FMC Technologies Beats Q2 Earnings on Improved Segments - Analyst Blog

Oilfield equipment manufacturer FMC Technologies, Inc. (FTI) reported robust second-quarter results, thereby continuing the trend from the past two quarters, based on improvement in its Subsea Technologies and Surface Technologies business segments.

 

The Houston, TX-based company posted second-quarter 2014 adjusted diluted earnings per share of 72 cents, up 50.0% from the year-earlier quarter adjusted figure of 48 cents. The reported figure also comfortably surpassed the Zacks Consensus Estimate of 63 cents. 

 

FMC Technologies reported revenues of $1,985.3 million, compared with $1,707.9 million in second quarter 2013.  

 

Segmental Analysis

 

Subsea Technologies: The segment revenues were $1,328.6 million, up around 18.2% from the second quarter of 2013. 

 

Operating profit of $193.7 million jumped 61.1% year over year as the company improved execution of its robust backlog. 

 

Surface Technologies: Segment revenues rose 16.1% year over year to $510.9 million.

 

Segment operating profit of $79.2 million increased 38.2% from the year-ago period. The favorable comparison reflects higher volumes from the international surface wellhead business and the North American fluid control business.

 

Energy Infrastructure: The segment revenues for the April-June period were $149.2 million, 5.5% lower than the second-quarter 2013 level.

 

Operating profit decreased to $18.2 million from $21.7 million earned in the year-ago quarter. The decline in profit was due to lower revenues as a result of the sale of its Material Handling Products business. However, this was partly offset by better results from the company's loading systems and separation systems businesses. 

 

Backlog

 

As of Jun 30, 2014, FMC Technologies reported total backlog (including intercompany eliminations) of $7,335.4 million, substantially higher than the prior-year quarter level of $6,720.3 million. Out of this, backlog for Subsea Technologies was $6,337.3 million, while Surface Technologies and Energy Infrastructure backlog exited the quarter with $779.2 million and $241.6 million, respectively.   

 

Balance Sheet

 

In the reported quarter, FMC Technologies spent $180.0 million on capital programs. As of Jun 30, the company had cash and cash equivalents of $382.2 million and debt of $1,309.8 million, with a debt-to-capitalization ratio of 33.2%.  

 

Guidance

 

Management raised its 2014 diluted earnings per share guidance to $2.70–$2.80 on the back of strong results from the Surface Technologies segment and a positive outlook of the North American market. 

 

Zacks Rank & Other Stock Picks

 

FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry. The company currently has a Zacks Rank #3 (Hold).

 

Meanwhile, one can consider better-ranked players from the oilfield machinery and equipment industry such as Cameron International Corporation (CAM), Dril-Quip, Inc. (DRQ) and Superior Energy Services, Inc. (SPN). All these stocks sport a Zacks Rank #2 (Buy).