TechnipFMC plc (NYSE: FTI) (the “Company” or “TechnipFMC”) today reported second quarter 2024 results.
Total Company revenue in the second quarter was $2,325.6 million. Net income attributable to TechnipFMC was $186.5 million, or $0.42 per diluted share. These results included after-tax charges and credits totaling $2.4 million of expense, or $0.01 per share (Exhibit 6).
Adjusted net income was $188.9 million, or $0.43 per diluted share (Exhibit 6).
Adjusted EBITDA, which excludes pre-tax charges and credits, was $361.4 million; adjusted EBITDA margin was 15.5 percent (Exhibit 8).
Included in total Company results was a foreign exchange loss of $17.7 million, or $17.8 million after-tax. When excluding the after-tax impact of foreign exchange, net income was $204.3 million. Adjusted EBITDA, excluding foreign exchange, was $379.1 million (Exhibit 7).
Doug Pferdehirt, Chair and CEO of TechnipFMC, stated, “Our quarterly results reflect strong operational performance throughout the Company. Revenue was $2.3 billion with adjusted EBITDA of $379 million when excluding foreign exchange impacts.”
“Results were particularly strong in Subsea, where operating profit margin improved 480 basis points sequentially to 13.8 percent. Adjusted EBITDA margin improved 370 basis points sequentially to 17.7 percent – a level of performance we expect to continue in the third quarter. Given the strength of our execution, we now expect Subsea adjusted EBITDA margin to exceed the high-end of our guidance for the full year.”
Pferdehirt continued, “Subsea inbound orders were $2.8 billion, representing a book-to-bill of 1.4. Partner collaboration and longstanding relationships were key drivers of our success in the quarter. Inbound included iEPCI™ projects for Woodside’s Xena Phase 3 and Energean’s Katlan development, both repeat clients of our integrated model. We were also awarded over 100 kilometers of flexible pipe from Petrobras, which is incremental to the volume associated with our existing frame agreements.”
“Further expansion in Guyana also contributed significantly to inbound with the award of the Whiptail project. This is the sixth project sanctioned by ExxonMobil in the Stabroek Block in just seven years. We are honored to have been awarded the subsea production systems for all of these projects.”
Pferdehirt added, “Through our success in Guyana, we have established a strong reputation for meeting the accelerated schedule requirements of an emerging basin. Importantly, it is our strategic commitment to the region and its people, collaboration with our global and local partners, and innovative mindset that have created a winning playbook for the development of our business in Guyana. This formula will also be utilized in new frontiers, including Suriname and Namibia.”
“At quarter end, total Company backlog was $13.9 billion, a record level for TechnipFMC, with orders exceeding revenue in 10 of the last 11 quarters. We are well positioned for Subsea orders to approach $10 billion for the year, also giving us continued confidence in achieving $30 billion in orders over the three-year period ending 2025. We expect this activity will drive further growth in backlog.”
“In Surface Technologies, we also demonstrated solid performance. We are seeing tangible benefits from the targeted actions taken to optimize our business in the Americas. In the Middle East, the growth we anticipated is now occurring, allowing us to further utilize our new in-country capacity.”
Pferdehirt concluded, “The strong financial performance in the period clearly demonstrates the solid momentum we are experiencing in our execution. Our success reflects the bold steps we took to create a new business model that reshaped the subsea industry and to deliver innovative technologies that further improve project economics. These actions continue to provide sustainable differentiation for TechnipFMC, driving results higher than what could be achieved through a market recovery alone.”
“We are confident that our strong execution and competitive differentiation, when combined with the proven success of our subsea playbook, will allow us to capitalize on the expanding opportunities that extend beyond the decade.”
Subsea reported second quarter revenue of $2,009.1 million, an increase of 15.8 percent from the first quarter. The sequential revenue improvement was largely driven by increased iEPCI™ project activity in the North Sea and Gulf of Mexico. Services revenue also increased primarily due to seasonal improvement.
Subsea reported an operating profit of $277.7 million, an increase of 77.3 percent from the first quarter. Operating results increased sequentially due to strong execution, improved earnings mix from backlog, and higher project and services activity. Operating profit margin increased 480 basis points to 13.8 percent.
Subsea reported adjusted EBITDA of $356.5 million, an increase of 47.1 percent when compared to the first quarter. The factors impacting operating profit also drove the sequential increase in adjusted EBITDA. Adjusted EBITDA margin increased 370 basis points to 17.7 percent.
Subsea inbound orders were $2.8 billion for the quarter. Book-to-bill was 1.4x. The following awards were included in the period:
- ExxonMobil Whiptail project (Guyana)
Large* contract award by ExxonMobil Guyana to supply subsea production systems for the Whiptail project in Guyana’s Stabroek Block. TechnipFMC will provide project management, engineering, and manufacturing to deliver 48 subsea trees and associated tooling, as well as 12 manifolds and associated controls and tie-in equipment. Whiptail is TechnipFMC’s most recent award from ExxonMobil Guyana, where the Company has been awarded subsea production system contracts since the first contract award in 2017 for Liza Phase 1.
*A “large” contract is between $500 million and $1 billion.
