Q2 2025 TechnipFMC PLC Earnings Call

Operator: Conference Operator today.

Operator: At this time, I would like to welcome everyone to the TechnipFMC second quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one a second time. We ask that you please limit yourself to one question and one follow-up.

Matt Seinsheimer: I would now like to turn the conference over to Matt Seinsheimer, Senior Vice President of Investor Relations and Corporate Development. Please go ahead.

Matt Seinsheimer: Matt Seinsheimer, Senior Vice President of Investor Relations and Corporate Development. Please go ahead. Thank you, Regina.

Hello, and thank you for standing by. My name is Regina and I will be your conference operator. Today at this time I would like to welcome everyone to the Technip FMC second quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question press star 1 a second time, we ask that you please limit yourself to 1 question and 1 follow-up. I would now like to turn the conference over to Matt finder, senior vice president of investor relations and corporate development. Please go ahead.

Matt Seinsheimer: Good morning and good afternoon and welcome to TechnipFMC's second quarter 2025 earnings conference call. Our news release and financial statements issued earlier today can be found on our website.

Matt Finder: Thank you, Regina. Good morning and good afternoon and welcome to technique fmc's, second quarter 2025 earnings conference call.

Matt Seinsheimer: I'd like to caution you with respect to any forward-looking statements made during this call. 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. 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. We wish to caution you not to place undue reliance on any forward-looking statements which speak only as of the date hereof.

our news release in financial statements issued earlier today, can be found on our website

Matt Finder: I'd like to caution you with respect to any forward-looking statements made during this call.

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 risk, and uncertainties that could cause actual results to, to differ materially from those expressed in or implied, by these statements,

Matt Finder: Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10K, most recent 10q and other periodic filings with the US Securities and Exchange Commission.

Matt Seinsheimer: We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

Matt Finder: We wish to caution you not to place undue Reliance on any forward-looking statements, which speak only as of the date hereof.

Douglas Pferdehirt: I will now turn the call over to Doug Pferdehirt, TechnipFMC's Chair and Chief Executive Officer. Thank you, Matt. Good morning and good afternoon. Thank you for participating in our second quarter earnings call. Total company revenue in the period was $2.5 billion. Adjusted EBITDA was $509 million with a margin of 20.1% when excluding foreign exchange impact. We generated free cash flow of $261 million and distributed $271 million through dividends and share buybacks. further demonstrating our commitment to return a significant portion of free cash flow to shareholders.

Matt Finder: We undertake no obligation to publicly update, or revise, any of our forward-looking statements after the date, they are made whether as a result of new information, future events or otherwise.

Matt Finder: I will now turn the call over to Doug ferti her technique. Fmc's chair and chief executive officer.

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

Matt Finder: Thank you for participating, in our second quarter earnings call.

Matt Finder: Total company Revenue in the period was 2.5 billion.

Matt Finder: Adjusted IBA was 59 million with a margin of 20.1% when excluding foreign exchange impacts,

Matt Finder: We generated free cash flow of 261 million and distributed 20071 million, through dividends and share BuyBacks.

Matt Finder: Further demonstrating our commitment to return. A significant portion of free cash flow to shareholders.

Douglas Pferdehirt: I am very proud of what our team has accomplished. This was another solid quarter driven by continued strength and execution from both the commercial and operational teams. I regularly speak to the transformation we have made in subsea to achieve meaningful and sustainable improvement. These include the complete reinvention of our commercial models. The development of configurable product offerings that provide solutions to our customers unique challenges. and the optimization of operational workflows that drive continuous improvement in everything we do. But I also want to recognize the much improved performance of surface technology. direct result of a similar transformation.

Matt Finder: I am very proud of what our team has accomplished.

Matt Finder: This was another solid quarter driven by continued strength and execution from both the commercial and operational teams.

Matt Finder: I regularly speak to the transformation. We have made in subk to achieve meaningful and sustainable improvements.

Matt Finder: These include the complete reinvention of our commercial models.

Matt Finder: The development of configurable product offerings that provide solutions to our customers unique challenges.

Matt Finder: And the optimization of operational workflows that drive continuous Improvement in everything we do.

Matt Finder: But I also want to recognize the much improved performance of Surface Technologies.

Douglas Pferdehirt: Driven by the right leadership. focused on the right customers in the right market. and executing with the team working in new ways that are fundamentally changing the way we operate our business today. In North America, this means doing more with less. Here we have exited unprofitable markets and product lines. and we have closed and consolidated facilities throughout the region. In fact, when including the actions taken in the second quarter, We have reduced our North America footprint by 50% over the last three years, while improving operating margins and increasing cash flow.

Matt Finder: A direct result of a similar transformation.

Matt Finder: Driven by the right leadership.

Matt Finder: Focused on the right customers in the right markets.

Matt Finder: And executing with the team working in new ways that are fundamentally changing the way we operate our business today.

Matt Finder: In North America. This means doing more with less

Matt Finder: Here we have exited on profitable, markets and product lines, and we have closed and consulted facilities throughout the region.

Matt Finder: in fact, when including the actions taken in the second quarter,

Matt Finder: we have reduced our North America footprint by 50% over the last 3 years.

Matt Finder: While improving operation operating margins and increasing cash flow.

Douglas Pferdehirt: looking beyond North America to the international markets, which today represent nearly two thirds of our surface technologies revenue. We continue to focus on core markets. with longer term production growth ambitions, where our strong customer relationships and technology leadership can provide unique avenues of growth for our company.

Matt Finder: Which today represent nearly 2/3 of our Surface Technologies Revenue.

Matt Finder: We continue to focus on core markets.

Matt Finder: With longer term production growth ambitions.

Matt Finder: Where our strong customer relationships and Technology leadership can provide unique Avenues of growth for our company.

Douglas Pferdehirt: Now moving to subsea orders. We achieved $2.6 billion of inbound in the quarter, representing a diverse set of awards. We continue to benefit from our unique combination of IEPCI, subsea services and direct awards. Subsea services was particularly robust, representing one of the highest quarterly inbound levels ever achieved. I would also add that while brownfield activity remained strong, nearly half of our project inbound was tied to greenfield development.

Matt Finder: Now, moving to subk orders.

Matt Finder: We achieve 2.6 billion of inbound in the quarter representing a diverse set of awards.

Matt Finder: We continue to benefit from our unique combination of PCI subk services and direct Awards.

Matt Finder: Subk Services was particularly robust, representing 1 of the highest quarterly inbound levels ever achieved.

Douglas Pferdehirt: We look forward to sharing more about some of these projects in the coming weeks. The uniqueness and diversity of our order book gives us continued confidence in delivering more than $10 billion of subsea inbound for the year. Our differentiated orders, most of which are direct awards to our company, speak in part to the strength of our customer relationship. which we work to build and enhance every day.

Matt Finder: I would also add that while Brownfield activity remains strong, nearly half of our project, inbound was tied to Greenfield developments.

Matt Finder: We look forward to sharing more about some of these projects in the coming weeks.

Matt Finder: The uniqueness and diversity of our order book.

Matt Finder: Gives us continued confidence in delivering more than 10 billion dollars of subk inbound for the year.

Matt Finder: Our differentiated orders, most of which are direct Awards to our company speak in part to the strength of our customer relationships, which we work to build, and enhance every day.

Douglas Pferdehirt: I'm proud to announce that we recently entered into a new IEPCI collaboration agreement with VAR Energy. Supporting their subsea developments on the Norwegian continental shelf. Working together, we will utilize our integrated execution model to optimize development solutions and maximize value creation.

Matt Finder: I'm proud to announce that we recently entered into a new IEP CI, collaboration agreement with VAR Energi.

Supporting their subsidy developments on the Norwegian, continental shelf.

Matt Finder: Working together. We will utilize our integrated execution model to optimize development Solutions.

Matt Finder: And maximize value creation.

Douglas Pferdehirt: Our differentiation goes beyond customer relationship. It is also fueled by technology leadership. We have been pioneering technology for decades, and we are constantly working with clients to solve their unique challenges. For instance, In partnership with Petrobras, we recently developed the technology behind HiSEN. A High Pressure Separation Process. that enables the capture of CO2 rich dense gas. directly from the well stream, all taking place on the seafloor. We have also been working with the same client to create a definitive solution for stress corrosion cracking that occurs in flexible pipe applications, where there is a very high CO2 content, predominantly in pre-sold.

Our differentiation goes beyond customer relationships.

Matt Finder: It is also fueled by technology leadership.

Matt Finder: We have been pioneering technology for decades and we are constantly working with clients to solve their unique challenges.

Matt Finder: For instance, in partnership with Petra brass, we recently developed the technology behind Heap.

Matt Finder: A high-pressure separation process that enables the capture of CO2. Rich dense, gases directly from the Welsh stream all taking place on the seafloor.

Douglas Pferdehirt: We approach this industry challenge as a technology leader. Rather than simply evolving to the next iteration of an existing product, we set our sights on an innovative technology that would retain the advantages of flexibility. but provide unrivaled corrosion resistance. without compromising on other attributes, such as weight. Product weight significantly impacts the design of the entire subsea architecture and can influence other major cost drivers, such as the vessel requirements for the installation canopy.

Matt Finder: We have also been working with the same client to create a definitive solution for stress, corrosion cracking that occurs in flexible pipe applications, where there is a very high CO2 content, predominantly and pre-sold fields.

Matt Finder: We approach this industry challenge as a technology leader.

Matt Finder: Rather than simply evolving to the next iteration of an existing product.

Matt Finder: We set our sights on an Innovative technology that would retain the advantages of flexibles, but provide unrivaled corrosion resistance without compromising on other attributes such as weight.

Douglas Pferdehirt: Our new hybrid flexible pipe is both disruptive and scalable. and is fully aligned with our goal of delivering certainty through industrialization. We continue to advance our solution and are currently in the qualification process.

Matt Finder: Product weight significantly impacts the design of the entire subzi architecture and can influence other major cost drivers such as the vessel requirements for the installation campaign.

Matt Finder: Our new hybrid flexible, pipe is both disruptive and scalable.

Matt Finder: And is fully aligned with our goal of delivering certainty through industrialization.

