Q1 2025 TechnipFMC PLC Earnings Call

Carter Earnings Call.

Adjusted EBITDA was $356 million, an increase of 38% when compared to the prior year.

Pre-Cacheflow was $380 million, a notable achievement in light of our typical seasonality.

I want to recognize the fantastic execution of the global team.

These results clearly demonstrate the substantial impact of our transformation driven by actions we have taken to simplify, standardize, and industrialize, and we have only scratched the surface of what is possible within the organization.

While our actions position as well for continued success for both our clients and stakeholders,

We also recognize that this level of performance starts with high quality, inbound orders.

First Quarter Sub-CM down was 2.8 billion with a book to bill of 1.4. I would also highlight the orders of now exceeded revenue in 8 of the last 9 quarters.

These results were supported by strong orders for both IEPCI and Sub-C2.0, including two annals projects.

and IEPCI Award from Equinor for the Johans Verge of Phase III Project, where we have supplied the subsea production systems in both previous phases.

And an IEPCI Award from Shell that will include our Subsea 2.0 technology on the Greenfield

In our effort to further advance the growth of our Integrated Portfolio, we announced a strategic alliance with Karen, Oil, and Gas to deliver future deep water developments offshore India using our IEPCI model.

This collaboration agreement lays the foundation for early engagement which will result in direct the award, IPCI Projects Utilizing Sub-C 2.0.

allowing us to deliver Karen's bold, deep water development vision faster and with greater project certainty.

Taking a broader view of the offshore market, I'll start with our SEBC Opportunities List.

which now highlights more than 26 billion of opportunities when using the midpoint of project values.

I'd also highlight the pervasiveness of new frontiers amongst these opportunities.

Guiana, with some I consider mature, continues to be an emerging market in growth mode.

Surinam, where the first offshore oil and gas development in the region was recently awarded as an IEPCI to TechnipFMC, Utilizing Sub-C2.0.

In Namibia, Mozambique, and Cyprus, while in early stages, all represent long-term opportunities as the development lifecycle of these regions will extend well beyond the end of the decade.

We also have access to a proprietary set of opportunities.

that extend well beyond this list, many of which will result in direct awards to our company.

When taken together, IEPCI direct awards and subsidy services, another key element of our commercial differentiation.

Constituated more than 80% of our inbound in 2024, and this trend has continued in the current year.

This level of success is supported by the growing number of clients that are adopting integrated execution and Sub-C 2.0.

which I mentioned at the outset is indicative of our high-quality imbalance that is many positive benefits for our clients and our company.

This makes us uniquely positioned for an expanding offshore market, one that is being driven by an increasing number of clients that are allocating a greater share of capital budgets to deep water developments.

We also expect another year of growth and subsidy services driven by our large and expanding install base to repair and maintenance needs of aging infrastructure and the development of enhanced services.

One of our new offerings is Riserless Coil Toothing, which has expanded our well-intervention offering.

This award-winning breakthrough solution was developed to our technology alliance with Halliburton and creates measurable value for our clients.

Technology innovation like this allows us to challenge industry norms and create tangible benefits for our customers by reducing cycle time and lowering the overall cost of life of field services.

before I conclude my remarks.

I want to acknowledge two topics that are currently top of mind, commodity prices and tariffs.

Commodity Prices are primary variable in our client's decisions to move forward on a development.

But the impact they have on economic feasibility of a project can differ significantly by region and resource.

Starting with the offshore, we continue to believe that offshore will remain a preferred investment of operators, with deep water attracting a growing share of capital flows.

driven by much-improved economic returns and broad access to these resources.

This gives us continued confidence in delivering more than $10 billion of sub-sea inbound in 2025.

Turning to U.S. Lane. This is amongst the most susceptible regions to lower commodity prices.

given its relatively high cost of development. [inaudible]

The majority of our surface technology's revenue comes from less cyclical international markets.

For most activities are undertaken by national oil companies with a long-term investment horizons

Here, we have already secured a significant portion of the embalm needed to support our full year guidance.

Importantly, we estimate that 95% of our total company revenue in 2025 will be generated from activity outside of the U.S.

Now moving to the second topic.

It is important to understand TechnipFMC's limited exposure to the recently announced terrorists.

Our revenue is derived from diverse sources.

which include not just products, but also installation and services activities.

When thinking about our potential exposure, this is confined to product-related revenue from our operations across U.S. land and the U.S. Gulf.

and given our mitigation efforts, we anticipate the impact to total company of justice to be less than $20 million for the full year.

So you can clearly see.

The TechnipFMC has limited exposure to regions most impacted by commodity prices and tariffs.

To close, this was another quarter that clearly demonstrates how TechnipFMC truly stands out.

In a dynamic environment, we have differentiated ourselves with a strong backlog, totally nearly $16 billion, providing revenue that extends through the end of the decade.

Exceptional execution, driving robust cash generation, and increased shareholder distributions, allowing for even more share repurchase at a time, when our equity offers a very compelling investment opportunity.

