HOUSTON, Jan. 27 /PRNewswire-FirstCall/ -- BJ Services Company
(NYSE: BJS; PCX; CBOE) today reported net income of $149.2 million, or $0.51
per diluted share, for the first quarter of fiscal 2009, which ended December
31, 2008. The quarter's diluted earnings per share decreased 12% compared to
the $0.58 per diluted share reported in the first quarter of fiscal 2008 and
11% from the $0.57 per diluted share in the previous quarter. First quarter
2009 operating results included a non-cash charge of $21.7 million (pre-tax),
or $0.05 per diluted share, related to the settlement of a frozen U.S. defined
benefit pension plan. In December 2008, the Company received a final
determination letter from the U.S. Internal Revenue Service allowing the
Company to settle its pension obligation in accordance with the terms of an
insurance company agreement entered into in September 2006.
Revenue in the first quarter of fiscal 2009 was $1,431.6 million, 11%
higher than the $1,285.1 million reported in the prior year's December quarter
and 6% lower than the $1,529.8 million reported in the previous quarter.
Including the pension-related charge mentioned above, operating income for the
quarter was $220.4 million, a 13% decrease compared to $252.6 million reported
in the first quarter of fiscal 2008 and a 16% decrease compared to $261.1
million for the previous quarter. As a percentage of revenue, operating
income was 15.4% in the first quarter of fiscal 2009, compared to 19.7% in the
first quarter of fiscal 2008 and 17.1% in the previous quarter. The $21.7
million pension charge represented 1.5% of revenue for the quarter.
Commenting on the results, Chairman and CEO Bill Stewart said, "We were
pleased with our operating results for the quarter, which exceeded our
expectations. U.S. activity was bolstered somewhat by projects that had been
delayed in the previous quarter due to hurricane activity along the Gulf
Coast. Our Canada pressure pumping operations experienced higher volume and
some pricing improvement sequentially. International pressure pumping
activity was down sequentially, primarily as a result of anticipated customer
and weather-related slowdowns, but showed marked year over year improvement in
revenue and profitability, as a result of new contracts added during fiscal
2008 and more favorable weather conditions in most international markets
between the two periods. Oilfield service group revenues were also down
sequentially, due in part to the seasonal slowdown in Process and Pipeline
Services activity, and operating income margins for the group were slightly
lower as a result of a change in product and service mix.
"Recent economic forecasts suggest that the lower commodity pricing
environment will likely be with us for at least the remainder of the year, as
a result of the global economic slowdown. This will lead to lower drilling
activity in the U.S. and other markets in which we serve, and consequently
reduce demand for our products and services. We are taking appropriate
measures to manage through these anticipated activity declines, without
sacrificing job quality, safety and long-term commitment to our customers. In
addition, we are reducing capital spending plans to a level that we expect to
be 20 - 25% lower than fiscal year 2008."
Cash and cash equivalents increased $22.2 million to $172.5 million and
debt decreased $3.9 million to $552.5 million during the quarter. Uses of
cash during the quarter included capital expenditures of $113.8 million,
treasury stock purchases of 3.5 million shares for $44.2 million, and the
payment of $14.7 million in dividends to our stockholders. Debt repayable
within the next twelve months is approximately $54 million, and the Company
has no borrowings outstanding under its $400 million bank credit facility.