Douglas Pferdehirt: Importantly, we have created a solution that can be used more broadly in applications that extend well beyond the precinct.

Matt Finder: We continue to advance our solution and are currently in the qualification process.

Matt Finder: Importantly, we have created a solution that can be used more broadly and applications that extend well beyond the pre-sold.

Douglas Pferdehirt: Another focus of innovation is all electric technology. Last year, we were awarded the industry's first all-electric subsea system for BP's Northern Endurance CCS project. This flagship project shows the critical importance of electric technology and the opportunities it can help clients realize.

Matt Finder: Another focus of innovation is always electric technology.

Matt Finder: Last year, we were awarded the industry's first all-electric subk system for BPS Northern endurance CCS project

Douglas Pferdehirt: However, carbon capture and storage is just one applicant. and electrification is not a one size fits all solution. Additionally, the use of all electric technology can be extended beyond new developments. can also help our clients exploit their sizable existing portfolios. including systems that are currently operating on the seabed today. Here we are collaborating with Petrobras to extend the performance of existing production systems using the electric solution. whether it be new commercial agreements, like our IEPCI collaboration with VAR Energy. or the development of innovative technologies like hybrid flexible pipe, and all electric, we are honored to be our client's trusted partner.

Matt Finder: This Flagship project shows the critical importance of electric technology, and the opportunities it can help clients realize.

Matt Finder: However, carbon capture and storage is just 1 application. An electrification is not a 1 size, fits all solution.

Matt Finder: Additionally, the use of all electric technology and be extended Beyond new developments. It can also help our clients exploit their sizable existing portfolios

Matt Finder: That are currently operating on the seabed today.

Matt Finder: Here we are collaborating with Petra brass to extend the performance of existing production systems using hydraulic salute using electric Solutions.

Matt Finder: Whether it be new commercial agreements like our ieci collaboration with VAR Energi.

Douglas Pferdehirt: and the team they turn to for their most challenging project.

Matt Finder: Or the development of Innovative Technologies. Like, hybrid flexible, pipe and all electric. We are honored to be our clients trusted partner.

Matt Finder: And the team they turn to, for their most challenging projects.

Douglas Pferdehirt: Turning to the Outlook. Offshore activity remains robust. Front-end engineering activity is strong, and our subsea opportunity list remains healthy, with named projects progressing across multiple basins over the next 24 months. This supports continued strength in subsea inbound. In Guyana, where a significant ramp in production is already underway, we are excited about the progression of future project sanctions. And we also see emerging potential for brownfield opportunities to provide incremental activity in the region. Mozambique continues to be one of the most promising areas for new development, particularly in gas. Suriname is also exciting as we were recently awarded an IEPCI contract from Total Energies for the first oil and gas development in the region.

Matt Finder: Turning to the Outlook.

Matt Finder: Offshore activity remains robust.

Front-end engineering activity, is strong, and our subk opportunity list remains healthy with name projects, progressing across, multiple basins over the next 24 months.

Matt Finder: This supports continued strength in subk inbound.

Matt Finder: In Guana, where a significant ramp in production is already underway.

Matt Finder: we are excited about the progression of future project, sanctioning

Matt Finder: And we also see emerging potential for Brownfield opportunities, to provide incremental activity, in the region.

Matt Finder: Mosan Beek continues to be 1 of the most promising areas for new development, particularly in gas.

Matt Finder: Suriname is also exciting as we were recently, awarded an iepc contract from totel energies for the first oil and gas development in the region.

Douglas Pferdehirt: TechnipFMC is also involved in front end engineering for multiple operators in the Orange Basin, offshore Namibia, and the surrounding area in South Africa. Taken together, these constitute a rich set of near-term opportunities, even before considering other frontier developments in the Americas, Eastern Mediterranean, and Asia. We continue to believe that offshore markets will attract more capital due to the superior quality of these abundant reserves. Their broad accessibility to operators and the strong economics these resources provide, which we aim to further enhance, in part, through greater execution certainty.

Matt Finder: Technic, FMC is also involved in front, end engineering for multiple operators in the orange, Basin offshore and Namibia and the surrounding area in South Africa.

Matt Finder: Taken together these constitute a rich set of near-term opportunities. Even before considering other Frontier developments in the Americas Eastern Mediterranean and Asia.

We continue to believe that offshore markets will attract more Capital due to the superior quality of these abundant Reserves.

Matt Finder: Their broad accessibility to operators and the strong economics, these resources provide, which we aim to further enhance in part through greater execution, certainty.

Douglas Pferdehirt: In closing, The market is not without challenge. However, as our results clearly demonstrate, We are navigating the issues and mitigating the impacts to our company. This reflects both the actions we are taking today and the structural changes we have made over the last several years. We have emphasized the importance of new commercial models and configurable product offerings as key enablers to our continued success. Our inbound also highlights the importance of strong and enduring customer relationship. This is further supported by our legacy of technology innovation focused on solving some of the industry's biggest challenges. Our visibility into the market continues to benefit from the high level of direct awards to our company.

Matt Finder: In closing.

Matt Finder: The market is not without challenges.

Matt Finder: However, as our results, clearly demonstrate, we are navigating the issues and mitigating the impacts to our company.

Matt Finder: This reflects both the actions, we are taking today.

Matt Finder: And the structural changes we have made over the last several years.

Matt Finder: We have emphasized the importance of new commercial models and configurable product offerings as key enablers to our continued success.

Matt Finder: Our inbound also highlights the importance of strong and enduring customer relationships.

Matt Finder: This is further supported by our Legacy of Technology Innovation.

Matt Finder: Focused on solving some of the industry's biggest challenges.

Douglas Pferdehirt: Our unique opportunity set also gives us confidence that we will reach our three-year goal of $30 billion in subsea inbound by the end of this year. And we see strength in offshore continuing, supported by client discussions for projects that are likely to be sanctioned through the end of the decade.

Matt Finder: Our visibility into the market continues to benefit from the high level of direct Awards to our company.

Matt Finder: Our unique opportunity set also gives us confidence that we will reach our 3 year goal of 30 billion dollars in subk inbound by the end of this year.

Matt Finder: And we see strength in offshore continuing supported by client discussions, for projects that are likely to be sanctioned through the end of the decade.

Douglas Pferdehirt: I am very proud of the financial results we shared today and want to acknowledge the unwavering efforts of our global teams that continue to drive our performance to higher levels.

Alf Melin: I will now turn the call over to Alf to discuss our financial results, and more importantly, our strengthened outlook for the balance of the year. Thanks, Doug. Inbound Indic order was $2.8 billion, driven by $2.6 billion of subsea order.

Matt Finder: I am very proud of the financial results we shared today and want to acknowledge the unwavering efforts of our Global teams that continue to drive our performance to higher levels.

Speaker Change: I will now turn the call over to elf to discuss our financial results. And more importantly, our strengthened outlook for the balance of the year.

Thanks Doug.

Alf Melin: Total company backlog increased 5% sequentially to $16.6 billion. Revenue in the quarter was $2.5 billion.

Speaker Change: Inbound in the quarter was 2.8 billion driven by 2.6 billion of subk orders.

Speaker Change: Total company backlog. Increased 5% sequentially to 16.6 billion.

Alf Melin: Justin Dibida was $509 million when excluding a foreign exchange gain of $12 million and restructuring impairment and other charges totaling $16 million, most of which were related to business transformation initiatives in surface technology.

Speaker Change: Revenue in the quarter was 2.5 billion.

Speaker Change: But just to be was 509 million. When excluding a foreign exchange gain of 122 million and restructuring impairment and other charges, totaling 16 million.

Alf Melin: Turning to segment results. In subsea, revenue of $2.2 billion increased 14% versus the first quarter. The sequential revenue improvement was largely driven by increased IEPCI project activity in the North Sea and higher installation activity and flexible pipe supply in Brazil, offset in part by project completions in Asia Pacific. services revenue also increased due to seasonal improvements. Adjusted EBITDA was $483 million, up 44% sequentially, due to strong execution, improved earnings mix from backlog, and higher project and services activity. adjusted EBITDA margin was 21.8%, up 450 basis points from the first quarter. In Surface Technologies, revenue was $318 million, an increase of 7% from the first quarter.

Speaker Change: Turning to segment results in subk revenue of 2.2 billion increased 14% versus the first quarter.

Speaker Change: The sequential Revenue Improvement was largely driven by increased PCI project activity in the North Sea and higher installation activity and flexible Pipe Supply in Brazil.

Speaker Change: Offset in part by project completions in Asia Pacific.

Speaker Change: Services Revenue also increased due to seasonal improvements.

I just leave it that was 483 million up. 44% sequentially due to strong, execution, improved earnings big from backlog and higher project and services activity.

Speaker Change: Adjusted. The margin was 21.8% up 450 basis points from the first quarter.

Alf Melin: The sequential increase in revenue was driven by higher project and services activity in the Middle East. modestly offset by lower activity in North America. Adjusted EBITDA was $52 million, an increase of 12% sequentially, due to the higher project and services activity in the Middle East, modestly offset by North America. Adjusted EBITDA margin was 16.4%. of 70 basis points versus the first quarter.

Speaker Change: In Surface Technologies, Revenue was 318 million and the increase of 7% from the first quarter.

Speaker Change: The sequential increase in Revenue was driven by higher project and services activity in the Middle East.

Speaker Change: Modestly offset by lower activity in North America.

Speaker Change: Adjusted Evita was 52 million. An increase of 12%, sequentially due to the higher project and services activity in the Middle East. Modestly offset by North America.

Speaker Change: Margin was 16.4% up 70 basis points versus the first quarter.

Alf Melin: Joining to corporate and other items in the period. Corporate expense was $27 million. Net interest expense was $14 million. And tax expense in the quarter was $160 million. cash flow from operating activities was $344 million and capital expenditures were $84 million. This resulted in free cash flow of $261 million. We repurchased $250 million of stock in the second quarter. when including 21 million of dividends, total shareholder distributions were 271 million. During the quarter, we repaid €200 million of private placement notes that matured in June, reducing our gross debt to €696 million. We ended the period with cash and cash equivalents of $950 million.

Speaker Change: Turning to corporate and other items in the period.

Speaker Change: Corporate expands was 27 million.

