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| 8-K - FORM 8-K - Complete Production Services, Inc. | d290553d8k.htm |
Exhibit 99.1
Complete Production Services, Inc. Reports Earnings from Continuing Operations of $0.98 Per Diluted Share for the Fourth Quarter of 2011
Houston—(Business Wire)—January 27, 2012—Complete Production Services, Inc. (NYSE: CPX) today reported fourth quarter revenue of $626.8 million, an increase of 12% over the third quarter of 2011, and fourth quarter Adjusted EBITDA (as defined below) of $183.9 million, an increase of $34.9 million, or 23%, over the third quarter of 2011 resulting in Adjusted EBITDA margins of 29.3%. Fourth quarter 2011 operating income was $134.7 million, up 32% versus the third quarter of 2011, and fourth quarter net income from continuing operations was $78.0 million, or $0.98 per diluted share, an increase of $22.9 million or $0.29 per diluted share over the prior quarter. Results for the fourth quarter of 2011 include approximately $3.3 million of pre-tax transactional expense associated with the pending merger with Superior Energy Services, Inc. and exclude the results of the rig logistics business which was divested on November 30, 2011.
Revenue for the Completion and Production Services segment during the fourth quarter of 2011 was $603.9 million, an increase of 13% over the prior quarter. Adjusted EBITDA for the segment was $191.2 million in the fourth quarter of 2011, an increase of $37.0 million, or 24%, versus the third quarter of 2011. The improved performance was primarily attributed to new asset deployments including a 49,500 horsepower pressure pumping spread in the Marcellus, under a long-term take or pay contract, contributions from the previously-announced acquisition of a Permian Basin focused pressure pumping and acidizing service company, and a recovery from previously reported items which adversely impacted the third quarter of 2011.
Drilling Services segment revenue was $22.9 million during the fourth quarter of 2011, versus $21.7 million in the third quarter of 2011. Adjusted EBITDA increased by $1.3 million over the third quarter of 2011 to $7.5 million, primarily due to a new drilling rig that was deployed under a term contract during the fourth quarter of 2011.
In comparison to the fourth quarter of 2010, revenue increased $190.0 million, Adjusted EBITDA increased $71.1 million, operating income increased $66.4 million, and net income from continuing operations increased by $43.9 million, or $0.55 per diluted share during the fourth quarter of 2011.
For the full year 2011, revenue was $2.2 billion, a 51% increase from full year 2010, and Adjusted EBITDA was $590.2 million, up $242.6 million over the prior year. In 2011, operating income was $398.4 million and net income from continuing operations was $217.1 million, or $2.74 per diluted share.
“Our results for the quarter, adjusted for the divestiture of our rig logistics business and merger related expenses, exceeded the guidance we communicated during our third quarter conference call,” commented Joe Winkler, Chairman and Chief Executive Officer.
“We are pleased with our results and the accomplishments achieved in 2011, which included:
| • | Assisting our customers in transitioning their focus to the development of oil- and liquid-rich plays by leveraging our: |
| • | New platform in the Permian Basin, |
| • | Expanded market positions in the Bakken, Niobrara, Granite Wash and Eagle Ford basins. |
| • | Divesting non-strategic businesses including our rig logistics operations and our Southeast Asian products business. |
| • | Investing over $420 million into strategic services and geographic markets, including: |
| • | Over 150,000 horsepower of pressure pumping capacity, approximately 80% of which is under long-term take-or-pay agreements, |
| • | Six large diameter, extended reach coiled tubing units. |
| • | Completing $116.8 million in acquisitions. |
| • | Strengthening our balance sheet by reducing net debt $84.5 million to $446.4 million, and finishing the year with a leverage ratio (net debt to trailing twelve month EBITDA) of 0.76x.” |
“We are very proud of what our people have accomplished since the company was established, and we believe our business is very well positioned to continue benefiting from trends in North America which are driving completions of service-intensive, multi-stage, long lateral wells. We look forward to completing the merger with Superior Energy Services, Inc. within the next few weeks and contributing to the growth of the combined company,” 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.
