Attached files
| file | filename |
|---|---|
| 8-K - CAMERON INTERNATIONAL CORP 8-K 10-23-2014 - CAMERON INTERNATIONAL CORP | form8k.htm |
Exhibit 99.1
2014-14
Contacts: Jeff Altamari
(713) 513-3344
Scott Lamb
(713) 513-3309
CAMERON ANNOUNCES RESULTS FOR THIRD QUARTER OF 2014
| · | Record-level quarterly earnings per share |
| · | 18.1% EBITDA margin in Drilling & Production Systems |
| · | Q4 2014 earnings-per-share-guidance updated to reflect agreement to sell the Company’s Centrifugal Compression business |
HOUSTON, October 23, 2014 -- Cameron (NYSE: CAM) today reported a record-level of fully diluted quarterly earnings per share from continuing operations, excluding unusual items, of $1.17 for the third quarter of 2014, compared to $0.75 for the same period of 2013.
The unusual items for the third quarter of 2014 were costs of $19 million, or $0.07 per fully diluted share, related primarily to the disposal of non-core assets; the unusual items for the third quarter of 2013 were costs of $14 million, or $0.03 per fully diluted share, related primarily to the integration of OneSubsea and certain other acquisitions.
On a GAAP basis, the Company’s fully diluted earnings per share from continuing operations were $1.10 for the third quarter of 2014, as compared to $0.72 for the third quarter of 2013.
In comparing the third quarter of 2014 to the year-ago quarter, Chairman and Chief Executive Officer Jack B. Moore, said, “The primary driver of improved results was the strong operating performance of our Drilling & Production Systems (DPS) business group, which reported a 140-basis point increase in its EBITDA margin and a 21% increase in its quarterly revenue to a new record of $1.98 billion. We believe DPS has made tremendous progress in re-establishing operating excellence after the production delays in the drilling business experienced in late 2013.”
Moore added, “We continue to focus on incremental margin expansion, continuous improvement in execution and cost reduction.”
Orders and Backlog Strong
The Company reported a book-to-bill ratio of nearly 1:1 in the third quarter of 2014, with new orders of approximately $2.6 billion and revenues of approximately $2.7 billion. As a result, backlog of $10.6 billion was relatively flat on a sequential-quarter basis, and was also little changed from the third quarter of 2013. Moore did note that “New orders in our Surface business were up more than 35% versus the year-ago quarter – and our OneSubsea joint venture reported its strongest booking quarter of the year, due in part to the recently announced Pemex contract. Moreover, earlier this month, OneSubsea signed a 10-year global frame agreement with BG Group to supply subsea production equipment and aftermarket services.”
Healthy Cash Flow from Operations Support Disciplined Capital Investments
Cameron's cash flow from operations totaled $216 million in the third quarter, net of a $95 million tax payment related to the sale of the Reciprocating Compression business, and $255 million for the first nine months of 2014.
Cameron invested $80 million in capital expenditures during the third quarter, focused on Surface Systems and aftermarket growth opportunities. The Company expects full-year 2014 capital expenditures to total approximately $425 million.
Share Repurchase Activity Continued
The Company continued to repurchase its shares, investing $351 million to acquire 4.9 million shares during the quarter. Year-to-date, the Company has invested $1.6 billion to repurchase 24.6 million shares. This follows a record-level of share acquisition in 2013, when the Company repurchased 27 million shares. Fully diluted shares outstanding at the end of the third quarter were approximately 200 million. During the third quarter of 2014, the Company’s board of directors approved an increase in the share buyback authorization to $1 billion. As of the end of the third quarter, $665 million was remaining under that authorization.
Earnings Guidance
“We expect that Cameron’s earnings will reach a record level in 2014,” said Moore. “The Company has demonstrated sequential-quarter improvement in earnings over the course of 2014, and we believe that trend will continue in the fourth quarter, with the expectation that earnings per share from continuing operations excluding unusual items will be in a range of $1.18 to $1.23. This updated guidance reflects agreement to sell the Company’s Centrifugal Compression business.”
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 fourth quarter and full year 2014, as well as expectations regarding incremental margin expansion, improved execution, cost reduction and expected 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.
2
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.
