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TechnipFMC plc (FTI - Free Report) recently reported second-quarter 2018 earnings on a diluted basis (excluding one-time items) of 28 cents a share, missing the Zacks Consensus Estimate of 39 cents. Moreover, the bottom line fell short of the year-ago adjusted earnings of 45 cents a share.
Second-quarter revenues came in at $2,960.9 million, which lagged the Zacks Consensus Estimate of $3,219 million and also decreased 23% from the prior-year figure of $3,845 million.
The quarterly results were primarily affected due to the completion of some of the company’s key projects in Asia Pacific, Africa, and North America regions, along with prior periods’ diminishing inbound orders, especially in the Subsea segment. The negatives were partially offset by improvement in the Surface Technologies segment.
As of Jun 30, 2018, TechnipFMC’s total backlog was $14,871.8 million compared with $15,182.9 million a year ago, reflecting a decline of more than 2%.
Total inbound orders of $4,231.7 million in the quarter, up 34.2% year over year, set a new record for the company.
Subsea: The segment’s revenues in the second quarter were $1,217.4 million, reflecting a decrease of 29.6% from the year-ago figure of $1,730.3 million. Operating profit came in at $75.9 million, down 67.9% year over year. Inbound orders in the quarter fell 14.5% year over year to $1,516.2 million. The segment’s backlog marginally declined from $6,186.8 million in the year-ago quarter to $6,177 million in second-quarter 2018.
With key projects nearing completion in Asia Pacific, Africa, and North America, combined with prior periods’ diminishing inbound orders triggered by the energy downturn, the segment’s results were affected.
Onshore/Offshore: This segment generated revenues of $1,342.4 million, down 26% from the prior-year quarter. Operating profit fell to $171.3 million from $204.5 million recorded in the second quarter of 2017. While inbound orders rose 108.5% year over year to $2,300.8 million in the quarter, backlogs fell 3.5% from the year-ago period to $8,279.5 million.
The segment’s results were negatively impacted by the completion of some key projects, partly offset by increased activities as well as project execution in the Asia Pacific and EMIA (Europe, Middle East, India and Africa) regions.
Surface Technologies: The segment’s revenues in the second quarter were $401.1 million, up 33.7% from second-quarter 2017 figure of $300 million. The increase is primarily attributed to the rising momentum in the North American market, as well as increased demand for hydraulic fracturing and other services. Further, higher global activity levels, rebounding prices in North America and enhanced cost structure helped the company report operating profit of $51.5 million against operating loss of $1 million incurred a year ago. Inbound orders in the quarter rose 50.1% year over year to $414.7 million. The segment’s backlog marginally increased from $414.1 million in the year-ago quarter to $415.3 million in second-quarter 2018.
Capex & Balance Sheet
In the reported quarter, TechnipFMC spent $81.6 million on capital programs. As of Jun 30, the company had cash and cash equivalents of $5,555.4 million and long-term debt of $3,787.5 million, with a debt-to-capitalization ratio of 22.6%.
Dividend
The board of directors declared a quarterly cash dividend of 13 cents per share, payable on Sep 5, 2018 to its shareholders of record as of Aug 21, 2018.
Guidance
TechnipFMC projects revenues for the Onshore/Offshore segment in the range of $5.6-$5.9 billion in 2018 (up from earlier expectation of $5.3-5.7 billion), with an EBITDA margin of 12% (at least), higher than the prior guidance of 11.5%. The company reiterated its guidance for the other two segments. 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 projects its subsea revenues within $5-$5.3 billion, with EBITDA margin of 14%. Capex for 2018 is estimated to be around $300 million.
New Contract
TechnipFMC recently received a subsea installation contract from the Australian wing of Chevron Corporation (CVX - Free Report) . The contract incorporates the development of the Gorgon stage-2, located offshore Western Australia. The objective of the second stage of the project is to upgrade the existing facilities at the site. The financial details of the deal are yet to be published.
Zacks Rank & Key Picks
Currently, the London-based oil and gas field service provider TechnipFMC has a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for some better-ranked stocks like Canadian Natural Resources Limited (CNQ - Free Report) and ConocoPhillips (COP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 35.3% year over year, while its bottom line is expected to increase more than 168%.
