Oil States Reports Adjusted Second Quarter 2015 Earnings of $0.15 Per Share

HOUSTON, July 28, 2015 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported net income for the second quarter ended June 30, 2015 of $6.1 million, or $0.12 per diluted share, which included pre-tax charges of $1.7 million for severance and other downsizing initiatives. Excluding these second quarter 2015 charges, net income would have totaled $7.5 million, or $0.15 per diluted share. These results compare to adjusted net income from continuing operations of $47.6 million, or $0.88 per diluted share, reported in the second quarter of 2014. The results for the second quarter of 2014 excluded spin-off related charges totaling $110.0 million, or $1.33 per diluted share after-tax, associated with the May 30, 2014 spin-off of Oil States' accommodations segment into a stand-alone, publicly traded corporation, Civeo Corporation or Civeo.

During the second quarter of 2015, the Company generated revenues of $269.3 million and Adjusted EBITDA (A) of $43.2 million (excluding $1.7 million of severance and downsizing related charges). These results compare to revenues of $459.6 million and Adjusted EBITDA (A) of $109.1 million (excluding $9.6 million of transaction costs reported in the second quarter of 2014), representing year-over-year declines of 41% and 60%, respectively. Activity declines were broad based and included lower North American activity levels resulting from the significant decline in crude oil prices, the corresponding precipitous drop in the U.S. land drilling rig count which continued throughout the second quarter, further activity declines due to certain customers who have elected to drill wells but not complete them, reduced pricing for our completion service offerings, and a reduction in short-cycle revenues in the offshore products business.

For the first half of 2015, the Company reported revenues of $606.6 million and Adjusted EBITDA of $112.1 million (excluding $3.8 million of pre-tax severance and downsizing related charges). Net income for the first half of 2015 included $6.1 million, or $0.09 per diluted share after-tax, of severance and other downsizing initiatives in addition to a higher effective tax rate driven by a $2.3 million deferred tax adjustment recorded in the first quarter of 2015 for certain non-deductible items. For the first half of 2014, the Company reported revenues of $864.8 million and Adjusted EBITDA of $202.0 million (after elimination of $11.0 million of spin-off related charges). The results for the first half of 2014 included $111.4 million, or $1.32 per diluted share after-tax, of spin-off related charges. Excluding the severance and downsizing related charges in the six months ended June 30, 2015 and the spin-off related charges in the six months ended June 30, 2014, EBITDA would have decreased 45% year-over-year.

Oil States' President and Chief Executive Officer, Cindy B. Taylor, stated, "Oil States' results for the second quarter continued to be negatively impacted by low crude oil prices and the resulting dramatic decline in North American land drilling and completion-related activity. Performance in our offshore products segment was in line, or better, than our earlier guidance with strong EBITDA margins reported despite the current low commodity price environment. Bidding and quoting activity continued, albeit at a slower pace in the second quarter for our offshore products segment, and our book-to-bill ratio has trended lower to average 0.63x for the second quarter and 0.81x year-to-date. While we are dealing with a very challenged market, our balance sheet and financial position are in good shape, and I remain confident that Oil States will emerge from this cyclical downturn well positioned both operationally and financially."

BUSINESS SEGMENT RESULTS

(Unless otherwise noted, the following discussion compares the quarterly results from continuing operations for the second quarters of 2015 and 2014, respectively. The historical results of operations of the accommodations segment through its respective transaction closing date has been reported as discontinued operations for all periods reported herein.)

Well Site Services

Well site services generated revenues of $86.1 million and EBITDA of $11.1 million in the second quarter of 2015 compared to revenues and EBITDA of $208.9 million and $67.0 million, respectively, in the second quarter of 2014. Segmental revenues and EBITDA decreased 59% and 83% year-over-year, respectively, primarily due to a 39% year-over-year decrease in the number of completion services jobs performed and a 27% year-over-year decrease in revenue per completion service job as a result of lower activity levels in the U.S. shale basins and pricing pressure from our customers. Lower utilization in the land drilling business, which averaged 34% during the second quarter of 2015 compared with 91% in the second quarter of 2014, also negatively impacted the segmental results. The well site services segment EBITDA included $0.7 million of severance and downsizing charges associated with cost reduction measures implemented in response to the significant activity declines.

Offshore Products

Offshore products generated revenues and EBITDA of $183.1 million and $40.9 million, respectively, in the second quarter of 2015 compared to revenues of $250.7 million and EBITDA of $56.2 million in the second quarter of 2014. Segmental revenues and EBITDA both decreased 27% year-over-year, primarily due to lower contributions across the majority of our product lines, including production, subsea, drilling and shorter cycle businesses such as elastomer products, coupled with a lower level of service activities and a lower backlog position entering the quarter. Conversely, EBITDA margins improved to 22.3% in the second quarter of 2015 from 21.8% realized in the first quarter of 2015 and were essentially flat with 22.4% reported in the second quarter of 2014. Backlog in the offshore products segment at June 30, 2015 decreased 14% to $409.2 million from $474.2 million at March 31, 2015 due to project deferrals and delays in awards resulting from the continued low commodity price environment. Backlog totaled $599.4 million at June 30, 2014. EBITDA in the offshore products segment included $1.0 million of severance costs related to cost reduction initiatives implemented in response to industry activity declines.

Financial Condition

The Company invested $30.5 million in capital expenditures during the second quarter of 2015, the majority of which was associated with projects carried over from 2014. Capital expenditures related to ongoing facility expansions in the offshore products segment, primarily in the U.K. and Brazil, along with the addition of completion services equipment deployed to service the U.S. shale plays.

During the second quarter of 2015, the Company repurchased 359,412 shares under its authorized share repurchase program at an average price of $39.94 per share. Amounts remaining available under the current share repurchase authorization, which is scheduled to expire on September 1, 2015, total $57.2 million. Since the current share repurchase authorization was approved in August 2012, the Company has repurchased approximately 12% of its outstanding common stock.

As of June 30, 2015, there was $150.9 million outstanding under the Company's revolving credit facility. Total availability under the facility as of June 30, 2015 was $409.0 million (net of standby letters of credit totaling $40.1 million).

Income Taxes

The Company recognized an effective tax rate of 19.0% in the second quarter of 2015 compared to an effective tax rate of 36.1% (benefit) in the second quarter of 2014. The lower effective tax rate in the second quarter of 2015 was primarily due to significantly lower domestic earnings stemming from the industry downturn. The tax benefit recorded in the second quarter of 2014 was primarily due to the loss incurred from the extinguishment of debt associated with the debt refinancings completed in conjunction with the spin-off of Civeo.

Conference Call Information

The call is scheduled for Wednesday, July 29, 2015 at 12:30 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 (866) 813-5647 in the United States or by dialing +1 847 619-6249 internationally and using the passcode of 40216593. 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 40216593.

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, 2014 filed by Oil States with the Securities and Exchange Commission on February 23, 2015.

(1) Adjustments to EBITDA and operating income for the three and six months ended June 30, 2015 included severance and other related costs of $0.7 million and $1.8 million, respectively, related to the completion services business and $1.0 million and $2.0 million, respectively, related to the offshore products segment.

(2) Adjustments to EBITDA and operating income for the three and six months ended June 30, 2014 included transaction costs of $9.6 million and $11.0 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.