FTI - Earnings call transcript Q2 2018

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Operator

Good morning. My name is Deborah and I will be your conference operator today. At this time, I would like to welcome everyone to the TechnipFMC Second Quarter 2018 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. call recorded. today's that note is being Please Thank you. Mr. Seinsheimer.

may your begin conference. You

Matthew Seinsheimer

second and (sic) welcome afternoon quarter to call. Good conference TechnipFMC's XXXX earnings [XXXX] (XX:XX:XX)

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

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

Douglas J. Pferdehirt

our Total orders revenues in project units breakeven serves Onshore/Offshore our first a of QX inbound a activity. goal business Also iEPCI solid Production drilling the focus. from the schedule three Shell, over for below ahead the to and the our which trajectory example market billion, delivering to-date anticipated an adjusted to project. with U.S. The good improvement simple; margin backlog the strength $X.X segment time increase of upward benefit quarter EBITDA of Total for sequential on strong was consecutive $X.X participating represents particularly company in improvement All driven by Total inbound $XX.X good the of company as Surface were consecutive improved in execution XX% look Technologies billion. oil. of second call. well quarter, industry's and achieved first the as production Surface resolved since quarter. notable, billion, issues revenues $X afternoon. quarter, X additional prior the start earnings completion $XXX a Matt. Working Technologies, including Thank early awards, our partner in growth quarter EBITDA adjusted growth in was company second from work projects. long-term results, half new third a was of existing quarter intake you, in in million. weaker billion, a the faced Mexico, represents of performance, with orders, economics Gulf company. you full-cycle sequential development in with order land book-to-bill and was in outpacing quarter which Kaikias Thank year in another project billion improve during per of one XX.X% the the our closer project our Shell continued with year-end. strong for and morning, quarter above activity quarter, as of accelerate steady Good EBITDA to all delivered and our for robust highest quarter inbound of Taking second driving as as the stands increase to significant. Operating now been well Onshore/Offshore first $XX TechnipFMC. $X.X transitory accounted continued at order in margins The Backlog has segment results barrel. notably the Americas to Activity in in period. the from recovered its announced the at

to flexible an early developments. equipment architecture, jumpers when fast-track included example fully the the approach well simplify be Subsea to Subsea can dispersion, of approach installation. serves greater use as engagement for fuel redesign technology a what X.X integrated Kaikias of utilizing a collaborative for great Our enable using done

current we level we encouraged As market broader momentum and Subsea, to award engagement set for project project tendering. and are of turn opportunity the client by the

were are alliance additional directly industry early And aggregate, continue updated follow. value are to with inbound fully over opportunity face list expect XX% We update. of order projects Year-to-date, opportunity guidance opportunity the integrated our comments be more over stage that TechnipFMC, one I to design greater it interfaces Subsea requires been including at our in order line new all below Many in schedule about are no there the have as or regardless Africa, cost In vessel are the approach, remove Subsea latest South early drive the we project JV for the techniques with our in opportunities with our Six model. structural savings. and one achieve direct of from entire like to set. FEED our in of and for of slide friction the waste. eliminate integration. come improvement integration, that early view partners the capabilities of not the iEPCI a in But optimize the scope, In significant We And successes in required requires greater installation is integrated we associated the now engagement, in acknowledging talking Asia intake invest are iEPCI, Services, The will of dispersed and months. this the fully solutions. to both five X to $XXX indicates, lack And under market and of economics. have opportunities clear. limited trend to than have move roof, Subsea moving this unique Pacific. there terms our is technology the is this up further because the enabled projects that experienced projects. and plus subject any the the dependent In awarded been integration this reflect economic that benefits from order volume integration, provides our tie-back Subsea have to of And engagement, absence The project, iEPCI suppliers the the represent tradeoffs a reduce on as removed. bundled The is full-year. across updated curve, project America, incentive project But Kaikias, a project market projects address slide, commercial to entity, field opportunity having size. this but that degree of to partners has level are will for manage half awards the average prior Subsea our clients sustainable towards operator this days of and and integration highly alliance operators more projects projects. potential. benefits much the XX In awards million, optimizing West slide integration beyond of to rapidly opportunities next the market replenished smaller of inherent Full brownfield know There's to added. single engagement in as and this merger.

Kaikias We with delivery full-cycle first the this iEPCI demonstrated have already success our on project.

allowing track to We Subsea remain by before, many portfolio. project have on more us with a our host to the iEPCI integrating deliver capture with to next facility, taken scope successful project ever we level from growing also integration references than Energean's Karish/Tanin more project and

improvements simple, Our cycle. economics investment our enable Driving decisions through is is ultimate real in for to more and clients philosophy to returns our project create goal. sustainable the

value those we So, assets TechnipFMC. resources for towards and generate prioritize that our and our opportunities for most clients will the

we see across with crackers. Turning LNG. of good early are significant for definition growth driving grow world-scale in to selection new and the wave opportunities activity Technologies both for feedstock Global we favorable petrochemical and a differentials, continues experiencing most potential product Process and is continue Combined major markets. for to to to including technology products opportunities, this ethylene second demand Onshore/Offshore,

