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8-K - FORM 8-K - Complete Production Services, Inc. | h68297e8vk.htm |
EXHIBIT 99.1
Complete Production Services, Inc. Reports Third Quarter 2009 Results
Houston(Business Wire)October 26, 2009 Complete Production Services, Inc. (NYSE: CPX) today
reported third quarter revenue of $229.9 million and an operating loss of $64.1 million, or $0.69
per diluted share. Third quarter results include pre-tax, non-cash charges of $41.0 million
primarily related to fixed assets. Excluding these charges, EBITDA for the third quarter of 2009
was $27.2 million (Modified EBITDA as defined below) and net loss was $0.32 per diluted share.
The $41.0 million in charges resulted from an ongoing evaluation and rationalization of operations
and assets due to the significant changes in market conditions which began in the fourth quarter of
2008. The contract drilling business accounted for approximately $37.6 million of the charges, of
which $36.2 million related to an impairment analysis done in accordance with U.S. GAAP and $1.4
million resulted from asset disposals. The remaining $3.4 million occurred within the Completion
and Production Services segment and was associated with asset disposals and inventory write-downs.
Revenue for the Completion and Production Services segment during the third quarter of 2009 was
$198.0 million, an increase of $1.6 million from the prior quarter. Modified EBITDA for the
segment was $34.8 million, which compares to $34.1 million in the prior quarter. Modified EBITDA
margin for the segment during the third quarter was 17.6% versus 17.4% for the quarter ending June
30, 2009.
Third quarter Drilling Services segment revenue was $25.4 million, versus $24.7 million reported
for the prior quarter. The segment reported a Modified EBITDA loss of $2.4 million compared to a
positive contribution of $3.6 million in the second quarter of 2009. The segment was adversely
impacted by a shift in mix, a decrease in utilization in the contract drilling business and an
increase in bad debt expense of $3.5 million.
Relative to the severe drop in activity earlier this year, market conditions have stabilized
considerably, commented Joe Winkler, Chairman and CEO. We anticipate that the near-term will
remain challenging, but are pleased with how our dedicated people have positioned the Company for
the market recovery. Year-to-date we:
| significantly reduced our cost structure and capital expenditures; |
| reduced our debt by $197.3 million, completely paying-down our revolving credit facility; |
| amended our undrawn credit facility to provide greater certainty that we will have access to liquidity beyond the $76.1 million in cash we had as of September 30, 2009; and |
| prudently protected and enhanced our core market positions. |
While we do not anticipate an improvement prior to year-end, we are seeing indications of future
increases in activity. Our focus has now shifted to preparing for the recovery which we believe
will be led by horizontal, multi-stage well completions in our core basins, 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 third quarter 2009 results on Tuesday, October 27,
2009 at 11:00 a.m. Eastern Time. To participate in the live conference call, dial (800) 561-2601
at least ten minutes prior to the scheduled start of the call. When prompted, provide the
passcode: 10516712. The conference call will be available for replay beginning at 2:00 p.m. on
October 27, 2009 and will be available until November 3, 2009. To access the conference call
replay, please call (888) 286-8010 and use the passcode: 45251817. 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 Companys business objectives in the fourth quarter of 2009 and the
Companys 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 and other risks described in
the Companys 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 Completes operating segments using non-GAAP financial
measures, EBITDA, Adjusted EBITDA and Modified EBITDA. EBITDA is calculated as net income from
continuing operations before net interest expense, taxes, depreciation and amortization. Adjusted
EBITDA is calculated as EBITDA before impairment charges and minority interest. Modified EBITDA is
calculated as Adjusted EBITDA before certain other non-cash charges including fixed asset and
inventory write-downs and loss on non-monetary asset exchange. EBITDA, Adjusted EBITDA and Modified
EBITDA are not substitutes for GAAP measures of earnings and cash flow. EBITDA, Adjusted EBITDA
and Modified EBITDA are used in this press release because our management considers these measures
to be important supplemental measures of performance and believes they are used by securities
analysts, investors and other interested parties in the evaluation of companies in our industry.
