HOUSTON, Feb. 28 /PRNewswire-FirstCall/ -- Universal Compression Holdings,
Inc. (NYSE: UCO) and Universal Compression Partners, L.P. (Nasdaq: UCLP) today
reported earnings for the fourth quarter and full year 2006.
Universal Compression Holdings, Inc. Financial Results
Universal Compression Holdings reported net income of $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. Net income was $25.0 million, or $0.80 per diluted share, in
the three months ended September 30, 2006, including a benefit of $3.2 million
on a pretax basis related to employee benefit programs; excluding this
benefit, earnings per diluted share would have been $0.73. Net income was
$19.6 million, or $0.60 per diluted share, in the prior year period.
Revenue was $253.0 million in the three months ended December 31, 2006,
compared to $246.9 million in the three months ended September 30, 2006 and
$224.8 million in the prior year period. EBITDA, as adjusted (as defined
below), was $76.5 million in the three months ended December 31, 2006, as
compared to $84.0 million in the three months ended September 30, 2006 and
$74.5 million in the comparable period of the prior year.
For the twelve months ended December 31, 2006, net income was a record
$87.7 million, or $2.82 per diluted share, including a charge of $1.1 million
on a pretax basis related to debt extinguishment costs and a benefit of $3.2
million on a pretax basis related to employee benefit programs. Excluding
these items, earnings per diluted share would have been $2.78 in 2006. For
the twelve months ended December 31, 2005, net income was $50.9 million, or
$1.56 per diluted share, including charges of $29.1 million on a pretax basis
related to debt extinguishment and asset impairment costs. Excluding these
items, earnings per diluted share would have been $2.14 in 2005.
For the twelve months ended December 31, 2006, revenue was $947.7 million
and EBITDA, as adjusted, was $311.8 million, as compared to revenue of $807.3
million and EBITDA, as adjusted, of $262.7 million in the prior year period.
"I am pleased with our performance in 2006, which included record levels
of revenue, EBITDA and earnings per share," commented Stephen A. Snider,
Universal Compression Holdings' Chairman, President and Chief Executive
Officer. "While the performance in each of our four business segments remains
strong due to the continuing healthy demand for our products and services,
recent labor and other cost increases have negatively impacted our domestic
contract compression segment. We are currently addressing many of the issues
related to these cost increases and believe that our proposed merger with
Hanover Compressor Company will allow us to be in a position to further combat
these cost pressures."
"We remain very enthusiastic about the recent announcement for Universal
Compression Holdings and Hanover to combine in a merger of equals," added
Snider. "We believe the merger will create a global leader in natural gas
compression services and production and processing equipment and will enhance
value for stockholders of both companies. We recently filed our initial
application under the Hart-Scott-Rodino Antitrust Improvements Act, and we
continue to expect the merger to close in the third quarter of this year."
"During the fourth quarter, we also pursued several activities of note,"
said Michael Anderson, Universal Compression Holdings' Senior Vice President
and Chief Financial Officer. "We completed the initial public offering of
Universal Compression Partners on October 20, 2006, raising in excess of $120
million of net proceeds. In connection with that transaction, we completed
the refinancing of a significant amount of Universal Compression Holdings'
debt, and put in place financing at Universal Compression Partners that
provides a foundation to allow us to pursue our strategy of offering the
remainder of our domestic contract compression business to Universal
Compression Partners over time. We also completed the repurchase of almost
570,000 shares of Universal Compression Holdings' common stock in the quarter,
at an average price of $63.30 per share. This share repurchase of
approximately $36.1 million was completed under the $200 million share
repurchase program previously authorized by Universal Compression Holdings'
Board of Directors."
"Finally, in January 2007, we completed the purchase of B.T. Engineering
Pte Ltd, a leading Singapore-based fabricator of oil and gas, petrochemical,
marine and offshore equipment, including pressure vessels, FPSO process
modules, terminal buoys, turrets, natural gas compression units and related
equipment," Anderson continued. "We believe each of these activities has
positioned Universal to continue to take advantage of the strong market
conditions we see for all of our business segments."
Universal Compression Partners, L.P. Financial Results
For the three months ended December 31, 2006, Universal Compression
Partners reported revenue of $13.5 million and net income of $2.7 million. In
October 2006, Universal Compression Partners commenced operations upon the
transfer of certain domestic contract compression assets from Universal
Compression Holdings in connection with the initial public offering of
Universal Compression Partners. For the quarter, EBITDA, as further adjusted
for operating and selling, general and administrative cost caps provided by
Universal Compression Holdings (as defined below), totaled $7.2 million and
distributable cash flow (as defined below) totaled $5.0 million.
