Maverick Tube Corporation Reports Fourth Quarter and Record Year End R

    Business Editors

    ST. LOUIS--(BUSINESS WIRE)--Feb. 9, 2005--Maverick Tube Corporation (NYSE:MVK) announced today its results for the quarter and year ended December 31, 2004. The Company reported net income for the fourth quarter of $38.5 million, or $0.90 per diluted share, compared to net income in the same quarter last year of $13.0 million, or $0.31 per diluted share, and net income of $68.5 million, or $1.60 per diluted share, in the third quarter of 2004. Net income for the year ended December 31, 2004 was $193.8 million, or $4.54 per diluted share, compared to net income for 2003 of $23.0 million, or $0.55 per diluted share. Net sales were $396.2 million for the quarter and $1,456.3 million for the twelve months ended December 31, 2004, up from net sales of $243.2 million and $884.3 million, respectively, compared to the prior year.
    Revenues from the sale of energy products recorded in the fourth quarter increased 15.4% sequentially to $295.9 million from $256.4 million in the third quarter. For the year, sales of energy products increased 53.5% to $954.4 million in 2004 compared to $622.0 million in 2003. Fourth quarter energy revenues reflect a 2.9% increase in tons shipped compared to the third quarter, from 209,635 tons to 215,667 tons, as well as increased selling prices. Rigs running in the United States increased by 2% during the quarter compared to the third quarter of 2004, with a 1% increase in gas-related drilling and a 7% increase in oil-related drilling. In Canada, drilling activity increased 2% sequentially and 3% compared to the fourth quarter of 2003.
    Revenues from the sale of non-energy products recorded in the fourth quarter decreased 30.5% sequentially to $100.3 million from $144.3 million in the third quarter. For the year, sales of non-energy products increased 91.3% to $501.8 million in 2004 compared to $262.4 million in 2003. Fourth quarter non-energy shipments reflect a 34.2% decrease as compared to the third quarter, from 93,212 tons to 61,377 tons, but an increase in average selling price.
    C. Robert Bunch, the Company's Chairman and Chief Executive Officer, said, "We are very pleased with our fourth quarter and annual results. As anticipated, our fourth quarter profits reflect the higher steel costs incurred earlier in the year. Energy sales reflect the continuing robust drilling environment in both the United States and Canada. In both of these markets, we have worked diligently to ensure that our selling prices reflect not only our increased steel costs but also the current competitive environment in these markets. Despite substantial price increases, we have maintained our OCTG market shares in both the United States and Canada. In addition to our strong OCTG performance throughout the year, we are also pleased by the contributions from our line pipe, couplings, coiled tubing and umbilical products. Sales of our non-energy products in the fourth quarter reflected seasonal declines typical during this period as well as some impact from our increased selling prices."
    Mr. Bunch continued, "2004 was a record year for Maverick in both revenues and profits. For this, we are grateful to our customers, fellow employees and suppliers. Faced with the challenge of unprecedented increases in the cost of steel, we have collectively maintained the financial vitality of our business while supplying our customers with the products and service they expect from Maverick. Our financial results also reflect the positive effects of our substantial geographic and product diversification over the past few years. As we move into 2005, U.S. OCTG inventories are relatively low, at about 4.1 months supply or 1.2 million tons at the end of 2004. We anticipate another strong year in 2005 for North American drilling activity. We believe that Maverick is well positioned to take advantage of any opportunities."
    Maverick Tube Corporation is a St. Louis, Missouri, based manufacturer of tubular products used in the energy industry for drilling, production, well servicing and line pipe applications, as well as industrial tubing products (HSS, electrical conduit and standard pipe) used in various applications.
    This news release contains forward-looking information that is based on assumptions that are subject to numerous business risks, many of which are beyond the control of the Company. There is no assurance that such assumptions will prove to be accurate. Actual results may differ from these forward-looking statements due to numerous factors, including those described under "Risk Factors" and elsewhere in Maverick's Form 10-K for its year ended December 31, 2003.
    Any financial or statistical information presented during the call can be accessed by clicking on the Investor Relations page of Maverick's website, located at http://www.mavericktube.com. Such financial or statistical information may include any non-GAAP measures, the most directly comparable GAAP measures, and a reconciliation to GAAP results.

