TechnipFMC Exits 2022 With Over $9 Billion Backlog

TechnipFMC FTI posted a solid fourth quarter, with total revenue up 11% year over year and slightly down 2% sequentially. Adjusted EBITDA margin jumped nearly 200 basis points to 7.1% in the fourth quarter, continuing its steady reversion to prepandemic levels (averaging about 8%) amid strengthening demand for offshore oilfield services. We foresee continued margin expansion over the next several quarters as offshore activity around the world continues to gain momentum. We’ll incorporate the firm’s full financial and operating results shortly, but after this first look, we maintain our $15 fair value estimate. Our no-moat rating and stable moat trend are unchanged following results.

TechnipFMC’s prospects are strong heading into 2023. Over 80% of the firm’s business resides outside of North America, and we expect activity growth in international markets will prove especially robust over the next few quarters. Investment in the Middle East is expected to be particularly strong moving forward—management indicated the majority of growth within its surface technologies segment will derive from the region.

We remain optimistic about TechnipFMC’s offshore operations, as well. The subsea segment concluded 2022 with over $8 billion in backlog, the majority of which will likely be recognized through 2024. The subsea opportunities list—comprising larger projects with potential for award over the next 24 months—remains at record levels, and management indicated subsea orders could exceed another $8 billion in 2023. TechnipFMC is in the early stages of a multiyear upcycle, and the very favorable outlook for inbound orders (typically comprising longer-term contracts) will ensure steady revenue streams over at least the next five years.