EXHIBIT 99.1
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Complete Production Services, Inc. Reports Second Quarter 2009 Results and Pay-Down of Revolving Credit Facility
Houston, August 4, 2009 (Business Wire) — Complete Production Services, Inc. (NYSE: CPX) today reported second quarter revenue of $238.4 million, EBITDA (as defined below) of $28.5 million, operating loss of $22.9 million and a net loss of $25.8 million, or $0.34 per diluted share. Second quarter results include $2.7 million of pre-tax, non-cash charges associated with fixed asset and inventory write downs.
“Despite very challenging market conditions, we continued to generate strong cash flow from operations,” commented Joe Winkler, Chairman and CEO. “Minimizing capital expenditures, reducing working capital and continuing our cost savings initiatives enabled us to pay down the remaining $77.2 million balance on our revolving credit facility. Today we have no scheduled material principal payments on long-term debt until December 2016.”
Revenue for the Completion and Production Services segment during the second quarter of 2009 was $196.4 million, down approximately 32% from the prior quarter due to the continued decline in activity and corresponding pricing pressure. Adjusted EBITDA (adjusted for the non-cash charges associated with the asset and inventory write-downs) for the segment was $34.1 million, which compares to the prior quarter’s adjusted EBITDA of $71.1 million. Adjusted EBITDA margin for the segment during the second quarter was 17.4% versus 24.7%, for the quarter ending March 31, 2009.
Second quarter Drilling Services segment revenue was $24.7 million, down 30% from the prior quarter. Segment EBITDA margins in the second quarter of 2009 declined to 14.4% from 19.5% in the first quarter of 2009.
“While market conditions appear to be stabilizing, we are not prepared to call the bottom of activity. Our focus in the third quarter remains the same as it was in the second — we will continue to protect our market positions in key resource play basins, focus on execution at the field level, enhance our liquidity and appropriately adjust our cost structure to market conditions.”
“Our dedicated workforce has done an outstanding job in this difficult environment, and we are confident their actions will allow us to capitalize on the eventual recovery,” concluded Mr. Winkler.
In the second quarter of 2009, management discovered accounting errors at one of its operations in the Rocky Mountain region, which occurred in prior years and would have impacted operating results for the years ended December 31, 2006, 2007 and 2008. The majority of the errors were due to a flawed revenue accrual process and ineffective
controls over inventory within this operation. Under the guidance of Staff Accounting Bulletin (“SAB”) No. 99, “Materiality”and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,”the Company has determined the errors are immaterial to its consolidated financial statements for all prior periods. Since the impact of correcting the cumulative prior period errors would be material to the results of operations for the quarter ended June 30, 2009, the Company has corrected these errors as of June 30, 2009 and made the required adjustments to reported results for the comparative quarter and six months ended June 30, 2008. In addition, the Company has adjusted the previously published balance sheet at December 31, 2008, decreasing beginning retained earnings by $8.4 million.
Complete Production Services, Inc. is a leading oilfield service provider focused on the completion and production phases of oil and gas wells. The company has established a significant presence in unconventional oil and gas plays in North America that it believes have the highest potential for long-term growth.
Complete will hold a conference call to discuss second quarter 2009 results on Wednesday, August 5, 2009 at 2:00 p.m. Eastern Time. To participate in the live conference call, dial (800) 261-3417 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 63557383. The conference call will be available for replay beginning at 5:00 p.m., August 5, 2009 and will be available until August 12, 2009. To access the conference call replay, please call (888) 286-8010 and use the passcode: 19788653. The call is also being webcast and can be accessed at our website atwww.completeproduction.com.
The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risk and uncertainties. These forward-looking include statements regarding future market conditions, the Company’s business objectives in the third quarter of 2009 and the Company’s future success. Such statements are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry and other risks described in the Company’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release.
Management evaluates the performance of Complete’s operating segments using non-GAAP financial measures, EBITDA and Adjusted EBITDA. EBITDA is calculated as net income from continuing operations before net interest expense, taxes, depreciation and amortization, and minority interest. Adjusted EBITDA is calculated as EBITDA before fixed asset and inventory write-downs and loss on non-monetary asset exchange. EBITDA and Adjusted EBITDA are not substitutes for GAAP measures of earnings and cash flow. EBITDA and Adjusted EBITDA are used in this press release because our management considers these measures as important supplemental measures of
performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
For more information, please contact:
Jose Bayardo
Vice President and Chief Financial Officer
281-372-2300
Vice President and Chief Financial Officer
281-372-2300
Complete Production Services, Inc.