Net, interest expense was 14 million.

Speaker Change: And tax expense in the quarter was 106 million.

Speaker Change: Cash flow from operating activities was 344 million and capital expenditures were 84 million.

Speaker Change: This resulted in 3 cash flow of 2161 million.

Speaker Change: We repurchased 250 million of stock in the second quarter.

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

during the quarter, we repaid 200 million euro of private placement notes that matured in June

Speaker Change: reducing our gross debt to 696 million.

Alf Melin: Net cash decreased modestly to $254 million.

Speaker Change: We ended a period with cash and cash equivalents of 950 million.

Speaker Change: Net cash decreased modestly to 254 million.

Alf Melin: Moving to our guide. For the third quarter, we expect subsea revenue to grow low to mid single digit sequentially, with an adjusted EBITDA margin that is similar to the 21.8% reported in the second quarter.

Speaker Change: Moving to our guidance.

Alf Melin: For surface technologies, we anticipate revenue to increase low single digit sequence. with an adjusted EBITDA margin of approximately 16%.

Speaker Change: For the third quarter, we expect subsidy Revenue to grow low to mid single digit sequentially with an adjusted economy. That is similar to the 21.8% reported in the second quarter.

Speaker Change: For Surface Technologies, we anticipate Revenue to increase low. Single digit sequentially.

Speaker Change: Within an adjusted ebita margin of approximately 16%.

Alf Melin: Moving to our full year out. for both subsea and surface technologies, we continue to expect revenue to come in near the midpoint of their respective guidance ranges. However, we are increasing our expectations for adjusted EBITDA margin, which we now expect to come in near the top end of the guidance range for both segments. When including corporate expense at the midpoint of guidance, we anticipate total company full year adjusted EBITDA to approximate $1.8 billion. when excluding foreign exchange. Our current estimated impact from tariffs is contained within our updated guidance. With the improved operational performance, we now expect free cash flow to come in near the top end of the guidance range of one to 1.15 billion.

Speaker Change: Moving to our full year outlook.

Speaker Change: For both subk and Surface Technologies, we continue to expect Revenue to come in near the midpoint of their respective guidance ranges.

Speaker Change: However, we are increasing our expectations for adjusted, Evita margin, which we now expect to come in near the top end of the guidance range for both segments.

Speaker Change: When including corporate expense at the midpoint of guidance, we anticipate total company full year adjusted Evita to approximate 1.8 billion.

Speaker Change: When excluding foreign exchange.

Speaker Change: our current estimated impact from tariffs,

Speaker Change: Is contained within our updated guidance.

Alf Melin: All other guidance items remain the same.

With improved operational performance. We now expect free cash flow to come in near the top end of the guidance range of 1 to 1.15 billion.

Speaker Change: All other guidance items remain the same.

Alf Melin: In closing, given the strength in Q2, we have solid momentum as we enter the second half of the year. We have increased our full year guidance for total company adjusted EBITDA by $40 million. with an expectation that we will now deliver $1.8 billion in 2025. an increase of 30% versus the prior year. This guidance is supported by our substantial backlog and continued strength in our execution. Through the first six months of the year, we have distributed 85% of free cash flow to shareholders. We are reiterating our commitment to distribute at least 70% of free cash.

Speaker Change: In closing.

Speaker Change: Given the strength in Q2 we have solid momentum as we enter the second half of the year.

Speaker Change: We have increased our full year guidance for total company adjusted ibida by 40 million.

Speaker Change: With an expectation that we will now deliver 1.8 billion in 2025.

Speaker Change: 30% versus the prior year.

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

Speaker Change: Through the first 6 months of the year, we have distributed 85% of free cash flow to shareholders.

Alf Melin: And given the strength of our balance sheet, we certainly have the flexibility to exceed that level.

Speaker Change: We are reiterating our commitment to distribute at least 70% of free cash flow.

Operator: Operator, you may now open the line for questions. At this time, if you'd like to ask a question, press star followed by the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up.

Speaker Change: And given the strength of our balance sheet, we certainly have the flexibility to exceed that level.

Operating you may now open the line for questions.

David Anderson: Our first question will come from the line of David Anderson with Barclays. Please go ahead. Thank you. Good morning, Doug. How are you? Good morning, Dave and yourself. I'm doing great.

Speaker Change: At this time, if you'd like to ask a question press star followed by the number 1 on your telephone keypad, we ask that you, please limit yourself to 1 question and 1 follow-up. Our first question will come from the line of David Anderson with Barclays. Please go ahead.

David Anderson: Thank you. Good morning. Doug. How are you?

Douglas Pferdehirt: So another strong subsea order book this quarter. Clearly, you're confident beating the $10 billion target this year. I was hoping you could break down sort of the composition a bit more and kind of how you see it changing this year.

Douglas Pferdehirt: I'm first curious about the services. You called out services being very strong this quarter. I'm curious if there was kind of a one-off or this is a new trend. And secondarily, as you're expecting more awards from the second half, I'm curious if you're expecting more awards in the second half to come from the subsea opportunities list, or is that more like the IETCI direct?

David Anderson: Good morning Dave and yourself, I'm doing great. Uh so another strong, subzi order book this quarter clearly you're confident being the 10 billion dollar Target this year. I was hoping you could break down sort of the composition a bit more and kind of how you see it changing this year. I'm first curious about the services you would call out Services being very strong in this quarter. I'm curious if there was kind of a 1-off or this is a new trend and secondarily, as you're expecting more awards from the second half. I'm curious, if you're expecting more Awards in the second, half to come from, the subsidy opportunities list or is that more likely ieci.

Speaker Change: Direct Awards.

Douglas Pferdehirt: Sure, Dave, thank you. So regarding Subsea Services, I think it's evident that we have been successful in the marketplace and our clients' adoption of our IEPCI and Subsea 2.0, which has resulted in a significant number of direct awards, meaning they don't go to competitive tender, they're just direct awarded to our company, has, you know, changed the market dynamic, let's say. That results in us having an ever-increasing install base on the seafloor. This is an OEM model. We inspect, maintain, repair, service all of our products that are on the seafloor, typically for a 20 to 35 year life, depending upon the design of the equipment and the requirement of the contract.

Speaker Change: Sure, Dave, thank you. Um, so regarding subk services.

Speaker Change: Um, I think it's evident that we have been successful in the marketplace and our clients adoption of our ieci and subk 2.0.

Speaker Change: Which is resulted. In a significant number of direct Awards. Meaning they don't go to competitive tender, they're just direct awarded to our company, as you know, changed the market Dynamic. Let's say, um, that results in us having an ever increasing install base on the seafloor.

Speaker Change: Uh, this is an oem model.

Douglas Pferdehirt: So a very long, sustainable tail of services. which is increasing in size as we've been more successful as we talked about a moment ago. So when you put the two together, it's certainly a very positive trend for our subsea services business. We talked about the growth last year, where we had achieved $1.6 billion for subsea services. And we said that it would grow in line with revenue again this year, or approximate $1.8 billion. And I can confirm that that is indeed the plan.

Speaker Change: Uh, we inspect maintain repair service, all of our products that are on the seafloor typically for a 20 to 35 year life, depending upon the design of the equipment and the requirement of the contract. So, a very long sustainable tale of services.

Speaker Change: Which is increasing in size as we've been more successful as we talked about a moment ago. So, when you put the 2 together, it's certainly a very positive trend for our subk services business.

Douglas Pferdehirt: So yes, no one-off, just a, this is a result of, you know, the strategy of the company, the winning rate that we have had, the success, the repeat orders, the direct awards, the unique alliances that we have been able to form, the continuous focus on supporting those through innovation and technology, superior execution, both in terms of the project execution, but also the service execution that set up our subsea services business to be a very strong and important component of our balance.

Douglas Pferdehirt: I believe there was a second follow-up, and I missed, I lost it already. Yeah, I was just sort of asking, you have your subsea opportunities list, which you updated. I'm just curious, you were talking about the direct awards, which are different from that. I was just curious, are more, in the second half, are more awards kind of shifting more towards the subsea opportunities list, or is it more of the direct awards side? Just kind of curious. Yeah, a good question.

Speaker Change: We talked about the growth last year where we had achieved 1.6 billion uh for subk services. And we said that it would grow in line with Revenue again this year or approximate 1.8 billion and I can uh, confirm that that is indeed the plan. So yes, no 1 off. Just a, uh, this is a result of um, you know, the strategy of the company, the winning rate that we have had the success, the repeat orders, the direct Awards, the unique alliances that we have been able to form in the continuous focus on supporting those through Innovation and Technology. Superior execution, both in terms of the project execution but also the service execution has set up. Our subzi services business to be a very strong and important. Uh component of our inbound.

Speaker Change: I believe there was a second follow-up and I I missed, I lost it already. You can I was just sort of asking you have your subzi opportunities list with you update. I'm just curious. You were talking about the direct Awards which are different from that. I was just curious are more the SEC in the second half or more Awards. Kind of Shifting more towards the subzi opportunities list or is it more the direct award side. Just kind of curious how that's shaping up.

Douglas Pferdehirt: And just to remind everyone else, you know, we publish the industry's, you know, subsea opportunity list that, you know, those opportunities that are likely to FID over the next 24 months, broadly across the industry. So that's something that can be used as a reference document. And we update that every quarter, which we did again this quarter, and that list has continued to grow.

Douglas Pferdehirt: But there's also a secondary list that is very important and exclusive to our company. And this is a result of the fact that we have the only IEPCI and Subsea 2.0 offering, which results in us working in the very early stages, typically two to three years before a contract is awarded, exclusively with our clients to develop a subsea architecture that is unique and, quite frankly, can't be designed or developed by others because they don't have the tools and resources and technology that we have. So they work with us on a proprietary basis, and then those projects, when and if they go to FID, are direct awarded to our company.

Speaker Change: Yeah, a good question and just to remind everyone else. Um, you know, we publish uh, the industries, you know, subzi opportunity list that, you know, uh, those opportunities that are likely to FID over the next 24 months, uh, broadly across the industry. So that's something that can be used as a reference document and we update that every quarter which we did again this quarter and that list has continued to grow, but there's also a secondary list that is very important and exclusive to our company. And this is a result of the fact that we have the only ieci and substitute 2.0 offering. Uh, which results in us working in the very early stages. Typically 2 to 3 years before a contract is awarded exclusively with our clients to develop an art. A subzi architecture that is unique and quite frankly can't be designed or developed by others because they don't have uh the tools and resources and technology that we have. So they work with us on a proprietary.

