EXHIBIT 99.1
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Complete Production Services Reports
Second-Quarter Earnings Per Share of $0.39
Second-Quarter Earnings Per Share of $0.39
HOUSTON, July 27, 2006 (BUSINESS WIRE) — Complete Production Services, Inc. (NYSE: CPX) today reported second quarter 2006 net income of $27.2 million, or $0.39 per diluted share on revenue of $275.4 million compared to net income of $8.4 million or $0.17 per diluted share on revenue of $168.6 million for the second quarter of 2005. This represents a 224% increase in net income and a 63% increase in revenue over the same period in 2005.
Operating income of $51.4 million increased 114% year-over-year resulting in an operating profit margin of 18.7% as compared to 14.2% in the prior year quarter. Segment revenues increased on a year-over-year basis with Completion and Production services up 62% compared to the second quarter of 2005, Drilling Services up 78%, and Product Sales up 52% over the same period.
“Quarter two results reflect the impact of our growth strategy. Revenues, earnings and margins increased year-over-year due to higher demand for our services, improved pricing, our investment in capital equipment and selective acquisitions,” commented Joe Winkler, President and Chief Executive Officer. “As expected, our second quarter results were impacted by the typical seasonal decline in the Canadian market.”
The Company continued its investment program during the second quarter investing $73.5 million in capital equipment. In addition, the Company closed two acquisitions at and subsequent to quarter end for total consideration of approximately $31 million cash. These transactions will augment future growth, with one a rental and fishing company having a presence in the Fayetteville Shale, and the other a fluid handling operation in East Texas. “It is exciting to see our acquisition program result in two additions in the last 30 days and we expect to be able to announce more in the future,” added Mr. Winkler.
“Our outlook is positive as we see continued strong demand for our services. We expect to benefit from the various price initiatives implemented during the course of the year, our investment in capital equipment and our acquisition program. Year to date, we have spent $132.4 million on capital equipment, the full benefit of which will occur in the second half of 2006 and beyond. Based upon the demand for our services, we are increasing our 2006 capital equipment forecast by approximately $30.0 million to approximately $230.0 million,” said Mr. Winkler.
As a result of the recent initial public offering, the Company reduced total debt to approximately $441 million and ended the quarter with cash and cash investments of approximately $123 million.
Complete Production Services, Inc. provides completion, production and drilling services and products to the oil and gas industry in many of the most active basins throughout North America. We will hold our quarterly conference call to discuss second quarter 2006 results on Friday, July 28, 2006, at 9:00 a.m. Central Time. To participate in the live conference call, dial 866-362-4829 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 94880369. The conference call will be available for replay beginning at 12:00 p.m., July 28, 2006, and will be available until August 4, 2006. To access the conference call replay, please call 888-286-8010 and use the passcode: 63976543. 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. The forward-looking statements included herein 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. 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 our operating segments using a non-GAAP financial measure, EBITDA. EBITDA is calculated as net income before interest expense, taxes, depreciation and amortization and minority interest. EBITDA is not a substitute for GAAP measures of earnings and cash flow. EBITDA is used in this press release because our management considers it an important supplemental measure of performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
For more information, please contact:
Mike Mayer
Senior Vice President and Chief Financial Officer
281-372-2311
mmayer@completeproduction.com
Senior Vice President and Chief Financial Officer
281-372-2311
mmayer@completeproduction.com
Complete Production Services, Inc.
