Oil drilling equipment maker FMC Technologies Inc. (FTI) reported third quarter diluted earnings per share of 50 cents, ahead of the Zacks Consensus Estimate of 46 cents and the year-ago profit of 33 cents. The better-than-expected results were mainly due to strength in subsea systems orders.
Revenues of $1,287.2 million came in short of our expectations of $1,301.0 million, but comfortably surpassed the third quarter 2010 level of $960.0 million.
Segmental Analysis
Energy Production Systems: The segment revenue for the most recent quarter was $1,012.8 million, an increase of 31.5% from the third quarter of 2010, buoyed by a 33% rise in sales of subsea systems.
Operating profit came in at $114.8 million, up 8.4% year over year. The positive comparison reflects improved sales volume, somewhat negated by lower margins in both subsea systems and surface wellhead.
Energy Processing Systems: Segment revenues were up 48.3% year-over-year to $285.7 million. The main reasons for the improved performance can be attributed to the sales ramp-up in the fluid control business, which had a record quarter. Segment operating profit, at $61.0 million, increased 76.8% from the year-ago period, driven by higher volume in fluid control on the back of strong North American pressure pumping activity.
Backlog
As of September 30, 2011, FMC’s total backlog was $4,608.2 million, compared to $3,653.9 million at September 30, 2010 and $4,969.6 million at the end of the previous quarter. Of this, backlog for Energy Production Systems was $4,148.8 million (including $3,800 million in subsea systems backlog), while Energy Processing Systems' backlog finished the quarter at $459.4 million.
Balance Sheet
During the quarter, FMC spent $84.2 million on capital programs. As of September 30, 2011, the company had cash and cash equivalents of $336.4 million and long-term debt of $522.1 million, with a debt-to-capitalization ratio of 25.7%.
Guidance
Management guided towards 2011 earnings per share in the $1.70 – $1.75 range, higher than the previous estimate of $1.60–$1.70.
Our Recommendation
FMC Technologies, which competes with Cameron International Corp. (CAM) and National-Oilwell Varco (NOV) in the ‘Oilfield Machineries and Equipment’ sector, currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. Longer-term, we are maintaining our Neutral recommendation on the stock.
CAMERON INTL (CAM): Free Stock Analysis Report
FMC TECH INC (FTI): Free Stock Analysis Report
NATL OILWELL VR (NOV): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment