TechnipFMC Q3 2026 Earnings Call Transcript

TechnipFMC (NYSE:FTI) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

TechnipFMC reported Q3 2026 revenue of $2.9 billion and an adjusted EBITDA of $636 million, reflecting a margin of 22%. Free cash flow was $470 million after excluding foreign exchange impacts.

The company achieved significant operational milestones, including early delivery of subsea equipment for the Grandmargood project in Suriname and the first Subsea 2.0 tree for Chevron’s Gorgon Stage 3 project.

TechnipFMC received multiple awards and recognitions, including the Petrobras Best Suppliers Awards in three categories, reinforcing its technological and execution capabilities.

The company announced subsea inbound orders totaling $2.1 billion for the quarter, including contracts with Azul Energy, Petrobras, and Petronas, highlighting its strong position in the subsea market.

Strategic initiatives included a collaboration agreement with Petronas and an MOU with BP, bolstering client relationships and expanding market opportunities.

Guidance for Q4 anticipates a seasonal decline in subsea revenue and adjusted EBITDA margin. Full-year guidance was increased, with expectations for subsea revenue between $9.6 to $9.8 billion and free cash flow of $1.45 to $1.55 billion.

The company projects a robust pipeline of opportunities with subsea orders expected to reach at least $14.5 billion over the next five quarters, driven by increased offshore activity and client confidence in project execution.

TechnipFMC emphasized its structural growth in the subsea market, attributing it to technological advancements, improved project economics, and global diversification of offshore projects.

Full Transcript

OPERATOR

TechnipFMC Third Quarter 2026 Earnings Conference Call. After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Matt Seinsheimer, Senior Vice President, Investor Relations and Corporate Development. Matt, please go ahead.

Matt Seinsheimer (Senior Vice President, Investor Relations and Corporate Development)

Thank you, Matt. Good morning and good afternoon, and welcome to TechnipFMC’s third quarter 2026 earnings conference call. Our news release and financial statements issued earlier today can be found on our website. I’d like to caution you with respect to any forward-looking statements made during the call. Although these forward-looking statements are based on our current expectations, beliefs, and assumptions regarding future developments and business conditions, they are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10-K, most recent 10-Q, and other periodic filings with the U.S. Securities and Exchange Commission.

We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise. I will now turn the call over to Doug Pferdehirt, TechnipFMC’s Chair and Chief Executive Officer.

Doug Pferdehirt (Chair and Chief Executive Officer)

Thank you, Matt. Good morning and good afternoon. Thank you for participating in our third quarter earnings call. Total company revenue in the period was 2.9 billion. Adjusted EBITDA was 636 million with an adjusted EBITDA margin of 22%. When excluding foreign exchange impacts, we generated free cash flow of 470 million in the quarter. Our quarterly results demonstrate continued strength and consistency in our execution, and I am proud of what our team has accomplished.

We recently achieved several operational milestones, all further strengthening our track record of client success in advancing offshore projects in Suriname. We continue to make strong progress on the Grandmargood project, with the delivery of critical subsea equipment ahead of schedule. Together with TotalEnergies, we are helping to bring Suriname’s first offshore development closer to production through early collaboration, standardized engineering, and delivery certainty.

In August we delivered the first Subsea 2.0 tree for Chevron’s Gorgon Stage 3 project. This is the first tree delivered under Chevron’s 20-year Subsea 2.0 frame agreement with TechnipFMC. During the quarter, we were also recognized at the 2026 Petrobras Best Suppliers Awards, receiving honors in three categories: Flexible Pipe Installation, Subsea Wellhead Systems, and ESG Governance. The awards recognize both our technology and execution performance, reinforcing the differentiated value we deliver to our clients and the strong governance standards that underpin our operations.

I want to specifically highlight the Flexible Pipe Award, as this marks the fifth time we have received this recognition, demonstrating a proven track record of operational excellence. And most recently, we celebrated the manufacture and delivery of the 200th subsea tree for ExxonMobil in Guyana, with our Subsea 2.0 platform enabling greater standardization across multiple projects. Together, these examples highlight the discipline that drives our execution.

The collective efforts of our global team ensure that we continue to perform at a very high level, delivering projects not only on schedule but, in many cases, ahead of schedule, giving our customers greater confidence in sanctioning offshore projects. Turning to inbound orders, we announced three Subsea awards for the quarter. We secured multiple contracts to supply flexible pipe systems: the first for Azul Energy in Angola and the second for Petrobras in support of multiple pre-salt fields in Brazil. We are well positioned for such awards, as our industry-leading flexible solutions and ongoing industrialization efforts enable us to deliver greater efficiency, consistency, and predictability around project timing and performance.

We were also awarded an integrated contract from Petronas for the Limbayong project, their first deepwater project offshore Malaysia. This greenfield development will benefit from both our Subsea 2.0 configure-to-order platform and iEPCI execution of the entire subsea scope, reducing project cycle time on this fast-track development. Notably, Limbayong was one of three iEPCI projects awarded to TechnipFMC in the period. Inbound orders in the quarter totaled 2.1 billion.

