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Press release from PR Newswire

Cameron Third Quarter Earnings Per Share $0.78, Excluding Charges

Thursday, October 27, 2011

Cameron Third Quarter Earnings Per Share $0.78, Excluding Charges08:15 EDT Thursday, October 27, 2011- Earnings total $0.67 per share, including charges, versus $0.61, including charges, in third quarter of 2010 - Orders $2.0 billion, up over $500 million from a year ago, backlog grows to $5.8 billion - Full year 2011 earnings guidance between $2.63 and $2.66 per shareHOUSTON, Oct. 27, 2011 /PRNewswire/ -- Cameron (NYSE: CAM) reported net income of $164.5 million, or $0.67 per diluted share, for the quarter ended September 30, 2011, compared with net income of $148.7 million, or $0.61 per diluted share, for the third quarter of 2010.  The third quarter 2011 results include pre-tax charges of $34.2 million, or $0.11 per share, primarily related to costs associated with retiring the Company's convertible debentures, litigation and mark-to-market losses associated with foreign currency derivatives (see attached reconciliation). The third quarter 2010 results included pre-tax charges of $10.4 million, or $0.03 per diluted share, related to the integration of the NATCO Group Inc. acquisition, as well as litigation and severance costs. Revenues were $1.69 billion for the quarter, up 10 percent from $1.53 billion a year ago, and income before income taxes was $198.0 million, up seven percent from the $185.1 million a year ago. Cameron Chairman and Chief Executive Officer Jack B. Moore said that the year-over-year revenue increase was due to gains in the Drilling & Production Systems (DPS) and Valves & Measurement (V&M) segments. He noted that EBITDA margins were up for the Company sequentially. Both the DPS and V&M segments drove these margin improvements.Total orders were $2.0 billion for the quarter, up from $1.48 billion in the third quarter of 2010, for an increase of 35%.  "We are pleased at the pace of orders for the quarter, particularly with the strength of our shorter cycle businesses", Moore commented, "In fact, this represents our third highest orders quarter in Cameron's history".  Surface systems, Distributed Valves, Process Valves and Measurement had record quarterly orders. Subsea saw a 15% increase sequentially.Cameron's backlog at the end of the third quarter was $5.79 billion, its second highest quarter-end level in history and up from $4.94 billion a year ago.  Moore noted that all three segments increased backlog over the past year with V&M gaining more than 47 percent from year-ago levels.Capital investment continues, balance sheet strongCameron's operations generated cash of $104.9 million during the third quarter. Moore said cash flow from operations should continue to accelerate in the fourth quarter as Cameron's working capital needs moderate. Moore also noted that Cameron spent approximately $228 million in capital expenditures in the first three quarters. "Depending on the pace of expenditures on several large expansion projects, capital spending should approximate $350 million for 2011," Moore said. "We continue to focus on investments in our aftermarket and unconventional resource related businesses, as well as our Brazilian capacity expansion," Moore added. He also noted that the Company called its 2.5% convertible debentures during the second quarter and the cash repurchase was completed during the third quarter. He said that this resulted in a 5.2 million share reduction from the first quarter of 2011. Moore said that as of September 30, 2011, Cameron's $1.54 billion of cash and cash equivalents was exceeded by its total debt by approximately $50 million. Full-year earnings guidance Moore said Cameron's full-year 2011 earnings, excluding charges, will be in the range of $2.63 to $2.66 per share. Cameron (NYSE: CAM) is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries.Website: www.c-a-m.comIn addition to the historical data contained herein, this document includes forward-looking statements regarding future cash flows, costs, margins, free cash flow and earnings of the Company (including fourth quarter and full-year 2011 earnings per share estimates), as well as expectations regarding cash and capital needs, acquisitions and stock repurchases, made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The Company's actual results may differ materially from those described in forward-looking statements.  Such statements are based on current expectations of the Company's performance and are subject to a variety of factors, some of which are not under the control of the Company, which can affect the Company's results of operations, liquidity or financial condition.  