10-QPeriod: Q2 FY2022

TechnipFMC plc Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 29, 2022For Securities:FTI

Summary

TechnipFMC plc (FTI) reported mixed financial results for the second quarter of 2022. While total revenue saw a modest increase of 2.9% to $1.72 billion compared to the prior year's quarter, the net income attributable to TechnipFMC plc swung from a significant loss of $167.0 million in Q2 2021 to a small profit of $2.1 million in Q2 2022. This improvement was largely driven by a substantial reduction in the loss from investment in Technip Energies and lower interest expenses, partially offset by increased impairment, restructuring, and other expenses. The company's performance was characterized by strength in its Subsea segment, which saw revenue grow 1.5% and operating profit surge by 34.1%, indicating improved margins and higher activity. However, the Surface Technologies segment experienced a decline in operating profit, primarily due to manufacturing transition challenges in Saudi Arabia, despite a 10.2% revenue increase driven by North American activity. For the first six months of 2022, revenue slightly decreased by 0.8% to $3.27 billion, and the company reported a net loss of $59.6 million compared to a net income of $201.2 million in the same period last year, reflecting challenging comparisons and ongoing operational adjustments.

Financial Highlights

48 data points
Beta

Revenue

$1.72B

Net Income

$2.10M

0.1% Net Margin

EPS (Diluted)

$0.00

Total Assets

$9.29B

Cash & Equivalents

$684.90M

Free Cash Flow

-$133.00M

Financial Statements
Beta
Revenue$1.72B
R&D Expenses$11.50M
SG&A Expenses$143.10M
Operating Expenses$1.64B
Operating Income$107.10M
Interest Expense$31.70M
Net Income$2.10M
Shares Outstanding (Basic)452.20M
Shares Outstanding (Diluted)456.80M

Key Highlights

  • 1Total revenue for the second quarter of 2022 increased by 2.9% to $1.72 billion compared to the prior year's quarter.
  • 2Net income attributable to TechnipFMC plc turned positive, reaching $2.1 million in Q2 2022 from a loss of $167.0 million in Q2 2021.
  • 3Subsea segment revenue increased by 1.5% to $1.41 billion, with operating profit up 34.1% to $97.1 million, driven by higher activity and improved margins.
  • 4Surface Technologies segment revenue increased by 10.2% to $302.6 million, but operating profit decreased by 22.5% to $10.0 million due to manufacturing transition impacts.
  • 5The company repurchased $430.2 million of its 2021 Notes, resulting in a $29.8 million loss on early extinguishment of debt for the quarter.
  • 6Order backlog increased by 17.9% to $9.04 billion as of June 30, 2022, indicating a positive outlook for future revenue, particularly in the Subsea segment.
  • 7A new share repurchase program of up to $400.0 million was authorized on July 27, 2022, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

The swing to profitability was largely driven by a significant reduction in the loss from the investment in Technip Energies and lower net interest expense. These factors more than offset increased impairment, restructuring, and other expenses.

The outlook for the Subsea segment is positive, with management expecting strong inbound orders through at least 2025 and full-year Subsea orders to increase by up to 40% in 2022, driven by renewed operator confidence and expanded opportunity sets. For the Surface Technologies segment, activity in North America is expected to increase, benefiting from higher drilling and completion activity, while international markets remain significant, with a large multi-year contract secured in the Middle East.

TechnipFMC maintains a strong balance sheet and ample liquidity. As of June 30, 2022, the company had $684.9 million in cash and cash equivalents and $784.6 million in availability under its Revolving Credit Facility. The company also actively manages its debt, evidenced by the repurchase of $430.2 million of its 2021 Notes during the quarter, which contributed to a reduction in outstanding debt and interest expense.

The company is involved in various legal and tax matters. A significant historical matter involved anti-corruption investigations, for which a global resolution was reached in June 2019, involving payments totaling $301.3 million. An investigation by the French PNF regarding historical projects in Equatorial Guinea and Ghana is ongoing, with a $70.0 million provision maintained, and the potential settlement amount could exceed this provision. Management believes the ultimate resolution of known contingencies will not materially adversely affect the company's financial position, results of operations, or cash flows.