FTI - Earnings call transcript Q1 2019

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Operator

Good morning and welcome to the TechnipFMC First Quarter 2019 Earnings Conference. My name is Carolyn. I will be your conference operator today. [Operator Instructions] Thank you. And now I am turning the call over to Matt Seinsheimer. sir. ahead, Go

Matt Seinsheimer

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

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

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

Doug Pferdehirt

X.Xx with of in quarter very backlog the QX good reflect Total of billion of adjusted of resulted quarter This revenue million. total in strong period. book-to-bill billion, first $X.X quarterly call. towards trend integration our our highest morning in billion. $X.X company company of were Good which X, the company participating new with orders total sequential $XXX and first And with iEPCI fourth quarter with of the inbound Matt. afternoon. orders since in represents in Thank a XX%. EBITDA above awarded you, of Subsea for $X.X we you Inbound Thank in X earnings the had XXXX. book-to-bill growth level increasing orders projects was

to addition project and contract an and the second Petrobras’ North phase installation Johan the for were we Equinor’s equipment integrated awarded of In in in project Mero orders, these Sverdrup Sea Brazil. X

We significantly While results replicate for full activity in year, this our back In be of be down weaker-than-expected change business completions recently expectations and the low for to our timing quarterly for awards America year. anticipate America now Technologies, forecasted to current in modestly level prior double-digit the activity led recovery no outlook of We originally year. order our success activity expect outlook. of to completions has December. our longer unchanged Americas, high we remain supports the Surface had difficult impacted single-digit will announced Outside to revenue a the these the versus North in North growth. the in

more includes as project delivered XXXX, the year Tortue than major in the a inbounded inbound downstream large billion. expansion quarter. of States We reach. double in strong quarterly in monetization for as $X.X Greater and record BP’s a refinery breadth Following in ExxonMobil Beaumont well Africa. West award geographic well were for FPSO our inbound gas offshore capabilities our contract gas revenues demonstrating as near of quarter, This the reimbursable the United in Orders projects with as onshore/offshore of in the the booked orders onshore/offshore another X

quarter we also last included First the that refinery MIDOR announced late project inbound in Egypt year.

we collaboration Arabia and our to in in TechnipFMC. growth opportunity can onshore/offshore position Surface strategic and segments. a our market number Saudi in further engaged investments the local for agreements have improve both Technology we and development, content expand we With projects, these to the addition competitive support In of anticipate and

Moving of increasing opportunities, company. demand The gas for outlook from Asia for the infrastructure natural largest need our by remains for Pacific. understood strong LNG for is the market primarily well to driven one additional LNG

experience upon tracking the for strategic set, the relationships. X reference client future prioritizing LNG projects project projects opportunity successful most positions significant next to see list XX be are countries X different X contractors partners. potential potential number globe. these us, is market are TechnipFMC incumbent minimum projects With months. new TechnipFMC critical the we in end to that we of of probability offer different assessing facilities with Of and are will in a over across X the wave our XX highest the small the leverage capacity When with global can of XX and the from next are X we that gained and liquefaction activities design more these, These front execution. LNG engineering our of our deliver projects, among extensive of global to than our sanctioned customers across

well are wave. participate We next positioned this in to

in instrumental majority integrated of iEPCI awards. our pipeline for securing key us in Subsea, differentiator is and the FEED capability a to Turning our has been

year the of iEPCI have customer providing continues mature of initial set opportunities. opportunity anticipate far breadth years The Many we exceeded we conversion sold of portfolio of prior double nearly a studies of We number our further has to to in into and exclusive now closer with studies look new iEPCI working expectations. and are our been X an at for awards. diversified studies, adoption TechnipFMC. Taking iFEED of iFEED on project continued portfolio projects, strength XXXX. studies and In of have an iFEED set a developed project growth the these extensive from nearly iFEED XXXX, proprietary

with portfolio April, additional of iEPCI have We in have very and months new developed and the four X the of XXXX, anticipated first in X awards quarter In soon. the first we the projects diversified most largest secured of in projects, the integrated X industry. month

projects further ConocoPhillips, and Lundin, ENI with iEPCI have all integrated to BP, adopters. from proud first-time are We expanded new portfolio our

iEPCI We are strengthen additional we working and are iEPCI Lundin, generation and the new to secure position. differentiate extensive and some traditional the further operators, today. decades now alliances next of for Hurricane, including are Subsea These more back foundation set market relationships, list than are alliance our Energean, of to which alliances two and more of with much executing incremental forming deepwater to our we date of work Neptune the agreements

pioneered think industry act consider and our how has and this clearly company It has integrated landscape. been. is Let’s been model broader impact the now disruptive a commercial has on the profound Subsea differently. We having it and transformative model to challenged the and

our represented industry’s provider capitalize XX% are Subsea towards integrated on integrated provider, in As In that fully solutions, only service further integration. level expectations given of trend integrated the confident we XXXX, absolute And projects exceed we Subsea will XX%, XXXX, which iEPCI this for order of iEPCI higher orders. project a would of well-positioned approximately our indicate are greater growth. to also

leverage Another This projects assets, and the manufacturing people, ability our our of notably, the fleet to benefit iEPCI most utilization. our of our recovery fleet. will is operations accelerate our

this offshore of majority fact, the campaigns awards In announced beginning XXXX. year have in will iEPCI

