• Oil States Announces First Quarter 2022 Results of Operations

    Source: Nasdaq GlobeNewswire / 28 Apr 2022 17:15:00   America/New_York

    HOUSTON, April 28, 2022 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE: OIS) reported a net loss of $9.4 million, or $0.16 per share, for the first quarter of 2022. During the first quarter of 2022, the Company generated revenues of $164.0 million and Consolidated EBITDA (Note A) of $14.5 million. These results compare to revenues of $161.3 million and Adjusted Consolidated EBITDA of $13.4 million reported in the fourth quarter of 2021.

    First quarter 2022 highlights included:

    • Consolidated revenues and EBITDA rose to the highest level reported since the outbreak of the COVID-19 pandemic in the first quarter of 2020
    • Short-cycle product and service revenues increased 15% sequentially, driven by higher customer completion activity levels
    • Offshore/Manufactured Products Adjusted Segment EBITDA (Note B) increased 14% sequentially, despite a 9% decline in revenue, yielding favorable EBITDA margins
    • Offshore/Manufactured Products backlog increased $5 million to $265 million, with a book-to-bill ratio of 1.1x

    Oil States' President and Chief Executive Officer, Cindy B. Taylor, stated,

    "Our first quarter 2022 consolidated revenues and EBITDA exceeded projections, driven by the improved commodity price environment and a favorable sales mix in our Offshore/Manufactured Products segment. Consolidated revenues and EBITDA increased sequentially to $164.0 million and $14.5 million, respectively, despite ongoing challenges associated with the COVID-19 pandemic, including supply chain disruptions. Our consolidated revenue and EBITDA for the current quarter are at the highest level reported since the start of the pandemic.

    "Adjusted Segment EBITDA for our Offshore/Manufactured Products segment increased $1.9 million, or 14%, sequentially totaling $15.6 million. During the first quarter 2022, backlog grew to $265 million at March 31, with quarterly bookings of $93 million, yielding a book-to-bill ratio of 1.1x.

    "Our Well Site Services segment revenues increased 11% sequentially due primarily to higher customer activity in our U.S. Mid-Continent and Gulf Coast regions. The sequential quarter revenue growth was tempered by our exit of U.S. thru-tubing operations in January of 2022, which resulted in a $3.9 million reduction in revenue when compared to the fourth quarter of 2021.

    "We were pleased to see first quarter revenues in our Downhole Technologies segment increase 23% from the fourth quarter, driven by higher demand internationally for perforating products along with improved U.S. sales of frac plugs and toe valves. Adjusted Segment EBITDA increased $2.7 million given strong segment incremental margins.

    "We are encouraged by the continued increase in industry activity, which should benefit each of our operating segments over the balance of 2022."

    BUSINESS SEGMENT RESULTS

    (See Segment Data tables)

    Offshore/Manufactured Products

    Offshore/Manufactured Products reported revenues of $84.1 million and Adjusted Segment EBITDA of $15.6 million in the first quarter of 2022, compared to revenues of $92.2 million and Adjusted Segment EBITDA of $13.7 million reported in the fourth quarter of 2021. Revenues decreased 9% sequentially, driven primarily by a 22% decrease in project-driven revenues, while margins improved due to a favorable product and service mix. During the first quarter of 2022, the segment recorded bad debt expense of $0.8 million on receivables from its Russia-based customers. Adjusted Segment EBITDA margin in the first quarter of 2022 was 19%, compared to 15% in the fourth quarter of 2021.

    Backlog totaled $265 million as of March 31, 2022, a 2% sequential increase from December 31, 2021. First quarter 2022 bookings totaled $93 million, yielding a quarterly book-to-bill ratio of 1.1x.

    Well Site Services

    Well Site Services reported revenues of $48.2 million and Adjusted Segment EBITDA of $5.5 million in the first quarter of 2022, compared to revenues of $43.3 million and Adjusted Segment EBITDA of $6.2 million reported in the fourth quarter of 2021. Adjusted Segment EBITDA margin in the first quarter of 2022 was 11%, compared to 14% in the fourth quarter of 2021. Revenue mix and inflationary pressures tempered overall segment margins.

