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Jul 29, 2020

Oil States Announces Second Quarter 2020 Results of Operations

HOUSTON, July 29, 2020 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE: OIS) reported a net loss of $24.6 million, or $0.41 per share, for the second quarter of 2020, on revenues of $146.2 million. Consolidated EBITDA (Note A) was a loss of $4.5 million. Excluding $5.4 million of severance and downsizing charges incurred during the quarter, Consolidated EBITDA totaled $0.9 million. The reported second quarter 2020 net loss included the following more significant charges and gains, which resulted in a net charge of $4.6 million after-tax, or $0.08 per share:

  • Severance and downsizing charges totaled $5.4 million ($4.3 million after-tax, or $0.07 per share)
  • Bad debt provision on receivables from customers claiming bankruptcy protection totaled $2.2 million ($1.7 million after-tax, or $0.03 per share)
  • Non-cash fixed asset impairment charges totaled $3.0 million ($2.4 million after-tax, or $0.04 per share)
  • Non-cash gain on extinguishment of convertible senior notes of $4.8 million ($3.8 million after-tax, or $0.06 per share)

Second quarter 2020 highlights and corporate actions included:

  • Generated $38.7 million in cash flow from operations
  • Amended our revolving credit facility, with existing financial covenants suspended through March 30, 2021 in exchange for a reduction in the facility size to $200 million
  • Reduced net debt (defined as total debt less cash) by $39.3 million, including the purchase of $12.0 million principal amount of our convertible senior notes at a 51% discount to par value
  • Implemented significant costs saving measures, including an approximate 30% reduction in our U.S. workforce

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

"As we projected on our first quarter earnings call held at the end of April, the market dislocations caused by the global response to the COVID-19 pandemic have been unprecedented. The impact on the energy industry has been extreme due to the rapid demand destruction for crude oil and the resulting inventory builds across the globe. U.S. land based drilling and completion activity fell sharply during the quarter, with the U.S. rig count declining 64% to a historical low of 265 rigs operating at the close of the second quarter.

"Our Offshore/Manufactured Products segment proved resilient during the second quarter, with revenues increasing 4% due to an increase in project-driven revenues, partially offset by reduced short-cycle sales. Segment EBITDA margins also improved 149 basis points sequentially, reflecting the benefit of closing out projects in backlog efficiently along with cost reduction initiatives implemented. Backlog totaled $235 million as of June 30, 2020, a decline of 12% sequentially. Our bookings totaled $64 million, yielding a book-to-bill ratio for the second quarter of 0.7x, bringing the year-to-date ratio to 0.8x.

"Revenues in our Completion Services and Downhole Technologies businesses declined 56% and 64% sequentially – driven by the steep reduction in industry activity in the U.S. shale play regions due to the low crude oil price environment. During the second quarter, both businesses implemented significant cost reduction measures in response to the material downturn in activity, leading to $4.9 million of severance and downsizing charges being incurred. The full benefit of these cost reduction measures should be realized during the third quarter.

"Importantly, we generated $39 million of cash flow from operations and bought in $12 million principal amount of our convertible senior notes at a 51% discount to par value. Cash on-hand at June 30 totaled $54 million while borrowings outstanding under our credit facility totaled $71 million. We amended our bank credit facility during the second quarter securing a covenant holiday through March 30, 2021 in exchange for reducing the facility size to $200 million. We believe that these actions have stabilized the Company during a very difficult period. We will continue to closely manage our debt, working capital and cash flow generation in the quarters to come."

BUSINESS SEGMENT RESULTS

(See Segment Data tables)

Offshore/Manufactured Products

Offshore/Manufactured Products reported revenues of $94.9 million and Segment EBITDA (Note B) of $15.0 million in the second quarter of 2020, compared to revenues of $91.2 million and Segment EBITDA of $13.1 million reported in the first quarter of 2020. Revenues increased 4% sequentially, due to an increase in the segment's project-driven revenue, which was partially offset by lower demand for U.S. land-based short-cycle products. Segment EBITDA increased 15%, driven by the higher revenues, efficient completion of projects in backlog and benefits from cost control measures implemented. Segment EBITDA margin in the second quarter of 2020 was 16% compared to 14% in the first quarter of 2020.