Consolidated Statements of Operations
For the Quarters and Six Months Ended June 30, 2006 and 2005
(in thousands)
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Revenue: | ||||||||||||||||
Services | $ | 234,420 | $ | 141,628 | $ | 469,539 | $ | 273,615 | ||||||||
Products | 41,006 | 27,011 | 81,623 | 56,275 | ||||||||||||
275,426 | 168,639 | 551,162 | 329,890 | |||||||||||||
Cost of services | 139,323 | 87,440 | 274,834 | 167,110 | ||||||||||||
Cost of products | 30,949 | 20,294 | 61,322 | 42,877 | ||||||||||||
General and administrative expense | 36,627 | 26,130 | 74,242 | 48,016 | ||||||||||||
Depreciation and amortization | 17,125 | 10,804 | 32,852 | 20,578 | ||||||||||||
224,024 | 144,668 | 443,250 | 278,581 | |||||||||||||
Operating income | 51,402 | 23,971 | 107,912 | 51,309 | ||||||||||||
Interest expense | 9,488 | 5,634 | 20,170 | 9,649 | ||||||||||||
Interest income | 1,015 | — | 1,022 | — | ||||||||||||
Income from continuing operations before minority interest and taxes | 42,929 | 18,337 | 88,764 | 41,660 | ||||||||||||
Minority interest, net of tax | (161 | ) | 3,354 | 144 | 6,566 | |||||||||||
Income before taxes | 43,090 | 14,983 | 88,620 | 35,094 | ||||||||||||
Tax provision | 15,936 | 6,607 | 33,353 | 14,963 | ||||||||||||
Net income | $ | 27,154 | $ | 8,376 | $ | 55,267 | $ | 20,131 | ||||||||
Earnings per share: | ||||||||||||||||
Basic earnings per share | $ | 0.40 | $ | 0.19 | $ | 0.90 | $ | 0.47 | ||||||||
Diluted earnings per share | $ | 0.39 | $ | 0.17 | $ | 0.86 | $ | 0.43 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 67,067 | 43,471 | 61,366 | 42,477 | ||||||||||||
Diluted | 69,065 | 48,378 | 63,953 | 47,126 |
Complete Production Services, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2006 and December 31, 2005
(in thousands)
June 30, | December 31, | |||||||
2006 | 2005 | |||||||
(unaudited) | (unaudited) | |||||||
Assets: | ||||||||
Current assets | $ | 395,610 | $ | 247,486 | ||||
Property, plant and equipment, net | 500,864 | 384,580 | ||||||
Goodwill | 346,684 | 298,297 | ||||||
Other long-term assets | 7,363 | 7,290 | ||||||
Total assets | 1,250,521 | 937,653 | ||||||
Liabilities and Stockholders’ Equity: | ||||||||
Current liabilities | 125,935 | 120,203 | ||||||
Long-term debt | 434,898 | 509,990 | ||||||
Long-term deferred tax liabilities | 59,682 | 54,334 | ||||||
Minority interest | 2,614 | 2,365 | ||||||
Total liabilities and minority interest | 623,129 | 686,892 | ||||||
Common stock | 698 | 555 | ||||||
Treasury stock | (202 | ) | (202 | ) | ||||
Additional paid-in capital | 535,242 | 220,786 | ||||||
Deferred compensation | — | (3,803 | ) | |||||
Retained earnings | 72,152 | 16,885 | ||||||
Cumulative translation adjustment | 19,502 | 16,540 | ||||||
Total stockholders’ equity | 627,392 | 250,761 | ||||||
Total liabilities and stockholders’ equity | $ | 1,250,521 | $ | 937,653 | ||||
Cash Flow Data
For the Six Months Ended June 30, 2006
(in thousands)
June 30, | ||||
2006 | ||||
(unaudited) | ||||
Cash flows provide by/(used for): | ||||
Operating activities | $ | 73,440 | ||
Investing activities: | ||||
Capital expenditures | $ | (132,423 | ) | |
Other investing activities | $ | (145,090 | ) | |
Financing activities | $ | 203,612 |
Complete Production Services, Inc.