Houston, TX-based ConocoPhillips is an integrated energy company. The company’s top line for 2018 is likely to improve 19% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 226.9%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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TechnipFMC (FTI) Q2 Earnings & Revenue Miss, Orders Jump
TechnipFMC plc (FTI - Free Report) recently reported second-quarter 2018 earnings on a diluted basis (excluding one-time items) of 28 cents a share, missing the Zacks Consensus Estimate of 39 cents. Moreover, the bottom line fell short of the year-ago adjusted earnings of 45 cents a share.
Second-quarter revenues came in at $2,960.9 million, which lagged the Zacks Consensus Estimate of $3,219 million and also decreased 23% from the prior-year figure of $3,845 million.
The quarterly results were primarily affected due to the completion of some of the company’s key projects in Asia Pacific, Africa, and North America regions, along with prior periods’ diminishing inbound orders, especially in the Subsea segment. The negatives were partially offset by improvement in the Surface Technologies segment.
As of Jun 30, 2018, TechnipFMC’s total backlog was $14,871.8 million compared with $15,182.9 million a year ago, reflecting a decline of more than 2%.
Total inbound orders of $4,231.7 million in the quarter, up 34.2% year over year, set a new record for the company.
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 second quarter were $1,217.4 million, reflecting a decrease of 29.6% from the year-ago figure of $1,730.3 million. Operating profit came in at $75.9 million, down 67.9% year over year. Inbound orders in the quarter fell 14.5% year over year to $1,516.2 million. The segment’s backlog marginally declined from $6,186.8 million in the year-ago quarter to $6,177 million in second-quarter 2018.
With key projects nearing completion in Asia Pacific, Africa, and North America, combined with prior periods’ diminishing inbound orders triggered by the energy downturn, the segment’s results were affected.
Onshore/Offshore: This segment generated revenues of $1,342.4 million, down 26% from the prior-year quarter. Operating profit fell to $171.3 million from $204.5 million recorded in the second quarter of 2017. While inbound orders rose 108.5% year over year to $2,300.8 million in the quarter, backlogs fell 3.5% from the year-ago period to $8,279.5 million.
The segment’s results were negatively impacted by the completion of some key projects, partly offset by increased activities as well as project execution in the Asia Pacific and EMIA (Europe, Middle East, India and Africa) regions.
Surface Technologies: The segment’s revenues in the second quarter were $401.1 million, up 33.7% from second-quarter 2017 figure of $300 million. The increase is primarily attributed to the rising momentum in the North American market, as well as increased demand for hydraulic fracturing and other services. Further, higher global activity levels, rebounding prices in North America and enhanced cost structure helped the company report operating profit of $51.5 million against operating loss of $1 million incurred a year ago. Inbound orders in the quarter rose 50.1% year over year to $414.7 million. The segment’s backlog marginally increased from $414.1 million in the year-ago quarter to $415.3 million in second-quarter 2018.
Capex & Balance Sheet
In the reported quarter, TechnipFMC spent $81.6 million on capital programs. As of Jun 30, the company had cash and cash equivalents of $5,555.4 million and long-term debt of $3,787.5 million, with a debt-to-capitalization ratio of 22.6%.
Dividend
The board of directors declared a quarterly cash dividend of 13 cents per share, payable on Sep 5, 2018 to its shareholders of record as of Aug 21, 2018.
Guidance
TechnipFMC projects revenues for the Onshore/Offshore segment in the range of $5.6-$5.9 billion in 2018 (up from earlier expectation of $5.3-5.7 billion), with an EBITDA margin of 12% (at least), higher than the prior guidance of 11.5%. The company reiterated its guidance for the other two segments. 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 projects its subsea revenues within $5-$5.3 billion, with EBITDA margin of 14%. Capex for 2018 is estimated to be around $300 million.
New Contract
TechnipFMC recently received a subsea installation contract from the Australian wing of Chevron Corporation (CVX - Free Report) . The contract incorporates the development of the Gorgon stage-2, located offshore Western Australia. The objective of the second stage of the project is to upgrade the existing facilities at the site. The financial details of the deal are yet to be published.
Zacks Rank & Key Picks
Currently, the London-based oil and gas field service provider TechnipFMC has a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for some better-ranked stocks like Canadian Natural Resources Limited (CNQ - Free Report) and ConocoPhillips (COP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 35.3% year over year, while its bottom line is expected to increase more than 168%.
Houston, TX-based ConocoPhillips is an integrated energy company. The company’s top line for 2018 is likely to improve 19% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 226.9%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>