Executive Summary / Key Takeaways

• Transformative Strategy Yields Superior Performance: TechnipFMC's eight-year journey since its 2017 merger, focused on integration through iEPCI and Subsea 2.0, has fundamentally reshaped its operating model, delivering significant and sustainable improvements in subsea project economics and financial results.
• Technological Edge Drives Market Leadership: Proprietary innovations like Subsea 2.0, HISEP, Hybrid Flexible Pipe, and All-Electric solutions provide quantifiable benefits such as reduced costs and accelerated delivery, cementing TechnipFMC's competitive moat and driving over 80% of its Subsea inbound orders through direct awards.
• Robust Financials and Strong Outlook: The company reported Q3 2025 revenue of $2.65 billion and adjusted EBITDA of $531 million (20.1% margin), with full-year 2025 adjusted EBITDA projected at approximately $1.83 billion. Subsea is poised for double-digit EBITDA growth in 2026, outpacing revenue growth and expanding margins to 20.5%-22%.
• Exceptional Cash Generation and Shareholder Returns: TechnipFMC is on track for $1.3 billion to $1.45 billion in free cash flow for 2025, committing to return at least 70% of this to shareholders, supported by a strong balance sheet and investment-grade credit ratings.
• Resilient Offshore Market Amidst Global Dynamics: Despite broader economic uncertainties, the offshore market remains robust, with deepwater attracting increasing capital due to superior economics and TechnipFMC's proven ability to deliver projects with schedule certainty, extending visibility through the end of the decade.

The Deepwater Transformation: A New Paradigm for Energy Services

TechnipFMC plc, with roots tracing back to 1884, has evolved into a global leader in energy projects, technologies, systems, and services. Operating through its Subsea and Surface Technologies segments, the company has strategically positioned itself at the forefront of offshore oil and natural gas exploration and production. The pivotal moment in its modern history was the January 2017 merger of Technip and FMC Technologies, a deliberate move towards integration rather than mere consolidation. This strategic choice aimed to fundamentally alter subsea economics by relentlessly pursuing cycle time reduction and enhancing project certainty for clients.

This transformative approach has given rise to TechnipFMC's distinctive commercial models: the integrated Engineering, Procurement, Construction, and Installation (iEPCI) solution and the configurable product architecture known as Subsea 2.0. These innovations are not just buzzwords; they are the foundational tools that have enabled the company to deliver significant and sustainable improvements across its operations. By streamlining processes and leveraging advanced technology, TechnipFMC has created a unique value proposition that resonates deeply with its discerning investment audience and, more importantly, with its global clientele.

Technological Edge: The Engine of Differentiation

TechnipFMC's core investment thesis is inextricably linked to its technological differentiation and innovation. The company's iEPCI model integrates the entire subsea field architecture, from subsea production systems (SPS) to subsea umbilicals, risers, and flowlines (SURF), and installation vessels. This holistic approach contrasts sharply with traditional, fragmented project execution, offering clients a single point of accountability and significantly de-risking complex deepwater developments.

Complementing iEPCI is Subsea 2.0, a pre-engineered, configure-to-order product platform. This technology simplifies projects by leveraging a Configure-to-Order (CTO) model, which has tangible and quantifiable benefits. Subsea 2.0 has led to up to 25% lower product costs and a shortened 12-month delivery time for subsea production equipment. The company has demonstrated the ability to more than double manufacturing output from its existing capacity for this product portfolio, and it can accelerate equipment delivery by up to nine months by eliminating product engineering hours and streamlining the supply chain. This efficiency translates directly into improved project returns for clients and enhanced profitability for TechnipFMC.

Beyond these core platforms, TechnipFMC is actively engaged in pioneering new technologies that address critical industry challenges. The HISEP project, developed in partnership with Petrobras (PBR), is a groundbreaking high-pressure separation process that captures CO2-rich dense gases directly from the well stream on the seafloor for injection back into the reservoir. This innovation is a first-of-its-kind solution for carbon capture and storage (CCS) in a subsea environment.

