HOUSTON, Jan. 25 /PRNewswire-FirstCall/ -- BJ Services Company (NYSE:
BJS; PCX; CBOE) today reported net income of $207.1 million for the first
fiscal quarter ended December 31, 2006, or $0.70 per diluted share. The
quarter's diluted earnings per share improved 46% compared to the $0.48 per
diluted share for the first quarter of fiscal 2006 and decreased 8%
compared to the $0.76 per diluted share reported in the previous quarter.
Consolidated revenue in the first quarter of fiscal 2007 was $1,183.9
million, up 24% compared to $956.2 million in prior year's December quarter
and down 3% compared to $1,216.0 million reported in the previous quarter.
Consolidated operating income for the quarter was $316.3 million, a 38%
increase compared to $229.6 million for the same quarter last year and a 7%
decrease compared to $340.0 million reported in the previous quarter.
Cash and cash equivalents decreased $29.9 million from the previous
quarter to $62.5 million. Uses of cash during the quarter include capital
expenditures of $146.9 million, short-term debt repayment of $115.2
million, dividend payments of $14.7 million and the purchase of
approximately 670,000 shares of the Company's common stock for $20.0
million. Since the Company began its share repurchase program in 1997, the
Company has repurchased 84.7 million shares for $1.75 billion, representing
22% of the Company's shares outstanding. The Company currently has
remaining authorization from its Board of Directors to purchase up to an
additional $449.3 million in stock.
Commenting on the results, Chairman and CEO Bill Stewart said, "The
Company's earnings for its first fiscal quarter were less than the earlier
projected range mainly due to lower than forecast activity in North America
caused by warmer than normal winter weather conditions and declining
natural gas prices. Our Canadian operations experienced revenue decline
from the prior quarter with margins being negatively impacted. U.S./Mexico
operating income margins improved even with lower than forecast activity.
Activity in both markets is improving as we move into the March quarter and
improved results are expected in both businesses.
"Our outlook for the second fiscal quarter is positive. We expect our
Canadian operations to rebound from the prior quarter, resulting in revenue
improvement in the 25% range. Modest revenue improvement is projected for
our U.S./Mexico and International Pressure Pumping businesses and our
Oilfield Services Group revenue is forecast to improve in the 8% range.
Based on these assumptions, we expect earnings for our second fiscal
quarter to be $0.73 - $0.75 per diluted share."
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
December 31 September 30
2006 2005 2006
Revenue $1,183,940 $956,161 $1,215,979
Operating Expenses:
Cost of sales and services 788,635 649,266 799,410
Research and engineering 15,694 15,153 16,483
Marketing 25,813 24,592 28,201
General and administrative 37,207 37,591 33,354
Loss (gain) on long-lived assets 265 8 (1,446)
Total operating expenses 867,614 726,610 876,002
Operating income 316,326 229,551 339,977
Interest expense (1) (8,779) (135) (11,762)
Interest income 320 3,390 4,569
Other income/(expense), net (2,076) 952 (409)
Income before income taxes 305,791 233,758 332,375
Income taxes 98,707 74,101 103,786
Net income $207,084 $159,657 $228,589
Earnings Per Share:
Basic $0.71 $0.49 $0.77
Diluted $0.70 $0.48 $0.76
Weighted Average Shares Outstanding:
Basic 293,024 323,903 297,634
Diluted 296,436 329,596 301,251
Supplemental Data:
Depreciation and amortization $45,705 $38,185 $46,271
Capital expenditures 146,861 81,860 136,725
Debt (1) 544,737 82,271 659,968
(1) In June 2006, the Company completed a public offering of $500
million aggregate principal amount of Senior Notes and had short-
term borrowings of $45.0 million as of December 2006. In February
2006, the Company redeemed debt of $79.0 million.
