On a sequential basis, fourth quarter revenue of $113.3 million was up 22%, operating income of $30.7 million was up 13%, and net income of $21.4 million was up 9%. Compared to the fourth quarter of 2004, revenue increased 31%, operating income increased 35%, and net income increased 41%.
For the year-ended December 31, 2005, earnings per diluted share was $3.05, up 54% when compared to $1.98 per diluted share in 2004. For the year, revenue of $376.7 million was up 32% from the prior year, operating income of $105.0 million was up 58%, and net income of $73.2 million was up 58%.
Chris Seaver, President and CEO, commented, "Sustained growth in deep formation drilling and demand for deepwater rigs propelled Hydril to its second consecutive year of significantly higher revenue and earnings. Strong demand for our premium connection products resulted in that segment generating nearly two-thirds, $246 million, of Hydril's 2005 revenue. The backlog of capital equipment for our pressure control business began a sharp upturn in the third quarter of 2005 resulting in a backlog of $157 million at year-end. The financial impact of these capital equipment orders should be realized over the next three years."
Premium Connection Segment
Fourth quarter revenue for Hydril's premium connection segment increased 16% sequentially to $73.1 million and operating income increased 4% to $23.8 million. These increases were primarily driven by increasing demand for our products in domestic markets and higher pipe sales for international markets. Operating margin for the fourth quarter was 33%, down from 37% for the third quarter due to increased lower-margin pipe revenue, product mix, and slightly higher costs of manufacturing.
Pressure Control Segment
Sequentially, fourth quarter revenue for the pressure control segment increased 34% to $40.2 million and operating income increased 32% to $11.4 million. Aftermarket revenue increased 30% sequentially to $20.9 million and capital equipment revenue increased 38% to $19.3 million. The increase in aftermarket revenue was due in part to the recovery efforts of drilling contractors from the impact of hurricane activity in the Gulf of Mexico. The increase in capital equipment revenue resulted from progress associated with project orders for deepwater and jack-up blowout prevention systems, which are recorded on a percentage-of-completion accounting basis.
At the end of the quarter, the capital equipment backlog reached $157 million up from $61 million at September 30, 2005, and up from $15 million at December 31, 2004. Deliveries for this backlog will begin in the first quarter of 2006 and continue into mid-year 2008.
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