TechnipFMC plc — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed February 28, 2022. This is an annual report, not a standalone fourth-quarter report. Amounts are in U.S. dollars unless stated otherwise.
Business context and reporting period
TechnipFMC is an energy technology and services company reporting two continuing segments: Subsea and Surface Technologies. On February 16, 2021, it spun off Technip Energies; the company presents that business as discontinued operations for comparative periods. This separation materially affects year-over-year balance-sheet and cash-flow comparisons.
Financial and operating performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $6.404 billion | $6.531 billion |
| Gross profit margin | 12.9% | 10.6% |
| Income (loss) from continuing operations attributable to TechnipFMC | $87.8 million | $(3.553) billion |
| Net income (loss) attributable to TechnipFMC, including discontinued operations | $13.3 million | $(3.288) billion |
| EPS, total | $0.03 | $(7.33) |
| Adjusted EBITDA, non-GAAP | $580.4 million | $397.2 million |
| Operating cash flow from continuing operations | $715.0 million | $772.4 million |
| Free cash flow from continuing operations, non-GAAP | $523.3 million | $516.3 million |
Revenue declined 1.9%, principally because Subsea began the year with a lower backlog following weak 2020 order intake; higher Surface Technologies activity partly offset the decline. Gross margin improved with prior cost reductions, increased Subsea services activity, stronger Surface activity and favorable product mix. Adjusted EBITDA and free cash flow improved, while continuing-operations operating cash flow fell $57.4 million, primarily due to project milestone and vendor-payment timing.
Segment results: Subsea revenue was $5.329 billion, down 2.6%, with reported operating profit of $141.4 million (2.7% margin), versus a large prior-year loss heavily affected by impairments. Surface Technologies revenue was $1.074 billion, up 1.4%, with operating profit of $42.0 million (3.9% margin), also recovering from a prior-year impairment-driven loss.
Orders, liquidity and debt
- Inbound orders rose to $6.754 billion from $5.064 billion: Subsea $4.961 billion (up more than 20%) and Surface Technologies $1.793 billion.
- Year-end backlog was $7.658 billion, versus $7.290 billion. Subsea backlog was $6.533 billion; Surface Technologies backlog rose to $1.125 billion, driven by a ten-year ADNOC framework award. The filing estimates approximately 49% of total backlog will be recognized through 2022.
- Cash and cash equivalents were $1.327 billion. Total debt was $2.005 billion, resulting in reported non-GAAP net debt of $677.5 million, improved from $2.191 billion at year-end 2020.
- The $1.0 billion revolving credit facility had $983.3 million available at year-end, after letters of credit. The company reported compliance with debt covenants.
- Investing activities from continuing operations provided $821.8 million, including $900.9 million of Technip Energies share-sale proceeds. Financing activities used $1.447 billion, largely reflecting debt repayment. The large consolidated cash decrease also reflects cash flows of discontinued operations and should not be read as continuing-operations cash burn.
Material changes, outlook and risks
- Separation and unusual items: The 2021 results include a $322.2 million gain from the Technip Energies investment, a $61.9 million loss on early debt extinguishment, and $66.7 million of impairment, restructuring and other expenses. The prior year included $3.402 billion of such expenses, mainly goodwill impairment. Discontinued operations recorded a $72.6 million loss in 2021 versus $280.2 million income in 2020.
- Contract estimates: Changes in estimates on projects in progress at year-end 2020 reduced 2021 operating income by approximately $68.4 million, including a $72.5 million adverse impact in Subsea, partly offset by $4.1 million favorable in Surface Technologies. Revenue recognition relies substantially on estimated costs to complete long-term contracts; this was the auditor’s critical audit matter.
- Management outlook: Management described a multi-year energy-demand upcycle and expected continued strong inbound orders through at least 2025. It anticipated Subsea inbound-order growth of up to 30% in 2022. These are expectations, not earnings or revenue guidance. Estimated 2022 capital expenditures were approximately $230 million. Management intended to sell its remaining Technip Energies stake over time and anticipated exiting within a year.
- Energy transition: New Energy Ventures focuses on greenhouse-gas removal, offshore floating renewables and hydrogen. These markets offer potential but involve uncertain technologies, competition and demand; the filing does not provide quantified financial targets for the business.
- Key risks and contingencies: Results depend on volatile oil and gas activity, project execution and fixed-price contract costs, supply-chain availability, COVID-related disruption, foreign exchange, and regulatory and geopolitical conditions. A French anti-corruption investigation remains unresolved: the company maintained a $70 million provision, but a settlement could exceed it; French authorities also reviewed historical Angola projects. Guarantees had maximum potential undiscounted payments of $1.246 billion, although management did not expect a material loss. Ordinary-course legal matters were also disclosed.
Most important facts for investors to verify
- Whether order growth and the $7.658 billion backlog convert to revenue and cash on schedule, particularly given project-estimate revisions and COVID-related execution risks.
- Underlying profitability excluding the Technip Energies fair-value gain, debt-extinguishment loss and other charges; reconcile GAAP results with non-GAAP measures.
- Debt repayment plans, available revolving-facility capacity, and the timing and proceeds of any remaining Technip Energies stake sales.
- The outcome and potential cost of the unresolved French investigation, including whether liabilities exceed the $70 million provision.
- Whether management’s Subsea order-growth outlook and $230 million 2022 capital expenditure estimate remain consistent with subsequent disclosures and market conditions.