LUFKIN, Texas, Feb. 10, 2011 /PRNewswire/ -- Lufkin Industries,
Inc. (Nasdaq: LUFK) today announced financial and operating results
for the fourth quarter and full-year 2010. All per share
numbers have been adjusted to reflect the Company's 2-for-1 stock
dividend, which occurred on June 1,
2010.
Earnings from continuing operations for the fourth quarter of
2010 more than tripled to $14.3
million, or $0.47 per diluted
share, from $4.2 million, or
$0.14 per diluted share, for the
fourth quarter of 2009, excluding the impact of a pre-tax
$1 million, or $0.02 per diluted share provision related to a
class-action lawsuit that was accrued in the 2009 quarter.
Fourth quarter SG&A expenses were impacted by
approximately $4.5 million due to
increased legal expenses, stock option expenses and other
compensation expenses resulting from stronger-than-expected
financial results and better performance of the stock price.
Revenues for the fourth quarter of 2010 increased 53% to
$193.5 million compared to
$126.8 million for the same period a
year ago.
For the full year 2010, excluding a pre-tax $1.0 million, or $0.02 per diluted share legal provision that was
accrued in the third quarter, earnings from continuing operations
were $44.2 million, or $1.46 per diluted share, compared with
$26.3 million, or $0.89 per diluted share, for 2009, excluding the
impact of a pre-tax $6.0 million, or
$0.13 per diluted share pre-tax
litigation charge. Including the impact of litigation charges
in both years, reported earnings from continuing operations for the
full year 2010 were $43.5 million, or
$1.44 per diluted share, compared to
$22.5 million, or $0.76 per diluted share in 2009. Revenues in 2010
increased 24% to $645.6 million,
compared with $521.4 million for
2009.
"We are very encouraged by the continued improvement in the
operating environment and in our financial results," said John F.
"Jay" Glick, president and chief executive officer of Lufkin. "Our expectations for a stronger
second half of 2010 have been fully realized.
"There are clear signs that activity levels are responding to a
stronger and more stable commodity price environment, as evidenced
by our strong revenue performance in the fourth quarter and the
continuing climb in the North American onshore drilling rig
count.
"We are very pleased with the level of domestic bookings during
the fourth quarter in both divisions compared to the fourth quarter
of last year as well as compared sequentially to the third quarter
of 2010. Total Oilfield Division bookings increased 27%
sequentially with strong orders for new units coming from the
Bakken and Niobrara plays in
North Dakota and Wyoming, stronger market penetration in the
Canadian Bakken extension in Saskatchewan and continued business from the
Eagle Ford Shale play and the Permian Basin in Texas.
"Fourth quarter demand was robust in North America for Lufkin pumping units. Units and parts
bookings on our North American factories were up 96% over Q3.
Canadian bookings were up 75% quarter on quarter. This
supports our long held view that demand for our products was
constrained by well completion crews and the improved flow from
more aggressive stimulation techniques that combined to increase
lag time between the oil directed land rig count and demand for our
pumping units. However, the shortage of hydraulic fracturing
resources was alleviated and as the population of stimulated wells
aged, demand for our equipment has ramped-up sharply. This
rate of increase gained momentum late in the quarter. Latin
American bookings were up 32% sequentially, driven by demand for
both pumping units and automation products.
"New order intake in the Power Transmission Division also showed
significant gains over prior quarter, driven by new international
orders from the oil and gas, power generation and petrochemical
sectors. Sequential bookings in Power Transmission were up 36%.
"The backlog in Oilfield increased 203% from last year's fourth
quarter and 25% sequentially. Power Transmission's backlog
increased 6% from a year ago and 2% sequentially. As a result, our
combined order backlog increased 67% from a year ago and 13%
sequentially to $234.6 million.
"The current oil prices are supporting increasing levels of
drilling activity both domestically in the shale plays and in
virtually every international oil province around the globe.
While most of our markets remain competitive, increasing
demand is slowly absorbing available capacity, which is moderating
the competitive price pressure in the market. There are signs
that competitors are discounting in a slightly less aggressive way
and that buyers are placing greater emphasis on equipment
reliability and availability, both strong suits for Lufkin. Additionally, the improved focus
on market opportunities provided by our new regional
organization was instrumental in delivering growth opportunities,
as well as improved customer service during 2010, and will be an
even bigger advantage as the markets expand in 2011," Glick
added.
FOURTH QUARTER RESULTS
Oilfield Division – Oilfield sales for the fourth
quarter of 2010 increased 62% to $144.2
million, from $88.8 million in
the fourth quarter of 2009, and grew 11% from the third quarter of
2010. A year-end increase in spending by both independents
and some majors resulted in an increase in pumping unit sales,
especially in the Permian Basin, and the Niobrara, Bakken and Eagle Ford Shale areas
and in Canada. Oilfield's
new order bookings increased 77% to $170.0
million from a year ago and were up 27% from $133.4 million in the prior quarter. Oilfield's
backlog more than tripled to $131.4
million at the end of the year from $43.3 million a year ago. The increase was mainly
due to increased orders for new pumping units in North America. Gross margin for the
Oilfield Division was 24.1%, versus 24.4% in the third quarter of
2010.
