Dresser-Rand Group Earnings Call Nuggets: 2014 Revenue and New Units Booking Expectation
Dresser-Rand Group, Inc. (NYSE:DRC) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
James West – Barclays: Vince couple of years ago at your Analyst Day, you had outlined a scenario where Dresser would get to some $4 billion in revenue and about $700 million in op income in ’14. Understanding that ’13 has some moving parts to it and you outlined a lot of those in your prepared remarks, is that still an achievable level of revenue and income for ’14?
Vincent R. Volpe Jr. – President and CEO: I think James, I would say, yes. I think it’s achievable, I think part of depends on currency, if you currency adjust those numbers from time that we made the projections in 2010, there is a significant change in – I don’t know if Mark’s got the number of the top of his head but, it’s I think on the operating income line, it’s – I don’t know $20 million to $40 million or $50 million. It’s a pretty big number right, so whatever that is, you know we can go back and look at it and so I think in terms of the fundamental business change, if you see you’ve got a business that you think is going to be sort of in the mid 3 billion this year on revenue, 2013, and you believe that you are going to book more than you are going to ship which is what we’re forecasting, that means you are going to build backlog again. I don’t think that’s it’s an unreasonable, I don’t think it’s an unreasonable view. And, the other thing, you got to look at is, if you don’t hit it right on the spot, you might hit it a month later on the trailing12-month basis. So, broadly speaking, I think the target is still achievable.
James West – Barclays: Then just a follow-up from me, the projects that got pushed from 4Q into the middle of the year, I know you talked about engineering delays there and other issues. Are these offshore projects or onshore project, could you give some color there and maybe perhaps what regions of the world you are seeing those delays?
Vincent R. Volpe Jr. – President and CEO: They are offshore. At least one of them is in the North Sea, one of them was in – there were really four project streams and it was between 150 million and 200 million, and they are all offshore and you got – I think had pretty good spread on them; one is in the Asia Pacific, one is in the Gulf of Mexico, and two in the North Sea. I just want to build on the math. We have provided guidance that says up to two-thirds of our bookings maybe in the second half of the year, I didn’t say two thirds of the bookings will be in the second half of the year. There is a difference. We’ve seen these projects move out, that’s between $150 million and $200 million of business and four jobs. I don’t know if that’s a proxy for other stuff moving out. We think those have moved out about six months and so you should – I think we are exercising a bit of caution, okay. I do think that the first quarter will be sort of on the order of magnitude of Q4, so in terms of what you expect in Q1 these things moved out for most part passed the first quarter. Second quarter maybe same order of magnitude or maybe better, so let’s not give up on Q2 being strong but we are sort in the interest of caution right now we don’t know if this a proxy for bottlenecks in other places where projects are being executed or in fact the other projects will go you know sort of when we expect them to go. And the final thing I would say, to reiterate all four of those projects we strongly believe are going to be for Dresser-Rand. So, this is not about these projects going away or going away from Dresser-Rand, it is strictly movement.
New Units Booking Expectation
Jeff Spittel – Global Hunter Securities: Could we start off Vice with your new units booking expectation for the year and speak a little bit about what percentage of that you would expect to come from offshore production infrastructure and then maybe whatever color you can provide on what component of that FPSO it might represent?
Vincent R. Volpe Jr. – President and CEO: Well, if I use the inquiries Jeff as a sort of option we’re going to book, I think we’ve got as an example our inquiries were up 20% year-over-year formal inquiries and so you know as people get to (EBGBs) about the fact that we were light in the fourth quarter on bookings, the formal inquiry level is up 20% year-over-year. That is a very concrete proxy for next year’s activity and the upstream activity was up over 30% year-over-year. Now, in terms of our forecast which we know is wrong, it always changes right from now to the end of the year, we’ve roughly got about half of our business so called between 40% and 50% coming from the upstream and then we’ve got the other two principal pieces which is downstream and midstream sort of divided equally amongst them with the environmental services slightly below that. So, I would say – well hold on, let me correct myself. We’ve got a little bit 40% and 45% on upstream, at this time the actual percentage is – so let give them to you between 40% and 45% upstream, 10% to 15% midstream that could be a little higher, downstream between 15% and 20%, environment services between 25% and 30% and then other is makes up the rest. So, again principally upstream and the preponderance of that would be (floaters), Jeff.
Jeff Spittel – Global Hunter Securities: And then modeling question on Q1. There is a lot going on in both segments anything you could do to help us out in terms of moving parts that are going to impact the segment operating margins in the first quarter specifically?
Mark E. Baldwin – EVP and CFO: Jeff, this is Mark. One thing historically that first quarter has been a slower quarter, that’s why we are guiding 60 to 70. Our fixed cost are spread roughly 25% per quarter and (indiscernible) period cost. And therefore the overall margins for the first quarter are going to be lower because of those fixed cost being spread ratably than our overall full year guidance, Jeff, is all I would say right now.