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
December 31 September 30
2008 2007 2008
Revenue $1,431,642 $1,285,065 $1,529,767
Operating
Expenses:
Cost of sales and
services 1,099,232 950,450 1,174,196
Pension settlement 21,695 --- ---
Research and engineering 17,120 17,198 17,323
Marketing 30,745 28,832 30,907
General and
administrative 42,421 36,630 42,344
Loss (gain) on
long-lived assets 28 (626) 3,867
Total operating
expenses 1,211,241 1,032,484 1,268,637
Operating income 220,401 252,581 261,130
Interest expense (6,081) (7,862) (6,705)
Interest income 515 474 528
Other income/(expense),
net 1,452 (2,711) (7,904)
Income before income taxes 216,287 242,482 247,049
Income taxes 67,049 70,298 78,954
Net income $149,238 $172,184 $168,095
Earnings Per Share:
Basic $0.51 $0.59 $0.57
Diluted $0.51 $0.58 $0.57
Weighted Average Shares
Outstanding:
Basic 292,685 292,627 294,153
Diluted 293,910 295,284 296,050
Supplemental Data:
Depreciation and
amortization $70,656 $62,766 $70,268
Capital expenditures 113,773 161,797 180,930
Debt 552,469 624,324 556,340
Operating Highlights
We revised our internal management reporting structure in fiscal 2009,
moving our U.S. service tool business, which previously had been reported
within the U.S./Mexico Pressure Pumping segment, into the Completion Tools
division of our Oilfield Services Group. All periods presented have been
recast to conform to the new reporting structure. Following are the results
of operations for the three months ended December 31, 2008, December 31, 2007
and September 30, 2008:
Three Months Ended
December 31 September 30
2008 2007 2008
U.S./Mexico Pressure Pumping
Revenue $721,546 $654,142 $755,240
Operating Income 151,885 180,088 147,942
Operating Income Margins 21% 28% 20%
Canada Pressure Pumping
Revenue $131,810 $121,346 $133,702
Operating Income 28,843 16,992 19,463
Operating Income Margins 22% 14% 15%
International Pressure Pumping
Revenue $328,968 $288,512 $355,019
Operating Income 45,559 35,925 56,645
Operating Income Margins 14% 12% 16%
Oilfield Services Group
Revenue $249,318 $221,065 $285,806
Operating Income 44,564 41,967 58,735
Operating Income Margins 18% 19% 21%
Corporate
Operating Loss $(50,450) $(22,391) $(21,655)
December Quarter Review
U.S./Mexico Pressure Pumping Services first quarter 2009 revenue of $721.5
million was 4% lower than the September 2008 quarter (sequential) and 10%
higher than the December 2007 quarter (year over year). Average drilling rig
activity for U.S./Mexico decreased 4% from the previous quarter and the
seasonal weather and regulatory-related declines in the Rocky Mountains
significantly impacted the sequential revenue results. Year over year,
average active drilling rigs increased 6% with almost all regions contributing
to the increase, with the Rocky Mountains, Mid-continent and Northeast regions
being the most significant contributors. The year over year improvement
represents higher volume but lower relative pricing for our products and
services. Operating income margins for U.S./Mexico improved slightly to 21%
from 20% in the previous quarter, but declined from 28% in the same quarter
last year, primarily as a result of the lower relative pricing.
Canada Pressure Pumping Services first quarter 2009 revenue of $131.8
million decreased 1% sequentially, as a result of unfavorable exchange rates
which were largely offset by increased service activity and modest pricing
improvement. The U.S. dollar strengthened approximately 16% against the
Canadian dollar between the two periods, resulting in a decrease in the U.S.
dollar equivalent value of Canadian sales. Year over year revenue increased
9% due to increased activity levels and an increase in the average size of
jobs being performed. Average active drilling rig activity in Canada
increased 15% from the prior year quarter and decreased 6% sequentially.
Operating income margin for Canada increased to 22% in the first quarter of
fiscal 2009 from 15% in the previous quarter, as the prior quarter was
negatively impacted by higher material costs and lower pricing. Year over
year, operating income margins improved from 14% reported in the prior year.
International Pressure Pumping Services first quarter 2009 revenue of
$329.0 million decreased 7% sequentially with average active drilling rig
levels remaining unchanged for the same period. Revenue compared to the same
quarter last year increased 14% with average active drilling rigs up 6%.
Percentage changes in revenue by region compared to the fourth quarter and
first quarter of fiscal 2008 are as follows:
Region Sequential Year Over Year
Europe -21% -7%
Middle East -8% 9%
Asia Pacific 1% 29%
Russia -23% 11%
Latin America -3% 20%
The decline in Europe revenue sequentially is primarily the result of
unfavorable exchange rates and lower activity in the continental Europe
markets, as well as customer and weather-related job delays in the U.K. The
sequential decline in the Middle East is largely attributable to lower
customer rig activity in Saudi Arabia, India and Algeria. The lower revenue
in Russia sequentially is a reflection of the difficult operating environment
in that market resulting from the financial and economic crisis. Latin
America revenues were lower sequentially, as lower stimulation activity in
Brazil offset the impact of higher activity in Peru.