Consolidated Segment Information
For the Quarters Ended June 30, 2006 and 2005, and March 31, 2006
and Six Months Ended June 30, 2006 and 2005
(in thousands)
Quarter Ended | ||||||||||||
June 30, | June 30, | March 31, | ||||||||||
2006 | 2005 | 2006 | ||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
Revenue: | ||||||||||||
Completion and production services | $ | 183,270 | $ | 112,866 | $ | 191,089 | ||||||
Drilling services | 51,150 | 28,762 | 44,030 | |||||||||
Products | 41,006 | 27,011 | 40,617 | |||||||||
Total revenues | $ | 275,426 | $ | 168,639 | $ | 275,736 | ||||||
EBITDA: (1) | ||||||||||||
Completion and production services | $ | 49,091 | $ | 23,739 | $ | 54,609 | ||||||
Drilling services | 18,236 | 8,647 | 16,020 | |||||||||
Products | 5,188 | 3,516 | 5,547 | |||||||||
Corporate and other | (3,988 | ) | (1,127 | ) | (3,932 | ) | ||||||
Total EBITDA | $ | 68,527 | $ | 34,775 | $ | 72,244 | ||||||
EBITDA as a % of Revenue: | ||||||||||||
Completion and production services | 26.8 | % | 21.0 | % | 28.6 | % | ||||||
Drilling services | 35.7 | % | 30.1 | % | 36.4 | % | ||||||
Products | 12.7 | % | 13.0 | % | 13.7 | % | ||||||
Total | 24.9 | % | 20.6 | % | 26.2 | % |
Six Months Ended June 30, | ||||||||
2006 | 2005 | |||||||
(unaudited) | (unaudited) | |||||||
Revenue: | ||||||||
Completion and production services | $ | 374,359 | $ | 218,259 | ||||
Drilling services | 95,180 | 55,356 | ||||||
Products | 81,623 | 56,275 | ||||||
Total revenues | $ | 551,162 | $ | 329,890 | ||||
EBITDA: (1) | ||||||||
Completion and production services | $ | 103,701 | $ | 49,848 | ||||
Drilling services | 34,256 | 16,519 | ||||||
Products | 10,734 | 7,453 | ||||||
Corporate and other | (7,927 | ) | (1,933 | ) | ||||
Total EBITDA | $ | 140,764 | $ | 71,887 | ||||
EBITDA as a % of Revenue: | ||||||||
Completion and production services | 27.7 | % | 22.8 | % | ||||
Drilling services | 36.0 | % | 29.8 | % | ||||
Products | 13.2 | % | 13.2 | % | ||||
Total | 25.5 | % | 21.8 | % |
(1) | EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. |
Complete Production Services, Inc.
Reconciliation of EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended June 30, 2006 and 2005 and March 31, 2006
and the Six Months Ended June 30, 2006 and 2005
(unaudited, in thousands)
Completion | ||||||||||||||||||||
& Production | Drilling | Corporate & | ||||||||||||||||||
Services | Services | Products | Other | Total | ||||||||||||||||
Quarter Ended June 30, 2006: | ||||||||||||||||||||
EBITDA | $ | 49,091 | $ | 18,236 | $ | 5,188 | $ | (3,988 | ) | $ | 68,527 | |||||||||
Depreciation & amortization | 14,001 | 2,284 | 575 | 265 | 17,125 | |||||||||||||||
Operating Income (loss) | $ | 35,090 | $ | 15,952 | $ | 4,613 | $ | (4,253 | ) | $ | 51,402 | |||||||||
Quarter Ended June 30, 2005: | ||||||||||||||||||||
EBITDA | $ | 23,739 | $ | 8,647 | $ | 3,516 | $ | (1,127 | ) | $ | 34,775 | |||||||||
Depreciation & amortization | 8,634 | 1,322 | 369 | 479 | 10,804 | |||||||||||||||
Operating Income (loss) | $ | 15,105 | $ | 7,325 | $ | 3,147 | $ | (1,606 | ) | $ | 23,971 | |||||||||
Quarter Ended March 31, 2006: | ||||||||||||||||||||
EBITDA | $ | 54,609 | $ | 16,020 | $ | 5,547 | $ | (3,932 | ) | $ | 72,244 | |||||||||
Depreciation & amortization | 12,932 | 2,018 | 503 | 274 | 15,727 | |||||||||||||||
Operating Income (loss) | $ | 41,677 | $ | 14,002 | $ | 5,044 | $ | (4,206 | ) | $ | 56,517 | |||||||||
Six Months Ended June 30, 2006: | ||||||||||||||||||||
EBITDA | $ | 103,701 | $ | 34,256 | $ | 10,734 | $ | (7,927 | ) | $ | 140,764 | |||||||||
Depreciation & amortization | 26,835 | 4,302 | 1,078 | 637 | 32,852 | |||||||||||||||
Operating Income (loss) | $ | 76,866 | $ | 29,954 | $ | 9,656 | $ | (8,564 | ) | $ | 107,912 | |||||||||
Six Months Ended June 30, 2005: | ||||||||||||||||||||
EBITDA | $ | 49,848 | $ | 16,519 | $ | 7,453 | $ | (1,933 | ) | $ | 71,887 | |||||||||
Depreciation & amortization | 16,750 | 2,537 | 745 | 546 | 20,578 | |||||||||||||||
Operating Income (loss) | $ | 33,098 | $ | 13,982 | $ | 6,708 | $ | (2,479 | ) | $ | 51,309 | |||||||||