LUFKIN, Texas, May 7, 2012 /PRNewswire/ -- Lufkin
Industries, Inc. (NASDAQ: LUFK) today announced financial and
operating results for the first quarter of 2012.
Net earnings from continuing operations for the first quarter of
2012 decreased to $10.9 million, or
$0.34 per diluted share, from
$12.4 million, or $0.40 per diluted share for the first quarter of
2011. Excluding the $0.22 per
diluted share impact of expenses related to recent acquisitions,
adjusted earnings from continuing operations for the first quarter
of 2011 increased 32% to $17.9
million, or $0.56 per diluted
share. First quarter 2011 adjusted net earnings from
continuing operations totaled $13.6
million, or $0.44 per
share.
Revenues for the first quarter of 2012 increased 44% to
$279.5 million compared to
$194.4 million for the first quarter
of 2011, and were flat versus the fourth quarter of 2011.
"Robust market conditions, supply chain improvements and
increased efficiencies at our U.S. manufacturing facilities,
combined with contributions from our recently acquired businesses
all added to a strong start to 2012," said John F. "Jay" Glick,
president and chief executive officer of Lufkin.
"We are clearly benefitting from the U.S. shift toward oil
exploration and production. We also continue to benefit from
strong demand for our artificial lift products, particularly in
North America. As a result, the Company was able to deliver
first quarter results that were above the mid-point of our
February 2012 earnings per share
guidance of $0.50 to $0.60.
"Total Oilfield Division bookings increased 39% versus the first
quarter of last year and 28% sequentially, driven by strong orders
for new pumping units and automation products in North America as well as a full quarter's
contribution from our acquisition of Quinn's. North American
unconventional oil plays continue to drive the growth.
International markets are showing signs of strength in North Africa, the Arab Gulf, and in
Latin America.
"First quarter bookings in the Power Transmission Division
decreased 6% from a year ago but increased 32% sequentially.
France had a particularly strong quarter for new
bookings. The bulk of our new orders were driven by demand
for high-speed gear drives for the oil and gas, power generation,
petrochemical and refining industries.
"Our combined order backlog increased 9% from a year ago and
increased 21% sequentially to $327.6
million. The backlog in Oilfield increased 16% from
last year's first quarter and 26% sequentially. Power
Transmission's backlog decreased 2% from a year ago and increased
12% sequentially.
"We began to more fully see the impact of our 2011 acquisitions
during the first quarter. We had a full-quarter benefit from
Quinn's, which has exceeded our expectations due to strong demand
for downhole rod pumps in North America. We also closed three
additional acquisitions during the quarter --Datac, RealFlex and
Zenith -- and all three of those businesses are performing well out
of the gate. While the weak natural gas environment has
negatively impacted the plunger lift market, the well optimization
business at Pentagon remains busy."
FIRST QUARTER RESULTS
Oilfield Division – Oilfield sales for the first
quarter of 2012 increased 54% to $236.0
million from $153.7million in
the first quarter of 2011 and grew 7% from the fourth quarter of
2011. The sequential increase was driven by Quinn's, which
contributed $43.3 million in
revenue. Oilfield revenue remains strong, especially in the
Permian, Bakken and Eagle Ford plays in North America.
Automation revenues were up 13% over the prior year period, but
down 4% sequentially from a very strong fourth quarter.
Oilfield's new order bookings increased 39% to $278.9 million from a year ago and were up 28%
from $217.9 million in the prior
quarter. Oilfield's backlog increased 16% to $207.1 million at the end of the first quarter
from $178.9 million a year earlier,
and was up 26% sequentially. The increase was mainly due to
increased orders for new pumping units in North America, particularly in the Bakken and
Eagle Ford shales, the Permian basin and California. Momentum
is also picking up in most of our international markets with the
exception of Argentina, which we
are monitoring closely, but, at this time, believe will continue to
grow at the pace we had projected for 2012. Gross margin for
the Oilfield Division was about flat at 23.8% compared to 24.0% in
the fourth quarter of 2011. The slight decline was primarily
from product mix changes and higher non-cash intangible
amortization associated with the recent acquisitions.
