TechnipFMC plc

Good morning and welcome everyone to the Technif FMC first quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session. If you would like to ask questions during this time, simply press star and then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Now, I would like to turn the call over to our first presenter for today, Mr. Matt Zinsumer. You may begin the conference.

Good morning and good afternoon, and welcome to TechNeep FMC's first quarter 2022 earnings conference call. Our news release and financial statements issued yesterday can be found on our website. I would 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 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 , most recent 10 , 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. 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 Ferdihurt, Technip FMC's Chair and Chief Executive Officer.

Thank you, Matt. Good afternoon. Thank you for participating in our first quarter earnings call. I would like to start off by addressing the war in Ukraine. What the world has witnessed has been truly heartbreaking. I am extremely proud of the compassion our teams worldwide are showing through their support for refugees. I want to personally recognize our employees in Poland, many of whom have been giving direct support to Ukrainian families by opening up their hearts and homes and providing much needed shelter and care. As a company, we continue to support their efforts through our Global Humanitarian Fund, providing practical and financial help where it is needed most. The invasion has prompted energy security to become a global priority. We remain committed to helping our clients address the essential needs for hydrocarbons today to ensure the continuity of affordable energy prices, while also playing an essential role in the longer-term energy transition. Now turning to the quarterly results. Total company revenue in the period was $1.6 billion. Total company adjusted EBITDA for the quarter was $154 million, with an adjusted EBITDA margin of 9.9%. Total company inbound orders in the quarter were $2.2 billion, driving sequential growth in backlog to $8.9 billion. Surface Technologies inbound orders were $291 million, with a book-to-bill above one. driven by strength in the US market. North America's sales and profitability grew sequentially, driven by increased drilling and completion activity and an improved pricing environment. Outside of North America, we are investing in new manufacturing capacity to support the strong Middle East outlook. As previously highlighted, we are transitioning to a new facility in Saudi Arabia which was expected to be a headwind to our financial results in the period. The qualification of the facility is extensive and the process has taken us more time than previously anticipated. We are now undergoing final production testing and expect final certification of the facility by the end of the second quarter, at which time we anticipate an acceleration of orders in country. We remain confident in meeting our full-year expectations as we have secured plans to accelerate recognition of these orders. Elf will cover the near-term financial impacts during his prepared remarks. Our results in the period also reflected our ability to effectively navigate the ongoing challenges facing the global supply chain. Inflationary pricing and logistical bottlenecks have resulted from a number of factors. The energy transition, the global pandemic, and the Russian invasion of Ukraine have all played a role, disrupting access to key commodities and supply routes at a time when the global economy has quickly transitioned from a period of contraction to one of accelerating growth. While we are not immune to all of the market dislocations, we have taken many strategic actions over the last several years that have mitigated the near-term effects. We are utilizing lessons learned from previous growth cycles to drive simplification, standardization, and industrialization throughout the organization. We have increased supplier diversification to reduce dependencies on sole source supply, while adding supply chain capacity to ensure proper balance with internal manufacturing capacity. And we are developing stronger relationships with our supply chain. Much like the alliance partnerships and frame agreements we have developed over the years with our customers, we are working more closely with our supply chain partners to better integrate them into our planning processes. Strengthening these long-standing relationships will keep us well-positioned in times of market volatility. Our Subsea 2.0 product platform is our most prominent example of industrialization, allowing for the successful implementation of a configure-to-order, or CTO, model. CTO has enabled us to create a value stream that delivers a more competitive offering to the market when compared to an equivalent engineered-to-order product, resulting in a 25% reduction in cost and a 50% reduction in product delivery time, savings that are both real and sustainable. And we have paved the way for other products to adopt a similar operating model, enabling an enterprise-wide approach. This resulted in three CTO principles that serve as the fundamental basis of how we operate in this environment. First, we are eliminating design engineering. Second, we have redefined our sourcing strategy by utilizing pre-approved suppliers and standard configurations. And third, we are transforming manufacturing flow by leveraging configurable assemblies. With CTO, the greater predictability of product manufacturing and high volumes of pre-engineered components has allowed us to completely redefine the supply chain, removing significant inventory from our balance sheet and cutting up to eight months of lead time. Ultimately, our success is determined by our execution, our client relationships, and our contractual arrangements. Project execution remains a core competency and oftentimes a point of competitive differentiation. But it is also dependent upon the partnerships we establish with both our customers and our suppliers. We are seeing strong support from our customers to ensure we can address their needs both today and throughout this evolving period of increased activity. An example of which is a new framework agreement with Total Energies that will utilize Sub-C 2.0 to address their future technology needs. And we are seeing improvements in contractual arrangements that more appropriately balance the terms and conditions needed to support this growth, be it through more favorable payment terms or supplier investment and risk sharing. In Sub-C, We had a very strong start to the year with inbound orders of $1.9 billion and a book-to-bill of $1.5 billion. This included two announced awards in the period, Petrobras' Buzio 6 Greenfield Development and Wintershaw's Maria Revitalization IEPCI project. This is our first IEPCI with Wintershaw DEA. an award built on our ability to leverage our iFeed model. Through early engagement, we optimized the field layout to maximize the benefits of integrated project execution. Our involvement helped reduce the project's carbon footprint by modifying existing infrastructure, eliminating the need for an additional 4,000 meters of pipe, What stands out most in the quarter is the breadth of the inbound, nearly 40% of which came from smaller, unannounced project awards, much of which was direct awarded to our company. This is a very diverse source of inbound. These smaller awards in the quarter included projects from more than 30 operators sourced from all major basins across the globe. Beyond project activity, subsea services remained resilient in the quarter despite the impact of weather-related seasonality. Activity trends remain favorable and consistent with our view that subsea services revenue will grow to approximately $1.2 billion this year. With energy security now a clear global priority, both operators and suppliers are working more collaboratively in the current environment. Our conversations with clients today are focused on balancing the need for new and different sources of supply with the challenges of more scarce resources, be it commodity inputs, skilled labor, supply chain logistics, or physical capacity requirements. This increased and constructive dialogue supports our view that we are in the midst of a multi-year upcycle for oil and gas. Our subsea opportunity list continues to highlight a very robust market outlook, representing an opportunity set of larger projects that totals more than $20 billion for the industry, led by Brazil, Guyana and West Africa. Looking ahead, We expect increased activity in other regions of the world in order to meet the growing global demand for feed gas used in LNG facilities, the majority of which is supplied by subsea wells. We expect these volumes to be supplied by increased activity in major basins from Africa to Asia Pacific. We have a strong track record with large gas developments and are well positioned as an agnostic provider of integrated subsea projects. The expanding LNG market gives us an even greater confidence in the intermediate term outlook. We continue to anticipate subsea inbound order growth of up to 30% in 2022, with IEPCI direct awards and subsea services together approaching 75% of our inbound orders. I will now turn the call over to Elf to discuss our financial results.