Jul. 29, 2010 (Business Wire) -- Boots & Coots, Inc. (NYSE:WEL), announced revenues of $70.9 million for the quarter ended June 30, 2010, compared to $47.0 million for the same quarter of 2009. Net income for the quarter was $6.2 million or $0.08 per diluted share, compared to $0.7 million or $0.01 per diluted share for the second quarter of 2009. EBITDA (earnings before interest, income taxes, depreciation and amortization; see the reconciliation for this non-GAAP financial measure below), adjusted for foreign currency translation costs, was $12.7 million or 17.9% of revenues for the quarter, compared to $5.4 million or 11.5% of revenues for the second quarter of 2009.
For the six months ended June 30, 2010, Boots & Coots reported revenues of $124.2 million compared to $101.7 million for 2009. Net income for the 2010 six month period was $6.9 million or $0.08 per diluted share, compared to $2.7 million or $0.03 per diluted share for the 2009 six month period. EBITDA adjusted for foreign currency translation costs was $19.2 million for the six months ended June 30, 2010 compared to $12.0 million for the 2009 period.
Business Segment Results
Pressure Control
For the quarter ended June 30, 2010, the Pressure Control segment generated revenues of $34.3 million, compared to $22.6 million in the second quarter of 2009 and $22.6 million in the 2010 first quarter. Adjusted EBITDA (EBITDA before foreign currency translation costs; see the reconciliation for this non-GAAP financial measure below), for the second quarter was $5.4 million, compared to $2.4 million for the second quarter of 2009 and $2.2 million for the 2010 first quarter. This year’s second quarter results were positively impacted by a Safeguard project in India, which was completed in June, increased global response revenue and increased Safeguard contract revenue in North Africa.
For the six months ended June 30, 2010, Pressure Control revenues were $56.9 million and adjusted EBITDA was $7.6 million compared to revenues of $49.6 million and adjusted EBITDA of $5.3 million for 2009.
Well Intervention
For the quarter ended June 30, 2010, the Well Intervention segment generated revenues of $24.4 million, compared to $18.6 million in the second quarter of 2009 and $23.3 million in the 2010 first quarter. Adjusted EBITDA for the second quarter was $3.3 million, compared to $1.6 million for the second quarter of 2009 and $2.8 million for the 2010 first quarter. The increase in results was primarily due to increased performance and utilization in the Middle East and North American land.
For the six months ended June 30, 2010, Well Intervention revenues were $47.7 million and adjusted EBITDA was $6.1 million compared to revenues of $39.1 million and adjusted EBITDA of $2.6 million in the prior year period.
Equipment Services
For the quarter ended June 30, 2010, the Equipment Services segment reported revenues of $12.2 million, compared to $5.8 million for the same period in 2009 and $7.4 million for the first quarter of 2010. Adjusted EBITDA for the quarter was $4.0 million, compared to $1.4 million for the second quarter of 2009 and $1.4 million for the first quarter of 2010. The company continues to expand this business in North America and internationally.
For the six months ended June 30, 2010, Equipment Services revenues were $19.6 million and adjusted EBITDA was $5.4 million compared to revenues of $13.0 million and adjusted EBITDA of $4.1 in the 2009 six month period.
For the quarter ended June 30, 2010, consolidated SG&A expenses were $3.4 million, compared to $2.5 million in the second quarter of 2009 and $3.2 million for the 2010 first quarter. The increase in SG&A expenses were primarily due to increases in professional fees related to our announced merger agreement with Halliburton. For the six months ended June 30, 2010 SG&A expenses were $6.6 million compared to $5.4 million for the 2009 six month period.
Interest expense in the 2010 second quarter was $0.8 million, compared to $1.0 million in the second quarter of last year and unchanged from $0.8 million in the first quarter of this year. The decrease from the second quarter of last year is primarily a result of lower borrowings. For the six month period interest expense was $1.6 million in 2010 compared to $1.9 million in 2009.
For the quarter ended June 30, 2010, the effective income tax rate was 24.9% of pre-tax income compared to 28.7% of pre-tax income in the quarter ended June 30, 2009. For the first six months of this year the effective tax rate was 26.4% compared to 30.8% for the same period last year. The change in the Company’s annual effective rate reflects, among other items, our best estimates of operating results and foreign currency exchange rates. Based on first quarter results we estimated a 37.3% annual tax provision. After second quarter results we have revised the provision to 26.4% for the year.
