Exhibit 99.1
OIL STATES ANNOUNCES THIRD QUARTER EARNINGS OF $0.99 PER SHARE
HOUSTON, Oct. 30 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported net income for the quarter ended September 30, 2006
of $50.1 million, or $0.99 per diluted share, a year-over-year increase of over
65%. These results compare to $30.3 million, or $0.60 per diluted share,
reported in the third quarter of 2005. With continuing robust 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 third quarter of
2006 of 22% and 47%, respectively.(A)
The Company generated $479.5 million of revenues and $93.9 million of EBITDA
in the third quarter of 2006 compared to $394.1 million and $64.1 million,
respectively, in the third quarter of 2005. Significant increases in Offshore
Products' revenues and EBITDA coupled with year-over-year improvements in Well
Site Services contributed to the strong third quarter results. Well Site
Services reported greater revenues and EBITDA due to high levels of North
American drilling activity, capital investments made in the past year and
contributions from the acquisition of three drilling rigs in August 2006.
Offshore Products generated significantly improved revenues and EBITDA due to
the acceleration in deepwater development spending and related capital equipment
upgrades by its customers. In addition, Offshore Products' backlog continued to
improve, up 14% during the quarter to $321.2 million. Tubular Services reported
a year-over-year improvement in revenues due to increased U.S. drilling
activity. EBITDA for Tubular Services was lower than the prior year as a result
of lower gross margins. The Company recognized an effective tax rate of 34.1% in
the quarter compared to 36.9% in the third quarter of last year. During the
third quarter of 2006, the Company repurchased $7.0 million in common stock (at
an average price of $28.15 per share) under its current share repurchase program
and spent $47.6 million in capital expenditures.
For the nine months ended September 30, 2006, the Company reported net
income of $148.3 million, or $2.91 per diluted share, on revenues of $1.4
billion and EBITDA of $282.4 million. 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. This
performance represents year-over-year revenue and EBITDA increases of 33% and
66%, respectively. Net income in the first nine months 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). Capital
expenditures in the first nine months of 2006 totaled $104.6 million.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly
results from the third quarter of 2006 to the results from the third quarter of
2005.)
Well Site Services
Well Site Services generated improved third quarter results due to the
upturn in North American activity year-over-year and contributions from $126.5
million of capital investments made over the past year, partially offset by the
sale of the hydraulic workover business completed in the first quarter of 2006.
For the third quarter of 2006, Well Site Services generated revenues of $154.4
million and EBITDA of $62.0 million compared to $141.5 million and $38.4
million, respectively, in the third quarter of 2005. Higher revenues in drilling
services and rental tools and improved margins in each of the Well Site Services
business lines contributed to the 9% year-over-year increase in revenues and 61%
increase in EBITDA. These results were partially offset by the conversion of the
Company's investment in its workover services business (which accounted for
$10.3 million in revenues and $2.1 million in EBITDA in the third quarter of
2005) to equity accounting with the sale of the business to Boots & Coots in
March 2006.
For the third quarter of 2006, the accommodations business generated $64.0
million of revenues and $20.3 million of EBITDA compared to $67.2 million and
$13.0 million, respectively, in the third quarter of 2005. Accommodations'
revenues were down slightly year-over-year due to decreased third-party
manufacturing work and lower international facility management revenues.
However, year-over-year EBITDA improved dramatically due to increased
contributions from higher margin camp rental and logistical services and
improved manufacturing margins from oil sands related camps manufactured for
third parties. The accommodations business also benefited from a 7%
strengthening of the Canadian dollar against the U.S. dollar. During the third
quarter of 2006, rental equipment generated a 33% year-over-year increase in
revenues and a 58% increase in EBITDA primarily due to increased completion
activity in the U.S. and contribution from capital expenditures made over the
past year. Drilling reported revenues and EBITDA of $37.1 million and $18.6
million, respectively, in the third quarter of 2006 compared to $24.0 million of
revenues and $8.8 million of EBITDA in the third quarter 2005 due to improved
utilization, pricing, contract terms and rig fleet expansion. We have added six
rigs to the drilling rig fleet since August 15, 2005 including the acquisition
of three rigs in Texas in August 2006. As previously announced, the Company has
committed to build two fit-for-purpose drilling rigs to begin work in the
Rockies in mid-2007 under long term contracts with a large independent E&P
customer.
