FMC Technologies, Inc. reported 2Q15 revenue of US$1.7 billion, a 15% y/y decline compared to the same period a year earlier, primarily due to the continued decline in the North American land market and its severe impact on the company’s Surface Technologies segment revenue. Diluted earnings per share were US$0.46, which included pre tax business restructuring charges of US$9.5 million, or US$0.03 per diluted share, and a US tax charge of US$8.0 million, or US$0.03 per diluted share, related to a tax settlement.
Total inbound orders were US$1.4 billion, including US$1.0 billion in Subsea Technologies orders. Backlog for the company was US$5.3 billion, including the Subsea Technologies backlog of US$4.7 billion.
"Subsea orders were stronger in the second quarter, as we received just over US$1.0 billion of awards," said John Gremp, Chairman and CEO of FMC Technologies. "We have increased confidence of exceeding US$3 billion of subsea awards this year. Because our execution remains solid, we maintain our expectation of delivering Subsea Technologies margins of approximately 15% for the full year. Our Surface Technologies segment was severely impacted by the decline in North American activity. We continue to take actions to change our business model and improve our operating effectiveness to address current market conditions and to be well positioned as the market improves."
Subsea Technologies second quarter revenue was US$1.2 billion, down 7% from the prior year quarter due to the strength of the US dollar. Excluding the impact of foreign currency translation, total revenue increased by US$62.2 million y/y.
Subsea Technologies operating profit decreased 5% from the prior year quarter to US$183.5 million, primarily due to the decrease in revenue and US$5.4 million of business restructuring costs. Excluding the impact of foreign currency translation, total operating profit increased by US$15.3 million y/y.
Subsea Technologies inbound orders for the second quarter were US$1.0 billion and backlog was US$4.7 billion.
Surface Technologies 2Q15 revenue was US$363.3 million, down 29% from the same period a year earlier as activity continued to decrease in the North American market.
Surface Technologies operating profit decreased 65% from the prior year quarter to US$27.5 million driven by the North American activity declines, less favourable pricing, and US$2.8 million of business restructuring costs.
Surface Technologies inbound orders for the second quarter were US$306.2 million, down 39% from the prior year quarter, as North American inbound has slowed by more than half, and international orders declined. Backlog currently stands at US$466.6 million.
Energy Infrastructure second quarter revenue was US$101.4 million, down 32% from the prior year quarter primarily due to decreased activity in the measurement solutions and loading systems businesses.
Energy Infrastructure operating profit decreased 71% from the prior year quarter to US$5.3 million, as a result of reduced revenue and US$1.3 million of business restructuring costs.
Energy Infrastructure inbound orders for the second quarter were US$112.7 million and backlog was US$187.1 million.
Corporate expense in 2Q15 was US$14.0 million, a decrease of US$2.8 million from the same period a year earlier. Other revenue and other expense, net, decreased US$97.5 million from the prior year quarter to an expense of US$29.5 million, due largely to the pre tax gain of US$85.6 million of the Material Handling Products disposition recorded in 2014, and an increase of US$13.8 million related to unfavourable foreign currency losses due primarily to the devaluation of the Angolan Kwanza.
The company ended the quarter with net debt of US$699.4 million. Net interest expense was US$9.0 million in the quarter. The company repurchased approximately 1.5 million shares of common stock at an average cost of US$41.62 per share in the quarter.
Depreciation and amortisation for the second quarter was US$53.4 million, down US$4.4 million from the sequential quarter. Capital expenditures for the second quarter were US$74.5 million.
The company recorded an effective tax rate of 34.1% for the second quarter that included a US tax charge of US$8.0 million related to a tax settlement for prior periods.
Adapted from press release by Rosalie Starling