITDA of $17.5
million for the second quarter of 2006 compared to $167.8 million and $18.4
million, respectively, in the second quarter of 2005. Tubular Services' OCTG
shipments increased 16% to 116,800 tons from 100,600 tons in the second quarter
of 2005. Gross margins in the second quarter of 2006 declined to 9.3% from 12.7%
in the second quarter of 2005 because of static OCTG mill pricing and a higher
percentage of carbon OCTG sales. The segment continued to see reduced demand for
higher margin seamless alloy tubulars while strong land based drilling activity
increased our lower margin carbon grade sales. The Company's OCTG inventory as
of June 30, 2006 was $269.8 million compared to $265.8 million as of March 31,
2006 and $274.2 million as of December 31, 2005. As of June 30, 2006,
approximately 65% of Oil States' OCTG inventory was committed to customer
orders.
"With strengthening deepwater construction activity, expanding capacity in
the oil sands region and improved North American activity, Oil States had a very
strong second quarter," stated Douglas E. Swanson, Oil States' Chief Executive
Officer. "While we clearly benefited from continued strength in U.S. land
drilling and completion activity, much of the upside in the second quarter was
driven by activity in two secular, oil-focused growth markets: deepwater
infrastructure spending and Canadian oil sands development. Deepwater
infrastructure spending drove improved results in our Offshore Products business
with record financial results and record quarter end backlog. For a public
oilfield service company, we have unique exposure to the oil sands activity
through our accommodations business. This market has been a major focus for our
strategic growth and our 2006 capital expenditure plan. Looking forward, our
current expectation for third quarter 2006 earnings is in a range of $0.82 to
$0.87 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 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, 2005 filed by Oil States with the
SEC on March 2, 2006.
Oil States International, Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenues $ 463,359 $ 358,469 $ 959,590 $ 690,415
Costs and expenses:
Cost of sales 353,686 284,711 731,919 545,364
Selling, general and
administrative expenses 26,753 20,660 52,197 39,725
Depreciation and amortization
expense 12,995 11,215 25,881 21,443
Other operating expense /
(income) (78) (93) 387 (307)
Operating income 70,003 41,976 149,206 84,190
Interest expense (4,938) (3,144) (9,734) (5,457)
Interest income 683 106 956 236
Equity in earnings of
unconsolidated affiliates 1,303 189 1,987 334
Sale of workover services
business (244) --- 11,250 ---
Other income / (loss) (1) 257 245 158
Income before income taxes 66,806 39,384 153,910 79,461
Income tax expense (21,501) (14,533) (55,689) (29,321)
Net income $ 45,305 $ 24,851 $ 98,221 $ 50,140
Net income per share
Basic $ 0.91 $ 0.50 $ 1.99 $ 1.01
Diluted $ 0.88 $ 0.49 $ 1.92 $ 0.99
Weighted average number of common
shares outstanding
Basic 49,598 49,651 49,403 49,644
Diluted 51,230 50,593 51,126 50,561
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Jun. 30, Mar. 31, Dec. 31,
2006 2006 2005
-------------- -------------- --------------
(unaudited) (unaudited) (audited)
Assets
Current assets
Cash and cash equivalents $ 14,141 $ 11,999 $ 15,298
Accounts receivable, net 304,929 302,296 274,070
Inventories, net 378,227 368,687 360,926
Prepaid expenses and other
current assets 13,357 14,074 13,450
Total current assets 710,654 697,056 663,744
Property, plant and equipment, net 328,216 305,866 310,452
Goodwill, net 333,611 330,431 339,703
Investments in unconsolidated
affiliates 33,253 31,730 2,265
Other non-current assets 58,199 47,138 26,708
Total assets $ 1,463,933 $ 1,412,221 $ 1,342,872
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
liabilities $ 199,363 $ 197,129 $ 214,504
