Miller Value Partners - TechnipFMC: Driving Efficiencies, Doubling Profits
Summary
- During the multi-year protracted downturn, TechnipFMC focused on building differentiated integrated system solutions.
- The enhancements to FTI's offerings and manufacturing footprint are expected to drive efficiencies and double profits over the next couple of years.
- FTI has potential for considerable stock price upside and greater returns.
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The following segment was excerpted from this fund letter.
TechnipFMC (NYSE:FTI)
TechnipFMC is an energy service provider, a global leader in subsea, offshore and surface projects. The company is known for its technology and innovation leadership within the subsea market.
During the multi-year protracted downturn, TechnipFMC focused on building differentiated integrated system solutions for their clients that cover the full life cycle from conceptual design to project execution and finally life of field/maintenance. Their underwater solutions (pre-engineered modular architectures) significantly differentiate the company from its peers and has potential to industrialize the subsea market.
In addition, TechnipFMC is well positioned to benefit from the Energy Transition (Offshore floating renewables, GHG removal, and Hydrogen). The enhancements to the company's offerings and manufacturing footprint are expected to drive efficiencies and double profits over the next couple of years, and free cash flow conversion should show nice improvement as well.
TechnipFMC has a strong balance sheet with more than $1.3B in cash and improving debt leverage. With a strong upcycle started for subsea (growing backlog orders) there is potential for considerable share price upside and greater return to shareholders over the next couple of years.
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