HOUSTON, Oct. 28 /PRNewswire-FirstCall/ --
Results Summary (dollars in millions, except per share data): Three Months Ended Sept. Nine Months Ended Sept. ------------------------ ----------------------- 2010 2009 2010 2009 ---- ---- ---- ---- Total revenues $483.1 $612.1 $1,416.4 $1,727.1 Operating income $65.3 $105.6 $192.6 $265.9 Income before income taxes $59.6 $100.5 $153.6 $246.3 Net income $37.5 $74.6 $94.8 $169.4 Diluted EPS $0.46 $0.91 $1.16 $2.07 Shares used to compute diluted EPS (000) 80,948 82,013 81,804 81,794 Total bookings $360.5 $290.8 $1,483.0 $1,051.3 Total backlog $1,738.0 $1,644.9 $1,738.0 $1,644.9
Dresser-Rand Group Inc. ("Dresser-Rand" or the "Company") , a global supplier of rotating equipment and aftermarket parts and services, reported net income of $37.5 million, or $0.46 per diluted share, for the third quarter 2010. This compares to a net income of $74.6 million, or $0.91 per diluted share, for the third quarter 2009.
Vince Volpe, President and Chief Executive Officer of Dresser-Rand, said, "As we work through lower volumes caused by last year's worldwide recession, we are pleased with the continued strong operating margins and solid business performance resulting in third quarter operating income of $65 million.
"With respect to new unit bookings, we saw the expected sequential drop in orders which were down from second quarter ($304 million) to third quarter ($125 million). The reduction was forecast during the second quarter conference call and is essentially due to timing of several large projects, which are expected to close in the fourth quarter. As an example, in the month of October the Company has already received commitments for approximately $[100] million of projects. On this basis, we reiterate our guidance that new unit full year bookings will be in the $1.1 to $1.3 billion range. We also expect to experience continued strength in demand going forward.
"As to aftermarket bookings, we continue to experience sluggish performance, especially in the downstream market. While year over year bookings for the third quarter were up by 11.1% from 2009, they were down sequentially by approximately 7.1% from the second quarter. We do believe that bookings will increase in the fourth quarter and throughout 2011, as we expect to see a more deliberate, but real, recovery in this segment."
Total revenues for the third quarter 2010 of $483.1 million decreased $129.0 million, or 21.1%, compared with $612.1 million for the third quarter 2009. Total revenues for the nine months ended September 30, 2010, of $1,416.4 million decreased $310.7 million, or 18.0%, compared with revenues of $1,727.1 million for the corresponding period in 2009.
Operating income for the third quarter 2010 was $65.3 million. This compares to operating income of $105.6 million for the third quarter 2009. Third quarter 2010 operating income decreased from the year ago quarter primarily due to lower volumes.
As a percentage of revenues, operating income for the third quarter 2010 was 13.6%, compared to 17.3% for the corresponding period in 2009. The decrease was primarily attributable to lower volumes and a less favorable mix within the new units segment.
Operating income for the nine months ended September 30, 2010, was $192.6 million. This compares to operating income of $265.9 million for the corresponding period in 2009. As a percentage of revenues, operating income for the nine months ended September 30, 2010 was 13.5%, compared to 15.4% for the nine months ended September 30, 2009. The decrease in both operating income and income as a percentage of sales was primarily due to lower volumes.
Net income for the third quarter of $37.5 million decreased 49.7% from the corresponding period in 2009. The decrease reflects the factors contributing to the change in operating income and a higher effective tax rate. The higher effective tax rate resulted from adjustments made in this year's third quarter to reflect certain foreign assessments. In addition, last year's third quarter effective tax rate reflected some one-time benefits and adjustments resulting from a corporate restructuring the Company executed to facilitate its global cash management.
