TechnipFMC plc Q3 FY2026 earnings call

• Operational Milestones: Delivered critical subsea equipment ahead of schedule for Suriname’s Grand Mergue project (with TotalEnergies). Delivered the first Subsea 2.0 tree for Chevron’s Gorgon Stage 3 project. Manufactured and delivered the 200th subsea tree for ExxonMobil in Guyana.
• Awards & Recognition: Recognized at Petrobras Best Suppliers Awards in three categories (flexible pipe installation, subsea wellhead systems, ESG governance), marking the fifth Flexible Pipe Award win.
• New Inbound Orders: Secured $2.1 billion in inbound orders, including flexible pipe contracts for Azul Energy (Angola) and Petrobras (Brazil), and an integrated contract for Petronas’ Limbayong deepwater project in Malaysia.
• Strategic Partnerships: Finalized a strategic collaboration with PETRONAS as its strategic deepwater development partner using the IFEED to IEPCI model. Announced an MOU with BP to be the preferred supplier of 20K systems for BP’s Paleogene program in the US Gulf.
• Market Outlook: Highlighted a sustained resurgence in offshore activity driven by improved economics, energy security concerns, and capital diversification. The subsea opportunities list has grown 25% over two years to $32 billion.
• Execution Discipline: Emphasized that standardization via Subsea 2.0 and integrated execution (IEPCI) are reducing cycle times and improving predictability, fostering client trust and direct awards rather than competitive tenders.

Subsea: Revenue was $2.6 billion, a 5% sequential increase, driven by IEPCI projects in Indonesia and Brazil and increased services activity, partially offset by lower activity in Norway. Adjusted EBITDA was $612 million (up 6% sequentially) with a margin of 23.5%. This segment accounted for approximately 90% of total company revenue ($2.6B of $2.9B). Surface Technologies: Revenue was $296 million, up 7% sequentially due to higher activity in the Middle East and North America completion services. Adjusted EBITDA was $53 million (up 7% sequentially) with a margin of 18%. Corporate/Other: Corporate expense was $29 million; net interest expense was $4 million; tax expense was $104 million.

• Q4 2026 Subsea: Expect seasonal impacts with revenue declining mid-to-high single digits sequentially. Adjusted EBITDA margin expected to decline ~250 basis points to 21%.
• Q4 2026 Surface Technologies: Anticipate revenue and adjusted EBITDA margin to remain in line with Q3 results.
• Full Year 2026 Updates: Increased Subsea revenue guidance to $9.6–$9.8 billion. Increased Free Cash Flow guidance to $1.45–$1.55 billion. Reduced effective tax rate expectation to 25–27%. Total Company Adjusted EBITDA increased to approx. $2.22 billion (excluding FX).
• 2027 Subsea Outlook: Expecting subsea revenue of $10.0–$10.4 billion with an adjusted EBITDA margin of 22.5–24%. Expects at least $14.5 billion in subsea orders over the next five quarters (through Q1 2027). Implies >10% YoY growth in subsea Adjusted EBITDA at midpoint.

• Macroeconomic Fluidity: While not directly dictating timing, macro conditions influence customer behavior regarding capital allocation and geographic diversification.
• Project Complexity: Greenfield projects carry inherent risks related to unknown seabed topography, soil conditions, and reservoir characteristics, potentially leading to longer initial development phases compared to brownfield projects.
• Timing Slippage: There is a risk that large final-stage awards could slip from calendar year 2026 into 2027, affecting short-term visibility despite long-term order strength.
• Capacity Constraints: Although current capacity is sufficient, the company focuses on throughput optimization within existing footprints; rapid scaling may require continued investment in automation and facility constraints management.

Q: Analyst asked if the $14.5B order outlook over five quarters is influenced by macro timing issues or if it reflects structural demand. / A: CEO stated the macro environment is fluid but does not directly correlate to the timing of the $14.5B figure. The outlook is driven by customers diversifying supply sources and replenishing reserves. Timing differences between 2026 and 2027 relate to a few large projects concluding late in the year, not macro shocks. He emphasized that greenfield and brownfield complexities differ, but the portfolio approach allows leverage across both.

Q: CFO was asked to elaborate on the '50% incremental margin' for 2027 and whether manufacturing capacity limits this throughput. / A: CFO explained that the high incremental margin stems from quality backlog and industrialization efforts, where increased throughput expands margins without proportional capex. Regarding capacity, he noted no immediate concerns, citing that Subsea 2.0 orders move through plants 2.5x faster than legacy products. The strategy focuses on solving constraints within existing footprints rather than defaulting to new capital expenditures.

Q: Analyst asked about the regional breakdown of 2027 opportunities and how commercial terms/pricing compare to current work. / A: CEO outlined that South America (Brazil, Guyana, Suriname) remains critical, while Africa is the next decade's driver. Asia (Indonesia, Australia) and the US Gulf (Paleogene) are also ramping up. He confirmed that new inbound work is accretive to backlog margins because reduced cycle times and improved project economics create shared value, allowing Technip FMC to capture a portion of the economic benefits they help clients achieve.

Q: Analyst questioned if the step-up in orders is structural or cyclical and if IEPCI 2.0 contributes to the 2027 margin guidance. / A: CEO characterized the order step-up as a structural change driven by improved offshore economics and energy security, not just cycles. He stressed that the 50% incremental margin for 2027 does NOT include contributions from IEPCI 2.0. IEPCI 2.0 is still in testing/trials and represents future upside beyond 2027, offering further cycle time reductions and economic improvements for clients.

Q: Analyst asked if the shift toward portfolio-based development is visible across different basin types and how it affects market share. / A: CEO stated every client is considering portfolio approaches, enabled by Subsea 2.0 standardization. This is visible in mature basins (Norway/Brownfield) and emerging ones (US Gulf/Paleogene). Clients like BP and Equinor are bundling multiple projects geographically. This behavior favors Technip FMC due to their proven execution consistency and standardized technology, which contrasts with the unpredictability of bespoke, non-industrialized competitors, thereby driving direct awards and market share gains.