Lufkin Industries Reports Preliminary Third Quarter 2011 Financial Results

LUFKIN, Texas, Oct. 5, 2011 /PRNewswire/ -- Lufkin Industries, Inc. (NASDAQ: LUFK) today announced preliminary unaudited financial results for the third quarter of 2011.

Based on preliminary financial data, the company expects to report revenue in the range of $225 million and $235 million for the third quarter of 2011, compared to previous guidance of $230 million to $250 million, and earnings per diluted share of between $0.55 and $0.60, compared to the range of $0.72 to $0.82 that was projected on July 20.  Reported net earnings for the third quarter are expected to be additionally impacted by acquisition-related expenses for the purchases of Quinn Oilfield Supply and Pentagon Optimization Services in September.

Third quarter results were negatively affected by several factors, including:  1) materials shortages in our U.S. factories that resulted in poor material flow, reduced capacity utilization and lower revenues in our Oilfield Division; 2) continued labor unrest in Argentina that impacted shipments during the quarter; 3) manufacturing inefficiencies in our Power Transmission Division; 4) unscheduled machine down time that affected both our Oilfield and Power Transmission divisions; 5) customer-driven shipment delays; and 6) the non-cash impact of higher-than-expected LIFO expenses.  

"We are disappointed by our preliminary third quarter results, but we have aggressively worked to address those issues that are within our control," said John F. "Jay" Glick, president and chief executive officer of Lufkin.  "We remain optimistic in the medium to long-term prospects for continued oil and gas industry development, but the uncertain global economic environment and resulting volatility in oil prices is causing us to be more cautious in our outlook for the fourth quarter and the first part of 2012.  

"We currently expect a sequential improvement in our fourth quarter financial and operating results driven by higher capacity utilization at our facilities.  We have largely addressed the materials supply challenges we faced in the third quarter, and we expect machine reliability to improve significantly, as many of the reliability issues we confronted were caused by record high temperatures in Texas throughout the quarter, which have now subsided. In Power Transmission, first article testing is behind us on several of the projects that were delayed in the third quarter, and the new emphasis on manufacturing performance should positively affect results for the remainder of the year.

"As a result, we now estimate fourth quarter revenues to be in the range of $240 million to $260 million and earnings to be between $0.70 and $0.80 per diluted share.  

"Despite the fact that the pace of productivity growth has been slower than we would have liked, we remain encouraged by the fundamentals that underpin the demand for our products in North America and targeted international markets well into the future," Glick concluded.

CONFERENCE CALL

Lufkin will release its third quarter 2011 financial results before the market opens on Wednesday, October 19.  In conjunction with the release, Lufkin has scheduled a conference call that will be broadcast live over the Internet the same day starting at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).  To listen to the call, dial (480) 629-9771 and ask for the Lufkin Industries call at least 10 minutes prior to the start of the call.  The conference call will also be broadcast live via the Internet and can be accessed through the Investor Relations page of Lufkin's corporate website at www.lufkin.com.  A telephonic replay will be available through November 3, 2011, by dialing (303) 590-3030 and entering reservation number 4473678#.

ABOUT LUFKIN

Lufkin Industries, Inc. sells and services oilfield pumping units, foundry castings and power transmission products throughout the world.  The Company has vertically integrated all vital technologies required to design, manufacture and market its products.

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements and information that are based on management's beliefs as well as assumptions made by and information currently available to management.  When used in this release, the words "anticipate," "believe," "estimate," "expect" and similar expressions are intended to identify forward-looking statements.  Such statements reflect the Company's current views with respect to certain events and are subject to certain assumptions, risks and uncertainties, many of which are outside the control of the Company.  These risks and uncertainties include, but are not limited to, (i) oil prices, (ii) capital spending levels of oil producers, (iii) availability and prices for raw materials and (iv) general industry and economic conditions.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.  

LUFK-IR

SOURCE Lufkin Industries, Inc.