Another significant development is the Hybrid Flexible Pipe, designed to combat stress corrosion cracking in high-CO2 flexible pipe applications, particularly in pre-salt fields. This disruptive and scalable technology not only provides unrivaled corrosion resistance but also offers a lighter product, positively impacting manufacturing, transportation, and installation costs. The Hybrid Flexible Pipe is currently in the qualification process, with the potential to expand the total market for flexible pipe and even displace some rigid pipe applications.

TechnipFMC is also at the forefront of All-Electric Technology, which is finding diverse applications. It is crucial for CCS projects, as evidenced by the industry's first all-electric subsea system for the Northern Endurance Partnership. For brownfield tiebacks, all-electric solutions can increase the radius from the host facility by approximately four times, enabling the economic tie-back of stranded reserves to existing infrastructure. Furthermore, the company is developing a novel solution to retrofit hydraulic trees with electric actuation in situ on the seafloor using remote-operated vehicles, potentially avoiding months of lost production associated with traditional retrieval and reinstallation. These technological advancements are not just about new products; they are about creating a sustainable competitive moat, driving higher average selling prices, lowering operational costs, expanding margins, and securing TechnipFMC's long-term growth strategy.

Competitive Landscape and Strategic Positioning

In a sector often characterized by consolidation, TechnipFMC's strategic choice of integration sets it apart. While competitors like Baker Hughes (BKR), SLB (SLB), and Halliburton (HAL) offer broad oilfield services, and Subsea 7 (SUBCY) specializes in subsea construction, TechnipFMC's iEPCI and Subsea 2.0 offerings provide a unique, end-to-end integrated solution. This differentiation is a critical factor in its ability to secure a significant portion of its business through direct awards, with over 80% of total Subsea inbound in 2024 coming from such channels. This effectively shrinks the "total available market accessible by the rest" and underscores the trust clients place in TechnipFMC's execution capabilities.

The company's competitive advantage in Subsea is further amplified by its "asset-light" philosophy. Instead of investing heavily in new assets, TechnipFMC focuses on efficiency. By delivering subsea projects in two years instead of three, it effectively creates 33% more capacity with its existing fleet, demonstrating higher returns without significant capital expenditure. This contrasts with competitors who may pursue scale through consolidation, which, as management notes, "does not fundamentally alter the market dynamic" but rather results in "more of the same."

In Surface Technologies, TechnipFMC has proactively refocused its business, reducing its North America footprint by 50% over the last three years while improving operating margins and increasing cash flow. The segment's strength lies in international markets, particularly the Middle East, where it benefits from in-country investments and strong relationships with national oil companies like ADNOC and Saudi Aramco. This high-end market demands specialized equipment and local presence, creating a differentiated growth opportunity where TechnipFMC's deep expertise and qualified technology provide a significant competitive edge against players with a more North American-centric background.

Financial Performance: A Story of Growth and Efficiency

TechnipFMC's financial performance reflects the success of its strategic transformation. For the three months ended September 30, 2025, the company reported total revenue of $2,647.30 million, a 12.7% increase compared to the same period in 2024. Adjusted EBITDA reached $531 million, with a robust margin of 20.1% (excluding foreign exchange impacts).

The Subsea segment was a primary driver of this growth, with revenue increasing 14.4% year-over-year to $2,319.20 million in Q3 2025. This was fueled by a higher backlog and increased activity across iEPCI and subsea services in key regions like Brazil, the United States, and Israel. Subsea operating profit surged to $401.30 million, representing a 17.30% margin, up from 14.20% in Q3 2024. The adjusted EBITDA margin for Subsea stood at an impressive 21.8% in Q3 2025.

Surface Technologies also contributed positively, with revenue of $328.10 million in Q3 2025, a 2.4% increase year-over-year. This growth was largely due to higher activity in the Middle East, Europe, and Africa, offsetting declines in North America and Latin America. The segment's operating profit was $36.80 million, achieving an 11.20% margin, and an adjusted EBITDA margin of 16.4%.

The company's liquidity and capital resources are exceptionally strong. As of September 30, 2025, TechnipFMC's net cash position increased to $438.60 million. The company significantly reduced its debt by $258.30 million in Q3 2025, including the early repayment of its 6.50% Senior Notes due February 2026. Cash provided by operating activities for the nine months ended September 30, 2025, dramatically increased by $928.90 million year-over-year to $1,311 million, driven by strong Subsea volume, an improved project mix, and advance payments from customers. This robust cash generation has enabled the company to achieve investment-grade ratings from all three major agencies.

