Universal Compression Reports Fiscal 2005 Third Quarter Results

HOUSTON, Jan. 25 /PRNewswire-FirstCall/ -- Universal Compression Holdings, Inc. , a leading provider of natural gas compression services, today reported net income of $14.1 million, or $0.44 per diluted share, in the fiscal 2005 third quarter compared to $12.2 million, or $0.38 per diluted share, in the fiscal 2005 second quarter and $11.7 million, or $0.38 per diluted share, in the fiscal 2004 third quarter.

Revenue was a record $192.7 million in the fiscal 2005 third quarter compared to $191.9 million in the fiscal 2005 second quarter and $170.2 million in the fiscal 2004 third quarter. EBITDA, as adjusted (as defined below), was a record $61.0 million in the fiscal 2005 third quarter compared to $59.5 million in the fiscal 2005 second quarter and $58.1 million in the fiscal 2004 third quarter.

"Universal achieved record levels of revenue and EBITDA in the fiscal 2005 third quarter, which was highlighted by increased contract compression activity in both domestic and international markets. With the continued implementation of our growth strategies, we have recorded sequential improvement in earnings per diluted share during the first three quarters of fiscal 2005," said Stephen A. Snider, Universal's President and Chief Executive Officer. "Looking ahead, we have a positive outlook for the first half of calendar 2005 due to continuing strong worldwide market conditions and expected contributions from previously announced new operations in Latin America and Canada."

"The recent closing of our new credit facility significantly enhances the Company's financial position. We plan to use this facility to redeem the outstanding $440 million of 8.875% senior secured notes on February 15, 2005, which will result in lower ongoing interest expense and extended debt maturities," added Michael Anderson, Universal's Chief Financial Officer.

Guidance

For the three months ending March 31, 2005, the Company expects revenue to be $185 million to $195 million and earnings per diluted share to be $0.44 to $0.48, excluding debt extinguishment costs of approximately $26 million on a pretax basis, or $0.52 per diluted share on an after-tax basis, related to the redemption of the 8.875% notes. Including debt extinguishment costs, the Company expects a net loss per diluted share of $0.08 to $0.04 in the three months ending March 31, 2005. For the twelve months ending March 31, 2005, the Company expects revenue of $755 million to $765 million and earnings per diluted share of $1.58 to $1.62, excluding the gain on termination of interest rate swaps and debt extinguishment costs. Including these items, the Company expects earnings per diluted share of $1.11 to $1.15 in fiscal year 2005.

Conference Call

Universal will host a conference call today, January 25, 2005 at 10:00 am Central Time, 11:00 am Eastern Time, to discuss the quarter's results and other corporate matters. The conference call will be broadcast live over the Internet to provide interested persons the opportunity to listen. The call will also be archived for approximately 90 days to provide an opportunity to those unable to listen to the live broadcast. Both the live broadcast and replay of the archived version are free of charge to the user.

Persons wishing to listen to the conference call live may do so by logging onto http://www.universalcompression.com/ (click "Investor Home" in the "Investor Relations" section) or http://phx.corporate-/ ir.net/phoenix.zhtml?p=irol-eventDetails&c=121184&eventID=995295 at least 15 minutes prior to the start of the call. The replay of the call will be available at the website http://www.universalcompression.com/ .

EBITDA, as adjusted, is defined as net income plus income taxes, interest expense (including debt extinguishment costs and excluding gain on termination of interest rate swaps), operating lease expense, depreciation and amortization, foreign currency gains or losses, excluding non-recurring items (including facility consolidation costs), and extraordinary gains or losses.

Universal Compression, headquartered in Houston, Texas, is a leading natural gas compression services company, providing a full range of contract compression, sales, operations, maintenance and fabrication services to the domestic and international natural gas industry.

Statements about Universal's outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside Universal's control, which could cause actual results to differ materially from such statements. While Universal believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the demand for Universal's products and services and worldwide economic and political conditions. These and other risk factors are discussed in Universal's filings with the Securities and Exchange Commission, copies of which are available to the public. Universal expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events, or otherwise.

