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TechnipFMC (FTI) Q3 Earnings Lag Estimates on Subsea Weakness
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TechnipFMC plc (FTI - Free Report) recently reported third-quarter 2018 earnings on a diluted basis (excluding one-time items) of 31 cents a share, missing the Zacks Consensus Estimate of 38 cents. Moreover, the bottom line fell short of the year-ago adjusted earnings of 39 cents a share. Lower-than-expected profits from its subsea and surface technologies segment led to weaker results. Precisely, operating profit from its subsea segment came in at around $80 million, lagging the Zacks Consensus Estimate of $108 million.
Third-quarter revenues came in at $3,143.8 million, which lagged the Zacks Consensus Estimate of $3,224 million and also decreased 24% from the prior-year figure of $4,141 million.
However, on an encouraging note, TechnipFMC’s total backlog at the end of the quarter was $15,178 million, reflecting year-over-year growth of 9%. Total inbound orders were 3,647.2 million in the quarter, up 48% year over year.
Segmental Analysis
Subsea: The segment’s revenues in the third quarter were $1,209.1 million, reflecting a decrease of 18.2% from the year-ago figure of $1,478 million. Operating profit came in at $79.7 million, down 22.5% year over year. Lower revenues and competitive price backlog weakened the operating profits. With key projects in Asia Pacific, Africa and Europe nearing completion, the company’s results were affected. The segment’s results were also impacted by the prior periods’ diminishing inbound orders, due to the energy downturn.
However, inbound orders in the quarter under review rose 58.6% year over year to $1,554 million. The segment’s backlog also increased from $5,949 million in the year-ago quarter to $6,343.4 million in third-quarter 2018.
Onshore/Offshore: This segment generated revenues of $1,532.5 million, down 33.6% from the prior-year quarter. The segment’s revenues were negatively impacted by the completion of some key projects, especially Yamal LNG. Nonetheless, operating profit rose to $243.4 million from $206.4 million recorded in the third quarter of 2017, on the back of lower costs, bonus on Yamal LNG and gains from the divestment of an offshore yard.
Notably, inbound orders rose 44.5% year over year to $1,666 million in the quarter. Backlog also increased 10.8% to stand at $8,378.8 million.
Surface Technologies: The segment recorded revenues of $402.2 million, up 13.6% from third-quarter 2017 figure of $354 million. The increase is primarily attributed to rising momentum in the North American market, as well as higher wellhead product sales. Further, higher global activity levels, rebounding prices in North America and favorable product mix outside America drove the operating profit to $51.9 million, up 6% from the year-ago level.
Inbound orders in the quarter rose 29.8% year over year to $427.2 million. The segment’s backlog increased to $455.8 million in the quarter from the prior-year level of $394.2 million.
Capex & Balance Sheet
In the reported quarter, TechnipFMC spent $120.4 million on capital programs. As of Sep 30, the company had cash and cash equivalents of $5,553.3 million and long-term debt of $4,017.1 million, with a debt-to-capitalization ratio of 23.8%.
Dividend
The board of directors declared a quarterly cash dividend of 13 cents per share, payable on Dec 5, 2018 to its shareholders of record as of Nov 20, 2018.
2018 Guidance
TechnipFMC projects revenues at the Onshore/Offshore segment in the range of $5.8-$6.1 billion in 2018 (up from earlier expectation of $5.6-$5.9 billion), with an EBITDA margin of 13% (at least), higher than the prior guidance of 12%. The Surface Technologies segment is expected to generate revenues between $1.5 billion and $1.6 billion, with EBITDA margin of 16% vis a vis the prior guidance of 17.5%. The company reiterated its guidance for the subsea unit, projecting revenues from the segment in the band of $5-$5.3 billion, with EBITDA margin of 14%. Capex for 2018 is estimated to be around $300 million.
Zacks Rank & Key Picks
TechnipFMC currently carries a Zacks Rank #3 (Hold).
Murphy Oil pulled off an average positive earnings surprise of 96.50% in the last four quarters.
Eni delivered an average positive earnings surprise of 492.8% in the trailing four quarters.
Range Resources delivered an average positive earnings surprise of 47.48% in the last four quarters.
