TechnipFMC plc (FTI) Stock Up 3.6% Despite Wider Q1 Loss

TechnipFMC plc’s FTI stock has gone up 3.6% since the first-quarter 2022 earnings announcement on Apr 27.

Despite the first-quarter loss being wider than the consensus mark and revenues lagging estimates, this stock performance could be attributed to the improving fundamentals of the company, backed by a year-over-year rise in inbound orders and backlog.

Behind the Earnings Headlines

TechnipFMC reported a first-quarter 2022 adjusted loss of 3 cents per share, in line with the year-ago quarter but wider than the Zacks Consensus Estimate of a loss of 1 cent. This underperformance was due to lower-than-anticipated earnings from the Subsea and Surface Technologies segments.

Adjusted EBITDA from the Subsea unit totaled $129 million, falling short of the Zacks Consensus Estimate of $132 million, while the Surface Technologies unit’s profit came in at $22 million, lagging the Zacks Consensus Estimate of $26.36 million.

For the quarter ended Mar 31, this seabed-to-surface oilfield equipment and services provider’s revenues of $1.56 billion missed the Zacks Consensus Estimate by 1.58% and also declined from the year-ago quarter’s $1.63 billion.

Giving some respite to investors, FTI’s first-quarter inbound orders increased 23.3% from the year-ago period’s level to almost $2.2 billion, reflecting strong revenue visibility.

Also, the company’s backlog rose. As of March end, TechnipFMC’s order backlog stood at $8.89 billion, improving about 23.2% from the 2021 reading.

TechnipFMC plc Price, Consensus and EPS Surprise

TechnipFMC plc Price, Consensus and EPS Surprise

TechnipFMC plc price-consensus-eps-surprise-chart | TechnipFMC plc Quote

Segment Analysis

Subsea: Revenues in the quarter under review were $1.29 billion, down 7% from the year-ago sales figure of $1.39 billion, due to reduced activities in Africa. However, adjusted EBITDA was reported at $129 million, down by about 4.5% from the year-ago quarter’s level, due to higher depreciation and amortization. The quarterly inbound orders jumped 24.7% to $1.89 billion, while the backlog rose 12.9%.

Surface Technologies: This smaller segment of the company recorded revenues of $266.7 million, up 8.6% year over year, primarily due to growth in North America, which benefited from the continued increase in drilling and completion activity. However, the unit’s adjusted EBITDA decreased by 18.2% to $22 million due to lower international revenues and the impacts of the manufacturing transition. The segment’s inbound orders rose 43.3%, while the quarter-end backlog increased 216.4%.

Financials

In the reported quarter, TechnipFMC spent $27.3 million on capital programs. As of Mar 31, the company had cash and cash equivalents of $1.2 billion and long-term debt of $1.72 billion, with a debt-to-capitalization of 33%.

2022 Outlook

TechnipFMC retained revenue expectations from the Subsea unit in the $5.2-$5.6 billion range for 2022 and maintained the 2022 Surface Technologies unit revenue guidance between $1.15 and $1.30 billion and an EBITDA margin in the range of 11%-12%.

This London-based oilfield services provider maintained that its free cash flow generation projection for 2022 is expected in the $100-$250 million band. The company guided to an annual capital expenditure view of $230 million and net interest expenses between $105 and $115 million.

Zacks Rank & Key Picks

TechnipFMC currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy space that recently came out with their earnings reports include Hess Corporation HES, Cenovus Energy CVE and Chevron Corporation CVX. While Hess and Cenovus each sport a Zacks Rank #1 (Strong Buy), Chevron carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hess reported first-quarter 2022 earnings per share (EPS) of $1.30, beating the Zacks Consensus Estimate of $1.12. Higher commodity price realizations backed the strong quarterly results.

As of Mar 31, 2022, Hess had $1,370 million in cash and cash equivalents. HES’ long-term debt was $7,934 million at the first-quarter end. The current maturity of the long-term debt is $22 million.

Cenovus Energy reported first-quarter 2022 EPS of 62 cents, missing the Zacks Consensus Estimate of 83 cents. Lower-than-expected earnings can be attributed to increased transportation and blending costs and expenses for purchased products.

As of Mar 31, 2022, Cenovus had cash and cash equivalents of C$3,399 million. The total long-term debt was C$11,744 million. CVE increased the quarterly base dividend to 10.5 Canadian cents per share, suggesting a 200% increase from 3.5 Canadian cents per share.

Chevron reported adjusted first-quarter EPS of $3.36, missing the Zacks Consensus Estimate of $3.44 on the weaker-than-expected performance in the downstream segment.

As of Mar 31, Chevron had $11.7 billion in cash and cash equivalents and total debt of $29.3 billion, with a debt-to-total capitalization of 16.7%. CVX paid out $2.7 billion in dividends and bought back $1.3 billion worth of its shares.

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