Our unique commercial model and product differentiation is providing real value in greater projects certainty to our customers.

and our high-quality backlog and growing pipeline of services opportunities can provide greater stability through the near-term uncertainty.

Importantly, our outlook for both subsea and bound orders and total company adjusted EBITDA for 2025 remains unchanged.

We are excited about what lies ahead for us and our opportunity set is deep and diverse.

and at the same time, our execution is strong and accelerating and our business transformation is creating even more value for our clients, our company, and our shareholders.

I will now turn the call over to elf.

Ellen: Thanks, Doug. Imbound in the quarter was 3.1 billion, driven by 2.8 billion of subsea orders.

Speaker Change: Total company backlog increased 10% sequentially to 15.8 billion. Revenue in the quarter was 2.2 billion.

Speaker Change: Adjusted EBITDA was 356 million when excluding a foreign exchange loss of 12 million and restructuring impairment and other charges totaling 1 million.

Turning to Sigmund results.

Speaker Change: In Sub-C, revenue 1.9 billion decreased 5% versus the fourth quarter. These results were driven by lower activity in Africa, the North Sea, and the Gulf of America, as well as reduced services activity due to typical offshore seasonality.

Speaker Change: This was partially offset by higher project activity in Asia Pacific and Brazil.

Speaker Change: Adjusted EBITDA was 335 million and modest sequential decline, driven by lower services activity and reduced fleet availability due to scheduled maintenance in the period.

This was largely upset by strong project execution.

Speaker Change: Adjusted EBITDA margin was 17.3% up 80 basis points from the fourth quarter.

Speaker Change: In surface technologies, revenue was 297 million, a decrease of 7% from the fourth quarter.

Speaker Change: Adjusted EBITDA was 47 million, a decrease of 13% sequentially due to lower activity in international markets, partially offset by higher activity in North America.

Speaker Change: The Justin EBITDA margin was 15.7% down 110 basis points versus the fourth quarter.

joining to corporate and other items in the period.

Speaker Change: Corporate expense was $26 million, net interest expense was $10 million, and tax expense in the quarter was $87 million.

Speaker Change: Casinal from Operating Activities was 442 million and capital expenditures were 62 million.

This resulted in free cashflow of $380 million. This resulted in free cashflow of $380 million.

Speaker Change: Our strong start to the year reflects the solid operating performance in the quarter driven in part by strong customer collections.

We repurchased 250 million of stock in the first quarter.

Speaker Change: with including 21 million of dividends, total shareholder distributions were 271 million.

Speaker Change: We ended the period with cash and cash equivalence of 1.2 billion.

Netcash improved to 282 million. [inaudible]

Speaker Change: We remain focused on shareholder distributions and reiterate our intent to distribute at least 70% of free cash

Speaker Change: And even at this high level of distributions, we will have the flexibility to pay down 200 million euro on private placement notes that mature at the end of June .

Speaker Change: Given our limited exposure to the U.S. land market and potential tariffs, we have confidence in providing thoughts around our outlook.

Speaker Change: For the second quarter, we anticipate subsidy revenue to grow low double digits sequentially with an increase in adjusted EBITDA margin of approximately 400 basis points.

Speaker Change: For surface technologies, we anticipate revenue to increase approximately 5% sequentially with an adjusted EBITDA margin of approximately 15.5%.

Speaker Change: For the full year outlook, we remain confident in our prior expectation for total company in the adjusted EBITDA of approximately 1.76 billion, well excluding foreign exchange.

Speaker Change: This guidance is supported by our substantial backlog and continued strength in our execution.

and also includes the potential of incremental tariffs.

Speaker Change: Considering our first quarter cash performance, we are increasing our full-year expectations for free cash flow to a range of 1 to 1.15 billion.

Speaker Change: In closing, we appreciate the market concerns regarding the commodity price and tariffs, and Doug addressed these potential exposures in his prepared remarks.

Speaker Change: That said, we have not let the external environment distract us.

And this was evident in our solid first quarter results.

Speaker Change: The team is intentfully focused on execution and continues to build up on our strong operational momentum.

Speaker Change: Additionally, we delivered exceptional free cash loan in the period, yet another tangible benefit of the changes we have made to the operating model.

Speaker Change: Importantly, these changes are structural, giving us confidence in our ability to convert even more of our EBITDA into cash in 2025.

Speaker Change: They also provide us with considerable flexibility as evidenced by our continued commitment to return at least 70% the free cash flow to shareholders in the current year.

Are unique operating model supports it? [inaudible]

Speaker Change: A robust backflow supported, and our strong balance sheet supported.

Operator, you may now open the line for question.

Speaker Change: At this time, if you'd like to ask a question, press star, followed by the number one on your telephone keypad. We kindly ask that you please limit yourself to one question and one follow up. Our first question will come from the line of David Anderson with Barclays. Please go ahead.

Thanks for the dog, are you?

Good morning, David.

Speaker Change: Doug, I certainly appreciate the longer cycle nature of subsea that gives you the confidence and more than 10 billion in orders this year, but...

