Oil States Announces Fourth Quarter 2018 Results of Operations
The fourth quarter 2018 results included:
- Legal fees incurred for patent defense of
$2 .4 million ($1 .9 million after-tax, or$0.03 per diluted share) - Transaction-related expenses of $0.7 million ($0.6 million after-tax, or
$0.01 per diluted share) - Severance and other downsizing charges of $0.8 million ($0.7 million after-tax, or
$0.01 per diluted share)
Oil States’ President and Chief Executive Officer,
"Our fourth quarter results were achieved in spite of the extreme volatility that we witnessed with respect to crude oil prices. The WTI spot price peaked at
For the year ended
The full year 2018 results included:
- Legal fees incurred for patent defense of
$8 .4 million ($6 .6 million after-tax, or$0.11 per diluted share) - Transaction-related expenses of
$3 .3 million ($2 .6 million after-tax, or$0.04 per diluted share) - Reserves for prior years' FLSA claim settlements of
$3 .0 million ($2 .4 million after-tax, or$0.04 per diluted share) - Severance and other downsizing charges of
$1 .6 million ($1 .3 million after-tax, or$0.02 per diluted share)
BUSINESS SEGMENT RESULTS
(See Segment Data Tables)
Well Site Services
Well Site Services generated revenues of
Downhole Technologies (acquisition of
Downhole Technologies generated revenues of
Offshore/Manufactured Products
Offshore/Manufactured Products segment generated revenues and Segment EBITDA of
Income Taxes
The Company recognized an effective tax rate provision of 5.1% in the fourth quarter of 2018 bringing the overall annual effective tax rate to a benefit of 12.1% for 2018.
Financial Condition
As of
Conference Call Information
The call is scheduled for
About
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
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended | Year Ended December 31, | ||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
2018 | 2017 | |||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
Revenues: | |||||||||||||||||||
Products | $ | 116,543 | $ | 120,271 | $ | 80,533 | $ | 501,822 | $ | 303,802 | |||||||||
Services | 157,575 | 154,323 | 103,177 | 586,311 | 366,825 | ||||||||||||||
274,118 | 274,594 | 183,710 | 1,088,133 | 670,627 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Product costs | 90,331 | 87,822 | 59,214 | 366,453 | 219,466 | ||||||||||||||
Service costs | 125,231 | 127,836 | 81,592 | 468,060 | 301,289 | ||||||||||||||
Cost of revenues (exclusive of depreciation and amortization expense presented below) | 215,562 | 215,658 | 140,806 | 834,513 | 520,755 | ||||||||||||||
Selling, general and administrative expenses | 35,671 | 32,285 | 30,761 | 138,070 | 114,816 | ||||||||||||||
Depreciation and amortization expense | 32,832 | 30,586 | 25,115 | 123,530 | 107,667 | ||||||||||||||
Other operating (income) expense, net | (7 | ) | (213 | ) | 887 | (2,104 | ) | 1,261 | |||||||||||
284,058 | 278,316 | 197,569 | 1,094,009 | 744,499 | |||||||||||||||
Operating loss | (9,940 | ) | (3,722 | ) | (13,859 | ) | (5,876 | ) | (73,872 | ) | |||||||||
Interest expense, net | (4,908 | ) | (4,843 | ) | (1,188 | ) | (18,995 | ) | (4,315 | ) | |||||||||
Other income | 1,212 | 709 | 298 | 3,139 | 775 | ||||||||||||||
Loss before income taxes | (13,636 | ) | (7,856 | ) | (14,749 | ) | (21,732 | ) | (77,412 | ) | |||||||||
Income tax (provision) benefit | (700 | ) | 3,837 | (23,146 | ) | 2,627 | (7,438 | ) | |||||||||||
Net loss | $ | (14,336 | ) | $ | (4,019 | ) | $ | (37,895 | ) | $ | (19,105 | ) | $ | (84,850 | ) | ||||
Net loss per share from: | |||||||||||||||||||
