TechnipFMC plc (FTI) Bundle
Understanding TechnipFMC plc (FTI) Revenue Streams
Understanding TechnipFMC plc’s Revenue Streams
The revenue of TechnipFMC plc for the nine months ended September 30, 2024, was $6,716.0 million, representing an increase of $969.5 million or 16.9% compared to the same period in 2023, when revenue was $5,746.5 million.
Breakdown of Primary Revenue Sources
TechnipFMC generates revenue primarily from two segments: Subsea and Surface Technologies. For the nine months ended September 30, 2024:
- Subsea Revenue: $5,772.0 million, an increase of $1,057.7 million or 22.4% from $4,714.3 million in 2023.
- Surface Technologies Revenue: $944.0 million, a decrease of $88.2 million or (8.5%) from $1,032.2 million in 2023.
| Segment | Revenue (2024) | Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Subsea | $5,772.0 million | $4,714.3 million | $1,057.7 million | 22.4% |
| Surface Technologies | $944.0 million | $1,032.2 million | ($88.2 million) | (8.5%) |
| Total | $6,716.0 million | $5,746.5 million | $969.5 million | 16.9% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the company reflects significant changes. The Subsea segment saw a substantial increase in revenue, largely driven by a 49.6% increase in backlog as of December 31, 2023, compared to the previous year. Conversely, the Surface Technologies segment experienced a decline due to lower drilling and completion activities in critical regions.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution to overall revenue was as follows:
- Subsea: 85.9% of total revenue
- Surface Technologies: 14.1% of total revenue
Analysis of Significant Changes in Revenue Streams
Notably, the increase in Subsea revenue was attributed to higher installation and flexible pipe supply activities, particularly in regions such as Angola, the United States, Guyana, Australia, Brazil, and the United Kingdom. In contrast, the Surface Technologies segment's decrease was primarily due to the sale of the Measurement Solutions business (MSB) and lower activity levels in Europe and North America.
For the three months ended September 30, 2024, total revenue was $2,348.4 million, up by $291.5 million or 14.2% from $2,056.9 million in the same period of 2023.
| Quarter | Revenue (2024) | Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Q3 | $2,348.4 million | $2,056.9 million | $291.5 million | 14.2% |
A Deep Dive into TechnipFMC plc (FTI) Profitability
A Deep Dive into TechnipFMC plc's Profitability
Gross Profit: For the three months ended September 30, 2024, the gross profit was $493.8 million, an increase from $366.9 million in the same period of 2023. For the nine months ended September 30, 2024, the gross profit rose to $1,336.1 million compared to $920.5 million in 2023.
Operating Profit: The operating profit for Q3 2024 was $288.8 million, up from $177.7 million in Q3 2023. For the nine months ended September 30, 2024, the operating profit was $723.1 million, compared to $397.9 million in the same period of the previous year.
Net Profit: The net income attributable to TechnipFMC plc for Q3 2024 was $274.6 million, a significant increase from $90.0 million in Q3 2023. For the nine months ended September 30, 2024, net income rose to $618.2 million from $3.2 million in the prior year.
Profitability Margins
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Margin | 21.0% | 17.8% | 19.9% | 16.0% |
| Operating Margin | 12.3% | 8.6% | 10.8% | 6.9% |
| Net Margin | 11.7% | 4.4% | 9.2% | 0.1% |
Trends in Profitability Over Time
Comparing the first nine months of 2024 to 2023, revenue increased from $5,746.5 million to $6,716.0 million, marking a growth of 16.9%. The gross profit margin improved significantly, indicating enhanced operational efficiency.
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, TechnipFMC's operating margin of 10.8% for the first nine months of 2024 exceeds the industry average of approximately 8.0%, reflecting superior cost management and operational efficiency.
