NATCO/Cameron
Meeting
Moderator (John Clarke, CEO
Natco)
I want to
add my welcome to Scott for not only the people that are in this room, but also
those that are going to listen in worldwide or follow up on the webcast later
on. We’re here to introduce a great topic, but before we do that, let me remind
you of a couple of housekeeping rules. Obviously, we have a very full
house today, overflow crowd. Safety’s still a primary concern. We can exit
through both of these doors out the door by Louis, out that way to the left –
Riley, point back there in the back. So, don’t trample anybody if anything
happens.
All
right. Shock value there. This is a great day I think for Natco and
for our shareholders, employees and customers. I think it’s one that
we’ve all worked very hard to accomplish and I want to tell you that it really
is the result of the hard work of everybody in this organization. You
are the people that create the value and this is the value proposition that
Cameron has recognized and this is why we’re here because last night we
announced a transaction that when it’s approved by our shareholders, will result
in Natco becoming part of the Cameron organization.
And so I
thought what we would do today is try to answer a few of your questions because
no doubt there are more than a few bouncing around in your head. But
I thought we would talk about what are we going to do; why did we do it; what
does it all mean; what’s next; how do I keep up; and by the way, who’s that
guy? And if I can get him to stand up, this is Jack Moore, who’s the
CEO of Cameron. (Applause) There you go. We always treat
our guests warmly, but I’ve had the pleasure of getting to know Jack really
since the first of the year and I can tell you that if tone at the top counts
for anything in an organization and you know that I am a strong believer in
that, Cameron is a great organization, great leadership team, many of the same
core values that Natco had and I think it goes from this guy in this corner
office. Jack, by way of background has been there since
1999. He’s moved up through the organization. He’s been
the Chief Operating Officer since the early part of 2007 and took the CEO’s role
in April of last year. In a few minutes, you’re going to get a chance
to hear a little bit more about Cameron and some of the things that they think
are important as they look at this combination going forward.
So, what
are we doing? Natco is going to be acquired by Cameron in a stock for
stock transaction and I think it’s important to note that that is a transaction
that is not a sale. It is a combination where our shareholders will
benefit from all of the things that we get by bringing these two organizations
together. The trade itself was that our shareholders will get 1.185
shares of Cameron stock for each of our Natco shares that we own and as of the
date that we cut the deal, which was last night, that meant that the share price
was worth $38.45 and that implied an enterprise value of $780 million and
importantly, for our shareholders that was about a 42 percent over the last 10
days of trading. Again, I think acknowledging the merits of the deal going
forward.
There are
still a number of hurdles that we have to get through in terms of regulatory
approvals to get this across the goal line. We got Hart-Scott Rodino, which is
an antitrust filing that we’ve got to clear. We’ve got to get through the SEC
and then eventually, we’ll have to have a shareholder vote, all of which I think
will occur somewhere in the third quarter kind of timeframe and in terms of how
we will fall into the Cameron organization in their Drilling and Production
Services group, which is the largest part of their organization, we will plug
into that group and align ourselves with Petreco, who we all know as a fierce
and friendly competitor from time to time and we will also fold in our subsea
initiatives with the things that Cameron has had in flight for the last several
years.
So, why
do we do this? And, again, I would repeat that we, the board, we, the
management, were not pursuing a sales transaction. We were perfectly content to
run this company and let Patrick retire in 15 mores, right? But, the
fact of the matter is when you do a good job, it gets recognized and Cameron has
long I think followed that Natco’s progress as we followed. There’s a
lot of synergies between the two companies and Jack approached us earlier in the
year about whether we would be interested in some type of strategic combination,
which again makes a kind of sense when you hear the story fully laid
out. If you look at what we do bring together, if you look at our
electrostatics, our CO2 membrane, our high performance separation with their
produced water, their gas conditioning and their mag reclamation, which I think
is fascinating – I don’t know anything about it. We really
do bring together like binding two companies, a full slate of technologies
offering to offer up to our customers. In terms of the synergies that
come from the combination, we are able to leverage our infrastructure in our
organization in a very big way. I think we will end up putting the
best athletes on the field as I said on the phone call today and I think that’s
a great opportunity for both organizations moving forward.
