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Third Quarter Results |
Wednesday October 22,
7:00 am Eastern Time
Company Press ReleaseLufkin Industries Announces 3rd-Quarter Financial ResultsLUFKIN, Texas, July 17 -- Lufkin Industries, Inc. (Nasdaq: LUFK) today announced results for the third quarter and nine months ended September 30, 2003. Net sales for the third quarter increased 17.5% to $71.5 million from $60.8 million for the third quarter of 2002. Net earnings for the third quarter were $3.4 million, or $0.51 per diluted share, compared with $3.8 million, or $0.56 per diluted share, for the third quarter of 2002. Net earnings per diluted share for the third quarter included a benefit of approximately $0.08 per diluted share from its two recently announced oil field acquisitions in Argentina and West Texas, offset by approximately $0.20 per diluted share for legal costs associated with the trial of one, and the ongoing efforts to resolve both of, the two previously announced legal claims against the Company. For the first nine months of 2003, net sales increased 8.6% to $187.6 million from $172.7 million for the comparable period in 2002. Net earnings were $6.4 million, or $0.96 per diluted share, for the first nine months of 2003 compared with $7.4 million, or $1.10 per diluted share, for the first nine months of 2002. Douglas V. Smith, president and chief executive officer of Lufkin, said, "Lufkin produced substantial growth in net sales for the third quarter, primarily as a result of the 32.4% increase in comparable-quarter net sales achieved by our oil field business. Growth in the Company's oil field business was realized in all markets except commercial castings. Gains in pumping unit sales from the Lufkin, Texas, and Canadian plants were complemented by increased service and automation revenues. Additionally, the two accretive, strategic acquisitions completed within the division during the third quarter, enhanced our international sales in South America, as well as our service offerings in the growing oil field automation business. The acquisitions also contributed to our oil field backlog, which increased 18.6% to $21.7 million at the end of the third quarter from the end of the third quarter last year. "The Company experienced another quarter of increased sales from its power transmission division with new unit sales revenues up 22% from those of the third quarter of 2002. This increase came from both its U.S. and French manufacturing facilities. During the third quarter, the Company's trailer division experienced a 4% decline in revenues from the third quarter of 2002. On the positive side, new unit revenues were up 4%, while reduced service revenues from our branches offset this gain." Net sales for oil field products for the third quarter increased 32.4% to $41.2 million from $31.1 million for the third quarter of 2002. Power transmission net sales were $20.8 million for the quarter, a 5.1% increase from $19.8 million for the prior-year third quarter. Trailer net sales of $9.5 million for the latest quarter were 4.3% less than $9.9 million for the third quarter of 2002. Lufkin's total backlog was $57.4 million at the end of the third quarter compared with $59.6 million at the end of the second quarter of 2003 and $63.9 million at the end of the third quarter of 2002. The Company's backlog for the oil field division was $21.7 million, an 18.6% increase from $18.3 million for the third quarter of 2002 and a 13.0% increase from $19.2 million for the second quarter of 2003. The power transmission backlog decreased to $26.4 million for the latest quarter from $33.6 million and $32.4 million for the third quarter of 2002 and second quarter of 2003, respectively. The decrease in backlog was driven by increased completions and shipments of large international oil and gas pipeline projects and by a slowdown in the booking of oil and gas projects during the third quarter. The trailer backlog was $9.3 million at quarter's end, compared with $8.0 million at the end of the second quarter of 2003 and $12.0 million at the end of the third quarter last year. Based on Lufkin's financial results for the third quarter and first nine months of 2003, its backlog at the end of the third quarter and the continuing uncertainty regarding the strength of the national and international economies, the Company today revised its guidance for earnings per diluted share for 2003 to a range of $1.20 to $1.40 from the previous range of $1.17 to $1.45. Lufkin also established its earnings per diluted share guidance for the fourth quarter of 2003 in a range of $0.25 to $0.45. Mr. Smith added, "While we are pleased with improved sales trends for the third quarter, our guidance remains tempered by the uncertain economic outlook and the continuing volatility in the world energy markets. Additionally, we expect additional higher-than-normal legal costs in the fourth quarter. "As our two third-quarter acquisitions demonstrate," Mr. Smith concluded, "Lufkin has continued to strengthen its global leadership position in oil field markets in spite of the short-term impact of the economic cycle. We are encouraged that oil field sales have strengthened, and, through our vertical integration, we remain prepared to respond quickly to continued strengthening in demand anywhere in the world. We are optimistic about Lufkin's prospects for further growth in an improving economic environment." Lufkin will discuss its results for the third quarter ended September 30, 2003, in a teleconference call today at 9:00 a.m. (central time). To listen to the call, participants should dial (913) 981-5532 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:00 a.m. (central time) October 22, 2003, through 7:00 p.m. (central time) October 29, 2003, by dialing (719) 457-0820 and entering reservation number 788321. 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 Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Net sales $71,455 $60,807 $187,593 $172,724
Cost of sales 55,244 46,605 151,049 136,253
Gross profit 16,211 14,202 36,544 36,471
Selling, general and
administrative expenses 10,596 8,197 27,479 24,676
Operating income 5,615 6,005 9,065 11,795
Interest and other income
(expense), net (173) 247 1,192 495
Earnings before income taxes 5,442 6,252 10,257 12,290
Income tax provision 2,068 2,470 3,898 4,855
Net earnings $3,374 $3,782 $6,359 $7,435
Net earnings per share:
Basic $0.52 $0.57 $0.97 $1.13
Diluted $0.51 $0.56 $0.96 $1.10
Weighted average
shares outstanding
Basic 6,542 6,647 6,534 6,594
Diluted 6,668 6,807 6,633 6,749
Cash dividends per share $0.18 $0.18 $0.54 $0.54
LUFKIN INDUSTRIES, INC.
Division Performance
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Revenue:
Oil field $41,155 $31,085 $100,752 $91,381
Power transmission 20,792 19,785 55,485 51,747
Trailer 9,508 9,937 31,356 29,596
Total $71,455 $60,807 $187,593 $172,724
September 30, June 30, September 30,
2003 2003 2002
Backlog:
Oil field $21,700 $19,200 $18,300
Power transmission 26,400 32,400 33,600
Trailer 9,300 8,000 12,000
Total $57,400 $59,600 $63,900
LUFKIN INDUSTRIES, INC.
Balance Sheet Highlights
(In thousands)
September 30, December 31,
2003 2002
Current assets $100,632 $95,236
Total assets 256,686 248,355
Current liabilities 32,838 30,815
Shareholders' equity 184,091 178,949
Working capital 67,794 64,421
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Lufkin Industries Inc., Lufkin
R. D. Leslie, 936/637-5325