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Press release from GlobeNewswire (a Nasdaq OMX company)

Oil States Announces Fourth Quarter Earnings of $1.72 Per Share, Up 83% From the Prior Year

Thursday, February 16, 2012

Oil States Announces Fourth Quarter Earnings of $1.72 Per Share, Up 83% From the Prior Year13:15 EST Thursday, February 16, 2012HOUSTON, Feb. 16, 2012 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported net income for the quarter ended December 31, 2011 of $94.3 million, or $1.72 per diluted share, compared to $50.6 million, or $0.94 per diluted share, in the fourth quarter of 2010 before acquisition related transaction costs totaling $6.3 million. The Company generated revenues of $995.8 million and EBITDA of $205.7 million during the fourth quarter of 2011 compared to revenues of $696.8 million and EBITDA of $99.4 million in the fourth quarter of 2010 (EBITDA(A) defined as net income plus interest, taxes, depreciation and amortization). The 43% increase in revenues and 107% increase in EBITDA were primarily due to improved earnings from each of the Company's business segments driven by increased global activity in the energy industry and earnings from acquisitions closed in the fourth quarter of 2010 which collectively contributed approximately $79 million of revenues and $41 million of EBITDA. Consolidated operating income more than doubled to $153.1 million in the current quarter, up from $67.6 million in the fourth quarter of 2010, and EBITDA margins improved to 21% in the fourth quarter of 2011 up from 14% a year ago. Cindy B. Taylor, Oil States' President and Chief Executive Officer commented, "We reported record results for the fourth quarter and full year 2011 due to strong activity levels across all of our business segments, allowing us to pursue several organic growth initiatives during the year. The acquisitions that we closed in the fourth quarter of 2010 provided the Company with exposure to new markets and new growth platforms that contributed significantly to our results." Mrs. Taylor continued, "We have successfully grown our accommodations segment with year-end lodge and village room counts up 4,588 rooms, or 36%, from year-end 2010 room counts. We look forward to continued organic expansion in Canada, Australia, and in the U.S. shale plays. Growth in the North American accommodations market will be facilitated by our new accommodations manufacturing facility in Colorado." "Our well site services business saw minimal impacts related to holiday downtime during the fourth quarter, as complex completions in the active shale plays generated increased demand and pricing for our equipment and services. Our offshore products segment generated record quarterly revenues, EBITDA and EBITDA margin percentage coupled with strong order flow during the fourth quarter resulting in a new record backlog level at December 31, 2011 of $535 million. We are optimistic that this trend of strong global deepwater spending will continue in 2012." The Company recognized an effective tax rate of 31.2% in the fourth quarter of 2011 bringing the annualized effective rate for 2011 to 28.9%. The higher effective tax rate in the fourth quarter of 2011 was primarily due to higher U.S. state taxes. The Company invested $116.3 million in capital expenditures during the fourth quarter of 2011 related to the ongoing expansion of its accommodations business in Australia, Canada, and the U.S. along with additional rental equipment deployed to service the active U.S. shale plays. For the year ended December 31, 2011, the Company reported revenues of $3.5 billion, EBITDA of $698.1 million and net income of $322.5 million, or $5.86 per diluted share. For the full year 2010, the Company reported revenues of $2.4 billion, EBITDA of $379.8 million and net income of $168.0 million, or $3.19 per diluted share. Included in the 2010 results was $7.0 million ($0.14 per diluted share after-tax) of transaction related expenses. For the full year, the Company spent $487 million in capital expenditures, compared to $182 million of capital expenditures in 2010. The year-over-year increase in capital expenditures was primarily due to the organic expansion of the Canadian and Australian accommodations businesses.  