Cameron's Q1 Profit Surges
Cameron reported net income of $101.0 million, or $0.88 per diluted share, for the quarter ended March 31, 2007, compared with net income of $56.0 million, or $0.47 per diluted share, for the first quarter of 2006. The first quarter 2006 results included after-tax acquisition integration charges of approximately $6.5 million, or $0.05 per diluted share.
Revenues up 20 percent from year ago, income before taxes up 80 percent
Revenues were $997.0 million for the quarter, up 20 percent from 2006's $829.7 million, and income before income taxes was $155.4 million, up 80 percent from $86.2 million a year ago. Cameron Chairman and Chief Executive Officer Sheldon R. Erikson said that the year-over-year increase in revenues was driven by gains across the business lines in the Drilling & Production Systems (DPS) group, particularly in drilling, which nearly doubled from a year ago. Revenues for both the Valves & Measurement (V&M) group and the Compression Systems (CS) division were essentially even with the first quarter of 2006. The significant increase in income before income taxes in the quarter was driven by incremental revenues at DPS, as well as margin expansion across all of the product lines in the V&M group.
Orders exceed revenues for tenth consecutive quarter
Total orders were $1.25 billion for the quarter and were greater than revenues for the tenth consecutive quarter, dating back to the fourth quarter of 2004. Orders were down from the first quarter of a year ago, due primarily to a decline in orders in the drilling segment of the DPS group. "The first quarter of 2006 was the highest single orders quarter in our history, with record bookings in the drilling business and in DPS in total," Erikson said. "While we have probably seen the peak in equipment orders related to deepwater rig construction, 2007's orders in the drilling business will likely be exceeded only by the record levels of 2006." Erikson also noted that DPS's surface business posted the highest level of orders in its history, and that the Company expects 2007 to be an active year for subsea orders. V&M's orders were very near the record levels they posted in 2006's first quarter, in spite of relative weakness in certain Canadian markets, and Compression Systems set a new record for orders.
As a result of the continued strong orders, the Company's backlog increased from $3.53 billion at year-end 2006 to nearly $3.77 billion, another new record, as of the end of the first quarter. This represents an increase of more than 40 percent from the March 31, 2006 level of $2.69 billion.
Quarter's operating cash flow reflects inventory needs related to expected sales growth
Cameron's cash flow from operations was $36.8 million during the first quarter. Erikson said the sequential drop in cash flow from the levels of 2006's fourth quarter reflects a decline in cash advances related to new rig construction orders and an increase in inventories to support Cameron's anticipated sales growth. He noted that he expects the Company to internally fund its cash needs for the year, including the increased level of capital spending, as well as any acquisitions or stock repurchases.
Share buybacks continue, senior notes retired after quarter's end
Cameron's total debt, net of cash and short-term investments, at March 31, 2007 was $113.1 million, up from Cameron's net cash position of approximately $81 million at December 31, 2006. The Company's net debt-to-capitalization ratio at the quarter's end was approximately 6.2 percent. Erikson said that Cameron repurchased approximately 2.8 million shares of its common stock during the quarter at an average price of $53.68 per share; he also noted that as of April 16, the Company used approximately $200.0 million of cash to retire its 2.65% Senior Notes due 2007.
Full-year earnings guidance raised
Erikson said that second quarter earnings are expected to be in the range of $0.90 to $0.95 per share, and that the Company now expects earnings per share for 2007 to be in the $3.85 to $4.00 range, up from the earlier guidance of $3.65 to $3.85. The updated full-year guidance is based, in part, on the Company's expectation that energy markets will continue to be relatively healthy, and is dependent on Cameron's ability to execute on the projects and orders in current backlog.
Cameron is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries.
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