FMC Reports Solid Quarter; Worth Buying

Oct.29.07 | About: FMC Technologies, (FTI)

Well it is hard to compare anything to what CF Industries (NYSE:CF) did, so everything pales in comparison, but FMC Technologies (NYSE:FTI) reported a very solid quarter and a bit of an increase to guidance so everything looks on track. Subsea systems are the driver for this stock and they were fantastic with an increasing backlog (read: visibility).

Analysts were in for $1.14 B revenue, and $0.55 EPS
Revenue came in line and they beat the bottom line by $0.04 EPS, at $0.59

  • Inbound orders in the quarter totaled $1.5 billion of which $766 million was in subsea systems. Backlog reached $3.7 billion, including a record $2.6 billion for subsea systems.
  • We continue to see positive returns from being positioned as the technology leader in our industry, said Peter D. Kinnear, President and Chief Executive Officer. Our energy segments again showed robust growth improving year-over-year in orders, backlog, sales, and operating profit, allowing us to raise our estimate for continuing operations for the full year to $2.16 - $2.21 per fully diluted share.
  • We are also announcing our intent to spin-off our FoodTech and Airport Systems businesses to shareholders in a tax-free distribution. With the growth in the energy businesses over the past few years, FoodTech and Airport Systems have become a smaller part of the total company. We now feel that they would perform better as an independent public company focused on their respective markets.
  • Energy Production Systems third quarter revenue of $683.8 million increased 21 percent over the prior-year quarter, due mainly to increased subsea systems sales. Revenue for subsea systems was $521 million in the quarter, up 17 percent from the prior-year quarter. Surface wellhead revenue improved 31 percent from the prior-year quarter.
  • Energy Production Systems operating profit of $70.4 million increased 43 percent over the prior-year quarter. The increase was due both to higher volume and operating margin in subsea systems. Surface wellhead operating profit improved due to higher volume.
  • Energy Production Systems inbound orders were $943.0 million for the third quarter, up $533.0 million over the prior-year quarter due to the strength of orders for subsea systems. Subsea systems inbound orders were $766 million in the quarter, up 178 percent from the prior-year quarter and 81 percent year-to-date. Energy Production backlog of $2.9 billion was up 88 percent from the prior-year quarter and up 10 percent sequentially. Subsea backlog was a record $2.6 billion at the end of the third quarter.
  • Energy Processing Systems third quarter revenue of $199.6 million was 14 percent higher than the prior-year quarter. The revenue improvement over the prior-year quarter was primarily the result of strong demand from service companies for fluid control products, including WECO®/Chiksan® equipment, which were up 25 percent from the prior-year quarter and 11 percent sequentially.
  • Energy Processing Systems third quarter operating profit of $38.0 million was 41 percent higher than the prior-year quarter. The improvement was largely the result of higher volume and operating margins in both fluid control and measurement solutions.
  • Energy Processing Systems inbound orders were $219.3 million for the third quarter, up 4 percent over the prior-year quarter and up 16 percent sequentially. Backlog is $357.2 million, up 31 percent from the prior-year quarter on strong fluid control, loading systems and measurement systems orders.
  • FMC Technologies announced its intent to combine its FoodTech and Airport Systems businesses into a separate, publicly-traded company and distribute it to shareholders in a manner that is tax free to shareholders. The Company estimates the distribution will occur in mid 2008.

Funny thing is the Foodtech business actually grew 40% year over year as well - not that I want anything to do with it. Let's keep focused on energy, spin off that non-related product line, and keep going. Another solid quarter much the same as Core Laboratories (NYSE:CLB). The stock is starting to get pricey but I thought the same after the CLB quarter and that stock just went on to tack another $10. I guess my definition of pricey is old school - the new school investor just buys, buys, buys.


Long FMC Technologies in fund; no personal position