November 30, 2020

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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 LONDON & PARIS & HOUSTON--(BUSINESS WIRE)--TechnipFMC plc (NYSE: FTI) (Paris: FTI)(ISIN:GB00BDSFG982) today reported third quarter 2020 results. Summary Financial Statements - Third Quarter 2020 Reconciliation of U.S. GAAP to non-GAAP financial measures are below and in financial schedules. Three Months Ended (In millions, except per share amounts) September 30, 2020 September 30,2019 Change Revenue $3,335.7 $3,335.1 0.0% Net income (loss) $(3.9) $(119.1) n/m Diluted earnings (loss) per share $(0.01) $(0.27) n/m Adjusted EBITDA $321.2 $379.2 (15.3%) Adjusted EBITDA margin 9.6 % 11.4 % (180 bps) Adjusted net income $72.2 $53.8 34.2% Adjusted diluted earnings per share $0.16 $0.12 33.3% Inbound orders $2,227.4 $2,610.6 (14.7%) Backlog $19,646.1 $24,115.3 (18.5%) 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.” Operational and Financial Highlights - Third Quarter 2020 Subsea Financial Highlights Reconciliation of U.S. GAAP to non-GAAP financial measures are below and in financial schedules. Three Months Ended (In millions) September 30, 2020 September 30, 2019 Change Revenue $1,501.8 $1,342.2 11.9% Operating profit (loss) $20.3 $(79.6) n/m Adjusted EBITDA $146.0 $139.1 5.0% Adjusted EBITDA margin 9.7 % 10.4 % (70 bps) Inbound orders $1,607.1 $1,509.9 6.4% Backlog $7,218.0 $8,655.8 (16.6%) 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. Subsea Estimated Backlog Scheduling as of September 30, 2020 (In millions) Consolidated backlog1,2 Non- consolidated backlog3 2020 (3 months) $1,068 $36 2021 $3,402 $129 2022 and beyond $2,748 $509 Total $7,218 $674 1 Backlog in the period was increased by a foreign exchange impact of $78 million. 2 Backlog does not capture all revenue potential for Subsea Services. 3 Non-consolidated backlog reflects the proportional share of backlog related to joint ventures that is not consolidated due to our minority ownership position. Technip Energies Financial Highlights Reconciliation of U.S. GAAP to non-GAAP financial measures are below and in financial schedules. Three Months Ended (In millions) September 30, 2020 September 30, 2019 Change Revenue $1,608.2 $1,596.3 0.7% Operating profit $129.5 $284.6 (54.5%) Adjusted EBITDA $174.5 $304.2 (42.6%) Adjusted EBITDA margin 10.9 % 19.1 % (820 bps) Inbound orders $412.8 $696.0 (40.7%) Backlog $12,059.2 $15,030.8 (19.8%) 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. Partnership and Alliance Highlights LanzaTech Sustainable Aviation Fuel Biorefinery (United States) TechnipFMC’s proprietary Hummingbird® ethanol-to-ethylene technology has been selected by LanzaTech for a key application which, when combined with LanzaTech’s Alcohol-to-Jet (ATJ) technology, can be used to manufacture sustainable aviation fuel (SAF) using ethanol as raw material. These sustainable technologies will be deployed in a first commercial demonstration-scale integrated biorefinery at LanzaTech’s Freedom Pines site in Georgia, U.S., that will produce 10 million gallons per year of SAF and renewable diesel starting from sustainable ethanol sources. 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. Technip Energies Estimated Backlog Scheduling as of September 30, 2020 (In millions) Consolidated backlog1 Non- consolidated backlog2 2020 (3 months) $1,611 $146 2021 $5,790 $828 2022 and beyond $4,658 $1,025 Total $12,059 $1,999 1 Backlog in the period was increased by a foreign exchange impact of $122 million. 2 Non-consolidated backlog reflects the proportional share of backlog related to joint ventures that is not consolidated due to our minority ownership position. Surface Technologies Financial Highlights Reconciliation of U.S. GAAP to non-GAAP financial measures are below and in financial schedules. Three Months Ended (In millions) September 30, 2020 September 30, 2019 Change Revenue $225.7 $396.6 (43.1%) Operating profit (loss) $(7.0) $6.1 n/m Adjusted EBITDA $17.3 $44.4 (61.0%) Adjusted EBITDA margin 7.7 % 11.2 % (350 bps) Inbound orders $207.5 $404.7 (48.7%) Backlog $368.9 $428.7 (13.9%) 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. Corporate and Other Items Corporate expense in the quarter was $27.7 million. Excluding charges and credits totaling $3.8 million of expense, corporate expense was $23.9 million. The results benefited from the accelerated pace of cost reduction actions. Foreign exchange gains in the quarter were $5.6 million, which resulted primarily from the timing of naturally hedged projects. Net interest expense was $91.8 million in the quarter, which included an increase in the liability payable to joint venture partners of $61.9 million. The Company recorded a tax provision in the quarter of $22.5 million. Total depreciation and amortization for the quarter was $108.5 million. The Company ended the period with cash and cash equivalents of $4,244 million; net cash was $383.8 million. 2020 Full-Year Financial Guidance1 The Company’s full-year guidance for 2020 can be found in the table below. No updates were made to the previous guidance that was issued on July 29, 2020. All segment guidance assumes no further material degradation from COVID-19-related impacts. 