FTI - Earnings call transcript Q1 2018

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Operator

Hello and welcome everyone to the TechnipFMC First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, we will conduct a question-and-answer session. Thank you. At this time I would like to turn today's call over to your host, Mr. Seinsheimer. Matt Mr. ahead, go Please Seinsheimer.

Matthew Seinsheimer

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

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

these results or factors recent future statements could to in regarding by in Securities certain actual uncertainties could and material and implied statements. these risks the Exchange and differ U.S. you forward-looking our current results any that Commission, to to Executive beliefs any will statement, result only wish UK they the reliance they the a date the XX-Q, no made, cause or on materially undue expressed most based and cause and of are and hereof. Although Known to business French from Authority. other to future are our speak TechnipFMC's revise Pferdehirt, forward-looking Financial call conditions, on We Conduct the obligation expectations, after to AMF as forward-looking assumptions developments results from new subject date our those with periodic the not XX-K, recent our are over actual or most differ are our filings which turn We publicly projected place that undertake to caution statements otherwise. whether now information, events Officer. I Doug Chief of update as of described

Douglas J. Pferdehirt

you earnings our quarter Good Matt. call. for afternoon. morning participating you, and in Thank Thank good first

in at the unchanged Surface in since first recorded that with Today, Driving and XX.X%. We in of reason billion, through backlog merger integration quarterly company billion of margin orders truly this were project year-over-year only the anticipated highest subsea at delivered Technologies. EBITDA TechnipFMC. growth with securing $X.X business inbound we we operational company quarter end. by solid again three model level quarter was benefits with in demonstrated Total In Onshore/Offshore. orders TechnipFMC. Subsea in quarter first of the to a $XX creation progress formation synergy. Total fundamental the on $X.X $XXX remain our seabed. can the adjusted results million, in strength the further integrated was revenue financial company unique or offset Our quarter value company partially awards. and of the particular Total EPCI, demonstrated behind the Total Onshore/Offshore the company the billion declines additional subsea grew execution execute sequentially validating by iEPCI was integrated

We have our talked size and a win Tanin direct previously largest award for announced scope contract TechnipFMC. a of and growing development. trend for March development us. In Mediterranean It another is new towards about undertaking subsea and Sea. to-date for and Energean's award we this flagship breath the make a major iEPCI project The Karish in independents entrants also

fully to portfolio. first integrates And for have with of award direct have facility, host Energean is our we also iEPCI the Malaysia. across early marks subsea award that in deliver from in have iEPCI that first award. with the solution traditional done Success the first of industry's Shell exclusively than region. In and through the It Asia-Pacific integrated creates cost-effective also iEPCI model. repeat their the customer capabilities faster opportunities. we unique could and the collaboratively an development quarter award the Gumusut a anyone and FEED, integrated EPCI We our worked under we a the is contracting second announced concept contract leveraging the entire scope will from production This

integrated model We topside Our Gulf North controls. of integration and region. Europe, brownfield our Mexico, and through the Sea, can Asia-Pacific the implemented in in Africa unique market new processing is model business of also now the being subsea demonstrate

We awarded have achieved for Mexico, shared a than Gulf Who a decade. for the first Dat an more XXXX. iEPCI contract of we in that Who with the field Dat alliance production an project originally that relationship have in LLOG been builds on

As has the field. declined, matured the recovery potential the of field have reservoir pressures suppressing

project the multiphase the rate, can us and Mexico, third With increase recovery first production the addition our our the of we providing such uplift pump, award to for boost for the own and solution return. of overall in an Gulf

iEPCI XX-month awards. the are as in will exclusive and validation as through will progressing As that a of in iEPCI deliver $X.X FEED activity, these a complete equipment well the an Subsea of order Many Subsea new us confidence serves now volume above leading In XX% towards rolling growing as see billion quarter which secured revenues basis, our we much and future the our final have integrated project this TechnipFMC install we subsea the control book-to-bill gives decision. on from we in further of indicator have first to achieved and again package inbound total, the projects iEPCI on orders are model inbound now XXXX. investment of All We of offering, of a exceeded X. nine quarter come as the Subsea as topside. business awards. integrated

commercial economics service significant of Subsea for the Importantly, deepwater view improvement both and projects supported Subsea is stream traditional breadth our a in highlights given cash list operator considerable opportunity and for set the opportunity by activity full FEED and flows. value reflects the momentum and market our the project offering. in us, tendering and iEPCI product, The of

quarters major year-over-year coming orders. achieve our in several remain again to growth will in we Subsea the confident forward that inbound We and expect projects move

Onshore/Offshore. the turning quarter. downstream processing, to multiple reported Onshore inbound for including refining. We activity reflect across and petrochemicals solid work orders Now, gas markets

FEED integrated by strengthened technologies process award FPSO this also contract. activity for primarily business the from and major driven EPCI work Offshore period. orders. a was of benefited Tanin, Our component Karish in multiple the fully

to smaller future the activity in can early typically periods. this are project engagement risk. significant revenues reduce project This to also these serves While in strategy lead work size, execution

FEED West broadly awards diversity end unit between in announced by we FPSO the LNG work the us located April, were In quarter, represents TechnipFMC $X.X on stage. major will to the scope the EPCI BP coming award to later inbound offshore equipment a for total project for and BP For quarters. transition This market. initially an early offshore with and reflect Africa. and opportunity These and major contract split agreement technology at of achieved Onshore/Offshore Tortue TechnipFMC provides geography both the a the the on opportunity and the defining contract a the development, billion. onshore of markets FEED inbound field a

