HOUSTON, Oct. 30 /PRNewswire-FirstCall/ -- BJ Services Company
(NYSE: BJS; CBOE; PCX) today reported net income of $168.1 million, or $0.57
per diluted share, for the fourth quarter of fiscal 2008, which ended
September 30, 2008. The quarter's diluted earnings per share increased 19%
compared to the $0.48 per diluted share reported in the previous quarter and
decreased 11% compared to the $0.64 per diluted share for the fourth quarter
of fiscal 2007.
Revenue in the fourth quarter of fiscal 2008 was a record $1.53 billion, a
15% increase from the $1.33 billion reported in the previous quarter and a 20%
increase from the $1.28 billion reported in the prior year's September
quarter, marking the second consecutive quarter of record revenue achievement
for the Company. Operating income for the quarter was $261.1 million, a 26%
increase compared to $206.9 million for the previous quarter and a 9% decrease
compared to $286.2 million reported in the fourth quarter of fiscal 2007.
Operating income as a percentage of revenue was 17.1% in the fourth quarter of
fiscal 2008, compared to 15.6% in the previous quarter and 22.4% in the
comparable quarter of the prior year. The improvement from the prior quarter
reflects revenue and profit growth in all reportable segments and the return
to normal activity levels in the Canadian market following Spring break-up,
while the decline in operating income from the prior year is primarily the
result of price declines in the Company's North American pressure pumping
operations.
Commenting on the results, Chairman and CEO Bill Stewart said, "Led by
strong drilling activity and recent pricing stability, our U.S. pressure
pumping operations reported strong quarterly results, despite disruptions
caused by Hurricanes Gustav and Ike along the Gulf Coast. Our Canadian
pressure pumping operations recovered nicely from Spring break-up, and we also
experienced solid sequential revenue growth with operating margin improvement
in our International Pressure Pumping business and our Oilfield Services
Group. In the U.S., we suffered property damage and repair costs of
approximately one million dollars as a result of the storms, and scheduled
projects that would have resulted in roughly $18 - 20 million of revenue
during the quarter were delayed or canceled due to the storms. We estimate
that the storms negatively impacted our quarterly operating results by $0.02
per diluted share.
"The recent drop in commodity prices coupled with uncertainty in the
credit markets will likely result in lower drilling activity during fiscal
2009. We expect drilling activity in North America to begin to decline during
our first fiscal quarter and anticipate moderate reductions in certain
international markets. As a result, we project that our earnings per share
for the first fiscal quarter will be $0.48 to $0.51."
During the quarter, debt decreased $44.9 million to $556.3 million and
cash and cash equivalents increased $67.8 million to $150.3 million. Uses of
cash during the quarter included capital expenditures of $180.9 million and
the payment of $14.7 million in dividends. Subsequent to September 30, 2008,
the Company purchased 3.5 million shares of its common stock for $44.2 million
in open market transactions, at an average price of $12.75 per share. The
Company has remaining authorization from its Board of Directors to purchase up
to an additional $348 million in treasury stock.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
September 30 June 30
2008 2007 2008
Revenue $1,529,767 $1,279,313 $1,328,228
Operating Expenses:
Cost of sales and services 1,174,196 910,623 1,032,375
Research and engineering 17,323 18,532 18,563
Marketing 30,907 28,083 29,400
General and administrative 42,344 37,521 40,401
Loss/(gain) on long-lived
assets 3,867 (1,645) 631
Total operating expenses 1,268,637 993,114 1,121,370
Operating income 261,130 286,199 206,858
Interest expense (6,705) (6,470) (6,596)
Interest income 528 219 554
Other expense, net (7,904) (905) (3,189)
Income before income taxes 247,049 279,043 197,627
Income taxes 78,954 89,693 55,844
Net income $168,095 $189,350 $141,783
Earnings Per Share:
Basic $0.58 $0.65 $0.48
Diluted $0.57 $0.64 $0.48
Weighted Average Shares
Outstanding:
Basic 294,153 291,630 293,892
Diluted 296,050 294,510 296,357
Supplemental Data:
Depreciation and
amortization $70,268 $57,914 $67,532
Capital expenditures 180,930 208,878 106,502
Debt 556,340 671,028 601,219
Twelve Months Ended September 30
2008 2007
Revenue $5,426,262 $4,802,409
Operating Expenses:
Cost of sales and services 4,161,128 3,332,620
Research and engineering 71,997 67,536
Marketing 120,903 107,421
General and administrative 161,027 143,992
