Cameron Beats: Profit, Backlog Up - Analyst Blog
July 28 2011 - 10:15AM
Zacks
Oil drilling equipment maker
Cameron International Corp. (CAM)
reported strong second quarter 2011 results, driven by robust
performance from its ‘Drilling & Production Systems’ and
‘Valves & Measurement’ segments.
The company’s earnings per share
(excluding special items) for the quarter came in at 66 cents,
exceeding the 58 cents (adjusted) earned in the prior-year quarter
and the Zacks Consensus Estimate of 64 cents.
Cameron generated total revenue of
$1,741.1 million in the quarter, above the Zacks consensus Estimate
of $1,648.0 million and up 19.9% from the year-ago level.
Segment
Analysis
Drilling & Production
Systems (DPS): Revenues for the DPS segment totaled
$1,002.7 million in the second quarter, up 19.9% from the year-ago
quarter, while the DPS segment EBITDA rose 11.4% year over year to
$187.3 million. The improved performance came on the back of higher
level of subsea sales.
Valves & Measurement
(V&M): Quarterly revenues in the V&M segment
totaled $426.5 million, up 31.1% year over year. The segment EBITDA
increased 52.3% year over year to $85.6 million. The positive
comparisons were driven by strong North American business activity
levels.
Process & Compression
Systems (PCS): Revenues in the PCS segment increased 7.2%
year over year to $311.9 million. However, the segment EBITDA
witnessed a year-over-year fall of 22.8% to $43.3 million on
account of the retrospective revision of the prior period data to
reflect the change in segments during the third quarter of
2010.
Backlog
During the quarter, Cameron received
orders totaling $2,387.3 million, up 71.9% year over year,
reflecting increases across the three business segments. The
composition of current order booking is 60% for DPS, 22% for
V&M and 18% for PCS.
As of June 30, 2011, total backlog
stood at $5,519.6 million, up from the year-earlier level of
$4,921.6 million, higher backlog across all segments.
Capital Expenditure
& Balance Sheet
During the quarter, Cameron’s
capital expenditure amounted to $72.4 million. As of June 30, 2011,
cash and cash equivalents stood at $2,043.1 million, while total
long-term debt (including the current portion) was $1,954.6 million
(with debt-to-capitalization ratio of 29.2%).
Guidance
Management guided toward earnings
per share between 70 to 75 cents for the third quarter. The company
also increased its EPS guidance range for fiscal 2011 to $2.55 –
$2.65 from the earlier guidance range of $2.50 – $2.60.
Our
recommendation
Cameron, which competes with
FMC Technologies Inc. (FTI) and
National-Oilwell Varco (NOV) in
the ‘Oilfield Machineries and Equipment’ sector, currently retains
a Zacks #3 Rank, which translates into a short-term Hold rating. We
are also maintaining our long-term Neutral recommendation on the
stock.
CAMERON INTL (CAM): Free Stock Analysis Report
FMC TECH INC (FTI): Free Stock Analysis Report
NATL OILWELL VR (NOV): Free Stock Analysis Report
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