Oil States Announces Fourth Quarter 2021 Results of Operations
During the fourth quarter of 2021, the Company generated revenues of
Fourth quarter 2021 highlights included:
- Offshore/Manufactured Products segment revenue and Adjusted Segment EBITDA (Note B) increased sequentially 34% and 59%, respectively, driven by a 72% increase in project-related revenue
- Offshore/Manufactured Products backlog increased $11 million to $260 million, with a book-to-bill ratio of 1.1x, augmented by one notable project award exceeding $10 million
- Well Site Services Adjusted Segment EBITDA increased sequentially to
$6 .2 million despite a modest seasonal reduction in revenue
"Our consolidated revenues and Adjusted Consolidated EBITDA increased sequentially by 15% and 57%, respectively, despite global challenges associated with the COVID-19 pandemic, supply chain disruptions and a modest seasonal decline in
"Revenues in our Offshore/Manufactured Products segment led the growth, with a 34% sequential increase driven primarily by higher sales of project-driven production, testing and connector products. Adjusted Segment EBITDA for Offshore/Manufactured Products increased
"Our Well Site Services segment revenues decreased 6% from the prior quarter due to a seasonal decline in customer activity in our
"Fourth quarter revenues in our Downhole Technologies segment were up modestly from the third quarter, driven by higher sales of our domestic perforating products.
"We continue to focus on delivering superior products and services to our customers, which are expected to provide sustainable returns to the Company and its stakeholders as industry activity continues to recover from the harsh effects of the COVID-19 pandemic. We are focused on profitable product and service lines and will allocate capital accordingly. With this focus, stockholders' returns should continue to improve."
For the year ended
BUSINESS SEGMENT RESULTS
(See Segment Data tables)
Offshore/Manufactured Products
Offshore/Manufactured Products reported revenues of
Backlog totaled $260 million as of
Well
Well
In the fourth quarter of 2021, the segment recorded non-cash inventory and fixed asset impairment charges of
Downhole Technologies
Downhole Technologies reported revenues of
Corporate
Corporate operating expenses in the fourth quarter of 2021 totaled
Interest Expense, Net
Net interest expense totaled
Other Income (Expense), Net
In the fourth quarter of 2021, the Company recognized a
Income Taxes
The Company recognized an effective tax rate benefit of 1% in the fourth quarter of 2021, which compared to an effective tax rate benefit of 21% in the third quarter of 2021. The effective tax rate benefit for the fourth quarter of 2021 was below the
Financial Condition
No borrowings were outstanding under the Company's asset-based revolving credit facility (the "ABL Facility") at
The Company's total debt represented 20% of combined total debt and stockholders' equity as of
Conference Call Information
The call is scheduled for
About
For more information on the Company, please visit
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, 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended | Year Ended | ||||||||||||||||||
2021 |
2021 |
2020 |
2021 |
2020 |
|||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
Revenues: | |||||||||||||||||||
Products | $ | 89,401 | $ | 70,409 | $ | 73,051 | $ | 299,293 | $ | 331,272 | |||||||||
Services | 71,919 | 70,119 | 64,326 | 273,868 | 306,803 | ||||||||||||||
161,320 | 140,528 | 137,377 | 573,161 | 638,075 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Product costs | 72,890 | 60,310 | 62,992 | 246,589 | 287,615 | ||||||||||||||
Service costs | 60,357 | 56,897 | 52,517 | 223,807 | 274,190 | ||||||||||||||
