Cameron International (CAM) Q2 2012 Earnings Call July 26, 2012 9:30 am ET Executives Jeffrey G. Altamari - Vice President of Investor Relations Jack B. Moore - Chairman of The Board, Chief Executive Officer and President Charles M. Sledge - Chief Financial Officer and Senior Vice President John D. Carne - Chief Operating Officer, Executive Vice President and President of Drilling & Production Systems Analysts James C. West - Barclays Capital, Research Division Michael W. Urban - Deutsche Bank AG, Research Division Collin Gerry - Raymond James & Associates, Inc., Research Division William Sanchez - Howard Weil Incorporated, Research Division Stephen D. Gengaro - Sterne Agee & Leach Inc., Research Division Jeffrey Spittel - Global Hunter Securities, LLC, Research Division Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division Edward Muztafago - Societe Generale Cross Asset Research Tom Curran - Wells Fargo Securities, LLC, Research Division Judson E. Bailey - ISI Group Inc., Research Division Presentation Operator
In accordance with the Safe Harbor provisions of the securities laws, we caution you that some of the statements made on this call may be forward looking in nature and, as such, are subject to various factors not under the control of the company. For a more complete description of these factors and the related risks and uncertainties, please refer to Cameron's annual report on Form 10-K, the company's most recent Form 10-Q and the recent earnings news release.I will now turn the meeting over to Jack. Jack B. Moore Thank you, Jeff. As many of you've seen, Cameron earned $0.74 in Q2, excluding charges related to pension settlements and integration cost. We had record revenues at the quarter at just north of $2 billion and we had another great order story for Q2, with total orders coming in at $2.6 billion, our second highest ever and just slightly ahead of a great Q1. Orders were strong across all of our divisions with Surface Systems and V&M setting new records. Subsea, Drilling and Process & Compression had sizable order rates as well in quarter 2. Total backlog for Cameron stands -- now stands at $7.5 billion, up 35% from a year ago and up 10% sequentially. Backlog has increased across all of our major business segments year-over-year. Our bookings in Q2 once again highlight the strength of our diverse businesses across a global footprint supported by a lot of hard-working Cameron employees. Both our international onshore and deepwater markets continue to move forward as we achieve another solid quarter in our Engineered Valves, Drilling and Subsea businesses as well and focused on these markets. And even with North American activity coming under pressure, Cameron still achieved sequential growth in this market. We did close on the TTS drilling technology acquisition in June and are extremely excited with bringing their employees and technology on board. It is a wonderful complement to our Drilling Systems platform and will be instrumental in executing on our rig solution strategy.
I will review some of the additional comments regarding our business unit performance in Q2. Our Valves & Measurement business had a record quarter across the board in bookings, revenues and profits. The big driver for our bookings -- our record bookings of $550 million came from projects both on onshore infrastructure and deepwater.Our Engineered and Process Valves business saw another record quarter with a number of sizable project bookings in the North Sea, Australia, U.S. and Canada, and we continue to track a long list of projects that cover both upstream and downstream opportunities, several of which were gazed in the early feed spaces at this time. Given this visibility, we remain very confident of our ability to build on the success we have had in the first half of 2012 well into the second half. And with all of the noise in North America, our Distributed Valves orders saw a sequential decline of just 2% in Q2. Our measurement business had a record quarter for bookings with strong order flow from our custody transfer products, as well as those focused on midstream developments. And while we expect to see the headwinds in our distributed business, we remain very bullish on the overall Valves & Measurement order flows in 2012. Our Surface Systems business unit had record -- had a record Q2 in both bookings and profitability. Surface Systems booked $438 million in the quarter, up 35% year-over-year and up 8% sequentially. Order activity in Latin America and our Asia-Pacific and Middle East markets are strong. And our North Sea markets, both in Norway and the U.K. sector, continue to expand. Our recent announcement for the supply of wellhead and tree systems for the Rumaila field in Iraq would generate over $100 million in revenues over the next several years, and our decision back in 2011 to build a comprehensive service and aftermarket support base in Iraq has won us a lot of support with the majority of the operators there. As for North America, investment in high-pressure frac tree and manifold systems is paying off, which is allowing us to build share. We continue to win over customers with the quality and reliability of these systems. And even more impressive, it has allowed Cameron to broaden its footprint and our customers' well-side by adding Valves & Measurement, Process & Compression technologies as a Cameron enterprise. This packaged solution is providing customers with more safe and cost-effective operations. Read the rest of this transcript for free on seekingalpha.com