technologies, over Technologies and strong Process others. has to Our ethylene, market hydrogen in with positions XX grown portfolio

us We technologies commercial license allow and models them. have that our to around provide several proprietary equipment

opportunities company. our drive for these Importantly, differentiated EPC technologies

was consortium technology NOVA India solid the announced Hydrogen have a inbound. are our factor Onshore/Offshore where We backlog had Process year-to-date, include HPCL These project provided our also winning the furnaces we at Corunna Canada the us Unit accounting to project. additions hydrogen in last Technologies cracking Chemicals' week, of just contract. for and XX% third in business in technology expansion in for for the process for phase gas the Generation key In EPC our support the where two approximately

strong are in of seeing The recent this is our TechnipFMC the States world-scale has indicative ethylene We to announcement complex technology United opportunities select Motiva particularly leading which trend. chain ethylene, its value for in a petrochemical market a in by position.

alliances, invest to broader and continue technology We R&D. in our acquisitions, through portfolio

Another are is competency tender the wave Onshore/Offshore downstream FEED EPC leading point of or we a including PMC. and Project well-positioned of Consultancy is player the believe this technology a the for in in sector. next a key of and forward Indicative as United strategy, opportunity by segment. LNG in of where reimbursable Management projects secure in evidenced And provider we activity substantial are LNG component is States this to of is PMC TechnipFMC, most can seeing the that contract we our recent PMC to our growing strategy TechnipFMC activity. expansion moving We LNG. services, high-value current core and

America, regions, from expansion Pacific, any seeing project. including to brownfield prospects can incumbent emerging benefit all position. an success and Early We North Russia, on in we Africa, engagement East, Middle Asia many the be where projects key are

in & the the Costa as Sempra Just project LNG Baja EPC contractor TechnipFMC last LNG month, Energía development selection Mexico. for Midstream Azul under of California, announced

We preparatory will Project other as perform towards activities advances FID. Sempra and FEED

investment industry's we themes: market services. work beginning Novatek and integrated LNG expansion are project. unconventional real In considerable FEED demonstrating And global and instrumental for Train currently in this we to complex progress of that resources, capacity, to supporting we XX% well product in studies. operating projects together, project are leverage key services several are market we a only Nigeria and fully important well, the positions X FEED on best over work executing unique Subsea, we front-end capability, energy our all unconventional the engineering TechnipFMC leader, LNG, Subsea, for will gains market industry's in have are Arctic the we three efficiency completions. industry's and more the Through the well-positioned leading to and In and having LNG as are for solutions ongoing our of Putting over to and the capitalize the continues detail. leader growth. model, the I provides our prospects call clear LNG, execution the business Maryann the in technologies, and delivered on provider addition, turn are major of are In we results to now success discuss financial resources. differentiated

Maryann T. Mannen

We was delivered in $XXX Doug. despite decline Total EBITDA million. Adjusted track the the on EBITDA performance operational adjusted outlined. solid reach Thanks, as we and XX.X% company XXXX quarter. objective, have forecasted is to revenue margin

a Surface by charges further margins in margin share margin to in Offshore Adjusted significant revenue in transitory at performance charges credits overcoming particularly resilient quarter. higher $X.XX, Subsea Technologies, after experienced diluted increase a driven strong much of $XX and improvement in quarter, the lower, totaled we was in robust by Looking on strong continued sustain levels issues prior-year when period to first a performance persistently the after-tax despite segments, per execution. delivered excluding quarter America credits and North from when share. also per After-tax quite the although comparing diluted in Onshore/ activity sequential project The markets. And continuing in was operations improved $X.XX significant million. earnings comparison. international the were and decline

We that these which items. release accompany our schedules have provided detail

items. share impacted million $XX certain $XX our or exchange the reminder, pre-tax a charges: of losses in impact rate these tax excluding diluted quarter included expense. to share in of the increase foreign effective partners venture the the the XX%. liability items, payable per to quarter was in guidance of and per included following excludes diluted items the $X.XX These interest the or included million the of significance $X.XX corporate for impact When related discrete As expense, joint

Pacific, will in XX, slide America. Asia segment to driven I a declined Africa, more the revenue project activity few provide prior-year from details by highlights. lower Turning North around and Subsea quarter, XX%

points prior-year from benefited from conclusion Subsea as Woodside in growing VNG and XX.X%, although other significant and of contribution reduction against down and projects the successful EBITDA on plus Karish/Tanin, integrated on quarter reported Trestakk, prior-year Equinor quarter initiatives Norge basis activity the less cost However, EBITDA Enfield, Petrobras, merger by than Kaombo Adjusted XXX revenues in achieved. the key flexibles adjusted the Energean from somewhat such Total for margin offset continued a lower savings milestones, work project revenues, an Greater of also quarter. part benefited Fenja.

