TechnipFMC plc (FTI) is a leading technology provider to the traditional and new energy sectors, delivering fully integrated projects, products, and services. The company reported solid financial results for the third quarter of 2024.
TechnipFMC’s inbound orders increased 29.8% during the third quarter from the prior year’s quarter to $2.78 billion, while its backlog stood at $14.70 billion. Also, the company's revenue from the Subsea segment was up 18.7% year-over-year to $2.03 billion.
FTI was awarded two significant contracts during the period by Petrobras for the Petrobras flexible pipe and subsea production systems. It received an iEPCI™ contract for BP's Greenfield Kaskida development in the Gulf of Mexico. TotalEnergies recently awarded the company a contract for its GranMorgu project.
Given the nature of FTI’s services and facilities, its market demand in the coming years appears robust with expanding industry operations, advanced technologies, and enhanced capabilities. It offers a wide array of services in the form of design, engineering, procurement, manufacturing, fabrication, installation, and life of field services, enabling smooth operations for its customers.
Also, amid the increasing demand for energy across various end-user sectors, favorable regulatory frameworks, and new technological advancements, the global energy as a service (EaaS) market is expected to grow to $208.20 million by 2032 at a CAGR of 11.8%. In global comparison, the U.S. energy as a service market is projected to grow significantly, reaching a value of $52.52 billion by 2032.
Shares of FTI have surged 21.3% over the past six months and 55.1% over the past year to close its last trading session at $31.37.
Let’s look at factors that could influence FTI’s performance in the upcoming months.
Positive Recent Developments
On November 14, FTI was awarded a major integrated engineering, procurement, construction, and installation (iEPCI™) contract by TotalEnergies for its GranMorgu project on Block 58, the first oil and gas development offshore Suriname.
On November 4, FTI and Prysmian signed a collaboration agreement to accelerate the global development of floating offshore wind to help meet the growing demand for renewable electricity. The combined competencies of the companies will provide unique capabilities to pioneer a complete water column solution, from seabed to ocean surface.
Also, on October 7, FTI was awarded an iEPCI™ contract by BP for its greenfield Kaskida development in the Gulf of Mexico. Under the contract, FTI will design and manufacture subsea production systems, including 20,000 psi (20K) standardized subsea trees and manifolds.
Robust Financials
FTI’s revenue increased 14.2% year-over-year to $2.35 billion during the third quarter that ended September 30, 2024. Its income before income taxes grew 140.6% from the year-ago value to $272.40 million. The company’s adjusted EBITDA of $386.10 million indicates an increase of 62.6% from the prior year’s quarter.
In addition, the company’s adjusted net income came in at $280.50 million, up 195.6% year-over-year, while adjusted EPS rose 204.8% from the prior-year quarter to $0.64, respectively. Also, the company’s cash and cash equivalents and total assets totaled $837.50 million and $9.72 billion as of September 30, 2024.
Buoyed by its financial performance, FTI projects Subsea segment revenue in the range of $7.60 - 7.80 billion and Surface Technologies segment revenue in the range of $1.20 - 1.35 billion. Also, it expects free cash flow between $425 and 575 million.
Solid Historical Growth
FTI’s revenue and EBITDA have grown at respective CAGRs of 10.7% and 46.2% over the past three years. The company’s EBIT has increased at a CAGR of 222% over the same timeframe, while its net income and EPS have improved at CAGRs of 70.1% and 73.1%, respectively.
Favorable Analyst Estimates
Analysts expect FTI’s revenue for the fourth quarter (ending December 2024) to increase 10.2% year-over-year to $2.29 billion. The consensus EPS estimate of $0.35 for the ongoing quarter indicates a 153% year-over-year improvement. Moreover, FTI has an impressive earnings surprise history, having topped consensus revenue and EPS estimates in each of the trailing four quarters.
For the fiscal year ending December 2024, the company’s revenue and EPS are expected to grow 15.1% and 269.6% year-over-year to $9.01 billion and $1.66, respectively. Additionally, Street expects its revenue and EPS for the fiscal year 2025 to increase 9.8% and 20.6% year-over-year to $9.89 billion and $2.01, respectively.
High Profitability
FTI’s trailing-12-month Levered FCF margin of 13.43% is 93.1% higher than the industry average of 6.95%. Its trailing-12-month ROCE of 20.16% is 63% higher than the industry average of 12.37%. Similarly, its trailing-12-month ROTC of 11.51% is considerably higher than the industry average of 6.96%.
POWR Ratings Reflect Optimism
FTI’s POWR Ratings reflect its solid fundamentals. The stock has an overall rating of B, which translates to a Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. FTI has a B grade for Growth, which is in sync with its impressive historical growth.
In addition, the stock has a B grade for Quality and Sentiment, consistent with its higher-than-industry profitability and optimistic analysts’ estimates.
FTI is ranked #10 in the 52-stock Energy - Services industry.
Beyond what I have stated above, we have also given FTI grades for Value, Momentum, and Stability. Get access to all the FTI ratings here.
Bottom Line
FTI reported better-than-expected earnings for the third quarter of fiscal 2024, beating analysts' estimates. The company’s strong industry footing, significant contracts and alliances, and solid financial performance position it for bright long-term prospects. Also, the company’s
The company’s Board declared a quarterly dividend of $0.05 per share and also authorized additional share repurchases of up to $1 billion, reflecting its continued strong cash generation.
Given FTI’s solid financials, accelerating profitability, reliable dividends, and promising growth outlook, this stock could be an ideal buy now.
How Does TechnipFMC plc (FTI) Stack Up Against Its Peers?
While FTI has an overall POWR Rating of B, investors could also check out these other stocks within the Energy - Services industry with A (Strong Buy) or B (Buy) ratings: Vibra Energia S/A ADR (PETRY), Ranger Energy Services, Inc. (RNGR), and Trican Well Service Ltd. (TOLWF).
For exploring more A and B-rated energy stocks, click here.
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FTI shares were trading at $31.09 per share on Monday morning, down $0.28 (-0.89%). Year-to-date, FTI has gained 55.54%, versus a 28.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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