BUSINESS SEGMENT RESULTS (Unless otherwise noted, the following discussion compares the quarterly results from the fourth quarter of 2011 to the results from the fourth quarter of 2010.) Accommodations Accommodations generated revenues of $236.9 million and EBITDA of $102.5 million for the fourth quarter of 2011 compared to revenues and EBITDA of $142.5 million and $47.6 million, respectively, in the fourth quarter of 2010. Accommodations revenues increased 66% and EBITDA increased 115% year-over-year primarily due to contributions from The MAC and Mountain West acquisitions which closed during the fourth quarter of 2010 in addition to a 33% increase in average available rooms and higher RevPAR year-over-year at the Company's oil sands lodges. Well Site Services Well site services generated revenues of $186.8 million and EBITDA of $58.6 million in the fourth quarter of 2011 compared to revenues and EBITDA of $139.3 million and $36.8 million, respectively, in the fourth quarter of 2010. Revenues increased 34% and EBITDA increased 59% year-over-year primarily due to higher revenues and margins in the rental tools business aided by the addition of new equipment deployed in the active shale basins. Revenues and EBITDA from the rental tools business improved 35% and 77% year-over-year, respectively, due to service intensity driven by increases in drilling and completion activity, which was particularly strong in the Bakken, Eagle Ford, Marcellus and the Permian Basin regions. Service tickets increased 14% year-over-year and revenue per ticket increased 18% year-over-year, favoring our higher specification equipment. Higher activity also led to improved cost absorption.   Offshore Products Offshore products generated revenues and EBITDA of $186.1 million and $37.5 million, respectively, in the fourth quarter of 2011 compared to revenues and EBITDA of $117.6 million and $20.5 million, respectively, in the fourth quarter of 2010. Revenues and EBITDA increased 58% and 83% year-over-year, respectively, primarily due to an improved mix of production equipment and connector products sales, coupled with improved project execution and service activity. Backlog reached a new record level with $535 million reported at December 31, 2011 compared to $514 million reported at September 30, 2011 and $354 million reported at December 31, 2010. Significant awards during the quarter included a major pipeline connector order in Brazil, tendon bearings for Guara Lula, also in Brazil, several crane orders and additional production equipment for a TLP in the Gulf of Mexico. Tubular Services Tubular services generated revenues of $386.0 million and EBITDA of $17.3 million during the fourth quarter of 2011 compared to revenues of $297.4 million and EBITDA of $8.9 million in the fourth quarter of 2010. Revenues and EBITDA improved 30% and 94% year-over-year, respectively, primarily due to the 26% year-over-year increase in OCTG shipments, which exceeded the 19% year-over-year increase in U.S. drilling activity. Gross margin as a percent of revenues in the fourth quarter of 2011 increased to 5.6% from 4.2% in the fourth quarter of 2010 primarily due to product mix and industry pricing. The Company's OCTG inventory increased 12% sequentially to $420.5 million at December 31, 2011 based on strong customer demand going into 2012. Oil States International, Inc. is a diversified oilfield services company with recently added exposure to the mining industry through The MAC acquisition. Oil States 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 will be 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 within the "Business" and "Risk Factors" sections of the Form 10-K for the year ended December 31, 2010 filed by Oil States with the SEC on February 22, 2011 and the "Risk Factors" section of the Form 10-Q for the three months ended September 30, 2011 filed by Oil States with the SEC on November 4, 2011.OIL STATES INTERNATIONAL, INC.AND SUBSIDIARIES  UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In Thousands, Except Per Share Amounts) (unaudited)             Three Months Ended December 31, Twelve Months Ended December 31,   2011 2010 2011 2010            Revenues  $995,801 $696,759 $3,479,180 $2,411,984  Costs and expenses:          Cost of sales and services   742,236  549,699  2,599,267  1,874,294 Selling, general and administrative expenses   50,532  41,386  182,434  150,865 Depreciation and amortization expense   