Basic | $ | (0.24 | ) | $ | (0.07 | ) | $ | (0.76 | ) | $ | (0.33 | ) | $ | (1.69 | ) | ||||
Diluted | $ | (0.24 | ) | $ | (0.07 | ) | $ | (0.76 | ) | $ | (0.33 | ) | $ | (1.69 | ) | ||||
Weighted average number of common shares outstanding: | |||||||||||||||||||
Basic | 59,032 | 59,026 | 49,987 | 58,712 | 50,139 | ||||||||||||||
Diluted | 59,032 | 59,026 | 49,987 | 58,712 | 50,139 | ||||||||||||||
CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31, 2018 |
December 31, 2017 |
||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 19,316 | $ | 53,459 | |||
Accounts receivable, net | 283,607 | 216,139 | |||||
Inventories, net | 209,393 | 168,285 | |||||
Prepaid expenses and other current assets | 21,715 | 18,054 | |||||
Total current assets | 534,031 | 455,937 | |||||
Property, plant and equipment, net | 540,427 | 498,890 | |||||
Goodwill, net | 647,018 | 268,009 | |||||
Other intangible assets, net | 255,301 | 50,265 | |||||
Other noncurrent assets | 27,044 | 28,410 | |||||
Total assets | $ | 2,003,821 | $ | 1,301,511 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 25,561 | $ | 411 | |||
Accounts payable | 77,511 | 49,089 | |||||
Accrued liabilities | 60,730 | 45,889 | |||||
Income taxes payable | 3,072 | 1,647 | |||||
Deferred revenue | 14,160 | 18,234 | |||||
Total current liabilities | 181,034 | 115,270 | |||||
Long-term debt | 306,177 | 4,870 | |||||
Deferred income taxes | 53,831 | 24,718 | |||||
Other noncurrent liabilities | 23,011 | 23,940 | |||||
Total liabilities | 564,053 | 168,798 | |||||
Stockholders' equity: | |||||||
Common stock | 718 | 627 | |||||
Additional paid-in capital | 1,097,758 | 754,607 | |||||
Retained earnings | 1,029,518 | 1,048,623 | |||||
Accumulated other comprehensive loss | (71,397 | ) | (58,493 | ) | |||
Treasury stock, at cost | (616,829 | ) | (612,651 | ) | |||
Total stockholders' equity | 1,439,768 | 1,132,713 | |||||
Total liabilities and stockholders' equity | $ | 2,003,821 | $ | 1,301,511 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended December 31, | |||||||
2018 | 2017 | ||||||
(Unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (19,105 | ) | $ | (84,850 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization expense | 123,530 | 107,667 | |||||
Stock-based compensation expense | 22,649 | 23,049 | |||||
Deferred income tax expense (benefit) | (3,489 | ) | 16,342 | ||||
Gain on disposals of assets | (6,288 | ) | (700 | ) | |||
Amortization of debt discount and deferred financing costs | 7,408 | 1,158 | |||||
Other, net | 1,411 | 288 | |||||
Changes in operating assets and liabilities, net of effect from acquired businesses: | |||||||
Accounts receivable | (16,792 | ) | 21,128 | ||||
Inventories | (7,283 | ) | 11,339 | ||||
Accounts payable and accrued liabilities | 5,796 | 14,048 | |||||
Income taxes payable | 802 | (4,126 | ) | ||||
Other operating assets and liabilities, net | (5,469 | ) | (9,961 | ) | |||
Net cash flows provided by operating activities | 103,170 | 95,382 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (88,024 | ) | (35,171 | ) | |||
Acquisitions of businesses, net of cash acquired | (379,676 | ) | (12,859 | ) | |||
Proceeds from disposition of property, plant and equipment | 3,659 | 2,134 | |||||
Proceeds from flood insurance claims | 3,850 | — | |||||
Other, net | (1,184 | ) | (1,719 | ) | |||
Net cash flows used in investing activities | (461,375 | ) | (47,615 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of 1.50% convertible senior notes | 200,000 | — | |||||
Revolving credit facility borrowings | 835,467 | 206,015 | |||||
