Oil States Announces Fourth Quarter Earnings

Oil States Announces Fourth Quarter Earnings

HOUSTON, Feb. 19, 2013 (GLOBE NEWSWIRE) -- Oil States International, Inc.
(NYSE:OIS) reported net income for the quarter ended December 31, 2012 of
$98.5 million, or $1.78 per diluted share. These results compare to net income
of $94.3 million, or $1.72 per diluted share, in the fourth quarter of 2011.

The Company generated revenues of $1.1 billion and EBITDA of $222.7 million
during the fourth quarter of 2012, compared to revenues of $995.8 million and
EBITDA of $205.7 million in the fourth quarter of 2011 (EBITDA^(A) is defined
as net income plus interest, taxes, depreciation and amortization).
Consolidated operating income and EBITDA increased by 2% and 8%
year-over-year, respectively, due to organic growth investments made in the
accommodations segment, increased sales of deepwater capital equipment and
increased shipments of OCTG in the tubular services segment.

Cindy B. Taylor, Oil States' President and Chief Executive Officer, stated,
"Despite a softening global macroeconomic environment and reduced U.S.
drilling and completion activity, our results for the fourth quarter of 2012
reflected solid revenue and earnings growth on a year-over-year basis."

"Occupancy levels and RevPAR in our major Canadian lodges and Australian
villages remained strong during the fourth quarter of 2012. We organically
expanded our lodges and villages by over 2,400 rooms during 2012, a 14% growth
rate. A significant portion of our lodge and village rooms are contracted on a
multi-year, take-or-pay basis, affording us considerable revenue visibility."

"Our offshore products segment reported record quarterly revenues and EBITDA
in the fourth quarter of 2012. Backlog in our offshore products segment
improved 5% year-over-year to $561 million at December 31, 2012, but declined
$36 million from September 30, 2012 due to strong fourth quarter sales and a
reduction in award activity in the fourth quarter of 2012. However, bidding
and quoting activity remains strong, and the outlook for global offshore
capital equipment demand is robust."

"Our tubular services segment benefitted from strong shipments of OCTG in the
fourth quarter largely due to an increase in deepwater Gulf of Mexico
deliveries. Well site services' results were negatively impacted by the
reduction in U.S. drilling activity and holiday downtime; however, pricing and
demand for our proprietary rental equipment was essentially flat
quarter-over-quarter."

The Company recognized an effective tax rate of 29.7% in the fourth quarter of
2012 bringing the annualized effective tax rate for 2012 to 28.2%. This
compares with an effective tax rate of 31.2% in the fourth quarter of 2011.
The lower effective tax rate in the fourth quarter of 2012 was primarily due
to higher U.S. state tax expense in the fourth quarter of 2011 and greater
foreign earnings as a percentage of total earnings in 2012. Our foreign
earnings are taxed at a lower rate than our domestic earnings.

The Company invested $156.2 million in capital expenditures during the fourth
quarter of 2012 primarily related to the ongoing expansion of its
accommodations business in Australia, Canada and the U.S., the addition of
proprietary rental equipment deployed to service the active U.S. shale plays
and facility and equipment investments in its offshore products segment.
During the fourth quarter of 2012, the Company repurchased $15.2 million, or
225,796 shares, of its common stock under its authorized share repurchase
program at an average price of $67.52 per share.

For the year ended December 31, 2012, the Company reported revenues of $4.4
billion, EBITDA of $923.1 million and net income of $448.6 million, or $8.10
per diluted share. The results for 2012 included (i) a pre-tax benefit of
$17.9 million, or $0.23 per diluted share after-tax, related to a favorable
contract settlement in its U.S. accommodations business recognized in the
first quarter of 2012 and (ii) a pre-tax gain of $2.5 million, or $0.03 per
diluted share after-tax, related to insurance proceeds received during the
second quarter for the land drilling rig that was lost in a fire. For the year
ended December 31, 2011, the Company reported revenues of $3.5 billion, EBITDA
of $698.1 million and $322.5 million of net income, or $5.86 per diluted
share.

