(Source: PrimeNewswire)HOUSTON, July 29, 2009 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported a net loss for the quarter ended June 30, 2009 of $63.5 million, or $1.28 per diluted share. The second quarter 2009 results included a non-cash, pre-tax charge of approximately $94.5 million, or $1.70 per diluted share after-tax, related to the interim goodwill impairment analysis which indicated an impairment of a portion of the Company's goodwill in its rental tool reporting unit. Excluding the non-cash impairment charge, the Company generated $21.0 million in net income, or $0.42 per diluted share, on $456.3 million of revenues and $60.2 million of Adjusted EBITDA in the second quarter of 2009 (EBITDA is defined as net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the goodwill impairment charges) compared to net income of $59.2 million, or $1.13 per diluted share, on $631.4 million of revenues and $120.4 million of EBITDA reported in the second quarter of 2008. (A)

"Our Offshore Products and Accommodations businesses generated over 80% of our segmental Adjusted EBITDA for the quarter," stated Cindy B. Taylor, Oil States' President and Chief Executive Officer. "The relative strength and stability of these contract-driven, oil levered businesses helped to partially offset what was a very difficult quarter for our North American, natural gas leveraged businesses."

Mrs. Taylor also stated, "Despite a difficult quarter in our North American operations, our balance sheet continued to strengthen. During the quarter, we paid down over $130 million on our revolving credit facility leaving Oil States with only $244 million in indebtedness at June 30, 2009. As a result, we had substantial liquidity at the end of the quarter with $56 million in cash and over $400 million of unused availability under our revolving facility. Our debt to capitalization ratio decreased from 27% at December 31, 2008 to 16% at June 30, 2009. With improving liquidity, we expect to capitalize on opportunities this downturn presents."

The Company recognized an effective tax rate benefit of 5.0% in the second quarter of 2009 compared to a tax rate expense of 33.8% in the second quarter of 2008. The tax benefit in the second quarter of 2009 was negatively impacted by a significant amount of the goodwill impairment charges which were non-deductible for tax purposes. Excluding the goodwill impairment, the effective tax rate for the second quarter of 2009 would have approximated 24.0%. The decrease in the effective tax rate from the prior year was largely the result of proportionately higher foreign sourced income which is taxed at lower statutory rates, coupled with domestic benefits derived from estimated tax losses.

For the first half of 2009, the Company reported revenues of $1.1 billion and EBITDA of $79.1 million which resulted in a $7.4 million net loss, or $0.15 per diluted share. Excluding the goodwill impairment charge, the Company reported $173.7 million of Adjusted EBITDA and $77.2 million of net income, or $1.56 per diluted share. The Company reported revenues of $1.2 billion and EBITDA of $246.2 million for the first half of 2008 which resulted in net income of $124.7 million, or $2.41 per diluted share.

BUSINESS SEGMENT RESULTS

(Unless otherwise noted, the following discussion compares the quarterly results from the second quarter of 2009 to the results from the second quarter of 2008. In order to present a more meaningful comparison of the Company's operating results, the second quarter 2009 results exclude the goodwill impairment charge.)

Well Site Services

Well Site Services generated revenues of $152.9 million and Adjusted EBITDA of $40.7 million in the second quarter of 2009, compared to $209.9 million and $70.4 million, respectively, in the second quarter of 2008, representing year-over-year decreases of 27% and 42%, respectively. The decrease in EBITDA was primarily due to declining revenues and margins in the rental tool and drilling businesses partially offset by improved year-over-year results from the Company's oil sands accommodations.

For the second quarter of 2009, the accommodations business reported revenues of $88.4 million and EBITDA of $34.8 million, compared to revenues and EBITDA of $80.9 million and $26.1 million, respectively, in the second quarter of 2008. Accommodations revenue and EBITDA increased 9% and 34%, respectively, primarily due to the significant increase in average available room capacity at the Company's four major oil sands lodges. EBITDA growth in accommodations was partially offset by a weaker Canadian dollar and reduced non-oil sands activity.

Excluding the $94.5 million goodwill impairment charge, rental tools generated $53.6 million of revenues and $5.7 million of Adjusted EBITDA in the second quarter of 2009 compared to revenue of $84.6 million and EBITDA of $25.2 million in the second quarter of 2008. Rental tool revenues decreased 37% year-over-year primarily due to the 50% year-over-year quarterly decline in the North American rig count. EBITDA declined by 77% due to the reduced revenues and decreased margins.

Drilling services generated revenues and EBITDA of $10.9 million and $0.2 million, respectively, in the second quarter of 2009 compared to $44.4 million of revenues and $19.1 million of EBITDA in the second quarter 2008. These year-over-year decreases in drilling services were primarily due to significantly lower utilization in each of the company's three primary drilling markets driven by a substantial reduction in drilling activity and substantial pricing pressures.

Offshore Products

In the second quarter of 2009, Offshore Products generated $122.5 million of revenues and $20.3 million in EBITDA compared to $139.9 million of revenues and $27.8 million in EBITDA in the second quarter of 2008. The 12% decrease in revenues and the 27% decrease in EBITDA year-over-year are primarily due to lower revenue contribution from higher margin drilling equipment and connector products, coupled with reduced cost absorption. In addition to the impact of lower revenues, the year-over-year decline in EBITDA included a $1.2 million foreign exchange loss primarily due to the weakening of the U.S. dollar against the pound sterling (compared to a loss of $0.3 million in the second quarter of 2008). Backlog totaled $302.8 million at June 30, 2009 compared to $317.8 million at March 31, 2009; however, net new orders received in the second quarter of 2009 increased to $107.8 million, up 29% from the $83.7 million of orders received in the first quarter of 2009.

Tubular Services

Tubular Services generated revenues and EBITDA of $180.9 million and $6.8 million, respectively, during the second quarter of 2009 compared to revenues of $281.6 million and EBITDA of $29.2 million in the second quarter of 2008. Tubular Services' OCTG shipments decreased 52% to 69,900 tons in the second quarter of 2009 from 146,200 tons in the second quarter of 2008 primarily due to the 50% year-over-year quarterly decrease in U.S. drilling activity coupled with the industry-wide excess inventory situation. These factors, in addition to more competitive pricing, negatively impacted gross margins in the second quarter of 2009 which decreased to 5.3% from 11.6% in the second quarter of 2008. Despite these difficult market conditions, the Company reduced its OCTG inventory significantly during the second quarter of 2009 to $296 million from $369 million at March 31, 2009.

Goodwill Impairment

In accordance with the interim impairment testing requirements of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," the Company concluded that at June 30, 2009 an indicator of potential impairment of goodwill existed at the rental tool reporting unit. Upon completing an assessment of the reporting unit valuation, the Company determined that the fair market value of the reporting unit was less than its carrying value. Based on the fair market value of the reporting unit, the Company concluded that a portion of the rental tool goodwill was impaired. The total goodwill impairment charge recognized in the second quarter of 2009 was $94.5 million before taxes and $84.5 million after-tax, or $1.70 per diluted share. This non-cash charge does not impact the Company's liquidity position, its debt covenants or the Company's cash flows.

Oil States International, Inc. is a diversified oilfield services company.