Q4 2023 TechnipFMC PLC Earnings Call

Operator: Thanks for watching! Hello, and welcome to the TechnipFMC 4th Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Hello, and welcome to the Technip FMC fourth 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 and if you would like to ask a question. During this time simply press star one on your telephone keypad.

Speaker Change: I will now turn the conference over to Matt Science Hymer. Please go ahead.

Speaker Change: Thank you Sarah good morning, and good afternoon, and welcome to Technip Fmc's fourth quarter 2023 earnings Conference call.

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

Matthew Seinsheimer: I will now turn the conference over to Matt Seinsheimer. Please go ahead. Although these forward-looking statements are based on our current expectations, beliefs, and assumptions regarding future developments and business conditions, they are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. Thank you, Matt. Good morning and good afternoon.

Speaker Change: Like to caution you with respect to any forward looking statements made during this call.

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

Speaker Change: Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10-K, most recent 10-Q and other periodic filings with the U S Securities and Exchange Commission.

Douglas J. Pferdehirt: Total company revenue for the year grew 17% to $7.8 billion, with direct awards, IEPCI, and subsea services together exceeding 70% of subsea inbound. We're also seeing tangible improvements in surface technology. Any way you look at it, 2023 was a period of strong growth for our company. Demand for energy will continue to grow, driven by the Middle East and offshore.

Speaker Change: We wish to caution you not to place undue reliance on any forward looking statements, which speak only as of the date hereof.

Speaker Change: Undertake no obligation to publicly update or revise any of our forward looking statements.

Speaker Change: After the date they are made whether as a result of new information future events or otherwise.

Douglas J. Pferdehirt: Looking ahead, the market for conventional energy resources will evolve differently than we have experienced in the past. Looking more closely at these major trends, let's start with the shift in capital flows. We expect to see continued strength in spending, both in land and offshore markets. However, the dynamics will differ across the major markets, as capital flows are typically a function of returns and access.

Speaker Change: I will now turn the call over to Doug for any hurt Technip FMC as chair and Chief Executive Officer.

Doug: Thank you, Matt good morning, and good afternoon.

Doug: Thank you for participating in our fourth quarter earnings call.

Doug: I am proud to report, our strong quarterly and full year results, which really speak to the growth and operational momentum we are achieving.

Doug: Total company inbound for the year grew to $11 billion.

Doug: This included subsea orders of $9 7 billion, which was an increase of 45% versus the prior year and the book to Bill of one five.

Douglas J. Pferdehirt: In North America, the industry has access to resources, but economic returns will continue to be challenged outside the most prolific areas. We believe this will result in more modest growth in the region. That said, the number of operators that have access to these attractive resources is far more limited. Which brings us to the offshore market. And with more than 90% of our total revenue generated outside the North America land market, we have high confidence in the durability of the market over the intermediate term. Today, we are also increasing our expectations for subsea inbound over the three-year period ending 2025 to reach $30 billion. A 20% increase versus our prior view. Looking beyond capital flows, we expect that technology will also play a bigger role in spending behavior. Here, TechnipFMC is focused on developing technologies for both conventional and new energies to drive market expansion.

Doug: These strong results benefited from a record level of IEP site <unk> awards in the period.

Doug: Total company revenue for the year grew 17% to seven 8 billion.

Doug: Adjusted EBITDA improved to $939 million when excluding the impact of foreign exchange.

Doug: This was an increase of 30% when compared to the prior year.

Doug: We generated free cash flow of $468 million for the year, and we returned nearly $250 million to shareholders through share repurchases and dividends.

Speaker Change: Well. These are all solid improvements I am, particularly pleased with the quality of the inbound received in 2023.

Speaker Change: With direct awards, IEP, Ci and subsea services together exceeding 70% of subsea inbound.

Speaker Change: We are also seeing tangible improvements in surface technologies.

Speaker Change: This has resulted in improved financial performance higher cash generation and greater consistency and delivering on our annual commitments.

Speaker Change: Any way you look at it 2023 was a period of strong growth for our company.

Douglas J. Pferdehirt: More specifically, we're using technology to drive further innovation in the offshore market, creating new growth opportunities. A clear example of innovation is the Mero III HiSEP contract, which we were awarded just last month. The significance of this project for the subsea industry cannot be overstated. It will be the first to use subsea processing to capture CO2 directly from the well stream for injection back into the reservoir.

Speaker Change: And we see continued strength ahead, driven by the resiliency and durability of this cycle.

Speaker Change: The demand for energy will continue to grow.

Speaker Change: And for more than a decade unconventional resources in North America have provided a significant portion of the world's hydrocarbon growth.

Speaker Change: With growth from the region will be more limited in the years ahead.

Speaker Change: Driven by capital frameworks that reward higher economic returns and increased shareholder distributions.

Speaker Change: This means that the incremental production needed to support global growth will come primarily from international markets, driven by the middle East and offshore.

Douglas J. Pferdehirt: Importantly, this will all take place on the seabed. HiSeth is a major milestone for the subsea industry and for TechnipFMC. HiSEPA allows us to demonstrate how technology innovation, project integration, and partner collaboration enable our meaningful participation in the energy transition while remaining aligned with our strategic priorities. It is the first IEPCI project ever awarded by Petrobras.

Speaker Change: Looking ahead the market for conventional energy resources, we've all differently than what we have experienced in the past driven by three major trends.

Speaker Change: Shifting capital flows in.

Speaker Change: An increased role for new technologies, and an expanded role for subsea services.

Speaker Change: All of which will allow technip FMC to leverage the full capabilities of our.

Speaker Change: Integrated solutions differentiated technologies and the industry's most comprehensive subsea service capabilities.

Douglas J. Pferdehirt: And finally, the third major trend driving subsea market growth opportunities can be found in services. Today, subsea fields host more than 7,000 subsea trees and associated infrastructure, including manifolds, control systems, umbilicals, and flexible pipes. This list is certainly not inclusive of all the major components of a subsea production system. However, it does highlight the size and scale of the industry's large and, more importantly, growing installed base, from system installation to maintenance, intervention, and production optimization, and all the way through Leipa Field. Our 2023 results clearly demonstrate that our strategy to enhance this resilient, growing, and high-return business is delivering real value, with our services revenue having achieved over $1.5 billion for the year. In summary, we close out a solid year having delivered many notable achievements.

Speaker Change: Looking more closely at these major trends lets start with the shift in capital flows.

Speaker Change: We expect to see continued strength in spending both in land and offshore markets. However, the dynamics will differ across the major markets as capital flows are typically a function of returns and access.

Speaker Change: In North America, the industry has access to resources, but economic returns will continue to be challenged outside the most prolific basins.

Speaker Change: We believe this will result in more modest growth in the region.

Speaker Change: Opportunities in the Middle East benefit from strong economic returns that will drive continued growth.

Speaker Change: That said the number of operators that have access to these attractive resources.

Speaker Change: There are more limited.

Speaker Change: Which brings us to the offshore markets.

Speaker Change: Here, we believe much improved economic returns and broad operator access to deepwater resources will attract a growing share of global capital flows.

Speaker Change: And with more than 90% of our total revenue generated outside the North America land market.

Douglas J. Pferdehirt: Subsea Inbound Orders increased 45% versus the prior year and included a new record for IEPCI awards and an expanded role for subsea services driven by the needs of growing and aging infrastructure. Importantly, these trends underpin the 20% increase in our expectation for sub-CM revenue bound over the three-year period ending 2025, which at $30 billion will provide additional growth and backlog and further extend the execution of our project portfolio through the end of the decade. I will now turn the call over to Al.

Speaker Change: Ft stands out as the pure play equity to address this opportunity.

Speaker Change: While the strength of these trends is partly reflected in our current backlog and revenue guidance, we have high confidence in the durability of the market over the intermediate term.

Speaker Change: In 2024, we remain on track to meet our prior guidance for subsea inbound with current year order expectations approaching $10 billion.

Speaker Change: Today, we are also increasing our expectations for subsea inbound over the three year period, ending 2025 to reach $30 billion.

Speaker Change: 20% increase versus our prior view.

al: Thanks, Doug. Inbound in the quarter was $1.5 billion, driven by $1.3 billion of subsea orders. Revenue in the quarter totaled $2.1 billion. EBITDA was $245 million when excluding a foreign exchange loss of $26 million and restructuring, impairment, and other charges totaling $10 million.

Speaker Change: Looking beyond capital flows we expect the technology will also play a bigger role in spending behavior.

Technip FMC is focused on developing technologies for both conventional and new energies to drive market expansion.

Speaker Change: More specifically, we are using technology to drive further innovation in the offshore market, creating new growth opportunities.

Speaker Change: Yeah.

Speaker Change: A clear example of innovation is the marrow three high sub contract, which we were awarded just last month.

al: Turning to Segment Results. Subsidized revenue of $1.7 billion increased modestly versus the third quarter. The increase in revenue was due to higher project activity in the Gulf of Mexico, Asia Pacific, and Africa, driven in part by accelerated conversion of several projects from backlog. However, the increased activity was largely affected by seasonal factors that impacted vessel utilization.

Speaker Change: The significance of this project for the subsea industry cannot be overstated.

Speaker Change: It will be the first to use subsea processing to capture cotwo roughly from the well stream for injection back into the reservoir.

Speaker Change: Importantly, this will all take place on the sea floor.

Speaker Change: In addition to reducing greenhouse gas emission intensity ICF technologies will increase production capacity by Debottlenecking the gas processing plant that currently resides on the <unk>.

al: Revenue for subsidy services modestly increased due to strength in asset maintenance and ROE services in Norway and the Gulf of Mexico. Services revenue was also less impacted in the quarter by typical offshore seasonality, particularly in the North Sea. Adjusted EBITDA was $225 million, with a margin of 13.1%, down 200 basis points from the third quarter due to lower vessel-based activity and a mix of projects executed from backlog in the period. For the full year, subsidy revenue grew 18% versus the prior year, with adjusted EBITDA margin up 180 basis points to 13.3%. In surface technologies, revenue was $357 million in the quarter, an increase of 2% sequentially. The increase in revenue was driven by higher activity in the international and North American markets, both benefiting from higher wellhead equipment sales. Adjusted EBITDA was $52 million, a 5% sequential increase benefiting from increased contribution from international services and higher wellhead sales. Adjusted EBITDA margin was 14.7%, up 30 basis points versus the third quarter.

Speaker Change: By moving the gas processing entirely to the seafloor future Fpss topside designs can be further simplified driving significant improvement in project economics.

Speaker Change: <unk> is a major milestone for the subsea industry and for Technip FMC.

Speaker Change: This project plays to our strengths.