On February 2, 2007, Universal Compression Partners announced a cash
distribution of $0.278 per unit. The distribution reflected the pro rata
share of the partnership's minimum quarterly distribution of $0.35 per unit
and covered the time period from the closing of the initial public offering
through December 31, 2006. Based on this distribution, the distributable cash
flow generated in the fourth quarter was approximately 1.40 times the amount
of the cash distribution to unitholders. Excluding the effects of the cost
caps provided by Universal Compression Holdings, distributable cash flow would
have been sufficient to cover cash distributions to unitholders by
approximately 1.26 times.
"We are pleased by Universal Compression Partners' successful initial
public offering and the results from our first period of operations,"
commented Snider, Universal Compression Partners' Chairman, President and
Chief Executive Officer. "As with the entirety of our contract compression
business, our outlook is positive for Universal Compression Partners due to
continuing strong demand for our services and sustainable growth prospects.
Additionally, we believe that the proposed merger with Hanover will enhance
the future growth for Universal Compression Partners as the combination
provides a larger pool of domestic contract compression customers and
equipment that can be offered for sale to Universal Compression Partners over
time."
Conference Call
Universal Compression Holdings and Universal Compression Partners will
host a joint conference call today, February 28, 2007, at 10:00 a.m. Central
Time, 11:00 a.m. Eastern Time, to discuss the quarter's and full year'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 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 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, foreign currency gains or losses,
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 depreciation and amortization
expense, interest expense and any capital contributions from Universal
Compression Holdings limiting the cost of sales and selling, general and
administrative costs reimbursed by Universal Compression Partners (pursuant to
the omnibus agreement to which Universal Compression Holdings and Universal
Compression Partners are parties) less cash interest expense and maintenance
capital expenditures.
With respect to Universal Compression Partners, EBITDA, as further
adjusted for operating and selling, general and administrative cost caps
provided by Universal Compression Holdings, a non-GAAP measure, is defined as
net income plus interest expense, depreciation and amortization, and capital
contributions from Universal Compression Holdings limiting the cost of sales
and selling, general and administrative costs reimbursed by Universal
Compression Partners (pursuant to the omnibus agreement to which Universal
Compression Holdings and Universal Compression Partners are parties).
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
for operating cost caps provided by Universal Compression Holdings, a non-GAAP
measure, is defined as total revenue less cost of sales (excluding
depreciation and amortization expense) plus any capital contributions from
Universal Compression Holdings limiting the cost of sales reimbursed by
Universal Compression Partners (pursuant to the omnibus agreement to which
Universal Compression Holdings and Universal Compression Partners are
parties).
Forward-Looking Statements
Statements about Universal Compression Holdings' and Universal Compression
Partners' 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 Compression
Holdings' and Universal Compression Partners' control, which could cause
actual results to differ materially from such statements. Forward looking
information includes, but is not limited to, statements regarding: the ability
of Universal Compression Holdings and Hanover to complete their proposed
merger; the belief that the merger will allow Universal to further combat
domestic contract compression cost pressures, will enhance value for
stockholders, will enhance future growth of Universal Compression Partners and
will close under the anticipated timing; and the belief that Universal
Compression Partners' initial public offering, Universal Compression Holdings'
debt refinancing, Universal Compression Partners' debt financing, a recent
acquisition, and share repurchases will enable Universal Compression Holdings
to continue to take advantage of strong market conditions. While Universal
Compression Holdings and Universal Compression Partners 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 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; changes in
safety and environmental regulations pertaining to the production and
transportation of natural gas; the performance of Universal Compression
Partners; 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; failure to receive the approval of the merger by
stockholders and the satisfaction of 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
Universal Compression Holdings' Transition Report on Form 10-K for the nine
months ended December 31, 2005, Universal Compression Partners' registration
statement on Form S-1 and those set forth from time to time in Universal
Compression Holdings' and Universal Compression Partners' filings with the
Securities and Exchange Commission ("SEC"), which are available through our
website www.universalcompression.com. Universal Compression Holdings and
Universal Compression Partners 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, a registration statement of the new company, Iliad Holdings,
Inc., which will include proxy statements of Universal Compression Holdings
and Hanover, and other materials, will be filed with the SEC. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT AND
THE PROXY STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS REGARDING THE
PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT UNIVERSAL, HANOVER, ILIAD HOLDINGS AND THE
PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of
the registration statement and the proxy statement/prospectus when they are
available and other documents containing information about Universal
Compression Holdings and Hanover, without charge, at the SEC's web site at
www.sec.gov , Universal Compression Holdings' web site at
www.universalcompression.com , and Hanover's web site at www.hanover-co.com .