Douglas Pferdehirt: That list, I will tell you, is also growing. So both the public list and the private list, for lack of a better term, are both growing in size. In terms of the mix in the second half, where is it likely to come from, I think it will continue to be strongly supported by both of those. And I think, you know, I am confident that our level of direct awards will continue to be very robust, which means that private list is very, very critical to our company.

Douglas Pferdehirt: And Doug, if I could sneak one more in here. I know it's early, but I was wondering if you could just kind of give us an early look at how you think orders are starting to shape up for 2026. Based upon what you were just saying there, is another $10 billion in 2026 a reasonable assumption at this time? Yes. Thank you.

Speaker Change: And if they go to FID or direct awarded to our company, that list I will tell you is also growing. So both the public list and the private list for lack of a better term, are both growing in size, in terms of the mix in the second half, where is it likely to come from? I think it will continue to be strongly supported by both of those. Um and I think you know, I am confident that our level of direct Awards will continue to be very robust which means that private list is very very critical to our company.

Speaker Change: And Doug. If I could sneak 1 more in here, I know it's early, but I was wondering if you could just kind of give us an orally. Look at how you think orders are starting to shape up for 2026 based upon what you were just saying there is another 10 billion in 2026. A a reasonable assumption at this time

Speaker Change: Yes.

Speaker Change: Thank you.

Marc Bianchi: Our next question comes from the line of Marc Bianchi with TD Cowan. Please go ahead. Thank you.

Speaker Change: Our next question comes from the line of Mark B and key with TD Cowen, please go ahead.

Douglas Pferdehirt: I wanted to drill down a little bit more into the services. orders were quite strong. I'm curious if the revenue was also strong because you know, historically, this was like a book and ship type of business, but I some of that's been going into backlog. So maybe you could talk a little bit about that. how we should think about. Sure, Marc. You correctly point out, it's largely a book-in-turn, but we do have a backlog and a growing backlog, actually, in our services business, and that just depends upon the type of awards and the nature of the awards that we receive.

Speaker Change: Hey, thank you. Um, I I wanted to, um, drill down a little bit more into the the services um, uh, success that you had this quarter. And and specifically it sounds like this service is uh, orders were were quite strong. I'm curious if the revenue was also strong because, you know, historically this was like a book and ship type of business, but I think more recently, some of that's been going into backlog. So maybe you could talk a little bit about that um, and how we should think about uh, the growth.

Speaker Change: Growth of services, for 25 and Beyond.

Douglas Pferdehirt: But the majority is book-in-turn, so yes, if inbound is strong, revenue is most likely to be strong as well, so I can confirm that to the first part of your question. In terms of the growth and the trajectory, as I was commenting earlier to Dave's question, the install base has a significant contribution to that very long and sustainable services revenue, again, over decades following the initial project. Clearly, we've been successful. And if we've been successful on the project side and on the subsea inbound side, that will reflect. in the subsea services growth, not only You know, at the time of the award, but again, very importantly, creates a very long, sustainable, important contributor to our company going forward.

Speaker Change: Sure Mark. Um and you know, you correctly point out it's largely a book in turn but we do have a backlog and a growing backlog actually in our services business. Um, and that just depends upon the type of awards and the nature of the awards that we receive, but the majority is booking turns. So yes, if inbound is strong Revenue, um, is reflect is most likely to be strong as well. So I can confirm that um, uh, to the first part of your question. Um, you know, in terms of the the growth and the trajectory as I was commenting earlier to to Dave's question, the, you know, the install base as a significant contribution to that very long and sustainable Services Revenue. Again, over decades following the initial project,

Speaker Change: Clearly we've been successful. Um, and if we've been successful on the project side and on the subk inbound side, um, that will reflect

Speaker Change: In the subzi. Services growth. Not only

Douglas Pferdehirt: Is Doug, I think previously the outlook was for services revenue to grow in line with all of is that still the case or are we seeing an acceleration? Let's let's stick with the current guidance that's out there, which is the 1.8 billion which would be in line with the revenue growth. But I'm very confident that our subsea services will continue to respond very favorably.

you know, um, at the time of the award, but again, very importantly creates a very long sustainable important, contributor to our company going forward,

Speaker Change: It is Doug, I think previously the Outlook was for services Revenue to grow in line with all of subk for this year. Um is that still the case or are we seeing an acceleration of that?

Alf Melin: And if I could just ask one real quick from Alf. Corporate has been running quite a bit below. right right quite a bit below the guidance range here so What's going on there? about that. No, you know, I appreciate the question. Clearly, there is some timing in this. As you reminded, corporate expense includes executive management expense and corporate functions, as well as some programs. And there are some timing in spend the first half versus second half in our programs, and in particular, the spending for upgrading our ERP environment that has a higher run rate in the second half compared to the first half.

Speaker Change: That's let's stick with the, uh, current guidance that's out there which is the 1.8 billion which would be in line with the revenue growth. Um, but I'm very confident um that our subzi services will continue to respond very favorably.

Speaker Change: super, and if I could just ask 1 real quick from Alf, um, the

Speaker Change: The corporate, um, has been running quite a bit below the mid.

Speaker Change: Or right, right? Quite a bit below the guidance range here. So, but you frame the guidance of the updated Guidance with kind of solving for, for the, the corporate, um, at 120 is

Speaker Change: What what's going on there? And and how should we think about that? You know, once we get past the back half of this year,

Speaker Change: No, you know, I appreciate the question clearly there is some timing in this. Um, as you remind the corporate expense includes executive management expense and in corporate functions as well as some programs. And there are some timing uh in spend the first half versus the second half in our programs in. And in particular, the spending for upgrading our Erp environment that has a higher run rate in the second half compared to the first half.

Unknown Attendee: Okay, thank you very much.

Speaker Change: Got it. Okay, thank you very much. I'll turn it back.

Scott Gruber: Our next question comes from the line of Scott Gruber with Citigroup. Please go ahead. Yes, good morning. Yeah, I want to come back to the the inbound details that you mentioned, Doug. You mentioned that we'll hear more about some Greenfield projects in the coming weeks. Will those be included in your 3Q volume? Or are we going to get the details on some projects that were included in 2Q? Thank you, Scott, and good morning. And the answer is most likely both. So I would fully expect that you'll hear about some Q3 awards that will be inbound in Q3.

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

Scott Gruber: Yes, good morning.

Speaker Change: um,

Speaker Change: Yeah, I want to come back to the uh the inbound details that you mentioned Doug. Um, you mentioned that we'll hear more about some uh Greenfield projects uh in the coming weeks, uh will those be uh included in in your 3 Q volume? Or we going to get the the details on some projects that were included in in 22.

Speaker Change: Most likely both.

Douglas Pferdehirt: But there is, there will be some press releases potentially in the coming weeks that will refer back to the awards that we have received in the second quarter. And look, I want to be clear, the only reason that occurs is if the client or the host country or, you know, someone involved has set a requirement around the disclosure of such a public disclosure of such award. Once we receive all of the requirements to be able to inbound per our internal requirements, then we are obligated to inbound that and account that for the current quarter. So I think you'll be hearing about some awards, some of which will refer back to Q2, but some will also be Q3 awards.

Douglas Pferdehirt: I appreciate that. I'm just trying to get a sense for, you know, the brownfield and the small projects because You know, just just contemplating history. You know, usually when crude prices moderate, you see the the elevator returns and lower capital intensity of the brownfield projects kind of drive a mixed shift toward tiebacks and brownfield. But this cycle, it seems like the appetite for greenfield remains robust. You see it in your project list, but also seems robust on the on the brownfield side.

Speaker Change: Um, so I would fully expect that you'll hear about some Q3 awards, that will be inbound in Q3. But there is, um, there will be some press releases potentially in the coming weeks that will refer back to the, uh, awards that we had received in the second quarter. And look, I want to be clear. The, the only reason that occurs is if the client or the host country or, you know, someone involved, uh, has said a requirement around the disclosure, um, of such a public disclosure of such a ward. Uh, once we receive all of the requirements, uh to be able to inbound uh, per our per our internal requirements, then then we are obligated to inbound that and account that for the current quarter. So I think you'll be hearing about some awards, some of which will refer back to Q2, but some will also be 2 3 Awards.

Speaker Change: No, I appreciate that. I'm just trying to get a sense for, you know, the Brownfield and the small projects because

Speaker Change: You know, just just contemplating history, you know, usually when when crude prices moderate um we see the the elevator returns and lower Capital intensity of of the Brownfield projects kind of drive a mix shift uh toward tie backs and Brownfield. Um, but this cycle it seems like the the appetite for Greenfield remains robust to see it in your product.

Douglas Pferdehirt: Can you just kind of discuss, you know, the appetite for brownfield and large greenfield kind of both sustaining even even in light of more moderate crude prices? Does that just reflect, you know, the volume of capital dollars and shifting towards deep water? Some color there, you know, would be great. No, Scott, thank you. I mean, that's one of the key takeaways that I would hope everyone takes from this call. And, you know, referred to it in my prepared remarks. There has been a absolute focus and commitment to moving greenfield, offshore greenfield projects forward. We've seen no change in that behavior.

Speaker Change: Project list. Um but also seems robust on the on the Brownfield side can you just kind of discuss?

Speaker Change: You know, the the appetite for Brownfield and and large Greenfield, kind of both sustaining. Even even the light of of more moderate crew prices, does that just reflect, you know, the, the volume of of capital dollars kind of Shifting towards deep water. Sometimes their, you know, would be great.

Douglas Pferdehirt: And as a matter of fact, the visibility that we now have, including conversations that I had just as recently as yesterday with a major operator, there is a firm commitment to moving these projects forward for a variety of different reasons, including commitments that they have made, their visibility into the market and understanding that these are projects that, you know, will take multiple years before they come online and are producing. So they're looking at, you know, their models and their forecast, as well as, as you said, the capital flow, which is now, let's say, prioritizing the offshore versus other investment opportunities of the past decade.

