Executive Summary

Q4 revenue $2.37B (+0.8% q/q, +13.9% y/y) and adjusted EBITDA $351M (14.8% margin) as Subsea seasonality and mix compressed margins sequentially; adjusted diluted EPS was $0.54 . Net income was $224.7M (9.5% margin) with a $54M discrete non‑cash tax benefit; adjusted figures exclude $14.6M restructuring and a $3.9M disposal loss .
Commercial momentum remained strong: total inbound $2.92B (Subsea $2.70B), book‑to‑bill ~1.3x; backlog $14.38B (+8.7% y/y) . Free cash flow was $452.7M in Q4; net cash ended at $272.5M .
2025 outlook raised for Subsea: revenue $8.4–$8.8B (from $8.3–$8.7B) and adj. EBITDA margin 19–20% (from 18.5–20%); Company guides FCF $850M–$1.0B and will distribute at least 70% of FCF (≥30% y/y growth in distributions) .
Strategic wins underpin medium‑term trajectory: major iEPCI award for TotalEnergies’ GranMorgu (Suriname) and Shell Bonga North (Nigeria) in Q4; Prysmian collaboration on floating wind adds New Energy optionality .
Stock‑relevant narrative: raised Subsea guidance, robust inbound, substantial FCF and a step‑up to ≥70% FCF payout are key near‑term catalysts; margins dipped sequentially on normal seasonality and mix but management reiterated a path to higher Subsea margins through execution and mix (iEPCI, Subsea 2.0, services) .

What Went Well and What Went Wrong

What Went Well

Strong cash generation and balance sheet: Q4 free cash flow $452.7M; net cash $272.5M; Moody’s upgrade to Baa3 in Jan 2025, making all three agencies investment grade .
Commercial execution: Q4 inbound $2.92B (Subsea $2.70B; book‑to‑bill 1.3x); backlog $14.38B (+8.7% y/y); Q4 awards include a “major” iEPCI for TotalEnergies GranMorgu (Suriname) and “substantial” Shell Bonga North (Nigeria) .
Strategic mix & outlook: Subsea 2.0 and iEPCI adoption accelerated; management raised 2025 Subsea guidance and committed to distributing at least 70% of FCF. CEO: “Both iEPCI and Subsea 2.0 orders reached new records in 2024… Subsea 2.0 tree inbound increasing more than 50%” .

What Went Wrong

Sequential margin compression: Q4 adjusted EBITDA margin 14.8% (vs. 16.4% in Q3) and Subsea adj. EBITDA margin 16.5% (–180 bps q/q) due to seasonally lower vessel‑based activity and project mix .
Surface Technologies softness: revenue $319.4M (–0.3% q/q, –10.6% y/y) on lower North America activity, partly offset by Middle East strength; inbound fell to $225M (–30% q/q) .
Non‑GAAP adjustments and charges: $14.6M restructuring/impairment and $3.9M loss on Measurement Solutions disposal in Q4; earnings also benefited from a $54M discrete tax benefit, complicating GAAP‑to‑non‑GAAP comparability .

Financial Results

Consolidated P&L (USD)

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($B)	$2.08	$2.35	$2.37
Net Income ($M)	$53.0	$274.6	$224.7
Net Income Margin (%)	2.6%	11.7%	9.5%
Diluted EPS ($)	$0.12	$0.63	$0.52
Adjusted EBITDA ($M)	$218.7	$386.1	$351.0
Adjusted EBITDA Margin (%)	10.5%	16.4%	14.8%
Adjusted Diluted EPS ($)	$0.14	$0.64	$0.54

Notes: Adjusted figures exclude restructuring/impairment, disposal gains/losses, and FX as reconciled in exhibits –.

Quarterly Trend (Q2–Q4 2024) – Headline Metrics

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($B)	$2.33	$2.35	$2.37
Diluted EPS ($)	$0.42	$0.63	$0.52
Adjusted EBITDA ($M)	$361.4	$386.1	$351.0
Adjusted EBITDA Margin (%)	15.5%	16.4%	14.8%
Adjusted Diluted EPS ($)	$0.43	$0.64	$0.54

Segments – Subsea

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($M)	$1,720.5	$2,028.1	$2,047.9
Operating Profit ($M)	$145.7	$288.8	$230.0
Operating Margin (%)	8.5%	14.2%	11.2%
Adjusted EBITDA ($M)	$225.5	$371.0	$338.6
Adjusted EBITDA Margin (%)	13.1%	18.3%	16.5%
Inbound Orders ($M)	$1,270.0	$2,463.2	$2,698.5
Ending Backlog ($M)	$12,164.1	$13,732.1	$13,518.1

Subsea comments: Q4 revenue up 1% q/q; margins down on seasonally lower vessel activity and mix; book‑to‑bill ~1.3x .

