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CST: 19/11/2019 11:51:52   

Oil States Announces Second Quarter 2019 Results of Operations

113 Days ago

HOUSTON, July 29, 2019 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE: OIS) reported a net loss for the second quarter of 2019 of $9.7 million, or $0.16 per diluted share, on revenues of $264.7 million and Consolidated EBITDA (Note A) of $26.5 million. The reported second quarter 2019 results included severance and downsizing charges totaling $1.3 million ($1.0 million after-tax, or $0.02 per diluted share). These results compare to reported net income for the second quarter of 2018 of $2.7 million, or $0.05 per diluted share, on revenues of $285.8 million and Consolidated EBITDA of $40.2 million.

Second quarter 2019 highlights included:

  • Offshore/Manufactured Products backlog increase of 21%, resulting in a 1.6x book-to-bill ratio for the quarter
  • Cash flow from operations totaling $31.7 million
  • Revolving credit facility net repayments totaling $21.1 million

Oil States’ President and Chief Executive Officer, Cindy B. Taylor, stated, "Our second quarter results were supported by sequential improvements in commodity prices, well completions, and stronger demand for offshore production-related equipment. Our Offshore/Manufactured Products segment was a stand-out in the quarter, exceeding the upper-end of our previously provided revenue and EBITDA guidance ranges. We received two notable project awards during the quarter, leading to a 21% increase in backlog and a 1.6x book-to-bill ratio for the quarter, further evidencing improving demand for global offshore projects. As of June 30, 2019 our backlog totaled $283 million, the highest level reported since June 30, 2016. Our Well Site Services segment revenues increased 7% sequentially due to stronger international activity levels in our Completion Services business. Our Downhole Technologies segment results were negatively impacted by continued costs associated with the development of our integrated perforating gun system, the ongoing costs of field trials and $1.4 million of inventory write-offs due to product design changes."

BUSINESS SEGMENT RESULTS

(See Segment Data tables)

Offshore/Manufactured Products

Offshore/Manufactured Products generated revenues and Segment EBITDA of $102.0 million and $15.8 million, respectively, in the second quarter of 2019 compared to revenues of $87.9 million and Segment EBITDA of $10.9 million reported in the first quarter of 2019. Revenues increased 16% while Segment EBITDA increased 45% sequentially, due to an increase in project-driven and short-cycle product sales, coupled with improved facility cost absorption. Segment EBITDA margin in the second quarter of 2019 was 16% compared to 12% in the first quarter of 2019.

Notable backlog additions during the second quarter of 2019 included production facility equipment destined for Southeast Asia and connector products destined for the Middle East. Backlog increased 21% sequentially to total $283 million at June 30, 2019 compared to $234 million at March 31, 2019, and $165 million at June 30, 2018. Second quarter 2019 bookings totaled $163 million, yielding a book-to-bill ratio of 1.6x.

Well Site Services

Well Site Services generated revenues of $116.0 million, Segment EBITDA (Note B) of $18.3 million and a Segment EBITDA margin of 16% in the second quarter of 2019. This compares favorably to revenues of $108.4 million, Segment EBITDA of $13.2 million and a Segment EBITDA margin of 12% reported in the first quarter of 2019. Results in the second quarter of 2019 benefited from both improved international activity and improved margins in our U.S. operations.

Downhole Technologies

Downhole Technologies generated revenues of $46.7 million and Segment EBITDA of $3.8 million in the second quarter of 2019 compared to revenues and Segment EBITDA of $54.3 million and $9.1 million, respectively, in the first quarter of 2019. Sequential declines were realized as the segment continued to absorb costs associated with field trials for its integrated gun system coupled with $1.4 million of inventory write-offs due to product design changes. Segment EBITDA margin was 8% in the second quarter of 2019 compared to 17% in the first quarter of 2019.

Income Taxes

The Company recognized an effective tax rate benefit of 2.6% in the second quarter of 2019 which compared to an effective tax rate benefit of 1.9% in the first quarter of 2019. The effective tax rate benefit in the second quarter of 2019 was lower than the statutory rate due to certain non-deductible items.

Financial Condition

As of June 30, 2019, $99.2 million was outstanding under the Company’s revolving credit facility, while cash totaled $12.4 million. The Company repaid $21.1 million of outstanding borrowings under its revolving credit facility during the second quarter of 2019. As of June 30, 2019, the total amount available to be drawn under the revolving credit facility was $96.0 million.

Conference Call Information

The call is scheduled for Monday, July 29, 2019 at 10:00 am Central Time, and is being webcast and can be accessed from the Company’s website at www.ir.oilstatesintl.com. Participants may also join the conference call by dialing (888) 771-4371 in the United States or by dialing +1 847 585 4405 internationally and using the passcode 48858900. A replay of the conference call will be available one and a half hours after the completion of the call by dialing (888) 843-7419 in the United States or by dialing +1 630 652 3042 internationally and entering the passcode 48858900.

