USA: Cameron Revenues up 23% for Quarter, 17 % for Year 2010
Cameron reported net income of $164.6 million, or $0.66 per diluted share, for the quarter ended December 31, 2010, compared with net income in the prior year’s fourth quarter of $97.3 million, or $0.41 per diluted share.
The fourth quarter 2010 results include after-tax charges of $6.2 million, or $0.03 per share, primarily related to litigation costs associated with the Deepwater Horizon matter and the continued integration of NATCO Group Inc. The fourth quarter 2009 results included after-tax charges of $31.1 million, or $0.13 per share, comprised of severance-related costs and charges associated with the NATCO acquisition. Excluding the above items, the Company’s earnings per diluted share were $0.69 for the fourth quarter of 2010, compared with $0.54 for the fourth quarter of 2009.
Revenues up 23 percent for quarter, 17 percent for year; both represent new highs
Revenues for the fourth quarter of 2010 were a record $1.81 billion, up more than 23 percent from the prior year, and revenues for the year were $6.13 billion, up more than 17 percent from 2009’s $5.22 billion, and also a new record. Earnings per diluted share for 2010 were $2.27, compared to $2.11 for 2009; excluding unusual items, earnings per diluted share were $2.42 for 2010 and $2.38 for 2009.
Cameron President and Chief Executive Officer Jack B. Moore said that the increased revenues were due primarily to record deliveries of subsea equipment, where revenues exceeded 2009 levels by more than $450 million. “Despite this increase in subsea revenues, margins in the Drilling & Production Systems (DPS) group actually increased from the third quarter as each business within DPS saw sequential margin improvement,” Moore said. He noted that Cameron’s full-year results exceeded the Company’s early 2010 forecasts and reflected strength in many of the shorter-cycle businesses and efficient execution on large-scale projects in the subsea and drilling markets.
Orders increase for third consecutive quarter; backlog exceeds $4.8 billion at year-end
Orders booked in 2010’s fourth quarter totaled $1.71 billion, up from the $1.37 billion of a year ago, as total orders increased for the third quarter in a row. Year-over-year orders were higher in all three of the Company’s operating groups. Full-year orders totaled $5.79 billion, up 26 percent from 2009, and represented the second-highest order year in the Company’s history.
Moore noted that while orders in the DPS group were helped by sizable subsea project awards in the fourth quarter, the strength in the V&M and PCS businesses were significant contributors to the increase over prior-year levels. “V&M posted a record level of orders in 2010, and the PCS group recorded its first billion-dollar orders year,” Moore said. “We continue to be pleased with the balance in our business lines and the opportunities that our diverse product offerings provide.”
Cash flow to improve, capital spending to increase in 2011
Moore said that Cameron’s cash flow from operations totaled approximately $294 million in 2010, compared with $613 million in 2009. “We spent approximately $200 million in capital expenditures during the year,” Moore said, “with an emphasis on enhancing aftermarket reach and capability and improving manufacturing efficiency and cost structures.”
Moore said that he expects Cameron’s capital spending to increase significantly during 2011 as a result of a combination of factors. “We see a mix of needs and opportunities for our businesses during the year that will push our capital expenditures to a new record,” he noted. “We expect an increased level of maintenance spending and have numerous capital requests from our divisions for specific projects that will continue to improve efficiency, lower costs and expand our product and service exposure, particularly in the aftermarket business. In addition, we see opportunities on several other fronts. We expect to spend approximately $50 to $75 million to expand our facilities in Brazil, including enhancements to our subsea manufacturing capacity, aftermarket exposure and our research and development capability. We will invest nearly $50 million in creating a fleet of Cameron equipment to increase our presence in the frac valve, tree and manifold markets, further expanding our exposure in shale gas.”
Moore said he expects 2011 capital expenditures to total approximately $250 to $300 million, depending on timing of certain projects. He also noted that he expects cash flow from operations to improve over the 2010 levels, as the Company’s working capital needs should moderate during 2011.
2011 earnings expected to reach $2.65 to $2.75 per share
Moore said Cameron currently expects its 2011 earnings to be in the range of $2.65 to $2.75 per diluted share, excluding any charges related to litigation associated with the Deepwater Horizon matter or any other charges that may arise. “We expect revenues in 2011 to increase by approximately three to five percent over the 2010 levels, with strength in our shorter-cycle businesses more than offsetting a 14 percent decline in subsea revenues following 2010’s record deliveries.” Moore noted that he expects Cameron’s EBITDA margins to improve over 2010’s levels as the Company continues to work through much of the lower-margin backlog that was on the books at the beginning of last year.
Moore also said Cameron’s first quarter 2011 earnings, excluding charges, are expected to be approximately $0.63 to $0.66 per diluted share, up from $0.51 in the first quarter of 2010, reflecting improving performance in both the DPS and PCS groups.
Cameron is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries.
Source:Cameron, February 3, 2011; Image: