Universal Compression Reports Fiscal 2003 Fourth Quarter Results

May 15, 2003

HOUSTON, May 15 /PRNewswire-FirstCall/ -- Universal Compression Holdings, Inc. (NYSE: UCO), a leading provider of natural gas compression services, today reported net income for its fiscal 2003 fourth quarter of $6.9 million, or $0.22 per diluted share, on revenues of $154.6 million. The Company reported net income of $12.3 million, or $0.40 per diluted share, on revenues of $187.9 million in the fiscal 2002 fourth quarter. EBITDA, as adjusted (as defined below), was $51.0 million in the fiscal 2003 fourth quarter, compared to $50.2 million in the fiscal 2003 third quarter and $53.3 million in the fiscal 2002 fourth quarter.

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For the year ended March 31, 2003, net income was $33.5 million, or $1.08 per diluted share, compared to $49.4 million, or $1.63 per diluted share in the prior year. The Company had revenues of $625.2 million and EBITDA of $201.2 million in fiscal 2003, compared to revenues of $680.0 million and EBITDA of $207.3 million in the prior year.

Capital expenditures were approximately $121 million for the twelve months ended March 31, 2003 compared to $188 million for the comparable period last year. The Company's cash balance increased to approximately $72 million at March 31, 2003 from $6 million at March 31, 2002.

"In fiscal 2003 we made considerable progress despite reduced industry demand in a period of sluggish economic activity. We strengthened our balance sheet and streamlined our operating structure to improve our current and future performance," said Stephen A. Snider, Universal's President and Chief Executive Officer. "We are optimistic about prospects for market conditions improving this year as higher industry drilling counts are expected to lead to additional production-related activity."

Capital Structure

On May 14, 2003, the Company's wholly-owned subsidiary, Universal Compression, Inc., initiated an offer to purchase its $229.75 million of 9 7/8% senior discount notes due 2008 in order to reduce ongoing interest expense levels. The tender offer is subject to the completion of a new senior notes offering, and is expected to be financed by a combination of the new senior notes offering, excess cash and borrowings under an existing revolving credit agreement. This event will result in a pre-tax charge of approximately $15 million, or $(0.30) per diluted share on an after-tax basis, in the first fiscal quarter.

"We are pleased with the opportunity to reduce our cost of capital," said Michael Anderson, Senior Vice President and Chief Financial Officer. "We expect to enhance our financial position further in fiscal 2004 with continuing strong levels of cash generated by operating activities and a conservative capital expenditure program of approximately $90 million to $110 million."

Guidance

For the three months ending June 30, 2003, the Company expects revenues to be $150 million to $160 million and earnings per diluted share to be $0.21 to $0.25. For the twelve months ending March 31, 2004, the Company expects revenues of $650 million to $700 million and earnings per diluted share of $1.20 to $1.40. This guidance excludes non-recurring costs related to the offer to purchase the 9 7/8% senior discount notes and the previously announced consolidation of fabrication operations. Including these costs, the Company expects a net loss per diluted share of $0.07 to $0.13 in its first fiscal quarter and earnings per diluted share of $0.86 to $1.06 in fiscal year 2004.

    Fourth Quarter Statistics

    -- Average fleet horsepower utilized was 1,948,000 in the fourth quarter
       compared to 1,932,000 in the third quarter and 1,922,000 in the prior
       year period.  Spot utilization was 84% at March 31, 2003 and December
       31, 2002 compared to 85% at March 31, 2002.  Average utilization was
       83% in the fourth and third quarters and 87% in the prior year period.

    -- Domestic contract compression gross margins were 64% in the fourth
       quarter, third quarter and prior year period, and international
       contract compression gross margins were 84% compared to 79% in the
       prior quarter and 77% in the prior year period.

    -- Total contract compression horsepower was 2,325,000 at March 31, 2003
       compared to 2,333,000 at December 31, 2002 and 2,236,000 at March 31,
       2002.  International contract compression horsepower was 368,000 at
       March 31, 2003 compared to 373,000 at December 31, 2002 and 345,000 at
       March 31, 2002.

