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Free Cash Flow: FMC Technologies versus Technip

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Sep. 24 2019, Updated 9:18 a.m. ET

FMC Technologies’ free cash flow

We already discussed that Technip’s earnings recovered in 3Q16, while FMC Technologies (FTI) is still struggling to improve its revenues and margin. How did these two companies’ free cash flows perform, so far, in 2016? Free cash flow is CFO (cash flow from operations) less capital expenditures. FMC Technologies accounts for 4.3% of the VanEck Vectors Oil Services ETF (OIH).

During the first nine months of 2016, FMC Technologies’ CFO fell 55% compared to the first nine months of 2015. The fall was due to a lower revenue and tax assessment payment related to a discontinued operation. Although its capex fell during the same period, it couldn’t resist the falling CFO. So, the free cash flow fell 54% to $134 million in the first nine months of 2016—compared to the same period in 2015. In comparison, Nabors Industries’ (NBR) free cash flow in the first nine months of 2016 was $121.5 million.

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Technip’s free cash flow

During the first nine months of 2016, Technip’s CFO fell 21% compared to the first nine months of 2015. It resulted from working capital deterioration due to higher payment for contracts. Technip’s capex fell sharply over the same period because it resisted CFO’s fall. So, the free cash flow improved 19% in the first nine months of 2016—compared to the same period last year.

Next, we’ll discuss FMC Technologies and Technip’s net debt.

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