HOUSTON, July 20, 2016 /PRNewswire/ — FMC Technologies, Inc. (NYSE: FTI) today reported second quarter 2016 revenue of $1.2 billion, down 32 percent from the prior-year quarter primarily due to lower activity. Diluted earnings per share were $0.01. Adjusted diluted earnings per share were $0.22, which excludes total Company pre-tax charges of $61 million, or $0.21 per diluted share as detailed in the attached financial schedules.
“Subsea Technologies delivered solid operating margins as we continue to benefit from our execution momentum as well as the savings from our ongoing restructuring activities,” said John Gremp, Chairman and CEO of FMC Technologies. Gremp added, “The further deterioration in North America led to a significant impact to our Surface Technologies earnings.”
Total inbound orders were $537.9 million, including $334.1 million in Subsea Technologies orders. Backlog for the Company was $3.4 billion, including Subsea Technologies backlog of $2.9 billion.
Gremp continued, “Although the timing around the sanctioning of deepwater projects remains uncertain, we continue to focus our strategy on lowering the cost of deepwater development, and I am confident that our merger with Technip will allow us to further improve project economics.”
Review of Operations – Second Quarter 2016
Subsea Technologies second quarter revenue was $854.2 million, down 31 percent from the prior-year quarter. After excluding $29.2 million of negative impact due to the strong U.S. dollar, total revenue was down 29 percent from the prior-year quarter.
Subsea Technologies operating profit in the second quarter was $97.2 million. Operating results include a $3 million negative impact related to the strong U.S. dollar. Adjusted operating profit was $120.2 million, excluding charges of $23 million. Total operating profit, excluding foreign currency impact and charges in both periods, was down approximately 33 percent year-over-year, primarily due to the decline in subsea revenues.
Subsea Technologies operating margins were 11.4 percent; adjusted operating margins were 14.1 percent, excluding charges as detailed in the attached financial schedules.
Subsea Technologies inbound orders for the second quarter were $334.1 million. Backlog was $2.9 billion.
Surface Technologies second quarter revenue was $218.7 million, down 40 percent from the prior-year quarter, primarily due to the 53 percent decline in the North American rig count.
Surface Technologies reported an operating loss of $21.7 million; adjusted operating loss was $17.2 million, excluding charges of $4.5 million as detailed in the attached financial schedules.
Surface Technologies inbound orders for the second quarter were $143.1 million. Backlog was $357 million, predominantly related to our wellhead business outside of North America.
Energy Infrastructure second quarter revenue was $85.1 million, down 16 percent from the prior-year quarter. The revenue decline was primarily due to lower North American land activity.
Energy Infrastructure reported operating profit of $7.8 million. Operating margins were 9.2 percent.
Energy Infrastructure inbound orders for the second quarter were $62.1 million. Backlog was $133.2 million.
Corporate expense in the second quarter was $13.1 million, a decrease of $1 million from the prior-year quarter.
Other revenue and other expense, net, increased $23.7 million from the prior-year quarter to $53.2 million of expense. Items of significance included the following:
The Company ended the quarter with net debt of $251.3 million, up $41.7 million sequentially. Net interest expense was $7.6 million in the quarter.
The Company repurchased approximately 782,000 shares of common stock at an average cost of $28.45 per share in the quarter. In accordance with the Business Combination Agreement related to the merger, the Company has suspended share repurchases.
Depreciation and amortization for the second quarter was $49.3 million, and capital expenditures were $31.7 million.
The Company recorded an effective tax rate of 77.6 percent for the second quarter. The tax provision of $7.4 million reflects certain expenses for merger activity that did not receive tax benefit.
FMC Technologies reported second quarter diluted earnings per share of $0.01. Adjusted diluted earnings per share were $0.22, when excluding total Company pre-tax restructuring and other severance charges, business combination transaction costs, Nigerian currency devaluation, transition and facility consolidation costs, and impairment and other charges of $61 million, or $0.21 per diluted share.
The Company recorded Subsea Technologies revenue of $854.2 million in the quarter with margins of 11.4 percent; adjusted operating margins were 14.1 percent, excluding charges as detailed in the attached financial schedules.
Total inbound orders of $537.9 million in the second quarter included $334.1 million in Subsea Technologies orders.
The Company’s backlog stands at $3.4 billion, including Subsea Technologies backlog of $2.9 billion.
About FMC Technologies
FMC Technologies, Inc. (NYSE: FTI) is the global market leader in subsea systems and a leading provider of technologies and services to the oil and gas industry. We help our customers overcome their most difficult challenges, such as improving shale and subsea infrastructures and operations to reduce cost, maintain uptime, and maximize oil and gas recovery. The company has approximately 15,500 employees and operates 29 major production facilities and services bases in 18 countries. Visit www.fmctechnologies.com or follow us on Twitter @FMC_Tech for more information.
This release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words such as “expected,” “continue,” “outlook,” and similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Such forward-looking statements involve significant risks, uncertainties and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. FMC Technologies cautions you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Known material factors that could cause actual results to differ materially from those contemplated in the forward-looking statements include those set forth in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as the following: demand for our products and services, which is affected by changes in the price of, and demand for, crude oil and natural gas in domestic and international markets; potential liabilities arising out of the installation or use of our products; U.S. and international laws and regulations, including environmental regulations, that may increase our costs, limit the demand for our products and services or restrict our operations; disruptions in the political, regulatory, economic and social conditions of the foreign countries in which we conduct business; fluctuations in currency markets worldwide; cost overruns that may affect profit realized on our fixed price contracts; disruptions in the timely delivery of our backlog and its effect on our future sales, profitability, and our relationships with our customers; the cumulative loss of major contracts or alliances; rising costs and availability of raw materials; a failure of our information technology infrastructure or any significant breach of security; our ability to develop and implement new technologies and services, as well as our ability to protect and maintain critical intellectual property assets; the outcome of uninsured claims and litigation against us; deterioration in future expected profitability or cash flows and its effect on our goodwill; a downgrade in the ratings of our debt could restrict our ability to access the debt capital markets; continuing consolidation within our industry; and our dependence on the continuing services of certain of our key managers and employees. FMC Technologies undertakes no obligation to publicly update or revise any of its forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required by law.
FMC Technologies, Inc. will conduct its third quarter 2016 conference call at 9 a.m. ET on Thursday, October 20, 2016. The event will be available at www.fmctechnologies.com. An archived audio replay will be available after the event at the same website address. In the event of a disruption of service or technical difficulty during the call, information will be posted at www.fmctechnologies.com/earnings.
SOURCE FMC Technologies, Inc.