HOUSTON, Nov. 4, 2010 (GLOBE NEWSWIRE) -- Today, Oil States International, Inc. (NYSE:OIS) reported net income for the quarter ended September 30, 2010 of $46.3 million, or $0.88 per diluted share, compared to $26.6 million, or $0.53 per diluted share, in the third quarter of 2009. The Company generated $588.3 million and $100.8 million of revenues and EBITDA, respectively, during the quarter compared to revenue of $456.1 million and EBITDA of $69.0 million in the third quarter of 2009 (EBITDA defined as net income plus interest, taxes, depreciation and amortization).(A) The year-over-year improvements in revenues and EBITDA were primarily due to the improvement in North American drilling and completion activity as well as increased room capacity and earnings from our oil sands accommodations business. Consolidated operating income in the third quarter of 2010 was $70.4 million compared to $38.5 million for the corresponding quarter of 2009.
"Our strategic product and service offering in key North American resource plays contributed to year-over-year growth that has outpaced the broader recovery in North American drilling and completion activity," stated Cindy B. Taylor, Oil States' President and Chief Executive Officer. "Our well site services businesses generated significantly improved results, with year-over-year revenue and EBITDA increases of 79% and 224%, respectively. The acceleration of oil sands activity continued to drive our Accommodations business, with growth also coming from our expansion of the Wapasu Creek Lodge in support of the Imperial Kearl contract."
Mrs. Taylor continued, "All of our businesses improved materially year-over-year except our Offshore Products segment which was hindered by reduced backlog coming into the year. However, with the third quarter orders of approximately $164 million leading to much improved backlog, we are optimistic about 2011 activity levels for our Offshore Products group."
The Company's effective tax rate for the third quarter of 2010 increased to 30.7% from 24.3% tax rate in the third quarter of 2009. The lower effective tax rate in the third quarter of 2009 was primarily attributable to the impact of the goodwill impairment taken in the second quarter of 2009 on the overall effective tax rate for the full year of 2009. The Company spent $44.9 million in capital expenditures during the third quarter of 2010 primarily related to the Accommodations segment ($28.3 million in capital expenditures) and rental tools segment ($11.3 million in capital expenditures).
For the nine months ended September 30, 2010, the Company reported revenues of $1.7 billion, EBITDA of $280.3 million and net income of $124.1 million, or $2.37 per diluted share. For the nine months ended September 30, 2009, the Company reported revenues of $1.6 billion and EBITDA of $148.1 million which resulted in net income of $19.2 million, or $0.39 per diluted share. Excluding the goodwill impairment charge taken in the second quarter of 2009, the Company reported $242.6 million of Adjusted EBITDA and $102.0 million of net income, or $2.04 per diluted share for the first nine months ended September 30, 2009.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly results from the third quarter of 2010 to the results from the third quarter of 2009.)
Accommodations
Accommodations generated revenues of $127.7 million and EBITDA of $49.1 million for the third quarter of 2010 compared to revenues and EBITDA of $110.3 million and $36.3 million, respectively, in the third quarter of 2009. Accommodations revenues increased 16% and EBITDA increased 35% year-over-year due to increased capacity and improved occupancy levels at the oil sands lodges. In addition, the third quarter 2010 results benefited from the stronger Canadian dollar which appreciated approximately 6% year-over-year relative to the U.S. dollar. These year-over-year increases were partially offset by lower manufacturing sales which typically carry a lower margin.
Well Site Services
Well Site Services generated revenues of $125.7 million and EBITDA of $30.6 million in the third quarter of 2010 compared to revenues and EBITDA of $70.1 million and $9.4 million, respectively, in the third quarter of 2009. The year-over-year revenue and EBITDA growth of 79% and 224%, respectively, was primarily due to the 71% year-over-year improvement in North American drilling and completion activity.
Rental tools generated $91.9 million and $24.3 million of revenues and EBITDA, respectively, in the third quarter of 2010 compared to revenues of $51.7 million and EBITDA of $6.5 million in the third quarter of 2009. The 78% year-over-year improvement in revenues and the 273% year-over-year improvement in EBITDA were primarily due to the increased U.S. drilling and completion activity, particularly in the key shale play regions such as the Marcellus, Bakken, Haynesville and Eagle Ford basins, combined with improved product mix and improved pricing.
