Cameron has reported net income of $138.6 million, or $0.62 per diluted share, for the quarter ended June 30, 2009, compared with net income of $148.8 million, or $0.64 per diluted share, for the second quarter of 2008. The second quarter 2009 results include a pretax charge of $10.9 million, or $0.03 per diluted share, for severance-related costs and a gain of $0.05 per diluted share related to certain tax matters. The Company's results for the second quarter and first half of 2008 have been revised to reflect a new accounting standard, which became effective on January 1, 2009, related to convertible debt.
Total revenues were $1,270.0 million for the quarter, down 14 percent from 2008's $1,480.6 million. Earnings before interest, taxes and depreciation, excluding restructuring costs, were $246.4 million, down 4 percent from the $255.5 million of a year ago, while income before income taxes was $173.5 million, down 21 percent from the $218.5 million of a year ago. Cameron President and Chief Executive Officer Jack B. Moore said that the results reflect solid performances in several areas across the Company. "Our people continue to execute and perform well in a difficult market," Moore said. "The Drilling & Production Systems group (DPS), particularly the Drilling Systems business, recorded a highly profitable mix of revenues, including the delivery of certain projects earlier than originally scheduled. Our Valves & Measurement group (V&M) and the Compression Systems group saw revenues decline from year-ago levels, but they also did an admirable job of maintaining margins." Moore noted that Cameron's recent reinvestment in upgrading many of its manufacturing facilities is having a meaningful impact on the Company's financial performance. "Our efforts to improve efficiency, reduce costs and lower cycle times have allowed us to reinforce our position as a low-cost manufacturer in many of our markets," he said. Moore also said that while the Company's effective tax rate was approximately 20 percent for the quarter as a result of the resolution of various tax uncertainties, Cameron expects a 27 percent tax rate for the foreseeable future due to several changes in the Company's overseas tax structure.
Orders decline year-over-year, approximate first quarter levels; backlog still exceeds $5 billion
Total orders for the second quarter of 2009 were $902 million, down from $1.8 billion a year ago. Moore noted that while orders across all business lines are well below year-ago levels, they were down only modestly on a sequential basis. "Factors affecting orders include the lack of large subsea orders in DPS, continued delays in large project orders in V&M and the impact of weak global economies on Compression Systems' centrifugal markets," Moore said. "We expect the second half of the year to be more active in terms of subsea awards, and we hope to see some pickup in orders in certain valve- and compression-related markets." He noted that year-to-date orders totaled approximately $1.9 billion, down from the $3.76 billion of the first half of 2008, and that at June 30, 2009, total backlog was $5.02 billion, down from the first quarter of 2009's $5.27 billion and the June 30, 2008 level of $5.22 billion.
Capital spending on track
Moore said that Cameron spent approximately $108 million in capital expenditures in the first half, including approximately $49 million related to the Malaysian subsea facility expansion and the new Romanian surface equipment plant. "We expect to spend another $46 million on the completion of these two projects," Moore said, "and we anticipate that capital expenditures will total approximately $220 million for the full year 2009."
NATCO transaction awaiting regulatory approval
Cameron has completed the required regulatory filings related to the previously announced proposed acquisition of NATCO Group Inc., including a Registration Statement on Form S-4 and antitrust filings in the applicable jurisdictions. Moore said that the closing date of the acquisition will depend on the timing of the receipt of all necessary regulatory approvals from the agencies involved. He noted that Cameron and NATCO have received a request for additional information from the Department of Justice, and said the companies remain hopeful that the closing could take place by the end of the third quarter or during the fourth quarter.
Balance sheet remains strong
At June 30, 2009, Cameron's cash and cash equivalents of $1.54 billion exceeded its total debt by approximately $106 million. Moore noted that Cameron did not repurchase any shares of its common stock during the second quarter, and that there are restrictions on the Company buying its common shares in the market until the NATCO transaction is closed. "The pending acquisition has not diminished our interest in additional acquisition targets," Moore said, "and we also expect to be back in the market as an opportunistic buyer of our own stock once we are free of the restrictions."
Full-year earnings expectations raised
Moore said that Cameron's third quarter earnings are expected to be in the range of approximately $0.50 to $0.55 per share, and that full-year earnings, excluding severance costs or other charges or gains, are expected to be approximately $2.15 to $2.25 per share, compared with the Company's previous guidance of $1.85 to $2.00 per share for the year. Moore also said that these figures assume no impact from the pending acquisition of NATCO.
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