Outlook and Guidance: Sustained Momentum

TechnipFMC's outlook is characterized by confidence and continued growth, particularly in its Subsea segment. The company expects to exceed $10 billion in Subsea inbound orders in 2025, fulfilling its three-year goal of $30 billion by year-end. This strong inbound activity underpins a positive long-term view, with management anticipating robust activity through the end of the decade.

For the full year 2025, TechnipFMC has raised its guidance, now expecting total company adjusted EBITDA to approximate $1.83 billion (excluding foreign exchange impacts) and free cash flow to be in the range of $1.3 billion to $1.45 billion. This reflects the "continued strength in our cash conversion" and the structural improvements in its operating model.

Looking ahead to 2026, TechnipFMC has provided early guidance for its Subsea segment, projecting revenue in the range of $9.1 billion to $9.5 billion and an adjusted EBITDA margin of 20.5% to 22%. This implies double-digit growth in adjusted EBITDA, which is "essentially double the anticipated growth in revenue," further expanding margins and improving returns. This confidence stems from a robust backlog, the increasing mix of higher-margin Subsea 2.0 and iEPCI projects, and the ongoing industrialization journey across the organization. By the end of 2025, Subsea 2.0 capacity utilization is expected to approach 40%, with orders continuing to grow as a percentage of total inbound.

While the outlook for Surface Technologies in 2026 is less certain due to market unpredictability, the segment's focus on less cyclical international markets, particularly the Middle East, provides a stable foundation. The company estimates that 95% of its total company revenue in 2025 will be generated from activity outside of the U.S. land market, significantly limiting its exposure to commodity price fluctuations and tariffs (with an estimated impact of less than $20 million to adjusted EBITDA).

TechnipFMC is committed to returning value to shareholders, pledging to distribute at least 70% of its free cash flow in both 2025 and 2026. This commitment is supported by a recent authorization for an additional $2 billion in share repurchases, bringing the total remaining authorization to $2.3 billion. The company's asset-light capital allocation strategy, with capital expenditures remaining below its long-term guidance of 3.5%-4.5% of revenue, ensures sustained financial flexibility.

Risks and Considerations

Despite a compelling investment thesis, potential risks warrant consideration. The energy sector remains susceptible to unpredictable trends in oil and natural gas demand and price. However, TechnipFMC's offshore portfolio boasts attractive breakevens (sub-$40, with brownfield tiebacks in the low $20s), providing resilience against short-term commodity price volatility. Geopolitical events and global trade tensions could also impact operations, though the company's diversified international footprint helps mitigate some regional exposures. Competition, particularly from larger, more diversified players or those pursuing consolidation, remains a factor. However, TechnipFMC's unique integrated offerings and technological leadership create a significant competitive moat that is difficult to replicate. The inability to continuously develop and protect new technologies could erode its competitive advantage over time, underscoring the importance of ongoing R&D.

Conclusion

TechnipFMC has successfully navigated a transformative period, emerging as a differentiated leader in the energy services sector. Its strategic shift towards integration, embodied by iEPCI and Subsea 2.0, has not only optimized project execution and reduced cycle times but has also cultivated deep, trust-based relationships with clients, leading to a dominant share of direct awards. This technological and operational supremacy is translating directly into robust financial performance, characterized by expanding margins, strong cash flow generation, and a clear commitment to shareholder returns.

The company's confident outlook for Subsea, projecting double-digit EBITDA growth and continued margin expansion into 2026 and beyond, underscores the sustainability of its model. With a resilient offshore market, a growing pipeline of high-quality opportunities, and a disciplined approach to capital allocation, TechnipFMC is well-positioned to capitalize on the evolving energy landscape. For investors seeking exposure to a company with a proven track record of innovation, operational excellence, and a clear path to enhanced shareholder value, TechnipFMC presents a compelling long-term investment opportunity, driven by its enduring technological leadership and strategic foresight.