EXHIBIT 99.1
DRESSER-RAND REPORTS STRONG FOURTH QUARTER AND YEAR 2005 RESULTS
- For the fourth quarter 2005:
- EPS grew to $0.38 from $0.15 for the third quarter 2005
- Operating income increased 42% from third quarter 2005 to
$51 million
- For the year 2005:
- EPS was $0.56
- Total operating income was $116 million
- Bookings increased 29% to $1,446 million and our backlog increased
39% to $885 million
- Total debt was reduced $225 million
Except for revenues and bookings, 2005 results are not comparable to 2004
because of the application of purchase accounting to the acquisition of
Dresser-Rand on October 29, 2004 by First Reserve Corporation.
HOUSTON, April 5 /PRNewswire-FirstCall/ -- Dresser-Rand Group Inc.
("Dresser-Rand" or the "Company") (NYSE: DRC), a global supplier of rotating
equipment, reported net income of $32.0 million, or $0.38 per diluted share, for
the fourth quarter 2005. This compares to net income of $10.4 million, or $0.15
per diluted share for the third quarter 2005.
Vincent R. Volpe, Jr., President and Chief Executive Officer of Dresser-
Rand, said, "2005 was a year of significant accomplishments for Dresser-Rand. In
addition to our strong operating results, we made significant progress during
the year completing our initial public offering, acquiring certain assets of
Tuthill Energy Systems ("TES") and paying down debt. We entered 2006 with a
record backlog and we believe we're well-positioned to benefit from the
continued strength in the markets we serve".
Revenues for the fourth quarter 2005 of $362.0 million were 17% higher than
the third quarter. Total operating income increased to $50.8 million for the
fourth quarter 2005 compared to $35.8 million for the third quarter. Fourth
quarter 2005 operating income improved from the prior quarter due to operating
productivity, volume leverage and improved pricing. Our fourth quarter 2005 net
income was reduced by a $1.9 million inventory write-off at our Brazilian
subsidiary, which reduced our earnings by about $0.02 per share. Additionally,
our fourth quarter 2005 provision for income taxes of $4.9 million was
substantially lower than the U.S. Federal statutory rate of 35 percent. This
occurred principally because our income exclusion available for export sales
from the U.S. was significantly larger than previously estimated.
Revenues for the year 2005 of $1,208.2 million compare to revenues for the
year 2004 of $915.4 million, an increase of approximately 32%. Operating income
for the year 2005 was $116.1 million. Bookings for the year were $1,446.2
million and the backlog at the end of December 2005 was $884.7 million, 39%
higher than the year ago level.
New Units
Revenues in the new units segment of $177.6 million for the fourth quarter
2005 increased $15.0 million from the third quarter 2005 and $88.9 million from
the same period in 2004. For the year 2005, revenues of $576.6 million increased
$231.3 million or 67% compared to revenues for the year 2004. Continued strength
in worldwide demand for rotating equipment was the principal reason for the
increase in revenue.
Segment operating income was $16.1 million for the fourth quarter 2005
compared to $8.3 million for the third quarter 2005 and $1.1 million for the
fourth quarter 2004. Operating margins improved to approximately 9.1% from 5.1%
for the third quarter 2005 and 1.2% for the fourth quarter 2004. This increase
is attributable to ongoing improvements in operating productivity, volume
leverage and pricing.
Bookings for the three months ended December 31, 2005, were $213.6 million,
40% higher than the bookings for the same period in 2004. Bookings for the
full-year 2005 of $771.9 million are 44% ahead of the same period a year ago.
The backlog at December 31, 2005, was $688.1 million, or 41% above the $489.3
million backlog at December 31, 2004. This increase is due to continuing strong
worldwide demand for rotating equipment and the acquisition of certain assets
of TES.
Aftermarket Parts and Services
Revenues in the aftermarket segment of $184.4 million for the fourth quarter
2005 increased by $37.2 million compared to the third quarter 2005 and $15.2
million compared to the same period in 2004 primarily from higher parts and
repair sales. For the year 2005, revenues of $631.6 million increased $61.5
million or 11% compared to revenues for the year 2004.
Segment operating income was $48.2 million for the fourth quarter 2005
compared to $38.4 million for the third quarter 2005 and $42.8 million for the
fourth quarter 2004. This increase is attributable to higher volume at sustained
margin levels of approximately 26%.
Bookings for the three months ended December 31, 2005 were $196.6 million,
32% above bookings for the same period in 2004. Bookings for the full-year 2005
of $674.3 million are 16% ahead of the same period a year ago. Backlog at
December 31, 2005, was $196.6 million, or 33% above the $148.3 million backlog
at December 31, 2004.
