HOUSTON, Feb. 17, 2011 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported net income for the quarter ended December 31, 2010 of $44.0 million, or $0.82 per diluted share, compared to $39.9 million, or $0.78 per diluted share, in the fourth quarter of 2009. During the fourth quarter of 2010, the Company completed the $725 million acquisition of The MAC Service Group Limited, a leading provider of remote site accommodations to the Australian natural resources industries, along with two other strategic acquisitions, incurring approximately $6.3 million ($0.11 per diluted share after-tax) of transaction related expenses and $0.9 million ($0.01 per diluted share after-tax) of interest expense prior to closing. Excluding these transaction costs, the Company earned fourth quarter 2010 net income of $50.6 million, or $0.94 per diluted share, and $105.7 million of Adjusted EBITDA on revenues of $696.8 million. EBITDA is defined as net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA excludes goodwill impairments taken in 2009 and transaction costs incurred in the fourth quarter of 2010. (Please refer to the press release footnotes (A) and (D) for a reconciliation of EBITDA and Adjusted EBITDA, respectively.) These results compare to revenues of $528.7 million and EBITDA of $90.1 million in the fourth quarter of 2009. The year-over-year improvements in revenues and EBITDA were primarily due to stronger North American drilling and completion activity partially offset by lower revenues and EBITDA from the offshore products segment due to lower backlog levels in 2010 compared to 2009. Consolidated operating income in the fourth quarter of 2010 was $67.6 million compared to $58.5 million for the corresponding quarter of 2009.
"Our well site services businesses generated significantly improved results during the quarter, well in excess of the increase in U.S. drilling rig activity. Year-over-year revenue and EBITDA increased 70% and 134%, respectively, due to our proportionately higher revenue potential on horizontal well completions performed in the most active shale play regions," stated Cindy B. Taylor, Oil States' President and Chief Executive Officer. "Oil sands activity remained strong given high occupancy levels at our oil sands lodges. Our offshore products business reported lower year-over-year results given its reduced backlog at the beginning of the period; however, order levels were exceptionally strong in the fourth quarter at $208 million, boding well for second half 2011 and 2012 activity for the segment."
Mrs. Taylor continued, "We were very pleased to complete three strategic acquisitions in the fourth quarter as well as syndicate a new senior credit facility. We completed the MAC acquisition on December 30, 2010, significantly increasing the reach of our accommodations segment. This acquisition allows us to leverage our expertise in providing the full suite of accommodations services in resource areas while providing substantial additional avenues for future growth."
"In addition, we acquired Mountain West in December 2010, which extended our North American accommodations' platform into the increasingly active Bakken shale play. We also completed the Acute Technology Services acquisition for the offshore products segment, enhancing our service offering and project capabilities on deepwater production platform and subsea pipeline projects. Consideration paid for these two transactions totaled $77 million."
The Company's effective tax rate for the fourth quarter of 2010 increased to 29.0% from 27.9% in the fourth quarter of 2009. The effective rate in the fourth quarter of 2010 was lower than statutory rates primarily due to lower foreign tax rates. The lower effective tax rate in the fourth 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 $61 million in capital expenditures during the fourth quarter of 2010 primarily related to the accommodations segment ($34 million) and rental tools segment ($15 million).
For the year ended December 31, 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. Excluding the transaction costs related to the fourth quarter acquisitions, the Company earned $386.7 million of Adjusted EBITDA and $175.3 million of net income, or $3.33 per diluted share. For the full year 2009, the Company reported revenues of $2.1 billion and EBITDA of $238.2 million which resulted in $59.1 million of net income, or $1.18 per diluted share. Excluding the goodwill impairment charges taken in the second quarter of 2009, the Company reported $332.7 million of Adjusted EBITDA and $140.4 million of net income, or $2.79 per diluted share, during 2009. Capital expenditures for the full year 2010 totaled $182 million.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly results from the fourth quarter of 2010 to the results from the fourth quarter of 2009.)
Accommodations
Accommodations generated revenues of $142.5 million and EBITDA of $47.6 million for the fourth quarter of 2010 compared to revenues and EBITDA of $140.9 million and $50.7 million, respectively, in the fourth quarter of 2009. The fourth quarter 2009 results included minimum contract guaranteed revenues which generated $7.4 million of EBITDA compared to $4.6 million of contract guarantee EBITDA in the fourth quarter of 2010, resulting in fairly flat accommodations results year-over-year. Revenues and EBITDA generated by the oil sands lodges increased by 28% and 20%, respectively, due to a 22% increase in available rooms and the 4% appreciation in the Canadian dollar relative to the U.S. dollar. Gross margin as a percent of revenues declined to 39% in the fourth quarter of 2010 compared to 42% in the fourth quarter of 2009 primarily due to lower payments under minimum contract guarantees compared to the prior year.
