FMC Technologies has reported record fourth quarter 2008 revenue from continuing operations of $1.2 billion, up 13 percent over the fourth quarter of 2007. Diluted earnings per share from continuing operations were $0.74, up 16 percent from $0.64 per diluted share in the prior-year quarter.
Fourth quarter operating profit increased 39 percent in Energy Production Systems and was up 4 percent in Energy Processing Systems compared to the fourth quarter of 2007. The acquisition of a 45 percent interest in Schilling Robotics, LLC was completed on December 26, 2008. Schilling Robotics is a leading manufacturer of remotely operated vehicles (ROVs), ROV manipulator systems, and control systems for use in subsea oil and gas exploration and production.
Full Year 2008 Results
Full year 2008 revenue of $4.6 billion increased 25 percent from $3.6 billion in 2007. This growth was led by subsea systems revenue which increased 32 percent to $3.0 billion. Full year 2008 diluted earnings per share from continuing operations of $2.72 were up 39 percent from 2007 diluted earnings per share of $1.95. Energy Production Systems' operating profit increased 46 percent and Energy Processing Systems' operating profit increased 16 percent over the prior year.
"We are very pleased with our results in 2008," said Peter D. Kinnear, Chairman, President and Chief Executive Officer. "We enter 2009 in the midst of an uncertain macroeconomic environment but with a solid base for future business. We expect the strength of our subsea
Review of Operations -- Fourth Quarter 2008
Energy Production Systems
Energy Production Systems' fourth quarter revenue of $972.8 million increased 12 percent over the prior-year quarter due to increased subsea systems sales. Revenue for subsea systems was a record $788 million for the quarter, up 15 percent from the prior-year quarter. Surface wellhead revenue decreased slightly from the fourth quarter of 2007.
Energy Production Systems' record operating profit of $119.1 million increased 39 percent over the prior-year quarter. The increase was due to higher volume and operating margin in subsea systems. Operating margin in the segment was a record 12.2 percent for the quarter and 11.5 percent for the full year.
Energy Production Systems' inbound orders of $401.5 million in the fourth quarter were adversely impacted by backlog translation due mainly to the strengthening of the U.S. dollar versus the Norwegian Krone and Brazilian Real. Full-year subsea system orders were $2.1 billion. Backlog for Energy Production Systems was $3.3 billion and included $3.0 billion in subsea backlog at the end of the fourth quarter.
Energy Processing Systems
Energy Processing Systems' fourth quarter revenue of $229.6 million was 9 percent higher than the prior-year quarter. The revenue increase came primarily from the material handling systems business. Energy Processing Systems' fourth quarter operating profit of $40.7 million was 4 percent higher than the prior-year quarter. Energy Processing Systems' inbound orders were $167.4 million for the fourth quarter and backlog was $313.2 million.
Corporate expense in the fourth quarter of 2008 was $9.1 million, a decrease of $0.8 million from the third quarter. Other expense, net, was $21.8 million, an increase of $34.7 million from the prior-year quarter. The net impact of foreign exchange gains and losses in the fourth quarter was a net loss of $8.3 million as compared to a net gain of $11.9 million in the prior-year quarter. The company also had a net increase from the fourth quarter of 2007 of $7.2 million in pension related expenses due to executive retirements and an increase of $4.6 million in LIFO inventory costs.
The company ended the quarter with net debt of $154.9 million. Net interest expense was $0.7 million in the fourth quarter. Depreciation and amortization for the fourth quarter was $19.2 million, up from $18.5 million in the prior-year quarter. Capital expenditures during the fourth quarter totaled $47.2 million, down from $73.2 million in the prior-year quarter due to lower spending on subsea capacity additions and light well intervention assets.
The company recorded an effective tax rate of 26.8 percent for the quarter.
Summary and Outlook
FMC Technologies reported diluted earnings per share from continuing operations of $0.74, up 16 percent from the prior-year quarter. Energy Production Systems' and Energy Processing Systems' operating profits were up 39 percent and 4 percent, respectively, over the fourth quarter of 2007.
FMC Technologies reported diluted earnings per share from continuing operations of $2.72 for the full year 2008, up 39 percent from the prior year. Subsea systems' revenue grew 32 percent in 2008 to $3.0 billion. The company provided an estimate for 2009 diluted earnings per share from continuing operations in a range of $2.40 to $2.65.
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