Drilling services generated revenues and EBITDA of $33.9 million and $6.3 million, respectively, in the third quarter of 2010 compared to $18.4 million of revenues and EBITDA of $2.9 million in the third quarter 2009. The year-over-year increase in revenues and EBITDA was due to an overall increase in rig utilization to 73% in the third quarter of 2010 from 40% in the third quarter of 2009. The positive utilization impact, coupled with higher dayrates, contributed to the 84% and 115% increases in revenues and EBITDA, respectively. EBITDA margins improved from 15.9% in the third quarter of 2009 to 18.6% in the third quarter of 2010, as higher utilization levels allowed for improved daily cash margin year-over-year.
Offshore Products
The Offshore Products segment generated revenues and EBITDA of $102.4 million and $17.3 million, respectively, in the third quarter of 2010 compared to $131.8 million of revenues and $23.3 million in EBITDA in the third quarter of 2009. Offshore Products revenues and EBITDA declined year-over-year primarily as a result of lower beginning backlog levels and reduced shipments of subsea pipeline and drilling rig and vessel equipment. Gross margin for Offshore Products improved to 27.4% in the third quarter of 2010 from 25.1% in the third quarter of 2009 primarily due to improved margins in connector products. Backlog increased 23% sequentially to $264.4 million at September 30, 2010 from $215.7 million at June 30, 2010. Significant awards during the quarter included connector orders for Petrobras' Papa Terra TLP project and fairlead orders for Chevron's Jack/St. Malo project.
Tubular Services
Tubular Services generated revenues of $232.5 million and EBITDA of $12.4 million during the third quarter of 2010 compared to revenues of $143.9 million and EBITDA of $7.2 million in the third quarter of 2009. Tubular Services' OCTG shipments were up 76% year-over-year with 118,500 tons shipped in the third quarter of 2010 compared to 67,500 tons shipped in the third quarter of 2009, exceeding the 67% year-over-year increase U.S. drilling activity. Gross margin as a percent of revenues was essentially flat year-over-year at 6.9% in the third quarter of 2010. The Company's OCTG inventory increased sequentially by 10% to $341.0 million at September 30, 2010 in support of program work for customers.
The MAC Group Acquisition
On October 15, 2010, the Company announced that it had entered into an agreement whereby Oil States proposed to acquire all of the shares in The MAC Services Group Limited at a cost of A$3.90 per share. The MAC Services Group supplies accommodations services to the coal mining, construction and resource industries. The MAC currently has 4,606 rooms in six locations in Queensland and Western Australia and upon completion of the acquisition will become part of the Company's Accommodations segment. The scheme arrangement is subject to Australian court and shareholder approval, among other conditions. A scheme booklet will be distributed to shareholders of the MAC and is expected to contain unanimous support for the transaction from The MAC board, barring a superior offer, and an expert's opinion that the offer price was fair and reasonable and the deal was in the best interests of the shareholders, except in the case of a superior offer. The acquisition is expected to close by the end of Q1 2011.
Oil States International, Inc. is a diversified oilfield services company. With locations around the world, Oil States is a leading supplier of a broad range of services to the oil and gas industry, including remote site accommodations, production-related rental tools, oil country tubular goods distribution and land drilling services as well as a leading manufacturer of products for deepwater production facilities and subsea pipelines. Oil States is publicly traded on the New York Stock Exchange under the symbol OIS.
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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 Factor" sections of the Form 10-K for the year ended December 31, 2009 filed by Oil States with the SEC on February 22, 2010 and the "Risk Factor" section of the Form 10-Q for the three months ended June 30, 2010 filed by Oil States with the SEC on August 5, 2010. In addition, the previously announced acquisition of The MAC Services Group Limited includes additional risks and uncertainties including, among other things, the risk that the Scheme of Arrangement is delayed or does not close, including due to the failure to obtain governmental approvals or to achieve shareholder approval or other closing conditions, the risk that the businesses will not be integrated successfully, the risk that any synergies or other benefits from the combination may not be fully realized or may take longer to realize than expected, and disruption from the combination making it more difficult to maintain relationships with customers, employees or suppliers.
CONTACT: Oil States International, Inc. Bradley J. Dodson 713-652-0582