Bookings for the third quarter 2010 were $360.5 million, which was $69.7 million or 24.0% higher than the third quarter 2009 of $290.8 million. Bookings for the nine and twelve months ended September 30, 2010, of $1,483.0 million and $2,093.2 million, respectively, were 41.1% and 18.8% higher than the bookings for the corresponding periods ended September 30, 2009, of $1,051.3 million and $1,762.1 million, respectively. The backlog at the end of September 2010, was $1,738.0 million or 5.7% higher than the backlog at the end of September 2009 of $1,644.9 million.
New Units Segment
New unit revenues for the third quarter 2010 of $251.3 million decreased $95.9 million or 27.6% compared with $347.2 million for the third quarter 2009. New unit revenues for the nine months ended September 30, 2010, of $704.1 million decreased $269.8 million or 27.7% compared with $973.9 million for the corresponding period in 2009.
New unit operating income was $32.6 million for the third quarter 2010 compared with operating income of $55.9 million for the third quarter 2009. This segment's operating margin was 13.0% compared with 16.1% for the third quarter 2009. The decrease in operating income and margin from the corresponding period in 2009 was principally attributable to lower volumes and a less favorable mix within the segment.
New unit operating income was $101.7 million for the nine months ended September 30, 2010, compared with operating income of $129.2 million for the corresponding period in 2009. The decrease in operating income was primarily due to lower volumes. This segment's operating margin for the nine months ended September 30, 2010, was 14.4% compared with 13.3% for the corresponding period in 2009. The increase in this segment's operating margin was primarily attributable to cost and productivity improvements in the nine months ended September 30, 2010.
Bookings for the three months ended September 30, 2010, of $125.1 million were 58.4% higher than bookings for the corresponding period in 2009 of $79.0 million. Bookings for the nine and twelve months ended September 30, 2010, of $730.1 million and $1,099.8 million, respectively, were 104.2% and 42.2% higher than the bookings for the corresponding periods ended September 30, 2009, of $357.5 million and $773.4 million, respectively. The backlog at September 30, 2010, of $1,384.4 million was 7.4% higher than the backlog of $1,289.2 million at September 30, 2009.
Aftermarket Parts and Services Segment
Aftermarket parts and services revenues for the third quarter 2010 of $231.8 million decreased $33.1 million or 12.5% compared with $264.9 million for the third quarter 2009. Aftermarket parts and services revenues for the nine months ended September 30, 2010, of $712.3 million decreased $40.9 million or 5.4% compared with $753.2 million for the corresponding period in 2009.
Aftermarket operating income for the third quarter 2010 of $55.2 million decreased 21.4% compared with $70.2 million for the third quarter 2009. This segment's operating margin for the third quarter 2010 of approximately 23.8% compares with 26.5% for the third quarter 2009. The decrease in this segment's operating income and margin was principally due to lower volumes.
Aftermarket operating income for the nine months ended September 30, 2010, of $159.2 million decreased 19.1% compared with $196.7 million for the corresponding period in 2009. This segment's operating margin for the nine months ended September 30, 2010, of approximately 22.4% compares with 26.1% for the corresponding period in 2009. The decrease in operating income and margin from the corresponding nine month period in 2009 was primarily attributable to lower volumes and a less favorable mix within the segment.
Bookings for the three months ended September 30, 2010, of $235.4 million were 11.1% higher than bookings for the corresponding period in 2009 of $211.8 million. Bookings for the nine and twelve months ended September 30, 2010, of $752.9 million and $993.4 million, respectively, were 8.5% and 0.5% higher than the bookings for the corresponding periods ended September 30, 2009, of $693.8 million and $988.7 million, respectively. The backlog at September 30, 2010, of $353.6 million was comparable to the backlog of $355.7 million at September 30, 2009.
Liquidity and Capital Resources
As of September 30, 2010, cash and cash equivalents totaled $333.0 million and borrowing availability under the Company's $500 million senior secured credit facility was $342.2 million, as $157.8 million was used for outstanding letters of credit.
