TechnipFMC plc

Previous wording

The price of oil has been supported by regional geopolitical tensions and the industry’s more disciplined capital spend, particularly for OPEC+ countries focused on production levels that support both economic growth and energy investment. This includes Aramco’s recent decision to forego an expansion in its production capacity above the current level of 12 million barrels per day (“MMBD”). An extended period of underinvestment also contributed to a supply deficit that has required increased upstream spending, lending support to a constructive view on the longer-term outlook for oil and natural gas prices.

Current wording

The price of oil has been supported by regional geopolitical tensions and the industry’s more disciplined capital spend, particularly for OPEC+ countries focused on production levels that support both economic growth and energy investment. This includes OPEC’s recent decision to maintain voluntary reductions to existing production quota into 2025. An extended period of underinvestment also contributed to a supply deficit that has required increased upstream spending, lending support to a constructive view on the longer-term outlook for oil and natural gas prices.

Previous wording

More recently, we were selected to deliver the first all-electric subsea iEPCI for carbon capture and storage from the Northern Endurance Partnership (“NEP”). The partnership, which is a joint venture between bp, Equinor, and TotalEnergies, is building CO 2 transportation and storage infrastructure for carbon capture projects in the U.K.’s East Coast Cluster. Our all-electric solution will collect and feed the pressurized gas into an aquifer for permanent storage. The NEP project demonstrates our ability to leverage our unique combination of innovative technologies and integrated execution as we continue to further refine our positioning and mature our offering, particularly in carbon transportation and storage.

Current wording

In March, we were selected to deliver the first all-electric subsea iEPCI for carbon capture and storage from the Northern Endurance Partnership (“NEP”). The partnership, which is a joint venture between bp, Equinor, and TotalEnergies, is building CO 2 transportation and storage infrastructure for carbon capture projects in the U.K.’s East Coast Cluster. Our all-electric solution will collect and feed the pressurized gas into an aquifer for permanent storage. The NEP project demonstrates our ability to leverage our unique combination of innovative technologies and integrated execution as we continue to further refine our positioning and mature our offering, particularly in carbon transportation and storage.

Previous wording

With CTO, we have designed an architecture, process, culture, and tools that are scalable and, more importantly, are transformational to the future of our company. CTO has allowed us to redefine our sourcing strategy and transform our manufacturing flow, resulting in up to 25% lower product cost and a shortened 12-month delivery time for subsea production equipment – savings that are both real and sustainable. This has paved the way for other products to adopt a similar operating model, enabling an enterprise-wide way of working.

Current wording

With CTO, we have designed an architecture, process, culture, and tools that are scalable and, more importantly, are transformational to the future of our company. CTO has allowed us to redefine our sourcing strategy and transform our manufacturing flow, resulting in up to 25 percent lower product cost and a shortened 12-month delivery time for subsea production equipment- savings that are both real and sustainable. This has paved the way for other products to adopt a similar operating model, enabling an enterprise-wide way of working.

Previous wording

There is also exploration activity occurring in new offshore frontiers. In Suriname, five major discoveries have been made through the successful appraisal of two oilfields, with confirmed combined recoverable resources of approximately 700 million barrels of oil. In Namibia, there has also been a major discovery with multiple operators beginning their drilling campaigns. We believe additional countries will become producers of deepwater resources during this decade.

Current wording

There is also exploration activity occurring in new offshore frontiers. In Suriname, five major discoveries have been made through the successful appraisal of two oilfields, with confirmed combined recoverable resources of approximately 700 million barrels of oil. One operator recently disclosed their intentions for future development of the resource, citing expectations for a final investment decision before the end of the year. In Namibia, there has also been a major discovery with multiple operators beginning their drilling campaigns. We believe additional countries will become producers of deepwater resources during this decade.

Previous wording

Our Subsea inbound orders grew to $9.7 billion in 2023, an increase of 45% versus the prior year. The robust inbound benefited from a record level of iEPCI projects, and when including all other direct awards and Subsea Services, the combination represented more than 70% of total segment orders. This growth in orders also drove a 50% increase in Subsea backlog to over $12.2 billion, with high quality inbound supportive of further improvement in our financial returns. Looking ahead, we continue to believe that Subsea inbound orders will reach $30 billion over the three-year period ending 2025.