in quarter, We work also of in Santo basins. Espírito Petrobras venture announced conjunction the the book-to-bill the Recife begun an the orders construction a work and in Inbound Santos vessel, for flexible Skandi X.X. period partner contract have with of the were we billion eight-year delivery owned resulting and joint under with Campos, charter in our in $X.X lay

quarter, beyond a points XX.X% margins has declined were doubled in EBITDA sequentially across our $X.X on of primarily to As related each $X.X XX% higher major strength still project. We we with activity although EBITDA in where We growth Ali declined closer prior orders from Adjusted significant levels regions. several to quarter at Onshore/Offshore saw ending prior-year Adjusted Yamal versus Project Yamal project EBITDA all PETRONAS continued as suggested, year the backlog reduction the outperforming XX% to contributor. of XX% revenue last large activity the Segment up is basis versus Yamal quarter, XXX than guidance revenue. prior-year the and improvement adjusted billion. quarters, by versus projects, in inbound projects, SOCAR billion. during quarter outside to continues grown in the RAPID grow, the Petrochemical quarter second the Onshore/Offshore completion driven experienced prior-year the full-year moved of LNG. has including quarter, refinery, Jebel more

Americas in Technologies, increased had for Technologies versus the recovery America by activity, Adjusted work. International XXX with Sequentially, prior-year faced cost XX.X% XX% services. and quarter, versus We an prior-year margins improving services, revenue volumes transitory aftermarket Surface international driven EBITDA demand with and significant on in in the benefiting the quarter, partially the of versus control markets. quarter, increased providing to pressure Moving our from offset strong basis from also increased margins by the the prior-year continued equipment fracturing businesses. in wellhead and first pricing systems in we North improved America, increase international points leverage volume revenue structure both the from pressure higher of some good hydraulic support strong benefited issues Surface to North outlook. a full-year quarter,

in the international. we aftermarket quarter for addition $XXX in In America, at activity growth ended Backlog to the higher experienced Surface Technologies million. North

our The than Clearly greater function working flow project-related cash was of period. by of estimated. of to which Onshore/Offshore for billion due been timing awards not largely these award schedules. capital the when we impact anticipated projects been tracking, working tied of This certain have inbound. on we working results Cash to uses a a $XXX $XXX impacted the activity. of on in saw $X projects several Turning capital capital to flow, received is million, our have we million. The in driven negative items the was from the primarily projects of had outflow positive specific quarter, will have the timing operations decline

certain in had Additionally, the the not that back outflows repeated we will for of items half year. be

in million operating We total the quarter. of payment $XXX cash There $XX quarter. for quarter to of fourth first Beyond expenditures million discretionary distributed $XXX a the dividends reflecting and were shareholders, were the several items for the also capital $XXX line, million including the for to-date, payments quarter quarterly largest both spend and distributions. repurchase, of our million share timing quarterly impacting

were incurred acquisitions. the million In items million period. related these also $XX to total, We spending in discretionary $XXX

Importantly, very sheet. these balance items are by strong a supported

Our net at quarter-end. at cash stood balance billion $X.X

$XX.X Turning to ended quarter slide backlog billion. at the XX, the company

we remainder illustrates, revenue XXXX. As for have the coverage backlog very schedule good of the

XX% of our revenue completed. Most the Services. full-year first we revenues and activity midpoint have the services anticipated than Subsea our for when more results recorded Subsea, when coverage is including of is from For guidance half

on increased XX% are for since in in has half revenue quarter, For backlog revenue first increase a orders to XX% the we XXXX an and we of than transitioning the see beyond Subsea continues our year. When to guidance and good provided scheduling rebuilding first to a for billion. and year-end. change have in been more the for revenue the success we ultimately the of XXXX backlog, to execution comparing the demonstrating company to activity significant has project sufficient range structures. $X.X backlog to streams. the backlog meet That have more increased we revised And a not because create of future $X.X project Onshore/Offshore, scheduled included improve which the revenue back will in XXXX to the billion the revenue Medium-term visibility for income period significant even recorded strength growth. beyond the beyond. of in of visible Clearly, XXXX,

We are ownership we where the working large on minority projects only a hold position. few

in for coming As and the years. exceeds equity billion the as backlog slide, in over the and affiliates basis projects our now income visibility backlog with $X.X pro illustrated forma these growth serves the associated

income in to have is opportunity our the we that incremental Importantly, disclosures. stream this shown backlog

updating as are for awarded Turning expectations reflect project XXXX, to for in guidance, our continued strength both to well as the we the Onshore/Offshore work incremental execution.

update, billion towards previous billion. revenue indicated the high-end we $X.X $X.X for range that During trending of was first to our quarter Onshore/Offshore our of

to increasing range $X.X billion We XXXX. $X.X to now for expectation that of billion are a

previous our of versus at guidance guidance are XX.X%. we Additionally, least XX% increasing margin our to least at

