10-QPeriod: Q1 FY2020

TechnipFMC plc Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 4, 2020For Securities:FTI

Summary

TechnipFMC plc (FTI) reported a significant net loss of $3,256.1 million for the first quarter of 2020, a substantial deterioration from a profit of $20.9 million in the same period last year. This loss was largely driven by a massive goodwill impairment charge of $3,083.4 million across its Subsea and Surface Technologies segments, signaling a sharp reassess of asset values in the wake of the COVID-19 pandemic and falling oil prices. Revenue, however, saw a modest increase of 7.5% to $3,130.3 million, primarily due to increased project activity in Subsea and Technip Energies. The company's outlook is significantly impacted by the prevailing market conditions, leading to a planned postponement of its separation transaction and aggressive cost-reduction measures. Despite the substantial net loss and significant impairments, the company's liquidity remains a focus, with $4,999.4 million in cash and cash equivalents and $588.8 million in net cash as of March 31, 2020. The company is implementing cost-saving initiatives and has reduced its capital expenditure outlook. The planned separation of its Onshore/Offshore segment (now Technip Energies) has been postponed due to market volatility. Investors should closely monitor the company's ability to navigate the challenging operating environment, manage its cost structure, and execute on its remaining backlog.

Financial Highlights

52 data points
Beta

Revenue

$1.58B

Net Income

-$3.26B

-205.7% Net Margin

EPS (Diluted)

$-7.28

Total Assets

$19.93B

Cash & Equivalents

$935.70M

Free Cash Flow

-$47.60M

Financial Statements
Beta
Revenue$1.58B
R&D Expenses$25.40M
SG&A Expenses$195.30M
Operating Expenses$4.82B
Operating Income-$3.17B
Interest Expense$32.80M
Net Income-$3.26B
EPS (Basic)$-7.28
EPS (Diluted)$-7.28
Shares Outstanding (Basic)447.50M
Shares Outstanding (Diluted)447.50M

Key Highlights

  • 1Reported a net loss of $3,256.1 million for Q1 2020, a significant decline from a net profit of $20.9 million in Q1 2019, primarily due to a $3,083.4 million goodwill impairment charge.
  • 2Total revenue increased by 7.5% to $3,130.3 million in Q1 2020, driven by higher project activity in Subsea and Technip Energies segments.
  • 3The company has postponed its planned separation transaction due to market volatility caused by COVID-19 and declining commodity prices.
  • 4Implemented aggressive cost reduction initiatives expected to yield at least $350.0 million in annualized savings, including a 75% reduction in the annual dividend.
  • 5Subsea segment experienced a significant operating loss of $2,750.7 million, largely attributable to asset impairments.
  • 6Technip Energies segment revenue grew by 15.9% to $1,547.7 million, but operating profit decreased slightly due to lower margin realization on early-stage projects.
  • 7Maintained a strong liquidity position with $4,999.4 million in cash and cash equivalents and $588.8 million in net cash as of March 31, 2020.

Frequently Asked Questions

The substantial net loss of $3,256.1 million in the first quarter of 2020 was primarily driven by significant impairment charges, most notably a $3,083.4 million goodwill impairment recognized in the Subsea and Surface Technologies segments. This reflects a reassessment of asset values due to market conditions, including the impact of the COVID-19 pandemic and declining commodity prices.

The COVID-19 pandemic has caused operational impacts including supply chain disruptions, productivity declines, and logistics constraints. It has also led to the postponement of the planned separation of the Onshore/Offshore segment and significant market volatility. In response, the company has implemented aggressive cost-reduction measures and is focused on cash and liquidity preservation.

As of March 31, 2020, TechnipFMC maintained a strong liquidity position with $4,999.4 million in cash and cash equivalents and $588.8 million in net cash. The company has access to a $2,500.0 million revolving credit facility with $625.9 million in unused capacity, and expects cash flow from operations to be positive for the full year despite reduced order forecasts.

The company announced on March 15, 2020, the postponement of the planned separation of its Onshore/Offshore segment (now renamed Technip Energies) into an independent company. This decision was made due to market volatility, a sharp decline in commodity prices, and heightened volatility in global equity markets, with the transaction to be reconsidered when markets sufficiently recover.