BUSINESS SEGMENT RESULTS

(Unless otherwise noted, the following discussion compares the quarterly
results from the fourth quarter of 2012 to the results from the fourth quarter
of 2011.)

Accommodations

Accommodations generated revenues of $277.4 million and EBITDA of $119.5
million for the fourth quarter of 2012 compared to revenues and EBITDA of
$236.9 million and $102.5 million, respectively, in the fourth quarter of
2011. Revenues and EBITDA both increased 17% year-over-year due to a 14%
increase in average available rooms and a 9% year-over-year increase in RevPAR
due to higher occupancy levels at the Company's major lodges. EBITDA margins
remained strong at 43%. Since the majority of the Company's rooms are
contracted under long term (three to five years), take-or-pay contracts with
minimum occupancy requirements, the slowdown in metallurgical coal mining in
Australia in the fourth quarter of 2012 had limited impact on our results as
modest declines in occupancy were offset by contracted room additions.

Well Site Services

Well site services generated revenues of $172.4 million and EBITDA of $55.9
million in the fourth quarter of 2012 compared to revenues and EBITDA of
$186.8 million and $58.6 million, respectively, in the fourth quarter of 2011.
Revenues decreased 8% and EBITDA decreased 5% year-over-year primarily due to
the overall reduction in natural gas drilling and completion activity in the
U.S. However, EBITDA margins for the segment increased 100 basis points to 32%
in the fourth quarter of 2012 compared to 31% in the fourth quarter of 2011.

Our completion services business, formerly referred to as our "rental tools"
business, generated strong margins despite declines in U.S. activity.
Completion services' revenue per ticket in the fourth quarter of 2012 was up
slightly; and activity, as measured by the number of service tickets issued,
decreased 7% year-over-year due to reduced work available in the Haynesville,
Barnett and Marcellus regions and was partially offset by increased activity
in the Rockies region.

Offshore Products

Offshore products generated revenues and EBITDA of $237.3 million and $40.4
million in the fourth quarter of 2012 compared to revenues and EBITDA of
$186.1 million and $37.5 million, respectively, in the fourth quarter of 2011.
Revenues and EBITDA increased 27% and 8% year-over-year, respectively,
primarily due to a revenue mix favoring our connector products and production
equipment coupled with contributions from Piper Valves which was acquired in
July 2012. Our EBITDA margin percentage decreased to 17% in the fourth quarter
of 2012 compared to 20% in the fourth quarter of 2011 largely due to a mix of
revenues which included greater conductor casing sales year-over-year coupled
with negative inventory adjustments totaling $2.5 million. Backlog totaled
$561 million at December 31, 2012 compared to $597 million reported at
September 30, 2012 and $535 million reported at December 31, 2011. Major
backlog additions during the quarter included connector product orders,
production equipment and deck equipment orders.

Tubular Services

Tubular services generated revenues of $455.3 million and EBITDA of $19.0
million during the fourth quarter of 2012 compared to revenues and EBITDA of
$386.0 million and $17.3 million, respectively, in the fourth quarter of
2011. Revenues improved 18% and EBITDA increased 10% year-over-year primarily
due to the 13% year-over-year increase in the Company's OCTG shipments
resulting from increased activity in the Gulf of Mexico coupled with certain
market share gains onshore. Gross margin as a percent of revenues were 5.1% in
the fourth quarter of 2012 down from the 5.6% margin reported in the fourth
quarter of 2011 primarily due to lower margin sales into certain onshore
markets as a result of declining OCTG prices throughout 2012. The Company
ended the quarter with $450.2 million of OCTG inventories, down $73.5 million,
or 14%, from September 30, 2012. The decrease in inventories was primarily due
to deepwater Gulf of Mexico shipments made during the fourth quarter of 2012.

