TechnipFMC(US:FTI)2024-07-25 14:36Financial Data and Key Metrics Changes - The company reported revenue of $2.3 billion and adjusted EBITDA of $379 million, resulting in an adjusted EBITDA margin of 16.3% when excluding foreign exchange impacts [22][26] - Total company inbound orders were $3.1 billion, with subsea orders accounting for $2.8 billion and a book-to-bill ratio of 1.4 [19][26] - Total company backlog reached a record level of $13.9 billion, driven by a book-to-bill above 1 in 10 of the last 11 quarters [12][31] Business Line Data and Key Metrics Changes - In the Subsea segment, revenue increased by 16% sequentially to $2 billion, with adjusted EBITDA of $357 million and a margin of 17.7%, up 370 basis points from the previous quarter [44][45] - Surface Technologies reported revenue of $316 million, a 3% sequential increase, primarily driven by increased activity in the Middle East [27][30] Market Data and Key Metrics Changes - The company emphasized the importance of Guyana, where it has established a strong presence and received multiple project awards, including ExxonMobil's Whiptail project [8][10] - The company also highlighted growth opportunities in emerging markets such as Mozambique, Suriname, and Namibia, indicating a robust pipeline of future projects [35][56] Company Strategy and Development Direction - The company is focused on developing local talent and partnerships in Guyana, with approximately 80% of its workforce being local [23][11] - The introduction of innovative technologies like Subsea 2.0 is expected to improve project economics and drive sustainable differentiation in the market [21][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a Subsea adjusted EBITDA margin exceeding 16.5% for the current year, reflecting a significant improvement from previous forecasts [20][48] - The company anticipates continued growth in backlog and revenue, with an expectation of total company full-year adjusted EBITDA of approximately $1.35 billion [30][51] Other Important Information - The company received investment grade ratings from Fitch and S&P, which will lower interest rates and fees, enhancing financial flexibility [29] - Free cash flow for the quarter was reported at $180 million, with capital expenditures of $51 million [28] Q&A Session Summary Question: Sustainability of the subsea market beyond current projects - Management indicated that clients are making earlier commitments for future projects, reflecting confidence in the market's durability and improved project economics [75][76] Question: Opportunities in emerging basins - Management highlighted Guyana, Mozambique, Namibia, and Suriname as key areas for future growth, with a focus on local partnerships and sustainable development [35][56] Question: Capacity and supply chain management - Management acknowledged potential capacity challenges but emphasized the scalability of their new business model, which allows for improved efficiency without significant capital expenditure [92] Question: Client confidence in long-term projects - Management noted that clients are increasingly focused on securing quality capacity for future projects, leading to direct awards and long-term partnerships [75][76] Question: Utilization of Subsea 2.0 technology - Management reported that about 50% of current orders are for Subsea 2.0, with expectations for increased utilization as more orders flow through [88][72]