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Oil drilling equipment maker Cameron International Corp. (CAM - Analyst Report) reported strong second quarter earnings, driven by robust profitability from its ‘Drilling & Production Systems’ segment.

The Houston, TX-based company came out with earnings per share – excluding charges – of 79 cents, beating the Zacks Consensus Estimate by a penny. Cameron’s performance also improved from the year-ago adjusted profit of 74 cents.

Quarterly revenue, at $2,053.7 million, was up 18.0% year over year and was also above the Zacks Consensus Estimate of $2,020.0 million.

Cameron’s quarterly revenue, at $2,287.4 million, was up 11.4% year over year but was below the Zacks Consensus Estimate of $2,356.0 million amid lower-than-expected contribution from the ‘Valves & Measurement’ and ‘Process & Compression Systems’ units.

Segment Analysis

Drilling & Production Systems (DPS): Revenues for the DPS segment totaled $1,438.4 million in the second quarter, an increase of 24.5% from the year-ago period, while the DPS segment EBITDA rose 11.9% year over year to $239.2 million. The higher profitability could be attributed to strength in its subsea business.

Valves & Measurement (V&M): Quarterly revenues in Cameron's V&M segment totaled $534.3 million, down 4.3% year over year. The segment EBITDA decreased 2.4% year over year to $118.6 million. The negative comparisons can be attributed to slightly tepid infrastructure activity levels throughout the world.

Process & Compression Systems (PCS): Revenues in the PCS segment fell 7.3% year over year to $314.7 million. The segment EBITDA witnessed a year-over-year deterioration of 11.1% to $32.0 million, on the back of operational hiccups.

Backlog

During the quarter, Cameron received orders totaling $2,330.9 million, down 9.4% year over year, reflecting a 7.1% decrease in the DPS segment. The composition of current order booking is 65% for DPS, 22% for V&M and 13% for PCS.

As of Jun 30, 2013, Cameron's total backlog stood at a record $10,497.1 million, up significantly from the year-earlier level of $7,453.6 million, driven by sharply higher backlog in the DPS segment.

Capital Expenditure & Balance Sheet

During the quarter, Cameron’s capital expenditures amounted to $98.8 million. As of Jun 30, 2013, cash and cash equivalents stood at $1,718.1 million, while long-term debt was $2,045.7 million (with debt-to-capitalization ratio of 23.4%).

Guidance

Cameron management lowered its 2013 earnings per share guidance to the $3.40–$3.55 range from the previous band of $3.50–$3.70, while the third quarter profitability is likely to be in the range of 80–85 cents. The current Zacks Consensus Estimate for Cameron’s third quarter is $1.00 per share, while that for the full year is $3.65 per share – both higher than the company guidance.

Zacks Rank & Stock Picks

Cameron currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at Dril-Quip Inc. (DRQ - Analyst Report), Blueknight Energy Partners L.P. (BKEP - Snapshot Report) and Natural Gas Services Group Inc. (NGS - Snapshot Report) as good buying opportunities. These energy equipment service providers – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with potential to rise significantly from current levels.

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