HOUSTON, April 29, 2020 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE: OIS) reported a net loss for the first quarter of 2020 of $405.0 million, or $6.79 per share, on revenues of $219.7 million and Consolidated EBITDA (Note A) of $21.9 million. The reported first quarter 2020 net loss included the following significant items, which totaled $396.8 million after-tax, or $6.65 per share:
- Non-cash goodwill asset impairment charges of $406.1 million ($386.5 million after-tax, or $6.48 per share)
- Non-cash write-downs of inventory totaling $25.2 million ($20.5 million after-tax, or $0.34 per share)
- Non-cash fixed asset impairment charge of $5.2 million ($4.1 million after-tax, or $0.07 per share)
- Severance and downsizing charges totaling $0.7 million ($0.5 million after-tax, or $0.01 per share)
- Discrete tax benefit of $14.8 million, or $0.25 per share, related to U.S. income tax net operating loss carrybacks under the provisions of the CARES Act
First quarter 2020 highlights and corporate actions included:
- Consolidated EBITDA of $21.9 million, which exceeded the upper end of our guided range
- Generated $5.4 million in cash flow from operations
- Offshore/Manufactured Products segment booked $87 million in new orders, yielding a 1.0x book-to-bill ratio
- Repurchased $5.7 million principal amount of the convertible senior notes at a 17% discount to par value
- Implemented significant costs saving measures, including an approximate 23% reduction in the U.S. workforce between December 31, 2019 and April 28, 2020
- Reduced capital spending plans for 2020 by approximately 70%
- Expect to receive U.S. income tax refunds of approximately $41 million in 2020 under provisions of the CARES Act
Oil States' President and Chief Executive Officer, Cindy B. Taylor, stated,
"While our first quarter results, excluding various impairments taken, exceeded our guidance issued in February, operational activity across our U.S. land-based businesses is declining quickly in the second quarter. During the first quarter, our Completion Services revenues were modesty up sequentially with EBITDA margins improving 370 basis points as activity had not yet been materially impacted by the COVID-19 pandemic or deteriorating market conditions. In our Downhole Technologies segment, revenues improved 7% sequentially and EBITDA margins increased 420 basis points. Revenues in our Offshore/Manufactured Products segment decreased 16% sequentially, with an 80 basis point decrease in EBITDA margins, due to delays in our major project-driven sales as a result of the global disruptions in our own operations and in various parts of our supply chain. Segment backlog totaled $267 million at March 31, a decrease of 4% sequentially. Our segment book-to-bill ratio for the first quarter was 1.0x."
"We are acutely aware of the challenging market conditions that we will face during the remainder of 2020 and into 2021. During stressed periods in our business, we know that the immediate focus needs to be on the preservation of liquidity and the management of variable and fixed costs through such a downturn. We are working with our lenders to amend our existing cash flow-based revolving credit facility and convert it into an asset-based lending arrangement. We have also taken significant actions on the cost side of our business to adjust to the expectation of significantly declining revenues, particularly those tied to shale completions in the United States. We will 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 generated revenues and Segment EBITDA (Note B) of $91.2 million and $13.1 million, respectively, in the first quarter of 2020 compared to revenues of $108.2 million and Segment EBITDA of $16.4 million reported in the fourth quarter of 2019. Sequentially, revenues decreased 16% and Segment EBITDA decreased 20% due primarily to a decline in project-driven product revenues due to global disruptions caused by the COVID-19 pandemic. Segment EBITDA margin in the first quarter of 2020 was 14%, compared to 15% in the fourth quarter of 2019.
During the first quarter of 2020, the Offshore/Manufactured Products segment recorded a non-cash goodwill impairment charge of $86.5 million and a non-cash inventory charge of $16.2 million. In the fourth quarter of 2019, results in this segment were negatively impacted by a $1.7 million bad debt provision on a prior-year receivable.
Backlog totaled $267 million at March 31, 2020, a decrease of 4% sequentially, but an increase of 14% year-over-year. First quarter 2020 bookings totaled $87 million, yielding a book-to-bill ratio of 1.0x.
Well Site Services
Well Site Services generated revenues of $87.5 million, Segment EBITDA of $12.0 million and a Segment EBITDA margin of 14% in the first quarter of 2020. This compares to revenues of $91.7 million, Segment EBITDA of $9.3 million and a Segment EBITDA margin of 10% reported in the fourth quarter of 2019. Segment EBITDA in the first quarter of 2020 benefited from a favorable shift in revenue mix and continued cost reduction measures.
