01—Abstract
Summary
Summary of the 10-K filed April 2, 2018. Cited figures are marked; the original filing is the authoritative source.
TechnipFMC plc, following its merger in early 2017, presented its 2017 annual report highlighting its position as a global leader in the subsea, onshore/offshore, and surface industries.
The company offers a comprehensive portfolio of solutions for oil and gas production and transformation, from discrete products to integrated solutions, with a focus on enhancing project lifecycles and client economics through technology and innovation. Despite a challenging market environment due to lower oil prices, the company has implemented cost reduction and restructuring initiatives to align operations with anticipated activity levels. The report also disclosed material weaknesses in internal controls over financial reporting, specifically related to foreign exchange adjustments, IT general controls, and period-end financial reporting processes in certain regions, with remediation plans underway.
The company's strategy centers on early involvement in project design (iFEED), integrated project delivery (iEPCI™), innovation, and superior project execution. Key developments in 2017 included the launch of the Subsea 2.0 product suite, designed to reduce equipment size and complexity, and continued investment in technology to address evolving market needs.
The company anticipates an increase in subsea market activity in 2018, driven by a blend of project sizes and service opportunities. While facing competitive pricing, particularly in international markets for Surface Technologies, TechnipFMC aims to leverage its integrated business model and technological differentiation to drive profitable and sustainable growth.
02—Key points
Key Highlights
- TechnipFMC plc was formed in January 2017 through the merger of Technip S.A. and FMC Technologies, creating a global leader in the energy services sector.
- The company operates across three main segments: Subsea, Onshore/Offshore, and Surface Technologies, offering a wide range of products and services for the oil and gas industry.
- In 2017, the company focused on cost reduction and restructuring initiatives to adapt to the challenging oil and gas market environment.
- TechnipFMC launched its 'Subsea 2.0' technology portfolio in late 2017, aiming to significantly reduce the size, weight, and part count of subsea equipment.
- The company reported material weaknesses in its internal control over financial reporting, specifically concerning foreign exchange adjustments, IT general controls, and period-end financial reporting processes in certain regions.
- Despite a revenue decrease compared to pro forma 2016 figures, the company saw an improvement in its gross profit margin in 2017.
- The company's order backlog stood at $12.98 billion at the end of 2017, with a significant increase in Subsea orders compared to the previous year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, TechnipFMC plc kept $0.01.
- Revenue$15.06B100.0%
- Cost of revenue−$2.40B16.0%
- Gross profit$12.65B84.0%
- Operating costs−$11.30B75.0%
- Operating income$1.35B9.0%
- Interest, other & tax−$1.24B8.2%
- Net income$113.3M0.8%
Where FY2017 revenue went
$15.06B- Other operating costs: $10.03B, 67% of revenue
- Cost of revenue: $2.40B, 16% of revenue
- Net income: $113.3M, 0.8% of revenue
- R&D: $212.9M, 1.4% of revenue
- SG&A: $1.06B, 7.0% of revenue
- Interest, other & tax: $1.24B, 8.2% of revenue
Kept 0.8% as net incomeNet income $113.3M · 0.8%R&D $212.9M · 1.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed April 2, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $15.06B$9.20B | +63.7% |
| Cost of Revenue | $2.40B$0 | — |
| Gross Profit | $12.65B$9.20B | +37.5% |
| R&D Expenses | $212.90M$105.40M | +102.0% |
| SG&A Expenses | $1.06B$572.60M | +85.3% |
| Operating Expenses | $14.09B$8.74B | +61.2% |
| Operating Income | $1.35B$766.10M | +76.8% |
| Interest Expense | $456.00M$114.10M | +299.6% |
| Net Income | $113.30M$393.30M | −71.2% |
| EPS (Basic) | $0.24$3.29 | −92.7% |
| EPS (Diluted) | $0.24$3.16 | −92.4% |
| Shares Outstanding (Basic) | 466.70M119.40M | +290.9% |
| Shares Outstanding (Diluted) | 448.00M125.10M | +258.1% |
05—Questions
Frequently Asked Questions
What is the company's overall financial performance in 2017?
In 2017, TechnipFMC plc experienced a revenue decrease compared to the pro forma 2016 figures, primarily due to lower activity in the Subsea segment. However, the company improved its gross profit as a percentage of sales. Net income attributable to TechnipFMC plc was $113.3 million, a decrease from the prior year, partly impacted by merger-related costs and specific financial events. The company's strategy involved significant cost reduction and restructuring efforts.
What are the key risks and challenges facing TechnipFMC?
Key risks include the dependence on oil and gas industry activity and expenditure levels, which are sensitive to commodity prices. The company also identified material weaknesses in its internal control over financial reporting. Other risks include potential liabilities from operations, the risk of losses on fixed-price contracts, reliance on subcontractors and suppliers, piracy risks, and the impact of global economic and political instability. Additionally, the integration of the merged entities presented ongoing challenges.
What are the company's growth strategies and outlook for 2018?
TechnipFMC's strategies focus on early involvement in project design (iFEED), integrated project delivery (iEPCI™), technological innovation, and superior project execution. The company anticipates an increase in subsea market activity in 2018, driven by major projects and a mix of smaller projects and services. Growth is also expected from natural gas developments, refining, and petrochemical projects in its Onshore/Offshore segment. The company aims to leverage its integrated business model and technological differentiation to further reduce client project break-even levels and drive profitable growth.
How did the merger of Technip and FMC Technologies impact the company's financial reporting?
The merger, completed in January 2017, led to Technip being the accounting acquirer. FMC Technologies' results were included from the merger date onwards. The company reported $101.8 million in merger transaction and integration costs in 2017. The combined entity operates under three segments: Subsea, Onshore/Offshore, and Surface Technologies. The report also highlighted that the 2017 results were not directly comparable to prior periods due to the merger, and pro forma data for 2016 was provided for comparability.
06—Continue