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FMC Technologies' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: FTI

Surface Technologies first quarter revenue of $378 million was up 30% from the prior year quarter and in line with the fourth quarter. North America shale activity remains strong for both fluid control and surface wellhead. However, as the frac lead capacity comes more in line with current demand, we think some spending on further horsepower additions will be reduced. As long as the North American rig count remains relatively stable, we think the field portion of our fluid control business should remain strong. Execution has improved for surface wellhead as we've recovered from the challenges we faced internationally last year. Going forward, we remain confident in the outlook for global surface markets.

Returning to the subsea business. In the first quarter, we inbounded 85 subsea trees and this represents 48% of the industry tree awards. Our Petrobras subsea award of 78 pre-salt trees, including controls, confirms the expanding market opportunities in Brazil and represents the largest Brazilian subsea award to date. There were 3 large subsea awards announced for the industry during the quarter and the list of projects we're tracking remains very strong. If many of these projects are awarded as we expect, we should see an improvement in the pricing environment.

Looking forward, in 2012, we expect to generate approximately $4 billion in revenue in our Subsea Technologies segment with margins improving in the coming quarters and inbound awards exceeding the numbers we recorded in 2011. We also expect our surface wellhead business to continue its strong performance globally. And in fluid control, our field replacement and repair business should remain strong while we anticipate slowing orders related to decreased horsepower expansion in the North America pressure pumping market. We're maintaining our full year guidance in the range of $2.10 to $2.25.

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