Power Transmission Division –
Revenues from Power Transmission products increased 30% to
$49.3 million from $38 million in the fourth quarter of 2009, and
was up 16% from the third quarter of 2010. Both the sequential and
year-over-year growth in revenues were led by international orders
from the oil and gas, power generation and industrial sectors. New
order bookings in Power Transmission increased 37% from
$37.1 million in last year's fourth
quarter and increased 36% sequentially to $50.9 million. The Power Transmission backlog
grew slightly to $103.1 million at
the end of the fourth quarter, from $97.0
million a year earlier and from $101.6 million at the end of the third quarter of
this year. Gross margin for the Power Transmission Division was
29.5%, versus 27.4% in the third quarter of 2010.
Consolidated – Gross profit margin for the fourth
quarter increased to 25.4% of revenues, compared to 20.8% a year
ago and 25.2% in the third quarter of 2010. The gross profit
margin improvement from both periods reflect higher utilization
rates in the Company's factories and improved leverage on fixed
costs. Operating income more than tripled to $21.5 million in the fourth quarter, compared to
$6.1 million in last year's fourth
quarter, excluding the impact of the litigation reserve.
Selling, general and administrative (SG&A) expenses
increased to $27.7 million in the
fourth quarter compared to $20.3
million in last year's fourth quarter. However, as a
percentage of revenues, SG&A expenses declined to 14.1% in the
latest quarter compared to 16.0% a year ago.
FULL YEAR 2010
Oilfield Division revenues for 2010 increased 37% to
$477.9 million from $349.2 million in 2009 driven by higher levels of
bookings across almost all product lines. Power Transmission
Division revenues for 2010 fell almost 3% to $167.8 million from $172.2
million in 2009. Power Transmission Division
performance was impacted by delays in LNG-related projects as a
result of the uncertain economic environment that was prevalent in
the first half of 2010.
Bookings for both divisions experienced a major turnaround,
especially in the second half of 2010. Oilfield Division bookings
increased 177% to $566 million, while
Power Transmission bookings rose 24% versus 2009 to $173.9 million. Overall bookings for Lufkin more than doubled to $739.9 million and were only 14% below the record
of $860 million in 2008. Demand from
international markets accounted for 39% of total Company bookings
in 2010.
Gross profit margin for the Company in 2010 recovered from the
impact of the 2009 recession and increased to 24.5% compared to
21.7% in 2009, primarily led by the 24% increase in revenues, which
resulted in improved fixed cost leverage.
OUTLOOK
"Improving oil prices along with continued investment in the
shale plays and a strong outlook for the domestic land drilling rig
count for the next two years give us reason to be optimistic,"
Glick said.
"Our fourth quarter Oilfield Division bookings were better than
anticipated, and early 2011 bookings are shaping up to be even
better. Firm orders we received in the first five weeks of
the year give us strong visibility for the first half of 2011. In
addition, several orders are already firming up for delivery during
the third quarter of 2011. We are also seeing increased demand for
larger units as a result of longer lateral wells being drilled.
"In the Power Transmission Division, we are encouraged by
several large oil and gas projects on the horizon that could
provide significant activity in the second half of 2011. This
improved environment is likely to generate additional attractive
market opportunities as we continue to improve our competitive
position through investments in technology, process innovation and
material cost reductions.
"Based on the above industry outlook and our current pipeline of
business, we are providing the following guidance for 2011.
We estimate first quarter revenues to be in the range of
$175 to $190 million and earnings in
the range $0.35 to $0.45 per diluted
share. The main factor behind the width of our first quarter
ranges is the uncertainty associated with the timing of the
revenues from our Egyptian operations. For the full year, we
expect consolidated revenues to range between $800 - $850 million and earnings to be between
$2.50 and $3.00 per diluted share.
These ranges assume very limited pricing improvements," Glick
concluded.
CONFERENCE CALL
Lufkin will discuss its fourth
quarter and year-end financial results in a conference call today
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 Earnings Conference Call
page of Lufkin's corporate website
at www.lufkin.com. A telephonic replay will be available
through February 17, 2011, by dialing
(303) 590-3030 and entering reservation number 4403790#.
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. The Company
does not intend to update these forward-looking statements and
information.