Backlog totaled $235 million at June 30, 2020, a decrease of 12% sequentially and 17% year-over-year. Second quarter 2020 bookings totaled $64 million, yielding a book-to-bill ratio of 0.7x in the period and a year-to-date ratio of 0.8x.

Well Site Services

Well Site Services reported revenues of $36.3 million and a Segment EBITDA loss of $5.4 million in the second quarter of 2020, compared to revenues of $87.5 million and Segment EBITDA of $12.0 million reported in the first quarter of 2020. Both revenues and Segment EBITDA were adversely impacted by the sharp decline in customer demand for completion and production services, as well as incremental costs incurred from workforce reductions and facility closures. During the second quarter of 2020, the Completion Services business recorded a non-cash fixed asset impairment charge of $3.0 million, severance and downsizing charges of $3.5 million and a $0.7 million bad debt provision on a receivable from a customer claiming bankruptcy protection.

Downhole Technologies

Downhole Technologies reported revenues of $15.0 million and a Segment EBITDA loss of $5.5 million in the second quarter of 2020, compared to revenues of $41.1 million and Segment EBITDA of $5.3 million reported in the first quarter of 2020. Segment EBITDA declined due to the precipitous fall in U.S. completion activity, reduced manufacturing cost absorption, a $1.5 million bad debt provision on a receivable from a customer claiming bankruptcy protection and $1.3 million of incremental expenses associated with workforce reductions and facility closures.

Interest Expense, Net

The Company reported net interest expense of $4.2 million in the second quarter of 2020, including $2.4 million of non-cash amortization of debt discount and deferred financing costs. Additionally, the Company expensed $0.5 million of deferred financing costs during the second quarter in connection with the amendment of its revolving credit facility.

Other Income, Net

During the second quarter of 2020, the Company recognized a non-cash gain of $4.8 million in connection with the purchase of $12.0 million principal amount of its 1.50% convertible senior notes (due February 2023) at a significant discount to the carrying value of the recorded liability.

Income Taxes

The Company recognized an effective tax rate benefit of 21.9% in the second quarter of 2020, which compared to an effective tax rate benefit of 8.9% in the first quarter of 2020. The effective tax rate benefit for the first quarter of 2020 was below the U.S. statutory rate primarily due to certain non-deductible expenses, including non-cash goodwill impairment charges.

Financial Condition

On June 17, 2020, the Company amended its revolving credit facility. The amendment provides for the suspension of financial maintenance covenants from July 1, 2020 to March 30, 2021, along with a reduction in the revolving credit facility size to $200 million. Borrowing availability is subject to a monthly borrowing base calculation beginning on July 1, 2020. The maturity date of the amended credit agreement remains January 30, 2022. As of June 30, 2020, $71.0 million was outstanding under the Company's amended revolving credit facility, while cash on-hand totaled $53.8 million. As of July 1, 2020, based on the then current borrowing base, the total amount available to be drawn under the amended revolving credit facility was $37.3 million.

During the second quarter of 2020, the Company purchased $12.0 million principal amount of its outstanding 1.50% convertible senior notes for $5.9 million in cash. Since September 2019, the Company has purchased $25.4 million principal amount of its notes for $17.3 million in cash.

The Company's total debt represented 25% of combined total debt and stockholders' equity at June 30, 2020, consistent with the March 31, 2020 level. The Company was in compliance with its covenants under the amended revolving credit facility at June 30, 2020.

Conference Call Information

The call is scheduled for July 30, 2020 at 10:00 a.m. Central 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 (888) 771-4371 in the United States or by dialing +1 (847) 585-4405 internationally and using the passcode 49833195. 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 products and services company predominantly 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 natural gas. 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, the impact of the COVID-19 pandemic on our Company and our customers 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, 2019, 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,
2020
  March 30,
2020
  June 30,
2019
  June 30,
2020
  June 30,
2019
Revenues:                    
Products   $ 82,643     $ 102,980     $ 124,965     $ 185,623     $ 241,293  
Services   63,602     116,714     139,720     180,316     274,003  
    146,245     219,694     264,685     365,939     515,296  
                     
