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TechnipFMC (FTI) Q3 Earnings Miss, Revenues Top Estimates

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TechnipFMC plc’s (FTI - Free Report) third-quarter 2020 adjusted earnings of 16 cents per share missed the Zacks Consensus Estimate of 20 cents. This underperformance was primarily caused by weak revenue contribution from the company’s Surface Technologies unit.

However, the bottom line improved 33.3% from the year-earlier quarter's adjusted earnings of 12 cents owing to better-than-expected profit from the Subsea segment. Also, adjusted EBITDA of $146 million from the same segment outperformed the Zacks Consensus Estimate of $125 million.

For the quarter ended Sep 30, the company’s revenues of $3.34 billion surpassed the Zacks Consensus Estimate of $3.29 billion. Meanwhile, the top line matched the year-ago quarter’s sales.

In the third quarter, this seabed-to-surface oilfield equipment and services provider’s inbound orders deteriorated 14.7% from the year-ago period to $2.23 billion.

The company’s backlog too decreased in the same period. The metric stood at $19.6 billion, declining 18.5% from the year-ago quarter.

Subsea: Revenues in the quarter under review were $1.50 billion, up 11.9% from the year-ago sales figure of $1.34 billion on the back ofa favorable execution of the segment’s backlog. Moreover, adjusted EBITDA of $146 million increased 5% year over year, attributable to lower charges and credits in the current period. Quarterly inbound orders and backlog decreased 6.4% and 16.6%, respectively, in the quarter under review.

Technip Energies (Onshore/Offshore is renamed as Technip Energies and includes Genesis, Loading Systems and Cybernetix): Revenues worth $1.61 billion inched up 0.7% from the prior-year quarter, driven by a continued ramp-up of Arctic LNG 2 as well as robust activity in the LNG, downstream business. In the third quarter, this unit reported $174.5 million as adjusted EBITDA, down from $304.2 million in the prior-year quarter.

Management attributed this downswing to weak project execution, particularly in the Yamal LNG project, and soft margin realization from early-stage projects including the Arctic LNG 2. Inbound orders were down 40.7% to $412.8 million while the segment’s backlog dropped 19.8% year over year to $12.1 billion at the end of the quarter.

Surface Technologies: This is the company’s smallest segment that recorded revenues of $225.7 million, down 43.1% year over year,primarily due to slowdown in North American completions activity. Adjusted EBITDA tanked 61% to $17.3 million due to lower rig count as well as completions-based activity in North America. The segment’s inbound orders and backlog fell 48.7% and 13.9%, respectively, in the quarter under review.

TechnipFMC plc Price, Consensus and EPS Surprise

TechnipFMC plc Price, Consensus and EPS Surprise

TechnipFMC plc price-consensus-eps-surprise-chart | TechnipFMC plc Quote


In the reported quarter, TechnipFMC spent $250.8 million. As of Sep 30, the company had cash and cash equivalents worth $4.24 billion and a long-term debt of $3.25 billion with total debt-to-total capital of 43.7%.

In June, the companystrengthened its balance sheet by amending its total unsecured credit facility of worth $2.5 billion. The company also signed an Amendment and Restatement Agreement to its €500 million senior unsecured revolving Euro credit facility agreement. These amendments authorise the company to include $3.2 billion of goodwill for the calculation of consolidated net value.

The amendments to its credit facilities will enhance its financial flexibility substantially to tide over the current difficult times.

2020 Guidance

TechnipFMC reiterates the full-year outlook for its operating segments. The company expects revenues from the Subsea and Technip Energies units to be $5.3-$5.6 billion and $6.3-$6.8 billion, respectively. For the Surface Technologies segment, the revenue projection is in the range of $950-$1,150 million. Further, the company set a minimum EBITDA margin target of 10% for the Technip Energies segment.

In April, this London-based company slashed its 2020 capex view by 30% from the past prediction due to the sudden oil price crash triggered by the pandemic. The company now anticipates to shell out $300 million as capital expenditures.

Zacks Rank & Stocks to Consider

TechnipFMC has a Zacks Rank #4 (Sell), currently.

Some better-ranked players in the energy space are SilverBow Resources Inc. (SBOW - Free Report) , Earthstone Energy Inc. (ESTE - Free Report) ) and NuStar Energy L.P. (NS - Free Report) , each stock carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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