    Downhole Technologies

    Downhole Technologies reported revenues of $31.8 million and Adjusted Segment EBITDA of $2.9 million in the first quarter of 2022, compared to revenues of $25.8 million and Adjusted Segment EBITDA of $0.1 million reported in the fourth quarter of 2021. Adjusted Segment EBITDA margin in the first quarter of 2022 was 9%, compared to 1% in the fourth quarter of 2021.

    Corporate

    Corporate expenses in the first quarter of 2022 totaled $9.6 million.

    Interest Expense, Net

    Net interest expense totaled $2.7 million in the first quarter of 2022, which included $0.5 million of non-cash amortization of deferred debt issuance costs.

    Income Taxes

    The Company recognized tax expense of $3.4 million on a pre-tax loss of $6.0 million during the first quarter of 2022. Income tax expense in the first quarter of 2022 included the impact of valuation allowances record against the Company's deferred tax assets as well as certain non-deductible expenses and discrete tax items. In the fourth quarter of 2021, the Company recognized a tax benefit of $0.3 million on a pre-tax loss of $20.1 million.

    Financial Condition

    No borrowings were outstanding under the Company's asset-based revolving credit facility (the "ABL Facility") at March 31, 2022. Cash totaled $39.2 million, compared to $52.9 million at December 31, 2021 due to working capital investments made as the Company prepares for growth. Liquidity (cash plus borrowing availability) totaled $90.2 million at March 31, 2022, with amounts available to be drawn under the ABL Facility totaling $51.0 million.

    The Company's total debt represented 21% and 20% of combined total debt and stockholders' equity as of March 31, 2022 and December 31, 2021, respectively.

    Subsequent Event

    On April 14, 2022, our Offshore/Manufactured Products segment acquired E-Flow Control Holdings Limited ("E-Flow"), a global provider of fully integrated handling, control, monitoring and instrumentation solutions. The purchase price of $8.6 million was funded with cash on-hand.

    Conference Call Information

    The call is scheduled for April 29, 2022 at 9:00 a.m. central daylight 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 (866) 374-5140 in the United States or by dialing +1 (404) 400-0571 internationally and using the passcode 40967423#. 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 provider of manufactured products and services to customers in the energy, industrial and military sectors. The Company's manufactured products include highly engineered capital equipment and consumable products. 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, geopolitical tensions, the impact of the COVID-19 pandemic on the Company and its customers, the other risks associated with the general nature of the energy service industry and other factors discussed in the "Business" and "Risk Factors" sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and the subsequently filed Periodic Reports on Form 8-K. 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

    CONSOLIDATED STATEMENTS OF OPERATIONS
    (In Thousands, Except Per Share Amounts)

     Three Months Ended
     March 31,
    2022    		 December 31,
    2021    		 March 31,
    2021
     (Unaudited) (Unaudited) (Unaudited)
    Revenues:     
    Products$85,761  $89,401  $61,445 
    Services 78,283   71,919   64,144 
      164,044   161,320   125,589 
          
    Costs and expenses:     
    Product costs 64,801   72,890   49,463 
    Service costs 61,803   60,357   52,847 
    Cost of revenues (exclusive of depreciation and amortization expense presented below)(1) 126,604   133,247   102,310 
    Selling, general and administrative expense 23,833   20,297   21,225 
    Depreciation and amortization expense 17,817   18,655   21,520 
    Impairments of fixed assets —   722   650 
    Other operating (income) expense, net 126   (328)  (354)
      168,380   172,593   145,351 
    Operating loss (4,336)  (11,273)  (19,762)
          
