Maverick Tube Corporation

Maverick Tube Corporation

October 24, 2005 19:50 ET

Maverick Tube Corporation Reports Third Quarter Results

ST. LOUIS--(CCNMatthews - Oct 24, 2005) -

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.

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)

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
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

Contact Information

  • Maverick Tube Corporation, St. Louis
    Richard Preckel, 636-733-1600