MVK Maverick Tube

Maverick Tube Corporation (NYSE:MVK) announced today its results of operations for the quarter and year ended December 31, 2005. The Company reported net income of $63.2 million, or $1.54 per diluted share, for the fourth quarter of 2005. This represents an increase of $24.7 million, or $0.64 per diluted share, from the fourth quarter of 2004, and an increase of $24.1 million, or $0.64 per diluted share, from the third quarter of 2005. For the year, the Company's net income was $172.3 million, or $4.02 per diluted share, below the prior year's level by $21.5 million, or $0.52 per diluted share. Net sales were $484.7 million for the fourth quarter and $1.8 billion for the twelve months ended December 31, 2005, up from $361.3 million and $1.3 billion for the quarter and year ended December 31, 2004, respectively. Sales of energy products recorded in the fourth quarter of 2005 increased 2.5% sequentially to $409.7 million from $399.5 million in the third quarter of 2005. This increase reflects higher energy product prices partially offset by lower volumes. Total energy products shipments decreased from about 300,000 tons in the third quarter to 286,000 tons in the fourth quarter of 2005. The decline was primarily attributable to an unusually large volume of line pipe project shipments in the third quarter. For the year ended December 31, 2005, sales of energy products grew 53.2% to a record $1.5 billion compared to sales of $954.4 million for the prior year. This year-over-year increase was primarily due to continued growth in the U.S., another record year in the Canadian energy market, seven months of net sales contribution from Tubos del Caribe S.A., along with growing revenues from our Precision Tube and Texas Arai businesses. Sales of electrical products recorded in the fourth quarter 2005 were $75.0 million compared to $89.6 million in the third quarter 2005. This 16.3% revenue decrease was primarily due to lower shipment volumes in the seasonally weaker fourth quarter. C. Robert Bunch, the Company's Chairman, President and Chief Executive Officer, said, "We are very pleased with Maverick's fourth quarter performance. Activity levels continue to be strong in all of our energy markets. A substantial portion of our sequential revenue growth came from Prudential, Texas Arai, and TuboCaribe, all acquisitions we've completed in the last five years. Precision Tube, our coiled tubing business unit acquired in 2002, continues to operate at capacity. Additionally, we've worked off our higher cost steel inventories, improving our consolidated gross margin to 26.6% for the quarter and setting the stage for what we expect will be a robust 2006." Mr. Bunch continued, "Looking forward, we expect drilling and workover activity in 2006 to continue to increase in the markets we serve. Building on our excellent fourth quarter, we expect to demonstrate the benefits of actions taken in 2005 such as our acquisition of TuboCaribe, the substantial increase in our premium alloy OCTG capacity, our coiled tubing expansion and the consolidation of our electrical conduit manufacturing capacity. Steel costs have declined from their highs in early 2005. And, most importantly, we expect the nimbleness and energy of our people unleashed by our new business structure to continue propelling our operating performance. We believe we are very well positioned for 2006 and beyond." 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. -0- *T Maverick Tube Corporation Selected Consolidated Financial Data For the Fourth Quarter and Twelve Months Ended December 31, 2005 (In thousands, except rig count and per share data) (Unaudited) Quarter Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 ----------------------------------------------- Net sales $484,650 $361,268 $1,785,233 $1,287,573 Cost of goods sold 355,855 280,697 1,434,250 923,178 ----------------------------------------------- Gross profit 128,795 80,571 350,983 364,395 Selling, general and administrative 25,780 20,159 83,025 68,232 Sales commissions 2,552 2,285 10,137 11,238 Impairment of intangible assets 2,100 - 2,100 - Trade case relief 121 (2,893) (679) (3,633) ----------------------------------------------- Income from operations 98,242 61,020 256,400 288,558 Interest expense 3,744 2,812 14,222 9,795 ----------------------------------------------- Income from continuing operations before provision for income taxes 94,498 58,208 242,178 278,763 Provision for income taxes 31,113 21,313 77,529 105,101 ----------------------------------------------- Income from continuing operations 63,385 36,895 164,649 173,662 Income (loss) from operations of discontinued businesses (net of tax) (154) 1,630 (3,570) 20,134 Gain on sale of HSS business (net of tax) - - 11,201 - ----------------------------------------------- Net income $63,231 $38,525 $172,280 $193,796 =============================================== Diluted earnings per share Income from continuing operations $1.54 $0.86 $3.84 $4.06 Income (loss) from discontinued operations $0.00 $0.04 $0.18 $0.47 Net income $1.54 $0.90 $4.02 $4.54 Average shares deemed outstanding 41,149,949 42,994,072 42,861,812 42,751,303 =============================================== Other Data: Depreciation and amortization $8,813 $7,135 $32,007 $26,756 Capital expenditures 30,792 15,415 84,577 34,465 December 31, December 31, 2005 2004 ------------------------- Balance Sheet Data: Working capital $308,011 $471,083 Property, plant & equipment - net 307,289 211,534 Goodwill & intangibles 218,647 120,506 Total assets 1,230,262 1,002,437 Current maturities of long-term debt 187,902 3,298 Long-term revolving credit facility 25,483 54,660 Convertible debt 250,000 120,000 Other long-term debt (less current maturities) 1,704 2,981 Stockholders' equity 566,855 595,664 Quarter Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 --------------------------------------- Average U.S. rig count (1) 1,478 1,249 1,380 1,190 Average Canadian rig count (1) 576 420 458 369 Average U.S. & Canadian workover rigs (1) 2,234 2,032 2,008 1,850 Latin America rig count (1) 313 306 316 290 International rig count (1) 929 862 908 836 (1) Source: Baker Hughes *T