Operating Highlights
Following are the results of operations for the three months ended
December 31, 2006, December 31, 2005 and September 30, 2006:
Three Months Ended
December 31 September 30
2006 2005 2006
U.S./Mexico Pressure Pumping Revenue $640,826 $497,294 $645,512
Operating Income 252,557 175,479 247,747
Operating Income Margins 39% 35% 38%
Canada Pressure Pumping Revenue $111,664 $124,265 $138,426
Operating Income 13,407 31,767 32,895
Operating Income Margins 12% 26% 24%
International Pressure
Pumping Revenue $252,056 $191,729 $255,333
Operating Income 40,338 25,623 46,851
Operating Income Margins 16% 13% 18%
Oilfield Services Group Revenue $179,394 $142,873 $176,708
Operating Income 32,698 25,153 35,956
Operating Income Margins 18% 18% 20%
Corporate Revenue $--- $--- $---
Operating Loss (22,674) (28,471) (23,472)
December Quarter Review
U.S./Mexico Pressure Pumping Services first quarter 2007 revenue of
$640.8 million was slightly below the September 2006 quarter (sequential)
and 29% higher than the December 2006 quarter (year over year). Drilling
activity for U.S./Mexico remained unchanged from the previous quarter,
while showing a 15% improvement year over year. Despite a small decrease in
revenue from the previous quarter, operating income margin for U.S./Mexico
increased to 39% from 38% reported in the previous quarter. Operating
income margin increased from 35% in the same quarter last year.
Canada Pressure Pumping Services first quarter 2007 revenue of $111.7
million was down 19% sequentially and 10% year over year. The decline in
revenue was the result of decreased Canadian drilling activity brought on
by lower natural gas prices. Sequentially, Canadian average rig count
declined 11% and wells drilled were down 22%. Year over year, average rig
count declined 23% and wells drilled were down 25%. Operating income margin
for Canada decreased to 12% from 24% in the previous quarter and 26%
reported in the same quarter last year. Contributing to the lower operating
income sequentially and year over year were lower drilling activity,
slightly lower pricing for our products and services and higher than
optimum labor costs.
International Pressure Pumping Services first quarter 2007 revenue of
$252.1 million decreased 1% sequentially with average active drilling rigs
flat for the same period. Revenue compared to the same quarter last year
increased 31% with average active drilling rigs up 11%. Revenue performance
by region is as follows:
Region Sequential Year Over Year
Europe/Africa 5% 61%
Middle East -12% 10%
Asia Pacific 8% 48%
Russia 1% 5%
Latin America -5% 26%
Sequential revenue contributions from our Europe/Africa and Asia
Pacific regions were offset by revenue declines in the Middle East and
Latin America. Activity increases in the Netherlands as well as an increase
in activity from our stimulation vessel operations in the North Sea led to
the increase in revenue for Europe/Africa. Our Asia/Pacific region's
revenue increase was mainly driven by activity increases in Indonesia and
Malaysia. Non-repeat blowout work from Bangladesh in the previous quarter
coupled with customer project delays in Saudi Arabia and Kazakhstan were
the significant causes of the decline in revenue for the Middle East. Lower
activity in Latin America, specifically Venezuela and Brazil, plus the
impact of strikes and poor weather conditions in Argentina, resulted in
lower revenue for the region.
All of our regions showed revenue improvement year over year, with
Europe/Africa being the most significant contributor. As mentioned last
quarter, as a result of acquiring controlling interest in our Algerian
venture, Societe Algerienne de Stimulation de Puits Productures
d'Hydrocarbures ("BJSP"), we now consolidate BJSP in our financial results.
Excluding this acquisition, revenue for this region increased 37% year over
year. The Europe/Africa region revenue improvement was due to overall
improved activity, most notably in the North Sea. The Middle East activity
gains in Saudi Arabia, Oman, Kazakhstan, and India were offset by declines
in Bangladesh. Australia, Thailand, Malaysia and Indonesia were the primary
contributors in the improvement in Asia Pacific. Argentina, Colombia and
Brazil contributed to the revenue gain in Latin America.
Operating income margins for international pressure pumping were 16%
compared to 18% reported in the previous quarter and 13% reported in last
year's December quarter. Most of the sequential margin reduction was due to
non-repeat higher margin blow out revenue from Bangladesh in the prior
quarter.