2020 Guidance Subsea Technip Energies Surface Technologies Revenue in a range of $5.3 - 5.6 billion Revenue in a range of $6.3 - 6.8 billion Revenue in a range of $950 - 1,150 million EBITDA margin at least 8.5% (excluding charges and credits) EBITDA margin at least 10% (excluding charges and credits) EBITDA margin at least 5.5% (excluding charges and credits) TechnipFMC Corporate expense, net $130 - 150 million Net interest expense $80 - 90 million (excluding the impact of revaluation of partners’ mandatorily redeemable financial liability) Tax provision, as reported $80 - 90 million Capital expenditures approximately $300 million Free cash flow $0 - 150 million (cash flow from operations less capital expenditures) ______________________ 12020 segment guidance is reflective of new business perimeters previously announced in 2019. Businesses with approximately $120 million of total revenue in 2019, most of which was in the Surface Technologies segment, were re-allocated to Technip Energies at the beginning of 2020. The revenue of these businesses is included in Technip Energies guidance for 2020. Our guidance measures adjusted EBITDA margin, corporate expense, net, net interest expense (excluding the impact of revaluation of partners’ mandatorily redeemable financial liability) and free cash flow are non-GAAP financial measures. We are unable to provide a reconciliation to comparable GAAP financial measures on a forward-looking basis without unreasonable effort because of the unpredictability of the individual components of the most directly comparable GAAP financial measure and the variability of items excluded from each such measure. Such information may have a significant, and potentially unpredictable, impact on our future financial results. Teleconference The Company will host a teleconference on Thursday, October 22, 2020 to discuss the third quarter 2020 financial results. The call will begin at 1 p.m. London time (8 a.m. New York time). Dial-in information and an accompanying presentation can be found at www.TechnipFMC.com. Webcast access will also be available on our website prior to the start of the call. An archived audio replay will be available after the event at the same website address. In the event of a disruption of service or technical difficulty during the call, information will be posted on our website. ### About TechnipFMC TechnipFMC is a global leader in the energy industry; delivering projects, products, technologies and services. With our proprietary technologies and production systems, integrated expertise, and comprehensive solutions, we are transforming our customers’ project economics. Organized in three business segments — Subsea, Surface Technologies and Technip Energies — we are uniquely positioned to deliver greater efficiency across project lifecycles from concept to project delivery and beyond. Through innovative technologies and improved efficiencies, our offering unlocks new possibilities for our customers in developing their energy resources and in their positioning to meet the energy transition challenge. Each of our approximately 37,000 employees is driven by a steady commitment to clients and a culture of project execution, purposeful innovation, challenging industry conventions, and rethinking how the best results are achieved. TechnipFMC utilizes its website www.TechnipFMC.com as a channel of distribution of material company information. To learn more about us and how we are enhancing the performance of the world’s energy industry, go to www.TechnipFMC.com and follow us on Twitter @TechnipFMC. This communication contains “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Words such as “guidance,” “confident,” “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “may,” “will,” “likely,” “predicated,” “estimate,” “outlook” and similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Such forward-looking statements involve significant risks, uncertainties and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections, including the following known material factors: risks associated with disease outbreaks and other public health issues, including the coronavirus disease 2019 (“COVID-19”), their impact on the global economy and the business of our company, customers, suppliers and other partners, changes in, and the administration of, treaties, laws, and regulations, including in response to such issues and the potential for such issues to exacerbate other risks we face, including those related to the factors listed or referenced below; risks associated with our ability to consummate our proposed separation and spin-off; unanticipated changes relating to competitive factors in our industry; demand for our products and services, which is affected by changes in the price of, and demand for, crude oil and natural gas in domestic and international markets; our ability to develop and implement new technologies and services, as well as our ability to protect and maintain critical intellectual property assets; potential liabilities arising out of the installation or use of our products; cost overruns related to our fixed price contracts or capital asset constructionContacts Investor relations Matt Seinsheimer Vice President Investor Relations Tel: +1 281 260 3665 Email: Matt Seinsheimer Phillip Lindsay Director Investor Relations (Europe) Tel: +44 (0) 20 3429 3929 Email: Phillip Lindsay Media relations Christophe Bélorgeot Senior Vice President Corporate Engagement Tel: +33 1 47 78 39 92 Email: Christophe Belorgeot Brooke Robertson Public Relations Director Tel: +1 281 591 4108 Email: Brooke Robertson Read full story here
  • 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

