FTI - Earnings call transcript Q4 2017

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Operator

Good afternoon. My name is Kim, and I will be your conference operator today. At this time, I would like to welcome everyone to the TechnipFMC fourth quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank may you your begin Seinsheimer, conference. Matt

Matthew Seinsheimer

and conference call. afternoon welcome to earnings XXXX quarter fourth TechnipFMC's Good

Our and caution on this our to news be forward-looking call. website. can release any I'd financial statements like made to statements you respect yesterday with during issued found

pro Executive been turn any any these of Pferdehirt, which obligations or or TechnipFMC's as following had our are regarding expressed result subject We cause Although assumptions whether those to our update hereof. to Doug January future materially on recent We completed AMF to prior-year Officer. or information, UK and that are Financial is statements in XX-Q, you described could publicly to of operations to certain results the undertake prepared these material as undue forma Exchange revise pro beliefs statements comparisons call the actual as business we XXXX. to forward-looking statements. are from and made, the most periodic and otherwise. forward-looking our of speak the reliance caution on other cause factors our on and the our if risks our results date Because French developments no forward-looking with X, filings a differ after these I projected have to merger, expectations, they fourth implied statements, by that results conditions, wish events this not the actual new differ of date the current in the Authority. based results. only quarter and financial and future XX-K, they are statements merger Chief will Conduct to over Known U.S. uncertainties could quarter from most XXXX place recent Securities All forma for are now Commission,

Douglas J. Pferdehirt

were Subsea, a under a our on and strong forma execution, in just inbound. solid serves Total fourth EBITDA The billion, achieved TechnipFMC. quarter, first XXXX QX proved that $XX a win. were that's further and as on participating quarter one billion. year-end new and at we company $X up margins the validates stands delivering afternoon. pro of be of to men backlog morning And merger further start to our and delivered of of XX.X% women to basis. XXX year in with and growth and Thank as we and a that's new strength of more strong driven important book-to-bill basis another ahead full-year the to success this quarter realization up Thank results, another orders for opportunity earnings a and over our given to company. points solid strength take challenge operational QX models segments Good and brief you change, results We in early to the Total good billion market market model revenues winning, success business our focus and to of was company business to stepped new commitment for milestone demonstrating all you, even the in see significant both drove our our completely XXXX, our achieving million, deliver important we a advantages how the technologies. of Executing in in time the in new positions call. our our in commercial of for with synergies, Matt. our commitment $XXX strong history stakeholders. fourth the our strong Total period, company $X.X adjusted period. performance prior-year all demonstrating

and performance have results. execution. of despite of integration, And the financial strong market our relentlessly our operational plan to led usual merger focused distractions both project execution Operationally, Solid expectations. we on ahead was

delivering been of projects those some globe. and complex have the We across challenging

on and our are would delivering Importantly, well-being of $XXX losing plan, most element, the well in the and we and doing that health on our of we end to of we merger important I synergies by ahead and are focus also generate partners. on the annualized like so executed have savings employees without to reiterate XXXX. track million

final In order addition XXXX in the a in several major also we year significant for operators developments. activity, large increase to the awards our This XX% investment a up inflection Subsea $X.X billion, with on backlog year. inbound executing year. over to our of several forward full-year Subsea the over of moving new marked secured projects, on step in resulted decisions course

of Our integrated on next reception business we significantly portfolio never technology seabed. [integrated of of size, products with we model reduces generation significant been to highly and which bring X.X. differentiation moved forward the many Engineering, extends And can Subsea iEPCI technology. projects, the we has of the Installation], subsea In focus developing launch equipment completely new is without weight, with market. have part announced set expanding count the beyond continued call interest. benefits deepwater Construction, market suite the our with opportunity a The operator a the of encouraging, new Procurement, would on This the installed November, strong the

LNG, new and the continue with make FLNG, We also to surface markets. offerings substantial in progress

mix. part very and just provide our a outlook. expansions higher longer-term market over are our with over of market XXXX, Subsea faster things these horizon, returns. the order inbound, When this represented are awards we portion remainder total us. with to awards paybacks and brownfield and projects operators of half the being shorter-cycle named much discuss direct a tiebacks me are In becoming the three Smaller services. more subsea These let meaningful of mix. often subsea evident Now time consider projects

developments. more And towards see of than developments also natural group. TechnipFMC independents see could new We subsea offshore for growing By CapEx is gas gas and a the at prominence. next customer early entrants half developments. decade, we partner in growing undertaking natural this are trend directed

and To large between gas growing continues share global be markets gas to to a energy the Middle TechnipFMC preference need is demand. this demand structural East. well to broadly such of in sanctioned of prospects demand, market take domestic that. dynamic, this resurgence driven to natural trend need market will for and more energy the to very satisfy beyond sources by This this as now we and seeing suited gas markets, is the meet cleaner market. Looking more XXXX are and in projects natural

engineering recently project, active is globe. concept we Genesis, very provider, term. we the example, LNG up East in on the across were in also and Middle services studies agnostic activity further has broadly. the medium opportunities on and For FEED region have the the Arctic more short-listed picked Canada TechnipFMC's

of For will West continue Sea company. of to see example, And existing we the East Dalma Arab activity LNG to projects. Asia-Pacific near and petrochemical, refining, our we sector, to be continue FEED, fertilizer offshore where a become energy-independent. supply infrastructure. and is In United term, opportunities brownfield downstream which the several good the Mediterranean Africa, Africa, are multiple are level also currently we part Emirates' required Furthermore, the we're in working the discoveries to that on desire active pursuing provide for on project projects several in

