Universal Compression Reports Fiscal 2005 Second Quarter Results

October 26, 2004

HOUSTON, Oct 26, 2004 /PRNewswire-FirstCall via COMTEX/ -- Universal Compression Holdings, Inc. (NYSE: UCO), a leading provider of natural gas compression services, today reported net income of $12.2 million, or $0.38 per diluted share, in the fiscal 2005 second quarter compared to $9.3 million, or $0.30 per diluted share, in the fiscal 2004 second quarter. Results in the fiscal 2004 second quarter included a charge of $0.4 million on a pretax basis, or $0.01 per diluted share on an after-tax basis, related to facility consolidation costs. Excluding this item, fiscal 2004 second quarter net income was $9.6 million, or $0.31 per diluted share.

Net income was $11.8 million, or $0.37 per diluted share, in the fiscal 2005 first quarter, including a gain of $3.2 million on a pretax basis, or $0.06 per diluted share on an after-tax basis, related to the termination of interest rate swaps and a charge of $0.5 million on a pretax basis, or $0.01 per diluted share on an after-tax basis, related to debt extinguishment costs. Excluding these items, fiscal 2005 first quarter net income was $10.1 million, or $0.32 per diluted share.

Revenue was a record $191.9 million in the fiscal 2005 second quarter compared to $184.9 million in the fiscal 2005 first quarter and $175.7 million in the fiscal 2004 second quarter. EBITDA, as adjusted (as defined below), was a record $59.5 million in the fiscal 2005 second quarter compared to $55.1 million in the fiscal 2005 first quarter and $55.3 million in the fiscal 2004 second quarter.

"We are pleased with our fiscal 2005 second quarter financial results which included record levels of revenue and EBITDA and a 23% improvement in diluted earnings per share compared to the prior year period results excluding facility consolidation costs. This strong earnings growth was driven by an increased gross profit contribution from each of our contract compression, aftermarket services and fabrication business segments. Contract compression fleet utilization improved steadily throughout the fiscal 2005 second quarter, increasing from 87.6% at June 30, 2004 to 89.8% at September 30, 2004. We are positive about the outlook for the second half of fiscal 2005 due to continuing strong natural gas industry conditions and a healthy demand for our products and services," said Stephen A. Snider, Universal's President and Chief Executive Officer.

"With strong industry conditions and higher utilization rates, we are investing in our contract compression fleet through the fabrication of new units and the repackaging of existing units, both domestically and internationally. Additional investments in our fleet will continue to be measured against and consistent with our disciplined focus on asset utilization and return on capital," added Michael Anderson, Universal's Chief Financial Officer.

Guidance

For the three months ending December 31, 2004, the Company expects revenues to be $185 million to $195 million and earnings per diluted share to be $0.39 to $0.43. For the twelve months ending March 31, 2005, the Company expects revenues of $760 million to $780 million and earnings per diluted share of $1.53 to $1.63, excluding the gain on termination of interest rate swaps and debt extinguishment costs. Including these items, the Company expects earnings per diluted share of $1.58 to $1.68 in fiscal year 2005.

Conference Call

Universal will host a conference call today, October 26, 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://phx.corporate- ir.net/phoenix.zhtml?p=irol-eventDetails&c=121184&eventID=951531 at least 15 minutes prior to the start of the call. The replay of the call will be available at the Web site www.universalcompression.com .

EBITDA, as adjusted, is defined as net income plus income taxes, interest expense (including debt extinguishment costs and excluding gain on termination of interest rate swaps), 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

                                          September 30, June 30, September 30,
                                              2004        2004        2003
    Revenue:
        Domestic contract compression       $73,178      $70,973    $69,716
        International contract compression   22,872       22,746     20,720
        Fabrication                          57,772       57,362     49,678
        Aftermarket services                 38,062       33,793     35,568
            Total revenue                   191,884      184,874    175,682

