Summary
TechnipFMC plc's (FTI) Form 10-Q for the period ending June 30, 2017, highlights the significant impact of the January 2017 merger between Technip S.A. and FMC Technologies. The company reported total revenue of $3,845.0 million for the quarter, a substantial increase from the prior year's pro forma revenue of $2,370.5 million, reflecting the combined entities. However, revenue across most segments, particularly Subsea, saw a year-over-year decrease when compared on a pro forma basis, driven by lower order activity and backlog from the preceding years' oil price downturn. Profitability showed mixed results. While gross profit as a percentage of sales improved due to cost reductions and project execution efficiencies, overall net income attributable to TechnipFMC plc was $164.9 million for the quarter, down from a pro forma comparable of $104.0 million in the prior year. This was influenced by higher merger transaction and integration costs ($23.3 million vs. $16.7 million pro forma), and significant foreign exchange losses. The company also reported a material weakness in internal controls over financial reporting related to foreign currency remeasurement, with remediation efforts underway. The company maintains a strong liquidity position with significant cash and cash equivalents and an available revolving credit facility.
Financial Highlights
52 data points| Revenue | $3.85B |
| Cost of Revenue | $614.80M |
| Gross Profit | $3.23B |
| R&D Expenses | $49.10M |
| SG&A Expenses | $268.00M |
| Operating Expenses | $3.49B |
| Operating Income | $439.60M |
| Net Income | $164.90M |
| EPS (Basic) | $0.35 |
| EPS (Diluted) | $0.35 |
| Shares Outstanding (Basic) | 466.70M |
| Shares Outstanding (Diluted) | 468.40M |
Key Highlights
- 1The merger between Technip and FMC Technologies, completed in January 2017, significantly altered the company's financial profile, with combined revenues of $3,845.0 million for Q2 2017.
- 2Despite increased revenue due to the merger, pro forma revenue (comparing combined entities as if merged earlier) showed a decline of 22.5% ($1,114.3 million) compared to the pro forma Q2 2016, largely due to reduced Subsea activity.
- 3Gross profit margin improved to 17.8% from a pro forma 14.1% in the prior year's quarter, attributed to cost reduction initiatives and improved project execution.
- 4Net income attributable to TechnipFMC plc for the quarter was $164.9 million, while the six-month period showed $146.2 million, indicating ongoing integration and market challenges.
- 5The company reported a material weakness in its internal control over financial reporting concerning foreign currency remeasurement for projects, with remediation actions being implemented.
- 6TechnipFMC maintained a strong liquidity position, with $7,179.1 million in cash and cash equivalents and $1,425.1 million in unused capacity under its revolving credit facility as of June 30, 2017.
- 7Inbound orders significantly increased to $3,153.0 million for the quarter, signaling potential future revenue growth, with Subsea and Onshore/Offshore segments showing notable increases.