HOUSTON, May 9 /PRNewswire-FirstCall/ -- Universal Compression Holdings,
Inc. (NYSE: UCO) and Universal Compression Partners, L.P. (Nasdaq: UCLP) today
reported earnings for the first quarter of 2007.
Universal Compression Holdings, Inc. Financial Results
Universal Compression Holdings reported net income of $14.3 million, or
$0.46 per diluted share, in the three months ended March 31, 2007, including a
charge of $1.4 million on a pretax basis for merger-related expenses.
Excluding this charge, earnings per diluted share would have been $0.49. Net
income was $20.0 million, or $0.64 per diluted share, in the three months
ended December 31, 2006, including a charge of $1.1 million on a pretax basis
related to debt extinguishment costs. Excluding this charge, earnings per
diluted share would have been $0.67 in the fourth quarter of 2006. Net income
was $20.9 million, or $0.68 per diluted share, in the prior year period.
Revenue was $239.4 million in the three months ended March 31, 2007,
compared to $253.0 million in the three months ended December 31, 2006 and
$229.1 million in the prior year period. EBITDA, as adjusted (as defined
below), was $72.3 million in the three months ended March 31, 2007, as
compared to $76.5 million in the three months ended December 31, 2006 and
$76.0 million in the comparable period of the prior year.
"We continued to experience solid demand in each of our business segments
in the first quarter although, as expected, field and administrative cost
pressures continued to be a challenge," commented Stephen A. Snider, Universal
Compression Holdings' Chairman, President and Chief Executive Officer. "With
our ongoing investment in people and infrastructure, such as our October 2006
IPO of Universal Compression Partners and January 2007 acquisition of BT
Engineering, we believe we are building a solid foundation to continue the
growth of our company. Our business outlook remains optimistic due to existing
market conditions, healthy overall company activity levels, including the
scheduled completion of significant fabrication projects in the second
quarter, ongoing initiatives to improve field operating efficiencies and our
proposed merger with Hanover Compressor Company."
Merger Update
On March 27, 2007, Universal Compression Holdings and Hanover Compressor
Company jointly announced that they had received a request for additional
information from the Antitrust Division of the U.S. Department of Justice
regarding the proposed merger between the companies. Universal is cooperating
with the government with respect to that request and continues to expect the
transaction to close in the third quarter of 2007.
Universal Compression Partners, L.P. Financial Results
Universal Compression Partners reported revenue of $17.6 million and net
income of $2.3 million in the three months ended March 31, 2007, compared to
revenue of $13.5 million and net income of $2.7 million in the three months
ended December 31, 2006. Universal Compression Partners commenced operations
in October 2006 upon the contribution of certain domestic contract compression
assets from Universal Compression Holdings in connection with the initial
public offering of Universal Compression Partners. EBITDA, as further adjusted
(as defined below), totaled $9.5 million in the three months ended March 31,
2007 compared to $7.3 million in the three months ended December 31, 2006.
Distributable cash flow (as defined below) totaled $6.0 million in the three
months ended March 31, 2007 compared to $5.2 million in the three months ended
December 31, 2006. Because Universal Compression Partners completed its
initial public offering on October 20, 2006, the three month period ended
December 31, 2006 only included results from operations from that date.
Universal Compression Partners' results for the three months ended March 31,
2007 included its first complete quarter of operations.
On April 30, 2007, Universal Compression Partners announced a cash
distribution of $0.35 per unit, which reflected the partnership's minimum
quarterly distribution, compared to its previous cash distribution of $0.278,
which represented a cash distribution of $0.35 per unit per quarter pro rated
to cover the time period from the closing of the initial public offering
through December 31, 2006. The distributable cash flow generated in the first
quarter is approximately 1.3 times the amount of the cash distribution to
unitholders.
"We are pleased with the results and operations of Universal Compression
Partners," commented Mr. Snider, Universal Compression Partners' Chairman,
President and Chief Executive Officer. "We are excited about growth
opportunities due to favorable market conditions and the large pool of
domestic contract compression customers and equipment that can be offered for
sale from Universal Compression Holdings to Universal Compression Partners
over time."
