Earnings call transcript Q2 2023

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Operator

Thank you for holding, and welcome everyone to the TechnipFMC Second Quarter 2023 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. [Operator Instructions] Thank you.

I will now turn the call over to Matt Seinsheimer, Senior Vice President, Investor Relations and Corporate Development. Mr. ahead. go please Seinsheimer,

Matt Seinsheimer

Good quarter good XXXX Jack. to and TechnipFMC’s second earnings morning you, afternoon, and welcome Thank conference call.

and our release be news financial earlier issued Our today found on website. statements can

you I would statements during call. this respect any forward made with like looking to caution to

looking those based could certain to from Although differ in assumptions uncertainties current that and actual by on risks expectations, results these materially subject these forward future they developments are our or implied beliefs cause to regarding expressed and statements are business conditions, statements. and

cause factors that our actual Non-material recent filings Exchange from differ our XX-K, U.S. recent results could XX-Q in our described the results other periodic and with to are and most projected Securities most Commission.

not forward are date on you of revise as of new undue wish our no information, We only speak or looking to looking the as which the to statements to any events they date otherwise. of hereof. or any made, future result forward obligation whether undertake caution reliance a place update statements publicly We after

the over now turn Chair call Executive will to TechnipFMC’s Doug and I Chief Pferdehirt, Officer.

Douglas Pferdehirt

Matt. Good for in good earnings afternoon morning and participating thank call. you and today’s you, Thank

both reflect Our second and of the achievement financial operational quarter results commitments. strong performance several

Subsea in point X.X. margin quarterly both inbound Subsea basis Surface XX.X%, representing We orders and XXXX. in XXX period were EBITDA to of X.X increase for margin billion including the delivered book-to-bill since improvement a in the adjusted strong sequential Subsea technologies, highest a

plans for we the and yesterday our two million provided updates in XXX was distributions. to flow quarter cash Free shareholder just

successes the value. to in that to doubling our initiation we believe shareholder clearly Alf cover $XXX the on previous of When these first share focused are demonstrate updates and the being important a the drivers authorization we of of detail. together, these the quarterly what million. be will taken buyback most more announcing With second dividend

when quarter the Adjusted financial million impacts. highlights adjusted was Continuing XXX an total revenue foreign in with EBITDA XX.X%, billion. was with company excluding of exchange X margin EBITDA

the company will Total sequentially beyond Subsea Total billion. converted for billion, which year. the XX% backlog into ended company period inbound XX.X current period revenue the X.X billion. grew of XX% be to at was XX.X backlog

I moment would like to in Equinor in for highlight development iEPCI take integrated secured including orders Brazil quality the year. the contract period. a inbound our to direct included of to the BM-C-XX Subsea award a projects, of the date six largest the from

for has iEPCI our Year-to-date, accounted intake. more XX% than order of

level ever by expect in to to inbound that award. direct enabled continue achieve a iEPCI to XXXX, activity highest often its We record of converts a iFEED

expected come from Importantly, our combination services to current of all other XX% iEPCI direct orders of are Subsea awards a year. in the and

Subsea the to second the project, product was X.X Equinor to our adoption quarter, project platform. they the adopt we utilizing of first be further In X.X. iEPCI and and the on BM-C-XX both Subsea will integrated drive continued configurable model

X.X. by systems agreement Subsea XX-year Northwest off And in month the time under gas signed fifth this were Subsea also we URO will for which X.X ExxonMobil plc with field production for development, contract in will finally, awarded a consecutive Also quarter, Australia's our provide developments the Chevron, TechnipFMC framework utilize which Guyana last we Coast.