Speaker Change: Hi, Sip will allow us to demonstrate how technology innovation project integration and partner collaboration enable our meaningful participation in the energy transition, while remaining aligned with our strategic priorities.

It is the first <unk> project ever awarded by Petrobras.

Speaker Change: And it builds upon our strong order momentum starting the year within IEP Ci award that exceeded $1 billion.

Speaker Change: And finally, the third major trend driving subsea market growth opportunities can be found in services.

Speaker Change: Today subsea fields hosts more than 7000, subsea trees and associated infrastructure, including manifolds control systems, and <unk> and flexible pipe.

Speaker Change: This list is certainly not inclusive of all major components of the subsea production system.

Speaker Change: However, it does highlight the size and scale of the industry is large and more importantly growing installed base.

Speaker Change: Secondly, Fmc's Global services organization plays a critical role throughout the entire life of the field.

Speaker Change: From system installation so.

Speaker Change: The maintenance intervention and production optimization.

Speaker Change: And all the way through life of field.

Speaker Change: Our 2020 results clearly demonstrate that our strategy to enhance this resilient growing and high return business is delivering real value.

al: For the full year, Surface Technology's revenue was up 12% versus the prior year, with adjusted EBITDA margin up 230 basis points to 13.6%. Turning to corporate and other items in the quarter, corporate expense was $33 million when excluding $5 million of charges.

Speaker Change: With our services revenue, having achieved over $1 $5 billion for the year.

In summary, we closed out a solid year, having delivered many notable achievements.

Speaker Change: Subsea inbound orders increased 45% versus the prior year and included a new record for IPC High Awards.

al: Net interest expense was $13 million and benefited from increased interest income in the period, driven in part by strong cash generation. Tax expense was $54 million. And lastly, foreign exchange loss was $26 million, the majority of which was related to the significant devaluation of the Argentine PESA.

Speaker Change: This growth in orders also drove a 50% increase in subsea backlog to over $12 billion with high quality inbound supportive of further improvement in our financial returns.

Speaker Change: And our growth in full year operational results reflect strong momentum that continues into 2024.

Speaker Change: We have entered an unprecedented time for the development of conventional energy resources driven by three major trends.

al: Cash flow from operating activities was $701 million, and capital expenditures were $72 million. This resulted in free cash flow of $630 million for the quarter.

Speaker Change: A shift in capital flows, which we believe will largely be directed to the offshore and middle East markets.

Speaker Change: An increased role for new technologies as shown by the Merrell III <unk> Award.

al: Free cash flow for the full year was $468 million, above the high end of our guidance range. When excluding the impact of foreign exchange, we converted 50% of adjusted EBITDA to free cash flow, achieving the cash conversion rate we had previously targeted for 2025. Total shareholder distributions were $77 million in the quarter and $249 million for the full year.

Speaker Change: And an expanded role for subsea services, driven by the needs of growing and aging infrastructure.

Speaker Change: Importantly, these trends underpin the 20% increase in our expectation for subsea inbound over the three year period, ending 2025, which at $30 billion will provide additional growth in backlog and further extend the execution of our project portfolio through the.

al: We ended the period with cash and cash equivalents of $952 million, and net debt declined more than $500 million to $116 million. In November, we announced an agreement to sell our Measurement Solutions business for $205 million in cash. We now expect to conclude the transaction by the end of the first quarter, subject to customary closing conditions. Moving to our financial outlook, we have provided detailed guidance for the current fiscal year in our earnings release. I won't speak to all the details, but we'll provide some context for certain items for the full year and first quarter. I will begin with the subsea.

Speaker Change: End of the decade.

Speaker Change: I will now turn the call over to al.

al: Thanks, Doug.

al: Inbound in the quarter was $1 5 billion driven by $1 3 billion of subsea orders.

al: Revenue in the quarter totaled $2 1 billion.

al: EBITDA was $245 million, when excluding foreign exchange loss of $26 million and restructuring impairment and other charges totaling $10 million.

al: Turning to segment results subsea revenue of $1 7 billion increased modestly versus the third quarter.

al: The increase in revenue was due to higher project activity in the Gulf of Mexico, Asia Pacific and Africa, driven in part by accelerated conversion of several projects from backlog.

al: The increased activity was largely offset by seasonal factors that impacted the vessel utilization.

al: At the midpoint of our full year guidance range, we anticipate revenue of $7.4 billion with an EBITDA margin of 16%. This represents a 270 basis point margin improvement from the prior year. Our outlook also anticipates continued growth in subsea services revenue to approximately $1.65 billion, achieving this level one year ahead of our previous target. For the first quarter, we anticipate subsea revenue to decline low to mid-single digits due to more typical seasonal activity patterns, and Ebitda Margin to be in line with fourth quarter results.

al: Revenue for subsea services modestly increased due to strength in asset maintenance and Roy services in Norway, and the Gulf of Mexico.

al: Services revenue was also less impacted in the quarter by typical offshore seasonality, particularly in the North Sea.

al: Adjusted EBITDA was $225 million with a margin of 13, 1% down 200 basis points from the third quarter due to lower vessel based activity and the mix of projects executed from backlog in the period.

al: For the full year subsea revenue grew 18% versus the prior year with adjusted EBITDA margin up 180 basis points to 13, 3%.

al: Turning to surface technologies, at the midpoint of our full year guidance range, we anticipate revenue of approximately $1.275 billion with an EBITDA margin of 14%. This guidance assumes we complete the sale of our measurement solutions business by the end of the first quarter, when excluding the impact of the failure As well as the exit of certain geographies and portfolio rationalization in the Americas, our surface technologies revenue is anticipated to grow approximately 5% year over year. For the first quarter, we anticipate revenue to decline approximately 10% when compared to the fourth quarter results, with an EBITDA margin of approximately 13%.

al: In surface technologies revenue was $357 million in the quarter, an increase of 2% sequentially.

al: The increase in revenue was driven by higher activity in international and North America markets, both benefiting from higher wellhead equipment sales.

al: Adjusted EBITDA was $52 million or 5%.

al: <unk> shall increase benefiting from increased contribution from international services and higher wellhead sales.

al: Adjusted EBITDA margin was 14, 7%.

al: Up 40 basis points.

al: Third quarter.

al: For the full year surface technologies revenue was up 12% versus the prior year with adjusted EBITDA margin up 230 basis points to 13, 6%.

al: We anticipate full-year corporate expenses of $115 to $125 million. In 2023, the company initiated an ERP system upgrade. Our corporate expense now includes approximately $10 million in annual costs related to the implementation of the upgraded system. We expect to incur a similar cost each year until completion of the project in 2027. We anticipate capital expenditures of $275 million, which is just over 3% of revenue at the midpoint of our guidance. Finally, we are guiding free cash flow for the full year in a range of $350 to $500 million. This includes approximately $170 million for the remaining payments related to the resolution of all outstanding matters with the PNF.

al: Turning to corporate and other items in the quarter.

al: Corporate expense was $33 million, when excluding $5 million of charges.

al: Net interest expense was $13 million and benefited from increased interest income in the period driven in part by strong cash generation.

al: Tax expense was $54 million.

al: And lastly, foreign exchange loss was $26 million, the majority of which was related to the significant devaluation of the Argentine peso.

al: Cash flow from operating activities was $701 million capital expenditures were $72 million.

al: This resulted in free cash flow of $630 million in the quarter.

al: Free cash flow for the full year was $468 million above the high end of our guidance range.

al: Excluding these payments, the midpoint of our free cash flow guidance would approximate $600 million. In closing, when our guidance items are taken at the midpoint of the range, we anticipate total company EBITDA of $1.25 billion for the full year. This represents EBITDA growth of 33% versus the prior year when excluding foreign exchange. I also want to stress that we expect to achieve this significant growth despite the impact of the strategic actions taken in surface technologies and the incremental spend related to the ERP system upgrade. This also implies a second consecutive year for free cash flow conversion of nearly 50% when excluding the settlement payment, and we expect this to drive growth in shareholder distribution of at least 35% and a further reduction in net debt. Operator, you may now open the line for questions. Thank you. If you have a question, please press star 1 on your telephone keypad.

al: When excluding the impact of foreign exchange, we converted 50% of adjusted EBITDA to free cash flow achieving.

al: Achieving the cash conversion rate, we had previously targeted for 2025.

al: Total shareholder distributions were $77 million in the quarter and $249 million for the full year.

Operator: We ask that you please limit yourself to one question and one follow-up. Your first question comes from the line of Arun Jayaram of JP Morgan Securities LLC. Your line is open.

al: Okay from the prior year.

al: Our outlook also anticipates continued growth in subsea services revenue to approximately one point 65 billion.

Douglas J. Pferdehirt: Yeah, good morning, Doug. I wanted to first start with the increase in your long-term or three-year order guide. You raised that from $25 to $30 billion. I was wondering if you could comment on what drove the increase and perhaps give us a sense of how much of this was your expectation for more market share versus just the growing TAM in terms of subsea and offshore FIDs.

al: Cheating this level one year ahead of our previous target.

al: For the first quarter, we anticipate subsea revenue to decline low to mid single digits do two more typical seasonal activity patterns and EBITDA margin to be in line with fourth quarter results.

al: Turning to surface technologies at the mid point of like full year guidance range. We anticipate revenue of approximately 1.275 billion with an EBITDA margin of 14%.

Douglas J. Pferdehirt: It's really a combination of both, you know, clearly the total market size is increasing. And as you know, our share of the market, we continue to enjoy an increasing share due to the unique offering that we provide. Look, what we are seeing is just giving us much greater visibility into the durability of the cycle and much greater confidence when we kind of risk weight opportunities. When you're in a direct negotiation, there is no competitive tender, as stated in my prepared remarks, which represents over 70% of our subsea business. You just obviously have a much higher ability to be able to properly risk weigh those opportunities. You know, you see the Outlook slides that we provide, and you know, the market's there, the size of the market is there, it's solid, and it's growing. It's just really, we're in a privileged position, and we are humble about it.

al: This guy knows assumes we complete the sale of our measurements solutions business by the end of the first quarter.

al: When excluding the impact of disabled as well as the exit of certain geographies and portfolio rationalization in the Americas.

al: Our surface technologist revenue is anticipated to grow approximately 5% year over year.

al: Or the first quarter, we anticipate revenue to decline approximately 10% when compared to fourth quarter results with an EBITDA margin of approximately 13%.

al: We anticipate full year corporate expense of $115 million to $125 million.

al: In 2023, the company initiated and ERP system upgrade or.

al: Corporate expense now includes approximately $10 million in annual costs related to the implementation of the upgraded system.

al: We expect to incur a similar cost each year until completion of the project in 2027.

