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Apr 28, 2022

Oil States Announces First Quarter 2022 Results of Operations

HOUSTON, April 28, 2022 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE: OIS) reported a net loss of $9.4 million, or $0.16 per share, for the first quarter of 2022. During the first quarter of 2022, the Company generated revenues of $164.0 million and Consolidated EBITDA (Note A) of $14.5 million. These results compare to revenues of $161.3 million and Adjusted Consolidated EBITDA of $13.4 million reported in the fourth quarter of 2021.

First quarter 2022 highlights included:

  • Consolidated revenues and EBITDA rose to the highest level reported since the outbreak of the COVID-19 pandemic in the first quarter of 2020
  • Short-cycle product and service revenues increased 15% sequentially, driven by higher customer completion activity levels
  • Offshore/Manufactured Products Adjusted Segment EBITDA (Note B) increased 14% sequentially, despite a 9% decline in revenue, yielding favorable EBITDA margins
  • Offshore/Manufactured Products backlog increased $5 million to $265 million, with a book-to-bill ratio of 1.1x

Oil States' President and Chief Executive Officer, Cindy B. Taylor, stated,

"Our first quarter 2022 consolidated revenues and EBITDA exceeded projections, driven by the improved commodity price environment and a favorable sales mix in our Offshore/Manufactured Products segment. Consolidated revenues and EBITDA increased sequentially to $164.0 million and $14.5 million, respectively, despite ongoing challenges associated with the COVID-19 pandemic, including supply chain disruptions. Our consolidated revenue and EBITDA for the current quarter are at the highest level reported since the start of the pandemic.

"Adjusted Segment EBITDA for our Offshore/Manufactured Products segment increased $1.9 million, or 14%, sequentially totaling $15.6 million. During the first quarter 2022, backlog grew to $265 million at March 31, with quarterly bookings of $93 million, yielding a book-to-bill ratio of 1.1x.

"Our Well Site Services segment revenues increased 11% sequentially due primarily to higher customer activity in our U.S. Mid-Continent and Gulf Coast regions. The sequential quarter revenue growth was tempered by our exit of U.S. thru-tubing operations in January of 2022, which resulted in a $3.9 million reduction in revenue when compared to the fourth quarter of 2021.

"We were pleased to see first quarter revenues in our Downhole Technologies segment increase 23% from the fourth quarter, driven by higher demand internationally for perforating products along with improved U.S. sales of frac plugs and toe valves. Adjusted Segment EBITDA increased $2.7 million given strong segment incremental margins.

"We are encouraged by the continued increase in industry activity, which should benefit each of our operating segments over the balance of 2022."

BUSINESS SEGMENT RESULTS

(See Segment Data tables)

Offshore/Manufactured Products

Offshore/Manufactured Products reported revenues of $84.1 million and Adjusted Segment EBITDA of $15.6 million in the first quarter of 2022, compared to revenues of $92.2 million and Adjusted Segment EBITDA of $13.7 million reported in the fourth quarter of 2021. Revenues decreased 9% sequentially, driven primarily by a 22% decrease in project-driven revenues, while margins improved due to a favorable product and service mix. During the first quarter of 2022, the segment recorded bad debt expense of $0.8 million on receivables from its Russia-based customers. Adjusted Segment EBITDA margin in the first quarter of 2022 was 19%, compared to 15% in the fourth quarter of 2021.

Backlog totaled $265 million as of March 31, 2022, a 2% sequential increase from December 31, 2021. First quarter 2022 bookings totaled $93 million, yielding a quarterly book-to-bill ratio of 1.1x.

Well Site Services

Well Site Services reported revenues of $48.2 million and Adjusted Segment EBITDA of $5.5 million in the first quarter of 2022, compared to revenues of $43.3 million and Adjusted Segment EBITDA of $6.2 million reported in the fourth quarter of 2021. Adjusted Segment EBITDA margin in the first quarter of 2022 was 11%, compared to 14% in the fourth quarter of 2021. Revenue mix and inflationary pressures tempered overall segment margins.

Downhole Technologies

Downhole Technologies reported revenues of $31.8 million and Adjusted Segment EBITDA of $2.9 million in the first quarter of 2022, compared to revenues of $25.8 million and Adjusted Segment EBITDA of $0.1 million reported in the fourth quarter of 2021. Adjusted Segment EBITDA margin in the first quarter of 2022 was 9%, compared to 1% in the fourth quarter of 2021.

Corporate

Corporate expenses in the first quarter of 2022 totaled $9.6 million.

Interest Expense, Net

Net interest expense totaled $2.7 million in the first quarter of 2022, which included $0.5 million of non-cash amortization of deferred debt issuance costs.

