BJ Services Announces Third Quarter Earnings of 70 Cents Per Share
BJ Services Company (NYSE: BJS; CBOE; PCX) announced net income of $114.2 million, or $0.70 per diluted share, for the quarter ended June 30, 2005. The Company's earnings per share improved 6% from the previous quarter and improved 56% from last year's June quarter, excluding the effect of the Halliburton patent infringement award recorded as income in last year's June quarter.
Revenues of $817.3 million generated during the quarter were up 3% compared to the previous quarter and were 24% higher than last year's June quarter.
Capital spending was $93.0 million for the quarter, resulting in year to date spending of $225.6 million.
The Company purchased 1,128,400 shares of its common stock for $56.5 million during the quarter. Year to date the Company has repurchased 1,991,000 shares for $98.3 million and has authorization remaining to purchase up to $153.1 million in stock.
On April 25, 2005 the Company redeemed all of its outstanding Convertible Senior Notes due 2022. The redemption of $422.4 million was funded with cash. Cash and cash equivalents, as of June 30, 2005 was $260.3 million, which exceeded total debt by $179.6 million.
Commenting on the results, Chairman and CEO Bill Stewart said, "BJ generated another quarter of record operating results. Continued activity increases in the U.S. market, together with improved pricing, helped offset the seasonally weak Canadian results. In addition, our international pumping service business outside North America experienced good top line growth and our operating income margins continued to show improvement.
"We expect activity to remain strong with continuing improvement in our major markets. Our earnings are forecasted to be in the range of $0.80 - 0.82 per diluted share for the quarter ending September 2005."
CONSOLIDATED STATEMENT OF OPERATIONS UNAUDITED (in thousands except per share amounts) Three Months Ended June 30 March 31 2005 2004 2005 Revenue $817,261 $658,662 $795,863 Operating Expenses: Cost of sales and services 587,826 498,484 573,593 Research and engineering 13,370 11,923 13,083 Marketing 23,497 20,788 22,170 General and administrative 28,365 20,133 26,218 Loss on long-lived assets 184 1,117 392 Total operating expenses 653,242 552,445 635,456 Operating income 164,019 106,217 160,407 Interest expense (2,219) (3,975) (3,790) Interest income 2,272 1,279 3,609 Other income/(expense), net (1,764) 83,604 (282) Income before income taxes 162,308 187,125 159,944 Income taxes 48,115 57,838 50,390 Net income $114,193 $129,287(A) $109,554 Earnings Per Share: Basic $0.71 $0.80(A) $0.68 Diluted $0.70 $0.79(A) $0.66 Weighted Average Shares Outstanding: Basic 161,552 160,882 162,300 Diluted 164,229 163,915 164,858 Supplemental Data: Depreciation and amortization $34,301 $31,946 $32,865 Capital expenditures 92,995 55,928 77,668 Debt 80,727 498,849 501,918 Nine Months Ended June 30 2005 2004 Revenue $2,350,906 $1,906,521 Operating Expenses: Cost of sales and services 1,711,505 1,440,320 Research and engineering 38,915 34,256 Marketing 67,342 60,218 General and administrative 77,066 58,041 Loss on long-lived assets 1,514 2,045 Total operating expenses 1,896,342 1,594,880 Operating income 454,564 311,641 Interest expense (9,977) (12,321) Interest income 8,844 2,997 Other income/(expense), net 7,555 83,008 Income before income taxes 460,986 385,325 Income taxes 142,206 121,262 Net income $318,780 $264,063(A) Earnings Per Share: Basic $1.97 $1.65(A) Diluted $1.94 $1.62(A) Weighted Average Shares Outstanding: Basic 162,090 159,735 Diluted 164,730 163,034 Supplemental Data: Depreciation and amortization $99,531 $93,908 Capital expenditures 225,602 139,329 (A) Includes $56 million for the Halliburton patent infringement award. Segment Highlights
Following are the results of operations by segment for the three months ended June 30, 2005, June 30, 2004 and March 31, 2005 and for the nine months ended June 30, 2005 and June 30, 2004:
Three Months Ended Nine Months Ended June 30 March 31 June 30 2005 2004 2005 2005 2004 U.S./Mexico Pressure Pumping Revenue 447,370 341,692 389,373 1,212,196 923,690 Operating Income 143,706 94,582 116,808 368,238 234,995 International Pressure Pumping Revenue 233,288 192,469 284,678 764,111 662,444 Operating Income 16,807 4,271 45,518 93,395 68,630 Other Oilfield Services Revenue 136,543 124,283 121,611 374,175 319,631 Operating Income 21,478 16,981 14,497 42,404 37,669 Corporate Revenue 60 218 201 424 756 Operating Loss (17,972) (9,617) (16,416) (49,473) (29,653)
U.S./Mexico Pressure Pumping Services revenue increased 15% sequentially and 31% year over year. The U.S. rig count averaged 1,336 during the quarter, up 4% from the previous quarter and up 15% from the prior year's quarter. All U.S. operating regions experienced revenue growth in excess of the growth in rig activity. Our Mexico revenue was down 22% sequentially and 56% year over year as result of activity reductions related to our integrated project in the Burgos area.
