| First Quarter Earnings |
Wednesday April 16, 2003 7:45 am Eastern Time
Company Press ReleaseLufkin Industries Announces Earnings Per Diluted Share of $0.12 for the 1st Quarter of 2003 Compared With $0.03 for the 1st Quarter of 2002LUFKIN, Texas, April 16 -- Lufkin Industries, Inc. (Nasdaq: LUFK) today announced results for the first quarter of 2003. Net sales for the quarter, which ended March 31, 2003, increased 7.9% to $55.1 million from $51.0 million for the first quarter of 2002. Net earnings for the first quarter increased to $774,000, or $0.12 per share (diluted), from $188,000, or $0.03 per share (diluted) for the first quarter last year. Lufkin's guidance for the first quarter was for earnings per share (diluted) in a range of $0.08 to $0.16. Douglas V. Smith, president and chief executive officer of Lufkin, remarked, "In spite of the continued uncertainty regarding world events and the strength of the national economy, net sales for all three of our divisions increased compared with the first quarter of 2002, with net sales also improving from the fourth quarter of 2002 for our oil field and trailer businesses. In addition to our comparable-quarter growth in net sales, our first-quarter earnings and profit margins also benefited from continued cost containment, increased manufacturing efficiencies and greater leverage of corporate overhead. "For the first quarter, our oil field business continued to reflect the potential for ongoing price volatility related to the events in the Middle East. Consistent with trends throughout 2002, international demand for oil field equipment remained relatively steady, while demand in North America was soft. Net sales associated with oil field services and automation equipment, both of which improve the efficiency of existing equipment and wells, partially offset weak domestic spending on oil field equipment for the first quarter. We also produced another double-digit increase in comparable-quarter net sales in our power transmission and trailer divisions. While both of these divisions have also been negatively affected by the uncertain economic environment, we believe each is positioned to produce growth in net sales for 2003." Net sales for oil field products were $28.8 million for the first quarter, up 2.2% from $28.1 million for the comparable prior-year quarter. Power transmission net sales grew 12.4% to $15.3 million from $13.6 million. Our trailer division produced an 18.9% increase in revenues for the first quarter to $11.0 million from $9.3 million for the first quarter of 2002. Lufkin's total backlog increased 3.4% to $55.4 million at the end of the first quarter from $53.6 million at the end of 2002. The oil field backlog declined slightly to $12.5 million from $12.6 million at year-end 2002, but the power transmission backlog increased 4.5% to $32.3 million from $30.9 million at the end of 2002 and the trailer backlog rose 5.0% to $10.6 million from $10.1 million at the end of 2002. The continuing impact of the challenging operating environment is evident in the reduction in our total backlog at the end of the first quarter from the total backlog of $67.3 million at the end of the first quarter of 2002, which consisted of $22.0 million, $33.9 million and $11.4 million for the oil field, power transmission and trailer divisions, respectively. Considering prospects for near-term economic uncertainty, as well as Lufkin's performance for the first quarter of 2003 and the backlog for each division at the quarter's end, the Company today reaffirms its guidance for earnings per share (diluted) for 2003 in a range of $1.17 to $1.58. Lufkin also establishes its guidance for second-quarter earnings per share (diluted) in a range of $0.25 to $0.45. Mr. Smith continued, "We expect our overall performance for the second quarter and the year to be primarily driven by the strength of our oil field business. As the global leader in our segment of the oil field equipment industry, we expect to benefit from any sustained firming in market demand because of our demonstrated ability to respond quickly to market opportunities around the world. We consistently seek to enhance this capability within all our businesses by leveraging the resources available through our strong balance sheet and financial liquidity. As a result, we remain confident of the value inherent in each of our businesses and our ability to realize this value through the consistent implementation of our long-term growth strategies." Lufkin will discuss its results for the first quarter ended March 31, 2003, in a teleconference call today at 9:00 a.m. (central time). To listen to the call, participants should dial (719) 457-2617 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:00 a.m. (central time) April 16, 2003, through 6:00 p.m. (central time) April 17, 2003, by dialing (719) 457-0820 and entering reservation number 465433. 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. 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.
Financial Highlights
(Thousands of dollars, except per share data)
(unaudited)
Three Months Ended
March 31,
------------------------
2003 2002
---------- ----------
Net sales $ 55,061 $ 51,007
Cost of sales 45,729 42,804
---------- ----------
Gross profit 9,332 8,203
Selling, general and administrative
expenses 8,243 7,960
---------- ----------
Operating income 1,089 243
Interest and other income
(expense), net 160 67
---------- ----------
Earnings before income taxes 1,249 310
Income tax provision 475 122
---------- ----------
Net earnings $ 774 $ 188
========== ==========
Net earnings per share:
Basic $ 0.12 $ 0.03
========== ==========
Diluted $ 0.12 $ 0.03
========== ==========
Cash dividends per share $ 0.18 $ 0.18
========== ==========
LUFKIN INDUSTRIES, INC.
Balance Sheet Highlights
(Thousands of dollars)
March 31 December 31,
2003 2002
-------------- ----------------
Current assets $ 94,280 $ 95,236
Total assets 248,190 248,355
Current liabilities 30,121 30,815
Shareholders' equity 179,248 178,949
Working capital 64,159 64,421
LUFKIN INDUSTRIES, INC.
Division Performance
(Thousands of dollars)
Three Months Ended
-------------------------------------
March 31, December 31, March 31,
2003 2002 2002
--------- --------- ------------
Revenue:
Oil field $ 28,754 $ 28,133 $ 27,318
Power transmission 15,295 13,609 18,707
Trailer 11,012 9,265 9,974
--------- --------- ------------
Total $ 55,061 $ 51,007 $ 55,999
========= ========= ============
March 31, December 31, March 31,
2003 2002 2002
--------- --------- ------------
Backlog:
Oil field $ 12,500 $ 12,600 $ 22,000
Power transmission 32,300 30,900 33,900
Trailer 10,600 10,100 11,400
--------- --------- ------------
Total $ 55,400 $ 53,600 $ 67,300
========= ========= ============
Contact: Lufkin Industries Inc., Lufkin |