It's always hard for companies to break out of slumps, and times have been especially difficult for energy companies trying to deal with volatile prices for oil and natural gas. TechnipFMC (NYSE:FTI) helps its clients with drilling services, and given how hard it's been for exploration and production companies to commit to spending capital on new projects, the slump that TechnipFMC has been in shouldn't really come as a surprise to anyone who follows the energy industry.

Coming into Wednesday's second-quarter financial report, however, TechnipFMC investors had high hopes that the company would finally be able to post solid growth and get itself moving back in the right direction. TechnipFMC's results were even better than many had expected, and that has some shareholders more optimistic than ever that better times lie ahead for the energy services company.

Drillship with derrick on the right.

Image source: TechnipFMC.

TechnipFMC shows what a rebound looks like

TechnipFMC's second-quarter financial results looked a whole lot better than its recent numbers. Revenue of $3.43 billion was up 16% from year-ago levels, easily topping the 10% growth rate that most of those following the stock had expected to see. Adjusted net income did even better, rising 33% to $175.6 million, and that corresponded to adjusted earnings of $0.39 per share. That was well ahead of the consensus forecast among investors for $0.35 per share.

As we've seen before, though, TechnipFMC got bigger contributions from some parts of its business than from others. On the revenue front, the subsea segment gave TechnipFMC the biggest top-line gains, with segment revenue climbing 24% as the company saw more activity on projects and also had more demand for subsea services. Meanwhile, the onshore/offshore segment saw revenue gains of 12%, as rising demand from the downstream, petrochemical, and offshore industries made up for slowdowns related to a key liquefied natural gas project approaching completion. The surface technologies unit was the most sluggish from a sales perspective, with top-line growth of just 5% as wellhead equipment sales and fracking rental services picked up in North America.

The picture was a little different in terms of profit. Onshore/offshore showed a massive 65% rise in adjusted pre-tax operating earnings, leading TechnipFMC's segments thanks largely to milestone bonuses on key projects. However, both subsea and surface technologies saw declines in segment bottom lines, with subsea seeing a 3% drop in adjusted pre-tax operating earnings and surface technologies posting a much larger 36% decline. Weaker pricing power was an especially large drag on profit for surface technologies.

The best news for TechnipFMC was that order flow and backlog stayed strong. Inbound order volume soared 164% to $11.18 billion, sending the backlog up 73% to $25.78 billion. That was an even better set of numbers than the company saw last quarter, and that's one big reason why investors are getting more optimistic about TechnipFMC.

What's next for TechnipFMC?

CEO Doug Pferdehirt couldn't have been happier with the results. "The unprecedented level of order activity demonstrates that we are winning," Pferdehirt said, "with an intense focus on project selectivity and commercial differentiation." The CEO said that those numbers made the company even more confident that it can achieve its long-term goals.

In response, TechnipFMC once again made some upward movements in its guidance for the full 2019 year. It now believes that its subsea revenue will come in between $5.6 billion and $5.8 billion, up $100 million to $200 million from its previous guidance. The energy services company also boosted its adjusted pre-tax operating margin projections, raising the subsea figure from 11% to 11.5% and the onshore/offshore margin prediction from 14% to 16.5%. In addition, a two percentage point cut in tax rate projections to a new range of 26% to 30% should help boost the bottom line a bit more.

Investors looked happy about the report, and the stock climbed about 2% in after-hours trading following the announcement. With such huge orders, TechnipFMC now has the wind at its back, and if it can execute on this huge opportunity, then it could see sustained growth well into the future.