Exhibit 99.1
DRESSER-RAND REVENUES, OPERATING INCOME, BOOKINGS & BACKLOG AT RECORD LEVELS
UNAUDITED RESULTS SUMMARY
(Dollars in millions, except share data)
* Fourth quarter EPS of $0.38 includes $0.08 of non-cash, compensation
expense
* Full year 2006 EPS of $0.92 includes a curtailment gain of $0.09 and
non-cash, compensation expense of $0.28
* 2006 bookings increased 27% to $1,839 and our backlog increased 43% to
a record $1,267
Three months ended Year Ended
December 31, December 31,
----------------------- ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Total Revenues $ 475.7 $ 361.9 $ 1,501.5 $ 1,208.2
Operating income* $ 70.4 $ 50.8 $ 176.3 $ 116.1
* Operating income includes:
Stock-based compensation
expense - exit units $ 6.7 - $ 23.6 -
Curtailment (gain) - - $ (11.8) -
Income before income taxes $ 61.5 $ 37.1 $ 137.3 $ 52.6
Net income $ 32.8 $ 32.2 $ 78.8 $ 37.1
Basic and Diluted EPS $ 0.38 $ 0.38 $ 0.92 $ 0.56
Shares used to compute EPS (000) 85,464 85,445 85,453 66,547
Total Bookings $ 556.2 $ 410.1 $ 1,838.9 $ 1,446.2
Total Backlog $ 1,267.4 $ 884.7 $ 1,267.4 $ 884.7
HOUSTON, March 1 /PRNewswire-FirstCall/ -- Dresser-Rand Group Inc.
("Dresser-Rand" or the "Company") (NYSE: DRC), a global supplier of rotating
equipment and aftermarket parts and services, reported unaudited net income of
$78.8 million, or $0.92 per diluted share, which includes $23.6 million of
non-cash, compensation expense and an $11.8 million curtailment gain. The net
effect of the compensation expense and curtailment gain reduced 2006 earnings by
$0.19 per share. This compares to 2005 net income of $37.1 million, or $0.56 per
diluted share.
Revenues for the year 2006 of $1,501.5 million compare to $1,208.2 million
for 2005, an increase of approximately 24%. Operating income for the year 2006
increased 52% to $176.3 million compared to $116.1 million for 2005. The
improvement was due to higher volume, improved price realizations and operating
productivity. Bookings for the year were $1,838.9 million and the backlog at the
end of December 2006 was $1,267.4 million, 43% higher than the year ago level.
Vincent R. Volpe, Jr., President and Chief Executive Officer of
Dresser-Rand, said, "2006 was a year of record performance. Revenues increased
24%, operating income increased over 50% and our year-end backlog was at a
record level. As we enter 2007, we believe we're well-positioned to benefit from
the continued strength in the markets we serve."
For the fourth quarter of 2006, net income was $32.8 million, or $0.38 per
diluted share. This compares to net income of $32.2 million, or $0.38 per
diluted share, for the fourth quarter 2005. Fourth quarter 2006 net income was
reduced by a pre-tax and after-tax, non-cash stock compensation expense of
approximately $6.7 million, or $0.08 per diluted share, in connection with the
recent sale of the Company's common stock by D-R Interholding, LLC, an affiliate
of First Reserve Corporation. This compensation expense, which is not tax
deductible, resulted from the vesting of "exit units" held by certain members of
management. Additionally, the Company incurred transaction-related expenses of
approximately $1.0 million (pre-tax) or $0.01 per diluted share.
Revenues for the fourth quarter 2006 of $475.7 million were 31% higher than
the corresponding period a year ago. Total operating income increased to $70.4
million for the fourth quarter 2006 compared to $50.8 million for the
corresponding quarter of 2005. Fourth quarter 2006 operating income improved
from the corresponding quarter of 2005 due to higher volume, improved price
realizations and operating productivity.
New Units
Revenues in the new units segment of $248.6 million for the fourth quarter
2006 increased $71.0 million from the corresponding period in 2005. For the year
2006, revenues of $749.6 million increased $173.0 million, or 30%, compared to
revenues for the year 2005. Continued strength in worldwide demand for rotating
equipment was the principal reason for the increase in revenues.
Segment operating income was $22.6 million for the fourth quarter 2006
compared $16.1 million for the fourth quarter of 2005. This segment's operating
margin of 9.1% for the fourth quarter 2006 was the same as the corresponding
quarter of 2005 as a less favorable project mix was offset by higher price
realizations and the benefits of volume leverage on fixed costs.