of market platform brings further have to Subsea studies technology. acceptance. X.X our included X.X XX% differentiation Subsea Subsea of growing XXXX, innovative Since experience FEED continues the beginning Our and

have deployed industry Subsea The outlook We already for continues Subsea X.X are the equipment. tendering systems full improve. production and Subsea to X.X

highlighting engagement mix of further services the In of partner tendering. We awards came majority diversified alliance direct well from differentiation. increased are quarter, level our subsea encouraged project iEPCI projects the by client and our as and awards the a of as competitive

with Our in positive growth and updated slide market projects. value both trend the deepwater volume the Subsea opportunity the broader of Subsea reflects for

are to capitalize We opportunities. well market on positioned these

position the we key benefit experiencing markets. intend many are returned has positioned growth improvements of end company is to well recovery. in continuing our But Our to cycle, do ourselves for portfolio our market than and more a this in we to just from

industry, As undifferentiated value. services depressing across has much in and sector scenario, displayed deploying the a of many oilfield creating too for peak capital behavior returns little, assets similar over-investing shareholder if shareholder any pattern cycle a cycles, often an

investment of prove on in through-cycle disciplined returns basis. it to financial needs can that Our industry while manner, community capital prospect to of a that cost the our offering the a invest exceed

TechnipFMC, discipline sheet. the starts balance with For capital

ensure grow awards either M&A. business the investment, strategic new have through we that or business to will sufficient capital We

We will continue to shareholders. return excess capital to

strong execution, will higher to over the quarterly over our X% over the Our us opportunistic share balance and more drive the provides call financial capital now detail. our discuss actions sheet Maryann for strong results our currently when And in are combined I these dividend returns we can time. flexibility to with yields repurchase. turn with operational

Maryann Mannen

is quarter. now throughout XXXX has momentum in order $XX company billion. nearly Strong year-over-year Doug. Total XX% to backlog up the Thanks, first accelerated

after-tax which $XXX exchange growth of by in FX expense negatively than company payable of prior $X.XX XXXX Full earnings margin liability to operations quarter per valuation more beyond, diluted interest venture execution which in in the benefit quarter. corporate credit and the tax not or million partners continuing quarter, $XX $XX an expense. million diluted In guidance in $X.XX outlook. expense the million per to added share share in reported to we reported allowance, or per the total and quarter quarter. We income is EBITDA future increase $XX credit. Adjusted the related year declined and million losses. charges foreign in the $X included to impacted our provide from items supporting $XX when quarter do unchanged. corporate net year The diluted and $X.XX million pre-tax expense; exchange excluding was $XX.X the quarter XX.X%. first quarter will tax quarter $XX.X EBITDA This share the income million the of Adjusted the non-cash year for million the versus million that of backlog included Adjusted excluding also medium-term prior the our was $X.XX in joint loss $XXX We of in billion included foreign compares adjusted reversal impacting in charges to diluted in a share. were for excluding period. of include expense guidance following: remains Other per

We of our year rate full range tax continue estimate to in to XX% the XX%.

backlog to Technologies of At orders, project In that of prior than America We year completions-related to Subsea operational revenue introduction XX.X% result delivered charges the revenues. margin completions-related revenue XXXX And margin of The in in to in in by margin first throughout line performance by we course in in each lower segments. of a financial delivered quarter by revenues most business awarded in the expected completion, December, of projects as early sequential performance significantly activity over stages LNG. negatively and notably recent Operating project into versus activity, moving are shipments key activity for to Several subsequent a strong expected onshore/offshore Surface quarters guidance major mature. on result projects decline related completion quarters and are prior delays our projects was the Technologies, the in at America. on new is in was onetime the Modest XXXX. product time, XX.X% guidance North is the of robust now of with more to Yamal forecasted Adjusted our growth of provided outside our delivered Americas Surface contribute were lower to execution. our year closer quarter. as segment, supportive more product EBITDA decline least North in impacted be profit predicated full quarter unfavorable of improvement year line mix in decline subsea XXXX. for services offset XX%. of assumptions our Turning driven

first However, quarter of the XXXX. North further American activity declined in

a to operator North decline in from of the impacted for completions-related The activity. Outside revenue Our the also the America market Americas, adjusts growth. unchanged. reduced market. in the now single-digit We remainder for digit by level. the to sequential experienced led supply North This high year remain related remain We current negatively business largely has single-digits. service completions the the pricing to as and expect expectations mid in anticipate to activity unchanged our spending product our low-double created outlook excess activity American revision lower a

at for Surface updated this guidance market now EBITDA margin margin We of outlook, are least Given decreasing $X.X XX%. anticipate revenue billion XXXX and between we our and Technologies. $X.X billion revenue and

are We our onshore/offshore. in guidance revenue increasing margin and

in quarter XXXX. first strong in billion the Given forecast billion to $X revenue we of range now $X.X a inbound,

well milestones project We are approach on is XXXX least our projects guidance reflect execution as from also least in in growth raising by it to in Subsea, we additional onshore/offshore as the EBITDA unchanged and for guidance In good at to the at backlog. XX% expectation first our strength margin performance remains nearing supported well the XX% continued financial quarter as completion.