Liquidity and Capital Resources
As of December 31, 2005, we had a cash balance of $98 million and the
ability to borrow $169 million under the $350 million revolving credit portion
of the senior credit facility, as $181 million was used for outstanding letters
of credit.
In 2005, cash provided by operating activities was $212.4 million, up from
$75.1 million for the combined periods in 2004. As a result of strong cash
flows, we funded capital expenditures of $15.5 million, approximately 1.3% of
revenues, and reduced our total debt by $225.2 million and funded the $54.6
million acquisition of TES. As of December 31, 2005, our total debt, net of cash
and equivalents was $500.2 million. We anticipate that during 2006 our
operations will again generate strong cash flows in excess of our capital
spending needs.
In the first quarter of 2006, the Company further reduced its debt by $50
million. As a result, annual interest expense will be reduced by approximately
$2.8 million. The Company will also incur a non-cash charge in the first quarter
2006 relating to the write-off of unamortized debt issuance costs of
approximately $1.1 million. The Company plans to further reduce debt this year.
On March 24, 2006, the Company filed with the Securities and Exchange
Commission Amendment No. 2 to the Registration Statement on Form S-4, and this
Registration Statement became effective on March 27, 2006. Under this
Registration Statement, the Company will exchange all of its outstanding 7-3/8%
Senior Subordinated Notes (the "Notes") for an equal principal amount of
exchange notes that are freely tradable. Once the exchange offer is complete,
the Company will cease paying penalty interest of 0.75% on the Notes.
Outlook
Worldwide markets for oil and gas products continue to be strong. Demand for
our products and services remain at historically high levels and many of our
major clients have announced higher capital expenditure budgets for 2006. We
believe our financial performance will improve this year.
Conference Call
The Company will discuss its fourth quarter and year 2005 results at its
conference call on Thursday, April 6, 2006. A webcast presentation will be
accessible live at 9:30 AM Eastern Time. You may access the live presentation at
http://www.dresser-rand.com. Participants may also join the conference call by
dialing (800) 289-0730 in the U.S. and (913) 981-5509 from outside the U.S. five
to ten minutes prior to the scheduled start time.
A replay of the webcast will be available from 12:00 PM Eastern Time on
April 6, 2006 through 11:59 PM Eastern Time on April 21, 2006. You may access
the webcast replay at http://www.dresser-rand.com. A replay of the conference
can be accessed by dialing (888) 203-1112 in the U.S. and (719) 457-0820 from
outside the U.S. The replay pass code is 5959499.
Dresser-Rand Group Inc. was formed October 29, 2004. The acquisition was
accounted for under the purchase method of accounting. As a result, there are
substantial differences in the accounting caused by the application of purchase
accounting to the acquisition of D-RG by First Reserve Corporation. Accordingly,
Predecessor and Successor Company results are not comparable because of purchase
accounting adjustments, except for revenues and bookings. Accordingly, 2005 and
2004 fourth quarter operating income figures are not comparable. For more
information, refer to Dresser-Rand's Form 10-K filed with the Securities and
Exchange Commission on April 5, 2006.
Dresser-Rand is among the largest suppliers of rotating equipment solutions
to the worldwide oil, gas, petrochemical, and process industries. The Company
operates manufacturing facilities in the United States, France, Germany, Norway,
India, and Brazil, and maintains a network of 24 service and support centers
covering 140 countries.
This news release may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements other
than statements of historical facts may be forward-looking statements. Many
risks and uncertainties may impact the matters addressed in the forward-looking
statements, and actual results may differ materially from those expressed or
implied. For a discussion of the factors that could cause actual results to
differ, please see the disclosure under the heading "Risk Factors" in the
Company's periodic reports on Form 10-K and Form 10-Q, and Forms S-1 and S-4,
filed with the Securities and Exchange Commission in March and April 2006.
For information about Dresser-Rand, go to our website at
http://www.dresser-rand.com.
Dresser-Rand Group Inc.