The other
thing that I think is significant from our standpoint is we do eliminate the
cost of being a public company and the fact of the matter is we are too big to
be small and too small to be big. So, we’re kind of caught in that middle zone
where it’s hard to make something work without either having a lot more scale or
being small and running under the radar screen. And again as I talked
about the product offerings get a boost on both sides. The other exciting thing
I think for the future is the opportunity to further invest in our R&D
effort. This is going to be a huge plus when the lab opens towards the end of
the year. We’ll be able to bring the best and the brightest that
we’ve got. That project is going to continue and we’re going to work
to bring more new products to the market as quickly as we can, particularly
advancing both initiatives from both companies on the subsea side of the
part. And again, bottom line, this is the way to maximize the value
for our shareholders over time.
Core
values. That was one of the things that we talked a lot about. To
begin with culturally, how will these organizations come together, and as I
said, I think that you’re going to find soul mates in the Cameron people like
you find here at Natco, shared values around safety. The first thing
that we talked about was no one gets hurt and nothing gets harmed, which I think
was a great little capsulized version of what we think of as Target Zero and our
focus on HS&E; compliance as well. State-of-the-art
compliance programs all carry on the same tradition of Natco in terms of doing
business the right way in the places that we operate.
So, what
does it mean? As I said, it’s the ultimate compliment, the ultimate
recognition of success is that somebody wants to own you and is willing to pay a
premium price for it. So, I think you should all pat yourself on the
back. It, no doubt, brings short-term uncertainty,
right? It’s okay to be nervous. Everybody
nervous? Yeah. Okay. That’s all right. But it’s
also going to move from nervousness to I think some excitement around some of
the things that we’re going to be able to do together. So, it’s okay to be
nervous for awhile. You’re going to have lots of questions and we are
going to do our very best to answer those questions in a timely, forthright
manner like we’ve done on everything that we put the organization through in the
last four or five years. The proudest thing I think of this
organization that I’ve seen in five years is the ability to adapt and embrace
change and this is yet one more of those chapters that the organization has to
step up to, and I think as you get into it and get comfortable with it, you’ll
see that those opportunities are there not only for us as a company but for you,
personally, as well. We’ve got about 75 days, 90 days, maybe of
transition to work through and that’s going to be a tough time because there’ll
be distractions, we’ll be working on post-closing integration while at the same
time doing the three jobs that you have to do in the eight to five shift anyway.
But, again, new opportunities I think will abound out there.
What’s
next? The regulatory process and the shareholder vote has to run its
course and we’ll be working on that through the better part of the summer but I
am optimistic that we can get something closed by the end of the third
quarter. We will be forming joint transitional teams to help on the
post-closing integration. Patrick and I have asked Bob Curcio to head
that effort from our standpoint and that will be kicking off later on this week,
early part of next week. We will be working in that period of time to begin to
design the organization that will be best suited for implementing the plan and
obviously, all of the leadership team will be involved and will have a voice in
shaping some of those decisions going forward. And again because we
are now bringing a whole stable of product technologies and portfolio products
to bear, we’ve got to work on how will we best brand the two combined names
which between Petreco and Natco, not only are household names but the brands
that are sub-branded underneath those, we have to figure out how that all fits
in and works together. And again, during this period of time, it’s a great
opportunity to get to know more about the company that you’re going to be part
of and the people that you’re going to be working with. So, within the rules of
the road in terms of exchanging information and data, it’ll be a great time to
get to know each other. And, again, unfortunately we still have to
run our business everyday. For all of the people that are involved in
Oracle, we’re going to continue on that track to get Go Live 2 in place and push
on the migration to that EBS system.
In terms
of how do you keep up? Nobody likes this except me, but as you know,
I get to do this one more time. Communication is the antidote to uncertainty and
if you have questions, ask them. We may not have all the answers, but
we’re not trying to hide anything from you at all and if we can tell you within
the guidelines of what the regulations will allow us and what our business
practices will allow, we’re obviously going to be responsive to
that. We are working on how to best formulate those communications
plans. As the deal progresses, we’re working on some frequently asked
questions. We’ll have explanations around benefits – that’s always going to be
an important question in people’s mind as they migrate from one to the
other. Hopefully, we’ll be able to use our website and Cameron’s
website in some fashion, again, subject to legal constraints because we will be
in a period of registration and there are all sorts of rules around solicitation
of votes and the like. But I would encourage all of you if you have not done it
yet, visit the Cameron website. It’s very helpful and I think it’ll
be a good way to begin to educate yourself.