During the first quarter of 2020, the Completion Services business recorded a non-cash goodwill impairment charge of $127.1 million and a non-cash inventory charge of $9.0 million. The Drilling Services business recorded a non-cash fixed asset impairment charge of $5.2 million.
Downhole Technologies
Downhole Technologies generated revenues of $41.1 million and Segment EBITDA of $5.3 million in the first quarter of 2020 compared to revenues and Segment EBITDA of $38.4 million and $3.4 million, respectively, in the fourth quarter of 2019. Both revenues and Segment EBITDA improved sequentially as the segment realized increased perforating sales from its integrated gun systems and completion products sales, together with improved manufacturing cost absorption. Segment EBITDA margin was 13% in the first quarter of 2020 compared to 9% in the fourth quarter of 2019.
During the first quarter of 2020, the Downhole Technologies segment recorded a non-cash goodwill impairment charge of $192.5 million.
Interest Expense, Net
The Company reported net interest expense of $3.5 million in the first quarter of 2020, compared to $3.9 million of net interest expense in the fourth quarter of 2019. Included in net interest expense was $1.7 million and $2.0 million of non-cash amortization of debt discount and deferred financing costs in the first quarter of 2020 and fourth quarter of 2019, respectively.
Income Taxes
The Company recognized an effective tax rate benefit of 8.9% in the first quarter of 2020 which compared to an effective tax rate benefit of 1.2% in the fourth quarter of 2019. The effective tax rate benefit for both periods was below the U.S. statutory rate primarily due to certain non-deductible expenses, including non-cash goodwill impairment charges.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law. In accordance with the recently established rules and procedures under the CARES Act, the Company has filed carryback claims regarding U.S. net operating losses generated in 2018 and plans to file carryback claims regarding U.S. net operating losses generated in 2019 during the second quarter of 2020. Prior to enactment of the CARES Act, such net operating losses could only be carried forward. The Company expects to receive refunds of approximately $41 million related to these carryback claims in 2020, which are classified in income taxes receivable in the consolidated balance sheet as of March 31, 2020.
Financial Condition
As of March 31, 2020, $71.7 million was outstanding under the Company's revolving credit facility, while cash on hand totaled $24.3 million and the total amount available to be drawn under the revolving credit facility was $107.6 million. The Company's total debt represented 25% of combined total debt and stockholders' equity at March 31, 2020, an increase from 17% at December 31, 2019 due primarily to the non-cash asset impairment charges recorded in the first quarter of 2020. The Company was in compliance with its covenants under the revolving credit facility at March 31, 2020.
The Company is working with its bank group regarding an amendment to its revolving credit facility. The amendment entails converting the Company's existing cash flow-based revolving credit facility into an asset-based revolving credit facility (the "Amended Facility"). The Company has made significant progress to date with its bank group and currently expects to complete the amendment process in the second quarter of 2020. The Amended Facility is expected to be subject to a borrowing base, with availability based upon the amount of the Company's accounts receivable and inventory with advance rates dependent upon several factors, including the age and geographic location of the assets. While the amount of the borrowing base has not been finalized, the Company expects the size of the Amended Facility to range from $175 million to $200 million. While the Company believes it will be able to complete the amendment process within the time frame estimated and on the general terms described above, the amendment process remains subject to completion of final documentation and credit approval by the bank group and, accordingly, the Company cannot be certain that it will be able to complete the amendment process within the time frame or on the terms currently expected.
If the Company is not successful in amending the revolving credit facility, its borrowings would be governed by the existing credit agreement, which contains financial covenants and restrictions, including an interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.0 to 1.0, a maximum senior secured leverage ratio, defined as the ratio of senior secured debt to consolidated EBITDA, of no greater than 2.25 to 1.0 and a total net leverage ratio, defined as the ratio of total net funded debt to consolidated EBITDA, of no greater than 3.75 to 1.0. Based on Company forecasts, the Company anticipates that it could fail to comply with the total net leverage ratio covenant in the third quarter of 2020 as a result of projected declines in consolidated EBITDA resulting from current industry conditions caused by the global response to the COVID-19 pandemic and the resulting collapse in crude oil prices. However, the Company believes that it will have sufficient liquidity over the next twelve months to fund its liabilities as they become due. Key elements affecting the Company’s liquidity position included the following as of March 31, 2020:
| • | Cash and cash equivalents | $24.3 million |
| • | Working capital, excluding cash and the current portion of debt and lease obligations | $348.1 million |
| • | Revolving credit facility borrowings outstanding | $71.7 million |
If the Company does not complete the amendment process and subsequently is not in compliance with the total net leverage ratio covenant under its revolving credit facility, the Company believes that it will have sufficient cash on hand, together with cash flow from operations (after investments in capital expenditures), to repay the borrowings outstanding under its revolving credit facility or that it could seek to obtain an amendment or waiver from its lenders in order to avoid a default.