Such factors may include overall demand for, and pricing of, the Company's products; the size and timing of orders; the Company's ability to successfully execute the large subsea and drilling systems projects it has been awarded; the possibility of cancellations of orders; the Company's ability to convert backlog into revenues on a timely and profitable basis; the impact of acquisitions the Company has made or may make; changes in the price of (and demand for) oil and gas in both domestic and international markets; raw material costs and availability; political and social issues affecting the countries in which the Company does business; fluctuations in currency markets worldwide; and variations in global economic activity.  In particular, current and projected oil and gas prices historically have generally directly affected customers' spending levels and their related purchases of the Company's products and services.  Additionally, changes in oil and gas price expectations may impact the Company's financial results due to changes it may make in its cost structure, staffing or spending levels.Because the information herein is based solely on data currently available, it is subject to change as a result of changes in conditions over which the Company has no control or influence, and should not therefore be viewed as assurance regarding the Company's future performance.  Additionally, the Company is not obligated to make public indication of such changes unless required under applicable disclosure rules and regulations.CameronUnaudited Consolidated Condensed Results of Operations($ and shares in millions except per share data)Three MonthsEnded September 30,Nine MonthsEnded September 30,2011201020112010Revenues:Drilling & Production Systems$  977.2$  944.0$  2,845.5$  2,600.1Valves & Measurement434.4312.71,200.8937.0Process & Compression Systems274.3270.4881.9789.4Total revenues1,685.91,527.14,928.24,326.5Costs and Expenses:Cost of sales (exclusive of depreciation and amortization shown separately below)1,136.61,048.73,407.92,947.5Selling and administrative expenses243.4210.2723.6611.9Depreciation and amortization53.152.7145.5153.7Interest, net20.620.062.756.4Other costs34.210.463.239.1Total costs and expenses1,487.91,342.04,402.93,808.6Income before income taxes198.0185.1525.3517.9Income tax provision(33.5)(36.4)(103.2)(119.7)Net income$  164.5$  148.7$  422.1$  398.2Earnings per common share:Basic$  0.67$  0.61$  1.72$  1.64Diluted$  0.67$  0.61$  1.69$  1.61Shares used in computing earnings per common share:Basic245.1242.2244.9243.2Diluted247.1245.5249.8247.0EBITDA:Drilling & Production Systems$  223.1$  185.6$  551.0$  532.7Valves & Measurement91.454.0242.2169.4Process & Compression Systems33.856.4115.9140.8Corporate and other(1)(76.6)(38.2)(175.6)(114.9)Total$  271.7$  257.8$  733.5$  728.0(1) Corporate EBITDA amounts include $34.2 and $63.2 of other costs for the three- and nine-month periods ended September 30, 2011; and $10.4 million and $39.1 million for the three- and nine-month periods ended September 30, 2010.CameronConsolidated Condensed Balance Sheets($ millions)September 30,2011December 31,2010(unaudited)Assets:Cash and cash equivalents$    1,536.5$  1,832.5Receivables, net1,396.21,056.1Inventories, net2,177.71,779.3Other328.6265.0Total current assets5,439.04,932.9Plant and equipment, net1,339.51,247.8Goodwill1,496.71,475.8Other assets351.6348.6Total Assets$    8,626.8$  8,005.1Liabilities and Stockholders' Equity:Current portion of long-term debt$    10.9$  519.9Accounts payable and accrued liabilities2,029.82,016.0Accrued income taxes   ?38.0Total current liabilities2,040.72,573.9Long-term debt1,576.3772.9Deferred income taxes159.595.7Other long-term liabilities240.5170.2Total liabilities4,017.03,612.7Stockholders' Equity:Common stock, par value $.01 per share, 400,000,000 shares  authorized, 263,111,472 shares issued at September 30, 2011 and  December 31, 20102.62.6Capital in excess of par value2,070.92,259.3Retained earnings3,270.42,848.3Accumulated other elements of comprehensive income (loss)(77.5)(27.1)Less:  Treasury stock, 17,913,815 shares at September 30, 2011  (19,197,642 shares at December 31, 2010)(656.6)(690.7)Total stockholders' equity4,609.84,392.4Total Liabilities and Stockholders' Equity$    8,626.8$  8,005.1CameronUnaudited Consolidated Condensed Statements of Cash Flows($ millions)Three MonthsEnded September 30,Nine MonthsEnded September 30,2011201020112010Cash flows from operating activities:Net income$  164.5$  148.7$  422.1$  398.2Adjustments to reconcile net income to net cash provided by (used for) operating activities:Depreciation42.936.4115.1107.8Amortization10.216.330.445.9Non-cash stock compensation expense9.16.726.725.2Tax benefit of employee stock compensation plan transactions and deferred income taxes25.6(13.0)12.5(5.5)Changes in assets and liabilities, net of translation, acquisitions and non-cash items:Receivables(159.1)(67.0)(360.4)(46.9)Inventories(146.4)(25.1)(431.4)(91.0)Accounts payable and accrued liabilities158.0(31.2)24.6(398.8)Other assets and liabilities, net0.123.139.8(95.6)Net cash provided by (used for) operating activities104.994.9(120.6)(60.7)Cash flows from investing activities:Capital expenditures(94.2)(47.0)(228.5)(115.0)Acquisitions, net of cash acquired??