3
Cameron
Unaudited Consolidated Condensed Results of Operations
($ and shares in millions except per share data)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
|||||||||||||
|
Revenues:
|
||||||||||||||||
|
Drilling & Production Systems
|
$
|
1,975
|
$
|
1,637
|
$
|
5,583
|
$
|
4,344
|
||||||||
|
Valves & Measurement
|
552
|
502
|
1,580
|
1,558
|
||||||||||||
|
Process & Compression Systems
|
151
|
178
|
414
|
505
|
||||||||||||
|
Total revenues
|
2,678
|
2,317
|
7,577
|
6,407
|
||||||||||||
|
Costs and Expenses:
|
||||||||||||||||
|
Cost of sales (exclusive of depreciation and amortization shown separately below)
|
1,915
|
1,649
|
5,456
|
4,547
|
||||||||||||
|
Selling and administrative expenses
|
320
|
325
|
970
|
920
|
||||||||||||
|
Depreciation and amortization
|
83
|
79
|
256
|
211
|
||||||||||||
|
Interest, net
|
36
|
23
|
98
|
74
|
||||||||||||
|
Other costs
|
19
|
14
|
62
|
80
|
||||||||||||
|
Total costs and expenses
|
2,373
|
2,090
|
6,842
|
5,832
|
||||||||||||
|
Income from continuing operations before income taxes
|
305
|
227
|
735
|
575
|
||||||||||||
|
Income tax provision
|
(70
|
)
|
(49
|
)
|
(179
|
)
|
(136
|
)
|
||||||||
|
Income from continuing operations
|
235
|
178
|
556
|
439
|
||||||||||||
|
Income from discontinued operations, net of income taxes
|
3
|
14
|
31
|
42
|
||||||||||||
|
Net income
|
238
|
192
|
587
|
481
|
||||||||||||
|
Less: Net income attributable to noncontrolling interests
|
13
|
3
|
29
|
3
|
||||||||||||
|
Net income attributable to Cameron stockholders
|
$
|
225
|
$
|
189
|
$
|
558
|
$
|
478
|
||||||||
|
Amounts attributable to Cameron stockholders:
|
||||||||||||||||
|
Income from continuing operations
|
$
|
222
|
$
|
175
|
$
|
527
|
$
|
436
|
||||||||
|
Income from discontinued operations
|
3
|
14
|
31
|
42
|
||||||||||||
|
Net income attributable to Cameron stockholders
|
$
|
225
|
$
|
189
|
$
|
558
|
$
|
478
|
||||||||
|
Earnings per common share attributable to Cameron stockholders:
|
||||||||||||||||
|
Basic-
|
||||||||||||||||
|
Continuing operations
|
$
|
1.11
|
$
|
.72
|
$
|
2.55
|
$
|
1.78
|
||||||||
|
Discontinued operations
|
.01
|
.06
|
.15
|
.17
|
||||||||||||
|
Basic earnings per share
|
$
|
1.12
|
$
|
.78
|
$
|
2.70
|
$
|
1.95
|
||||||||
|
Diluted-
|
||||||||||||||||
|
Continuing operations
|
$
|
1.10
|
$
|
.72
|
$
|
2.53
|
$
|
1.77
|
||||||||
|
Discontinued operations
|
.01
|
.06
|
.15
|
.17
|
||||||||||||
|
Diluted earnings per share
|
$
|
1.11
|
$
|
.78
|
$
|
2.68
|
$
|
1.94
|
||||||||
|
Shares used in computing earnings per common share:
|
||||||||||||||||
|
Basic
|
201
|
243
|
207
|
246
|
||||||||||||
|
Diluted
|
203
|
244
|
208
|
247
|
||||||||||||
|
EBITDA, excluding other costs :
|
||||||||||||||||
|
Drilling & Production Systems
|
$
|
357
|
$
|
273
|
$
|
910
|
$
|
711
|
||||||||
|
Valves & Measurement
|
115
|
108
|
340
|
349
|
||||||||||||
|
Process & Compression Systems(1)
|
15
|
18
|
26
|
32
|
||||||||||||
|
Corporate and other(2)
|
(44
|
)
|
(56
|
)
|
(125
|
)
|
(152
|
)
|
||||||||
|
Total
|
$
|
443
|
$
|
343
|
$
|
1,151
|
$
|
940
|
||||||||
|
(1)
|
Excludes discontinued operations
|
| (2) | Corporate EBITDA amounts exclude $19 million and $14 million of other costs for the three-month periods ended September 30, 2014 and 2013; and $62 million and $80 million for the nine month periods ended September 30, 2014 and 2013. |
4
Cameron
Consolidated Condensed Balance Sheets
($ millions)
|
September 30,
2014
|
December 31,
2013
|
|||||||
|
(unaudited)
|