In addition to these projects, we continue to enhance our customer relationships through collaborative partnerships. We recently finalized a strategic collaboration agreement with Petronas that establishes TechnipFMC as Petronas’ Strategic Deepwater Development Partner, embeds our iFEED to iEPCI integrated delivery model, strengthens executive-level engagement, and creates opportunities for growth across multiple projects and countries over the coming years.

The collaboration deepens our long-standing relationship and extends well beyond the scope of a traditional frame agreement. And just last week, we announced a memorandum of understanding with BP, under which TechnipFMC will be the preferred strategic supplier of 20K systems for BP’s Paleogene program in the U.S. Gulf. This exclusive agreement builds upon our proven 20K technologies and the experience gained through collaboration on BP’s initial Paleogene developments Kaskida and Tiber.

These new agreements exemplify our focus on client relationships and reinforce our commitment to deeper collaboration. Moving to the outlook, we remain optimistic about the durability of the subsea market. We have high visibility in offshore activity, where we see a sustained resurgence driven by a record level of deepwater projects with significantly improved economics and a shift in operator capital toward prolific, high-quality offshore reservoirs. This outlook is reflected in our Subsea Opportunities list, which has increased for the ninth consecutive quarter and highlights an opportunity set that has grown 25% over the last two years to 32 billion when using the midpoint of project values.

Let me now close on a few points. First, we are a technology company that has fundamentally changed the way we execute and deliver for our customers. Our unique operating model improves project economics while reinforcing customer trust and confidence in our delivery capabilities. Next, client recognition and new collaboration announcements further reinforce the value of customer engagement. Deeper collaboration drives even greater success, where trust and shared goals create a clear path to direct awards. These relationships become increasingly more valuable as clients adopt a portfolio approach to offshore development, optimizing opportunities across their entire asset base rather than simply advancing individual projects.

And finally, improving project economics and greater schedule certainty are attracting capital flows to offshore development. At the same time, energy security is prompting operators to diversify their investment opportunities, while consuming nations are looking to diversify their source of supply. Additionally, there is a near-term requirement to replenish diminishing stockpiles. Increased exploration is likely to follow, expanding activity in established regions while opening new markets in countries that have never produced from offshore basins.

This is all driving a robust pipeline of opportunities, and if we extend our view to include 2027, we expect subsea orders over the next five quarters to be at least 14.5 billion. Let me be clear, the subsea order step-up is here. This momentum should also lift the quality of our inbound orders, with substantially more Subsea 2.0, iEPCI, and direct awards expected in the year ahead. We also believe the step-up in 2027 marks the start of a sustained wave of activity that will extend beyond the end of the decade.

I will now turn the call over to Elf to discuss our financial results and, importantly, our outlook for subsea in 2027.

Alf Melin (Chief Financial Officer)

Thanks, Doug. Inbound in the quarter was 2.3 billion, driven by 2.1 billion of subsea orders. Revenue in the quarter was 2.9 billion. Adjusted EBITDA was 636 million when excluding a foreign exchange loss of 9 million. Turning to segment results, in subsea, revenue was 2.6 billion, a 5% increase versus the second quarter. The sequential revenue improvement was driven by increased project activity, specifically iEPCI projects in Indonesia and Brazil, as well as increased services activity. The revenue increase was partially offset by lower project activity in Norway. Adjusted EBITDA was 612 million, up 6% sequentially due to strong execution and higher project and services activity.

Adjusted EBITDA margin improved to 23.5%, the highest quarterly margin achieved to date. In Surface Technologies, revenue was 296 million, an increase of 7% from the second quarter. The increase was driven primarily by higher activity in the Middle East along with higher completion activity in North America. Adjusted EBITDA was 53 million, an increase of 7% sequentially. Adjusted EBITDA improved due to higher activity in the Middle East and North America. Adjusted EBITDA margin was 18%, essentially in line with the second quarter.

Turning to corporate and other items, corporate expense was 29 million, net interest expense was 4 million, and tax expense was 104 million. Cash flow from operating activities was 531 million with capital expenditures totaling 61 million in the quarter. This resulted in free cash flow of 470 million. We repurchased 320 million of stock in the third quarter, and including 20 million of dividends, total shareholder distributions were 340 million. Cash and cash equivalents was 1 billion.

We ended the quarter with a net cash position of 645 million. Turning to fourth quarter guidance, for subsea, we expect seasonal impacts to our fourth quarter results with revenue declining mid to high single digits. Sequentially, adjusted EBITDA is expected to decline approximately 250 basis points to 21%. For Surface Technologies, we anticipate revenue and adjusted EBITDA margin to be in line with our third quarter results. Moving to our full year outlook, we are making the following updates to our guidance. We are increasing subsea revenue to a range of 9.6 to 9.8 billion, we are increasing free cash flow guidance to a range of 1.45 to 1.55 billion, and we are reducing the full year effective tax rate to a range of 25 to 27%. With this update, we are increasing our expectation for total company adjusted EBITDA to approximately 2.22 billion for the full year excluding foreign exchange.