Bookings in the quarter ended December 31, 2006 were $327.4 million, 53%
higher than bookings in the corresponding quarter in 2005. Bookings in the year
2006 of $1002.3 million were 30% greater than 2005. The backlog at December 31,
2006 was $981.8 million, or 43% above the $688.1 million backlog at December 31,
2005. This increase was due to continuing strong worldwide demand for rotating
equipment.
Aftermarket Parts and Services
Revenues in the aftermarket segment of $227.1 million for the fourth quarter
2006 increased $42.7 million compared to the corresponding quarter in 2005,
primarily from higher parts and repair sales. For the year 2006, revenues of
$751.9 million increased $120.3 million, or 19%, compared to revenues for the
year 2005 of $631.6 million.
Segment operating income increased 51% to $72.6 million for the fourth
quarter 2006 compared to $48.2 million for the fourth quarter of 2005. This
segment's operating margin was 31.9% compared to 26.1% for the fourth quarter of
2005. The improvement was primarily due to higher price realizations and the
benefits of volume leverage on fixed costs.
Bookings in the quarter ended December 31, 2006 were $228.8 million, 16%
above bookings in the fourth quarter of 2005. Bookings in the year 2006 of
$836.6 million were 24% ahead of 2005. Backlog at December 31, 2006 was $285.6
million, or 45% above the $196.6 million backlog at December 31, 2005.
Provision for Income Taxes
The provision for income taxes was $28.7 million and $58.6 million for the
quarter and the year ended December 31, 2006, respectively. The effective tax
rates for the quarter and year ended December 31, 2006 of 46.7% and 42.6%,
respectively, were higher than the U.S. federal statutory rate. The fourth
quarter rate was higher primarily because of the non-tax deductible, stock-based
compensation expense recognized of approximately $6.7 million resulting from the
vesting of exit units and adjustments to certain foreign income taxes. The year
2006 rate was higher because of the year's total expense for exit units of $23.6
million and the fourth quarter adjustment to foreign taxes. In addition, the
company recorded a valuation allowance at one of its foreign subsidiaries
earlier in the year because that subsidiary's accumulated losses and related net
operating loss carryforward caused management to conclude that it was more
likely than not that the deferred tax asset would not be realized. The provision
for income taxes was $4.9 million and $15.5 million for the quarter and the year
ended December 31, 2005, respectively. The effective tax rates for the quarter
and year ended December 31, 2005 of 13.2% and 29.4%, respectively, were
substantially lower than the U.S. federal statutory rate. This occurred
principally because our income exclusion available for export sales from the
U.S. was significantly larger than previously estimated.
Liquidity and Capital Resources
As of December 31, 2006, cash and cash equivalents totaled $146.8 million
and borrowing availability under the $350.0 million revolving credit portion of
the Company's senior credit facility was $147.1 million, as $202.9 million was
used for outstanding letters of credit.
For the quarter ended December 31, 2006, net cash provided by operating
activities was $72.0 million, which compared to $(9.0) million used in the
corresponding quarter in 2005. The increase of $81.0 million was principally
from higher net income and favorable changes in net working capital. During the
fourth quarter 2006, capital expenditures totaled $6.7 million. This compares to
$4.8 million in the corresponding period last year.
In 2006, cash provided by operating activities was $164.1 million compared
to $212.4 million for the year 2005. The decrease of $48.3 million was
principally the result of unfavorable changes in working capital (higher
accounts receivable and inventories), partially offset by improved operating
results. Additionally, in 2005, $30.5 million was collected from Ingersoll Rand
as part of the settlement of the working capital adjustment from the
Acquisition. As a result of strong cash flows in 2006, the Company funded
capital expenditures of $19.7 million and repaid $100 million of borrowings
under its senior secured credit facility. As of December 31, 2006, total debt,
net of cash and equivalents, was $358.8 million.
In January 2007, the Company prepaid $50.0 million of its senior secured
credit facility. As a result, annual interest expense will be lower by
approximately $3.6 million in 2007 and a $0.9 million pre-tax, non-cash charge
relating to the write-off of unamortized debt issuance costs will be recorded in
the first quarter 2007.
Outlook
Worldwide markets for oil and gas products continue to be strong. Demand for
the Company's products and services remain at historically high levels and many
of its major clients have announced higher capital expenditure budgets for 2007.