Power Transmission Division –
Revenues from Power Transmission Division products and services
increased 7% to $43.5 million from
$40.7 million in the first quarter of
2011 and were down 26% versus the fourth quarter of 2011 as clients
delayed delivery into the second quarter of several high margin
orders totaling approximately $4
million. Activity in this division was driven by both
upstream and downstream oil and gas projects. Our
manufacturing performance also continued to improve during the
quarter.
New order bookings of $56.7
million in Power Transmission decreased 6% from $60.3 million in the first quarter of 2011 and
increased 32% sequentially. The Power Transmission backlog
declined 2% to $120.5 million at the
end of the first quarter, from $122.8
million a year earlier, but it was up 12% sequentially as
our customers reload for 2012 projects. Gross margin for the
Power Transmission Division was 26.0%, compared to 28.5% in the
fourth quarter of 2011. Gross margins were lower than
forecast primarily due to the delayed shipments mentioned
above.
Consolidated – Gross profit margin for the first
quarter was 24.2% of revenues, compared to 24.3% a year ago and
24.9% in the fourth quarter of 2011. Sequentially, the slight
margin decline was the result of the delayed delivery of several
high-speed projects in Power Transmission and the mix impact of
increased Oilfield revenues.
Before special items, operating income increased almost 47% to
$31.3 million in the first quarter,
compared to $21.3 million in the
prior year's first quarter. Selling, general and administrative
(SG&A) expenses increased to $36.2
million in the first quarter compared to $25.9 million in last year's first quarter.
As a percentage of revenues, however, SG&A expenses
declined to 13.0% in the latest quarter compared to 13.3% a year
ago.
OUTLOOK
"The current oil price environment and oil rig count continue to
support strong levels of drilling activity, both domestically in
the shale plays, as well as in virtually every international oil
province around the globe," Glick said.
"The shift in drilling activity towards oil and away from
natural gas is a trend that benefits Lufkin Industries and will
continue to drive demand for our oilfield products. In
addition, the shortage of hydraulic fracturing capacity that
limited the pace of well completions has been all but eliminated as
a constraint on oilfield services growth. We are starting to
see a return to a stronger correlation between rig count and the
volume of new orders for artificial lift equipment. Low gas
prices are also helping the refining and petrochemical industries
with lower feedstock and fuel costs, which in turn, is driving
investment in new capacity and debottlenecking operations
downstream and generating demand for gears and bearings made by the
Power Transmission Division.
"While most of our markets remain competitive, pricing pressure
is abating, somewhat. Current levels of demand have absorbed
capacity for artificial lift products and prices are
responding. Our clients are increasingly placing greater
emphasis on equipment quality, reliability and availability, which
is typically a positive development for our products and
services.
"Internally, the improvements in our supply chain, together with
reductions in rework and scrap, have resulted in improved
manufacturing performance. While we still have work to do,
these improvements have demonstrated our ability to increase output
to meet ever higher levels of demand. Our two business units
are laser-focused on design and productivity improvements, and as a
result of these efforts and of the impact of the recent price
increases, we expect to see an improvement in operating margins as
2012 unfolds. We believe our productive capacity is adequate
to meet current market demand and we expect that our Romanian
facility will be up and running in the fourth quarter of 2012.
"Our first quarter results were very much in line with our
expectations. Based on the outlook for the industry and our
current pipeline of business, we are modifying the guidance for
2012 that we provided in our fourth quarter conference call to
capture the impact of the previously announced higher revenue and
net earnings dilution impact of the Zenith acquisition and equity
offering of approximately 3%.
"We currently estimate second quarter revenues to be in the
range of $300 to $310 million and net
earnings in the range $0.80 to $0.90
per diluted share. For the full year, we expect consolidated
revenues to range between $1.25 billion and
$1.30 billion and earnings to be between $3.75 and $4.05 per diluted share, before
adjusting for acquisition-related expenses.
"We expect 2012 earnings to be impacted by the accounting
treatment of future non-cash pension liabilities of $0.16 per diluted share, resulting from the
combination of unprecedented low interest rates and the current
conditions in investment markets. In addition, our guidance
continues to assume limited pricing leverage and only modest
manufacturing performance improvements," Glick concluded.
CONFERENCE CALL
Lufkin will discuss its first
quarter 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 480-629-9835 and ask for the Lufkin Industries call at
least 10 minutes prior to the start time. The conference call
will also be broadcast live via the Internet and can be accessed at
www.lufkin.com in the Events and Presentations section of
Lufkin's Investor Relations
page. A telephonic replay will be available through
May 21, 2012, by dialing 303-590-3030
and entering reservation number 4532384#.
