Complete Production Services, Inc. Reports Fourth Quarter Earnings of $0.49 Per Diluted Share
HOUSTON--(BUSINESS WIRE)--Complete Production Services, Inc. (NYSE:CPX) today reported fourth quarter revenue of $472.8 million, an increase of 13% over the third quarter of 2010, and fourth quarter Adjusted EBITDA (as defined below) of $120.7 million, an increase of 7% over the third quarter of 2010. Fourth quarter 2010 operating income was $74.4 million, up 9% versus the third quarter of 2010, and fourth quarter net income was $38.2 million, or $0.49 per diluted share, an increase of $5.2 million or $0.07 per diluted share, over the prior quarter.
Revenue for the Completion and Production Services segment during the fourth quarter of 2010 was $416.6 million, an increase of 15% over the prior quarter. Results for our pressure pumping, coil tubing and fluid handling businesses, as well as the seasonal improvements in Canada accounted for the majority of the increase in revenue. Adjusted EBITDA for the segment was $119.2 million in the fourth quarter of 2010, up 10% versus the third quarter of 2010. The segment continued to benefit from increasing activity levels in service intensive oil and liquid-rich plays into which we deployed approximately 43,000 hydraulic horse power (HHP) of pressure pumping equipment during the third quarter of 2010. Adjusted EBITDA margin of 28.6% was slightly lower than the prior quarter primarily due to start up related costs associated with new equipment deployments.
Drilling Services segment revenue was $48.7 million during the fourth quarter of 2010, versus $48.6 million during the third quarter of 2010. Fourth quarter Adjusted EBITDA of $12.0 million for the segment was $1.0 million lower than the third quarter of 2010, primarily due to non-recurring cost recoveries in the third quarter and higher contract drilling repair and maintenance costs.
For the full year 2010, revenue was $1.56 billion, an increase of 48% from full year 2009, and Adjusted EBITDA was $374.9 million, up $225.8 million over the prior year. Operating income was $193.1 million in 2010 and net income was $84.2 million or $1.08 per diluted share. Cash flow from operating activities totaled $216.8 million in 2010 and capital expenditures totaled $169.1 million, contributing to a build in cash to a total of $126.7 million at December 31, 2010.
“Our performance in 2010 was outstanding,” commented Joe Winkler, Chairman and Chief Executive Officer. “Our dedicated workforce anticipated an improvement in activity levels and quickly responded to our customer’s needs for additional services in new markets while staying focused on quality and safety at the well site.”
“We continue to enhance our platform through capital investments, acquisitions and operational achievements, such as obtaining firm customer commitments for approximately 185,000 HHP of pressure pumping equipment that will be deployed throughout the course of 2011. Approximately seventy percent of our pressure pumping capacity will be committed under long-term take or pay contracts with an average duration of 2.3 years, providing additional certainty in our future cash-flow.”
“We are optimistic about activity levels in 2011 and expect the positive trends related to the development of oil and liquid-rich basins and the increasing service intensity associated with longer laterals and more stages to continue, creating attractive prospects for growth. We are well positioned to capitalize on opportunities as a result of our positions in the market, our asset base, our quality personnel and our strong balance sheet,” concluded Mr. Winkler.
Complete Production Services, Inc. is a leading oilfield service provider focused on the completion and production phases of oil and gas wells. The company has established a significant presence in unconventional oil and gas plays in North America that it believes have the highest potential for long-term growth.