As one opportunities projects we to markets call, discussed the LNG be the on likely few LNG next oil beyond is demand, and we sanctioned earnings many the see a three in and our growing customer sector. LNG fastest over years market. of in the To will gas increasing QX continue that. satisfy developing more

list of back extensive first an world's the that references the LNG XXXXs. in have to date project LNG We

midscale executed have as the developments We plants. many of many world's LNG LNG well largest as

expertise delivered for developing having now FLNG. floating we and We developed ever to projects in solutions and are significant applying the project we projects locations. commissioning the the FLNG scale first And modularization large largest management in mega are have successfully in LNG, pioneer remote

competency of XX% clearly XX million TechnipFMC. core global annualized production. some developed installed over In fact, of is LNG a have tons of we capacity,

We are market to capable leaving large capitalize in and with us on present improved reserves, gas for all gas monetization. regions the well-positioned dynamics

of provider in differentiate investments further delivery have offering of and of both our potential Flexible like weight, we we Magma with and schedule exploration let Pipe. me future the subsea accelerate portfolio upon the new other unique is this made X.X we the in in March, acceptance our by provide offering the X.X the minority that such increased and of of Global, leading positive. innovative provide we'll Through automation. risers, will in the for Composites involve We Customer applications corrosion has that manufacturing technology of we use taken discoveries for our Now our very announced next-generation downlines Subsea of X.X update have of driven the introduction a as see also of products high tolerance for ownership collaboration commercial significant we will Much This content today, some gas complete been product materials growth our have pre-salt reductions Brazil. in opportunities and you company. superior products. on suite and jumpers and natural Subsea part Magma, in rollout our production. Hybrid

of year. have components new these studies FEED entire X.X in studies the included this And products. several XX% of been Our than have more of suite incorporated

resins, beyond acquisition of extend related project compelling and a to the interest X.X unique used associated We produce technology provide proprietary the a also chemicals it chemical epoxy across license various our are design founding manufacturing investments services Epicerol, with in equipment. our level we In to very coatings, intermediate composites of engineering, adhesive offering. announced technology, and used TechnipFMC as pleased benefits of supply late March, But this speaks technology of to the this will industries. and applications the subsea.

iEPCI are of value-added technologies. resulted will company. in to this another broader Market new and opportunities. in over is three the that generated our further quarter. turn create acceptance and portfolio continue orders to new increase operational and of rebuild importantly, strategy will integrated that model, our our project growth much opportunities X.X, the differentiating backlog our more LNG, to marked enabling importantly, of backlog. as leadership on now period integrated the technologies continues to of is on Momentum we first representative to in focused And new Maryann. clear us demonstrate position through evidenced performance building In solid Onshore/Offshore projects market we I pursue leadership we the deliver awarded unique ever undertaken strengthen investment, expanding in execute but Subsea a robust inbound like the a successfully project by continue sequential also call Yamal and More as by selectively Magma our largest quarter closing, activity, confident we

Maryann T. Mannen

project otherwise despite of the X%. levels first we issues. strong of year-over-year the in in and face negative North facilities. execution Technologies, robust lower our improvement, of much were and of performance effects Subsea volume. by in Onshore/Offshore the driver the Good initiatives reduced benefits EBITDA are offset the results in declines America Surface performance company project year $XXX revenue unchanged to and transitory was portfolio, revenue the was manufacturing saving XX.X% across primary decline year-over-year utilization operational Thanks, fleets and delivered cost higher million sales Doug. muted the $XXX the of other compares with project in and first Total solid of quarter million Overall, at adjusted execution quarter Adjusted activity and merger somewhat quarter. delivered prior of quarter. a pleased the margin the in EBITDA with

of by international However, versus operations This price Charges charges $X.XX quarter lower and per year credits and $XX deferrals were share the in excluding in the totaled diluted the from of basis, Adjusted performance sequential charges on after-tax quarter when market. the earnings tax million. negatively credits diluted share. share. fourth an in per project excluding continuing $X.XX, quarter was and impacted of share diluted per $X.XX the to backlog and award after compares our credits results when period prior adjusted per $X.XX

quarter that higher accompany the range you within XX%. was are keep tax these that in the clarity rate effects details you with to when provided discrete XX% our rates Strong The tax targeted of give excluding tax effective release the schedules items. of greater full-year expected with XX.X% have rate items. jurisdictions to results the for on We of our

in offset reduction impacted cost revenues, EBITDA points more XX.X% to utilization, Subsea initiatives. detail prior-year somewhat segment vessel margins by highlights. a decline were XXX lower the in now down quarter Turning XX% the basis of against the by

backlog prior XX% While vessel year first achieved utilization down $X.X for in the quarter $X.X orders stands the lower typically now from XX% of factors, the due billion Inbound year. in in Subsea is level first quarter. billion. at the the rate seasonal the were the was to utilization quarter

our first to presentation revenue as the Importantly, revenue year declined in Notably, revenue further Linge, as beyond and deck backlog quarter prior-year Services. activity Ali, from on projects, several related versus illustrates progressed FLNG, work we quarter the that from is LNG. to by FLNG. projects results the year-over-year completion Martin significantly towards Jebel This for higher on revenue levels more Coral the of well our XX% Subsea as major we activity support driven including Yamal related Yamal Onshore/Offshore activity coverage project to our ramp anticipated XX% and including including increased Prelude midpoint have than when revenue large on guidance. the XXXX schedule of full now guidance

