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Universal Compression Reports Second Quarter Results

August, 08, 2006

HOUSTON, Aug. 8 /PRNewswire-FirstCall/ -- Universal Compression Holdings, Inc. (NYSE: UCO) today reported record net income of $21.8 million, or $0.70 per diluted share, in the three months ended June 30, 2006 compared to $20.9 million, or $0.68 per diluted share, in the three months ended March 31, 2006 and $18.1 million, or $0.56 per diluted share, in the prior year period.

Revenue was $218.7 million in the three months ended June 30, 2006 compared to $229.1 million in the three months ended March 31, 2006 and $207.7 million in the prior year period. EBITDA, as adjusted (as defined below), was $75.2 million in the three months ended June 30, 2006 compared to $76.0 million in the three months ended March 31, 2006 and $65.2 million in the comparable period of the prior year.

Stephen A. Snider, Universal's Chairman, President and Chief Executive Officer, commented, "Worldwide markets for compression services and products continue to be very active. Our second quarter results included a 25% increase in diluted earnings per share as compared to the prior period results and reflected continued strong performance from our domestic and international contract compression segments. Our outlook for the foreseeable future is positive based upon, among other things, favorable industry conditions and continuing healthy order and inquiry levels from our customers."

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 the proposed initial public offering of Universal Compression Partners, L.P. that was announced on June 27, 2006 or any acquisition, disposition, merger, joint venture or other material transactions that could occur in the future.

For the three months ending September 30, 2006, we expect revenue of $240 million to $250 million and earnings per diluted share of $0.73 to $0.77. For the twelve months ending December 31, 2006, we now expect earnings per diluted share of $2.85 to $2.95, compared to previously reported guidance of $2.80 to $2.95. We continue to expect that revenue will be $950 million to $970 million and capital expenditures, net of sale proceeds, will be $210 million to $240 million in calendar year 2006.

Conference Call

We will host a conference call today, August 8, 2006, at 10:00 a.m. Central Time, 11:00 a.m. Eastern Time, to discuss the quarter's results and certain 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 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 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. In addition to the recently announced proposed initial public offering of Universal Compression Partners, L.P., other factors that could cause results to differ materially from those indicated by such forward- looking statements are the conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for natural gas and the impact on the price of natural gas; employment workforce factors, including our ability to hire, train and retain key employees; our ability to timely and cost-effectively obtain components necessary to conduct our business; changes in political or economic conditions in key operating markets, including international markets; our ability to timely and cost-effectively implement our enterprise resource planning system; and changes in safety and environmental regulations pertaining to the production and transportation of natural gas.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Universal's Transition Report on Form 10-K for the nine months ended December 31, 2005 and those set forth from time to time in Universal's filings with the Securities and Exchange Commission, which are available through our website www.universalcompression.com. 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,
                                              2006         2006       2005
    Revenue:
       Domestic contract compression       $101,460      $94,045    $79,672
       International contract compression    35,010       33,293     30,300
       Fabrication                           38,528       56,309     55,836
       Aftermarket services                  43,718       45,421     41,876
           Total revenue                    218,716      229,068    207,684

    Costs and expenses:
       Cost of sales (excluding
        depreciation and amortization
        expense):
           Domestic contract compression     35,792       32,914     27,776
           International contract
            compression                       8,430        8,397      7,907
           Fabrication                       33,797       50,105     52,972
           Aftermarket services              36,359       35,807     33,047
       Depreciation and amortization         30,013       29,799     25,633
       Selling, general and administrative   29,461       26,581     20,438
       Interest expense, net                 14,605       14,057     12,460
       Foreign currency (gain) loss             299         (609)      (837)
       Other (income) loss, net                (360)        (733)       352
           Total costs and expenses         188,396      196,318    179,748

    Income before income taxes               30,320       32,750     27,936

    Income tax expense                        8,504       11,875      9,800

       Net income                           $21,816      $20,875    $18,136

    Weighted average common and common
       equivalent shares outstanding:
       Basic                                 29,891       29,629     31,800

