Cameron Q4 Revs Jump 25%, Orders and Backlog Reach New Highs
Cameron reported net income of $125.9 million, or $0.54 per diluted share, for the quarter ended December 31, 2007, compared with net income in the prior year's fourth quarter of $96.5 million, or $0.42 per diluted share. The fourth quarter 2007 results include a non-cash, after-tax charge of $22.1 million, or $0.10 per share, associated with the previously announced termination of the Company's U.S. pension plans, as well as a reduction in income tax expense of $7.1 million, or $0.03 per share, related to certain tax gains. (Per share data for all prior periods have been revised to reflect a 2-for-1 stock split effective December 28, 2007.) The fourth quarter 2006 results included after-tax charges totaling $10.5 million, or $0.05 per diluted share, related to the integration of the Dresser acquisition and a settlement of a class action lawsuit. Excluding the above items, the Company's earnings were $0.61 per diluted share for the fourth quarter of 2007, up from $0.47 per diluted share for the fourth quarter of 2006.
Revenues for the fourth quarter of 2007 were $1.34 billion, up 25 percent from the fourth quarter of 2006's $1.08 billion as all three business segments posted increases from year-ago levels. Revenues for the year were a record $4.67 billion, up 25 percent from 2006's $3.74 billion with increases in all three segments. Net income per diluted share for 2007 was $2.16 compared to $1.36 per diluted share for 2006; excluding unusual items, earnings per diluted share were $2.11 for the full year 2007 and $1.49 for 2006.
Cameron Chairman and Chief Executive Officer Sheldon R. Erikson said that the Company's results reflect solid performances across all its businesses in generating record earnings and continued strength in orders in several of Cameron's product lines.
Orders booked during the fourth quarter of 2007 were a record $1.49 billion, up more than 20 percent from a year ago, as the Drilling & Production Systems group (DPS) posted its first billion-dollar orders quarter, and Compression Systems continued to report positive year-over-year comparisons. Valves & Measurement's (V&M) fourth quarter orders were lower than a year ago, due to fewer project orders in the engineered valves and process valves businesses.
Orders for full-year 2007 were a record $5.38 billion, up six percent from 2006's $5.07 billion. Erikson said that both DPS ($3.42 billion) and V&M ($1.32 billion) again posted record orders, and Compression Systems' orders increased for the fifth consecutive year. "The growth in our consolidated orders again confirms the value of Cameron's diversified product offerings," Erikson said. "Softer markets for certain product lines were more than offset by gains in orders for others during the year, pushing our year-end backlog to another record high."
Total backlog at year-end was $4.27 billion, 21 percent above the $3.53 billion of a year ago, as both DPS and V&M reached the highest levels in their history. Erikson noted that 2007 marked the eighth consecutive year that Cameron's total year-end backlog has increased.
Erikson said that Cameron's cash flow from operations totaled nearly $452 million during 2007, compared with almost $547 million in 2006, and the Company's reinvestment in its business continues to be the highest priority. "We spent approximately $246 million during 2007 in capital expenditures, with the vast majority of that directed toward enhancing capacity and efficiency," Erikson said, "and we repurchased 10.7 million shares of our common stock at an average price of approximately $31.85 per share." He noted that the share repurchase numbers are adjusted to reflect the 2-for-1 split.
Erikson said that he expects cash flow in 2008 to once again allow the Company to internally fund its capital budgets, acquisitions and share repurchases. "We currently estimate that capital expenditures will total approximately $250 to $270 million this year, including approximately $40 million related to the new surface manufacturing facility in Romania," he said. "We will also continue to consider suitable acquisition opportunities and repurchases of our own stock."
Erikson said Cameron currently expects its 2008 earnings to be in the range of $2.45 to $2.55 per diluted share, excluding any charges related to the ongoing pension plan termination. "Our initial assessment of our internal forecasts confirms that execution on another record backlog will be the primary factor in meeting our 2008 goals," Erikson said. "Our recent investments in machine tool upgrades, productivity improvements and new facilities should support a healthy increase in revenues and earnings this year." Erikson noted that the Company's full-year results will depend on overall activity in the energy markets, the spending levels of Cameron's customers and the Company's continued success in controlling and reducing its operating costs. He also said that the remaining charges associated with the termination of the U.S. pension plans will be recognized in late 2008 or early 2009, depending on the timing of the final regulatory approval of the termination. Erikson also said that while the Company had previously expected to incur $10 to $15 million of cash costs related to the termination, it now appears that there will be no cash required to complete the process.
Erikson said Cameron's first quarter 2008 earnings per diluted share are expected to be approximately $0.50 to $0.53. "This guidance reflects the visibility of certain near-term business, our plans for delivery of projects currently in process, and our expectations for customer spending in the oil and gas markets," he said.
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