HOUSTON, Oct. 30 /PRNewswire-FirstCall/ -- BJ Services Company (NYSE:
BJS; PCX; CBOE) today reported net income of $189.4 million for the fourth
fiscal quarter ended September 30, 2007, or $0.64 per diluted share. The
quarter's diluted earnings per share increased 12% compared to the $0.57
per diluted share reported in the previous quarter and decreased 16%
compared to the $0.76 per diluted share for the fourth quarter of fiscal
2006.
Consolidated revenue in the fourth quarter of fiscal 2007 was $1,279.3
million, an increase of 11% compared to $1,152.5 million in the previous
quarter and an increase of 5% compared to $1,216.0 million reported in the
prior year's September quarter. Consolidated operating income for the
quarter was $286.2 million, an 11% increase compared to $257.8 million in
the previous quarter and a 16% decrease compared to $340.0 million reported
in the same quarter last year.
During the fourth quarter, debt decreased $36.0 million to $671.0
million and cash and cash equivalents decreased $7.1 million to $58.2
million. Uses of cash during the quarter include capital expenditures of
$208.9 million and dividend payments of $14.6 million.
Commenting on the results, Chairman and CEO Bill Stewart said, "Our
oilfield service segment performed well during the quarter with record
revenue, operating income and operating income margins. As was anticipated,
our US/Mexico pressure pumping service revenue was slightly down with
operating income margins down about 300 basis points as pricing pressure
offset the small activity increase for the quarter. Our Canadian pressure
pumping operations recovered nicely from Spring breakup, however the region
continued to be depressed from the prior year as had been experienced in
the previous quarters of fiscal 2007. Our International pressure pumping
operations were mixed with revenue growth experienced in the Middle East,
Russia and Latin America operations. The segment experienced a number of
unexpected charges to account for restructuring and balance sheet
adjustments which resulted in reduced operating income margins for the
quarter. These adjustments should be behind us now and we expect margin
improvement from our International pressure pumping operations in fiscal
2008.
"For fiscal 2008, we project revenue and margin improvement in all
segments of our business except US/Mexico pressure pumping operations where
pricing pressure is expected to continue during the year. We are projecting
earnings per share for fiscal 2008 to be in the range of $2.35 to $2.45.
Earnings per share for the first fiscal quarter are projected to be $0.58 to
$0.60."
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
September 30 June 30
2007 2006 2007
Revenue $1,279,313 $1,215,979 $1,152,518
Operating Expenses:
Cost of sales and services 910,623 799,410 812,701
Research and engineering 18,532 16,483 17,146
Marketing 28,083 28,201 27,450
General and administrative 37,521 33,354 35,630
Loss (gain) on
long-lived assets (1,645) (1,446) 1,764
Total operating expenses 993,114 876,002 894,691
Operating income 286,199 339,977 257,827
Interest expense (6,470) (11,762) (8,994)
Interest income 219 4,569 581
Other (expense), net (905) (409) (1,806)
Income before income taxes 279,043 332,375 247,608
Income taxes 89,693 103,786 79,318
Net income $189,350 $228,589 $168,290
Earnings Per Share:
Basic $0.65 $0.77 $0.57
Diluted $0.64 $0.76 $0.57
Weighted Average Shares
Outstanding:
Basic 291,630 297,634 293,142
Diluted 294,510 301,251 296,407
Supplemental Data:
Depreciation and
amortization $57,914 $ 46,271 $55,581
Capital expenditures 208,878 136,725 186,315
Debt 671,028 659,968 707,052
Twelve Months Ended
September 30
2007 2006
Revenue $4,802,409 $4,367,864
Operating Expenses:
Cost of sales and services 3,332,620 2,895,749
Research and engineering 67,536 63,875
Marketing 107,421 103,319
General and administrative 143,992 132,011
Loss on long-lived assets 301 1,174
Total operating expenses 3,651,870 3,196,128
Operating income 1,150,539 1,171,736
Interest expense (2) (32,731) (14,558)
Interest income 1,624 14,916
Other (expense), net (6,584) (11)
Income before income taxes 1,112,848 1,172,083
Income taxes 359,208 367,473
Net income $753,640 $804,610
Earnings Per Share:
Basic $2.57 $2.55
Diluted $2.55 $2.52
Weighted Average Shares Outstanding:
Basic 292,757 315,022
Diluted 295,916 318,820
Supplemental Data:
Depreciation and amortization $209,019 $166,763
Capital expenditures (1) 752,113 459,974
(1) Includes $47.8 million paid for the buyout of an equipment partnership
in the quarter ended March 31, 2007.
