Finance News

Oil States Announces Third Quarter 2021 Results of Operations

Oil States International, Inc. (NYSE: OIS) reported a net loss of $13.0 million, or $0.22 per share, for the third quarter of 2021.

Reported third quarter results reflect the impact of Hurricane Ida, which negatively affected operations in southeast Louisiana and the Gulf of Mexico. The results also include a non-cash inventory impairment charge of $2.1 million ($1.7 million after-tax, or $0.03 per share) and severance and restructuring charges of $0.7 million ($0.6 million after-tax, or $0.01 per share).

During the third quarter of 2021, the Company generated revenues of $140.5 million and Adjusted Consolidated EBITDA (Note A) of $8.5 million. These results compare to revenues of $145.7 million and Adjusted Consolidated EBITDA of $10.1 million reported in the second quarter of 2021.

Third quarter 2021 highlights and corporate actions included:

  • Hurricane Ida resulted in a transitory reduction in Oil States' and its customers operations in southeast Louisiana and the Gulf of Mexico, resulting in an estimated reduction in third-quarter consolidated revenues and EBITDA of $5.9 million and $3.0 million, respectively
  • Offshore/Manufactured Products backlog increased $35 million to $249 million, with quarterly bookings up 64% sequentially resulting in a book-to-bill ratio of 1.5x
  • Generated cash flow from operations of $6.6 million
  • Received the ESG Accelerator Award from the Energy Workforce & Technology Council

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

"We hope for a rapid recovery for the residents of Louisiana, particularly our employees, who were in the path of Hurricane Ida following its landfall on August 30th. We are thankful that our personnel remained safe through this devastating storm. While our facilities did not sustain major damage, results of operations within our Offshore/Manufactured Products and Well Site Services segments were negatively impacted due to the cessation of work in the Gulf of Mexico, temporary facility closures, local workforce challenges and resulting delays in the production and shipment of goods to our customers. On a consolidated basis, we estimate that Hurricane Ida resulted in reductions to third-quarter revenues and EBITDA of $5.9 million and $3.0 million, respectively, offsetting the benefit of increased U.S. land-based completion activity.

"Revenues in our Offshore/Manufactured Products segment decreased 10% from the second quarter of 2021 due primarily to transitory delays in customer projects following landfall of Hurricane Ida, creating the need to outsource certain project work to third-party contractors in the interim. Adjusted Segment EBITDA for Offshore/Manufactured Products decreased $1.7 million sequentially to $8.6 million, reflective of the September revenue decline caused by the storm. Backlog grew to $249 million as of September 30, 2021 with quarterly bookings increasing 64% sequentially to $106 million, yielding book-to-bill ratios of 1.5x for the third quarter and 1.2x year-to-date.

"Our Well Site Services segment revenues increased 9% from the prior quarter – driven by higher U.S. land-based activity, partially offset by a decline in Gulf of Mexico work in September as Hurricane Ida shut down Gulf of Mexico activity for most of September, coupled with reduced customer activity internationally. Adjusted Segment EBITDA for Well Site Services increased modestly to $5.9 million in the third quarter, with the impact of revenue growth substantially offset by a shift in revenue mix.

"Third quarter revenues in our Downhole Technologies segment decreased 5% sequentially, driven by lower demand for its perforating products internationally. Our Downhole Technologies segment reported Adjusted Segment EBITDA of $1.4 million in the third quarter.

"We are committed to advancing the future of energy from traditional sources, while enabling pathways to a lower-carbon, multisource energy mix to meet global demand. Oil States continues to strive for improvement in the health and safety of our employees, to further our sustainability initiatives, to avoid any negative impacts to the environment, and to support the communities in which we work and live. In this regard, we were recently recognized by the Energy Workforce & Technology Council with the ESG Accelerator Award for our significant advances in ESG reporting and industry leadership."

Offshore/Manufactured Products

Offshore/Manufactured Products reported revenues of $69.0 million and Adjusted Segment EBITDA (Note B) of $8.6 million in the third quarter of 2021, compared to revenues of $76.9 million and Adjusted Segment EBITDA of $10.3 million reported in the second quarter of 2021. Revenues decreased 10% sequentially, driven primarily by lower connector product sales and the effects of Hurricane Ida, which caused the temporary closure of a manufacturing and service facility in southeast Louisiana in September. Adjusted Segment EBITDA margin in the third quarter of 2021 was 12% compared to 13% in the second quarter of 2021. Reported results for the third quarter of 2021 included the adverse impact of Hurricane Ida, which reduced revenues and Adjusted Segment EBITDA by an estimated $4.8 million and $2.1 million, respectively.

Backlog totaled $249 million as of September 30, 2021, a 16% sequential increase. During the third quarter, the segment booked two notable project awards exceeding $10 million. Third quarter 2021 bookings totaled $106 million, yielding a quarterly book-to-bill ratio of 1.5x and a year-to-date ratio of 1.2x.

Downhole Technologies

Downhole Technologies reported revenues of $25.5 million and Adjusted Segment EBITDA of $1.4 million in the third quarter of 2021, compared to revenues of $26.8 million and Adjusted Segment EBITDA of $2.4 million reported in the second quarter of 2021. Adjusted Segment EBITDA margin in the third quarter of 2021 was 6% compared to 9% in the second quarter of 2021.

Well Site Services

Well Site Services reported revenues of $46.0 million and Adjusted Segment EBITDA of $5.9 million in the third quarter of 2021, compared to revenues of $42.1 million and Adjusted Segment EBITDA of $5.7 million reported in the second quarter of 2021. Adjusted Segment EBITDA margin the third quarter of 2021 was 13% compared to 14% in the second quarter of 2021. Reported results for the third quarter of 2021 included the adverse impact of Hurricane Ida, which reduced revenues and Adjusted Segment EBITDA by an estimated $1.1 million and $0.9 million, respectively.

Corporate

Corporate expenses in the third quarter of 2021 totaled $7.6 million.

Interest Expense, Net

The Company reported net interest expense of $2.6 million in the third quarter of 2021, which included $0.5 million of non-cash amortization of deferred debt issuance costs.

Income Taxes

The Company recognized an effective tax rate benefit of 21% in the third quarter of 2021, which compared to an effective tax rate benefit of 17% in the second quarter of 2021.

Financial Condition

As of September 30, 2021 and June 30, 2021, no borrowings were outstanding under the Company's asset-based revolving credit facility (the "ABL Facility"). Cash on-hand totaled $67.6 million as of September 30, 2021, compared to $62.7 million as of June 30, 2021. Liquidity (cash plus borrowing availability) totaled $129.0 million as of September 30, 2021 with amounts available to be drawn under the ABL Facility totaling $61.4 million.

The Company's total debt represented 20% of combined total debt and stockholders' equity as of September 30, 2021 and December 31, 2020.

Conference Call Information

The call is scheduled for November 1, 2021 at 9:00 a.m. central daylight time, is being webcast and can be accessed from the Company's website. Participants may also join the conference call by dialing 1 (888) 771-4371 in the United States or by dialing +1 (847) 585-4405 internationally and using the passcode 50243892. 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.

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.

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