Complete will hold a conference call to discuss fourth quarter 2010 results on Friday, February 4, 2011 at 10:00 a.m. Eastern Time. To participate in the live conference call, dial (800) 322-2803 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 68464296. The conference call will be available for replay beginning at 1:00 p.m. Eastern Time on February 4, 2011 and will be available until February 11, 2011. To access the conference call replay, please call (888) 286-8010 and use the passcode: 21048942. 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. These forward-looking statements include statements regarding future market conditions, the company’s deployment of additional pressure pumping capacity, growth in oil and liquid-rich plays, increasing service intensity and the company’s future success. Such statements 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 uncertainty of near-term and long-term activity levels, general economic conditions in the United States and globally, and other risks described in the company’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. 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 non-GAAP financial measures, including Adjusted EBITDA. Adjusted EBITDA is calculated as net income from continuing operations before net interest expense, taxes, depreciation, amortization, impairment charges and non-controlling interest. Adjusted EBITDA is not a substitute for GAAP measures of earnings and cash flow. Adjusted EBITDA is used in this press release because our management considers this measure to be an important supplemental measure of performance and believes it is used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
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Complete Production Services, Inc. Consolidated Statements of Operations For the Quarters Ended December 31, 2010 and 2009 and September 30, 2010 And the Twelve Months Ended December 31, 2010 and 2009 (in thousands, except per share data) |
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| Quarter Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||||||||
| 2010 | 2009 | 2010 | 2010 | 2009 | ||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Services | $ | 465,264 | $ | 244,607 | $ | 410,057 | $ | 1,527,618 | $ | 1,012,103 | ||||||||||
| Products | 7,571 | 6,795 | 8,552 | 33,775 | 44,291 | |||||||||||||||
| 472,835 | 251,402 | 418,609 | 1,561,393 | 1,056,394 | ||||||||||||||||
| Cost of services | 297,221 | 172,470 | 257,487 | 985,093 | 692,164 | |||||||||||||||
| Cost of products | 6,154 | 4,618 | 6,346 | 25,947 | 33,201 | |||||||||||||||
| General and administrative expense | 48,787 | 41,833 | 41,790 | 175,445 | 181,948 | |||||||||||||||
| Depreciation and amortization | 46,227 | 47,262 | 44,805 | 181,823 | 200,732 | |||||||||||||||
| Fixed asset and other impairment loss | - | 2,488 | - | - | 38,646 | |||||||||||||||
| Goodwill impairment loss | - | 97,643 | - | - | 97,643 | |||||||||||||||
| 398,389 | 366,314 | 350,428 | 1,368,308 | 1,244,334 | ||||||||||||||||
| Income (loss) before interest and taxes | 74,446 | (114,912 | ) | 68,181 | 193,085 | (187,940 | ) | |||||||||||||
| Interest expense | 14,016 | 14,551 | 14,152 | 57,669 | 56,895 | |||||||||||||||
| Interest income | (122 | ) | (36 | ) | (57 | ) | (322 | ) | (79 | ) | ||||||||||
| Income (loss) before taxes | 60,552 | (129,427 | ) | 54,086 | 135,738 | (244,756 | ) | |||||||||||||
| Tax provision (benefit) | 22,333 | (25,952 | ) | 21,056 | 51,580 | (63,088 | ) | |||||||||||||
| Net income (loss) | $ | 38,219 | $ | (103,475 | ) | $ | 33,030 | $ | 84,158 | $ | (181,668 | ) | ||||||||
| Basic earnings (loss) per share: | $ | 0.50 | $ | (1.38 | ) | $ | 0.43 | $ | 1.11 | $ | (2.42 | ) | ||||||||
| Diluted earnings (loss) per share: | $ | 0.49 | $ | (1.38 | ) | $ | 0.42 | $ | 1.08 | $ | (2.42 | ) | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic | 76,318 | 75,243 | 76,130 | 76,048 | 75,095 | |||||||||||||||
| Diluted | 78,545 | 75,243 | 77,792 | 77,684 | 75,095 | |||||||||||||||
