Smith International, Inc. Reports First Quarter Earnings of 68 Cents Per Share

Apr 18, 2001, 01:00 ET from Smith International, Inc.

    HOUSTON, April 18 /PRNewswire/ -- Smith International, Inc. (NYSE:   SII)
 today announced first quarter earnings of $34.2 million, or 68 cents per share
 on a diluted basis, on revenues of $865.3 million.  The net income was more
 than three times the amount reported in the prior year period which totaled
 $11.3 million, or 23 cents per share, on a revenue base of $625.4 million.
 Revenues grew 38 percent over the first quarter of 2000 and 14 percent
 sequentially, attributable to the impact of increased activity levels,
 acquisitions and improved pricing in the Company's oilfield segment
 operations.  The majority of the year-to-year revenue growth was reported in
 the United States and Europe/Africa which, on a combined basis, accounted for
 approximately three-quarters of the increase.  After excluding the effect of
 acquired and divested operations, revenues were 30 percent above the amounts
 reported in the prior year quarter.
     M-I's revenues were $392.3 million, an increase of 46 percent over the
 first quarter of 2000.  After excluding the impact of acquisitions completed
 in the fourth quarter of 2000, revenues grew 37 percent over the prior year
 period.  The base revenue growth was reported across all geographic areas with
 the majority of the improvement attributable to increased activity levels in
 the United States and Europe/Africa, including the North Sea, West Africa and
 the Commonwealth of Independent States.  Increased demand for synthetic and
 completion fluids, acquisitions and improved pricing in the North American
 market contributed a significant portion of the reported increase.
     Smith Bits reported revenues of $102.8 million in the first quarter of
 2001, a 36 percent increase over the prior year level and an 11 percent
 improvement sequentially.  Approximately three-quarters of the revenue
 increase was generated in the United States and Europe/Africa due to higher
 sales volumes and improved pricing across both the three-cone and diamond bit
 product lines.  On a combined basis, revenues for petroleum three-cone and
 diamond bits grew 40 percent over the first quarter of 2000 and compared to a
 30 percent improvement in the average M-I worldwide rig count between the
 corresponding periods.
     Smith Services' revenues increased to $86.4 million in the first quarter
 of 2001.  Excluding the effect of the directional operations divested in
 January 2001, revenues were 39 percent over the prior year period and
 12 percent higher on a sequential quarter basis.  The base revenue increase
 was primarily reported in the United States, Canada and Latin America related
 to the impact of increased activity levels, pricing and new contract awards.
 On a product basis, the majority of the year-to-year revenue growth was
 attributable to improved tubular and inspection revenues and increased demand
 for remedial products and services in the U.S. Gulf Coast area.
     Wilson's revenues totaled $283.8 million for the first quarter of 2001,
 30 percent above the prior year level.  The acquisition of the Van Leeuwen
 operations, which was completed on January 31, 2001, contributed just under
 half of the period-to-period increase.  Excluding the impact of the
 acquisition, revenues were 16 percent above the prior year quarter.  The base
 revenue growth primarily related to improved North American activity levels,
 which favorably impacted sales volumes in Wilson's energy branches.  Increased
 customer spending associated with plant maintenance programs benefited the
 industrial sector of Wilson's operations, contributing to the reported revenue
 growth over the prior year period.
     Commenting on the results, Chairman and CEO, Doug Rock stated, "Our
 revenues and earnings continue to accelerate as we benefit from an improved
 operating environment and the effect of price increases implemented across our
 business units.  Although we have yet to see any substantial improvement in
 activity levels outside the U.S. and Canada, we believe exploration projects
 in the international areas are moving forward as planned.  With our
 significant exposure to markets outside of North America, we are well
 positioned to capitalize on the expected increase in global E&P spending."
     Loren Carroll, Executive Vice President, also noted that, "Our results
 were above the elevated earnings guidance provided to the market in late March
 due to higher revenue and profitability levels, particularly in the oilfield
 operations.  During the last seven quarters the operating margins in our
 oilfield segment have increased, on average, 150 basis points each quarter --
 more than twice the rate of improvement experienced during the last cycle.
 Oilfield operating margins improved to 13.8 percent of revenues during the
 first quarter, and are currently less than 100 basis points below the level
 reported in 1997."
 
     Smith International, Inc. is a leading worldwide supplier of premium
 products and services to the oil and gas exploration and production industry,
 the petrochemical industry and other industrial markets through its
 four principal business units -- M-I, Smith Bits, Smith Services and Wilson.
 