The Company currently expects its 2007 operating income to be in the range
of $250 to $270 million and its first quarter 2007 operating income to be in the
range of 12% to 14% of the total year. The Company expects its full year 2007
earnings per share to be in the range of $1.52 to $1.73. This assumes interest
expense in the range of $42 to $44 million and an effective tax rate in the
range of 35 to 37 percent.
Conference Call
The Company will discuss its fourth quarter and year 2006 results at its
conference call on March 2, 2007. A webcast presentation will be accessible live
at 8:30 a.m. Eastern Standard Time. You may access the live presentation at
http://www.dresser-rand.com. Participants may also join the conference call by
dialing (877) 502-9276 in the U.S. and (913) 981-5591 from outside the U.S. five
to ten minutes prior to the scheduled start time.
A replay of the webcast will be available from 11:30 a.m. Eastern Standard
Time on March 2, 2007 through 11:59 p.m. Eastern Standard Time on March 9, 2007.
You may access the webcast replay at http://www.dresser-rand.com. A replay of
the conference can be accessed by dialing (888) 203-1112 in the U.S. and (719)
457-0820 from outside the U.S. The replay pass code is 2468656.
Form 10-K Filing
The Company has filed a Form 12b-25 notifying the Securities and Exchange
Commission that it could not meet its accelerated Year 2006 Form 10-K filing
deadline of March 1, 2007, without unreasonable effort and expense. The Company
currently anticipates filing its 2006 Form 10-K in the next few days which will
be before the extended deadline of March 16, 2007. The Company and its
independent registered public accounting firm are still in the process of
completing their work required in order for the Company's independent registered
public accounting firm to render its opinion on the Company's financial
statements and internal controls over financial reporting. The Company continues
to dedicate significant resources to the audit of the financial statements,
testing internal control over financial reporting and preparing the 2006 Form
10-K.
Dresser-Rand is among the largest suppliers of rotating equipment solutions
to the worldwide oil, gas, petrochemical, and process industries. The Company
operates manufacturing facilities in the United States, France, Germany, Norway
and India, and maintains a network of 26 service and support centers covering
more than 140 countries.
This news release may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward- looking
statements concerning The Company's plans, objectives, goals, strategies, future
events, future revenue or performance, capital expenditures, financing needs,
plans or intentions relating to acquisitions, business trends, executive
compensation and other information that is not historical information. The words
"anticipates," "believes," "expects", "intends," and similar expressions
identify such forward-looking statements. Although the Company believes that
such statements are based on reasonable assumptions, these forward-looking
statements are subject to numerous factors, risks and uncertainties that could
cause actual outcomes and results to be materially different from those
projected. These factors, risks and uncertainties include, among others, the
following: material weaknesses in its internal controls; economic or industry
downturns; its inability to implement its business strategy to increase
aftermarket parts and services revenue; competition in its markets; failure to
complete or achieve the expected benefits from, any future acquisitions;
economic, political, currency and other risks associated with international
sales and operations; loss of senior management; the Company's brand name may be
confused with others; environmental compliance costs and liabilities; failure to
maintain safety performance acceptable to its clients; failure to negotiate new
collective bargaining agreements; ability to operate as a stand-alone company;
unexpected product claims and regulations; and infringement on its intellectual
property or infringement on others' intellectual property. These and other risks
are discussed in greater detail in the Company's filings with the Securities and
Exchange Commission at www.sec.gov. Actual results, performance or achievements
could differ materially from those expressed in, or implied by, the
forward-looking statements. The Company can give no assurances that any of the
events anticipated by the forward-looking statements will occur or, if any of
them does, what impact they will have on results of operations and financial
condition. The Company undertakes no obligation to update or revise
forward-looking statements, which may be made to reflect events or circumstances
that arise after the date made or to reflect the occurrence of unanticipated
events. For information about Dresser-Rand, go to its website at
http://www.dresser-rand.com.
Dresser-Rand Group Inc.
Unaudited Consolidated Statement of Operations
(Dollars in thousands, except per share amounts)
Three months ended Year ended
December 31, December 31,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Total revenues $ 475,698 $ 361,966 $ 1,501,527 $ 1,208,203
Total cost of sales 334,744 263,119 1,097,823 920,964
Gross profit 140,954 98,847 403,704 287,239
Selling and administrative
expenses 67,918 45,724 228,815 164,055
Research and development
expenses 2,611 2,313 10,423 7,058
Curtailment (gain) - - (11,796) -
Income from operations 70,425 50,810 176,262 116,126
Interest expense, net (10,863) (12,418) (47,877) (57,037)
Early redemption premium on debt - - - (3,688)
Other income (expense), net 1,984 (1,289) 8,931 (2,847)
Income before income taxes 61,546 37,103 137,316 52,554
Provision for income taxes 28,724 4,899 58,557 15,459
Net income $ 32,822 $ 32,204 $ 78,759 $ 37,095
Net income per common share -
basic and diluted $ 0.38 $ 0.38 $ 0.92 $ 0.56
Weighted average shares
outstanding - basic and diluted 85,464 85,445 85,453 66,547
Dresser-Rand Group Inc.