the by which product and benefits more new certainty and engineering evidenced order complexity, project and clients lead times, portfolio our second three more As addition quarter to the improves the execution. in reduces configured adopters of shortens of recognizing are

billion. for for to period, are the the With of reach orders XXXX our Subsea year X.X orders inbound success first in totaled nine the increasing half we outlook billion, and strong a today full-year Subsea

feed pipeline towards FID. in projects advanced stages more to remains backdrop continues strong. with The very moving The expand

more of XX-months, out opportunity opportunity value set Subsea based the of which these on only extends developments. billion Our Subsea list, robust than remains XX an midpoint with

only opportunity two-thirds list the XX our is that projects one-third set available the result our strength fact orders typically the And while inbound outlook offshore that of our last our market, the by is to to came a project the of and over unique broader on market. being of quarters, unique from the view predicated other are the service This are of evidenced opportunities proprietary with these into Company. the

from And from Equinor increased services. is also contract order with that new Subsea outlook that little note frontiers. services. offshore scope Well quarter, Intervention important announced an activity as seen in In we This to provides Riserless XXXX. out have to anticipated, us the we our assumes It Light extends benefit to award no

And visibility improving. is even this without optionality longer term

project clients are view out very the securing that customers the have extends a be level likely XXXX. among These that their signs today speaks we inbound deliver tangible safely to for ability extended way market more see our many time on confidence, of that our will all and to projects our prove capacity in execution Our this budget. even support importantly, the to on cycle. to And it are

we placed of America company our market. More the a and total outside have in strategically XX% orders closing, land ourselves revenue are North than In position. very generated differentiated

stakeholders, business the all We market, value recognized being greater we we this ensure iEPCI are for X.X. given and clearly the that of to fundamentally our adoption changing and way Subsea the is continued by operate create

In milestones X.X forward fact, of represented history. continue the inbound look ahead. on Company's both level our We quarter you in as future ambitious iEPCI Subsea sharing our activity we the more to with and for highest journey

discuss call the I results. will financial our now Alf turn to over

Alf Melin

in impact Revenue The settlement other billion. previously the Doug. restructuring and and million loss. XXX charges. of exchange foreign disclosed the when EBITDA was legal excluding, Thanks X was quarter

up largely sequential due Mexico. quarter. Sea delivered of strong the Subsea revenue we South Operationally, America, was first the activity North results. and higher was the X.X billion, In The to increase project XX% in Gulf from

a EBITDA including improvement, intervention installation margin from the due XX.X%, Adjusted points Services seasonal revenue quarter. first of basis the and up XXX with to compared higher to activity. also increased million XXX when quarter first was

up Technologies activity. Results due revenue, Middle XXX the margins in higher revenue in was North increased improved the to primarily activity Surface the East benefited from quarter. backlog higher America. X% increased million, first and and in from Revenue In installation services

sequential from Adjusted XXX a versus points EBITDA and operational XX% margin higher revenue basis up Results was first performance. XX benefited quarter. improved XX.X%, increase. million Adjusted EBITDA was the

French million to resolution and non-recurring of million. was other Turning a the charge was to The expense all totaling expense related period XX a Prosecutor's non-recurring outstanding Office. matters corporate XXX in excluding legal corporate the items settlement period. Corporate in legal XXX was charge, settlement million National the with

for liability. disclosed responsible the legal and value As settlement. million existing interest TechnipFMC was XXX XX increase million expense now was the the is total XX million. the an to of charge lastly, The tax of expense Net the technique, provision quarter reflect represented previously to in

operating resulted with Capital ended million. collections. equivalence XXX XXX XX This expenditures the and cash by of free in was was solid million activities from debt million. million. the customer flow were cash XXX million. in of period cash We Cashflow quarter supported XXX Net

just per of During one $XX put repurchased the for total million. $XXX have of stock Under the million an at ago place year share. price $XX X.X we quarter below a average million we in buyback of program shares repurchased

Moving to guidance. our

in quarter, line with to third revenue second expect and the the For adjusted Subsea we quarter. EBITDA be margin

the for be line improvement EBITDA adjusted we in expect the potential with quarter revenue Technologies, second to modest Surface in For with margin.

we XXXX the of range guidance revenue adjusted at to expect the midpoint be full-year EBITDA above Subsea For the modestly margin with midpoint.