Current wording

Our Subsea inbound orders grew to $9.7 billion in 2023, an increase of 45 percent versus the prior year. The robust inbound benefited from a record level of iEPCI projects, and when including all other direct awards and Subsea Services, the combination represented more than 70 percent of total segment orders. The strong order activity continued in the first half of 2024, with more than $5.2 billion of orders increasing backlog to $12.9 billion as of June 30, 2024 - a record level for TechnipFMC. We are well positioned for Subsea inbound to approach $10 billion for the full year, giving us confidence in achieving $30 billion in Subsea orders over the three-year period ending 2025.

Previous wording

Surface Technologies - International markets comprise a significant portion of segment revenue, representing 59% of the total in 2023. We continue to benefit from our exposure to the North Sea, Asia Pacific, and the Middle East. TechnipFMC’s unique capabilities in these markets, which demand higher specification equipment, global services, and local content, provide a platform for us to extend our leadership positions.

Current wording

Surface Technologies - International markets comprise a significant portion of segment revenue, representing 60 percent of the total in the first half of the year. We continue to benefit from our exposure to the North Sea, Asia Pacific, and the Middle East. TechnipFMC’s unique capabilities in these markets, which demand higher specification equipment, global services, and local content, provide a platform for us to extend our leadership positions.

Previous wording

Drilling activity in international markets is less cyclical than in North America as most activities are undertaken by national oil companies that tend to maintain a longer-term view that exhibits less variability in capital spend. We experienced a continued ramp up in production at our Saudi Arabia facility, as well as successful execution on our 10-year framework agreement with Abu Dhabi National Oil Company.

Current wording

Drilling activity in international markets is less cyclical than in North America as most activities are undertaken by national oil companies that tend to maintain a longer-term view that exhibits less variability in capital spend. This trend is most evident in the Middle East where we experienced a continued ramp up in production at our Saudi Arabia facility, as well as successful execution on our 10-year framework agreement with Abu Dhabi National Oil Company.

Previous wording

Revenue increased by $324.6 million during the three months ended March 31, 2024, compared to the same period in 2023. Subsea revenue increased by $347.2 million, driven by conversion of increased backlog, which was 49.6% higher as of December 31, 2023, when compared to December 31, 2022, particularly in Brazil, Guyana, Angola, and the United States from higher installation activities, sales of subsea production equipment and supply of flexible pipe. Surface Technologies revenue decreased by $22.6 million, compared to the same period in 2023 and was driven by the sale of MSB prior to the end of the quarter and lower activity in North America driven by lower levels of drilling and completion activity.

Current wording

Revenue increased by $678.0 million during the six months ended June 30, 2024, compared to the same period in 2023. Subsea revenue increased by $737.9 million, driven by conversion of increased backlog, which was 49.6 percent higher as of December 31, 2023, when compared to December 31, 2022, and resulted in increased revenue from higher iEPCI, installation and services activities, sales of subsea production equipment and increased supply of flexible pipe, particularly in the United States, Angola, Brazil, Guyana, Australia, and the United Kingdom. Surface Technologies revenue decreased by $59.9 million, compared to the same period in 2023, primarily due to the sale of MSB during the three months ended March 31, 2024 and lower levels of drilling and completion activity in North America of $74.2 million, partially offset by $14.3 million of growth in the Middle East and the rest of the world.

Previous wording

Gross profit (revenue less cost of sales) increased to $341.4 million in 2024 compared to $220.9 million in 2023. Subsea gross profit increased year-over-year by $114.5 million, of which $70.7 million was due to volume increase and $43.8 million due to favorable activity mix. Surface Technologies gross profit was flat compared to the same period in 2023, as the sale of MSB and lower activity in North America were offset by improved profitability in the rest of the world.

Current wording

Gross profit increased to $842.3 million in 2024 compared to $551.3 million in 2023. Subsea gross profit increased year-over-year by $278.5 million, of which $134.5 million was due to volume increase and $144.0 million due to favorable activity mix. Surface Technologies gross profit decreased by $2.9 million compared to the same period in 2023. $17.4 million of the decrease is due to the sale of MSB in the three months ended March 31, 2024 and lower levels of drilling and completion activity in North America, offset by $14.5 million of growth and higher profitability in the Middle East, Asia Pacific and Africa.

Previous wording

Selling, general and administrative expense increased by $5.9 million during the three months ended March 31, 2024, compared to the same period in 2023, as a result of increased activity in both reporting segments.

Current wording

Selling, general and administrative expense increased by $30.8 million during the six months ended June 30, 2024, compared to the same period in 2023, driven by higher employee costs in support of increased business activities.

