Morningstar | FTI Updated Forecasts and Estimates from 25 Apr 2019
After a strong third quarter, TechnipFMC's results moderated somewhat in the fourth quarter. Revenue increased 6% sequentially, but adjusted operating margin declined to 6.9% (8% if removing foreign exchange losses) from 10.2% in the prior quarter. The top-line increase was driven chiefly by the Onshore/Offshore segment, and the bottom-line decrease was due primarily to the Subsea segment. The company also recognized a $280 million provisional charge for potential settlement with various investigations (including by the U.S. Department of Justice) regarding corrupt practices in Brazil and other areas. We will be incorporating the full impact of the charge in our model shortly, which will lower our fair value estimate by about $0.50 per share.The Onshore/Offshore segment was the strongest performer in the quarter, as the segment's revenue increased 9%. Adjusted operating margins did fall to 12.5% after a record high 14% in the third quarter, when the company benefited from strong execution on the Yamal project. The outlook for the segment is strong, with a book-to-bill of 1.21 for 2018 as a whole and several more awards likely to arrive in 2019.
In the Subsea segment, revenue increased 2% sequentially but adjusted operating margins fell to 5.2% from 8.4%. Profitability suffered due to lower activity levels, as vessel utilization fell to 62% vs. 69% in the prior quarter, owing chiefly to the typical winter seasonal slowdown.
TechnipFMC is global leader in oil and gas projects, technologies, systems, and services. Co. offers subsea, surface, onshore, and offshore solutions for oil and gas projects. Co. serves customers worldwide. With Co.'s technologies and production systems, integrated expertise, and comprehensive solutions, Co. is transforming Co.'s clients' project economics. Co. is uniquely positioned to deliver greater efficiency across project lifecycles from concept to project delivery and beyond. Through innovative technologies and improved efficiencies, Co.'s offering unlocks new possibilities for Co.'s clients in developing their oil and gas resources.
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