TechnipFMC plc (FTI) reported first-quarter 2024 adjusted earnings of 22 cents per share, which beat the Zacks Consensus Estimate of 16 cents. The company reported breakeven earnings in the year-ago quarter. The improvement can be attributed to better-than-expected performance in the Subsea segment.
Revenues of $2 billion beat the Zacks Consensus Estimate by 3.5%. The top line also increased from the year-ago quarter’s reported figure of $1.7 billion. This was primarily due to a higher revenue contribution from the aforementioned segment.
FTI’s first-quarter inbound orders decreased 5.2% from the year-ago period’s level to $2.4 billion. The company’s backlog rose during the same time frame. As of March-end, TechnipFMC’s order backlog totaled $12.5 billion, up about 32.6% from the year-ago quarter.
On Apr 23, FTI’s board of directors declared a quarterly cash dividend of 5 cents per share to its common shareholders of record as of May 21. The payout, which remained flat quarter over quarter, will be made on Jun 5.
In the reported quarter, the company repurchased 6.3 million of its common shares for a total of $150.1 million. Total shareholder distributions were $171.8 million, including a $21.7 million dividend.
TechnipFMC plc Price, Consensus and EPS Surprise
TechnipFMC plc price-consensus-eps-surprise-chart | TechnipFMC plc Quote
Segmental Analysis
Subsea: Revenues from this segment totaled $1.73 billion, up 25% from the year-ago quarter’s level of $1.39 billion. The figure also beat our projection of $1.63 billion. The increase in revenues was primarily due to increased project activity in Brazil.
Adjusted EBITDA amounted to $242.4 million, up about 71% from the year-ago quarter’s level. The figure also surpassed our estimate of $215.9 million. Inbound orders declined 5.2% year over year to $2.4 billion. The backlog rose 32.6% during the same time frame.
Surface Technologies: This segment recorded revenues of $307.2 million, down 6.9% year over year. The decline in revenues was primarily due to the disposal of the Measurement Solutions business before the end of the quarter, lower activity in North America and portfolio optimization in Latin America. However, the figure beat our projection of $296.1 million.
The unit’s adjusted EBITDA increased 2.7% to $41.4 million and the figure beat our estimate of $38.3 million. The segment’s inbound orders fell 15% year over year. The quarter-end backlog decreased 14.4% during the same time frame.
Financials
TechnipFMC reported $1.88 billion in costs and expenses, 13% higher than the year-ago quarter’s level of $1.67 billion. During the reported quarter, the company spent $52 million on capital programs.
As of Mar 31, FTI had cash and cash equivalents worth $696.8 million and long-term debt of $887.2 million, with a debt-to-capitalization of 22.8%.
2024 Outlook
TechnipFMC retained its previous guidance that was issued on Feb 22, 2024. The company expects revenues from the Subsea unit in the $7.2-$7.6 billion range. It also anticipates revenues between $1.2 billion and $1.35 billion for the Surface Technologies unit. The adjusted EBITDA margin is anticipated in the range of 15.5-16.5% for the Subsea segment and between 13% and 15% for the Surface Technologies segment.
The company expects free cash flow generation in the band of $350-$500 million for 2024. It also expects annual capital expenditure of $275 million and net interest expense of $70-$80 million for the year. It anticipates net corporate expenses in the range of $115-$125 million, including depreciation and amortization of $3 million, net interest expense of $70-$80 million and tax provisions of $280-$290 million.
Zacks Rank and Key Picks
Currently, FTI carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Hess Corporation HES and SM Energy Company SM, each sporting a Zacks #1 Rank (Strong Buy), and Sunoco LP SUN, carrying a Zacks #2 Rank (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hess Corporation is valued at approximately $50.08 billion. In the past year, the company’s shares have surged 12%.
HES is a leading oil and natural gas exploration and production company. The upstream energy player primarily operates in the prolific offshore Guyana resources.
SM Energy is valued at $5.88 billion. The company currently pays a dividend of 72 cents per share, or 1.42% on an annual basis.
SM engages in the acquisition, exploration, development and production of oil, gas and natural gas liquids in the state of Texas.
Sunoco is valued at $5.71 billion. It is a major wholesale motor fuel distributor in the United States, distributing over 10 fuel brands through long-term contracts with more than 10,000 convenience stores, thereby ensuring consistent cash flow.
SUN’s extensive distribution network across 40 states provides a robust and reliable source of income, and the Brownsville terminal expansion should add to its revenue diversification.
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