All other guidance items for the current year remain unchanged. Now let me take a moment to focus on next year. As Doug commented earlier, we have high visibility in offshore activity which supports our expectations to inbound at least 14.5 billion of subsea orders over the next five quarters. And importantly, this visibility puts us in a good position to provide an early view of subsea financial guidance for next year. For 2027, we are expecting subsea revenue to be in a range of 10 to 10.4 billion with adjusted EBITDA margin in a range of 22.5 to 24%.

We will provide the remainder of our 2027 financial guidance with our fourth quarter earnings. In summary, our team continues to execute well. Both total company revenue and adjusted EBITDA margin improved sequentially, and with today’s update, we have now increased our expectations for total company adjusted EBITDA for the full year. Free cash flow for the first nine months of the year improved to 1.2 billion. We have distributed 1.1 billion to shareholders through dividends and share buybacks, representing 86% of free cash flow, already exceeding distributions made in all of 2025.

Lastly, we have provided an early view of our 2027 subsea outlook, reiterating our expectation for growth in subsea inbound, revenue, and adjusted EBITDA margin. When using the midpoint of the 2027 guidance ranges, we expect subsea adjusted EBITDA to increase more than 10% year over year. This reflects continued strength in operational execution with incremental margin for subsea approaching 50% in the coming years. Operator, you may now open the line for questions.

OPERATOR

We will now begin the question and answer session. Please limit yourself to one question and one follow up. If you would like to ask a question, please press Star one to raise your hand. To withdraw your question, press Star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Anderson with Barclays.

Your line is now open. Please go ahead.

David Anderson (Analyst)

Hi, good morning. Thank you, Doug. I hope all my communication is okay. I’m a little—I’m traveling at the moment. I want to ask you about the 14.5 billion in terms of the next five quarters. Is the macro that we’re looking at today, is that an influence in terms of the timing of those projects, in terms of either the fourth quarter or next year? Just curious from your standpoint of kind of how your customers are thinking about the macro and how much that’s influencing the offshore?

Or do you have such line of sight that to a certain extent it’s irrelevant?

Doug Pferdehirt (Chair and Chief Executive Officer)

Sure, Dave, and good morning. And we can hear you just fine. So the macro environment, you know, as we’re all dealing with, is quite fluid at this point in time. In terms of its impact on our outlook or the timing of the outlook, there’s no direct correlation, Dave. As we pointed out in the prepared remarks, it is driving some changes in customer behavior where they are looking to diversify where they do their projects and spend their capital. And also, consuming countries are looking to pursue their own reserves where possible and where applicable, and also to diversify their source of supply.

And this is what’s driving a lot of activity in the offshore. We’ve got a tremendous amount of inbound in terms of commercial inbound at this point, working with clients to unlock new opportunities all around the world. So the timing issue in the 14.5 billion is really just the fact of, you know, what’s going to fall within the calendar year of 2026 and what could tip over to 2027. In particular, we have two to three very large projects that we are just in the final stages of concluding. Expect those to conclude by year end, but they could tip into the new year.

But I wouldn’t tie it to the macro, Dave.

David Anderson (Analyst)

Thanks, Doug. I’m just curious, as we look before you, in the past I think on the prior call you had talked about kind of more greenfield, larger greenfield projects next year. Curious on the complexity of those projects. Something was brought up on another call talking about the complexity of offshore projects and how that changes. I don’t want to—you know, the iEPCI model for the most part, I don’t want to characterize this the wrong way, but tends to be kind of on the smaller side.

As you go into larger projects, are they getting more complex? And by extension does that mean there’s more TechnipFMC revenue per tree, however you want to talk about it, and is that accretive to margins? Just kind of curious how to think about that trend.

Doug Pferdehirt (Chair and Chief Executive Officer)

Sure. So the complexity of a greenfield versus a brownfield is typically just around the geology. From a subsea point of view and from what we do, we’re somewhat agnostic if it’s a greenfield or a brownfield or, you know, the location of it. I mean, it may change between an oil reservoir and a gas reservoir, the type of tree system that we use. But our 2.0 configured order architecture applies across the board. So where the greenfield comes in is just less knowledge that you have about the topography of the seabed, maybe less knowledge you have around the soil conditions and, you know, clearly less knowledge you have about the reservoir itself. And that’s why you see greenfield projects sometimes take a little longer to move forward, because customers are diligently making sure that they understand the complexity of the geology that they’re dealing with in the subsurface.

But from our point of view, it doesn’t make a big difference, Dave, you know, with our customers moving towards a portfolio approach both in greenfield and brownfield. As we pointed out last quarter, an example of that would be Equinor—how they were approaching their additional work that they’re doing in the brownfield activity on the Norwegian Continental Shelf, where they’re doing groups of projects at a time—where we were very successful and very appreciative of the work we’re doing with Equinor. So for us, we can get the leverage in a brownfield as well as in a greenfield. And so one is not necessarily more interesting than the other.

And, you know, both are ramping up because clearly the shortest path to first oil is a brownfield development. Therefore it tends to have the highest project returns, at least in the near term. So those are being pursued as vigorously as now many greenfield opportunities around the world.