Douglas J. Pferdehirt: We are honored to have this position. And, you know, we offer our customers a clear line of sight to improve subsea project economics that is unique to our offering, both in terms of our subsea 2.0 architecture and our IEPCI offering that, you know, reduces their cycle time by, you know, 12 to 14 months on a deepwater project, thus vastly improving their economics. So it's a privileged position to be in.

al: We anticipate capital expenditures of $275 million, which is just over 3% of revenue at the midpoint of our guidance range.

al: Finally, we are guiding free cash flow for the full year, two a range of $350 million to $500 million.

al: This includes.

al: <unk> 170 million for the remaining payments related to the resolution of all outstanding matters with a P N F.

al: Excluding these payments the mid point of our free casual guidance would approximate $600 million.

Douglas J. Pferdehirt: One we don't take lightly, and we continue to work really, really hard to deliver for our customers every day. Great My follow-up, Doug. You know, we're intrigued by the Mero 3 project award. I know you announced this a bit earlier in the quarter, but I was wondering if you could just talk a little bit about it. Some of the unique technology that you're bringing to the table for this, and it seems like an application that could open up a world of new opportunities just by taking some of the processing and separation to the seafloor. As you mentioned, it would perhaps reduce some of the... needs at the surface in terms of the design of the facility, so top sides.

al: In closing when our guide is items are taken at the mid point of the range. We anticipate total company EBITDA, one point 25 billion for the full year.

al: This represents EBITDA growth of 33% versus the prior year when excluding foreign exchange.

al: I also want to stress that we expect to achieve this significant growth. Despite the impact of the strategic actions taken in surface technologies.

al: The incremental spans related to the E. R P system upgrades.

al: It's also in first second consecutive year for free cash flow conversion on nearly 50%.

Douglas J. Pferdehirt: So I was wondering if you could maybe comment on the technology and perhaps the scope here of future opportunities and what this could open up for FTI. Sure, and thank you for the question, because although it was announced earlier, we haven't had a chance to talk about it, you know, here in this forum. This was the first opportunity.

al: Excluding the settlement payments.

al: And we expect this to drive growth and shareholder distribution of at least 75% and it further reduction in net debt.

Speaker Change: Operated you May know open the lines for questions.

Speaker Change: Thank you.

Speaker Change: Have a question. Please press star one on your telephone keypad.

Speaker Change: We ask that you please limit yourself to one question and one <unk>.

Speaker Change: Your first question comes from the line add that in.

Speaker Change: <unk> J P. Morgan Securities L. L. See your line is open.

Speaker Change: Yeah, Good morning, Doug.

Speaker Change: Wanted to first start with the increase in your long term or a three year Order guide you raised up from 25 to 30 billion. I was wondering if you can comment on what drove the increase in and perhaps give us a sense of how much of this was your expectation for more market share.

Douglas J. Pferdehirt: So, very excited, as I pointed out. You know, I think it, as we said, is really, really unique, both for the industry as well as for our company. And I think understanding, as you said, what are some of the, there's the actual award, and then there's what is enabled by that. So, you know, let's start with just some of the highlights.

Speaker Change: Versus just the growing Tam.

Speaker Change: In terms of sub sea.

Speaker Change: An offshore F I DS.

Speaker Change: Sure good morning around.

Speaker Change: It's really a combination of both you know clearly boat.

Douglas J. Pferdehirt: Yes, one of the bottlenecks that we see in greenfield developments, as the offshore market continues to grow, will be the delivery of the FPSO. FPSOs are complicated, and, you know, there are a certain number of providers of those FPSOs, and clearly, they are becoming, if you will, the long pole in the tent, in terms of the project cycle time. Our approach to ensuring that deep water economics remain privileged, i.e., to draw our customers' global capital spend, is by really doing everything we can to, in every way, address the cycle time, as well as reducing the risk of delivering the projects and ensuring that they're delivered on time. So an example of that would be the FPSO itself is an intriguing unit, but let's say the complexity is really in the topside configuration that you put on top. And you do that because, you know, you either have to separate water from oil or you have to treat the gas or you have to separate, in this case, high CO2 rich dense gas from the flow stream.

Speaker Change: The total market size is increasing and as you know our our.

Speaker Change: The share of the market, we continue enjoying it an increasing share.

Speaker Change: The unique offering that we provide.

Speaker Change:

Speaker Change: <unk>.

Speaker Change: We are seeing.

Speaker Change: She was giving us much greater visibility.

Speaker Change: Enter the door ability of the cycle.

Speaker Change: And much greater confidence when we kind of risk weight opportunities.

Speaker Change: When you're in a direct negotiation there is no competitive tender as stated in my prepared remarks, which represents over 70% of our subsea business.

Speaker Change: Obviously have a much higher.

Speaker Change: Ability to be able to properly risk wait for those opportunities.

Speaker Change: You see the outlook slides that we provide in yoga the mortgage their of the size of the market's there it's Charlotte it's growing.

Speaker Change: It's just really wearing a privilege position, which we are humble about it we are honored to have this position and.

Speaker Change: We offer our customers a clear line of sight to improve subsea project economics that <unk> you need to are offering both in terms of our subsea two point of architecture and R. I a P. C I offering that reduces the recycled time by 12 to 14 months on the deepwater project, thus vastly improving their economic so.

Douglas J. Pferdehirt: If you can do that on the seabed, it has many advantages. One, it simplifies the FPSO, therefore reducing the risk of that becoming a bottleneck in terms of driving even further improvements in cycle time. Secondly, there's obviously more real estate on the seafloor. We can do things, if you will, horizontally, whereas if you're on a ship, you are pretty much constrained to doing things vertically.

Speaker Change: It's a privilege position to be in one we don't take lightly and we continue to work really really hard to deliver for our customers everyday.

Speaker Change: Great My follow up Doug.

Douglas J. Pferdehirt: Any sort of vertical construction costs more than horizontal construction. So, in the simplest terms, we just have more real estate to play with. And, more importantly than the economics, this is a CCS project. This is about reducing greenhouse gas intensity. This is about separating the CO2 on the seafloor and re-injecting it into the subsurface so that it never sees the atmosphere.

Speaker Change: [noise] you know were intrigued by.

Speaker Change: By the marrow three project ordinary announced us a bit earlier in the quarter.

Doug: But I was wondering if you could just talk a little bit about some of the unique technology that you're bringing to the table for this and it seems like the an application.

Speaker Change: That could open up a world of new opportunities just by taking some of the processing.

Speaker Change: And separation to the sea floor as you mentioned that it would perhaps reduce some of the.

Douglas J. Pferdehirt: It is at the bottom of the ocean on the seafloor in a closed loop system where we can separate out the CO2 and again re-inject the CO2, hence delivering a much lower greenhouse gas intensity for the project. And then I also mentioned, and I think it's important to point out, this is the first ever IEPCI, which is our unique commercial model, the integrated commercial model, the first time Petrobras is using this model. So you're absolutely right. We've done separation projects in the past. We've done some boosting. This is a unique combination of advanced separation, the first time for CO2 specifically, as well as boosting and reinjection, and putting this all together into an integrated system architecture is something that we are extremely proud and excited to be working on with Petrobras to deliver.

Speaker Change: The needs at the surface in terms of the design of the the facility. So top sides. So as long as you can maybe come in on on the technology and perhaps perhaps the scope here.

Speaker Change: Future opportunities and what what this could open up for FTA.

Speaker Change: Sure and thank you for the question because although was announced earlier, we haven't had a chance to talk about it you know here in this forum. This was the first opportunity so.

Speaker Change: Very excited as I pointed out.

Speaker Change: You know I think it.

Speaker Change: We you know we said, it's really really unique both for the industry as well as for our company.

Speaker Change: And I think understanding as you said what are some of the there's the actual award and then there's with those what is enabled by that.

Speaker Change: So.

Speaker Change: Let's start with just some of the highlights uhm, yes, one of the bottleneck that we see in Greenfield developments as the offshore market continues to grow will be the delivery of the Fps. So.

Douglas J. Pferdehirt: And this is being done under the premise of design one, build many. So, as you point out, this can start to open up all sorts of other opportunities as we move forward. Thanks, Doug. I'll turn it back.

Speaker Change: The episodes are a complicated and there are a certain number of providers of those ipso's and clearly they are becoming if you will the long pulling the tent in terms of the project cycle time.

Operator: Your next question comes from the line of Dave Anderson with Barclays. Your line is open. Great, thanks. Good morning, Doug. How are you?

Douglas J. Pferdehirt: Good morning, Dave. Great, thank you. I'll just follow up on Arun's question on subsea processing. So subsea processing is something we've been talking about for a long time. I want to go, if I go back to probably more than 10 years ago, you guys started introducing the, The cycle kind of ended, I found, if my memory serves, I think the cycle kind of ended before this really became, um.., before this really kind of took off. So maybe can you just talk about kind of what's different today about subsea processing versus 10 years ago? Maybe it's just the CCS part. And how effective was it before, and kind of what's changing? I'm just kind of curious why the adoption today.

Speaker Change: <unk> to ensuring that deep water economics remain privileged I E drawl, our customers global capital spend it is by really doing everything we can to in every way address the cycle time as well as reducing the risk of delivering the projection.

Speaker Change: During that they're delivered on time so.

Speaker Change: So an example of that would be the F. P. S. O itself is an intriguing unit.

Speaker Change: Let's say the complexity is really on the top sides configuration that you put on top.

Speaker Change: And you do that because you know you either have to separate water from oil or you have to treat the gas where you have to separate.

Speaker Change: In this case I C O two rich dense gas from the flow stream.

Speaker Change: If you can do that on the sea bed. It has many advantages one simplifying the M. P. S. O therefore, reducing that risk about becoming a bottleneck in terms of driving even further improvements in cycle time, secondly, there's obviously more real estate on the seafloor we can.

Douglas J. Pferdehirt: You've talked about the FPSO, but I seem to recall that was kind of the whole point of this in the first place. So why didn't that catch on before, or maybe it did, and why does it catch on now? Dave, I wouldn't disagree.

Douglas J. Pferdehirt: I would say the subsidy processing market has maybe underdelivered in the past, to be very blunt. What we're looking at here is a completely different application. And as you know, greenhouse gas intensity, CCS, opens up a completely different dynamic in terms of the thinking around sanctioning a project.

Speaker Change: Do things if you will horizontally, whereas if you're on a ship you are pretty much constrained in doing things vertically any sort of political construction costs more than horizontal construction. So in the simplest terms, we just have more real estate to play with.