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Complete Production Services, Inc. Condensed Consolidated Balance Sheets As of December 31, 2010 and 2009 (in thousands) |
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December 31, 2010 |
December 31, 2009 |
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| (unaudited) | (unaudited) | |||||||
| Assets: | ||||||||
| Cash | $ | 126,681 | $ | 77,360 | ||||
| Other current assets | 425,229 | 292,566 | ||||||
| Property, plant and equipment, net | 956,028 | 941,133 | ||||||
| Goodwill | 250,533 | 243,823 | ||||||
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Restricted cash (1) |
17,000 | - | ||||||
| Other long-term assets | 25,105 | 33,972 | ||||||
| Total assets | 1,800,576 | 1,588,854 | ||||||
| Liabilities and stockholders' equity: | ||||||||
| Current liabilities | 148,404 | 91,722 | ||||||
| Long-term debt | 650,000 | 650,002 | ||||||
| Long-term deferred tax liabilities | 190,422 | 148,240 | ||||||
| Other long-term liabilities | 5,916 | - | ||||||
| Total liabilities | 994,742 | 889,964 | ||||||
| Common stock | 765 | 752 | ||||||
| Treasury stock | (1,765 | ) | (334 | ) | ||||
| Additional paid-in capital | 657,992 | 636,904 | ||||||
| Retained earnings | 126,165 | 42,007 | ||||||
| Cumulative translation adjustment | 22,677 | 19,561 | ||||||
| Total stockholders' equity | 805,834 | 698,890 | ||||||
| Total liabilities and stockholders' equity | $ | 1,800,576 | $ | 1,588,854 | ||||
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| (1) |
Represents funds placed in escrow as a compensating balance for certain potential long-term insurance claim liabilities, effectively cash collateralizing and replacing a letter of credit. |
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Complete Production Services, Inc. Consolidated Segment Information For the Quarters Ended December 31, 2010 and 2009, and September 30, 2010 And the Twelve Months Ended December 31, 2010 and 2009 (in thousands, except percentages) |
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| Quarter Ended | ||||||||||||
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December 31, 2010 |
December 31, 2009 |
September 30, 2010 |
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| (unaudited) | (unaudited) | (unaudited) | ||||||||||
| Revenue: | ||||||||||||
| Completion and production services | $ | 416,592 | $ | 215,603 | $ | 361,457 | ||||||
| Drilling services | 48,672 | 29,214 | 48,600 | |||||||||
| Products | 7,571 | 6,585 | 8,552 | |||||||||
| Total revenues | $ | 472,835 | $ | 251,402 | $ | 418,609 | ||||||
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Adjusted EBITDA: (1) |
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| Completion and production services | $ | 119,217 | $ | 36,743 | $ | 108,104 | ||||||
| Drilling services | 11,955 | 2,942 | 12,936 | |||||||||
| Products | 695 | 1,540 | 1,689 | |||||||||
| Corporate and other | (11,194 | ) | (8,744 | ) | (9,743 | ) | ||||||
| Total | $ | 120,673 | $ | 32,481 | $ | 112,986 | ||||||
| Adjusted EBITDA as a % of Revenue: | ||||||||||||
| Completion and production services | 28.6 | % | 17.0 | % | 29.9 | % | ||||||
| Drilling services | 24.6 | % | 10.1 | % | 26.6 | % | ||||||
| Products | 9.2 | % | 23.4 | % | 19.7 | % | ||||||
| Total | 25.5 | % | 12.9 | % | 27.0 | % | ||||||
| Twelve Months Ended | ||||||||||||
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December 31, 2010 |
December 31, 2009 |
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| (unaudited) | (unaudited) | |||||||||||
| Revenue: | ||||||||||||
| Completion and production services | $ | 1,354,797 | $ | 897,584 | ||||||||
| Drilling services | 172,821 | 114,729 | ||||||||||
| Products | 33,775 | 44,081 | ||||||||||
| $ | 1,561,393 | $ | 1,056,394 | |||||||||
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Adjusted EBITDA: (1) |
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| Completion and production services | $ | 369,826 | $ | 165,787 | ||||||||
| Drilling services | 38,973 | 9,641 | ||||||||||
| Products | 5,197 | 7,966 | ||||||||||
| Corporate and other | (39,088 | ) | (34,313 | ) | ||||||||