About Boots & Coots
Boots & Coots, Inc., with its headquarters in Houston, Texas, provides a suite of integrated pressure control services to onshore and offshore oil and gas exploration companies around the world. Boots & Coots’ products and services include well intervention services designed to enhance production for oil and gas operators. These services consist primarily of hydraulic workover and snubbing services. Boots & Coots’ equipment services segment provides high pressure, high temperature rental tools. The company’s pressure control services are designed to reduce the number and severity of critical events such as oil and gas well fires, blowouts or other incidences due to loss of control at the well. This segment consists primarily of the company’s Safeguard prevention and emergency response services. Additional information can be found at www.boots-coots.com.
Additional Information
As previously announced, on April 9, 2010, Boots & Coots entered into a definitive merger agreement with Halliburton pursuant to which Halliburton will acquire all of the outstanding stock of Boots & Coots in a stock and cash transaction. The Boards of Directors of both companies have approved the merger agreement, and the Board of Directors of Boots & Coots has recommended approval of the transaction to its stockholders. Completion of the transaction is subject to the approval of the stockholders of Boots & Coots, regulatory approvals, and other customary conditions.
In connection with the proposed merger, Halliburton and Boots & Coots have filed materials relating to the transaction with the SEC, including a registration statement of Halliburton, which includes a prospectus of Halliburton and a proxy statement of Boots & Coots, and intend to file additional materials relating to the transaction with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT, AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS AND ANY OTHER MATERIALS REGARDING THE PROPOSED MERGER WHEN THEY ARE AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT HALLIBURTON, BOOTS & COOTS AND THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of the registration statement, and the definitive proxy statement/prospectus when it is available, as well as other documents containing information about Halliburton and Boots & Coots, without charge, at the SEC’s web site at www.sec.gov. Copies of Halliburton’s SEC filings may also be obtained for free by directing a request to investors@halliburton.com. Copies of the Boots & Coots’ SEC filings may also be obtained for free by directing a request to investorrelations@boots-coots.com.
Participants in Solicitation
Halliburton and Boots & Coots and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Boots & Coots’ stockholders in respect of the merger. Information about these persons can be found in Halliburton’s proxy statement relating to its 2010 Annual Meeting of Stockholders, as filed with the SEC on April 5, 2010, Boots & Coots’ Annual Report on Form 10-K/A, as filed with the SEC on April 30, 2010, and Boots & Coots’ Current Report on Form 8-K, as filed with the SEC on March 5, 2010. These documents can be obtained free of charge from the sources indicated above. Additional information about the interests of such persons in the solicitation of proxies in respect of the merger is included in the registration statement and will be included in the definitive proxy statement/prospectus to be filed with the SEC in connection with the proposed transaction.
Certain statements included in this news release are intended as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Boots & Coots cautions that actual future results may vary materially from those expressed or implied in any forward-looking statements. More information about the risks and uncertainties relating to these forward-looking statements are found in Boots & Coots' SEC filings, which are available free of charge on the SEC's web site at www.sec.gov.
| BOOTS & COOTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share and per share amounts) (Unaudited) | ||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||
| REVENUES | $ | 70,872 | $ | 47,048 | $ | 124,183 | $ | 101,710 | ||||||
| COST OF SALES, excluding depreciation and amortization | 46,831 | 31,339 | 84,244 | 68,225 | ||||||||||
| OPERATING EXPENSES | 7,990 | 7,835 | 14,188 | 16,067 | ||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 3,357 | 2,518 | 6,582 | 5,415 | ||||||||||
| DEPRECIATION AND AMORTIZATION | 3,570 | 3,122 | 6,984 | 5,953 | ||||||||||
| OPERATING INCOME | 9,124 | 2,234 | 12,185 | 6,050 | ||||||||||
| INTEREST EXPENSE | 837 | 974 | 1,613 | 1,935 | ||||||||||
| FOREIGN CURRENCY TRANSLATION | 36 | 223 | 1,209 | 195 | ||||||||||
