Maverick Tube Corporation Reports Record First Quarter Earnings From Continuing Operations and Exits from Drawn over Mandrel Tubular Business

Apr 18, 2001, 01:00 ET from Maverick Tube Corporation

    ST. LOUIS, April 18 /PRNewswire/ -- Maverick Tube Corporation (NYSE:   MVK)
 announced today its results for the quarter ended March 31, 2001, and the
 Company's decision to exit the Cold Drawn Tubular Business (DOM).  The Company
 reported income from continuing operations of $15.0 million, or $0.43 per
 diluted share, for the quarter, compared to income from continuing operations
 reported in the same quarter last year of $6.2 million, or $0.18 per share.
 The Company also reported a one-time charge to earnings associated with the
 decision to discontinue its DOM business of $11.2 million (net of $6.3 million
 of taxes) or $0.32 per diluted share.  Of this amount, non-cash items are
 estimated to be $9.1 million after tax, resulting primarily from the
 write-down of equipment.  Including the loss from discontinued operations,
 Maverick reported a profit of $3.8 million or $0.11 per diluted share as
 compared to the same quarter last year of $5.6 million or $0.16 per diluted
 share.
     Gregg Eisenberg, President and CEO said, "It was a difficult decision to
 discontinue our efforts at making a successful operation of our DOM business.
 Although we had achieved some success in market penetration, we have not been
 able to reach a break-even level.  If the Company had not been in the DOM
 business during 2000, the Company's earnings per share would have been $0.09
 higher.  The downturn in the economy causes us to conclude that we will be
 unable to achieve profitability within a reasonable timeframe and therefore,
 it would be best for us to exit the DOM business.  Further, we see
 opportunities to potentially redeploy some of the assets in our energy
 products business, which could increase our ability to produce higher margin
 alloy products, where we are now capacity constrained."
     Regarding ongoing operations, the Company shipped 194,969 tons of energy
 related products during the first quarter, 15% above prior year levels, with
 shipments from Maverick's operations up 25% and shipments from Prudential's
 operations (Maverick's Canadian subsidiary), including the Longview,
 Washington facility, up by 6%.  Drilling rates in the United States and Canada
 increased by 48% and 7%, respectively, over last year's levels.  Total
 industrial products shipments by the Company were down 5%.
     Gregg Eisenberg, President and CEO said, "Maverick's U.S. energy business
 continued to improve during the quarter as our OCTG shipments were very
 strong, up 22% from the last year's first quarter.  Energy pricing continued
 to increase, up by 1% from the fourth quarter 2000 and 13% from last year.
 Prudential's energy products volume also increased by 6% over last year.
 Canadian energy product prices were mixed with pricing up 4% from the fourth
 quarter of 2000 but down 6% from last year.  The decrease from last year was
 primarily exchange rate driven.  I remain optimistic about our results during
 the balance of this year.  Inventories of our energy products, which had been
 rising, have flattened and remain in line with current consumption levels.
 The import rate, while still high, has slowed somewhat since the middle of
 last year.  Drilling has reached the highest levels since 1986 in the United
 States.  In addition our raw material costs are low, providing strong margins
 in our energy business."
     Maverick Tube Corporation is a St. Louis, Missouri, based manufacturer of
 tubular products used in the energy industry in drilling, production and
 surface transportation applications as well as industrial tubing products
 (HSS, standard pipe and cold drawn tubing) used in various industrial
 applications.  This news release contains forward-looking information with
 respect to Maverick's operations and beliefs.  Actual results may differ from
 these forward looking statements due to numerous factors, including those
 discussed in Exhibit 99.1 to Maverick's Form 10-K for its year ended December
 31, 2000.
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
                   For the First Quarter Ended March 31, 2001
       (In thousands, except rig count, tons shipped and per share data)
                                  (Unaudited)
 
 
                                                           First Quarter
                                                        2001           2000
 
     Average U.S. Rig Count                             1,139            770
     Canadian Rig Count                                   515            480
 
     Tons shipped                                     244,198        221,808
 
     Net sales                                       $153,475       $132,050
     Gross profit                                      31,081         16,483
 