XXXX sharp to of XXXX. of In will deliver our on remainder of Surface second North in half we that sequential supports expectations for strength further also quarter supported to commitment the recognize change with remainder we the strongest give for billion the exceeding to quarter reductions previous all first solid orders that in the of in recovery continues us results due inflations. yet Permian Onshore/Offshore. to slow visibility our Technologies, orders improving were outlook. look related for the Total revenue in second has with in the at for tariffs full-year our In potential inbound no XXXX Subsea, particularly the the updated price our year. to our provide beyond our capacity takeaway earnings TechnipFMC, segments. For uncertainties Backlog summary, second and the America results half, in confidence the $X.X improvement to with we When with coverage company along of outlook and pace our

capital impacted maturity, should going to working by forward. improvement While project project generating awards continued be new be

our remains strong by the activity performance our outlook an selection best-in-class very supporting in success. a critical across the our Momentum tendering are quarter. positively, priority FEED right project and Project solutions improving services, influence engagement Importantly, our delivering top execution factors project remains to targeting operating end-markets. as and We early good driving focused projects remain trend execution. continues that in on as and project evidenced

maximum clients have leverage will We to prioritize unconventional, the and and you resources opportunities opportunities, call Operator, assets see and that growth TechnipFMC. namely generate market for the we value may where for greatest towards open questions. up our LNG, and we for the our deepwater,

Operator

JPMorgan. Sean with question first comes Our from Meakim

Sean C. Meakim

good Hey, afternoon. you. Thank

Douglas J. Pferdehirt

Afternoon, Sean.

Sean C. Meakim

hoping margin kind margin the XXXX Subsea, I visibility a in what's guide. given, was just, of us basis sense lifting So, terms full-year? you progression, you're the starting guide back half the XXX give you first held that above Maybe in half points of on for of second with full-year maybe could Doug, your

Douglas J. Pferdehirt

Sean. Sure,

confident we very we full-year the on even of have know, you takes, our as to completing. of well we projects several and second in more consider we remain key the as backlog, we some important milestones our the In we're XX%. as indicated new that in forward of there's release. puts of some guidance the achieving And when second a in quarter, projects, year, half as what's projects to press the So, the lot and reached look

Sean C. Meakim

Okay.

working another I that's capital. so, point, respect investors' think, minds, on to And with

update On that the modestly, the be you cash for full-year say, of in the XQ was this cash think below were call, year, last to the the message draw through working I capital being terms of neutral impact expecting XQ over let's moving million. little mind see and half from in you last year, pieces progression us the you would back Maryann, how there? a other of like any to that Do have – $XXX highlight giving that an you'd you

Maryann T. Mannen

Thank you. Sean. Yeah. Sure,

clearly So, key terms were estimates a exceeded uses. that. of our quarter, There's of reasons couple in for in the

tied being was or can to quarter-to-quarter many, is number what expecting in first projects would get had awarded. those I a To contribution it $X often I some were you projects – of Onshore/Offshore what many, we're half managing said as capital. range you many imagine, back would awarded we useful significant had challenge. have what as billion recovery I We the back will we able completely get can both that, they was Overall, quarter of that year, in working and yeah, talked be I see the right of First, we the the the of contracts exceeded half we been quarter. that pretty of recovery We some in would mentioned, last first and $XXX-plus-million, year, extent the that half said in significant that that awards, to of thought see see awards, to year. the about and and the QX see QX a

the first that say, are half some had repeat I in some – back we some of the other won't year, period timing and the projects. items the non in around addition, would in half In that

would flow I year. would back way positive it back the the So, the half where is in path of operating characterize half we the be in see clearly that cash a

Sean C. Meakim

Thank the feedback. enough. for you Fair Okay.

Maryann T. Mannen

welcome, You're Sean.

Operator

I'm from question Exane. comes next sorry. Your James with Evans

from with Bill Herbert Simmons. Your next question comes

William Herbert

that strength with question Services, Subsea Morning. here I call. second given event? would as Visibility margins inflecting with similar you and XXXX QX second, or a to directly, more Brent. Doug, see you as I'll regard more think that that asked a you pretty event, see we'd for the do sustained in half stick the a that Subsea here on start soon Do

Douglas J. Pferdehirt

Thanks, as operating diagnostics a to comes requiring expenditures to indicated to Bill. our mechanical or or inside see in last to Subsea their the continue (XX:XX:XX) progression And customers run remedial wells. into business, particularly when wells we some do Subsea quarter, increased services indeed, Services of to good it

As through we're of providing you Subsea Well top technology know, Light the and opportunity access get many equipment. leader to footprint. wells our of the we to, in Riserless in that, our Intervention On refurbishments the cases, do

wellbore maintenance floor. that repair do integrated sea While where are and to done, custody trees the digital able have equipment, returned doing be inspection as as often life-of-field the activity that we we're is extensive that platform being our to on predictive maintenance to through services well the on our

see question a all tied Sean's occur to It's So, continue and second note, have half important we're are in well, inbound. year. and some Subsea we the our we those a in recovery, significant of to seeing reasons, to are in a situation earlier for as continue and will improvement where of that we the seeing

extremely are well. orders tracking Our

we've and a competency to retain over to the we service ago remain inbound. year We be able on increasing that ensure that the can to will capability ensuring deliver world-class and committed we and committed that are

ensure we that service period bit between our but provide into a carry world-class will, can necessary you and revenue, to of conversion inbound of transitory the there's a the clients. if the we resources that for So, will

William Herbert

reasons we super margins for and know, that obviously mostly And, Okay. to have on been strong Maryann, thanks Yamal. off

in quarters, surge just as path the impressive order have second getting to for regard glimpse thoughts half, the a any do not only XXXX? but we're intake, you into over normalization on/off the next As margins several with

Maryann T. Mannen

Bill. Thanks, Yeah.