Conference Call
Universal Compression Holdings and Universal Compression Partners will
host a joint conference call today, May 9, 2007, 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 http://www.universalcompression.com (click UCO or UCLP "Investor
Information" section) at least 15 minutes prior to the start of the call. The
replay of the call will be available at the website
http://www.universalcompression.com.
With respect to Universal Compression Holdings, EBITDA, as adjusted, a
non-GAAP measure, 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 expense, foreign currency gains or
losses, merger related expenses, minority interest, excluding non-recurring
items (including facility consolidation costs), and extraordinary gains or
losses.
With respect to Universal Compression Partners, distributable cash flow, a
non-GAAP measure, is defined as net income plus income taxes, depreciation and
amortization expense, non-cash selling, general and administrative expenses,
interest expense and any amounts by which cost of sales and selling, general
and administrative costs are reduced as a result of caps on these costs
contained in the omnibus agreement to which Universal Compression Holdings and
Universal Compression Partners are parties, which amounts are treated as
capital contributions from Universal Compression Holdings for accounting
purposes, less cash interest expense and maintenance capital expenditures.
With respect to Universal Compression Partners, EBITDA, as further
adjusted, a non-GAAP measure, is defined as net income plus income taxes,
interest expense, depreciation and amortization expense, non-cash selling,
general and administrative expenses and any amounts by which cost of sales and
selling, general and administrative costs are reduced as a result of caps on
these costs contained in the omnibus agreement to which Universal Compression
Holdings and Universal Compression Partners are parties, which amounts are
treated as capital contributions from Universal Compression Holdings for
accounting purposes.
With respect to Universal Compression Holdings, Gross Margin, a non-GAAP
measure, is defined as total revenue less cost of sales (excluding
depreciation and amortization expense).
With respect to Universal Compression Partners, Gross Margin, as adjusted,
a non-GAAP measure, is defined as total revenue less cost of sales (excluding
depreciation and amortization expense) plus any amounts by which cost of sales
are reduced as a result of caps on these costs contained in the omnibus
agreement to which Universal Compression Holdings and Universal Compression
Partners are parties, which amounts are treated as capital contributions from
Universal Compression Holdings for accounting purposes.
Forward Looking Statements
Statements about Universal Compression Holdings' and Universal Compression
Partners' (collectively, the "Companies") outlook and all other statements in
this release (and oral statements made regarding the subjects of 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
the Companies' control, which could cause actual results to differ materially
from such statements. Forward looking information includes, but is not limited
to, statements regarding: the belief that the Companies will be able to
continue to take advantage of strong market conditions; the on-going nature of
investments in people and infrastructure, the Companies' optimism regarding
business outlook; Universal Compression Holdings' ability to complete its
scheduled fabrication projects in the second quarter of 2007; the success of
Universal Compression Holdings' ongoing initiatives to improve field operating
efficiencies; the belief that the merger will close in the third quarter of
2007; the existence of growth opportunities for Universal Compression
Partners' and the basis for those opportunities, including favorable market
conditions; and the expectation that Universal Compression Holdings will
contribute assets to Universal Compression Partners in the future. While the
Companies believe that the assumptions concerning future events are
reasonable, they caution that there are inherent difficulties in predicting
certain important factors that could impact the future performance or results
of their business. Among the 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 Universal Compression
Holdings' ability to hire, train and retain key employees; Universal
Compression Holdings' ability to timely and cost-effectively obtain components
necessary to conduct the Companies' business; changes in political or economic
conditions in key operating markets, including international markets;
Universal Compression Holdings' ability to timely and cost-effectively
implement the Companies' enterprise resource planning system; changes in
safety and environmental regulations pertaining to the production and
transportation of natural gas; as to each of Universal Compression Holdings
and Universal Compression Partners, the performance of the other entity; the
failure to realize anticipated synergies from the proposed merger; the results
of the review of the proposed merger by various regulatory agencies and any
conditions imposed on the new company in connection with consummation of the
merger; and failure to receive the approval of the merger by stockholders and
failure to satisfy any of the various other conditions to the closing of the
merger contemplated by the merger agreement.