Conference Call Information
The call is scheduled for Thursday, April 30, 2020 at 10:00 am 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 49654508. 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, our ability to amend our revolving credit facility 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 | |||||||||||
| March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||
| Revenues: | |||||||||||
| Products | $ | 102,980 | $ | 119,999 | $ | 116,328 | |||||
| Services | 116,714 | 118,362 | 134,283 | ||||||||
| 219,694 | 238,361 | 250,611 | |||||||||
| Costs and expenses: | |||||||||||
| Product costs | 89,746 | 93,841 | 89,268 | ||||||||
| Service costs | 107,856 | 99,668 | 110,610 | ||||||||
| Cost of revenues (exclusive of depreciation and amortization expense presented below)(1) | 197,602 | 193,509 | 199,878 | ||||||||
| Selling, general and administrative expense | 26,124 | 29,405 | 30,108 | ||||||||
| Depreciation and amortization expense | 26,409 | 28,519 | 31,551 | ||||||||
| Impairments of goodwill | 406,056 | 165,000 | — | ||||||||
| Impairment of fixed assets | 5,198 | — | — | ||||||||
| Other operating expense (income), net | 107 | (2,037 | ) | (86 | ) | ||||||
| 661,496 | 414,396 | 261,451 | |||||||||
| Operating loss | (441,802 | ) | (176,035 | ) | (10,840 | ) | |||||
| Interest expense, net | (3,504 | ) | (3,915 | ) | (4,752 | ) | |||||
| Other income, net | 774 | 2,223 | 667 | ||||||||
| Loss before income taxes | (444,532 | ) | (177,727 | ) | (14,925 | ) | |||||
| Income tax benefit | 39,491 | 2,175 | 277 | ||||||||
| Net loss | $ | (405,041 | ) | $ | (175,552 | ) | $ | (14,648 | ) | ||
| Net loss per share: | |||||||||||
| Basic | $ | (6.79 | ) | $ | (2.95 | ) | $ | (0.25 | ) | ||
| Diluted | $ | (6.79 | ) | $ | (2.95 | ) | $ | (0.25 | ) | ||
| Weighted average number of common shares outstanding: | |||||||||||
| Basic | 59,654 | 59,431 | 59,258 | ||||||||
| Diluted | 59,654 | 59,431 | 59,258 | ||||||||
________________
(1) Cost of revenues (exclusive of depreciation and amortization expense) includes 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.
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
| March 31, 2020 | December 31, 2019 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 24,308 | $ | 8,493 | |||
| Accounts receivable, net | 222,472 | 233,487 | |||||
| Inventories, net | 209,180 | 221,342 | |||||
| Income taxes receivable | 43,950 | 2,568 | |||||
| Prepaid expenses and other current assets | 14,638 | 17,539 | |||||
| Total current assets | 514,548 | 483,429 | |||||
| Property, plant, and equipment, net | 429,002 | 459,724 | |||||
| Operating lease assets, net | 40,902 | 43,616 | |||||
| Goodwill, net | 75,757 | 482,306 | |||||
| Other intangible assets, net | 223,958 | 230,091 | |||||
| Other noncurrent assets | 27,843 | 28,701 | |||||
| Total assets | $ | 1,312,010 | $ | 1,727,867 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Current portion of long-term debt | $ | 25,643 | $ | 25,617 | |||
| Accounts payable | 75,392 | 78,368 | |||||
| Accrued liabilities | 43,227 | 48,840 | |||||
| Current operating lease liabilities | 8,361 | 8,311 | |||||
| Income taxes payable | 2,845 | 4,174 | |||||
| Deferred revenue | 20,721 | 17,761 | |||||
| Total current liabilities | 176,189 | 183,071 | |||||
| Long-term debt | 239,229 | 222,552 | |||||
| Long-term operating lease liabilities | 33,323 | 35,777 | |||||
| Deferred income taxes | 38,506 | 38,079 | |||||
| Other noncurrent liabilities | 22,131 | 24,421 | |||||
| Total liabilities | 509,378 | 503,900 | |||||
| Stockholders' equity: | |||||||
| Common stock | 732 | 726 | |||||
| Additional paid-in capital | 1,115,677 | 1,114,521 | |||||
| Retained earnings | 392,669 | 797,710 | |||||
| Accumulated other comprehensive loss | (82,537 | ) | (67,746 | ) | |||
| Treasury stock | (623,909 | ) | (621,244 | ) | |||
| Total stockholders' equity | 802,632 | 1,223,967 | |||||
