TechnipFMC plc — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Amounts below are in U.S. dollars; financial statement amounts are in millions unless noted.
Business context
TechnipFMC provides products, systems and services to the energy industry through its Subsea and Surface Technologies segments. The company describes a constructive outlook for offshore and international energy investment, while continuing to pursue offshore renewables, hydrogen and greenhouse-gas-removal opportunities.
Financial and operating highlights
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $2,056.9 | $1,733.0 | $5,746.5 | $5,006.0 |
| Gross profit | $366.9 | $256.0 | $920.5 | $674.0 |
| Income (loss) attributable to TechnipFMC | $90.0 | $(10.3) | $3.2 | $(69.9) |
| Diluted EPS | $0.20 | $(0.02) | $0.01 | $(0.16) |
| Cash from (used in) operating activities | Not separately shown for the quarter | $(8.1) | $(214.3) |
- Q3 revenue rose 18.7% year over year; nine-month revenue rose 14.8%. Gross margin was approximately 17.8% in Q3 versus 14.8% a year earlier, and 16.0% for the nine-month period versus 13.5%.
- Q3 Subsea revenue was $1,708.3, with segment operating profit of $177.7 (10.4% margin), up from $105.0 (7.4%). Surface Technologies revenue was $348.6, with operating profit of $33.3 (9.6% margin), up from $19.0 (6.0%).
- Nine-month segment operating profit was $397.9 for Subsea (8.4% margin) and $81.4 for Surface Technologies (7.9% margin), compared with $256.1 (6.2%) and $32.7 (3.7%), respectively, in 2022.
- At September 30, cash was $690.9, total debt was $1,340.8, and the company reported net debt of $(649.9), reflecting net cash of $649.9. At December 31, 2022, reported net debt was $(309.5), or net cash of $309.5. Current assets were $5,295.3 and current liabilities $4,456.2.
- Nine-month investing activities used $63.5; capital expenditures were $153.7. Cash used in financing activities was $276.7, including $150.1 of share repurchases and $21.8 of dividends. Cash declined to $690.9 from $1,057.1 at year-end 2022.
- Order backlog reached $13.2 billion at September 30, 2023, up from $9.4 billion at year-end 2022. Nine-month inbound orders were $9.45 billion, including $8.48 billion in Subsea.
Material changes and unusual items
- Q3 earnings improved substantially, supported by higher revenue, favorable Subsea activity mix and improved Surface Technologies performance. Nine-month attributable income was only $3.2 despite higher operating results, in part because of a $126.5 non-recurring legal settlement charge and foreign-exchange losses.
- The nine-month “other income (expense), net” was a $225.1 expense, compared with $33.5 income in 2022. The company cited the legal settlement and foreign-exchange movements as key factors. The Q3 amount was a $41.5 expense, also primarily affected by foreign exchange.
- In June 2023, the company agreed to a French public-interest fine resolution (CJIP) concerning historical matters, without admission of liability or guilt. TechnipFMC’s allocated responsibility is €179.45 million, payable in installments through July 2024. After a July installment, the reported outstanding liability was $164.0 at September 30.
- Operating cash use narrowed year over year, but receivables and contract assets together consumed $587.6 of cash in the first nine months. The filing attributes the improvement in operating cash flow mainly to timing differences in project milestones, vendor payments and derivatives.
Outlook, risks and contingencies
- Management expects full-year 2023 Subsea orders to exceed $9 billion, at least 34% above 2022, and Subsea Services revenue to reach $1.3 billion. Subsea orders through September were $8.5 billion.
- Management estimated 2023 capital expenditures at approximately $250 million, excluding contingent spending that may be needed for contract awards. The filing provides no consolidated earnings or revenue guidance.
- Management cites potential recession and credit availability risks, commodity-price and demand variability, geopolitical disruption, contract execution and fixed-price exposure, supply-chain dependence, foreign-exchange movements, cybersecurity, and regulatory and legal matters. It states that the previously disclosed risk factors had no material updates.
- TechnipFMC and its joint-venture partner provide guarantees for vessel-related joint-venture debt; the company’s share of guarantees was $397.3 at September 30. A fire aboard the Skandi Buzios vessel in June caused no reported serious injuries; repairs were expected to begin in Q4 2023, and the vessel was not expected to be on hire before 2024.
- The company reported compliance with debt covenants and $1,195.8 of availability under its revolving credit facility at quarter-end. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Whether Subsea order intake, backlog conversion and the stated full-year order outlook translate into revenue and cash generation.
- How much cash the remaining €179.45 million French settlement obligation requires through July 2024, and whether further related costs arise.
- Whether working-capital demands—especially receivables, contract assets and inventory—continue to weigh on operating cash flow.
- Debt maturities, liquidity availability and the distinction between reported net cash and gross debt.
- Execution and timing risks for major projects, joint-venture guarantees, and the return to service of the Skandi Buzios vessel.