Orders And Key Projects: In Q2 2024, TechnipFMC’s (FTI) Subsea segment inbound orders were $2.8 billion, which amounted to a book-to-bill ratio of 1.4x. This is a healthy ratio pointing to robust revenue visibility. Given the strong improvement in the Subsea segment’s operating margin in Q2, the company expects the margin to exceed the high-end of its guidance for FY2024. The company increased the revenue guidance for the Subsea segment by 4% from the previous guidance. It also expanded the adjusted EBITDA margin guidance by 75 basis points of the prior guidance, suggesting an improved outlook for the year. In aggregate, it expects to achieve $30 billion in orders over the three years ending 2025.

Some key Subsea project awards in Q2 included Woodside’s Xena Phase 3, Energean’s Katlan development, the Whiptail project in Guyana, and ExxonMobil’s project in the Stabroek Block. In Surface Technologies, the company optimized its business in the Americas and utilized its new in-country capacity in the Middle East.

Segment Results Differed In Q2: Quarter-over-quarter, revenues in the company’s subsea operating segment rose 16% in Q2. The top line in the Surface Technologies segment increased by 2.9%. Operating income in the subsea segment increased significantly by 70% in Q2. In contrast, operating income in the Surface Technologies segment decreased by 77%. However, readers should keep in mind that a year earlier, the company benefited from the gain on the disposal of the Measurement Solutions business.

Higher iEPCI project activity in the North Sea and Gulf of Mexico led to higher revenue. Its operating income growth is backed by higher project activity and improved earnings mix from backlog. On the other hand, revenue lost from the disposition of the Measurement Solutions business in March 2024 lowered its topline in Surface Technologies in Q2 2024.

Cash Flows And Balance Sheet Strengthened: FTI’s cash flow from operations strengthened and turned positive in 1H 2024 from a steeply negative cash flow a year ago. As a result, its FCF also turned mildly positive. Debt-to-equity (0.76x) also showed an improvement from FY2023, due primarily to lower long-term debt. During Q2, it repurchased shares worth $100 million to improve shareholder returns.

Thanks for reading the FTI take three, designed to give you three critical takeaways from FTI’s earnings report.  Soon, we will present a second update on HAL earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.