TechnipFMC

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TechnipFMC

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TechnipFMC Announces Third Quarter 2020 Results
  • Solid operational results driven by strong execution across all segments
  • Total Company inbound orders of $2.2 billion; Subsea book-to-bill of 1.1
  • Resilient backlog of $19.6 billion; $9.4 billion scheduled in 2021
  • Achieved targeted cost savings of more than $350 million ahead of schedule
  • Cash flow from operations of $168 million; free cash flow of $95 million
  • U.S. GAAP diluted loss per share was $0.01
Includes total after-tax charges, net of credits, of $0.17 per diluted share
  • Adjusted diluted earnings per share, excluding charges and credits, was $0.16
Includes foreign exchange gains of $0.02 per diluted share
Includes expense resulting from increased liability to joint venture partners of $0.14 per diluted share

Total Company revenue was $3,335.7 million. Net loss was $3.9 million, or $0.01 per diluted share. These results included after-tax charges and credits totaling $76.1 million of expense, or $0.17 per diluted share. Adjusted net income was $72.2 million, or $0.16 per diluted share.

Adjusted EBITDA, which excludes pre-tax charges and credits, was $321.2 million and included a foreign exchange gain of $5.6 million; adjusted EBITDA margin was 9.6 percent (Exhibit 10).

Doug Pferdehirt, Chairman and CEO of TechnipFMC, stated, “We delivered strong operational results in the third quarter. All three segments delivered sequential improvement in adjusted EBITDA margin, with total Company adjusted EBITDA of $321 million and a margin of 9.6 percent. These results were achieved working collaboratively with our clients, where our innovative solutions, demonstrated execution excellence and financial strength enabled our project portfolio to progress through a challenging period.”

Pferdehirt added, “As our clients continue to re-prioritize their portfolio investments, we have seen an increase in our award activity. Inbound orders of more than $2.2 billion represent our strongest quarter of the year and a sequential increase of 45 percent, largely driven by Subsea where we were awarded notable projects in South America and Norway. With the services and project activity forecast for the remainder of the year, we remain confident in achieving $4 billion of Subsea inbound orders for 2020.”

“Technip Energies secured an EPC contract for the Assiut Hydrocracking Complex, which we expect will be inbound by year-end. We also announced a revamp project at Shell’s Moerdijk plant, demonstrating both our leadership in ethylene technology and our ability to reduce CO2 emissions.”

“And in Surface Technologies, we continued to leverage the strength and resilience of our international franchise with two important growth opportunities captured in the Middle East. These awards provide us the opportunity to further expand our market share of high-specification equipment across the region.”

“We continued to accelerate our cost reduction efforts and have already achieved the full targeted run-rate savings of more than $350 million. These savings, combined with our award momentum, provide us with confidence to reaffirm full-year guidance for all operating segments.”

“Digital is another key enabler of our business transformation. We continue to apply digital technologies to enhance our customer offering and expand our market leadership. With Subsea Studio™, we are leveraging our proprietary global database of projects to rapidly evaluate field development scenarios, which enables our ability to utilize machine learning and artificial intelligence. And our integrated and digitally enabled iComplete™ offering for surface well completions is providing significant cost and efficiency benefits with a dramatic reduction in components, connections and operating costs. Since product launch, we have achieved broad customer acceptance, leading to market share gains.”

Pferdehirt continued, “Our energy transition expertise across all segments will support our clients’ efforts to meet their carbon reduction ambitions. We recently announced a strategic collaboration to accelerate the development of green hydrogen technologies with McPhy – a leading manufacturer of equipment used in the production and distribution of green hydrogen. We are a leader in hydrogen today, and with McPhy, we are bringing our core competencies in technology, engineering, integration and project execution to develop large scale and competitive green hydrogen solutions.”

Pferdehirt concluded, “In the midst of an extremely challenging time, the women and men of TechnipFMC continued to deliver strong operational results. We remained focused on strengthening our market leading positions and leveraging our financial flexibility to pursue growth opportunities. We are fully committed to further our business transformation through new business models, innovative technologies and digital solutions across the organization.”

Subsea

Subsea reported third quarter revenue of $1,501.8 million, an increase of 11.9 percent from the prior year driven by continued strong execution of our backlog. Revenue growth in project activity was most significant in the United States, Norway and Africa. Sequentially, revenue increased 9 percent primarily driven by continued improvement in operational efficiency as well as increased activity in Subsea Services.

Subsea reported an operating profit of $20.3 million. Operating profit increased versus the prior-year quarter primarily driven by significantly lower charges and credits in the current period. Sequentially, operating profit benefited from project completions and improved asset utilization in the third quarter.

Adjusted EBITDA was $146 million, with a margin of 9.7 percent. Adjusted EBITDA increased versus the prior-year quarter as higher activity and the benefits of our cost reduction initiatives more than offset the COVID-19-related inefficiencies in the quarter.

Third Quarter Subsea Highlights

Neptune Energy Fenja iEPCI™ (Norway)
Began installation of electrically trace heated pipe-in-pipe.

BP Atlantis Phase 3 iEPCI™ (United States)
Helped client achieve fast track start-up.

Woodside Pyxis iEPCI™ (Australia)
Successful installation of two Subsea 2.0™ trees.

Shell BC-10 (Brazil)
Successful installation of Subsea 2.0™ tree; well is now operational and producing.

