COLUMBUS, Miss., May 12 /PRNewswire-FirstCall/ -- Warrior Energy
Services Corporation (NASDAQ:WARR) ("Warrior Energy" or the
"Company") announced today its financial results for the three
months ended March 31, 2006. For the quarter ended March 31, 2006,
Warrior Energy's revenues were $27.3 million, an increase of
approximately $12.9 million over the quarter ended March 31, 2005.
Revenues from the wireline segment were $20.7 million for the three
months ended March 31, 2006 compared with revenues of $14.4 million
during the quarter ended March 31, 2005. The Company had revenues
of $6.6 million from its well intervention segment during the
quarter ended March 31, 2006. The Company entered into the well
intervention business in December 2005 with its acquisition of
Bobcat Pressure Control, Inc. ("Bobcat") and as such, had no
revenues from this segment during the first quarter of 2005.
Revenue growth for the quarter ended March 31, 2006 was driven by
increased well service activity levels, improved pricing, additions
of assets in the wireline segment and the acquisition of Bobcat.
EBITDA for the quarter ended March 31, 2006 was $8.6 million, which
was an increase of $5.7 million over the quarter ended March 31,
2005. EBITDA margins improved to 32% from 20% in the first quarter
of 2005, primarily due to higher utilization of assets, improved
pricing and economies of scale. See below for further explanation
of EBITDA and reconciliation to net income. For the quarter ended
March 31, 2006, the Company had operating income of $5.9 million,
which was an increase of $4.3 million (269%) over the first quarter
of 2005. Operating income margins improved to 21.6% from 11.1% in
the first quarter of 2005, for the reasons described above,
partially offset by higher depreciation and amortization expenses
associated with the Bobcat acquisition. Depreciation and
amortization was $2.7 million in the three months ended March 31,
2006, an increase of $1.4 million over the first quarter of 2005.
This is increase is mainly comprised of $0.6 million of
depreciation from the well intervention segment and $0.6 million of
amortization of intangible assets from the Bobcat acquisition.
Provision for income taxes for the quarter ended March 31, 2006 was
$1.5 million, versus $0 for the first quarter of 2005. The non-cash
provision for income taxes is a result of the Bobcat acquisition
and is due to the Company's previously unbenefited book net
operating losses ("NOL's") being fully absorbed as a result of the
Bobcat acquisition. For the quarter ended March 31, 2006, the
Company had net income of $2.5 million, or $0.56 per fully diluted
share, compared with net income of $0.6 million, or $0.52 per fully
diluted share, for the quarter ended March 31, 2005. The
computation of earnings per fully diluted share at March 31, 2006
included 3,502,010 shares issuable on exercise or conversion of
outstanding options, warrants and convertible notes, all of which
were issuable at an exercise or conversion price of $7.50 per
share. These shares were not included in the computation of
earnings per share, basic or diluted, at March 31, 2005 because the
effect would have been anti-dilutive. As of May 8, 2006, the
Company had 10,964,791 shares outstanding and options and warrants
for an additional 963,950 shares at an average exercise price of
$7.50. Cash provided by the Company's operating activities was
approximately $3.4 million (including a use of cash of $3.5 million
for financing of the Company's insurance premiums) for the three
months ended March 31, 2006 as compared to cash provided of
approximately $1.8 million for the same period in 2005. The
increase in cash provided by operating activities was due mainly as
a result in the increase in demand for the Company's services.
During the three months ended March 31, 2006, investing activities
used cash of approximately $7.9 million for the acquisition of
property, plant and equipment (including approximately $3.3 million
of down payments on equipment to be delivered later in the year) as
compared to $2.0 million for the same period in 2005. During the
three months ended March 31, 2006, financing activities used cash
of approximately $1.2 million for principal payments on debt offset
by proceeds from bank and other borrowings and net draws on working
capital revolving loans of approximately $6.7 million. During the
three months ended March 31, 2005, financing activities used cash
of approximately $1.3 million for principal payments on debt offset
by proceeds from bank and other borrowings and net draws on working
capital revolving loans of approximately $1.4 million. Management
attributed the Company's improved performance to strong demand in
the oilfield service sector, driving higher utilization of the
Company's assets and improved pricing. The Company also added five
wireline trucks, one snubbing unit and one P&A unit in the
first quarter, providing additional revenue generating capacity.
