HOUSTON, Oct. 24, 2005 (PRIMEZONE) -- Hydril (Nasdaq:HYDL) reported earnings for the third quarter ended September 30, 2005 of $0.81 per diluted share, up 13% sequentially from $0.72 reported in the second quarter of 2005, and up 33% from $0.61 reported for the third quarter of 2004. The current quarter included a gain on the sale of surplus real estate which, net of selling expenses, increased after-tax earnings by $0.06 per diluted share.
On a sequential basis, third quarter revenue of $93.0 million was up 2%, operating income of $27.2 million was up 9%, and net income of $19.6 million, which included the gain on the surplus real estate sale, was up 14%. Compared to the third quarter of 2004, revenue increased 19%, operating income increased 38%, and net income was up 36%.
Chris Seaver, President and CEO, commented, "The third quarter presented a significant challenge to the company and especially our employees as a result of the two devastating hurricanes that hit the Gulf Coast. Although our Gulf Coast plants were temporarily shut down as a result of these hurricanes, through dedication and hard-work we were able to continue to meet the needs of our customers. I am pleased to report that all our Gulf Coast area plants are operational and our New Orleans area facility, although not at pre-hurricane levels, is making steady progress towards full production."
Premium Connection Segment
Third quarter revenue for Hydril's premium connection segment increased 5% sequentially to $62.9 million and operating income increased 16% to $23 million. The increase in revenue was driven by higher demand for our products in international markets. The operating income increase resulted from manufacturing efficiencies in our international plants and lower sales, general and administration expenses.
Pressure Control Segment
Sequentially, third quarter revenue for the pressure control segment decreased 5% to $30 million and operating income decreased 10% to $8.6 million. Capital equipment revenue increased 19% to $14 million while aftermarket revenue decreased 20% to $16 million. The increase in capital equipment revenue resulted from progress associated with project orders for deepwater and jack-up blowout prevention systems, which are recorded on a percentage-of-completion accounting basis. Aftermarket revenue was down from an unusually strong second quarter.
The capital equipment backlog was $61 million at September 30, 2005, up 29% from $47 million at June 30, 2005, and more than triple the $16 million at September 30, 2004.
Market Indicators
As more fully described on our website at www.hydril.com on the "Market Indicators" page, our principal indicators are: (1) the U.S. rig count for rigs drilling at targets deeper than 15,000 feet, (2) Gulf of Mexico rigs under contract, (3) the international rig count, (4) the worldwide offshore rig count, and (5) the total U.S. rig count.
Conference Call
Hydril's conference call to discuss third quarter financial results is scheduled for Tuesday, October 25, 2005 at 8:30 a.m. EDT, (7:30 a.m. CDT, 5:30 a.m. PDT) and is accessible by dialing (800) 657-1269 (domestic) or (973) 409-9256 (international) and referencing passcode no. 6603991. For further information on the call or the webcast, please visit the company's website at www.hydril.com or see the company's press release announcing the earnings conference call dated October 14, 2005.
To the extent not provided in the call, reconciliations of any non-GAAP financial measures discussed in the call will be available on the Investor Relations page of Hydril's website.
Hydril, headquartered in Houston, Texas, is engaged worldwide in engineering, manufacturing and marketing premium connection and pressure control products used for oil and gas drilling and production.