| $ | 374,908 | $ | 149,081 | |||||||||
| Adjusted EBITDA as a % of Revenue: | ||||||||||||
| Completion and production services | 27.3 | % | 18.5 | % | ||||||||
| Drilling services | 22.6 | % | 8.4 | % | ||||||||
| Products | 15.4 | % | 18.1 | % | ||||||||
| Total | 24.0 | % | 14.1 | % | ||||||||
| (1) | Adjusted EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. |
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Complete Production Services, Inc. Reconciliation of Adjusted EBITDA to Net Income (Loss) For the Quarters Ended December 31, 2010 and 2009, and September 30, 2010 And the Twelve Months Ended December 31, 2010 and 2009 (unaudited, in thousands) |
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Completion & Production Services |
Drilling Services |
Products |
Corporate & Other |
Total | |||||||||||||||
| Quarter Ended December 31, 2010: | |||||||||||||||||||
| Adjusted EBITDA (1) | $ | 119,217 | $ | 11,955 | $ | 695 | $ | (11,194 | ) | $ | 120,673 | ||||||||
| Depreciation & amortization | 40,469 | 4,705 | 535 | 518 | 46,227 | ||||||||||||||
| Operating income (loss) | $ | 78,748 | $ | 7,250 | $ | 160 | $ | (11,712 | ) | $ | 74,446 | ||||||||
| Interest expense | 14,016 | ||||||||||||||||||
| Interest income | (122 | ) | |||||||||||||||||
| Income taxes | 22,333 | ||||||||||||||||||
| Net income (loss) | $ | 38,219 | |||||||||||||||||
| Quarter Ended December 31, 2009: | |||||||||||||||||||
| Adjusted EBITDA (1) | $ | 36,743 | $ | 2,942 | $ | 1,540 | $ | (8,744 | ) | $ | 32,481 | ||||||||
| Depreciation & amortization | 41,536 | 4,565 | 599 | 562 | 47,262 | ||||||||||||||
| Other intangible impairment loss | 2,488 | - | - | - | 2,488 | ||||||||||||||
| Goodwill impairment loss | 97,643 | - | - | - | 97,643 | ||||||||||||||
| Operating income (loss) | $ | (104,924 | ) | $ | (1,623 | ) | $ | 941 | $ | (9,306 | ) | $ | (114,912 | ) | |||||
| Interest expense | 14,551 | ||||||||||||||||||
| Interest income | (36 | ) | |||||||||||||||||
| Income taxes | (25,952 | ) | |||||||||||||||||
| Net income (loss) | $ | (103,475 | ) | ||||||||||||||||
| Quarter Ended September 30, 2010: | |||||||||||||||||||
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Adjusted EBITDA (1) |
$ | 108,104 | $ | 12,936 | $ | 1,689 | $ | (9,743 | ) | $ | 112,986 | ||||||||
| Depreciation & amortization | 39,078 | 4,673 | 539 | 515 | 44,805 | ||||||||||||||
| Operating income (loss) | $ | 69,026 | $ | 8,263 | $ | 1,150 | $ | (10,258 | ) | $ | 68,181 | ||||||||
| Interest expense | 14,152 | ||||||||||||||||||
| Interest income | (57 | ) | |||||||||||||||||
| Income taxes | 21,056 | ||||||||||||||||||
| Net income (loss) | $ | 33,030 | |||||||||||||||||
| Twelve Months Ended December 31, 2010: | |||||||||||||||||||
| Adjusted EBITDA (1) | $ | 369,826 | $ | 38,973 | $ | 5,197 | $ | (39,088 | ) | $ | 374,908 | ||||||||
| Depreciation & amortization | 159,110 | 18,480 | 2,211 | 2,022 | 181,823 | ||||||||||||||
| Operating income (loss) | $ | 210,716 | $ | 20,493 | $ | 2,986 | $ | (41,110 | ) | $ | 193,085 | ||||||||
| Interest expense | 57,669 | ||||||||||||||||||
| Interest income | (322 | ) | |||||||||||||||||
| Income taxes | 51,580 | ||||||||||||||||||
| Net income (loss) | $ | 84,158 | |||||||||||||||||
| Twelve Months Ended December 31, 2009: | |||||||||||||||||||
| Adjusted EBITDA (1) | $ | 165,787 | $ | 9,641 | $ | 7,966 | $ | (34,313 | ) | $ | 149,081 | ||||||||
| Depreciation & amortization | 174,929 | 21,067 | 2,460 | 2,276 | 200,732 | ||||||||||||||
| Fixed asset and other intangible impairment loss | 2,488 | 36,158 |
- |
- |
38,646 | ||||||||||||||
| Goodwill impairment loss | 97,643 | - | - | - | 97,643 | ||||||||||||||
| Operating income (loss) | $ | (109,273 | ) | $ | (47,584 | ) | $ | 5,506 | $ | (36,589 | ) | $ | (187,940 | ) | |||||
| Interest expense | 56,895 | ||||||||||||||||||
| Interest income | (79 | ) | |||||||||||||||||
| Income taxes | (63,088 | ) | |||||||||||||||||
| Net income (loss) | $ | (181,668 | ) | ||||||||||||||||
| (1) | Adjusted EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. |