Oil drilling equipment maker Cameron International Corp. (CAM) reported strong fourth quarter earnings, propped up by robust performance from its ‘Surface’ and ‘Drilling’ segments.
The Houston, TX-based company came out with earnings per share – excluding special items – of $1.34, ahead of the Zacks Consensus Estimate of $1.20 and the year-ago adjusted profit of 90 cents.
However, Cameron’s quarterly revenue, at $2,804 million, was down 2.7% year over year and was below the Zacks Consensus Estimate of $2,847 million amid lower sales from the ‘Subsea’ business.
Segment Analysis
Subsea: Revenues for the Subsea segment totaled $872 million in the fourth quarter, a decrease of 15.3% from the year-ago period, while the Subsea segment operating income fell 5.4% year over year to $88 million.
Surface: Quarterly revenues in Cameron's Surface segment totaled $660 million, up 18.5% year over year. The segment operating income increased 23% to reach $123 million.
Drilling: Revenues for the Drilling segment totaled $816 million in the fourth quarter, an increase of 20% from the year-ago period, while the Drilling segment operating income rose 88.8% year over year to $151 million.
Valves & Measurement (V&M): Revenues in the V&M segment remained essentially flat at $528 million. The segment operating income witnessed a year-over-year deterioration of 22.9% to $81 million.
Backlog
During the quarter, Cameron received orders totaling $2,006 million, down 35.8% year over year. The composition of current order booking is 26% for Subsea, 28% for Surface, 21% for Drilling and 25% for V&M.
As of Dec 30, 2014, Cameron's total backlog stood at $9,536 million, down 13.9% from the year-earlier level of $11,079 million, essentially due to lower backlog in the Subsea and Drilling segments.
Share Repurchase
Over the last quarter, Cameron repurchased 3.4 million shares for $191 million. As of end-2014, $476 million remain under current buyback authorization.
Capital Expenditure & Balance Sheet
During the quarter, Cameron’s capital expenditures amounted to $126 million bringing the full-year spending to approximately $385 million.
As of Dec 31, 2014, cash and cash equivalents stood at $1,513 million, while long-term debt was $2,819 million (with debt-to-capitalization ratio of 34.1%).
2015 Outlook
Cameron – which last year sold its ‘Reciprocating Compression’ business to General Electric Co. (GE) and the ‘Centrifugal Compression’ unit to Ingersoll-Rand Plc (IR) respectively – expects the ongoing oil price slump to impact its revenues and operating profit through receding orders. At the same time, the oil drilling equipment provider believes that its balance sheet strength and good operational skills will help withstand those challenges.
Zacks Rank
Cameron – which counts FMC Technologies Inc. (FTI) as its competitor – currently carries a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
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