Income Taxes

The Company recognized tax expense of $3.4 million on a pre-tax loss of $6.0 million during the first quarter of 2022. Income tax expense in the first quarter of 2022 included the impact of valuation allowances record against the Company's deferred tax assets as well as certain non-deductible expenses and discrete tax items. In the fourth quarter of 2021, the Company recognized a tax benefit of $0.3 million on a pre-tax loss of $20.1 million.

Financial Condition

No borrowings were outstanding under the Company's asset-based revolving credit facility (the "ABL Facility") at March 31, 2022. Cash totaled $39.2 million, compared to $52.9 million at December 31, 2021 due to working capital investments made as the Company prepares for growth. Liquidity (cash plus borrowing availability) totaled $90.2 million at March 31, 2022, with amounts available to be drawn under the ABL Facility totaling $51.0 million.

The Company's total debt represented 21% and 20% of combined total debt and stockholders' equity as of March 31, 2022 and December 31, 2021, respectively.

Subsequent Event

On April 14, 2022, our Offshore/Manufactured Products segment acquired E-Flow Control Holdings Limited ("E-Flow"), a global provider of fully integrated handling, control, monitoring and instrumentation solutions. The purchase price of $8.6 million was funded with cash on-hand.

Conference Call Information

The call is scheduled for April 29, 2022 at 9:00 a.m. central daylight time, 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 1 (866) 374-5140 in the United States or by dialing +1 (404) 400-0571 internationally and using the passcode 40967423#. A replay of the conference call will be available one and a half hours after the completion of the call and can be accessed from the Company's website at www.ir.oilstatesintl.com

About Oil States

Oil States International, Inc. is a global provider of manufactured products and services to customers in the energy, industrial and military sectors. The Company's manufactured products include highly engineered capital equipment and consumable products. 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 thereof, the cyclical nature of the oil and natural gas industry, geopolitical tensions, the impact of the COVID-19 pandemic on the Company and its customers, the other risks associated with the general nature of the energy service industry and other factors discussed in the "Business" and "Risk Factors" sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and the subsequently filed Periodic Reports on Form 8-K. 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

CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)

  Three Months Ended
  March 31,
2022
  December 31,
2021
  March 31,
2021
  (Unaudited)   (Unaudited)   (Unaudited)
Revenues:          
Products $ 85,761     $ 89,401     $ 61,445  
Services   78,283       71,919       64,144  
    164,044       161,320       125,589  
           
Costs and expenses:          
Product costs   64,801       72,890       49,463  
Service costs   61,803       60,357       52,847  
Cost of revenues (exclusive of depreciation and amortization expense presented below)(1)   126,604       133,247       102,310  
Selling, general and administrative expense   23,833       20,297       21,225  
Depreciation and amortization expense   17,817       18,655       21,520  
Impairments of fixed assets         722       650  
Other operating (income) expense, net   126       (328 )     (354 )
    168,380       172,593       145,351  
Operating loss   (4,336 )     (11,273 )     (19,762 )
           
Interest expense, net   (2,672 )     (2,577 )     (2,325 )
Other income (expense), net(2)   1,025       (6,289 )     3,960  
Loss before income taxes   (5,983 )     (20,139 )     (18,127 )
Income tax (provision) benefit   (3,441 )     269       2,317  
Net loss $ (9,424 )   $ (19,870 )   $ (15,810 )
           
Net loss per share:          
Basic $ (0.16 )   $ (0.33 )   $ (0.26 )
Diluted $ (0.16 )   $ (0.33 )   $ (0.26 )
           
Weighted average number of common shares outstanding:        
Basic   60,498       60,380       60,098  
Diluted   60,498       60,380       60,098  

(1) In the three months ended December 31, 2021, cost of revenues (exclusive of depreciation and amortization expense) included non-cash inventory impairment charges of $1.5 million (in service costs).

(2) Other expense, net in the three months ended December 31, 2021 included a non-cash loss of $9.3 million associated with the reclassification of unrealized foreign currency translation adjustments which were released upon the liquidation of an international operation. For the three months ended March 31, 2021, other income, net included non-cash gains of $3.6 million recognized in connection with the purchases of $125.0 million principal amount of the 2023 Notes.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In Thousands)

  March 31, 2022   December 31, 2021
  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 39,158     $ 52,852  
Accounts receivable, net   194,257       186,080  
Inventories, net   180,886       168,573  
Prepaid expenses and other current assets   20,238       19,222  
Total current assets   434,539       426,727  
       
Property, plant, and equipment, net   330,118       338,583  
Operating lease assets, net   26,202       25,388  
Goodwill, net   76,179       76,412  
Other intangible assets, net   180,639       185,749  
Other noncurrent assets   30,288       32,889  
Total assets $ 1,077,965     $ 1,085,748  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Current portion of long-term debt $ 44,047     $ 18,262  
Accounts payable   60,650       63,343  
Accrued liabilities   41,541       43,401  
Current operating lease liabilities   6,143       6,481  
Income taxes payable   4,857       2,564  
Deferred revenue   47,560       43,236  
Total current liabilities   204,798       177,287  
       
