HOUSTON, April 24, 2019 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE: OIS) reported a net loss for the first quarter of 2019 of $14.6 million, or $0.25 per diluted share on revenues of $250.6 million and Consolidated EBITDA (Note A) of $21.4 million. The reported first quarter 2019 results included severance charges totaling $1.0 million ($0.8 million after-tax, or $0.01 per diluted share).
First quarter 2019 highlights included:
- Offshore/Manufactured Products backlog increase of 31%, resulting in a 1.63x book-to-bill ratio for the quarter
- Cash flow from operations totaling $34.3 million
- Revolving credit facility net repayments totaling $15.9 million
Oil States’ President and Chief Executive Officer, Cindy B. Taylor, stated, "Following a volatile fourth quarter regarding commodity prices, we entered the first quarter with a heightened level of uncertainty. As the quarter progressed, our outlook improved given commodity price increases and a relatively stable, if not improving, level of customer spending activity. All of our business segments completed the quarter at or near the high-end of our previous guidance. Our Completion Services revenues declined 7% sequentially due to rig count reductions in the U.S. coupled with an adverse service mix in the quarter. Our land drilling operations declined at a disproportionate rate as customers temporarily shut-down their drilling programs following the decline in commodity prices in the fourth quarter of 2018. However, our Well Site Services and Downhole Technologies segments experienced improving product and service demand later in the quarter. We were particularly encouraged by our Offshore/Manufactured Products bookings, which led to a 1.63x book-to-bill ratio for the quarter, evidencing improving global offshore demand."
BUSINESS SEGMENT RESULTS
(See Segment Data tables)
Well Site Services
Well Site Services generated revenues of $108.4 million, Segment EBITDA (Note B) of $13.2 million and a Segment EBITDA margin of 12% in the first quarter of 2019. This compares to revenues of $126.1 million, Segment EBITDA of $19.0 million and a Segment EBITDA margin of 15% in the fourth quarter of 2018. Results in the first quarter of 2019 were negatively impacted by disproportionately lower utilization of the land drilling rigs as customers temporarily shut-down their drilling programs following the material decline in crude oil prices in the fourth quarter of 2018. Utilization in the land drilling business averaged only 12% in the first quarter of 2019 compared to 30% in the fourth quarter of 2018.
Downhole Technologies
Downhole Technologies generated revenues of $54.3 million and Segment EBITDA of $9.1 million in the first quarter of 2019 compared to revenues and Segment EBITDA of $52.2 million and $6.2 million, respectively, in the fourth quarter of 2018. Revenues and Segment EBITDA increased 4% and 47%, respectively, on a sequential basis due to increased demand for completion, intervention and perforating products. Segment EBITDA margin was 17% in the first quarter of 2019 compared to 12% in the fourth quarter of 2018. First quarter 2019 EBITDA margin benefited from improved manufacturing facility cost absorption due to higher levels of throughput and product demand, as well as the non-recurrence of $2.4 million of patent defense costs recorded in the fourth quarter of 2018.
Offshore/Manufactured Products
Offshore/Manufactured Products generated revenues and Segment EBITDA of $87.9 million and $10.9 million, respectively, in the first quarter of 2019 compared to revenues of $95.8 million and Segment EBITDA of $12.9 million in the fourth quarter of 2018. Revenues decreased 8% while Segment EBITDA decreased 16% sequentially, due to a decrease in other product and service revenues, partially offset by higher project-driven product sales. Segment EBITDA margin in the first quarter of 2019 was 12% compared to 13% in the fourth quarter of 2018.
Backlog increased 31% sequentially to total $234 million at March 31, 2019 compared to $179 million at December 31, 2018. First quarter 2019 bookings totaled $144 million, yielding a book-to-bill ratio of 1.63x.
Income Taxes
The Company recognized an effective tax rate benefit of 1.9% in the first quarter of 2019 which compared to an effective tax rate provision of 5.1% in the fourth quarter of 2018. The effective tax rate benefit in the first quarter of 2019 was lower than the statutory rate due to certain non-deductible items.
Financial Condition
As of March 31, 2019, $120.2 million was outstanding under the Company’s revolving credit facility, while cash totaled $15.3 million. The Company had access to $133.1 million of revolving credit facility availability as of March 31, 2019.
Conference Call Information
The call is scheduled for Thursday, April 25, 2019 at 9:00 am Central Time, and 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 (888) 771-4371 in the United States or by dialing +1 847 585 4405 internationally and using the passcode 48533728. 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 48533728.