These forward-looking statements are also affected by the risk factors,
forward-looking statements and challenges and uncertainties described in the
Companies' Annual Reports on Form 10-K for the year ended December 31, 2006
and those set forth from time to time in the Companies' filings with the
Securities and Exchange Commission ("SEC"), which are available through our
website http://www.universalcompression.com. The Companies expressly disclaim
any intention or obligation to revise or update any forward-looking statements
whether as a result of new information, future events, or otherwise.
Additional Information
In connection with the proposed merger of Universal Compression Holdings
and Hanover Compressor Company, a registration statement of the new company,
Iliad Holdings, Inc., which includes preliminary proxy statements of Universal
and Hanover, and other materials, has been filed with the SEC. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE PRELIMINARY PROXY
STATEMENT/PROSPECTUS, WHICH IS AVAILABLE NOW, AND THE DEFINITIVE PROXY
STATEMENT/PROSPECTUS AND OTHER MATERIALS REGARDING THE PROPOSED MERGER WHEN
THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN AND WILL CONTAIN IMPORTANT
INFORMATION ABOUT UNIVERSAL, HANOVER, ILIAD HOLDINGS AND THE PROPOSED
TRANSACTION. Investors and security holders may obtain a free copy of the
preliminary proxy statement/prospectus and the definitive proxy
statement/prospectus when it is available and other documents containing
information about Universal and Hanover, without charge, at the SEC's web site
at http://www.sec.gov, Universal's web site at
http://www.universalcompression.com, and Hanover's web site at
http://www.hanover-co.com. Copies of the preliminary proxy
statement/prospectus, the definitive proxy statement/prospectus and the SEC
filings that are and will be incorporated by reference therein may also be
obtained for free by directing a request to either Investor Relations,
Universal Compression Holdings, Inc., 713-335-7000 or to Investor Relations,
Hanover Compressor Company, 832 554-4856.
Participants in Solicitation
Universal and Hanover and their respective directors, officers and certain
other members of management may be deemed to be participants in the
solicitation of proxies from their respective stockholders in respect of the
merger. Information about these persons can be found in Universal's and
Hanover's respective proxy statements relating to their 2006 annual meetings
of stockholders as filed with the SEC on March 15, 2006 and March 24, 2006,
respectively. Additional information about the interests of such persons in
the solicitation of proxies in respect of the merger is included in the
preliminary proxy statement/prospectus that has been filed with the SEC and
will be included in the definitive proxy statement/prospectus to be filed with
the SEC in connection with the proposed transaction.
Universal Compression Holdings, 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 Partners was formed by Universal Compression
Holdings to provide natural gas contract compression services to customers
throughout the United States. Universal Compression Holdings owns
approximately 51% of Universal Compression Partners.
