Could Guidance Change Affect TechnipFMC in 2017?

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Part 2
Could Guidance Change Affect TechnipFMC in 2017? PART 2 OF 6

Analyzing TechnipFMC’s Management Guidance for 2017 and Beyond

Management guidance

  • For TechnipFMC’s (FTI) Subsea segment, 2017 guidance remained the same in 3Q17 compared to 2Q17. The company expects revenues of $6.1 billion and EBITDA (earnings before interest, tax, depreciation, and amortization) margins of 17%, excluding charges and credits.
  • For the Onshore/Offshore segment, FTI raised its 2017 guidance for both revenue and adjusted EBITDA margin. Based on improved performance expected in the second half of 2017, revenue guidance was increased to $7.7 billion and EBITDA margins to 9.5%.
  • For the Surface Technologies segment, FTI currently expects 2017 revenue to be $1.3 billion. It also increased its adjusted EBITDA margin guidance by 3.5% to 16.5%. FTI makes up 6.1% of the VanEck Vectors Oil Services ETF (OIH). OIH has fallen 11% since January 17, 2017, while FTI has fallen 18% during the same period.Analyzing TechnipFMC&#8217;s Management Guidance for 2017 and Beyond

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Positive drivers

  • continued strong project execution positively affecting the Onshore/Offshore segment’s EBITDA margin
  • increased hydraulic fracturing intensity leading to higher demand for pressure control equipment
  • strong performance and higher expectations for North America

Negative drivers

  • fleet utilization to be lower in 2018
  • beyond the revenue impact, near-term investment to be a headwind for margins
  • lower contribution from Yamal LNG as the project moves toward completion in 20191

Next, let’s take a look at FTI’s segmental performance in 3Q17.

  1. FTI and its partners procured the project in May 2014.

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