Oil States Announces Third Quarter 2014 Earnings of $1.07 Per Share

HOUSTON, Oct. 30, 2014 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported net income from continuing operations for the third quarter ended September 30, 2014 of $58.4 million, or $1.07 per diluted share. These results compare to net income from continuing operations of $35.5 million, or $0.64 per diluted share, reported in the third quarter of 2013.

The Company generated revenues of $471.0 million and EBITDA (A) of $122.9 million during the third quarter of 2014, representing year-over-year growth rates of 7% and 26%, respectively. These results compare to revenues of $438.2 million and Adjusted EBITDA of $97.2 million reported in the third quarter of 2013.

EBITDA increased as a result of strong demand for the Company's completion services business offerings and higher utilization of its land drilling rigs, coupled with increased contributions from production facility and subsea product sales, improved manufacturing facility throughput and operational efficiencies in the offshore products segment.

Cindy B. Taylor, Oil States' President and Chief Executive Officer stated, "Operationally, our businesses performed extremely well in the third quarter. We reported record quarterly revenues and EBITDA in our well site services segment and generated record EBITDA margin percentages in our offshore products segment. Our well site services segment enjoyed a good product and service mix with an emphasis on our more proprietary offerings. Product mix and execution were good in our offshore products segment with most of our manufacturing locations generating improved results. Despite the recent pull back in commodity prices, demand for our products and services, both in the onshore and offshore markets, remains at very strong levels."

For the first nine months of 2014, the Company reported revenues of $1.3 billion and Adjusted EBITDA of $325.0 million (after elimination of $11.0 million of charges primarily associated with the May 30, 2014 spin-off of the accommodations segment into a stand-alone, publicly traded corporation, Civeo Corporation or Civeo). The results for the first nine months of 2014 included $111.4 million of losses on debt extinguishment and Civeo spin-off related charges. For the first nine months of 2013, the Company reported revenues of $1.2 billion and Adjusted EBITDA of $263.5 million (after elimination of $7.1 million of acquisition and transaction costs).

Income Taxes

The Company recognized an effective tax rate of 35.4% in the third quarter of 2014 compared to 35.0% in the third quarter of 2013.

Financial Condition

The Company invested $59.3 million in capital expenditures during the third quarter of 2014. Spending primarily related to the addition of completion services equipment deployed to service the active U.S. shale plays along with ongoing facility expansions in the offshore products segment.

During the third quarter, the Company repurchased 307,897 shares of its common stock under its authorized share repurchase program at an average price of $62.10 per share. In October, the Company repurchased an additional 843,478 shares of its common stock at an average price of $59.28 per share. The Company currently has $163.4 million remaining available under its share repurchase authorization which is scheduled to expire on September 1, 2015.

As of September 30, 2014, there was $171.7 million outstanding under the Company's revolving credit facility. Total availability as of September 30, 2014 was $391.9 million (net of standby letters of credit totaling $36.4 million).

BUSINESS SEGMENT RESULTS

(Unless otherwise noted, the following discussion compares the quarterly results from continuing operations for the third quarters of 2014 and 2013, respectively. The historical results of operations of the accommodations and tubular services segments through their respective transaction closing dates have been reported as discontinued operations for all periods reported herein.)

Well Site Services

Well site services generated record revenues and EBITDA of $224.4 million and $77.2 million, respectively, in the third quarter of 2014 compared to revenues and EBITDA of $195.9 million and $64.1 million, respectively, in the third quarter of 2013. Segmental revenues and EBITDA increased 15% and 20% year-over-year, respectively, primarily due to a 6% year-over-year increase in the number of completion services jobs performed and a 7% year-over-year increase in revenue per completion service job as a result of increased service intensity in the active shale basins. Increased utilization in the land drilling business, which averaged 90% during the third quarter of 2014 compared with 78% in the third quarter of 2013, also contributed to the record performance for this segment.

Offshore Products

Offshore products generated revenues of $246.6 million and EBITDA of $60.6 million in the third quarter of 2014 compared to revenues of $242.3 million and EBITDA of $45.7 million in the third quarter of 2013. Segmental revenues and EBITDA increased 2% and 33% year-over-year, respectively, primarily due to greater contributions from production facility product sales and continued strong demand for services on a global basis, along with margin improvement from product mix, operational efficiencies, and strong project execution by our major divisions. EBITDA margins increased to a record 24.6% in the third quarter of 2014 compared to 18.9% in the third quarter of 2013. Backlog declined 9% sequentially, totaling $543 million at September 30, 2014 compared to $599 million reported at June 30, 2014. There were no individual project awards in excess of $15 million booked during the third quarter of 2014 due to award timing and contract negotiations. Backlog additions in the fourth quarter of 2014 are currently expected to exceed third quarter 2014 bookings.

Conference Call Information

The call is scheduled for Friday, October 31, 2014 at 11:00 am EDT, is being webcast and can be accessed from the Company's website at http://www.oilstatesintl.com. Participants may also join the conference call by dialing (800) 446-1671 in the United States or by dialing +1 847 413 3362 internationally and using the passcode of 38296266. A replay of the conference call will be available one hour after the completion of the call by dialing (888) 843-7419 in the United States or by dialing +1 630 652 3042 internationally and entering the passcode of 38296266.

About Oil States

Oil States International, Inc. is an energy services company with a leading market position as a manufacturer of products for deepwater production facilities and certain drilling equipment, as well as a provider of completion services and land drilling services to the oil and gas industry. 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 http://www.oilstatesintl.com.

Forward Looking Statements

The foregoing contains 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 are 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 energy service industry and other factors discussed in the "Business" and "Risk Factors" sections of the Form 10-K for the year ended December 31, 2013 filed by Oil States with the Securities and Exchange Commission on February 25, 2014.

(1) As of September 30, 2014, the Company had approximately $391.9 million available under its revolving credit facility. 

(1) The EBITDA and operating income for the completion services segment for the nine months ended September 30, 2013 were negatively impacted by $3.0 million from an increase in an acquisition related contingent liability.

(2) The EBITDA and operating expense related to the Company's corporate function for the nine months ended September 30, 2014 included transaction costs of $11.0 million. These costs primarily related to activities associated with the spin-off of Civeo. EBITDA and operating expense related to the Company's corporate function for the three and nine months ended September 30, 2013 included transaction costs of $2.6 million and $4.1 million, respectively. These costs primarily related to activities associated with the spin-off of Civeo.

(A) The terms EBITDA and Adjusted EBITDA consist of net income from continuing operations plus interest, taxes, depreciation and amortization. EBITDA and Adjusted 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 income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA and Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA and Adjusted 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 and Adjusted 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 table above sets forth a reconciliation of EBITDA and Adjusted EBITDA to net income, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles.