Cameron 2Q Powers Ahead - Analyst Blog

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Oil drilling equipment maker Cameron International Corp. ( CAM ) reported strong second quarter results, driven by robust profitability from its 'Drilling & Production Systems' and 'Valves & Measurement' segments.

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 million.

Segment Analysis

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. ( FTI ).

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 operational inefficiencies.


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.

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

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

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