Lufkin Industries Q4 2007 Earnings Call Transcript

Lufkin Industries Inc.(LUFK)

Q4 2007 Earnings Call

February 14, 2008 10:00 am ET

Executives

Douglas Smith - Chairman and CEO

Jay Glick - President

Bob Leslie - VP, Treasurer and CFO

Chris Boone - Corporate Controller

Analysts

Collin Gerry - Raymond James

Byron Pope - Tudor Pickering & Co

Bradley Teets - KDT Investments

Eric Mentz - Eagle Assets

Presentation

Operator

Good day everyone and welcome to this Lufkin Industries fourth quarter 2007 conference call. Today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn the call over to the Chairman and Chief Executive Officer, Mr. Douglas Smith. Please go ahead, sir.

Douglas Smith

Thank you, operator, and good morning, everyone. Welcome to the Lufkin Industries fourth quarter conference call for the period ending December 31st, 2007. With me this morning is Jay Glick, President, Bob Leslie, Vice-President, Treasurer and Chief Financial Officer, and Chris Boone, Corporate Controller.

After my brief remarks, Jay will review the status of our business segments and Bob will provide you with more detail on our financial results. After our remarks, we will respond to any specific questions you may have.

I would first like to read our Safe Harbor language. The conference call today may contain certain forward-looking statements including by way of illustration and not of limitation, statements relating to liquidity revenues, expenses and margins. The company strongly encourages listeners to note that some of all the assumptions upon which these forward-looking statements are based are beyond the company's ability to control or estimate precisely and may in some cases be subject to rapid and material changes.

As stated in today's press release, Lufkin Industries had net income of $19.8 million or $1.34 per diluted share for the fourth quarter of 2007. This compares with $23 million or $1.52 per diluted share for fourth quarter of 2006. Fourth quarter 2006 results included a $0.26 per share benefit, which Bob Leslie will discuss later. Bob will also speak to comparable quarter revenue comparisons, which include business changes in the Trailer division. On a sequential basis revenues were up 7.4% and earnings up 4%, EPS up 6%.

Overall backlog grew 5.2%, sequentially to $202 million on the strength of improved bookings in the Oil Field and Power Transmission divisions, more than offsetting the decline in Trailers. Comparisons that I consider particularly relevant as we wind down our Trailer division are comparisons that exclude Trailer. If we exclude the revenue of our Trailer division the fourth quarter comparison between 2006 and 2007, which show revenues up 4.7%, the same comparison for the full year '06 versus '07 shows a revenue increase of 5.6% in 2007. As you can also calculate from our press release the backlog, excluding trailers, at the end of 2006 is now up 22% at the end of 2007.

Cash generation in the company was on plan, including our capital expenditure program and our stock buyback. Bob Leslie will elaborate on this later. We are generally pleased with the fourth quarter results, particularly the intake of new orders in the Power Transmission and Oil Field divisions. At this time Jay Glick will provide more information on each business unit. Jay?

Jay Glick

Thanks, Doug. Markets served by Lufkin's oil field and power transmission division remain strong during the fourth quarter. The fundamental drivers in those markets have long-term strengths, but we also recognize the short-term uncertainties associated with the US economy.

As discussed in period calls, Lufkin's Trailer division has been buffeted by the slowdown in transportation spending during the past several years. The precipitous decline in the market for flat and dump trailers drove our decision to suspend activities in this division during the first quarter of 2008.

Let's begin with a brief explanation of that decision. New trailer demand has been hammered by the combination of a sharp decline in demand, due to the slowing economy in the United States and the severe impact that that has had on the construction and housing sectors. Lufkin's flatbed and dump trailers are used in those sectors and we have felt the impact of the reduced demand.

According to the Americas Commercial Transportation research company, ACT a research firm that analyzes the US trailer market, new orders for flatbed trailers were off 43%, and dump trailer bookings declined 27% year-on-year for all domestic trailer producers. Lufkin’s same period bookings for trailers were down 63.4% but this decrease also includes the drop in van bookings. Adjusted for flatbed and dock trailers only bookings were off 53% year-over-year.