Speaker Change:

Speaker Change: More and and just as importantly than the economics is this is accs project, but it says about reducing greenhouse gas intensity. This is about separating the C O two.

Douglas J. Pferdehirt: Okay, so let's just say it adds an additional dimension, which is one reason why we believe that this is almost a new market. I almost wouldn't put it under the category of subsea processing, even though it uses many of the same technologies. There are multiphase pumps and separation, et cetera, but it is a unique application.

Speaker Change: On the sea floor and Reinjecting it into the sub surface.

Speaker Change: <unk> sees the atmosphere. It is at the bottom of the ocean on the sea floor in a in a closed loop system.

Speaker Change: We can separate out the C O two and again Reinject C O two hence delivering a a a a a much lower greenhouse gas intensity for the project.

Douglas J. Pferdehirt: Secondly, there is unique technology involved here, and we've been working with Petrobras since 2016. We have an R&D center for Subsea in Brazil, which gives us the unique ability to work closely with Petrobras in developing and bringing this technology to light.

Speaker Change: And then I also mentioned and I think it's important to point out. This is the first ever I E. P. C I, which is our unique commercial model the integrated commercial model. The first time Petra brass is using this model so you're you're you're absolutely right, we done separation projects in the past.

Douglas J. Pferdehirt: And then just our experience in terms of system integration and putting together the entire package gives us a reason to believe, Dave, that this application, again, and I'm going to go back to point one, when you add this other dimension to the project, if you will, sanctioning criteria, I believe it makes the decision, leans the decision more towards the Subsea. And as you're saying, and it takes costs off the FPSO as well, is that sort of the idea, to help kind of lower the overall development costs of the project? Is that sort of the intent here?

Speaker Change: We've done boosting this is a unique combination of advanced separation. The first time for C. O two specifically as well as boosting and Reinjection and putting this all together into an integrated.

Speaker Change: System architecture is something that we are extremely proud and excited to be working on petrol brass to deliver this and this.

Speaker Change: This is a being done under the <unk>.

Speaker Change: Premise of design one build many so as you point out this can start to open up all sorts of other opportunities as we move forward.

Speaker Change: Thanks, Doug I'll turn it back.

Douglas J. Pferdehirt: Well, well, costs, but more importantly, it just is going to, you can build an FPSO with a basic topside in a fraction of the time that it takes to build one with a full gas processing plant on top. The time isn't in building the hull and building the storage and the onloading and offloading system. The time element is in the topside configuration, which, as you know, is often done at a different yard than the hull is made, or at multiple different yards, and then has to be all brought together, configured, and assembled.

Dave Anderson: Your next question comes from the line as gave Anderson with Barclays. Your line is open.

Gave Anderson: Great. Thanks, Good morning, Doug how are Ya.

Gave Anderson: You're more than a day great. Thank you.

Gave Anderson: Follow up on that quite an orange question on the subsea processing subsidy processing, we've been talking about for a long time I wanted to know if I go back to probably more than 10 years ago, you guys start introducing this.

Gave Anderson: Recycle kinda ended I think if memory serves I think the cycle kind of ended before this really became before this really kind of took off some maybe can you just talk about the kind of what's different today about subsea processing versus 10 years ago, maybe it's just the Ccs part and.

Douglas J. Pferdehirt: You're building a floating, if you will, gas processing unit or a refinery in a broad sense, just much more complex. So, as you know, our whole focus, and it's why our customers, I think, are proud of what we're doing, is we're going to help them improve their economics by focusing on shortening the cycle time. That's the real focus. Thanks.

Gave Anderson: And how effective was it before it kind of what's changing I'm I'm just kind of curious why the adoption today, you've talked about they appear so but I seem to recall that was kind of the whole kind of pointed us in the first place. So why didn't that catch on before or maybe it did and why does it catch on now.

Speaker Change: Dave I wouldn't disagree I would say the subsea processing market has maybe under delivered in the past to be very blunt.

Douglas J. Pferdehirt: And if I go back to the awards, your kind of two-year outlook on sub-C awards up there, you've essentially kind of added about $5 billion in orders to your kind of next two-year view. I'm just curious, in terms of your IEPC awards, you're saying 70% today. Does that number go up over the next two years? And, I assume, are you already working on these projects? I mean, is that kind of where your confidence comes from?

Speaker Change: We're looking at here is a completely different application and as you know that you know greenhouse.

Speaker Change: Greenhouse gas intensity.

Gave Anderson: Ccs opens up a completely different dynamic in terms of the thinking around sanctioning a project. Okay. So so let you say it adds an additional dimension, which is one reason why we believe that that that this is a I would call it almost a new market.

Gave Anderson: Wouldn't put it under the bucket of subsea processing, even though it's using many of the same technologies. There's you know multiphase pumps and separation et cetera, but it is a unique application.

Douglas J. Pferdehirt: Because I know these IEPC awards start at a very early stage. Is that kind of where this is all coming from? And if I could just pile on one more question, how is pricing evolving here? We're in a consolidated market now. Are we starting to show up? Is that starting to show up in the bids? Sorry, I packed a lot in.

Gave Anderson: Secondly, there is unique technology involved here and we've been working with Petra breath since 2016.

Gave Anderson: We have a R&D center for subsea in Brazil.

Gave Anderson: Which gives us the unique ability to work closely with better brass and developing and bringing this technology to light and then just our experienced in terms of system integration and putting together the entire package gives us a reason to believe they've that this application again and I'm Gonna go back to 0.1.

Douglas J. Pferdehirt: No problem, Dave. I'll try to address it as best I can. So the 70%, or over 70% that we refer to, as you know, is the direct awards, which is a combination of those IEPCIs that are directly awarded. Most of ours are directly awarded. Very few go out to a competitive tender, as well as our subsea services and other direct awards from our Alliance partners.

Gave Anderson: When you add this other dimension into the project. If you will sanctioning criteria I believe it makes the decision.

Gave Anderson: It means the decision more towards the subsea.

Gave Anderson: And as you are saying and it takes costs off the <unk> as well as that sort of the idea to help kind of lower the overall development costs of the project does that sort of the intent here.

Douglas J. Pferdehirt: The IEPCI portion for us is about 50% of our total. Do I see that increasing? Yes. What gives me the confidence and visibility is that they typically, almost always in our case, start with an integrated feed study, the Integrated Front End Engineering and Design, which is two to three years out. So what gives us unique visibility is one, we can see because we're at the table much earlier; we are, in many cases, doing an integrated feed study, an I-Feed. Contractually, we don't do iFeeds unless it will be directly awarded to us because it would not make sense for us to do an integrated feed study demonstrating the value of integration if we weren't going to execute the project.

Gave Anderson: Will cost, but more importantly, it just is going to you can build an F. P. S. So with a basic topside and a fraction of the time that it takes to build one with a full gas processing plant on top.

Gave Anderson: The time isn't in the building the hall in building the storage in the automotive an offloading system. The time element is in the top side configuration, which is you know is often done at a different yard than the whole is made or at multiple different yards. Then has to be brought together configured assembled.

Gave Anderson: You're building a floating if you will gas processing unit or refinery.

Gave Anderson: And Ah.

Gave Anderson: Broad sense.

Gave Anderson: Much more complex. So as you know our whole focus and it's one of our customers. I think are are proud of what we're doing is we're gonna help them improve their economics by focusing on shorting shortening the cycle time, that's the real focus today, okay. Thanks, and if I go back to the awards, you're kind of to your outlook on sub seal.

Douglas J. Pferdehirt: So in the front-end engineering studies, which are at a very robust level right now, the percentage of integrated feeds, which will convert into integrated EPCI studies, continues to grow, which again gives us that confidence. So we know the client, we know the basin, we know that working together, if we can achieve the right economics for the project, then that will turn around and be directly awarded to our company. So I would say we have great confidence, as you know, when we give our inbound outlook. It's by project, by name.

Gave Anderson: Words out there.

Gave Anderson: Essentially kind of added about 5 billion in orders to your kind of next to your view.

Gave Anderson: I'm just curious in terms of your I P. C Awards, you're saying 70 per cent today does that number go up over the next two years and are and I'm assume are you already working on these projects I mean is that kind of where your confidence comes from because I know these are a P C or start at a very early stage. It is that kind of where this is all coming.

Speaker Change: And sorry, if I could just pile on one more question in there how is how is pricing evolving here. We're in a consolidated market now are we starting to show up at his that's starting to show up and the Bitch, sorry, I packed a lot in there.

Douglas J. Pferdehirt: There is a great degree of confidence in the numbers that we put out there and our ability and consistent track record of delivering against them. So, you know, we have that visibility from the feed studies. It gives us confidence. We continue to see direct awards going up. And, you know, I'll make one other kind of comment here for you, Dave. It wasn't part of your question, but I do think it's interesting. Just this year, right, I mean, we're not that far into the new year. I will tell you the number of very large greenfield projects that we are already in the front end engineering and or commercial tendering stage, or let's say, commercial negotiations stage, because again, if they're a direct award, there is no tender. I've never seen anything like it before.

Speaker Change: No problem <unk> I will try to address it as well as I can.

Speaker Change: So the 70 per cent over 70 per cent that we refer to as you know as the direct awards, which is a combination of those I E. P. C is that or direct awarded the most or most of our hours are a direct awarded very few go out to a competitive tender as.

Speaker Change: As well as our subsea services and other direct awards from our Alliance partners Uhm, the PCI portion for Us is.

Speaker Change: Is about 50 per cent.

Speaker Change: Of our total.

Speaker Change: Do I see that increasing yes, what gives me the confidence and visibility is remember they typically almost always in our case start with an integrated feed study the integrated front in engineering and design, which is two to three years old. So it gives us a unique visibility is.

Speaker Change: One we can see because we're <unk> we're at the table much earlier, we are in many cases doing an integrated feed study and I feed.

Douglas J. Pferdehirt: And, you know, the cadence and the size of the projects are really quite, they'll be records. It'll be one record after the next record. And by the way, I'm not counting the emerging countries here, you know, Namibia, Tanzania, Colombia, et cetera. I'm not counting those.

Speaker Change: Contractually, we don't do I feeds unless it will be direct awarded to us because.

Speaker Change: Not make sense for us to do an integrated page study demonstrating the value of integration, if we weren't going to execute the project. So in the front end engineering studies, which or at a very robust level right now the percentage of integrated feeds.

Douglas J. Pferdehirt: I'm saying this within the traditional or known basins that we're operating in today. There are a lot of big projects coming in, and we think, you know, we're working very closely with our customers to bring those to life. And Doug, is that incremental to the orders that you're highlighting out to 25? Well, you know, no, not necessarily. If we're obviously in direct negotiations today, it's probably going to happen before then. But you raise another good point. And I don't want to be too verbose here.