Revolving credit facility repayments | (699,322 | ) | (248,199 | ) | |||
Other debt and capital lease repayments, net | (537 | ) | (517 | ) | |||
Payment of financing costs | (7,372 | ) | (759 | ) | |||
Purchase of treasury stock | — | (16,283 | ) | ||||
Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock | (4,178 | ) | (5,317 | ) | |||
Net cash flows provided by (used in) financing activities | 324,058 | (65,060 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 4 | 1,952 | |||||
Net change in cash and cash equivalents | (34,143 | ) | (15,341 | ) | |||
Cash and cash equivalents, beginning of year | 53,459 | 68,800 | |||||
Cash and cash equivalents, end of year | $ | 19,316 | $ | 53,459 | |||
SEGMENT DATA
(In Thousands)
(unaudited)
Three Months Ended | Year Ended December 31, | ||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
2018 | 2017 | |||||||||||||||
Revenues: | |||||||||||||||||||
Well Site Services - | |||||||||||||||||||
Completion Services | $ | 108,142 | $ | 111,669 | $ | 66,675 | $ | 411,019 | $ | 234,252 | |||||||||
Drilling Services | 18,000 | 16,920 | 15,342 | 69,235 | 54,462 | ||||||||||||||
Total Well Site Services | 126,142 | 128,589 | 82,017 | 480,254 | 288,714 | ||||||||||||||
Downhole Technologies | 52,187 | 56,571 | — | 213,813 | — | ||||||||||||||
Offshore/Manufactured Products(1) - | |||||||||||||||||||
Project-driven products | 22,593 | 22,277 | 37,345 | 120,894 | 126,960 | ||||||||||||||
Short-cycle products | 32,431 | 34,170 | 36,591 | 144,367 | 147,463 | ||||||||||||||
Other products and services | 40,765 | 32,987 | 27,757 | 128,805 | 107,490 | ||||||||||||||
Total Offshore/Manufactured Products | 95,789 | 89,434 | 101,693 | 394,066 | 381,913 | ||||||||||||||
Total revenues | $ | 274,118 | $ | 274,594 | $ | 183,710 | $ | 1,088,133 | $ | 670,627 | |||||||||
Operating income (loss): | |||||||||||||||||||
Well Site Services - | |||||||||||||||||||
Completion Services | $ | (1,109 | ) | $ | (3,271 | ) | $ | (6,209 | ) | $ | (7,647 | ) | $ | (45,169 | ) | ||||
Drilling Services | (1,889 | ) | (2,206 | ) | (2,670 | ) | (9,363 | ) | (13,909 | ) | |||||||||
Total Well Site Services | (2,998 | ) | (5,477 | ) | (8,879 | ) | (17,010 | ) | (59,078 | ) | |||||||||
Downhole Technologies | 566 | 6,485 | — | 26,705 | — | ||||||||||||||
Offshore/Manufactured Products | 6,729 | 7,069 | 10,695 | 38,914 | 38,155 | ||||||||||||||
Corporate | (14,237 | ) | (11,799 | ) | (15,675 | ) | (54,485 | ) | (52,949 | ) | |||||||||
Total operating loss | $ | (9,940 | ) | $ | (3,722 | ) | $ | (13,859 | ) | $ | (5,876 | ) | $ | (73,872 | ) | ||||
(1) Disaggregated revenue data is provided to supplement the Segment Data.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
SEGMENT EBITDA (B)
(In Thousands)
(unaudited)
Three Months Ended | Year Ended December 31, | ||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
2018 | 2017 | |||||||||||||||
Well Site Services: | |||||||||||||||||||
Completion Services: | |||||||||||||||||||
Operating loss | $ | (1,109 | ) | $ | (3,271 | ) | $ | (6,209 | ) | $ | (7,647 | ) | $ | (45,169 | ) | ||||
Depreciation and amortization expense | 17,333 | 16,884 | 15,128 | 66,415 | 63,528 | ||||||||||||||
Other income | 1,209 | 620 | 171 | 2,624 | 583 | ||||||||||||||
EBITDA | $ | 17,433 | $ | 14,233 | $ | 9,090 | $ | 61,392 | $ | 18,942 | |||||||||
Drilling Services: | |||||||||||||||||||
Operating loss | $ | (1,889 | ) | $ | (2,206 | ) | $ | (2,670 | ) | $ | (9,363 | ) | $ | (13,909 | ) | ||||
Depreciation and amortization expense | 3,456 | 3,479 | 4,230 | 14,354 | 18,513 | ||||||||||||||
Other income | 1 | (1 | ) | 46 | 380 | 95 | |||||||||||||