David Anderson: I'm wondering if the current environment favors certain markets moving forward over others. The US Gulf is a fairly small component of your subsidy's chart, but...

David Anderson: I'm just wondering if you think that gets pushed out because of some of the higher development caused either with tariffs or well heads or whatnot. On the other hand, could Petra about push forward even faster, that glowing project list? Intuitively, I was thinking maybe some of these orders could get pushed out into 26, but you don't seem very concerned.

David Anderson: So that's a fair question, David, and one that obviously everybody's putting a lot of attention on. We try to address it in the prepared remarks.

David Anderson: and as you point out, our exposure is very limited, but let me just maybe turn to the conversations with the clients. We are not...

David Anderson: Hearing and being requested to defer push out a project activity, I would say the conversations have remained fairly consistent and maybe even a little bit accelerated and what do I mean by accelerated?

David Anderson: You know, our clients have a phenomenal set of opportunities as reflected in our subsea opportunity list but more importantly within their own organizations in the offshore domains in the US Gulf but also internationally. Thank you very much.

David Anderson: and they're seeing the need to secure the best capacity from the industry to deliver these projects.

David Anderson: The whole key in offshore developments is the certainty of the project delivery.

David Anderson: This is what has been an issue in the past, is companies that were all operating in the same kind of bespoke manner, we would inevitably run into execution issues as activity increased.

David Anderson: What we have demonstrated, and I'm proud to say only we have demonstrated, is the ability to significantly increase our volume while not sacrificing certainty.

David Anderson: So the reason our clients are coming to us to secure our capacity earlier than normal.

David Anderson: is they see the benefits of IEPCI and of Sub-C2.0 and of our operating model. This gives them the certainty and the confidence to move these projects forward, which is stated in my prepared remarks, still have some of the best project economics.

Speaking specifically to the Gulf, which was your question,

David Anderson: I do not see a slowing in the cadence of the developments of some of the newer green field opportunities like the paleojean. As you know, it's very active right now. There are likely to be subsequent projects that will come from the paleojean.

David Anderson: Beyond the paleojean, when you look at the economics associated with the brown field opportunities, they're some of the best, and it's simply because there's not the capital required for the floating structure that would be required in a green field development.

David Anderson: So then when you look at the US Gulf, you realize there's a significant amount of installed base in terms of floating structures which would allow for greater brownfield opportunities.

So what inevitably you could see? [inaudible]

and a low commodity price environment.

David Anderson: is potentially a slowing of Greenfield developments in a place like the Gulf.

David Anderson: But I think you would see an acceleration in brownfield developments because the economics of those projects...

Or just...

David Anderson: Exceptional, again, given the fact that you don't have the capital allocated to the floating structure.

David Anderson: You know, it has the mature field, so it has the opportunity for the Bronfield tiebacks, but it also has a very prolific and very exciting new Greenfield region, the Padiagene which we would expect our customers to continue to prioritize amongst their opportunity sets. [inaudible]

I appreciate the call.

Speaker Change: We're facing another downturn. You've been here before, we've all been here before, but you haven't had this IEPC eye model really as fully as

Speaker Change: I'm just curious, what if anything your customers are asking of you and what you're trying to do for them? We're clearly, you know, if you're clearly not talking pricing concessions concerning the current market structure. Good luck, Kurt.

Speaker Change: But with most of your points for direct awards, is there anything you could do to push for those environment or is it just simply about projects certainly like you talked about and customers just need to look through the oil market uncertainty? Is there anything you can kind of do here on this some curious about? [inaudible]

Speaker Change: Sure, and Dave, I'm just going to maybe key in on one word you said and maybe it's unfair, but in offshore we are not seeing a market downturn.

Speaker Change: So let me just start with that. We are not seeing any slowing.

Speaker Change: of the opportunity set. I can tell you the tendering activity when I look at my calendar.

Speaker Change: And, you know, our my time is being spent. There is certainly no slowdown in terms of tendering or discussions and it does matter fact in some cases. There's actually an opportunity. There's opportunities to accelerate. [inaudible]

Speaker Change: in terms of where we are as a company and I appreciate you pointing that out.

Speaker Change: Look, in a period of uncertainty and we don't deny that this is a period of uncertainty, but in a period of uncertainty we have never gone into it with a backlog as large or more importantly as high quality that we have today.

Speaker Change: So keep in mind, we're sitting on a substantial backlog that covers multiple years.

Speaker Change: That provides that really takes out that short term uncertainty risk that you would have in the very short cycle book to bill markets like the US land.

Speaker Change: and they're in there in lies to challenge, but for the offshore market and for our position in the offshore market, which as you know has improved substantially over the last several years, puts us in a very strong position to weather any uncertainty.

But you appreciate it. Thanks, Doug.

Speaker Change: Our next question comes from the line of Arun Jayaram with JP Morgan Securities. Please go ahead.