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 and trends, the anticipated closing of the company’s merger with Superior Energy Services, Inc. and the company’s future growth. 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 and recent Current Reports on Form 8-K. 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
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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. Reconciliations of Adjusted EBITDA to income from continuing operations are included in the tables at the end of this press release.
For more information, please contact:
Jose Bayardo
Sr. V.P. and Chief Financial Officer
(281) 372-2300
Canaan Factor
Director of Investor Relations
(281) 372-2300
3
Complete Production Services, Inc.
Consolidated Statements of Operations
For the Quarters Ended December 31, 2011 and 2010 and September 30, 2011
And the Twelve Months Ended December 31, 2011 and 2010
(unaudited, in thousands, except share and per share data)
| Quarter Ended | Twelve Months
Ended December 31, |
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| December 31, | September 30, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2011 | 2010 | ||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
| Revenue |
626,788 | 436,758 | 557,304 | 2,153,317 | 1,424,053 | |||||||||||||||
| Cost of services |
385,189 | 277,697 | 356,310 | 1,358,611 | 910,629 | |||||||||||||||
| General and administrative expense |
57,682 | 46,227 | 51,988 | 204,555 | 165,905 | |||||||||||||||
| Depreciation and amortization |
49,254 | 44,565 | 47,262 | 191,792 | 175,322 | |||||||||||||||
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| 492,125 | 368,489 | 455,560 | 1,754,958 | 1,251,856 | ||||||||||||||||
| Income from continuing operations before interest and taxes |
134,663 | 68,269 | 101,744 | 398,359 | 172,197 | |||||||||||||||
| Interest expense |
12,594 | 13,952 | 12,917 | 53,303 | 57,605 | |||||||||||||||
| Interest income |
(181 | ) | (74 | ) | (180 | ) | (588 | ) | (322 | ) | ||||||||||
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| Income from continuing operations before taxes |
122,250 | 54,391 | 89,007 | 345,644 | 114,914 | |||||||||||||||
| Tax provision |
44,267 | 20,321 | 33,931 | 128,580 | 44,694 | |||||||||||||||
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| Income from continuing operations |
$ | 77,983 | $ | 34,070 | $ | 55,076 | $ | 217,064 | $ | 70,220 | ||||||||||
| Discontinued operations, net of tax |
$ | 40,057 | $ | 4,149 | $ | 4,110 | $ | 53,601 | $ | 13,938 | ||||||||||
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| Net income |
$ | 118,040 | $ | 38,219 | $ | 59,186 | $ | 270,665 | $ | 84,158 | ||||||||||
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| Earnings per Share: |
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| Continuing operations |
$ | 1.00 | $ | 0.45 | $ | 0.71 | $ | 2.79 | $ | 0.92 | ||||||||||
| Discontinued operations |
$ | 0.51 | $ | 0.05 | $ | 0.05 | $ | 0.69 | $ | 0.19 | ||||||||||
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| Basic earnings per share: |
$ | 1.51 | $ | 0.50 | $ | 0.76 | $ | 3.48 | $ | 1.11 | ||||||||||
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| Continuing operations |
$ | 0.98 | $ | 0.43 | $ | 0.69 | $ | 2.74 | $ | 0.90 | ||||||||||
| Discontinued operations |
$ | 0.50 | $ | 0.06 | $ | 0.05 | $ | 0.68 | $ | 0.18 | ||||||||||
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| Diluted earnings per share: |
$ | 1.48 | $ | 0.49 | $ | 0.74 | $ | 3.42 | $ | 1.08 | ||||||||||
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| Weighted average shares outstanding: |
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| Basic |
78,022 | 76,318 | 78,004 | 77,690 | 76,048 | |||||||||||||||
| Diluted |
79,575 | 78,545 | 79,445 | 79,208 | 77,684 | |||||||||||||||
4
Complete Production Services, Inc.
