TechnipFMC ((FTI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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TechnipFMC’s recent earnings call showcased a strong financial performance, with significant achievements in the Subsea segment and a positive outlook for offshore activities. Despite facing challenges in the North America market and incurring restructuring charges, the company’s highlights, particularly its robust order book and strategic partnerships, significantly outweighed the lowlights.
Strong Financial Performance
TechnipFMC reported a total company revenue of $2.5 billion, with an adjusted EBITDA of $509 million, achieving a margin of 20.1%. The company generated a free cash flow of $261 million and returned $271 million to shareholders through dividends and share buybacks, underscoring its commitment to delivering shareholder value.
Subsea Segment Success
The Subsea segment was a standout performer, with orders reaching $2.6 billion, contributing to a 5% increase in the total company backlog, now at $16.6 billion. Revenue for this segment rose to $2.2 billion, marking a 14% increase compared to the first quarter, highlighting the segment’s robust growth trajectory.
Strong Subsea Services Performance
Subsea services achieved one of the highest quarterly inbound levels ever, with revenue expected to grow to approximately $1.8 billion. This aligns with the company’s overall revenue growth, reinforcing the strength and potential of its Subsea services.
Strategic Partnerships and Innovations
TechnipFMC entered a new iEPCI collaboration with Vår Energi in Norway and developed innovative technologies such as hybrid flexible pipe and all-electric systems for subsea applications. These strategic partnerships and innovations are expected to drive future growth and enhance the company’s competitive edge.
Positive Outlook for Offshore Activity
The company expects continued strength in Subsea inbound orders, driven by robust offshore activity in regions like Guyana and Mozambique. TechnipFMC is confident in achieving its $30 billion Subsea inbound target by the end of the year, reflecting a positive outlook for offshore activities.
North America Market Challenges
TechnipFMC faced challenges in the North America market, exiting unprofitable markets and product lines, reducing its footprint by 50% over the last three years. The company also closed and consolidated facilities throughout the region as part of its strategic realignment.
Restructuring and Impairment Charges
The quarter included restructuring, impairment, and other charges totaling $16 million, primarily related to business transformation initiatives in Surface Technologies. These charges reflect the company’s ongoing efforts to streamline operations and enhance efficiency.
Forward-Looking Guidance
TechnipFMC provided comprehensive financial guidance, emphasizing its robust performance and optimistic outlook. The company expects Subsea revenue to grow by low to mid-single digits sequentially in the third quarter, with a stable adjusted EBITDA margin. Surface Technologies is anticipated to see a low single-digit revenue increase and an adjusted EBITDA margin of approximately 16%. For the full year, adjusted EBITDA is expected to reach $1.8 billion, a 30% increase compared to the prior year, with free cash flow projected near the top end of the $1 billion to $1.15 billion guidance range.
In summary, TechnipFMC’s earnings call reflected a strong financial performance, driven by significant achievements in the Subsea segment and a positive outlook for offshore activities. Despite challenges in the North America market and restructuring charges, the company’s strategic partnerships and robust order book position it well for future growth.