Yeah, good morning, Doug. You know, last quarter, you mentioned how- [inaudible]

Speaker Change: You thought 2026 would be kind of a significant year for subsea orders with further margin expansion potential. I think you just mentioned in response to Dave's question that the ten-hour of your conversations with the customers really hasn't changed too much.

Speaker Change: So, my question is how would you...

Speaker Change: Gage, the order outlook for 2026, and when do you think you'd be in a position maybe to provide maybe even a soft outlook for 2026, relative to the 10 billion per annum orders you've been clipping over the last three years including 2025.

Arun Jayaram: Well, good morning to you too, Arun. I knew I wasn't going to get very far into this conference call without talking about 2026.

Speaker Change: and I guess we're privileged to be in a position to do so. But let me just reinforce that. We just came out with confidence.

Arun Jayaram: and stating that our 2025 total company EBITDA target is unchanged.

That's really important because, as you know, this is...

Arun Jayaram: An earning cycle where many are not able to confirm their Q2 guidance, let alone provide 20, 25, 4-year guidance or commit to unchanged, giving everything that's going on. So I do want to start with that, I think that's important.

Arun Jayaram: And then, of course, once one does that, it kind of begs, well, what could 2026 do? So I don't blame you for asking, Rune, I would tell you my opinion of 2026 as you correctly summarizes remains unchanged.

Arun Jayaram: As you know, most of the conversations we're having with our clients now are really 20-28 and beyond.

Speaker Change: So the order flow in 2026 is really going to be a function of the timing of FIDs.

Speaker Change: I'm not concerned about the probability of the FIDs. Again, the opportunity said is very rich. When we talked about, you know, could it also be in the 10 billion range? Does it look very solid? Yes and yes.

Speaker Change: Again, it will just come down to the process and the timing of the FIDs, but…

Speaker Change: The quality of the advanced stage of the commercial discussions on those projects.

Speaker Change: is very real, increases the probability, many, or will again be direct awarded to our company, it's just a very humbling and unique position to be in.

Speaker Change: Great, that's super helpful. Maybe my follow-up, but we were pleasantly surprised the tariff impact is very, very minor, called less than 20 million. So maybe just if you could dig down a little bit, is this a function?

Speaker Change: of FTI, obviously a lot of local content, is the relatively known number a function of your ability to adjust the supply chain, or is this maybe embedded in some of your contractual agreements or customers where you're not taking on this risk.

David Anderson: Sure, and I'm going to get let off, provide some color on this one. But let me start with just, I want to reiterate a number that I had in my prepared remarks, which is 95%.

David Anderson: 95% of our revenue comes outside of the U.S. land market, and that's really, really important. And so, you know,

David Anderson: When you think about our company and yes we're global, yes we have presence in the US and it's important to us but we really are the international company.

Speaker Change: We have the broadest international footprint. And as a result of that, in the scenario that we're talking about here today, it's certainly just from right off the top, it just dramatically reduces mathematically our exposure. But I'm going to have Elf provide some additional color around that. [inaudible]

and Matt Seinsheimer.

Elf: and when you think about what we do in these areas, not everything is related to products, right? We talked a lot about that we are doing installation and services activities and those obviously have no foreign content.

Elf: So that's important, so it's really narrowed down to certain products that are being sold in the US.

Elf: We talked about that we see no less, no more than 20 million of impact to the...

To the Financials this year. [inaudible]

and I want to point out the other thing that...

This is...

Elf: Spread pretty evenly between the two segments, so when you think about that in the contours of our guidance, but most important in the contours of our guidance, you should know that it's contained within the guidance ranges that we have given.

Great, thanks for your run, I'll just close. Maybe your run, I'll just close on that one. You know, this is...

You know, we have very, um...

Elf: Pete, and intimate relationships with our customers. When something like this happens, we sit down with them and we work together. Thank you very much.

Elf: and it could result in some changes in the way that things flow. There are solutions if you are willing to work and your client more importantly is willing to work in a collaborative way with you and we're in a strong position to do so.

Thank you, Doug.

Speaker Change: Our next question comes from the line of Ati Modak with Goldman Sachs. Please go ahead.

Ati Modak: Doug, you mentioned that most of your conversations are for 28-28 and beyond. I'm just curious what those customers are saying with respect to those long dated projects. Has the current environment affected that at all versus what you were hearing earlier or is it steady?

Ati Modak: Good morning. Well, first of all, they're looking at a very different commodity outlook when they're looking at that period of time. So, you know, that's obviously proprietary to them, but I can assure you they're not looking at.

Ati Modak: You know, the very recent fluctuations in the quantity price they're looking at a much longer term script as you can imagine. You know, they're looking at projects for the latter part of the decade that will be delivered in, you know, three to five years, so that's a very different outlook. [inaudible]

Ati Modak: The other thing I would say is they're also looking more at gas.

Ati Modak: You know, start to gain a lot of attention as well. So it also kind of expands the opportunity set, but I would say more gas focused and oil focused in that latter part of the time frame that we're discussing.

