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FMC Technologies’ Guidance prior to 1Q16 Earnings

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Comments from FMC Technologies’ CEO

FMC Technologies’ (FTI) management is adopting diverse strategies to counter upstream companies’ cash flow uncertainty in the short term. In the 4Q15 conference call, John T. Gremp, FMC Technologies’ chairman and chief executive officer, commented, “We’re driving costs lower and reducing operator risk through product standardization, new technologies and new business models.” He also added, “More importantly, our restructuring activities go beyond workforce and facility reductions. We’re using the downturn as a catalyst to fundamentally change the way we manage our organization, so that we can sustainably deliver our products and services in an effective and cost-efficient manner regardless of the market conditions.”

 

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Forum Energy Technologies (FET), FTI’s smaller market cap peer, is focusing on revenues and operating margin in 1Q16. Halliburton’s (HAL) management expects energy market challenges to persist in 2016. FTI makes up 0.03% of the iShares Core S&P 500 ETF (IVV). The energy sector makes up 6.9% of IVV. FTI also forms 0.88% of the Energy Select Sector SPDR Fund (XLE).

Management’s guidance for 2016

  • The Surface Technologies segment’s revenue for 2016 is expected to fall 15%–20% from 2015.
  • The Subsea Technologies segment’s revenue for 2016 is expected to be ~$3.6 billion, a fall of 20% from 2015.
  • The Energy Infrastructure segment’s revenue is expected to fall ~5% year-over-year.

Next, we’ll discuss Wall Street analysts’ recommendations for FTI.

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