Varco Announces First Quarter Results
ORANGE, Calif., April 19 /PRNewswire/ -- Varco International, Inc.
(NYSE: VRC) today announced results of operations for the first quarter ended
March 31. Net Income for the quarter totaled $6.0 million, $.09 per share
(diluted), on Revenues of $96.3 million. For the first quarter of 1999 Net
Income was $11.7 million, $.18 per share (diluted), and Revenues were
$152.2 million.
Incoming orders for the first quarter of 2000 totaled $97.7 million,
12 percent higher than the fourth quarter of 1999 and 35 percent above the
$72.3 million, before cancellations of $15.8 million, for the comparable
period last year. The year-to-year increase in orders is primarily
attributable to the market's stabilization following the dramatic decline in
worldwide drilling activity that began in the latter part of 1998. Although
oil prices have declined recently due to the announced OPEC production
increase, prices remain in the $26 per barrel range, approximately double the
level of a year ago. Backlog at March 31, 2000 was $66.5 million, a four
percent increase over the $63.8 million at December 31, 1999. This represents
the first increase in backlog since the first quarter of 1998.
Set forth below are Revenues and orders for each of the Company's
operating divisions for the quarters ended March 31, 2000 and 1999.
Revenues Orders
2000 1999 2000 1999
(In thousands)
Varco Systems $34,004 $60,141 $26,086 $20,972
Varco BJ 10,326 20,985 13,456 13,935
M/D Totco 18,673 13,647 17,569 12,836
Shaffer 27,831 53,735 36,688 20,344
Rigtech 4,191 3,233 4,193 4,176
Cancellations N/A N/A (262) (15,831)
95,025 $151,741 $97,730 $56,432
In discussing the first quarter results, Varco's Chief Executive Officer
George Boyadjieff said, "Although we currently see overall industry market
conditions improving, in the first quarter of 2000 we began to experience the
full impact of the drilling activity decline that started over a year and a
half ago. With the majority of new rig equipment delivered, Revenues are now
comprised primarily of sales of spare parts, services and some replacement
equipment. We did produce Income Before Taxes of ten percent of Revenues in
the first quarter of 2000 on a 37 percent decline in Revenues as compared to
the same quarter a year ago. This reflects the expense reductions that have
been implemented thus far.
"We are encouraged by the three quarters of sequential increases in order
rate. Furthermore, there are indications that we may be entering a recovery
period in the industry. Worldwide offshore rig utilization reached
approximately 78 percent at the end of the first quarter, the highest level in
over a year. In conjunction with the higher activity level, day rates for
these rigs are beginning to see upward momentum, in particular Jackups with
250+ feet of water drilling capability. In addition, the non-North American
rig count recently increased, the first time in over a year, which suggests
the industry has reached its trough. Despite these positive indicators, the
response to date from oil companies and drilling contractors has been
restrained spending, and the timing and degree of any industry recovery
remains uncertain. Therefore, we will continue to manage our cost structure
and pursue the strategies that have made us successful, focusing on the
development of products and technologies that help our customers reduce the
cost of drilling.
"Looking to the future, the proposed merger with Tuboscope is on track and
we expect to close in the second quarter of 2000," Boyadjieff concluded.
QUARTER ENDED MARCH 31 2000 1999
(In $000's except per share data)
Revenues $96,263 $152,168
Income Before Income Taxes 9,324 18,145
Net Income 6,003 11,734
Basic Income Per Share .09 .18
Shares Used to Calculate Per Share Amounts 65,385 64,736
Diluted Income Per Share .09 .18
Shares Used to Calculate Per Share Amounts 66,207 65,480
This press release contains forward-looking statements, which involve
risks and uncertainties that may impact the Company's results of operations.
These statements include, among others, statements concerning the Company's
general business strategies, customer orders and cancellations, backlog and
industry trends. See "Cautionary Statement Pursuant to Private Securities
Litigation Reform Act of 1995" included in Varco's 1999 Annual Report to
Shareholders for a description of certain of these risks and uncertainties.
Varco International, Inc. is a leader in the design and manufacture of
drilling equipment and machinery and rig instrumentation for oil and gas well
drilling worldwide.
The Company's conference call is scheduled for 11:30am EDT on Thursday,
April 20, 2000. To make a reservation, please call (800) 289-0579 or
(719) 457-2550 for International calls. The conference call reference number
is 383766.
SOURCE Varco International, Inc.
CO: Varco International, Inc.
ST: California
IN: OIL
SU: ERN
04/19/2000 16:00 EDT prnewswire.com |