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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) Q3 Earnings Lag Estimates on Subsea Weakness
TechnipFMC plc (FTI - Free Report) recently reported third-quarter 2018 earnings on a diluted basis (excluding one-time items) of 31 cents a share, missing the Zacks Consensus Estimate of 38 cents. Moreover, the bottom line fell short of the year-ago adjusted earnings of 39 cents a share. Lower-than-expected profits from its subsea and surface technologies segment led to weaker results. Precisely, operating profit from its subsea segment came in at around $80 million, lagging the Zacks Consensus Estimate of $108 million.
Third-quarter revenues came in at $3,143.8 million, which lagged the Zacks Consensus Estimate of $3,224 million and also decreased 24% from the prior-year figure of $4,141 million.
However, on an encouraging note, TechnipFMC’s total backlog at the end of the quarter was $15,178 million, reflecting year-over-year growth of 9%. Total inbound orders were 3,647.2 million in the quarter, up 48% year over year.
Segmental Analysis
Subsea: The segment’s revenues in the third quarter were $1,209.1 million, reflecting a decrease of 18.2% from the year-ago figure of $1,478 million. Operating profit came in at $79.7 million, down 22.5% year over year. Lower revenues and competitive price backlog weakened the operating profits. With key projects in Asia Pacific, Africa and Europe nearing completion, the company’s results were affected. The segment’s results were also impacted by the prior periods’ diminishing inbound orders, due to the energy downturn.
However, inbound orders in the quarter under review rose 58.6% year over year to $1,554 million. The segment’s backlog also increased from $5,949 million in the year-ago quarter to $6,343.4 million in third-quarter 2018.
Onshore/Offshore: This segment generated revenues of $1,532.5 million, down 33.6% from the prior-year quarter. The segment’s revenues were negatively impacted by the completion of some key projects, especially Yamal LNG. Nonetheless, operating profit rose to $243.4 million from $206.4 million recorded in the third quarter of 2017, on the back of lower costs, bonus on Yamal LNG and gains from the divestment of an offshore yard.
Notably, inbound orders rose 44.5% year over year to $1,666 million in the quarter. Backlog also increased 10.8% to stand at $8,378.8 million.
Surface Technologies: The segment recorded revenues of $402.2 million, up 13.6% from third-quarter 2017 figure of $354 million. The increase is primarily attributed to rising momentum in the North American market, as well as higher wellhead product sales. Further, higher global activity levels, rebounding prices in North America and favorable product mix outside America drove the operating profit to $51.9 million, up 6% from the year-ago level.
Inbound orders in the quarter rose 29.8% year over year to $427.2 million. The segment’s backlog increased to $455.8 million in the quarter from the prior-year level of $394.2 million.
Capex & Balance Sheet
In the reported quarter, TechnipFMC spent $120.4 million on capital programs. As of Sep 30, the company had cash and cash equivalents of $5,553.3 million and long-term debt of $4,017.1 million, with a debt-to-capitalization ratio of 23.8%.
Dividend
The board of directors declared a quarterly cash dividend of 13 cents per share, payable on Dec 5, 2018 to its shareholders of record as of Nov 20, 2018.
2018 Guidance
TechnipFMC projects revenues at the Onshore/Offshore segment in the range of $5.8-$6.1 billion in 2018 (up from earlier expectation of $5.6-$5.9 billion), with an EBITDA margin of 13% (at least), higher than the prior guidance of 12%. The Surface Technologies segment is expected to generate revenues between $1.5 billion and $1.6 billion, with EBITDA margin of 16% vis a vis the prior guidance of 17.5%. The company reiterated its guidance for the subsea unit, projecting revenues from the segment in the band of $5-$5.3 billion, with EBITDA margin of 14%. Capex for 2018 is estimated to be around $300 million.
Zacks Rank & Key Picks
TechnipFMC currently carries a Zacks Rank #3 (Hold).
TechnipFMC plc Price, Consensus and EPS Surprise
TechnipFMC plc Price, Consensus and EPS Surprise | TechnipFMC plc Quote
A few better-ranked players in the energy space are Murphy Oil Corporation (MUR - Free Report) , Eni SpA (E - Free Report) and Range Resources Corporation (RRC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy Oil pulled off an average positive earnings surprise of 96.50% in the last four quarters.
Eni delivered an average positive earnings surprise of 492.8% in the trailing four quarters.
Range Resources delivered an average positive earnings surprise of 47.48% in the last four quarters.
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 >>