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TechnipFMC’s 1Q18 Earnings Missed Analysts’ Estimates

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TechnipFMC’s 1Q18 revenues

TechnipFMC (FTI) released its 1Q18 financial results on May 9 after the market closed. The company recorded operating revenues of $3.12 billion in 1Q18—down 7.8% from $3.38 billion in 1Q17. TechnipFMC’s revenues for 1Q18 decreased following subsea project completions in Africa and project completions in the Onshore/Offshore segment. The project completions were partially offset by increased demand for hydraulic fracturing, wellhead, and flow metering equipment in North America.

Compared to 4Q17, TechnipFMC’s revenues decreased 15.1%. Schlumberger’s (SLB) 1Q18 revenues declined 4.3% quarter-over-quarter. To learn more about Schlumberger’s 1Q18 earnings, read Schlumberger Reports 1Q18 Earnings, Beats Estimates.

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TechnipFMC’s 1Q18 earnings

In 1Q18, TechnipFMC’s adjusted EPS (earnings per share) is $0.28. The EPS fell short of consensus sell-side analysts’ earnings estimate by 17%. A weaker operating income margin in the Subsea and Surface Technologies segments due to weak inbound orders in the previous quarter and project award deferrals in international markets pushed TechnipFMC’s earnings below analysts’ estimates.

Compared to the adjusted earnings in 1Q17, TechnipFMC’s 1Q18 earnings deteriorated sharply. Compared to 4Q17, TechnipFMC’s adjusted earnings improved due to a steady decline in costs and expenses. On average, the adjusted earnings exceeded the consensus earnings in the past five quarters. TechnipFMC accounts for 5.0% of the VanEck Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 OFS (oilfield equipment and services) companies. In the past year, OIH increased 1%—compared to a 4.7% increase in TechnipFMC’s stock price during the same period.

What impacted TechnipFMC’s 1Q18 reported earnings?

In 1Q18, TechnipFMC’s reported net income was $95.1 million—a significant improvement compared to 1Q17 when the company reported a net loss of ~$18.7 million. TechnipFMC’s 1Q18 earnings were also a sharp improvement compared to 4Q17 when its net loss was $159.3 million. A stronger year-over-year operating income margin in the Onshore/Offshore and Surface Technologies segments led to the improved earnings in 1Q18. In comparison, Weatherford International (WFT) recorded a net loss of ~$245 million in 1Q18. Weatherford International’s 1Q18 net income was impacted negatively by various one-time charges including currency devaluation charges, restructuring charges, asset write-downs, and bond tender and call premium charges.

In 1Q18, TechnipFMC’s reported net income was impacted negatively by a $23.9 million purchase price accounting adjustment and $6.2 million in restructuring and other severance charges. In 1Q17, a $94.5 million purchase price accounting adjustment and $38.7 million business combination charges reduced TechnipFMC’s net income. On January 16, 2017, TechnipFMC was created by the business combination of Technip S.A. and FMC Technologies To learn more, read Technip-FMC Technologies Merger: Reaching the Finale.

To learn more about the OFS industry, read The Oilfield Equipment and Services Industry: A Primer.

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