FMC Technologies (FTI) Q3 Earnings Beat, Guidance Raised - Analyst Blog

Oilfield equipment manufacturer FMC Technologies Inc. (FTI) reported robust third-quarter 2014 results, thereby continuing the trend seen over the past three quarters. Higher revenues from subsea services along with an improved North American fluid control business led to the strength.

The Houston, TX-based company posted adjusted diluted earnings per share of 79 cents, up 49% from the year-earlier quarter adjusted figure of 53 cents. The bottom-line also comfortably surpassed the Zacks Consensus Estimate of 74 cents.

FMC Technologies reported revenues of $1,976.7 million, up more than 14% from $1,724.5 million in third quarter 2013. The top-line also beat the Zacks Consensus Estimate of 1,965 million.  

Segmental Analysis

Subsea Technologies: Segment revenues were $1,300.4 million, up 16% from the third quarter of 2013. Operating profit of $204.4 million jumped above 69% year over year.

Higher sales from subsea services along with improved execution on increased volumes from all the regions aided the results.

Surface Technologies: Segment revenues rose almost 22% year over year to $556.0 million.

Segment operating profit of $109.5 million increased 47% from the year-ago period. The favorable comparison reflects higher activities in international surface wellhead business and increasing capital orders in fluid control business in North America.

Energy Infrastructure: The segment revenues for the July-September period were $124.9 million, 18% lower than the third-quarter 2013 level.

Operating profit decreased to $5.1 million from $17.9 million earned in the year-ago quarter. The decline in profit was due to corrections made in the company's earlier reported 2014 quarterly results in automation and control business. However, this was partly offset by higher operations in the measurement solutions business.  

Backlog

As of Sep 30, 2014, FMC Technologies reported total backlog (including intercompany eliminations) of $6,827.3 million, lower than the prior-year quarter level of $7,365.7 million. Out of this, backlog for Subsea Technologies was $5,855.2 million, while Surface Technologies and Energy Infrastructure backlog were $750.6 million and $241.5 million, respectively.         

Balance Sheet

In the reported quarter, FMC Technologies spent $103.7 million on capital programs. As of Sep 30, the company had cash and cash equivalents of $511.5 million and debt of $1,347 million, with a debt-to-capitalization ratio of 33.7%.  
 
Guidance

Management raised its 2014 diluted earnings per share guidance to $2.75–$2.85 from the previous range of $2.70–$2.80.

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 look at better-ranked players in the energy sector like Cobalt International Energy Inc. (CIE), Enbridge Energy Management LLC (EEQ) and Petrobras Argentina SA (PZE). All the stocks sport a Zacks Rank #1 (Strong Buy).