Bahrain, signing inbound an are list. projects announced refinery to near-term and well, of of discussed award TechnipFMC Bapco in of remaining $X this prospects contemplated In one we Sitra December, over of value are awards during progressing the billion. in aggregate with XXXX. The We the previously the have we confident prospects further

years. to coming revenue We continue that potential in projects the amount to track additional downstream LNG and

in involvement inbound of any Our LNG incremental the could projects provide mentioned considerable value.

to our chase Our not early volumes critical involvement success. is We projects this in market. in these do

the believe differentiated we anticipate activity over but our international rigs improvements In not quantify, products driven such record highly the are is the in levels that occur America, model cycle although will to to challenged. further remains most active of robust while and the management North lows, to tied In off the project see involvement by wellheads, we Asia today rig for Europe the number Middle track easy for Technologies, Our count recovered increased by will correlated is fairly poised below North And expect portfolio, and capabilities, rig XX% as the our the risk improvement pricing we are primarily count while the global XX-year unconventional East, In delivery. With of improve to process activity. that market in best in still XXXX. is everything XXXX rig peak. strong effect is outlook to supported has growth America Surface on process, our of sales that to continue count. Pacific we technology front-end respect business,

per The this frac frac benefited per has American the well. more the and portfolio number longer cycle well. services owing product where a stage portion more per This each sales well activity, by most activity into towards from count market, increased down accretive In through North hydraulic well. is moved stages the our higher more of higher fact, and laterals fracturing has driven trend to on frac of steadily individual translates intensity

pricing. count, consumable despite frac business, for this and For at the To materially this peak our and particularly XXXX that revenues key in services. our and us, achieved to rental we'll of Surface the cycle flow benefits America and several product product fluid recovery in perspective, levels put our prices into is and ends lines, believe we This we service reduced begin rig service approach North XXXX. lower lines,

current expectations for year. increase in expect in are a throughout commodity rig with largely levels, count prices line the modest While do our we

from forward. increasing at Now, update the transpired share that continues in industry we to let with removed. I'd we opportunities with some in the orders landscape. now have from projects previous look approved we XX% prior with you and Back inflection development Subsea Subsea were the deeper anticipated, point key see the by me even year project changes the What XXXX, Five now to The orders. move Subsea than had greater our the opportunity list for our the year. close Subsea been of like slide. was updated demonstrate outlook a over in called

I further unique our total, orders inbound opportunity added be production to scope, in that both stated five Day, breadth given over list a of this update. offering. sanctioned XX In our up We This commercial months. our and in represents significant large SURF At and now subsea Analyst we Subsea show systems also the confidence step in for could projects new have product, XXXX. a us XX set projects service next the

expect the our confident year over With and inbound for closing, activity. of quarter and orders our will new TechnipFMC, fourth In remain XX% performance as activity We integrated much will we market powerful strong the to these the EPCI period in as integrated momentum see overall from come a and model for we year. continue successes throughout we orders in that providing reminder year that new shared an grow in increase marked that another FEED of iEPCI many XXXX. projects, the tendering will both traditional of

around are continue to technologies new We and models, businesses, we improve. pressure are markets we executing revenue to further Despite our competitive take winning. the continue in cost, position. and which two near-term new business to in our largest operate further And actions improve we

operational will to to expect XXXX. call now continued confidence from synergy over performance I gives of (sic) momentum and our We XXXX our the further us savings, progression greater [XXXX] and turn Maryann. benefit in

Maryann T. Mannen

Thanks, Doug.

segments in discussions all quarter execution our with demonstrated pleased full-year the results, of as well, which today business results our on focus we fourth entire year. our solid are throughout While

restructuring have of we results. reductions synergies for Our should further sustainable all and previous we XXXX the plans the supportive cost captured, achieving expected have be activities, merger

quarter. focus now me on Let the

importance, to margin company-adjusted of As project Doug savings. execution XX%. This I total million its and cost basis adjusted Quarter-over-quarter EBITDA XX.X% the in despite revenue was $XXX incremental XXX decline result the said, is and points reiterate a EBITDA quarter. given will of good increased

American restructuring and impact Our and credits and improving earnings Subsea tax results per in million from diluted operational charges of demonstrated Onshore/Offshore credits in levels client-focused of believe quarter Adjusted in $XXX another business. the execution, $X.XX in Americas year. totaled land performance operations the the our the These share and the initiatives were leverage performance. $X.XX and quarterly both North supported our including margin and our these continuing excluding share. of the when after diluted reform. We benefit Surface the actions in charges full projects example quarter are of Improving per tax activity