    -- Fabrication revenues were $34.9 million compared to $50.3 million in
       the prior quarter and $66.9 million in the prior year period;
       fabrication gross margins were 11% compared to 9% in the prior quarter
       and 11% in the prior year period.  Fabrication backlog was $56 million
       at March 31, 2003 and December 31, 2002 compared to $80 million at
       March 31, 2002.  The current fabrication backlog is approximately
       $75 million.

    -- Aftermarket services gross margins were 22% in the fourth quarter, 21%
       in the third quarter and 22% in the prior year period.

    Conference Call

Universal will host a conference call today, May 15, 2003 at 12:00 pm Central Time, 1:00 pm Eastern Time, to discuss the quarter's results and other corporate matters. The conference call will be broadcast over the Internet to provide interested persons the opportunity to listen to it live. The call will also be archived for one week to provide an opportunity to those unable to listen to the live broadcast. Both the live broadcast and replay of the archived version are free of charge to the user.

Persons wishing to listen to the conference call live may do so by logging onto http://www.universalcompression.com (click "Company Overview" in the "Company Information" section) or http://www.firstcallevents.com/service/ajwz381439374gf12.html at least 15 minutes prior to the start of the call. A replay of the call will remain available at the Web sites www.universalcompression.com and http://www.prnewswire.com through May 22, 2003.

EBITDA, as adjusted, is defined as net income plus income taxes, interest expense, leasing expense, depreciation and amortization, foreign currency gains or losses, excluding non-recurring items and extraordinary gains or losses. Beginning with the quarter ended September 30, 2002, the Company changed its definition of EBITDA, as adjusted, to exclude foreign currency gains or losses. All periods prior to September 30, 2002 have been recalculated from amounts previously disclosed by the Company to be consistent with this new definition of EBITDA, as adjusted.

Universal Compression, headquartered in Houston, Texas, is a leading natural gas compression services company, providing a full range of contract compression, sales, operations, maintenance and fabrication services to the domestic and international natural gas industry.

Statements about Universal's outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside Universal's control, which could cause actual results to differ materially from such statements. While Universal believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the demand for Universal's products and services and worldwide economic and political conditions. These and other risk factors are discussed in Universal's filings with the Securities and Exchange Commission, copies of which are available to the public. Universal expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events, or otherwise.

                  UNIVERSAL COMPRESSION HOLDINGS, INC.
             UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share amounts)

                                Three Months Ended         Twelve Months Ended
                         March 31, December 31,  March 31,      March 31,
                              2003        2002      2002      2003      2002
    Revenues:
      Domestic contract
       compression          $67,788     $67,065   $67,336   $265,465 $267,550
      International
       contract compression  16,428      16,156    13,317     66,505   60,185
      Fabrication            34,881      50,258    66,942    162,678  211,265
      Aftermarket services   35,492      31,105    40,346    130,570  140,989
          Total revenue     154,589     164,584   187,941    625,218  679,989

    Costs and expenses:
      Cost of sales -
       domestic contract
       compression           24,422      24,195    24,539     95,597   97,658
      Cost of sales -
       international
       contract
       compression            2,674       3,453     3,012     12,736   16,774
      Cost of sales -
       fabrication           31,099      45,576    59,397    146,603  186,918
      Cost of sales -
       aftermarket
       services              27,712      24,609    31,552    102,314  110,293
      Depreciation and
       amortization          19,619      15,726    13,275     63,706   48,600
      Selling, general and
       administrative        17,539      16,923    16,267     67,944   60,890
      Operating lease             0      15,239    15,047     46,071   55,401
      Interest expense       20,247       5,671     5,555     36,421   23,017
      Foreign currency
       (gain) / loss           (156)       (353)     (219)       459      (42)
      Other (income) /
       expense                  179        (411)     (112)    (1,126)     141
          Total costs and
           expenses         143,335     150,628   168,313    570,725  599,650