Also, the revenues from the entry into the well intervention
business in December 2005 were included for a full quarter. Bill
Jenkins, President and CEO, commented, "Our operating results for
the first quarter of 2006 have shown significant improvements. We
believe that our operations should continue to improve throughout
2006." Subsequent Events * On April 24, 2006, the Company completed
an underwritten public offering of its common stock. In the
offering, the Company sold an aggregate of 8,860,534 shares of its
common stock. In addition, selling stockholders sold an additional
592,466 shares. The Company applied the net proceeds it received
from the sale of the common stock approximately as follows: - To
repay $29.6 million of outstanding indebtedness under the Company's
credit agreements with GECC which includes each of the following:
-- $4.0 million under the Company's existing Senior Secured Credit
Agreement and $0.1 million in prepayment fees incurred, and --
$25.0 million under the Company's Second Lien Credit Agreement and
$0.5 million in prepayment fees; and - $133.9 million to repurchase
or repay the Company's equity securities, which included each of
the following: -- $102.1 million to repurchase 4,762,223 of the
5,413,437 shares of common stock issued on conversion of
outstanding convertible notes and accrued interest thereon, and --
$31.8 million to repurchase 4,075,528 of the Company's 4,289,028
remaining outstanding common stock purchase warrants. - The 592,466
shares of common stock sold by the selling stockholders in the
underwritten public offering were issued concurrently with the
public offering on conversion of $3.1 million principal amount of
and accrued interest on outstanding convertible notes. In addition,
also concurrently with the public offering, the holders of
approximately $525,000 principal amount of and accrued interest on
outstanding convertible notes converted the principal of and
accrued interest on those notes into an aggregate of 117,507 shares
of common stock. - As a consequence of the above transactions: --
the Company's outstanding indebtedness under its credit agreements
with GECC was reduced by an aggregate of $29.0 million, -- the
Company's outstanding indebtedness under its convertible notes and
accrued interest thereon, which aggregated $40.9 million before the
completion of the offering, was eliminated, and -- the Company's
outstanding shares of common stock after reflecting those
transactions increased by approximately 5.4 million shares and the
Company's stockholders' equity increased by approximately $69.6
million. * During the period April 1, 2006 through May 8, 2006,
options granted under the Company's Incentive Option Plan to
purchase an aggregate of 279,350 shares of common stock were
exercised resulting in total proceeds to the Company of $1.7
million. * In addition, during the period April 1, 2006 through May
8, 2006, the holders of 180,000 warrants exercised those warrants
and purchased 135,897 shares of the Company's common stock. Warrior
Energy Services Corporation is a natural gas and oil service
company providing services to natural gas and oil well operators in
the most active basins in the continental United States and in the
Gulf of Mexico. It is headquartered in Columbus, Mississippi.
Additional information may be obtained by contacting Mr. Rob
McNally, Executive Vice President, at (662) 329-1047. Earnings
Release and Investor Conference Call A conference call and webcast
has been scheduled for Friday, May 12, 2006, at 1:30 p.m. CT (2:30
p.m. ET). Shareholders and all other interested parties may
participate in the conference call by dialing (800) 510-0219 and
pass code 23895668 a few minutes before 1:30 p.m. CT (2:30 p.m. ET)
on May 12, 2006. To listen to a live webcast of the conference
call, go to
http://phx.corporate-ir.net/playerlink.zhtml?c=91004&s=wm&e=1315961
The webcast is also being distributed through the Thomson
StreetEvents Network to both institutional and individual
investors. Individual investors can listen to the call at
Thomson/CCBN's individual investor portal, powered by StreetEvents.
Institutional investors can access the call via Thomson's
password-protected event management site, StreetEvents
(http://www.streetevents.com/). The webcast replay will be
available from 4:30 p.m. CT, Friday, May 12, until August 12, 2006.
Listening to the webcast requires speakers and Windows Media
Player. If you do not have Media Player, download the free software
at http://www.windowsmedia.com/ . If you do not have Internet
access and want to listen to an audio replay, call 1-888-286-8010
and enter conference call code 63566290. The audio replay will be
available beginning at 4:30 p.m. CT on Friday, May 12 until 5:00
p.m. CT on Friday, May 19. Warrior Energy Services Corporation
Condensed Balance Sheets March 31, December 31, 2006 2005
(unaudited) ASSETS Current assets: Cash and cash equivalents $ - $
701,031 Restricted cash 1,829,039 214,813 Accounts receivable, less
allowance of $973,143 20,177,413 19,998,282 Other receivables
175,741 215,629 Prepaid expenses 3,455,308 7,314 Other current
assets 1,989,551 1,969,273 Total current assets 27,627,052
23,106,342 Property, plant and equipment, less accumulated
depreciation 34,573,001 31,750,477 Other assets 6,904,898 3,001,036
Goodwill 14,040,182 14,040,182 Other intangible assets 29,096,465
29,735,923 Total assets $112,241,598 $101,633,960 LIABILITIES AND
STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $
7,495,224 $ 6,699,944 Accrued salaries and vacation 3,120,897
2,926,975 Other accrued expenses 1,002,383 1,866,159 Accrued
interest payable 510,537 282,337 Current maturities of long-term