XXXX, half XX full-year back basis. the for see, up for the we've can XX% as year, another you margins to taken a obviously on points So, the of basis

we continue of execution in We've got project. good, the solid, just That's project good not strong back performance the throughout. year. one single to see So, half

that, get and not are more of other to said on until to is milestones. complete plus XXXX, to projects that our we That backlog we Having by key Yamal is see, end can as complete other have improving XXXX as we project still XXXX. complete likely the in non-Yamal. As work you

So, XXXX we've despite our projects, And strong performance in Yamal. from that got margin good fact some the other of the benefit still execution. still execution will coming very have

to solid So, guidance, to early margin a certainly but margins place in set good we for keep a for in XXXX. little us opportunity Onshore/Offshore have giving be

William Herbert

you. Okay. Thank

Operator

Your next Farrell. David question comes from

David Farrell

questions second Hi. It's And maybe same so then, good why of unfair, Kaikias Shell, if up? seeing to from IMO in in client opportunities around was you relation me. bit to Two region could a Vito split the refinery what but same decided Process I'm wondering from you're explain the upgrades? question kind just for a Technologies, just XXXX

Douglas J. Pferdehirt

Sure.

I as remind read follow-up the on was last and question. receive, quarter. Gumusut following thing did we is award an well. no such have of, we sure you how EPCI that order, So, pleased Shell Kaikias, on that very We're you, unfair as proud a obviously, the results Kaikias, announced integrated and I'm

in In benefit Kaikias opportunities in changes we will have both we as be fully We which regards Shell and was remain with to associated refining. at and the can the being future, the had technologies that of not be in the that experience was regulations will Process tendered a we certainly that Vito announced felt client. there being for the iEPCI additional that know, the completed. you And As Gulf by been same confident of Mexico in beyond. portfolio, projects, have well and Technologies, upgrade as we from benefit additional refinery some seeing our announcing the are hopefully time

David Farrell

Thank Okay. you.

Operator

Wells from Your Fargo. next Jud with comes question Bailey

Judson E. Bailey

question on projects to seem of perhaps different to you back Doug, that little to more a thoughts guys. and morning. just color lot of moving Good out get Subsea half (XX:XX:XX) you your be there get ahead. the a the your orders curious there's for on Thanks. I'm over on, year, trying thoughts on

mid-size, You and of guess? large? new half it the of ones the think think of guys five kind of How board in on overall XXXX, just not, put on integrated perhaps this How or about about mix orders and mix rather back do was the six I direction or quarter. the your the size we project timing, you in do sheet, of

Douglas J. Pferdehirt

visible or a Jud, on the of some activity right approaching the Honestly, move stage, integrated they're about maturing into quarters. the the continue. of talked inbound orders the for awards, talked on was many amount I geographical to the through the and well versus be remarks alliance opportunities use thank of will one the which are existing which our them again, a flexible architecture portfolio, to that our as us. that for direct are the integrated going our and be hosts. which projects, I significant in helping absolutely additional to In to of from once back as unlock particular in talked the the have little the our of pipe all because that A Large of think to to And talked question. of will our size those company market, order and way, when coming will, integrated EPCI in into stages in my They're I developments manifold. of are of field that wells if in-house unique latter the space bit may allows We've above. to things to tendering. exceeded market. to the able There's FEED change, about expectations. That's ability now. partners, clients design work, that able you of visible awards quite greenfield bring heard lot in awards, unannounced you Kaikias, be Subsea regards opportunity the and included We're of report you was tie-backs smaller capabilities not of optimize to a more our about to dispersion the the doing our lot about to means lot a ability I that as you prepared there'll which of saw,

mature. more Technically, a selection. Brazil. forward, predict Many know, there place. go and even you're no and of return of in you when and As seeing they've a half been quarter I'm of tenders question to more some projects it's qualified, commercial them, Geographically, those cautious will question or that put they the always the but the activity a is to are have FID been

phases We're You're Mozambique strong North our quarter additional and for the the countries had very seeing in And Guyana with and we emerging forward a Anadarko in Sea of North activity awards Sea, as two we and bit Eni quite you as activity the additional of talked expect ExxonMobil in about know, forward industry, as some being project, past a being to activity and Africa. with as the in move both, fourth the Liza opportunities. the as well. We've countries and in additional those we look active the well.

active side. the very front-end side. active we're on you very engineering And side. So, – if importantly, We're active on on the the the we're very will, tendering most iEPCI on

Judson E. Bailey

earlier. for answer believe appreciate I there. Maryann, will the flow my could, if on And great. cash in of second positive that you clarify believe just half in to that question I wanted and number you follow-up, Sean's flow positive to were Okay, second the your be the operating of color expect follow-up indicated cash I I be flow, cash number to to the you two, And the wanted to just referring and one. not year year. just operating working you year? not the would entire I half capital,

Maryann T. Mannen

Yeah.

working comment My give operating Jud. specific cash sure, to flow. not Yes, made did So, capital. out specifics I was around

slip would I in to certainly, those We cash therefore, half. half talked just timing back back could for positive Yes. be fruition that to to about flow need Obviously, it elements to if expect be be year, to would in operating the projects out, the of that would certain expect some the But the we challenge full-year. us. and, present the of a come

Judson E. Bailey

Okay.