Analysis of Operational Efficiency
Corporate expenses declined by 57.7% to $(87.0) million for the nine months ended September 30, 2024, compared to $(205.6) million in 2023, primarily due to a non-recurring legal settlement charge in the previous year. This reduction in corporate expenses positively impacted overall profitability.
The operating profit as a percentage of revenue rose to 14.2% in Q3 2024 from 10.4% in Q3 2023, indicating improved operational efficiency.
Overall, TechnipFMC's profitability metrics demonstrate a robust financial performance in 2024, driven by increased revenues, improved operating margins, and effective cost management strategies.
Debt vs. Equity: How TechnipFMC plc (FTI) Finances Its Growth
Debt vs. Equity: How TechnipFMC plc Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported a total short-term debt of $310.4 million and long-term debt of $656.3 million. This compares to short-term debt of $153.8 million and long-term debt of $913.5 million as of December 31, 2023.
| Debt Category | September 30, 2024 (in millions) | December 31, 2023 (in millions) |
|---|---|---|
| Short-term Debt | $310.4 | $153.8 |
| Long-term Debt | $656.3 | $913.5 |
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, was calculated at 0.22, indicating a lower reliance on debt relative to equity. This is in contrast to the industry average of approximately 0.5, suggesting a more conservative capital structure.
Recent Debt Issuances and Credit Ratings
On March 7, 2024, S&P upgraded the company's credit rating to BBB- from BB+, indicating improved creditworthiness. Additionally, on June 27, 2024, Fitch assigned a first-time long-term issuer default rating of BBB- to the company.
Balancing Debt Financing and Equity Funding
The company has strategically maintained a balance between debt financing and equity funding. For the nine months ended September 30, 2024, the company repurchased $330.1 million of ordinary shares under its share repurchase program. The total share repurchase authorization was increased to $800.0 million, reflecting a commitment to returning capital to shareholders while managing debt levels.
Net Debt Position
As of September 30, 2024, the net debt was calculated at ($129.2 million), which indicates that cash and cash equivalents exceed total debt obligations. This is an improvement from a net debt of ($115.6 million) as of December 31, 2023.
| Net Debt Calculation | September 30, 2024 (in millions) | December 31, 2023 (in millions) |
|---|---|---|
| Cash and Cash Equivalents | $837.5 | $951.7 |
| Short-term Debt | ($310.4) | ($153.8) |
| Long-term Debt | ($656.3) | ($913.5) |
| Net Debt | ($129.2) | ($115.6) |
As of September 30, 2024, the company demonstrated a solid financial position with a focus on maintaining a manageable debt load while effectively utilizing equity to support growth initiatives.
Assessing TechnipFMC plc (FTI) Liquidity
Assessing TechnipFMC plc's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.14, calculated as current assets of $5,190.2 million divided by current liabilities of $4,561.9 million.
Quick Ratio: The quick ratio stands at 0.83, derived from current assets less inventories ($4,047.8 million) divided by current liabilities ($4,561.9 million).
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $628.3 million, reflecting a significant increase from the previous year, primarily due to improved cash flow and effective management of current liabilities.
| Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Assets | $5,190.2 million | $5,195.4 million |
| Current Liabilities | $4,561.9 million | $4,468.6 million |
| Working Capital | $628.3 million | $726.8 million |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, operating cash flows provided $382.1 million, a turnaround from $(8.1 million) in the same period of 2023.
Investing Cash Flow: Investing activities provided $36.7 million during the nine months ended September 30, 2024, compared to cash used of $(63.5 million) in 2023.
Financing Cash Flow: Financing activities used $(522.5 million) in 2024, compared to $(276.7 million) in 2023, driven by increased share repurchases and dividends paid.
| Cash Flow Activities | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Operating Cash Flow | $382.1 million | $(8.1 million) |
| Investing Cash Flow | $36.7 million | $(63.5 million) |
| Financing Cash Flow | $(522.5 million) | $(276.7 million) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents totaled $837.5 million, while net debt stands at $(129.2 million), indicating a net cash position. This is an improvement from $(115.6 million) as of December 31, 2023, showcasing strengthened liquidity.
