HOUSTON, July 25 /PRNewswire-FirstCall/ -- BJ Services Company (NYSE:
BJS; PCX; CBOE) today reported net income for the quarter ended June 30,
2006 of $212.9 million, or $0.67 per diluted share. Third quarter diluted
earnings per share improved 91% compared to the $0.35 per diluted share for
the third quarter of fiscal 2005 and up 8% compared to the $0.62 per
diluted share for the previous quarter.
Consolidated revenue in the third quarter of fiscal 2006 was $1,116.9
million, up 37% compared to $817.3 million in prior year's June quarter and
up 4% compared to $1,078.8 million reported in the previous quarter.
Consolidated operating income for the quarter was $306.9 million, an
87% increase compared to $164.0 million for the same quarter last year and
a 4% increase compared to $295.3 million reported in the previous quarter.
During the quarter, the Company's capital expenditures were $131.7
million. Other uses of cash during the quarter included dividend payments
of $16.2 million and the purchase of 18,228,900 shares of the Company's
common stock for $656.5 million. On May 25, 2006, the Company's Board of
Directors authorized an expansion of its share repurchase program,
increasing the repurchase authority by $1.0 billion. Fiscal year to date,
the Company has repurchased 21,551,282 shares for $768.6 million and has
remaining authorization to purchase up to an additional $835 million in
stock. Since the Company began its share repurchase program in 1997, the
Company has repurchased 73.9 million shares for $1.4 billion, representing
20% of the Company's shares outstanding.
On June 8, 2006, the Company completed a public offering of $500
million aggregate principal amount of Senior Notes, consisting of $250
million in floating rate Senior Notes due 2008 and $250 million in 5.75%
Senior Notes due 2011. The net proceeds from the offering of approximately
$497.1 million, after deducting underwriting discounts and commissions and
expenses, will be used to repurchase outstanding shares of common stock,
repay indebtedness, fund capital expenditures and for other corporate
purposes. The Company also borrowed $100 million under its Revolving Credit
Facility during the quarter for general corporate purposes.
Cash and cash equivalents increased $56.1 million from the previous
quarter to $382.9 million.
Commenting on the results, Chairman and CEO Bill Stewart said, "During
the quarter, the Company utilized its free cash flow and leverage capacity
to further repurchase treasury shares and to enhance long term shareholder
value while maintaining considerable financial flexibility to pursue growth
opportunities.
"Activity increases and improved pricing in the U.S. market coupled
with increases in activity in our international pressure pumping business
outside of North America offset the seasonal decline in Canadian results.
We expect activity to remain strong into the foreseeable future. Based on
our current estimates, we expect earnings per share for the 2006 fourth
fiscal quarter to be $0.73 - $0.75.
"Our outlook for fiscal year 2007 is quite positive with consolidated
revenue growth expectations in the range of 20%. Revenue generated from our
North America Pressure Pumping operations is expected to grow in the range
of 20%. We expect revenue growth for our International Pressure Pumping
operations outside North America in the range of 20% and for our Oilfield
Services Group in the range of 18% for the fiscal year."
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
June 30 March 31
2006 2005 2006
Revenue $1,116,906 $817,261 $1,078,818
Operating Expenses:
Cost of sales and services 734,717 587,826 712,358
Research and engineering 16,665 13,370 15,574
Marketing 25,571 23,497 24,953
General and administrative 32,310 28,365 28,756
Loss on long-lived assets 764 184 1,848
Total operating expenses 810,027 653,242 783,489
Operating income 306,879 164,019 295,329
Interest expense (A) (2,506) (2,219) (155)
Interest income 3,456 2,272 3,501
Other income/(expense), net 194 (1,764) (748)
Income before income taxes 308,023 162,308 297,927
Income taxes 95,143 48,115 94,443
Net income $212,880 $114,193 $203,484
Earnings Per Share:
Basic $0.67 $0.35 $0.63
Diluted $0.67 $0.35 $0.62
Weighted Average Shares
Outstanding:
Basic 315,705 323,104 323,027
Diluted 319,502 328,458 326,859
Supplemental Data:
Depreciation
and amortization $42,390 $34,301 $39,917
Capital expenditures 131,685 92,995 109,631
Debt 603,325 80,727 496
Nine Months Ended
June 30
2006 2005
Revenue $3,151,885 $2,350,906
Operating Expenses:
Cost of sales and services 2,096,339 1,711,505
Research and engineering 47,392 38,915
Marketing 75,118 67,342
General and administrative 98,657 77,066
Loss on long-lived assets 2,620 1,514
Total operating expenses 2,320,126 1,896,342
Operating income 831,759 454,564
Interest expense (A) (2,796) (9,977)
Interest income 10,347 8,844
Other income/(expense), net (B) 398 7,555
Income before income taxes 839,708 460,986
Income taxes 263,687 142,206
Net income $576,021 $318,780
Earnings Per Share:
Basic $1.80 $.98
Diluted $1.77 $.97
Weighted Average Shares Outstanding:
Basic 320,881 324,179
Diluted 324,765 329,460
Supplemental Data:
Depreciation and amortization $120,492 $99,531
Capital expenditures 323,176 225,602
(A) In April 2005 and February 2006, the Company redeemed debt of
$422.4 million and $79.0, respectively. In June 2006, the Company
completed a public offering of $500 million aggregate principal
amount of Senior Notes and borrowed $100 million under its Revolving
Credit Facility.