Loss on long-lived assets 4,110 301
Total operating expenses 4,519,165 3,651,870
Operating income 907,097 1,150,539
Interest expense (28,112) (32,731)
Interest income 1,912 1,624
Other expense, net (12,751) (6,584)
Income before income taxes 868,146 1,112,848
Income taxes 258,781 359,208
Net income $609,365 $753,640
Earnings Per Share:
Basic $2.08 $2.57
Diluted $2.06 $2.55
Weighted Average Shares Outstanding:
Basic 293,479 292,757
Diluted 295,766 295,916
Supplemental Data:
Depreciation and amortization $265,466 $209,019
Capital expenditures 599,218 752,113
Operating Highlights
Following are the results of operations for the three months ended
September 30, 2008, September 30, 2007 and June 30, 2008 and for the
twelve months ended September 30, 2008 and 2007:
Three Months Ended Twelve Months Ended
September 30 June 30 September 30
2008 2007 2008 2008 2007
U.S./Mexico
Pressure
Pumping
Revenue $765,293 $641,846 $706,689 $2,777,577 $2,562,747
Operating
Income 150,235 193,285 146,821 605,594 881,631
Operating
Income
Margins 20% 30% 21% 22% 34%
Canada
Pressure
Pumping
Revenue $133,702 $117,838 $48,636 $442,474 $386,547
Operating
Income
(Loss) 19,463 21,886 (16,595) 34,341 32,493
Operating
Income
Margins 15% 19% -34% 8% 8%
International
Pressure
Pumping
Revenue $355,019 $295,003 $316,922 $1,252,573 $1,074,744
Operating
Income 56,645 40,668 45,235 172,519 152,734
Operating
Income
Margins 16% 14% 14% 14% 14%
Oilfield
Services
Group
Revenue $275,753 $224,626 $255,981 $953,638 $778,371
Operating
Income 56,442 52,367 49,669 183,913 163,539
Operating
Income
Margins 20% 23% 19% 19% 21%
Corporate
Operating
Loss $(21,655) $(22,007) $(18,272) $(89,270) $(79,858)
Year in Review
For the fiscal year ended September 30, 2008, consolidated revenue was a
record $5.4 billion, increasing 13% from the $4.8 billion generated during
fiscal 2007. Earnings per diluted share of $2.06 decreased 19% from the $2.55
reported in fiscal 2007, primarily as a result of lower pricing in North
America for pressure pumping products and services.
All of our reporting segments contributed to the fiscal 2008 revenue
growth. Revenue from U.S./Mexico Pressure Pumping Services increased 8% from
last year as a result of higher activity levels largely offset by lower
pricing for our products and services. Revenue from our Canada and
International Pressure Pumping Services increased 14% and 17%, respectively.
The Canadian increase was primarily attributable to favorable exchange rates
and the International increase was the result of increased activity in the
Middle East, Asia Pacific and Latin America. During 2008, our Oilfield
Services Group's revenue increased 23%, largely as a result of increased
international activity and, to a lesser extent, the acquisition of Innicor
Subsurface Technologies Inc. in the third fiscal quarter.
September Quarter Review
U.S./Mexico Pressure Pumping Services fourth quarter 2008 revenue of
$765.3 million was 8% higher than the June 2008 quarter (sequential) with
average active drilling rigs for the same period increasing 6%. Most of the
increase was attributable to higher activity in the Rocky Mountains and the
Northeast, partially offset by business interruptions along the Gulf Coast due
to tropical storm and hurricane activity. Compared to the September 2007
quarter (year over year), revenue increased 19% on a 10% increase in average
active drilling rigs. Operating income margin for U.S./Mexico decreased to
20% from 21% in the previous quarter and 30% in the same quarter last year.
The lower operating income margin compared to the same quarter of last year
was due to lower pricing and increased material, maintenance and fuel costs.
Canada Pressure Pumping Services fourth quarter 2008 revenue of $133.7
million was 175% higher sequentially as the region returned to normal activity
levels following the third fiscal quarter Spring break-up period with average
drilling rig activity up 156%. Year over year revenue increased 13% with
average drilling rig activity increasing 24%. The year over year revenue
increased less than rig activity, primarily as a result of lower pricing in
fiscal 2008. Operating income margin for the fourth quarter of 2008 was 15%,
up from -34% in the previous quarter and down from 19% in the same quarter in
the previous year. The margin decline from the same quarter of last year is
largely attributable to lower pricing and increased material costs.
International Pressure Pumping Services fourth quarter 2008 revenue of
$355.0 million increased 12% sequentially with average active drilling rig
levels increasing 1% for the same period. Revenue compared to the same
quarter last year increased 20% with average active drilling rig count up 7%.
