Dresser-Rand Group Inc. (DRC) Q1 2012 Earnings Call May 4, 2012 9:00 a.m. ET Executives Blaise Derrico - Director, IR Vincent Volpe - President and CEO Mark Baldwin - EVP and CFO Analysts James West - Barclays Capital Jeff Spittel - Global Hunter Robin Shoemaker - Citigroup Rhett Carter - Tudor, Pickering Jon Donnel - Howard Weil Ole Slorer - Morgan Stanley Presentation Operator
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Please turn to Slide 2. The statements made during this conference call that are not historical facts may be forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied in such statements. In addition, this conference call contains time-sensitive information that reflects management's best judgment, only as of the date of the live call.Management’s statements may include non-GAAP financial measures. For a reconciliation of these measures, refer to our earnings news release or the conference slides available on our website. Dresser-Rand does not undertake any ongoing obligation, other than that imposed by law to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after this call. Further information concerning issues that could materially affect the financial performance related to forward-looking statements can be found in Dresser-Rand's periodic filings with the SEC. I'll now turn the call over to Vince Volpe, our President and CEO. Vincent Volpe Thank you for joining us today and welcome to Dresser-Rand's earnings conference call. I'll start with a few opening comments and, Mark Baldwin, our Chief Financial Officer, will follow me with a detailed discussion of our first quarter results. Please turn to Slide 3. Our first quarter 2012 financial results were good and reflect higher volumes as a result of the continuing recovery in our markets. Operating income of $52 million was above the top end of our guidance range. Bookings of approximately $442 million and $385 million for new units and aftermarket parts and services respectively were strong and are important to helping us achieve our 2012 earning goals and in building a strong backlog for 2013. As previously guided, we expect to see improved operating margins resulting from the increase in volume over the balance of the year and as such, are reiterating our full year operating income guidance of $360 million to $420 million. Similarly, we are reiterating bookings guidance for new units and aftermarket parts and services in the range of $1.7 billion to $1.9 billion and $1.4 billion to $1.6 billion respectively.
It should also be noted that the New Unit's backlog for 2013 now stands at a little over $900 million, which is a record at this point in the year for the follow year's shipments. As previously reported in January we completed the strategically important acquisition of Synchrony. The acquisition allows us to integrate Synchrony's active magnetic bearing capability into our product development process and to offer oil-free solutions in high speed rotating equipment applications, the benefits of which include reduced footprint and weight and more environmentally friendly applications.Please turn to Slide 4. Aftermarket bookings of $385 million for the first quarter of 2012 were 46% higher than the corresponding period in 2011. Excluding Guascor bookings, Aftermarket bookings on an apples-to-apples basis were up approximately 20%. Let me repeat. Excluding Guascor bookings, Aftermarket bookings on an apples-to-apples basis were up approximately 20%. In the New Unit segment, first quarter bookings of $442 million were approximately 70% higher than the corresponding period in 2011. Please turn to Slide 5. Our first quarter New Unit bookings came from all segments of energy infrastructure including our traditional oil and gas markets as well as the emerging environmental solutions markets. In oil and gas, we booked an order for a fixed platform located offshore Angola to supply both compression and power generation equipment. We believe this order of more than $150 million underscores our strong offerings for upstream oil and gas applications. We will supply all of the critical rotating equipment for this important project as our technology offers our clients all of the benefits associated with reliability, reduced footprint and weight, all of which are important considerations for offshore installations. One other project that deserves mention, is an order we received from a client in China for LNG refrigeration compressors for their mini-LNG program. This is the 10th order from this client. We expect the market for mini LNG facilities, those facilities with a million tons or less of capacity per year, will remain strong for the foreseeable future. Read the rest of this transcript for free on seekingalpha.com