Maverick Tube (NYSE:MVK)
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Maverick Tube Corporation (NYSE:MVK) announced today its
results for the quarter ended September 30, 2005. The Company reported
net income for the third quarter of $39.2 million, or $0.90 per
diluted share, compared to net income of $38.7 million, or $0.89 per
diluted share, for the second quarter 2005. Income from continuing
operations for the third quarter was $40.6 million, or $0.93 per
diluted share, compared to $28.9 million, or $0.67 per diluted share,
for the second quarter 2005, as adjusted for discontinued operations.
Net income for the third quarter of 2005 included the negative impact
of Hurricane Rita, severance costs, expenses associated with the
Company's consolidation of its electrical conduit manufacturing
facilities and losses from discontinued operations. These items
aggregate approximately $6.8 million, or $0.16 per diluted share. Net
income from the second quarter of 2005 included a $0.23 gain on the
sale of the Company's hollowed structural sections (HSS) industrial
business and a $0.01 loss from discontinued operations. Net sales from
continuing operations were $489.1 million for the third quarter
compared to $400.6 million for the second quarter 2005.
Sales of energy products recorded in the third quarter 2005 were
$399.5 million compared to $319.6 million in the second quarter 2005,
due to very robust Canadian activity, continued strength in the U.S.
market, and a full quarter of net sales contribution from Tubos del
Caribe and Colmena S.A. Total energy products shipments increased
71,504 tons, or 31.2%, from the second quarter of 2005. Energy
products revenue increased 25.0%, reflecting the higher volumes
partially offset by a lower average selling price attributable to a
higher percentage of line pipe in the mix. U.S. active rigs running
increased 6.9% over the second quarter while the Canadian rig count
more than doubled over the same period.
Sales of industrial products recorded in the third quarter 2005
were $89.6 million compared to $81.1 million in the second quarter
2005. This 10.5% revenue increase is attributable to a 16.0% increase
in shipments partially offset by lower average selling prices.
C. Robert Bunch, the Company's Chairman and Chief Executive
Officer, said, "We are very pleased with the performance of our energy
segment in the third quarter. Our participation in the explosive
growth experienced by the Canadian oilpatch was a key driver to this
quarter's results, along with continued strong demand in the U.S.
energy markets. In addition, we believe the performance of our
recently acquired Latin American operation, Tubos del Caribe,
validates our strategic growth initiatives. Further, our coiled tubing
and coupling businesses made significant contributions to our results.
Finally, energy gross margins improved over last quarter primarily due
to the anticipated impact of reduced steel costs flowing through cost
of goods sold."
Mr. Bunch continued, "We believe we have made substantial progress
on the major initiatives in place for the year. Our premium alloy
expansion, expected to double our ability to provide premium alloy
OCTG to our customers in 2006, has begun. When completed early next
year, we expect our U.S. OCTG sales mix will be about one-half premium
alloy products. In addition, our coiled tubing expansion, which should
allow us to meet current demand and to continue to develop new
products that address our customers' needs, is well under way.
Further, we are currently installing equipment in our new electrical
conduit plant in Louisville, KY. We expect to begin realizing the cost
savings associated with this consolidation sometime in the second
quarter of 2006. Finally, the realignment of our Company into smaller,
more nimble business units supported by a lean, efficient corporate
office, is just about complete."
"These are exciting times for all the stakeholders of Maverick,"
Mr. Bunch continued, "We believe the Company is now properly
structured and aligned to fully capitalize on current market
opportunities and pursue our growth strategy. Global drilling activity
is expected to continue to grow in 2006 and beyond, which should drive
demand for all of our energy products. As we move into the fourth
quarter, we expect to see our cost of sales more closely reflect
current steel prices, which should result in improved operating
margins. All in all, we believe Maverick is ideally positioned for
continued growth."
Maverick Tube Corporation is a St. Louis, Missouri, based
manufacturer of tubular products in the energy industry for
exploration, production, and transmission, as well as industrial
tubing products (steel electrical conduit, HSS, standard pipe, pipe
piling, and mechanical tubing) used in various applications.
This news release may contain forward-looking information that is
based on assumptions that are subject to numerous business risks, many
of which are beyond the control of the Company. There is no assurance
that such assumptions will prove to be accurate. Actual results may
differ from these forward-looking statements due to numerous factors,
including those described under "Risk Factors" and elsewhere in
Maverick's Form 10-K for its year ended December 31, 2004.
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Maverick Tube Corporation
Selected Consolidated Financial Data
For the Third Quarter and Nine Months Ended September 30, 2005
(In thousands, except rig count and per share data)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
--------------------------------------------
Net sales $489,137 $353,722 $1,300,583 $926,305
Cost of goods sold 402,615 232,396 1,078,395 642,481
--------------------------------------------
Gross profit 86,522 121,326 222,188 283,824
Selling, general and
administrative 21,205 13,618 57,245 48,073
Sales commissions 2,516 3,369 7,585 8,953
Partial trade case relief (800) (740) (800) (740)
--------------------------------------------
Income from operations 63,601 105,079 158,158 227,538
Interest expense 4,696 1,884 10,478 6,983
--------------------------------------------
Income from continuing
operations before income
taxes 58,905 103,195 147,680 220,555
Provision for income taxes 18,329 39,292 46,416 83,788
--------------------------------------------
Income from continuing
operations 40,576 63,903 101,264 136,767
Income (loss) from
operations of
discontinued businesses
(net of tax) (1,420) 4,630 (3,416) 18,504
Gain on sale of HSS
business (net of tax) -- -- 11,201 --
--------------------------------------------
Net income $39,156 $68,533 $109,049 $155,271
============================================
Diluted earnings per share
Income from continuing
operations $0.93 $1.49 $2.33 $3.21
Income (loss) from
discontinued
operations ($0.03) $0.11 $0.18 $0.44
Net income $0.90 $1.60 $2.51 $3.64
Average shares deemed
outstanding 43,510,635 42,872,304 43,441,106 42,682,920
============================================
Other Data:
Depreciation and
amortization $8,821 $6,871 $25,761 $19,980
Capital expenditures 24,196 7,595 54,434 19,254
September December
30, 2005 31, 2004
----------------------
Balance Sheet Data:
Working capital $400,065 $471,083
Property, plant &
equipment - net 285,277 211,534
Goodwill & intangibles 227,340 120,506
Total assets 1,160,278 1,002,437
Current maturities of
long-term debt 67,282 3,298
Long-term revolving credit
facility 46,857 54,660
Convertible debt 120,000 120,000
Other long-term debt (less
current maturities) 2,114 2,981
Stockholders' equity 717,964 595,664
Quarter Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
----------------------------------
Average U.S. rig count (1) 1,428 1,229 1,348 1,170
Average Canadian rig count (1) 497 326 420 352
Average U.S. & Canadian workover
rigs(1) 2,012 1,889 1,932 1,789
Latin America rig count (1) 311 292 317 285
International rig count (1) 911 846 901 827
(1) Source: Baker Hughes
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