NATCO Group Announces 2nd Quarter 2009 Results
NATCO Group Inc. (NYSE: NTG) today announced revenue for the second quarter 2009 of $155.5 million, compared with the second quarter 2008 revenue of $160.4 million. Net income available to common stockholders for the second quarter 2009 was $6.4 million, or $0.32 per diluted share compared with net income of $6.2 million, or $0.31 per diluted share for the second quarter 2008. Segment profit was $14.1 million for this year’s second quarter compared with $12.1 million for the second quarter last year.
Included in the second quarter 2009 net income available to common stockholders were approximately $1.7 million of costs associated with the proposed acquisition of the Company by Cameron International Corporation (NYSE: CAM) and $0.6 million of costs associated with the Company’s UK subsidiary’s cancellation of certain contracts. The second quarter of 2008 included $3.2 million of certain legal and compliance review costs incurred. Without these charges, all of which were net of tax, net income available to common stockholders would have been $0.44 per diluted share for the second quarter 2009 compared with $0.47 per diluted share in the second quarter of 2008.
Bookings for the second quarter 2009 were $88.2 million, compared with $238.5 million for the second quarter 2008. At June 30, 2009, backlog stood at $246.7 million, compared with backlog of $273.1 million at June 30, 2008, and $280.2 million at year end 2008.
For the year-to-date period ended June 30, 2009, the Company posted revenue of $317.4 million, up 1.6% over the same period in 2008; segment profit of $29.7 million, compared with $30.2 million year to date 2008; and net income available to common stockholders for year to date 2009 of $15.1 million, or $0.75 per diluted share, compared with net income available to common stockholders for year-to-date 2008 of $15.8 million, or $0.80 per diluted share. Included in the year-to-date period ended June 30, 2009 were approximately $1.7 million of costs associated with the proposed acquisition of the Company by Cameron International Corporation (NYSE: CAM), $0.6 million of costs associated with the Company’s UK subsidiary’s cancellation of certain contracts, and $0.3 million of legal and compliance review costs, which, net of tax, total $2.6 million or $0.13 per diluted share. The year-to-date period ended June 30, 2008 included $4.6 million of legal and compliance review costs net of tax, or $0.23 per diluted share.
Bookings for the 2009 year-to-date period were $283.9 million, compared with 2008 year-to-date period bookings of $414.9 million.
Revenue from the Integrated Engineered Solutions segment was $73.9 million in the second quarter 2009, compared to $51.5 million in the second quarter 2008. Segment profit for the second quarter 2009 was $11.9 million, compared with $5.6 million in the prior year period primarily as a result of higher revenue runoff on orders booked during the latter months of 2008. Bookings in the second quarter 2009 totaled $26.5 million, compared with $104.2 million in the second quarter 2008.
For the second quarter 2009, revenue for the Standard & Traditional segment decreased from $85.2 million during the second quarter 2008 to $65.9 million, and segment profit decreased to $3.0 million from $5.0 million. In the second quarter 2009, bookings for the segment were $37.8 million compared with $112.6 million for the second quarter 2008. These decreases were primarily due to lower sales of equipment, parts and services across the US branch network, partially offset by additional sales and incremental margin contribution from the acquisition of Connor Sales Company, Inc. made in the third quarter of the previous year.
Revenue from the Automation & Controls segment in the second quarter 2009 was $17.4 million, compared with $25.0 million in the second quarter 2008. A segment loss of $768,000 was incurred in the second quarter 2009, compared with segment profit of $1.5 million in the second quarter 2008. Revenue was down primarily due to the completion of the Kazakhstan operations as of December 31, 2008 and lower panel and packaged system sales associated with the general decrease in industry activity. Margins have stabilized in spite of deteriorating activity levels due to successful cost cutting initiatives.
Weighted average diluted shares of 19.7 million for the second quarter 2009 were essentially unchanged from the second quarter 2008.
2009 Guidance
In light of the proposed merger, NATCO is withdrawing 2009 guidance and will not hold a quarterly conference call. Interested parties are directed to the Company’s 2nd quarter 10-Q filing for more information.
Pending Acquisition by Cameron
On June 1, 2009, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), with Cameron International Corporation, a Delaware corporation (“Cameron”) and Octane Acquisition Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Cameron (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Cameron, in exchange for common stock of Cameron. Under the terms of the Merger Agreement, each holder of common stock of the Company will receive 1.185 shares of common stock of Cameron for each share of Company common stock. No fractional shares of common stock of Cameron will be issued in the Merger, and the Company’s stockholders will receive cash in lieu of fractional shares, if any, of Cameron common stock.
The consummation of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, without limitation, the approval of the Merger Agreement by the Company’s stockholders, the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, effectiveness of the registration statement on Form S-4 filed by Cameron with the Securities and Exchange Commission, approval of the listing on the New York Stock Exchange of the shares of common stock of Cameron to be issued in the Merger and the absence of any injunction or restraint that prohibits consummation of the Merger. Each party’s obligation to close the Merger is also subject to the accuracy of representations and warranties of, and compliance with, covenants by the other party to the Merger Agreement, in each case, as set forth in the Merger Agreement. The obligation of each party to close the Merger is also subject to the absence of any material adverse effect on the other party. The Merger Agreement also contains customary representations, warranties, and covenants of Cameron, Merger Sub, and the Company. NATCO and Cameron made the Hart-Scott Rodino filing on June 27, 2009 and received a request for additional information and documentary material (commonly referred to as a second request) from the Department of Justice on July 28, 2009. Cameron filed a Form S-4 Registration Statement with the Securities and Exchange Commission on July 20, 2009.
NATCO Group Inc. is a leading provider of wellhead process equipment, systems and services used in the production of oil and gas. NATCO has designed, manufactured and marketed production equipment and services for over 80 years. NATCO production equipment is used onshore and offshore in most major oil and gas producing regions of the world.
Statements made in this press release that are forward-looking in nature are intended to be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and may involve risks and uncertainties. Forward looking statements in this press release include, but are not limited to, revenue, earnings and segment profit guidance and discussions regarding the proposed merger, markets, potential awards and demand for our products. These statements may differ materially from actual future events or results. Further, bookings and backlog are not necessarily indicative of future results. Readers are referred to documents filed by NATCO Group Inc. with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which identify significant risk factors that could cause actual results to differ from those contained in the forward-looking statements.