Speaker Change: That's very helpful and then on the surface technology side I'm just wondering if there's any sensitivity around that in the current environment.

Speaker Change: So, good question. And again, it's really two, you know, a tale of two stories here. We'll start with the international. As you know, the bulk of our international earnings come from the Middle East.

Speaker Change: and the bulk of that comes from Saudi Ramco and Adnaught. These are customers that have very strategic and long-term views. They tend to react less to short-term commodity prices.

Speaker Change: than other areas around the world. So as a result of that, I would say greater stability, an area that you know we've invested heavily in in terms of our surface technologies business to ensure that we had world-class industry leading capabilities in both the kingdom.

as well as in the Emirates.

Speaker Change: and as a result of that, we are receiving preferential treatment because of the investment that we made, so that remains very positive and that retains a very positive outlook and much less susceptible to short-term fluctuations.

Speaker Change: And an area that, you know, one of the earlier questions, you know, that we've seen cycles before, I've seen a lot of cycles in North America.

Speaker Change: and it's one that we know how to manage and we will manage proactively. That being said, it's also important to point out in the US land market, we really work for some of the largest clients. [inaudible]

Speaker Change: The bulk of our revenue, a significant amount of our revenue comes from a limited set of clients.

Speaker Change: So we're not working broadly and extensively for the independence and the privates. We're really working for the majors.

Speaker Change: There you're going to have greater stability than you're going to have on some of the smaller companies that don't quite have the same balance sheet.

Speaker Change: as the very large companies that we work for in the US land market. But look, we're in active conversations, very transparent conversations with our customers, and we will take the actions that are necessary to ensure that we retain the integrity of our business across the globe.

Very helpful. Thank you, Doug.

Speaker Change: Our next question will come from the line of Mark Wilson with Jeffries. Please go ahead.

Mark Wilson: Thank you and good morning. I'd like to ask Doug regarding which of any of those

You're seeing competition to your offering and here I'm speaking specifically to...

Not only the IEPCI, but the Sub-C 2.0.

Mark Wilson: Set up, because clearly that's being adopted by pretty much all the major deep water.

Companies, Exxon, Shell, Total, etc. But I note that...

Mark Wilson: Six or all six of the opportunities in Brazil are with Petra Brass, which obviously has its own standard setup and that works for it but you've seen Sub-C2.0 into Brazil now with Shell. What is the potential?

Mark Wilson: for take-up on a broadest scale in Brazil and what broader competition you're seeing in other areas. Thank you.

Sure, Mark. So Brazil had Petra Brass.

Mark Wilson: Has their own standard, so they have a standard tree design that gets bit out to the menu, to the subsea community, and it's built to a similar to their standard. [inaudible]

Mark Wilson: It is not Sub-C2.0. It is built because they're trying to build it to have...

Let's call it a universal adaptability. It's got some additional...

Configuration that makes it not as efficient as Sub-C2.0.

Mark Wilson: We certainly have and continue to have talks with Petrobras about that. And I remain optimistic at Petrobras.

does see the value and will potentially embrace Sub-C2.0. [inaudible]

Mark Wilson: In the meantime, they continue to tender their standard and it's interesting to us. We have the largest install base in Brazil. We have a very strong, subsidy services business in Brazil and it benefits obviously from having the install base.

So you'll see tenders come out on occasion.

Mark Wilson: and we do tend to participate in those tenders for Petra Brass.

It's also important, as you noted.

Mark Wilson: In Brazil, although Petra Brass is clearly a significant portion of the market, there are other operators.

Mark Wilson: and we are now offering Sub-C2.0 for multiple operators in Brazil.

Mark Wilson: You pointed out Shell with the Gato de Mato project, but we're also doing the higher project for Equinor. This was another IEPCI 2.0 and we also delivered a project for Corun Energy which was an IEPCI 2.0 so 2.0 is in the Brazil market.

Speaker Change: Petra Brass does not tender the 2.0 because they're trying to tender...

Speaker Change: They're a standard product that can be manufactured by multiple companies. So that's just kind of the lay of the land but it remains an important market for us and obviously targeting IEPCI 2.0 opportunities is important.

Speaker Change: The opportunity set that you see on the subsea opportunity outlook list, those are installation projects, so those are not equipment projects, so that's just a different set of opportunities that you see there, but you'll probably be hearing about a pet your breast tender for equipment relatively soon if you heard about it.

Speaker Change: And then beyond that, in the North Sea, there's a Norsock standard, which we have a standard tree for the Norsock to be Norsock compliant.

and we continue to deliver that in that market.

Speaker Change: But beyond that, Sub-C2.0, as you point out, has really proliferated the market and we would expect it to continue to grow.

Where were...

Speaker Change: We're in a unique position and we're the only ones who have the Sub-C2.0. [inaudible]

Speaker Change: As a result of that, there has been a significant amount of direct awards.

Speaker Change: It's not something that we expect to be emulated by the competition. They've chosen to consolidate and build scale and mass around the 1.0 offering, and that's just a different strategy, but we continue to invest in 2.0 and beyond, which will continue to give us the competitive advantage.

