Cameron International (CAM)
Q1 2011 Earnings Call
April 28, 2011 9:30 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
Brian Uhlmer - Global Hunter Securities, LLC
David Anderson - Palo Alto Investors
William Herbert - Simmons
James West - Lehman Brothers
Brad Handler - Crédit Suisse AG
Tom Curran - Wells Fargo Securities, LLC
James Crandell - Dahlman Rose & Company, LLC
Brad Handler - Wachovia
William Conroy - Pritchard Capital Partners, LLC
Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc.
Geoff Kieburtz - Weeden & Co., LP
Unknown Analyst -
Douglas Becker - BofA Merrill Lynch
Robin Shoemaker - Citigroup Inc
Michael Urban - Deutsche Bank AG
Previous Statements by CAM
» Cameron International's CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Cameron International CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Cameron International Q2 2010 Earnings Call Transcript
Good morning, and thank you for joining us today. 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 this morning by John Carne, Executive Vice President and Chief Operating Officer; and Jeff Altamari, our incoming Vice President of Investor Relations. 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 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'll now turn things over to Jack.
Thank you, Scott. Before we get started, I would like to take a moment to thank Scott Amann for his valued years of service to Cameron. As many of you know, Scott announced his retirement after 16 outstanding years. He's played an instrumental role in developing Cameron's brand with our shareholders and many of you here on this call. And I think many of you would echo our sentiments that he is truly the best in this industry. Scott, thank you for an exceptional job.
Thank you, Jack. I appreciate it.
Now with respect to Cameron's results for quarter 1, as you've seen, we reported earnings of $0.46 a share, excluding charges of $0.30 related to litigation costs associated with the Deepwater Horizon. Our earnings also reflect the previously announced charges of $0.17 a share, related to cost overruns on the subsea project in Nigeria and uncollectible receivables in Libya. These charges reflect the risk of doing business in emerging countries that have now been incorporated into our earnings guidance for the remainder of 2011.
Revenues for the quarter finished just over $1.5 billion, up 11% versus Q1 of 2010 with gains coming in all 3 of our operating segments. Net income for Q1 came in at $140 million, including the Usan and Libya charges of $44 million, versus the $160 million reported in Q1 of 2010. We also experienced a negative impacts to both revenues and margins from disruptions in our businesses in North Africa in the quarter.
As for orders, Cameron had another strong bookings quarter. Total bookings exceeded $1.5 billion, a 25% increase over last year. Bookings were up across all business units with the exception of process where several sizable projects have moved into quarter 2. Project bookings were up versus last year in subsea, drilling and engineered valves, and we also continue to see improvement in our Shorter Cycle businesses in both our new and aftermarket products and services.
Our Drilling & Production Systems orders totaled over $800 million in Q1 without the benefit of any large project awards. Surface Systems bookings totaled over $280 million, up 30% versus prior year's level and 18% sequentially. All regions contributed to the highest bookings quarters we have seen since Q1 of 2008.
North America bookings have primarily grown as a result of our sales focus in capital investments and our frac support infrastructure. Investments in both frac stack and manifold systems have been well received by our customers, as Cameron is one of the few companies that can design, build and service this equipment as a true OEM. And we will continue to ramp up these investments as these markets continued to involve.
While the challenges of the evolving frac markets in North America have been met by Cameron, we're also taking on the technical challenges of high-pressure, high-temperature wells in the North Sea and we were recently awarded the Greater Ekofisk platform project for ConocoPhillips in Norway, which will span a multiyear period with a value in excess of $200 million.
Our Drilling Systems once again set a new record for aftermarket bookings at $118 million in Q1, made up of both Onshore and Offshore businesses. As a result, we will continue to direct capital and personnel investment towards expanding our capacity to meet this growing demand. Overall, Drilling Systems and bookings were $246 million in the quarter, a threefold increase over last year and 48% sequentially. We booked 8 18 3/4% 15k stacks in the quarter for jack-up systems. While no new subsea stack orders were received in the quarter, we continue to track a very large number of new builds and quotation activity remains very high for both drillships and jack-ups including 20K psi systems.
One area of interest we are now receiving a number of inquiries on is in the retrofitting of existing stacks to accommodate secondary share ram capabilities. Depending on the complexity of these upgrades, the cost to make these additions can reach as much as $10 million per rig.