Patrick
and I and the rest of the team are fully committed and I’ve got to read this
‘cause I want you to listen to the words, “We will tell you everything you need
to know to do your job and make your personal plans as soon as possible, even if
it is not yet everything you want to know.” Now, I’ve said that to my children a
few times. They don’t like it very much, but it’s a fair
trade. Right? Everything you need to know we will tell
you. Everything you want to know, you may not be able to know because we may not
be able to even explain yet. So, again, everybody work
together. It’ll all work out – we’ll keep everybody plugged
in.
Who’s
that guy? All right. Let’s make him work for his dinner
here.
Jack Moore, CEO
Cameron
First of
all, let me thank John for the privilege of getting to visit with y’all in
person. This is, you know, I’m looking at the best part of Natco
right here and that’s all the employees in this room and all the employees on
this call. That is always the greatest asset that you can acquire in any kind of
transaction. So, I’m privileged to be able to address you
personally. I will say, Wow! Wow! This is wow
for Cameron. This is the largest transaction we have ever done in the history of
Cameron. So, $780 million value transaction, y’all have created one fabulous
enterprise and we are just thrilled to be able to bring it into the Cameron
family and I hope that as we go through this process over the coming 60, 75 days
and the sooner the better, to bring this thing into the organization, I think
we’ll all be pleased.
You know,
one of the things that John and I when we first talked about this opportunity
and I will tell you that Cameron has admired Natco for many
years. This is, you know, this is something we have talked about
probably more among ourselves and in Cameron in terms of how can we put these
great companies together? And really, to be honest, how can we bring Cameron in
to make Natco a part of Cameron, to make Cameron more effective and a bigger
player in this separation process technologies business? If you look
at Cameron and John said go on our website, what we do is everything that our
customers produce flows through our products – no different than
yours – and if you look at what process technologies does in terms of its fit
within the flow of customer products, everything they produce has to be
processed in some way, shape or form, whether it’s onshore, whether it’s
offshore; whether it’s in the U.S. or the Middle East or in the Far East or West
Africa. So, when you think about the impact that you could have if you can touch
that every day, every minute, it’s a wonderful market opportunity because our
industry never sleeps, right? So, this is why this business is
important to Cameron. We fell in love with it after we acquired
Petreco in 2004. We didn’t really appreciate it until we had a piece of the
business and Petreco fit in a very small part of really – not a very small part,
but just a piece of Natco. When you look at Natco with the S&T [Standard and
Traditional] and A&C [Automation and Controls] businesses, we’re not in
those businesses. So, all those really compliment what we do in other areas of
our industry and the real fit with Natco and I’m talking about when you put both
organizations together and say, Here’s some real synergy from the product side
and the technology side, is really in the IES [Integrated Engineered Solutions]
piece and the Petreco piece. And you guys are bigger than
us. So, we’re just thrilled to be able to have that
opportunity.
I can
talk forever, I know, and John’s probably saying, Look, they have work to do.
So, let’s see, Cameron. We’re a Fortune 500 company. Last year we had
$5.8 billion in revenue. We make money, which John
likes. That’s kind of important, especially in this day and age when
you see other things going on in the world. One thing I will say we
are not going to brand this product to this new company, Pontiac, even though I
know that brand is available today (laughter). So, we won’t use
that. Oh, let me go back. I don’t want to get there that
quick. Here’s kind of a thumbnail sketch of who we are. We
like to build things like Natco but we don’t build things in the process and
separation business. It’s interesting when we acquired Petreco, it
was an outsource strategy and it’s kind of not Cameron strategy. I
mean, if you look at where we got our roots, not unlike Natco – National Tank
Company in what 1920s, I think Patrick – Patrick were you part of it back
then? (Laughter) I don’t think he was. We know
Joe Wilson was.
