Oil States Announces Second Quarter Earnings of $1.14 per Share

HOUSTON, July 31 /PRNewswire-FirstCall/ -- Oil States International, Inc.
(NYSE: OIS) today reported net income for the quarter ended June 30, 2008 of
$60.2 million, or $1.14 per diluted share, compared to $52.2 million, or $1.03
per diluted share, reported in the second quarter of 2007.
"Each of our businesses contributed to significant year-over-year growth
for Oil States in the second quarter of 2008," stated Cindy B. Taylor, Oil
States' President and Chief Executive Officer. "Our Tubular Services group
generated record revenues and EBITDA during the quarter and our oil sands
lodges in Canada continue to be a significant driver of our growth. Our
Offshore Products segment, which supports global deepwater infrastructure
development, also posted another strong quarter with revenue growth and good
margins. Our current expectation for third quarter 2008 earnings is in a
range of $1.19 to $1.24."
Excluding the gains related to the partial sales of its investment in
Boots & Coots (described below), the Company generated $631.4 million of
revenues and $117.7 million of Adjusted EBITDA (defined as net income plus
interest, taxes, depreciation and amortization), during the second quarter of
2008, compared to $499.3 million and $85.6 million, respectively, in the
second quarter of 2007. (A) Significantly improved activity and profitability
in our Tubular Services segment, strong year-over-year growth in our oil sands
accommodations capacity and contributions from two rental tool acquisitions
completed during the third quarter of 2007 led to year-over-year increases in
revenue and Adjusted EBITDA of 26% and 38%, respectively, in the second
quarter of 2008. During the quarter, consolidated operating income was $91.0
million compared to $68.5 million for the second quarter of 2007.
During the second quarter of 2008, the Company recognized a $2.7 million
pre-tax gain, or $0.03 per diluted share after-tax, related to the sale of a
portion of its investment in Boots & Coots. During the second quarter of
2007, the Company recognized a $12.8 million pre-tax gain, or $0.17 per
diluted share after-tax, related to the sale of a portion of its investment in
Boots & Coots. The Company currently owns approximately 7% of Boots & Coots,
and as a result, will account for its remaining investment in Boots & Coots as
marketable securities available for sale (included in non-current assets),
thereby ending its use of the equity method of accounting for this investment.
This common stock ownership is in addition to a $21.2 million note receivable
held by the Company payable by Boots & Coots.
In the second quarter of 2008, the Company recognized an effective tax
rate of 33.9% compared to 34.1% in the second quarter of 2007. The Company
spent $74.9 million in capital expenditures during the second quarter of 2008
primarily related to expansion efforts at Wapasu Creek Lodge and the continued
construction of the Conklin Lodge, both of which serve customers in the oil
sands region of Canada.
For the first half of 2008, the Company reported net income of $126.6
million, or $2.45 per diluted share, on revenues of $1.2 billion and operating
income of $192.4 million. The Company reported net income of $104.7 million,
or $2.08 per diluted share, on revenues of $979.8 million and operating income
of $151.4 million, for the first half of 2007. This represents year-over-year
increases in revenue and operating income of 26% and 27%, respectively.
BUSINESS SEGMENT RESULTS
Unless otherwise noted, the following discussion compares the quarterly
results from the second quarter of 2008 (which exclude the aforementioned $2.7
million gain on the sale of Boots & Coots stock) to the results from the
second quarter of 2007 (which exclude the aforementioned $12.8 million gain on
the sale of Boots & Coots stock) in order to present a more meaningful
comparison of the Company's operating results.
Well Site Services
Well Site Services generated revenues of $209.9 million and Adjusted
EBITDA of $67.6 million in the second quarter 2008, compared to $149.5 million
and $52.8 million, respectively, in the second quarter of 2007, representing
year-over-year increases of 40% and 28%, respectively. Increases in revenues
and Adjusted EBITDA were across all of the businesses but were primarily due
to growth in oil sands accommodations and contributions from the two rental
tool acquisitions closed in the third quarter of 2007.
For the second quarter of 2008, accommodations generated revenues of $80.9
million and EBITDA of $26.1 million compared to revenues and EBITDA of $61.9
million and $18.5 million, respectively, in the second quarter of 2007. The
accommodations business revenue increased 31% and EBITDA increased 41%,
primarily due to contributions from additional room capacity at our major oil
sands lodges. Drilling services generated revenues of $44.4 million and
Adjusted EBITDA of $16.4 million in the second quarter of 2008 compared to
revenues and Adjusted EBITDA of $36.8 million and $15.1 million, respectively,
in the second quarter 2007. The year-over-year improvement in revenue was due
to higher pricing and the addition of four new drilling rigs. This revenue
improvement was partially offset by increased labor, repair and maintenance
costs. Rental tools generated $84.6 million of revenues and $25.2 million of
EBITDA in the second quarter of 2008 compared to revenue of $50.8 million and
EBITDA of $19.3 million in the second quarter of 2007. This year-over-year
growth was substantially due to the two acquisitions completed in the third
quarter of 2007.
Offshore Products
During the second quarter of 2008, the Offshore Products segment reported
revenue and EBITDA of $139.9 million and $27.8 million, respectively, compared
to $135.4 million of revenues and $27.0 million in EBITDA in the second
quarter of 2007. Revenues improved year-over-year due primarily to increased
after-market service work and deliveries of subsea pipeline equipment. Gross
margin remained strong at 26.6% in the second quarter of 2008 compared to
26.2% in the second quarter of 2007. Backlog totaled $385.8 million at June
30, 2008 which was a slight increase from the $383.5 million reported as of
March 31, 2008 and a 7% increase from the $362.2 million reported as of
December 31, 2007.
Tubular Services
Tubular Services generated record quarterly revenues and EBITDA of $281.6
million and $29.2 million, respectively, during the second quarter of 2008
compared to revenues of $214.4 million and EBITDA of $11.3 million in the
second quarter of 2007. These increases were due to price increases
implemented by the domestic OCTG mills during the quarter coupled with a 22%
increase in tons shipped. In the second quarter of 2008, Tubular Services'
shipped a quarterly record of 146,200 tons up from 120,100 tons shipped in the
second quarter of 2007. Gross margin percentages improved significantly to
11.6% in the second quarter of 2008 from 6.4% in the corresponding quarter of
2007. The Company's OCTG inventory level at June 30, 2008 was $227.2 million
which was an increase from the March 31, 2008 level of $190.4 million.
Oil States International, Inc. is a diversified oilfield services company.
With locations around the world, Oil States is a leading manufacturer of
products for deepwater production facilities and subsea pipelines, and a
leading supplier of a broad range of services to the oil and gas industry,
including production-related rental tools, work force accommodations and
logistics, oil country tubular goods distribution and land drilling services.
Oil States is organized in three business segments -- Offshore Products,
Tubular Services and Well Site Services, and 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 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 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 other things, risks associated with the general
nature of the oilfield service industry and other factors discussed within the
"Business" section of the Form 10-K for the year ended December 31, 2007 filed
by Oil States with the SEC on February 22, 2008.