Oilfield Services Group first quarter 2007 revenue of $179.4 million
increased 2% sequentially and increased 26% year over year.
Division Sequential Year Over Year
Tubular Services 13% 46%
Process & Pipeline Services -12% 19%
Chemical Services 16% 60%
Completion Tools 5% 22%
Completion Fluids 2% 3%
The year over year revenue improvement for Tubular Services was the
result of strong U.S. activity coupled with contributions from most
international operating locations. Sequentially, the revenue improvement
was primarily due to increased activity in the North Sea.
Process and Pipeline Services revenue improved year over year due to
strong performance from the Middle East operations along with higher
pipeline inspection work. Sequentially, the business was negatively
impacted by seasonal slowdowns and reduced activity in North America.
For our Chemical Services division, revenue improved year over year and
sequentially due to increased market activity and the acquisition of Dyna-
Coil, a capillary string and production chemical company.
The Oilfield Services Group operating income margin for the quarter was
18%, down from 20% in the previous quarter and flat with that reported in
last year's December quarter. The sequential decline was due primarily to
lower revenue with our process and pipeline business.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated
revenue by geographic area for the December 2007 quarter compared to the
September 2006 quarter and the December 2006 quarter. The information
presented is based on our combined service and product line offering by
geographic region.
Geographic Sequential Year Over Year
U.S. -1% 28%
Canada -17% -8%
Total -4% 21%
Latin America -1% 25%
Europe/Africa -7% 32%
Russia 1% 5%
Middle East -8% 21%
Asia Pacific 6% 51%
Total -3% 24%
Non-GAAP Financial Measures
A non-GAAP financial measure is a numerical measure of a registrant's
historical or future financial performance, financial position or cash
flows that 1) excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most directly
comparable measure calculated and presented in accordance with GAAP in the
statement of income, balance sheet, or statement of cash flows, or 2)
includes amounts, or is subject to adjustments that have the effect of
including amounts, that are excluded from the most directly comparable
measure so calculated and presented.
Any unexpected disclosures of non-GAAP financial measures discussed on
the call will be posted on our website as soon as possible after the
disclosure.
Conference Call
The Company will hold a conference call following this earnings
release. The call will take place at 9:00 a.m. Central Time.
To participate in the conference call, please call 913/981-5523, 10
minutes prior to the conference call start time and give the conference
code number 3651184. If you are unable to participate, the conference call
will be available for playback three hours after conclusion of the
conference call. The playback number is 719/457-0820 and the replay entry
code is 3651184. Playback will be available for five days.
The conference call will also be available via real-time webcast at
http://www.bjservices.com . Playback of the webcast will be available
following the conference call.
This news release contains forward-looking statements that anticipate
future performance such as the Company's prospects, expected revenue, and
expenses and profits. These forward-looking statements are based on
assumptions that may prove to be inaccurate, and they are subject to risks
and uncertainties that may cause actual results to differ materially from
expected results. These risk factors include, without limitation, general
global business and economic conditions, drilling activity and rig count,
pricing volatility for oil and gas, reduction in demand for our services
and products, risks from operating hazards such as fire, explosion and oil
spills, unexpected litigation for which insurance and customer agreements
do not provide complete protection, potential adverse results from our SEC
and DOJ investigations, changes in exchange rates and declines in the U.S.
dollar, and risks associated with our international operations, including
potential instability and hostilities. This list of risk factors is not
intended to be comprehensive. More extensive information concerning risk
factors may be found in our public filings with the Securities and Exchange
Commission.
BJ Services Company is a leading provider of pressure pumping and other
oilfield services to the petroleum industry.
(NOT INTENDED FOR DISTRIBUTION TO BENEFICIAL OWNERS)
SOURCE BJ Services Company
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Related links:
http://www.bjservices.com
CONTACT:
Jeff Smith of BJ Services Company,
+1-713-462-4239
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