LONDON & PARIS & HOUSTON–(BUSINESS WIRE)–TechnipFMC plc (NYSE: FTI) (Paris: FTI)(ISIN:GB00BDSFG982) today reported third quarter 2020 results.

Summary Financial Statements – Third Quarter 2020

Reconciliation of U.S. GAAP to non-GAAP financial measures are below and in financial schedules.

Three Months Ended

(In millions, except per share amounts)

September 30,

2020

September 30,
2019

Change

Revenue

$3,335.7

$3,335.1

0.0%

Net income (loss)

$(3.9)

$(119.1)

n/m

Diluted earnings (loss) per share

$(0.01)

$(0.27)

n/m

Adjusted EBITDA

$321.2

$379.2

(15.3%)

Adjusted EBITDA margin

9.6 %

11.4 %

(180 bps)

Adjusted net income

$72.2

$53.8

34.2%

Adjusted diluted earnings per share

$0.16

$0.12

33.3%

Inbound orders

$2,227.4

$2,610.6

(14.7%)

Backlog

$19,646.1

$24,115.3

(18.5%)

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.”

Operational and Financial Highlights – Third Quarter 2020

Subsea

Financial Highlights

Reconciliation of U.S. GAAP to non-GAAP financial measures are below and in financial schedules.

Three Months Ended

(In millions)

September 30,

2020

September 30,

2019

Change

Revenue

$1,501.8

$1,342.2

11.9%

Operating profit (loss)

$20.3

$(79.6)

n/m

Adjusted EBITDA

$146.0

$139.1

5.0%

Adjusted EBITDA margin

9.7 %

10.4 %

(70 bps)

Inbound orders

$1,607.1

$1,509.9

6.4%

Backlog

$7,218.0

$8,655.8

(16.6%)

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.

Subsea

Estimated Backlog Scheduling as of September 30, 2020

(In millions)

Consolidated

backlog1,2

Non-

consolidated

backlog3

2020 (3 months)

$1,068

$36

2021

$3,402

$129

2022 and beyond

$2,748

$509

Total

$7,218

$674

1 Backlog in the period was increased by a foreign exchange impact of $78 million.

2 Backlog does not capture all revenue potential for Subsea Services.

3 Non-consolidated backlog reflects the proportional share of backlog related to joint ventures that is not consolidated due to our minority ownership position.