     Start-up costs (a)                                 1,064             --
     Income from operations                            23,563         10,805
     Income from continuing operations
      before income taxes                              22,906         10,256
     Income from continuing operations                 15,024          6,157
     Loss from discontinued operations (b)            (11,197)          (604)
     Net income                                        $3,827         $5,553
 
     Basic earnings per share from continuing
      operations                                        $0.45          $0.18
 
     Basic earnings per share                           $0.11          $0.17
 
     Diluted earnings per share from continuing
      operations                                        $0.43          $0.18
 
     Diluted earnings per share                         $0.11          $0.16
 
     Weighted average number of shares
      deemed outstanding                               34,575         34,487
 
     Working capital                                 $129,655       $120,299
     Property, plant and equipment                    159,922        139,578
     Total assets                                     371,816        366,860
 
     Long-term debt                                   $72,668        $51,112
     Stockholders' equity                             212,165        204,932
 
     Depreciation and amortization                     $3,790         $3,310
 
 
     (a) During calendar 2000, the Company constructed a new production
         facility in Hickman, Arkansas.  Start-up costs for the quarter ended
         March 31, 2001 were $1.1 million.  These costs, which are comprised
         primarily of manufacturing costs incurred prior to the fully
         integrated operation of the facility, decreased net income for the
         quarter ended March 31, 2001 by $0.02 per share.
 
     (b) On April 17, 2001, the Company decided to discontinue its DOM business
         and expects to sell certain of its assets during the later part of
         calendar 2001.  The Company estimates its loss on the sale to be
         approximately $9.3 million (net of $5.2 million of taxes).  The
         operating losses from January 1 to March 31, 2001 were $957,000 (net
         of $567,000 of taxes).  The estimated operating losses from April 1,
         2001 to the anticipated disposal date are $927,000 (net of $520,000 of
         taxes).  These charges reduced net income in total by $0.32 per share.
         Sales of DOM were $15.3 million and $3.0 million in the calendar year
         ended December 31, 2000 and the quarter ended March 31, 2001,
         respectively.  The assets of the DOM business to be sold consist of
         inventories and equipment amounting to approximately $7.6 million
         after deducting an allowance for the estimated loss on disposal, and
         the related liabilities were $3.5 million including estimated
         operating losses to the disposal date.
 
 

SOURCE Maverick Tube Corporation
    ST. LOUIS, April 18 /PRNewswire/ -- Maverick Tube Corporation (NYSE:   MVK)
 announced today its results for the quarter ended March 31, 2001, and the
 Company's decision to exit the Cold Drawn Tubular Business (DOM).  The Company
 reported income from continuing operations of $15.0 million, or $0.43 per
 diluted share, for the quarter, compared to income from continuing operations
 reported in the same quarter last year of $6.2 million, or $0.18 per share.
 The Company also reported a one-time charge to earnings associated with the
 decision to discontinue its DOM business of $11.2 million (net of $6.3 million
 of taxes) or $0.32 per diluted share.  Of this amount, non-cash items are
 estimated to be $9.1 million after tax, resulting primarily from the
 write-down of equipment.  Including the loss from discontinued operations,
 Maverick reported a profit of $3.8 million or $0.11 per diluted share as
 compared to the same quarter last year of $5.6 million or $0.16 per diluted
 share.
     Gregg Eisenberg, President and CEO said, "It was a difficult decision to
 discontinue our efforts at making a successful operation of our DOM business.
 Although we had achieved some success in market penetration, we have not been
 able to reach a break-even level.  If the Company had not been in the DOM
 business during 2000, the Company's earnings per share would have been $0.09
 higher.  The downturn in the economy causes us to conclude that we will be
 unable to achieve profitability within a reasonable timeframe and therefore,
 it would be best for us to exit the DOM business.  Further, we see
 opportunities to potentially redeploy some of the assets in our energy
 products business, which could increase our ability to produce higher margin
 alloy products, where we are now capacity constrained."
     Regarding ongoing operations, the Company shipped 194,969 tons of energy
 related products during the first quarter, 15% above prior year levels, with
 shipments from Maverick's operations up 25% and shipments from Prudential's
 operations (Maverick's Canadian subsidiary), including the Longview,
 Washington facility, up by 6%.  Drilling rates in the United States and Canada
 increased by 48% and 7%, respectively, over last year's levels.  Total
 industrial products shipments by the Company were down 5%.
     Gregg Eisenberg, President and CEO said, "Maverick's U.S. energy business
 continued to improve during the quarter as our OCTG shipments were very
 strong, up 22% from the last year's first quarter.  Energy pricing continued
 to increase, up by 1% from the fourth quarter 2000 and 13% from last year.
 Prudential's energy products volume also increased by 6% over last year.
 Canadian energy product prices were mixed with pricing up 4% from the fourth
 quarter of 2000 but down 6% from last year.  The decrease from last year was
 primarily exchange rate driven.  I remain optimistic about our results during
 the balance of this year.  Inventories of our energy products, which had been
 rising, have flattened and remain in line with current consumption levels.
 The import rate, while still high, has slowed somewhat since the middle of
 last year.  Drilling has reached the highest levels since 1986 in the United
 States.  In addition our raw material costs are low, providing strong margins
 in our energy business."
     Maverick Tube Corporation is a St. Louis, Missouri, based manufacturer of
 tubular products used in the energy industry in drilling, production and
 surface transportation applications as well as industrial tubing products
 (HSS, standard pipe and cold drawn tubing) used in various industrial
 applications.  This news release contains forward-looking information with
 respect to Maverick's operations and beliefs.  Actual results may differ from
 these forward looking statements due to numerous factors, including those
 discussed in Exhibit 99.1 to Maverick's Form 10-K for its year ended December
 31, 2000.
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
                   For the First Quarter Ended March 31, 2001
       (In thousands, except rig count, tons shipped and per share data)
                                  (Unaudited)
 
