HOUSTON, April 25, 2005 (PRIMEZONE) -- Hydril (Nasdaq:HYDL) reported earnings for the first quarter ended March 31, 2005 of $0.63 per diluted share, down 1% sequentially from $0.64 reported in the fourth quarter of 2004, while up 85% from $0.34 reported for the first quarter of 2004. The first quarter of 2004 included an income tax benefit of $0.04 per diluted share, related to prior years.
Compared to the first quarter of 2004, revenue and operating income increased 37% and 111%, respectively, with net income up 91%. On a sequential basis, first quarter revenue of $78.8 million was down 9%, operating income of $22.1 million was down 3%, and net income of $15 million was essentially flat with the fourth quarter.
Chris Seaver, President and CEO, commented, "The first quarter results met our expectations and we were pleased by our strong financial returns and free cash flow generation. While demand for premium connections continued to improve in most regions, revenue was lower sequentially primarily as the result of a return to a more normal level of business in Venezuela following the shipment of large restocking orders in late 2004. We continue to be encouraged by further announcements during the quarter from deepwater drilling contractors of higher day rates and longer term contracts for deepwater rigs, and specifically the announcement by Diamond Offshore Drilling, Inc. (NYSE: DO) of plans to upgrade the Ocean Endeavor rig which resulted in Hydril obtaining an $18 million capital equipment order."
Premium Connection Segment
First quarter revenue for Hydril's premium connection segment decreased 13% sequentially to $50.5 million and operating income decreased 10% to $18.4 million. In addition to reduced shipments to Venezuela, the decrease in revenue was partially a result of the timing of pipe deliveries in select international markets which will shift revenue to the second quarter. The operating income decrease was primarily due to the lower sales, partially offset by a slightly higher operating margin of 36%.
Pressure Control Segment
Sequentially, first quarter revenue for the pressure control segment increased slightly to $28.3 million and operating income increased 25% to $7.8 million. Aftermarket revenue increased 8% to $16.2 million, while capital equipment revenue decreased 8% to $12.1 million. The increase in aftermarket revenue resulted from increased spare parts sales, which was driven by improving rig counts. The operating income increase was the result of the increase in higher-margin aftermarket shipments and lower operating costs.
The capital equipment backlog was $30 million at March 31, 2005, compared to $14.6 million at December 31, 2004 and $11.9 million at March 31, 2004. The first quarter backlog includes the $18 million order received during the quarter from a subsidiary of Diamond Offshore for a deepwater subsea blowout prevention system for Diamond's semi-submersible drilling rig Ocean Endeavor and a fleet spare blowout preventer stack, all of which is scheduled for delivery in early 2006.
Business Drivers
As more fully described on our website at www.hydril.com on the "Business Drivers" page, our principal business drivers are: (1) the U.S. rig count for rigs drilling at targets deeper than 15,000 feet, (2) the 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 first quarter financial results is scheduled for Tuesday, April 26, 2005 at 8:30 a.m. EDT, (7:30 a.m. CDT) and is accessible by dialing (800) 657-1269 (domestic) or (973) 409-9256 (international) and referencing passcode no. 5964056. 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 April 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.
The Hydril logo can be found at: http://www.primezone.com/newsroom/prs/?pkgid=1511
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 Annual Report on Form 10-K for the year-ended December 31, 2004 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)
----------------------------------------
March 31, Dec. 31, March 31,
2005 2004 2004
---------- ---------- ----------
Revenue
Premium Connection $ 50,508 $ 58,389 $ 33,425
Pressure Control
Aftermarket 16,243 14,995 15,620
Capital Equipment 12,066 13,140 8,452
---------- ---------- ----------
Subtotal Pressure
Control 28,309 28,135 24,072
Total Revenue 78,817 86,524 57,497
Total Gross Profit 35,407 36,916 22,350
Gross Margin 45% 43% 39%
Selling, General,
and Admin. Expenses 13,308 14,103 11,893
---------- ---------- ----------
Operating Income (Loss)
Premium Connection 18,405 20,460 9,397
Pressure Control 7,806 6,253 4,786
Corporate Administration (4,112) (3,900) (3,726)
---------- ---------- ----------
Total Operating Income 22,099 22,813 10,457
Operating Margin 28% 26% 18%
Interest Income 661 466 184
Other Income/(Expense) (107) (261) (105)
---------- ---------- ----------
Income Before Income Taxes 22,653 23,018 10,536
Provision for Income Taxes 7,641 7,869 2,662
---------- ---------- ----------
Net Income $ 15,012 $ 15,149 $ 7,874
Net Income Per Share:
Basic $ 0.64 $ 0.65 $ 0.34
Diluted $ 0.63 $ 0.64 $ 0.34
Weighted Average
Shares Outstanding:
Basic 23,361,493 23,191,513 22,847,662
Diluted 23,920,538 23,765,644 23,137,955
Depreciation
Premium Connection $ 1,959 $ 2,068 $ 1,905
Pressure Control 760 746 720
Corporate Administration 521 479 481
---------- ---------- ----------
Total Depreciation 3,240 3,293 3,106
Capital Expenditures 4,064 5,965 1,402
Pressure Control Backlog
Capital Equipment $ 29,966 $ 14,576 $ 11,880
HYDRIL COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
--------------------------------------------------------------------
March 31, December 31,
2005 2004
-------- --------
(unaudited)
--------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 58,595 $ 51,733
Investments 86,271 69,365
Total receivables 56,091 62,441
Total inventories 36,235 34,820
Other current assets 11,357 12,216
-------- --------
Total current assets 248,549 230,575
-------- --------
LONG-TERM ASSETS:
Property, net 102,084 102,368
Other long-term assets 10,425 10,703
-------- --------
Total long-term assets 112,509 113,071
-------- --------
TOTAL $361,058 $343,646
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CURRENT LIABILITIES:
Accounts payable $ 22,444 $ 23,292
Accrued liabilities and other
current liabilities 28,599 31,061
-------- --------
Total current liabilities 51,043 54,353
-------- --------
LONG-TERM LIABILITIES:
Post retirement, pension benefits
and other 15,291 14,510
-------- --------
Total long-term liabilities 15,291 14,510
-------- --------
STOCKHOLDERS' EQUITY:
Total stockholders' equity 294,724 274,783
-------- --------
TOTAL $361,058 $343,646
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