Oil States Announces Fourth Quarter Earnings of $1.74 per Share Before Goodwill Impairment
"We had a record year in 2008 with each of our business lines having
record or near record earnings," stated
Mrs. Taylor continued, "We have substantially reduced our planned capital expenditures for 2009 as compared to our 2008 spending and are reducing our cost structure in response to the market downturn. We expect all of our businesses to be negatively impacted in 2009 with the most immediate impact occurring in our Tubular Services and Drilling businesses."
Mrs. Taylor concluded, "We have a strong liquidity position. At year end,
we had
The Company recognized an effective tax rate of 85.2% in the fourth
quarter of 2008 compared to 30.1% in the fourth quarter of 2007. The
effective tax rate in the fourth quarter of 2008 was negatively impacted by a
significant amount of the goodwill impairment charges which were
non-deductible. Excluding the goodwill impairment, the effective tax rate for
the fourth quarter of 2008 would have approximated 34.9%. The effective tax
rate in the fourth quarter of 2007 benefited from statutory tax rate
reductions in
For the full year 2008, the Company reported revenues of
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly results from the fourth quarter of 2008 to the results from the fourth quarter of 2007. In order to present a more meaningful comparison of the Company's operating results, the fourth quarter 2008 results exclude the goodwill impairment charges.)
Well Site Services
Excluding the
For the fourth quarter of 2008, the accommodations business reported
revenues of
Drilling services generated revenues and Adjusted EBITDA of
Rental tools generated
Offshore Products
In the fourth quarter of 2008, Offshore Products generated
Tubular Services
Excluding the
Goodwill Impairment
In accordance with Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," the Company concluded that the
goodwill amounts previously recorded in the Drilling and Tubular Services
reporting units were impaired in their entirety. The total goodwill
impairment charge recognized in the fourth quarter of 2008 was
The Company will be hosting a conference call to discuss the results for
the fourth quarter of 2008 on
This press release contains and the associated conference call will
contain forward-looking statements within the meaning 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 therein will be based on then 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 other things, risks associated with the general nature of the oilfield
service industry and other factors discussed within the "Business" section of
the Form 10-K for the year ended
Oil States International, Inc. Unaudited Condensed Consolidated Statements of Income (in thousands, except per share amounts) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- 2008 2007 2008 2007 ---- ---- ---- ---- Revenues $901,056 $580,971 $2,948,457 $2,088,235 Costs and expenses: Cost of sales 702,100 456,331 2,234,974 1,602,213 Selling, general and administrative expenses 37,504 31,989 143,080 118,421 Depreciation and amortization expense 26,863 21,383 102,604 70,703 Impairment of goodwill 85,630 - 85,630 - Other operating income (928) (373) (1,586) (888) ---- ---- ------ ---- Operating income 49,887 71,641 383,755 297,786 Interest expense (3,613) (5,191) (17,530) (17,988) Interest income 805 909 3,561 3,508 Equity in earnings of unconsolidated affiliates 868 1,307 4,035 3,350 Gain on sale of workover services and resulting investment - - 6,160 12,774 Other income / (expense) (331) 333 (922) 928 ---- --- ---- --- Income before income taxes 47,616 68,999 379,059 300,358 Income tax provision (40,591) (20,799) (156,349) (96,986) ------- ------- -------- ------- Net income $7,025 $48,200 $222,710 $203,372 ====== ======= ======== ======== Net income per share Basic $0.14 $0.97 $4.49 $4.11 Diluted $0.14 $0.95 $4.33 $3.99 Weighted average number of common shares outstanding Basic 49,622 49,730 49,622 49,500 Diluted 49,806 50,994 51,414 50,911 Oil States International, Inc. Consolidated Balance Sheets (in thousands) December 31, September 30, December 31, 2008 2008 2007 ---- ---- ---- Assets (unaudited) (unaudited) (audited) Current assets Cash and cash equivalents $30,199 $55,621 $30,592 Accounts receivable, net 575,982 502,807 450,153 Inventories, net 612,488 463,086 349,347 Prepaid expenses and other current assets 18,815 13,475 35,575 ------ ------ ------ Total current assets 1,237,484 1,034,989 865,667 Property, plant and equipment, net 695,338 723,626 586,910 Goodwill, net 305,441 399,151 391,644 Investments in unconsolidated affiliates 5,899 6,255 24,778 Other non-current assets 55,085 56,940 60,627 ---------- ---------- ---------- Total assets $2,299,247 $2,220,961 $1,929,626 ========== ========== ========== Liabilities and stockholders' equity Current liabilities Accounts payable and accrued liabilities $371,789 $347,450 $239,119 Current portion of long- term debt 4,943 179,941 4,718 Income taxes 52,546 24,392 43 Deferred revenue 105,640 83,585 60,910 Other current liabilities 1,587 1,220 121 ----- ----- --- Total current liabilities 536,505 636,588 304,911 Long-term debt (B) 474,948 236,574 487,102 Deferred income taxes 55,646 52,966 40,550 Other noncurrent liabilities 13,155 14,293 12,236 ------ ------ ------ Total liabilities 1,080,254 940,421 844,799 Stockholders' equity Common stock 526 526 522 Additional paid-in capital 425,284 422,044 402,091 Retained earnings 913,423 906,398 690,713 Accumulated other comprehensive income / (loss) (28,409) 37,854 73,036 Treasury stock (91,831) (86,282) (81,535) ------- ------- ------- Total stockholders' equity 1,218,993 1,280,540 1,084,827 ---------- ---------- ---------- Total liabilities and stockholders' equity $2,299,247 $2,220,961 $1,929,626 ========== ========== ========== Oil States International, Inc. Segment Data (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- 2008 2007 2008 2007 ---- ---- ---- ---- Revenues Accommodations $94,612 $91,535 $427,130 $312,846 Rental Tools 97,041 82,321 355,809 260,404 Drilling and Other 44,023 35,268 177,339 143,153 ------ ------ ------- ------- Well Site Services 235,676 209,124 960,278 716,403 Offshore Products 141,385 141,209 528,164 527,810 Tubular Services 523,995 230,638 1,460,015 844,022 ------- ------- --------- ------- Total Revenues $901,056 $580,971 $2,948,457 $2,088,235 ======== ======== ========== ========== Adjusted EBITDA (A) Accommodations $35,335 $28,968 $156,223 $109,270 Rental Tools 30,535 28,138 111,224 96,006 Drilling and Other (C) (D) 14,196 10,092 68,096 66,983 ------ ------ ------ ------ Well Site Services (C) 80,066 67,198 335,543 272,259 Offshore Products 25,598 21,342 100,357 93,444 Tubular Services (D) 63,913 10,974 172,086 40,763 Corporate and Eliminations (6,660) (4,850) (26,724) (20,925) ------ ------ ------- ------- Total Adjusted EBITDA (C) (D) $162,917 $94,664 $581,262 $385,541 ======== ======= ======== ======== Operating Income / (Loss) Accommodations $27,210 $21,056 $120,972 $85,347 Rental Tools 20,860 20,536 75,787 71,973 Drilling and Other (D) 8,521 5,789 40,200 40,508 ----- ----- ------ ------ Well Site Services 56,591 47,381 236,959 197,828 Offshore Products 22,624 18,572 89,280 82,460 Tubular Services (D) 62,800 10,494 169,333 38,467 Corporate and Eliminations (6,498) (4,806) (26,187) (20,969) ------ ------ ------- ------- Total Operating Income (D) $135,517 $71,641 $469,385 $297,786 ======== ======= ======== ======== Oil States International, Inc. Additional Quarterly Segment and Operating Data (unaudited) Three Months Ended December 31, 2008 2007 ---- ---- Supplemental Operating Data Land Drilling Operating Statistics Average Rigs Available 37 34 Utilization 79.1% 74.3% Implied Day Rate ($ in thousands per day) $16.4 $15.2 Implied Daily Cash Margin ($ in thousands per day) $5.5 $4.3 Offshore Products Backlog ($ in millions) $362.1 $362.2 Tubular Services Operating Data Shipments (Tons in thousands) 166.2 137.0 Quarter end Inventory ($ in thousands) $396,462 $191,374 (A) The term EBITDA consists of net income plus interest, taxes, depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles. You should not consider it in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding our 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 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. Adjusted EBITDA is a non-GAAP measure which excludes the goodwill impairment charges recognized in the fourth quarter of 2008. The following table sets forth a reconciliation of EBITDA to net income, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles: Reconciliation of GAAP to Non-GAAP Financial Information (in thousands) (unaudited) Three Months Twelve Months Ended December 31, Ended December 31, ------------------ ------------------ 2008 2007 2008 2007 ---- ---- ---- ---- Net income $7,025 $48,200 $222,710 $203,372 Income tax expense 40,591 20,799 156,349 96,986 Depreciation and amortization 26,863 21,383 102,604 70,703 Interest income (805) (909) (3,561) (3,508) Interest expense 3,613 5,191 17,530 17,988 ----- ----- ------ ------ EBITDA $77,287 $94,664 $495,632 $385,541 Goodwill impairment 85,630 - 85,630 - ------ --- ------ --- Adjusted EBITDA $162,917 $94,664 $581,262 $385,541 ======== ======= ======== ======== (B) As ofDecember 31, 2008 , the Company had approximately$195.9 million available under its revolving credit facility. (C) Includes$6.2 million and$12.8 million gains on sale of Boots & Coots common stock in the full years 2008 and 2007 results, respectively. (D) Drilling EBITDA and Operating Income exclude$22.8 million goodwill impairment charge. Tubular Services EBITDA and Operating Income exclude a$62.9 million goodwill impairment charge. Consolidated EBITDA and Operating Income exclude an$85.6 million goodwill impairment charge.