So, but
you know Cameron got its start in 1922 over here in Houston building blowout
preventers. We invented the first oilfield safety devices I like to say and it’s
evolved now to be what it is and so when you look at our past to where we’ve
gotten to, there’s a lot of similarities in terms of the growth in
the industry and the impact both these companies have made in the marketplace
around the world. But we like to build things and like you, we feel
that when you control the manufacturing process, you control your quality, you
control your delivery, you control your ability to respond to customers in any
way shape or form and I think that’s the true secret to a great company is being
very focused on its customers. Let me tell you, that’s the one thing
that differentiates you in many, many aspects in this business we’re in and if
you can do that better than the next guy, you will win their confidence and
you’ll win their respect and you’ll win their business and that’s the game that
we have to be very, very good at.
Number
one or two in nearly every business. We weren’t number – I think we
were number two in the process technologies business in the
market. Now, I think we clearly can say that we’re going to move into
that number one position. Rarely in your lives do you get to create a number one
market leading company and that’s what we have the ability to do today and
that’s just – it’s just a wonderful opportunity for all of us to be able to
touch every aspect of the separation and process business.
From the
beginning whether, again, the S&T business is what we do all the way to the
IES business, touching it from the wellhead al the way to the
refinery. And that’s what we are creating here. We’re creating a
business that can really spread across all those markets and clearly be the
number one player in the businesses that we’re in. If you look at our
footprint in our other businesses, Cameron’s really made up of 11 different
businesses and I’m going to show you – I can talk to this next slide for
probably hours as Joe Mongreen will attest. I’ll get to that in a
minute, but primarily focused on the process and transportation sides of the
business, we really are truly an oil and gas company and everything that kind of
happened from the front end to the back end, that’s what we like to hang out
in. Deepwater. You know that is the sexy part of the
business now – deepwater – everything’s moving offshore – everything’s moving in
the subsea arena, pre-salt in Brazil, West Africa, Gulf of
Mexico. We’re really good at that. Cameron is very good at
that. And I think that’s going to be something that we can take what
we’re going to create here with Natco and Petreco and be even better at it from
the separation and process side of the business.
After
market. We love to take care of things after we have sold ‘em and
what appealed really to us about the Natco brand and you look in the S&T
business, you look in pieces of the IES business, even in the A&C business
where you have a lot of service components to it. Service, as I said,
is a very key differentiator in this business. If you build it and
you have the ability to service it for many, many, many years to come, you would
create a true value chain and what I say, you really create an annuity with
every installed base and we love to take full advantage of that
annuity. Think of you when you take your car to the dealership to get
it worked on or repaired and you buy oil filters and air filters and everything
else. That’s truly where the money is made and I think we understand
that. I know Cameron understands it. I know Natco
understands it and when you get it, I think you really understand that you have
to put a lot of focus on it and you have to put an organization around it that’s
committed to it and so you are working – you’re going to be working with a
company who does understand that and values it.
A lot of
our business is overseas. Again, not unlike where you’ve seen a lot
of your business migrate over the years so has Camerons. We have
probably 70 percent of the orders we received in ’08 came from outside of North
America. So, we’re going to see that trend continue and it’s a good
thing to work for a company that has a focus on the global market instead of
just a piece of the world and we truly are going to benefit from
that.
I think
it’s important to tell you that you are going to work for a company that is
financially healthy. We have no debt, just like Natco. We have a
billion, four in cash at the end of the first quarter – that’s a lot of money,
but no net debt relative to all of that. So, we’ve got a lot of visibility to
our business in terms of our balance sheet and the opportunities that can give
us to continue to grow and invest in the businesses that we truly
value. And, you know, when we look at how we spend our money, the
first thing we always spend our money is ourselves. When you look at Cameron’s
investments over the last five years, we’ve spent close to a billion dollars
just internally on improving our work practices, improving the things that make
us more efficient, make us more competitive, expanding our footprint in various
parts of the world to investing an infrastructure and facility. I
think it’s one of the things that attracted John and his organization to Cameron
is just the commitment to that and take what Natco’s doing into a lot of these
other markets in a bigger way – having the ability to build some of the products
in markets where that’s going to be very critical to our future.