(42.5)(40.9)Proceeds from sale of plant and equipment7.81.417.68.9Net cash used for investing activities(86.4)(45.6)(253.4)(147.0)Cash flows from financing activities:Short-term loan borrowings (repayments), net18.212.149.7(6.6)Issuance of senior debt??747.8?Debt issuance cost??(4.7)?Redemption of convertible debentures(524.5)?(705.7)?Sale (purchase) of equity call options, net9.7?(12.2)?Purchase of treasury stock???(123.9)Proceeds from stock option exercises, net of tax payments from stock compensation plan transactions3.32.520.0(9.6)Excess tax benefits from employee stock compensation plan transactions0.50.95.46.3Principal payments on capital leases(2.2)(1.6)(6.0)(4.9)Net cash provided by (used for) financing activities(495.0)13.994.3(138.7)Effect of translation on cash(30.1)20.1(16.3)(2.8)Increase (decrease) in cash and cash equivalents(506.6)83.3(296.0)(349.2)Cash and cash equivalents, beginning of period2,043.11,428.51,832.51,861.0Cash and cash equivalents, end of period$  1,536.5$  1,511.8$  1,536.5$  1,511.8CameronOrders and Backlog($ millions)OrdersThree MonthsEnded September 30,Nine MonthsEnded September 30,2011201020112010Drilling & Production Systems$  1,149.1$  718.0$  3,410.1$  2,034.6Valves & Measurement508.6396.81,462.51,137.0Process & Compression Systems345.4365.01,040.2908.3Total$  2,003.1$  1,479.8$  5,912.8$  4,079.9BacklogSeptember 30,2011December 31, 2010September 30,2010Drilling & Production Systems$  3,755.9$    3,195.9$  3,401.9Valves & Measurement1,090.4833.8740.0Process & Compression Systems941.2787.4793.5Total$  5,787.5$    4,817.1$  4,935.4CameronReconciliation of GAAP to Non-GAAP Financial Information($ millions)Three Months Ended September 30, 2011Drilling &ProductionSystemsValves & MeasurementProcess & CompressionSystemsCorporateTotalIncome (loss) before income taxes$    196.6$    81.5$    24.0$    (104.1)$    198.0Depreciation & amortization26.59.99.86.953.1Interest, net   -   -   -20.620.6EBITDA$    223.1$    91.4$    33.8$    (76.6)$    271.7Three Months Ended September 30, 2010Drilling &ProductionSystemsValves & MeasurementProcess & CompressionSystemsCorporateTotalIncome (loss) before income taxes$    161.8$    43.0$    41.4$    (61.1)$    185.1Depreciation & amortization23.811.015.02.952.7Interest, net   -   -   -20.020.0EBITDA$    185.6$    54.0$    56.4$    (38.2)$    257.8CameronReconciliation of GAAP to Non-GAAP Financial Information($ millions)Nine Months Ended September 30, 2011Drilling &ProductionSystemsValves & MeasurementProcess & CompressionSystemsCorporateTotalIncome (loss) before income taxes$    474.3$    212.2$    88.5$    (249.7)$    525.3Depreciation & amortization76.730.027.411.4145.5Interest, net   -   -   -62.762.7EBITDA$    551.0$    242.2$    115.9$    (175.6)$    733.5Nine Months Ended September 30, 2010Drilling &ProductionSystemsValves & MeasurementProcess & CompressionSystemsCorporateTotalIncome (loss) before income taxes$    463.8$    137.3$    96.4$    (179.6)$    517.9Depreciation & amortization68.932.144.48.3153.7Interest, net   -   -   -56.456.4EBITDA$    532.7$    169.4$    140.8$    (114.9)$    728.0CameronReconciliation of GAAP to Non-GAAP Financial Information($ millions, except per share amounts)Three Months Ended September 30, 2011After Tax(1)Diluted EPS(2)Net income, as reported$  164.5$  0.67Adjustments:BOP litigation costs11.00.04Mark-to-market impact on currency derivatives(3)5.30.02Acquisition, refinancing and other restructuring costs(4)12.10.05         Adjusted EPS$  192.9$  0.78(1) Individual adjustments assume a 16.9% effective tax rate(2) Based on 247.1 million diluted shares(3) These derivatives have not been designated as accounting hedges(4) Includes $11.5 million of costs associated with retiring the 2.5% convertible debenturesThree Months Ended September 30, 2010After Tax(1)Diluted EPS(2)Net income, as reported$  148.7$  0.61Adjustments:NATCO acquisition integration costs4.60.02BOP litigation costs3.30.01Severance, acquisition, refinancing and other restructuring costs0.5   ?         Adjusted EPS$  157.1$  0.64(1) Individual adjustments assume a 19.7% effective tax rate(2) Based on 245.5 million diluted sharesNine Months Ended September 30, 2011After Tax(1)Diluted EPS(2)Net income, as reported$  422.1$  1.69Adjustments:BOP litigation costs28.50.11Mark-to-market impact on currency derivatives(3)5.10.02Severance, acquisition, refinancing and other restructuring costs(4)17.10.07         Adjusted EPS$  472.8$  1.89(1) Individual adjustments assume a 19.6% effective tax rate(2) Based on 249.8 million diluted shares(3) These derivatives have not been designated as accounting hedges(4) Includes $9.8 million of costs associated with retiring the 2.5% convertible debenturesNine Months Ended September 30, 2010After Tax(1)Diluted EPS(2)Net income, as reported$  398.2$  1.61Adjustments:NATCO acquisition integration costs14.20.06BOP litigation costs5.20.02Severance, acquisition, refinancing and other restructuring costs10.60.04         Adjusted EPS$  428.2$  1.73(1) Individual adjustments assume a 23.1% effective tax rate(2) Based on 247.0 million diluted sharesSOURCE CameronFor further information: Jeff Altamari, Vice President, Investor Relations, +1-713-513-3344