David Anderson (Analyst)

Fantastic. Thanks, Doug.

OPERATOR

Your next question comes from the line of Mark Wilson with Jefferies. Your line is now open. Please go ahead.

Mark Wilson (Analyst)

Thank you. Good morning. Excellent results again. Congratulations on that. Alf, I would like to ask on one of the last comments you just mentioned, talking about an incremental margin on subsea approaching 50% in the coming years. Could we get a bit more detail on that? Are we talking about Subsea 2.0 awards, iEPCI—and goodness me, it sounds very incremental. Some details, please.

Alf Melin (Chief Financial Officer)

Yes, thanks, Mark, for the question. So, first of all, I don’t think I commented on that this was, you know, beyond 2027. I think I specifically commented on 27. But nevertheless, it’s something that we are proud of in terms of what we are able to deliver. And it always starts with the quality of our backlog. And what we have done is continuously through 2026, as you can see from our continuous raises of revenue guidance, we have continued to demonstrate our ability to execute on this backlog.

And we’re doing so with increased throughput. And when the throughput increases, we are also able to expand margins. So that’s part of what you’re seeing: really the underlying fundamentals of our quality of backlog, but our ongoing industrialization of our company. So whenever we have revenue increase year over year, we expect to have an outsized ability to expand our margins. And yes, that is through many different aspects including increased mix of Subsea 2.0, iEPCI, as well as making sure that our service business grows at least in line with our overall business.

And all of those factors combined is what gives us the confidence to come out with this guidance at this point in time and indeed imply a 50% incremental margin into 27.

Mark Wilson (Analyst)

Could you talk about the capacity limits within that throughput? Alf, I think you’ve got three major producing manufacturing facilities around the world. What kind of utilization are we speaking to in that guidance? And then I’ll hand it over. Thank you.

Doug Pferdehirt (Chair and Chief Executive Officer)

Yeah, no, you know, clearly one of the things that we have focused on in our, you know, model over the last operating model over the last couple of years is to be two things: capital light, as well as focusing on throughput, rather than keep on thinking about what incremental capex do we need. We build our business nowadays around creating constraints and thereby driving our thinking for how you can solve problems within the existing footprint rather than automatically defaulting to capital expenditures.

Sure. Are we investing in certain technologies that will enhance the automation and the throughput of our facilities? Yes, on an ongoing basis. But that’s also where we have talked about before that we have demonstrated that, for instance, a Subsea 2.0 order can go through our manufacturing plants at a 2.5 times what a normal 1.0 tree could do. These are the things that we continue to see demonstrate to ourselves on a daily basis as well as keep on investing in for the future.

And with that said, at this moment in time, no real concern for overall capacity.

OPERATOR

Your next question comes from the line of Arun Jayaram with J.P. Morgan Securities LLC. Your line is now open. Please go ahead.

Arun Jayaram (Analyst)

Good morning, Doug and Alfred. Appreciate taking my question. Doug, my first question is I wanted to see if you could talk about what you’re doing on. On. On. On accelerating cycle times. You mentioned kind of the Suriname project with TotalEnergies. I was wondering if you could maybe elaborate a little bit on what’s driving that. Is that just the shift to 2.0 and perhaps I’d love a mini update on what you’re doing in terms of industrializing the, you know, the installation process.

Any updates on that would be helpful.

Doug Pferdehirt (Chair and Chief Executive Officer)

Sure, Arun. Thank you for the question. So when I. What I was talking about on the Grandmard project in Suriname was the delivery of some of the critical equipment, including the trees ahead of schedule. This is, you know, this is a new market. This is the first project that’s ever been done in that market. You know, we have a track record of being very successful in entering into new markets and being the pioneer to bring subsea into those markets.

Matter of fact, an impeccable track record. And this is just another example of that. So it’s about doing business the right way. It’s about being on the ground in Suriname, knowing the people, knowing the support network that we have there, building the relationships early on. And then yes, the shift of TotalEnergies to our Subsea 2.0 standard configurable product allowed us to have the deliveries not only on schedule, but ahead of schedule. Something that, quite frankly, is just very difficult for, you know, in the past for any subsea company to do, but certainly something that we are uniquely doing today, which is delivering projects ahead of schedule on even shorter cycle times than what has typically been done in the past. So this all falls under the relentless pursuit of reduction of cycle time, Arun, and something we continue to be very focused on.

Arun Jayaram (Analyst)

Got it. My follow up, Doug, I wanted to talk a little bit about your inbound order commentary. The company had previously indicated, you know, confidence in delivering 10 billion of inbound orders in calendar 26. Is that still a good target? I know you mentioned two or three large projects that are still trying to get to the finish line is maybe just comment on that. And I guess the question is if there is slippage in that $10 billion target, is that just driven by just the timing of these contracts or, you know, or contracts that you thought you’d win?

