Hydril (NASDAQ:HYDL)
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Hydril (Nasdaq:HYDL) reported earnings for the first
quarter ended March 31, 2006 of $0.94 per diluted share, up 7%
sequentially from $0.88 reported in the fourth quarter of 2005, and up
49% from $0.63 reported for the first quarter of 2005.
On a sequential basis, first quarter revenue of $114.1 million was
essentially flat, while operating income of $32.9 million was up 7%,
and net income of $22.7 million was up 6%. Compared to the first
quarter of 2005, revenue and operating income increased 45% and 49%,
respectively, and net income increased 51%.
Chris Seaver, President and CEO, commented, "Continued growth in
our premium connection markets resulted in improved financial
performance for the first quarter. Our outlook remains strong for both
of our segments, and we remain focused on our commitment to meeting
the growing demands of our customers. The backlog of capital equipment
for our pressure control segment increased 48% during the quarter, and
includes orders received from offshore drilling contractors for
deepwater blowout prevention systems."
Premium Connection Segment
First quarter revenue for Hydril's premium connection segment
remained steady sequentially, while operating income increased 16% to
$27.5 million. Operating margin of 37% was up from 33% in the prior
quarter as a result of higher product sales and less lower-margin pipe
sales.
Pressure Control Segment
Sequentially, first quarter revenue for the pressure control
segment increased slightly to $40.5 million and operating income
decreased 9% to $10.4 million. Aftermarket revenue was essentially
flat with the prior quarter and capital equipment revenue increased 2%
sequentially to $19.7 million. Operating margin for the first quarter
was 26%, down from 28% for the fourth quarter 2005 due to product mix.
The capital equipment backlog was $233 million at March 31, 2006,
up 48% from $157 million at December 31, 2005, and up from $30 million
at March 31, 2005. Deliveries for this backlog are scheduled into the
second half of 2008.
Market Indicators
As more fully described on our website at www.hydril.com on the
"Market Indicators" page, our principal business drivers are: (1) the
U.S. rig count for rigs drilling at targets deeper than 15,000 feet,
(2) the number of 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 25, 2006 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 # 7285142.
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 17, 2006.
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 Annual Report on Form 10-K for the year-ended
December 31, 2005 filed with the Securities and Exchange Commission,
include but are not limited to competition from steel mills,
limitations on the availability of pipe for threading, the impact of
imports of tubular goods and of international and domestic trade
laws, the loss of or change to distribution methods of premium
connections in the U.S. and Canada, the consolidation of end-users,
the risks associated with fixed-price contracts, 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 ability to attract and retain skilled labor and Hydril's
ability to successfully develop new technologies and products and
maintain and increase its market share. 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.
Contact:
Sue Nutt, Manager, Investor Relations & Corporate Communications
Hydril
281-985-3532
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HYDRIL COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Amounts)
--------------------------------------------
-----------------------------------
Three Months Ended
(unaudited)
-----------------------------------
March 31, Dec. 31, March 31,
2006 2005 2005
-----------------------------------
Revenue
Premium Connection $73,549 $73,130 $50,508
Pressure Control
Aftermarket $20,789 20,890 16,243
Capital Equipment 19,722 19,306 12,066
----------- ----------- -----------
Subtotal Pressure Control 40,511 40,196 28,309
Total Revenue 114,060 113,326 78,817
Total Gross Profit 49,879 46,407 35,407
Gross Margin 44% 41% 45%
Selling, General, and Admin.
Expenses 17,028 15,722 13,308
----------- ----------- -----------
Operating Income (Loss)
Premium Connection 27,526 23,784 18,405
Pressure Control 10,373 11,375 7,806
Corporate Administration (5,048) (4,474) (4,112)
----------- ----------- -----------
Total Operating Income 32,851 30,685 22,099
Operating Margin 29% 27% 28%
Loss From Unconsolidated
Entities (45) - -
Interest Income 1,470 1,337 661
Other Income/(Expense) (99) (341) (107)
----------- ----------- -----------
Income Before Income Taxes 34,177 31,681 22,653
Provision for Income Taxes 11,508 10,311 7,641
----------- ----------- -----------
Net Income $22,669 $21,370 $15,012
Net Income Per Share:
Basic $0.96 $0.90 $0.64
Diluted $0.94 $0.88 $0.63
Weighted Average Shares
Outstanding:
Basic 23,697,639 23,630,944 23,361,493
Diluted 24,120,861 24,155,879 23,920,538
Depreciation and Amortization
Premium Connection $2,257 $2,287 $1,959
Pressure Control 810 804 760
Corporate Administration 506 488 521
----------- ----------- -----------
Total Depreciation 3,573 3,579 3,240
Capital Expenditures 5,005 6,454 4,064
Pressure Control Backlog
Capital Equipment $232,614 $156,718 $29,966
HYDRIL COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
----------------------------------------------------------------------
March 31, December 31,
2006 2005
------------ ------------
(unaudited)
-------------------------
CURRENT ASSETS:
Cash and cash equivalents $63,939 $65,145
Investments 137,136 108,084
Total receivables 93,491 78,204
Total inventories 62,291 57,646
Deferred tax asset 11,792 11,390
Other current assets 3,733 3,669
------------ ------------
Total current assets 372,382 324,138
------------ ------------
LONG-TERM ASSETS:
Property, net 105,766 105,138
Other long-term assets 18,850 21,286
------------ ------------
Total long-term assets 124,616 126,424
------------ ------------
TOTAL $496,998 $450,562
============ ============
CURRENT LIABILITIES:
Accounts payable $30,512 $23,443
Accrued liabilities and other current
liabilities 50,947 39,934
------------ ------------
Total current liabilities 81,459 63,377
------------ ------------
LONG-TERM LIABILITIES:
Deferred tax liability and other tax
obligations 10,846 12,143
Post-retirement, pension benefits and
other 17,476 14,207
------------ ------------
Total long-term liabilities 28,322 26,350
------------ ------------
STOCKHOLDERS' EQUITY:
Total stockholders' equity 387,217 360,835
------------ ------------
TOTAL $496,998 $450,562
============ ============
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