Oilfield services company Smith International Inc. (SII) on Wednesday posted a steep decline in fourth-quarter profit, and said it remains "cautious with respect to the sustainability of the current trajectory." Further, the company projects first-quarter adjusted earnings generally in line with market forecast.
The Houston, Texas-based company's fourth-quarter net income attributable to Smith was $20.1 million or $0.09 per share, compared to $199.2 million or $0.91 per share in the year-ago quarter.
On average, 25 analysts polled by Thomson Reuters expected the company to post earnings of $0.09 per share. Analysts' estimates typically exclude special items.
Quarterly revenues dropped to $1.98 billion from the previous year's $3.06 billion, but surpassed the $1.92 billion consensus revenue estimate of eighteen Street analysts.
However, the company noted that its fourth quarter was primarily influenced by increased drilling activity in the North American market coupled with stable prices for its products and services, and by a significant increase in revenue per rig in Latin America and Africa for both M-I SWACO and the Smith Oilfield segments.
John Yearwood, Chief Executive Officer, said, "I am very pleased with the continued growth of our PathFinder business which once again outpaced the growth in the U.S. non-vertical rig count. M-I SWACO produced good revenue gains outside of North America and our Distribution segment showed strong sequential revenue growth."
The company's M-I SWACO segment generated quarterly revenue of $1.06 billion, a decline of 19% from the prior-year's $1.30 billion. Fourth-quarter sales from the Smith Oilfield division fell 46% to $516.3 million from $957.3 million reported in the comparable quarter of the previous year.
The Distribution segment revenue totaled $410.1 million in the fourth quarter of 2009, 48% below the last year's $794.2 million.
During the fourth quarter of 2009, total costs and expenses amounted to $1.86 billion, compared to $2.63 billion in the same quarter of last year. Interest expense increased to $39.5 million from $33.1 million incurred in the three months ended December 31, 2008. Operating income slid to $122.8 million from $430.8 million earned in the year-earlier period.
For the full-year 2009, the company reported net income of attributable to Smith of $148.5 million or $0.66 per share, compared to $767.3 million or $3.68 per share in 2008.
On a non-GAAP basis, earnings totaled $181.5 million or $0.81 per share, compared to $788.7 million or $3.78 per share in fiscal 2008. Analysts expected earnings of $0.81 per share for the full year.
Annual revenues for fiscal 2009 were $8.22 billion, a decline from $10.8 billion reported in the previous year. Nineteen Wall Street analysts had a consensus revenue estimate of $8.16 billion for fiscal 2009.
Looking ahead, the company said it is optimistic about the projected future growth in deepwater rig activity for M-I SWACO business and the increased worldwide drilling of new unconventional resources using non-vertical drilling techniques that should benefit Smith Oilfield segment.
Although, the company said it will not provide guidance for the full year 2010, Smith believes that its first quarter earnings before any non-recurring charges will be generally in line with market expectations, citing the current expectation of sequentially stronger industry activity levels and overall positive demand for many of oilfield lines of business as well as improved earnings from Distribution segment.
For fiscal 2010, the company expects to invest about $320 million in net capital expenditures.
Among Smith International's rivals, Halliburton Co. (HAL) reported a sharp decline in fourth-quarter profit, totaling $243 million or $0.27 per share, compared to $468 million or $0.52 per share in the year-earlier quarter, as weak global demand and volatility in the commodity markets negatively impacted the oil service industry. Revenues for the fourth quarter declined to $3.69 billion from $4.91 billion in the prior year period.
Another peer, Schlumberger Ltd. (SLB) reported fourth-quarter net income of $795 million or $0.65 per share, down from $1.15 billion or $0.95 per share, reflecting a downswing in the Oilfield Services and WesternGeco revenues. Quarterly revenues dropped to $5.74 billion from the previous year's revenue of $6.87 billion.
Yet another competitor, Baker Hughes Inc. (BHI) posted lower fourth-quarter profit, totaling $84 million or $0.27 per share, compared to $432 million or $1.41 per share in the year-ago period, dented by weak performance across all its business operations. Revenues dropped 24% to $2.43 billion from the previous year's revenue of $3.19 billion.
SII closed Tuesday's trading session at $30.56, up 5 cents or 0.16%. In the past 52 weeks, the stock has been trading between $18.43 and $34.46.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.