MAVERICK TUBE CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA For the Fourth Quarter and Year Ended December 31, 2004 (In thousands, except rig count and per share data) (Unaudited)

Fourth Quarter Ended Year Ended December 31, December 31, 2004 2003 2004 2003 ----------- ----------- ----------- -----------

Average U.S. Rig Count 1,249 1,109 1,190 1,031 Average Canadian Rig Count 420 408 369 372 Average North American Workover Rigs 2,032 1,503 1,850 1,479 International Rig Count 862 791 836 771

Net sales $396,194 $243,201 $1,456,264 $884,317 Cost of goods sold 311,523 202,557 1,047,777 783,353 ----------- ----------- ----------- ----------- Gross profit 84,671 40,644 408,487 100,964 Partial trade case relief (1) (2,893) (154) (3,633) (1,104) Selling, general and administrative 23,840 16,912 88,058 56,726 ----------------------------------------------- Income from operations 63,724 23,886 324,062 45,342 Interest expense 3,003 2,484 10,374 9,637 ----------- ----------- ----------- ----------- Income from continuing operations before income taxes and accounting change 60,721 21,402 313,688 35,705 Provision for income taxes 22,196 8,427 118,308 12,748 ----------- ----------- ----------- ----------- Income before cumulative effect of a change in accounting principle 38,525 12,975 195,380 22,957 Cumulative effect of accounting change (2) -- -- (1,584) -- ----------- ----------- ----------- ----------- Net income $38,525 $12,975 $193,796 $22,957 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Diluted earnings per share before cumulative effect of a change in accounting principle $0.90 $0.31 $4.57 $0.55 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Diluted earnings per share (3) $0.90 $0.31 $4.54 $0.55 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Average shares deemed outstanding (3) 42,994,072 42,367,297 42,751,303 42,102,073 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------

Other Data: Depreciation and amortization $7,718 $5,678 $27,698 $22,411 Capital expenditures 15,566 7,856 34,820 20,902

Balance Sheet Data: Working capital $471,083 $253,663 Property, plant & equipment -- net 211,534 189,434 Goodwill & intangibles 120,506 118,286 Total assets 1,002,437 670,726 Current maturities of long-term debt 3,298 3,533 Long-term revolving credit facility 54,660 50,213 Convertible debt 120,000 120,000 Other long-term debt (less current maturities) 2,981 4,209 Stockholders' equity 595,664 384,798

(1) Payments were made to several steel and metals companies under "The Continued Dumping and Subsidy Offset Act of 2000" in December, 2004. These payments were made to cover certain expenses, including investment in manufacturing facilities and anti-subsidy measures. The Company accrued a $740,000 partial recovery for the trade case outstanding with the Department of Commerce during the third quarter. An additional $2.9 million was received in the fourth quarter. This recovery increased income from continuing operations (net of taxes) by $0.04 and $0.05 per share for the quarter and for the year, respectively.

(2) The Company adopted FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" on March 31, 2004, requiring consolidation of our former Drawn Over Mandrel facility (DOM) since its sale to a third party (PCD) in March 2002. The factors that distinguish PCD from our wholly-owned subsidiaries included in our consolidated financial statements are: (1) the former DOM operation's assets were acquired by PCD with the Company's financial support, (2) the assets sold to PCD remain legally isolated and are restricted and (3) the liabilities of PCD are not our legal obligations, but will be repaid with cash flows generated from the assets. In March 2004, the Company recorded a $1.6 million (net of $1.0 million in taxes) non-cash cumulative charge to recognize the prior losses of PCD. The assets and liabilities of PCD were consolidated in our balance sheet as of March 31, 2004 and the operating results of PCD are included in the income statement starting as of April 1, 2004.

(3) The dilutive effect of our contingently convertible debt has been calculated on the if-converted method for the $4.5 million which remains outstanding under the terms of the original debt issued in June, 2003 and on a treasury stock method for the $115.5 million which was exchanged into net share settlement convertible debt on December 29, 2004.

--30--CB/na*

CONTACT: Maverick Tube Corporation, St. Louis Richard W. Preckel, 636-733-1600

KEYWORD: MISSOURI INTERNATIONAL CANADA INDUSTRY KEYWORD: OIL/GAS BANKING MINING/METALS ENERGY MANUFACTURING EARNINGS SOURCE: Maverick Tube Corporation

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