FTI Lags Q3 Earnings, Cuts Guidance


Oil drilling equipment maker FMC Technologies Inc. (FTI) reported third quarter diluted earnings per share of 49 cents, improving from 41 cents profit recorded a year ago. Both quarters include 4 cents as the 2013 Multi Phase Meters earn-out adjustment. The results were driven by the strength in its subsea business.

However, FTI’s reported earnings failed to beat the Zacks Consensus Estimate of 59 cents.

Revenues of $1,724.5 million were up 21.5% year over year but below the Zacks Consensus Estimate of $1,745.0 million.

Segmental Analysis

Subsea Technologies: FTI is particularly well positioned in the subsea technologies market. The segment revenues for the most recent quarter were $1,119.9 million, up 20.5% from third quarter 2012.

Operating profit came in at $121.1 million, up 9.7% year over year. The positive comparison reflects higher sales and better execution.

Surface Technologies: Segment revenues were up 25.7% year over year at $455.9 million. The main reasons for the improved performance can be attributed to the sales ramp-up in the surface wellhead business, together with contribution from completion services revenues.

Moreover, segment operating profit – at $74.5 million – also increased 29.6% from the year-ago period on the back of higher sales from the surface wellhead business.

Energy Infrastructure: The segment revenue for the Jul-Sep period was $152.4 million, 15.0% above the third quarter 2012 level of $132.4 million.

Operating profit improved to $17.9 million from $12.8 million earned a year ago, aided by better showing in loading systems and measurement solutions.


As of Sep 30, 2013, FTI’s total backlog (including intercompany eliminations) was a record $7,365.7 million compared to $5,282.2 million a year ago. Of this, Subsea Technologies was the highest contributor with a record backlog of $6,467.5 million, after winning $1,728.7 million in contracts this quarter. Surface Technologies and Energy Infrastructure backlog finished the quarter at $608.1 million and $299.0 million, respectively.

Balance Sheet

During the quarter, FTI spent $80.8 million on capital programs. As of Sep 30, 2013, FTI had cash and cash equivalents of $360.2 million and long-term debt (including current portion) of $1,575.9 million, with a debt-to-capitalization ratio of 43.1%.


Management downsized the 2013 earnings per share guidance, which now stands at $2.00–$2.10 against the previous $2.10–$2.25.

Zacks Rank & Stock Picks

FTI currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider Stone Energy Corp. (SGY), Seadrill Partners LLC (SDLP) and Gulfmark Offshore, Inc. (GLF) as investment opportunities. These energy sector stocks – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with the potential to rise significantly from the current levels.

Read the Full Research Report on FTI
Read the Full Research Report on SGY
Read the Full Research Report on GLF
Read the Full Research Report on SDLP

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