On a sequential basis, revenue of $78.4 million was up 25%, operating income of $19.8 million was up 48%, and net income of $14.4 million, which includes the additional income tax deduction, was up 60%. Compared to the third quarter of 2003, revenue was up 56%, operating income was up 221%, and net income, including both income tax reductions, was up 87%.
Chris Seaver, President and CEO, commented, "As we stated in our September earnings guidance release, premium connection revenue was much stronger in international markets, particularly Latin America, while the domestic business continues to improve as expected. Pressure Control aftermarket revenue remains strong while capital equipment remains soft as expected. Recent announcements by drilling contractors of higher rig day-rates and longer-term contracts are seen as encouraging for the capital equipment business."
Premium Connection Segment
Third quarter revenue for Hydril's premium connection segment increased 35% sequentially to $53.4 million and operating income increased 43% to $18.3 million. The increase in revenue was driven by higher demand for our products in international markets, particularly Latin America, and by higher domestic demand as the result of an increasing deep formation rig count and operator mix within that rig count.
Pressure Control Segment
Third quarter revenue for Hydril's pressure control segment increased 7% sequentially to $25 million and operating income increased 21% to $5.4 million. Aftermarket revenue was up 9% sequentially to $15.9 million, and capital equipment revenue increased 5% to $9.1 million from the second quarter of 2004. Operating income increased primarily due to greater higher-margin aftermarket sales and higher gross margin from capital equipment shipped during the quarter. At the end of the quarter, the capital equipment backlog stood at $15.9 million, up from $14 million at the end of the preceding quarter, but down from $17 million as of September 30, 2003.
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