EX-99.1 2 h53664exv99w1.htm PRESS RELEASE exv99w1
 

EXHIBIT 99.1
(COMPLETE PRODUCTION SERVICES LOGO)
Complete Production Services, Inc. Reports
Fourth Quarter and Full Year 2007 Earnings
HOUSTON, February 5, 2008 (Business Wire) – Complete Production Services, Inc. (NYSE: CPX) today reported 2007 revenue of $1.66 billion versus $1.21 billion in 2006. Net income from continuing operations was $174.7 million before a $13.1 million goodwill impairment charge in Canada, up 27% compared to the prior year. Earnings per diluted share from continuing operations was $2.38 before the impairment charge of $0.18 per share versus $2.02 in 2006.
Fourth quarter revenue was $424.5 million, up 17% over the fourth quarter of 2006. Earnings before interest, taxes, depreciation, amortization and impairment charge (EBITDA, as defined below) totaled $114.2 million in the fourth quarter, an increase of 11% over the prior year. Fourth quarter income from continuing operations was $41.9 million, or $0.57 per diluted share before the Canadian goodwill impairment charge of $13.1 million or $0.18 per share. This compares with income from continuing operations of $44.1 million, or $0.61 per diluted share for the fourth quarter of 2006.
Revenue for the Completion and Production Services segment during the fourth quarter of 2007 was $330.1 million, up 23% over the prior year, with EBITDA of $102.5 million compared to $80.7 million for the same period in 2006. EBITDA margins for the segment were 31.0%, up from 30.0% for the fourth quarter of the prior year. Results in this segment benefited from the impact of investments in capital equipment and acquisitions offset somewhat by lower utilization and pricing in certain areas and lower activity levels in Canada.
Drilling Services revenue was $61.2 million for the fourth quarter of 2007, down slightly from the same quarter of the prior year and EBITDA margins of 25.9% were down from 37.3%. Lower utilization, lower pricing and higher costs negatively impacted contract drilling revenue. Rig logistics operations were also impacted by lower pricing and utilization in some markets and the effects of relocating an operation to more attractive markets.
Product Sales revenue was $33.2 million for the fourth quarter of 2007, with EBITDA margins of 11.9%.
“While we experienced some softness in the second half of the year, particularly in our Drilling Services and Products segments, we finished the year with a 37% increase in revenue and a 39% increase in EBITDA. We are proud of our accomplishments in 2007 and in the way our people responded to ever changing market conditions. We also made meaningful investments in our operations that will benefit Complete for years to come while lowering our leverage ratio,” commented Joe Winkler, Chairman and Chief Executive Officer. “While we may see some near-term continued softness due to additional capacity, many of our customers have indicated that activity levels in 2008

 

 

should remain healthy and we remain optimistic about the long-term fundamentals of North American natural gas.”
Conference Call
Complete will hold a conference call to discuss fourth quarter 2007 results on Wednesday, February 6 at 8:00 a.m. Central Time. To participate in the live conference call, dial (866) 314-9013 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 94118890. The conference call will be available for replay beginning at 10:00 a.m., February 6, 2008 and will be available until February 13, 2008. To access the conference call replay, please call (888) 286-8010 and use the passcode: 25309821. The call is also being webcast and can be accessed at our website at www.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 Complete’s 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, impairment charge, and minority interest. EBITDA is not a substitute for the 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
Jose Bayardo
Vice President, Corporate Development and Investor Relations
281-372-2325
jbayardo@completeproduction.com

 

 

Complete Production Services, Inc.
Consolidated Statements of Operations
For the Quarters and Years Ended December 31, 2007 and 2006
(in thousands except per share data)
                                 
    Quarter Ended     Year Ended  
    December 31,     December 31,  
    2007     2006     2007     2006  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Revenue:
                                
Services
   $ 391,301     $ 331,218     $ 1,502,477     $ 1,088,748  
Products
     33,231       32,290       152,760       123,676  
 
                        
 
     424,532       363,508       1,655,237       1,212,424  
 
                                
Cost of services
     232,271       187,257       863,705       622,786  
Cost of products
     24,077       21,137       116,557       88,175  
General and administrative expense
     53,975       52,249       210,147       167,334  
Depreciation and amortization
     38,103       25,854       135,961       79,465  
 
