Oilfield equipment maker Cameron today reported record quarterly and yearly revenues. Orders booked in the fourth quarter of 2013 totaled $3.3 billion
Cameron reported earnings per share for the fourth quarter of 2013 of$1.00, excluding charges. This compares to earnings per share for the fourth quarter of 2012 of $0.95, excluding charges. After-tax charges for the fourth quarter of 2013 were $0.05 per share, primarily related to integration and restructuring costs. After-tax charges for the fourth quarter 2012 were $0.07 per share.
The Company reported GAAP net income of $243.1 million for the fourth quarter of 2013, or $0.95 per diluted share. This represents an increase of 11 percent from $218.3 million, or $0.88 per diluted share in GAAP net income for the fourth quarter of 2012.
For the full year 2013, the Company reported diluted earnings per share of $3.30 excluding charges and the tax consequences of the formation of OneSubsea. This compares to diluted earnings per share, excluding charges, of $3.13 in 2012.
For the full year 2013, the Company reported GAAP net income of $724.2 million, or $2.87 per diluted share, compared to GAAP net income of $750.5 million, or $3.02 per diluted share in 2012.
Chairman, President and CEO Jack Moore Reiterates Strategic Priorities
Jack Moore, Chairman, President and Chief Executive Officer of Cameron noted, “In 2013, we made significant progress against our plan to leverage the record-breaking sales and order momentum in our core markets, expand our product and service offerings in strategic growth areas, optimize our operations and drive increasing shareholder value. We achieved a number of key strategic milestones including the recently announced sale of our Reciprocating Compression Division and intention to explore alternatives for our Centrifugal Compression Division. We continue to address our capacity and cost challenges in Drilling Systems, which is attributable to record backlog levels. Despite the operational headwind in our Drilling business, we believe that our fundamental growth drivers remain intact. In addition, we added a number of industry experts to our leadership team in 2013, strengthening our operational focus that remains dedicated to execution and the disciplined management of our cost structure. Furthermore, we executed a record amount of share repurchases.”
Moore further commented, “Going forward, we will focus on improving our return on invested capital by strengthening margins and maintaining capital discipline. We will make prudent investments in technology, such as with OneSubsea, in order to provide transformational solutions to our customers. We remain committed to invest in maximizing the potential of our core businesses and achieving strong aftermarket growth which will allow us to deliver additional value for our shareholders.”
Record Revenues Up Sequentially and Year-over-Year
Cameron generated record revenues of $2.9 billion for the quarter, up 21 percent from $2.4 billion a year ago and 18 percent from$2.5 billion in the third quarter of 2013. The Company experienced record revenues in its Drilling, Surface Systems and OneSubsea businesses.
Record revenues for the year of $9.8 billion exceeded 2012 revenues of $8.5 billion by 16%.
In addition to record revenue performance, the Company saw sequential margin expansion in all of its businesses during the fourth quarter, other than the drilling business. Management remains committed to expanding its margins during 2014.
Strong Fourth Quarter Orders; Record Orders and Backlog for the Year
Orders booked in the fourth quarter of 2013 totaled $3.3 billion. Drilling Systems saw its second highest order quarter in history as customer demand for drilling equipment and aftermarket services remained strong. Surface Systems had a record quarter in North America, following two earlier record quarters in North America in 2013. The Process business in PCS had a record orders quarter driven by a $250 million CO2 separation order in Malaysia.
For the year, the Company saw record orders of $12.4 billion, up over 13 percent from 2012. The Drilling and Production Systems group experienced a record order year, up 18 percent from 2012, driven by record orders in Surface Systems and OneSubsea.
Company backlog ended at a record $11.5 billion up 34 percent from 2012 and up 93 percent from the end of 2011.
Strong Cash Flow from Operations Support Disciplined Capital Investments
Cameron’s cash flow from operations totaled $632 million in the fourth quarter and $838 million for the year.
Cameron recorded $520 million in capital expenditures during the year, focused on expanding its Drilling Systems capacity needs, additions to the Surface Systems infrastructure and its overall aftermarket growth. The Company expects 2014 capital expenditures to be between $425 and $450 million.
Repurchases Shares at Record Levels
The Company repurchased a record 27 million shares in 2013 at a cost of $1.5 billion, resulting in an ending diluted share count of 223 million. Cameron increased share authorizations by $1.9 billion in 2013 and an authorization of $843 million remained at the end of 2013. In addition, the Company issued $750 million of unsecured senior notes in the fourth quarter to help fund the share repurchase. The Company plans to continue to be an aggressive repurchaser of its stock when market conditions favor this strategy.
Announces Sale of Reciprocating Compression Business to GE and Intention to Explore Strategic Alternatives for the Remainder of Compression Systems Business
On January 20, 2014, the Company announced an agreement to sell its Reciprocating Compression Division to GE for approximately $550 million subject to closing adjustments. The Company expects to complete the sale in the third quarter of 2014. Cameron also announced its intention to evaluate strategic alternatives for its Centrifugal Compression business, as part of its ongoing effort to optimize the Company’s asset base with a focus on its core markets. Management expects to apply net proceeds from the sale of the Reciprocating Compression Division, estimated at $400 million net of tax, to the share repurchase program under the current authorization.
2014 Earnings Expected to Reach $3.60 to $4.00 Per Share
Beginning in the first quarter of 2014, the Company’s Reciprocating Compression business will be reported as discontinued operations. With this exclusion noted, Cameron currently expects its 2014 earnings from continuing operations to be in the range of $3.60 to $4.00 per diluted share, excluding charges. First quarter 2014 earnings from continuing operations, excluding charges and Reciprocating Compression, are expected to reflect the typical seasonal decline from the fourth quarter and are forecasted to be approximately $0.70 to $0.75 per diluted share.
Cameron is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries.