FMC Technologies Sees Slide in 2Q Earnings, Increase in Backlog
FMC Technologies reported second quarter 2010 revenue from continuing operations of $1.0 billion. Diluted earnings per share from continuing operations were $0.78 compared to $0.84 in the prior-year quarter and $0.80 in the first quarter of 2010.
Second quarter operating profit in Energy Production Systems decreased seven percent from the second quarter of 2009 due to lower volume which was partially offset by higher operating margin. Operating profit in Energy Processing Systems was up 17 percent from the prior-year quarter on higher volume and operating margin in the fluid control business.
Total Company backlog increased six percent from the first quarter of 2010 to $2.8 billion and included $2.3 billion in subsea systems. It was the second consecutive quarterly backlog increase and was mainly driven by $946 million in subsea systems orders. The Company's 2010 year-to-date subsea orders of $1.8 billion have already surpassed the total subsea orders received for all of 2009.
"Our strong order intake this quarter builds on our first quarter results and confirms the subsea market opportunities that we have been forecasting since late 2009," said Peter D. Kinnear, Chairman and Chief Executive Officer. "Although we face some market uncertainty due to the situation in the Gulf of Mexico, our strong first half results allow us to maintain our estimate for 2010 diluted earnings per share in a range of $2.70 to $2.90."
Energy Production Systems
Energy Production Systems' second quarter revenue was $822.9 million, including subsea systems revenue of $675 million. Energy Production Systems' operating profit of $129.6 million decreased from the prior-year quarter due to lower volume in both the subsea systems and surface wellhead businesses. The impact from the lower volume was partially offset by higher operating margin in subsea systems.
Energy Production Systems' inbound orders for the second quarter were $1.1 billion. This total was nearly double the inbound recorded in the second quarter of 2009 and included subsea systems orders of $946 million. Backlog for Energy Production Systems was $2.6 billion including $2.3 billion in subsea systems. Both orders and backlog increased for the second consecutive quarter.
Energy Processing Systems
Energy Processing Systems' second quarter revenue was $192.4 million, an 11 percent increase over the prior-year quarter. Energy Processing Systems' second quarter operating profit of $33.4 million was up 17 percent from the prior-year quarter. The increase was driven by higher volume and operating margin in the fluid control business, partially offset by operating profit declines in all other businesses within the segment.
Energy Processing Systems' inbound orders were $225.7 million for the second quarter, a 60 percent increase compared to the prior-year quarter. The increases in revenue, operating profit and orders were predominately driven by the fluid control business, which continued to benefit from the resurgence in North American pressure pumping activity. Backlog for the segment was $255.6 million at the end of the quarter.
Corporate expense in the second quarter was $10.1 million, an increase of $1.0 million from the prior-year quarter. Other expense, net, was $9.9 million, an increase of $4.1 million from the prior-year quarter.
The Company ended the second quarter with net debt of $196.4 million. Net interest expense was $2.4 million in the quarter.
The Company repurchased 1.3 million shares of common stock in the quarter for $73.0 million and now has 3.2 million shares remaining in its stock repurchase authorization.
Depreciation and amortization for the second quarter was $23.7 million, down $4.9 million from the previous quarter, and capital expenditures totaled $19.3 million.
The Company recorded an effective tax rate of 31.5 percent for the second quarter.
Summary and Outlook
FMC Technologies reported second quarter revenue from continuing operations of $1.0 billion and diluted earnings per share from continuing operations of $0.78. Second quarter operating profit in Energy Production Systems decreased seven percent and in Energy Processing Systems increased 17 percent from the prior-year quarter.
Total Company backlog increased six percent from the first quarter of 2010 to $2.8 billion and included $2.3 billion in subsea systems. The backlog increase was mainly driven by $946 million in subsea systems orders, which brought the year-to-date total for subsea orders to $1.8 billion, surpassing the total for 2009.
The Company maintained guidance for 2010 diluted earnings per share from continuing operations in a range of $2.70 to $2.90.
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