revenue the XXXX, year-over-year Onshore/Offshore for While contributor will the of over project comparisons most course a remain the significant to will year. LNG Yamal headwind the in still be

from We expect quarter Yamal large of towards margins the continue solid XXX decline, progress revenue year driven key projects. more through were versus despite XX.X% several completion of continued up in to points final on project. XXXX the execution revenue prior part as Adjusted we than the by EBITDA basis

end are a $XXX interest. of $X.X previously booked the with announced also Orders in Inbound Bapco highlight that Bahrain award related portion expansion pleased strength the grew of in the our Onshore/Offshore, economic million, geography We for over both to to will our quarter. the Sitra market. billion the and broad-based project was this for quarter. just inbound small was in by I refinery

XX% in venture, not which within do stake statements. a project the position have joint minority and We ownership our a financial therefore consolidate is

revenue However of for have $X.X value in our to sufficient significant holds now backlog We full-year $X.X meet guidance hand this billion. to TechnipFMC. billion at project stands now $X.X billion. economic backlog Onshore/Offshore

activity revenues Surface we our largely Despite Adjusted anticipated further more hydraulic equipment. American year-over-year XX in in also for wellhead the activity business, increase increased International by of of the metering versus than versus a American the declined year prior driven significant flow although demand and increased the basis the XX% improvement remainder Technologies, XX.X% by drove to prior Moving at points expect fracturing, quarter, over pace. North strong year North revenue performance year. moderate margins EBITDA margin quarter. softer that

services our market. integrated Additionally, and for Outside we results. offering the pad targeted benefit are which near-term should experiencing demand North investment increased business of orders America, shale increased

as confident potential we the Surface whole. ended $XXX the international meet on million. of can at quarter cautious that full for segment remain a in we are year Backlog pricing objective for markets, our some While impact we the Technologies

Turning project to flow the working decline capital quarter. million. related that several by results items $XXX outflows, function was primarily from cash negative a highlight driven in flow, activity. I a to wanted our our frame operations was The of Cash

standard, revenue the Let me to liabilities. liabilities. billed presentation now we contract point recognize new revenue change we out A with amounts net another on we basis assets change have now Previously, the exists receivables, a assets certain associated the receivables of Under recognition. trade payment. in contract right within and recognition reported contract when contract unconditional and

standard. quarterly will standard the $X.X change Going the we see million looking here When forward, Contract provide billion as due $X.X can filings, under you reported. the which in be $XXX going what trade billion the contract been this the we would to changes the is change have you the should with liabilities would In balances prior contract liability have recognition was forward, included. recognition $XXX billion billion quarter, receivables method. to so position first increased reported. of net million the the assets versus would $X.X been prior been $X.X note with in The quarter, that compared have at under

Beyond the the expenditures also capital There $XX operating line, several quarter. items million impacting in the were period. discretionary were

First, in $XXX for short-term use related was debt reduction our of the of outstanding, financing. million in to much which commercial paper reduction the

to bringing activity, completing by related our million. authorization to inception end committed in remain total Second, of share the repurchase $XX $XXX of since the plan year. $XXX million to this XXXX the million repurchases We

Island which the included completion million of transaction is strengthen Lastly, to growth with Offshore our that related platform. the intended to acquisitions, services $XX

integrated new well engineering, on our Island The and stack transition capabilities vessel-based services. TIOS. or expands accelerate execution supplier company intervention This and a forming well Offshore combination focus Subsea, we're an called intervention provider. will reminder, a light our from design TechnipFMC As a services to

subsea worked together have intervention Island have than XX and on with years than wells. performed Offshore XXX more We for we more successfully services

these double years, we size. items these $XXX In total, five Over million for the the the in services were period. spending next market discretionary believe in will

cash Importantly, at and billion end. a stood strong they by at very net $X.X are our sheet balance balance supported quarter

recognition me to new the you Let revenue of financial implication standard. update on the

restatements the from no period statement adopted this prior periods. Since in totaling using new Revenue occur method segment have change effect in results. the will of income. this there of of to expenses, timing recognized million modified the income no We future standard course are of will Under Onshore/Offshore the our method. period in made project is be largely the over the retrospective $XXX realized be pre-tax most majority costs and The revenue will XXXX. as

$XXX backlog. are our This Onshore/Offshore not impacted approximately of there the to additional like project a work now the to are reimbursable favorable revenues new majority of change the work was also activity the the of period. recognition. our future adjustment in Additionally reflecting recorded timing guidelines, order was to backlog, not in that Yamal included during inbound million net was a made Under in related to segment. related The adjustment note project. this I'd adjustment that

future segment. In is up for underpin recognition now be the expect of at at standard, the unchanged billion, least our increasing quarter least summary, of margin guidance full-year the first results, in our the now confidence earnings XX.X%, new guidance as end from $X.X our while guidance the high for at range. XXXX outlook first billion well to We between XXXX. revenue to anticipate from reported results the to near quarter as XX.X%, operating our revenue $X.X we we margins prior this be impact full-year EBITDA full-year in Given Onshore/Offshore strength are

strong the despite growth margin margins remain of XX% Surface first company by quarter. expect billion quarter softer part ability EBITDA orders to to XX.X% results the exceeding all in of least inbound strong were driven least Onshore/Offshore, in for Subsea. continue segments. guidance at our in our EBITDA in at confident And in $X.X increased at performance. We deliver orders have Technologies Total with the we We

are Three leadership future integrated iEPCI our awards encouraged project for growing activity across during the quarter We project which by success model. awards business developing speak tendering, well segments. FEED bodes and in major business our the and to

