(RTTNews) - Oil field and power transmission products supplier Lufkin Industries Inc. (LUFK:
News ) reported, Wednesday, lower profit for the third quarter, hurt by 40% decline in sales and shrinking profit margins. On a per share basis, earnings came in above Wall Street consensus. The group expects financial results to be negatively affected by reduced revenues and the deleveraging of fixed overhead in the fourth quarter.
The Lufkin, Texas-based group's quarterly net income plunged to $4.99 million or $0.34 per share from $24.81 million or $1.65 per share a year ago. Earnings from continuing operations for the recent quarter fell to $5.05 million or $0.34 per share from $24.96 million or $1.66 per share in the comparable period.
On average, three analysts polled by Thomson Reuters expected earnings per share of $0.20. Analysts' estimates typically exclude special items.
Lufkin's quarterly sales slumped nearly 40% year-over-year to $117.69 million from $195.09 million. Segmentally, sales from oil fields halved to $73.73 million from $147.07 million, while sales from power transmission fell to $44 million from $48 million.
Quarterly gross profit margin decreased to 21.2% of revenues, compared with 28.6% of revenues a year earlier, hurt by pricing pressure and the loss of manufacturing fixed cost leverage. Selling, general and administrative expenses as a percentage of revenues was at 15% of revenues, up from 9% in the prior-year quarter, as the group resorted to maintain employment levels for international growth opportunities and product development.
With continued steps to reduce costs in order to improve competitive position and restore operating margins, however, the group noted that operating income declined to $7.2 million from $38.8 million, as operations continued to be negatively affected by uncertainties surrounding the short term direction and pace of the economic recovery and its impact on oil and gas demand.
Combined order backlog declined to $133.8 million in the third quarter from $413.9 million in the third quarter of last year, affected by substantially lower booking across segments, owing to high levels of customer inventory and delayed order.
Looking ahead, John Glick, president and chief executive officer of Lufkin said, "The near term outlook remains challenging, at least through the next quarter. As a result of the poor order intake in Power Transmission during the first quarter of this year, and our inability to book short delivery orders to fill capacity in this division during the second and third quarters, financial results will be negatively affected by reduced revenues and the deleveraging of fixed overhead in the fourth quarter."
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