Well Site Services
Well site services generated revenues of $139.3 million and EBITDA of $36.8 million in the fourth quarter of 2010 compared to revenues and EBITDA of $81.7 million and $15.7 million, respectively, in the fourth quarter of 2009. The year-over-year revenue and EBITDA growth of 70% and 134%, respectively, was primarily due to the 52% year-over-year improvement in U.S. drilling and completion activity along with higher revenue potential from horizontal completions in the shale plays.
Rental tools generated $104.5 million and $28.1 million of revenues and EBITDA, respectively, in the fourth quarter of 2010 compared to revenues of $57.0 million and EBITDA of $11.7 million in the fourth quarter of 2009. The 83% year-over-year improvement in revenues and the 140% 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 Haynesville, Marcellus, Eagleford and Granite Wash basins, combined with improved product mix and pricing.
Drilling services generated revenues and EBITDA of $34.8 million and $8.6 million, respectively, in the fourth quarter of 2010 compared to $24.7 million of revenues and EBITDA of $4.0 million in the fourth quarter 2009. The year-over-year increase in revenues and EBITDA was due to an overall increase in rig utilization to 71% in the fourth quarter of 2010 from 52% in the fourth quarter of 2009. The positive utilization impact, coupled with higher dayrates, contributed to the 41% and 116% increases in revenues and EBITDA, respectively. EBITDA margins improved from 16% in the fourth quarter of 2009 to 25% in the fourth 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 $117.6 million and $20.5 million, respectively, in the fourth quarter of 2010 compared to $127.1 million of revenues and $24.5 million in EBITDA in the fourth quarter of 2009. Offshore products revenues and EBITDA declined year-over-year primarily as a result of reduced shipments of subsea pipeline and drilling rig and vessel equipment, given lower beginning backlog levels in 2010 compared to 2009. Gross margin as a percent of revenues declined slightly year-over-year to 27% in the fourth quarter of 2010 compared to 28% in the fourth quarter of 2009, primarily due to lower cost absorption. Backlog increased 34% sequentially to $353.7 million at December 31, 2010 from $264.4 million at September 30, 2010. Significant awards during the quarter included a major connector order for the Southeast Asian market and orders for equipment related to production platforms in the Gulf of Mexico and Brazil.
Tubular Services
Tubular services generated revenues of $297.4 million and EBITDA of $8.9 million during the fourth quarter of 2010 compared to revenues of $179.0 million and EBITDA of $6.9 million in the fourth quarter of 2009. Tubular services' OCTG shipments were up 68% year-over-year with 148,400 tons shipped in the fourth quarter of 2010 compared to 88,500 tons shipped in the fourth quarter of 2009, exceeding the 52% year-over-year increase U.S. drilling activity. Gross margin as a percent of revenues was 4% in the fourth quarter of 2010 compared to 5% in the fourth quarter of 2009. The lower gross margin in the fourth quarter of 2010 was primarily due to a larger portion of service related costs expensed on certain program work. The Company's OCTG inventory decreased from the third quarter of 2010 by 2% to $333 million at December 31, 2010 due to strong fourth quarter shipments.
In conjunction with closing three strategic acquisitions, Oil States entered into a five year, senior credit facilities totaling $1.05 billion. The credit agreement provides revolving credit facilities in both the U.S. and Canada aggregating $750 million as well as funded term debt in both the U.S. and Canada totaling $300 million. In connection with the MAC acquisition, the Company assumed an Australian credit facility with total borrowing capacity of A$75 million (US$75.9 million). At December 31, 2010, the Company had a total of $735.5 million drawn on these facilities leaving $368.3 million available to be drawn.
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.
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The foregoing contains forward-looking statements within the meaning of the Securities Act of 1933 and 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 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 September 30, 2010 filed by Oil States with the SEC on November 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 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 acquisition making it more difficult to maintain relationships with customers, employees or suppliers.
CONTACT: Company Contact: Bradley J. Dodson Oil States International, Inc. 713-652-0582