Cameron reported net income of $126.3 million, or $0.55 per diluted share, for the quarter ended March 31, 2008, compared with net income of $101.0 million, or $0.44 per diluted share, for the first quarter of 2007.
Revenues up 34 percent from year ago
Revenues were $1,339.3 million for the quarter, up 34 percent from 2007's $997.0 million, and income before income taxes was $185.8 million, up nearly 20 percent from $155.4 million a year ago. Cameron President and Chief Executive Officer Jack B. Moore said that the year-over-year change in revenues was driven by significant increases in both the drilling and subsea product lines in the Drilling & Production Systems (DPS) group, as well as a solid performance from Compression Systems (CS). He noted that revenues for the Valves & Measurement (V&M) group also increased over year-ago levels, though not at the same pace as the other businesses.
"Our first quarter revenue growth was fueled by drilling systems, subsea systems and engineered valves," Moore said. "While the margins on project-related businesses like these may not be as high as those of our traditional product and aftermarket businesses, we continue to see solid growth in our overall earnings. We expect to see margin improvement, particularly in the second half of the year, as the recent additions to orders and backlog are converted into revenues."
Subsea and surface bookings drive record orders, backlog
Total orders were $1.95 billion for the quarter, exceeding revenues for the fourteenth consecutive time, and establishing another new record for orders in a single quarter. Orders were up 56 percent from a year ago and more than 30 percent from the fourth quarter of 2007, which was the previous record quarter. "While the Total Usan booking pushed the subsea orders to record levels, we also posted the highest level of surface equipment orders in our history," Moore said. "In addition, our V&M group's orders reached a new high in the quarter, and Compression Systems posted the second highest orders quarter in its history. We expect total orders in 2008 to exceed the 2007 level by approximately 20 percent, driven by solid activity across our business lines."
As a result, the Company's backlog increased from $4.27 billion at year-end 2007 to $4.90 billion, another new record, as of the end of the first quarter. This represents an increase of 30 percent from the March 31, 2007 level of $3.77 billion.
Operating cash flow up from prior year's first quarter
Cameron's cash flow from operations was $44.3 million during the first quarter of 2008, up from $36.8 million a year ago. Moore said there was a sequential decline in cash flow from the fourth quarter of 2007, but noted that it reflects the typical seasonality of Cameron's business and working capital builds in support of the Company's growth. He also noted that Cameron expects its capital spending during 2008 to be $250 to $270 million, and that the Company will continue to consider additional acquisitions and further repurchases of the Company's stock.
Share buybacks continue; credit facility capacity increased
Cameron's total debt, net of cash and short-term investments, at March 31, 2008 was $179.1 million, up from approximately $14.0 million at December 31, 2007, and the Company's net debt-to-capitalization ratio at the quarter's end was approximately 7.6 percent. Moore said that Cameron repurchased approximately 2.2 million shares of its common stock during the quarter at an average price of about $46.61 per share. He also noted that in February, the Company's board of directors authorized an additional 10 million shares under Cameron's ongoing share repurchase plan; as a result, approximately 12.2 million shares remained under the authorization as of March 31, 2008.
Moore said that in April, Cameron replaced its existing revolving credit facility with a new facility that runs through April 2013 and increased its borrowing capacity from $350 million to $585 million. The added capacity is intended for general corporate purposes and gives the Company additional flexibility to act on any acquisition or other investment opportunities that may arise.
Full-year earnings guidance raised
Moore said that second quarter earnings are expected to be in the range of $0.60 to $0.62 per share, and that the Company now expects earnings per share for 2008 to be in the $2.50 to $2.60 range, up from the earlier guidance of $2.45 to $2.55. The updated full-year guidance reflects a combination of the recent strength in orders, expectations of customers' spending and Cameron's ability to execute on the projects and orders in current backlog.
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