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Second Quarter Results |
Wednesday July 16, 7:04 am Eastern Time
Company Press ReleaseLufkin Industries Announces 2nd-Quarter Earnings Meet Company Guidance for the QuarterLUFKIN, Texas, July 17 -- Lufkin Industries, Inc. (Nasdaq: LUFK) today announced results for the second quarter and six months ended June 30, 2003. Net sales for the second quarter increased to $61.1 million from $60.9 million for the second quarter of 2002. Net earnings for the second quarter were $2.2 million, or $0.33 per diluted share, compared with $3.5 million, or $0.52 per diluted share, for the second quarter of 2002. Net earnings per diluted share for the second quarter of 2003 include proceeds from the sale of assets during the quarter of $0.09 per diluted share and severance costs during the quarter of $0.03 per diluted share. Lufkin's guidance for the second quarter was for earnings per diluted share in a range of $0.25 to $0.45. For the first six months of 2003, net sales increased to $116.1 million from $111.9 million for the first half of 2002. Net earnings were $3.0 million, or $0.45 per diluted share, for the first six months compared with $3.7 million, or $0.55 per diluted share, for the same period last year. "Given the continued uncertainty of the economic environment in the United States and abroad, we are relatively pleased with Lufkin's overall performance for the second quarter of 2003," commented Douglas V. Smith, president and chief executive officer of Lufkin. "The Company's net sales for the quarter reflected a slight increase over the second quarter of 2002, consisting of increased power transmission, trailer and domestic oil field activity. In addition, the total backlog expanded for the second consecutive quarter, driven by a substantial increase in the backlog for oil field products, compared with the oil field backlog at the end of the first quarter of 2003. "Oil field sales for the second quarter increased on a sequential-quarter basis for the second consecutive quarter but were below the second quarter of 2002. These results reflected sales growth for new pumping units in the domestic market driven by activity with small independents and continued growth in automation products domestically and internationally. Strength in the Argentina market was offset by inactivity in the Venezuela market. The uncertain domestic economy also affected the rate of growth in power transmission and trailer sales. We benefited from stronger international power transmission orders, especially for high-speed gears with energy and industrial applications, which drove the division's increased sales for the quarter. Trailer sales also grew for the quarter, but the trailer backlog at the quarter's end declined, which is indicative of continued softness in the domestic transportation markets." Net sales for oil field products for the second quarter were $30.8 million, a 4.1% decline from $32.2 million for the second quarter of 2002. Power transmission net sales increased 5.7% for the quarter to $19.4 million from $18.4 million for the second quarter last year, while trailer net sales rose 4.2% to $10.8 million from $10.4 million. Lufkin's total backlog was $59.6 million at the end of the second quarter, up 7.6% from $55.4 million at the end of the first quarter of 2003 and 11.2% from $53.6 million at the end of 2002. The oil field backlog rose 53.6% to $19.2 million from $12.5 million at the end of the first quarter of 2003, while the power transmission backlog increased slightly to $32.4 million from $32.3 million. The trailer backlog was $8.0 million at quarter's end, down 24.5% from $10.6 million at the end of the first quarter of 2003. The total backlog at the end of the second quarter of 2002 was $68.6 million, consisting of $21.9 million, $33.1 million and $13.6 million for the oil field, power transmission and trailer divisions, respectively. Based on Lufkin's financial results for the second quarter and first half of 2003, its backlog at the end of the second quarter and the continuing uncertainty regarding the strength of the national and international economy, the Company today revises its guidance for earnings per diluted share for 2003 in a range of $1.17 to $1.45. Lufkin also establishes its earnings per diluted share guidance for the third quarter of 2003 in a range of $0.35 to $0.55. Mr. Smith concluded, "As we discussed in our first-quarter earnings release, we expect the strength of our oil field business to be the key to the strength of our financial results throughout 2003. While we have been encouraged by early signs that the domestic oil field business may be firming, we remain cautious about the strength and duration of any improvement. We remain confident, however, of our ability to maintain and expand our position as the global leader in our oil field markets, through our ability to respond quickly both to demand from existing and potential customers around the world and to market consolidation opportunities that result from the difficult industry environment we have experienced for the past two years." Lufkin will discuss its results for the second quarter ended June 30, 2003, in a teleconference call today at 9:00 a.m. (central time). To listen to the call, participants should dial (913) 981-5507 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:00 a.m. (central time) July 16, 2003, through 7:00 p.m. (central time) July 23, 2003, by dialing (719) 457-0820 and entering reservation number 624761. This release contains forward-looking statements and information that are based on management's beliefs as well as assumptions made by and information currently available to management. When used in this release, the words "anticipate," "believe," "estimate," "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect the Company's current views with respect to certain events and are subject to certain assumptions, risks and uncertainties, many of which are outside the control of the Company. These risks and uncertainties include, but are not limited to, (i) oil prices, (ii) capital spending levels of oil producers, (iii) availability and prices for raw materials and (iv) general industry and economic conditions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company does not intend to update these forward-looking statements and information. Lufkin Industries, Inc. sells and services oil field pumping units, foundry castings, power transmission products and highway trailers throughout the world. The Company has vertically integrated all vital technologies required to design, manufacture and market its products. LUFKIN INDUSTRIES, INC.
Financial Highlights
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Net sales $61,077 $60,910 $116,137 $111,917
Cost of sales 50,077 46,845 95,805 89,648
Gross profit 11,000 14,065 20,332 22,269
Selling, general and
administrative expenses 8,640 8,519 16,883 16,479
Operating income 2,360 5,546 3,449 5,790
Interest and other income
(expense), net 1,205 181 1,365 248
Earnings before income taxes 3,565 5,727 4,814 6,038
Income tax provision 1,355 2,262 1,829 2,385
Net earnings $2,210 $3,465 $2,985 $3,653
Net earnings per share:
Basic $0.34 $0.53 $0.46 $0.56
Diluted $0.33 $0.52 $0.45 $0.55
Weighted average shares
outstanding
Basic 6,532 6,510 6,530 6,509
Diluted 6,617 6,678 6,615 6,661
Cash dividends per share $0.18 $0.18 $0.36 $0.36
LUFKIN INDUSTRIES, INC.
Division Performance
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Revenue:
Oil field $30,843 $32,163 $59,596 $60,296
Power transmission 19,399 18,353 34,694 31,963
Trailer 10,835 10,394 21,847 19,658
Total $61,077 $60,910 $116,137 $111,917
June 30, March 31, June 30,
2003 2003 2002
Backlog:
Oil field $19,200 $12,500 $21,900
Power transmission 32,400 32,300 33,100
Trailer 8,000 10,600 13,600
Total $59,600 $55,400 $68,600
LUFKIN INDUSTRIES, INC.
Balance Sheet Highlights
(In thousands)
June 30, December 31,
2003 2002
Current assets $93,369 $95,236
Total assets 253,747 248,355
Current liabilities 32,964 30,815
Shareholders' equity 181,494 178,949
Working capital 60,405 64,421
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Lufkin Industries Inc., Lufkin
R. D. Leslie, 936/637-5325