Oilfield equipment manufacturer FMC Technologies Inc. FTI reported better-than-expected third-quarter 2015 results. The company posted adjusted diluted earnings per share of 61 cents that surpassed the Zacks Consensus Estimate of 59 cents.
The bottom line, however, deteriorated from the year-ago quarter earnings of 79 cents. The year-over-year decline stemmed from weakness in the North American land market and a stronger U.S. dollar.
The company reported quarterly revenues of $1,545 million, which came in substantially below the third-quarter 2014 level of $1,976.7 million. The top line also fell short of the Zacks Consensus Estimate of $1,680.1 million.
Segmental Analysis
Subsea Technologies: Revenues in this segment were $1,093.7 million, down about 16% from the prior-year quarter. This was primarily due to the adverse effect of a stronger U.S. dollar.
Operating profit of $170.7 million was lower than the year-ago quarter level of $204.4 million. Lower revenues and business restructuring costs of about $14.6 million primarily hampered the results.
Surface Technologies: Revenues in this segment plunged over 35% year over year to $361 million due to weakness in the North American market.
Also, the company reported operating loss of $22.5 million, which compared unfavorably with the year-ago quarter operating profit of $109.5 million. Decline in North American activity as well as impairment and business restructuring costs affected the results. Excluding impairment and restructuring charges, the company reported third-quarter operating profit of $37.1 million.
Energy Infrastructure: Revenues in this segment for the period between July and September were $97.1 million, 22% lower than that in third-quarter 2014. Reduced activity in the company’s measurement solutions resulted in the unfavorable results.
The company reported operating loss of $2 million. This compared unfavorably with a profit of $5.1 million in third-quarter 2014. Lower revenues and restructuring costs of about $1.7 million affected profits.
Backlog
As of Sep 30, 2015, FMC Technologies reported a total backlog (including inter-company eliminations) of $4,952.6 million. This was significantly lower than the prior-year quarter level of $6,827.3 million. Out of this, backlog for Subsea Technologies was $4,287.6 million, while Surface Technologies and Energy Infrastructure backlog were $495 million and $172.8 million, respectively
Balance Sheet
In the reported quarter, FMC Technologies spent $211 million on capital programs. As of Sep 30, the company had cash and cash equivalents of $711.5 million, long-term debt (including current portion) of $1,294.5 million, and a debt-to-capitalization ratio of 34%.
Zacks Rank & Other Stock Picks
FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry. The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked players from the oilfield machinery and equipment industry are Matrix Service Company MTRX, Natural Gas Services Group Inc. NGS and McDermott International Inc. MDR. While Matrix and Natural Gas Services sport a Zacks Rank #1 (Strong Buy), McDermott holds a Zacks Rank #2 (Buy).
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