| OTHER (INCOME) EXPENSE, net | (9 | ) | 28 | (5 | ) | 68 | ||||||||
| INCOME BEFORE INCOME TAXES | 8,260 | 1,009 | 9,368 | 3,852 | ||||||||||
| INCOME TAX EXPENSE | 2,057 | 290 | 2,470 | 1,187 | ||||||||||
| NET INCOME | $ | 6,203 | $ | 719 | $ | 6,898 | $ | 2,665 | ||||||
| Basic Earnings per Common Share | $ | 0.08 | $ | 0.01 | $ | 0.09 | $ | 0.03 | ||||||
| Weighted Average Common Shares Outstanding – Basic | 78,700,000 | 76,824,000 | 78,180,000 | 76,738,000 | ||||||||||
| Diluted Earnings per Common Share | $ | 0.08 | $ | 0.01 | $ | 0.08 | $ | 0.03 | ||||||
| Weighted Average Common Shares Outstanding – Diluted | 82,110,000 | 78,244,000 | 81,327,000 | 78,026,000 | ||||||||||
Information concerning operations in our business segments for the three and six months ended June 30, 2010 and 2009 is presented below. Certain reclassifications have been made to the prior periods to conform to the current presentation.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Revenues | ||||||||||||||||
| Pressure Control | $ | 34,301 | $ | 22,587 | $ | 56,859 | $ | 49,621 | ||||||||
| Well Intervention | 24,382 | 18,615 | 47,710 | 39,084 | ||||||||||||
| Equipment Services | 12,189 | 5,846 | 19,614 | 13,005 | ||||||||||||
| $ | 70,872 | $ | 47,048 | $ | 124,183 | $ | 101,710 | |||||||||
| Adjusted EBITDA (a) | ||||||||||||||||
| Pressure Control | $ | 5,370 | $ | 2,371 | $ | 7,605 | $ | 5,321 | ||||||||
| Well Intervention | 3,292 | 1,622 | 6,118 | 2,563 | ||||||||||||
| Equipment Services | 4,032 | 1,363 | 5,446 | 4,119 | ||||||||||||
| $ | 12,694 | $ | 5,356 | $ | 19,169 | $ | 12,003 | |||||||||
| Depreciation and Amortization (b) | ||||||||||||||||
| Pressure Control | $ | 194 | $ | 161 | $ | 375 | $ | 309 | ||||||||
| Well Intervention | 2,280 | 2,146 | 4,521 | 4,210 | ||||||||||||
| Equipment Services | 1,096 | 815 | 2,088 | 1,434 | ||||||||||||
| $ | 3,570 | $ | 3,122 | $ | 6,984 | $ | 5,953 | |||||||||
| Operating Income (Loss) (b) | ||||||||||||||||
| Pressure Control | $ | 5,176 | $ | 2,210 | $ | 7,230 | $ | 5,012 | ||||||||
| Well Intervention | 1,012 |
| (524 | ) | 1,597 |
| (1,647 | ) | ||||||||
| Equipment Services | 2,936 | 548 | 3,358 | 2,685 | ||||||||||||
|
| $ | 9,124 | $ | 2,234 | $ | 12,185 | $ | 6,050 | ||||||||
|
| ||||||||||||||||
_________________________________
(a) EBITDA represents earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA before foreign currency translation costs, which includes $1.2 million in the first quarter of 2010 due to the devaluation of the Venezuelan Bolivar effective January 11, 2010. See the reconciliation and rationale for these non-GAAP financial measures.
(b) Operating expenses and depreciation and amortization have been charged to each segment based upon specific identification of expenses and an allocation of remaining non-segment specific expenses pro rata between segments based upon relative revenues.
| BOOTS & COOTS, INC. RECONCILIATION BETWEEN CONSOLIDATED STATEMENTS OF INCOME AND EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (in thousands) (Unaudited) | ||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||
| Net Income | $ | 6,203 | $ | 719 | $ | 6,898 | $ | 2,665 | ||||||
| Income Tax Expense | $ | 2,057 | $ | 290 | $ | 2,470 | $ | 1,187 | ||||||
| Other (Income) Expense, net | $ | (9 | ) | $ | 28 | $ | (5 | ) | $ | 68 | ||||
| Interest Expense | $ | 837 | $ | 974 | $ | 1,613 | $ | 1,935 | ||||||
| Depreciation and Amortization | $ | 3,570 | $ | 3,122 | $ | 6,984 | $ | 5,953 | ||||||
| Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (a) | $ | 12,658 | $ | 5,133 | $ | 17,960 | $ | 11,808 | ||||||
| Foreign Currency Translation | $ | 36 | $ | 223 | $ | 1,209 | $ | 195 | ||||||
| Adjusted EBITDA (a) | $ | 12,694 | $ | 5,356 | $ | 19,169 | $ | 12,003 | ||||||
_________________________________
(a) Earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and EBITDA before foreign currency translation costs (“Adjusted EBITDA”) are non-GAAP financial measures, as they exclude amounts or are subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with GAAP in financial statements. “GAAP” refers to generally accepted accounting principles in the United States of America. Non-GAAP financial measures disclosed by management are provided as additional information to investors in order to provide them with an alternative method for assessing our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we also present the most directly comparable financial measure and present it in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure and such comparable GAAP financial measure. Management believes that EBITDA and Adjusted EBITDA may provide additional information with respect to the Company’s performance or ability to meet its debt service and working capital requirements.