Subsea inbound orders were $1,607.1 million for the quarter, resulting in a book-to-bill of 1.1. The following announced awards were included in the period:

Libra Consortium’s Mero 2 Project (Brazil)

Large* contract from the Libra Consortium for the Mero 2 project, operated by Petrobras. The contract covers the engineering, procurement, construction, installation and pre-commissioning of the infield rigid riser and flowlines for production, including the water alternating gas wells. It also comprises the installation and pre-commissioning of service flexible lines and steel tube umbilicals, as well as towing and hook-up of the floating production storage and offloading unit (FPSO).
*A “large” award ranges between $500 million and $1 billion.

ExxonMobil Payara Project (Guyana)

Large* contract for the subsea system for the Payara project in Guyana from ExxonMobil subsidiary Esso Exploration and Production Guyana Limited. The contract covers the manufacture and delivery of the subsea production system, including 41 enhanced vertical deep water trees and associated tooling, six flexible risers and 10 manifolds along with associated controls and tie-in development.
*A “large” award ranges between $500 million and $1 billion.

Technip Energies

Technip Energies reported third quarter revenue of $1,608.2 million, largely unchanged versus the prior-year quarter. Revenue benefited from the continued ramp-up of Arctic LNG 2 and higher activity on downstream projects in Africa, North America and India, which more than offset the anticipated decline in revenue from Yamal LNG. Sequentially, revenue increased 4.5 percent primarily driven by the improvement in operational efficiency related to our supply chain and construction sites.

Technip Energies reported operating profit of $129.5 million; adjusted EBITDA was $174.5 million with a margin of 10.9 percent. Operating profit decreased 54.5 percent versus the prior-year quarter primarily due to a reduced contribution from Yamal LNG and lower margin realization on early phase projects, including Arctic LNG 2. Despite the challenging environment, project execution remained strong across the portfolio. Sequentially, operating profit increased 9.7 percent when excluding the benefit of the favorable litigation settlement in the second quarter of $113.2 million.

Third Quarter Technip Energies Highlights

Arctic LNG 2 (Russia)
Construction progressing at all yards in China and on-site in the Gydan peninsula.

Eni Coral South FLNG (Mozambique)
Seven out of thirteen modules were installed on the hull in South Korea, confirming the good progress of the module lifting campaign and integration phase.

Dow Chemical Company LHC-9 (United States)
Our technology and design expertise have helped Dow achieve well over 2,000 KTA capacity at their new U.S. Gulf Coast steam cracker, the largest operating ethylene unit in the world.

Technip Energies inbound orders were $412.8 million for the quarter, resulting in a book-to-bill of 0.3. The following announced award and early engagement studies were included in the period:

Shell Moerdijk Plant Ethylene Furnaces Modernization (Netherlands)
Significant* Engineering, Procurement and module Fabrication (EPF) contract from Shell Moerdijk for proprietary equipment and related services for eight ethylene furnaces at the Moerdijk petrochemicals complex. The new furnaces will utilize TechnipFMC’s innovative multi-line radiant coil design and will replace 16 older units without reducing capacity at the facility, while increasing energy efficiency and reducing greenhouse gas emissions.
*A “significant” award ranges between $75 million and $250 million.

Sakhalin-1 Russian Far East LNG Plant (Russian Federation)
Awarded FEED contract by Exxon Neftegas Ltd for the 6.2Mtpa LNG plant to be built in De-Kastri, Khabarovsk Krai in Russia. This award demonstrates our leadership in engineering services and EPC for significant LNG projects.

Qatar CO2 Sequestration (Qatar)
Awarded the engineering study and pre-FEED contract for a 5Mtpa CO2 project in Qatar; this is the largest carbon recovery and sequestration facility in the region.

Hydrogen Generation (U.K. North Sea)
Genesis has been awarded a concept study which aims to identify clean gas-to-hydrogen generation from natural gas in the North Sea.

Surface Technologies

Surface Technologies reported third quarter revenue of $225.7 million, a decrease of 43.1 percent from the prior-year quarter. The decline was primarily driven by the sharp reduction in operator activity in North America. Revenue outside of North America displayed resilience, with a more modest decline due to reduced activity levels. Nearly 70 percent of total segment revenue was generated outside of North America in the period.

Surface Technologies reported an operating loss of $7 million; adjusted EBITDA was $17.3 million with a margin of 7.7 percent. Operating profit decreased primarily due to lower activity in North America driven by the significant decline in rig count and completions-related activity, partially offset by the accelerated cost reduction actions initiated in the first quarter. Sequentially, operating profit improved through a combination of favorable product mix, the benefit of our cost reduction program, and improved manufacturing execution.

Inbound orders for the quarter were $207.5 million, a decrease versus the prior-year quarter primarily due to the significant reduction in North America activity. Backlog decreased 13.9 percent versus the prior-year quarter to $368.9 million. Given the short-cycle nature of the business, orders are generally converted into revenue within twelve months.

Third Quarter Surface Technologies Highlights

5-year frame agreement (Oman)
Received orders for wellheads, trees and services as part of a new 5-year frame agreement with Petrogas Rima.

High-specification equipment and services (Kuwait)
Nominated to supply high-specification gas equipment and in-country services for client’s 20 well program.

Expansion of offerings (United Arab Emirates)
Received a services award for maintenance of wellheads and trees from Crescent Petroleum for its Nahrwan field; successfully completed the installation of trees as part of Total’s Diyab Unconventional Exploration project.

Successful commercialization of iComplete™ system (United States)
Secured awards from operators in all major U.S. basins for our iComplete™ system offering for surface well completions.

Orders for new UH-5 Unihead® wellhead systems (Malaysia)
Received orders with Carigali Hess Operating Company (CHOC) in support of its migration to our new standard wellhead products which reduce installation time, improve safety and minimize customers’ non-productive time.
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