Cameron Announces First Quarter Earnings - First quarter earnings per share of $0.75, excluding charges and discontinued operations

- Record first quarter revenues

- 15.2 million shares repurchased during quarter

- Full year earnings guidance raised

HOUSTON, April 24, 2014 /PRNewswire/ -- Cameron (NYSE: CAM) reported earnings per share for the first quarter of 2014 of $0.75 excluding charges and discontinued operations. This compares to earnings per share for the first quarter of 2013 of $0.69 excluding charges. After-tax charges for the first quarter of 2014 were $0.21 per share primarily related to the write-off of non-tax deductible goodwill associated with the planned sale of the reciprocating compression business. Discontinued operations were a $0.03 loss.

The Company reported GAAP earnings per diluted share from continuing operations of $0.54 for the first quarter of 2014, compared to $0.59 for the first quarter of 2013.

Year-over-year revenues increase

Revenues were a first quarter record of $2.4 billion, up 18 percent from $2.1 billion a year ago. Cameron Chairman, President and Chief Executive Officer Jack B. Moore said that the year-over-year revenue increase was due to gains in the Drilling and Production Systems group. Further, Moore commented, "Year over year revenue gains were reflected in our Drilling Systems, Surface Systems and OneSubsea businesses, a result of record backlogs established in 2013. We were pleased with our overall DPS and Valves & Measurement margins for the quarter and we continue to make progress in improving execution in our drilling business."

Orders and backlog strong

Total orders for the quarter were $2.5 billion. While orders were down sequentially and year-over-year, they represented the second best first quarter results in the Company's history. "Orders for the first quarter were driven by our drilling, surface and V&M businesses", Moore said, "With a more robust outlook for North America and several deepwater projects expected to move forward, we believe our orders could exceed 2013's record level."

Cameron's backlog at the end of the first quarter was $11.3 billion, down slightly from its historical high of $11.4 billion at the end of 2013. The ending first quarter backlog reflects the cancellation of the STX deep-water rig order during the quarter. First quarter backlog is up 13% from prior year levels.

Share repurchase activity continued; repurchase authorization increased; additional borrowing

The Company continued to actively repurchase its shares during the quarter. Following a record year in 2013, when 27 million shares were repurchased for $1.5 billion, an additional 15.2 million shares were repurchased during the first quarter for $926 million. Cameron increased its borrowing by $330 million during the quarter to help support its share repurchase activities. Also, during the quarter an additional $500 million of share repurchases were authorized by the Board of Directors. The quarter ended with an outstanding authorization of $420 million.

Continued disciplined capital investments

The Company recorded $105 million in capital expenditures in the first quarter, primarily in Surface Systems and OneSubsea. Full year capital expenditures are expected to be between $450 and $500 million, focused on Surface Systems, OneSubsea and Drilling Systems infrastructure. The Company continues to see capital investment opportunities in its core businesses.

Full year earnings guidance revised

Beginning in the first quarter of 2014, the Company's Reciprocating Compression business is being reported as discontinued operations. With this exclusion noted, Cameron currently expects second quarter earnings from continuing operations to be in the range of $0.84 to $0.89 per diluted share excluding charges, and expects full-year 2014 earnings from continuing operations to be in the range of $3.80 to $4.10 per share excluding charges.

Cameron (NYSE: CAM) is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries.

Website: www.c-a-m.com

In addition to the historical data contained herein, this document includes forward-looking statements regarding anticipated earnings of the Company, including those of OneSubsea, for the second quarter and full year 2014, as well as expectations regarding improved execution in its drilling business, orders and capital spending, made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.             

The Company's actual results may differ materially from those described in forward-looking statements.  Such statements are based on current expectations of the Company's performance and are subject to a variety of factors, some of which are not under the control of the Company, which can affect the Company's results of operations, liquidity or financial condition.  Such factors may include overall demand for, and pricing of, the Company's products, particularly as affected by North American activity; the size and timing of orders; the Company's ability to successfully execute the large subsea and drilling systems projects it has been awarded; the possibility of cancellations of orders; the Company's ability to convert backlog into revenues on a timely and profitable basis; the impact of acquisitions the Company has made or may make; changes in the price of (and demand for) oil and gas in both domestic and international markets; raw material costs and availability; political and social issues affecting the countries in which the Company does business; fluctuations in currency markets worldwide; and variations in global economic activity.  In particular, current and projected oil and gas prices historically have generally directly affected customers' spending levels and their related purchases of the Company's products and services.  Additionally, changes in oil and gas price expectations may impact the Company's financial results due to changes it may make in its cost structure, staffing or spending levels.

Because the information herein is based solely on data currently available, it is subject to change as a result of changes in conditions over which the Company has no control or influence, and should not therefore be viewed as assurance regarding the Company's future performance.  Additionally, the Company is not obligated to make public indication of such changes unless required under applicable disclosure rules and regulations.