UNIVERSAL COMPRESSION HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31, December 31, March 31,
2007 2006 2006
Revenue:
Domestic contract compression $102,034 $101,626 $94,045
International contract compression 38,534 37,894 33,293
Fabrication 54,616 63,346 56,309
Aftermarket services 44,179 50,125 45,421
Total revenue 239,363 252,991 229,068
Costs and expenses:
Cost of sales (excluding
depreciation and amortization
expense):
Domestic contract compression 41,056 40,299 32,914
International contract
compression 10,315 10,601 8,397
Fabrication 47,237 54,968 50,105
Aftermarket services 34,436 38,855 35,807
Depreciation and amortization 34,863 31,735 29,799
Selling, general and
administrative 35,741 32,571 26,581
Interest expense, net 14,039 13,535 14,057
Debt extinguishment costs -- 1,125 --
Merger related expenses 1,373 -- --
Foreign currency gain (693) (290) (609)
Minority interest 1,324 1,354 --
Other (income) loss, net (1,731) (838) (733)
Total costs and expenses 217,960 223,915 196,318
Income before income taxes 21,403 29,076 32,750
Income tax expense 7,079 9,071 11,875
Net income $14,324 $20,005 $20,875
Weighted average common and common
equivalent shares outstanding:
Basic 29,820 30,081 29,629
Diluted 30,881 31,200 30,700
Earnings per share:
Basic $0.48 $0.67 $0.70
Diluted $0.46 $0.64 $0.68
UNIVERSAL COMPRESSION HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands)
Three Months Ended
March 31, December 31, March 31,
2007 2006 2006
Revenue:
Domestic contract compression $102,034 $101,626 $94,045
International contract
compression 38,534 37,894 33,293
Fabrication 54,616 63,346 56,309
Aftermarket services 44,179 50,125 45,421
Total $239,363 $252,991 $229,068
Gross Margin:
Domestic contract compression $60,978 $61,327 $61,131
International contract
compression 28,219 27,293 24,896
Fabrication 7,379 8,378 6,204
Aftermarket services 9,743 11,270 9,614
Total (1) $106,319 $108,268 $101,845
Selling, General and Administrative $35,741 $32,571 $26,581
% of Revenue 15% 13% 12%
EBITDA, as adjusted (1) $72,309 $76,535 $75,997
% of Revenue 30% 30% 33%
Capital Expenditures $59,560 $62,926 $38,732
Proceeds from Sale of PP&E 3,690 1,592 1,685
Net Capital Expenditures $55,870 $61,334 $37,047
Gross Margin Percentage:
Domestic contract compression 60% 60% 65%
International contract
compression 73% 72% 75%
Fabrication 14% 13% 11%
Aftermarket services 22% 22% 21%
Total 44% 43% 44%
Reconciliation of GAAP to Non-GAAP
Financial Information:
Net income $14,324 $20,005 $20,875
Income tax expense 7,079 9,071 11,875
Depreciation and amortization 34,863 31,735 29,799
Interest expense, net 14,039 13,535 14,057
Foreign currency gain (693) (290) (609)
Merger related expenses 1,373 -- --
Minority interest 1,324 1,354 --
Debt extinguishment costs -- 1,125 --
EBITDA, as adjusted (1) 72,309 76,535 75,997
Selling, general and
administrative 35,741 32,571 26,581
Other (income) loss, net (1,731) (838) (733)
Gross Margin (1) $106,319 $108,268 $101,845
March, 31 December 31, March 31,
2007 2006 2006
Debt and Capital Lease Obligations $856,582 $830,554 $898,314
Stockholders' Equity $935,856 $916,430 $861,278
Total Debt to Capitalization 47.8% 47.5% 51.1%
(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 supplemental
measures to review current period operating performance, comparability
measures and performance measures 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
March 31, December 31, March 31,
2007 2006 2006
Total Available Horsepower
(at period end):
Domestic contract compression 2,098 2,069 1,968
International contract
compression 608 607 591
Total 2,706 2,676 2,559
Average Operating Horsepower:
Domestic contract compression 1,822 1,816 1,803
International contract
compression 552 541 548
Total 2,374 2,357 2,351
Horsepower Utilization:
Spot (at period end) 87.7% 88.9% 92.2%
Average 88.3% 89.4% 92.1%
Fabrication Backlog (in millions) $280 $289 $228
UNIVERSAL COMPRESSION PARTNERS, L.P.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three Months Ended
March 31, December 31,
2007 2006
Revenue $17,585 $13,465
Cost of sales (excluding depreciation
and amortization expense) 7,018 4,952
Depreciation 2,782 2,108
Selling, general and administrative 3,259 1,885