Forward-Looking Statements
This press release contains forward-looking statements concerning expected future results. These statements relate to future events and the company's future financial performance, including the company's business strategy and product development plans, and involve known and unknown risks, uncertainties and assumptions. These risks, uncertainties and assumptions, many of which are more fully described in Hydril Company's Quarterly Report on Form 10-Q for the quarter-ended June 30, 2005 filed with the Securities and Exchange Commission, include but are not limited to the impact of changes in oil and natural gas prices and worldwide and domestic economic conditions on drilling activity and demand for and pricing of Hydril's products, the impact of geo-political and other events affecting international markets and trade, Hydril's ability to successfully develop new technologies and products and maintain and increase its market share, the impact of international and domestic trade laws, the loss of or change to distribution methods of premium connections in the U.S. and Canada, overcapacity in the pressure control industry, and high fixed costs that could affect the pricing of Hydril's products. These factors may cause Hydril's or the industry's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
HYDRIL COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Amounts)
--------------------------------------------------
Three Months Ended
(unaudited)
------------------------------------
Sept. 30, June 30, Sept. 30,
2005 2005 2004
---------- ---------- ----------
Revenue
Premium Connection $ 62,928 $ 59,904 $ 53,404
Pressure Control
Aftermarket 16,094 19,989 15,929
Capital Equipment 13,952 11,714 9,094
---------- ---------- ----------
Subtotal Pressure Control 30,046 31,703 25,023
Total Revenue 92,974 91,607 78,427
Total Gross Profit 41,284 40,465 33,076
Gross Margin 44% 44% 42%
Selling, General, and
Admin. Expenses 14,109 15,468 13,308
---------- ---------- ----------
Operating Income (Loss)
Premium Connection 22,974 19,891 18,264
Pressure Control 8,628 9,572 5,441
Corporate Administration (4,427) (4,466) (3,937)
---------- ---------- ----------
Total Operating Income 27,175 24,997 19,768
Operating Margin 29% 27% 25%
Interest Income 959 943 293
Other Income/(Expense) 1,318 (146) (101)
---------- ---------- ----------
Income Before Income Taxes 29,452 25,794 19,960
Provision for Income Taxes 9,840 8,545 5,519
---------- ---------- ----------
Net Income $ 19,612 $ 17,249 $ 14,441
Net Income Per Share:
Basic $ 0.83 $ 0.74 $ 0.63
Diluted $ 0.81 $ 0.72 $ 0.61
Weighted Average Shares
Outstanding:
Basic 23,550,685 23,455,850 23,030,468
Diluted 24,121,067 23,996,733 23,553,551
Depreciation and Amortization
Premium Connection $ 2,181 $ 2,160 $ 1,941
Pressure Control 797 755 731
Corporate Administration 490 485 467
---------- ---------- ----------
Total Depreciation 3,468 3,400 3,139
Capital Expenditures 3,926 2,700 3,405
Pressure Control Backlog
Capital Equipment $ 61,164 $ 47,305 $ 15,898
-----------------------------
Nine Months Ended
(unaudited)
-----------------------------
Sept. 30,
2005 2004
------------ ------------
Revenue
Premium Connection $ 173,340 $ 126,392
Pressure Control
Aftermarket 52,326 46,209
Capital Equipment 37,732 26,227
------------ ------------
Subtotal Pressure Control 90,058 72,436
Total Revenue 263,398 198,828
Total Gross Profit 117,156 81,497
Gross Margin 44% 41%
Selling, General, and Admin. Expenses 42,885 37,905
------------ ------------
Operating Income (Loss)
Premium Connection 61,270 40,438
Pressure Control 26,006 14,718
Corporate Administration (13,005) (11,564)
------------ ------------
Total Operating Income 74,271 43,592
Operating Margin 28% 22%
Interest Income 2,563 647
Other Income/(Expense) 1,065 (74)
------------ ------------
Income Before Income Taxes 77,899 44,165
Provision for Income Taxes 26,026 12,828
------------ ------------
Net Income $ 51,873 $ 31,337
Net Income Per Share:
Basic $ 2.21 $ 1.37
Diluted $ 2.16 $ 1.34
Weighted Average Shares
Outstanding:
Basic 23,456,702 22,930,889
Diluted 23,993,313 23,304,555
Depreciation and Amortization
Premium Connection $ 6,300 $ 5,747
Pressure Control 2,312 2,174
Corporate Administration 1,496 1,423
------------ ------------
Total Depreciation 10,108 9,344
Capital Expenditures 10,690 6,391
HYDRIL COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
---------------------------------------------------------------------
Sept. 30, Dec. 31,
2005 2004
---- ----
(unaudited)
-------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 58,600 $ 51,733
Investments 106,609 69,365
Total receivables 64,619 62,441
Total inventories 53,875 34,820
Other current assets 6,580 12,216
-------- --------
Total current assets 290,283 230,575
-------- --------
LONG-TERM ASSETS:
Property, net 102,201 102,368
Other long-term assets 19,468 10,703
-------- --------
Total long-term assets 121,669 113,071
-------- --------
TOTAL $411,952 $343,646
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CURRENT LIABILITIES:
Accounts payable $ 23,969 $ 23,292
Accrued liabilities and other
current liabilities 34,273 31,061
-------- --------
Total current liabilities 58,242 54,353
-------- --------
LONG-TERM LIABILITIES:
Post-retirement, pension
benefits and other 15,624 14,510
-------- --------
Total long-term liabilities 15,624 14,510
-------- --------
STOCKHOLDERS' EQUITY:
Total stockholders' equity 338,086 274,783
-------- --------
TOTAL $411,952 $343,646
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