EXHIBIT 99.1
Complete Production Services Reports
Third Quarter Earnings Per Share of $0.55
Third Quarter Earnings Per Share of $0.55
HOUSTON, November 1, 2006 (BUSINESS WIRE) — Complete Production Services, Inc. (NYSE: CPX) today reported record revenue, net income and earnings per diluted share from continuing operations for the quarter ended September 30, 2006. Revenue for the quarter increased 72% to $322.0 million compared to $187.1 million in the third quarter of 2005. Net income from continuing operations for the quarter was $39.7 million, or $0.55 per diluted share, up 128% and 62%, respectively, compared to quarter three of 2005.
Operating income for the quarter increased to $72.2 million, representing an operating profit margin of 22.4%. This compares to $28.7 million and 15.4% in the prior year. This growth and improved performance was spread across all business segments, with every segment delivering higher revenues and operating income on both a year over year and sequential quarter basis.
For the first nine months of 2006, revenue from continuing operations was $848.9 million, up 70% over the prior year, while net income from continuing operations was $93.2 million, up 158% compared to the prior year. Year-to-date earnings per diluted share from continuing operations was $1.40 per share versus $0.74 per share for the same period in 2005. Subsequent to quarter end, the Company sold its manufacturing, fabrication and unrelated production enhancement business in Canada which is being treated as discontinued operations effective September 30, 2006. All applicable periods shown in this release have been adjusted to reflect this treatment of the discontinued operation.
The increase in revenue and profits is the result of the successful execution of the organic growth initiatives implemented starting in late 2005, a robust market, improved operating efficiencies and higher pricing in most of our service offerings, as well as an active acquisition program. During the first nine months of 2006, we invested in excess of $160 million in growth capital which has been deployed in the major basins where Complete operates. “The benefits of our investment in growth capital is evident in our operating results for the third quarter,” commented Joe Winkler, President and Chief Executive Officer of Complete. “Almost three-fourths of our 72% revenue growth in the quarter was from organic initiatives, our operating profit increased more than two and one-half times and operating income margins improved to 22.4%.”
Earnings before interest, taxes, depreciation and amortization (EBITDA, as defined below) totaled $93.2 million for the current quarter, up 144% compared to
the third quarter of 2005. As a percent of revenue, EBITDA was 29% in the current quarter, 20% in the third quarter of 2005, and 26% in the second quarter of 2006. EBITDA increased in each of our operating segments on a year-over-year basis and a sequential basis. “The outlook for the remainder of 2006 is solid and we expect market conditions to permit us to finish the year strong. Although there may be some concern over the supply of and price of natural gas in North America, we believe the underlying fundamentals are sound. Our strategy of being well positioned in the resource plays will allow us to continue to execute our strategic plans and to earn the benefits of our investments in growth capital and acquisitions,” added Mr. Winkler.
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 Wednesday, November 1, 2006 at 11:00 a.m. Central Time. To participate in the live conference call, dial 866-356-4281 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 24861675. The conference call will be available for replay beginning at 2:00 p.m., November 1, 2006, and will be available until November 8, 2006. To access the conference call replay, please call 888-286-8010 and use the passcode: 95539038. 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 from continuing operations before net 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 Nine Months Ended September 30, 2006 and 2005
(in thousands, except per share data)
Consolidated Statements of Operations
For the Quarters and Nine Months Ended September 30, 2006 and 2005
(in thousands, except per share data)
| Quarter Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Revenue: | ||||||||||||||||
| Services | $ | 287,991 | $ | 166,555 | $ | 757,530 | $ | 440,170 | ||||||||
| Products | 34,043 | 20,594 | 91,386 | 58,455 | ||||||||||||
| 322,034 | 187,149 | 848,916 | 498,625 | |||||||||||||
| Cost of services | 160,695 | 104,659 | 435,529 | 271,769 | ||||||||||||
| Cost of products | 25,213 | 14,696 | 67,038 | 42,376 | ||||||||||||
| General and administrative expense | 42,887 | 26,784 | 115,085 | 73,511 | ||||||||||||
| Depreciation and amortization | 21,005 | 12,282 | 53,611 | 32,673 | ||||||||||||
| 249,800 | 158,421 | 671,263 | 420,329 | |||||||||||||
| Operating income | 72,234 | 28,728 | 177,653 | 78,296 | ||||||||||||
| Interest expense | 9,142 | 5,968 | 29,312 | 15,616 | ||||||||||||
| Interest income | (256 | ) | — | (1,278 | ) | — | ||||||||||
| Write-off of deferred financing costs | — | 2,844 | — | 2,844 | ||||||||||||
| Income from continuing operations before minority interest and taxes | 63,348 | 19,916 | 149,619 | 59,836 | ||||||||||||
| Minority interest, net of tax | (121 | ) | (6,186 | ) | 23 | 380 | ||||||||||
| Income from continuing operations before taxes | 63,469 | 26,102 | 149,596 | 59,456 | ||||||||||||
| Tax provision | 23,800 | 8,714 | 56,411 | 23,408 | ||||||||||||
| Income from continuing operations | 39,669 | 17,388 | 93,185 | 36,048 | ||||||||||||
| Income from discontinued operations (net of tax) | 570 | 393 | 2,321 | 1,864 | ||||||||||||
| Net income | $ | 40,239 | $ | 17,781 | $ | 95,506 | $ | 37,912 | ||||||||
Basic earnings per share: | ||||||||||||||||
| Continuing Operations | $ | 0.57 | $ | 0.38 | $ | 1.45 | $ | 0.83 | ||||||||
| Discontinued Operations | $ | 0.01 | $ | 0.01 | $ | 0.04 | $ | 0.04 | ||||||||
| $ | 0.58 | $ | 0.39 | $ | 1.49 | $ | 0.87 | |||||||||
Diluted earnings per share: | ||||||||||||||||
| Continuing Operations | $ | 0.55 | $ | 0.34 | $ | 1.40 | $ | 0.74 | ||||||||
| Discontinued Operations | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.04 | ||||||||
| $ | 0.56 | $ | 0.35 | $ | 1.43 | $ | 0.78 | |||||||||
Weighted average shares outstanding: | ||||||||||||||||
| Basic | 69,816 | 45,961 | 64,216 | 43,651 | ||||||||||||
| Diluted | 71,738 | 50,896 | 66,587 | 48,397 | ||||||||||||
Complete Production Services, Inc.