(2) In June 2006, the Company completed a public offering of $500 million
aggregate principal amount of Senior Notes and had other borrowings of
$171.3 million as of September 30, 2007.
Operating Highlights
Three Months Ended Twelve Months Ended
September 30 June 30 September 30
2007 2006 2007 2007 2006
U.S./Mexico
Pressure
Pumping
Revenue $641,846 $645,512 $646,719 $2,562,747 $2,353,772
Operating
Income 193,285 247,747 215,449 881,631 899,213
Operating
Income
Margins 30% 38% 33% 34% 38%
Canada
Pressure
Pumping
Revenue $117,838 $138,426 $35,169 $386,547 $481,380
Operating
Income
(Loss) 21,886 32,895 (21,610) 32,493 102,094
Operating
Income
Margins 19% 24% -61% 8% 21%
International
Pressure
Pumping
Revenue $295,003 $255,333 $277,314 $1,074,744 $884,670
Operating
Income 40,668 46,851 42,643 152,734 138,069
Operating
Income
Margins 14% 18% 15% 14% 16%
Oilfield
Services
Group
Revenue $224,626 $176,708 $193,316 $778,371 $648,042
Operating
Income 52,367 35,956 41,800 163,539 132,420
Operating
Income
Margins 23% 20% 22% 21% 20%
Corporate
Revenue $- $- $- $- $-
Operating
Loss (22,007) (23,472) (20,455) (79,858) (100,060)
Year in Review
For the fiscal year ended September 30, 2007, consolidated revenue of
$4.8 billion increased 10% from the $4.4 billion generated during fiscal
2006 and earnings per diluted share of $2.55 improved 1% from the $2.52
reported in fiscal 2006.
All of our reporting segments, except Canada Pressure Pumping,
contributed to the fiscal 2007 increase in revenue. Revenue from
U.S./Mexico Pressure Pumping Services increased 9% from last year as a
result of higher activity levels which was somewhat offset by lower pricing
for our products and services. During 2007, our International Pressure
Pumping Services and Oilfield Services Group's revenue increased 21% and
20%, respectively. International Pressure Pumping revenue growth was from
activity increases in all operating regions except Russia, where the
divestiture of our work-over rig business contributed to lower revenue year
over year. The Oilfield Services Group's revenue growth was due to higher
activity levels and international market expansion. Revenue from Canada
Pressure Pumping Services declined 20% from fiscal 2006 as drilling
activity in the Canadian market remained depressed throughout fiscal 2007.
September Quarter Review
U.S./Mexico Pressure Pumping Services fourth quarter 2007 revenue of
$641.8 million was 1% below both the June 2007 quarter (sequential) and the
September 2006 quarter (year over year). Customer drilling activity for
U.S./Mexico increased 2% from the previous quarter and 5% from the prior
year. Operating income margin for the quarter was 30%, down from 33% in the
previous quarter and 38% in the September 2006 quarter. Lower pricing for
our products and services both sequential and year over year was the
primary cause for the decline in revenue and operating income. Increased
materials and labor costs also contributed to the year over year operating
income decline.
Canada Pressure Pumping Services fourth quarter 2007 revenue of $117.8
million increased 235% from the previous quarter. During the quarter,
Canadian drilling activity recovered from its seasonal spring breakup with
the average active rig count increasing 150% from the previous quarter.
Year over year, revenue decreased 15% with drilling activity 30% lower than
the same quarter last year. Operating income margin for Canada increased to
19% from - 61% in the previous quarter and decreased from 24% reported in
the same quarter last year. The sequential margin increase was due to cost
reductions and the recovery from low spring break up activity levels
experienced in the prior quarter while the year over year margin decline
was due to lower drilling activity and pricing pressures as experienced in
the previous quarters of fiscal 2007.