Thank you very much, I'll hand it over [inaudible]

Speaker Change: Our next question will come from the line of Saurabh Pant, the Bank of America. Please go ahead.

Hi, good morning, Doug and I.

You did a good morning.

Speaker Change: Doug, maybe I want to touch on the execution as a more broader topic. We talked about Paris, Arun Commentary, it's a pleasant surprise. The impact is pretty minimal, right? But if we just talk about...

Speaker Change: We have almost forgotten that this is a project business. There is no wrong to project them. It's a fantastic job at education, right? But

Speaker Change: Maybe talk to your project selection process, the improvements in the DNC and the projects that are in your backlog, maybe just give us a little more color on how you have managed to execute and do these uncertain times, right? How you still manage to remain in control of the process?

Speaker Change: Sure, thank you, Saurabh, and it's actually a great follow-up after Mark's question because...

Speaker Change: You know, the difference for us is, you know, executing an IPCI 2.0 project has significantly lower risk.

and Executing, Unknown IPCI, Non 2.0 Project.

Speaker Change: So, again, that's why we are in a very different world right now in terms of execution. By the way, it showed up in our free cash flow this quarter because of our ability to be able to really do things.

Speaker Change: in a unique way and often in a way that rewards both our clients in terms of project certainty but also rewards us as well.

So,

Speaker Change: You know, there's no doubt through that we think about execution every single day. We actually had our board meeting on Tuesday and our board spent one hour in our sub-sealed daya. [inaudible]

Speaker Change: Looking at the execution work that we're doing today and we make things very visible, things that are going well, but also areas that we need to improve upon.

Speaker Change: But I can assure you that our execution given the new model, the new operating model allows us much greater transparency, the ability to be able to address issues much earlier in the process which leads to greater project certainty. This is measured by the Director Awards.

Speaker Change: You know, a client would not give you a repeat direct award order if you did not deliver on time. So what you see from us is I cannot think of an instance.

We have not gotten a subsequent. [inaudible]

Director Ward.

Speaker Change: from a project, if it was a multiple phase project as an example, because they see the experience of success and hence we've had the opportunity to repeat that success and you know I guess the best example that would be in Guiana which we are very happy to be part of and thankful to Exile Mobile.

Speaker Change: But if you look at other, you know, some of the other work that's going on out there where they're attempting to do integrated projects, but they're not going so well, you're seeing those clients tender the follow up phase.

Speaker Change: That says that maybe that the execution that they're experiencing in the first phase was not as good as they had hoped it would be.

Speaker Change: and then sometimes we'll agree to tender and sometimes we won't agree to tender on the subsequent phase if we're asked to, you know, because of the performance of others.

Speaker Change: If we're not executing at the very highest level, and I'll repeat just one more time, certainty is what matters to our customers.

Speaker Change: Sure, there's the economic evaluation, but a big portion of that economic evaluation is the certainty of the delivery and we have been doing an exemplary job and put a shout out to the 22,000 women and men of the company who are executing these projects every single day.

Speaker Change: That's very helpful. And then a quick one, maybe also you on the free cash flow guide of the city. It's fantastic to see the free cash flow guide for the full year being raised. And first quarter was super strong, right?

Editing Our Backload.

So it's fairly simply in a way if you perform.

then

Speaker Change: If we achieve the milestones there, not only are those milestones important to our clients and they get what they need, but we get cash.

Speaker Change: So that is really how we structure the contracts and everything that we do in what's embedded in our high quality backlog.

Speaker Change: I will also point out that both sub-CN surface had very strong cash in the first quarter. So, again, very pleased with the results.

Speaker Change: If you kind of then look at the rest of the year to some degree and think about what we typically have had us, a little bit weaker Q1, a little bit stronger Q4, we see a more balanced...

Speaker Change: performance this year. So it will probably be fairly evenly balanced to get to call it the midpoint of the new guidance and clearly it implies but for the full year we'll have a little bit of a working capital. Yeah, yeah, yeah, yeah.

in the flow that affects the financials. [inaudible]

Speaker Change: Obviously, again, with what we just experienced in Q1 and looking out, we are really confident in the pre-catchable and raised our guidance by 150 million, so now sitting at 150 million above the prior guidance range. And maybe last comment on this, you think about the underlying pre-catchable conversion that we have. Even if you... [inaudible]

Speaker Change: Do not consider that any call it variation in working capital. We are continuously trending well about 50% of conversion of recastment from EBITDA.

Speaker Change: Yep, no, that's a very good point, I'll turn it back and clearly you deliver the project on time and the customer stay on time so that's a fantastic syrup. Thank you, I'll turn it back.

Speaker Change: Our next question comes from the line of Mark Bianchi with TD Cowan. Please go ahead.

Hi, thank you. I guess...

Mark Bianchi: We're seeing building evidence every quarter from you guys that you've got something that's differentiated here and value added for the customer, but you did mention in the press release that commodity prices is a primary variable for the customer. So I'm just kind of curious, what level...