Condensed Consolidated Balance Sheets
As of December 31, 2011 and 2010
(in thousands)
| December 31, 2011 |
December 31, 2010 |
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| (unaudited) | (unaudited) | |||||||
| Assets: |
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| Cash |
$ | 203,588 | $ | 119,135 | ||||
| Other current assets |
549,086 | 401,289 | ||||||
| Property, plant and equipment, net |
1,178,455 | 915,770 | ||||||
| Goodwill |
277,501 | 244,138 | ||||||
| Restricted cash (1) |
17,000 | 17,000 | ||||||
| Other long-term assets |
57,716 | 24,162 | ||||||
| Assets of discontinued operations |
— | 85,910 | ||||||
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| Total assets |
2,283,346 | 1,807,404 | ||||||
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| Liabilities and stockholders’ equity: |
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| Current liabilities |
237,650 | 135,356 | ||||||
| Long-term debt |
650,000 | 650,000 | ||||||
| Long-term deferred tax liabilities |
289,427 | 181,473 | ||||||
| Other long-term liabilities |
3,511 | 5,916 | ||||||
| Liabilities of discontinued operations |
— | 28,825 | ||||||
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| Total liabilities |
1,180,588 | 1,001,570 | ||||||
| Common stock |
780 | 764 | ||||||
| Treasury stock |
(7,750 | ) | (1,765 | ) | ||||
| Additional paid-in capital |
692,204 | 657,993 | ||||||
| Retained earnings |
396,830 | 126,165 | ||||||
| Cumulative translation adjustment |
20,694 | 22,677 | ||||||
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| Total stockholders’ equity |
1,102,758 | 805,834 | ||||||
| Total liabilities and stockholders’ equity |
$ | 2,283,346 | $ | 1,807,404 | ||||
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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, 2011 and 2010, and September 30, 2011
And Twelve Months Ended December 31, 2011 and 2010
(in thousands, except percentages)
| Quarter Ended | ||||||||||||
| December 31, | September 30, | |||||||||||
| 2011 | 2010 | 2011 | ||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||
| Revenue: |
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| Completion and production services |
$ | 603,903 | $ | 416,592 | $ | 535,625 | ||||||
| Drilling services (2)(3) |
22,885 | 20,166 | 21,679 | |||||||||
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| Total revenues |
$ | 626,788 | $ | 436,758 | $ | 557,304 | ||||||
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| Adjusted EBITDA: (1) |
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| Completion and production services |
$ | 191,208 | $ | 119,217 | $ | 154,249 | ||||||
| Drilling services (2)(3) |
7,453 | 4,811 | 6,127 | |||||||||
| Corporate and other |
(14,744 | ) | (11,194 | ) | (11,370 | ) | ||||||
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| Total |
$ | 183,917 | $ | 112,834 | $ | 149,006 | ||||||
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| Adjusted EBITDA as a % of Revenue: |
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| Completion and production services |
31.7 | % | 28.6 | % | 28.8 | % | ||||||
| Drilling services (2)(3) |
32.6 | % | 23.9 | % | 28.3 | % | ||||||
| Total |
29.3 | % | 25.8 | % | 26.7 | % | ||||||
| Twelve Months Ended | ||||||||||||
| December 31, 2011 |
December 31, 2010 |
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| (unaudited) | (unaudited) | |||||||||||
| Revenue: |
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| Completion and production services |
$ | 2,068,496 | $ | 1,354,797 | ||||||||
| Drilling services (2)(3) |
84,821 | 69,256 | ||||||||||
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| Total |
$ | 2,153,317 | $ | 1,424,053 | ||||||||
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| Adjusted EBITDA: (1) |
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| Completion and production services |
$ | 611,901 | $ | 369,826 | ||||||||
| Drilling services (2)(3) |
25,264 | 16,781 | ||||||||||
| Corporate and other |
(47,014 | ) | (39,088 | ) | ||||||||
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| Total |
$ | 590,151 | $ | 347,519 | ||||||||
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| Adjusted EBITDA as a % of Revenue: |
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| Completion and production services |
29.6 | % | 27.3 | % | ||||||||
| Drilling services (2)(3) |
29.8 | % | 24.2 | % | ||||||||
| Total |
27.4 | % | 24.4 | % | ||||||||
| (1) | Adjusted EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. |
| (2) | Our Products segment historically consisted of our fabrication and repair shop in north Texas and our Southeast Asian business. We sold our Southeast Asian business in July 2011 and recorded these results as discontinued operations. The remaining Products segment has been combined into the Drilling Services segment for all periods presented. |
| (3) | Our Drilling services segment historically primarily consisted of contract drilling and rig logistics businesses. On November 30, 2011, we completed the divestiture of our rig logistics operation and recorded these results as discontinued operations. For the eleven months ended November 30, 2011, our rig logistics business had revenue of $119.0 million and Adjusted EBITDA of $28.1 million. |
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Complete Production Services, Inc.
