Exhibit 99.1
OIL STATES ANNOUNCES FOURTH QUARTER EARNINGS OF $0.98 PER SHARE
HOUSTON, Feb. 7 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported net income for the quarter ended December 31, 2006 of
$49.4 million, or $0.98 per diluted share. These results compare to $41.4
million, or $0.82 per diluted share, reported in the fourth quarter of 2005.
With strong contributions from its Well Site Services and Offshore Products
groups, Oil States recognized year-over-year growth in revenues and EBITDA
(defined as net income plus interest, taxes, depreciation and amortization) of
8% and 25%, respectively, in the fourth quarter of 2006.[A]
The Company generated $484.3 million of revenues and $90.4 million of EBITDA
in the fourth quarter of 2006 compared to $447.1 million and $72.4 million,
respectively, in the fourth quarter of 2005. Improvements in Offshore Products'
revenues and EBITDA coupled with significant year-over-year increases in Well
Site Services EBITDA contributed to the strong fourth quarter results. Well Site
Services reported greater revenues and EBITDA due to continuing high levels of
North American drilling activity, capital investments made in the past year and
contributions from oil sands related accommodations. Offshore Products generated
significantly improved revenues and EBITDA due to increased deepwater
development spending and capital equipment upgrades by its customers. Offshore
Products' backlog increased 9% during the quarter to a record $349.3 million.
Tubular Services reported essentially flat revenues, but EBITDA declined
compared to the prior year because of lower gross margins realized. Corporate
and Other expenses increased $2.3 million in the fourth quarter of 2006 compared
to the prior year's fourth quarter primarily due to increased stock award
expense related to the adoption of SFAS 123R in 2006. The Company's effective
tax rate was 31.3% in the current quarter compared to 24.8% in the fourth
quarter of last year. The effective tax rate in the fourth quarter of 2006 was
lower than expected because of tax return adjustments and the annualized benefit
of lower state effective tax rates. The effective tax rate in the fourth quarter
of 2005 included a $4.6 million, or $0.09 per diluted share, income tax benefit
related to the reversal of substantially all of the Company's remaining
valuation allowances applied against net operating loss carryforwards. During
the fourth quarter of 2006, the Company repurchased 300,000 shares of its common
stock (at an average price of $32.92 per share) under its current share
repurchase program and spent $25.0 million in capital expenditures. As of
December 31, 2006, the Company's debt to total capitalization ratio was 32.2%.
For the year ended December 31, 2006, the Company reported record net income
of $197.6 million, or $3.89 per diluted share, on revenues of $1.9 billion and
EBITDA of $372.9 million. For the year ended December 31, 2005, the Company
reported net income of $121.8 million, or $2.41 per diluted share, on revenues
of $1.5 billion and EBITDA of $242.6 million. This performance represents
year-over-year revenue and EBITDA increases of 26% and 54%, respectively. Net
income in 2006 included the recognition in the first quarter 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. Capital expenditures for the year totaled
$129.1 million, a substantial portion of which was spent on expanding our
accommodations fleet in support of construction activity in the oil sands region
of Canada.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the results from
the fourth quarter of 2006 to the results from the fourth quarter of 2005.)
Well Site Services
Well Site Services generated improved fourth quarter results due to a 16%
year-over-year increase in the U.S. drilling rig count and contributions from
$117.4 million of capital investments made over the past year, partially offset
by a 23% decrease in the Canadian drilling rig count and the sale of the
hydraulic workover business completed in the first quarter of 2006. For the
fourth quarter of 2006, Well Site Services generated revenues of $158.5 million
and EBITDA of $62.9 million compared to $152.8 million and $40.4 million,
respectively, in the fourth quarter of 2005. Higher revenues and margins in
drilling services and rental tools contributed to the segment's 4%
year-over-year increase in revenues and 56% increase in EBITDA. This growth in
revenues and EBITDA was partially offset by the conversion of the Company's
investment in its workover services business (which accounted for $10.2 million
in revenues and $2.6 million in EBITDA in the fourth quarter of 2005) to equity
accounting with the sale of the business to Boots & Coots in March 2006.
