TechnipFMC Confirms Total Company 2019 Segment Guidance, Announces Fourth Quarter Non-cash Impairment Charges of $2.4 Billion Largely Due to Change in Market Capitalization
LONDON & PARIS & HOUSTON--(BUSINESS WIRE)--Feb 10, 2020--
TechnipFMC plc (NYSE: FTI) (Paris: FTI) today announced a preliminary financial update in advance of the Company’s fourth quarter 2019 earnings release scheduled for Wednesday, February 26, 2020.
The Company anticipates segment results for the full year 2019 to be as follows:
The Company expects approximately $2.4 billion of non-cash asset impairment charges to impact results in the fourth quarter.
|Three Months Ended|
|(Approximate, in billions)|
|Primary driver||Reduced market |
|Change in North |
As part of the Company’s annual goodwill impairment test, the Company’s market capitalization was compared to our estimate of fair value for each reporting segment. TechnipFMC’s market capitalization on its testing date had declined significantly when compared to the prior-year’s assessment, driven in part by greater geopolitical uncertainty and lower commodity prices. As a result, our estimate of business fair value could not be supported by the market capitalization on the testing date.
In Subsea, the Company expects to record a goodwill impairment charge of approximately $1.3 billion due to the decline in the Company’s market capitalization. The charge does not reflect a change in our outlook for 2020 or the long term.
In Surface Technologies, the Company expects to record a goodwill impairment charge of approximately $0.7 billion. This charge reflects a change in our outlook for the North American market given the challenging near-term environment and reductions to our regional activities focused on improving the economic returns of our business.
In Onshore/Offshore, the Company will not incur a goodwill impairment. An improved business outlook, as evidenced by significant growth in the Company’s LNG-related backlog, supports the current level of goodwill attributable to the segment.
Additionally, the Company expects to record other asset impairment charges totaling approximately $0.4 billion. Most of these charges will be incurred in the Subsea segment, driven by continued rationalization of our global footprint as we benefit from the market’s accelerated adoption of our integrated offering. The remaining charges will be recorded in Surface Technologies and relate to our North American operations.
Also in the quarter, the Company expects to record approximately $50 million of pre-tax charges and credits related to the Company’s separation, restructuring, and other activities.
These preliminary financial results are subject to completion of the Company’s customary annual closing and financial statement audit procedures.
1 Our guidance measures of adjusted EBITDA margin (excluding amortization related impact of purchase price accounting, and other charges) and corporate expense, net (excluding the impact of foreign currency fluctuations), are both non-GAAP measures for which we are unable to provide a reconciliation to the most directly comparable GAAP financial measures on a forward-looking basis without unreasonable effort, as further described in our press release of October 23, 2019.
Teleconference and presentation
As a reminder, the Company will issue its fourth quarter 2019 earnings release after the close of the New York Stock Exchange on Wednesday, February 26, 2020. The Company will also host its fourth quarter 2019 earnings release teleconference on Thursday, February 27, 2020, at 1 p.m. London time (8 a.m. New York time).
To participate in the conference call, you may call any of the following telephone numbers approximately 10 minutes prior to the scheduled start time:
France: +33 (0) 1 70 80 71 53
United Kingdom: +44 (0) 203 107 0289
United States: +1 844 304 0775
International (Other): +1 970 297 2369
Callers should reference Conference ID 6568587.
The event will be webcast simultaneously and can be accessed at https://edge.media-server.com/mmc/p/ppnfrxn3.
Those interested in listening to the webcast should register on the website at least 10 minutes before the call begins.
An audio replay of the call will be available online at approximately 8 p.m. London time (3 p.m. New York time) on February 27, 2020.
Important Information for Investors and Securityholders
This communication contains “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Words such as “guidance,” “confident,” “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “may,” “will,” “likely,” “predicated,” “estimate,” “outlook” and similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Such forward-looking statements involve significant risks, uncertainties and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections, including the following known material factors:
We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required by law.
TechnipFMC is a global leader in subsea, onshore/offshore, and surface projects. With our proprietary technologies and production systems, integrated expertise, and comprehensive solutions, we are transforming our clients’ project economics.
We are uniquely positioned to deliver greater efficiency across project lifecycles from concept to project delivery and beyond. Through innovative technologies and improved efficiencies, our offering unlocks new possibilities for our clients in developing their oil and gas resources.
Each of our more than 37,000 employees is driven by a steady commitment to clients and a culture of purposeful innovation, challenging industry conventions, and rethinking how the best results are achieved.
TechnipFMC utilizes its website www.TechnipFMC.com as a channel of distribution of material company information. To learn more about us and how we are enhancing the performance of the world’s energy industry, go to www.TechnipFMC.com and follow us on Twitter @TechnipFMC.
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KEYWORD: TEXAS NORTH AMERICA FRANCE UNITED STATES UNITED KINGDOM EUROPE
INDUSTRY KEYWORD: CONSTRUCTION & PROPERTY MARITIME ENGINEERING OTHER ENERGY TRANSPORT OIL/GAS MANUFACTURING ENERGY OTHER CONSTRUCTION & PROPERTY
SOURCE: TechnipFMC plc
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PUB: 02/10/2020 04:15 PM/DISC: 02/10/2020 04:15 PM