Universal Compression Reports Fiscal 2004 Third Quarter Results

January 27, 2004

HOUSTON, Jan. 27 /PRNewswire-FirstCall/ -- Universal Compression Holdings, Inc. (NYSE: UCO), a leading provider of natural gas compression services, today reported fiscal 2004 third quarter net income of $11.7 million, or $0.38 per diluted share. The Company had net income of $9.3 million, or $0.30 per diluted share, in the fiscal 2004 second quarter and $8.6 million, or $0.28 per diluted share, in the fiscal 2003 third quarter.

Revenues were $170.2 million in the fiscal 2004 third quarter compared to $175.7 million in the fiscal 2004 second quarter and $164.6 million in the prior year period. EBITDA, as adjusted (as defined below), was $58.1 million in the fiscal 2004 third quarter compared to $55.3 million in the fiscal 2004 second quarter and $50.2 million in the fiscal 2003 third quarter.

"We are pleased with our performance in the fiscal 2004 third quarter which included a record level of EBITDA and a 36% increase in earnings per share compared to the prior year period. We achieved sequential improvement in earnings per share over the first three quarters of fiscal 2004 due largely to improving industry conditions and better utilization of our contract compression fleet. Our outlook for the first half of calendar 2004 remains positive as our customers seek to enhance their natural gas production and transportation capabilities," said Stephen A. Snider, Universal's President and Chief Executive Officer.

"We have been able to strengthen our balance sheet while we improve our financial results. Capital expenditures were $68 million in the first nine months of fiscal 2004 compared to $99 million in the comparable year ago period. Our financial liquidity continues to improve as we generate operating cash flow in excess of capital expenditures," added Michael Anderson, Universal's Chief Financial Officer.

Guidance

For the three months ending March 31, 2004, the Company expects revenues to be $185 million to $195 million and earnings per diluted share to be $0.35 to $0.39. For the twelve months ending March 31, 2004, the Company expects revenues of $683 million to $693 million and earnings per diluted share of $1.29 to $1.33, excluding the charges related to debt extinguishment and facility consolidation costs that occurred during the first half of the fiscal year. Including these charges, the Company expects earnings per diluted share of $0.97 to $1.01 in fiscal 2004. The Company expects capital expenditures will be $90 million to $100 million in fiscal 2004 and that operating cash flow after capital expenditures will be positive.

Conference Call

Universal will host a conference call today, January 27, 2004 at 10:00 am Central Time, 11:00 am Eastern Time, to discuss the quarter's results and other corporate matters. The conference call will be broadcast live over the Internet to provide interested persons the opportunity to listen. The call will also be archived for approximately 90 days 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 "Investor Home" in the "Investor Relations" section) or http://www.firstcallevents.com/service/ajwz397161505gf12.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 for approximately 90 days.

EBITDA, as adjusted, is defined as net income plus income taxes, interest expense (including debt extinguishment costs), operating lease expense, depreciation and amortization, foreign currency gains or losses, excluding non-recurring items (including facility consolidation costs), and extraordinary gains or losses.

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
                                       December 31, September 30, December 31,
                                           2003         2003          2002
    Revenues:
        Domestic contract compression    $71,067       $69,716      $67,065
        International contract
         compression                      20,789        20,720       16,156
        Fabrication                       42,092        49,678       50,258
        Aftermarket services              36,219        35,568       31,105
            Total revenues               170,167       175,682      164,584

    Costs and expenses:
        Domestic contract compression
         - direct costs                   25,073        26,965       24,195
        International contract
         compression - direct costs        4,981         4,812        3,453
        Fabrication - direct costs        38,480        44,113       45,576
        Aftermarket services - direct
         costs                            29,053        27,880       24,609
        Depreciation and amortization     21,504        20,915       15,726
        Selling, general and
         administrative                   16,101        17,324       16,923
        Operating lease                       --            --       15,239
        Interest expense                  17,994        17,960        5,671
        Foreign currency (gain) loss        (466)          884         (353)
        Other (income)                    (1,630)         (714)        (411)
        Facility consolidation costs          --           417           --
            Total costs and expenses     151,090       160,556      150,628

    Income before income taxes            19,077        15,126       13,956

    Income taxes                           7,344         5,823        5,373

        Net income                       $11,733        $9,303       $8,583

    Weighted average common and common
     equivalent shares outstanding:
        Basic                             30,841        30,797       30,668

        Diluted                           31,243        31,108       30,859

    Earnings per share:
        Basic                              $0.38         $0.30        $0.28

        Diluted                            $0.38         $0.30        $0.28


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

                                                  Three Months Ended
                                       December 31, September 30, December 31,
                                          2003          2003         2002

    Revenues:
        Domestic contract compression     $71,067      $69,716      $67,065
        International contract compression 20,789       20,720       16,156
        Fabrication                        42,092       49,678       50,258
        Aftermarket services               36,219       35,568       31,105
            Total                        $170,167     $175,682     $164,584

    Gross Profit:
        Domestic contract compression     $45,994      $42,751      $42,870
        International contract compression 15,808       15,908       12,703
        Fabrication                         3,612        5,565        4,682
        Aftermarket services                7,166        7,688        6,496
            Total                         $72,580      $71,912      $66,751

    Selling, General and Administrative   $16,101      $17,324      $16,923
        % of Revenue                            9%          10%          10%

    EBITDA, as adjusted                   $58,109      $55,302      $50,239
        % of Revenue                           34%          31%          31%

    Capital Expenditures                  $31,153      $20,577      $39,978

    Profit Margin:
        Domestic contract compression          65%          61%          64%
        International contract compression     76%          77%          79%
        Fabrication                             9%          11%           9%
        Aftermarket services                   20%          22%          21%
        Total                                  43%          41%          41%

    Reconciliation of GAAP to Non-GAAP
     Financial Information:
        Net income                        $11,733       $9,303       $8,583
        Income taxes                        7,344        5,823        5,373
        Depreciation and amortization      21,504       20,915       15,726
        Operating lease                        --           --       15,239
        Interest expense                   17,994       17,960        5,671
        Foreign currency (gain) loss         (466)         884         (353)
        Facility consolidation costs           --          417           --
        EBITDA, as adjusted               $58,109      $55,302      $50,239

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

    Debt *                               $889,262     $945,155     $945,052
    Stockholders' Equity                 $779,800     $744,451     $708,534
    Total Debt to Capitalization             53.3%        55.9%        57.2%

    * Debt includes capital lease obligations.


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

                                                   Three Months Ended
                                       December 31, September 30, December 31,
                                          2003          2003         2002

    Total Horsepower Available
     (at period end):
        Domestic contract compression     1,900         1,936        1,960
        International contract compression  401           410          374
            Total                         2,301         2,346        2,334

    Average Contracted Horsepower:
        Domestic contract compression     1,661         1,662        1,625
        International contract compression  363           364          319
            Total                         2,024         2,026        1,944

    Horsepower Utilization:
        Spot (at period end)               87.0%         86.9%        83.6%
        Average                            86.9%         85.9%        83.4%

    Fabrication Backlog (in millions)        $92         $101          $56

SOURCE Universal Compression Holdings, Inc.