FMC Cites Strong 3Q Results, Raises Fourth Quarter Guidance
FMC Technologies has reported third quarter 2009 revenue from continuing operations of $1.1 billion. Diluted earnings per share from continuing operations were $0.73, up one percent from $0.72 in the prior-year quarter. Led by higher operating margin and volume in subsea systems, third quarter operating profit in Energy Production Systems increased 38 percent from the third quarter of 2008 to a record $140.4 million.
Total backlog for the company remained strong, ending the third quarter at $3.0 billion including $2.4 billion in subsea systems.
"Our execution of projects in backlog continued at the level we saw in the second quarter," said Peter D. Kinnear, Chairman, President and Chief Executive Officer. "As a result of our strong third quarter and our outlook for the fourth quarter, we are raising our 2009 guidance. We estimate our fourth quarter 2009 diluted earnings per share from continuing operations to be in a range of $0.70 to $0.75. Additionally, we were excited to announce two acquisitions during the quarter that will add to the technology that provides value to our customers."
Energy Production Systems
Energy Production Systems' third quarter revenue of $926.9 million increased three percent from the prior-year quarter. Revenue for subsea systems was $770 million for the third quarter, up seven percent from the prior-year quarter. Surface wellhead revenue was down 11 percent from the third quarter of 2008 but was flat compared to the second quarter of 2009. Energy Production Systems' record operating profit of $140.4 million increased 38 percent over the prior-year quarter and the operating margin reached 15.1 percent. The increase in operating profit was primarily due to higher operating margins across the segment and increased volume in subsea systems.
Energy Production Systems' inbound orders for the third quarter were $841.6 million, including subsea systems orders of $715 million. Backlog for Energy Production Systems was $2.7 billion, including $2.4 billion in subsea backlog at the end of the third quarter.
Energy Processing Systems
Energy Processing Systems' third quarter revenue of $166.2 million was 27 percent lower than the prior-year quarter and five percent lower than the second quarter of 2009. The revenue decrease came primarily from the fluid control business, which continues to be impacted by the reduction in North American pressure pumping activity, and from the material handling business, which has several projects nearing completion.
Energy Processing Systems' third quarter operating profit of $24.8 million was down 42 percent from the prior-year quarter primarily driven by lower volume and operating margin in the fluid control business.
Energy Processing Systems' inbound orders were $140.8 million for the third quarter, and its backlog finished the quarter at $226.7 million.
Corporate expense in the third quarter was $9.3 million, a decrease of $0.6 million from the prior-year quarter. Other expense, net, was $21.0 million, an increase of $25.0 million from the prior-year quarter. Net foreign exchange losses in the quarter totaled $5.8 million compared to a net gain of $4.7 million in the third quarter of 2008. Additionally, the company had an increased liability of $2.1 million associated with company stock held in its non-qualified savings plan compared to a gain of $5.2 million in the prior-year quarter. The company ended the quarter with net cash of $78.0 million. Net interest expense was $2.1 million in the quarter.
The company repurchased 917 thousand shares of common stock in the quarter for $38.5 million and now has 5.8 million shares remaining in its stock repurchase authorization. Depreciation and amortization for the third quarter was $24.6 million, up $3.8 million from the previous quarter, and capital expenditures totaled $21.1 million. The company recorded an effective tax rate of 31.3 percent for the third quarter.
During the quarter, the company announced the signing of definitive agreements to acquire Direct Drive Systems, Inc. (DDS) for approximately $120 million and Multi Phase Meters AS (MPM) for approximately $30 million plus an earn out. The MPM acquisition closed on October 20, 2009, while the DDS acquisition is expected to close in the fourth quarter of 2009.
Summary and Outlook
FMC Technologies reported diluted earnings per share from continuing operations of $0.73, up one percent from the prior-year quarter. Energy Production Systems' operating profit was up 38 percent over the third quarter of 2008 to a record $140.4 million. Total company backlog was $3.0 billion at the end of the quarter, including $2.4 billion in subsea systems. The company increased its guidance for 2009. It estimates fourth quarter 2009 diluted earnings per share from continuing operations to be in a range of $0.70 to $0.75.
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