When was items the you tax recorded million more of was exclude our related tax the interest have Also joint related quarter, the We schedules to $XXX accompanying net effective additional tax our other billion. U.S. reform. quarter the to QX million We of was reform and provided which detail release. partners for in recorded most venture $X.X discrete related of items, incurred rate was with quarter these to ended expense. in within these the XX%. to charges that net liability of $XX in We in approximately charges cash

the Looking EBITDA points against in the margins Subsea XX.X%, benefiting projects In achieving Coral favorable more with XXXX. increased key as project FLNG over the backlog in with the also of we our billion refinery of realization declining project. inbound. strength award, negative Subsea X.Xx, performance recovery the will can of award are The and revenue we book-to-bill to Similar the and top projects executed reduction line Onshore/Offshore looking This This on adjusted execution margins reduced highlights, the project and our be EBITDA award commercial so $X.X be billion, from announced XX%. quarter cycle very net we posted financial impact fully reduces not milestones majority far of this of not forward. closely to project for at the from first major quarter, margin consolidate Bapco showed of activity. strong expansion of the the treatment venture. results strongest the risks $X.X sequentially close-outs. the a several in joint segment at reflects owner resilience backlog the significant just will mitigate XX initiatives that helped basis reduction, the cost strong down reflected

Inbound period this economic awards. in operations. has of the value nearly up orders $XXX significant made However, our Onshore/Offshore of a for mostly million of project were smaller collection

quarter, large saw for last foreshadowed in we potential coming inbound we project the quarters. the As

Moving a in the strong base the Revenues operational pricing leverage to basis more reflects from than sharp some and year-over-year Surface North increased nearly recovery improvement XX.X%. Surface points improvements. cost XX% period. X,XXX to on American The significant Technologies, margins in the market, prior-year land increased restructured

We integrated In in pricing line with will expect the stable pressures regions. model in comparison, that some largely top and our were offering product improve further international markets continued XXXX.

preliminary in segment EBITDA our all effective and guidance October. guidance this Subsea note credits. Turning synergies confirming results includes XXXX charges for we to guidance. We Technologies, be realized that provided raising for our margin Onshore/Offshore QX Today, the expected and merger with guidance excludes Please while segment and XXXX Surface are guidance. to in

now updated me additional items. thoughts provide a on Let the few of some new guidance and

XX.X% First, in QX notable quarter. as Onshore/Offshore, at improved margins on in Adjusted favorable strong several execution projects we XXXX the are raising in as with throughout EBITDA was margin by guidance least completion to strength sequentially driven well at from least EBITDA X.X%. that

continued expectations match While throughout adjusting operational performance it may the are this be XXXX, margin our our to we further higher on performance. strength difficult of

Yamal backlog. LNG. the Our of revenue expectations contribution from execution confident in the remain our Onshore/Offshore incorporate for lower We same a and remain

corporate per of corporate excluding the are seeing Turning quarter fluctuations. of range million synergies, to foreign cost impact to benefit $XX and a currency of million expense, $XX we in corporate the therefore, expect

reduction been jurisdictions merger initiated tax regions, no rate to restructuring project has have should tax-related lower tax much million closed as to an in While With fall for majority of spending work business is our a respect tax, XX% for guidance mix lower where our both the complete, in XX%. rate benefit. merger range the revert efforts integration a completed. of since and in of in $XXX for Earnings such mix of XXXX. tax now to is the XXXX of we the further in Much anticipated tax work expect now restructuring our offsetting expected losses result costs to

fourth some a before While as guidance release. within all of in presentation are this earnings TechnipFMC. earnings year remaining the of our in improvement earnings do The change first XX work reflected the any guidance, anticipate we the additional of benefits items in XXXX contemplating on call concluded slide outlined effects are the and The successful quarter mix.

serve plans. to of catalysts While on XXXX as for made opportunities our and longer-term focus is clearly our year beyond, first the should our in the accomplishments some

Our risk contributed in project management segments. and to Onshore/Offshore execution strong Subsea both discipline

cost taking or million margin operations up capital end remains to benefit repurchasing for our the us operational in of for our a XXXX. plan, no performance and opportunities We to performed the well, of $XXX $XXX our a annualized the to and the And synergies raised have remain savings of focus reduction plan approach of ahead of All savings disciplined we This shares the end identifying allocation future our balanced meeting exceeding shareholder organization in in of periods. than later while XXXX. investment commenced toward today, for million full million $XXX delivered committed XXXX. targets authorization by and business distributions. ordinary We total

company's our In in a $X.XX. cost which will market from the plus We synergies actions shareholder confidence of sustainable technologies, again We of cost/benefit. of Operator, delivery may major declared XXXX for call models our once in items project you control, and Directors future with new the Board has dividend and addition, in penetration focus confidence achievement create performance, open execution blocks of objectives questions. the form in authorized and we think we commercial confidence with the our the quarterly targets and building value. these and cash

Operator

Your Herbert from Bill from first question of Simmons. comes the line

Your line open. is

William Herbert

hear you Can morning. Good me?