Segments – Surface Technologies

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($M)	$357.2	$320.3	$319.4
Operating Profit ($M)	$33.2	$33.7	$36.5
Operating Margin (%)	9.3%	10.5%	11.4%
Adjusted EBITDA ($M)	$52.5	$49.1	$53.5
Adjusted EBITDA Margin (%)	14.7%	15.3%	16.8%
Inbound Orders ($M)	$261.6	$321.3	$225.0
Ending Backlog ($M)	$1,066.9	$966.8	$858.2

Surface comments: Lower North America volume; Middle East strength and portfolio optimization supported sequential margin improvement .

KPIs and Cash

KPI	Q2 2024	Q3 2024	Q4 2024
Inbound Orders – Total ($B)	$3.09	$2.78	$2.92
Backlog – Total ($B)	$13.90	$14.70	$14.38
Cash from Ops ($M)	$230.9	$277.9	$578.9
Capital Expenditures ($M)	$50.8	$52.6	$126.2
Free Cash Flow ($M)	$180.1	$225.3	$452.7
Net Cash / (Debt) ($M)	$(260.2)	$(129.2)	$272.5

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Subsea Revenue	FY 2025	$8.3–$8.7B (10/24/24)	$8.4–$8.8B (2/27/25)	Raised
Subsea Adjusted EBITDA Margin	FY 2025	18.5–20% (10/24/24)	19–20% (2/27/25)	Raised midpoint
Surface Revenue	FY 2025	n/a	$1.2–$1.35B	New
Surface Adjusted EBITDA Margin	FY 2025	n/a	15–16%	New
Corporate Expense, net (excl. charges)	FY 2025	n/a	$115–$125M	New
Net Interest Expense	FY 2025	n/a	$45–$55M	New
Effective Tax Rate	FY 2025	n/a	28–32%	New
Capital Expenditures	FY 2025	n/a	~ $340M	New
Free Cash Flow	FY 2025	n/a	$850M–$1.0B	New
Shareholder Distributions	FY 2025	≥50% of FCF (prior practice)	≥70% of FCF; ≥30% y/y growth in distributions	Increased payout target

Note: Prior 2025 guidance available in Oct‑24 was Subsea‑only; Company‑wide 2025 guidance introduced Feb‑25 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Q4 2024 (Current)	Trend
Subsea margins trajectory	Q2: Subsea adj. EBITDA margin 17.7%, expecting continued strength; raised FY24 Subsea margin guidance to 16.5–17% . Q3: Margin at 18.3% and confidence in 2025 Subsea outlook .	Targeting FY25 Subsea adj. EBITDA margin ~19.5% at midpoint; management does not view ~20% as a peak given new operating model (iEPCI, Subsea 2.0) .	Improving
iEPCI and Subsea 2.0 mix	Q2/Q3: iEPCI and Subsea 2.0 embedded in awards (Whiptail, Xena, Katlan; Petrobras flexible pipe) .	2024 records in iEPCI and Subsea 2.0; ~1/3 of current manufacturing tied to Subsea 2.0; orders >50% from 2.0; more to come .	Increasing penetration
Regional activity	Q2: Brazil flexible pipe; Guyana momentum; Middle East ramp in Surface . Q3: Middle East execution, Subsea Asia/LatAm/Canada strength .	Q4: Suriname “major” iEPCI; Nigeria Bonga North; continued Middle East growth; strong tendering in mature/ new basins (Gulf, North Sea, Brazil, W. Africa, Namibia) .	Broadening
Supply chain/vessel seasonality	Normal seasonality noted across 2024 .	Q4 Subsea margins down on seasonally lower vessel‑based activity and project mix .	Seasonality persistent
Capital allocation	Q2/Q3: Buybacks and dividends continued; authorization +$1B in Oct .	Net cash position; ≥70% FCF payout in 2025; preference for small net cash balance while retiring maturities .	More shareholder returns
New Energy/CCS & Offshore Wind	Q3: NEP all‑electric subsea CCS contract moving forward .	Prysmian collaboration for floating wind; NEP notice to proceed reaffirmed .	Building optionality