Consolidated Statements of Operations
For the Quarters and Six Months Ended June 30, 2009 and 2008
(in thousands, except per share data)
Consolidated Statements of Operations
For the Quarters and Six Months Ended June 30, 2009 and 2008
(in thousands, except per share data)
Quarter Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
Revised | Revised | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Revenue: | ||||||||||||||||
Services | $ | 221,150 | $ | 423,608 | $ | 544,067 | $ | 825,996 | ||||||||
Products | 17,248 | 15,237 | 31,012 | 27,452 | ||||||||||||
238,398 | 438,845 | 575,079 | 853,448 | |||||||||||||
Cost of services | 150,773 | 261,464 | 361,986 | 506,950 | ||||||||||||
Cost of products | 13,492 | 10,730 | 23,987 | 18,550 | ||||||||||||
General and administrative expense | 45,633 | 50,811 | 94,911 | 95,454 | ||||||||||||
Depreciation and amortization | 51,402 | 43,063 | 103,091 | 82,337 | ||||||||||||
261,300 | 366,068 | 583,975 | 703,291 | |||||||||||||
Income (loss) from continuing operations before interest and taxes | (22,902 | ) | 72,777 | (8,896 | ) | 150,157 | ||||||||||
Interest expense | 13,899 | 14,854 | 28,357 | 30,200 | ||||||||||||
Interest income | (20 | ) | (101 | ) | (30 | ) | (157 | ) | ||||||||
Income (loss) from continuing operations before taxes | (36,781 | ) | 58,024 | (37,223 | ) | 120,114 | ||||||||||
Tax provision | (10,949 | ) | 19,706 | (11,055 | ) | 42,018 | ||||||||||
Income (loss) from continuing operations | $ | (25,832 | ) | $ | 38,318 | $ | (26,168 | ) | $ | 78,096 | ||||||
Loss from discontinued operations (net of tax) | — | (6,857 | ) | — | (4,706 | ) | ||||||||||
Net income (loss) | $ | (25,832 | ) | $ | 31,461 | $ | (26,168 | ) | $ | 73,390 | ||||||
Basic earnings (loss) per share: | ||||||||||||||||
Continuing operations | $ | (0.34 | ) | $ | 0.52 | $ | (0.35 | ) | $ | 1.07 | ||||||
Discontinued operations | $ | — | $ | (0.09 | ) | $ | — | $ | (0.06 | ) | ||||||
$ | (0.34 | ) | $ | 0.43 | $ | (0.35 | ) | $ | 1.01 | |||||||
Diluted earnings (loss) per share: | ||||||||||||||||
Continuing operations | $ | (0.34 | ) | $ | 0.51 | $ | (0.35 | ) | $ | 1.05 | ||||||
Discontinued operations | $ | — | $ | (0.09 | ) | $ | — | $ | (0.06 | ) | ||||||
$ | (0.34 | ) | $ | 0.42 | $ | (0.35 | ) | $ | 0.99 | |||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 75,036 | 73,171 | 74,966 | 72,866 | ||||||||||||
Diluted | 75,036 | 74,407 | 74,966 | 74,059 |
Complete Production Services, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2009 and December 31, 2008
(in thousands)
Condensed Consolidated Balance Sheets
As of June 30, 2009 and December 31, 2008
(in thousands)
Revised | ||||||||
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
(unaudited) | (unaudited) | |||||||
Assets: | ||||||||
Cash | $ | 22,033 | $ | 18,500 | ||||
Other current assets | 264,045 | 420,877 | ||||||
Property, plant and equipment, net | 1,073,410 | 1,166,686 | ||||||
Goodwill | 341,512 | 341,592 | ||||||
Other long-term assets | 36,750 | 39,698 | ||||||
Total assets | 1,737,750 | 1,987,353 | ||||||
Liabilities and stockholders’ equity: | ||||||||
Current liabilities | 87,113 | 136,440 | ||||||
Long-term debt | 650,170 | 843,842 | ||||||
Long-term deferred tax liabilities | 156,844 | 146,360 | ||||||
Total liabilities | 894,127 | 1,126,642 | ||||||
Common stock | 752 | 748 | ||||||
Treasury stock | (325 | ) | (202 | ) | ||||
Additional paid-in capital | 630,843 | 623,988 | ||||||
Retained earnings | 197,507 | 223,675 | ||||||
Cumulative translation adjustment | 14,846 | 12,502 | ||||||
Total stockholders’ equity | 843,623 | 860,711 | ||||||
Total liabilities and stockholders’ equity | $ | 1,737,750 | $ | 1,987,353 | ||||
Complete Production Services, Inc.