50,828  32,114  188,147  124,202 Other operating expense /(income)   (915)  5,926  1,809  7,041  Operating income   153,120  67,634  507,523  255,582            Interest expense   (17,966)  (5,769)  (57,506)  (16,274)  Interest income   278  436  1,700  751  Equity in earnings (loss) of unconsolidated affiliates   (11)  95  (163)  239  Other income / (expense)   1,998  (258)  3,515  330 Income before income taxes   137,419  62,138  455,069  240,628  Income tax (expense)/benefit   (42,890)  (18,035)  (131,647)  (72,023) Net income   94,529  44,103  323,422  168,605  Less: Net income attributable to noncontrolling interest   247  151  969  587 Net income attributable to Oil States International, Inc.  $94,282 $43,952 $322,453 $168,018            Net income per share          Basic  $1.84 $0.87 $6.30 $3.34 Diluted  $1.72 $0.82 $5.86 $3.19            Weighted average number of common shares outstanding          Basic   51,222  50,626  51,163  50,238 Diluted   54,946  53,888  55,007  52,700    OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS(In Thousands, Except Share Amounts)    December 31,  2011  2010 ASSETS Current assets:     Cash and cash equivalents  $ 71,721  $ 96,350 Accounts receivable, net  732,240  478,739 Inventories, net  653,698  501,435 Prepaid expenses and other current assets   32,000   23,480 Total current assets  1,489,659  1,100,004       Property, plant and equipment, net  1,557,088  1,252,657 Goodwill, net  467,450  475,222 Other intangible assets, net  127,602  139,421 Other noncurrent assets   61,842   48,695 Total assets  $ 3,703,641  $ 3,015,999  LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:     Accounts payable and accrued liabilities  $ 348,957  $ 304,739 Income taxes  10,395  4,604 Current portion of long-term debt and capitalized leases   34,435  181,175 Deferred revenue  75,497  60,847 Other current liabilities   5,665   2,810 Total current liabilities  474,949  554,175       Long-term debt and capitalized leases (B)  1,142,505  731,732 Deferred income taxes  97,377  81,198 Other noncurrent liabilities   25,538   19,961 Total liabilities  1,740,369  1,387,066       Stockholders' equity:     Oil States International, Inc. stockholders' equity:     Common stock, $.01 par value, 200,000,000 shares authorized, 54,803,539 shares and 54,108,011 shares issued, respectively, and 51,288,750 shares and 50,838,863 shares outstanding, respectively      548      541 Additional paid-in capital  545,730  508,429 Retained earnings  1,450,586  1,128,133 Accumulated other comprehensive income  74,371  84,549 Common stock held in treasury at cost, 3,514,789 and 3,269,148 shares, respectively    (109,079)    (93,746) Total Oil States International, Inc. stockholders' equity   1,962,156   1,627,906 Noncontrolling interest   1,116   1,027 Total stockholders' equity   1,963,272   1,628,933 Total liabilities and stockholders' equity  $ 3,703,641  $ 3,015,999  OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands)     Year Ended December 31,    2011   2010  Cash flows from operating activities:     Net income $ 323,422 $ 168,605 Adjustments to reconcile net income to net cash provided by operating activities:     Depreciation and amortization  188,147  124,202 Deferred income tax provision (benefit)  27,075  20,590 Excess tax benefits from share-based payment arrangements  (8,583)  (4,029) Loss on impairment of goodwill  --  -- Non-cash compensation charge  14,565  12,620 Accretion of debt discount  7,786  7,249 Amortization of deferred financing costs  6,497  1,703 Other, net  (2,654)  (52) Changes in operating assets and liabilities, net of effect from acquired businesses:     Accounts receivable  (260,186)  (61,835) Inventories  (154,290)  (75,416) Accounts payable and accrued liabilities  47,610  82,032 Taxes payable  24,789  (22,468) Other current assets and liabilities, net  1,735  (22,279) Net cash flows provided by operating activities  215,913  230,922   Cash flows from investing activities:     Capital expenditures, including capitalized interest  (487,482)  (182,207) Acquisitions of businesses, net of cash acquired  (2,412)  (709,575) Proceeds from sale of buildings and equipment  5,949  2,734 Other, net  (5,010)  (632) Net cash flows used in investing activities  (488,955)  (889,680)   Cash flows from financing activities:     Revolving credit borrowings and (repayments), net  (316,736)  347,129 6 1/2 % senior notes issued  600,000  -- Term loan borrowings (repayments)  (14,972)  300,955 Debt and capital lease repayments  (2,529)  (487) Issuance of common stock from share based payment arrangements  14,154  23,361 Purchase of treasury stock  (12,632)  -- Excess tax benefits from share based payment arrangements  8,583  4,029 Payment of financing costs  (13,464)  (24,548) Other, net  (4,516)  (1,407) Net cash flows provided by (used in) financing activities  257,888  649,032   Effect of exchange rate changes on cash    (9,332)    16,477 Net increase (decrease) in cash and cash equivalents from continuing operations continuing operations  (24,486)  6,751 Net cash used in discontinued operations – operating activities  (143)  (143) Cash and cash equivalents, beginning of year  96,350  89,742       Cash and cash equivalents, end of year $ 71,721 $ 96,350          OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES  SEGMENT DATA(In Thousands) (unaudited)             Three Months Ended December 31, Twelve Months Ended December 31,   2011 2010 2011 2010            Revenues           Rental tools  $140,535 $104,476 $487,941 $342,953  Drilling services   46,250  34,807  165,903  133,214  Well site services   186,785  139,283  653,844  476,167  Accommodations   236,876  142,481  864,701  537,690  Offshore products   186,111  117,588  585,818  428,963  Tubular services   386,029  297,407  1,374,817  969,164  Total revenues  $995,801 $696,759 $3,479,180 $2,411,984            EBITDA (A)           Rental tools  $49,659 $28,121 $162,537 $88,097  Drilling services   8,944  8,641  40,686  25,464            Well site services   58,603  36,762  203,223  113,561  Accommodations   102,516  47,590  361,156  196,022  Offshore products   37,505  20,484  107,376  72,120  Tubular services   17,271  8,925  67,283  37,701  Corporate and eliminations   (10,207)  (14,327)  (40,985)  (39,638)  Total EBITDA  $205,688 $99,434 $698,053 $379,766            Operating income / (loss)           Rental tools  $38,416 $18,108 $120,849 $47,326  Drilling services   3,816  3,141  20,394  576            Well site services   42,232  21,249  141,243  47,902  Accommodations   70,525  35,069  248,977  151,417  Offshore products   34,292  17,386  94,666  60,664  Tubular services   16,486  8,427  64,422  35,941  Corporate and eliminations   (10,415)  (14,497)  (41,785)  (40,342)  Total operating income  $153,120 $67,634 $507,523 $255,582    OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES  ADDITIONAL QUARTERLY SEGMENT AND OPERATING DATA (unaudited)         Three Months Ended December 31,   2011 2010       Supplemental operating data            Lodge/village revenues ($ in thousands)  $171,355 $80,171 Other accommodations revenues ($ in thousands)   65,521  62,310 Total accommodations revenues ($ in thousands)  $236,876 $142,481       Average available lodge/village rooms   17,069  7,516 Lodge/village revenues per available room  $109 $116       Offshore products backlog ($ in millions)  $535.2 $353.7       Rental tool job tickets   12,858  11,298 Average revenue per ticket ($ in thousands)  $10.9 $9.2       Tubular services operating data      Shipments (tons in thousands)  189.0 148.4 Quarter end inventory ($ in millions)  $420.5 $332.7       Land drilling operating statistics      Average rigs available  34 36 Utilization  86.4% 71.4% Implied day rate ($ in thousands per day)  $17.1 $14.7 Implied daily cash margin ($ in thousands per day)  $3.6 $4.0       (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. You should not consider it 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. AND SUBSIDIARIES  RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION  (In Thousands) (unaudited)             Three Months Ended December 31, Twelve Months Ended December 31,   2011 2010 2011 2010            Net income / (loss)  $94,282 $43,952 $322,453 $168,018  Income tax provision   42,890  18,035  131,647  72,023  Depreciation and amortization   50,828  32,114  188,147  124,202  Interest income   (278)  (436)  (1,700)  (751)  Interest expense   17,966  5,769  57,506  16,274  EBITDA  $205,688 $99,434 $698,053 $379,766   (B)  As of December 31, 2011, the Company had approximately $769 million available under its credit facilities.CONTACT: Bradley J. Dodson Oil States International, Inc. 713-652-0582