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Fourth Quarter |
Thursday February 12, 7:35 am Eastern
TimeCompany Press ReleaseLufkin Industries Reports 4th-Quarter Earnings of $0.50 Per Diluted Share, Exceeding Earnings GuidanceLUFKIN, Texas, Feb. 12 -- Lufkin Industries, Inc. (Nasdaq: LUFK) today announced results for the fourth quarter and twelve months ended December 31, 2003. Net sales increased 33.3% for the fourth quarter to $74.7 million from $56.0 million for the fourth quarter of 2002. Net earnings rose 207.1% to $3.4 million for the fourth quarter of 2003 from $1.1 million for the comparable prior-year period. Net earnings per diluted share for the latest quarter increased 212.5% to $0.50 from $0.16 for the fourth quarter of 2002. Lufkin's established earnings guidance for the fourth quarter was in a range of $0.25 to $0.45 per diluted share. Net sales for 2003 were $262.3 million, an increase of 14.7% from $228.7 million for 2002. Net earnings increased 14.1% to $9.7 million for 2003 from $8.5 million for 2002, and earnings per diluted share increased 15.9% to $1.46 from $1.26. "We are pleased by the better-than-anticipated results for the fourth quarter of 2003, which were driven primarily by 58.6% growth in oil field revenue," remarked Douglas V. Smith, president and chief executive officer of Lufkin. "This growth reflected stronger domestic demand for new pumping units in response to high energy prices and continued steady international demand. While new unit sales again increased as a percentage of the division's total net sales as a result of this demand, we also produced further significant growth in our service and automation revenue for the fourth quarter. In addition, foundry revenue grew due to both higher internal demand and increased machine tool castings for commercial customers. As previously discussed, the oil field division completed three strategic, accretive acquisitions in the second half of 2003, the last of which closed in mid- December, contributing to growth in the division's net sales. The oil field division's net sales have now increased sequentially from the previous quarter for four consecutive quarters. "Lufkin's net sales for the fourth quarter also reflected 22.2% growth in trailer revenue compared with the fourth quarter of 2002, as the stronger economic growth evident in the second half of 2003 drove new unit sales, which more than offset lower service revenues from our branches due to our downsizing. Furthermore, the power transmission division contributed a 2.3% increase in fourth-quarter revenue. "Lufkin's total backlog at the end of 2003 rose 13.4% to $60.9 million from $53.7 million at the end of 2002 and increased 6.2% from $57.3 million at the end of the third quarter of 2003. The growth in the Company's backlog at year-end reflected the trends affecting our divisional revenue for the fourth quarter. The oil field division produced a 97.5% increase in its backlog to $24.9 million at the end of 2003 from $12.6 million at the end of 2002 and a 15.1% increase from $21.7 million at the end of the third quarter of 2003. The power transmission backlog was $24.8 million at the end of 2003, down 19.8% from $30.9 million at the end of the prior year and 5.8% from $26.4 million at the end of the prior quarter. The trailer backlog grew 9.8% to $11.1 million at the end of 2003 from $10.1 million at the end of 2002 and 19.4% from $9.3 million at the end of the third quarter of 2003." Based on Lufkin's financial results for 2003 and its backlog at year-end, the Company today established its guidance for earnings per diluted share for the first quarter of 2004 in a range of $0.15 to $0.30, compared with $0.12 for the first quarter of 2003. Lufkin also established its guidance for earnings per diluted share for full-year 2004 in a range of $1.75 to $2.10. Mr. Smith continued, "As in 2003, we expect our financial results for 2004 to be primarily driven by growth in our oil field division. With four consecutive quarters of sequential revenue growth and three consecutive quarters of sequential growth in the backlog, this division is demonstrating its ability to leverage its industry leadership position in an improving industry environment. We also expect modest growth in our power transmission revenue for 2004. Although we are focused on the decline in this division's backlog, we attribute this decline primarily to timing issues in the completion and startup of large oil and gas projects. In addition, the industrial market for our power transmission products and services, which was weak for 2003, became more active in the fourth quarter. As in all our divisions, we are fully prepared to respond rapidly to increased demand from our power transmission customers. Finally, we are encouraged by the growth in both fourth-quarter revenue and backlog for the trailer division, as well as by indications that a strengthening economy will produce increased trailer demand for 2004." Mr. Smith concluded, "Our consistent long-term strategy has been to build our market leadership in each division through innovative design, high quality engineering, precision manufacturing, superior service and a strong financial position. As demonstrated by our three recent acquisitions, we also will evaluate and pursue accretive acquisitions that enhance our ability to achieve this goal. We are confident that this strategy not only serves all of Lufkin's stakeholders throughout the full economic cycle, but has also positioned the Company well to produce profitable growth as the cycle improves." Lufkin will discuss its results for the fourth quarter ended December 31, 2003, in a teleconference call today at 9:00 a.m. (central time). To listen to the call, participants should dial (913) 981-5542 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 12:00 a.m. (central time) February 12, 2004, through 7:00 p.m. (central time) February 19, 2004, by dialing (719) 457-0820 and entering reservation number 533365. 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 Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Net sales $74,662 $55,999 $262,255 $228,724
Cost of sales 59,188 45,632 210,238 181,886
Gross profit 15,474 10,367 52,017 46,838
Selling, general and
administrative expenses 10,066 8,752 37,544 33,428
Operating income 5,408 1,615 14,473 13,410
Interest and other income
(expense), net 41 (139) 1,233 357
Earnings before income taxes 5,449 1,476 15,706 13,767
Income tax provision 2,071 376 5,968 5,232
Net earnings $3,378 $1,100 $9,738 $8,535
Net earnings per share:
Basic $0.51 $0.17 $1.49 $1.29
Diluted $0.50 $0.16 $1.46 $1.26
Weighted average shares
outstanding:
Basic 6,568 6,660 6,542 6,610
Diluted 6,693 6,795 6,648 6,761
Cash dividends per share $0.18 $0.18 $0.72 $0.72
LUFKIN INDUSTRIES, INC.
Division Performance
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Revenue:
Oil field $43,330 $27,318 $144,082 $118,700
Power transmission 19,140 18,707 74,625 70,455
Trailer 12,192 9,974 43,548 39,569
Total $74,662 $55,999 $262,255 $228,724
December 31, September 30, December 31,
2003 2003 2002
Backlog:
Oil field $24,944 $21,671 $12,628
Power transmission 24,821 26,354 30,930
Trailer 11,106 9,304 10,112
Total $60,871 $57,329 $53,670
LUFKIN INDUSTRIES, INC.
Balance Sheet Highlights
(In thousands)
December 31, December 31,
2003 2002
Current assets $104,299 $95,236
Total assets 263,656 248,355
Current liabilities 33,468 30,815
Long-term debt, net of current portion - 164
Shareholders' equity 188,196 178,949
Working capital 70,831 64,421
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Lufkin Industries Inc., Lufkin
R. D. Leslie, 936/637-5325