Condensed Consolidated Balance Sheets
As of September 30, 2006 and December 31, 2005
(in thousands)
Condensed Consolidated Balance Sheets
As of September 30, 2006 and December 31, 2005
(in thousands)
| September 30, | December 31, | |||||||
| 2006 | 2005 | |||||||
| (unaudited) | (unaudited) | |||||||
| Assets: | ||||||||
| Current assets | $ | 318,256 | $ | 228,818 | ||||
| Property, plant and equipment, net | 641,880 | 383,707 | ||||||
| Goodwill | 387,092 | 295,195 | ||||||
| Other long-term assets | 9,524 | 6,558 | ||||||
| Discontinued operations | 25,479 | 23,375 | ||||||
| Total assets | 1,382,231 | 937,653 | ||||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Current liabilities | 139,880 | 114,753 | ||||||
| Long-term debt | 502,380 | 509,981 | ||||||
| Long-term deferred tax liabilities | 62,947 | 54,084 | ||||||
| Minority interest | 2,507 | 2,365 | ||||||
| Discontinued operations | 5,191 | 5,709 | ||||||
| Total liabilities and minority interest | 712,905 | 686,892 | ||||||
| Common stock | 698 | 555 | ||||||
| Treasury stock | (202 | ) | (202 | ) | ||||
| Additional paid-in capital | 536,518 | 220,786 | ||||||
| Deferred compensation | — | (3,803 | ) | |||||
| Retained earnings | 112,391 | 16,885 | ||||||
| Cumulative translation adjustment | 19,921 | 16,540 | ||||||
| Total stockholders’ equity | 669,326 | 250,761 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,382,231 | $ | 937,653 | ||||
Cash Flow Data
For the Nine Months Ended September 30, 2006
(in thousands)
For the Nine Months Ended September 30, 2006
(in thousands)
| September 30, | ||||
| 2006 | ||||
| (unaudited) | ||||
| Cash flows provide by/(used for): | ||||
| Operating activities | $ | 107,812 | ||
| Investing activities: | ||||
| Capital expenditures | $ | (215,204 | ) | |
| Other investing activities | $ | (165,323 | ) | |
| Financing activities | $ | 271,609 | ||
Complete Production Services, Inc.