Tanin on sheer integration the development Our our Karish and Energean's illustrate involvement breadth capabilities. extensive clearly of

to LNG, the We in our may that Tier technology improved given clear for about potential. our status opportunities X for questions. positions, market we and are continue LNG, call our onshore for floating enhancing and the projects you up market value our extend optimistic investment leadership and strengthen particularly leadership Operator, outlook growth pursue now open bolster

Operator

Again we and do pause will compile yourself the moment I you. one ask that to for brief follow-up roster. question Thank you a limit one question. to Q&A

comes Michael Alsford Your the ahead. first go line question of Please Citi. from with

Michael J. Alsford

Thanks the I've cash my afternoon. please. one I for flow got Good if on taking could question.

in outflow Just on what to outflow as first capital you my adopting. obviously guidance the XQ, in will to rules accounting some XXXX? come working XXXX to change in done big expect and be back relate Thank you be that you're how a to comments and question. Maryann's the capital Can maybe Obviously, would working give performance you've the been would for there's you. the

Maryann T. Mannen

In $XX million you. in the the swing Thank change capital in yes, couple associated change working that's million of capital, about things, A about quarter. largely a from working Michael. FX, with Sure, $XXX that euro. part, there's in

what prior in quarter, in change of we piece happened working our about it XXXX. – And half there's quarter. in capital we pretty about we be estimated first obviously, of a talked of piece the experienced a big that had As to

depending imagine, working project can range things that working in we've from clearly might work as the at But quite we are, But challenging we is bit by range challenge be up and working of that, project a reasonable of at which project. piece. within our basis, they confident when our probably seen we in XXXX. will that pretty forecast. a to one look that forecasting to projects capital on the capital projects biggest come would submit capital flows remain there but On do most that full-year expectation, confident working a is timing of still still which we're than pretty I completion, creep lower in As you a looking capital bit the

Michael J. Alsford

way just sense year. prices sanctions? to And of broader they awards. Okay. me whether guess, customers executing the a about project a are let targeting have I lot the Thanks. on Maryann. quite Thanks, new as of the the I the rallied terms of in a momentum I'm in whether up got know behavior pipeline since the wondering question, changing kind just you've your it's beginning following obviously and, think oil of

Douglas J. Pferdehirt

year, Michael, unique thank had our actually you. I'll that behavior projects. platform change sustainably behavior customers' in We driven new saw and lower was that (XX:XX) created and in that structurally that take base one. in of commercial and through we technologies, change a subsea last model developing for technologies, occur recognition a by acceptance cost and could the

it drive think and couple price, was pointed price real change a to in increase to oil just projects. I further not TechnipFMC those both provides because and clients, structural just it's created important price, recovery So, sanction know fluctuate about attributes. their economics. sustainable for But the improved forward with oil improves as and that the move the ability we when confidence of and to time. our over as you further cash will It's mention out flows you in commodity project

this the now in new product platform, Our FEED our over product year that last gives platform of of studies our include we're customers introduction platform, us late confidence our of see real market XX% Subsea broad acceptance solution. and providing great a where that X.X new this

Operator

ahead. go from Your with Fargo. next question Jud of comes Wells Bailey Please line the

Judson E. Bailey

flow you the Doug, on alluded commentary of guys good that maybe perspective and but a moving for and There's just through and big to be are little expected, has Question press are. just we been not kind of where from than Good on FIDs, kind slower little of of the actual terms year curious lot at increase would've FMC, lot it We're this kind activity of necessary of momentum a your candidly in looking has the a award to forward for we'll the in halfway bid lot you, momentum picture. and pretty you kind going I some about do of a a of Thanks. a projects award May have positive year afternoon a that. guys think think and morning, where towards been what's positive cadence you into as been the of across of going you get slower of the and sit rest on? the second XXXX, in of a industry. bigger I'd you half awards for year kind additional

Douglas J. Pferdehirt

project direct are doing Yes, look a a for record that. also I guess the significant two very translated a quarter awards. of just iEPCI if those of We that over I as results, good work this that, years, capturing a pointed example to And you, integrated been now Energean to TechnipFMC. translating would been into way have Thank Karish opportunities. lot a that a recognize thank out, portion we very good being we've sheer of now FEED for say believe Jud. has project you, being The at our we're Jud. – we're

our iEPCI with So cadence quite Onshore/Offshore both inbound of a it's but that business see received. The as pleased quarter. continued in awards in of that secured we the we'll likely that actually the well we first the three FIDs, in level our Subsea improvement we're as project

Judson E. Bailey

to us up, the thoughts follow guys kind margin progression think of of you how give to Maryann. for little margin Typically in trying maybe my context bit a the within XXXX maybe Subsea of over your just on guidance Could annual how about about see just an XXXX? Subsea? within you progression and see maybe improvement And XQ. XQ for And from the Okay. seasonally of think you balance the to

