Total sales increased by $92.5 million to $309.8 million, or 43% for the quarter ended September 30, 2005, compared to the same period in 2004. Operating income increased to $35.8 million for the third quarter 2005 compared to $22.5 million for the same period last year. Third quarter 2005 operating income was adversely affected by about $8.3 million due to additional depreciation and amortization from purchase accounting as compared to the same period last year.
Vincent R. Volpe, Jr., President and Chief Executive Officer of Dresser-Rand, said, "I am pleased with the company's third quarter performance. Our operating income for the third quarter and first nine months of 2005 improved from year ago levels and our record backlog reflects continued strength in the markets for rotating equipment. He further stated that "Dresser-Rand made significant progress during the quarter by completing its initial public offering, acquiring Tuthill Energy Systems and paying down debt. We believe we're well-positioned to capitalize on the continued strength in the markets we serve."
Sales in the new units segment increased $76.7 million for the three months ended September 30, 2005, compared to the same period in 2004. Continued strength in worldwide demand for rotating equipment contributed to the increase in revenue.
Gross profit increased by $11.0 million for the three months ended September 30, 2005, compared to the same period in 2004. As a percentage of segment revenues, gross profit increased to 13.2% for the period in 2005 from 12.3% for the same period in 2004. The increase in gross profit was primarily due to margins on buyouts and a reduction in costs primarily due to improved direct labor and engineering absorption, no severance costs in 2005 and a reduction in the provisions for obsolete and slow moving inventory.
Operating income increased by $8.0 million for the three months ended September 30, 2005, compared to the same period in 2004. This increase is attributable to the $11.0 million change in gross profit mentioned above reduced by $3.0 million increase in the allocation of selling and administrative expenses to this segment due to the increase in sales.
Bookings for the three months ended September 30, 2005, were $121.3 million, 16% below the bookings for the same period in 2004. However, year to-date bookings are 45% ahead of the same period a year ago. The backlog at September 30, 2005, was $687.3 million, or 64.5% above the $417.8 million backlog at September 30, 2004. This increase is due to continuing strong worldwide demand for rotating equipment and the acquisition of certain assets of Tuthill Energy Systems (TES).
Aftermarket Parts and Services
Sales increased by $15.8 million, or 12%, for the three months ended September 30, 2005 compared to the same period in 2004 primarily from higher parts sales.
Gross profit increased by $8.8 million for the three months ended September 30, 2005 compared to the same period in 2004 as a result of the increases in sales. As a percentage of sales, gross profit increased to 37.6% for the three months ended September 30, 2005 from 35.4% for the same period in 2004 as a result of reduced allocations of costs and expenses due to the stronger growth in new units.
Operating income increased by $8.6 million, or 29.0% for the three months ended September 30, 2005 compared to the same period in 2004. This increase is mainly attributable to the change in gross profit mentioned above.
Bookings for the three months ended September 30, 2005 were $167.6 million, 16% above bookings for the same period in 2004. Backlog at September 30, 2005, was $185.5 million, or 10.2% above the $168.4 million backlog at September 30, 2004.
Liquidity and Capital Resources
As of September 30, 2005, we had a cash balance of $109.5 million and the ability to borrow $178.7 million under the $350 million revolving credit portion of the senior credit facility, as $171.3 million was used for outstanding letters of credit. We believe that our cash flow from operations, available cash and available borrowings under the senior secured revolving credit facility will be adequate to meet our working capital, capital expenditures, debt service and other funding requirements for the next twelve months and our long-term future contractual obligations.
Our capital expenditures have averaged $10.3 million per year over the past three years. Capital expenditures for the nine months ended September 30, 2005 were $10.7 million.
On August 10, 2005, we completed our initial public offering of 31,050,000 shares of our common stock for net proceeds of approximately $609.0 million. On September 12, 2005, we used approximately $55.0 million of the net proceeds to redeem $50.0 million face value of our 7-3/8% senior subordinated notes, and to pay the applicable redemption premium of $3.7 million ($0.05 earnings per share effect) and accrued interest of $1.3 million. A dividend of the remaining net proceeds, excluding certain related costs, was paid to our stockholders, consisting principally of affiliates of First Reserve Corporation.
On September 8, 2005, we acquired from Tuthill Corporation certain assets of its TES division. TES is an international manufacturer of single and multi-stage steam turbines and portable ventilators under the Coppus, Murray and Nadrowski brands complementing our steam turbine business. The current estimated cost of TES is approximately $57.0 million, net of $4.0 million cash acquired, subject to future adjustments for agreement on the final working capital at the closing date and other related matters.
Transition teams are now working to integrate operations. With an installed equipment base estimated at 17,000 units, and sales of $70 million in 2004, the TES operations are expected to add $80 million annually to Dresser-Rand's revenue stream when fully integrated.
Most Popular Articles
From the Career Center
Jobs that may interest you