Reconciliation of Adjusted EBITDA to Income from Continuing Operations
For the Quarters Ended December 31, 2011 and 2010, and September 30, 2011
And the Twelve Months Ended December 31, 2011 and 2010
(unaudited, in thousands)
| Completion & Production Services |
Drilling Services |
Corporate & Other |
Total | |||||||||||||
| Quarter Ended December 31, 2011: |
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| Adjusted EBITDA (1) |
$ | 191,208 | $ | 7,453 | $ | (14,744 | ) | $ | 183,917 | |||||||
| Depreciation & amortization |
45,023 | 3,658 | 573 | 49,254 | ||||||||||||
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| Operating income (loss) |
$ | 146,185 | $ | 3,795 | $ | (15,317 | ) | $ | 134,663 | |||||||
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| Interest expense |
12,594 | |||||||||||||||
| Interest income |
(181 | ) | ||||||||||||||
| Income taxes |
44,267 | |||||||||||||||
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| Income from continuing operations |
$ | 77,983 | ||||||||||||||
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| Quarter Ended December 31, 2010: |
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| Adjusted EBITDA (1) |
$ | 119,217 | $ | 4,811 | $ | (11,194 | ) | $ | 112,834 | |||||||
| Depreciation & amortization |
40,469 | 3,578 | 518 | 44,565 | ||||||||||||
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| Operating income (loss) |
$ | 78,748 | $ | 1,233 | $ | (11,712 | ) | $ | 68,269 | |||||||
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| Interest expense |
13,952 | |||||||||||||||
| Interest income |
(74 | ) | ||||||||||||||
| Income taxes |
20,321 | |||||||||||||||
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| Income from continuing operations |
$ | 34,070 | ||||||||||||||
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| Quarter Ended September 30, 2011: |
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| Adjusted EBITDA (1) |
$ | 154,249 | $ | 6,127 | $ | (11,370 | ) | $ | 149,006 | |||||||
| Depreciation & amortization |
43,147 | 3,539 | 576 | 47,262 | ||||||||||||
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| Operating income (loss) |
$ | 111,102 | $ | 2,588 | $ | (11,946 | ) | $ | 101,744 | |||||||
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| Interest expense |
12,917 | |||||||||||||||
| Interest income |
(180 | ) | ||||||||||||||
| Income taxes |
33,931 | |||||||||||||||
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| Income from continuing operations |
$ | 55,076 | ||||||||||||||
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| Twelve Months Ended December 31, 2011: |
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| Adjusted EBITDA (1) |
$ | 611,901 | $ | 25,264 | $ | (47,014 | ) | $ | 590,151 | |||||||
| Depreciation & amortization |
175,011 | 14,427 | 2,354 | 191,792 | ||||||||||||
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| Operating income (loss) |
$ | 436,890 | $ | 10,837 | $ | (49,368 | ) | $ | 398,359 | |||||||
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| Interest expense |
53,303 | |||||||||||||||
| Interest income |
(588 | ) | ||||||||||||||
| Income taxes |
128,580 | |||||||||||||||
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| Income from continuing operations |
$ | 217,064 | ||||||||||||||
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| Twelve Months Ended December 31, 2010: |
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| Adjusted EBITDA (1) |
$ | 369,826 | $ | 16,781 | $ | (39,088 | ) | $ | 347,519 | |||||||
| Depreciation & amortization |
159,110 | 14,190 | 2,022 | 175,322 | ||||||||||||
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| Operating income (loss) |
$ | 210,716 | $ | 2,591 | $ | (41,110 | ) | $ | 172,197 | |||||||
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| Interest expense |
57,605 | |||||||||||||||
| Interest income |
(322 | ) | ||||||||||||||
| Income taxes |
44,694 | |||||||||||||||
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| Income from continuing operations |
$ | 70,220 | ||||||||||||||
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| (1) | Adjusted EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. |
7