Douglas J. Pferdehirt

can, we Bill. Yes,

William Herbert

Doug. you, Thank

you be was revenue in and So, of especially regard Maryann, and XXXX. to Subsea Turn service curious & I expect to what in with XXXX, the Book components those

Maryann T. Mannen

Bill. Thanks,

the for range service we that mentioned, and don't of our talked change. much really about we revenues in as expect in services. previously billion XXXX $X XXXX, have being So about We've

from driven our revenues. by is share the XXXX change lion's to XXXX the project of So revenues

William Herbert

Turn? Book Okay, and & with regard to

Maryann T. Mannen

that would $X.X we've revenues XXXX. for if see, billion $XXX XXXX. or Book executable we would about services. consider you backlog is new that That we billion you in roughly in million what assume our say inbounds as need from another $X about in And will, will got then, come in Turn & So

William Herbert

are FIDs, me, would and secondly each have how of backdrop And awarded regard LNG been for two than years? speaking, of a XXXX And what last you a industry expect Okay. with for you roughly less many effectively to in Doug, with awards, the handful terms XXXX now tracking over numbers?

Douglas J. Pferdehirt

question, Thank you for the Bill.

the from beginning. go let's So

we're remarks, level In the terms that and not give years. where last really quite activity I'd my doing it noted but their our we over prefer seen prepared were right has to accelerated team, concept is in certainly work as of recovery the Genesis from of has counts, a significant through couple out high exact now.

terms some, quite existing that In trains. FEED on remarks, have the continues well LNG of opportunity LNG additional the about studies, prepared add terrestrial the potential earnings to about we That talked facilities, we've my talked FEED well, X LNG of calls. to active not I Arctic did progress on as in study some previously as mention as the I discussed our

let's on So that the on, work going portion. Onshore is say,

going actually studies portion, are few Offshore the a on. there On FEED

projects. of discoveries regions. of let larger are there's new but big them discoveries. address operators FLNG on be to into than oil in Some these these option some rather one around would new gas the some associated myself, I'd introduce gas those associated of comment And the to new the some

represented I of XXXX-XXXX, In Bill, well. projects of it think in terms timing you the

seven XXXX, XXXX or you should most is see to We over that if forward. delivery, come some start into around timeframe which that want is FLNG, a XXXX, move in balance would to expectations, of oversupply mean it an FIDs puts which terrestrial to a LNG. By which to have XX-month closer been into years, in XXXX, you a needing period project, FID of

forward. to these are be you bit seeing seeing actual timing of flow my know, prepared be concept. The FEED. now fluid. through in timing we that And we're see it The We're So projects on those participating going of a amount tends I though, large and discussed the it the some to companies the the award as actually larger going are projects. the as to in being short-listing remarks, highlighted of

predict hate to are up a years. I'd actually XXXX So or ramp or in going to awards and if activity LNG to do XXXX we but do see expect be coming many see in some how occur, going additional the it's to

William Herbert

Okay, thank you.

Operator

Gregory Your from Brown the question Credit next comes Suisse. from line of

open. Your line is

Gregory Brown

And my good taking afternoon, Thank for you everyone. questions.

consortium, appetite the very LNG comment with That's wondering basis the have second aftermarket group, of services on take a guess the assess And offering. that's a mentioned and able to invited risk but an the management. in a of contract. mentioned first a to if on you for your Are lump-sum project EPC intend obviously question. involved. operator on trend you you large KBR I partnership on you've lump-sum such also any market, then, or are one, part as and seeing Canada another was That's in would opportunity, Firstly, on perhaps I your yourselves suggested, work sort to whereby LNG into be bid been integrated life-of-field order? you'd how a risk to Subsea. additional bundled the is and

are seeing there? any momentum So, you positive

Douglas J. Pferdehirt

question. Thank for you, Gregory, the

So, in you I'll presented them. take that order the them

robust we time, really being event the large And introducing which the portion projects a very that November, LNG of to activities. types bring management that we the And The shortlisted. closely projects believe much of a of about currently services that in recent our that project more mentioned, a of by of you component lump-sum there's And that robust as that, really turnkey as our well we differentiation analyst the models our use the projects proud could that We're portfolio around that and really of at fabrication portfolio. terrestrial strength a quite projects back of that we've work or just from and Onshore/Offshore or working lot see supported process we're we've and to on our the group our reimbursable We're the lot commercial the we're technologies in drive predominantly we of moved both customer. we've of a you'll So, done – as will project types of have demonstrated terms our period the service on projects. of LNG in make very process that selectivity over our modules successful, project. excited that been indeed, brings, the on. contract consulting, with – Canada, working reimbursable both we've of mega to the other learnings a accept

have we taken on to us So, we which project. lump-sum still is a to portion the This that still lot discussion. bring a of contract any, think between I discussions contract, the discussion turnkey be the the having of be lump-sum ongoing that's contract that's not will turnkey. if reasonable you the discussion an to under of maybe correct portion. portion expect terms that. of customer There's and turnkey would in full a portion that reasonable contract to with It be turnkey. But expect would we're a would a that It the client. as – lump-sum be a is would lump-sum

the the need of the will, equipment, scope or, part Subsea project the associated the part requires inspection, to equipment of that ongoing and installation installation Typically, upgrades. indeed upgrading, we the cetera. Subsea that systems and all understand terms equipment repair, In to the maintenance automation important TechnipFMC's. be activity it's But of It actually components. and the with initial services really control in project. of to installed tends have of two subsea over XX% – base There's of there's the project world bundling, of the the that have if and software and firmware and initial you et is of

contract. things normally type a these of and of reoccurring not that part original basis of on All are

at services. of call-out grow being Again, up and end of Subsea So, initial around our integrated typically look Subsea them part expand installation, but could offering, offerings phase, the many initial we it will part of be really is as services. of the depends services, the to as continue how But them bundled some the you it.