Previous wording

Other income (expense), net, includes gains and losses associated with the remeasurement of net monetary assets and liabilities, gains and losses on sales of property, plant and equipment and non-operating gains and losses. The netincrease in expense of $11.0 million wasdriven by an increase in net foreign exchange loss of$6.6 million compared to same period in 2023 and other non-operating losses.

Current wording

Other income (expense), net, includes gains and losses associated with the remeasurement of net monetary assets and liabilities, gains and losses on sales of property, plant and equipment, and non-operating gains and losses. The net decrease in expense of $127.2 million was driven by the $126.5 million non-recurring legal settlement charge recognized during the six months ended June 30, 2023. Foreign currency loss decreased by $24.0 million, due to exposures to certain currencies with limited derivative hedging markets such as Angola kwanza and the net impact of hedging positions during the six months ended June 30, 2023. These decreases are partially offset by a net increase in miscellaneous other non-operating charges.

Previous wording

For the three months ended March 31, 2024, we recognized a gain of $75.2 million from the sale of equity interests and assets of MSB.

Current wording

For the six months ended June 30, 2024, we recognized a gain of $75.2 million from the sale of equity interests and assets of MSB.

Previous wording

For the three months ended March 31, 2024 and 2023, we recorded income from equity method affiliates of $1.4 million and $14.2 million, respectively, driven by a decrease in operat ional activity of our joint ventures.

Current wording

For the six months ended June 30, 2024 and 2023, we recorded income from equity method affiliates of$4.0 million and $15.3 million, respectively, and the difference is driven by adecrease in operat ional activity of our joint ventures.

Previous wording

Net interest expenseof $12.7 million decreased by $6.0 million in the three months ended March 31, 2024, compared to the same period in 2023, due to a reduction in outstanding debt and higher interest income.

Current wording

Net interest expenseof $34.1 million decreased by $14.9 million in the six months ended June 30, 2024, compared to the same period in 2023, due to a net reduction in outstanding debt and higher interest income.

Previous wording

Our provision for income taxes for the three months ended March 31, 2024 and 2023 reflected effective tax rates of 23.6% and 82.7%, respectively. The change in the effective tax rate was largely due to the change in geographical profit mix year over year, tax adjustments related to the reassessment of prior year tax accruals and changes in valuation allowances on some of our deferred tax assets.

Current wording

Our provision for income taxes for the six months ended June 30, 2024 and 2023 reflected effective tax rates of 23.9 percent and (1,034.6) percent, respectively. The change in the effective tax rate was largely due to the change in geographical profit mix year-over-year, tax adjustments related to the reassessment of prior year tax accruals, and changes in valuation allowances on some of our deferred tax assets.

Previous wording

Subsea operating profit for the three months ended March 31, 2024, increased by $89.8 million, of which $70.7 million came from volume, combined with $43.8 million due to a favorable activity mix, partially offset by a $24.7 million increase in operating expense related to the higher activity.

Current wording

Subsea operating profit for the three months ended June 30, 2024, increased by $124.3 million, of which $100.2 million was the result of a favorable activity mix and $63.8 million from higher volume, partially offset by a $39.7 million increase in operating expense related to the higher activity.

Previous wording

Subsea revenue increased by $347.2 million during the three months ended March 31, 2024, compared to the same period in 2023, driven by increased backlog during 2023, related to higher energy demand and upstream spending, further aided by our unique commercial offerings. $152.6 million of the increase in revenue came from Brazil, $83.8 million from Guyana, $80.9 million from Angola, and $66.5 million from the United States, due to higher installation activities, sales of subsea production equipment, and increased supply of flexible pipe. The increased revenue in these geographies was offset by a net $36.6 million decrease from the rest of the world primarily from lower activity as projects reached completion.

Current wording

Subsea revenue increased by $737.9 million during the six months ended June 30, 2024, compared to the same period in 2023, driven by increased backlog during 2023 related to higher energy demand and upstream spending, further aided by our unique commercial offerings. $236.7 million of the increase in revenue was from the United States, $178.8 million from Angola, $170.4 million from Brazil, $114.3 million from Guyana, $67.7 million from Australia, and $55.6 million from the United Kingdom, driven by higher iEPCI, installation and services activities, sales of subsea production equipment, and increased supply of flexible pipe. The increased revenue in these geographies was offset by a net $85.6 million decrease from the rest of the world, primarily from lower activity as projects reached completion.