                        
 
     348,426       286,497       1,326,370       957,760  
 
                                
 
                        
Income from continuing operations before interest, taxes and minority interest
     76,106       77,011       328,867       254,664  
 
                                
Interest expense
     15,308       11,447       62,673       40,759  
Interest income
     (624 )     (109 )     (1,636 )     (1,387 )
Write-off of deferred financing costs
     —       170       —       170  
Impairment charge
     13,094       —       13,094       —  
 
                                
 
                        
Income from continuing operations before minority interest and taxes
     48,328       65,503       254,736       215,122  
 
                                
Minority interest, net of tax
     (342 )     (72 )     (569 )     (49 )
 
                                
 
                        
 
                              
Income from continuing operations before taxes
     48,670       65,575       255,305       215,171  
 
                                
Tax provision
     19,847       21,477       93,741       77,888  
 
                                
 
                        
 
                              
Income from continuing operations
     28,823       44,098       161,564       137,283  
 
                                
Income from discontinued operations (net of tax)
     —       (518 )     —       1,803  
 
                                
 
                        
Net income
   $ 28,823     $ 43,580     $ 161,564     $ 139,086  
 
                        
 
                                
Basic earnings per share:
                                
Continuing operations
   $ 0.40     $ 0.62     $ 2.24     $ 2.09  
Discontinued operations
   $ —     $ 0.00     $ —     $ 0.02  
 
                        
 
   $ 0.40     $ 0.62     $ 2.24     $ 2.11  
 
                        
Diluted earnings per share:
                                
Continuing operations
   $ 0.39     $ 0.61     $ 2.20     $ 2.02  
Discontinued operations
   $ —     $ (0.01 )   $ —     $ 0.02  
 
                        
 
   $ 0.39     $ 0.60     $ 2.20     $ 2.04  
 
                        
 
                                
Weighted average shares outstanding:
                                
Basic
     72,343       70,670       71,991       65,843  
Diluted
     73,514       72,492       73,352       68,075  

 

 

Complete Production Services, Inc.
Condensed Consolidated Balance Sheets
As of December 31, 2007 and 2006
(in thousands)
                 
    December 31,  
    2007     2006  
    (unaudited)     (unaudited)  
Assets:
                
Current assets
   $ 422,863     $ 390,640  
Property, plant and equipment, net
     1,034,136       771,703  
Goodwill
     560,022       552,671  
Other long-term assets
     31,214       25,310  
 
            
Total assets
     2,048,235       1,740,324  
 
            
 
                
Liabilities and stockholders’ equity:
                
Current liabilities
     164,286       175,401  
Long-term debt
     825,873       750,577  
Long-term deferred tax liabilities
     128,839       76,802  
Minority interest
     —       2,323  
 
            
Total liabilities and minority interest
     1,118,998       1,005,103  
 
                
Common stock
     725       714  
Treasury stock
     (202 )     (202 )
Additional paid-in capital
     581,404       563,006  
Retained earnings
     317,535       155,971  
Cumulative translation adjustment
     29,775       15,732  
 
            
Total stockholders’ equity
     929,237       735,221  
 
                
 
            
Total liabilities and stockholders’ equity
   $ 2,048,235     $ 1,740,324  
 
            

 

 

Complete Production Services, Inc.
Cash Flow Data
For the Year Ended December 31, 2007
(in thousands)
         
    December 31,
    2007
    (unaudited)
Cash flows provide by/(used for):
        
Operating activities
   $ 344,189  
Investing activities:
        
Capital expenditures
   $ (372,033 )
Other investing activities
   $ (40,167 )
Financing activities
   $ 66,546  

 

 

Complete Production Services, Inc.
Consolidated Segment Information
For the Quarters Ended December 31, 2007 and 2006, and September 30, 2007
and Years Ended December 31, 2007 and 2006
(in thousands, except percentages)
                         
    Quarter Ended  
    December 31,     December 31,     September 30,  
    2007     2006     2007  
    (unaudited)     (unaudited)     (unaudited)  
Revenue:
                        
Completion and production services
   $ 330,079     $ 269,041     $ 317,170  
Drilling services
     61,222       62,177       60,566  
Products
     33,231       32,290       35,187  
 