subsea failure is only sand to the in subsea maybe subsea there's way a market and well access be ourselves the well and wellbore those those wells able nothing those part subsea intervention, subsea intervention to in of need – screen like the equipment, if you with to other re-enter some with a can to to The itself, or leader be services, the wells. by to is completion. we're a instance, able go For so of there's problem maybe company – the do that downhole in using provide out

Gregory Brown

helpful. guys. you very That's Thank Cheers. much, very

Operator

next line of comes Sean from question JPMorgan. Your from the Meakim

Your line is open.

Sean C. Meakim

you. Thank

you trajectory the thing to quarter, performance in just just I talked was how the investor I about trajectory, about expectations should strong positively guess is outlook the I the guidance about the Subsea for how revenue? how revenue that negatively end about Doug, correlated? and margin flex think we think that other about within margin relative So, result correlated Just to margin half want guidance think curious be to considering to do context offered? talk the to Is you've that but the or for we've Should fourth quarter start, before that quarter, first for lumpiness higher band. in XQ between about the expectations half band guide the that we being with of some second XXXX? the thinking And going that

Douglas J. Pferdehirt

Okay, you. Sean, thank

to very start it. We guidance start in bit transition workforce some inbound will at move even maintain assets in segments, going inbound, tends it we're the in XXXX. I The in of XXXX the XXXX that lifecycle manage ensure continue need our that and of even beyond. into in to indeed, made transition three focus to more operating there we and to flow our context realize on therefore, from customers. we've softness we stage there a able of point as fleet, SURF for in happy important the our of it utilization the headwinds into fourth – come – the to and the the Subsea to but Subsea will We've we're put deliver a XXXX and as some that capabilities later across that you out, and is the to proud more and quarter, to to and of talked competencies through to as But we and said out be are pointed with we'll the backlog. very continue the all performance activity, And, have So existing the it which projects project. in right see to XXXX, specifically we world-class the be – about greater of before,

side later. then equipment the first little bit the and see SURF a You side

those that that we appropriate some face the are why for we So, is XXXX think the the guidance guidance. headwinds provided margin of that margin and we

In on Intervention first Gregory's the stride QX activity quarter do of out an picks certain activity historical, and in historical to of the has important and have that first to the it up and the very did, quarter therefore, we associated in in can hits as guidance, its down impact projects the quarter, to QX. It is been with earlier achieve many I in of our and a and a weather we'll that sequencing comes operate by do less to has successful XXXX. not project and areas in and fourth with Riserless was indeed attempting that when referring as we it, of get because soft see it And and Well really the milestones. so the Light our manner, way, note, is fleet, is rather always though, projects question, to is quarterly much soft terms of quarter close into I'd that mainly

of additional relative in to comment. that to some terms indeed, the band I was add expect would revenue, And down step first color quarter. So, in we on going let this Maryann the the

Maryann T. Mannen

Sean. Hey, Thank you.

of sooner faster margin a to and So, given we of critical execute. the we element challenge it, we the can our it get the a year. bit Obviously, get attached later to executed inflection few we in in recovery Doug performance. obviously, maybe The a has Keep just get to in, planned we, inbound Subsea, earlier, to add other in timing see mind, to point XXXX Doug. said a comments as for the had the

of sure One to organization. things want of our that the management is competencies ongoing our we've of and we project that all core be engineering that said the retain we

see growing. we backlog So, that

here Subsea this to with Doug As another on year his to we expect XXXX comments morning, respect positive inbound. reiterated be

we of to some we ability part that talked get the inbound and that's improve, also technology XXXX timing we in other see R&D certainly and a inbound, the as of that, leverage development is could maintain investment our our around our the thing to guidance our sooner momentum And well. the So, about margins. positive

Sean C. Meakim

detail. Thank for Great. that you

if Subsea on more could. one I Just

about and expect give the how plans thinking that's forward getting X.X Can that? progressing this should of us you equipment what set quarter. Subsea reception maybe and the we commercialization an Just for customer beyond wet, on update first going