Scott Gruber: No, uh, Scott, thank you. I mean that's 1 of the key takeaways that I would, uh, hope everyone takes from this call, uh, and, you know, referred to it in my prepared remarks. Um, there is been a absolute focus and commitment to moving, Greenfield offshore, Greenfield projects forward, we've seen no, um, change in that behavior. Um, and as a matter of fact, the visibility that we now have including conversations that I had just as recently as yesterday uh with a major operator, there is a a firm commitment to moving these projects forward for a variety of different reasons, including commitments that they have made uh, their visibility into the market. And you know, understanding that these are projects that you know will take multiple years before, you know, they come online and are producing. So they're looking at, you know, their models and their forecasts, as well as, as you said, the capital flow, which is now

Douglas Pferdehirt: This is a significant amount of additional capital coming into the offshore market. So the greenfields has remained very resilient. And the brownfield has been steady and that really shows up in our unannounced awards, which, you know, based on your earlier question, you know, I've indicated that there was probably a couple more projects that would have, could have been announced in Q2, but the client did not, you know, have the opportunity, we didn't have the opportunity to do so, but we will in the coming weeks. Even if you take those into account, let's say the unannounced bucket, which is direct awards and a lot of it is the brownfields and the smaller type awards, is still approaching a billion dollars.

Scott Gruber: Now let's say prioritizing the offshore versus other investment opportunities of the past decade. Uh this is a significant amount of additional Capital coming into the offshore market so the green fields has has remained very resilient um and the Brownfield has been steady and that really shows up in our unannounced Awards which, you know, you know, based on your earlier question. You know, I've indicated that there was probably a couple more uh projects that would have could have been announced in Q2 but the client did not, you know, have the operate. We didn't have the opportunity to do so, but we will in the coming weeks.

Douglas Pferdehirt: So the brownfield activity is very strong. You correctly point out that it is extremely constructive in terms of economics. Very little capital investment required because the host facility is normally operating below nameplate capacity. So if you will, you're improving the returns on that initial investment by adding the incremental barrels without the significant upfront capital costs, which is often associated with large greenfield projects. So we're very focused on the brownfield market and an area we continue to innovate in, including the application of all electric, which will increase the radius around an existing host facility for up to four times further distance that we'll be able to tie stranded reserves back to a host facility.

Scott Gruber: Even if you take those into account, let's say the unannounced bucket which is, you know, direct Awards. And um you know the the a lot of it is the brown fields in the smaller type of wards uh is still approaching a billion dollars. So the Brownfield activity is very strong. You you correctly point out and you know that it is extremely um constructive in terms of economics. Um, very little capital investment required because the host facility already exists, the host facility is uh normally operating below name plate capacity. So if you will, you're improving the Returns on that initial investment by adding the incremental barrels without the significant upfront Capital costs which is often associated with large Greenfield projects so we're very focused.

Douglas Pferdehirt: So increasing the total available market, if you will, for brownfield opportunity. So that remains very important as well.

Scott Gruber: I appreciate the call. Thank you, Doug.

Scott Gruber: Just on the Broadfield market and an area. We continue to innovate in, including the application of all electric, which will increase the radius around an existing host facility for up to 4 times, further distance that will be able to tie um, stranded reserves back to a host facility. So, increasing the total available Market, if you will, for Brownfield opportunity. So that remains very important as well.

Doug Ferti: Thank you, Doug.

Arun Jayaram: Our next question comes from the line of Arun Jayaram with JPMorgan Securities. Please go ahead. Good morning.

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

Douglas Pferdehirt: I was wondering if you could highlight what you're seeing outside of the Golden Triangle across the globe and perhaps some emerging areas where we could see some FID activity over the next call it 12 to 24 months. as well as maybe address some of the recent question marks around Namibia. Sure. And good morning, Arun.

Speaker Change: Hey, good morning.

Arun: Doug. I was wondering if you could highlight what you're seeing outside of the Golden Triangle, um, across the globe and and perhaps some emerging areas where we could see some FID activity, over the next call at 12, uh, to 24 months.

Arun: As well as maybe address some of the recent uh question marks around the media.

Speaker Change: Sure. And good morning Arun. Um,

Douglas Pferdehirt: I actually think we probably need to redefine the Golden Triangle because it's, I don't know if it's a polygon now or what, I'll have to think about that, but it clearly has changed. And, you know, just a historical reference for those on the call, the Golden Triangle really being, you know, the North Sea, West Africa and Brazil, you know, encompassing the Gulf of Mexico. So it's really changed quite dramatically. Those activities remain robust. Norway is particularly important and continues to be a key source of energy security to continental Europe. The U.S. Gulf continues to be very active, not only in brownfield activity, but now with the Paleogene in greenfield activity.

Speaker Change: I actually think we, we probably need to redefine the Golden Triangle to make because it's I don't know if it's a polygon now or what. I'll have to think about that. But um, it clearly has changed and, you know, just a historical reference for those on the call The Golden Triangle really being, you know, the North Sea West Africa and and and Brazil, you know, encompassing the Gulf of Mexico. So, um, it's really changed quite dramatically. Um, those activities remain robust a Norway is, uh, particularly important and continues to be a key source of energy, security to Continental Europe.

Douglas Pferdehirt: And that's a very important area for our company where we provide our 20K solution for the Paleogene. West Africa. Indeed, has slowed down over the last decade, but we're seeing increased activity. We announced an award in Nigeria not that long ago, and we see increasing activity in Angola. Now, you have, you know, you obviously have the strength of Brazil and the continued commitment by Petrobras and other international operators, which is very important. There's multiple billion-dollar projects going on in Brazil operated by international oil companies as well as Petrobras. And now we have Guiana, and we all know the importance of Guiana and certainly the importance of Guiana to TechnipFMC, and we were honored to be the exclusive provider of subsea equipment in the country.

Speaker Change: The US Gulf continues to be very active not only in Brownfield activity. But now with the Paleo Gene in Greenfield activity, and that's a very important area for our company where we provide our 20K, uh, solution for the Paleo Gene.

Speaker Change: Um, West Africa.

Douglas Pferdehirt: And now we added Suriname, and Suriname, where we received the first project award for their offshore production, which was a IEPCI, an integrated project for our company. And you know, we continue to see other areas in South America looking like future opportunities as well.

Speaker Change: Uh, indeed uh, has slowed down over the last decade. Uh, but we're seeing increased activity. We announced an award in Nigeria, uh, not that long ago and we uh, see increasing activity uh, in Angola. Um, now you have you know that you obviously have the strength of Brazil and the continued commitment by Petra brass and other International operators which is very important. You know there's multiple billion dollar projects going on in Brazil operated by International oil companies as well as Petra brass. Um and now we have GA and we all know that the the importance of GA and certainly in the importance of GA to Technic FMC. We were to be the exclusive provider of subsea equipment in the country. Uh and now we added Suriname and Suriname where we received the first project award for their offshore production, uh which was a PCI and integrated project for

Douglas Pferdehirt: So if we kind of, you know, draw the, you know, the triangle a little more broadly, you start to encompass actually quite a few additional unique opportunities as well.

Douglas Pferdehirt: Now, if we shift kind of from the triangle to the polygon or whatever we want to, whatever angle we want to go, you have to talk about East Africa. I mean, East Africa is important. This is gas. Gas is important for the future of the global economy and for the world. And East Africa has significant gas reserves, and particularly, and Mozambique in particular, that as I mentioned in my prepared remarks, we, has been and will continue to be very important to our company, where we've been, you know, the first mover in the country, and where we've had a significant presence, and that we believe will have a growing presence going forward.

Speaker Change: For our company. Um, and you know, we continue to see other areas in South America um, looking like future opportunities as well. So if we kind of you know draw the the the the you know, the triangle a little more broadly. Um you start doing Compass actually quite a few additional unique opportunities as well. Now if we shift kind of from the triangle to the polygon or whatever, uh, we we we want to whatever angle, we want to go. You have to talk about East Africa, I mean East Africa is important. This is gas.

Speaker Change: Gas is important for the future of of, of the global economy and and for for the world um and East Africa has significant gas reserves and particularly in Mozambique in particular. That as I mentioned, in my prepared remarks we has been and will continue to be very important to our company where we've been, you know, the S the first mover in the country and where we've had a significant presence and that we believe will have a growing presence going forward.

Douglas Pferdehirt: Douglas Pferdehirt, Atidrip Modak, Alf Melin, TechnipFCMC The Eastern Mediterranean, which is also gas, very prolific gas reserves, where we're operating projects today, but we think will continue to be an area of investment going forward.

Speaker Change: Um, you have, um,

Douglas Pferdehirt: You have the, you know, southern part, if you will, of Africa, southwest Africa, which is Namibia and the Orange Basin. I actually think one of the major operators had comments earlier today, and he is much better positioned to comment on it than I am, but I think they were very positive and constructive, and I can just say from our perspective, we're involved in multiple pre-feed and feed studies and actively in commercial negotiations today on projects in Namibia.

Speaker Change: the Eastern Mediterranean which is also gas very prolific, gas reserves, where we're operating projects today, but we think we'll continue to be an area of investment going forward.

Douglas Pferdehirt: Beyond that, I would look towards Asia-Pacific, where in Indonesia, massive gas reserves. We've seen success, quite a bit of success by one of the international operators, and we believe they will continue to invest in others in Indonesia in the gas reserves. I think I'll stop there, only because I think it just shows the robustness, both in the traditional basins or the traditional Golden Triangle, but now well beyond that, and it's what gets us so excited and keeps us so motivated to continue to do what we do.

Speaker Change: Uh, you have the, you know, southern part, if you will of Africa, Southwest Africa, which is now, maybe in the orange Basin. Um, I actually think 1 of the major operators had comments earlier today, and he is much better position to comment on it than I am. But I think they were very positive and constructive. And, and I can just say, from our perspective, we're involved in multiple preheat and feed studies, and actively in commercial negotiations today on projects, and that may be up.