Speaker Change: Does Commodity Price Weakness start to enter the conversation or maybe reduce the urgency for some of the consumers?

Mark: Sure Mark, important question. As stated earlier, that has not entered into the conversation at this point. Again, keeping in mind that these are longer cycle projects. Thanks for your time.

Mark: and projects that once they are awarded, we've actually never had a project cancelled or deferred that was in our backlog, including during COVID. So there's a lot of stability actually in this business.

Mark: because of the longer term nature of the investments that the clients are making.

Mark: Also keep in mind, we come at the very tail end and that's not a bad thing in this case.

Mark: In other words, they've invested a tremendous amount of cash and capital.

Mark: in terms of acquiring the least, doing the seismic, doing the exploration drilling, delineation drilling, etc.

Mark: It's really the only thing that stands between us and them generating revenue or first oil or first gas.

Mark: is putting in place the production system which is what we're delivering to them. So because of that we're kind of in a unique position.

Speaker Change: If you, and I don't really want to speak on behalf of our customers, but I think you'll find these numbers.

Speaker Change: really across our customers, you know, numbers that they use across our customer base, but honestly it's really up to them to answer the question, but what they will typically say is they're offshore portfolios.

Speaker Change: and a sub-40 dollar break even, and in some of the more prolific basins, it is sub-30.

Speaker Change: and then when you get into the Bronfield tiebacks, it's sub-30 and in some cases it's in, you know, it can be in the very low 20s.

So, it's a very different setup than other areas.

Speaker Change: and other investment opportunities that they have, which is why we continue to see a greater shift on the capital expenditures.

Speaker Change: Investment for future developments to be being preferentially treated, or if you will, guided to the offshore versus the onshore, the land market.

Speaker Change: So, that's kind of the setup, that's what we're seeing, you know, look, I am sure we're talking about it, they're talking about it, you know, our clients are phenomenal in world class, what they do. So, no suggestion that they're not talking about it, but certainly not showing up in any of their, you know, in any of the conversations that we're having. And again, they do have...

Speaker Change: Breakeven, that is much preferred to other investment opportunities that they have and they would have in their offshore opportunity set.

Speaker Change: Yeah, that makes sense. Thanks for that color, Doug. The other question I had was on on subsidy services. It seems like the outlook is unchanged there. I would have thought that maybe if there's anywhere in subsidy business, maybe there's some commodity price sensitivity there around, you know, just some of the discretionary services that you might you might do. Has your outlook for subsidy services changed at all in the last 90 days?

Doug: That's a good question. Actually, it's one of the more resilient parts of our portfolio. And again, I hate to keep reference to the second time, but even during COVID, our subsea services revenue was the most stable of any of our revenue streams within the company.

Doug: There's not a lot of discretionary services that they do. [inaudible]

Doug: Typically, you know, we're involved because it's a, you know, it's a normal, you know, inspection maintenance repair schedule, or it may be something that happens in the well bore itself.

Doug: More often or not, the issues occur in the well-bore, and that's just because over time the...

Doug: You know, the geochemistry changes, it may start to scale off, but they may start to get sand intrusion, they may have a sensor or a valve or a screen fell down hole and then they have to go in and do an intervention. .

Doug: That's why, you know, that was one of the exciting things and we talked about riserless coil tubing.

Doug: Interventing because that's kind of been a holy grail that's the industry's been working on for multiple decades actually.

Doug: and we addressed that along with our technology partner, Halliburton, for the first time. So, no, it's actually fairly stable. Our look has in change because there's just not a lot of discretionary. It's not like maintenance of...

You really, because of think about it, but...

Doug: It's something that you don't really defer maintenance on or it's not really discretionary.

Doug: It's something that our clients are very, very good at maintaining, and as a result of that it's proven to be quite resilient again, even in the 2021 timeframe.

Very good. Thanks so much. I'll turn it back.

Speaker Change: Our next question comes from the line of Scott Gruber with City Group. Please go ahead.

Yeah, good morning.

Scott Gruber: I'm the project outlook list. There's a larger board for Petrobras listed simply as revitalization of fields. I think it's shut up last quarter, but can you just convince more color on that opportunity in as of a bunch of

Speaker Change: Stepouts, intervention component, what does that refer to? Thank you.

Speaker Change: Sure, Scott, good morning. Luke Petra Brass is a very, very sophisticated client. They've been operating in the sub-C, you know, one of the longest operators in the sub-C.

Speaker Change: and they're very good at what they do and they'll look at their asset base and if they see an opportunity

Speaker Change: To reconfigure, let's think of it as reconfiguring, reconfiguring the architecture, which would allow them to improve the recoverable from the reservoir, then that's something that they're willing to invest in. So I would say what you're seeing there is a very sophisticated, very mature, subsea customer. [inaudible]

and that doesn't involve new technology that they're looking at applying.

This has got a field configuration.

