Oil States International, Inc. (OIS) Q4 2011 Earnings Call February 17, 2012 11:00 a.m. ET Executives Cindy Taylor – President and CEO Bradley Dodson – SVP, CFO and Treasurer Patricia Gill – Director, IR Analysts Jeff Tillery - Tudor, Pickering, Holt & Co. Collin Gerry – Raymond James Jeff Spittle – Global Hunter Securities Victor Marchon – RBC Capital Markets Stephen Gengaro – Sterne Agee Joseph Gibney - Capital One Southcoast Jonathan Sisto – Credit Suisse Scott Burk – Canaccord Bill Sanchez - Howard Weil Cole Sullivan - Jefferies & Company Jim Casagrande - Bridgehampton Capital Presentation Operator
I will now turn the call over to Cindy.Cindy Taylor Thank you, Patricia. And thanks to all of you for joining our call this morning. I am pleased to report that Oil States generated record revenues and EBITDA in the fourth quarter both on a quarterly and full year basis. Current commodity prices were conducive to continued customer investment driving strong activity across all of our business lines. The strong demand coupled with the results of our strategic growth initiatives over the last two years led to our record earnings. In 2011, we successfully grew the room count in accommodations segment by over 4500 rooms representing a 36% growth from year end 2010 level. Opportunity for investment remains strong and we look forward to continued organic room count expansions in Australia, Canada and in the U.S. shale plays. Our offshore products segment also generated record quarterly revenues, EBITDA, EBITDA margin percentage and backlog. We entered the year with 535 -- we ended the year with $535 million of backlog in our offshore products segment, and we expect a strong pipeline of bidding opportunities to continue in 2012. Our well site services and tubular services business saw a minimal impact related to holiday downtime during the fourth quarter at complex completions and the active shale plays generated increased demand and pricing for our equipment and services. During the fourth quarter of 2011, Oil States generated earnings of $1.72 per diluted share on $94 million of net income, $206 million of EBITDA, and $996 million in revenues. Consolidated operating income more than doubled to $153 million in the current quarter, up from $68 million in the fourth quarter of 2010. In addition, our gross margins improved to 25% from 21% a year ago. At this time, Bradley will take you through details of our consolidated results and financial position. And then I will conclude our prepared remarks with a discussion of each of our segment and will give you our thoughts as to the current market outlook.
Bradley DodsonThank you, Cindy. During the fourth quarter of 2011, we reported operating income of $153 million on revenues of $996 million. Our net income for the fourth quarter of 2011 totaled $94 million or $1.72 per diluted share. The comparable fourth quarter 2010 results were $68 million of operating income on revenues of $697 million. Our fourth quarter 2010 net income totaled $51 million or $0.94 per diluted share, the four acquisition costs totaling $6.3 million. The year-over-year increases in profitability were primarily due to organic growth and improved earnings from each of our company’s business segments, coupled with contributions from the three acquisitions we closed in the fourth quarter of 2010. During the fourth quarter, we reported cash used from operations of $7 million due to a $170 million investment in working capital. Working capital increased during the fourth quarter primarily due to increased receivables and inventory in our tubular services segment. Capital expenditures in the fourth quarter of 2011 were $116 million. Our net debt at the end of the fourth quarter totalled approximately $1 billion and our debt to cap ratio was approximately 37.5%. As of December 31, 2011, the company had approximately $759 million of combined availability under our credit facilities and a cash balance totaling $72 million. For the full year 2011, we invested $487 million in capital expenditures. We currently expect to spend between $600 million and $700 million in capital expenditures during 2012, of which $150 million relates to projects carrying over from 2011. Approximately 66% of the 2012 CapEx budget will be directed towards accommodations, 20% towards well site services and 14% towards offshore products. In terms of first quarter 2012 guidance, we forecast depreciation and amortization expense to be approximately $51 million and net interest expense to be approximately $19 million. Diluted shares are expected to total 55.5 million shares in the first quarter of 2012 due to our current stock price. We currently expect our first quarter 2012 effective tax rate to approximate 28.6%. Read the rest of this transcript for free on seekingalpha.com