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Complete Production Services Reports First-Quarter Earnings Up 139%

Posted on: Tuesday, 2 May 2006, 18:00 CDT

Complete Production Services, Inc. (NYSE:CPX) today reported first-quarter 2006 net income of $28.1 million, or $0.48 per diluted share on revenue of $275.7 million compared to net income of $11.8 million or $0.26 per diluted share on revenue of $161.3 million for the first quarter of 2005. This represents a 139% increase in net income and a 71% increase in revenue over the same period in the prior year.

First quarter 2006 revenues and operating margins increased year-over-year as a result of significant investment in growth capital during the last twelve months, higher market activity and an improved pricing environment, along with an active acquisition program. Operating profit of $56.5 million increased 107% from the previous year, resulting in an operating profit margin as a percent of revenue of 20.5%. All three operating segments' revenue increased on a year-over-year basis, with the Completion & Production Services segment up 82%, the Drilling Services segment up 66% and the Product Sales segment up 36%. Revenues compared to the fourth quarter of 2005 were up 19% overall, with Completion & Production Services revenue up 21%, Drilling Services revenue up 10% and Product Sales up 19%.

"I am pleased to report excellent results in our first earnings report as a public company," commented Joe Winkler, President and Chief Executive Officer. "Quarter one results are reflective of our growth strategy of investment in capital equipment and selective acquisitions within the resource plays of North America," noted Winkler.

During the first quarter of 2006, we completed two acquisitions for total consideration of approximately $18 million (net of cash acquired) and invested approximately $59 million in capital equipment. As previously disclosed, we sold 13 million shares of common stock on April 20, 2006 in our Initial Public Offering and our stock began trading on the New York Stock Exchange on April 21 under the ticker symbol "CPX".

Complete Production Services, Inc. provides completion, production and drilling services and products to the oil and gas industry in many of the most active basins throughout North America. We will hold our quarterly conference call to discuss first quarter 2006 results on Wednesday, May 3, 2006, at 10:00 a.m. Central Time. To participate in the live conference call, dial 866-761-0748 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 60280152. The conference call will be available for replay beginning at 1:00 p.m., May 3, 2006, and will be available until May 10, 2006. To access the conference call replay, please call 888-286-8010 and use the passcode: 78473959. The call is also being webcast and can be accessed at our website at www.completeproduction.com.

The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risk and uncertainties. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release.

Management evaluates the performance of our operating segments using a non-GAAP financial measure, EBITDA. EBITDA is calculated as net income before interest expense, taxes, depreciation and amortization and minority interest. EBITDA is not a substitute for GAAP measures of earnings and cash flow. EBITDA is used in this press release because our management considers it an important supplemental measure of performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

Complete Production Services, Inc. Consolidated Statements of Operations For the Quarters Ended March 31, 2006 and 2005 (in thousands) Quarter Ended Quarter Ended March 31, March 31, 2006 2005 -------------- -------------- (unaudited) (unaudited) Revenue: Services $235,119 $131,987 Products 40,617 29,264 -------------- -------------- 275,736 161,251 Cost of services 135,511 79,670 Cost of products 30,373 22,583 Selling, general and administrative expense 37,608 21,886 Depreciation and amortization 15,727 9,774 -------------- -------------- 219,219 133,913 -------------- -------------- Operating income 56,517 27,338 Interest expense 10,682 4,015 Income from operations -------------- -------------- before taxes and minority interest 45,835 23,323 Tax provision 17,417 8,356 -------------- -------------- Income before minority interest 28,418 14,967 Minority interest 305 3,212 -------------- -------------- Net income $28,113 $11,755 ============== ============== Earnings per share: Basic earnings per share $0.51 $0.28 -------------- -------------- Diluted earnings per share $0.48 $0.26 -------------- -------------- Weighted average shares outstanding: Basic 55,601 41,471 Diluted 58,783 45,860 Complete Production Services, Inc