Cash Flow Data
For the Six Months Ended June 30, 2009
(in thousands)
Cash Flow Data
For the Six Months Ended June 30, 2009
(in thousands)
June 30, | ||||
2009 | ||||
(unaudited) | ||||
Cash flows provided by/(used for): | ||||
Operating activities | $ | 219,726 | ||
Investing activities: | ||||
Capital expenditures | $ | (22,760 | ) | |
Other investing activities | $ | 8,218 | ||
Financing activities | $ | (201,362 | ) |
Complete Production Services, Inc.
Consolidated Segment Information
For the Quarters Ended June 30, 2009 and 2008, and March 31, 2009
And for the Six Months Ended June 30, 2009 and 2008
(in thousands, except percentages)
Consolidated Segment Information
For the Quarters Ended June 30, 2009 and 2008, and March 31, 2009
And for the Six Months Ended June 30, 2009 and 2008
(in thousands, except percentages)
Quarter Ended | ||||||||||||
Revised | ||||||||||||
June 30, | June 30, | March 31, | ||||||||||
2009 | 2008 | 2009 | ||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
Revenue: | ||||||||||||
Completion and production services | $ | 196,441 | $ | 366,416 | $ | 287,526 | ||||||
Drilling services | 24,709 | 57,192 | 35,391 | |||||||||
Products | 17,248 | 15,237 | 13,764 | |||||||||
Total revenues | $ | 238,398 | $ | 438,845 | $ | 336,681 | ||||||
EBITDA: (1) | ||||||||||||
Completion and production services | $ | 31,424 | $ | 105,199 | $ | 66,224 | ||||||
Drilling services | 3,569 | 15,512 | 6,887 | |||||||||
Products | 2,085 | 3,532 | 2,551 | |||||||||
Corporate and other | (8,578 | ) | (8,403 | ) | (9,967 | ) | ||||||
Total EBITDA | $ | 28,500 | $ | 115,840 | $ | 65,695 | ||||||
EBITDA as a % of Revenue: | ||||||||||||
Completion and production services | 16.0 | % | 28.7 | % | 23.0 | % | ||||||
Drilling services | 14.4 | % | 27.1 | % | 19.5 | % | ||||||
Products | 12.1 | % | 23.2 | % | 18.5 | % | ||||||
Total | 12.0 | % | 26.4 | % | 19.5 | % |
Six Months Ended | ||||||||
Revised | ||||||||
June 30, | June 30, | |||||||
2009 | 2008 | |||||||
(unaudited) | (unaudited) | |||||||
Revenue: | ||||||||
Completion and production services | $ | 483,967 | $ | 715,493 | ||||
Drilling services | 60,100 | 110,503 | ||||||
Products | 31,012 | 27,452 | ||||||
Total revenues | $ | 575,079 | $ | 853,448 | ||||
EBITDA: (1) | ||||||||
Completion and production services | $ | 97,648 | $ | 214,300 | ||||
Drilling services | 10,456 | 27,728 | ||||||
Products | 4,635 | 6,822 | ||||||
Corporate and other | (18,544 | ) | (16,356 | ) | ||||
Total EBITDA | $ | 94,195 | $ | 232,494 | ||||
EBITDA as a % of Revenue: | ||||||||
Completion and production services | 20.2 | % | 30.0 | % | ||||
Drilling services | 17.4 | % | 25.1 | % | ||||
Products | 14.9 | % | 24.9 | % | ||||
Total | 16.4 | % | 27.2 | % |
(1) | EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. |
Footnote: The results 2008 exclude discontinued operations.
Complete Production Services, Inc.
