Sequential Earnings Up 24% for Second Consecutive Quarter
HOUSTON, April 24 /PRNewswire-FirstCall/ -- Weatherford International Ltd. (NYSE: WFT) today reported first quarter 2006 net income of $203.3 million from continuing operations or $0.57 per diluted share. First quarter diluted earnings per share from continuing operations improved 24 percent over fourth quarter 2005 diluted earnings per share of $0.46 excluding the gain on sale of Universal common stock and exit and restructuring charges associated with the Precision acquisition.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990308/WEATHERFORDLOGO )
Revenues for the first quarter were $1,536.0 million and represented a 79 percent increase over the $857.7 million reported last year. Operating income was $307.4 million for the quarter, nearly 2.5 times 2005 first quarter operating income before charges. First quarter diluted earnings per share from continuing operations of $0.57 increased 97 percent from first quarter 2005 diluted earnings per share of $0.29 before charges.
On a sequential basis, first quarter revenues improved 5 percent above the record levels posted in the fourth quarter of 2005. Revenues increased 12 percent in North America doubling the 6 percent sequential improvement in rig count. The strong performance in this region more than offset a slight decline in Eastern Hemisphere revenues.
The company's first quarter operating income reached record levels as it increased 25 percent sequentially, and company-wide margins improved 320 basis points. Incremental operating margins were 82 percent. All divisions posted improvements in profitability. The strong increase in profitability was the combined result of better absorption, product mix and pricing improvements.
Evaluation, Drilling & Intervention Services
Revenues for the quarter were $916.7 million, 9 percent above the prior quarter and 96 percent above the same quarter in the prior year. Geographically, all regions excluding Asia Pacific, posted sequential revenue improvements. Canada reported the highest increase at 25 percent, followed by Latin America and the U.S. improving 13 percent and 7 percent, respectively.
Operating income of $257.1 million was 135 percent higher than the same quarter in the prior year and 23 percent higher than the preceding quarter. Incremental operating margins were 62 percent. Activity increases in North America and a strong performance by all of the divisional product lines contributed to the very strong incremental margins.
Production Systems
First quarter revenues of $510.0 million were 37 percent higher than the first quarter of 2005 and slightly lower than the prior quarter. Canadian and U.S. revenues improved 13 percent and 5 percent over the prior quarter, respectively. Revenues in the Eastern Hemisphere declined slightly from previous highs due to lower sales in Russia and West Africa.
The current quarter's operating income of $88.9 million improved 73 percent as compared to the same quarter in the prior year and 3 percent as compared to the fourth quarter of 2005. Productivity gains resulted in operating income margin improvements of 80 basis points sequentially and 350 basis points over the same quarter in the prior year.
Other Operations
Other Operations includes the company's pipeline services and contract drilling businesses. Sequential revenues and operating income in the first quarter improved 4 percent and 292 percent respectively.
Reclassifications and Non-GAAP
Reclassifications have been made to the company's reporting of certain expenses. All prior periods have been restated to conform with the current presentation and are included for reference. In addition, Non-GAAP performance measures and corresponding reconciliations to GAAP financial measures have been provided for meaningful comparisons between current results and results in prior operating periods.
Conference Call
The company will host a conference call with financial analysts to discuss the 2006 first quarter results on April 24, 2006 at 9:00 a.m. (CDT). The company invites investors to listen to a play back of the conference call at the company's website, http://www.weatherford.com in the "investor relations" section.
Weatherford is one of the largest global providers of innovative mechanical solutions, technology and services for the drilling and production sectors of the oil and gas industry. Weatherford operates in over 100 countries and employs approximately 29,000 people worldwide.
Contact:
Lisa W. Rodriguez
(713) 693-4746
Chief Financial Officer
Andrew P. Becnel
(713) 693-4136
Vice President - Finance
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, Weatherford's prospects for its operations which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Weatherford International Ltd.'s reports and registration statements filed with the SEC, include the impact of oil and natural gas prices and worldwide economic conditions on drilling activity, the demand for and pricing of Weatherford's products and services, domestic and international economic and regulatory conditions and changes in tax and other laws affecting our business. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated.