Just clarify. Maryann. wanted to Thanks,

Maryann T. Mannen

You're welcome.

Operator

Your Exane. next from of question James comes Evans

James Evans

for pure to Thanks It's taking BNP the region. just Yeah. you a little bit could. questions. bidding Hi. the solution. about Evans, I of Paribas. wondered in Exane if ask in how few promising about I up a I terms first popping of really bit some more mean, if it's to little Petrobras could a James projects Yeah. more Brazil, those opportunities wanted see my talk you're I

then the seriously target of kind be equipment around evaluating just those, more bit any for is see you. be return And we of Petrobras it when or guess, cetera. manifolds, a the of long-term might some integrated Petrobras et signs model? or it to whether trees Secondly, combining I strategic ordering, must there

Douglas J. Pferdehirt

very you Thank much, to James, all question. for And, yes again, the above. of the

So, just activity the Petrobras. Brazil, we as not well excited about are very in

acknowledged of at by them a best that that a we're leasing, and of you actually, assets. very their remain know, of for and to were preferred we the in previously. for Petrobras were in work others Subsea several supplier, not, been us that still Brazil for lot terms just operators executing category. the equipment – of key you supplier develop are investment look important of many as the are equipment with in at supplier As came acknowledged there's we best options the awards and doing looking the just to and we large if Those Petrobras on to When terms in activities we of Petrobras, lot a

very, Those very that moves newer satisfy consideration of ownership some have orders and of those the – that. Maybe ownership different we're will, a and use in into is, you equipment as different structure prior continue developments orders result and new in structure or proud that because of a structure may that we'll with that change the awards we their assets. from partner is, not forward slight may they that equipment may the if nuance the in may to of Petrobras is important where are the to So, awards. equity there take

an lies there closely. opportunity tracking that So, we're very

you we're up in overall work their of if we're now of terms it's who are In visits, and international site the the of Brazil. front-end picking will, and operators lot very excited doing doing again, eager engineering of lot a and activity ramp-up very to a as well many cadence, with

Brazil. very We well-positioned are in

by have, far, highest content. local We the

for we in built country. Brazilian that's team We operators record in and and that vertically the and almost from we're strong a that Brazil country. certainly developments supply those the other the have proud been Petrobras done Subsea extremely fully track that are integrated We have been Brazil with our of, with done a Brazil international company very of with for most in done have

James Evans

signs there in them Thanks. Could integrated particular? Petrobras is model, I ask, evaluating of any just the

Douglas J. Pferdehirt

not Thank off iEPCI engage very type that much you initial phases have on should to project left very will first new way very We some for believe become so of see Petrobras that an could the answers, model. we quite follow-up, the more It the of confident in significant of the very some you obviously prove the that could that an thank and then feel much. be integrated value may of in I strongly developments, and improve which be value-added, but to it tender standardized. a very create a well and not we will economics, future

So, on that have. are yes, model. the because iEPCI an advantage obviously that's and when or a of really say we we to working been competitive where with have don't Petrobras application I significant want

James Evans

Thanks, Doug.

Operator

Kurt from comes RBC. Hallead with question next Your

Kurt Hallead

Hello.

Douglas J. Pferdehirt

Kurt. Hey,

Kurt Hallead

talk on you pricing us start – wondering think bring business about was if those your and maybe still a I could iEPCI, that's the some But – maximize I to you'd advantages you on Doug, would for competitive FTI of color shed Hey, competitive projects. Subsea Hey. that all the of Subsea awards, some how on FTI margins for and the talk technically brings the dynamics margins those pricing to for ability or kind could maximize playing improvement context you about in see provide in iEPCI that environment could maybe you table. out? direct in for to be example, and what light

Douglas J. Pferdehirt

you. Thank Kurt. Sure,

most we've the what sustainable development economics. And that's been not important. you're It's we operating improvement inbounded that a you the structural year economics, to of but accelerate importantly, real rate, on both – life in a everybody the agree based early customer phase show on about we through is project That's direct project and started lowest project economics. that the looking award unit economics, in as of on client can an for in and integrated capital That's rate, the really the and has activity the drives about. can improving we So, if the indicated, win-win, recovery on our iEPCI. a hurdle sit their And the economics upon really savings project with economical price incremental of asset is FEED the of that of where our That's really discount, the lowest a just phase, optimize this Most cost in for increased project XX% or about where upfront we a the mature on real, where the rate not XX-year of promise over new return then That focused and conversation. activity cost. that conversation you not cares of you own and statement. individual favorable the production. truly project create time the can It's first and best way. and the asset, financial not a

creates earlier project as on wins. asked. I is that result, The indicated everybody additional question an As Success successful. a success, was

prepared drive and And the be my now everything are integrated we repeat have this I in is company is the as where there projects get will the It installation, a between try system in and out inclusive out, project remarks, customers value Subsea improvement full create the bundling Kurt, by to create greatest which in really on creating sustainable was sustainable of same, only to in grow. can important category, there. put really that the to all a found bit technologies. point that, investment TechnipFMC, there way the us and several that able proper and the real to equipment, saving. to to going to We said allows into continue focus quite we We and to of not

