Maverick Tube Corporation Reports First Fiscal Quarter 1999 Results
ST. LOUIS, Jan. 19 /PRNewswire/ -- Maverick Tube Corporation
(Nasdaq: MAVK) announced today results for the quarter ended December 31,
1998. The Company reported a net loss during the quarter of $2.4 million, or
$0.15 per share, down from the profit reported in the same quarter last year
of $6.6 million, or $0.42 per share. Net sales for the quarter were
$41 million, down from $86 million in the prior year quarter. Included in
the net loss for the quarter was a charge, which lowered net income by $0.03
per share, in order to reduce the carrying value of inventories in light of
reduced pricing for the Company's products.
Total tons of the Company's energy related product lines shipped during
the first fiscal quarter of 1999 declined by 58% compared to the first quarter
of 1998, while product prices declined by 13%. Drilling rates in the United
States during the quarter were down by 31% from the prior year quarter, due to
a 49% decrease in oil related drilling and a 19% decrease in gas related
drilling. Drilling decreased by 54% in Canada. Shipments of industrial
products decreased by 10% compared to the same quarter last year.
Gregg Eisenberg, President and CEO said, "Maverick's energy related
business continued to decline during the first quarter. Both oil prices and
natural gas prices fell, further eroding the cash flows of our end user
customers and their interest in and willingness to drill at previous levels.
During the quarter Maverick reduced its OCTG finished goods levels while
industry wide inventory reductions reduced the demand for new OCTG by
approximately 35%. Inventory reductions, coupled with the sharp decline in
consumption, caused domestic OCTG industry shipments to fall by approximately
70% from the first quarter of 1998. Drilling levels have continued to decline
since the end of the quarter and budgets are being reduced sharply from 1998
levels. Our hope is that the inventory adjustments can soon run their course
so at least production can get back in line with shipment levels."
Eisenberg went on to say, "Things are moving forward in our new business
of making cold drawn products. The quarter was negatively impacted by start
up costs, which reduced net income by $.03 per share, but those efforts should
start to contribute to earnings later in the fiscal year. Also, our
industrial products business slowed a bit during the quarter as distributors
pulled down their inventories, but demand for the product continued to be
strong. We expect solid contributions from our industrial business in the
coming months."
Maverick Tube Corporation is a St. Louis, Mo., based manufacturer of
tubular products used in the energy industry in drilling, production and
surface transportation applications as well as industrial tubing products
(HSS, standard pipe, and cold drawn mechanical tubing) used in various
industrial applications.
This news release contains forward looking information with respect to
Maverick's operations and beliefs. Actual results may differ from these
forward looking statements due to numerous factors, including those discussed
in Exhibit 99.1 to Maverick's Form 10-K for its fiscal year ended September
30, 1998.
MAVERICK TUBE CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
For the First Quarter Ended December 31, 1998
(In thousands, except rig count, tons shipped and per share data)
(Unaudited)
First Quarter
1999 1998
Average U.S. Rig Count 692 997
Tons shipped 76,152 134,104
Net sales $41,388 $86,479
Gross profit (A) 745 13,774
Start-up costs (B) 719 --
Income (Loss) from operations (3,358) 10,627
Pre-tax income (loss) (3,693) 10,186
Net income (loss) $(2,364) $6,570
Basic earnings (loss) per share $(0.15) $0.43
Diluted earnings (loss) per share $(0.15) $0.42
Weighted average number shares 15,437 15,435
Working capital $48,838 $47,725
Property, plant and equipment 71,154 56,991
Total assets 141,334 157,388
Long-term debt 28,026 20,745
Stockholders' equity 87,699 84,599
Depreciation and amortization $1,659 $1,416
(A) Gross profit for the quarter ended December 31, 1998 includes a
$707,000 charge to earnings for the reduction in carrying value of inventory,
primarily related to a decline in the selling prices of the Company's energy
products ($0.03 per share).
(B) During September 1998, the Company acquired assets to be used in the
production of cold drawn tubular products at a production facility in Beaver
Falls, Pa. The Company incurred costs of $719,000 in the first quarter of
fiscal 1999 related to the commencement of operations at this facility. These
costs are comprised primarily of salary and related costs for the production,
sales and administrative personnel prior to the fully integrated operation of
the facility ($0.03 per share).
SOURCE Maverick Tube Corporation
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