SERVICE SECTOR - EARNINGS / BJ Q3 results
BJ SERVICES REPORTS QUARTERLY EPS INCREASE OF 21%
HOUSTON, July 28 /CNW/ -- BJ Services Company (NYSE: BJS; CBOE)
continued its earnings growth, reporting net income of $32.9 million, or
$.41 per diluted share, for the quarter ended June 30, 1998. These figures
represent increases of 17% and 21% over prior year's third fiscal quarter net
income and EPS, respectively. The rise in earnings was attributed to improved
profitability outside North America and occurred despite a slight decrease in
total revenues from the prior year period. The earnings represent the highest
third quarter figures in the Company's history and were achieved despite a
weakened oilfield drilling market.
Operating income margins, exclusive of goodwill amortization, improved to
15.5% from 14.0% in the prior year's third fiscal quarter. Gross margins
improved due to results of the Company's growth initiatives in coiled tubing,
tools and international stimulation. Marketing and general and administrative
expenses were relatively flat with the prior year, while research and
engineering expenses increased by 24% due primarily to additional spending on
growth plan initiatives.
For the nine months ended June 30, 1998, the Company showed increases in
revenue and net income of 12% and 69%, respectively, over the comparable
period in the prior year.
U.S. Revenues Decrease 2% Due to Lower Oil Prices
With the U.S. active drilling rig count and workover rig count dropping by
7% and 21%, respectively, the Company's U.S. revenues declined by 2%. Most of
the revenue decline was confined to the primarily oil-related Pacific and
Permian Basin Regions, which declined by 30% and 33%, respectively. Revenue
in the Company's Gulf Coast Region, however, increased by 18% as the Company
had a record number of offshore cementing skids working during the quarter.
International Growth Continues
Pressure pumping revenues outside North America increased by 11% compared
to the prior year's period. The Company's Europe/Africa, Middle East and Far
East regions all experienced double-digit revenue gains during the quarter,
with North Sea revenues advancing 28%. Revenues were essentially flat in
Latin America due to the recent slowing of activity in Argentina and Venezuela
although profitability improved due to growth in stimulation activities in
Brazil and Venezuela. Both the Europe/Africa and Far East Regions achieved
record quarterly profitability. Partially offsetting these gains was a 31%
reduction in the Company's Canadian operations caused by lower oil-related
drilling activity, a more severe spring breakup season and unusually rainy
weather that restricted the ability to move drilling rigs. In addition,
export equipment sales declined by $4.9 million from the prior year's third
fiscal quarter.
Other Service Lines Also Show Gains
Each of the Company's other service lines, which include its tubular
services, process and pipeline services, and production and industrial
chemical businesses, showed revenue improvement from the prior year and
achieved an overall revenue increase of 19%. The improvement was due mainly
to increases in the Company's U.S., Norway and Far East pipeline services
businesses.
CEO Stewart Comments
CEO J.W. Stewart commented, "The prolonged weakness in oil prices had a
significant impact on our operations during the quarter in several areas, most
significantly in California, West Texas, Canada and parts of Latin America.
Because these areas have historically been some of the Company's strongest
market share regions, the impact has been particularly felt by BJ. The
reduction in oil related drilling activity has been partially offset by a
continued shift towards natural gas drilling in North America; however this
transition will take some time to complete. Given the current uncertainty
surrounding our customers' spending plans, cost reduction efforts are underway
with field operating costs being adjusted in accordance with activity levels.
Additionally, plans for reductions in overhead and capital spending are being
reviewed and will be implemented as business conditions warrant.
"Our growth initiatives in coiled tubing, tools and international
stimulation have continued to contribute to revenue and earnings improvements.
Additionally, our international expansion efforts are ongoing with recently
awarded business in the Democratic Republic of Congo and Brunei, and an
agreement in principle reached to acquire 100% interest in our Bolivian joint
venture.
"During the quarter, the Company increased its share repurchase program
from $150 million to $300 million. This program has resulted in a 5.1 million
reduction in the Company's outstanding share base since November 1997 while
maintaining a debt to capitalization ratio at below 33%."
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
6/30/98 6/30/97 6/30/98 6/30/97
(In thousands except per share data)
Revenue $ 365,343 $ 368,619 $ 1,176,305 $1,052,697
Operating Expenses:
Cost of sales and
services 275,615 285,741 872,482 832,659
Research and engineering7,913 6,367 23,496 18,359
Marketing 13,815 13,342 43,020 37,236
General and
administrative 11,455 11,509 37,532 33,715
Goodwill amortization 3,426 3,515 10,466 10,900
Total operating
expenses 312,224 320,474 986,996 932,869
Operating income 53,119 48,145 189,309 119,828
Interest expense (6,918) (7,780) (19,657) (24,078)
Interest income 370 300 1,093 603
Other income - net 121 78 (645) 1,023
Income before income
taxes 46,692 40,743 170,100 97,376
Income taxes 13,821 12,632 54,546 29,094
Net income $32,871 $28,111 $115,554 $68,282
Earnings Per Share:
Basic $ .44 $.37 $1.53 $.89
Diluted .41 .34 1.40 .84
Average Shares Outstanding:
Basic 73,886 76,710 75,420 76,585
Diluted 80,919 82,340 82,732 81,729
Other Data:
Depreciation and
amortization $22,817 $21,756 $ 67,889 $67,364
Capital expenditures 48,811 27,802 116,468 60,043
U.S. revenue 192,552 196,306 625,898 555,726
International revenue 172,791 172,313 550,407 496,971
This news release contains forward-looking statements within the meaning
of the Securities Litigation Reform Act that involve risks and uncertainties,
including price volatility, operational and other risks, and other factors
described from time to time in the Company's publicly available SEC reports,
which could cause actual results to differ materially from those indicated in
the forward-looking statements. In this press release, the words "expect,"
"estimate," "project," "believe," and similar words are intended to identify
forward-looking statements.
BJ Services Company is a leading provider of pressure pumping and other
oilfield services to the petroleum industry.
(NOT INTENDED FOR DISTRIBUTION TO BENEFICIAL OWNERS)
-30-
For further information: Mike McShane of BJ Services Company,
713-462-4239
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