       Diluted                               31,040       30,700     32,563

    Earnings per share:
       Basic                                  $0.73        $0.70      $0.57

       Diluted                                $0.70        $0.68      $0.56



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

                                                    Three Months Ended
                                            June 30,     March 31,  June 30,
                                              2006         2006       2005
    Revenue:
        Domestic contract compression      $101,460      $94,045    $79,672
        International contract compression   35,010       33,293     30,300
        Fabrication                          38,528       56,309     55,836
        Aftermarket services                 43,718       45,421     41,876
            Total                          $218,716     $229,068   $207,684

    Gross Margin:
        Domestic contract compression       $65,668      $61,131    $51,896
        International contract compression   26,580       24,896     22,393
        Fabrication                           4,731        6,204      2,864
        Aftermarket services                  7,359        9,614      8,829
            Total                          $104,338     $101,845    $85,982

    Selling, General and Administrative     $29,461      $26,581    $20,438
        % of Revenue                            13%          12%        10%

    EBITDA, as adjusted                     $75,237      $75,997    $65,192
        % of Revenue                            34%          33%        31%

    Capital Expenditures                    $59,402      $38,732    $41,886
    Proceeds from Sale of PP&E                4,070        1,685      4,400
    Net Capital Expenditures                $55,332      $37,047    $37,486

    Gross Margin Percentage:
        Domestic contract compression           65%          65%        65%
        International contract compression      76%          75%        74%
        Fabrication                             12%          11%         5%
        Aftermarket services                    17%          21%        21%
        Total                                   48%          44%        41%

    Reconciliation of GAAP to Non-GAAP
     Financial Information:
        Net income                          $21,816      $20,875    $18,136
        Income tax expense                    8,504       11,875      9,800
        Depreciation and amortization        30,013       29,799     25,633
        Interest expense, net                14,605       14,057     12,460
        Foreign currency (gain) loss            299         (609)      (837)
        EBITDA, as adjusted (1)              75,237       75,997     65,192
        Selling, general and administrative  29,461       26,581     20,438
        Other (income) loss, net               (360)        (733)       352
        Gross Margin (1)                   $104,338     $101,845    $85,982


                                             June 30,   March 31,   June 30,
                                               2006         2006       2005

    Debt and Capital Lease Obligations     $898,855     $898,314   $849,463
    Stockholders' Equity                   $904,308     $861,278   $876,026
    Total Debt to Capitalization              49.8%        51.1%      49.2%

    (1) Management believes disclosure of EBITDA, as adjusted and Gross
        Margin, non-GAAP measures, provide useful information to investors
        because, when viewed with our GAAP results and accompanying
        reconciliations, they provide a more complete understanding of our
        performance than GAAP results alone.  Management uses EBITDA, as
        adjusted and Gross Margin, as a supplemental measure to review current
        period operating performance, a comparability measure and a
        performance measure for period to period comparisons.  In addition,
        EBITDA, as adjusted is used by management as a valuation measure.



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

                                                      Three Months Ended
                                              June 30,     March 31,  June 30,
                                                2006         2006       2005
    Total Available Horsepower
     (at period end):
          Domestic contract compression        1,989        1,968      1,921
          International contract compression     595          591        566
              Total                            2,584        2,559      2,487

    Average Operating Horsepower:
          Domestic contract compression        1,794        1,803      1,740
          International contract compression     549          548        513
              Total                            2,343        2,351      2,253

    Horsepower Utilization:
          Spot (at period end)                 90.2%        92.2%      91.4%
          Average                              91.1%        92.1%      90.7%

    Fabrication Backlog (in millions)           $275         $228        $73

SOURCE Universal Compression Holdings, Inc.
08/08/2006

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

5198 08/08/2006 08:00 EDT http://www.prnewswire.com

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