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

The Houston, Texas-based company came out with earnings per share – excluding charges associated with pension settlement and integration costs – of 73 cents, beating the Zacks Consensus Estimate by a penny. Cameron’s performance also improved from the year-ago adjusted profit of 65 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.

Segment Analysis

Drilling & Production Systems (DPS): Revenues for the DPS segment totaled $1,155.8 million in the second quarter, an increase of 15.3% from the year-ago period, while the DPS segment EBITDA rose 14.2% year over year to $213.8 million. The improved performance came on the back of higher level of subsea activity, where it competes with FMC Technologies Inc. ( FTI - Analyst Report ) .

Valves & Measurement (V&M): Quarterly revenues in the V&M segment totaled $558.3 million, up 30.9% year over year. The segment EBITDA jumped 41.9% year over year to $121.5 million. The positive comparisons were driven by strong infrastructure activity levels throughout the world.

Process & Compression Systems (PCS): Revenues in the PCS segment increased 8.9% year over year to $339.6 million. However, the segment EBITDA witnessed a year-over-year decline of 16.9% to $36.0 million, hamstrung by weak pricing and operational inefficiencies.

Backlog

During the quarter, Cameron received orders totaling $2,574.0 million, up 7.8% year over year, reflecting increases across DPS and V&M segments. The composition of current order booking is 63% for DPS, 21% for V&M and 16% for PCS.

As of June 30, 2012, total backlog stood at a record $7,453.6 million, up from the year-earlier level of $5,519.6 million, driven by sharply higher backlog in the DPS segment.

Capital Expenditure & Balance Sheet

During the quarter, Cameron’s capital expenditures amounted to $95.1 million. As of June 30, 2012, cash and cash equivalents stood at $829.0 million, while total long-term debt – including the current portion – was $2,037.6 million (with debt-to-capitalization ratio of 28.8%).

Guidance

Management reiterated its EPS guidance range for 2012 at $3.20–$3.30, while the third quarter profitability is likely to be in the range of 87–90 cents.

Rating & Recommendation

Even though Cameron has a Zacks #4 Rank (Sell rating) in the short run, we are Neutral on the shares in the longer term.