Maryann T. Mannen

Jud. Yeah, thanks,

So, is QX, has for normally for yeah, least seasonally many it at some been a Normally you're us time, right. softer reasons. quarter for

not progress we that flowing quarters. out, the couple a the should give level down as to of in as be, challenged. little to our continue certainly would you of guidance, we've work way, respect through synergies are We our lot to really expecting say, half fairly with a we are range but As this in our cost say would ability know, done next revenues, volumes more manufacturing the much now very to with would bound respect we certainly, quarterly be good back variability in operations. I improve don't our I margins

you know, of there a well. bit As we've done quite as work

we're a to see not organization. quarter-by-quarter right-sized we variability as So, expecting have amount of our tremendous

Operator

Your line ahead. go Simmons. comes Please the of with next Bill Herbert question from

Bill Herbert

free you is question, Thanks. or more that could difficulty capital, for course neutral expect Good the consumer to morning. down with cash nailing moreover flow cash than year? free regard Maryann, cash or this back to on average a over working modest of flow cadence the the – you And if perhaps regard with of recognizing XXXX? do – to do the expected you to be what roughly think

Maryann T. Mannen

Yeah. Thanks, Bill.

is those would in and where So, completion in we we project we backlog QX. of more had year we expect the half The of QX back milestone of a of et would replenish see payments happening, bit awards, the lot as a in well. depending offset and the form project of advanced on that in obviously some timing of payments the cetera, form as

would than say be should I half. the half So, first more back positive

think... I question your of part second The

Bill Herbert

Okay.

Maryann T. Mannen

to obviously to operating the on projects completions consumer those offsetting the type big our significant I from negative, the and a but we part not look then do the perspective, FX, project second year that. operating would the answer milestone in beginning way, of And But of be as would payments. slightly there. would operational to big this – in be cash I neutral of a a which expect expect certainly projects as say on challenge more plays line. we they start come we be the to swings your was at reiterate, question way just in flow absent The the I as again timing neutral? forecast significant or consumer an question new in ability cash are flow, should obviously to

Bill Herbert

Okay. And assume prior We've appears $XX. your which maintained, I strongly. short then pretty think, flat I called that general cycle services Brent Subsea approaching with have got would picking for to up guidance regard revenues year-over-year. been to secondly, activity in is for

just (XX:XX) comment the is Subsea updated of higher within importance well. Subsea overall to drive your services and I'd on which that to So you sub-segment margins it's that, curious as highest as that? would your course for Can Subsea I'm guidance of hope margin regard

Douglas J. Pferdehirt

the for Thanks Doug. question. is this Bill, Yeah.

we As would you relatively to sub-segments, know, in expect had be we we indicated that don't with guidance that give but on activity line specific XXXX.

or maintenance well returned of the and riserless provider with maintenance the tree, hit the I while on got repair. also level of reinstallation there as shore light client, very well be of from – well to back subsea can of experienced most of tree interesting regardless is done we the visiting who leading from typically indicating is But intervention. as an wellbore removal will know, that benefit it tree, riserless riserless being actually for increased requires the certainly if riser-based, provider a intervention, clearly is you which a intervention, and the point. just done, via intervention, the light and You mode the the of inspection,

going I important in component a maintenance is well to our intervention you're to repair both for is as there riserless and think in company. right some activity, increased level activity inspection, that of expect very as So, activity well which terms of be

take up provide if are is the half see that plays well-positioned out with plays wait out, the XXXX agree how our of towards that a or beginning more to that Let's and I pent clients. into latter would pushed of there support demand to for we you well-prepared But XXXX. to that

Operator

with ahead. line go question next comes Your Suisse. Gregory Please of Brown from Credit the

Gregory Brown

integrated an few perhaps services and approach sense encouraging perhaps multiphase It's guys. over following toolkit Hi, that another and anything life-of-field sale. interested you greenfield you second type together? you've already Thank to kit to that opportunities Are perhaps within seeing feel your those you're clients question. the invested are up see services And the what's bundling pump from services any that the you. That's there past in in missing increasingly said, from obviously the the of do months, more been the you Subsea and that space get is first market? then question, deploy

Douglas J. Pferdehirt

Short regards greenfield... to In questions for yes. you the questions. Thank yes both is to answer and

Gregory Brown

for the answer. Thanks

Douglas J. Pferdehirt

activity greenfield pumps, for is to processing, and In studies not subsea a opportunities been the regards leader has spoken recent the in been XXX% for processing, boosting you have all doing few that years. much and are we separation subsea inclusive also that done of hasn't the are there industry. quite way, clearly by we're know, multiphase in as that about for including right of something that the now done just And

yes, few a quite activities. So,

the of the and to Subsea of and the few part significantly enable is our a of instead interchangeable architecture. spread Now, making that subsea part front-end be all focused challenge. which can has number able impact that by to in vision those sanctioning significant being words, FID years. on project. simplified only to interfaces, other has In for more the big for customers necessarily and frankly components. our project, engineering putting This interoperability way dynamic project life reducing of on a is capital economics quite said, a that the quite that the It's over a things do one our the count is the by the and is making you The project, of company reducing have been of things to more of that overall the

client. we was which later see over reservoir conditions intimately the in in second changes, of change, That question, year services, as the us the us not life maybe a we we terms intimately subsea year, terms change, want XX into that can and greenfield, your would is the as but it but important? that asset, of also there's a the designed engaged things involved to XX reservoir do geochemistry only with stage. we pressure keeps the with that time keeps it aftermarket as at asset for So, add capability if potentially of deliver Why it

this where product going pressure to This being in Subsea continue activity, really absolutely kit, the position and subsea changing move role. device, key terms which you and or from is remarks made talked invest. in from integrator, saw within intervention the well was about is important RLWI area the the of of will, containing Maryann from supplier, that will status if based that very services, integrator a stack piece strengthening are well important things it we you move that is In our the a around that missing, terms becoming to but was being her the an to the of our we prepared certainly very the absolutely

at our and continue of other competencies in will and expand opportunities look to portfolio within services. to bring our We range products

