10-QPeriod: Q1 FY2017

TechnipFMC plc Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 4, 2017For Securities:FTI

Summary

TechnipFMC plc (FTI) reported its first quarterly results following the significant merger of Technip S.A. and FMC Technologies, Inc. effective January 16, 2017. For the three months ended March 31, 2017, the company generated total revenue of $3,388.0 million, a substantial increase from the prior year's pro forma revenue of $4,904.6 million, reflecting the combined entity's scale but also a decline in certain segments. Net income attributable to TechnipFMC plc was $190.8 million, or $0.41 per diluted share, compared to a pro forma net income of $123.3 million in the prior year. The company incurred $54.7 million in merger transaction and integration costs during the quarter. Despite lower revenue in Subsea and Surface Technologies, improved performance in Onshore/Offshore and significant foreign exchange gains (primarily from the Russian Ruble) bolstered profitability. The company ended the quarter with a strong cash position of $7,041.7 million and a net cash balance of $3,459.9 million.

Financial Highlights

52 data points
Beta

Revenue

$3.39B

82.9% Gross Margin

Net Income

-$18.70M

-0.6% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$29.62B

Cash & Equivalents

$7.04B

Free Cash Flow

$99.80M

Financial Statements
Beta
Revenue$3.39B
Cost of Revenue$577.70M
Gross Profit$2.81B
R&D Expenses$43.40M
SG&A Expenses$254.10M
Operating Expenses$3.34B
Operating Income$178.40M
Net Income-$18.70M
EPS (Basic)$-0.04
EPS (Diluted)$-0.04
Shares Outstanding (Basic)466.60M
Shares Outstanding (Diluted)466.60M

Key Highlights

  • 1The first quarter of 2017 represents the first reporting period post-merger of Technip and FMC Technologies, creating a larger, more diversified energy services company.
  • 2Total revenue for Q1 2017 was $3,388.0 million, a decrease from the pro forma Q1 2016 revenue of $4,904.6 million, driven by declines in Subsea and Onshore/Offshore segments due to lower backlog and project activity.
  • 3Net income attributable to TechnipFMC plc was $190.8 million ($0.41 per diluted share), an increase from the pro forma Q1 2016 net income of $123.3 million, supported by merger integration cost savings, improved Onshore/Offshore performance, and significant foreign exchange gains.
  • 4The company reported $54.7 million in merger transaction and integration costs in Q1 2017.
  • 5Operating profit in the Subsea segment decreased significantly to $54.2 million (3.9% margin) from a pro forma $196.4 million (12.9% margin) in Q1 2016, primarily due to lower project activity and backlog.
  • 6The Onshore/Offshore segment showed strong improvement, with operating profit increasing to $139.9 million (7.9% margin) from a pro forma $58.5 million (6.6% margin) in Q1 2016, benefiting from a favorable project mix and the non-recurrence of prior year impairment charges.
  • 7TechnipFMC maintained a robust liquidity position, ending the quarter with $7,041.7 million in cash and cash equivalents and a net cash balance of $3,459.9 million.

Frequently Asked Questions

The merger, completed on January 16, 2017, significantly impacted the financial statements. The company incurred $54.7 million in merger transaction and integration costs. Pro forma results for the prior year were presented to allow for comparable analysis, reflecting the combined entity's scale, but also highlighting segment performance shifts.

The Subsea segment saw a significant revenue decline and a sharp drop in operating profit margin, attributed to lower backlog and project activity. Conversely, the Onshore/Offshore segment demonstrated strong improvement in both revenue and operating profit margin, driven by a favorable project mix and the consolidation of the Yamal LNG project. The Surface Technologies segment experienced revenue decline and continued operating losses, though the loss narrowed due to reduced restructuring charges.

TechnipFMC ended the first quarter of 2017 with a strong liquidity position, reporting $7,041.7 million in cash and cash equivalents. The company maintained a net cash position of $3,459.9 million, indicating a healthy balance of cash over debt after the merger and associated financing activities.

The company highlighted significant risks including volatile oil and gas prices impacting demand for its services, potential liabilities from product use or installation, risks associated with fixed-price contracts and project cost overruns, disruptions in backlog delivery, reliance on subcontractors and joint ventures, and the successful integration of the legacy Technip and FMC Technologies businesses. Additionally, regulatory, political, and economic conditions in countries of operation, as well as currency exchange rate fluctuations, pose ongoing risks.