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TechnipFMC (FTI) Q1 Earnings Miss Estimates, Revenues Beat

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TechnipFMC plc (FTI - Free Report) reported first-quarter 2018 earnings on a diluted basis (excluding one-time items) of 28 cents a share, missing the Zacks Consensus Estimate of 32 cents. The weaker-than-expected results can be primarily attributed to lower-than-anticipated operating profit in its Subsea segment. Precisely, the operating income in its Subsea segment amounted to $54.4 million, lagging the Zacks Consensus Estimate of $80 million.

However, the bottom line was higher than the year-ago adjusted earnings of 26 cents a share on higher year-over-year profits, mainly in its Surface Technologies and Onshore/Offshore segments.

Revenues in the first quarter came in at $3,125.2 million, beating the Zacks Consensus Estimate of $3,110 million. However, revenues in the quarter under review decreased 7.7% from the prior-year figure of $3,388 million.

TechnipFMC plc Price, Consensus and EPS Surprise

 

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

Segmental Analysis

Subsea: The segment’s revenues in the first quarter were $1,180.2 million, reflecting a decrease of 14.3% from the year-ago figure of $1,376.7 million. Reduced project activities in Africa resulted in the weaker results. However, operating profit came in at $54.4 million, up 0.4% year over year due to synergistic benefits of the merger between Technip S.A. and FMC Technologies, completed last January.

Onshore/Offshore: This segment generated revenues of $1,573.4 million, down 10.8% from the prior-year quarter. Revenues declined due to the completion of some key projects including Yamal LNG project, partly offset by increased activities in the Middle East, Europe and Asia Pacific regions. However, operating income rose to $202.9 million versus $142.8 million recorded in the first quarter of 2017 on strong project execution.

Surface Technologies: The segment’s revenues in the first quarter were $371.6 million, up 49.6% from first-quarter 2017 figure of $248.4 million. The increase is primarily attributed to the rising momentum in the North American market and increased demand for hydraulic fracturing. Further, higher global activity levels and rebounding prices in North America helped the company report operating profit of $30.6 million against operating loss of $18.6 million incurred a year ago.

Backlog

As of Mar 31, 2018, TechnipFMC’s total backlog was $14,012 million compared with $16,056.2 million a year ago, reflecting a decline of 12.7%. Of this, backlog for Onshore/Offshore was $7,491.6 million, while Subsea and Surface Technologies backlogs were $6,110.9 million and $409.5 million, respectively.

Capex & Balance Sheet

In the reported quarter, TechnipFMC spent $53.2 million on capital programs. As of Mar 31, the company had cash and cash equivalents of $6,220.6 million and long-term debt of $3,735.8 million, with a debt-to-capitalization ratio of 22%.

Dividend

The board of directors declared a quarterly cash dividend of 13 cents per share, payable on Jun 6, 2018 to its shareholders of record as of May 22, 2018.

Guidance

TechnipFMC projects revenues for Onshore/Offshore segment to be within the range of $5.3-$5.7 billion in 2018, with an EBITDA margin of 11.5%, up from the prior guidance of 10.5%. The Surface Technologies segment is expected to generate revenues between $1.5 billion and $1.6 billion, with EBITDA margin of 17.5%. The company estimates its subsea revenues to lie within $5-$5.3 billion, with EBITDA margin of 14%. Capex for 2018 is estimated to be around $300 million.

Zacks Rank & Key Picks

Headquartered in London, TechnipFMC is a manufacturer and supplier of technology solutions for the energy industry. Currently, the company carries a Zacks Rank #3 (Hold).

Some better-ranked players in the same industry include Nine Energy Service, Inc. (NINE - Free Report) , Core Laboratories N.V. (CLB - Free Report) and Newpark Resources, Inc. (NR - Free Report) . While Nine Energy sports a Zacks Rank #1 (Strong Buy), Core Laboratories and Newpark carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nine Energy’s 2018 earnings are expected to witness a year-over-year increase of 164.54%.

Core Laboratories’ earnings are anticipated to witness a year-over-year increase of 33.5% in 2018.

Newpark’s earnings are expected to witness a year-over-year increase of 310% in 2018.

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