Tuesday, provider of flow equipment products, systems, and services Cameron International Corp. (CAM), reported a decline in earnings for the third quarter, hit by severance-related charges as well as an 18% drop in revenues from last year, mainly due to pricing pressure and reduced purchasing by customers. The company also raised its earnings forecast for fiscal year 2009.
The Houston, Texas-based company's net income for the third quarter decreased to $124.9 million or $0.56 per share from $163.0 million or $0.71 per share in the year-ago quarter. The results for the latest quarter included a pretax charge of $5.9 million or $0.02 per share, for severance-related costs
On average, 22 analysts polled by Thomson Reuters expected the company to earn $0.53 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the sequentially preceding quarter, Cameron reported net income of $138.6 million or $0.62 per share, down from $148.8 million or $0.64 per share in the year-earlier quarter.
Revenue for the recent third quarter dropped to $1.23 billion from $1.50 billion reported in the corresponding quarter a year earlier. Street analysts' had a consensus revenue estimate of $1.28 billion for the quarter.
For the preceding second quarter, Cameron reported revenues that declined 14% to $1.27 billion from $1.48 billion a year ago.
Segment wise, Drilling & Production systems revenues for the third quarter slipped to $791.5 million from $957.0 million in the year earlier quarter. Valves & Measurement revenues dropped to $294.7 million from $383.7 million, while Compression systems revenues slid to $145.6 million from $164.0 million in the prior year quarter.
Income before income taxes for the quarter was $168.6 million, down 30% from $242.2 million last year.
Total costs and expenses for the quarter were $1.06 billion, compared to $1.26 billion in the same quarter last year.
Jack Moore, president and chief executive officer, Cameron said, "The results reflect a continued focus on exceptional execution by our team in a difficult market. " Moore also noted that margins held up well during the quarter.
Cameron indicated that orders received during the third quarter totaled $1.34 billion, up from the levels of the first two quarters of 2009. Drilling & Production Systems orders benefited from the bookings associated with a multi-year frame agreement for subsea equipment offshore Brazil, whereas orders in Valves & Measurement and Compression Systems reached their highest quarterly totals to date during 2009. As a result, Cameron's total orders surpassed revenues during the quarter for the first time since the third quarter of 2008, driving an increase in its total backlog.
At September 30, 2009, Cameron's backlog totaled $5.12 billion, up from the $5.02 billion level on a sequential basis.Cash and cash equivalents on balance sheet for the period totaled $1.53 billion, and exceeded total debt by nearly $237 million.
Further, the company said it spent around $60 million so far this year on a new Romanian surface equipment plant, which opened in early October and is ramping up its manufacturing capabilities, and on the continuing expansion of its subsea facility in Malaysia.
On June 1, Cameron had agreed to acquire smaller rival Houston, Texas-based NATCO Group Inc. (NTG) in an all-stock deal, valued at about $780 million. The company expects to close the acquisition during the fourth quarter of 2009, subject to the resolution of remaining antitrust issues and approval by NATCO's stockholders. The acquisition is anticipated to add to Cameron's earnings and cash flow in 2010. Upon closure of the deal, NATCO shareholders would own about 10% stake in Cameron.
For the nine-month period, net income decreased to $378.2 million or $1.71 per share from $434.8 million or $1.88 per share in the year- ago period.
Revenues for nine months dropped to $3.76 billion from $4.32 billion in the same period last year.
Looking ahead to the full year 2009, Cameron now expects earnings in the range of $2.26 - $2.30 per share, compared to earlier issued forecast of $2.15 - $2.25 per share. Previously, the company projected earnings between $1.85 per share and $2.00 per share .Analysts currently expect the company to report earnings of $2.22 per share for the full year.
The company noted that the guidance does not include any impact from the pending NATCO acquisition.
Amongst others in the sector, Swiss-based oilfield service company Weatherford International Ltd. (WFT), on October 19, reported a sharp decline in profit for the third quarter, hurt by a 15% decline in revenue along with higher losses on foreign currency remeasurement and the settlement of a legal dispute. Net income attributable to Weatherford plummeted to $77.37 million or $0.11 per share from $370.6 million or $0.53 per share in the year-ago quarter, while net revenues declined to $2.15 billion from $2.54 billion in the prior year quarter.
CAM closed Monday's trading at $37.42 on the NYSE.
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