Speaker Change: Which will convert in the integrated D. P. E. P. C. I studies continues to grow which again gives us that confidence. So we know the client we know the basin, we know that working together if we can achieve the economic you know the right economics for the project and that will turn around and be direct awarded to to our <unk>.

Speaker Change: Japanese so.

Speaker Change: I would say.

Speaker Change: We have great confidence as you know when we give our embattled outlook. It's you know it's <unk>.

Speaker Change: <unk> project by name, there's a great degree of confidence in the numbers that we put out there and our ability and consistent track record of delivering against them. So we have the visibility from the beach studies that gives us the confidence.

Douglas J. Pferdehirt: But, you know, we are, and I've mentioned this on past calls, this started about nine months ago. Our clients want to secure our capacity; they understand what we have is a unique offering. So they're not only talking to us about the current award, but in most cases, they're talking to us about the future phase or the future tie-ins or whatever, you know, it may be. So yes, part of it is in. But yes, we are also looking for and working on awards that will be coming beyond 2025. Thanks a lot.

Speaker Change: We continue to see the direct awards growing up.

Speaker Change: You know I'll make one other comment here for you Dave It wasn't part of your question, but I do think it's interesting <unk>.

Dave Anderson: Just this year right I mean, we're not that far into the new year.

Dave Anderson: Will tell you the number of.

Dave Anderson: Very large greenfield projects.

Dave Anderson: We are already in the front and engineering and or commercial tendering stage or let's say commercial negotiation stage because again, if they're direct award there is no tender.

Dave Anderson: I've never seen anything like it and.

Dave Anderson: It's it's.

Dave Anderson: The cadence of the size of the projects are really quite there'll be record it'll be one record after the next record and by the way I'm I'm not counting the emerging countries and hearing it you know and it might be a Tanzania, Columbia et cetera, I'm not counting those I'm, saying this is within the traditional or known basins that we're all.

Operator: Your next question comes from the line of Marc Wilson with Jeffries. Your line is open. Thank you. My first question, Doug, is on the subject of the additional awards and the $30 billion out to 2025. You've talked a lot in the past about the manufacturing process you put in place as well to be able to deliver all the services you build. So can we talk about the impact on the expected margin from this additional, if not, and larger market outlook? That's my first question. Good afternoon, Marc.

Dave Anderson: Parading in today, there's a lot of big projects coming in and we think.

Dave Anderson: We're working very closely with our customers to bring those to like.

Dave Anderson: And Doug is that incremental to the orders that you're highlighting for up to 25.

Doug: Well you know no not necessarily at four obviously, if we're indirect negotiations today is probably going to happen before then but you.

Doug: You raised another good point and I don't Wanna be too verbose here, but you know we.

Doug: We are and I've mentioned this on past calls they started about nine months ago.

Doug: Our clients wanted to secure capacity they understand what we have is a unique offering.

Douglas J. Pferdehirt: So I believe you're going the angle of CAPEX, and I'm going to go there even, you know, I hope that's where you wanted me to go. But look, because of the 2.0 and the configure to order, some of which I believe you've had an opportunity to witness yourself, it allows us to actually achieve these higher rates of throughput within the existing facilities without having to spend additional capital. So, as always, there'll be capital spent on replacing certain machine tools, etc. But in terms of roofline capacity or major expansion or major capital investment to be able to deliver this growth, that is not the case. It will be within our normal CAPEX expenditure. Thanks for that.

Doug: So they're not only talking to us about the current award but in most cases are talking to us about the future phase or the future tie ins or whatever you know made it.

Dave Anderson: It may be so yes part of it is in but yes. We are also looking and working on awards that will be coming beyond 2025.

Speaker Change: Thanks, a lot.

Dave Anderson: Your next question comes from the line of Mark Wilson with Caffeine. Your line is open.

Mark Wilson: Thank you.

Mark Wilson: First question is on the subject of the additional awards and the third of building up 2025.

Mark Wilson: Locked in the past about the the manufacturing process, you've put in place as well to be able to deliver them.

Mark Wilson: All the the the services you your bill so can we talk about the cause any impact the expected margin from the additional.

Mark Wilson: In larger market outlook. That's my first question. Thank you.

Speaker Change: Good afternoon, <unk>, So I believe you're going the angle of Capex and I'm Gonna go there even I hope that's where you wanted me to go but look because of the 2.0 and the configure it to order some of which I believe you've had an opportunity to witness yourself.

Douglas J. Pferdehirt: And actually, where I was really looking is the EBITDA margin you'd be expected to generate, you know, if we're not having to put in more investment, are the economies of scale, frankly, from a higher throughput coming through within your margin expectations? I would agree with that statement, fully agree with that statement. Okay, thank you very much.

Speaker Change: It allows us to actually achieve these higher rates of throughput within the existing facilities without having to spend additional capital. So it was always there'll be capital span on replacing certain machine tools et cetera, but in terms of roofline capacity your major expansion or major major capital investment to be able to.

Operator: And then, and then lastly, looking further ahead, and obviously, a lot of technology coming through gas processing, subsea separation, CO2 injection. There are new basins emerging, clearly bringing some things to Brazil, which has now been out there for a few decades now. But there are a million pages coming through with new technologies, new levels you have to go to, certainly in terms of depth and gas processing. Where would you suggest the industry is looking in terms of the next technological step? Is it in terms of going deeper, doing more with gas, or indeed electrification, just generally? Mark, I'm laughing because you're spot on. It's as if you were at our technology review with our Chief Technology Officer the other day. And the only thing I would add to what you said is that one actually enables the other.

Mark Wilson: To deliver this growth.

Mark Wilson: That is not the case it will be within our normal capex expenditures.

Speaker Change: Thanks for that and and actually when I was really lucky because on the the EBITDA margin you you'd be expected to generate uhm.

Speaker Change: If we're not having to put any more investment.

Speaker Change: Economies of scale, frankly from a higher throughput coming through within Europe margin expectations. Thanks.

Speaker Change: I would agree with that statement fully agree with that statement.

Speaker Change: Okay. Thank you very much and then and then lastly, looking further ahead and obviously spoken to a lot of technology coming through the gas processing subsea separation C O two injection.

Speaker Change: <unk> based in emerging you pull to bring some things in Brazil, which is now being.

Speaker Change: Out there for a few decades now.

Speaker Change: <unk> coming through with new technologies, new levels have to go through 70 times of death.

Speaker Change: And with gas purchasing where would you suggest the industry's looking in terms of the next technological step is it in terms of going deeper.

Speaker Change: With gas or indeed electrification just generally.

Speaker Change: Mark I'm laughing, because you're you're spot on it.

Mark Wilson: It's as if you were in our technology review with are cheaper technology officer, the other day.

Douglas J. Pferdehirt: So deeper and electrified are actually complementary, and electrification will allow us to go deeper. We've talked about electrification in the past in terms of allowing us to have longer step-outs. But it's just the ability to be able to transmit hydraulic fluid and the response time because the further you push it, the more friction pressure, the more delays, if you will, and to be able to get a response from a hydraulic actuation versus an electric actuation, which can be done very, very quickly.

Mark Wilson: And the only thing I would add to what you said is what actually enables the other so deeper and electrified are actually complimentary electrification will allow us to go deeper we've talked about is education in the past in terms of allowing us to have a longer step outs, but it's just the ability to be able to transmit hydraulic <unk> flu.

Mark Wilson: <unk> <unk>.

Mark Wilson: The response time.

Mark Wilson: Because the further depreciate the the <unk> the more friction pressure the more delays if you're willing to be able to get a response from a hydraulic actuation versus an electric actuation, which can be done very very quickly. So I would certainly deeper now it is only elect.

Douglas J. Pferdehirt: So certainly deeper. Now, it is only electrification, but electrification will enable deeper. But there are also other aspects to going deeper, particularly when you think about things like flexible pipe design. We have the only flexible pipe that will be able to work at the depths that these emerging basins are being developed.

Mark Wilson: Vacation, but electrification will enable deeper.

Mark Wilson: But there's also other aspects to going deeper, particularly when you think about things like Ah flexible pipe design, we have the only flexible pipe that we'll be able to work at the depth that these emerging basins are being developed it takes a very very unique design. So there's other technologies that we're working on that will also be.

Douglas J. Pferdehirt: It takes a very, very unique design. So there are other technologies that we're working on that will also be very beneficial as we move into some of the new basins, which will indeed be at greater depths than we've routinely operated at today. Thank you very much. I'll hand it over to you.

Mark Wilson: Very beneficial as we as we move into some of the new basins, which indeed will be at greater depth than we've routinely operated have today.

Mark Wilson: Thank you very much on 100 of it.

Operator: Your next question comes from the line of Daniel Thompson with BNP Paribas. Your line is open. Hi, Doug, thanks for taking the question. Maybe continuing on the sort of technology front, just looking at West Africa, there are a few prospects on your list in areas like Angola and Nigeria that have been sitting there for quite some time.

Mark Wilson: You know our next question comes from the line as Daniel Thompson with BNP, Panama. Your line is open.

James Thompson: Hi, Thanks for taking the Christian maybe continuing on the sort of technology front, just looking at West Africa. There are a few prospects in your list in areas like Angola, Nigeria, none of that has been set there for quite some time.

Douglas J. Pferdehirt: And we know the operators have been really strict on getting those to a point where project economics are acceptable. So I was kind of wondering how many of those projects you've refreshed offers on recently or will in the near future, and if you found ways within your work scope, be it through technology or something else, to bring those costs down, to enable sanction while still maintaining the attractiveness to yourselves. Good afternoon. No, a very fair question.

James Thompson: And we know the after it has been really strict on getting those to a point where project economics are acceptable.

Speaker Change: So it was kind of wondering how many of those projects you've refreshed offers on recently will in the near future.

James Thompson: And if you're found ways within your works.

James Thompson: Technology or something else to it to bring those costs down.

James Thompson: You know to enable sanction while still maintaining the attractiveness.

Speaker Change: T ourselves thank you.

Speaker Change: Good afternoon, <unk>, a very fair question.

Douglas J. Pferdehirt: One we look at often, and I'm actually looking at the Subsidy Opportunity List as I answer your question. So, first of all, as you know, to be on the list, there's an expectation that it will reach FID within the next 24 months. That expectation is aligned with the customer, and in some cases, projects aren't on here because they're confidential, or projects that are going to be directly awarded to our company, so they're not on the list. But I can confidently say all but one, as you said, are either going through a refreshed feed study or are at some level of a commercial negotiation. So, actually, the vast majority of them.

