Oil drilling equipment maker Cameron International Corp. CAM reported strong first quarter earnings, propped up by robust performance from its ‘Subsea’ and ‘Drilling’ segments that reflected robust execution and cost control initiatives.
The Houston, TX-based company came out with earnings per share – excluding special items – of 91 cents, ahead of the Zacks Consensus Estimate of 72 cents and the year-ago adjusted profit of 70 cents.
Cameron’s quarterly revenue, at $2,273 million, also edged past the Zacks Consensus Estimate of $2,261 million though it was down 2.4% year over year amid lower sales from the ‘Subsea’ business.
Segment Analysis
Subsea: Revenues for the Subsea segment totaled $631 million in the first quarter, a decrease of 7.3% from the year-ago period. However, the Subsea segment operating income jumped 97% year over year to $57 million.
Surface: Quarterly revenues in Cameron's Surface segment totaled $543 million, up $5 million year over year. The segment operating income was essentially flat from the first quarter 2014 level at $92 million.
Drilling: Revenues for the Drilling segment totaled $726 million in the first quarter, an increase of 9% from the year-ago period, while the operating income more than doubled to $135 million.
Valves & Measurement (V&M): Revenues in the V&M segment fell 14.4% to $500 million. The segment operating income witnessed a year-over-year deterioration of 54% to $45 million.
Backlog
During the quarter, Cameron received orders totaling $1,665 million, down 31% year over year. The composition of current order booking is 34% for Subsea, 27% for Surface, 16% for Drilling and 23% for V&M.
As of Mar 31, 2015, Cameron's total backlog stood at $8,784 million, down 20% from the year-earlier level of $10,975 million, essentially due to lower backlog in the Subsea and Drilling segments.
Share Repurchase
Over the last quarter, Cameron repurchased almost 4 million shares. As of end-Mar, $298 million remain under current buyback authorization.
Capital Expenditure & Balance Sheet
During the quarter, Cameron’s capital expenditures amounted to $89 million.
As of Mar 31, 2015, cash and cash equivalents stood at $1,322 million, while long-term debt was $2,813 million (with debt-to-capitalization ratio of 35.9%).
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 execution strength and good cost control skills will help withstand those challenges.
Zacks Rank
Cameron – which counts FMC Technologies Inc. FTI as its competitor – currently carries a Zacks Rank #3 (Hold).
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