Long-term debt   134,790       160,488  
Long-term operating lease liabilities   24,169       23,452  
Deferred income taxes   2,897       3,637  
Other noncurrent liabilities   23,203       25,058  
Total liabilities   389,857       389,922  
       
Stockholders' equity:      
Common stock   746       739  
Additional paid-in capital   1,106,963       1,105,135  
Retained earnings   272,143       281,567  
Accumulated other comprehensive loss   (65,170 )     (66,031 )
Treasury stock   (626,574 )     (625,584 )
Total stockholders' equity   688,108       695,826  
Total liabilities and stockholders' equity $ 1,077,965     $ 1,085,748  

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

  Three Months Ended March 31,
    2022       2021  
  (Unaudited)    
Cash flows from operating activities:      
Net loss $ (9,424 )   $ (15,810 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization expense   17,817       21,520  
Impairments of fixed assets         650  
Stock-based compensation expense   1,835       2,820  
Amortization of debt discount and deferred financing costs   469       895  
Deferred income tax benefit   (174 )     (2,710 )
Gains on extinguishment of 1.50% convertible senior notes         (3,637 )
Gains on disposals of assets   (543 )     (307 )
Other, net   550       285  
Changes in operating assets and liabilities:      
Accounts receivable   (9,086 )     (10,701 )
Inventories   (13,090 )     (3,890 )
Accounts payable and accrued liabilities   (4,555 )     1,648  
Deferred revenue   4,324       (206 )
Other operating assets and liabilities, net   1,142       1,026  
Net cash flows used in operating activities   (10,735 )     (8,417 )
       
Cash flows from investing activities:      
Capital expenditures   (2,858 )     (4,120 )
Proceeds from disposition of property and equipment   869       1,851  
Other, net   (67 )     (95 )
Net cash flows used in investing activities   (2,056 )     (2,364 )
       
Cash flows from financing activities:      
Revolving credit facility borrowings   367       12,220  
Revolving credit facility repayments   (367 )     (24,220 )
Issuance of 4.75% convertible senior notes         135,000  
Purchases of 1.50% convertible senior notes         (120,000 )
Other debt and finance lease repayments, net   (165 )     (145 )
Payment of financing costs   (68 )     (7,961 )
Shares added to treasury stock as a result of net share settlements
due to vesting of stock awards
  (990 )     (1,500 )
Net cash flows used in financing activities   (1,223 )     (6,606 )
       
Effect of exchange rate changes on cash and cash equivalents   320       (111 )
Net change in cash and cash equivalents   (13,694 )     (17,498 )
Cash and cash equivalents, beginning of period   52,852       72,011  
Cash and cash equivalents, end of period $ 39,158     $ 54,513  
       
Cash paid for:      
Interest $ 522     $ 1,842  
Income taxes, net   119       577  

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA
(In Thousands)
(unaudited)

  Three Months Ended
  March 31,
2022(2)
  December 31,
2021(3)
  March 31,
2021(4)
Revenues:          
Offshore/Manufactured Products(1):          
Project-driven products $ 33,844     $ 43,603     $ 21,374  
Short-cycle products   20,624       18,212       12,250  
Other products and services   29,644       30,394       26,985  
Total Offshore/Manufactured Products   84,112       92,209       60,609  
Well Site Services   48,172       43,336       39,550  
Downhole Technologies   31,760       25,775       25,430  
Total revenues $ 164,044     $ 161,320     $ 125,589  
           
Operating income (loss):          
Offshore/Manufactured Products $ 10,196     $ 7,802     $ 1,071  
Well Site Services   (3,395 )     (7,818 )     (9,853 )
Downhole Technologies   (1,505 )     (4,525 )     (1,615 )
Corporate   (9,632 )     (6,732 )     (9,365 )
Total operating loss $ (4,336 )   $ (11,273 )   $ (19,762 )

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

(2) Operating income (loss) for the three months ended March 31, 2022 included $0.8 million of bad debt expense on receivables from Russia-based customers within the Offshore/Manufactured Products segment.

(3) Operating income (loss) for the three months ended December 31, 2021 included $0.3 million of severance and restructuring charges related to the Offshore/Manufactured Products segment. In the Well Site Services segment, operating income (loss) included non-cash inventory and fixed asset impairment charges of $1.5 million and $0.7 million, respectively, and severance and restructuring charges of $0.3 million. In the Downhole Technologies segment, operating income (loss) included severance and restructuring charges of $0.2 million.

