FMC's Pocketbook 28% Thicker in Third Quarter

FMC Technologies has reported third quarter 2008 revenue of $1.1 billion for continuing operations, up 28 percent over the third quarter of 2007. Diluted earnings per share from continuing operations were $0.72, up 47 percent from $0.49 per diluted share in the prior-year quarter.

In the quarter, operating profit was up 44 percent in Energy Production Systems and up 12 percent in Energy Processing Systems from the third quarter of 2007.

The spin-off of JBT Corporation was completed on July 31, 2008. An 8-K/A was filed on November 4, 2008 that updated pro forma financials.

"We are very pleased with the growth of revenues and profits in our third quarter results," said Peter D. Kinnear, Chairman, President, and Chief Executive Officer. "We are reaffirming diluted earnings per share guidance for 2008 in a range of $2.60 to $2.70. Our guidance projects growth of approximately 36 percent over the 2007 diluted earnings from continuing operations."

Energy Production Systems

Energy Production Systems' third quarter revenue of $896.2 million increased 31 percent over the prior-year quarter due mainly to increased subsea systems sales. Revenue for subsea systems was $722 million for the quarter, up 38 percent from the prior-year quarter. Surface wellhead revenue was up 15 percent from the third quarter of 2007.

Energy Production Systems' operating profit of $101.6 million increased 44 percent over the prior-year quarter. The increase was mainly due to higher volume and operating margin in subsea systems. Operating margin in the segment was 11.3 percent for the quarter.

Energy Production Systems' inbound orders were $551.3 million for the third quarter. The year-to-date subsea systems inbound orders are now $1.9 billion. Backlog was $3.9 billion and included $3.6 billion in subsea backlog at the end of the third quarter.

Energy Processing Systems

Energy Processing Systems' third quarter revenue of $229.0 million was 15 percent higher than the prior-year quarter. The revenue increase was driven by the Measurement Solutions and Material Handling Systems businesses.

Energy Processing Systems' third quarter operating profit of $42.7 million was 12 percent higher than the prior-year quarter. This improvement was led by the Measurement Solutions and Material Handling businesses.
Energy Processing Systems’ inbound orders were $237.2 million for the third quarter and backlog was $375.4 million.

Corporate Items

Corporate expense in the third quarter of 2008 was $9.9 million, a $0.1 million increase from the prior-year quarter.

Other revenue and other income, net, of $4.0 million increased $1.5 million from the prior-year quarter. The net impact of foreign exchange gains or losses in the third quarter was a gain of $4.7 million. The company also had a reduced liability associated with FMC stock held in its non-qualified savings plan of $5.2 million in the quarter.

The company ended the quarter with net debt of $69.0 million. Net interest expense was $0.9 million in the third quarter as compared to a $3.3 million net interest expense in the third quarter of 2007. The lower interest was the result of lower average debt levels in the quarter.

In the quarter, the company repurchased 2.8 million shares of common stock for $154 million. The company has 9.7 million shares remaining in its stock repurchase authorization.

Depreciation and amortization for the third quarter of 2008 was $20.0 million, up from $15.4 million in the prior-year quarter.

Capital expenditures during the third quarter of 2008 totaled $39.5 million, down from $45.5 million in the prior-year quarter as the spending for our previously announced subsea capacity additions nears completion.
The company recorded an income tax rate of 32.8 percent for continuing operations.

Summary and Outlook

FMC Technologies reported diluted earnings per share from continuing operations of $0.72, up 47 percent from the prior-year quarter.

Energy Production Systems' and Energy Processing Systems' operating profits were up 44 percent and 12 percent, respectively, over the third quarter of 2007.

The company reaffirmed its estimate for 2008 diluted earnings per share from continuing operations in a range of $2.60 to $2.70. This guidance projects earnings growth of approximately 36 percent over 2007 on a comparable basis.
 

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