Oct. 14, 2009 (PR Newswire) --
LUFKIN, Texas, Oct. 14 /PRNewswire-FirstCall/ -- Lufkin Industries, Inc. (Nasdaq: LUFK) today announced financial results for the third quarter of 2009.
Earnings from continuing operations for the quarter declined to $5.1 million, or $0.34 per diluted share, compared with $25.0 million, or $1.66 per diluted share, for the third quarter of 2008. Revenues declined approximately 40% to $117.7 million for the third quarter, compared with $195.1 million for the third quarter of 2008.
"Although there are encouraging signs that activity levels may be responding to a more stable commodity price environment, our operations continued to be negatively affected by uncertainties surrounding the short term direction and pace of the economic recovery and its impact on oil and gas demand. As a result, we continued to see restricted capital spending from our customers during the third quarter," said John F. "Jay" Glick, president and chief executive officer of Lufkin.
"Bookings in our Oil Field Division were up substantially from the second quarter of 2009, but they were down significantly from 2008 levels, when we saw historically high levels of new orders. High levels of customer inventory continue to inhibit orders for new units for our oilfield products. Bookings in the Power Transmission Division fell 24% from both the second quarter of 2009 and from last year's third quarter, as order awards on large projects were delayed.
"As a result, our combined order backlog declined to $133.8 million in the third quarter from $413.9 million in the third quarter of last year and from $162.3 million at the end of the second quarter of 2009.
"The fact that our Oilfield Division had its strongest quarter of the year for new orders, with September being the strongest month of the year, suggests that the increase in the North American land drilling rig count is beginning to translate into new orders. Additionally, order cancellations virtually stopped at the end of July. If North American activity continues to recover and international projects remain active, it should bode well for the Oil Field Division in 2010," Glick added.
"We continue to take steps to reduce costs in order to improve our competitive position and restore our operating margins. Efforts undertaken last year to improve operational efficiencies through the use of Lean methods are now beginning to have a positive impact on profitability.
"The near term outlook remains challenging, at least through the next quarter. As a result of the poor order intake in Power Transmission during the first quarter of this year, and our inability to book short delivery orders to fill capacity in this division during the second and third quarters, financial results will be negatively affected by reduced revenues and the deleveraging of fixed overhead in the fourth quarter."
THIRD QUARTER RESULTS
Oil Field Division - Oil Field revenues for the third quarter of 2009 decreased 50% to $73.7 million, compared to $147.1 million in the third quarter of 2008; they were only slightly lower than second quarter revenues of $75.0 million. The year-over-year decrease was led by a 60% decline in new pumping unit sales, primarily in North America, as well as a 49% drop in Automation product sales. Sales from the March 2009 acquisition of ILS contributed $4.7 million, an increase from the $4.2 million during the second quarter of 2009.
Oil Field's new business bookings declined 78% from the third quarter of 2008 but were up 62% from the second quarter of 2009. Order backlog decreased to $35.9 million at the end of the third quarter from $53.1 million at the end of the second quarter and from $279.8 million at the end of last year's third quarter.