| Total liabilities and stockholders' equity | $ | 1,312,010 | $ | 1,727,867 | |||
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
| Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (405,041 | ) | $ | (14,648 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization expense | 26,409 | 31,551 | |||||
| Impairments of goodwill | 406,056 | — | |||||
| Impairments of inventories | 25,230 | — | |||||
| Impairment of fixed assets | 5,198 | — | |||||
| Stock-based compensation expense | 1,162 | 4,425 | |||||
| Amortization of debt discount and deferred financing costs | 1,681 | 1,937 | |||||
| Deferred income tax benefit | (40,832 | ) | (1,513 | ) | |||
| Gain on disposals of assets | (513 | ) | (418 | ) | |||
| Other, net | 771 | (340 | ) | ||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 4,617 | 21,893 | |||||
| Inventories | (15,332 | ) | 2,735 | ||||
| Accounts payable and accrued liabilities | (8,625 | ) | (9,576 | ) | |||
| Income taxes payable | (1,100 | ) | 1,878 | ||||
| Other operating assets and liabilities, net | 5,768 | (3,632 | ) | ||||
| Net cash flows provided by operating activities | 5,449 | 34,292 | |||||
| Cash flows from investing activities: | |||||||
| Capital expenditures | (5,881 | ) | (17,922 | ) | |||
| Proceeds from disposition of property, plant and equipment | 4,092 | 368 | |||||
| Other, net | (256 | ) | (304 | ) | |||
| Net cash flows used in investing activities | (2,045 | ) | (17,858 | ) | |||
| Cash flows from financing activities: | |||||||
| Revolving credit facility borrowings | 72,173 | 57,874 | |||||
| Revolving credit facility repayments | (52,404 | ) | (73,774 | ) | |||
| Purchase of 1.50% convertible senior notes | (4,737 | ) | — | ||||
| Other debt and finance lease activity, net | 35 | (142 | ) | ||||
| Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock | (2,665 | ) | (3,610 | ) | |||
| Purchase of treasury stock | — | (757 | ) | ||||
| Net cash flows provided by (used in) financing activities | 12,402 | (20,409 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 9 | (32 | ) | ||||
| Net change in cash and cash equivalents | 15,815 | (4,007 | ) | ||||
| Cash and cash equivalents, beginning of period | 8,493 | 19,316 | |||||
| Cash and cash equivalents, end of period | $ | 24,308 | $ | 15,309 | |||
| Cash paid for: | |||||||
| Interest | $ | 2,436 | $ | 3,460 | |||
| Income taxes, net of refunds | 2,499 | (487 | ) | ||||
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT DATA
(In Thousands)
(unaudited)
| Three Months Ended | |||||||||||
| March 31, 2020(2) | December 31, 2019(3) | March 31, 2019(4) | |||||||||
| Revenues: | |||||||||||
| Well Site Services: | |||||||||||
| Completion Services | $ | 82,926 | $ | 82,820 | $ | 100,642 | |||||
| Drilling Services | 4,531 | 8,916 | 7,750 | ||||||||
| Total Well Site Services | 87,457 | 91,736 | 108,392 | ||||||||
| Downhole Technologies | 41,065 | 38,402 | 54,290 | ||||||||
| Offshore/Manufactured Products(1): | |||||||||||
| Project-driven products | 36,788 | 53,969 | 27,245 | ||||||||
| Short-cycle products | 22,069 | 21,500 | 32,013 | ||||||||
| Other products and services | 32,315 | 32,754 | 28,671 | ||||||||
| Total Offshore/Manufactured Products | 91,172 | 108,223 | 87,929 | ||||||||
| Total revenues | $ | 219,694 | $ | 238,361 | $ | 250,611 | |||||
| Operating income (loss): | |||||||||||
| Well Site Services: | |||||||||||
| Completion Services | $ | (139,603 | ) | $ | (9,339 | ) | $ | (3,494 | ) | ||
| Drilling Services | (5,351 | ) | 236 | (4,559 | ) | ||||||
| Total Well Site Services | (144,954 | ) | (9,103 | ) | (8,053 | ) | |||||
| Downhole Technologies | (192,691 | ) | (167,259 | ) | 4,054 | ||||||
| Offshore/Manufactured Products | (95,496 | ) | 9,815 | 5,259 | |||||||
| Corporate | (8,661 | ) | (9,488 | ) | (12,100 | ) | |||||
| Total operating loss | $ | (441,802 | ) | $ | (176,035 | ) | $ | (10,840 | ) | ||
(1) Disaggregated revenue data is provided to supplement the Segment Data.