    Interest expense, net (2,672)  (2,577)  (2,325)
    Other income (expense), net(2) 1,025   (6,289)  3,960 
    Loss before income taxes (5,983)  (20,139)  (18,127)
    Income tax (provision) benefit (3,441)  269   2,317 
    Net loss$(9,424) $(19,870) $(15,810)
          
    Net loss per share:     
    Basic$(0.16) $(0.33) $(0.26)
    Diluted$(0.16) $(0.33) $(0.26)
          
    Weighted average number of common shares outstanding:    
    Basic 60,498   60,380   60,098 
    Diluted 60,498   60,380   60,098 

    (1) In the three months ended December 31, 2021, cost of revenues (exclusive of depreciation and amortization expense) included non-cash inventory impairment charges of $1.5 million (in service costs).

    (2) Other expense, net in the three months ended December 31, 2021 included a non-cash loss of $9.3 million associated with the reclassification of unrealized foreign currency translation adjustments which were released upon the liquidation of an international operation. For the three months ended March 31, 2021, other income, net included non-cash gains of $3.6 million recognized in connection with the purchases of $125.0 million principal amount of the 2023 Notes.

    OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

    CONSOLIDATED BALANCE SHEETS
    (In Thousands)

     March 31, 2022 December 31, 2021
     (Unaudited)  
    ASSETS   
    Current assets:   
    Cash and cash equivalents$39,158  $52,852 
    Accounts receivable, net 194,257   186,080 
    Inventories, net 180,886   168,573 
    Prepaid expenses and other current assets 20,238   19,222 
    Total current assets 434,539   426,727 
        
    Property, plant, and equipment, net 330,118   338,583 
    Operating lease assets, net 26,202   25,388 
    Goodwill, net 76,179   76,412 
    Other intangible assets, net 180,639   185,749 
    Other noncurrent assets 30,288   32,889 
    Total assets$1,077,965  $1,085,748 
        
    LIABILITIES AND STOCKHOLDERS' EQUITY   
    Current liabilities:   
    Current portion of long-term debt$44,047  $18,262 
    Accounts payable 60,650   63,343 
    Accrued liabilities 41,541   43,401 
    Current operating lease liabilities 6,143   6,481 
    Income taxes payable 4,857   2,564 
    Deferred revenue 47,560   43,236 
    Total current liabilities 204,798   177,287 
        
    Long-term debt 134,790   160,488 
    Long-term operating lease liabilities 24,169   23,452 
    Deferred income taxes 2,897   3,637 
    Other noncurrent liabilities 23,203   25,058 
    Total liabilities 389,857   389,922 
        
    Stockholders' equity:   
    Common stock 746   739 
    Additional paid-in capital 1,106,963   1,105,135 
    Retained earnings 272,143   281,567 
    Accumulated other comprehensive loss (65,170)  (66,031)
    Treasury stock (626,574)  (625,584)
    Total stockholders' equity 688,108   695,826 
    Total liabilities and stockholders' equity$1,077,965  $1,085,748 

    OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In Thousands)

     Three Months Ended March 31,
      2022   2021 
     (Unaudited)  
    Cash flows from operating activities:   
    Net loss$(9,424) $(15,810)
    Adjustments to reconcile net loss to net cash used in operating activities:   
    Depreciation and amortization expense 17,817   21,520 
    Impairments of fixed assets —   650 
    Stock-based compensation expense 1,835   2,820 
    Amortization of debt discount and deferred financing costs 469   895 
    Deferred income tax benefit (174)  (2,710)
    Gains on extinguishment of 1.50% convertible senior notes —   (3,637)
    Gains on disposals of assets (543)  (307)
    Other, net 550   285 
    Changes in operating assets and liabilities:   
    Accounts receivable (9,086)  (10,701)
    Inventories (13,090)  (3,890)
    Accounts payable and accrued liabilities (4,555)  1,648 
    Deferred revenue 4,324   (206)
    Other operating assets and liabilities, net 1,142   1,026 
    Net cash flows used in operating activities (10,735)  (8,417)
        