Operator

Meakim Your of next go ahead. the JPMorgan. question Sean Please from line with comes

Sean C. Meakim

you. Thank Good afternoon.

Douglas J. Pferdehirt

afternoon, Sean. Good

Sean C. Meakim

and about the get I'm consistent the Subsea. quarter, would as on on a pretty we're XXXX. with handle depending And in impact just solid mix I'm year SPS year what obviously the to for a on as cadence services. thinking of forward Doug, if we the inbound trying ability turn versus words, in through result, the the to go better XXXX potential maintain assumptions the be book asking, the of impact we in awards for of updated to of your In balance thoughts inbound So, SURF other Subsea the

Douglas J. Pferdehirt

you, Thank Sean.

committed the billion we're an expectation and take quarter, said and it an in we we at just we increase. going that if rate So, look run first and see $X.X remain continue to to the have on the to annualized

XXXX, we we versus saw increase know, increase you XXXX we a indicated would XX% over expect As a XXXX in in XXXX. further

from very awarded for the was activity come to in inbound and expect awards of earlier – that pending it to that which question will much current the be the activity, and may as are on rate, we're certainly looking on Sean. cadence that the from That be orders terms earlier run a well yes, uptick the and the benefit would that year. greater level need and back be where have some that inbound XXXX of that very an could Jud's the from you large in really it of we focused we later is, well, and kind this said, some of currently ties being would we we're Jud, question, and So it FID-ed to as you know, that

can or vastly everything by showing opportunities to to in A doing that economics XX solutions XX opportunity solutions XX put month installed, significantly. schedule we (XX:XX) front we're unique them we reduce cases commissioned XX in deliver the can a best to and their So the give improve project and very where of brownfield greenfield months. [month] many them projects year our (sic) on in and months just XX seabed clients the project delivered in

So you also it's capture our if it's more sanctioned, project and accelerate revenue getting quickly. but the will, to, that ability

Sean C. Meakim

for Understood. Thank that. you

established, many project that best and time, you're making sanctioned you're types so, you're cases, model operator. be as to that I'm these would other projects at for At you that show hand the to the those same inbound, you how And to on in for certainly able looking iEPCI you're characterize the as, compared opportunity to I projects? get one providing particular asking of to the get want guess particular good pricing trying for traction. this

point and dropping for your the into how So in you the this at backlog? puts types projects see cycle I'm just curious of takes those

Douglas J. Pferdehirt

assure and delivery unique pricing, single This structural This exercise. we our SPS engaged one rate interfaces This down that and be buy early, through the by the successful, is architecture providing the setting Thank project installed as accelerating which get economics. to subsea real you two. no those no reducing entity. you This I you, that's Sean. procurement showing many a ability the earlier, economics, the project to with able simplifies be understanding very split greatly which in sitting reducing by do an a them, then X package economical to take to Look, that project in will that and being about how savings the hurdle away integrated is discounting. a our demonstrate clients. introductory seabed as pricing. there there's we're what unnecessary project by can times isn't There's XX isn't that special from no indicated about when the months, – and And commissioned the drives engagement through on solution the off package, SURF of required are early can is

project conversation having you're very a not a around economics, conversation mature the So discounting. around

Operator

line of comes Rae go from question ahead. the Michael Redburn. next with Your Please

Michael Rae

Thanks Yeah. for Hi, there. taking questions. my

customers material input of way impact to forward this business? that steel there protected? bought What's impact the of an on pass raw kind Is that or have some First costs. is rising through you you prices can Thanks. you your year just in or leaves on

Douglas J. Pferdehirt

move some as shortlisted we've projects, being a different locking going Look, pricing. process Michael. through you, award, the actually our if project the securing – going indicative chain. confident supply out of pricing with Thank from at there that the tendering to we're become in direct we're or it's and as And sanctioned, is going more communication we're suppliers. We're various that and become into in we already we the when either looking getting

group we than diversified not But group suppliers. very very and be have of businesses, we suppliers not would impact a to a our of seeing would we short be any think cycle quite year. other this I projects class high our –

Michael Rae

bit That's great. then brief just backlog. Okay, risk the the And up a follow okay. of Subsea on pedantic a at being

So, looks backlog reported like actually Subsea I of quarter-on-quarter. declined so can see X, book-to-bill the but slightly ever you've it's above in

there of re-phasing in happening? is has cancellation that or there. been or So, any kind anything Why a

Maryann T. Mannen

segments they're related flow There the Michael, it's of inbound to some across all adjustments which are through and don't recognition. directly revenue hi, Maryann. minor

would have In addition FX to any impact. is you that, what

substance. – two. than to that, other impact would in you that small there we of of as things the want two look result they're But is a would those Subsea else that that In minor a at. nothing So, business

Douglas J. Pferdehirt

cancellations. no certainly But

Maryann T. Mannen

No cancellations, sorry. Correct.

