Inbound orders in Energy Production were $987 million, down 9% from the prior year quarter.
- Backlog of 4.3 billion, was up modestly compared to the last quarter with subsea backlog at 3.9 billion.
- Energy Processing sales were up 20% over the prior year quarter.
- The segment generated EBIT of 42.9 million in the quarter up 23% from the prior year quarter. The operating profit improvement was primarily the result of higher volume.
Energy Processing Systems'' revenue of $220.8 million was 20 % higher than the prior-year quarter.
- Each business in the segment recorded revenue improvements over the prior-year quarter mostly on higher volume of oil and gas infrastructure products.
- Energy Processing Systems'' operating profit of $42.9 million was 23 % higher than the prior-year quarter with the improvement due to the higher volume.
- Inbound orders were $203.5 million and backlog was $367.2 million, up 9% percent from the prior-year quarter.
Fluid control sales were up 10% and measurement, loading systems and material handling infrastructure businesses all had record second quarters for both sales and profit.
- Inbound orders for Energy Processing were up 8% from the prior year quarter.
- Backlog at $367 million was up 9% from the prior year quarter.
- FoodTech''s revenue of $160 million was up 4% from the prior year quarter.
- Operating profit was $15.9 million, up 27% on higher operating margins.
Airport systems'' revenue of $117 million was up 37% in the quarter, mainly on deliveries of ground support equipment.
- Operating profit was $10.5 million up 84% over the prior year quarter on the higher volume and ability to leverage overhead across the business.
- FMC Technologies incurred $5.5 million, or 4 cents per share in JBT spin-off related expenses in the quarter.
- $300,000 of that expense, was incorporate to staff expense and $5.2 was in other expense net on the income statement.
- In total, other expense net of $6 million increased $2.1 million from the prior year quarter.
The JBT spin-off expenses of $5.2 million in that line item were offset by an $11.2 million, non-cash, mark-to-market gain associated with foreign currency forward contracts.
- This foreign exchange gain compares to $5.2 million gain in 2007.
- The majority of the foreign exchange gain in the second quarter was related to foreign currency forward contracts associated with past four projects.
- The firm entered into foreign exchange contracts to protect the economic value of the project.
During the first quarter of 2008, the decline in US interest rates resulted in charges to the income statement, while in the second quarter, the increase in US rates resulted in gains.
- These gains and charges are temporary, will reverse them and ultimately net to zero as the foreign exchange contracts progress towards maturity.
- The higher than expected tax rate related to the country mix of earnings and the limited deductibility of certain spin-off costs.
- The company ended the quarter with net debt of $48.2 million, net interest income was $0.1 million from $3.7 million net interest expense in 2007.
- Capital expenditures totaled $43.4 million, up from $41.4 million in the prior-year quarter due mainly to investment in subsea intervention assets.
FMC Technologies spent $81 million to repurchase approximately 1.2 million shares of common stock.
- The firm still has 10.7 million shares and $95 million outstanding on its stock repurchase programs and averaged 130.4 million diluted shares outstanding in the second quarter.
- The plan to spin-off FoodTech and Airport businesses in the JBT Corporation is on schedule.
- FMC Technologies when-issued is trading without the dividend of JBT and JBT when-issued is trading as if it had already been spun-out.
- After July 31st, both FMC Technologies and JBT will be trading the regular way.
Fiscal 2008 Outlook
- With the recent Petrobras rig announcements the deepwater rig fleet is now expected to grow almost 50% by the end of 2012.
- This added capacity to develop future deepwater fields will support the growth of the subsea business.
- In the near term, 2008 is another year of growth in subsea, solid execution of the backlog lead to subsea revenue of over $3 billion for the full year.
Full year estimate of FTI diluted earnings per share excluding JBT is increased by 20 cents to a range of $2.60 to $2.70.
- The previous guidance of $2.80 is increased to $2.90 for FMC included JBT, although approximately 86% of this guidance is based on net income from the energy businesses.
Key questions and answers from the second quarter fiscal 2008 earnings call as presented by FMC Technologies, Inc. (FTI) on July 25, 2007
Robert McKenzie (Friedman, Billings, Ramsey & Co.):
Give us a run down for how you handicapped the upcoming orders. What timing looks like, what slipped, what is close?