positive prepayments of benefited Yamal flow, cash in project to a the receipt quarter operating Turning the on million. flow we cash period period. from our the awards. key of modest The use in generated $XXX flow was operating of customer cash

continue approximate expect when positive million. We $XXX be in from $XXX to will to XXXX. cash cash impact excluding of operations flow operations the flow to from Yamal, million And

the flow quarter vessel, within as lease the the excluding other in uses we will million. our all leaseback remainder included category retain operating transaction sale Beyond this the $XX note in and the also shown the our intend term. not period, repurchase we XX. $XXX financing million. our we have is million that million committed cash for disciplined support statements Other in it spend a we the full financial was Slide do of totaling in of the of remain against cash have in $XX $XX line, control netted transaction, $X.XX to We we asset consolidated Since quarterly debt closing dive of another own the year was guidance capital our period. of reduction as a settled investment walk quarter approximately which the dividend to quarter share capital the debt in the in was meet in through net CapEx Included vessel I of the of but on declared the the XX% revenue integrated our increasingly backlog, Surface evident of American demonstrated up quarter. as XXXX improvement guidance backlog the in success million in awards the margin in awards by preparing revised a is $X portfolio. guidance our lowering reflect of million Total and closing, now new execution coverage for the inbound Technologies to the and cash And the strong of year in QX. total, X our $X model to year-over-year. a Yamal company further for We solid Subsea to venture raised is for LNG in ended billion. decreased distribution financing, the project. $XXX cash with partners vessel $XXX the improved cash orders were of services. addition inbound of Unannounced subsea In revenue consistent the revenue billion. position iEPCI activity. are this across on outlook North we In period joint the onshore/offshore posted before net Subsea with broad-based in With while growth We for considering modestly

our in call to disciplined leveraging to growth strategy spend remain returns execution stakeholders. will may the growth We support our now this up all for you of profitable Operator, superior while higher open the for deliver and differentiated and questions.

Operator

ahead from Instructions] the Wells is of Bailey line [Operator first Go Jud Fargo. question from please. Our

Jud Bailey

Good morning.

minimum question starting I margins. you me. A think of off that’s still guiding Subsea, with to are XX%

that bit next going is quarter. or first could talk little in margins forward? this about think You below above progression quarters hold think Does margin can going to maybe next think couple still being dip you that XX% started to of quarters, the us how we Do level in mean conservative? couple in the that about off Maryann, you just over out please? about of of that, we kind help the are a

Maryann Mannen

Jud. Thanks,

see our the know, given is So that seasonality and typically so typically first our as you softest declining. line we quarter just quarter top

at certainly and look our feel the we of we guidance could revenue trend the seen the revenue As like that. end that high we inbound toward have coverage,

volatility margins and we move of highly see at period. we would but down, confident the guidance margin the of the we up expect As XX% bit talk to a little strong certainly EBITDA in of least EBITDA projects are as about performance,

Jud Bailey

you From think quarter-to-quarter degree is guess can pacing to kind you have help the about how about Yamal progress kind a amount progression the how will flow statement? cash my some on I through at MRL us annual cash you kind addressing a the Okay. be of Could standpoint, any pretty give forward. all? to follow-up clear things how flow of going been the to basis color for on from flow us of some either timing of going or think additional

Maryann Mannen

Sure, Jud.

the payment approximately but for so seen the At So a ability our this of for this a certainly and the have the you balance a that in payment certainly balance of year, planned partners, the the partners quarter, do to we year. have we to that quarter. of request in may $XXX is possibility make did JV the million not actually juncture, have

front As it we operations positive. we full as Having cash the are a from expect that, half than back end to to of you be no of the on expecting that’s the I with basis, and expected relates have the from we to said flow cash of weaker different what probably again. flow, shared first year before, cash continue year flow probably than to our the year, half be operations,

QX, if weaker the QX, probably we little last back to you so of year, So saw a and half pattern, will stronger, then similar obviously a bit what year.

Jud Bailey

Okay.

So operating pretty was an good. first came quarter cash from perspective flow in

So so that front of the case? loaded working year, you still think half in Yamal the kind a still of more terms the little movements, that’s capital of front-end

Maryann Mannen

we quite successful. Yes, were

As is as the orders had we some critical we good component Yamal, in is you about and to progress progress that the working inbound receivables, quarter. probably the talked the continuing efficiency etcetera. we progress see. have advance given on success of imagine, We carried case that capital a payments. just Obviously, the made But still can new good on

Jud Bailey

you. thank Okay,

Operator

is Rob Morgan from line Stanley. from Pulleyn question of next Our the coming

Rob Pulleyn

the return made really about the the a that or the on can as up? capital to the capital please note given that much remarks. go from base Could to TechnipFMC discipline, side bit you is on good you Thank thanks. refresh obviously of the can emphasis in Yes, intensity quite would little have prepared We on the recovery capital leads up that need where question strength think Hi, I on capital intake? leverage asset order cycle in morning. question soon? return A returns but how think ultimately, the we Doug do picking help your understanding anytime point you.