Percentage changes in revenue by region compared to the third quarter of
fiscal 2008 and the fourth quarter of fiscal 2007 are as follows:
Sequential Year Over Year
Region
Europe(1) 1% 20%
Middle East(1) 16% 21%
Asia Pacific 14% 27%
Russia 12% 12%
Latin America(1) 11% 17%
Total 12% 20%
(1) During the second quarter of fiscal 2008, we revised the internal
management reporting structure of our pressure pumping operations in
Africa, whose results of operations were previously reported in our
Europe/Africa operating segment. Our North Africa results, including
Algeria and Libya, are now included in our Middle East operating
segment, while our West Africa results south of Nigeria, including
Angola and Gabon, are now included in our Latin America operating
segment. Nigeria and coastal areas north of there remain as part of
our Europe operating segment. Prior period results have been revised
to conform with the current presentation.
All of our International Pressure Pumping operating segments showed
sequential revenue growth, with our Middle East, Asia Pacific and Latin
America operations accounting for most of the improvement. The Middle East
results reflect a full quarter of vessel operations in India compared to the
previous quarter, in which we had an offshore stimulation vessel docked for
repairs for most of the period. Activity levels also increased in Algeria,
Saudi Arabia and Azerbaijan. Asia Pacific experienced activity-related growth
in China, Malaysia and Thailand compared to the prior quarter. Latin America
also contributed to the sequential increase, with revenue improvement in
Argentina, Brazil and Venezuela.
Year over year, International Pressure Pumping revenue improved 20% with
average active drilling rigs increasing 7%. Revenue increased 27% in Asia
Pacific, 21% in the Middle East and 17% in Latin America, with average active
drilling rigs increasing 11%, 3% and 8%, respectively. The Asia Pacific
increase reflects increased activity levels in China, Malaysia, Thailand and
New Zealand. The Middle East increase was primarily the result of increased
activity in Algeria as well as new service contracts in Kazakhstan and
Azerbaijan. Latin America benefited from increased stimulation activity in
Venezuela, Brazil and Argentina.
Operating income margin for International Pressure Pumping was 16% for the
fourth quarter of fiscal 2008, a sequential increase from 14% reported in both
the previous quarter and in the same quarter last year.
During the quarter we recognized a non-cash goodwill impairment charge of
$6.1 million related to our Russia operations. With the competitive pressure
in the areas in which we operate in Russia, cost inflation, currency risks and
concerns over future activity reductions, our analysis indicates that our
goodwill associated with Russia might not be recoverable. We also recorded a
non-cash pre-tax loss of $2.9 million on the sale of our interest in a
Hungarian joint venture operation, and we received a $4.0 million cash
settlement in a litigation matter during the quarter. The aggregate impact of
these three non-operating items are reflected in Other Expense, net, on our
statement of operations, and resulted in a loss of $0.02 per diluted share for
the quarter.
Oilfield Services Group fourth quarter 2008 revenue of $275.8 million
increased 8% sequentially and increased 23% year over year. Percentage
changes in revenue by division compared to the third quarter of fiscal 2008
and the fourth quarter of fiscal 2007 are as follows:
Sequential Year Over Year
Division
Tubular Services 3% 16%
Process & Pipeline Services 2% 7%
Chemical Services 1% 31%
Completion Tools 81% 110%
Completion Fluids -25% -8%
Total 8% 23%
All of our Oilfield Services Group's operating segments except Completion
Fluids reported sequential revenue improvement in the fourth quarter of fiscal
2008. Completion Tools showed an 81% increase in revenue, mostly due to the
acquisition of Innicor Subsurface Technologies Inc. in late May 2008.
Excluding the effect of the Innicor acquisition, Completion Tools revenue
increased 41%, benefiting mostly from project-related sales in Latin America.
The decline in revenue from the previous quarter for Completion Fluids was due
to lower activity levels in the Gulf of Mexico during the quarter, which was
largely attributable to interrupted operations due to hurricanes and tropical
storms.
Year over year Completion Tools also benefited from the Innicor
acquisition. Excluding Innicor, Completion Tools revenue increased 41% year
over year, primarily as a result of increased international sales. Chemical
Services revenue increased 31% year over year, due to increased U.S. activity
and capillary work. Tubular Services improved 16% from the prior year
quarter, benefiting from increased activity in Asia Pacific and Latin America.
The Oilfield Services Group operating income margin for the quarter was
20%, up from 19% in the previous quarter and down from 23% in the prior year's
fourth quarter.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated revenue
by geographic area for the September 2008 quarter compared to the June 2008
quarter and the September 2007 quarter. The information presented is based on
our combined service and product line offering by geographic region.
Region Sequential Year Over Year
U.S. 6% 16%
Canada 131% 29%
Total 16% 18%
Latin America 20% 25%
Europe/Africa 2% 6%
Russia 3% 84%
Middle East 16% 22%
Asia Pacific 15% 27%
Total 15% 20%
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
conference call mentioned below will be posted on our website as soon
thereafter as practicable.
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 913-312-1446 ten
minutes prior to the conference call start time and give the conference code
number 9688354. 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 9688354.
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, well
completion, production enhancement and pipeline services to the petroleum
industry.
