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Oil drilling equipment maker FMC Technologies Inc. (FTI - Analyst Report) reported second quarter diluted earnings per share (excluding one-time charge of 4 cents) of 48 cents, ahead of the Zacks Consensus Estimate of 47 cents and the year-ago profit of 46 cents. The results were driven by strength in its subsea business.

Revenues at $1,707.9 million were up 14.3% year over year and also came above the Zacks Consensus Estimate of $1,637.0 million.

Segmental Analysis

Subsea Technologies: FTI is particularly well positioned in the subsea technologies market, where it competes with larger rival Cameron International Corp. (CAM - Analyst Report). The segment revenue for the most recent quarter was $1,123.7 million, an increase of 18.8% from the second quarter of 2012, buoyed by a rise in sales of subsea systems.

Operating profit came in at $123.4 million, up 12.5% year over year. The positive comparison reflects higher sales and better execution.

Surface Technologies: Segment revenues were up 6.4% year-over-year to $440.2 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 revenue.

But FTI’s segment operating profit – at $57.3 million – decreased 32.0% from the year-ago period, hamstrung by depressed North American fluid control activity and pitfalls from the Canadian breakup on completion services.

Energy Infrastructure: The segment revenue for the Apr-Jun period was $158.0 million, 13.4% above the second quarter 2012 level of $139.4 million.

Operating profit improved to $18.5 million from $9.1 million earned a year ago, helped by better showing in loading systems and measurement solutions.

Backlog

As of Jun 30, 2013, FTI’s total backlog (including intercompany eliminations) was a record $6,720.3 million, compared to $5,204.7 million a year ago. Of this, backlog for Subsea Technologies was $5,866.3 million, while Surface Technologies and Energy Infrastructure backlog finished the quarter at $581.7 million and $281.6 million, respectively.

Balance Sheet

During the quarter, FTI spent $77.8 million on capital programs. As of Jun 30, 2013, the company had cash and cash equivalents of $267.6 million and long-term debt (including current portion) of $1,533.3 million, with a debt-to-capitalization ratio of 44.2%.

Guidance

Management raised the lower end of its 2013 earnings per share guidance, which now stands in the range of $2.10–$2.25, as against the previous $2.05–$2.25.

Zacks Rank & Stock Picks

FTI currently carries a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.

Apart from FTI, one can look at Dril-Quip Inc. (DRQ - Analyst Report) and Natural Gas Services Group Inc. (NGS - Snapshot Report) as good buying opportunities. These energy equipment service providers – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with potential to rise significantly from current levels.

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