Cost of revenues (exclusive of depreciation and amortization expense presented below)(1) |
133,247 | 117,207 | 115,509 | 470,396 | 561,805 | ||||||||||||||
Selling, general and administrative expense | 20,297 | 20,078 | 22,597 | 83,692 | 94,102 | ||||||||||||||
Depreciation and amortization expense | 18,655 | 19,657 | 23,237 | 80,741 | 98,543 | ||||||||||||||
Impairments of goodwill | — | — | — | — | 406,056 | ||||||||||||||
Impairments of fixed and lease assets | 722 | — | 4,257 | 4,166 | 12,447 | ||||||||||||||
Other operating income, net | (328 | ) | (275 | ) | 141 | (1,042 | ) | (538 | ) | ||||||||||
172,593 | 156,667 | 165,741 | 637,953 | 1,172,415 | |||||||||||||||
Operating loss | (11,273 | ) | (16,139 | ) | (28,364 | ) | (64,792 | ) | (534,340 | ) | |||||||||
Interest expense, net | (2,577 | ) | (2,569 | ) | (2,637 | ) | (10,170 | ) | (13,869 | ) | |||||||||
Other income (expense), net(2) | (6,289 | ) | 2,137 | 368 | 1,628 | 13,880 | |||||||||||||
Loss before income taxes | (20,139 | ) | (16,571 | ) | (30,633 | ) | (73,334 | ) | (534,329 | ) | |||||||||
Income tax benefit | 269 | 3,529 | 11,886 | 9,341 | 65,946 | ||||||||||||||
Net loss | $ | (19,870 | ) | $ | (13,042 | ) | $ | (18,747 | ) | $ | (63,993 | ) | $ | (468,383 | ) | ||||
Net loss per share: | |||||||||||||||||||
Basic | $ | (0.33 | ) | $ | (0.22 | ) | $ | (0.31 | ) | $ | (1.06 | ) | $ | (7.83 | ) | ||||
Diluted | $ | (0.33 | ) | $ | (0.22 | ) | $ | (0.31 | ) | $ | (1.06 | ) | $ | (7.83 | ) | ||||
Weighted average number of common shares outstanding: | |||||||||||||||||||
Basic | 60,380 | 60,377 | 59,885 | 60,293 | 59,812 | ||||||||||||||
Diluted | 60,380 | 60,377 | 59,885 | 60,293 | 59,812 |
________________
(1) In the three months and year ended
(2) Other income (expense), net in the three months and year ended
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 52,852 | $ | 72,011 | |||
Accounts receivable, net | 186,080 | 163,135 | |||||
Inventories, net | 168,573 | 170,376 | |||||
Prepaid expenses and other current assets | 19,222 | 18,071 | |||||
Total current assets | 426,727 | 423,593 | |||||
Property, plant, and equipment, net | 338,583 | 383,562 | |||||
Operating lease assets, net | 25,388 | 33,140 | |||||
76,412 | 76,489 | ||||||
Other intangible assets, net | 185,749 | 205,749 | |||||
Other noncurrent assets | 32,889 | 29,727 | |||||
Total assets | $ | 1,085,748 | $ | 1,152,260 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 18,262 | $ | 17,778 | |||
Accounts payable | 63,343 | 46,433 | |||||
Accrued liabilities | 43,401 | 44,504 | |||||
Current operating lease liabilities | 6,481 | 7,620 | |||||
Income taxes payable | 2,564 | 2,413 | |||||
Deferred revenue | 43,236 | 43,384 | |||||
Total current liabilities | 177,287 | 162,132 | |||||
Long-term debt | 160,488 | 165,759 | |||||
Long-term operating lease liabilities | 23,452 | 29,166 | |||||
Deferred income taxes | 3,637 | 14,263 | |||||
Other noncurrent liabilities | 25,058 | 23,309 | |||||
Total liabilities | 389,922 | 394,629 | |||||
Stockholders' equity: | |||||||
Common stock | 739 | 733 | |||||
Additional paid-in capital | 1,105,135 | 1,122,945 | |||||
Retained earnings | 281,567 | 329,327 | |||||
Accumulated other comprehensive loss | (66,031 | ) | (71,385 | ) | |||
(625,584 | ) | (623,989 | ) | ||||
Total stockholders' equity | 695,826 | 757,631 | |||||
Total liabilities and stockholders' equity | $ | 1,085,748 | $ | 1,152,260 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended |
|||||||
2021 | 2020 | ||||||
(Unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (63,993 | ) | $ | (468,383 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization expense | 80,741 | 98,543 | |||||
Impairments of goodwill | — | 406,056 | |||||
Impairments of inventories | 3,581 | 31,151 | |||||
Impairments of fixed and lease assets | 4,166 | 12,447 | |||||
Stock-based compensation expense | 7,879 | 8,431 | |||||
Amortization of debt discount and deferred financing costs | 2,314 | 7,736 | |||||
Deferred income tax benefit | (8,639 | ) | (24,404 | ) | |||
Release of foreign currency translation adjustments on liquidation of an international operation | 9,320 | — | |||||
Gains on extinguishment of 1.50% convertible senior notes | (4,022 | ) | (10,721 | ) | |||
Gains on disposals of assets | (6,472 | ) | (2,444 | ) | |||
Other, net | (511 | ) | 4,668 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (24,407 | ) | 63,876 | ||||
Inventories | (10,334 | ) | 17,578 | ||||
Accounts payable and accrued liabilities | 17,727 | (37,315 | ) | ||||
Deferred revenue | (148 | ) | 25,549 | ||||
Other operating assets and liabilities, net | (8 | ) | (13 | ) | |||
Net cash flows provided by operating activities | 7,194 | 132,755 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (17,517 | ) | (12,749 | ) | |||
Proceeds from disposition of property and equipment | 11,527 | 9,601 | |||||
Other, net | (636 | ) | (581 | ) | |||
Net cash flows used in investing activities | (6,626 | ) | (3,729 | ) | |||
Cash flows from financing activities: | |||||||
Revolving credit facility borrowings | 12,873 | 72,173 | |||||
Revolving credit facility repayments | (31,873 | ) | (105,104 | ) | |||
Issuance of 4.75% convertible senior notes | 135,000 | — | |||||
Purchases of 1.50% convertible senior notes | (125,952 | ) | (20,078 | ) | |||
Other debt and finance lease repayments, net | (230 | ) | (8,222 | ) | |||
Payment of financing costs | (7,791 | ) | (1,041 | ) | |||
Shares added to treasury stock as a result of net share settlements due to vesting of stock awards |
(1,595 | ) | (2,745 | ) | |||
Net cash flows used in financing activities | (19,568 | ) | (65,017 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (159 | ) | (491 | ) | |||
Net change in cash and cash equivalents | (19,159 | ) | 63,518 | ||||
Cash and cash equivalents, beginning of period | 72,011 | 8,493 | |||||
Cash and cash equivalents, end of period | $ | 52,852 | $ | 72,011 | |||
Cash paid (received) for: | |||||||
Interest | $ | 6,532 | $ | 6,402 | |||
Income taxes, net | 152 | (36,766 | ) |
SEGMENT DATA
(In Thousands)
(unaudited)
Three Months Ended | Year Ended | ||||||||||||||||||
2021(2) |
2021(3) |
2020(4) |
2021(5) |
2020(6) |
|||||||||||||||
Revenues: | |||||||||||||||||||
Offshore/Manufactured Products(1): | |||||||||||||||||||
Project-driven products | $ | 43,603 | $ | 25,294 | $ | 36,340 | $ | 122,097 | $ | 165,497 | |||||||||
Short-cycle products | 18,212 | 18,682 | 6,808 | 65,174 | 48,142 | ||||||||||||||
Other products and services | 30,394 | 25,027 | 32,370 | 111,458 | 126,661 | ||||||||||||||
Total Offshore/Manufactured Products | 92,209 | 69,003 | 75,518 | 298,729 | 340,300 | ||||||||||||||
Downhole Technologies | 25,775 | 25,527 | 23,193 | 103,492 | 97,936 | ||||||||||||||
Well |
43,336 | 45,998 | 38,666 | 170,940 | 199,839 | ||||||||||||||
Total revenues | $ | 161,320 | $ | 140,528 | $ | 137,377 | $ | 573,161 | $ | 638,075 | |||||||||
Operating income (loss): | |||||||||||||||||||
Offshore/Manufactured Products | $ | 7,802 | $ | 1,764 | $ | 1,408 | $ | 15,447 | $ | (80,794 | ) | ||||||||
Downhole Technologies | (4,525 | ) | (5,035 | ) | (8,019 | ) | (13,470 | ) | (224,414 | ) | |||||||||
Well |
(7,818 | ) | (5,250 | ) | (11,642 | ) | (34,511 | ) | (193,388 | ) | |||||||||
Corporate | (6,732 | ) | (7,618 | ) | (10,111 | ) | (32,258 | ) | (35,744 | ) | |||||||||
Total operating loss | $ | (11,273 | ) | $ | (16,139 | ) | $ | (28,364 | ) | $ | (64,792 | ) | $ | (534,340 | ) |
________________
(1) Disaggregated revenue data is provided to supplement the Segment Data.