EBITDA | $ | 1,568 | $ | 1,272 | $ | 1,606 | $ | 5,371 | $ | 4,699 | |||||||||
Total Well Site Services: | |||||||||||||||||||
Operating loss | $ | (2,998 | ) | $ | (5,477 | ) | $ | (8,879 | ) | $ | (17,010 | ) | $ | (59,078 | ) | ||||
Depreciation and amortization expense | 20,789 | 20,363 | 19,358 | 80,769 | 82,041 | ||||||||||||||
Other income | 1,210 | 619 | 217 | 3,004 | 678 | ||||||||||||||
Segment EBITDA | $ | 19,001 | $ | 15,505 | $ | 10,696 | $ | 66,763 | $ | 23,641 | |||||||||
Downhole Technologies: | |||||||||||||||||||
Operating income | $ | 566 | $ | 6,485 | $ | — | $ | 26,705 | $ | — | |||||||||
Depreciation and amortization expense | 5,651 | 4,582 | — | 18,649 | — | ||||||||||||||
Other expense | (7 | ) | 1 | — | (19 | ) | — | ||||||||||||
Segment EBITDA | $ | 6,210 | $ | 11,068 | $ | — | $ | 45,335 | $ | — | |||||||||
Offshore/Manufactured Products: | |||||||||||||||||||
Operating income | $ | 6,729 | $ | 7,069 | $ | 10,695 | $ | 38,914 | $ | 38,155 | |||||||||
Depreciation and amortization expense | 6,181 | 5,426 | 5,505 | 23,207 | 24,596 | ||||||||||||||
Other income | 9 | 89 | 81 | 154 | 97 | ||||||||||||||
Segment EBITDA | $ | 12,919 | $ | 12,584 | $ | 16,281 | $ | 62,275 | $ | 62,848 | |||||||||
Corporate: | |||||||||||||||||||
Operating loss | $ | (14,237 | ) | $ | (11,799 | ) | $ | (15,675 | ) | $ | (54,485 | ) | $ | (52,949 | ) | ||||
Depreciation and amortization expense | 211 | 215 | 252 | 905 | 1,030 | ||||||||||||||
EBITDA | $ | (14,026 | ) | $ | (11,584 | ) | $ | (15,423 | ) | $ | (53,580 | ) | $ | (51,919 | ) | ||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In Thousands)
(unaudited)
Three Months Ended | Year Ended December 31, | ||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
2018 | 2017 | |||||||||||||||
Net loss | $ | (14,336 | ) | $ | (4,019 | ) | $ | (37,895 | ) | $ | (19,105 | ) | $ | (84,850 | ) | ||||
Income tax provision (benefit) | 700 | (3,837 | ) | 23,146 | (2,627 | ) | 7,438 | ||||||||||||
Depreciation and amortization expense | 32,832 | 30,586 | 25,115 | 123,530 | 107,667 | ||||||||||||||
Interest income | (47 | ) | (70 | ) | (116 | ) | (319 | ) | (359 | ) | |||||||||
Interest expense | 4,955 | 4,913 | 1,304 | 19,314 | 4,674 | ||||||||||||||
Consolidated EBITDA (A) | $ | 24,104 | $ | 27,573 | $ | 11,554 | $ | 120,793 | $ | 34,570 | |||||||||
(A) The term Consolidated EBITDA consists of net loss from continuing operations 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 from continuing operations 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 from continuing operations, 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.
ADDITIONAL QUARTERLY SEGMENT AND OPERATING DATA
(unaudited)
Three Months Ended | |||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
|||||||||
Supplemental operating data: | |||||||||||
Offshore/Manufactured Products backlog ($ in millions) | $ | 178.6 | $ | 174.6 | $ | 168.0 | |||||
Completion services job tickets | 7,914 | 8,485 | 5,301 | ||||||||
Average revenue per ticket ($ in thousands) | $ | 13.7 | $ | 13.2 | $ | 12.6 | |||||
Land drilling operating statistics: | |||||||||||
Average rigs available | 34 | 34 | 34 | ||||||||
Utilization | 29.6 | % | 30.5 | % | 31.4 | % | |||||
Implied day rate ($ in thousands per day) | $ | 19.5 | $ | 17.7 | $ | 15.6 | |||||
Implied daily cash margin (loss) ($ in thousands per day) | $ | 2.1 | $ | 1.8 | $ | 2.1 | |||||
Company Contact:
Executive Vice President, Chief Financial Officer and Treasurer
713-652-0582
Director, Investor Relations
713-470-4860
SOURCE:
Source: Oil States International, Inc.