above be Technologies, revenue adjusted modestly now the midpoint to EBITDA margin and expect For guidance range. full-year we of the Surface

the When when For full-year adjusted corporate the outlook, expect still at we considering outcomes range range. million the XXX our EBITDA foreign approximate exchange. of revised of we excluding expense to now midpoint to anticipate land for

that is third quarters free to to as the part was This over will for in XX equal of XXX the XXXX. million cash settlement. be a owed change three remaining the there cash current no our made in the Lastly, roughly The portion of guidance paid includes of installments first XXX quarter legal million year. flow million payment

which EBITDA for translate expect in cash from our current growth levels, growth ahead, further calls strong XXXX operating Looking flow. will outlook in we significant into

how capital. of Let we me think that a about moment to discuss take the allocation

business. the investment First, our is there in

have approach to a new stated disciplined we investment. maintain As we will before,

can We some that strategic we today the own maintained assets now and managed in have be time demonstrated for manner. efficient capital a

the capital we target We low of growth. operating remain us to this allow will current of and for revenue, a to of we made have continue expenditures at changes long-term period of established in range, the end X.X% our the have X.X% believe that model to even to

authorization, repurchase authorization shareholder initiated additional yesterday In will total be viewed investment thesis that XXX Now, to a should our capital We shareholders a XXX TechnipFMC. doubling returning believe I the any fundamental we added XXXX, we to million. million million of as $XXX to share for focus on an distributions. and

we million $XXX As of have the repurchases I completed earlier, share to authorization date. stated under

Additionally, close. yesterday's our share, quarterly to we $X.XX a a on equates announcing delivered per a dividend based which on of annualized dividend X.X% yield commitment to

taken will free exceed through our dividend committing that the annual at are XX% and XXXX. buyback distributions When are we together, of least cash to generation flow

than XXXX. to distributions grow or with line expect EBITDA also the in We total better in shareholder in company growth

in as time, majority significant is potential dividend evidenced will the come over of is the the expectation for distributions there current authorization. the buyback that share repurchase grow While expansion to our from by

the to sheet. We that. metrics The committed plan confident final current and achieve allocation can of relates achieving financial remain grade balance are investment our that component capital to we

allows investment will focused we The distributions. strength of our balance sheet shareholder more the flexibility and net to on same be to us At the time, retain reduce capital debt. today

capital by our driving that allocation models, one it supported financial of performance. changes improvement is aspirational, our in is are both this execution which commitment business framework to Importantly, sustainable and a not is

now may for line the you Operator, questions. open

Operator

Anderson [Operator Barclays. with Instructions] David

Your line open. is

David Anderson

quarter. itself massive order we sort FIDs the of wake the in offshore quarter So this for saw this the speaks Subsea of all intake

looking So internally what compared kind or what as to you it your incremental billion expecting are year. view just dollars that forward, in that pulled being year? relates top that provided on you outlook Are you order you the outlook this forecast on these orders three-year were Thanks. that of this to are order these curious of earlier

Douglas Pferdehirt

appreciate Thanks Dave. it. I

quantity was is but important in first exceptional to emphasize the The is think that my tried including exceptional. that that is Not really strength of And we clarify. an in which why half in I that this quality. I script. just quarter, truly obviously

very continue selective. We to be

we humbled quarter. position And to prepared honored in of quality to the that the a do and in are We so. clearly demonstrated inbound in be the remarks

forward, things being XX billion no concern, As deeply remain will, There's we you pulled we if to XXXX. by look committed about the forward.

extremely even remain XXXX. by the We so but outlook confident XXXX more obviously, are very billion XX in for confident,

year the the XXXX, of What's it enabled a, let kind half a bit is of I'm unique the the I view strength of going take which would, good of to but we Alf to is share earlier about than is actually news. a actually first us normally know