Lufkin Industries, Inc. sells and services oilfield pumping
units, well automation systems, gas lift and plunger lift systems,
progressing cavity pumps, well completion products, foundry
castings and power transmission products throughout the
world. Lufkin 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:
|
Christopher L. Boone
|
|
Chief
Financial Officer
|
|
936-631-2749
|
|
|
|
DRG&L
|
|
Jack
Lascar / 713-529-6600
|
|
Anne
Pearson / 210-408-6321
|
(Tables to
follow)
|
|
|
|
LUFKIN
INDUSTRIES, INC.
|
Financial Highlights
|
(In
thousands, except per share data)
|
(unaudited)
|
|
|
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2012
|
|
2011
|
Sales
|
|
$
279,536
|
|
$
194,397
|
Cost of
sales
|
211,997
|
|
148,204
|
Gross
profit
|
67,539
|
|
46,193
|
Selling,
general and administrative
|
|
|
|
|
Expenses
|
36,227
|
|
26,740
|
Acquisition expenses
|
7,318
|
|
-
|
Operating
income
|
23,994
|
|
19,453
|
|
|
|
|
|
|
Other
income (expense), net
|
(3,768)
|
|
(76)
|
|
|
|
|
|
|
|
Earnings
before income tax provision
|
20,226
|
|
19,377
|
|
|
|
|
|
|
Income tax
provision
|
9,332
|
|
6,976
|
|
|
|
|
|
|
|
Net
earnings
|
10,894
|
|
12,401
|
|
|
|
|
|
|
Net
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
0.35
|
|
$
0.41
|
|
|
|
|
|
|
|
Diluted
|
$
0.34
|
|
$
0.40
|
|
|
|
|
|
|
Dividends
per share
|
$
0.125
|
|
$
0.125
|
|
|
|
|
|
|
LUFKIN
INDUSTRIES, INC.
|
Balance
Sheet Highlights
|
(In
thousands)
|
|
|
|
|
|
Mar.
31,
|
|
Dec.
31,
|
|
2012
|
|
2011
|
Current
assets
|
509,809
|
|
435,482
|
Total
assets
|
1,341,508
|
|
1,096,705
|
Current
liabilities
|
172,183
|
|
141,752
|
Long-term
debt
|
295,156
|
|
332,500
|
Shareholders' equity
|
756,630
|
|
507,533
|
Working
capital
|
337,626
|
|
293,730
|
LUFKIN
INDUSTRIES, INC.
|
Division Performance
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
|
|
|
|
|
Mar.
31,
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
Oilfield
|
|
|
|
|
|
|
$
236,007
|
|
$
153,722
|
|
Power
Transmission
|
|
|
|
|
|
43,529
|
|
40,675
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
$
279,536
|
|
$
194,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar.
31,
|
|
Dec.
31,
|
|
March.
31,
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2011
|
Backlog:
|
|
|
|
|
|
|
|
|
|
|
|
Oilfield
|
|
|
|
|
$
207,125
|
|
$
164,220
|
|
$
178,869
|
|
Power
Transmission
|
|
|
|
120,493
|
|
107,352
|
|
122,751
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
$
327,618
|
|
$
271,572
|
|
$
301,620
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
March
31,
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
10,894
|
|
$
12,401
|
|
|
Plus:
|
|
|
|
|
|
|
General
Liability Accrual
|
-
|
|
640
|
|
|
|
IP Legal
Expense
|
-
|
|
544
|
|
|
|
Acquisition Expenses
|
7,010
|
|
-
|
|
Adjusted
net earnings
|
17,904
|
|
13,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share:
|
$
0.34
|
|
$
0.40
|
|
|
Plus:
|
|
|
|
|
|
|
General
Liability Accural
|
$
-
|
|
$
0.02
|
|
|
|
IP Legal
Expense
|
$
-
|
|
$
0.02
|
|
|
|
Acquisition Expenses
|
$
0.22
|
|
$
-
|
|
|
Adjusted
net earnings
|
$
0.56
|
|
$
0.44
|
|
SOURCE Lufkin Industries, Inc.