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Cameron International (CAM)
Q3 2010 Earnings Call
November 02, 2010 8:30 am ET
Jack Moore - Chief Executive Officer, President and Director
R. Amann - Vice President of Investor Relations
John Carne - Chief Operating Officer, Executive Vice President and President of Drilling & Production Systems
Charles Sledge - Chief Financial Officer and Senior Vice President
David Anderson - Palo Alto Investors
Jeff Tillery - Tudor, Pickering & Co. Securities, Inc.
William Herbert - Simmons
William Sanchez - Howard Weil Incorporated
Geoff Kieburtz - Weeden & Co. Research
Roger Read - Natixis Bleichroeder LLC
James Crandell - Barclays Capital
Brad Handler - Crédit Suisse AG
Stephen Gengaro - Jefferies & Company, Inc.
Tom Curran - Wells Fargo Securities, LLC
Kurt Hallead - RBC Capital Markets Corporation
Jeffrey Spittel - Madison Williams and Company LLC
Douglas Becker - BofA Merrill Lynch
Michael LaMotte - Guggenheim Securities, LLC
Robin Shoemaker - Citigroup Inc
Ole Slorer - Morgan Stanley
Daniel Boyd - Goldman Sachs Group Inc.
Michael Urban - Deutsche Bank AG
Previous Statements by CAM
» Cameron International Q2 2010 Earnings Call Transcript
» Cameron International Corporation Q1 2010 Earnings Call Transcript
» Cameron International Corporation Q4 2009 Earnings Call Transcript
Good morning, and thanks to all of you for joining us on this election day. 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.
We're also joined today by John Carne, our Executive Vice President and Chief Operating Officer. Jack and Chuck will offer some commentary on the results for the quarter and will then take time to field your questions.
In accordance with the Safe Harbor provisions of the securities laws, we caution you that 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 will now turn things over to Jack.
Thank you, Scott. Cameron reported third quarter earnings of $0.64 a share, excluding charges of $0.03. Revenues are at $1.53 billion for the quarter, and net income came in at $149 million. These results reflect the continued improvement we are realizing in several of our business segments due to the execution of backlog and recovery in our short cycle focus markets.
Orders for the quarter finished at $1.48 billion, our largest bookings quarter since 2008. Like last quarter, we had no significant project bookings in our numbers. In fact, through Q3, year-to-date bookings stand at just over $4 billion, up 25% from the same nine-month period a year ago, and again, without any large bookings.
Cameron's order flow demonstrates the value we are driving from an averse portfolio businesses across the world. Backlog finished at $4.94 billion, up slightly from last quarter.
I'll speak to more specific areas of our businesses in just a moment, but I would like to highlight the fact that our drilling aftermarket bookings topped $100 million in Q3 and our Process Systems orders exceeded $200 million, both records in Cameron's history.
For Process and Compression Systems, as noted in our release this morning. We have now combined our Process Systems group in our Compression businesses to form a new operating segment within Cameron. This change comes to a result to see a number of synergies emerge in these two businesses as we've integrated NATCO into Cameron over the past year. These synergies will result in enhanced cost efficiencies, product development and customer initiatives focused on both onshore and offshore Process Systems and opportunities targeted things, such as shale gas steel developments and our FPSO markets. I would also note that this will not affect those initiatives we had formed with the combination of NATCO separation technologies and Cameron's Subsea Systems development. In fact, the compact electric static separator unit, co-developed with Petrobras and ourselves, was to deliver to them in Q3 for trial that will ultimately be used in subsea separation applications.
As for Process Systems' results in Q3, net bookings totaling $215 million in the quarter, a record for them. Thus a result of number of projects finally coming home to roost, as well as continued improvement in our North American land markets. This number also, I think, attributes to the results to the Process Systems team, as they're beginning to hit and stride after close to a year working together as a new organization.
Our Compression Systems bookings grew by 10% sequentially, and more importantly, we are seeing a meaningful increased in our tendering activity. Much of this directed at gas process infrastructure, both in the field and plant levels. I would also note that we're seeing an increasing in the number of inquiries for plant air compression as well, most of which is in Southeast Asia and China.
For Drilling Systems, let me discuss what is currently going on in our Drilling Systems business. Bookings came in at $223 million for the quarter, driven by $100 million in bookings for aftermarket as I previously mentioned. This was primarily driven by many of the customers shift to full OEM repair and part programs for pressure control equipment. We expect this ship to continue and as reported in the last call, where we are today, we continue to invest in increasing our capacity to support this movement.
We've also advanced our commitment to new product and development programs focused on increasing RAM and sheering and sealing capacities and design to support operations in higher pressure offshore environments.
We continue to see a healthy order rate for land BOPs as higher spec new builds remain in high demand. We've also seen increase in inquiries for a number of jack-ups, again driven by our plight to quality by operators, seeing the benefits of newer generation flexibility and capacity.
I noted others have talked about the age of the jack-up fleet and the need to upgrade. It is still worth repeating that given over 2/3 of the fleet is 25-plus years old, we could expect to see a decent new Build program for years to come. We did book over 200 cavities and one deepwater stack in Q3. We have also seen a few inquiries for new build floaters, not sure if it's driven by lower financial rates and hungry shipyards or increased demand. We think currently the former versus latter.