10-QPeriod: Q2 FY2018

TechnipFMC plc Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 6, 2018For Securities:FTI

Summary

TechnipFMC plc's (FTI) second quarter 2018 report shows a significant year-over-year revenue decline of 23.0%, attributed to reduced Subsea project activity, particularly in Africa, Asia Pacific, and North America, as well as slower progress on some Onshore/Offshore projects like Yamal LNG. Despite the revenue drop, the company reported an increase in Net Income attributable to TechnipFMC plc to $105.7 million, up from $164.9 million in the prior year's comparable quarter, and a 37.3% increase in net income for the first six months of 2018 compared to the same period in 2017, reaching $200.8 million. The Surface Technologies segment showed robust growth, with revenue up 33.7% for the quarter and 40.9% for the six-month period, driven by the recovery in the North American market and increased demand for pressure control equipment and services. The Onshore/Offshore segment also saw a recovery in operating profit margin, despite a revenue decrease, owing to strong project execution. The company's order backlog increased to $14.9 billion, bolstered by strong inbound orders in Onshore/Offshore and Surface Technologies, indicating a positive outlook for future revenue streams. Financially, TechnipFMC ended the period with a net cash position of $1.7 billion, down from $2.9 billion at the end of 2017, reflecting operational cash usage and investments. The company continues to navigate market volatility but expresses confidence in its liquidity and ability to meet future funding requirements through operations and its credit facility. Management is actively working to remediate previously identified material weaknesses in internal controls.

Financial Highlights

52 data points
Beta

Revenue

$2.96B

81.6% Gross Margin

Net Income

$105.70M

3.6% Net Margin

EPS (Diluted)

$0.23

Total Assets

$27.06B

Cash & Equivalents

$5.56B

Free Cash Flow

-$365.20M

Financial Statements
Beta
Revenue$2.96B
Cost of Revenue$544.10M
Gross Profit$2.42B
R&D Expenses$53.60M
SG&A Expenses$281.40M
Operating Expenses$2.78B
Operating Income$298.70M
Net Income$105.70M
EPS (Basic)$0.23
EPS (Diluted)$0.23
Shares Outstanding (Basic)461.40M
Shares Outstanding (Diluted)463.30M

Key Highlights

  • 1Total revenue declined by 23.0% year-over-year in Q2 2018, reaching $2.96 billion, mainly due to lower Subsea project activity.
  • 2Net income attributable to TechnipFMC plc for Q2 2018 was $105.7 million, a decrease from $164.9 million in Q2 2017.
  • 3The Surface Technologies segment demonstrated strong growth, with Q2 2018 revenue increasing by 33.7% year-over-year to $401.1 million.
  • 4Total order backlog grew to $14.9 billion as of June 30, 2018, indicating robust future revenue potential, driven significantly by the Onshore/Offshore segment.
  • 5The company maintained a net cash position of $1.7 billion, although it decreased from $2.9 billion at the end of 2017, indicating a strong liquidity stance.
  • 6Operating profit margin improved in the Onshore/Offshore segment (12.8% vs 11.3%) and Surface Technologies (12.8% vs -0.3%), signaling operational efficiencies and market recovery.
  • 7TechnipFMC continues to address material weaknesses in internal controls and is implementing remediation efforts.

Frequently Asked Questions

The primary reason for the 23.0% year-over-year decrease in revenue to $2.96 billion was the decline in Subsea project activity, particularly in Africa, Asia Pacific, and North America, as projects progressed towards completion. Additionally, slower activity on certain Onshore/Offshore projects, such as Yamal LNG, contributed to the decline.

Net income attributable to TechnipFMC plc decreased to $105.7 million in the second quarter of 2018 from $164.9 million in the same quarter of 2017. However, for the first six months of 2018, net income increased by 37.3% year-over-year to $200.8 million, indicating an overall improvement in profitability over a longer period despite the quarterly dip.

The Surface Technologies segment exhibited the strongest growth, with revenue increasing by 33.7% year-over-year in the second quarter to $401.1 million, driven by the recovery in the North American market. The Onshore/Offshore segment also saw an improvement in its operating profit margin, suggesting effective project execution and favorable project mix.

TechnipFMC's total order backlog stood at $14.9 billion as of June 30, 2018, a notable increase from $13.0 billion at the end of 2017. This growth, particularly in the Onshore/Offshore and Surface Technologies segments, indicates a positive outlook and potential for future revenue generation as these orders are fulfilled.

As of June 30, 2018, TechnipFMC maintained a net cash position of $1.7 billion, down from $2.9 billion at the end of 2017. The company has $976.8 million in unused capacity under its revolving credit facility and expresses confidence in its ability to meet short- and long-term liquidity needs through a combination of cash on hand, operational cash generation, and access to capital markets.