Doug Pferdehirt

that are and in you, We all are today you Thank the is reporting. Rob heavy to of today. know you day particularly a that phone companies of thank on terms

your you – interest So for interesting you thank our very point. raise bring a Rob, you in company.

have integrated benefits the opportunity most the we or part business. and intensive capital One the of is company to as an of if will which you we utilization real integrated have fleet, of timing, the heaviest an our part is the only leverage company the our

and manifold. iEPCI through tree other we leverage cadence historically or doing or installing let’s coming alliance. back later things and we do installing companies quite in in can manage than scope, later are that we greater a that we When unique or the – So as had hanger that an installation we back therefore operate manage manage cadence tubing we installing coming and the feeds when they the the words, independent that tree the much create around that manufacturing we project, operate and and say the hanger also schedule, under as do our tubing peers and an

that that the way So, have experience benefit of within in those this we delivered, we We been we full to projects real begun that benefit is three we operate. that cycle see have a to-date. – the have that already

X.X way equipment – In same manufacturability because designed much for a to way throughput new move the Subsea the to the deployment allows the the us our of this our drive and greater manufacturing we through simplification that technology, and have facilities. that improved deployment was performance the further more addition to that, towards we an really of as capacity technology, or

So, we do indeed anticipate increased leverage.

Rob Pulleyn

to you also filling. much, for Thanks Thank that understand the theme, you think if in XXXX maybe vessel these outer you very are utilization the are it and of both to follow-up side load can mentioned out Subsea is XXXX how just Thank the if Doug. I even you. And today? the for I you. the about talk on many right Could filling it and a as beyond maybe equipment for looking years and way awards bit stands that’s little out, same

Doug Pferdehirt

Thanks, Rob.

to and things, we are able the the one, first an So, schedule. project throughout we do oil use to when entire two technology, Subsea we iEPCI X.X accelerate time

we can contract the we the if portion can be So do installation earlier would normally bring a of under than done contract. that, it conventional

benefit begin and projects, the that’s these early one in first see to So, award quarter. iEPCI inbound on that’s why we

we Typically, begin that clearly saying, of absolutely Subsea that, but quarter conventional we occurred will not a XXXX. stated, to installation spectacular had XXXX an on of would As first we of not in are see that, and occur activity, some project. was some all have until that

start of So, you quite iEPCI that view, an to from Indeed, assets see that’s the level some of can to utilization we increase you the of significantly. see that bring start get benefit forward. when to to the of you is start XXXX, point industry of

will continue ensure to others as we have we success. that continued able partner to very with first but capability iEPCI to We well to work ensure prioritize our way the be and we a activity, right access then our foremost and well that to ensure have and to

Rob Pulleyn

over. it turn will I Doug. Thanks,

Operator

Evercore question is from West of next line James from Our ISI. the

Doug Pferdehirt

it’s James, possible be you could muted.

James West

hear guys. you Sorry Can now? me about that,

Doug Pferdehirt

Very well. Thank you, James.

James West

Maryann. Doug. morning, Good Good morning, perfect. Okay,

same performance are we in in your disclosures? this are necessary both Could from at is if little a levels, the So Doug, one detail of go great you curious the down can’t more whole the corporate other governance, metrics pushed that to returns, to say things which drive company. how ranked see on the on proxies exactly things that around of they maybe focus business that’s and with comments you against glean you this done you though from agree totally we we

Doug Pferdehirt

you Thank the for James. question. Sure,

basically you. provide leaders that is but and right, you operating some are commentary of so business when that’s to We take share for top the you statement everybody NEOs some the a a report, the there returns granularity additional So improving made. UK so quite level, company. of objective P&L In we in me down remuneration in the let the driving to same that’s all returns see unit additional few we people, detail, company, our share as the the comes it

team I the to you bit critical, it confusion a corporate if organization team, doesn’t you think the and executive that’s begin get in results. actually or quite optimum because achieve it a disconnect it’s of create only the allow and to the can

So, we the all we created that ensuring TechnipFMC assets, but we not way that our as quite the when instill would felt investment on only right strongly improving and that making through the culture responsible the are behavior and we they for at that turns those also all decisions. look returns

indeed, So it organization. and within our deep quite is goes it shared

James West

I of the the what the not XXX% partnership growing, same is margin, fairly better year, then course much because Subsea awards guys the the returns maybe of are coming question, Subsea pricing? through? projects, with the maybe probably on or in in perhaps at not understand but some more that’s follow-up come this And And in disciplined and point, guess is the still seeing come quarter this that pricing of is, some market the types you at overall related hopefully a I is – business, iEPCI so the to but that and the quarter, profile leverage so I Perfect. behavior there more obviously, how into more strategy. with margin competitive levels, massive other agree here, it’s backlog? for huge a to a but this roll

Doug Pferdehirt

the first. will, part you indeed, summarized second And quite you am if to I James. it and Yes, – accurately the answer going

we engagement, through that shared have to project returns obviously a is objective often an clients strategy, an in. is early on direct awarded being exclusive FEED our as able favorable work In where position terms to of an our we the through to integrated we meet and clearly with when be project study have then on company our basis threshold, that and a

have way, important? XXXX, XXX% those that iEPCI why company is that Now, only we it was awards, approximately award. to have received, all one not we been awarded different XXX%. secured In was awards of said our direct XX% have or that Of a direct there

total So over way gives our XXX% James, being exposed huge year. iEPCI are iEPCIs awards opposed XX% in that far us the from as the Those thus clearly, award that’s the to a value coming advantage to XX% to to competitive coming – market. close of

impact. So a huge quite it’s

iEPCI awards, indicated unannounced Now, direct prepared those by other two announced is – were the again, of I we projects mean, partners. two of and that tendered did quite then did that have it – those as I competitively remarks, in not other being my couple were we not announced were have that a awards there many awards, awarded alliance our But still is competitive.

