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TechnipFMC (FTI) Misses on Q3 Earnings, Sales Decline Y/Y

Energy services company TechnipFMC plc FTI reported third-quarter 2017 earnings on a diluted basis (excluding one-time items) of 39 cents a share, missing the Zacks Consensus Estimate of 46 cents. The weak results can be attributed to lower revenues mainly due to reduced project activities in Europe and Africa, partially offset by increased activities in North America.

Revenues in the third quarter came in at $4,141 million beating the Zacks Consensus Estimate of $3,890 million. Revenues in the quarter under review however, decreased from $5,038.2 million recorded in the year-ago quarter.

TechnipFMC plc Price, Consensus and EPS Surprise

 

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

 

Segmental Analysis

Subsea: The segment’s revenues for the third quarter were $1,478.2 million, reflecting a decrease of 37% from third-quarter 2016. Reduced project activities in Europe and Africa led to lower revenues. Operating profit came in at $102.8 million, down 71.3% year over year.

Onshore/Offshore: This segment generated revenues of $2,308.1 million, down 3.8% year over year. Revenues declined due to the completion of several projects since the prior-year period, partly offset by the increased activities in the Middle East. However, operating income jumped 74% to $206.4 million on successful progression of several major projects.

Surface Technologies: The segment’s revenues for the third quarter were $353.9 million, up 19.9% from third -quarter 2016 figure of $295.2 million. The increase is primarily attributed to the rising momentum in the North American as well as completion activity. However, a favorable product mix and a leaner cost structure helped the company to report an operating profit of $49 million as against an operating loss of $17.4 million incurred a year ago.

Backlog

As of Sep 30, 2017, TechnipFMC’s total backlog was $13,902.4 million compared with $13,698.8 million a year ago. Of this, backlog for Onshore/Offshore was $7,559.3 million, while Subsea and Surface Technologies backlogs were $5,948.9 million and $394.2 million, respectively.

Capex & Balance Sheet

In the reported quarter, TechnipFMC spent $62.9 million on capital programs. As of Sep 30, the company had cash and cash equivalents of $6,896.1 million and long-term debt of $3,167.4 million, with a debt-to-capitalization ratio of 18.7%.

Guidance

TechnipFMC projects its revenue for Onshore/ Offshore segment to be at least $7.7 billion in 2017 compared with the prior guidance of $7.3 billion. Surface Technologies are expected to generate revenues of $1.3 billion compared with the prior guidance of $1.4 billion. The company maintains its prior guidance for the subsea revenues at $6.1 billion. Estimated capex budget for 2017 is $250 million.

TechnipFMC has also provided preliminary segment guidance for 2018. It projects revenues for the subsea segment be within $5.0-$5.3 billion range in 2018. Onshore/Offshore revenues are estimated to lie between $5.3 billion and $5.7 billion. Revenues for Surface Technologies are forecasted to be within $1.5-1.6 billion range.

Zacks Rank and Key Picks

London-based TechnipFMC is a leading manufacturer and supplier of technology solutions for the energy industry. The company currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the oil and energy sector are Par Pacific Holdings, Inc. PARR, Braskem S.A. BAK and Denbury Resources, Inc. DNR. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Par Pacific’s sales for third-quarter 2017 are expected to increase 28.5% year over year. The company delivered an average positive earnings surprise of 195.3% in the last four quarters.

Braskem’s sales for third-quarter 2017 are expected to increase 4.1% year over year. The company delivered a positive earnings surprise of 68.2% in the preceding four quarters.

Denbury Resources’ sales for 2017 are expected to increase 5.9% year over year. The company delivered average positive earnings surprise of 25% in the trailing four quarters.

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