Dresser-Rand Reports Record Fourth Quarter and Year 2008 Results
- Revenues for the fourth quarter and year 2008 were
$745.8 million and$2,194.7 million , respectively, up 43.4% and 31.8% compared with the corresponding periods in 2007 - Operating income for the fourth quarter and year 2008 were
$132.3 million and$337.5 million , respectively, up 70.3% and 71.2% compared with the corresponding periods in 2007 - Net cash provided by operating activities was
$234.8 million for 2008, an increase of 8.7% compared with 2007 - Bookings for 2008 of
$2,523.3 million increased 15.0% compared with bookings for 2007 - Backlog as of
December 31, 2008 , increased 21.1% fromDecember 31, 2007 , to$2,251.5 million
Results Summary ($in millions, except per share data):
Fourth Quarter Year
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- --------
Total revenues $745.8 $520.1 $2,194.7 $1,665.0
Operating income $132.3 $77.7 $337.5 $197.1
Income before income taxes $119.7 $69.1 $301.3 $167.6
Net income $77.0 $43.8 $197.7 $106.7
Diluted EPS $0.94 $0.51 $2.36 $1.25
Shares used to compute
diluted EPS (000) 81,563 85,724 83,837 85,586
Total bookings $710.8 $613.7 $2,523.3 $2,194.7
Total backlog $2,251.5 $1,859.3 $2,251.5 $1,859.3
Dresser-Rand Group Inc. (“Dresser-Rand” or the “Company”) (NYSE: DRC), a global supplier of rotating equipment and aftermarket parts and services, reported net income of
“As we enter 2009, the market for new unit orders is changing, as end users, for tactical reasons, are choosing to delay purchase decisions on some major projects. Based on comments from several key clients, we believe this to be more of a delay in demand, rather than a definitive move to cancel their investment programs. Indeed we continue to experience a high level of activity in our new unit inquiries. While it is not possible at present to accurately forecast the length of the delays, we currently expect new unit bookings to be in the range of approximately
“This is not the first slowdown we have faced, and we have been planning our manufacturing strategy over the past eight years to be ready when this occurred. It is difficult to accurately predict when the economy will begin to improve; hence we will be prudent about how we manage in this environment. However, we are fortunate to have a strong backlog of new unit orders, a historically dependable aftermarket segment, a strong supply chain management program focused on material productivity, a flexible manufacturing model which will allow us to flex capacity down if necessary without major restructuring, and the proper leadership in place to ensure continued good execution.”
Total revenues for the fourth quarter 2008 of
Operating income for the fourth quarter 2008 was
Operating income for 2008 was
Bookings for the fourth quarter 2008 were
The backlog at the end of
New Units Segment
New unit revenues for the fourth quarter 2008 of
New unit operating income for the fourth quarter 2008 of
New unit operating income was
New unit bookings for the fourth quarter 2008 of
The backlog at
Aftermarket Parts and Services Segment
Aftermarket parts and services revenues for the fourth quarter 2008 of
Aftermarket operating income for fourth quarter 2008 of
Aftermarket operating income for 2008 of
Aftermarket bookings for the fourth quarter 2008 of
The backlog at
Liquidity and Capital Resources
As of
In 2008, cash provided by operating activities was
Outlook
At
Consistent with previous guidance, the Company expects 2009 operating income to be in the range of
The Company expects first quarter 2009 operating income to be in the range of 11% to 13% of the total year.
Conference Call
The Company will discuss its fourth quarter 2008 results at its conference call on
A replay of the webcast will be available from
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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
This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements with respect to planned or proposed repurchase of shares of common stock. Forward-looking statements include, without limitation, the Company’s plans, objectives, goals, strategies, future events, future revenue, 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”, 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; 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 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 www.dresser-rand.com.
DRC-FIN
Dresser-Rand Group Inc.
Consolidated Statement of Income
($ in millions except per share amounts)
Fourth Quarter Year
-------------- ------------------
2008 2007 2008 2007
------ ------ -------- --------
Net sales of products $618.1 $425.8 $1,805.1 $1,339.5
Net sales of services 127.7 94.3 389.6 325.5
------ ------ -------- --------
Total revenues 745.8 520.1 2,194.7 1,665.0
------ ------ -------- --------
Cost of products sold 451.6 315.3 1,307.2 989.5
Cost of services sold 88.7 64.8 268.9 226.6
------ ------ -------- --------
Cost of sales 540.3 380.1 1,576.1 1,216.1
------ ------ -------- --------
Gross profit 205.5 140.0 618.6 448.9
Selling and administrative
expenses 69.8 59.6 273.8 239.0
Research and development
expenses 3.4 2.7 12.7 12.8
Curtailment amendment /
partial settlement - - (5.4) -
------ ------ -------- --------
Income from operations 132.3 77.7 337.5 197.1
------ ------ -------- --------
Interest expense, net (8.2) (6.6) (29.4) (36.8)
Other (expense) income, net (4.4) (2.0) (6.8) 7.3
------ ------ -------- --------
Income before income taxes 119.7 69.1 301.3 167.6
Provision for income taxes 42.7 25.3 103.6 60.9
------ ------ -------- --------
Net income $77.0 $43.8 $197.7 $106.7
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Net income per common share -
basic and diluted $0.94 $0.51 $2.36 $1.25
====== ====== ======== ========
Weighted average shares
outstanding - (In Thousands)
Basic 81,506 85,482 83,678 85,470
====== ====== ======== ========
Diluted 81,563 85,724 83,837 85,586
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Dresser-Rand Group Inc.