Consolidated Statement of Operations - Successor and Predecessor
($ and shares in thousands, except per share amounts)
Successor Predecessor
---------------------------- ------------
Period Period
from from
October 30 January 1
Year Ended through through
December 31, December 31, October 29,
2005 2004 2004
------------ ------------ ------------
Total revenues $ 1,208,203 $ 199,907 $ 715,495
Cost of goods sold 920,964 149,564 538,042
Gross profit 287,239 50,343 177,453
Selling and administrative expenses 164,055 21,499 122,700
Research and development expenses 7,058 2,840 5,670
Operating income 116,126 26,004 49,083
Interest income (expense), net (57,037) (9,654) 3,156
Early redemption premium on debt (3,688) -- --
Other income (expense), net (2,847) (1,846) 1,882
Income before income taxes 52,554 14,504 54,121
Provision for income taxes 15,459 7,275 11,970
Net income $ 37,095 $ 7,229 $ 42,151
Net income per share:
basic and diluted $ 0.56 $ 0.16
Shares used to compute EPS 66,547 53,793
Segment Data:
Revenues
New units $ 576,612 $ 77,607 $ 267,691
Aftermarket parts and services 631,591 122,300 447,804
Total revenues $ 1,208,203 $ 199,907 $ 715,495
Gross profit
New units $ 70,866 $ 9,802 $ 32,253
Aftermarket parts and services 216,373 40,541 145,200
Total gross profit $ 287,239 $ 50,343 $ 177,453
Operating income
New units $ 20,847 $ 3,567 $ (464)
Aftermarket parts and services 141,374 30,571 85,039
Unallocated corporate expense (46,095) (8,134) (35,492)
Total operating income $ 116,126 $ 26,004 $ 49,083
Bookings
New units $ 771,894 $ 121,107 $ 415,763
Aftermarket parts and services 674,287 96,891 485,455
Total bookings $ 1,446,181 $ 217,998 $ 901,218
Backlog - ending
New units $ 688,095 $ 489,284 $ 439,734
Aftermarket parts and services 196,567 148,287 173,701
Total backlog $ 884,662 $ 637,571 $ 613,435
Dresser-Rand Group Inc.
Consolidated Statement of Operations - Successor and Predecessor
($ and shares in thousands, except per share amounts)
Successor Predecessor
------------ ----------------------------
Period Period
Three from from
months October 30 October 1
ended through through
December 31, December 31, October 29,
2005 2004 2004
------------ ------------ ------------
Total revenues $ 361,966 $ 199,907 $ 58,001
Cost of goods sold 263,119 149,564 38,834
Gross profit 98,847 50,343 19,167
Selling and administrative expenses 45,724 21,499 12,207
Research and development expenses 2,313 2,840 975
Operating income 50,810 26,004 5,985
Interest income (expense), net (12,418) (9,654) 850
Early redemption premium on debt -- -- --
Other income (expense), net (1,289) (1,846) 4,636
Income before income taxes 37,103 14,504 11,471
Provision for income taxes 4,899 7,275 7,052
Net income $ 32,204 $ 7,229 $ 4,419
Net income per share:
basic and diluted $ 0.38 $ 0.16
Shares used to compute EPS 85,445 53,793
Segment Data:
Revenues
New units $ 177,568 $ 77,607 $ 11,101
Aftermarket parts and services 184,398 122,300 46,900
Total revenues $ 361,966 $ 199,907 $ 58,001
Gross profit
New units $ 30,501 $ 9,802 $ 565
Aftermarket parts and services 68,348 40,541 18,602
Total gross profit $ 98,847 $ 50,343 $ 19,167
Operating income
New units $ 16,134 $ 3,567 $ (2,472)
Aftermarket parts and services 48,177 30,571 12,182
Unallocated corporate expense (13,501) (8,134) (3,725)
Total operating income $ 50,810 $ 26,004 $ 5,985
Bookings
New units $ 213,564 $ 121,107 $ 31,261
Aftermarket parts and services 196,600 96,891 51,788
Total bookings $ 410,164 $ 217,998 $ 83,049
Backlog - ending
New units $ 688,095 $ 489,284 $ 439,734
Aftermarket parts and services 196,567 148,287 173,701
Total backlog $ 884,662 $ 637,571 $ 613,435
Dresser-Rand Group Inc.