Alf Melin

Well, Doug. beneficial very XXXX for QX to clearly thank you strong going here. is an really inbound, which will be primarily with Yes, and outlook beyond forward revenue in to us move impact the

is an this look. early So

So, EBITDA as adjusted of guidance XXXX foreign I for updated And full-year million component. mentioned in is prepared XXXX. remarks, implies XX% our growth exchange company excluding roughly a versus the my that approximately XXX

quality if inbound actually the how the strength the now impact half year, look of helps that given our XX% of inbound commitments. embedded given my and in adjusted much that into will EBITDA believe you our that, growth So ability deliver confidence and XXXX of we margin much that of first the top and and take I much, how next that successfully XXXX. given, in how of how and in meet On to can the backlog, in of

David Anderson

question first that orders is how was of and, of next I'm with actually half part year. So that in the might the to utilization follow-up related My was the I to just maybe just about going. the curious change you where of surge of coming sort XX manufacturing in I this. answered guess And XX-months. just and that

to X.X if orders Subsea were somewhere the a Doug, or the second the peso I'm bit I this to would wondering, orders of XX% expect - just half, be XXXX? if progression said thereabouts. XXXX? margin inbound is slow think in even sort part the the you or utilization year least you kind Even Subsea you of about of expected about thinking would to manufacturing higher than optimal throughput the How at what close into utilization. Just and next lighter back full of consider year

Douglas Pferdehirt

Sure, Dave.

high of us margins a we define you having out way quality couple our which updated for So, orders XXXX just quarters Subsea that already to take is confidence. just that think is, way greater described, XX%. laid ambition X.X, that and gives to I we all Obviously Subsea these ago. We that as the one

And to be seen company. the the has margins, give our give confidence it customers is they have the to able us operating able the achieve profound on X.X be orders to Subsea to to take confidence that not but be change the had only the able the configure-to-order and because or also model our to volume

And them time majority the throughput, what really within to they of pace The us with us. does is but to are and ago, spent it confidence I what are repeat success allows milestones in vast on. have all will able more been and we the are they considerable journey. which here always They journey on major our few have the the and which facilities. milestones, said quarters see ambitious to cadence and this enjoy road a And to major have what continue are the we these just that a be

David Anderson

dough. appreciate it. Understood thanks I

Operator

JPMorgan Arun Jayaram with Securities.

open. Your line is

Arun Jayaram

be how Doug, services, talk on just subsea I how the your quality And is And expect orders I impact Subsea? in about of your that you margin mix if this does to get you to for direct how XXXX your Subsea integrated XX% wanted just the on XX% you evolving that market or or awards thoughts of now your could thoughts year, the are services. seeing mix - wonder of guide does favorable X.X? orders

Douglas Pferdehirt

both both market put clients a in X.X very achieving And confidence of and our humbled record remarkable. in XX%. It quarter the Clearly, setting Subsea and this iEPCI, Arun. our level you, again, into of now spoken terms quite is the company. iEPCI we Thank has remain terms trust of that with

ensuring are model been do operating company has created the capacity the major These and greatest but industry. Their projects, on within so exists. focus because they the quality of that because that of is

through we quarter isn't have that this. and demonstrated we And - first time this been doing to year have time them first the again or

We will few the all focus a the give our for them have be model budget, now, have that they and operating ability the able years to benefits that really been be new confidence really a and deliver safely, able doing project our for them. on primary this we where to associated with and on time to enjoyed remains to

our any one it it And cherish, think is going but we the is vary it not that one a one I any journey degree because, So again, phenomenal don't from is look, done. that XX% is is is and that metric. it is that in to see unique XX% great company, our we that reason to

of technology the And we for next the that talking innovation operating energy are well as the the the model we bringing way market. as are well we today, as the the energy, well and are but everything about generations that into for new both the of market, into traditional

certainty because it you that their it through facilities, you level upon performing. much know chain just that inbound. is is benefits more your supply same Arun, it you the us, high-quality you our are you are just putting this we and do we the high performance from work which And depend as they know of gives get So not confidence, what

Arun Jayaram

Total at if exploration-driven offshore some Block Great. My was raised billion note size you $X in emerging the are XX. project to did comments on subsidy basins more list wondering you we positive you the had Patrick follow-up, Doug, in and what in of over potential your Suriname, could seeing opportunity I that describe some

you Suriname, cetera? emerging you could deepwater basins. of us some Namibia, seeing what give et a So if are wondering these of sense in