Doug Pferdehirt (Chair and Chief Executive Officer)

Sure. So, Arun, the short answer is yes, but I’ll give you a little more color. It is two to three projects that awards that we’re just going through those final stages. We’re not. I can’t. I couldn’t say with confidence coming on the call that they were going to land within the calendar year, they are still more more likely than not going to land in the calendar year. Delivering the approximately 10 billion of inbound for 2026. Just wanted to be realistic given the fact that the end of the year is fast approaching and if they slipped into the following year to make sure that they were being properly accounted for in our inbound guidance.

Hence going to the 14.5 billion for the five quarters. Simply an issue of timing.

Arun Jayaram (Analyst)

Got it. That’s clear. Thank you very much, Doug.

OPERATOR

Your next question comes from the line of Alexa Brenno with Goldman Sachs. Your line is now open. Please go ahead.

Alexa Brenno (Analyst)

Good morning, team, and thanks for taking our question. We just wanted to ask that the early 27 color is very helpful. Could you help just frame it from a regional perspective? Where are you seeing opportunities across maybe Africa, North Sea, etc. And how should we think about it in that framework?

Doug Pferdehirt (Chair and Chief Executive Officer)

Yeah. So good morning, Alexa and team as well. The if we look at it geographically, it’s. We had said that there was, you know, the last decade was really being driven by South America. It was going to continue to be very strong and the next decade would be driven by Africa. And I would say largely that that is still the case. So we’ll see a tremendous amount of awards coming from South America, both, you know, Brazil, Suriname, obviously Guyana.

So there’s lots of activity going on. Also some activity, potential activity in some neighboring countries which may not hit in 27, but could hit beyond 27. And then you also have, you know, kind of the whole region between, you know, the northern part of Guyana and Venezuela, etc. That could get interesting probably beyond 2027. So South America remains a critical focus for us. We wish Petrobras continued success in their exploration that they’re doing in the Equatorial Margin, which is a different region than the pre-salt in Brazil and could be quite prolific as well.

So lots of reasons to be continue to be excited about South America. Moving towards Africa. I mean, it’s just, it’s robust, it’s robust in West Africa, it’s robust in East Africa and we’re going to see continued activity in North Africa as well. So those regions are all regions that we are targeting and, you know, pursuing in our opportunity list, as you can see that we publish and would probably therefore also be reflected as, you know, inbound opportunities.

At the same time important, as I mentioned earlier to mention the NCS or the Norwegian Continental Shelf. It continues to be quite robust by multiple operators that continue to move projects forward as they help supply energy security for continental Europe. And then we talked about Asia. I think on the last couple of calls we said keep an eye out for places like Indonesia. And that’s really coming to fruition now where we have multiple, you know, multiple tendering activities and we are actually performing multiple projects in Indonesia at this time and then Australia.

Australia is a major LNG producer and exporter and they will be going through multiple rounds, including as we mentioned in our prepared remarks, the Chevron Gorgon Stage 3 project, which is all brownfield projects to supply gas to the existing LNG infrastructure in Australia. So a long answer to say, Alexa, it really is heating up around the world. It really isn’t region specific. I want to throw in the Paleogene. I would be wrong not to in the U.S. Gulf, you know, it continues to surprise to the upside in terms of activity. And we also made a note in the prepared remarks about a very important relationship and agreement that we signed with BP to be their exclusive provider for the 20k in the Paleogene. So really, it’s ramping up geographically, it’s ramping up quite broadly.

Alexa Brenno (Analyst)

That’s very helpful, thank you. And then just a follow up. As we look at the projects that are entering backlog today versus work being executed, can you give any color on how commercial terms are progress, pricing are comparing, and then, you know, how should we think about margins thereafter?

Doug Pferdehirt (Chair and Chief Executive Officer)

No, it’s an important question, Alexa and I will, you know, I’m happy to share with you that the, you know, the new work or the inbound that we’re putting in the backlog is accretive to the backlog margins. This is really because of the work that we’re doing to help our customers be successful by reducing cycle time, improving their project economics, which allows us to share in a portion of that economic value that we create. So it’s a true win win.

Alexa Brenno (Analyst)

Sounds great. We’ll turn it over. Thank you very much.

OPERATOR

Your next question comes from the line of Scott Gruber with Citigroup. Your line is now open. Please go ahead.

Scott Gruber (Analyst)

Yes, good morning, Doug. You mentioned that the step up in subsea orders is here, but I’m curious whether that step up that you see into 27 and we’ll ignore, you know, the timing issues around year end, but is that volume step up, you know, within the ballpark of what you would have expected at the start of the year, or has that gotten better given the macro backdrop? I’m asking because earlier this week an offshore driller suggested they hadn’t seen much of a cyclical response yet.

So I’m wondering, you know, your perspective on that and, and whether the secular trend is really going to dominate here and the macro will help, you know, essentially extend that trend rather than add a material cyclical element to the order cadence. So just curious your thoughts on that.

