Weatherford Reports Record Earnings Per Diluted Share of $0.59 (Before Non-recurring Charges of $0.04 Per Share)
Posted: 25 April 2005
Weatherford International Ltd. has reported first quarter 2005 net income of $86.5 million from continuing operations or $0.59 per diluted share, before after-tax charges of $6.1 million or $0.04 per diluted share. This represents the highest quarterly earnings per share in the company's history. Non-recurring items affecting the quarter were exit and debt restructuring charges primarily related to Weatherford's percentage ownership of Universal Compression Holdings, Inc. Excluding the charges, first quarter diluted earnings per share from continuing operations improved 55 percent over first quarter 2004 diluted earnings per share of $0.38.
Revenues for the first quarter were $857.7 million and represented a 20 percent increase over the $712.6 million reported last year. Revenues improved in all geographic regions. North American revenues improved 25 percent compared to a 10 percent improvement in rig count. Eastern Hemisphere revenues improved 14 percent as compared to a 7 percent rig count improvement. Operating income before charges was $129.8 million for the quarter, nearly 50% higher than the same quarter in the prior year.
On a sequential basis, first quarter revenues were slightly below the record levels posted in the fourth quarter of 2004. As expected, seasonally lower activity in the North Sea and lower export sales negatively impacted first quarter revenues; however, sequential operating income (excluding charges) increased 4 percent above the fourth quarter of 2004. These improvements were driven by increased profitability in the Drilling Services Division and lower research and development expenditures company-wide. First quarter diluted earnings per share from continuing operations before charges of $0.59 increased 7 percent from fourth quarter diluted earnings per share of $0.55, which excluded the gain relating to the Company's sale of Universal Compression Holdings, Inc.'s common stock.
Drilling Services
Revenues for the quarter were $486.6 million, 21 percent above the same quarter in the prior year and essentially flat as compared to the prior quarter. Geographically, sequential revenue improvements in Canada were offset by lower revenues in the U.S. and the Eastern Hemisphere . As expected, the seasonal declines in the North Sea negatively impacted first quarter revenues.
Operating income of $112.2 million was 46 percent higher than the same quarter in the prior year and 3 percent higher than the preceding quarter. Operating income margins improved 110 basis points sequentially and 410 basis points over the same quarter in the prior year. Sequential improvements were due to a strong performance by our drilling methods product line.
Production Systems
First quarter revenues of $371.1 million were 20 percent higher than the first quarter of 2004 and 4 percent lower than the prior quarter. The sequential revenue decline resulted from higher export sales in the fourth quarter as our clients ended their budget cycle. On a product line basis, artificial lift continues to be the largest contributor to this division's revenues.
The current quarter's operating income of $51.2 million improved 41 percent as compared to the same quarter in the prior year and was essentially flat as compared to the fourth quarter of 2004. Operating income margins improved 60 basis points sequentially and 210 basis points over the same quarter in the prior year.
Research and Development
The Company's Research and Development expenditures of $21.0 million returned to expected levels for the first quarter of 2005. Research and Development expenditures were $2.8 million greater in the fourth quarter of 2004 due principally to high costs for prototype development.
Corporate Expenses
Corporate Expenses were relatively flat sequentially and increased $5.5 million as compared to the same period last year due primarily to corporate governance compliance and employee stock-based compensation expense.
Equity in Earnings of Unconsolidated Affiliates
Equity in Earnings of Unconsolidated Affiliates excluding charges were $4.2 million and decreased $1.6 million as compared to the sequential quarter. The decrease was due to Weatherford's lower percentage ownership of Universal Compression Holdings, Inc., partially offset by increased earnings.
Posted by Editor Pipeline Magazine
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