International Pressure Pumping Services fourth quarter 2007 revenue of
$295.0 million increased 6% sequentially with average active drilling rigs
increasing 1% during the same period. Revenue compared to the same quarter
last year increased 16% with average active drilling rigs up 7%. Revenue
performance by region was as follows:
Region Sequential Year Over Year
Europe/Africa -13 % -7 %
Middle East 19 % 24 %
Asia Pacific -6 % 33 %
Russia 10 % -11 %
Latin America 22 % 27 %
Sequential
Our Latin American and Middle Eastern operations led the sequential
revenue improvement for International Pressure Pumping. In Latin America,
all markets showed improvement from the previous quarter with Brazil being
the largest contributor. The Middle East showed improvement in most
markets, with strong performance from our Saudi Arabia and India
operations. Our Russian operations also showed improvement from the
previous quarter due to increased fracturing activity.
The Europe/Africa revenue decline was the result of lower activity in
the U.K. and the Netherlands, and the impact from transferring our
stimulation vessel from the U.K. to India in the previous quarter, which
was partially offset by higher activity from our Norway and Africa
operations. Unfavorable weather conditions and project delays in our Asia
Pacific region resulted in a 6% decline in revenue from the record results
reported in the previous quarter.
Year Over Year
With the exception of Europe/Africa, which had a decrease in revenue
from our North Sea operations, and Russia, which experienced a decline in
revenue from the divestiture of our work-over rig business, the remaining
regions within International Pressure Pumping had strong double-digit
growth year over year. Excluding the impact from the stimulation vessel
transfer to India, Europe/Africa revenue would have been consistent with
the prior year. Activity increase in Brazil, Argentina and other major
markets of Latin America resulted in a 27% increase in revenue from the
prior year, while new contracts in Malaysia and Indonesia and market
expansion in China contributed to the Asia Pacific increase. Middle East
revenue benefited from the start up of the stimulation vessel in India as
well as cementing and coiled tubing activity increases in Saudi Arabia, but
was slightly offset by non-repeat work in the prior year in Bangladesh and
project delays in Kazakhstan.
Operating income margin for international pressure pumping was 14%
compared to 15% reported in the previous quarter and 18% reported in last
year's September quarter. The sequential decline was the result of
unexpected charges and unfavorable business mix in Asia Pacific, partially
offset by margin improvement in Latin America. Year over year, the
operating income margin decline was due primarily to unexpected charges in
the quarter, non- repeat blow out work in Bangladesh during the same
quarter last year and lower activity in Kazakhstan.
Oilfield Services Group fourth quarter 2007 revenue of $224.6 million
increased 16% sequentially and increased 27% year over year.
Division Sequential Year Over Year
Tubular Services 4 % 19 %
Process & Pipeline Services 38 % 52 %
Chemical Services 12 % 32 %
Completion Tools -9 % 23 %
Completion Fluids 8 % -12 %
Our Process & Pipeline Services business was the most significant
contributor to the sequential revenue improvement within the Oilfield
Services Group with their Europe/Africa operations providing benefit from a
seasonal increase in activity. Chemical Services improvement was activity
driven, in addition to the capillary string business acquisition completed
late in the previous quarter. Completion Fluids showed improvement from the
prior quarter due to increased domestic activity, while revenue from our
Completion Tools division was hindered by lower activity and project
delays.
Year over year, all of the divisions in the Oilfield Services Group,
except Completion Fluids, showed revenue improvement. As with the
sequential results, our Process & Pipeline Services business was the most
significant contributor to the increase. Process & Pipeline Services
completed fiscal 2007 with record revenue results for the division, with
our U.K. and U.S. operations contributing greatly to the results. Our
Chemical Services operations improvement was from activity increases in
addition to the benefit of two capillary string business acquisitions
completed earlier in the year. Completion Tools and Tubular Services
benefited from increased international activity. The decline in revenue for
Completion Fluids is almost entirely due to the shut down of low margin
operations in Norway in the prior year.
The Oilfield Services Group operating income margin for the quarter was
23%, up from 22% in the previous quarter and from 20% reported in last
year's September quarter.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated
revenue by geographic area for the September 2007 quarter compared to the
June 2007 quarter and the September 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 % 3 %
Canada 162 % -13 %
Total 12 % 0 %
Latin America 16 % 30 %
Europe/Africa 3 % 6 %
Russia 8 % -10 %
Middle East 19 % 14 %
Asia Pacific 2 % 39 %
Total 11 % 5 %
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 5974489. 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 5974489. 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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