TechnipFMC Earnings: 2023 Order Intake Set to Surpass 2022 Mark Amid High Contracting Activity

TechnipFMC FTI posted a very strong second-quarter performance. Revenue increased 15% year over year and quarter over quarter, and the firmwide adjusted EBITDA margin achieved sequential expansion above 100 basis points to nearly 10.5%. High demand for subsea products and services was the driving force behind this quarter’s results as offshore oil and gas activity accelerates around the world. We maintain our $18 per share fair value estimate and no-moat rating following results.

Following years of deferred investment, well operators are finally investing in offshore projects, commencing an upcycle that’s likely to span several years. We see this exemplified through TechnipFMC’s order intake, which totaled $6.7 billion in the first half of 2023 and is well on its way to surpassing the $8 billion of orders secured in all of fiscal 2022. The firm exited the third quarter $13.3 billion in its backlog, roughly one third of which involves projects slated for 2025 and beyond. Contracting activity will remain elevated in the near term, and management indicated TechnipFMC will likely garner another $2.3 billion of orders in the second half.

Numerous regions will fuel activity growth moving forward. Brazil and Guyana are expected to commence numerous large (exceeding $1 billion) greenfield projects over the next 24 months. More mature producing regions like the North Sea, Gulf of Mexico, and West Africa are likely to expand tieback activity over the same time frame, three regions in which TechnipFMC maintains a substantial installed base. Overall, we’re confident in TechnipFMC’s prospects over the next several years and maintain our outlook for annual revenue growth averaging 9% over the next five years with firmwide adjusted EBITDA margins approaching 13% by 2027.