. Condensed Consolidated Balance Sheet As of March 31, 2006 and December 31, 2005 (in thousands) March 31, December 31, 2006 2005 ------------- ------------- (unaudited) (unaudited) Assets: Current assets $279,760 $247,486 Property, plant and equipment, net 436,596 384,580 Goodwill 336,378 298,297 Other long-term assets 6,939 7,290 ------------- ------------- Total assets 1,059,673 937,653 ============= ============= Liabilities and Stockholder's Equity: Current liabilities 133,300 120,203 Long-term debt 562,965 509,990 Long-term deferred tax liabilities 53,752 54,334 Minority interest 2,664 2,365 ------------- ------------- Total liabilities and minority interest 752,681 686,892 Common stock 568 555 Treasury stock (202) (202) Additional paid-in capital 248,996 220,786 Deferred compensation (3,790) (3,803) Retained earnings 44,998 16,885 Cumulative translation adjustment 16,422 16,540 ------------- ------------- Total stockholder's equity 306,992 250,761 ------------- ------------- Total liabilities and stockholder's equity $1,059,673 $937,653 ============= ============= Cash Flow Data For the Quarter Ended March 31, 2006 (in thousands) March 31, 2006 ------------- (unaudited) Cash flows provide by/(used for): Operating activities $31,307 Investing activities: Capital expenditures $(58,882) Other investing activities $(16,466) Financing activities $44,805 Complete Production Services, Inc. Consolidated Segment Information For the Quarters Ended March 31, 2006 and 2005, and December 31, 2005 (in thousands) March 31, March 31, December 31, 2006 2005 2005 ------------ ------------- ------------- (unaudited) (unaudited) (unaudited) Revenue: Completion and production services $192,021 $105,393 $159,150 Drilling services 44,030 26,594 40,101 Products 39,685 29,264 33,239 ------------ ------------- ------------- Total revenues $275,736 $161,251 $232,490 ============ ============= ============= EBITDA: (1) Completion and production services $54,609 $26,109 $35,188 Drilling services 16,020 7,872 14,839 Products 5,547 3,937 4,902 Corporate and other (3,932) (806) (4,211) ------------ ------------- ------------- Total EBITDA $72,244 $37,112 $50,718 ============ ============= ============= EBITDA as a % of Revenue: Completion and production services 28.4% 24.8% 22.1% Drilling services 36.4% 29.6% 37.0% Products 14.0% 13.5% 14.7% Total 26.2% 23.0% 21.8% (1) EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. Complete Production Services, Inc. Reconciliation of EBITDA to the most Comparable GAAP Measure For the Quarters Ended March 31, 2006 and 2005 and December 31, 2005 (unaudited, in thousands) --------------------------------------- Quarter Ended March 31, 2006 --------------------------------------- (unaudited) Depreciation Operating Segment: EBITDA & Amortization Income ------------------------------ ------------ -------------------------- Completion and production services $54,609 $12,932 $41,677 Drilling services 16,020 2,018 14,002 Products 5,547 503 5,044 Corporate and other (3,932) 274 (4,206) ------------ ------------- ------------ Totals $72,244 $15,727 $56,517 ============ ============= ============ --------------------------------------- Quarter Ended March 31, 2005 --------------------------------------- (unaudited) Depreciation Operating Segment: EBITDA & Amortization Income ------------------------------ ------------ -------------------------- Completion and production services $26,109 $8,116 $17,993 Drilling services 7,872 1,215 6,657 Products 3,937 376 3,561 Corporate and other (806) 67 (873) ------------ ------------- ------------ Totals $37,112 $9,774 $27,338 ============ ============= ============ --------------------------------------- Quarter Ended December 31, 2005 --------------------------------------- (unaudited) Depreciation Operating Segment: EBITDA & Amortization Income ------------------------------ ------------ -------------------------- Completion and production services $35,188 $13,506 $21,682 Drilling services 14,839 1,698 13,141 Products 4,902 376 4,526 Corporate and other (4,211) 358 (4,569) ------------ ------------- ------------ Totals $50,718 $15,938 $34,780 ============ ============= ============ (1)"EBITDA" is a non-GAAP measure. See a definition and description of the use of EBITDA at footnote (a) to this Press Release.

Source: Business Wire

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