Contact:
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Christopher L. Boone
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Chief Financial
Officer
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936-631-2749
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DRG&L
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Jack Lascar /
713-529-6600
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Anne Pearson /
210-408-6321
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(Tables to
follow)
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|
LUFKIN
INDUSTRIES, INC.
|
|
Financial
Highlights
|
|
(In
thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Sales
|
|
$ 193,536
|
|
$
126,794
|
|
$ 645,643
|
|
$ 521,359
|
|
Cost of sales
|
144,296
|
|
100,361
|
|
487,125
|
|
408,815
|
|
Gross profit
|
49,240
|
|
26,433
|
|
158,518
|
|
112,544
|
|
Selling, general and
administrative
|
|
|
|
|
|
|
|
|
|
Expenses
|
27,704
|
|
20,346
|
|
89,859
|
|
75,120
|
|
Litigation reserve
|
-
|
|
1,000
|
|
1,000
|
|
6,000
|
|
Operating income
|
21,536
|
|
5,087
|
|
67,659
|
|
31,424
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net
|
236
|
|
(99)
|
|
(215)
|
|
1,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
continuing
|
|
|
|
|
|
|
|
|
|
|
operations before income
|
|
|
|
|
|
|
|
|
|
|
tax provision
|
21,771
|
|
4,989
|
|
67,445
|
|
33,012
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
7,472
|
|
1,382
|
|
23,914
|
|
10,533
|
|
|
Earnings from
continuing
|
|
|
|
|
|
|
|
|
|
operations
|
14,299
|
|
3,607
|
|
43,531
|
|
22,479
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
discontinued
|
|
|
|
|
|
|
|
|
|
operations net of tax
|
304
|
|
(48)
|
|
292
|
|
(453)
|
|
|
Net earnings
|
$ 14,603
|
|
$
3,559
|
|
$ 43,823
|
|
$ 22,026
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share:
|
|
|
|
|
|
|
|
|
|
Earnings from
continuing
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
0.47
|
|
$
0.12
|
|
$
1.45
|
|
$
0.76
|
|
|
Earnings from
discontinued
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
0.01
|
|
$
-
|
|
$
0.01
|
|
$
(0.02)
|
|
|
Net earnings
|
$
0.48
|
|
$
0.12
|
|
$
1.46
|
|
$
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
|
|
|
|
|
|
|
|
|
Earnings from
continuing
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
0.47
|
|
$
0.12
|
|
$
1.44
|
|
$
0.76
|
|
|
Earnings from
discontinued
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
0.01
|
|
$
-
|
|
$
0.01
|
|
$
(0.02)
|
|
|
Net earnings
|
$
0.48
|
|
$
0.12
|
|
$
1.45
|
|
$
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share
|
$ 0.125
|
|
$
0.125
|
|
$ 0.500
|
|
$ 0.500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LUFKIN
INDUSTRIES, INC.
|
|
Balance
Sheet Highlights
|
|
(In
thousands)
|
|
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
2010
|
|
2009
|
|
Current assets
|
345,197
|
|
318,632
|
|
Total assets
|
621,078
|
|
541,590
|
|
Current liabilities
|
84,577
|
|
64,888
|
|
Long-term debt
|
-
|
|
1,516
|
|
Shareholders' equity
|
485,960
|
|
435,678
|
|
Working capital
|
260,620
|
|
253,744
|
|
|
|
|
|
|
|
LUFKIN
INDUSTRIES, INC.
|
|
Division
Performance
|
|
(In
thousands)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Oilfield
|
|
|
$ 144,196
|
|
$ 88,760
|
|
$ 477,868
|
|
$ 349,168
|
|
|
Power Transmission
|
|
49,340
|
|
38,034
|
|
167,776
|
|
172,191
|
|
|
Total
|
|
|
$ 193,536
|
|
$ 126,794
|
|
$ 645,644
|
|
$ 521,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec.
31,
|
|
Sept.
30,
|
|
Dec.
31,
|
|
|
|
|
|
|
|
2010
|
|
2010
|
|
2009
|
|
Backlog:
|
|
|
|
|
|
|
|
|
|
|
|
|
Oilfield
|
|
|
|
|
$ 131,423
|
|
$ 105,576
|
|
$ 43,282
|
|
|
Power Transmission
|
|
|
|
103,127
|
|
101,564
|
|
96,960
|
|
|
Total
|
|
|
|
|
$ 234,550
|
|
$ 207,140
|
|
$ 140,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LUFKIN
INDUSTRIES, INC.
|
|
Reconciliation of Net Income
under U.S. GAAP to Adjusted Net Earnings
|
|
(In
thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Earnings from
continuing
|
|
|
|
|
|
|
|
|
|
operations
|
$ 14,299
|
|
$ 3,607
|
|
$ 43,531
|
|
$ 22,479
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Litigation reserve, net of tax
|
-
|
|
640
|
|
640
|
|
3,840
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings
from
|
|
|
|
|
|
|
|
|
|
continuing operations
|
$ 14,299
|
|
$ 4,247
|
|
$ 44,171
|
|
$ 26,319
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
|
|
|
|
|
|
|
|
|
Earnings from
continuing
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
0.47
|
|
$ 0.12
|
|
$
1.44
|
|
$ 0.76
|
|
|
Plus: Litigation
reserve
|
$
-
|
|
$ 0.02
|
|
$
0.02
|
|
$ 0.13
|
|
|
Adjusted net earnings
|
$
0.47
|
|
$ 0.14
|
|
$
1.46
|
|
$ 0.89
|
|
|
|
|
|
|
|
|
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|
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SOURCE Lufkin Industries, Inc.