UNIVERSAL COMPRESSION HOLDINGS, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three Months Ended Dec. 31, Sept. 30, Dec. 31, 2004 2004 2003 Revenue: Domestic contract compression $75,170 $73,178 $71,067 International contract compression 27,810 22,872 20,789 Fabrication 50,823 57,772 42,092 Aftermarket services 38,873 38,062 36,219 Total revenue 192,676 191,884 170,167 Costs and expenses: Domestic contract compression - direct costs 27,071 26,798 25,073 International contract compression - direct costs 6,427 5,412 4,981 Fabrication - direct costs 48,605 51,772 38,480 Aftermarket services - direct costs 30,917 30,204 29,053 Depreciation and amortization 23,611 23,123 21,504 Selling, general and administrative 19,224 18,245 16,101 Interest expense 16,821 16,154 17,994 Foreign currency (gain) loss (238) 882 (466) Other (income) expense (589) (56) (1,630) Total costs and expenses 171,849 172,534 151,090 Income before income taxes 20,827 19,350 19,077 Income taxes 6,702 7,160 7,344 Net income $14,125 $12,190 $11,733 Weighted average common and common equivalent shares outstanding: Basic 31,406 31,336 30,841 Diluted 32,082 32,045 31,243 Earnings per share: Basic $0.45 $0.39 $0.38 Diluted $0.44 $0.38 $0.38 UNIVERSAL COMPRESSION HOLDINGS, INC. UNAUDITED SUPPLEMENTAL INFORMATION (Dollars in thousands) Three Months Ended Dec. 31, Sept. 30, Dec. 31, 2004 2004 2003 Revenue: Domestic contract compression $75,170 $73,178 $71,067 International contract compression 27,810 22,872 20,789 Fabrication 50,823 57,772 42,092 Aftermarket services 38,873 38,062 36,219 Total $192,676 $191,884 $170,167 Gross Profit: Domestic contract compression $48,099 $46,380 $45,994 International contract compression 21,383 17,460 15,808 Fabrication 2,218 6,000 3,612 Aftermarket services 7,956 7,858 7,166 Total $79,656 $77,698 $72,580 Selling, General and Administrative $19,224 $18,245 $16,101 % of Revenue 10% 10% 9% EBITDA, as adjusted $61,021 $59,509 $58,109 % of Revenue 32% 31% 34% Capital Expenditures $45,797 $39,240 $31,153 Profit Margin: Domestic contract compression 64% 63% 65% International contract compression 77% 76% 76% Fabrication 4% 10% 9% Aftermarket services 20% 21% 20% Total 41% 40% 43% Reconciliation of GAAP to Non-GAAP Financial Information: Net income $14,125 $12,190 $11,733 Income taxes 6,702 7,160 7,344 Depreciation and amortization 23,611 23,123 21,504 Interest expense 16,821 16,154 17,994 Foreign currency (gain) loss (238) 882 (466) EBITDA, as adjusted (A) $61,021 $59,509 $58,109 Dec. 31, Sept. 30, Dec. 31, 2004 2004 2003 Debt (B) $847,057 $792,966 $889,262 Stockholders' Equity $856,334 $832,604 $779,800 Total Debt to Capitalization 49.7% 48.8% 53.3% (A) Management believes disclosure of EBITDA, as adjusted, a non-GAAP measure, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, it provides a more complete understanding of our performance than GAAP results alone. Management uses EBITDA, as adjusted, as a supplemental measure to review current period operating performance, a comparability measure, a performance measure for period to period comparisons and a valuation measure. (B) Debt includes capital lease obligations. UNIVERSAL COMPRESSION HOLDINGS, INC. UNAUDITED SUPPLEMENTAL INFORMATION (Horsepower in thousands) Three Months Ended Dec. 31, Sept. 30, Dec. 31, 2004 2004 2003 Total Horsepower Available (at period end): Domestic contract compression 1,908 1,896 1,900 International contract compression 518 437 401 Total 2,426 2,333 2,301 Average Contracted Horsepower: Domestic contract compression 1,696 1,665 1,661 International contract compression 442 401 363 Total 2,138 2,066 2,024 Horsepower Utilization: Spot (at period end) 89.9% 89.8% 87.0% Average 89.8% 88.9% 86.9% Fabrication Backlog (in millions) $83 $66 $92