Doug Pferdehirt (Chair and Chief Executive Officer)

Sure. Scott, good morning. As I’ve said in the past, I’m not a driller, I don’t drill. So I don’t want to speak on their behalf. And I’ve also made it a point to emphasize, as has proven to be the case, we’re a leading indicator. When you look at the offshore and the deep water, our projects are typically awarded one to two years before the drillers get, you know, get a tender or get an ITT. So just keep that in the back of your mind. But to more specifically answer your question, I do see this as a structural change. I don’t see this as a cyclical change. It’s not being driven by any particular event. Yes, as I pointed out, due to some of the geopolitical events that are happening around the world, it is driving customers’ choices of where they spend their capital and it’s also driving host nations or the consumers to decide where they acquire their energy from. So I do think that there’s an attribute of that embedded, but I certainly don’t think that that’s the primary driver.

This is a structural change that we’ve been talking about for years. It was coming. It’s a result of the ability that we’ve been able to demonstrate through iEPCI and Subsea 2.0 to be able to help our customers improve the economics of offshore developments. And it’s not just the upfront economics, it’s the delivered economics. Often the upfront economics worked on paper, but what was delivered was often over schedule and over budget. We have a consistent track record of delivering on schedule or ahead of schedule, giving our customers the benefit of accelerated time to first oil and improved project economics. So in other words, their confidence in moving their capital towards the offshore is back. And I don’t see it moving.

I don’t see it changing as a result of any other geological play that’s out there in the world today. And it’s really because the best reservoirs, you know, barring some reservoirs in the Middle East, are offshore and those are the ones that they have access to. So you have high-quality reservoirs with very solid economics. You just needed to know that you could work with companies that shared the commitment to delivering these projects on time and at an economic rate that made them successful.

This is why you see our customers’ buying behavior changing. You know, the fact that 80%—80—80% of our business is being direct-awarded to our company, it’s not going out to a competitive tender. The fact that our customers are booking us multiple projects at a time, not just one, but today’s project plus tomorrow’s plus the next day’s project, because they want to ensure that they have access to the innovation that we’re driving in the subsea industry.

All supported and important to say, by the way, that we were very, very pleased to receive the award we received from Petrobras, identifying us as their top ESG company that they work with. How you do business is as important as what you do. So look, this is, as we’re calling it, you know, a sustained wave of activity. It’s just where capital is flowing, and the capital is flowing to the offshore for economic reasons, it’s flowing to the offshore for energy security reasons. And it’s flowing to the offshore because our customers have confidence that we can bring these projects to completion for them in a positive way.

Scott Gruber (Analyst)

I appreciate that. Color makes a ton of sense. And my follow-up is on margins for next year. Is there much benefit from the next phase of the iEPCI 2.0 initiative? You know, the SURF portion? Is there much benefit from that, you know, hitting in the 27 margin guidance, or is that still kind of more on the come?

Doug Pferdehirt (Chair and Chief Executive Officer)

Scott? I’m smiling, Scott, because I thought this question was going to come up a lot earlier in the queue. So thank you, thank you for bringing it up. And look, I am actually going to pivot back to Mark’s question earlier when he acknowledged the phenomenal, you know, I think in his own words, I think he said, you know, strong performance in terms of a 50% incremental margin. That’s something you don’t expect in the industry from the companies that you follow.

And Alf explained why that was. Your follow-up is a perfect, you know, is a perfect follow-up to that question because I will tell you, in that 50% incremental margin, we’re not counting on the iEPCI 2.0 contribution. So imagine that. Imagine. Just imagine that, Scott. So it is more to come. And I’m not saying that we won’t see some of, you know, we won’t be talking more about iEPCI 2.0. Obviously, we’ll continue to provide updates. I can tell you it’s moving very well. We continue to have strong success in the testing that we’re doing and in the field trials that we’re doing.

So it’s moving in the right direction. But no, we did not embed that. And I’m not saying that would necessarily be upside to 2027, but as you look at 2027 and beyond, that’s a whole other wave of margin contribution that you’re not—that we are not—experiencing today. And as importantly, and I always like to talk about a win-win, it’s a whole nother wave of cycle time reduction that our customers aren’t experiencing today. So they’re going to win because we’re going to continue to drive down cycle time, simplify the complexity that remains in the non-industrialized portion of the subsea offering, which will be addressed in our iEPCI 2.0 offering, giving them much improved project economics and allowing us to continue to share in the value, in that economic value that we create.

Scott Gruber (Analyst)

Well, thanks. Every once in a while we do see 50% incrementals. We just don’t see people sustain it for multiple years. So congrats on that. I’ll turn it back. Thank you.

OPERATOR

Your next question comes from the line of Josh Silverstein with UBS. Your line is now open. Please go ahead.

Josh Silverstein (Analyst)

Thanks. Good morning, guys. Maybe just sticking on the margin front here. You know, really strong margins of the past two quarters. Outside of normal seasonality, is there some sort of expected, you know, big drop-off in the fourth quarter, or is there some sort of margin headwinds or mix change? Because it seems like you’re already trending to the bottom half of the 2027 guide, you know, just based on the normal, normal seasonality. Thanks.