In the second quarter of 2009, management discovered accounting errors at one of its operations in
the Rocky Mountain region, which occurred in prior years and impacted operating results for the
years ended December 31, 2006, 2007 and 2008. The Company corrected these errors as of June 30,
2009 and made the required adjustments to reported results for certain prior periods, including the
three and nine-month periods ended September 30, 2008. Accordingly, the financial information in
this press release for the three and nine-month periods ended September 30, 2008 has been revised
from its original presentation.
For more information, please contact:
Jose Bayardo
Vice President and Chief Financial Officer
281-372-2300
Vice President and Chief Financial Officer
281-372-2300
Complete Production Services, Inc.
Consolidated Statements of Operations
For the Quarters and Nine Months Ended September 30, 2009 and 2008
(in thousands, except per share data)
Consolidated Statements of Operations
For the Quarters and Nine Months Ended September 30, 2009 and 2008
(in thousands, except per share data)
Quarter Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
Revised | Revised | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Revenue: |
||||||||||||||||
Services |
$ | 223,429 | $ | 481,073 | $ | 767,496 | $ | 1,307,069 | ||||||||
Products |
6,484 | 13,237 | 37,496 | 40,689 | ||||||||||||
229,913 | 494,310 | 804,992 | 1,347,758 | |||||||||||||
Cost of services |
157,708 | 294,958 | 519,694 | 801,908 | ||||||||||||
Cost of products |
4,596 | 8,888 | 28,583 | 27,438 | ||||||||||||
General and administrative expense |
45,204 | 46,498 | 140,115 | 141,952 | ||||||||||||
Depreciation and amortization |
50,379 | 47,721 | 153,470 | 130,058 | ||||||||||||
Fixed asset impairment loss |
36,158 | | 36,158 | | ||||||||||||
294,045 | 398,065 | 878,020 | 1,101,356 | |||||||||||||
Income (loss) from continuing operations before
interest and taxes |
(64,132 | ) | 96,245 | (73,028 | ) | 246,402 | ||||||||||
Interest expense |
13,987 | 14,052 | 42,344 | 44,252 | ||||||||||||
Interest income |
(13 | ) | (85 | ) | (43 | ) | (242 | ) | ||||||||
| ||||||||||||||||
Income (loss) from continuing operations before taxes |
(78,106 | ) | 82,278 | (115,329 | ) | 202,392 | ||||||||||
Tax provision (benefit) |
(26,081 | ) | 29,804 | (37,136 | ) | 71,822 | ||||||||||
Income (loss) from continuing operations |
$ | (52,025 | ) | $ | 52,474 | $ | (78,193 | ) | $ | 130,570 | ||||||
Loss from discontinued operations (net of tax) |
| (153 | ) | | (4,859 | ) | ||||||||||
Net income (loss) |
$ | (52,025 | ) | $ | 52,321 | $ | (78,193 | ) | $ | 125,711 | ||||||
Basic earnings (loss) per share: |
||||||||||||||||
Continuing operations |
$ | (0.69 | ) | $ | 0.71 | $ | (1.04 | ) | $ | 1.78 | ||||||
Discontinued operations |
$ | | $ | (0.00 | ) | $ | | $ | (0.07 | ) | ||||||
$ | (0.69 | ) | $ | 0.71 | $ | (1.04 | ) | $ | 1.71 | |||||||
Diluted earnings (loss) per share: |
||||||||||||||||
Continuing operations |
$ | (0.69 | ) | $ | 0.70 | $ | (1.04 | ) | $ | 1.76 | ||||||
Discontinued operations |
$ | | $ | (0.00 | ) | $ | | $ | (0.07 | ) | ||||||
$ | (0.69 | ) | $ | 0.70 | $ | (1.04 | ) | $ | 1.69 | |||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
75,200 | 73,935 | 75,045 | 73,225 | ||||||||||||
Diluted |
75,200 | 75,008 | 75,045 | 74,370 |
Complete Production Services, Inc.
