Cameron Earnings Beat, Sales Miss - Analyst Blog


Oil drilling equipment maker Cameron International Corp. ( CAM ) reported strong second quarter earnings, driven by robust profitability from its 'Drilling & Production Systems' segment.

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 million.

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 Systems' units.

Segment Analysis

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 operational hiccups.


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 segment.

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 guidance.

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 Dril-Quip Inc. ( DRQ ), Blueknight Energy Partners L.P. ( BKEP ) and Natural Gas Services Group Inc. ( NGS ) 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 current levels.

BLUEKNIGHT EGY (BKEP): Free Stock Analysis Report

CAMERON INTL (CAM): Free Stock Analysis Report

DRIL-QUIP INC (DRQ): Free Stock Analysis Report

NATURAL GAS SVC (NGS): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: BKEP , CAM , DPS , DRQ , NGS

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