About Oil States

Oil States International, Inc. is a global oilfield products and services company serving the drilling, completion, subsea, production and infrastructure sectors of the oil and gas industry. The Company’s manufactured products include highly engineered capital equipment as well as products consumed in the drilling, well construction and production of oil and gas. The Company is also a leading researcher, developer and manufacturer of engineered solutions to connect the wellbore with the formation in oil and gas well completions. Oil States is headquartered in Houston, Texas with manufacturing and service facilities strategically located across the globe. Oil States 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 www.oilstatesintl.com.  

Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of Section 27A 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 others, the level of supply of and demand for oil and natural gas, fluctuations in the prices therefor and the cyclical nature of the oil and natural gas industry and the other risks associated with the general nature of the energy service industry discussed in the “Business” and “Risk Factors” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, Periodic Reports on Form 8-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.

 
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
 
  Three Months Ended   Six Months Ended
  June 30,
 2019
  March 31,
 2019
  June 30,
 2018
  June 30,
 2019
  June 30,
 2018
Revenues:                  
Products $ 124,965     $ 116,328     $ 136,182     $ 241,293     $ 265,008  
Services 139,720     134,283     149,663     274,003     274,413  
  264,685     250,611     285,845     515,296     539,421  
                   
Costs and expenses:                  
Product costs 95,289     89,268     95,324     184,557     188,300  
Service costs 112,823     110,610     118,079     223,433     214,993  
Cost of revenues (exclusive of depreciation and amortization expense presented below) 208,112     199,878     213,403     407,990     403,293  
Selling, general and administrative expense 31,484     30,108     35,919     61,592     70,114  
Depreciation and amortization expense 31,883     31,551     30,922     63,434     60,112  
Other operating income, net (399 )   (86 )   (3,099 )   (485 )   (1,884 )
  271,080     261,451     277,145     532,531     531,635  
Operating income (loss) (6,395 )   (10,840 )   8,700     (17,235 )   7,786  
                   
Interest expense, net (4,617 )   (4,752 )   (4,790 )   (9,369 )   (9,244 )
Other income 1,009     667     571     1,676     1,218  
Income (loss) before income taxes (10,003 )   (14,925 )   4,481     (24,928 )   (240 )
Income tax (provision) benefit 263     277     (1,739 )   540     (510 )
Net income (loss) $ (9,740 )   $ (14,648 )   $ 2,742     $ (24,388 )   $ (750 )
                   
Net income (loss) per share:                  
Basic $ (0.16 )   $ (0.25 )   $ 0.05     $ (0.41 )   $ (0.01 )
Diluted $ (0.16 )   $ (0.25 )   $ 0.05     $ (0.41 )   $ (0.01 )
                   
Weighted average number of common shares outstanding:                
Basic 59,406     59,258     59,005     59,332     58,396  
Diluted 59,406     59,258     59,005     59,332     58,396  
                             
                             


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(In Thousands)
 
  June 30, 2019   December 31,
2018
  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 12,406     $ 19,316  
Accounts receivable, net 263,453     283,607  
Inventories, net 210,006     209,393  
Prepaid expenses and other current assets 25,514     21,715  
Total current assets 511,379     534,031  
       
Property, plant, and equipment, net 520,324     540,427  
Operating lease assets, net 48,235      
Goodwill, net 646,984     647,018  
Other intangible assets, net 242,886     255,301  
Other noncurrent assets 27,893     27,044  
Total assets $ 1,997,701     $ 2,003,821  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Current portion of long-term debt $ 25,583     $ 25,561  
Accounts payable 83,909     77,511  
Accrued liabilities 53,478     60,730  
Current operating lease liabilities 8,997      
Income taxes payable 4,243     3,072  
Deferred revenue 15,360     14,160  
Total current liabilities 191,570     181,034  
       
Long-term debt 272,784     306,177  
Long-term operating lease liabilities 39,268      
Deferred income taxes 50,224     53,831  
Other noncurrent liabilities 24,127     23,011  
Total liabilities 577,973     564,053  
       
Stockholders' equity:      
Common stock 726     718  
Additional paid-in capital 1,106,340     1,097,758  
Retained earnings 1,005,130     1,029,518  
Accumulated other comprehensive loss (71,260 )   (71,397 )
Treasury stock (621,208 )   (616,829 )
Total stockholders' equity 1,419,728     1,439,768  
Total liabilities and stockholders' equity $ 1,997,701     $ 2,003,821  
               
               