About Oil States
Oil States International, Inc. is a global oilfield products and services company 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 gas. The Company is also a leading researcher, developer and manufacturer of engineered solutions to connect the wellbore with the formation in oil and gas well completions. 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 therefor and the cyclical nature of the oil and natural gas industry 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, 2018, 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 | |||||||||||
| March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||
| Revenues: | |||||||||||
| Products | $ | 116,328 | $ | 116,543 | $ | 128,826 | |||||
| Services | 134,283 | 157,575 | 124,750 | ||||||||
| 250,611 | 274,118 | 253,576 | |||||||||
| Costs and expenses: | |||||||||||
| Product costs | 89,268 | 90,331 | 92,976 | ||||||||
| Service costs | 110,610 | 125,231 | 96,914 | ||||||||
| Cost of revenues (exclusive of depreciation and amortization expense presented below) | 199,878 | 215,562 | 189,890 | ||||||||
| Selling, general and administrative expense | 30,108 | 35,671 | 34,195 | ||||||||
| Depreciation and amortization expense | 31,551 | 32,832 | 29,190 | ||||||||
| Other operating (income) expense, net | (86 | ) | (7 | ) | 1,215 | ||||||
| 261,451 | 284,058 | 254,490 | |||||||||
| Operating loss | (10,840 | ) | (9,940 | ) | (914 | ) | |||||
| Interest expense, net | (4,752 | ) | (4,908 | ) | (4,454 | ) | |||||
| Other income | 667 | 1,212 | 647 | ||||||||
| Loss before income taxes | (14,925 | ) | (13,636 | ) | (4,721 | ) | |||||
| Income tax (provision) benefit | 277 | (700 | ) | 1,229 | |||||||
| Net loss | $ | (14,648 | ) | $ | (14,336 | ) | $ | (3,492 | ) | ||
| Net loss per share: | |||||||||||
| Basic | $ | (0.25 | ) | $ | (0.24 | ) | $ | (0.06 | ) | ||
| Diluted | $ | (0.25 | ) | $ | (0.24 | ) | $ | (0.06 | ) | ||
| Weighted average number of common shares outstanding: | |||||||||||
| Basic | 59,258 | 59,032 | 57,787 | ||||||||
| Diluted | 59,258 | 59,032 | 57,787 | ||||||||
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
| March 31, 2019 | December 31, 2018 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 15,309 | $ | 19,316 | |||
| Accounts receivable, net | 262,296 | 283,607 | |||||
| Inventories, net | 207,179 | 209,393 | |||||
| Prepaid expenses and other current assets | 24,041 | 21,715 | |||||
| Total current assets | 508,825 | 534,031 | |||||
| Property, plant, and equipment, net | 533,994 | 540,427 | |||||
| Operating lease assets, net | 49,171 | — | |||||
| Goodwill, net | 647,185 | 647,018 | |||||
| Other intangible assets, net | 248,911 | 255,301 | |||||
| Other noncurrent assets | 29,141 | 27,044 | |||||
| Total assets | $ | 2,017,227 | $ | 2,003,821 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Current portion of long-term debt | $ | 25,561 | $ | 25,561 | |||
| Accounts payable | 78,688 | 77,511 | |||||
| Accrued liabilities | 48,833 | 60,730 | |||||
| Current operating lease liabilities | 8,712 | — | |||||
| Income taxes payable | 4,934 | 3,072 | |||||
| Deferred revenue | 12,899 | 14,160 | |||||
| Total current liabilities | 179,627 | 181,034 | |||||
| Long-term debt | 292,072 | 306,177 | |||||
| Long-term operating lease liabilities | 40,311 | — | |||||
| Deferred income taxes | 52,370 | 53,831 | |||||
| Other noncurrent liabilities | 25,203 | 23,011 | |||||
| Total liabilities | 589,583 | 564,053 | |||||
| Stockholders’ equity: | |||||||
| Common stock | 725 | 718 | |||||
| Additional paid-in capital | 1,102,176 | 1,097,758 | |||||
| Retained earnings | 1,014,870 | 1,029,518 | |||||
| Accumulated other comprehensive loss | (68,931 | ) | (71,397 | ) | |||
| Treasury stock | (621,196 | ) | (616,829 | ) | |||
| Total stockholders’ equity | 1,427,644 | 1,439,768 | |||||
| Total liabilities and stockholders’ equity | $ | 2,017,227 | $ | 2,003,821 | |||
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
| Three Months Ended March 31, | |||||||
| 2019 | 2018 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (14,648 | ) | $ | (3,492 | ) | |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
| Depreciation and amortization expense | 31,551 | 29,190 | |||||
| Stock-based compensation expense | 4,425 | 5,149 | |||||