Oil States International, Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007

Revenues $631,364 $499,308 $1,232,611 $979,824
Costs and expenses:
Cost of sales 478,435 386,710 923,519 742,513
Selling, general and
administrative expenses 35,976 28,225 68,083 55,548
Depreciation and
amortization expense 25,689 16,113 48,417 30,532
Other operating (income)
expense 244 (221) 234 (141)
Operating income 91,020 68,481 192,358 151,372

Interest expense (4,561) (3,739) (9,788) (8,581)
Interest income 894 784 1,815 1,710
Equity in earnings of
unconsolidated affiliates 1,242 748 2,737 1,290
Other income (B) 2,451 13,011 2,672 13,125
Income before income taxes 91,046 79,285 189,794 158,916
Income tax provision (30,883) (27,052) (63,164) (54,222)
Net income $60,163 $52,233 $126,630 $104,694

Net income per share
Basic $1.21 $1.06 $2.56 $2.12
Diluted $1.14 $1.03 $2.45 $2.08

Weighted average number of
common shares outstanding
Basic 49,633 49,341 49,527 49,305
Diluted 52,627 50,833 51,763 50,414

Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)

June 30, March 31, December 31,
2008 2008 2007
Assets (unaudited) (unaudited) (audited)
Current assets
Cash and cash equivalents $45,999 $31,235 $30,592
Accounts receivable, net 442,389 463,538 450,153
Inventories, net 402,715 357,352 349,347
Prepaid expenses and other
current assets 33,417 24,284 35,575
Total current assets 924,520 876,409 865,667
Property, plant and equipment, net 694,082 640,499 586,910
Goodwill, net 401,652 401,950 391,644
Investments in unconsolidated
affiliates 5,945 26,163 24,778
Other non-current assets 71,185 59,557 60,627