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
 
  Six Months Ended June 30,
  2019   2018
Cash flows from operating activities:      
Net loss $ (24,388 )   $ (750 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization expense 63,434     60,112  
Stock-based compensation expense 8,590     10,861  
Amortization of debt discount and deferred financing costs 3,894     3,613  
Deferred income tax provision (benefit) (3,495 )   481  
Gain on disposals of assets (1,245 )   (927 )
Other, net 141     2,520  
Changes in operating assets and liabilities, net of effect from acquired businesses:      
Accounts receivable 19,884     (19,134 )
Inventories (534 )   (1,768 )
Accounts payable and accrued liabilities 1,200     (2,251 )
Income taxes payable 943     (31 )
Other operating assets and liabilities, net (2,421 )   (5,792 )
Net cash flows provided by operating activities 66,003     46,934  
       
Cash flows from investing activities:      
Capital expenditures (31,577 )   (38,261 )
Acquisitions of businesses, net of cash acquired     (379,676 )
Proceeds from disposition of property, plant and equipment 2,151     1,197  
Other, net (1,459 )   (985 )
Net cash flows used in investing activities (30,885 )   (417,725 )
       
Cash flows from financing activities:      
Issuance of 1.50% convertible senior notes     200,000  
Revolving credit facility borrowings 119,252     704,469  
Revolving credit facility repayments (156,208 )   (546,564 )
Other debt and finance lease repayments, net (301 )   (266 )
Payment of financing costs (8 )   (7,366 )
Purchase of treasury stock (757 )    
Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock (3,622 )   (4,022 )
Net cash flows provided by (used in) financing activities (41,644 )   346,251  
       
Effect of exchange rate changes on cash and cash equivalents (384 )   183  
Net change in cash and cash equivalents (6,910 )   (24,357 )
Cash and cash equivalents, beginning of period 19,316     53,459  
Cash and cash equivalents, end of period $ 12,406     $ 29,102  
               
               


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
SEGMENT DATA
(In Thousands)
(unaudited)
 
  Three Months Ended   Six Months Ended
  June 30,
 2019
  March 31,
 2019
  June 30,
 2018
  June 30,
 2019
  June 30,
 2018
Revenues:                  
Well Site Services:                  
Completion Services $ 103,320     $ 100,642     $ 108,368     $ 203,962     $ 191,208  
Drilling Services 12,646     7,750     16,756     20,396     34,315  
Total Well Site Services 115,966     108,392     125,124     224,358     225,523  
Downhole Technologies 46,740     54,290     59,274     101,030     105,055  
Offshore/Manufactured Products(1):                  
Project-driven products 38,517     27,245     35,225     65,762     76,024  
Short-cycle products 35,011     32,013     37,348     67,024     77,766  
Other products and services 28,451     28,671     28,874     57,122     55,053  
Total Offshore/Manufactured Products 101,979     87,929     101,447     189,908     208,843  
Total revenues $ 264,685     $ 250,611     $ 285,845     $ 515,296     $ 539,421  
                   
Operating income (loss):                  
Well Site Services:                  
Completion Services(2,3,4) $ (507 )   $ (3,494 )   $ 1,204     $ (4,001 )   $ (3,267 )
Drilling Services (2,601 )   (4,559 )   (2,957 )   (7,160 )   (5,268 )
Total Well Site Services (3,108 )   (8,053 )   (1,753 )   (11,161 )   (8,535 )
Downhole Technologies(4) (1,462 )   4,054     11,600     2,592     19,654  
Offshore/Manufactured Products(2,3,4) 9,809     5,259     12,664     15,068     25,116  
Corporate(4) (11,634 )   (12,100 )   (13,811 )   (23,734 )   (28,449 )
Total operating income (loss) $ (6,395 )   $ (10,840 )   $ 8,700     $ (17,235 )   $ 7,786  

(1) Disaggregated revenue data is provided to supplement the Segment Data.

(2) Operating income (loss) for the three months ended June 30, 2019 included severance and downsizing charges of $0.3 million related to the Completion Services business and $1.0 million related to the Offshore/Manufactured Products segment.

(3) Operating income (loss) for the three months ended March 31, 2019 included severance charges of $0.8 million related to the Completion Services business and $0.3 million related to the Offshore/Manufactured Products segment.

(4) Operating income (loss) for the six months ended June 30, 2018 included transaction-related expenses of $2.4 million and $0.2 million related to Corporate and the Downhole Technologies segment, respectively, as well as $2.4 million of legal fees incurred for patent defense in the Downhole Technologies segment, severance and other downsizing charges of $0.8 million related to the Offshore/Manufactured Products segment, and $0.7 million in reserves for prior years' FLSA claims settlements related to the Completion Services business.