| Amortization of debt discount and deferred financing costs | 1,937 | 1,749 | |||||
| Deferred income tax provision (benefit) | (1,513 | ) | 1,807 | ||||
| Gain on disposals of assets | (418 | ) | (493 | ) | |||
| Other, net | (340 | ) | 2,061 | ||||
| Changes in operating assets and liabilities, net of effect from acquired businesses: | |||||||
| Accounts receivable | 21,893 | (27,094 | ) | ||||
| Inventories | 2,735 | 1,719 | |||||
| Accounts payable and accrued liabilities | (9,576 | ) | (19,905 | ) | |||
| Income taxes payable | 1,878 | 645 | |||||
| Other operating assets and liabilities, net | (3,632 | ) | (3,587 | ) | |||
| Net cash flows provided by (used in) operating activities | 34,292 | (12,251 | ) | ||||
| Cash flows from investing activities: | |||||||
| Capital expenditures | (17,922 | ) | (14,238 | ) | |||
| Acquisitions of businesses, net of cash acquired | — | (379,676 | ) | ||||
| Proceeds from disposition of property, plant and equipment | 368 | 540 | |||||
| Other, net | (304 | ) | (289 | ) | |||
| Net cash flows used in investing activities | (17,858 | ) | (393,663 | ) | |||
| Cash flows from financing activities: | |||||||
| Issuance of 1.50% convertible senior notes | — | 200,000 | |||||
| Revolving credit facility borrowings | 57,874 | 622,369 | |||||
| Revolving credit facility repayments | (73,774 | ) | (434,369 | ) | |||
| Other debt and capital lease repayments, net | (142 | ) | (132 | ) | |||
| Payment of financing costs | — | (6,712 | ) | ||||
| Purchase of treasury stock | (757 | ) | — | ||||
| Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock | (3,610 | ) | (3,939 | ) | |||
| Net cash flows provided by (used in) financing activities | (20,409 | ) | 377,217 | ||||
| Effect of exchange rate changes on cash and cash equivalents | (32 | ) | 383 | ||||
| Net change in cash and cash equivalents | (4,007 | ) | (28,314 | ) | |||
| Cash and cash equivalents, beginning of period | 19,316 | 53,459 | |||||
| Cash and cash equivalents, end of period | $ | 15,309 | $ | 25,145 | |||
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT DATA
(In Thousands)
(unaudited)
| Three Months Ended | |||||||||||
| March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||
| Revenues: | |||||||||||
| Well Site Services: | |||||||||||
| Completion Services | $ | 100,642 | $ | 108,142 | $ | 82,840 | |||||
| Drilling Services | 7,750 | 18,000 | 17,559 | ||||||||
| Total Well Site Services | 108,392 | 126,142 | 100,399 | ||||||||
| Downhole Technologies | 54,290 | 52,187 | 45,781 | ||||||||
| Offshore/Manufactured Products(1): | |||||||||||
| Project-driven products | 27,245 | 22,593 | 40,799 | ||||||||
| Short-cycle products | 32,013 | 32,431 | 40,418 | ||||||||
| Other products and services | 28,671 | 40,765 | 26,179 | ||||||||
| Total Offshore/Manufactured Products | 87,929 | 95,789 | 107,396 | ||||||||
| Total revenues | $ | 250,611 | $ | 274,118 | $ | 253,576 | |||||
| Operating income (loss): | |||||||||||
| Well Site Services: | |||||||||||
| Completion Services(2,3) | $ | (3,494 | ) | $ | (1,109 | ) | $ | (4,471 | ) | ||
| Drilling Services | (4,559 | ) | (1,889 | ) | (2,311 | ) | |||||
| Total Well Site Services | (8,053 | ) | (2,998 | ) | (6,782 | ) | |||||
| Downhole Technologies(3,4) | 4,054 | 566 | 8,054 | ||||||||
| Offshore/Manufactured Products(2,3,4) | 5,259 | 6,729 | 12,452 | ||||||||
| Corporate(3,4) | (12,100 | ) | (14,237 | ) | (14,638 | ) | |||||
| Total operating loss | $ | (10,840 | ) | $ | (9,940 | ) | $ | (914 | ) | ||
(1) Disaggregated revenue data is provided to supplement the Segment Data.
(2) Operating income (loss) for the three months ended March 31, 2019 included severance charges of $0.8 million related to the Completion Services business and $0.3 million related to the Offshore/Manufactured Products segment.
(3) Operating income (loss) for the three months ended December 31, 2018 included severance and other downsizing charges of $0.2 million and $0.7 million related to the Completion Services business and Offshore/Manufactured Products segment, respectively, $2.4 million of patent defense costs related to the Downhole Technologies segment, and $0.1 million and $0.6 million of transaction costs related to the Downhole Technologies segment and Corporate, respectively.