 
                                                           First Quarter
                                                        2001           2000
 
     Average U.S. Rig Count                             1,139            770
     Canadian Rig Count                                   515            480
 
     Tons shipped                                     244,198        221,808
 
     Net sales                                       $153,475       $132,050
     Gross profit                                      31,081         16,483
 
     Start-up costs (a)                                 1,064             --
     Income from operations                            23,563         10,805
     Income from continuing operations
      before income taxes                              22,906         10,256
     Income from continuing operations                 15,024          6,157
     Loss from discontinued operations (b)            (11,197)          (604)
     Net income                                        $3,827         $5,553
 
     Basic earnings per share from continuing
      operations                                        $0.45          $0.18
 
     Basic earnings per share                           $0.11          $0.17
 
     Diluted earnings per share from continuing
      operations                                        $0.43          $0.18
 
     Diluted earnings per share                         $0.11          $0.16
 
     Weighted average number of shares
      deemed outstanding                               34,575         34,487
 
     Working capital                                 $129,655       $120,299
     Property, plant and equipment                    159,922        139,578
     Total assets                                     371,816        366,860
 
     Long-term debt                                   $72,668        $51,112
     Stockholders' equity                             212,165        204,932
 
     Depreciation and amortization                     $3,790         $3,310
 
 
     (a) During calendar 2000, the Company constructed a new production
         facility in Hickman, Arkansas.  Start-up costs for the quarter ended
         March 31, 2001 were $1.1 million.  These costs, which are comprised
         primarily of manufacturing costs incurred prior to the fully
         integrated operation of the facility, decreased net income for the
         quarter ended March 31, 2001 by $0.02 per share.
 
     (b) On April 17, 2001, the Company decided to discontinue its DOM business
         and expects to sell certain of its assets during the later part of
         calendar 2001.  The Company estimates its loss on the sale to be
         approximately $9.3 million (net of $5.2 million of taxes).  The
         operating losses from January 1 to March 31, 2001 were $957,000 (net
         of $567,000 of taxes).  The estimated operating losses from April 1,
         2001 to the anticipated disposal date are $927,000 (net of $520,000 of
         taxes).  These charges reduced net income in total by $0.32 per share.
         Sales of DOM were $15.3 million and $3.0 million in the calendar year
         ended December 31, 2000 and the quarter ended March 31, 2001,
         respectively.  The assets of the DOM business to be sold consist of
         inventories and equipment amounting to approximately $7.6 million
         after deducting an allowance for the estimated loss on disposal, and
         the related liabilities were $3.5 million including estimated
         operating losses to the disposal date.
 
 SOURCE  Maverick Tube Corporation