 

 


Cameron

Unaudited Consolidated Condensed Results of Operations

($ and shares in millions except per share data)



Three Months Ended

March 31,


2014

2013

Revenues:



Drilling & Production Systems

$      1,705.1

$      1,269.0

Valves & Measurement

492.3

521.5

Process & Compression Systems

234.1

270.4

Total revenues

2,431.5

2,060.9




Costs and Expenses:



Cost of sales (exclusive of depreciation and amortization shown separately below)

1,765.1

1,453.0

Selling and administrative expenses

328.3

303.3

Depreciation and amortization

86.8

67.3

Interest, net

32.1

25.8

Other costs

49.0

31.0

Total costs and expenses

2,261.3

1,880.4




Income from continuing operations before income taxes

170.2

180.5

Income tax provision

(48.5)

(34.1)

Income from continuing operations

121.7

146.4

Income (loss) from discontinued operations, net of income taxes

(5.6)

1.9

Net income

116.1

148.3

Net income attributable to noncontrolling interests

5.0

Net income attributable to Cameron stockholders

$         111.1

$         148.3




Amounts attributable to Cameron stockholders:



    Income from continuing operations

$         116.7

$         146.4

    Income (loss) from discontinued operations

(5.6)

1.9

        Net income attributable to Cameron stockholders

$         111.1

$         148.3




Earnings (loss) per common share attributable to Cameron stockholders:



    Basic



        Continuing operations

$           0.54

$           0.59

        Discontinued operations

(0.03)

0.01

            Earnings per share attributable to Cameron stockholders

$           0.51

$           0.60




    Diluted



        Continuing operations

$           0.54

$           0.59

        Discontinued operations

(0.03)

0.01

            Earnings per share attributable to Cameron stockholders

$        0.51

$           0.60




Shares used in computing earnings per common share:



Basic

214.9

247.5

Diluted

216.2

249.0




EBITDA, excluding other costs:



Drilling & Production Systems

$      249.3

$         198.1

Valves & Measurement

106.0

123.3

Process & Compression Systems(1)

22.9

25.7

Corporate and other(2)

(40.1)

(42.5)

Total

$      338.1

$        304.6



1

Excludes discontinued operations.

2

Corporate EBITDA amounts exclude $49.0 million and $31.0 million of other costs during the three months ended March 31, 2014 and 2013, respectively.

 

 


Cameron

Consolidated Condensed Balance Sheets

($ millions)



March 31,

2014

December 31,

2013


(unaudited)


Assets:



Cash and cash equivalents

$          972.1

$         1,812.9

Short-term investments

41.0

41.0

Receivables, net

2,668.5

2,719.1

Inventories, net

3,193.0

3,132.4

Other

448.1

463.2

Assets of discontinued operations

483.0

Total current assets

7,805.7

8,168.6

Plant and equipment, net

1,995.3

2,036.9

Goodwill

2,693.2

2,924.8

Intangibles, net

892.0

903.7

Other assets

254.3

214.5

Total Assets

$     13,640.5

$       14,248.5




Liabilities and Stockholders' Equity:



Short-term debt

$          626.7

$             297.0

Accounts payable and accrued liabilities

3,633.9

3,883.4

Accrued income taxes

87.8

80.1

Liabilities of discontinued operations

60.7

Total current liabilities

4,409.1

4,260.5




Long-term debt

2,563.1

2,562.8

Deferred income taxes

273.5

276.8

Other long-term liabilities

239.0

233.0

Total liabilities

7,484.7

7,333.1




Stockholders' Equity:



Common stock, par value $.01 per share, 400,000,000  shares authorized,  263,111,472 shares issued at March 31, 2014 and December 31, 2013

2.6

2.6

Capital in excess of par value

3,207.5

3,206.9

Retained earnings

4,931.0

4,819.9

Accumulated other elements of comprehensive income (loss)

(69.1)

(79.5)

Less:  Treasury stock 56,109,636 shares at March 31, 2014 (41,683,164 shares at December 31, 2013)

(2,999.5)

(2,098.0)

Total Cameron stockholders' equity

5,072.5

5,851.9

Noncontrolling interests

1,083.3

1,063.5

    Total equity

6,155.8

6,915.4




Total Liabilities and Stockholders' Equity

$     13,640.5

$       14,248.5

 

 


Cameron

Unaudited Consolidated Condensed Statements of Cash Flows

($ millions)



Three Months Ended

March 31,


2014

2013

Cash flows from operating activities:



Net income

$       116.1

$       148.3

Adjustments to reconcile net income to net cash used for operating activities:



Depreciation

67.8

56.1

Amortization

19.0

13.9

Non-cash stock compensation expense

14.0

13.4

Deferred income taxes and tax benefit of stock compensation plan transactions

(16.5)