Consolidated Segment Information
For the Quarters Ended September 30, 2006 and 2005 and June 30, 2006
and Nine Months Ended September 30, 2006 and 2005
(in thousands)
Consolidated Segment Information
For the Quarters Ended September 30, 2006 and 2005 and June 30, 2006
and Nine Months Ended September 30, 2006 and 2005
(in thousands)
| Quarter Ended | ||||||||||||
| September 30, | September 30, | June 30, | ||||||||||
| 2006 | 2005 | 2006 | ||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||
| Revenue: | ||||||||||||
| Completion and production services | $ | 230,093 | $ | 132,895 | $ | 183,270 | ||||||
| Drilling services | 57,898 | 33,660 | 51,150 | |||||||||
| Products | 34,043 | 20,594 | 30,116 | |||||||||
| Total revenues | $ | 322,034 | $ | 187,149 | $ | 264,536 | ||||||
| EBITDA: (1) | ||||||||||||
| Completion and production services | $ | 73,003 | $ | 29,711 | $ | 49,291 | ||||||
| Drilling services | 21,110 | 10,980 | 18,236 | |||||||||
| Products | 4,677 | 2,945 | 3,988 | |||||||||
| Corporate and other | (5,551 | ) | (5,470 | ) | (3,996 | ) | ||||||
| Total EBITDA | $ | 93,239 | $ | 38,166 | $ | 67,519 | ||||||
| EBITDA as a % of Revenue: | ||||||||||||
| Completion and production services | 31.7 | % | 22.4 | % | 26.9 | % | ||||||
| Drilling services | 36.5 | % | 32.6 | % | 35.7 | % | ||||||
| Products | 13.7 | % | 14.3 | % | 13.2 | % | ||||||
| Total | 29.0 | % | 20.4 | % | 25.5 | % | ||||||
| Nine Months Ended September 30, | ||||||||
| 2006 | 2005 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue: | ||||||||
| Completion and production services | $ | 604,452 | $ | 351,154 | ||||
| Drilling services | 153,078 | 89,016 | ||||||
| Products | 91,386 | 58,455 | ||||||
| Total revenues | $ | 848,916 | $ | 498,625 | ||||
| EBITDA: (1) | ||||||||
| Completion and production services | $ | 176,904 | $ | 79,558 | ||||
| Drilling services | 55,367 | 27,499 | ||||||
| Products | 12,471 | 8,471 | ||||||
| Corporate and other | (13,478 | ) | (7,403 | ) | ||||
| Total EBITDA | $ | 231,264 | $ | 108,125 | ||||
| EBITDA as a % of Revenue: | ||||||||
| Completion and production services | 29.3 | % | 22.7 | % | ||||
| Drilling services | 36.2 | % | 30.9 | % | ||||
| Products | 13.6 | % | 14.5 | % | ||||
| Total | 27.2 | % | 21.7 | % | ||||
| (1) | EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. |
Footnote: The results for all periods exclude discontinued operations.
Complete Production Services, Inc.
Reconciliation of EBITDA to the most Comparable GAAP Measure
For the Quarters Ended September 30, 2006 and 2005 and June 30, 2006
and the Nine Months Ended September 30, 2006 and 2005
(unaudited, in thousands)
Reconciliation of EBITDA to the most Comparable GAAP Measure
For the Quarters Ended September 30, 2006 and 2005 and June 30, 2006
and the Nine Months Ended September 30, 2006 and 2005
(unaudited, in thousands)
| Completion | ||||||||||||||||||||
| & Production | Drilling | Corporate & | ||||||||||||||||||
| Services | Services | Products | Other | Total | ||||||||||||||||
Quarter Ended September 30, 2006: | ||||||||||||||||||||
| EBITDA | $ | 73,003 | $ | 21,110 | $ | 4,677 | $ | (5,551 | ) | $ | 93,239 | |||||||||
| Depreciation & amortization | 16,895 | 2,858 | 574 | 678 | 21,005 | |||||||||||||||
| Operating Income (loss) | $ | 56,108 | $ | 18,252 | $ | 4,103 | $ | (6,229 | ) | $ | 72,234 | |||||||||
Quarter Ended September 30, 2005: | ||||||||||||||||||||
| EBITDA | $ | 29,711 | $ | 10,980 | $ | 2,945 | $ | (5,470 | ) | $ | 38,166 | |||||||||
| Depreciation & amortization | 10,350 | 1,431 | 417 | 84 | 12,282 | |||||||||||||||
| Write-off of deferred financing costs | — | — | — | (2,844 | ) | (2,844 | ) | |||||||||||||
| Operating Income (loss) | $ | 19,361 | $ | 9,549 | $ | 2,528 | $ | (2,710 | ) | $ | 28,728 | |||||||||
Quarter Ended June 30, 2006: | ||||||||||||||||||||
| EBITDA | $ | 49,291 | $ | 18,236 | $ | 3,988 | $ | (3,996 | ) | $ | 67,519 | |||||||||
| Depreciation & amortization | 14,001 | 2,284 | 449 | 265 | 16,999 | |||||||||||||||
| Operating Income (loss) | $ | 35,290 | $ | 15,952 | $ | 3,539 | $ | (4,261 | ) | $ | 50,520 | |||||||||
Nine Months Ended September 30, 2006: | ||||||||||||||||||||
| EBITDA | $ | 176,904 | $ | 55,367 | $ | 12,471 | $ | (13,478 | ) | $ | 231,264 | |||||||||
| Depreciation & amortization | 43,730 | 7,160 | 1,406 | 1,315 | 53,611 | |||||||||||||||
| Operating Income (loss) | $ | 133,174 | $ | 48,207 | $ | 11,065 | $ | (14,793 | ) | $ | 177,653 | |||||||||
Nine Months Ended September 30, 2005: | ||||||||||||||||||||
| EBITDA | $ | 79,558 | $ | 27,499 | $ | 8,471 | $ | (7,403 | ) | $ | 108,125 | |||||||||
| Depreciation & amortization | 27,100 | 3,968 | 975 | 630 | 32,673 | |||||||||||||||
| Write-off of deferred financing costs | — | — | — | (2,844 | ) | (2,844 | ) | |||||||||||||
| Operating Income (loss) | $ | 52,458 | $ | 23,531 | $ | 7,496 | $ | (5,189 | ) | $ | 78,296 | |||||||||