Cameron 3Q10 Profit Rises 19%
Cameron reported net income of $148.7 million, or $0.61 per diluted share, for the quarter ended September 30, 2010, compared with net income of $124.9 million, or $0.56 per diluted share, for the third quarter of 2009. The current quarter's results include pretax charges of $10.4 million, or $0.03 per share, related to the continued integration of NATCO Group Inc. and litigation costs associated with the Deepwater Horizon matter, while the third quarter 2009 results included a pretax charge of $5.9 million, or $0.02 per share, for severance-related costs.
Total revenues were $1,527.1 million for the quarter, up 24 percent from 2009's $1,231.8 million, while income before income taxes was $185.1 million, up nearly ten percent from the $168.6 million of a year ago. Cameron President and Chief Executive Officer Jack B. Moore said, "While we did see improvement in a number of our businesses, overall margins declined in the third quarter and are expected to trough in the fourth quarter."
Process & Compression Systems segment created
Moore said that Cameron's Process Systems business, previously a unit of the Drilling & Production Systems segment, has been combined with the Compression Systems organization to create Process & Compression Systems. "This move will allow us to realize cost savings and better focus on the markets served by our processing and separation businesses, while continuing to benefit from Cameron's ability to combine product offerings from multiple business lines to offer cooperative services and solutions to our customers," Moore said.
Orders move higher on strength in several product lines
Orders received during the third quarter of 2010 totaled $1.48 billion, representing the Company's highest quarterly total since the third quarter of 2008 and a ten percent increase over the prior year's quarter. "The value of our diverse market exposure is apparent in the current quarter's bookings," Moore said. "While there were no large projects booked during the quarter, several of Cameron's businesses posted solid order levels, including drilling, distributed and engineered valves, centrifugal compression and process systems. We also saw continued strength in drilling aftermarket, where orders exceeded $100 million in the quarter."
Moore said that year-to-date orders totaled $4.08 billion, up from $3.23 billion in the first nine months of 2009. At September 30, 2010, Cameron's backlog was $4.94 billion, up from $4.92 billion at the end of the second quarter and down from the $5.12 billion level of a year ago.
Cash flow strong in quarter, capital spending expectation maintained
Moore said that Cameron's cash flow from operations totaled $94.9 million in the quarter, partially offsetting the cash used in the first half of the year due to builds in working capital. "We expect to generate cash again in the fourth quarter," Moore said, "and comfortably fund our cash needs for the year." He noted that year-to-date capital expenditures totaled $115.0 million, compared with $163.7 million for the same period in 2009, and that the Company still expects capital spending to total approximately $200 million for the year. "With no major expansion projects under way, our focus remains on enhancing our aftermarket reach and capabilities and improving manufacturing efficiencies and cost structure," he said.
With regard to Cameron's balance sheet, Moore said, "At September 30, 2010, our cash and cash equivalents totaled $1.51 billion, exceeding our total debt by approximately $223.1 million. We continue to evaluate acquisition opportunities, and we expect that our liquidity will allow us to take advantage of any opportunities that may develop."
Fourth quarter earnings per share expected to be $0.65 to $0.67
"Cameron's fourth quarter earnings, excluding any charges or gains, are expected to be in the range of approximately $0.65 to $0.67 per share, resulting in full-year earnings of approximately $2.38 to $2.40, excluding charges," Moore said.