Oil States International, Inc. is a diversified oilfield services company and
is a leading integrated provider of remote site accommodations with prominent
market positions in the Canadian oil sands and the Australian mining
regions. Oil States is also a leading manufacturer of products for deepwater
production facilities and subsea pipelines as well as a provider of
completion-related rental tools, oil country tubular goods distribution 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.

The Oil States International, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6058

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 oilfield service industry and other
factors discussed in the "Business" and "Risk Factors" sections of the Form
10-K for the year ended December 31, 2011 filed by Oil States with the SEC on
February 17, 2012 and the "Risk Factors" section of the form 10-Q for the
three months ended September 30, 2012 filed by Oil States with the SEC on
November 2, 2012.

 
Oil States International, Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited, unless otherwise noted)
                                                                 
                      Three Months Ended December Twelve Months Ended December
                      31,                         31,
                      2012           2011         2012          2011
                                                                 (audited) 
 Revenues             $1,142,336     $995,801     $4,413,088    $3,479,180
 Costs and expenses:                                             
 Cost of sales and     863,975        742,236      3,292,969     2,599,267
services 
 Selling, general and
administrative         55,750         50,532       203,651       182,434
expenses 
 Depreciation and      65,775         50,828       230,098       188,147
amortization expense 
 Other operating       888            (915)        2,590         1,809
expense /(income) 
 Operating income      155,948        153,120      683,780       507,523
                                                                 
 Interest expense      (17,305)       (17,966)     (68,922)      (57,506)
 Interest income       604            278          1,583         1,700
 Equity in earnings
(loss) of              (427)          (11)         243           (163)
unconsolidated
affiliates 
 Other income          1,681          1,998        10,211        3,515
 Income before income  140,501        137,419      626,895       455,069
taxes 
 Income tax expense    (41,710)       (42,890)     (177,047)     (131,647)
 Net income            98,791         94,529       449,848       323,422
 Less: Net income
attributable to        272            247          1,239         969
noncontrolling
interest 
 Net income
attributable to Oil   $98,519        $94,282      $448,609      $322,453
States International,
Inc. 
                                                                 
 Net income per                                                  
share 
 Basic                $1.80          $1.84        $8.47         $6.30
 Diluted              $1.78          $1.72        $8.10         $5.86
                                                                 
 Weighted average
number of common                                                 
shares outstanding 
 Basic                 54,794         51,222       52,959        51,163
 Diluted               55,362         54,946       55,384        55,007

 
 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(in thousands)
 
                                                      December 31, 
                                                      2012         2011 
ASSETS
Current assets:                                                    
Cash and cash equivalents                             $ 253,172    $ 71,721
Accounts receivable, net                              832,785      732,240
Inventories, net                                      701,496      653,698
Prepaid expenses and other current assets              38,639       32,000
Total current assets                                  1,826,092    1,489,659
                                                                   
Property, plant and equipment, net                    1,852,126    1,557,088
Goodwill, net                                         520,818      467,450
Other intangible assets, net                          146,103      127,602
Other noncurrent assets                                94,823       61,842
Total assets                                          $ 4,439,962  $ 3,703,641
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:                                               
Accounts payable                                      $ 279,933    $ 252,209
Accrued liabilities                                   107,906      96,748
Income taxes                                          29,588       10,395
Current portion of long-term debt and capitalized     30,480       34,435
leases 
Deferred revenue                                      66,311       75,497
Other current liabilities                              4,314        5,665
Total current liabilities                             518,532      474,949
                                                                   
Long-term debt and capitalized leases (1)             1,279,805    1,142,505
Deferred income taxes                                 129,235      97,377
Other noncurrent liabilities                           46,590       25,538
Total liabilities                                     1,974,162    1,740,369
                                                                   
Stockholders' equity:                                              
Oil States International, Inc. stockholders' equity:               
Common stock, $.01 par value, 200,000,000 shares
authorized, 58,488,299 shares and 54,803,539 shares               548
issued, respectively, and 54,695,473 shares and      585
51,288,750 shares outstanding, respectively
Additional paid-in capital                            586,070      545,730
Retained earnings                                     1,899,195    1,450,586
Accumulated other comprehensive income                107,097      74,371
Common stock held in treasury at cost, 3,792,826 and (128,542)    (109,079)
3,514,789 shares, respectively
Total Oil States International, Inc. stockholders'     2,464,405    1,962,156
equity
Noncontrolling interest                                1,395        1,116
Total stockholders' equity                             2,465,800    1,963,272
Total liabilities and stockholders' equity            $ 4,439,962  $ 3,703,641

(1) As of December 31, 2012, the Company had approximately $973 million
available under its credit facilities.  

