FMC Technologies (FTI) Q2 Earnings Hit By Low Rig Count

Oilfield equipment manufacturer FMC Technologies Inc (NYSE:FTI). FTI reported weak second-quarter 2016 results. A stronger U.S. dollar, record low rig counts in North America along with reduced land activity in the continent was primarily behind the downfall.

The Houston, TX-based company posted adjusted diluted earnings per share of 22 cents, which plummeted almost 58% from the year-earlier adjusted figure of 52 cents. The bottom line also came in below the Zacks Consensus Estimate of 30 cents.

FMC Technologies reported revenues of $1,150.3 million, down 32% from $1,695.2 million generated in second-quarter 2015. The top line also failed to meet the Zacks Consensus Estimate of $1,260 million.

Segmental Analysis

Subsea Technologies: Revenues were $854.2 million, down 31% from the second quarter of 2015. This was primarily due to the effect of a stronger U.S. dollar.

Operating profit of $97.2 million was lower than the year-ago quarter level of $183.5 million. Lower subsea revenues hampered the results.

Surface Technologies: Revenues fell almost 40% year over year to $218.7 million. A significant decline in North American rig count affected the segment’s performance.

So much so that the segment incurred operating loss of $21.7 million against a profit $27.5 million in the year-ago comparable quarter.

Energy Infrastructure: Revenues for the April to June period came in at $85.1 million, 16% lower than second-quarter 2015. This was owing to reduced land activity in North America.

Operating profit for the segment increased to $7.8 million from $5.3 million in the year-earlier quarter.

Backlog

As of Jun 30, 2016, FMC Technologies reported a total backlog (including inter-company eliminations) of $3,386.9 million, significantly below the prior-year quarter level of $5,323.8 million. Out of this, backlog for Subsea Technologies was $2,898.8 million, while Surface Technologies and Energy Infrastructure backlog was $357 million and $133.2 million, respectively.

Balance Sheet

In the reported quarter, FMC Technologies spent $31.7 million on capital programs. As of Jun 30, the company had cash and cash equivalents of $1,075 million, long-term debt of $1,298.7 million, and a debt-to-capitalization ratio of 33.5%.

FMC TECH INC Price, Consensus and EPS Surprise

FMC TECH INC Price, Consensus and EPS Surprise | FMC TECH INC Quote

Zacks Rank & Other Stock Picks

FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry. The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy sector include Murphy USA Inc. MUSA, NGL Energy Partners LP NGL and North Atlantic Drilling Limited NADL. Each of these stocks sports a Zacks Rank #1 (Strong Buy).