Costs and expenses:                    
Product costs   68,088     89,746     95,289     157,834     184,557  
Service costs   59,995     107,856     112,823     167,851     223,433  
Cost of revenues (exclusive of depreciation and amortization expense presented below)(1)   128,083     197,602     208,112     325,685     407,990  
Selling, general and administrative expense   23,992     26,124     31,484     50,116     61,592  
Depreciation and amortization expense   24,646     26,409     31,883     51,055     63,434  
Impairments of goodwill       406,056         406,056      
Impairments of fixed assets   2,992     5,198         8,190      
Other operating income, net   (134 )   107     (399 )   (27 )   (485 )
    179,579     661,496     271,080     841,075     532,531  
Operating loss   (33,334 )   (441,802 )   (6,395 )   (475,136 )   (17,235 )
                     
Interest expense, net   (4,179 )   (3,504 )   (4,617 )   (7,683 )   (9,369 )
Other income, net(2)   5,994     774     1,009     6,768     1,676  
Loss before income taxes   (31,519 )   (444,532 )   (10,003 )   (476,051 )   (24,928 )
Income tax benefit   6,893     39,491     263     46,384     540  
Net loss   $ (24,626 )   $ (405,041 )   $ (9,740 )   $ (429,667 )   $ (24,388 )
                     
Net loss per share:                    
Basic   $ (0.41 )   $ (6.79 )   $ (0.16 )   $ (7.19 )   $ (0.41 )
Diluted   $ (0.41 )   $ (6.79 )   $ (0.16 )   $ (7.19 )   $ (0.41 )
                     
Weighted average number of common shares outstanding:                
Basic   59,839     59,654     59,406     59,747     59,332  
Diluted   59,839     59,654     59,406     59,747     59,332  

________________
(1) Cost of revenues (exclusive of depreciation and amortization expense) included non-cash inventory impairment charges of $25.2 million ($12.0 million in product costs and $13.2 million in service costs) recognized in the first quarter 2020.
(2) Other income, net included a non-cash gain of $4.8 million recognized in connection with the purchase of $12.0 million principal amount of the 1.50% convertible senior notes in the second quarter of 2020.

 
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(In Thousands)
       
  June 30, 2020   December 31, 2019
  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 53,819     $ 8,493  
Accounts receivable, net 168,778     233,487  
Inventories, net 198,276     221,342  
Income taxes receivable 44,986     2,568  
Prepaid expenses and other current assets 12,533     17,539  
Total current assets 478,392     483,429  
               
Property, plant, and equipment, net 409,148     459,724  
Operating lease assets, net 38,297     43,616  
Goodwill, net 75,746     482,306  
Other intangible assets, net 217,854     230,091  
Other noncurrent assets 27,446     28,701  
Total assets $ 1,246,883     $ 1,727,867  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Current portion of long-term debt $ 25,626     $ 25,617  
Accounts payable 52,160     78,368  
Accrued liabilities 40,823     48,840  
Current operating lease liabilities 8,091     8,311  
Income taxes payable 3,606     4,174  
Deferred revenue 23,583     17,761  
Total current liabilities 153,889     183,071  
               
Long-term debt 229,490     222,552  
Long-term operating lease liabilities 31,502     35,777  
Deferred income taxes 31,796     38,079  
Other noncurrent liabilities 21,337     24,421  
Total liabilities 468,014     503,900  
       
Stockholders' equity:      
Common stock 733     726  
Additional paid-in capital 1,117,771     1,114,521  
Retained earnings 368,043     797,710  
Accumulated other comprehensive loss (83,767 )   (67,746 )
Treasury stock (623,911 )   (621,244 )
Total stockholders' equity 778,869     1,223,967  
Total liabilities and stockholders' equity $ 1,246,883     $ 1,727,867  
               
               


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
   
  Six Months Ended June 30,
  2020   2019
Cash flows from operating activities:      
Net loss $ (429,667 )   $ (24,388 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization expense 51,055     63,434  
Impairments of goodwill 406,056      
Impairments of inventories 25,230      
Impairments of fixed assets 8,190      
Stock-based compensation expense 3,257     8,590  
Amortization of debt discount and deferred financing costs 4,067     3,894  
Deferred income tax benefit (48,738 )   (3,495 )
Gain on extinguishment of 1.50% convertible senior notes (4,779 )    
Gain on disposals of assets (1,489 )   (1,245 )
Other, net 3,177     141  
Changes in operating assets and liabilities:      
Accounts receivable 56,062     19,884  
Inventories (4,320 )   (534 )
Accounts payable and accrued liabilities (34,227 )   1,200  
Income taxes payable (635 )   943  
Other operating assets and liabilities, net 10,892     (2,421 )
Net cash flows provided by operating activities 44,131     66,003  
       