(B) Includes Other income of $2.8 million and $9.0 million related to
our ongoing investigations in the Asia-Pacific region in the first
fiscal quarters ended December 2005 and December 2004, respectively.
Segment Highlights
Following are the results of operations by segment for the three months
ended June 30, 2006, June 30, 2005 and March 31, 2006 and for the nine
months ended June 30, 2006 and June 30, 2005:
Three Months Ended Nine Months Ended
June 30 March 31 June 30
2006 2005 2006 2006 2005
U.S./Mexico Pressure
Pumping
Revenue $644,070 $447,370 $566,896 $1,708,260 $1,212,196
Operating Income 260,618 143,706 215,369 651,466 368,238
Operating Income
Margins 40% 32% 38% 38% 30%
International Pressure
Pumping
Revenue $300,674 $233,288 $355,623 $972,291 $764,111
Operating Income 35,950 16,807 67,077 160,417 93,395
Operating Income
Margins 12% 7% 19% 16% 12%
Oilfield Services
Group
Revenue $172,162 $136,543 $156,299 $471,334 $374,175
Operating Income 39,389 21,478 31,922 96,464 42,404
Operating Income
Margins 23% 16% 20% 20% 11%
Corporate
Revenue $0 $60 $0 $0 $424
Operating Loss (A) (29,078) (17,972) (19,039) (76,588) (49,473)
(A) Includes stock based compensation expense of $5.9 million in the
quarter ended June 30, 2006, $3.9 million for the quarter ended
March 31, 2006, and $17.3 million for the nine months ended June 30,
2006.
June Quarter Review
U.S./Mexico Pressure Pumping Services third quarter 2006 revenue of
$644.1 million increased 14% compared to the March 2006 quarter
(sequential) and 44% from the June 2005 quarter (year over year). The U.S.
rig count averaged 1,632, up 7% from the previous quarter and up 22% from
the prior year's quarter. Operating income margins for U.S./Mexico improved
to 40% from 38% reported in the previous quarter and 32% reported in the
same quarter last year. These results reflect higher activity and price
improvement during the quarter.
International Pressure Pumping Services third quarter 2006 revenue of
$300.7 million decreased 15% sequentially and increased 29% year over year:
Region Sequential Year Over Year
Europe/Africa 3 % 14 %
Middle East 18 % 26 %
Asia Pacific 5 % 38 %
Russia 38 % 6 %
Latin America 23 % 32 %
Canada -56 % 45 %
The 15% sequential revenue decline is the direct result of a 58% rig
activity reduction in Canada caused by Spring break up. Excluding Canada,
international revenue increased 15% from the previous quarter on a 2%
increase in average active drilling rigs. Latin America led the increase in
international revenue excluding Canada largely due to revenue improvement
in all countries within the region. Resumed activity in Russia, after
weather conditions hindered operations in the previous quarter, also
contributed to the overall increase in international revenue excluding
Canada. The Middle East region also realized strong revenue growth.
Year over year revenue, excluding Canada, increased 25%. Revenue
increases from Latin America have continued as activity in the primary
markets within the region remains strong. Activity in New Zealand was the
primary contributor to the revenue increase in the Asia Pacific region. The
Middle East also benefited from increase in activity in Kazakhstan and
Saudi Arabia. Despite Spring break up, our Canadian operations benefited
from a 15% increase in drilling activity year over year.
Operating income margins for international pressure pumping were 12%
compared to 19% reported in the previous quarter and 7% reported in last
year's June quarter. The operating income margin decline from the previous
quarter is a direct result of lower margins in Canada due to Spring break
up. Excluding Canada, operating income margins were 15%, increasing from
12% reported in both the previous quarter and in last year's quarter.
Oilfield Services Group third quarter 2006 revenue of $172.2 million
increased 10% sequentially and increased 26% year over year.
Division Sequential Year Over Year
Tubular Services 11 % 20 %
Process & Pipeline Services 42 % 31 %
Chemical Services 4 % 48 %
Completion Tools -7 % -6 %
Completion Fluids -13 % 35 %
Overall activity increases for Process and Pipeline Services led the
Oilfield Services Group increase in revenue sequentially and year over
year, while increased activity in the U.S. contributed to the increase in
revenue for Chemical Services for the same period.
The Oilfield Services Group operating income margins for the quarter
were 23%, up from 20% in the previous quarter and up from 16% reported in
last year's June quarter.
Consolidated Geographic Highlights
The following table reflects the percentage change in the Company's
consolidated revenue by geographic area for the June 2006 quarter compared to
the March 2006 quarter and the June 2005 quarter. The information presented
is based on the Company's combined service and product line offering by
geographic region.
Geographic Sequential Year Over Year
U.S. 13 % 46 %
Canada -48 % 47 %
0 % 46 %
Latin America
(includes Mexico) 19 % 21 %
Europe/Africa 3 % 3 %
Russia 38 % 6 %
Middle East 16 % 24 %
Asia Pacific 11 % 39 %
13 % 18 %
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 913/981-5543, 10
minutes prior to the conference call start time and give the conference
code number 4809772. 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 4809772. 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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