Total assets $2,097,384 $2,004,578 $1,929,626

Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt $179,930 $179,975 $4,718
Accounts payable and accrued
liabilities 276,805 232,213 239,119
Income taxes 978 9,472 43
Deferred revenue 62,874 54,697 60,910
Other current liabilities 1,595 1,082 121
Total current liabilities 522,182 477,439 304,911
Long-term debt (C) 288,965 326,456 487,102
Deferred income taxes 54,151 44,473 40,550
Other liabilities 12,212 12,191 12,236
Total liabilities 877,510 860,559 844,799

Stockholders' equity
Common stock 526 523 522
Additional paid-in capital 417,926 407,590 402,091
Retained earnings 817,343 757,180 690,713
Accumulated other comprehensive
income 66,381 60,540 73,036
Treasury stock (82,302) (81,814) (81,535)
Total stockholders' equity 1,219,874 1,144,019 1,084,827

Total liabilities and stockholders'
equity $2,097,384 $2,004,578 $1,929,626

Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007

Revenues
Accommodations $80,880 $61,864 $227,137 $155,417
Rental Tools 84,576 50,842 167,069 104,481
Drilling and Other 44,426 36,752 81,230 67,669

Well Site Services 209,882 149,458 475,436 327,567
Offshore Products 139,850 135,437 266,772 254,477
Tubular Services 281,632 214,413 490,403 397,780
Total Revenues $631,364 $499,308 $1,232,611 $979,824

EBITDA (A)
Accommodations $26,066 $18,512 $86,972 $57,589
Rental Tools 25,194 19,254 50,660 41,476
Drilling and Other (B) 19,096 27,824 30,316 40,574

Well Site Services (B) 70,356 65,590 167,948 139,639
Offshore Products 27,776 26,979 51,906 47,415
Tubular Services 29,220 11,272 39,344 19,624
Corporate and Eliminations (6,950) (5,488) (13,014) (10,359)
Total EBITDA (B) $120,402 $98,353 $246,184 $196,319

Operating Income / (Loss)
Accommodations $17,257 $13,152 $70,065 $48,144
Rental Tools 16,293 14,131 33,924 31,613
Drilling and Other 10,794 11,816 16,846 21,810

Well Site Services 44,344 39,099 120,835 101,567
Offshore Products 24,936 24,207 46,383 41,815
Tubular Services 28,751 10,710 38,272 18,444
Corporate and Eliminations (7,011) (5,535) (13,132) (10,454)
Total Operating Income $91,020 $68,481 $192,358 $151,372

Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)

Three Months Ended June 30,
2008 2007
Supplemental Operating Data
Land Drilling Operating Statistics
Average Rigs Available 36 32
Utilization 84.2% 83.2%
Implied Day Rate ($ in thousands per day) $16.3 $15.1
Implied Daily Cash Margin ($ in thousands
per day) $6.0 $6.3

Offshore Products Backlog ($ in millions) $385.8 $402.2

Tubular Services Operating Data
Shipments (Tons in thousands) 146.2 120.1
Quarter end Inventory ($ in thousands) $227,182 $221,702

(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:

Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007

Net income $60,163 $52,233 $126,630 $104,694
Income tax expense 30,883 27,052 63,164 54,222
Depreciation and
amortization 25,689 16,113 48,417 30,532
Interest income (894) (784) (1,815) (1,710)
Interest expense 4,561 3,739 9,788 8,581
EBITDA $120,402 $98,353 $246,184 $196,319
Gain on sale of investment (2,708) (12,774) (2,708) (12,774)
Adjusted EBITDA $117,694 $85,579 $243,476 $183,545

The Company is not in the business of trading public equity securities nor
does it depend on gains from the sales of such securities for funding ongoing
operations. The Company excludes the gain on the sale of its Boots & Coots
stock in order to present a more meaningful comparison of the Company's
results of operations from period to period as that gain is unrelated to the
Company's ongoing business and operating results.
(B) Includes a $2.7 million gain on sale of Boots & Coots common stock in
the three months and six months ended June 30, 2008. Includes a
$12.8 million gain on sale of Boots & Coots common stock in the three
months and six months ended June 30, 2007.
(C) As of June 30, 2008, the Company had approximately $208.8 million
available under its revolving credit facility.

SOURCE Oil States International, Inc.

Bradley J. Dodson of Oil States International, Inc., +1-713-652-0582