The Company's U.S. operations continued to realize price improvement during the quarter and operating income margins for U.S./Mexico improved to 32% from 30% reported in the previous quarter and 28% reported in last year's quarter.
International Pressure Pumping Services revenue decreased 18% sequentially and increased 21% from last year's quarter:
Region Sequential Year Over Year Europe/Africa -2% 30% Middle East 11% 27% Asia Pacific 14% 10% Russia 18% 9% Latin America 19% 33% Canada -60% 12%
The sequential revenue decline is primarily attributed to reduced activity in Canada, resulting from Spring break up. Excluding Canada, international revenue was up 11% sequentially. Revenue from the Europe/Africa region was negatively affected by lower coiled tubing activity in the North Sea compared to last quarter. Middle East revenue improved from activity increases in India and Bangladesh. Activity increases in Thailand, Malaysia and China accounted for the improvement in Asia Pacific. Russia benefited from increase in stimulation activity and increases in coiled tubing activity in Venezuela and Argentina contributed to the improvement in Latin America.
Year over year revenue, excluding Canada, was up 24%.
Operating income margins were 7% compared to 16% reported in the previous quarter and 2% reported in last year's quarter. Excluding Canada, operating income margins were 12%, increasing from 8% reported in the previous quarter and from 6% reported in last year's quarter.
Other Oilfield Services revenue increased 12% sequentially and 10% year over year: Division Sequential Year Over Year Tubular Services 11% 28% Process & Pipeline Services 29% 2% Chemical Services 2% 13% Completion Tools 39% 13% Completion Fluids -15% 10%
The sequential revenue increase from Tubular Services is primarily the result of higher activity in the North Sea. Process and Pipeline Services improved due to an increase in activity from their seasonally slow March quarter. Our Completion Tools division benefited from an increase in international tool deliveries, as well as an increase in Gulf of Mexico deepwater activity. The Completion Fluids division experienced a decline in revenue resulting from unfavorable product sales mix and exceptional activity in the prior quarter.
The year over year growth from our Tubular Services division is attributable to activity improvement in the North Sea and Asia Pacific. Our Chemical Services and Completion Fluids businesses benefited from activity in the U.S. while Completion Tools revenue improved from higher activity in Brazil.
Other oilfield services operating income margins for the quarter were 16%, up from 12% reported in the previous quarter and 14% reported in last year's quarter.
Consolidated Geographic Highlights
The following table reflects the percentage change in the Company's consolidated revenue by geographic area for the June 2005 quarter compared to the March 2005 quarter (sequential) and the June 2004 quarter (year over year). The information presented is based on the Company's combined service and product line offering by geographic region.
Geographic Sequential Year Over Year U.S. 14% 32% Canada -56% 10% -2% 29% Latin America (includes Mexico) 13% 0% Europe/Africa 7% 29% Russia 18% 9% Middle East 17% 28% Asia Pacific 18% 8% 13% 15% Non-GAAP Financial Measures
A non-GAAP financial measure is a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet, or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.
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