(4) Operating income (loss) for the three months ended March 31, 2021 included $0.3 million of severance and restructuring charges related to the Offshore/Manufactured Products segment. In the Well Site Services segment, operating income (loss) included non-cash fixed asset impairment charges of $0.7 million and severance and restructuring charges of $1.3 million. In the Downhole Technologies segment, operating income (loss) included severance and restructuring charges of $0.3 million. In Corporate, operating income (loss) included $1.6 million of severance charges.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
SEGMENT EBITDA AND ADJUSTED SEGMENT EBITDA (B)
(In Thousands)
(unaudited)

  Three Months Ended
  March 31, 2022   December 31,
2021
  March 31,
2021
Offshore/Manufactured Products:          
Operating income $ 10,196     $ 7,802     $ 1,071  
Other income (expense), net   41       21       (62 )
Depreciation and amortization expense   5,330       5,502       5,469  
Segment EBITDA   15,567       13,325       6,478  
Severance and restructuring charges         330       282  
Adjusted Segment EBITDA $ 15,567     $ 13,655     $ 6,760  
           
Well Site Services:          
Operating loss $ (3,395 )   $ (7,818 )   $ (9,853 )
Other income   986       3,010       387  
Depreciation and amortization expense   7,932       8,511       11,468  
Impairments of inventories         1,468        
Impairment of fixed assets         722       650  
Segment EBITDA   5,523       5,893       2,652  
Severance and restructuring charges         257       1,306  
Adjusted Segment EBITDA $ 5,523     $ 6,150     $ 3,958  
           
Downhole Technologies:          
Operating loss $ (1,505 )   $ (4,525 )   $ (1,615 )
Other expense, net   (2 )           (2 )
Depreciation and amortization expense   4,384       4,455       4,389  
Segment EBITDA   2,877       (70 )     2,772  
Severance and restructuring charges         202       275  
Adjusted Segment EBITDA $ 2,877     $ 132     $ 3,047  
           
Corporate:          
Operating loss $ (9,632 )   $ (6,732 )   $ (9,365 )
Other income (expense)         (9,320 )     3,637  
Depreciation and amortization expense   171       187       194  
Release of foreign currency translation adjustments on liquidation of an international operation         9,320        
Gains on extinguishment of debt               (3,637 )
EBITDA   (9,461 )     (6,545 )     (9,171 )
Severance charges               1,555  
Adjusted EBITDA $ (9,461 )   $ (6,545 )   $ (7,616 )

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
CONSOLIDATED EBITDA AND ADJUSTED CONSOLIDATED EBITDA (A)
(In Thousands)
(unaudited)

  Three Months Ended
  March 31,
2022
  December 31,
2021
  March 31,
2021
           
Net loss $ (9,424 )   $ (19,870 )   $ (15,810 )
Interest expense, net   2,672       2,577       2,325  
Income tax provision (benefit)   3,441       (269 )     (2,317 )
Depreciation and amortization expense   17,817       18,655       21,520  
Impairments of inventories         1,468        
Impairments of fixed and lease assets         722       650  
Release of foreign currency translation adjustments on liquidation of an international operation         9,320        
Gains on extinguishment of 1.50% convertible senior notes               (3,637 )
Consolidated EBITDA   14,506       12,603       2,731  
Severance and restructuring charges         789       3,418  
Adjusted Consolidated EBITDA $ 14,506     $ 13,392     $ 6,149  

(A) The terms Consolidated EBITDA and Adjusted Consolidated EBITDA consist of net loss plus net interest expense, taxes, depreciation and amortization expense, non-cash asset impairment charges and a non-cash loss associated with the reclassification of unrealized foreign currency translation adjustments which were released upon the liquidation of an international operation, less gains on extinguishment of 1.50% convertible senior notes (the "2023 Notes") and adjustments for certain other items. Consolidated EBITDA and Adjusted Consolidated 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 net loss or cash flow measures prepared in accordance with generally accepted accounting principles or as measures of profitability or liquidity. Additionally, Consolidated EBITDA and Adjusted Consolidated EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Consolidated EBITDA and Adjusted Consolidated EBITDA as supplemental disclosures because its management believes that Consolidated EBITDA and Adjusted Consolidated 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 Consolidated EBITDA and Adjusted 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 reconciliations of Consolidated EBITDA and Adjusted 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, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA consist of operating income (loss) plus other income (expense), depreciation and amortization expense, non-cash asset impairment charges and a non-cash loss associated with the reclassification of unrealized foreign currency translation adjustments which were released upon the liquidation of an international operation, less gains on extinguishment of the 2023 Notes and adjustments for certain other items. EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted 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, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA as supplemental disclosures because its management believes that EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted 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, Adjusted EBITDA, Segment EBITDA and Adjusted 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, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA to operating income (loss), which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles.

Company Contact:

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

SOURCE: Oil States International, Inc.


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Source: Oil States International, Inc.

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