In the first nine months of 2010, cash provided by operating activities was $258.1 million compared with $79.6 million for the corresponding period in 2009. The increase of $178.5 million in net cash provided by operating activities was principally from changes in working capital and reduced pension contributions . Principal uses of cash in the first nine months of 2010, included capital expenditures of $13.5 million, share repurchases of $63.3 million, acquisitions totaling $44.7 million and an earnout payment of $24.1 million associated with the 2008 acquisition of Peter Brotherhood Ltd.
As of September 30, 2010, total debt was $370.0 million and total debt net of cash and cash equivalents was approximately $37.0 million.
Outlook
The market for new unit orders continues to be strong and the Company reiterates its guidance for full year segment bookings to be between $1.1 and $1.3 billion. Similarly, the Company expects sequentially higher aftermarket bookings in the fourth quarter compared to the average run rate for the first nine months of 2010 of approximately $250 million per quarter. The Company estimates that the stronger U.S. dollar and its decision in March of this year to restrict its foreign subsidiaries from continuing aftermarket support in sanctioned countries will negatively impact its full year operating income by approximately $20 million. As such, the Company expects its full year operating income to be in the range of $255 to $270 million.
Members of Dresser-Rand's senior executive team will conduct an in-depth discussion of the Company's strategy and plans to accelerate growth through various R&D programs and infrastructure initiatives at its upcoming Investor / Analyst Day scheduled for Thursday, November 11, 2010, at the JW Marriott Hotel, Houston, Texas.
Conference Call
The Company will discuss its third quarter 2010 results at its conference call on Friday, October 29, 2010. A webcast presentation will be accessible live at 9:00 a.m. Eastern Time. You may access the live presentation at http://www.dresser-rand.com/. Participants may also join the conference call by dialing (877) 303-3133 in the U.S. and (408) 247-3882 from outside the U.S. five to ten minutes prior to the scheduled start time.
A replay of the webcast will be available from 12:00 (noon) Eastern Time on October 29, 2010, through 11:59 p.m. Eastern Time on November 5, 2010. You may access the webcast replay at http://www.dresser-rand.com/. A replay of the conference can be accessed by dialing (800) 642-1687 in the U.S. and (706) 645-9291 from outside the U.S. And referencing conference ID 19627553.
About Dresser-Rand
Dresser-Rand is among the largest suppliers of rotating equipment solutions to the worldwide oil, gas, petrochemical, and process industries. The Company operates manufacturing facilities in the United States, France, United Kingdom, Germany, Norway, India, and China, and maintains a network of 39 service and support centers covering more than 140 countries.
This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, the Company's plans, objectives, goals, strategies, future events, future bookings, revenues, or performance, capital expenditures, financing needs, plans, or intentions relating to acquisitions, business trends, executive compensation, and other information that is not historical information. The words "anticipates", "believes", "expects", "intends", "appears", "outlook", and similar expressions identify such forward-looking statements. Although the Company believes that such statements are based on reasonable assumptions, these forward-looking statements are subject to numerous factors, risks, and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include, among others, the following: potential for material weaknesses in its internal controls; economic or industry downturns; the variability of bookings due to volatile market conditions, subjectivity clients exercise in placing orders, and timing of large orders; volatility and disruption of the credit markets; its inability to generate cash and access capital on reasonable terms and conditions; its inability to implement its business strategy to increase aftermarket parts and services revenue; competition in its markets; failure to complete or achieve the expected benefits from any future acquisitions; economic, political, currency and other risks associated with international sales and operations; fluctuations in currencies and volatility in exchange rates; loss of senior management; environmental compliance costs and liabilities; failure to maintain safety performance acceptable to its clients; failure to negotiate new collective bargaining agreements; unexpected product claims and regulations; infringement on its intellectual property or infringement on others' intellectual property; difficulty in implementing an information management system; and the Company's brand name may be confused with others. These and other risks are discussed in detail in the Company's filings with the Securities and Exchange Commission at http://www.sec.gov/. Actual results, performance, or achievements could differ materially from those expressed in, or implied by, the forward-looking statements. The Company can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them does, what impact they will have on results of operations and financial condition. The Company undertakes no obligation to update or revise forward-looking statements, which may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. For information about Dresser-Rand, go to its website at http://www.dresser-rand.com/.
