Could Guidance Change Affect TechnipFMC in 2017?

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

TechnipFMC’s Free Cash Flow, Repurchase, and Acquisition Plan

TechnipFMC’s operating cash flows

TechnipFMC’s (FTI) cash flow from operating activities (or CFO) declined in 3Q17. Its CFO was -$15 million in 3Q17 compared to $143 million in 2Q17.

Despite the improvement in 3Q17 revenues, FTI’s 3Q17 CFO was negatively affected by adverse changes in working capital. TechnipFMC makes up 1.0% of the Vanguard Energy ETF (VDE). From September 29, 2017, to November 8, 2017, VDE rose 2% compared to a 4% rise in FTI stock for the same period.TechnipFMC&#8217;s Free Cash Flow, Repurchase, and Acquisition Plan

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FTI’s free cash flow

FTI’s capital expenditure (or capex) increased 12% from 2Q17 to 3Q17, while its CFO turned negative. A sharp fall in CFO coupled with capex growth led to lower FCF (free cash flow) in 3Q17. Negative CFO led to TechnipFMC’s FCF turning negative in 3Q17. Its FCF was -$78 million in 3Q17, compared to $87 million in 2Q17. Its FCF was positive in the previous two quarters.

Operating cash flows for FTI’s peers

Below are the CFOs in 3Q17 for TechnipFMC and its peers:

  • TechnipFMC (FTI): -$15 million
  • Weatherford International (WFT): -$243 million
  • Nabors Industries (NBR): -$26.5 million
  • National Oilwell Varco (NOV): $232 million

You can read more on oilfield services companies in Market Realist’s Oilfield Services after 3Q17: SLB, HAL, BHGE, and NOV.

TechnipFMC’s acquisition and repurchase plans

In its 3Q17 earnings conference call, TechnipFMC announced an agreement to acquire Lexuses’ exploration drilling products and services business. The acquisition, if successful, is expected to extend its Surface Technologies segment’s offering.

Recently, FTI put in place its plan to repurchase up to $500 million of ordinary shares by the end of 2018. You can learn more about the oilfield services and equipment industry in Market Realist’s The Oilfield Equipment and Services Industry: A Primer.


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