James Thompson: When we looked at when we look at often and I'm actually looking at the subsidy opportunity. Your listeners I answer. Your question. So first of all as you know to be on the list is there was an expectation that it would reach if I D. Within the next 24 months that expectation is aligned with the customer and in some cases projects at.

James Thompson: On here, because they're confidential or their projects that are gonna be directed toward into our company. So they are not on the list.

James Thompson: I will tell you looking at the list right here in front of me. The same when you are I can confidently say, all but one as you said or either going through refreshed.

James Thompson: Uhm feed study and or are in at some level of a commercial negotiation. So actually the vast majority of them and I know I know I understand the point and I know there's been some of these have been here awhile and some of these have been discussed many times over.

Douglas J. Pferdehirt: And I know, I know, I understand the point, and I know there's been, some of these have been around a while, and some of these have been discussed many times over. But, you know, just to be very blunt, that was before IEPCI, that was before sub-C 2.0. So, when you can deliver a project 12 to 14 months sooner, it has a big impact on the economics. Now, there are other reasons that are specific to the client that they may be wanting to move a project forward, which is not anything I would comment on. You know, that's up to them to comment. But that's what we're providing to them to help them, to help bring these projects to at least the stage that the customer could if they chose to FID the project. Thanks, yeah, that makes sense. Maybe one follow-up on Brazil.

James Thompson: But you know just be very blood that was before I P. C. I that was before subsea 2.0. So when you can deliver a project 12 to 14 months shorter cycle time. It has a big impact on the economics now there's other reasons.

James Thompson: That's specific to the client that they may be wanting to move a project board, which is not anything I would comment on it that's up to them to comment, but that's what we're providing to them to help them to help bring these projects at.

James Thompson: At least bring them to the stage that the customer could if they chose to F. I D. The project.

Speaker Change: Thanks, Yeah. It makes sense, maybe one follow up on Brazil, I wondered if you had any comments on how your your bidding strategy in Brazil may have changed just in light of one of your competitors being being poured from.

Douglas J. Pferdehirt: I wondered if you had any comments on how your bidding strategy in Brazil may have changed, just in light of one of your competitors being barred from contracting with Petrobras for the next two years. I feel you guys might be going for more work there, or are the Opportunities Officials. Look, we are a company that has very close relationships with our clients. We always look towards the future, not just at the present opportunity, and treat our clients with respect, as we expect them to treat us with respect. And we have a very strong relationship with Petrobras and are very proud of the work we're doing, including, you know, the award of their first ever IEPCI, the first ever application of ISEP, you know, in Brazil. So, you know, I will just say that we'll continue to treat our clients the way that we appreciate them treating us, and we believe that is the right way to do business. Thank you all. Turn it over.

Speaker Change: Contracting with petrol vessel in the next few years I mean.

James Thompson: Do you feel that you guys might be thankful more work there or you know.

James Thompson: [noise] attunity sufficient elsewhere.

James Thompson: We <unk> we are a company that is very close relationships with our clients. We always look towards the future not just at the present opportunity and treat our clients with respect as we expect them to treat us with respect.

James Thompson:

James Thompson: We have a very strong relationship with Petrobras and very proud of the work we're doing including.

James Thompson: Their first ever IPC I and.

James Thompson: The first ever application of high <unk>, you know in in Brazil. So.

James Thompson: I will just say that will continue to treat our clients. The way that we appreciate them treating us and we believe that is the right way to do business.

Speaker Change: Alright, Thank you I'll turn it over.

Speaker Change: Your next question comes from in line of current <unk> with French Mac. Your line is open.

Operator: Your next question comes from the line of Kurt Hallead with Benchmark. Your line is open. Hello, everybody. Morning, Kurt. So, uh, kind of doggone it, kind of.

French Mac: Hello, everybody.

French Mac: Monitor.

French Mac: So <unk>.

French Mac: <unk>.

Operator: A bigger picture question for you, potentially, right? So, you know, last June, you referenced increased visibility on potential projects that extend out toward the end of the decade. We continue to reiterate that in each and every conference call, yet there seems to be a... Douglas Pulte, CFP®, Financial Planner & Investment Advisor, you know, predicated on Scott Gruber, Luke Lemoine, Saurabh Pant, James Thompson, Michael Alsford, Douglas Pferdehirt, Thank you.

Hannah.

al: A bigger picture question for Ya essentially right. So last June.

Operator: Reference you have increased visibility.

Operator: On potential projects that extend out towards the end of the decade you.

Operator: If you read it right that in each and every conference call.

Operator: Yet there seems to be a <unk>.

Operator: Significant disconnect between what investors want I believe in and what you are actually seeing.

Operator: Predicated on the discussion.

Speaker Change: Discussion the game plan that that your customers have and it's probably the biggest disconnect I've ever seen in my 35 years Mrs. Davis.

Operator: So you know.

Douglas J. Pferdehirt: We've given a lot of input, commentary, and data around, you know, what you're seeing and what it is, but what's driving it? What do you think is driving, as your customer, to pursue these projects, for oil production that's going to come online in three to five, when everybody's freaking out about what oil companies are. So what are the oil companies? The investor base may not be in your Well, look, I don't, you know, Kurt. I learned a long time ago as a service hand not to speak on behalf of my clients. And so I'll just give you my perspective, not speaking on behalf of my clients. And, you know, they may or may not agree or disagree with me.

Operator: You've given a lot of input and and commentary and data points around.

Douglas J. Pferdehirt: Know, what you're saying and <unk>, but what's driving the conviction.

Douglas J. Pferdehirt: What do you think you're driving conviction of your customer base strippers.

Speaker Change: To pursue these projects.

Douglas J. Pferdehirt: For oil production, that's gonna come online in three to five years.

Douglas J. Pferdehirt: When everybody's freaking out about what are the mascot. So what are the oil companies, saying.

Speaker Change: At the Investor base May not in your personal opinion.

Douglas J. Pferdehirt: <unk> <unk> learned a long time ago as a service hand, not to speak on behalf of my clients and and so I'll just give you my perspective, not speaking on behalf of my clients and they.

Douglas J. Pferdehirt: They may or they may agree or disagree with me I think everybody has their long term energy outlook people understand the rate of change both in terms of the demand is going to go up and the rate of change of the energy mix.

Douglas J. Pferdehirt: But look, I think everybody has their long-term energy outlook; people understand the rate of change, both in terms of demand going to go up and the rate of change in the energy mix. And I think when you look at those two through a realistic lens, you come to the conclusion that these are probably the right investments to be making to ensure that the world has access to reliable and dependable energy as we continue our journey forward. These are solid projects with solid economics and are created, you know, now with the confidence they have because of what we have done as a company and by the creation of TechnipFMC and our ability to deliver these projects consistently on schedule or ahead of schedule, which again is, you know, 12 plus months faster than anyone else can do it because they're doing it the old-fashioned way. It's just a very unique scenario to be in, and they have a much higher level of confidence, I would tell you, in our company. You know, it's hard for me to say that. I wish, you know, they always did.

Douglas J. Pferdehirt: And I think when you don't get those two are realistic lens.

Douglas J. Pferdehirt: Come to a conclusion that these are probably the right investments to be making to ensure that the world has access to reliable and dependable energy as we continue our journey forward.

Douglas J. Pferdehirt: These are solid projects with solid economics.

Douglas J. Pferdehirt: And are created now with.

Douglas J. Pferdehirt: The confidence they have because of what we have done as a company and by the creation of to eat that's M C and our ability to deliver these projects consistently.

Douglas J. Pferdehirt: On schedule or ahead of schedule, which it again is you know 12 plus months faster than anyone else can do it because they are doing it the old fashioned way. It's just a very unique scenario to be and then they have a much higher level of confidence I will tell you in our company.

Douglas J. Pferdehirt: Yeah, It's hard for me to say that I wish you know they always did but when we were all doing bespoke work like the rest of the market is doing today, you have confidence until something goes wrong, because you've never done it before we're not doing bespoke anymore, and we're doing configured the order versus engineer to order. So the level of confidence is there were giving our.

Douglas J. Pferdehirt: But, you know, when we were all doing bespoke work like the rest of the market is doing today, you have confidence until something goes wrong because you've never done it before. We're not doing bespoke anymore. We're doing configure to order versus engineer to order. So, the level of confidence is there. We're giving our customers that level of confidence. What they're deciding about their investment, you know, decisions I don't, you know, want to weigh in on.

Douglas J. Pferdehirt: Customers that level of confidence Woodbury deciding in their investment decisions.

Douglas J. Pferdehirt: Decisions I don't want to weigh in on but I again will just reiterate we know the demand is gonna be there and as we move towards.

Douglas J. Pferdehirt: But I, you know, again, we'll just reiterate, we know the demand is going to be there. And as we move towards, you know, just the simple impact of artificial intelligence and the electricity demand that that's going to require, there's demand coming from all facets of the energy complex. And then you just have to make a decision based upon what is the realistic energy mix to be able to deliver that demand.

Douglas J. Pferdehirt: <unk> <unk> <unk>.

Douglas J. Pferdehirt: <unk> simple impact of artificial intelligence and the electricity demand that that's going to require there's this demand coming from all facets on the energy complex and then you just have to make a decision based upon what is the realistic energy mixed to be able to.

Douglas J. Pferdehirt: To deliver that demand our customers I can tell you.

Douglas J. Pferdehirt: Our customers, I can tell you, you know, and I don't know that there's a disconnect. I'll maybe be a little less. I appreciate your viewpoint, and I don't disagree with what you said.

Douglas J. Pferdehirt: And I don't know that it's a disconnect I'll, maybe be a little less I'd, probably appreciate your viewpoint and I don't disagree with what you said, but.

Douglas J. Pferdehirt: I think people are quickly recognizing that this is the new reality and you know we will we will just keep our head down execute inbound execute continue to grow continue to innovate bring in other applications.

Douglas J. Pferdehirt: But look, I think people are quickly recognizing that this is the new reality. And you know, we will just keep our heads down, execute, you know, inbound, execute, continue to grow, continue to innovate, bring in other applications that will allow our business to continue to grow both in terms of the top line of profitability. And we've been extremely disciplined and good stewards of returning to our shareholders, and we'll continue to do so. So I think we'll just continue doing what is the right thing to do, and confident that we'll be rewarded or continue to be rewarded for doing that. I appreciate that insight, Doug. Now, you know, to follow up on that, right? So you've indicated that, you know, you're, Integrated processes reduce cycle time by 12 to 14 months. I think you do it faster than some of your competitors, in a similar time period. So, is that maxed out, or how much more can you reduce that cycle time?