Previous wording

Subsea - Subsea backlog of $12,455.5 million as of March 31, 2024 increased by $291.4 million compared to December 31, 2023, and was composed of various subsea projects, including Petrobras Buzios 6, Mero II, and, Mero 3 HISEP®; TotalEnergies Mozambique LNG and GirLiFlex; ExxonMobil Uaru; AkerBP Utsira High; Azule Energy Agogo; Shell Sparta, Husky West White Rose; Equinor Raia and Rosebank; ENI Merakes East; Woodside Trion and OMV Berling.

Current wording

Subsea - Subsea backlog of $12,925.9 million as of June 30, 2024 increased by $761.8 million compared to December 31, 2023, and was composed of various subsea projects, including Petrobras Buzios 6, Mero 3 HISEP® and flexibles; TotalEnergies Mozambique LNG and GirLiFlex; ExxonMobil Whiptail and Uaru; AkerBP Utsira High; Azule Energy Agogo; Shell Sparta, Husky West White Rose; Equinor Raia and Rosebank; ENI Merakes East, and Woodside Trion.

Previous wording

Surface Technologies - Order backlog for Surface Technologies as of March 31, 2024 decreased by $29.9 million compared to December 31, 2023. Surface Technologies’ backlog of $1,037.0 million as of March 31, 2024, was composed primarily of projects in the Middle East, namely Aramco and ADNOC. The remaining backlog was composed of various projects in the rest of the world.

Current wording

Surface Technologies - Order backlog for Surface Technologies as of June 30, 2024 decreased by $94.0 million compared to December 31, 2023. Surface Technologies’ backlog of $972.9 million as of June 30, 2024, was composed primarily of projects in the Middle East, namely Aramco and ADNOC. The remaining backlog was composed of various projects in the rest of the world.

Previous wording

Operating cash flows - We used $126.7 million and $386.2 million in operating cash flows from continuing operations during the three months ended March 31, 2024 and 2023, respectively. The decrease of $259.5 million in cash used by operating activities in 2024, as compared to 2023, was due to timing differences on project milestones, payments to vendors for inventory, fluctuations in derivative assets and liabilities and timing of income tax payments.

Current wording

Operating cash flows - Operating activities provided $104.2 million of cash during six months ended June 30, 2024 as compared to $230.0 million cash used in operating cash flows during the same period in 2023. The increase of $334.2 million in cash from operating activities was due to timing differences on project milestones, payments to vendors for inventory, and fluctuations in derivative assets and liabilities.

Previous wording

Investing cash flows - Investing activities provided $136.3 million of cash during the three months ended March 31, 2024 as compared to $52.8 million cash used in investing cash flows during the same period in 2023. The increase of $189.1 million in cash from investing activities was primarily due to $186.1 million in proceeds received from the sale of MSB during the three months ended March 31, 2024.

Current wording

Investing cash flows - Investing activities provided $87.1 million of cash during the six months ended June 30, 2024 as compared to $79.4 million cash used in investing cash flows during the same period in 2023. The increase of $166.5 million in cash from investing activities was primarily due to $186.1 million in proceeds received from the sale of MSB during the six months ended June 30, 2024.

Previous wording

Financing cash flows - Financing activities used $256.2 million and $87.5 million during the three months ended March 31, 2024 and 2023, respectively. The increase of $168.7 million in cash used by financing activities was primarily due to an increase of $100.1 million in share repurchases, an increase of payments related to taxes withheld on share-based compensation of $35.1 million and dividends paid of $21.7 million during the three months ended March 31, 2024.

Current wording

Financing cash flows - Financing activities used $417.9 million and $141.8 million during the six months ended June 30, 2024 and 2023, respectively. The increase of $276.1 million in cash used by financing activities was primarily due to an increase of $150.1 million in share repurchases, an increase of payments related to taxes withheld on share-based compensation of $32.5 million, dividends paid of $43.2 million and a decrease of $43.8 million in net debt activity during the six months ended June 30, 2024.

Previous wording

Credit Ratings - Our credit ratings with Standard and Poor’s (“S&P”) are BBB- for our long-term unsecured, guaranteed debt (2021 Notes) and BBB- for our 2012 and 2020 long-term unsecured debt (the 2012 and 2020 Private Placement Notes). Our credit rating with Moody’s is Ba1 for our long-term unsecured, guaranteed debt. See Note 12 for further details regarding our debt. On March 7, 2024, S&P Global Ratings upgraded TechnipFMC to investment grade, raising its rating to ‘BBB-’ from ‘BB+’ for both the issuer credit as well as the issue-level ratings on the Company’s senior unsecured notes.

