TechnipFMC: Lowest Oilfield Services Free Cash Company in Q1 2018

TechnipFMC’s operating cash flows

TechnipFMC’s (FTI) cash flow from operating activities (or CFO) was negative in the first quarter and declined sharply year-over-year. It generated -$201 million of CFO in the first quarter. Year-over-year, its revenues declined following its subsea project completions in Africa and project completions in its Onshore-Offshore segment. That was partially offset by an increased demand for hydraulic fracturing, wellhead, and flow metering equipment in North America.

Lower revenues in the past year and adverse changes in working capital led to FTI’s CFO deteriorating in the first quarter. The change in working capital was primarily due to a decrease in trade accounts payable.TechnipFMC: Lowest Oilfield Services Free Cash Company in Q1 2018

TechnipFMC’s free cash flow and capex

FTI’s capex increased 4% YoY (year-over-year) in the first quarter. Negative CFO coupled with rising capex resulted in a deterioration of its free cash flow (or FCF), which turned negative in the first quarter to -$254.8 million. It has been negative only once in the past five quarters.

FTI makes up 0.55% of the iShares Global Energy ETF (IXC), which tracks an index of global equities in the energy sector. The oil and gas equipment and services sector accounts for 7.5% of IXC. In the past year, IXC has risen 18% compared to a 6.6% rise in FTI stock in the same period.

In comparison, FTI’s lower market cap OFS industry peer Superior Energy Services’ (SPN) first-quarter FCF was -$90.7 million compared to -$63.9 million the previous year. Although SPN’s year-over-year CFO improved in the first quarter, its capex increased more, which led to a decline in its FCF.

FTI’s capex plans for 2018

In 2018, FTI plans to incur $300 million in capex, excluding any contingent capital that may be needed to respond to a contract award. That would be 18% higher than its 2017 capex.

Next, let’s take a look at Weatherford International’s (WFT) cash flow and capex.