    Cash flows from investing activities:   
    Capital expenditures (2,858)  (4,120)
    Proceeds from disposition of property and equipment 869   1,851 
    Other, net (67)  (95)
    Net cash flows used in investing activities (2,056)  (2,364)
        
    Cash flows from financing activities:   
    Revolving credit facility borrowings 367   12,220 
    Revolving credit facility repayments (367)  (24,220)
    Issuance of 4.75% convertible senior notes —   135,000 
    Purchases of 1.50% convertible senior notes —   (120,000)
    Other debt and finance lease repayments, net (165)  (145)
    Payment of financing costs (68)  (7,961)
    Shares added to treasury stock as a result of net share settlements
    due to vesting of stock awards    		 (990)  (1,500)
    Net cash flows used in financing activities (1,223)  (6,606)
        
    Effect of exchange rate changes on cash and cash equivalents 320   (111)
    Net change in cash and cash equivalents (13,694)  (17,498)
    Cash and cash equivalents, beginning of period 52,852   72,011 
    Cash and cash equivalents, end of period$39,158  $54,513 
        
    Cash paid for:   
    Interest$522  $1,842 
    Income taxes, net 119   577 

    OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

    SEGMENT DATA
    (In Thousands)
    (unaudited)

     Three Months Ended
     March 31,
    2022(2)    		 December 31,
    2021(3)    		 March 31,
    2021(4)
    Revenues:     
    Offshore/Manufactured Products(1):     
    Project-driven products$33,844  $43,603  $21,374 
    Short-cycle products 20,624   18,212   12,250 
    Other products and services 29,644   30,394   26,985 
    Total Offshore/Manufactured Products 84,112   92,209   60,609 
    Well Site Services 48,172   43,336   39,550 
    Downhole Technologies 31,760   25,775   25,430 
    Total revenues$164,044  $161,320  $125,589 
          
    Operating income (loss):     
    Offshore/Manufactured Products$10,196  $7,802  $1,071 
    Well Site Services (3,395)  (7,818)  (9,853)
    Downhole Technologies (1,505)  (4,525)  (1,615)
    Corporate (9,632)  (6,732)  (9,365)
    Total operating loss$(4,336) $(11,273) $(19,762)

    (1) Disaggregated revenue data is provided to supplement the Segment Data.

    (2) Operating income (loss) for the three months ended March 31, 2022 included $0.8 million of bad debt expense on receivables from Russia-based customers within the Offshore/Manufactured Products segment.

    (3) Operating income (loss) for the three months ended December 31, 2021 included $0.3 million of severance and restructuring charges related to the Offshore/Manufactured Products segment. In the Well Site Services segment, operating income (loss) included non-cash inventory and fixed asset impairment charges of $1.5 million and $0.7 million, respectively, and severance and restructuring charges of $0.3 million. In the Downhole Technologies segment, operating income (loss) included severance and restructuring charges of $0.2 million.

    (4) Operating income (loss) for the three months ended March 31, 2021 included $0.3 million of severance and restructuring charges related to the Offshore/Manufactured Products segment. In the Well Site Services segment, operating income (loss) included non-cash fixed asset impairment charges of $0.7 million and severance and restructuring charges of $1.3 million. In the Downhole Technologies segment, operating income (loss) included severance and restructuring charges of $0.3 million. In Corporate, operating income (loss) included $1.6 million of severance charges.

    OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

    RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
    SEGMENT EBITDA AND ADJUSTED SEGMENT EBITDA (B)
    (In Thousands)
    (unaudited)

     Three Months Ended
     March 31, 2022 December 31,
    2021    		 March 31,
    2021
    Offshore/Manufactured Products:     
    Operating income$10,196  $7,802  $1,071 
    Other income (expense), net 41   21   (62)
    Depreciation and amortization expense 5,330   5,502   5,469 
    Segment EBITDA 15,567   13,325   6,478 
    Severance and restructuring charges —   330   282 
    Adjusted Segment EBITDA$15,567  $13,655  $6,760 
          