    Costs and expenses:
        Domestic contract compression -
         direct costs                        26,798       26,265     26,965
        International contract
         compression - direct costs           5,412        4,913      4,812
        Fabrication - direct costs           51,772       53,336     44,113
        Aftermarket services - direct costs  30,204       26,612     27,880
        Depreciation and amortization        23,123       22,673     20,915
        Selling, general and administrative  18,245       18,215     17,324
        Interest expense                     16,154       16,817     17,960
        Foreign currency (gain) loss            882         (358)       884
        Other (income) expense                  (56)         417       (714)
        Debt extinguishment costs               ---          475        ---
        Gain on termination of interest
         rate swaps                             ---       (3,197)       ---
        Facility consolidation costs            ---          ---        417
            Total costs and expenses        172,534      166,168    160,556

    Income before income taxes               19,350       18,706     15,126

    Income taxes                              7,160        6,921      5,823

        Net income                          $12,190      $11,785     $9,303

    Weighted average common and common
       equivalent shares outstanding:
        Basic                                31,336       31,248     30,797
        Diluted                              32,045       31,880     31,108

    Earnings per share:
        Basic                                 $0.39        $0.38      $0.30
        Diluted                               $0.38        $0.37      $0.30


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

                                                  Three Months Ended
                                        September 30,  June 30,  September 30,
                                             2004         2004        2003
    Revenue:
        Domestic contract compression       $73,178      $70,973    $69,716
        International contract compression   22,872       22,746     20,720
        Fabrication                          57,772       57,362     49,678
        Aftermarket services                 38,062       33,793     35,568
            Total                          $191,884     $184,874   $175,682

    Gross Profit:
        Domestic contract compression       $46,380      $44,708    $42,751
        International contract compression   17,460       17,833     15,908
        Fabrication                           6,000        4,026      5,565
        Aftermarket services                  7,858        7,181      7,688
            Total                           $77,698      $73,748    $71,912

    Selling, General and Administrative     $18,245      $18,215    $17,324
        % of Revenue                            10%          10%        10%

    EBITDA, as adjusted                     $59,509      $55,116    $55,302
        % of Revenue                            31%          30%        31%

    Capital Expenditures                    $39,240      $20,344    $20,577

    Profit Margin:
        Domestic contract compression           63%          63%        61%
        International contract compression      76%          78%        77%
        Fabrication                             10%           7%        11%
        Aftermarket services                    21%          21%        22%
        Total                                   40%          40%        41%

    Reconciliation of GAAP to Non-GAAP
     Financial Information:
        Net income                          $12,190      $11,785     $9,303
        Income taxes                          7,160        6,921      5,823
        Depreciation and amortization        23,123       22,673     20,915
        Interest expense                     16,154       16,817     17,960
        Foreign currency (gain) loss            882         (358)       884
        Facility consolidation costs            ---          ---        417
        Debt extinguishment costs               ---          475        ---
        Gain on termination of interest
         rate swaps                             ---       (3,197)       ---
        EBITDA, as adjusted (A)             $59,509      $55,116    $55,302

                                        September 30,   June 30, September 30,
                                             2004         2004       2003

    Debt (B)                               $792,966     $792,665   $889,673
    Stockholders' Equity                   $832,604     $813,508   $762,866
    Total Debt to Capitalization              48.8%        49.4%      53.8%

    (A)  Management believes disclosure of EBITDA, as adjusted, a non-GAAP
         measure, provides useful information to investors because, when
         viewed with our GAAP results and accompanying reconciliations, it
         provides a more complete understanding of our performance than GAAP
         results alone.  Management uses EBITDA, as adjusted, as a
         supplemental measure to review current period operating performance,
         a comparability measure, a performance measure for period to period
         comparisons and a valuation measure.

    (B)  Debt includes capital lease obligations.


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

                                                   Three Months Ended
                                              Sept. 30,     June 3,  Sept. 30,
                                                2004         2004      2003
    Total Horsepower Available
     (at period end):
          Domestic contract compression        1,896        1,899      1,936
          International contract compression     437          424        410
              Total                            2,333        2,323      2,346

    Average Contracted Horsepower:
          Domestic contract compression        1,665        1,626      1,662
          International contract compression     401          388        364
              Total                            2,066        2,014      2,026

    Horsepower Utilization:
          Spot (at period end)                 89.8%        87.6%      86.9%
          Average                              88.9%        86.7%      85.9%

    Fabrication Backlog (in millions)            $66          $81       $101

SOURCE Universal Compression Holdings, Inc.

David Oatman, Vice President, Investor Relations of Universal
Compression Holdings, Inc., +1-713-335-7460
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