Unaudited Consolidated Segment Data
(Dollars in thousands)
Three months ended Year ended
December 31, December 31,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenues
New units $ 248,572 $ 177,568 $ 749,609 $ 576,612
Aftermarket parts and services 227,126 184,398 751,918 631,591
Total Revenues $ 475,698 $ 361,966 $ 1,501,527 $ 1,208,203
Gross Profit
New units $ 42,731 $ 30,501 $ 108,608 $ 70,866
Aftermarket parts and services 98,223 68,346 295,096 216,373
Total Gross Profit $ 140,954 $ 98,847 $ 403,704 $ 287,239
Operating Income
New units $ 22,571 $ 16,134 $ 47,303 $ 20,847
Aftermarket parts and services 72,561 48,177 204,350 141,374
Unallocable (24,707) (13,501) (75,391) (46,095)
Total Operating Income $ 70,425 $ 50,810 $ 176,262 $ 116,126
Bookings
New units $ 327,362 $ 213,564 $ 1,002,256 $ 771,894
Aftermarket parts and services 228,820 196,600 836,628 674,287
Total bookings $ 556,182 $ 10,164 $ 1,838,884 $ 1,446,181
Backlog-ending
New units $ 981,763 $ 688,095 $ 981,763 $ 688,095
Aftermarket parts and services 285,615 196,567 285,615 196,567
Total backlog $ 1,267,378 $ 884,662 $ 1,267,378 $ 884,662
Dresser-Rand Group Inc.
Unaudited Consolidated Summarized Balance Sheet
(Dollars in thousands)
December 31, December 31,
2006 2005
------------ ------------
Assets
Total current assets $ 669,032 $ 549,415
Property, plant and equipment, net 223,085 228,671
Goodwill and other assets 879,212 879,785
Total assets $ 1,771,329 $ 1,657,871
Liabilities and Stockholders' Equity
Total current liabilities $ 466,140 $ 393,180
Long-term debt 505,565 598,137
Other noncurrent liabilities 167,753 151,894
Total liabilities 1,139,458 1,143,211
Total stockholders' equity 631,871 514,660
Total liabilities and stockholders' equity $ 1,771,329 $ 1,657,871
Dresser-Rand Group Inc.
Unaudited Consolidated Cash Flow
(Dollars in thousands)
Three Months Ended Year Ended
December 31, December 31,
--------------------- ---------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net cash provided by(used in)
operating activities $ 71,995 $ (8,952) $ 164,052 $ 212,422
Cash flows from investing
activities
Capital expenditures (6,687) (4,787) (19,747) (15,534)
Acquisitions - 2,248 - (54,970)
Proceeds from equity
investment disposition - - - 10,000
Proceeds from sales of
property, plant and equipment 228 777 228 1,021
Net cash (used in) investing
activities (6,459) (1,762) (19,519) (59,483)
Cash flows from financing
activities
Payments of long-term debt (50,014) - (100,070) (211,162)
Payments of short-term
borrowings - - - (1,627)
Proceeds from initial public
offering - net - - - 608,925
Issuance of common stock - - - 1,419
Cash dividends paid - - - (557,686)
Net cash (used in) financing
activities (50,014) - (100,070) (160,131)
Effect of exchange rate changes
on cash and cash equivalents 1,788 (754) 4,347 (6,272)
Net increase (decrease) in cash
and cash equivalents 17,310 (11,468) 48,810 (13,464)
Cash and cash equivalents,
beginning of the period 129,536 109,504 98,036 111,500
Cash and cash equivalents,
end of period $ 146,846 $ 98,036 $ 146,846 $ 98,036
SOURCE Dresser-Rand Group Inc.
-0- 03/01/2007
/CONTACT: Blaise Derrico, Director Investor Relations, Dresser-Rand Group
Inc., +1-713-973-5497/
/Web site: http://www.dresser-rand.com /