TechnipFMC plc

Most of our cash is managed centrally and flows through bank accounts controlled and maintained by TechnipFMC globally in various jurisdictions to best meet the liquidity needs of our global operations.

Net Debt -Net debt is a non-GAAP financial measure reflecting cash and cash equivalents, net of debt. Management uses this non-GAAP financial measure to evaluate our capital structure and financial leverage. We believe net debt is a meaningful financial measure that may assist investors in understanding our financial condition and recognizing underlying trends in our capital structure. Net debt should not be considered an alternative to, or more meaningful than, cash and cash equivalents as determined in accordance with GAAP or as an indicator of our operating performance or liquidity.

The following table provides a reconciliation of our cash and cash equivalents to net debt, utilizing details of classifications from our condensed consolidated balance sheets:

Cash Flows

Operating cash flows - Operating activities provided $382.1 million of cash during nine months ended September 30, 2024 as compared to $8.1 million cash used in operating cash flows during the same period in 2023. The increase of $390.2 million in cash from operating activities was primarily due to increased profitability during nine months ended September 30, 2024, as compared to the same period in 2023. It was also due to timing differences on project milestones, payments to vendors for inventory, and fluctuations in derivative assets and liabilities that require cash settlement.

Investing cash flows - Investing activities provided $36.7 million of cash during the nine months ended September 30, 2024 as compared to $63.5 million cash used in investing cash flows during the same period in 2023. The increase of $100.2 million in cash from investing activities was primarily due to $186.1 million in proceeds received from the sale of MSB, which was partially offset by a decrease of $69.8 million from proceeds of sale of other assets as compared to the same period in 2023.

Financing cash flows - Financing activities used $522.5 million and $276.7 million during the nine months ended September 30, 2024 and 2023, respectively. The increase of $245.8 million in cash used by financing activities was primarily due to an increase of $180.0 million in share repurchases, an increase in dividends paid of $42.9 million, and an increase of payments related to taxes withheld on share-based compensation of $32.5 million during the nine months ended September 30, 2024.

Debt and Liquidity

We are committed to maintaining a capital structure that provides sufficient cash resources to support future operating and investment plans. We maintain a level of liquidity sufficient to allow us to meet our cash needs in both the short term and long term.

Availability of borrowings under the Revolving Credit Facility is reduced by the outstanding letters of credit issued against the facility. As of September 30, 2024, there were no letters of credit outstanding, and our availability of borrowings under the Revolving Credit Facility was $1,250.0 million.

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 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. On June 27, 2024, Fitch assigned a first-time investment grade long-term issuer default rating of “BBB-” to TechnipFMC. As a result of the S&P and Fitch investment grade ratings and the satisfaction of certain other conditions precedent, the Investment Grade Debt Rating (as defined in the Credit Agreement) has occurred and the collateral securing the Credit Agreement and the Performance LC Credit Agreement was released and certain negative covenants no longer apply to the Company.

On February 20, 2024, April 23, 2024 and July 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, June 5, 2024, and September 4, 2024 to shareholders of record as of the close of business on the New York Stock Exchange on March 19, 2024, May 21, 2024, and August 20, 2024, respectively. The cash dividends paid during the three and nine months ended September 30, 2024 were $21.5 million and $64.7 million, respectively. We intend to pay dividends on a quarterly basis, and these dividends represent $0.20 per share on an annualized basis.

On October 23, 2024, the Company announced that its Board of Directors authorized and declared a quarterly cash dividend of $0.05 per share, payable on December 4, 2024 to shareholders of record as of the close of business on the New York Stock Exchange on November 19, 2024. The ex-dividend date is November 19, 2024.

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 $330.1 million of ordinary shares during the nine months ended September 30, 2024.

The Board of Directors also authorized additional share repurchase of up to $1.0 billion on October 23, 2024. Together with the existing program, the Company’s remaining authorization allows for repurchases up to $1.2 billion, representing more than 10 % of the Company’s outstanding shares as of October 23, 2024.

Since the initial share repurchase authorization in July 2022, we have purchased an aggregate amount of $635.4 million of ordinary shares through September 30, 2024. Based upon the remaining repurchase authority of $164.6 million and the closing stock price as of September 30, 2024, approximately 6.3 million ordinary shares could be subject to repurchase. All shares repurchased were immediately cancelled.

Credit Risk Analysis

For the purposes of mitigating the effect of the changes in exchange rates, we hold derivative financial instruments. Valuations of derivative assets and liabilities reflect the fair value of the instruments, including the values associated with counterparty risk. These values must also take into account our credit standing, thus including the valuation of the derivative instrument and the value of the net credit differential between the counterparties to the derivative contract. Adjustments to our derivative assets and liabilities related to credit risk were not material for any period presented.

The income approach was used as the valuation technique to measure the fair value of foreign currency derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change from the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values. Credit risk is then incorporated by reducing the derivative’s fair value in asset positions by the result of multiplying the present value of the portfolio by the counterparty’s published credit spread. Portfolios in a liability position are adjusted by the same calculation; however, a spread representing our credit spread is used.

Our credit spread, and the credit spread of other counterparties not publicly available, are approximated using the spread of similar companies in the same industry, of similar size, and with the same credit rating. See Notes 17 and 18 for further details.

At this time, we have no credit-risk-related contingent features in our agreements with the financial institutions that would require us to post collateral for derivative positions in a liability position.

Financial Position Outlook

We are committed to a strong balance sheet. We continue to maintain sufficient liquidity to support the needs of the business through growth, cyclicality, and unforeseen events. We continue to maintain and drive sustainable leverage to preserve access to capital throughout the cycle. Our capital expenditures can be adjusted and managed to match market demand and activity levels. Projected capital expenditures do not include all contingent capital that may be needed to respond to contract awards. In maintaining our commitment to sustainable leverage and liquidity, we expect to be able to continue to generate cash flow available for investment in growth and distribution to shareholders through the business cycle.