Boots & Coots Pleased with Response, Well Intervention for Q3
Boots & Coots International Well Control, Inc. reported net income attributable to common stockholders of $3.4 million, or $0.05 per diluted share, for the third quarter ended September 30, 2006 compared to a loss of $0.7 million, or $(.02) per diluted share, for the same three months in 2005. Revenues for the three months were $28.3 million compared to $4.6 million in the third quarter of 2005. The company reported EBITDA (defined as earnings before interest, income taxes, depreciation and amortization; see the reconciliation and rationale for this non-GAAP financial measure below) of $7.2 million for the 2006 third quarter compared to $0.3 million for the 2005 third quarter. The 2006 third quarter includes the operating results for the hydraulic well control business acquired, effective as of March 1, 2006.
For the nine months ended September 30, 2006, the Company reported net income attributable to common stockholders of $7.3 million, or $0.13 per diluted share, compared to $0.7 million, or $0.02 per diluted share for the same nine month period in 2005. Revenues for the nine months were $63.3 million compared to $23.7 million for the same period last year. EBITDA was $15.8 million for the 2006 nine month period compared to $3.3 million for the 2005 nine month period. The 2006 nine month period includes operating results for the hydraulic well control business from March 1 through September 30. The Company recognized an effective tax rate of 34.9% for the 2006 nine month period compared to 39.5% for the 2005 nine month period.
Business Segment Results
For the 2006 third quarter, the Well Intervention segment generated revenues of $21.3 million and EBITDA of $4.4 million compared to $3.1 million in revenues and $0.3 million in EBITDA in the 2005 third quarter, reflecting a revenue increase of 585% and an EBITDA increase of 1431%. These increases were due primarily to the inclusion of results for the hydraulic well control business from and after March 1, 2006, the effective date of the acquisition, and year-over-year growth in the Company's Safeguard services of 63%. The hydraulic well control business contributed $15.7 million of revenues and $3.4 million of EBITDA in the third quarter of 2006. For the first nine months of 2006, Well Intervention generated $54.1 million of revenues and $12.3 million of EBITDA, up 424% and 465%, respectively, compared to revenues of $10.3 million and EBITDA of $2.1 million for the same period last year. The hydraulic well control business contributed $38 million of revenues and $10.9 million of EBITDA for the period from March 1, 2006 to September 30, 2006.
For the 2006 third quarter, the Response segment generated revenues of $7.0 million and EBITDA of $2.8 million compared to $1.5 million in revenue and negative $27,000 of EBITDA in the 2005 third quarter. For the first nine months of 2006, the Response segment generated $9.1 million of revenue and $3.5 million of EBITDA compared to $13.3 million of revenue and EBITDA of $1.2 million for the first nine months of 2005. Revenues were lower in the current year nine months due to the high level of work performed in Iraq during the prior year time period. Margins improved during both periods due to reduced third party pass-through charges, favorable pricing and operating leverage gained on increased activity.
"The strong results across the board are a testimonial to the intrinsic value we provide our customers and to our expertise and leadership in the pressure control industry," stated Jerry Winchester, President and Chief Executive Officer. "Response activity has been strong and we have benefited from our expanded international locations which allow us to significantly reduce response time during critical operations."
"Growth in our Well Intervention segment continues to be strong: on a proforma basis, revenues from this segment of our business grew by over 56% as compared to the prior year nine month period as both our hydraulic well control and Safeguard businesses reported strong quarters. Utilization of our hydraulic units was 36.3% during the third quarter of 2006, which represents an 8% year-over-year increase on a proforma basis."
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 nine months, the Company incurred non-cash charges of $0.4 million, or $0.01 per diluted share, and $1.0 million, or $0.02 per diluted share, respectively, related to share based awards as compared to zero in both comparable periods in 2005.
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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