Offshore Products
During the third quarter of 2006, Offshore Products generated record
quarterly results, reporting $110.0 million of revenues and $19.1 million in
EBITDA compared to $64.3 million and $8.3 million, respectively, in the third
quarter of 2005. Gross margin percentage for the third quarter increased to 24%
from 22% in the third quarter of 2005 primarily due to increased activity and
fixed cost absorption in the majority of the Company's manufacturing locations,
increased revenues and gross profit contributions from each of its major product
lines, particularly in the rig and vessel equipment and subsea pipeline
businesses. Backlog topped second quarter record levels, reaching $321.2 million
at September 30, 2006 compared to $280.6 million at June 30, 2006 and $110.7
million as of December 31, 2005.
Tubular Services
Tubular Services reported revenues of $215.0 million and EBITDA of $17.3
million for the third quarter of 2006 compared to $188.3 million and $20.4
million, respectively, in the third quarter of 2005. Tubular Services' OCTG
shipments increased 15% to 120,000 tons from 104,100 tons in the third quarter
of 2005. Gross margins in the third quarter of 2006 declined to 9.1% from 12.3%
in the third quarter of 2005 because of relatively static OCTG mill pricing
since the third quarter of 2005 and a higher percentage of carbon OCTG sales.
The segment continued to see rising land based drilling activity, increasing our
lower margin carbon grade sales. The Company's OCTG inventory as of September
30, 2006 was $279.9 million compared to $269.8 million at June 30, 2006 and
$274.2 million as of December 31, 2005. As of September 30, 2006, approximately
64% of Oil States' OCTG inventory was committed to customer orders.
"Oil States reported strong results in the third quarter of 2006 due
primarily to continued strength in Well Site Services and substantial growth in
Offshore Products," stated Douglas E. Swanson, Oil States' Chief Executive
Officer. "We continued to see higher North American drilling and completion
activity benefiting our Well Site Services and Tubular Services segments. In
addition, our third quarter results continued to demonstrate the importance of
our exposure to deepwater capital spending and Canadian oil sands development,
which benefited our Offshore Products and accommodations businesses. While there
is currently some concern regarding the short term impact on North American
activity due to high natural gas storage levels and reduced natural gas pricing,
we believe the long term fundamentals remain intact. Fourth quarter activity
could see softness in Canada and certain regions of the United States due to the
impact of lower natural gas prices on customer spending coupled with holiday and
year-end shutdowns. As a result, our current expectation for fourth quarter 2006
earnings is in a range of $0.87 to $0.92 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 Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenues $ 479,463 $ 394,140 $ 1,439,053 $ 1,084,555
Costs and expenses:
Cost of sales 363,007 308,267 1,094,926 853,631
Selling, general and
administrative expenses 27,414 22,441 79,611 62,165
Depreciation and
amortization expense 13,880 12,253 39,762 33,697
Other operating expense /
(income) (330) (87) 56 (394)
Operating income 75,492 51,266 224,698 135,456
Interest expense (4,797) (3,857) (14,531) (9,313)
Interest income 714 77 1,670 313
Equity in earnings of
unconsolidated affiliates 2,637 473 4,624 806
Sale of workover services
business --- --- 11,250 ---
Other income 1,866 72 2,111 231
Income before income
taxes 75,912 48,031 229,822 127,493
Income tax expense (25,860) (17,723) (81,549) (47,045)
Net income $ 50,052 $ 30,308 $ 148,273 $ 80,448
Net income per share
Basic $ 1.01 $ 0.62 $ 2.99 $ 1.63
Diluted $ 0.99 $ 0.60 $ 2.91 $ 1.59
Weighted average number of
common shares outstanding
Basic 49,736 48,925 49,514 49,436
Diluted 50,475 50,108 50,909 50,442
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Sep. 30, Jun. 30, Dec. 31,
2006 2006 2005
------------ ------------ ------------
(unaudited) (unaudited) (audited)
Assets
Current assets
Cash and cash equivalents $ 13,198 $ 14,141 $ 15,298
Accounts receivable, net 315,266 304,929 274,070