look as decreasing upon projects are managers assets, that if for most the deliver look is it. the to you start successful as will, people becoming, where to improving our rates we forward can customers. you looking do that at capital as manufacturing same ensure is you Although all under how forward our project or to well was the assets, asked as absorption you earlier we depending and Rob, And by utilization planning see capability the

more and project have sanctioned issue the has but timing because is FEED there to was we that that. knew would you’re some to The glad I kept from then do you It a seeing to convert behavioral had priced you. be saying We So, competitively are a said those We we occurring we get all that shift is and us That’s through do to as on we by capacity up to tenders iEPCI, when would it the not we load that. stood patient. firm before seeing peers, it. our be and opportunity had an was huge than of what now did proprietary we took set. we’re times candid it’s were just we And direct We and our lighter advantage will we client that. XXXX made that benefit the we of this but at with direction, seeing us. little strategic awarded study. a be of see a

continue to be be will our we’ll be that that So awards iEPCI There’s announcing. more going strategy. to

James West

Okay Thanks, perfect. Doug.

Operator

is coming Evans next question James Our Exane from line from of the Paribas.

Doug Pferdehirt

the perhaps mute? James,

James Evans

Apologies, apologies.

got Second from Exane Evans BNP James - a I’ve couple. Paribas. James

Firstly, of mean, in sort performance, great that growth the to seems big was through. given just margin digging onshore/offshore. detail, coming bit into It charge the a me I I reorganization surprising a noticed

you you’re can impact on one talk on what there. Surface, you give product a to an going little be secondly, bit the And going things business? cost it forward? if in you’ve mentioned positive that then what a more I new about to you’re detail So, as more of QX in significant is that Could a introducing; slant is that just there being Thanks. bit you the a introducing think was of this doing about

Doug Pferdehirt

James. Thanks,

Let market with were I of the was in is The lack question the Surface distinct this. first think It and me the Look, recovery. full the One that market, results it important unacceptable. because a quarter that I we business related really our X together. came to address start Surface take responsibility. things was

planning market. of built expectations the completions-related that actually for matter may that That that recall, year. we now the expect provided not graph do into a activity as our and we of we occurred. you the when forecast we the a had And remainder occur provided therefore, our As has related our to of guidance, not to showed fact, our

a that, as we’re very the impact. material So, that result was a necessary adjustments but of making

behavior the customers. our pumping The was us area the in pressure by second impacted that quarter

that the either and heard removing the already product a for true is of fleet. report assets or have this you the idling fact As season consistent that, It those so has will, you theme they many throughout mix, that affects if are us. from probably been assets far

fracturing the clients We the customers. hydraulic the are pressure consumables pumping industry high-pressure of provider leading a for our and are

as product. And So and be that issue maintained, thing that, introducing quite behavior as modified very impact of recover and ahead of equipment significant upgrade within that consumable. their well. finally, will introduction. product our actually be activity And be existing then that were is couple got to cyclical is a we dramatically, that ahead recovers, is the repaired the with assets needs which business. ourselves That very for our had to on of as ourselves business, replenished. to we that need will period an inspected, of we a a get allowed those It cost we that just an to business that’s know market. months, an had was strong business a replaced. will and One on into us, a will we It And new market that

quarter but now us an be that in to some We’re addressing in to required of latter the stages had able adjustments. the impact the make that, that quarter,

things coming that it really results. James, together, to was So, three those really led the

We’re making an guidance, in are. we identified required will the see we adjustments we our from certainly we and will that as and are improvement where

the quarter. items, of I’ve product in those off as the it back introduction, significant you If had one-off ones indicated, kinds the particularly around impact a

of result was year So, the up, margins lowered but as a and the to full we’ll we back have activity. get that the market guidance did lower

Maryann Mannen

James, Maryann here.

was was what your question adjustment reorganization. onshore/offshore the the for in and think charge I

So be a to final business a growth and that business in a that all-in-all, effectively model in the period, this model, there particular greater That out now that in us also were particular for have different really structure complete restructuring the lead and a so compete so partnership that opportunity more we onshore/offshore enter closed using able to to access manner. in so well, as in to we business to allow in jurisdiction region that onshore/offshore, a with can were positive change them completed payments jurisdiction. particular the to business and we market we will

James Evans

I the in is slightly Okay. that your And I in, to a returns, X end about Rob’s with markets? CapEx to the you different of ask $XXX want even next extra and question that sustainable risk just sneaking say, way see in guess question level to over one $XXX the at million, million an a years the growth with is, X the

Doug Pferdehirt

very way capital of rate function something forecasting, to the that and our to and just overall, in it’s a both are CapEx we it’s across the terms way James, that of the we continue address the but and we prudent that monitoring growth company. Obviously, be address stewards we’re going

more very to utilization. much of we And of new with terms It That for very gives level of we their pleased learning most available manner assets again, and learn amount efficient the how our of it. an ensure in for create and highest live we’re from safe the realize being us in we’re liking business said the in world will to model. always the it we that capability perform clients. more different it, a quite people just activities It’s utilization, much the are from success that leverage We our have. we this we enormous timing, the the phasing have we and the

James Evans

Thank you.

