Complete Production Services, Inc. Reports First Quarter 2008 Earnings and Pressure Pumping Acquisition

Complete Production Services, Inc. (NYSE:CPX) today reported first quarter 2008 revenue of $455.3 million, up 12% over first quarter 2007 revenue and up 7% over the fourth quarter of 2007. Net income for the quarter was $43.9 million, or $0.60 per diluted share, compared to first quarter 2007 net income of $47.4 million, or $0.65 per diluted share. Fourth quarter 2007 net income was $41.9 million, or $0.57 per diluted share, before the impact of a goodwill impairment charge of $13.1 million, or $0.18 per diluted share. Earnings before interest, taxes, depreciation, amortization, impairment charge and minority interest (EBITDA, as defined below) totaled $124.5 million, up 3% year-over-year, and up 9% over the fourth quarter of 2007. For the Completion and Production Services Segment revenue and EBITDA were $356.7 million and $113.1 million, respectively. Segment revenue was up 16% year-over-year and up 8% sequentially. Segment EBITDA was up 9% year-over-year and up 10% sequentially. Activity levels were robust during the quarter in most of the company’s operating areas, particularly in the Rockies, Mid-Continent region and Mexico. Sequentially, segment revenues were up in every major service offering except rental operations which were down slightly. "We are very pleased with our results for the first quarter of 2008, especially in light of the concerns we had when we entered the quarter related to activity levels and capacity additions,” commented Joe Winkler, Chairman and Chief Executive Officer. Segment EBITDA margins for the quarter were 31.7%, up slightly versus the 31.0% margin achieved in the fourth quarter of 2007 and down compared to 33.9% in the first quarter of 2007. The year-over-year decline in margin was primarily due to reduced pricing levels for certain service offerings, slightly lower utilization rates and the impact of inflationary forces on labor and fuel. For the Drilling Services Segment revenue and EBITDA were $61.0 and $13.8 million, respectively compared to $61.2 million and $15.9 million in the prior quarter, and $58.4 million and $18.1 million in the first quarter of 2007. EBITDA margins declined sequentially in rig logistics, where we experienced continued pricing pressures as well as higher fuel and labor costs, and in contract drilling where labor costs continued to trend upwards. Year-over-year, EBITDA margins were adversely impacted by lower pricing levels as well as increased costs for labor and fuel. For the Products Segment revenue and EBITDA were $37.5 million and $5.6 million, respectively, compared to $33.2 million and $3.9 million in the prior quarter and $41.0 million and $5.2 million in the first quarter of 2007. Margins improved primarily due to a better product mix. "In addition to an outstanding operational performance during the first quarter, we also continued executing our strategy to expand our core service lines within the resource plays of North America,” stated Joe Winkler. "In line with that strategy Complete acquired Frac Source Services, Inc., a provider of pressure pumping services in the Barnett Shale on April 15. This transaction will result in three frac fleets working for a major customer under long-term contracts. The ability to secure this contract and execute this transaction is a testament to our team’s capabilities and reputation to deliver results for our customers.” Complete’s total investment including the purchase price and additional capex required will be approximately $90 million. "Our outlook remains positive regarding the long-term fundamentals of natural gas,” commented Mr. Winkler. "Our customers continue to execute their drilling plans and expand their positions within the resource plays of North America.” Conference Call Complete will hold a conference call to discuss first quarter 2008 results on Thursday, April 24 at 8:00 a.m. Central Time. To participate in the live conference call, dial 800-322-2803 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 23004731. The conference call will be available for replay beginning at 10:00 a.m., April 24, 2008 and will be available until May 1, 2008. To access the conference call replay, please call 888-286-8010 and use the passcode: 80452270. The call is also being webcast and can be accessed at our website at www.completeproduction.com. The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risk and uncertainties. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release. Management evaluates the performance of Complete’s operating segments using a non-GAAP financial measure, EBITDA. EBITDA is calculated as net income from continuing operations before net interest expense, taxes, depreciation and amortization, impairment charge, and minority interest. EBITDA is not a substitute for the GAAP measures of earnings and cash flow. EBITDA is used in this press release because our management considers it an important supplemental measure of performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Complete Production Services, Inc.Consolidated Statements of OperationsFor the Quarters Ended March 31, 2008 and 2007(in thousands, except per share data)     Quarter Ended March 31, 2008 2007 (unaudited) (unaudited) Revenue: Services $ 417,735 $ 366,035 Products   37,528     41,032   455,263 407,067   Cost of services 251,705 203,513 Cost of products 27,481 31,811 General and administrative expense 51,567 50,570 Depreciation and amortization   40,582     28,970   371,335 314,864     Income from continuing operations before interest, taxes and minority interest 83,928 92,203   Interest expense 15,919 15,625 Interest income (625 ) (212 )     Income from continuing operations before minority interest and taxes 68,634 76,790   Minority interest, net of tax - 261     Income from continuing operations before taxes 68,634 76,529   Tax provision 24,708 29,179     Net income $ 43,926   $ 47,350     Earnings per share:     Basic $ 0.61   $ 0.66   Diluted $ 0.60   $ 0.65     Weighted average shares outstanding: Basic 72,562 71,503 Diluted 73,712 73,021 Complete Production Services, Inc.Condensed Consolidated Balance SheetsAs of March 31, 2008 and December 31, 2007(in thousands)         March 31, December 31, 2008 2007 (unaudited) (unaudited) Assets: Current assets $ 437,455 $ 428,324 Property, plant and equipment, net 1,044,688 1,034,695 Goodwill 565,536 560,488 Other long-term assets   28,213     31,252   Total assets   2,075,892     2,054,759     Liabilities and stockholders' equity: Current liabilities 152,218 169,545 Long-term debt 807,326 825,987 Long-term deferred tax liabilities   142,484     128,904   Total liabilities and minority interest 1,102,028 1,124,436   Common stock 727 725 Treasury stock (202 ) (202 ) Additional paid-in capital 584,663 581,404 Retained earnings 361,461 317,535 Cumulative translation adjustment   27,215     30,861   Total stockholders' equity 973,864 930,323     Total liabilities and stockholders' equity $ 2,075,892   $ 2,054,759   Complete Production Services, Inc.Cash Flow DataFor the Quarter Ended March 31, 2008(in thousands)   March 31, 2008 (unaudited) Cash flows provided by/(used for): Operating activities $ 75,883 Investing activities: Capital expenditures $ (51,332 ) Other investing activities $ (5,910 ) Financing activities $ (22,204 ) Complete Production Services, Inc. Consolidated Segment Information For the Quarters Ended March 31, 2008 and 2007, and December 31, 2007 (in thousands, except percentages)       Quarter Ended March 31, March 31, December 31, 2008 2007 2007 (unaudited) (unaudited) (unaudited) Revenue: Completion and production services $ 356,748 $ 307,639 $ 330,079 Drilling services 60,987 58,396 61,222 Products   37,528     41,032     33,231   Total revenues $ 455,263   $ 407,067   $ 424,532     EBITDA: (1) Completion and production services $ 113,056 $ 104,162 $ 102,481 Drilling services 13,795 18,068 15,856 Products 5,614 5,157 3,945 Corporate and other   (7,955 )   (6,214 )   (8,073 ) Total EBITDA $ 124,510   $ 121,173   $ 114,209     EBITDA as a % of Revenue: Completion and production services 31.7 % 33.9 % 31.0 % Drilling services 22.6 % 30.9 % 25.9 % Products 15.0 % 12.6 % 11.9 % Total 27.3 % 29.8 % 26.9 %   (1) EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release. Complete Production Services, Inc. Reconciliation of EBITDA to the Most Comparable GAAP Measure For the Quarters Ended March 31, 2008 and 2007 and December 31, 2007 (unaudited, in thousands)           Completion& Production Drilling Corporate & Services Services Products Other Total Quarter Ended March 31, 2008: EBITDA $ 113,056 $ 13,795 $ 5,614 $ (7,955 ) $ 124,510 Depreciation & amortization   34,123   5,125   775   559     40,582 Operating income (loss) $ 78,933 $ 8,670 $ 4,839 $ (8,514 ) $ 83,928   Quarter Ended March 31, 2007: EBITDA $ 104,162 $ 18,068 $ 5,157 $ (6,214 ) $ 121,173 Depreciation & amortization   24,284   3,635   678   373     28,970 Operating income (loss) $ 79,878 $ 14,433 $ 4,479 $ (6,587 ) $ 92,203   Quarter Ended December 31, 2007: EBITDA $ 102,481 $ 15,856 $ 3,945 $ (8,073 ) $ 114,209 Depreciation & amortization 31,904 4,785 745 669 38,103 Impairment charge   13,094   -   -   -     13,094 Operating income (loss) $ 57,483 $ 11,071 $ 3,200 $ (8,742 ) $ 63,012