     Financial highlights follow:
 
 
                           SMITH INTERNATIONAL, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
 
                                                         Three Months Ended
                                                              March 31,
                                                         2001           2000
 
     Revenues                                       $ 865,311      $ 625,432
 
     Costs and expenses:
       Costs of revenues                              619,222        463,949
       Selling expenses                               123,176         95,304
       General and administrative expenses             33,496         27,613
       Goodwill amortization                            3,831          2,641
         Total costs and expenses                     779,725        589,507
 
     Income before interest and taxes                  85,586         35,925
 
     Interest expense, net                             10,343          8,765
 
     Income before income taxes and
      minority interests                               75,243         27,160
 
     Income tax provision                              24,805          9,675
 
     Income before minority interests                  50,438         17,485
 
     Minority interests                                16,220          6,162
 
     Net income                                     $  34,218      $  11,323
 
     Earnings per share:
       Basic                                        $    0.69      $    0.23
       Diluted                                      $    0.68      $    0.23
 
     Weighted average shares outstanding:
       Basic                                           49,844         49,169
       Diluted                                         50,439         49,930
 
     OTHER DATA:
     Depreciation and amortization                  $  22,170      $  19,434
     Capital spending (a)                           $  28,440      $  15,639
     EBIT excluding minority interests (b)          $  65,634      $  27,317
     EBITDA excluding minority interests (b)        $  83,163      $  43,022
 
     NOTE (a):
     Capital spending is reported gross and not reduced for the proceeds
 arising on lost-in-hole sales or sales of fixed asset equipment replaced.  Net
 capital spending was approximately $25.1 million and $12.6 million for the
 three months ended March 31, 2001 and 2000, respectively.
 
     NOTE (b):
     "Earnings before interest and taxes (EBIT) excluding minority interests"
 and "Earnings before interest, taxes, depreciation and amortization (EBITDA)
 excluding minority interests" represent the amount of EBIT and EBITDA earned
 by the Company after reduction for the portion of the respective amounts
 allocable to the minority interest partners.
 
 
                           SMITH INTERNATIONAL, INC.
                                REVENUE ANALYSIS
                                 (In thousands)
 
                                                            Three Months
                                                           Ended March 31,
                                                         2001           2000
 
     M-I                                             $392,269       $267,777
 
     Smith Bits                                       102,787         75,439
 
     Smith Services                                    86,435         64,664
 
     Wilson                                           283,820        217,552
 
     TOTAL                                           $865,311       $625,432
 
 

SOURCE Smith International, Inc.
    HOUSTON, April 18 /PRNewswire/ -- Smith International, Inc. (NYSE:   SII)
 today announced first quarter earnings of $34.2 million, or 68 cents per share
 on a diluted basis, on revenues of $865.3 million.  The net income was more
 than three times the amount reported in the prior year period which totaled
 $11.3 million, or 23 cents per share, on a revenue base of $625.4 million.
 Revenues grew 38 percent over the first quarter of 2000 and 14 percent
 sequentially, attributable to the impact of increased activity levels,
 acquisitions and improved pricing in the Company's oilfield segment
 operations.  The majority of the year-to-year revenue growth was reported in
 the United States and Europe/Africa which, on a combined basis, accounted for
 approximately three-quarters of the increase.  After excluding the effect of
 acquired and divested operations, revenues were 30 percent above the amounts
 reported in the prior year quarter.
     M-I's revenues were $392.3 million, an increase of 46 percent over the
 first quarter of 2000.  After excluding the impact of acquisitions completed
 in the fourth quarter of 2000, revenues grew 37 percent over the prior year
 period.  The base revenue growth was reported across all geographic areas with
 the majority of the improvement attributable to increased activity levels in
 the United States and Europe/Africa, including the North Sea, West Africa and
 the Commonwealth of Independent States.  Increased demand for synthetic and
 completion fluids, acquisitions and improved pricing in the North American
 market contributed a significant portion of the reported increase.
     Smith Bits reported revenues of $102.8 million in the first quarter of
 2001, a 36 percent increase over the prior year level and an 11 percent
 improvement sequentially.  Approximately three-quarters of the revenue
 increase was generated in the United States and Europe/Africa due to higher
 sales volumes and improved pricing across both the three-cone and diamond bit
 product lines.  On a combined basis, revenues for petroleum three-cone and
 diamond bits grew 40 percent over the first quarter of 2000 and compared to a
 30 percent improvement in the average M-I worldwide rig count between the
 corresponding periods.
     Smith Services' revenues increased to $86.4 million in the first quarter
 of 2001.  Excluding the effect of the directional operations divested in
 January 2001, revenues were 39 percent over the prior year period and
 12 percent higher on a sequential quarter basis.  The base revenue increase
 was primarily reported in the United States, Canada and Latin America related
 to the impact of increased activity levels, pricing and new contract awards.
 On a product basis, the majority of the year-to-year revenue growth was
 attributable to improved tubular and inspection revenues and increased demand
 for remedial products and services in the U.S. Gulf Coast area.
     Wilson's revenues totaled $283.8 million for the first quarter of 2001,
 30 percent above the prior year level.  The acquisition of the Van Leeuwen
 operations, which was completed on January 31, 2001, contributed just under
 half of the period-to-period increase.  Excluding the impact of the
 acquisition, revenues were 16 percent above the prior year quarter.  The base
 revenue growth primarily related to improved North American activity levels,
 which favorably impacted sales volumes in Wilson's energy branches.  Increased
 customer spending associated with plant maintenance programs benefited the
 industrial sector of Wilson's operations, contributing to the reported revenue
 growth over the prior year period.
     Commenting on the results, Chairman and CEO, Doug Rock stated, "Our
 revenues and earnings continue to accelerate as we benefit from an improved
 operating environment and the effect of price increases implemented across our
 business units.  Although we have yet to see any substantial improvement in
 activity levels outside the U.S. and Canada, we believe exploration projects
 in the international areas are moving forward as planned.  With our
 significant exposure to markets outside of North America, we are well
 positioned to capitalize on the expected increase in global E&P spending."
     Loren Carroll, Executive Vice President, also noted that, "Our results
 were above the elevated earnings guidance provided to the market in late March
 due to higher revenue and profitability levels, particularly in the oilfield
 operations.  During the last seven quarters the operating margins in our
 oilfield segment have increased, on average, 150 basis points each quarter --
 more than twice the rate of improvement experienced during the last cycle.
 Oilfield operating margins improved to 13.8 percent of revenues during the
 first quarter, and are currently less than 100 basis points below the level
 reported in 1997."
 