Technip Energies

Financial Highlights

Reconciliation of U.S. GAAP to non-GAAP financial measures are below and in financial schedules.

Three Months Ended

(In millions)

September 30,

2020

September 30,

2019

Change

Revenue

$1,608.2

$1,596.3

0.7%

Operating profit

$129.5

$284.6

(54.5%)

Adjusted EBITDA

$174.5

$304.2

(42.6%)

Adjusted EBITDA margin

10.9 %

19.1 %

(820 bps)

Inbound orders

$412.8

$696.0

(40.7%)

Backlog

$12,059.2

$15,030.8

(19.8%)

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.

Partnership and Alliance Highlights

  • LanzaTech Sustainable Aviation Fuel Biorefinery (United States)

    TechnipFMC’s proprietary Hummingbird® ethanol-to-ethylene technology has been selected by LanzaTech for a key application which, when combined with LanzaTech’s Alcohol-to-Jet (ATJ) technology, can be used to manufacture sustainable aviation fuel (SAF) using ethanol as raw material. These sustainable technologies will be deployed in a first commercial demonstration-scale integrated biorefinery at LanzaTech’s Freedom Pines site in Georgia, U.S., that will produce 10 million gallons per year of SAF and renewable diesel starting from sustainable ethanol sources.

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.

Technip Energies

Estimated Backlog Scheduling as of September 30, 2020

(In millions)

Consolidated

backlog1

Non-

consolidated

backlog2

2020 (3 months)

$1,611

$146

2021

$5,790

$828

2022 and beyond

$4,658

$1,025

Total

$12,059

$1,999

1 Backlog in the period was increased by a foreign exchange impact of $122 million.

2 Non-consolidated backlog reflects the proportional share of backlog related to joint ventures that is not consolidated due to our minority ownership position.

Surface Technologies

Financial Highlights

Reconciliation of U.S. GAAP to non-GAAP financial measures are below and in financial schedules.

Three Months Ended

(In millions)

September 30,

2020

September 30, 2019

Change

Revenue

$225.7

$396.6

(43.1%)

Operating profit (loss)

$(7.0)

$6.1

n/m

Adjusted EBITDA

$17.3

$44.4

(61.0%)

Adjusted EBITDA margin

7.7 %

11.2 %

(350 bps)

Inbound orders

$207.5

$404.7

(48.7%)

Backlog

$368.9

$428.7

(13.9%)

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.

Corporate and Other Items

Corporate expense in the quarter was $27.7 million. Excluding charges and credits totaling $3.8 million of expense, corporate expense was $23.9 million. The results benefited from the accelerated pace of cost reduction actions.

Foreign exchange gains in the quarter were $5.6 million, which resulted primarily from the timing of naturally hedged projects.

Net interest expense was $91.8 million in the quarter, which included an increase in the liability payable to joint venture partners of $61.9 million.

The Company recorded a tax provision in the quarter of $22.5 million.

Total depreciation and amortization for the quarter was $108.5 million.

The Company ended the period with cash and cash equivalents of $4,244 million; net cash was $383.8 million.

2020 Full-Year Financial Guidance1

The Company’s full-year guidance for 2020 can be found in the table below. No updates were made to the previous guidance that was issued on July 29, 2020.

All segment guidance assumes no further material degradation from COVID-19-related impacts.

2020 Guidance

Subsea

Technip Energies

Surface Technologies

Revenue in a range of $5.3 – 5.6 billion

Revenue in a range of $6.3 – 6.8 billion

Revenue in a range of $950 – 1,150 million

EBITDA margin at least 8.5% (excluding charges and credits)

EBITDA margin at least 10% (excluding charges and credits)

EBITDA margin at least 5.5% (excluding charges and credits)

TechnipFMC

Corporate expense, net $130 – 150 million

Net interest expense $80 – 90 million

(excluding the impact of revaluation of partners’ mandatorily redeemable financial liability)

Tax provision, as reported $80 – 90 million

Capital expenditures approximately $300 million

Free cash flow $0 – 150 million

(cash flow from operations less capital expenditures)

______________________

12020 segment guidance is reflective of new business perimeters previously announced in 2019. Businesses with approximately $120 million of total revenue in 2019, most of which was in the Surface Technologies segment, were re-allocated to Technip Energies at the beginning of 2020. The revenue of these businesses is included in Technip Energies guidance for 2020.

