FMC Technologies (NYSE:FTI), dubbed Lord of the Subsea by yours more than a year ago, delivered some unexpectedly strong results this quarter. I can't name another firm in the space that's talking about record operating profits, but that's exactly what FMC reported. Subsea systems (the gear that brings oil and gas from the seabed to the surface) led the charge, with the Energy Production Systems segment ringing up $140 million in operating profits.
Of course, there's a "but" here. FMC made it quite plain that it doesn't expect to sustain the subsea segment's margins in the back half of the year. Profitability was juiced by both a favorable project mix and the recovery of receivables that had previously been written off. The 15% operating margins seen this quarter are thus expected to slide back to the 12% to 13% range.
That non-recurring boost shouldn't detract from the bigger picture here. Demand for FMC's underwater wares is not getting decimated to anywhere near the degree of onshore services and equipment provided by the likes of Lufkin Industries or Nabors Industries (NYSE:NBR). The firm's backlog is a bulky $3.1 billion, which should help FMC bring in subsea sales pretty close to last year's lofty levels.
Of course, like National Oilwell Varco (NYSE:NOV), FMC is seeing some backlog slippage, and saw a sequential drop of about 9%, just like NOV. But the firm's recent wins with firms like StatoilHydro (NYSE:STO) and Eni (NYSE:E) convince me that FMC is still the go-to subsea shop.
Along with my favored offshore contract drillers Noble (NYSE:NE) and Ensco International (NYSE:ESV), FMC Technologies remains one of the best offshore investment opportunities, in my mind.
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