Consolidated Segment Data
($ in millions)
Fourth Quarter Year
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues
New units $447.3 $272.9 $1,202.7 $813.5
Aftermarket parts and
services 298.5 247.2 992.0 851.5
-------- -------- -------- --------
Total revenues $745.8 $520.1 $2,194.7 $1,665.0
======== ======== ======== ========
Gross profit
New units $84.1 $41.2 $217.2 $127.2
Aftermarket parts and
services 121.4 98.8 401.4 321.7
-------- -------- -------- --------
Total gross profit $205.5 $140.0 $618.6 $448.9
======== ======== ======== ========
Operating Income
New units $59.2 $22.4 $131.9 $56.4
Aftermarket parts and
services 92.1 70.6 276.7 213.8
Unallocated expense (19.0) (15.3) (71.1) (73.1)
-------- -------- -------- --------
Total operating income $132.3 $77.7 $337.5 $197.1
======== ======== ======== ========
Bookings
New units $415.9 $348.5 $1,429.3 $1,321.5
Aftermarket parts and
services 294.9 265.2 1,094.0 873.2
-------- -------- -------- --------
Total bookings $710.8 $613.7 $2,523.3 $2,194.7
======== ======== ======== ========
Backlog - ending
New units $1,830.5 $1,543.0 $1,830.5 $1,543.0
Aftermarket parts and
services 421.0 316.3 421.0 316.3
-------- -------- -------- --------
Total backlog $2,251.5 $1,859.3 $2,251.5 $1,859.3
======== ======== ======== ========
Dresser-Rand Group Inc.
Consolidated Balance Sheet
($ in millions)
December 31,
------------------
2008 2007
-------- --------
Assets
Current assets
Cash and cash equivalents $147.1 $206.2
Accounts receivable, less allowance for losses
of $11.6 at 2008 and $5.9 at 2007 366.3 311.9
Inventories, net 328.5 265.3
Prepaid expenses 43.4 23.0
Deferred income taxes, net 22.5 19.3
-------- --------
Total current assets 907.8 825.7
Property, plant and equipment, net 250.3 216.7
Goodwill 429.1 447.5
Intangible assets, net 441.6 440.0
Other assets 23.4 21.0
-------- --------
Total assets $2,052.2 $1,950.9
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accruals $430.9 $358.4
Customer advance payments 275.0 239.9
Accrued income taxes payable 30.2 22.0
Loans payable 0.2 0.2
-------- --------
Total current liabilities 736.3 620.5
Deferred income taxes 22.9 48.4
Postemployment and other employee
benefit liabilities 135.3 80.6
Long-term debt 370.1 370.3
Other noncurrent liabilities 27.4 25.9
-------- --------
Total liabilities 1,292.0 1,145.7
-------- --------
Commitments and contingencies
Stockholders' Equity
Common stock, $0.01 par value, 250,000,000 shares
authorized; and, 81,958,846 and 85,831,530
shares issued and outstanding, respectively 0.8 0.9
Additional paid-in capital 384.6 527.3
Retained earnings 427.3 229.7
Accumulated other comprehensive (loss) income (52.5) 47.3
-------- --------
Total stockholders' equity 760.2 805.2
-------- --------
Total liabilities and stockholders' equity $2,052.2 $1,950.9
======== ========
Dresser-Rand Group Inc.
Consolidated Statement of Cash Flow
($ in millions)
Year Ended
December 31,
--------------
2008 2007
------ ------
Cash flows from operating activities
Net income $197.7 $106.7
Adjustments to arrive at net cash provided by
operating activities:
Depreciation and amortization 48.8 49.3
Deferred income taxes (2.6) (1.7)
Stock-based compensation 6.0 8.1
Excess tax benefits from share-based
compensation (0.4) -
Amortization of debt financing costs 3.1 6.9
Provision for losses on inventory 3.3 0.4
Loss (Gain) on sales of property, plant and
equipment - (0.6)
Curtailment amendment / partial settlement (11.8) -
Working capital and other, net of acquisitions
Accounts receivable (57.9) 2.4
Inventories (51.2) (71.6)
Accounts payable and accruals 77.7 40.6
Customer advances 25.4 93.9
Other (3.3) (18.4)
------ ------
Net cash provided by operating activities 234.8 216.0
------ ------
Cash flows from investing activities
Capital expenditures (40.2) (23.7)
Acquisitions, net of cash acquired (91.4) (8.1)
Other investment (5.0) -
Proceeds from sales of property, plant and
equipment 0.3 5.8
------ ------
Net cash used in investing activities (136.3) (26.0)
------ ------
Cash flows from financing activities
Proceeds from exercise of stock options 1.4 0.4
Excess tax benefits from share-based
compensation 0.4 -
Repurchase of common stock (150.2) -
Payments for debt financing costs - (4.5)
Payments of long-term debt (0.2) (137.2)
Proceeds from long-term debt - 0.5
------ ------
Net cash used in financing activities (148.6) (140.8)
------ ------
Effect of exchange rate changes on cash and cash
equivalents (9.0) 10.2
------ ------
Net (decrease) increase in cash and cash
equivalents (59.1) 59.4
Cash and cash equivalents, beginning of the
period 206.2 146.8
------ ------
Cash and cash equivalents, end of period $147.1 $206.2
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SOURCE Dresser-Rand Group Inc.