Oil drilling equipment maker
Cameron International Corp.
) reported strong second quarter results, driven by robust
profitability from its 'Drilling & Production Systems' and
'Valves & Measurement' segments.
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The Houston, Texas-based company came out with earnings per share -
excluding charges associated with pension settlement and
integration costs - of 73 cents, beating the Zacks Consensus
Estimate by a penny. Cameron's performance also improved from the
year-ago adjusted profit of 65 cents.
Quarterly revenue, at $2,053.7 million, was up 18.0% year over year
and was also above the Zacks Consensus Estimate of $2,020.0
Drilling & Production Systems (DPS):
Revenues for the DPS segment totaled $1,155.8 million in the second
quarter, an increase of 15.3% from the year-ago period, while the
DPS segment EBITDA rose 14.2% year over year to $213.8 million. The
improved performance came on the back of higher level of subsea
activity, where it competes with
FMC Technologies Inc.
Valves & Measurement (V&M):
Quarterly revenues in the V&M segment totaled $558.3 million,
up 30.9% year over year. The segment EBITDA jumped 41.9% year over
year to $121.5 million. The positive comparisons were driven by
strong infrastructure activity levels throughout the world.
Process & Compression Systems (PCS):
Revenues in the PCS segment increased 8.9% year over year to $339.6
million. However, the segment EBITDA witnessed a year-over-year
decline of 16.9% to $36.0 million, hamstrung by weak pricing and
During the quarter, Cameron received orders totaling $2,574.0
million, up 7.8% year over year, reflecting increases across DPS
and V&M segments. The composition of current order booking is
63% for DPS, 21% for V&M and 16% for PCS.
As of June 30, 2012, total backlog stood at a record $7,453.6
million, up from the year-earlier level of $5,519.6 million, driven
by sharply higher backlog in the DPS segment.
Capital Expenditure & Balance Sheet
During the quarter, Cameron's capital expenditures amounted to
$95.1 million. As of June 30, 2012, cash and cash equivalents stood
at $829.0 million, while total long-term debt - including the
current portion - was $2,037.6 million (with debt-to-capitalization
ratio of 28.8%).
Management reiterated its EPS guidance range for 2012 at
$3.20-$3.30, while the third quarter profitability is likely to be
in the range of 87-90 cents.
Rating & Recommendation
Even though Cameron has a Zacks #4 Rank (Sell rating) in the short
run, we are Neutral on the shares in the longer term.