Universal Compression Reports Record Earnings of $0.56 Per Share in Fiscal 2006 First Quarter and Raises Guidance

July 27, 2005

HOUSTON, July 27 /PRNewswire-FirstCall/ -- Universal Compression Holdings, Inc. (NYSE: UCO), a leading provider of natural gas compression services, today reported net income of $18.1 million, or $0.56 per diluted share, in the fiscal 2006 first quarter compared to a net loss of $4.5 million, or $0.14 per diluted share, in the fiscal 2005 fourth quarter and net income of $11.8 million, or $0.37 per diluted share, in the fiscal 2005 first quarter.

Revenue was a record $207.7 million in the fiscal 2006 first quarter compared to $193.6 million in the fiscal 2005 fourth quarter and $184.9 million in the fiscal 2005 first quarter. EBITDA, as adjusted (as defined below), was a record $65.2 million in the fiscal 2006 first quarter compared to $56.9 million in the fiscal 2005 fourth quarter and $55.1 million in the fiscal 2005 first quarter.

"We are pleased with our overall performance in the fiscal 2006 first quarter, which included a 75% increase in earnings per share as compared to the fiscal 2005 first quarter results before gain on termination of interest rate swaps and debt extinguishment costs," said Stephen A. Snider, Universal's President and Chief Executive Officer. "With continuing robust market conditions, we are selectively adding new, large-horsepower units to our contract compression fleet to meet customer requirements in domestic and international markets."

Fiscal 2005 fourth quarter net income included charges of $26.1 million on a pretax basis, or $0.53 per diluted share on an after-tax basis, related to debt extinguishment costs and $3.1 million on a pretax basis, or $0.06 per diluted share on an after-tax basis, related to an asset impairment expense. Excluding these items, fiscal 2005 fourth quarter net income was $14.8 million, or $0.45 per diluted share. Fiscal 2005 first quarter net income included 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.

"We are investing in key initiatives to help support the future growth of our company. These initiatives include an increased marketing and business development commitment targeted at aftermarket service and international expansion, and a new company-wide enterprise resource planning system, which is being implemented during fiscal 2006," added Michael Anderson, Universal's Chief Financial Officer.

Guidance

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Factors affecting these forward-looking statements are detailed below under the section titled "Forward-Looking Statements." These statements do not include the potential impact of any acquisition, disposition, merger, joint venture, or other transactions that could occur in the future.

For the three months ending September 30, 2005, the Company expects revenue to be $180 million to $190 million and earnings per diluted share to be $0.51 to $0.55. For the twelve months ending March 31, 2006, the Company now expects revenue of $800 million to $820 million and earnings per diluted share of $2.15 to $2.30; previous guidance was revenue of $775 million to $800 million and earnings per diluted share of $2.05 to $2.20. The Company continues to expect that capital expenditures, net of sale proceeds, will be $125 million to $140 million in fiscal 2006.

Conference Call

Universal will host a conference call today, July 27, 2005, 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) at least 15 minutes prior to the start of the call. The replay of the call will be available at the website 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), depreciation and amortization, foreign currency gains or losses, excluding non-recurring items (including facility consolidation costs), and extraordinary gains or losses.

Forward-Looking Statements

Statements about Universal's outlook and all other statements in this release (and oral statements made regarding the subjects of this release, including on the conference call announced herein) 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 factors that could cause results to differ materially from those indicated by such forward-looking statements are the worldwide supply and demand for natural gas; the demand for Universal's products and services; our ability to implement and effect price increases for our products and services; the ability of our competitors to capture market share and our ability to retain or increase our market share; our ability to manage the rising costs and availability of components and materials from our vendors; changes in our strategic direction; changes in laws or regulatory conditions in the U.S. and other countries in which we operate; our ability to timely, properly and cost-effectively implement our enterprise resource planning system; and changes in the economic conditions in the U.S. or other countries in which we operate.

These forward-looking-statements are also affected by the risk factors and forward-looking statements described in Universal's Annual Report on Form 10-K for the year ended March 31, 2005 and those set forth from time to time in Universal's filings with the Securities and Exchange Commission (SEC), which are available through Universal's website and through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. 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, 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.

