Cameron Reports 2Q Earnings for 2010
Cameron reported net income of $129.2 million, or $0.52 per diluted share, for the quarter ended June 30, 2010, compared with net income of $138.6 million, or $0.62 per diluted share, for the second quarter of 2009. The second quarter 2010 results include pretax charges of $18.4 million, or $0.06 per diluted share, related to the continued integration of the NATCO Group Inc. acquisition, as well as severance-related costs and costs associated with investigations and litigation related to the Deepwater Horizon matter. The second quarter 2009 results included 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.
Total revenues were $1,452.7 million for the quarter, up 14 percent from 2009's $1,270.0 million. Earnings before interest, taxes and depreciation (EBITDA), excluding charges, were $263.0 million, up seven percent from the $246.4 million of a year ago, while income before income taxes was $172.3 million, down slightly from the $173.5 million of a year ago. Cameron President and Chief Executive Officer Jack B. Moore said that the gains in revenues and EBITDA reflect an exceptional focus on execution by the Company's employees across numerous businesses in the wake of the Deepwater Horizon tragedy. "Revenues increased in Drilling & Production Systems (DPS) and Valves & Measurement (V&M) both year-over-year and sequentially," Moore said, "while the Compression Systems group saw revenues decline from year-ago levels due to continuing softness in their industrial markets worldwide." Moore noted that the year-over-year gains in DPS revenues reflect the 2009 acquisition of NATCO and increased subsea systems deliveries. With regard to margins, Moore said, "We expected to see a decline in the overall EBITDA margins for DPS as subsea deliveries became a larger component of the revenue mix, but solid performances across the drilling, surface and process systems businesses more than offset this impact, driving a sequential increase in margins. We do still expect some moderation in margins as we work through our subsea backlog, and this has been incorporated into our guidance."
Orders increase 54 percent over prior year, backlog declines modestly
Total orders for the second quarter of 2010 were $1.39 billion, up from $902 million a year ago. Moore noted that increases in DPS' drilling business and in V&M were the primary drivers, with surface and process systems also posting solid gains. "North American markets continued to be strong during the quarter," Moore said, "including the booking of a sizable surface production equipment order in the Gulf of Mexico for the Davy Jones development, as well as the initial order of a Cameron 20,000-psi BOP, for use on a jackup rig." He noted that year-to-date orders totaled approximately $2.60 billion, up from the $1.89 billion of the first half of 2009, and that at June 30, 2010, total backlog was $4.92 billion, down modestly from the first quarter of 2010's $4.98 billion.
Capital reinvestment continues, balance sheet remains strong
Cameron's operations utilized cash totaling $155.4 million in the first six months of 2010, reflecting an ongoing build in working capital as project-related activity, particularly in subsea systems, continued to ramp up. Moore also noted that Cameron spent approximately $68 million in capital expenditures in the first half. "We now expect capital spending to total approximately $200 million for 2010," Moore said, "as we continue to focus on investments in our aftermarket facilities and efficiency gains."
At June 30, 2010, Cameron's cash and cash equivalents of $1.43 billion exceeded its total debt by approximately $158 million. Moore said that year-to-date, Cameron has repurchased approximately 3.2 million shares of its common stock at a total cost of nearly $124 million.
Full-year earnings expectations raised
Moore said that Cameron's third quarter earnings are expected to be in the range of approximately $0.58 to $0.60 per share, and that full-year earnings, excluding charges, are expected to be approximately $2.30 to $2.35 per share, compared with the Company's previous guidance of $2.20 to $2.30 per share.
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