Operator

Meakim from The is line question the Sean of JPMorgan. from next

please. Your question

Sean Meakim

Doug, quarter how short I we revenue our we think revenue about of through you. came cadence model. go up mean the in versus the the first on-off should as year? Thank in

legacy Yamal up for noted, wind guidance moved you As the you projects the down, starting to other and but also year. full

been think for has wind model new some of revenue much that backfill And how of EBITDA. down to and that inbound of point so, concern evaluating trying I can a Yamal investors

the how replenishment and of with wind in guidance, the seasonality the new project respect typical the Yamal the that to then interpret interplay revenue? So, we business with down, of new should

Doug Pferdehirt

the full project the opportunities, strategically the $XX.X $XX I In project, BAPCO frame we take of value of new exact. you’re inbounded you billion it want be And if business, Sean. billion you actually just I to $XX and closer put billion in Thanks, take the bit. in focused. really laid that BAPCO to our And the over appreciate take X little a past and delivered a ago I you out, actually, years of was we We projects focused team. that, and we really strategic. quarters. expectation. really while stayed hard X had quite and worked guess, we That X exceeded had on shared that important your stayed We we We with colleagues proud on really, those only now. quarters, to it have I’m and targeted that original and question. us ago, the

$XX we’re that first the the in last year. Sean, billion, gets now have of billion the fully excluding was So first the award BAPCO, that’s to back quarter consolidated what seeing. in even closer $XX.X opportunity, big the you which of we

throughout So, into the know, the award seeing even we’re and revenue as And quarters major that our recent we quarter. actually year MIDOR, revenue. on secured the that you started that we’re turn most was now fourth in seeing last that activity we turn to projects we announced, which

you’re that’s what So seeing.

next LNG. providing ensure to of were we bridge, strategically us seeing wave you if that You’re continuity and will, the that that

of a downstream are next in what U.S., reimbursable de-risking out the project there the there other is at went all projects. remarks, project ex-LNG, they’re plus project $XX.X was or all remind that that was awards positioned, the we executing the in meantime, we fully that’s grow refining FEED them. had team today. done our commercial got we opportunities particularly the So, strategically were had about we and petrochemical looking terms have projects prepared I We our the of also in downstream, in I fertilizer. billion direct LNG. out as talked looking most a significant active referred BLADE We In a And and to to after opportunities. ExxonMobil those advantage that as study of function you, being well where and

We’re not we’re very going to focused. be remain

target projects maturing successful We’re we’re and really projects and that those we think high-quality we we list believe as of be that can most to speak. a on, we we going have working

Sean Meakim

helpful, sequentially related flat net quarter. a topic, in very looked Doug. contract liability In the somewhat pretty That’s

at closing bottom there booked some seen coming. large How would projects interplay and that as trend the cash so the payments cycle, of terms years? pointed out projects And more are very of seen you you new the characterize how some we’ve So, and numbers out, in projects projects here and few outflows, the legacy far? that of you next the we’ve in payouts between the versus should on quarters progress impacted how has interplay

Maryann Mannen

Sure, thanks. It’s Maryann.

completion. in a some particular, So even inbounds Yamal We of saw come yes, liabilities of leveling bit we and see closer you’re to LNG, in. on extinguished, will those contract happening those new reduction a with as to right? Keep So, right. closer would as closure, larger we some projects, the that reach the contract they in liabilities be coming liabilities of contract mind

things know either of reach our the contract get ability that a X ways. to risk completion extinguished we of project because we One positive will many liabilities on avoid is X those as projects,

that as incremental vendor third that are remain not either incur and or if We’re terms risk going it, a profitability. party of or to pay in a mitigate we to cost able will then

forward, will Yamal do the as liability profitability up actually that XX% we project that take an example, extinguishment you are going able that If as of TechnipFMC. wind if to to of

liabilities as projects expect of some that this these to of move can some you completion So, curve. to close along their unwinding particularly year, completion

Sean Meakim

Here you go. Thank you.

Operator

the from of Societe Guillaume from coming Delaby is question next The Generale. line

Guillaume Delaby

I what would please? cliff. recent it analyst follow-up Maybe, the say, like I would end Yamal steer come old on the color with more us that, on most previous of say, chronological planned, question. be regarding could I’d nearly Basically, to project? debate Is you provide another just the I about Could had a Yamal back to the might give some by your you the mid-HX XXXX?

Maryann Mannen

Sure.

certainly So, balance in as do of some you we the have know, to work XXXX.

we project warranty a headed have But mind, we’ll XXXX, of keep that do on toward completion. left reach we project. be in As bit

for to XXXX assume the completion think you warranty work largely we will in not So, on of XXXX, project quite complete happen but can that the in most project. I Yamal, still should that done, exception have some with later of

Guillaume Delaby

very Maryann. Okay you, clear. Thank

Operator

Our Kurt next question of from RBC. line the is Hallead from

Kurt Hallead

this you is and out XX the months, challenges okay, rolling efforts discussions a done the different the some and a do to Subsea And with the the like afternoon. past I know and that customers maybe over course months, great, value to iEPCI at been proposition that’s X.X, of the been circle would Hi can dynamics. outlook I I facing XYZ the discussions, street good back was, having strategy, that very had is out you’ve to have may dynamics job you as in number on get what the you we have and X in differentiating of significant go and is business saying, how fronts. the look, this prior Doug, XX your And great laying company a price. pushback of providing sure on guys we’re you across are guys I’m the but have yes,

maybe Buy on helpful. basically, these So and to is book proposition able to on penetrate a it breaking of a contracts value that now Bid to Any and that iEPCI number kind with awards that been demonstrate with process? the a get customers, had traditionally been really to glass that and insights better market X broader more you ceiling able of you’ve would further the pricing deal easier becoming be this you’ve on

