Boots & Coots Reports Record Results for the Second Quarter
Boots & Coots International Well Control, Inc. late Tuesday reported net income of $2.6 million, or $0.04 per diluted share, for the second quarter ended June 30, 2006, compared to a loss of $0.9 million for the same three months in 2005. Revenues for the three months were $23.5 million compared to $4.8 million in the second quarter of 2005. With the first full quarter inclusion of our recently acquired hydraulic well control business, EBITDA (defined as earnings before interest, income taxes, depreciation and amortization; see the reconciliation and rationale for this non-GAAP financial measure below) was $6.1 million in this year's second quarter compared to $11,000 in the second quarter of 2005.
For the six months ended June 30, 2006, the company reported net income of $3.9 million, or $0.08 per diluted share, compared to $1.4 million, or $0.04 per diluted share for the same six month period in 2005. Revenues for the six months were $35.0 million compared to $19.1 million for the same period last year. EBITDA was $8.6 million for the 2006 six month period compared to $3.1 million for the first six months of 2005.
Business Segment Results
For the second quarter of 2006, Well Intervention generated $22.8 million in revenues and $5.9 million in EBITDA compared to $4.1 million in revenues and $0.9 million in EBITDA in 2005, reflecting a revenue increase of 453% and an EBITDA increase of 590%. These increases were due primarily to the inclusion of results for Hydraulic Well Control (HWC) from and after March 1, 2006, the effective date of the acquisition, and year-over-year growth in the company's Safeguard services of 71%. The HWC business contributed $17.9 million of revenues and $5.4 million of EBITDA in the second quarter of 2006. For the first six months of 2006, Well Intervention generated $32.8 million of revenues and $7.9 million of EBITDA, up 354% and 317%, respectively, compared to revenues of $7.2 million and EBITDA of $1.9 million for the same period last year.
For the second quarter of 2006, the Response segment reported revenues of $0.7 million and EBITDA of $0.2 million compared to $0.6 million and a loss of $0.8 million, respectively, in the second quarter of 2005. For the first six months of 2006, the Response segment reported revenues of $2.2 million and EBITDA of $0.7 million compared to $11.8 million and $1.2 million, respectively, in the first six months of 2005. The 2006 results were down from the prior year period due to a high volume of response work in Iraq during the first quarter of 2005. Margins were up as the current six month period did not include any third-party pass through revenues and expenses for security.
"With strong activity both domestically and internationally, Boots and Coots experienced a great quarter due to the acquisition of HWC and strong international activity which also benefited our Safeguard business," stated Jerry Winchester, President and Chief Executive Officer. "On a proforma basis, our Well Intervention segment grew by 52% for the quarter and over 55% as compared to the prior year six month period. In addition to the strong results for HWC, revenues for our Safeguard services in North Africa and Kazakhstan almost doubled from the prior year six month period."
"We are continuing to focus our business development efforts toward additional growth internationally and domestically, continued expansion into new markets and improving current utilization in our existing locations," added Winchester. "We are confident in our plan and our ability to achieve a $60 million Well Intervention revenue target in 2006."
For the second quarter, the income tax expense was $1.2 million, or 31.8% of pre-tax income, compared to a total of $0.2 million in the second quarter of 2005. In the second quarter of 2005, only foreign income taxes were accrued during the period due to a pre-tax income loss. For the six-month period, the effective tax rate was 36.9% compared to 17.5% in 2005. The higher tax rate was primarily due to an increase in the percentage of our consolidated pre-tax income sourced in taxable foreign jurisdictions.
For the six-month period, interest expense was $1.3 million and included the one time write-off of deferred finance costs of $0.9 million related to retired subordinated debt and interest expense of $1.1 million primarily related to the HWC acquisition, partially offset by a one time interest credit of $0.6 million related to the payment of the subordinated debt. The company also benefited from an adjustment to preferred dividends of $0.8 million relating to discounts on the repurchase of its redeemable preferred stock, partially offset by dividend expense of $0.2 million. During the first quarter, the company adopted Statement of Financial Accounting Standards No. 123 (revised 2004) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants and directors; including employee stock options based on estimated fair values. For the current quarter and six months, the company incurred non-cash charges of $0.3 million, or $0.00 per diluted share and $0.6 million, or $0.01 per diluted share respectively, as compared to zero in both comparable periods in 2005.
Houston-based Boots & Coots International Well Control, Inc., Houston, Texas, provides a suite of integrated oilfield services centered on the intervention, emergency response, and restoration of blowouts and well fires as well as hydraulic workover/snubbing and hot tapping services around the world.
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