Alf Melin (Chief Financial Officer)

No, you shouldn’t read too much into this. This is normal seasonality. We, in the fourth quarter, we experience lower activity, in particular in places like the North Sea. We do take portions of our vessel fleet into maintenance and dry docking, and those things affect utilization. But it’s actually timed with the fact that there is lower activity going on. So that is really the main reason of why you’re seeing this. And there’s nothing, you know, specifically pronounced about it more than that activity is going on in the fourth quarter.

Josh Silverstein (Analyst)

Got it. And then you guys have specifically highlighted kind of a customer shift towards this portfolio-based offshore development approach. You talked about the Petronas collaboration, the BP MOU there. Where are you seeing customers adopt this portfolio-wide development versus the individual projects? And how does that change your view on visibility and pricing and market share? Thanks,

Doug Pferdehirt (Chair and Chief Executive Officer)

Josh. I would put it this way. I think every client is thinking about it. Not every client has a portfolio. Right. You know, clients have different sets of opportunities. So it’s maybe more applicable for some clients than others. And I think every one of them is considering it. Just, you know, I can say that because of the discussions that we’re having with them. It’s really applicable anywhere where they have the visibility and the portfolio within their own scope of assets to be able to approach the market in this way.

So you see it in mature basins because there tends to be, you know, more assets available within those mature basins. But then you also see it occurring in emerging basins, like the Paleogene is an emerging basin. So, you know, there you had BP take a very proactive approach. We’re seeing it in Greenfield and Brownfield, again pointing to Equinor on the Norwegian Continental Shelf, who’s doing it with their Brownfield portfolio. So it really is—and we have clients that are doing it not just within one basin—because of Subsea 2.0 being a configured-to-order or more standardized product.

We have customers who have multiple assets and multiple geographies approaching us in a portfolio approach cross geography because the core of the Subsea 2.0 configured-to-order system is standardized. So they’re able to do that. So this, you know, the technology is enabling this type of buying behavior, but I also think our performance is enabling this type of buying behavior because a customer is not going to entrust you with multiple projects in the future if they don’t think you’re going to perform well on the project you’re doing today. And if we’re being honest with ourselves, the industry didn’t have a great track record in the past. And when you’re still in a 1.0 world and still doing work, you know, the old way and you haven’t transformed as TechnipFMC has, it’s hard to be predictable in your execution performance.

It’s just hard. You’re in a bespoke world. You’re doing many, many first articles. It’s really, really hard to have that level of consistency. So I think it’s a combination of the customer’s behavior—you know, their asset base and their behavior—our performance, and our technology that is enabling this approach. But, you know, I will tell you it’s very favorable for both parties. And again, we believe in a win-win. We don’t believe we have to win at our customers’ demise. And it’s important for us that our customers continue to win because we want offshore to continue to be strong.

OPERATOR

Your next question comes from the line of Mark Bianchi with TD Cowen. Your line is now open. Please go ahead.

Mark Bianchi (Analyst at TD Cowen)

Thank you, Doug. Appreciate the expectation for the step-up here in the orders. If I look at the year-to-date orders, you know, they’ve trended I think below certainly what we would have expected, perhaps what you were expecting. Is there anything you can point to thematically that was maybe affecting some of the order conversion over the course of, you know, this year that you see changing? I don’t know, one thing I have in mind is obviously there’s this war going on and maybe folks are dragging their feet a bit, but just anything thematic that you would point to.

Doug Pferdehirt (Chair and Chief Executive Officer)

No, Mark, actually, if you go back, I guess probably about a year ago now, back in 2025, we said that 2026 was going to be a bunch of smaller awards. And, you know, just think about it statistically, a bunch of smaller awards—harder to predict the exact timing of those awards. So really it’s just been a timing issue. You see it in our, you know, again this quarter, you know, three announced awards but $2.1 billion of inbound, so lots of unannounced awards, which just means there’s been a lot of smaller awards.

I think last quarter or two quarters ago I pointed to the fact that 2027, we were going to start to see some of the larger orders really through the end of the decade. And those are shaping up as I was responding to Alexa’s question earlier. So it was really just a mix of the type of opportunities that we’ve been chasing. The team’s been working really hard. We’ve been very successful. It’s just a bunch of smaller awards and therefore they tend to spread out a bit more on you.

Mark Bianchi (Analyst at TD Cowen)

Yeah. Okay. And then the other one I have is on looking at 27 in the Subsea revenue guidance. It’s about a 5% increase. And I’m curious, that makes perfect sense just given the backlog scheduling you have. But I was wondering about the services piece of that because I think over the past couple years you’ve said, you know, that’s going to grow in line with broader Subsea revenue, which is kind

Alf Melin (Chief Financial Officer)

Of like a double-digit rate. Is services still growing at that double-digit rate in the 27 outlook that you provided? So again, I think at this point in time, and we’ll obviously be able to provide further updates as the year goes on, but I think it’s a reasonable assumption to continue to look at services growing in line with the growth of the overall segment at this point in time.

OPERATOR

Your next question comes from the line of Victoria McCulloch with RBC. Your line is now open. Please go ahead.

