Subsea Segment’s Performance Is a Bright Spot for Cameron


Nov. 20 2020, Updated 3:58 p.m. ET

Cameron’s revenue growth by segments

Cameron International’s (CAM) Subsea segment showed signs of recovery in fiscal 3Q15 after reporting falling revenue in three consecutive quarters. Subsea’s fiscal 3Q15 revenue was up 15% compared with that of fiscal 2Q15, only 3% down from fiscal 3Q14. Since the crude oil market crash in June 2014, US offshore rig count and exploration projects have shown more resilience than the onshore market.

Cameron’s Surface segment was the most affected in the past four quarters. The segment’s revenue has fallen 26% since fiscal 3Q14.

In fiscal 3Q15, Cameron recorded total revenues of $2.2 billion, down by 17.6% from the $2.7 billion recorded in fiscal 3Q14.

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Cameron International’s earnings growth by segment

Cameron’s Subsea segment’s performance improved as its operating earnings significantly rose in fiscal 3Q15. Over fiscal 3Q14, they grew by 173%. The growth amounted to 79% over fiscal 2Q15. The company’s other three segments witnessed a fall in operating income in fiscal 3Q15 from the year prior, although the Drilling and Valves & Measurement segments saw their operating income improve over fiscal 2Q15.

Cameron’s fiscal 3Q15 net income dropped 17% from fiscal 3Q14. In comparison, Nabors Industries (NBR), Cameron’s peer, switched to a $296 million net loss in fiscal 3Q15 from a $106 million net income a year earlier. Cameron International is 0.9% of the Vanguard Energy ETF (VDE). VDE tracks an index of stocks of large, mid-size, and small US companies within the energy sector.

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Analyzing factors affecting Cameron’s segments

  • the Subsea segment’s strong operating performance was led primarily by project cost reductions
  • the Surface segment’s weak result was led by the ongoing demand weakness and lower pricing for onshore OFS (oil field services) products in North America
  • the Drilling segment witnessed a larger operating margin as backlog delivery picked up
  • the Valves & Measurement segment’s weak operating income and margin were triggered by lower volumes and pricing pressures

Overall, Cameron’s consolidated backlog fell to $7.2 billion by the end of fiscal 3Q15, a decrease of 24% from the beginning of 2015. Backlog represents projects scheduled to be executed during 2015.

What the proposed merger with Schlumberger means

In August, Schlumberger (SLB), Cameron’s larger market capitalization peer, proposed to acquire Cameron International in a stock and cash transaction. On November 17, the merger received unconditional approval from the US Department of Justice. The transaction is expected to close in fiscal 1Q16.

Cameron has a joint venture with Schlumberger, OneSubsea, in which Cameron has the majority stake of 60%. OneSubsea’s robust performance is backed by a number of projects, including the recent Gulf of Mexico project it received from Shell Offshore, a Royal Dutch Shell (RDS-A) company.


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