All
right. Now, I’m going to show you the bubble graph. This
is busy and I know it’s kind of – what is this? It really describes
Cameron in how we’re organized. We have 11 different
businesses. I have 11 folks that wake up every day focused on their
specific businesses. Again, not unlike how you’re
organized. You know, it’s comforting for me to know that I don’t have
to worry about every one of these together, that I’ve got individuals who really
look and say:
·
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How
can I be more competitive?
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·
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What
am I missing to be more
competitive?
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·
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What
products do I need?
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·
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What
technology do I need to be more
competitive?
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·
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How
is my cost structure affecting my ability to run my business most
effectively?
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·
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What
markets am I not serving?
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·
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What
markets do I need to serve better?
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·
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How
do I build this product in this part of the world versus that part of the
world?
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You know,
focus is a true, I think been a true enabler for Cameron’s ability to grow its
business so significantly through just an organic organization over the last
several years and I think it had a lot to do with just how we’re organized and
focus on those businesses.
If you
look right in the middle of this, there’s a circle called Separation and that’s about a
$250 million business today for Cameron. The size of the bubble
represents the size of the business. So, you can see the subsea
surface drilling businesses are close to billion-dollar businesses for
us. And the red circles means it’s sitting within our DPS
group, which is Drilling & Production Systems group. The circles in the
orange is our Valve and Measurement group and then the Compression group is our
Recip and Centrifugal, which are gray, are the compression pieces. In
that, you know, look at the bubble way up there on the right, Centrifugal, you
say, Wait a minute. Does that really fit and everything? Actually
that bubbles moving a little more to the left. The real bubble that I
think we’re going to talk a lot about as it relates to Natco’s products and
capabilities is that recip business. That’s going to be a wonderful
enabler I think for us to expand to markets. But look what happens
when we add Natco to the Cameron portfolio. It becomes a pretty big business,
and we’re excited about that. We’re excited about where it sits, where it’s
focused both on onshore and offshore, deepwater markets. You know I
say deepwater’s important to our future. Onshore is important today.
When you say 98 percent of the wells that are drilled and completed around the
world are onshore, it’s a market you better be focused on and so I like our
portfolio. Things above that line that runs through the horizontally through the
middle of all of this, it shows you the focus we have in surface applications
and it also shows you I think where we have migrated to become a very
significant player in the subsea or deepwater markets.
This
really is, I think, the message I want to get to all of the employees here today
is really the breadth of the organization that Cameron represents, the
opportunities it represents. Many of us at Cameron have had the
privilege of working through a lot of the different businesses that are up here
and I think the strength of any organization’s ability to grow and be successful
is to leverage the talent of its employees and put ‘em where they can best be
successful. You know, as John said you get the best players on the
field and we’ve got a pretty big playing field. You’re coming to work
for a company that is more than just a separation technology
company. It’s more than just a subsea company, more than just a
drilling equipment company, more than just a surface systems company or
compression or valve company. We have the opportunity I think to
create a lot of value, not only for our shareholders but for our employees with
this footprint that we have today.
And as I
could say, I could go on about the organization and you know, the focus we have.
We have about 16,800 employees, Joe? Whatever. When I
joined Cameron in ’99, I think we had about 3,500 employees and so that – that
is a big step change for us and I know we’ll be pushing 19,000 employees I guess
with this transaction. So, anyway, I am – I think I’m probably have allotted –
finished my allotted time, at least on these slides, but be happy to answer
questions. Joe Mongrain, who is Cameron’s head of Human Resources
here is with me. Kevin Fleming, who’s head of Cameron’s Drilling
Production Systems’ HR group is here. Let me tell you, you know you
say why does it fit in DPS? And I will tell you, the guy who runs this piece of
the business as our senior vice president of Cameron is John Carne – John’s over
in Europe right now dealing with some other pieces of the
business. As you can see, he’s got a pretty broad portfolio, but this
fits great and, you know, in terms of it’s where Petreco fits because it hangs
out with some of the things we’re doing subsea, hangs out with some of the
things we’re doing onshore. We just continue to see the great fit that it will
have within this piece of the business. But I will tell you it hangs
out well with the Valve & Measurement – that piece of the business, too, and
I think Compression – as we see the opportunity to create – actually create new
business. We don’t really quite yet appreciate with the Compression
footprint. I think a lot of you have heard of a company called
Exterran who we compete with. I know Frank knows ‘em and you guys
compete with ‘em in the S&T business every day. Well, let me tell, you we’ll
kick their ass with this combination right here. (Laugher) That’s a
fact. Can I say that Kathy? You know, we’ve been – I tell
you what, poor John and I – and I use the word “neutered” around what we can say
about, we’re gonna really go out and, you know, do something with this. Well,
let me tell you, we’re creating a very, very big business and it’s going to wake
some people up and when you look at the combination, the technology, and you
look at the people, you look at the footprint, I mean, there is no where we do
not are not going to just be able to cover up our customers and give them
everything they need. I think it’s going to be a lot of
fun. So, I’m looking forward to it. Thank
y’all!