Condensed Consolidated Balance Sheets
As of September 30, 2009 and December 31, 2008
(in thousands)
Condensed Consolidated Balance Sheets
As of September 30, 2009 and December 31, 2008
(in thousands)
Revised | ||||||||
September 30, | December 31, | |||||||
2009 | 2008 | |||||||
(unaudited) | (unaudited) | |||||||
Assets: |
||||||||
Cash |
$ | 76,143 | $ | 18,500 | ||||
Other current assets |
262,095 | 420,877 | ||||||
Property, plant and equipment, net |
980,706 | 1,166,686 | ||||||
Goodwill |
341,512 | 341,592 | ||||||
Other long-term assets |
35,382 | 39,698 | ||||||
Total assets |
1,695,838 | 1,987,353 | ||||||
Liabilities and stockholders equity: |
||||||||
Current liabilities |
99,907 | 136,440 | ||||||
Long-term debt |
650,121 | 843,842 | ||||||
Long-term deferred tax liabilities |
148,198 | 146,360 | ||||||
Total liabilities |
898,226 | 1,126,642 | ||||||
Common stock |
752 | 748 | ||||||
Treasury stock |
(328 | ) | (202 | ) | ||||
Additional paid-in capital |
633,858 | 623,988 | ||||||
Retained earnings |
145,482 | 223,675 | ||||||
Cumulative translation adjustment |
17,848 | 12,502 | ||||||
Total stockholders equity |
797,612 | 860,711 | ||||||
Total liabilities and stockholders equity |
$ | 1,695,838 | $ | 1,987,353 | ||||
Complete Production Services, Inc.
Cash Flow Data
For the Nine Months Ended September 30, 2009
(in thousands)
Cash Flow Data
For the Nine Months Ended September 30, 2009
(in thousands)
September 30, | ||||
2009 | ||||
(unaudited) | ||||
Cash flows provided by/(used for): |
||||
Operating activities |
$ | 270,063 | ||
Investing activities: |
||||
Capital expenditures |
$ | (29,094 | ) | |
Other investing activities |
$ | 20,155 | ||
Financing activities |
$ | (203,314 | ) |
Complete Production Services, Inc.
Consolidated Segment Information
For the Quarters Ended September 30, 2009 and 2008, June 30, 2009
And for the Nine Months Ended September 30, 2009 and 2008
(in thousands, except percentages)
Consolidated Segment Information
For the Quarters Ended September 30, 2009 and 2008, June 30, 2009
And for the Nine Months Ended September 30, 2009 and 2008
(in thousands, except percentages)
Quarter Ended | ||||||||||||
Revised | ||||||||||||
September 30, | September 30, | June 30, | ||||||||||
2009 | 2008 | 2009 | ||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
Revenue: |
||||||||||||
Completion and production services |
$ | 198,014 | $ | 418,865 | $ | 196,441 | ||||||
Drilling services |
25,415 | 62,208 | 24,709 | |||||||||
Products |
6,484 | 13,237 | 17,248 | |||||||||
Total revenues |
$ | 229,913 | $ | 494,310 | $ | 238,398 | ||||||
Adjusted EBITDA: (1) |
||||||||||||
Completion and production services |
$ | 31,396 | $ | 133,459 | $ | 31,424 | ||||||
Drilling services |
(3,757 | ) | 17,005 | 3,569 | ||||||||
Products |
1,791 | 3,387 | 2,085 | |||||||||
Corporate and other |
(7,025 | ) | (9,885 | ) | (8,578 | ) | ||||||
Total Adjusted EBITDA |
$ | 22,405 | $ | 143,966 | $ | 28,500 | ||||||
Adjusted EBITDA as a % of Revenue: |
||||||||||||
Completion and production services |
15.9 | % | 31.9 | % | 16.0 | % | ||||||
Drilling services |
-14.8 | % | 27.3 | % | 14.4 | % | ||||||
Products |
27.6 | % | 25.6 | % | 12.1 | % | ||||||
Total |
9.7 | % | 29.1 | % | 12.0 | % |
Nine Months Ended | ||||||||
Revised | ||||||||
September 30, | September 30, | |||||||
2009 | 2008 | |||||||
(unaudited) | (unaudited) | |||||||
Revenue: |
||||||||