Speaker Change: Uh beyond that, uh, I would look towards uh Asia Pacific where in Indonesia, massive gas reserves. Uh, we've seen success uh by you know, see quite a bit of success by 1 of the international uh operators and and we believe they will continue to invest in others uh in in in Indonesia in in the gas reserves. And and um I think I'll stop there only because I think it just

Douglas Pferdehirt: Great, thanks for the fulsome answer. I really appreciate it.

Speaker Change: Additional basins, or the traditional Golden Triangle, but now well beyond that. And, um, it's what gets us, so excited and keeps us so motivated, uh, to continue to do what we do.

Douglas Pferdehirt: Doug, my follow-up is regarding Surface. You announced some business transformations, some self-help activities, I think concentrated in North America. I was wondering if you could address maybe some near-term changes in the competitive dynamics with Cactus planning to enter the Middle East Surface market through the transaction with Baker. Talk to us about, you know, they're a pretty capable player looking at what they've done in North America, but how does that change? Does that impact FTI in any way as you think about that transaction? Sure.

Doug Ferti: Great. Thanks for the full time answer there, really appreciate it. Um Doug my my follow-up is regarding surface.

Speaker Change: Uh, you announced some business transformation, some self-help activities.

Speaker Change: Um, uh, I think concentrate in North America. I was wondering if you could address maybe some near-term changes in the competitive Dynamics with cactus uh planning to enter the Middle East surface Market through the transaction. Uh, with Baker, uh, talk to us about, you know, they're pretty uh, capable player looking at what they've been in North America. But how does that change? Does that impact FTI in any ways? You think about that? Uh, transaction.

Douglas Pferdehirt: Let's let me first step back a little bit on the transformation because it's really important. As I said, this has been going on for three years. You know, this isn't a response to any kind of current events, if you will. We recognize that in order to have a sustainable high returns business in North America, we needed to change our approach and it needed to be very focused. And we needed to really bring the knowledge and the technology that we have in the company, particularly in the area of automation and control. And that's what we're doing.

Speaker Change: Sure, um, let's let me first step back a little bit on the transformation because it's really important.

Speaker Change: As I said, this has been going on for 3 years. Uh, you know, this isn't a response to any kind of current events. If you will, we recognize that in order to have a sustainable

Speaker Change: High returns business in North America, we needed to change our approach and it needed to be very focused.

Douglas Pferdehirt: And we're doing it in a very focused effort. Hence the reason we've reduced our footprint by over 50%. And it's important while increasing cash flow. So I think clearly was the right thing to do. As we look outside of North America, we are also using a similar playbook outside of North America. So it's not exclusive to North America. And it's important that there, too, we really identify where is it that we can create the greatest value and be, you know, gain our portion of the economic value we create for our clients. And and we're doing that by looking at the footprint and the products and services and again, increasing the amount of digital offerings in our business outside of North America for surface technology.

Speaker Change: And we needed to uh, really bring the knowledge and the technology that we have, in the company, particularly in the area of Automation and control. And that's what we're doing. And we're doing it in a very focused effort. Hence, the reason we've reduced our footprint by over 50% and it's important while increasing cash flow. So, um, I think clearly was the right thing to do. Um, as we look outside of North America, we are also using a similar Playbook outside of North America. So it's not exclusive to North America and it's important that there too. We really identify where is it that we can create the greatest value and be, you know, gain our, uh, portion of the economic value. We create for our clients,

Douglas Pferdehirt: Speaking specifically to the Middle East and the recent transactions, look, this is a very high-end portion of our surface technologies business. At an investor conference that we had a few years ago, we actually did a side-by-side of a surface tree for the unconventionals or for the US versus a surface tree for the Middle East. It's about 10 times, 10 times the degree of difficulty, 10 times the cost, 10 times the complexity. There is no translation between the North America market and the Middle East market. There is no translation. It is a very different market. Look, I think everybody knows that and acknowledges that, but it's important that that is emphasized.

Speaker Change: And and we're doing that by looking at the footprint and the products and services. And again increasing the amount of digital offerings in our business outside of North America for Surface Technologies.

Speaker Change: Uh speaking specifically to the Middle East and the recent transactions. Look this is a very high-end portion of our Surface Technologies business at an investor conference that we had. A few years ago we actually did a side by side of a surface tree for, you know, the unconventional or for the US versus a

Douglas Pferdehirt: What we have seen historically is a very focused group of companies, two to maximum three of us, who work on that very high-end. In this transaction, you're just swapping one for the other, but with a massive learning curve associated with it. We look forward to continuing to have a very focused market structure in the Middle East. We will continue to invest both in technology where we are the leader in technology and qualified technology in the Middle East, which is important and very much recognized and rewarded by our clients.

Speaker Change: 10 times the complexity, if there is no translation between the North American market, and the Middle East Market, there is no translation. It is a very diff different market and look, I think everybody wreck everybody knows that it acknowledges that but it's important that that that is emphasized. So you know what? We have seen historically is uh a very focused group of companies to, to maximum 3 of us who worked on that very high end. Um, so in this transaction you're just swapping 1 for the other, um, but with a massive learning curve associated with it. So, um, you know, it, you know, we look forward to continuing to have a very focused, uh, Market structure in the Middle East. Um and um, we will continue to invest both in technology where we are the leader in technology and qualified technology in the Middle East, which is important. And

Sebastian Erskine: Thanks, Ted.

Speaker Change: And very much recognized and rewarded by our clients.

Doug Ferti: Thanks Doug.

Douglas Pferdehirt: Our next question comes from the line of Sebastian Erskine with Rothschild. Please go ahead. Yeah, hi, good morning, Doug. Good morning, Al. Thanks for taking my questions. I'd like to start on Brazil, and you kind of touched on it in a bit of detail there on the response to Arun. I mean, historically, with some of the Brazilian tenders, you kind of haven't been happy with the kind of non-integrated nature of those scopes, kind of surf only or SBS only, and it didn't make sense to kind of pull vessels away from integrated work to do that.

Speaker Change: Our next question comes from the line of Sebastian Erskine with Rothschild. Please go ahead.

Douglas Pferdehirt: We've obviously seen kind of a TARPU2 come out, and that looks like it's gone to all seats, quite a low bid. There are some other activity.

Douglas Pferdehirt: How do you do Brazil specifically evolving? You've got a great relationship with Petrobras, but just specifically on the prospects, how many of those realistically would you hope to convert? Sure, and good afternoon. The Brazilian market has its own dynamic. It's incredibly important. We have had a very long-term relationship with Petrobras. We have been recognized and continue to be recognized as their number one subsea supplier, something we're very proud of. And it's reflected in our install base and a very significant subsea services business that we have in Brazil. In terms of the construct of their awards, actually, they've done integrated awards.

Speaker Change: Yeah, hi. Good morning, uh, Doug. Good morning, Al thanks for. Um, thanks for taking my questions. I'd like to start on on Brazil and you kind of touched on it, um, in the in, in a bit of detail there on the response to a run. I mean, historically, with some of the Brazilian tenders you kind of haven't been happy with the kind of non-integrated nature of those Scopes, um, kind of surf only or, or SPS only and it didn't make sense to kind of pull vessels away from, from integrated work to do that. Um, we obviously seen kind of a to 2 come out, and that looks like it's gone to, to, to all see it's quite a low Bid And there are some other activity, how do you view Brazil, specifically, evolving, you've got a great relationship with petrol bass, but just specifically, on the prospects, how many of those realistically would you would you hope to convert

Sebastian Erskine: Sure, and good afternoon. Um,

Speaker Change: The the Brazilian Market um, has its own Dynamic. It's incredibly important.

Speaker Change: we have had a very long-term relationship with Petra brass

Speaker Change: We have been recognized and continue to be recognized as their number 1, subk supplier something, we're very proud of and just reflected in our install base and a very significant subcase Services business that we have in Brazil.

Douglas Pferdehirt: And the one and only integrated award they did, not surprisingly, is the only integrated company, went to TechnipFMC, and that was the HiSET project. Petrobras continues to invest in technology and innovation. They always have. And we've always been right there beside them. And we're proud of that. And we will continue to do that. The most recent example of that, as I pointed out, is some work we're doing on all electric to retrofit. hydraulic equipment that exists on the seafloor today, which is completely, completely game changing. So look, an important relationship, very much focused on technology.

Speaker Change: In terms of the construct of their Awards, um, actually they've done integrated Awards and the 1 and only integrated award. They did not surprisingly is The only integrated company went to Technic FMC, and that was the high set project.

Speaker Change: Petra brass continues to invest in technology and Innovation they always have and we've always been right there beside them, and we're proud of that, and we will continue to do that. The most recent example of that, as I pointed out, is some work we're doing on, all electric to retrofit.

Douglas Pferdehirt: In terms of their opportunity set, it remains robust. And we remain select. Beyond the Petrobras portfolio of opportunities in Brazil, we must remember there are many other operators now in Brazil. We have done IEPCI projects for some smaller independents, and we are executing IEPCI projects for some of the largest international companies in the world today. So the market remains a mix of integrated projects, which we benefit from, and non-integrated projects where we remain selective, and a lot of focus on technology and technology development. We're proud to be considered to be a trusted partner and the number one supplier to Petrobras.

Speaker Change: Hydraulic um, equipment that exists on the seafloor today, which is completely completely game-changing. So look, um, an an important relationship very much focused on technology, uh, in terms of their opportunity. Set it remains robust,

Speaker Change: And we remain selective.

Speaker Change: Um beyond the Petra brass portfolio of opportunities in Brazil, we must remember. There are many other operators. Now in Brazil,

Sebastian Erskine: Appreciate that, Doug.

Projects, where we remain selective and a lot of focus on technology and Technology development. We're proud to be considered to be a trusted partner. And the number 1 supplier to Petra breast.

Douglas Pferdehirt: And just a quick follow up on the opportunities list. I noticed because of the couple in the in the changes in scope value on on bar energy, kind of post the exclusive agreement with with with them and you and then on ENI is kind of Coral Norte. Is that purely like a tree count increase or anything specific you can flag there and kind of going forward?