Given our assessment of our long-term prospects for volume, pricing and the bearing of the potential return from our Trailer division, we chose to suspend the activities in this division by completing existing order commitments. The current production schedule projects completion of business on the order book, by the end of Q1. Given the decrease in activity in this division during the past several years, this move will not materially impact the overall performance of Lufkin industries. During Q4 trailer division revenues were 5% of our total revenues.

Turning to Oil Field, Lufkin’s Oil Field division witnessed a stronger demand for its products and services during the fourth quarter, with bookings increasing 14.3% sequentially to $119 million at the end of the year modestly ahead of the 2006 level. This is in part due to increased spending in the [oil rig] sector of the oil and gas industry where Lufkin’s products are principally used.

New order intake was up significantly in our international markets and up slightly in the United States. Quarter-on-quarter international demand was strong in both Latin America with new orders up 35% and in the eastern hemisphere, where orders for new equipment and services were up 41%.

As a percent of the total Oil Field bookings the international component increased from 35% to 41% sequentially, reflecting the more active markets in those regions, as well as the increased focus the company has placed on developing markets outside of North America. At the same time the investments in plant equipment in the regions are enabling us to more fully support customers in those markets.

New bookings for Canada were also up 23% over Q3, in part due to seasonal increases in Canadian activities. We remain cautious about the longer term impact of the changes to the increased royalty rates in Alberta and their effect on capital spending in the province.

Backlog increased 20.7% sequentially to $76.8 million in Oil Field. As we have said before our Oil Field business does not typically enjoy a large backlog because project lead times are in those cases very short. However, the increased backlog reflects the greater element of international projects in North Africa and Latin America and their attendant longer lead times.

Our outlook for this part of the business remains very positive driven by the strong global demand for oil coupled with the existing limitations on supply, which continue to support oil prices at the upper end of their historic range.

We recognize the uncertainties that are attached to the US economic outlook but believe those will not materially impact global demand, baring a major dislocation in the US economic activity.

I'll turn to Power Transmission now. The Power Transmission division saw bookings soften slightly 5.9% sequentially to $45.4 million but still recorded a record level of bookings of $185 million for the year, up 10.7% over the previous record set in 2006.

The sectors that drove Q4 bookings in Power Transmission were oil and gas at 35%, power generation and petrochemical applications each representing 13% of the total. For the full year all sectors exhibited growth with bookings for oil and gas projects representing 29% of the new orders followed by power generation at 16%, marine at 16% and petrochemical at 10%.

Geographically power transmission bookings are split 45% for the United States, 45% for the Eastern Hemisphere, 6% for Latin America and 4% for Canada. We continue to be encouraged by the growth and revenue from Power Transmission and its contribution to the company's bottom line performance. Based on our view of the markets, combined with the knowledge we have of active projects under bid or in the budgetary stage, we expect bookings to continue at or above the pace we saw in 2007 and with a similar mix of segments driving demand.

The challenge for 2008 in this division is in the execution as we ramp up to the higher volumes of activity. Given the capital spending in this division, together with additional personnel, Power Transmission is well positioned to achieve the revenue growth we expect for the coming year.

Overall, the company had a very good quarter, with revenues up 7.4% sequentially and EPS up $1.34 for the quarter compared to $1.26 for Q3. Our view for 2008 is for continued top line growth in both Oil Field and Power Transmission divisions.

We anticipate that Q1 will be impacted by the seasonal slowdown that we historically see. On that basis, we are providing guidance for Q1 earnings in the range of $0.90 to $1.00, reflecting our normal seasonal challenges for Q1. Our guidance for the full year 2008 is for earnings in the range of $5.00 to $5.20 per share.

Bob Leslie will now provide a more detailed explanation of Lufkin's financial performance during the fourth quarter.