Victoria McCulloch (Analyst)

Hi, thanks, Doug. And I guess my question actually is a good follow-on from that previous one, because when you look at the contribution that services has made that have certainly got some highlighted in today’s results, how does the magnitude of the contribution and the margin profile of the services contribution compare to where you expected to be 12 months ago?

Doug Pferdehirt (Chair and Chief Executive Officer)

Good question, Victoria. I don’t know that it’s much different than what we had expected. You know, we have a—it’s an OEM model, as you know, and so we have a lot of visibility into our services profile. It is more of a book-and-turn than a backlog business. But it’s still, because it’s an OEM model, we service our equipment, we have standard maintenance programs for that. So we’re able to predict it fairly well. So I don’t know that there’s anything necessarily unusual.

We did see, for instance, a strong pickup in our well intervention business in the third quarter. So that’s something that we could potentially see more of as we move forward, where customers are really trying to optimize their existing wellbores, and one way they can do that is with a drilling rig. The other way is to use one of our service vessels to be able to do that. So we are seeing an uptick there. But I wouldn’t say anything that particularly stands out, Victoria.

It’s a very good, very solid, very sustainable, and a strong-margin contribution business for us, and one that we continue to invest in and grow.

Victoria McCulloch (Analyst)

Thanks very much. That was all for me.

OPERATOR

Your next question comes from the line of Derek Bottheyzer with Piper Sandler. Your line is now open. Please go ahead.

Derek Bottheyzer (Analyst)

Hey, good morning, Doug. I know you’ve been talking about this throughout the course of the call, but maybe this is a nuance or something I picked up on in the release was you talked about the strength extending beyond a decade with this wave of activity. And I feel like previously you’ve talked about strength towards the end of the decade. Again, maybe pretty nuanced, but could you help unpack that comment for us? Just a reflection of the continued momentum that you’ve seen over the past three years, or has anything changed recently to extend your visibility beyond the end of the decade?

Doug Pferdehirt (Chair and Chief Executive Officer)

Well, thank you, Derek, and good morning. Look, the biggest thing that is driving our confidence to make that—and you’re right, it was a pivot in terms of the terminology that we’ve been using—is the portfolio approach. I mean, a project today is going to be delivered sometime just prior to the end of the decade. So when you’re talking about a portfolio approach and where customers are buying multiple projects in series from us, another way of saying that is beyond the end of the decade.

So that’s what’s giving us greater confidence. And as I mentioned a couple of times on the call, we are seeing customers potentially reconsider the allocation of their capital and looking at offshore, both from the ability to be able to replenish reserves, the economics that are there now, and the certainty that we are providing them, as mentioned earlier, as well as wanting to have maybe a more diversified distribution of their capital geographically. And we’re also seeing host nations really driving to pursue their own hydrocarbon reserves for their own energy security.

You see that a lot in Asia. As an example, we mentioned an award from Petronas in Malaysia. We talked about Indonesia earlier on the call, et cetera. So it’s a combination of those things, Derek, that are just making it increasingly visible to us that this activity—we’re either booking beyond the end of the decade already or we see a clear path to do so. And I’m going to go all the way back to Scott’s comment: this isn’t the best we can do. We still have two-thirds of our subsea infrastructure, or the subsea project, that we’ve not industrialized yet. That’s what we’re working on. That’s what will be called iEPCI 2.0.

That’s going to bring a whole other wave of improvement in economics for our clients and for TechnipFMC.

Derek Bottheyzer (Analyst)

Matt, that’s great and very helpful. And I know you’ve already been asked about the iEPCI 2.0 you just mentioned. Again, I think the other upcoming catalyst that you leave a little breadcrumbs for us is around your partnerships with some of these startups that are looking to move markets from the onshore to the subsea. Just wanted to give you an opportunity if there’s any updates there, or still this is more of a stay tuned event.

Doug Pferdehirt (Chair and Chief Executive Officer)

No, that’s clearly happening today. And there were a couple of articles recently. I don’t want to comment on them because they were in the media, but I don’t know that they were necessarily a press release from the client. But they’re out there in the public domain where there are independent operators that are coming to TechnipFMC in a direct award as a result of our iEPCI and our Subsea 2.0 offering, and their belief, again, that we will continue to drive this industrialization and innovation for the industry as we go forward.

So, as mentioned previously, in years past, our total client mix was between nine and 12 clients a year, and we now service anywhere from 30 to 40 clients in any given year. And that market—they continue to expand the market as well as they bring fresh capital into the market.

Derek Bottheyzer (Analyst)

Great. Appreciate all the comments, Doug. I’ll turn it back.

OPERATOR

We have reached the end of the call. I’ll now turn the call back to Matt for closing remarks.

Matt Seinsheimer (Senior Vice President, Investor Relations and Corporate Development)

Thank you, Matt. This concludes our conference call. A replay of the call will be available on our website beginning at approximately 3:00 p.m. New York time today. If you have any further questions, please feel free to reach out to the investor relations team. Thank you for joining us, Matt. You may now end the call.

OPERATOR

This concludes today’s call. Thank you for attending. You may now disconnect.

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