||||||||
|
Assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
1,058
|
$
|
1,813
|
||||
|
Short-term investments
|
115
|
41
|
||||||
|
Receivables, net
|
2,580
|
2,719
|
||||||
|
Inventories, net
|
3,130
|
3,133
|
||||||
|
Other current assets
|
378
|
463
|
||||||
|
Assets from discontinued operations
|
235
|
-
|
||||||
|
Total current assets
|
7,496
|
8,169
|
||||||
|
Plant and equipment, net
|
1,941
|
2,037
|
||||||
|
Goodwill
|
2,607
|
2,925
|
||||||
|
Intangibles, net
|
817
|
904
|
||||||
|
Other assets
|
228
|
214
|
||||||
|
Total Assets
|
$
|
13,089
|
$
|
14,249
|
||||
|
Liabilities and Stockholders’ Equity:
|
||||||||
|
Short-term debt
|
$
|
403
|
$
|
297
|
||||
|
Accounts payable and accrued liabilities
|
3,456
|
3,883
|
||||||
|
Accrued income taxes
|
97
|
80
|
||||||
|
Liabilities from discontinued operations
|
107
|
-
|
||||||
|
Total current liabilities
|
4,063
|
4,260
|
||||||
|
Long-term debt
|
2,809
|
2,563
|
||||||
|
Deferred income taxes
|
199
|
277
|
||||||
|
Other long-term liabilities
|
222
|
233
|
||||||
|
Total liabilities
|
7,293
|
7,333
|
||||||
|
Stockholders’ Equity:
|
||||||||
|
Common stock, par value $.01 per share, 400,000,000 shares authorized, 263,111,472 shares issued at September 30, 2014 and December 31, 2013
|
3
|
3
|
||||||
|
Capital in excess of par value
|
3,244
|
3,207
|
||||||
|
Retained earnings
|
5,378
|
4,820
|
||||||
|
Accumulated other elements of comprehensive income (loss)
|
(232
|
)
|
(80
|
)
|
||||
|
Less: Treasury stock, 64,808,073 shares at September 30, 2014 (41,683,164 shares at December 31, 2013)
|
(3,608
|
)
|
(2,098
|
)
|
||||
|
Total Cameron stockholders’ equity
|
4,785
|
5,852
|
||||||
|
Noncontrolling interests
|
1,011
|
1,064
|
||||||
|
Total equity
|
5,796
|
6,916
|
||||||
|
Total Liabilities and Stockholders’ Equity
|
$
|
13,089
|
$
|
14,249
|
||||
5
Cameron
Unaudited Consolidated Condensed Statements of Cash Flows
($ millions)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
|||||||||||||
|
Cash flows from operating activities:
|
||||||||||||||||
|
Net income
|
$
|
238
|
$
|
192
|
$
|
587
|
$
|
481
|
||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
|
Gain on sale of Reciprocating Compression business
|
–
|
–
|
(95
|
)
|
–
|
|||||||||||
|
Depreciation
|
74
|
62
|
217
|
177
|
||||||||||||
|
Amortization
|
11
|
22
|
49
|
46
|
||||||||||||
|
Non-cash stock compensation expense
|
13
|
13
|
43
|
41
|
||||||||||||
|
Gain from remeasurement of prior interest in equity method investment
|
–
|
–
|
(8
|
)
|
–
|
|||||||||||
|
Deferred income taxes and tax benefit of employee stock compensation plan transactions transactions
|
(74
|
)
|
19
|
(57
|
)
|
30
|
||||||||||
|
Changes in assets and liabilities, net of translation, acquisitions and non-cash items:
|
||||||||||||||||
|
Receivables
|
(69
|
)
|
(162
|
)
|
42
|
(233
|
)
|
|||||||||
|
Inventories
|
(55
|
)
|
(110
|
)
|
(283
|
)
|
(450
|
)
|
||||||||
|
Accounts payable and accrued liabilities
|
152
|
211
|
(291
|
)
|
219
|
|||||||||||
|
Other assets and liabilities, net
|
(74
|
)
|
(48
|
)
|
51
|
(105
|
)
|
|||||||||
|
Net cash provided by operating activities
|
216
|
199
|
255
|
206
|
||||||||||||
|
Cash flows from investing activities:
|
||||||||||||||||
|
Proceeds from sales and maturities of short-term investments
|
18
|
259
|
41
|
888
|
||||||||||||
|
Purchases of short-term investments
|
(78
|
)
|
(447
|
)
|
(115
|
)
|
(869
|
)
|
||||||||
|
Capital expenditures
|
(80
|
)
|
(123
|
)
|
(259
|
)
|
(306
|
)
|