14.0

Changes in assets and liabilities, net of translation and non-cash items:



Receivables

(60.3)

165.2

Inventories

(174.7)

(215.5)

Accounts payable and accrued liabilities

(213.3)

(204.5)

Other assets and liabilities, net

73.4

(13.6)

Net cash used for operating activities

(174.5)

(22.7)




Cash flows from investing activities:



Proceeds from sales and maturities of short-term investments

5.0

275.2

Purchases of short-term investments

(5.0)

(286.9)

Capital expenditures

(104.8)

(83.7)

Proceeds from sales of plant and equipment

6.3

3.0

Net cash used for investing activities

(98.5)

(92.4)




Cash flows from financing activities:



Short-term loan borrowings (repayments), net

330.1

36.9

Purchase of treasury stock

(902.0)

(32.1)

Proceeds from stock option exercises, net of tax payments from stock compensation plan transactions

 

9.0

 

22.2

Excess tax benefits from stock compensation plan transactions

2.0

5.6

Principal payments on capital leases

(2.8)

(2.7)

Net cash provided by (used for) financing activities

(563.7)

29.9




Effect of translation on cash

(4.1)

(18.2)




Decrease in cash and cash equivalents

(840.8)

(103.4)




Cash and cash equivalents, beginning of period

1,812.9

1,185.8




Cash and cash equivalents, end of period

$       972.1

$   1,082.4

 

Cameron

Orders and Backlog

($ millions)



Three Months Ended

March 31,

Orders(1)

2014

2013




Drilling & Production Systems

$       1,758.9

$       2,743.0

Valves & Measurement

536.4

538.5

Process & Compression Systems

186.6

268.0

Total

$       2,481.9

$       3,549.5









Backlog(1)

March 31,

2014

December 31,
2013

March 31,

2013





Drilling & Production Systems

$  9,321.2

$       9,451.4

$  7,970.7

Valves & Measurement

1,057.2

1,017.4

1,083.5

Process & Compression Systems

890.7

941.5

864.6

Total

$      11,269.1

$     11,410.3

$  9,918.8



(1)

Excludes discontinued operations

 

 


Cameron

Reconciliation of GAAP to Non-GAAP Financial Information

($ millions)



Three Months Ended March 31, 2014


Drilling &

Production

Systems

Valves &
Measurement

  Process &

Compression

   Systems(1)

Corporate

Total







Income (loss) from continuing operations before income taxes

 

$      183.0

$       94.1

$        15.5

$     (122.4)

$      170.2

Depreciation & amortization

66.3

11.9

7.4

1.2

86.8

Interest, net

32.1

32.1

Other costs

49.0

49.0







EBITDA, excluding other costs

$      249.3

$     106.0

$        22.9

$       (40.1)

$      338.1








Three Months Ended March 31, 2013


    Drilling &

   Production

Systems

     Valves &
Measurement

  Process &

Compression

Systems(1)

Corporate

Total







Income (loss) from continuing operations before income taxes

 

$      154.4

$     113.4

$        19.6

$     (106.9)

$      180.5

Depreciation & amortization

43.7

9.9

6.1

7.6

67.3

Interest, net

25.8

25.8

Other costs

31.0

31.0







EBITDA, excluding other costs

$      198.1

$     123.3

$        25.7

   $       (42.5)

$      304.6



(1)

Excludes discontinued operations

 

 

Cameron

Reconciliation of GAAP to Non-GAAP Financial Information

($ millions, except per share amounts)



Three Months Ended March 31, 2014


After Tax

Diluted EPS(4)




Income from continuing operations

$       121.7


Less:  Net income attributable to noncontrolling interests

(5.0)


Net income attributable to Cameron from continuing operations

116.7

$           0.54

Adjustments:



    Impairment of goodwill(1)

39.9


    Acquisition and other integration costs(2)

0.6


    Severance, restructuring and other costs(3)

5.3


Net income attributable to Cameron excluding charges

$      162.5

$           0.75



(1)     Adjustment is non-deductible for tax purposes

(2)     Individual adjustment assumes a 22.5% effective tax rate

(3)     Individual adjustment assumes a 23.0% effective tax rate

(4)     Based on 216.2 million diluted shares






Three Months Ended March 31, 2013


After Tax(1)

Diluted EPS(2)




Income from continuing operations

$     146.4

$           0.59

Adjustments:



Acquisition and other integration costs

14.9


Devaluation of Venezuelan bolivar

6.0


Mark-to-market impact on currency derivatives not designated as accounting hedges

2.2


Severance, litigation, and other restructuring costs

1.9


Net income excluding charges

$     171.4

$           0.69




(1)     Individual adjustments assume an 18.9% effective tax rate

(2)     Based on 249.0 million diluted shares




SOURCE Cameron



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