Operator

comes Your of Marc ahead. the Please from question go next Cowen. line Bianchi with

Marc Bianchi

relates My you. LNG. first to question Thank

think about or not us right, that opportunity You could timing? award have that the and some help If and for there opportunity any the I billion some optimistic the On/Off could and I LNG. include commentary project for recall was if at biz come had the TechnipFMC, LNG of from on you about perhaps mentioned opportunity opportunity $X that the did

Douglas J. Pferdehirt

correct. question, Great Marc, are you and

be really, refining, What of mainly of technologies a downstream also process and seeing that orders tracking, were portfolio, frankly, spans our a petrochemicals our the $X that much in and quarter. and the petrochemicals unannounced And clear very about that billion to we've we very Just LNG. significant talking quite uptake that, fertilizer. FEED were say opportunities when beyond we're opportunities is which much was that – in in let's drove strong onshore, activity seen, increase the a we

So right there several will, projects out the expansion, projects depends the upon maybe greenfield projects, there's specifically, trains. several but that mean, project. know, addition it also that would the now I be there or are two you are as of of LNG the you addition a train if

partner a So with where in somebody billions, could you type know, they're $X they they from the would could of certainly could range, on as range range $XX – and billion but they likely billion, we to project. those

in you're the benefit quite attempting with out, would LNG. be but bit think I and be to necessarily But and tendering would had going partner. activity, it economic So along FEED of that on the substantial upside we of contract we've of doing both in a point the be not a realizing a we would value also full as activity

Marc Bianchi

Okay. you there's for revenue than On/Off to if the given of lower expected in On/Off $XXX helpful that this, of mentioned here. benefit, that I like and bit any revenue in also of long-term the I color. in so million little Maryann, Was you it given that talk business the kind kind million margin a is recognition but quite of margin that's the would it guess if here included or and change Well, first to change for accounting? wasn't, guidance thanks on didn't catch profile can of whether seems that, was what I Doug, increase it any the in have thought the quarter $XXX

Maryann T. Mannen

Sure, Marc. Thank you.

all, impact we'll million, that was first recognition and me, excuse you. total $XX $XX the million million of the fault, quarter, that the sorry, of adjustment $XX – I'm my right. Of So – And is report in of $XXX yes, you're about absolutely revenue, revenue to million. million, $XX

$XXX of through quarter-by-quarter, how year balance see through. You'll the that million be flows able to the

Onshore/Offshore second flow the part that in that we your of to most through through XXXX flows and of segment. on of expect question The is, most

all guidance you – because a that with strong for really in through asked comes revenue come We've segment. had by to question portion the account through profitability of you to it as the quarter guidance As very the we the in good Onshore/Offshore that'll increased respect or there, execution. recognition that project EBITDA pure the

at I comment the on XX.X%. As I least or fact to you tried least – that at know, guidance is

to to projected. we I'm is you no that year signal different trying the back of are is than Again, way and it of all in So Onshore/Offshore. the half any these estimates not

to in in the feel should Onshore/Offshore range confident XX.X%. of a project deliver you very margins ability our and performance about So

first you question, the recognition answer revenue million just in that see new of that guidance. again your to revenue revenue under the accompanying $XX So is

Operator

next question of the go Please from with Your Vlad Barclays. line Sergievskiy comes ahead.

Mick Pickup

I not questions, afternoon. Vlad, here. may. of Mick It's it's Good if Couple

Magma collaboration the on and composite. just Doug, Firstly, the with

are that flexibles good. just So, been and the for long message obviously been a there's a long-time has as debate

is composites flexible come or wondering resistance I'm into of now, So why issues need to go why point. because just the it corrosion they've age? this you and it at the Is of

Douglas J. Pferdehirt

our This flexibles a changed of all of methodology The what how important it do an operating together, is a (sic) impact our engineering that looking easy on way thinking. maybe count, at new you, across that's And weight. because a at This think where thank been look Mick, fully is company is we we're X.X. question. answer hasn't when profound of I has completely drive part you model. And appreciated. simplification, reduce [Subsea]

easy it's things of to diet, when the easy crash making back So, can at the talk weight talk – just guess about put about on on end we people day. it's lighter, but as I a the go to

Mick Pickup

Tell me (XX:XX).

Douglas J. Pferdehirt

has systems, the cetera. delivery process, that fundamental change about on impact What the et the profound talking philosophy a on is in roofline, manufacturing our fleet, a engineering we're on on the

it's look, right the much is many we strategic got is this we develop continue benefits, no, higher tolerance future an and but with important big, couldn't assets So, one around world, more big forward to as the And have and the bigger at has structure for and We point out you look which It excited. We company. decision ownership as the now seat be than of table that's clearly that. partner. together. corrosion a our I to a

Mick Pickup

have armor for years. the in answer does To they're that given several weight pretty confident question it, form. armor an think saying or on don't manufacturers need reduction, because been it Why about any the I actually what Yeah. last it's shape the need you composite

just can composite? fully to You go

Douglas J. Pferdehirt

It the upon Sure. right. application, depends

you're do agree. just going if to downline, So, would I a

riser, stiff systems I subsea look trying flow require But If at would like to you're you're a agree. – things really doing and if are that going for to do riser, going we're the to lines, using to by them way, bending it the stress going require they're you the across armor larger a system. And It adds provides have to armor. weight. allows different The a actually moment. profile

with composite challenges a the of float. is One they

weight system. applications, So, to actually in add want to the some you

going Magma So two together, that to have believe unique put with think, we strongly we when we're Global, technologies together and truly something you differentiated. these

Operator

Research. Your Mulvehill from next Chase Please question go Wolfe comes the with of line ahead.