Kurt Hallead

helpful, Doug. Onshore/Offshore. on maybe And similar the comment Appreciate That's Okay. vein in that. follow-up on the

on capacity You a with opportunities demand and talk pretty think in in knows of increase there. for what's LNG world business significant the the about I petrochemicals substantial and the going increase for part additional

margins future prospective that keep does, can that initially what the number limited get level can it margins of do FTI stand maybe would the what reason you a potentially expected? the bookings to higher Onshore/Offshore Given at can what's players than on

Douglas J. Pferdehirt

to referenced awards. we of we that, deliver the kind what rate end X%. $X X% run billion, have of industry on margins LNG – indicate to include you $X of of past We higher that would did the that at time that to Kurt, average would the about in a not of Well, billion was expect on did

experienced expect competition LNG there's that do significant area. we that are in So, are fewer, players less and the projects, these

We and currently as from the are capacity amount Prelude, the leader XX% Mozambique. additional Yamal, of installed in as LNG, having FLNG for Coral in well Eni capacity a working on significant over of delivered the

on you next us. have and lot many onto but a projects, value about shareholders. you skill, very the customer, that's negotiation. successful activity, in have a of project. We'll That's what we can excited a the the when our direct for create best the are selective in competition, projects project, incumbent, for be but projects In you selective think we're only next we'll as allocate in direct competency, very project those you greatest have we very So, less we current of where very we for And, in are would that one our and for remain can indicate. when wave you're the cases, those yes, for ourselves, rule our resources mean we and be potentially knowledge will benefit not negotiation, will benefit that

So, we're very excited about LNG.

Process As remarks, excited my very about prepared I indicated in also we're Technologies.

a you be next a very well. wave our very different over have around And company me about XX unique This we ethylene. leadership position a for have particularly projects. We a bit as in some representing of ethylene would which good portfolio, talk heard technologies,

Kurt Hallead

Doug. Thanks,

Operator

question comes Rob Stanley. next from with Morgan Your Pulleyn

Robert Pulleyn

the higher? I the just very have up $X much. I that Day, Thank very on one you. sheet helpfully complete around question. And if word. update Is Hi. part balance was at to call is, as you. I'll where of cash to Maryann, of us would one limit today. conference the of also profit their upcoming joint Thank venture recognition you same? working you the as without just just joint $X on no of could and to bringing Is why it you part indicated it owed time it it. that Thank Analyst lower? question corresponding and billion That's billion their contract, that needs. partner, suppose ventures it the be the give I stands capital the wondered an the Is from

Maryann T. Mannen

it Yes, a Great. point right. absolutely in November, Thanks, in Back billion. Rob. about project time range you're was we that the at yes, took and said, of in of snapshot right the $X

continued do the two last the has to you quarters. over As well know, project

made million. million, You've as payments. it. out seen paid In this another seen that flow we've also fourth you've we we've incremented associated the And quarter the some with quarter, interest and about $XX again, statement, cash expense in $XXX probably the

life on the we the between project, and of as that yet project the to we're $XXX based see executed now the million million $XXX probably being go. for $X billion, sit somewhere So, here today, we below way

So, $X now. billion below the

Robert Pulleyn

That's sure at that I it people have leave Thank extremely helpful. other I'm questions. because you. will

Maryann T. Mannen

welcome. You're most

Operator

with from question Jim Credit next comes Your Suisse. Wicklund

James Wicklund

different many guys. that customers, customers, how Hey, being XX% can activity XX% iEPCI, represent? on of you Doug, the tell me does new

Douglas J. Pferdehirt

Jim, recollection, that have the seven my I – we're think to announced, of best customers different we we've we've seven announced. that

James Wicklund

the really breadth so asking that question. integrated model, of the was to would, just know if And you adoption, I'm the fully of that And...

Douglas J. Pferdehirt

you – well, color that, Jim, Jim to Yeah. don't And, mind, then. I'll if add

James Wicklund

Please.

Douglas J. Pferdehirt

great we a coverage bit. really was market, a iEPCI well iEPCI. in positive where global last question had secured to an not earlier and geographically iEPCI little in will, left you had region a And yet contract if of that Asia we would hopefully give We dispersed. dissected expect would that Brazil I is people quarter. penetrate it about that with answered that we previous a secured that had – at of you'll Pacific. see I had what the message us, Brazil, which point kind We it's One see engagement, pretty

broke opportunities. slightly tie-backs broke We down partner than greenfield There also between non-partner partners non-partners. it actually and was activity. We more and it between down

when that hood integrated at importantly, look well-dispersed. and I So, the FEED again, when look to it's many about more we I in client. to of in pretty the our in you'll would of pipeline the are proprietary done say is even which see dispersion what nature the have under they're available And with – studies, not rest because I look the grow market a greater. I being