Copies of the registration statement and the proxy statement/prospectus and
the SEC filings that 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
Hanover and Universal Compression Holdings 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
Hanover's and Universal Compression Holdings' respective proxy statements
relating to their 2006 annual meetings of stockholders as filed with the SEC
on March 24, 2006 and March 15, 2006, respectively. Additional information
about the interests of such persons in the solicitation of proxies in respect
of the merger will be included in the registration statement and the 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 recently formed by Universal
Compression Holdings to provide natural gas contract compression services to
customers throughout the United States and completed its initial public
offering in October 2006 with an initial fleet comprising approximately
330,000 horsepower, or approximately 17% by available horsepower of Universal
Compression Holdings' domestic contract compression business at that time.
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 Twelve Months Ended
December 31, September 30, December 31, December 31,
2006 2006 2005 2006 2005
Revenue:
Domestic
contract
compression $101,626 $101,058 $86,778 $398,189 $325,332
International
contract
compression 37,894 36,251 33,455 142,448 123,570
Fabrication 63,346 57,642 59,681 215,825 191,747
Aftermarket
services 50,125 51,981 44,921 191,245 166,634
Total
revenue 252,991 246,932 224,835 947,707 807,283
Costs and
expenses:
Cost of sales
(excluding
depreciation
and amortization
expense):
Domestic
contract
compression 40,299 34,866 30,533 143,871 117,398
International
contract
compression 10,601 8,968 7,762 36,396 30,723
Fabrication 54,968 47,594 51,778 186,464 174,515
Aftermarket
services 38,855 41,304 36,050 152,325 134,160
Depreciation
and amorti-
zation 31,735 31,154 27,827 122,701 104,289
Selling,
general and
administrative 32,571 30,149 23,819 118,762 85,341
Interest
expense, net 13,535 15,152 14,727 57,349 54,617
Debt extinguish-
ment costs 1,125 - - 1,125 26,068
Asset impair-
ment expense - - - - 3,080
Foreign currency
(gain) loss (290) (45) 755 (645) (589)
Minority
interest 1,354 - - 1,354 -
Other (income)
loss, net (838) 3 388 (1,928) (681)
Total costs
and
expenses 223,915 209,145 193,639 817,774 728,921
Income before
income taxes 29,076 37,787 31,196 129,933 78,362
Income tax
expense 9,071 12,827 11,642 42,277 27,483
Net income $20,005 $24,960 $19,554 $87,656 $50,879
Weighted average
common and
common equivalent
shares out-
standing:
Basic 30,081 30,037 31,616 29,911 31,799
Diluted 31,200 31,163 32,522 31,032 32,615
Earnings per
share:
Basic $0.67 $0.83 $0.62 $2.93 $1.60
Diluted $0.64 $0.80 $0.60 $2.82 $1.56
UNIVERSAL COMPRESSION HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31,
2006 2006 2005 2006 2005
Revenue:
Domestic
contract
compression $101,626 $101,058 $86,778 $398,189 $325,332
International
contract
compression 37,894 36,251 33,455 142,448 123,570
Fabrication 63,346 57,642 59,681 215,825 191,747
Aftermarket
services 50,125 51,981 44,921 191,245 166,634
Total $252,991 $246,932 $224,835 $947,707 $807,283
Gross Margin:
Domestic
contract
compression $61,327 $66,192 $56,245 $254,318 $207,934
International
contract
compression 27,293 27,283 25,693 106,052 92,847
Fabrication 8,378 10,048 7,903 29,361 17,232
Aftermarket
services 11,270 10,677 8,871 38,920 32,474
Total (1) $108,268 $114,200 $98,712 $428,651 $350,487
Selling, General
and
Administrative $32,571 $30,149 $23,819 $118,762 $85,341
% of Revenue 13% 12% 11% 13% 11%
EBITDA, as
adjusted (1) $76,535 $84,048 $74,505 $311,817 $262,747
% of Revenue 30% 34% 33% 33% 33%
Capital
Expenditures $62,926 $58,552 $37,557 $219,309 $156,368
Proceeds from
Sale of PP&E 1,592 5,175 3,532 12,522 17,811
Net Capital
Expenditures $61,334 $53,377 $34,025 $206,787 $138,557
Gross Margin
Percentage:
Domestic contract
compression 60% 65% 65% 64% 64%
International
contract
compression 72% 75% 77% 74% 75%
Fabrication 13% 17% 13% 14% 9%
Aftermarket
services 22% 21% 20% 20% 19%
Total 43% 46% 44% 45% 43%
Reconciliation of
GAAP to Non-GAAP
Financial Information:
Net income $20,005 $24,960 $19,554 $87,656 $50,879
Income tax
expense 9,071 12,827 11,642 42,277 27,483
Depreciation and
amortization 31,735 31,154 27,827 122,701 104,289
Interest
expense, net 13,535 15,152 14,727 57,349 54,617
Foreign currency
(gain) loss (290) (45) 755 (645) (589)
Minority
interest 1,354 - - 1,354 -
Debt extinguish-
ment costs 1,125 - - 1,125 26,068
EBITDA, as
adjusted (1) 76,535 84,048 74,505 311,817 262,747
Selling,
general and
administrative 32,571 30,149 23,819 118,762 85,341
Other (income)