Completion and production services |
$ | 681,981 | $ | 1,134,358 | ||||
Drilling services |
85,515 | 172,711 | ||||||
Products |
37,496 | 40,689 | ||||||
Total revenues |
$ | 804,992 | $ | 1,347,758 | ||||
Adjusted EBITDA: (1) |
||||||||
Completion and production services |
$ | 129,044 | $ | 347,759 | ||||
Drilling services |
6,698 | 44,733 | ||||||
Products |
6,427 | 10,209 | ||||||
Corporate and other |
(25,569 | ) | (26,241 | ) | ||||
Total Adjusted EBITDA |
$ | 116,600 | $ | 376,460 | ||||
Adjusted EBITDA as a % of Revenue: |
||||||||
Completion and production services |
18.9 | % | 30.7 | % | ||||
Drilling services |
7.8 | % | 25.9 | % | ||||
Products |
17.1 | % | 25.1 | % | ||||
Total |
14.5 | % | 27.9 | % |
(1) | Adjusted EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. |
Footnote: | The results 2008 exclude discontinued operations. |
Complete Production Services, Inc.
Reconciliation of Adjusted EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended September 30, 2009 and 2008 and June 30, 2009
And the Nine Months Ended September 30, 2009 and 2008
(unaudited, in thousands)
Reconciliation of Adjusted EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended September 30, 2009 and 2008 and June 30, 2009
And the Nine Months Ended September 30, 2009 and 2008
(unaudited, in thousands)
Completion | ||||||||||||||||||||
& Production | Drilling | Corporate & | ||||||||||||||||||
Services | Services | Products | Other | Total | ||||||||||||||||
Quarter Ended September 30, 2009: |
||||||||||||||||||||
Adjusted EBITDA |
$ | 31,396 | $ | (3,757 | ) | $ | 1,791 | $ | (7,025 | ) | $ | 22,405 | ||||||||
Depreciation & amortization |
43,744 | 5,466 | 603 | 566 | 50,379 | |||||||||||||||
Fixed asset impairment loss |
| 36,158 | | | 36,158 | |||||||||||||||
Operating income (loss) |
$ | (12,348 | ) | $ | (45,381 | ) | $ | 1,188 | $ | (7,591 | ) | $ | (64,132 | ) | ||||||
Quarter Ended September 30, 2008 (Revised): |
||||||||||||||||||||
Adjusted EBITDA |
$ | 133,459 | $ | 17,005 | $ | 3,387 | $ | (9,885 | ) | $ | 143,966 | |||||||||
Depreciation & amortization |
41,195 | 5,223 | 657 | 646 | 47,721 | |||||||||||||||
Operating income (loss) |
$ | 92,264 | $ | 11,782 | $ | 2,730 | $ | (10,531 | ) | $ | 96,245 | |||||||||
Quarter Ended June 30, 2009: |
||||||||||||||||||||
Adjusted EBITDA |
$ | 31,424 | $ | 3,569 | $ | 2,085 | $ | (8,578 | ) | $ | 28,500 | |||||||||
Depreciation & amortization |
44,723 | 5,488 | 624 | 567 | 51,402 | |||||||||||||||
Operating income (loss) |
$ | (13,299 | ) | $ | (1,919 | ) | $ | 1,461 | $ | (9,145 | ) | $ | (22,902 | ) | ||||||
Nine Months Ended September 30, 2009: |
||||||||||||||||||||
Adjusted EBITDA |
$ | 129,044 | $ | 6,698 | $ | 6,427 | $ | (25,569 | ) | $ | 116,600 | |||||||||
Depreciation & amortization |
133,393 | 16,502 | 1,861 | 1,714 | 153,470 | |||||||||||||||
Fixed asset impairment loss |
| 36,158 | | | 36,158 | |||||||||||||||
Operating income (loss) |
$ | (4,349 | ) | $ | (45,962 | ) | $ | 4,566 | $ | (27,283 | ) | $ | (73,028 | ) | ||||||
Nine Months Ended September 30, 2008 (Revised): |
||||||||||||||||||||
Adjusted EBITDA |
$ | 347,759 | $ | 44,733 | $ | 10,209 | $ | (26,241 | ) | $ | 376,460 | |||||||||
Depreciation & amortization |
111,972 | 14,527 | 1,762 | 1,797 | 130,058 | |||||||||||||||
Operating income (loss) |
$ | 235,787 | $ | 30,206 | $ | 8,447 | $ | (28,038 | ) | $ | 246,402 | |||||||||
Complete Production Services, Inc.
