TechnipFMC plc (FTI) Earnings

Management highlights

Doug mentioned strong operational performance throughout the company. Orders in sub C were 1.9 billion driven by services and unannounced project activity. Middle East revenue is 4% of total company revenue, related to surface technology's onshore activities. Subsea opportunities list has approximately 30 billion of opportunities for potential award over next 24 months, growing 30% over last two years. Company focused on reducing cycle time, improving capital efficiency and free cash flow conversion, committed to returning at least 70% of free cash flow to shareholders. Surface technologies' Middle East exposure is 4% of total company revenue, with subsea having 95% revenue coverage when using midpoint of guidance.

Guidance

For the second quarter, subsea revenue to increase high single digits sequentially with adjusted EBITDA margin improving approximately 300 basis points to 23%. Surface technologies revenue to decline low single digits sequentially with adjusted EBITDA margin of approximately 17%. Corporate expense to decline approximately 25% in second quarter. Confident in exceeding 2.1 billion of total company EBITDA in 2026 with each segment contributing in line with full year guidance, and high confidence in delivering continued growth in 2027.

Segment performance

Total company revenue in the period was 2.5 billion. Adjusted EBITDA was 453 million with a margin of 18.2% when excluding foreign exchange. Free cash flow was 277 million with total shareholder distributions of 285 million in the quarter. In sub C, revenue of 2.2 billion increased 1% versus the fourth quarter. Adjusted EBITDA was $441 million, up 6% sequentially, with a margin of 20%. In surface technologies, revenue was 284 million, a decrease of 12% from the fourth quarter. Adjusted EBITDA was 50 million, a decrease of 15% sequentially, with a margin of 17.4%.

Risks & headwinds

Known material factors that could cause actual results to differ from projected results are described in company's most recent 10K, 10Q, and other periodic filings with SEC. Risks include market uncertainties, geopolitical risks like Middle East conflict's potential impact on business.

Analyst Q&A

• Q: good morning doug how are you good david good morning um so it's been a long time since i've heard a service company talk about being in full growth mode here um so obviously we're looking towards 27 you're getting pretty optimistic just curious how much of that has to do with what's happened the last 60 days and how this impacted the deep water cycle um are you expecting fids to kind of accelerate from here i'm just kind of curious your customers are they are they getting more confident long-term oil prices this some insight into how they're thinking about deepwater, please.

  A: Thanks for the question, David, and it gives me an opportunity to clarify. I could have made the same statement in prior quarters. Certainly last quarter we talked a lot about the growth of the market in terms of the subsea opportunity list, which again grew this quarter for the seventh consecutive quarter, now achieving $30 billion. a 30% increase over the last two years. So we talked about that aspect a lot last quarter and how that was going to translate into a step up in inbound orders for Technip FMC from 2027 through the end of the decade. So the short answer would be we could have made the comment prior to the conflict. What is true, David, is indeed our customers are interested looking at their portfolios we are in discussions on opportunities to accelerate both brownfield tiebacks as well as some greenfield developments at the same time our customers are looking at replacing their reserve base the reservoirs offshore are prolific they're well known and the economics now are extremely attractive by our ability to be able to reduce cycle time and accelerate time to first oil If you complement that with a higher commodity price, yes, clearly those project economics look increasingly interesting to our clients.

• Q: Doug, subsea 2.0 has obviously been a game changer for you. You talk about reducing the cycle time there. That's been critical there. I'm curious how that's tying into what you're seeing in terms of subsea margins for 27. You're guiding them higher. Can you talk about kind of what percent of that revenue you're expecting to be subsea 2.0 within kind of the 27 number and how that's trending forward? I know we've been talking, kind of looking historically the last kind of year or two, subsea 2.0 has been something like 80% of some of your orders. Can you just sort of talk about the orders and into revenue and how that's sort of impacting your margins in the 27?

  A: Yeah, David, I don't have an exact number. We haven't rolled that forward, if you will. But if I think about where we are today and where we would likely to be in 2027 in terms of the revenue being recognized from the subsea 2.0 orders, I would put it in the neighborhood of about 50%, perhaps a bit north of 50%. What's important is what you also said, which is 80% of our new orders are coming in with subsea 2.0 orders. is representing about 80% of our new orders. So that obviously demonstrates the glide path that we have to improve the efficiency simply by converting the higher quality backlog as a result of our customer's acceptance and the significant impact that Subsea 2.0 and the integrated model IEPCI is having on shortening cycle times and improving their economics. And as I said in the prepared remarks, We're happiest when our client wins and we win. etc.