London-based oilfield contractor Acergy S.A. (ACGY) reported significantly better-than-expected fourth-quarter (ending Nov. 30, 2009) results on the back of solid margins, strong operational performance, and good project execution skills. Earnings per share from continuing operations came in at 39 cents, well above the Zacks Consensus Estimate of 18 cents.
However, compared with the corresponding quarter of 2008, Acergy’s earnings per share was down 11.4%, reflecting the still tentative operating environment due to the commodity price and credit market overhang.
Revenue & Operating Performance
Revenue for the quarter increased 9.5% year-over-year to $621.9 million, primarily due to robust exploration and production activity levels in West Africa and Asia Pacific, partially offset by weak contributions from the North Sea and Brazil. The sales figure easily beat the Zacks Consensus of $543 million. Gross profit was up 15% year-over-year, reflecting good project execution and improved vessel utilization.
Operating income from continuing operations was up 11% year-over-year, mainly due to good operational performance and a slight reduction in administrative expenses, partly offset by lower contribution from associates and joint ventures. Adjusted EBITDA from continuing operations for the quarter was $163.3 million, up nearly 21% year-over-year, while EBITDA margin was 26.3%, an increase of 250 basis points.
Backlog
Acergy’s order backlog, as of Nov. 30, 2009, stood at $2.8 billion, up from $2.6 billion in the previous quarter and the prior-year quarter’s level of $2.5 billion. Of the $2.8 billion total backlog position, $1.7 billion is likely to be executed in fiscal year 2010.
Capital Expenditure & Balance Sheet
Acergy’s capital expenditures for the quarter were $34.9 million, bringing the full-year total to $171.8 million. At the end of the quarter, the company had cash on hand of $907.6 million, up from $807.0 million in the prior quarter.
Outlook
Management indicated that the medium-term business environment has improved with oil price operating in ‘appropriate’ range with greater stability. The company anticipates more activity in the conventional West African market, that too at good margins.
In particular, Acergy is encouraged that some of the company’s relatively high-margin Sub-sea construction, Umbilicals, Risers, and Flowlines (SURF) activities, which were delayed during 2009 due to macroeconomic concerns, are expected to come to market. However, given the size and complexity of these new major SURF projects, offshore installation is not expected to commence before late 2011.
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