Bob Leslie

Thank you, Jay. Good morning to all conference call participants, thank you for your interest in Lufkin Industries. As both Doug and Jay indicated, fourth quarter 2007 revenues were $157.7 million as compared to $165.6 million for the fourth quarter of 2006, this represented an increase of $7.9 million or 4.8%.

In spite of the 4.8% net decrease in total company period-on-period revenues Power Transmissions revenues actually increased to $8.8 million or 25%. Oil Field revenues were down slightly by $2 million or 1.9%, reflecting soft North American markets as anticipated Trailer’s period-on-period revenues were down $14.7 million or 65% reflecting no fourth quarter 2007 van business and the continued soft flatbed and dump volumes.

As previously discussed the company exited the van market in the third quarter of 2006 and ran that backlog out through the first quarter of 2007. In January of 2008 the company announced that it will also exit the flatbed and dump markets and will run those backlogs out in the first half of 2008 and then cease operations in the Trailer markets.

While fourth quarter 2007 net revenues were down compared to the same period of `06 the company experienced a sequential revenue growth in Oil Field as compared to the third quarter of 07 up $9.9 million or 10%. Revenue from the company’s main pumping unit plant in Lufkin were up $6.7 million or 17% as compared to the third quarter of `07 strong international shipments were the biggest components of this increase.

Similarly the fourth quarter revenues in Canada were up $3.2 million or 67% as compared to the third quarter of 2007,. The continued strong revenue result from Power Transmission reflected the increased shipments from it’s backlog and it’s continued strong order book. Compared to the fourth quarter of 2006 Power Transmission revenues of $43.5 million were up $8.8 million or 25%.

New unit sales from Lufkin Texas and Lufkin France represented $8 million of this increase. Lufkin France's revenues were up $4.9 million or 66% representing a strong energy play.

As reported in this morning’s press release, fourth quarter net income of $19.8 million or $0.34 per diluted share, as compared to reported net income of the fourth quarter of 2006 of $23 million or $1.52 per diluted share, which contained a $0.26 per diluted share net credit for R&D tax credits for the years 2002 to 2006 of approximately $0.30 per diluted share, partially offset by a $0.04 per diluted share expense accrual associated with the companies exit and run out of its Trailer van backlogs.

On a comparable basis the fourth quarter 2007 EPS of $1.34 is up $0.08 or 6.3% per diluted share, as compared to the same period of 2006. This is significant, when one recognizes that the revenues between the two periods were down $7.9 million or 4.8%.

Gross margins for the fourth quarter 2007 reflected this positive leverage on earnings by increasing to 28.5% of revenues, as compared to 25.9% of revenues during the fourth quarter of 2006. Oil Field’s gross margins remained strong at 27.8% of revenues. Power Transmission’s margin for the fourth quarter were 31.4%, as compared to 35.5% for the same period of '06, reflecting a more typical balancing of the revenue mix to include a combination of low speed and marine units, along with the higher margin high-speed units. Going forward, this balance should provide continued growth and increase plant utilization.

Fourth quarter 2007 SG&A expenses were $999,000 or increased to $999,000 or 6.8% as compared to the fourth quarter 2006 SG&A expenses. The increase in SG&A spending reflected the increased personnel cost company-wide, foreign travel associated with the strong international market, the increased foreign sales commission, increased engineering costs driven largely by the increase in Power Transmission backlog. As a percentage of revenue, fourth quarter 2007 SG&A expenses increased to 10% of revenues as compared to 8.9% for the fourth quarter of 2006. This increase in SG&A spending as a percentage of revenues was the result of both increased spending and the reduction of period-on-period revenues.

Full year 2007 revenues were $597 million as compared to $605 million for the year 2006, representing an $8.3 million decrease or 1.4%. Trailer revenues were down $38 million or 48% due primarily to reduced van markets as planned. Flatbed and dump volumes were also down reflecting the continued soft markets.