(2) 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 and downsizing charges.
(3) Operating income (loss) for the three months ended December 31, 2019 included severance and downsizing charges of $0.5 million related to the Completion Services business and a non-cash goodwill impairment charge of $165.0 million related to the Downhole Technologies segment.
(4) 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.
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, 2020 | December 31, 2019 | March 31, 2019 | |||||||||
| Well Site Services: | |||||||||||
| Completion Services: | |||||||||||
| Operating loss | $ | (139,603 | ) | $ | (9,339 | ) | $ | (3,494 | ) | ||
| Depreciation and amortization expense | 14,766 | 16,882 | 17,286 | ||||||||
| Impairment of goodwill | 127,054 | — | — | ||||||||
| Impairment of inventory | 8,981 | — | — | ||||||||
| Other income | 675 | 1,258 | 581 | ||||||||
| EBITDA | $ | 11,873 | $ | 8,801 | $ | 14,373 | |||||
| Drilling Services: | |||||||||||
| Operating income (loss) | $ | (5,351 | ) | $ | 236 | $ | (4,559 | ) | |||
| Depreciation and amortization expense | 270 | 244 | 3,341 | ||||||||
| Impairment of fixed assets | 5,198 | — | — | ||||||||
| Other income | — | — | 21 | ||||||||
| EBITDA | $ | 117 | $ | 480 | $ | (1,197 | ) | ||||
| Total Well Site Services: | |||||||||||
| Operating loss | $ | (144,954 | ) | $ | (9,103 | ) | $ | (8,053 | ) | ||
| Depreciation and amortization expense | 15,036 | 17,126 | 20,627 | ||||||||
| Impairment of goodwill | 127,054 | — | — | ||||||||
| Impairment of inventory | 8,981 | — | — | ||||||||
| Impairment of fixed assets | 5,198 | — | — | ||||||||
| Other income | 675 | 1,258 | 602 | ||||||||
| Segment EBITDA | $ | 11,990 | $ | 9,281 | $ | 13,176 | |||||
| Downhole Technologies: | |||||||||||
| Operating income (loss) | $ | (192,691 | ) | $ | (167,259 | ) | $ | 4,054 | |||
| Depreciation and amortization expense | 5,584 | 5,616 | 5,066 | ||||||||
| Impairment of goodwill | 192,502 | 165,000 | — | ||||||||
| Other expense | (77 | ) | — | — | |||||||
| Segment EBITDA | $ | 5,318 | $ | 3,357 | $ | 9,120 | |||||
| Offshore/Manufactured Products: | |||||||||||
| Operating income (loss) | $ | (95,496 | ) | $ | 9,815 | $ | 5,259 | ||||
| Depreciation and amortization expense | 5,628 | 5,602 | 5,587 | ||||||||
| Impairment of goodwill | 86,500 | — | — | ||||||||
| Impairment of inventory | 16,249 | — | — | ||||||||
| Other income | 176 | 965 | 65 | ||||||||
| Segment EBITDA | $ | 13,057 | $ | 16,382 | $ | 10,911 | |||||
| Corporate: | |||||||||||
| Operating loss | $ | (8,661 | ) | $ | (9,488 | ) | $ | (12,100 | ) | ||
| Depreciation and amortization expense | 161 | 175 | 271 | ||||||||
| EBITDA | $ | (8,500 | ) | $ | (9,313 | ) | $ | (11,829 | ) | ||
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In Thousands)
(unaudited)
| Three Months Ended | |||||||||||
| March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||
| Net loss | $ | (405,041 | ) | $ | (175,552 | ) | $ | (14,648 | ) | ||
| Income tax benefit | (39,491 | ) | (2,175 | ) | (277 | ) | |||||
| Depreciation and amortization expense | 26,409 | 28,519 | 31,551 | ||||||||
| Impairment of goodwill | 406,056 | 165,000 | — | ||||||||
| Impairment of inventory | 25,230 | — | — | ||||||||
| Impairment of fixed assets | 5,198 | — | — | ||||||||
| Interest expense, net | 3,504 | 3,915 | 4,752 | ||||||||
| Consolidated EBITDA (A) | $ | 21,865 | $ | 19,707 | $ | 21,378 | |||||
(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. 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.