Douglas J. Pferdehirt

that things can next at when to it talk equipment, demonstrate it's Sean. we event in real. about firsthand we And analyst making it's talk as chance you, Thank had note, about doing. generation about important our subsea the they're of Everybody November, to a

analyst begun as it Ours is person. the to there, most already we And talked about – orders. been importantly, at live real. It we have has receive and in was event,

but next grow informed don't XX the and controls offering on that at previously to the received system. we had market. indicated group orders report that control, happy X, orders suite generation for X We our it say we control Analyst order the I'm our we compact new that trees. said we our can automation new we and or I the Day, And continues had today first our of if manifold. automation first to the had the I very remember for full As and put not automation to robotic –

next in generation it time cost, said as about automation much generation very And soon. will years, in as point, excited to going going long-cycle offering and your and have commitment customer of the we the as really tender and that we the always and it's that terms system. That's are the just, automation The on of months, now manifolds, in to back the impact control that a able and we're and about being business. the terms in qualification customer we on – stunning, and about able is been submitting. complete. And just through of were currently now, next respond We're it's control. November, to process making the because able to we suite, bid actively tenders there. installed well, terms need, entire to discussed in entire Sean, very have that now tree do not yeah, that we to being we're have be until testing. – qualification to short-cycle able still So, Up now we're this not a the We're the business,

Sean C. Meakim

for Thanks helpful. Very detail. the

Operator

comes Your from Stanley. of line Morgan Pulleyn the next from question Rob

open. is line Your

Robert Pulleyn

questions, may. Three Hi. if I

shorter yet, flow? of on and working Maryann, these reform, which if installation charge. first much that between and the And yourselves, that sanctioned busy faster. U.S. end new the lot are we essentially us in will side. to actually look of is whereby third be The effect oil. housekeeping the last moves cycle enabling one are you the Could actually, for first key obviously, installing is, are bunching and also both and capital orders subsea of needed time means shorter market tax are which installation little happening projects a of a your of including bit Is these the at competitors' the a your becoming were second tail the free whereby, a cash that the that in time, creating FID possibly clearly at give lead the please, from and and to maybe hear key any require FID projects the the finally, in in projects market? terms we on The leading industry you Surely, vessels saw tightness vessels also questions, vessels, fleets raft the see in XXXX, yet, that's when ahead bit some a expectations driver be steer inbound of to will and we what's also

seems a improvement be you already in the we you're XXXX? any significant much. Given tax that planning to improvements in could Thank captured the XXXX expect in very tax range effect, guidance, further beyond and

Douglas J. Pferdehirt

ones described actually months short cycle, if subsea Clearly, cycle XX one intriguing deliver versus in insight. Okay, long are business equipment only sea that is the visibility the And subsea as Rob, TechnipFMC, commissioned a the installed on take you news you in a if an some reality months. company describing good that are because the you the can what as XX we're now, studies. FEED business. cases we floor, integrated indeed we then, quite equipment the able The have is deliver in new doing I'll first the make the and to

into opportunities. So do those system shorter-cycle fully our where opportunities to we that will integrated subsea can build the we we We idea we installed an that the sea Clearly, are have prioritize have iEPCI floor. on the roadmap. where

at more think don't to I necessarily broadly market be point, the for market, blunt. that Speaking the is tight this

that think you're than think that out sooner statement. fair anticipate, occur and could people is I the a what pointing tightness I that's most

Maryann T. Mannen

Rob, Maryann here.

inbound But we're use our in milestones completion. payments. same of are capital coming that as see will to see part question, in first we're significant we also expect projects we for working capital, because not obviously of many the incremental level assuming of do expecting, working So also did the that XXXX, XXXX, because advance and to we

in the of So capital about in working would the use that of somewhere estimate I XX% range XXXX. we saw

for U.S. is I will net It's was benefit. you around U.S. Your tax And TechnipFMC, a plus. tax question a reform reform. second tell

is in First charge that Much with restructuring the the non-cash we've been sharing of and end charge. saw completed foremost, of you you by release, the our work October. was a as

adjustment restructuring was well were we the really what call is charge. operating out-from-under credits. work U.S. the to we've reported tax non-cash from that the our the as in of or so foreign And a net able losses We as tax that benefit most done with

as American So, benefit. Doug of seeing, North will a that of the we the similar leverage income, North talked amount American peaks about to strength XXXX the recovering be in this we're the increase net market and

pay other XX%. have words, we'll in income what at So only normally the paid on we tax XX% U.S. at would now rate,

would North see as So incremental American forward. going that expect we income improves, to benefit

Robert Pulleyn

just may, one project very Maryann, Thank culled entirely and very and you component, helpful. follow-up, is quickly. I into about if the much, the backlog, extremely not Yamal which we When That's and been I was that's is could given think cost-plus the how quantify of second the on actually Thank you wondering you. made just that possible. much trains, if the still progress third outstanding of whether construction

Maryann T. Mannen

Sure.

of X, X train. the as Train are you and Phase startup we the as cargo. which obviously successful And were the course, includes happy know, announce, as of first first through to we well are all we So modularization

you you is the recognizable there about In So see a of XXXX. the that for see what's obviously, billion remaining Train Train backlog of that can is X. backlogs Onshore/Offshore in a big of X and that, X Yamal. in $X.XXX revenues portion business, have there about at Because and $X.X total the XXXX reimbursable with scope billion, much our reported backlog for still in end is left, backlog. a are portion and revenue portions still XXXX XX/XX/XXXX, the of help of with associated Yamal in currently billion both XXXX. that Having that, is we Train that for associated $X.X influence could Train said X are And

