Cameron International Corporation (CAM)

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Cameron International Corporation (CAM)

Q3 2009 Earnings Call

November 3, 2009 8:30 am ET

Executives

Scott Amann – Vice President Investor Relations

Jack Moore – President and Chief Executive Officer

Chuck Sledge – Senior Vice President and Chief Financial Officer

Analysts

James Carndell – Barclays Capital

Bill Herbert – Simmons & Company

Robin Shoemaker – Citigroup

Jeff Tillery – Tudor, Pickering & Holt

Dan Boyd – Goldman Sachs

Geoff Kieburtz – Weeden & Co.

[Roger Reid] – Natixis Bleichroeder

Mike Urban – Deutsche Bank

Stephen Gengaro – Jeffries & Co.

Joe Gibney – Capital One Southcoast

Brian Uhlmer – Pritchard Capital Partners

[David Griffiths – Scopia Capital]

Brad Handler – Credit Suisse

Presentation

Operator

Welcome to the Cameron Third Quarter Earnings Release. (Operator instructions) It is now my pleasure to introduce your host, Mr. Scott Amann Vice President of Investor Relations for Cameron.

Scott Amann

This morning you'll hear from Jack Moore President and Chief Executive Officer of Cameron, and Chuck Sledge Senior Vice President and Chief Financial Officer. Jack and Chuck will offer some commentary on the results for the quarter and we'll then take time to field your questions.

In accordance with the Safe Harbor provisions of the securities laws, we caution you some of the statements made on this call may be forward-looking in nature and as such are subject to various factors not under the control of the company. For a more complete description of these factors and the related risks and uncertainties, please refer to Cameron's annual report on Form 10-K, the company's most recent Form 10-Q and the associated news release.

With that I'll turn things over to Jack.

Jack Moore

Q3 earnings for Cameron were $0.56 a share which included $0.02 for restructuring costs. Revenues for the quarter were just over $1.2 billion, slightly below last quarter and 18% below the prior year quarter primarily due to short cycle businesses. The most significant story for Cameron in Q3 is bookings. Each of our three operating groups reported sequential bookings growth in Q3. In fact, 8 of our 11 business units realized increased sequential order flows in the quarter.

I'm pleased with all of our business units and their ability to focus on markets and customers in this environment. Maintaining that focus while addressing costs including downsizing operations is a real testament to the quality of the people on our team.

Total bookings for the quarter finished at over 1.3 billion an increase of 440 million from Q2 which resulted in an ending backlog of over 5.1 billion which is an increase of 100 million sequentially. Our drilling and production systems group signed a multiyear frame agreement with Petrobras. As a part of this agreement, we booked the first 111 trees or about 80% of the total package in the third quarter. We expect the remainder of the order over the next 12 to 24 months.

We also increased orders in our surface systems and Petroco, Cameron's process systems business as well. Petroco booked its largest order ever with the award of a project for multi-faced pumping systems offshore Mexico. This project is directed at boosting flow rates of crude production in existing fields. It could be just the first of several more to come in the future.

I have no doubt that when NATCO is combined with this business that many more opportunities like this one will be developed for both onshore, offshore, and subsidy applications. While on the top of NATCO, NATCO's shareholders are scheduled to approve the transaction at a special meeting on November 18. Once this is confirmed we hope to complete the transaction as soon as possible, perhaps the same day.

As I've said before we're very excited about adding the people, technologies, and overall capabilities of NATCO, and together with Cameron we'll have the combined capability to offer more advanced technology and global reach to meet the present and future needs of our customers.

Another pleasant surprise was that our surface system orders grew by 30% sequentially in Q3. Results from a lot of focus that we have placed with our U.S. shale gas initiatives in both the Haynesville and the Marcelles are paying off plus we've seen some decent recovery in both the Rockies as well as project orders in Europe and Africa.

Our drilling orders were essentially flat with Q2 of '09. We did however book one stack in the quarter for Sevan, had no cancellations, and our aftermarket bookings continue to improve over sequential quarters.

Our value and measurement group also saw sequential bookings in Q3 versus Q2 driven by a 60% increase in our engineered value business. This is due to the receipt of several large project awards in both China and Russia that we have been tracking for most of the year.

Process values also saw its best bookings quarter for the year in Q3 with a big shift to international orders. This is where we secured a large order for [Gastrom]. These guys have been very successful with expanding their market penetration and we will see more success in the future. We've also realized some additional benefit in our process aftermarket orders from the integration of a recent acquisition in Australia.

The biggest change but with the smallest number was in our distributed value business. Bookings improved by 10%. The main fact here is that they improved versus Q1 and Q2. This positive turn is the result of a lot of hard work on the part of this team to go out and expand their markets.

Read the rest of this transcript for free on seekingalpha.com