BJ Services Reports Third Fiscal Quarter Earnings
BJ Services Company reported a net income of $141.8 million, or $0.48 per diluted share, for the third quarter of fiscal 2008, which ended June 30, 2008. These results represent a 12% increase from the $0.43 per diluted share reported in the previous quarter and a 16% decrease compared to the $0.57 per diluted share reported in the third quarter of fiscal 2007.
Revenue in the third quarter of fiscal 2008 was a record $1.33 billion, a 4% increase from the $1.28 billion reported in the previous quarter and a 15% increase from the $1.15 billion reported in the prior year's June quarter. Operating income for the quarter was $206.9 million, an 11% increase compared to $186.5 million for the previous quarter and a 20% decrease compared to $257.8 million reported in the third quarter of fiscal 2007. Operating income as a percentage of revenue was 15.6% in the third quarter of fiscal 2008, compared to 14.5% in the previous quarter and 22.4% in the comparable quarter of the prior year. The lower operating margin compared to the prior year is primarily attributable to lower pricing in our U.S. Pressure Pumping operations.
Chairman and CEO Bill Stewart said, "We are greatly encouraged by our operating results for the quarter. The significant milestone of achieving price and margin stabilization in U.S. Pressure Pumping operations appears to have occurred during the quarter. Improved margins in our International Pressure Pumping operations were also achieved and we expect these two events to be positive turning points for the Company in today's market environment.
"Looking at our fourth fiscal quarter, we expect drilling activity in the U.S. to be up 3%-4% compared to the third fiscal quarter. In Canada, the spring break-up period is over, and we expect meaningful positive contribution sequentially from our operations there. We anticipate modest sequential revenue and margin improvement from our International Pressure Pumping and Oilfield Services operations. Based on these assumptions, we are currently projecting diluted earnings for the fourth fiscal quarter to be in the range of $0.54 to $0.57 per share."
Debt decreased $14.7 million during the quarter to $601.2 million and cash and cash equivalents increased $38.9 million to $82.5 million during the quarter. Uses of cash during the quarter included capital expenditures of $106.5 million, payment of $14.7 million in dividends and $53.4 million for the May 2008 purchase of Innicor Subsurface Technologies Inc., an important complement to the Company's completion tool product line. Innicor is a Calgary-based designer, manufacturer and provider of tools and equipment used in the completion and production phases of oil and gas well development in Canada and select international markets.
All of the International Pressure Pumping operating segments except Russia showed sequential revenue improvement benefiting from increased activity levels. Average active drilling rigs in Europe and Asia Pacific increased 7% and 11%, respectively, from the prior quarter while our revenue in Europe and Asia Pacific increased 25% and 26%, respectively. Middle East and Latin America revenue improvement sequentially was in line with average drilling rig activity in those regions.
Year over year revenue improved 30% in Latin America and 21% in the Middle East, with average active drilling rigs increasing 3% and 4%, respectively. The Latin America increase was primarily the result of increased stimulation activity in Brazil, Venezuela and Argentina, while the Middle East increase was primarily the result of new service contracts in North Africa and Kazakhstan. Operating income margin for International Pressure Pumping was 14% for the third quarter of fiscal 2008, a sequential increase from 12% in the previous quarter and a decrease from 15% reported in the prior year June quarter.
The Company will hold a conference call following the earnings release.
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