| BOOTS & COOTS, INC. CONSOLIDATED BALANCE SHEETS (in thousands except share and per share amounts) | ||||||||
| ASSETS | ||||||||
|
| June 30, 2010 | December 31, 2009 | ||||||
| (unaudited) | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 8,330 | $ | 7,357 | ||||
| Restricted cash | 323 | 323 | ||||||
| Receivables, net | 93,725 | 70,471 | ||||||
| Inventory | 4,012 | 3,569 | ||||||
| Prepaid expenses and other current assets | 8,215 | 10,928 | ||||||
| Total current assets | 114,605 | 92,648 | ||||||
| PROPERTY AND EQUIPMENT, net | 83,956 | 80,289 | ||||||
| GOODWILL | 14,313 | 14,313 | ||||||
| INTANGIBLE ASSETS, net | 7,017 | 7,500 | ||||||
| OTHER ASSETS | 2,408 | 2,616 | ||||||
| Total assets | $ | 222,299 | $ | 197,366 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current maturities of long-term debt | $ | 6,933 | $ | 6,931 | ||||
| Accounts payable | 32,319 | 17,857 | ||||||
| Income tax payable | 8,565 | 3,587 | ||||||
| Accrued compensation and benefits | 5,671 | 6,004 | ||||||
| Accrued taxes, other than income tax | 4,172 | 5,003 | ||||||
| Accrued liabilities | 8,295 | 6,262 | ||||||
| Total current liabilities | 65,955 | 45,644 | ||||||
| LONG-TERM DEBT, net of current maturities | 34,924 | 32,359 | ||||||
| RELATED PARTY LONG-TERM DEBT | 3,000 | 3,000 | ||||||
| DEFERRED TAXES | 200 | 5,638 | ||||||
| OTHER LIABILITIES | 587 | 1,108 | ||||||
| Total liabilities | $ | 104,666 | $ | 87,749 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred stock ($.00001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively) |
— |
— | ||||||
| Common stock ($.00001 par value, 125,000,000 shares authorized, 82,558,000 and 80,046,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively) |
1 |
1 | ||||||
| Additional paid-in capital | 131,073 | 129,955 | ||||||
| Accumulated other comprehensive loss | (1,234 | ) | (1,234 | ) | ||||
| Accumulated deficit | (12,207 | ) | (19,105 | ) | ||||
| Total stockholders' equity | 117,633 | 109,617 | ||||||
| Total liabilities and stockholders' equity | $ | 222,299 | $ | 197,366 | ||||
| BOOTS & COOTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) | ||||||||
| Six Months Ended June 30, | ||||||||
| 2010 | 2009 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 6,898 | $ | 2,665 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 6,984 | 5,953 | ||||||
| Deferred tax expense (credit) | (5,438 | ) | 658 | |||||
| Stock-based compensation | 1,101 | 675 | ||||||
| Excess tax expense from stock options exercised | 872 | — | ||||||
| Bad debt provision, net | 1,161 | 11 | ||||||
| Loss (gain) on sale/disposal of assets | 26 | (261 | ) | |||||
| Changes in operating assets and liabilities, net of business acquisitions: | ||||||||
| Receivables | (24,415 | ) | (3,383 | ) | ||||
| Inventory | (443 | ) | (308 | ) | ||||
| Prepaid expenses and other current assets | 2,713 | 2,129 | ||||||
| Other assets | 207 | (3,015 | ) | |||||
| Accounts payable and accrued liabilities | 18,918 | (5,244 | ) | |||||
| Net cash provided by (used in) operating activities | 8,584 | (120 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Business acquired, net of cash received | — | (6,668 | ) | |||||
| Property and equipment additions | (10,263 | ) | (11,277 | ) | ||||
| Proceeds from sale of property and equipment | 70 | 346 | ||||||
| Net cash used in investing activities | (10,193 | ) | (17,599 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payments of related party debt | — | (21,166 | ) | |||||
| Payments of term loan | (3,440 | ) | (5,647 | ) | ||||
| Revolving credit net borrowings | 6,032 | 7,047 | ||||||
| Principal payments under capital lease obligations | (27 | ) | (24 | ) | ||||
| Term loan borrowings | — | 34,400 | ||||||
| Increase in restricted cash | — | (323 | ) | |||||
| Stock options exercised | 889 | — | ||||||
| Excess tax expense from stock options exercised | (872 | ) | — | |||||
| Net cash provided by financing activities | 2,582 | 14,287 | ||||||
| Net increase (decrease) in cash and cash equivalents | 973 | (3,432 | ) | |||||
| CASH AND CASH EQUIVALENTS, beginning of period | 7,357 | 6,220 | ||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | 8,330 | $ | 2,788 | ||||
| SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||||||||
| Cash paid for interest | $ | 1,394 | $ | 1,416 | ||||
| Cash paid for income taxes | 4,058 | 3,672 | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Long term notes issued for acquisition of business | $ | — | $ | 3,000 | ||||