DRC-FIN DRESSER-RAND GROUP INC. CONSOLIDATED STATEMENT OF INCOME Three months ended Nine months ended September 30, September 30, ------------------ ----------------- 2010 2009 2010 2009 ---- ---- ---- ---- (Unaudited; $ in millions, except per share amounts) Net sales of products $378.5 $494.8 $1,085.3 $1,400.3 Net sales of services 104.6 117.3 331.1 326.8 ----- ----- ----- ----- Total revenues 483.1 612.1 1,416.4 1,727.1 ----- ----- ------- ------- Cost of products sold 261.9 350.3 748.6 1,015.7 Cost of services sold 76.0 79.6 236.9 222.2 ---- ---- ----- ----- Total cost of sales 337.9 429.9 985.5 1,237.9 ----- ----- ----- ------- Gross profit 145.2 182.2 430.9 489.2 Selling and administrative expenses 73.5 70.9 219.0 207.4 Research and development expenses 6.4 5.7 19.3 14.6 Plan settlement - - - 1.3 --- --- --- --- Income from operations 65.3 105.6 192.6 265.9 ---- ----- ----- ----- Interest expense, net (8.2) (8.3) (24.8) (23.6) Other income (expense) , net 2.5 3.2 (14.2) 4.0 --- --- ----- --- Income before income taxes 59.6 100.5 153.6 246.3 Provision for income taxes 22.1 25.9 58.8 76.9 ---- ---- ---- ---- Net income $37.5 $74.6 $94.8 $169.4 ===== ===== ===== ====== Net income per share Basic $0.47 $0.91 $1.17 $2.07 ===== ===== ===== ===== Diluted $0.46 $0.91 $1.16 $2.07 ===== ===== ===== ===== Weighted average shares outstanding -(in thousands) Basic 80,370 81,705 81,340 81,644 ====== ====== ====== ====== Diluted 80,948 82,013 81,804 81,794 ====== ====== ====== ====== DRESSER-RAND GROUP INC. CONSOLIDATED SEGMENT DATA Three months ended September 30, ------------------ 2010 2009 ---- ---- (unaudited; $ in millions) Revenues New units $251.3 $347.2 Aftermarket parts and services 231.8 264.9 ----- Total revenues $483.1 $612.1 ====== ====== Gross profit New units $54.7 $80.2 Aftermarket parts and services 90.5 102.0 Total gross profit $145.2 $182.2 ====== ====== Operating income New units $32.6 $55.9 Aftermarket parts and services 55.2 70.2 Unallocated (22.5) (20.5) Total operating income $65.3 $105.6 ===== ====== Bookings New units $125.1 $79.0 Aftermarket parts and services 235.4 211.8 Total bookings $360.5 $290.8 ====== ====== Backlog - ending New units $1,384.4 $1,289.2 Aftermarket parts and services 353.6 355.7 Total backlog $1,738.0 $1,644.9 ======== ======== Nine months ended September 30, ----------------- 2010 2009 ---- ---- (unaudited; $ in millions) Revenues New units $704.1 $973.9 Aftermarket parts and services 712.3 753.2 ----- Total revenues $1,416.4 $1,727.1 ======== ======== Gross profit New units $164.7 $198.7 Aftermarket parts and services 266.2 290.5 Total gross profit $430.9 $489.2 ====== ====== Operating income New units $101.7 $129.2 Aftermarket parts and services 159.2 196.7 Unallocated (68.3) (60.0) Total operating income $192.6 $265.9 ====== ====== Bookings New units $730.1 $357.5 Aftermarket parts and services 752.9 693.8 Total bookings $1,483.0 $1,051.3 ======== ======== Backlog - ending New units $1,384.4 $1,289.2 Aftermarket parts and services 353.6 355.7 Total backlog $1,738.0 $1,644.9 ======== ======== DRESSER-RAND GROUP INC. CONSOLIDATED BALANCE SHEET September 30, December 31, 2010 2009 ---- ---- (Unaudited; $ in millions, except share amounts) Assets Current assets Cash and cash equivalents $333.0 $223.2 Accounts receivable, less allowance for losses of $13.5 at 2010 and $14.4 at 2009 285.8 289.8 Inventories, net 297.4 353.0 Prepaid expenses and other 39.1 24.9 Deferred income taxes, net 43.0 45.4 ---- ---- Total current assets 998.3 936.3 Property, plant and equipment, net 269.2 268.9 Goodwill 489.5 486.0 Intangible assets, net 431.2 430.9 Other assets 25.5 28.1 ---- ---- Total assets $2,213.7 $2,150.2 ======== ======== Liabilities and Stockholders' Equity Current liabilities Accounts payable and accruals $356.8 $412.0 Customer advance payments 221.0 165.2 Accrued income taxes payable 27.0 8.1 Loans payable - 0.1 --- --- Total current liabilities 604.8 585.4 Deferred income taxes, net 44.0 38.5 Postemployment and other employee benefit liabilities 107.6 109.9 Long-term debt 370.0 370.0 Other noncurrent liabilities 44.7 33.8 ---- ---- Total liabilities 1,171.1 1,137.6 ------- ------- Stockholders' equity Common stock, $0.01 par value, 250,000,000 shares authorized; and 80,606,075 and 82,513,744 shares issued and outstanding, respectively 0.8 0.8 Additional paid-in capital 344.2 396.6 Retained earnings 732.9 638.1 Accumulated other comprehensive loss (35.3) (22.9) ----- ----- Total stockholders' equity 1,042.6 1,012.6 ------- ------- Total liabilities and stockholders' equity $2,213.7 $2,150.2 ======== ======== DRESSER-RAND GROUP INC. CONSOLIDATED STATEMENT OF CASH FLOWS Nine months ended September 30, ----------------- 2010 2009 ---- ---- (Unaudited; $ in millions) Cash flows from operating activities Net income $94.8 $169.4 Adjustments to arrive at net cash provided by operating activities Depreciation and amortization 38.5 37.9 Deferred income taxes 9.0 (1.3) Stock-based compensation 10.0 8.0 Excess tax benefits from share-based compensation (0.8) - Amortization of debt financing costs 2.4 2.4 Provision for losses on inventory 3.9 4.2 Plan settlement - (0.2) Loss on sale of property, plant and equipment 0.6 0.1 Net (income) loss from equity investment - 0.8 Working capital and other, net of acquisitions Accounts receivable 10.9 61.8 Inventories 48.4 (38.2) Accounts payable and accruals (25.4) (49.8) Customer advances 59.5 (77.5) Other 6.3 (38.0) --- ----- Net cash provided by operating activities 258.1 79.6 ----- ---- Cash flows from investing activities Capital expenditures (13.5) (21.1) Proceeds from sales of property, plant and equipment 0.2 1.0 Other investments - (5.0) Acquisitions, net of cash (68.8) (12.7) ----- ----- Net cash used in investing activities (82.1) (37.8) ----- ----- Cash flows from financing activities Proceeds from exercise of stock options 0.9 2.1 Excess tax benefits from share-based compensation 0.8 - Purchase of treasury stock (63.3) - Payments of long-term debt (0.1) (0.1) ---- ---- Net cash (used in) provided by financing activities (61.7) 2.0 ----- --- Effect of exchange rate changes on cash and cash equivalents (4.5) 7.3 ---- --- Net increase in cash and cash equivalents 109.8 51.1 Cash and cash equivalents, beginning of the period 223.2 147.1 ----- ----- Cash and cash equivalents, end of period $333.0 $198.2 ====== ======
Dresser-Rand Group Inc.
CONTACT: Investors, Blaise Derrico, Director Investor Relations of
Dresser-Rand Group Inc., +1-713-973-5497
Web Site: http://www.dresser-rand.com/