(2) Operating income (loss) for the three months ended
(3) Operating income (loss) for the three months ended
(4) Operating income (loss) for the three months ended
(5) Operating income (loss) for the year ended
(6) Operating income (loss) for the year ended
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
SEGMENT EBITDA AND ADJUSTED SEGMENT EBITDA (B)
(In Thousands)
(unaudited)
Three Months Ended | Year Ended | ||||||||||||||||||
2021 |
2021 |
2020 |
2021 |
2020 |
|||||||||||||||
Offshore/Manufactured Products: | |||||||||||||||||||
Operating income (loss) | $ | 7,802 | $ | 1,764 | $ | 1,408 | $ | 15,447 | $ | (80,794 | ) | ||||||||
Other income, net | 21 | 881 | 82 | 770 | 542 | ||||||||||||||
Depreciation and amortization expense | 5,502 | 5,662 | 5,376 | 22,190 | 21,881 | ||||||||||||||
Impairment of goodwill | — | — | — | — | 86,500 | ||||||||||||||
Impairment of inventories | — | — | — | — | 16,249 | ||||||||||||||
Segment EBITDA | 13,325 | 8,307 | 6,866 | 38,407 | 44,378 | ||||||||||||||
Severance and restructuring charges | 330 | 256 | 633 | 868 | 1,355 | ||||||||||||||
Adjusted Segment EBITDA | $ | 13,655 | $ | 8,563 | $ | 7,499 | $ | 39,275 | $ | 45,733 | |||||||||
Downhole Technologies: | |||||||||||||||||||
Operating loss | $ | (4,525 | ) | $ | (5,035 | ) | $ | (8,019 | ) | $ | (13,470 | ) | $ | (224,414 | ) | ||||
Other income (expense), net | — | (4 | ) | 16 | (6 | ) | (81 | ) | |||||||||||
Depreciation and amortization expense | 4,455 | 4,226 | 5,745 | 17,591 | 22,649 | ||||||||||||||
Impairment of goodwill | — | — | — | — | 192,502 | ||||||||||||||
Impairment of inventories | — | 2,113 | — | 2,113 | 5,921 | ||||||||||||||
Impairment of fixed and lease assets | — | — | 3,602 | — | 3,602 | ||||||||||||||
Segment EBITDA | (70 | ) | 1,300 | 1,344 | 6,228 | 179 | |||||||||||||
Severance and restructuring charges | 202 | 129 | 703 | 809 | 2,018 | ||||||||||||||
Adjusted Segment EBITDA | $ | 132 | $ | 1,429 | $ | 2,047 | $ | 7,037 | $ | 2,197 | |||||||||
Well |
|||||||||||||||||||
Operating loss | $ | (7,818 | ) | $ | (5,250 | ) | $ | (11,642 | ) | $ | (34,511 | ) | $ | (193,388 | ) | ||||
Other income | 3,010 | 1,260 | 270 | 6,162 | 2,698 | ||||||||||||||
Depreciation and amortization expense | 8,511 | 9,531 | 11,906 | 40,152 | 53,240 | ||||||||||||||
Impairment of goodwill | — | — | — | — | 127,054 | ||||||||||||||
Impairments of inventories | 1,468 | — | — | 1,468 | 8,981 | ||||||||||||||
Impairments of fixed and lease assets | 722 | — | 655 | 4,166 | 8,845 | ||||||||||||||
Segment EBITDA | 5,893 | 5,541 | 1,189 | 17,437 | 7,430 | ||||||||||||||