debt 10,499,891 5,168,880 Total current liabilities 22,628,932
16,944,295 Long-term debt, less current maturities 51,411,631
51,252,352 Non current accrued interest payable to related parties
18,972,134 18,150,795 Notes payable to related parties 21,902,375
21,902,375 Deferred taxes 10,338,693 8,955,590 Total liabilities
125,253,765 117,205,407 Stockholders' deficit: Preferred stock,
$.0005 par value, 2,500,000 shares authorized, none issued at March
31, 2006 or December 31, 2005 - - Common stock, $.0005 par value,
35,000,000 shares authorized, 2,379,002 and 2,342,125 shares issued
and outstanding March 31, 2006 and December 31, 2005, respectively
11,728 11,709 Additional paid-in capital 21,801,087 21,698,506
Accumulated deficit (34,241,589) (36,698,269) Treasury stock, at
cost (583,393) (583,393) Total stockholders' deficit (13,012,167)
(15,571,447) Total liabilities and stockholders' deficit
$112,241,598 $101,633,960 Warrior Energy Services Corporation
Condensed Statements of Operations For the three months ended March
31, 2006 and March 31, 2005 March 31, 2006 March 31, 2005
(Unaudited) (Unaudited) Revenues $ 27,303,768 $ 14,447,772
Operating costs 15,176,606 9,407,401 Selling, general and
administrative expenses 3,532,246 2,159,380 Depreciation and
amortization 2,697,904 1,283,656 Income from operations 5,897,012
1,597,335 Interest expense 1,999,216 961,583 Net gain on sale of
fixed assets 1,500 - Other income 18,851 10,552 Income before
income taxes 3,918,147 646,304 Provision for income taxes 1,461,466
- Net income $ 2,456,681 $ 646,304 Net income per share - basic $
1.03 $ .52 Net income per share - diluted $ .56 $ .52 Warrior
Energy Services Corporation Condensed Statements of Cash Flows For
the three months ended March 31, 2006 and March 31, 2005 March 31,
2006 March 31, 2005 (Unaudited) (Unaudited) Cash flows from
operating activities: $ 3,351,614 $ 1,824,080 Cash flows from
investing activities: Acquisitions of property, plant and equipment
(7,930,209) (2,045,385) Increase in restricted cash (1,614,226)
(934,144) Proceeds from sale of property, plant and equipment 1,500
- Cash used in investing activities (9,542,935) (2,979,529) Cash
flows from financing activities: Proceeds from bank and other
borrowings 3,831,783 99,711 Principal payments on long-term debt,
notes payable and capital lease obligations (1,248,150) (1,271,415)
Proceeds from working revolver, net 2,906,657 1,300,000 Cash
provided by financing activities 5,490,290 128,296 Net decrease in
cash and cash equivalents (701,031) (1,027,153) Cash and cash
equivalents, beginning of period 701,031 2,647,980 Cash and cash
equivalents, end of period $ - $ 1,620,827 Supplemental disclosure
of cash flow information: Cash paid during the period for: Interest
$ 949,677 $ 142,530 Income taxes $ 90,000 $ - Segment Information
Segment information for the three months ended March 31, 2006 as
well as for certain corporate expenses not allocated to the
individual operating segments is as follows: Well Wireline
Intervention Corporate Total Segment revenues $20,701,419 $
6,602,349 $ - $ 27,303,768 Segment operating and sg&a expenses
$12,927,413 $ 3,498,487 $ 2,282,952 $ 18,708,852 Segment
depreciation and amortization $ 1,260,884 $ 1,200,834 $ 236,186 $
2,697,904 Segment operating income $ 6,513,122 $ 1,903,028
$(2,519,138)$ 5,897,012 Segment EBITDA (1) $ 7,774,006 $ 3,103,862
$(2,282,952)$ 8,594,916 Segment assets $58,123,244 $53,675,064 $
443,290 $112,241,598 Segment goodwill $ 1,237,417 $12,802,765 $ - $
14,040,182 (1) Reconciliation of EBITDA with net income: Net income
$ 2,456,681 Plus provision for income taxes 1,461,466 Minus other
income (18,851) Minus gain on sale of fixed assets (1,500) Plus
depreciation and amortization 2,697,904 Plus interest expense
1,999,216 EBITDA $ 8,594,916 Warrior Energy Services Corporation
Summarized Financial Information (In thousands, except for per
share income (loss) data) (unaudited) Three months ended March 31,
2006 2005 Income Statement Data Revenues $ 27,304 $ 14,448 Expenses
Operating costs $ 15,177 $ 9,407 Selling, general and
administrative expenses $ 3,532 $ 2,159 Depreciation and
amortization $ 2,698 $ 1,284 EBITDA(1) $ 8,595 $ 2,881 Net Income $
2,457 $ 646 Per share data Net income per share - basic $ 1.03 $
0.52 Net income per share - diluted $ 0.56 $ 0.52 March 31,
December 31, 2006 2005 Balance Sheet Data Total current assets $
27,627 $ 23,106 Total assets $ 112,242 $ 101,634 Total current
liabilities $ 22,629 $ 16,944 Total stockholders' deficit $
(13,012) $ (15,571) Total liabilities and stockholders' deficit $
112,242 $ 101,634 (1) See attached reconciliation of Non-GAAP
Financial Measures Reconciliation of Non-GAAP Financial Measures To
fully assess the Company's operating results, management believes
that, although not prescribed under generally accepted accounting
principals ("GAAP"), EBITDA is an appropriate measure of the
Company's ability to satisfy capital expenditure obligations and
working capital requirements. EBITDA is a non-GAAP financial
measure as defined under SEC rules. The Company's EBITDA should not
be considered in isolation or as a substitute for other financial
measurements prepared in accordance to GAAP or as a measure of the
Company's profitability or liquidity. As EBITDA excludes some, but
not all, items that affect net income and may vary among companies,
the EBITDA presented below may not be comparable to similarly
titled measures of other companies. Management believes that net
income (loss) calculated in accordance with GAAP is the most
directly comparable measure most similar to EBITDA. EBITDA is
defined as net income (loss) plus interest expense, depreciation
and amortization, deferred income taxes and other non-cash items.