For the full year 2007, Oil Field revenues were only down $3.8 million or 1% compared to the full year of 2006. Reflecting some recovery in the fourth quarter North American markets continued to be reduced from the prior year, while international markets remained strong.

Full year 2007 Power Transmission revenues increased 27% to a $158.5 million, up $33.5 million. The volume increase provide several good business indicators to the company.

First, Power Transmission’s increased participation in industry-related sector such as oil and gas, refining, petrochemical and power generation enhanced Power Transmission’s product mix both domestically and internationally.

As Jay has discussed, second, quarter France volumes increased $14.3 million or 57%, associated primarily energy related participation.

Third, overall volumes increased in response to the second year of record bookings and increases in the backlog.

Fourth, Lufkin continued to expand it’s service and repair business into the international markets

And last, these increased volumes balanced with product mix improvement provided improved plant utilization and leverage on fixed costs resulting in the year-on-year gross margins improving to 33.1% as compared to 32.8% for 2006.

Reported full year 2007 net income was $74.2 million, up $1.2 million or 1.8% on a 1.4% reduction in revenues. Full year reported earnings per diluted share were $4.92 as compared to $4.83 per diluted share in 2006, up 1.9%.

When the net favorable impact of the fourth quarter 2006 R&D and trailer van accrual were removed to 2007 full year EPS of $4.92 is up 7.7%, as compared to a normalized $4.50 per diluted share for the full year 2006 on basically flat to slightly reduced revenues.

As noted in the revenue discussions, the earnings leverage provided improved gross margins. The total company gross margins increased 2 percentage points to 27.9% of revenues up from 25.8% of revenues in 2006.

Oil Field’s full year gross margin improved to 27.5%. Trailer’s gross margins improved to 11.6% and Power Transmission’s gross margins were 33.1%.

SG&A expenses for the full year 2007 increased to $59 million or 9.9% of revenues, up from $53 million or 8.8% of revenues in '06.

This increase reflected the full year cost of new international sales offices, primarily in Power Transmission. the increased foreign sales commissions to third party representative's, increased international travel, the annual inflationary increase in personnel cost, primarily salary and the increase of stock option expense associated with the increase in the number of retirement age individuals.

Total year 2007 EBITDA was $127.5 million, or 21.4% of revenue, as compared to $116.8 million, or 19.3% of revenues in 2006. The company ended the year with $95.7 million in cash and cash equivalents as compared to $57.8 million at the end of 2006, representing a net $37.9 million or 66% year-on-year increase.

During 2007, the company spent $27.5 million to repurchase 500,000, or approximately 3% of its outstanding common shares. Also during this year, the company spent $19.3 million on capital spending, primarily in its Oil Field and Power Transmission division. The company also increased its quarterly dividend twice during 2007 and paid out $3.1 million in total dividends.

During 2007, inventories increased $7.5 million, primarily in Power Transmission. Receivables increased $1 million associated with the larger mix of international revenues and taxes payable were reduced by $4.6 million.

During the fourth quarter of 2007, the company both expanded its credit facility with JPMorgan Chase to $40 million and extended its maturation day to December 31 of 2010.

At this time, this concludes the financial overview, and I would like to turn it back to Doug and to Jay.

Douglas Smith

Thanks very much Bob. At this time, operator will be happy to take some questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And we'll go first to Collin Gerry with Raymond James.

Collin Gerry - Raymond James

Hi, good morning guys I want to ask a quick question, dive a little bit more into the guidance. It looks like you have a degree of seasonality in the beginning of the first quarter could you just kind of go over with us how that goes through in the Oil Field and the Power Transmission division and really what’s driving that and what kind of magnitude we should expect?

Jay Glick

Okay I’ll start of Collin. The main issue on Oil Field is, we have some contracts that involve inventory overhangs at the end of the year that result in Q4 invoicing of any inventory that has not been called off early in the year. That sometimes causes the pipeline to empty out in fourth quarter and we start trying to replenish that in the first half of the year, but it lead to this situation where Oil Field sometimes falls off a little bit on the revenue side comparing Q4 to Q1.