||||||||
|
Proceeds received from sale of Reciprocating Compression business, net
|
–
|
–
|
547
|
–
|
||||||||||||
|
Other dispositions (acquisitions), net
|
10
|
(20
|
)
|
(7
|
)
|
(11
|
)
|
|||||||||
|
Proceeds received and cash acquired from formation of OneSubsea
|
–
|
–
|
–
|
603
|
||||||||||||
|
Proceeds from sales of plant and equipment
|
1
|
3
|
11
|
8
|
||||||||||||
|
Net cash provided by (used for) investing activities
|
(129
|
)
|
(328
|
)
|
218
|
313
|
||||||||||
|
Cash flows from financing activities:
|
||||||||||||||||
|
Issuance of senior notes
|
–
|
–
|
500
|
–
|
||||||||||||
|
Debt issuance costs
|
–
|
–
|
(4
|
)
|
–
|
|||||||||||
|
Early retirement of senior notes
|
(253
|
)
|
–
|
(253
|
)
|
–
|
||||||||||
|
Short-term loan borrowings (repayments), net
|
94
|
32
|
104
|
41
|
||||||||||||
|
Purchase of treasury stock
|
(351
|
)
|
(433
|
)
|
(1,556
|
)
|
(558
|
)
|
||||||||
|
Contributions from noncontrolling interest owners
|
–
|
62
|
–
|
62
|
||||||||||||
|
Distribution to noncontrolling interest owners
|
(40
|
)
|
–
|
(40
|
)
|
–
|
||||||||||
|
Purchases of noncontrolling ownership interests
|
–
|
(7
|
)
|
–
|
(7
|
)
|
||||||||||
|
Proceeds from stock option exercises, net of tax payments from stock compensation plan transactions
|
14
|
1
|
39
|
30
|
||||||||||||
|
Excess tax benefits from employee stock compensation plan transactions
|
1
|
1
|
6
|
9
|
||||||||||||
|
Principal payments on capital leases
|
(6
|
)
|
(3
|
)
|
(15
|
)
|
(13
|
)
|
||||||||
|
Net cash used for financing activities
|
(541
|
)
|
(347
|
)
|
(1,219
|
)
|
(436
|
)
|
||||||||
|
Effect of translation on cash
|
(13
|
)
|
15
|
(9
|
)
|
(12
|
)
|
|||||||||
|
Increase (decrease) in cash and cash equivalents
|
(467
|
)
|
(461
|
)
|
(755
|
)
|
71
|
|||||||||
|
Cash and cash equivalents, beginning of period
|
1,525
|
1,718
|
1,813
|
1,186
|
||||||||||||
|
Cash and cash equivalents, end of period
|
$
|
1,058
|
$
|
1,257
|
$
|
1,058
|
$
|
1,257
|
||||||||
6
Cameron
Orders and Backlog
($ millions)
Orders(1)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
|||||||||||||
|
Drilling & Production Systems
|
$
|
1,874
|
$
|
2,205
|
$
|
5,323
|
$
|
6,451
|
||||||||
|
Valves & Measurement
|
529
|
497
|
1,582
|
1,560
|
||||||||||||
|
Process & Compression Systems
|
178
|
206
|
465
|
533
|
||||||||||||
|
Total
|
$
|
2,581
|
$
|
2,908
|
$
|
7,370
|
$
|
8,544
|
||||||||
Backlog(1)
|
September 30,
2014
|
December 31,
2013
|
September 30,
2013
|
||||||||||
|
Drilling & Production Systems
|
$
|
8,996
|
$
|
9,451
|
$
|
9,162
|
||||||
|
Valves & Measurement
|
954
|
1,017
|
1,058
|
|||||||||
|
Process & Compression Systems
|
634
|
611
|
499
|
|||||||||
|
Total
|
$
|
10,584
|
$
|
11,079
|
$
|
10,719
|
||||||
|
(1)
|
Excludes discontinued operations
|
7
Cameron
Reconciliation of GAAP to Non-GAAP Financial Information
($ millions)
|
Three Months Ended September 30, 2014
|
||||||||||||||||||||
|
Drilling &
Production
Systems
|
Valves &
Measurement
|
Process &
Compression
Systems(1)
|
Corporate
|
Total
|
||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
$
|
295
|
$
|
103
|
$
|
9
|
$
|
(102
|
)
|
$
|
305
|
|||||||||
|
Depreciation & amortization
|
62
|
12
|
6
|
3
|
83
|
|||||||||||||||
|
Interest, net
|
-
|
-
|
-
|
36
|
36
|
|||||||||||||||
|
Other costs
|
-
|
-
|
-
|
19
|
19
|
|||||||||||||||
|
EBITDA, excluding other costs
|
$
|
357
|
$
|
115
|
$
|
15
|
$
|
(44
|
)
|
$
|
443
|
|||||||||
|
Three Months Ended September 30, 2013
|
||||||||||||||||||||
|
Drilling &