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

                                                  Three Months Ended
                                          June 30,     March 31,  June 30,
                                            2005         2005       2004
    Revenue:
        Domestic contract compression       $79,672      $76,918    $70,973
        International contract compression   30,300       28,739     22,746
        Fabrication                          55,836       48,037     57,362
        Aftermarket services                 41,876       39,942     33,793
            Total revenue                   207,684      193,636    184,874

    Costs and expenses:
        Domestic contract compression -
         direct costs                        27,776       29,240     26,265
        International contract
         compression - direct costs           7,907        6,967      4,913
        Fabrication - direct costs           52,972       44,996     53,336
        Aftermarket services - direct
         costs                               33,047       33,281     26,612
        Depreciation and amortization        25,633       24,390     22,673
        Selling, general and
         administrative                      20,438       20,072     18,215
        Interest expense, net                12,460       14,396     16,817
        Foreign currency (gain) loss           (837)         103       (358)
        Other (income) expense                  352         (897)       417
        Debt extinguishment costs               -         26,068        475
        Gain on termination of interest
         rate swaps                             -            -       (3,197)
        Asset impairment costs                  -          3,080        -
            Total costs and expenses        179,748      201,696    166,168

    Income (loss) before income taxes        27,936       (8,060)    18,706

    Income tax expense (benefit)              9,800       (3,570)     6,921

        Net income (loss)                   $18,136      $(4,490)   $11,785

    Weighted average common and common
       equivalent shares outstanding:
        Basic                                31,800       31,580     31,248

        Diluted                              32,563       31,580     31,880

    Earnings (loss) per share:
        Basic                                 $0.57       $(0.14)     $0.38

        Diluted                               $0.56       $(0.14)     $0.37


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

                                                  Three Months Ended
                                          June 30,     March 31,  June 30,
                                            2005         2005       2004
    Revenue:
        Domestic contract compression       $79,672      $76,918    $70,973
        International contract
         compression                         30,300       28,739     22,746
        Fabrication                          55,836       48,037     57,362
        Aftermarket services                 41,876       39,942     33,793
            Total                          $207,684     $193,636   $184,874

    Gross Profit:
        Domestic contract compression       $51,896      $47,678    $44,708
        International contract
         compression                         22,393       21,772     17,833
        Fabrication                           2,864        3,041      4,026
        Aftermarket services                  8,829        6,661      7,181
            Total                           $85,982      $79,152    $73,748

    Selling, General and Administrative     $20,438      $20,072    $18,215
      % of Revenue                              10%          10%        10%

    EBITDA, as adjusted                     $65,192      $56,897    $55,116
      % of Revenue                              31%          29%        30%

    Capital Expenditures                    $41,886      $38,283    $20,345
    Proceeds from Sale of PP&E                4,400        6,003      1,910
    Net Capital Expenditures                $37,486      $32,280    $18,435

    Profit Margin:
        Domestic contract compression           65%          62%        63%
        International contract
         compression                            74%          76%        78%
        Fabrication                              5%           6%         7%
        Aftermarket services                    21%          17%        21%
        Total                                   41%          41%        40%

    Reconciliation of GAAP to Non-GAAP
     Financial Information:
        Net income (loss)                   $18,136      $(4,490)   $11,785
        Income tax expense (benefit)          9,800       (3,570)     6,921
        Depreciation and amortization        25,633       24,390     22,673
        Interest expense, net                12,460       14,396     16,817
        Foreign currency (gain) loss           (837)         103       (358)
        Debt extinguishment costs               -         26,068        475
        Gain on termination of interest
         rate swaps                             -            -       (3,197)
        EBITDA, as adjusted(1)              $65,192      $56,897    $55,116


                                          June 30,   March 31,    June 30,
                                            2005        2005        2004

    Debt and Capital Lease Obligations     $849,463    $858,096    $792,665
    Stockholders' Equity                   $876,705    $861,672    $813,508
    Total Debt to Capitalization              49.2%       49.9%       49.4%

    (1) 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.


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

                                                   Three Months Ended
                                           June 30,     March 31,  June 30,
                                             2005         2005       2004
    Total Available Horsepower (at period
     end):
          Domestic contract compression        1,921        1,925      1,899
          International contract
           compression                           566          544        424
              Total                            2,487        2,469      2,323

    Average Contracted Horsepower:
          Domestic contract compression        1,740        1,717      1,626
          International contract
           compression                           513          484        388
              Total                            2,253        2,201      2,014

    Horsepower Utilization:
          Spot (at period end)                 91.4%        90.4%      87.6%
          Average                              90.7%        90.0%      86.7%

    Fabrication Backlog (in millions)            $73          $69        $81

SOURCE Universal Compression Holdings, Inc.
07/27/2005

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9256 07/27/2005 08:00 EDT http://www.prnewswire.com