Weatherford International Ltd.
Consolidated Condensed Statements of Income
(In 000's, Except Per Share Amounts)
Three Months
Ended
3/31/2006 12/31/2005 9/30/2005 6/30/2005 3/31/2005
Net Revenues:
Evaluation,
Drilling &
Intervention
Services $916,689 $837,832 $609,547 $514,022 $466,981
Completion &
Production
Systems 510,023 518,358 429,591 403,873 371,062
Other Operations 109,299 105,220 37,678 19,400 19,663
1,536,011 1,461,410 1,076,816 937,295 857,706
Operating Income
(Expense):
Evaluation,
Drilling &
Intervention
Services 257,134 208,632 139,396 122,180 109,196
Completion &
Production
Systems 88,868 86,181 65,803 57,549 51,413
Other Operations 17,422 4,446 5,879 (909) 3,400
Research and
Development (36,443) (35,300) (27,140) (23,903) (21,019)
Equity in
Earnings 2,634 3,313 2,991 2,822 1,301
Corporate
Expenses (22,256) (21,039) (19,159) (17,330) (16,889)
Exit Costs and
Restructuring
Charges --- (16,977) (97,258) --- (2,737)
307,359 229,256 70,512 140,409 124,665
Other Income
(Expense):
Debt Redemption
Expense --- --- (4,733) --- ---
Debt Redemption
Expense of
Unconsolidated
Affiliate --- --- --- --- (4,025)
Gain on Sale of
Universal Common
Stock --- 115,456 --- --- ---
Other, Net (2,119) 6,333 10,966 3,432 1,799
Interest Expense,
Net (18,988) (23,301) (17,197) (14,979) (13,658)
Income from
Continuing
Operations Before
Income Taxes 286,252 327,744 59,548 128,862 108,781
Provision for Income
Taxes (82,935) (83,994) (12,249) (34,137) (28,346)
Income from
Continuing
Operations 203,317 243,750 47,299 94,725 80,435
Income from
Discontinued
Operation, Net of
Taxes --- --- 587 463 161
Net Income $203,317 $243,750 $47,886 $95,188 $80,596
Basic Earnings Per
Share:
Income from
Continuing
Operations $0.58 $0.70 $0.16 $0.34 $0.29
Income from
Discontinued
Operation 0.00 0.00 0.00 0.00 0.00
Net Income $0.58 $0.70 $0.16 $0.34 $0.29
Diluted Earnings Per
Share:
Income from
Continuing
Operations $0.57 $0.69 $0.15 $0.32 $0.27
Income from
Discontinued
Operation 0.00 0.00 0.00 0.00 0.00
Net Income $0.57 $0.69 $0.15 $0.32 $0.27
Weighted Average
Shares Outstanding:
Basic 349,160 346,874 300,972 277,872 275,626
Diluted 358,326 355,630 311,788 307,026 304,732
Weatherford International Ltd.