Cash flows from investing activities:      
Capital expenditures (8,915 )   (31,577 )
Proceeds from disposition of property, plant and equipment 5,418     2,151  
Other, net (301 )   (1,459 )
Net cash flows used in investing activities (3,798 )   (30,885 )
       
Cash flows from financing activities:      
Revolving credit facility borrowings 72,173     119,252  
Revolving credit facility repayments (53,104 )   (156,208 )
Purchases of 1.50% convertible senior notes (10,595 )    
Other debt and finance lease repayments, net (165 )   (301 )
Payment of financing costs (651 )   (8 )
Shares added to treasury stock as a result of net share settlements
due to vesting of stock awards
(2,667 )   (3,622 )
Purchase of treasury stock     (757 )
Net cash flows provided by (used in) financing activities 4,991     (41,644 )
       
Effect of exchange rate changes on cash and cash equivalents 2     (384 )
Net change in cash and cash equivalents 45,326     (6,910 )
Cash and cash equivalents, beginning of period 8,493     19,316  
Cash and cash equivalents, end of period $ 53,819     $ 12,406  
       
Cash paid for:      
Interest $ 3,486     $ 5,285  
Income taxes, net of refunds 2,888     2,002  
           
           


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
SEGMENT DATA
(In Thousands)
(unaudited)
       
  Three Months Ended   Six Months Ended
  June 30, 2020(2)   March 30, 2020(3)   June 30, 2019(4)   June 30,
2020
  June 30,
2019
Revenues:                  
Well Site Services:                  
Completion Services $ 36,175     $ 82,926     $ 103,320     $ 119,101     $ 203,962  
Drilling Services 169     4,531     12,646     4,700     20,396  
Total Well Site Services 36,344     87,457     115,966     123,801     224,358  
Downhole Technologies 14,965     41,065     46,740     56,030     101,030  
Offshore/Manufactured Products(1):                  
Project-driven products 51,365     36,788     38,517     88,153     65,762  
Short-cycle products 11,452     22,069     35,011     33,645     67,024  
Other products and services 32,119     32,315     28,451     64,310     57,122  
Total Offshore/Manufactured Products 94,936     91,172     101,979     186,108     189,908  
Total revenues $ 146,245     $ 219,694     $ 264,685     $ 365,939     $ 515,296  
                   
Operating income (loss):                  
Well Site Services:                  
Completion Services $ (22,475 )   $ (139,603 )   $ (507 )   $ (162,078 )   $ (4,001 )
Drilling Services (445 )   (5,351 )   (2,601 )   (5,796 )   (7,160 )
Total Well Site Services (22,920 )   (144,954 )   (3,108 )   (167,874 )   (11,161 )
Downhole Technologies (11,110 )   (192,691 )   (1,462 )   (203,801 )   2,592  
Offshore/Manufactured Products 9,419     (95,496 )   9,809     (86,077 )   15,068  
Corporate (8,723 )   (8,661 )   (11,634 )   (17,384 )   (23,734 )
Total operating loss $ (33,334 )   $ (441,802 )   $ (6,395 )   $ (475,136 )   $ (17,235 )

________________

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

(2) Operating income (loss) for the three months ended June 30, 2020 included a non-cash fixed asset impairment charge of $3.0 million and severance and downsizing charges of $3.5 million related to the Completion Services business. In the Downhole Technologies segment, operating income (loss) included $1.3 million of severance and downsizing charges. In the Offshore/Manufactured Products segment, operating income (loss) included $0.3 million of severance charges.

(3) Operating income (loss) for the three months ended March 31, 2020 included a non-cash goodwill impairment charge of $127.1 million, non-cash inventory charges of $9.0 million and severance and downsizing charges of $0.3 million related to the Completion Services business. In the Drilling Services business, operating income (loss) included a non-cash fixed asset impairment charge of $5.2 million and $0.2 million of severance and downsizing charges. In the Downhole Technologies segment, operating income (loss) included a non-cash goodwill impairment charge of $192.5 million. In the Offshore/Manufactured Products segment, operating income (loss) included a non-cash goodwill impairment charge of $86.5 million, non-cash inventory charges of $16.2 million and $0.1 million of severance charges.