Speaker Change: That will allow our business that can do do grow in both in terms of the top line of profitability and we've been extremely discipline and good stewards of you know.

Speaker Change: Returning to our shareholders and will continue to do so so I think we'll just continue doing what is the right thing to do and confident that will be rewarded or continue to be rewarded for doing that Kurt.

Speaker Change: I appreciate that insight.

Speaker Change: Now you know the follow up on that right.

Speaker Change: Oh, So you you you've indicated that your your I.

Douglas J. Pferdehirt: PCI processing.

Speaker Change: Great your processes reduce cycled time by 12 to 14 months.

Speaker Change: Do it faster than some of your competitors and and and what time period. So.

Douglas J. Pferdehirt: Alright is that Max out or how much more can you reduce that cycle time.

Douglas J. Pferdehirt: How do we think? So, it's a continuous innovation curve. Look, this isn't new, right? We saw this. This is what happened with the unconventionals.

Speaker Change: You know how do we think about that.

Speaker Change: Sure So let's continue.

Douglas J. Pferdehirt: Continuous innovation curve you know look this is a new right. We solve this this is what happened in the Unconventionals and you know when I was back in the day when I was racking. It was single stage single well and you know at most you did two a day because you had a rig download the the next well and we know that every one.

Douglas J. Pferdehirt: Back in the day, when I was fracking, it was single stage, single well, and at most, you did two a day because you had to rig down, move to the next well. And we know that we went to 24 hours, then we went to simulfracking, now trimulfracking. So, look, there will continue to be – we're in the very early stages versus – well, let me say it another way. We saw that productivity curve, which was dramatic and very impressive for what was able to be accomplished in the unconventionals. Think about it, and subsea is going to be no different.

Douglas J. Pferdehirt: To the 24 hours then we went to.

Douglas J. Pferdehirt: Simon fracking now tribal fracking. So you know look there will continue to be willing the very early stages verses.

Douglas J. Pferdehirt: Well, let me say it a different way, we solve that productivity curb which was dramatic and very impressive what was able to be accomplished.

Douglas J. Pferdehirt: In the Unconventionals think about it and subsidy is going to be no different. It's just we're in the very early stages of it. So yes, there will be more to come.

Douglas J. Pferdehirt: It's just we're in the very early stages of it. So, yes, there will be more to come. Great. I appreciate it.

Speaker Change: Okay I appreciate it thank you Ana.

Operator: Thanks for your insights, Doug. Your next question comes from the line of Scott Gruber with Citigroup. Your line is open. Yes, good morning, Doug and Al. Good morning, Scott.

Scott Gruber: Your next question comes from the line of Scott <unk> with your.

Scott Gruber: Your line is open.

Scott Gruber: Yeah, good morning <unk>.

Scott Gruber: Morning slot.

Scott Gruber: So I wanted to circle back on a large and so.

Douglas J. Pferdehirt: So I wanted to circle back on margins. So you're forecasting robust margin expansion... Douglas Pferdehirt, TechnipFMC, Arun Jayaram, Waqar Syed, Angeline Sedita, Dan Boyd, Scott. How should we think about the margin expansion potential into 26? You know, can we extrapolate that trend literally and assume something close to 20% in 26 years? And, you know, would recent awards support that level of margins in a few years?

Douglas J. Pferdehirt: Four cats and robust 16% this year and then climbed into your 18% forecast instead of the 25 and that you can talk to about 18 per cent being closer to normal versus closer to peek.

Douglas J. Pferdehirt: Now with this <unk>.

Douglas J. Pferdehirt: Order intake outlook.

Douglas J. Pferdehirt: How should we didn't think about the margin expansion potential into 26, if we extrapolate that that trend literally and as soon as something close to 20% and 26.

Douglas J. Pferdehirt: With recent awards for that level of margins in a few years.

Douglas J. Pferdehirt: Scott, I had a look at my watch for a minute, and I had to remind myself what year we're in. Look, Scott, I appreciate the question. Clearly, you know, kind of based upon the whole discussion we've had thus far on the call, the market is there, our position in the market is there, our unique offering is there, the direct awards are there.

Douglas J. Pferdehirt: She got I had to look at my watch for a minute and just <unk> I had to remind myself.

Douglas J. Pferdehirt: In look Scott I appreciate the question.

Douglas J. Pferdehirt: Clearly.

Douglas J. Pferdehirt: You know kind of based upon the whole discussion we've had thus far on the call.

Douglas J. Pferdehirt: The market's there our position in the market is there.

Douglas J. Pferdehirt: Our unique offering is there the direct awards are there.

Douglas J. Pferdehirt: You know, we just talked about that there is more leverage to come, both in terms of cycle time, which will improve project economics and improve the total available market, but also in terms of our own internal cycle time and benefit, and leverage, if you will, as we go more so in terms of conversion to 2.0 and IEPCI, neither of which are at 100% today and may never be exactly 100%, but will certainly be more than they are today. So, look, let's just say we remain very confident that we will continue on the path that we're on and have certainly, as we've said before, you know, we've made comments like, you know, a major milestone on a more ambitious journey. And I really, I just think it's fair if I stick with that kind of terminology today. But certainly no less confidence; if anything, even more conviction. I appreciate it. I know it's a few years out, but I had to ask.

Douglas J. Pferdehirt: We've just talked about that there is more leverage to come.

Douglas J. Pferdehirt: Both in terms of cycle time, which will improve project economics and improve the total available market, but also in terms of our own.

Douglas J. Pferdehirt: Internal cycle time, and benefit and leverage if you will as we go Ah more so conversion to 2.0 and I P. C. I neither of which are at 100 per cent today and may never be exactly 100 per cent, what will certainly be more than the order today. So.

Douglas J. Pferdehirt: Let's just say we remain very confident.

Douglas J. Pferdehirt: We will continue on on the path that we're on and have certainly as we've said before.

Douglas J. Pferdehirt: We made comments like you know a.

Douglas J. Pferdehirt: A major milestone on a more ambitious journey and I really I just think it's fair if I stick with that kind of terminology today, but certainly no less confidence if anything even more conviction.

Speaker Change: I appreciate it and the seniors out but had to ask.

Douglas J. Pferdehirt: I also want to come back to the subsea separation. It's exciting to talk about it again. Can you help us think about the content uplift for STI by putting the separation and re-injection on the seafloor?

Speaker Change: I also wanted to come back to the subsea separation takes second thoughts about again.

Douglas J. Pferdehirt: Okay can you help us think about the content uplift.

Douglas J. Pferdehirt: F B I about putting the separation reinjection on the seafloor I imagine there's a range.

Douglas J. Pferdehirt: I imagine there's a range, you know, based upon what is actually done on the seafloor and the content of the production stream, but just kind of what's a reasonable range for us to think about in terms of content uptake. Well, the way I would view it is, you know, we know that it's a billion-dollar plus award because that's how we classified it, right. So that was being done somewhere else. And, if you will, on the top side today. So from an FTI point of view, we don't do top sides, or we do no engineering construction work whatsoever. So, you just think of it at a minimum, you're taking a functionality that was under the scope of someone else and putting it under the scope of FTI. And then we're putting it on the C floor. So that's kind of one aspect that I would kind of think about in terms of margin expansion. And again, if you say, Well, what is the scale of that?

Douglas J. Pferdehirt: What is actually done on the sea floor and the content production stream, which is kind of what's the reason arrange for a restaurant I think about it <unk>.

Speaker Change: Well [laughter].

Douglas J. Pferdehirt: I would be with is we know that it's a billion dollars plus award because that's how we classified it right. So.

Douglas J. Pferdehirt: So that was being done somewhere else and if you will on the top side today.

Douglas J. Pferdehirt: So from an F. T I, we don't do top sides or we do know engineering construction work whatsoever.

Douglas J. Pferdehirt: So.

Douglas J. Pferdehirt: Just think of it at a minimum you're taking a functionality that was being under the scope, but someone else and putting it under the scope of F. T. I and then we're putting it on the sea floor. So that's kind of one aspect that I was trying to think about in terms of margin expansion and again, if if you say well what is the scale of that well.

Douglas J. Pferdehirt: Well, this is actually a brownfield project. It's not a greenfield project. So this is a brownfield project where you're seeing an incremental billion-dollar plus scope coming to our company as a result of this unique offering and capability. So that's, you know, you can't multiply that by every brownfield.

Douglas J. Pferdehirt: This is actually a brownfield project, it's it's not a greenfield project. So this is a brownfield project, where you're seeing an incremental billion dollars plus go coming.

Douglas J. Pferdehirt: Coming to our company as a result of.

Douglas J. Pferdehirt: This unique offering and capability. So that's you know <unk> I know you can't multiply that by every brownfield, but.

Douglas J. Pferdehirt: But if you multiply it by just a few, that's a pretty dramatic uplift right there, Scott. And then the other kind of interesting thing, and I alluded to when I said it was a brownfield versus a greenfield, but this is a billion-dollar award that doesn't include a single Christmas. So, you know, we've often in the past always thought about trees and trees, you know, tree count Now here's a billion dollar award without a single tree. It really shows how.

Douglas J. Pferdehirt: But if you multiply it by just a few that's a pretty dramatic uplift right there Scott and any other kind of interesting thing and I alluded to and I said it was a brownfield versus a greenfield.

Douglas J. Pferdehirt: This is a billion dollar reward that doesn't include a single Christmas tree.

Douglas J. Pferdehirt: So you know.

Douglas J. Pferdehirt: We've often in the past always thought about trees and the trees tree count.

Douglas J. Pferdehirt: There's $1 billion reward without a single tree it really shows out there.

Douglas J. Pferdehirt: This market is expanding in a very favorable way for the industry but also for our company. I appreciate all the comments. Thanks, Doug. Your next question comes from the line of Bertrand Hodee with Kepler Shaviro.

Douglas J. Pferdehirt: This market is expanding in a very favorable way for the industry, but also for our company.

Bertrand Hodee: I appreciate all of the card.

Bertrand Hodee: You know our next question comes from the line Bertrand Jose <unk>. Your line is open.

Operator: Your line is open. Yes. Hello, Doug.

Bertrand Hodee: Yes, <unk> to a question if I may.

Douglas J. Pferdehirt: Two questions, if I may. So how should we think of your 2025 subsidy intermediate guidance when it comes to revenues? You had in mind $8 billion. Are you ready to, you know, give us an uplift to that? And then the second question is on free cash flow for Q4 was extremely strong, but you may have received a lot of down payment as now, when I look at the balance, your net contract liabilities are now close to $500 million, as it was close to zero in previous quarters. So how should we think of this item going forward? Sure. Good afternoon, Bertrand.