 
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
SEGMENT EBITDA (B)
(In Thousands)
(unaudited)
 
  Three Months Ended   Six Months Ended
  June 30,
 2019
  March 31,
 2019
  June 30,
 2018
  June 30,
 2019
  June 30,
 2018
Well Site Services:                  
Completion Services:                  
Operating income (loss) $ (507 )   $ (3,494 )   $ 1,204     $ (4,001 )   $ (3,267 )
Depreciation and amortization expense 17,248     17,286     16,816     34,534     32,198  
Other income 809     581     526     1,390     795  
EBITDA $ 17,550     $ 14,373     $ 18,546     $ 31,923     $ 29,726  
                   
Drilling Services:                  
Operating loss $ (2,601 )   $ (4,559 )   $ (2,957 )   $ (7,160 )   $ (5,268 )
Depreciation and amortization expense 3,224     3,341     3,551     6,565     7,419  
Other income 126     21     5     147     380  
EBITDA $ 749     $ (1,197 )   $ 599     $ (448 )   $ 2,531  
                   
Total Well Site Services:                  
Operating loss $ (3,108 )   $ (8,053 )   $ (1,753 )   $ (11,161 )   $ (8,535 )
Depreciation and amortization expense 20,472     20,627     20,367     41,099     39,617  
Other income 935     602     531     1,537     1,175  
Segment EBITDA $ 18,299     $ 13,176     $ 19,145     $ 31,475     $ 32,257  
                   
Downhole Technologies:                  
Operating income (loss) $ (1,462 )   $ 4,054     $ 11,600     $ 2,592     $ 19,654  
Depreciation and amortization expense 5,256     5,066     4,532     10,322     8,416  
Other income (expense) 14             14     (13 )
Segment EBITDA $ 3,808     $ 9,120     $ 16,132     $ 12,928     $ 28,057  
                   
Offshore/Manufactured Products:                  
Operating income $ 9,809     $ 5,259     $ 12,664     $ 15,068     $ 25,116  
Depreciation and amortization expense 5,973     5,587     5,786     11,560     11,600  
Other income 60     65     40     125     56  
Segment EBITDA $ 15,842     $ 10,911     $ 18,490     $ 26,753     $ 36,772  
                   
Corporate:                  
Operating loss $ (11,634 )   $ (12,100 )   $ (13,811 )   $ (23,734 )   $ (28,449 )
Depreciation and amortization expense 182     271     237     453     479  
Other expense                  
EBITDA $ (11,452 )   $ (11,829 )   $ (13,574 )   $ (23,281 )   $ (27,970 )
                                       
                                       


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In Thousands)
(unaudited)
 
  Three Months Ended   Six Months Ended
  June 30,
 2019
  March 31,
 2019
  June 30,
 2018
  June 30,
 2019
  June 30,
 2018
                   
Net income (loss) $ (9,740 )   $ (14,648 )   $ 2,742     $ (24,388 )   $ (750 )
Income tax provision (benefit) (263 )   (277 )   1,739     (540 )   510  
Depreciation and amortization expense 31,883     31,551     30,922     63,434     60,112  
Interest expense, net 4,617     4,752     4,790     9,369     9,244  
Consolidated EBITDA (A) $ 26,497     $ 21,378     $ 40,193     $ 47,875     $ 69,116  
                                       

(A) The term Consolidated EBITDA consists of net loss plus net interest expense, taxes, depreciation and amortization expense, and certain other items. Consolidated EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net loss or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Consolidated EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Consolidated EBITDA as a supplemental disclosure because its management believes that Consolidated EBITDA provides useful information regarding its 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 Consolidated EBITDA to compare and to monitor the performance of the Company and its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. The table above sets forth a reconciliation of Consolidated EBITDA to net loss, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles.

(B) The terms EBITDA and Segment EBITDA consist of operating income (loss) plus depreciation and amortization expense, and certain other items. EBITDA and Segment EBITDA are not measures of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for operating income (loss) or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA and Segment EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA and Segment EBITDA as a supplemental disclosure because its management believes that EBITDA and Segment EBITDA provide useful information regarding its 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 and Segment 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. The tables above set forth reconciliations of EBITDA and Segment EBITDA to operating income (loss), which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles.

 
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
ADDITIONAL QUARTERLY SEGMENT AND OPERATING DATA
(unaudited)
 
  Three Months Ended
  June 30,
 2019
  March 31,
 2019
  June 30,
 2018
Supplemental operating data:                      
Offshore/Manufactured Products backlog ($ in millions) $ 282.9     $ 234.0     $ 165.3  
                       
Land drilling operating statistics:                      
Average rigs available   34       34       34  
Utilization   20.2 %     11.9 %     30.1 %
Implied day rate ($ in thousands per day) $ 20.2     $ 21.2     $ 18.0  
Implied daily cash margin (loss) ($ in thousands per day) $ 1.8     $ (2.2 )   $ 1.0  
                       
                       

Company Contact:
Lloyd A. Hajdik
Oil States International, Inc.
Executive Vice President, Chief Financial Officer and Treasurer
713-652-0582

Patricia Gil
Oil States International, Inc.
Director, Investor Relations
713-470-4860

SOURCE: Oil States International, Inc.

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