Reconciliation of EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended June 30, 2009 and 2008, and March 31, 2009
And the Six Months Ended June 30, 2009 and 2008
(unaudited, in thousands)
Reconciliation of EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended June 30, 2009 and 2008, and March 31, 2009
And the Six Months Ended June 30, 2009 and 2008
(unaudited, in thousands)
Completion | ||||||||||||||||||||
& Production | Drilling | Corporate & | ||||||||||||||||||
Services | Services | Products | Other | Total | ||||||||||||||||
Quarter Ended June 30, 2009: | ||||||||||||||||||||
EBITDA | $ | 31,424 | $ | 3,569 | $ | 2,085 | $ | (8,578 | ) | $ | 28,500 | |||||||||
Depreciation & amortization | 44,723 | 5,488 | 624 | 567 | 51,402 | |||||||||||||||
Operating income (loss) | $ | (13,299 | ) | $ | (1,919 | ) | $ | 1,461 | $ | (9,145 | ) | $ | (22,902 | ) | ||||||
Quarter Ended June 30, 2008 (Revised): | ||||||||||||||||||||
EBITDA | $ | 105,199 | $ | 15,512 | $ | 3,532 | $ | (8,403 | ) | $ | 115,840 | |||||||||
Depreciation & amortization | 37,024 | 4,888 | 559 | 592 | 43,063 | |||||||||||||||
Operating income (loss) | $ | 68,175 | $ | 10,624 | $ | 2,973 | $ | (8,995 | ) | $ | 72,777 | |||||||||
Quarter Ended March 31, 2009: | ||||||||||||||||||||
EBITDA | $ | 66,224 | $ | 6,887 | $ | 2,551 | $ | (9,967 | ) | $ | 65,695 | |||||||||
Depreciation & amortization | 44,926 | 5,548 | 634 | 581 | 51,689 | |||||||||||||||
Operating income (loss) | $ | 21,298 | $ | 1,339 | $ | 1,917 | $ | (10,548 | ) | $ | 14,006 | |||||||||
Six Months Ended June 30, 2009: | ||||||||||||||||||||
EBITDA | $ | 97,648 | $ | 10,456 | $ | 4,635 | $ | (18,544 | ) | $ | 94,195 | |||||||||
Depreciation & amortization | 89,649 | 11,036 | 1,258 | 1,148 | 103,091 | |||||||||||||||
Operating income (loss) | $ | 7,999 | $ | (580 | ) | $ | 3,377 | $ | (19,692 | ) | $ | (8,896 | ) | |||||||
Six Months Ended June 30, 2008 (Revised): | ||||||||||||||||||||
EBITDA | $ | 214,300 | $ | 27,728 | $ | 6,822 | $ | (16,356 | ) | $ | 232,494 | |||||||||
Depreciation & amortization | 70,777 | 9,304 | 1,105 | 1,151 | 82,337 | |||||||||||||||
Operating income (loss) | $ | 143,523 | $ | 18,424 | $ | 5,717 | $ | (17,507 | ) | $ | 150,157 | |||||||||
Complete Production Services, Inc.
Reconciliation of Adjusted EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended June 30, 2009 and March 31, 2009
(unaudited, in thousands)
Reconciliation of Adjusted EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended June 30, 2009 and March 31, 2009
(unaudited, in thousands)
Completion | ||||||||||||||||||||
& Production | Drilling | Corporate & | ||||||||||||||||||
Services | Services | Products | Other | Total | ||||||||||||||||
Quarter Ended June 30, 2009: | ||||||||||||||||||||
Adjusted EBITDA | $ | 34,095 | $ | 3,569 | $ | 2,085 | $ | (8,578 | ) | $ | 31,171 | |||||||||
Fixed asset and inventory write-down | 2,671 | — | — | — | 2,671 | |||||||||||||||
EBITDA | 31,424 | 3,569 | 2,085 | (8,578 | ) | 28,500 | ||||||||||||||
Depreciation and amortization | 44,723 | 5,488 | 624 | 567 | 51,402 | |||||||||||||||
Operating income (loss) | $ | (13,299 | ) | $ | (1,919 | ) | $ | 1,461 | $ | (9,145 | ) | $ | (22,902 | ) | ||||||
Quarter Ended March 31, 2009: | ||||||||||||||||||||
Adjusted EBITDA | $ | 71,092 | $ | 6,887 | $ | 2,551 | $ | (9,967 | ) | $ | 70,563 | |||||||||
Loss on non-monetary asset exchange | 4,868 | — | — | — | 4,868 | |||||||||||||||
EBITDA | 66,224 | 6,887 | 2,551 | (9,967 | ) | 65,695 | ||||||||||||||
Depreciation and amortization | 44,926 | 5,548 | 634 | 581 | 51,689 | |||||||||||||||
Operating income (loss) | $ | 21,298 | $ | 1,339 | $ | 1,917 | $ | (10,548 | ) | $ | 14,006 | |||||||||