                  
Total revenues
   $ 424,532     $ 363,508     $ 412,923  
 
                  
 
                        
EBITDA: (1)
                        
Completion and production services
   $ 102,481     $ 80,705     $ 97,070  
Drilling services
     15,856       23,176       16,701  
Products
     3,945       6,257       3,901  
Corporate and other
     (8,073 )     (7,443 )     (5,579 )
 
                  
Total EBITDA
   $ 114,209     $ 102,695     $ 112,093  
 
                  
 
                        
EBITDA as a % of Revenue:
                        
Completion and production services
     31.0 %     30.0 %     30.6 %
Drilling services
     25.9 %     37.3 %     27.6 %
Products
     11.9 %     19.4 %     11.1 %
Total
     26.9 %     28.3 %     27.1 %
                 
    Year Ended December 31,  
    2007     2006  
    (unaudited)     (unaudited)  
Revenue:
                
Completion and production services
   $ 1,262,100     $ 873,493  
Drilling services
     240,377       215,255  
Products
     152,760       123,676  
 
            
Total revenues
   $ 1,655,237     $ 1,212,424  
 
            
 
                
EBITDA: (1)
                
Completion and production services
   $ 404,893     $ 257,630  
Drilling services
     69,628       78,543  
Products
     18,443       18,708  
Corporate and other
     (28,136 )     (20,922 )
 
            
Total EBITDA
   $ 464,828     $ 333,959  
 
            
 
                
EBITDA as a % of Revenue:
                
Completion and production services
     32.1 %     29.5 %
Drilling services
     29.0 %     36.5 %
Products
     12.1 %     15.1 %
Total
     28.1 %     27.5 %
 
(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 December 31, 2007 and 2006 and September 30, 2007
and the Years Ended December 31, 2007 and 2006
(unaudited, in thousands)
                                         
    Completion                            
    & Production     Drilling             Corporate &        
    Services     Services     Products     Other     Total  
Quarter Ended December 31, 2007:
                                        
EBITDA
   $ 102,481     $ 15,856     $ 3,945     $ (8,073 )   $ 114,209  
Depreciation & amortization
     31,904       4,785       745       669       38,103  
Impairment charge
     13,094       —       —       —       13,094  
 
                              
Operating income (loss)
   $ 57,483     $ 11,071     $ 3,200     $ (8,742 )   $ 63,012  
 
                              
 
                                        
Quarter Ended December 31, 2006:
                                        
EBITDA
   $ 80,705     $ 23,176     $ 6,257     $ (7,443 )   $ 102,695  
Depreciation & amortization
     21,694       3,439       430       291       25,854  
Write-off of deferred financing costs
     —       —       —       (170 )     (170 )
 
                              
Operating income (loss)
   $ 59,011     $ 19,737     $ 5,827     $ (7,564 )   $ 77,011  
 
                              
 
                                        
Quarter Ended September 30, 2007:
                                        
EBITDA
   $ 97,070     $ 16,701     $ 3,901     $ (5,579 )   $ 112,093  
Depreciation & amortization
     29,817       4,586       793       200       35,396  
 
                              
Operating income (loss)
   $ 67,253     $ 12,115     $ 3,108     $ (5,779 )   $ 76,697  
 
                              
 
                                        
Year Ended December 31, 2007:
                                        
EBITDA
   $ 404,893     $ 69,628     $ 18,443     $ (28,136 )   $ 464,828  
Depreciation & amortization
     114,139       17,023       2,918       1,881       135,961  
Impairment charge
     13,094       —       —       —       13,094  
 
                              
Operating income (loss)
   $ 277,660     $ 52,605     $ 15,525     $ (30,017 )   $ 315,773  
 
                              
 
                                        
Year Ended December 31, 2006:
                                        
EBITDA
   $ 257,630     $ 78,543     $ 18,708     $ (20,922 )   $ 333,959  
Depreciation & amortization
     65,317       10,599       1,943       1,606       79,465  
Write-off of deferred financing costs
     —       —       —       (170 )     (170 )
 
                              
Operating income (loss)
   $ 192,313     $ 67,944     $ 16,765     $ (22,358 )   $ 254,664