Shares of Dresser-Rand Group Inc. (DRC) fell over seven percent on Friday after the maker of heating and ventilation equipment lowered its operating income guidance for the full year 2011, citing shortfall in new unit revenues. The company also lowered its full year 2012 operating income outlook.
The Houston-headquartered company lowered its full-year operating income guidance to a range of $253 million to $258 million, from prior estimate of $275 million to $315 million. The outlook was reviewed due to a shortfall in new unit revenues, which the company expects to realize in 2012.
Chief Executive Vincent Volpe said, "While this result is disappointing, it should be noted that this is more a question of timing rather than project margin erosion or higher than anticipated fixed costs. Hence the earnings are displaced out of the period but are not lost to the company."
Dresser-Rand expects new unit revenues of about $350 million for the fourth quarter, which would be nearly $200 million lower than its earlier expectations. The shipment shortfall was due mainly to supply chain delays on major buyouts and client requests to defer deliveries to 2012.
The company's bookings in 2011 was $2.9 billion. However, new unit bookings were about $1.5 billion - at the low end of guidance range of $1.5 billion to $1.7 billion - as several major awards did not close in the fourth quarter as expected. Dresser-Rand expects the new unit bookings that moved out of the year to close in 2012, however, the delay is expected to shift related revenues from 2012 to 2013.
The company expects the strengthening of US dollar relative to euro to adversely impact its operating income for 2012 by about $30 million. Dresser-Rand lowered its full year 2012 operating income guidance range to $360 million to $420 million from previous outlook of $390 million to $450 million.
DRC is currently trading on the NYSE at $48.82, down $4.05 or 7.66% on a volume of 2.2 million shares, above the three-month average volume of 0.6 million.
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