Oil States International Inc (OIS) Company Conference Call September 6, 2012, 10:30 am ET Executives Cindy Taylor – President, CEO Brad Dodson – CFO Analysts Presentation Unidentified Participant
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A lot of the things that we're going to try to update you on today really deal with the drivers for activity and demand for our products and services. We're going to focuses on resource developments in both Canada and Australia, which drive demand for our accommodations services, also investments in global deep water capital equipment is, again, on a global basis, the driver for our offshore products.And then lastly, drilling and completion activity in North America impacts demand for our product and services in the tubular services and well site services business lines. One of the things that I hope you take away from the presentation is, again, one thing we think differentiates our company is the fact that between our accommodations business and our offshore products business, we have very good visibility into future revenues, EBITDA and cash flow that really comes from the contract coverage that we have in place in our accommodations segment, also the backlog that we have in our offshore products. As noted on this slide and really supported by the next one, that represents 66% of our trailing 12 EBITDA. Again, accommodations is 50%, offshore products is 16%. The balance of 34% is really driven by North American drilling and completion activity. Again, you see well site services at 25%, tubular services at 9%. For that 12-month period that we're focusing on, EBITDA totaled $882 million. I was kind of doing the math last night and that figure is up 76% from the comparable period just a year ago, so, again, I think you'll see what is demonstrated in this chart is significant growth for our company as a whole. Over the period of time, there was a downward inflection in 2009 with the global financial crisis but, absent that, a very good track record of growth. The other major message is really the changing landscape in terms of the business line contribution to our results.
If you look in 2008, roughly 55% to 60% of our earnings came from the more cyclical North American based businesses. Today, again, demonstrated by the earlier chart and this one, significant growth in our accommodations business and offshore products now has mitigated the more cyclical contribution from North America to the 34% that we highlighted earlier.We run the business based on returns on invested capital. This is a nice chart provided from another company that follows us. The takeaways here are growing contributions, high levels of returns on invested capital. And, again, I think it's notable that we have the expanded returns, again, despite devoting a lot of growth capital into our business over the last three years or so. We'd like to give you an update. I tried to takeaway some of the high-level points in the presentation on business line basis. But the major takeaways for our accommodation's business recent activities: we're on track to ad 2000 to 3000 incremental lodge and village rooms between our markets in Canada and Australia this year. I think Patricia's last measure was 1164 with the addition of our Karratha village on the northwest shelf of Australia. We mentioned Callipe and Karratha because that expands our geographic footprint in Australia, gives us exposure to the eastern coast L&G developments, (inaudible) gas developments and then on the northwest shelf, conventional gas developments, L&G developments in that region and longer term iron ore – projected iron ore expansions in the (Pilbar) region. We bought and opened a new manufacturing facility in Colorado to diversity our supply sources in the North American market and to also further penetrate opportunities in the United States. We've – I think a lot of you know us and know that we've had delays from permitting but I am pleased to tell you that we are finally going to open our facility in the Eagle Ford early in the first quarter, so we've got some progress there. Our manufacturing facilities have now been certified by the state and so we'll also look at deployment opportunities elsewhere in the state of Texas, particularly in the Permian Basin. Read the rest of this transcript for free on seekingalpha.com