Power transmission has similar seasonality. We have a lot of projects that seem come to fruition or come to their climax in terms of shipment in Q3 and Q4 in PT. Some of that also corresponds to our customer in that division’s build schedules. There is one other factor PT where we have the seasonality in the sugar business on the repair side where the growing season is the time that they try and replenish all their sugar mill capital items and that typically means that in Mexico and South Louisiana that Q3 and Q4 are the big quarters for shipments and that can have a seasonal impact on the power transmission.

But that’s really the seasonality that we typically see and if you go back historically I think you'll find every year but last year, we've had a slower Q1 than the other quarters.

Collin Gerry - Raymond James

Yeah I see that and I guess just following up on that. It looks like you can see it from a revenue perspective and I'm just thinking mainly on the Oil Field side if you are getting a little bit less volumes going across your plants, maybe the margins come down a little bit too in the first quarter?

Jay Glick

You're talking about the utilization stocks?

Collin Gerry - Raymond James

Yes, yes.

Jay Glick

We may see that but it's not all that significant because sometimes we're building up for shipments in Q2 that just don’t get invoiced in Q1. We're replenishing some of the inventory that we drew down in the invoicing process in Q4 associated with stocking agreements. So we may see that but I don’t look for that to be a major issue.

Collin Gerry - Raymond James

Okay. And then, not to dive too much into it but on the margin side Oil Field saw pretty nice bump to almost the 28% range and we saw sequentially Power Transmission come down to the 31% range. Can you give us how we should look at those two divisions in the balance of '08 and how that differs from maybe the first quarter?

Jay Glick

Well let me start with PT. I think Power Transmission you may see more of the same for the first half of this year because the mix in PT is going to be more returning to a historic mix where we have a larger element of low-speed that tends to dilute the margin but we also make up for that, in part with the higher utilization on the plant.

Oil Field I think you're probably going to see that Oil Field margins somewhere in the neighborhood of what you're seeing right now, maybe down slightly. What we typically see in oil field is better margins on the international business and slightly lower margins on domestic business. And given that, we may in the first quarter see the kind of a more historic mix between domestic and international of that margin may soften a bit, but I think for the year we are anticipating that the international business will buoy that back up for our full year number.

Collin Gerry - Raymond James

Okay. Well, I appreciate the color there. Finally just, I want to hone in on the trailer side. Maybe give us a little bit better perspective of what the financial impact of that could be as we go to 2008. I mean, are we burning off inventory in the first quarter to the second quarter and where does SG&A and kind of depreciation fall into that business?

Bob Leslie

Okay. First of all, I think we all need to understand that when you follow the strict rules of the accounting guidance, we have not viewed that as a discontinued operation and it is technically in a run out mode. We see that, as we continue to run that out and reason I say it's not a discontinued operation, we have not laid anyone off, we have not incurred any severance and the accounting regulations prevent us from booking a more global or comprehensive accrual and disclosing at that. I would note that in January, when we made our announcement that we would choose to exit and run out this business, it triggered impairment asset testing and we successfully completed that. It has been preliminarily reviewed by our external auditors and there have been no problems or indicated impairments.

Now, going forward as we run this out, for example, as I said last year in my overview for the full year last year, we had $41 million worth of revenues that was down from $79 million or it was down $37 million that was offset by our Transmission but in the fourth quarter on a standalone basis the trailer contribution was basically break-even to the slightly early up, in that it contributed about $0.03 per share on an after-tax basis and that compares with also a break-even or $0.02 per share in the fourth quarter of 06. So I think as you can see Trailer was basically at break-even situation for us and we have not finalized our plans that would involve some headcount reallocation of people and ultimately the reallocation of corporate overhead. So at this time we're not fully in a position to discuss that but I think my reference point is Trailer has been basically a break-even at this point.