Doug Pferdehirt

to we not thank and and our you. really fully but to you integrated that everything significant to of you projects dramatic, community, a overly amount we were of the that broader the to we’ve FEED forming has and X from these industry, for and does cycle take what success really breeds feedback shareholders that It’s be clients were full and I your working you just It were it said can’t studies success. created first a some this mature And overnight. quarter but been to not why agree replicate shattered delivered and relationship. we about time, believe trying to was their I momentum. on the that’s to that do waiting some just had the to demonstrate able colleagues. on to the Kurt, quarter we Likewise, with glass this ceiling the

and be some done in or quite be and that are have period it were living had things should back we that that moved of and successful work, be X Subsea to have They’d model, to these You on clients. actual take the this have actually clients quite for studies studies could most value amount case come theoretical. their demonstrating through paper, actually the as tremendous where to FEED to be their but vehicles, with date, And we a working true, of that were projects the that calling repeat to move But would show world have have on done and from our credibility. projects Kurt, the past delivery. is in there project now time, been were able other of – builds time a a theoretical we and we do first

Just clients. X we this new quarter, announced

that something Subsea into word remarks, time That and going to traditional existing have with another iEPCI clients relationships, as are saying we there really Kurt. in amount company. make going of to from they but for success that’s and prepared important which my going see to sustainable full follow gives our going going and for clients quarter’s Subsea many the investment forward. next it’s is direction a just what’s and the of were directly converting our think on of we’re our they’re for equipment when I in, generation now other alliances the proud of Subsea coming success we this them alliance We tremendous is iEPCI be people industry people those It’s because know them going talked alliances a a around important think to we’re of momentum, and difference of We moving making to not us this that many clients now a of is Lundin, big Hurricane, about more makes important. and just really Energean alliances announcing and it’s I it it’s forward. Neptune, and iEPCI the important be

Kurt Hallead

Great.

awesome. I think that’s

threshold a how launched value say, companies, suggested economic to and context off the the providing up this was price, curious on the pulling their you their business when has with wind the that as I to with well you proposition that shelf value reduced because guys even could Now think that as you threshold oil it know I And say. dynamic, of let’s some proposition. projects Brent this it also the their is let’s

was wondering on that us I as So, well. if some insights you’d give

Doug Pferdehirt

Sure, Kurt, indeed, and it has.

they had investment from we’ve people industry other the community on that the come projects bucket call came we people a Some economic or from in that together, our had from? put have list, get did we forward, that clients And that moving often phone the economic didn’t where to an combination have potential. forward. move that saying, viable of you help tracking one technology unlock it offering hadn’t that Subsea in our a one often interest projects it a but the the they in model when we in of from announced, iEPCI-integrated Well, X.X can which and of our strategic

if also rate So, creates it it there creates, makes you momentum difference the some not and a have order opportunities will, otherwise. that additional been in both would big and it

tremendous creating dedicated intimate a early amount again, men hard It’s of opportunities. engagement. and women being many relationships. It’s work these by done it’s many, So that’s

foundation building a solid we forward. on this really We’re as move

Kurt Hallead

guidance may just for question, a the on Great. doesn’t that change And the mentioned Maryann, financials, year. for if the housekeeping corporate you and maybe full I expense have you

run to the down right it and you $XXX that probably the guidance to the be the from million of about out quarter year? full million have about that, FX first for I million, $XX quarter number, am thinking rest full the the If you do which that that $XXX would take get way mean corporate year, rate back Is first expense the the for we’d to would the kind year. of vis-à-vis

Maryann Mannen

year as our we guidance, on are. exclude a Yes, FX. for gave full million basis, we $XXX we When Kurt, always corporate always have, you to $XXX million

the unfold absolutely see That’s would of So year. that balance the to for we yes, things right. way you’re expect the

Kurt Hallead

the does exclude that CapEx, the $XXX And then on million, vessel?

Maryann Mannen

Kurt. does, It

Kurt Hallead

Appreciate Okay that. thank you very much.

Maryann Mannen

a if it’s can that, little be that clear And maybe, way bit to color you Kurt, the sure just that handled. of I on on you’re give

see to There in take CapEx. the with the in flow, you it the cash vessel the period. outflow cash included associated If the you obviously vessel no can was

show trying you a to have that. vessel, if and It’s to looks because leaseback sale kind so control forma of pro that So, over we we like. what have we you, are will, that consolidate

to clear, feel just sure answers free that, to question to hopefully, me. back that but your was that So be wanted come

Kurt Hallead

Thank so Doug. you Appreciate that Yes, helps. much. Thanks, it.

Operator

the next question Mark Wilson Jefferies. from is from Our line of

Your question please.

