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Oil States International Inc.$13.31$.977.86%

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 Oil States Announces Second Quarter 2019 Results of Operations
   Monday, July 29, 2019 7:00:00 AM ET

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 
Services139,720  134,283  149,663  274,003  274,413 
 264,685  250,611  285,845  515,296  539,421 
          
Costs and expenses:         
Product costs95,289  89,268  95,324  184,557  188,300 
Service costs112,823  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 expense31,484  30,108  35,919  61,592  70,114 
Depreciation and amortization expense31,883  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 income1,009  667  571  1,676  1,218 
Income (loss) before income taxes(10,003) (14,925) 4,481  (24,928) (240)
Income tax (provision) benefit263  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:        
Basic59,406  59,258  59,005  59,332  58,396 
Diluted59,406  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, net263,453  283,607 
Inventories, net210,006  209,393 
Prepaid expenses and other current assets25,514  21,715 
Total current assets511,379  534,031 
    
Property, plant, and equipment, net520,324  540,427 
Operating lease assets, net48,235   
Goodwill, net646,984  647,018 
Other intangible assets, net242,886  255,301 
Other noncurrent assets27,893  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 payable83,909  77,511 
Accrued liabilities53,478  60,730 
Current operating lease liabilities8,997   
Income taxes payable4,243  3,072 
Deferred revenue15,360  14,160 
Total current liabilities191,570  181,034 
    
Long-term debt272,784  306,177 
Long-term operating lease liabilities39,268   
Deferred income taxes50,224  53,831 
Other noncurrent liabilities24,127  23,011 
Total liabilities577,973  564,053 
    
Stockholders' equity:   
Common stock726  718 
Additional paid-in capital1,106,340  1,097,758 
Retained earnings1,005,130  1,029,518 
Accumulated other comprehensive loss(71,260) (71,397)
Treasury stock(621,208) (616,829)
Total stockholders' equity1,419,728  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 expense63,434  60,112 
Stock-based compensation expense8,590  10,861 
Amortization of debt discount and deferred financing costs3,894  3,613 
Deferred income tax provision (benefit)(3,495) 481 
Gain on disposals of assets(1,245) (927)
Other, net141  2,520 
Changes in operating assets and liabilities, net of effect from acquired businesses:   
Accounts receivable19,884  (19,134)
Inventories(534) (1,768)
Accounts payable and accrued liabilities1,200  (2,251)
Income taxes payable943  (31)
Other operating assets and liabilities, net(2,421) (5,792)
Net cash flows provided by operating activities66,003  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 equipment2,151  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 borrowings119,252  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 period19,316  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 Services12,646  7,750  16,756  20,396  34,315 
Total Well Site Services115,966  108,392  125,124  224,358  225,523 
Downhole Technologies46,740  54,290  59,274  101,030  105,055 
Offshore/Manufactured Products(1):         
Project-driven products38,517  27,245  35,225  65,762  76,024 
Short-cycle products35,011  32,013  37,348  67,024  77,766 
Other products and services28,451  28,671  28,874  57,122  55,053 
Total Offshore/Manufactured Products101,979  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 expense17,248  17,286  16,816  34,534  32,198 
Other income809  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 expense3,224  3,341  3,551  6,565  7,419 
Other income126  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 expense20,472  20,627  20,367  41,099  39,617 
Other income935  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 expense5,256  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 expense5,973  5,587  5,786  11,560  11,600 
Other income60  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) $(28,449)
Depreciation and amortization expense182  271  237  453  479 
Other expense         
EBITDA$(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 expense31,883  31,551  30,922  63,434  60,112 
Interest expense, net4,617  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.

Oil States International Inc. Logo

Source: Oil States International, Inc.


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