Current wording

Credit Ratings - Our credit ratings with Standard and Poor’s (“S&P”) are BBB- for our long-term unsecured, guaranteed debt (2021 Notes) and BBB- for our 2012 and 2020 long-term unsecured debt (the 2012 and 2020 Private Placement Notes). Our credit rating with Moody’s is Ba1 for our long-term unsecured, guaranteed debt. See Note 12 for further details regarding our debt.

Previous wording

On February 20, 2024, our Board of Directors authorized and declared a quarterly cash dividend of $0.05 per share. The cash dividend of $0.05 per share was paid on March 28, 2024, to shareholders of record as of the close of business on the New York Stock Exchange on March 19, 2024. The cash dividend paid during the three months ended March 31, 2024 was $21.7 million. We intend to pay dividends on a quarterly basis, and this dividend represents $0.20 per share on an annualized basis.

Current wording

On February 20, 2024 and April 23, 2024, our Board of Directors authorized and declared a quarterly cash dividend of $0.05 per share. The cash dividends of $0.05 per share were paid on March 28, 2024 and June 5, 2024, to shareholders of record as of the close of business on the New York Stock Exchange on March 19, 2024 and May 21, 2024, respectively. The cash dividends paid during the three and six months ended June 30, 2024 were $21.5 million and $43.2 million, respectively. We intend to pay dividends on a quarterly basis, and these dividends represent $0.20 per share on an annualized basis.

Previous wording

On July 26, 2023, our Board of Directors authorized an additional share repurchase of up to $400.0 million. Together with the then existing program, our total share repurchase authorization was increased to $800.0 million of our outstanding ordinary shares under our share repurchase program. Pursuant to this share repurchase program, we repurchased $150.1 million of ordinary shares during the three months ended March 31, 2024. Since the initial share repurchase authorization in July 2022, we have purchased an aggregate amount of $455.4 million of ordinary shares through March 31, 2024. Based upon the remaining repurchase authority of $344.6 million and the closing stock price as of March 31, 2024, approximately 13.7 million ordinary shares could be subject to repurchase. All shares repurchased were immediately cancelled.

Current wording

On July 26, 2023, our Board of Directors authorized an additional share repurchase of up to $400.0 million. Together with the then existing program, our total share repurchase authorization was increased to $800.0 million of our outstanding ordinary shares under our share repurchase program. Pursuant to this share repurchase program, we repurchased $250.1 million of ordinary shares during the six months ended June 30, 2024.

Previous wording

Refer to our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of our critical accounting estimates. During the three months ended March 31, 2024, there were no changes to our identified critical accounting estimates.

Current wording

Refer to our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of our critical accounting estimates. During the six months ended June 30, 2024, there were no changes to our identified critical accounting estimates.

Previous wording

Under the terms of the CJIP, Technip UK and Technip Energies France will pay a public interest fine of €154.8 million and €54.1 million, respectively, for a total of €208.9 million. Under the companies’ separation agreements, TechnipFMC is responsible for €179.45 million to be paid in installments through July 2024, and Technip Energies is responsible for the remaining €29.45 million. During the three months ended June 30, 2023, we recorded an incremental liability of $126.5 million. After making scheduled installment payments of €24.7 million and €51.6 million on July 13, 2023 and January 15, 2024, respectively, we have an outstanding balance of €103.2 million that is translated to $111.5 million and is recorded in other current liabilities in our condensed consolidated balance sheets as of March 31, 2024.

Current wording

Under the terms of the CJIP, Technip UK, and Technip Energies France will pay a public interest fine of €154.8 million and €54.1 million, respectively, for a total of €208.9 million. Under the companies’ separation agreements, TechnipFMC is responsible for €179.45 million to be paid in installments through July 2024, and Technip Energies is responsible for the remaining €29.45 million. During the three months ended June 30, 2023, we recorded an incremental liability of $126.5 million. After making scheduled installment payments of €24.7 million, €51.6 million and €51.6 million, respectively, on July 13, 2023, January 15, 2024, and April 8, 2024, we have an outstanding balance of €51.6 million that is translated to $55.2 million and is recorded in other current liabilities in our condensed consolidated balance sheets as of June 30, 2024. On July 10, 2024, we made the final installment payment of €51.6 million.