Cameron International Corp. (CAM), a provider of flow equipment products, systems, and services to the oil industry, on Tuesday reported a 33% decline in earnings for the fourth quarter from the same period last year, hurt by higher charges and a 4% decline in revenues. Margins declined across several product lines, while a larger portion of the company's revenues was related to its subsea projects, which typically carry lower margins.
For the first quarter of fiscal year 2010, the company forecasts earnings per share below analysts' consensus estimate. The company provided earnings outlook for the full year in line with analysts' estimates.
The Houston, Texas-based company's net income for the fourth quarter declined to $97.3 million or $0.41 per share from $146.0 million or $0.66 per share in the year-ago quarter. In the preceding third quarter, the company had reported net income of $124.9 million or $0.56 per share.
The results for the latest quarter included after-tax charges of $31.1 million or $0.13 per share, comprised of severance-related costs in certain of the company's businesses and charges associated with the acquisition of NATCO Group Inc., which closed in mid-November.
The year-ago quarter's results included a non-cash, after-tax charge of $16.5 million, or $0.08 per share, associated with the termination of the company's U.S. pension plans.
Excluding the above items, earnings per share for the fourth quarter were $0.54, down from $0.74 in the year-ago period. On average, twenty four 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.
Revenue for the fourth quarter declined 4% to $1.46 billion from $1.52 billion reported in the corresponding quarter a year earlier, but increased 19% from $1.23 billion in the preceding third quarter. Analysts had a consensus revenue estimate of $1.29 billion for the quarter.
Jack Moore, Cameron President and Chief Executive Officer, said, "Our results in the quarter were in-line with our expectations and reflect solid performance by our people, particularly in the execution of project-related business. Cameron's full-year results, which surpassed our early 2009 forecasts, reflected the strength and quality of our backlog, significant progress on cost control and a continuing focus on execution of deepwater projects in the subsea and drilling markets."
Among the company's peers, Geneva, Switzerland-based Weatherford International Ltd. (WFT) in late January reported a loss for the fourth quarter, reflecting lower revenues, loss for investigation and exit costs and and a tax provision. Loss from continuing operations attributable to Weatherford for the fourth quarter was $30.39 million or $0.04 per share, compared to net profit of $348.11 million or $0.50 per share a year ago. Net revenues for the quarter were $2.42 billion, down from $2.63 billion a year earlier.
Last week, National Oilwell Varco, Inc. (NOV) reported a decline in profit for the fourth quarter, reflecting lower revenues across segments. The Houston, Texas-based company's net income attributable to company for the fourth quarter was $394 million or $0.94 per share, down from $585 million or $1.40 per share last year. Total revenue for the quarter declined to $3.13 billion from $3.81 billion in the prior-year quarter.
Segment wise, Cameron said that drilling & production systems revenues for the fourth quarter declined 1.7% to $946.9 million from $963.1 million in the year-ago period. Valves & measurement revenues dropped 17.5% to $312.1 million from $378.1 million in the prior-year quarter, while compression systems revenues increased 12.2% to $205.4 million from $183.1 million in the same period last year.
Total costs and expenses for the quarter were $1.33 billion, up from $1.31 billion in the previous-year quarter.
Cameron's orders booked in the fourth quarter totaled $1.37 billion, up 17% from $1.17 billion a year ago and up from $1.34 billion in the preceding third quarter, as gains in drilling & production systems as well as valves & measurement segments more than offset slight declines in the compression systems segment.
The company booked a substantial level of deepwater project business, including the largest subsea tree order ever placed in Brazil and Chevron's high-profile Jack & St. Malo subsea development in the Gulf of Mexico.
The company's backlog at the end of the quarter was $5.19 billion, down from $5.61 billion at the end of the prior-year period.
Cameron noted that while it was not permitted to make share repurchases until the NATCO acquisition closed in mid-November, it purchased nearly 590,000 shares at an average price of approximately $37.65 per share in the latest quarter.
For fiscal year 2009, Cameron's net income decreased to $475.5 million or $2.11 per share from $580.7 million or $2.54 per share a year ago.
Excluding unusual items, earnings per share for the year were $2.38, down from $2.62 in the previous year. Cameron had projected earnings for the year in a range of $2.26-$2.30 per share, excluding any impact from the NATCO acquisition. Analysts expected the company to report earnings of $2.30 per share for the year.
Revenues for the year declined 11% to $5.22 billion from $5.85 billion last year, but topped analysts' consensus estimate of $5.06 billion.
Cash flow from operations for the year totaled about $613 million, down from $988 million in the prior year. The company spent approximately $241 million in capital expenditures during the year, continuing its focus on lowering costs and improving efficiency.
Looking ahead to the first quarter, Cameron forecasts earnings in the range of $0.48-$0.50 per share. Analysts currently expect the company to earn $0.51 per share for the quarter.
For fiscal year 2010, Cameron projects earnings in the range of $2.10-$2.20 per share, excluding the impact on any charges related to restructuring or integration activities. Analysts currently expect the company to earn $2.18 per share for the year.
Moore said, "We enter 2010 with another solid backlog, more than half of which is Subsea Systems business. As a result, we expect subsea revenues to be up substantially over the year-ago levels, but that project-related business will, as is typical, carry lower margins than most of our other product lines. Meanwhile, we continue to see some pressure on margins in shorter-cycle businesses, but we expect Cameron's overall margins to trough during 2010. Finally, we anticipate the NATCO acquisition will be accretive for the year, excluding integration costs."
Moore said that he expects cash flow in 2010 to comfortably fund the company's needs, with capital expenditures anticipated to total about $180 million.
CAM closed Monday's trading at $36.91, down $0.41 on a volume of 3.72 million shares. In Tuesday's pre-market, the stock is trading at $37.45, up $0.54 or 1.46%. In the past 52 weeks, the stock has been trading in a range of $17.19-$45.43.
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