Cameron Releases First Quarter Earnings Report (USA)

Cameron  reported net income of $109.5 million, or $0.43 per diluted share, for the quarter ended March 31, 2011, compared with net income of $120.4 million, or $0.48 per diluted share, for the first quarter of 2010.

The first quarter 2011 results include after-tax charges of $7.0 million, or $0.03 per share, primarily related to litigation costs associated with the Deepwater Horizon matter. The first quarter 2010 results included after-tax charges of $7.7 million, or $0.03 per diluted share, for severance-related costs in certain of the Company’s businesses and acquisition integration costs. Cameron President and Chief Executive Officer Jack B. Moore noted that previously announced charges totaling $43.9 million after-tax, or $0.17 per share, related to cost overruns on a subsea project and the Libya sanctions, are not being accounted for as discrete items. “While these charges are rare and unusual in nature, they reflect the risks of doing business in emerging countries,” Moore said, “and have been incorporated into our operating results for the first quarter of 2011.”

Year-over-year revenues increase in all groups

Revenues were $1,501.3 million for the quarter, up 11 percent from $1,346.7 million a year ago, and income before income taxes was $139.9 million (including the charges described above), down 13 percent from $160.5 million (including the $10.3 million pretax charge) a year ago. Moore said that the year-over-year revenue increase was due to gains in all three of the Company’s segments, with particular strength in surface equipment in Drilling & Production Systems (DPS) and shorter-cycle business in Valves & Measurement (V&M), while Process & Compression Systems (PCS) saw revenue gains across its business lines. He noted that absent the impact of the subsea and Libyan charges, EBITDA margins were in line with the Company’s expectations for the quarter. “DPS margins in both the drilling and surface businesses improved over year-ago levels; V&M margins showed a solid recovery sequentially; and margins in the PCS business are up slightly both from the fourth quarter and year-over-year,” Moore said.

Orders increase by more than 25 percent, exceed $1.5 billion

Total orders were $1.52 billion for the quarter, up from $1.21 billion in the first quarter of 2010. Moore said the gain in orders was primarily attributable to solid increases in each of the DPS businesses, including drilling, surface and subsea. “Orders in each of these DPS businesses were up at least 25 percent year-over-year,” Moore said, “while V&M and PCS both recorded modest gains in total.”

Cameron’s backlog at the end of the first quarter was $4.89 billion, up from the December 31, 2010 level of $4.81 billion and down slightly from $4.98 billion a year ago. Moore noted that deliveries of drilling and subsea projects continue to work off backlog in those business lines, while gains in surface offset much of the overall decline in the DPS backlog. “Both V&M and PCS have actually increased backlog over the past year,” he said, “with V&M gaining more than 45 percent from year-ago levels, and PCS up more than 18 percent.”

Capital investment continues, balance sheet strong

Cameron’s operations utilized cash of $326.8 million during the first quarter of 2011, compared with a cash use of $115.8 million a year ago. Moore said that the Company’s cash uses typically exceed cash inflows during the first quarter of the year, and that he expects Cameron to again generate meaningful free cash flow for the full year. He also noted that capital spending is still expected to total approximately $250 to $300 million, up from $200 million in 2010, reflecting multiple opportunities for deployment of capital, including enhanced exposure to North American resource plays, expansion of Brazilian facilities and investment in drilling aftermarket support.

Moore said the Company expects to finance its cash needs internally, and noted that as of March 31, 2011, Cameron’s $1.45 billion of cash and cash equivalents exceeded its total debt by approximately $152 million.

Earnings guidance adjusted to reflect charges

Moore said that Cameron’s second quarter earnings are expected to be in the range of $0.60 to $0.65 per share, and that the Company anticipates that full-year 2011 earnings will be in the range of $2.50 to $2.60 per share, compared with earlier expectations of $2.65 to $2.75. He noted that the full-year guidance has been adjusted to reflect the inclusion of the previously announced charges totaling approximately $0.17 per share that were recorded in the first quarter results.

Cameron is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries.

[mappress]
Source: c-a-m , April 29, 2011;