The following table provides a reconciliation of EBITDA to net
income for the periods presented (in thousands). Three months ended
March 31, 2006 2005 Reconciliation of EBITDA with net income: Net
income $2,456,681 $ 646,304 Plus provision for income taxes
1,461,466 - Less other income (18,851) (10,552) Less gain on sale
of fixed assets (1,500) - Plus interest expense 1,999,216 961,583
Plus: depreciation and amortization 2,697,904 1,283,656 EBITDA
$8,594,916 $2,880,991 The Company believes EBITDA is useful to an
equity investor in evaluating its operating performance because: *
it is widely used by investors in the Company's industry to measure
a company's operating performance without regard to items such as
interest expense, depreciation and amortization, which can vary
substantially from company to company depending upon accounting
methods and book value of assets, capital structure and the method
by which the assets were acquired; and * it helps investors more
meaningfully evaluate and compare the results of the Company's
operations from period to period by removing the impact of the
Company's capital structure and asset base from its operating
results. Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995.
With the exception of historical matters, the matters discussed in
this press release are "forward-looking statements" as defined
under the Securities Exchange Act of 1934, as amended, that involve
risks and uncertainties. The Company intends that the
forward-looking statements herein be covered by the safe-harbor
provisions for forward-looking statements contained in the
Securities Exchange Act of 1934, as amended, and this statement is
included for the purpose of complying with these safe-harbor
provisions. Such forward-looking statements relate to the Company's
ability to generate revenues and maintain profitability and cash
flow, the stability and level of prices for natural gas and oil,
predictions and expectations as to the fluctuations in the levels
of natural gas and oil prices, pricing in the natural gas and oil
services industry and the willingness of customers to commit for
natural gas and oil well services, the Company's ability to
implement its intended business plans, which include, among other
things, the implementation of its previously announced growth
initiatives and business strategy and goals, the Company's ability
to raise additional debt or equity capital to meet its requirements
and to implement its intended growth initiatives and to obtain
additional financing to fund that growth when required, the
Company's ability to maintain compliance with the covenants of its
credit agreement and obtain waivers of violations that occur and
consents to amendments as required, the Company's ability to
compete in the premium natural gas and oil services market, the
Company's ability to re-deploy its equipment among regional
operations as required, the Company's ability to provide services
using state of the art tooling and its ability to successfully
integrate and operate the well intervention operations acquired
from Bobcat. The Company's revenues and net income are dependent on
the level of exploration, development and production expenditures
by its customers. The Company's forward-looking statements also
include the possible completion of any future business acquisition
transactions. The inability of the Company to meet these goals,
objectives or requirements or the consequences on the Company from
adverse developments in general economic conditions, changes in
capital markets, adverse developments in the natural gas and oil
industry and declines and fluctuations in the prices for natural
gas and oil, developments in international relations and the
commencement or expansion of hostilities by the United States or
other governments and events of terrorism, weather events
disrupting natural gas and oil operations and other factors could
have a material adverse effect on the Company. Material declines in
the prices for natural gas and oil can be expected to adversely
affect the Company's revenues. The Company cautions readers that
various risk factors could cause the Company's operating results
and financial condition to differ materially from those expressed
in any forward-looking statements made by the Company and could
adversely affect the Company's ability to pursue its business
strategy and plans. Readers should refer to the Company's Annual
Report on Form 10-K and the risk factors disclosed therein.
DATASOURCE: Warrior Energy Services Corporation CONTACT: Mr. Rob
McNally, Executive Vice President, +1-662-329-1047
Copyright