Douglas Pferdehirt: Is this kind of typical in terms of a developer might look to change kind of quite late notice scope and hence that increase in the in the value of the of the of the project? No, a good observation and an important question. And, you know, for a while there, we were seeing project sizes as they move towards FID decrease. And that was either because operators decided to do them in phases, or, you know, just the reservoirs themselves did not, let's say, pan out to be as prolific as they had originally anticipated. I think what you're seeing here is the quality of the reservoirs that are offshore.

Speaker Change: Kind of going forward is this kind of typical in terms of a developer might look to change kind of quite like notice a scope and and hence that increase in the in the value of the of of the of the project.

Douglas Pferdehirt: The increased technology that they're able to use in terms of evaluation is giving them greater certainty as they move into the field development phase and the FID phase of projects.

Speaker Change: Uh know and a good observation and an important question and you know for a while there we were seeing project sizes as they move towards FID um decrease. Um and that was the other because operators decided to do them in phases or, you know, just the reservoirs themselves did not. Um let's say panel to be as prolific as they had originally anticipated. I think what you're seeing here is the quality of the reservoirs that are offshore.

Douglas Pferdehirt: So, in one case, and I don't want to be specific because I would leave that to the client, but in one case, they've actually added an additional reservoir to be tied in with the other reservoirs, which increased the scope of the project. And in other cases, it's just the, again, the increased confidence in the quality of the reservoir. And look, underlying all of that, I do believe that there is an understanding that the market dynamic in subsea has changed dramatically. It's very concentrated, and they have a strong desire to secure our resources, giving our unique capability in doing integrated projects and are configured to order subsea 2.0.

The increased, um, technology that they're able to use in terms of evaluation is giving them greater certainty as they move into the field development phase and the FID phase of projects. So, in 1 case and I don't want to be specific because that would I would leave that to the client. But in 1 case, they've actually added an additional Reservoir to be tied in with the other reservoirs, which increased the scope of the project. And in other cases, it's just uh, the again the increased confidence in the quality of the reservoir and and look, underlying, all of that. I do believe that there is an understanding that the market Dynamic and subsidy has changed dramatically.

Speaker Change: It's very concentrated and they have a strong desire to secure our resources, giving our unique capability in doing integrated projects and our configured to order subk 2.0.

Sebastian Erskine: Appreciate that.

Unknown Attendee: Thanks very much for taking the time and congrats on a strong quarter. Thank you.

Speaker Change: Appreciate that. Thanks very much for taking the time and and congrats on on a strong quarter. Thank you.

Victoria Mcculloch: Our next question comes from the line of Victoria McCulloch with RBC. Please go ahead. Hi, thanks very much for taking questions this morning.

Speaker Change: Our next question comes from the line of Victoria McCullough with RBC. Please go ahead.

Douglas Pferdehirt: So just firstly, it sounds well to carry on. Var Energy's CEO commented about, you know, cost depreciation that he's seeing in the market. Obviously, that doesn't appear to be aligned, particularly with the with your scope, but maybe that helps us to kind of get your view on where pricing is in the market. And you know, and you know, you talked to the competitive environment, but your views on that would be interesting. Thanks.

Speaker Change: Hi, thanks very much for taking questions this morning. Um, so just firstly, it times Well to carry on um, VAR energies CEO commented about, you know, cost depreciation that he's seeing in the market. Um, obviously that's doesn't appear to be aligned, particularly with the upsizing of the scope that you mentioned for their projects in Norway. Now, I appreciate you're not responsible for the entirety of the project so it's not. Um, maybe this is, you know, out with your scope. But maybe you can you that helps us to kind of get your view on where pricing is um, in the market. And you know and you know

Speaker Change: You know, you talk to me being competitive environment but your views on that would be interesting. Thanks.

Douglas Pferdehirt: Sure, Victoria, and thank you for the question. Keep in mind, most over 80% of our business is direct awarded to our company. So there is no pricing dynamic, or competitive dynamic. You know, in that portion of our, you know, the summit, the significant portion of our business. So that's, that's what makes us just absolutely unique. And almost always results in direct, repeat direct awards.

Douglas Pferdehirt: So, you know, that's, that changes that whole dynamic that you were describing, which I think would be more applicable to, you know, other parts of the industry or other companies and other parts of the industry. In regards to the actual opportunity that you're referencing, look, our focus is on shortening the cycle. So this isn't about unit cost. This isn't about, you know, a pricing. This is about shortening the cycle time. So one of the successes we've had with VAR and predecessor companies that we, you know, had this similar relationship with was allowing them to achieve first oil far sooner than they would by working with anyone else.

Speaker Change: Sure, Victorian. Thank you for the question. Um, keep in mind most over 80% of our businesses, direct awarded to our company. So there is no pricing dynamic or competitive Dynamic, um, uh, you know, in in that portion of our, you know, the the significant portion of our business. So that's that's what makes us just absolutely unique. Um, and something we're very proud of and something we work very hard, uh, to earn from our clients every single day and almost always results in direct. Repeat direct Awards. Um, so you know, that's that, that changes that whole dynamic that you were describing, which I think would be more applicable to, you know, other parts of the industry or other companies and other parts of the industry um in regards to the actual opportunity that you're referencing look, our focus is on shortening the cycle time.

Douglas Pferdehirt: And by accelerating time to first oil, the overall project returns are improved significantly. So I think you have to separate the two subjects. One is a unicost inflation, but more importantly, what is the project return? And focusing on the project returns is where we deliver value to our customers. That's why we get 80% direct awards. That's why they enter into these proprietary exclusive agreements with us. That's why they value us and give us repeat awards. So we're going to continue to focus on shortening the cycle time and improving their project economics.

Speaker Change: So this isn't about unic cost, this isn't about, um, you know, uh, you know, a pricing. This is about shortening the cycle time. So 1 of the successes we've had with VAR and predecessor companies, uh, that we, you know, had this a similar relationship with was allowing them to achieve first oil far sooner than they would buy working with anyone else.

Douglas Pferdehirt: What's happening in the rest of, you know, from the rest of their supply chain, I can't comment, but that's our role. We take it very seriously. This isn't a pricing game. This isn't a supply and demand game. We are not an asset company. We think very differently. We're a technology company and we're focused on improving their returns while we share a portion of the economic value we create.

And by accelerating time to first oil the overall project returns are improved significantly. So I think you have to you have to separate the 2 subjects. 1 is a unicast inflation but more importantly, what is the project return and focusing on the project returns is where we deliver value to our customers, that's why we get 80% direct Awards. That's why they enter into these proprietary exclusive agreements with us. That's why they value US and give us repeat Awards. So we're going to continue to focus on shortening the cycle time and improving their project economics.

Victoria Mcculloch: Thanks, that's really helpful, Doug. And I think that aligns with sort of maybe the comment being misconstrued, in that it wasn't necessarily deflationary on the subsea side of pricing. So that's interesting to hear that you're aligned with my views on that one.

Speaker Change: Improving their project returns while we share a portion of the economic value. We create

Speaker Change: thanks.

Speaker Change: Helpful, Doug. And I think,

Douglas Pferdehirt: And if I can ask a follow up, not really connected, but you, interesting comments on the hybrid flexible pipe. Ex-Brazil, where would this be most, what markets would this most be attractive to sell Good question. We are still kind of exploring that and, you know, considering that ourselves. But you could come to the conclusion that it could not only be applicable in all existing markets for flexible pipe, but could increase the total market for flexible pipe. So what do I mean by that? Brazil is clearly been a key market and a key driver for flexible pipe technology.

Speaker Change: In that, it wasn't necessarily deflationary on the, the sort of subk side, um, of pricing. So that's interesting to hear that. Your alignments might be used on that 1. And if I get a follow-up, not really connected. But um, you interesting comments on the hybrid flexible, pipe X Brazil, um, where would this be most, What markets would be this? Most be attractive to sell into

Speaker Change: Good question. Um,

We are still.

Speaker Change: Kind of exploring that and and you know, considering that ourselves but you could come to the conclusion that it could.

Speaker Change: Not only be applicable in all existing markets for flexible pipe. But could increase the total market for a flexible pipe. So, what do I mean by that?

Douglas Pferdehirt: And as a matter of fact, Petrobras has built an entire ecosystem, including vessels, onshore support, investment in products to make the hybrid flexible pipe or the flexible pipe market interesting in many, many ways. And they benefited from this because one very interesting attribute of flexible pipe is you can reuse it. You can use it for a while in one field, move it to another field. You can't do that with a rigid pipe. A rigid pipe, by definition, only has X length and can only be used in one application. So it's much better over the long term to be used in a project.

Brazil is clearly, uh, been a key market and a key driver for flexible pipe technology. And as a matter of fact, Petra brass is built an entire ecosystem, including vessels, uh, onshore support um, investment in products to uh, to uh, make the hybrid flexible part or the flexible pipe Market. Um, interesting in many, many ways and they benefited,

Douglas Pferdehirt: Flexible pipe is used globally. It's used in many of the, when I went around the world earlier talking about all of the existing basins and activity in some of the new basins, I can tell you our architecture and part of the unique opportunity and differentiation that we bring, including shortening the cycle time, is because of flexible pipe. So, yeah, it's actually quite broad. Now, why do I say hybrid flexible pipe could be used anywhere where conventional flexible pipe could be used? Because it actually has a very positive attribute, which I, you know, hinted to, or I guess directly addressed in my script, which is weight.

Speaker Change: From this because 1, you know, very interesting, attribute of flexible pipes, you can reuse it, you can use it for a while. In 1 field, move it to another field. You can't do that with a rigid pipe. A Ridgid pipe by definition only has X length and can only be used in 1 application. Um, so it's, it's much better over the long term to be used in a project. Um, flexible pipe is used globally, it's used in many of the when I went around the world earlier talking about all of the existing basins and and activity and some of the new basins, I can tell you our architecture and part of the unique opportunity and differentiation that we bring including shortening, the cycle time is because of flexible pipe.

Douglas Pferdehirt: And the weight of the weight factors into everything. It factors into the manufacturing costs, the transportation costs, most importantly, into the cost of installation, the heavier, the more the bigger the vessel, the bigger the crane, the more costly the vessel is. We don't think that way, right? We're trying to drive reduction in cycle time and improved economics for our customers. I'm not trying to sell bigger boats.