- Woodside Energy Xena Phase 3 iEPCI™ project (Australia)
Significant* integrated Engineering, Procurement, Construction, and Installation (iEPCI™) contract by Woodside Energy to design, manufacture, and install the subsea production system, flexible pipe, and umbilicals for the Xena Infill well (XNA03) to support ongoing production from the Pluto LNG Project. The award follows an integrated front end engineering design (iFEED™) study. The project will use the Company’s Subsea 2.0® production system. Xena Phase 3 will be tied back to existing subsea infrastructure previously supplied by TechnipFMC. The contract is the latest call-off on the framework agreement between Woodside Energy and TechnipFMC.
*A “significant” contract is between $75 million and $250 million.
- Energean Katlan iEPCI™ project (Israel)
Large* iEPCI™ contract by Energean for its Katlan development in the Mediterranean Sea. This is Energean’s first project to use TechnipFMC’s configure-to-order Subsea 2.0® production systems. The award follows an iFEED™ study by TechnipFMC, which optimized the commercial and technological solution for the field. The contract covers the design, manufacture, and installation of the production systems, pipe, umbilicals, and subsea structures. The subsea infrastructure will tie back to the Energean Power floating production, storage, and offloading vessel (FPSO), which currently serves the Karish and Karish North developments. TechnipFMC also delivered fully integrated subsea solutions utilizing our iEPCI™ execution model for both of these developments.
*A “large” contract is between $500 million and $1 billion.
- Petrobras Flexible Pipe contract (Brazil)
Substantial* contract by Petrobras to supply flexible pipe for the pre-salt fields offshore Brazil. The contract covers the design, engineering, and manufacture of flexible pipe for water injection and gas lift.
*A “substantial” contract is between $250 million and $500 million.
Surface Technologies
Financial Highlights
Reconciliation of U.S. GAAP to non-GAAP financial measures are provided in financial schedules.
Surface Technologies reported second quarter revenue of $316.5 million, an increase of 3 percent from the first quarter. The sequential revenue improvement was primarily driven by increased activity in the Middle East, largely offset by the absence of revenue from the Measurement Solutions business disposed of in March of 2024.
Surface Technologies reported operating profit of $30.6 million, a decrease of 70.4 percent versus the first quarter. Operating profit in the prior quarter benefited from a $75.2 million gain on the disposal of the Measurement Solutions business. Excluding the gain on the disposal, operating profit increased $2.4 million sequentially. The increase was primarily due to higher volume in the Middle East, largely offset by the absence of operating profit from Measurement Solutions.
Surface Technologies reported adjusted EBITDA of $46 million. Adjusted EBITDA increased 11.1 percent when compared to the first quarter. The improvement was driven by higher volume in the Middle East, largely offset by the absence of Measurement Solutions. Adjusted EBITDA margin increased 100 basis points sequentially to 14.5 percent.
Inbound orders for the quarter were $254.2 million, a sequential decrease of 31.4 percent. Backlog ended the period at $972.9 million.
Corporate and Other Items (three months ended June 30, 2024)
Corporate expense was $23.7 million.
Foreign exchange loss was $17.7 million.
Net interest expense was $21.4 million.
The provision for income taxes was $59.2 million.
Total depreciation and amortization was $92.1 million.
Cash provided by operating activities was $230.9 million. Capital expenditures were $50.8 million. Free cash flow was $180.1 million (Exhibit 11).
During the quarter, the Company repurchased 3.9 million of its ordinary shares for total consideration of $100 million. When including a dividend payment of $21.5 million, total shareholder distributions in the quarter were $121.5 million.
The Company ended the period with cash and cash equivalents of $708.2 million; net debt decreased $66.8 million sequentially to $260.2 million (Exhibit 10).
On June 27, 2024, Fitch Ratings assigned a first-time Long-Term Issuer Default Rating of ‘BBB-’ with a Stable Outlook to the Company and its subsidiary, FMC Technologies Inc. Fitch Ratings also assigned ‘BBB-’ ratings to the Company’s revolving credit facility and senior unsecured notes. This follows a rating upgrade in early March by S&P Global Ratings, which elevated both the issuer credit and the issue-level ratings on the Company’s senior unsecured notes to investment grade (‘BBB-’).
With investment grade ratings from two credit rating agencies, the Company will benefit from lower interest rates and fees and eliminate all collateral requirements for its $1.25 billion Revolving Credit Facility and $500 million Letter of Credit Facility. Additionally, the Company will gain access to the lower-cost investment grade bond market for future term debt needs.
2024 Full-Year Financial Guidance1
The Company’s full-year financial guidance for 2024 can be found in the table below. Updates to the previous guidance issued on February 22, 2024 are as follows:
- Subsea revenue in a range of $7.6 - 7.8 billion, which increased from the previous guidance range of $7.2 - 7.6 billion.
- Subsea adjusted EBITDA margin in a range of 16.5 - 17%, which increased from the previous guidance range of 15.5 - 16.5%.
- Free cash flow in a range of $425 - 575 million, which increased from the previous guidance range of $350 - 500 million.
Financial results prior to the completion of the sale of the Measurement Solutions business, which was completed on March 11, 2024, are included in full-year guidance for Surface Technologies.