Douglas Pferdehirt

can we Mozambique, Mexico Med Africa, in I mean that and Eastern if list. South add the resurgence Colombia, Tanzania, to - that will, all, you Sure. is

The of in significant to projects when first Suriname the strength forward. depending decade, a add the the to our going opportunities upon these subsea it ones really part what level to in two both $XX into of eyes that happens important lot it being will basins, inbound billion continue Namibia is being and these upon which that a the give which objective, emerging note next latter there's to and is not

have Look, speak certainly their who share our - unique any and of often focus I area. I customers wouldn't and about their don't respectful exploration be

if follow taken into the contracts being to think enough those are that is you activity exploration capital on and and just I of would of the rig kind to that consider level a draw basins. attractive the I be enthusiasm certainly

focused. very remain We

basins that those early working is create upon and the unique relationship very to them long-term building and partners, of is different and have is X.X. And from closely in rest market, that certainly Mozambique. intent success to by our and and done with as Guyana that bringing is Our treat the our iEPCI something we the

Arun Jayaram

Dough. handle will it I back. Thanks Great,

Operator

Piper Sandler. Luke with Lemoine

Your open. line is

Luke Lemoine

quarter You year, doesn't your include I be can be Can about XXXX. an in talked When just over and the raised maybe orders had could how you any $X monster and you about in talk customers? a think more orders guide for product? billion X.X, through but received with order believe, you conversations this have going which are do this

Douglas Pferdehirt

milestone in Thanks. was Actually, Luke. of on the quarter our pretty big for journey. us it Sure, a terms

working they would us major the they with need. players all that you industry We of opportunity provide a with them expect the joint the that a fulfill will that are have all on been program standard will and actually electric - through working system set

to integrated - quarter this taking drawing point ESG of Subsea, which certainly of U.S. what's would an same view where and transportation carbon maybe it, a both or in attention be the maybe offshore quarter is the from At the before, this way it the what talked from the emitter injecting but our or, CC really point as about the COX we taking and most be a time, social - favorable the we do and quarter I call will view well. particular, system, from last and

looking So is application, we that at well. opportunities the is as it call market a be like several (Ph), is tree for it. time is that we our for seeing really going this designed [eCOX.X] benefit COX unique and are configurable that from to It to as

our we XXX the mainly installed have around using we valve technology, electric systems over benefit is The have all actuation.

are a for been they So time. been long They in the They a have water industry tested time. long standard. have the

we the electric architecture. build upon that So all to out complete build be as subsea able we will

I our have And in then because want providing controls the wellbore on to it we include well don't do as rely well electric to Halliburton an we about system. that relationship with electric is which that in can go all-electric also hydraulic, as

COX So I be continue our between not quite we think and traditional is only unique. market when excited, what And for put technology but it for energy, systems. we own the our electric all to partners together also to have comes that with again the

Luke Lemoine

Dough. Thanks great. Alright,

Operator

Company. the Kurt Hallead with Benchmark

Your line is open.

Kurt Hallead

Doug, a able is moat well et cetera. that that FTI in yes, of business wanted as I because And that as this bit of So iEPCI, more been with the to has to the heavily emphasize competitive of insight X.X dynamic. Subsea the little get develop maybe around amount you kind coming

you moat long sustain is So much that a of can it? how competitive how

in got decade. - opportunities companies the an it it wanted lot to a a lot real key economics of And Is oil what what are doing. related? you the doing? bit know end oil give company they when of are execution deciding you to here of related? clearly, more the the kind Is factors out a find color are you of for little into value And Just go are what extending with because the I

on looking for just more and color more that. So

Douglas Pferdehirt

Sure, Kurt.

are foremost, extremely So of respectful they respect what and our first competition we and do.

that of the XXth to path. you led take venture, to XXXX, that chosen on a XXXX. the earn the XXXX which But as as started back could - in of engineering the argue TechnipFMC X.X configurable have back to early We work in that a of led terms We an into joint went the of different Subsea development or creation XXXX January system.