Question/Answer
Segment
Q: Question
A: Answer M: Moderator
Moderator
Okay. Who’s
got the first question? Come on, Cindy?
Q: What’s going to happen with the Natco
name?
A:
|
I
think you asked, what’s going to happen with the Natco name? As
Jack just said over my shoulder, you know we are very, very fortunate in
that we are bringing two highly regarded and well-recognized brands to the
table in Cameron and in Natco. As I said in my remarks, if you look below
Natco and you see the test brand, you see Cynara, you see all of the other
Port-a-test – the brands that we have reserved at a product level, I
expect that those will continue as they have within the Petreco family,
brands that they cobrand with Petreco and with Cameron. And I
know that will be a central effort of this transition team is how do we
put the best face on the combined entity for our customers so that they
clearly understand what it is that we offer and we take advantage of that
brand identity in the various markets that we’ll serve. You
want to add anything to that?
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A2:
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No,
I would agree to that. You know, we’ve got a lot of
ideas. John and I can come up with a lot of ways to – we do
know it will not be called Petco. (Laughter)
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A:
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And
we took Patrico
off the table,
too. (Laughter)
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A2:
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If
you do go to the Cameron website and you look in our process technologies
under the Petreco brand, you will see every similar to Natco, Wemco,
Vortoil – things that really make up the value of the brand
itself. We are very, very focused on maintaining visibility to
those product technologies and those brandings that are there, but we do
have – we’re going to have some smart people working on
this. So, I’m confident we’ll come up with the right way to get
this out into the public and capture the best of both of what we
bring.
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A:
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Guillermo,
do you have a question? I saw your hand go
up.
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Q:
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I
know. How long will we be remaining in this
building?
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A:
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I
hope for some time. And again, that’s going to be a topic of
the transition team, but as you know, most of the DPS group is right down
the street here and they are fresh out of room and as you know on one of
my spending sprees, I’ve contracted for more space and so, I think that
we’ll come up with an optimal solution, but it’s clearly going to be in
this zip code and I think, most likely will be in this building. That’s a
safe bet, I heard. Yeah?
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Q:
|
You
had mentioned about our present path with Oracle – and I know Cameron’s on
SAP. What are the plans down the road for
that?
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A:
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They’re
going to convert to Oracle
(laughter).
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Q2:
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Can
we get rid of them both?
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A:
|
Yeah.
We’re gonna go back to the “Big Chief” tablet. That was a lot
easier to do. No, we have begun to sort of have that discussion
about where do we end up. And I think the short answer is for
Natco, we continue on the course that we’re on. It’s too
important for us to stop and then wait. So, clearly, we’ll stay
on the Go Live 2 a plan that we’re on – we’ve got a lot of things to do
around data cleansing and all the kinds of things and then in time, we’ll
figure out where we end up as a combined entity but all lights are green
for Oracle. Everyone stay focused. Everyone keep working and we look
forward to a successful implementation of the program as we have it
contemplated right now.
|
Q:
|
Will
the various parts of Natco be split up? Things like Linco would probably
be best served in the measurement group, TEST maybe in some other
group.