Reconciliation of Modified EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended September 30, 2009 and June 30, 2009
(unaudited, in thousands)
Reconciliation of Modified EBITDA to the Most Comparable GAAP Measure
For the Quarters Ended September 30, 2009 and June 30, 2009
(unaudited, in thousands)
Completion | ||||||||||||||||||||
& Production | Drilling | Corporate & | ||||||||||||||||||
Services | Services | Products | Other | Total | ||||||||||||||||
Quarter Ended September 30, 2009: |
||||||||||||||||||||
Modified EBITDA |
$ | 34,830 | $ | (2,359 | ) | $ | 1,791 | $ | (7,025 | ) | $ | 27,237 | ||||||||
3rd Qtr. 2009 fixed asset and inventory adjustments |
3,434 | 1,398 | | | 4,832 | |||||||||||||||
Adjusted EBITDA |
31,396 | (3,757 | ) | 1,791 | (7,025 | ) | 22,405 | |||||||||||||
Depreciation and amortization |
43,744 | 5,466 | 603 | 566 | 50,379 | |||||||||||||||
Fixed asset impairment charge |
| 36,158 | | | 36,158 | |||||||||||||||
Operating income (loss) |
$ | (12,348 | ) | $ | (45,381 | ) | $ | 1,188 | $ | (7,591 | ) | $ | (64,132 | ) | ||||||
Quarter Ended June 30, 2009: |
||||||||||||||||||||
Modified EBITDA |
$ | 34,095 | $ | 3,569 | $ | 2,085 | $ | (8,578 | ) | $ | 31,171 | |||||||||
2nd Qtr. 2009 fixed asset and inventory adjustments |
2,671 | | | | 2,671 | |||||||||||||||
Adjusted EBITDA |
31,424 | 3,569 | 2,085 | (8,578 | ) | 28,500 | ||||||||||||||
Depreciation and amortization |
44,723 | 5,488 | 624 | 567 | 51,402 | |||||||||||||||
Operating income (loss) |
$ | (13,299 | ) | $ | (1,919 | ) | $ | 1,461 | $ | (9,145 | ) | $ | (22,902 | ) | ||||||
Complete Production Services, Inc.
Reconciliation of Earnings Per Share per GAAP Less Certain Non-cash Charges
For the Quarters Ended September 30, 2009
(unaudited, in thousands except per share amounts)
Reconciliation of Earnings Per Share per GAAP Less Certain Non-cash Charges
For the Quarters Ended September 30, 2009
(unaudited, in thousands except per share amounts)
Quarter Ended | ||||
September 30, | ||||
2009 | ||||
(unaudited) | ||||
Net loss from continuing operations, as reported |
$ | (52,025 | ) | |
Add: Fixed asset impairment charge |
36,158 | |||
Add: 3rd Qtr. 2009 fixed asset and inventory adjustments |
4,832 | |||
Less: Tax benefit recognized from these non-cash charges |
(13,199 | ) | ||
Adjusted net loss |
$ | (24,234 | ) | |
Diluted weighted average shares outstanding, as reported |
75,200 | |||
Diluted loss per share: |
||||
As reported |
$ | (0.69 | ) | |
As adjusted |
$ | (0.32 | ) | |