Collin Gerry - Raymond James

Okay well. That’s helpful I’ll turn it over for further questions. Thanks guys

Bob Leslie

Thank you

Operator

And we'll take our next question from Byron Pope with Tudor Pickering & Co

Byron Pope - Tudor Pickering & Co

Good morning guys. Just want to follow-up on this issue of guidance and as you mentioned seasonally Q1 is generally down versus Q4 but the order of magnitude implied by your guidance at $1.90 just implies a much bigger sequential decline in revenues. And so, Bob I was wondering if you could as you've done in the past, kind of walk down the various pieces of the problem in Q4 and then what I am really trying to delve into is where there any extraordinarily large export orders that hit in Q4 and that’s causing the big sequential drop?

Jay Glick

The only the thing that I would cite, this is Jay, is the impact of Q4 bookings for stocking arrangements that we have with a couple of firms. That would cause Q4 to be higher than what we're going to see in Q1 mainly in Oil Field. I don’t know if there is any other things to add to that from Bob’s statement.

Douglas Smith

Well this Doug I think one of the things that we do need to keep in mind and you see there's a lots of places in the oil-patch. Because you do have end of the year activity, vis-à-vis budgets and using them up and then in the first quarter revising plans look at them and then getting lost on a new set of procurement activity that sort of thing.

So the there's issues associated with our customers as much as in our backlogs and that sort of thing and you have little bit of that at Power Transmission, although Power Transmission typically has a much more solid backlog but there is on account of activity level in the fourth quarter that in my experience has been particularly associated with the rotating equipment business. That they are really kind of a re-digestion process in the first quarter.

So some of the seasonality doesn’t lend itself to the kind of analysis that we are comfortable with, with our spreadsheets or whatever. It has to do with the activity levels in the offices and kind of seasonality. Frankly, in my history in the oil service business 25 years ago when we had the businesses that we typically closed our books at the middle of the summer, the first quarter that ended at the end of September, we all sat around and said, what in the world happened here, what changed and there really is not a whole lot point at to.

But anyway, I don’t want to duck the question because we do have solid backlogs but there is some kind of non-quantified elements of the business activity in the first quarter for whatever reason.

Byron Pope - Tudor Pickering & Co

Okay. And then Doug with regard to the full year 2008 guidance, I mean, if I look back to a year ago and your guidance at that point for '07 was $4.50 to $5.30, and you just are just of at $4.92, so well above the low end. You've got a tighter band this year kind of $5.00 to $5.20 and what should we think about as being your key assumptions driving the low end of your '08 guidance i.e. with the $5. Are you assuming that Canada is down year-over-year and US flattish? And how are you thinking about kind of the low end, your assumption is having a low end with that range through the full year '08 guidance?

Jay Glick

My response would be with the low end of that guidance assumes that there is slight drop in Canada from where we are expecting it to be and that the US would be flat, and maybe that we would see the increasing pricing pressure domestically. And that's -- that would be my short answer. It does not include any cataclysmic change in the US economy or anything like that. We are really forecasting things to stay pretty much as we saw them in Q4.

Byron Pope - Tudor Pickering & Co

And what's driving that pricing pressure in the US market? Is it imports from the Chinese or is it other competitors, kind of what are the dynamics?

Jay Glick

Yeah. But, my response would be its more driven by the oil companies trying to get control of costs, and I think everybody in the industry, regardless what sector you're in from a drilling contractor to a frac unit to an equipment supplier is going to be under some pricing pressure.

Byron Pope - Tudor Pickering & Co

Okay. And then, my last question just relates to CapEx. Bob, I think you mentioned $19 million spent this year, and kind of implied maybe kind [$7.5] million you spent in Q4. What are your thoughts with regards to 2008 CapEx? Are we looking kind of $20 million to $30 million range? How you are thinking about at this point given that you're planning to expand the France facility?

Bob Leslie

First of all with regards to $19 million we spend this year as Doug has indicated in the past we had a higher capital plan this year but we did have some timing issues on projects that are overlapping. So in 2008 we are seeing a higher capital spending but at the same time we realize that there maybe things that we plan to do in 08 that will roll into 09. So I would say that the 2008 capital spending number probably will be somewhere between $35 million and $40 million.