Speaker Change: So um, yeah, it's actually quite broad now. Why do I say hybrid flexible pipe could be used anywhere where conventional flexible pipe could be used because it actually has a very positive attribute which I you know, hinted to or I guess directly addressed in my script which is weight.

Douglas Pferdehirt: So, we're out there really being disrupted to the boat industry and to the vessel industry by thinking about it as what can we do to make this product lighter, simpler, could be installed with a much lower cost vessel as an example, and in addition to that, the lack of the durability of the product and the design life of the product will be greater than conventional flexible pipe. So, if you think about all of that, you could say, well, why couldn't it be used anywhere and why wouldn't it be used anywhere and why wouldn't it soon start to displace some rigid pipe applications, and I think those are all viable challenges and opportunities for us and why we have invested so much and continue to be strong believers that this will truly be a disruptive technology.

Speaker Change: Uh, and the weight of the, the, you know, weight factors in everything, it factors into the manufacturing costs, the transportation costs, most importantly, into the cost of installation. The heavier the more, the bigger, the vessel, the bigger, the crane, the more costly the vessel is, we don't think that way, right? We're trying to drive reduction in cycle, time and improved economics for our customers. I'm not trying to sell bigger boats.

Speaker Change: So we're out there really being disrupted to the boat industry and to the vessel industry by thinking about it, as what can we do to make this product lighter? Simpler could be installed with a much, uh, lower cost vessel as an example. Um, and in addition to that, the lack of the durability of the product and the design life of the product will be greater than conventional flexible pipe. So, if you think about all of that, you could say, well, why couldn't it be used anywhere? And why wouldn't it be used anywhere? And why wouldn't it soon start to displace? Um, some rigid pipe applications, um, and and I think those are all viable uh, challenges and opportunities for us and why we have invested so much and continue to be strong. Believers that this will truly be a disruptive technology.

Unknown Attendee: Thanks very much. Really appreciate the colour you've provided.

Speaker Change: Very much really appreciate the, the color your private.

Saurabh Pant: Our final question will come from the line of Saurabh Pant with Bank of America. Please go ahead. Hi, good morning, Doug. Good morning.

Speaker Change: Our final question will come from the line of SRA pond with Bank of America. Please go ahead.

Doug Ferti: hi, good morning, Doug

Douglas Pferdehirt: Doug, I think at the top of the Q&A I heard a short and sweet yes to Dave's question on 10 billion dollars for subsea 2026 potential, right, so that was fantastic and maybe I'll ask another question on life beyond 25, right, but this time maybe on the margin front. I know it's hard to guide numerically, right, but Doug, how should we think about where subsea margins can go because there are a ton of moving pieces, right, subsea 2.0, just more integrated work, more backlog roll-off, right, just maybe help us think about potential margins and what are the moving for us.

Speaker Change: Good morning.

Speaker Change: Uh, de I think at the top of the Q&A, I heard a short and sweet. Yes, to Dave's question on 10 billion dollars for subsidy, uh, 2026 potential, right? So that was fantastic. And maybe I'll ask another question on Life Beyond 25 right? But this time maybe on the margin front. I know it's hard to guide numerically, right. But uh Doug how should we think about where subzi margins can go? Because there are a ton of moving.

Speaker Change: Pieces. Right? Subk 2.0, just more integrated work. More backlog role of right. Just maybe help us think about uh, potential margins and what are the moving pieces uh, for us there, please.

Douglas Pferdehirt: Sure. So for all the reasons that you stated, in addition to a very robust backlog that we continue to grow, and the new inbound opportunities that we talked about are continued to be accretive to the backlog margins, we would anticipate further growth in our EBITDA margin for subsea in 2021. Right, that's fantastic. That makes a ton of sense. And then maybe one follow up question on what you said, what you said in your prepared remarks, Doug, on the all elect Right, especially the Unknown Speaker opportunity to replace hydraulics on current projects, right? That sounds like a pretty big opportunity over a longer duration of time, right?

Speaker Change: Opportunities that we talked about are continued to be accretive to the backlog margins.

Speaker Change: We would anticipate further growth in our ibba margin for subk in 2026.

Speaker Change: Right, that's fantastic. That makes a ton of sense and then maybe 1 follow up, question on what you sent, what you said in your prepared remarks dagger on the all electric side of things, right? Especially the

Douglas Pferdehirt: Maybe just talk to that, Doug. How big could that opportunity be? How quickly could that manifest right and what? Sure.

Speaker Change: Uh, opportunity to replace hydraulics on current projects, right? That sounds like a pretty big opportunity over a longer duration of time, right? Maybe just talk to that Doug, uh, how big could that opportunity be how quickly could that manifest, right? And and, and what regions?

Douglas Pferdehirt: So and let me expand on that just a little bit. You know, in my prepared remarks, I talked about all electric not being a one size fits all. So like everything else, when we looked at the development, we wanted to have something that was scalable. and configurable that we could apply on across multiple, multiple different purposes and solutions to help meet our customers needs. So, you know, the initial focus was on new oil and gas production. And then we very quickly realized that probably the biggest, a bigger market was going to be the carbon capture and storage market, which is where we've been focused on, which was our CO 2.0 tree, again, configurable and designed for the CO2 application.

Speaker Change: Sure so and let me expand on that just a little bit um you know in my prepared remarks I talked about all electric not being a 1 size fits all so like everything else when we looked at the development we wanted to have something that was scalable.

Douglas Pferdehirt: And it led to the award from BP for the Northern Endurance Partnership, which is the first all electric subsea field development. And why is electric important there? Because the emitters are onshore. So they're going to capture the CO2 onshore, but then it needs to be transferred 145 kilometers offshore to be stored safely and permanently in a subsea structure. So you can only get that done by using an all electric solution. Because being able to control hydraulics over 145 kilometers would not be economically viable. And now what we're working on, and I'm not going to say too much, because this is an active, you know, R&D program for us, and one that we're extremely excited about, is how do we address the existing market that's out there today, that huge install base that I talk about that we have well over 50% of?

Speaker Change: And configurable that we could apply on across multiple multiple different purposes and solutions to help our meet our customers needs. Um so you know the initial Focus was on new oil and gas production and then we very quickly realized that probably the biggest a bigger Market was going to be the carbon capture and storage Market which is where we've then focused on, which was our co2.0 tree again, configurable and designed for the CO2 application and it.

Speaker Change: Led to the award from BP for the northern endurance partnership which is the first all-electric, subk field development and why is electric important there because the emitters are on Shore, so they're going to capture the CO2 on Shore. But then it needs to be transferred, uh, 145 km offshore to be stored safely and permanently in a subk, uh, structure. So, uh, you can only get that done, uh, by using an all-electric solution because, uh, being able to control Hydraulics, over 145 kilometers would not be economically viable.

Douglas Pferdehirt: But how do we address 100% of that market, meaning not only our own equipment, and go out and find a way to retrofit, they're all hydraulics, everything down there is hydraulics, today, and hydraulically operated, and hydraulics, you know, have, you know, over time, they do deteriorate, and it could lead to a situation where valves aren't operating appropriately or to design, which typically then results in the well either being shut in and abandoned, or the well being shut in, the tree being recovered from the seafloor, brought back to the onshore facility, retrofitted, or I shouldn't say retrofitted, but repaired, and then taken back offshore and reinstalled.

And now what we're working on and and I'm not going to say too much because this is an active, uh, you know, R&D program for us and 1 that we're extremely excited about is, how do we address the existing Market that's out there today that, that huge install base? That I talked about that we have well over 50% of, uh, but how do we address 100% of that market? Meaning not only our own equipment and go out and, and find a way to retrofit, they're all Hydraulics. Everything down there is Hydraulics today and hydraulically operated and that Hydraulics, you know, have, you know, over time they do deteriorate and it could lead to a situation where vowels aren't operating, uh, uh, uh, appropriately or, um, to design, which typically, then results in the well, either being shut in and abandoned or the well-being shut in the tree being

Recovered from the seafloor, brought back to the onshore facility.

Douglas Pferdehirt: That's a six, nine, 12, 15 month process. So in other words, you've shut in production for quite an extended period of time, as opposed to, let's just play make-believe for a moment.

Douglas Pferdehirt: If there was a company that was an industry leader in robotics, an industry leader in automation and control, and an industry leader in all electric, if we could find a way to send a robot down there to actually retrofit an existing tree and remove the hydraulic controls and put on electric actuation whilst not having to stop production for any more than the short period of time, you know, a couple of days that that process may take, that's a game changer. So you bet, we're very excited. Right, right. Now we need to start flying by wire subsea, Doug.

Speaker Change: Uh retrofitted or or or I shouldn't say retrofitted, but repaired, uh, and then taken back offshore and reinstalled. That's a 6912 15-month process. So in other words, you've shut in production for quite an extended period of time as opposed to that. Let's just play Make Believe for a moment. If there was a company that was an industry leader in robotics and industry leader in Automation and control and industry leader in all electric. If we could find a way to send a robot down there to actually retrofit an existing tree and remove the hydraulic controls and and and and and put on electric actuation whilst not having to stop production for any more than the short period of time. You know a couple of days that that process may take that's a game changer. So you bet we're very excited.

Unknown Attendee: That makes a ton of sense. Thank you, Doug.

Matt Seinsheimer: I'll turn it back.

Doug Ferti: Right. Right now, we need to start flying by wire. Subk Doug, that makes a ton of sense. Thank you Doug. I'll send it back.

Matt Seinsheimer: And I will now turn the call back over to Matt Seinsheimer for any closing comments.

Matt Finder: And I will now turn the call back over to Mad signer for any closing comments.

Matt Seinsheimer: This concludes our conference call. A replay of the call will be available on our website beginning at approximately 3 p.m. New York time today.

Operator: If you have any further questions, please feel free to contact the investor relations Thank you for joining us.

Speaker Change: This concludes our conference call, a replay of the call will be available on our website, beginning at approximately 3:00 p.m. New York time today.

Speaker Change: If you have any further questions, please feel free to contact the investor relations team.

Operator: Regina, you may end the call. This will conclude today's call. Thank you all for joining. You may now disconnect.

Speaker Change: Thank you for joining us, Regina. You may end the call.

Speaker Change: This will conclude today's call, thank you all for joining you may now. Disconnect