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Analyzing FMC Technologies’ Free Cash Flow

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FMC Technologies’ operating cash flows and capex

In this article, we’ll analyze how FMC Technologies’ (FTI) operating cash flows have trended over the past few quarters. We’ll also discuss how its free cash flow (or FCF) was affected given its capital expenditure (capex).

FTI’s cash from operating activities (or CFO) fell in 1Q16 compared to 1Q15. During this period, the company’s operating cash flow fell by 38% to $109 million.

FTI’s revenue fell following crude oil’s price fall and upstream companies’ exploration and production budget reductions. This led to lower cash flows in the past year.

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FMC Technologies’ free cash flow

FMC Technologies’ FCF has been volatile in the past year. FTI’s capex fell by 59% during the same period. FTI’s CFO has also fallen in the past year, more than offsetting its fall in capex. This led to FCF’s falling in 1Q16 compared to a year ago.

In comparison, Forum Energy Services (FET) saw a 39% FCF fall in 1Q16 compared to 1Q15. FET is FTI’s smaller peer, generating $22.5 million in FCF compared to FTI’s $74 million 1Q16. FMC Technologies makes up 3.4% of the iShares US Oil Equipment & Services ETF (IEZ).

FTI’s capex outlook

In 2016, FMC Technologies’ management expects its capex to be ~$150 million, or 40% lower than in 2015. However, this capex amount could vary depending on the need to include contingent capital in response to future contract awards.

Next, let’s discuss FTI’s proposed merger with Technip.

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