Our guidance measures adjusted EBITDA margin, corporate expense, net, net interest expense (excluding the impact of revaluation of partners’ mandatorily redeemable financial liability) and free cash flow are non-GAAP financial measures. We are unable to provide a reconciliation to comparable GAAP financial measures on a forward-looking basis without unreasonable effort because of the unpredictability of the individual components of the most directly comparable GAAP financial measure and the variability of items excluded from each such measure. Such information may have a significant, and potentially unpredictable, impact on our future financial results.

Teleconference

The Company will host a teleconference on Thursday, October 22, 2020 to discuss the third quarter 2020 financial results. The call will begin at 1 p.m. London time (8 a.m. New York time). Dial-in information and an accompanying presentation can be found at www.TechnipFMC.com.

Webcast access will also be available on our website prior to the start of the call. An archived audio replay will be available after the event at the same website address. In the event of a disruption of service or technical difficulty during the call, information will be posted on our website.

###

About TechnipFMC

TechnipFMC is a global leader in the energy industry; delivering projects, products, technologies and services. With our proprietary technologies and production systems, integrated expertise, and comprehensive solutions, we are transforming our customers’ project economics.

Organized in three business segments — Subsea, Surface Technologies and Technip Energies — we are uniquely positioned to deliver greater efficiency across project lifecycles from concept to project delivery and beyond. Through innovative technologies and improved efficiencies, our offering unlocks new possibilities for our customers in developing their energy resources and in their positioning to meet the energy transition challenge.

Each of our approximately 37,000 employees is driven by a steady commitment to clients and a culture of project execution, purposeful innovation, challenging industry conventions, and rethinking how the best results are achieved.

TechnipFMC utilizes its website www.TechnipFMC.com as a channel of distribution of material company information. To learn more about us and how we are enhancing the performance of the world’s energy industry, go to www.TechnipFMC.com and follow us on Twitter @TechnipFMC.

This communication contains “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Words such as “guidance,” “confident,” “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “may,” “will,” “likely,” “predicated,” “estimate,” “outlook” and similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Such forward-looking statements involve significant risks, uncertainties and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections, including the following known material factors:

  • risks associated with disease outbreaks and other public health issues, including the coronavirus disease 2019 (“COVID-19”), their impact on the global economy and the business of our company, customers, suppliers and other partners, changes in, and the administration of, treaties, laws, and regulations, including in response to such issues and the potential for such issues to exacerbate other risks we face, including those related to the factors listed or referenced below;
  • risks associated with our ability to consummate our proposed separation and spin-off;
  • unanticipated changes relating to competitive factors in our industry;
  • demand for our products and services, which is affected by changes in the price of, and demand for, crude oil and natural gas in domestic and international markets;
  • our ability to develop and implement new technologies and services, as well as our ability to protect and maintain critical intellectual property assets;
  • potential liabilities arising out of the installation or use of our products;
  • cost overruns related to our fixed price contracts or capital asset construction

Contacts

Investor relations

Matt Seinsheimer

Vice President Investor Relations

Tel: +1 281 260 3665

Email: Matt Seinsheimer

Phillip Lindsay

Director Investor Relations (Europe)

Tel: +44 (0) 20 3429 3929

Email: Phillip Lindsay

Media relations

Christophe Bélorgeot

Senior Vice President Corporate Engagement

Tel: +33 1 47 78 39 92

Email: Christophe Belorgeot

Brooke Robertson

Public Relations Director

Tel: +1 281 591 4108

Email: Brooke Robertson

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