     Smith International, Inc. is a leading worldwide supplier of premium
 products and services to the oil and gas exploration and production industry,
 the petrochemical industry and other industrial markets through its
 four principal business units -- M-I, Smith Bits, Smith Services and Wilson.
 
     Financial highlights follow:
 
 
                           SMITH INTERNATIONAL, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
 
                                                         Three Months Ended
                                                              March 31,
                                                         2001           2000
 
     Revenues                                       $ 865,311      $ 625,432
 
     Costs and expenses:
       Costs of revenues                              619,222        463,949
       Selling expenses                               123,176         95,304
       General and administrative expenses             33,496         27,613
       Goodwill amortization                            3,831          2,641
         Total costs and expenses                     779,725        589,507
 
     Income before interest and taxes                  85,586         35,925
 
     Interest expense, net                             10,343          8,765
 
     Income before income taxes and
      minority interests                               75,243         27,160
 
     Income tax provision                              24,805          9,675
 
     Income before minority interests                  50,438         17,485
 
     Minority interests                                16,220          6,162
 
     Net income                                     $  34,218      $  11,323
 
     Earnings per share:
       Basic                                        $    0.69      $    0.23
       Diluted                                      $    0.68      $    0.23
 
     Weighted average shares outstanding:
       Basic                                           49,844         49,169
       Diluted                                         50,439         49,930
 
     OTHER DATA:
     Depreciation and amortization                  $  22,170      $  19,434
     Capital spending (a)                           $  28,440      $  15,639
     EBIT excluding minority interests (b)          $  65,634      $  27,317
     EBITDA excluding minority interests (b)        $  83,163      $  43,022
 
     NOTE (a):
     Capital spending is reported gross and not reduced for the proceeds
 arising on lost-in-hole sales or sales of fixed asset equipment replaced.  Net
 capital spending was approximately $25.1 million and $12.6 million for the
 three months ended March 31, 2001 and 2000, respectively.
 
     NOTE (b):
     "Earnings before interest and taxes (EBIT) excluding minority interests"
 and "Earnings before interest, taxes, depreciation and amortization (EBITDA)
 excluding minority interests" represent the amount of EBIT and EBITDA earned
 by the Company after reduction for the portion of the respective amounts
 allocable to the minority interest partners.
 
 
                           SMITH INTERNATIONAL, INC.
                                REVENUE ANALYSIS
                                 (In thousands)
 
                                                            Three Months
                                                           Ended March 31,
                                                         2001           2000
 
     M-I                                             $392,269       $267,777
 
     Smith Bits                                       102,787         75,439
 
     Smith Services                                    86,435         64,664
 
     Wilson                                           283,820        217,552
 
     TOTAL                                           $865,311       $625,432
 
 SOURCE  Smith International, Inc.