Consolidated Balance Sheet (Successor)
December 31, December 31,
(In thousands of dollars except for shares) 2005 2004
- --------------------------------------------- ------------ ------------
Assets
Current assets
Cash and cash equivalents $ 98,036 $ 111,500
Accounts receivable, less allowance
for doubtful accounts of $8,649 and
$14,569 at 2005 and 2004 268,831 265,479
Inventories, net 145,762 175,873
Prepaid expenses 25,887 14,256
Deferred income taxes, net 10,899 7,445
Total current assets 549,415 574,553
Investments in and advances to
partially owned equity companies -- 12,448
Property, plant and equipment, net 228,671 226,764
Goodwill 393,300 423,330
Intangible assets, net 460,919 479,587
Other assets 25,566 34,392
Total assets $ 1,657,871 $ 1,751,074
Liabilities and Stockholders'
Equity/Partnership Interest
Current liabilities
Accounts payable and accruals $ 303,430 $ 271,275
Customer advance payments 84,695 38,661
Accrued income taxes payable 4,988 12,977
Loans payable 67 2,734
Current maturities of long-term debt -- 4,015
Total current liabilities 393,180 329,662
Deferred income taxes 22,586 27,287
Postemployment and other employee
benefit liabilities 113,861 111,640
Long-term debt 598,137 816,664
Other noncurrent liabilities 15,447 12,924
Total liabilities 1,143,211 1,298,177
Commitments and contingencies
(Notes 12 and 13 through 20)
Stockolders' Equity
Common stock, $0.01 par value,
250,000,000 and 101,200,000 shares
authorized, 85,476,283 and
53,838,816 shares issued and
outstanding, respectively 855 542
Additional paid-in capital 493,163 436,642
Retained earnings 44,324 7,229
Accumulated other comprehensive
income (loss) (23,682) 8,484
Total stockholders' equity 514,660 452,897
Total liabilities and
stockholders' equity $ 1,657,871 $ 1,751,074
Dresser-Rand Group Inc.
Consolidated Statement of Operations - Successor and Predecessor
($ and shares in thousands, except per share amounts)
Successor Predecessor
---------------------------- ----------------------------
Period Period
from from
Year October 30 January 1 Year
Ended through through Ended
December 31, December 31, October 29, December 31,
(In thousands of dollars) 2005 2004 2004 2003
- ------------------------------ ------------ ------------ ------------ ------------
Cash flows from operating
activities
Net income $ 37,095 $ 7,229 $ 42,151 $ 20,365
Adjustments to arrive at
net cash provided by
operating activities:
Depreciation and
amortization 61,435 16,269 22,715 29,109
(Gain) loss on sale of
property, plant and
equipment (10) -- (1,031) (31)
Amortization of debt
financing costs 9,545 738 -- --
Employee stock
compensation 4,076 75 -- --
Provision for losses on
inventory 920 1,780 6,953 5,581
Write off of purchased in -
process research and
development assets -- 1,800 -- --
Minority interest, net of
dividends (513) 51 (1,247) (110)
Equity in undistributed
(earnings) losses 325 (194) 1,013 (1,150)
Deferred income taxes (2,199) (974) 633 (4,901)
Working capital and other 1,989 377 -- --
Accounts receivable (183) (30,050) 54,213 (12,323)
Inventories 28,682 600 (37,818) 127,410
Accounts payable 20,310 4,664 (12,976) (36,835)
Customer advances 49,904 8,461 11,048 (82,097)
Other 1,046 6,590 (27,925) 5,945
Net cash provided by
operating activities 212,422 17,416 57,729 50,963
Cash flows from investing
activities
Capital expenditures (15,534) (1,791) (7,701) (7,590)
Acquisitions (54,970) (1,125,148) -- --
Proceeds from entity
investment dispositons 10,000 -- -- --
Proceeds from sales of
property, plant and
equipment 1,021 -- 1,757 560
(Increase) decrease in
marketable securities -- -- 1,037 (59)
Net cash provided by
(used in) investing
activities (59,483) (1,126,939) (4,907) (7,089)
Cash flows from financing
activities
Proceeds from short-term
borrowings -- -- -- 462
Payments of short-term
borrowings (1,627) -- (993) --
Proceeds from long-term
debt -- 815,033 43 --
Cash paid for debt issuance
costs -- (33,498) -- --
Proceeds from revolver -- 5,000 -- --
Payments of revolver -- (5,000) -- --
Payments of long-term
debt (211,162) (1,013) (65) (520)
Issuance of common stock 1,419 437,109 -- --
Change in due to (from)
unconsolidated affiliates -- -- (45,918) (63,429)
Proceeds from Initial
Public Offering 608,925 -- -- --
Dividends paid (557,686) -- (5,097) --
Net cash provided by
(used in) financing
activities (160,131) 1,217,631 (52,030) (63,487)
Effect of exchange rate
changes on cash and cash
equivalents (6,272) 3,392 1,930 1,531
Net increase (decrease) in
cash and cash equivalents (13,464) 111,500 2,722 (18,082)
Cash and cash equivalents,
beginning of the period 111,500 -- 41,537 59,619
Cash and cash equivalents,
end of period $ 98,036 $ 111,500 $ 44,259 $ 41,537
SOURCE Dresser-Rand Group Inc.
-0- 04/05/2006
/CONTACT: Blaise Derrico, Director Investor Relations, Dresser-Rand Group
Inc., +1-716-375-3152/
/Web site: http://www.dresser-rand.com /
(DRC)