Oil States Announces Fourth Quarter 2014 Earnings of $1.09 Per Share

HOUSTON, Feb. 18, 2015 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported net income from continuing operations for the fourth quarter ended December 31, 2014 of $58.3 million, or $1.09 per diluted share. These results compare to net income from continuing operations of $36.1 million, or $0.65 per diluted share, reported in the fourth quarter of 2013. Results for the fourth quarter of 2013 included pre-tax charges of $1.6 million for transaction costs primarily associated with the May 30, 2014 spin-off of the accommodations segment into a stand-alone, publicly traded corporation, Civeo Corporation or Civeo, and losses on debt extinguishment of $6.2 million. Excluding the fourth quarter 2013 charges, net income from continuing operations would have been $43.9 million, or $0.73 per diluted share.

The Company generated revenues of $483.7 million and EBITDA (A) of $124.2 million during the fourth quarter of 2014, representing year-over-year growth rates of 15% and 21%, respectively. These results compare to revenues of $421.3 million and Adjusted EBITDA (A) of $102.9 million reported in the fourth quarter of 2013.

Cindy B. Taylor, Oil States' President and Chief Executive Officer stated, "Our business segments reported a number of new records in the fourth quarter. In our well site services segment, we reported record quarterly revenues, and in our offshore products segment, revenues and EBITDA both set quarterly records. During the fourth quarter, our well site services segment benefitted from a product and service mix which favored our more proprietary offerings, while in our offshore products segment, higher margin product mix and efficient project execution were the key drivers for our success."

"In January 2015, we acquired Montgomery Machine Company ("MMC"), a Houston, Texas based company that combines machining and proprietary cladding technology and services to manufacture high-specification components for the offshore capital equipment industry. This acquisition will serve to strengthen our position in our offshore products segment as a supplier of critical subsea components with enhanced capabilities, proprietary technology and logistical advantages."

For the year ended December 31, 2014, the Company reported revenues of $1.8 billion, Adjusted EBITDA of $449.1 million and net income from continuing operations of $127.2 million, or $2.35 per diluted share. However, the results for the year ended December 31, 2014 included $111.4 million of losses on debt extinguishment and Civeo spin-off related charges. Excluding these charges, net income from continuing operations would have been $199.4 million, or $3.69 per diluted share. For the year ended December 31, 2013, the Company reported revenues of $1.6 billion, Adjusted EBITDA of $363.4 million (after elimination of $5.7 million of transaction costs) and $129.0 million of net income from continuing operations, or $2.31 per diluted share. Excluding the $11.9 million of losses on extinguishment of debt and transaction costs, net income from continuing operations for the year ended December 31, 2013 would have been $136.6 million, or $2.44 per diluted share.

Income Taxes

The Company recognized an effective tax rate of 35.9% in the fourth quarter of 2014 resulting in an annualized effective tax rate for the year of 35.2%. This compares with an effective tax rate of 39.3% in the fourth quarter of 2013 and 36.8% for the full year 2013. The lower effective tax rate in the fourth quarter of 2014 was primarily due to the mix and levels of pre-tax earnings between the Company's domestic and foreign operations.

Financial Condition

The Company invested $56.7 million in capital expenditures during the fourth quarter of 2014. Spending primarily related to the addition of completion services equipment deployed to service the U.S. shale plays along with ongoing facility expansions in the offshore products segment.

During the fourth quarter, the Company repurchased 1,139,015 shares of its common stock under its authorized share repurchase program at an average price of $55.72 per share. Subsequent to year end and through February 18, 2015, the Company repurchased an additional 1,619,832 shares of its common stock at an average price of $43.21 per share. The Company's currently available share repurchase authorization totals $79.9 million and is scheduled to expire on September 1, 2015.

As of December 31, 2014, there was $140.7 million outstanding under the Company's revolving credit facility. Total availability as of December 31, 2014 was $423.8 million (net of standby letters of credit totaling $35.5 million).

BUSINESS SEGMENT RESULTS

(Unless otherwise noted, the following discussion compares the quarterly results from continuing operations for the fourth 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 of $231.7 million and EBITDA of $74.9 million in the fourth quarter of 2014 compared to revenues and EBITDA of $186.7 million and $65.8 million, respectively, in the fourth quarter of 2013. Segmental revenues and EBITDA increased 24% and 14% year-over-year, respectively, primarily due to a 2% year-over-year increase in the number of completion services jobs performed and a 24% 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 86% during the fourth quarter of 2014 compared with 73% in the fourth quarter of 2013, also contributed positively to the segmental results.

Offshore Products

Offshore products generated record quarterly revenues and EBITDA of $252.1 million and $61.9 million, respectively, in the fourth quarter of 2014 compared to revenues of $234.7 million and EBITDA of $52.0 million in the fourth quarter of 2013. Segmental revenues and EBITDA increased 7% and 19% 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 were consistent with the third quarter 2014 record, once again averaging 24.6% in the fourth quarter of 2014, compared to 22.1% realized in the fourth quarter of 2013. Backlog declined 10% sequentially, totaling $490 million at December 31, 2014 compared to $543 million reported at September 30, 2014 and $580 million reported at December 31, 2013. Major backlog additions during the fourth quarter included receptacles and connector products destined for West Africa along with tendon couplings and flex elements for a project in the US Gulf of Mexico.

Conference Call Information

The call is scheduled for Thursday, February 19, 2015 at 11:00 am EST, 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) 447-0521 in the United States or by dialing +1 847 413 3238 internationally and using the passcode of 38904900. A replay of the conference call will be available one and a half hours 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 38904900.

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) Consolidated balance sheet data at December 31, 2013 included the balances of our former accommodations segment, Civeo Corporation, which was spun-off to the Company's shareholders on May 30, 2014.

(2) As of December 31, 2014, the Company had approximately $423.8 million available under its revolving credit facility.

(1) Adjustments to EBITDA for the twelve months ended December 31, 2014 included transaction costs of $11.0 million. These costs primarily related to activities associated with the spin-off of Civeo. Adjustments to EBITDA for the three and twelve months ended December 31, 2013 included transaction costs of $1.6 million and $5.7 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 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 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.