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TechnipFMC (FTI) Q1 Loss Narrower Than Expected, Sales Beat

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Seabed-to-surface oilfield equipment and services provider TechnipFMC plc FTI reported first-quarter 2021 adjusted loss per share of 3 cents, narrower than the Zacks Consensus Estimate of 10 cents and the year-ago loss of 13 cents.

The outperformance can be primarily attributed to higher-than-anticipated profits from the Subsea segment – the major contributor to the company’s top and bottom line. Precisely, adjusted EBITDA from the unit totaled $135.1 million, ahead of the Zacks Consensus Estimate of $115 million. Overall, TechnipFMC reported adjusted EBITDA of $165.2 million, surging 107.3% year over year, while adjusted EBITDA margin also more than doubled to 10.1%.

Moreover, for the quarter ended Mar 31, the company’s revenues of $1.6 billion beat the Zacks Consensus Estimate by 9.2% and increased 3.1% from a year ago.

In the first quarter, TechnipFMC’s inbound orders rose by 11.9% from the year-ago period to $1.7 billion – a signal of improving revenue visibility.

But the company’s backlog was down. As of March-end, TechnipFMC’s order backlog stood at $7.2 billion, deteriorating by 11.9% from 2020.

TechnipFMC plc Price, Consensus and EPS Surprise

TechnipFMC plc Price, Consensus and EPS Surprise
TechnipFMC plc Price, Consensus and EPS Surprise

TechnipFMC plc price-consensus-eps-surprise-chart | TechnipFMC plc Quote

Segment Analysis

Subsea: The segment’s revenues in the quarter under review were $1.4 billion, up 10.6% from the year-ago sales figure of $1.3 billion with project and service activities on the rise. Meanwhile, adjusted EBITDA was reported at $135.1 million, reflecting a 28.9% year-over-year improvement on lower costs and strong installation activity. Quarterly inbound orders jumped 29.6% to $1.5 billion, though backlog fell 11.8%.

Surface Technologies: The company’s smaller segment – Surface Technologies – recorded revenues of $245.5 million, down 25.5% year over year, primarily due to slowdown in North American activity. Despite lower sales, the unit’s adjusted EBITDA increased 9.8% to $26.9 million and went past the Zacks Consensus Estimate of $23.4 million on operational efficiencies and volume and successful cost-cutting efforts. The segment’s inbound orders fell 44.5%, while quarter-end backlog decreased 13.7%.

Financials

In the reported quarter, TechnipFMC spent $44.2 million on capital programs. Meanwhile, cash flow from operations for the quarter came in at $181.5 million. As of Mar 31, the company had cash and cash equivalents of $752.8 million and long-term debt of $2.4 billion with a debt-to-capitalization of 40%.

2021 Outlook & Guidance

Looking ahead, TechnipFMC expects a robust global recovery, which would be more sustainable than the earlier cycles. Based on this encouraging outlook, the company sees full-year subsea inbound orders in excess of $4 billion, with growth continuing into 2022.

TechnipFMC still expects revenues from the Subsea and Surface Technologies units to be $5-$5.4 billion and $1.05-$1.25 billion, respectively. Further, this London-based oilfield services provider expects to generate free cash flows in the $120-$220 million range in 2021, up from the previous guidance of $50-$150 million. Finally, the company reiterated its annual capital expenditure view of $250 million.

Zacks Rank & Stock Picks

TechnipFMC currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Exxon Mobil Corporation XOM, Diamondback Energy FANG and Suncor Energy SU. Both companies sport a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil has an expected earnings growth rate of 1,087.88% for the current year.

Diamondback Energy has an expected earnings growth rate of 164.8% for the current year.

Suncor Energy has an expected earnings growth rate of 223.64% for the current year.

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