business. and are deep they with we And they It is that, be really customers are of differently. believe We respectful have built where on is it but we they better, combination. relationships doing can our know a we things I they know mean, focused trust doing. us top again, on that are what of this

we We believe what play, and this a We what it we want well, doing very pure enjoy is this it, we do. to do. we but are is do

of that economically front to And be our and is day challenge market robust success customers the to create sure that them. we to our make offshore for we for ourselves that continues put in every ensure

to we we right do focus they how that maybe And the is now your the the when factors and a in project economics are relentless do do part are economic of cost certainty delivered view And affected, looking that? late. the is it because by question, when is capital yes, an negatively into projects this second there ,but that at of project, get a is the delivery is do certainty the on it start to what

customers And our value iEPCI are unique year our we than them is with first out X.X a gas, to competition. there proposition or give where earlier up company, oil first giving to we the can that a

project upfront, we trust that returns that have significant then on it. their So impact will they only but a not does deliver actually

have is we what that built. And

do differently. and continue that. We They done to see done have have we will they it that consistently. consistently, grown And we it things acknowledge to have

had We very of others, like we been, that five entire traditionally. are use years today. different really the a of reshape, we reengineer to eight than redesign, We where to period company company to are time

of I said, being saying, we competition. will close are again, That by respectful our

in deepen a moat and us, drive the continue focus single to we maybe or differentiation to further place humbled widen your to relentless using our day. trust are and the We that by customers every have analogy

Kurt Hallead

awesome Great, that color. is

But highlight companies important this has with thing XX-year this for other one it clearly, one you in time. extremely you agreement had flagged that today FTI particular. of frame So was I to with here oil know was major felt that periods frame agreements Chevron,

your a see a are these do you in this - guess, agreements. have of is I So to where that you think opportunities this frame start trend more mind, extended is going to

Just add great. that insight you that, more little if to a on would can be

Douglas Pferdehirt

Sure.

and and built out, pointed long the company for history of we We of really a reason which those was long the adoption with have the many every have frame our specifically single But relationships, Chevron differentiation you Subsea of X.X. of exclusive us. calling As are earn for out because agreement deep day.

the is X.X frame agreement going to real was this Subsea first So with Chevron a where they family, for the product highlight which us. are configurable

Kurt Hallead

Thanks Okay, Dough. sounds great.

Operator

[Operator with Instruction] Marc Bianchi Cowen. TD

open. I line Your

Marc Bianchi

ask I orders more wanted to a about year. little this bit the for

in you second way thinking upgraded billion about piece billion. about guidance about of seem outlook By Is right the leaves thinking to assume That be this my $X it of and lower the portions math, maybe the large to would a here? zero slightly How are this? unannounced $X.X you almost announced that awards. Now have half. and got the unannounced

Douglas Pferdehirt

I that Obviously any Marc, be know, might and level as announced draw certainly the awards. of be will There unannounced know our subsea that. confirm draw I services awards. the I strong base strong don't - determination any more the from continued would you mix. will of early to

you a quarter laid phenomenal you a rightfully probably mix, I quarter, will, in higher saw So in of think phenomenal just if awards second in you that second that was the and mix a announced the out. what bit

more look awards, at going as exceptional. but be second probably you not will same was level kind announced to that saw forward, there recipe we if quite So in which the the quarter, of

on focus And has our significantly quarters Again, I it the just billion. $XX ability confidence now achieve I what make be where the to to in sure next $XX would or is level XX be focus over, our our so. of That I think to is. want able increased the remains the guess, billion

Operator

And now Seinsheimer the over call that remarks. final Matt to question. turn final the back was for I will

Matt Seinsheimer

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

call. team. the If you further reach Jack, have please end Investor for to feel Thanks free much the any questions, Relations to may us. joining so you out

Operator

This concludes participation. today's conference. We for your thank you

now disconnect. You may

TechnipFMC (FTI) 27 Jul 232023 Q2 Earnings call transcript