Inventories, net 401,537 378,227 360,926
Prepaid expenses and other
current assets 9,408 13,357 13,450
Total current assets 739,409 710,654 663,744
Property, plant and equipment, net 360,212 328,216 310,452
Goodwill, net 333,699 333,611 339,703
Investments in unconsolidated
affiliates 35,891 33,253 2,265
Other noncurrent assets 58,526 58,199 26,708
Total assets $ 1,527,737 $ 1,463,933 $ 1,342,872
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued
liabilities $ 203,772 $ 199,363 $ 214,504
Income taxes 5,072 7,408 7,023
Current portion of long-term
debt 6,861 5,554 3,901
Deferred revenue 48,095 47,173 34,046
Other current liabilities 3,678 3,693 3,223
Total current liabilities 267,478 263,191 262,697
Long-term debt (B) 398,015 390,374 402,109
Deferred income taxes 37,746 36,996 35,259
Other liabilities 20,915 15,701 8,823
Total liabilities 724,154 706,262 708,888
Stockholders' equity
Common stock 511 511 504
Additional paid-in capital 369,988 367,751 350,667
Retained earnings 438,266 388,214 289,993
Accumulated other comprehensive
income 35,459 34,798 23,137
Treasury stock (40,641) (33,603) (30,317)
Total stockholders' equity 803,583 757,671 633,984
Total liabilities and stockholders'
equity $ 1,527,737 $ 1,463,933 $ 1,342,872
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenues
Accommodations $ 63,973 $ 67,173 $ 243,577 $ 215,356
Rental Tools 53,320 40,010 149,685 90,296
Drilling and Other (C) 37,126 24,005 97,349 60,599
Workover Services --- 10,349 8,544 29,712
Well Site Services 154,419 141,537 499,155 395,963
Offshore Products 110,038 64,345 281,984 194,695
Tubular Services 215,006 188,258 657,914 493,897
Total Revenues $ 479,463 $ 394,140 $ 1,439,053 $ 1,084,555
EBITDA (A)
Accommodations $ 20,339 $ 12,982 $ 69,291 $ 42,356
Rental Tools 23,021 14,601 62,279 32,084
Drilling and Other (C) 18,626 8,778 48,769 20,083
Workover Services (D) --- 2,084 13,828 6,097
Well Site Services 61,986 38,445 194,167 100,620
Offshore Products 19,130 8,342 49,839 23,997
Tubular Services 17,256 20,417 53,026 54,239
Corporate / Other (4,497) (3,140) (14,587) (8,666)
Total EBITDA $ 93,875 $ 64,064 $ 282,445 $ 170,190
Operating Income / (Loss)
Accommodations $ 13,802 $ 9,479 $ 54,743 $ 32,803
Rental Tools 18,775 10,861 49,785 22,472
Drilling and Other (C) 14,473 7,282 39,860 15,984
Workover Services --- 1,108 1,922 3,189
Well Site Services 47,050 28,730 146,310 74,448
Offshore Products 16,342 5,885 41,592 16,649
Tubular Services 16,629 19,801 51,470 53,069
Corporate / Other (4,529) (3,150) (14,674) (8,710)
Total Operating Income $ 75,492 $ 51,266 $ 224,698 $ 135,456
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended
September 30,
----------------------------
2006 2005
------------ ------------
Supplemental Operating Data
Accommodations Operating
Statistics
Average Mandays Served 5,322 7,385
Average Camps Rented
Canadian Side-by-Side Camps 25 17
US Offshore Steel Buildings
(10 foot wide) 160 147
Land Drilling Operating
Statistics
Average Rigs Available 30 26
Utilization 94.3% 91.0%
Implied Day Rate ($ in
thousands per day) $ 14.3 $ 10.8
Implied Daily Cash Margin ($ in
thousands per day) $ 6.7 $ 4.2
Offshore Products Backlog ($ in
millions) $ 321.2 $ 119.4
Tubular Services Operating Data
Shipments (Tons in thousands) 120.0 104.1
Quarter end Inventory ($ in
thousands) $ 279,851 $ 241,543
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,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net income $ 50,052 $ 30,308 $ 148,273 $ 80,448
Income tax expense 25,860 17,723 81,549 47,045
Depreciation and amortization 13,880 12,253 39,762 33,697
Interest income (714) (77) (1,670) (313)
Interest expense 4,797 3,857 14,531 9,313
EBITDA $ 93,875 $ 64,064 $ 282,445 $ 170,190
(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 September 30, 2006, the Company had approximately $90.7 million
available under its revolving credit facility.
(C) Includes results for the workover services business, which was sold to
Boots & Coots International Well Control, Inc., subsequent to 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- 10/30/2006
/CONTACT: Bradley J. Dodson of Oil States International, Inc.,
+1-713-652-0582/
/Web site: http://www.oilstatesintl.com /