For the fourth quarter of 2006, the accommodations business generated $70.4
million of revenues and $23.3 million of EBITDA compared to $72.0 million and
$10.5 million, respectively, in the fourth quarter of 2005. Year-over-year
quarterly revenues were down slightly due to lower traditional drilling camp
activity and decreased third-party manufacturing work, partially offset by
increased oil sands related activity. Accommodations' EBITDA grew dramatically
year-over-year, as did the EBITDA margin percentage, due primarily to increased
contributions from higher margin rental and catering services in support of oil
sands developments. The Accommodations results for the fourth quarter of 2005
included significant revenues at lower margins related to a large third party
manufacturing contract which has since been completed. Rental Tools generated a
14% year-over-year increase in revenues and a 21% increase in EBITDA primarily
due to contributions from capital expenditures made over the past year,
partially offset by weaker completion activity in Canada. Drilling and Other
generated revenues and EBITDA of $37.2 million and $19.7 million, respectively,
in the fourth quarter of 2006 compared to $26.1 million of revenues and $10.9
million of EBITDA in the fourth quarter 2005 due to improved pricing, contract
terms, rig fleet expansion and the inclusion of equity in earnings from the
Company's investment in Boots & Coots (which only impacted EBITDA).
Offshore Products
During the fourth quarter of 2006, Offshore Products generated $107.7
million of revenues and $17.1 million in EBITDA compared to $76.5 million and
$12.4 million, respectively, in the fourth quarter of 2005. Gross margin
percentage for the fourth quarter declined to 23% from 25% in the fourth quarter
of 2005. The lower gross margin was primarily due to product mix and cost
absorption. For the fourth consecutive quarter, backlog reached a record level
totaling $349.3 million at December 31, 2006 compared to $321.2 million at
September 30, 2006 and $110.7 million as of December 31, 2005.
Tubular Services
Tubular Services reported revenues of $218.1 million and EBITDA of $15.6
million for the fourth quarter of 2006 compared to $217.8 million and $22.5
million, respectively, in the fourth quarter of 2005. Tubular Services' OCTG
shipments of 118,400 tons during the fourth quarter were essentially flat with
2005. Gross margins in the fourth quarter of 2006 declined to 8.5% from 11.0% in
the fourth quarter of 2005 because of relatively flat OCTG mill pricing
throughout most of 2006 and competitor destocking during the fourth quarter. The
Company's OCTG inventory as of December 31, 2006 was $261.8 million compared to
$279.9 million at September 30, 2006 and $274.2 million as of December 31, 2005.
As of December 31, 2006, approximately 66% of Oil States' OCTG inventory was
committed to customer orders.
"Oil States finished 2006 with a record year of profitability," stated
Douglas E. Swanson, Oil States' Chief Executive Officer. "U.S. drilling and
completion activity remained at a high level despite concerns about high natural
gas storage levels and reduced natural gas pricing.
We experienced some weakness in Canada in the fourth quarter of 2006 and into
the first quarter of 2007 due to warmer weather and lower natural gas prices.
However, this weakness is mitigated to a large degree by growth in Offshore
Products and our activities that are tied to the oil sands developments. As
evidenced by our recently announced capital spending commitments, we believe
that the oil sands region of Canada continues to provide significant
opportunities for organic growth in our Accommodations business going forward.
Our current expectation for first quarter 2007 earnings is in a range of $0.97
to $1.02 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 Twelve Months Ended
December 31, December 31,
----------------------------- -----------------------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
Revenues $ 484,303 $ 447,081 $ 1,923,357 $ 1,531,636
Costs and expenses:
Cost of sales 373,062 352,556 1,467,988 1,206,187
Selling, general and
administrative expenses 27,604 22,506 107,216 84,672
Depreciation and
amortization expense 14,578 13,007 54,340 46,704
Other operating income (4,180) (93) (4,124) (488)
Operating income 73,239 59,105 297,937 194,561
Interest expense (4,859) (4,589) (19,389) (13,903)
Interest income 836 162 2,506 475
Equity in earnings of
unconsolidated affiliates 2,523 469 7,148 1,276
Sale of workover services
business --- --- 11,250 ---
Other income / (loss) 86 (133) 2,195 98
Income before income
taxes 71,825 55,014 301,647 182,507
Income tax expense (22,464) (13,649) (104,013) (60,694)
Net income $ 49,361 $ 41,365 $ 197,634 $ 121,813
Net income per share
