Oil drilling equipment maker Cameron International Corp. (CAM) reported weak first quarter 2011 results, adversely affected by muted performance from its ‘Drilling & Production Systems’ segment.   

The company’s earnings per share (excluding special items) for the quarter came in at 46 cents, lagging the 51 cents (adjusted) earned in the prior-year quarter and the Zacks Consensus Estimate of 57 cents.

Cameron generated total revenue of $1,501.3 million in the quarter, up 11.5% year over year, though it was below the Zacks consensus Estimate of $1,626.0 million.

Segment Analysis

Drilling & Production Systems (DPS): Revenues for the DPS segment totaled $865.7 million in the first quarter, up 5.6% from the year-ago quarter. However, the DPS segment EBITDA fell 21.5% year over year to $140.6 million.

Valves & Measurement (V&M): Quarterly revenues in the V&M segment totaled $339.9 million, up 13.7% year over year, while the segment EBITDA increased 10.5% year over year to $65.3 million.

Process & Compression Systems (PCS): Revenues in the PCS segment increased 29.8% year over year to $295.7 million and the segment EBITDA witnessed a year-over-year rise of 37.1% to $38.8 million.

Backlog

During the quarter, Cameron received orders totaling $1,522.4 million, up 25.7% year over year, reflecting increases across the three business segments. The composition of current order booking is 54% for DPS, 28% for V&M and 18% for PCS.

As of March 31, 2011, total backlog stood at $4,892.7 million, down from the year-earlier level of $4,976.2 million, reflecting lower DPS backlog.

Capital Expenditure & Balance Sheet

During the quarter, Cameron’s capital expenditure amounted to $61.9 million. As of March 31, 2011, cash and cash equivalents stood at $1,449.6 million, while total long-term debt (including the current portion) was $1,297.2 million (with debt-to-capitalization ratio of 22.0%).

Guidance

Management guided toward earnings per share between 60 to 65 cents for the second quarter and $2.50 to $2.60 for full-year 2011.

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.

 
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