Oil drilling equipment maker
Cameron International Corp.
) reported strong second quarter results, propped up by robust
performance from its 'Drilling & Production Systems' segment,
particularly in North America.
The Houston, TX-based company came out with earnings per share -
excluding special items - of $1.00, ahead of the Zacks Consensus
Estimate of 88 cents and the year-ago adjusted profit of 77 cents.
Cameron International Corporation - Earnings
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Cameron's quarterly revenue, at a record $2,641.0 million, was
up 19.6% year over year and was above the Zacks Consensus Estimate
of $2,563.0 million.
Drilling & Production Systems (DPS):
Revenues for the DPS segment totaled $1,903.0 million in the second
quarter, an increase of 32.3% from the year-ago period, while the
DPS segment EBITDA rose 27.2% year over year to $304.0 million. The
higher profitability could be attributed to strength in both its
surface and subsea businesses.
Valves & Measurement (V&M):
Quarterly revenues in Cameron's V&M segment totaled $536.0
million, essentially flat year over year. The segment EBITDA also
remained static at $119.0 million, as strength in North America
were offset by slightly tepid infrastructure activity levels in
other parts of the world.
Process & Compression Systems (PCS):
Revenues in the PCS segment fell 14.8% year over year to $202.0
million. The segment EBITDA witnessed a year-over-year
deterioration of 13.0% to $20.0 million, on the back of operational
During the quarter, Cameron received orders totaling $2,436.0
million, up 8.8% year over year, reflecting a 12.4% jump in the DPS
segment. The composition of current order booking is 70% for DPS,
21% for V&M and 9% for PCS.
As of Jun 30, 2014, Cameron's total backlog stood at $11,143.0
million, up significantly from the year-earlier level of $10,365.0
million, driven by sharply higher backlog in the DPS and PCS
The backlog is expected to improve further and hit record levels by
the year-end with North American outlook looking even better and a
number of deepwater projects likely to progress during the next two
Capital Expenditure & Balance Sheet
During the quarter, Cameron's capital expenditures amounted to
$73.0 million. Full-year spending is expected to be between $450
and $500 million.
As of Jun 30, 2014, cash and cash equivalents stood at $1,525.0
million, while long-term debt was $2,814.0 million (with
debt-to-capitalization ratio of 31.5%).
Cameron, which earlier in the year sold its reciprocating
compression business to
General Electric Co.
), upgraded its guidance for second time in the year. The company
raised earnings per share projection (from continuing operations),
specifying a new range of $4.00 to $4.25, over the previous range
of $3.80 to $4.10. Management underscored the impact of continued
margin expansion in the second half of 2014 and strong demand in
North America. Meanwhile, the third quarter profitability is likely
to be between $1.10 and $1.20.
Zacks Rank & Stock Picks
Cameron - which counts
National Oilwell Varco Inc.
) as its competitor - currently carries a Zacks Rank #2 (Buy),
implying that it is expected to outperform the broader U.S. equity
market over the next one to three months.
Another stock worth considering in the 'Oilfield Machineries and
Equipment' sector would be
). The company - also sporting a Zacks Rank #2 - has the potential
to rise from current levels.
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