Income taxes 7,408 27,482 7,023
Current portion of long-term debt 5,554 3,566 3,901
Deferred revenue 47,173 33,243 34,046
Other current liabilities 3,693 3,814 3,223
Total current liabilities 263,191 265,234 262,697
Long-term debt (B) 390,374 406,007 402,109
Deferred income taxes 36,996 38,936 35,259
Other liabilities 15,701 8,392 8,823
Total liabilities 706,262 718,569 708,888
Stockholders' equity
Common stock 511 507 504
Additional paid-in capital 367,751 357,581 350,667
Retained earnings 388,214 342,909 289,993
Accumulated other comprehensive
income 34,798 23,202 23,137
Treasury stock (33,603) (30,547) (30,317)
Total stockholders' equity 757,671 693,652 633,984
Total liabilities and stockholders'
equity $ 1,463,933 $ 1,412,221 $ 1,342,872
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenues
Accommodations $ 75,015 $ 64,990 $ 179,604 $ 148,183
Rental Tools 46,777 31,229 96,365 50,286
Drilling Services 32,205 19,739 60,223 36,594
Workover Services (C) --- 10,872 8,544 19,363
Well Site Services 153,997 126,830 344,736 254,426
Offshore Products 93,675 63,859 171,946 130,350
Tubular Services 215,687 167,780 442,908 305,639
Total Revenues $ 463,359 $ 358,469 $ 959,590 $ 690,415
EBITDA (A)
Accommodations $ 19,745 $ 9,536 $ 48,951 $ 29,374
Rental Tools 18,399 11,594 39,258 17,483
Drilling Services 15,354 5,931 28,767 11,305
Workover Services (C) (D) 784 2,992 15,202 4,014
Well Site Services 54,282 30,053 132,178 62,176
Offshore Products 17,915 7,912 30,709 15,655
Tubular Services 17,472 18,421 35,770 33,822
Corporate / Other (5,613) (2,749) (10,088) (5,528)
Total EBITDA $ 84,056 $ 53,637 $ 188,569 $ 106,125
Operating Income / (Loss)
Accommodations $ 15,581 $ 6,232 $ 40,940 $ 23,324
Rental Tools 14,193 8,349 31,010 11,611
Drilling Services 13,517 4,528 25,298 8,701
Workover Services (C) 147 2,007 2,011 2,082
Well Site Services 43,438 21,116 99,259 45,718
Offshore Products 15,186 5,496 25,251 10,764
Tubular Services 17,023 18,123 34,842 33,268
Corporate / Other (5,644) (2,759) (10,146) (5,560)
Total Operating Income $ 70,003 $ 41,976 $ 149,206 $ 84,190
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended June 30,
----------------------------
2006 2005
------------ ------------
Supplemental Operating Data
Accommodations Operating Statistics
Average Mandays Served 5,059 6,048
Average Camps Rented
Canadian Side-by-Side Camps 20 8
US Offshore Steel Buildings
(10 foot wide) 168 126
Land Drilling Operating Statistics
Average Rigs Available 28 25
Utilization 91.5% 82.8%
Implied Day Rate ($ in thousands per day) $ 13.8 $ 10.4
Implied Daily Cash Margin ($ in
thousands per day) $ 6.9 $ 3.4
Offshore Products Backlog ($ in millions) $ 280.6 $ 113.5
Tubular Services Operating Data
Shipments (Tons in thousands) 116.8 100.6
Quarter end Inventory ($ in
thousands) $ 269,803 $ 189,724
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,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net income $ 45,305 $ 24,851 $ 98,221 $ 50,140
Income tax expense 21,501 14,533 55,689 29,321
Depreciation and amortization 12,995 11,215 25,881 21,443
Interest income (683) (106) (956) (236)
Interest expense 4,938 3,144 9,734 5,457
EBITDA $ 84,056 $ 53,637 $ 188,569 $ 106,125
(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.
(B) As of June 30, 2006, the Company had approximately $99.3 million available
under its revolving credit facility.
(C) Reflects two months' results for the workover services business, which was
sold to Boots & Coots International Well Control, Inc. effective on March
1, 2006.
(D) Includes the $11.3 million non-cash, pre-tax gain from the sale of the
workover services business to Boots & Coots International Well Control,
Inc.
SOURCE Oil States International, Inc.
-0- 08/02/2006
/CONTACT: Bradley Dodson of Oil States International, Inc.,
+1-713-652-0582/
/Web site: http://www.oilstatesintl.com /