Speaker Change: So it could, you know, and you know we're deploying some new technologies in Brazil right now so those type of projects could include subsea processing technology but not necessarily.

Speaker Change: Okay, well, we'll continue to watch. That another kind of execution or efficiency question. As you've shifted towards Sub-C2.0, you've been reconfiguring your plans.

and based on past comments, he didn't...

Speaker Change: Finding some surprising games as you do so. What do you stand in that process? What do you stand in that process?

Speaker Change: Plant Reconfiguration occurred in tandem with the product flow. Does it happen in anticipation of greater soapsc2.0 load? Just some color on kind of how you're reconfiguring the plants and the efficiency of the plants again, you're finally going to be great.

Speaker Change: and just to be clear, the conversation you're asking about the physical manufacturing plants or the plans.

Speaker Change: Was it the flow through the plan? Yes and comments, you had some kind of, at each station there's like targets with days and you're beating them and there's some of that to all I think it's interesting.

Speaker Change: Yep, got it. Thank you, Scott. I just want to make sure I had heard clearly.

Speaker Change: No, this is a key portion, you know, this is a key element of the sub-C 2.0 in the configured order and again some of which showing up in the operating results of the company now is as we see more flow of the sub-C 2.0 in the manufacturing facilities.

Speaker Change: We have a significant increase in the cadence or shorter delivery times because of an increase cadence through the manufacturing facilities.

Speaker Change: and look, it continues to impress. I will even say, to surprise me.

Speaker Change: We are learning as we go. It is making a profound impact.

Speaker Change: Just got back from a trip through, you know, Brazil, Suriname, and Guiana.

Speaker Change: and in our Brazil plant, we're building a lot of the 2.0 equipment. We're building a lot of the 2.0 equipment.

Speaker Change: and when you see the flow and the cadence going through 2.0, it's now being delivered to Guyana.

Speaker Change: as well as projects in Brazil and in the future to Sauron Am.

Speaker Change: It really is just fascinating compared to some of the non-2.0 as I talked about earlier.

Speaker Change: For instance, the Petra Brass Standard, which is not a 2.0 configuration, doesn't have the same flow or cadence.

Speaker Change: that the Sub-C2.0 has. That shows up in many different ways. It obviously allows us to do more with less.

i.e. expand our capacity without...

Spending Capital on manufacturing infrastructure.

Speaker Change: But it's beyond that now. I was super impressed by the team. They're finding ways to even within the Sub-C2.0 architecture to improve the efficiency of manufacturing by manufacturing features, if you will, instead of product.

Speaker Change: So they'll do multiple features on multiple parts that I'll have the same profile, which means there's no stopping and rejigging.

Speaker Change: The Machine Tools in between the various products that go through or across that machine. So look, we're just learning so much. We're honored to have some really smart people who are willing to do things differently and every day look for ways to improve. Thank you very much.

Speaker Change: The future remains very exciting and very bright for our company and our customers.

I appreciate the call. Thanks, Doug.

Speaker Change: Our final question will come from the line of Victoria McCulloch with RBC. Please go ahead.

Speaker Change: Hi there, thanks very much. I'm just one question remaining for me and today.

Speaker Change: We saw quite a wide range of pricing some of the Pet Tribress awards in the start of the year.

Should obviously the macro change quite a lot from that time? [inaudible]

Speaker Change: But just in terms of what any read or false we can take from that, is that a reflection of some of the capacity constraints that you're dealing with in 25-26, or a risk appetite that you approach some of these contracts with? Any colour would be helpful. Thank you very much.

Speaker Change: Sure, thank you for the question. Look, there's a very, the market structure is very different than it used to be historically. You have very mature discipline companies that are

Speaker Change: You know, that are left, if you will. And therefore you should expect to see a very disciplined approach. And as a result of that.

Speaker Change: I can assure you you always see a disciplined approach from TechnipFMC.

Speaker Change: and we do look at the project in its totality. We don't look at it in terms of absorbing capacity. We look at it in terms of generating the returns that were required for our company.

Speaker Change: And these are returns, not just because we want these returns, it's returns that will allow us to continue to invest in technology, continue to improve our performance but also to improve subsea project economics. Our customers respect that. Our customers understand that.

We win, but they also win. [inaudible]

Speaker Change: because they get projects delivered on time and on budget and they're not getting that from the rest of the industry and they certainly weren't getting that historically. Thank you very much.

Speaker Change: So, as long as we continue to generate a return that will allow us to reinvest, we'll continue to innovate, we'll continue to improve, reduce cycle time, which is the main component to improving subsea project economics, they win, we win, and that will continue to be our focus, which is a return focus.

Thanks, actually helpful color.

Speaker Change: I will now turn the call back over to Matt Seinsheimer for closing remarks.

Speaker Change: This concludes our conference call. A replay of the call will be available on our website beginning at approximately 3pm New York time today. If you have any further questions, please feel free to contact the Investor Relations team. Thanks for joining us, Regina, you may now end the call.

Speaker Change: That will conclude today's call. Thank you all for joining. You may now disconnect.