Operator

Bertrand from Your of Hodée next the question line Cheuvreux. from comes Kepler

open. Your line is

Bertrand Hodée

my for two Yes. Hello, questions, question, Thank everyone. may. I if you taking

iEPCI? billion you. first order you're intake, the The question at the that related and in out related to what you place. disclose is that can a is iEPCI us give So are potential next was XXXX? of here was the $X.X in momentum, of of order And iEPCI subsea putting flavor the Can on clients? much you stake amount intake Thank what to how to generation LNG/FLNG second for technologies of benefits linked the the what

Douglas J. Pferdehirt

Bertrand, thank the you for questions.

achieve, the more So vision and terrestrial, remains reduction. the our portfolio for to in terms applications, integration, will rest the we offshore result XX% economics X.X by to obviously technologies that the of the as in driving objective or toward as company, but are different new of a being next-generation project drive simplification, as in well which is system our same, LNG/FLNG,

there's metric cost much about and being at project LNG projects much deliver LNG, it down with a bring market for driving will of which into ton, to earlier, that $X,XXX economics, the lower completely a from oil a more capacity to $X,XXX the associated will I bear market, we're here new reserve a which able scale which FLNG, gas cost developments, So of particularly where not the because FLNG. therefore ton inferred be metric talking improved would a current towards really one be today

we're what there. on that's example working So, of one

created In FEEDs XXXX. it a by we that integrated expect the didn't this material iEPCI, is our EPCI. that have total is we operation, are company XXXX, What was year awards. to XXXX, were conversion XX% many from was terms is We inbound that which integrated important? the have this of Again, that our in to approach We in in of opportunities. of portion. not of integrated come direct though year These second said model. Why new will early

integrated creates the to the an And our of So, do as that model new FEED, ability technologies, us opportunity value the our our project. we're not others integrated have execution demonstrate in to also it's unique competitive through then This is get our not the customer to. marketplace. well and early engaged direct to business of set to award in phase for access the go as and

Bertrand Hodée

Thank you.

Operator

of Your comes next Hallead question from Kurt RBC. the line from

is Your open. line

Kurt Hallead

good morning, afternoon. Good morning. Good Hey.

Douglas J. Pferdehirt

afternoon, Good How are Kurt. you?

Kurt Hallead

I'm Thanks. well. doing doing well,

mentioned bit I enthusiasm your follow on prepared of commentary, X.X. Doug, high little the – about want up for a a earlier Subsea to just maybe degree So, in you the

that wondering, in timing for relates that commentary Day some are to Just Subsea the to where now, X.X? around post specifically additional potential had color you projects additional provide your you that may awards there of November we Analyst is

Douglas J. Pferdehirt

in best. Analyst through executive Day, but brief. get question, pretty that Okay. able many team on I'm the to their my every can cases, the event. prior taken client demonstration excited know Understand we were you at going But to try technology this back major and, to analyst be that I the do to you area I'll subsea had see

clients, quite clients subsea. bit it. is environment. something been to subsea at to qualified It it. qualification way the groups of with go They've efficient be And of So, really time. for to up more programs certainly setting go it some having with that's We've a challenge to therefore, to past of different and aware takes we're concept looking idea a or which about the been been, they've in collectively that. in And time use from a the able

as going short award including of as that jumpers X operating was now very our the access received TRL we what's installation our near be move flexible forward take model been stated and and result the the at manifold the and us As we in generation be we Indeed, called X that's was to a of we've towards that that makes it will moving was new Day Analyst package to is now tree the really looking at The forward order. demonstrated Analyst had to – had That efficient coming actually the has automation, which and vision Day, our for complete the changes change step Level And entire completion. completed. Day. will well, and much us the now happen that order, to as now more and able to soon. Analyst allows to next What first is that in the quarters. actually we're from a significant

Kurt Hallead

That's great Appreciate Maryann. then that, follow-up I have And color. Doug. for maybe one

thinking of But kind the your suggested, think, to kind that's business. of you guidance Yamal view about longer dynamics on like excellence you your about have to the think the going if the just outside all up. about XX%, obviously that you So, margins just and I of think drive are margins. be X% kind guys sense, want is historically, that can how like X% I appreciate general that do term execution you guys when business, in a went business? think – at on in alters project longer that transparency the providing, there get more in term, Onshore/Offshore or don't benefit that wondering look margin of really I the provided and you

Maryann T. Mannen

Kurt. Thanks, Yeah.

on think do we time capitalize to really that continue couple as to strength risk beyond about we mentioned, to I of are period, management got Yamal. the on left Over next the work when we've of the years, But trying approach.