    Well Site Services:     
    Operating loss$(3,395) $(7,818) $(9,853)
    Other income 986   3,010   387 
    Depreciation and amortization expense 7,932   8,511   11,468 
    Impairments of inventories —   1,468   — 
    Impairment of fixed assets —   722   650 
    Segment EBITDA 5,523   5,893   2,652 
    Severance and restructuring charges —   257   1,306 
    Adjusted Segment EBITDA$5,523  $6,150  $3,958 
          
    Downhole Technologies:     
    Operating loss$(1,505) $(4,525) $(1,615)
    Other expense, net (2)  —   (2)
    Depreciation and amortization expense 4,384   4,455   4,389 
    Segment EBITDA 2,877   (70)  2,772 
    Severance and restructuring charges —   202   275 
    Adjusted Segment EBITDA$2,877  $132  $3,047 
          
    Corporate:     
    Operating loss$(9,632) $(6,732) $(9,365)
    Other income (expense) —   (9,320)  3,637 
    Depreciation and amortization expense 171   187   194 
    Release of foreign currency translation adjustments on liquidation of an international operation —   9,320   — 
    Gains on extinguishment of debt —   —   (3,637)
    EBITDA (9,461)  (6,545)  (9,171)
    Severance charges —   —   1,555 
    Adjusted EBITDA$(9,461) $(6,545) $(7,616)

    OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

    RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
    CONSOLIDATED EBITDA AND ADJUSTED CONSOLIDATED EBITDA (A)
    (In Thousands)
    (unaudited)

     Three Months Ended
     March 31,
    2022    		 December 31,
    2021    		 March 31,
    2021
          
    Net loss$(9,424) $(19,870) $(15,810)
    Interest expense, net 2,672   2,577   2,325 
    Income tax provision (benefit) 3,441   (269)  (2,317)
    Depreciation and amortization expense 17,817   18,655   21,520 
    Impairments of inventories —   1,468   — 
    Impairments of fixed and lease assets —   722   650 
    Release of foreign currency translation adjustments on liquidation of an international operation —   9,320   — 
    Gains on extinguishment of 1.50% convertible senior notes —   —   (3,637)
    Consolidated EBITDA 14,506   12,603   2,731 
    Severance and restructuring charges —   789   3,418 
    Adjusted Consolidated EBITDA$14,506  $13,392  $6,149 

    (A) The terms Consolidated EBITDA and Adjusted Consolidated EBITDA consist of net loss plus net interest expense, taxes, depreciation and amortization expense, non-cash asset impairment charges and a non-cash loss associated with the reclassification of unrealized foreign currency translation adjustments which were released upon the liquidation of an international operation, less gains on extinguishment of 1.50% convertible senior notes (the "2023 Notes") and adjustments for certain other items. Consolidated EBITDA and Adjusted Consolidated 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 net loss or cash flow measures prepared in accordance with generally accepted accounting principles or as measures of profitability or liquidity. Additionally, Consolidated EBITDA and Adjusted Consolidated EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Consolidated EBITDA and Adjusted Consolidated EBITDA as supplemental disclosures because its management believes that Consolidated EBITDA and Adjusted Consolidated 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 Consolidated EBITDA and Adjusted 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 reconciliations of Consolidated EBITDA and Adjusted 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, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA consist of operating income (loss) plus other income (expense), depreciation and amortization expense, non-cash asset impairment charges and a non-cash loss associated with the reclassification of unrealized foreign currency translation adjustments which were released upon the liquidation of an international operation, less gains on extinguishment of the 2023 Notes and adjustments for certain other items. EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted 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, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted Segment EBITDA as supplemental disclosures because its management believes that EBITDA, Adjusted EBITDA, Segment EBITDA and Adjusted 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, Adjusted EBITDA, Segment EBITDA and Adjusted 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, Adjusted EBITDA, Segment EBITDA and Adjusted 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.


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