Basic $ 1.00 $ 0.84 $ 3.99 $ 2.47
Diluted $ 0.98 $ 0.82 $ 3.89 $ 2.41
Weighted average number of
common shares outstanding
Basic 49,533 49,069 49,519 49,344
Diluted 50,367 50,481 50,773 50,479
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Dec. 31, Sep. 30, Dec. 31,
2006 2006 2005
------------- ------------- -------------
(unaudited) (unaudited) (audited)
Assets
Current assets
Cash and cash equivalents $ 28,396 $ 13,198 $ 15,298
Accounts receivable, net 351,701 315,266 274,070
Inventories, net 386,182 401,537 360,926
Prepaid expenses and other
current assets 17,710 9,408 13,450
Total current assets 783,989 739,409 663,744
Property, plant and equipment, net 358,716 360,212 310,452
Goodwill, net 331,804 333,699 339,703
Investments in unconsolidated
affiliates 38,079 35,891 2,265
Other noncurrent assets 58,506 58,526 26,708
Total assets $ 1,571,094 $ 1,527,737 $ 1,342,872
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued
liabilities $ 199,842 $ 203,772 $ 214,504
Income taxes 11,376 5,072 7,023
Current portion of long-term
debt 6,873 6,861 3,901
Deferred revenue 58,645 48,095 34,046
Other current liabilities 3,680 3,678 3,223
Total current liabilities 280,416 267,478 262,697
Long-term debt [B] 391,729 398,015 402,109
Deferred income taxes 38,020 37,746 35,259
Other liabilities 21,093 20,915 8,823
Total liabilities 731,258 724,154 708,888
Stockholders' equity
Common stock 511 511 504
Additional paid-in capital 372,043 369,988 350,667
Retained earnings 487,627 438,266 289,993
Accumulated other comprehensive
income 30,183 35,459 23,137
Treasury stock (50,528) (40,641) (30,317)
Total stockholders' equity 839,836 803,583 633,984
Total liabilities and stockholders'
equity $ 1,571,094 $ 1,527,737 $ 1,342,872
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------------- -----------------------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
Revenues
Accommodations $ 70,389 $ 71,984 $ 313,966 $ 287,340
Rental Tools 50,924 44,524 200,609 134,820
Drilling and Other 37,175 26,107 134,523 86,706
Workover Services [C] --- 10,173 8,544 39,885
Well Site Services 158,488 152,788 657,642 548,751
Offshore Products 107,699 76,502 389,684 271,197
Tubular Services 218,116 217,791 876,031 711,688
Total Revenues $ 484,303 $ 447,081 $ 1,923,357 $ 1,531,636
EBITDA [A]
Accommodations $ 23,268 $ 10,499 $ 92,559 $ 52,856
Rental Tools 19,906 16,425 82,184 48,508
Drilling and
Other [C] 19,690 10,851 68,458 30,934
Workover Services [C] [D] --- 2,595 13,828 8,692
Well Site Services 62,864 40,370 257,029 140,990
Offshore Products 17,092 12,439 66,931 36,436
Tubular Services 15,622 22,478 68,648 76,716
Corporate / Other (5,152) (2,839) (19,738) (11,503)
Total EBITDA $ 90,426 $ 72,448 $ 372,870 $ 242,639
Operating Income / (Loss)
Accommodations $ 18,900 $ 6,898 $ 73,643 $ 39,701
Rental Tools 15,457 12,606 65,469 35,078
Drilling and Other [C] 14,685 9,183 54,368 25,167
Workover Services [C] --- 1,558 1,872 4,747
Well Site Services 49,042 30,245 195,352 104,693
Offshore Products 14,365 9,902 55,957 26,552
Tubular Services 15,015 21,818 66,486 74,887
Corporate / Other (5,183) (2,860) (19,858) (11,571)
Total Operating Income $ 73,239 $ 59,105 $ 297,937 $ 194,561
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended December 31,
2006 2005
--------------- ---------------
Supplemental Operating Data
Land Drilling Operating
Statistics
Average Rigs Available 32 27
Utilization 85.9% 90.7%
Implied Day Rate ($ in
thousands per day) $ 14.7 $ 11.6
Implied Daily Cash Margin ($ in
thousands per day) $ 7.1 $ 5.1
Offshore Products Backlog ($ in
millions) $ 349.3 $ 110.7
Tubular Services Operating Data
Shipments (Tons in thousands) 118.4 118.6
Quarter end Inventory ($ in
thousands) $ 261,785 $ 274,232
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,
----------------------------- -----------------------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
Net income $ 49,361 $ 41,365 $ 197,634 $ 121,813
Income tax expense 22,464 13,649 104,013 60,694
Depreciation and amortization 14,578 13,007 54,340 46,704
Interest income (836) (162) (2,506) (475)
Interest expense 4,859 4,589 19,389 13,903
EBITDA $ 90,426 $ 72,448 $ 372,870 $ 242,639
[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 December 31, 2006, the Company had approximately $173.9 million
available under its revolving credit facility.
[C] On March 1, the Company sold the workover services business to Boots &
Coots International Well Control, Inc. for equity and debt consideration.
Subsequent to closing, Drilling and Other results include equity in
earnings of unconsolidated affiliates related to this transaction.
[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- 02/07/2007
/CONTACT: Bradley J. Dodson of Oil States International, Inc.,
+1-713-652-0582/
/Web site: http://www.oilstatesintl.com /
(OIS)