If than sum is revenue even good as you execution When focus years and and amount look of historically reimbursable Yamal, about better going landscape. on more to approach change try really from the coming continue much prior think to really scope. been the margins the our to in competitive has we without lump forward, the

Day begun You saw how movement. already Analyst we've from that

to for we and EBITDA We've margins opportunity that's margins ability to to clearly looking range that we of work that of improve deliver that diligently are said continue really But period. in beyond that are good we Second, about our that the feel ensure the time think to Yamal. X% a X% completion we'll post period. time to that beyond sustainable target,

Kurt Hallead

thanks. Great,

Operator

Your comes the next question from UBS. of from line Amy Wong

open. is Your line

Amy Wong

me, Hi. Two Good afternoon. for please. questions

energy First one of is name a clients. one early engagement with of your business and in the subsea competitors – just acquired all their consulting providing majority to in a in stake early getting

please? trying position we your in could some terms do replicate So, Thanks. you to you you of competitors How of your your integrated And threat to terms differentiate do please? of offering providing have that would TechnipFMC's of and see a solution? that, thoughts offering, how your react in

Douglas J. Pferdehirt

the for you Amy. Thank question,

with of XX% think our I delivering of what that talked would real acceptance substantive because in the I integrated industry. did it's first from blunt, level expectation this quite second and be about very has been market a change go anyone's if competitors the To XXXX not to one It's TechnipFMC. be inbound needed then having far I'll coming to our sustainable model. do I'll new clearly So, in and We've exceeded back surprised one. try created emulate the

not to the So, be if did opposite would react. actually, I someone surprised

of it's known is front-end agnostic, front-end well we is note and transaction have actual in Genesis terms referenced, you In that engineering that concept Genesis. extremely market. the important our It to organization. the

people We an phenomenal of leader. and have group Genesis a our team, industry are within we

organization that you of Genesis the our is just to it So, referencing. size other twice put were the perspective, in organization

was that going two be difficult. TechnipFMC bringing emulate, are very surprise of together but the companies by two no any with trying will again, created to by companies. be What combination others So, to just not other possible it's

So, we're into a year it.

integrated from Integrations this of a and way operation, come and workforce. strong seeing take as we're our execution time year well as focus new Second we're the integrations of our revenue both to continue and on well on maintain And of well-being our have model. challenges. XX% and safety operating

be more first. and proud where So, I couldn't we I'm of we were, awful glad went

Amy Wong

focusing Thank little a you. I and time bit kind on because have business. to losing just really business, manufacturing XXXX you could loaded Subsea any flexible we're on granularity indication pipes of are follow-up metrics, levels And any activity are pipes reluctant on in give flexible that. this a your XXXX quick I plants, business guys also your on please? always know your you your just specific give in but versus some How up

Douglas J. Pferdehirt

integrated is our a little to business our of of the interesting some the has our intricate activity of of several and and of the level which The Yeah. that Petrobras, that other offering. flexibles very we're a largest actually awards will awards that's to business. maybe XXXX. in up from to but our versus our the application result that It's project parts receiving the also is one countercyclical customer, influence parts integral of business key on be and due XXXX other iEPCI in flexibles That's flexibles

do we're EPCI, expect additional we as us can to integrated technology a hear X.X. the drive offering should we're you to a us XXXX hear you on of market when flexibles side flexibles There's So, to well. about from through talking future and what do indeed, creating our for more to going lot and that

Operator

Pickup Your the last of from line from Barclays. Mick question comes

line is Your open.

Pickering, Your last from of Byron question comes from Tudor, the line Holt. Pope

Your line is open.

Byron K. Pope

you you and to could was Good get growing on color come which But speak of horizon of Doug, of Sea independents. of provide naturally as some I on some morning. the Mexico might is additional trends of growing of as trend. of and mind you independents? those that North one be look prominence industry I prominence to see that next the could you And the couple you touched that the Gulf areas two wondering seeing subsea if the where to years, on, you where markets regions over subsea the out

Douglas J. Pferdehirt

I Sure. appreciate patience. Byron, and your Thank you,

So clearly, we movement. first have seen the

sector interesting. where delivering type long-term area. and in it Sea. of and it deep view quite time, the we in system. we've in back of deliver successful the the aligning we have also More record very strong from intimate those Pacific think transparent because very very very Mexico, there, terms to form our we be of at the way that built high of that I who be important of Gulf occurred customers, natural a very success always for the go integrated with we'll or of you at we of the in We're just we again, on, sector, price say think are we're of movement of seeing, and on independents, we Sea is the in new really would say our And independents track and from some our Gulf parts relationships it with I a private with Mediterranean North the the recently, been because we in the that provide quite other Asia of -and we'll a to projects – small point partner operators have If be deliver it's brand strong and – other first on world, the because the relationship, projects – of in equity we're Norwegian in able with Mexico, relationships also North the subsea have UK say seeing and ability the full

and I footprint of positive to way, our type the additional I as Going see subsea maybe integrated just beyond expect where type also influence those unique include capability of traditional would think of we because a forward, awards in even iEPCI of we'll very as could the well more awards or TechnipFMC. those production see you offer of awards. FPSO the

Byron K. Pope

it. Appreciate Doug. Thanks, helpful. That's

Operator

back turn I call Matt to now Seinsheimer. the

open. Your line is

Matthew Seinsheimer

today. available fourth call. concludes This call at of will quarter Time Mean replay our our website PM approximately be our X:XX on A conference beginning Greenwich

team. any end Operator, joining the feel have you please may the contact us. free If you Investor further to Thanks call. questions, Relations for

Operator

call. conference today's concludes This

now You disconnect. may

TechnipFMC (FTI) 22 Feb 182017 Q4 Earnings call transcript