Interest expense, net 2,133 1,815
Other income, net (6) --
Total costs and expenses 15,186 10,760
Income before income taxes 2,399 2,705
Income tax expense 56 --
Net income $2,343 $2,705
General partner interest in net income $47 $54
Limited partner interest in net income $2,296 $2,651
Weighted average limited partners'
units outstanding:
Basic 12,650 10,038
Diluted 12,671 10,041
Earnings per limited partner unit:
Basic $0.18 $0.26
Diluted $0.18 $0.26
UNIVERSAL COMPRESSION PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands, except per unit amounts)
Three Months Ended
March 31, December 31,
2007 2006
Revenue $17,585 $13,465
Gross Margin, as adjusted (1) $11,974 $9,039
EBITDA, as further adjusted (1) $9,480 $7,277
% of Revenue 54% 54%
Capital Expenditures $6,079 $332
Proceeds from Sale of PP&E -- --
Net Capital Expenditures $6,079 $332
Gross Margin percentage, as adjusted 68% 67%
Reconciliation of GAAP to Non-GAAP
Financial Information:
Net income $2,343 $2,705
Income tax expense 56 --
Depreciation 2,782 2,108
Cap on operating and selling,
general and administrative costs
provided by Universal Compression
Holdings ("UCO") 1,578 526
Non-cash selling, general and
administrative costs 588 123
Interest expense, net 2,133 1,815
EBITDA, as further adjusted (1) 9,480 7,277
Cash selling, general and
administrative costs 2,671 1,762
Less: cap on selling, general and
administrative costs provided by
UCO (1) (171) --
Other income, net (6) --
Gross Margin, as adjusted for
operating cost caps provided by
UCO (1) $11,974 $9,039
Less: Cash interest expense (2,077) (1,815)
Less: Cash selling, general and
administrative, as adjusted for
cost caps provided by UCO (1) (2,500) (1,762)
Less: Maintenance capital
expenditures (1,373) (306)
Distributable cash flow (2) $6,024 $5,156
Distributions per Unit $0.35 $0.28
Distribution to All Unitholders $4,518 $3,588
Distributable Cash Flow Coverage 1.33x 1.44x
March 31, December 31,
2007 2006
Debt $125,000 $125,000
Total Partners' Capital $71,064 $69,457
Total Debt to Capitalization 63.8% 64.3%
Total Debt to Annualized EBITDA, as
further adjusted UCO (1) 3.3x 3.4x
EBITDA, as further adjusted (1) to
Interest Expense 4.4x 4.0x
(1) Management believes disclosure of EBITDA, as further adjusted, and
Gross Margin, as adjusted, 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 further adjusted, and
Gross Margin, as adjusted, as supplemental measures to review current period
operating performance, comparability measures and performance measures for
period to period comparisons. In addition, EBITDA, as further adjusted, is
used by management as a valuation measure.
(2) Distributable cash flow, a non-GAAP measure, is a significant
liquidity metric used by management to compare basic cash flows generated by
us to the cash distributions we expect to pay our partners. Using this metric,
management can quickly compute the coverage ratio of estimated cash flows to
planned cash distributions.
UNIVERSAL COMPRESSION PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Horsepower in thousands)
Three Months October 20,
Ended Through
March 31, December 31,
2007 2006 (1)
Total Available Horsepower (at period end) 358 343
Average Operating Horsepower 331 330
Horsepower Utilization:
Spot (at period end) 93.4% 96.9%
Average 94.8% 98.6%
Combined Domestic Contract Compression
Horsepower of Universal Compression
Holdings and Universal Compression
Partners covered by contracts
converted to service agreements 1,154 1,114
Total Available Domestic Contract
Compression Horsepower of Universal
Compression Holdings and Universal
Compression Partners (at period end): 2,098 2,069
% of Domestic Contract Compression
Horsepower of Universal
Compression Holdings
and Universal Compression
Partners under Converted
Contract Form 55.0% 53.8%
(1) Average data shown is for the period from October 20, 2006 to December
31, 2006 because the actual operations of Universal Compression Partners, L.P.
began on October 20, 2006.
SOURCE Universal Compression Holdings, Inc. and Universal Compression
Partners, L.P.
05/09/2007
CONTACT: David Oatman, Vice President, Investor Relations of Universal
Compression, +1-713-335-7460
4179 05/09/2007 07:45 EDT http://www.prnewswire.com