Douglas J. Pferdehirt:

Douglas J. Pferdehirt: How should we think of your 2025 steps T intimidate guidance when it comes to our revenues you.

Douglas J. Pferdehirt: Nine 8 billion dollar.

Douglas J. Pferdehirt: Ready to you know to to give us.

Douglas J. Pferdehirt: In a place to that and then the second question is on.

Douglas J. Pferdehirt: And the free cash flow for Q4.

Douglas J. Pferdehirt: Was extremely strong.

Douglas J. Pferdehirt: But you may have received a lot of down payment is now when I look at the balance sheet.

Douglas J. Pferdehirt: <unk> now close to 500 million dollar.

Bertrand: It was you know close to zero in previous classes.

Douglas J. Pferdehirt: So how should we think of this item.

Bertrand: <unk>. Thank you.

Speaker Change: Sure Good afternoon, <unk> I'll I'll touch on the 2025 question and then I'll turn it over to Alex if he wants to add any color and then he can touch on the free cash flow.

Douglas J. Pferdehirt: I'll, I'll touch on the 2025 question, and then I'll turn it over to Alf if he wants to add any color, and then he can touch on the free cash flow as well. So on the 2025 question, look, we updated our inbound target through the end of 2025. That obviously gives greater conviction in the, you know, the numbers that had previously been shared around 2025.

Douglas J. Pferdehirt: As well so on the 2025.

Douglas J. Pferdehirt: We updated our inbound target through the end of 2025 that obviously gives greater conviction.

Alf: You know in the numbers that had previously been shared around 2025, and you know <unk> you know maybe give you a little better view of.

al: And, you know, I'll let Alf maybe give you a little better view of, you know, kind of at a total company level, what one could expect. But, you know, there's some things happening in our surface business, as an example, and, but there's also, meaning the sale of the business and the implications, but there are also some positive things happening on the subsea side, but without giving any specific, commenting specifically on the revenue target, I think we can give you directionally something very compelling. I'll pass it over to Alf. Yes, thanks, Doug. Maybe just putting in context the subsidy situation, really.

Alf: Kind of a total company level, what one could expect but.

Alf: There's some things happening in our surface business as an example, and but there's also meaning the sale of the business and the implications, but there's also some positive things are happening on the sub seaside, but without getting any specific commenting.

Alf: Commenting specifically to the revenue target I think we can give you directionally something very compelling I'll pass it over to Hell.

Alf: Yes time started maybe just putting in context situation really coming off of strong growth.

al: We're coming off strong growth in earnings this past year, and we're looking forward to another strong year in 2024. We saw our backlog grow 50%, and not only did the backlog grow, but the quality of that backlog grew as well. We are building stronger average margins in the backlog. And then on top of that, we are upgrading the $25 billion previous target to $30 billion. And lastly, complement it with positive momentum in our subsidy services business. All that adds up, really, to having just greater confidence overall in the subsidy outlook. And what Doug was talking about, and maybe call it a little bit similar to 2024, we do expect a lower surplus revenue due to the measurement solution sale, as well as some of the rationalization we've done over the last 12 to 18 months. And clearly, we will expect to offset that by a higher relative earnings mix coming from subsidy in 2025. And maybe you know, or maybe I missed a pretty important question.

al: This past year I'm really looking forward to another strong you mean 2024, we saw a backlog grove, 50% and not only did good backlog grow the quality of that backlog grew rebuilding stronger average margins in the backlog and then on top of that you are you know we are upgrading the the the 25.

al: Billion dollar previous target to 30 billion and lastly, copper Bath with a positive moment, Anthony subsea services business, all that adds up really to having just greater confidence overall <unk> outlook and what Doug was talking about it made me call it a little bit similar to 2024.

al: We do expect them over a surplus revenue G T. Mr management solutions, so as well as some other rationalization we've done over the last 12 to 18 months and clearly we will expect to offset that by a higher relative earnings mix coming from subsea in 2025.

Speaker Change: And maybe you know maybe I skipped a prude to ask you a question. So let me get back to that so first of all you appropriately noted that in part of the queue for info did indeed come from.

al: So let me get back to that. First of all, you appropriately noted that, you know, part of the Q4 inflow did indeed come from advances, not necessarily advances, but us achieving milestone and progress payments on our subsidy business. And I don't necessarily consider it a negative to build the contract liabilities; I consider it as a positive that we can run our business on a very neutral working capital basis for the whole company.

al: <unk>.

al: Certainly advances, but also cheating milestone in progress payments on our subsea business and I don't necessarily continue to the negative to build <unk> contact liabilities are considering there was a positive that we actually can run our business on a very neutral working capital basis for the only company.

al: So when you look forward, I certainly don't expect the same kind of, call it, build-in contract liabilities, but I do expect us to continue to be neutral to positive, slightly positive, in working capital for the next year. Okay, perfect. Thank you. Thank you very much. Your last question comes from the line of Saurabh Pant of Bank of America. Your line is open. Hi, good morning, Doug and Al. Maybe, Doug, if you don't mind, I think I don't remember if you said this or Al said it.

al: So when you look forward I certainly don't expect the same kind of call me build in contact liabilities, but I do expect us to continue to be neutral to positive.

Saurabh Pant: Slightly positive in the working capital for the for the next year.

Saurabh Pant: Okay perfect. Thank you very much.

al: Alright.

Saurabh Pant: Tim comes from the line Sarratt plant Bank of America. Your line is open.

Saurabh Pant: Hi, Good morning, Duncan as maybe <unk>, if you don't mind I think I don't remember if you said this or that said this in the prepared remarks.

Operator: But subsea revenues were really strong in the fourth quarter, and I think you'll notice... conversion of backlog. But can you comment on if that's a project specific, one-off timing specific thing in the fourth quarter, or is that a trend?

Saurabh Pant: But subsidy revenues were really strong in the fourth quarter and I think you've noted accelerated conversion of backlog info Q R. That can you comment on that project specific one of timing specific thing in the fourth quarter or is that a trend that we should be mindful off in terms of.

Douglas J. Pferdehirt: Timing of converting. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional both in the U.S. and Israel. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional both in the U.S. and Israel. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered at www.profile-financial.com.

Douglas J. Pferdehirt: Timing of unwitting backlog into revenue going forward and subsea.

Speaker Change: Sure, obviously, a good story and I'm going to let us tell the story.

Douglas J. Pferdehirt: So first of all you're absolutely right. You know, we did have and indeed, a very strong revenue quarter for in subsea basically the holding flat to the prior quarter and party that is due to <unk> actually experiencing less of the typical seasonal factors like we do have is headwinds going from the third quarter to the fourth quarter, but we also did have.

Douglas J. Pferdehirt: Some some projects that it.

Douglas J. Pferdehirt: Accelerating revenue more than expected.

Douglas J. Pferdehirt: And I would say that.

Douglas J. Pferdehirt: That includes a mix of what I want to turn legacy projects that are executed out of the backbone and hands may be also saw that the margin mixed with not necessarily positive reasoning for the corner.

Douglas J. Pferdehirt: He is a licensed financial professional in both the U.S. and Israel. Okay, awesome. Thanks for clarifying. And then just one more.

Douglas J. Pferdehirt: It's really was.

Douglas J. Pferdehirt: Nothing that would affect any of the guidance, we have given forward looking including anything we have talked about how our backlog will evolve over the next two years.

Douglas J. Pferdehirt: I know we spent a lot of time on subsea processing today, or maybe an unrelated technology question. You also won the spot, if I'm not wrong, at www.technipfmc.org, and I think Ankur and Shenandoah were the other ones. You won Shenandoah. How should we look at the opportunity because there is a good pipeline for... Gulf. How should we look? Excellent question, spot on.

Douglas J. Pferdehirt: Okay Awesome Alpha Thanks for clarifying and then just one moment I know we spent a lot of time on a subsea processing today, but.

Douglas J. Pferdehirt: Maybe an unrelated technology question you also wonder spot projects recently, and I think if I'm not wrong. This is only the third when he get PSA project in the Gulf.

Douglas J. Pferdehirt: I think I'm current Shenandoah, whether you are the ones you want <unk>, how should we look at the opportunity because it is a good pipeline of these high pressure or projects in the Gulf How should we look at that opportunity going forward Duggan and how can I have the added benefit from that.

Douglas J. Pferdehirt: [laughter] excellent question spot on lower tertiary Gulf of Mexico High pressure clearly is starting to move forward. We were excited to get the first award which was the Shenandoah reward as you pointed out.

Douglas J. Pferdehirt: Lower Tertiary Gulf of Mexico, high pressure, clearly is starting to move forward. We were excited to get the first award, which was the Shenandoah Award, as you pointed out. So, Sparta for Shell will not be our first delivery of 20K, but it will be the first 20K IEPCI project. So, we're super excited to have that as well and set that new milestone. Going forward, as you know, Chevron has assets, Shell has assets, BP has assets, Beacon, and LLOG both have assets, most of which are, we think, high probability of additional projects going forward.

Douglas J. Pferdehirt: So spell it out for show will not be our first delivery of 20, K, but it will be the first 20, K I E. P. C. Hi project, so super excited to have that as well and said that new milestone.

Douglas J. Pferdehirt: Going forward.

Douglas J. Pferdehirt: No Chevron has assets.

Douglas J. Pferdehirt: <unk> assets B P as assets.

Douglas J. Pferdehirt: <unk> both have assets most of which are you know.

Douglas J. Pferdehirt: We think a high probability of of additional projects going forward. So yeah, we don't speak to it as a new frontier, but it certainly is a new horizon within an existing frontier.

Douglas J. Pferdehirt: So, yeah, we don't speak of it as a new frontier, but it certainly is a new horizon within an existing frontier. And with that, I will turn the call over to Matt Seinsheimer for closing remarks. Thank you. This concludes our fourth quarter conference call. A replay of the call will be available on our website beginning at approximately 8 p.m. Greenwich Mean Time today. If you have any further questions, please feel free to reach out to anyone on the Investor Relations team.

Matthew Seinsheimer: And with that I will <unk> sign center for closing remarks.

Matthew Seinsheimer: Thank you. This concludes our fourth quarter conference call.

Matthew Seinsheimer: The call will be available on our website beginning at approximately ATM Greenwich mean time today. If you have any further questions. Please feel free to reach out to anyone on the Investor Relations team. Thank you for joining us Sarah He may end the call.

Matthew Seinsheimer: Thank you for joining us. Sarah, you may end the call. Thank you. This concludes today's conference call. Thank you for joining us. You may now disconnect your line.

Matthew Seinsheimer: Thank you. This concludes today's conference call. Thank you for joining you may not disconnect your lines.

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