Mark Wilson

And but question just additions Good check I answered haven’t on then there, given if Okay not just to term. required the at just in fine, has actually second CapEx wanted onshore/offshore, Doug, other point the so in the will color my targeted far, that you check said, on you you and see straightaway to Very morning. looking fleet if are you what if are this, you given may that’s good in five any thank those have you. fact, medium but I that obviously? guidance, projects

Doug Pferdehirt

able and question. your of Mark, I’m glad first Okay, were CapEx we part answer to the

that we’ll The second said doing look, within are certain the what $XXX million part, capital there budget, upgrades I repeat to fleet. be Again, I that earlier.

women and with dedicated the projects. which in and our men to to the our that ensure to work from work going in and always industry deliver best We’re assets have

or again remarks. will returns on little This additional list based work thinking the once end anything the goes well beyond differently. or CapEx maintain back fleet or we requirement and manufacturing be capacity another through made, and closely of we industry. a my Our else, of to work opportunity enhance vessel rest a path our we peak as will look the industry the CapEx fleet, needs to what to my with function all are acting again, able be the and The if improve CapEx market, start know and for prepared preferred capacity upgrade the to and happen. I the our of And cycle or cycle. the all of capacity very individually and comment, bit destroy forward peak We’ll to be it of at build

the and strategic we what to not me to made we see we’re we’re would either believe because to pretty in for have prefer strategic, I that’s strategic we incumbent not and right we it and actively have those we’re we I it’s expect as that pursuing. not projects Only downstream that to a way begin working in your what we X going to, engaged are obviously or those XX think today. doing and and clients, success. recognized are prospects, very a our to step on study others with named partners but strategic it’s do it’s in or named known see in create said to keen doing are hope see set other We our we the And demonstrating good projects incumbent those we projects. of very and well named trust forward move going to pursue and have thing providers the on have second that’s leverage and of us. and we with We not the we’re X be other our FEED case with X the XX be well how act and are direct plays also we let We’ll differently and to not behavior. the is create LNG prioritizing have be negotiation really we well, have We That’s considered X, they’re partner will But of a a people, this, to X to of will well FEED are the looking those, at do have question project with and be tell XX suppliers. X plus, both out. type I put we you but that that have to as strategic. accordingly. some we’re Obviously, that with are I’ve it really, list, that we’re we study as company our able the of rewarded the forward. LNG project that and

Mark Wilson

That’s going forward. very you Thank and clear. luck good

Operator

question ahead Bertrand please. Cheuvreux. from Hodee the Kepler Go last of line comes from Our

Bertrand Hodee

everyone. Hi for I taking Thanks may. my Two if question.

earlier projects, to us my the so but not not X X, the to are share going would most but And with achievable, X the guess, as list those the and question the in very made trying be to that on they, really XX%? what XX% offtake your given do able know capabilities be back so you the the the completed utilization one relate Can internally LNG are X? possible ahead in have could would Can first to the you to going you trough of more Subsea if that Doug, you’re you’re next you go be advanced, are And ‘XX you I to iEPCI. the guided those second to for pretty all us. is obvious I looking finalize my total around to name, The orders you order and rates, sanction are thinking, Because execute as you also, believe at? comment partners and will FEED able the soon them value utilization in on them. rate year continue given have to a secure guess, to on well that, success I to

Doug Pferdehirt

Thank Bertrand. you,

Let’s start question. with the LNG

our the the projects, So, your to but that it we projects. the when capacity. one X were provide did that second scope versus we I total question, the I for some with targeting not LNG projects, value scope. of some have LNG given total manage depends as And or that’s you we downstream ways know, a which as company

to though, will per range general are looking talking the may do ensure of actually to a and manage we infrastructure. billion the resources not may to the you number maybe you cases, the may be how It in are be success. that just certain We it trains, $XX we the trains. on do to our in the of overall lead, we but utilities depends in and maybe contribution our cases, the the project $X on So, We be project. In project. project other about lead able we a billion depends

Some of them are smaller.

to are X or trains. As add add an and that project a to is the X projects now train start projects you that’s one with single right of would greenfield contemplated off being to expansion others know,

way projects. it the the And those So, is on we manage to depends really manage capacity again, our just scope.

projects demonstrated as have cover, historically, not deliver we the currently X projects to We be simultaneous X ability you that that’s we in remind simultaneously. we to what LNG is but successfully engaged now delivering and to only cover, LNG I are able just are speak. X

will the biggest a I we the and in order and to our have is than focused to the The right thumb. project not made resources That to has more right that would that. us office make of projects with of do and that’s deliver and of companies leadership the and intention of we around to right project selectivity and most that manager of in right allow mistakes resources, we been the we the think GBU ensuring projects. probably has steadfast on starts one stretching past ensure capable which can rule successful have that no the industry we I agree are So good we try the cover the director doing. feel that

So, not continue overextend sure to selective. more and, ourselves. to make don’t one and Always and opportunities opportunities better that we’ll therefore, have that we be can less more do we’ll

Moving on question, getting utilization is see be of look could we dunk. but the fleet back needs our not slam need short XXXX. forward, as and favor in your to to Subsea to It’s XX% sequenced, we a Certain the in our answer timing yes. things to work

Bertrand Hodee

thanks. Many

Operator

turning the sir. to Matt And Thank Seinsheimer. ahead, I am you. over back call Go now

Matt Seinsheimer

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

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

Operator

all today’s for This call. conference concludes Thank attending. you

may You now disconnect.

TechnipFMC (FTI) 27 Apr 192019 Q1 Earnings call transcript