TechnipFMC plc

Good day and thank you for standing by. Welcome to the TechNIP FMC first quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Matt Seinsheimer. Please go ahead.

Good morning and good afternoon, and welcome to Technip FMC's first quarter 2021 earnings conference call. Our news release and financial statements issued yesterday can be found on our website. 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 US Securities and Exchange Commission and the French AMF. We wish to caution you not to place undue reliance on any forward-looking statements which speak only as of the date hereof. 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. I will now turn the call over to Doug Ferdihart, Technip FMC's Chairman and Chief Executive Officer.

Thank you, Matt. Our first quarter as a leading pure play technology and services provider to both traditional and new energy industries began with solid financial results with notable achievements that uniquely position us in the growing markets we serve. This was reflected through strong operational execution and improving market backdrop that is poised to be even stronger for longer and continued development of real and material opportunities for Technip FMC in the energy transition. Starting with the operational performance, we had an exceptional quarter in both operating segments. In Sub C, revenue grew sequentially in the period, driven by particularly strong execution of project backlog that offset the seasonal reduction in installation activity. In surface technologies, our international operations represented nearly 70% of total segment revenue, and we remain focused on delivering profitable results supported by strong execution both in the international and U.S. markets. In the U.S., we experienced sequential revenue growth despite the severe winter weather. Adjusted EBITDA from continuing operations totaled $165 million. Free cash flow from continuing operations totaled $137 million. We ended the quarter with net debt of $1.8 billion. And earlier this week, we announced the partial sale of our stake in Technip Energies for approximately $360 million. Inbound orders from continuing operations improved sequentially to $1.7 billion. Subsea inbound more than doubled sequentially to $1.5 billion, reflecting solid order momentum and a book to bill of 1.1. Integrated projects comprised nearly 40% of our subsea order inbound in the quarter, with particular strength in IEPCI orders and increased adoption of 2.0 technologies. During the quarter, we announced two separate IEPCI projects with EnergyN, building upon our previous experience with the Karish development and leveraging our iFeed capabilities to further extend our collaborative relationship to additional opportunities. We also received an IEPCI contract for the Petronas Limbayong project in Malaysia, their first deepwater development, awarded based on our subsea 2.0 technology and integrated execution. Other projects awards in the period included a contract for manifolds for the Petrobras Marlum and Vidor fields offshore Brazil. The manifolds will utilize our next generation, all-electric robotic technology that replaces traditional subsea hydraulics, as well as thousands of mechanical parts, while providing real-time data and analysis on performance. The use of digital automation and control allows for a more compact unit that is smaller, less complex, and less costly with a significantly reduced carbon footprint. and the robotic software can be remotely upgraded, increasing the overall reliability and availability of the subsea systems. Turning to the market outlook, client conversations remain constructive, suggesting a further increase in activity. Additionally, the external conditions that have driven oil and gas prices higher could provide greater price stability over the intermediate term. These include expansion in economic activity, driven by strong fiscal stimulus, COVID vaccinations, and expanded reopenings of local economies. And more constrained supply, a function of disciplined capital spend, particularly for OPEC+, whose actions appear focused on realizing a price that supports economic growth and continued energy investment. In surface technologies, international revenue continued to expand and represented nearly 70% of the segment in the quarter, driven by strength in the Middle East, North Sea, and Asia Pacific. These markets demand higher specification equipment, global services, and local capabilities, areas where we continue to further differentiate our offering. In the Kingdom of Saudi Arabia, we are nearing completion and startup of a new facility that will significantly increase our local manufacturing capabilities. And in the North Sea, our extensive experience and high pressure, high temperature technologies provide us significant opportunities in a region where activity remains robust and well supported by government incentives. We believe our unique capabilities will allow us to extend our leadership positions in these more resilient geographies. In sub C, we are confident in our 2021 outlook of more than $4 billion in inbound orders, and we are well on our way to meeting this commitment just three months into the year. We expect continued benefit from our differentiated market strategy, as well as favorable market fundamentals. More specifically, we believe that integrated project awards have the potential to more than double versus the prior year. and the combination of direct awards and our service related orders could represent 50% of total inbound for the full year. We also believe that we will see order growth again in 2022, supported in part by an expanding list of opportunities on our opportunities map, where total project revenue or value grew 10% sequentially at the midpoint, despite the award of three projects during the period. In summary, we see potential for a recovery in global activity that is longer and more sustainable than what has been experienced in previous cycles, allowing for continued investment in traditional markets while providing incremental capital for the development of new energy resources. With regard to new energy resources, We believe that renewable energy will be increasingly sourced and stored offshore for both environmental and scalability reasons. The momentum has clearly shifted for offshore wind in particular, which has attracted considerable attention in recent months. There was significant interest in the recent auction for seabed leases in the UK, with sites auctioned for more than 10 times prices paid in the previous auction. Norway is also moving forward with North Sea Wind Power, awarding its first development licenses for both fixed and floating wind developments. And the United States has unveiled a growth, a goal to expand offshore wind energy in the coming decade by opening new areas for development, accelerating permits, and increasing public project financing. We believe that an increasing share of this investment will be made in deeper waters where winds are stronger and more consistent. It is estimated that nearly 80% of the world's offshore wind resource potential is in waters deeper than 60 meters. This will require floating and seabed infrastructure for energy generation, storage, and transmission, all of which can be enabled by our Deep Purple technology. During the quarter, we announced two strategic partnerships, both of which are focused on generating renewable energy from novel wind and wave resources. First, we announced a partnership with Magnora to jointly pursue offshore wind project development opportunities. Magnora holds a strategic position within the renewable energy sector as an owner in wind project development. The partnership has already commenced operations and is focused on opportunities in Scotland and Norway and will consider entering new markets in the coming months. Additionally, we announced a strategic partnership with Bombora to bring together both wind and wave power, utilizing Bombora's M-Wave technology coupled with proprietary technologies from Technip FMC to convert wave energy into electricity. By combining both wind and wave, we believe we can generate even higher yields from floating turbines when compared to fixed projects, further lowering project development costs. Importantly, we will look to further differentiate ourselves in the marketplace by utilizing the very same playbook that led to the successful transformation of our subsea business and extended our technological differentiation increased project economics, and improved our market positioning. And to be clear, we are playing the long game, built around our differentiated technologies and integration capabilities and focused on selecting the right partners and the right projects. Remember, the benefits of this path were not obvious at the time we initiated IEPCI. Integrated project execution was a fundamental change in the approach to subsea project delivery. And its tremendous success gives us absolute confidence that we are taking the right steps to create a sustainable and high-returns business to address the market demand for a renewable future. I will now turn the call over to Elf Moline.