 
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
                                                       Year Ended December 31,
                                                        2012        2011 
Cash flows from operating activities:                               
Net income                                             $ 449,848   $ 323,422
Adjustments to reconcile net income to net cash                     
provided by operating activities:
Depreciation and amortization                           230,098     188,147
Deferred income tax provision                           17,370      27,075
Excess tax benefits from share-based payment            (8,164)     (8,583)
arrangements
Non-cash compensation charge                            18,904      14,565
Gains on disposals of assets                            (8,600)     (3,614)
Accretion of debt discount                              4,106       7,786
Amortization of deferred financing costs                7,301       6,497
Other, net                                              1,535       960
Changes in operating assets and liabilities, net of                 
effect from acquired businesses:
Accounts receivable                                     (83,379)    (260,186)
Inventories                                             (34,182)    (154,290)
Accounts payable and accrued liabilities                30,697      47,610
Taxes payable                                           17,960      24,789
Other current assets and liabilities, net               (6,011)     1,735
Net cash flows provided by operating activities         637,483     215,913
                                                                    
Cash flows from investing activities:
Capital expenditures, including capitalized interest    (487,937)   (487,482)
Acquisitions of businesses, net of cash acquired        (80,449)    (2,412)
Proceeds from disposition of property, plant and        14,653      5,949
equipment
Deposits held in escrow related to acquisitions of      (20,000)    --
businesses
Other, net                                              (3,244)     (5,010)
Net cash flows used in investing activities             (576,977)   (488,955)
                                                                    
Cash flows from financing activities:
Revolving credit repayments, net                        (64,251)    (316,736)
6 1/2 % senior notes issued                             --          600,000
Payment of principal on 2 3/8% Notes conversion         (174,990)   (10)
5 1/8 % senior notes issued                             400,000     --
Term loan repayments                                    (30,047)    (14,972)
Debt and capital lease repayments                       (4,569)     (2,529)
Issuance of common stock from share based payment       13,628      14,154
arrangements
Purchase of treasury stock                              (15,245)    (12,632)
Excess tax benefits from share based payment            8,164       8,583
arrangements
Payment of financing costs                              (7,914)     (13,464)
Tax withholdings related to net share settlements of    (4,218)     (2,702)
restricted stock
Other, net                                              --          (1,804)
Net cash flows provided by financing activities         120,558     257,888
                                                                    
Effect of exchange rate changes on cash                 680         (9,332)
Net increase (decrease) in cash and cash equivalents    181,744     (24,486)
from continuing operations continuing operations
Net cash used in discontinued operations – operating    (293)       (143)
activities
Cash and cash equivalents, beginning of year            71,721      96,350
                                                                    
Cash and cash equivalents, end of year                 $ 253,172   $ 71,721
                                                                    

 
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
                                                                     
                             Three Months Ended December Twelve Months Ended
                             31,                         December 31,
                             2012           2011         2012       2011
                                                                     
 Revenues                                                            
 Completion services         $131,233       $140,535     $522,618   $487,941
 Drilling services            41,177         46,250       191,034    165,903
 Well site services           172,410        186,785      713,652    653,844
 Accommodations               277,369        236,876      1,113,470  864,701
 Offshore products            237,259        186,111      804,067    585,818
 Tubular services             455,298        386,029      1,781,899  1,374,817
 Total revenues              $1,142,336     $995,801     $4,413,088 $3,479,180
                                                                     
 EBITDA (A)                                                          
 Completion services         $43,679        $49,659      $176,755   $162,537
 Drilling services (1)        12,194         8,944        57,839     40,686
 Well site services           55,873         58,603       234,594    203,223
 Accommodations (2)           119,476        102,516      505,894    361,156
 Offshore products            40,428         37,505       149,377    107,376
 Tubular services (3)         18,977         17,271       78,948     67,283
 Corporate and eliminations   (12,049)       (10,207)     (45,720)   (40,985)
 Total EBITDA                $222,705       $205,688     $923,093   $698,053
                                                                     
 Operating income / (loss)                                           
 Completion services         $29,634        $38,416      $124,620   $120,849
 Drilling services            6,400          3,816        32,160     20,394
 Well site services           36,034         42,232       156,780    141,243
 Accommodations (2)           77,265         70,525       364,629    248,977
 Offshore products            36,935         34,292       134,051    94,666
 Tubular services (3)         18,052         16,486       75,042     64,422
 Corporate and eliminations   (12,338)       (10,415)     (46,722)   (41,785)
 Total operating income      $155,948       $153,120     $683,780   $507,523

(1) The EBITDA of our drilling business for the twelve months ended December
31, 2012 includes a pre-tax gain of $2.5 million related to insurance proceeds
received during the second quarter for the land drilling rig that was lost in
a fire.     

(2) The EBITDA and operating income of our accommodations segment for the
twelve months ended December 31, 2012 includes a pre-tax benefit of $17.9
million related to a favorable contract settlement in its U.S. accommodations
business recognized in the first quarter of 2012.

(3) The EBITDA and operating income of our tubular services segment for the
twelve months ended December 31, 2012 includes $7.5 million of out-of-period
adjustments related to corrections of accruals for customer credits and
related returned inventory recognized in the third quarter of 2012.

 
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
                                                                
                                               Three Months Ended December 31,
                                               2012            2011
                                                                
 Supplemental operating data                                    
                                                                
 Lodge/village revenues ($ in thousands)       $212,921        $171,355
 Other accommodations revenues ($ in            64,448          65,521
thousands) 
 Total accommodations revenues ($ in           $277,369        $236,876
thousands) 
                                                                
 Average available lodge/village rooms          19,378          17,069
 Lodge/village revenues per available room     $119            $109
                                                                
 Offshore products backlog ($ in millions)     $560.8          $535.2
                                                                
 Rental tool job tickets                        11,959          12,858
 Average revenue per ticket ($ in thousands)   $11.0           $10.9
                                                                
 Tubular services operating data                                
 Shipments (tons in thousands)                 213.8           189.0
 Quarter end inventory ($ in thousands)        $450,244        $420,519
                                                                
 Land drilling operating statistics                             
 Average rigs available                        33              34
 Utilization                                   79.2%           86.4%
 Implied day rate ($ in thousands per day)     $17.1           $17.1
 Implied daily cash margin ($ in thousands per $5.3            $3.6
day) 

(A) The term EBITDA consists of net income plus interest, taxes, depreciation
and amortization. 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 may not be
comparable to other similarly titled measures of other companies. The Company
has included EBITDA as a supplemental disclosure because its management
believes that 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 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 following table sets forth a reconciliation of EBITDA
to net income, which is the most directly comparable measure of financial
performance calculated under generally accepted accounting principles.

Oil States International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)
                                                                      
                               Three Months Ended December Twelve Months Ended
                               31,                         December 31,
                               2012          2011          2012      2011
                                                                      
 Net income / (loss)           $98,519       $94,282       $448,609  $322,453
 Income tax provision           41,710        42,890        177,047   131,647
 Depreciation and               65,775        50,828        230,098   188,147
amortization 
 Interest income                (604)         (278)         (1,583)   (1,700)
 Interest expense               17,305        17,966        68,922    57,506
 EBITDA                        $222,705      $205,688      $923,093  $698,053

CONTACT: Bradley J. Dodson
         Oil States International, Inc.
         713-652-0582

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