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Oil States (OIS) Trims Q3 Revenue Guidance

October 18, 2017 5:18 PM EDT

Oil States International, Inc. (NYSE: OIS) announced today updated guidance for third quarter 2017 primarily due to the impact of Hurricane Harvey, which caused widespread damage and logistical challenges in Houston and the surrounding region during the quarter. Oil States was impacted by lower revenues and under-absorption of manufacturing facility costs primarily in its Offshore/Manufactured Products segment, but also suffered field-level downtime due to employee dislocations resulting from the storm. The Company operates five manufacturing facilities in the Houston area and employs approximately 500 individuals in the region. One of the Company’s Houston facilities experienced significant flooding and is not yet operational, but was fully insured. Project work in that facility has been shifted to other manufacturing locations to meet customer delivery requirements.

Based upon currently available information, the Company is revising its third quarter 2017 guidance. Previously, revenues were expected to range between $165 and $185 million. Currently, the Company anticipates unaudited third quarter revenues of approximately $164 million, an unaudited operating loss of approximately $18 million and total Adjusted Segment EBITDA (Note A) of approximately $9 million. These amounts are not yet final and are subject to change as the Company finalizes its financial statement close process for the third quarter.

(Street sees Q3 revenue of $176.7 million)

Oil States will provide a more detailed update on its third quarter 2017 earnings conference call scheduled for October 27, 2017.

The tables below provide a summary of current expected third quarter results.

Segment Data for the Three Months Ended September 30, 2017 (In Thousands) (Unaudited)
Well SiteServices Offshore /ManufacturedProducts Corporate Total
Revenues$ 77,177 $ 86,871 $ - $ 164,048
Operating income (loss)$ (13,168) $ 7,334 $ (12,349) $ (18,183)
Well SiteServices Offshore /ManufacturedProducts Corporate Total
Operating income (loss)$ (13,168) $ 7,334 $ (12,349) $ (18,183)
Depreciation and amortization expense 20,133 6,404 251 26,788
Other income 177 30 - 207
Segment EBITDA (A) 7,142 13,768 (12,098) 8,812
Severance and other downsizing charges 175 253 - 428
Adjusted Segment EBITDA (A)$ 7,317 $ 14,021 $ (12,098) $ 9,240
Adjusted Segment EBITDA Margin 9.5% 16.1% 5.6%

(A) The terms Segment EBITDA and Adjusted Segment EBITDA consist of operating income (loss) plus depreciation and amortization expense, and certain other items as set forth in the tables above. Segment EBITDA and Adjusted Segment EBITDA are not measures of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for operating income (loss) or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Segment EBITDA and Adjusted Segment EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Segment EBITDA and Adjusted Segment EBITDA as a supplemental disclosure because its management believes that Segment EBITDA and Adjusted Segment EBITDA provide useful information regarding its 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 Segment EBITDA and Adjusted Segment 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 tables above set forth reconciliations of Segment EBITDA and Adjusted Segment EBITDA to operating income (loss), which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles.



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