The company maintains a Revolving Credit Facility with availability of $1,250 million, and there were no outstanding letters of credit as of September 30, 2024.
| Debt Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Cash and Cash Equivalents | $837.5 million | $951.7 million |
| Short-term Debt | $310.4 million | $153.8 million |
| Long-term Debt | $656.3 million | $913.5 million |
| Net Debt | $(129.2 million) | $(115.6 million) |
Is TechnipFMC plc (FTI) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of the company, we will analyze key financial ratios including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 16.4, with the diluted earnings per share (EPS) reported at $0.63 for the latest quarter. This suggests that investors are willing to pay $16.40 for every dollar of earnings.
Price-to-Book (P/B) Ratio
The P/B ratio is measured at 2.5, indicating that the stock is trading at 2.5 times its book value. The book value per share is approximately $4.00.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 10.8, with an enterprise value of $7.4 billion and EBITDA for the last twelve months at $685 million.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $10.50 and a high of $16.75. As of the latest closing price, the stock is trading at $15.30.
Dividend Yield and Payout Ratios
The current dividend yield is 1.3%, with an annual dividend of $0.20 per share. The payout ratio is approximately 31% of the net income.
Analyst Consensus
According to recent analyst ratings, the consensus is a buy with a median target price of $17.00, suggesting an upside potential of approximately 11% from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | 16.4 |
| P/B Ratio | 2.5 |
| EV/EBITDA Ratio | 10.8 |
| 12-Month Stock Price Range | $10.50 - $16.75 |
| Current Stock Price | $15.30 |
| Dividend Yield | 1.3% |
| Annual Dividend | $0.20 |
| Payout Ratio | 31% |
| Analyst Consensus | Buy |
| Median Target Price | $17.00 |
These metrics provide a comprehensive view of the company's valuation, allowing investors to make informed decisions regarding their investment strategy.
Key Risks Facing TechnipFMC plc (FTI)
Key Risks Facing TechnipFMC plc
The financial health of TechnipFMC plc is influenced by a variety of internal and external risk factors that investors should consider. These risks encompass industry competition, regulatory changes, and market conditions.
Industry Competition
The energy sector is characterized by intense competition, particularly within subsea and surface technology services. The company must contend with both established players and emerging competitors. As of September 30, 2024, TechnipFMC reported total revenue of $6,716.0 million, which reflects a significant increase from $5,746.5 million during the same period in 2023. However, the pressure from competitors can impact pricing strategies and profit margins.
Regulatory Changes
Regulatory frameworks governing the energy sector can shift rapidly, impacting operational costs and compliance requirements. The effective tax rate for the nine months ended September 30, 2024, was 14.1%, a notable decrease from 95.1% in the prior year, primarily due to the release of a valuation allowance in the United States .
Market Conditions
Fluctuations in oil and gas prices directly affect demand for the company’s services. For instance, subsea revenue increased by $1,057.7 million during the nine months ended September 30, 2024, driven by higher energy demand and upstream spending. Conversely, surface technologies revenue decreased by $88.2 million due to lower drilling activity in North America and Europe .
Operational Risks
Operational risks include project execution challenges and cost overruns. For example, the company reported a net income of $625.6 million for the nine months ended September 30, 2024, a substantial increase from just $5.2 million in the same period of 2023. This reflects improved operational performance but also highlights the variability inherent in project-based work.
Financial Risks
Financial risks involve exposure to currency fluctuations, interest rate changes, and credit risk. As of September 30, 2024, the company reported net debt of $129.2 million, a slight increase from $115.6 million at the end of 2023. This level of debt indicates a manageable financial risk profile, yet vigilance is required as market conditions evolve.
Strategic Risks
Strategic risks include the ability to adapt to technological changes and shifts in customer preferences. The company is focusing on enhancing its technological capabilities to maintain competitive advantages. The order backlog for subsea projects as of September 30, 2024, stood at $13,732.1 million, an increase from $12,164.1 million at year-end 2023. This backlog is vital for future revenue generation but must be managed effectively to mitigate risks associated with project execution.
Mitigation Strategies
TechnipFMC has implemented various strategies to mitigate risks. These include diversifying its service offerings, optimizing operational efficiencies, and maintaining a robust financial position. The company’s operating profit for the nine months ended September 30, 2024, reached $723.1 million, reflecting a significant improvement from $397.9 million in the previous year.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | Intense competition in energy sector | Revenue pressure |
| Regulatory Changes | Shifts in compliance requirements | Impact on operational costs |
| Market Conditions | Fluctuations in oil and gas prices | Revenue variability |
| Operational Risks | Project execution challenges | Potential cost overruns |
| Financial Risks | Currency fluctuations and credit risks | Manageable debt levels |
| Strategic Risks | Adapting to technological changes | Need for continuous innovation |
In summary, the company faces a multifaceted risk landscape that requires ongoing management and strategic planning to safeguard its financial health and maintain competitive positioning.
Future Growth Prospects for TechnipFMC plc (FTI)
Growth Opportunities
Future growth prospects for TechnipFMC plc are shaped by several key drivers, including product innovations, market expansions, and strategic acquisitions.
Key Growth Drivers
- Product Innovations: The company has focused on developing advanced technologies in subsea engineering and surface technologies. Recent advancements include enhanced flexible pipe systems and integrated engineering, procurement, construction, and installation (iEPCI) solutions that cater to the increasing demand for efficient energy solutions.
- Market Expansions: TechnipFMC is expanding its footprint in high-demand regions, particularly in the Middle East and Latin America. This is evidenced by significant revenue growth from areas such as Angola ($257.5 million), Brazil ($195.0 million), and Guyana ($176.9 million) during the nine months ended September 30, 2024, compared to the same period in 2023.
- Acquisitions: The strategic sale of the Measurement Solutions business generated a gain of $75.2 million, which is expected to bolster cash reserves for future investments and acquisitions.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, increased by $969.5 million (16.9%) compared to the same period in 2023, totaling $6,716.0 million. Earnings projections indicate a continued upward trend, with operating profit for the subsea segment showing a robust increase of $325.2 million (81.7%), reaching $723.1 million.
Strategic Initiatives and Partnerships
- Joint Ventures: TechnipFMC has established partnerships with major energy companies, enhancing its capabilities in project execution and technology sharing.
- Research and Development: Continued investments in R&D, with expenses of $48.2 million for the nine months ended September 30, 2024, support the development of innovative solutions.
Competitive Advantages
TechnipFMC's competitive advantages include a strong order backlog, with total confirmed orders valued at $14.7 billion as of September 30, 2024. This backlog is a critical indicator of future revenue, with approximately 12.1% expected to be recognized in 2024. The company’s investment grade credit rating, upgraded to BBB- by S&P, enhances its financial stability and access to capital for growth initiatives.
| Growth Driver | Details |
|---|---|
| Product Innovations | Advanced flexible pipe systems and iEPCI solutions |
| Market Expansions | Revenue from Angola: $257.5 million, Brazil: $195.0 million, Guyana: $176.9 million |
| Acquisitions | Gain from Measurement Solutions sale: $75.2 million |
| Revenue Growth | Increase of $969.5 million (16.9%) to $6,716.0 million |
| Operating Profit Growth | Subsea operating profit increase of $325.2 million (81.7%) |
| Order Backlog | Total order backlog: $14.7 billion |
| Credit Rating | Upgraded to BBB- by S&P |
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Article updated on 8 Nov 2024
Resources:
- TechnipFMC plc (FTI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of TechnipFMC plc (FTI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View TechnipFMC plc (FTI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.