    Income before income
     taxes                   11,254      13,956    19,628     54,493   80,339

    Income taxes              4,331       5,373     7,309     20,975   30,931

      Net income             $6,923      $8,583   $12,319    $33,518  $49,408

    Weighted average
     common and common
     equivalent shares
     outstanding:
      Basic                  30,709      30,668    30,590     30,665   30,008

      Diluted                30,943      30,859    30,823     30,928   30,250

    Earnings per share:
      Basic                   $0.23       $0.28     $0.40      $1.09    $1.65

      Diluted                 $0.22       $0.28     $0.40      $1.08    $1.63


                     UNIVERSAL COMPRESSION HOLDINGS, INC.
                      UNAUDITED SUPPLEMENTAL INFORMATION
                                (In thousands)

                             Three Months Ended         Twelve Months Ended
                      March 31,  December 31,  March 31,       March 31,
                        2003        2002         2002      2003       2002

    Revenues:
     Domestic
      contract
      compression     $67,788     $67,065     $67,336   $265,465     $267,550
     International
      contract
      compression      16,428      16,156      13,317     66,505       60,185
     Fabrication       34,881      50,258      66,942    162,678      211,265
     Aftermarket
      services         35,492      31,105      40,346    130,570      140,989
       Total         $154,589    $164,584    $187,941   $625,218     $679,989

    Gross Profit:
     Domestic
      contract
      compression     $43,366     $42,870     $42,797   $169,868     $169,892
     International
      contract
      compression      13,754      12,703      10,304     53,769       43,411
     Fabrication        3,782       4,682       7,545     16,075       24,347
     Aftermarket
      services          7,780       6,496       8,794     28,256       30,696
      Total           $68,682     $66,751     $69,440   $267,968     $268,346

    Selling,
     General and
     Administrative   $17,539     $16,923     $16,267    $67,944      $60,890
      % of Revenue         11%         10%          9%        11%           9%

    EBITDA, as
     adjusted         $50,964     $50,239     $53,286   $201,150     $207,315
      % of Revenue         33%         31%         28%        32%          30%

    Capital
     Expenditures     $21,602     $39,978     $48,652   $120,750     $188,019

    Average
     Utilization           83%         83%         87%        83%          89%

    Profit Margin:
     Domestic
      contract
      compression          64%         64%         64%        64%          63%
     International
      contract
      compression          84%         79%         77%        81%          72%
     Fabrication           11%          9%         11%        10%          12%
     Aftermarket
      services             22%         21%         22%        22%          22%
       Total               44%         41%         37%        43%          39%

    Reconciliation
     of GAAP to
     Non-GAAP
     Financial
     Information:
      Net income        6,923       8,583      12,319     33,518       49,408
      Income taxes      4,331       5,373       7,309     20,975       30,931
      Depreciation and
       amortization    19,619      15,726      13,275     63,706       48,600
      Operating lease       0      15,239      15,047     46,071       55,401
      Interest expense 20,247       5,671       5,555     36,421       23,017
      Foreign currency
       (gain) / loss     (156)       (353)       (219)       459          (42)
      EBITDA,
       as adjusted *  $50,964     $50,239     $53,286   $201,150     $207,315


                                           March 31,  December 31, March 31,
                                             2003        2002        2002

    Debt                                   $945,155    $945,051    $226,762
    Operating Leases                            $--         $--    $708,500
    Shareholders' Equity                   $744,451    $722,857    $700,344
    Total Debt to Capitalization **           55.9%       56.7%       57.2%

    *  Beginning with the quarter ended September 30, 2002, the Company
       changed its definition of EBITDA, as adjusted, to exclude foreign
       currency gains or losses.  All periods prior to September 30, 2002 have
       been recalculated from amounts previously disclosed by the Company to
       be consistent with this new definition of EBITDA, as adjusted.

    ** Total Debt includes Debt and Operating Leases.

SOURCE Universal Compression Holdings, Inc.