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A:
|
Well,
that’s a question for Jack. So, I’ll let him
…
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Q:
|
You
know, quite honestly, we haven’t probably grounded all of
that. I think right now our focus is to embrace Natco as Natco
looks like and see where we can leverage the various pieces of Natco with
the various pieces of Cameron and you know, our intent is to one plus one
equals three, not two. And where we can put the pieces that
make up Natco. Natco’s not unlike Cameron. There’s
lots of technologies kind of embedded in pieces of it. And if you look at
– we do have a measurement company – it’s about $120 million piece of our
business. It’s part of our valve group. There’s
probably some opportunity there. We don’t really understand what all of
that is yet and I think we – there’s certain things we can’t do yet and
until we get that green light to be able to dive into some of this in a
deeper way. You know, we just agreed to do this
yesterday. So, there’s some things we haven’t quite been able
to run the ground yet and but you know, our mission is to make sure we
create as much value as we can and there’s some obvious opportunities with
leveraging. You know as I said, some of the compression
technology and the valve and the surface wellhead technologies with
existing pieces of Natco, but it’s really more just linking those
together. It’s really more of disconnecting and what fits. But
in terms of embedding something in something else, that really hasn’t been
run to ground yet and we will. We will look at those. I’m going to
reiterate what John said as well as far as
communications. Obviously, we’re going to be looking at how we
can make this a bigger, better company. So, that means there
will be some changes. I don’t know what they’ll all be and I
don’t know who all it will affect, but our mission here is to make sure
that we communicate that as effectively and as quickly and as much as what
we know when we know it. And I believe in that,
too. I truly believe in what John has said that if you don’t
communicate what’s going on, you create a lot of uncertainty, you create a
lot of – a lot of rumors that probably are going to be unfounded and
untrue and we’d rather communicate to you what’s really happening when it
happens and what we can and that’s the commitment I have and I believe in
that and I think that’s kind of driven by our HR philosophy, too, and I
think you’ll appreciate that.
|
M:
|
Great.
We echo the same thing. Yes,
sir?
|
Q:
|
When
does the business integration start at the grunt
level?
|
Q:
|
Grunt
level. (Laughter)
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A:
|
Well,
nothing officially can happen until the transaction closes,
right. So, that’s one of the main rules that we have to abide
by, but hopefully, in the transitional period, which again is probably 75
to 90 days, we’ll formulate jointly those plans so that those closings
whatever those plans turn out to be, we can implement as quickly and
efficiently as we can.
|
Q:
|
How
will the manufacturing facilities be affected for Natco being that Petreco
uses subcontractors for their
equipment?
|
A:
|
Well,
one of the synergies and I’ll let Jack respond as well, but one of the
synergies that we saw putting the two companies together was we had
typically had sort of a manufacturing centric focus around certainly
S&T and to a lesser degree but still – still a pretty important focus
around IES. That being said, we also have had ours to fill and capacity to
use within these shops. As Jack said, Petreco has used a
model where they subcontracted out all of our fabrication around the
world. That cost them some margin when they do that and it’s a
different model. For us, from our shareholders, we saw this as
an opportunity to actually fill our shops possibly with some of that
Petreco work that otherwise would be going elsewhere. So, I think that’s a
great example where one plus one equals three kind of opportunities
exists. So, I think that’s a good outcome of
it.
|
A2:
|
I
would agree. I had the privilege last week to hook up with
Patrick here and run up and see Electra and run over and see New Iberia
firsthand what your capabilities are and what you’re doing and obviously,
there’s a lot of opportunity for Cameron to leverage what’s already there
and that is that’s truly one of the opportunities we’re going to have to
understand and take full advantage
of.
|
A:
|
And
again, I think you heard Jack say, they are very much manufacturers. So,
they get it.
|
Q:
|
I’m
going to ask the hard question.
|
Q:
|
Jack,
from a manufacturing standpoint, just say how many facilities you have in
Cameron that are manufacturing?
|
A:
|
Oh,
wow! Bob would ask me that question. Well, okay about
25. I mean, when you look – Cameron has 250 locations in 70
countries. Not all of them are manufacturers. We build product
in Brazil. We build product in Malaysia. We build product in
Singapore. We build product in Romania. We build product in
France. We build product in Italy. We build product in the
UK. We build product in Ireland. Let’s see, what
country have we not … Germany. We build product in
Germany. Then we come over to this side of the world. We build
product in Argentina. We build product in Mexico. We build product in
Venezuela, a little bit, still. I don’t know – our finance guys
aren’t here. Maybe we didn’t get paid this week (laughter). We
build product in Louisiana. We build product in Texas. We build product in
Oklahoma. We build product in Canada. We build
product – what else did we – we don’t build anything in California like
you do, unfortunately. We do build all over the world but we don’t build
any of what you guys do. But when you’re looking at wellhead
technology, drilling technology, the valve technology, we probably build
70 percent of what we sell. That’s probably a good rule of
thumb.