Year over year, International Pressure Pumping revenue improved 14% with
average international drilling rig activity increasing 6%. Revenue increased
29% in Asia Pacific, 20% in Latin America and 9% in the Middle East, with
average active drilling rigs increasing 2%, 11% and 3%, respectively,
primarily as a result of new contracts awarded during fiscal 2008. The Asia
Pacific increase reflects new projects in China, increased activity levels in
Malaysia and increased product sales in Thailand. Latin America benefited
from increased stimulation activity in Venezuela, Brazil and Argentina. The
Middle East increase was primarily the result of increased activity in North
Africa and Oman, partially offset by lower activity in India. Russia revenue
increased year over year primarily as a result of more favorable weather
conditions in the first quarter of fiscal 2009 compared to the same quarter in
fiscal 2008.
Operating income margins for International Pressure Pumping were 14%
compared to 16% reported in the previous quarter and 12% reported in last
year's December quarter. Sequential declines were the result of the overall
activity and revenue decline in the segment, while the year over year
improvement was mainly due to increased volume in Asia Pacific and Latin
America.
Oilfield Services Group first quarter 2009 revenue of $249.3 million
decreased 13% sequentially and increased 13% year over year. Percentage
changes in revenue by division compared to the fourth quarter and first
quarter of fiscal 2008 are as follows:
Division Sequential Year Over Year
Tubular Services -11% -2%
Process and Pipeline Services -20% -2%
Chemical Services -2% 16%
Completion Tools -24% 38%
Completion Fluids 18% 38%
Completion Fluids benefited from increased fluid sales in Mexico,
improving revenue 18% from the previous quarter, while all other operating
segments within the Oilfield Services Group had a sequential decline in
revenue during the first fiscal quarter of 2009. The Process and Pipeline
Services business, which had record revenue results in the previous quarter,
was most significantly impacted by seasonal slowdowns in the North Sea as well
as project delays in Africa. Completion Tools revenue decreased as a result
of large project-related sales in Latin America in the previous quarter.
Completion Tools led the Oilfield Services Group revenue improvement year
over year, benefiting from the operations of Innicor Subsurface Technologies,
which was acquired in late May 2008. Completion Fluids and Chemical Services
also made solid contributions to the overall revenue increase.
The Oilfield Services Group operating income margin for the quarter was
18%, down from 21% in the previous quarter and 19% reported in last year's
December quarter. The sequential decline was due primarily to the seasonal
decline in revenue from our Process and Pipeline Services business and a
difference in product and service mix.
Corporate operating loss in the first quarter of fiscal 2009 includes the
$21.7 million non-cash pension settlement charge and higher estimated
incentive and stock compensation expenses than the comparable periods.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated revenue
by geographic area for the December 2008 quarter compared to the September
2008 quarter and the December 2007 quarter. The information presented is
based on our combined service and product line offering by geographic region.
Geographic Sequential Year Over Year
U.S. -5% 9%
Canada -4% 21%
Total -5% 10%
Latin America -7% 28%
Europe/Africa -18% -6%
Russia -34% 55%
Middle East -7% 1%
Asia Pacific 4% 28%
Total -6% 11%
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 dial 913-981-5559 ten
minutes prior to the conference call start time and give the conference code
number 6445232. 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 6445232.
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, expenses
and profits, strategies for our operations, and other subjects, including
conditions in the oilfield service and oil and natural gas industries and in
the U.S. and international economy in general. These forward-looking
statements are based on assumptions that may prove to be inaccurate, and they
are subject to risks and uncertainties that could cause actual results to
differ materially from the results expected. These risk factors include, but
are not limited to, general economic and business conditions, global economic
growth and activity, oil and natural gas market conditions, political and
economic uncertainty, and other risks and uncertainties described in our
Annual Report on Form 10-K and subsequent public filings with the Securities
and Exchange Commission.
BJ Services Company is a leading provider of pressure pumping, well
completion, production enhancement and pipeline services to the petroleum
industry.
(NOT INTENDED FOR DISTRIBUTION TO BENEFICIAL OWNERS)