Supplemental Information
(In 000's)
Three Months
Ended
3/31/2006 12/31/2005 9/30/2005 6/30/2005 3/31/2005
Geographic Revenues:
Eastern
Hemisphere $451,482 $478,796 $373,485 $357,920 $298,347
United States 542,803 508,517 410,725 372,247 317,720
Canada 379,631 316,985 188,787 124,459 161,265
Latin America 162,095 157,112 103,819 82,669 80,374
$1,536,011 $1,461,410 $1,076,816 $937,295 $857,706
Depreciation and
Amortization:
Evaluation,
Drilling &
Intervention
Services $81,446 $79,088 $57,181 $48,131 $47,854
Completion &
Production
Systems 20,967 19,505 19,174 18,816 18,742
Other Operations 10,411 10,839 3,615 1,639 1,816
Research and
Development 1,896 1,744 1,431 1,168 1,142
Other 783 773 549 563 568
$115,503 $111,949 $81,950 $70,317 $70,122
Research and
Development:
Evaluation,
Drilling &
Intervention
Services $21,963 $21,612 $14,624 $11,312 $9,361
Completion &
Production
Systems 14,056 13,170 12,255 12,189 11,214
Other
Operations 424 518 261 402 444
$36,443 $35,300 $27,140 $23,903 $21,019
We report our financial results in accordance with generally accepted accounting principles (GAAP). However, Weatherford's management believes that certain non-GAAP performance measures and ratios may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. One such non-GAAP financial measure we may present from time to time is operating income or income from continuing operations excluding certain charges or amounts. This adjusted income amount is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for operating income, net income or other income data prepared in accordance with GAAP. See the table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended December 31, 2005, September 30, 2005 and March 31, 2005. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
Weatherford International Ltd.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except per share data)
For the three months ended December 31, 2005
Items impacting Non-GAAP Adjusted
GAAP the period* Earnings
Operating Income $229,256 $16,977 $246,233
Other Income (Expense), Net 98,488 (115,456) (16,968)
Income from Continuing
Operations Before
Income Taxes 327,744 (98,479) 229,265
Provision for Income Taxes (83,994) 18,650 (65,344)
Income from Continuing
Operations $243,750 $(79,829) $163,921
Diluted Earnings Per Share
from Continuing Operations $0.69 $0.46
Diluted Weighted Average
Shares Outstanding 355,630 355,630
* Exit costs, restructuring charges and tax expense associated with the
Precision acquisition and related activities and the gain on sale of
shares of Universal Compression Holdings, Inc., with no related income
tax effects.
For the three months ended September 30, 2005
Items impacting Non-GAAP Adjusted
GAAP the period* Earnings
Operating Income $70,512 $97,258 $167,770
Other Income (Expense), Net (10,964) 4,733 (6,231)
Income from Continuing
Operations Before
Income Taxes 59,548 101,991 161,539
Provision for Income Taxes (12,249) (31,740) (43,989)
Income from Continuing
Operations $47,299 $70,251 $117,550
Diluted Earnings Per Share
from Continuing Operations $0.15 $0.37
Diluted Weighted Average
Shares Outstanding ** 311,788 323,510
* Exit costs and restructuring charges associated with the Precision
acquisition and debt redemption expense incurred with the settlement
of the Zero Coupon Convertible Debentures.
** The effect of our Zero Coupon Convertible Debentures is anti dilutive
for GAAP purposes, however, after adjusting for non-GAAP items, the
effect of the Zero Coupon Convertible Debentures is dilutive.
For the three months ended March 31, 2005
Items impacting Non-GAAP Adjusted
GAAP the period* Earnings
Operating Income $124,665 $2,737 $127,402
Other Income (Expense), Net (15,884) 4,025 (11,859)
Income from Continuing
Operations Before
Income Taxes 108,781 6,762 115,543
Provision for Income Taxes (28,346) (712) (29,058)
Income from Continuing
Operations $80,435 $6,050 $86,485
Diluted Earnings Per Share
from Continuing Operations $0.27 $0.29
Diluted Weighted Average
Shares Outstanding 304,732 304,732
* Exit and debt restructuring costs primarily related to our equity
investment in Universal Compression Holdings, Inc.
SOURCE Weatherford International Ltd.
/CONTACT: Lisa W. Rodriguez, Chief Financial Officer, +1-713-693-4746, or Andrew P. Becnel, Vice President - Finance, +1-713-693-4136, both of Weatherford International Ltd./ /Photo: http://www.newscom.com/cgi-bin/prnh/19990308/WEATHERFORDLOGO PRN Photo Desk, photodesk@prnewswire.com / /Web site: http://www.weatherford.com / (WFT)