Chase Mulvehill

margins with Subsea quarters Jud, unchanged in me talked talking of you were here. Subsea being kind coming over next When guess you squeezing for to I back Thanks Hey. about margins. the few kind going you Subsea talk takes of you look to you margins of as next the over could out see the if kind past medium-term? out But quarters. puts and the few

Maryann T. Mannen

a It's try things it question in will us. But asked in be of bit terms XXXX. Obviously to your for an takes. address us way Chase. the the terms think of volume margin forecasting early be Thanks, puts the me let beyond piece you for Sure. I sort of and to important

of is Subsea the the list inbound which SURF we and Doug as an variable. can that receive turn say iEPCI that the of revenue projects. timing isn't it talked opportunities, extent So whether into And quickly it's so or that to we quite about, iEPCI you've the as in project, are one the that robust, well, timing how equipment all whether seen I'll of those it

So timing important. would be

The second one utilization. fleet there obviously is our

element a And it. obviously so, cost has component that to

optimization, the positive variable. that in manufacturing that we about to sooner our fleet to work be our comes other benefit can We've that or our respect the of overall throughput, installations last lot project Subsea our And footprint reducing faster. couple we oil back the elements, that iEPCI get fundamentally get facility to talked the reduce will the lean, being through with bring first of So calls some product a cost much is, ability can our the cost another to over quicker. obviously obviously a it X.X without that we all that work through does, can

recovery have be as think of Subsea and as So, so demonstrate is, those to We've demonstrated the as benefit also hopeful be and continue those those held in of I what that to we've could communicate resources, our those clearly well. through and some XXXX to I tried we've will to we'll We've fully utilize a come being talking a been XXXX. a resources, think resources to in volumes strategic and leverage on got we we've belief you about lever. in able that as strategic people

bit competitive those. here is still The a losses project may have of other and is, away quite as a talked some market project wins from about and why some we this know. We've piece relatively you walked

could projects to iEPCI competitive with these market Doug lever iEPCI, a competitive on downward work not us. are advantage have we a that commented have margins inbound the So, on, as clearly that but would the

carefully. looking are We're all they things helped. We're very cost very very carefully, synergies So, have that working we're the watching at diligently.

Subsea but too you little those all give organization, given positive the broader know, got we've would contributors across forward, some more early year As a us be to more any obviously impact of going for clarity, the could this moving synergies and just pieces. they just

Chase Mulvehill

on kind big quick in side and about narrowing seeing there there talk environment talk maybe you're for kind of you that. you the outliers there pricing talk winners if the side? about are the Thank so Maryann. and the a losers, on range about SPS follow-up. of pricing the between in Could and of just One tree and still SURF Understand,

Douglas J. Pferdehirt

from little range, in that you see and is Thank behaviors unrecognizable, is strength do still There are see if that our will, Subsea certain there asking. outliers. services behaviors if to be that you market outliers. a you The the band, now be the an are to outlier. outliers. not are there occasion unpredictable you certainly answer tighten is allowing the That we earlier, That's our but market, do a because are by our exposure you for brief reduces assure outliers. of business. is but I unfortunately tightening will just tightening competitive you the as activity XX%. is to why and in the partners, reason awards there then of expect I remaining as as to the iEPCI pricing terms further some direct are you a still market and certain exposed will, And But the competitive awards but see not on direct well our XX% of we our from discussed alliance projects the tendering. the

Operator

And line of come question last Solutions. go today the CM-CIC from Romain ahead. your Market will Please of Jean-Luc

Jean-Luc Romain

for of (X:XX:XX) once your their you producing. more of Could much appears about taking you it that Thank how Energean part kind tell need comments projects, the plans a it's question. to afternoon. project they When looking – about pay would to awards of Good finance us project? we my at

Douglas J. Pferdehirt

changed. for you our Thank has position Look, question, Jean-Luc. the not

sheet a use here very you We scope. balance unique not see is projects. to What fund will our

storage floating plus and As Subsea I iEPCI production pointed out, facility. offloading the it's a full

that no So be the you with use project we that would in see composition. that a and different than terms structured of scope would

are and we concept stage customer we the very is been working intimate are be to unique and balance with and direct their what of project are leveraging a this not the to we So again, success way repeat proud solution. in continue they from I closely We've part from portfolio. Energean's beginning, expand sheet, the worked this a very providing as

Jean-Luc Romain

Thank you.

Operator

like presenters. questions this And back call turn time. the now to there further the I are no would

Matthew Seinsheimer

today. This first X replay A PM call conference available our at website be Time quarter Summer concludes our beginning approximately on of our will British call.

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

Operator

today. everyone you This Thank to for disconnect. you conclude call. attending now will today's And may

TechnipFMC (FTI) 10 May 182018 Q1 Earnings call transcript