TechnipFMC books $3.25B loss; cuts execs pay and dividend
TechnipFMC has reported first-quarter 2020 loss of $3.25 billion or $7.28 per diluted share against $21 million profit same time last year.
The services major has seen the results affected by after-tax charges and credits totaling $7.17 per share, primarily driven by non-cash impairment charges.
TechnipFMC warned the market on impairment impact prior to releasing its earnings results.
Impairment and other charges were approximately $3.16 billion for goodwill and assets in the subsea and surface technologies units.
In the quarter, subsea recorded non-cash impairment and other charges totaling $2.8 billion.
Adjusted EPS for the quarter was -$0.11, versus 6 cents profit in Q1 2019. Analysts projected adjusted earnings at 22 cents per share.
Revenues for the quarter were up 7.5 per cent at $3.13 billion, form $2.91 billion in the prior-year comparable period.
TechnipFMC has secured quarterly order intake of $2.1 billion, down 66 per cent from $6.2 billion in Q1 2019.
Subsea division generated $1.17 billion.
Subsea reported first quarter revenue of $1.25 billion, up close to 6 per cent compared to the corresponding period in 2019.
2020 revenue guidance for subsea division was in a range of $6.2 – 6.5 billion. However, TechnipFMC said it now expects to convert only $3.1 billion of backlog into revenue for remainder of the year.
At the end of the first quarter 2020, TechnipFMC backlog was $22 billion ($17.8 billion in Q1 2019), including subsea backlog of $7.8 billion.
Further cost reductions
The company recently announced a series of cost reduction initiatives that would result in annualized savings of at least $130 million.
However, TechnipFMC has now identified actions that will result in additional savings of more than $220 million.
Total annualized savings are now estimated to exceed $350 million.
Additionally, the company has revised compensation through the end of the year which include a 30 per cent reduction to the chairman and CEO’s salary; a 30 per cent reduction in the board of directors’ retainer; and a 20 per cent reduction to the executive leadership team’s salaries.
Furthermore, the company has also reduced the annual cash distribution by $175 million when compared to the prior year.