|
M:
|
Okay. If
you ask one more question, you can take an early lunch – if you quit now,
you have to go back to
work. Cindy? Save the
group.
|
Q:
|
I
have two questions. One about business and then the one that
probably a lot of people want to ask, but nobody’s gonna
ask. The first is about our activities over in the Middle East
with our new facility and then moving into Brazil, are we going to be
continuing forward with all of the things that we have in
place?
|
A:
|
Yes
and yes. We talked at length this morning on the analysts
conference call about the benefits of bringing the two companies together
as it affects the Saudi market and the manufacturing joint venture and
Cameron has the same partner in Saudi that we have. So, that’s a big plus
to start with. And again, we now have the opportunity to bring
the full product line into the Kingdom. The plant itself is on schedule.
We should be up and running by the end of the year. I think
being able to not only address markets within the Kingdom itself but also
in the region, that’ll help that ramp-up and, again, I think being
together gives us a lot more substance, a lot more opportunities that stir
up work that put through the shop. So, I think it’s a huge plus
going forward. And your second
question?
|
Q:
|
Is
about the employees and do you anticipate a lot of layoffs due to
redundancies and job positions and
otherwise?
|
A:
|
Well,
look, the honest answer is we’re going to have to sort through all of that
through this transitional period, right? But I think what you
hear in the message that we have both tried to convey today is that there
is far more complimentary activity by bringing these two companies
together than consolidation. This is not about whacking out a
bunch of people to make a business work. This business will work from the
top line from the opportunities that we’ve identified. That
being said, there are also positions that are likely redundant when the
two organizations come together and that is our commitment that as we sort
through what that means to everyone as an individual, ‘cause that’s where
it counts. It counts what has affected me – we’ll be as
forthright as we can. I think everyone in this room and
listening in knows that Patrick and I have from the get-go had an
established practice and we treat people right on the way into the
organization, we treat people right when they’re in the organization and
if this comes to a fact where someone is leaving the organization because
of this combination, we’re gonna treat ‘em right, treat ‘em with respect
and help ‘em move into whatever is next on their personal
horizon.
|
|
And
that, again, that’s a worrisome thing that’s lurking around on everybody’s
mind. But just relax, it’ll take care of
itself.
|
Q:
|
This
question is on a lighter note. Will we have access to the – to
Cameron’s gym and
deli? (laughter)
|
A:
|
I
don’t see why not. Get over there early. The access is – well, I guess
it’s 24/7, right, if you have the right pass. I’m sure Mr.
Fleming would not exclude a key part of their organization, let’s put it
that way. Put him on the spot. No, I think it is a
wonderful – you know, the one thing I miss about where I’m at over there
on Post Oak is that you don’t have access to a cafeteria and a place where
people gather and have lunch in a lighter environment and it’s been a very
big asset for that building and one that I encourage everyone to
use. So, yeah, it’s – and I think certain outside people have
access into it, but if you’re a Cameron employee, it’s easier to get
through the process. So, I’m sure that will be a great option for
you.
|
M:
|
They
have a lot of cool stuff. (Laughter) All right. Let me close
with one kind of thank you. This effort that we’ve announced
last night did not come about easily and there about I would say five,
then a dozen, then two dozen people that worked tirelessly to get Natco in
position to address due diligence and to do the number of things that have
to happen in order to get this far in this process and I thank everyone of
you for that effort. There’s still a lot of work to do to get the deal
done. There’s still a lot of work to do to run our business and to manage
our business everyday. So, again, from the bottom of my heart and on
behalf of Patrick, we thank you for the work that you’ve done and the
sacrifice you made and what is ahead. So, celebrate the day. Be
a little nervous, but it’s good – it’s an exciting thing moving forward.
So, I appreciate everybody coming today. Thank
you. (Applause)
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17