On Thursday, TechnipFMC (NYSE:FTI) saw its stock price target increased by BTIG from $28.00 to $30.00, while maintaining a Buy rating on the stock. The adjustment follows the company's first-quarter 2024 earnings release, which revealed an adjusted EBITDA of approximately $257 million, surpassing the consensus estimate by roughly 11%.
The earnings beat was attributed to higher-than-anticipated Subsea revenues, which reached approximately $1.73 billion, a slight sequential increase and above the consensus forecast of approximately $1.65 billion. Subsea EBITDA margins also improved, registering at 14.0%, an increase of around 90 basis points sequentially and approximately 375 basis points year-over-year.
TechnipFMC's backlog growth was highlighted, with a book-to-bill ratio of approximately 1.4x, a significant jump from the previous quarter's 0.7x. The Subsea order intake stood at approximately $2.4 billion, marking an almost 90% increase sequentially. This marks the eighth quarter since the start of 2022 that the subsea book-to-bill ratio has exceeded 1.0x, with the fourth quarter of 2023 being the sole exception.
Still, Surface revenue did not meet expectations, coming in at around $307 million, which is approximately 5% below the consensus of around $324 million. Surface EBITDA margins were at 13.5%, declining about 120 basis points sequentially but improving around 130 basis points year-over-year. The lower results were partly due to decreased activity in North America, with the average frac count down by approximately 6% year-over-year.
The company also addressed the recent disposal of Measurement Solutions, which was finalized in late March. The surface backlog now stands at approximately $1.0 billion, slightly down from $1.1 billion in the previous quarter. Despite this, TechnipFMC anticipates that onshore activity in Saudi Arabia will provide a tailwind for the Surface segment.
TechnipFMC is optimistic about the future, citing the expected rise in global subsea spending, which is projected to increase at a compound annual growth rate of approximately 7.5% through 2027. This trend is anticipated to continue driving margin expansion in the medium term.
InvestingPro Insights
Following the upbeat earnings report from TechnipFMC, real-time data and analysis from InvestingPro provide additional context for investors considering the company's stock. The market capitalization of TechnipFMC stands at $11.75 billion, reflecting investor confidence in the company's growth prospects. Notably, the company's revenue has grown by 16.38% over the last twelve months as of Q4 2023, indicating robust financial performance.
InvestingPro Tips reveal that analysts expect net income and sales growth for TechnipFMC in the current year, with four analysts having revised their earnings upwards for the upcoming period. This aligns with the company's strong performance and backlog growth highlighted in the recent earnings report. Moreover, TechnipFMC has been trading near its 52-week high, with a significant price uptick of 29.63% over the last six months, underscoring the positive momentum behind the stock.
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