loss, net (838) 3 388 (1,928) (681)
Gross
Margin (1) $108,268 $114,200 $98,712 $428,651 $347,407
December 31, September 30, December 31,
2006 2006 2005
Debt and
Capital Lease
Obligations $830,554 $914,116 $923,341
Stockholders'
Equity $916,430 $927,662 $831,312
Total Debt to
Capitalization 47.5% 49.6% 52.6%
(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 Twelve Months Ended
December 31, September 30, December 31, December 31,
2006 2006 2005 2006 2005
Total Available
Horsepower
(at period end):
Domestic contract
compression 2,069 2,017 1,965 2,069 1,965
International
contract compression 607 599 584 607 584
Total 2,676 2,616 2,549 2,676 2,549
Average Operating
Horsepower:
Domestic contract
compression 1,816 1,792 1,787 1,802 1,748
International
contract compression 541 547 538 546 515
Total 2,357 2,339 2,325 2,348 2,263
Horsepower Utilization:
Spot (at period end) 88.9% 89.8% 92.3% 88.9% 92.3%
Average 89.4% 90.0% 91.7% 90.6% 90.9%
Fabrication Backlog
(in millions) $289 $268 $145 $289 $145
UNIVERSAL COMPRESSION PARTNERS, L.P.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three Months
Ended
December 31,
2006
Revenue $13,465
Cost of sales (excluding depreciation
and amortization expense) 4,952
Depreciation and amortization 2,108
Selling, general and administrative 1,885
Interest expense, net 1,815
Net income $2,705
General partner interest in net income $54
Limited partner interest in net income $2,651
UNIVERSAL COMPRESSION PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands, except per unit amounts)
Three Months
Ended
December 31,
2006
Revenue $13,465
Gross Margin, as adjusted for operating cost
caps provided by Universal
Compression Holdings ("UCO") (1) $9,039
Selling, General and Administrative $1,885
% of Revenue 14%
EBITDA, as further adjusted for operating
and selling, general and
administrative cost caps provided by UCO (1) $7,154
% of Revenue 53%
Capital Expenditures $332
Proceeds from Sale of PP&E 0
Net Capital Expenditures $332
Gross Margin percentage, as adjusted
for operating cost caps provided by UCO 67%
Reconciliation of GAAP to Non-GAAP Financial Information:
Net income $2,705
Depreciation and amortization 2,108
Cap on operating and selling, general and
administrative costs provided by UCO 526
Interest expense, net 1,815
EBITDA, as further adjusted for operating
and selling, general and administrative
cost caps provided by UCO (1) 7,154
Selling, general and administrative costs 1,885
Gross Margin, as adjusted for operating
cost caps provided by UCO (1) $9,039
Less: Cash interest expense (1,815)
Less: Selling, general and administrative (1,885)
Less: Maintenance capital expenditures (306)
Distributable cash flow (2) $5,033
Distributions per Unit $0.28
Distribution to All Unitholders $3,588
Distributable Cash Flow Coverage 1.40x
December 31,
2006
Debt and Capital Lease Obligations $125,000
Total Partners' Capital $69,457
Total Debt to Capitalization 64.3%
Total Debt to Annualized EBITDA, as further
adjusted for operating and selling, general
and administrative cost caps provided by UCO (1) 3.5x
EBITDA, as further adjusted for operating and
selling, general and administrative cost caps
provided by UCO (1) to Interest Expense 3.9x
(1) Management believes disclosure of EBITDA, as further adjusted for
operating and selling, general and administrative cost caps provided
by UCO, and Gross Margin, as adjusted for operating cost caps provided
by UCO, 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 for operating and selling, general and administrative
cost caps provided by UCO, and Gross Margin, as adjusted for operating
cost caps provided by UCO, 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 for operating and selling, general and administrative
cost caps provided by UCO, 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)
October 20,
Through
December 31,
2006 (1)
Total Available Horsepower (at period end) 343
Average Operating Horsepower 330
Horsepower Utilization:
Spot (at period end) 96.9%
Average 98.6%
Combined Domestic Contract Compression Horsepower
of Universal Compression Holdings and Universal
Compression Partners covered by contracts
converted to service agreements 1,114
Total Available Domestic Contract Compression
Horsepower of Universal Compression Holdings and
Universal Compression Partners (at period end): 2,069
% of Domestic Contract Compression Horsepower
of Universal Compression Holdings and Universal
Compression Partners under Converted Contract Form 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.; Universal Compression Partners,
L.P.
02/28/2007
CONTACT: David Oatman, Vice President, Investor Relations,
+1-713-335-7460
9873 02/28/2007 07:45 EST http://www.prnewswire.com