Cameron's 2009 Revenues Trimmed by 11%
Cameron reported net income of $97.3 million, or $0.41 per diluted share, for the quarter ended December 31, 2009, compared with net income in the prior year's fourth quarter of $146.0 million, or $0.66 per diluted share. The fourth quarter 2009 results include after-tax charges of $31.1 million, or $0.13 per share, comprised of severance-related costs in certain of the Company's businesses and charges associated with the acquisition of NATCO Group Inc., which was closed in mid-November. The fourth quarter 2008 results included a non-cash, after-tax charge of $16.5 million, or $0.08 per diluted share, associated with the termination of the Company's U.S. pension plans. Excluding the above items, the Company's earnings per diluted share were $0.54 for the fourth quarter of 2009, compared with $0.74 for the fourth quarter of 2008.
Revenues down 4% for quarter, 11% for year
Revenues for the fourth quarter of 2009 were $1.46 billion, down four percent from the prior year, but up 19 percent sequentially. Revenues for the year were $5.22 billion, down 11 percent from 2008's record $5.85 billion. Earnings per diluted share for 2009 were $2.11, compared to $2.54 for 2008; excluding unusual items, earnings per diluted share were $2.38 for 2009 and $2.62 for 2008.
Cameron President and Chief Executive Officer Jack B. Moore said that the Company saw, as expected, a decline in margins across several of Cameron's product lines in the quarter and the impact of an increased percentage of revenues associated with subsea projects, which typically carry lower margins than other Cameron businesses. "Our results in the quarter were in-line with our expectations and reflect solid performance by our people, particularly in the execution of project-related business," Moore said." Cameron's full-year results, which surpassed our early 2009 forecasts, reflected the strength and quality of our backlog, significant progress on cost control and a continuing focus on execution of deepwater projects in the subsea and drilling markets."
Orders increase over year-ago quarter; backlog remains above $5 billion at year-end
Orders booked in 2009's fourth quarter totaled $1.37 billion, up from the $1.17 billion of a year ago and up sequentially from the third quarter, as gains in Drilling & Production Systems and Valves & Measurement more than offset slight declines in Compression Systems.
Moore noted that in spite of a difficult market environment, Cameron booked a substantial level of deepwater project business, including the largest subsea tree order ever placed in Brazil and Chevron's high-profile Jack & St. Malo subsea development in the Gulf of Mexico. "These sizable subsea bookings and stabilization in orders in other parts of our business, along with the acquisition of NATCO, have allowed our backlog to increase modestly from mid-year levels," Moore said.
Cash flow remains strong, expected to fund 2010 needs
Moore said that Cameron's cash flow from operations totaled approximately $613 million in 2009, compared with $988 million in 2008. "We spent approximately $241 million in capital expenditures during the year, continuing our focus on lowering costs and improving efficiency," Moore said. He also noted that while the Company was not permitted to make share repurchases until the NATCO acquisition was closed in mid-November, it still purchased nearly 590,000 shares at an average price of approximately $37.65 per share in the fourth quarter alone.
Moore said that he expects cash flow in 2010 to comfortably fund the Company's needs, with capital expenditures anticipated to total approximately $180 million.
2010 earnings expected to be at level similar to 2009; NATCO acquisition to be accretive
Moore said Cameron currently expects its 2010 earnings to be in the range of $2.10 to $2.20 per diluted share, excluding the impact on any charges related to restructuring or integration activities. "We enter 2010 with another solid backlog, more than half of which is Subsea Systems business," Moore said. "As a result, we expect subsea revenues to be up substantially over the year-ago levels, but that project-related business will, as is typical, carry lower margins than most of our other product lines. Meanwhile, we continue to see some pressure on margins in shorter-cycle businesses, but we expect Cameron's overall margins to trough during 2010. Finally, we anticipate the NATCO acquisition will be accretive for the year, excluding integration costs. All of these factors are reflected in our full-year earnings guidance, but are, as always, subject to customer spending levels and our execution on delivering backlog and controlling costs."
Moore also said Cameron's first quarter 2010 earnings are expected to be approximately $0.48 to $0.50 per diluted share, with the actual level dependent on a variety of factors, including those described above.
"Our 2009 performance was impressive, considering that we entered the year with a great deal of concern over the risk of cancellations and uncertainty with regard to customer spending," he noted. "We begin 2010 with few concerns about the quality of our backlog and a sense that our customers' confidence in the security and viability of their spending plans is far greater than a year ago. We expect to maintain our leadership positions in our markets, continue to pursue acquisition opportunities and remain focused on execution and cost control."