Severance and restructuring charges | 257 | 352 | 219 | 4,266 | 4,311 | ||||||||||||||
Adjusted Segment EBITDA | $ | 6,150 | $ | 5,893 | $ | 1,408 | $ | 21,703 | $ | 11,741 | |||||||||
Corporate: | |||||||||||||||||||
Operating loss | $ | (6,732 | ) | $ | (7,618 | ) | $ | (10,111 | ) | $ | (32,258 | ) | $ | (35,744 | ) | ||||
Other income (expense) | (9,320 | ) | — | — | (5,298 | ) | 10,721 | ||||||||||||
Depreciation and amortization expense | 187 | 238 | 210 | 808 | 773 | ||||||||||||||
Release of foreign currency translation adjustments on liquidation of an international operation |
9,320 | — | — | 9,320 | — | ||||||||||||||
Gains on extinguishment of debt | — | — | — | (4,022 | ) | (10,721 | ) | ||||||||||||
EBITDA | (6,545 | ) | (7,380 | ) | (9,901 | ) | (31,450 | ) | (34,971 | ) | |||||||||
Severance charges | — | — | 1,169 | 1,555 | 1,385 | ||||||||||||||
Adjusted EBITDA | $ | (6,545 | ) | $ | (7,380 | ) | $ | (8,732 | ) | $ | (29,895 | ) | $ | (33,586 | ) |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
CONSOLIDATED EBITDA AND ADJUSTED CONSOLIDATED EBITDA (A)
(In Thousands)
(unaudited)
Three Months Ended | Year Ended | ||||||||||||||||||
2021 |
2021 |
2020 |
2021 |
2020 |
|||||||||||||||
Net loss | $ | (19,870 | ) | $ | (13,042 | ) | $ | (18,747 | ) | $ | (63,993 | ) | $ | (468,383 | ) | ||||
Interest expense, net | 2,577 | 2,569 | 2,637 | 10,170 | 13,869 | ||||||||||||||
Income tax benefit | (269 | ) | (3,529 | ) | (11,886 | ) | (9,341 | ) | (65,946 | ) | |||||||||
Depreciation and amortization expense | 18,655 | 19,657 | 23,237 | 80,741 | 98,543 | ||||||||||||||
Impairments of goodwill | — | — | — | — | 406,056 | ||||||||||||||
Impairments of inventories | 1,468 | 2,113 | — | 3,581 | 31,151 | ||||||||||||||
Impairments of fixed and lease assets | 722 | — | 4,257 | 4,166 | 12,447 | ||||||||||||||
Release of foreign currency translation adjustments on liquidation of an international operation |
9,320 | — | — | 9,320 | — | ||||||||||||||
Gains on extinguishment of 1.50% convertible senior notes | — | — | — | (4,022 | ) | (10,721 | ) | ||||||||||||
Consolidated EBITDA | 12,603 | 7,768 | (502 | ) | 30,622 | 17,016 | |||||||||||||
Severance and restructuring charges | 789 | 737 | 2,724 | 7,498 | 9,069 | ||||||||||||||
Adjusted Consolidated EBITDA | $ | 13,392 | $ | 8,505 | $ | 2,222 | $ | 38,120 | $ | 26,085 |
________________
(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:
Executive Vice President, Chief Financial Officer and Treasurer
713-652-0582
SOURCE:

Source: Oil States International, Inc.