Cameron Sees Profits Surge - Analyst Blog
October 27 2011 - 3:00PM
Zacks
Oil drilling equipment maker Cameron International
Corp. (CAM) reported third quarter earnings per share
(excluding special items) of 78 cents, exceeding the 64 cents
(adjusted) earned in the prior-year quarter and the Zacks Consensus
Estimate of 74 cents. The outperformance reflects robust
profitability from its ‘Drilling & Production Systems’ and
‘Valves & Measurement’ segments.
Quarterly revenue, at $1,685.9 million, was up 10.4% year over
year but came below the Zacks Consensus Estimate of $1,795.0
million.
Segment Analysis
Drilling & Production Systems (DPS):
Revenues for the DPS segment totaled $977.2 million in the third
quarter, up 3.5% from the year-ago quarter, while the DPS segment
EBITDA rose 20.2% year over year to $223.1 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 $434.4 million, up 38.9%
year over year. The segment EBITDA increased 69.3% year over year
to $91.4 million. The positive comparisons were driven by strong
North American business activity levels.
Process & Compression Systems (PCS):
Revenues in the PCS segment increased 1.4% year over year to $274.3
million. However, the segment EBITDA witnessed a year-over-year
fall of 40.1% to $33.8 million.
Backlog
During the quarter, Cameron received orders totaling $2,003.1
million, up 35.4% year over year, reflecting increases across the
DPS and V&M segments. The composition of current order booking
is 57% for DPS, 26% for V&M and 17% for PCS.
As of September 30, 2011, total backlog stood at $5,787.5
million, up from the year-earlier level of $4,935.4 million, driven
by higher backlog across all segments.
Capital Expenditure & Balance
Sheet
During the quarter, Cameron’s capital expenditure amounted to
$94.2 million. As of September 30, 2011, cash and cash equivalents
stood at $1,536.5 million, while total long-term debt (including
the current portion) was $1,587.2 million (with
debt-to-capitalization ratio of 25.6%).
Guidance
Management increased its EPS guidance range for fiscal 2011 to
$2.63 – $2.66 from the earlier guidance range of $2.55 – $2.65.
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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