FMC Tech Misses EPS, Trims Guidance


Oil drilling equipment maker FMC Technologies Inc. (FTI) reported second quarter diluted earnings per share of 46 cents, below the Zacks Consensus Estimate of 48 cents. The weaker-than-expected results were mainly due to lower profitability in the company’s energy infrastructure business.

However, compared with the year-ago period, FMC’s earnings per share improved by a handsome 18.0% – from 39 cents to 46 cents – on the back of strength in subsea and surface systems orders.

Revenues at $1,494.9 million were up 21.6% year over year and were also above the Zacks Consensus Estimate of $1,486.0 million.

Segmental Analysis

Subsea Technologies: FMC is particularly well positioned in the subsea technologies market, where it competes with larger rival Cameron International Corp. (CAM). The segment revenue for the most recent quarter was $945.8 million, an increase of 18.1% from the second quarter of 2011, buoyed by a rise in sales of subsea systems.

Operating profit came in at $109.7 million, up 30.6% year over year. The positive comparison reflects higher sales, better execution, as well as contribution from the Schilling Robotics acquisition.

Surface Technologies: Segment revenues were up 33.4% year-over-year to a record $413.8 million. The main reasons for the improved performance can be attributed to the sales ramp-ups in the fluid control and surface wellhead businesses.

Segment operating profit, at $84.2 million – the highest ever reported – increased 49.0% from the year-ago period, driven by higher volume in fluid control and surface wellhead on the back of strong North American shale activity.

Energy Infrastructure: The segment revenue for the April-June period was $139.4 million, 16.0% above the second quarter 2011 level. This reflects better performance from measurement solutions and material handling.

Operating profit came in at $9.1 million, compared with $10.7 million earned a year ago, pulled down by lower volumes in loading systems.


As of June 30, 2012, FMC’s total backlog (including intercompany eliminations) was $5,204.7 million, compared to $4,964.3 million a year ago. Of this, backlog for Subsea Technologies was $4,347.7 million, while Surface Technologies and Energy Infrastructure backlog finished the quarter at $573.6 million and $284.7 million, respectively.

Balance Sheet

During the quarter, FMC spent $99.3 million on capital programs. As of June 30, 2012, the company had cash and cash equivalents of $275.3 million and debt of $1,216.2 million, with a debt-to-capitalization ratio of 43.2%.


Management narrowed its 2012 earnings per share guidance to the $2.10–$2.20 range from the previous band of $2.10–$2.25.

Rating & Recommendation

FMC shares currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

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