TechnipFTI Earnings: Elevated Contracting Activity Secures Stable Revenue Streams Through 2025

TechnipFMC’s FTI first-quarter revenues increased 10% year over year and 1% sequentially, as standard seasonal activity declines offset an otherwise strengthening global offshore market. Brazil and the Gulf of Mexico are currently the most active regions, but opportunities abound all over the world as the offshore industry commences its long-awaited upcycle. The firmwide adjusted EBITDA margin was 9%, up 200 basis points quarter over quarter. We’ll incorporate the firm’s full operating and financial results shortly, but for now, we maintain our no-moat rating and $18 fair value estimate.

We remain optimistic about TechnipFMC’s prospects moving forward. Industry estimates suggest international offshore upstream investment will exhibit year-over-year growth in the midteens for 2023, supporting elevated contracting activity moving forward. TechnipFMC garnered over $2.5 billion in subsea orders this quarter, yielding a book/bill ratio of 1.8 times in its subsea segment. At quarter-end, the subsea backlog exceeded $9.3 billion and will generate revenue through at least 2025.

More than half of this quarter’s inbound orders involved iEPCI, the firm’s solution for integrated subsea field development. The iEPCI contracts are typically more profitable for TechnipFMC, mainly because of their superior cost efficiency compared with traditional bespoke solutions. Customer adoption has steadily increased over the last several years, and we expect TechnipFMC’s margins will expand as the firm recognizes revenue from these higher-margin projects. We expect iEPCI adoption will continue to accelerate moving forward, bolstered by record activity levels in iFEED, the firm’s solution for front-end engineering. The iFEED projects almost guarantee an iEPCI contract, ultimately securing stable, margin-accretive revenue streams spanning several years.