Byron Pope - Tudor Pickering & Co

Okay thank you guys

Operator

(Operator Instructions) we'll go next to Bradley Teets with KDT Investments.

Bradley Teets - KDT Investments

Thank you for taking my call. In general, I think of Lufkin as serving the oil factor more so perhaps than the natural gas sector and with oil prices as high as they generally are, is there anything you can do to try to increase sales beyond expectations and capitalize on these higher oil prices because of the things -- that I haven’t seen anything on your conference calls about on foreign competition necessarily hurting you significantly. I wonder if there is anything you could do to keep sales moving up even more?

Jay Glick

Brad I think we are -- we think we're doing a lot in that area. We're certainly focused on expanding into some geographic markets that we're not into currently. We have products -- growth opportunities in our automation product line that I think we'll come to fruition here later in the year and hopefully that we'll be the subject of each of our conference call.

We also see growth opportunities in Argentina our access to certain markets in Latin America through the Mercosur is certainly helped by our automation in Argentina and also growth in Mid-East and North Africa as we expand our service centers in that part of the world.

So I think we see a lot of opportunities for growth, we've tried to build some of those in but there may be other things that I will talk about in future conference calls.

Bradley Teets - KDT Investments

Okay thank you.

Operator

And we'll go to Eric Mentz with Eagle Assets.

Eric Mentz - Eagle Assets

Hi guys, just again I'm sorry to belay with the point on the Q1 guidance, but just given the fact that --I understand, I guess there may have been some kind of contractual Q4 obligations but I'm trying to reconcile that with how strong the bookings were in Q4 and that the backlog is up so strong sequentially.

Jay Glick

Yeah again a lot of the Q4 bookings had to do with international projects that will not all invoice in Q1. Some of those are going to be spread across Q2 and Q3. And in addition to that the PT bookings certainly are longer term. So the Oil Field bookings have a strong international element as I've mentioned in my discussion and I think the PT bookings also have pretty long lead times associated with those.

Eric Mentz - Eagle Assets

Well you guys clearly saw from the press release fourth quarter momentum in North American oil bookings right?

Jay Glick

We did, we did.

Eric Mentz - Eagle Assets

Ok, can you maybe elaborate on what specific regions are stronger than others in North America?

Jay Glick

Clearly the regions that we're in West Texas improved a bit. We've had some success from the Rocky Mountains during the quarter and the Northern Rockies in particular. Our automation products were strong, Latin America was very strong but if your interested mainly in North America its going to be the Rockies, West Texas and California.

Eric Mentz - Eagle Assets

Okay. And then, just on the share buyback, I think the original authorization is $30 million, is that right $30 million?

Jay Glick

It was $30 million and we had about $2.5 million left over from the previous authorization, we currently have about $4.6 million left on the combined authorizations.

Eric Mentz - Eagle Assets

Okay. I am assuming at this level stock, given the outlook here that you would consider expanding that?

Jay Glick

Yes. Well, we will continue to run out what we have and then our Board reviews that each quarter, but we will probably spend out the remainder that we have.

Eric Mentz - Eagle Assets

Okay. Anything on acquisitions?

Jay Glick

There is always a lot on acquisitions, there will be a lot more coming and we are constantly reviewing opportunities in this area and its something that high our agenda right now.

Eric Mentz - Eagle Assets

Okay. Thanks, nice quarter.

Operator

Thank you. And with no additional questions in the queue, I'd like to turn the conference back over to Douglas Smith.

Douglas Smith

Okay. Well, thank you very much. We greatly appreciate everyone joining us and taking the time to be with us today. We've got a lot of optimism as has been expressed today, and we look forward to talking with you at the end of the next quarter. Thank you very much.

Operator

Thank you. That does conclude our conference call today. We appreciate your participation. You may disconnect at this time.

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