(4) 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.

 
 
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,
2020
  March 31,
2020
  June 30,
2019
  June 30,
2020
  June 30,
2019
Well Site Services:                  
Completion Services:                  
Operating loss $ (22,475 )   $ (139,603 )   $ (507 )   $ (162,078 )   $ (4,001 )
Depreciation and amortization expense 13,352     14,766     17,248     28,118     34,534  
Impairment of goodwill     127,054         127,054      
Impairment of inventory     8,981         8,981      
Impairment of fixed assets 2,992             2,992      
Other income 1,115     675     809     1,790     1,390  
EBITDA $ (5,016 )   $ 11,873     $ 17,550     $ 6,857     $ 31,923  
                   
Drilling Services:                  
Operating loss $ (445 )   $ (5,351 )   $ (2,601 )   $ (5,796 )   $ (7,160 )
Depreciation and amortization expense 16     270     3,224     286     6,565  
Impairment of fixed assets     5,198         5,198      
Other income         126         147  
EBITDA $ (429 )   $ 117     $ 749     $ (312 )   $ (448 )
                   
Total Well Site Services:                  
Operating loss $ (22,920 )   $ (144,954 )   $ (3,108 )   $ (167,874 )   $ (11,161 )
Depreciation and amortization expense 13,368     15,036     20,472     28,404     41,099  
Impairment of goodwill     127,054         127,054      
Impairment of inventory     8,981         8,981      
Impairments of fixed assets 2,992     5,198         8,190      
Other income 1,115     675     935     1,790     1,537  
Segment EBITDA $ (5,445 )   $ 11,990     $ 18,299     $ 6,545     $ 31,475  
                   
Downhole Technologies:                  
Operating income (loss) $ (11,110 )   $ (192,691 )   $ (1,462 )   $ (203,801 )   $ 2,592  
Depreciation and amortization expense 5,619     5,584     5,256     11,203     10,322  
Impairment of goodwill     192,502         192,502      
Other income (expense) (13 )   (77 )   14     (90 )   14  
Segment EBITDA $ (5,504 )   $ 5,318     $ 3,808     $ (186 )   $ 12,928  
                   
Offshore/Manufactured Products:                  
Operating income (loss) $ 9,419     $ (95,496 )   $ 9,809     $ (86,077 )   $ 15,068  
Depreciation and amortization expense 5,476     5,628     5,973     11,104     11,560  
Impairment of goodwill     86,500         86,500      
Impairment of inventory     16,249         16,249      
Other income 113     176     60     289     125  
Segment EBITDA $ 15,008     $ 13,057     $ 15,842     $ 28,065     $ 26,753  
                   
Corporate:                  
Operating loss $ (8,723 )   $ (8,661 )   $ (11,634 )   $ (17,384 )   $ (23,734 )
Depreciation and amortization expense 183     161     182     344     453  
EBITDA $ (8,540 )   $ (8,500 )   $ (11,452 )   $ (17,040 )   $ (23,281 )


 
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,
2020
  March 31,
2020
  June 30,
2019
  June 30,
2020
  June 30,
2019
                   
Net loss $ (24,626 )   $ (405,041 )   $ (9,740 )   $ (429,667 )   $ (24,388 )
Income tax benefit (6,893 )   (39,491 )   (263 )   (46,384 )   (540 )
Depreciation and amortization expense 24,646     26,409     31,883     51,055     63,434  
Impairments of goodwill     406,056         406,056      
Impairments of inventory     25,230         25,230      
Impairments of fixed assets 2,992     5,198         8,190      
Interest expense, net 4,179     3,504     4,617     7,683     9,369  
Gain on extinguishment of 1.50% convertible senior notes (4,779 )           (4,779 )    
Consolidated EBITDA (A) $ (4,481 )   $ 21,865     $ 26,497     $ 17,384     $ 47,875  

________________
A. The term Consolidated EBITDA consists of net loss plus net interest expense, taxes, depreciation and amortization expense, and adjustments for certain other items such as non-cash asset impairment charges and gain on extinguishment of 1.50% convertible senior notes. 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 adjustments for certain other items such as non-cash asset impairment charges. 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.

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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