Production
Systems
|
Valves &
Measurement
|
Process &
Compression
Systems(1)
|
Corporate
|
Total
|
||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
$
|
216
|
$
|
98
|
$
|
13
|
$
|
(100
|
)
|
$
|
227
|
|||||||||
|
Depreciation & amortization
|
57
|
10
|
5
|
7
|
79
|
|||||||||||||||
|
Interest, net
|
–
|
–
|
–
|
23
|
23
|
|||||||||||||||
|
Other costs
|
–
|
–
|
–
|
14
|
14
|
|||||||||||||||
|
EBITDA, excluding other costs
|
$
|
273
|
$
|
108
|
$
|
18
|
$
|
(56
|
)
|
$
|
343
|
|||||||||
|
(1)
|
Excludes discontinued operations
|
8
Cameron
Reconciliation of GAAP to Non-GAAP Financial Information
($ millions)
|
Nine Months Ended September 30, 2014
|
||||||||||||||||||||
|
Drilling &
Production
Systems
|
Valves &
Measurement
|
Process &
Compression
Systems(1)
|
Corporate
|
Total
|
||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
$
|
713
|
$
|
304
|
$
|
9
|
$
|
(291
|
)
|
$
|
735
|
|||||||||
|
Depreciation & amortization
|
197
|
36
|
17
|
6
|
256
|
|||||||||||||||
|
Interest, net
|
–
|
–
|
–
|
98
|
98
|
|||||||||||||||
|
Other costs
|
–
|
–
|
–
|
62
|
62
|
|||||||||||||||
|
EBITDA, excluding other costs
|
$
|
910
|
$
|
340
|
$
|
26
|
$
|
(125
|
)
|
$
|
1,151
|
|||||||||
|
Nine Months Ended September 30, 2013
|
||||||||||||||||||||
|
Drilling &
Production
Systems
|
Valves &
Measurement
|
Process &
Compression
Systems(1)
|
Corporate
|
Total
|
||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
$
|
566
|
$
|
320
|
$
|
18
|
$
|
(329
|
)
|
$
|
575
|
|||||||||
|
Depreciation & amortization
|
145
|
29
|
14
|
23
|
211
|
|||||||||||||||
|
Interest, net
|
–
|
–
|
–
|
74
|
74
|
|||||||||||||||
|
Other costs
|
–
|
–
|
–
|
80
|
80
|
|||||||||||||||
|
EBITDA, excluding other costs
|
$
|
711
|
$
|
349
|
$
|
32
|
$
|
(152
|
)
|
$
|
940
|
|||||||||
|
(1)
|
Excludes discontinued operations
|
9
Cameron
Reconciliation of GAAP to Non-GAAP Financial Information
($ millions, except per share amounts)
|
Three Months Ended
September 30, 2014
|
||||||||
|
After Tax(1)
|
Diluted EPS(2)
|
|||||||
|
Income from continuing operations
|
$
|
235
|
||||||
|
Less: Net income attributable to noncontrolling interests
|
13
|
|||||||
|
Net income attributable to Cameron from continuing operations
|
222
|
$
|
1.10
|
|||||
|
Adjustments:
|
||||||||
|
Loss on disposal of non-core assets
|
8
|
|||||||
|
Cost for early retirement of debt
|
2
|
|||||||
|
Mark-to-market impact on currency derivatives not designated as accounting hedges
|
3
|
|||||||
|
Severance, restructuring and other costs
|
2
|
|||||||
|
Net income attributable to Cameron excluding charges
|
$
|
237
|
$
|
1.17
|
||||
|
(1)
|
Individual adjustment assumes a 23.0% effective tax rate
|
|
(2)
|
Based on 203 million diluted shares
|
|
Three Months Ended
September 30, 2013
|
||||||||
|
After Tax (1)
|
Diluted EPS (2)
|
|||||||
|
Income from continuing operations
|
$
|
178
|
||||||
|
Less: Net income attributable to noncontrolling interests
|
3
|
|||||||
|
Net income attributable to Cameron from continuing operations
|
175
|
$
|
0.72
|
|||||
|
Adjustments:
|
||||||||
|
OneSubsea formation and other acquisition integration costs
|
6
|
|||||||
|
Mark-to-market impact on currency derivatives not designated as accounting hedges
|
1
|
|||||||
|
Severance, restructuring and other costs
|
2
|
|||||||
|
Net income attributable to Cameron excluding charges
|
||||||||
|
$
|
184
|
$
|
0.75
|
|||||
|
(1)
|
Individual adjustments assume a 21.6% effective tax rate
|
|
(2)
|
Based on 244 million diluted shares
|
10