Management Commentary

CEO on growth drivers: “Both iEPCI and Subsea 2.0 orders reached new records in 2024… Subsea 2.0 tree inbound increasing more than 50% versus the prior year” .
On 2025 distributions: “We are committed to… shareholder distributions—with our 2025 target now being increased to at least 70% of free cash flow—driving year‑over‑year growth in distributions of at least 30%” .
On Subsea margin journey: “20% seemed like maybe a peak… but… we continue to expect to deliver higher margins as we have higher quality backlog… with this new operating model” .
On market outlook: “We have secured $20.2B of subsea orders over the past two years… confidence we will exceed $10B of inbound in the current year… activity will remain robust through the end of the decade” .
On balance sheet and payout: “We are not looking to build a cash balance… it makes sense to have a small net cash position… we will distribute at least 70% of our free cash flow in 2025” .

Q&A Highlights

Subsea margin upside: Management does not consider ~20% a peak; believes integration model (iEPCI) and Subsea 2.0 enable structurally higher margins as higher‑quality backlog converts .
Competitive landscape (Saipem merger): FTI emphasizes integration vs. consolidation; vessel “ecosystem” provides optionality; no change to 2025 inbound outlook or multi‑year view .
Capital returns and leverage: Net cash $272M; plan to retire near‑term maturities and maintain small net cash while distributing ≥70% of FCF in 2025 .
Mix tailwinds: ~1/3 of manufacturing activity already Subsea 2.0; services projected at ~$1.8B revenue in 2025; both support margin expansion .
Market cadence: Strong tendering and direct awards across mature (Gulf of Mexico, North Sea, Brazil) and emerging basins (Suriname, Namibia); 2026 expected “more significant” than 2025 .
Surface outlook: Q1 seasonality more pronounced with North America weakness; ramp in Middle East drives snapback through the year; margins to improve as volume builds .
Capex & ERP: 2025 capex step‑up tied to ERP program; bulk flows through capex with limited opex impact; below long‑term 3.5–4.5% capex framework .
FCF conversion: Targeting >50% EBITDA‑to‑FCF conversion; higher earnings, neutral working capital over cycle, and stable “other” items support improvement .

Estimates Context

S&P Global consensus for Q4 2024 revenue and EPS was unavailable at time of analysis due to data access limits. As a result, we cannot quantify beat/miss versus Street for Q4 2024 at this time (values will be updated when available).
Directionally, revenue grew modestly q/q and margins compressed on seasonality/mix; management’s raised 2025 Subsea guidance and ≥70% FCF payout should drive estimate revisions upward for EBITDA/FCF, while Q1 seasonality in Surface may temper near‑term revenue/EPS run‑rates .

Key Takeaways for Investors

Quality of backlog rising: iEPCI, Subsea 2.0, and services now dominate inbound, supporting sustained margin expansion beyond the ~19–20% Subsea target in 2025 .
Cash is the story: Q4 FCF $453M and net cash position provide ample capacity for ≥70% FCF distribution in 2025 alongside debt retirement; all three agencies now investment grade .
Guidance momentum: Raised Subsea revenue and margin ranges for 2025 underscore confidence; Company FCF guide $850M–$1.0B creates visibility on cash yields .
Watch near‑term margin cadence: Expect typical Q1 seasonality; sequential margin recovery as mix shifts toward higher‑margin execution and services through 2025 .
New awards underpin multi‑year growth: Suriname (major iEPCI), Nigeria (substantial), and broad tendering pipeline across mature and emerging basins point to sustained >$10B Subsea inbound in 2025 and robust 2026 .
Execution transformation is accruing: Lean/industrialization and visual management are embedding earlier risk detection and schedule certainty—key to cycle‑time advantage and pricing power .
Surface pivot continues: International/Middle East ramp and North America optimization are improving margins despite softer NA volumes; monitor Q1 trough and FY trajectory to ~15–16% margin .

Appendix: Additional Data Points

Q4 cash and leverage: Cash & equivalents $1.16B; gross debt $885M; net cash $272.5M .
Q4 corporate items: Corporate expense $37.9M; net interest expense $13.5M; FX loss $3.2M; tax benefit ($17.8M) includes $54M non‑cash valuation allowance release .
Backlog schedule (Subsea): 2025 $5,505M; 2026 $3,482M; 2027+ $4,531M; total $13,518M (FX reduced backlog by $865M) .

Sources: Q4 2024 8‑K and press release, earnings call transcript, and prior quarter press releases .

TechnipFMC plc (FTI)·Q4 2024 Earnings Summary