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Tickers in this Article: CAM, FTI
Oil drilling equipment maker Cameron International Corp. (CAM) reported strong third quarter results, driven by higher orders across the firm's products and markets.

The Houston, Texas-based company came out with earnings per share - excluding charges associated with integration costs - of 91 cents, beating the Zacks Consensus Estimate by 3 cents. Cameron's performance also improved from the year-ago adjusted profit of 78 cents.

Quarterly revenue, at a record $2,218.3 million, was up 31.6% year over year and was also above the Zacks Consensus Estimate of $2,196.0 million.

Segment Analysis

Drilling & Production Systems (DPS): Revenues for the DPS segment totaled $1,279.7 million in the third quarter, an increase of 31.0% from the year-ago period, while the DPS segment EBITDA rose 7.5% year over year to $239.9 million. The improved performance came on the back of higher level of subsea activity, where it competes with FMC Technologies Inc. (FTI).

Valves & Measurement (V&M): Quarterly revenues in the V&M segment totaled $536.0 million, up 23.4% year over year. The segment EBITDA increased 26.9% year over year to $116.0 million. The positive comparisons were driven by strong infrastructure activity levels throughout the world.

Process & Compression Systems (PCS): Revenues in the PCS segment jumped 46.8% year over year to $402.6 million. The segment EBITDA witnessed a year-over-year improvement of 49.7% to $50.6 million, driven by operational efficiencies.

Backlog

During the quarter, Cameron received orders totaling $2,300.1 million, up 14.8% year over year, reflecting an increase in the DPS segment. The composition of current order booking is 64% for DPS, 21% for V&M and 15% for PCS.

As of September 30, 2012, total backlog stood at a record $7,597.7 million, up from the year-earlier level of $5,787.5 million, driven by sharply higher backlog in the DPS segment.

Capital Expenditure & Balance Sheet

During the quarter, Cameron's capital expenditures amounted to $98.7 million. As of September 30, 2012, cash and cash equivalents stood at $990.7 million, while total long-term debt was $2,017.8 million (with debt-to-capitalization ratio of 27.5%).

Guidance

Management expects fourth quarter profitability to be in the range of 95-97 cents per share.

Rating & Recommendation

Cameron currently retains a Zacks #3 Rank (short-term Hold rating). We are also maintaining our long-term Neutral recommendation on the stock.

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