BJ Services reports third quarter earnings
Posted: 22 July 2003
BJ Services Company reported net income of $49.5 million ($0.31
per diluted share) for its third fiscal quarter ended June 30, 2003.
Consolidated revenue increased 2 per cent over the prior quarter,
with US/Mexico Pressure Pumping Services up 16 per cent, International
Pressure Pumping Services down 16 per cent, and Other Oilfield Services
up 13 per cent. International Pressure Pumping Services revenue
was negatively impacted by seasonal activity decline in Canada.
International Pressure Pumping Services revenue excluding Canada
increased 4 per cent sequentially. Compared to the prior year's
third quarter, consolidated revenue increased 24 per cent with US/Mexico
Pressure Pumping Services revenue increasing 26 per cent and International
Pressure Pumping Services increasing 15 per cent.
Revenues from Other Oilfield Services were up 41 per cent over
the prior year's third quarter, due primarily to the addition of
the completion fluids and completion tools service lines acquired
with OSCA in May 2002.
Operating income margins improved to 13.9 per cent from 13.4 per
cent reported in the second fiscal quarter and 10.1 per cent reported
in the prior year's third quarter, due primarily to increased margins
from the Company's US/Mexico operations.
Interest expense increased $1.3 million from the prior year's third
quarter as a result of the issuance of convertible debt used to
finance the OSCA acquisition.
Capital spending was $50.4 million for the quarter and $121.4 million
fiscal year to date. Cash and cash equivalents as of June 30, 2003
was $193.4 million. Debt (net of cash and cash equivalents) to total
capitalization was 16.0 per cent at the end of June, down from 19.6
per cent at the end of March.
US/Mexico Pressure Pumping Revenue
The Company's US/Mexico pressure pumping revenue increased 16 per
cent sequentially as the average US drilling rig count during the
quarter increased 14 per cent to 1,028 rigs. Also contributing to
the revenue improvement was continued activity increase in Mexico.
Compared to the third quarter of the prior year, revenue increased
26 per cent with a 28 per cent increase in rig activity. During
the quarter, 83 per cent of the rigs were drilling for natural gas,
the same percentage as last year.
International Pressure Pumping Revenue
Canadian revenue decreased 55 per cent sequentially due primarily
to a 59 per cent decrease in rig activity as a result of seasonal
spring break-up during the third quarter. International Pressure
Pumping Services revenue excluding Canada increased 4 per cent sequentially.
Revenue increased in Venezuela as activity continued to improve.
In addition, revenue increased from our North Sea vessel, the Vestfonn,
as it resumed full utilization after the second quarter's scheduled
maintenance. Partially offsetting these increases were activity
declines in the UK, India and Norway.
Compared to the third quarter of the prior year, Canadian revenue
increased 48 per cent on the strength of a 38 per cent increase
in rig activity. International revenue excluding Canada increased
10 per cent year-over-year led by improved activity in Brazil, Colombia,
Argentina, Russia and Malaysia. These increases more than offset
activity declines in India and the impact of the labor strike in
Venezuela.
During the quarter, the Company implemented a 5 per cent price book
increase effective July 1 in Canada.
Other Oilfield Services
Revenue from the Company's Other Oilfield Services (completion fluids,
completion tools, process and pipeline services, tubular services
and production chemicals) increased 13 per cent sequentially due
primarily to completion of projects delayed from the second quarter
and seasonal increases. Compared to the third quarter of the prior
year, revenue for these services increased 41 per cent due to the
addition of the completion fluids and completion tools service lines
acquired with OSCA.
CEO Stewart Comments
Chairman and CEO Bill Stewart commented, "Our third fiscal
quarter was solid as strong US and Mexico activity more than offset
the normal seasonal decline in Canada. Revenue and earnings were
helped this quarter from the May 1st price book increase implemented
in the U.S.
"Near term, the North American natural gas fundamentals remain
strong and we expect the US market activity to continue to improve
into the fourth quarter. The Canadian market has recovered significantly
from its spring break-up and we expect activity to remain strong.
We believe earnings will be in the $.39 to $.41 range for our fourth
fiscal quarter and in the $1.18 to $1.20 range for the fiscal year
ending September 30, 2003."
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.
The Company anticipates utilizing non-GAAP financial measures in
today's earnings release conference call. The most common non-GAAP
financial measures used by the Company include EBITDA, EBITDA margin,
free cash flow, net debt, and net interest expense. The reconciliations
to the most comparable GAAP measure are posted on the Investor's
section of our website at www.bjservices.com . The required disclosures
for these measures were included in our March 31, 2003 Form 10-Q.
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 has scheduled a conference call to discuss the results
of today's earnings announcement. The call will begin at 9:00 a.m.
Central Time. To participate in the conference call, please phone
719/457-2665, ten minutes prior to the start time and give the conference
code number 427177. If you are unable to participate, the conference
call will be available for playback three hours after its conclusion.
The playback number is 719/457-0820 and the replay entry code is
427177. Playback will be available for three days.
The conference call will also be available via real-time webcast
at www.bjservices.com.
Playback of the webcast will be available for twelve months following
the conference call.
Posted by Richard Price,
Editor Pipeline Magazine
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