Oil drilling equipment maker
Cameron International Corp.
) reported strong second quarter earnings, driven by robust
profitability from its 'Drilling & Production Systems'
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The Houston, TX-based company came out with earnings per share -
excluding charges - of 79 cents, beating the Zacks Consensus
Estimate by a penny. Cameron's performance also improved from the
year-ago adjusted profit of 74 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
Cameron's quarterly revenue, at $2,287.4 million, was up 11.4%
year over year but was below the Zacks Consensus Estimate of
$2,356.0 million amid lower-than-expected contribution from the
'Valves & Measurement' and 'Process & Compression
Drilling & Production Systems (DPS):
Revenues for the DPS segment totaled $1,438.4 million in the
second quarter, an increase of 24.5% from the year-ago period,
while the DPS segment EBITDA rose 11.9% year over year to $239.2
million. The higher profitability could be attributed to strength
in its subsea business.
Valves & Measurement (V&M):
Quarterly revenues in Cameron's V&M segment totaled $534.3
million, down 4.3% year over year. The segment EBITDA decreased
2.4% year over year to $118.6 million. The negative comparisons
can be attributed to slightly tepid infrastructure activity
levels throughout the world.
Process & Compression Systems (PCS):
Revenues in the PCS segment fell 7.3% year over year to $314.7
million. The segment EBITDA witnessed a year-over-year
deterioration of 11.1% to $32.0 million, on the back of
During the quarter, Cameron received orders totaling $2,330.9
million, down 9.4% year over year, reflecting a 7.1% decrease in
the DPS segment. The composition of current order booking is 65%
for DPS, 22% for V&M and 13% for PCS.
As of Jun 30, 2013, Cameron's total backlog stood at a record
$10,497.1 million, up significantly from the year-earlier level
of $7,453.6 million, driven by sharply higher backlog in the DPS
Capital Expenditure & Balance Sheet
During the quarter, Cameron's capital expenditures amounted to
$98.8 million. As of Jun 30, 2013, cash and cash equivalents
stood at $1,718.1 million, while long-term debt was $2,045.7
million (with debt-to-capitalization ratio of 23.4%).
Cameron management lowered its 2013 earnings per share guidance
to the $3.40-$3.55 range from the previous band of $3.50-$3.70,
while the third quarter profitability is likely to be in the
range of 80-85 cents. The current Zacks Consensus Estimate for
Cameron's third quarter is $1.00 per share, while that for the
full year is $3.65 per share - both higher than the company
Zacks Rank & Stock Picks
Cameron currently carries a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can look at
Blueknight Energy Partners L.P.
Natural Gas Services Group Inc.
) as good buying opportunities. These energy equipment service
providers - sporting a Zacks Rank #1 (Strong Buy) - have solid
secular growth stories with potential to rise significantly from