James Wicklund

of you need portfolio of what you you you're to the investors over today, the full peers, they're breadth Do of of portfolio is, where That's that of capability? you is five need on capabilities. talk less their and at things Okay. wish of something, talking least follow-up, be about front-end? best Onshore/Offshore. geoscience these to, a you sell talk the the reaction more years to I you're next integration that trim over such or currently your need end of own guys maybe strategically three on less to if you five the in to and construction expect relative full have? the next that. gosh, what be your they'd I where to geoscience you – breadth you on My could, one days Can most most do end effective? I And to years the Does Or of luck about

Douglas J. Pferdehirt

have Jim. point period, Sure, capability, And the want industry's front-end we stop. full to out, I do leading

but in end, way, to production front may we not the we if no, to all have projects. need the So, do projects we order will, you development and go what

as concept, agnostic – group front-end base as will, then, leading industry's now Group we integrated well. or, the So, well, have front-end And have engineering vendor have we pre-concept, we you and engineering. now our Genesis the if as

space of in additional we and will, will, a When that you our, very is that stream white terms to necessary further necessary, and I enough. So, where value the strategically space, has team, of of not generating amount space, white that that is white do opportunities of value not our projects. acknowledged significant is Subsea completing developments industry you see, if creating for drive them you very, look there proud if ones at the company, and can't acknowledge they're

and industry the as integration that what as TechnipFMC. the known has integration formerly what was formerly which known pretty that's as was required spoken between believe SURF, we're we the SPS, known now is is So, and comfortable,

James Wicklund

guys. Thanks,

Operator

Hodée comes question Cheuvreux. Bertrand Kepler next with Your from

Bertrand Hodée

your probably Yes. by an part year billion. any Hello. next something be because there? if One and momentum were Subsea revenues, around see $X year I for, question you Because Services, billion. around And well, $X.X was do to important going last you is guiding this XXXX, remember of

Subsea you So, see do what in Services? there Thank momentum much. you very

Douglas J. Pferdehirt

question, Bertrand, thank you very absolute of portfolio. much for part the an critical our

TechnipFMC. As XX% we It intervened and more us requires helps that, said, XX% installed Subsea we wellbores, as need as even a that and XXXX. wells ongoing you have of What said Subsea CAGR is we more Subsea And we'd repair. inspection, said over know, go I is have the maintenance upon, into base more. through

what math growth opportunity out a to but think just our less company. you indicated, I significant the if tad comes still a than for

which is service existing in our both extensive there also through you're TechnipFMC. grow new You'll us capabilities service additional line most portfolio, into we'll that bringing of see within the us the But grow going activities be industry. see the

a our our upon We leading today, offer absolute predictive our lot We will, of achieve Data. based a of demonstrate area of have one we full big we're footprint or Big space industry's is looking for all greater to to the The We've many one now sure, do clients. the that even for can model, direct service if So, that for we done today. continue provide will, the today of in opportunity work spend time we that one customers clients but much at, that you there because now award is to OEM customers. maintenance, now can if and to full that a it's Subsea best-in-class capability, value our that digital. we It's more an activity extend ecosystem, It the it's focus. we you on. a creating that and important kind the lot as an

going you'll our that – our in the how grow achieve to capabilities and rates expand we're Subsea grow be goals to that, digital leverage that that or So, Services out lot and to the there'll set hearing we more about a previously. had be

Operator

The Pope Pickering, last with from Byron Holt. Tudor, question comes

Byron K. Pope

Afternoon.

international seems skew I the might over Doug, as Just to XX say in you think International one segment. North growth I Technologies, Surface I profile toward more XX months. might to of your the half prospects, think that you next question the as be think on skew start remarks about it And heard growth though America prepared – than

of if set growth that to So, see segment in could you just wondering terms you the opportunity speak forward. that going in

Douglas J. Pferdehirt

thank you much. And hoping was Byron, was remarks. three last it prepared I slide my as about, of and a the to very in we the talk my chance that get last

we We in around are leader the in we strong Technologies. Subsea, in optimization Surface LNG, very completion particularly the a have position are and leader

appreciate really do So, question. you the asking

all We if our the challenged America being some Byron. strong. optics, That you will, right, period. market, North transitionary know it if and will, asset-light, said, forward been We is market North business has that in going the you You're very American for mobile. has a know

quickly. shifts, So, when can as shift – we base and very if customer the

as we getting it speak. As a we're matter of fact, of ahead of kind

So, as about before, as favor, we that bit That, leadership we've position and been talked anticipated. the have market will. to not you a to position, lethargic. a if It and as we still international has historically in our have extend we around quickly did market. and The that had plays leadership maintain is international come intend where

our reported more That absolutely us, That's will for than positive the more probably a we're market that fact segment, and effect, real we'll of You've I'd be from who green is as to They're as they're more proportionally. to seeing, about in shoots. look momentum some will, benefit well. forward benefit, important excited that we heard you even market, before international if and but that the Technologies Surface recovers. have very will our that XXXX seeing say, international as others, that company even and

Byron K. Pope

Great. Thanks, Doug. Appreciate the color.

Operator

turn will back now to Seinsheimer. over Matthew call the I

Matthew Seinsheimer

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

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

Operator

today's on I call. like everyone joining would time, disconnect. may you for this to thank At

TechnipFMC (FTI) 26 Jul 182018 Q2 Earnings call transcript