(4) Operating income (loss) for the three months ended March 31, 2018 included transaction costs of $2.4 million and $0.2 million related to Corporate and the Downhole Technologies segment, respectively, as well as severance and other downsizing charges of $0.8 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 | |||||||||||
| March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||
| Well Site Services: | |||||||||||
| Completion Services: | |||||||||||
| Operating loss | $ | (3,494 | ) | $ | (1,109 | ) | $ | (4,471 | ) | ||
| Depreciation and amortization expense | 17,286 | 17,333 | 15,382 | ||||||||
| Other income | 581 | 1,209 | 269 | ||||||||
| EBITDA | $ | 14,373 | $ | 17,433 | $ | 11,180 | |||||
| Drilling Services: | |||||||||||
| Operating loss | $ | (4,559 | ) | $ | (1,889 | ) | $ | (2,311 | ) | ||
| Depreciation and amortization expense | 3,341 | 3,456 | 3,868 | ||||||||
| Other income | 21 | 1 | 375 | ||||||||
| EBITDA | $ | (1,197 | ) | $ | 1,568 | $ | 1,932 | ||||
| Total Well Site Services: | |||||||||||
| Operating loss | $ | (8,053 | ) | $ | (2,998 | ) | $ | (6,782 | ) | ||
| Depreciation and amortization expense | 20,627 | 20,789 | 19,250 | ||||||||
| Other income | 602 | 1,210 | 644 | ||||||||
| Segment EBITDA | $ | 13,176 | $ | 19,001 | $ | 13,112 | |||||
| Downhole Technologies: | |||||||||||
| Operating income | $ | 4,054 | $ | 566 | $ | 8,054 | |||||
| Depreciation and amortization expense | 5,066 | 5,651 | 3,884 | ||||||||
| Other expense | — | (7 | ) | (13 | ) | ||||||
| Segment EBITDA | $ | 9,120 | $ | 6,210 | $ | 11,925 | |||||
| Offshore/Manufactured Products: | |||||||||||
| Operating income | $ | 5,259 | $ | 6,729 | $ | 12,452 | |||||
| Depreciation and amortization expense | 5,587 | 6,181 | 5,814 | ||||||||
| Other income | 65 | 9 | 16 | ||||||||
| Segment EBITDA | $ | 10,911 | $ | 12,919 | $ | 18,282 | |||||
| Corporate: | |||||||||||
| Operating loss | $ | (12,100 | ) | $ | (14,237 | ) | $ | (14,638 | ) | ||
| Depreciation and amortization expense | 271 | 211 | 242 | ||||||||
| EBITDA | $ | (11,829 | ) | $ | (14,026 | ) | $ | (14,396 | ) | ||
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In Thousands)
(unaudited)
| Three Months Ended | |||||||||||
| March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||
| Net loss | $ | (14,648 | ) | $ | (14,336 | ) | $ | (3,492 | ) | ||
| Income tax provision (benefit) | (277 | ) | 700 | (1,229 | ) | ||||||
| Depreciation and amortization expense | 31,551 | 32,832 | 29,190 | ||||||||
| Interest income | (45 | ) | (47 | ) | (79 | ) | |||||
| Interest expense | 4,797 | 4,955 | 4,533 | ||||||||
| Consolidated EBITDA (A) | $ | 21,378 | $ | 24,104 | $ | 28,923 | |||||
(A) The term Consolidated EBITDA consists of net loss plus net interest expense, taxes, depreciation and amortization expense, and certain other items. 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 certain other items. 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.
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
ADDITIONAL QUARTERLY SEGMENT AND OPERATING DATA
(unaudited)
| Three Months Ended | |||||||||||
| March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||
| Supplemental operating data: | |||||||||||
| Offshore/Manufactured Products backlog ($ in millions) | $ | 234.0 | $ | 178.6 | $ | 156.6 | |||||
| Land drilling operating statistics: | |||||||||||
| Average rigs available | 34 | 34 | 34 | ||||||||
| Utilization | 11.9 | % | 29.6 | % | 31.1 | % | |||||
| Implied day rate ($ in thousands per day) | $ | 21.2 | $ | 19.5 | $ | 18.5 | |||||
| Implied daily cash margin (loss) ($ in thousands per day) | $ | (2.2 | ) | $ | 2.1 | $ | 2.2 | ||||
Company Contact:
Lloyd A. Hajdik
Oil States International, Inc.
Executive Vice President, Chief Financial Officer and Treasurer
713-652-0582
Patricia Gil
Oil States International, Inc.
Director, Investor Relations
713-470-4860
SOURCE: Oil States International, Inc.